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Our business
CRH creates value by maintaining a balanced portfolio. Our product mix spans the breadth
of building materials demand and sectoral end-use, thereby minimising exposure to any one
single demand driver. In addition, the Group offsets cyclical economic risk by maintaining a
geographically diversified portfolio across its key regions of North America and Europe, as well
as in the emerging regions of Asia and South America.
Heavyside Materials
• Aggregates – crushed stone
• Cement – primary binding agent
• Asphalt – road and highway surfaces
• Readymixed Concrete – pourable pre-mixed,
aggregates, cement and water based compound
• Precast Concrete – structural floors, beams, vaults
• Architectural Concrete – blocks, bricks, pavers
Lightside Products
Building Materials
Distribution
• Glass & Glazing Systems – engineered products for
external and internal use
• Construction Accessories – engineered fixing,
connecting and anchoring solutions
• Shutters & Awnings – solar shading, terrace roof and
window protection solutions
• Fencing & Security – outdoor security and protection
systems
• Cubis – composite access chambers
• Builders Merchants – channel for distribution of building
materials to the professional contractor
• SHAP – specialist distribution of sanitary, heating and
plumbing products
• DIY – providing decorative and home improvement
products to the consumer
Contents
Chairman’s Introduction
Strategy Review
Chief Executive’s Review
Strategy
Business Model
Measuring Performance
Sustainability
Risk Governance
Business Performance
Finance Director’s Review
Operational Snapshot
Europe
Americas
LH Assets
China & India
Governance
Board of Directors
Corporate Governance Report
Directors’ Remuneration Report
3
6
8
10
12
14
16
20
24
26
36
44
48
52
56
70
Directors’ Report
108
Financial Statements
Independent Auditor’s Report
122
Consolidated Financial Statements 132
Accounting Policies
Notes on Consolidated
Financial Statements
Other Information
137
148
Shareholder Information
220
Principal Subsidiary Undertakings
224
Principal Equity Accounted
Investments
Group Financial Summary
Photo Captions
Index
231
232
234
236
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CRH Annual Report I 2015 CRH at a glance
CRH plc is a leading global diversified building materials group,
employing 89,000 people at over 3,900 operating locations in
31 countries worldwide.
CRH is a top two building materials company globally and the largest in North America. The
Group has leadership positions in Europe as well as established strategic positions in the
emerging economic regions of Asia and South America.
CRH is committed to improving the built environment through the delivery of superior
materials and products for the construction and maintenance of infrastructure, residential and
commercial projects.
A Fortune 500 company, CRH is listed in London and Dublin and is a constituent member
of the FTSE100 and the ISEQ 20 indices. CRH’s American Depositary Shares are listed
on the New York Stock Exchange. CRH’s market capitalisation at 31 December 2015 was
approximately €22 billion.
Our vision:
To be the leading building materials
business in the world
2015 Performance highlights
€23•6 billion
Sales
€1•0 billion
Profit Before Tax
€2•2 billion
EBITDA
€1•3 billion
Operating Profit
89•1 cent
Earnings Per Share
62•5 cent
Dividend Per Share
Visit our Investor Relations
Centre
http://www.crh.com/investors
View Annual Report Online
http://www.crh.com/reports/
2015-annual-report.pdf
1
CRH Annual Report I 2015 Our global presence
31
countries
#1
in building materials
in North America
20
billion tonnes
of reserves
3,900
operating
locations
450
million tonnes of
manufactured product
89,000
people
#2
in building materials
worldwide
860
distribution
branches
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CRH Annual Report I 2015
Chairman’s Introduction
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Dear Shareholder,
2015 was a very significant year for CRH,
with a strong performance in our heritage
businesses, continued progress in our
portfolio review, total disposal proceeds
in the year of circa €1 billion and the
completion of two strategically important
acquisitions. The Board is recommending
a final dividend of 44c per share, which,
if approved at the 2016 Annual General
Meeting, will maintain the full year dividend
at 62.5c per share.
On behalf of the Board, I would like to
acknowledge the support from shareholders
for the acquisition of assets from Lafarge
S.A. and Holcim Limited (the ‘LH Assets’) in
a €6.5 billion deal. In early February 2015,
we completed a placing of 74 million shares
which raised €1.6 billion as part of the
financing of this transaction. Also in March,
shareholders approved the acquisition at an
Extraordinary General Meeting, with a very
positive level of support (99.999%) indicating
shareholders’ views on the value and
strategic importance of this acquisition for
CRH. The transaction was slightly different
in that we acquired a portfolio of assets
across the globe from two companies, with
no central head office or organisational
structure. In order to mitigate the resulting
challenges, the executive team developed
a thorough integration plan, which I am
pleased to report is well under way. Given
the importance of the integration, a specific
committee of the Board was set up to
oversee the process and report on progress.
Also in 2015, we acquired C.R. Laurence
(CRL) for a total consideration of
$1.3 billion. CRL is North America’s
leading manufacturer and distributor of
custom hardware and installation products
for the professional glazing industry. CRL
provides CRH with an exceptional strategic
fit for our BuildingEnvelope® business in
the Americas and, over time, a scalable
international growth platform.
In addition to the two large acquisitions
referred to above, we completed 20 smaller
“bolt-on” acquisitions and investments,
bringing our total acquisition spend to
approximately €8 billion.
Looking forward to 2016, the Board will
be visiting a number of the newly acquired
businesses. We will continue to maintain
our strong focus on financial discipline and
prudent financial management, and the
Board is committed to restoring our debt
metrics to normalised levels.
With employee numbers now at approximately
89,000, keeping our people safe is a
strategic priority for the Group. The Board
and executives throughout the Group
maintain a relentless focus on improving our
safety programmes. During a recent visit
to our operations in Utah, the Board had a
demonstration of one new innovative safety
technology which increases the safety of our
employees and contractors by alerting them to
work zone intrusions by third party vehicles that
can result in serious accidents and fatalities.
This time last year I wrote about the
introduction of a new Chairman’s award for
safety excellence in the Group. Inaugural
ceremonies for these awards were held
during the summer of 2015. The energy and
commitment shown in this vital area, by the
men and women in our business, is inspiring
and I look forward to the next series of award
events in 2016.
I would like to record my appreciation
for the significant time commitment my
non-executive colleagues give to CRH,
particularly during the course of last year. Bill
Egan and Utz-Hellmuth Felcht will retire from
the Board at the conclusion of the Annual
General Meeting to be held on 28 April 2016,
following completion of three 3-year terms
as non-executive Directors. On behalf of my
colleagues, I extend our gratitude to them for
their substantial contribution to CRH during
their time on the Board. The Corporate
Governance Report on pages 56 to 69,
contains details in relation to the Board’s
ongoing renewal process.
Finally, I would like to take the opportunity to
thank Albert Manifold and all staff throughout
the Group for their significant achievements
over the past year.
Nicky Hartery
Chairman
2 March 2016
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CRH Annual Report I 2015
Strategy Review
Chief Executive’s Review
Strategy
Business Model
Measuring Performance
Sustainability
Risk Governance
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CRH Annual Report I 2015 Chief Executive’s Review
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Our ambition to be the leading building
materials business in the world can be
traced back to the very earliest roots of
CRH and a commitment to excellence in
how we deliver for our customers. Since
1970, that commitment to excellence, along
with entrepreneurial flair, hard work and a
relentless focus on value creation, has come
to define our Group. Each new generation
has continued to build on that heritage
by pursuing opportunities that advance
shareholder returns and take us closer to
realising our ambition.
There have been many significant steps
along the way, including our step-out into
Europe, our entry into the North American
market and more recently our entry into
Asia. In 2015, CRH took another significant
step forward with the €6.5 billion acquisition
of certain assets from Lafarge S.A. and
Holcim Limited (LH Assets). This deal saw us
double our cement capacity to become the
second largest building materials company
in the world and the number two provider of
aggregates in the world.
This was a compelling acquisition for
CRH due to its significant value creation
potential and the strategic fit with our legacy
businesses. The acquired assets include
businesses with market leading positions
and they bring to CRH four new regional
platforms for growth in cement, aggregates
and readymixed concrete.
In addition to the LH Assets, we also
concluded the $1.3 billion acquisition of
CRL, North America’s leading manufacturer
and distributor of custom hardware and
installation products for the professional
glazing industry. This business provided an
exceptional operational fit with our existing
glass business in North America and is
an excellent example of targeting focused
and balanced growth across our portfolio.
These strategic acquisitions widen our global
footprint and will have a significant impact on
our future growth trajectory.
Reflecting on our operational performance,
I am pleased to report that 2015 was a very
satisfactory year for CRH. Construction
activity in the United States continued
to strengthen in line with the domestic
economy, and the signing into law of a new
five-year highway bill provides certainty
in relation to large scale infrastructure
projects including roads, bridges and mass-
transit systems. In Europe, where trading
conditions were more mixed, our businesses
maintained a steady performance.
Overall sales increased 25% to €23.6 billion
while EBITDA was up 35% to €2.2 billion
and profit before tax at €1.0 billion was
36% ahead. Strong profit growth was
attributable to both acquisition activity and
the performance of our heritage businesses.
Importantly, sales from continuing operations
increased with margins ahead in all divisions.
Our relentless focus on operational
performance in all of our businesses helped
deliver Return on Net Assets (RONA) of
7.6% (2014: 7.4%). When adjusted to take
account of non-recurring costs relating to the
acquisition of the newly acquired LH Assets,
Group RONA in 2015 was 8.8%, well ahead
of the previous year.
Earnings Per Share were also ahead despite
the Group issuing an additional 74 million
shares following February’s equity placing
and we have again maintained our dividend,
thereby extending CRH’s track record for
dividend delivery to 32 years.
Looking at our primary operating regions;
in Europe, against a mixed economic
backdrop, with challenging conditions
persisting in several key markets, we were
pleased to see further top line improvement,
across continuing operations, along with
good profit delivery, continued strong cost
management and crucially, margins ahead in
all divisions.
Our Heavyside business saw some
encouraging signs of market recovery
with overall cement volumes up on 2014.
While this was a step in the right direction,
pricing remained a challenge. Our Lightside
business delivered healthy sales and profit
growth following a pick-up in project activity
and export demand. In Distribution, there
was a strong finish to the year, in part due
to mild weather, which saw sales and profits
both ahead.
CRH Annual Report I 2015
In the Americas, the continuing positive
economic conditions underpinned strong top
line growth and with disciplined pricing and
cost control, we delivered significant margin
expansion. The Group also benefited from a
favourable currency translation effect during
the year.
In our Americas Materials Division, margins
were ahead in all product lines as overall
economic recovery continued to drive
construction demand across all regions. Our
Products business across both residential
and non-residential sectors also benefited
from the positive trading environment, with
sales from continuing operations ahead in
all categories, while the newly acquired CRL
business performed in line with expectations.
In Distribution, we have been able to deliver
good profit growth and margin improvement
in competitive markets.
In line with our expectations, the LH Assets
delivered an EBITDA contribution in 2015 of
€0.37 billion before taking into account
one-off transaction costs and accounting
policy adjustments of €0.2 billion.
Against the backdrop of the two major
acquisitions completed during 2015, it is
important to remember how CRH creates
value. We do so by maintaining strong
financial discipline which includes an ongoing
focus on good cash management and
strong cash generation. This in turn supports
our ability to fund new value creating
acquisitions and to deliver improved returns
for shareholders. We remain committed
to protecting our investment grade credit
ratings and we are on track to deliver on our
target to restore debt metrics to normalised
levels in 2016.
For both acquisitions, we have been
resolutely focused on integration. In the
case of the LH Assets, the operational
integration is now largely complete and
these businesses will be fully incorporated
into CRH’s 2016 reporting structures. To
ensure transparency in this report, we have
presented the partial year 2015 contribution
from LH Assets separately from our existing
operations.
Integration of the Group’s second major
acquisition during 2015, CRL, into our
Americas Products Division, is also very well
advanced, with management now firmly
focused on delivering the performance and
synergy targets identified.
Portfolio management, and in particular the
reallocation of capital from lower growth
areas into core businesses for growth, is a
cornerstone of our value creation model.
We are pleased with our progress in 2015,
which brought cumulative proceeds from our
multi-year divestment programme to almost
€1.4 billion, while the targeted bolt-on
investments completed during the year,
strengthened our existing businesses.
Total acquisition spend for 2015 was
approximately €8 billion, comprising our two
major transactions and 20 smaller bolt-ons.
During 2015 we again maintained a constant
focus and uncompromising approach to
safety at every level in our business.
Outlook for 2016
The backdrop in Europe is expected to be
broadly stable in 2016, although there are
regional variations. We expect markets in
Switzerland, Belgium, Germany and France
to be flat. Continued growth is expected in
the UK, Ireland and the Netherlands, and
we are seeing positive trends in Poland and
Finland.
We expect the US economy to continue
to grow in 2016 at a pace similar to recent
trends. Funding for infrastructure is expected
to increase moderately with improving State
finances and the passing in 2015 of a new
federal programme (FAST) which secures
highway funding until 2020. We expect
continued growth in US housing construction
and that non-residential construction will
also show gains. In Canada, we expect
current good demand to continue in the
Ontario market, while the Quebec market
will remain subdued. Overall, we expect the
market in Canada to be steady in 2016. In
Asia, we expect continued good growth
in the Philippines driven by residential and
infrastructure demand.
As a result of good performance from our
heritage businesses and contributions
from acquisitions, 2015 was a year of
significant profit growth for CRH. Strong
cash generation resulted in our year-end
debt metrics being ahead of target, and we
are well on track to restoring these metrics
to normalised levels during 2016. Recently
there has been some uncertainty about the
pace of global growth. Our focus remains on
consolidating and building upon the gains
made in 2015, and against this backdrop
we believe 2016 will be a year of continued
growth for the Group.
Albert Manifold
Chief Executive
2 March 2016
7
CRH Annual Report I 2015 Becoming the global leader
in building materials
CRH’s vision is to be the leading building materials business in the
world and in doing so to create value and deliver superior returns for
all our stakeholders.
Today, CRH’s businesses are key parts of
the building materials supply chain in their
local markets. We manufacture and supply
a range of materials and products spanning
the breadth of the building materials
spectrum. The practical application of our
strategy is in identifying such businesses,
acquiring them, integrating them into our
Group and making them better performing
businesses that deliver sustainable and
superior returns for our shareholders.
Since the Group’s foundation in 1970,
CRH has successfully refined and honed
its strategy, in continuously evolving market
environments. We have implemented this
strategy by strengthening existing positions
and developing new platforms for growth.
While the Group continues to grow in scale,
we remain resolutely focused on serving
the unique needs of our customers in local
and regional markets around the world.
We provide a world class service with the
personal touch of a local supplier. This focus
on delivery for customers through strong
local businesses is a key factor in enabling
CRH to realise its vision of becoming the
global leader in building materials.
Delivery of the Group’s strategy
is centred on:
• Maximising performance and returns in
our business
• Conducting our business responsibly
and sustainably
• Expanding our balanced portfolio of
diversified products and geographies
We are guided by a number of
strategic imperatives:
• Continuous Business Improvement
Make our businesses better through
operational, commercial and financial
excellence
• Disciplined and Focused Growth
Maintain financial discipline, use our
strong balance sheet, cash generation
capability and focused allocation of
capital to achieve optimum growth
Leadership Development
Attract, develop and empower the next
generation of performance orientated,
innovative and entrepreneurial leaders
Extracting the Benefits of our Scale
Leverage Group scale to fund
expansion by acquisition and to build
leadership positions in local markets
•
•
In this way, we ensure that risk and return
is carefully balanced in order to deliver
sustainable levels of growth for the long-
term. The link between risk governance and
value creation is outlined on page 16 and 17.
Continuous
Improvement
Extracting Benefits
of Scale
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Maximising performance and returns in our business
Vision
Global Leader in
Building Materials
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Disciplined and
Focused Growth
Leadership
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Expanding our balanced portfolio of
diversified products and geographies
CRH Annual Report I 2015
Strategy in action
Continuous Business
Improvement
Our relentless focus on operational and commercial performance in all of our businesses in
2015 helped deliver improved returns.
In financial terms this resulted in Return on Net Assets (RONA) of 7.6% in 2015. This reflects
improved margins, on a continuing operations basis, in each of our six legacy divisions.
When adjusted to take account of non-recurring costs relating to the acquisition of our newly
acquired LH Assets, Group RONA in 2015 was 8.8%, ahead of 2014 (7.4%).
Disciplined and
Focused Growth
Leadership
Development
Portfolio management, and in particular the recycling of capital from lower growth areas
into core businesses for growth, is a cornerstone of our value creation model. In 2015,
we continued to manage our portfolio carefully, recording total disposal proceeds of
approximately €1 billion.
While net debt levels of €6.6 billion at year-end 2015 reflect the significant €8 billion acquisition
spend during the year, we continued to maintain financial discipline through careful working
capital management and capital expenditure controls. The Group is committed to restoring its
debt metrics to normalised levels in 2016.
2015 was an active year for talent injection and promotion throughout the Group. This ensures
that CRH is attracting the very best talent in the market and promoting talented individuals
from within.
The Group also maintained its focus on leadership development with high performers selected
to participate in a range of leadership development programmes.
Mobility opportunities continue to expand as the Group seeks to offer rewarding career and
personal development experiences at different operating locations worldwide.
Extracting the
Benefits of Scale
In 2015, the newly acquired LH Assets more than doubled the Group’s cement production
volumes and made CRH the second largest building materials player globally and the world
No. 2 in aggregates. The transaction enabled the Group to establish new leadership positions
in certain heavyside materials markets globally. For example, CRH is now the market leader
in the UK, has regional leadership positions in Canada, Germany and the Philippines, and has
established top three positions in Romania, Slovakia, Hungary and Serbia.
9
CRH Annual Report I 2015 Creating value and growth
CRH delivers on its strategy through the execution of a dynamic
business model which is focused on value creation and growth.
This has allowed CRH to deliver an industry-leading Total
Shareholder Return of 16.1% since 1970. €100 invested in
CRH shares in 1970, with dividends reinvested, would now
be worth €83,000.
CRH’s business model revolves around
continuously making our core businesses
better and then identifying and acquiring
strong businesses that complement and
add value.
We do all of this while maintaining strong
financial discipline that enables efficient
funding of value adding investments which
generate consistent and superior returns for
shareholders.
CRH operates this business model across its
growing global footprint in 31 countries and
at over 3,900 operating locations. Every day,
our 89,000 employees in our three primary
business areas – Heavyside Materials,
Lightside Products and Building Materials
Distribution – serve customers in the
residential, non-residential and infrastructure
market segments.
By maintaining a balanced portfolio, we
ensure that these businesses are diversified
across a number of products, geographies
and end-uses, while also spanning multiple
different demand cycles, thereby mitigating
the impact of low demand at the bottom of
any one cycle.
We work hard to improve these businesses
so that they realise their full potential and
help us create further value.
We constantly monitor how capital is
deployed across the Group and strive to
identify where capital can be recycled into
areas offering optimum returns and/or
superior growth.
financial discipline
which enables us to
further invest in our
businesses
strong businesses
that complement
and add value
capital to areas
that provide the
best returns
our portfolio
across products
geography and
end-use
the performance
of our business
to deliver greater
value
10
CRH Annual Report I 2015 Business Model in action
Balanced
Portfolio
CRH creates value by maintaining a balanced portfolio. Our product mix
spans the breadth of building materials demand and sectoral end-use,
thereby reducing exposure to any one single demand driver. The Group also
offsets cyclical economic risk by maintaining a geographically diversified
portfolio across its key regions of North America and Europe, as well as the
emerging regions of Asia and South America.
In 2015 the Group’s sector exposure was split 35% residential,
35% non-residential and 30% infrastructure. End-use was balanced
equally between New Build and RMI.
Infra
30%
Res
35%
Non Res
35%
Making
Businesses
Better
CRH’s emphasis on making better businesses is a key component of its
focus on value creation and growth. We have a proven track record in
acquiring new businesses and bringing the Group’s collective knowledge
and experience to bear in working with the local management teams of
those businesses to deliver improvements in performance.
The Group supports the delivery of such improvements through targeted
investment in measures that improve capacity, quality and efficiency.
Over time these improvements help us build better businesses that deliver
stronger returns on capital invested.
7.6%
RONA
Proven
Acquisition
Model
CRH creates value and growth by identifying and acquiring strong
businesses that complement our existing portfolio of operations. Typically
we specialise in acquiring small and mid-sized companies, releasing value
through synergies and network optimisation. From time to time the Group
also evaluates and concludes larger transactions where the strategic
rationale is compelling.
LH
Assets
20
Bolt on
Transactions
We excel at integrating businesses and ensuring that they are appropriately
positioned and resourced to succeed as part of the CRH Group.
CRL
Dynamic
Capital
Management
CRH constantly strives to ensure that capital is recycled from low growth
areas into core parts of our business that offer the potential for stronger
growth and returns.
With a portfolio which is diversified across many products, geographies and
end-uses, we allocate capital to the areas best positioned to take advantage
of developing growth cycles and new areas that offer improved value
creation and growth potential.
Financial
Strength
The Group maintains a constant focus on financial discipline and strong
cash generation which in turn supports our ability to fund new value creating
acquisitions and returns for shareholders.
Our strong financial position reduces the cost of capital. In 2015, we raised
over €2.5 billion at historically low interest rates for the Group; with an
eight-year bond for €600 million at 1.875%, a ten-year bond for $1.25 billion
at 3.875%, a 14-year bond of £400 million at 4.125% and a 30-year bond
for $500 million at 5.125%.
€8 billion
Acquisitions
Divestments
€1 billion
S&P Rating
BBB+
Moody’s Rating
Baa2
11
CRH Annual Report I 2015 Measuring Performance
CRH believes that measurement fosters positive behaviour and performance improvement.
As part of the Group’s strategic focus on continuous business improvement, CRH uses a number
of financial and non-financial Key Performance Indicators (KPIs) to measure progress across our
organisation.
Non-financial KPIs
2015 Performance
2016 Focus
% Zero-Accident
Locations
A measure of safety performance
in our operations.
Health & Safety is a priority for
CRH and we constantly strive
to improve our performance.
A strong safety culture is a key
element of our business strategy.
)
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(
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92% zero-accident
locations in 2015.
Further enhancement of a strong
safety culture with the ultimate aim
of achieving zero-accident status at
every location.
95%
90%
85%
80%
Links to other disclosures: CRH Sustainability Report published mid-year 2016
2013 2014 2015
Greenhouse Gas
Emissions
A measure of addressing the
challenges of climate change.
Energy efficiency and carbon
reduction are twin imperatives
of CRH’s environmental
management strategy.
)
e
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R
€
/
g
k
(
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2
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C
0.9
0.7
0.5
0.3
Links to other disclosures: CRH Sustainability Report published mid-year 2016
2013 2014 2015
Absolute CO2 emissions and
CO2 emissions/Revenue
increased with the acquisition
of LH Assets. For the portfolio
of plants covered by the CO2
commitment, there was a
continued reduction to 0.61
tonnes net CO2 per tonne of
cementitious product.
CO2 Emissions (million tonnes)
Scope 1 Scope 2
2015
2014
20.0
10.3
2.1
1.4
Ongoing programmes focus on
reducing CO2 emissions, with a
targeted reduction commitment
in cement.
Lower carbon products and
Group-wide energy and resource
efficiency programmes.
Note 1: CO2 emissions subject to final
verification under the EU Emissions
Trading Scheme (EU ETS).
Note 2: Group CO2 emissions data
includes both Scope 1 and Scope
2 emissions, as defined by the WRI
Greenhouse Gas Protocol.
Gender Diversity
A measure of an inclusive
workplace.
Recruitment, selection and
promotion decisions are
merit-based and in line with the
principles of equal opportunity
and non-discrimination.
20%
15%
10%
5%
In 2015, 18% of all employees
were female. Within this, 11%
of operational staff and 40%
of clerical and administrative
staff were female. At Board
level, 31% of our directors
were female while at senior
management level, 8% were
female.
The building materials industry
traditionally attracts a higher
than average proportion of male
employees.
Continue to encourage all CRH
employees to develop their careers.
)
l
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a
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F
%
(
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Links to other disclosures: Corporate Governance Report pages 56 to 69; CRH Sustainability Report published mid-year 2016
2013 2014 2015
12
CRH Annual Report I 2015
Financial KPIs
2015 Performance
2016 Focus
Total Shareholder
Return (TSR)
A measure of shareholder returns
delivery through the cycle.
)
%
(
n
r
u
t
e
R
l
r
e
d
o
h
e
r
a
h
S
l
a
t
o
T
40%
30%
20%
10%
CRH delivered TSR of
37.8% in 2015 and in
euro terms has delivered a
compound annual TSR of
16.1%, since the formation
of the Group in 1970.
Delivering superior return on
invested capital and maintaining
strong cash flows to support the
continued development of the
Group and dividend payment.
Links to other disclosures: Directors’ Remuneration Report pages 70 to 107
2013 2014 2015
Return on Net
Assets (RONA)
A measure of pre-tax returns
through excellence in operational
performance.
)
%
(
s
t
e
s
s
A
t
e
N
n
o
n
r
u
t
e
R
9%
7%
5%
3%
2013 2014 2015
RONA at 7.6% in 2015 is a
reflection of improved profit
margins in our six legacy
divisions, offset by non-
recurring costs relating to the
LH Assets. Excluding these
costs Group RONA would be
8.8%.
Improved RONA
through effective margin
management, continued
enhancement of operating
efficiencies and tight working
capital management.
Links to other disclosures: Business Performance Review pages 20 to 49; Directors’ Remuneration Report pages 70 to 107
Operating
Cash Flow (OCF)
A measure of cash flows
generated to fund organic and
acquisitive growth and dividend
returns to shareholders.
)
n
b
€
(
l
w
o
F
h
s
a
C
g
n
i
t
a
r
e
p
O
Prudent management of
working capital and other
cash flows increased OCF
to over €1.3 billion in 2015.
To continue to generate
strong operating cash flows
in 2016.
1.5
1.0
0.5
0.0
Links to other disclosures: Summarised cash flow page 22
2013 2014 2015
EBITDA Interest
Cover
A measure of financial liquidity
and capital resources which
underpins investment grade
credit ratings and the ability to
access finance.
)
x
(
r
e
v
o
C
t
s
e
r
e
t
n
I
A
D
T
B
E
I
7.0
6.0
5.0
4.0
2013 2014 2015
Cover at 7.5x was higher in
2015 in spite of increased
interest arising on acquisition
debt.
CRH’s credit ratings:
Standard & Poor’s: BBB+
Baa2
Moody’s:
Maintain financial discipline to
ensure that EBITDA cover remains
strong and should usually be no
lower than 6x.
CRH committed to restoring debt
metrics to normalised levels in
2016.
Links to other disclosures: Finance Director’s Introduction pages 20 to 22; Note 23 Interest-bearing Loans and Borrowings page 183
13
CRH Annual Report I 2015
Building a sustainable business
Corporate Social Responsibility and Sustainability concepts are
embedded in the heart of our business and are fundamental to
achieving our vision of becoming the leading building materials
business in the world.
CRH continues to be ranked among
sector leaders by leading Sustainable and
Responsible Investment (SRI) rating agencies
and continues as a constituent member of
several sustainability indices including the
FTSE4Good Index, the STOXX® Global ESG
Leaders Indices and the Vigeo World 120
Index. In addition, many Group locations
have won high-ranking accolades for
excellence in sustainability achievements.
Our Approach
CRH is committed to delivering a built
environment that is sustainable and of value
to the communities we serve. Our extensive
global presence and industry leadership puts
the Group in a strong position to influence
transformative innovation that improves
the sustainability of the built environment.
Applying a strategic approach to deriving
tangible long-term business value from
sustainability, we collaborate
with stakeholders to ensure our
medium-term objectives and long-term
ambitions are achieved. The Group does this
while also being sensitive and responsive
to our stakeholders as well as to the
environment in which we operate.
Sustainability Performance
CRH has formal structures in place to
identify, evaluate and manage potential risks
and opportunities in sustainability areas.
Group performance and effectiveness is
reviewed regularly by the Board of Directors.
We are committed to reporting on the
breadth of our sustainability performance in
a comprehensive and transparent manner
and to publishing performance indicators
and ambitions in key identified sustainability
areas.
The Group’s annual Sustainability Report
is published mid-year following external
independent verification and is available at
www.crh.com.
14
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CRH Annual Report I 2015
Health & Safety
92%
locations
accident free
Environment & Climate
Change
23million
tonnes of alternative
raw materials
People & Community
800+
stakeholder
engagement
events held
Health & Safety is a strategic priority for CRH.
With a global workforce of 89,000 people, the
Group adopts an unwavering approach to safety
at every level of the organisation, from frontline
employees through to operational management
and senior executives. Our global network of
safety officers oversees the implementation
of policy and best practice across all our
operations. In 2015, particular attention was paid
to integrating acquired businesses into Group
safety systems.
CRH continues to invest in initiatives targeted at
promoting and maintaining a strong culture of
safety. Over the past five years €138 million has
been invested in this area.
In 2015, 92% of active locations were accident
free. The accident frequency rate has continued
to decline and has reduced by an average of
16% per annum over the last decade.
CRH’s Fatality Elimination Plan, which remains
a cornerstone of our safety strategy, proved
very effective in eliminating employee fatalities
in both 2014 and 2015. However, there were
two fatalities involving contractors at Group
operations during 2015. We deeply regret
the loss of these lives and extend our sincere
sympathies to the families of these individuals.
We continue to focus on all aspects of
contractor safety within the Group’s control.
CRH believes that excellence in environmental
management, together with a proactive
approach to addressing the challenges and
opportunities of climate change, is fundamental
to making our businesses better. The Group
works with stakeholders including customers
and the wider building materials industry to
implement programmes that promote energy
and resource efficiency, achieve targeted
emissions reductions, enhance biodiversity
and realise environmentally driven product and
process innovation.
In 2015 CRH products incorporated a significant
23 million tonnes of externally sourced alternative
raw materials. Recycled asphalt pavement and
shingles together now provide a fifth of asphalt
requirements in our US operations, while lower
carbon warm-mix asphalt now accounts for
approximately 40% of the Group’s US asphalt
sales. We also provide low carbon cement for
sustainable construction applications.
In 2013 CRH committed to reduce specific
net CO2 emissions by 25% by 2020, relative
to 1990, from the portfolio of cement plants
owned at that time. To-date 79% of the
commitment has been achieved. The Group
has also endorsed the World Business Council
for Sustainable Development’s Low Carbon
Technology Partnership Initiative (LCTPi), a
statement of ambition, which seeks a reduction
in Global Cement CO2 emissions in the range of
20 to 25% by 2030.
CRH believes that continued sustainable
business success is built on maintaining
excellent relationships with all stakeholders.
Our philosophy is to develop and nurture all
employees, recognising that people are critical
to sustaining competitive advantage and to
achieving focused growth over the long-term.
In 2015 we continued to place an emphasis on
training and skills learning, while strengthening
our focus on developing and recruiting talented
leaders to guide our evolving and growing
Group. CRH is committed to fostering respect
in the workplace and to developing an inclusive
workforce based on merit and ability. In 2015,
18% of CRH’s employees were female. The
building materials industry traditionally attracts
more male than female employees and CRH
has a number of programmes in place aimed at
increasing gender diversity. CRH has exceeded
its target of 25% for Board gender diversity by
the end of 2015 and currently has four female
directors.
We also recognise a wider responsibility beyond
our core business activities in the communities in
which Group companies operate. In 2015 Group
companies hosted over 800 stakeholder events
in keeping with our policy to engage in an open,
honest and proactive way. CRH assists local
community initiatives, in addition to supporting
programmes in education, environmental
protection and job creation.
The Group endorses human and labour rights
and supports the principles set out in the articles
of the United Nations’ Universal Declaration
of Human Rights and the International Labour
Organisation’s Core Labour Principles. CRH
operates a comprehensive Code of Business
Conduct and has additionally implemented an
Ethical Procurement Code and Supplier Code of
Conduct, with the aim of extending the Group’s
positive influence along the value chain.
15
CRH Annual Report I 2015 Creating value through
Risk Governance
The aim of Enterprise Risk Management is to deliver increased shareholder value for CRH. Effective
governance, which is considered fundamental in CRH, is critical to success, supporting management
in executing strategy, managing costs, responding to risks, attracting investment, achieving regulatory
compliance and in promoting effective decision making.
Managing risk is of vital importance and CRH
has a formal Enterprise Risk Management
(“ERM”) Framework as the basis for
assessing and managing risks associated
with business and strategic corporate
decisions. From a CRH perspective, ERM is
a forward-looking, strategy-centric, risk-
based approach to managing the risks
inherent in decision making. It recognises
the linkage between business objectives
and strategies, and their associated risks
and opportunities, and hence integrates
strategic decision making and risk taking in
order to preserve and/or enhance value and
reputation.
While the Board of CRH is ultimately
responsible for risk management, it has
delegated some of its responsibilities to the
Audit Committee. The Audit Committee
in turn monitors the activities of various
functions including Group Regulatory,
Compliance and Ethics, Group IT
Governance, Group Finance and Group
Risk. Group Internal Audit is charged with
independently assessing and reporting on
the risk management initiatives implemented
by these functions. There is regular reporting
to the Board and the Audit Committee on
key strategic, operational, compliance,
financial and other risks and uncertainties.
With our balanced portfolio, the
decentralised and geographically dispersed
structure of the Group provides some natural
mitigation for some of the significant risks
and uncertainties faced, such as industry
cyclicality, political and economic uncertainty
and damage to corporate reputation.
16
ERM Framework
The ERM Framework (“the Framework”)
encompasses risks across the various
strands of CRH’s strategy – driving
performance, executing organic and
acquisitive growth, protecting information
assets, monitoring compliance with
all laws and regulations (including an
unwavering commitment to health & safety),
sustainability, leadership development and
talent management and finance.
In formalising CRH’s approach to risk
management through ERM, a key
requirement has been to ensure that the
Framework continues to deliver value for
management by providing visibility on
strategic priorities and the linkages to the
associated risks and opportunities. The
key risks identified are reported periodically
through the Framework to the Audit
Committee and the Board with the risks
being subject to common, standardised
and repeatable processes of assessment,
evaluation, management and monitoring.
In line with international best practice, CRH
follows a “three lines of defence” model for
risk management and internal control.
Our Risk Management Framework – Three Lines of Defence
3rd Line of
Defence
2nd Line of
Defence
Provide
independent
assurance
Internal Audit
Provide
independent
assurance
Group Risk
Group
Finance
Regulatory,
Compliance
& Ethics
Group Risk
Governance
Functions
IT
Governance
Sustainability
Executive Management
CRH Divisions / Product Groups
1st Line of
Defence
Underlying
Businesses
Underlying
Businesses
Underlying
Businesses
Underlying
Businesses
Underlying
Businesses
CRH Annual Report I 2015CRH plc BoardAudit Committee Roles and Responsibilities
The Board is ultimately responsible for risk
management within CRH. The Board has
delegated responsibility for the monitoring
of the effectiveness of the Group’s risk
management and internal control systems
to the Audit Committee. Such systems are
designed to manage, rather than eliminate,
the risk of failure to achieve business
objectives.
The Board and Audit Committee receive, on
a regular basis, reports from management on
the key risks to the business and the steps
being taken to manage/mitigate such risks.
They also consider whether the significant
risks faced by the Group are being identified,
evaluated and appropriately managed. The
Audit Committee reviews the list of principal
risks and uncertainties disclosed on pages
113 to 119.
Risk Management
Lines of Defence
First Line of Defence
Operating company/business leaders are
responsible for ensuring that a risk control
environment is established as part of their
day-to-day operations. Proactive risk
engagement and management is critical to
quick identification and response.
Second Line of Defence
CRH has various Group oversight functions
such as Group Sustainability, Group
Regulatory, Compliance and Ethics, Group
IT Governance, Group Finance and Group
Risk. These functions are responsible for
setting policies and ensuring that they are
implemented throughout the Group.
Third Line of Defence
Group Internal Audit provides independent
assurance. It reports on the effectiveness
of the risk management and internal control
frameworks to the Audit Committee on a
regular basis.
Our Risk Assessment
Process
CRH’s risk management process operates
to ensure a comprehensive evaluation is
performed and is the subject of continuous
improvement. The risk management cycle
operates as follows:
Identify
Report
Monitor
Operations
Assess
Manage
Identify and Assess
Management identify risks as part of their
day-to-day activities and are required to
conduct a robust assessment of these risks.
Robust assessment ensures the following
factors are taken into consideration:
• The nature and extent of risks facing the
Group, including emerging risks
• Risk appetite and risk tolerance
• The likelihood of the risk materialising
• The impact and velocity should the risk
materialise
• The mitigation strategies implemented in
order to manage the risks
• The monitoring processes in place
to determine and respond to the
effectiveness of mitigation strategies.
Management are required to assess all risks
which could have an impact on the current
or future operation of their business and
document these risks in a standardised
template. Risks are assessed in terms of
their financial and operational impact should
they occur and their likelihood of occurrence,
using a defined risk scoring methodology.
Risk velocity, the speed at which a risk
impacts the business, is an important
constituent of this evaluation.
Manage and Monitor
In line with our ongoing focus on continuous
process improvement, risks are assessed
by management on an inherent/gross basis
(prior to mitigation strategies) and a residual/
net basis (post mitigation strategies). Where
the gross risk score determines the risk to be
material, appropriate mitigation strategies are
implemented to bring the residual risk to
a level which is within Risk Appetite
and Tolerance levels approved by the
CRH Board.
The Risk Appetite and Tolerance Framework
is a critical component of CRH’s risk
governance system through defining the
key risk parameters within which strategic
decision making takes place. The Board
approves the Risk Appetite and Tolerance
Framework on an annual basis in line with
best corporate governance practice.
Report
The Group-level Risk Register, which is
compiled by the Group Risk function,
identifies those risks which may impede the
realisation of core strategic objectives. The
risks listed on pages 113 to 119 constitute
this register, which forms the basis of Board
and Audit Committee communications and
discussions.
Viability Statement
Our Viability Statement, prepared in
accordance with the UK Corporate
Governance Code 2014, is set out on page
110 of the Directors’ Report.
17
CRH Annual Report I 2015 e
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18
CRH Annual Report I 2015
Business Performance
Finance Director’s Review
Operational Snapshot
Europe
Americas
LH Assets
China & India
20
24
26
36
44
48
19
19
CRH Annual Report I 2015 Finance Director’s Introduction
As noted in the Chief Executive’s review on
page 6, 2015 was a year of growth for CRH,
with continued positive momentum in the
Americas and more mixed market conditions
in Europe. The Group also benefited from
more normal weather patterns in the
Americas at the start of the year compared
with 2014 and the favourable conditions
through to the end of the year in all markets.
The post-acquisition contribution from the
LH Assets was ahead of expectations.
The Group continued to focus on cash
generation with operating cash flow for
the year amounting to €1.3 billion (2014:
€902 million) and year-end net debt finished
at €6.6 billion. This was achieved with
significant acquisition spend of almost
€8 billion being partly offset by the strong
cash inflows from operations, proceeds of
circa €1 billion from disposals and
€1.8 billion from shares issues, including
circa 74 million shares placed in February
2015.
Key Components of 2015
Performance
Reported sales of €23.6 billion for the period
were 25% ahead of 2014. On a continuing
operations basis, excluding the impact of
divestments and the LH Assets and with
the benefit of positive currency impacts,
sales were 17% higher than 2014. An
increase of 30% in the Americas reflected
the strength of the US Dollar versus the
euro and the continued positive momentum
in construction markets, while sales from
continuing operations in Europe were 3%
ahead of last year. Profits and margins from
continuing operations increased in all six
segments with good operating leverage also
delivered.
EBITDA from continuing operations in the
Americas was 51% ahead of 2014, with our
continuing European operations delivering
EBITDA growth of 4%. The LH Assets
delivered profits ahead of expectations in
the post-acquisition period, with reported
EBITDA of €171 million stated after charging
transaction/one-off costs of €197 million.
Including this contribution, and the impact of
divestments, EBITDA for the year amounted
to €2,219 million, a 35% increase on 2014.
During 2015, most major currencies
strengthened in value compared with the
euro, the US Dollar strengthened 20% from
an average of 1.33 versus the euro in 2014
to an average of 1.11 in 2015, while the
Swiss Franc strengthened from an average
of 1.21 in 2014 to 1.07 in 2015. These
movements, partly offset by the weakening
of certain other currencies, particularly the
Ukrainian Hryvnia, resulted in a favourable
foreign currency translation impact on our
results; this is the principal factor behind
the exchange effects shown in the table on
the right. The average and year-end 2015
exchange rates of the major currencies
impacting on the Group are set out on
page 147.
We continued to advance the significant
cost-reduction initiatives which have been
progressively implemented since 2007 and
which by year-end 2015 had generated
cumulative annualised savings of over
€2.5 billion. Total restructuring costs
associated with these initiatives (which
generated gross savings of €110 million
in 2015) amounted to €29 million in 2015
(2014: €51 million).
n
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Finance Director
20
CRH Annual Report I 2015
Key Components of 2015 Performance
Sales
revenue
EBITDA
Operating
profit
Profit on
disposals
Finance
costs (net)
Assoc. and
JV PAT*
Pre-tax
profit
€ million
2014
Exchange effects
2014 at 2015 rates
Incremental impact in 2015 of:
- 2014/2015 acquisitions
- 2014/2015 divestments
- Restructuring/Impairment
- Swiss fine/Pension/CO2
- Early bond redemption
- Organic
2015
18,912
2,198
21,110
2,738
(855)
-
-
-
642
1,641
218
1,859
215
(100)
22
(35)
-
258
917
137
1,054
28
(69)
27
(35)
-
272
23,635
2,219
1,277
77
6
83
-
20
-
-
-
(2)
101
(288)
(27)
(315)
(50)
6
-
-
(38)
8
(389)
55
4
59
1
(10)
-
-
-
(6)
44
761
120
881
(21)
(53)
27
(35)
(38)
272
1,033
36%
31%
% Total change
% Organic change
25%
3%
35%
14%
39%
26%
* CRH’s share of after-tax profits of joint ventures and associated undertakings
Cash Management and
Financial Performance
Throughout 2015 the Group remained
focused on cash management, targeting
in particular working capital and capital
expenditure, and overall operating cash flow
increased to €1.3 billion (2014: €902 million).
Year-end working capital of
€2.1 billion represented just 8.9% of sales,
an improvement compared with year-end
2014 (10.6%); this performance delivered net
inflows for the year of €642 million
(2014: €69 million). CRH believes that its
current working capital is sufficient for the
Group’s present requirements.
Controlled spending on property, plant
and equipment, focusing on markets
and businesses with increased demand
backdrop and efficiency requirements,
particularly the Americas, resulted in
increased cash outflows of €882 million
(2014: €435 million), with spend in 2015
representing 105% of depreciation
(2014: 69%). Capital expenditure in acquired
LH businesses amounted to €155 million
in the post-acquisition period (95% of
depreciation) while the currency translation
impact due to the weakening euro was
€85 million.
During the year the Group spent a total
of €7.5 billion on 20 bolt-on transactions
together with acquisition of the LH Assets
and CRL which was partly offset by
divestment and disposal proceeds of circa
€1 billion.
Dividend payments of €511 million (before
scrip) and proceeds of €1.8 billion from
share issues (including the placing of circa
74 million shares in February 2015, scrip
dividends and net of own shares purchased)
reflected the Group’s focus on balanced
financing and returns to shareholders.
At year-end the stronger US Dollar
(1.0887 versus the euro compared with
1.2141 at year-end 2014) was the main
factor in the negative translation and
mark-to-market impact of €138 million on
net debt. Reflecting all these movements,
net debt of €6.6 billion at 31 December 2015
was €4.1 billion higher than year-end 2014.
The Group is in a good financial position. It is
well funded and interest cover
(EBITDA/net debt-related interest costs) of
7.5x is significantly higher than the minimum
requirements in the Group covenant
agreements. Further details are set out in
note 23 to the financial statements.
21
CRH Annual Report I 2015 Finance Director’s Introduction | continued
Summarised Cash Flow
Inflows
Profit before tax
Depreciation, amortisation and impairment
Working capital inflow (i)
Outflows
Tax payments
Capital expenditure
Premium payable on debt redemption
Other (ii)
Operating cash inflow
Pension payments
Acquisitions and investments (iii)
Proceeds from disposals
Share issues (iv)
Dividends (before scrip dividend)
Translation and mark-to-market adjustments
(Increase)/decrease in net debt
2015
€m
1,033
942
642
2,617
(235)
(882)
(38)
(133)
(1,288)
1,329
(53)
(7,549)
1,017
1,779
(511)
(138)
(4,126)
2014
€m
761
724
69
1,554
(127)
(435)
-
(90)
(652)
902
(66)
(188)
345
129
(460)
(181)
481
(i) Working capital inflow includes deferred divestment proceeds and the difference between net
finance costs included in profit before tax and interest paid/received.
(ii) Primarily non-cash items included in profit before tax, including profits on disposals/divestments of
€101 million (2014: €77 million), share-based payments expense of €27 million (2014: €16 million)
and CRH’s share of equity accounted investments’ profit of €44 million (2014: €55 million profit).
Other cash flows included comprise dividends received from equity accounted investments of
€53 million (2014: €30 million), cash and cash equivalents in disposed companies of €90 million
(2014: Nil) and debt in disposed companies of €20 million (2014: Nil).
(iii) Acquisitions and investments spend comprises consideration for acquisition of subsidiaries
(including debt acquired), deferred and contingent consideration paid, other investments and
advances and, in 2014, acquisition of non-controlling interests.
(iv) Proceeds from share issues include scrip dividends of €132 million (2014: €107 million).
In December a €600 million 8-year bond
was issued with a coupon of 1.875% along
with a 14-year GB£400 million bond with
a coupon of 4.125%. These 2015 bond
issues reflect CRH’s commitment to prudent
management of our debt and the timing of
the related maturities and also to maintaining
an investment grade credit rating.
The Group took advantage of the low
interest rate environment in 2015 to raise
the equivalent of over €2.5 billion in the debt
capital markets during the year. In May, dollar
bonds totalling US$1.75 billion were issued,
comprising a US$1.25 billion 10-year bond
at a coupon rate of 3.875% and a US$0.5
billion 30-year bond at a coupon rate of
5.125%. Part of the proceeds from these
US Dollar issues were used to make an early
redemption of US$0.97 billion of the total
US$1.6 billion bonds due in 2016, resulting
in overall interest savings for the Group in
2015 and 2016.
22
The Group ended 2015 with total liquidity at
end 2015 of €5.6 billion comprising
€2.5 billion of cash and cash equivalents on
hand and €3.1 billion of undrawn committed
facilities, €2.8 billion of which do not mature
until 2020. These cash balances were
enough to meet all maturing debt obligations
for the next two and a half years and the
weighted average maturity of the remaining
term debt was nine years.
CRH’s euro share price increased by 34%
in 2015 to €26.70 at year end; combined
with the maintained dividend of 62.5c,
shareholder euro returns were 38% in
2015. Net debt as a percentage of market
capitalisation increased to 30% (2014: 17%)
and represented a multiple of 3.0 times
EBITDA. These metrics reflect the impact on
net debt of the significant acquisition activity
during 2015; the Group remains committed
to restoring its debt metrics to normalised
levels during 2016.
Business Performance
Reviews
The section that follows outlines the scale
of CRH’s business in 2015, and provides a
more detailed review of performance in each
of CRH’s six legacy reporting segments, for
transparency we have presented the partial
year contribution from LH Assets separately
from our existing operations in a seventh
segment.
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CRH Annual Report I 2015
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23
CRH Annual Report I 2015
Operational Snapshot
Sector exposure and end-use based on 2015 annualised EBITDA (as defined)*
Europe Heavyside
Geography
Sector Exposure
End-use
€ million
% of Group
Sales
EBITDA
Net Assets*
3,607
334
2,542
15%
15%
12%
West
55%
East
45%
40%
Residential
Non-residential 30%
30%
Infrastructure
New 75%
25%
RMI
Annualised Production Volumes
Cement - 10.5m tonnes (18.1m tonnes**); Aggregates - 40.6m tonnes (40.7m tonnes**); Asphalt - 2.4m tonnes; Readymixed Concrete - 7.2m m3 (7.5m m3**);
Lime - 1.1m tonnes; Concrete Products - 6.1m tonnes; Architectural Concrete - 6.0m tonnes
Europe Lightside
Products
Sector Exposure
End-use
Sales
EBITDA
Net Assets*
€ million
% of Group
961
100
506
4%
4%
2%
15%
Fencing
& Cubis
25%
Shutters &
Awnings
60%
Construction
Accessories
35%
Residential
Non-residential 50%
15%
Infrastructure
New 70%
30%
RMI
Annualised Production Volumes
Fencing & Security - 3.9m lineal metres
Europe Distribution
Activities
Sector Exposure
End-use
Sales
EBITDA
Net Assets*
€ million
% of Group
4,158
171
1,591
18%
8%
8%
SHAP
25%
Builders
Merchants
45%
s
DIY
30%
Outlets
Builders Merchants - 347 (506**); DIY - 183 (228**); SHAP - 134
Residential
80%
Non-residential 20%
0%
Infrastructure
New 30%
70%
RMI
* Net Assets at 31 December 2015 comprise segment assets less segment liabilities as disclosed in note 1 to the Consolidated Financial Statements
24
CRH Annual Report I 2015 LH Assets
Geography
Sector Exposure
End-use
Sales
EBITDA
Net Assets*
€ million
% of Group
2,418
171
6,785
10%
8%
32%
Americas
25%
Asia
10%
CEE
15%
Europe West
50%
35%
Residential
Non-residential 30%
35%
Infrastructure
New 70%
30%
RMI
Annualised Production Volumes
Cement - 23.0m tonnes; Aggregates - 86.4m tonnes (95.1m tonnes**); Asphalt - 9.0m tonnes; Readymixed Concrete - 11.0m m3
Americas Materials
Geography
Sector Exposure
End-use
Sales
EBITDA
Net Assets*
€ million
% of Group
6,400
912
5,738
27%
41%
28%
West
30%
East
70%
15%
Residential
Non-residential 30%
55%
Infrastructure
New 35%
65%
RMI
Annualised Production Volumes
Aggregates - 143.3m tonnes (144.1m tonnes**); Asphalt - 43.1m tonnes (44.5m tonnes**); Readymixed Concrete - 6.0m m3 (6.2m m3**)
Americas Products
Products
Sector Exposure
End-use
Sales
EBITDA
Net Assets*
€ million
% of Group
3,862
391
3,194
16%
18%
15%
Building
Envelope
30%
Precast
20%
APG
50%
Residential
Non-residential
Infrastructure
40%
55%
5%
New 55%
45%
RMI
Annualised Production Volumes
Concrete masonry, patio products pavers – 9.2m tonnes; Pre-packaged concrete mixes – 3.3m tonnes; Pre-packaged lawn & garden products – 5.2m tonnes;
Precast concrete products – 1.2m tonnes; Pipe and prestressed concrete – 0.4m tonnes; Building envelope products –7.6m square metres, 67,000 SKUs
Americas Distribution
Activities
Sector Exposure
End-use
Sales
EBITDA
Net Assets*
€ million
% of Group
2,229
140
731
10%
6%
3%
Interior
40%
Exterior
60%
Residential
Non-residential
Infrastructure
50%
50%
0%
New 45%
55%
RMI
Outlets
Exterior products – 144; Interior products – 53
**
Including equity accounted investments; the volumes quoted above for Europe Heavyside also include the Group’s share of production volumes in the businesses in China and
India in which CRH has equity-accounted investments
25
CRH Annual Report I 2015
Norway
Sweden
Finland
Estonia
St. Petersburg
Region of Russia
Ireland
Britain
Denmark
Netherlands
Belgium
Germany
Italy
France
Switz.
Poland
Ukraine
Austria
Slovakia
Hungary
Romania
Portugal
Spain
CRH in Europe*
Norway
Sweden
Denmark
Finland
Estonia
St. Petersburg
Region of Russia
Norway
Sweden
Finland
Estonia
Ireland
St. Petersburg
Region of Russia
Britain
Netherlands
Ireland
Britain
Denmark
Netherlands
Belgium
Germany
Poland
Ukraine
Austria
Slovakia
Hungary
Romania
France
Switz.
Italy
Portugal
Spain
Belgium
Germany
France
Switz.
Austria
Poland
Slovakia
Hungary
Italy
Romania
Ukraine
Portugal
Spain
26
26
Singapore
and
Malaysia
Australia
CRH Annual Report I 2015 CRH is a regional leader in the manufacture and supply of building
materials to construction markets in Europe and strives to maintain
No. 1 and No. 2 market positions in its various product segments
across a range of European countries.
The European operations are comprised
of three divisions: Heavyside, Lightside
and Distribution. The Heavyside operations
produce cement, aggregates, asphalt,
readymixed concrete, precast concrete
and concrete landscaping. Our Lightside
operations manufacture construction
accessories, shutters and awnings,
fencing and composite access chambers.
In Distribution, we are a leading player in
builders merchanting, DIY and sanitary,
heating and plumbing.
Operating across Western and Eastern
Europe, more than 32,000 people
are employed by our businesses at
approximately 1,500 locations.
The limestone quarry at Trzuskawica’s plant
at Sitkówka. The plant is located near the
city of Kielce, an area rich in limestone. This
is one of the biggest quarries in Poland, with
yearly extraction of up to 6m tonnes of high
quality limestone in peak years.
Metal Inert Gas (MIG) welding of a stainless
steel brick cladding support system at
Ancon’s 6,500m2 manufacturing facility
in Sheffield, UK. Ancon, part of Europe
Lightside, is a two-time winner of the
Queen’s Award for Enterprise.
Raboni, a general builders merchant,
supplies a wide range of building materials
to professional contractors in the Normandy
and Paris regions of France.
* A map showing the countries, including in Europe, where the newly acquired LH Assets are located is shown on page 44
27
CRH Annual Report I 2015 Europe Heavyside
Business Description
Europe Heavyside’s strategic goal is to be
the leading vertically integrated heavyside
business in Europe, building leading
regional positions in businesses that have
the potential to grow further in the large
European construction markets. With a
balanced approach to demand exposure,
product penetration and maximising
the benefits of scale and best practice,
our business is well differentiated in the
marketplace. Enhanced alignment and
collaboration leads to value creation
throughout our extensive network of
well-invested facilities across the division.
Europe Heavyside comprises cement,
aggregates, asphalt and concrete operations
organised into two regional divisions:
Western Europe, which includes primarily
Switzerland, Germany, Benelux, France,
Denmark, Ireland and Spain; and Eastern
Europe which includes Poland, Ukraine
and Finland. The business model of vertical
integration is founded in resource-backed
cement and aggregates assets, which
support the manufacture and supply of
cement, aggregates, readymixed and
precast concrete, concrete landscaping
and asphalt products. As a result, extending
reserves is an ongoing process and a key
focus for the Heavyside business. We
place great emphasis on performance
improvement initiatives across the
business and seek to create value through
optimisation of the asset base, maximising
Group synergies and leveraging commercial
and operational excellence. The scale of
our operations provides economies in
purchasing and logistics management
and our commitment to sustainability is
evidenced by greater use of alternative fuels
and the manufacture of low carbon cements.
28
The Europe Heavyside development strategy
is currently focused on integration of our
recent acquisitions, maximising the synergies
to be gained. We remain focused on
bolt-on acquisitions for synergies, reserves
and further vertical integration, in addition
to opportunities in contiguous regions to
extend and strengthen regional positions.
Our portfolio is managed through a focus
on value creation, with a strong pipeline
of opportunities across regions, including
developing markets in Eastern Europe that
offer long-term growth potential. As part
of CRH’s ongoing strategy to optimise our
portfolio, Europe Heavyside completed a
total of 14 divestments in 2015, including the
disposal of its 25% equity interest in Mashav,
the holding company for the sole producer of
cement in Israel, in December 2015.
In total Europe Heavyside employs
approximately 16,100 people at close to
700 locations in 19 countries.
Market leadership positions
Cement
Top 10
Europe
No.1
No.2
No.3
Finland, Ireland, Ukraine
Switzerland
Poland
Aggregates
No.1
Finland, Ireland
Readymixed concrete
No.1
No.2
Finland, Ireland, Poland
Switzerland
Agricultural & chemical lime
No.1
No.2
Ireland
Poland
Concrete products
No.1
No.1
No.1
No.1
Structural concrete & flooring:
Benelux
Structural concrete: Denmark
Utility precast: France
Precast structural elements:
Hungary
Architectural concrete
No.1
No.2
Blocks: Ireland
Rooftiles: Ireland
Landscaping products:
No.1
Finland, Poland, Benelux,
France and Slovakia
Paving/landscape walling:
Germany
Paving products: Denmark
No.1
No.2
CRH Annual Report I 2015 Operations Review
Results
Analysis of change
€ million
Sales revenue
EBITDA*
%
Change
2015
2014
Total
Change
-8% 3,607 3,929
-322
-12%
334
380
-46
-16
Operating profit*
-11%
135
151
EBITDA/sales
Operating profit/sales
9.3% 9.7%
3.7% 3.8%
* EBITDA and operating profit exclude profit on disposals
Organic Acquisitions Divestments
Restructuring/
Impairment
Pension/
CO2 Exchange
-30
+1
+7
+5
-
-
-386
-62
-45
-
+9
+18
-
-3
-3
+89
+9
+7
Restructuring costs amounted to €6 million (2014: €15 million)
Impairment charges of €26 million were incurred (2014: €35 million)
Pension restructuring gains amounted to €4 million (2014: nil)
Gains from CO2 trading amounted to €2 million (2014: €9 million)
2015 was characterised by mixed trends
across our major European markets
with challenging market conditions in
our businesses in Switzerland, France,
Germany and Finland offsetting increased
activity in Ireland, Poland, Denmark and the
Netherlands. As a result, like-for-like sales
for the year were slightly behind 2014, with
like-for-like EBITDA broadly in line with 2014
due to ongoing cost savings initiatives and
improved capacity utilisation. While reported
margins for 2015 were slightly behind
2014, margins for Heavyside’s continuing
operations (excluding the impact of
divestments and one-off items), were ahead
of last year. In addition to the divestment
of the UK’s clay and products operations,
Heavyside completed 13 divestments in
2015. The commentary below excludes the
impact of these divestments.
Western Europe
(55% of EBITDA)
The strong Swiss Franc created challenging
market conditions in Switzerland. Combined
with the slight slowdown in residential
construction and decline in infrastructure
spend, this resulted in pricing pressure in all
markets. Sales volumes in both our cement
and downstream businesses declined, and
operating profit was below 2014.
In Belgium, our cement and readymixed
concrete businesses continue to face
competitive trading conditions while curtailed
public spending and lower exports to
France affected our landscaping business
in particular. Our structural concrete
business has seen some improvement in
sales, however operating profit was flat.
Construction activity in the Netherlands
improved, mainly due to strong growth in the
residential market. This was reflected in sales
and operating profit growth in our structural
concrete business.
While sales of other products were adversely
impacted by the competitive trading
environment, ongoing cost reduction
programmes resulted in improved operating
profit.
In Ireland, construction growth was
supported by improvements across all
sectors, primarily non-residential, albeit
from a low base. While cement volumes
grew by 17%, pricing was under pressure
in competitive markets. With the benefit of
higher volumes and the positive impact of
cost savings initiatives in previous years,
operating profit was ahead of 2014.
With the benefit of a continued strong
non-residential market and growth in new
residential construction in Denmark, both
volumes and prices in our structural concrete
business improved. Sales and operating
profit were ahead of 2014.
29
CRH Annual Report I 2015 Europe Heavyside | continued
Construction activity in Finland was
somewhat down in 2015, and our cement
operations reported a 6% decline in
volumes, with pricing also under pressure.
Readymixed concrete volumes were also
lower than 2014 while aggregates and
the concrete products businesses have
benefited from a number of large projects.
With the benefit of cost and efficiency
initiatives, overall operating profit was ahead
of 2014.
Our Ukraine operations are based in the
West of the country, which continues to be
less impacted than Eastern Ukraine by the
ongoing political conflict. Cement volumes
were up 2% year-on-year, with volume
growth of 8% in the second half of the year
compensating for a slower start to 2015.
Local inflation negatively impacted input
costs and operating profit was lower than
last year impacted by the weakening of the
local currency.
Volumes in our concrete products
businesses in Germany and France were
under pressure as lower government
spending contributed to subdued
construction markets. While sales declined,
the effect on operating profit has been
moderate due to vigorous implementation
of cost reduction programmes. Overall,
the macro-economic situation in Spain
has stabilised but there are some regional
variations. In the regions in which we
operate, both cement and readymixed
concrete volumes have been under pressure
with difficult trading conditions, resulting
in sales below 2014. However, operating
results have shown improvement due to
ongoing cost reductions.
Eastern Europe
(45% of EBITDA)
In Poland, cement volumes improved, with
growing momentum in the second half of
the year; however prices remained under
pressure with overcapacity in the market.
Both sales and operating profit were ahead
of the prior year with the benefit of cost
savings, disposal of non-performing assets
and increased readymixed concrete activity.
Reserves
Physical Location
Cement
Ireland
Poland
Switzerland
Ukraine
Spain
Aggregates
Finland
Ireland
Poland
Spain
Other
Lime
Ireland/Poland
30
Proven & probable
million tonnes
Period to depletion
years
215
185
31
158
85
192
1,073
182
96
172
161
109
46
21
51
366
17
94
40
44
23
160
.
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CRH Annual Report I 2015
.
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31
31
CRH Annual Report I 2015
Europe Lightside
Business Description
Europe Lightside’s strategy is to build and
grow scalable businesses in construction
markets across a range of products and
end-use segments. We operate a portfolio
of business platforms which focus on
increasing the penetration of our range of
high-quality, value-added products, and
create competitive advantage through strong
customer relationships and service.
We realise commercial, operational and
procurement synergies across the larger
network to benefit from scale and best
practice, and leverage a range of flagship
brands at a regional, European and global
level. There is a continuous focus on product
innovation and development and we work
with specialist end-users, such as architects
and engineers, to develop design solutions
that are approved and certified for individual
target markets.
The Division is organised into three business
areas: Construction Accessories, Shutters
& Awnings, and Fencing & Cubis Access
Chambers. Our development strategy is to
deepen our positions in existing business
platforms in developed Europe, to broaden
our differentiated product portfolio through
selected new growth platforms, and to
expand our presence in developing regions
as construction markets in those regions
become more sophisticated. This strategy
complements CRH’s aim to provide
innovative solutions that meet the
longer-term opportunities presented
by economic development, changing
demographics and sustainability.
We draw upon an established record of
enabling mature and high-growth businesses
alike to expand their offerings, and develop
their markets. Lightside has historically
achieved consistently attractive returns; this
reflects active, balanced management of
our product range and our geographic and
business cycle exposures.
Employees total approximately 4,800 people
at over 100 operating locations in
16 countries.
Market leadership positions
Construction Accessories
No.1
Europe
Shutters & Awnings
No.1
No.3
Netherlands
Germany
Fencing & Cubis (Composite Access
Chambers)
No.1
No.1
Europe (Fencing, Cubis)
Australia (Cubis)
32
Erhardt Markisen is part of the Shutters &
Awnings platform in Europe Lightside. It is a
leading German manufacturer of sun protection
and terrace roof systems, which encourage
year-round outdoor living.
CRH Annual Report I 2015 Operations Review
€ million
Sales revenue
EBITDA*
Operating profit*
EBITDA/sales
Operating profit/sales
Results
%
Change
+5%
+6%
+6%
2015
961
100
75
2014
913
94
71
10.4% 10.3%
7.8%
7.8%
Total
Change
+48
+6
+4
Analysis of change
Organic Acquisitions Restructuring
Exchange
+3
+2
-
+12
-
-
-
-
-
+33
+4
+4
* EBITDA and operating profit exclude profit on disposals
Restructuring costs amounted to €5 million (2014: €5 million)
Fencing & Cubis Access
Chambers (15% of EBITDA)
Our Permanent Fencing business continued
to experience difficult trading conditions,
especially in the non-residential markets in
the Netherlands and Germany and some
export markets. Profits were also affected
by restructuring measures in Germany.
Against a backdrop of mixed markets,
Mobile Fencing recorded strong growth in
sales and profits through various commercial
and operational excellence measures. The
innovation focused Cubis Access Chambers
business had another good year despite
some challenges in France, increasing sales
and operating profits due to strong UK
demand and a positive contribution from the
newly acquired business in Australia.
Europe Lightside saw further growth in
2015 with total sales 5% ahead, reflecting a
good performance in key markets and the
benefit of favourable weather conditions in
the second half of the year. The UK market
experienced growth, particularly in residential
construction. Market circumstances in
France and the Netherlands remained
challenging, while overall activity in Germany,
Belgium and Switzerland was relatively
stable. Export markets outside of Europe
were robust. With the benefit of new product
innovation and process improvements,
operating profit increased.
Construction Accessories
(60% of EBITDA)
Construction Accessories supplies a broad
range of connecting, fixing and anchor
systems to the construction industry.
Like-for-like sales grew by 2% in 2015, with
an increase in operating profit. Engineered
Accessories benefited from new product
innovation and favourable market conditions
in the UK. Our businesses in Germany
and the UK continued to deliver growth
in operating profit. Our Swiss business
recorded stable sales and profits in spite
of the negative exchange rate impact on
market demand.
Building Site Accessories results were mixed,
with a satisfactory performance in the UK,
Belgium, the Netherlands and Spain offset by
more difficult trading in Germany and France.
The German Building Site Accessories
business was divested at the end of 2015.
The Southeast Asia business was affected
by more difficult trading conditions and
exchange rate effects but recorded an
improvement in operating profit.
Shutters & Awnings
(25% of EBITDA)
Shutters & Awnings is focused on the
attractive RMI and residential end-use
segments. Overall, like-for-like sales
increased by 4% and the business achieved
higher operating profit. Our German Awnings
businesses benefited from the introduction
of new products and favourable weather
conditions, and recorded significant growth
in both sales and profits. The German
Shutters business recorded stable sales
and substantially higher profits as a result
of previous restructuring measures. The UK
business also showed improved sales and
margins. Our business in the Netherlands
recorded a stable and satisfactory
performance in a relatively flat RMI market.
