CRH Annual Report 2018 | Quarterlytics

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2018 Annual Report and Form 20-F OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexii1CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018View the Report on our website: www.crh.com/reports/2018-annual-report-20-f.pdfThis document constitutes the Annual Report and Financial Statements in accordance with Irish and UK requirements and the Annual Report on Form 20-F in accordance with the US Securities Exchange Act of 1934, for CRH plc for the year ended 31 December 2018. A cross reference to Form 20-F requirements is included on page 261.The Directors’ Statements (comprising the Statement of Directors’ Responsibilities, the Viability Statement and the Directors’ Compliance Statement on pages 100 to 103), the Principal Risks and Uncertainties (on pages 104 to 109), the Independent Auditor’s Report (on pages 112 to 120) and the Parent Company financial statements of CRH plc (on pages 207 to 212) do not form part of CRH’s Annual Report on Form 20-F as filed with the Securities and Exchange Commission (SEC).Forward-Looking StatementsThis document contains forward-looking statements, which by their nature involve risk and uncertainty. Please see Disclaimer/Forward-Looking Statements on page 99 for more information about these statements and certain factors that may cause them to prove inaccurate.CRH manufactures and distributes a diverse range of superior building materials and products for the built environment. From foundations, to frame and roofing, to fitting out the interior space and improving the exterior aesthetic, to on-site works and infrastructural projects including roads and bridges, our materials and products are used extensively in construction projects of all sizes, all across the world.PRODUCTSDISTRIBUTIONMATERIALS• Aggregates• Lime• Cement• Readymixed Concrete• Paving & Construction• Asphalt• General Builders Merchants • Sanitary, Heating and Plumbing • DIY • Architectural Products• Glass and Glazing Systems• Infrastructure Products• Construction Accessories• Shutters & Awnings • Network Access Products & Perimeter ProtectionContentsOverviewOur Global Business in 2018 ....................2Why Invest in Us .......................................4Chairman’s Introduction ............................5 Strategy ReviewChief Executive’s Review ..........................8Strategy ..................................................10Business Model ......................................12Measuring Performance ..........................14Sustainability ..........................................16Risk Governance ....................................22 Business PerformanceBusiness Overview .................................26Finance Director’s Review .......................27 Segmental Reviews ................................32GovernanceBoard of Directors ..................................54Corporate Governance Report ...............58Directors’ Remuneration Report..............68Directors’ Report ....................................98 Principal Risks and Uncertainties ..........104 Financial StatementsIndependent Auditor’s Reports .............112Consolidated Financial Statements .......123Accounting Policies ..............................128Notes on Consolidated Financial Statements ............................139Supplementary 20-F Disclosures ......214Shareholder Information ....................238Other Information ...............................250Cross Reference to Form 20-F Requirements .......................................261Index ....................................................262CRH Annual Report and Form 20-F I 20182018 Performance Highlights* 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. Details of how non-GAAP measures are calculated are set out on pages 217 to 220.How our global business performed in 2018...Ash Grove Cement Company’s Midlothian Plant in Texas produces approximately 861,000 tonnes of clinker per year and employs 120 people. CRH Annual Report and Form 20-F I 2018€26.82017€25.2bn2018€26.8bn+6%billionSales€3.42017€3.1bn2018€3.4bn+7%billionEBITDA (as defined)* €2.22017€2.1bn2018€2.2bn+4%billionOperating Profit2017€1.9bn2018€2.5bn€2.5billionProfit After Tax +31%2017226.8c2018302.4c302.4centEarnings Per Share+33%201768.0c201872.0c+6%72.0centDividend Per Share1OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexOverview23CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Our Global Business in 2018Regional ScaleCRH’s global footprint spans 32 countries and over 3,700 operating locations, serving customers across the entire building materials spectrum, on five continents, worldwide.Building Materialsc. 45,100employeesOperations in 46 US states, seven Canadian provinces and Southeast Brazilc. 1,820 operating locationsAmericas€13.4 billionSales2017: €12.3 billionGrowth +9%Heavyside Materialsc. 43,400employeesOperations in 24 countriesc. 1,870 operating locationsEurope€13.0 billionSales2017: €12.5 billionGrowth +4%Our Balanced PortfolioBuilding a balanced portfolio is a core constituent of our strategy and a key determinant of value creation for CRH.Cement Producer in Philippinesc. 1,300employeesRegional leadership positions12 operating locationsAsia€0.4 billionSales2017: €0.4 billionDecline -1%2Percentages based on 2018 Operating ProfitBy GeographyAmericas68% Asia-1%By DivisionProducts26% Materials69% Distribution5% Percentages based on 2018 Operating ProfitBy End-UseResidential35% Non-Residential30% Infrastructure35% Percentages based on 2018 Group SalesNew Build vs RMINew Build55% Repair,Maintenance & Improvement (RMI) 45% Percentages based on 2018 Group SalesEurope33% OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexOverview45CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Why Invest in UsScale in attractive marketsCRH is the largest building materials company in North America and the largest heavyside materials business in Europe.Balanced portfolioOur businesses are diversified across a range of products, geographies and end-uses. 32Countries GloballyUnique acquisition model We are focused on adding small to mid-sized companies that complement our existing portfolio, together with occasional large acquisitions where we see compelling value.€3.6bnDevelopment Spend in 2018€7.0bn2018 Revenue from Products with Enhanced Sustainability AttributesSustainable business modelTo create long-term value, we embed sustainability principles in all areas of our strategy and business model. 409bps EBITDA (as defined)* Margin Improvement 2013 to 2018Continuously improving CRH is relentlessly focused on operational and commercial excellence, coordinated and driven from the centre and delivered locally by its businesses around the world.Strong leadership and talent management Our experienced senior management team is underpinned by a focus on talent identification, development, diversity and succession planning.Proven track-recordOver the past five years we have increased revenue 64%, EBITDA (as defined)* 143% and cash generation 74%. +12%Operating Cash Flow CAGR 5 YearsLong-term growth opportunityPopulation and economic growth along with a good balance of New Build and RMI demand are long-term drivers of construction growth in our main markets.+64%Revenue Growth since 201338%Percentage of Female Directors on CRH BoardIndustry Leading Value & Returns Total Shareholder Return+14.8%35%Infrastructure35%Residential30%Non-ResidentialSince 1970 CRH has delivered an industry-leading compound Total Shareholder Return (TSR) of 14.8%. €100 invested in CRH shares in 1970, with dividends reinvested, would now be worth €76,000.Against a backdrop of international economic uncertainty, 2018 has been another year of progress for CRH with EBITDA (as defined)* for the year of €3.4 billion (2017: €3.1 billion), profit after tax of €2.5 billion (2017: €1.9 billion) and Net Debt at year end being 2.1x EBITDA (as defined)*2 (2017: 1.8x) after net development activity of €553 million and the completion of €789 million of the €1 billion buyback programme announced in April 2018. Based on performance in 2018, the Board is recommending a final dividend of 52.4c per share, which, if approved at the 2019 Annual General Meeting (AGM), will result in an increase in the full-year dividend of 6% to 72.0c per share.Active portfolio management is part of CRH’s strategy to deliver improved margins and returns. During 2018, the Group invested c. €3.6 billion on 46 transactions including the acquisition of Ash Grove Cement Company (Ash Grove) for c. €2.9 billion, which received regulatory approval in June 2018. We also completed the divestment of our Americas Distribution business in January 2018 for €2.4 billion and we divested our Benelux DIY business, together with certain related property assets, for a total consideration of c. €0.5 billion. Total business and asset disposal proceeds in 2018 amounted to €3.0 billion. As announced in May 2018, a strategic review of our Distribution business in Europe is underway. The review, which will continue in 2019, is focused on improving our margins and returns and identifying opportunities to create further value for shareholders.Also in May 2018, we announced a multi-year business improvement initiative to deliver 300bps of EBITDA (as defined)* margin improvement by 2021. As part of this plan, a number of organisational and business improvement initiatives are underway. These include a more simplified organisational structure with three Divisions effective 1 January 2019: Europe Materials, Americas Materials and Building Products. This will create a more focused and agile Group. Given the importance to the Board of having a business strategy which is sustainable, we have set up a new Safety, Environment & Social Responsibility (SESR) Committee. Under its terms of reference, this Committee will work with management in areas such as fatality elimination, emission targets, inclusion and diversity, employee engagement and sustainability reporting. Following completion of two terms of three years on the Board, Don McGovern will retire as a non-executive Director at the conclusion of the AGM on 25 April 2019. During his time on the Board, Don has held the roles of Senior Chairman’s Introduction1Independent Director and Remuneration Committee Chairman. I would like to thank him for the energy and commitment that he has displayed in carrying out these roles in such an exemplary fashion and I wish him every success in the future.I am pleased to report that during the year, we appointed three new non-executive Directors in Richie Boucher, Mary Rhinehart and Siobhán Talbot. The Corporate Governance section on pages 54 to 67 contains details of the biographies of all Board members, the competencies of the Board, details of CRH’s Board renewal policy and our approach in the area of inclusion and diversity. I have evaluated the performance of each Director and I believe that each of them has an important role to play in relation to the Company’s long-term success. Accordingly, I am recommending that shareholders vote in favour of the re-appointment of each Director going forward for re-election at the 2019 AGM.Finally, on behalf of the Board, I would like to thank the CRH management team, led by Albert Manifold, for their continued hard work, their commitment to our Company and for the record progress achieved in 2018.Nicky HarteryChairman27 February 2019* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.1. See cautionary statement regarding forward-looking statements on page 99.2. Net Debt/EBITDA (as defined)* is a non-GAAP measure as defined on page 219. The GAAP figures that are most directly comparable to the components of Net Debt/EBITDA (as defined)* include: interest-bearing loans and borrowings (2018: €9,316 million; 2017: €7,976 million) and profit after tax (2018: €2,521 million; 2017: €1,919 million). Details of how non-GAAP measures are calculated are set out on pages 217 to 220.“”Active portfolio management is part of CRH’s strategy to deliver improved margins and returns.Revenue* 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.€25.2bn€24.8bn201720162018€26.8bnOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexStrategy Review67CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Halfen, part of CRH’s Europe Lightside Division, provided specialist fixing solutions for the installation of 3,500 protective sunscreens in the ‘La Marseillaise’ tower created by architect Jean Nouvel. The tower forms the largest part of the new maritime façade of the Euroméditerranée redevelopment project in Marseille, France. 6Chief Executive’s Review 8Strategy 10Business Model 12Measuring Performance 14Sustainability 16Risk Governance 22STRATEGY REVIEWOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexStrategy Review89CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018As the leading building materials business in the world, the success of CRH has been defined by a relentless focus on value creation, underpinned by a consistent emphasis on delivering superior returns and cash for shareholders through the cycle. Over the past five years we have significantly reshaped and redirected our business to capitalise on the growth opportunities we see for CRH. This has included a comprehensive portfolio review and divestment programme which enabled us to reallocate capital to higher growth markets, leading to structurally higher margins, a better business mix and improving returns and cash.Whether it is a capital expenditure project, or an acquisition or divestment opportunity, or the return of cash to shareholders through dividends or buybacks, every capital allocation decision made in CRH is rigorously analysed and assessed through the lens of creating maximum value for our shareholders.In 2018 our strong balance sheet and cash flow generation gave us the opportunity to deliver further value to shareholders by returning €789 million of cash through a share buyback programme while completing €3.6 billion of acquisitions (2017: €1.9 billion) and €3.0 billion of disposals (2017: €0.2 billion) at the same time continuing to invest in our business to execute our strategic growth initiatives. To support the delivery of these initiatives we announced a simplified new structure for the Group, moving from seven divisions to three: Americas Materials, Europe Materials and a new global Building Products platform. These changes (effective 1 January 2019) provide CRH with a more focused business, driven from a leaner corporate centre, with an improved ability to leverage our scale and create further value in our key markets and core lines of business. Performance Highlights2018 was a year of record profit delivery for the Group and continued positive performance overall. The momentum in our businesses and the benefit of acquisitions delivered a 6% increase in Group revenue to €26.8 billion (2017: €25.2 billion). This was reinforced by continued favourable market fundamentals in the Americas and good underlying momentum in Europe. EBITDA (as defined)* amounted to €3.4 billion representing a 7% increase on the previous year (2017: €3.1 billion), despite rising input costs and adverse weather conditions in certain markets. Profit after tax which included the profit on disposal of our Americas Distribution business increased 31% to €2.5 billion (2017: €1.9 billion) reflecting yet another year of progress. Despite an inflationary cost environment, EBITDA (as defined)* margin was ahead, with measures introduced to drive efficiencies and performance improvement across our business having a positive impact. Return on Net Assets (RONA)2 for the year was 9.6% (2017: 10.6%).Our strong financial discipline and operational cash flows resulted in a year-end Net Debt/EBITDA (as defined)* of 2.1x (2017: 1.8x) despite significant acquisition spend and share buyback activity.Earnings per share (EPS) increased 33% to 302.4c (2017: 226.8c) and the Board has proposed to increase the dividend to 72.0c per share, an increase of 6% on the previous year’s level of 68.0c per share.Operational HighlightsIn the Americas a positive economic environment and solid underlying demand saw sales increase 9% to €13.4 billion (2017: €12.3 billion). Despite labour constraints and cost inflation, particularly in energy, our key markets performed well with good underlying fundamentals and favourable conditions across residential, non-residential and infrastructure. Notwithstanding significant weather disruption in key markets, our Americas Materials Division delivered a positive performance overall, generating sales of €9.0 billion, an increase of 12% on 2017 (2017: €8.0 billion) with good price increases across all products and the benefit of a six month contribution from Ash Grove, our cement and materials acquisition completed in June for €2.9 billion.Improved pricing and a continued focus on commercial and operational initiatives contributed to growth in our Americas Products Division, with a notable strong performance by our Oldcastle Infrastructure business.Overall sales in Europe increased by 4% to €13.0 billion (2017: €12.5 billion) and setting aside the ongoing Brexit related uncertainty in the United Kingdom (UK), the Group’s strong footprint across Europe means we are well positioned to capitalise on the broad based nature of economic and construction growth as markets continue to normalise.Chief Executive’s Review1* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. 1. See cautionary statement regarding forward-looking statements on page 99.2. RONA is a non-GAAP measure as defined on page 218. The GAAP figures that are most directly comparable to the components of RONA include: Group operating profit (2018: €2,177 million; 2017: €2,095 million), total assets and total liabilities respectively (2018: €35,173 million and €18,619 million respectively; 2017: €31,633 million and €16,656 million respectively). Details of how non-GAAP measures are calculated are set out on pages 217 to 220. In line with the purpose of the metric, as set out on page 220, to “measure management’s ability to generate profits from the net assets required to support that business”, for the 2018 calculation, as the net segment assets classified as held for sale at 31 December 2017 were disposed of on 2 January 2018, these have been excluded from the prior year element. For consistency, the related immaterial operating loss of €5 million is also excluded.Our Europe Heavyside businesses made good strides with increased demand and modest pricing improvements experienced across multiple markets, partly offset by increasing input costs. Our operations in the Benelux, Denmark, Ireland and Poland performed particularly well. Our Europe Lightside Division delivered a robust performance across most platforms reflecting encouraging levels of demand in the Netherlands, Poland and Australia. Acquisitions in certain platforms also lifted sales. Europe Distribution, which remains the subject of a strategic review, had a mixed performance with positive momentum in our General Builders Merchants business partly offset by our business in Switzerland.In Asia, while we saw signs of market stabilisation in the Philippines and increased sales volumes, trading conditions remained challenging, with rising fuel and energy costs impacting on profitability. Sustainability and SafetyAt CRH we are acutely aware of our role in advancing the global sustainability agenda. In 2018 CRH became one of the founding members of the Global Cement and Concrete Association (GCCA). Sustainable development is at the core of the GCCA’s work programme which also includes safety & health, climate change & energy, social responsibility, environment & nature and the circular economy. Within CRH, the safety of our people is the number one priority at all of our sites, around the world and we work hard to ensure that our people return home safely to their families at the end of each working day. Regrettably however, there were six fatalities involving our operations during 2018. Our thoughts and deepest sympathies are with their families and we are determined to do all we can to achieve our target of zero injuries and zero fatalities at our operations. DevelopmentIn 2018 we completed 46 deals with a total spend of €3.6 billion (2017: €1.9 billion). Disposals in the year delivered proceeds of €3.0 billion (2017: €0.2 billion).In addition to Ash Grove, our largest acquisition of the year, the Group completed 45 bolt-on transactions across the Americas and Europe. Bolt-ons are an integral part of CRH’s acquisition model generating above average returns. With timely and efficient integration, these businesses offer good opportunities for synergies and the potential for adding bolt-ons is a key determining factor when we consider larger acquisition opportunities. The majority of our divestment activity in 2018 related to the sale of our Americas Distribution business for c. €2.4 billion in January. In Europe, we completed the sale of our Benelux DIY business for c. €0.5 billion in July. Both divestments enabled us to reallocate capital to other areas where we see better potential for growth and higher returns. This value-adding portfolio management activity combined with a strong operational performance in 2018, in addition to the reshaping of our business and focus on driving further performance improvement, ensures that CRH is well positioned for further value creation in 2019. Outlook Supported by continued favourable market dynamics, we expect the United States (US) economy to continue to advance in 2019 at a similar pace to recent trends. We expect continued growth in US housing construction and that non-residential construction will also show gains. Federal funding for infrastructure in 2019 is expected to increase, while state fiscal conditions continue to improve, with more states introducing additional infrastructure funding measures. In Canada, we anticipate the overall market to be ahead in 2019.The backdrop in Europe is expected to be positive with continued progress in key markets, albeit with regional variations. While Brexit has created a level of uncertainty, against an overall backdrop of increasing demand, particularly in the residential sector, we expect progress in Europe to continue in 2019. In the Philippines, with the benefit of continued economic growth we expect progress in the cement market in 2019.CRH remains well positioned to build upon the gains made in 2018. With a relentless focus on continuous business improvement, margin expansion, cash generation and returns for shareholders, together with continued strong financial discipline and efficient allocation of capital, we believe 2019 will be a year of progress and further growth for the Group.Albert ManifoldChief Executive27 February 2019Continuous Performance Improvement Our commitment to building better businesses is a key component of our value creation model and our shareholders benefit from our philosophy of continuous improvement. In 2018 we initiated a new multi-year business improvement initiative focused on shareholder value, cash generation and capital allocation. Key features of this initiative include, simplifying our structure, increasing our operating leverage and growing our EBITDA (as defined)* margin by 300bps by 2021.201820172016EBITDA (as defined)* Over the past five years we have significantly reshaped and redirected our business... “”AMERICAS CEMENT EXPANSIONAsh Grove’s deep-water cement terminal in Houston, Texas. In 2018, Ash Grove shipped 7.5m tonnes of cement from its eight cement plants and network of 25 terminals. Combined with Suwannee American Cement Company and CRH Canada, the acquisition of Ash Grove has made CRH one of the leading cement producers in North America, with operations across Florida, Texas, the Midwest and Western US, and Canada.* 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.€3.4bn€3.1bn€3.0bnOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexStrategy Review1011CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Each day, millions of people around the world come into contact with our materials and products. In implementing our strategy we remain resolutely focused on serving the unique needs of our customers in local and regional markets worldwide. 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 deliver its strategy and maximise long-term value and superior returns for shareholders. The leading building materials business in the world... ...creating long-term value and delivering superior returns.CRH continuously refines and hones its strategy as market environments evolve. Delivery of the Group’s strategy is centred on four strategic pillars:Continuous ImprovementDrive continuous improvement and value realisation through operational, commercial and financial excellence.1Leverage Group capabilities and scale to build leadership positions in local markets.Benefits of ScaleAttract, develop and empower the next generation of performance-orientated, innovative and entrepreneurial leaders.Developing LeadersFocused GrowthMaintain a constant focus on financial discipline and strong cash generation, which in turn supports our ability to fund new value-creating acquisitions and generate returns for shareholders.Strategy in Action 20181Continuous ImprovementOperational excellence initiatives are one of the ways we drive continuous improvement and value creation across our businesses. One example is a programme undertaken by our Architectural Products Group (APG), a leading supplier of concrete masonry, hardscape and related products for residential, commercial and DIY construction markets. APG operates at 194 locations in the US and Canada. In 2018 APG installed a production monitoring system at all of its plants to help track and mitigate downtime, improve throughput and provide accurate daily reporting. Operational excellence is a key lever used by CRH to improve RONA performance across the Group. In 2018 CRH Group RONA was 9.6% (2017: 10.6%). Focused GrowthCRH takes a disciplined approach to value creation through the effective and efficient allocation of capital. The Group spent c. €3.6 billion on acquisitions during 2018 including 45 bolt-on transactions. Bolt-ons are strategically integral to CRH’s ability to maximise value for shareholders through its acquisition activity. Bolt-ons can be quickly integrated, offer good potential for synergies, vertical integration and downstream opportunities, and have generated above average returns for CRH. When considering larger acquisitions, the potential for associated bolt-ons is a key part of our disciplined and focused approach to acquisition-driven growth. Benefits of ScaleOur global scale enables CRH to benefit from savings associated with centralising experience, expertise, knowledge and insight. Global procurement is one example of this and a key driver of value in our business. CRH procures c. €17 billion in products and services annually in areas including transport, logistics, mobile equipment and energy. During 2018 we continued to further integrate and centralise procurement at a global level enabling us to deliver purchasing programmes in a more efficient and effective way across the Group. Specific areas of improvement included increasing our use of technology in the areas of advanced analytics, e-procurement, and through supply chain optimisation. This in turn helps unlock value and deliver superior returns for our shareholders. 3In 2018 we continued to make progress in our efforts to identify, attract, retain and develop top talent at CRH. We continued to build upon and evolve our approach which focuses on providing high-performing and motivated individuals with access to critical experiences and exposure to key people and projects. This is achieved through our suite of leadership development programmes, including global mobility assignments, coaching, global action-learning project teams and other development initiatives. These programmes are attended by top talent from across our businesses, ensuring there is a diverse, capable and expanding leadership pool of talent across all levels of the organisation. Developing Leaders42234Acting Responsibly & SustainablyManaging Our PortfolioMaximising Performance & ReturnsCRH’s strategy is to continue to grow and improve our business and in doing so to maximise long-term value and deliver superior returns for our shareholders and for society. StrategyTargeting future growth and deliveryOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexStrategy Review1213CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Business ModelHow we create value and growthCRH delivers on its strategy through the execution of a dynamic business model which is focused on value creation and growth. Our ResourcesWe aim to optimise our return on the resources we use, including:Mineral Reserves€7.7bnRaw Materials SpendBusiness SystemsIntellectual PropertyCapital and Net Debt€23.0bn90,000EmployeesDynamic Capital ManagementWe take a disciplined and focused approach to capital allocation and reallocation to ensure that capital is recycled at attractive multiples to create value.Benelux DIY DivestmentIn July we completed the divestment of our Benelux DIY business, together with certain related property assets, for a total consideration of c. €0.5 billion. Disciplined Financial ManagementOur financial strength allows us to benefit from a lower cost of capital thereby funding growth at rates below our sector peers. Dual Tranche US$ BondCRH raised US$1.5 billion in April 2018 through the issue of a 10-year US$900 million bond with a coupon of 3.95% and a 30-year US$600 million bond with a coupon of 4.5%. The Group also successfully issued in the European Commercial Paper market for the first time. CRH is rated BBB+ by S&P, Baa1 by Moody’s and BBB by Fitch.Continuous ImprovementWe focus on making our existing businesses better and on improving newly acquired businesses to deliver growth and create additional value and stronger returns on capital invested.Improving RONAIn Finland our heavyside materials business Rudus improved its RONA by 4.5% between 2015 and 2018 through initiatives which maximised synergies and drove operational excellence. Overall Group RONA in 2018 was 9.6%. Proven Acquisition ModelWe continuously work to identify and acquire high-potential businesses that complement our existing strengths, can be quickly integrated and drive value.Ash Grove AcquisitionIn June 2018 we completed the acquisition of Ash Grove for c. €2.9 billion. Ash Grove provides us with a leadership position in the North America cement market along with potential for vertical integration with our existing aggregates, asphalt and readymixed concrete businesses. What We DoValue CreatedValue created in 2018 included:€2.5bnProfit After Tax€3.4bnEBITDA (as defined)*€663mTaxes PaidCO2 Prevented302.4c9.6%EPSRONA11.5mtonnesRisk MitigationCRH uses a dynamic Enterprise Risk Management (ERM) framework to identify, manage and report risk in a manner that supports the strategic planning processes, allowing us to conduct our business in a sustainable manner.Integrating ERM at an Operations LevelIn 2018 CRH conducted risk workshops with over 300 senior leaders from our operating businesses globally, helping to ensure alignment on risk mitigation priorities throughout the Group.Balanced PortfolioWe aim to maintain a balanced portfolio by ensuring that our businesses are diversified across a range of products, geographies, and end-uses, thereby mitigating the impact of cyclical changes in demand in any one market.Re-balancing for Growth Divesting our Americas Distribution business in 2018 enabled CRH to reallocate capital into the higher growth regions of Texas and the Northwest United States through the acquisition of Ash Grove.Why It Matters* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.1. RONA is a non-GAAP measure as defined on page 218.23.3bntonnesBenefits to CRHFinancial strengthTo support further acquisition activityInvestmentTo drive continuous improvement and maximise returnsLower capital costsSupports our ability to fund new value-creating acquisitionsShareholder returnsThrough dividends and value appreciationBenefits to SocietyCustomer solutionsProducts that meet the needs of our customersPartner to suppliersResilient and reliable business partnerJob creationResponsible employer in local communitiesTaxation contributionTaxes paid to GovernmentsOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexStrategy Review1415CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 201894%20171.120179%201794%201890%20161.120161.4201810%201820168%9.4x2016 10.9x201711.0x20189.7%201610.6%20179.6%201820.2%201617.5%20177.4%20182.320162.220171.9201894%20171.120179%201794%201890%20161.120161.4201810%201820168%9.4x2016 10.9x201711.0x20189.7%201610.6%20179.6%201822.9%201621.8%20171.5%20182.320162.220171.92018Continued achievement of a high level of zero-accident locations following our ongoing focus on embedding a culture of safety and continued investment in safety improvements.What did we do?Further enhancement of our strong safety culture with the ultimate aim of achieving zero-accident status at every location. Focus for 201994%20171.120179%201794%201890%20161.120161.4201810%201820168%9.4x2016 10.9x201711.0x20189.7%201610.6%20179.6%201820.2%201617.5%20177.4%20182.320162.220171.92018Measuring PerformanceWe believe sustainability and corporate social responsibility are fundamental to CRH being the leading building materials business in the world. A selection of KPIs on three of our sustainability priority areas are below:Sustainability PerformanceA measure of health and safety performance in our operations.Health and 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. Safety% Zero-Accident Locations94%1. CO2 emissions subject to final verification under the European Union Emissions Trading Scheme (EU ETS). CO2 emissions data includes Scope 1 (2018: 35.4m tonnes, 2017: 25.6m tonnes, 2016: 24.7m tonnes) and Scope 2 (2018: 2.7m tonnes, 2017: 2.6m tonnes, 2016: 2.5m tonnes) emissions. Scope 1 and Scope 2 emissions are as defined by the World Resources Institute Greenhouse Gas Protocol.2. We are highlighting the percentage of females in the senior management cohort as a KPI. Refer to page 19 for further information on inclusion and diversity, including additional indicators.9.6%1.5%Following the global market uncertainty, which impacted CRH’s share price during 2018, the Group reported a 3-year annualised TSR of 1.5%. Since the formation of the Group in 1970, CRH has delivered a compound annual TSR of 14.8%.What did we do?Delivering a superior return on invested capital and maintaining strong cash flows to support the continued development of the Group and dividend payment.Focus for 2019RONA at 9.6% in 2018 was impacted by increased impairment charges and the non-recurrence of 2017 one-off income.What did we do?Improving RONA through effective margin management, continued enhancement of operating efficiencies and tight working capital management.Focus for 2019EBITDA (as defined)* Net Interest Cover at 11.0x improved in 2018 due to improved profitability.What did we do?Maintain financial discipline to ensure net interest cover remains strong. We remain committed to protecting our investment grade credit ratings.Focus for 2019Management continues to focus on strong cash generation and excluding tax paid on the disposal of Americas Distribution, OCF was ahead of 2017. What did we do?Continued focus on prudent working capital and capital expenditure to generate strong operating cash flows in 2019.Focus for 201994%20171.120179%201794%201890%20161.120161.4201810%201820168%9.4x2016 10.9x201711.0x20189.7%201610.6%20179.6%201820.2%201617.5%20177.4%20182.320162.220171.92018Financial PerformanceAs part of our strategic focus on continuous improvement, CRH uses four financial KPIs to measure our progress and foster positive performance behaviour.A measure of shareholder returns delivery through the cycle. TSR represents the total accumulated value delivered to shareholders (via gross dividends reinvested and share appreciation).Returns to ShareholdersTotal Shareholder Return (TSR)A measure of pre-tax returns through excellence in operational performance. Value CreationReturn on Net Assets (RONA)A measure of financial liquidity and capital resources which underpins investment-grade credit ratings and the ability to access finance.Financial Discipline EBITDA (as defined)* Net Interest Cover194%20171.120179%201794%201890%20161.120161.4201810%201820168%9.4x2016 10.9x201711.0x20189.7%201610.6%20179.6%201820.2%201617.5%20177.4%20182.320162.220171.92018A measure of cash flows generated to fund organic and acquisitive growth and dividend returns to shareholders.Cash GenerationOperating Cash Flow (OCF)* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.1. EBITDA (as defined)* Net Interest Cover is a non-GAAP measure as defined on page 219. The GAAP figures that are most directly comparable to the components of EBITDA (as defined)* Net Interest Cover include: profit after tax: €2,521 million (2017: €1,919 million), finance costs: €339 million (2017: €301 million) and finance income: €34 million (2017: €12 million). Details of how non-GAAP measures are calculated are set out on pages 217 to 220.€1.9bn11.0xCO2 emissions increased primarily due to recent acquisitions in our cement and lime activities. For the portfolio of plants covered by our CO2 reduction commitment, a 23% decrease on 1990 levels was achieved and we are on-track for our 2020 target.What did we do?Ongoing programmes focused on reducing CO2 emissions, with a targeted reduction commitment in cement. Lower carbon products and Group-wide energy and resource efficiency programmes remain a focus.Focus for 201994%20171.120179%201794%201890%20161.120161.4201810%201820168%9.4x2016 10.9x201711.0x20189.7%201610.6%20179.6%201820.2%201617.5%20177.4%20182.320162.220171.920181.4kg/€ RevenueEnvironmentGreenhouse Gas Emissions1Scope 1 and 2 CO2 Emissions (kg/€ Revenue)A measure of addressing the challenges of climate change.Energy efficiency and carbon reduction are twin imperatives of CRH’s environmental management strategy.The percentage of female senior managers increased in 2018 and as at 27 February 2019, 38% of the Directors of CRH plc were female. In line with our focus on inclusion and diversity, we appointed a Chief Inclusion and Diversity Officer and established a Global Inclusion and Diversity Council. What did we do?At CRH, we continue to champion inclusion and diversity, integrating them into our business strategy. We recognise the real impact of an inclusive and diverse workforce and have a clear roadmap for 2019 and beyond.Focus for 201994%20171.120179%201794%201890%20161.120161.4201810%201820168%9.4x2016 10.9x201711.0x20189.7%201610.6%20179.6%201820.2%201617.5%20177.4%20182.320162.220171.9201810%A measure of an inclusive workplace.Recruitment, selection and promotion decisions are merit-based and in line with the principles of reaching a wider talent pool, equal opportunity and non-discrimination. People% Females in Senior Management2CRH uses a number of financial and non-financial Key Performance Indicators (KPIs) to measure performance across our business. KPIs are a consistent feature of how we operate and fundamental to how we track progress towards achieving our strategic objectives.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexStrategy Review1617CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018We believe that being sustainable and socially responsible are fundamental to being the leading building materials business in the world. We are working to positively contribute to some of the key sustainable development challenges facing society, addressing non-financial business imperatives such as protecting the environment, developing people and community, respecting human rights and operating with integrity. Sustainability creates value for us and our stakeholders through delivery of products that enhance the sustainability of structures.Our ViewWith our global presence and industry leadership positions, we are very aware of our role in the many communities in which we operate. Our business activities provide materials that are needed to fulfil the basic human need of shelter, together with the infrastructure that is needed for our societies to thrive. We believe that meeting these needs in a manner that respects sustainability principles and addresses potentially negative impacts will create long-term value for all our stakeholders, including: investors, customers, employees, partners, suppliers and local communities. Our ApproachSustainability principles are embedded in our business strategy. At Group level, we set policies in key sustainability areas, including our Health & Safety Policy, our Social Policy and our Environmental Policy as well as our Code of Business Conduct (CoBC). These are all available on the CRH website (www.crh.com). The implementation of these is the responsibility of management. We have a dedicated Safety, Environment & Social Responsibility (SESR) Board Committee. Policy implementation, effectiveness and performance against our medium-term objectives, as well as long-term ambitions which are monitored and reviewed regularly. Acquired businesses are efficiently integrated into our processes following pre-acquisition due diligence.We take a risk-based, collaborative and strategic approach to responding to global trends in areas including demographic change, urbanisation, climate change, resource scarcity and technological developments. Risks related to sustainability, including those related to climate change, are recognised in our ERM Framework, described on pages 22 and 23, and details of sustainability risks are included on page 106. Our non-financial policies and due diligence processes are well established and we made no material changes to these in 2018.Our key sustainability priorities are identified through our materiality assessment processes, which include annual sustainability reporting by our businesses to Group, review of issues raised through ERM processes and regular formal materiality assessment reviews.We are committed to reporting on the breadth of our sustainability performance and to publishing performance indicators, ambitions and outcomes in key sustainability areas. We publish an annual independently-assured Sustainability Report, which is prepared in line with the Global Reporting Initiative Standards and available on www.crh.com. It is anticipated that the 2018 Sustainability Report will be published in March 2019.SustainabilityCreating long-term valuePublished in 2015, the United Nations’ (UN) Sustainable Development Goals (SDGs) are a call to action for a better and more sustainable future. We have assessed the detailed targets behind each of the 17 SDGs, and identified the four that most closely align to where we, as a building materials company, can have the most impact and influence. 1. Resource-efficient raw materials We strive to responsibly operate our quarries and pits and where possible, we use alternative raw materials, recycling material that would otherwise be disposed of as waste. 32 million tonnes of alternative raw materials recycled or re-used in new products in 20182017: 30 million tonnes4. Sustainable distribution Many of our products are produced locally, minimising the need for transport. We strive to optimise transport logistics across our business and use rail, boat and barge transport. c. 20km average delivery distance for readymixed concrete2. Innovative product designProducts designed for enhanced sustainability attributes include lower carbon cement, warm-mix asphalt, porous or permeable asphalt and concrete, as well as building envelope solutions such as high-performance glass and glazing products that incorporate innovative thermal break technologies for superior thermal performance, while providing essential daylight and ventilation for the building.42% of product revenue is from products with enhanced sustainability attributes2017: 42%3. Manufacturing for sustainability In our manufacturing processes, resource and energy efficiency are key considerations. Focus areas, depending on the product, include alternative fuels, plant upgrades, process optimisation and automation.2.1 million tonnes of alternative fuels used in cement plants2017: 2.0 million tonnes5. Product use for more sustainable buildings and infrastructureConcrete is a durable, low-maintenance product that is resilient to severe weather events such as storm and flood activity. Concrete, as well as many of our building envelope products, also contributes to improvements in the energy efficiency of buildings.24% of relevant product revenue is from products that can be used in certified sustainable buildings2017: 26%6. Regenerative processes at product end-of-life At end-of-life, concrete and asphalt can be fully recycled. During the life time of a building and with proper recycling practices, concrete also chemically reabsorbs CO2 from the air.Up to 25% of CO2 released in cement production can be reabsorbed during concrete’s life cycle Integrating sustainability across the whole product life cycleOur Sustainable Value Creation ModelOur aim is to create sustainable value by providing industry-leading products and solutions to satisfy the construction needs of our customers around the world. By considering the full life cycle of our products and innovating to drive more sustainable outcomes in the built environment, we aim to have a more positive impact on wider society and the environment while delivering profitable growth. As well as being beneficial for our business, these ambitions also have an outward focus. In collaboration with our stakeholders, our actions contribute to the delivery of key initiatives such as the United Nations’ (UN) Sustainable Development Goals (SDGs).CRH is ranked among sector leaders by leading Environmental, Social and Governance (ESG) rating agencies. We are a constituent member of indices including the FTSE4Good Index, the STOXX® Global ESG Leaders Indices and the Dow Jones Sustainability Indices as well as a long-term participant in the Carbon Disclosure Project (CDP). In addition, many of our Group companies have achieved accolades for excellence in sustainability achievements. Ergon, part of CRH’s Europe Heavyside Division, supplied precast concrete products to ‘The One’ complex in the heart of Brussels’ European district. The project, which was completed in December 2018, is a mixed development of offices, apartments and retail space. The office unit is a passive building, with very low energy consumption achieved through high-performance insulation in the skin of the building. This is also helped by its compactness and airtightness, and the optimisation of heating and cooling techniques inside the building. OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexStrategy Review1819CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Sustainability - continuedProgressing our key priority areas94% of locations accident-freeThere are multiple safety risks and hazards associated with our industry – from kilns operating at over 1,400°C, to working at height and operating heavy machinery. Because of this, putting safety first is a core CRH value, and we view embedding a culture of safety as a pre-requisite to addressing safety risks and eliminating accidents.We demand the highest safety standards in everything we do and promote safety excellence across our industry. Our global network of safety officers works closely with our businesses in implementing policy and best practice across all our operations. The health and safety of our employees and contractors is paramount.In 2018, 94% of active locations were accident free. The accident frequency rate (number of accidents per million man-hours) has reduced by an average of 10% per annum over the last decade. We are, however, deeply saddened to report three employee fatalities and three contractor fatalities during 2018. Of these, two were road traffic accidents. We extend our sincere sympathies to each of their families. All fatalities are independently investigated and we have redoubled our focus on our CRH Life Saving Rules, which is a cornerstone of our safety strategy. We continued to invest in safety initiatives and in the past five years over €190 million has been invested in this area. 2018 has seen a further focus on areas including contractor management and safety culture, as well as electrical and machine safety.Creating solutions for our customers42% of product revenue comes from products with enhanced sustainability attributesEvery day, in 32 countries worldwide, our employees deliver solutions for our customers’ construction projects in the residential, non-residential and infrastructure sectors. We work with our customers to create products that deliver specific sustainability and performance goals as well as solve problems through innovative design. We are also interested in the development of climate-friendly building materials such as lower carbon cements and recycled aggregates. As well as reducing CO2 emissions, this improves resource efficiency and minimises construction waste. For example, recycled asphalt pavement and shingles provided 22% of raw materials requirements in our US asphalt business. In addition, concrete and building envelope products can also contribute to a more energy-efficient, resilient and sustainable built environment. Overall, 42% of our product revenue comes from products with enhanced sustainability attributes, such as products that incorporate recycled material or that have a lower carbon footprint. Additionally, 24% of revenue from products that can be used directly in structures (such as concrete and building envelope products) comes from products that can be used in structures certified to sustainability standards such as LEEDTM and BREEAM®.Participants in the graduate training programme at Podilsky Cement Plant, Ukraine, part of CRH’s Europe Heavyside Division. Through its graduate programme, Podilsky Cement teams up with tomorrow’s brightest creative talent to make products that create opportunities for everyone.Developing and empowering our people90,000 employeesWith operations in 32 countries, CRH is not only multinational but also multicultural. Our ambition is to be the employer of choice in our industry, recognising that people are critical to sustaining competitive advantage and long-term success. In 2018 we further increased our focus on inclusion and diversity, aiming ultimately to attract and develop a workforce that is as diverse as our customers and our communities. We believe that employing people from a broad range of ethnicities, backgrounds, experiences and perspectives creates an inclusive workforce, which provides us with a competitive advantage. We are therefore implementing a pragmatic programme aimed at increasing social diversity, not only of employees, but also of the pool of talent available to take up opportunities in CRH. In relation to gender diversity, we recognise that the building materials industry traditionally attracts more male than female employees. In 2018, 16% of employees overall were female, a decrease on the previous year due to the divestment of our DIY businesses in the Netherlands and Belgium. Of operational staff, 8% are female, of clerical and administrative staff, 43% are female, while within senior management, 10% are female, a positive increase from 9% in 2017 and a recognition of our ambition to have greater gender representation at senior levels of our organisation in future years. As of 27 February 2019, 38% of the Directors of CRH plc were female.We respect the right of employees to freedom of association and in 2018, c. 19% of our employees were represented by trade unions. We endeavour to ensure equal access to rewarding career and personal development experiences for employees worldwide. In 2018, we continued to place an emphasis on training and skills learning, as well as developing and recruiting talented leaders to guide our evolving and growing company. Collaborating and engaging for sustainabilityCRH collaborates with the Wildlife Habitat Council to enhance biodiversity at many of its locations across North America. This insect hotel was constructed by employees and their children on the wildlife habitat site of Stoneco Ottawa Lake Quarry, Michigan. The Quarry achieved Wildlife Habitat Council certification in 2018.1,300+ stakeholder eventsWe engage with many different stakeholders around the world, serving as a materials and products provider to millions of projects, an employer to thousands, operating as local businesses rooted in our surrounding communities. As well as carrying out our responsibilities as a leading business, collaboration and engagement with stakeholders helps us in our ambition to contribute to addressing global sustainability challenges. For example, we are a founding member of the Global Cement and Concrete Association (GCCA), an organisation dedicated to developing the industry’s role in sustainable construction. It is our practice to take an inclusive, collaborative and responsive approach to developing stakeholder relationships and in 2018, our Group companies hosted over 1,300 stakeholder events. As a responsible corporate citizen, it is our policy to participate fully in the communities in which we operate and to support charities and local community projects through donations and other assistance, actively encouraging employee participation. Recent projects included providing education, employment and shelter, as well as supporting conservation and cultural programmes.Together, our businesses purchase c. €17 billion of goods and services every year. We have a Supplier Code of Conduct. We assess risks and opportunities at the commodity level and aim to drive improvement actions at the point where we have most influence with our suppliers. We endorse human and labour rights and support the principles set out in the articles of the UN’s Universal Declaration of Human Rights and the International Labour Organisation’s Core Labour Principles, insofar as they apply to our businesses. We continue to evolve our processes and policies in line with changing best practices and publish an annual ‘Commitment to Human Rights: Modern Slavery Statement of CRH plc’ on www.crh.com.Tarmac, part of CRH’s Europe Heavyside Division, works closely with its customers to understand their needs and deliver outstanding levels of service. New technology and innovation enables Tarmac to adapt and be flexible in its approach to delivering for its customers.Embedding a culture of safetySafe working practices and personal fall protection reduce safety risks for these employees of Gulf Coast, part of CRH’s Americas Materials Division, working on the Port of Beaumont overpass project in Texas. OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexStrategy Review2021CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Progressing our key priority areasSustainability - continuedCRH Canada’s biodiversity initiatives are focused on creating habitats that complement adjacent lands and enhance opportunities for attracting new native species, such as this Red Fox, pictured at the Dufferin Aggregates Flamboro Quarry in Ontario.Protecting the environment23% reduction in specific cement CO2With ever increasing demands on world resources and mounting pressures on the global climate, we believe that it is important that we continue to focus on achieving continuous improvement in standards of environmental management and control, addressing our environmental risks and reducing potential impacts. This ensures we play our part in protecting the environment. We work with stakeholders including customers and the wider building materials industry to promote emissions reduction and resource efficiency. One particular focus area is the circular economy, also known as the closed-loop economy, where products and resources are re-used where appropriate as part of new product life-cycles. For example, by incorporating alternative raw materials into our products, we reduced our reliance on virgin raw materials by 32 million tonnes in 2018. We also encourage biodiversity and 98% of our extractive locations have restoration plans.Our climate strategy, which is integrated with our business strategy, seeks to provide more building solutions that reduce emissions and promote climate resilience, recognising the long-term durability and carbon benefits of concrete construction during the lifetime of buildings. We have governance structures that provide oversight, assessment and management of risks and opportunities related to climate. We focus on reducing our own emissions and hence the carbon footprint of our products. Having achieved our initial CO2 reduction commitment three years ahead of target in 2012, we are on-track for our 2020 CO2 reduction commitment. This is for a 25% reduction in specific net CO2 emissions on 1990 levels, and covers the portfolio of cement plants owned by CRH in 2013 when the target was set. We are now looking at setting a post 2020 target in line with the Paris Agreement on Climate Change and our commitment to a lower carbon future. We are also considering the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). Further key performance indicators in this area are included on page 14. CRH’s CoBC training programme, which includes an e-learning component, has at its core the aim of ensuring that everyone in CRH understands that there is never a good business reason to do the wrong thing.Operating with integrityc. 38,500 employees trained in our Code of Business Conduct in 2018We view integrity and good governance as fundamental to long-term business success and we are committed to meeting the highest standards of business conduct and corporate governance.We embrace a ‘Speak-up’ culture where employees are encouraged to inform us immediately of any actual or suspected unethical behaviour or a possible breach of our CoBC. Our comprehensive CoBC is underpinned by our Anti-Bribery Policy, which explicitly states that CRH does not tolerate any form of bribery, prohibits facilitation payments and requires that political contributions must not be made to obtain an unfair advantage in business transactions. Further guidance is provided within the Anti-Bribery Policy on what is acceptable in relation to gifts, hospitality and promotional expenditure, political contributions, and charitable and community donations. The policy also outlines the due diligence required on business partners to ensure they share our commitment to ethical business standards. At year end, senior management complete an Annual Compliance Certification confirming that procedures at their business complied with both our CoBC and Anti-Bribery Policy.All new employees are provided with the CoBC and training is provided on a regular basis to relevant employees. Certain employees, determined according to the risk profile of their role, receive the Anti-Bribery Policy and undertake annual advanced compliance training (ACT) covering Anti-Bribery among other CRH policies. This training is delivered in a classroom setting every third year, with e-learning in the intervening years, and c. 14,000 employees completed ACT training during 2018.All CRH companies respect and comply with the laws regarding political contributions in the countries and regions in which they operate. In the US, CRH supports the rights of employees to participate in the political process through employee-funded Political Action Committees (PACs). CRH’s US operations provide administrative support (consistent with applicable laws) to their affiliated federal and state PACs in the US. AVALON NORTH COMPLEXOldcastle BuildingEnvelope®, part of CRH’s Americas Products Division, manufactured and supplied a custom engineered curtain wall, windows and storefronts for the Avalon North Station apartment complex, one of the tallest buildings in Boston, Massachusetts, US. The Avalon North Station complex has achieved Leadership in Energy and Environmental Design (LEED®) silver certification.By considering the full life cycle of our products and innovating to drive more sustainable outcomes in the built environment, we aim to have a more positive impact on wider society and the environment while delivering profitable growth. “”OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexStrategy Review2223CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018ERM FrameworkERM in CRH is a forward-looking, strategy-centric approach to managing the risks inherent in decision-making.The ERM framework implemented across the Group ensures a standardised, global system of identification, management and reporting of risks. It is developed in line with the Committee of Sponsoring Organisations of the Treadway Commission (COSO) guidelines and sets out a structured and consistent approach to risk throughout all our operations.The common language and overarching nature of the ERM framework supports senior management when considering risks in strategic planning processes, thereby refining the strategy chosen, ensuring resilience and responsiveness to risks associated with the execution of strategy and conducting our business in a sustainable manner.Integrating risk with related strategic and performance functions and processes within CRH has helped clarify the linkages and further highlight the importance of ERM as a key component in strategic planning and performance management. Ongoing development of the ERM framework is informed on a continuous basis through bottom-up processes undertaken across the Group. These activities support risk information originating at operating company level, to feed through to higher levels of the organisation. Roles and ResponsibilitiesThe ERM framework facilitates the execution of executive responsibilities, by providing high quality risk information which offers clear visibility and enables informed decision-making. Final output of the reporting exercise is presented to the Audit Committee and the Board for approval.