33
CRH Annual Report I 2015 Europe Distribution
Business Description
Europe Distribution’s strategy is to
increase its network density in the largely
unconsolidated core European markets while
also investing in other attractive segments of
building materials distribution. Organisational
initiatives leverage expertise between DIY
and Builders Merchants and use
best-in-class IT to deliver operational
excellence, optimise the supply chain
and provide superior customer service.
From an established base in the
Netherlands, CRH has expanded its leading
Builders Merchants positions in Switzerland,
Northern Germany, Austria and France
servicing the growing repair, maintenance
and improvement construction sector. Our
Professional Builders Merchants sell a range
of bricks, cement, roofing and other building
products mainly to small and medium-sized
builders.
In addition Europe Distribution is growing its
DIY “GAMMA” format in the Benelux. The
DIY Europe platform operates under four
different brands: GAMMA (the Netherlands
and Belgium), Karwei (the Netherlands),
Hagebau (Germany) and Maxmat (Portugal)
selling to DIY enthusiasts and home
improvers.
Substantial opportunities remain to expand
our existing network in core European
markets and to establish new platforms
aimed at increasing our exposure to
growing RMI market demand. An example
is CRH’s entry in recent years into the
developing Sanitary, Heating and Plumbing
(“SHAP”) distribution market, which has
since replicated and expanded to service
the specialist needs of plumbers, heating
specialists and installers, and of gas and
water technicians.
Europe Distribution employs approximately
11,400 people at over 650 locations across
7 countries.
Market leadership positions
Builders Merchants
No.1
No.1
No.1
No.1
No.2
DIY
No.1
No.3
No.5
No.2
Austria
Netherlands
Switzerland
Northern Germany
Ile-de-France and Normandy
Netherlands*
Belgium*
Germany**
Portugal (50%)
* Member of Gamma/Karwei franchise
** Member of Hagebau franchise
SHAP
No.2
No.2
No.3
Switzerland
Belgium
Northern Germany
34
In the Netherlands, 27 different General Builders
Merchants companies in Europe Distribution
united under one new name.
BMN Bouwmaterialen was formally launched in
October 2015 and has nearly 80 branches
nationwide.
CRH Annual Report I 2015 Operations Review
€ million
Sales revenue
EBITDA)*
Operating profit*
EBITDA/sales
Operating profit/sales
Results
%
Change
2015
2014
Total
Change
Organic
Acquisitions
Restructuring/
Impairment
Swiss
Fine Exchange
Analysis of change
+4% 4,158
3,999
+159
-10%
-16%
171
94
190
112
-19
-18
-21
+4
+10
+27
+1
-
-
-
-1
-
-32
-32
+153
+8
+5
4.1% 4.8%
2.3% 2.8%
* EBITDA and operating profit exclude profit on disposals
Restructuring costs amounted to €4 million (2014: €4 million)
Impairment charges of €1 million were incurred (2014: nil)
The market backdrop for Distribution
remained mixed in 2015, with improving
sentiment in the Netherlands partly offset by
weaker markets in France and Switzerland,
leaving full year organic sales flat on 2014.
Swiss sales in particular were negatively
impacted by a softening residential
market and exchange rate movements.
Encouraging sales in our Dutch businesses
have been driven by a recovery in new
residential markets together with commercial
excellence initiatives to drive market
share growth, particularly in our general
merchants business. Excluding the impact
of the provision for the Swiss Competition
Commission fine of €32 million overall
profitability was ahead of the prior year with
performance improvement and cost savings
measures offsetting challenging markets.
Professional Builders Merchants
(45% of EBITDA)
Like-for-like results for our wholly-owned
professional builders merchants business,
which operates 347 branches in six
countries, were slightly behind 2014 with
pricing pressure in competitive markets
a feature in 2015. Sales ended slightly
behind 2014 partly due to strong prior year
comparatives which benefited from very mild
weather in Q1 2014. Our Swiss business
experienced a difficult market environment in
2015 due to a softening of residential activity
and the negative market impact of the Swiss
National Bank decision in early 2015 to
unpeg the Swiss Franc to the euro. Margin
improvement initiatives together with cost
savings measures helped protect profits to
leave results only slightly behind 2014. Sales
growth in our Dutch businesses were driven
by a recovering new residential market in
addition to commercial excellence initiatives
to capture market share growth. Strong
leverage on these higher sales coming
from margin improvement measures (e.g.
procurement initiatives, private label growth)
and cost savings delivered operating profit
progress. Without the recurrence of the very
mild weather which benefited the first half of
2014, sales and operating profit in Germany
were slightly behind 2014.
DIY (30% of EBITDA)
Our wholly-owned DIY business operates
183 stores in the Netherlands, Germany and
Belgium. Overall sales were slightly ahead
due to improving sales in our Dutch business
with profit progress coming from higher
volumes and margins. In the DIY business,
which is more exposed to RMI compared
to our builders merchants business, sales
showed moderate progress with improving
consumer confidence a key factor behind
the growth in the Dutch market. Strong
leverage on these sales from procurement
excellence initiatives helped to deliver good
operating profit growth in 2015. Germany
saw broadly flat sales with very little growth
seen in the market. Overall operating profit
for DIY was ahead of 2014.
Sanitary, Heating and Plumbing
(“SHAP”) (25% of EBITDA)
Sales for our SHAP business, which
operates 134 branches, were ahead of
2014. Despite very challenging markets
in Switzerland, sales ended only slightly
behind 2014 with profitability ahead due to
margin improvement initiatives, purchasing
benefits from a stronger Swiss Franc, and
cost savings measures. Sales in Belgium
showed good progress as we consolidated
market share leaving operating profit ahead
of prior year. In Germany, the benefit of
moderate sales growth was offset by lower
margins and profit was broadly in line with
2014. Overall operating profit for our SHAP
activities was ahead of 2014 due to higher
sales and commercial excellence initiatives.
35
CRH Annual Report I 2015 CRH in the Americas
Alaska
British
Columbia
Alberta
Saskatchewan
Manitoba
Quebec
Ontario
Washington
Montana
Oregon
Idaho
Wyoming
North
Dakota
South
Dakota
a
t
o
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n
M
i
Nebraska
Iowa
Nevada
Utah
Colorado
Kansas
Missouri
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Kentucky
New
York
Pennsylvania
W. Virginia
Virginia
6.
7.
8.
Alaska
Tennessee
N. Carolina
Arkansas
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36
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CRH Annual Report I 2015 Alaska
British
Columbia
Alberta
Saskatchewan
Manitoba
Quebec
Ontario
Washington
Montana
Oregon
Idaho
Wyoming
North
Dakota
South
Dakota
a
t
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Nebraska
Iowa
a Ohio
n
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l
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I
Kentucky
Tennessee
N. Carolina
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a
g
i
h
c
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M
a
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d
n
I
a
m
a
b
a
l
A
Maine
New
York
1.
2.
3.
5.
4.
6.
7.
1. Vermont
8.
2. New Hampshire
3. Massachusetts
4. Rhode Island
5. Connecticut
6. New Jersey
7. Delaware
8. Maryland
Pennsylvania
W. Virginia
Virginia
S. Carolina
Florida
Oklahoma
Arkansas
Texas
a
n
a
i
s
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o
L
i
p
p
i
s
s
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s
s
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M
a
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g
r
o
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Nevada
Utah
Colorado
Kansas
Missouri
C
alifornia
Arizona
New Mexico
CRH is the largest building materials company in North America. We
operate in all 50 US states and in six Canadian provinces.
Our Americas operations comprise Materials,
Products and Distribution divisions. In
Materials, we are the largest producer
of asphalt and third largest producer of
aggregates and readymixed concrete in the
United States. Our Products operations, with
their national footprint and broad product
range, are the leading supplier of concrete
products and architectural glazing systems in
North America.
In Distribution, we are a leading supplier of
product to the specialist Exterior roofing/
siding contractor and also the Interior
ceilings/walls demand segments.
Close to 40,000 people are employed by
CRH in the Americas, with operations at over
1,700 locations.
The Shelly Company’s Smith Concrete
supplied 35,000 cubic yards of concrete
for the US$45 million Bridge of Honor. The
bridge is a cast-in-place segmental concrete
edge girder system with transverse floor
beams. The bridge, which has a span of
675-feet, connects the cities of Pomeroy,
Ohio, and Mason, West Virginia, across the
Ohio River.
A rigorous quality assurance process at the
Anjou Plant in Quebec, Canada, ensures
that our customers receive world-class
quality products and service. For more
than 60 years, Oldcastle Architectural has
been Canada’s leader in concrete products,
offering leading-edge design options for
residential and commercial applications.
Tri-Built Materials Group, the private-label
division of Allied Building Products, has been
well received and now includes more than
30 residential and commercial accessory
products.
37
CRH Annual Report I 2015 Market leadership positions
Reserves
Aggregates
No.3
Asphalt
No.1
United States
United States
Readymixed concrete
No.3
United States
Physical
Location
Aggregates
East USA
West USA
Proven &
probable
million
tonnes
Period to
depletion
years
9,286
3,888
120
69
A CAT 988K wheel loader, loads a gravel train at
the Stoneco of Michigan - Ottawa Lake Quarry.
The quarry shipped approx. two million tonnes in
2015 while continuing their run of 4,812 days
worked without a lost time incident. Ottawa Lake
has won multiple NSSGA and MAA awards for
safety, community relations and environmental
controls and is an MDOT-certified supplier of
crushed limestone, sand, and gravel.
Americas Materials
Business Description
Americas Materials’ strategy is to build
strong regional leadership positions
underpinned by well-located, long-term
reserves. We are the largest producer of
asphalt and the third largest producer of
both aggregates and readymixed concrete
in the United States. We operate nationally
in 44 states with over 13 billion tonnes of
aggregates reserves of which circa 80%
are owned. The business is vertically
integrated from primary resource quarries
into aggregates, asphalt and readymixed
concrete products. With 55% exposure
to infrastructure, the business is further
integrated into asphalt paving services
through which it is the leading supplier of
product to highway repair and maintenance
demand in the United States.
Our national network of operations and
deep local market knowledge drive local
performance and national synergies in
procurement, cost management and
operational excellence. In a largely
unconsolidated sector where the top ten
industry participants account for just 35%
of aggregates production, 25% of asphalt
production and 25% of readymixed concrete
production, CRH’s strategy is to position
the business to participate as the industry
consolidates further.
Americas Materials employs approximately
18,500 people at close to 1,200 operating
locations.
38
CRH Annual Report I 2015 Operations Review
€ million
Sales revenue
EBITDA*
Operating profit*
EBITDA/sales
Operating profit/sales
Results
%
Change
2015
2014
Total
Change
+26% 6,400
5,070
+1,330
+50%
+72%
912
611
609
355
+303
+256
14.3% 12.0%
9.5% 7.0%
Analysis of change
Organic Acquisitions Divestments Restructuring
Exchange
+342
+170
+176
+80
+14
+11
-95
-7
-3
-
+1
+1
+1,003
+125
+71
* EBITDA and operating profit exclude profit on disposals
Restructuring costs amounted to €8 million (2014: €9 million)
2015 was a year of good growth across
all regions for Americas Materials, with the
benefit of reduced energy costs, along
with improved weather patterns in most
markets. Trading conditions improved with
increased demand in key market areas, led
by improved residential and non-residential
segments and stable infrastructure. US
Dollar revenues grew 5% and US Dollar
EBITDA increased 25% compared to 2014.
Positive trends in pricing continued for
aggregates and readymixed concrete, with
asphalt pricing declines more than offset by
lower input costs in 2015.
10 acquisitions and two investments were
completed in 2015 at a total cost of €86
million, adding over 253 million tonnes of
aggregates reserves, 6 operating quarries,
18 asphalt plants and 1 aggregates terminal,
with annual production of 2.3 million tonnes
of aggregates and 1.3 million tonnes of
asphalt. Business and asset disposals during
the year generated proceeds of €109 million.
Energy and related costs: The price of
bitumen, a key component of asphalt mix,
decreased by 18% in 2015 following a
3% increase in 2014. Prices for diesel and
gasoline, important inputs to our aggregates,
readymixed concrete and paving operations,
decreased by 28% and 29% respectively.
The price of energy used at our asphalt
plants, consisting of fuel oil, recycled oil,
electricity and natural gas, decreased
by 25%. Recycled asphalt and shingles
accounted for approximately 22% of total
asphalt requirements in 2015, lessening
demand on virgin bitumen.
Aggregates: Both like-for-like and overall
volumes rose 4% from 2014. Average prices
increased by 5% on a like-for-like basis and
4% overall compared with 2014. These price
and volume increases, together with efficient
cost control, resulted in improved margin for
our aggregates business.
Asphalt: Volumes increased 6% on a
like-for-like basis and 7% overall compared
to 2014. Despite price declines of 4%,
volume increases together with efficient cost
control contributed to an overall asphalt
margin expansion.
Readymixed Concrete: Like-for-like volumes
increased 2% while total volumes including
the impact of acquisitions and divestments
were down 1% compared with 2014.
Average prices increased 5% on both a
like-for-like and an overall basis, contributing
to margin expansion for this business.
Paving and Construction Services: With flat
federal funding and pockets of increased
state infrastructure spending, like-for-like
sales increased 6%. Bidding continued to be
under pressure in a competitive environment.
However, efficient cost controls enabled
overall margin to improve slightly in 2015.
East (70% of EBITDA)
The East region comprises operations in
24 states, the most important of which are
Ohio, New York, Florida, Michigan, New
Jersey, Pennsylvania and Connecticut. With
the benefit of lower bitumen costs, operating
profit in the Northeast division increased
strongly compared with 2014.
The Central division benefited from increased
transportation spending in Ohio, along
with favourable bitumen costs. Operating
profit was also ahead in the Mid-Atlantic
division despite closure of coal mines and
a slowdown in natural gas exploration
in the region. The strong residential and
non-residential markets in the Southeast
division contributed to higher asphalt and
readymixed concrete volumes and better
prices resulting in significant margin growth.
Overall volumes for the East region were
7% ahead of prior year for aggregates,
11% ahead for asphalt and 1% behind for
readymixed concrete.
West (30% of EBITDA)
The West region has operations in 20
states, the most important of which are
Utah, Texas, Washington, Kansas, Arkansas
and Colorado. With strong operating
and overhead cost management across
the product lines, all divisions reported
significant margin increases. With resilient
market growth in Texas in both the public
and private sectors, the Southwest
division delivered higher margins, while
the Northwest division benefited from
increased commercial demand. Volumes in
the Great Plains division were impacted by
state spending cuts which were offset by
strengthening residential and commercial
sectors. Overall West volumes were flat for
aggregates and decreased 2% from 2014
for both asphalt and readymixed concrete
respectively.
39
CRH Annual Report I 2015 of a local supplier. Focusing on strategic
accounts and influencers in the construction
supply chain, the Oldcastle Building
Solutions group provides an additional
avenue for growth as it is well-positioned in
the industry to create value for stakeholders
across all phases of construction.
The number of employees in this division
totals approximately 17,900 at over 350
locations.
Market leadership positions
Concrete masonry, patio products and
pavers
No.1
No.1
Paving & patio: North America
Masonry: North America
Packaged cement mixes
No.2
United States
Packaged lawn & garden products
No.2
United States
Precast concrete products
No.1
Precast concrete utility
products: North America
Building envelope solutions
No.1
North America
Custom glazing hardware and
installation products
No.1
North America
Concrete accessories
No.2
United States
Operations Review
Our Products business in the Americas is
located in the United States and Canada.
Trading results improved due to an
ongoing pick-up in US macroeconomic
fundamentals, including stronger labour
markets and consumer confidence, which
have strengthened private new residential
construction and RMI. The non-residential
construction sector also performed
strongly in 2015, with the Southern and
Western markets particularly strong. Input
cost inflation was more than offset by the
effects of improved operational efficiencies,
procurement initiatives, favourable product
mix and targeted price increases. Combined
with the added benefits of cost reduction
initiatives, Americas Products achieved a
24% increase in US$ EBITDA and margins
improved.
In 2015, we acquired CRL, a highly
complementary platform for our
BuildingEnvelope® group (“OBE”) together
with three bolt-on acquisitions at a total
cost of €1.2 billion. CRL is the leading
North American manufacturer and supplier
of custom door hardware and glazing
installation products. OBE and CRL expect
to generate synergies through integrated
supply chains, increased sales to a larger
customer base and more efficient fixed
costs. The Architectural Products Group’s
(“APG”) acquisition of Anchor Block and
Anchor Wall Systems expanded the
product capabilities of its core masonry and
hardscape business and enhanced APG’s
market position in the upper Midwest region.
In addition to the disposal of the Glen-Gery
clay business, nine further divestments
together with asset disposals in 2015
generated net proceeds of €155 million.
Americas Products
Business Description
Americas Products’ strategy is to build a
portfolio of businesses which have leading
market positions across a balanced range
of products and end-use segments.
Our activities are organised into three
product groups under the Oldcastle brand:
Architectural Products (concrete masonry
and hardscapes, packaged lawn and
garden products, packaged cement mixes);
Precast (utility, drainage and structural
precast, construction accessories); and
BuildingEnvelope® (architectural glass,
aluminium glazing systems, customised
hardware products to glass and glazing
industry). The Group’s commitment to
building better businesses is reflected in
its co-ordinated approach at national and
regional levels to achieve economies of scale
and to facilitate the sharing of best practices
which drive operational and commercial
improvement. Innovation is a hallmark of
the business and through Oldcastle’s North
American research and development centres,
a pipeline of value-added products and
design solutions is maintained.
The CRL acquisition completed in September
2015 includes 28 operating locations in the
US, five in Canada, four in Europe and two in
Australia.
In the context of the detailed review of the
portfolio undertaken by the Group in 2014,
CRH completed multiple divestments in
2015, including our Merchants Metals
fencing business and a lightweight
aggregates division, both in the United
States. In addition, CRH’s operations in
South America were divested.
A national business operating in 38 US
states and six Canadian provinces, CRH has
the breadth of product range and national
footprint that combines providing a national
service to customers with the personal touch
40
CRH Annual Report I 2015 Results
Analysis of change
€ million
%
Change
2015
2014
Total
Change
Organic Acquisitions Divestments
Restructuring/
Impairment
Exchange
Sales revenue
+20% 3,862
3,225
+637
EBITDA*
Operating profit*
EBITDA/sales
Operating profit/sales
+49%
+72%
391
249
263
145
+128
+104
10.1% 8.2%
6.4% 4.5%
* EBITDA and operating profit exclude profit on disposals
+246
+67
+68
+196
+29
+15
-374
-31
-21
-
+13
+10
+569
+50
+32
Restructuring costs amounted to €5 million (2014: €18 million)
Impairment charges of €17 million were incurred (2014: €14 million)
Architectural Products
(50% of EBITDA)
APG is a leading supplier of concrete
masonry and hardscape products and
has strong national positions in dry mixes
and packaged lawn and garden products.
In addition to contractor-based new
construction, the DIY and professional RMI
segments are significant end-users. The
business benefited from improving economic
fundamentals, which have given rise to
increased RMI spend, stronger residential
construction, in particular increasing
growth in single-family home construction,
and recovering non-residential demand.
Sales volumes were robust across the
US but more muted in Canada, where
macroeconomic growth has been less
favourable. The strengthening market,
together with product innovation and
commercial initiatives, drove gains across
nearly all product channels resulting in an
increase in like-for-like sales compared with
2014. Input costs increased moderately
in 2015 but were offset by the impacts of
cost reduction measures and selected price
improvements. Overall, APG recorded strong
improvements in operating profit and margin
for the year.
BuildingEnvelope®
(30% of EBITDA)
The BuildingEnvelope® group is North
America’s largest supplier of architectural
glass, aluminium glazing systems and
custom hardware products to the glass and
glazing industry. In 2015, non-residential
building activity experienced improved
market demand. Sales growth was also
driven by ongoing initiatives to gain market
share and differentiate the business through
innovative products and technology. Organic
sales increased and with improved pricing
and a more favourable product mix, OBE
achieved robust growth in margins and
operating profit.
Precast (20% of EBITDA)
The Precast group manufactures a broad
range of value-added concrete and
polymer-based products primarily for utility
infrastructure applications. In addition,
the business is a leading manufacturer of
accessories to the concrete construction
industry. In 2015, with improved demand
for both private construction and public
infrastructure, the business registered solid
sales gains as growth initiatives continued
to deliver. Operating profit increases were
achieved in most markets across all concrete
product lines. Our enclosures solutions
business realised significantly increased sales
and profits, and our construction accessories
business also continued to grow and
improve. Overall, like-for-like sales rose and
operating profit was significantly ahead and
backlogs remained strong.
41
CRH Annual Report I 2015 Americas Distribution
Business Description
Americas Distribution strategy is focused
on being the supplier of choice to specialty
contractors of Exterior Products, (roofing and
siding), and Interior Products, (ceilings and
walls), as well as primarily residential Solar
Roofing panels.
Demand in the Exterior Products business
is largely influenced by residential and
commercial replacement activity with the key
products having an average lifespan of 25 to
30 years.
Demand for Interior Products is primarily
driven by the new residential, multi-family
and commercial construction markets.
Through CRH’s commitment to continuously
making businesses better, we employ
state-of-the-art customer facing IT
technologies, disciplined and focused cash
and asset management, and well established
procurement and commercial systems
to support supply chain optimisation and
enable us to provide superior customer
service.
Americas Distribution operates in 31 states,
with growth opportunities which include
investment in new and existing markets,
in complementary private label and
energy-saving product offerings, and in
other attractive building materials distribution
segments that service professional dealer
networks.
The division employs approximately 3,900
people at close to 200 locations.
Market leadership positions
Exterior Products
No.3
United States
Interior Products
No.3
United States
42
Allied Building Products delivering the PVC
Roofing System for the new 500,000 square foot
Fresh Direct distribution centre and corporate
headquarters at the Harlem River Yards in the
South Bronx, New York.
CRH Annual Report I 2015 Operations Review
€ million
Results
%
Change
2015
Sales revenue
+26%
2,229
EBITDA*
Operating profit*
EBITDA/sales
Operating profit/sales
+33%
+34%
140
111
6.3%
5.0%
Total
Change
+453
+35
+28
2014
1,776
105
83
5.9%
4.7%
Analysis of change
Organic
Restructuring
Exchange
+102
+14
+11
-
-1
-1
+351
+22
+18
* EBITDA and operating profit exclude profit on disposals
Restructuring costs amounted to €1 million (2014: nil)
Americas Distribution, trading as Allied
Building Products (“Allied”), experienced
solid performance across its activities in
2015, reporting another year of good profit
delivery on increased sales. Our Exterior
Products and Interior Products divisions,
as well as our growing Solar business,
continued to advance and benefit from
organic sales and profit growth compared to
2014. Performance in our Exterior Products
business was led by strong demand in our
West Coast markets (California and Oregon),
focused growth in Texas and steady volumes
in the Northeast (New York/New Jersey/New
England). The Mountain (Colorado) market
experienced modest setbacks coming off
seasonal storm activity in 2014.
The Interior Products business continued to
experience volume growth throughout the
year. The strongest gains were experienced
in our Western markets, Hawaii and
California, driven by multi-family construction.
Modest declines were experienced in our
Mountain (Colorado) and Mid-Atlantic
(Carolinas) markets.
In 2015, Allied management remained
focused on gross margins in a highly
competitive environment, maintaining price
discipline while controlling variable costs
through continuous improvement and
efficiency; the team also achieved significant
improvements in our working capital
through better procurement and demand
planning technologies in conjunction with
our maturing regional service area (district)
approach. Additionally, the continued
simplification of our business processes,
the ongoing evolution of our organisational
structure and regional service area strategy
has helped to drive operating leverage and
allow for greater economies of scale as our
business and the overall market grows.
While no acquisitions were completed within
the Americas Distribution group in 2015,
we have continued to build on our organic
greenfield and service centre strategy by
opening three bolt-on locations within
some of our key existing markets. Our
service centre model enables us to improve
customer service, consolidate fixed costs
and more efficiently leverage branch assets.
Progress continued to be made in 2015 to
increase brand awareness of Tri-Built, our
proprietary private label brand, as both sales
and product offerings grew. The growth
of Tri-Built, combined with the ongoing
expansion and improvement of our service
centre network continue to differentiate Allied
in the marketplace.
Exterior Products
(60% of EBITDA)
Exterior Products is largely comprised of
commercial and residential roofing, siding
and related products, the demand for which
is greatly influenced by residential and
commercial replacement activity (75% of
sales volume is RMI-related). Allied continues
to maintain its position as one of the top
three roofing and siding distributors in the
United States. Growth in 2015 came mainly
from the commercial roofing sector which
benefited from strong demand, particularly in
California and the East Coast metro markets.
With pricing discipline maintained in highly
competitive markets, the Exterior Products
division maintained margins and reported
strong sales and operating profit growth over
2014.
Interior Products
(40% of EBITDA)
The Interior Products business specialises in
the distribution of gypsum wallboard, metal
studs and acoustical ceiling systems and
related products to specialty contractors.
The primary market is new construction,
including residential, multi-family and
commercial, with limited exposure to the
repair and remodel market and low exposure
to weather-driven replacement activity. Allied
is the third largest distributor of these interior
products in the United States. Performance
in this business was strong in most markets
with increased demand of core products
contributing to higher sales and improved
operating profit.
43
CRH Annual Report I 2015 LH Assets
Britain
Germany
France
Slovakia
Hungary
Romania
Serbia
Britain
Germany
France
Slovakia
Hungary
Romania
Serbia
Alaska
Philippines
Canada & US
Brazil
Philippines
44
Business Description
CRH’s vision is to be the leading building
materials business in the world. To achieve
this vision, the Group makes large or
transformational acquisitions from time
to time when the strategic rationale and
opportunity is compelling.
During 2015, the opportunity arose for CRH
to acquire certain assets from Lafarge S.A.
and Holcim Limited for a total enterprise
value of €6.5 billion. These assets have
leading market positions and produce
cement, aggregates, readymixed concrete
and asphalt and related construction
activities globally.
For CRH there were five compelling
rationales for this acquisition: the quality of
the assets being acquired; their strategic fit
with our existing range of businesses; the
timing of the acquisition at the right point
of the cycle; the value creation potential
inherent in the deal; and maximising returns
through capital efficiencies.
The newly acquired heavyside assets
delivered four regional platforms for growth
in one global deal. We are now the second
largest global provider of aggregates with
a circa 45% increase in volumes, while our
cement volumes have more than doubled.
The four regional platforms are: Western
Europe (UK, France/La Reunion, Germany),
Central and Eastern Europe (Romania,
Slovakia, Hungary, Serbia), the Americas
(Canada/United States, Brazil) and Asia
(Philippines), and a programme of integration
to CRH’s existing business is well underway.
As at 31 December 2015, LH Assets
employs 16,000 people, at over 700
locations, in 11 countries.
Philippines
CRH Annual Report I 2015Alaska Overview of business segments acquired
Cement
Aggregates
Readymixed
Concrete
Western
Europe
Central
& Eastern
Europe
UK
France
Germany
Romania
Slovakia
Hungary
Serbia
The
Americas
Asia
Canada/US
Brazil
Philippines
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
Asphalt
ü
ü
Market leadership positions
Cement
No.1
No.2
Aggregates
No.1
No.2
No.3
UK, Slovakia, La Reunion
Canada (excluding British Colombia), Hungary, Philippines, Romania, Serbia
UK
Ontario and Quebec
La Reunion, Serbia
Readymixed Concrete
No.1
No.2
No.3
Asphalt
No.1
No.3
Ontario and Quebec
La Reunion
UK
UK
Canada
45
CRH Annual Report I 2015 LH Assets | continued
Operations Review
Results
Analysis by Region
€ million
Sales revenue
EBITDA*
Operating profit*
EBITDA/sales
Operating profit/sales
2015
2,418
171
2
7.1%
0.1%
Western
Europe
1,464
183
85
12.5%
5.8%
CEE
186
51
22
27.4%
11.8%
Americas
617
100
67
16.2%
10.9%
Asia
151
34
25
22.5%
16.6%
Transaction/
One-off costs
-
-197
-197
-
-
* EBITDA and operating profit exclude profit on disposals
Transaction costs of €144 million and other one-off costs of €53 million
The acquisition of assets in 11 countries
from Lafarge S.A. and Holcim Limited
(“LH Assets”) for a total consideration of
€6.5 billion was completed on 31 July 2015
(European and American assets) and 15
September (the Philippines), adding four
regional platforms for CRH, in Western
Europe, Central and Eastern Europe (“CEE”),
Americas (mainly Canada) and Asia (mainly
the Philippines). Three countries, the UK,
Canada and the Philippines account for circa
70% of the results.
Trading results for these businesses for
the five month post-acquisition period
ended 31 December 2015 were ahead of
expectations. Strong performances were
reported in the UK, CEE and the Philippines,
with growth in volumes and reduced input
costs driving solid sales and operating profit
performance. Canada’s performance was
in line with expectations. More challenging
market conditions were experienced in
France, Germany and Brazil.
At the time of acquisition, CRH indicated
that it expected €90 million in synergies
over three years; since completion of the
acquisition, we have identified additional
potential operational efficiencies and now
expect to realise up to €120 million in
synergies over the three-year period.
Western Europe
Construction activity in the UK showed
strong growth trends in 2015 with the pace
moderating slightly in the second half of the
year. This positive backdrop is reflected in
sales volumes and price growth in all our
major business lines. Lower input costs
also contributed to a strong operating profit
performance.
In France, the cement and readymixed
concrete operations faced difficult conditions
as continued market slowdown resulted in
an 8% decline in cement market volumes for
the year. The challenging market conditions
have also negatively impacted prices. A
focus on cost reduction initiatives across all
product lines has limited the operating profit
impact.
Cement volumes were also under pressure in
Germany reflecting a combination of regional
market declines and project delays with a
resultant impact on cement prices which
were slightly lower than expected in 2015.
Central & Eastern Europe
Construction activity in Romania increased
in 2015 driven by residential and
non-residential market growth. This positive
growth drove strong sales and operating
profit performance in the post-acquisition
period.
EBITDA margins in Serbia were strong;
however, pricing remains challenging due
to overcapacity and import pressure. Our
operations in North Danube (Hungary and
Slovakia) are trading favourably, supported
by a modest recovery in construction activity
in this region.
Americas
Regional variations in key operational
geographies produced mixed results for our
businesses in Canada which are located
primarily in Quebec and Ontario. Continued
government investment in large-scale public
infrastructure projects and stable demand
for residential housing delivered positive
results across all segments in the core
Ontario market. Cement exports increased
with favourable pricing as the US recovery
took hold. In contrast, excess capacity and
a reduction in available bid work created
pressure on volume and price in the
Quebec/Atlantic markets. The Brazilian
construction market suffered in 2015 as the
country struggled with significant economic,
financial and political problems.
Asia
Construction activity in the Philippines
showed favourable growth trends during
2015. This positive growth is reflected in
higher volumes and prices contributing to a
robust operating performance in 2015.
46
CRH Annual Report I 2015 Reserves
Location
Cement
Brazil
Canada
France
Germany
Philippines
Romania
Serbia
Slovakia
UK
US
Aggregates
Canada
France
La Reunion
Romania
Slovakia
UK
Lime
UK
Proven & probable million
tonnes
Period to depletion
years
169
300
155
164
189
241
109
307
251
31
481
250
4
121
19
1,438
39
89
106
81
54
31
79
185
113
63
76
29
24
4
50
25
33
36
47
A newly branded tanker on display at the CRH
Canada Joliette Cement Plant in Quebec to
celebrate becoming part of the CRH family.
CRH Annual Report I 2015 CRH in China & India
Northeast China
Provinces:
Heilongjiang
Jilin
Liaoning
Southern
India
States:
Andhra Pradesh
Telangana
48
48
CRH Annual Report I 2015 CRH has established strategic footholds in China and India over
the last eight years. Our strategy is to build select leading regional
positions to enable us to benefit from industrialisation, urbanisation
and population growth in these developing economies over the
coming decades.
Market leadership positions
Cement
No.1
No.1
Andhra Pradesh and
Telangana, India (50%)
Northeast China (26%)
Commissioned in 2009, this 3.7km conveyor belt
feeds crushed limestone to two 5,000 tonne per
day kilns in Shuangyang Cement Plant which is
located in the northeast of China.
The Group has a 26% stake in associate
Yatai Building Materials, which is a market
leader in building materials in Northeast
China. In India, we have a 50% Joint Venture
with My Home Industries Limited (“MHIL”)
which is a leading player in the southern
states of Andhra Pradesh and Telangana.
In 2013, we also opened a regional
headquarters in Singapore.
CRH operations in China and India employ
circa 10,000 people.
China
Market conditions in 2015 were very
challenging as the Chinese economy
moves towards a more sustainable level of
growth. This has impacted negatively on
the construction industry. Performance at
our 26% associate, Yatai Building Materials,
which is a market leader in Northeast China
with a capacity of 32 million tonnes of
cement, continues to be affected by lower
volumes and selling prices, partially offset by
lower energy costs.
India
CRH has a cement capacity of 8 million
tonnes across three locations in Southern
India, where it operates through a 50% Joint
Venture, MHIL. The regional market has a
cement consumption of 76 million tonnes
and MHIL is the market leader in southern
states of Andhra Pradesh and Telangana.
In 2015, MHIL sales grew by 5% helped
by better pricing and the benefit of clinker
exports to Sri Lanka and Bangladesh. The
lower cost of raw materials and fuels and
the focus on commercial and operational
excellence also resulted in higher trading
profits in 2015.
49
CRH Annual Report I 2015 e
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Governance
Board of Directors
Corporate Governance Report
Directors’ Remuneration Report
Directors’ Report
52
56
70
108
51
Board of Directors
Chairman
Appointed to the Board:
June 2004
Nationality: Irish
Age: 64
Committee membership:
Acquisitions Committee;
Finance Committee;
Nomination & Corporate
Governance Committee;
Remuneration Committee
Chief Executive
Appointed to the Board:
January 2009
Nationality: Irish
Age: 53
Committee membership:
Acquisitions Committee
Skills and experience: Nicky was Vice President of Manufacturing and
Business Operations for Dell Inc.’s Europe, Middle East and Africa (EMEA)
operations from 2000 to 2008. Prior to joining Dell, he was Executive Vice
President at Eastman Kodak and previously held the position of President
and Chief Executive Officer at Verbatim Corporation, based in the United
States.
Qualifications: C.Eng, FIEI, MBA.
External appointments: Non-listed: Chief Executive of Prodigium, a
consulting company which provides business advisory services;
non-executive Director of Musgrave Group plc, a privately-owned
international food retailer and Eircom Limited, a telecommunications
services provider in Ireland. Listed: Non-executive Director of Finning
International, Inc., the world’s largest Caterpillar equipment dealer.
Skills and experience: Albert was appointed a CRH Board Director
in January 2009. He joined CRH in 1998. Prior to joining CRH, he was
Chief Operating Officer with a private equity group. While at CRH, he has
held a variety of senior positions, including Finance Director of the Europe
Materials Division (now part of Europe Heavyside), Group Development
Director and Managing Director of Europe Materials. He became Chief
Operating Officer in January 2009 and was appointed Group Chief
Executive with effect from 1 January 2014.
Qualifications: FCPA, MBA, MBS.
External appointments: Non-listed: Not applicable. Listed: Not
applicable.
Finance Director
Appointed to the Board:
January 2016
Nationality: Irish
Age: 46
Skills and experience: Senan has over 25 years’ experience in
international business across financial services, banking and renewable
energy. He joined CRH from Bank of Ireland Group plc where he was
the Chief Operating Officer and a member of the Group’s Executive
Committee. He previously held positions as Chief Operating Officer and
Finance Director at Ulster Bank, Chief Financial Officer at Airtricity and
numerous senior financial roles in GE, both in Ireland and the United
States.
Qualifications: BComm, FCA.
External appointments: Non-listed: Not applicable. Listed: Not
applicable.
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52
CRH Annual Report I 2015
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Group
Transformation
Director
Appointed to the Board:
May 2010
Nationality: Irish
Age: 57
Committee membership:
Acquisitions Committee;
Finance Committee
Chairman,
CRH Americas
Appointed to the Board:
July 2008
Nationality: United States
Age: 66
Skills and experience: Since joining CRH in 1988, Maeve has held a
number of roles in the Group Finance area and was appointed Group
Controller in 2001, Head of Group Finance in January 2009 and to the
position of Finance Director in May 2010. She was appointed as Group
Transformation Director with effect from January 2016. Maeve has
broad-ranging experience of CRH’s reporting, control, budgetary and
capital expenditure processes and has been extensively involved in CRH’s
evaluation of acquisitions. Prior to joining CRH, she worked for a number of
years as a chartered accountant in an international accountancy practice.
Qualifications: MA, FCA.
External appointments: Non-listed: Agency Member of the National
Treasury Management Agency (NTMA), a state body that provides asset
and liability management services to the Irish Government. Listed: Not
applicable.
Skills and experience: Mark joined CRH in 1997 and was appointed
a CRH Board Director with effect from July 2008. In 2000, he was
appointed President of Oldcastle Materials, Inc. and became the Chief
Executive Officer of this Division in 2006. He was appointed Chief
Executive Officer of Oldcastle, Inc. (the holding company for CRH’s
operations in the Americas) in July 2008 and, with effect from January
2016, assumed the role of Chairman, CRH Americas. With over 40
years’ of experience in the building materials industry, he has overall
responsibility for the Group’s aggregates, asphalt and readymixed
concrete operations in the United States and its products and distribution
businesses in the Americas.
External appointments: Non-listed: Not applicable. Listed: Not
applicable.
Non-executive
Director*
Appointed to the Board:
July 2013
Nationality: United States
Age: 64
Committee membership:
Nomination & Corporate
Governance Committee;
Remuneration Committee
Skills and experience: Don retired from PricewaterhouseCoopers
(PwC) in June 2013, following a 39 year career with the firm. During that
time he was Vice Chairman, Global Assurance at PwC, a position he had
held since July 2008 and directed the US firm’s services for a number
of large public company clients. He also held various leadership roles in
PwC and was, from July 2001 to June 2008, a member of, and past lead
Director for, the Board of Partners and Principals of the US firm as well as
a member of PwC’s Global Board.
Qualifications: CPA, MBA.
External appointments: Non-listed: Director of Neuraltus
Pharmaceuticals, Inc. and eAsic Corporation. Listed: Not applicable.
* Don McGovern is Senior Independent Director
Non-executive
Director
Appointed to the Board:
October 2011
Nationality: Swiss
Age: 63
Committee membership:
Audit Committee
(Financial Expert);
Finance Committee
Skills and experience: Ernst was Chief Executive of Sika AG, a
manufacturer of speciality chemicals for construction and general
industry, until 31 December 2011. Prior to joining Sika, he worked for the
Schindler Group and was Chief Finance Officer between 1997 and 2001.
Over the course of his career he has gained extensive experience in India,
China and the Far East generally.
Qualifications: LIC.OEC.HSG
External appointments: Non-listed: Member of the Advisory Board of
China Renaissance Capital Investment Inc., a private equity investment
company in Hong Kong, China. Listed: Chairman of the Board of
Directors of Conzetta AG, a broadly diversified Swiss company and a
member of the Board of Bucher Industries AG, a mechanical and vehicle
engineering company based in Switzerland.
53
CRH Annual Report I 2015
Board of Directors | continued
Non-executive
Director
Appointed to the Board:
January 2007
Nationality: United States
Skills and experience: Bill is founder and General Partner of Alta
Communications and Marion Equity Partners LLC, Massachusetts-based
venture capital firms. He is past Chairman of Cephalon Inc., and past
President and Chairman of the National Venture Capital Association. He
was until May 2014, a Director of the Irish venture capital company Delta
Partners Limited.
Age: 70
Qualifications: BA, MBA.
Committee membership:
Nomination & Corporate
Governance Committee;
Remuneration Committee
External appointments: Non-listed: Member of the Board of Avadeyne
Health, Davler Media Group, Integra Partners and Sentinel Peak Capital,
LLC. Listed: Not applicable.
Non-executive
Director
Appointed to the Board:
July 2007
Nationality: German
Age: 68
Committee membership:
Acquisitions Committee;
Finance Committee
Skills and experience: Utz-Hellmuth was, until May 2011, Chairman
of the Supervisory Board of Süd-Chemie Aktiengesellschaft. He was
also Chief Executive of Degussa AG, Germany’s third largest chemical
company, until May 2006, a partner in the private equity group One Equity
Partners Europe GmbH until July 2014 and a Director of Jungbunzlauer
Holding AG until March 2015.
External appointments: Non-listed: Chairman of the Supervisory Board
of German rail company Deutsche Bahn AG. Non-executive Director of
Honosthor N.V. Listed: Not applicable.
Non-executive
Director
Appointed to the Board:
January 2015
Nationality: Irish
Age: 62
Committee membership:
Acquisitions Committee;
Audit Committee
Skills and experience: Pat was Chairman of the Executive Board of
Directors of SHV Holdings (SHV), a large family-owned Dutch multinational
company with a diverse portfolio of businesses, including the production
and distribution of energy, the provision of industrial services, heavy lifting
and transport solutions, cash and carry wholesale and the provision of
private equity. He retired from SHV mid-2014. During a 32 year career
with SHV, he held various leadership roles across SHV’s diverse portfolio
of businesses, while living in various parts of the world, and was a
member of the Executive Board of SHV from 2001, before becoming
Executive Chairman in 2006.
Qualifications: MBS, BComm.
External appointments: Non-listed: Member of the Board of Liquigas
S.p.A., a LPG distribution company. Listed: Not applicable.
Non-executive
Director
Appointed to the Board:
September 2015
Nationality: United States
Age: 63
Committee membership:
Acquisitions Committee;
Finance Committee
Skills and experience: Rebecca has held a variety of executive
leadership positions in the energy sector, including Chief Executive
of Laurus Energy, President Gas and Power in BHP Billiton and Chief
Executive of Amoco Energy Development Company, and has international
experience in the Americas, Asia and Africa. She was, until recently,
a non-executive Director of Granite Construction, Inc., a leading
infrastructure contractor and construction materials producer in the
United States.
Qualifications: Bachelor of Sciences degree
External appointments: Non-listed: Not applicable.
Listed: Non-executive Director of Aggreko plc, Veresen,
Inc. and ITT Corporation.
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54
CRH Annual Report I 2015
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Non-executive
Director
Appointed to the Board:
February 2012
Nationality: Irish
Age: 54
Committee membership:
Audit Committee;
Finance Committee
Skills and experience: Heather Ann is a former Managing Director
Ireland of Reckitt Benckiser and Boots Healthcare and was previously a
non-executive Director of Bank of Ireland plc and IDA Ireland.
Qualifications: BComm, MBS.
External appointments: Non-listed: Chairman of the Bank of Ireland
Pension Fund Trustees Board; Director of Ergonomics Solutions
International and the Institute of Directors. Listed: Non-executive Director
of Greencore Group plc and Jazz Pharmaceuticals plc.
Non-executive
Director
Appointed to the Board:
March 2015
Nationality: British
Age: 54
Committee membership:
Nomination & Corporate
Governance Committee;
Remuneration Committee
Skills and experience: Lucinda spent the majority of her career in
investment banking, including 21 years in UBS Investment Bank and
its predecessor firms where she worked until 2007. She held senior
management positions in the UK and the US, including Global Head and
Chairman of UBS’s Equity Capital Markets Group and Vice Chairman of
the Investment Banking Division.
Qualifications: Masters in Philosophy, Politics and Economics and a
Masters in Political Science.
External appointments: Non-listed: Non-executive Director of UK
Financial Investments Limited, which manages the UK government’s
investments in financial institutions, and the British Standards Institution.
Lucinda is also a non-executive member of the Partnership Board of King
& Wood Mallesons LLP and a trustee of Sue Ryder. Listed: Non-executive
Director of Diverse Income Trust plc and Graphite Enterprise Trust plc.
Non-executive
Director
Appointed to the Board:
February 2014
Nationality: Dutch
Age: 59
Committee membership:
Acquisitions Committee;
Audit Committee
Skills and experience: Henk has a background in distribution, wholesale
and logistics. Until 2010, he was Chief Executive Officer at Pon Holdings
B.V., a large, privately held international company which is focused on
the supply and distribution of passenger cars and trucks, and equipment
for the construction and marine sectors. He was also a member of the
Supervisory Board of the Royal Bank of Scotland N.V. and the retail group
Detailresult Groep.
Qualifications: Masters degree in Dutch Law; PMD Harvard Business
School (1989).
External appointments: Non-listed: Member of the Supervisory Boards
of Stork Technical Services Group and Blokker Holding B.V. and holder of
several non-profit board memberships. Listed: Not applicable.
Non-executive
Director
Appointed to the Board:
3 March 2016
Nationality: United States
Age: 64
Committee membership:
Not applicable
Skills and experience: Bill is the Vice Chairman at EMC Corporation, a
global leader in enabling businesses and service providers to transform
their operations and deliver IT as a service. In previous roles he was
responsible for EMC’s global sales and distribution organisation
(2006 - 2012) and served as Chief Financial Officer leading the company’s
worldwide finance operation (1996 - 2006). Prior to joining EMC he was a
partner in the audit and financial advisory services practice of Coopers &
Lybrand LLP.
Qualifications: MBA degree from Babson College, a Masters of Science
in Taxation from Bentley College and a Bachelors degree from Holy Cross.
External appointments: Non-listed: Director of Pivotal Software, Inc.
and College of the Holy Cross. Listed: Member of the Board of Directors
of Popular, Inc., a diversified financial services company, and Inovalon
Holdings, Inc., a healthcare technology company.
55
CRH Annual Report I 2015
Corporate Governance Report
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Chairman’s Introduction
In keeping with general reporting trends
in recent years to focus on key issues for
shareholders, the Corporate Governance
Report this year addresses matters relevant
to 2015 and includes separate updates from
the respective Committee Chairmen. Details
of CRH’s general governance practices,
which are largely unchanged from prior
years, are available on CRH’s website,
www.crh.com (the “Governance Appendix”)*.
Chairman
Governance
CRH implements the 2014 UK Corporate
Governance Code (the “2014 Code”) and
complied with its provisions in 2015. A copy
of the 2014 Code can be obtained from the
Financial Reporting Council’s website,
www.frc.org.uk.
The 2014 Code introduced a new
requirement to include provisions in incentive
plans that would enable a company to
recover sums paid or withhold the payment
of any sum. The Remuneration Committee
has included clawback and malus provisions
in the Annual Bonus Plan (see page 82 in
the Directors’ Remuneration Report). For
the 2014 Performance Share Plan, awards
are subject to malus during the three-
year performance period and during the
additional two-year holding period following
performance assessment. Given that malus
provisions apply for the combined five-year
vesting period from the date of award,
the Remuneration Committee considers
that an additional clawback provision
for Performance Share Plan awards is
not necessary and is satisfied that the
Company’s arrangements are appropriate
and balanced in the context of the intent
of the 2014 Code. This position will,
nevertheless, be kept under review.
We also have procedures in place for
compliance with our obligations under the
applicable rules and regulations issued by
the United States Securities and Exchange
Commission.
Board Renewal, Re-election and
Succession Planning
Details in relation to the approach taken by
the Nomination & Corporate Governance
Committee in respect of Board renewal and
succession planning in general are set out in
my report as Chairman of the Nomination &
Corporate Governance Committee
on page 62.
There have been a number of executive and
non-executive Director changes to the Board
during 2015 and to-date in 2016, details
of which are set out on page 111 of the
Directors’ Report.
Pat Kennedy, Rebecca McDonald and
Lucinda Riches were appointed as
non-executive Directors in 2015. In addition,
Bill Teuber will join the Board with effect
from 3 March 2016 as a non-executive
Director. I welcome each of these individuals
to the Board and look forward to working
with them. In order to facilitate their full and
active participation as Directors, I have put
in place a detailed induction programme for
each of them (a sample of CRH’s induction
programme is included in Section 1 of the
Governance Appendix).
In relation to each of the Directors putting
themselves forward for re-election at the
2016 Annual General Meeting, I have
conducted a formal evaluation of the
performance of each Director, which also
considered individual training needs where
appropriate. I can confirm that each of the
Directors continues to perform effectively
and to demonstrate strong commitment to
the role. Following a review carried out by
*
The Governance Appendix is published in conjunction with the Directors’ Report in compliance with Section 1373 of the Companies Act 2014. For the purposes of Section
1373 (2) of the Companies Act 2014, the Governance Appendix and the risk management disclosures on pages 16, 17 and 113 to 119 form part of, and are incorporated by
reference into, this Corporate Governance Report.
56
CRH Annual Report I 2015
the Nomination & Corporate Governance
Committee, the Board has determined that
each non-executive Director continues to
be independent. I strongly recommend
that each Director be re-elected. Their
biographies are set out on pages 52 to 55.
Board Training, Development
and Effectiveness
Don McGovern, Senior Independent Director,
and I organised a number of workshops
for the Board in 2015. The Board has a
very effective “working together dynamic”,
which is reflected in the outcome of the
external board evaluation referred to below.
Nevertheless, the current environment
presents constant challenges for boards
and it is important that we continually seek
to identify areas for potential beneficial
advancement. The workshops, which were
facilitated by an external expert, reviewed
the workings of the Board, the Board’s
role in strategy and executive and Board
succession.
In order to facilitate the continued
development of non-executive Directors
in terms of their knowledge of CRH’s
operations, in 2016 we will extend the
number of Board visits from two to three,
with the usual site visits in Europe and the
United States, which generally last between
three and five days, to be supplemented
by the addition of a week-long visit to Asia,
including CRH’s Asia Pacific Head Office in
Singapore and a site visit to the operations
acquired from Lafarge S.A. in the Philippines.
In 2015, the Board visits were to Berlin in
Germany and Utah in the United States. Also
in 2015, a group of non-executive Directors
visited CRH’s offices and Yatai’s operations
in China.
An external consultant, ICSA Board
Evaluation (“ICSA”), was engaged to
facilitate a formal external evaluation of the
effectiveness of the Board during 2015.
ICSA*, which also conducted the previous
external evaluation in 2012, has reported
its findings to the Board. Overall, similar
to the 2012 evaluation, the performance
of the Board was found to be “very good”
as rated on a six-point scale, ranging
from poor to excellent. Some relatively
minor recommendations arose from the
process which we will consider with a view
to implementing over the course of the
next year. These related to the interaction
between the Board and its Committees
as the work and responsibilities of the
Committees evolve, the arrangements for
feedback from non-executive Directors in
relation to the performance of executive
Directors and the establishment of additional
protocols for certain Board discussions.
Further details in relation to Board training
and development, and the processes by
which the Board evaluates its effectiveness
are included in the Governance Appendix.
Talent Management/Succession
Planning
In last year’s Annual Report, I reported
that the Board was working with the Chief
Executive and the Group Human Resources
and Talent Development Director to take
a fresh look at our talent management
and succession processes to ensure we
have a pipeline of executives at all levels to
match our needs. We are pleased with the
progress, both in terms of assessing the
Group’s existing management talent base
and the executives recruited as part of the
acquisition of assets from Lafarge S.A.
and Holcim Limited. Talent management/
succession planning will be a regular agenda
item for the Board during 2016.
Risk Management & Cyber
Security
The 2014 Code introduced a new
requirement for the Directors to explain in the
Annual Report how they have assessed the
prospects of the Group over an extended
period of time and to state whether they
have a reasonable expectation that it will be
able to continue in operation and meet its
liabilities as they fall due over the period of
their assessment. This “viability statement”
is included in the Directors’ Report on
page 110. The 2015 Annual Report also
contains additional disclosures regarding risk
management in CRH (see pages 16, 17 and
113 to 119).
Cyber security has been identified as a key
risk for the Board. In relation to the Group’s
readiness to deal with any cyber security
issues, the Group’s head office team has
been strengthened in recent years by the
addition of a number of specialist information
security professionals, and an information
security programme has been implemented
across the Group, including the United
States, Asia and Europe, to bring uniform
approaches and practices to security. The
programme has involved the engagement
of third party experts to advise on global
standards and frameworks and to ensure
that adequate capabilities and resourcing
are available. Responsibility for monitoring
progress in this area has been delegated
to the Audit Committee, while the Board
receives regular updates on the status of the
programme.
Committees of the Board
I am pleased to report that CRH’s Board
Committees continue to work very
effectively, enabling the Board increasingly
to concentrate on matters of strategic
importance.
*
ICSA is part of an organisation which provides software solutions to third parties, including CRH. The value of the contract is de minimus and otherwise ICSA has no business
connection with CRH.
57
CRH Annual Report I 2015 Corporate Governance Report | continued
Conclusion
Good corporate governance is important in
enabling the Board to meet the challenges,
and avail of the opportunities, which an
environment of continual change, both
internal and external to CRH, presents.
We, therefore, keep our governance
structures and arrangements under review
on an on-going basis and I am satisfied
that our processes remain at the forefront
of best practice, are aligned to the needs
of the business, help us manage risk and
provide assurance and accountability in
a transparent way for the benefit of our
shareholders and all stakeholders.
Nicky Hartery
Chairman
2 March 2016
The Audit Committee determined in 2015
that it would not be appropriate to carry
out a tender for the Group’s external audit
in 2016. However, the position will be kept
under review. Ernst & Young have been
CRH’s auditors since 1988 and under new
EU rules cannot hold the position after 2020.
The reasons for not carrying out a tender
in 2016, along with further details on the
work of the Audit Committee, are set out in
the report from Committee Chairman, Ernst
Bärtschi, on page 59.
The Remuneration Committee has, as
indicated in last year’s Annual Report,
carried out an extensive review of CRH’s
remuneration policies. The purpose of the
review was to ensure that the Group’s
remuneration structures were appropriate for
the needs of the business. The Committee
Chairman, Don McGovern, consulted with
shareholders on the proposals which are the
subject of a policy vote at the 2016 Annual
General Meeting. I believe these proposals
are measured and appropriate for CRH in the
coming years and I would recommend that
shareholders vote in favour of the changes
to the policy at the Annual General Meeting.
Further details are set out in the Directors’
Remuneration Report on page 74.
In 2015, the Board set up an ad-hoc
committee to support management in
relation to the integration of the LH Assets.
CRH plc has a secondary listing on the Irish Stock Exchange. For this reason, CRH plc is not subject to the same ongoing listing requirements as would apply to an Irish company
with a primary listing on the Irish Stock Exchange. For further information, shareholders should consult their own financial adviser. Further details on the Group’s listing
arrangements, including its premium listing on the London Stock Exchange, are set out on page 67.
58
CRH Annual Report I 2015 Audit Committee Report
i
h
c
s
t
r
ä
B
t
s
n
r
E
Chairman of Audit Committee
Audit Committee Financial Expert
(as determined by the Board)
Key areas - 2015
Issue
Description
Chairman’s Overview
On behalf of the Audit Committee, I am
pleased to introduce the Audit Committee
Report for the year ended 31 December
2015. The purpose of this report is to
provide shareholders with an insight into
the workings of the Committee in the last
12 months. In keeping with the changes
outlined in the Chairman’s introduction on
page 56, the format of the Audit Committee
Report has been amended this year to
focus more clearly on the principal matters
we have dealt with at the nine meetings we
held in the past 12 months. General details
in relation to the operation of the Committee
and the policies applied by it can be found in
the Governance Appendix.
Table 1 outlines the key areas that the
Committee focused on in 2015.
Audit Committee Effectiveness
and Priorities for 2016
During 2015, the effectiveness of the
Committee was reviewed by both the Board
as part of the external evaluation facilitated
by ICSA and by the Committee itself. No
issues of concern were identified.
The key areas of focus for the Committee
in 2016 will be on internal control, external
audit planning, IT governance, cyber security
and Enterprise Risk Management.
Ernst Bärtschi
Chairman of Audit Committee
2 March 2016
Table 1
Financial Reporting
and External Audit
In July 2015, we met with Ernst & Young to agree the 2015 external audit plan. Table 2 on page 60 outlines the key areas
identified as being potentially significant and how we addressed these during the year.
Impairment Testing
Through discussion with both management and Ernst & Young, we reviewed management’s impairment testing methodology
and processes. We found the methodology to be robust and the results of the testing process appropriate. Details of the
impairments recorded during the year, which amount to a total of €44 million, are set out in note 2 on page 152.
Acquisitions
During 2015, the Group acquired a number of significant assets and businesses. We considered various related aspects,
including, estimates and judgements regarding valuations, the recognition of intangible assets and the implementation of
CRH’s internal control structures.
Enterprise Risk
Management
We monitored progress in respect of the ongoing formalisation of Enterprise Risk Management, including development of a
Risk Appetite & Tolerance Framework and preparations for the “viability statement” disclosed in the Directors’ Report (further
details in relation to CRH’s risk governance are outlined on pages 16 and 17).
We also considered an assessment of the Group’s risk management and internal control systems. This had regard to all
material controls, including financial, operational and compliance controls that could affect the Group’s business.
Cyber Security
We monitored progress in refining the Group’s information security programme and cyber security capabilities.
External Auditors
Ernst & Young have been the Group’s auditors since 1988. During 2015, we considered whether to put the external audit
contract out to tender. Given the focus on the integration of the major acquisitions completed in 2015, the appointment of a
new Finance Director in January 2016 and the Committee’s continued satisfaction with the performance of Ernst & Young
(details of the Committee’s processes in reviewing the effectiveness of the external audit are set out on page 61), we
concluded that it would not be in the best interests of the Group to carry out a tender at this time. We will continue to keep
this under review in the context of EU rules mandating the rotation of external auditors which, for CRH, would require a
transition by the end of 2020.
As in prior years, the continuance in office of Ernst & Young will be subject to a non-binding advisory vote at the 2016 Annual
General Meeting.
Internal Audit
We considered the results of an independent external assessment of the Internal Audit function. The assessment included
interviews with key stakeholders across the Group (including the members of the Committee) and the examination of the
information provided to the Committee. The results, which were generally very positive, identified some areas where the
effectiveness of the function and its reporting to the Committee could be enhanced. A detailed action plan to address these
was agreed.
59
CRH Annual Report I 2015
Corporate Governance Report | continued
Areas identified for focus during the 2015 External Audit Planning Process
Area of Focus
Audit Committee Action
Table 2
Impairment of Goodwill
For the purposes of its annual impairment testing process, the Group assesses the recoverable amount
of each of CRH’s cash-generating units (CGUs – see details in note 14 to the Consolidated Financial
Statements) based on a value-in-use computation. The annual goodwill impairment testing was
conducted by management, and papers outlining the methodology and assumptions used in, and the
results of, that assessment were presented to the Audit Committee. Following its deliberations, the Audit
Committee was satisfied that the methodology used by management (which was consistent with prior
years) and the results of the assessment, together with the disclosures in note 14, were appropriate.
Similar to 2014, a separate assessment was carried out in 2015 in respect of any remaining business
units identified for divestment as part of the previously announced Group-wide portfolio review. The
valuation of each business unit (based on the estimated fair value less costs of disposal) was reassessed
in 2015 on a standalone CGU basis and compared with its carrying value. The Audit Committee reviewed
and considered the methodology used by management in the reassessment process and was satisfied
that it was appropriate.
During 2015, and as noted elsewhere in this report, the Group completed two significant acquisitions. As
the initial allocation of the goodwill to CGUs is not complete, CRH is required to assess whether
indicators of impairment exist in relation to goodwill attributable to these businesses. Papers outlining the
methodology used in, and the results of, that assessment were presented to the Audit Committee.
Following its deliberations, the Audit Committee was satisfied that the methodology used by management
and the results of the assessment were appropriate (see note 14 for further details).
Impairment of Property, Plant and
Equipment, and Financial Assets
In addition to the goodwill impairment testing process discussed above, the Group also annually
assesses the need for impairment of other non-current assets (property, plant and equipment and
financial assets) as and when indicators of impairment exist. The Audit Committee considered the
methodology used by management in that process and was satisfied that it was appropriate.
Contract Revenue Recognition
Accounting for Acquisitions and
Disposals
IAS 11 – Construction Contracts requires revenue and expenses to be recognised on uncompleted
contracts, with the underlying principle that, once the outcome of a long-term construction contract can
be reliably estimated, revenue and expenses associated with that contract should be recognised by
reference to the stage of completion of the contract activity at the balance sheet date. If it is anticipated
that the contract will be loss-making, the expected loss must be recognised immediately. Following
discussions with management and Ernst & Young, the Audit Committee was satisfied that contract
revenue recognition was not a material issue for the Group in 2015 as the majority of contracts were
completed within the financial year.
During 2015, the Group completed 22 acquisitions and investments at a total cost of approximately
€8 billion and realised total disposal proceeds of approximately €1 billion across 30 business disposals.
Following discussions with management and Ernst & Young, the Audit Committee was satisfied that the
accounting treatment applied to acquisitions and disposals during 2015 was appropriate.
LH Assets Acquisition – Fair Value
Accounting for Property, Plant and
Equipment and Provisions
Given the significant scale of the acquisition of the LH Assets, both in terms of monetary value and
geographical spread, the Audit Committee considered with management and Ernst & Young the
judgements and estimates used by management in the fair value accounting for property, plant and
equipment and in the recognition of provisions related to the acquisition and was satisfied that these were
appropriate.
C.R. Laurence Acquisition –
Identification and Valuation of
Acquired Intangible Assets
The Audit Committee considered with management and Ernst & Young the estimates and judgements
used by management in the identification and valuation of intangible assets related to the CRL acquisition
and determined that these were appropriate.
60
CRH Annual Report I 2015 Percentage of Audit
and Non-audit Fees
Table 3
2015
2014
2013
73%
27%
89%
11%
85%
15%
% 0 10 20 30 40 50 60 70 80 90 100
Audit services
Non-audit related services
Non-audit Fees
In 2015, the external auditors provided a
number of audit-related services, including
Sarbanes-Oxley section 404 attestation,
and non-audit services, including due
diligence services associated with proposed
acquisitions and disposals. Ernst & Young
were also engaged during 2015 in a number
of jurisdictions in which the Group operates
to provide help with local tax compliance,
advice on taxation laws and other related
matters; assignments which typically involve
relatively small fees. The Audit Committee
is satisfied that the external auditors’
knowledge of the Group was an important
factor in choosing them to provide these
services. The Committee is also satisfied
that the fees paid to Ernst & Young for
non-audit work in 2015, which amounted
to €7 million and represented 27% of the
total fees for the year, did not compromise
their independence or integrity. Details of the
amounts paid to the external auditors during
the year for audit and other services are set
out in note 3 to the Consolidated Financial
Statements on page 153 (see also table
3). Further details in relation to the Group’s
policy regarding non-audit fees are set out in
Section 2 of the Governance Appendix.
Audit Committee
Membership
The Audit Committee currently consists of
four non-executive Directors considered
by the Board to be independent. The
biographical details of each member are
set out on pages 53 to 55. Together the
members of the Committee bring a broad
range of experience and expertise from a
wide range of industries which is vital in
supporting effective governance.
External Audit
Effectiveness
The Committee, on behalf of the Board, is
responsible for the relationship with Ernst
& Young and for ensuring the effectiveness
and quality of the external audit process. The
Committee’s primary means of assessing
the effectiveness of the external audit
process is by monitoring performance
against the agreed audit plan. Each year
the Committee considers (i) the experience
and knowledge of the Ernst & Young audit
team; (ii) the results of post-audit interviews
with management and the Audit Committee
Chairman; (iii) the transparency reports
issued under the European Communities
(Statutory Audits) (Directive 2006/43/EC)
Regulations 2010 by Ernst & Young Ireland;
and (iv) where applicable, relevant reports
by regulatory bodies on the performance of
Ernst & Young. These annual procedures are
supplemented by periodic formal reviews
of the performance of Ernst & Young, the
most recent of which took place in late
2014. The 2014 review captured the views
of relevant stakeholders across the Group
and members of the Committee. The
results indicated a continued high level of
satisfaction with Ernst & Young and the
services provided by them to CRH. Further
details in relation to the external auditors,
including information on how auditor
objectivity and independence are maintained,
are included in the Governance Appendix.
61
CRH Annual Report I 2015
Nomination & Corporate Governance Committee
Senan Murphy joined the Group from Bank
of Ireland and his biography, along with those
of Rebecca McDonald and Bill Teuber are set
out on pages 52, 54 and 55 respectively.
With effect from January 2016, Maeve
Carton and Mark Towe have taken on new,
challenging and important roles as Group
Transformation Director and Chairman,
CRH Americas respectively. They remain as
executive Directors.
The services of Board Works and KornFerry
were used for the recruitment of Rebecca
McDonald and Bill Teuber. Other than the
provision of recruitment services, neither
agency has any connections with CRH.
Following the Annual General Meeting to
be held on 28 April 2016, Bill Egan and
Utz-Hellmuth Felcht will retire as Directors
following nine years’ service on the Board.
Diversity
I am pleased to report that women will
represent 31% of CRH’s Board following the
2016 Annual General Meeting. As previously
reported, the Board had set itself the goal of
increasing the number of female Directors to
circa 25% of the Board by the end of 2015.
The Nomination & Corporate Governance
Committee will continue to retain gender
diversity as a key factor to consider in all
Board appointments for the foreseeable
future.
Chairman’s Overview
Board Renewal
The Nomination & Corporate Governance
Committee regularly reviews the Board’s skill
mix, experience and tenure in order that the
renewal process is orderly and planned. A
skills matrix has been developed to aid this
process and is used by the Committee to
identify candidates for the role of
non-executive Director.
During 2015, the members of the
Committee along with other Board members
participated in a workshop which in part
considered the issue of Board renewal and
succession planning. The purpose of the
session was to consider the challenges of
succession generally and whether CRH’s
processes could be strengthened. The
output from the workshop will be taken into
consideration during the course of 2016.
During 2015, and to-date in 2016, the
Committee identified and recommended to
the Board that the following individuals be
appointed:
• Rebecca McDonald (non-executive
Director), appointed to the Board with
effect from 1 September 2015;
• Senan Murphy (executive Director),
appointed to the Board and as Finance
Director with effect from 4 January 2016;
and
• Bill Teuber (non-executive Director), to be
appointed to the Board with effect from 3
March 2016.
The search criteria for the non-executive
Director appointments included
candidates with a Chief Executive or senior
management background, experience
in CRH’s industry in an executive or
non-executive capacity, financial expertise
and experience in emerging markets.
Chairman of Nomination &
Corporate Governance Committee
y
r
e
t
r
a
H
y
k
c
N
i
62
CRH Annual Report I 2015
Membership of Board Committees - Post 2016 AGM(i)
Table 4
Acquisitions
Audit
Finance
Nomination
Remuneration
Ernst Bärtschi
Maeve Carton
Nicky Hartery
Pat Kennedy
Albert Manifold
Senan Murphy
Rebecca
McDonald
Don McGovern
Heather Ann
McSharry
Henk
Rottinghuis
Lucinda Riches
Bill Teuber
-
M
CH
-
M
M
M
-
-
M
-
-
(i) M = Member: CH = Chairman
CH
-
-
-
-
-
-
-
M
M
-
M
M
M
CH
-
-
M
M
-
-
-
-
M
-
-
CH
M
-
-
-
M
-
-
M
-
-
-
-
M
-
-
-
CH
M
-
M
-
Board Committees
In accordance with the Terms of Reference
of the Remuneration Committee, I will
cease to be a member of that Committee
following the 2016 Annual General Meeting.
Following our recommendation to the Board
regarding other changes, the membership of
the Committees following the 2016 Annual
General Meeting will be as set out in table 4.
Corporate Governance
During the course of the year the Committee
agreed the terms of reference for the external
Board evaluation conducted by ICSA
Board Evaluation, made recommendations
to the Board to maximise the usage of its
Committees for the benefit of the Board’s
efficiency and effectiveness, and considered
various developments in the area of
Corporate Governance.
The Committee also reviewed the voting
outcome at the 2015 Annual General
Meeting and concluded that there was
no issue or pattern in voting which was
unexplained or warranted discussion with
individual shareholders.
Nicky Hartery
Chairman of Nomination & Corporate
Governance Committee
2 March 2016
63
CRH Annual Report I 2015 Corporate Governance Report | continued
Nomination & Corporate
Governance Committee
Membership
The Nomination & Corporate Governance
Committee consists of four non-executive
Directors, considered by the Board to be
independent. The biographical details of
each member are set out on pages 52 to
55. The Chief Executive normally attends
meetings of the Committee.
Policy on Diversity
We are committed to ensuring that the
Board is sufficiently diverse and appropriately
balanced. In its work in the area of Board
renewal, the Nomination & Corporate
Governance Committee looks at the
following four criteria when considering
non-executive Director candidates:
•
international business experience,
particularly in the regions in which the
Group operates or into which it intends
to expand;
• skills, knowledge and expertise in areas
relevant to the operation of the Board;
• diversity, including nationality and gender;
and
•
the need for an appropriately sized
Board.
During the ongoing process of Board
renewal, each, or a combination, of these
factors can take priority.
Board of Directors
Membership Structure of the
Board
We consider the current size and
composition of the Board to be within a
range which is appropriate. The spread
of nationalities of the Directors reflects the
geographical reach of the Group and we
consider that the Board as a whole has the
appropriate blend of skills, knowledge and
experience, from a wide range of industries,
regions and backgrounds, necessary to lead
the Group. Section 1 of the Governance
Appendix contains further details on the
Board’s structures. None of the executive
Directors is a non-executive Director of
another listed company.
Membership of the CRH Board
Table 5
Independence (determined
by CRH Board annually)
Tenure of non-executive
Directors (excluding Chairman)
29%
Independent
71%
Non-independent
Years on CRH Board:
22%
22%
56%
33%
45%
22%
0-3 years
3-6 years
6-9 years
Gender Diversity
Geographical Spread (by residency)
29%(i)
Female
Male
71%
(i)
Will increase to 31% following 2016 Annual General Meeting
29%
35%
7%
29%
Ireland
Mainland Europe
UK
US
64
CRH Annual Report I 2015 Role and Responsibilities of the
Board
The Board is responsible for the leadership,
oversight, control, development and
long-term success of the Group. It is also
responsible for instilling the appropriate
culture, values and behaviour throughout
the organisation. There is a formal schedule
of matters reserved to the Board for
consideration and decision. This includes the
matters set out in table 6.
The Group’s strategy, which is regularly
reviewed by the Board, and its business
model are summarised on pages 8 to 11.
The Board has delegated some of its
responsibilities to Committees of the
Board. While responsibility for monitoring
the effectiveness of the Group’s risk
management and internal control systems
has been delegated to the Audit Committee*,
the Board retains ultimate responsibility for
determining the Group’s risk appetite and
tolerance and annually considers a report
in relation to the monitoring, controlling and
reporting of identified risks and uncertainties.
In addition, the Board receives regular
reports from the Chairman of the Audit
Committee in relation to the work of that
Committee in the area of risk management.
As required by the 2014 Code, the “viability
statement”, which explains how the Directors
have assessed the prospects of the Group
over the five-year period to 31 December
2020, is included in the Directors’ Report on
page 110.
Individual Directors may seek independent
professional advice, at the expense of the
Company, in the furtherance of their duties
as a Director.
Matters Reserved
to the Board
Table 6
Appointment of Directors
Strategic plans for the Group
Annual budget
Major acquisitions and disposals
Significant capital expenditure
Approval of the Annual Report
Approval of the Interim Results
The Group has a Directors’ and Officers’
Liability insurance policy in place.
Chairman
Nicky Hartery was appointed Chairman of
the Group in 2012. On his appointment as
Chairman, he met the independence criteria
set out in the UK Corporate Governance
Code. Although he holds a number of other
directorships, including a Canadian listed
company (see details on page 52), the Board
has satisfied itself that these do not impact
on his role as CRH Chairman.
Committees
The Board has established five permanent
Committees to assist in the execution
of its responsibilities. The current
permanent Committees of the Board are
the Acquisitions Committee, the Audit
Committee, the Finance Committee, the
Nomination & Corporate Governance
Committee and the Remuneration
Committee.
In addition, 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 Chairman of each Committee reports to
the Board on its deliberations and minutes
of all Committee meetings are circulated to
all Directors. Chairmen of the Committees
attend the Annual General Meeting and
are available to answer questions from
shareholders.
The Audit, Nomination & Corporate
Governance and Remuneration Committees
reviewed their respective Terms of Reference
in December 2015 and determined that no
changes were required.
In December 2015, the Terms of Reference
of the Acquisitions Committee were updated
to increase the limits under which the
Committee can consider acquisition and
capital expenditure proposals. In addition,
the quorum for Committee meetings
was changed from two to three. Also, in
December 2015, the Terms of Reference
of the Finance Committee were updated
to enable it to consider and, if deemed
appropriate, to approve the acceptance
by the Company of any bank facility, or
the issuance of any related guarantee or
indemnity up to a maximum limit and to
consider and, if deemed appropriate, to
approve the affixing of the Company’s
common seal to documents.
The Terms of Reference of each Committee
are available on the CRH website,
www.crh.com.
*
In accordance with Section 167(7) of the Companies Act 2014
65
CRH Annual Report I 2015 Corporate Governance Report | continued
Attendance at meetings during the year ended 31 December 2015
Board
Total Attended
E.J. Bärtschi
M. Carton
W.P. Egan
U-H. Felcht
N. Hartery
J.W. Kennedy(i)
P.J. Kennedy(ii)
R. McDonald(iv)
D.A. McGovern, Jr.
H.A. McSharry
A. Manifold
D.N. O’Connor(i)
L.J. Riches(iii)
H.Th. Rottinghuis
M.S. Towe
(i) Retired May 2015
8
8
8
8
8
2
8
3
8
8
8
2
7
8
8
7
8
8
8
8
2
8
3
8
8
8
2
6
7
8
Acquisitions
Audit
Finance
Nomination
Total Attended Total Attended Total Attended Total
9
-
-
-
-
-
7
-
-
9
-
-
-
8
-
-
-
6
-
6
-
-
-
6
-
-
1
5
-
-
-
5
-
5
5
1
4
2
-
-
5
-
-
4
-
-
5
-
5
5
1
4
2
-
-
5
-
-
4
-
4
4
-
3
4
-
-
3
-
4
-
-
-
-
-
4
4
-
4
4
-
-
3
-
4
-
-
-
-
-
9
-
-
-
-
-
8
-
-
9
-
-
-
9
-
Attended
-
-
6
-
6
-
-
-
6
-
-
1
5
-
-
Table 7
Remuneration
Total Attended
-
-
10
-
10
-
-
-
10
-
-
2
9
-
-
-
-
10
-
10
-
-
-
10
-
-
2
8
-
-
(ii) Appointed to Board January 2015
(iii) Appointed to Board March 2015
(iv) Appointed to Board September 2015
All Directors attended the 2015 Annual General Meeting.
Substantial Holdings
Table 8
As at 31 December 2015, the Company had received notification of the following interests in its Ordinary share capital, which were equal to, or in excess
of, 3%:
Name
31 December 2015
31 December 2014
31 December 2013
Holding/
Voting Rights
%
at year end
Holding/
Voting Rights
%
at year end
Holding/
Voting Rights
%
at year end
Baillie Gifford Overseas Limited
and Baillie Gifford & Co.
BlackRock, Inc.(i)
Harbor International Fund
41,193,797
74,030,167
21,853,816
5.00
8.99
2.65
-
40,681,647
21,999,275
Templeton Global Advisors Limited
-
-
21,503,171
UBS AG
26,380,604
3.20
26,380,604
-
5.49
2.96
2.90
3.56
-
43,857,751
21,999,275
21,503,171
26,380,604
-
5.98
3.00
2.93
3.59
(i) BlackRock, Inc. has advised that its interests in CRH shares arise by reason of discretionary investment management arrangements entered into by it or its subsidiaries.
66
CRH Annual Report I 2015 Substantial Holdings
The Company is not owned or controlled
directly or indirectly by any government or
by any corporation or by any other natural
or legal person severally or jointly. The major
shareholders do not have any special voting
rights. Details of the substantial holdings as
at 31 December 2015 are provided in table
8. Between 31 December 2015 and 2 March
2016, the Company has been advised
that BlackRock, Inc. reduced its holding to
73,838,812 shares (8.97%).
Stock Exchange Listings and
Corporate Governance codes
CRH, which is incorporated in Ireland
and subject to Irish Company Law, has
a premium listing on the London Stock
Exchange, a secondary listing on the Irish
Stock Exchange and its American Depositary
Shares are listed on the New York Stock
Exchange.
Regulatory, Compliance & Ethics
The Group Regulatory, Compliance & Ethics
(“RCE”) programme continues to develop in
scope and reach. The structure of the RCE
organisation was strengthened in 2015 with
the following appointments:
• Group Regulatory and Compliance
Director
• Europe/Asia General Counsel
• Senior Competition Counsel at Group
level
• Group Compliance Manager
In addition, in line with the Group’s efforts
to continually review and improve its RCE
programmes, the Group commissioned
an external quality assessment review
to be completed in Q4 2015 - final
reporting expected during Q1 2016 with
recommendations expected to be actioned
during 2016.
Following updates to the CRH Code of
Business Conduct (COBC) approved by the
Board in February 2014, the RCE team’s
primary focus since then has been to ensure
all relevant employees receive appropriate
training. In the current training cycle, circa
28,000 employees participated in COBC
training and over a mix of two and three
year training cycles, a further 14,000 have
also undertaken advanced instruction on
competition law and anti-bribery, corruption
and fraud. During 2015, COBC training,
which had already been online in the US,
was also rolled out across Europe. In
addition, in Europe the roll out of a new fraud
awareness online training tool commenced
in 2015.
In addition, our development teams and
procurement teams continue to receive
appropriate instruction on both our RCE
Mergers, Acquisitions and Joint Venture
Due Diligence Programme and our Ethical
Procurement Code. CRH continues to
implement our Supplier Code of Conduct
so that our Corporate Social Responsibility
requirements are understood by existing
and new suppliers. Similar procedures
are being developed and implemented for
engagements with business partners.
An updated version of the Anti-Fraud Policy
will be finalised early in 2016. In addition,
guidance underlying the following is under
review:
• The Competition/Antitrust Compliance
Code
• Speaking Up
• Gifts, Hospitality and Donations
The COBC has scored an “A” rating by New
York Stock Exchange Governance Services
and incorporates some welcome new
features, including learning aids, an ethical
decision making guide and a clear focus
on the core values of the Group: Honesty,
Integrity and Respect for the law. It was
translated and distributed during 2014.
A robust communications plan is in place
to complement the training programme. A
multi-lingual “Hotline” facility called “Speak
Up” is also available to employees to report
issues that concern them, for example
an issue concerning business ethics. All
Hotline reports (or reports outside of the
Hotline process) received are fully reviewed
and investigated by appropriately qualified
personnel.
The RCE programme has been integrated
into our standard Internal Audit procedures
and forms part of an annual management
certification process (this process was
changed to an online process during 2015).
Its effectiveness is also regularly reviewed by
the RCE function with appropriate oversight
from senior management and the Audit
Committee. The collective goal is to ensure
the message is clearly understood that at
CRH “there is never a good business reason
to do the wrong thing”.
Communications with
Shareholders
Communications with shareholders are
given high priority and the Group devotes
considerable time and resources each year
to shareholder engagement. We recognise
the importance of effective dialogue as
an integral element of good corporate
governance. The Investor Relations team,
together with the Chief Executive, Finance
Director and other senior executives, meet
67
CRH Annual Report I 2015 Corporate Governance Report | continued
regularly with institutional shareholders (each
year covering over 50% of the shareholder
base). Detailed reports on the issues
covered in those meetings and the views of
shareholders are circulated to the Board after
each group of meetings. Table 9 provides
a brief outline of the nature of the activities
undertaken by our Investor Relations team.
During 2015, the Chairman, Senior
Independent Director and Company
Secretary participated in a number of
conference calls with some of the Group’s
major shareholders in advance of the 2015
Annual General Meeting. The meetings were
organised to provide those shareholders with
an opportunity to discuss the resolutions on
the 2015 Annual General Meeting agenda
and corporate governance matters generally.
In addition to the above, major acquisitions
are notified to the Stock Exchanges in
accordance with the requirements of the
Listing Rules and development updates,
giving details of other acquisitions
completed and major capital expenditure
projects, are issued periodically (typically in
January and July each year).
In addition, we respond throughout the year
to correspondence from shareholders on a
wide range of issues.
The Chief Executive made a presentation
to shareholders at the 2015 Annual General
Meeting on CRH’s businesses.
Investor Relations Activities
Table 9
Formal Announcements, including the release of the annual and interim results and the issuance of
trading statements. These announcements are typically accompanied by presentations and
webcasts or conference calls.
Investor Roadshows, typically held following the release of formal announcements, provide an
opportunity for the management team to meet existing and/or potential investors in a concentrated
set of meetings.
Industry Conferences: Attendance at key sector and investor conferences affords members of the
senior management team the opportunity to engage with key investors and analysts.
Investor Briefings: In addition to regular contact with investors and analysts during the year, the
Company periodically holds capital market days, which include presentations on various aspects of
CRH’s operations and strategy and provide an opportunity for investors and analysts to meet with
CRH’s wider management team.
Media Briefings: Each year, the Company provides media briefings on numerous issues.
The following are available on the CRH website,
www.crh.com
Table 10
Corporate Governance section:
• Governance Appendix
• Terms of Reference of Acquisitions Committee (amended December 2015)
• Terms of Reference of Audit Committee (amended December 2013)
• Terms of Reference of Finance Committee (amended December 2015)
• Terms of Reference of Nomination & Corporate Governance Committee (amended December
2013)
• Terms of Reference of Remuneration Committee (amended December 2013)
• The Memorandum and Articles of Association of the Company
• Pre-approval policy for non-audit services provided by the auditors
• Compliance & Ethics statement, Code of Business Conduct and Hotline contact numbers
Investors section:
• Annual & Interim Reports, the Annual Report on Form 20-F, the Sustainability Report, Trading
Statements and copies of presentations to analysts and investors
• News releases
• Webcast recordings of key investor briefings
• General Meeting dates, notices, shareholder circulars, presentations and poll results
• Answers to Frequently Asked Questions, including questions regarding dividends and
shareholder rights in respect of general meetings
68
.
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CRH Annual Report I 2015
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69
69
CRH Annual Report I 2015
Directors’ Remuneration Report
Chairman of Remuneration Committee
.
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70
Introduction
companies (excluding financial services
companies).
In last year’s Remuneration Report we
communicated that the Committee would
review the Group’s remuneration policy and
structures during the course of 2015. The
context for the review was the transformation
of CRH with the impending acquisition of
assets from Lafarge S.A. and Holcim Limited
(LH Assets). Subsequently, the Group also
acquired CRL. These developments have
seen CRH become the number two player
globally in the building materials sector.
The Committee, therefore, felt it was vital
to the success of CRH to ensure that our
remuneration incentives are appropriate
for the evolving needs of the Group, are
competitive, support the delivery of our
strategy and are aligned with shareholders’
interests.
When Albert Manifold was appointed Chief
Executive in January 2014, the Committee
set his remuneration package at a level
which it believed should be increased as he
grew into the position. In the period since his
appointment, the Committee and the Board
believes that he has performed exceptionally
well in a role that has become increasingly
more complex.
Remuneration Review
During the year, the Committee carried
out an in-depth review and concluded that
CRH’s remuneration structures were not
sufficiently incentivising for management and,
in particular, for the Chief Executive. Given
the importance of the on-going strategic
transformation of the Company, we felt that
it was important for CRH to submit a revised
remuneration policy to shareholders at the
2016 Annual General Meeting (the “2016
Policy”), rather than waiting for the current
policy to expire in April 2017.
The Committee developed its proposals
based on what we believe are fair and
appropriate remuneration arrangements for
the Company. In doing so, we considered
a number of market data reference points.
In particular, the Committee considered
its proposals in the context of FTSE50
Shareholder Consultation
On behalf of the Committee, I met with a
number of our major shareholders to outline
the background to the review and to consult
on our proposals. These meetings covered
just under 50% of the Company’s issued
share capital. The feedback received on
our proposed changes illustrated a broad
range of perspectives on remuneration.
The Committee considered the comments
and views that were expressed and made
changes to the proposals to take into
account the viewpoints expressed. In doing
so, we were conscious that it was not
possible to address every point. However,
we believe that the final proposals are fair,
balanced and deal with the key issues
communicated to us by shareholders. I
would like to take the opportunity to thank
those shareholders for their input into the
review.
Proposed Policy Changes
Opportunity under CRH’s
Incentive Plans
The proposed policy increases the maximum
opportunity under CRH’s incentive plans as
set out in table 1.
The increases in the opportunity under
the annual bonus plan and the 2014
Performance Share Plan (the “2014 Plan”)
will only apply to the Chief Executive in 2016.
Going forward, the Committee will consider
whether it is appropriate to increase the
opportunity for the other executive Directors.
However, any such increase would be within
the limits set by the 2016 Policy and would
be set at an appropriate level for their role.
Shareholding Guidelines
In line with the increased opportunity
under the Performance Share Plan, the
shareholding guideline will be increased for
the Chief Executive from one times salary to
two-and-a-half times salary, to be achieved
by 2020.
CRH Annual Report I 2015
Performance Measures for
Annual Bonus and
Performance Share Plans
The existing metrics for the annual bonus
plan (EPS, Return on Net Assets (“RONA”),
Cash Flow and Personal/Strategic) will
remain unchanged for 2016.
CRH’s current focus is on restoring our debt
metrics to normalised levels, successfully
integrating our newly acquired businesses
and maximising long-term shareholder
value. The Committee, therefore, believes
that the current Performance Share Plan
performance measures remain appropriate
as they reflect our focus on cash generation
and shareholder value creation. We propose,
however, to re-weight these measures to
reflect their equal significance as set out in
table 2.
We are also proposing to introduce a
second comparator benchmark for relative
TSR. Under the proposals, 50% of the TSR
element will continue to be measured against
a tailored peer group, which will comprise
14 companies in 2016, and 50% will now
be measured against the FTSE All-World
Construction & Materials Index (as at the
start of the relevant performance period). The
revised structure is summarised in table 3,
which also sets out the performance target
for each element. The list of tailored peer
companies for awards in 2016 is set out in
table 8 on page 75.
For 2016 awards, performance will be
assessed over the three-year period to 31
December 2018. For TSR performance,
vesting between the threshold and maximum
levels is calculated on a straight-line basis.
For the cash flow measure, vesting is
calculated on a straight-line basis between
25% and 80% for cash flow of between
€2.8 billion and €3.25 billion and between
80% and 100% for an outturn between
€3.25 billion and €3.7 billion.
The Committee will monitor, and, if required,
will make appropriate adjustments to cash
flow to reflect unusual items such as a
significant underspend or delay in budgeted
capital expenditure, both ordinary and
extraordinary.
Revised Maximum Opportunity
under CRH’s Incentive Plans
Bonus opportunity
Current
150% of salary
Performance Share Plan opportunity
250% of salary
Table 1
Revised
225% of salary
365% of salary
Performance Measures Performance Share Plans
Table 2
Relative TSR
Cash flow
Current Weighting
Revised Weighting
75%
25%
50%
50%
2014 Performance Share Plan - Revised Structure
Table 3
Weighting
Threshold
(25% vesting)
TSR(i) vs. Peers
TSR vs. Index
Cash flow
25%
25%
50%
Median
Index
€2.8bn
Maximum
(100% vesting)
Upper quartile
Index +5% p.a.
€3.7bn
(i)
The methodology for calculating TSR assumes all dividends are reinvested on the ex-dividend date at the
closing share price on that day; the open and close price is based on the three-month average closing price
on the last day before the start of the performance period and the final day of the performance period
respectively.
During the consultation process, some
shareholders expressed a preference for
the introduction of RONA as a long-term
incentive metric. Given the importance to our
business of this measure, which has been
an integral part of our short-term incentive
plans for senior executives for many years,
the Committee thoroughly explored the
possibility of introducing a RONA element
for PSP awards to be made in 2016.
However, we concluded that setting a robust
performance range at this point in time, with
a threshold and maximum long-term RONA
that appropriately capture the performance
of the recently acquired LH Assets, is very
difficult. As CRH purchased these assets
primarily on 31 July 2015 (the Philippine
assets were purchased in September 2015),
a full year of ownership of these assets and
a final plan for capital expenditure, which is
currently being completed, is required.
Nevertheless, given the importance of
a returns-based measure to CRH and
a number of our shareholders, we are
proposing to introduce RONA as an
underpin to the TSR element of the 2014
Plan (including both the tailored peer group
and FTSE index measures). At the end of
the three-year vesting period, the Committee
will consider the RONA performance of the
business, including that of the LH Assets.
The PSP outcome for the TSR element
may be adjusted (downwards only) if RONA
performance has not met the expectations
of the Board and the Committee. In addition,
the Committee intends to introduce a
specific RONA measurement when robust
targets can be set.
The updated metrics for the 2014 Plan
will apply to all awards made to executive
Directors in 2016.
71
CRH Annual Report I 2015 Directors’ Remuneration Report | continued
Other Changes in 2016
Management changes
Senan Murphy was appointed as Finance
Director on 4 January 2016. His salary
was set at €625,000 and he will receive a
supplementary taxable non-pensionable cash
supplement equivalent to 25% of his annual
base salary in lieu of a pension contribution.
For 2016 his annual bonus opportunity
is 150% of salary, and his PSP award
opportunity will be 200% of salary.
Following Senan Murphy’s appointment,
Maeve Carton has changed role to Group
Transformation Director. There were no
changes to Maeve Carton’s remuneration as a
result of her appointment to this new role.
Salaries
The salaries which will apply in respect of
2016 are set out in table 4.
The salary increases for Maeve Carton
and Mark Towe are in line with increases
for employees generally in their respective
regions.
As stated above, when Albert Manifold
was appointed Chief Executive in January
2014, the Committee set his remuneration
package at a level which it believed should
be increased over time to reflect his
development in the role. In the period since
his appointment, the Committee believes that
he has performed exceptionally well in a role
that has become significantly more complex.
At the revised level, his 2016 salary remains
below the salary paid to the Chief Executive in
2008 (see table 11 on page 75).
Non-executive Directors
Given the evolving nature of the Group and
its increased complexity, the Board felt that
it was appropriate to consider the fees paid
to non-executive Directors. The resulting
proposed changes were included in the
consultation process referred to above. The
main purpose was to align fees more closely
with the market generally and to reflect the
need to recruit high quality non-executives in
different markets (Ireland, the US, Europe and
Asia), in light of CRH’s growth and increasingly
72
international scope since fees were last
increased in 2008. The changes in table 5
have been implemented with effect from
January 2016.
The extension of the travel fee to Irish-based
non-executive Directors reflects the increase
in time commitment to travel to CRH sites
across the globe. In 2016, Board visits,
incorporating Board meetings, will be held in
Asia, Europe and North America.
Remuneration in 2015
During 2015, CRH made significant
progress with strong delivery from continuing
operations and the newly acquired
businesses:
EPS
Operating Cash flow
RONA
Net Debt
Divestment proceeds
+13%(i)
+47%
+20bps
€6.6bn
€1.0bn
(i)
EPS was 13% ahead despite the Group issuing
an additional 74 million shares following the
equity placing in February 2015.
This has translated into annual bonus payouts
of between 145% and 150% of salary. All
of the financial targets (EPS, RONA and
cash flow), which applied to each executive
Director, were met resulting in a maximum
payout. Further details, including the
Committee’s assessment of the outcome in
terms of personal and strategic goals, are set
out on page 76.
In relation to long-term incentive awards, there
will be a 77.84% vesting in respect of the
award made in 2013 under the 2006 PSP.
This award was subject to a three-year TSR
performance test (2013 – 2015 inclusive).
Details of CRH’s performance against the TSR
targets are set out on page 81.
There will also be partial vesting of the award
made in 2013 under the 2010 Share Option
Scheme (the “2010 Scheme”). Adjusted
EPS for this award grew by 12.6% p.a. over
three years, resulting in a vesting of 37.2%
of maximum. This excludes the impact (both
costs and benefits) of the acquisition of the
LH Assets, which was completed in the final
few months of the performance period, and
ensures that EPS performance is measured
on a like-for-like basis.
Salaries
Albert Manifold
Maeve Carton
Senan Murphy
Mark Towe
(i) Effective from January 2016
2016(i)
€1,400,000
€688,500
€625,000
US$1,448,400
Table 4
2015
€1,290,000
€675,000
Not applicable
US$1,420,000
Non-executive Directors’ Fees
Table 5
Chairman
Basic non-executive Director fee
Committee fee
Committee Chair fee
Travel fee extended to Irish non-executive Directors(i)
2016
2015
€575,000
€450,000
€78,000
€27,000
€39,000
€15,000
€68,000
€22,000
€34,000
€0
(i)
European based (non-Irish) non-executive Directors receive a travel fee of €15,000 and non-European based
non-executive Directors receive a travel fee of €30,000.
CRH Annual Report I 2015 Conclusion
The Committee believes that the proposed
changes to the Group’s remuneration policy
outlined above:
• maintain the best practice elements of
the 2014 Remuneration Policy (the “2014
Policy”) (including bonus deferral, the
simplicity of a single long-term incentive
plan, two-year holding period (after a
three-year vesting period) for vested
PSP awards, malus/clawback and
shareholding guidelines);
• are better aligned to the Group’s strategic
priorities; and
• are vital to the delivery of CRH’s strategy
and delivery of value to our shareholders
by the Chief Executive and his team in
the coming years.
The increase in potential awards for variable
pay under the annual and long-term
incentive plans will require amendments
to the 2014 Policy, which will need to be
approved by shareholders before they can
take effect.
The 2016 Policy has been included on the
agenda for the 2016 Annual General Meeting
to be held on 28 April 2016. The proposed
2016 Policy is set out in full in the Policy
section of this Report on pages 95 to 106.
On behalf of the Remuneration Committee,
I would strongly recommend that
shareholders vote in favour of the 2016
Policy and the 2015 Directors’ Remuneration
Report.
Donald A. McGovern, Jr.
Chairman of Remuneration Committee
2 March 2016
The design for this park in Ciechocinek, Poland
was completed by students who won Polbruk’s
“Direction: Ciechocinek” competition. 4,200m2 of
Urbanika and Carmino pavers were used to bring
this design to life.
73
CRH Annual Report I 2015 Principal proposed changes to the 2014 Directors’ Remuneration Policy
Table 6
Framework 2014-2015
Framework for 2016 Policy
Comments
Annual Bonus
• 80% of award based on financial
performance (profit, EPS growth,
cash flow, RONA)
• 20% based on individual personal
and strategic goals
• 50% of maximum bonus awarded
for delivering target performance
• No changes proposed
• No changes proposed
• Maximum annual award of 150%
of salary for all executive Directors
• Maximum annual award of up
to 225% of salary
• The Committee considered that the metrics for the
annual bonus plan remain appropriate, robust and
challenging
• Table 7 on the right summarises the bonuses paid
between 2009 and 2015
• The revised maximum award will apply to the Chief
Executive only in 2016; the maximum award for
other executives in 2016 will be 150%
• The Committee will review the annual bonus
opportunity for other executive Directors in due
course. However, any increase will be within the
maximum in the 2016 Policy and will be set at an
appropriate level for the role of the individual
• 25% of bonus awards for all
• No changes proposed
• Best practice provision
• No changes proposed
• Best practice provision
executive Directors deferred for
three years
• Malus provisions apply for deferred
share awards to provide the ability
to scale back awards prior to
vesting in the event of material
misstatement, serious reputational
damage or the Group suffering
serious losses
• Clawback provisions apply to the
cash portion of the annual bonus
Performance
Share Plan
Vesting based:
Vesting based:
• 75% on TSR performance against
• 50% TSR:
sector peers
• 25% on cumulative cash flow
target
–
–
25% against selected
sector peers (see table 8)
25% against FTSE
All-World Construction &
Materials Index
• 50% on cumulative cash flow
target
The TSR element will be subject
to a RONA underpin.
•
Inclusion of the FTSE All-World Construction &
Materials Index ensures the TSR test reflects CRH’s
geographic spread
• Cash flow targets will be adjusted, if required, to
reflect unusual items such as a significant
underspend, or a delay, in budgeted capital
expenditure, both ordinary and extraordinary
• 3-year performance period
• No changes proposed
• Best practice provision
• Vested awards required to be held
for a further 2 years post vesting
• Annual award size of:
• Maximum award amount of
– Chief Executive: 250% of salary
up to 365% of salary
• No provisions for exceptional
• The revised maximum award will apply to the Chief
Executive only in 2016; the maximum award for
other executives in 2016 will be 200%
– Other executive Directors:
200% of salary
• Awards in exceptional
circumstances limited to 350% of
base salary
circumstances
• Changes to award levels for other executive
Directors may be made in due course. However, any
adjustments will be within the maximum in the 2016
Policy and will be set at an appropriate level for the
role of the individual
• Malus provisions for unvested
• No changes proposed
• Best practice provision
share awards (see above annual
bonus section for circumstances in
which it may operate)
• 1.0x salary
• Chief Executive: 2.5x salary
• The increased shareholding guideline for the Chief
• Other executive Directors:
1.0x salary
Executive must be achieved by 2020
Shareholding
Guidelines
74
CRH Annual Report I 2015 Annual Bonus Levels as a Percentage of Salary 2009 - 2015
Table 7
150%
120%
90%
60%
30%
0%
Albert Manifold
Maeve Carton(i)
Mark Towe
2009
2010
2011
2012
2013
2014
2015
Bonus payments in period 2009 to 2015 ranged from 25% - 150%
(i) Appointed in May 2010
2014 Performance Share Plan
Tailored Peer Group for TSR Performance Metric (2016 Awards)
ACS
Boral
Braas Monier
LafargeHolcim
Skanska
Vinci
Cemex
Rockwool
Titan Cement
Wienerberger
Buzzi Unicem
Heidelberg Cement
Saint Gobain
Vicat
Vesting Schedule (2016 Awards)
Table 8
Table 9
TSR vs. tailored peer group
(25% of award)
TSR vs. FTSE All-World Cons & Materials
(25% of award)
100%
)
t
n
e
m
e
e
l
100%
)
t
n
e
m
e
e
l
Cumulative cash flow 2016-2018
(50% of award)
100%
80%
)
t
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m
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e
l
f
o
%
(
f
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%
(
f
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(
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25%
0%
g
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i
t
s
e
V
25%
0%
g
n
i
t
s
e
V
25%
0%
Median
Upper quartile
Index
Index +5% p.a.
€2.8bn
€3.25bn
€3.7bn
Historic vesting of 2006 Performance Share Plan Awards Table 10
Chief Executive Salary
Table 11
Award
2006
2007
2008
2009
2010
2011
2012
2013
Vested/
lapsed in
2009
2010
2011
2012
2013
2014
2015
2016
Average
€m
€2.0
€1.5
€1.0
€0.5
€0
0%
20%
40%
60%
80%
100%
Vested
Lapsed
2
0
0
8
2
0
0
9
2
0
1
0
2
0
1
1
2
0
1
2
2
0
1
3
2
0
1
4
2
0
1
5
2
0
1
6
75
CRH Annual Report I 2015
Directors’ Remuneration Report | continued
Annual Bonus Plan
A summary of the structure of CRH’s Annual
Bonus Plan and the proposed changes for
2016 is set out in table 6.
2015 Annual Bonus Outcomes
CRH’s Annual Bonus Plan for 2015 was
based on a combination of financial targets
and personal/strategic goals. The specific
weightings for each executive Director are
shown in table 15. The relative weighting of
the components of the plan, together with
indicative performance for each measure is
given in tables 15 and 16. Specific targets
for the 2015 Annual Bonus Plan have not
been disclosed in this report as they are
considered by the Board to be commercially
sensitive. However, it is intended that Group-
related targets for 2015 will be disclosed in
the 2016 Directors’ Remuneration Report,
subject to the information no longer being
commercially sensitive at that time. Targets
for the 2014 annual bonuses are disclosed
on page 79.
Overall, strong performance against the
2015 Annual Bonus Plan metrics resulted
in bonus payments of 150% of salary for
Albert Manifold, 145% of salary for Maeve
Carton and 147.5% of salary for Mark
Towe, representing a percentage against
the maximum payable of 100%, 96.7% and
98.3% respectively. There was a maximum
payout under each of the financial targets
(EPS, RONA and cash flow), which applied
to each executive Director. The outcome
in relation to each executive Director’s
personal/strategic objectives is set out in
table 16 on page 78.
In accordance with the Group’s 2014
Remuneration Policy, 25% of the bonus
amount will be deferred into shares for
a period of three years. Deferred Share
awards are not subject to any additional
performance conditions during the deferral
period and are adjusted for dividend
equivalents based on dividends paid by CRH
during the deferral period.
2016 Salaries – Executive Directors
Director
Albert Manifold
Maeve Carton
Senan Murphy(i)
Mark Towe
(i) appointed with effect from 4 January 2016
Table 12
% Change
+8.5%
+2%
Not applicable
+2%
2015 Annual Bonus Outcome - Summary
Table 13
Director
Albert Manifold
Maeve Carton
Mark Towe
Payout level as a % of
Maximum Opportunity
100.0%
96.7%
98.3%
Salary
150.0%
145.0%
147.5%
Annual Statement
of Remuneration
Pages 70 to 93 of this report set out:
• a summary of the proposed changes to
the Directors’ Remuneration Policy;
• details of how CRH’s remuneration policy
will operate for 2016;
• details of the remuneration paid to
Directors in respect of 2015; and
• other areas of disclosure.
The Directors’ Remuneration Report,
excluding the Remuneration Policy on pages
95 to 106, will be put to shareholders for the
purposes of an advisory vote at the Annual
General Meeting to be held on 28 April 2016.
Executive Directors
Remuneration received by
executive Directors in respect
of 2015
Details of individual remuneration for
executive Directors for the year ended 31
December 2015, including explanatory
notes, are given in table 14. Details of
Directors’ remuneration charged against
profit in the year are given in table 39 in the
Other Disclosures section.
Basic salary and benefits
Details of executive Directors’ salaries
for 2016 compared with 2015 are set
out in table 4. The percentage increases
implemented in 2016 are shown in table 12.
The background to these increases is set out
in the Chairman’s introduction.
Details in relation to employment-related
benefits are set out in note (b) in table 14. No
material changes to benefits are proposed
for 2016. The level of benefits provided will
depend on the cost of providing individual
items and the individual circumstances.
76
CRH Annual Report I 2015 Similar to 2015, CRH’s Annual Bonus Plan
for 2014 was based on a combination of
financial targets and personal/strategic
goals. Due to commercial sensitivity,
specific targets were not disclosed in the
2014 Directors’ Remuneration Report.
The Remuneration Committee considers
that Group-related targets for 2014 have
ceased to be commercially sensitive and,
accordingly, these are set out in table 17.
Indicative performance against Oldcastle
targets for 2014 is shown in table 18; the
actual targets have not been disclosed as it
is considered that the information remains
commercially sensitive. Please see table 24
in the 2014 Directors’ Remuneration Report
for performance in 2014 against personal/
strategic measures.
The 2016 Annual Bonus Plan will be
operated broadly in line with the 2015 Annual
Bonus Plan, except that the maximum award
size for the Chief Executive will increase to
225% of salary, subject to the 2016 Policy
being approved by shareholders at the 2016
Annual General Meeting. The Committee
intends to disclose the targets for the 2016
Annual Bonus Plan in the 2017 Directors’
Remuneration Report.
Individual remuneration for the year ended 31 December 2015 (Audited)
Table 14
Annual Bonus Plan
Basic salary
Benefits
(a)
€000
(b)
€000
Cash element
(c)
Deferred shares
(c)
€000
€000
Long-term
incentives
Retirements
benefit expense
(d)
€000
(e)
€000
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
2015
2014
Total
€000
2015
Total
€000
2014
Executive Directors
Albert Manifold
1,290
1,200
22
39
1,451
1,350
484
450
1,671
586
607
559
5,525
4,184
Maeve Carton
675
625
10
16
734
703
245
234
1,161
69
282
260
3,107
1,907
Mark Towe
1,280
1,036
72
59
1,416
1,166
472
389
2,091
129
256
207
5,587
2,986
3,245
2,861
104
114
3,601
3,219
1,201
1,073
4,923
784
1,145
1,026
14,219
9,077
(a) Basic Salary: Further details and background in relation to the changes in salaries effective for 2015 are set out on pages 73 and 74 of the 2014 Directors’ Remuneration
Report.
(b) Benefits: For executive Directors these relate principally to the use of company cars, medical insurance and life assurance and, where relevant, the value of the discount on
the grant of options under the Group’s 2010 Savings-related Share Option Scheme.
(c) Annual Bonus Plan: Under the executive Directors’ Annual Bonus Plan for 2015, a bonus was payable for meeting clearly defined and stretch targets and strategic goals. The
structure of the 2015 Plan, together with details of the performance against targets and payouts in respect of 2014 and 2015, are set out on pages 78 and 79. For 2015 and
2014 bonuses, 25% of executive Directors’ bonuses are paid in Deferred Shares, vesting after three years, with no additional performance conditions.
(d) Long-Term Incentives: In February 2016, the Remuneration Committee determined that 77.84% of the award made in 2013 under the 2006 Performance Share Plan will vest
on 7 March 2016. The Remuneration Committee also determined that 37.2% of the award made in 2013 under the 2010 Share Option Scheme would vest. For the purposes
of this table, the value of these awards, both of which were subject to a three-year performance period ending in 2015, has been estimated using a share price of €25.60,
being the three month average share price to 31 December 2015, less, in the case of the award under the 2010 Share Option Scheme, the amount payable by the Directors
to purchase the shares under option (i.e. the total exercise cost). Amounts in the long-term incentive column for 2014 reflect the value of vested long-term incentive awards
with a performance period ending in 2014. These amounts reflect the value of the awards granted in 2006, 2007, 2008 and 2009 under the 2000 Share Option Scheme,
which the Remuneration Committee determined in May 2015 had met the applicable EPS performance targets (see table 22 on page 81) and had vested. For the purposes of
this table, the value of these awards have been calculated based on the difference between the total exercise cost and the market value on the date of vesting (€25.11) (see
page 81 for more details). No other long-term incentive awards with a performance period ending in 2014 vested.
(e) Retirement Benefits Expense: The Irish Finance Act 2006 effectively 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 7 December 2005. This cap was further reduced by the Irish Finance Act 2011 to
€2.3 million and, by the Finance (No. 2) Act 2013, to €2.0 million. As a result of these legislative changes, the Remuneration Committee has decided that executive Directors
who are members of Irish pension schemes 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. Maeve Carton and Albert Manifold chose to opt for the alternative arrangement which
involved capping their pensions in line with the provisions of the Finance Acts 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.
77
CRH Annual Report I 2015 Directors’ Remuneration Report | continued
2015 Annual Bonus - Achievement - Financial Targets
(Albert Manifold, Maeve Carton and Mark Towe)
Table 15
Opportunity
as a % of salary
Performance achieved
relative to targets
Target
Maximum
Threshold(i)
Target
Maximum
Performance
achieved
% Outcome versus
Maximum Opportunity
18.75%
37.5%
89.1c
37.5% / 37.5%
Measure
CRH EPS
CRH Cash Flow
- Operating Cash Flow(ii)
11.25%
22.5%
- Divestments
CRH RONA(iii)
11.25%
22.5%
18.75%
37.5%
€1,722m
€1,017m
8.8%
22.5% / 22.5%
22.5% / 22.5%
37.5% / 37.5%
(i) 0% of each element is earned at threshold, 50% at target and 100% at maximum, with a straight-line pay out schedule between these points.
(ii)
For this purpose, operating cash flow has been defined as reported internally and for 2015 excludes the operating cash flows attributable to the post acquisition period for
the LH Assets. The figure also differs from the “cash generated from operations” figure of €2,784m reported in the Consolidated Statement of Cash Flows, primarily because
it is calculated after deducting outflows on the purchase of property, plant and equipment (PP&E), net of proceeds from the disposal of PP&E.
(iii) 2015 RONA is calculated excluding the transaction/one-off costs of €197m related to the acquisition of the LH Assets.
2015 Annual Bonus - Achievement - Personal/Strategic Targets
Directors
Achievements
Albert Manifold
Maeve Carton
Mark Towe
Effective leadership of the process to integrate the assets acquired from Lafarge S.A. and Holcim
Limited; successful recruitment of new Group Finance Director and supporting the incumbent in the
transition to a new strategic role; leading the process of organisation change, including the
establishment and resourcing of refined organisation structures in the Americas, Europe and Asia;
continued strong leadership of the Group’s talent management process and the mentoring of the
senior executive team.
Continued progress in the area of operational performance including the roll-out of financial reporting
systems for the measuring and reporting of KPIs; leading succession planning for the Group’s tax
function, the development of a new supporting organisation structure and co-ordinating refinements
to the Group’s tax strategy; managing the process of funding the significant acquisition spend in
2015 and effective management of the Group’s bond programme; guiding the process for the
evolution of CRH’s cyber security arrangements.
Leadership in relation to the transition to a new organisation structure in the Americas; management of
the process to integrate the assets acquired from Lafarge S.A. and Holcim Limited in Canada and the
United States; continued input into the Group’s talent management process; working closely with the
Chief Executive in relation to the ongoing process to leverage the size and collective scale of the Group
in areas such as procurement.
Table 16
% Outcome versus
Maximum Opportunity
30.0% / 30.0%
25.0% / 30.0%
27.5% / 30.0%
78
CRH Annual Report I 2015 2014 Annual Bonus - Achievement - Group Targets
(Albert Manifold, Maeve Carton and Mark Towe)
Table 17
Measure
CRH EPS
CRH Cash Flow
Performance needed for payout at
Threshold
68c
Target
74c
Maximum
Performance
achieved
Payout %
of Maximum
78c
78.9c
100.0%
- Operating Cash Flow(i)
€1,163m
€1,264m
€1,365m
€1,477m
- Divestments
CRH RONA
€200m
6.15%
€225m
6.7%
€250m
7.2%
€345m
7.4%
100.0%
100.0%
100.0%
(i)
For this purpose, operating cash flow has been defined as reported internally, which differs from the “cash generated from operations” of €1,626m shown in the 2014
Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows on the purchase of property, plant and equipment (PP&E), net of
proceeds from disposal of PP&E.
2014 Annual Bonus - Achievement - Oldcastle Targets (Mark Towe)
Table 18
Performance achieved relative to targets
Threshold(ii)
Target
Maximum
Payout % of Maximum
Measure
Oldcastle Group PBIT(i)
Oldcastle Cash Flow
- Operating Cash Flow
- Divestments
(i) PBIT is defined as earnings before interest and taxes.
(ii)
0% of each element is earned at threshold, 50% at target and 100% at maximum, with a straight-line pay out schedule between these points.
100.0%
100.0%
100.0%
79
CRH Annual Report I 2015 Directors’ Remuneration Report | continued
Share scheme awards
A summary of share scheme awards made
to executive Directors in 2015 is set out in
table 23. Details of outstanding performance
share awards and share options held by
executive Directors are shown in tables 27,
28 and 29.
Long-Term Incentives
2014 Performance Share Plan
A summary of the proposed changes to the
operation of the 2014 Performance Share
Plan (the “2014 Plan”) is set out in table 6.
During 2015, awards were made under the
2014 Plan to the executive Directors, details
of which are summarised in table 28. The
performance metrics for the 2015 awards
are set out in table 19.
The definition of cash flow is adjusted to
exclude:
• dividends to shareholders;
• acquisition/investment expenditure;
Vested awards for executive Directors are
required to be held for a further two years
post-vesting.
Participants under the 2014 Plan are entitled
to receive dividend equivalents in proportion
to the percentage of an award which vests.
However, they are not entitled to vote in
respect of any shares subject to the award,
until the shares vest.
2006 Performance Share Plan
The Performance Share Plan (the “2006
PSP”), which was approved by shareholders
in May 2006, is based on Total Shareholder
Return (TSR) over a three-year performance
period. This plan was replaced by the 2014
Performance Share Plan (see above), which
was approved by shareholders at the 2014
Annual General Meeting. Consequently, the
last award under the 2006 PSP was made
in 2013 and vested on performance to
31 December 2015. Half of each award was
assessed against TSR for a tailored peer
group of global building materials companies
and the other half against TSR for the
constituents of the Eurofirst 300 Index. The
peer group for the TSR test was the same as
set out in table 20 with the addition of Home
Depot.
The performance criteria for the 2006
PSP are set out in table 21. Participants
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 the shares vest.
2014 Performance Share Plan (2014 Plan) Metrics
(2014 and 2015 Awards)
Table 19
3-year TSR(i) performance compared to peer group (75% of Award)
Vesting level
Equal to or greater than 75th percentile
100%
• share issues (scrip dividend, share
Between 50th and 75th percentile
Straight-line between 25% and 100%
options, other);
• financing cash flows (new loans/
repayments);
Equal to 50th percentile
Below 50th percentile
• back funding pension payments;
Three-Year Cumulative Cash Flow (25% of award)
•
foreign exchange translation.
Equal to or greater than €3.5bn
25%
0%
Vesting Level
100%
The Remuneration Committee considers that
it is appropriate to make these adjustments
in order to remove items that do not reflect
the quality of management’s operational
performance, or are largely outside of
management control.
The Remuneration Committee will also
consider whether any adjustments are
required to cash flows resulting from any
significant acquisitions completed during the
performance period.
The proposed cash flow target for awards
in 2016 under the 2014 Plan is set out in
table 3 in the Remuneration Committee
Chairman’s introduction on page 71.
Between €2.9bn - €3.5bn
Straight-line between 25% and 100%
Equal to €2.9bn
Below €2.9bn
25%
0%
(i)
The methodology for calculating TSR assumes all dividends are reinvested on the ex-dividend date at the closing
share price on that day; the open and close price is based on the three month average closing price on the last
day before the start of the performance period and the final day of the performance period respectively.
Peer Group for TSR Performance Metric for awards
in 2014 and 2015 under the 2014 Plan
Table 20
Boral
Heidelberg Cement
Martin Marietta Materials
Vulcan Materials
Buzzi Unicem
Italcementi
Holcim
Cemex
Kingspan Group
Saint Gobain
Travis Perkins
Wienerberger
Grafton Group
Lafarge
Titan Cement
Wolseley
80
CRH Annual Report I 2015 The rules of the 2006 PSP provide that
no award, or portion of an award, which
has satisfied the TSR performance criteria
should be released unless the Remuneration
Committee has confirmed the validity of
the TSR performance and reviewed EPS
performance to assess its consistency with
the objectives of the assessment.
In respect of the award made in 2013 (with a
performance period 2013-2015), in February
2016, the Remuneration Committee
determined that 77.84% of the award will
vest as, over the three-year period 2013
-2015, CRH’s TSR performance was 91.6%.
The Company’s TSR performance was
reviewed by the Remuneration Committee’s
remuneration consultants (Deloitte).
During 2015, the Remuneration Committee
determined that the award made under
the 2006 PSP in 2012 (with a performance
period 2012-2014) lapsed as, over the
three-year period 2012-2014, CRH’s TSR
performance was below the median of both
the peer group and the Eurofirst Index.
2010 Share Option Scheme
At the 2010 Annual General Meeting,
shareholders approved the introduction
of the Earnings Per Share (EPS) based
share option scheme (the “2010 Scheme”).
Following the approval by shareholders
for the introduction of the 2014 Plan, no
further awards will be made under the 2010
Scheme. Consequently, the last award under
the 2010 Scheme was made in 2013.
Options were granted at the market price of
the Company’s shares at the time of grant.
The vesting period for options is three years,
with vesting only occurring once an initial
EPS performance target has been reached.
Awards under the 2010 Scheme were limited
to 150% of salary.
The performance criteria for the 2010
Scheme are set out in table 22.
The grants of options under the 2010
Scheme made in 2010, 2011 and 2012 did
not meet the EPS performance criteria set
out in table 22 and, accordingly, the options
lapsed on the third anniversary of the date
of grant.
There will be a partial vesting of the award
made in 2013 under the 2010 Scheme.
Adjusted EPS for this award grew by 12.6%
p.a. over three years, resulting in a vesting
of 37.2% of maximum. This excludes the
impact (both costs and benefits) of the
acquisition of the LH Assets, which was
completed in the final few months of the
performance period, and ensures that the
performance was measured on a like-for-like
basis.
Details of outstanding awards to Directors
under the 2010 Scheme are provided in
tables 29 and 30 on page 86.
2006 Performance Share Plan (2006 PSP) Metrics
Table 21
3-year TSR(i) performance compared to peer group/Eurofirst 300 Index
Vesting level
Equal to or greater than 75th percentile
100%
Between 50th and 75th percentile
Straight-line between 30% and 100%
Equal to 50th percentile
Below 50th percentile
30%
0%
(i)
The methodology for calculating TSR assumes all dividends are reinvested on the ex-dividend date at the
closing share price on that day; the open and close price is based on the closing price on the last day before
the start of the performance period and the final day of the performance period respectively.
Share Option Scheme Metrics
Compound EPS(i) Growth Performance over Three Years
Awarded in 2010 & 2011
Awarded in 2012 & 2013
Table 22
Vesting Level
Equal to or greater than 27.5% p.a.
Equal to or greater than 20% p.a.
100%
Between 17.5% and 27.5% p.a.
Between 13% and 20% p.a.
Between 12.5% and 17.5% p.a.
Between 10% and 13% p.a.
Equal to 12.5% p.a.
Equal to 10% p.a.
Less than 12.5% p.a.
Less than 10% p.a.
Straight-line between
40% and 100%
Straight-line between
20% and 40%
20%
0%
(i)
The EPS figure used for the purposes of the 2010 Scheme is the basic consolidated earnings per share of the
Company for the accounting period concerned as shown in the Annual Report issued by the Company for that
accounting period.
81
CRH Annual Report I 2015 Directors’ Remuneration Report | continued
2000 Share Option Scheme
Other employee share plans
Malus and Clawback
At the Annual General Meeting held in 2000,
shareholders approved the introduction of a
share option scheme (the “2000 Scheme”).
This scheme was superseded by the 2010
Scheme referred to above. No awards have
been made under the 2000 Scheme since
2009. Details of unexercised awards and the
performance criteria for the 2000 Scheme
are set out in the notes to tables 29 and 30
on page 86.
Pursuant to the rules of the 2000 Scheme,
during 2015, the Remuneration Committee
determined that the grants of options made
in 2006, 2007, 2008 and 2009 under the
2000 Scheme had met the applicable
performance criteria and these awards
vested. Details in relation to the performance
test for these options is set out in table 30.
Executive Directors are eligible to participate
in the 2010 Savings-Related Option Scheme
(Republic of Ireland) (the “2010 SAYE
Scheme”) and in the Group’s Irish Revenue
approved Share Participation Scheme (the
“Participation Scheme”).
The 2010 SAYE Scheme is an Irish Revenue
approved plan open to all Irish employees.
Participants may save up to €500 a month
from their net salaries for a fixed term of
three or five years and at the end of the
savings period they have the option to buy
CRH shares at a discount of up to 15% of
the market price on the date of invitation
of each savings contract. Details of the
outstanding awards of executive Directors
under the 2010 SAYE Scheme are set out in
table 29 on page 86.
The Participation Scheme is an Irish
Revenue approved plan and is open to all
employees in Ireland. Grants can be made
to participants up to a maximum of €12,700
annually in CRH shares. Maeve Carton
and Albert Manifold participated in the
Participation Scheme in 2015.
Since 2015 all incentive awards to executive
Directors are subject to recovery provisions.
Annual bonus awards are subject to recovery
provisions for three years from the date of
payment (cash awards) or grant (deferred
awards). Performance Share Plan awards
are subject to malus for the three years prior
to performance assessment and the two
further years of the holding period.
Malus or clawback provisions may be
triggered in the event of:
• material misstatement;
• serious reputational damage; or
•
the Group suffering serious losses.
Summary of Scheme Interests Granted in 2015
Table 23
Directors
Scheme
Basis of
award
(% of salary)
Number
of
shares
Face
value(i)
Exercise
price
Percentage
vesting at
threshold
performance
(% of maximum)
Performance
period end
date
Expected
date of
release
A. Manifold
M. Carton
M. Towe
PSP
(conditional shares)
Annual Bonus(ii)
(deferred shares)
PSP
(conditional shares)
Annual Bonus(ii)
(deferred shares)
PSP
(conditional shares)
Annual Bonus(ii)
(deferred shares)
250%
132,064
€3,225,002
n/a
25%
31-Dec-17
Feb-2020
37.5%
24,928
€450,000
n/a
n/a
n/a
Feb-2018
200%
55,283
€1,350,010
n/a
25%
31-Dec-17
Feb-2020
37.5%
12,983
€234,375
n/a
n/a
n/a
Feb-2018
200%
107,110
€2,615,626
n/a
25%
31-Dec-17
Feb-2020
37.5%
22,908
€413,489
n/a
n/a
n/a
Feb-2018
(i) Face value for PSP awards has been calculated using the share price at the date of grant (€24.42).
(ii) See table 21 on page 76 of the 2014 Annual Report for the structure of the 2014 Annual Bonus Plan.
82
CRH Annual Report I 2015 Pension entitlements - defined benefit (Audited)
Table 24
Increase in accrued personal pension
during 2015(i)
€000
Transfer value of increase in
dependants’ pension(i)
€000
Total accrued personal pension
at year-end(ii)
€000
Executive Directors
A. Manifold
M. Carton
-
-
109
33
273
266
(i)
As noted below, the pensions of Albert Manifold and Maeve Carton have been capped in line with the provisions of the Irish Finance Acts. However, dependants’ pensions
continue to accrue resulting in Greenbury transfer values which have been calculated on the basis of actuarial advice. These amounts do not represent sums paid out or
due, but are the amounts that the pension scheme would transfer to another pension scheme in relation to benefits accrued in 2015 in the event of these Directors leaving
service.
(ii) The accrued pensions shown are those which would be payable annually from normal retirement date.
Pension entitlements - defined contribution (Audited)
Table 25
The accumulated liabilities related to the unfunded Supplemental Executive Retirement Plans for Mark Towe are as follows:
As at
31 December 2014
€000
2015
contribution
€000
2015 notional
interest(iii)
€000
Translation adjustment
€000
As at
31 December 2015
€000
Executive Director
M. Towe
2,502
237
119
295
3,153
(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 the above plans.
Retirement benefit
expense
Maeve Carton and Albert Manifold are
participants in a contributory defined
benefit plan which is based on an accrual
rate of 1/60th of salary* for each year of
pensionable service and is designed to
provide two-thirds of career average salary
at retirement for full service. If either Maeve
Carton or Albert Manifold leaves service
prior to Normal Retirement Age (60) they
will become entitled to a deferred pension,
payable from Normal Retirement Age,
based on the pension they have accrued to
their date of leaving. The Finance Act 2006
established a cap on pension provisions by
introducing a penalty tax charge on pension
assets in excess of the higher of €5 million
(in the Finance Act 2011, this threshold was
reduced to €2.3 million and reduced further
to €2 million by the Finance (No. 2) Act 2013)
or the value of individual accrued pension
entitlements as at 7 December 2005.
As a result of these legislative changes,
the Remuneration Committee decided that
executive Directors should have the option
of continuing to accrue pension benefits
as previously, or of choosing an alternative
arrangement - by accepting pension benefits
limited by the cap - with a similar overall
cost to the Group. Maeve Carton and Albert
Manifold have opted for an arrangement
whereby their pensions are capped in
line with the provisions of the Finance Act
2006 and receive a supplementary taxable
non-pensionable cash supplement in lieu
of pension benefits forgone. There was,
therefore, no additional accrual in 2015.
The cash pension supplements for 2015
are detailed in table 14. These supplements
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 contributory defined benefit plan in
which Albert Manifold and Maeve Carton
participate is closed to new entrants.
Mark Towe participates in a defined
contribution retirement plan in respect of
basic salary; and 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 (20%), offset by contributions made to
the other retirement plan.
No changes in the above pension
arrangements are proposed in 2016.
Senan Murphy receives a supplementary
taxable non-pensionable cash supplement
equivalent to 25% of his annual base salary
in lieu of a pension contribution.
Details regarding pension entitlements for the
executive Directors are set out in tables 24
and 25.
*
salary is defined as basic annual salary and excludes any fluctuating emoluments.
83
CRH Annual Report I 2015 Directors’ Remuneration Report | continued
Directors’ Interests in Shares and Share Scheme Awards
Deferred Share Awards under the Annual Bonus Plan (Audited)
31 December
2014
Awards in
2015(i)
Dividend Equivalent
adjustment(iii)/Scrip
Dividend allotment 2015
Released in
2015
31 December
2015
Maeve Carton
Albert Manifold
Mark Towe
-
-
2,626
-
2,626
12,983
24,928
-
22,908
60,819
325
624
54
573
1,576
-
-
-
-
-
Table 26
Release Date
March 2018(ii)
March 2018(ii)
13,308
25,552
2,680
March 2017(ii)
23,481
65,021
March 2018(ii)
(i)
The shares awarded during 2015 relate to the deferred portion of 2014 bonus and were included in total remuneration reported for 2014. Under the rules of Annual Bonus
Plan, the number of shares awarded was calculated using the three month average share price to 31 December 2014, being €18.05.
(ii) Under the Annual Bonus Plan in operation in respect of the financial years ended 31 December 2014 and 2015, up to one-third of the earned bonus was 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. Deferred Shares are not
subject to any additional performance conditions during the deferral period.
(iii) In order to calculate the Dividend Equivalents Adjustment it is assumed that an election for scrip shares in lieu of cash is made for each dividend during the vesting period.
Directors’ awards under the 2006 Performance Share Plan(i) (Audited)
Granted
in 2015
Released
in 2015(ii)
Lapsed
in 2015(ii)
31
December
2015
Performance
Period
Release
Date
Table 27
Market
Price in euro
on award
Year
of
award
31
December
2014
2012
50,000
Maeve Carton
2013
50,000
100,000
2012
70,000
Albert Manifold
2013
72,000
142,000
2012
90,000
Mark Towe
2013
90,000
180,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
50,000
-
-
50,000
01/01/13
- 31/12/15
March
2016
16.19
50,000
70,000
50,000
-
-
72,000
01/01/13
- 31/12/15
March
2016
16.19
70,000
90,000
72,000
-
-
90,000
01/01/13
- 31/12/15
March
2016
16.19
90,000
90,000
(i)
2006 Performance Share Plan: 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. 77.84% of the shares awarded in 2013 are scheduled for release in March 2016. See pages 80 and 81 for more details.
(ii) In 2015, the Remuneration Committee determined that the 2012 award lapsed as, over the three-year period 2012-2014, CRH’s TSR performance was below the median
of both the peer group and the Eurofirst Index.
84
CRH Annual Report I 2015 Directors’ awards under the 2014 Performance Share Plan(i) (Audited)
Table 28
Year of
award
31
December
2014
Granted
in 2015
Dividend
Equivalents
2015(ii)
Released
in 2015
Lapsed
in 2015
31
December
2015
Performance
Period
Release
date
2014
60,118
-
1,508
Maeve Carton
2015
-
55,283
391
60,118
55,283
1,899
2014
144,384
-
3,621
Albert Manifold
2015
-
132,064
934
144,384
132,064
4,555
2014
98,109
-
2,461
Mark Towe
2015
-
107,110
757
98,109
107,110
3,218
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
61,626
55,674
117,300
148,005
132,998
281,003
100,570
107,867
208,437
01/01/14
- 31/12/16
February
2019
01/01/15
- 31/12/17
February
2020
01/01/14
- 31/12/16
February
2019
01/01/15
- 31/12/17
February
2020
01/01/14
- 31/12/16
February
2019
01/01/15
- 31/12/17
February
2020
Market
Price in
euro on
award
20.49
24.42
20.49
24.42
20.49
24.42
(i) 2014 Performance Share Plan: 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 scheduled for release in February 2019 and February 2020 will be allocated to the extent that the relevant performance conditions are
achieved. The structure of the 2014 Performance Share Plan is set out in table 6.
(ii) The Remuneration Committee has determined that dividend equivalents should accrue on awards under the 2014 Performance Share Plan. Subject to the satisfaction of
the applicable performance criteria, such dividend equivalents will be released to participants in the form of additional shares at vesting.
85
CRH Annual Report I 2015 Directors’ Remuneration Report | continued
Directors’ Share Options (Audited)
Table 29
Details of movements on outstanding options and those exercised during the year are set out in the table below
Options exercised during 2015
31
December
2014
55,831
Maeve Carton
97,000
1,726
166,445
Albert Manifold
137,500
Mark Towe
2,236
133,081
175,000
768,819
Granted
in 2015
Lapsed
in 2015
Exercised
in 2015
31
December
2015
-
-
-
-
-
-
-
-
-
-
19,234
36,597
(a)
50,000
-
-
70,000
-
-
-
-
47,000
(b)
1,726
(c)
110,995
55,450
(a)
-
-
67,500
(b)
2,236
(c)
27,725
105,356
(a)
90,000
-
85,000
(b)
210,000
157,954
400,865
Weighted
average
option price at
31 December
2015
€
27.97
16.19
17.67
28.15
16.19
13.64
25.84
16.19
Weighted
average
exercise
price
€
Weighted
average
market price
at date of
exercise
€
21.52
25.11
18.88
25.08
18.85
25.10
Options by price (Audited)
Table 30
31
December
2014
€
18.7463
16,635
18.8545
27,725
26.1493
72,085
29.4855
53,232
29.8643
36,043
21.5235
99,637
16.58
15.19
16.19
13.64
17.67
50,000
210,000
199,500
2,236
1,726
768,819
Granted
in 2015
Lapsed
in 2015
Exercised
in 2015
31
December
2015
Earliest exercise date
Expiry date
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
210,000
-
-
-
16,635
27,725
-
-
-
-
-
(a)
(a)
72,085
(a)
53,232
(a)
36,043
(a)
March 2016
April 2016
March 2016
April 2017
March 2016
April 2017
63,594
36,043
(a)
March 2016
April 2018
50,000
-
-
-
-
-
-
(a)
(b)
199,500
(b)
March 2016
April 2023
2,236
(c)
1,726
(c)
August 2017
January 2018
August 2019
January 2020
210,000
157,954
400,865
The market price of the Company’s shares at 31 December 2015 was €26.70 and the range during 2015 was €18.73 to €28.09.
(a) 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.
(b) Granted under the 2010 Share Option Scheme. Vesting will only occur once an initial performance target has been reached and, thereafter, will be dependent on
performance. The performance criteria are set out in table 22 on page 81.
(c) Granted under the 2010 Savings-related Share Option Scheme.
86
CRH Annual Report I 2015 Shareholding guidelines for
executive Directors
The Remuneration Committee adopted a
policy in 2013 whereby executive Directors
are required to build up (and maintain),
within five years of appointment a minimum
holding in CRH shares which is equivalent
to one times basic salary. For existing
executive Directors it was required that this
guideline be achieved by 31 December
2015, unless the executive Director had a
significant change in role which resulted in
a step change in salary in which case the
one times salary guideline was required be
achieved within five years of the change.
Senan Murphy will have until 31 December
2020 to meet the shareholding guideline. As
at his date of appointment, he held 1,000
CRH shares.
As part of the remuneration review carried
out in 2015, the Remuneration Committee
considered whether the shareholding
guideline should be increased, particularly in
relation to the Chief Executive.
Executive Director Shareholdings
(as a multiple of 2016 basic salary)
No. of Shares
The Remuneration Committee concluded
that, subject to shareholder approval for the
increase in PSP opportunity set out in the
2016 Policy (see page 99), the shareholding
guideline for the Chief Executive should be
increased to two-and-a-half times basic
salary and that the Chief Executive should be
required to meet this guideline by 2020. The
Committee concluded that the shareholding
guidelines for the other executive Directors
remain appropriate.
The current shareholdings of executive
Directors as a multiple of 2016 basic salary,
excluding Senan Murphy, are shown in
table 31. The table includes, for illustrative
purposes, shares beneficially owned by the
Directors as at 2 March 2016, the estimated
after tax vesting of the 2013 awards under
the 2006 PSP (which will vest on 7 March
2016) and the estimated after tax vesting of
Deferred Share awards granted in respect of
2014, 2015 and 2016 (as appropriate).