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.The Group Enterprise Risk Committee provides governance, leadership and vision, to risk management initiatives throughout the Group.The Audit Committee reviews the list of principal risks and uncertainties and the risk factors disclosed on pages 104 to 109 and 225 to 233 respectively.Engaging and EmbeddingTo reflect the Group’s diverse risk landscape and thoroughly understand potential risks that may materialise over the coming years, the Group Risk function facilitates risk workshops, supplemented by meetings, seminars and regional risk champion forums.Risk workshops are not only conducted at operating company level, but also for other strategic areas (cluster, product, function) and at Group level. The Group’s Enterprise Risk Management (ERM) framework is fully embedded into our business processes. It is not a static framework, but a dynamic process that the Group utilises to ensure the barriers to the realisation of strategy are identified, assessed and managed. Managing these barriers assists in realising our objectives of disciplined and focused growth, on a continuous basis, maximising performance and returns, and conducting our business in a sustainable manner. Such an environment allows for effective risk taking to generate sustainable shareholder value for CRH. Risk GovernanceCreating value through risk managementSustainable Value Creation Through ERM STRATEGY AGENDAPERFORMANCE AGENDAINFLUENCING& EMPOWERINGLEADERSHIPPRIORITIESSTRATEGICPLANNINGRISKMANAGEMENTRISKINTEGRATIONRISKREPORTINGGROUPLEADERSHIPOPERATINGCOMPANIESVALUE CREATIONRisk WorkshopsOver 30 risk workshops were held, bringing the total number to c. 100 in three years.These business-led, discussion-based workshops create an environment to garner comprehensive risk insights to ensure appropriate execution of risk management and that opportunities are identified and acted upon. Senior Operating Leadership EngagementOver 300 senior leaders participated in workshops, bringing the total number to over 900 in three years.Management crystalises their view of their unique internal and external risk landscapes, informing the Group’s perspective, and ensuring that risks are managed within defined risk appetites in the businesses. Risk Champion ForumsCreation and hosting of forums involving 31 business leaders as part of our Risk Champion network.Risk Champion forums act as a medium to share best practice risk management within our operating companies and create opportunities for sharing knowledge and competencies within the network and the wider Group. Senior Group Leadership SurveyCRH conducted a number of face-to-face interviews and surveys among its senior leaders, with the activity being completed by 36 participants.The feedback and recommendations provided by senior leaders were integrated into the ERM framework and helped to improve ERM within our operations and Group.In order to continue to develop the ERM framework and integrate it into our operations, a number of activities were carried out during 2018:2018 HIGHLIGHTS303003136New acquisitions are generally brought onto the ERM framework within 12 months of acquisition, using a workshop as a foundation stone.Evolution and IntegrationGiven the dynamic nature of risk and the evolutionary nature of ERM, the framework operates as a business process at all levels of the Group. Integration with strategy and performance agendas, in addition to ongoing management processes, ensures a robust and effective risk environment assisting in maximising the performance of our businesses.All uncertainties that present themselves as downside risks are appropriately managed in line with the Group risk appetite and those which present themselves as opportunities are sufficiently explored and captured, where possible.Risk Champion NetworkThe risk champion network established within CRH ensures that an advocate exists within each entity at every level of the Group, promoting ownership and acting as a focal point for sharing knowledge and best practices.To further the efficacy of the network, Group Risk organises various seminars and forums that allow for further training and development of members. During these sessions individuals discuss management practices of prominent risks that occur in certain geographies, product groups or across the wider Group.Reporting and Documentation Risk information gathered from across the Group is aggregated and further reviewed and enriched by cluster, division and platform level management.Additional strategic and Group-related risks are then added by senior executives to ensure the risks highlighted on pages 104 to 109 and 225 to 233 of this report are reflective of the potential barriers to the realisation of our business strategy. These risks form the basis of Board and Audit Committee communications and discussions. The ERM framework provides ongoing assurance to the Board that processes and behaviours are embedded in CRH that ensure the most important risks facing the business are routinely and consistently identified, assessed and effectively managed.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, assisting with our objectives of disciplined and focused growth. The Board approves the Risk Appetite and Tolerance Framework on an annual basis in line with best corporate governance practice.Viability Statement Our Viability Statement, which does not form part of the Annual Report and Form 20-F, as filed with the SEC, has been prepared in accordance with the UK Corporate Governance Code 2016 and is set out on page 100 of the Directors’ Report.123OperatingCompanies/BusinessesRisk OwnersGroup OversightFunctionsReview and ChallengeGroupInternal AuditIndependent AssuranceCRH Divisions Executive ManagementExecutive ManagementProvidesindependentassuranceProvidesindependentassuranceCRH Board/Audit CommitteeFirst Line of DefenceOperating 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 DefenceCRH has various Group oversight functions such as Group Sustainability, Group Regulatory, Compliance & 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 DefenceGroup Internal Audit provides independent assurance. It reports on the effectiveness of the risk management and internal control frameworks to management and the Audit Committee on a regular basis.Our Three Lines of Defence CRH RISK MANAGEMENT FRAMEWORK OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance2425CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 201824Business Overview 26Finance Director’s Review 27Segmental Reviews 32BUSINESS PERFORMANCECoral Industries, acquired in 2018 by Oldcastle BuildingEnvelope®, part of CRH’s Americas Products Division, provided materials to this 27,000-square-foot office building in Richmond, Virginia. Coral’s architectural products were used to create the elegant, all-glass clerestory atrium, with its curtain wall systems in both clear and bronze anodised finishes used throughout the exterior applications. Coral also provided 1/2" glass stair railing in the interior atrium along with medium stile entrances and storefront on the interior office fronts. OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance2627CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Business OverviewThe percentage of Group revenue and operating profit for each of the reporting segments for 2018, 2017 and 2016 is as follows:The overall trading environment for the Group in 2018 was positive with good demand and continued favourable market fundamentals in the Americas coupled with positive underlying momentum in Europe; both experienced against a backdrop of energy-related input cost inflation and significant weather disruption throughout the year. The Group continued to focus on cash generation and appropriate deployment of capital. Operating cash flow for the year amounted to €1.9 billion (2017: €2.2 billion) impacted by the tax paid on the divestment of Americas Distribution. Year-end net debt finished under €7.0 billion (2017: €5.8 billion) after acquisition spend net of disposal proceeds of €0.6 billion (2017: €1.7 billion) and total distributions to shareholders of €1.3 billion (2017: €0.5 billion).Key Components of 2018 PerformanceThe overall sales movement in the year was a combination of the performance of each of the individual segments as noted below.Despite harsh winter weather conditions experienced in the early months and record levels of rainfall during the year, our Americas operations benefited from a positive macroeconomic backdrop and good underlying demand in the US. An organic sales2 increase of 4% in our Americas Materials Division was supported by continued growth across all sectors in our markets. Americas Products saw growth along the West Coast and in parts of the South, due to good residential and non-residential construction, partly offset by softness in some Northern US regions. Overall sales improved by 2% compared to 2017.In Europe, total sales were up 4% compared with 2017 and organic sales were 2% ahead due to ongoing improvement in key markets. Performance for Europe Heavyside was positive, particularly for our operations in Ireland, the Benelux, Denmark and Poland with more challenging trading conditions in the UK, due to continued Brexit uncertainty during the year. With sales 5% ahead of 2017, it was a year of progress for Europe Lightside boosted by acquisitions in the Network Access Products and Construction Accessories platforms. Europe Distribution had a mixed performance with ongoing positive momentum in the Netherlands, particularly in residential construction, partly offset by first half challenges in Switzerland and Belgium.In Asia, against a backdrop of strong domestic demand and accelerating government infrastructure spending, the Philippine economy continued to perform amidst inflationary pressures. However, the resultant volume and price progress was more than offset by cost increases, particularly energy.EBITDA (as defined)* for the year amounted to €3.4 billion, a 7% increase on 2017 (2017: €3.1 billion) as the benefit from acquisitions and underlying growth was partly offset by energy-related input cost inflation. Reported profit after tax was €0.6 billion ahead of 2017 at €2.5 billion, (2017: €1.9 billion), with this year’s profit augmented by the profit on disposal of our Americas Distribution business partly offset by two non-recurring one-off items in 2017; a past service credit of €81 million due to changes in a Swiss pension scheme and a €440 million reduction in the Group’s net deferred tax liabilities due to changes in tax legislation in the US.Finance Director’s Review 20181* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.1. See cautionary statement regarding forward-looking statements on page 99.2. Details of how non-GAAP measures are calculated are set out on pages 217 to 220.The euro strengthened against most major currencies during 2018 resulting in the average euro/US Dollar rate weakening from 1.1297 in 2017 to 1.1810 in 2018 and the Pound Sterling weakening from an average 0.8767 in 2017 to 0.8847 in 2018. Overall currency movements resulted in an unfavourable net foreign currency translation impact on our results as shown on the table on page 28. The average and year-end 2018 exchange rates of the major currencies impacting on the Group are set out on page 138.201820172016€2.2bn€2.1bn€1.9bnOperating ProfitSenan Murphy, Finance Director2018 was a year of record profit delivery, with continued margin improvement amid weather disruption and inflationary cost environment.“”Revenue 20186%28%14%33%17%2%Europe HeavysideAsiaEurope LightsideAmericas MaterialsAmericas ProductsEurope Distribution20176%27%16%32%17%2%Europe HeavysideAsiaEurope LightsideAmericas MaterialsAmericas ProductsEurope Distribution20166%28%16%31%17%2%Europe HeavysideAsiaEurope LightsideAmericas MaterialsAmericas ProductsEurope DistributionOperating Profit20185%23%5%47%21%(1%)Europe HeavysideAsiaEurope LightsideAmericas MaterialsAmericas ProductsEurope Distribution20175%22%10%41%21%1%Europe HeavysideAsiaEurope LightsideAmericas MaterialsAmericas ProductsEurope Distribution4%21%43%20%7%5%2016Europe HeavysideAsiaEurope LightsideAmericas MaterialsAmericas ProductsEurope DistributionOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance2829CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Key Components of 2018 Performance€ millionSales revenueEBITDA (as defined)*Operating profit (Loss)/profit on disposalsFinance costs (net)Assoc. and JV PAT (i)Pre-tax profit 201725,2203,1462,09556(349)651,867Exchange effects(682)(100)(68)(2)9(2)(63)2017 at 2018 rates24,5383,0462,02754(340)631,804Incremental impact in 2018 of: - 2017/2018 acquisitions1,855357226-(57)-169 - 2017/2018 divestments(348)(36)(26)(72)2-(96) - Swiss pension past service credit (ii)-(81)(81)---(81) - Early bond redemption----17-17 - Organic 7457931(6)27(3)49201826,7903,3652,177(24)(351)601,862% Total change6%7%4%-% Organic change3%3%2%3%(i) CRH’s share of after-tax profits of joint ventures and associated undertakings.(ii) 2018 includes the impact of the non-recurrence of a one-off past service credit of €81 million in 2017 due to Swiss pension plan amendments.Liquidity and Capital Resources- 2018 compared with 2017The comments that follow refer to the major components of the Group’s cash flows for 2018 and 2017 as shown in the Consolidated Statement of Cash Flows on page 127.The Group maintained its focus on cash management in 2018. Operating cash flow in 2018 was €1.9 billion (2017: €2.2 billion) which included cash outflows of €469 million related to the Americas Distribution discontinued operation, primarily the tax paid on the profit on disposal. Net working capital outflow for the year of €463 million (2017: €209 million outflow) reflected trends in overall sales, seasonal weather patterns and the impact of acquisitions while working capital of €2.5 billion at year end (2017: €1.8 billion) represented 9.4% of sales (2017: 7.2%). CRH believes that its current working capital is sufficient for the Group’s present requirements.Focused spending on property, plant and equipment in markets and businesses with increased demand backdrop and efficiency requirements, resulted in higher cash outflows Finance Director’s Review 2018 - continued* 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.of €1.1 billion (2017: €1.0 billion), with spend in 2018 representing 105% of depreciation (2017: 104%).During the year the Group spent €3.6 billion on 46 transactions (2017: €1.9 billion) which was partly financed by divestment and disposal proceeds of €3.0 billion (net of cash disposed and deferred proceeds) (2017: €222 million).On 25 April 2018, the Group announced its intention to repurchase ordinary shares of up to €1.0 billion over the forthcoming 12 months. Between 2 May and 31 December 2018, 27.9 million ordinary shares were repurchased on the London Stock Exchange (LSE) and Euronext Dublin for a total of €789 million, at an average price of €28.24 per share. The Group remains committed to the programme and it is expected that it will complete over the timeframe indicated. This buyback, together with cash dividend payments of €533 million (2017: €477 million) reflect the Group’s continued focus on returns to shareholders. Net proceeds from share issues in 2018 was €11 million (2017: €42 million).Year-end interest-bearing loans and borrowings increased by €1.3 billion to €9.3 billion (2017: €8.0 billion). At year end, the weaker euro against the US Dollar had a negative translation impact on net debt.Reflecting all these movements, net debt of €7.0 billion at 31 December 2018 was €1.2 billion higher than year-end 2017 (€5.8 billion). The Group is in a good financial position. It is well funded and Net Interest Cover (EBITDA (as defined)*/net debt related interest costs) is 11.0x (2017: 10.9x). As set out in note 25 to the Consolidated Financial Statements the Group is significantly in excess of the minimum requirements of its covenant agreements.In March 2018, the Group successfully issued a total of US$1.5 billion dollar bonds, comprised of a US$0.9 billion 10-year bond at a coupon rate of 3.95% and a US$0.6 billion 30-year bond at a coupon rate of 4.5%. Concurrently, the Group redeemed the US$0.29 billion bond due in July 2018 at a make-whole price.2018In 2018, the Group spent a total of c. €3.6 billion (including deferred and contingent consideration in respect of prior year acquisitions) on 46 acquisition/investment transactions. On the divestment front, the Group realised business and asset disposal proceeds of c. €3.0 billion, which demonstrates CRH’s commitment to active portfolio management as part of our strategy to deliver improved margins and returns. Our strategic review of the European Distribution business is ongoing.The most significant acquisition in 2018 was the June acquisition of Ash Grove, which gives CRH a market leadership position in the North America cement market, allowing for greater vertical integration with our existing aggregates, asphalt and readymixed concrete businesses.In addition to the acquisition of Ash Grove, our Americas Materials Division completed 23 bolt-on acquisitions and one investment throughout the US and Canada for consideration of c. €370 million. The Americas Products Division also completed six bolt-on acquisitions in 2018 at a cost of c. €160 million.Development Review The 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 ended 2018 with total liquidity of €5.9 billion comprising €2.3 billion of cash and cash equivalents on hand and almost €3.6 billion of undrawn committed facilities (which are available until 2023). At year end, the cash balances were enough to meet all maturing debt obligations for the next 3.1 years and the weighted average maturity of the remaining term debt was 11.5 years.CRH also has a US$1.5 billion US commercial paper programme and a €1.5 billion Euro commercial paper programme. The purpose of these programmes is to provide short-term liquidity at attractive terms. There was no commercial paper outstanding under either of these programmes at 31 December 2018.Contractual obligations and Off-Balance Sheet arrangements are disclosed on page 221 of this Annual Report and Form 20-F.Segmental ReviewsThe sections on pages 32 to 51 outline the scale of CRH’s operations in 2018, and provide a more detailed review of performance in each of CRH’s reporting segments.In Europe, 14 acquisitions and one investment with a total spend of c. €120 million were completed. Our Europe Heavyside business completed ten acquisitions across the UK, Ireland and France, and one investment in Poland. Our Europe Lightside Division completed an acquisition in both the UK and Australia, while our Europe Distribution Division completed an acquisition in both Belgium and Germany, complementing our existing operations in these countries.The majority of divestment proceeds relate to the divestment of our Americas Distribution business in January 2018 for a final agreed consideration of c. €2.4 billion. In July, the Group completed the divestment of our DIY business in the Netherlands and Belgium, together with certain related property assets, for total consideration of c. €0.5 billion. A further 18 smaller business divestments were completed across all segments demonstrating our continued focus on portfolio management. In addition to these business divestments, the Group realised proceeds of c. €0.1 billion from the disposal of surplus property, plant and equipment.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance3031CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 20182017 was a year of growth for CRH with increased underlying demand in the Americas, and positive momentum in Europe, while very competitive market conditions remained in Asia. With a constant focus on performance in all our businesses, coupled with our vertically integrated business model for heavyside materials, good operational leverage underpinned improved margins and returns in our American and European Divisions. The Group also maintained a focus on cash generation and appropriate deployment of capital as operating cash flow for 2017 amounted to €2.2 billion (2016: €2.3 billion) and year-end 2017 net debt increased by €0.5 billion to €5.8 billion (2016: €5.3 billion) despite acquisition spend net of disposal proceeds increasing to €1.7 billion (2016: net inflow €0.1 billion).Key Components of 2017 PerformanceThe overall sales movement in 2017 was a combination of the performance of each of the individual segments as noted below.Despite hurricane activity and record levels of rainfall during 2017, our Americas operations benefited from stable market fundamentals in the US and good underlying demand. An organic sales increase of 3% in our Americas Materials Division was supported by growth in the residential and non-residential sectors, while infrastructure remained relatively stable in our markets. In Americas Products, sales were broadly in line with 2016 as good growth along the West Coast and parts of the South and Southeast were partly offset by more modest trading in Canada and parts of the Northern US.In Europe, total sales were up 1% compared with 2016 and organic sales were 2% ahead due to continued recovery in key markets. Europe Heavyside’s outturn was positive, with a broad-based recovery in Ireland, France, Poland and Finland more than offsetting more subdued activity in Switzerland and the UK. Europe Lightside experienced a year of further progress as good performances in a number of our main markets resulted in sales finishing 3% ahead of 2016. The backdrop at Europe Distribution was stable as a strong contribution from the Netherlands together with solid demand in Belgium and Germany was partly offset by challenges in Switzerland.In Asia, economic growth and market fundamentals remained robust in the Philippines in 2017, with both residential and non-residential demand stable, though infrastructure investment was slower than expected and pricing remained very competitive. In India, a favourable economic backdrop drove demand, while reduced construction activity in China had a negative impact on volumes but this was more than offset by stronger pricing.Americas Distribution, which was classified as discontinued operations for reporting purposes, benefited from good underlying demand in 2017, particularly for Exterior Products.EBITDA (as defined)* for 2017 amounted to €3.1 billion, a 6% increase on 2016 (2016: €3.0 billion) and reported profit after tax1 was €1.9 billion (2016: €1.3 billion).The euro strengthened against most major currencies during 2017, particularly towards the end of the year resulting in the average euro/Pound Sterling rate weakening from 0.8195 in 2016 to 0.8767 in 2017 and the US Dollar weakening from an average 1.1069 in 2016 to 1.1297 in 2017. Overall currency movements resulted in an unfavourable net foreign currency translation impact on our results as shown in the table below. The average and year-end 2017 exchange rates of the major currencies which impacted on the Group are set out on page 138.Key Components of 2017 Performance€ millionSales revenueEBITDA (as defined)*Operating profit Profit on disposalsFinance costs (net)Assoc. and JV PAT (i)Pre-tax profit 201624,7892,9801,90853(383)421,620Exchange effects(479)(74)(53)(1)61(47)2016 at 2017 rates24,3102,9061,85552(377) 431,573Incremental impact in 2017 of: - 2016/2017 acquisitions5966014- (8)-6 - 2016/2017 divestments(204)(21)(14)(3)1-(16) - LH Assets integration costs (ii) - 4545- 15-60 - Swiss pension past service credit (iii)-8181---81 - Early bond redemption----(18)-(18) - Organic 5187511473822181201725,2203,1462,09556(349)651,867% Total change2%6%10%15%% Organic change2%3%6%12%(i) CRH’s share of after-tax profits of joint ventures and associated undertakings.(ii) LH Assets integration costs of €45 million were incurred in 2016. In addition, following the related debt restructuring, finance costs reduced by €15 million in 2017.(iii) 2017 included a one-off past service credit of €81 million due to changes in the Group’s pension scheme in Switzerland.Finance Director’s Review 2017* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.1. Profit after tax is as reported in the Consolidated Income Statement on page 123.2017In 2017, the Group spent a total of €1.9 billion (including deferred and contingent consideration in respect of prior year acquisitions) on 34 acquisition/investment transactions. On the divestment front, the Group realised business and asset disposal proceeds of €0.2 billion.In the Americas, c. €1.3 billion was spent on 21 acquisitions and one investment. Our Materials Division completed the largest 2017 acquisition at the end of November with the acquisition of Suwannee American Cement together with certain other materials assets in Florida. The total assets acquired consisted of a 1 million tonne cement plant in North Central Florida, 18 readymixed concrete plants, an aggregates quarry, two block plants and nine gunite facilities. The Materials Division also completed 12 further bolt-on acquisitions, including two in Canada, adding c. 2.5 billion tonnes of additional aggregates reserves. The Products Division completed eight acquisitions and one investment in 2017 at a cost of c. €0.2 billion.In Europe, c. €0.6 billion was spent on ten acquisitions and two investments. This was split between eight acquisitions and one investment in Europe Heavyside and two acquisitions and one investment in Europe Distribution.The largest acquisition in Europe in 2017 was that of the Fels lime business which was acquired at the end of October 2017. Fels’ assets included significant high-quality limestone reserves and 11 production locations; nine in Germany and one in both the Czech Republic and Russia. Business divestments during 2017, all in Europe, generated net proceeds of c. €85 million. The remaining clay products businesses in Europe (Belgium, Germany, Netherlands and Poland) were divested and our Heavyside Division also sold its civil prefabricated concrete businesses in the Benelux, along with seven other small non-core businesses. In addition to these business divestments, the Group realised proceeds of c. €137 million from the disposal of surplus property, plant and equipment. Development Review The underlying results for 2017 were augmented by two one-off items; a past service credit of €81 million due to changes in a Swiss pension scheme and a €447 million reduction in the Group’s net deferred tax liabilities1 due to changes in tax legislation related to the enactment of the “Tax Cuts and Jobs Act” in the US during 2017.Liquidity and Capital Resources - 2017 compared with 2016The comments that follow refer to the major components of the Group’s cash flows for 2017 and 2016 as shown in the Consolidated Statement of Cash Flows on page 127.Throughout 2017 the Group remained focused on cash management. Operating cash flow decreased marginally to €2.2 billion (2016: €2.3 billion) with net working capital outflow for 2017 of €209 million (2016: €56 million inflow) which reflected trends in overall sales, seasonal weather patterns and the impact of acquisitions in the final quarter of 2017. Focused spending on property, plant and equipment in markets and businesses with increased demand backdrop and efficiency requirements, particularly in the Americas, resulted in higher cash outflows of €1.0 billion (2016: €853 million).During 2017 the Group spent €1.9 billion on 34 transactions (2016: €213 million) which was partly financed by divestment and disposal proceeds of €222 million (net of cash disposed and deferred proceeds) (2016: €283 million).Cash dividend payments of €477 million in 2017 (2016: €360 million) reflected the Group’s continued focus on returns to shareholders. Net proceeds of €42 million from share issues in 2017 were similar to 2016 (2016: €52 million).Year-end 2017 interest-bearing loans and borrowings increased by €0.2 billion to €8.0 billion (2016: €7.8 billion). At year end 2017, the stronger euro against both the US Dollar and Pound Sterling had a positive translation impact on net debt.1. Net deferred tax liabilities reduction of €447 million is stated on a continuing (€440 million) and discontinued (€7 million) basis.2016In 2016, the Group completed 21 bolt-on acquisitions and three investment transactions for a total spend of €213 million (including deferred and contingent consideration in respect of prior year acquisitions). In Europe, eight acquisitions and two investments with a total spend of c. €43 million were completed. Our Heavyside business acquired 11 readymixed concrete plants in the UK, three quarries in Ireland, an aggregates terminal in Belgium and entered into a sand & gravel joint venture in France, adding reserves of 11 million tonnes. Further investments were also made to buy out a minority position in Spain and add to an existing joint venture in Ireland. Our Lightside Division completed two acquisitions in the UK. The Distribution Division acquired a small builders merchant in Austria. In the Americas, c. €170 million was spent on 13 acquisitions and one investment. Our Materials Division completed eight bolt-on acquisitions and one investment in 2016. The principal acquisition was of a significant aggregates and asphalt operation in Utah. Seven further bolt-on acquisitions were completed. In total 93 million tonnes of permitted reserves were added during the year. The Products Division completed five acquisitions, the largest of which was of a Canadian exterior surfaces company which was a strong addition to the core hardscape business of our Architectural Products Group (APG). Three Infrastructure bolt-on operations were also acquired. Finally, a glass hardware company was added in Perth, Australia.On the divestment front, the Group completed 13 transactions and realised total business and asset disposal proceeds of €283 million in 2016. Business divestments during 2016 generated net proceeds of €123 million. In Europe, our Distribution Division disposed of a roofing products company in the Netherlands while the Heavyside business divested of operations in Poland, Switzerland and Romania. Two small joint venture holdings in France and Germany were also divested. The Americas Materials Division disposed of select aggregates and asphalt operations in Missouri, a small waterproofing business in Michigan and a readymixed concrete operation in Iowa and Minnesota. Certain aggregates assets in Oregon and Montana were also disposed in a cash neutral swap. Finally, our Americas Products Division disposed of a pavement products operation, certain Infrastructure operations in Canada and the assets of a burial vaults business. OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance3233CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 201832SEGMENTAL REVIEWSMaterials Overview 34 - Americas Materials 36 - Europe Heavyside 38 - Asia 40Products Overview 42 - Americas Products 44 - Europe Lightside 46Distribution Overview 48 - Europe Distribution 50Farrans, a division of Northstone, which is part of CRH’s Europe Heavyside Division, completed the design and construction of a new cable-stayed dual carriageway bridge over the River Wear in Sunderland, England, in August 2018. The project, known as the Northern Spire, was carried out in a joint-venture partnership between Farrans and Belgian steel construction specialist, Victor Buyck. The bridge is a three span cable-stayed bridge with a 105m-high A-frame pylon, which stands taller than London’s Big Ben. It has two lanes of traffic in both directions which are forecast to carry 27,000 vehicles per day, plus dedicated cycleways and footpaths along its full length. OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance3435CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018AGGREGATES Aggregates are naturally occurring mineral deposits such as granite, limestone and sandstone. Our businesses extract these deposits and process them for sale. They are supplied as a range of products for use in general construction and engineering projects as well as in a variety of additional CRH product lines including asphalt and readymixed concrete. For additional information on the Group’s mineral reserves, see page 223. LIME Lime is a versatile chemical product used in multiple industries. Our Europe based lime businesses produce and supply a wide range of specialist products for the agricultural, environmental, industrial and construction sectors. CRH is the second largest producer of lime in the European market and has operations in Ireland, the Czech Republic, Germany, Poland, Russia and the UK.CEMENT Cement is the primary binding agent in the production of concrete products for the construction industry. Primarily produced from limestone, cement products are most commonly mixed with sand, stone or other aggregates and water to form concrete. While typically produced for sale within each country, cement can also be traded internationally. Because cement manufacturing is an energy-intensive process, our businesses have established a range of initiatives to reduce our carbon footprint.Materials OverviewWhat we doOur materials businesses are founded in resource-backed cement and aggregates assets, which support the manufacture and supply of aggregates, lime, cement, concrete products and asphalt.These materials are used extensively in a wide range of construction applications from major public road and infrastructure projects, to the development or refurbishment of commercial buildings and private residential structures. Customers typically range from national, regional and local governments, to building CRH is a leading vertically integrated producer and supplier of heavyside building materials globally. We produce aggregates, lime, cement, concrete products, and asphalt in major markets across North America, Europe and Asia. CRH is the largest heavyside materials business in Europe and the largest producer of aggregates and asphalt in North America.2228281. Net Assets at 31 December 2018 comprise segment assets less segment liabilities as disclosed in note 2 to the Consolidated Financial Statements.2. Geography, sector exposure and end-use balance are based on sales.3. Throughout this document annualised volumes have been used which reflect the full-year impact of development activity during the year and may vary from actual volumes sold.ASPHALT Asphalt is primarily used in road surfacing and other transport infrastructure including airport runways. It consists of aggregates bound together with bitumen, a by-product of the oil industry. Customers are typically government and local authorities involved in the construction and maintenance of road networks. CRH uses recycled materials and innovative technologies that result in lower emissions. CRH is the number one asphalt producer in North America, and has leadership positions in the UK and Ireland.CONCRETE PRODUCTSEurope Heavyside manufactures concrete products such as floor and wall elements, beams and vaults, pavers and fillers. Raw materials include cement, crushed stone and sand and gravel, all of which are readily available locally. Concrete products are sold to both the public and private construction sectors. Competition comes mainly from other readymixed concrete and concrete products producers, as well as from a variety of smaller manufacturers in local economies.READYMIXED CONCRETE Readymixed concrete is a highly versatile building material comprised of aggregates bound together with cement and water. It is strong, customisable and durable, making it the world’s most popular building material. Our readymixed concrete is produced to customer specifications, mainly on-site at aggregates locations and is delivered in a timely manner from our extensive network in local markets.% of GroupOperating Loss-1%-14EBITDA (as defined)*1%25Net Assets15%1,2792%431Sales€ millionASIAPAVING & CONSTRUCTIONCRH is the leading supplier of product for road construction and repair/maintenance demand in North America. Annually, our crews complete approximately €3.8 billion in paving and construction projects.In Europe CRH has a number of paving and construction businesses in Ireland, Poland and the UK.50%35%ResidentialNon-ResidentialInfrastructure15%SECTOR EXPOSURE2END-USE2NewRMI10%90%100%Philippinescontractors and other construction product and service providers. In addition to leveraging the benefits of scale and best practice, our businesses are differentiated in their markets by a proven track record in serving the unique needs of local customers and successfully delivering for those customers.How we create valueOur portfolio of vertically integrated materials businesses build strong regional leadership positions underpinned in local markets. We place great emphasis on performance improvement initiatives across our businesses and seek to Sales% of GroupOperating Profit47%1,009EBITDA (as defined)*44%1,493Net Assets147%11,73533%8,951€ millionAMERICAS MATERIALS10%Distribution30%Non-Residential30%Infrastructure35%Tarmac UK40%Residential35%Europe West15%Europe North15%Europe East88%United States1%Brazil11%Canada26%Lightside Products64%Heavyside Materials10%Distribution30%Non-Residential30%Infrastructure35%Tarmac UK40%Residential35%Europe West15%Europe North15%Europe East88%United States1%Brazil11%Canada26%Lightside Products64%Heavyside Materials88% United States 35% Tarmac UK 15% Europe North15% Europe East1%Brazil11% Canada20%55%ResidentialNon-ResidentialInfrastructure25%SECTOR EXPOSURE2END-USE2NewRMI55%45%GEOGRAPHY2% of GroupOperating Profit23%501EBITDA (as defined)*27%911Net Assets126%6,44328%7,611Sales€ millionEUROPE HEAVYSIDE35%35%ResidentialNon-ResidentialInfrastructure30%SECTOR EXPOSURE2END-USE2NewRMI30%70%GEOGRAPHY2GEOGRAPHY2* 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.35% Europe WestAnnualised Sales Volumes3: Aggregates: 304.6m tonnes; Lime: 7.7m tonnes; Cement: 48.2m tonnes; Readymixed Concrete: 31.0m m3; Concrete Products: 6.4m tonnes; Asphalt: 57.3m tonnescreate value through optimisation of our asset base. Our deep market knowledge drives performance, while our extensive network allows us to leverage talent, synergies for procurement, cost and logistics management and drive both commercial and operational excellence.With a strong pipeline of opportunities across regions, our development strategy is focused on identifying and integrating bolt-on acquisitions for synergies, reserves and further vertical integration, in addition to opportunities in contiguous regions to extend and strengthen regional positions.How we structure our operations Our Americas Materials Division is organised across three countries (the US, Canada and Brazil) and employs approximately 27,300 people at over 1,450 locations. Our Europe Heavyside Division is organised across four operational clusters (Tarmac (UK), Europe North, Europe West and Europe East). Europe Heavyside employs approximately 25,900 people at close to 1,140 locations. Our operations in Asia comprise cement operations in the Philippines along with equity accounted investments in Northeast China and Southern India. Approximately 1,300 people are employed at 12 operating locations with a further 7,300 people in our equity accounted investments. As of 1 January 2019, Asia was combined with Europe Heavyside to form Europe Materials.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance3637CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018ResultsAnalysis of change€ million2016ExchangeAcquisitionsDivestmentsLH Costs1Organic2017% changeSales revenue7,598‐123+379‐80-+1967,9705%EBITDA (as defined)*1,204‐24+46‐5+7+421,2705%Operating profit818‐19+12‐2+7+428585%EBITDA (as defined)*/sales 15.8%15.9%Operating profit/sales10.8%10.8%1The LH integration costs refers to the businesses acquired from LafargeHolcim in 20152017 was a year of progress in Americas Materials, supported by economic growth across residential and non-residential sectors, while infrastructure remained stable in our markets. Despite record levels of rainfall during 2017 and hurricane activity experienced in Florida and Texas, both sales and operating profit increased 5%, as selling price increases were achieved across all products in North America.Aggregates had a strong finish to 2017 and together with the positive impact of acquisitions during 2017, total volumes were 7% ahead, while like-for-like volumes were flat. Average price increases of 6% on a like-for-like basis combined with efficient cost control resulted in margin expansion.Margin improvement was also experienced in our readymixed concrete operations as like-for-like volumes increased 4% while overall volumes were 3% ahead, impacted by 2016 divestments in our Central division. Both like-for-like and total average prices increased by 3%.Although like-for-like asphalt volumes increased 2% and 6% on an overall basis, asphalt margins were under pressure with like-for-like average price increases unable to offset higher input costs.With pockets of increased state infrastructure spending, like-for-like sales for paving and construction services increased 1% with overall sales 7% ahead. Construction margin improved slightly in 2017, despite the competitive bidding environment.Our cement business in North America saw total volumes 3% ahead in 2017 and marginal price increases, supported by stronger demand in the US. Against the backdrop of a favourable US price environment, Americas Materials optimised its terminal network and market penetration by repositioning more volumes to the US from Canada, where competitive market conditions remained, especially in Quebec.Americas Materials strengthened its position in existing and complementary markets throughout North America in 2017 and completed 13 acquisitions for a combined total of €1.1 billion. The principal acquisition, which was completed at the end of November 2017 and therefore had a limited contribution to 2017 trading, was Suwannee American Cement together with certain other materials assets; consisting of a 1 million tonne cement plant in Florida, 18 readymixed concrete plants, an aggregates quarry, two block plants and nine gunite facilities.United StatesTrading benefited from solid demand in the US and, despite some unfavourable weather, total volumes and prices increased across all products in 2017. Like-for-like sales saw a resulting 4% increase in 2017. Operating profit also increased though margin expansion in aggregates and readymixed concrete was partly offset by a decline in asphalt margins due to higher bitumen prices, a key component of asphalt mix.With significant precipitation as well as softer markets in Michigan and Connecticut in 2017, volumes were down across all products in the North division, although increased pricing and improved construction sales resulted in a like-for-like sales increase. Operating profit was impacted by increased input costs, and margin declined. Like-for-like South division sales and operating profit were ahead 7% and 14% respectively in 2017, despite the impact of hurricane Irma which caused downtime at several locations in Florida and Georgia. Improvements were mainly driven by increased construction activity and margin, as well as price increases across all products.Like-for-like Central division sales were down 3% in 2017 mainly due to unfavourable weather during the summer which continued into autumn, along with the impact of hurricane Harvey; however, with strong cost control and the benefit of operating efficiencies, overall operating profit improved over 2016. Overall demand was strong across the West division, with improved volumes across all product lines resulting in like-for-like sales up 11% compared with 2016. Operating profit was also well ahead in the division, with aggregates and readymixed concrete price increases taking hold and driving increased margin.CanadaThe overall Canadian economy expanded in 2017, led by robust gains in the core markets of Ontario, Quebec and Alberta. The pace of growth was largely fuelled by improvements in oil prices and spending by Canadian consumers. Despite the positive environment and increased volumes across all products, like-for-like sales were muted by regional variations in pricing and the performance within the construction business, which was impacted by adverse weather conditions and the non-recurrence of key projects in 2017.BrazilWeakness in the construction market continued during 2017 due to the unfavourable economic and political situation; however, in late 2017, lower interest rates and a reduction in inflation started to have a positive impact. While cement consumption was down 5% in 2017 in the Southeast region, CRH saw volume improvements through a focus on key customer segments; however, selling prices fell below 2016 levels.Operations Review - Americas MaterialsPrior Year 2017* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.ResultsAnalysis of change€ million2017ExchangeAcquisitionsDivestmentsOrganic2018% changeSales revenue 7,970 ‐356+1,026-26+337 8,951 12%EBITDA (as defined)* 1,270 -56+267-12+24 1,493 18%Operating profit 858 -37+176-9+21 1,009 18%EBITDA (as defined)*/sales 15.9%16.7%Operating profit/sales10.8%11.3%Current Year 2018* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.Following significant development activity in 2018 and the latter half of 2017, Americas Materials operating profit was €1.0 billion in 2018, 18% ahead of the prior year. Continued economic growth in the residential, non-residential and infrastructure sectors drove underlying demand and organic sales were 4% ahead of 2017, while organic operating profit grew 3%. The Division experienced pricing progress, with improvements across all products. However, margins were impacted by poor weather in key markets and ongoing cost inflation, with notable increases in bitumen, a key input in asphalt production, and energy costs, including diesel and gasoline.Total aggregates volumes including acquisitions increased 8% in 2018, with the impact of inclement weather impacting like-for-like volumes, which were 1% ahead. Average prices increased 3% on a like-for-like basis and 2% overall compared with 2017, however margins were under pressure due to increased input costs.With a later start to paving projects across some key regions and further weather-related delays experienced in the third quarter in the North and Central divisions, like-for-like asphalt volumes were down 3% with total volumes down 2%. Like-for-like prices improved 10%, but higher bitumen costs negatively impacted margins. Total readymixed concrete volumes were 29% ahead of 2017 due to acquisition activity, and prices improved 3%. Like-for-like volumes were impacted by the unfavourable weather, though margins improved as management continued to focus on operational performance. Overall paving and construction services revenue for 2018 increased 6% and like-for-like revenue was up 4%, mainly driven by the South division, which benefited from a good paving season that extended into the last quarter of the year. Input cost pressure, particularly in raw materials and energy, negatively impacted overall margins in the year. The acquisition of Ash Grove in June 2018 gave CRH a market leadership position in the North American cement market, and including the partial year of ownership with our operations in Florida, Canada and Brazil, resulted in total cement volumes in 2018 of over ten million tonnes. Combined with an additional 24 bolt-on transactions, Americas Materials spent €3.3 billion in the year, adding c. 1.6 billion tonnes of reserves to the business.United StatesDespite unfavourable weather throughout the year, like-for-like sales increased 5% in 2018, and like-for-like operating profit increased 4%. US operations are organised into five divisions: North, South, Central, West and Cement. The North division comprises operations in 13 states, with key operations in Ohio, New York, New Jersey and Michigan. Like-for-like sales increased 5%, mainly due to improved aggregates volumes and prices, as well as greater construction sales. However, adverse weather conditions and increased input costs resulted in a flat operating profit performance. The South division comprises operations in 12 states with key operations in Florida, West Virginia and North Carolina. Like-for-like sales increased 11%, benefiting from increased construction activity with several new projects undertaken in key states. Volumes and price increases across all products resulted in a strong operating profit performance in the year. The Central division has operations in ten states, with key operations in Texas, Minnesota and Arkansas. With record levels of rainfall and flooding, like-for-like sales decreased 4%. Reduced volumes and margin pressure resulted in operating profit finishing behind 2017. The West division has operations in ten states, with key operations in Utah, Idaho, Washington and Colorado. With strong pricing across all products and volumes growth aided by acquisitions, sales increased 12% during 2018. Although delayed funding in certain states impacted like-for-like aggregates and asphalt volumes, operating profit was ahead of 2017. Our cement operations delivered higher volumes in 2018 primarily due to the acquisition of Ash Grove and a full year of ownership of the Suwannee American Cement business. Strong price realisation across our major markets and synergies with CRH’s heritage businesses contributed good operating profits in 2018. Integration of the Ash Grove business progressed well and the business performed in line with expectations.CanadaCanada had moderate GDP growth in 2018, with solid jobs growth. The economy lost some momentum in the second half of the year due to a slowdown in business and government spending. Cement volumes and prices were behind 2017 due to the exit of the Maritimes market and competitive cement market conditions. The business continued to optimise its terminal network and to further penetrate US markets. Furthermore, adverse weather conditions impacted volumes in our other product categories and as a result, operating profit was behind 2017.Brazil Continued political uncertainty, particularly in relation to the presidential elections as well as a truck drivers strike, impacted the Brazilian economy during 2018. The weakness in the construction market continued. CRH cement volumes were stable, in line with consumption trends in the Southeast region. Selling price increases were achieved in a higher input cost environment. OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance3839CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Operations Review - Europe HeavysideResultsAnalysis of change€ million2016ExchangeAcquisitionsDivestmentsPension Credit1/ LH Costs2Organic2017% changeSales revenue6,945‐203+95‐110-+1756,902‐1%EBITDA (as defined)*781‐26+3‐17+52+468397%Operating profit386-16-3‐14+52+7347824%EBITDA (as defined)*/sales 11.2%12.2%Operating profit/sales5.6%6.9%1 Swiss pension plan past service credit of €20 million in 20172 LH integration costs of €32 million were incurred in 2016 The LH integration costs refers to the businesses acquired from LafargeHolcim in 2015The commentary below excludes the impact of a past service credit due to pension plan amendments in Switzerland.Overall the 2017 outturn for Heavyside was positive with market recovery in Ireland, France, Poland and Finland in particular compensating for more subdued trading conditions in Switzerland and the UK. Although total sales declined, modest year-on-year organic growth resulted in improved operating profit, due to strong operating leverage arising from volume growth in some key countries, signs of progress on pricing and a focus on performance improvement initiatives and synergies.Tarmac (UK)Despite political and economic uncertainty in the UK, organic sales in our Tarmac business were ahead of 2016, with growth in building products and contracting sales and modest improvements in pricing for aggregates, asphalt and readymixed concrete compensating for a slight decline in overall volumes. Operating profit was slightly behind 2016, with increased bitumen costs in the asphalt division not fully compensated by increased sales and the impact of performance improvement initiatives.Europe NorthThe UK cement and lime operations maintained stable pricing against a backdrop of modest economic growth in 2017, while improvements in production processes and synergies, achieved through network optimisation, further contributed to operating profit growth.In Ireland, both sales and operating profit were ahead of 2016 mainly due to market recovery, particularly in the residential and commercial sectors, and the resulting growth in cement, aggregates and readymixed concrete volumes; positive trends on pricing across key products also contributed to sales and operating profit.Improvement in the residential sector and an overall positive economic backdrop resulted in cement volumes in Finland finishing ahead of 2016 and, despite competition from importers negatively affecting cement pricing, operating profit increased.Europe WestBoth sales and operating profits in France benefited from increased volumes in all major products in 2017, particularly cement and readymixed concrete, driven by growth in the residential sector, although pricing remained challenging.Organic sales in the Benelux grew in 2017 with a strong contribution from some larger projects in the Belgian structural business and growth in the Dutch residential sector; operating profit declined, impacted by a one-off cost in the structural business.The 2017 outturn in Denmark was positive, with sales and operating profit significantly ahead of 2016 supported by residential construction in major cities, some large non-residential projects and overall modest economic growth.The performance in Spain advanced on 2016, with an improvement in the macroeconomic situation.Both sales and organic operating profit were behind 2016 in Switzerland due to difficult market conditions, with overall domestic cement consumption also impacted by poor weather early in 2017. With pricing pressure arising from imports, cement prices declined.Lower cement volumes were experienced in our German operations due to reduced demand in key rural markets, a competitive landscape and individual project delays; results were behind 2016. Our lime acquisition, Fels, performed in line with expectations.Europe EastOverall economic growth was experienced in Poland, driven by private consumption and supported by EU-financed public spending. In addition, execution of previously delayed infrastructure projects resulted in growth in cement volumes and both sales and operating profit were well ahead of 2016.Both sales and operating profit in Ukraine increased in 2017, with pricing improvement mitigating the impact of inflation and compensating for a decline in cement volumes, which were affected by an increased level of imports.Our operations in Hungary and Slovakia benefited from solid economic and construction growth in 2017. Improved sales and operating profits were driven by higher cement and readymixed concrete volumes, some positive signs on pricing and an emphasis on performance improvement.Although the mix of products and projects in Serbia negatively affected cement pricing, overall sales and operating profit were ahead of 2016, supported by both ongoing infrastructure projects and some residential growth.Organic sales in Romania were slightly ahead of 2016, with poor weather in the early part of 2017 and slower than anticipated commencement of major infrastructure projects compensated by stronger volumes in the last quarter of 2017. Operating profits were ahead of 2016, positively impacted by price improvement and by performance improvement initiatives.Prior Year 2017* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.ResultsAnalysis of change€ million2017ExchangeAcquisitionsDivestmentsPension Credit1Organic2018% changeSales revenue 6,902 -54+511-53-+305 7,611 10%EBITDA (as defined)* 839 -9+65-1-20+37 911 9%Operating profit 478 -6+36--20+13 501 5%EBITDA (as defined)*/sales 12.2%12.0%Operating profit/sales6.9%6.6%1 Swiss pension plan past service credit of €20 million in 2017Current Year 2018* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.The 2018 trading performance for Europe Heavyside was positive, particularly for our operations in Ireland, the Benelux, Denmark and Poland, with more challenging trading conditions in the UK due to increased input costs and continued uncertainty as to the impact on construction activity following the Brexit vote. The year-on-year organic sales growth was reflected in an increase in operating profit, as prices progressed and a continued focus on performance initiatives contributed to the growth to offset cost inflation, which is a feature across all markets.Tarmac (UK)Despite challenging weather conditions earlier in the year and ongoing political and economic uncertainty in the UK, sales in our Tarmac business were ahead of 2017, underpinned by growth in contracting sales and more modest growth in other materials. Overall, operating profit was behind compared with prior year as continued progress on performance improvement measures was offset by increased input costs and a challenging market environment. Europe NorthA positive performance in the UK lime business as a result of strong environmental volumes partially offset the decline in cement volumes, resulting in overall UK sales and operating profit being behind 2017.In Ireland, sales and operating profit were ahead of 2017 mainly due to the continued market recovery, particularly in the Dublin region. Volumes increased and positive pricing trends were evident across key products, offsetting increased input costs, particularly energy.Although cement and readymixed concrete volumes in Finland were slightly behind in 2018, aggregates volumes were higher, positively impacted by project activity. The concrete products business also performed well due to good market demand, particularly residential, and overall sales and operating profit finished ahead of 2017.Europe WestSales and operating profit in France benefited from favourable trading conditions, as good underlying demand resulted in increased volumes and a positive pricing environment for key products, with the exception of the precast concrete business, which was impacted by project delays. Sales in the Benelux were ahead of 2017, as a positive contribution from the structural businesses reflected good demand in the residential sector, together with improved readymixed concrete pricing. Operating profit finished ahead of 2017, benefiting from good underlying market demand and one-off income.In Denmark, sales and operating profit finished ahead of prior year, as the business benefited from good underlying demand and progress in pricing achieved during the year. In Spain, results advanced on prior year, with improved pricing in cement and readymixed concrete partly offset by lower cement volumes, due to severe weather at the beginning of the year and the conclusion of a major project during the year. Despite a significant increase in cement volumes in Switzerland, benefiting from solid construction growth, sales and operating profit were behind prior year due to a decline in cement and readymixed concrete prices, reflecting strong competition.In Germany, improved cement pricing as well as the contribution of our lime business Fels, resulted in sales and operating profit ahead of prior year.Europe EastTrading in Poland was ahead of prior year with good performance in all businesses. Healthy volumes were supported by the economy and the construction sector, which continued to grow at high rates. In addition, good price development was achieved across all activities in a competitive market, contributing to the positive performance in 2018.In Ukraine, pricing improved in all businesses in 2018 resulting in organic sales finishing ahead year-on-year, however cement volumes declined due to increased market capacity and unfavourable weather conditions during the first quarter, which combined with cost inflation and logistical constraints resulted in operating profit being behind 2017. Continued solid economic and construction growth in 2018 contributed to improved sales in Hungary and Slovakia. Despite increasing input costs, operating profit was ahead of prior year, mainly as a result of higher volumes across the businesses. In Serbia, cement and readymixed concrete volumes increased compared to prior year and overall sales and operating profit were ahead of 2017, supported by performance improvement initiatives. In Romania, after a slow start to the year, affected by very poor weather conditions, cement volumes recovered and were ahead of prior year. In addition good pricing and margin progression contributed to sales and operating profit growth.