Table 31
0.4x 2.9x
0.6x
0.4x
3.9x
1.9x
0.6x
0.35x 1.5x
2.9x
0.44x
0.7x
Albert Manifold
Maeve Carton
Mark Towe
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
Total
Estimated after tax vesting of Deferred Share Awards made in 2014, 2015, 2016 (as applicable)
Estimated after tax vesting of 2013 PSP award (to vest on 7 March 2016)
Beneficially Owned Shares at 2 March 2016
87
CRH Annual Report I 2015 Directors’ Remuneration Report | continued
Shareholdings of Directors and Company Secretary
as at 31 December 2015
Directors’ interests in share capital at 31 December 2015 (Audited)
Table 32
The interests of the Directors and Secretary in the shares of the Company, which are beneficial unless otherwise indicated, are shown below.
The Directors and Secretary have no beneficial interests in any of the Group’s subsidiary, joint venture or associated undertakings.
Ordinary Shares
Directors
E.J. Bärtschi
M. Carton
W.P. Egan
- Non-beneficial
U-H. Felcht
N. Hartery
P.J. Kennedy
R. McDonald
D.A. McGovern, Jr.
H.A. McSharry
A. Manifold
L.J. Riches
H.Th. Rottinghuis
M. Towe
Secretary
N. Colgan
31 December 2015
31 December 2014
25,200
84,818(i)
16,112
12,000
1,303
16,591
2,000
1,000
5,255
3,965
43,372(i)
2,000
15,426
107,388(i)
9,511
345,941
25,200
82,036
16,112
12,000
1,285
12,265
-(ii)
-(ii)
5,131
3,886
39,998
-(ii)
15,124
100,276(i)
15,549
328,862
There were no transactions in the above Directors’ and Secretary’s interests between 31 December 2015 and 2 March 2016. Senan Murphy was
appointed to the Board with effect from 4 January 2016. His holding at that date was 1,000 Ordinary Shares. Of the above holdings, the following are held
in the form of American Depository Receipts:
W.P. Egan
- Non-beneficial
R. McDonald
D.A. McGovern, Jr.
(i) Excludes awards of Deferred Shares, details of which are disclosed on page 84.
(ii) Holding at date of appointment.
88
31 December 2015
31 December 2014
15,000
12,000
1,000
5,255
15,000
12,000
-(ii)
5,131
CRH Annual Report I 2015 Non-executive Directors
Remuneration paid to non-executive Directors in 2015 is set out in table 33.
Individual remuneration for the year ended 31 December 2015 (Audited)
Table 33
Basic salary and fees
(a)
€000
Benefits
(b)
€000
Other remuneration
(c)
€000
Non-executive Directors
2015
2014
2015
2014
2015
2014
E.J. Bärtschi
W.P. Egan
U-H. Felcht
N. Hartery
J.M. de Jong (d)
J.W. Kennedy (e)
P.J. Kennedy (f)
R. McDonald (g)
D.A. McGovern, Jr.
H.A. McSharry
L.J. Riches (h)
D.N. O'Connor (e)
H.Th. Rottinghuis (i)
68
68
68
68
-
24
68
23
68
68
57
24
68
68
68
68
68
24
68
-
-
68
68
-
68
59
672
627
-
-
-
6
-
-
-
-
-
-
-
-
-
6
-
-
-
10
5
-
-
-
-
-
-
-
-
71
52
37
71
52
37
382
382
-
13
37
17
85
22
31
10
37
13
37
-
-
52
22
-
56
27
Total
€000
2015
139
120
105
456
-
37
105
40
153
90
88
34
105
Total
€000
2014
139
120
105
460
42
105
-
-
120
90
-
124
86
15
794
749
1,472
1,391
(a) Fee levels for non-executive Directors were unchanged in 2015. The fees which will apply for 2016 are out on page 90.
(b) Benefits: In the case of Nicholas Hartery the amount reflects the reimbursement of travel expenses from his residence to his Chairman’s office in Dublin, which have been
grossed up for Irish tax purposes.
(c) Other Remuneration: Includes remuneration for Chairman, Board Committee work and allowances for non-executive Directors based outside of Ireland.
(d) Jan Maarten de Jong retired as Director on 7 May 2014.
(e) John Kennedy and Dan O’Connor retired as Directors on 7 May 2015.
(f) Pat Kennedy became a Director on 1 January 2015.
(g) Rebecca McDonald became a Director on 1 September 2015.
(h) Lucinda Riches became a Director on 1 March 2015.
(i) Henk Rottinghuis became a Director on 18 February 2014.
89
CRH Annual Report I 2015 Directors’ Remuneration Report | continued
In July 2014, the Irish Revenue
Commissioners issued guidance that
certain travel and subsistence expenses for
non-executive Directors were to be treated
as taxable. Irish law was subsequently
amended in 2015 to state that travel and
subsistence expenses for non-Irish resident
non-executive Directors will not be taxable
from 1 January 2016 onwards. The relevant
expenses reimbursed to non-executive
Directors in respect of travel to/from Board
meetings for 2015 have, therefore, been
taxed. The total grossed up value of these
expenses in 2015 was €290,105 (including
tax).
Remuneration for non-executive
Directors in 2016
The remuneration of non-executive
Directors and the Chairman is determined
by the Board of Directors as a whole.
The fees were last increased in 2008. As
part of the recent remuneration review
referred to in the Committee Chairman’s
introduction, increases to the fees have been
implemented with effect from January 2016.
The revised fees are set out in table 34.
Other Disclosures
Fees paid to former Directors
The 2013 Large and Medium-sized
Companies and Groups (Accounts and
Reports) (Amendment Regulations)
Regulations in the UK, require disclosure
of payments to former directors in certain
circumstances. No payments have been
made to individual former directors in those
circumstances which exceed the de minimis
threshold of €20,000 per annum set by the
Remuneration Committee.
As reported in the 2013 Directors’
Remuneration Report, following his
retirement as Chief Executive, the
Remuneration Committee granted Myles Lee
an extension of 12 months, from the date of
vesting of his options under the 2000 Share
Option Scheme, to exercise those options.
90
Non-executive Director Fee Structure
Role
Table 34
2016
2015
Group Chairman (including non-executive Director salary and fees
for committee work)
€575,000
€450,000
Basic non-executive Director fee
Committee fee
Additional fees
€78,000
€68,000
€27,000
€22,000
Senior Independent Director/Remuneration Committee Chairman(i)
€39,000
€34,000
Audit Committee Chairman
€39,000
€34,000
Fee for Europe-based non-executive Directors(ii)
€15,000
€15,000
Fee for US-based non-executive Directors
€30,000
€30,000
(i)
If the roles of Senior Independent Director and Remuneration Committee Chair are not combined, fees of
€25,000 and €15,000 apply respectively.
(ii) Fee for Europe-based non-executive Directors has been extended to Irish non-executive Directors for 2016
onwards. This reflects the increase in time commitment to travel to CRH sites across the globe. In 2016,
Board visits, incorporating Board meetings, will be held in Asia, Europe and North America.
Total Shareholder Return
The value at 31 December 2015 of €100
invested in 2005 and 2008 respectively,
compared with the value of €100 invested
in the Eurofirst 300 Index and the FTSE100
Index (which CRH joined in December 2011)
is shown in table 36.
TSR performance has been compared
against the FTSE100 and the Eurofirst 300
as these are broad general market indices of
which CRH is a constituent. The Committee,
therefore, considers that they offer a
reasonable comparison for performance.
Compound TSR growth since the formation
of the Group in 1970 (assuming the
reinvestment of dividends) is 16.1%.
As outlined above, the options granted in
2006, 2007, 2008 and 2009 vested during
2015. The total value of these awards on
vesting, based on the difference between the
total exercise cost and the market value on
the date of vesting (€25.11), was €841,497.
Executives’ external
appointments
The executive Directors may accept external
appointments with the prior approval of the
Board provided that such appointments
do not prejudice the individual’s ability to
fulfil their duties at the Group. Whether any
related fees are retained by the individual
or remitted to the Group is considered on a
case-by-case basis.
In December 2014, Maeve Carton was
appointed as an agency member of the
National Treasury Management Agency,
an Irish state body that provides asset and
liability management services to the Irish
government. During 2015, Ms. Carton
received a total of €30,870 fees in relation to
this appointment.
CRH Annual Report I 2015 Remuneration paid to Chief Executive 2009 - 2015
Table 35
€m
Myles Lee (2009 - 2013)
Albert Manifold
€5.5m
€4.2m
€4.2m
PSP: 78%
Options: 37%
€2.6m
€2.6m
50%(ii)
22%(i)
46%
21%
€2.9m
17%
39%
Options(iii)
€2.5m
PSP: 49%
LTIP: 34%
100%
100%
27.8%
30%
€6.0
€5.0
€4.0
€3.0
€2.0
€1.0
€0.0
2009
2010
2011
2012
2013
2014
2015
Retirement Benefits
Long-Term Incentives
Bonus
Benefits
Salary
(i) Value of bonus award each year is shown as a percentage of the maximum opportunity.
(ii) Value of vested long-term incentive awards is shown as a percentage of the maximum opportunity.
(iii) Value of long-term incentives for 2014 has been updated to reflect the full vesting of options under the 2000
Share Option Scheme (see page 77 for more details).
TSR Performance
Table 36
2005(i)
2008(i)
180
160
140
120
100
80
60
40
20
0
250
200
150
100
50
0
5
0
0
2
6
0
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
CRH
FTSE
Eurofirst 300
(i)
For the purposes of comparability, the FTSE100 Index has been converted to euro using the closing exchange
rate at each year-end.
Remuneration paid to
Chief Executive
2009 - 2015
Table 35 to the left shows the total
remuneration paid to the Chief Executive
in the period 2009 to 2015 inclusive and
shows bonuses and vested long-term
incentive awards as a percentage of the
maximum bonus and award that could have
been received in each year. Albert Manifold
succeeded Myles Lee as Chief Executive
in January 2014.
The increase in the Chief Executive’s salary
in the period 2009 to 2015 is set out in table
11 on page 75.
The increase in total remuneration paid to the
Chief Executive in 2015 compared to 2014
arises primarily as a result of the vesting of
the PSP award made in 2013 (see page
77 for more details); no PSP awards with a
performance period to 31 December 2014
vested. Excluding the impact of vested share
based awards, the percentage change in the
Chief Executive’s salary, benefits and bonus
between 2014 and 2015 was as follows:
Salary
Benefits
Bonus
+7.5%
-43.6%
+7.5%
The combined percentage change was
+6.8%.
There was a 23% increase in the total
average employment costs in respect of
employees in the Group as a whole between
2014 and 2015.
91
CRH Annual Report I 2015
Directors’ Remuneration Report | continued
Relative importance of
spend on pay
Table 37 sets out the amount paid by
the Group in remuneration to employees
compared to dividend distributions made to
shareholders in 2014 and 2015. The average
number of employees is set out in note 5 to
the Consolidated Financial Statements on
page 155. We have also shown the change
in EBITDA performance year on year to
provide an indication of the change in profit
performance.
The Remuneration
Committee and Advisers
Relative importance of spend on pay
Table 37
€m
€5,000
€4,000
€3,000
€2,000
€1,000
€0
2015
2014
€4,961
€4,034
€2,219
€1,641
€511
€460
Dividends €m
Remuneration received by all
employees €m
EBITDA €m
(as defined)(i)
(i)
Defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on
disposals and the Group’s share of equity accounted investments’ profit after tax.
The non-executive Directors who were
members of the Remuneration Committee
during 2015, together with their record of
attendance at Committee meetings, are
identified on page 66.
Committee also engaged the services of
Kepler, a brand of Mercer, in relation to the
performance metrics for the performance share
plan. Kepler also assisted along with Deloitte
LLP in the shareholder consultation process.
Risk policies and systems
During 2015, the Chairman of the
Remuneration Committee reviewed with the
Audit Committee the Group’s remuneration
structures from a risk perspective.
Remuneration consultants
Deloitte LLP are the Committee’s
independent remuneration consultants.
The Committee has satisfied itself that the
advice provided by Deloitte LLP is robust
and independent and that the Deloitte LLP
engagement partner and team that provide
remuneration advice to the Committee do
not have connections with CRH plc that may
impair their independence.
Both Deloitte LLP and Kepler are signatories
to the Voluntary Code of Conduct in relation
to executive remuneration consulting in the
UK. During 2015, Deloitte LLP provided the
following remuneration services:
•
research and advice regarding
remuneration trends, best practice and
remuneration levels for executive and
non-executive Directors in companies of
similar size and complexity;
• guidance and advice in relation to
remuneration developments;
• analysis of TSR workings under the 2006
Performance Share Plan;
• advice in relation to remuneration matters
generally; and
For the purposes of the remuneration review
carried out in 2015 and in early 2016, the
• attendance at Committee meetings,
when required.
Deloitte LLP also provide other consultancy
services to the Company including
support for Internal Audit and Regulatory &
Compliance functions, when required, and
in respect of talent management and human
resources, technology and taxation advisory
services.
In 2015, Kepler’s parent, Mercer, provided
pensions advice and related services to the
Company.
In respect of work carried out on behalf of
the Remuneration Committee in 2015, fees
in the amount of €125,739 (Deloitte LLP) and
€60,766 (Kepler) were incurred.
2015 Annual General
Meeting votes on
remuneration matters
The voting outcome in respect of the
remuneration related votes at the 2015
Annual General Meeting is set out in table 38.
AGM – Remuneration Related Votes
Table 38
Directors’ Remuneration Report (“Say on Pay”)
Directors’ Remuneration Policy
92
Year of
AGM
% in
Favour
%
Against
No. of
votes
withheld
Total No. of Votes
Cast (incl. votes
withheld)
% of issued
share capital
voted
2015
2014
94.39%
5.61%
8,946,923
569,847,488
95.23%
4.77%
3,648,186
511,208,343
69.8%
69.6%
CRH Annual Report I 2015 In January 2016, the Chairman of the
Remuneration Committee met with a
number of major shareholders to discuss the
Committee’s proposals, which form part of
the 2016 Remuneration Policy to be voted
on at the 2016 Annual General Meeting.
Shareholder Engagement
The Chairman and the Remuneration
Committee Chairman met with a number of
the Group’s major shareholders in advance
of the 2015 Annual General Meeting (the
“AGM”). No issues of concern in relation to
remuneration arose. Following the AGM the
Remuneration Committee determined that
there were no concerns with the Group’s
remuneration structures that required
investigation.
Details of remuneration charged against profit in 2015
Directors’ Remuneration(i) (Audited)
Executive Directors
Basic salary
Performance-related incentive plan
- cash element
- deferred shares element
Retirement benefits expense
Benefits
Total executive Directors' remuneration
Table 39
2015
€000
2014
€000
3,245
2,861
3,601
1,201
1,145
104
9,296
3,219
1,073
1,026
114
8,293
Average number of executive Directors
3.00
3.00
Non-executive Directors
Fees
Other remuneration
Benefits
Total non-executive Directors' remuneration
672
627
794
749
6
1,472
15
1,391
Average number of non-executive Directors
9.75
9.30
Payments to former Directors(ii)
Total Directors' remuneration
Notes to Directors' remuneration
95
23
10,863
9,707
(i) See analysis of 2015 remuneration by individual in tables 14 and 33 on pages 77 and 89 respectively.
(ii) Consulting and other fees paid to a number of former Directors.
93
CRH Annual Report I 2015 94
94
.
5
3
2
e
g
a
p
e
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CRH Annual Report I 2015
Directors’ Remuneration Report | continued
2016 Remuneration Policy
Report
As outlined in the Committee Chairman’s
Statement on page 70, the Committee
carried out a review of the Group’s
remuneration arrangements during 2015
and early 2016. The principal proposed
changes to the 2014 Remuneration Policy,
which was approved by shareholders at the
2014 Annual General Meeting, are set out on
pages 70 to 72. The following sets out the
full 2016 Directors’ Remuneration Policy (the
“Policy”). As an Irish incorporated company,
CRH is not required to comply with section
439A of the UK Companies Act 2006, which
requires UK companies to submit their
remuneration policy to a binding shareholder
vote. However, maintaining high levels of
corporate governance is important to CRH
and, therefore, the Company intends to
submit this Policy to an advisory shareholder
vote at the 2016 Annual General Meeting.
The Committee’s intention is to operate
within this Policy unless it is not practical to
do so in exceptional circumstances. As an
Irish incorporated company, CRH cannot rely
on the statutory provisions applicable to UK
companies under the 2013 UK Regulations
which, in certain circumstances, can resolve
any inconsistency between a remuneration
policy and any contractual or other right of a
Director.
In the event there were to be such an
inconsistency the Company may be obliged
to honour any such right, notwithstanding
it may be inconsistent with the Policy. If
approved, the Policy will apply to payments
made from the date of the 2016 Annual
General Meeting.
The Remuneration Committee’s aim is to
make sure that CRH’s pay structures are
fair, responsible and competitive, in order
that CRH can attract and retain staff of the
calibre necessary for it to compete in all of its
markets.
The Group’s remuneration structures are
designed to drive performance and link
rewards to responsibility and the individual
contribution of executives. It is policy to grant
participation in the Group’s performance-
related plans to key management to
encourage identification with shareholders’
interests and to create a community
of interest among different regions and
nationalities.
The policy on Directors’ remuneration, which
is derived from the overall Group policy, is
designed to:
• help 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;
• properly reward and motivate executive
Directors to perform in the long-term
interest of the shareholders;
• provide an appropriate blend of fixed
and variable remuneration and short
and long-term incentives for executive
Directors;
• complement CRH’s strategy of
fostering entrepreneurship in its regional
companies by rewarding the creation of
shareholder value through organic and
acquisitive growth;
•
reflect the spread of the Group’s
operations so that remuneration
packages in each geographical area are
appropriate and competitive for that area;
and
•
reflect the risk policies of the Group.
In setting remuneration levels, the
Remuneration Committee takes into
consideration the remuneration practices
of other international companies of similar
size and scope and trends in executive
remuneration generally, in each of the
regions in which the Company operates.
The Remuneration Committee also
takes into account the EU Commission’s
recommendations on remuneration in listed
companies.
.
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95
CRH Annual Report I 2015
Directors’ Remuneration Report | continued
Policy Table
Further details regarding the operation of the Policy for the 2016 financial year can be found on pages 70 to 93 of the Directors’
Remuneration Report.
Policy Table
Element
Purpose and
link to
strategy
Fixed Base Salary
• Competitive salaries help to attract and retain staff
with the experience and knowledge required to
enable the Group to compete in its markets.
Operation
• Base salaries are set by the Committee taking into
account:
–
–
–
the size and scope of the executive Director’s
role and responsibilities;
the individual’s skills, experience and
performance;
salary levels at FTSE listed companies of a
similar size and complexity to CRH and other
international construction and building
materials companies;
– pay and conditions elsewhere in the Group.
• Base salary is normally reviewed annually with
changes generally effective on 1 January, although
the Committee may make an out-of-cycle increase
if it considers it to be appropriate.
Table 40
Fixed Pension
• Pension arrangements provide competitive and appropriate retirement
plans.
• Given the long-term nature of the business, pension is an important part of
the remuneration package to support creation of value and succession
planning.
Irish-based executive Directors participate in a contributory defined benefit
scheme or, if they joined the Group after 1 January 2012, in a defined
contribution scheme as the defined benefit scheme which the Directors
participate in is closed to new entrants.
•
• The US-based executive Director participates in a defined contribution
scheme and in an unfunded Supplemental Executive Retirement Plan.
• For new appointments to the Board the Committee may determine that
alternative pension provisions will operate (for example a cash contribution).
When determining pension arrangements for new appointments the
Committee will give regard to existing entitlements, the cost of the
arrangements, market practice and the pension arrangements received
elsewhere in the Group.
Maximum
opportunity
• Base salaries are set at a level which the Committee
considers to be appropriate taking into consideration
the factors outlined in the “operation” column.
• While there is no maximum base salary, normally
increases will be in line with the typical level of
increase awarded to other employees in the Group
but may be higher in certain circumstances. These
circumstances may include:
– Where a new executive Director has been
appointed at a lower salary, higher increases
may be awarded over an initial period as the
executive Director gains in experience and the
salary is moved to what the Committee
considers is an appropriate positioning.
– Where there has been a significant increase in
the scope or responsibility of an executive
Director’s role or where an individual has been
internally promoted, higher salary increases may
be awarded.
– Where a larger increase is considered necessary
to reflect significant changes in market practice.
Performance
measure
• n/a
96
• The defined benefit pension is provided through an Irish Revenue approved
retirement benefit scheme up until the pension cap established in the
Finance Act 2006 (see details on page 83). Accrued benefits for service to
31 December 2011 are based on pensionable salary and years of service as
at that date (annual accrual of 1/60ths), with this tranche being re-valued
annually at the Consumer Price Index subject to a 5% ceiling. For service
subsequent to that date, a career-average re-valued earnings system was
introduced with each year of service being subject to annual revaluation on
the same basis as outlined above. Irish-based executive Directors receive a
supplementary taxable non-pensionable cash allowance in lieu of pension
benefits foregone as a result of the pension cap. These allowances are
similar in value to the reduction in the Company’s liability represented by the
pension benefit foregone. Whilst there is no absolute maximum to the
quantum of these payments they are calculated based on actuarial advice as
the equivalent of the reduction in the liability the Company would otherwise
have had under the Scheme in respect of each individual’s benefits and
spread over the term to retirement as annual compensation allowances.
• The US-based executive Director participates in a defined contribution
retirement plan in respect of basic salary; and 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 (currently 20%), offset by contributions made to the other
retirement plan.
• n/a
CRH Annual Report I 2015 Policy Table | continued
Fixed Benefits
• To provide a market competitive level of benefits for executive Directors.
Element
Purpose and
link to
strategy
Operation
• The Committee’s policy is to set benefit provision at an appropriate market competitive level taking into account market practice, the
level of benefits provided for other employees in the Group, the individual’s home jurisdiction and the jurisdiction in which the individual
is based.
• Employment-related benefits include the use of company cars (or a car allowance), medical insurance for the Director and his/her
family and life assurance.
•
In the event that the Chief Executive falls ill or is injured in such a way as which would constitute ill-health or disablement so that the
Chief Executive could not work for a period of more than six months, in lieu of the early ill-health retirement provisions in the pension
scheme which would otherwise operate in such cases, he shall be entitled to receive a disability salary of €1,000,000 per annum. Such
payment would cease when the Chief Executive reaches age 60, returns to work or if the service agreement is terminated.
• The US-based executive Director also receives benefits in relation to club membership and short-term disability insurance.
• Benefits may also be provided in relation to legal fees incurred in respect of agreeing service contracts, or similar agreements (for which
the Company may settle any tax incurred by the executive Director) and a gift on retirement.
• The Committee may remove benefits that executive Directors receive or introduce other benefits if it is considered appropriate to do so.
The Company may also pay the tax due on benefits if it considers that it is appropriate to do so.
• All-employee share schemes - executive Directors are eligible to participate in the Company’s all-employee share schemes on the
same terms as other employees. Executive Directors may also receive other benefits which are available to employees generally.
• Re-location policy - where executive Directors are required to re-locate to take up their role, the Committee may determine that they
should receive appropriate re-location and ongoing expatriate benefits. The level of such benefits would be determined based on
individual circumstances taking into account typical market practice.
• The level of benefit provided will depend on the cost of providing individual items and the individual’s circumstances, and therefore
the Committee has not set a maximum level of benefits.
Maximum
opportunity
Performance
measure
• n/a
97
CRH Annual Report I 2015 Directors’ Remuneration Report | continued
Policy Table | continued
Element
Performance-related pay
Annual Bonus
Table 40
Purpose and link to strategy
• The Annual Performance-related Incentive Plan is designed to reward the creation of shareholder value through
operational excellence and organic and acquisitive growth. The Plan incentivises executive Directors to deliver Group
and individual goals that support long-term value creation.
• A Deferred Annual Performance-related Incentive Plan element links the value of executive Directors’ reward with the
long-term performance of the CRH share price and aligns the interests of executive Directors with shareholders
interests.
• The “malus” and clawback provisions enable the Company to mitigate risk.
Operation
• The Annual Performance-related Incentive Plan rewards executive Directors for meeting Company performance
goals over a financial year of the Company. Targets are set annually by the Committee.
• The annual bonus is paid in a mix of cash and shares (structured as a deferred share award).
• For 2016:
–
–
75% of the bonus will be paid in cash;
25% will be paid in shares.
•
In future years, the Committee may determine that a different balance between cash and shares is appropriate and
adjust the relevant payments accordingly.
• When assessing performance and determining bonus payouts the Committee also considers the underlying financial
performance of the business to ensure it is consistent with the overall award level.
• The deferred element of the bonus will be structured as a conditional share award or nil-cost option and will normally
vest after three years from grant (or a different period determined by the Committee). Deferred share awards may be
settled in cash.
• Dividend equivalents may be paid on deferred share awards in respect of dividends paid during the vesting period.
These payments may be made in cash or shares and may assume the reinvestment of dividends on a cumulative
basis.
• For deferred awards, “malus” provisions apply (see page 100). Cash bonus payments are subject to clawback of the
net amount paid for a period of three years from payment.
Maximum opportunity
• Maximum annual opportunity of 225% of base salary.
• For 2016, the intended maximum award levels are:
–
–
225% of base salary for Chief Executive;
150% of base salary for other executive Directors. The Committee may increase the percentage in future years
up to a maximum of 225%.
Performance measure
• The performance-related incentive plan is based on achieving clearly defined and stretching annual targets and
strategic goals set by the Committee each year based on key business priorities.
• The performance metrics used are a mix of financial targets including return goals and personal/strategic objectives
generally. Currently 80% of the bonus is based on financial performance measures. The Committee may vary the
weightings of measures but no less than 50% shall be based on financial performance measures.
• A portion of the bonus metrics for any Director may be linked to his/her specific area of responsibility.
• Up to 50% of the maximum bonus will be paid for achieving target levels of performance.
98
CRH Annual Report I 2015 Policy Table | continued
Element
Performance-related pay
2014 Performance Share Plan (PSP)
Purpose and link to strategy
• The purpose of the 2014 Plan is to align the interest of key management across different regions and nationalities
with those of shareholders through an interest in CRH shares and by incentivising the achievement of long-term
performance goals.
• The “malus” provision enables the Company to mitigate risk.
Operation
• Awards (in the form of conditional share awards or nil-cost options) normally vest based on performance over a
period of not less than three years. Awards may also be settled in cash.
• Awards are normally subject to an additional holding period ending on the fifth anniversary of the grant date (or
another date determined by the Committee).
• Dividend equivalents may be paid on PSP awards that vest in respect of dividends paid during the vesting period
until the end of the holding period. These payments may be made in cash or shares and may assume reinvestment
on a cumulative basis.
•
“Malus” provisions (as set out in the rules of the 2014 Plan) will apply to awards (see page 82).
Maximum opportunity
• Maximum annual opportunity of up to 365% of base salary
• For 2016 the intended award levels are:
–
–
365% of base salary for Chief Executive
200% of base salary for other executive Directors. The Committee may increase the percentage in future years
up to a maximum of 365%.
Performance measure
• Awards to be granted in 2016 will vest based on a relative TSR test compared to a tailored group of key peers (25%)
and an index comparator (25%), and cumulative cash flow performance (50%).
• For threshold levels of performance, 25% of the award vests.
• Where applicable, when determining vesting under the PSP the Committee reviews whether the TSR performance
has been impacted by unusual events and whether it therefore, reflects the underlying performance of the business.
In addition, the Committee considers financial performance (including Return on Net Assets) in the period to ensure
that TSR performance is consistent with the objectives of the performance criteria and was not distorted by
extraneous factors.
• The Committee may in future years change performance measures including introducing additional performance
measures for awards made under this policy, for example, returns based measures.
• The Committee may amend the performance conditions if an event occurs that causes it to consider that an
amended performance condition would be more appropriate and would not be materially less difficult to satisfy.
99
CRH Annual Report I 2015 Directors’ Remuneration Report | continued
Notes to policy table
Changes to 2014 Remuneration
Policy
Proposed changes to the 2014 Directors’
Remuneration Policy are outlined in the
Chairman’s introductory statement on pages
70 to 73.
Plan Rules
The 2014 Deferred Share Bonus Plan,
the 2014 Performance Share Plan, the
2010 Share Option Scheme and the 2000
Share Option Scheme shall be operated
in accordance with the relevant plan rules.
Awards may be (a) adjusted in accordance
with the rules in the event of a variation of the
Company’s share capital, merger, de-merger,
special dividend or other event that, in the
opinion of the Committee, materially affects
the price of shares: and (b) amended in
accordance with the plan rules.
Clawback/Malus
For Deferred Annual Performance-related
Incentive plan awards and Performance
Share Plan awards, the Committee has
the discretion to reduce or impose further
conditions on awards prior to vesting in
certain circumstances, including:
• a material misstatement of the Group’s
audited financial results;
• a material failure of risk management; or
• serious reputational damage to the
Group or one of its businesses as a
result of a participant’s misconduct or
otherwise.
Cash bonus payments are subject to
clawback of the net amount paid for a
period of three years from payment in the
circumstances outlined.
Other elements of remuneration are not
subject to clawback or malus provisions.
with such payments) notwithstanding that
they are not in line with the policy set out
above where the terms of the payment
were agreed (i) before 7 May 2014 (the
date the Company’s first shareholder-
approved Directors’ Remuneration Policy
came into effect; (ii) before the policy set
out above came into effect, provided that
the terms of the payment were consistent
with the shareholder-approved Directors’
Remuneration Policy in force at the time
they were agreed; or (iii) at a time when
the relevant individual was not a director
of the Company and, in the opinion of
the Committee, the payment was not in
consideration for the individual becoming a
director of the Company. For these purposes
“payments” includes the Committee
satisfying awards of variable remuneration
and, in relation to an award over shares, the
terms of the payment are “agreed” at the
time the award is granted.
Minor amendments
The Committee may make minor changes
to this Policy for regulatory, exchange
control, tax or administrative purposes or
to take account of a change in legislation
without seeking shareholder approval for that
amendment.
Information supporting the
policy table
Selection of performance
measures and targets
(i) Annual bonus
Annual incentive plan targets are selected
each year to incentivise executive Directors
to achieve annual financial, operational,
strategic and personal goals across a range
of metrics which are considered important
for delivering long-term performance
excellence.
General
(ii) Performance share plan
The Committee reserves the right to make
any remuneration payments and payments
for loss of office (including exercising any
discretions available to it in connection
The ultimate goal of our strategy is to provide
long-term sustainable value for all of our
shareholders. Performance measures for
PSP awards to be granted in 2016 are,
100
therefore, focused on achieving relative
outperformance of Total Shareholder
Return against our key peers and an index
comparator and generating cash in the
business to support the restoration of debt
levels to normalised levels, further investment
and dividend payments to shareholders.
Targets for the annual bonus and PSP are
set each year by the Committee taking
into account internal plans and external
expectations. Targets are calibrated to be
stretching but motivational to management
and to be aligned with the long-term creation
of shareholder value.
Remuneration arrangements
throughout the Group
CRH operates significant operations in
over 3,900 locations in 31 countries with
approximately 89,000 employees across
the globe. Remuneration arrangements
through-out the organisation, therefore,
differ depending on the specific role being
undertaken, the level of seniority and
responsibilities, the location of the role and
local market practice. However, remuneration
arrangements are designed based on a
common set of principles: that reward should
be set at a level which is appropriate to retain
and motivate individuals of the necessary
calibre to fulfil the roles without paying more
than is considered necessary to achieve. The
reward framework is designed to incentivise
employees to deliver the requirements of
their roles and add value for shareholders.
The Group operates share participation plans
and savings-related share option schemes
for eligible employees in all regions where
the regulations permit the operation of such
plans.
Remuneration policy for
new hires
CRH has a strong history of succession
planning and developing internal executive
talent.
CRH Annual Report I 2015 The Committee’s key principle when
determining appropriate remuneration
arrangements for a new executive Director
(appointed from within the organisation
or externally) is that arrangements are in
the best interests of both CRH and its
shareholders without paying more than is
considered necessary by the Committee to
recruit an executive of the required calibre to
develop and deliver the business strategy.
The Committee would generally seek to
align the remuneration package offered with
our remuneration policy outlined in table
40. Although in exceptional circumstances,
the Committee may make remuneration
proposals on hiring a new executive Director
which are outside the standard policy to
facilitate the hiring of someone of the calibre
required to deliver the Group’s strategy.
When determining appropriate remuneration
arrangements the Committee will take into
account all relevant factors including (among
others) the level of opportunity, the type of
remuneration opportunity being forfeited and
the jurisdiction the candidate was recruited
from. Any remuneration offered would be
within the limit on variable pay outlined
below.
Variable remuneration in respect of an
executive Director’s appointment shall be
limited to 590% of base salary measured at
the time of award. This limit is in line with the
plan maximum outlined in table 40. This limit
excludes any awards made to compensate
the Director for awards forfeited from his or
her previous employer.
The Committee may make awards on
appointing an executive Director to ‘buy-
out’ remuneration terms forfeited on
leaving a previous employer. In doing so
the Committee will take account of relevant
factors including any performance conditions
attached to these awards, the form in which
they were granted (e.g. cash or shares)
and the time over which they would have
vested. The Committee’s key principle is that
generally buy-out awards will be made on a
comparable basis to those forfeited.
To facilitate awards outlined above, the
Committee may grant awards under
Company incentive schemes or under
Listing Rule 9.4.2 which allows for the
granting of awards, to facilitate, in unusual
circumstances, the recruitment of an
executive Director, without seeking prior
shareholder approval or under other relevant
company incentive plans. The use of Listing
Rule 9.4.2 shall be limited to buy-out awards.
In the event that an internal candidate
is promoted to the Board, legacy terms
and conditions will normally be honoured,
including pension entitlements and any
outstanding incentive awards.
In the event of the appointment of a new
Chairman or non-executive Director,
remuneration arrangements will normally
reflect the policy outlined above for Chairman
and non-executive Directors. Other
remuneration arrangements may be provided
to a new Chairman or non-executive Director
if these arrangements are considered
appropriate in accordance with the principles
set out above.
Remuneration Policy for non-executive Directors
Table 41
Approach to setting fees
Basis of fees
Other items
• The remuneration of non-executive
Directors is determined by a Board
committee of the Chairman and the
executive Directors.
• The Remuneration Committee
determines the remuneration of the
Chairman within the framework or broad
policy agreed with the Board.
• Remuneration is set at a level which will
attract individuals with the necessary
experience and ability to make a
substantial contribution to the
Company’s affairs and reflect the time
and travel demands of Board duties.
• Fees are set taking into account typical
practice at other companies of a similar
size and complexity to CRH.
• Fees are reviewed at appropriate
intervals.
• Fees are paid in cash.
• Non-executive Director fees policy is to pay:
– A basic fee for membership of the Board.
– An additional fee for chairing a Committee.
• The non-executive Directors do not
participate in any of the Company’s
performance-related incentive plans or share
schemes.
• Non-executive Directors do not receive
– An additional fee for the role of Senior
pensions.
• The Group Chairman is reimbursed for
expenses incurred in travelling from his
residence to his CRH office. The Company
settles any tax incurred on this on his behalf.
• Non-executive Directors do not currently
receive any benefits. However, benefits may
be provided in the future if, in the view of the
Board (for non-executive Directors or for the
Chairman), this was considered appropriate.
The Company may settle any tax due on
benefits.
Independent Director (SID) (if the SID is not
the Chairman of the Remuneration
Committee).
– An additional fee to reflect committee work
(combined fee for all committee roles).
– An additional fee based on the location of the
Director to reflect time spent travelling to
Board meetings.
• Other fees may also be paid to reflect other
board roles or responsibilities.
•
In accordance with the Articles of Association,
shareholders set the maximum aggregate
amount of the fees payable to non-executive
Directors. The current limit of €750,000 was set
by shareholders at the Annual General Meeting
held in 2005. A resolution to increase the limit to
€875,000 will be included on the agenda for the
2016 Annual General Meeting.
101
CRH Annual Report I 2015 Directors’ Remuneration Report | continued
Remuneration outcomes
in different performance
scenarios
Remuneration at CRH consists of fixed pay
(salary, pension and benefits), short-term
variable pay and long-term variable pay. A
significant portion of executive Directors’
remuneration is linked to the delivery of key
business goals over the short and long-term
and the creation of shareholder value.
Table 44 shows hypothetical values of
the remuneration package for executive
Directors under three assumed performance
scenarios (based on 2016 proposals).
No share price growth or the payment of
dividend equivalents has been assumed in
these scenarios. Potential benefits under
all-employee share schemes have not been
included.
Hypothetical remuneration values
Remuneration outcomes in different performance
scenarios
Table 42
Performance scenario
Payout level
Minimum
• Fixed pay (see table 43 for each executive Director)
• No bonus payout
• No vesting under the Performance Share Plan
On-target performance
• 50% annual bonus payout (112.5% of salary for the Chief
Executive and 75% for the other executive Directors)
• 25% vesting under the Performance Share Plan (91.25% of salary
for the Chief Executive and 50% for other executive Directors)
Maximum performance
• 100% annual bonus payout (225% of salary for the Chief Executive
and 150% of salary for other executive Directors)
• 100% Performance Share Plan vesting (365% of salary for the
Chief Executive and 200% for other executive Directors)
Chief Executive (Albert Manifold)
Finance Director (Senan Murphy)
Group Transformation Director (Maeve Carton)
Chairman, CRH Americas (Mark Towe)
Salary
With effect from
1 January 2016
€1,400,000
€625,000
€688,500
$1,448,400
Benefits
Level paid
in 2015(i)
€22,000
€18,500
€10,000
$72,000
Estimated
Pension(ii)
€700,000
€156,250
€290,000
$289,680
(i) estimated in the case of S. Murphy; based on 2015 expenses for other executive Directors.
(ii) see page 96 for details in relation to retirement benefit arrangements.
102
Table 43
Total
Fixed Pay
€2,122,000
€799,750
€988,500
$1,810,080
CRH Annual Report I 2015 Performance-related remuneration outcomes
Table 44
€m
€10.0
€8.0
€6.0
€4.0
€2.0
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Performance
Fixed Pay
Annual Bonus
Long-term incentives
103
CRH Annual Report I 2015
Directors’ Remuneration Report | continued
Executive Director service
contracts and policy on
payment for loss of office
When determining leaving arrangements for
an executive Director the Committee takes
into account any contractual agreements
(including any incentive arrangements)
and the performance and conduct of the
individual.
Service contracts
The Chief Executive and Finance Director
have entered into service contracts with the
Company. The summaries in tables 45 and
46 set out the key remuneration terms of
those contracts.
The Committee reserves the right to make
any other payments in connection with a
director’s cessation of office or employment
where the payments are made in good faith
in discharge of an existing legal obligation
(or by way of damages for breach of such
an obligation) or by way of a compromise or
settlement of any claim arising in connection
with the cessation of a director’s office or
employment. Any such payments may
include paying any fees for outplacement
assistance and/or the Director’s legal/or
professional advice fees in connection with
his cessation of office or employment.
The Group Transformation Director (Maeve
Carton) and Chairman, CRH Americas
(Mark Towe) do not currently have service
contracts. They do not have a notice period
in excess of 12 months or an entitlement to
any benefits on termination of employment.
The Committee will determine the amount, if
any, paid on termination taking into account
the circumstances around departure and the
prevailing employment law.
The Committee’s policy in this area is that
service contracts will be put in place for
newly appointed executive Directors and
in cases where there is a significant step
change in Directors’ responsibilities. It is
currently anticipated that these terms will
be similar to those agreed with the Chief
Executive.
104
Under Irish Company Law, CRH is not
required to make service contracts available
for inspection as the notice period is not
more than 12 months. Service contracts will
only be available with the executive Director’s
consent due to data protection reasons.
Annual cash bonus
Executive Directors may, at the discretion
of the Committee, remain eligible to receive
an annual bonus award for the financial
year in which they leave employment. Such
awards will be determined by the Committee
taking into account time in employment and
performance.
Chief Executive service contract
Table 45
Notice period
• 12 months’ notice by the Company or the executive.
Expiry date
•
Indefinite duration.
• Terms of contract will automatically terminate on the executive’s 62nd birthday.
Termination
payments
• On lawful termination of employment, the Committee may, at its absolute
discretion, make a termination payment in lieu of 12 months’ notice based on
base salary, benefits and pension contribution due during that period.
• Where the Company terminates the contract lawfully without notice then no
payment in lieu of notice shall be due.
•
If, in the event of a change of control, there is a diminution in the role and
responsibilities of the Chief Executive he may terminate the contract; on such
termination a payment equal to one year’s remuneration (being salary, pension,
other benefits and vested incentive awards) will be made to the executive.
Disability
•
In the event that the Chief Executive falls ill or is injured in such a way as which
would constitute ill-health or disablement so that the Chief Executive could not
work for a period of more than six months, in lieu of the early ill-health
retirement provisions in the pension scheme which would otherwise operate in
such cases, he shall be entitled to receive a disability salary of €1,000,000 per
annum. Such payment would cease when the Chief Executive reaches age
60, returns to work or if the service agreement is terminated.
Other
information
• The Company retains the ability to suspend the executive from employment
on full salary and to require the executive to observe a period of “garden leave”
of up to 12 months on full salary, contractual benefits and pension
contribution.
Finance Director service contract
Table 46
Notice period
• Six months’ notice by the Company or the executive.
Expiry date
•
Indefinite duration.
• Terms of contract will automatically terminate on the executive’s 65th birthday.
Termination
payments
• On lawful termination of employment, the Committee may, at its absolute
discretion, make a termination payment in lieu of six months’ notice based on
base salary, benefits and pension contribution due during that period.
• Where the Company terminates the contract lawfully without notice then no
payment in lieu of notice shall be due.
Other
information
• The Company retains the ability to suspend the executive from employment
on full salary and to require the executive to observe a period of “garden
leave” of up to 12 months on full salary, contractual benefits and pension
contribution.
CRH Annual Report I 2015 • Unvested awards vest, unless the
Committee determines otherwise, to the
extent determined by the Committee.
Alternatively, the Committee may determine that awards should vest in
full at cessation of employment.
“Good Leavers” as determined by the Committee in
accordance with the plan rules
• Awards shall normally vest in full at the normal vesting date.
Share Plan Rules –
Leaver Provisions
The treatment of outstanding share awards
in the event that an executive Director leaves
is governed by the relevant share plan rules.
The following table summarises leaver
provisions under the executive share plans.
Leaver Provisions
Death
Deferred
Annual
Performance
Incentive
Plan 2014
Performance
Share Plan
2014
• Awards in the form of nil-cost options may
be exercised for 12 months from death (or
another period determined by the
Committee).
• Unvested awards shall vest as soon as
practicable following death unless the
Committee determines otherwise. The
number of shares vesting shall be
determined by the Committee taking into
account the extent to which the
performance condition has been met and,
if the Committee determines, the length of
time that has elapsed since the award was
granted until the date of death (or if death
occurs during an applicable holding period,
to the beginning of the holding period).
• Awards in the form of nil-cost options may
be exercised for 12 months from death (or
another period determined by the
Committee).
Share
Option
Scheme
2010
• The Committee may determine the extent
to which options shall vest. Options shall
be exercisable for 12 months from vesting
or from death (whichever is later).
“Good leaver” circumstances are defined
in the 2014 Performance Share Plan and
deferred annual performance incentive plans
as ill-health, injury, disability, the participants
employing company or business being sold
out of the Group or any other reason at the
Committee’s absolute discretion (except
where a participant is summarily dismissed).
Where an individual leaves by mutual
agreement the Committee has discretion to
determine the treatment of outstanding share
awards.
Individuals who are dismissed for gross
misconduct would not be treated as “good
leavers”.
• Where awards vesting in such circumstances are granted in the form
of nil-cost options participants shall have six months from vesting to
exercise their award.
• Where awards have already vested at cessation of employment,
participants shall have six months from cessation of employment to
exercise their option.
• Awards shall normally vest at the normal vesting date. Alternatively the
Committee may determine that awards should vest at the time the
individual leaves.
• The level of vesting shall be determined by the Committee taking into
account the extent to which the performance condition has been met
and, unless the Committee determines otherwise, the period of time
that has elapsed since the date of grant until the date of cessation (or
if cessation occurs during an applicable holding period, to the
beginning of the holding period).
• Awards vesting in such circumstances in the form of nil-cost options
may be exercised for six months from vesting (or another period
determined by the Committee). Where a nil-cost option was already
vested at cessation of employment, participants may exercise such
options for six months from cessation (or another period determined
by the Committee).
Retirement (for age or health reasons)
• The Committee may determine the extent to which options may be
exercised on the same terms as if the individual had not ceased to
hold employment or office having determined the extent to which the
performance conditions applicable to the award have been satisfied.
Options shall be exercisable for 12 months from vesting or from the
participant’s cessation (whichever is later).
Redundancy, early retirement, sale of the individual’s employing subsidiary
out of the Group or for any other reason determined by the Committee.
• The Committee may determine the extent to which the option may be
exercised having determined the extent to which the performance
conditions applicable to the award have been satisfied. Options shall
be exercisable for six months from vesting or cessation of employment
(whichever is later).
• Where a participant has ceased to hold office or employment because
of health reasons, redundancy, retirement or sale of his employing
subsidiary out of the Group, the Committee may waive any relevant
performance conditions, in which case his options may be scaled
down by reference to the participant’s performance and the proportion
of the relevant performance period the participant has served.
Table 47
Leavers in other
circumstances
• Awards will
lapse on the
individual’s
cessation of
office or
employment.
• Awards will
lapse on the
individual’s
cessation of
office or
employment.
• Awards will
normally
lapse.
105
CRH Annual Report I 2015 Directors’ Remuneration Report | continued
Under the 2000 Share Option Scheme,
if a participant leaves employment in the
event of death, retirement (on age or health
grounds), redundancy, or in cases where
a subsidiary is divested, the Committee
will determine the extent to which options
vest. In cases of death and retirement,
options may be exercised within 12 months
of cessation of office of employment. In
other circumstances, where the Committee
uses its discretion to deem an individual a
good leaver then the exercise window is six
months. Where an individual ceases office or
employment for other reasons option awards
will normally lapse.
Awards under the 2010 Savings-related
Share Option Scheme are treated in
accordance with the rules. The rules
provide that awards may be exercised by a
participant’s executor within 12 months of
the date of death, and six months from the
date of termination of employment in other
circumstances where options automatically
become exercisable, for example in the case
of retirement.
Where an executive ceases employment
as a result of summary dismissal they will
normally forfeit outstanding share incentive
awards.
The Committee may allow awards to
vest early at its discretion in the event an
executive Director is to be transferred to
a jurisdiction where he would suffer a tax
disadvantage or he would be subject to
restrictions in connection with his award, the
underlying shares or the sales proceeds.
Change of control
In the event of a change of control of the
Company, the Committee will determine the
treatment of share awards.
In the event of a change of control of the
Company:
a) awards granted under the 2014 Plan
will vest taking into account the extent
to which any performance condition has
been satisfied and, unless the Committee
determines otherwise the period of time
that has elapsed since grant and the
relevant event (or if the event occurs
106
during an applicable holding period, to
the beginning of the holding period);
b) awards granted under the 2014 Deferred
Annual Performance-related Incentive
Plan may, at the discretion of the
Committee, vest in full;
c) options granted under the 2000 Share
Option Scheme may be exercised to the
extent determined by the Committee;
and
d) options granted under the Share Option
Scheme 2010 may be exercised to the
extent determined by the Committee and
may be subject to personal performance
and time pro-rating (by reference to the
proportion of the performance period
that has elapsed).
If the Company is wound up or there is a
de-merger, de-listing, special dividend or
other similar event which the Committee
considers may affect the price of the
Company’s shares:
a) awards granted under the 2014 Plan
may, at the Committee’s discretion, vest
taking into account the extent to which
any performance condition has been
satisfied and, unless the Committee
determines otherwise, the period of time
that has elapsed since the date of grant
and the relevant event (or if the event
occurs during an applicable holding
period, to the beginning of the holding
period);
b) awards granted under the 2014 Deferred
Annual Performance-related Incentive
Plan will vest to the extent the Committee
determines.
Non-executive Director -
Letters of appointment
Non-executive Directors serve under letters
of appointment, copies of which are available
for inspection at the Company’s Registered
Office and at the Annual General Meeting.
In line with the UK Corporate Governance
Code, all non-executive Directors submit
themselves for re-election by shareholders
every year at the Annual General Meeting.
All non-executive Director appointments
can be terminated by either party without
notice. There is no payment in lieu of notice
provided.
Considering employee
views
When setting remuneration policy for
executive Directors, the Remuneration
Committee reviews and has regard to the
remuneration trends across the Group
and considers how executive Director
remuneration compares to that for all
employees to ensure that the structure
and quantum of executive pay remains
appropriate in this context.
The Company does not currently consult
directly with employees when developing the
Directors’ Remuneration Policy and there is
no current intention to do so in the future.
Consulting with
shareholders
The Committee believes that it is very
important to maintain open dialogue with
shareholders on remuneration matters. CRH
made significant changes to remuneration
arrangements during the year and consulted
extensively with shareholders in relation to
this. Shareholder views were important in
shaping the final proposals outlined in this
Policy Report.
The Committee will continue to liaise with
shareholders regarding remuneration matters
more generally and CRH arrangements as
appropriate. It is the Committee’s intention
to consult with major shareholders in
advance of making any material changes to
remuneration arrangements.
On behalf of the Board
Donald A. McGovern, Jr.
Chairman of Remuneration Committee and
Senior Independent Director
2 March 2016
.
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CRH Annual Report I 2015
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107
107
CRH Annual Report I 2015
Directors’ Report
Sustainability
Sustainability and Corporate Social
Responsibility (CSR) concepts are
embedded in all CRH operations and
activities. Embracing all aspects of these
concepts is considered fundamental to
achieving the CRH vision to be the leading
building materials business in the world.
Excellence in the areas of health & safety,
environment & climate change, governance,
and people & community is a daily priority.
The Group’s policies and implementation
systems are summarised in the Strategy
Review section on pages 14 and 15, and
are described in detail in the independently
verified annual Sustainability Report, which is
published mid-year in respect of the previous
calendar year, and is available on the Group’s
website. CRH is recognised by several
leading Socially Responsible Investment (SRI)
agencies as being among the leaders in its
sector in these important areas.
Greenhouse Gas Emissions
Disclosures relating to the Group’s
greenhouse gas emissions are contained
in the Measuring Performance section on
page 12.
An interim dividend of 18.5c (2014: 18.5c)
per share was paid in November 2015
and the Board is recommending a final
dividend of 44.0c per share. This would give
a total 2015 dividend of 62.5c, unchanged
from last year’s level (2014: 62.5c). The
earnings per share for 2015 amounted to
89.1c representing a cover of 1.4 times
the proposed dividend for the year. It is
proposed to pay the final dividend on 6 May
2016 to shareholders registered at the close
of business on 11 March 2016. Subject to
the approval of resolutions 2 and 13 at the
2016 Annual General Meeting, shareholders
are being offered a scrip dividend alternative.
Share placing
CRH completed a placing of 74,039,915
new ordinary shares in CRH plc (which rank
pari passu in all respects with the existing
ordinary shares including the right to receive
all future dividends declared or paid after the
date of the placing) raising gross proceeds of
approximately €1.6 billion, and representing
approximately 9.99% of CRH’s issued
ordinary share capital before the placing.
Closing of the placing and admission of
the placing shares to the official lists and to
trading on the main markets of the London
Stock Exchange and Irish Stock Exchange
took place on 5 February 2015.
2016 Outlook
The 2016 outlook set out in the Chief
Executive’s Review on page 7 is deemed to
be incorporated in this part of the Directors’
Report.
Location of information required pursuant to Listing Rule 9.8.4C
Listing Rule
LR 9.8.4 (12) and (13)
Information to be included*:
Waivers of dividends Disclosure
The Trustees of the Employee Benefit Trust,
have elected to waive dividends in respect of
certain holdings of CRH shares. See page
201 to the Consolidated Financial Statements.
*
No information is required to be disclosed in respect of Listing Rules 9.8.4 (1), (2), (3), (4), (5), (6), (7), (8), (9),
(10), (11) and (14).
The Directors submit their report and the
audited Consolidated Financial Statements
for the year ended 31 December 2015.
Principal Activity, Results for the
Year and Review of Business
CRH is a leading global diversified building
materials group which manufactures and
distributes a diverse range of products
servicing the breadth of construction needs,
from the fundamentals of heavy materials
and elements to construct the frame,
through value-added exterior products
that complete the building envelope,
to distribution channels which service
construction fit-out and renewal. The Group
has over 1,400 subsidiary, joint venture and
associate undertakings; the principal ones
as at 31 December 2015 are listed on pages
224 to 231.
The Group’s strategy, business model and
development activity are summarised in the
Strategy Review section on pages 6 to 17
and are deemed to be incorporated in this
part of the Directors’ Report.
As set out in the Consolidated Income
Statement on page 132, the Group
reported a profit before tax for the year of
€1.03 billion. Comprehensive reviews of
the financial and operating performance of
the Group during 2015 are set out in the
Business Performance Review on pages 20
to 49; key financial performance indicators
are also set out in this section. The treasury
policy and objectives of the Group are set
out in detail in note 21 to the Consolidated
Financial Statements.
Dividend
CRH recognises the contribution dividends
make to overall shareholder return, and for
the 26 years between 1984 to 2009 the
Group maintained a progressive dividend
policy delivering dividend growth in each
of these years. The Group maintained the
dividend at 62.5c per share for each of the
subsequent five years, during which, with
the exception of 2013 when the Group
recorded a non-cash impairment charge of
€755 million which resulted in a net loss per
share, the dividend cover was just over 1x.
108
CRH Annual Report I 2015 This table contains information which is required to be provided for regulatory purposes.
Regulatory Information
Companies Act 2014:
2006 Takeover Regulations:
2007 Transparency Regulations:
Disclaimer:
For the purpose of Section 1373, the Corporate Governance report on pages 56 to 68, together with the
Governance Appendix located on the CRH website (www.crh.com), which contains the information required by
Section 1373(2) of the Companies Act 2014 and the risk management disclosures on pages 16, 17 and 113 to
119 are deemed to be incorporated in the Director’s Report and form part of the corporate governance
statement required by section 1373 of the Companies Act. Details of the Company’s Employee Share Schemes
and capital structure can be found in notes 7 and 28 to the Consolidated Financial Statements on pages 156 to
158 and 199 to 202 respectively.
For the purpose of Regulation 21 of Statutory Instrument 255/2006 European Communities (Takeover Bids
(Directive 2004/25/EC)) Regulations 2006, the rules relating to the appointment and replacement of Directors are
summarised in the Governance Appendix. The Chief Executive and the Finance Director have entered into
service contacts, the principal terms of which are summarised on page 104 of the Directors’ Remuneration
Report and are deemed to be incorporated in this part of the Directors’ Report. The Company’s Memorandum
and Articles of Association, which are available on the CRH website, are also deemed to be incorporated in this
part of the Directors’ Report. The Group has certain banking facilities and bond issues outstanding which may
require repayment in the event that a change in control occurs with respect to the Company. In addition, the
Company’s share option schemes and Performance Share Plan contain change of control provisions which can
allow for the acceleration of the exercisability of share options and the vesting of share awards in the event that a
change of control occurs with respect to the Company.
For the purpose of Statutory Instrument 277/2007 Transparency (Directive 2004/109/EC) Regulations 2007, the
Sustainability Report as published on the CRH website is deemed to be incorporated in this part of the Directors’
Report, together with the following sections of this annual report: the Chairman’s Introduction on page 3, the
Strategy Review section on pages 8 to 11, the Principal Risks and Uncertainties section on pages 113 to 119,
the Business Performance Review on pages 20 to 49, the details of earnings per Ordinary Share in note 12 to
the Consolidated Financial Statements, details of derivative financial instruments in note 24, the details of the
re-issue of Treasury Shares in note 28 and details of employees in note 5.
This Annual Report contains certain forward-looking statements with respect to the financial condition, results of
operations, business, viability and future performance of CRH and certain of the plans and objectives of CRH.
These forward-looking statements may generally, but not always, be identified by the use of words such as “will”,
“anticipates”, “should”, “expects”, “is expected to”, “estimates”, “believes”, “intends” or similar expressions.
By their nature, forward-looking statements involve risk and uncertainty because they relate to events and
depend on circumstances that may or may not occur in the future and reflect the Company’s current
expectations and assumptions as to such future events and circumstances that may not prove accurate. A
number of material factors could cause actual results and developments to differ materially from those expressed
or implied by these forward-looking statements, certain of which are beyond our control and which include,
among other things: economic and financial conditions generally in various countries and regions where we
operate; the pace of recovery in the overall construction and building materials sector; demand for infrastructure,
residential and non-residential construction in our geographic markets; increased competition and its impact on
prices; increases in energy and/or raw materials costs; adverse changes to laws and regulations; approval or
allocation of funding for infrastructure programs; adverse political developments in various countries and regions;
failure to complete or successfully integrate acquisitions; and the specific factors identified in the discussions
accompanying such forward-looking statements and in the Principal Risks and Uncertainties included at pages
113 to 119 of this Directors’ Report.
You should not place undue reliance on any forward-looking statements. The Principal Risks and Uncertainties
included at pages 113 to 119 of this Directors’ Report could cause the Company’s results to differ materially
from those expressed in forward-looking statements. There may be other risks and uncertainties that the
Company is unable to predict at this time or that the Company currently does not expect to have a material
adverse effect on its business. These forward-looking statements are made as of the date of this Directors’
Report. The Company expressly disclaims any obligation to update these forward-looking statements other than
as required by law.
The forward-looking statements in this Annual Report do not constitute reports or statements published in
compliance with any of Regulations 4 to 8 and 26 of the Transparency (Directive 2004/109/EC) Regulations
2007.
109
CRH Annual Report I 2015 Directors’ Report | continued
Viability Statement
In accordance with Provision C.2.2. of the
2014 UK Corporate Governance Code, the
Board has carried out a robust assessment of
the principal risks facing the Group, including
those which would threaten its business
model, future performance, solvency or
liquidity. The nature of and the strategies,
practices and controls to mitigate those
risks are addressed in the principal risks and
uncertainties section on pages 113 to 119 of
this Directors’ Report.
Using the Group Strategic Plan (“the Plan”),
which is prepared annually on a bottom-
up basis and is submitted to Board for
approval, the prospects of the Group have
been assessed over a five-year period from
1 January 2016 to 31 December 2020
inclusive. The projections in the Plan consider
the Group’s cash flows, committed funding
and liquidity positions, forecast future funding
requirements, banking covenants and other
key financial ratios, including those relevant
to maintaining the Group’s investment grade
credit ratings.
Appropriate stress-testing of certain
key performance, solvency and liquidity
assumptions underlying the Plan has been
conducted taking account of the principal
risks and uncertainties faced and possible
severe but plausible combinations of those
risks and uncertainties. Whilst each of the
principal risks and uncertainties set out in this
Directors’ Report could have an impact, the
sensitivity analysis focused on the economic
environment (captioned “Industry Cyclicality”
in the Principal Risks & Uncertainties
disclosure), acquisition integration
(captioned “Acquisition Activity”) and
regulatory compliance (captioned “Laws and
Regulations”) and presumed the availability
and effectiveness of various mitigating actions
which could realistically be implemented to
avoid or reduce the impact or occurrence of
those risks and uncertainties. In evaluating
the likely effectiveness of such actions, the
conclusions of the Board’s regular monitoring
and review of risk management and internal
control systems were taken into account.
110
As a result of this assessment, the Board
has a reasonable expectation that the Group
will be able to continue in operation and
meet its liabilities as they fall due over the
aforementioned five-year period.
of the Group’s operations and the Group’s
decentralised structure. The principal risks
and uncertainties are set out on page 113 to
119 and are deemed to be incorporated in
this part of the Directors’ Report.
Going Concern
The Group’s business activities, together
with the factors likely to affect its future
development, performance and position
are set out in the Strategy Review and in
this report on pages 8 to 17 and 113 to
119 respectively. The financial position of
the Group, its cash flows, liquidity position
and borrowing facilities are described in the
Business Performance Review on pages
20 to 49. In addition, notes 20 to 24 to the
Consolidated Financial Statements include the
Group’s objectives, policies and processes
for managing its capital; its financial risk
management objectives; details of its financial
instruments and hedging activities; and its
exposures to credit, currency and liquidity
risks.
The Group has considerable financial
resources and a large number of customers
and suppliers across different geographic
areas and industries. In addition, the local
nature of building materials means that the
Group’s products are not usually shipped
cross-border.
Having assessed the relevant business risks,
the Directors believe that the Group is well
placed to manage these risks successfully,
and they have a reasonable expectation that
CRH plc, and the Group as a whole, has
adequate resources to continue in operational
existence for the foreseeable future. For this
reason, they continue to adopt the going
concern basis in preparing the Consolidated
Financial Statements.
Principal Risks and Uncertainties
Under Section 327(1)(b) of the Companies
Act 2014 and Regulation 5(4)(c)(ii) of the
Transparency (Directive 2004/109/EC)
Regulations 2007, CRH is required to give
a description of the principal risks and
uncertainties which it faces. These risks and
uncertainties reflect the international scope
Risk Management and Internal
Control
The Directors confirm that, in addition to
the monitoring carried out by the Audit
Committee under its terms of reference,
they have reviewed the effectiveness of
the Group’s risk management and internal
control systems up to and including the date
of approval of the financial statements. This
had regard to all material controls, including
financial, operational and compliance controls
that could affect the Group’s business.
Directors’ Remuneration Report
Resolution 3 to be proposed at the 2016
Annual General Meeting deals with the 2016
Directors’ Remuneration Report (excluding
the Remuneration Policy Report), as set out
on pages 70 to 93, which the Board has
again decided to present to shareholders for
the purposes of a non-binding advisory vote.
This is in line with international best practice.
Resolution 4 to be proposed at the 2016
Annual General Meeting deals with the
Remuneration Policy for the three-year period
from April 2016 to April 2019, as set out on
pages 95 to 106, which the Board has also
decided to present to shareholders for the
purposes of a non-binding advisory vote.
The Directors believe that the resolution will
provide shareholders with an opportunity to
have a say on the framework within which
remuneration matters are dealt with.
Directors’ Fees
An ordinary resolution will be proposed at
the 2016 Annual General Meeting to
increase the limit of the aggregate fees for
non-executive Directors to €875,000. The
current limit, approved at the 2005 Annual
General Meeting, is €750,000. The proposed
increase allows for an increase in the number
of non-executive Directors and capacity for
fee increases over time.
CRH Annual Report I 2015 Changes to the Board of
Directors
• Mr. P.J. Kennedy was appointed to the
Board with effect from 1 January 2015.
• Ms. L.J. Riches was appointed to the
Board with effect from 1 March 2015.
• Mr. J.W. Kennedy and Mr. D.N. O’
Connor retired from the Board on
7 May 2015.
• Ms. R. McDonald was appointed to the
Board with effect from 1 September
2015.
• Mr. S. Murphy was appointed to the
Board with effect from 4 January 2016.
• Mr. B. Teuber will be appointed to the
Board with effect from 3 March 2016.
• Mr. U-H Felcht and Mr. W.P. Egan will
retire from the Board at the conclusion of
the Annual General Meeting to be held
on 28 April 2016.
Under the Company’s Articles of Association,
co-opted Directors are required to submit
themselves to shareholders for election at
the Annual General Meeting following their
appointment and all Directors are required to
submit themselves for re-election at intervals
of not more than three years. However, in
accordance with the provisions contained
in the UK Corporate Governance Code, the
Board has decided that all Directors eligible
for re-election should retire at each Annual
General Meeting and offer themselves for
re-election.
Auditors
As required under Section 381(1)(b) of
the Companies Act 2014, the Annual
General Meeting agenda includes a
resolution authorising the Directors to fix the
remuneration of the Auditors.
Section 383 of the Companies Act 2014
provides for the automatic re-appointment
of the auditor of an Irish Company at a
company’s annual general meeting, unless
the auditor has given notice in writing of
his unwillingness to be re-appointed or a
resolution has been passed at that meeting
appointing someone else or providing
expressly that the incumbent auditor shall not
be re-appointed. The Auditors, Ernst & Young,
Chartered Accountants, are willing to continue
in office.
Notwithstanding the provisions of Irish
company law, the Board has decided to
provide shareholders with an opportunity to
have a say on the continuance in office of
Ernst & Young and a non-binding resolution
has been included on the agenda for the
2016 Annual General Meeting for this
purpose.
Authority to Allot Shares
The Directors require the authority of the
shareholders to allot any unissued share
capital of the Company. Accordingly, an
ordinary resolution will be proposed at the
2016 Annual General Meeting to grant
authority for that purpose. The authority will be
for the total amount of the available unissued
share capital, which represents 51.86% of the
issued share capital as at 2 March 2016. The
authority being sought at the 2016 Annual
General Meeting is an increase from the
authority granted by shareholders in 2015,
which was set at 33% of the issued share
capital. The proposed increased authority
is in line with general market trends and is
in accordance with generally accepted best
practice. The resolution to be considered at
the 2016 Annual General Meeting provides
that any allotment exceeding 33% of the
issued share capital would be made pursuant
to a fully pre-emptive rights issue.
No issue of shares will be made which could
effectively alter control of the Company
without prior approval of the Company in
General Meeting. The Directors have no
present intention of making any issue of
shares. If approved, this authority will expire
on the earlier of the date of the Annual
General Meeting in 2017 or 27 July 2017.
Disapplication of Pre-emption
Rights
A special resolution will be proposed at the
2016 Annual General Meeting to authorise the
Directors 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 total number
of shares which the Directors may issue under
this authority will be limited to a number which
is equivalent to 10% of the issued share
capital of the Company as at 2 March 2016.