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance4041CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Operations Review - AsiaResultsAnalysis of change€ million2016ExchangeLH Costs1Organic2017% changeSales revenue508-39-‐33436‐14%EBITDA (as defined)*109-11+6‐5252‐52%Operating profit71-7+6‐5515‐79%EBITDA (as defined)*/sales 21.5%11.9%Operating profit/sales14.0%3.4%1 The LH integration costs refers to the businesses acquired from LafargeHolcim in 2015PhilippinesWhile economic growth and market fundamentals remained robust, with both residential and non-residential demand stable, major infrastructure projects progressed at a slower pace in 2017. Although volumes increased in 2017, driven by a strong performance in the Visayas and Mindanao (VisMin) housing sector, overall sales were behind, as prices were impacted by additional capacities in the market and aggressive competitor pricing. The impact of lower selling prices combined with increased fuel and power costs resulted in lower operating profit than 2016.Equity Accounted InvestmentsChina Despite volumes being under pressure in Northeast China, prices significantly recovered in the market, with both cement and clinker prices in Yatai Building Materials well ahead of 2016. The higher prices more than offset increased coal prices and resulted in improved performance in 2017.India Despite recording higher cement volumes and marginally higher prices, My Home Industries (MHIL) ended 2017 with operating profit behind 2016 due to increased fuel prices, as well as lower sales of power to third parties.Prior Year 2017* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.ResultsAnalysis of change€ million2017ExchangeOrganic2018% changeSales revenue 436 -36+31 431 -1%EBITDA (as defined)* 52 -7-20 25 -52%Operating profit/(loss) 15 -4-25-14-193%EBITDA (as defined)*/sales 11.9%5.8%Operating profit/sales3.4%-3.2%PhilippinesAgainst a backdrop of strong domestic demand and accelerating government infrastructure spending, the Philippine economy continued to perform despite inflationary pressures and tighter global financial conditions. The favourable long-term outlook for the construction industry remains with the government’s increased focus on capital investment.Organic revenue performance advanced due to positive prices and ongoing demand from all segments. However, notwithstanding this, operating profit was significantly behind 2017 primarily due to higher fuel and power costs, which were only partially offset by continued commercial excellence and operational performance initiatives.Equity Accounted InvestmentsChinaCement demand remained subdued in Northeast China. Price increases partially offset lower volumes and increased coal prices, however Yatai Building Materials’ 2018 performance was lower than 2017.IndiaStrong growth in MHIL volumes in India was driven mainly by a sustained pick up in infrastructure spend in Andhra Pradesh and Telangana. However, prices continued to be under pressure due to competition and large institutional sales. Increased fuel prices were exacerbated by adverse foreign exchange rates. As a result, MHIL ended 2018 with operating profit lower than prior year.Current Year 2018* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance4243CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Products OverviewCONSTRUCTION ACCESSORIESOur Construction Accessories business is a leading global manufacturer and supplier of high-value innovative products and engineered solutions for challenging construction projects. Construction Accessories products include a broad range of engineered anchoring, fixing and connection solutions as well as lifting systems, formwork accessories and general accessories for construction applications. NETWORK ACCESS PRODUCTS & PERIMETER PROTECTIONSimilar to our Infrastructure platform, Network Access Products design and manufacture technical systems for access to and protection of utilities infrastructure, including composite access chambers and covers, and meter boxes. These solutions offer a time-saving alternative to traditional methods of construction.What we doOur businesses are leading suppliers of value-added building products, primarily to residential and non-residential construction projects in markets globally. Customer understanding, product and process innovation and the relative ease with which certain of our products can be transported long distances, are all key features of our products businesses.We operate a portfolio of product platforms; in Europe, our product platforms are Construction Accessories, Shutters & Awnings,Network Access Products & Perimeter Protection and Architectural Products, and in North America, our product platforms are Infrastructure, BuildingEnvelope® and Architectural Products. We continually focus on product innovation and development and we work with specialist end-users, such as architects and engineers, to develop design-solutions that are approved and certified for individual target markets.We leverage our scale, breadth and capabilities to build competitive advantage in key segments and channels. CRH is a leading supplier of building products globally. Our businesses manufacture, supply and deliver a wide range of high quality, value-added, innovative products and solutions needed to shape and enhance the built environment for modern communities.Our Perimeter Protection business designs, manufactures, installs and services fully integrated outdoor security and detection solutions. This includes fencing, entrance control and perimeter intrusion detection. 2228281. Net Assets at 31 December 2018 comprise segment assets less segment liabilities as disclosed in note 2 to the Consolidated Financial Statements.2. Products, sector exposure and end-use balance are based on sales.10%Distribution30%Non-Residential30%Infrastructure35%40%Residential30%20%15%45%Arch. products20%infrastructure35%buildingenvelope26%Lightside Products64%Heavyside Materials35% Architectural Products15% Shutters & AwningsSHUTTERS & AWNINGSOur Shutters & Awnings business designs, manufactures and supplies roller shutters, awnings, terrace roofs and related products for sun protection and outdoor living. CRH companies offer energy-efficient products and solutions which contribute to a secure, sustainable and comfortable environment. ARCHITECTURAL PRODUCTSIn North America, our Architectural Products (APG) business is a leading supplier of concrete masonry, hardscape and related products for residential, commercial and DIY construction markets.Our concrete masonry products are used for veneers, walls and foundations. Hardscape products comprise pavers, retaining wall and patio products. Dry cement mixes, such as Sakrete® and Amerimix®, are also an important product offering of our business. Lawn & garden products are marketed to major DIY and homecenter chains across the US. Composite decking products, ChoiceDekTM and MoistureShieldTM are another key outdoor living offering in our portfolio.In Europe, our Architectural Products business is a leading producer of exterior hardscape products across five countries. It produces pavers, kerbs, retaining walls and slabs for both private and public use. Products are sold to General Builders Merchants and DIY outlets as well as to municipalities and large contractors.BUILDING ENVELOPE®Our Oldcastle BuildingEnvelope® (OBE) business is a leading integrated supplier of products specified to close the building envelope, including architectural glass, storefront systems, custom engineered curtain and window wall, architectural windows, doors and skylights. How we create valueOur strategy is to build and grow scalable businesses, balanced across products, geographies and end-use sectors, through increasing the penetration of our range of value-added products and creating competitive advantage through strong customer relationships, brand leadership and service.Our development focus aims to deepen our positions in existing business platforms, to broaden our differentiated product portfolio through selected new growth platforms that are exposed to attractive global megatrends, and to expand our presence in developing regions as construction markets become more sophisticated. This enables CRH to provide innovative solutions that meet the longer-term opportunities presented by economic development, changing demographics and sustainability.As part of our ongoing focus on value creation we consistently invest in talent development, commercial and operational excellence processes, innovation and technology to ensure continuous improvement in everything we do. Our commitment to building better businesses is demonstrated in our approach at national, regional and global levels to facilitate best practice sharing. How we structure our operations Our Americas Products Division is organised into three strategic product groups: Infrastructure, BuildingEnvelope® and Architectural Products employing approximately 17,800 people at nearly 370 locations.Our Europe Lightside Division is organised into four business areas: Construction Accessories, Shutters & Awnings, Network Access Products & Perimeter Protection and Architectural Products. This Division employs approximately 7,300 people at close to 180 locations. As of 1 January 2019, both these Divisions, together with our Europe Distribution Division merged into one new global Building Products Division.Sales% of GroupOperating Profit21%459EBITDA (as defined)*18%603Net Assets114%3,42717%4,433€ millionAMERICAS PRODUCTS10%Distribution30%Non-Residential30%Infrastructure35%40%Residential30%20%15%45%Arch. products20%infrastructure35%buildingenvelope26%Lightside Products64%Heavyside Materials20% Infrastructure35%BuildingEnvelope®45% Architectural Products45%5%ResidentialNon-ResidentialInfrastructure50%NewRMI45%55%PRODUCTS2% of GroupOperating Profit5%1105%152Net Assets13%7926%1,508Sales€ millionEUROPE LIGHTSIDE40%20%ResidentialNon-ResidentialInfrastructure40%NewRMI35%65%PRODUCTS2* 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.30% Construction Accessories 20% Network Access Products & Perimeter ProtectionINFRASTRUCTURECRH’s Infrastructure group manufactures a range of precast concrete and polymer-based products such as underground vaults, drainage pipe and structures, utility enclosures and modular precast structures which are supplied to the water, electrical, telephone and railroad markets and to select non-residential building applications. END-USE2END-USE2SECTOR EXPOSURE2SECTOR EXPOSURE2EBITDA (as defined)*OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance4445CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Operations Review - Americas ProductsImprovements in macroeconomic conditions positively impacted construction; however, activity was limited by historically high levels of precipitation in 2017, supply-side factors such as the shortage of skilled construction labour and competitive markets. Americas Products saw good growth along the West Coast and parts of the South and Southeast due to improved residential and non-residential construction, partly offset by more modest trading in Canada and parts of the Northern US. Contributions from improved operational efficiencies, improved product and project mix, procurement initiatives and targeted price increases more than offset the impact of input cost inflation. Benefiting from the contribution of acquisitions and synergies from the CRL acquisition, Americas Products achieved a 6% increase in operating profit in 2017 and margins improved.Americas Products completed eight acquisitions and one joint venture investment in 2017 for total consideration of €0.2 billion. The acquisition of Advanced Environmental Recycling Technologies, Inc. (AERT), a manufacturer of composite decking, added an outdoor living product complementary to APG’s Belgard hardscapes and retaining wall products. Also, the acquisition of Block USA extended APG’s masonry footprint into Alabama, Mississippi and the Gulf Coast.Architectural ProductsWith the benefit of acquisitions, APG saw increased activity in 2017, especially in the residential RMI sector. Growth was at a more measured pace than 2016, with volumes affected by unfavourable weather and installation labour shortages. Activity was good across most of the US but more moderate in Canada. Solid demand from major products and distribution channels, together with product innovation and commercial initiatives, drove a modest increase in like-for-like sales compared with 2016. APG focused on operating cost reduction efforts to maximise returns. Overall, APG saw good operating profit growth for 2017.BuildingEnvelope® In 2017, non-residential building activity advanced but at a slower pace than prior years. OBE experienced relatively flat sales revenue in 2017 because of more challenging market conditions, more selective bidding on larger projects and tighter skilled labour markets. However, OBE recorded improved operating profits because of better sales mix, improved operational performance and synergies from the integration of the CRL and OBE businesses.InfrastructureSales growth was achieved in 2017 but was limited by unfavourable weather and relatively slower demand growth for both private construction and public infrastructure in certain markets. The Infrastructure group recorded increased operating profits, due to better operational performance at construction project businesses, partly offset by margin impacts from increased input costs. In addition, backlogs remained strong in 2017.ResultsAnalysis of change€ million2016ExchangeAcquisitionsDivestmentsOrganic2017% changeSales revenue4,280‐79+87‐14+534,3271%EBITDA (as defined)*543‐10+10+1+295736%Operating profit411‐8+4+2+264356%EBITDA (as defined)*/sales 12.7%13.2%Operating profit/sales9.6%10.1% Prior Year 2017* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.ResultsAnalysis of change€ million2017ExchangeAcquisitionsDivestmentsOrganic2018% changeSales revenue 4,327 -187+193-2+102 4,433 2%EBITDA (as defined)* 573 -25+21+1+33 603 5%Operating profit 435 -19+12+1+30 459 6%EBITDA (as defined)*/sales 13.2%13.6%Operating profit/sales10.1%10.4% Current Year 2018Construction activity continued to benefit from the improved macroeconomic backdrop; however, volumes were impacted by bad winter and wet fall weather, continued supply-side factors such as labour and construction cost inflation, and competitive markets. Similar to 2017, Americas Products saw growth along the West Coast of the US and in parts of the South due to good residential and non-residential construction activity, partly offset by softness in Canada and parts of the Northern US, due to weather and slower growth markets. Targeted price increases, operational efficiencies, procurement initiatives and overhead cost reductions all helped deliver improved margins despite cost increases in raw materials, labour, and logistics. Americas Products achieved a 6% increase in total operating profit.Americas Products completed six acquisitions for total consideration of c. €160 million. The acquisitions of Coral Industries and SIGCO extended OBE’s geographic footprint and product offerings in the Southeast and Northeast US, respectively. Similarly, the Concrete Specialties acquisition and the Ash Grove packaging division added geographic exposure to Central US markets where Infrastructure and APG, respectively, had a relatively small presence.Architectural Products APG saw modest sales growth in 2018, benefiting from healthy residential RMI demand, but volumes were limited by adverse weather, as well as contract labour shortages. Demand for most products was particularly strong along the West Coast, which together with commercial initiatives, drove a small increase in like-for-like sales compared with 2017. Overall, APG saw solid operating profit growth due to acquisition results and cost reduction initiatives, which more than offset the unfavourable impacts from rising logistics and input costs.BuildingEnvelope® Non-residential building activity in 2018 was muted by higher building materials costs, increasingly tight skilled labour markets and higher interest rates. OBE saw relatively flat organic revenue in 2018 because of a strategic shift away from larger projects. However, OBE achieved increased operating profits due to improved trading results at its metals and glazing hardware businesses and the inclusion of acquisition results, which more than offset the effects of higher labour and raw material costs.InfrastructureThe Oldcastle Precast business was rebranded to Oldcastle Infrastructure in 2018 to better reflect the diversity of its product offerings. Sales growth advanced in 2018 due to good demand for both private construction and public infrastructure, particularly in the Southeast, West and Mountain states of the US. Infrastructure recorded significantly increased operating profits, due to reductions in fixed overheads, better operational execution, and good acquisition performance. Infrastructure was also able to pass on price increases to offset input cost inflation, and the business saw backlog growth in 2018.* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance4647CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Operations Review - Europe LightsideEurope Lightside experienced a year of growth in 2017 as good performances in a number of key markets resulted in total sales for the Division finishing 3% ahead of 2016. Strong activity levels in the UK market underpinned demand, particularly for our Construction Accessories and Network Access Products businesses. Economic recovery in the Netherlands and Poland in 2017 resulted in good growth, while activity in other key markets, including Belgium and Germany, was stable. Against this overall favourable market backdrop, cost optimisation and margin enhancement resulted in an 11% operating profit increase for the Division.Construction Accessories2017 was one of progress for the Construction Accessories platform with strong organic sales due to robust activity levels across core markets and product innovation. Operating profit also expanded, despite restructuring charges taken as part of the platform’s optimisation of its production network. Our UK-based engineered accessories business experienced strong demand for its products, supported by good activity levels and both sales and operating profit were ahead of 2016. In Germany, the business also advanced in 2017, as positive trading conditions resulted in increased demand. For our Swiss business, reasonable activity levels saw sales finish ahead of 2016. Activities in the Netherlands and France benefited from economic recovery in 2017 while sales in our Belgian business advanced in competitive markets. Our export markets proved challenging as project delays impacted performance, though our Australian business saw organic growth due to good demand for its products.Shutters & Awnings The Shutters & Awnings business recorded a 3% increase in sales compared with 2016. The Netherlands, supported by underlying market activity and benefiting from operational improvements, reported a good trading performance. Our German businesses experienced challenges arising from tighter labour markets and increased input costs; however, sales across the businesses advanced in 2017. The UK business reported a solid trading performance despite currency pressure. Operating profit for the platform remained in line with 2016.Network Access Products & Perimeter Protection The Network Access Products business had another year of growth in both sales and operating profit in 2017. Positive underlying infrastructure demand continued, particularly in its UK-based business; in addition, focus on optimising costs and product profile resulted in positive margin development for the business.The permanent fencing business overall had a positive year in 2017 as it reported both sales and operating profit ahead of 2016. Continued cost focus at our UK businesses resulted in improved sales and profitability and margins advanced in the Netherlands, despite competitive markets. The mobile fencing business, after a strong 2016, experienced another year of growth benefiting from improved building activity in its core markets.Architectural ProductsDespite a good demand backdrop across the platform’s main markets and sales progression, operating profit finished behind 2016 as a result of a lower margin product profile in some markets. In the Benelux, trading advanced in 2017 in an overall positive economic environment. For our German business, trading was broadly in line with 2016 while results were positively impacted by improved pricing and operational performance. In Poland, our operations experienced strong demand, albeit for some lower margin products, and with good volume growth sales finished ahead of 2016.ResultsAnalysis of change€ million2016ExchangeAcquisitionsOrganic2017% changeSales revenue1,392‐15+7+561,4403%EBITDA (as defined)*137‐2+1+71434%Operating profit92‐2+1+1110211%EBITDA (as defined)*/sales 9.8%9.9%Operating profit/sales6.6%7.1%Prior Year 2017* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.ResultsAnalysis of change€ million2017ExchangeAcquisitionsDivestmentsOrganic2018% changeSales revenue 1,440 -11+16-12+75 1,508 5%EBITDA (as defined)* 143 -1+2+1+7 152 6%Operating profit 102 -1+1+1+7 110 8%EBITDA (as defined)*/sales 9.9%10.1%Operating profit/sales7.1%7.3%Current Year 2018With sales 5% ahead of 2017, it was a successful year for Europe Lightside, boosted by acquisitions in the Network Access Products and Construction Accessories platforms. The Netherlands saw a significant improvement in performance as the economy continued to expand. Activity levels in Australia were good and the Polish market also benefited from a strong increase in demand. Sales in the key markets of Germany and the UK remained stable, where the UK incurred some headwinds on profitability driven by the under-performance of the now divested Plaka UK business and a changing customer mix in Network Access Products. Operating profit for the Division increased by 8% as a result of the improved sales performance and a continued focus on cost optimisation and margin enhancement.Construction AccessoriesIt was another year of solid organic sales and operating profit growth for the Construction Accessories platform, primarily driven by improvements in Western European markets. In Germany, labour shortages on building sites and resulting project delays impacted overall performance. Excluding the divested Plaka business, trade in our UK business saw continued growth. The Australian business benefited from continued demand in the high-rise residential market and was also boosted by an acquisition earlier in the year. The export market remained important but challenging due to further project delays, however performance in the Chinese and US markets improved.Shutters & Awnings The Shutters & Awnings business recorded a 1% increase in sales compared with the prior year, whilst operating profit remained flat. Once again operations in the Netherlands were assisted by a positive economic environment, supported by favourable weather conditions, while a focus on improvement initiatives and an increased online presence in the UK business resulted in sales and margin growth. Our German businesses were impacted by lower margins due to a combination of increasing input and labour costs in a more competitive environment.Network Access Products & Perimeter Protection Network Access Products had another year of growth in sales and operating profit. The Australian business continued to experience growth driven by a robust construction market. The French market also saw improvements, while the underlying performance in the UK was behind last year due to a change in customer mix, which was partly offset by an acquisition in the second quarter of 2018. The Perimeter Protection business showed a solid increase in sales and operating profit. In the permanent fencing business, performance was driven by the Netherlands, which benefited from the strong economy, while improvement in the mobile fencing business was driven by strong trading across most of our key markets. Architectural ProductsAs a result of a favourable economic environment in certain key markets, sales and operating profit finished ahead of prior year. In Poland, operations experienced strong demand and an improvement in performance, through increased sales of higher margin products and overall price improvement. Despite the disruptive weather conditions early in the year, sales in the German business finished ahead of 2017, however, operational challenges and an unfavourable sales mix resulted in operating profit below prior year. The French business was divested in November. The Benelux operations benefited from higher demand in public markets.* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance4849CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018What we doWe supply a wide range of building materials, catering to different local markets and varied customer groups. Typically we serve professional customers, including both specialist and general contractors, as well as consumers.Our distribution customers rely on us to have the right products in stock, at the right time and in the right location in order to ensure their own operations can continue to operate in an efficient and economical manner. They also expect us to have a high degree of product knowledge and technical information, which is an area we focus on through ongoing employee training and development. Distribution OverviewDIY Our DIY platform operates under two different brands: Hagebaumarkt (Germany) and our Maxmat joint venture (Portugal). Serving the residential RMI segment, our DIY business sells decorative and home improvement products direct to the consumer from easily-accessible retail locations. GENERAL BUILDERS MERCHANTSOur businesses distribute heavy building materials and related products from 332 locations to professional customers, mainly small and medium sized builders. These businesses have strong regional positions based on a comprehensive branch coverage, wide product offering and high stock availability.CONSTRUCTION ACCESSORIESNETWORK ACCESSARCHITECTURALSHUTTERS & AWNINGSCRH’s Europe Distribution businesses supply building materials to professional builders, specialist heating and plumbing contractors, and DIY customers through a network of trusted local and regional brands across a number of mature markets in Western Europe.2228281. Net Assets at 31 December 2018 comprise segment assets less segment liabilities as disclosed in note 2 to the Consolidated Financial Statements.2. Activities, sector exposure and end-use balance are based on sales.SANITARY, HEATING AND PLUMBING Our SHAP businesses specialise in servicing the needs of plumbers and heating, gas, water, and ventilation technicians at 178 locations. The businesses are organised around public-facing showrooms to facilitate product choice, central warehousing and a wide network of pick-up locations for installers to collect or co-ordinate delivery.How we create valueWe operate a portfolio of local brands that focus on building deep customer relationships through quality of service, reliability and focused propositions tailored to selected market segments. We innovate around the changing needs of our customers through the introduction of additional product categories, new formats and technology supporting our interaction with customers.Collective expertise from across our various business segments is leveraged to optimise the supply chain, with just-in-time logistics, a category-management-based approach to procurement and focused IT systems.Our development strategy is focused on increasing the network density of our existing businesses in our core markets, while also investing in new platforms and formats in other attractive segments of building materials distribution. Substantial opportunities remain to develop our existing network in our core markets and to establish new propositions aimed at increasing our exposure to growing RMI market demand.How we structure our operationsOur businesses are active in three primary business areas: DIY (Do-It-Yourself), General Builders Merchants (GBM) and Sanitary, Heating and Plumbing (SHAP). We also hold a 21.13% equity interest in Samse S.A., a publicly-quoted distributor of building materials to the merchanting sector in the Rhône-Alpes region of France. The Division employed approximately 10,200 people during the year, and following the divestment of the DIY business in Benelux in July 2018, now operates across over 550 locations. % of GroupOperating Profit5%112EBITDA (as defined)*5%181Net Assets15%1,24214%3,856Sales€ millionEUROPE DISTRIBUTION10%30%30%65%40%20%15%45%20%35%26%64%75%ResidentialNon-ResidentialInfrastructure20%NewRMI60%40%20% SHAP 65% GBM15% DIYACTIVITIES25%* 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.END-USE2SECTOR EXPOSURE2OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance5051CRH Annual Report and Form 20-F I 2018 CRH Annual Report and Form 20-F I 2018Operations Review - Europe DistributionThe commentary below excludes the impact of a past service credit due to pension plan amendments in Switzerland.Europe Distribution experienced stable sales and profit development in 2017 but with mixed performances across our businesses. Overall sales were slightly ahead of 2016 with a strong contribution from our GBM business in the Netherlands which benefited from an increase in residential building volumes. In addition, our SHAP businesses in Germany and Belgium gained market share in consolidating markets. These positive developments were partly offset by difficult market conditions in Switzerland.General Builders Merchants Our GBM business showed 3% sales growth in 2017, with stable operating profit excluding depreciation. Increased demand in the Netherlands combined with delivery on performance improvement projects resulted in further growth of the Dutch operating profit. Our German business showed sales growth against a flat RMI market backdrop, with profit impacted by acquisition-related costs. Market conditions in Switzerland remained challenging in 2017 due to sluggish residential demand, and cost savings initiatives could not fully offset the impact of lower sales and increased pressure on trade margins. Our French business benefited from an improving residential sector and the performance in our Austrian business improved due to the focus on our cost base.Sanitary, Heating and Plumbing Sales growth from additional pick-up locations and further investments in showrooms led to market share improvement in our German and Belgian SHAP businesses in 2017. Operating profit decreased due to declining results in Switzerland, which were partly offset by operational improvement, procurement initiatives and growth in Belgium and Germany.DIYDespite improved consumer confidence in the Netherlands, Belgium and Germany in 2017, competitive pressures and an increased trend towards online sales contributed to declining store sales. Operating profit in our Netherlands business improved due to a focus on overhead costs and personnel productivity initiatives. Despite the opening of a new store in the Brussels area, sales and operating profit remained stable in a competitive environment. Our German DIY business performed in line with 2016, although trading was impacted by some unfavourable weather conditions at the beginning of 2017.ResultsAnalysis of change€ million2016ExchangeAcquisitionsPension Credit1Organic2017% changeSales revenue4,066‐20+28-+714,1452%EBITDA (as defined)*206‐1-+61+326931%Operating profit130‐1-+61+1720759%EBITDA (as defined)*/sales 5.1%6.5%Operating profit/sales3.2%5.0%1 Swiss pension plan past service credit of €61 million in 2017Prior Year 2017* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.Europe Distribution realised modest like-for-like sales growth in 2018, excluding the change in treatment of certain direct sales. This increase was driven mainly by our GBM business, with ongoing positive momentum in the Netherlands, particularly in residential construction activity. Furthermore, our SHAP business in Germany continued to gain market share in a relatively flat market. These positive developments were partly offset by challenging market conditions in a competitive environment across our Swiss business, particularly in the first half of the year. Overall sales were behind 2017, primarily due to the divestment of our DIY business in the Benelux.General Builders Merchants Our GBM business realised solid like-for-like sales, excluding the change in treatment of certain direct sales, and improved like-for-like operating profit. Positive market conditions and performance improvement initiatives led to continued growth of operating profit in the Netherlands, while sales and profit growth in Germany was partly attributable to prior year acquisitions. Underlying sales in Switzerland were marginally behind 2017, with the residential market remaining challenging due to a tendency towards multi-family homes, which contributed to lower margin levels. Our businesses in France and Austria were impacted by adverse weather in the beginning of the year and increased competition from new entrants.ResultsAnalysis of change€ million2017ExchangeAcquisitionsDivestmentsPension Credit2Organic2018% changeSales revenue1 4,145 -38+109-255--105 3,856 -7%EBITDA (as defined)* 269 -2+2-25-61-2 181 -33%Operating profit 207 -1+1-19-61-15 112 -46%EBITDA (as defined)*/sales 6.5%4.7%Operating profit/sales5.0%2.9%1 Reported 2018 sales were impacted by the change in treatment of certain direct sales at GBM to an agency (net commission) basis following the adoption of the new revenue accounting standard, IFRS 15. Excluding the adjustment (c. €175 million), like-for-like sales were 2% ahead of 20172 Swiss pension plan past service credit of €61 million in 2017Current Year 2018* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.Sanitary, Heating and PlumbingOur SHAP business in Germany continued to realise growth and gained further market share, benefiting from additional pick-up locations and showrooms. Our Belgian business faced some challenges in a somewhat slower market, which negatively impacted results. Sales and profit at our business in Switzerland were below prior year, due to continued challenges in the residential market and increased competition.Our SHAP business completed acquisitions in Germany and Belgium in the second half of the year. These bolt-on acquisitions had a modest impact on sales and operating profit in 2018.DIYWhile DIY sales were down on a like-for-like basis driven by the ongoing trend towards online sales, focus on operational productivity resulted in improved underlying profits. In Germany, our DIY business recovered from the inclement weather conditions in the beginning of the year and realised stable sales and profit levels. Overall results however were impacted by the disposal of our DIY business in the Benelux in July 2018.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance52 53CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Board of Directors 54Corporate Governance Report 58Directors’ Remuneration Report 68Directors’ Report 98Principal Risks and Uncertainties 104GOVERNANCE52CRH’s ‘Life Saving Rules’ set out the minimum safety standards for all CRH operations globally. Helmets and safety glasses similar to those worn by this Raw Materials Manager at Mykolaivcement, Ukraine, part of CRH’s Europe Heavyside Division, are among the minimum mandatory personal protective equipment (PPE) requirements when working at CRH sites.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance54 55CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Senior Independent DirectorAppointed to the Board: January 2017Nationality: CanadianAge: 65Committee membership:Gillian L. PlattSkills and experience: During the course of her executive career, Gillian has held a number of senior leadership positions in a variety of industries, geographies and roles including human resources, corporate affairs and strategy. Most recently she was Executive Vice President and Chief Human Resources Officer at Finning International, Inc. (the world’s largest Caterpillar equipment dealer) with global responsibility for human resources, talent development and communications. She previously held senior executive roles at Aviva, the multinational insurance company, as Executive Vice President Human Resources and Executive Vice President Strategy and Corporate Development.Qualifications: Bachelor of Arts from the University of Western Ontario and a Masters of Education from the University of Toronto.External appointments: Listed: Non-executive Director and Chair of the Management Resources & Compensation Committee of Interfor Corporation, a Canadian listed company, which is one of the world’s largest providers of lumber. Non-listed: Not applicable. Board of DirectorsSkills and experience: Nicky was Vice President of Manufacturing and Business Operations for Dell Inc.’s Europe, Middle East and Africa (EMEA) operations from 2000 to 2008. Prior to joining Dell, he was Executive Vice President at Eastman Kodak and previously held the position of President and Chief Executive Officer at Verbatim Corporation, based in the US.Qualifications: C.Eng, FIEI, MBA.External appointments: Listed: Non-executive Director of Finning International, Inc., the world’s largest Caterpillar equipment dealer. Non-listed: Chief Executive of Prodigium, a consulting company which provides business advisory services; non-executive Chairman of Musgrave Group plc, a privately-owned international food retailer; and Chair of Horse Racing Ireland, a body which is responsible for developing and promoting Ireland as a world centre for excellence for horse racing and breeding.Chief Executive Appointed to the Board: January 2009Nationality: IrishAge: 56Committee membership: Albert ManifoldSkills and experience: Albert was appointed a CRH Board Director in January 2009. He joined CRH in 1998. Prior to joining CRH, he was Chief Operating Officer with a private equity group. While at CRH he has held a variety of senior positions, including Finance Director of the Europe Materials Division, Group Development Director and Managing Director of Europe Materials. He became Chief Operating Officer in January 2009 and was appointed Group Chief Executive with effect from 1 January 2014.Qualifications: FCPA, MBA, MBS.External appointments: Listed: Not applicable. Non-listed: Not applicable. Skills and experience: Senan has over 28 years’ experience in international business across financial services, banking and renewable energy. He joined CRH from Bank of Ireland Group plc where he was the Chief Operating Officer and a member of the Group’s Executive Committee. He previously held positions as Chief Operating Officer and Finance Director at Ulster Bank, Chief Financial Officer at Airtricity and numerous senior financial roles in GE, both in Ireland and the US. Qualifications: BComm, FCA.External appointments: Listed: Not applicable. Non-listed: Not applicable. Group Finance Director Appointed to the Board: January 2016Nationality: IrishAge: 50Committee membership:Senan MurphyChairman Appointed to the Board: June 2004Nationality: IrishAge: 67Committee membership:Nicky HarterySkills and experience: Richie has extensive experience in all aspects of financial services and was Chief Executive of Bank of Ireland Group plc between February 2009 and October 2017. He also held a number of key senior management roles within Bank of Ireland, Royal Bank of Scotland and Ulster Bank. He is a past President of the Institute of Banking in Ireland and of the Irish Banking Federation.Qualifications: Bachelor of Arts (Economics) from Trinity College, Dublin; Fellow of the Institute of Banking in Ireland.External appointments: Listed: Director of Kennedy-Wilson Holdings, Inc., a global real estate investment company; Atlas Mara Limited, a company with investments in banks in Africa; and Eurobank Ergasias SA, a bank based in Athens, Greece which has operations in Greece and several other European countries. Non-listed: Not applicable. Non-executive Director Appointed to the Board: March 2018Nationality: IrishAge: 60Committee membership:Richard BoucherSkills and experience: Pat was Chairman of the Executive Board of Directors of SHV Holdings (SHV), a large family-owned Dutch multinational company with a diverse portfolio of businesses, including the production and distribution of energy, the provision of industrial services, heavy lifting and transport solutions, cash and carry wholesale and the provision of private equity. During a 32 year career with SHV, he held various leadership roles across SHV’s diverse portfolio of businesses, while living in various parts of the world, and was a member of the Executive Board of SHV from 2001, before becoming Executive Chairman in 2006. He retired from SHV in mid-2014.Qualifications: BComm, MBS.External appointments: Listed: Not applicable. Non-listed: Member of the Supervisory Board of SHV Holdings N.V.Non-executive Director Appointed to the Board: January 2015Nationality: IrishAge: 65Committee membership:Patrick J. KennedyAqFAqSNSRNSRAqFAcquisitionsAudit Finance Nomination & Corporate Governance Remuneration Safety, Environment & Social ResponsibilityCommittee ChairmanAFNRSAqBoard CommitteesRAqFNSOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance56 57CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Skills and experience: Don retired from Pricewaterhouse Coopers (PwC) in June 2013, following a 39 year career with the firm. During that time he was Vice Chairman, Global Assurance at PwC, a position he had held since July 2008 and directed the US firm’s services for a number of large public company clients. He also held various leadership roles in PwC and was, from July 2001 to June 2008, a member of, and past lead Director for, the Board of Partners and Principals of the US firm as well as a member of PwC’s Global Board.Qualifications: CPA, MBA.External appointments: Listed: Director of Cars.com Inc.Non-listed: Director of Neuraltus Pharmaceuticals, Inc.Non-executive Director Appointed to the Board: July 2013Nationality: United StatesAge: 68Committee membership:Donald A. McGovern, Jr. Board of Directors - continuedSkills and experience: Siobhán is Group Managing Director of Glanbia plc, a global nutrition company with operations in 32 countries, a position she has held since 2013. She has been a member of the Glanbia Board since 2009 and was previously Finance Director, a role which encompassed responsibility for Glanbia’s strategic planning. Prior to joining Glanbia, she worked with PricewaterhouseCoopers in Dublin and Sydney.Qualifications: BComm and Diploma in Professional Accounting from University College Dublin, FCA. External appointments: Listed: Group Managing Director of Glanbia plc. Non-listed: Director of the Irish Business Employers Confederation (IBEC). Non-executive Director Appointed to the Board: December 2018Nationality: IrishAge: 55Committee membership:Siobhán TalbotSkills and experience: Mary is Chairman, Chief Executive Officer and President of Johns Manville Corporation, a Berkshire Hathaway company, which is a leading global manufacturer of premium-quality building products and engineered specialty materials. Over nearly 40 years with Johns Manville she has held a wide range of global leadership roles, encompassing responsibility for business management and strategic business development and was also Chief Financial Officer. Mary was until recently a non-executive Director of Ply Gem Holdings Inc., a leader in exterior building products in North America and Lead Director of CoBiz Financial Inc.Qualifications: Bachelor’s degree in Finance from the University of Colorado; MBA from the University of Denver.External appointments: Listed: Not applicable. Non-listed: Chairman, Chief Executive Officer and President of Johns Manville Corporation and member of the Board of Trustees of the University of Denver.Non-executive Director Appointed to the Board: October 2018Nationality: United StatesAge: 60Committee membership:Mary K. RhinehartSkills and experience: Lucinda spent the majority of her career in investment banking, including 21 years in UBS Investment Bank and its predecessor firms where she worked until 2007. She held senior management positions in the UK and the US, including Global Head and Chairman of UBS’ Equity Capital Markets Group and Vice Chairman of the Investment Banking Division.Qualifications: Masters in Philosophy, Politics and Economics and a Masters in Political Science.External appointments: Listed: Non-executive Director of Ashtead Group plc and ICG Enterprise Trust plc. Non-listed: Non-executive Director of the British Standards Institution. Non-executive Director Appointed to the Board: March 2015Nationality: BritishAge: 57Committee membership:Lucinda J. RichesSkills and experience: Henk has a background in distribution, wholesale and logistics. Until 2010, he was Chief Executive Officer at Pon Holdings B.V., a large, privately held international company which is focused on the supply and distribution of passenger cars and trucks, and equipment for the construction and marine sectors. He was also a member of the Supervisory Boards of the Royal Bank of Scotland N.V., the food-retail group Detailresult Groep and the retail group Blokker Holding B.V.Qualifications: Masters degree in Dutch Law; PMD Harvard Business School.External appointments: Listed: Not applicable. Non-listed: Chairman of Koole Terminals B.V. Henk also holds several non-profit board memberships. Non-executive Director Appointed to the Board: February 2014Nationality: DutchAge: 63Committee membership:Henk Th. RottinghuisSkills and experience: Until September 2016, Bill was the Vice Chairman of EMC Corporation. In previous roles he was responsible for EMC’s global sales and distribution organisation (2006-2012) and served as Chief Financial Officer (1996-2006). Prior to joining EMC he was a partner in the audit and financial advisory services practice of Coopers & Lybrand LLP.Qualifications: MBA degree from Babson College, a Masters of Science in Taxation from Bentley College and a Bachelors degree from Holy Cross.External appointments: Listed: Member of the Board of Directors of Popular, Inc. a diversified financial services company, and Inovalon Holdings, Inc., a healthcare technology company. Non-listed: Director of Accedian Networks, a technology company and BGP Bravo Holdings, a technology services company.Non-executive Director Appointed to the Board: March 2016Nationality: United StatesAge: 67Committee membership:William J. Teuber, Jr.Skills and experience: Heather Ann is a former Managing Director Ireland of Reckitt Benckiser and Boots Healthcare and was previously a non-executive Director of Bank of Ireland plc and IDA Ireland.Qualifications: BComm, MBS.External appointments: Listed: Non-executive Director of Greencore Group plc and Jazz Pharmaceuticals plc. Non-listed: Director of Ergonomics Solutions International and the Institute of Directors in Ireland. Non-executive Director Appointed to the Board: February 2012Nationality IrishAge: 57Committee membership:Heather Ann McSharry FRNAAqFARNAAAqSAcquisitionsAudit Finance Nomination & Corporate Governance Remuneration Safety, Environment & Social ResponsibilityCommittee ChairmanAFNRSAqBoard CommitteesASANAqFS111. Audit Committee Financial Expert as determined by the Board.11. Audit Committee Financial Expert as determined by the Board.1. Audit Committee Financial Expert as determined by the Board.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance58 59CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Chairman’s OverviewThe Corporate Governance report contains details of CRH’s governance structures and highlights the main areas of focus for the Board during 2018. In keeping with prior years, details of CRH’s general governance practices are available in the governance appendix on CRH’s website, www.crh.com (the ‘Governance Appendix’)1. CRH implemented the 2016 UK Corporate Governance Code (the ‘2016 Code’) and complied with its provisions in 2018. A copy of the 2016 Code can be obtained from the Financial Reporting Council’s website, www.frc.org.uk. The 2019 Annual Report and Form 20-F will contain details of the implementation of the 2018 UK Corporate Governance Code (the ‘2018 Code’), which was published in July 2018 and is effective for CRH from 1 January 2019.Areas of Focus for the BoardIn 2018, the Board focused on strategy, Board renewal, succession planning, talent management and safety, and these areas will continue to be areas of priority for the Board over the next 12 months.In May 2018, we announced our plans for margin improvement and financial capacity targets over the next number of years. This gave us an opportunity to provide shareholders with additional details on the strategic direction and ambitions of the Group in the medium-term. An ad-hoc committee of the Board has been formed to monitor delivery and progress against these plans. The report from the Nomination & Corporate Governance Committee on pages 63 and 64 contains details on the Board renewal process. The Board views executive talent management and succession planning as core responsibilities and receives regular updates from the Chief Human Resources Officer on developments in this area generally and, in particular, in relation to retaining and adding world class talent, ensuring we have capacity to support growth, developing the talent pipeline and succession planning for senior executive roles. The non-executive Directors also have a number of opportunities to interact directly with executives in formal meeting settings throughout the year and during twice yearly Board visits to our operations. Safety is a key strategic issue for the Board. The Chief Executive commented in his review in last year’s Annual Report and Form 20-F that, despite our progress in safety matters, a number of fatalities at our operations underlined the need for us to do even more to ensure that all of our people return home safe to their families at the end of each working day. When fatalities occur, the full Board receives a report on the background circumstances and the actions being taken to ensure that any corrective actions or procedure changes have been taken not only at the site concerned but across the Group. During 2018, the Board received regular updates on the progress of a number of new initiatives, including, the creation of an external advisory panel of safety management experts who were tasked with reviewing the background to recent fatalities and existing safety programmes, undertaking site visits and identifying areas for improvement. Priorities for the Board’s Committees in 2018 During the last year, the Audit Committee oversaw an audit tender process, which resulted in the Board selecting Deloitte for appointment as the Group’s auditors, with effect from the 2020 financial year. The appointment will be subject to a confirmatory advisory vote at the 2020 Annual General Meeting (AGM). Further details on the process and on other matters dealt with by the Audit Committee during 2018 are set out on pages 60 to 62.In addition to its work in the area of Board renewal mentioned above, the Nomination & Corporate Governance Committee report describes the work of the Committee in the areas of committee composition and diversity.In his role as Remuneration Committee Chairman, Richie Boucher has led an in-depth consultation with shareholders on the Group’s remuneration policy and on how remuneration will be implemented in 2019. This follows a significant vote against the 2017 Directors’ Remuneration Report at the 2018 AGM. The 2018 Directors’ Remuneration Report on pages 68 to 97 sets out how the feedback received from shareholders has been reflected in the Committee’s remuneration proposals, which will be submitted to shareholders at the 2019 AGM. During 2018, the Board set up a new permanent committee to deal with safety, environmental and social responsibility (SESR) matters. The SESR Committee receives regular updates in each of these areas and is responsible for external reporting on sustainability matters. It will also monitor progress being made in relation to inclusion and diversity and will be responsible for the new provisions in the 2018 Code regarding culture monitoring and stakeholder engagement. While the building materials industry is somewhat challenging from a gender diversity perspective, we are committed to a sustainable approach to inclusion and diversity across the Group and we have a comprehensive strategy in place that is supported by the senior leadership team and includes changes in policy, recruitment practices, culture and Board oversight.Re-election of DirectorsI have evaluated the performance of each Director and am satisfied that each Director is committed to their role, provides constructive challenge and devotes sufficient time and energy to contribute effectively to the performance of the Board. Table 8 on page 65 provides a summary of competencies, important to the long-term success of the Group, that each Director seeking re-election at the 2019 AGM brings to the Board. Their full biographies are set out on pages 54 to 57. I recommend that shareholders vote in favour of the re-appointment of each Director going forward for re-election at the 2019 AGM.ConclusionThe governance landscape is ever-changing and there is now an important new focus on the alignment of corporate purpose, strategy, culture and stakeholder engagement. We believe that the structures and processes outlined in this report leave us well placed to demonstrate this alignment. Nevertheless, we have carried out a review of our structures and processes in the context of the 2018 Code and we look forward to sharing details with you on how these will evolve in the 2019 Annual Report and Form 20-F. Nicky HarteryChairmanFebruary 2019Corporate Governance ReportIn 2018, the Board focused on strategy, Board renewal, succession planning, talent management and safety, and these areas will continue to be areas of priority for the Board over the next 12 months.In September 2018, the Board visited Suwannee American Cement Company’s Sumterville Plant in Florida. The company, which is part of CRH’s Americas Materials Division, has two plants in Florida and is a leading cement supplier in the State. Following the acquisition of Ash Grove in 2018, CRH is now one of the leading cement producers in North America.1. The Governance Appendix is published in conjunction with the Directors’ Report in compliance with Section 1373 of the Companies Act 2014. For the purposes of Section 1373(2) of the Companies Act 2014, the Governance Appendix and the risk management disclosures on pages 22, 23 and 104 to 109 form part of, and are incorporated by reference into, this Corporate Governance Report. The primary (premium) listing of CRH plc is on the LSE, with the listing on Euronext Dublin characterised as secondary. For this reason, CRH plc is not subject to the same ongoing listing requirements as would apply to an Irish company with a primary listing on Euronext Dublin. For further information, shareholders should consult their financial adviser. Further details on the Group’s listing arrangements, including its premium listing on the LSE, are set out on page 66.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance60 61CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Chairman’s Overview On behalf of the Committee, I am pleased to introduce the Audit Committee Report for the year ended 31 December 2018. The purpose of this report is to provide shareholders with an insight into the workings of, and principal matters considered by, the Committee in 2018. General details in relation to the roles and responsibilities of the Committee, its operation and the policies applied by it can be found in the Governance Appendix. Table 2 on page 62 outlines the key areas that the Committee focused on in 2018.Audit Committee MembershipThe Committee currently consists of six non-executive Directors considered by the Board to be independent1. The biographical details of each member are set out on pages 56 and 57. Together, the members of the Committee bring a broad range of relevant experience and expertise from a variety of industries which is vital in supporting effective governance.External AuditorsAudit Tender/Rotation of AuditorsAs outlined in last year’s Audit Committee Report, a key focus for the Committee during 2018 was the launch of a competitive audit tender process with a view to appointing a new external auditor for the 2020 financial year.The Committee was responsible for the design and operation of the tender process and our key objectives were to ensure that (i) the process was efficient, fair, effective, open and transparent; and (ii) at the end of the tender process we would be in a position to submit two potential firms to the Board for appointment, with a reasoned preference for the appointment of one of them.An assessment was carried out in 2017 to identify the firms reasonably likely to be capable of performing the audit. This assessment considered: • Sector experience; • Size and geographical presence; and • Extent and nature of existing non-audit services provided to CRHBased on this assessment, three firms were invited to tender. EY, CRH’s current auditor, was not invited to participate due to the length of their tenure.Following the issuance of the Request for Proposal (RFP) in April 2018, we conducted a number of evaluation activities, including site visits with each firm covering CRH’s Divisions, key functions and geographies. In addition, we sought assurance that each firm would be capable of being independent in the timeframe required by applicable law or regulation before being appointed as auditor. The proposals received, and other activities conducted, were evaluated against the following criteria:• Audit quality;• Cultural fit;• Corporate fit; and• ExperienceFollowing evaluation of the proposals and activities, which was done on a “fee blind” basis, it was agreed to invite two of the firms to make final presentations to the Committee and Group Finance Director.Following these final presentations and discussions, the Committee2 recommended to the Board that Deloitte be appointed to succeed EY as CRH’s auditor. Whilst the Committee appreciated the quality of the proposals presented by all the firms, it believes that the strength and experience of Deloitte’s team best met the predefined criteria it had set. After considering the Committee’s recommendation, the Board selected Deloitte as CRH’s auditor for the financial year ending 31 December 2020. The appointment will be subject to a confirmatory advisory vote at the 2020 AGM.On behalf of the Committee, I would like to express my sincere thanks to each of the firms who participated in the tender process.Effectiveness The Committee, on behalf of the Board, is responsible for the relationship with EY and for monitoring the effectiveness and quality of the external audit process. The Committee’s primary means of assessing the effectiveness of the external audit process is by monitoring performance against the agreed audit plan. Each year the Committee considers the experience and knowledge of the EY audit team and the results of post-audit interviews with management and the Audit Committee Chairman. These annual procedures are supplemented by periodic formal reviews of the performance of EY. All of the above procedures indicate a continued high level of satisfaction with EY and the services provided by them to CRH. Corporate Governance Report - continuedAudit Committee ReportFurther details in relation to the external auditors, including information on how auditor objectivity and independence are maintained, are included in Section 2 of the Governance Appendix.Non-audit FeesIn order to ensure auditor independence and objectivity, the Committee has a policy on the provision of audit and non-audit services by the external auditor. In 2018, the external auditors provided a number of audit-related services, including Sarbanes-Oxley Section 404 attestation3, and non-audit services, including due diligence services associated with proposed acquisitions and disposals. EY were also engaged during 2018 in a number of jurisdictions in which the Group operates to provide help with local tax compliance, advice on taxation laws and other related matters; assignments which typically involve relatively small fees. The Committee is satisfied that the external auditors’ knowledge of the Group was an important factor in choosing them to provide these services. The Committee is also satisfied that the fees paid to EY for non-audit work in 2018, which amounted to €1.2 million and represented 6% of the total fees for the year, did not compromise their independence or integrity. Details of the amounts paid to the external auditors during the year for audit and other services are set out in note 5 to the Consolidated Financial Statements on page 147 (see also table 4 on page 62). Further details in relation to the Group’s policy regarding non-audit fees are set out in Section 2 of the Governance Appendix.Internal Audit EffectivenessIn December 2017, the Committee received and approved the Internal Audit plan for 2018. During the year, the Committee received regular updates from the Head of Internal Audit outlining the principal findings from the work of Internal Audit and management’s responses thereto.Audit Committee Effectiveness and Priorities for 2019During 2018, the Committee and the Board reviewed the operation, performance and effectiveness of the Committee and I am pleased to confirm that the Committee continues to operate effectively. I would like to thank my fellow Committee members for their commitment and input to the work of the Committee during 2018. The Committee will continue to focus on external audit planning, internal control, IT governance and cyber security and enterprise risk management during 2019. In addition, the Committee will receive regular updates in 2019 on the plans to transition external audit services from EY to Deloitte in 2020.William J. Teuber, Jr.Chairman of Audit Committee February 2019Audit Tender - Key Activities & Timeline2017JulSepOctNov-MarApr-JunOct-Dec2018• Gather requirements and design process • Establish governance structure• Issue Request for Information (RFI)• Consider evaluation criteria• Assess RFI responses• Commence independence assessment• Confirm shortlist of firms and evaluation criteria• Prepare RFP• Establish and launch data room• Determine and prepare for evaluation activities • Hold initial briefing meetings with the firms and one to one meetings with the Audit Committee Chairman• Develop, finalise and issue RFP• Support firms to ensure accurate understanding of requirements• Create evaluation template• Organise additional evaluation activities i.e. site visits, challenges• Submission of RFP responsesJul-AugSep• Review and evaluate RFP responses• Shortlist audit firms• Presentations by firms to Management• Final presentations to Audit Committee and Group Finance Director• Finalisation of Audit Committee recommendation• Approval by the Board of Audit Committee recommended firm• Commence exit/transition activitiesTable 11. The Board has determined that all of the non-executive Directors on the Audit Committee are independent according to the requirements of Rule 10A.3 of the rules of the Securities and Exchange Commission (SEC). 2. Due to his connection with one of the firms, Mr. McGovern took no part in the Committee’s recommendation and recused himself when the Board discussed and approved the appointment.3. A copy of Section 404 of the Sarbanes Oxley Act 2002 can be obtained from the SEC’s website, www.sec.gov....a key focus for the Committee during 2018 was the launch of a competitive audit tender process with a view to appointing a new external auditor for the 2020 financial year.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance62 63CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Areas Identified for Focus during the 2018 External Audit Planning Process Table 3Area of FocusAudit Committee ActionImpairment of GoodwillFor 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 16 to the Consolidated Financial Statements) based on a value-in-use computation or fair value less costs to sell. The annual goodwill impairment testing was conducted by management, and papers outlining the methodology and assumptions used in, and the results of, that assessment were presented to the Audit Committee. Following its deliberations, the Audit Committee was satisfied that the methodology used by management and the results of the assessment, together with the disclosures in note 16, were appropriate. Impairment of Property, Plant and Equipment, and Financial AssetsIn addition to the goodwill impairment testing process discussed above, the Group also undertook its annual assessment of 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 RecognitionIFRS 15 Revenue from Contracts with Customers 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 percentage-of-completion using an input method based on the proportion of contract costs incurred at the balance sheet date. If it is anticipated that the contract will be onerous (i.e. its unavoidable cost exceeds the economic benefit of the contract), a provision is created; being the lower of costs to complete the contract and the cost of exiting the contract. Following discussion with management and EY, and on the basis that the majority of contracts were completed within the financial year, the Audit Committee was satisfied that the recognition of contract revenue was appropriate for the Group in 2018.Accounting for Acquisitions and Divestments During 2018, the Group completed 46 acquisitions and investments at a total cost of €3.6 billion and realised disposal proceeds of approximately €3.0 billion across 20 business disposals. Particular focus was given to the acquisition of Ash Grove, due to its size and scale, and the judgements and estimates used by management in relation to the purchase price allocation for property, plant and equipment and in the recognition of provisions related to this acquisition. Following discussion with management and EY, the Committee was satisfied that the accounting treatment applied to all acquisitions and divestments during 2018 was appropriate.Chairman’s OverviewDuring the last 12 months, the main areas of focus for the Committee were the ongoing renewal and refreshment of the Board, the composition of the Board’s Committees and reviewing the approach to improving inclusion and diversity in the Group.Nomination & Corporate Governance Committee MembershipThe Committee currently consists of six non-executive Directors, considered by the Board to be independent. The biographical details of each member are set out on pages 54 to 57. The Chief Executive normally attends meetings of the Committee.Board Renewal The focus for Board renewal is aligned to CRH’s strategy and the needs of the business. The Committee maintains a skills matrix of the current Board to identify areas for enhancement and to highlight skills which may need to be replaced due to Board retirements. During the year, the Committee recommended to the Board that the following be appointed as non-executive Directors:• Richie Boucher (March 2018);• Mary K. Rhinehart (October 2018); and• Siobhán Talbot (December 2018)In order to identify shortlists for these roles, the areas of focus were industry expertise, increasing the number of non-executive Directors with financial expertise for the Audit Committee (in the context of potential retirements in the coming years), global experience, mergers and acquisitions expertise, strategic planning skills and improving Board diversity.Richie is a former Chief Executive of Bank of Ireland and has experience in finance, risk management, mergers and acquisitions and private equity. Mary is currently Chief Executive of Johns Manville, and has c. 40 years’ experience in the building materials sector, and was previously also Chief Financial Officer at Johns Manville. Siobhán is currently Managing Director of Glanbia, a listed multinational food company and has held a number of senior management roles including Finance Director. Their biographies, along with those of the rest of the Board, are set out in full on pages 54 to 57. I have agreed tailored induction programmes with each of Richie, Mary and Siobhán. Further details in relation to the induction process, including an indicative sample induction programme, are set out on page 4 of the Governance Appendix.External agents (Egon Zehnder and Leaders Mores) were used to identify candidates during the course of 2018. Egon Zehnder provides executive recruitment services to the business. Leaders Mores has no other connection with the Group.In February 2019, the Committee recommended to the Board that Bill Teuber, who has completed his initial three-year term as a non-executive Director, be appointed for a second three-year term. At the conclusion of the 2019 AGM, Don McGovern will retire from the Board following completion of his second three-year term as a Director.Chairman SuccessionAs I reported in last year’s Annual Report and Form 20-F, the Board asked me in February 2018 to extend my term as Chairman to act as a bridge until my successor is identified and a timeline for induction and appointment is agreed. A thorough and robust succession process is being led by Gillian Platt, Senior Independent Director, in conjunction with the Committee. The Board expects to make an announcement on the appointment of a Chairman Designate later this year. As part of the process for the appointment of the next Chairman, the Committee will take the provision of the 2018 Code, that the chair should not remain in position beyond nine years from the Nomination & Corporate Governance Committee Reportdate of appointment to the Board, into account. The 2018 Code applies to CRH with effect from 1 January 2019. Board Committee CompositionDuring the year, the Committee considered and made recommendations to the Board regarding changes to the composition of the Board’s Committees to ensure refreshment of the membership. Details of each Director’s Committee memberships are set out on pages 54 to 57. In September 2018, Richie Boucher took over as Chairman of the Remuneration Committee from Don McGovern. Richie was a member of the Remuneration Committee of Atlas Mara, a listed company, for a year prior to his appointment as the CRH Remuneration Committee Chairman.Senior Independent DirectorIn September 2018, Gillian Platt succeeded Don McGovern as Senior Independent Director.Inclusion & Diversity I am pleased to report that, as at 31 December 2018, 38% of the Directors on the Board were women. This percentage will increase to 42% at the conclusion of the 2019 AGM. Progress in improving the gender diversity on the Board since 2013 is shown in table 7 on page 65. Diversity is a key criteria for consideration as part of the Board renewal process. The Committee has updated its policy on diversity to highlight the importance of diversity in all aspects, including gender, social and ethnic backgrounds, cognitive and personal strengths. The updated policy is set out on page 64. Corporate Governance Report - continuedAudit Committee Report - continuedKey Areas of Focus in 2018Table 2IssueDescriptionExternal AuditorsEY have been the Group’s external auditors since 1988. Following an assessment of EY’s continued independence, objectivity and performance, and having received confirmation of their willingness to continue in office, the Committee has recommended to the Board their continuance in office for the 2019 financial year. As in prior years, their continuance in office will be subject to a non-binding advisory vote at the 2019 AGM. Pat O’Neill has been the Group’s lead audit engagement partner with effect from the financial year beginning 1 January 2016.Following the conclusion of a competitive tender process during 2018, the Board has selected, subject to a confirmatory advisory vote at the 2020 AGM, Deloitte for appointment as the external auditor for the financial year commencing 1 January 2020. Further details of the tender process are outlined on pages 60 and 61.Financial Reporting and External AuditWe reviewed the 2018 Annual Report and Form 20-F, together with the annual and half-year trading statements and recommended them to Board for approval. In July, we met with EY to agree the 2018 external audit plan. Table 3 below 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 EY, we reviewed management’s impairment testing methodology and processes. We found the methodology to be robust and the results of the testing process appropriate. New Accounting StandardsThe Committee considered and discussed with management the plans for, and expected impact of, the implementation of the new accounting standard in relation to IFRS 16 Leases with effect from 1 January 2019. Please see page 129 for further information on the implementation of IFRS 16.Enterprise Risk Management The Committee continued to monitor and review the Group’s Enterprise Risk Management framework and the methodology and process underlying the Viability Statement included on page 100 of the Directors’ Report (further details in relation to CRH’s risk governance are outlined on pages 22 and 23).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.IT Governance and Cyber Security We continued to monitor the Group’s IT governance and information security programme and ability to address cyber security threats. Percentage of Audit and Non-audit FeesTable 4Audit ServicesNon-audit Services7%93%201611%89%2017The focus for Board renewal is aligned to CRH’s strategy and the needs of the business.6%94%2018OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance64 65CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Increasing the percentage of women executives at below Board level and inclusion and diversity generally is also a key priority for the management team and the Board. Monitoring of progress being made in the area of inclusion and diversity comes under the terms of reference of the newly formed Safety, Environment and Social Responsibility Committee.Board EffectivenessIndependent Audit was engaged to carry out an external evaluation of the effectiveness of the Board and its Committees in 2018. Independent Audit met Board members, the Head of Internal Audit, the Company Secretary and a number of the senior executive management team in one-to-one interviews. They also observed Board and Committee meetings and reviewed the content and structure of Board papers. The resulting report has recently been presented to the Board. The Nomination & Corporate Governance Committee will review the recommendations contained in the report and agree appropriate action plans with the Board during the course of 2019. Independent Audit has no other connection with CRH.Time CommitmentDuring 2018, I was appointed as non-executive Chairman of Horse Racing Ireland, a body which is responsible for developing and promoting Ireland as a world centre of excellence for horse racing and breeding. I am satisfied that the responsibilities resulting from this new position will not impact on my time commitment to CRH. Prior to accepting the role, I discussed the nature of, and the time requirement associated with, the position with the Committee. Nicky Hartery,Chairman of Nomination & Corporate Governance Committee February 2019 Board of DirectorsMembership Structure of the BoardFollowing the changes outlined on page 63, the Board increased in size to 13 members during 2018. This will reduce to 12 following the 2019 AGM. This recent expansion beyond the Board’s normal range of 10 to 11 members is primarily for timing and succession planning reasons and it is expected to reduce in size in due course. The spread of nationalities of the Directors reflects the geographical reach of the Group and we consider that the Board as a whole has the appropriate blend of skills, knowledge and experience, from a wide range of industries, regions and backgrounds, necessary to lead the Group. Section 1 of the Governance Appendix on the CRH website (www.crh.com) contains further details on the Board’s structures and the Board’s policies with regard to the appointment and retirement of Directors. Role and Responsibilities The Board is responsible for the leadership, oversight, control, development and long-term success of the Group. It is also responsible for instilling the appropriate culture, values and behaviour throughout the organisation. There is a formal schedule of matters reserved to the Board for consideration and decision. This includes the matters set out in table 5 below.The Group’s strategy, which is regularly reviewed by the Board, and business model are summarised on pages 10 to 13.The Board has delegated some of its responsibilities to Committees of the Board. While responsibility for monitoring the effectiveness of the Group’s risk management and internal control systems has been delegated to the Audit Committee1, the Board retains ultimate responsibility for determining the Group’s risk appetite and tolerance, and annually considers a report in relation to the monitoring, controlling and reporting of identified risks and uncertainties. In addition, the Board receives regular reports from the Chairman of the Audit Committee in relation to the work of that Committee in the area of risk management. Individual Directors may seek independent professional advice, at the expense of the Company, in the furtherance of their duties as a Director.The Group has a Directors’ and Ofﬁcers’ liability insurance policy in place.Independence of DirectorsThe Nomination & Corporate Governance Committee has reviewed the interests of each Director and the Board has determined that each non-executive Director remains independent. ChairmanNicky Hartery was appointed Chairman of the Group in 2012. On his appointment as Chairman, he met the independence criteria set out in the 2016 Code. Notwithstanding the new provisions in the 2018 Code regarding tenure, the Board has determined that Mr. Hartery remains independent and is satisfied that he continues to demonstrate objective judgement and promotes constructive challenge amongst other Board members. Although he holds a number of other directorships, the Board has satisfied itself that these do not impact on his role as Chairman. Changes in Mr. Hartery’s time commitments in the past 12 months are outlined in the Nomination & Corporate Governance Committee report above. Policy on DiversityWe are committed to ensuring that the Board is sufficiently diverse and appropriately balanced. In its work in the area of Board renewal and succession planning, the Nomination & Corporate Governance Committee looks at the following four criteria when considering non-executive Director roles: • international business experience, particularly in the regions in which the Group operates or into which it intends to expand; • skills, knowledge and expertise (including education or professional background) in areas relevant to the operation of the Board; • diversity in all aspects, including nationality, gender, social and ethnic backgrounds, cognitive and personal strengths; and• the need for an appropriately sized Board Corporate Governance Report - continuedMatters Reserved to the Board Table 5• Appointment of Directors• Strategic plans for the Group• Annual budget• Major acquisitions and disposals• Significant capital expenditure• Approval of full-year results and the Annual Report and Form 20-F• Approval of the interim resultsIndependence (determined by CRH Board annually)15%Non-Independent85%IndependentGeographical Spread (by residency)8%Mainland Europe53%Ireland31%North America8%UK62%MaleGender Diversity38%FemaleTenure of Non-executive Directors (excluding Chairman)10%6-9 years50%0-3 years40%3-6 years1. In accordance with Section 167(7) of the Companies Act 2014.40%30%20%10%0%20142015201620172013201815%23%29%33%30%38%42%Post-2019 AGMMembership of the CRH Board (as at 31 December 2018)Table 6Gender Diversity - % of Female Directors (as at 31 December) Table 7Summary of Director Competencies Table 8CompetencyBoard Member Accounting, Internal Control & Financial ExpertiseA. Manifold, S. Murphy, M.K. Rhinehart, S. Talbot, W. J. Teuber Jr.Financial ServicesR. Boucher, S. Murphy, L.J. RichesGovernanceR. Boucher, N. Hartery, H.A. McSharry, G. Platt, M.K. Rhinehart, L.J. Riches, H. Th. Rottinghuis, W.J. Teuber Jr.Industry ExperienceN. Hartery, A. Manifold, S. Murphy, M.K. Rhinehart, H. Th. RottinghuisIT & Cyber SecurityN. Hartery, S. Murphy, W.J. Teuber Jr.Mergers & Acquisitions, Private Equity & Emerging MarketsR. Boucher, N. Hartery, P.J. Kennedy, A. Manifold, S. Murphy, L.J. Riches, H. Th. Rottinghuis, S. Talbot, W.J. Teuber Jr.Organisational Change, Succession Planning & Talent ManagementN. Hartery, G. Platt, M.K. RhinehartRemunerationR. Boucher, N. Hartery, H.A. McSharry, G. Platt, L.J. RichesSafety & SustainabilityN. Hartery, P.J. Kennedy, A. Manifold, G. Platt, M.K. Rhinehart, H. Th. Rottinghuis, S. TalbotStrategyR. Boucher, N. Hartery, P.J. Kennedy, H.A. McSharry, A. Manifold, S. Murphy, G. Platt, M. K. Rhinehart, L.J. Riches, H.Th. Rottinghuis, S. Talbot, W.J. Teuber Jr.Attendance at Meetings during the year ended 31 December 2018Table 9NameBoardAcquisitionsAuditFinanceNomination (i)RemunerationSESR (ii) TotalAttendedTotalAttendedTotalAttendedTotalAttendedTotalAttendedTotalAttendedTotal AttendedR. Boucher (iii)5522--44--55--N. Hartery6633--6666--22P.J. Kennedy6611----66111122D.A. McGovern, Jr.66--65(vi)--661111--H.A. McSharry66--77--441111--A. Manifold6633--------22S. Murphy6633--66------G.L. Platt66------66111122M.K. Rhinehart (iv)11------------L.J. Riches662266442265--H. Th. Rottinghuis663376------22S. Talbot (v)11------------W.J. Teuber, Jr. 66--7766------(i) Nomination & Corporate Governance Committee.(ii) Safety, Environment & Social Responsibility Committee. (iii) Appointed March 2018. (iv) Appointed October 2018.(v) Appointed December 2018.(vi) Due to his connection with one of the prospective audit firms, Mr. McGovern took no part in the Audit Committee meeting where the two shortlisted firms for potential appointment as the Group’s external auditor presented their final audit proposals.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance66 67CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018During the ongoing process of Board renewal, each, or a combination, of these factors can take priority.To date, the Board has not set any policy regarding age. The ages of the Directors range from 50 to 68, which the Nomination & Corporate Governance Committee believes is appropriate at the current time.Committees The Board has established six permanent Committees to assist in the execution of its responsibilities. The current permanent Committees are:• Acquisitions;• Audit;• Finance;• Nomination & Corporate Governance;• Remuneration; and• Safety, Environment & Social ResponsibilityAd-hoc Committees are formed from time to time to deal with speciﬁc matters. Each of the permanent Committees has Terms of Reference1, under which authority is delegated to them by the Board. The Chairman of each Committee reports to the Board on its deliberations and minutes of all Committee meetings are circulated to all Directors. The Chairmen of the Committees attend the AGM and are available to answer questions from shareholders.Each of the Committees has reviewed their respective Terms of Reference.The Terms of Reference of each Committee are available on the CRH website, www.crh.com.Substantial HoldingsThe 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 2018 are provided in table 10 below. The Company has not been advised of any changes in holdings since 31 December 2018. Stock Exchange ListingsCRH, which is incorporated in Ireland and subject to Irish company law, has a premium listing on the London Stock Exchange (LSE), a secondary listing on Euronext Dublin (formerly the Irish Stock Exchange) and its American Depositary Shares are listed on the New York Stock Exchange (NYSE).Regulatory, Compliance & Ethics CRH’s Regulatory, Compliance & Ethics (RCE) programmes support the Group in operating sustainably and consistently to its core values. CRH’s Legal and Compliance team provides support on a range of matters including establishing policies and procedures, providing compliance training and communications, providing legal advice on compliance issues, monitoring and investigating Hotline calls, competition/antitrust law, and ensuring the Group is informed of any changes to regulation and/or reporting requirements. During 2018, RCE’s priorities included enhancing our compliance programmes around data privacy, trade sanctions, antitrust, and culture. Code of Business Conduct The foundation of the RCE programmes is the Code of Business Conduct (CoBC) and supporting policies, which set out the guiding business principles and core values of the CRH Group. The Code complies with the applicable code of ethics regulations of the SEC arising from the Sarbanes-Oxley Act and it also reinforces the fundamental CRH principle that “there is never a good business reason to do the wrong thing.” The Code is applicable to all employees of the CRH Group, including the Chief Executive and senior financial officers. Awareness and Training In line with our commitment to maintain high ethical business standards, the CoBC and Advanced Compliance Training (which includes Anti-bribery, Anti-fraud, Anti-theft and Competition/Antitrust topics) e-Learning modules were enhanced to include both a first time and refresher element to the programme in 23 languages. During 2018, RCE implemented policies and guidance to support compliance with the General Data Privacy Regulation (GDPR) across the CRH businesses. Personal Data Privacy e-Learning along with general Personal Data Privacy information was rolled out. Additionally, a robust communication plan was put in place to promote awareness among employees in the form of toolkits, implementation checklists, and progress reports along with ensuring a “Business as Usual” operating model for data privacy within CRH. Substantial Holdings Table 10As at 31 December 2018, the Company had received notiﬁcation of the following interests in its Ordinary Share capital, which were equal to, or in excess of, 3%: 31 December 201831 December 201731 December 2016NameHolding/Voting Rights% at year endHolding/ Voting Rights% at year endHolding/ Voting Rights% at year endBaillie Gifford Overseas Limited and Baillie Gifford & Co.Holding below 3%Holding below 3%33,171,2993.98BlackRock, Inc. (i)65,387,2078.0175,119,2868.9574,809,4998.98Standard Life Aberdeen plc.Holding below 3%25,643,7473.05Holding below 3%UBS AG26,380,6043.2326,380,6043.1626,380,6043.16(i) BlackRock, Inc. has advised that its interests in CRH shares arise by reason of discretionary investment management arrangements entered into by it or its subsidiaries.The following are available on the CRH website (www.crh.com) Table 13Corporate GovernanceInvestors• Governance Appendix• Directors’ Remuneration Policy• Terms of Reference of the Acquisitions, Audit, Finance, Nomination & Corporate Governance, Remuneration and Safety, Environment & Social Responsibility Committees • Memorandum and Articles of Association of the Company• Pre-approval policy for non-audit services provided by the auditors • Compliance & Ethics statement, Code of Business Conduct and Hotline contact numbers• Annual and Interim Reports, the Annual Report and Form 20-F (separate documents up to 2015) and the annual Sustainability Report• News releases• Webcast recordings of results briefings• General Meeting dates, notices, shareholder circulars, presentations and poll results• Answers to Frequently Asked Questions, including questions regarding dividends and shareholder rights in respect of general meetingsHotline A 24/7 multi-lingual confidential “Hotline” facility is available for employees to report good faith concerns of violations of the CRH policies or the law. The Hotline is maintained by an independent operator. All reports received via the Hotline (or through other channels) are handled discreetly and professionally, and investigated with appropriate actions taken based on investigation findings. CRH is committed to creating an atmosphere where employees feel empowered to speak up when they have good faith concerns. Retaliation or reprisals are not tolerated at CRH. Communications with ShareholdersCommunications with shareholders are given high priority and the Group devotes considerable time and resources each year to shareholder engagement. We recognise the importance of effective dialogue as an integral element of good corporate governance. The Investor Relations team, together with the Chief Executive, Finance Director and other senior executives, regularly meet with institutional shareholders (each year covering over 60% of the shareholder base). Detailed reports on the issues covered in those meetings and the views of shareholders are circulated to the Board after each group of meetings. Table 12 provides a brief outline of the nature of the activities undertaken by our Investor Relations team. 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.During 2018, the Chairman, Senior Independent Director and Company Secretary again participated in a number of meetings with some of the Group’s major shareholders, in advance of the 2018 AGM. Also, as outlined in the Remuneration Committee Chairman’s introduction to the Directors’ Remuneration Report on page 68, there was extensive engagement with the Group’s major shareholders in late 2018/early 2019 on the Remuneration Committee’s proposals regarding the 2019 Directors’ Remuneration Policy. We respond throughout the year to correspondence from shareholders on a wide range of issues.US Listing - Additional Information Table 11Additional details in relation to CRH’s general corporate governance practices are set out in the Governance Appendix, which has been filed as an exhibit to the Annual Report on Form 20-F as filed with the SEC. For the purposes of the Annual Report on Form 20-F, the Governance Appendix, and in particular the following sections thereof, are incorporated by reference herein:Section 1 - Frequently Asked Questions• Page 3: For what period are non-executive Directors appointed?• Page 5: What are the requirements regarding the retirement and re-election of Directors?Section 2 - Operation of the Board’s Committees• Page 6: Audit Committee: Role and Responsibilities• Page 6: Audit Committee: Meetings• Page 8: Audit Committee: Non-audit FeesDetails of the executive Directors’ service contracts and the policy for loss of office are set out on page 81.Investor Relations Activities Table 12• Formal Announcements: including the release of the annual and interim results and the issuance of trading statements. These announcements are typically accompanied by presentations and webcasts or conference calls • Investor Roadshows: typically held following the release of formal announcements, provide an opportunity for the management team to meet existing and/or potential investors in a concentrated set of meetings• Industry Conferences: attendance at key sector and investor conferences affords members of the senior management team the opportunity to engage with key investors and analysts• Investor Briefings: in addition to regular contact with investors and analysts during the year, the Company periodically holds capital market days, which include presentations on various aspects of CRH’s operations and strategy and provides an opportunity for investors and analysts to meet with CRH’s wider management team• Media Briefings: each year, the Company provides media briefings on numerous issuesCorporate Governance Report - continued1. The Terms of Reference of these Committees comply fully with the 2016 Code; CRH considers that the Terms of Reference are generally responsive to the relevant NYSE rules, but may not address all aspects of these rules.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance68 69CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Chairman’s OverviewIntroductionAs Chairman of the Remuneration Committee, I am pleased to present the Directors’ Remuneration Report for the year ended 31 December 2018. I succeeded Don McGovern as Committee Chairman in September 2018. On behalf of the Committee, I would like to take this opportunity to thank Don for his stewardship of the Committee since 2015. I would also like to thank him for his help and guidance as I have transitioned into the role in recent months.The Directors’ Remuneration Report (the ‘Report’) is split into three sections:• this Chairman’s Statement (pages 68 to 72), which sets out: –the Committee’s approach to setting remuneration; –the background to the remuneration review carried out by the Committee in 2018 and details of our proposed updates to the Directors’ Remuneration Policy approved by shareholders at the 2016 AGM (the ‘2016 Policy’); –the Group’s performance in 2018 and details of the relevant incentive plan outcomes for 2018; and –the way in which we intend to implement remuneration in 2019; • the proposed Directors’ Remuneration Policy (the ‘2019 Policy’) (pages 74 to 83), which will be submitted to shareholders for approval at the 2019 AGM; and• the Annual Report on Remuneration (pages 84 to 97), which sets out details of the remuneration paid to Directors in respect of 2018 and how the 2019 Policy will operate for 2019Committee’s Approach to RemunerationThe key principles underpinning the Committee’s approach to remuneration are that remuneration should be set at a level that:• is fair and balanced; • is market competitive, enabling the Company to recruit and retain talented executives;• incentivises executives in a way that focuses on delivering the Company’s strategic objectives; and• aligns the interests of the executive team with those of shareholdersThe Committee is also committed to engaging with shareholders to understand their views on remuneration.Outcome of 2018 Annual General Meeting Vote on RemunerationA significant number of votes (39.69%) were received against the resolution to consider the 2017 Annual Report on Remuneration at the 2018 AGM. We engaged extensively with shareholders and proxy voting agencies before the 2018 AGM and subsequently communicated with shareholders again afterwards. Based on all of the feedback received, we understand that the votes cast against the resolution related mainly to remuneration levels (particularly in the context of the increase for the Finance Director in 2018), the timing of disclosures for bonus plan outcomes and certain elements of the performance measures in the Performance Share Plan (PSP).Remuneration ReviewFollowing in-depth consideration of the feedback referred to above, developments in best practice and newly introduced provisions in the 2018 Code, the Committee developed a number of proposals for policy changes and for the implementation of remuneration in 2019. A key element of the remuneration review was a desire to address shareholder feedback, promote consistency in remuneration and simplify CRH’s remuneration structures where possible. On behalf of the Committee, I contacted shareholders representing c. 70% of the issued share capital and major proxy voting agencies, to consult on our proposals. The consultation process took place over two phases in October 2018 and January 2019. We received feedback through in person meetings, conference calls and via correspondence. Overall, the feedback on the proposals was positive and supportive. The finalised proposals are summarised in table 14. 2019 Performance Share Plan TargetsIn determining the appropriate targets for the long-term PSP incentive plan, one area of feedback that we received from a number of shareholders was that they would like to see a returns metric introduced. We considered the merits of different returns measures and proposed the introduction of RONA, in line with our approach of simplicity and transparency, as Directors’ Remuneration ReportA key element of the remuneration review was a desire to address shareholder feedback, promote consistency in remuneration and simplify CRH’s remuneration structures where possible.Summary of 2019 Remuneration ProposalsTable 14ElementProposalFurther DetailsSalary• 2.5% increase in salary for executive Directors in 2019, which is in line with average workforce increases in CRH’s core countriessee page 94Annual Bonus Plan• No change in annual bonus opportunity • Annual bonus targets to be disclosed immediately on a reported year basis• Expanded disclosures on how targets are set to be included in the Director’s Remuneration Report• Percentage of earned annual bonus to be deferred into shares for a period of three years to be increased from 25% to 33.3%see pages 84 and 94Performance Share Plan• No change in PSP opportunity• RONA to be introduced as a measure in the PSP • TSR is to be measured against a re-confirmed bespoke peer group of companies, which will be more relevant and comparable by being weighted for market capitalisation. The TSR component will also be simplified by the removal of the FTSE All-World Construction and Materials Index• The weightings for PSP awards in 2019 will be 50% cash flow, 25% TSR and 25% RONA• For future awards, the Committee will retain flexibility to adjust the weightings of the PSP measures with no measure’s weighting falling below 25%• The targets for each PSP measure are set out in table 16 on page 70• The policy will be updated to introduce clawback provisions in addition to the existing malus provisionssee page 95 Pension• Introduction of new policy provision that pension contribution rates for new executive Director hires will not exceed the norm for pension related contributions/allowances for other new recruits, across the general workforce, in the individual’s home jurisdiction or, if applicable, the jurisdiction in which the individual is to be based in their executive Director role. For example, in Ireland and the UK such contributions/allowances range between 8%-12% of base salary depending on the rules of the relevant schemesee page 75 Shareholding Guidelines• Minimum shareholding requirement for the Chief Executive to be increased from 250% of salary to 350% of salary, with the revised guideline to be met from no later than 31 December 2023• Minimum shareholding requirement for the Finance Director to remain at 200% of salary, to be met from no later than 31 December 2022see page 83 Post-employment Holdings• Introduction of a new policy on post-employment holdings, whereby, if an executive leaves employment, to the extent that their PSP awards have met, or subsequently meet, the PSP financial criteria, at the discretion of the Remuneration Committee such awards will continue in place and will vest on a phased basis up to four years after date of cessation of employment or a minimum of five years after the date of awardsee page 83 Non-executive Directors• Fees to be increased with effect from 1 January 2019, as follows: –Chairman fee increased to €630,000 from €575,000 –non-executive Director base fee to increase by €10,000 to €88,000 –Committee fee to increase by €5,000 to €32,000 –Remuneration Chair fee to increase from €15,000 to €30,000 (when not combined with Senior Independent Director role)see page 94 RONA is a key metric used by management to assess investment opportunities and to run the business. In order to retain an equal balance between growth and returns, we have proposed that RONA and TSR be weighted at 25% each, with the important cash generation metric continuing to be weighted at 50%.In discussions with shareholders, we emphasised that all targets (particularly those for RONA) need to be seen in the context of the economic cycle and other factors such as portfolio management and mix. For example, RONA is generally negatively impacted by material acquisitions in the initial years post acquisition as integration and performance enhancing measures are implemented. Similarly, divestments of high RONA performing businesses (albeit with limited growth potential) have the effect of reducing overall Group RONA. The recent acquisition of Ash Grove and the divestment of Americas Distribution, both of which were in the Board’s view in the best long-term interests of shareholders, are cases in point. Further details in relation to the cash flow, TSR and RONA targets are set out on page 95.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance70 71CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018We also discussed with shareholders the extent to which the targets for cash flow and RONA in the PSP were related to the targets for margin improvement and cash capacity announced in May 2018. The proposed targets for full payout reflect most of our ambitious plan to improve margin and cash capacity. To achieve the RONA target for full payout, EBITDA (as defined)* margins would need to broadly equate to the highest ever achieved by the Group. The Committee is satisfied that these are significantly stretching targets.For PSP awards made in 2019 and in future years, clawback provisions will apply, in addition to the existing malus provisions, for a period of three years from the date of vesting. The PSP rules and the relevant award certificates will be updated to reflect this policy change.New 2018 Code ProvisionsIn July, new 2018 Code provisions relating to remuneration were introduced, which apply for CRH from 1 January 2019. The main new provisions which impact on the remuneration policy relate to pensions and post-employment shareholding requirements.During the consultation process, an area which resulted in a certain amount of discussion with shareholders was the issue of pension contributions, particularly for newly hired executive Directors. We have reflected on the various viewpoints expressed to us on this topic and have decided to update our policy to the effect that pension related contributions/allowances for newly hired executive Directors will be in line with the general practice for new recruits, across the general workforce, in the individual’s home jurisdiction or, if applicable, the jurisdiction in which the individual is to be based in their executive Director role. For example, in Ireland and the UK such contributions range from 8%-12% of base salary depending on the rules of the relevant scheme. There was a recognition in our discussions with shareholders that addressing this issue for new hires is more achievable than seeking to change the contracts for incumbent executive Directors, although we will keep the latter under review.We also discussed with shareholders the newly evolving area of post-employment shareholding requirements. Executive Director Shareholdings as a % of 2019 Base Salary (i)Table 19Guideline(% of Salary)To beachieved by Holdings as of 27 February 2019Total Interests(% of Salary)A. Manifold350%2023302%S. Murphy (ii)200%202229%Beneficially Owned SharesEstimated after tax value of PSP awards subject to a two-year hold period onlyEstimated after tax value of Deferred Share Awards made in 2016, 2017 and 2018, as appropriateNo. of sharesNo. of shares56%212%034%50,000100,000150,000200,00002,5005,0007,50010,0005%24%(i) For the purposes of this table, the interests have been valued using the three-month average share price to 31 December 2018, €24.90.(ii) Appointed with effect from 1 January 2016.Directors’ Remuneration Report - continued2019 Remuneration Snapshot Table 15DirectorSalaryMax. Annual Bonus (% of salary)Metrics for 2019 Bonus2019 PSP Award (% of salary)Metrics for 2019 PSP AwardAlbert Manifold€1,522,500 (+2.5%)225%• EPS (25%) • RONA (25%)• Operating cash flow (30%)• Personal/Strategic (20%)365%• Cash flow (50%)• TSR (25%)• RONA (25%)Senan Murphy€794,500 (+2.5%)150%225%Performance Share Plan Metrics – 2019 AwardsTable 16(i) For the purposes of the PSP, operating cash flow is defined as reported internally. The figure differs from the net cash inflow from operating activities reported in the Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows on the purchase of property, plant and equipment (PP&E), net proceeds from the disposal of PP&E, and before deducting interest and tax payments. Further information on the cash flow targets for the 2019 awards is set out on page 95.(ii) The methodology for TSR assumes all dividends are reinvested on 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. Details of the tailored peer group are set out in table 17 below.(iii) RONA is also defined as reported internally and differs from the RONA reported in the Non-GAAP Performance Measures in this report as it excludes one-off items and reflects seasonality and timing of development activity. Further information on the RONA targets for the 2019 awards is set on page 95.Vesting (% of element)25%0%MedianUpper Quartile100%TSR vs. tailored peer group (2019-2021)(25% of award) (ii)25%0%9%11.5%100%RONA (2021)(25% of award) (iii)Peer Group for Performance Share Plan Awards (i)Table 17ACSBoralBuzzi UnicemCemexHeidelberg CementLafargeHolcimSaint Gobain SkanskaTitan CementVicatVinciWienerberger(i) As outlined on page 95, following consultation with our brokers and advisers, Braas Monier and Rockwool have been removed from the peer group used for awards between 2014 and 2018.2018 Remuneration Snapshot (full details of 2018 remuneration are set out in table 32 on page 85)Table 18 FixedPerformance Related Variable Remuneration DirectorSalaryAnnual Bonus (% of max)Value of PSP awarded in 2016 (i) (% of max)Albert Manifold€1,485,260 81.48%59.13%Senan Murphy€775,000 81.48%59.13%(i) The awards, for which performance was measured over the three-year period to end 2018, will vest at 59.13% in 2021 following the completion of a two-year holding period. Further details in relation to the estimated value of the awards are included in table 32 on page 85. The market value per share on the date of award (March 2016) was €24.56.Vesting (% of element)Executive Directors’ Remuneration Summary25%0%€3.3bn€4.3bn100%Cumulative Cash Flow (2021) (50% of award) (i)Vesting (% of element)The 2018 Code requires companies to develop policies for such shareholding requirements. I discussed with shareholders the Committee’s view that the current holding period on our vested PSP awards provides a considerable de facto post-employment shareholding requirement as it continues to apply post-cessation of employment. Assuming 50% vesting (the average PSP vesting since 2006 has been 50%), PSP awards that remain subject to a two-year holding requirement at the time of cessation of employment would equate to c. 1.8x salary for the Chief Executive and c. 1.1x salary for the Finance Director, on a net of tax basis. These shares are released on a phased basis during the two years from the date of leaving. In addition, unvested PSP awards at the date of leaving, which would vest subject to performance on a time pro-rated basis, would be released on a phased basis up to four years from the date of leaving. In the case of the Chief Executive, for example, this is designed to result in expected post holding multiples as follows: • Year 1: 1.8x salary; • Year 2: 1.5x salary; • Year 3: 0.9x salary; and • Year 4: 0.3x salary We, therefore, propose to implement the 2018 Code requirement on this basis initially. However, as post-employment shareholding guidelines are a recent development, we will keep the position under review over the next year, during which market and best practice design should become more clear. The Board is regularly kept abreast of the perspectives of our employees and takes these perspectives into account when making decisions. The Committee has oversight of remuneration policy across the Group and endeavours to keep the principles and structure of remuneration consistent as far as possible across the Group. In line with the requirements of the 2018 Code, when we announced the voting results of the 2018 AGM, we also announced the actions that we would take to understand the reasons behind the voting outcome on the Directors’ Remuneration Report referred to above. We also issued an update at the end of October.The Committee’s Terms of Reference have been reviewed by the Committee and will be updated to reflect the requirements of the 2018 Code. The Terms of Reference are available on CRH’s website, www.crh.com.* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance72 73CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Directors’ Remuneration Report - continuedRemuneration Related Votes 2014-2018Table 23Year of AGM% in Favour% AgainstNo. of Votes WithheldTotal No. of Votes Cast (incl. Votes Withheld)% of Issued Share Capital VotedDirectors’ Remuneration Report (“Say on Pay”)201860.3139.6923,445,412533,151,07663.10201782.3117.698,260,492522,037,88162.45201691.358.654,214,665559,004,37767.83201594.395.618,946,923569,847,48869.51201498.111.8913,587,697511,277,38768.90Directors’ Remuneration Policy Report201659.1540.8513,830,863559,015,68467.83201495.234.773,648,186511,208,34368.90TSR Performance (2008-2018) Table 20 (i) For the purposes of comparability, the FTSE100 Index is converted to euro using the closing exchange rate at each year end.(ii) See table 17 on page 70 for details of the peer group.20142015201620172013201220112010200920082018350300250200150100500 CRH (DUB) FTSE100 (i) Eurofirst 300 Median of tailored peer group (ii) Historic Vesting of Performance Share Plan Awards as a % of Max. OpportunityTable 21(i) The awards which ‘vested’ in 2017, 2018 and 2019 are subject to a two-year hold period and will be released in 2019, 2020 and 2021 respectively.Vesting %2014201520162017201320122011201020182019100%80%60%40%20%0%2009Year of Vesting (i)Historic Bonus Payout as a % of Max. OpportunityTable 22Bonus Payment2014201520162017201320122011201020092018100%80%60%40%20%0%€2018 PerformanceAgainst a backdrop of international economic uncertainty, 2018 has been another year of progress for CRH with EBITDA (as defined)* for the year of €3.4 billion. Continued focus on strong financial performance in 2018 resulted in Net Debt at year end being 2.1x EBITDA (as defined)* despite significant development activity and the completion of €789 million of the €1 billion buyback programme announced in April 2018.Incentive Outcomes for 2018The Group’s performance in 2018 is reflected in the executive Directors’ remuneration for 2018, which is summarised on table 18 on page 70 and set out in detail on pages 84 to 88. The Committee determined that the annual bonus plan should pay out at 81.48% of the maximum opportunity for the Chief Executive and the Finance Director. Further details in relation to the annual bonus plan are set out on page 86. In line with evolving best practice, we have accelerated the disclosure of targets that the plan was based on in 2018 in this Report. Previously, these targets would have been disclosed in the 2019 Directors’ Remuneration Report.The Committee also determined that 59.13% of the awards made in 2016 under the PSP had met the relevant performance criteria for the period 2016-2018. Further details in relation to the 2016 Awards, including details of the applicable targets and performance for each of the components of the 2016 Awards, are set out on page 88.Alignment between Pay and PerformanceIn conjunction with Mercer Kepler, our external remuneration consultants, the Committee has conducted an analysis of the Company’s remuneration outcomes in 2018 against the TSR performance of the bespoke peer group used for PSP awards (see table 17 on page 70 for a list of these peer companies). This peer group is also used for remuneration benchmarking exercises by the Committee. Following this analysis, the Committee is satisfied that there was a strong alignment between pay and performance in 2018.2019 Annual General MeetingAt the 2019 AGM, shareholder approval will be sought in respect of three separate remuneration related resolutions:• the Directors’ Remuneration Report, which is an advisory vote on the way in which our remuneration policy was implemented in 2018, and the Committee’s proposed approach to its implementation in 2019;• the updated 2019 Remuneration Policy, which contains the policy changes outlined above. Shareholders have voted on CRH’s remuneration policy since 2014; and• the resolution to increase the limit on Directors’ fees, which is required as a result of an increased number of non-executive Directors on the Board (10 at the conclusion of the 2019 AGM) as well as the increase in non-executive Director feesConclusionI would like to thank shareholders and proxy advisory institutions who gave very generously of their time to review our proposals and provide feedback during the course of our remuneration review and consultation. This was an extensive process and I am satisfied that the Committee is aware of the issues which drove the significant vote against the remuneration report at the 2018 AGM. We believe that the proposals we have put forward both in terms of implementation in 2019 and updated policies for the next three years are fair and balanced, aligned to the interests of shareholders and executives and promote the long-term sustainable success of CRH. We hope to receive your support at the 2019 AGM on each of the three proposed resolutions.Richard BoucherChairman of the Remuneration Committee27 February 2019* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance74 75CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Directors’ Remuneration Report - continuedProposed 2019 Directors’ Remuneration Policy As outlined in the Committee Chairman’s Statement on page 68, the Committee carried out a review of the Group’s remuneration arrangements during 2018. The principal proposed changes to the 2016 Policy, which was approved by shareholders at the 2016 AGM, are set out on in table 14 on page 69. The following sets out the full updated 2019 Policy. The 2019 Policy, if approved, will provide the framework for remuneration decisions made by the Remuneration Committee. It is the Company’s intention that the 2019 Policy will apply until the 2022 AGM, unless the Remuneration Committee seeks shareholder approval for a renewed policy at an earlier date.The Remuneration Committee’s aim is to make sure that CRH’s pay structures are fair, responsible and competitive, in order that CRH can attract and retain staff of the calibre necessary for it to compete in all of its markets.The Group’s remuneration structures are designed to drive performance and link reward to the responsibilities and individual contribution of executives, while at the same time reflecting the risk policies of the Group. It is our policy to grant participation in the Group’s performance-related plans to key management to encourage alignment with shareholders’ interests and to create a community of interest among different regions and nationalities. CRH’s Approach to RemunerationThe purpose of the Policy is to:Attract and retain executives of the highest calibreReward and motivate executives to perform in the long-term interests of the shareholdersProvide an appropriate blend of fixed and variable remuneration and short and long-term incentivesPolicy TableTable 24 ElementFixed Base SalaryFixed PensionPurpose and link to strategy• Competitive salaries help to attract and retain staff with the experience and knowledge required to enable the Group to compete in its markets• Pension arrangements provide competitive and appropriate retirement plans• Given the long-term nature of the business, pension is an important part of the remuneration package to support creation of value and succession planning Operation• Base salaries are set by the Committee taking into account: –the size and scope of the executive Director’s role and responsibilities; –the individual’s skills, experience and performance; –salary levels at FTSE listed companies of a similar size and complexity to CRH and other international construction and building materials companies; and –pay and conditions elsewhere in the Group• Base salary is normally reviewed annually with changes generally effective on 1 January, although the Committee may make an out-of-cycle increase if it considers it to be appropriate• Irish-based executive Directors may participate in a contributory defined benefit scheme or, if they joined the Group after 1 January 2012, in a defined contribution scheme as the defined benefit scheme which the Directors participate in is closed to new entrants• For new appointments to the Board the Committee may determine that alternative pension provisions will operate (for example a cash contribution). When determining pension arrangements for new appointments the Committee will give regard to existing entitlements, the cost of the arrangements, market practice and the pension arrangements received elsewhere in the Group. Pension contribution rates for any newly hired executive Directors will not exceed the norm for pension related contributions/allowances for new recruits, across the general workforce, in the individual’s home jurisdiction or, if applicable, the jurisdiction in which the individual is to be based in their executive Director roleMaximum opportunity• Base salaries are set at a level which the Committee considers to be appropriate taking into consideration the factors outlined in the “operation” section above • While there is no maximum base salary, normally increases will be in line with the typical level of increase awarded to other employees in the Group but may be higher in certain circumstances. These circumstances may include: –Where a new executive Director has been appointed at a lower salary, higher increases may be awarded over an initial period as the executive Director gains in experience and the salary is moved to what the Committee considers is an appropriate positioning; –Where there has been a significant increase in the scope or responsibility of an executive Director’s role or where an individual has been internally promoted, higher salary increases may be awarded; and –Where a larger increase is considered necessary to reflect significant changes in market practice• The entitlement of individuals participating in defined contribution schemes reflects the accumulated individual and matching company contributions paid into the schemes. At present no Ireland-based executive Directors are members of a defined contribution scheme• In relation to Mr. Manifold, who joined the Group prior to 31 December 2011, the defined benefit pension is provided through an Irish-revenue approved retirement benefit scheme (the ‘Scheme’). Accrued benefits for service to 31 December 2011 are based on pensionable salary and years of service as at that date (annual accrual of 1/60th), with this tranche being revalued annually at the Consumer Price Index subject to a 5% ceiling. For service subsequent to that date a career-average revalued earnings system was introduced with each year of service being subject to annual revaluation on the same basis as outlined above. Mr. Manifold has elected to cease accruing pension benefits and to receive a supplementary taxable non-pensionable cash allowance in lieu of pension benefits foregone as a result of the pension cap (see page 94 for more details). This allowance is similar in value to the reduction in the Company’s liability represented by the pension benefit foregone. Whilst there is no absolute maximum to the quantum of these payments they are calculated based on actuarial advice as the equivalent of the reduction in the liability the Company would otherwise have had under the Scheme in respect of Mr. Manifold’s benefits and spread over the term to retirement as annual compensation allowancesPerformance measure• Not applicable• Not applicableFuture Policy TableFurther details regarding the operation of the 2019 Policy for the 2019 financial year can be found on pages 94 and 95 of the Directors’ Remuneration Report.The Remuneration CommitteeThe Remuneration Committee consists of five non-executive Directors considered by the Board to be independent. They bring the range of experience of large organisations and public companies, including experience in the area of senior executive remuneration, to enable the Committee to fulfil its role. Their biographical details are set out on pages 55 and 56. A schedule of attendance at Committee meetings is set out in table 9 on page 65.The main focus of the Committee is to: • determine and agree with the Board the Group’s policy on executive remuneration; • seek shareholder approval for the Directors’ Remuneration Policy at least every three years; • ensure that CRH’s remuneration structures are fair and responsible; and• consider and approve salaries and other terms of the remuneration packages for the executive Directors and the ChairmanIn addition, the Committee: • recommends and monitors the level and structure of remuneration for the executive Directors and senior management; and • oversees the preparation of this Directors’ Remuneration ReportIn considering remuneration levels for executive Directors particularly, the Committee takes into account remuneration trends across the CRH Group, which has a diverse range of operations in 32 countries, in geographic regions which are often at different stages in the economic cycle. Annually, the Chairman of the Remuneration Committee reviews with the Audit Committee the Group’s remuneration structures from a risk perspective. Foster entrepreneurship in regional companies by rewarding the creation of shareholder value through organic and acquisitive growthReflect the spread of the Group’s operations so that remuneration packages in each geographical area are appropriate and competitive for that areaReflect the risk policies and appetite 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 is cognisant that the pending legislation resulting from the updated Shareholder Rights Directive will introduce new provisions in relation to remuneration, which the Committee will consider in due course. OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance76 77CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Policy Table | continuedElementFixed BenefitsPurpose and link to strategy• To provide a market competitive level of benefits for executive DirectorsOperation• The Committee’s policy is to set benefit provision at an appropriate market competitive level taking into account market practice, the level of benefits provided for other employees in the Group, the individual’s home jurisdiction and the jurisdiction in which the individual is based• Employment-related benefits include the use of company cars (or a car allowance), medical insurance for the executive Director and his/her family and life assurance• In the event that the Chief Executive falls ill or is injured in such a way as which would 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• 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 practiceMaximum opportunity• The level of benefit provided will depend on the cost of providing individual items and the individual’s circumstances, and therefore the Committee has not set a maximum level of benefitsPerformance measure• Not applicableDirectors’ Remuneration Report - continuedPolicy Table | continuedPerformance-related pay - Annual BonusPerformance-related pay - 2014 Performance Share Plan• The Annual Performance-related Incentive Plan is designed to reward the creation of shareholder value through operational excellence and organic and acquisitive growth. The Plan incentivises executive Directors to deliver Group and individual goals that support long-term value creation• A Deferred Annual Performance-related Incentive Plan element links the value of executive Directors’ reward with the long-term performance of the CRH share price and aligns the interests of executive Directors with shareholders interests• “Malus” and clawback provisions enable the Company to mitigate risk• The purpose of the 2014 Plan is to align the interest of key management across different regions and nationalities with those of shareholders