The authority being sought at the 2016
Annual General Meeting is an increase from
the authority granted by shareholders in 2015,
which was set at 5% of the issued share
capital. The Directors confirm that they intend
to follow the Statement of Principles updated
by the Pre-emption Group in March 2015 (the
“2015 Principles”) and that any allotment in
excess of 5% of the issued share capital will
only be used in connection with an acquisition
or specified capital investment. If approved,
this authority will expire on the earlier of the
date of the Annual General Meeting in 2017
or 27 July 2017.
The Directors also confirm that they intend to
follow the 2015 Principles in that allotments of
shares for cash and the re-issue of Treasury
Shares on a non-pre-emptive basis, other
than for rights issues to ordinary shareholders
and employees’ share schemes or as
permitted in connection with an acquisition
or specified capital investment as described
above, will not exceed 7.5% of the issued
Ordinary/Income share capital within a rolling
three-year period without prior consultation
with its shareholders.
Transactions in Own Shares
During 2015, 2,980,193 (2014: 2,175,649)
Treasury Shares were re-issued under the
Group’s Share Schemes. As at 2 March
2016, 791,305 shares were held as Treasury
Shares, equivalent to 0.09% of the Ordinary
Shares in issue (excluding Treasury Shares).
A special resolution will be proposed at the
2016 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
at the date of the Annual General Meeting.
111
CRH Annual Report I 2015 Directors’ Report | continued
If approved, the minimum price which
may be paid for shares purchased by the
Company shall not be less than the nominal
value of the shares and the maximum
price will be 105% of the higher of the last
independent trade in the Company’s shares
(or current independent bid, if higher) and the
average market price of such shares over
the preceding five days. A special resolution
will also be proposed for the purpose of
renewing the authority to set the maximum
and minimum prices at which Treasury
Shares (effectively shares purchased and
not cancelled) may be re-issued off-market
by the Company. If granted, both of these
authorities will expire on the earlier of the
date of the Annual General Meeting in 2017
or 27 July 2017.
As at 2 March 2016, options to subscribe
for a total of 9,209,910 Ordinary/Income
Shares are outstanding, representing 1.1%
of the issued Ordinary/lncome share capital
(excluding Treasury Shares). If the authority
to purchase Ordinary/Income Shares was
used in full, the options would represent
1.2% of the remaining shares in issue.
The Directors do not have any current
intention of exercising the power to
purchase the Company’s own shares and
will only do so if they consider it to be in
the best interests of the Company and its
shareholders.
Authority to Offer Scrip
Dividends
An ordinary resolution will be proposed at the
2016 Annual General Meeting to renew the
Directors’ authority to make scrip dividend
offers. This authority will apply to dividends
declared or to be paid commencing on 28
April 2016. Unless renewed at the Annual
General Meeting in 2017, this authority shall
expire at the close of business on 27 July
2017.
Annual General Meeting
A circular to shareholders, which will
contain the Notice of Meeting for the 2016
Annual General Meeting, will be posted to
shareholders on 30 March 2016.
112
Statement of Directors’
Responsibilities
The Directors as at the date of this report,
whose names are listed on pages 52
to 55, are responsible for preparing the
Annual Report and Consolidated Financial
Statements in accordance with applicable
laws and regulations.
Irish Company law requires the Directors to
prepare financial statements for each financial
year which give a true and fair view of the
assets, liabilities, financial position of the
Parent Company and of the Group and of the
profit or loss of the Group taken as a whole
for that period (the “Consolidated Financial
Statements”).
In preparing the Consolidated Financial
Statements, 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 Directors are required by the
Transparency (Directive 2004/109/EC)
Regulations 2007 and the Transparency
Rules of the Central Bank of Ireland to
include a management report containing
a fair review of the development and
performance of the business and the
position of the Parent Company and of the
Group taken as a whole and a description
of the principal risks and uncertainties facing
the Group.
The Directors confirm that to the best of
their knowledge they have complied with the
above requirements in preparing the 2015
Annual Report and Consolidated Financial
Statements.
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 210 to 216), 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
Company Financial Statements in accordance
with Irish law and accounting standards
issued by the Financial Reporting Council
and promulgated by the Institute of Chartered
Accountants in Ireland (Generally Accepted
Accounting Practice in Ireland), including
FRS 102, the Financial Reporting Standard
applicable in the UK and Republic of Ireland.
The Directors are responsible for keeping
adequate accounting records which disclose
with reasonable accuracy at any time the
financial position of the Parent Company
and which enable them to ensure that the
Consolidated Financial Statements are
prepared in accordance with applicable
International Financial Reporting Standards as
adopted by the European Union and comply
with the provisions of the Companies Act
2014 and Article 4 of the IAS Regulation.
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.
The Directors 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.
Each of the Directors, whose names are
listed on pages 52 to 55, confirms that
they consider that the Annual Report and
Consolidated Financial Statements, taken as
a whole, is fair, balanced and understandable
and provides the information necessary
for shareholders to assess the Company’s
position, performance, business model and
strategy.
CRH Annual Report I 2015 Principal Risks and Uncertainties
Under Section 327(1)(b) of the Companies Act 2014 and Regulation 5(4)(c)(ii) of the Transparency (Directive 2004/109/EC) Regulations 2007,
the Group is required to give a description of the principal risks and uncertainties which it faces. These risks and uncertainties reflect the
international scope of the Group’s operations and the Group’s decentralised structure.
Strategic Risks and Uncertainties
Risk
Description
Impact
How we Manage the Risk
Industry
Cyclicality
Political and
Economic
Uncertainty
Failure of the Group to
respond on a timely basis
and/or adequately to
unfavourable events
beyond its control may
adversely affect financial
performance.
The level of construction
activity in local and national
markets is inherently cyclical
being influenced by a wide
variety of factors including
global and national economic
circumstances, ongoing
austerity programmes in the
developed world,
governments’ ability to fund
infrastructure projects,
consumer sentiment and
weather conditions. Financial
performance may also be
negatively impacted by
unfavourable swings in fuel
and other commodity/raw
material prices.
As an international business,
the Group operates in many
countries with differing, and in
some cases, potentially
fast-changing economic,
social and political conditions.
These conditions could include
political unrest, currency
disintegration, strikes, civil
disturbance and other forms of
instability including natural
disasters, epidemics,
widespread transmission of
diseases and terrorist attacks.
These factors are of particular
relevance in developing/
emerging markets.
Changes in these
conditions, or in the
governmental or regulatory
requirements in any of the
countries in which the
Group operates, may
adversely affect the Group’s
business, results of
operations, financial
condition or prospects thus
leading to possible
impairment of financial
performance and/or
restrictions on future growth
opportunities.
• CRH’s market and product diversification strategy,
in addition to the spread of activity across multiple
end-use sectors means that recession would need
to be general across the US and/or Europe to have
a significant impact at Group level. CRH’s
geographic footprint is spread across 31 countries
and multiple end-use sectors. CRH is the largest
building materials company in North America and
is a regional leader in Europe with strategic
positions in Asia.
• Through an ingrained philosophy of business
improvement, the Group is strongly committed to
ongoing cost control, strong cash generation and
disciplined financial management. This
commitment, and the strength of its reporting and
internal control systems, assist the Group in
responding quickly and hence mitigating the
volatility associated with cyclicality.
• The Group prioritises dynamic capital allocation
and reallocation aimed at ensuring profitable
growth across the Group’s network of businesses.
• The annual budgeting process is undertaken in
two phases with prevailing economic and market
forecasts factored into performance targets.
• Commentaries and economic indicators are
provided to senior management and Board on a
monthly basis together with trading results and
forecasts to facilitate tracking of political and
economic events which may create uncertainties
as to financial performance.
• Where political tensions are heightened, or
materialise, mitigation strategies are in place to
protect CRH’s people and assets.
113
CRH Annual Report I 2015 Directors’ Report | continued
Strategic Risks and Uncertainties | continued
Risk
Description
Impact
How we Manage the Risk
Commodity
Products and
Substitution
The Group faces strong
volume and price competition
across its product lines. In
addition, existing products
may be replaced by substitute
products which the Group
does not produce or
distribute.
Acquisition Activity
Joint Ventures and
Associates
114
Growth through acquisition
and active management of the
Group’s business portfolio are
key elements of the Group’s
strategy with the Group’s
balanced portfolio growing
year on year through bolt-on
activity occasionally
supplemented by larger and/
or step-change transactions.
In 2015, the Group completed
the largest transaction in its
history, namely the acquisition
of the LH Assets across 11
countries.
In addition, the Group may be
liable for the past acts,
omissions or liabilities of
companies or businesses it
has acquired.
The Group does not have a
controlling interest in certain of
the businesses (i.e. joint
ventures and associates) in
which it has invested and may
invest. The absence of a
controlling interest gives rise
to increased governance
complexity and a need for
proactive relationship
management, which may
restrict the Group’s ability to
generate adequate returns
and to develop and grow
these businesses.
Against this backdrop, if the
Group fails to generate
competitive advantage
through differentiation and
innovation across the value
chain (for example, through
superior product quality,
engendering customer
loyalty or excellence in
logistics), market share, and
thus financial performance,
may decline.
The Group may not be able
to continue to grow as
contemplated in its
business plans if it is unable
to identify attractive targets
(including potential new
platforms for growth),
execute full and proper due
diligence, raise funds on
acceptable terms, complete
such acquisition
transactions, integrate the
operations of the acquired
businesses and realise
anticipated levels of
profitability and cash flows.
If the Group is held liable for
the past acts, omissions or
liabilities of companies or
businesses it has acquired,
those liabilities may either
be unforeseen or greater
than anticipated at the time
of the relevant acquisition.
These limitations could
impair the Group’s ability to
manage joint ventures and
associates effectively and/
or realise the strategic goals
for these businesses. In
addition, improper
management or ineffective
policies, procedures or
controls for non-controlled
entities could adversely
affect the business, results
of operations or financial
condition of the relevant
investment.
• CRH endeavours to counter the competitive
positioning difficulties posed by low barriers to
entry across many of its markets, products and
services through focusing on customer service
and other means of differentiation.
•
Innovation and research and development are
aimed at ensuring that the Group is constantly
aligning its products and services to the demands
of customers. These activities are supported by
the Group Sustainability function.
• Further details are outlined in the sustainability
section of the Governance Appendix,
at www.crh.com and in the Group Sustainability
Report, issued annually and approved by the
Board.
• CRH has traditionally grown through acquisition
and as such has developed significant expertise in
identifying and evaluating appropriate targets and
conducting due diligence and subsequent
integration.
• Many of the Group’s core markets remain
fragmented or relatively unconsolidated and will
continue to offer growth opportunities via the
proven acquisition model in the decades ahead.
• The Group’s detailed due diligence programme is
supported by external specialists where internal
expertise or resources do not exist or are
insufficient.
•
In respect of the LH Assets, well-tested integration
processes and procedures were implemented and
will continue into 2016.
• Further discussion is provided in the Business
Performance Review, Chairman’s Introduction and
Chief Executive’s Review.
• Board-approved governance protocols are in
place which require acquisition/investment
contracts to contain appropriate provisions as
regards future Board participation and ongoing
management and interaction, amongst other
items.
•
In joint venture arrangements, CRH has
traditionally appointed CRH personnel, by way of
the legal agreement entered into, to facilitate
integration, assist in best practice transfer and
drive performance and growth.
CRH Annual Report I 2015 Strategic Risks and Uncertainties | continued
Risk
Description
Impact
How we Manage the Risk
In the longer term, failure to
manage talent and plan for
leadership and succession
could impede the realisation
of core strategic objectives
around performance and
growth.
• Succession planning and talent management
initiatives are implemented in an organised and
concerted way in respect of all senior
management positions across the Group. These
exercises are promoted and co-ordinated by
Group Human Resources & Talent Management
with support from senior operational and HR
executives across the Group.
• Through appropriate structures, the Group and its
operating entities seek to maintain positive
employee and trade/labour union relations which
are key to successful operations.
Human Resources
Existing processes to recruit,
develop and retain talented
individuals and promote their
mobility may be inadequate
thus giving rise to employee/
management attrition,
difficulties in succession
planning and inadequate
“bench strength”, potentially
impeding the continued
realisation of the core strategy
of performance and growth. In
addition, the Group is
exposed to various risks
associated with collective
representation of employees
in certain jurisdictions, these
risks could include strikes and
increased wage demands with
possible reputational
consequences.
Corporate
Affairs and
Communications
As a publicly-listed company,
the Group undertakes regular
communications with its
stakeholders. Given that these
communications may contain
forward-looking statements,
which by their nature involve
uncertainty, actual results and
developments may differ from
those communicated due to a
variety of external and internal
factors giving rise to
reputational risk.
Failure to deliver on
performance indications
and non-financial
commitments
communicated to the
Group’s variety of
stakeholders could result in
a reduction in share price,
reduced earnings and
reputational damage.
• The strategic, operational and financial
performance of the Group and its constituent
entities is reported to the Board on a monthly
basis with all results announcements and other
externally-issued documentation being discussed
by the Board/Audit Committee prior to release.
• Communications with stakeholders are given high
priority and the Group devotes considerable time
and resources each year to stakeholder
engagement. The Group has an active and
well-recognised investor relations programme
fostering openness and transparency in
communications with shareholders. CRH
recognises the importance of effective dialogue as
an integral element of good corporate
governance.
115
CRH Annual Report I 2015 Directors’ Report | continued
Operational Risks and Uncertainties
Risk
Description
Impact
How we Manage the Risk
Cyber and
Information
Security/
Technology
Sustainability
As a result of the proliferation
of information technology in
the world today, the Group is
dependent on the
employment of advanced
information systems and is
exposed to risks of failure in
the operation of these
systems. Further, the Group is
exposed to security threats to
its digital infrastructure
through cyber-crime. Such
attacks are by their nature
technologically sophisticated
and may be difficult to detect
and defend in a timely fashion.
The Group is subject to
stringent and evolving laws,
regulations, standards and
best practices in the area of
sustainability (comprising
corporate governance,
environmental management
and climate change
(specifically capping of
emissions), health & safety
management and social
performance).
Should a threat materialise,
it might lead to interference
with production processes,
manipulation of financial
data, the theft of private
data or misrepresentation
of information via digital
media. In addition to
potential irretrievability or
corruption of critical data,
the Group could suffer
reputational losses,
regulatory penalties and
incur significant financial
costs in remediation.
Non-adherence to such
laws, regulations, standards
and best practices may
give rise to increased
ongoing remediation and/or
other compliance costs and
may adversely affect the
Group’s business, results of
operations, financial
condition and/or prospects.
Compliance Risks and Uncertainties
Laws and
Regulations
The Group is subject to many
local and international laws
and regulations, including
those relating to competition
law, corruption and fraud,
across many jurisdictions of
operation and is therefore
exposed to changes in those
laws and regulations and to
the outcome of any
investigations conducted by
governmental, international or
other regulatory authorities.
Potential breaches of local
and international laws and
regulations in the areas of
competition law, corruption
and fraud, among others,
could result in the
imposition of significant
fines and/or sanctions for
non-compliance, and may
inflict reputational damage.
• Ongoing strategic and tactical efforts to address
the evolving nature of cyber threats and the
challenges posed, including the revision of internal
practices and controls.
• Enhancement of existing information and cyber
security practices towards best practices for
organisational assets, which include people,
processes and technology.
• Ongoing investment and development of risk
management and governance associated with
information and cyber security.
• CRH’s strategy and business model are built
around sustainable, responsible and ethical
performance. Sustainability and CSR concepts
are embedded in all CRH operations and
activities. Excellence in the areas of Health &
Safety, Environment & Climate Change,
Governance and People & Community is a daily
priority of line management.
• The Group has implemented detailed policies and
procedures promoting Health & Safety,
Environmental Practices and Energy Efficiency.
• Further details are outlined in the Sustainability
Report, issued annually and approved by the
Board.
• CRH’s Code of Business Conduct, which was
substantially revised in 2014 and is in effect
mandatorily across the Group, stipulates best
practice in relation to regulatory and compliance
matters amongst other issues. The Code is
available on www.crh.com.
• Proactive on-the-ground engagement throughout
the Group through an extensive training
programme, a dedicated whistleblowing hotline
(the results of which are reported to the Audit
Committee) and detailed policies and procedures
to support the Code of Business Conduct.
• Significant internal controls and compliance
policies have been implemented in order to
promote strong and ongoing compliance with all
laws and regulations, including the UK Bribery
Act, 2010 and the US Foreign Corrupt Practices
Act, 1977.
116
CRH Annual Report I 2015 Financial and Reporting Risks and Uncertainties
Risk
Description
Impact
How we Manage the Risk
Financial
Instruments
(interest rate and
leverage, foreign
currency,
counterparty,
credit ratings and
liquidity)
The Group uses financial
instruments throughout its
businesses giving rise to
interest rate and leverage,
foreign currency, counterparty,
credit rating and liquidity risks.
A significant portion of the
cash generated by the Group
from operational activity is
currently dedicated to the
payment of principal and
interest on indebtedness. In
addition, the Group has
entered into certain financing
agreements containing
restrictive covenants requiring
it to maintain a certain
minimum interest coverage
ratio and a certain minimum
net worth.
A downgrade of the
Group’s credit ratings may
give rise to increases in
funding costs in respect of
future debt and may impair
the Group’s ability to raise
funds on acceptable terms.
In addition, insolvency of
the financial institutions with
which the Group conducts
business (or a downgrade
in their credit ratings) may
lead to losses in derivative
assets and cash and cash
equivalents balances or
render it more difficult either
to utilise existing debt
capacity or otherwise
obtain financing for
operations.
Defined Benefit
Pension Schemes
and Related
Obligations
The Group operates a number
of defined benefit pension
schemes and related
obligations (for example,
termination indemnities and
jubilee/long-term service
benefits, which are accounted
for as defined benefit) in
certain of its operating
jurisdictions. The assets and
liabilities of defined benefit
pension schemes may exhibit
significant period-on-period
volatility attributable primarily
to asset values, changes in
bond yields/discount rates
and anticipated longevity.
In addition to the
contributions required for
the ongoing service of
participating employees,
significant cash
contributions may be
required to remediate
deficits applicable to past
service. Further, fluctuations
in the accounting surplus/
deficit may adversely
impact credit metrics thus
harming the Group’s ability
to raise funds.
• Fixed and floating rate debt and interest rate
swaps are used to manage borrowing costs, while
currency swaps and forward foreign currency
contracts are used to manage currency exposures
and to achieve the desired profile of borrowings.
• The Group seeks to ensure that sufficient
resources are available to meet the Group’s
liabilities as they fall due through a combination of
cash and cash equivalents, cash flows and
undrawn committed bank facilities. Systems are in
place to monitor and control the Group’s liquidity
risks, which are reported to the Board on a
monthly basis. Cash flow forecasting is provided
to executive management on a daily basis.
• 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.
• All of the Group’s financial counterparties are
leading financial institutions of international scope
with a minimum A- S&P credit rating.
• Please see note 21 to the Consolidated Financial
Statements for further detail.
• Where feasible, defined benefit pension schemes
have been closed to future accrual. Where closure
to future accrual was not feasible for legal and
other reasons, the relevant final salary schemes
were transitioned to a career average
methodology for future service with severance of
the final salary link and the introduction of defined
contribution for new entrants.
• De-risking frameworks (for example, Liability-
Driven Investment techniques) have been
instituted to mitigate deficit volatility and enable
better matching of investment returns with the
cash outflows related to benefit obligations.
• A Group Pension Advisory Committee has been
established to provide support to trustees on the
investment strategies pursued together with other
matters.
• Defined benefit pension scheme exposures and
the mitigation strategies are reviewed by the Audit
Committee on a periodic basis.
117
CRH Annual Report I 2015 Directors’ Report | continued
Financial and Reporting Risks and Uncertainties | continued
Risk
Description
Impact
How we Manage the Risk
Adequacy of
Insurance
Arrangements and
Related
Counterparty
Exposures
Foreign Currency
Translation
The building materials sector
is subject to a wide range of
operating risks and hazards,
not all of which can be
covered, adequately or at all,
by insurance; these risks and
hazards include climatic
conditions such as floods and
hurricanes/cyclones, seismic
activity, technical failures,
interruptions to power
supplies, industrial accidents
and disputes, environmental
hazards, fire and crime. In its
worldwide insurance
programme, the Group
provides coverage for its
operations at a level believed
to be commensurate with the
associated risks.
The principal foreign exchange
risks to which the
Consolidated Financial
Statements are exposed
pertain to adverse movements
in reported results when
translated into euro (which is
the Group’s reporting
currency) together with
declines in the euro value of
net investments which are
denominated in a wide basket
of currencies other than the
euro.
In the event of failure of one
or more of the Group’s
counterparties, the Group
could be impacted by
losses where recovery from
such counterparties is not
possible. In addition, losses
may materialise in respect
of uninsured events or may
exceed insured amounts.
•
Insurance protection is maintained with leading,
highly-rated international insurers with appropriate
risk retention by wholly-owned insurance
companies and by insured entities in the context
of deductibles/excesses borne.
• Strong adherence to Group policies on property
management, quality control, Information Security,
Health & Safety and Sustainability assist in
avoiding potential loss events. Insurance captives
play a critical role in CRH’s insurable risk
management strategies.
• Constant monitoring of the risk environment to
determine whether all key risks are covered by
insurance, where practicable and sensible.
Adverse changes in the
exchange rates used to
translate these and other
foreign currencies into euro
have impacted and will
continue to impact retained
earnings. The annual
impact is reported in the
Consolidated Statement of
Comprehensive Income.
• The Group’s activities are conducted primarily in
the local currency of operation resulting in low
levels of foreign currency transactional risk.
• The Group’s established policy is to spread its net
worth across the currencies of the various
operations with the objective of limiting its
exposure to individual currencies and thus
promoting consistency with the geographical
balance of its operation.
• The Group manages its multi-currency borrowings
through hedging a portion of its foreign currency
assets.
• Sensitivity analysis is conducted in order to
understand the impact of significant variances in
currency fluctuations.
118
CRH Annual Report I 2015 Financial and Reporting Risks and Uncertainties | continued
Risk
Description
Impact
How we Manage the Risk
Goodwill
Impairment
Significant underperformance
in any of the Group’s major
cash-generating units or the
divestment of businesses in
the future may give rise to a
material write-down of
goodwill.
A write-down of goodwill
could have a substantial
impact on the Group’s
income and equity.
• Economic indicators of goodwill impairment are
monitored closely through the monthly reporting
process and regular senior management dialogue
in order to ensure that potential impairment issues
are flagged on a timely basis and corrective action
taken, where feasible.
• Detailed impairment testing in respect of each of
the cash-generating units across the Group is
undertaken prior to year-end for the purposes of
the Consolidated Financial Statements.
• The goodwill impairment assessment is subject to
regular review by the Audit Committee.
• For further information on how we manage the
risk posed by Goodwill Impairment, please refer to
note 14 to the Consolidated Financial Statements
on page 165 to 168.
Inspections by
Public Company
Accounting
Oversight Board
Our auditors, like other
independent registered public
accounting firms operating in
Ireland and a number of other
European countries, are not
currently permitted to be
subject to inspection by the
PCAOB.
Investors who rely on the
audit report prepared by the
Group’s auditors are
deprived of the benefits of
PCAOB inspections to
assess audit work and
quality control procedures.
• Auditors in Ireland are subject to strenuous
internal reviews by the relevant regulators and by
their regional and international offices to ensure
auditing standards remain at an appropriate level.
• Auditing practices are built on IFRS and PCAOB
rules to ensure that audit work is conducted in
accordance with best international standards.
On behalf of the Board,
N. Hartery, A. Manifold
Directors
2 March 2016
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CRH Annual Report I 2015
Financial Statements
Independent Auditor’s Report
122
Consolidated Financial Statements 132
Accounting Policies
Notes on Consolidated
Financial Statements
137
148
121
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CRH Annual Report I 2015 Independent Auditor’s Report
to the members of CRH plc
Our opinion on the financial statements
In our opinion:
• CRH plc’s Group financial statements and Company financial statements (the “financial statements”) give a true and fair view of the assets,
liabilities and financial position of the Group’s and of the Company’s affairs as at 31 December 2015 and of the Group’s profit for the year
then ended;
•
•
•
the Group financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the Company financial statements have been properly prepared in accordance with Generally Accepted Accounting Practice in Ireland; and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2014, and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
What we have audited
CRH plc’s financial statements comprise:
Group
Company
Consolidated Income Statement for the year ended 31 December 2015
Balance Sheet as at 31 December 2015
Consolidated Statement of Comprehensive Income for the year then ended
Statement of Changes in Equity for the year then ended
Consolidated Balance Sheet as at 31 December 2015
Statement of Cash Flows for the year then ended
Consolidated Statement of Changes in Equity for the year then ended
Related notes 1 to 14 to the Company Financial Statements
Consolidated Statement of Cash Flows for the year then ended
Related notes 1 to 33 to the Consolidated Financial Statements
The financial reporting framework that has been applied in the preparation of the Group Financial Statements is Irish law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied in the preparation of the
Company Financial Statements is Irish law and accounting standards issued by the Financial Reporting Council and promulgated by the Institute
of Chartered Accountants in Ireland (Generally Accepted Accounting Practice in Ireland), including FRS 102 The Financial Reporting Standard
applicable in the UK and Republic of Ireland.
122
CRH Annual Report I 2015 Independent Auditor’s Report | continued
Overview of our audit approach
Risks of material misstatement
• Assessment of the carrying value of goodwill.
• Assessment of the carrying value of property, plant and equipment and financial assets.
• Revenue recognition for construction contracts.
• Accounting for acquisitions and disposals.
•
In relation to the acquisition of certain assets from Lafarge S.A. and Holcim Limited (the “LH Assets”), fair
value accounting for property, plant and equipment and provisions.
•
In relation to the C.R. Laurence (“CRL”) acquisition, identification and valuation of acquired intangible assets.
Audit Scope
• We performed an audit of the complete financial information of 28 components and performed audit
procedures on specific balances for a further 63 components.
• The components where we performed either full or specific audit procedures accounted for 98% of profit
before tax, 90% of revenue and 87% of total assets.
•
“Components” represent business units across the Group considered for audit scoping purposes.
Materiality
• Overall Group materiality was assessed to be €50 million which represents approximately 5% of profit before
tax.
123
CRH Annual Report I 2015 Independent Auditor’s Report | continued
Our assessment of risk of material misstatement
We identified the risks of material misstatement described below as those that had the greatest effect on our overall audit strategy, the allocation
of resources in the audit and the direction of the efforts of the audit team. In addressing these risks, we have performed the procedures below
which were designed in the context of the financial statements as a whole and, consequently, we do not express any opinion on these individual
areas.
What we reported to the
Audit Committee
We completed our planned audit procedures
with no adverse findings.
Consistent with the previous year, two CGUs
had allocated goodwill balances approximating
10% of total goodwill and therefore warranted
separate disclosure. In addition, 4 CGUs were
determined to be sensitive, compared to 2 in the
previous year.
Risk
Our response to the risk
Assessment of
of goodwill
the carrying value
The impairment review of goodwill, with a
carrying value of €7.4 billion, is considered to
be a risk area due to the size of the balance as
well as the fact that it involves significant
judgement by management. Judgemental
aspects
future
include assumptions of
profitability, revenue growth, margins and
forecast cash flows, and the selection of
appropriate discount rates.
There has been no change in this risk from the
prior year.
Refer to the Audit Committee Report (page
59); accounting policies (page 137); and note
14 of the Consolidated Financial Statements
(page 165).
Our specialist valuations team performed an
independent assessment against external
market data of key
inputs used by
management
in calculating appropriate
discount rates, principally risk free rates,
country risk premium and inflation rates.
We challenged the determination of the
Group’s 21 Cash Generating Units (‘CGUs’)
and flexed our audit approach relative to our
risk assessment and the level of headroom in
each CGU. For all CGUs selected for detailed
testing, we corroborated key assumptions in
the models and benchmarked growth
assumptions to external economic forecasts
and construction activity measures.
We challenged management’s sensitivity
analyses and performed our own sensitivity
calculations to assess the level of headroom
in place based on reasonably expected
movements in such assumptions.
the
adequacy
considered
We
of
management’s disclosures in respect of
impairment
the
disclosures appropriately communicate the
underlying sensitivities.
testing and whether
Our planned audit procedures were completed
without exception. An impairment charge of
€41 million was recorded in respect of PP&E
impairment.
The above procedures were performed
predominantly by the Group audit team.
In respect of the discount rate, we performed
similar procedures to those noted above for
goodwill.
The Group operates a variety of business
models and as a result the identification of
CGUs for testing is based on these business
models and management’s assessment of
impairment indicators.
Similar audit procedures to those noted
under goodwill above are performed in
respect of the key assumptions underpinning
the impairment models.
We performed the above procedures in 37
locations representing 91% of total PP&E
and financial asset carrying values.
Assessment of the carrying value of
property, plant and equipment (‘PP&E’)
and financial assets
The impairment review of PP&E and financial
assets, with a carrying value of €13.1 billion
and €1.3 billion respectively, is considered to
be a risk area due to the size of the balances as
judgemental nature of key
well as
assumptions, which may be subject
to
management override, similar to that noted in
the assessment of the carrying value of
goodwill above.
the
There has been no change in this risk from the
prior year.
Refer to the Audit Committee Report (page
59); accounting policies (page 137); and note
13 and note 15 of the Consolidated Financial
Statements (pages 164 and 169).
124
CRH Annual Report I 2015 Independent Auditor’s Report | continued
Risk
Our response to the risk
Revenue recognition for construction
contracts
the
under
There are significant accounting judgements
including determining the stage of completion,
the timing of revenue recognition and the
percentage-of-
calculation
completion method, made by management in
applying
the Group’s revenue recognition
policies to long-term contracts entered into by
the Group. The nature of these judgements
result in them being susceptible to management
override.
The majority of the Group’s construction
contracts have a maturity within one year and
most are completed prior to the year-end,
reflecting seasonality.
Total revenue for construction contracts was
€4.5 billion which represents 19% of the
Group’s revenue in 2015.
is significant seasonality
to when
There
services are rendered under these construction
contracts, with the majority of the work
performed in the summer months.
There has been no change in this risk from the
prior year.
Refer to the Audit Committee Report (page
59); accounting policies (page 137); and note 1
of the Consolidated Financial Statements
(page 148).
Accounting
disposals
for
acquisitions
and
During 2015,
the Group completed 19
acquisitions at a cost of €7.9 billion and
realised total disposal proceeds of €0.9 billion
across 30 disposals.
Acquisitions and disposals continue to be a
significant focus area for the Group and an
area where we allocate significant resources in
directing the efforts of the engagement team.
There has been no change in this risk from the
prior year. However, given the scale and nature
of the LH Assets and CRL acquisitions in the
current year, in addition to this broader risk we
have also identified specific risks in respect of
these transactions, as detailed below.
Refer to the Audit Committee Report (page
59); accounting policies (page 137); and note 4
and note 30 of the Consolidated Financial
Statements (pages 154 and 203).
We performed a range of audit procedures
included obtaining a sample of
which
contracts, reviewing
for change orders,
retrospectively reviewing estimated profit and
costs to complete and enquiring of key
personnel regarding adjustments for job
costing and potential contract losses. We
also performed testing procedures over
routine sales transactions.
We performed the above procedures in 8
locations representing 96% of construction
contract revenue recognised during the year.
Our specialist valuations team challenged
purchase price allocation adjustments,
deferred consideration and the identification
and valuation of acquired intangible assets
as all such elements involve significant
judgement by management.
In testing the accounting for disposals we
verified
including
consideration, net assets, disposal costs and
foreign exchange reserve recycling.
various
factors
We also considered the adequacy of the
related disclosures (note 4 and note 30).
The above procedures are performed both
locally and by the Group audit team, and
covered 98% of acquisition spend and
disposal proceeds.
What we reported to the
Audit Committee
As a result of our audit procedures, we believe
that revenue has been appropriately recognised
in relation to construction contracts and that the
judgements made
in
recognising revenue, margin and provisioning on
loss-making contracts are reasonable.
by management
Our procedures in respect of current year
acquisitions were focused on the LH Assets and
CRL acquisitions which together comprised
98% of total acquisition spend. Substantial audit
resources were allocated to these procedures,
including evaluation of the work done by experts
utilised by management, involvement of our own
specialists, and audit of the opening balance
sheets by component teams in all material
countries.
Whilst a number of businesses were disposed of
during the year, the most significant disposal
was of the clay units in the United Kingdom and
the United States. Our audit procedures in
respect of this and all other material disposals,
were performed as planned and without
exception.
125
CRH Annual Report I 2015 What we reported to the
Audit Committee
Our procedures in respect of PP&E fair value
adjustments concluded that the procedures
performed by management and the experts
employed by them, and the resulting valuation
conclusions, were appropriate.
For provisions, our procedures were performed
predominantly by our component teams and
focused on assessing the legal and constructive
obligations which exist and the resulting fair
value adjustments. We concluded that the fair
value adjustments processed were within an
acceptable range.
Independent Auditor’s Report | continued
Risk
Our response to the risk
In relation to the acquisition of the LH
Assets,
for
property, plant and equipment (‘PP&E’)
and provisions
fair value accounting
The significant scale of this acquisition, both in
terms of monetary value and geographical
spread across 11 countries, results in risks
related
the purchase price allocation
exercise performed by management. We
identified the following specific risk areas:
to
• Fair value adjustments to PP&E given the
asset intensive nature of the businesses
acquired, with total PP&E balances
related to LH Assets of €5.3 billion, and
the need for complex and judgemental
valuation techniques to be utilised.
• Recognition and valuation of fair value
adjustments to provisions, with total
provisions of €0.6 billion recorded in the
opening balance sheet, requiring
significant estimates and judgements to
be made by management.
As this risk relates to a transaction which took
place in 2015 it is a new area of focus for the
2015 audit and did not exist in the prior year.
Refer to the Audit Committee Report (page
59); accounting policies (page 137); and note
30 of the Consolidated Financial Statements
(page 203).
lives, direct costs
In respect of the fair value adjustments to
PP&E, we performed an evaluation of
valuation methodologies, assessed
the
appropriateness of the underlying data used,
in
tested significant assumptions
and
conjunction with our valuations specialists.
We performed corroborative procedures
including examining relevant external third
party benchmarks and performing sensitivity
analyses on key assumptions, being the
useful
inputs and
economics of relevant countries. We also
held discussions with the experts employed
by management to assist in this area and
evaluated the findings and conclusions in
their valuation report. These procedures were
predominantly performed by the Group audit
team and our valuations specialists, although
we also
leveraged the knowledge and
expertise of our component teams. Our
procedures covered the total fair value
adjustments to PP&E.
In respect of the recognition and valuation of
the fair value adjustments to provisions, we
identified all material provisions, obtained
evidence and examined the key assumptions
and calculations used to ensure they were
recorded in accordance with IFRS 3. We also
performed an evaluation of any experts
engaged by management and utilised our
own specialists where necessary. Whilst our
procedures were principally
focused on
recognition and valuation, we also assessed
the completeness of recorded provisions.
The procedures performed at a component
level were performed in 9 locations.
126
CRH Annual Report I 2015 Independent Auditor’s Report | continued
Risk
Our response to the risk
What we reported to the
Audit Committee
In relation to the CRL acquisition,
identification and valuation of acquired
intangible assets
The acquisition of CRL during the year resulted
in the recognition of separately identifiable
intangible assets and goodwill of €252 million
and €833 million respectively. Total intangible
assets comprised 22% of
total
consideration for CRL, a significantly higher
proportion than previous acquisitions.
the
The identification and valuation exercise for
these differing categories of intangible assets
involved significant estimates and judgements
to be made by management. Furthermore the
amortisation
income
statements of separately identifiable intangible
assets results in this exercise carrying a greater
risk of management override.
impact
future
in
We engaged internal valuation specialists to
examine the approach and models used by
identify and value all
management
to
intangible assets arising on
the CRL
acquisition. This assessment also addressed
the completeness risk associated with any
assets which had not been recognised.
We reviewed the intangible asset documentation
prepared by management and performed a
variety of audit procedures, including detailed
review of the valuation model and a sensitivity
analysis of key assumptions. We concluded that
the intangible assets identified and the assigned
valuations were appropriate.
local component team.
These procedures were predominantly
performed by the Group audit team, but also
In
involved the
addition, a CRL site visit was performed by
senior Group audit team members during the
planning phase in order to understand the
nature of CRL’s operations and ensure that
identified were
the
consistent with the underlying business
model.
intangible assets
As this risk relates to a transaction which took
place in 2015 it is a new area of focus for the
2015 audit and did not exist in the prior year.
Refer to the Audit Committee Report (page
59); accounting policies (page 137); and note
30 of the Consolidated Financial Statements
(page 203).
In the prior year, our auditor’s report included a risk of material misstatement in relation to accounting and disclosure requirements arising from the
application of held for sale requirements contained within IFRS 5. This reflected management’s decision in 2013 to divest of a number of business
units. In the current year, we do not believe there is a risk of material misstatement in connection with this area as a significant proportion of the
units have now been disposed of.
127
CRH Annual Report I 2015 Independent Auditor’s Report | continued
The scope of our audit
Tailoring the scope
Our assessment of audit risk, our evaluation of
materiality and our allocation of performance
materiality determine our audit scope for
each entity within the Group. Taken together,
this enables us to form an opinion on the
Consolidated Financial Statements.
In determining those components in the
Group to which we perform audit procedures,
we utilised size and risk criteria in accordance
with International Standards on Auditing (UK
and Ireland).
In assessing the risk of material misstatement
to the Group financial statements, and
to ensure we had adequate quantitative
coverage of significant accounts
in the
financial statements, we selected 91
components covering entities across Europe
and the US, which represent the principal
business units within the Group.
Of the 91 components selected, we performed
an audit of the complete financial information
of 28 components (“full scope components”)
which were selected based on their size or
risk characteristics. For the remaining 63
components (“specific scope components”),
we performed audit procedures on specific
accounts within that component that we
considered had the potential for the greatest
impact on the significant accounts in the
financial statements either because of the
size of these accounts or their risk profile.
reporting components where we
The
performed audit procedures accounted for
98% (2014: 91%) of the Group’s profit before
tax, 90% (2014: 86%) of the Group’s revenue
and 87% (2014: 87%) of the Group’s total
assets.
For the current year, the full scope components
contributed 93% (2014: 89%) of the Group’s
profit before tax, 81% (2014: 78%) of the
Group’s revenue and 78% (2014: 74%) of
the Group’s total assets. The specific scope
components contributed 5% (2014: 2%)
of the Group’s profit before tax, 9% (2014:
8%) of the Group’s revenue and 9% (2014:
13%) of the Group’s total assets. The audit
scope of these components may not have
included testing of all significant accounts of
the component but will have contributed to
the coverage of significant risks tested for the
Group.
the
remaining components, which
Of
together represent 2% of the Group’s profit
before tax, none is individually greater than
5% of the Group’s profit before tax. For
these components, we performed other
procedures, including analytical review, testing
of consolidation journals and intercompany
eliminations and foreign currency translation
recalculations to respond to any potential
risks of material misstatement to the Group
financial statements.
The charts below illustrate the coverage obtained from the work performed by our audit teams.
Profit before tax
Revenue
Total assets
5%
9%
9%
93%
81%
78%
Full scope components
Specific scope components
Other procedures
128
CRH Annual Report I 20152%10%13% Independent Auditor’s Report | continued
Involvement with component
teams
In establishing our overall approach to the
Group audit, we determined the type of work
that needed to be undertaken at each of
the components by us, as the Group audit
team, or by component auditors from other
EY global network firms operating under our
instruction.
We issued detailed instructions to each
component auditor in scope for the Group
audit, with specific audit requirements and
requests across key areas. The Group audit
team continued to perform a programme of
site visits at key locations across the Group,
visiting eight component teams during 2015
and visiting 39 component teams in the past
five years. The visits conducted during the
year involved discussing with the component
team the audit approach and any issues
arising from their work, meeting with local
management, attending planning and closing
meetings and reviewing key audit working
papers on risk areas. The Group audit team
interacted regularly with the component teams
where appropriate during various stages of
the audit, reviewed key working papers and
were responsible for the scope and direction
of the audit process. This, together with the
additional procedures performed at Group
level, gave us appropriate evidence for our
opinion on the Group financial statements.
Our application of
materiality
We apply the concept of materiality in planning
and performing the audit, in evaluating the
effect of identified misstatements on the audit
and in forming our audit opinion.
Materiality
We determined materiality for the Group to
be €50 million (2014: €36 million), which is
approximately 5% (2014: 5%) of profit before
tax. Profit before tax is a key performance
indicator for the Group and is also a key
metric used by the Group in the assessment
of the performance of management. We
therefore considered profit before tax to be
the most appropriate performance metric
on which to base our materiality calculation
as we consider it to be the most relevant
performance measure to the stakeholders of
the Group.
Performance materiality
On the basis of our risk assessments,
together with our assessment of the Group’s
overall control environment, our judgement
was that performance materiality should
be set at 50% (2014: 50%) of our planning
materiality, namely €25 million (2014: €18
million). We have set performance materiality
at this percentage due to our past experience
of the risk of misstatements, both corrected
and uncorrected.
Audit work at component locations for the
purpose of obtaining audit coverage over
significant financial statement accounts is
undertaken based on a percentage of total
performance materiality. The performance
materiality set for each component is based on
the relative scale and risk of the component to
the Group as a whole and our assessment of
the risk of misstatement at that component.
In the current year, the range of performance
materiality allocated to components was
€4.1 million to €13 million (2014: €3.6 million
to €11 million).
Reporting threshold
We agreed with the Audit Committee that we
would report to them all uncorrected audit
differences in excess of €2.1 million (2014:
€1.8 million), which is set at approximately 5%
of planning materiality, as well as differences
below that threshold that, in our view,
warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements
against both the quantitative measures of
materiality discussed above and in light of
other relevant qualitative considerations in
forming our opinion.
Scope of the audit of the
financial statements
An audit involves obtaining evidence about
the amounts and disclosures in the financial
statements sufficient to give reasonable
assurance that the financial statements are
free from material misstatement, whether
caused by fraud or error. This includes an
assessment of: whether the accounting
policies are appropriate to the Group’s and
the Company’s circumstances and have
been consistently applied and adequately
disclosed; the reasonableness of significant
accounting estimates made by the Directors;
and the overall presentation of the financial
statements. In addition, we read all the
financial
information
in the Annual Report to identify material
inconsistencies with the audited financial
statements and to identify any information that
is apparently materially incorrect based on, or
materially inconsistent with, the knowledge
acquired by us in the course of performing the
audit. If we become aware of any apparent
material misstatements or inconsistencies we
consider the implications for our report.
and non-financial
Respective responsibilities
of Directors and auditor
As explained more fully in the Directors’
Responsibilities Statement set out on page
112 the Directors are responsible for the
preparation of the financial statements and
for being satisfied that they give a true and
fair view and otherwise comply with the
Companies Act 2014. Our responsibility is to
audit and express an opinion on the financial
statements in accordance with Irish law and
(UK
International Standards on Auditing
and Ireland). Those standards require us to
comply with the Auditing Practices Board’s
Ethical Standards for Auditors.
129
CRH Annual Report I 2015 Independent Auditor’s Report | continued
Opinion on other matters prescribed by the Companies Act 2014
• We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
•
In our opinion the information given in the Directors’ Report is consistent with the financial statements and the description in the Corporate
Governance Statement of the main features of the internal control and risk management systems in relation to the process for preparing the Group
Financial Statements is consistent with the Group Financial Statements.
•
In our opinion the accounting records of the Company were sufficient to permit the Company financial statements to be readily and properly audited.
• The Company Balance Sheet is in agreement with the accounting records.
Matters on which we are required to report by exception
ISAs (UK and
Ireland) reporting
We are required to report to you if, in our opinion, financial and non-financial information in
the Annual Report is:
We have no exceptions to report.
• materially inconsistent with the information in the audited financial statements; or
apparently materially incorrect based on, or materially inconsistent with, our knowledge
of the Group acquired in the course of performing our audit; or
• otherwise misleading.
In particular, we are required to report whether we have identified any inconsistencies
between our knowledge acquired in the course of performing the audit and the Directors’
statement that they consider the Annual Report and accounts taken as a whole is fair,
balanced and understandable and provides the information necessary for shareholders to
assess the entity’s performance, business model and strategy; and whether the Annual
Report appropriately addresses those matters that we communicated to the Audit
Committee that we consider should have been disclosed.
Companies Act
2014 reporting
Listing Rules
review
requirements
We are required to report to you if, in our opinion:
We have no exceptions to report.
In respect of Sections 305 to 312 of the Companies Act 2014 we are required to report to
you if, in our opinion, the disclosures of Directors’ remuneration and transactions specified
by law are not made.
We are required to review:
We have no exceptions to report.
•
•
the Directors’ statement in relation to going concern, set out on page 110, and longer
term viability, set out on page 110;
the part of the Corporate Governance Statement relating to the Company’s compliance
with the provisions of the UK Corporate Governance Code specified for our review; and
• certain elements of the report to shareholders by the Board on Directors’ remuneration.
130
CRH Annual Report I 2015 Independent Auditor’s Report | continued
Statement on the Directors’ Assessment of the Principal Risks that would threaten
the Solvency or Liquidity of the Entity
ISAs (UK and
Ireland) reporting
We are required to give a statement as to whether we have anything material to add or to
draw attention to in relation to:
We have nothing material to add or
to draw attention to.
•
•
•
•
the Directors’ confirmation in the Annual Report that they have carried out a robust
assessment of the principal risks facing the entity, including those that would threaten
its business model, future performance, solvency or liquidity;
the disclosures in the Annual Report that describe those risks and explain how they are
being managed or mitigated;
the Directors’ statement in the financial statements about whether they considered it
appropriate to adopt the going concern basis of accounting in preparing them, and
their identification of any material uncertainties to the entity’s ability to continue to do so
over a period of at least twelve months from the date of approval of the financial
statements; and
the Directors’ explanation in the Annual Report as to how they have assessed the
prospects of the entity, over what period they have done so and why they consider that
period to be appropriate, and their statement as to whether they have a reasonable
expectation that the entity will be able to continue in operation and meet its liabilities as
they fall due over the period of their assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.
Breffni Maguire
for and on behalf of Ernst & Young
Chartered Accountants and Statutory Audit Firm
Dublin
2 March 2016
131
CRH Annual Report I 2015 2015
€m
23,635
(16,394)
7,241
(5,964)
1,277
101
1,378
(303)
8
(94)
44
1,033
(304)
729
724
5
729
89.1c
88.7c
2014
€m
18,912
(13,427)
5,485
(4,568)
917
77
994
(254)
8
(42)
55
761
(177)
584
582
2
584
78.9c
78.8c
Consolidated Income Statement
for the financial year ended 31 December 2015
Notes
1
2
Revenue
Cost of sales
Gross profit
2
Operating costs
1,3,5,6 Group operating profit
1,4
Profit on disposals
Profit before finance costs
Finance costs
Finance income
Other financial expense
Share of equity accounted investments' profit
Profit before tax
Income tax expense
Group profit for the financial year
Profit attributable to:
Equity holders of the Company
Non-controlling interests
Group profit for the financial year
Basic earnings per Ordinary Share
Diluted earnings per Ordinary Share
All of the results relate to continuing operations.
8
8
8
9
1
10
12
12
132
CRH Annual Report I 2015 Consolidated Statement of Comprehensive Income
for the financial year ended 31 December 2015
Notes
24
27
10
Group profit for the financial year
729
584
2015
€m
2014
€m
Other comprehensive income
Items that may be reclassified to profit or loss in subsequent years:
Currency translation effects
Losses relating to cash flow hedges
Items that will not be reclassified to profit or loss in subsequent years:
Remeasurement of retirement benefit obligations
Tax on items recognised directly within other comprehensive income
Total other comprehensive income for the financial year
Total comprehensive income for the financial year
Attributable to:
Equity holders of the Company
Non-controlling interests
Total comprehensive income for the financial year
661
(2)
659
203
(30)
173
832
1,561
1,538
23
1,561
599
(6)
593
(414)
69
(345)
248
832
830
2
832
133
CRH Annual Report I 2015 Consolidated Balance Sheet
as at 31 December 2015
Notes
13
14
15
15
17
24
26
16
17
24
22
28
28
28
28
31
23
24
26
18
27
25
18
23
24
25
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments accounted for using the equity method
Other financial assets
Other receivables
Derivative financial instruments
Deferred income tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Current income tax recoverable
Derivative financial instruments
Cash and cash equivalents
Assets held for sale
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
Treasury Shares and own shares
Other reserves
Foreign currency translation reserve
Retained income
Non-controlling interests
Total equity
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings
Derivative financial instruments
Deferred income tax liabilities
Other payables
Retirement benefit obligations
Provisions for liabilities
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
Liabilities associated with assets classified as held for sale
Total current liabilities
Total liabilities
Total equity and liabilities
N. Hartery, A. Manifold, Directors
134
2015
€m
13,062
7,820
1,317
28
149
85
149
22,610
2,873
3,977
5
24
2,518
-
9,397
32,007
281
1
6,021
(28)
240
700
5,800
13,015
529
13,544
8,465
5
2,023
410
588
603
12,094
4,761
401
756
19
432
-
6,369
18,463
32,007
2014
€m
7,422
4,173
1,329
23
85
87
171
13,290
2,260
2,644
15
15
3,262
531
8,727
22,017
253
1
4,324
(76)
213
57
5,405
10,177
21
10,198
5,419
3
1,305
257
711
257
7,952
2,894
154
447
20
139
213
3,867
11,819
22,017
CRH Annual Report I 2015
Consolidated Statement of Changes in Equity
for the financial year ended 31 December 2015
Attributable to the equity holders of the Company
Share
premium
account
€m
Treasury
Shares/
own
shares
€m
Foreign
currency
translation
reserve
€m
Other
reserves
€m
Issued share
capital
€m
Retained
income
€m
Non-
controlling
interests
€m
Total
equity
€m
Notes
At 1 January 2015
Group profit for the financial year
28
7
28
28
10
11
30
28
7
28
11
Other comprehensive income
Total comprehensive income
Issue of share capital (net of expenses)
Share-based payment expense
Treasury/own shares reissued
Shares acquired by Employee Benefit Trust (own shares)
Tax relating to share-based payment expense
Share option exercises
Dividends (including shares issued in lieu of dividends)
Non-controlling interests arising on acquisition of subsidiaries
At 31 December 2015
for the financial year ended 31 December 2014
At 1 January 2014
Group profit for the financial year
Other comprehensive income
Total comprehensive income
Issue of share capital (net of expenses)
Share-based payment expense
Treasury/own shares reissued
Share option exercises
Dividends (including shares issued in lieu of dividends)
Acquisition of non-controlling interests
At 31 December 2014
254
4,324
-
-
-
28
-
-
-
-
-
-
-
282
252
-
-
-
2
-
-
-
-
-
254
-
-
-
1,697
-
-
-
-
-
-
-
6,021
4,219
-
-
-
105
-
-
-
-
-
4,324
(76)
-
-
-
-
-
51
(3)
-
-
-
-
(28)
(118)
-
-
-
-
-
42
-
-
-
(76)
213
-
-
-
-
27
-
-
-
-
-
-
240
197
-
-
-
-
16
-
-
-
-
213
57
-
643
643
-
-
-
-
-
-
-
-
700
(542)
-
599
599
-
-
-
-
-
-
57
5,405
724
171
895
-
-
(51)
-
5
57
(511)
-
5,800
5,654
582
(351)
231
-
-
(42)
22
(460)
-
5,405
21
5
18
23
-
-
-
-
-
-
(4)
489
529
24
2
-
2
-
-
-
-
(4)
(1)
21
10,198
729
832
1,561
1,725
27
-
(3)
5
57
(515)
489
13,544
9,686
584
248
832
107
16
-
22
(464)
(1)
10,198
135
CRH Annual Report I 2015
Consolidated Statement of Cash Flows
for the financial year ended 31 December 2015
Notes
8
9
4
2
2
2
7
19
4
13
30
15
19
28
8
28
11
11
22
30
4
20
136
Cash flows from operating activities
Profit before tax
Finance costs (net)
Share of equity accounted investments' profit after tax
Profit on disposals
Group operating profit
Depreciation charge
Amortisation of intangible assets
Impairment charge
Share-based payment expense
Other (primarily pension payments)
Net movement on working capital and provisions
Cash generated from operations
Interest paid (including finance leases)
Corporation tax paid
Net cash inflow from operating activities
Cash flows from investing activities
Proceeds from disposals (net of cash disposed and deferred proceeds)
Interest received
Dividends received from equity accounted investments
Purchase of property, plant and equipment
Acquisition of subsidiaries (net of cash acquired)
Other investments and advances
Deferred and contingent acquisition consideration paid
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of shares (net)
Proceeds from exercise of share options
Acquisition of non-controlling interests
Increase in interest-bearing loans, borrowings and finance leases
Net cash flow arising from derivative financial instruments
Premium paid on early debt redemption
Treasury/own shares purchased
Repayment of interest-bearing loans, borrowings and finance leases
Dividends paid to equity holders of the Company
Dividends paid to non-controlling interests
Net cash inflow/(outflow) from financing activities
(Decrease)/increase in cash and cash equivalents
Reconciliation of opening to closing cash and cash equivalents
Cash and cash equivalents at 1 January
Translation adjustment
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 31 December
Reconciliation of opening to closing net debt
Net debt at 1 January
Debt in acquired companies
Debt in disposed companies
Increase in interest-bearing loans, borrowings and finance leases
Net cash flow arising from derivative financial instruments
Repayment of interest-bearing loans, borrowings and finance leases
(Decrease)/increase in cash and cash equivalents
Mark-to-market adjustment
Translation adjustment
Net debt at 31 December
2015
€m
1,033
389
(44)
(101)
1,277
843
55
44
27
(47)
585
2,784
(302)
(235)
2,247
889
8
53
(882)
(7,296)
(19)
(59)
(7,306)
1,593
57
-
5,633
47
(38)
(3)
(2,744)
(379)
(4)
4,162
(897)
3,295
120
(897)
2,518
(2,492)
(175)
20
(5,633)
(47)
2,744
(897)
(1)
(137)
(6,618)
2014
€m
761
288
(55)
(77)
917
631
44
49
16
(66)
35
1,626
(262)
(127)
1,237
345
8
30
(435)
(151)
(3)
(26)
(232)
-
22
(1)
901
(11)
-
-
(934)
(353)
(4)
(380)
625
2,540
130
625
3,295
(2,973)
(7)
-
(901)
11
934
625
(3)
(178)
(2,492)
CRH Annual Report I 2015
Accounting Policies
(including key accounting estimates and assumptions)
Basis of Preparation
The Consolidated Financial Statements of CRH
plc have been prepared in accordance with
International Financial Reporting Standards
(IFRSs) as adopted by the European Union,
which comprise standards and interpretations
approved by the International Accounting
Standards Board (IASB). 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. The Consolidated Financial
Statements are also prepared in compliance
with the Companies Act 2014 and Article 4 of
the EU IAS Regulation.
CRH plc, the Parent Company, is a publicly
traded limited company incorporated and
domiciled in the Republic of Ireland.
The Consolidated Financial Statements, which
are presented in euro millions, have been
prepared under the historical cost convention
as modified by the measurement at fair value
of share-based payments, retirement benefit
obligations and certain financial assets
and liabilities including derivative financial
instruments.
The accounting policies set out below have
been applied consistently by all the Group’s
subsidiaries, joint ventures and associates to
all periods presented in these Consolidated
Financial Statements.
In accordance with Section 304 of the
Companies Act, 2014, the Company is
availing of the exemption from presenting
its individual profit and loss account to
the Annual General Meeting and
from
filing it with the Registrar of Companies.
Adoption of IFRS and
International Financial
Reporting Interpretations
Committee (IFRIC)
interpretations
related
A number of amendments to existing IFRS
(principally
to clarifications and
refinements of definitions) became effective
for, and have been applied in preparing,
these Consolidated Financial Statements.
The application of these amendments did
not result in material changes to the Group’s
Consolidated Financial Statements.
(i) IFRS and IFRIC interpretations
being adopted in subsequent
years
standard
from Contracts with
IFRS 15 Revenue
Customers will replace IAS 18 Revenue,
IAS 11 Construction Contracts and related
interpretations. The new
is
applicable from 1 January 2018 and is subject
to EU endorsement. The new standard will be
adopted by the Group on the effective date of
1 January 2018. IFRS 15 provides a new five
step model to be applied to revenue arising
from contracts with customers. The principles
in
IFRS 15 provide a more structured
approach to measuring and recognising
revenue and may impact the timing and
amount of revenue recognised from contracts
with customers. During 2015, the Group
performed a preliminary assessment of
IFRS 15, which is subject to changes arising
from a more detailed ongoing analysis. It is
expected that the application of IFRS 15 may
impact accounting for long-term construction
contracts in our Americas Materials segment
and our new UK and Canadian businesses
acquired during the year. The new standard
will also result in additional disclosures in
future years.
IFRS 9 Financial Instruments reflects the final
phase of the IASB’s work on the replacement
of IAS 39 Financial Instruments: Recognition
and Measurement and applies
the
classification and measurement of financial
to
assets and liabilities as defined in IAS 39,
impairment, and the application of hedge
accounting. IFRS 9 is effective from 1 January
2018 and is awaiting EU endorsement. The
new standard will be adopted by the Group
on the effective date of 1 January 2018. The
Group is currently performing an assessment
of the impact of IFRS 9.
IFRS 16 Leases was issued in January 2016
and is effective for periods beginning on
or after 1 January 2019. The new standard
eliminates the classification of leases as either
operating leases or finance leases for a lessee.
Leases will be capitalised by recognising the
present value of the lease payments, similar
to a finance lease under the existing standard.
This will have the effect of increased lease
assets and financial liabilities for the Group.
The standard is yet to be endorsed by the EU.
The Group will assess the impact of IFRS 16
during 2016.
IFRS or
There are no other
IFRIC
interpretations that are effective subsequent
to the CRH 2015 financial year-end that
would have a material impact on the results
or financial position of the Group.
Key Accounting Policies
which involve Estimates,
Assumptions and
Judgements
The preparation of the Consolidated Financial
Statements in accordance with IFRS requires
management to make certain estimates,
assumptions and judgements that affect the
application of accounting policies and the
reported amounts of assets, liabilities, income
and expenses. Management believes that
the estimates, assumptions and judgements
upon which it relies are reasonable based
on the information available to it at the time
those estimates, assumptions and
that
In some cases,
judgements are made.
the accounting treatment of a particular
transaction is specifically dictated by IFRS and
does not require management’s judgement in
its application.
137
CRH Annual Report I 2015 Accounting Policies | continued
Management consider that their use of
estimates, assumptions and judgements in
the application of the Group’s accounting
policies are inter-related and therefore discuss
them together below. The critical accounting
policies which involve significant estimates,
assumptions or
the actual
outcome of which could have a material
impact on the Group’s results and financial
position outlined below, are as follows:
judgements,
Impairment of long-lived
assets and goodwill –
Notes 13 and 14
Impairment of property, plant
and equipment and goodwill
The carrying values of items of property, plant
and equipment are reviewed for indicators of
impairment at each reporting date and are
subject to impairment testing when events
or changes in circumstances indicate that
the carrying values may not be recoverable.
Goodwill is subject to impairment testing on
an annual basis and at any time during the
year if an indicator of impairment is considered
to exist. A decision to dispose of a business
unit represents one such indicator and in
these circumstances the recoverable amount
is assessed on a fair value less costs of
disposal basis. In the year in which a business
combination is effected and where some or
all of the goodwill allocated to a 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.
Property, plant and equipment assets are
reviewed for potential impairment by applying
a series of external and internal indicators
specific to the assets under consideration;
these indicators encompass macroeconomic
issues including the inherent cyclicality of the
building materials sector, actual obsolescence
in
or physical damage, a deterioration
forecast performance in the internal reporting
cycle and restructuring and rationalisation
programmes.
138
the carrying value exceeds
the
Where
estimated recoverable amount (being the
greater of fair value less costs of disposal
and value-in-use), an impairment loss is
recognised by writing down the assets to
their recoverable amount. 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. Impairment losses arising in respect
of goodwill are not reversed once recognised.
Goodwill relating to associates and joint
ventures is included in the carrying amount
of the investment and is neither amortised
nor individually tested for impairment. Where
indicators of impairment of an investment
arise in accordance with the requirements of
IAS 39 Financial Instruments: Recognition and
Measurement, the carrying amount is tested
for impairment by comparing its recoverable
amount with its carrying amount.
The impairment testing process requires
management to make significant judgements
and estimates regarding the future cash
flows expected to be generated by the use
of and, if applicable, the eventual disposal
of, long-lived assets and goodwill as well as
other factors to determine the fair value of the
assets. Management periodically evaluates
and updates the estimates based on the
conditions which influence these variables.
A detailed discussion of the impairment
methodology applied and key assumptions
used by the Group in the context of long-lived
assets and goodwill is provided in note 14 to
the Consolidated Financial Statements.
for
The assumptions and conditions
determining
long-lived
impairments of
assets and goodwill reflect management’s
best assumptions and estimates, but
these items involve inherent uncertainties
described above, many of which are not
under management’s control. As a result,
the accounting for such items could result in
different estimates or amounts if management
used different assumptions or if different
conditions occur in future accounting periods.
Retirement benefit
obligations – Note 27
Costs arising in respect of the Group’s defined
contribution pension schemes are charged to
the Consolidated Income Statement in the
period in which they are incurred. The Group
has no legal or constructive obligation to pay
further contributions in the event that the fund
does not hold sufficient assets to meet its
benefit commitments.
The liabilities and costs associated with the
Group’s defined benefit pension schemes
(both funded and unfunded) are assessed 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.
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 in the Consolidated Balance Sheet.
The deferred tax impact of pension scheme
surpluses and deficits is disclosed separately
within deferred tax assets or liabilities as
appropriate. Remeasurements, comprising
of actuarial gains and losses and the return
on plan assets (excluding net interest), are
recognised immediately in the Consolidated
Balance Sheet with a corresponding debit
or credit to retained earnings through other
CRH Annual Report I 2015 Accounting Policies | continued
comprehensive income in the period in
which they occur. Remeasurements are not
reclassified to profit or loss in subsequent
periods.
The defined benefit pension asset or liability
in the Consolidated Balance Sheet comprises
the total for each plan of the present value of
the defined benefit obligation less the fair value
of plan assets out of which the obligations are
to be settled directly. Plan assets are assets
that are held by a long-term employee benefit
fund or qualifying insurance policies. Fair value
is based on market price information and,
in the case of published securities, it is the
published bid price. The value of any defined
benefit asset is limited to the present value of
any economic benefits available in the form of
refunds from the plan and reductions in the
future contributions to the plan.
and
in
healthcare
respect of
The Group’s obligation
life
post-employment
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.
Assumptions
The assumptions underlying the actuarial
valuations from which the amounts recognised
in the Consolidated Financial Statements are
determined (including discount rates, rates
of increase in future compensation levels,
mortality rates and healthcare cost trend
rates) are updated annually based on current
economic conditions and for any relevant
changes to the terms and conditions of the
pension and post-retirement plans. These
assumptions can be affected by (i) for the
discount rate, changes in the rates of return
on high-quality corporate bonds; (ii) for
future compensation levels, future labour
market conditions and (iii) for healthcare
cost trend rates, the rate of medical cost
inflation in the relevant regions. The weighted
average actuarial assumptions used and
sensitivity analysis in relation to the significant
assumptions employed in the determination
of pension and other post-retirement liabilities
are contained in note 27 to the Consolidated
Financial Statements.
in
are
that
used
expenses
recognised
the
While management believes
appropriate,
assumptions
differences in actual experience or changes
in assumptions may affect the obligations
and
future
accounting periods. The assets and liabilities
of defined benefit pension schemes may
exhibit significant period-on-period volatility
attributable primarily to changes in bond yields
and longevity. In addition to future service
contributions, significant cash contributions
may be required to remediate past service
deficits.
Provisions for liabilities –
Note 25
A provision is recognised when the Group
has a present obligation (either legal or
constructive) as a result of a past event, it is
probable that a transfer of economic benefits
will be required to settle the obligation and a
reliable estimate can be made of the amount
of the obligation. Where the Group anticipates
that a provision will be reimbursed, the
reimbursement is recognised as a separate
asset only when it is virtually certain that
the reimbursement will arise. The expense
relating to any provision is presented in the
Consolidated Income Statement net of any
reimbursement. Provisions are measured
at the present value of the expenditures
expected
the
obligation. The increase in the provision
due to passage of time is recognised as an
interest expense. Contingent liabilities arising
on business combinations are recognised
as provisions if the contingent liability can be
reliably measured at its acquisition-date fair
value. Provisions are not recognised for future
operating losses.
to be required
to settle
Rationalisation and redundancy
provisions
Provisions for rationalisation and redundancy
are established when a detailed restructuring
plan has been drawn up, resolved upon by
the responsible decision making level of
management and communicated to the
employees who are affected by the plan.
These provisions are recognised at the
present value of future disbursements and
cover only expenses that arise directly from
restructuring measures and are necessary
for restructuring; these provisions exclude
costs related to future business operations.
Restructuring measures may include the sale
or termination of business units, site closures
and relocation of business activities, changes
in management structure or a fundamental
reorganisation of departments or business
units.
Environmental and remediation
provisions
The measurement of environmental and
is based on an
remediation provisions
evaluation of currently available facts with
respect to each individual site and considers
factors such as existing technology, currently
enacted laws and regulations and prior
experience in remediation of sites. Inherent
uncertainties exist in such evaluations primarily
due
to unknown conditions, changing
governmental regulations and legal standards
regarding liability, the protracted length of the
clean-up periods and evolving technologies.
The environmental and remediation liabilities
provided for in the Consolidated Financial
Statements reflect the information available
to management at the time of determination
of the liability and are adjusted periodically as
remediation efforts progress or as additional
information becomes
technical or
available. Due to the inherent uncertainties
described above, many of which are not under
management’s control, the accounting for
such items could result in different amounts if
management used different assumptions or if
different conditions occur in future accounting
periods.
legal
139
CRH Annual Report I 2015 Accounting Policies | continued
Legal contingencies
The status of each significant claim and legal
proceeding in which the Group is involved is
reviewed by management on a periodic basis
and the Group’s potential financial exposure
is assessed. If the potential loss from any
claim or legal proceeding is considered
probable, and the amount can be estimated,
a liability is recognised for the estimated loss.