through an interest in CRH shares and by incentivising the achievement of long-term performance goals • “Malus” and clawback provisions enable the Company to mitigate risk • 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 2019: –66.7% of the bonus will be paid in cash; and –33.3% will be paid in shares• In future years, the Committee may determine that a different balance between cash and shares is appropriate and adjust the relevant payments accordingly• When assessing performance and determining bonus payouts the Committee also considers the underlying financial performance of the business to ensure it is consistent with the overall award level• The deferred element of the bonus will be structured as a conditional share award 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. Cash bonus payments are subject to clawback of the net amount paid for a period of three years from payment• Awards (in the form of conditional share awards 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. Clawback provisions will apply with effect from the 2019 awards• Maximum annual opportunity of 225% of base salary• For 2019, the intended maximum award levels are: –225% of base salary for Chief Executive; and –150% of base salary for the Finance Director• Maximum annual opportunity of up to 365% of base salary• For 2019, the intended award levels are: –365% of base salary for Chief Executive; and –225% of base salary for Finance Director• The performance-related incentive plan is based on achieving clearly defined and stretching annual targets and strategic goals set by the Committee each year based on key business priorities• The performance metrics used are a mix of financial targets including return goals and personal/strategic objectives generally. Currently 80% of the bonus is based on financial performance measures• The Committee may vary the weightings of measures but no less than 50% shall be based on financial performance measures• A portion of the bonus metrics for any Director may be linked to his/her specific area of responsibility • Up to 50% of the maximum bonus will be paid for achieving target levels of performance• Awards to be granted in 2019 will vest based on cumulative cash flow (50%), a relative TSR test compared to a tailored group of key peers (25%) and RONA (25%)• For threshold levels of performance, 25% of the award vests • Where applicable, when determining vesting under the PSP the Committee reviews whether the TSR performance has been impacted by unusual events and whether it therefore, reflects the underlying performance of the business• The Committee may adjust the weightings of the measures at the start of each cycle, with no measure’s weighting falling below 25%• The Committee may amend the performance conditions if an event occurs that causes it to consider that an amended performance condition would be more appropriate and would not be materially less difficult to satisfyOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance78 79CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Notes to Policy TableChanges to 2016 Remuneration PolicyProposed changes to the 2016 Policy are outlined in the Chairman’s introductory statement on pages 68 to 72.Plan RulesThe 2014 Deferred Share Bonus Plan and the 2014 Performance Share Plan form part of the 2019 Policy and shall be operated in accordance with the relevant plan rules. Awards may be (i) adjusted in accordance with the rules in the event of a variation of the Company’s share capital, merger, de-merger, special dividend or other event that, in the opinion of the Committee, materially affects the price of shares; and (ii) amended in accordance with the plan rules.Clawback/MalusFor Deferred Annual Performance-related Incentive plan awards and Performance Share Plan awards, the Committee has the discretion to reduce or impose further conditions on awards prior to vesting in certain circumstances, including but not limited to:• a material misstatement of the Group’s audited financial results;• a material failure of risk management; or• serious reputational damage to the Group or one of its businesses as a result of a participant’s misconduct or otherwiseCash bonus payments are subject to clawback of the net amount paid for a period of three years from payment in the circumstances outlined. With effect from the awards made in 2019, vested PSP awards will be subject to clawback for a period of three years from the date of vesting.Other elements of remuneration are not subject to clawback or malus provisions.GeneralThe Committee reserves the right to make any remuneration payments and payments for loss of office (including exercising any discretions available to it in connection with such payments) notwithstanding that they are not in line with the policy set out above where the terms of the payment were agreed (i) before 7 May 2014 (the date the Company’s first shareholder-approved Directors’ Remuneration Policy came into effect); (ii) before the policy set out above came into effect, provided that the terms of the payment were consistent with the shareholder-approved Directors’ Remuneration Policy in force at the time they were agreed; or (iii) at a time when the relevant individual was not a director of the Company and, in the opinion of the Committee, the payment was not in consideration for the individual becoming a director of the Company; or (iv) in settlement of statutory employment rights. For these purposes “payments” includes the Committee satisfying awards of variable remuneration and, in relation to an award over shares, the terms of the payment are “agreed” at the time the award is granted.Minor AmendmentsThe Committee may make minor changes to the 2019 Policy for regulatory, exchange control, tax or administrative purposes or to take account of a change in legislation without seeking shareholder approval for that amendment.Information Supporting the Policy TableSelection of Performance Measures and Targets(i) Annual bonusAnnual incentive plan targets are selected each year to incentivise executive Directors to achieve annual financial, operational, strategic and personal goals across a range of metrics which are considered important for delivering long-term performance excellence. (ii) Performance share planThe ultimate goal of our strategy is to provide growth and long-term sustainable value for all of our shareholders. Performance measures for PSP awards to be granted in 2019 are, therefore, focused on generating cash in the business, achieving relative outperformance of TSR against our key peers and generating a return on net assets. Targets for the annual bonus and PSP are set each year by the Committee taking into account internal plans and external expectations. Targets are calibrated to be stretching but motivational to management and to be aligned with the long-term creation of shareholder value.Remuneration Arrangements Throughout the GroupCRH operates significant operations in over 3,700 locations in 32 countries with approximately 90,000 employees across the globe. Remuneration arrangements throughout the organisation, therefore, differ depending on the specific role being undertaken, the level of seniority and responsibilities, the location of the role and local market practice. However, remuneration arrangements are designed based on a common set of principles: that reward should be set at a level which is appropriate to retain and motivate individuals of the necessary calibre to fulfil the roles without paying more than is considered necessary. The reward framework is designed to incentivise employees to deliver the requirements of their roles and add value for shareholders. The Group operates share participation plans and savings-related share option schemes for eligible employees, including executive Directors, in all regions where the regulations permit the operation of such plans. Remuneration Policy for New HiresCRH has a strong history of succession planning and developing internal executive talent. The Committee’s key principle when determining appropriate remuneration arrangements for a new executive Director (appointed from within the organisation or externally) is that arrangements are in the best interests of both CRH and its shareholders without paying more than is considered necessary by the Committee to recruit an executive of the required calibre to develop and deliver the business strategy.Remuneration Policy for Non-Executive DirectorsTable 25Approach to Setting FeesBasis of FeesOther 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; –an additional fee for the role of Senior Independent Director; –an additional fee to reflect committee work (combined fee for all committee roles); and –an additional fee based on the location of the Director to reflect time spent travelling to Board meetings• Other fees may also be paid to reflect other Board roles or responsibilities• In accordance with the Articles of Association, shareholders set the maximum aggregate amount of the fees payable to non-executive Directors. The current limit of €875,000 was set by shareholders at the Annual General Meeting held in 2016. A resolution to increase the limit to €1,000,000 will be included on the agenda for the 2019 AGM• 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 pensions• The Group Chairman is reimbursed for expenses incurred in travelling from his residence to his CRH office on a gross up basis so that he is not at a net loss after deduction of tax• Benefits including retirement gifts (provided they do not exceed the de minimis threshold outlined on page 95) may be provided if, in the view of the Board (for non-executive Directors or for the Chairman), this is considered appropriate. The Company may gross up any expenses so that the non-executive Directors are not at a net loss after deduction of tax. Details regarding any benefit provided will be disclosed in the relevant year of receiptThe Committee would generally seek to align the remuneration package offered with our remuneration policy outlined in table 24. Although in exceptional circumstances, the Committee may make remuneration proposals on hiring a new executive Director which are outside the standard policy to facilitate the hiring of someone of the calibre required to deliver the Group’s strategy. When determining appropriate remuneration arrangements the Committee will take into account all relevant factors including (among others) the level of opportunity, the type of remuneration opportunity being forfeited and the jurisdiction the candidate was recruited from. Any remuneration offered would be within the limit on variable pay outlined in this 2019 Policy.Variable remuneration in respect of an executive Director’s appointment shall be limited to 590% of base salary measured at the time of award. This limit is in line with the plan maximum outlined in table 24. This limit excludes any awards made to compensate the Director for awards forfeited from his or her previous employer.The Committee may make awards on appointing an executive Director to “buy-out” remuneration terms forfeited on leaving a previous employer. In doing so the Committee will take account of relevant factors including any performance conditions attached to these awards, the form in which they were granted (e.g. cash or shares) and the time over which they would have vested. The Committee’s key principle is that 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 UK Listing Rule 9.4.2 which allows for the granting of awards, to facilitate, in unusual circumstances, the recruitment of an executive Director, without seeking prior shareholder approval or under other relevant company incentive plans. The use of Listing Rule 9.4.2 shall be limited 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 in table 25 below. 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 in table 25.Directors’ Remuneration Report - continuedOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance80 81CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Performance-related Remuneration OutcomesTable 28Remuneration Outcomes in different Performance ScenariosTable 26Performance ScenarioPayout LevelMinimum• Fixed pay (see table 27 for each executive Director)• No bonus payout• No vesting under the Performance Share PlanOn-target performance• Fixed pay (see table 27 for each executive Director)• 50% annual bonus payout (112.5% of salary for the Chief Executive and 75% for the Finance Director)• 25% vesting under the Performance Share Plan (91.25% of salary for the Chief Executive and 56.25% for the Finance Director)Maximum performance (at constant share prices and assuming a 50% increase in share price)• Fixed pay (see table 27 for each executive Director)• 100% annual bonus payout (225% of salary for the Chief Executive and 150% of salary for the Finance Director)• 100% Performance Share Plan vesting (365% of salary for the Chief Executive and 225% for the Finance Director)Fixed Pay Annual Bonus Long-term incentives€m€14.0€12.0€10.0€8.0€6.0€4.0€2.0€0Chief Executive€2,339k100%€5,440k31%26%43%€11,319k21%30%49%€14,097k17%24%59%€m€5.0€4.0€3.0€2.0€1.0€0Finance Director€1,018k100%€2,061k29%22%49%€3,997k25%30%45%€4,891k21%24%55%MinimumOn-target performanceMinimumOn-target performanceHypothetical Remuneration ValuesTable 27Salary With effect from 1 January 2019Benefits Level paid in 2018 (i)Estimated Pension (ii)Total Fixed PayChief Executive (Albert Manifold)€1,522,500€55,000€761,250€2,338,750Finance Director (Senan Murphy)€794,500€25,000€198,625€1,018,125(i) Based on 2018 expenses.(ii) See page 94 for details in relation to retirement benefit arrangements.Executive Director Service Contracts and Policy on Payment for Loss of OfficeWhen 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 ContractsThe Chief Executive and Finance Director have entered into service contracts with the Company. The summaries in tables 29 and 30 set out the key remuneration terms of those contracts (other than in respect of bonus or other incentive arrangements, for which the discretion of the Committee will remain). As part of a review and harmonisation of executive service contracts generally in 2018, we identified an anomaly in the Finance Director’s service contract whereby the notice period from the company is six months but the restriction on termination of employment provisions in the contract are for a period of up to 12 months. We indicated to shareholders during the course of the consultation referred to in the Remuneration Committee Chairman’s introduction on page 68 that we will look to regularise this and we would expect to do so during the course of 2019.The Committee reserves the right to make any other payments in connection with a director’s cessation of office or employment where the payments are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation) or by way of a compromise or settlement of any claim arising in connection with the cessation of a director’s office or employment. Under Irish Company Law, CRH is not required to 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 BonusExecutive 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 ContractTable 29Notice period• 12 months’ notice by the Company or the executiveExpiry date• Indefinite duration• Terms of contract will automatically terminate on the executive’s 62nd birthdayTermination 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 executiveDisability• 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 terminatedOther 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 contributionFinance Director Service ContractTable 30Notice period• Six months’, notice by the Company or the executiveExpiry date• Indefinite duration• Terms of contract will automatically terminate on the executive’s 65th birthdayTermination 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 dueOther 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 contributionDirectors’ Remuneration Report - continuedRemuneration Outcomes in different Performance ScenariosRemuneration at CRH consists of fixed pay (salary, pension and benefits), short-term variable pay and long-term variable pay. A significant portion of executive Directors’ remuneration is linked to the delivery of key business goals over the short and long-term and the creation of shareholder value. Table 28 shows hypothetical values of the remuneration package for executive Directors under four assumed performance scenarios (based on 2019 proposals).No share price growth or the payment of dividend equivalents has been assumed in these scenarios. Potential benefits under all-employee share schemes have not been included.Constant share priceShare price +50%Maximum Performance Constant share priceShare price +50%Maximum Performance Share Plan Rules – Leaver ProvisionsThe treatment of outstanding share awards in the event that an executive Director leaves is governed by the relevant share plan rules. Table 31 on page 82 summarises leaver provisions under the executive share plans. “Good leaver” circumstances are defined in the 2014 Performance Share Plan and deferred annual performance-related incentive plans as ill-health, injury, disability, the participant’s employing company or business being sold out of the Group or any other reason at the Committee’s absolute discretion (except where a participant is summarily dismissed).Where an individual leaves by mutual agreement the Committee has discretion to determine the treatment of outstanding share awards.Individuals who are dismissed for gross misconduct would not be treated as “good leavers”.Awards under the 2010 Savings-related Share Option Scheme are treated in accordance with the rules. The rules provide that awards may be exercised by a participant’s executor within 12 months of the date of death, and six months from the date of termination of employment in other circumstances where options automatically become exercisable, for example in the case of retirement. OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance82 83CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Leaver ProvisionsTable 31Death“Good Leavers” as determined by the Committee in accordance with the plan rulesLeavers in other circumstances Deferred Annual Performance Incentive Plan 2014• Unvested awards vest, unless the Committee determines otherwise, to the extent determined by the Committee• Awards in the form of nil-cost options may be exercised for 12 months from death (or another period determined by the Committee)• Awards shall normally vest in full at the normal vesting date. Alternatively, the Committee may determine that awards should vest at the time the individual leaves, subject to the Committee determining that the individual has a shareholding sufficient to apply as a de facto post-shareholding requirement post-cessation of employment• Where awards vesting in such circumstances are granted in the form 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 will lapse on the individual’s cessation of office or employmentPerformance Share Plan 2014• Unvested awards shall vest as soon as practicable following death unless the Committee determines otherwise. The number of shares vesting shall be determined by the Committee taking into account the extent to which the performance condition has been met and, if the Committee determines, the length of time that has elapsed since the award was granted until the date of death (or if death occurs during an applicable holding period, to the beginning of the holding period)• Awards in the form of nil-cost options may be exercised for 12 months from death (or another period determined by the Committee)• Awards shall normally vest at the normal vesting date. Alternatively the Committee may determine that awards should vest at the time the individual leaves, subject to the Committee determining that the individual has a shareholding sufficient to apply as a de facto shareholding requirement post-cessation• The level of vesting shall be determined by the Committee taking into account the extent to which the performance condition has been met and, unless the Committee determines otherwise, the period of time that has elapsed since the date of grant until the date of cessation (or if cessation occurs during an applicable holding period, to the beginning of the holding period)• Awards vesting in such circumstances in the form 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)• Awards will lapse on the individual’s cessation of office or employmentWhere an executive ceases employment on his own volition or as a result of summary dismissal they will normally forfeit outstanding share incentive awards.The Committee may allow awards to vest early at its discretion in the event an executive Director is to be transferred to a jurisdiction where he would suffer a tax disadvantage or he would be subject to restrictions in connection with his award, the underlying shares or the sales proceeds.Change of ControlIn the event of a change in control of the Company, the Committee will consider whether it would be appropriate for awards to be exchanged for equivalent awards in the purchaser’s shares.Directors’ Remuneration Report - continuedUnless the Committee determines otherwise, in the event of a change in control of the Company:• awards granted under the 2014 Plan will vest taking into account the extent to which any performance condition has been satisfied and, unless the Committee determines otherwise the period of time that has elapsed since grant and the relevant event (or if the event occurs during an applicable holding period, to the beginning of the holding period); and• awards granted under the 2014 Deferred Annual Performance-related Incentive Plan may, at the discretion of the Committee, vest in fullIf 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:• awards granted under the 2014 Plan may, at the Committee’s discretion, vest taking into account the extent to which any performance condition has been satisfied and, unless the Committee determines otherwise, the period of time that has elapsed since the date of grant and the relevant event (or if the event occurs during an applicable holding period, to the beginning of the holding period); and• awards granted under the 2014 Deferred Annual Performance-related Incentive Plan will vest to the extent the Committee determinesShareholding Guideline for Executive DirectorsExecutive Directors are required to build up (and maintain) a minimum holding in CRH shares. The shareholding guidelines for the Chief Executive and Finance Director are 3.5x basic salary and 2.0x basic salary respectively, with the guidelines to be achieved by 31 December 2023 and 31 December 2022, respectively. For the purposes of determining the number of shares held by the executive Directors, the relevant calculation will include shares beneficially owned by the executive Directors, annual bonus awards which are deferred into shares for three years and PSP awards that have met the financial performance criteria but are subject to a two-year holding period prior to release. The deferred share awards and PSP awards subject to a two-year hold period are not subject to any further performance criteria other than continued employment with the Group.In the event that the shareholding guidelines are not met by the applicable deadlines, the Remuneration Committee will consider what action to take at that time.Post-employment Holding RequirementsThe Remuneration Committee believes that the current holding period on our vested PSP awards provides a considerable de facto post-employment shareholding requirement as it continues to apply post-cessation. Assuming 50% vesting, PSP awards that remain subject to a two-year holding requirement at the time of cessation of employment would equate to c. 1.8x basic salary for the Chief Executive and c. 1.1x basic salary for the Finance Director, on a net tax basis. These shares are released on a phased basis during the two years from the date of leaving. In addition, unvested PSP awards at the date of leaving, which can, at the discretion of the Remuneration Committee, vest subject to performance on a time pro-rated basis, would be released on a phased basis up to four years from the date of leaving.Non-executive Director – Letters of AppointmentNon-executive Directors serve under letters of appointment, copies of which are available for inspection at the Company’s Registered Office and at the AGM.In line with the 2016 Code, all non-executive Directors submit themselves for re-election by shareholders every year at the AGM. All non-executive Director appointments can be terminated by either party without notice. There is no payment in lieu of notice provided.Considering Employee ViewsThe Board is regularly kept abreast of employees’ perspectives and takes them into account when making decisions. In particular, the Remuneration Committee has oversight of remuneration policy across the Group and endeavours to keep the structure of remuneration consistent as far as possible.Consulting with ShareholdersThe Committee believes that it is very important to maintain open dialogue with shareholders on remuneration matters. CRH consulted extensively with shareholders in relation to the 2019 Policy. Shareholder views were important in shaping the final proposals outlined in the 2019 Policy.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.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance84 85CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Directors’ Remuneration Report - continuedIndividual Executive Remuneration for the year ended 31 December 2018 (Audited)Table 32Albert ManifoldSenan MurphyMaeve Carton (i)201820172016201820172016201820172016Fixed Pay€000€000€000€000€000€000€000€000€000Basic Salary (ii)1,4851,4421,400775706625-470689Benefits (iii)553522252522-1810Retirement Benefit Expense (iv)684677671194176156-135252Total Fixed Pay2,2242,1542,093994907803-623951Performance-related PayAnnual Bonus (v):Cash Element2,0422,3382,323710762679-634748Deferred Shares681779774237254227--250Total Annual Bonus2,7233,1173,0979471,016906-634998Long-term Incentives (vi):Performance Share Plan- value delivered through performance3,2382,7203,171792---1,1381,320- value delivered through share price growth456681,62211---280675Total Long-term Incentives3,2833,3884,793803---1,4181,995Total Performance-related Pay6,0066,5057,8901,7501,016906-2,0522,993Total Single Figure 8,2308,6599,9832,7441,9231,709-2,6753,944(fixed and performance-related)(i) Maeve Carton retired as a Director on 31 August 2017.(ii) Basic Salary: Further details and background in relation to the changes in salaries effective for 2018 are set out on pages 72 and 73 of the 2017 Directors’ Remuneration Report.(iii) Benefits: For executive Directors these relate principally to the use of company cars, medical insurance and life assurance and, where relevant, the value of the non-taxable discount on the grant of options under the Group’s 2010 Savings-related Option Scheme and any retirement gifts or long-service awards.(iv) Retirement Benefit Expense: As noted on page 94, Albert Manifold receives a supplementary taxable non-pensionable cash allowance, in lieu of prospective pension benefits foregone. This allowance is similar in value to the reduction in the Company’s liability represented by the pension benefit foregone. It is calculated based on actuarial advice as the equivalent of the reduction in the Company’s liability to Mr. Manifold and spread over the term to retirement as an annual compensation allowance. Senan Murphy receives a supplementary taxable non-pensionable cash supplement equivalent to 25% of his annual base salary in lieu of a pension contribution.(v) Annual Bonus Plan: Under the executive Directors’ Annual Bonus Plan for 2018, a bonus was payable for meeting clearly defined and stretch targets and strategic goals. The structure of the 2018 Annual Bonus Plan, together with details of the performance against targets and payouts in respect of 2017 and 2018, are set out on pages 86 and 87. For 2018, 2017 and 2016 bonuses, 25% of executive Directors’ bonuses were paid in Deferred Shares, vesting after three years, with no additional performance conditions. In the case of Maeve Carton, following her retirement in 2017 the Remuneration Committee determined that the Deferred Shares in respect of the bonus granted in 2016 should be released to her and that her 2017 bonus, pro-rated for service to her retirement in August 2017, should be paid in cash.(vi) Long-term Incentives: In February 2019, the Remuneration Committee determined that 59.13% of the performance conditions which applied to the PSP awards made in 2016 have been met. The awards are subject to a two-year holding period and will vest in 2021. For the purposes of this table, the value of these awards (including accrued dividend equivalents), which were subject to a three-year performance period ending in 2018, has been estimated using a share price of €24.90, being the three-month average share price to 31 December 2018. Amounts in the long-term incentive column for 2017 reflect the value of long-term incentive awards with a performance period ending in 2017 (i.e. the PSP awards granted in 2015), which the Remuneration Committee determined in February 2018 had met 78.7% of the applicable performance targets. The awards are scheduled to vest in 2020 following the completion of a two-year holding period. For the purposes of this table, the value of these awards (including accrued dividend equivalents) has been estimated using a share price of €30.42, being the three-month average share price to 31 December 2017. Amounts in the long-term incentive column for 2016 reflect the value of long-term incentive awards with a performance period ending in 2016 (i.e. the PSP awards granted in 2014), which the Remuneration Committee determined in February 2017 had met the applicable performance targets. The awards are scheduled to vest in 2019 following the completion of a two-year holding period. For the purposes of this table, the value of these awards (including accrued dividend equivalents) has been estimated using a share price of €30.97, being the three-month average share price to 31 December 2016.Annual Report on Remuneration Remuneration Received by Executive Directors in Respect of 2018 Details of individual remuneration for executive Directors for the year ended 31 December 2018, including explanatory notes, are given in table 32 on page 85. Details of Directors’ remuneration charged against profit in the year are given in table 47 on page 97. 2018 Annual Bonus PlanCRH’s Annual Bonus Plan for 2018 was based on a combination of financial targets and personal/strategic goals. The metrics for target payout, which is up to a maximum of 50% of the total annual bonus opportunity, are based on achieving the budget set by the Board in respect of each metric. The threshold level for bonus payouts is for the achievement of 92% of budget, whereas maximum payout is achieved for stretch performance of between 105% of budget for EPS and Cash Flow and 108% of budget for RONA. The relative weighting of the components of the 2018 plan, together with details of the applicable targets and performance for each measure is given in table 33 on page 86.When setting the targets for the annual bonus plan, the Committee makes assumptions regarding exchange rates and development activity. The Committee also compares the proposed targets to the outturn for the previous year to ensure that the targets are sufficiently stretching. In this regard, it is important to note that the metrics in the plan are influenced by the economic cycle and other factors, such as ongoing portfolio management. In relation to the targets for the 2018 bonus plan, a number of factors, including, the impact of the divestment of Americas Distribution, the non-recurrence of one-off gains, lower expected asset disposals, challenging markets in CRH’s operations in Asia and adverse exchange rates resulted in target EPS, cash flow and RONA being set by the Board at a level that was lower than the actual outturn for 2017 (see tables 33 and 35 on pages 86 and 87). When reviewing performance against the bonus plan, the Committee typically makes a number of adjustments, for example, in relation to actual exchange rates and development activity during the year. For the 2018 bonus plan, adjustments were made due to the later than planned closing of the acquisition of Ash Grove, the additional contribution from other acquisitions completed in 2018, the deduction of budgeted income for the period from July to December 2018 as a result of the divestment of the DIY business by Europe Distribution (which was completed on 13 July 2018) and for exchange rates. Also, when assessing performance, the Committee made adjustments to counteract the impact of the share buyback programme (which commenced in May 2018) on EPS and excluded the significant profit from the divestment of Americas Distribution, which was a one-off item in 2018.Details of each executive Director’s personal and strategic objectives and their achievement against these objectives are set out in table 34 on page 86.Overall, the combination of the performance by the Group in 2018 and the achievement against personal and strategic objectives translated to annual bonus payouts of 81.48% of the maximum opportunity for Albert Manifold and Senan Murphy, with total bonus payments of 183% of salary and 122% of salary respectively.In accordance with the 2016 Policy, 25% of the bonus amounts for Albert Manifold and Senan Murphy will be deferred into shares for a period of three years. Deferred Share awards are not subject to any additional performance conditions during the deferral period and are adjusted for dividend equivalents based on dividends paid by CRH during the deferral period. Annual bonus awards are subject to recovery provisions for three years from the date of payment (cash awards) or grant (deferred awards). 2017 Annual Bonus – Retrospective Disclosure of TargetsCRH’s Annual Bonus Plan for 2017 was also based on a combination of financial targets and personal/strategic goals. The Group-related financial targets are set out in table 35 on page 87.Long-term IncentivesPerformance Share Plan2016 awardsIn 2016, the executive Directors were granted conditional awards under the 2014 PSP. The awards were based on TSR (50% of the award) – 25% against a tailored group of key peers (see table 17 on page 70) and 25% against the FTSE All-World Construction & Materials Index – and Cumulative Cash Flow (50% of the award), and performance was measured over the three-year period 1 January 2016 to 31 December 2018. Based on performance, the Committee has determined that 59.13% of the awards had met the relevant performance criteria as performance in relation to the cumulative cash flow element (50% out of 50%) and TSR performance against the tailored peer group element (9.13% out of 25%) exceeded the relevant threshold targets for vesting. TSR performance against the FTSE All-World Construction & Materials Index was below the minimum threshold target for vesting. The Committee considers that the vesting outcome is reflective of the Company’s underlying performance over the performance period. In particular, the Committee considered RONA performance since 2016 as an underpin to the TSR component. As the RONA target in each of the annual bonus plans for 2016, 2017 and 2018 was met, the Committee determined that the TSR percentage was appropriate and did not need to be adjusted. In accordance with the Policy, the 2016 awards to executive Directors will vest in 2021 on completion of an additional two-year holding period. Vested awards will be adjusted for dividend equivalents based on dividends in the period from grant to the date of vesting in 2021. Table 36 on page 88 sets out details of the relevant targets. Table 37 on page 88 sets out details of the awards.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance86 87CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Directors’ Remuneration Report - continued2018 Annual Bonus - Achievement - Personal/Strategic TargetsTable 34DirectorsWeightingAchievementsPercentage of Maximum AwardedAlbert Manifold20%Safety: Development and implementation of plans for a safety front-line leadership programme and for the implementation of recommendations from a review by an external advisory panel of experts, in the Chief Executive’s area of responsibility. Inclusion & Diversity: The establishment and implementation of an inclusion & diversity roadmap for the Group, including initiatives and measures and a timeline for implementation.Group Leadership Team (GLT): Continued development of the GLT as a functioning executive leadership team for CRH, including, working with the team to provide effective management succession for senior roles across the Group.Strategy: Continued assessment of the strategic alternatives for the Group in discussion with the Board and senior management and ensuring that the organisation structure of CRH is aligned with its future strategy.18%Senan Murphy20%Safety: Development and implementation of plans for a safety front-line leadership programme and for the implementation of recommendations from a review by an external advisory panel of experts, in the Finance Director’s area of responsibility. Inclusion & Diversity: The establishment and implementation of an inclusion & diversity roadmap for the Finance organisation, including initiatives and measures and a timeline for implementation.Strategy: Support for the next phase of the rollout of our strategic playbooks process, ensuring that robust roadmaps are developed, actioned and integrated with the strategic planning process and that KPIs are developed to track progress.Risk Management, Internal Control and Management of External Relations: Maintaining a strong risk and control environment across the Group, including audit, Sarbanes Oxley and regulatory compliance, supervising the successful integration of all acquisitions and managing relations with investors, banks, rating agencies and other key stakeholders.18%Annual Bonus Plan - 20172017 Annual Bonus - Achievement - Financial Targets (i)Table 35Performance needed for payout atMeasureWeightingThresholdTargetMaximumPerformance AchievedPercentage of Maximum AwardedCRH EPS25%134c146c153c166c (iii)25%CRH Cash Flow (ii)30%€1,656m€1,800m€1,890m€2,234m30%CRH RONA 25%8.89.610.410.3% (iii)24%(i) Due to commercial sensitivity, 2017 bonus targets were not disclosed in the 2017 Directors’ Remuneration Report.(ii) For the purpose of the annual bonus, operating cash flow has been defined as reported internally. The figure differs from the net cash inflow from operating activities of €2,189 million reported in the 2017 Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows on the purchase of property, plant and equipment (PP&E), net of proceeds for the disposal of PP&E, and before deducting interest and tax payments. Similarly, RONA has also been defined as reported internally and differs from the RONA reported in the Non-GAAP Performance Measures in this report as it excludes one-off items and reflects seasonality and the timing of development activity.(iii) Reported EPS and RONA have been adjusted by the Remuneration Committee to exclude one-off benefits.Annual Bonus Plan - 20182018 Annual Bonus - Achievement - Financial TargetsTable 332018 Targets - Performance needed for payout at (i)MeasureWeighting2017 Performance AchievedThresholdTarget (ii)Maximum2018 Performance AchievedPercentage of Maximum AwardedCRH EPS25%166c148c161c169c172c25.00%CRH Cash Flow (iii)30%€2,234m€1,847m€2,008m€2,108m€2,068m23.89%CRH RONA (iii)25%10.3%8.5%9.2%9.9%9.3%14.59%Personal/Strategic20%See table 3418.00%Total100%81.48%(i) 0% of each element is earned at threshold, 50% at target and 100% at maximum, with a straight-line payout schedule between these points. (ii) Targets have been adjusted to reflect actual currency rates, the actual timing of acquisitions and disposals, the impact of the 2018 share buyback programme and the exclusion of the significant profit from the disposal of Americas Distribution, which was a one-off item. (iii) For the purposes of the annual bonus plan, operating cash flow has been defined as reported internally. The figure differs from the net cash inflow from operating activities reported in the Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows on the purchase of property, plant and equipment (PP&E), net proceeds from the disposal of PP&E, and before deducting interest and tax payments. Similarly, RONA has also been defined as reported internally and differs from the RONA reported in the Non-GAAP Performance Measures in this report as it excludes one-off items and reflects seasonality and the timing of development activity.Long-term Incentives - continued2018 awardsDuring 2018 awards under the 2014 PSP were made to the executive Directors, details of which are summarised in table 39 on page 89. 50% of each award made in 2018 is subject to a TSR measure, with 25% being measured against a tailored sector peer group (see table 17 on page 70) and 25% against the FTSE All-World Construction & Materials Index (as at the start of the relevant performance period). Given the importance of returns-based measures to a number of our shareholders, the TSR measure will be subject to a RONA underpin. At the end of the three-year performance period, the Remuneration Committee will consider the RONA performance of the business and the outcome for the TSR element may be adjusted (downwards only) if RONA performance has not met the expectations of the Board and the Remuneration Committee. The other 50% of each award made in 2018 is subject to a cumulative cash flow metric. The definition of cash flow is the net increase/decrease in cash and cash equivalents adjusted to exclude:• dividends to shareholders;• acquisition/investment expenditure;• proceeds from divestments;• share issues (scrip dividend, share options, other);• financing cash flows (new loans/repayments);• back funding pension payments; and• foreign exchange translationThe Remuneration Committee considers that it is appropriate to make these adjustments in order to remove items that do not reflect the quality of management’s operational performance, or are largely outside of the Company’s control. The Remuneration Committee will also consider whether any adjustments are required to cash flows, for example, as a result of significant acquisitions completed during the performance period or a significant underspend or delay in budgeted capital expenditure, both ordinary and extraordinary.Performance for the awards made in 2018 will be assessed over the three-year period to 31 December 2020. Details of the performance targets are set out in table 38 on page 89. Awards, to the extent that they vest, will be adjusted for dividend equivalents based on dividends in the period from grant to the date of vesting in 2023. “Malus” provisions apply to the awards.Other Employee Share PlansExecutive 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 40 on pages 90 and 91. The Participation Scheme is an Irish Revenue approved plan and is open to all employees in Ireland. Grants can be made to participants up to a maximum of €12,700 annually in CRH shares. Albert Manifold and Senan Murphy participated in the Participation Scheme in 2018.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance88 89CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Directors’ Remuneration Report - continued2016 Performance Share Plan Award - Vesting DetailsTable 37Executive DirectorInterests HeldVesting Outcome (% of max)Interests Due to VestDate of VestingAssumed Share Price (i)Estimated ValueAlbert Manifold222,97659.13%131,846March 2021€24.90€3,282,958Senan Murphy54,54359.13%32,251March 2021€24.90€803,057(i) As the share price on the date of vesting is not yet known, for the purposes of this table, the value of these awards, which were subject to a three-year performance period ending in 2018, has been estimated using a share price of €24.90, being the three-month average share price to 31 December 2018.(i) See page 87 for further information on how cash flow is calculated for 2016, 2017, 2018 and 2019 awards. (ii) 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.(iii) For the purposes of the 2016 Award, TSR performance was above the median against the tailored peer group (see table 17 on page 70) and below the FTSE All-World Construction & Materials Index. TSR performance was subject to a RONA underpin (see page 84). The cumulative cash flow for the three years to end 31 December 2018 was €4.5 billion. The Committee has reviewed the primary drivers for the outperformance against the target for cumulative cash flow set in early 2016. It has concluded that this resulted from increased cash flow, in 2016 in particular, mainly from the faster than anticipated integration of the assets acquired from Lafarge and Holcim in 2015.Long-Term Incentives - Awards 2016Performance Share Plan MetricsTable 36 Vesting (% of element)Performance Share Plan MetricsTable 38Long-Term Incentives - Awards in 2017 and 20182017 Award Cumulative cash flow (50% of award) (i)100%25%80%0%€2.8bn€3.7bn€3.25bnTSR vs. tailored peer group (25% of award) (ii)100%25%80%0%100%25%0%IndexMedianIndex +5% p.a.Upper quartile(i) and (ii) see footnotes to table 36.2018 Award Vesting (% of element)Cumulative cash flow (50% of award) (i)100%25%80%0%€3.3bn€4.3bn€3.8bnTSR vs. tailored peer group (25% if award) (ii)100%25%80%0%100%25%0%IndexMedianIndex +5% p.a.Upper quartileVesting LevelVesting (% of element)MedianUpper quartile25%0%36.5%100%TSR vs. tailored peer group(25% of award) (ii)Element vested at 36.5% (iii)2018 Performance Share Plan Award Details Table 39Executive DirectorDate of GrantNumber of SharesMarket Price on which Award was BasedFace Value at Date of AwardFace Value at Date of Award(% of salary) Albert Manifold15 March 2018196,278€27.62€5,421,198365%Senan Murphy15 March 201863,194€27.62€1,745,418225%25%0%IndexIndex +5% p.a.100%TSR vs. FTSE All-World Cons & Materials (25% of award) (ii)Element vested at 0% (iii)Vesting (% of element)25%0%€2.8bn€3.7bn100%Cumulative cash flow(50% of award) (i)Vesting LevelElement vested at 100% (iii)80%€3.25bnVesting (% of element)Vesting (% of element)Vesting (% of element)Vesting (% of element)Vesting (% of element)TSR vs. FTSE All-World Cons & Materials (25% of award) (ii)TSR vs. FTSE All-World Cons & Materials (25% of award) (ii)OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance90 91CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Summary of Outstanding Share Incentive Awards (Audited)Table 40Year of AwardPerformance PeriodRelease DateMarket Value at Date of AwardExercise PriceBalance at 31 December 2017Granted in 2018Released in 2018Exercised in 2018Lapsed in 2018Balance at 31 December 2018Dividends Awarded & ReleasedMarket Value on Date of Exercise/ReleasedAlbert ManifoldAnnual Bonus Plan (Deferred Share Awards) (i)201501/01/14-31/12/20142018€18.05n/a24,928-24,928---1,786€27.24201601/01/15-31/12/20152019€25.60n/a18,900----18,900--201701/01/16-31/12/20162020€30.97n/a25,007----25,007--201801/01/17-31/12/20172021€30.42n/a-25,619---25,619--2014 Performance Share Plan (ii)201401/01/14-31/12/20162019€20.49n/a142,900----142,900--201501/01/15-31/12/20172020€24.42n/a132,064---28,130103,934--201601/01/16-31/12/20182021€24.56n/a208,104----208,104--201701/01/17-31/12/20192022€32.24n/a163,254----163,254--201801/01/18-31/12/20202023€27.62n/a-196,278---196,278--2010 Savings-Related Share Option Scheme2017n/a2022n/a€27.861,085---1,085---2018n/a2023n/a€23.39-1,293---1,293--Senan MurphyAnnual Bonus Plan (Deferred Share Awards) (i)201701/01/16-31/12/20162020€30.97n/a7,316----7,316--201801/01/17-31/12/20172021€30.42n/a-8,352---8,352--2014 Performance Share Plan (i)201601/01/16-31/12/20182021€24.56n/a50,906----50,906--201701/01/17-31/12/20192022€32.24n/a43,779----43,779--201801/01/18-31/12/20202023€27.62n/a-63,134---63,134--The market price of the Company’s shares at 31 December 2018 was €23.10 and the range during 2018 was €21.84 and €32.62.(i) The Remuneration Committee has determined that dividend equivalents should accrue on awards under the Annual Bonus Plan. Such dividend equivalents will be released to participants on the date of release of the Deferred Shares. (ii) The Remuneration Committee has determined that dividend equivalents should accrue on awards under the 2014 Performance Share Plan. Subject to satisfaction of the applicable performance criteria, such dividend equivalents will be released to participants in the form of additional shares on vesting.Directors’ Remuneration Report - continuedOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance92 93CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Shareholdings of Directors and Company SecretaryTable 41Beneficially Owned (i)Name31 December 201831 December 2017Executive DirectorsA. Manifold21,31020,170S. Murphy1,5201,039Non-executive DirectorsR. Boucher 1,790- (ii)N. Hartery17,62917,309P.J. Kennedy2,0002,000D.A. McGovern, Jr. (iii) 5,6045,481H.A. McSharry4,1704,111G.L. Platt1,0381,019M.K. Rhinehart (iii)1,000- (iv)L.J. Riches5,0005,000H.Th. Rottinghuis1,0001,000W.J. Teuber, Jr. (iii)1,0001,000S. Talbot (v)1,5501,550Company SecretaryN. Colgan10,91510,416Total75,52670,095(i) Excludes awards of Deferred Shares, details of which are disclosed on pages 90 and 91. The Directors and Company Secretary do not have any special voting rights.(ii) Appointed with effect from 1 March 2018. Richie Boucher did not have a holding of CRH shares on his appointment.(iii) Holdings in the form of American Depositary Receipts (ADRs).(iv) Appointed with effect from 1 October 2018. Mary Rhinehart did not have a holding of CRH Shares on her appointment.(v) Appointed with effect from 1 December 2018.Directors’ Remuneration Report - continuedA Production Supervisor enters the homogenising silos at Ash Grove’s Plant in Durkee, Oregon. The Durkee Plant produces more than 1m tonnes of clinker annually and employs approximately 120 people. Production at the plant began in 1979.Non-executive Directors Individual Remuneration for the year ended 31 December 2018 (Audited) Table 42Basic salary and fees (i) €000Benefits (ii) €000Other remuneration (iii) €000Total €000201820172018201720182017201820172016Non-executive DirectorsE.J. Bärtschi (iv)- 78 --- 81 -159 159 R. Boucher (v)65---34-99--N. Hartery 78 78 11512 512 591591 597 P.J. Kennedy78 78 --42 42 120120 120 D.A. McGovern, Jr. 78 78 --86 96 164174 174 H.A. McSharry78 78 --42 42 120120 120 G.L. Platt78 78 --63 53 141131-M.K. Rhinehart (vi)20---7-27--L.J. Riches78 78 --42 42 120120 120 H.Th. Rottinghuis 78 78 --42 42 120120 120 S. Talbot (vii)7---1-8--W.J. Teuber, Jr. 78 78 --90 57 168135 112 716 702 119619671,6781,670 1,522 (i)Further information in relation to the non-executive Director fee structure is set out in table 44 on page 95.(ii)Benefits: In the case of Nicky Hartery the amount reflects the reimbursement of travel expenses from his residence to his Chairman’s office in Dublin, which have been grossed up for Irish tax purposes. (iii)Other Remuneration: Includes remuneration for Chairman, Board Committee work and travel allowances for non-executive Directors. (iv)Ernst Bärtschi resigned as a Director on 20 December 2017. (v)Richie Boucher became a Director on 1 March 2018.(vi)Mary Rhinehart became a Director on 1 October 2018.(vii)Siobhán Talbot became a Director on 1 December 2018.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance94 95CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Retirement Benefit ExpenseAlbert Manifold is a participant in a contributory defined benefit plan which is based on an accrual rate of 1/60th of salary1 for each year of pensionable service and is designed to provide two-thirds of career average salary at retirement for full service. Albert Manifold will become entitled to a deferred pension, payable from Normal Retirement Age, if he leaves service prior to Normal Retirement Age. The Finance Act 2006 established a cap on pension provisions by introducing a penalty tax charge on pension assets in excess of the higher of €5.4 million (in the Finance Act 2011, this threshold was reduced to €2.3 million and reduced further to €2 million by the Finance (No. 2) Act 2013) or the value of individual accrued pension entitlements as at 7 December 2005. As a result of these legislative changes, the Remuneration Committee decided that executive Directors should have the option of continuing to accrue pension benefits as previously, or of choosing an alternative arrangement - by accepting pension benefits limited by the cap - with a similar overall cost to the Group. Albert Manifold has opted for an arrangement whereby his pension is capped in line with the provisions of the Finance Act 2006 and receives a supplementary taxable non-pensionable cash supplement in lieu of pension benefits foregone. There was, therefore, no additional accrual in 2018. The cash pension supplement for 2018 is detailed in table 32 on page 85. This supplement is similar in value to the reduction in the Company’s liability represented by the pension benefits foregone. It is calculated based on actuarial advice as the equivalent of the reduction in the Company’s liability to Mr. Manifold and spread over the term to retirement as annual compensation allowances. The contributory defined benefit plan in which Albert Manifold participates closed to new entrants at the end of 2011. Senan Murphy receives a taxable non-pensionable cash supplement equivalent to 25% of his annual base salary in lieu of a pension contribution.Details regarding the pension entitlements of Albert Manifold are set out in table 43 below.Shareholding Guideline for Executive DirectorsPursuant to the 2016 Policy, executive Directors are required to build up (and maintain) a minimum holding in CRH shares. The current shareholding guideline for the Chief Executive is 2.5x basic salary and 2.0x basic salary for the Finance Director. As part of the 2019 Policy proposals, the shareholding guideline requirement for the Chief Executive will be increased to 3.5x basic salary, to be achieved by 31 December 2023. The guideline for the Finance Director, which must be achieved by 31 December 2022, will remain at 2.0x salary.The current shareholdings of executive Directors as a multiple of basic salary are shown in table 19 on page 71. The table includes, for illustrative purposes, shares beneficially owned by the executive Directors as at 27 February 2019, the estimated after tax vesting of PSP awards subject to a two-year hold period only, which will be released in 2019 and 2020 respectively, and the estimated after tax vesting of Deferred Share awards granted in respect of 2016, 2017 and 2018, as appropriate.Non-executive DirectorsThe remuneration of non-executive Directors is determined by the Board of Directors. The fees were last increased in 2016. Details of the remuneration paid to non-executive Directors in 2018 are set out in table 42 on page 93. 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 2019 to ensure that CRH fees remain market competitive. The revised fees are set out in table 44.Proposed Implementation of Remuneration in 2019Basic Salary and Benefits Details of the executive Directors’ salaries for 2019 compared with 2018 are set out in the Committee Chairman’s introduction on pages 68 to 72. These increases are in line with the average workforce increases in CRH’s core countries for 2019, which range from 2% to 3%.Executive Directors will receive benefits in line with the 2019 Policy in 2019. The level of benefits provided will depend on the cost of providing individual items and the individual circumstances.2019 Annual Bonus PlanThe Remuneration Committee has determined that the 2019 Annual Bonus Plan will be operated broadly in line with the 2018 Annual Bonus Plan (as described on page 84). However, the EPS and RONA targets will need to be adjusted by the Committee when performance against the targets is being assessed to reflect the impact of IFRS 16, which introduces new rules for lease accounting with effect from the 2019 financial year. In addition, subject to approval of the 2019 Policy at the 2019 AGM, the amount deferred into shares will increase from 25% to 33.3%.Pension Entitlements - Defined Benefit (Audited)Table 43Executive DirectorIncrease in accrued personal pension during 2018 (i) €000Transfer value of increase in dependants pension (i) €000Total accrued personal pension at year end (ii) €000Albert Manifold-112273(i) As noted above, the pension of Albert Manifold has been capped in line with the provisions of the Irish Finance Acts. However, dependants’ pensions continue to accrue resulting in Greenbury transfer values which have been calculated on the basis of actuarial advice. These amounts do not represent sums paid out or due in 2018 in the event of Mr. Manifold leaving service.(ii) The accrued pensions shown are those which would be payable annually from normal retirement date.Directors’ Remuneration Report - continued1. Salary is defined as basic annual salary and excludes any fluctuating emoluments.2019 Performance Share Plan AwardsFor the 2019 PSP awards, awards will be assessed over the three-year period to 31 December 2021. The metrics, weightings and opportunity for the 2019 PSP awards are summarised in table 16 on page 70 and further details in relation to the operation of the metrics is provided below.Cumulative Cash Flow (weighting 50%)As outlined in the Chairman’s introduction on pages 68 to 71, 50% of the 2019 awards will be subject to a cumulative cashflow metric. 25% of the measure will vest at €3.3 billion of cumulative cash flow, with full vesting at or above €4.3 billion of cumulative cash flow, and straight-line vesting in between.In setting the target, the Committee reviews the proposed target to the outturn of the most recent PSP award cycle and the prior year award, considering items such as EBITDA (as defined)* changes, exchange rates, capital expenditure levels, tax and interest charges etc. While cumulative cash flow (as defined above) over the period 2016-2018 (€4.5 billion) is above the target for maximum achievement for the 2019 awards, these figures differ in a number of important respects:• planned capital expenditure in the period 2019-2021 is higher; • growth forecasts for the coming years are projected to moderate; and• the underlying EBITDA (as defined)* targets are based on current euro/US Dollar exchange rates, which are unfavourable compared to the prior three yearsThe Committee will adjust the vesting outcomes if the cash targets are achieved because capital expenditure was less than planned and to reflect actual exchange rates over the period.TSR (weighting 25%)The Committee is proposing to simplify the TSR measure by measuring performance against peer companies only. This will remove the FTSE All-World Construction & Materials Index as a benchmark. Following consultation with our brokers and advisers, the peer group used for previous PSP awards has been re-confirmed with two minor modifications; Braas Monier has been removed as it is no longer listed and Rockwool has been removed as its business is not comparable with CRH. The proposed peer group, which will be weighted by market capitalisation, is set out in table 17 on page 70. 25% of this measure will vest at median performance against the peer group, with full vesting at the upper quartile, and straight line vesting in between. The Committee is satisfied that the proposed peer group provides an appropriately robust benchmark against which to compare CRH’s TSR performance.RONA (weighting 25%)As outlined in the Chairman’s introduction on page 68, it is proposed to introduce a RONA metric into the PSP for awards made in 2019. 25% of the RONA measure will vest at RONA of 9%, with full vesting at or above RONA of 11.5% and straight-line vesting in between. The Committee considers the maximum RONA target to be very stretching. In order to achieve this target, EBITDA (as defined)* margins would need to broadly equate to the highest ever achieved by the Group.In addition, payouts for threshold achievement would require a RONA which meets our cost of capital at a minimum.The RONA target for the 2019 PSP awards will need to be adjusted by the Committee in due course to reflect the impact of IFRS 16, which introduces new rules for lease accounting with effect from the 2019 financial year.Retirement Benefit ExpenseNo changes in pension arrangements are proposed in 2019.Fees Paid to Former DirectorsThe 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.Non-executive Director Fee StructureTable 44Role20192018Group Chairman (including non-executive Director salary and fees for committee work)€630,000€575,000Basic non-executive Director fee€88,000 €78,000 Committee fee€32,000 €27,000 Additional feesSenior Independent Director€25,000 €25,000 Remuneration Committee Chairman€30,000€15,000Audit Committee Chairman€39,000 €39,000 Fee for Europe-based non-executive Directors€15,000 €15,000Fee for US-based non-executive Directors€30,000€30,000 * 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.