Because of the uncertainties inherent in such
matters, the related provisions are based on
the best information available at the time; the
issues taken into account by management
and factored into the assessment of legal
contingencies
applicable,
the status of settlement negotiations,
interpretations of contractual obligations,
prior experience with similar contingencies/
claims, the availability of insurance to protect
against the downside exposure and advice
obtained from legal counsel and other third
parties. As additional information becomes
available on pending claims, the potential
liability is reassessed and revisions are made
to the amounts accrued where appropriate.
Such revisions in the estimates of the potential
liabilities could have a material impact on the
results of operations and financial position of
the Group.
include,
as
Taxation – current and
deferred – Notes 10 and
26
Current tax represents the expected tax
payable (or recoverable) on the taxable profit
for the year using tax rates enacted for the
period. Any interest or penalties arising are
included within current tax. Where items are
accounted for outside of profit or loss, the
related income tax is recognised either in
other comprehensive income or directly in
equity as appropriate.
Deferred tax is recognised using the liability
method on temporary differences arising
at the balance sheet date between the
tax bases of assets and liabilities and their
carrying amounts
the Consolidated
in
Financial Statements. However, deferred tax
liabilities are not recognised if they arise from
140
it
that
is probable
the initial recognition of goodwill; in addition,
deferred income tax is not accounted for if it
arises from initial recognition of an asset or
liability in a transaction other than a business
combination that at the time of the transaction
affects neither accounting nor taxable profit or
loss. For the most part, no provision has been
made for temporary differences applicable to
investments in subsidiaries and joint ventures
as the Group is in a position to control the
timing of reversal of the temporary differences
and
temporary
differences will not reverse in the foreseeable
future. However, a temporary difference has
been recognised to the extent that specific
assets have been identified for sale or where
there is a specific intention to unwind the
temporary difference in the foreseeable future.
Due to the absence of control in the context
of associates
influence only),
(significant
deferred tax liabilities are recognised where
appropriate in respect of CRH’s investments
in these entities on the basis that the exercise
of significant influence would not necessarily
prevent earnings being remitted by other
shareholders in the undertaking.
the
Deferred tax is determined using tax rates
(and
laws) that have been enacted or
substantially enacted by the balance sheet
date and are expected to apply when the
related deferred income tax asset is realised
or the deferred income tax liability is settled.
Deferred tax assets and liabilities are not
subject to discounting. Deferred tax assets
are recognised in respect of all deductible
temporary differences, carry-forward of
unused tax credits and unused tax losses
to the extent that it is probable that taxable
profits will be available against which the
temporary differences can be utilised. The
carrying amounts of deferred tax assets
are subject to review at each balance sheet
date and are reduced to the extent that
future taxable profits are considered to be
inadequate to allow all or part of any deferred
tax asset to be utilised.
The Group’s income tax charge is based on
reported profit and expected statutory tax
rates, which reflect various allowances and
reliefs and tax planning opportunities available
to the Group in the multiple tax jurisdictions
requires
in which it operates. The determination
of the Group’s provision for income tax
requires certain judgements and estimates
in relation to matters where the ultimate tax
outcome may not be certain. The recognition
or non-recognition of deferred tax assets
as appropriate also
judgement
as it involves an assessment of the future
recoverability of those assets. In addition, the
Group is subject to tax audits which can involve
complex issues that could require extended
periods for resolution. Although management
believes that the estimates included in the
Consolidated Financial Statements and its tax
return positions are reasonable, no assurance
can be given that the final outcome of these
matters will not be different than that which is
reflected in the Group’s historical income tax
provisions and accruals. Any such differences
could have a material impact on the income
tax provision and profit for the period in which
such a determination is made.
Property, plant and
equipment – Note 13
The Group’s accounting policy for property,
plant and equipment is considered critical
because the carrying value of €13,062 million
at 31 December 2015 represents a significant
portion (41%) of total assets at that date.
Property, plant and equipment are stated at
cost less any accumulated depreciation and
any accumulated impairments except for
certain items that had been revalued to fair
value prior to the date of transition to IFRS (1
January 2004).
is
Repair and maintenance expenditure
included
in an asset’s carrying amount
or recognised as a separate asset, as
appropriate, only when it is probable that
future economic benefits associated with the
item will flow to the Group and the cost of the
item can be measured reliably. All other repair
and maintenance expenditure is charged to
the Consolidated Income Statement during
the financial period in which it is incurred.
Borrowing costs incurred in the construction
of major assets which take a substantial
period of time to complete are capitalised in
the financial period in which they are incurred.
CRH Annual Report I 2015 Accounting Policies | continued
In the application of the Group’s accounting
policy, judgement is exercised by management
in the determination of residual values and
useful lives. Depreciation and depletion is
calculated to write off the book value of each
item of property, plant and equipment over its
useful economic life on a straight-line basis at
the following rates:
Land and buildings: The book value of
mineral-bearing land, less an estimate of its
residual value, is depleted over the period of
the mineral extraction in the proportion which
production for the year bears to the latest
estimates of proven and probable mineral
reserves. Land other than mineral-bearing
land is not depreciated. In general, buildings
are depreciated at 2.5% per annum (“p.a.”).
Plant and machinery: These are depreciated
at rates ranging from 3.3% p.a. to 20% p.a.
depending on the type of asset. Plant and
machinery includes transport which is, on
average, depreciated at 20% p.a.
Depreciation methods, useful
lives and
residual values are reviewed at each financial
year-end. Changes in the expected useful
life or the expected pattern of consumption
of future economic benefits embodied in the
asset are accounted for by changing the
depreciation period or method as appropriate
on a prospective basis. For the Group’s
accounting policy on impairment of property,
plant and equipment please see impairment
of long-lived assets and goodwill.
Other Significant
Accounting Policies
Basis of consolidation
the financial statements of
The Consolidated Financial Statements
include
the
Parent Company and all subsidiaries, joint
ventures and associates, drawn up to 31
December each year. The financial year-ends
of the Group’s subsidiaries, joint ventures and
associates are co-terminous.
Subsidiaries
Subsidiaries are all entities over which the
Group has control. The Group controls an
entity when the Group is exposed to, or has
rights to, variable returns from its involvement
with the entity and has the ability to affect
those returns through its power over the
entity. Subsidiaries are fully consolidated
from the date on which control is transferred
to the Group. They are deconsolidated from
the date that control ceases. A change in the
ownership interest of a subsidiary without
a change in control is accounted for as an
equity transaction.
When the Group holds less than the majority
of voting rights, other facts and circumstances
including contractual arrangements
that
give the Group power over the investee
may result in the Group controlling the
investee. The Group reassesses whether
it controls an investee if, and when, facts
and circumstances indicate that there are
changes to the elements evidencing control.
Non-controlling interests represent the portion
of the equity of a subsidiary not attributable
either directly or indirectly to the Parent
Company and are presented separately in
the Consolidated Income Statement and
within equity in the Consolidated Balance
Sheet, distinguished from Parent Company
shareholders’ equity. Acquisitions of non-
controlling interests are accounted for as
transactions with equity holders in their
capacity as equity holders and therefore no
goodwill is recognised as a result of such
transactions. On an acquisition by acquisition
basis,
the Group recognises any non-
controlling interest in the acquiree either at
fair value or at the non-controlling interest’s
proportionate share of the acquiree’s net
assets.
Investments in associates and
joint ventures – Notes 9 and 15
An associate is an entity over which the Group
has significant influence. Significant influence
is the power to participate in the financial and
operating policy decisions of an entity, but is
not control or joint control over those policies.
A joint venture is a type of joint arrangement
whereby the parties that have joint control
of the arrangement have rights to the net
assets of the joint venture. Joint control is
the contractually agreed sharing of control
of the arrangement, which exists only when
decisions about the relevant activities require
unanimous consent of the parties sharing
control.
The Group’s investments in its associates
and joint ventures are accounted for using
the equity method from the date significant
influence/joint control is deemed to arise until
the date on which significant influence/joint
control ceases to exist or when the interest
becomes classified as an asset held for sale.
The Consolidated
Income Statement
reflects the Group’s share of profit after tax
of the related associates and joint ventures.
Investments in associates and joint ventures
are carried in the Consolidated Balance Sheet
at cost adjusted in respect of post-acquisition
changes in the Group’s share of net assets,
less any impairment in value. Loans advanced
to equity accounted investments that have
the characteristics of equity financing are
also included in the investment held on the
Consolidated Balance Sheet. If necessary,
impairment losses on the carrying amount of
an investment are reported within the Group’s
share of equity accounted
investments’
results in the Consolidated Income Statement.
If the Group’s share of losses exceeds the
carrying amount of an associate or joint
venture, the carrying amount is reduced
to nil and recognition of further losses is
discontinued except to the extent that the
Group has incurred obligations in respect of
the associate or joint venture.
Transactions eliminated on
consolidation
Intra-group balances and
transactions,
income and expenses, and any unrealised
gains or losses 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.
141
CRH Annual Report I 2015 Segment reporting –
Note 1
Share-based payments –
Note 7
Accounting Policies | continued
Revenue recognition
Revenue represents the value of goods and
services supplied and is net of trade discounts
and value added tax/sales tax. Other than in
the case of construction contracts, revenue
is recognised to the extent that revenue and
related costs incurred or to be incurred are
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, usually on delivery of the goods.
Construction contracts
Operating segments are reported in a manner
consistent with the internal organisational
and management structure and the internal
reporting information provided to the Chief
Operating Decision Maker who is responsible
resources and assessing
for allocating
performance of the operating segments.
Assets and liabilities held
for sale – Note 4
The Group engages primarily
the
performance of fixed price contracts, as
opposed to cost plus contracts. Contract
costs are recognised as incurred.
in
Non-current assets and disposal groups
classified as held for sale are measured at the
lower of carrying amount and fair value less
costs to sell.
Non-current assets and disposal groups
are classified as held for sale if their carrying
amounts will be recovered through a sale
transaction rather than through continuing
use. This condition is regarded as met only
when the sale is highly probable and the asset
or disposal group is available for immediate
sale in its present condition subject only
to terms that are usual and customary for
sales of such assets. Management must
be committed to the sale, which should
be expected to qualify for recognition as a
completed sale within one year from the date
of classification as held for sale.
Property, plant and equipment and intangible
assets are not depreciated or amortised once
classified as held for sale. The Group ceases
to use the equity method of accounting
from the date on which an interest in a joint
venture or associate becomes held for sale.
Non-current assets classified as held for sale
and liabilities directly associated with those
assets are presented separately as current
items in the Consolidated Balance Sheet.
When the outcome of a contract can be
estimated reliably the Group recognises
revenue in accordance with the percentage-
of-completion method. The completion
percentage is generally measured based on
the proportion of contract costs incurred at
the balance sheet date relative to the total
estimated costs of the contract. When the
outcome of a construction contract cannot
be estimated reliably, contract revenue is
recognised only to the extent of contract
costs incurred where it is probable that these
costs will be recoverable.
total contract revenue,
When it is probable that total contract costs
will exceed
the
expected loss is recognised immediately as
an expense. Revenue and/or costs in respect
of variations or contracts claims and incentive
payments, to the extent that they arise,
are recognised when it is probable that the
amount, which can be measured reliably, will
be recovered from/paid to the customer.
If circumstances arise that may change the
original estimates of revenues, costs or extent
of progress towards completion, estimates
are revised. These revisions may result in
increases or decreases in revenue or costs
and are reflected in income in the period in
which the circumstances that give rise to the
revision became known by management.
142
The Group operates a number of
equity-settled share-based payment plans.
Its policy in relation to the granting of share
options and awards under these plans,
together with the nature of the underlying
market and non-market performance and
other vesting conditions, are addressed in
the Directors’ Remuneration Report on page
70. The Group has no exposure in respect
share-based payment
of
transactions and share-based payment
transactions with cash alternatives.
cash-settled
Share options
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
at market value at date of grant and are not
subject to market-based vesting conditions
within the meaning of IFRS 2 Share-based
Payment.
The cost is recognised, together with a
corresponding increase in equity, over the
period in which the performance and/or
service conditions are fulfilled. The cumulative
expense recognised at each reporting date
until the vesting date reflects the extent to
which the vesting period has expired and
the Group’s best estimate of the number
of equity instruments that will ultimately
vest. The Consolidated Income Statement
expense/credit for a period represents the
movement in cumulative expense recognised
at the beginning and end of that period.
The cumulative charge to the Consolidated
Income Statement is reversed only where the
performance condition is not met or where an
employee in receipt of share options leaves
service prior to completion of the expected
vesting period and those options forfeit in
consequence.
No expense is recognised for awards that do
not ultimately vest, except for share-based
payments where vesting is conditional upon
a non-vesting condition which is treated as
CRH Annual Report I 2015 Accounting Policies | continued
vesting irrespective of whether or not it is
satisfied, provided that all other performance
and/or service conditions are satisfied.
Where an award is cancelled, it is treated as
if it is vested on the date of cancellation, and
any expense not yet recognised for the award
is recognised immediately. This includes any
award where non-vesting conditions within
the control of either the Company or the
employee are not met. All cancellations of
awards are treated equally.
The proceeds received net of any directly
attributable transaction costs are credited
to share capital (nominal value) and share
premium when the options are exercised.
The dilutive effect of outstanding options is
reflected as additional share dilution in the
determination of diluted earnings per share.
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; where the amount of any tax
deduction (or estimated future tax deduction)
exceeds the amount of the related cumulative
remuneration expense, the current or deferred
tax associated with the excess is recognised
directly in equity.
Awards under the Performance
Share Plans
All awards granted under
the 2006
Performance Share Plan and 75% of the
awards granted under the 2014 Performance
Share Plan are subject to a total shareholder
return-based
(and hence market-based)
vesting condition. Accordingly, the fair value
assigned to the related equity instruments
at the grant date is adjusted so as to reflect
the anticipated likelihood as at the grant
date of achieving the market-based vesting
condition. Awards are treated as vesting
irrespective of whether or not the market
condition is satisfied, provided that all other
performance and/or service conditions are
satisfied.
The remaining 25% of awards granted
under the 2014 Performance Share Plan
are subject to a cumulative cash flow target
(non-market-based) vesting condition. The
fair value of the awards is calculated as the
market price of the shares at the date of grant.
No expense is recognised for awards that do
not ultimately vest. At the balance sheet date
the estimate of the level of vesting is reviewed
and any adjustment necessary is recognised
in the Consolidated Income Statement.
Awards under the Restricted
Share Plan
The fair value of shares granted under the
Restricted Share Plan is calculated as the
market price of the shares at the date of grant
reduced by the present value of dividends
expected to be paid over the vesting period.
Information on the models used by the Group
to estimate the fair value of awards granted is
included in note 7.
Business combinations –
Note 30
The Group applies the acquisition method in
accounting for business combinations. The
cost of an acquisition is measured as the
aggregate of the consideration transferred
(excluding amounts relating to the settlement
of pre-existing relationships), the amount of
any non-controlling interest in the acquiree
and, in a business combination achieved
in stages, the acquisition-date fair value of
the acquirer’s previously held equity interest
in the acquiree. Transaction costs that the
Group incurs in connection with a business
combination are expensed as incurred.
To the extent that settlement of all or
any part of consideration for a business
combination is deferred, the fair value of the
deferred component is determined through
discounting the amounts payable to their
present value at the date of exchange. The
discount component is unwound as an
interest charge in the Consolidated Income
Statement over the life of the obligation. Any
contingent consideration is recognised at fair
value at the acquisition date and included
in the cost of the acquisition. The fair value
of contingent consideration at acquisition
date is arrived at through discounting the
expected payment
(based on scenario
modelling) to present value. In general, in
order for contingent consideration to become
payable, pre-defined profit and/or profit/net
asset ratios must be exceeded. Subsequent
changes to the fair value of the contingent
consideration will be recognised in profit or
loss unless the contingent consideration is
classified as equity, in which case it is not
remeasured and settlement is accounted for
within equity.
The assets and liabilities arising on business
combination activity are measured at their
acquisition-date
fair values. Contingent
liabilities assumed in business combination
activity are recognised as of the acquisition
date, where such contingent liabilities are
present obligations arising from past events
and their fair value can be measured reliably. In
the case of a business combination achieved
in stages, the acquisition-date fair value of
the acquirer’s previously held equity interest
in the acquiree is remeasured to fair value as
at the acquisition date through profit or loss.
When the initial accounting for a business
combination
is determined provisionally,
any adjustments to the provisional values
allocated to the consideration, identifiable
assets or liabilities (and contingent liabilities,
if relevant) are made within the measurement
period, a period of no more than one year
from the acquisition date.
Goodwill – Note 14
Goodwill arising on a business combination
is initially measured at cost, being the excess
of the cost of an acquisition over the net
identifiable assets and liabilities assumed at
the date of acquisition and relates to the future
economic benefits arising from assets which
are not capable of being individually identified
and separately recognised. Following initial
recognition, goodwill is measured at cost
less any accumulated impairment losses. If
the cost of the acquisition is lower than the
fair value of the net assets of the subsidiary
acquired, the identification and measurement
of the related assets and liabilities and
contingent liabilities are revisited and the cost
143
CRH Annual Report I 2015 Accounting Policies | continued
is reassessed with any remaining balance
recognised immediately in the Consolidated
Income Statement.
The carrying amount of goodwill in respect of
associates and joint ventures is included in
investments accounted for using the equity
method (i.e. within financial assets) in the
Consolidated Balance Sheet.
Where a subsidiary
is disposed of or
terminated through closure, the carrying value
of any goodwill of that subsidiary is included
in the determination of the net profit or loss on
disposal/termination.
Intangible assets (other
than goodwill) arising on
business combinations –
Note 14
An intangible asset is capitalised separately
from goodwill as part of a business
combination at cost (fair value at date of
acquisition).
to
initial
Subsequent
recognition,
intangible assets are carried at cost less
any accumulated amortisation and any
accumulated impairment losses. The carrying
values of definite-lived intangible assets (the
Group does not currently have any indefinite-
lived intangible assets other than goodwill)
are reviewed for indicators of impairment
at each reporting date and are subject to
impairment testing when events or changes
in circumstances indicate that the carrying
values may not be recoverable.
Intangible assets are amortised on a
straight-line basis. In general, definite-lived
intangible assets are amortised over periods
ranging from one to ten years, depending on
the nature of the intangible asset.
Amortisation periods, useful lives, expected
patterns of consumption and residual values
are reviewed at each financial year-end.
Changes in the expected useful life or the
expected pattern of consumption of future
economic benefits embodied in the asset are
accounted for by changing the amortisation
period or method as appropriate on a
prospective basis.
144
Leases – Notes 3 and 29
Leases where the lessor retains substantially
all the risks and rewards of ownership are
classified as operating leases. Operating
lease rentals are charged to the Consolidated
Income Statement on a straight-line basis
over the lease term.
Other financial assets –
Note 15
All investments are initially recognised at
the fair value of consideration given plus
any directly attributable transaction costs.
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.
Unquoted equity investments are recorded at
historical cost given that it is impracticable to
determine fair value in accordance with IAS
39 and are included within financial assets in
the Consolidated Balance Sheet.
Inventories and
construction contracts –
Note 16
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. Estimates of net
realisable value are based on the most
reliable evidence available at the time the
estimates are made, taking into consideration
fluctuations of price or cost directly relating
to events occurring after the end of the
period, the likelihood of short-term changes
in buyer preferences, product obsolescence
or perishability (all of which are generally low
given the nature of the Group’s products) and
the purpose for which the inventory is held.
Materials and other supplies held for use in
the production of inventories are not written
down below cost if the finished goods, in
which they will be incorporated, are expected
to be sold at or above cost.
recoverable on
construction
Amounts
contracts, which are included in receivables,
are stated at the net invoiced 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,
provisions for contingencies and payments
on account not matched with revenue, are
included as construction contract balances
in inventories. Cost includes all expenditure
directly related to specific projects and an
allocation of fixed and variable overheads
incurred in the Group’s contract activities
based on normal operating capacity.
Trade and other
receivables – Note 17
less an allowance
Trade receivables are carried at original
for
invoice amount
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 to the Consolidated Income Statement on
identification.
Cash and cash
equivalents – Note 22
Cash and cash equivalents comprise
cash balances held for the purpose of
meeting short-term cash commitments and
investments which are readily convertible to
a known amount of cash and are subject
to an insignificant risk of change in value.
Bank overdrafts are included within current
interest-bearing loans and borrowings in
CRH Annual Report I 2015 Accounting Policies | continued
the Consolidated Balance Sheet. Where the
overdrafts are repayable on demand and form
an integral part of cash management, they are
netted against cash and cash equivalents for
the purposes of the Consolidated Statement
of Cash Flows.
Interest-bearing loans and
borrowings – Note 23
interest-bearing
All loans and borrowings are initially recorded
at the fair value of the consideration received
net of directly attributable transaction costs.
Subsequent to initial recognition, current
and non-current
loans
and borrowings are, in general, measured
at amortised cost employing the effective
interest methodology. Fixed rate term loans,
which have been hedged to floating rates
(using interest rate swaps), are measured at
amortised cost adjusted for changes in value
attributable to the hedged risks arising from
changes in underlying market interest rates.
The computation of amortised cost includes
any issue costs and any discount or premium
materialising on settlement.
Gains and losses are recognised in the
Consolidated
through
amortisation on the basis of the period of the
loans and borrowings.
Income Statement
Borrowing costs arising on
financial
instruments are recognised as an expense in
the period in which they are incurred (unless
capitalised as part of the cost of property,
plant and equipment).
Derivative financial
instruments and hedging
practices – Note 24
In order to manage interest rate, foreign
currency and commodity risks and to realise
the desired currency profile of borrowings,
the Group employs derivative financial
instruments (principally interest rate swaps,
currency swaps and forward foreign exchange
contracts). Derivative financial instruments are
recognised initially at fair value on the date on
which a derivative contract is entered into and
are subsequently remeasured at fair value.
The carrying value of derivatives is fair value
based on discounted future cash flows and
adjusted for counterparty risk. Future floating
rate cash flows are estimated based on future
interest rates (from observable yield curves
at the end of the reporting period). Fixed and
floating rate cash flows are discounted at
future interest rates and translated at period-
end foreign exchange rates.
At the inception of a derivative transaction, the
Group documents the relationship between
the hedged item and the hedging instrument
together with its risk management objective
and the strategy underlying the proposed
transaction. The Group also documents its
assessment, both at the inception of the
hedging relationship and subsequently on
an ongoing basis, of the effectiveness of the
hedging instrument in offsetting movements
in the fair values or cash flows of the hedged
items. Where derivatives do not fulfil the
criteria for hedge accounting, changes in
fair values are reported in the Consolidated
Income Statement.
Fair value and cash flow hedges
The Group uses fair value hedges and cash
flow hedges in its treasury activities. For the
purposes of hedge accounting, hedges are
classified either as fair value hedges (which
entail hedging the exposure to movements in
the fair value of a recognised asset or liability
or an unrecognised firm commitment that
could affect profit or loss) or cash flow hedges
(which hedge exposure to fluctuations in
future cash flows derived from a particular risk
associated with a recognised asset or liability,
or a highly probable forecast transaction that
could affect profit or loss).
Where the conditions for hedge accounting
are satisfied and the hedging instrument
fair value
is classified as a
concerned
hedge, any gain or loss stemming from the
remeasurement of the hedging instrument
to fair value is reported in the Consolidated
Income Statement. In addition, any gain or
loss on the hedged item which is attributable
to the hedged risk is adjusted against
the carrying amount of the hedged item
and reflected in the Consolidated Income
Statement. Where the adjustment is to
the carrying amount of a hedged interest-
bearing financial instrument, the adjustment
is amortised to the Consolidated Income
Statement with the objective of achieving full
amortisation by maturity.
in
the Consolidated
Where a derivative financial instrument is
designated as a hedge of the variability in
cash flows of a recognised asset or liability
or a highly probable forecast transaction
that could affect profit or loss, the effective
part of any gain or loss on the derivative
financial instrument is recognised as other
comprehensive income, net of the income
tax effect, with the ineffective portion being
reported
Income
Statement. The associated gains or losses
that had previously been recognised as
other comprehensive income are transferred
to
Income Statement
contemporaneously with the materialisation
of the hedged transaction. Any gain or loss
arising in respect of changes in the time
value of the derivative financial instrument is
excluded from the measurement of hedge
effectiveness and is recognised immediately
in the Consolidated Income Statement.
the Consolidated
Hedge accounting is discontinued when
the hedging instrument expires or is sold,
longer
terminated or exercised, or no
qualifies for hedge accounting. At that point
in time, any cumulative gain or loss on the
hedging instrument recognised as other
comprehensive income remains there until
the forecast transaction occurs. If a hedged
transaction is no longer anticipated to occur,
the net cumulative gain or loss previously
recognised as other comprehensive income
is transferred to the Consolidated Income
Statement in the period.
145
CRH Annual Report I 2015 Accounting Policies | continued
Net investment hedges
Where foreign currency borrowings provide a
hedge against a net investment in a foreign
operation, and the hedge is deemed to be
effective, foreign exchange differences are
taken directly to a foreign currency translation
reserve. The ineffective portion of any gain or
loss on the hedging instrument is recognised
immediately in the Consolidated Income
Statement. Cumulative gains and losses
remain in equity until disposal of the net
investment in the foreign operation at which
point the related differences are transferred to
the Consolidated Income Statement as part
of the overall gain or loss on sale.
Fair value hierarchy –
Note 24
For financial reporting purposes, fair value
measurements are categorised into Level 1,
2 or 3 based on the degree to which inputs to
the fair value measurements are observable
and the significance of the inputs to the fair
value measurement in its entirety, which are
described as follows:
Level 1: quoted prices (unadjusted) in active
markets for identical assets or liabilities;
Level 2: valuation techniques for which
the lowest level of inputs which have a
significant effect on the recorded fair value are
observable, either directly or indirectly; and
Level 3: valuation techniques for which the
lowest level of inputs that have a significant
effect on the recorded fair value are not based
on observable market data.
Share capital and
dividends –
Notes 11 and 28
Treasury Shares and own shares
Ordinary Shares acquired by the Parent
Company or purchased by the Employee
Benefit Trust on behalf of the Parent Company
under the terms of the Performance Share
Plans and the Restricted Share Plan are
deducted from equity and presented on the
face of the Consolidated Balance Sheet. No
gain or loss is recognised in profit or loss on
the purchase, sale, issue or cancellation of
the Parent Company’s Ordinary Shares.
Dividends
Dividends on Ordinary Shares are recognised
as a liability in the Consolidated Financial
Statements in the period in which they are
declared by the Parent Company.
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.
To the extent that excess emission rights
are disposed of during a financial period,
the profit or loss materialising thereon is
recognised immediately within cost of sales in
the Consolidated Income Statement.
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
Parent Company.
Transactions in foreign currencies are recorded
at the rate ruling at the date of the transaction.
Monetary assets and liabilities denominated
in foreign currencies are retranslated at the
rate of exchange ruling at the balance sheet
date. All currency translation differences are
taken to the Consolidated Income Statement
with the exception of all monetary items
that provide an effective hedge for a net
investment in a foreign operation. These are
recognised in other comprehensive income
until the disposal of the net investment,
at which time they are recognised in the
Consolidated Income Statement.
Results and cash flows of subsidiaries, joint
ventures and associates with non-euro
functional currencies have been translated
into euro at average exchange rates for the
year, and the related balance sheets have
been translated at the rates of exchange
ruling at the balance sheet date. Adjustments
arising on translation of the results and net
assets of non-euro subsidiaries, joint ventures
and associates are recognised in a separate
translation reserve within equity, net of
differences on related currency borrowings.
All other translation differences are taken
to
Income Statement.
Goodwill and fair value adjustments arising on
acquisition of a foreign operation are regarded
as assets and liabilities of the foreign operation
and are translated accordingly.
the Consolidated
146
CRH Annual Report I 2015 Accounting Policies | continued
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
Average
Year-end
2015
1.1095
0.7258
4.1841
2014
1.3290
0.8062
4.1839
2015
1.0887
0.7340
4.2639
2014
1.2141
0.7789
4.2732
Ukrainian Hryvnia
24.3693
15.8908
26.1434
19.1814
Swiss Franc
Canadian Dollar
Argentine Peso
Turkish Lira
Indian Rupee
Chinese Renminbi
Brazilian Real
Romanian Leu
Hungarian Forint
Serbian Dinar
Philippine Peso
1.0679
1.4186
10.2803
3.0255
71.1956
6.9733
3.7004
4.4454
309.9956
120.7168
50.5217
1.2147
1.4664
10.7785
2.9068
81.0576
8.1883
-
-
-
-
-
1.0835
1.5116
14.0824
3.1765
72.0215
7.0608
4.3117
4.5240
315.9800
121.5612
50.9990
1.2024
1.4063
10.2645
2.8320
76.7190
7.5358
-
-
-
-
-
147
CRH Annual Report I 2015 Notes on Consolidated Financial Statements
1. Segment Information
CRH is a diversified international building
materials group which manufactures and
distributes a range of building materials
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. During 2015 the Group
was organised into the following segments:
Europe Heavyside, Europe Lightside, Europe
Distribution, Americas Materials, Americas
In
Products and Americas Distribution.
addition,
from
Lafarge S.A. and Holcim Limited during the
second half of 2015 (LH Assets) are reported
as a separate segment in 2015. No operating
segments have been aggregated to form
these segments.
the businesses acquired
Heavyside
businesses
are
Europe
predominantly engaged in the manufacturing
and
aggregates,
readymixed and precast concrete, concrete
landscaping and asphalt products.
supply of
cement,
Lightside
businesses
Europe
are
predominantly engaged in the production and
supply of construction accessories, shutters
& awnings, fencing and composite access
chambers.
Distribution
businesses
in
are
Europe
supplying
engaged
predominantly
Do-It-Yourself (DIY), General Merchants and
Sanitary, Heating and Plumbing (“SHAP”)
businesses catering to the general public
and small and medium-sized builders, selling
a range of bricks, cement, sanitary, heating,
plumbing and other building products.
businesses
Americas Materials
are
predominantly engaged in the production and
sale of aggregates, asphalt and readymixed
concrete products and provide asphalt
paving services.
to assess performance. Segment
and
performance
is predominantly evaluated
based on operating profit. As performance is
also evaluated using operating profit before
depreciation and amortisation (EBITDA (as
defined)*), supplemental information based on
EBITDA (as defined)* is also provided below.
Given that net finance costs and income tax
are managed on a centralised basis, these
items are not allocated between operating
segments for the purposes of the information
presented to the Chief Operating Decision
Maker and are accordingly omitted from the
detailed segmental analysis below. There
are no asymmetrical allocations to reporting
segments which would require disclosure.
Products
businesses
Americas
are
predominantly engaged in the production and
sale of concrete masonry and hardscapes,
lawn and garden products,
packaged
packaged cement mixes, fencing, utility,
drainage and structural precast products,
construction accessories and glass and
aluminium glazing systems.
businesses
Americas Distribution
are
predominantly engaged in supplying Exterior
Products such as roofing and siding and
Interior Products such as gypsum wallboard,
metal studs and acoustical ceiling systems.
the businesses are
LH Assets
located
in 11 countries: Brazil, Canada, France
(including La Reunion), Germany, Hungary,
the Philippines, Romania, Serbia, Slovakia,
the United Kingdom and the United States.
They are predominantly engaged in the
manufacturing and supply of cement and
aggregates products. Given
the size,
complexity and timing of this acquisition, the
Chief Operating Decision Maker reviewed the
performance of the acquired businesses as a
separate segment during the post-acquisition
period in 2015. The acquired businesses
have their own divisional management team
which report to the Chief Operating Decision
Maker.
in
factors employed
The principal
the
identification of the seven segments reflected
in this note include the Group’s organisational
structure in 2015, the nature of the reporting
lines to the Chief Operating Decision Maker (as
defined in IFRS 8 Operating Segments), the
structure of internal reporting documentation
such as management accounts and budgets,
and the degree of homogeneity of products,
services and geographical areas within each
of the segments from which revenue is
derived.
The Chief Operating Decision Maker monitors
the operating results of segments separately in
order to allocate resources between segments
*
EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted
investments’ profit after tax.
148
CRH Annual Report I 2015 1. Segment Information | continued
A. Operating segments disclosures - Consolidated Income Statement data
Year ended 31 December
Group operating
profit before
depreciation and
amortisation
(EBITDA (as
defined)*)
2015
€m
334
100
171
605
912
391
140
1,443
2014
€m
380
94
190
664
609
263
105
977
Revenue
2015
€m
3,607
961
4,158
8,726
6,400
3,862
2,229
12,491
2014
€m
3,929
913
3,999
8,841
5,070
3,225
1,776
10,071
Depreciation,
amortisation and
impairment
Group operating
profit (EBIT)
2015
€m
199
25
77
301
301
142
29
472
2014
€m
229
23
78
330
254
118
22
394
2015
€m
135
75
94
304
611
249
111
971
2014
€m
151
71
112
334
355
145
83
583
2,418
-
171
-
169
-
2
-
23,635
18,912
2,219
1,641
942
724
1,277
917
101
(295)
(94)
44
1,033
77
(246)
(42)
55
761
(ii) Share of
equity accounted
investments’
profit (note 9)
4
-
15
19
35
-
13
48
23
-
-
23
2
44
7
-
-
7
-
55
(i) Profit/(loss) on
disposals (note
4)
97
(23)
8
82
24
(11)
2
15
4
101
38
1
6
45
11
20
1
32
-
77
Europe Heavyside
Europe Lightside
Europe Distribution
Europe
Americas Materials
Americas Products
Americas Distribution
Americas
LH Assets
Total Group
Profit on disposals (i)
Finance costs less income
Other financial expense
Share of equity accounted investments' profit (ii)
Profit before tax
Europe Heavyside
Europe Lightside
Europe Distribution
Europe
Americas Materials
Americas Products
Americas Distribution
Americas
LH Assets
Total Group
*
EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted
investments’ profit after tax.
149
CRH Annual Report I 2015
1. Segment Information | continued
B. Operating segments disclosures - Consolidated Balance Sheet data
Europe Heavyside
Europe Lightside
Europe Distribution
Europe
Americas Materials
Americas Products
Americas Distribution
Americas
LH Assets
Total Group
Reconciliation to total assets as reported in the Consolidated Balance Sheet:
Investments accounted for using the equity method
Other financial assets
Derivative financial instruments (current and non-current)
Income tax assets (current and deferred)
Cash and cash equivalents
Assets held for sale
Total assets as reported in the Consolidated Balance Sheet
Reconciliation to total liabilities as reported in the Consolidated Balance Sheet:
Interest-bearing loans and borrowings (current and non-current)
Derivative financial instruments (current and non-current)
Income tax liabilities (current and deferred)
Liabilities associated with assets classified as held for sale
Total liabilities as reported in the Consolidated Balance Sheet
As at 31 December
Total assets
Total liabilities
2015
€m
3,802
767
2,238
6,807
6,933
4,146
1,095
12,174
2014
€m
3,864
761
2,221
6,846
6,245
2,542
951
9,738
2015
€m
1,260
261
647
2,168
1,195
952
364
2,511
2014
€m
1,468
215
644
2,327
969
679
283
1,931
8,900
-
2,115
-
27,881
16,584
6,794
4,258
1,317
28
109
154
2,518
-
32,007
1,329
23
102
186
3,262
531
22,017
9,221
24
2,424
-
18,463
5,866
23
1,459
213
11,819
150
CRH Annual Report I 2015 1. Segment Information | continued
C. Operating segments disclosures - other items
Additions to non-current assets
Year ended 31 December
Property, plant and
equipment (note 13)
Financial assets
(note 15)
Total Group
Europe Heavyside
Europe Lightside
Europe Distribution
Europe
Americas Materials
Americas Products
Americas Distribution
Americas
LH Assets (i)
2015
€m
153
15
46
214
319
153
41
513
155
Total Group
882
(i) Additions for the LH Assets are reported from the date of acquisition.
D. Entity-wide disclosures
Section 1: Information about products and services
2014
€m
113
14
36
163
173
81
18
272
-
435
2015
€m
2
-
1
3
10
-
-
10
6
19
2014
€m
-
-
-
-
3
-
-
3
-
3
2015
€m
155
15
47
217
329
153
41
523
161
901
2014
€m
113
14
36
163
176
81
18
275
-
438
The Group’s revenue from external customers in respect of its principal products and services is analysed in the disclosures above. Segment revenue includes
€4,523 million (2014: €3,351 million) in respect of revenue applicable to construction contracts. The bulk of our construction activities are performed by our
Americas Materials reportable segment, are for the most part short-term in nature and are generally completed within the same financial reporting period.
Neither revenue derived through the supply of services nor intersegment revenue is material to the Group. The transfer pricing policy implemented by the Group
between operating segments and across its constituent entities is described in greater detail in note 32. In addition, due to the nature of building materials, which
exhibit a low value-to-weight ratio, the Group’s revenue streams include a low level of cross-border transactions.
Section 2: Information about geographical areas and customers
CRH has a presence in 31 countries worldwide. The revenues from external customers and non-current assets (as defined in IFRS 8) attributable to the country
of domicile and all foreign countries of operation are as follows; individual foreign countries which exceed 10% of total external Group revenue have been
highlighted separately on the basis of materiality.
Country of domicile - Republic of Ireland
Benelux (mainly the Netherlands)
United States of America
Other
Total Group
Year ended 31 December
Revenue by destination
2015
€m
349
2,478
12,048
8,760
23,635
2014
€m
306
2,350
9,650
6,606
18,912
As at 31 December
Non-current assets
2014
€m
2015
€m
609
1,209
8,911
11,470
22,199
477
1,231
6,948
4,268
12,924
While the United Kingdom does not exceed 10% of total external Group revenue, at 31 December 2015 it represented 13% of the Group’s non-current assets.
There are no material dependencies or concentrations on individual customers which would warrant disclosure under IFRS 8. The individual entities within the
Group have a large number of customers spread across various activities, end-uses and geographies.
151
CRH Annual Report I 2015 2. Cost Analysis
Cost of sales analysis
Raw materials and goods for resale
Employment costs (note 5)
Energy conversion costs
Repairs and maintenance
Depreciation, amortisation and impairment(i)
Change in inventory (note 19)
Other production expenses (primarily sub-contractor costs
and equipment rental)
Total
Operating costs analysis
Selling and distribution costs
Administrative expenses
Total
(i) Depreciation, amortisation and impairment analysis
2015
€m
8,629
2,446
789
630
697
29
2014
€m
7,527
1,985
655
452
532
34
3,174
2,242
16,394
13,427
3,878
2,086
5,964
3,143
1,425
4,568
Depreciation and depletion (note 13)
Amortisation of intangible assets (note 14)
Impairment of property, plant and equipment (note 13)
Impairment of intangible assets (note 14)
Impairment of financial assets (note 15)
Total
Cost of sales
2015
€m
667
-
30
-
-
697
2014
€m
485
-
47
-
-
532
Operating costs
2014
2015
€m
€m
146
176
44
55
2
11
-
1
-
2
192
245
Total
2014
€m
631
44
49
-
-
724
2015
€m
843
55
41
1
2
942
152
CRH Annual Report I 2015 3. Operating Profit Disclosures
Operating lease rentals
- hire of plant and machinery
- land and buildings
- other operating leases
Total
Auditor’s remuneration
2015
€m
204
263
50
517
2014
€m
149
216
48
413
In accordance with statutory requirements in Ireland, fees for professional services provided by the Group’s independent auditor in respect of each of the
following categories were:
EY Ireland (statutory auditor)
EY (network firms)
Total
Audit of the Group
accounts (i)
2015
€m
3
16
19
2014
€m
2
12
14
Other assurance
services (ii)
2015
€m
1
4
5
2014
€m
-
1
1
Tax advisory
services
2015
€m
-
2
2
2014
€m
-
1
1
Total
2015
€m
4
22
26
2014
€m
2
14
16
(i) Audit of the Group accounts includes Sarbanes-Oxley attestation and parent and subsidiary statutory audit fees, but excludes €2 million
(2014: €2 million) paid to auditors other than EY.
(ii) Other assurance services includes attestation and due diligence services that are closely related to the performance of the audit.
153
CRH Annual Report I 2015
4. Business and Non-Current Asset Disposals
Assets/(liabilities) disposed of at net carrying amount:
- non-current assets (notes 13,14,15)
- cash and cash equivalents
- working capital and provisions (note 19)
- interest-bearing loans and borrowings
- deferred tax (note 26)
- retirement benefit obligations (note 27)
Net assets disposed
Reclassification of currency translation effects on disposal
Total
Proceeds from disposals (net of disposal costs)
Profit on step acquisition (note 30)
Profit on disposals
Net cash inflow arising on disposal
Proceeds from disposals
Less: cash and cash equivalents disposed
Less: deferred proceeds arising on disposal (note 19)
Total
Business disposals
2015 (i)
2014 (ii)
€m
€m
570
90
246
(20)
(22)
(84)
780
39
819
875
6
62
875
(90)
(38)
747
117
-
11
-
-
-
128
57
185
224
-
39
224
-
-
224
Disposal of other
non-current assets
2015
€m
2014
€m
103
83
Total
2015
€m
673
90
246
(20)
(22)
(84)
883
39
922
1,017
6
101
2014
€m
200
-
11
-
-
-
211
57
268
345
-
77
-
-
-
-
-
83
-
83
121
-
38
121
1,017
345
-
-
121
(90)
(38)
889
-
-
345
-
-
-
-
-
103
-
103
142
-
39
142
-
-
142
(i) This relates principally to the divestment of the Group’s clay and concrete businesses in the United Kingdom (Europe Heavyside) and its clay business in
the United States (Americas Products) on 26 February 2015. The assets and liabilities associated with this transaction, together with those relating to a
number of smaller business units, met the “held for sale” criteria set out in IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations and were
reclassified accordingly as assets or liabilities held for sale as at 31 December 2014. As the vast majority of the assets and liabilities held for sale at 31
December 2014 have been divested prior to 31 December 2015, all opening balances have been reclassified back to the relevant asset and liability
categories prior to their divestment for presentation purposes. During the year the Group also sold its businesses in South America (which were part of the
Americas Products segment) and our 25% equity stake in our Israeli associates.
Assets and liabilities that met the IFRS 5 criteria at 31 December 2015 have not been separately disclosed as held for sale as they were not considered
material in the context of the Group. The businesses divested in 2015 are not considered to be either separate major lines of business or geographical
areas of operation and therefore do not constitute discontinued operations as defined in IFRS 5.
(ii) This relates principally to the disposal of our 50% equity stake in our Turkish joint venture, Denizli Çimento (which was part of the Europe Heavyside
segment).
154
CRH Annual Report I 2015
5. Employment
The average number of employees is as follows:
Europe Heavyside
Europe Lightside
Europe Distribution
Europe
Americas Materials
Americas Products (i)
Americas Distribution
Americas
LH Assets (i)
Total Group
Employment costs charged in the Consolidated Income Statement are analysed as follows:
Wages and salaries
Social welfare costs
Other employment-related costs*
Share-based payment expense (note 7)
Total retirement benefits expense (note 27)
Total
Total charge analysed between:
Cost of sales
Operating costs
Finance costs (net) - applicable to retirement benefit obligations (note 8)
Total
Year ended 31 December
2015
16,138
4,787
11,392
32,317
18,459
16,712
3,920
39,091
6,698
2014
19,096
5,003
11,607
35,706
18,457
17,707
3,836
40,000
-
78,106
75,706
2015
€m
3,690
419
537
27
288
4,961
2,446
2,498
17
4,961
2014
€m
2,987
368
448
16
215
4,034
1,985
2,035
14
4,034
(i) LH Assets and CRL employee numbers included above are average employee numbers for 2015 (i.e. weighted for the post-acquisition period).
The year-end employee numbers were 16,050 for LH Assets and 1,750 for CRL respectively. Total Group employees were 88,650 at year-end.
* Other employment costs relate principally to redundancy, severance and healthcare costs.
6. Directors’ Emoluments and Interests
Directors’ emoluments (which are included in administrative expenses in note 2) and interests are presented in the Directors’ Remuneration
Report on pages 70 to 106 of this Annual Report.
155
CRH Annual Report I 2015 7. Share-based Payment Expense
Total share-based payment expense
2015
€m
27
2014
€m
16
Share-based payment expense relates primarily to awards granted under the 2006 and 2014 Performance Share Plans. The expense, which also
includes charges in relation to the 2013 Restricted Share Plan and to options granted under the Group’s savings-related share option schemes,
is reflected in operating costs in the Consolidated Income Statement.
In May 2014, shareholders approved the adoption of a new Performance Share Plan (the “2014 Performance Share Plan”), which replaced the
2006 Performance Share Plan (approved by shareholders in May 2006), the 2010 Share Option Scheme (approved by shareholders in May 2010)
and the 2013 Restricted Share Plan (together, the “Existing Plans”). Following the introduction of the 2014 Performance Share Plan, no further
awards will be made under the Existing Plans. Consequently, the last awards under the Existing Plans were made in 2013. The general terms and
conditions applicable to the various plans are set out in the Directors’ Remuneration Report on pages 70 to 106.
2014 Performance Share Plan
The structure of the 2014 Performance Share Plan is set out in the Directors’ Remuneration Report on page 70. An expense of €20 million was
recognised in 2015 (2014: €5 million).
Details of awards granted under the 2014 Performance Share Plan
Granted in 2015
Granted in 2014
Share price at
date of award
€24.84
€20.49
Period to earliest
release date
3 years
3 years
Number of Shares
Initial award Net outstanding
2,949,146
2,190,120
2,989,371
2,283,960
75% of vesting is subject to Total Shareholder Return (TSR) performance against sector peers, while the remaining 25% of vesting is subject to a
cumulative cash flow target. A number of awards are subject only to a three year service period (i.e. no performance conditions).
The fair value assigned to the portion of awards which are subject to TSR performance was €13.99 (2014: €10.88). The fair value of these awards
was calculated using a TSR pricing model taking account of peer group TSR, volatilities and correlations together with the following assumptions:
Risk-free interest rate (%)
Expected volatility (%)
2015
0.25
21.4
2014
0.13
21.9
The expected volatility was determined using a historical sample of 37 month-end CRH share prices.
The fair value of (i) the portion of awards subject to cash flow performance and (ii) the awards with no performance conditions (which are subject
to a three year service period) was €24.84 (2014: €20.49). The fair value was calculated using the closing CRH share price at the date the award
was granted. Awards vest only if all performance and service conditions are met. No expense is recognised for awards that do not ultimately vest.
At the balance sheet date the estimate of the level of vesting is reviewed and any necessary adjustment to the share-based payment expense is
recognised in the Consolidated Income Statement.
156
CRH Annual Report I 2015 7. Share-based Payment Expense | continued
2006 Performance Share Plan
The expense of €4 million (2014: €8 million) reported in the Consolidated Income Statement has been arrived at through applying a Monte Carlo
simulation technique to model the combination of market-based and non-market-based performance conditions in the Plan.
Details of awards granted under the 2006 Performance Share Plan
Granted in 2012
Granted in 2013
Number of Shares
Share price at
date of award
€15.63
€16.69
Period to earliest
release date
3 years
3 years
Initial award Net outstanding
-
992,750
2,079,000
1,195,500
Fair value
€7.77
€8.54
In April 2015, none of the shares awarded under the Performance Share Plan in 2012 vested and accordingly all remaining awards granted in
2012 lapsed.
2013 Restricted Share Plan
Due to the immateriality of the Restricted Share Plan expense and the level of awards outstanding in this Plan at 31 December 2015 and
31 December 2014, detailed financial disclosures have not been provided in relation to this share-based payment arrangement.
The Group also operates savings-related share option schemes. Due to the immateriality of the savings-related schemes’ expense and the level
of savings-related share options outstanding, detailed financial disclosures have not been provided in relation to these schemes.
Share option schemes
Details of movement and options outstanding under share option schemes (excluding savings-related share option schemes)
Outstanding at beginning of year
Exercised (a)
Lapsed
Outstanding at end of year (b)
Exercisable at end of year
Weighted average
exercise price
€19.58
€19.35
€16.64
€21.14
€24.18
Number of options
2015
15,481,191
(2,544,141)
(4,316,360)
8,620,690
5,335,290
Weighted
average
exercise price
€18.75
€16.58
€16.77
€19.58
€18.79
Number of options
2014
21,798,887
(919,205)
(5,398,491)
15,481,191
1,248,698
(a) The weighted average share price at the date of exercise of these options was €25.51 (2014: €20.47).
(b) The level of vesting of options outstanding at the end of the year will be determined by reference to certain performance targets (outlined on page 78 of
this Annual Report). If the performance criteria have been met, these options, or portion thereof as appropriate, may be exercised after the expiration of
three years from their date of grant. All options granted have a life of ten years.
157
CRH Annual Report I 2015 7. Share-based Payment Expense | continued
Weighted average remaining contractual life for the share options outstanding at 31 December (years)
Euro-denominated options outstanding at the end of the year (number)
Range of exercise prices (€)
Sterling-denominated options outstanding at the end of the year (number)
Range of exercise prices (Stg£)
2015
3.86
2014
4.89
8,604,776
16.19-29.86
15,389,922
15.19-29.86
15,914
91,269
13.64-18.02
12.80-20.23
The CRH share price at 31 December 2015 was €26.70 (2014: €19.90).
The following analysis shows the number of outstanding share options with exercise prices lower/higher than the year-end share price:
Number of options with exercise prices lower than year-end price:
Exercisable
Not exercisable
Number of options with exercise prices higher than year-end price:
Exercisable
Not exercisable
3,667,056
3,285,400
6,952,456
1,668,234
-
1,668,234
1,248,698
8,789,200
10,037,898
-
5,443,293
5,443,293
Total options outstanding
8,620,690
15,481,191
158
CRH Annual Report I 2015 8. Finance Costs and Finance Income
Finance costs
Interest payable on borrowings
Net income on interest rate and currency swaps
Mark-to-market of derivatives and related fixed rate debt:
- interest rate swaps (i)
- currency swaps and forward contracts
- fixed rate debt (i)
Net loss/(gain) on interest rate swaps not designated as hedges
Net finance cost on gross debt including related derivatives
Finance income
Interest receivable on loans to joint ventures and associates
Interest receivable on cash and cash equivalents and other
Finance income
2015
€m
334
(32)
12
4
(22)
7
303
(4)
(4)
(8)
2014
€m
308
(42)
(15)
-
8
(5)
254
(3)
(5)
(8)
Finance costs less income
295
246
Other financial expense
Premium paid on early debt redemption
Unwinding of discount element of provisions for liabilities (note 25)
Unwinding of discount applicable to deferred and contingent acquisition consideration (note 18)
Pension-related finance cost (net) (note 27)
Total
38
19
20
17
94
-
16
12
14
42
(i) The Group uses interest rate swaps to convert fixed rate debt to floating rate. Fixed rate debt, which has been converted to floating rate through the use
of interest rate swaps, is stated in the Consolidated Balance Sheet at adjusted value to reflect movements in underlying fixed rates. The movement on this
adjustment, together with the offsetting movement in the fair value of the related interest rate swaps, is included in finance costs in each reporting period.
159
CRH Annual Report I 2015
9. Share of Equity Accounted Investments’ Profit
The Group’s share of joint ventures’ and associates’ profit after tax is equity accounted and is presented as a single line item in the Consolidated
Income Statement; it is analysed as follows between the principal Consolidated Income Statement captions:
Group share of:
Revenue
EBITDA (as defined)*
Depreciation and amortisation
Operating profit
Finance costs (net)
Profit before tax
Income tax expense
Profit after tax
Joint Ventures
2015
€m
2014
€m
Associates
2015
€m
2014
€m
496
488
79
(27)
52
(6)
46
(5)
41
62
(27)
35
(6)
29
(3)
26
961
84
(55)
29
(17)
12
(9)
3
953
106
(45)
61
(21)
40
(11)
29
Total
2015
€m
2014
€m
1,457
1,441
163
(82)
81
(23)
58
(14)
44
168
(72)
96
(27)
69
(14)
55
An analysis of the profit after tax by operating segment is presented in note 1. The aggregated balance sheet data (analysed between current and
non-current assets and liabilities) in respect of the Group’s investment in joint ventures and associates is presented in note 15.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges and profit on disposals.
10. Income Tax Expense
Recognised within the Consolidated Income Statement
(a) Current tax
Republic of Ireland
Overseas
Total current tax expense
(b) Deferred tax
Origination and reversal of temporary differences:
Retirement benefit obligations
Share-based payment expense
Derivative financial instruments
Other items
Total deferred tax (income)/expense
Income tax expense reported in the Consolidated Income Statement
160
2015
€m
-
339
339
7
(8)
1
(35)
(35)
304
2014
€m
-
141
141
7
-
6
23
36
177
CRH Annual Report I 2015 10. Income Tax Expense | continued
Recognised within equity
(a) Within the Consolidated Statement of Comprehensive Income:
Deferred tax - retirement benefit obligations
(b) Within the Consolidated Statement of Changes in Equity:
Deferred tax - share-based payment expense
Income tax expense recognised directly within equity
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)
2015
€m
(30)
(30)
5
5
(25)
1,033
32.8%
29.4%
The following table reconciles the applicable Republic of Ireland statutory tax rate to the effective tax rate (current and deferred) of the Group:
% of profit before tax
Irish corporation tax rate
Higher tax rates on overseas earnings
Other items (primarily comprising items not chargeable to tax/expenses not deductible
for tax)
Total effective tax rate
12.5
13.8
3.1
29.4
2014
€m
69
69
-
-
69
761
18.5%
23.2%
12.5
9.6
1.1
23.2
Other disclosures
Effective tax rate
The 2015 Consolidated Income Statement includes one-off charges related to the LH Assets transaction of €197 million (€144 million of
acquisition-related costs as detailed in note 30 and a €53 million inventory-related adjustment) which are substantially non-deductible for
income tax purposes. The 2015 effective tax rate excluding the impact of these costs is 25.8%.
Changes in tax rates
The total tax charge in future periods will be affected by any changes to the tax rates in force in the countries in which the Group operates.
Excess of capital allowances over depreciation
The current tax charge will also be impacted by changes in the excess of tax depreciation (capital allowances) over accounting depreciation.
Based on current capital investment plans, the Group expects to continue to be in a position to claim capital allowances in excess of
depreciation in future years.
Investments in subsidiaries
Given management’s intention not to unwind temporary differences in respect of its investment in subsidiaries or tax exemptions and credits
being available in the majority of jurisdictions in which the Group operates, the aggregate amount of deferred tax liabilities on temporary
differences which have not been recognised would be immaterial.
Proposed dividends
There are no income tax consequences for the Company in respect of dividends proposed prior to issuance of the Consolidated Financial
Statements and for which a liability has not been recognised.
161
CRH Annual Report I 2015 11. Dividends
The dividends paid and proposed in respect of each class of share capital are as follows:
Dividends to shareholders
Preference
5% Cumulative Preference Shares €3,175 (2014: €3,175)
7% 'A' Cumulative Preference Shares €77,521 (2014: €77,521)
Equity
Final - paid 44.00c per Ordinary Share (2014: 44.00c)
Interim - paid 18.50c per Ordinary Share (2014: 18.50c)
Total
Dividends proposed (memorandum disclosure)
Equity
Final 2015 - proposed 44.00c per Ordinary Share (2014: 44.00c)
Reconciliation to Consolidated Statement of Cash Flows
Dividends to shareholders
Less: issue of scrip shares in lieu of cash dividends (note 28)
Dividends paid to equity holders of the Company
Dividends paid by subsidiaries to non-controlling interests
Total dividends paid
2015
€m
-
-
359
152
511
362
511
(132)
379
4
383
2014
€m
-
-
323
137
460
359
460
(107)
353
4
357
162
CRH Annual Report I 2015
12. Earnings per Ordinary Share
The computation of basic and diluted earnings per Ordinary Share is set out below:
Numerator computations
Group profit for the financial year
Profit attributable to non-controlling interests
Profit attributable to equity holders of the Company
Preference dividends
Profit attributable to ordinary equity holders of the Company - numerator for basic/diluted earnings per Ordinary Share
Depreciation charge
Amortisation of intangible assets
Impairment of property, plant and equipment and intangible assets
Impairment of financial assets
Numerator for "cash" earnings per Ordinary Share (i)
Denominator computations
Denominator for basic earnings per Ordinary Share
Weighted average number of Ordinary Shares (millions) outstanding for the year (ii)
Effect of dilutive potential Ordinary Shares (employee share options) (millions) (ii) and (iii)
Denominator for diluted earnings per Ordinary Share
Basic earnings per Ordinary Share
Diluted earnings per Ordinary Share
"Cash" earnings per Ordinary Share (i)
2015
€m
2014
€m
729
(5)
724
-
724
843
55
42
2
584
(2)
582
-
582
631
44
49
-
1,666
1,306
812.3
3.6
815.9
89.1c
88.7c
737.6
0.7
738.3
78.9c
78.8c
205.1c
177.1c
(i) This measure 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 Ordinary Share on a diluted earnings basis amounted to 204.2c (2014: 176.9c). This is not a recognised measure under generally accepted
accounting principles.
(ii) The weighted average number of Ordinary Shares included in the computation of basic and diluted earnings per Ordinary Share has been adjusted to
exclude shares held by the Employee Benefit Trust and Ordinary Shares repurchased and held by the Company (CRH plc) as Treasury Shares given that
these shares do not rank for dividend. The number of Ordinary Shares so held at the balance sheet date is detailed in note 28.
(iii) Contingently issuable Ordinary Shares (totalling 8,630,786 at 31 December 2015 and 19,062,236 at 31 December 2014) are excluded from the computation
of diluted earnings per Ordinary Share where the conditions governing exercisability have not been satisfied as at the end of the reporting period or they are
antidilutive for the periods presented.
163
CRH Annual Report I 2015 13. Property, Plant and Equipment
At 31 December 2015
Cost/deemed cost
Accumulated depreciation (and impairment charges)
Net carrying amount
At 1 January 2015, net carrying amount
Translation adjustment
Reclassifications
Additions at cost
Arising on acquisition (note 30)
Reclassified from held for sale
Disposals at net carrying amount
Depreciation charge for year
Impairment charge for year (ii)
At 31 December 2015, net carrying amount
The equivalent disclosure for the prior year is as follows:
At 31 December 2014
Cost/deemed cost
Accumulated depreciation (and impairment charges)
Net carrying amount
At 1 January 2014, net carrying amount
Translation adjustment
Reclassifications
Additions at cost
Arising on acquisition (note 30)
Reclassified as held for sale
Disposals at net carrying amount
Depreciation charge for year
Impairment charge for year
At 31 December 2014, net carrying amount
At 1 January 2014
Cost/deemed cost
Accumulated depreciation (and impairment charges)
Net carrying amount
Land and
buildings (i)
€m
Plant and
machinery
€m
Assets in
course of
construction
€m
8,471
(2,075)
6,396
4,176
292
145
96
1,999
173
(283)
(175)
(27)
6,396
6,068
(1,892)
4,176
4,096
329
66
45
20
(173)
(68)
(132)
(7)
4,176
5,912
(1,816)
4,096
12,583
(6,496)
6,087
3,026
115
46
514
3,138
88
(161)
(665)
(14)
6,087
8,940
(5,914)
3,026
3,214
64
34
264
71
(88)
(27)
(499)
(7)
3,026
8,847
(5,633)
3,214
582
(3)
579
220
6
(191)
272
276
1
(2)
(3)
-
579
220
-
220
229
1
(100)
126
-
(1)
-
-
(35)
220
229
-
229
Total
€m
21,636
(8,574)
13,062
7,422
413
-
882
5,413
262
(446)
(843)
(41)
13,062
15,228
(7,806)
7,422
7,539
394
-
435
91
(262)
(95)
(631)
(49)
7,422
14,988
(7,449)
7,539
(i) The carrying value of mineral-bearing land included in the land and buildings category above amounted to €2,855 million at the balance sheet date
(2014: €1,997 million).
(ii) The impairment charge of €41 million in 2015 (2014: €49 million), principally relates to the write down of property, plant and equipment in Europe Heavyside
and Americas Products of €24 million and €15 million respectively (2014: €35 million and €14 million respectively).
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
2015
€m
311
118
2014
€m
211
70
164
CRH Annual Report I 2015 14. Intangible Assets
At 31 December 2015
Cost/deemed cost
Accumulated amortisation (and impairment charges)
Net carrying amount
At 1 January 2015, net carrying amount
Translation adjustment
Arising on acquisition (note 30)
Reclassifications
Reclassified from held for sale
Disposals
Amortisation charge for year
Impairment charge for year
At 31 December 2015, net carrying amount
The equivalent disclosure for the prior year is as follows:
At 31 December 2014
Cost/deemed cost
Accumulated amortisation (and impairment charges)
Net carrying amount
At 1 January 2014, net carrying amount
Translation adjustment
Arising on acquisition (note 30)
Reclassified as held for sale
Disposals
Amortisation charge for year
At 31 December 2014, net carrying amount
At 1 January 2014
Cost/deemed cost
Accumulated amortisation (and impairment charges)
Net carrying amount
Other intangible assets
Goodwill
€m
Marketing-
related
€m
Customer-
related (i)
€m
Contract-
based
€m
7,699
(293)
7,406
4,018
247
3,187
-
16
(61)
-
(1)
7,406
4,362
(344)
4,018
3,734
279
31
(16)
(10)
-
4,018
4,158
(424)
3,734
137
(46)
91
12
3
84
(2)
-
-
(6)
-
91
52
(40)
12
12
3
2
-
(1)
(4)
12
48
(36)
12
639
(375)
264
126
11
167
1
1
-
(42)
-
264
448
(322)
126
151
6
10
(1)
(2)
(38)
126
420
(269)
151
85
(26)
59
17
2
47
1
-
(1)
(7)
-
59
37
(20)
17
14
1
4
-
-
(2)
17
31
(17)
14
(i) The customer-related intangible assets relate predominantly to non-contractual customer relationships.
Total
€m
8,560
(740)
7,820
4,173
263
3,485
-
17
(62)
(55)
(1)
7,820
4,899
(726)
4,173
3,911
289
47
(17)
(13)
(44)
4,173
4,657
(746)
3,911
165
CRH Annual Report I 2015 14. Intangible Assets | continued
(a) Annual goodwill testing
The net book value of goodwill capitalised under previous GAAP (Irish GAAP) as at the transition date to IFRS (1 January 2004) has been treated
as deemed cost. Goodwill arising on acquisition since that date is capitalised at cost.
Cash-generating units
Goodwill acquired through business combination activity has been allocated to cash-generating units (CGUs) that are expected to benefit from
synergies in that combination. 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 operating segments determined in accordance with IFRS 8 Operating Segments.
A total of 21 (2014: 20) cash-generating units have been identified and these are analysed between the six business segments below, excluding
the newly acquired LH Assets and CRL. Given the size and timing of these acquisitions in the second half of 2015, the related goodwill has not yet
been allocated to CGUs; the allocation will be completed during 2016. The increase in the number of CGUs in 2015 relates to a reorganisation in
the Americas Materials segment. All businesses within the various cash-generating units exhibit similar and/or consistent profit margin and asset
intensity characteristics. Assets, liabilities, deferred tax and goodwill have been assigned to the CGUs on a reasonable and consistent basis.
Significant under-performance in any of CRH’s major cash-generating units may give rise to a material write-down of goodwill which would have
a substantial impact on the Group’s income and equity.
Europe Heavyside*
Europe Lightside*
Europe Distribution
Europe
Americas Materials
Americas Products
Americas Distribution
Americas
Unallocated Goodwill
LH Assets
CRL
Total Group
Cash-generating units
2014
2015
Goodwill (€m)
2015
2014
8
1
1
10
8
2
1
11
-
-
21
8
1
1
10
7
2
1
10
-
-
20
648
347
662
650
346
649
1,657
1,645
1,484
758
398
2,640
2,252
857
7,406
1,313
703
357
2,373
-
-
4,018
*
Included in the goodwill numbers of Europe Heavyside and Europe Lightside at 31 December 2015 are amounts of €52 million and €8 million respectively (2014: €54 million
and €9 million respectively) relating to businesses identified for divestment as part of the portfolio review, which have been tested separately (see section (b) on page 168).
166
CRH Annual Report I 2015 14. Intangible Assets | continued
Impairment testing methodology and results
Goodwill is subject to impairment testing on an annual basis. The recoverable amount of each of the 21 CGUs is determined based on a value-
in-use computation, using Level 3 inputs in accordance with the fair value hierarchy (as described in the “fair value hierarchy” section of the
accounting policies on page 146). The cash flow forecasts are primarily based on a five-year strategic plan document formally approved by
senior management and the Board of Directors and specifically exclude the impact of future development activity. These cash flows are projected
forward for an additional five years to determine the basis for an annuity-based terminal value, calculated on the same basis as the Group’s
acquisition modelling methodology. As in prior years, the terminal value is based on a 20-year annuity. The projected cash flows assume zero
growth in real cash flows beyond the initial evaluation period. The value-in-use represents the present value of the future cash flows, including
the terminal value, discounted at a rate appropriate to each CGU. The real pre-tax discount rates used range from 7.0% to 11.7% (2014: 7.5%
to 12.2%); these rates are in line with the Group’s estimated weighted average cost of capital, arrived at using the Capital Asset Pricing Model.
The 2015 and 2014 annual goodwill impairment testing processes have resulted in no intangible asset impairments.
Key sources of estimation uncertainty
The cash flows have been arrived at taking account of the Group’s strong financial position, its established history of earnings and cash flow
generation and the nature of the building materials industry, where product obsolescence is very low. However, expected future cash flows are
inherently uncertain and are therefore liable to material change over time. The key assumptions employed in arriving at the estimates of future
cash flows factored into impairment testing are subjective and include projected EBITDA (as defined)* margins, net cash flows, discount rates
used and the duration of the discounted cash flow model.
Significant goodwill amounts
The goodwill allocated to the Europe Distribution and the Oldcastle Building Products (Americas Products segment) CGUs each account for
approximately 10% of the total carrying amount of €7,406 million. The goodwill allocated to each of the remaining CGUs is less than 10% of the
total carrying value in all other cases, except for the goodwill arising on the acquisitions of LH Assets and CRL which account for 30% and 12%
of the total carrying amount of goodwill respectively. No additional disclosures are presented for the acquired goodwill as the initial allocation of
the goodwill to CGUs has not been completed and therefore the goodwill has been assessed for impairment indicators as at 31 December 2015.
The additional disclosures required for the two CGUs with significant goodwill are as follows:
Europe Distribution
2014
2015
Oldcastle Building Products
2014
2015
Goodwill allocated to the cash-generating unit at balance sheet date
Discount rate applied to the cash flow projections (real pre-tax)
Average EBITDA (as defined)* margin over the initial 5-year period
Value-in-use (present value of future cash flows)
Excess of value-in-use over carrying amount
€662m
9.0%
6.1%
€2,153m
€472m
€649m
9.4%
5.9%
€2,015m
€336m
€756m
11.7%
12.0%
€2,726m
€566m
€699m
11.9%
11.0%
€2,588m
€509m
The key assumptions and methodology used in respect of these two CGUs are consistent with those described above. The values applied to
each of the key estimates and assumptions are specific to the individual CGUs and were derived from a combination of internal and external
factors based on historical experience and took into account the cash flows specifically associated with these businesses. The cash flows and
20-year annuity-based terminal value were projected in line with the methodology disclosed above.
Europe Distribution and Oldcastle Building Products are not included in the CGUs referred to in the “Sensitivity analysis” section below. Given
the magnitude of the excess of value-in-use over carrying amount, and our belief that the key assumptions are reasonable, management believe
that it is not reasonably possible that there would be a change in the key assumptions such that the carrying amount would exceed the value-in-
use. Consequently no further disclosures relating to sensitivity of the value-in-use computations for the Europe Distribution or Oldcastle Building
Products CGUs are considered to be warranted.
*
EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted
investments’ profit after tax.
167
CRH Annual Report I 2015 14. Intangible Assets | continued
Sensitivity analysis
Sensitivity analysis has been performed and results in additional disclosures in respect of 4 of the 21 CGUs including the Ukraine. The key
assumptions, methodology used and values applied to each of the key assumptions for the 4 CGUs are in line with those outlined above. The
4 CGUs had aggregate goodwill of €216 million at the date of testing. The table below identifies the amounts by which each of the following
assumptions may either decline or increase to arrive at a zero excess of the present value of future cash flows over the book value of net assets
in the 4 CGUs selected for sensitivity analysis disclosures:
Reduction in EBITDA (as defined)* margin
Reduction in profit before tax
Reduction in net cash flow
Increase in pre-tax discount rate
4 CGUs
0.6 to 3.6 percentage points
9.1% to 16.2%
8.0% to 17.1%
0.8 to 1.8 percentage points
The average EBITDA (as defined)* margin for the aggregate of these 4 CGUs over the initial five-year period was 11.1%. The value-in-use (being
the present value of the future net cash flows) was €1,024 million and the carrying amount was €895 million, resulting in an excess of value-in-
use over carrying amount of €129 million.
(b) Portfolio review update
In November 2013, a Group-wide portfolio review was initiated to identify and focus on those businesses within our portfolio which offer the
most attractive future returns, and to prioritise capital allocation to ensure profitable growth across our network of businesses. This review was
completed during 2014 and a multi-year divestment programme is well under way with proceeds of €1.4 billion realised on business and non-
current asset disposals in 2015 and 2014 (see note 4).
The decision to sell these business units resulted in the need to assess them for impairment, either individually or on a combined basis where they
form a new group for disposal purposes. Excluding business units divested during 2014 and 2015, the remainder were assessed for impairment
or reversal of previous impairments and also assessed from the perspective of the held for sale criteria set out in IFRS 5 Non-Current Assets Held
for Sale and Discontinued Operations.
A valuation was prepared based on the estimated fair value less costs of disposal (FVLCD) for each business unit. The valuations were then
compared to the carrying value of each business and where that valuation fell below the carrying value an impairment charge was taken.
Impairments of €33 million (€1 million relating to goodwill) were recorded during the year in the Europe Heavyside and Americas Products
segments. No reversal of previous impairments were recorded during the year.
*
EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted
investments’ profit after tax.
168
CRH Annual Report I 2015 15. Financial Assets
At 1 January 2015
Translation adjustment
Investments and advances
Joint Ventures becoming subsidiaries (note 30)
Reclassified from held for sale
Disposals and repayments
Return of Share Capital
Arising on acquisition (note 30)
Impairment charge for year
Retained loss
At 31 December 2015
The equivalent disclosure for the prior year is as follows:
At 1 January 2014
Translation adjustment
Investments and advances
Reclassified as held for sale
Disposals and repayments
Retained profit
At 31 December 2014
Investments accounted for
using the equity method
(i.e. joint ventures and associates)
Share of net
assets
€m
Loans
€m
1,193
103
7
(25)
34
(159)
(6)
23
-
(9)
1,161
1,211
73
-
(34)
(82)
25
1,193
136
14
11
-
-
(6)
-
1
-
-
156
129
14
3
-
(10)
-
136
Total
€m
1,329
117
18
(25)
34
(165)
(6)
24
-
(9)
1,317
1,340
87
3
(34)
(92)
25
1,329
Other (i)
€m
23
1
1
-
-
-
-
5
(2)
-
28
23
-
-
-
-
-
23
(i) Other financial assets primarily comprise trade investments carried at historical cost.
Summarised financial information for the Group’s investment in joint ventures and associates which are accounted for using the equity method
is as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Joint Ventures
Associates
Total
2015
€m
696
173
(194)
(187)
488
2014
€m
548
121
(161)
(73)
435
2015
€m
880
444
(140)
(511)
673
2014
€m
955
538
(209)
(526)
758
2015
€m
1,576
617
(334)
(698)
1,161
2014
€m
1,503
659
(370)
(599)
1,193
A listing of the principal equity accounted investments is contained on page 231.
The Group holds a 21.13% stake (2014: 21.13%) in Samse S.A., a publicly-listed distributor in France which is accounted for as an associate
investment above. The fair value of this investment at the balance sheet date, calculated based on the number of shares held multiplied by the
closing share price at 31 December 2015 (Level 1 input in the fair value hierarchy), was €82 million (2014: €75 million).
169
CRH Annual Report I 2015 16. Inventories
Raw materials
Work-in-progress (i)
Finished goods
Total inventories at the lower of cost and net realisable value
2015
€m
836
106
1,931
2,873
2014
€m
612
80
1,568
2,260
(i) Work-in-progress includes €9 million (2014: €8 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.
An analysis of the Group’s cost of sales expense is provided in note 2 to the financial statements.
Write-downs of inventories recognised as an expense within cost of sales amounted to €12 million (2014: €29 million).
17. Trade and Other Receivables
Current
Trade receivables
Amounts receivable in respect of construction contracts (i)
Total trade receivables, gross
Provision for impairment
Total trade receivables, net
Amounts receivable from equity accounted investments
Prepayments and other receivables
Total
Non-current
Other receivables
2015
€m
2,752
720
3,472
(161)
3,311
11
655
3,977
2014
€m
1,810
476
2,286
(106)
2,180
6
458
2,644
149
85
The carrying amounts of current and non-current trade and other receivables approximate their fair value largely due to the short-term maturities
and nature of these instruments.
(i) Includes unbilled revenue and retentions held by customers in respect of construction contracts at the balance sheet date amounting to €155 million and
€145 million respectively (2014: €119 million and €82 million respectively).
170
CRH Annual Report I 2015
17. Trade and Other Receivables | continued
Provision for impairment
The movements in the provision for impairment of receivables during the financial year were as follows:
At 1 January
Translation adjustment
Provided during year
Reclassified from/(as) held for sale
Disposed of during year
Written-off during year
Arising on acquisitions during year (note 30)
Recovered during year
At 31 December
106
5
40
2
(4)
(36)
55
(7)
161
118
4
28
(2)
-
(36)
-
(6)
106
Information in relation to the Group’s credit risk management is provided in note 21 to the financial statements.
Aged analysis
The aged analysis of trade receivables and amounts receivable in respect of construction contracts at the balance sheet date was as follows:
Neither past due nor impaired
Past due but not impaired:
- less than 60 days
- 60 days or greater but less than 120 days
- 120 days or greater
Past due and impaired (partial or full provision)
Total
2,385
608
211
107
161
3,472
1,638
373
117
45
113
2,286
Trade receivables and amounts receivable in respect of construction contracts are in general receivable within 90 days of the balance sheet date.
171
CRH Annual Report I 2015 18. Trade and Other Payables
Current
Trade payables
Construction contract-related payables (i)
Deferred and contingent acquisition consideration (ii)
Accruals and other payables
Amounts payable to equity accounted investments
Total
Non-current
Other payables
Deferred and contingent acquisition consideration (ii)
Total
2015
€m
2014
€m
2,521
240
46
1,911
43
4,761
168
242
410
1,506
129
59
1,148
52
2,894
109
148
257
(i) Construction contract-related payables include billings in excess of revenue, together with advances
received from customers in respect of work to be performed under construction contracts and
foreseeable losses thereon.
Other than deferred and contingent consideration, the carrying amounts of trade and other payables
approximate their fair value largely due to the short-term maturities and nature of these instruments.
(ii) Deferred and contingent acquisition consideration:
The fair value of total contingent consideration is €111 million (2014: €122 million), (Level 3 input in
the fair value hierarchy) and deferred consideration is €177 million (2014: €85 million). On an
undiscounted basis, the corresponding basis for which the Group may be liable for contingent
consideration ranges from nil to a maximum of €117 million. The movement in deferred and contingent
consideration during the financial year was as follows:
At 1 January
Translation adjustment
Arising on acquisitions and investments during the year (note 30)
Changes in estimate
Paid during the year
Discount unwinding
At 31 December
2015
€m
207
21
97
2
(59)
20
288
2014
€m
208
16
3
(6)
(26)
12
207
172
CRH Annual Report I 2015
19. Movement in Working Capital and Provisions for Liabilities
Trade and
other
receivables
€m
Trade and
other
payables
€m
Provisions
for liabilities
€m
Inventories
€m
At 1 January 2015
Translation adjustment
Arising on acquisition (note 30)
Reclassified from held for sale
Disposals
Deferred and contingent acquisition consideration:
- arising on acquisitions during year (note 30)
- paid during year
Deferred proceeds arising on disposals during year
Interest accruals and discount unwinding
Decrease in working capital and provisions for liabilities
At 31 December 2015
The equivalent disclosure for the prior year is as follows:
At 1 January 2014
Translation adjustment
Arising on acquisition (note 30)
Reclassified as held for sale
Disposals
Deferred and contingent acquisition consideration:
- arising on acquisitions during year (note 30)
- paid during year
Interest accruals and discount unwinding
2,260
130
621
102
(211)
-
-
-
-
(29)
2,873
2,729
147
1,533
79
(178)
-
-
38
-
(222)
4,126
(3,151)
(151)
(1,549)
(98)
137
(97)
59
-
(20)
(301)
(5,171)
2,254
2,609
(3,043)
128
23
(102)
(9)
-
-
-
165
20
(79)
(4)
-
-
-
(173)
(17)
98
2
(3)
26
(1)
(40)
(3,151)
(396)
(5)
(581)
(7)
6
-
-
-
(19)
(33)
(1,035)
(380)
(27)
(1)
7
-
-
-
(16)
21
(396)
Decrease/(increase) in working capital and provisions for liabilities
At 31 December 2014
(34)
2,260
18
2,729
Total
€m
1,442
121
24
76
(246)
(97)
59
38
(39)
(585)
793
1,440
93
25
(76)
(11)
(3)
26
(17)
(35)
1,442
173
CRH Annual Report I 2015 20. Analysis of Net Debt
Components of net debt
Net debt is a non-GAAP measure which we provide to investors as we believe they find it useful. Net debt comprises cash and cash equivalents,
derivative financial instrument assets and liabilities and interest-bearing loans and borrowings and enables investors to see the economic effects
of these in total (see note 21 for details of the capital and risk management policies employed by the Group). Net debt is commonly used in
computations such as net debt as a % of total equity and net debt as a % of market capitalisation.
Cash and cash equivalents (note 22)
Interest-bearing loans and borrowings (note 23)
Derivative financial instruments (net) (note 24)
Group net debt
As at 31 December 2015
Fair value (i)
€m
Book value
€m
As at 31 December 2014
Fair value (i)
€m
Book value
€m
2,518
(9,526)
85
(6,923)
2,518
(9,221)
85
(6,618)
3,295
(6,302)
79
(2,928)
3,295
(5,866)
79
(2,492)
(i) All interest-bearing loans and borrowings are Level 2 fair value measurements.
The following table shows the effective interest rates on period-end fixed and gross debt:
Interest-bearing loans and borrowings nominal - fixed rate (i)
Derivative financial instruments - fixed rate
Net fixed rate debt including derivatives
Interest-bearing loans and borrowings nominal - floating rate (ii)
Adjustment of debt from nominal to book value (i)
Derivative financial instruments - currency floating rate
Gross debt including derivative financial instruments
Cash and cash equivalents - floating rate
Group net debt
Cash at bank and in hand reclassified as held for sale (note 22)
Group net debt excluding cash reclassified as held for sale
As at 31 December 2015
Weighted
average
fixed period
Years
Interest
rate
4.0%
9.4
3.3%
€m
(7,431)
2,270
(5,161)
(1,668)
(122)
(2,185)
(9,136)
2,518
(6,618)
-
(6,618)
As at 31 December 2014
Weighted
average
fixed period
Years
Interest
rate
4.5%
5.2
4.1%
€m
(5,657)
1,227
(4,430)
(63)
(146)
(1,148)
(5,787)
3,295
(2,492)
(33)
(2,525)
(i) Of the Group’s nominal fixed rate debt at 31 December 2015, €2,270 million (2014: €1,227 million) is hedged to floating rate using interest rate swaps.
(ii) 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.
174
CRH Annual Report I 2015
20. Analysis of Net Debt | continued
Currency profile
The currency profile of the Group’s net debt and net worth (capital and reserves attributable to the Company’s equity holders) as at 31 December
2015 and 31 December 2014 is as follows:
euro
€m
US
Dollar
€m
Pound
Sterling
€m
Canadian
Dollar
€m
Philippine
Peso
€m
Polish
Zloty
€m
Swiss
Franc Other (i)
€m
€m
Total
€m
Cash and cash equivalents (note 22)
1,062
791
Interest-bearing loans and borrowings (note 23)
(4,533)
(3,503)
Derivative financial instruments (net) (note 24)
2,449
(918)
99
(540)
(413)
131
(29)
(536)
10
(226)
-
120
(64)
(50)
182
(304)
(232)
123
2,518
(22)
(9,221)
(215)
85
Net debt by major currency including derivative
financial instruments
Non-debt assets and liabilities analysed as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Non-controlling interests
Capital and reserves attributable to the Company's
equity holders
The equivalent disclosure for the prior year is as follows:
(1,022)
(3,630)
(854)
(434)
(216)
6
(354)
(114)
(6,618)
4,487
1,855
(643)
(1,547)
(39)
9,111
2,934
(1,837)
(1,956)
(12)
2,845
1,403
1,459
818
(254)
(1,091)
-
393
(228)
(272)
-
121
(193)
(150)
(467)
365
158
(8)
(121)
2
821
331
(377)
(200)
(13)
2,034
22,525
245
6,855
(84)
(3,624)
(257)
(5,594)
-
(529)
3,091
4,610
1,464
862
554
402
208
1,824
13,015
Cash and cash equivalents (note 22)
1,776
1,092
Interest-bearing loans and borrowings (note 23)
(2,648)
(2,573)
Derivative financial instruments (net) (note 24)
1
364
Net debt* by major currency including derivative
financial instruments
(871)
(1,117)
68
(310)
174
(68)
7
(1)
(109)
(103)
Non-debt assets (including cash reclassified as held for sale) and liabilities analysed as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Non-controlling interests
Capital and reserves attributable to the Company's
equity holders
3,061
1,611
(616)
(1,117)
7,003
2,558
(1,481)
(1,436)
(5)
(4)
346
489
(92)
(368)
-
2,063
5,523
307
221
113
(9)
(65)
-
157
-
-
-
-
-
-
-
-
-
-
43
(24)
(112)
(93)
395
171
(35)
(88)
-
350
212
(274)
(188)
(250)
778
326
(270)
(191)
(12)
64
3,262
(36)
(51)
(5,866)
79
(23)
(2,525)
1,399
13,203
182
5,450
(27)
(2,530)
(135)
(3,400)
-
(21)
381
1,396
10,177
(i) The principal currencies included in this category are the Chinese Renminbi, the Romanian new leu, the Indian Rupee, the Ukrainian Hryvnia and the Serbian
Dinar.
* Excluding €33 million cash reclassified as held for sale which is analysed by major currency in current assets above.
175
CRH Annual Report I 2015 20. Analysis of Net Debt | continued
Liquidity and capital resources
The following table provides certain information related to our cash generation and changes in our cash and cash equivalents position:
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash inflow/(outflow) from financing activities
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of year, excluding overdrafts (note 22)
Effect of exchange rate changes
Cash and cash equivalents at the end of year, excluding overdrafts (note 22)
Bank overdrafts
Borrowings
Derivative financial instruments
Net debt at end of year
2015
€m
2,247
(7,306)
4,162
(897)
3,295
120
2,518
(117)
(9,104)
85
(6,618)
2014
€m
1,237
(232)
(380)
625
2,540
130
3,295
(70)
(5,796)
79
(2,492)
The Group’s financing strategy includes maintenance of adequate financial resources and liquidity. During 2015 the Group’s total net cash outflow
from investing activities amounted to €7.3 billion which was funded by €2.2 billion of operating cash flow, €4.2 billion of net financing and a
€0.9 billion reduction in cash and cash equivalents.
The Group believes that its financial resources (operating cash together with cash and cash equivalents of €2.5 billion and undrawn committed
loan facilities of €3.1 billion) will be sufficient to cover the Group’s cash requirements.
At 31 December 2015, euro and US Dollar denominated cash and cash equivalents represented 42% (2014: 54%) and 31% (2014: 33%) of total
cash and cash equivalents respectively.
Significant borrowings
The main sources of Group debt funding are public bond markets in Europe and North America.
The following bonds were outstanding as at 31 December 2015:
Annual
coupons
Outstanding
millions
Final
maturity
4.125%
6.00%
8.125%
5.00%
2.75%
5.75%
1.75%
1.375%
3.125%
1.875%
3.875%
4.125%
6.40%
5.125%
$114
$518
$650
€500
€750
$400
€600
CHF 330
€750
€600
$1,250
£400
$213
$500
2016
2016
2018
2019
2020
2021
2021
2022
2023
2024
2025
2029
2033
2045
US Dollar bonds
US Dollar bonds
US Dollar bonds
euro bonds
euro bonds
US Dollar bonds
euro bonds
Swiss Franc bonds
euro bonds
euro bonds
US Dollar bonds
Sterling bonds
US Dollar bonds
US Dollar bonds
176
CRH Annual Report I 2015 21. Capital and Financial Risk Management
Capital management
Overall summary
The primary objectives of CRH’s capital management strategy are to ensure that the Group maintains a strong credit rating to support its business
and to create shareholder value by managing the debt and equity balance and the cost of capital. No changes were made in the objectives,
policies or processes for managing capital during 2015.
The Board periodically reviews the capital structure of the Group, including the cost of capital and the risks associated with each class of capital.
The Group manages and, if necessary, adjusts its capital structure taking account of underlying economic conditions; any material adjustments
to the Group’s capital structure in terms of the relative proportions of debt and equity are approved by the Board. In order to maintain or adjust
the capital structure, the Group may issue new shares, dispose of assets, amend investment plans, alter dividend policy or return capital to
shareholders.
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. Dividend cover for the year ended 31 December 2015 amounted to 1.43 times (2014: 1.26 times).
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
Capital and net debt
2015
€m
13,015
6,618
19,633
2014
€m
10,177
2,492
12,669
177
CRH Annual Report I 2015 21. Capital and Financial Risk Management | continued
Financial risk management objectives and policies
The Group uses financial instruments throughout its businesses: interest-bearing loans and borrowings, cash and cash equivalents and finance
leases are used to finance the Group’s operations; trade receivables and trade payables arise directly from operations; and derivatives, principally
interest rate and currency swaps and forward foreign exchange contracts, are used to manage interest rate risks and currency exposures and
to achieve the desired profile of borrowings. The Group does not trade in financial instruments nor does it enter into any leveraged derivative
transactions.
The Group’s corporate treasury function provides services to the business units, co-ordinates access to domestic and international financial
markets, and monitors and manages the financial risks relating to the operations of the Group. The Head of Group Financial Operations reports
to the General Manager of Finance and the activities of the corporate treasury function are subject to regular internal audit. Systems are in place
to monitor and control the Group’s liquidity risks. The Group’s net debt position forms part of the monthly documentation presented to the Board
of Directors.
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 arising from financial instruments 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 using a mix of fixed and floating rate debt. With the objective of managing this mix in a cost-efficient manner, the Group enters into
interest rate swaps, under which the Group contracts to exchange, at predetermined intervals, the difference between fixed and variable interest
amounts calculated by reference to a pre-agreed notional principal. Such contracts enable the Group to mitigate the risk of changing interest rates
on the fair value of issued fixed rate debt and the cash flow exposures of issued floating rate debt.
The majority of these swaps are designated under IAS 39 Financial Instruments; Recognition and Measurement to hedge underlying debt
obligations and qualify for hedge accounting; undesignated financial instruments are termed “not designated as hedges” in the analysis of
derivative financial instruments presented in note 24. The following table demonstrates the impact on profit before tax and total equity of a range
of possible changes in the interest rates applicable to net floating rate borrowings, with all other variables held constant. These impacts are
calculated based on the closing balance sheet for the relevant period and assume all floating interest rates and interest curves change by the
same amount. For profit before tax, the impact shown is the impact on closing balance sheet floating rate net debt for a full year while for total
equity the impact shown is the impact on the value of financial instruments.
Percentage change in cost of borrowings
+/- 1%
+/- 0.5%
2015
2014
2015
2014
-/+ €14m
+/- €21m
-/+ €7m
+/- €10m
-/+ €7m
-/+ €5m
-/+ €4m
-/+ €2m
Impact on profit before tax
Impact on total equity
178
CRH Annual Report I 2015 21. Capital and Financial Risk Management | 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 Consolidated Income Statement in the period in which they arise.
Given the Group’s presence in 31 countries worldwide, the principal foreign exchange risk arises from fluctuations in the euro value of the Group’s
net investment in a wide basket of currencies other than the euro; such changes are reported separately within the Consolidated Statement of
Comprehensive Income. A currency profile of the Group’s net debt and net worth is presented in note 20. The Group’s established policy is to
spread its net worth across the currencies of its various operations with the objective of limiting its exposure to individual currencies and thus
promoting consistency with the geographical balance of its operations. In order to achieve this objective, the Group manages its borrowings,
where practicable and cost effective, to hedge a portion of its foreign currency assets. Hedging is done using currency borrowings in the same
currency as the assets being hedged or through the use of other hedging methods such as currency swaps.
The following table demonstrates the sensitivity of profit before tax and equity to selected movements in the relevant €/US$ exchange rate (with
all other variables held constant); the US Dollar has been selected as the appropriate currency for this analysis given the materiality of the Group’s
activities in the United States. The impact on profit before tax is based on changing the €/US$ exchange rate used in calculating profit before tax
for the period. The impact on total equity and financial instruments is calculated by changing the €/US$ exchange rate used in measuring the
closing balance sheet.
Percentage change in relevant €/US$ exchange rate
Impact on profit before tax
Impact on total equity*
* Includes the impact on financial instruments which is as follows:
+/- 5%
+/- 2.5%
-/+ €33m
-/+ €26m
-/+ €17m
-/+ €13m
-/+ €230m
-/+ €263m
-/+ €115m
-/+ €135m
+/- €181m
+/- €53m
+/- €90m
+/- €27m
2015
2014
2015
2014
2015
2014
Financial instruments include deposits, money market funds, bank loans, medium term notes and other fixed term debt, interest rate swaps,
commodity swaps and foreign exchange contracts. They exclude trade receivables and trade payables.
179
CRH Annual Report I 2015
21. Capital and Financial Risk Management | continued
Credit/counterparty risk
In addition to cash at bank and in hand, the Group holds significant cash balances which are invested on a short-term basis and are classified
as cash equivalents (see note 22). These deposits and other financial instruments (principally certain derivatives and loans and receivables
included within financial assets) give rise to credit risk on amounts due from counterparty financial institutions (stemming from their insolvency or
a downgrade in their credit ratings). Credit risk is managed by limiting the aggregate amount and duration of exposure to any one counterparty
primarily depending on its credit rating and by regular review of these ratings. Acceptable credit ratings are high investment-grade ratings -
generally counterparties have ratings of A2/A or higher from Moody’s/Standard & Poor’s ratings agencies. The maximum exposure arising in the
event of default on the part of the counterparty (including insolvency) is the carrying value of the relevant financial instrument.
In its worldwide insurance programme, the Group carries appropriate levels of insurance for typical business risks (including product liability) with
various leading insurance companies. However, in the event of the failure of one or more of its insurance counterparties, the Group could be
impacted by losses where recovery from such counterparties is not possible.
Credit risk arising in the context of the Group’s operations is not significant with the total bad debt provision at the balance sheet date amounting
to 4.6% of gross trade receivables (2014: 4.6%). Customer credit risk is managed at appropriate Group locations according to established
policies, procedures and controls. Customer credit quality is assessed in line with strict credit rating criteria and credit limits are established where
appropriate. Outstanding customer balances are regularly monitored and a review for indicators of impairment (evidence of financial difficulty
of the customer, payment default, breach of contract etc.) is carried out at each reporting date. Significant balances are reviewed individually
while smaller balances are grouped and assessed collectively. Receivables balances are in general unsecured and non-interest-bearing. The
trade receivables balances disclosed in note 17 comprise a large number of customers spread across the Group’s activities and geographies
with balances classified as neither past due nor impaired representing 69% of the total trade receivables balance at the balance sheet date
(2014: 72%); amounts receivable from related parties (notes 17 and 32) are immaterial. Factoring and credit guarantee arrangements are
employed in certain of the Group’s operations where deemed to be of benefit by operational management.
Liquidity risk
The principal liquidity risks faced by the Group stem from the maturation of debt obligations and derivative transactions. A downgrade of CRH’s
credit ratings may give rise to increases in funding costs in respect of future debt and may impair the Group’s ability to raise funds on acceptable
terms. The Group’s corporate treasury function ensures that sufficient resources are available to meet such liabilities as they fall due through a
combination of cash and cash equivalents, cash flows and undrawn committed bank facilities. Flexibility in funding sources is achieved through
a variety of means including (i) maintaining cash and cash equivalents only with a diversity of highly-rated counterparties; (ii) limiting the maturity
of such balances; (iii) borrowing the bulk of the Group’s debt requirements under committed bank lines or other term financing; and (iv) having
surplus committed lines of credit.
The undrawn committed facilities available to the Group as at the balance sheet date are quantified in note 23; these facilities span a wide number
of highly-rated financial institutions thus minimising any potential exposure arising from concentrations in borrowing sources. The repayment
schedule (analysed by maturity date) applicable to the Group’s outstanding interest-bearing loans and borrowings as at the balance sheet date
is also presented in note 23.
180
CRH Annual Report I 2015 21. Capital and Financial Risk Management | continued
The tables below show the projected contractual undiscounted total cash outflows (principal and interest) arising from the Group’s trade and
other payables, gross debt and derivative financial instruments. The tables also include the gross cash inflows projected to arise from derivative
financial instruments. These projections are based on the interest and foreign exchange rates applying at the end of the relevant financial year.
At 31 December 2015
Financial liabilities - cash outflows
Trade and other payables
Finance leases
Other interest-bearing loans and borrowings
Interest payments on other interest-bearing loans and borrowings (i)
Cross-currency swaps - gross cash outflows
Gross projected cash outflows
Derivative financial instruments - cash inflows
Interest rate swaps - net cash inflows (ii)
Cross-currency swaps - gross cash inflows
Gross projected cash inflows
The equivalent disclosure for the prior year is as follows:
At 31 December 2014
Financial liabilities - cash outflows
Trade and other payables
Finance leases
Other interest-bearing loans and borrowings
Interest payments on other interest-bearing loans and borrowings (i)
Cross-currency swaps - gross cash outflows
Gross projected cash outflows
Derivative financial instruments - cash inflows
Interest rate swaps - net cash inflows (ii)
Cross-currency swaps - gross cash inflows
Gross projected cash inflows
Commodity price risk
Within
1 year
€m
Between
1 and 2
years
€m
Between
2 and 3
years
€m
Between
3 and 4
years
€m
Between
4 and 5
years
€m
After
5 years
€m
Total
€m
4,761
2
760
315
2,716
8,554
231
2
800
277
146
80
2
1,361
270
-
1,456
1,713
(53)
(2,707)
(2,760)
(35)
(162)
(197)
(35)
-
(35)
2,894
2
452
253
1,729
5,330
(34)
(1,738)
(1,772)
178
2
1,371
207
-
1,758
(28)
-
(28)
25
2
1
157
-
185
(19)
-
(19)
37
2
500
196
-
735
(21)
-
(21)
16
1
536
137
-
690
(14)
-
(14)
48
2
750
190
-
65
5
4,971
1,271
-
5,222
15
9,142
2,519
2,862
990
6,312
19,760
(21)
-
(21)
(87)
(252)
-
(2,869)
(87)
(3,121)
11
2
56
4
500
2,882
90
-
305
-
3,180
13
5,742
1,149
1,729
603
3,247
11,813
(6)
-
(6)
(18)
(119)
-
(1,738)
(18)
(1,857)
The fair value of derivatives used to hedge future energy costs was €17 million unfavourable as at the balance sheet date (2014: €19 million
unfavourable).
(i) At 31 December 2015 and 31 December 2014, a portion of the Group’s long-term debt carried variable interest rates. The Group uses the interest rates in
effect on 31 December to calculate the interest payments on the long-term debt for the periods indicated.
(ii) The Group uses interest rate swaps to help manage its interest cost. Under these contracts the Group has agreed to exchange at predetermined intervals,
the difference between fixed and variable interest amounts calculated by reference to a pre-agreed notional principal. The Group uses the interest rates in
effect on 31 December to calculate the net interest receipts or payments on these contracts.
181
CRH Annual Report I 2015 22. Cash and Cash Equivalents
Cash and cash equivalents balances are spread across a wide number of highly-rated financial
institutions. The credit risk attaching to these items is documented in note 21.
Cash and cash equivalents are included in the Consolidated Balance Sheet at fair value and are
analysed as follows:
Cash at bank and in hand
Investments (short-term deposits)
Total
2015
€m
938
1,580
2,518
2014
€m
689
2,573
3,262
Cash at bank earns interest at floating rates based on daily deposit bank rates. Short-term
deposits, which include bank and money market deposits, are made for varying periods of
between one day and three months depending on the immediate cash requirements of the
Group, and earn interest at the respective short-term deposit rates.
Cash and cash equivalents at fair value include the following for the purposes of the Consolidated
Statement of Cash Flows:
Cash at bank and in hand
Investments (short-term deposits)
Cash at bank and in hand reclassified as held for sale
Total
2015
€m
938
1,580
-
2,518
2014
€m
689
2,573
33
3,295
182
CRH Annual Report I 2015 23. Interest-bearing Loans and Borrowings
Loans and borrowings outstanding
Bank overdrafts
Bank loans
Finance leases
Bonds and private placements
Other
Interest-bearing loans and borrowings*
2015
€m
117
1,564
15
7,508
17
9,221
2014
€m
70
16
13
5,750
17
5,866
*
Including loans of €1 million (2014: €1 million) secured on specific items of property, plant and equipment; these
figures do not include finance leases.
Maturity profile of loans and borrowings and undrawn committed facilities
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
Total
As at 31 December 2015
As at 31 December 2014
Loans and
borrowings
Undrawn
committed
facilities**
Loans and
borrowings
Undrawn
committed
facilities**
€m
756
794
1,382
501
747
5,041
9,221
€m
31
220
-
-
2,837
-
3,088
€m
447
1,395
-
562
505
2,957
5,866
€m
22
-
-
-
2,641
-
2,663
**
The Group manages its borrowing ability by entering into committed borrowing agreements. Revolving committed bank facilities are generally available to the Group for periods
of up to five years from the date of inception. The figures shown above are the undrawn committed facilities available to be drawn by the Group at 31 December 2015.
183
CRH Annual Report I 2015 23. Interest-bearing Loans and Borrowings | continued
Guarantees
The Company has given letters of guarantee to secure obligations of subsidiary undertakings as follows: €8.9 billion in respect of loans, bank
advances, derivative obligations and future lease obligations (2014: €5.8 billion), €308 million in respect of letters of credit (2014: €288 million) and
€10 million in respect of other obligations (2014: €5 million).
Pursuant to the provisions of Section 357(1)(b) of the Companies Act 2014, the Company has guaranteed all amounts shown as liabilities in
the statutory financial statements of its wholly-owned subsidiary undertakings and the Oldcastle Finance Company general partnership in the
Republic of Ireland for the financial year ended 31 December 2015 and as a result, such subsidiary undertakings and the general partnership have
been exempted from the filing provisions of Sections 347 and 348 of the Companies Act 2014 and Regulation 20 of the European Communities
(Accounts) Regulations, 1993 respectively.
Lender covenants
The Group’s major bank facilities and debt issued pursuant to Note Purchase Agreements in private placements require the Group to maintain
certain financial covenants. Non-compliance with financial covenants would give the relevant lenders the right to terminate facilities and demand
early repayment of any sums drawn thereunder thus altering the maturity profile of the Group’s debt and the Group’s liquidity. Calculations for
financial covenants are completed for twelve-month periods half-yearly on 30 June and 31 December. The Group was in full compliance with
its financial covenants throughout each of the periods presented. The Group is not aware of any stated events of default as defined in the
Agreements.
The financial covenants are:
(1)
(2)
Minimum interest cover defined as PBITDA/net interest (all as defined in the relevant agreement) cover at no lower than 4.5 times (2014: 4.5
times). As at 31 December 2015 the ratio was 8.5 times (2014: 7.0 times);
Minimum net worth defined as total equity plus deferred tax liabilities and capital grants less repayable capital grants being in aggregate no
lower than €5.6 billion (2014: €5.0 billion) (such minimum being adjusted for foreign exchange translation impacts). As at 31 December 2015
net worth (as defined in the relevant agreement) was €15.6 billion (2014: €11.5 billion).
184
CRH Annual Report I 2015 24. Derivative Financial Instruments
The fair values of derivative financial instruments are analysed by year of maturity and by accounting designation as follows:
Fair value
hedges
€m
Cash flow
hedges
€m
Net
investment
hedges
€m
Not
designated
as hedges
€m
Total
€m
At 31 December 2015
Derivative assets
Within one year - current assets
Between one and two years
Between two and three years
Between three and four years
After five years
Non-current assets
Total derivative assets
Derivative liabilities
Within one year - current liabilities
Between one and two years - non-current liabilities
Total derivative liabilities
Net asset arising on derivative financial instruments
The equivalent disclosure for the prior year is as follows:
At 31 December 2014
Derivative assets
Within one year - current assets
Between one and two years
Between three and four years
Between four and five years
After five years
Non-current assets
Total derivative assets
Derivative liabilities
Within one year - current liabilities
Between one and two years
Between two and three years
Between three and four years
Non-current liabilities
Total derivative liabilities
Net asset arising on derivative financial instruments
4
21
22
-
34
77
81
-
-
-
81
-
22
26
-
30
78
78
-
-
-
-
-
-
78
-
-
-
-
-
-
-
(7)
(4)
(11)
(11)
2
-
-
-
-
-
2
(7)
(1)
(1)
(1)
(3)
(10)
(8)
15
-
-
-
-
-
5
-
-
8
-
8
24
21
22
8
34
85
15
13
109
(7)
-
(7)
8
13
-
-
-
-
-
13
(4)
-
-
-
-
(4)
9
(5)
(1)
(6)
7
-
-
-
9
-
9
9
(9)
-
-
-
-
(9)
-
(19)
(5)
(24)
85
15
22
26
9
30
87
102
(20)
(1)
(1)
(1)
(3)
(23)
79
185
CRH Annual Report I 2015 24. Derivative Financial Instruments | continued
At 31 December 2015 and 2014, the Group had no master netting or similar arrangements, collateral posting requirements, and enforceable right
of set-off agreements with any of its derivative counterparts.
Fair value hedges consist of interest rate swaps and currency swaps. These instruments hedge risks arising from changes in asset/liability fair
values due to interest rate and foreign exchange rate movements.
Cash flow hedges consist of forward foreign exchange and commodity contracts and interest rate and currency swaps. These instruments hedge
risks arising to future cash flows from movements in foreign exchange rates, commodity prices and interest rates. Cash flow hedges are expected
to affect profit and loss over the period to maturity.
Net investment hedges comprise cross-currency swaps and hedge changes in the value of net investments due to currency movements.
The (loss)/profit arising on fair value, cash flow, net investment hedges and related hedged items reflected in the Consolidated Income Statement
is shown below:
2015
€m
(16)
13
2014
€m
15
(16)
(2)
(6)
Fair value of hedge instruments
Fair value of the hedged items
Components of other comprehensive income - cash flow hedges
Losses arising during the year:
- commodity forward contracts
Fair value hierarchy
Assets measured at fair value
Fair value hedges - cross-currency and interest rate swaps
Net investment hedges - cross-currency swaps
Not designated as hedges (held-for-trading) - interest rate swaps
Cash flow hedges - cross-currency, interest rate swaps and commodity forwards
Total
Liabilities measured at fair value
Cash flow hedges - cross-currency, interest rate swaps and commodity forwards
Net investment hedges - cross-currency swaps
Not designated as hedges (held-for-trading) - interest rate swaps
Total
2015
Level 2
€m
2014
Level 2
€m
81
15
13
-
109
(11)
(7)
(6)
(24)
78
13
9
2
102
(10)
(4)
(9)
(23)
At 31 December 2015 and 2014 there were no derivatives valued using Level 1 or Level 3 fair value techniques. Valuation methods for Levels 1,
2 and 3 are described in the “fair value hierarchy” section of the accounting policies on page 146.
186
CRH Annual Report I 2015 25. Provisions for Liabilities
At 1
January
Translation
adjustment
Arising on
acquisition
(note 30)
Provided
during
year
Utilised
during
year
Reclassified
from/(as) held
for sale
Disposed
during
year
Reversed
unused
Discount
unwinding
At 31
December
€m
€m
€m
€m
€m
8
348
61
20
(49)
(10)
2
23
(23)
223
581
62
166
(21)
(103)
31 December 2015
Insurance (i)
Environment and
remediation (ii)
Rationalisation and
redundancy (iii)
Other (iv)
Total
Analysed as:
Non-current liabilities
Current liabilities
Total
€m
18
(5)
1
(9)
5
€m
208
96
24
68
396
257
139
396
The equivalent disclosure for the prior year is as follows:
31 December 2014
Insurance (i)
Environment and
remediation (ii)
Rationalisation and
redundancy (iii)
Other (iv)
Total
Analysed as:
Non-current liabilities
Current liabilities
Total
181
87
43
69
380
231
149
380
20
5
1
1
27
-
-
-
1
1
52
12
30
(50)
(4)
(48)
14
108
(8)
(110)
-
4
-
3
7
-
(4)
-
(3)
(7)
-
(5)
-
(1)
(6)
-
-
-
-
-
€m
(12)
(4)
(2)
(12)
(30)
(3)
(4)
(3)
(9)
(19)
€m
10
6
1
2
19
8
4
1
3
16
€m
244
450
26
315
1,035
603
432
1,035
208
96
24
68
396
257
139
396
187
CRH Annual Report I 2015 25. Provisions for Liabilities | continued
(i) This provision relates to actual and potential obligations arising under the self-insurance components of the Group’s insurance arrangements which comprise
employers’ liability (workers’ compensation in the United States), public and products liability (general liability in the United States), automobile liability,
property damage, business interruption and various other insurances; a substantial proportion of the total provision pertains to claims which are classified
as “incurred but not reported”. Due to the extended timeframe associated with many of the insurances, a significant proportion of the total provision is
subject to periodic actuarial valuation. The projected cash flows underlying the discounting process are established through the application of actuarial
triangulations, which are extrapolated from historical claims experience. The triangulations applied in the discounting process indicate that the Group’s
insurance provisions have an average life of six years (2014: six years).
(ii) This provision comprises obligations governing site remediation, restoration and environmental works to be incurred in compliance with either local or
national environmental regulations together with constructive obligations stemming from established best practice. Whilst a significant element of the total
provision will reverse in the medium-term (two to ten years), 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.
(iii) These provisions relate to irrevocable commitments under various rationalisation and redundancy programmes, none of which is individually material to the
Group. In 2015, €23 million (2014: €30 million) was provided in respect of rationalisation and redundancy activities as a consequence of undertaking various
cost reduction initiatives across all operations. These initiatives included removing excess capacity from manufacturing and distribution networks and scaling
operations to match market supply and demand; implementation of these initiatives resulted in a reduction in staffing levels in all business segments over
recent years. The Group expects that these provisions will be utilised within one to two years of the balance sheet date (2014: one to two years).
(iv) Other provisions primarily relate to legal claims (only one of which is individually material to the Group, see below for further details), onerous contracts,
guarantees and warranties and employee related provisions. The Group expects these provisions will be utilised within two to five years of the balance sheet
date (2014: two years).
Swiss Competition Commission Investigation
In July 2015, the Swiss Competition Commission (“ComCo”) announced its decision to impose fines of approximately CHF 80 million on the
Association of Swiss Wholesalers of the Sanitary Industry (the “Association”) and on major Swiss wholesalers including certain subsidiaries of
CRH in Switzerland. The full decision of ComCo, setting out the basis of its findings, is expected to be available in March 2016 at which time
CRH has the option to appeal the decision to the Federal Administrative Tribunal, and ultimately to the Federal Supreme Court. While the Group
is of the view that the position of ComCo is fundamentally ill-founded and that the fine imposed on CRH is unjustified, a provision of €32 million
(CHF 34 million), representing the full amount of the fine attributed to the Group’s subsidiaries, has been recorded in the 2015 Consolidated
Financial Statements.
Discount rate sensitivity analysis
All non-current provisions are discounted at a rate of 5% (2014: 5%), consistent with the average effective interest rate for the Group’s borrowings.
The impact on profit before tax of a 1% change in the discount rate applicable to provisions, with all other variables held constant, is approximately
€2 million (2014: €nil million).
188
CRH Annual Report I 2015 26. Deferred Income Tax
The deductible and taxable temporary differences in respect of which deferred tax has been recognised are as follows:
Reported in balance sheet after offset
Deferred tax liabilities
Deferred tax assets
Net deferred income tax liability
Deferred income tax assets (deductible temporary differences)
Deficits on Group retirement benefit obligations (note 27)
Revaluation of derivative financial instruments to fair value
Tax loss carryforwards
Share-based payment expense
Provisions for liabilities and working capital-related items
Other deductible temporary differences
Total
2015
€m
2,023
(149)
1,874
126
13
158
15
326
46
684
2014
€m
1,305
(171)
1,134
140
14
97
2
187
37
477
Deferred income tax assets have been recognised in respect of all deductible temporary differences, with the exception of some tax loss
carryforwards. The amount of tax losses where recovery is not probable and is therefore not recognised in the Consolidated Balance Sheet is
€959 million (2014: €937 million). The vast majority will expire post 2020 (2014: 2019).
Deferred income tax liabilities (taxable temporary differences)
Taxable temporary differences principally attributable to accelerated tax depreciation and fair value adjustments arising on
acquisition (i)
Revaluation of derivative financial instruments to fair value
Rolled-over capital gains
Total
(i) Fair value adjustments arising on acquisition principally relate to property, plant and equipment.
Movement in net deferred income tax liability
At 1 January
Translation adjustment
Net (income)/expense for the year (note 10)
Arising on acquisition (note 30)
Reclassified from/(as) held for sale
Disposal (note 4)
Movement in deferred tax asset on Group retirement benefit obligations
Movement in deferred tax asset on share-based payment expense
At 31 December
2,521
1,575
18
19
18
18
2,558
1,611
1,134
126
(35)
627
19
(22)
30
(5)
1,059
125
36
2
(19)
-
(69)
-
1,874
1,134
189
CRH Annual Report I 2015 27. Retirement Benefit Obligations
The Group operates either defined benefit or defined contribution pension schemes in all of its principal operating areas. The disclosures included
below relate to all pension schemes in the Group.
The Group operates defined benefit pension schemes in the Republic of Ireland, Britain and Northern Ireland, the Netherlands, Belgium, France,
Germany, Switzerland, the United States, Romania, Serbia, Slovakia, Brazil, the Philippines and Canada; for the purposes of the disclosures
which follow, the schemes in the Republic of Ireland, the Netherlands, Belgium, France, Germany and Slovakia have been aggregated into a
“Eurozone” category on the basis of common currency and financial assumptions. 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 on page 193 with unfunded schemes restricted
to a number of schemes in Germany, Canada, the Philippines and one scheme in each of the Netherlands and the United States.
All funded defined benefit schemes are administered by separate funds that are legally separate from the Group under the jurisdiction of Trustees.
Each of the Group’s schemes operate under broadly similar regulatory frameworks. The Trustees of the various pension funds in existence across
the Group are required by law and by their articles of association to act in the best interests of the scheme participants and are responsible for
the definition of investment strategy and for scheme administration. The level of benefits available to members depends on length of service and
either their average salary over their period of employment or their salary in the final years leading up to retirement. The Group’s pension schemes
in Switzerland are contribution-based schemes with guarantees to provide further contributions in the event that certain targets are not met
largely in relation to investment return and the annuity conversion factor on retirement.
Provision has been made in the financial statements for post-retirement healthcare obligations in respect of certain current and former employees
in the United States and Canada and for long-term service commitments in respect of certain employees in the Netherlands and Switzerland.
These obligations are unfunded in nature and the required disclosures form part of this note.
Defined benefit pension schemes - principal risks
Through its defined benefit pension schemes and post-retirement healthcare plans, the Group is exposed to a number of risks, the most
significant of which are detailed below:
Asset volatility: Under IAS 19 Employee Benefits, the assets of the Group’s defined benefit pension schemes are reported at fair value (using bid
prices, where relevant). The majority of the schemes’ assets comprise of equities, bonds and property all of which may fluctuate significantly in
value from period to period. Given that liabilities are discounted to present value based on bond yields and that bond prices are inversely related
to yields, an increase in the liability discount rate (which would reduce liabilities) would reduce bond values though not necessarily by an equal
magnitude.
Given the maturity of certain of the Group’s funded defined benefit pension schemes, de-risking frameworks have been introduced to mitigate
deficit volatility and enable better matching of investment returns with the cash outflows related to benefit obligations. These frameworks entail the
usage of asset-liability matching techniques whereby triggers are set for the conversion of equity holdings into bonds of similar average duration
to the relevant liabilities.
Discount rates: The discount rates employed in determining the present value of the schemes’ liabilities are determined by reference to market
yields at the balance sheet date on high-quality corporate bonds of a currency and term consistent with the currency and term of the associated
post-employment benefit obligations. Changes in discount rates impact the quantum of liabilities as discussed above.
Inflation risk: A significant amount of the Group’s pension obligations have an inflation linkage; higher inflation will lead to higher liabilities (although
in most cases, caps on the level of inflationary increases are in place to protect the scheme against extreme inflation).
Longevity risk: In the majority of cases, the Group’s defined benefit pension schemes provide benefits for life with spousal and dependent child
reversionary provisions; increases in life expectancy will therefore give rise to higher liabilities.
190
CRH Annual Report I 2015 27. Retirement Benefit Obligations | continued
Financial assumptions - scheme liabilities
The major long-term assumptions used by the Group’s actuaries in the computation of scheme liabilities as at 31 December 2015 and
31 December 2014 are as follows:
Rate of increase in:
- salaries
- pensions in payment
Inflation
Discount rate
Medical cost trend rate
Eurozone*
2015
%
2014
%
Britain and
Northern Ireland
2014
2015
%
%
Switzerland
United States and
Canada
2015
%
2014
%
2015
%
2014
%
3.64
1.75
1.75
2.61
n/a
3.75
1.75
1.75
2.00
n/a
4.00
3.00-3.20
3.00
3.95
n/a
4.00
3.00-3.20
3.00
3.50
n/a
1.75
-
0.75
0.85
n/a
2.25
-
1.25
1.15
n/a
3.29
-
2.00
4.22
6.21
3.50
-
2.00
3.80
16.70
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. For the Group’s most material schemes, the future life expectations factored into the relevant valuations, based on retirement at
65 years of age for current and future retirees, are as follows:
Current retirees
- male
- female
Future retirees
- male
- female
Republic of Ireland
United States
and Canada
Switzerland
2015
2014
2015
2014
2015
2014
22.8
24.9
22.8
24.9
21.2
23.4
22.0
24.0
21.5
24.0
21.3
23.8
25.8
26.9
25.8
26.8
23.0
25.1
24.0
26.0
23.6
26.0
23.5
25.9
The above data allows for future improvements in life expectancy.
* 2015 is calculated based on the weighted average of the assumptions for Republic of Ireland, the Netherlands, Belgium, France, Germany and Slovakia.
191
CRH Annual Report I 2015 27. Retirement Benefit Obligations | continued
Impact on Consolidated Income Statement
The total retirement benefit expense in the Consolidated Income Statement is as follows:
Total defined contribution expense
Total defined benefit expense
Total expense in Consolidated Income Statement
2015
€m
211
77
288
2014
€m
152
63
215
At 31 December 2015, €79 million (2014: €44 million) was included in other payables in respect
of defined contribution pension liabilities.
Analysis of defined benefit expense
Eurozone
2015
€m
Britain and
Northern Ireland
2015
€m
Switzerland
2015
€m
United States
and Canada
2015
€m
Other Total Group
2015
2015
€m
€m
Charged in arriving at Group profit before finance costs:
Current service cost
Administration expenses
Past service costs
Gain on settlements
Subtotal
Included in finance income and finance costs respectively:
Interest income on scheme assets
Interest cost on scheme liabilities
Net interest expense
Net charge to Consolidated Income Statement
Reconciliation of scheme assets (bid value)
19
1
(1)
-
19
(19)
27
8
27
7
-
-
(4)
3
(10)
12
2
5
34
1
-
-
35
(9)
11
2
37
At 1 January
Movement in year
Administration expenses
Interest income on scheme assets
Arising on acquisition (note 30)
Reclassified from held for sale
Disposals
Remeasurement adjustments
- return on scheme assets excluding interest income
Employer contributions paid
Contributions paid by plan participants
Benefit and settlement payments
Translation adjustment
At 31 December
935
155
745
(1)
19
10
-
-
19
74
3
(43)
-
1,016
-
10
-
633
(705)
14
11
-
(11)
56
163
(1)
9
-
-
(39)
(6)
19
11
(47)
83
774
2
-
-
-
2
(12)
16
4
6
211
-
12
216
-
-
(20)
6
-
(21)
12
416
1
-
-
-
1
-
1
1
2
-
-
-
28
-
-
(2)
3
-
-
1
63
2
(1)
(4)
60
(50)
67
17
77
2,046
(2)
50
254
633
(744)
5
113
14
(122)
152
30
2,399
192
CRH Annual Report I 2015 27. Retirement Benefit Obligations | continued
Eurozone
2015
€m
Britain and
Northern Ireland
2015
€m
Switzerland
2015
€m
United States
and Canada
2015
€m
Other Total Group
2015
2015
€m
€m
Reconciliation of actuarial value of
liabilities
At 1 January
Movement in year
Current service cost
Past service costs
Gain on settlements
Interest cost on scheme liabilities
Arising on acquisition (note 30)
Reclassified from held for sale
Disposals
Remeasurement adjustments
- experience variations
- actuarial gain/(loss) from changes in
financial assumptions
- actuarial gain from changes in
demographic assumptions
Contributions paid by plan participants
Benefit and settlement payments
Translation adjustment
At 31 December
Recoverable deficit in schemes
Related deferred income tax asset
Net pension liability
Split of scheme liabilities - funded and
unfunded
Funded defined benefit pension schemes
Unfunded defined benefit pension schemes
Total - defined benefit pension schemes
Post-retirement healthcare obligations
(unfunded)
Long-term service commitments (unfunded)
Actuarial value of liabilities (present value)
(1,332)
(216)
(900)
(19)
1
-
(27)
(67)
-
-
28
144
-
(3)
43
-
(1,232)
(216)
34
(182)
(1,135)
(91)
(1,226)
-
(6)
(1,232)
(7)
-
4
(12)
-
(714)
781
11
(9)
19
-
11
(65)
(197)
(34)
3
(31)
(197)
-
(197)
-
-
(197)
(34)
-
-
(11)
-
-
47
15
(43)
-
(11)
47
(99)
(989)
(215)
42
(173)
(984)
-
(984)
-
(5)
(989)
(309)
(2)
-
-
(16)
(235)
-
-
-
26
5
-
21
(20)
(530)
(114)
43
(71)
(496)
(30)
(526)
(4)
-
(530)
-
(2,757)
(1)
-
-
(1)
(39)
-
-
(1)
3
-
-
-
-
(39)
(9)
4
(5)
(36)
(3)
(39)
-
-
(39)
(63)
1
4
(67)
(341)
(714)
828
53
121
24
(14)
122
(184)
(2,987)
(588)
126
(462)
(2,848)
(124)
(2,972)
(4)
(11)
(2,987)
193
CRH Annual Report I 2015 27. Retirement Benefit Obligations | continued
The equivalent disclosure for the prior year is as follows:
Analysis of defined benefit expense
Charged in arriving at Group profit before finance costs:
Current service cost
Administration expenses
Past service costs
Subtotal
Included in finance income and finance costs respectively:
Interest income on scheme assets
Interest cost on scheme liabilities
Net interest expense
Net charge to Consolidated Income Statement
Reconciliation of scheme assets (bid value)
At 1 January
Movement in year
Administration expenses
Interest income on scheme assets
Remeasurement adjustments
- return on scheme assets excluding interest income
Employer contributions paid
Contributions paid by plan participants
Benefit and settlement payments
Reclassified as held for sale
Translation adjustment
At 31 December
Eurozone
2014
€m
11
1
(5)
7
(29)
37
8
15
790
(1)
29
87
72
3
(45)
-
-
935
Britain and
Northern Ireland
2014
Switzerland
2014
United States
2014
Total Group
2014
€m
14
2
-
16
(31)
34
3
19
662
(2)
31
54
19
-
(25)
(633)
49
155
€m
24
-
-
24
(16)
17
1
25
683
-
16
34
17
10
(30)
-
15
745
€m
€m
2
-
-
2
(9)
11
2
4
51
3
(5)
49
(85)
99
14
63
179
2,314
-
9
4
7
-
(14)
-
26
211
(3)
85
179
115
13
(114)
(633)
90
2,046
194
CRH Annual Report I 2015 27. Retirement Benefit Obligations | continued
Reconciliation of actuarial value of liabilities
At 1 January
Movement in year
Current service cost
Past service costs
Interest cost on scheme liabilities
Remeasurement adjustments
- experience variations
- actuarial loss from changes in financial
assumptions
- actuarial loss from changes in demographic
assumptions
Contributions paid by plan participants
Benefit and settlement payments
Reclassified as held for sale
Translation adjustment
At 31 December
Recoverable deficit in schemes
Related deferred income tax asset
Net pension liability
Split of scheme liabilities - funded and unfunded
Funded defined benefit pension schemes
Unfunded defined benefit pension schemes
Total - defined benefit pension schemes
Post-retirement healthcare obligations (unfunded)
Long-term service commitments (unfunded)
Actuarial value of liabilities (present value)
Reclassified as held for sale
Actuarial value of liabilities (present value)
excluding schemes reclassified as held for sale
Eurozone
2014
€m
Britain and
Northern Ireland
2014
€m
Switzerland
2014
€m
United States
2014
€m
Total Group
2014
€m
(1,045)
(723)
(727)
(229)
(2,724)
(11)
5
(37)
20
(306)
-
(3)
45
-
-
(1,332)
(397)
59
(338)
(1,274)
(52)
(1,326)
-
(6)
(1,332)
-
(1,332)
(14)
-
(34)
1
(129)
-
-
25
714
(56)
(216)
(61)
12
(49)
(930)
-
(930)
-
-
(930)
714
(216)
(24)
-
(17)
7
(142)
-
(10)
30
-
(17)
(900)
(155)
30
(125)
(894)
-
(894)
-
(6)
(900)
-
(900)
(2)
-
(11)
-
(27)
(17)
-
14
-
(37)
(309)
(98)
39
(59)
(297)
(8)
(305)
(4)
-
(309)
-
(309)
(51)
5
(99)
28
(604)
(17)
(13)
114
714
(110)
(2,757)
(711)
140
(571)
(3,395)
(60)
(3,455)
(4)
(12)
(3,471)
714
(2,757)
195
CRH Annual Report I 2015 27. Retirement Benefit Obligations | continued
Sensitivity analysis
The impact of a movement (as indicated below) in the principal actuarial assumptions would be as follows:
Eurozone
2015
€m
Britain and
Northern Ireland
2015
€m
Switzerland
2015
€m
United States
and Canada
2015
€m
Other Total Group
2015
2015
€m
€m
Scheme liabilities at 31 December 2015
(1,232)
(197)
(989)
(530)
(39)
(2,987)
Revised liabilities
Discount rate
Inflation rate
Decrease by 0.25%
Increase by 0.25%
Life expectancy
Increase by 1 year
(1,284)
(1,280)
(1,236)
(210)
(204)
(205)
(1,035)
(989)
(1,014)
(549)
(530)
(545)
(39)
(39)
(39)
(3,117)
(3,042)
(3,039)
The above sensitivity analysis are derived through changing the individual assumption while holding all other assumptions constant.
290
9
297
294
45
31
15
10
-
1
3
18
3
90
1
29
8
12
-
18
-
5
-
-
-
-
1,016
163
282
-
262
70
35
-
-
-
-
-
98
11
16
774
108
-
139
38
-
115
15
-
-
-
-
1
-
-
-
-
23
-
7
-
-
-
-
-
-
-
770
10
727
433
92
153
48
10
5
1
101
30
19
416
30
2,399
Split of scheme assets
Investments quoted in active markets
Equity instruments:
- Developed markets
- Emerging markets
Debt instruments:
- Non Government debt instruments
- Government debt instruments
Property
Cash and cash equivalents
Investment funds
Unquoted investments
Equity instruments:
- Developed markets
- Emerging markets
Debt instruments:
- Non Government debt instruments
Property
Cash and cash equivalents
Assets held by insurance company
Total assets
196
CRH Annual Report I 2015 27. Retirement Benefit Obligations | continued
The equivalent disclosure for the prior year is as follows:
Split of scheme assets
Eurozone
2014
€m
Britain and
Northern Ireland
2014
€m
Switzerland
2014
€m
United States
2014
€m
Total Group
2014
€m
Investments quoted in active markets
Equity instruments:
- Developed markets
- Emerging markets
Debt instruments:
- Non Government debt instruments
- Government debt instruments
Property
Cash and cash equivalents
Investment funds
Unquoted investments
Equity instruments:
- Developed markets
- Emerging markets
Debt instruments:
- Non Government debt instruments
Property
Cash and cash equivalents
Assets held by insurance company
Total assets
Reclassified as held for sale
Total excluding schemes reclassified as held for sale
281
10
279
265
37
16
24
-
-
-
3
17
3
935
-
935
329
55
166
165
41
2
17
-
6
-
-
7
-
788
(633)
155
260
-
226
65
31
-
-
1
-
2
97
44
19
745
-
745
69
-
59
67
-
16
-
-
-
-
-
-
-
211
-
211
939
65
730
562
109
34
41
1
6
2
100
68
22
2,679
(633)
2,046
197
CRH Annual Report I 2015 27. Retirement Benefit Obligations | continued
Actuarial valuations - funding requirements and future cash flows
In accordance with statutory requirements in Ireland and Britain (minimum funding requirements), additional annual contributions and lump-sum
payments are required to certain of the schemes in place in those jurisdictions. The funding requirements in relation to the Group’s defined benefit
schemes are assessed in accordance with the advice of independent and qualified actuaries and valuations are prepared in this regard either
annually, where local requirements mandate that this be done, or at triennial intervals at a maximum in all other cases. In 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 Germany. In the United
States, valuations are performed using a variety of actuarial cost methodologies - current unit, projected unit and aggregate cost. In Canada, the
projected unit credit method is used in valuations. The dates of the actuarial valuations range from January 2013 to December 2015.
In general, actuarial valuations are not available for public inspection; however, the results of valuations are advised to the members of the various
schemes on request.
The maturity profile of the Group’s contracted payments (on a discounted basis) to certain schemes in the Eurozone (Ireland) and Britain and
Northern Ireland is as follows:
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
Eurozone
Britain and
Northern Ireland
Total
2015
€m
2014
€m
2015
€m
2014
€m
2015
€m
2014
€m
18
17
17
-
-
-
52
18
17
17
17
-
-
69
2
2
2
2
2
11
21
8
8
7
7
7
48
85
20
19
19
2
2
11
73
26
25
24
24
7
48
154
Employer contributions payable in the 2016 financial year including minimum funding payments (expressed using year-end exchange rates for
2015) are estimated at €105 million.
Average duration and scheme composition
Eurozone
Britain and
Northern Ireland
Switzerland
2015
2014
2015
2014
2015
2014
United States
and Canada
2015
2014
Average duration of defined benefit obligation (years)
14.7
16.0
19.9
17.5
18.0
16.0
14.0
12.0
Allocation of defined benefit obligation by participant:
Active plan participants
Deferred plan participants
Retirees
64%
12%
24%
37%
21%
42%
30%
38%
32%
27%
34%
39%
85%
-
15%
85%
-
15%
45%
17%
38%
35%
30%
35%
198
CRH Annual Report I 2015 28. Share Capital and Reserves
Equity Share Capital
Authorised
At 1 January (€m)
Increase in authorised share capital
At 31 December (€m)
Number of Shares at 1 January ('000s)
Increase in number of Shares ('000s)
Number of Shares at 31 December ('000s)
Allotted, called-up and fully paid
At 1 January (€m)
Issue of share capital - equity placing
Issue of scrip shares in lieu of cash dividends (iii)
At 31 December (€m)
2015
2014
Ordinary
Shares of
€0.32 each (i)
Income
Shares of
€0.02 each (ii)
Ordinary
Shares of
€0.32 each (i)
Income
Shares of
€0.02 each (ii)
320
80
400
20
5
25
320
-
320
20
-
20
1,000,000
250,000
1,250,000
1,000,000
250,000
1,250,000
1,000,000
-
1,000,000
1,000,000
-
1,000,000
239
25
2
266
14
1
-
15
237
-
2
239
14
-
-
14
The movement in the number of shares (expressed in '000s) during the financial year was as follows:
At 1 January
Issue of share capital - equity placing
Issue of scrip shares in lieu of cash dividends (iii)
At 31 December
744,525
74,040
5,345
823,910
744,525
74,040
5,345
823,910
739,231
-
5,294
744,525
739,231
-
5,294
744,525
(i) The Ordinary Shares represent 93.73% of the total issued share capital.
(ii) The Income Shares, which represent 5.86% of the total issued share capital, were created on 29 August 1988 for the express purpose of giving shareholders
the choice of receiving dividends on either their Ordinary Shares or on their Income Shares (by notice of election to the Company). The Income Shares
carried a different tax credit to the Ordinary Shares. The creation of the Income Shares was achieved by the allotment of fully paid Income Shares to each
shareholder equal to his/her holding of Ordinary Shares but the shareholder is not entitled to an Income Share certificate, as a certificate for Ordinary Shares
is deemed to include an equal number of Income Shares and a shareholder may only sell, transfer or transmit Income Shares with an equivalent number of
Ordinary Shares. Income Shares carry no voting rights. Due to changes in Irish tax legislation since the creation of the Income Shares, dividends on the
Company’s shares no longer carry a tax credit. As elections made by shareholders to receive dividends on their holding of Income Shares were no longer
relevant, the Articles of Association were amended on 8 May 2002 to cancel such elections.
199
CRH Annual Report I 2015 28. Share Capital and Reserves | continued
Share schemes
The aggregate number of shares which may be committed for issue in respect of any share option scheme, savings-related share option scheme,
share participation scheme, performance share plan or any subsequent option scheme or share plan, may not exceed 10% of the issued ordinary
share capital from time to time.
Share option schemes
Details of share options granted under the Company’s share option schemes and the terms attaching thereto are provided in note 7 to the
financial statements and on page 86 of the Directors’ Remuneration Report.
Options exercised during the year
(satisfied by the reissue of Treasury Shares)
Share participation schemes
Number of Shares
2015
2014
2,876,066
1,307,406
As at 31 December 2015, 7,613,252 (2014: 7,509,125) Ordinary Shares had been appropriated to participation schemes. In the financial year
ended 31 December 2015, the appropriation of 104,127 shares was satisfied by the reissue of Treasury Shares (2014: 123,078). 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.
(iii) Issue of scrip shares in lieu of cash dividends:
Number of Shares
2015
2014
May 2015 - Final 2014 dividend (2014: Final 2013 dividend)
5,056,633
4,081,636
October 2015 - Interim 2015 dividend (2014: Interim 2014 dividend)
288,769
1,212,700
Total
5,345,402
5,294,336
Price per Share
2015
2014
€24.60
€26.16
€20.99
€17.81
200
CRH Annual Report I 2015
28. Share Capital and Reserves | continued
Preference Share Capital
Authorised
At 1 January 2015 and 31 December 2015
Allotted, called-up and fully paid
At 1 January 2015 and 31 December 2015
5% Cumulative
Preference Shares of
€1.27 each (iv)
7% ‘A’ Cumulative
Preference Shares of
€1.27 each (v)
Number of
Shares ‘000s
€m
Number of
Shares ‘000s
150
50
-
-
872
872
€m
1
1
There was no movement in the number of cumulative preference shares in either the current or the prior year.