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance96 97CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Remuneration Paid to Chief Executive - 2009 to 2018 inclusiveTable 462009201020112012201320142015201620172018Single figure Remuneration (€m) (i)€2.6m€2.6m€2.9m€2.5m€4.2m€4.3m€5.4m€9.9m€8.7m€8.2mAnnual Bonus (% of max)22%21%39%28%30%100%100%98%96%81%Long-term incentive award vesting (% of max)50%46%17%0%PSP: 49%LTIP: 34%PSP: 0%Options: 75%PSP: 78%Options: 37%100%79%59%(i) Single figure remuneration comprises the total fixed pay, annual bonus and the value of long-term incentives vesting in respect of each year.Executives’ External AppointmentsThe 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.Total Shareholder Return The value at 31 December 2018 of €100 invested in CRH in 2008, 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 20 on page 73.TSR performance has been compared against the FTSE100 and the Eurofirst 300 as these are broad general market indices of which CRH is a constituent. The Committee, therefore, considers that they offer a reasonable comparison for performance. Compound TSR growth since the formation of the Group in 1970 (assuming the reinvestment of dividends) is 14.8%.Remuneration Paid to Chief Executive 2009 – 2018Table 46 shows the total remuneration paid to the Chief Executive in the period 2009 to 2018 inclusive and shows bonuses and vested long-term incentive awards as a percentage of the maximum bonus and award that could have been received in respect of each year. Albert Manifold succeeded Myles Lee as Chief Executive in January 2014. Excluding the impact of vested share-based awards and the non-taxable benefit associated with participation in the Group’s Savings-related Share Option Scheme, the percentage change in the Chief Executive’s salary, benefits and bonus between 2017 and 2018 was as follows:• Salary +3.0%• Benefits +57.1%• Bonus -12.6%The combined percentage change was -7.2%. There was a 6.5% increase in the total average employment costs in respect of employees in the Group as a whole between 2017 and 2018.Directors’ Remuneration Report - continued* 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.Relative Importance of Spend on PayTable 45€m 6,0005,0004,0003,0002,0001,0000201820176%6%7%Remuneration received by all employeesEBITDA (as defined)*DividendsShare BuybackRelative Importance of Spend on PayTable 45 sets out the amount paid by the Group in remuneration to employees compared to the amount returned to shareholders as part of the share buyback programme in 2018 and dividend distributions made to shareholders in 2017 and 2018. We have also shown the change in EBITDA (as defined)* performance year-on-year to provide an indication of the change in profit performance. Advisers to the Remuneration CommitteeMercer Kepler, a brand of Mercer, are the Committee’s independent remuneration consultants. The Committee has satisfied itself that the advice provided by Mercer Kepler is robust and independent and that the Mercer Kepler engagement partner and team that provide remuneration advice to the Committee do not have connections with CRH plc that may impair their independence.Mercer Kepler are signatories to the Voluntary Code of Conduct in relation to executive remuneration consulting in the UK. During 2018, Mercer Kepler 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; • advice in relation to remuneration matters generally; and • attendance at Committee meetings, when required In 2018, Mercer Kepler’s parent, the MMC Group, provided pensions advice and related services to the Company. In 2018, the total fees paid to Mercer Kepler were Stg£99,366.2018 Annual General MeetingThe voting outcome in respect of the remuneration-related votes at the 2018 AGM is set out in table 23 on page 73. Further details in relation to the voting outcome are set out in the Committee Chairman’s introduction on page 68.On behalf of the BoardRichie BoucherChairman of Remuneration Committee27 February 2019Directors’ Remuneration (i) (Audited) Table 472018€0002017€0002016€000Executive Directors Basic Salary2,2602,6184,023Performance-related Incentive Plan- cash element2,7523,7345,197- deferred shares element9181,0331,734Retirement Benefits Expense8789881,341Benefits8078128Total executive Directors’ remuneration6,8888,45112,423Average number of executive Directors2.002.674.00Non-executive DirectorsFees716702722Other remuneration961967980Benefits117Total non-executive Directors’ remuneration1,6781,6701,709Average number of non-executive Directors9.169.009.24Payments to former Directors (ii)149124Total Directors’ remuneration8,58010,13014,256(i) See analysis of 2018 remuneration by individual in tables 32 and 42 on pages 85 and 93 respectively. (ii) Consulting and other amounts paid to a number of former Directors.Details of Remuneration Charged against Profit in 2018OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance98 99CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018The Directors submit their report and the audited Consolidated Financial Statements for the year ended 31 December 2018.Principal Activity, Results for the Year and Review of BusinessCRH is a leading 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 1,250 subsidiary, joint venture and associate undertakings; the principal ones as at 31 December 2018 are listed on pages 252 to 257.The Group’s strategy, business model and development activity are summarised on pages 10 to 13 and 27 to 31 and are deemed to be incorporated in this part of the Directors’ Report.As set out in the Consolidated Income Statement on page 123, the Group reported a profit before tax for the year of €1.86 billion from continuing operations. Comprehensive reviews of the financial and operating performance of the Group during 2018 are set out in the Business Performance section on pages 24 to 51; key financial performance indicators are set out on pages 14 and 15.The treasury policy and objectives of the Group are set out in detail in note 23 to the Consolidated Financial Statements. On 25 April 2018, the Group announced its intention to return excess cash to shareholders and to repurchase ordinary shares of up to €1.0 billion over the forthcoming 12 months. Between 2 May and 31 December 2018, 27.9 million ordinary shares were repurchased on the London Stock Exchange and Euronext Dublin for a total of €789 million, at an average price of €28.24 per share. The Group remains committed to the programme and it is expected that it will complete over the timeframe indicated. Further details in relation to the buyback programme and the Company’s profits available for distribution are set on pages 101 and 212 respectively.DividendCRH’s capital allocation policy reflects the Group’s strategy of generating industry leading returns through value-accretive allocation of capital while delivering long-term dividend growth for shareholders. The Board continues to believe that a progressive dividend policy is appropriate for the Group and further to the 5% dividend increase in 2017, an interim dividend of 19.6c (2017: 19.2c) per share was paid in September 2018. The Board is recommending a final dividend of 52.4 per share. This would give a total dividend of 72.0c for the year (2017: 68.0c), an increase of 6% over last year. The earnings per share for the year were 302.4c, representing a cover of 4.2x the proposed dividend for the year while continuing operations earnings per share for the year were 172.0c, representing a cover of 2.4x the proposed dividend for 2018.It is proposed to pay the final dividend on 30 April 2019 to shareholders registered at the close of business on 15 March 2019. In connection with the share buyback programme, CRH announced the suspension of the scrip dividend scheme on 2 May 2018. Therefore the final dividend will be paid wholly in cash. While the Board continues to believe that a progressive dividend policy is appropriate for the Group, our target is to build dividend cover to 3.0x before one-off items over the medium-term and accordingly, any dividend increases in coming years will continue to lag increases in earnings per share. 2019 OutlookThe 2019 outlook set out in the Chief Executive’s Review on page 9 is deemed to be incorporated in this part of the Directors’ Report.Principal Risks and UncertaintiesPursuant to Section 327(1)(b) of the Companies Act 2014, Regulation 5(4)(c)(ii) of the Transparency (Directive 2004/109/EC) Regulations 2007, the principal risks and uncertainties that could affect the Group’s business are set out on pages 104 to 109 and are deemed to be incorporated in this part of the Directors’ Report. These risks and uncertainties reflect the international scope of the Group’s operations and its decentralised structure. If any of these risks occur, the Group’s business, financial condition, results of operations, liquidity and/or prospects could be materially adversely affected. Non-Financial ReportingThe European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 (the ‘Non-Financial Regulations’) require CRH to provide certain non-financial information to investors and other stakeholders necessary to provide them with an understanding of the Company’s development, performance, position and impact of its activity. Table 48 below provides more details on the information required to be provided by the Non-Financial Regulations and where this information has been provided in this Annual Report and Form 20-F.Directors’ ReportNon-Financial ReportingTable 48Reporting RequirementRelevant Policies (i)Location of Information (ii)PagesEnvironmental MattersEnvironmental PolicySustainability – Creating long-term value16 to 21Social & Employee MattersHealth & Safety Policy, Social PolicySustainability – Creating long-term value16 to 21, 63 and 64Human RightsSocial Policy, Code of Business ConductSustainability – Creating long-term value16 to 21Anti-bribery & CorruptionCode of Business ConductSustainability – Creating long-term value16 to 21Business Model–Business Model12 to 13Non-financial KPIs–Managing Performance14 to 15Principal Risks–Risk Governance22 to 23Principal Risks and Uncertainties104 to 109(i) Policies are available on CRH’s website, www.crh.com. (ii) The referenced sections are deemed to be incorporated within this Directors’ Report.Regulatory Information1Table 49Companies Act 2014For the purpose of Section 1373, the Corporate Governance Report on pages 58 to 67, together with the Governance Appendix located on the CRH website (www.crh.com), which contains the information required by Section 1373(2) of the Companies Act 2014 and the risk management disclosures on pages 22, 23 and 104 to 109, are deemed to be incorporated in the Directors’ Report and form part of the corporate governance statement required by Section 1373 of the Companies Act. Details of the Company’s employee share schemes and capital structure can be found in notes 9 and 31 to the Consolidated Financial Statements on pages 150 to 152 and 189 to 191 respectively.2006 Takeover RegulationsFor the purpose of Regulation 21 of Statutory Instrument 255/2006 European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations 2006, the rules relating to the appointment and replacement of Directors are summarised in the Governance Appendix. The Chief Executive and the Finance Director have entered into service contracts, the principal terms of which are summarised in the 2019 Directors’ Remuneration Policy on page 81 and are deemed to be incorporated in this part of the Directors’ Report. The Company’s Memorandum and Articles of Association, which are available on the CRH website, are also deemed to be incorporated in this part of the Directors’ Report. The Group has certain banking facilities and bond issues outstanding which may require repayment in the event that a change in control occurs with respect to the Company. In addition, the Company’s Share Option Schemes and Performance Share Plan contain change of control provisions which can allow for the acceleration of the exercisability of share options and the vesting of share awards in the event that a change of control occurs with respect to the Company.2007 Transparency RegulationsFor the purpose of Statutory Instrument 277/2007 Transparency (Directive 2004/109/EC) Regulations 2007, the following sections of this Annual Report and Form 20-F are deemed to be incorporated into this part of the Directors’ Report2: the Chairman’s Introduction on page 5, the Strategy Review section on pages 6 to 23, the Principal Risks and Uncertainties section on pages 104 to 109, the Business Performance section on pages 24 to 51, the information on inclusion and diversity on pages 63 and 64, the details of earnings per Ordinary Share in note 14 to the Consolidated Financial Statements, the details of derivative financial instruments in note 26, the details of the reissue of Treasury Shares in note 31 and the details of employees in note 7. Disclaimer/Forward-Looking StatementsIn order to utilise the “Safe Harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, CRH plc (the ‘Company’), and its subsidiaries (collectively, ‘CRH’ or the ‘Group’) is providing the following cautionary statement.This document contains certain statements that are, or may be deemed to be forward-looking statements with respect to the financial condition, results of operations, business, viability and future performance of CRH and certain of the plans and objectives of CRH including but not limited to the statements under: “Overview – Chairman’s Introduction”; “Strategy Review – Chief Executive’s Review – Outlook”; “Strategy Review” regarding the Group’s strategy for future growth and delivery; “Measuring Performance” with regard to our focus for 2019; “Business Performance – Finance Director’s Review” with respect to our belief that the Group has sufficient resources to meet its debt obligations and capital and other expenditure requirements in 2019; “Business Performance” with respect to our expectations regarding economic activity and fiscal developments in our operating regions; and our expectations for the residential, non-residential and infrastructure markets; the statements relating to our strategies for individual segments and business lines in the section entitled “Segmental Reviews”; “Governance – Directors’ Remuneration Report” with regard to growth forecasts for the coming years; and “Governance – Principal Risks and Uncertainties” with respect to the potential impact and evolving nature of risk as well as the direction risk may be trending.These forward-looking statements may generally, but not always, be identified by the use of words such as “will”, “anticipates”, “should”, “could”, “would”, “targets”, “aims”, “may”, “continues”, “expects”, “is expected to”, “estimates”, “believes”, “intends” or similar expressions. These forward-looking statements include all matters that are not historical facts or matters of fact at the time of this document.By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future and reflect the Company’s current expectations and assumptions as to such future events and circumstances that may not prove accurate. A number of material factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, certain of which are beyond our control and which include, among other things: economic and financial conditions generally in various countries and regions where we operate; the pace of 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 programmes; adverse political developments in various countries and regions; failure to complete or successfully integrate acquisitions; and the specific factors identified in the discussions accompanying such forward-looking statements and in the Principal Risks and Uncertainties included on pages 104 to 109 of the Directors’ Report and in the Risk Factors included on pages 225 to 233 of this Annual Report and Form 20-F.You are cautioned not to place undue reliance on any forward-looking statements. These forward-looking statements are made as of the date of this Directors’ Report. The Company expressly disclaims any obligation or undertaking to publicly update or revise these forward-looking statements other than as required by applicable law.The forward-looking statements in this Annual Report and Form 20-F do not constitute reports or statements published in compliance with any of Regulations 4 to 8 and 26 of the Transparency (Directive 2004/109/EC) Regulations 2007.Location of Information required pursuant to Listing Rule 9.8.4CTable 50Listing RuleInformation to be included (i):LR 9.8.4 (12) and (13)Waivers of Dividends DisclosureThe Trustees of the Employee Benefit Trust have elected to waive dividends in respect of certain holdings of CRH shares. See page 191 to the Consolidated Financial Statements. (i) No information is required to be disclosed in respect of Listing Rules 9.8.4 (1), (2), (4), (5), (6), (7), (8), (9), (10), (11) and (14).1. This table contains information which is required to be provided for regulatory purposes.2. For the purposes of the Company’s Annual Report on Form 20-F as filed with the SEC, the Sustainability Report, and any reference thereto, is explicitly excluded from this Directors’ Report.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance100 101CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Viability StatementIn accordance with Provision C.2.2. of the 2016 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 104 to 109.Using the Group Strategic Plan (the ‘Plan’), which is prepared annually on a bottom up basis and is approved by the Board, the prospects of the Group have been assessed over a three-year period from 1 January 2019 to 31 December 2021 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 and Adverse Economic Conditions) 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.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 three-year period.Going ConcernThe Group’s business activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategy Review section and in this report on pages 6 to 23 and 104 to 109 respectively. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Business Performance section on pages 24 to 51. In addition, notes 22 to 26 to the Consolidated Financial Statements include the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit, currency, cash flow and liquidity risks.The Group has considerable financial resources and a large number of customers and suppliers across different geographic areas and industries. In addition, the local nature of building materials means that the Group’s products are not usually shipped cross-border.Having assessed the relevant business risks, the Directors believe that the Group is well 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 with no material uncertainties. For this reason, the Directors continue to adopt the going concern basis in preparing the Consolidated Financial Statements.Risk Management and Internal Control1 The Directors confirm that, in addition to the monitoring carried out by the Audit Committee under its Terms of Reference, they have reviewed the effectiveness of the Group’s risk management and internal control systems up to and including the date of approval of the financial statements. This review had regard to all material controls, including financial, operational and compliance controls that could affect the Group’s business.Directors’ Compliance StatementIt is the policy of the Company to comply with its relevant obligations (as defined in the Companies Act 2014). The Directors have drawn up a compliance policy statement (as defined in section 225(3)(a) of the Companies Act 2014) and arrangements and structures are in place that are, in the Directors’ opinion, designed to secure material compliance with the Company’s relevant obligations. The Directors confirm that these arrangements and structures were reviewed during the financial year. As required by Section 225(2) of the Companies Act 2014, the Directors acknowledge that they are responsible for the Company’s compliance with the relevant obligations. In discharging their responsibilities under Section 225, the Directors relied on the advice both of persons employed by the Company and of persons retained by the Company under contract, who they believe have the requisite knowledge and experience to advise the Company on compliance with its relevant obligations.Directors’ Remuneration Report Resolution 3 to be proposed at the 2019 AGM deals with the 2018 Directors’ Remuneration Report (excluding the Remuneration Policy Report), as set out on pages 68 to 97, 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 2019 AGM deals with the Remuneration Policy, as set out on pages 74 to 83. The 2019 Directors’ Remuneration Policy will, if approved, provide the framework for remuneration decisions made by the Remuneration Committee. It is the Company’s intention that this will apply until the 2022 AGM, unless the Remuneration Committee seeks shareholder approval for a renewed policy at an earlier date.Directors’ Report - continued1. For more information in relation to the Group’s risk management and internal control systems, please see the Risk Management and Internal Control section in the Supplementary 20-F Disclosures section on page 234.Directors’ FeesAn ordinary resolution will be proposed at the 2019 AGM to increase the limit of the aggregate fees for non-executive Directors to €1,000,000. The current limit, approved at the 2016 AGM, is €875,000. The proposed increase is required as a result of an increase in the number of non-executive Directors and fee increases with effect from 1 January 2019.Changes to the Board of Directors• Mr. R. Boucher was appointed to the Board with effect from 1 March 2018;• Mrs. M.K. Rhinehart was appointed to the Board with effect from 1 October 2018;• Mrs. S. Talbot was appointed to the Board with effect from 1 December 2018; and• Mr. D. A. McGovern, Jr. will retire from the Board at the conclusion of the AGM to be held on 25 April 2019Under the Company’s Articles of Association, co-opted Directors are required to submit themselves to shareholders for election at the AGM following their appointment and all Directors are required to submit themselves 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 AGM and offer themselves for re-election.Auditors As required under Section 381(1)(b) of the Companies Act 2014, the AGM agenda includes a resolution authorising the Directors to fix the remuneration of the auditors.Section 383 of the Companies Act 2014 provides for the automatic re-appointment of the auditor of an Irish company at a company’s AGM, unless the auditor has given notice in writing of his unwillingness to 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, EY, Chartered Accountants, are willing to continue in office.Notwithstanding the provisions of Irish company law, the Board has decided to provide shareholders with an opportunity to have a say on the continuance in office of EY and a non-binding resolution has been included on the agenda for the 2019 AGM for this purpose.As outlined in the Audit Committee Report on pages 60 and 61, following a competitive tender process in 2018, the Board has selected Deloitte for appointment as the Company’s auditor with effect from the 2020 financial year.Authority to Allot Shares The Directors require the authority of the shareholders to allot any unissued Ordinary Share capital of the Company. Accordingly, an ordinary resolution will be proposed at the 2019 AGM (Resolution 9) to renew the annual authority for that purpose. The authority will be for an amount which represents just under 50% of the issued Ordinary Share capital as at 27 February 2019. Any allotment exceeding 33% of the issued Ordinary Share capital will only be made pursuant to a pre-emptive issue and no issue of shares will be made which could effectively alter control of the Company without prior approval of the Company in General Meeting. The Directors have no present intention of making any issue of shares, other than in connection with the Group’s share incentive plans and, if applicable, scrip dividend scheme. If approved, this authority will expire on the earlier of the date of the AGM in 2020 or 24 July 2020.Disapplication of Pre-emption RightsResolutions 10 and 11 are special resolutions which, if approved by shareholders, will renew the annual authorities of the Directors to disapply statutory pre-emption rights in relation to allotments of Ordinary Shares for cash in certain circumstances.Resolution 10 will, if approved, authorise the Directors to allot Ordinary Shares on a non-pre-emptive basis and for cash (otherwise than in connection with a rights issue or similar pre-emptive issue) up to a maximum nominal value of €14,337,000. This amount represents approximately 5% of the issued Ordinary Share capital as at 27 February 2019, being the latest practicable date prior to publication of this document. Resolution 10 will also allow the Directors to disapply pre-emption rights in order to accommodate any regulatory restrictions in certain jurisdictions where the Company might otherwise wish to undertake a pre-emptive issue.Resolution 11 will, if approved, afford the Directors with an additional power to allot Ordinary Shares on a non-pre-emptive basis and for cash up to a further 5% of the issued share capital as at 27 February 2019. The power conferred by Resolution 11 can be used only in connection with an acquisition or a specified capital investment which is announced contemporaneously with the issue, or which has taken place in the preceding six-month period and is disclosed in the announcement of the issue.The 5% limits in Resolutions 10 and 11 include any Treasury Shares reissued by the Company during the same period.The Directors confirm that in respect of Resolutions 10 and 11, they intend to follow the Statement of Principles updated by the Pre-Emption Group in that allotments of shares for cash and the reissue of Treasury Shares on a non-pre-emptive basis (other than for an open offer or rights issue to Ordinary Shareholders, the operation of CRH’s employee share schemes or in connection with an acquisition or specified capital investment) will not exceed 7.5% of the issued Ordinary Share capital within a rolling three-year period without prior consultation with shareholders.Transactions in Own SharesUnder the share buyback programme, a total of 32,429,352 Ordinary/Income Shares, equivalent to 3.84% of the Company’s issued share capital have been repurchased to date, at an average price of €27.86 per share. As at 27 February 2019, 32,063,844 shares were held as Treasury Shares, equivalent to 3.95% of the Ordinary Shares in issue (excluding Treasury Shares) (2018: 53,848 shares).During 2018, 403,933 (2017: 29,575) Treasury Shares were reissued under the Group’s employees’ share schemes. OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance102 103CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018A special resolution will be proposed at the 2019 AGM (Resolution 12) to renew the authority of the Company, or any of its subsidiaries, to purchase up to 10% of the Company’s Ordinary/Income Shares in issue at the date of the AGM.If approved, the minimum price which may be paid for shares purchased by the Company shall not be less than the nominal value of the shares and the maximum price will be 105% of the higher of the last independent trade in the Company’s shares (or current independent bid, if higher) and the average market price of such shares over the preceding five days. A special resolution (Resolution 13) 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 reissued off-market by the Company. If granted, both of these authorities will expire on the earlier of the date of the AGM in 2020 or 24 July 2020.As at 27 February 2019, options to subscribe for a total of 2,471,523 Ordinary/Income Shares are outstanding, representing 0.30% of the issued Ordinary/Income Share capital (excluding Treasury Shares). If the authority to purchase Ordinary/lncome Shares was used in full, the options would represent 0.32% of the remaining shares in issue.The ongoing share buyback programme is scheduled to expire on 29 March 2019. While no decision has been made to extend the programme, the Board believes that the Company should retain the ability to buyback its own shares so that it can be used in the best interests of shareholders generally.Authority to Offer Scrip DividendsThe scrip dividend scheme was suspended during 2018 in connection with the buyback programme. The buyback programme was expected to be for a period of up to 12 months when the suspension of the scrip dividend programme was announced. No decision has yet been taken on whether the scrip dividend scheme will be re-introduced. However, to provide flexibility should a decision be made to re-introduce the scheme, an ordinary resolution is being proposed to renew the Directors’ authority to make scrip dividend offers. Unless renewed at the AGM in 2020, this authority shall expire at the close of business on 24 July 2020.Annual General MeetingThe Notice of Meeting for the 2019 AGM is available on the CRH website (www.crh.com) and will be posted to shareholders on 27 March 2019.Statement of Directors’ ResponsibilitiesThe Directors as at the date of this report, whose names are listed on pages 54 to 57, are responsible for preparing the Annual Report and Form 20-F 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 businessThe 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 2018 Annual Report and Form 20-F 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 207 to 212), in respect of which the applicable accounting standards are those which are generally accepted in 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 101 Reduced Disclosure Framework.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.Directors’ Report - continuedThe 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 Group’s administrative head offices located at Stonemason’s Way, Rathfarnham, Dublin 16.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 confirms that they consider that the Annual Report and Form 20-F 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. For the purposes of Section 330 of the Companies Act 2014, each of the Directors also confirms that:• so far as they are aware, there is no relevant audit information of which the Company’s statutory auditors are unaware; and• they have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company’s statutory auditors are aware of that informationOn behalf of the Board, N. Hartery, A. Manifold Directors 27 February 2019Oldcastle BuildingEnvelope®, part of CRH’s Americas Products Division, provided window wall, exit devices and hardware through its C.R. Laurence business, for the renovation and expansion of the Visitor Centre and Museum at the famous Gateway Arch in St. Louis, Missouri. The arch soars almost 200 metres above the Mississippi River and the museum, a civic space for the city, opened to the public in July 2018. The museum has received LEED® Gold Certification from the US Green Building Council for the building’s sustainable site development, water savings, and building materials selection.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance104 105CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Brexit DescriptionImpactHow we Manage the RiskUncertainties resulting from the UK’s withdrawal from the European Union could pose challenges with currency devaluations, a fall in construction activity in the UK, challenges in labour resources accessing the UK, movement of goods and services and repatriating earnings. Risk trend: Failure by the Group to manage the uncertainties posed by Brexit could result in adverse financial performance and a fall in the Group’s net worth.• Executive management receive regular reports on Brexit and closely monitor the changing economic situation in the UK• Contingency plans have been put in place within UK and Ireland operations to address the range of potential economic, financial and operational effects of Brexit• Stress tests and scenario analysis have been conducted to understand potential outcomes and inform contingency plansCommodity Products and Substitution DescriptionImpactHow we Manage the RiskMany of the Group’s products are commodities, which face strong volume and price competition, and may be replaced by substitute products which the Group does not produce or distribute. Further, the Group must maintain strong customer relationships to ensure changing consumer preferences are addressed. Risk trend: Failure to differentiate and innovate could lead to market share decline, thus adversely impacting financial performance.• Strong focus on customer service ensures differentiation from competitors• Business-led innovation and Research and Development services aimed at ensuring the Group aligns its products and services to the demands of customers• Robust cost management practices and innovation in production processes ensure competitively priced productsReserves Availability and Planning DescriptionImpactHow we Manage the RiskAppropriate reserves are an increasingly scarce commodity and licences and/or permits required to enable operation are becoming harder to secure. There are numerous uncertainties inherent in reserves estimation and in projecting future rates of production.Risk trend: Failure by the Group to plan for reserve depletion, or to secure permits, may result in operation stoppages, adversely impacting financial performance.• Effective permit management systems in place in all operating entities ensure compliance with permit conditions and timely renewal• Planning for reserves enlargement and security of permits is a key point of focus for heavyside businesses• Efficient and economic extraction and utilisation of mineral reserves are constantly monitoredUnder 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. The risks and uncertainties presented below, which are supplemented by a broader discussion of Risk Factors set out on pages 225 to 233, are reviewed on an annual basis and represent the principal risks and uncertainties faced by the Group at the time of compilation of the 2018 Annual Report and Form 20-F. During the course of 2019, new risks and uncertainties may materialise attributable to changes in markets, regulatory environments and other factors and existing risks and uncertainties may become less relevant.Principal Risks and UncertaintiesGeopolitical and/or Social Instability DescriptionImpactHow we Manage the RiskAdverse and fast changing economic, social, and political situations in any country in which the Group operates could lead to business interruption, restrictions on repatriation of earnings or a loss of plant access. Risk trend: Changes in these conditions may adversely affect the Group’s business, results of operations, financial condition or prospects.• Two-phase budgeting process with prevailing economic and market forecasts factored in• Senior management and Board monitoring of commentaries and economic indicators• Mitigation strategies to protect CRH’s people and assets are in place in high risk areasIndustry Cyclicality and Adverse Economic Conditions DescriptionImpactHow we Manage the RiskConstruction activity, and therefore demand for the Group’s products, is inherently cyclical as it is influenced by global and national economic circumstances, governments’ ability to fund infrastructure projects, consumer sentiment and weather conditions. The Group may also be negatively impacted by unfavourable swings in fuel and other commodity/raw material prices.Risk trend: Failure to predict and plan for cyclical events or adverse economic conditions could negatively impact financial performance.• Market diversification strategies, in addition to the Group’s multiple end-use sectors• Constant focus on cash control, strong cash generation and disciplined financial management• Dynamic capital allocation and reallocation aimed at ensuring profitable growthPortfolio Management DescriptionImpactHow we Manage the RiskThe Group may engage in acquisition and divestment activity during the year as part of the Group’s active portfolio management which presents risks around due diligence, execution and integration of assets. Additionally, the Group may be liable for liabilities of companies it has acquired or divested.Risk trend: Failure to identify and execute deals in an efficient manner may limit the Group’s growth potential and impact financial performance. • Expertise in identifying and evaluating targets, conducting due diligence and executing integration • Many core markets are fragmented and continue to offer growth opportunities• The Group’s detailed due diligence programmes are supported by external specialists when necessaryPrincipal Strategic Risks and UncertaintiesLink to strategic objective Benefits of Scale Continuous Improvement Focused Growth Developing LeadersPrincipal Strategic Risks and Uncertainties - continuedOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance106 107CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Principal Strategic Risks and Uncertainties - continuedSustainability, Corporate Social Responsibility and Climate Change DescriptionImpactHow we Manage the RiskThe Group may face challenges associated with developing and providing innovative building products and solutions that help deliver a more sustainable environment while meeting our social responsibilities, the stringent and ever evolving laws and regulations that govern the climate change agenda and changing consumer demand.Risk trend: Failure to innovate, keep up with current technological changes or changing consumer preferences may result in falling demand for the Group’s products, adversely impacting financial performance. • CRH’s strategy and business model are built around sustainable, responsible and ethical performance. CRH takes a lead in re-thinking the nature of future developments and communities, offering multiple products and building solutions that enhance the environmental performance of the built environment• Sustainability performance is subject to rigorous external evaluation. The Group’s achievements have been recognised through its inclusion in a variety of leading global sustainability indicesHealth and Safety Performance DescriptionImpactHow we Manage the RiskThe Group’s businesses operate in an industry where health and safety risks are inherently prominent. Further, the Group is subject to stringent regulations from a health and safety perspective in the various jurisdictions in which it operates.Risk trend: A significant health and safety incident could have a serious impact on the Group’s operational and financial performance, as well as the Group’s reputation.• A robust health and safety framework is implemented throughout the Group’s operations requiring all employees to complete formal health and safety training on a regular basis• The Group monitors the performance of its health and safety framework, and takes immediate and decisive action where non-adherence is identified• The development of a strong safety culture is driven by management and employees at every level and is a core part of doing business with integrityOperational Continuity DescriptionImpactHow we Manage the RiskThe Group’s operating entities are subject to a wide range of operating risks and hazards including climatic conditions, technical failures, interruptions to power supplies, industrial accidents and disputes, environmental hazards, fire and crime.Risk trend: The occurrence of a significant adverse event could lead to prolonged operational interruption, negatively impacting financial performance or the Group’s prospects.• Strong adherence to Group policies on property management, quality control, information security, health and safety and sustainability assist in avoiding potential loss events• Established and robust controls exist in our businesses to manage operational continuity risks• Constant monitoring of the risk environment to determine whether all key risks are covered by insurance, where practicable and sensibleJoint Ventures and Associates DescriptionImpactHow we Manage the RiskThe Group does not have a controlling interest in certain of the businesses (i.e. joint ventures and associates) in which it has invested and may invest, which gives rise to increased governance complexity and a need for proactive relationship management.Risk trend: The lack of a controlling interest could impair the Group’s ability to manage joint ventures and associates effectively and/or realise its strategic goals for these businesses.• 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 growthPeople Management DescriptionImpactHow we Manage the RiskExisting processes around people management (such as attracting, retaining and developing people, leadership succession planning, as well as dealing with collective representation groups) may not deliver, inhibiting the Group achieving its strategy.Risk trend: Failure to effectively manage talent and plan for leadership succession could impede the realisation of strategic objectives.• Talent management processes are in place within operating companies with oversight and support from Group Human Resources and Talent Management• Succession planning and talent management initiatives implemented across the Group• Positive employee and trade/labour union relations are maintainedPrincipal Operational Risks and Uncertainties - continuedPrincipal Operational Risks and UncertaintiesInformation Technology and/or Cyber Security DescriptionImpactHow we Manage the RiskThe Group is dependent on information technology systems to support its business activities. Any significant operational event, whether caused by external attack, insider threat or error, could lead to loss of access to systems or data, adversely impacting business operations.Risk trend: Security breaches, IT interruptions or data loss could result in reputational damage and regulatory penalties and significant financial costs in remediation. • Ongoing strategic and tactical efforts to address the evolving nature of cyber threats and the challenges posed, including 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 cyber security and information technologyPrincipal Compliance Risks and UncertaintiesLaws and Regulations DescriptionImpactHow we Manage the RiskThe Group is subject to a wide variety of local and international laws and regulations across the many jurisdictions in which it operates, which vary in complexity, application and frequency of change. Risk trend: Potential breaches of local and international laws and regulations could result in the imposition of significant fines or sanctions and may inflict reputational damage.• CRH’s Code of Business Conduct, which is in effect mandatorily across the Group, stipulates best practice in relation to regulatory and compliance matters amongst other issues. The Code of Business Conduct 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 ConductOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernance108 109CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Principal Financial and Reporting Risks and UncertaintiesDefined Benefit Pension Schemes and Related Obligations DescriptionImpactHow we Manage the RiskThe assets and liabilities of defined benefit pension schemes, in place in certain operating jurisdictions, exhibit significant period-on-period volatility attributable primarily to asset values, changes in bond yields/discount rates and anticipated longevity.Risk trend: Significant cash contributions may be required to remediate deficits applicable to past service. Fluctuations in the accounting surplus/deficit may adversely impact the Group’s credit metrics thus harming its ability to raise funds.• De-risking frameworks (for example, Liability-Driven Investment techniques) have been instituted to mitigate deficit volatility and enable better matching of investment returns with cash outflows related to benefit obligations• 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 entrantsFinancial Instruments DescriptionImpactHow we Manage the RiskThe Group uses financial instruments throughout its businesses giving rise to interest rate and leverage, foreign currency, counterparty, credit rating and liquidity risks. In addition, the Group must maintain a certain minimum interest coverage ratio and a certain minimum level of net worth. Risk trend: A downgrade of the Group’s credit ratings or inability to maintain certain financial ratios may give rise to increases in future funding costs and may impair the Group’s ability to raise funds on acceptable terms. In addition, insolvency of the financial institutions with which the Group conducts business may adversely impact the Group’s financial position.• 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• All of the Group’s financial counterparties are leading financial institutions of international scope with a strong investment grade credit rating with S&P• Please see note 23 to the Consolidated Financial Statements for further detailTaxation Charge and Balance Sheet Provisioning DescriptionImpactHow we Manage the RiskThe Group is exposed to uncertainties stemming from governmental actions in respect of taxes paid and payable in all jurisdictions of operation. In addition, various assumptions are made in the computation of the overall tax charge and in balance sheet provisions which may not be borne out in practice.Risk trend: Changes in tax regimes or findings in future audits that additional taxes are due could result in incremental tax liabilities which could have a material adverse effect on cash flows, financial condition and results of operations.• The Group Tax Guidelines and Group Transfer Pricing Guidelines provide a tax governance framework operable throughout the Group• Group Tax is managed by in-house specialists with significant experience. The in-house expertise is supplemented by the assistance of external advisors where requiredForeign Currency Translation DescriptionImpactHow we Manage the RiskThe principal foreign exchange risks to which the Consolidated Financial Statements are exposed pertain to (i) adverse movements in reported results when translated into euro and (ii) declines in the euro value of net investments which are denominated in a wide basket of currencies other than the euro.Risk trend: Adverse changes in the exchange rates will continue to negatively affect retained earnings. The annual impact is reported in the Consolidated Statement of Comprehensive Income. • 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 operationGoodwill Impairment DescriptionImpactHow we Manage the RiskSignificant under-performance in any of the Group’s major cash-generating units or the divestment of businesses in the future may give rise to a material write-down of goodwill.Risk trend: 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. Detailed impairment testing is undertaken prior to year end• The goodwill impairment assessment is subject to regular review by the Audit Committee• For further information on how the Group manages the risk posed by goodwill impairment, please refer to note 16 to the Consolidated Financial Statements on pages 159 to 161OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018110Independent Auditor’s Reports 112Consolidated Income Statement 123Consolidated Statement of Comprehensive Income 124 Consolidated Balance Sheet 125Consolidated Statement of Changes in Equity 126Consolidated Statement of Cash Flows 127Accounting Policies 128Notes on Consolidated Financial Statements 139110FINANCIALSTATEMENTSIn operation for more than 20 years, the Texas Materials Beckmann Plant in San Antonio has supplied materials to highway projects including San Antonio’s heavily travelled Interstate 10, Loop 1604 and Loop 410 highways.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018IndependentAuditor’sIrishReporttothemembersofCRHplcOpinionWehaveauditedthefinancialstatementsofCRHplc(‘theCompany’)anditssubsidiaries(together‘theGroup’)fortheyearended31December2018,whichcomprisetheConsolidatedIncomeStatement,theConsolidatedStatementofComprehensiveIncome,theConsolidatedBalanceSheet,theConsolidatedStatementofChangesinEquity,theConsolidatedStatementofCashFlows,theCompanyBalanceSheet,theCompanyStatementofChangesinEquity,theAccountingPoliciesincludingthesummaryofSignificantAccountingPoliciessetoutonpages128to138andnotestothefinancialstatements.ThefinancialreportingframeworkthathasbeenappliedintheirpreparationisIrishlawandInternationalFinancialReportingStandards(IFRS)asadoptedbytheEuropeanUnionand,asregardstheCompanyfinancialstatements,AccountingStandardsincludingFRS101ReducedDisclosureFramework(IrishGenerallyAcceptedAccountingPractice).Inouropinion:•theGroupfinancialstatementsandtheCompanyfinancialstatementsgiveatrueandfairviewoftheassets,liabilitiesandfinancialpositionoftheGroupandtheCompanyasat31December2018andoftheGroup’sprofitfortheyearthenended;•theGroupfinancialstatementshavebeenproperlypreparedinaccordancewithIFRSasadoptedbytheEuropeanUnion;•theCompanyfinancialstatementshavebeenproperlypreparedinaccordancewithIrishGenerallyAcceptedAccountingPractice;and•theGroupfinancialstatementsandtheCompanyfinancialstatementshavebeenproperlypreparedinaccordancewiththerequirementsoftheCompaniesAct2014and,asregardstheGroupfinancialstatements,Article4oftheIASRegulationBasisforopinionWeconductedourauditinaccordancewithInternationalStandardsonAuditing(Ireland)(ISAs(Ireland))andapplicablelaw.OurresponsibilitiesunderthosestandardsarefurtherdescribedintheAuditor’sResponsibilitiesfortheAuditoftheFinancialStatementssectionofourreport.WeareindependentoftheGroupandCompanyinaccordancewithethicalrequirementsthatarerelevanttoourauditoffinancialstatementsinIreland,includingtheEthicalStandardasappliedtopublicinterestentitiesissuedbytheIrishAuditingandAccountingSupervisoryAuthority(IAASA),andwehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeserequirements.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.OverviewofourauditapproachKeyauditmatters•Assessmentofthecarryingvalueofgoodwill•Assessmentofthecarryingvalueofproperty,plantandequipmentandfinancialassets•Revenuerecognitionforconstructioncontracts•InrelationtotheacquisitionofAshGroveCementCompany(AshGrove),thepurchasepriceallocationofproperty,plantandequipment(PP&E)andprovisions•AccountingforacquisitionsandbusinessdisposalsAuditscope•Weperformedanauditofthecompletefinancialinformationof18componentsandperformedauditproceduresonspecificbalancesforafurther34components•Weperformedproceduresatafurther22componentsthatwerespecifiedbytheGroupauditteaminresponsetospecificriskfactors•Thecomponentswhereweperformedeitherfullorspecificauditproceduresaccountedfor97%ofProfitbeforetaxfromcontinuingoperations,83%ofRevenueand89%ofTotalAssets•‘Components’representbusinessunitsacrosstheGroupconsideredforauditscopingpurposesMateriality•OverallGroupmaterialitywasassessedtobe€95millionwhichrepresentsapproximately5%ofProfitbeforetaxfromcontinuingoperationsWhathaschanged?•Inthecurrentyear,ourauditor’sreportincludesakeyauditmatterinrelationtothepurchasepriceallocationofPP&Eandprovisionsinconnectionwiththe€3.0billionAshGroveacquisition•Wehavealsoincludedaccountingforbusinessdisposalsinthecurrentyearasakeyauditmatter(aspartofaccountingforacquisitionsandbusinessdisposals).In2018,thetotalaggregateproceedsforbusinessdisposalsamountedto€2.9billioncomparedto€0.1billionintheprioryear112CRHAnnualReportandForm20-F|2018KeyauditmattersKeyauditmattersarethosemattersthat,inourprofessionaljudgement,wereofmostsignificanceinourauditofthefinancialstatementsofthecurrentperiodandincludethemostsignificantassessedrisksofmaterialmisstatement(whetherornotduetofraud)thatweidentified,includingthosewhichhadthegreatesteffecton:ouroverallauditstrategy,theallocationofresourcesintheauditanddirectingoftheeffortsoftheengagementteam.Thesematterswereaddressedinthecontextofourauditofthefinancialstatementsasawhole,andinformingouropinionthereon,andwedonotprovideaseparateopiniononthesematters.RiskOurresponsetotheriskKeyobservationscommunicatedtotheAuditCommitteeAssessmentofthecarryingvalueofgoodwillTheimpairmentreviewofgoodwill,withacarryingvalueof€8.1billion,isconsideredtobeariskareaduetothesizeofthebalanceaswellasthefactthatitinvolvessignificantjudgementbymanagement.Judgementalaspectsincludeassumptionsoffutureprofitability,revenuegrowth,marginsandforecastcashflows,andtheselectionofappropriatediscountrates,allofwhichmaybesubjecttomanagementoverride.Therehasbeennochangeinthisriskfromtheprioryear.RefertotheAuditCommitteeReport(page60);AccountingPolicies(page128);andnote16oftheConsolidatedFinancialStatements(page159).Ourvaluationspecialistwithintheengagementteamperformedanindependentassessmentagainstexternalmarketdataofkeyinputsusedbymanagementincalculatingappropriatediscountrates,principallyrisk-freerates,countryriskpremiumandinflationrates.WechallengedthedeterminationoftheGroup’s26cash-generatingunits(CGUs)andflexedourauditapproachrelativetoourriskassessmentandthelevelofexcessofvalue-in-useovercarryingamountineachCGU.ForallCGUsselectedfordetailedtesting,wecorroboratedkeyassumptionsinthemodelsandbenchmarkedgrowthassumptionstoexternaleconomicforecastsandconstructionactivitymeasures.Wechallengedmanagement’ssensitivityanalysesandperformedourownsensitivitycalculationstoassessthelevelofexcessofvalue-in-useoverthegoodwillcarryingamountinplacebasedonreasonablypossiblechangesinsuchassumptions.Weconsideredtheadequacyofmanagement’sdisclosuresinrespectofimpairmenttestingandwhetherthedisclosuresappropriatelycommunicatetheunderlyingsensitivities.TheaboveprocedureswereperformedpredominantlybytheGroupauditteam.Wecompletedourplannedauditprocedureswithnoexceptionsnoted.Consistentwiththepreviousyear,twoCGUshadallocatedgoodwillbalancesofbetween10%and25%oftotalgoodwillwhichtheGroupconsideredsignificantandthereforewarrantedseparatedisclosure.TwoCGUsweredeterminedtobesensitiveinrespectoftheexcessofvalue-in-useoveritscarryingvalue.113OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018IndependentAuditor’sIrishReport-continuedRiskOurresponsetotheriskKeyobservationscommunicatedtotheAuditCommitteeAssessmentofthecarryingvalueofproperty,plantandequipmentandfinancialassetsTheimpairmentreviewofPP&Eandfinancialassets,withacarryingvalueof€15.8billionand€1.1billionrespectively,isconsideredtobeariskareaduetothesizeofthebalancesaswellasthejudgementalnatureofkeyassumptions,whichmaybesubjecttomanagementoverride,similartothatnotedintheassessmentofthecarryingvalueofgoodwillabove.Therehasbeennochangeinthisriskfromtheprioryear.RefertotheAuditCommitteeReport(page60);AccountingPolicies(page128);andnote15andnote17oftheConsolidatedFinancialStatements(pages158and162).Inrespectofthediscountrate,weperformedsimilarprocedurestothosenotedaboveforgoodwill.TheGroupoperatesavarietyofbusinessmodelsandasaresulttheidentificationofCGUsfortestingisbasedonthesebusinessmodelsandmanagement’sassessmentofimpairmentindicators.Similarauditprocedurestothosenotedundergoodwillaboveareperformedinrespectofthekeyassumptionsunderpinningtheimpairmentmodels.Weperformedtheaboveproceduresin35componentsrepresenting94%oftotalPP&Eandfinancialassetcarryingvalues.Ourplannedauditprocedureswerecompletedwithoutexception.RevenuerecognitionforconstructioncontractsTherearesignificantaccountingjudgementsincludingdeterminingthestageofcompletion,thetimingofrevenuerecognitionandthecalculationunderthepercentage-of-completionmethod,madebymanagementinapplyingtheGroup’srevenuerecognitionpoliciestolong-termcontractsenteredintobytheGroup.Thenatureofthesejudgementsresultsinthembeingsusceptibletomanagementoverride.ThemajorityoftheGroup’sconstructioncontractshaveamaturitywithinoneyear.Thereissignificantseasonalityastowhenservicesarerenderedundertheseconstructioncontracts,withthemajorityoftheworkhistoricallyperformedinthesummermonthsand,consequently,mostarecompletedpriortotheyearend.Totalrevenueforconstructioncontractswas€5.6billionwhichrepresents21%oftheGroup’srevenuein2018.Therehasbeennochangeinthisriskfromtheprioryear.RefertotheAuditCommitteeReport(page60);AccountingPolicies(page128);andnote1oftheConsolidatedFinancialStatements(page139).Weperformedarangeofauditprocedureswhichincludedobtainingasampleofcontracts,reviewingforchangeorders,retrospectivelyreviewingestimatedprofitandcoststocompleteandenquiringofkeypersonnelregardingadjustmentsforjobcostingandpotentialcontractlosses.Weperformedtheaboveproceduresin8componentsrepresenting95%ofconstructioncontractrevenuerecognisedduringtheyear.Ourobservationsincludedanoutlineoftherangeofauditproceduresperformed,thekeyjudgementsmadebymanagementinrecognisingrevenue,marginandprovisioningonloss-makingcontractsandtheresultsofourtesting.114CRHAnnualReportandForm20-F|2018RiskOurresponsetotheriskKeyobservationscommunicatedtotheAuditCommitteeInrelationtotheacquisitionofAshGrove,thepurchasepriceallocationforproperty,plantandequipmentandprovisionsThesignificantscaleoftheAshGroveacquisitionresultsinrisksrelatedtothepurchasepriceallocationexerciseperformedbymanagement.Weidentifiedthefollowingspecificriskareas:•FairvalueadjustmentstoPP&Egiventheassetintensivenatureofthebusinessesacquired,withtotalPP&Ebalancesof€2.1billion,andtheneedforcomplexandjudgementalvaluationtechniquestobeutilised•Recognitionandvaluationoffairvalueadjustmentstoprovisions,withtotalprovisionsof€81millionrecordedintheopeningbalancesheet,requiringsignificantestimatesandjudgementstobemadebymanagementRefertotheAuditCommitteeReport(page60);AccountingPolicies(page128);andnote32oftheConsolidatedFinancialStatements(page192).InrespectofthefairvalueadjustmentstoPP&E,weperformedanevaluationofvaluationmethodologies,assessedtheappropriatenessoftheunderlyingdataused,andtestedsignificantassumptionsinconjunctionwithourvaluationsspecialistswithintheengagementteam.Weperformedcorroborativeproceduresincludingexaminingrelevantexternalthirdpartybenchmarksandperformingsensitivityanalysesonkeyassumptions,beingtheusefullivesanddirectcostsinputs.Wealsohelddiscussionswiththeexpertsemployedbymanagementtoassistinthisareaandevaluatedthefindingsandconclusionsintheirvaluationreport.TheseprocedureswerepredominantlyperformedbytheGroupauditteamandthevaluationsspecialistswithintheengagementteam,althoughwealsoleveragedtheknowledgeandexpertiseofourrelevantcomponentteam.OurprocedurescoveredthetotalfairvalueadjustmentstoPP&E.Inrespectoftherecognitionandvaluationofthefairvalueadjustmentstoprovisions,weexaminedhowtheGroupidentifiedallmaterialprovisions,obtainedrelatedevidenceandexaminedthekeyassumptionsandcalculationsusedtoensuretheywererecordedinaccordancewithIFRS3BusinessCombinations.Wealsoperformedanevaluationofanyexpertsengagedbymanagementandutilisedourownspecialistswherenecessary.Whilstourprocedureswereprincipallyfocusedonrecognitionandvaluation,wealsoassessedthecompletenessofrecordedprovisions.Theproceduresweremainlyperformedatacomponentlevel.Ourobservationsincludedanoutlineoftherangeofauditproceduresperformed,thekeyjudgementsmadebymanagementinarrivingatthefairvalueadjustmentsinrespectofPP&EandprovisionsinrespectoftheAshGroveacquisitionandtheresultsofourrelatedtesting.AccountingforacquisitionsandbusinessdisposalsDuring2018,theGroupcompleted44acquisitionsatacostof€3.7billionandrealisedtotalbusinessdisposalproceedsof€3.1billionacross20disposals.AcquisitionsandbusinessdisposalscontinuetobeasignificantfocusareafortheGroupandanareawhereweallocatesignificantresourcesindirectingtheeffortsoftheengagementteam.GiventhescaleandnatureoftheAshGroveacquisitioninthecurrentyear,inadditiontothisbroaderriskwehavealsoidentifiedspecificrisksinrespectofthistransaction,asdetailedabove.RefertotheAuditCommitteeReport(page60);AccountingPolicies(page128);andnotes6and32oftheConsolidatedFinancialStatements(pages148and192).Ourvaluationspecialistswithintheengagementteamchallengedmanagement’spurchasepriceallocationadjustments,deferredconsiderationandtheidentificationandvaluationofacquiredintangibleassets,asallsuchelementsinvolvesignificantjudgement.Intestingtheaccountingforbusinessdisposalsweverifiedvariousfactorsincludingconsideration,netassetcarryingvalueofthebusinessdisposed,disposalcostsandforeignexchangereserverecycling.Wealsoconsideredtheadequacyoftherelateddisclosures(note6andnote32).TheaboveproceduresareperformedbothlocallyandbytheGroupauditteam,andcovered87%ofacquisitionspendand95%ofdisposalproceeds.Ourproceduresinrespectofcurrentyearacquisitionswerefocusedon5acquisitionswhichtogethercomprised87%oftotalacquisitionspendand3businessdisposalswhichcomprised95%oftotalbusinessdisposalproceeds.Substantialauditresourceswereallocatedtotheseprocedures,includingevaluationoftheworkdonebyexpertsutilisedbymanagementandinvolvementofourownspecialists,inparticularwithrespecttothepurchasepriceallocationsforthebusinessesacquired;andtheauditoftheopeningbalancesheetsbycomponentteams.Ourplannedauditproceduresinrespectofacquisitionsandbusinessdisposalswerecompletedwithoutexception.115OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018IndependentAuditor’sIrishReport-continuedOurapplicationofmaterialityWeapplytheconceptofmaterialityinplanningandperformingtheaudit,inevaluatingtheeffectofidentifiedmisstatementsontheauditandinformingourauditopinion.MaterialityThemagnitudeofanomissionormisstatementthat,individuallyorintheaggregate,couldreasonablybeexpectedtoinfluencetheeconomicdecisionsoftheusersofthefinancialstatements.Materialityprovidesabasisfordeterminingthenatureandextentofourauditprocedures.WedeterminedmaterialityfortheGrouptobe€95million(2017:€100million),whichisapproximately5%ofGroupProfitbeforetaxfromcontinuingoperations(2017:5%ofGroupProfitbeforetaxfromcontinuinganddiscontinuedoperations).ProfitbeforetaxisakeyperformanceindicatorfortheGroupandisalsoakeymetricusedbytheGroupintheassessmentofmanagement’sperformance.WethereforeconsideredProfitbeforetaxtobethemostappropriateperformancemetriconwhichtobaseourmaterialitycalculationasweconsiderittobethemostrelevantperformancemeasuretothestakeholdersoftheGroup.WedeterminedmaterialityfortheCompanytobe€92million(2017:€87million),whichisapproximately1%(2017:1%)oftotalequity.Duringthecourseofouraudit,wereassessedinitialmaterialityandconsideredthatnofurtherchangestomaterialitywerenecessary.PerformancematerialityPerformancematerialityistheapplicationofmaterialityattheindividualaccountorbalancelevel.Itissetatanamounttoreducetoanappropriatelylowleveltheprobabilitythattheaggregateofuncorrectedandundetectedmisstatementsexceedsmateriality.Onthebasisofourriskassessments,togetherwithourassessmentoftheGroup’soverallcontrolenvironment,ourjudgementwasthatperformancematerialityshouldbesetat75%(2017:50%)ofourplanningmateriality,namely€71million(2017:€50million).Wehavere-assessedperformancematerialityinthecurrentyearbasedonourpastexperienceoftheriskofmisstatements,bothcorrectedanduncorrected.Auditworkatcomponentlocationsforthepurposeofobtainingauditcoverageoversignificantfinancialstatementaccountsisundertakenbasedonapercentageoftotalperformancemateriality.TheperformancematerialitysetforeachcomponentisbasedontherelativescaleandriskofthecomponenttotheGroupasawholeandourassessmentoftheriskofmisstatementatthatcomponent.Inthecurrentyear,therangeofperformancematerialityallocatedtocomponentswas€14millionto€46million(2017:€10millionto€32.5million).ReportingthresholdAnamountbelowwhichidentifiedmisstatementsareconsideredasbeingclearlytrivial.WeagreedwiththeAuditCommitteethatwewouldreporttothemalluncorrectedauditdifferencesinexcessof€4.75million(2017:€5million),whichissetatapproximately5%ofplanningmateriality,aswellasdifferencesbelowthatthresholdthat,inourview,warrantedreportingonqualitativegrounds.Weevaluateanyuncorrectedmisstatementsagainstboththequantitativemeasuresofmaterialitydiscussedaboveandinlightofotherrelevantqualitativeconsiderationsinformingouropinion.AnoverviewofthescopeofourauditreportTailoringthescopeOurassessmentofauditrisk,ourevaluationofmaterialityandourallocationofperformancematerialitydetermineourauditscopeforeachentitywithintheGroup.Takentogether,thisenablesustoformanopinionontheConsolidatedFinancialStatements.IndeterminingthosecomponentsintheGrouptowhichweperformauditprocedures,weutilisedsizeandriskcriteriainaccordancewithISAs(Ireland).InassessingtheriskofmaterialmisstatementtotheGroupfinancialstatements,andtoensurewehadadequatequantitativecoverageofsignificantaccountsinthefinancialstatements,weselected52(2017:70)componentscoveringentitiesacrossEuropeandtheAmericas,aswellasthePhilippines,whichrepresenttheprincipalbusinessunitswithintheGroup.Ofthe52componentsselected,weperformedanauditofthecompletefinancialinformationof18(2017:19)components(‘fullscopecomponents’)whichwereselectedbasedontheirsizeorriskcharacteristics.Fortheremaining34(2017:51)components(‘specificscopecomponents’),weperformedauditproceduresonspecificaccountswithinthatcomponentthatweconsideredhadthepotentialforthegreatestimpactonthesignificantaccountsinthefinancialstatementseitherbecauseofthesizeoftheseaccountsortheirriskprofile.Inadditiontothe52componentsdiscussedabove,weselectedafurther22(2017:1)componentswhereweperformedproceduresatthecomponentlevelthatwerespecifiedbytheGroupauditteaminresponsetospecificriskfactors.Also,weperformedreviewproceduresatanadditional24(2017:17)components.Thereportingcomponentswhereweperformedeitherfullorspecificscopeauditproceduresaccountedfor97%(2017:93%)oftheGroup’sProfitbeforetaxfromcontinuingoperations,83%(2017:85%)oftheGroup’sRevenueand89%(2017:93%)oftheGroup’sTotalAssets.Forthecurrentyear,thefullscopecomponentscontributed90%(2017:81%)oftheGroup’sProfitbeforetaxfromcontinuingoperations,75%(2017:77%)oftheGroup’sRevenueand79%(2017:76%)oftheGroup’sTotalAssets.Thespecificscopecomponentscontributed7%(2017:12%)oftheGroup’sProfitbeforetaxfromcontinuingoperations,8%(2017:8%)oftheGroup’sRevenueand10%(2017:17%)oftheGroup’sTotalAssets.ThecomponentswhereweeitherperformedproceduresthatwerespecifiedbytheGroupauditteaminresponsetospecificriskfactorsorreviewscopeprocedurescontributed0%and2%(2017:0%and1%)respectivelyoftheGroup’sProfitbeforetaxfromcontinuingoperations,2%and6%(2017:0%and5%)respectivelyoftheGroup’sRevenueand4%and2%(2017:0%and2%)respectivelyoftheGroup’sTotalAssets.TheauditscopeofthesecomponentsmaynothaveincludedtestingofallsignificantaccountsofthecomponentbutwillhavecontributedtothecoverageofsignificantriskstestedfortheGroup.Oftheremainingcomponents,whichtogetherrepresent1%(2017:6%)oftheGroup’sProfitbeforetaxfromcontinuingoperations,noneisindividuallygreaterthan5%oftheGroup’sProfitbeforetaxfromcontinuingoperations.Forthesecomponents,weperformedotherprocedures,includinganalyticalreview,confirmationofcashbalances,testingofconsolidationjournalsandintercompanyeliminationsandforeigncurrencytranslationrecalculationstorespondtoanypotentialrisksofmaterialmisstatementtotheConsolidatedFinancialStatements.116CRHAnnualReportandForm20-F|2018Thechartsbelowillustratethecoverageobtainedfromtheworkperformedbyourauditteamsbasedoncontinuingoperations.Profit