(iv) The holders of the 5% Cumulative Preference Shares are entitled to a fixed cumulative preference dividend at a rate of 5% per annum and priority in 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 15 April and 15 October in each year. The
5% Cumulative Preference Shares represent 0.02% of the total issued share capital.
(v) 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 or unless the business of the meeting
includes certain matters, which are specified in the Articles of Association. Dividends on the 7% ‘A’ Cumulative Preference Shares are payable half-yearly
on 5 April and 5 October in each year. The 7% ‘A’ Cumulative Preference Shares represent 0.39% of the total issued share capital.
Treasury Shares/own shares
At 1 January
Treasury Shares/own shares reissued
Shares acquired by Employee Benefit Trust (own shares)
At 31 December
2015
€m
(76)
51
(3)
(28)
2014
€m
(118)
42
-
(76)
As at the balance sheet date, the total number of Treasury Shares held was 795,262 (2014: 3,775,455); the nominal value of these shares was
€0.3 million (2014: €1 million). During the year ended 31 December 2015, 2,980,193 (2014: 1,430,484) shares were reissued to satisfy exercises
and appropriations under the Group’s share option and share participation schemes. These reissued Treasury Shares were previously purchased
at an average price of €17.12 (2014: €19.40). No Treasury Shares were purchased during 2015 or 2014.
During 2015, the Employee Benefit Trust purchased 95,843 shares on behalf of CRH plc in respect of awards under the 2014 Deferred Share
Bonus Plan. These shares were purchased at a price of £19.79 (€26.74) per share. As at 31 December 2015, the Employee Benefit Trust held
489,654 Ordinary Shares on behalf of CRH plc in respect of awards made under the 2013 Restricted Share Plan and the 2014 Deferred Share
Bonus Plan. The nominal value of own shares, on which dividends have been waived by the Trustees in respect of the 2013 Restricted Share
Plan and the 2014 Deferred Share Bonus Plan amounted to €0.2 million at 31 December 2015 (2014: €0.1 million).
201
CRH Annual Report I 2015
28. Share Capital and Reserves | continued
Reconciliation of shares issued to net proceeds
Shares issued at nominal amount:
- share capital issued - equity placing
- scrip shares issued in lieu of cash dividends
Premium on shares issued
Total value of shares issued
Issue of scrip shares in lieu of cash dividends (note 11)
Proceeds from issue of shares
Expenses paid in respect of share issues
Net proceeds from issue of shares
2015
€m
2014
€m
26
2
1,722
1,750
(132)
1,618
(25)
1,593
-
2
105
107
(107)
-
-
-
In connection with the acquisition of LH Assets, CRH completed a placing of 74,039,915 new ordinary shares in February 2015, raising gross
proceeds of approximately €1.6 billion, and representing approximately 9.99% of CRH’s issued ordinary share capital before the placing.
Share Premium
At 1 January
Premium arising on shares issued
Expenses paid in respect of shares issued
At 31 December
29. Commitments under Operating and Finance Leases
Operating leases
Future minimum rentals payable under non-cancellable operating leases at 31 December are as follows:
Within one year
After one year but not more than five years
More than five years
Finance leases
Future minimum lease payments under finance leases are not material for the Group.
202
4,324
1,722
(25)
6,021
4,219
105
-
4,324
2015
€m
370
915
831
2014
€m
310
663
417
2,116
1,390
CRH Annual Report I 2015
30. Business Combinations
The acquisitions completed during the year ended 31 December 2015 by reportable segment, together with the completion dates, are detailed
below; these transactions entailed the acquisition of an effective 100% stake except where indicated to the contrary:
Europe Heavyside:
Poland: selected assets of Stal-Bruk Sp. z o.o. (1 December).
Europe Lightside:
Australia: BVCI Pty Limited (5 June), Netherlands: increased stake in Handelsmaatschappij Caralu B.V. from 50% to 100% (30 November).
Europe Distribution:
Switzerland: Kiener & Wittlin (1 August).
Americas Materials:
Idaho: assets formerly of Gordon Paving (25 March); Iowa: selected assets of McAlister Aggregates (23 February); Michigan and North Carolina:
Colas’ Barrett and Larco assets (27 March); New York: assets of Hudson River Construction Company and Albany Asphalt & Aggregates
(3 April); Ohio: increased stake in Scioto Materials LLC from 50% to 51% (1 July); Texas: selected assets of State Development Corporation
(11 May), selected assets of Martin Marietta (23 October); Utah: selected assets of Kunkler Trust (15 October); Virginia: increased stake in Boxley
Aggregates from 50% to 100% and the selected assets of the Boxley Corporation (31 December); Canada: selected assets of Promix Beton
(30 October).
Americas Products:
C.R. Laurence (“CRL”) (3 September), headquartered in Los Angeles, California with operations in 33 sites in North America in addition to the
United Kingdom, Germany, Denmark and Australia; Arizona: Western Block Company (17 December); Minnesota: Anchor Wall Systems, Inc. and
Anchor Block Company (8 June); Tennessee: Red River Concrete Products (17 December).
LH Assets:
On 31 July 2015 (and 15 September 2015 for the Philippines) CRH acquired certain assets of Lafarge S.A. and Holcim Limited. The acquired
assets consist of over 700 locations in 11 countries: Brazil, Canada, France (including La Reunion), Germany, Hungary, the Philippines (55%),
Romania, Serbia, Slovakia, the United Kingdom and the United States.
203
CRH Annual Report I 2015 30. Business Combinations | continued
LH Assets
2015
€m
CRL
2015
€m
Other
acquisitions
2015
€m
5,288
26
24
5
5,343
492
1,445
463
2,400
(1,500)
(580)
(87)
(169)
(147)
(520)
(3,003)
4,740
2,307
-
(486)
6,561
6,561
-
-
-
6,561
6,561
(463)
6,098
26
252
-
-
278
105
69
29
203
(31)
-
-
(6)
(2)
(106)
(145)
336
833
-
-
1,169
1,072
97
-
-
1,169
1,072
(29)
1,043
99
20
-
-
119
24
19
2
45
(18)
(1)
-
-
-
(1)
(20)
144
47
(25)
(3)
163
157
-
-
6
163
157
(2)
155
Total
2015
€m
5,413
298
24
5
5,740
621
1,533
494
2,648
(1,549)
(581)
(87)
(175)
(149)
(627)
(3,168)
5,220
3,187
(25)
(489)
7,893
7,790
97
-
6
7,893
7,790
(494)
7,296
Total
2014
€m
91
16
-
-
107
23
20
1
44
(17)
(1)
-
(7)
-
(2)
(27)
124
31
-
-
155
152
1
2
-
155
152
(1)
151
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Equity accounted investments
Other financial assets
Total non-current assets
Current assets
Inventories
Trade and other receivables (i)
Cash and cash equivalents
Total current assets
Liabilities
Trade and other payables
Provisions for liabilities
Retirement benefit obligations
Interest-bearing loans and borrowings and finance leases
Current income tax liabilities
Deferred income tax liabilities
Total liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition (ii)
Joint Ventures becoming subsidiaries
Non-controlling interests*
Total consideration
Consideration satisfied by:
Cash payments
Deferred consideration (stated at net present cost)
Contingent consideration
Profit on step acquisition
Total consideration
Net cash outflow arising on acquisition
Cash consideration
Less: cash and cash equivalents acquired
Total outflow in the Consolidated Statement of Cash Flows
* Measured at fair value.
204
CRH Annual Report I 2015 30. Business Combinations | continued
The acquisitions of LH Assets and CRL have been deemed to be material acquisitions. None of the remaining acquisitions completed during the
financial year were considered sufficiently material to warrant separate disclosure. The acquisition of LH Assets was completed in the second
half of 2015 and spanned 11 countries. The fair value of the identifiable net assets acquired was €4.2 billion (after deducting non-controlling
interests of €0.5 billion) and the transaction resulted in the recognition of €2.3 billion of goodwill. Due to both the timing of when the acquisition
was completed and the size and scale of the acquisition, the allocation of the purchase price and the determination of the fair values of identifiable
assets acquired and liabilities assumed as disclosed above are only provisional (principally PP&E, provisions and the associated goodwill and
deferred tax impacts). The fair value assigned to identifiable assets and liabilities acquired is based on estimates and assumptions made by
management at the time of acquisition. CRH may revise its preliminary purchase price allocation during the 12 month window as permitted
under IFRS 3 Business Combinations. Where the impact of these revisions is sufficiently material, it may result in the restatement of the 2015
Consolidated Balance Sheet to take account of these valuation updates; where the impact is not material, CRH will provide additional disclosures
to outline the adjustments made.
The balance sheet as disclosed above for CRL should also be considered provisional (principally intangible assets and the related deferred tax
impacts) and will be subject to the same requirements as outlined above for LH Assets.
(i) Trade and other receivables
LH Assets
CRL
Other acquisitions
Gross contractual
amounts due
Allowance
for impairment
2015
€m
1,499
70
19
1,588
2014
€m
-
-
22
22
2015
€m
(54)
(1)
-
(55)
2014
€m
-
-
(2)
(2)
Fair value
2015
€m
1,445
69
19
1,533
2014
€m
-
-
20
20
(ii) The principal factor contributing to the recognition of goodwill on acquisitions entered into by the Group is the realisation of cost savings and other synergies
with existing entities in the Group which do not qualify for separate recognition as intangible assets. Due to the asset-intensive nature of operations in the Europe
Heavyside and Americas Materials business segments, no significant intangible assets are recognised on business combinations in these segments. €254 million
of the goodwill recognised in respect of acquisitions completed in 2015 is expected to be deductible for tax purposes (2014: €18 million).
Acquisition-related costs
LH Assets
CRL
Other acquisitions
2015
€m
144
6
2
152
2014
€m
-
-
2
2
Acquisition-related costs amounting to €152 million (2014: €2 million) have been included in operating costs in the Consolidated Income
Statement (note 2).
205
CRH Annual Report I 2015
30. Business Combinations | continued
The following table analyses the 19 acquisitions (2014: 21 acquisitions) by reportable segment and provides details of the goodwill and
consideration figures arising in each of those segments:
Reportable segments
Number of
acquisitions
2015
2014
Europe Heavyside
Europe Lightside
Europe Distribution
Europe
Americas Materials
Americas Products
Americas
Unallocated goodwill (note 14)
LH Assets
CRL
Total Group
Adjustments to provisional fair values of prior year acquisitions
Total
1
2
1
4
10
3
13
1
1
19
2
-
6
8
8
5
13
-
-
21
Goodwill
Consideration
2015
€m
-
6
-
6
32
9
41
2,307
833
3,187
-
3,187
2014
€m
2
-
9
11
5
17
22
-
-
33
(2)
31
2015
€m
5
12
1
18
80
65
145
6,561
1,169
7,893
-
7,893
2014
€m
7
-
20
27
71
59
130
-
-
157
(2)
155
206
CRH Annual Report I 2015 30. Business Combinations | continued
The post-acquisition impact of acquisitions completed during the year on the Group’s profit for the financial year was as follows:
Revenue
(Loss)/profit before tax for the financial year
LH Assets
2015
€m
2,418
(26)
CRL
2015
€m
162
13
Other
acquisitions
2015
€m
99
6
Total
2015
€m
2,679
(7)
Total
2014
€m
122
7
The revenue and profit of the Group for the financial year determined in accordance with IFRS as though the acquisitions effected during the
year had been at the beginning of the year would have been as follows:
Pro-forma 2015
2015
acquisitions
€m
CRH Group
excluding 2015
acquisitions
€m
Pro-forma
consolidated
Group
€m
Pro-forma
2014
€m
Revenue
Profit before tax for the financial year
6,261
201
20,956
1,040
27,217
1,241
18,972
764
In accordance with the terms of the acquisition agreements, CRH and LafargeHolcim are currently engaged in a process to finalise the post-
completion consideration for the acquisition of the LH Assets as detailed above. That process is not sufficiently advanced to make a financial
adjustment in respect of the final purchase price. CRH will continue to monitor the situation and will reflect any financial adjustments when there
is sufficient evidence.
There have been no acquisitions completed subsequent to the balance sheet date which would be individually material to the Group, thereby
requiring disclosure under either IFRS 3 or IAS 10 Events after the Balance Sheet Date. Development updates, giving details of acquisitions which
do not require separate disclosure on the grounds of materiality, are typically published in January and July each year.
207
CRH Annual Report I 2015 31. Non-controlling Interests
The total non-controlling interest at 31 December 2015 is €529 million (2014: €21 million) of which €467 million relates to Republic Cement &
Building Materials (RCBM), Inc. and Luzon Continental Land Corporation (LCLC). The non-controlling interests in respect of the Group’s other
subsidiaries are not considered to be material.
Name
Principal activity
Country of incorporation
Economic ownership
interest held by non-
controlling interest
Republic Cement & Building Materials, Inc. and
Luzon Continental Land Corporation
Manufacture, development and
sale of cement and building
materials
Philippines
45%
The following is summarised financial information for Republic Cement & Building Materials, Inc. and Luzon Continental Land Corporation
prepared in accordance with IFRS 12 Disclosure of Interests in Other Entities. This information is before intragroup eliminations with other Group
companies.
Summarised financial information
Loss for the period since acquisition
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Cash flows from operating activities
Dividends paid to non-controlling interests during the period
2015
€m
(5)
141
1,459
(150)
(675)
775
(2)
(1)
CRH holds 40% of the equity share capital in RCBM and LCLC and has an economic interest of 55% of the combined Philippines business.
Non-controlling interest relates to another party who holds 60% of the equity share capital in RCBM and LCLC and has an economic interest of
45% of the combined Philippines business. CRH has obtained control (as defined under IFRS 10 Consolidated Financial Statements) by virtue of
contractual arrangements which give CRH power to direct the relevant non-nationalised activities of the business, in compliance with Philippine
law.
208
CRH Annual Report I 2015 32. 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; the
identification and compensation of key management personnel; and lease arrangements.
Subsidiaries, joint ventures and associates
The Consolidated Financial Statements include the financial statements of the Company (CRH plc, the ultimate parent) and its subsidiaries, joint
ventures and associates as documented in the accounting policies on pages 137 to 147. The Group’s principal subsidiaries, joint ventures and
associates are disclosed on pages 224 to 231.
Sales to and purchases from joint ventures are immaterial in 2015 and 2014. Loans extended by the Group to joint ventures and associates (see
note 15) are included in financial assets. Sales to and purchases from associates during the financial year ended 31 December 2015 amounted
to €48 million (2014: €33 million) and €422 million (2014: €411 million) respectively. Amounts receivable from and payable to equity accounted
investments (arising from the aforementioned sales and purchases transactions) as at the balance sheet date are included as separate line items
in notes 17 and 18 to the Consolidated Financial Statements.
Terms and conditions of transactions with subsidiaries, joint ventures and associates
In general, the transfer pricing policy implemented by the Group across its subsidiaries is market-based. Sales to and purchases from joint ventures
and associates are conducted in the ordinary course of business and on terms equivalent to those that prevail in arm’s-length transactions.
The outstanding balances included in receivables and payables as at the balance sheet date in respect of transactions with joint ventures and
associates are unsecured and settlement arises in cash. No guarantees have been either requested or provided in relation to related party
receivables and payables. Loans to joint ventures and associates (as disclosed in note 15) are extended on normal commercial terms in the
ordinary course of business with interest accruing and, in general, paid to the Group at predetermined intervals.
Key management personnel
For the purposes of the disclosure requirements of IAS 24, the term “key management personnel” (i.e. those persons having authority and
responsibility for planning, directing and controlling the activities of the Company) comprises the Board of Directors which manages the business
and affairs of the Company.
Key management remuneration amounted to:
Short-term benefits
Post-employment benefits
Share-based payments - calculated in accordance with the principles disclosed in note 7
Total
2015
€m
10
1
2
13
2014
€m
9
1
2
12
Other than these compensation entitlements, there were no other transactions involving key management personnel.
Lease arrangements
CRH has a number of lease arrangements in place with related parties across the Group, which have been negotiated on an arm’s-length basis
at market rates. We do not consider these arrangements to be material either individually or collectively in the context of the 2015 or 2014
Consolidated Financial Statements.
33. Board Approval
The Board of Directors approved and authorised for issue the financial statements on pages 132 to 209 in respect of the year ended 31
December 2015 on 2 March 2016.
209
CRH Annual Report I 2015 2015
€m
2014
€m
2,205
595
7,784
408
8,192
1,091
11
1,102
5,532
1,411
6,943
1,003
2
1,005
7,090
5,938
9,295
6,533
281
1
6,025
(28)
42
230
2,744
9,295
253
1
4,328
(76)
42
203
1,782
6,533
Company Balance Sheet
as at 31 December 2015
Notes
Fixed assets
3
Financial assets
Current assets
4
Debtors
Cash at bank and in hand
Total current assets
Creditors (amounts falling due within one year)
5
Trade and other creditors
Bank loans and overdrafts
Total current liabilities
Net current assets
Net assets
8
8
8
9
Capital and reserves
Called-up share capital
Preference share capital
Share premium account
Treasury Shares and own shares
Revaluation reserve
Other reserves
9
Profit and loss account
Total equity
N. Hartery, A. Manifold, Directors
210
CRH Annual Report I 2015 Company Statement of Changes in Equity
for the financial year ended 31 December 2015
Issued
share
capital
€m
Share
premium
account
€m
Treasury
Shares/
own
shares
€m
Revaluation
reserve
€m
Other
reserves
€m
Profit
and loss
account
€m
At 1 January 2015
Profit for the financial year
Total comprehensive income
254
4,328
(76)
42
203
-
-
-
-
Issue of share capital (net of expenses)
28
1,697
Share-based payment expense
Treasury/own shares reissued
Shares acquired by Employee Trust (own shares)
Share option exercises
Dividends (including shares issued in lieu of dividends)
-
-
-
-
-
-
-
-
-
-
At 31 December 2015
282
6,025
At 1 January 2014
Profit for the financial year
Total comprehensive income
Issue of share capital (net of expenses)
Share-based payment expense
Treasury/own shares reissued
Share option exercises
Dividends (including shares issued in lieu of dividends)
-
-
2
-
-
-
-
-
-
105
-
-
-
-
At 31 December 2014
254
4,328
-
-
-
-
51
(3)
-
-
(28)
-
-
-
-
-
-
-
-
-
-
-
27
-
-
-
-
42
230
-
-
-
-
42
-
-
(76)
-
-
-
-
-
-
-
-
-
-
16
-
-
-
42
203
1,782
1,467
1,467
-
-
(51)
-
57
(511)
2,744
1,054
1,208
1,208
-
-
(42)
22
(460)
1,782
252
4,223
(118)
42
187
Total
equity
€m
6,533
1,467
1,467
1,725
27
-
(3)
57
(511)
9,295
5,640
1,208
1,208
107
16
-
22
(460)
6,533
211
CRH Annual Report I 2015
Company Statement of Cash Flows
for the financial year ended 31 December 2015
Cash flows from operating activities
Profit before tax
Amounts due from subsidiary undertakings
Finance income
Share-based payment
Loss on disposals
Dividends received from subsidiaries - reclassified to investing activities
Net cash inflow from operating activities
Cash flows from investing activities
Interest received
Dividends received from subsidiaries
Net cash inflow from investing activities
Cash flows from financing activities
Advances (to)/from subsidiary undertakings
Treasury/own shares purchased
Proceeds from exercise of share options
Dividends paid to equity holders of the Company
Increase in/(repayment of) bank loans and overdrafts
Net cash (outflow)/inflow from financing activities
2015
€m
2014
€m
1,467
(1,460)
(1)
(2)
7
(2)
9
1
2
3
(699)
(3)
57
(379)
9
(1,015)
1,208
-
-
-
-
(1,203)
5
-
1,203
1,203
413
-
22
(353)
(55)
27
(Decrease)/increase in cash and cash equivalents
(1,003)
1,235
Reconciliation of opening to closing cash and cash equivalents
Cash and cash equivalents at 1 January
Translation adjustment
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at 31 December
1,411
-
(1,003)
408
175
1
1,235
1,411
212
CRH Annual Report I 2015 Notes to the Company Balance Sheet
1. Basis of Preparation
The financial statements have been prepared on a going concern basis under the historical cost convention in accordance with the Companies
Act 2014 and Generally Accepted Accounting Practice in the Republic of Ireland (“FRS 102”). Note 2 below describes the principal accounting
policies under FRS 102, which have been applied consistently.
Following the publication of FRS 100, ‘Application of financial reporting requirements’, by the Financial Reporting Council, the Company was
required to change its accounting framework for its financial year commencing 1 January 2015. This is the first year that the Company has
presented financial statements complying with FRS 102. The last financial statements under Irish GAAP were for the financial year ended
31 December 2014.
The Company’s date of transition to FRS 102 is 1 January 2014. There were no adjustments to the total equity of the Company as at 1 January
2014 or 31 December 2014 and profit for the financial year ending 31 December 2014 between Irish GAAP as previously reported and FRS 102.
The Company has availed of an exemption under Section 35 of FRS 102 to measure its investments in subsidiaries on transition at the carrying
amount at the date of transition as determined under previous GAAP.
The Company’s investment in shares in its subsidiaries was revalued at 31 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 31 December 1980
At cost post 31 December 1980
Total
2015
€m
47
1,946
1,993
2014
€m
47
353
400
Deemed cost in respect of the investment in these subsidiaries amounted to €400 million at the date of transition.
FRS 101 Reduced Disclosure Framework
For the financial year ending 31 December 2016, the Company intends to transition to and adopt FRS 101 Reduced Disclosure Framework.
The main area of reduced disclosures is the exemption available to the Company from preparing a statement of cash flows. A shareholder or
shareholders holding in aggregate 5% or more of the total allocated shares in CRH plc may serve objections to the use of the FRS 101 disclosure
exemptions on CRH plc, in writing, to its registered office (42 Fitzwilliam Square, Dublin 2, Ireland) not later than 26 April 2016.
213
CRH Annual Report I 2015 Cash and cash equivalents
Cash and cash equivalents comprise
cash balances held for the purpose of
meeting short-term cash commitments and
investments which are readily convertible to
a known amount of cash and are subject to
an insignificant risk of change in value. Bank
overdrafts are included within creditors falling
due within one year in the Company Balance
Sheet.
Notes to the Company Balance Sheet | continued
2. Accounting Policies
Key accounting policies
which involve estimates,
assumptions and
judgements
Preparation of
the financial statements
requires management to make significant
judgements and estimates. The items in the
financial statements where these judgements
and estimates have been made include:
Financial assets
Investments in subsidiaries, are stated at
cost less any accumulated impairment and
are reviewed for impairment if there are
indications that the carrying value may not
Impairment assessment
be
is considered as part of the Group’s overall
impairment assessment.
recoverable.
Loans receivable and payable
initially
Intercompany loans receivable and payable
are
transaction
recognised at
price. These are subsequently measured
at amortised cost, less any provision for
impairment.
Other significant
accounting policies
Operating income and expense
Operating income and expense arises from
the Company’s principal activities as a holding
and financing company for the Group and are
accounted for on an accruals basis.
Foreign currencies
The functional and presentation 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
214
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 Section 26 of FRS 102.
The accounting policy applicable to share-
based payments is consistent with that
applied under
is accordingly
IFRS and
addressed in detail on pages 156 to 158 of
the Consolidated Financial Statements.
Treasury Shares and own shares
Treasury Shares
Own equity instruments (i.e. Ordinary Shares)
acquired by the Company are deducted
from equity and presented on the face of the
Company Balance Sheet. No gain or loss is
recognised in profit or loss on the purchase,
sale, issue or cancellation of the Company’s
Ordinary Shares.
Own shares
Ordinary Shares purchased by the Employee
Benefit Trust on behalf of the Company under
the terms of the Performance Share Plan are
recorded as a deduction from equity on the
face of the Company Balance Sheet.
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.
Dividend income
Dividend income is recognised when the right
to receive payment is established.
CRH Annual Report I 2015
Notes to the Company Balance Sheet | continued
3. Financial Assets
The Company’s investment in its subsidiaries is as follows:
At 1 January 2015 at cost
Capital contribution in respect of share-based payments
Additions
Disposals
At 31 December 2015 at cost
The equivalent disclosure for the prior year is as follows:
At 1 January 2014 at cost
Capital contribution in respect of share-based payments
At 31 December 2014 at cost
Shares
€m
Other
€m
400
-
1,593
-
1,993
400
-
400
195
24
-
(7)
212
181
14
195
Total
€m
595
24
1,593
(7)
2,205
581
14
595
The additions in the year relate to the Company's investment in its subsidiary CRH Finance Jersey Limited.
The Company's principal subsidiaries, joint ventures and associates are disclosed on pages 224 to 231.
Pursuant to Section 348(4) of the Companies Act 2014, a full list of subsidiaries, joint ventures and associated undertakings will be annexed to
the Company's annual return to be filed in the Companies Registration Office in Ireland.
4. Debtors
Amounts owed by subsidiary undertakings
Amounts owed by subsidiary undertakings are repayable on demand.
5. Creditors
Amounts falling due within one year
Amounts owed by subsidiary undertakings
2015
€m
2014
€m
7,784
5,532
2015
€m
2014
€m
1,091
1,003
Amounts owed by subsidiary undertakings are repayable on demand.
6. Auditor’s Remuneration (Memorandum Disclosure)
In accordance with Section 322 of the Companies Act 2014, the fees paid in 2015 to the statutory auditor for work engaged by the Parent
Company comprised audit fees of €20,000 (2014: €20,000) and other assurance services of nil (2014: €118,000).
215
CRH Annual Report I 2015 Notes to the Company Balance Sheet | continued
7. Dividends Proposed (Memorandum Disclosure)
Details in respect of dividends proposed of €362 million (2014: €359 million) and dividends paid during the year are presented in the dividends
note (note 11) on page 162 of the notes to the Consolidated Financial Statements.
8. Called-up Share Capital
Details in respect of called-up share capital, preference share capital, Treasury Shares and own shares are presented in the share capital and
reserves note (note 28) on pages 199 to 202 of the notes to the Consolidated Financial Statements.
9. Reserves
Revaluation reserve
The Company’s revaluation reserve arose on the revaluation of certain investments prior to the transition to FRS 102.
In accordance with Section 304 of the Companies Act 2014, the Company is availing of the exemption from presenting its individual profit and
loss account to the Annual General Meeting and from filing it with the Registrar of Companies. The profit for the financial year dealt with in the
Company Financial Statements amounted to €1,467 million (2014: €1,208 million).
10. Share-based Payments
The total expense of €27 million (2014: €16 million) reflected in note 7 to the Consolidated Financial Statements attributable to employee share
options and the Performance Share Plan has been included as a capital contribution in financial assets (note 3) in addition to any payments to/
from subsidiaries.
11. Section 357 Guarantees
Pursuant to the provisions of Section 357(1)(b) of the Companies Act 2014, the Company has guaranteed all amounts shown as liabilities in
the statutory financial statements of its wholly-owned subsidiary undertakings and the Oldcastle Finance Company general partnership in the
Republic of Ireland for the financial year ended 31 December 2015 and as a result, such subsidiary undertakings and the general partnership have
been exempted from the filing provisions of Sections 347 and 348 of the Companies Act 2014 and Regulation 20 of the European Communities
(Accounts) Regulations, 1993 respectively.
Details in relation to other guarantees provided by the Company are provided in the interest-bearing loans and borrowings note (note 23) on page
183 of the notes to the Consolidated Financial Statements.
12. Related Party Transactions
The Company is exempt under Section 33 of FRS 102, from disclosing related party transactions with wholly-owned members within the CRH
Group.
13. Directors’ Emoluments
Directors’ emoluments and interests are presented in the Directors’ Remuneration Report on pages 70 to 106 of this Annual Report.
14. Board Approval
The Board of Directors approved and authorised for issue the Company Financial Statements on pages 210 to 216 in respect of the year ended
31 December 2015 on 2 March 2016.
216
.
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CRH Annual Report I 2015
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217
217
CRH Annual Report I 2015
n
o
i
t
a
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t
218
218
CRH Annual Report I 2015
Other Information
Shareholder Information
220
Principal Subsidiary Undertakings
224
Principal Equity Accounted
Investments
Group Financial Summary
Photo Captions
Index
231
232
234
236
219
219
CRH Annual Report I 2015 Shareholder Information
Dividend payments
An interim dividend of 18.5c was paid in
respect of Ordinary Shares on 6 November
2015.
A final dividend of 44c, if approved at the
2016 Annual General Meeting, will be paid in
respect of Ordinary Shares on 6 May 2016 to
shareholders on the Register of Members as
at the close of business on 11 March 2016.
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 Asset Services
(the “Registrars”). DWT applies to dividends
paid by way of cash or by way of shares under
a scrip dividend scheme and is deducted at
the standard rate of Income Tax (currently
20%). Non-resident shareholders and certain
Irish companies, trusts, pension schemes,
investment undertakings and charities may be
entitled to claim exemption from DWT. Copies
of the exemption form may be obtained from
the Registrars. Shareholders should note
that DWT will be deducted from dividends in
cases where a properly completed form has
not been received by the record date for a
dividend. Individuals who are resident in the
Republic of Ireland for tax purposes are not
entitled to an exemption.
to have
their
Shareholders who wish
dividend paid direct to their bank account,
by electronic funds transfer, can do so by
logging on to www.capitashareportal.com,
selecting CRH and registering for the share
portal
(the “Share Portal”). Shareholders
should note that they will need to have
their Investor Code (found on the share
certificate), and follow the instructions online
to register. Alternatively shareholders can
complete a paper dividend mandate form
and submit it to the Registrars. A copy of the
form can be obtained from the shareholder
the CRH website,
services section of
www.crh.com, under “Equity
Investors”.
Tax vouchers will continue to be sent to the
shareholder’s registered address under this
arrangement.
Dividends are generally paid in euro. However,
in order to avoid costs to shareholders,
dividends are paid in Sterling and US Dollars
to shareholders whose shares are not held in
the CREST system (see below) and whose
address, according to the Share Register, is
in the UK and the United States respectively,
unless they require otherwise.
Dividends in respect of 7% ‘A’ Cumulative
Preference Shares are paid half-yearly on
5 April and 5 October.
Dividends in respect of 5% Cumulative
Preference Shares are paid half-yearly on
15 April and 15 October. Shareholders have
the option of taking their dividend in the
form of shares under the Company’s Scrip
Dividend Scheme.
CREST
Transfer of the Company’s shares takes place
through the CREST system. Shareholders
have the choice of holding their shares
in electronic form or in the form of share
certificates.
Where shares are held in CREST, dividends
are automatically paid in euro unless a
currency election is made. CREST members
should use the facility in CREST to make
currency elections. Such elections must be
made in respect of entire holdings as partial
elections are not permissible.
Stock Exchange listings
CRH has a premium listing on the London
Stock Exchange (LSE) and a secondary
listing on the Irish Stock Exchange (ISE). The
Group’s American Depositary Shares (ADSs),
each representing one Ordinary Share, are
listed on the New York Stock Exchange
(NYSE). The ADSs are evidenced by American
Depositary Receipts.
220
CRH Annual Report I 2015 Shareholder Information | continued
Share price data
Share price at 31 December
Market capitalisation
Share price movement during year:
- high
- low
2015
2014
ISE
€26.70
€22.0bn
€28.09
€18.73
LSE
£19.71
£16.2bn
£19.80
£14.71
ISE
€19.90
€14.7bn
€21.82
€15.86
LSE
£15.44
£11.4bn
£17.88
£12.66
Shareholdings as at 31 December 2015
Ownership of Ordinary Shares
Geographic location*
Number of shares held
’000s
% of total
North America
United Kingdom
Europe/Other
Retail
Ireland
Treasury
274,395
265,209
136,083
119,051
28,377
795
823,910
33.30
32.19
16.52
14.45
3.44
0.10
100
*
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.
221
CRH Annual Report I 2015 Shareholder Information | continued
Holdings
1 - 1,000
1,001 - 10,000
10,001 - 100,000
100,001 - 1,000,000
Over 1,000,000
Number of
shareholders
% of total
Number of
shares held ‘000s
% of total
14,698
7,968
1,175
337
116
24,294
60.50
32.80
4.84
1.39
0.47
100
4,821
23,294
33,513
116,264
646,018
823,910
0.58
2.83
4.07
14.11
78.41
100
Financial calendar
Announcement of final results for 2015
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
Further updates to the calendar can be found on www.crh.com
3 March 2016
10 March 2016
11 March 2016
20 April 2016
28 April 2016
6 May 2016
222
CRH Annual Report I 2015 Shareholder Information | continued
Website
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, interim management
statements and copies of presentations to
analysts and investors. News releases are
made available on the website, immediately
after release to the Stock Exchanges.
Electronic communications
via
the
introduction of
the 2007
Following
Transparency Regulations, and
in order
to adopt a more environmentally friendly
and cost effective approach, the Company
provides the Annual Report to shareholders
electronically
the CRH website,
www.crh.com, and only sends a printed
copy to those shareholders who specifically
request a copy. Shareholders who choose
to do so can receive other shareholder
communications, for example, notices of
general meetings and shareholder circulars,
electronically. However, shareholders will
continue to receive printed proxy forms,
dividend documentation and, if the Company
deems it appropriate, other documentation
by post. Shareholders can alter the method
by which they receive communications by
contacting the Registrars.
Electronic proxy voting
Shareholders may lodge a proxy form for the
2016 Annual General Meeting electronically
by accessing the Registrars’ website as
described below.
CREST members wishing to appoint a proxy
via CREST should refer to the CREST Manual
and the notes to the Notice of the Annual
General Meeting.
Registrars
Enquiries concerning shareholdings should
be addressed to the Registrars:
Capita Asset Services,
P.O. Box 7117, Dublin 2, Ireland.
Telephone: +353 (0) 1 553 0050
Fax: +353 (0) 1 224 0700
Website: www.capitaassetservices.com
Portal
(Ireland)”.
Shareholders with access to the internet
may check their accounts by accessing
the Registrars’ website and selecting
“Shareholder
This
facility allows shareholders to check their
shareholdings and dividend payments,
register e-mail addresses, appoint proxies
electronically and download standard forms
required to initiate changes in details held
by the Registrars. Shareholders will need to
register for a User ID before using some of
the services.
American Depositary Receipts
(ADRs)
The ADR programme is administered by
the Bank of New York Mellon and enquiries
regarding ADRs should be addressed to:
BNY Mellon Shareowner Services,
P.O. Box 30170, College Station,
TX 77842-3170, U.S.A.
Telephone: Toll Free Number (United States
residents): 1-888-269-2377
International: +1 201-680-6825
E-mail: shrrelations@cpushareownerservices.com
Website: www.mybnymdr.com
Frequently Asked
Questions (FAQ)
asked
questions
frequently
The Group’s website contains answers
to
by
shareholders, including questions regarding
shareholdings, dividend payments, electronic
communications and shareholder rights. The
FAQ can be accessed in the Investors section
of the website under “Equity Investors”.
223
CRH Annual Report I 2015 Principal Subsidiary Undertakings
as at 31 December 2015
Incorporated and operating in
% held
Products and services
Europe Heavyside
Belgium
Douterloigne N.V.
Ergon N.V.
Oeterbeton N.V.
Prefaco N.V.
Remacle S.A.
Schelfhout N.V.
Stradus Infra N.V.
Stradus Aqua N.V.
Marlux N.V.
VVM N.V.
Britain &
Northern Ireland
Northstone (NI) Limited
(including Farrans Construction Limited
and Ready Use Concrete)
Premier Cement Limited
Betongruppen RBR A/S
CRH Concrete A/S
Finnsementti Oy
Rudus Oy
L'industrielle du Béton S.A.*
Stradal
Marlux
EHL AG
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Concrete floor elements, pavers and blocks
Precast concrete and structural elements
Precast concrete
Precast concrete structural elements
Precast concrete products
Precast concrete wall elements
Concrete paving and landscaping products
Concrete paving, sewerage and water treatment
Concrete paving and landscaping products
Cement transport and trading, readymixed concrete, clinker grinding
Aggregates, readymixed concrete, mortar, coated macadam, rooftiles,
building and civil engineering contracting
Marketing and distribution of cement
Concrete paving manufacturer
Structural concrete products
Cement
Aggregates, readymixed concrete and concrete products
Structural concrete products
Utility and infrastructural concrete products
Concrete paving manufacturer
Concrete paving and landscape walling products
Ferrobeton Beton-és Vasbetonelem
gyártó Zrt.
100
Precast concrete structural elements
Irish Cement Limited
Clogrennane Lime Limited
Roadstone Limited
100
100
100
Cement
Burnt and hydrated lime
Aggregates, readymixed concrete, mortar, coated macadam, concrete
blocks and pipes, asphalt, agricultural and chemical limestone and
contract surfacing
Denmark
Finland
France
Germany
Hungary
Ireland
224
CRH Annual Report I 2015 Principal Subsidiary Undertakings | continued
Incorporated and operating in
% held
Products and services
Europe Heavyside | continued
Cementbouw B.V.
100
Cement transport and trading, readymixed concrete and aggregates
Calduran Kalkzandsteen B.V.
100
Sand-lime bricks and building elements
Netherlands
CRH Structural Concrete B.V.
100
Precast concrete structural elements
Dycore B.V.
100
Concrete flooring elements
Struyk Verwo Groep B.V.
100
Concrete paving products
Bosta Beton Sp. z o.o.
90.30
Readymixed concrete
CRH Klinkier Sp. z o.o.
100
Clay brick manufacturer
Drogomex Sp. z o.o.*
99.94
Asphalt and contract surfacing
100
Cement
Grupa Silikaty Sp. z o.o.
100
Sand-lime bricks
Masfalt Sp. z o.o.*
100
Asphalt and contract surfacing
Polbruk S.A.
100
Readymixed concrete and concrete paving
Trzuskawica S.A.
99.95
Production of lime and lime products
Ferrobeton Romania SRL
100
Structural concrete products
Elpreco S.A.
100
Architectural concrete products
Poland
Romania
Slovakia
Premac, spol. s.r.o.
100
Concrete paving and floor elements
Beton Catalan S.A.
100
Readymixed concrete
Spain
Cementos Lemona S.A.
98.75
Cement
Switzerland
JURA-Holding AG
100
Cement, aggregates and readymixed concrete
LLC Cement*
51
Cement and clinker grinding
Ukraine
PJSC Mykolaivcement
99.27
Cement
Podilsky Cement PJSC
99.60
Cement
225
CRH Annual Report I 2015 Principal Subsidiary Undertakings | continued
Incorporated and operating in
% held
Products and services
Europe Lightside
Australia
Ancon Building Products Pty Ltd
100
Construction accessories
Belgium
Plakabeton N.V.
100
Construction accessories
Anchor Bay Construction Products*
100
Construction accessories
Ancon Limited
100
Construction accessories
Britain &
Northern Ireland
CRH Fencing & Security Group (UK)
Limited
100
Security fencing
Cubis Industries Limited
100
Supplier of access chambers and ducting products
Security Windows Shutters Limited
100
Physical security, industrial and garage doors, roofing systems
France
Plaka Group France S.A.S.
100
Construction accessories
Alulux GmbH*
100
Roller shutter and awning systems
ERHARDT Markisenbau GmbH*
100
Roller shutter and awning systems
Germany
Halfen GmbH
100
Construction accessories
Heras-Adronit GmbH
100
Security fencing and access control
Tenbrink Rolladensysteme GmbH Co KG
100
Roller shutter and awning systems
Aluminium Verkoop Zuid B.V.
100
Roller shutter and awning systems
Netherlands
Heras B.V.
100
Security fencing and perimeter protection
Sweden
Heras Stängsel AB
100
Security fencing
Switzerland
F.J. Aschwanden AG*
100
Construction accessories
United States
Halfen USA Inc.
100
Construction accessories
226
CRH Annual Report I 2015 Principal Subsidiary Undertakings | continued
Incorporated and operating in
% held
Products and services
Europe Distribution
Austria
Quester Baustoffhandel GmbH
100
Builders merchants
Creyns N.V.
Lambrechts N.V.
Halschoor N.V.
100
Builders merchants
100
Builders merchants
100
Builders merchants
Belgium
Sax Sanitair N.V.
100
Sanitary ware, heating and plumbing
Schrauwen Sanitair en Verwarming N.V.
100
Sanitary ware, heating and plumbing
Van Den Broeck BVBA
100
Builders merchants
Van Neerbos België N.V.
100
DIY stores
CRH Ile de France Distribution*
100
Builders merchants
France
CRH TP Distribution
100
Builders merchants
Germany
CRH Normandie Distribution
100
Builders merchants
BauKing AG
100
Builders merchants, DIY stores
Andreas Paulsen GmbH
100
Sanitary ware, heating and plumbing
CRH Bouwmaten B.V.
100
Cash & Carry building materials
Netherlands
BMN | Bouwmaterialen Nederland
100
Builders merchants
Van Neerbos Bouwmarkten B.V.
100
DIY stores
BR Bauhandel AG (trading as BauBedarf
and Richner)
100
Builders merchants, sanitary ware and ceramic tiles
Switzerland
Gétaz Romang Holding SA (trading as
Gétaz Romang and Miauton)
100
Builders merchants
Regusci Reco S.A. (trading as Regusci
and Reco)
100
Builders merchants
227
CRH Annual Report I 2015 Principal Subsidiary Undertakings | continued
Incorporated and operating in
% held
Products and services
Americas Materials
Oldcastle Materials, Inc.
100
Holding company
APAC Holdings, Inc. and Subsidiaries
Callanan Industries, Inc.
CPM Development Corporation
Dolomite Products Company, Inc.
Eugene Sand Construction, Inc.
Evans Construction Company
100
100
100
100
100
100
Aggregates, asphalt, readymixed concrete and related construction
activities
Aggregates, asphalt, readymixed concrete and related construction
activities
Aggregates, asphalt, readymixed concrete, prestressed concrete and
related construction activities
Aggregates, asphalt, readymixed concrete and related construction
activities
Aggregates, asphalt, readymixed concrete and related construction
activities
Aggregates, asphalt, readymixed concrete and related construction
activities
Michigan Paving and Materials Company
100
Aggregates, asphalt and related construction activities
Mountain Enterprises, Inc.
100
Aggregates, asphalt and related construction activities
OMG Midwest, Inc.
United States
Preferred Materials Inc.
Oldcastle SW Group, Inc.
Pennsy Supply, Inc.
Pike Industries, Inc.
100
100
100
100
100
Aggregates, asphalt, readymixed concrete and related construction
activities
Aggregates, asphalt, readymixed concrete, aggregates distribution and
related construction activities
Aggregates, asphalt, readymixed concrete and related construction
activities
Aggregates, asphalt, readymixed concrete and related construction
activities
Aggregates, asphalt, readymixed concrete and related construction
activities
P.J. Keating Company
100
Aggregates, asphalt and related construction activities
Staker & Parson Companies
The Shelly Company
Tilcon Connecticut, Inc.
100
100
100
Aggregates, asphalt, readymixed concrete and related construction
activities
Aggregates, asphalt, readymixed concrete and related construction
activities
Aggregates, asphalt, readymixed concrete and related construction
activities
Tilcon New York, Inc.
100
Aggregates, asphalt and related construction activities
Trap Rock Industries, LLC*
60
Aggregates, asphalt and related construction activities
West Virginia Paving, Inc.
100
Aggregates, asphalt and related construction activities
228
CRH Annual Report I 2015 Principal Subsidiary Undertakings | continued
Incorporated and operating in
% held
Products and services
Americas Products & Distribution
Building Products
Canada
Oldcastle BuildingEnvelope™ Canada,
Inc.
Oldcastle Building Products Canada, Inc.
(trading as Décor Precast, Expocrete
Concrete Products, Groupe Permacon,
Oldcastle Enclosure Solutions and
Transpavé)
Americas Products & Distribution, Inc.
CRH America, Inc.
Oldcastle, Inc.
Building Products
100
Custom fabricated and tempered glass products and curtain wall
100
Masonry, paving and retaining walls, utility boxes and trenches
100
100
100
Holding company
Holding company
Holding company
Anchor Block Company
100
Speciality masonry, hardscape and patio products
C.R. Laurence Co., Inc.
Oldcastle Architectural, Inc.
Oldcastle Building Products, Inc.
Meadow Burke, LLC
100
100
100
100
Fabrication and distribution of custom hardware products for the glass
industry
Holding company
Holding company
Concrete accessories
United States
Oldcastle APG Northeast, Inc. (trading
principally as Anchor Concrete Products
and Trenwyth Industries)
Oldcastle APG South, Inc. (trading
principally as Adams Products, Georgia
Masonry Supply, Northfield Block
Company and Oldcastle Coastal)
Oldcastle APG West, Inc. (trading
principally as Amcor Masonry Products,
Central Pre-Mix Concrete Products, Texas
Masonry Products, Miller Rhino Materials,
Sierra Building Products and Superlite
Block)
Oldcastle BuildingEnvelope™, Inc.
Oldcastle Lawn & Garden, Inc.
Oldcastle Precast, Inc.
Distribution
100
Specialty masonry, hardscape and patio products
100
Specialty masonry, hardscape and patio products
100
Specialty masonry and stone products, hardscape and patio products
100
100
100
Custom fabricated architectural glass
Patio products, bagged stone, mulch and stone
Precast concrete products, concrete pipe, prestressed plank and
structural elements
Oldcastle Distribution, Inc.
100
Holding company
Allied Building Products Corp.
100
Distribution of roofing, siding and related products, wallboard, metal
studs, acoustical tile and grid
229
CRH Annual Report I 2015
Principal Subsidiary Undertakings | continued
Incorporated and operating in
% held
Products and services
LH Assets
CRH Brasil Participações Ltda
100
Holding company
Brazil
CRH Sudeste Indústria de Cimentos S.A.
99.74
Cement
CRH Cantagalo Indústria de Cimentos
S.A.
100
Cement
Blackbird Infrastructure 407 CRH GP Inc.
100
Holding company
Canada
La Reunion
(France)
CRH Canada Group Inc.
100
Aggregates, asphalt, cement and readymixed concrete
Teralta Ciments Reunion S.A.*
100
Cement
Teralta Granulats Betons Reunion S.A.S.*
100
Aggregates, readymixed concrete
France
Eqiom
99.99
Aggregates, cement and readymixed concrete
Germany
Opterra GmbH
100
Cement
Hungary
CRH Magyarország Kft.
100
Cement and readymixed concrete
Philippines(i)
Romania
Republic Cement & Building Materials, Inc.
40
Cement
Luzon Continental Land Corporation
40
Cement and building products
CRH Ciment (Romania) S.A.
98.62
Cement
CRH Agregate Betoane S.A.
98.62
Readymixed concrete
Serbia
CRH (Srbija) doo Popovac
100
Cement
Slovakia
CRH (Slovensko) a.s.
99.70
Cement and readymixed concrete
Britain &
Northern Ireland
Tarmac Trading Limited
100
Aggregates, asphalt, cement, readymixed concrete and contracting
Tarmac Aggregates Limited
100
Aggregates, asphalt, readymixed concrete and contracting
Tarmac Building Products Limited
100
Building products
Tarmac Cement and Lime Limited
100
Cement and lime
(i) 55% economic interest in the combined Philippines business (see note 31 to the Consolidated Financial Statements).
230
CRH Annual Report I 2015 Principal Equity Accounted Investments
as at 31 December 2015
Incorporated and operating in
% held
Products and services
Europe Heavyside
China
India
Ireland
Jilin Yatai Group Building Materials
Investment Company Limited*
My Home Industries Limited
Kemek Limited*
Europe Distribution
26
50
50
Cement
Cement
Commercial explosives
France
Samse S.A.*
21.13
Builders merchants and DIY stores
Netherlands
Bouwmaterialenhandel de Schelde B.V.
50
DIY stores
Intergamma B.V.
48.57
DIY franchisor
Portugal
Modelo Distribuição de Materials de
Construção S.A.*
50
DIY stores
Americas Materials
American Cement Company, LLC*
Southside Materials, LLC*
Cadillac Asphalt, LLC*
United States
Piedmont Asphalt, LLC*
American Asphalt of West Virginia, LLC*
HMA Concrete, LLC*
Buckeye Ready Mix, LLC*
50
50
50
50
50
50
45
Cement
Aggregates
Asphalt
Asphalt
Asphalt and related construction activities
Readymixed concrete
Readymixed concrete
* Audited by firms other than Ernst & Young.
Pursuant to Sections 314-316 of the Companies Act, 2014, a full list of subsidiaries, joint ventures and associated undertakings will be annexed to the
Company’s Annual Return to be filed in the Companies Registration Office in Ireland.
231
CRH Annual Report I 2015 Group Financial Summary
(Figures prepared in accordance with IFRS)
Revenue
EBITDA (as defined)*
Group operating profit
Profit on disposals
Profit before finance costs
Net finance costs (funding/cash)
Other financial expense
Share of equity accounted investments' profit/(loss)
Profit/(loss) before tax
Income tax expense
Group profit/(loss) for the financial year
Employment of capital
Non-current and current assets
Property, plant and equipment
Intangible assets
Equity accounted investments/other financial assets
Net working capital
Other liabilities - current and non-current
Assets and liabilities held for sale
Total
Capital and reserves excluding preference share capital
Preference share capital
Non-controlling interests
Net deferred income tax liability
Net debt
Total
Purchase of property, plant and equipment
Acquisitions and investments
Total
Depreciation of property, plant and equipment
Amortisation of intangible assets
(a)
(b)
(c)
(d)
(e)
Impairment of property, plant and equipment and intangible assets
Earnings per share after amortisation of intangible
assets (cent)
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
(f)
(f)
(f)
(f), (g)
(h)
Restated
2006
€m
17,836
Restated
2007
€m
19,916
Restated
2008
€m
19,715
2,326
1,724
36
1,760
(221)
(15)
60
1,584
(360)
1,224
6,954
2,713
1,169
2,314
(1,070)
-
12,080
7,062
1
31
742
4,244
12,080
777
2,311
3,088
577
25
-
202.2
206.5
46.89
332.0
4.3
2,704
1,973
57
2,030
(282)
(7)
138
1,879
(441)
1,438
7,503
3,424
1,448
2,326
(836)
-
13,865
7,953
1
37
875
4,999
13,865
956
2,227
3,183
696
35
-
236.9
242.7
61.31
372.3
3.9
2,478
1,704
68
1,772
(324)
(6)
160
1,602
(340)
1,262
7,904
3,772
1,969
2,468
(1,078)
-
15,035
8,086
1
38
972
5,938
15,035
955
1,072
2,027
717
43
14
210.2
217.4
62.22
357.4
3.4
Restated
2009
€m
16,278
1,654
861
25
886
(263)
(27)
117
713
(115)
598
7,570
3,754
2,204
1,838
(1,051)
-
14,315
9,636
1
41
1,028
3,609
14,315
487
458
945
709
43
41
88.3
96.3
62.50
222.9
1.4
Restated
2010
€m
16,112
1,487
630
54
684
(211)
(29)
69
513
(74)
439
7,939
3,960
2,265
1,799
(1,056)
-
14,907
10,327
1
50
1,149
3,380
14,907
418
567
985
711
44
102
61.3
79.9
62.50
203.2
1.0
The Group financial summary for 2006 to 2012 has been restated for the impact of IFRS 11 Joint Arrangements. The 2012 results also reflect the change in accounting as required
by IAS 19 Employee Benefits.
(a) Represents the sum of equity accounted investments and other financial assets.
(b) Represents the sum of inventories and trade and other receivables (included in current assets) less trade and other payables (included in current liabilities).
(c) Represents the sum of current income tax liabilities, current and non-current provisions for liabilities, non-current other payables and retirement benefit obligations less the sum
of current income tax recoverable and non-current other receivables.
(d) Represents the sum of assets and liabilities reclassified as held for sale, excluding cash and cash equivalents reclassified which is included under net debt (see note (e) below).
(e) Represents the sum of current and non-current interest-bearing loans and borrowings and derivative financial instrument liabilities less the sum of liquid investments, cash and
cash equivalents (including cash reclassified as held for sale) and current and non-current derivative financial instrument assets.
232
CRH Annual Report I 2015 Revenue
EBITDA (as defined)*
Group operating profit
Profit on disposals
Profit before finance costs
Net finance costs (funding/cash)
Other financial expense
Share of equity accounted investments' profit/(loss)
Profit/(loss) before tax
Income tax expense
Group profit/(loss) for the financial year
Employment of capital
Non-current and current assets
Property, plant and equipment
Intangible assets
Equity accounted investments/other financial assets
Net working capital
Other liabilities - current and non-current
Assets and liabilities held for sale
Total
Capital and reserves excluding preference share capital
Preference share capital
Non-controlling interests
Net deferred income tax liability
Net debt
Total
Purchase of property, plant and equipment
Acquisitions and investments
Total
Depreciation of property, plant and equipment
Amortisation of intangible assets
(a)
(b)
(c)
(d)
(e)
Impairment of property, plant and equipment and intangible assets
Earnings per share after amortisation of intangible
assets (cent)
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
(f)
(f)
(f)
(f), (g)
(h)
Restated
2011
€m
17,374
1,543
811
53
864
(223)
(28)
87
700
(103)
597
8,008
4,148
2,107
2,004
(1,323)
-
14,944
10,508
1
41
1,059
3,335
14,944
507
610
1,117
673
38
21
82.6
88.6
62.50
201.4
1.3
Restated
2012
€m
18,084
1,563
805
230
1,035
(256)
(49)
(84)
646
(106)
540
7,971
4,267
1,456
2,078
(1,376)
143
14,539
10,552
1
36
1,041
2,909
14,539
544
548
1,092
686
44
28
74.6
80.6
62.50
199.8
1.2
2013
€m
18,031
1,475
100
26
126
(249)
(48)
(44)
(215)
(80)
(295)
7,539
3,911
1,363
2,016
(1,111)
-
13,718
9,661
1
24
1,059
2,973
13,718
497
576
1,073
671
54
650
(40.6)
(33.2)
62.50
162.4
n/a
2014
€m
18,912
1,641
917
77
994
(246)
(42)
55
761
(177)
584
7,422
4,173
1,352
2,010
(1,418)
285
13,824
10,176
1
21
1,134
2,492
13,824
435
188
623
631
44
49
78.9
84.9
62.50
177.1
1.3
2015
€m
23,635
2,219
1,277
101
1,378
(295)
(94)
44
1,033
(304)
729
13,062
7,820
1,345
2,089
(2,280)
-
22,036
13,014
1
529
1,874
6,618
22,036
882
7,549
8,431
843
55
42
89.1
95.9
62.50
205.1
1.4
(f)
Per share amounts for restated 2005 to 2008 have been restated for the bonus element of the Rights Issue in March 2009.
(g) Cash earnings per share represents profit attributable to equity holders of the Company less preference dividends paid plus depreciation of property, plant and equipment, amortisation
of intangible assets and, where applicable, asset impairments divided by the average number of Ordinary Shares outstanding for the year.
(h) Represents earnings per Ordinary Share divided by dividends per Ordinary Share.
*
EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted
investments’ profit after tax.
233
CRH Annual Report I 2015 Photo Captions
Section Breaks
Strategy Review
Podilsky Cement in Ukraine operates a
modern, fully certified concrete laboratory.
It conducts tests of cements from all CRH
plants in Ukraine and provides a customer
advice service.
Governance
A newly branded cement tanker at CRH
Canada, one of the country’s largest
vertically integrated building materials and
construction companies.
Other Information
Oldcastle Precast placed 50, 24-foot by
6.5-foot precast concrete box culverts for
a US$252 million infrastructure rehabilitation
project along the Interstate 15 corridor in
Utah, United States. This single box culvert
weighs approximately 80,000 pounds and
replaced 40-year-old infrastructure on the
East Jordan Canal.
Our Global Presence
Oldcastle Architectural supplied Trenwyth
Astra-Glaze SW+® concrete masonry blocks
to William Allen High School in Allentown,
Pennsylvania. This product contributes to
Leadership in Energy and Environmental
Design (LEED) credits in recycled content,
energy efficiency and regional production.
Zoontjens
Studentencomplex Johanna is a student
accommodation building in Utrecht, the
Netherlands. Zoontjens supplied its
Drenoliet® rooftop terrace tiles for
communal areas, producing a landscape
that is aesthetically pleasing and
capable of withstanding high loads.
Full Page Images
234
Business Performance
Readymixed concrete from OPTERRA
being delivered to site. OPTERRA’s
headquarters is in Leipzig from where it
operates two cement plants, a grinding
station and a network of readymixed
concrete plants, located across Germany.
Financial Statements
Oldcastle BuildingEnvelope® designed,
engineered, tested, manufactured and
delivered 2.6 million square feet of
custom-engineered curtain wall,1.6 million
square feet of high performance and
silk-screened architectural glass, 20,450
sunshades and 4,000 square feet of
custom-engineered skylights for ExxonMobil’s
new global campus in Houston, Texas.
Halfen Construction Accessories
The German pavilion EXPO 2015 in Milan
made extensive use of the HALFEN DETAN
tension and compression rod system. The
DETAN product was installed into the steel
stress, shell and stage of the pavilion, and
meets the highest aesthetic and quality
standards. HALFEN is part of the Construction
Accessories platform within Europe Lightside.
Anchor Masonry
Oldcastle Architectual’s Anchor business
manufactured 20,000 square feet of
Dufferin® Stone for the new Herbert
Hoover Middle School in Potomac,
Maryland. Dufferin® Stone products
are known for their durable antiqued
finishes and custom-look results.
CRH Annual Report I 2015 Full Page Images
Our Business
Sustainability
Coastal
Oldcastle Architectural’s Coastal business
provided 2,712 square feet of pavers for this
residential driveway in Clearwater, Florida,
that features Belgard Appian and Holland
pavers. The designer added a grass median
to create a permeable space, to aid in water
run-off and to create a dramatic entrance.
Allied Distribution
Dream Finders Homes built a 2,400 square foot,
four-bedroom home in the Fan Entertainment
Zone at EverBank Field in Jacksonville, Florida.
This home will be donated to a military veteran
and moved for that purpose, after it sits on
display at the NFL stadium for two years. The
Gypsum Wallboard for the project was supplied
by Allied Building Products.
Heavyside Materials
1,300 tonnes of cement from OPTERRA was
used to construct the elephant enclosure at
Erfurt Zoo in Germany. The rough finish on
the 11m high walls is designed to resemble
an elephant’s skin.
Building Materials Distribution
Bauking, CRH’s leading distribution brand in
Germany, operates general builders
merchants and DIY stores through the
hagebaumarkt brand. This branch, in
Königs-Wusterhausen near Berlin, is a
35,000m2 site serving both customer groups.
People and Community
School children from Lisburn, Northern
Ireland, visited a local residential
development, completed by Farrans
Construction. The children learnt about
building materials, the construction process
and the importance of safety on site.
CRH Romania
Medgidia Cement Plant is one of two
plants owned and operated by CRH
Romania in addition to a grinding station,
a network of terminals, quarries, gravel
pits and concrete plants.
Lightside Products
An installation of sun protection screens
and drop-arm awnings, supplied by
SMITS Rolluiken & Zonwering, at a
nursery in the Netherlands.
Environment and Conservation
Tarmac owns Panshanger Park, in
Hertfordshire, England. Since the 1980s,
it has been extracting minerals from the
area but it is now being restored to
agriculture, wetland and nature
conservation. It includes a Forest School,
which encourages hands-on learning
experiences in a natural environment.
235
CRH Annual Report I 2015 Index
A
Accounting policies
Acquisitions Committee
American Depositary Receipts
Annual General Meeting
Audit Committee
Auditors (Directors’ Report)
Auditor’s remuneration (note 3)
Auditor’s Report, Independent
B
Balance sheet
- Company
- Consolidated
Board approval of financial
statements (note 33)
Board Committees
Board evaluation
Board of Directors
Board responsibilities
Business and non-current asset
disposals (note 4)
Business combinations (note 30)
Business model
Business performance review
C
Capital and financial risk
management (note 21)
Cash and cash equivalents (note 22)
Cash flow, operating
Cash flow statement, Consolidated
Cash flow, summarised
Chairman’s Introduction
Changes in Equity, Consolidated
Statement of
Chief Executive’s Review
Communications with shareholders
Company Secretary
Compliance and ethics
Comprehensive Income,
Consolidated Statement of
Consolidated Financial Statements
Corporate Governance report
Cost analysis (note 2)
CREST
CRH in China & India
CRH in Europe
CRH in the Americas
137
65
223
72
59
111
61,153
122
210
134
209
63
57
52
65
154
143, 203
11
19
177
144, 182
13, 22
136
22
3
135
6
67
68
67
133
132
56
152
220
48
26
36
236
D
Debt, Analysis of net (note 20)
Deferred income tax
- Expense (note 10)
- Assets and liabilities (note 26)
Depreciation
- Cost analysis (note 2)
- Property, plant and equipment
(note 13)
- Segment analysis (note 1)
Derivative financial instruments
(note 24)
Directors’ emoluments and interests
(note 6)
Directors’ interests in share capital
Directors’ remuneration report
Directors’ Report
Directors’ responsibilities, Statement
of
Directors’ share options
Distribution
Dividend payments (shareholder
information)
Dividend per Share
Dividends (note 11)
174
140, 160
189
152
140, 164
149
145, 185
155, 216
88
70
108
112
86
34, 42
108, 220
1
146, 162
E
Earnings per Ordinary Share
(note 12)
Employees, average number
(note 5)
Employment costs (note 5)
End-use
- Americas Distribution
- Americas Materials
- Americas Products
- Europe Distribution
- Europe Heavyside
- Europe Lightside
- LH Assets
Equity accounted investments’
profit/(loss), share of (note 9)
Exchange rates
163
155
155
25
25
25
24
24
24
25
160
147
F
Finance Committee
Finance costs and finance income
(note 8)
Finance Director’s Review
Financial assets (note 15)
Financial calendar
Financial statements, Consolidated
Financial summary, Group
(2006-2015)
Foreign currency translations
Frequently asked questions
G
Gender diversity
Going concern
Governance
Greenhouse gas emissions
Guarantees (note 23; note 11 to
Company Balance Sheet )
H
Health and safety
Heavyside
I
Income Statement, Consolidated
Income tax expense (note 10)
Independent auditors’ report
Intangible assets (note 14)
Inventories (note 16)
Investor relations activities
K
Key components of 2015
performance
KPIs, financial
KPIs, non-financial
L
Leases, commitments under
operating and finance (note 29)
LH Assets
Lightside
Listing rule 9.8.4C
Loans and borrowings, interest-
bearing (note 23)
65
159
20
169
222
132
232
118
68
12, 64
110
50
12
184, 216
15
24, 28
132
160
122
144, 165
144, 170
68
20
13
12
144, 202
44
32
108
145, 183
CRH Annual Report I 2015 S
Sector exposure and end-use
Segment information (note 1)
Senior Independent Director
Share-based payments (note 7)
Share capital and reserves (note 28)
Share options
- Directors
- Employees (note 7)
Share price data
Shareholder communication
Shareholder information
Shareholdings as at 31 December
2015
Snapshot 2015
Statement of Changes in Equity,
Consolidated
Statement of Comprehensive
Income, Consolidated
Statement of Directors’
responsibilities
Stock Exchange listings
Strategic report
Strategy review
Substantial holdings
Sustainability
T
Total Shareholder Return (TSR)
Trade and other payables (note 18)
Trade and other receivables
(note 17)
V
Volumes, annualised production
- Americas Materials
- Americas Products
- Europe Heavyside
- Europe Lightside
- LH Assets
W
Website
Working capital and provision for
liabilities, movement during year
(note 19)
24
142, 148
53
142, 156
146, 199
86
157
221
67
220
221
24
135
133
112
67, 220
8
4
66
14
10
172
144, 170
25
25
24
24
25
68, 223
139, 173
M
Materials
Measuring performance
Memorandum and Articles of
Association
N
Nomination and Corporate
Governance Committee
Non-controlling interest (note 31)
Notes on Consolidated Financial
Statements
38
12
68
62
208
148
O
Operating costs (note 2)
Operating leases (note 29)
Operating profit disclosures (note 3)
Operational Reviews and 2015 results
- Americas Distribution
- Americas Materials
- Americas Products
- Europe Distribution
- Europe Heavyside
- Europe Lightside
- LH Assets
152
144, 202
153
42
38
40
34
28
32
44
P
Pensions, retirement benefit
obligations (note 27)
Principal equity accounted
investments
Principal subsidiary undertakings
Products
Profit on disposals (note 4)
Property, plant and equipment
(note 13)
Provisions for liabilities (note 25)
Proxy voting, electronic
R
Registrars
Regulatory information
Related party transactions (note 32)
Remuneration Committee
Reserves (million tonnes)
Retirement benefit obligations
(note 27)
Return on net assets
Risk Governance
Risk management and internal
control
Risks and uncertainties
138, 190
231
224
40
154
140, 164
139, 187
223
223
109
209
65, 70
30, 38, 47
138, 190
13
16
110
113
237
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CRH Annual Report I 2015
CRH plc
Belgard Castle
Clondalkin
Dublin 22
D22 AV61
Ireland
Telephone: +353 1 404 1000
E-mail: mail@crh.com
Website: www.crh.com
Registered Office
42 Fitzwilliam Square
Dublin 2
D02 R279
Ireland
Telephone: +353 1 634 4340
Fax: +353 1 676 5013
E-mail: crh42@crh.com
CRH® is a registered trade mark
of CRH plc.
Front cover: This bridge, which spans the Unstrut
valley near Karsdorf (Saxony-Anhalt) in Germany, is
one of the largest structures on the newly built ICE
railway line between Erfurt and Leipzig/Halle. With
a length of 2.7 kilometres, the bridge is the second
longest railway bridge in Germany, and is part
of the largest railway project under the “German
Unification Transportation Projects” programme.
The bridge stands on a total of 41 piers and
is supported on 4 arches in the shape of an
inverted V, each with a span length of 108 metres.
Approximately 220,000 cubic metres of concrete
were used to create the abutments, arches, and
superstructure for the bridge. OPTERRA cement
plant in Karsdorf, one of CRH’s newly acquired
businesses, delivered more than 40,000 tonnes
of cement needed to meet the demanding
requirements of the bridge’s structural
engineering design.