before tax fromcontinuing operations90% Fullscope7% Specificscope0% Specifiedprocedures2% Reviewscope1% OtherproceduresRevenue75% Fullscope8% Specificscope2% Specifiedprocedures6% Reviewscope9% OtherproceduresTotal Assets79% Full scope10% Specific scope4% Specifiedprocedures2% Review scope5% Other proceduresInvolvementwithcomponentteamsInestablishingouroverallapproachtotheGroupaudit,wedeterminedthetypeofworkthatneededtobeundertakenateachofthecomponentsbyus,astheGroupauditteam,orbycomponentauditorsfromotherEYglobalnetworkfirmsoperatingunderourinstruction.Forthefullscopeandspecificscopecomponents,wheretheworkwasperformedbycomponentauditors,wedeterminedtheappropriatelevelofinvolvementtoenableustodeterminethatsufficientauditevidencehadbeenobtainedasabasisforouropinionontheGroupasawhole.WeissueddetailedinstructionstoeachcomponentauditorinscopefortheGroupaudit,withspecificauditrequirementsandrequestsacrosskeyareas.TheGroupauditteamcontinuedtoperformaprogrammeofsitevisitsatkeylocationsacrosstheGroup,visiting12componentteamsduring2018andvisiting49componentteamsinthepastfiveyears.Thevisitsconductedduringtheyearinvolveddiscussingwiththecomponentteamtheauditapproachandanyissuesarisingfromtheirwork,meetingwithlocalmanagement,attendingplanningandclosingmeetingsandreviewingkeyauditworkingpapersonriskareas.TheGroupauditteaminteractedregularlywithallcomponentteamswhereappropriateduringvariousstagesoftheaudit,reviewedkeyworkingpapersandwereresponsibleforthescopeanddirectionoftheauditprocess.This,togetherwiththeadditionalproceduresperformedatGrouplevel,gaveusappropriateevidenceforouropinionontheConsolidatedFinancialStatements.117OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018IndependentAuditor’sIrishReport-continuedConclusionsrelatingtoprincipalrisks,goingconcernandviabilitystatementWehavenothingtoreportinrespectofthefollowinginformationintheannualreport,inrelationtowhichtheISAs(Ireland)requireustoreporttoyouwhetherwehaveanythingmaterialtoaddordrawattentionto:•thedisclosuresintheAnnualReportsetoutonpages104to109thatdescribetheprincipalrisksandexplainhowtheyarebeingmanagedormitigated;•theDirectors’confirmationsetoutonpage100intheAnnualReportthattheyhavecarriedoutarobustassessmentoftheprincipalrisksfacingtheGroupandtheCompany,includingthosethatwouldthreatenitsbusinessmodel,futureperformance,solvencyorliquidity;•theDirectors’statementsetoutonpage100inthefinancialstatementsaboutwhethertheDirectorsconsidereditappropriatetoadoptthegoingconcernbasisofaccountinginpreparingthefinancialstatementsandtheDirectors’identificationofanymaterialuncertaintiestotheGroup’sandtheCompany’sabilitytocontinuetodosooveraperiodofatleast12monthsfromthedateofapprovalofthefinancialstatements;•whethertheDirectors’statementrelatingtogoingconcernrequiredundertheListingRulesofEuronextDublinandtheUKListingAuthorityismateriallyinconsistentwithourknowledgeobtainedintheaudit;or•theDirectors’explanationsetoutonpage100intheAnnualReportastohowtheyhaveassessedtheprospectsoftheGroupandtheCompany,overwhatperiodtheyhavedonesoandwhytheyconsiderthatperiodtobeappropriate,andtheirstatementastowhethertheyhaveareasonableexpectationthattheGroupandtheCompanywillbeabletocontinueinoperationandmeetitsliabilitiesastheyfalldueovertheperiodoftheirassessment,includinganyrelateddisclosuresdrawingattentiontoanynecessaryqualificationsorassumptionsOtherinformationTheDirectorsareresponsiblefortheotherinformation.TheotherinformationcomprisestheinformationincludedintheAnnualReportotherthanthefinancialstatementsandourauditor’sreportthereon.Ouropiniononthefinancialstatementsdoesnotcovertheotherinformationand,excepttotheextentotherwiseexplicitlystatedinourreport,wedonotexpressanyformofassuranceconclusionthereon.Inconnectionwithourauditofthefinancialstatements,ourresponsibilityistoreadtheotherinformationand,indoingso,considerwhethertheotherinformationismateriallyinconsistentwiththefinancialstatementsorourknowledgeobtainedintheauditorotherwiseappearstobemateriallymisstated.Ifweidentifysuchmaterialinconsistenciesorapparentmaterialmisstatements,wearerequiredtodeterminewhetherthereisamaterialmisstatementinthefinancialstatementsoramaterialmisstatementoftheotherinformation.If,basedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementofthisotherinformation,wearerequiredtoreportthatfact.Wehavenothingtoreportinthisregard.Inthiscontext,wealsohavenothingtoreportinregardtoourresponsibilitytospecificallyaddressthefollowingitemsintheotherinformationandtoreportasuncorrectedmaterialmisstatementsoftheotherinformationwhereweconcludethatthoseitemsmeetthefollowingconditions:•Fair,balancedandunderstandable(setoutonpage103)–thestatementgivenbytheDirectorsthattheyconsidertheAnnualReportandfinancialstatementstakenasawholeisfair,balancedandunderstandableandprovidestheinformationnecessaryforshareholderstoassesstheGroup’sandtheCompany’sperformance,businessmodelandstrategy,ismateriallyinconsistentwithourknowledgeobtainedintheaudit;or•AuditCommitteereporting(setoutonpage60)–thesectiondescribingtheworkoftheAuditCommitteedoesnotappropriatelyaddressmatterscommunicatedbyustotheAuditCommitteeismateriallyinconsistentwithourknowledgeobtainedintheaudit;or•Directors’statementofcompliancewiththeUKCorporateGovernanceCode(setoutonpage58)–thepartsoftheDirectors’statementrequiredundertheListingRulesrelatingtotheCompany’scompliancewiththeUKCorporateGovernanceCodecontainingprovisionsspecifiedforreviewbytheauditorinaccordancewiththeListingRulesofEuronextDublinandtheUKListingAuthoritydonotproperlydiscloseadeparturefromarelevantprovisionoftheUKCorporateGovernanceCode118CRHAnnualReportandForm20-F|2018OpinionsonothermattersprescribedbytheCompaniesAct2014Basedsolelyontheworkundertakeninthecourseoftheaudit,wereportthat:•inouropinion,theinformationgivenintheDirectors’Report,otherthanthosepartsdealingwiththenon-financialstatementpursuanttotherequirementsofS.I.No.360/2017onwhichwearenotrequiredtoreportinthecurrentyear,isconsistentwiththefinancialstatements;and•inouropinion,theDirectors’Report,otherthanthosepartsdealingwiththenon-financialstatementpursuanttotherequirementsofS.I.No.360/2017onwhichwearenotrequiredtoreportinthecurrentyear,hasbeenpreparedinaccordancewiththeCompaniesAct2014Wehaveobtainedalltheinformationandexplanationswhichweconsidernecessaryforthepurposesofouraudit.InouropiniontheaccountingrecordsoftheCompanyweresufficienttopermitthefinancialstatementstobereadilyandproperlyauditedandtheCompanyBalanceSheetisinagreementwiththeaccountingrecords.MattersonwhichwearerequiredtoreportbyexceptionBasedontheknowledgeandunderstandingoftheGroupandtheCompanyanditsenvironmentobtainedinthecourseoftheaudit,wehavenotidentifiedmaterialmisstatementsintheDirectors’Report,excludingthosepartsdealingwiththenon-financialstatementpursuanttotherequirementsofS.I.No.360/2017onwhichwearenotrequiredtoreportinthecurrentyear.TheCompaniesAct2014requiresustoreporttoyouif,inouropinion,thedisclosuresofDirectors’remunerationandtransactionsrequiredbysections305to312oftheActarenotmade.Wehavenothingtoreportinthisregard.RespectiveresponsibilitiesRespectiveresponsibilitiesofDirectorsforthefinancialstatementsAsexplainedmorefullyintheStatementofDirectors’Responsibilitiessetoutonpage102,theDirectorsareresponsibleforthepreparationofthefinancialstatementsandforbeingsatisfiedthattheygiveatrueandfairview,andforsuchinternalcontrolastheydetermineisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.Inpreparingthefinancialstatements,theDirectorsareresponsibleforassessingtheGroupandtheCompany’sabilitytocontinueasgoingconcerns,disclosing,asapplicable,mattersrelatedtogoingconcernandusingthegoingconcernbasisofaccountingunlessmanagementeitherintendstoliquidatetheGrouportheCompanyortoceaseoperations,orhasnorealisticalternativebuttodoso.Auditor’sresponsibilitiesfortheauditofthefinancialstatementsOurobjectivesaretoobtainreasonableassuranceaboutwhetherthefinancialstatementsasawholearefreefrommaterialmisstatement,whetherduetofraudorerror,andtoissueanauditor’sreportthatincludesouropinion.Reasonableassuranceisahighlevelofassurance,butisnotaguaranteethatanauditconductedinaccordancewithISAs(Ireland)willalwaysdetectamaterialmisstatementwhenitexists.Misstatementscanarisefromfraudorerrorandareconsideredmaterialif,individuallyorintheaggregate,theycouldreasonablybeexpectedtoinfluencetheeconomicdecisionsofuserstakenonthebasisofthesefinancialstatements.Theobjectivesofouraudit,inrespecttofraud,are;toidentifyandassesstherisksofmaterialmisstatementofthefinancialstatementsduetofraud;toobtainsufficientappropriateauditevidenceregardingtheassessedrisksofmaterialmisstatementduetofraud,throughdesigningandimplementingappropriateresponses;andtorespondappropriatelytofraudorsuspectedfraudidentifiedduringtheaudit.However,theprimaryresponsibilityforthepreventionanddetectionoffraudrestswithboththosechargedwithgovernanceoftheentityandmanagement.119OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018IndependentAuditor’sIrishReport-continuedOurapproachwasasfollows:•WeobtainedanunderstandingofthelegalandregulatoryframeworksthatareapplicabletotheGroupacrossthevariousjurisdictionsgloballyinwhichtheGroupoperates.Wedeterminedthatthemostsignificantarethosethatrelatetotheformandcontentofexternalfinancialandcorporategovernancereportingincludingcompanylaw,taxlegislation,employmentlawandregulatorycompliance•WeunderstoodhowtheGroupiscomplyingwiththoseframeworksbymakingenquiriesofmanagement,internalaudit,thoseresponsibleforlegalandcomplianceproceduresandtheCompanySecretary.WecorroboratedourenquiriesthroughourreviewoftheGroup’sCompliancePolicies,boardminutes,papersprovidedtotheAuditCommitteeandcorrespondencereceivedfromregulatorybodies•WeassessedthesusceptibilityoftheGroup’sfinancialstatementstomaterialmisstatement,includinghowfraudmightoccur,bymeetingwithmanagement,includingwithinvariouspartsofthebusiness,tounderstandwheretheyconsideredtherewassusceptibilitytofraud.Wealsoconsideredperformancetargetsandthepotentialformanagementtoinfluenceearningsortheperceptionsofanalysts.Wherethisriskwasconsideredtobehigher,weperformedauditprocedurestoaddresseachidentifiedfraudrisk.Theseproceduresincludedtestingmanualjournalsandweredesignedtoprovidereasonableassurancethatthefinancialstatementswerefreefromfraudorerror•Basedonthisunderstandingwedesignedourauditprocedurestoidentifynon-compliancewithsuchlawsandregulations.Ourproceduresincludedareviewofboardminutestoidentifyanynon-compliancewithlawsandregulations,areviewofthereportingtotheAuditCommitteeoncompliancewithregulations,enquiriesofinternalandexternallegalcounselandmanagementAfurtherdescriptionofourresponsibilitiesfortheauditofthefinancialstatementsislocatedontheIAASA’swebsiteat:http://www.iaasa.ie/getmedia/b2389013-1cf6-458b-9b8f-a98202dc9c3a/Description_of_auditors_responsibilities_for_audit.pdf.Thisdescriptionformspartofourauditor’sreport.OthermatterswhichwearerequiredtoaddressWewereappointedbytheBoardofDirectorsfollowingtheAGMheldon26April2018toauditthefinancialstatementsfortheyearended31December2018.Theperiodoftotaluninterruptedengagementincludingpreviousrenewalsandre-appointmentsofthefirmis31years.Thenon-auditservicesprohibitedbyIAASA’sEthicalStandardwerenotprovidedtotheGroupandweremainindependentoftheGroupinconductingouraudit.OurauditopinionisconsistentwiththereporttotheAuditCommittee.ThepurposeofourauditworkandtowhomweoweourresponsibilitiesOurreportismadesolelytotheCompany’smembers,asabody,inaccordancewithsection391oftheCompaniesAct2014.OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany’smembers,asabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.PatO’NeillforandonbehalfofErnst&YoungCharteredAccountantsandStatutoryAuditFirmDublin27February2019120CRHAnnualReportandForm20-F|2018IndependentAuditor’sUSReportsREPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRMTotheShareholdersandtheBoardofDirectorsofCRHpubliclimitedcompany(CRHplc):OpinionontheFinancialStatementsWehaveauditedtheaccompanyingConsolidatedBalanceSheetsofCRHplc(‘theCompany’)asof31December2018and2017,therelatedConsolidatedIncomeStatementsandConsolidatedStatementsofComprehensiveIncome,ChangesinEquityandCashFlowsforeachofthethreeyearsintheperiodended31December2018,andtherelatednotes(collectivelyreferredtoasthe‘financialstatements’).Inouropinion,thefinancialstatementspresentfairly,inallmaterialrespects,theconsolidatedfinancialpositionoftheCompanyat31December2018and2017,andtheconsolidatedresultsofitsoperationsanditscashflowsforeachofthethreeyearsintheperiodended31December2018,inconformitywithInternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard.Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)(PCAOB),theCompany’sinternalcontroloverfinancialreportingasof31December2018,basedoncriteriaestablishedinInternalControl-IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganisationsoftheTreadwayCommission(2013Framework)andourreportdated27February2019expressedanunqualifiedopinionthereon.BasisforOpinionThesefinancialstatementsaretheresponsibilityoftheCompany’smanagement.OurresponsibilityistoexpressanopinionontheCompany’sfinancialstatementsbasedonouraudits.WeareapublicaccountingfirmregisteredwiththePCAOBandarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththeUSfederalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB.WeconductedourauditsinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement,whetherduetoerrororfraud.Ourauditsincludedperformingprocedurestoassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetoerrororfraud,andperformingproceduresthatrespondtothoserisks.Suchproceduresincludedexamining,onatestbasis,evidenceregardingtheamountsanddisclosuresinthefinancialstatements.Ourauditsalsoincludedevaluatingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.Webelievethatourauditsprovideareasonablebasisforouropinion.ERNST&YOUNGWehaveservedastheCompany’sauditorsince1988.Dublin,Ireland27February2019121OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018IndependentAuditor’sUSReports-continuedREPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRMTotheShareholdersandtheBoardofDirectorsofCRHpubliclimitedcompany(CRHplc):OpiniononInternalControloverFinancialReportingWehaveauditedCRHplc’sinternalcontroloverfinancialreportingasof31December2018,basedoncriteriaestablishedinInternalControl-IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganisationsoftheTreadwayCommission(2013Framework)(the‘COSOcriteria’).Inouropinion,CRHplc(theCompany)maintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasof31December2018,basedontheCOSOcriteria.AsindicatedintheaccompanyingManagement’sReportonInternalControloverFinancialReporting,management’sassessmentofandconclusionontheeffectivenessofinternalcontroloverfinancialreportingdidnotincludetheinternalcontrolsofbusinesscombinationsduringtheyearended31December2018,whichareincludedinthe2018ConsolidatedFinancialStatementsoftheCompanyandconstituted9.5%and14.6%oftotalandnetassets,respectively,asof31December2018and4.6%and4.2%ofrevenueandgroupprofit,respectively,fortheyearthenended.Oftheseacquisitions,theacquisitionofAshGroveCementCompanyrepresented7.1%and10.9%oftotalandnetassets,respectively,asof31December2018and2.4%and3.5%ofrevenueandgroupprofit,respectively,forthefinancialyear.OurauditofinternalcontroloverfinancialreportingoftheCompanyalsodidnotincludeanevaluationoftheinternalcontroloverfinancialreportingbusinesscombinationscompletedduringtheyearended31December2018.Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)(PCAOB),theConsolidatedBalanceSheetsofCRHplcasof31December2018and2017,therelatedConsolidatedIncomeStatementsandConsolidatedStatementsofComprehensiveIncome,ChangesinEquityandCashFlowsforeachofthethreeyearsintheperiodended31December2018,andtherelatednotes(collectivelyreferredtoasthe“financialstatements”)oftheCompanyandourreportdated27February2019expressedanunqualifiedopinionthereon.BasisforOpinionTheCompany’smanagementisresponsibleformaintainingeffectiveinternalcontroloverfinancialreportingandforitsassessmentoftheeffectivenessofinternalcontroloverfinancialreportingincludedintheaccompanyingManagement’sReportonInternalControloverFinancialReporting.OurresponsibilityistoexpressanopinionontheCompany’sinternalcontroloverfinancialreportingbasedonouraudit.WeareapublicaccountingfirmregisteredwiththePCAOBandarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththeUSfederalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB.WeconductedourauditinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhethereffectiveinternalcontroloverfinancialreportingwasmaintainedinallmaterialrespects.Ourauditincludedobtaininganunderstandingofinternalcontroloverfinancialreporting,assessingtheriskthatamaterialweaknessexists,testingandevaluatingthedesignandoperatingeffectivenessofinternalcontrolbasedontheassessedrisk,andperformingsuchotherproceduresasweconsiderednecessaryinthecircumstances.Webelievethatourauditprovidesareasonablebasisforouropinion.DefinitionandLimitationsofInternalControloverFinancialReportingAcompany’sinternalcontroloverfinancialreportingisaprocessdesignedtoprovidereasonableassuranceregardingthereliabilityoffinancialreportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyacceptedaccountingprinciples.Acompany’sinternalcontroloverfinancialreportingincludesthosepoliciesandproceduresthat(1)pertaintothemaintenanceofrecordsthat,inreasonabledetail,accuratelyandfairlyreflectthetransactionsanddispositionsoftheassetsofthecompany;(2)providereasonableassurancethattransactionsarerecordedasnecessarytopermitpreparationoffinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciples,andthatreceiptsandexpendituresofthecompanyarebeingmadeonlyinaccordancewithauthorisationsofmanagementanddirectorsofthecompany;and(3)providereasonableassuranceregardingpreventionortimelydetectionofunauthorisedacquisition,use,ordispositionoftheCompany’sassetsthatcouldhaveamaterialeffectonthefinancialstatements.Becauseofitsinherentlimitations,internalcontroloverfinancialreportingmaynotpreventordetectmisstatements.Also,projectionsofanyevaluationofeffectivenesstofutureperiodsaresubjecttotheriskthatcontrolsmaybecomeinadequatebecauseofchangesinconditions,orthatthedegreeofcompliancewiththepoliciesorproceduresmaydeteriorate.ERNST&YOUNGDublin,Ireland27February2019122CRHAnnualReportandForm20-F|2018ConsolidatedIncomeStatementforthefinancialyearended31December20182018€m2017€m2016€mNotes1,2Revenue26,79025,22024,7894Costofsales(18,152)(16,903)(16,566)Grossprofit8,6388,3178,2234Operatingcosts(6,461)(6,222)(6,315)2,5,7,8Groupoperatingprofit2,1772,0951,9082,6(Loss)/profitondisposals(24)5653Profitbeforefinancecosts2,1532,1511,96110Financecosts(339)(301)(325)10Financeincome3412810Otherfinancialexpense(46)(60)(66)11Shareofequityaccountedinvestments’profit6065422Profitbeforetaxfromcontinuingoperations1,8621,8671,62012Incometaxexpense(426)(55)(431)Groupprofitforthefinancialyearfromcontinuingoperations1,4361,8121,1893Profitaftertaxforthefinancialyearfromdiscontinuedoperations1,08510781Groupprofitforthefinancialyear2,5211,9191,270Profitattributableto:EquityholdersoftheCompanyFromcontinuingoperations1,4321,7881,162Fromdiscontinuedoperations1,08510781Non-controllinginterestsFromcontinuingoperations42427Groupprofitforthefinancialyear2,5211,9191,27014BasicearningsperOrdinaryShare302.4c226.8c150.2c14DilutedearningsperOrdinaryShare300.9c225.4c149.1c14BasicearningsperOrdinarySharefromcontinuingoperations172.0c214.0c140.4c14DilutedearningsperOrdinarySharefromcontinuingoperations171.2c212.7c139.4c123OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018ConsolidatedStatementofComprehensiveIncomeforthefinancialyearended31December20182018€m2017€m2016€mNotesGroupprofitforthefinancialyear2,5211,9191,270OthercomprehensiveincomeItemsthatmaybereclassifiedtoprofitorlossinsubsequentyears:Currencytranslationeffects276(1,076)(82)26(Losses)/gainsrelatingtocashflowhedges(40)81412Taxrelatingtocashflowhedges5--241(1,068)(68)Itemsthatwillnotbereclassifiedtoprofitorlossinsubsequentyears:29Remeasurementofretirementbenefitobligations10114(61)12Taxrelatingtoretirementbenefitobligations(1)(33)3981(58)Totalothercomprehensiveincomeforthefinancialyear250(987)(126)Totalcomprehensiveincomeforthefinancialyear2,7719321,144Attributableto:EquityholdersoftheCompany2,7689691,128Non-controllinginterests3(37)16Totalcomprehensiveincomeforthefinancialyear2,7719321,144124CRHAnnualReportandForm20-F|2018ConsolidatedBalanceSheetasat31December20182018€m2017€mNotesASSETSNon-currentassets15Property,plantandequipment15,76113,09416Intangibleassets8,4337,21417Investmentsaccountedforusingtheequitymethod1,1631,24817Otherfinancialassets232519Otherreceivables18115626Derivativefinancialinstruments303028Deferredincometaxassets7195Totalnon-currentassets25,66221,862Currentassets18Inventories3,0612,71519Tradeandotherreceivables4,0743,630Currentincometaxrecoverable1516526Derivativefinancialinstruments153424Cashandcashequivalents2,3462,115Assetsheldforsale-1,112Totalcurrentassets9,5119,771Totalassets35,17331,633EQUITYCapitalandreservesattributabletotheCompany’sequityholders31Equitysharecapital28728631Preferencesharecapital1131Sharepremiumaccount6,5346,41731TreasurySharesandownshares(792)(15)Otherreserves296285Foreigncurrencytranslationreserve(109)(386)Retainedincome9,8127,903CapitalandreservesattributabletotheCompany’sequityholders16,02914,49133Non-controllinginterests525486Totalequity16,55414,977LIABILITIESNon-currentliabilities25Interest-bearingloansandborrowings8,6987,66026Derivativefinancialinstruments18328Deferredincometaxliabilities2,2091,66620Otherpayables47222629Retirementbenefitobligations42437727Provisionsforliabilities719693Totalnon-currentliabilities12,54010,625Currentliabilities20Tradeandotherpayables4,6094,534Currentincometaxliabilities44345825Interest-bearingloansandborrowings61831626Derivativefinancialinstruments411127Provisionsforliabilities368371Liabilitiesassociatedwithassetsclassifiedasheldforsale-341Totalcurrentliabilities6,0796,031Totalliabilities18,61916,656Totalequityandliabilities35,17331,633N.Hartery,A.Manifold,Directors125OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018ConsolidatedStatementofChangesinEquityforthefinancialyearended31December2018AttributabletotheequityholdersoftheCompanyIssuedsharecapital€mSharepremiumaccount€mTreasuryShares/ownshares€mOtherreserves€mForeigncurrencytranslationreserve€mRetainedincome€mNon-controllinginterests€mTotalequity€mNotesAt1January20182876,417(15)285(386)7,90348614,977Groupprofitforthefinancialyear-----2,51742,521Othercomprehensiveincome----277(26)(1)250Totalcomprehensiveincome----2772,49132,77131Issueofsharecapital(netofexpenses)-62-----629Share-basedpaymentexpense---67---6731SharesacquiredbyCRHplc(TreasuryShares)--(789)----(789)31Treasury/ownsharesreissued--15--(15)--31SharesacquiredbyEmployeeBenefitTrust(ownshares)--(3)----(3)31SharesdistributedunderthePerformanceSharePlanAwards155-(56)----12Taxrelatingtoshare-basedpaymentexpense-----(2)-(2)Shareoptionexercises-----7-713Dividends(includingsharesissuedinlieuofdividends)-----(572)(12)(584)32Non-controllinginterestsarisingonacquisitionofsubsidiaries------4848At31December20182886,534(792)296(109)9,81252516,554forthefinancialyearended31December2017At1January20172856,237(14)2866296,47254814,443Groupprofitforthefinancialyear-----1,895241,919Othercomprehensiveincome----(1,015)89(61)(987)Totalcomprehensiveincome----(1,015)1,984(37)93231Issueofsharecapital(netofexpenses)1118-----119Share-basedpaymentexpense---62---6231Treasury/ownsharesreissued--2--(2)--31SharesacquiredbyEmployeeBenefitTrust(ownshares)--(3)----(3)31SharesdistributedunderthePerformanceSharePlanAwards162-(63)----12Taxrelatingtoshare-basedpaymentexpense-----(5)-(5)13Dividends(includingsharesissuedinlieuofdividends)-----(546)(8)(554)32Non-controllinginterestsarisingonacquisitionofsubsidiaries------2020Transactionsinvolvingnon-controllinginterests------(37)(37)At31December20172876,417(15)285(386)7,90348614,977forthefinancialyearended31December2016At1January20162826,021(28)2407005,80052913,544Groupprofitforthefinancialyear-----1,243271,270Othercomprehensiveincome----(71)(44)(11)(126)Totalcomprehensiveincome----(71)1,199161,144Issueofsharecapital(netofexpenses)3216-----219Share-basedpaymentexpense---46---46Treasury/ownsharesreissued--18--(18)--SharesacquiredbyEmployeeBenefitTrust(ownshares)--(4)----(4)12Taxrelatingtoshare-basedpaymentexpense-----12-1213Dividends(includingsharesissuedinlieuofdividends)-----(519)(8)(527)32Non-controllinginterestsarisingonacquisitionofsubsidiaries------99Transactionsinvolvingnon-controllinginterests-----(2)2-At31December20162856,237(14)2866296,47254814,443126CRHAnnualReportandForm20-F|2018ConsolidatedStatementofCashFlowsforthefinancialyearended31December20182018€m2017€m2016€mNotesCashflowsfromoperatingactivitiesProfitbeforetaxfromcontinuingoperations1,8621,8671,6203Profitbeforetaxfromdiscontinuedoperations1,558146121Profitbeforetax3,4202,0131,74110Financecosts(net)35134938311Shareofequityaccountedinvestments’profit(60)(65)(42)6Profitondisposals(1,539)(59)(55)Groupoperatingprofit2,1722,2382,02715Depreciationcharge1,0711,0061,00916Amortisationofintangibleassets61667115,16Impairmentcharge56-239Share-basedpaymentexpense676546Other(primarilypensionpayments)(67)(186)(65)21Netmovementonworkingcapitalandprovisions(463)(209)56Cashgeneratedfromoperations2,8972,9803,167Interestpaid(includingfinanceleases)(335)(317)(346)Corporationtaxpaid(663)(474)(481)Netcashinflowfromoperatingactivities1,8992,1892,340Cashflowsfrominvestingactivities6Proceedsfromdisposals(netofcashdisposedanddeferredproceeds)3,009222283Interestreceived3411817Dividendsreceivedfromequityaccountedinvestments48314015Purchaseofproperty,plantandequipment(1,121)(1,044)(853)32Acquisitionofsubsidiaries(netofcashacquired)(3,505)(1,841)(149)17Otherinvestmentsandadvances(2)(11)(7)21Deferredandcontingentacquisitionconsiderationpaid(55)(53)(57)Netcashoutflowfrominvestingactivities(1,592)(2,685)(735)Cashflowsfromfinancingactivities31Proceedsfromissueofshares(net)114252Proceedsfromexerciseofshareoptions7--Transactionsinvolvingnon-controllinginterests-(37)-22Increaseininterest-bearingloans,borrowingsandfinanceleases1,4341,01060022Netcashflowarisingfromderivativefinancialinstruments6169(5)10Premiumpaidonearlydebtredemption-(18)-31Treasury/ownsharespurchased(792)(3)(4)22Repaymentofinterest-bearingloans,borrowingsandfinanceleases(246)(343)(2,015)13DividendspaidtoequityholdersoftheCompany(521)(469)(352)13Dividendspaidtonon-controllinginterests(12)(8)(8)Netcash(outflow)/inflowfromfinancingactivities(113)343(1,732)Increase/(decrease)incashandcashequivalents194(153)(127)ReconciliationofopeningtoclosingcashandcashequivalentsCashandcashequivalentsat1January2,1352,4492,518Translationadjustment17(161)58Increase/(decrease)incashandcashequivalents194(153)(127)24Cashandcashequivalentsat31December2,3462,1352,449127OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018AccountingPolicies(includingkeyaccountingestimatesandassumptions)ThisdocumentconstitutesboththeAnnualReportandtheFinancialStatementsinaccordancewiththeIrishandUKrequirements,andtheAnnualReportonForm20-FinaccordancewiththeUSSecuritiesExchangeActof1934.BasisofPreparationTheConsolidatedFinancialStatementsofCRHplchavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRS)asadoptedbytheEuropeanUnion,whichcomprisestandardsandinterpretationsapprovedbytheInternationalAccountingStandardsBoard(IASB).IFRSasadoptedbytheEuropeanUniondifferincertainrespectsfromIFRSasissuedbytheIASB.However,theConsolidatedFinancialStatementsforthefinancialyearspresentedwouldbenodifferenthadIFRSasissuedbytheIASBbeenapplied.TheConsolidatedFinancialStatementsarealsopreparedincompliancewiththeCompaniesAct2014andArticle4oftheEUIASRegulation.CRHplc,theParentCompany,isapubliclytradedlimitedcompanyincorporatedanddomiciledintheRepublicofIreland.TheConsolidatedFinancialStatements,whicharepresentedineuromillions,havebeenpreparedunderthehistoricalcostconventionasmodifiedbythemeasurementatfairvalueofshare-basedpayments,retirementbenefitobligationsandcertainfinancialassetsandliabilitiesincludingderivativefinancialinstruments.TheaccountingpoliciessetoutbelowhavebeenappliedconsistentlybyalloftheGroup’ssubsidiaries,jointventuresandassociatestoallperiodspresentedintheseConsolidatedFinancialStatements.InaccordancewithSection304oftheCompaniesAct2014,theCompanyisavailingoftheexemptionfrompresentingitsindividualprofitandlossaccounttotheAnnualGeneralMeetingandfromfilingitwiththeRegistrarofCompanies.AdoptionofIFRSandInternationalFinancialReportingInterpretationsCommittee(IFRIC)interpretationsThefollowingnewstandards,interpretationsandstandardamendmentsbecameeffectivefortheGroupasof1January2018:•IFRS9FinancialInstruments•IFRS15RevenuefromContractswithCustomers•IFRIC22ForeignCurrencyTransactionsandAdvancedConsideration•AmendmentstoIFRS2Share-basedPayment•AmendmentstoIAS28InvestmentsinAssociatesandJointVenturesWhilethenewstandards,interpretationsandstandardamendmentsdidnotresultinamaterialimpactontheGroup’sresults,thenatureandeffectofchangesrequiredbyIFRS9andIFRS15aredescribedbelow.IFRS9FinancialInstrumentsIFRS9replacesIAS39FinancialInstruments:RecognitionandMeasurement.Itaddressestheclassification,measurementandderecognitionoffinancialassetsandfinancialliabilities,introducesanewimpairmentmodelforfinancialassetsandnewrulesforhedgeaccounting.TheGrouphasappliedIFRS9retrospectively,butelectednottorestatecomparativeinformation.TheGrouphasassessedthebusinessmodelsandcontractualcashflowswhichapplytoitsfinancialassetsandclassifiedtheassetsintotheappropriateIFRS9categoriesaccordingly.FinancialassetclassificationsunderIFRS9:FinancialassetcategoryClassificationandmeasurementunderIAS39ClassificationandmeasurementunderIFRS9ClassificationtestoutcomesCashandcashequivalentsTradereceivablesOtherreceivablesOtherfinancialassetsDeferredproceedsLoansandreceivablesatfairvalue(initialrecognition)followedbyamortisedcost(subsequentmeasurement).Financialassetsatfairvalue(initialrecognition)followedbyamortisedcostnetofimpairments(subsequentmeasurement).Businessmodeltestresult:holdtocollectcontractualcashflows.Cashflowcharacteristicstestresult:solelypaymentsofprincipalandinterest.ContingentproceedsFairvaluethroughprofitorloss.Fairvaluethroughprofitorloss.Businessmodeltestresult:holdtocollectcontractualcashflows.Cashflowcharacteristicstestresult:potentialvariabilityinfuturepaymentsresultsinchangestofairvalue.Asoutlinedabove,theclassificationrequirementsunderIFRS9didnotimpactthemeasurementorcarryingamountoffinancialassets.128CRHAnnualReportandForm20-F|2018ImpairmentofFinancialAssetsTheGroup’sfinancialassetsmeasuredatamortisedcost,themostsignificantofwhicharetradereceivablesandamountsreceivableinrespectofconstructioncontracts,aresubjecttoIFRS9’snewexpectedcreditlossmodel.TheGroup’simpairmentmethodologyhasbeenrevisedinlinewiththerequirementsofIFRS9.Thesimplifiedapproachtoprovidingforexpectedcreditlosseshasbeenappliedtotradereceivables,whichrequirestheuseofalifetimeexpectedlossprovision.AspartoftheIFRS9transitionproject,theGroupassesseditsexistingtradeandotherreceivablesforimpairment,usingreasonableandsupportableinformationthatisavailablewithoutunduecostoreffort,todeterminethecreditriskofthereceivablesatthedateonwhichtheywereinitiallyrecognisedandcomparedthattothecreditriskasat1January2018.Thisassessmenthasnotresultedinamaterialadjustmenttotradeandotherreceivables.HedgeAccountingThenewhedgeaccountingrulesaligntheaccountingforhedginginstrumentsmorecloselywiththeGroup’sriskmanagementpractices.TheGroup’scurrenthedgerelationshipsqualifyascontinuinghedgesupontheadoptionofIFRS9.Accordingly,therehasnotbeenasignificantimpacttothefinancialpositionoftheGroupasaresultofadoptingIFRS9.IFRS15RevenuefromContractswithCustomersIFRS15replacedIAS18Revenue,IAS11ConstructionContractsandrelatedinterpretations.TheGroupadoptedIFRS15followinganextensivetransitionproject,whichincludedanassessmentoftheimpactofmultipleperformanceobligationsandvariableconsiderationwithinourconstructioncontractbusinesses,andwhethercertainrevenuemightbemoreappropriatelyrecordedonanagencyornetbasis,ratherthanonagrossbasisinaccordancewiththeprincipalofcontrol.TheassessmentresultedinanimmaterialchangeinthetreatmentofcertaindirectsalesfromaprincipaltoanagencybasisinourEuropeDistributionsegment.TherewasnomaterialimpactontheGroup’srevenuerecognitionortheclassificationofcontractrelatedassetsorliabilitiesintheGroup’sConsolidatedBalanceSheetasaresultoftransitioningtoIFRS15.AdescriptionoftheGroup’srevenuerecognitionpolicyunderIFRS15issetoutonpage133.InaccordancewiththerequirementsofIFRS15,newdisclosuresoutliningthedisaggregationofrevenuebyprimarygeographicmarketsandprincipalactivitiesandproductsareincludedinnote1totheConsolidatedFinancialStatements.IFRSandIFRICinterpretationsbeingadoptedinsubsequentyearsIFRS16LeasesIFRS16willreplaceIAS17Leasesandrelatedinterpretations.CRHwilladoptIFRS16from1January2019byapplyingthemodifiedretrospectiveapproach.TheGroupwillapplytherecognitionexemptionforbothshort-termleasesandleasesoflowvalueassets.TheGroupdoesnotexpecttoavailofthepracticalexpedienttonotseparatenon-leasecomponentsfromleasecomponents;nordoesitintendtoavailofthepracticalexpedientallowingleasespreviouslyclassifiedasoperatingleases,andendingwithin12monthsofthedateoftransition,tobeaccountedforasshort-termleases.CertainoftheGroup’skeyfinancialmetricswillbeimpactedupontransitiontoIFRS16.TheadoptionofthenewstandardwillhaveamaterialimpactontheGroup’sConsolidatedIncomeStatementandConsolidatedBalanceSheet,asfollows:IncomeStatementCostofsalesandoperatingcosts(excludingdepreciation)willdecrease,astheGroupcurrentlyrecognisesoperatingleaseexpensesineithercostofsalesoroperatingcosts(dependingonthenatureoftherelevantoperationsandofthelease).TheGroup’soperatingleaseexpensefor2018was€628million(2017:€606million)andisdisclosedinnote5totheseConsolidatedFinancialStatements.Paymentsforleaseswhichmeettherecognitionexemptioncriteriaandcertainotherleasepaymentswhichdonotmeetthecriteriaforcapitalisationwillcontinuetoberecordedasanexpensewithincostofsalesandoperatingcosts(excludingdepreciation).Duetobusinessseasonality,certainassetsareleasedonashort-termbasis(i.e.12monthsorless)todealwithpeakdemand.Accordingly,itislikelythataportionofcostsclassifiedasoperatingleaseexpensesin2018willnotbecapitalisedontheGroup’sConsolidatedBalanceSheetandwillcontinuetobeexpensedintheGroup’sConsolidatedIncomeStatementfrom2019onwards.Ignoringacquisitionanddivestmentactivity,potentialchangesinassetprocurementstrategiesandforeigncurrencymovements,thecurrentestimateofexpectedspendonexemptleasesin2019isintherangeof€0.25billion.DepreciationandfinancecostsascurrentlyreportedintheGroup’sConsolidatedIncomeStatementwillincrease,asunderthenewstandardaright-of-useassetwillbecapitalisedanddepreciatedoverthetermoftheleasewithanassociatedfinancecostappliedannuallytotheleaseliability.BalanceSheetAttransitiondate,theGroupwilldeterminetheminimumleasepaymentsoutstandingatthatdate(alongwithpaymentsforrenewaloptionswhicharereasonablycertaintobeexercised)andapplytheappropriatediscountratetocalculatethepresentvalueoftheleaseliabilityandright-of-useassettoberecognisedontheGroup’sConsolidatedBalanceSheet.ThediscountratesappliedwerearrivedatusingamethodologytocalculateincrementalborrowingratesacrosstheGroup.TheGroup’soutstandingcommitmentinrespectofalloperatingleasesasat31December2018is€1,911million(2017:€1,939millionforcontinuingoperations)(seenote30totheseConsolidatedFinancialStatements).Takingintoaccountexistingfinanceleases,thepresentvalueoftheleaseliabilityandright-of-useassettoberecognisedontheGroup’sConsolidatedBalanceSheetat1January2019isexpectedtobec.€2.0billion.IFRS17InsuranceContractsInMay2017,theIASBissuedIFRS17.Itisexpectedtobeeffectiveforreportingperiodsbeginningonorafter1January2022,withpresentationofcomparativefiguresrequired.TheGroupiscurrentlyevaluatingtheimpactofthisstandardonfutureperiods.IFRIC23UncertaintyoverIncomeTaxTreatmentsIFRIC23wasissuedinJune2017;withaneffectivedateof1January2019.Itclarifiestheaccountingforuncertaintiesinincometaxes.TheGroupdoesnotexpecttheadoptionofIFRIC23tohaveamaterialimpactonitsresults.129OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018AccountingPolicies-continuedIAS19EmployeeBenefitsInFebruary2018,theIASBissuedanarrowscopeamendmenttoIAS19.Theamendmentwillbeappliedprospectivelyforplanamendments,curtailmentsorsettlementsoccurringonorafter1January2019.TheseamendmentsarenotexpectedtohaveanimpactontheGroupontheeffectivedate,butwillimpacthowtheGroupdeterminescurrentservicecostandnetinterestintheeventofanyplanamendments,curtailmentsorsettlementswhicharisethereafter.IFRS3BusinessCombinationsInOctober2018,theIASBissuedamendmentstoIFRS3,regardingthedefinitionofabusiness.Theamendmentsclarifythattheprocessrequiredtomeetthedefinitionofabusiness(togetherwithinputstocreateoutputs)mustbesubstantive;and,thattheinputsandprocessmusttogethersignificantlycontributetocreatingoutputs.Thedefinitionofoutputshasbeennarrowedtofocusongoodsandservicesprovidedtocustomersandotherincomefromordinaryactivities.Inaddition,theamendmentsindicatethatanacquisitionofprimarilyasingleassetorgroupofsimilarassetsisunlikelytomeetthedefinitionofabusiness.Theamendmentswillbeappliedprospectivelyforacquisitionsoccurringonorafter1January2020.TheGroupiscurrentlyevaluatingtheimpactofthisamendmentonfutureperiods.DisclosureInitiative–DefinitionofMaterial(AmendmentstoIAS1andIAS8)InOctober2018,theIASBissuedDefinitionofMaterial(AmendmentstoIAS1PresentationofFinancialStatementsandIAS8AccountingPolicies,ChangesinAccountingEstimatesandErrors),whichiseffectivefrom1January2020.Theamendmentsclarifyandalignthedefinitionof“material”tothedefinitionusedintheConceptualFrameworkandotherIFRSstandards.Informationisnowconsideredmaterialifomitting,misstatingorobscuringitcouldreasonablybeexpectedtoinfluencedecisionsthattheprimaryusersofgeneralpurposefinancialstatementsmakeonthebasisofthosefinancialstatements,whichprovidefinancialinformationaboutaspecificreportingentity.ThisamendmentisnotexpectedtohaveanimpactontheGroup.TherearenootherIFRSorIFRICinterpretationsthatareeffectivesubsequenttotheCRH2018financialyearendthatwouldhaveamaterialimpactontheresultsorfinancialpositionoftheGroup.KeyAccountingPolicieswhichinvolveEstimates,AssumptionsandJudgementsThepreparationoftheConsolidatedFinancialStatementsinaccordancewithIFRSrequiresmanagementtomakecertainestimates,assumptionsandjudgementsthataffecttheapplicationofaccountingpoliciesandthereportedamountsofassets,liabilities,incomeandexpenses.Managementbelievesthattheestimates,assumptionsandjudgementsuponwhichitreliesarereasonablebasedontheinformationavailabletoitatthetimethatthoseestimates,assumptionsandjudgementsaremade.Insomecases,theaccountingtreatmentofaparticulartransactionisspecificallydictatedbyIFRSanddoesnotrequiremanagement’sjudgementinitsapplication.Managementconsidersthattheiruseofestimates,assumptionsandjudgementsintheapplicationoftheGroup’saccountingpoliciesareinter-relatedandthereforediscussthemtogetherbelow.Estimatesandunderlyingassumptions,arereviewedonanongoingbasis.Changesinaccountingestimatesmaybenecessaryiftherearechangesinthecircumstancesorexperiencesonwhichtheestimatewasbasedorasaresultofnewinformation.Thecriticalaccountingpolicieswhichinvolvesignificantestimates,assumptionsorjudgements,theactualoutcomeofwhichcouldhaveamaterialimpactontheGroup’sresultsandfinancialpositionoutlinedbelow,areasfollows:Impairmentofgoodwill–Note16Goodwillissubjecttoimpairmenttestingonanannualbasisandatanytimeduringtheyearifanindicatorofimpairmentisconsideredtoexist.Adecisiontodisposeofabusinessunitrepresentsonesuchindicatorandinthesecircumstancestherecoverableamountisassessedonafairvaluelesscostsofdisposalbasis.Intheyearinwhichabusinesscombinationiseffectedandwheresomeorallofthegoodwillallocatedtoaparticularcash-generatingunitaroseinrespectofthatcombination,thecash-generatingunitistestedforimpairmentpriortotheendoftherelevantannualperiod.Wherethecarryingvalueexceedstheestimatedrecoverableamount(beingthegreateroffairvaluelesscostsofdisposalandvalue-in-use),animpairmentlossisrecognisedbywritingdowngoodwilltoitsrecoverableamount.Inassessingvalue-in-use,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheassetforwhichthefuturecashflowestimateshavenotbeenadjusted.Theestimatesoffuturecashflowsexcludecashinflowsoroutflowsattributabletofinancingactivitiesandincometax.Therecoverableamountofgoodwillisdeterminedbyreferencetothecash-generatingunittowhichthegoodwillhasbeenallocated.Impairmentlossesarisinginrespectofgoodwillarenotreversedoncerecognised.Goodwillrelatingtoassociatesandjointventuresisincludedinthecarryingamountoftheinvestmentandisneitheramortisednorindividuallytestedforimpairment.WhereindicatorsofimpairmentofaninvestmentariseinaccordancewiththerequirementsofIFRS9,thecarryingamountistestedforimpairmentbycomparingitsrecoverableamountwithitscarryingamount.Theimpairmenttestingprocessrequiresmanagementtomakesignificantjudgementsandestimatesregardingthefuturecashflowsexpectedtobegeneratedbycash-generatingunitstowhichgoodwillhasbeenallocated.Futurecashflowsrelatingtotheeventualdisposalofthesecash-generatingunitsandotherfactorsmayalsoberelevanttodeterminethefairvalueofgoodwill.Managementperiodicallyevaluatesandupdatestheestimatesbasedontheconditionswhichinfluencethesevariables.AdetaileddiscussionoftheimpairmentmethodologyappliedandkeyassumptionsusedbytheGroupinthecontextofgoodwillisprovidedinnote16totheConsolidatedFinancialStatements.Theassumptionsandconditionsfordeterminingimpairmentsofgoodwillreflectmanagement’sbestassumptionsandestimates,buttheseitemsinvolveinherentuncertaintiesdescribedabove,manyofwhicharenotundermanagement’scontrol.Asaresult,theaccountingforsuchitemscouldresultindifferentestimatesoramountsifmanagementuseddifferentassumptionsorifdifferentconditionsoccurinfutureaccountingperiods.130CRHAnnualReportandForm20-F|2018Retirementbenefitobligations–Note29CostsarisinginrespectoftheGroup’sdefinedcontributionpensionschemesarechargedtotheConsolidatedIncomeStatementintheperiodinwhichtheyareincurred.TheGrouphasnolegalorconstructiveobligationtopayfurthercontributionsintheeventthatthefunddoesnotholdsufficientassetstomeetitsbenefitcommitments.TheliabilitiesandcostsassociatedwiththeGroup’sdefinedbenefitpensionschemes(bothfundedandunfunded)areassessedeitheronthebasisoftheattainedage,theprojectedunitcredit,thecurrentunitcreditortheaggregatecostmethodsbyprofessionallyqualifiedactuariesandarearrivedatusingactuarialassumptionsbasedonmarketexpectationsatthebalancesheetdate.Thediscountratesemployedindeterminingthepresentvalueoftheschemes’liabilitiesaredeterminedbyreferencetomarketyieldsatthebalancesheetdateonhigh-qualitycorporatebondsofacurrencyandtermconsistentwiththecurrencyandtermoftheassociatedpost-employmentbenefitobligations.ThenetsurplusordeficitarisingontheGroup’sdefinedbenefitpensionschemes,togetherwiththeliabilitiesassociatedwiththeunfundedschemes,areshowneitherwithinnon-currentassetsornon-currentliabilitiesintheConsolidatedBalanceSheet.Thedeferredtaximpactofpensionschemesurplusesanddeficitsisdisclosedseparatelywithindeferredtaxassetsorliabilitiesasappropriate.Remeasurements,comprisingactuarialgainsandlossesandthereturnonplanassets(excludingnetinterest),arerecognisedimmediatelyintheConsolidatedBalanceSheetwithacorrespondingdebitorcredittoretainedearningsthroughothercomprehensiveincomeintheperiodinwhichtheyoccur.Remeasurementsarenotreclassifiedtoprofitorlossinsubsequentperiods.ThedefinedbenefitpensionassetorliabilityintheConsolidatedBalanceSheetcomprisesthetotalforeachplanofthepresentvalueofthedefinedbenefitobligationlessthefairvalueofplanassetsoutofwhichtheobligationsaretobesettleddirectly.Planassetsareassetsthatareheldbyalong-termemployeebenefitfundorqualifyinginsurancepolicies.Fairvalueisbasedonmarketpriceinformationand,inthecaseofpublishedsecurities;itisthepublishedbidprice.Thevalueofanydefinedbenefitassetislimitedtothepresentvalueofanyeconomicbenefitsavailableintheformofrefundsfromtheplanandreductionsinthefuturecontributionstotheplan.TheGroup’sobligationinrespectofpost-employmenthealthcareandlifeassurancebenefitsrepresentstheamountoffuturebenefitthatemployeeshaveearnedinreturnforserviceinthecurrentandpriorperiods.Theobligationiscomputedonthebasisoftheprojectedunitcreditmethodandisdiscountedtopresentvalueusingadiscountrateequatingtothemarketyieldatthebalancesheetdateonhigh-qualitycorporatebondsofacurrencyandtermconsistentwiththecurrencyandestimatedtermofthepost-employmentobligations.AssumptionsTheassumptionsunderlyingtheactuarialvaluations(includingdiscountrates,ratesofincreaseinfuturecompensationlevels,mortalityratesandhealthcarecosttrends),fromwhichtheamountsrecognisedintheConsolidatedFinancialStatementsaredetermined,areupdatedannuallybasedoncurrenteconomicconditionsandforanyrelevantchangestothetermsandconditionsofthepensionandpost-retirementplans.Theseassumptionscanbeaffectedby(i)forthediscountrate,changesintheratesofreturnonhigh-qualitycorporatebonds;(ii)forfuturecompensationlevels,futurelabourmarketconditionsand(iii)forhealthcarecosttrendrates,therateofmedicalcostinflationintherelevantregions.Theweightedaverageactuarialassumptionsusedandsensitivityanalysisinrelationtothesignificantassumptionsemployedinthedeterminationofpensionandotherpost-retirementliabilitiesarecontainedinnote29totheConsolidatedFinancialStatements.Whilstmanagementbelievesthattheassumptionsusedareappropriate,differencesinactualexperienceorchangesinassumptionsmayaffecttheobligationsandexpensesrecognisedinfutureaccountingperiods.Theassetsandliabilitiesofdefinedbenefitpensionschemesmayexhibitsignificantperiod-on-periodvolatilityattributableprimarilytochangesinbondyieldsandlongevity.Inadditiontofutureservicecontributions,significantcashcontributionsmayberequiredtoremediatepastservicedeficits.Asensitivityanalysisofthechangeintheseassumptionsisprovidedinnote29.Provisionsforliabilities–Note27AprovisionisrecognisedwhentheGrouphasapresentobligation(eitherlegalorconstructive)asaresultofapastevent,itisprobablethatatransferofeconomicbenefitswillberequiredtosettletheobligationandareliableestimatecanbemadeoftheamountoftheobligation.WheretheGroupanticipatesthataprovisionwillbereimbursed,thereimbursementisrecognisedasaseparateassetonlywhenitisvirtuallycertainthatthereimbursementwillarise.TheexpenserelatingtoanyprovisionispresentedintheConsolidatedIncomeStatementnetofanyreimbursement.Provisionsaremeasuredatthepresentvalueoftheexpendituresexpectedtoberequiredtosettletheobligation.Theincreaseintheprovisionduetothepassageoftimeisrecognisedasaninterestexpense.Contingentliabilitiesarisingonbusinesscombinationsarerecognisedasprovisionsifthecontingentliabilitycanbereliablymeasuredatitsacquisitiondatefairvalue.Provisionsarenotrecognisedforfutureoperatinglosses.Managementisnotawareofanypotentialchangestokeyassumptionsthathaveasignificantriskofcausingamaterialadjustmenttothecarryingvalueofprovisionswithinthenextfinancialyear;howeverduetothenatureofsomeourprovisions,estimatesmaydependontheoutcomeoffutureeventsandneedtoberevisedascircumstanceschangeinfutureaccountingperiods.Refertonote27fortheexpectedtimingofoutflowsbyprovisionscategory.EnvironmentalandremediationprovisionsThemeasurementofenvironmentalandremediationprovisionsisbasedonanevaluationofcurrentlyavailablefactswithrespecttoeachindividualsiteandconsidersfactorssuchasexistingtechnology,currentlyenactedlawsandregulationsandpriorexperienceinremediationofsites.Inherentuncertaintiesexistinsuchevaluationsprimarilyduetounknownconditions,changinggovernmentalregulationsandlegalstandardsregardingliability,theprotractedlengthoftheclean-upperiodsandevolvingtechnologies.TheenvironmentalandremediationliabilitiesprovidedforintheConsolidatedFinancialStatementsreflectthejudgementappliedbymanagementinrespectofinformationavailableatthetimeofdeterminingtheliabilityandareadjustedperiodicallyasremediationeffortsprogressorasadditionaltechnicalorlegalinformationbecomesavailable.Duetotheinherentuncertaintiesdescribedabove,manyofwhicharenotundermanagement’scontrol,actualcostsandcashoutflowscoulddifferifmanagementuseddifferentassumptionsorifdifferentconditionsoccurinfutureaccountingperiods.131OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018AccountingPolicies-continuedLegalcontingenciesThestatusofeachsignificantclaimandlegalproceedinginwhichtheGroupisinvolvedisreviewedbymanagementonaperiodicbasisandtheGroup’spotentialfinancialexposureisassessed.Ifthepotentiallossfromanyclaimorlegalproceedingisconsideredprobable,andtheamountcanbereliablyestimated,aliabilityisrecognisedfortheestimatedloss.Becauseoftheuncertaintiesinherentinsuchmatters,therelatedprovisionsarebasedonthebestinformationavailableatthetime;theissuestakenintoaccountbymanagementandfactoredintotheassessmentoflegalcontingenciesinclude,asapplicable,thestatusofsettlementnegotiations,interpretationsofcontractualobligations,priorexperiencewithsimilarcontingencies/claims,theavailabilityofinsurancetoprotectagainstthedownsideexposureandadviceobtainedfromlegalcounselandotherthirdparties.Asadditionalinformationbecomesavailableonpendingclaims,thepotentialliabilityisreassessedandrevisionsaremadetotheamountsaccruedwhereappropriate.SuchrevisionsinthejudgementsandestimatesofthepotentialliabilitiescouldhaveanimpactontheresultsofoperationsandfinancialpositionoftheGroupinfutureaccountingperiods.InsuranceprovisionsInsuranceprovisionsaresubjecttoactuarialvaluationandarebasedonactuarialtriangulationswhichareextrapolatedfromhistoricalclaimsexperience.Theseprovisionsincludeclaimswhichareclassifiedas“incurredbutnotreported”,thestatusofwhicharereviewedperiodicallybymanagement,inconjunctionwithappropriatelyqualifiedadvisors.Changesinactuarialmethodologiesandassumptions,alongwiththereceiptofnewinformation,couldhaveanimpactonthefinancialpositionoftheGroupthroughrecognitionofadditional,orreleaseof,provisionsinfutureaccountingperiods.Taxation–currentanddeferred–Notes12and28Currenttaxrepresentstheexpectedtaxpayable(orrecoverable)onthetaxableprofitfortheyearusingtaxratesenactedfortheperiod.Anyinterestorpenaltiesarisingareincludedwithincurrenttax.Whereitemsareaccountedforoutsideofprofitorloss,therelatedincometaxisrecognisedeitherinothercomprehensiveincomeordirectlyinequityasappropriate.DeferredtaxisrecognisedusingtheliabilitymethodontemporarydifferencesarisingatthebalancesheetdatebetweenthetaxbasesofassetsandliabilitiesandtheircarryingamountsintheConsolidatedFinancialStatements.However,deferredtaxliabilitiesarenotrecognisediftheyarisefromtheinitialrecognitionofgoodwill.Inaddition,deferredincometaxisnotaccountedforifitarisesfrominitialrecognitionofanassetorliabilityinatransactionotherthanabusinesscombinationthat,atthetimeofthetransaction,affectsneitheraccountingnortaxableprofitorloss.Forthemostpart,noprovisionhasbeenmadefortemporarydifferencesapplicabletoinvestmentsinsubsidiariesandjointventuresastheGroupisinapositiontocontrolthetimingofreversalofthetemporarydifferencesanditisprobablethatthetemporarydifferenceswillnotreverseintheforeseeablefuture.However,atemporarydifferencehasbeenrecognisedtotheextentthatspecificassetshavebeenidentifiedforsaleorwherethereisaspecificintentiontounwindthetemporarydifferenceintheforeseeablefuture.Duetotheabsenceofcontrolinthecontextofassociates(significantinfluenceonly),deferredtaxliabilitiesarerecognisedwhereappropriateinrespectofCRH’sinvestmentsintheseentitiesonthebasisthattheexerciseofsignificantinfluencewouldnotnecessarilypreventearningsbeingremittedbyothershareholdersintheundertaking.Deferredtaxisdeterminedusingtaxrates(andlaws)thathavebeenenactedorsubstantivelyenactedbythebalancesheetdateandareexpectedtoapplywhentherelateddeferredincometaxassetisrealisedorthedeferredincometaxliabilityissettled.Deferredtaxassetsandliabilitiesarenotsubjecttodiscounting.Deferredtaxassetsarerecognisedinrespectofalldeductibletemporarydifferences,carry-forwardofunusedtaxcreditsandunusedtaxlossestotheextentthatitisprobablethattaxableprofitswillbeavailableagainstwhichthetemporarydifferencescanbeutilised.Thecarryingamountsofdeferredtaxassetsaresubjecttoreviewateachbalancesheetdateandarereducedtotheextentthatfuturetaxableprofitsareconsideredtobeinadequatetoallowallorpartofanydeferredtaxassettobeutilised.TheGroup’sincometaxchargeisbasedonreportedprofitandexpectedstatutorytaxrates,whichreflectvariousallowancesandreliefsandtaxplanningopportunitiesavailabletotheGroupinthemultipletaxjurisdictionsinwhichitoperates.ThedeterminationoftheGroup’sprovisionforincometaxrequirescertainjudgementsandestimatesinrelationtomatterswheretheultimatetaxoutcomemaynotbecertain.Therecognitionornon-recognitionofdeferredtaxassetsasappropriatealsorequiresjudgementasitinvolvesanassessmentofthefuturerecoverabilityofthoseassets.Inaddition,theGroupissubjecttotaxauditswhichcaninvolvecomplexissuesthatcouldrequireextendedperiodstoconclude,theresolutionofwhichisoftennotwithinthecontroloftheGroup.AlthoughmanagementbelievesthattheestimatesincludedintheConsolidatedFinancialStatementsanditstaxreturnpositionsarereasonable,thereisnocertaintythatthefinaloutcomeofthesematterswillnotbedifferentthanthatwhichisreflectedintheGroup’shistoricalincometaxprovisionsandaccruals.Whilstitispossible,theGroupdoesnotcurrentlyanticipatethatanysuchdifferencescouldhaveamaterialimpactontheincometaxprovisionandprofitfortheperiodinwhichsuchadeterminationismadenordoesitexpectanysignificantimpactonitsfinancialpositioninthenearterm.ThisisbasedontheGroup’sknowledgeandexperience,aswellastheprofileoftheindividualcomponentswhichhavebeenreflectedinthecurrenttaxliability,thestatusofthetaxaudits,enquiriesandnegotiationsinprogressateachyearend,previousclaimsandanyfactorsspecifictotherelevanttaxenvironments.OtherSignificantAccountingPoliciesBasisofconsolidationTheConsolidatedFinancialStatementsincludethefinancialstatementsoftheParentCompanyandallsubsidiaries,jointventuresandassociates,drawnupto31Decembereachyear.Thefinancialyear-endsoftheGroup’ssubsidiaries,jointventuresandassociatesareco-terminous.SubsidiariesSubsidiariesareallentitiesoverwhichtheGrouphascontrol.TheGroupcontrolsanentitywhentheGroupisexposedto,orhasrightsto,variablereturnsfromitsinvolvementwiththeentityandhastheabilitytoaffectthosereturnsthroughitspowerovertheentity.SubsidiariesarefullyconsolidatedfromthedateonwhichcontrolistransferredtotheGroup.Theyaredeconsolidatedfromthedatethatcontrolceases.Achangeintheownershipinterestofasubsidiarywithoutachangeincontrolisaccountedforasanequitytransaction.WhentheGroupholdslessthanthemajorityofvotingrights,otherfactsandcircumstancesincludingcontractualarrangementsthatgivetheGrouppowerovertheinvesteemayresultintheGroupcontrollingtheinvestee.TheGroupreassesseswhetheritcontrolsaninvesteeif,andwhen,factsandcircumstancesindicatethattherearechangestotheelementsevidencingcontrol.Non-controllinginterestsrepresenttheportionoftheequityofasubsidiarynotattributableeitherdirectlyorindirectlytotheParentCompanyandarepresentedseparatelyintheConsolidatedIncomeStatementandwithinequityintheConsolidatedBalanceSheet,distinguishedfromParentCompanyshareholders’equity.132CRHAnnualReportandForm20-F|2018Acquisitionsofnon-controllinginterestsareaccountedforastransactionswithequityholdersintheircapacityasequityholdersandthereforenogoodwillisrecognisedasaresultofsuchtransactions.Onanacquisitionbyacquisitionbasis,theGrouprecognisesanynon-controllinginterestintheacquireeeitheratfairvalueoratthenon-controllinginterest’sproportionateshareoftheacquiree’snetassets.Investmentsinassociatesandjointventures–Notes11and17AnassociateisanentityoverwhichtheGrouphassignificantinfluence.Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsofanentity,butisnotcontrolorjointcontroloverthosepolicies.Ajointventureisatypeofjointarrangementwherebythepartiesthathavejointcontrolofthearrangementhaverightstothenetassetsofthejointventure.Jointcontrolisthecontractuallyagreedsharingofcontrolofthearrangement,whichexistsonlywhendecisionsabouttherelevantactivitiesrequireunanimousconsentofthepartiessharingcontrol.TheGroup’sinvestmentsinitsassociatesandjointventuresareaccountedforusingtheequitymethodfromthedatesignificantinfluence/jointcontrolisdeemedtoariseuntilthedateonwhichsignificantinfluence/jointcontrolceasestoexistorwhentheinterestbecomesclassifiedasanassetheldforsale.TheConsolidatedIncomeStatementreflectstheGroup’sshareofprofitaftertaxoftherelatedassociatesandjointventures.InvestmentsinassociatesandjointventuresarecarriedintheConsolidatedBalanceSheetatcostadjustedinrespectofpost-acquisitionchangesintheGroup’sshareofnetassets,lessanyimpairmentinvalue.LoansadvancedtoequityaccountedinvestmentsthathavethecharacteristicsofequityfinancingarealsoincludedintheinvestmentheldontheConsolidatedBalanceSheet.Ifnecessary,impairmentlossesonthecarryingamountofaninvestmentarereportedwithintheGroup’sshareofequityaccountedinvestments’resultsintheConsolidatedIncomeStatement.IftheGroup’sshareoflossesexceedsthecarryingamountofanassociateorjointventure,thecarryingamountisreducedtonilandrecognitionoffurtherlossesisdiscontinuedexcepttotheextentthattheGrouphasincurredobligationsinrespectoftheassociateorjointventure.JointoperationsAjointoperationisatypeofjointarrangementwherebythepartiesthathavejointcontrolofthearrangementhaverightstotheassetsandobligationsfortheliabilities,relatingtothearrangement.TheGroup’sinvestmentsinitsjointoperationsareaccountedforbyrecognisingitsassetsanditsliabilities,includingitsshareofanyassetsorliabilitiesheldjointly;itsshareoftherevenuefromthesaleoftheoutputbythejointoperation;anditsexpenses,includingitsshareofanyexpensesincurredjointly.Revenuerecognition–Note1TheGrouprecognisesrevenueintheamountofthepriceexpectedtobereceivedforgoodsandservicessuppliedatapointintimeorovertime,ascontractualperformanceobligationsarefulfilledandcontrolofgoodsandservicespassestothecustomer.Itexcludestradediscountsandvalue-addedtax/salestax.Revenuederivedfromsaleofgoods(sourcesotherthanconstructioncontracts)TheGroupmanufacturesanddistributesadiverserangeofbuildingmaterialsandproducts.WhilstthereareanumberofdifferentactivitiesacrosstheGroup;recognitionofrevenuefromthesaleofgoodsissimilar;beingatthepointintimewhencontrolisdeemedtopasstothecustomeruponleavingaCRHpremisesorupondeliverytoacustomerdependingonthetermsofthesale.Contractsdonotcontainmultipleperformanceobligations(asdefinedbyIFRS15).AcrosstheGroup,goodsareoftensoldwithdiscountsorrebatesbasedoncumulativesalesoveraperiod.Thisvariableconsiderationisonlyrecognisedwhenitishighlyprobablethatitwillnotbesubsequentlyreversedandisrecognisedusingthemostlikelyamountorexpectedvaluemethods,dependingontheindividualcontractterms.Intheapplicationofappropriaterevenuerecognition,judgementisexercisedbymanagementinthedeterminationofthelikelihoodandquantumofsuchitemsbasedonexperienceandhistoricaltradingpatterns.TheGroupisdeemedtobeaprincipaltoanarrangementwhenitcontrolsapromisedgoodorservicebeforetransferringthemtoacustomer;andaccordinglyrecognisesrevenueonagrossbasis.WheretheGroupisdeterminedtobeanagenttoatransaction,basedontheprincipalofcontrol;thenetamountretainedafterthedeductionofanycoststotheprincipalisrecognisedasrevenue.Withinthenon-constructioncontractbusinessesnoelementoffinancingisdeemedpresentastransactionsareallmadewithaveragecreditterms(usually90days),consistentwithmarketpractice.RevenuederivedfromconstructioncontractsTheGroupentersintoanumberofconstructioncontracts,tocompletelargeconstructionprojects.Contractsusuallycommenceandcompletewithinonefinancialperiodandaregenerallyfixedprice.TheGrouptypicallyrecognisesrevenuewithinitsconstructioncontractbusinessesovertime,asitperformsitsobligations.Managementbelievethisbestreflectsthetransferofcontroltothecustomerbyprovidingafaithfuldepictionofprimarilytheenhancementofacustomercontrolledassetortheconstructionofanassetwithnoalternativeuse.Thepercentage-of-completionmethodisusedtorecogniserevenuewhentheoutcomeofacontractcanbeestimatedreliably.Thepercentage-of-completioniscalculatedusinganinputmethodandbasedontheproportionofcontractcostsincurredatthebalancesheetdaterelativetothetotalestimatedcostsofthecontract.InallofourconstructioncontractarrangementstheGrouphasanenforceablerighttopaymentforworkandperformanceobligationscompletedtodate.SomeoftheGroup’sconstructioncontractsmaycontainformsofvariableconsiderationthatcaneitherincreaseordecreasethetransactionprice.Variableconsiderationisestimatedbasedonthemostlikelyamountorexpectedvaluemethods(dependingonthecontractterms)andthetransactionpriceisadjustedtotheextentitisprobablethatasignificantreversalofrevenuerecognisedwillnotoccur.Insomeinstancesacustomercanbebilledandrevenuerecognisedintheperiodsubsequenttothecontractedworkbeingcompletedwhenitemssuchasvariableconsiderationareagreedwiththecustomer.RecognitionofcontractassetsandliabilitiesInourconstructioncontractbusinesses,amountsarebilledasworkprogressesinaccordancewithpre-agreedcontractualterms.Whenaperformanceobligationissatisfiedbutacustomerhasnotyetbeenbilledthisisrecognisedasacontractasset(unbilledrevenue)andincludedwithinTradeandOtherReceivables(note19).RetentionsarealsoacommonfeatureofconstructioncontractsandarerecognisedasacontractassetwithinTrade133OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018AccountingPolicies-continuedandOtherReceivableswhenwehavearighttoconsiderationinexchangeforthecompletionofthecontract.Retentionsareconsistentwithindustrynormsandthepurposeoftheseisnottoprovideaformoffinancing.Apartfromretentions,theGroupdoesnothaveanyconstructioncontractswheretheperiodbetweenthetransferofthepromisedgoodstothecustomerandpaymentbythecustomerexceedsoneyear.Asaconsequence,theGroupappliesthepracticalexpedientinIFRS15anddoesnotadjustanyofitstransactionpricesforthetimevalueofmoney.Whenconsiderationisreceivedinadvanceofworkbeingperformed,orwehavebilledanamounttoacustomerthatisinexcessofrevenuerecognisedonthecontract;thisisrecognisedasacontractliabilitywithinTradeandOtherPayables(note20);andtherevenueisgenerallyrecognisedinthesubsequentperiodwhentherighttorecogniserevenuehasbeendetermined.Asaresultadvancepaymentsreceivedforconstructioncontractarrangementsarenotconsideredasignificantformoffinancing.Cumulativecostsincurred,netofamountstransferredtocostofsales,afterdeductingonerousprovisions,provisionsforcontingenciesandpaymentsonaccountnotmatchedwithrevenue,areincludedasconstructioncontractbalancesininventories(note18).CostincludesallexpendituredirectlyrelatedtospecificprojectsandanallocationoffixedandvariableoverheadsincurredintheGroup’scontractactivitiesbasedonnormaloperatingcapacity.TheGroup’scontractsgenerallyareforadurationoflessthanoneyearandthereforetheGroupdoesnotcapitaliseincrementalcontractcosts;insteadexpensingasincurred,aspermittedbythepracticalexpedientunderIFRS15.OnerouscontractsandwarrantiesWhenacontractisidentifiedasbeingonerous(i.e.itsunavoidablecostexceedstheeconomicbenefitofthecontract),aprovisioniscreated;beingthelowerofcoststocompletethecontractandthecostofexitingthecontract.TheGrouprecognisesaprovisionforassurance-type(standard)warrantiesofferedacrosstheGroupunderitstermsandconditionsinaccordancewithIAS37Provisions,ContingentLiabilitiesandContingentAssets.TheGroupprovidesassurance-typewarrantiesforgeneralrepairsanddoesnottypicallyprovideservice-type(extended)warranties.Segmentreporting–Note2OperatingsegmentsarereportedinamannerconsistentwiththeinternalorganisationalandmanagementstructureandtheinternalreportinginformationprovidedtotheChiefOperatingDecisionMakerwhoisresponsibleforallocatingresourcesandassessingperformanceoftheoperatingsegments.Assetsandliabilitiesheldforsale–Note3Non-currentassetsanddisposalgroupsclassifiedasheldforsalearemeasuredatthelowerofcarryingamountandfairvaluelesscoststosell.Non-currentassetsanddisposalgroupsareclassifiedasheldforsaleiftheircarryingamountswillberecoveredthroughasaletransactionratherthanthroughcontinuinguse.Thisconditionisregardedasmetonlywhenthesaleishighlyprobableandtheassetordisposalgroupisavailableforimmediatesaleinitspresentconditionsubjectonlytotermsthatareusualandcustomaryforsalesofsuchassets.Managementmustbecommittedtothesale,whichshouldbeexpectedtoqualifyforrecognitionasacompletedsalewithin12monthsfromthedateofclassificationasheldforsale.Property,plantandequipmentandintangibleassetsarenotdepreciatedoramortisedonceclassifiedasheldforsale.TheGroupceasestousetheequitymethodofaccountingfromthedateonwhichaninterestinajointventureorassociatebecomesheldforsale.Non-currentassetsclassifiedasheldforsaleandliabilitiesdirectlyassociatedwiththoseassetsarepresentedseparatelyascurrentitemsintheConsolidatedBalanceSheet.Discontinuedoperations–Note3DiscontinuedoperationsarereportedwhenacomponentoftheGrouphasbeendisposedof,orwhenasaleishighlyprobable;anditsoperationsandcashflowscanbeclearlydistinguished,operationallyandforfinancialreportingpurposes,fromtherestoftheGroupandisclassifiedasheldforsaleorhasbeendisposedof.TheGroupclassifiesanon-currentassetordisposalgroupasheldfordisposalifitscarryingvaluewillberecoveredthroughasalestransactionordistributiontoshareholdersratherthancontinuinguse.IntheConsolidatedIncomeStatement,discontinuedoperationsareexcludedfromtheresultsofcontinuingoperationsandarepresentedasasingleamountasprofitorlossaftertaxfromdiscontinuedoperations.CorrespondingnotestotheConsolidatedIncomeStatementexcludeamountsfordiscontinuedoperations,unlessstatedotherwise.Share-basedpayments–Note9TheGroupoperatesanumberofequity-settledshare-basedpaymentplans.Itspolicyinrelationtothegrantingofshareoptionsandawardsundertheseplans,togetherwiththenatureoftheunderlyingmarketandnon-marketperformanceandothervestingconditions,areaddressedintheDirectors’RemunerationReportonpage68.TheGrouphasnomaterialexposureinrespectofcash-settledshare-basedpaymenttransactionsandshare-basedpaymenttransactionswithcashalternatives.AwardsunderthePerformanceSharePlans50%oftheawardsunderthe2014PerformanceSharePlanaresubjecttoaTSR(andhencemarket-based)vestingcondition;with25%beingmeasuredagainstatailoredsectorpeergroupand25%againsttheFTSEAll-WorldConstruction&MaterialsIndex.Accordingly,thefairvalueassignedtotherelatedequityinstrumentsatthegrantdateisderivedusingaMonteCarlosimulationtechniquetomodelthecombinationofmarket-basedandnon-market-basedperformanceconditionsintheplan;andisadjustedtoreflecttheanticipatedlikelihoodasatthegrantdateofachievingthevestingcondition.Awardsaretreatedasvestingirrespectiveofwhetherornotthemarketconditionissatisfied,providedthatallotherperformanceand/orserviceconditionsaresatisfied.Theremainingawardsgrantedunderthe2014PerformanceSharePlanaresubjecttoacumulativecashflowtarget(non-market-based)vestingcondition.Thefairvalueoftheawardsiscalculatedasthemarketpriceofthesharesatthedateofgrant.Noexpenseisrecognisedforawardsthatdonotultimatelyvest.AtthebalancesheetdatetheestimateofthelevelofvestingisreviewedandanyadjustmentnecessaryisrecognisedintheConsolidatedIncomeStatement.Ifawardswhichvestunderthe2014PerformanceSharePlanareallottedtoanEmployeeBenefitTrust,anincreaseinnominalShareCapitalandSharePremiumarerecognisedaccordinglyonallotment.134CRHAnnualReportandForm20-F|2018Savings-relatedShareOptionSchemeThefairvaluesassignedtooptionsundertheSavings-relatedShareOptionSchemearederivedinaccordancewiththetrinomialvaluationmethodologyonthebasisthattheservicestoberenderedbyemployeesasconsiderationforthegrantingofshareoptionswillbereceivedoverthevestingperiod,whichisassessedasatthegrantdate.Thecostisrecognised,togetherwithacorrespondingincreaseinequity,overtheperiodinwhichtheperformanceand/orserviceconditionsarefulfilled.ThecumulativeexpenserecognisedateachreportingdateuntilthevestingdatereflectstheextenttowhichthevestingperiodhasexpiredandtheGroup’sbestestimateofthenumberofequityinstrumentsthatwillultimatelyvest.TheConsolidatedIncomeStatementexpense/creditforaperiodrepresentsthemovementincumulativeexpenserecognisedatthebeginningandendofthatperiod.ThecumulativechargetotheConsolidatedIncomeStatementisreversedonlywhereanemployeeinreceiptofshareoptionsleavesservicepriortocompletionoftheexpectedvestingperiodandthoseoptionsforfeitinconsequence.Whereanawardiscancelled,itistreatedasifitisvestedonthedateofcancellation,andanyexpensenotyetrecognisedfortheawardisrecognisedimmediately.Thisincludesanyawardwherenon-vestingconditionswithinthecontrolofeithertheCompanyortheemployeearenotmet.Allcancellationsofawardsaretreatedequally.Theproceedsreceivednetofanydirectlyattributabletransactioncostsarecreditedtosharecapital(nominalvalue)andsharepremiumwhentheoptionsareexercised.Thedilutiveeffectofoutstandingoptionsisreflectedasadditionalsharedilutioninthedeterminationofdilutedearningspershare.Property,plantandequipment–Note15Thecarryingvalueofproperty,plantandequipmentof€15,761millionat31December2018represents45%oftotalassetsatthatdate.Property,plantandequipmentarestatedatcostlessanyaccumulateddepreciationandanyaccumulatedimpairmentsexceptforcertainitemsthathadbeenrevaluedtofairvaluepriortothedateoftransitiontoIFRS(1January2004).Repairandmaintenanceexpenditureisincludedinanasset’scarryingamountorrecognisedasaseparateasset,asappropriate,onlywhenitisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheGroupandthecostoftheitemcanbemeasuredreliably.AllotherrepairandmaintenanceexpenditureischargedtotheConsolidatedIncomeStatementduringthefinancialperiodinwhichitisincurred.Borrowingcostsincurredintheconstructionofmajorassetswhichtakeasubstantialperiodoftimetocompletearecapitalisedinthefinancialperiodinwhichtheyareincurred.IntheapplicationoftheGroup’saccountingpolicy,judgementisexercisedbymanagementinthedeterminationofresidualvaluesandusefullives.Depreciationanddepletioniscalculatedtowriteoffthebookvalueofeachitemofproperty,plantandequipmentoveritsusefuleconomiclifeonastraight-linebasisatthefollowingrates:LandandbuildingsThebookvalueofmineral-bearingland,lessanestimateofitsresidualvalue,isdepletedovertheperiodofthemineralextractionintheproportionwhichproductionfortheyearbearstothelatestestimatesofprovenandprobablemineralreserves.Land,otherthanmineral-bearingland,isnotdepreciated.Ingeneral,buildingsaredepreciatedat2.5%perannum(p.a.).PlantandmachineryThesearedepreciatedatratesrangingfrom3.3%p.a.to20%p.a.dependingonthetypeofasset.Plantandmachineryincludestransportwhichis,onaverage,depreciatedat20%p.a.Depreciationmethods,usefullivesandresidualvaluesarereviewedateachfinancialyearend.Changesintheexpectedusefullifeortheexpectedpatternofconsumptionoffutureeconomicbenefitsembodiedintheassetareaccountedforbychangingthedepreciationperiodormethodasappropriateonaprospectivebasis.Impairmentofproperty,plantandequipmentThecarryingvaluesofitemsofproperty,plantandequipmentarereviewedforindicatorsofimpairmentateachreportingdateandaresubjecttoimpairmenttestingwheneventsorchangesincircumstancesindicatethatthecarryingvaluesmaynotberecoverable.Property,plantandequipmentassetsarereviewedforpotentialimpairmentbyapplyingaseriesofexternalandinternalindicatorsspecifictotheassetsunderconsideration;theseindicatorsencompassmacroeconomicissuesincludingtheinherentcyclicalityofthebuildingmaterialssector,actualobsolescenceorphysicaldamage,adeteriorationinforecastperformanceintheinternalreportingcycleandrestructuringandrationalisationprogrammes.Similartotheprocessforgoodwill,wherethecarryingvalueexceedstheestimatedrecoverableamount(beingthegreateroffairvaluelesscostsofdisposalandvalue-in-use),animpairmentlossisrecognisedbywritingdowntheassetstotheirrecoverableamount.Inassessingvalue-in-use,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheassetforwhichthefuturecashflowestimateshavenotbeenadjusted.Theestimatesoffuturecashflowsexcludecashinflowsoroutflowsattributabletofinancingactivitiesandincometax.Foranassetthatdoesnotgeneratelargelyindependentcashinflows,therecoverableamountisdeterminedbyreferencetothecash-generatingunittowhichtheassetbelongs.Businesscombinations–Note32TheGroupappliestheacquisitionmethodinaccountingforbusinesscombinations.Thecostofanacquisitionismeasuredastheaggregateoftheconsiderationtransferred(excludingamountsrelatingtothesettlementofpre-existingrelationships),theamountofanynon-controllinginterestintheacquireeand,inabusinesscombinationachievedinstages,theacquisition-datefairvalueoftheacquirer’spreviously-heldequityinterestintheacquiree.TransactioncoststhattheGroupincursinconnectionwithabusinesscombinationareexpensedasincurred.Totheextentthatsettlementofalloranypartofconsiderationforabusinesscombinationisdeferred,thefairvalueofthedeferredcomponentisdeterminedthroughdiscountingtheamountspayabletotheirpresentvalueatthedateofexchange.ThediscountcomponentisunwoundasaninterestchargeintheConsolidatedIncomeStatementoverthelifeoftheobligation.Anycontingentconsiderationisrecognisedatfairvalueattheacquisitiondateandincludedinthecostoftheacquisition.Thefairvalueofcontingentconsiderationatacquisitiondateisarrivedatthroughdiscountingtheexpectedpayment(basedonscenariomodelling)topresentvalue.Ingeneral,inorderforcontingentconsiderationtobecomepayable,pre-definedprofitand/orprofit/netassetratiosmustbeexceeded.Subsequentchangestothefairvalueofthecontingentconsiderationwillberecognisedinprofitorlossunlessthecontingentconsiderationisclassifiedasequity,inwhichcaseitisnotremeasuredandsettlementisaccountedforwithinequity.Theassetsandliabilitiesarisingonbusinesscombinationactivityaremeasuredattheiracquisition-datefairvalues.Contingentliabilities135OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018AccountingPolicies-continuedassumedinbusinesscombinationactivityarerecognisedasoftheacquisitiondate,wheresuchcontingentliabilitiesarepresentobligationsarisingfrompasteventsandtheirfairvaluecanbemeasuredreliably.Inthecaseofabusinesscombinationachievedinstages,theacquisition-datefairvalueoftheacquirer’spreviously-heldequityinterestintheacquireeisremeasuredtofairvalueasattheacquisitiondatethroughprofitorloss.Whentheinitialaccountingforabusinesscombinationisdeterminedprovisionally,anyadjustmentstotheprovisionalvaluesallocatedtotheconsideration,identifiableassetsorliabilities(andcontingentliabilities,ifrelevant)aremadewithinthemeasurementperiod,aperiodofnomorethanoneyearfromtheacquisitiondate.Goodwill–Note16Goodwillarisingonabusinesscombinationisinitiallymeasuredatcost,beingtheexcessofthecostofanacquisitionoverthenetidentifiableassetsandliabilitiesassumedatthedateofacquisitionandrelatestothefutureeconomicbenefitsarisingfromassetswhicharenotcapableofbeingindividuallyidentifiedandseparatelyrecognised.Followinginitialrecognition,goodwillismeasuredatcostlessanyaccumulatedimpairmentlosses.Ifthecostoftheacquisitionislowerthanthefairvalueofthenetassetsofthesubsidiaryacquired,theidentificationandmeasurementoftherelatedassetsandliabilitiesandcontingentliabilitiesarerevisitedandthecostisreassessedwithanyremainingbalancerecognisedimmediatelyintheConsolidatedIncomeStatement.Thecarryingamountofgoodwillinrespectofassociatesandjointventuresisincludedininvestmentsaccountedforusingtheequitymethod(i.e.withinfinancialassets)intheConsolidatedBalanceSheet.Whereasubsidiaryisdisposedoforterminatedthroughclosure,thecarryingvalueofanygoodwillofthatsubsidiaryisincludedinthedeterminationofthenetprofitorlossondisposal/termination.Intangibleassets(otherthangoodwill)arisingonbusinesscombinations–Note16Anintangibleassetiscapitalisedseparatelyfromgoodwillaspartofabusinesscombinationatcost(fairvalueatdateofacquisition).Subsequenttoinitialrecognition,intangibleassetsarecarriedatcostlessanyaccumulatedamortisationandanyaccumulatedimpairmentlosses.Thecarryingvaluesofdefinite-livedintangibleassets(theGroupdoesnotcurrentlyhaveanyindefinite-livedintangibleassetsotherthangoodwill)arereviewedforindicatorsofimpairmentateachreportingdateandaresubjecttoimpairmenttestingwheneventsorchangesincircumstancesindicatethatthecarryingvaluesmaynotberecoverable.Intangibleassetsareamortisedonastraight-linebasis.Ingeneral,definite-livedintangibleassetsareamortisedoverperiodsrangingfromonetotenyears,dependingonthenatureoftheintangibleasset.Amortisationperiods,usefullives,expectedpatternsofconsumptionandresidualvaluesarereviewedateachfinancialyearend.Changesintheexpectedusefullifeortheexpectedpatternofconsumptionoffutureeconomicbenefitsembodiedintheassetareaccountedforbychangingtheamortisationperiodormethodasappropriateonaprospectivebasis.Leases–Notes5and30Leaseswherethelessorretainssubstantiallyalltherisksandrewardsofownershipareclassifiedasoperatingleases.OperatingleaserentalsarechargedtotheConsolidatedIncomeStatementonastraight-linebasisovertheleaseterm.Inventories–Note18Inventoriesarestatedatthelowerofcostandnetrealisablevalue.Costisbasedonthefirst-in/first-outprinciple(andweightedaverage,whereappropriate)andincludesallexpenditureincurredinacquiringtheinventoriesandbringingthemtotheirpresentlocationandcondition.Rawmaterialsarevaluedonthebasisofpurchasecostonafirst-in/first-outbasis.Inthecaseoffinishedgoodsandwork-in-progress,costincludesdirectmaterials,directlabourandattributableoverheadsbasedonnormaloperatingcapacityandexcludesborrowingcosts.Netrealisablevalueistheestimatedproceedsofsalelessallfurthercoststocompletion,andlessallcoststobeincurredinmarketing,sellinganddistribution.Estimatesofnetrealisablevaluearebasedonthemostreliableevidenceavailableatthetimetheestimatesaremade,takingintoconsiderationfluctuationsofpriceorcostdirectlyrelatingtoeventsoccurringaftertheendoftheperiod,thelikelihoodofshort-termchangesinbuyerpreferences,productobsolescenceorperishability(allofwhicharegenerallylowgiventhenatureoftheGroup’sproducts)andthepurposeforwhichtheinventoryisheld.Materialsandothersuppliesheldforuseintheproductionofinventoriesarenotwrittendownbelowcostifthefinishedgoods,inwhichtheywillbeincorporated,areexpectedtobesoldatorabovecost.Cashandcashequivalents–Note24Cashandcashequivalentscomprisecashbalancesheldforthepurposeofmeetingshort-termcashcommitmentsandinvestmentswhicharereadilyconvertibletoaknownamountofcashandaresubjecttoaninsignificantriskofchangeinvalue.Bankoverdraftsareincludedwithincurrentinterest-bearingloansandborrowingsintheConsolidatedBalanceSheet.Wheretheoverdraftsarerepayableondemandandformanintegralpartofcashmanagement,theyarenettedagainstcashandcashequivalentsforthepurposesoftheConsolidatedStatementofCashFlows.Interest-bearingloansandborrowings–Note25Allloansandborrowingsareinitiallyrecordedatthefairvalueoftheconsiderationreceivednetofdirectlyattributabletransactioncosts.Subsequenttoinitialrecognition,currentandnon-currentinterest-bearingloansandborrowingsare,ingeneral,measuredatamortisedcostemployingtheeffectiveinterestmethodology.Fixedratetermloans,whichhavebeenhedgedtofloatingrates(usinginterestrateswaps),aremeasuredatamortisedcostadjustedforchangesinvalueattributabletothehedgedrisksarisingfromchangesinunderlyingmarketinterestrates.Thecomputationofamortisedcostincludesanyissuecostsandanydiscountorpremiummaterialisingonsettlement.GainsandlossesarerecognisedintheConsolidatedIncomeStatementthroughamortisationonthebasisoftheperiodoftheloansandborrowings.Borrowingcostsarisingonfinancialinstrumentsarerecognisedasanexpenseintheperiodinwhichtheyareincurred(unlesscapitalisedaspartofthecostofproperty,plantandequipment).Derivativefinancialinstrumentsandhedgingpractices–Note26Inordertomanageinterestrate,foreigncurrencyandcommodityrisksandtorealisethedesiredcurrencyprofileofborrowings,theGroupemploysderivativefinancialinstruments(principallyinterestrateswaps,currencyswapsandforwardforeignexchangecontracts).Derivativefinancialinstrumentsarerecognisedinitiallyatfairvalueonthedateonwhichaderivativecontractisenteredintoandare136CRHAnnualReportandForm20-F|2018subsequentlyremeasuredatfairvalue.Thecarryingvalueofderivativesisfairvaluebasedondiscountedfuturecashflowsandadjustedforcounterpartyrisk.Futurefloatingratecashflowsareestimatedbasedonfutureinterestrates(fromobservableyieldcurvesattheendofthereportingperiod).Fixedandfloatingratecashflowsarediscountedatfutureinterestratesandtranslatedatperiod-endforeignexchangerates.Shortdatedforwardforeignexchangecontractsareusedtohedgethespotpriceriskoncurrencyexposures.TheforwardpriceelementstothesecontractsareimmaterialandaccountedforintheConsolidatedIncomeStatement.Attheinceptionofaderivativetransaction,theGroupdocumentstherelationshipbetweenthehedgeditemandthehedginginstrumenttogetherwithitsriskmanagementobjectiveandthestrategyunderlyingtheproposedtransaction.TheGroupalsodocumentsitsassessment,bothattheinceptionofthehedgingrelationshipandsubsequentlyonanongoingbasis,oftheeffectivenessofthehedginginstrumentinoffsettingmovementsinthefairvaluesorcashflowsofthehedgeditems.Wherederivativesdonotfulfilthecriteriaforhedgeaccounting,changesinfairvaluesarereportedintheConsolidatedIncomeStatementandConsolidatedBalanceSheet.FairvalueandcashflowhedgesTheGroupusesfairvaluehedgesandcashflowhedgesinitstreasuryactivities.Forthepurposesofhedgeaccounting,hedgesareclassifiedeitherasfairvaluehedges(whichentailhedgingtheexposuretomovementsinthefairvalueofarecognisedassetorliabilityoranunrecognisedfirmcommitmentthatcouldaffectprofitorloss)orcashflowhedges(whichhedgeexposuretofluctuationsinfuturecashflowsderivedfromaparticularriskassociatedwitharecognisedassetorliability,orahighlyprobableforecasttransactionthatcouldaffectprofitorloss).Wheretheconditionsforhedgeaccountingaresatisfiedandthehedginginstrumentconcernedisclassifiedasafairvaluehedge,anygainorlossstemmingfromtheremeasurementofthehedginginstrumenttofairvalueisreportedintheConsolidatedIncomeStatement.Inaddition,anygainorlossonthehedgeditemwhichisattributabletothehedgedriskisadjustedagainstthecarryingamountofthehedgeditemandreflectedintheConsolidatedIncomeStatement.Wheretheadjustmentistothecarryingamountofahedgedinterest-bearingfinancialinstrument,theadjustmentisamortisedtotheConsolidatedIncomeStatementwiththeobjectiveofachievingfullamortisationbymaturity.Whereaderivativefinancialinstrumentisdesignatedasahedgeofthevariabilityincashflowsofarecognisedassetorliabilityorahighlyprobableforecasttransactionthatcouldaffectprofitorloss,theeffectivepartofanygainorlossonthederivativefinancialinstrumentisrecognisedasothercomprehensiveincome,netoftheincometaxeffect,withtheineffectiveportionbeingreportedintheConsolidatedIncomeStatement.TheassociatedgainsorlossesthathadpreviouslybeenrecognisedasothercomprehensiveincomearetransferredtotheConsolidatedIncomeStatementcontemporaneouslywiththematerialisationofthehedgedtransaction.AnygainorlossarisinginrespectofchangesinthetimevalueofthederivativefinancialinstrumentisexcludedfromthemeasurementofhedgeeffectivenessandisrecognisedimmediatelyintheConsolidatedIncomeStatement.Hedgeaccountingisdiscontinuedwhenthehedginginstrumentexpiresorissold,terminatedorexercised,ornolongerqualifiesforhedgeaccounting.Atthatpointintime,anycumulativegainorlossonthehedginginstrumentrecognisedasothercomprehensiveincomeremainsthereuntiltheforecasttransactionoccurs.Ifahedgedtransactionisnolongeranticipatedtooccur,thenetcumulativegainorlosspreviouslyrecognisedasothercomprehensiveincomeistransferredtotheConsolidatedIncomeStatementintheperiod.NetinvestmenthedgesWhereforeigncurrencyborrowingsprovideahedgeagainstanetinvestmentinaforeignoperation,andthehedgeisdeemedtobeeffective,foreignexchangedifferencesaretakendirectlytoaforeigncurrencytranslationreserve.TheineffectiveportionofanygainorlossonthehedginginstrumentisrecognisedimmediatelyintheConsolidatedIncomeStatement.CumulativegainsandlossesremaininequityuntildisposalofthenetinvestmentintheforeignoperationatwhichpointtherelateddifferencesaretransferredtotheConsolidatedIncomeStatementaspartoftheoverallgainorlossonsale.Sharecapitalanddividends–Notes31and13TreasurySharesandownsharesOrdinarySharesacquiredbytheParentCompanyorpurchasedbytheEmployeeBenefitTrustonbehalfoftheParentCompanyunderthetermsofthePerformanceSharePlansandtheRestrictedSharePlanaredeductedfromequityandpresentedonthefaceoftheConsolidatedBalanceSheet.Nogainorlossisrecognisedinprofitorlossonthepurchase,sale,issueorcancellationoftheParentCompany’sOrdinaryShares.DividendsDividendsonOrdinarySharesarerecognisedasaliabilityintheConsolidatedFinancialStatementsintheperiodinwhichtheyaredeclaredbytheParentCompany.ForeigncurrencytranslationItemsincludedinthefinancialstatementsofeachoftheGroup’sentitiesaremeasuredusingthecurrencyoftheprimaryeconomicenvironmentinwhichtheentityoperates(‘thefunctionalcurrency’).TheConsolidatedFinancialStatementsarepresentedineuro,whichisthepresentationcurrencyoftheGroupandthefunctionalcurrencyoftheParentCompany.Transactionsinforeigncurrenciesarerecordedattheraterulingatthedateofthetransaction.Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesareretranslatedattherateofexchangerulingatthebalancesheetdate.AllcurrencytranslationdifferencesaretakentotheConsolidatedIncomeStatementwiththeexceptionofallmonetaryitemsthatprovideaneffectivehedgeforanetinvestmentinaforeignoperation.Thesearerecognisedinothercomprehensiveincomeuntilthedisposalofthenetinvestment,atwhichtimetheyarerecognisedintheConsolidatedIncomeStatement.Resultsandcashflowsofsubsidiaries,jointventuresandassociateswithnon-eurofunctionalcurrencieshavebeentranslatedintoeuroataverageexchangeratesfortheyear,andtherelatedbalancesheetshavebeentranslatedattheratesofexchangerulingatthebalancesheetdate.Adjustmentsarisingontranslationoftheresultsandnetassetsofnon-eurosubsidiaries,jointventures,associatesandjointoperationsarerecognisedinaseparatetranslationreservewithinequity,netofdifferencesonrelatedcurrencyborrowings.AllothertranslationdifferencesaretakentotheConsolidatedIncomeStatement.Goodwillandfairvalueadjustmentsarisingonacquisitionofaforeignoperationareregardedasassetsandliabilitiesoftheforeignoperationandaretranslatedaccordingly.137OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018AccountingPolicies-continuedTheprincipalexchangeratesusedforthetranslationofresults,cashflowsandbalancesheetsintoeurowereasfollows:AverageYear-endeuro1=20182017201620182017BrazilianReal4.30853.60543.85614.44403.9729CanadianDollar1.52941.46471.46591.56051.5039ChineseRenminbi7.80817.62907.35227.87517.8044HungarianForint318.8897309.1933311.4379320.9800310.3300IndianRupee80.733273.532474.371779.729876.6055PhilippinePeso62.210156.973452.555560.113059.7950PolishZloty4.26154.25704.36324.30144.1770PoundSterling0.88470.87670.81950.89450.8872RomanianLeu4.65404.56884.49044.66354.6585SerbianDinar118.2302121.3232123.1356118.3157118.3086SwissFranc1.15501.11171.09021.12691.1702UkrainianHryvnia32.098730.034128.281231.690033.6769USDollar1.18101.12971.10691.14501.1993138CRHAnnualReportandForm20-F|2018NotesonConsolidatedFinancialStatements1.RevenueCRHisaleadingglobaldiversifiedbuildingmaterialsgroupwhichmanufacturesanddistributesarangeofbuildingmaterialsproductsfromthefundamentalsofheavymaterialsandelementstoconstructtheframe,throughvalue-addedproductsthatcompletethebuildingenvelope,todistributionchannelswhichserviceconstructionfit-outandrenewal.TheGroup’ssixoperatingsegmentsgeneraterevenuethroughthefollowingactivities:EuropeHeavysidebusinessesarepredominantlyengagedinthemanufactureandsupplyofcement,lime,aggregates,readymixedandprecastconcreteandasphaltproducts.Thesegmentcomprisesbusinessesoperatingin19countriesacrossWestern,CentralandEasternEurope.EuropeLightsidebusinessesarepredominantlyengagedintheproductionandsupplyofconstructionaccessories,architecturalproducts,shutters&awnings,perimeterprotection&networkaccessproductsacross17countriesprimarilyinWesternEurope.EuropeDistributionbusinessesarepredominantlyengagedinsupplyingGeneralMerchantsandSanitary,HeatingandPlumbing(SHAP)businessesinAustria,Belgium,France,Germany,theNetherlandsandSwitzerland,andDo-It-Yourself(DIY)businessesinGermany,anduptodateofdisposalinBelgiumandtheNetherlands,cateringtothegeneralpublicandsmallandmedium-sizedbuilderssellingarangeofbricks,cement,sanitary,heating,plumbingandotherbuildingproducts.AmericasMaterialsbusinessesarepredominantlyengagedintheproductionandsaleofaggregates,asphalt,cementandreadymixedconcreteproductsandprovideasphaltpavingservicesintheUSandCanada.ThissegmentalsoincludestheGroup’scementoperationsinBrazil.AmericasProductsbusinessesarepredominantlyengagedintheproductionandsaleintheUSandCanadaofconcretemasonryandhardscapes,packagedlawnandgardenproducts,packagedcementmixes,fencing,utility,drainageandstructuralprecastproducts,constructionaccessoriesandglassandaluminiumglazingsystems.AsiabusinessesarepredominantlyengagedinthemanufactureandsupplyofcementinthePhilippines.Seenote2formoredetailedinformationonreportablesegments,asidentifiedunderIFRS8OperatingSegments.A.DisaggregatedrevenueInthefollowingtables,revenueisdisaggregatedbyprimarygeographicmarketandbyprincipalactivitiesandproducts.DuetothediversifiednatureoftheGroup,thebasisonwhichmanagementreviewsitsbusinessesvariesacrosstheGroup.GeographyistheprimarybasisfortheEuropeHeavyside,AmericasMaterialsandAsiabusinesses;whileactivitiesandproductsareusedfortheEuropeLightside,EuropeDistributionandAmericasProductsbusinesses.Revenuefromexternalcustomers(asdefinedinIFRS8)attributabletothecountryofdomicileandallforeigncountriesofoperationgreaterthan10%areincludedbelow.Furtheroperatingsegmentdisclosuresaresetoutinnote2.Yearended31DecemberEuropeHeavyside2018EuropeLightside2018EuropeDistribution2018AmericasMaterials2018AmericasProducts2018Asia2018Total201820172016Primarygeographicmarkets€m€m€m€m€m€m€m€m€mContinuingoperationsRepublicofIreland(countryofdomicile)468-----468435403Benelux(mainlytheNetherlands)5623711,498---2,4312,5892,576UnitedKingdom3,045223----3,2683,0233,091RestofEurope(i)3,5367912,358---6,6856,3486,250UnitedStates---7,8964,065-11,96110,84410,415RestofWorld(ii)-123-1,0553684311,9771,9812,054TotalGroupfromcontinuingoperations7,6111,5083,8568,9514,43343126,79025,22024,789DiscontinuedoperationsUnitedStates-AmericasDistribution72,3432,315TotalGroup26,79727,56327,104(i)TheRestofEuropeprincipallyincludesAustria,CzechRepublic,Denmark,Finland,France,Germany,Hungary,Poland,Romania,Serbia,Slovakia,Spain,Sweden,SwitzerlandandUkraine.(ii)TheRestofWorldprincipallyincludesAustralia,Brazil,CanadaandthePhilippines.139OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|20181.Revenue-continuedYearended31DecemberEuropeHeavyside(iii)2018EuropeLightside2018EuropeDistribution2018AmericasMaterials(iii)2018AmericasProducts2018Asia2018Total2018Principalactivitiesandproducts€m€m€m€m€m€m€mContinuingoperationsCement,limeandcementproducts2,075--810-4313,316Aggregates,asphaltandreadymixedproducts2,919--4,330--7,249Constructioncontractactivities*1,54262-3,811178-5,593Constructionaccessories-459----459Perimeterprotection,shutters&awningsandnetworkaccessproducts-482----482Architecturalandprecastproducts1,075505--2,824-4,404Architecturalglassandglazingsystemsandwholesalehardwaredistribution----1,431-1,431GeneralBuildersMerchants,DIYandSanitary,Heating&Plumbing--3,856---3,856TotalGroupfromcontinuingoperations7,6111,5083,8568,9514,43343126,790DiscontinuedoperationsExteriorandinteriorproducts-AmericasDistribution7TotalGroup26,797(iii)EuropeHeavysideandAmericasMaterialsbothoperateverticallyintegratedbusinesses,whicharefoundedinresource-backedcementandaggregatesassetsandwhichsupportthemanufactureandsupplyofaggregates,asphalt,cement,readymixedandprecastconcreteandlandscapingproducts.Accordingly,forthepurposeofdisaggregationofrevenuewehaveincludedcertainproductstogether,asthisishowmanagementreviewandevaluatethisbusinessline.TherearenomaterialdependenciesorconcentrationsofindividualcustomerswhichwouldwarrantdisclosureunderIFRS8.TheindividualentitieswithintheGrouphavealargenumberofcustomersspreadacrossvariousactivities,end-usesandgeographies.RevenuederivedthroughthesupplyofservicesandintersegmentrevenuearenotmaterialtotheGroup.ThetransferpricingpolicyimplementedbytheGroupbetweenoperatingsegmentsandacrossitsconstituententitiesisdescribedinnote34.Inaddition,duetothenatureofbuildingmaterials,whichhavealowvalue-to-weightratio,theGroup’srevenuestreamsincludealowlevelofcross-bordertransactions.B.ContractbalancesForinformationontheGroup’sconstructioncontractbalancesrefertonotes18,19and20.Movementsinournetcontractbalancesarenotconsideredsignificantandareprimarilydrivenbythetimingofbillingwork-in-progresswithinourconstructioncontractbusinesses.C.Unsatisfiedlong-termconstructioncontractsandotherperformanceobligationsRevenueyettoberecognisedfromfixed-pricelong-termconstructioncontracts,primarilywithinourEuropeHeavysideandAmericasMaterialsbusinesses,amountedto€1,848millionat31December2018.TheGrouphasappliedthepracticalexpedientofIFRS15RevenuefromContractswithCustomerswherebyrevenueyettoberecognisedoncontractsthathadanoriginalexpecteddurationoflessthanoneyearisnotdisclosed.AspermittedunderthetransitionalprovisionsofIFRS15,thetransactionpriceallocatedto(partially)unsatisfiedperformanceobligationsat31December2017isnotdisclosed.Themajorityofopencontractsat31December2018willcloseandrevenuewillberecognisedwithin12monthsofthebalancesheetdate.140*Revenueprincipallyrecognisedovertime.Constructioncontractsaregenerallycompletedwithinthesamefinancialreportingyear.CRHAnnualReportandForm20-F|20182.SegmentInformationAsoutlinedinnote1,theGroupreportsacrossthefollowingsixoperatingsegments:EuropeHeavyside,EuropeLightside,EuropeDistribution,AmericasMaterials,AmericasProductsandAsia.ThesegmentsreflecttheGroup’sorganisationalstructurein2018andthenatureofthefinancialinformationreportedtoandassessedbytheGroupChiefExecutiveandFinanceDirector,whoaretogetherdeterminedtofulfiltheroleofChiefOperatingDecisionMaker(asdefinedinIFRS8).Effective1January2019theGroupimplementedasimplifiednewstructurereducingitsoperatingsegmentsfromsixtothree:EuropeMaterials(formerlyEuropeHeavyside),AmericasMaterialsandanewBuildingProductssegment.TheBuildingProductssegmentbringstogetherourEuropeLightside,EuropeDistributionandAmericasProductssegments.Theprincipalfactorsemployedintheidentificationofthesixsegmentsreflectedinthisnoteinclude:•theGroup’sorganisationalstructurein2018(during2018eachdivisionalPresidentfulfilledtheroleof“segmentmanager”asoutlinedinIFRS8,withthePresidentofEuropeLightsideandDistributionactingas“segmentmanager”foreachoftheEuropeLightsideandEuropeDistributionsegmentsrespectively);•thenatureofthereportinglinestotheChiefOperatingDecisionMaker(asdefinedinIFRS8);•thestructureofinternalreportingdocumentationsuchasmanagementaccountsandbudgets;and•thedegreeofhomogeneityofproducts,servicesandgeographicalareaswithineachofthesegmentsfromwhichrevenueisderivedTheChiefOperatingDecisionMakermonitorstheoperatingresultsofsegmentsseparatelyinordertoallocateresourcesbetweensegmentsandtoassessperformance.Segmentperformanceispredominantlyevaluatedbasedonoperatingprofit.Asperformanceisalsoevaluatedusingoperatingprofitbeforedepreciation,amortisationandimpairment(EBITDA(asdefined)*),supplementalinformationbasedonEBITDA(asdefined)*isprovidedoverleaf.Giventhatnetfinancecostsandincometaxaremanagedonacentralisedbasis,theseitemsarenotallocatedbetweenoperatingsegmentsforthepurposesoftheinformationpresentedtotheChiefOperatingDecisionMakerandareaccordinglyomittedfromthedetailedsegmentalanalysisoverleaf.Therearenoasymmetricalallocationstoreportingsegmentswhichwouldrequiredisclosure.*EBITDAisdefinedasearningsbeforeinterest,taxes,depreciation,amortisation,assetimpairmentcharges,profitondisposalsandtheGroup’sshareofequityaccountedinvestments’profitaftertax.141OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|20182.SegmentInformation-continuedA.Operatingsegmentsdisclosures-ConsolidatedIncomeStatementdataYearended31DecemberRevenueGroupEBITDA(asdefined)*Depreciation,amortisationandimpairmentGroupoperatingprofit2018€m2017€m2016€m2018€m2017€m2016€m2018€m2017€m2016€m2018€m2017€m2016€mContinuingoperationsEuropeHeavyside7,6116,9026,945911839781410361395501478386EuropeLightside1,5081,4401,39215214313742414511010292EuropeDistribution3,8564,1454,066181269206696276112207130Europe12,97512,48712,4031,2441,2511,124521464516723787608AmericasMaterials8,9517,9707,5981,4931,2701,2044844123861,009858818AmericasProducts4,4334,3274,280603573543144138132459435411Americas13,38412,29711,8782,0961,8431,7476285505181,4681,2931,229Asia4314365082552109393738(14)1571TotalGroupfromcontinuingoperations26,79025,22024,7893,3653,1462,9801,1881,0511,0722,1772,0951,908DiscontinuedoperationsAmericasDistribution72,3432,315(5)164150-2131(5)143119TotalGroup26,79727,56327,1043,3603,3103,1301,1881,0721,1032,1722,2382,027Groupoperatingprofitfromcontinuingoperations2,1772,0951,908(Loss)/profitondisposals(i)(24)5653Financecostslessincome(305)(289)(317)Otherfinancialexpense(46)(60)(66)Shareofequityaccountedinvestments’profit(ii)606542Profitbeforetaxfromcontinuingoperations1,8621,8671,620(i)(Loss)/profitondisposals(note6)(ii)Shareofequityaccountedinvestments’profit/(loss)(note11)EuropeHeavyside7192413912EuropeLightside(33)-1---EuropeDistribution(9)413171513Europe(35)2338302425AmericasMaterials4429(19)253234AmericasProducts(33)434---Americas113315253234Asia---59(17)TotalGroup(24)5653606542142*EBITDAisdefinedasearningsbeforeinterest,taxes,depreciation,amortisation,assetimpairmentcharges,profitondisposalsandtheGroup’sshareofequityaccountedinvestments’profitaftertax.CRHAnnualReportandForm20-F|2018B.Operatingsegmentsdisclosures-ConsolidatedBalanceSheetdataAsat31DecemberTotalassetsTotalliabilities2018€m2017€m2018€m2017€mEuropeHeavyside9,0428,9322,5992,641EuropeLightside1,0791,100287302EuropeDistribution1,7202,178478563Europe11,84112,2103,3643,506AmericasMaterials13,7989,1802,0631,628AmericasProducts4,4044,017977895Americas18,20213,1973,0402,523Asia1,4671,402188172TotalGroup31,51026,8096,5926,201ReconciliationtototalassetsasreportedintheConsolidatedBalanceSheet:Investmentsaccountedforusingtheequitymethod1,1631,248Otherfinancialassets2325Derivativefinancialinstruments(currentandnon-current)4564Incometaxassets(currentanddeferred)86260Cashandcashequivalents2,3462,115Assetsheldforsale-1,112TotalassetsasreportedintheConsolidatedBalanceSheet35,17331,633ReconciliationtototalliabilitiesasreportedintheConsolidatedBalanceSheet:Interest-bearingloansandborrowings(currentandnon-current)9,3167,976Derivativefinancialinstruments(currentandnon-current)5914Incometaxliabilities(currentanddeferred)2,6522,124Liabilitiesassociatedwithassetsclassifiedasheldforsale-341TotalliabilitiesasreportedintheConsolidatedBalanceSheet18,61916,656143OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|20182.SegmentInformation-continuedC.Operatingsegmentsdisclosures-otheritemsAdditionstonon-currentassetsYearended31DecemberProperty,plantandequipment(note15)Financialassets(note17)TotalGroup2018€m2017€m2016€m2018€m2017€m2016€m2018€m2017€m2016€mContinuingoperationsEuropeHeavyside351349260--2351349262EuropeLightside423627---423627EuropeDistribution313326---313326Europe424418313--2424418315AmericasMaterials429375328255431380333AmericasProducts166167142-6-166173142Americas5955424702115597553475Asia1025547---1025547TotalGroupfromcontinuingoperations1,1211,01583021171,1231,026837DiscontinuedoperationsAmericasDistribution-2923----2923TotalGroup1,1211,04485321171,1231,055860D.InformationaboutgeographicalareasThenon-currentassets(asdefinedinIFRS8)attributabletothecountryofdomicileandallforeigncountriesofoperation,forwhichrevenueexceeds10%oftotalexternalGrouprevenue,aresetoutbelow.Asat31DecemberNon-currentassets*20182017€m€mContinuingoperationsRepublicofIreland(countryofdomicile)495493Benelux(mainlytheNetherlands)8161,162UnitedKingdom2,4612,395UnitedStates12,9258,749Other8,6608,757TotalGroupfromcontinuingoperations25,35721,556DiscontinuedoperationsUnitedStates-AmericasDistribution-476TotalGroup25,35722,032144*Non-currentassetscompriseproperty,plantandequipment,intangibleassetsandinvestmentsaccountedforusingtheequitymethod.CRHAnnualReportandForm20-F|20183.AssetsHeldforSaleandDiscontinuedOperationsA.ProfitondisposalofdiscontinuedoperationsOn2January2018,theGroupcompletedthedivestmentofits100%holdinginAlliedBuildingProducts,thetradingnameofourformerAmericasDistributionsegment.Theassetsandliabilitiesassociatedwiththistransactionmetthe“heldforsale”criteriasetoutinIFRS5Non-CurrentAssetsHeldforSaleandDiscontinuedOperationsandwerereclassifiedaccordinglyasassetsorliabilitiesheldforsaleasat31December2017.Asthebusinesswasdivestedin2018,allopeningbalanceshavebeenreclassifiedbacktotherelevantassetandliabilitycategoriespriortotheirdivestmentforpresentationpurposes.WiththeexceptionofAlliedBuildingProducts,nootherbusinessesdivestedin2018areconsideredtobeeitherseparatemajorlinesofbusinessorgeographicalareasofoperationandthereforedonotconstitutediscontinuedoperationsasdefinedinIFRS5.NobusinessesmettheIFRS5heldforsalecriteriaat31December2018.Thetablebelowsetsouttheproceedsandrelatedprofitrecognisedonthedivestmentwhichisincludedinprofitaftertaxforthefinancialyearfromdiscontinuedoperations.2018€mAssets/(liabilities)disposedofatnetcarryingamount:-non-currentassets472-cashandcashequivalents18-workingcapitalandprovisions367-deferredtax(14)Netassetsdisposed843Reclassificationofcurrencytranslationeffectsondisposal(27)Total816Proceedsfromdisposal(netofdisposalcosts)2,379Profitondisposalfromdiscontinuedoperations1,563NetcashinflowarisingondisposalProceedsfromdisposalfromdiscontinuedoperations2,379Less:cashandcashequivalentsdisposed(18)Total2,361B.ResultsofdiscontinuedoperationsTheresultsofthediscontinuedoperationsincludedintheGroupprofitforthefinancialyeararesetoutasfollows:2018€m2017€m2016€mRevenue72,3432,315EBITDA(asdefined)*(5)164150Depreciation-(16)(22)Amortisation-(5)(9)Operating(loss)/profit(5)143119Profitondisposals1,56332Profitbeforetax1,558146121Attributableincometaxexpense(473)(39)(40)Profitaftertax1,08510781BasicearningsperOrdinarySharefromdiscontinuedoperations130.4c12.8c9.8cDilutedearningsperOrdinarySharefromdiscontinuedoperations129.7c12.7c9.7cCashflowsfromdiscontinuedoperationsNetcash(outflow)/inflowfromoperatingactivities(i)(469)111123Netcashinflow/(outflow)frominvestingactivities(ii)2,361(27)(22)Netcash(outflow)/inflowfromfinancingactivities(5)1(1)Netcashinflow1,88785100(i)Includesthecorporationtaxpaidin2018onthesaleofAlliedBuildingProducts.(ii)IncludestheproceedsfromthesaleofAlliedBuildingProducts.*EBITDAisdefinedasearningsbeforeinterest,taxes,depreciation,amortisation,assetimpairmentcharges,profitondisposalsandtheGroup’sshareofequityaccountedinvestments’profitaftertax.145OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|20184.CostAnalysisContinuingoperations2018€m2017€m2016€mCostofsalesanalysisRawmaterialsandgoodsforresale7,6537,4287,307Employmentcosts(note7)3,1552,8692,725Energyconversioncosts1,2221,004940Repairsandmaintenance882811803Depreciation,amortisationandimpairment(i)939830817Changeininventory(189)(142)(33)Otherproductionexpenses(primarilysub-contractorcostsandequipmentrental)4,4904,1034,007Total18,15216,90316,566OperatingcostsanalysisSellinganddistributioncosts4,5114,2364,100Administrativeexpenses1,9501,9862,215Total6,4616,2226,315(i)Depreciation,amortisationandimpairmentanalysisCostofsalesOperatingcostsTotal2018€m2017€m2016€m2018€m2017€m2016€m2018€m2017€m2016€mDepreciationanddepletion(note15)9038308171681601701,071990987Amortisationofintangibleassets(note16)---616162616162Impairmentofproperty,plantandequipment(note15)36-----36--Impairmentofintangibleassets(note16)---20-2320-23Total9398308172492212551,1881,0511,072146CRHAnnualReportandForm20-F|20185.OperatingProfitDisclosuresContinuingoperations2018€m2017€m2016€mOperatingleaserentals-hireofplantandmachinery324292262-landandbuildings243258250-otheroperatingleases615657Total628606569Auditor’sremunerationInaccordancewithstatutoryrequirementsinIreland,feesforprofessionalservicesprovidedbytheGroup’sindependentauditorinrespectofeachofthefollowingcategorieswere:EYIreland(statutoryauditor)EY(networkfirms)Total2018€m2017€m2016€m2018€m2017€m2016€m2018€m2017€m2016€mAuditfees(i)443151616192019Otheraudit-relatedassurancefees(ii)---11-11-Taxadvisoryservices----11-11Total443161817202220(i)AuditoftheGroupaccountsincludesauditofinternalcontrolsoverfinancialreportingandparentandsubsidiarystatutoryauditfees,butexcludes€2million(2017:€2million;2016:€2million)paidtoauditorsotherthanEY.(ii)Otherassuranceservicesincludesattestationandduediligenceservicesthatarecloselyrelatedtotheperformanceoftheaudit.TherewerenootherfeesforservicesprovidedbytheGroup’sindependentauditor(2017:€nilmillion;2016:€nilmillion).147OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|20186.BusinessandNon-CurrentAssetDisposalsBusinessdisposalsDisposalofothernon-currentassetsTotal2018€m2017€m2016€m2018€m2017€m2016€m2018€m2017€m2016€mContinuingoperationsAssets/(liabilities)disposedofatnetcarryingamount:-non-currentassets622471475979109681126256-cashandcashequivalents60113---60113-workingcapitalandprovisions1322924---1322924-currenttax(2)-----(2)---deferredtax(2)2(1)---(2)2(1)-retirementbenefitobligations(6)-----(6)--Netassetsdisposed804891735979109863168282Reclassificationofcurrencytranslationeffectsondisposal159(44)---159(44)Total819981295979109878177238Proceedsfromdisposals(netofdisposalcosts)69799133106134158803233291Assetexchange(note32)12-----12--Profitonstepacquisition(note32)39-----39--(Loss)/profitondisposalsfromcontinuingoperations(71)14475549(24)5653DiscontinuedoperationsProfitondisposalsfromdiscontinuedoperations(note3)1,563---321,56332TotalGroupprofitondisposals1,492144758511,5395955NetcashinflowarisingondisposalContinuingoperationsProceedsfromdisposalsfromcontinuingoperations69799133106134158803233291Less:cashandcashequivalentsdisposed(60)(11)(3)---(60)(11)(3)Less:deferredproceedsarisingondisposal(note21)(10)(3)(7)---(10)(3)(7)Less:investmentandloantoassociateinlieuofcashproceeds(i)(note17)(85)-----(85)--Netcashinflowarisingondisposalfromcontinuingoperations54285123106134158648219281DiscontinuedoperationsNetcashinflowarisingondisposalfromdiscontinuedoperations(note3)2,361---322,36132TotalGroupnetcashinflowarisingondisposal2,903851231061371603,009222283(i)AspartofthedivestmentofourDIYbusinessinBelgiumandtheNetherlands(seenote16forfurtherdetails)weacquiredanequitystakeof22.78%in,andadvancedaloanof€50milliontothepurchaser,Intergamma.148CRHAnnualReportandForm20-F|20187.EmploymentContinuingoperationsTheaveragenumberofemployeesisasfollows:Yearended31December201820172016EuropeHeavyside25,91024,40124,551EuropeLightside7,3407,2727,084EuropeDistribution10,16711,03610,971Europe43,41742,70942,606AmericasMaterials27,27224,07722,650AmericasProducts17,83417,14616,259Americas45,10641,22338,909Asia1,3081,4311,374TotalGroup89,83185,36382,889EmploymentcostschargedintheConsolidatedIncomeStatementareanalysedasfollows:2018€m2017€m2016€mWagesandsalaries4,2253,9973,915Socialwelfarecosts478465454Otheremployment-relatedcosts(i)581546531Share-basedpaymentexpense(note9)676044Totalretirementbenefitsexpense(note29)296236307Total5,6475,3045,251Totalchargeanalysedbetween:Costofsales3,1552,8692,725Operatingcosts2,4822,4242,514Financecosts(net)-applicabletoretirementbenefitobligations(note10)101112Total5,6475,3045,251(i)Otheremploymentcostsrelateprincipallytohealthcare,redundancyandseverancecosts.8.Directors’EmolumentsandInterestsDirectors’emoluments(whichareincludedinadministrativeexpensesinnote4)andinterestsarepresentedintheDirectors’RemunerationReportonpages68to97.149OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|20189.Share-basedPaymentExpenseContinuingoperations2018€m2017€m2016€mPerformanceSharePlansandRestrictedSharePlanexpense645738Shareoptionexpense336Totalshare-basedpaymentexpense676044Share-basedpaymentexpenserelatesprimarilytoawardsgrantedunderthe2014PerformanceSharePlanandtheGroup’sSavings-relatedShareOptionSchemes.Theexpense,whichalsoincludeschargesinrelationtothe2013RestrictedSharePlan,isreflectedinoperatingcostsintheConsolidatedIncomeStatement.2014PerformanceSharePlanThestructureofthe2014PerformanceSharePlanissetoutintheDirectors’RemunerationReportonpage84.Anexpenseof€63millionwasrecognisedin2018(2017:€56million;2016:€37million).Detailsofawardsgrantedunderthe2014PerformanceSharePlanNumberofsharesSharepriceatdateofawardPeriodtoearliestreleasedateInitialaward(i)Netoutstandingat31December2018Grantedin2018€28.323years3,863,4333,775,573Grantedin2017€33.213years3,342,9002,927,331Grantedin2016€24.873years3,879,9013,201,098(i)NumbersrepresenttheinitialawardsincludingthosegrantedtoemployeesofAlliedBuildingProductsin2017and2016.TheRemunerationCommitteehasdeterminedthatdividendequivalentswillaccrueonawardsunderthe2014PerformanceSharePlan.Subjecttosatisfactionoftheapplicableperformancecriteria,suchdividendequivalentswillbereleasedtoparticipantsintheformofadditionalsharesonvesting.50%ofeachawardmadeissubjecttoaTSRmeasure,with25%beingmeasuredagainstatailoredsectorpeergroupand25%againsttheFTSEAll-WorldConstruction&MaterialsIndex.Theother50%ofeachawardmadeissubjecttoacumulativecashflowmetric.Furtherdetailsaresetoutonpage84intheDirectors’RemunerationReport.ThefairvaluesassignedtotheportionofawardswhicharesubjecttoTSRperformanceagainstpeersandtheindexwere€13.52and€13.18respectively(2017:€17.43and€14.99respectively;2016:€11.94and€10.52respectively).ThefairvalueoftheseawardswascalculatedusingaTSRpricingmodeltakingaccountofpeergroupTSR,volatilitiesandcorrelationstogetherwiththefollowingassumptions:201820172016Risk-freeinterestrate(%)(0.43)(0.40)(0.53)Expectedvolatility(%)27.430.121.7TheexpectedvolatilitywasdeterminedusingahistoricalsampleofdailyCRHshareprices.Thefairvalueof(i)theportionofawardssubjecttocashflowperformanceand(ii)theawardswithnoperformanceconditions(whicharesubjecttoaoneorthree-yearserviceperiod)was€28.32(2017:€33.21;2016:€24.87).ThefairvaluewascalculatedusingtheclosingCRHsharepriceatthedatetheawardwasgranted.150CRHAnnualReportandForm20-F|2018ShareOptionSchemesThe2010ShareOptionSchemewasreplacedin2014bythe2014PerformanceSharePlan,andaccordinglynooptionshavebeengrantedsince2013.DetailsofmovementandoptionsoutstandingunderShareOptionSchemes(excludingSavings-relatedShareOptionSchemes)WeightedaverageexercisepriceNumberofoptionsWeightedaverageexercisepriceNumberofoptionsWeightedaverageexercisepriceNumberofoptions201820172016Outstandingatbeginningofyear€17.961,441,779€21.512,997,495€21.148,620,690Exercised(i)€19.82(634,994)€24.85(1,462,863)€22.04(2,102,332)Lapsed€17.36(6,015)€24.14(92,853)€20.27(3,520,863)Outstandingatendofyear(ii)€16.48800,770€17.961,441,779€21.512,997,495Exercisableatendofyear€16.48800,770€17.961,441,779€21.512,997,495(i)Theweightedaveragesharepriceatthedateofexerciseoftheseoptionswas€27.90(2017:€32.24;2016:€29.70).(ii)Alloptionsgrantedhavealifeoftenyears.201820172016Weightedaverageremainingcontractuallifefortheshareoptionsoutstandingat31December(years)2.572.532.46euro-denominatedoptionsoutstandingatendofyear(number)796,8501,436,1152,991,831Rangeofexerciseprices(€)16.19-17.3016.19-21.5216.19-29.86PoundSterling-denominatedoptionsoutstandingatendofyear(number)3,9205,6645,664Rangeofexerciseprices(Stg£)15.3015.30-17.1915.30-17.192010Savings-relatedShareOptionSchemesTheGroupoperatesSavings-relatedShareOptionSchemes.Participantsmaysaveupto€500/Stg£500permonthfromtheirnetsalariesforafixedtermofthreeorfiveyearsandattheendofthesavingsperiodtheyhavetheoptiontobuyCRHsharesatadiscountofupto15%ofthemarketpriceonthedateofinvitationofeachsavingscontract.DetailsofoptionsgrantedundertheSavings-relatedShareOptionSchemesWeightedaverageexercisepriceNumberofoptionsWeightedaverageexercisepriceNumberofoptionsWeightedaverageexercisepriceNumberofoptions201820172016Outstandingatbeginningofyear€21.50/Stg£18.051,556,299€18.63/Stg£15.921,402,174€16.96/Stg£14.27593,177Exercised(i)€19.00/Stg£15.26(161,950)€15.73/Stg£14.27(126,472)€13.66/Stg£11.95(121,242)Lapsed€24.62/Stg£20.75(209,264)€21.42/Stg£18.22(123,455)€17.55/Stg£15.68(81,628)Granted(ii)€23.39/Stg£20.83501,091€27.86/Stg£24.51404,052€20.83/Stg£16.161,011,867Outstandingatendofyear€22.15/Stg£18.741,686,176€21.50/Stg£18.051,556,299€18.63/Stg£15.921,402,174Exercisableatendofyear€18.75/Stg£15.5414,059€15.89/n/a15,890€13.45/Stg£12.2223,897(i)Theweightedaveragesharepriceatthedateofexerciseoftheseoptionswas€29.54(2017:€31.14;2016:€27.90).(ii)Pursuanttothe2010Savings-relatedShareOptionSchemesoperatedbytheGroup,employeesweregrantedoptionsover501,091ofCRHplc’sOrdinarySharesinApril2018(2017:404,052shareoptionsinMarch2017;2016:1,011,867shareoptionsinMarch2016).Thisfigurecomprisesoptionsover379,253(2017:304,492;2016:692,334)sharesand121,838(2017:99,560;2016:319,533)shareswhicharenormallyexercisablewithinaperiodofsixmonthsafterthethirdorthefifthanniversaryofthecontract,whicheverisapplicable.Theexercisepriceatwhichtheoptionsaregrantedundertheschemerepresentsadiscountof15%tothemarketpriceonthedateofinvitationofeachsavingscontract.151OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|20189.Share-basedPaymentExpense-continuedContinuingoperations201820172016Weightedaverageremainingcontractuallifefortheshareoptionsoutstandingat31December(years)1.501.902.41euro-denominatedoptionsoutstandingatendofyear(number)304,713304,963320,362Rangeofexerciseprices(€)14.15-27.8613.64-27.8612.82-21.12PoundSterling-denominatedoptionsoutstandingatendofyear(number)1,381,4631,251,3361,081,812Rangeofexerciseprices(Stg£)14.94-24.5112.22-24.5111.55-16.16TheweightedfairvaluesassignedtooptionsissuedundertheSavings-relatedShareOptionSchemes,whichwerecomputedinaccordancewiththetrinomialvaluationmethodology,wereasfollows:3-year5-yearGrantedin2018€5.38€5.88Grantedin2017€5.97€6.49Grantedin2016€5.01€5.57Thefairvalueoftheseoptionsweredeterminedusingthefollowingassumptions:2018201720163-year5-year3-year5-year3-year5-yearWeightedaverageexerciseprice(€)23.3923.3927.8627.8620.8320.83Riskfreeinterestrate(%)(0.44)(0.06)(0.72)(0.45)(0.48)(0.33)Expecteddividendpaymentsovertheexpectedlife(€)2.213.832.073.551.953.32Expectedvolatility(%)20.020.520.920.621.822.9Expectedlifeinyears353535Theexpectedvolatilitywasdeterminedusingahistoricalsampleof37month-endCRHsharepricesinrespectofthethree-yearsavings-relatedshareoptionsand61month-endsharepricesinrespectofthefive-yearsavings-relatedshareoptions.Theexpectedlivesoftheoptionsarebasedonhistoricaldataandarethereforenotnecessarilyindicativeofexercisepatternsthatmaymaterialise.Otherthantheassumptionslistedabove,nootherfeaturesofoptionsgrantswerefactoredintothedeterminationoffairvalue.ThetermsoftheoptionsissuedundertheSavings-relatedShareOptionSchemesdonotcontainanymarketconditionswithinthemeaningofIFRS2Share-basedPayment.152CRHAnnualReportandForm20-F|201810.FinanceCostsandFinanceIncomeContinuingoperations2018€m2017€m2016€mFinancecostsInterestpayableonborrowings335300337Netloss/(income)oninterestrateandcurrencyswaps72(10)Mark-to-marketofderivativesandrelatedfixedratedebt:-interestrateswaps(i)121614-currencyswapsandforwardcontracts(4)-(3)-fixedratedebt(i)(16)(23)(20)Netlossoninterestrateswapsnotdesignatedashedges567Netfinancecostongrossdebtincludingrelatedderivatives339301325FinanceincomeInterestreceivableonloanstojointventuresandassociates(4)(5)(4)Interestreceivableoncashandcashequivalentsandother(30)(7)(4)Financeincome(34)(12)(8)Financecostslessincome305289317OtherfinancialexpensePremiumpaidonearlydebtredemption-18-Unwindingofdiscountelementofprovisionsforliabilities(note27)212430Unwindingofdiscountapplicabletodeferredandcontingentacquisitionconsideration(note20)15724Pension-relatedfinancecost(net)(note29)101112Total466066Totalnetfinancecosts351349383(i)TheGroupusesinterestrateswapstoconvertfixedratedebttofloatingrate.Fixedratedebt,whichhasbeenconvertedtofloatingratethroughtheuseofinterestrateswaps,isstatedintheConsolidatedBalanceSheetatadjustedvaluetoreflectmovementsinunderlyingfixedrates.Themovementonthisadjustment,togetherwiththeoffsettingmovementinthefairvalueoftherelatedinterestrateswaps,isincludedinfinancecostsineachreportingperiod.153OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201811.ShareofEquityAccountedInvestments’ProfitTheGroup’sshareofjointventures’andassociates’profitaftertaxisequityaccountedandispresentedasasinglelineitemintheConsolidatedIncomeStatement;itisanalysedasfollowsbetweentheprincipalConsolidatedIncomeStatementcaptions:JointVenturesAssociatesTotal2018€m2017€m2016€m2018€m2017€m2016€m2018€m2017€m2016€mGroupshareof:Revenue6725824809038167691,5751,3981,249EBITDA(asdefined)*577785817752138154137Depreciationandamortisation(23)(28)(26)(41)(39)(40)(64)(67)(66)Operatingprofit344959403812748771Profitondisposals---3--3--Profitbeforefinancecosts344959433812778771Financecosts(net)1(1)(4)(9)(10)(15)(8)(11)(19)Profit/(loss)beforetax3548553428(3)697652Incometaxexpense(2)(5)(4)(7)(6)(6)(9)(11)(10)Profit/(loss)aftertax3343512722(9)606542Ananalysisoftheprofitaftertaxbyoperatingsegmentispresentedinnote2.Theaggregatedbalancesheetdata(analysedbetweencurrentandnon-currentassetsandliabilities)inrespectoftheGroup’sinvestmentinjointventuresandassociatesispresentedinnote17.12.IncomeTaxExpenseContinuingoperationsRecognisedwithintheConsolidatedIncomeStatement2018€m2017€m2016€m(a)CurrenttaxRepublicofIreland1095Overseas313312443Totalcurrenttaxexpense323321448(b)DeferredtaxOriginationandreversaloftemporarydifferences:Retirementbenefitobligations3168Share-basedpaymentexpense4(4)(11)Derivativefinancialinstruments(1)21Otheritems(2017includesdeferredtaxcreditassociatedwiththe“TaxCutsandJobsAct”)97(280)(15)Totaldeferredtaxexpense/(income)103(266)(17)IncometaxreportedintheConsolidatedIncomeStatement42655431154*EBITDAisdefinedasearningsbeforeinterest,taxes,depreciation,amortisation,assetimpairmentchargesandprofitondisposals.CRHAnnualReportandForm20-F|201812.IncomeTaxExpense-continued2018€m2017€m2016€mRecognisedoutsidetheConsolidatedIncomeStatement(a)WithintheConsolidatedStatementofComprehensiveIncome:Deferredtax-retirementbenefitobligations(1)(33)3Deferredtax-cashflowhedges5--4(33)3(b)WithintheConsolidatedStatementofChangesinEquity:CurrenttaxCurrenttax-shareoptionexercises22-DeferredtaxDeferredtax-share-basedpaymentexpense(4)(7)12(2)(5)12IncometaxrecognisedoutsidetheConsolidatedIncomeStatement2(38)15ReconciliationofapplicabletaxratetoeffectivetaxrateProfitbeforetax(€m)1,8621,8671,620Taxchargeexpressedasapercentageofprofitbeforetax(effectivetaxrate):-currenttaxexpenseonly17.3%17.2%27.7%-totalincometaxexpense(currentanddeferred)22.9%2.9%26.6%ThefollowingtablereconcilestheapplicableRepublicofIrelandstatutorytaxratetotheeffectivetaxrate(currentanddeferred)oftheGroup:%ofprofitbeforetaxIrishcorporationtaxrate12.512.512.5Highertaxratesonoverseasearnings11.715.915.1Deferredtaxcreditrelatingtotheenactmentofthe“TaxCutsandJobsAct”-(23.6)-Otheritems(primarilycomprisingitemsnotchargeabletotax/expensesnotdeductiblefortax)(1.3)(1.9)(1.0)Totaleffectivetaxrate22.92.926.6OtherdisclosuresEffectivetaxrateThe2018effectivetaxrateis22.9%(2017:2.9%).The2017reportedtaxchargeincludedanon-cashdeferredtaxcreditof€440millionrelatedtotheenactmentofthe“TaxCutsandJobsAct”intheUS.The2017effectivetaxrateexcludingtheimpactofthisexceptionaldeferredtaxcreditwas26.5%.Thetaxchargeassociatedwithdiscontinuedoperationsisrecognisedseparatelyin“Profitaftertaxforthefinancialyearfromdiscontinuedoperations”.Seenote3forfurtherdetails.ChangesintaxratesThetotaltaxchargeinfutureperiodswillbeaffectedbyanychangestothetaxratesinforceinthecountriesinwhichtheGroupoperates.ExcessofcapitalallowancesoverdepreciationThecurrenttaxchargewillalsobeimpactedbychangesintheexcessoftaxdepreciation(capitalallowances)overaccountingdepreciation.Basedoncurrentcapitalinvestmentplans,theGroupexpectstocontinuetobeinapositiontoclaimcapitalallowancesinexcessofdepreciationinfutureyears.InvestmentsinsubsidiariesGivenmanagement’sintentionnottounwindtemporarydifferencesinrespectofitsinvestmentinsubsidiariesortaxexemptionsandcreditsbeingavailableinthemajorityofjurisdictionsinwhichtheGroupoperates,theaggregateamountofdeferredtaxliabilitiesontemporarydifferenceswhichhavenotbeenrecognisedwouldbeimmaterial.ProposeddividendsTherearenoincometaxconsequencesfortheCompanyinrespectofdividendsproposedpriortoissuanceoftheConsolidatedFinancialStatementsandforwhichaliabilityhasnotbeenrecognised.155OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201813.DividendsThedividendspaidandproposedinrespectofeachclassofsharecapitalareasfollows:2018€m2017€m2016€mDividendstoshareholdersPreference5%CumulativePreferenceShares€3,175(2017:€3,175;2016:€3,175)---7%‘A’CumulativePreferenceShares€77,521(2017:€77,521;2016:€77,521)---EquityFinal-paid48.80cperOrdinaryShare(2017:46.20c;2016:44.00c)409386363Interim-paid19.60cperOrdinaryShare(2017:19.20c;2016:18.80c)163160156Total572546519ReconciliationtoConsolidatedStatementofCashFlowsDividendstoshareholders572546519Less:issueofscripsharesinlieuofcashdividends(note31)(51)(77)(167)DividendspaidtoequityholdersoftheCompany521469352Dividendspaidbysubsidiariestonon-controllinginterests1288Totaldividendspaid533477360Dividendsproposed(memorandumdisclosure)EquityFinal2018-proposed52.40cperOrdinaryShare(2017:48.80c;2016:46.20c)425409385156CRHAnnualReportandForm20-F|201814.EarningsperOrdinaryShareThecomputationofbasicanddilutedearningsperOrdinaryShareissetoutbelow:2018€m2017€m2016€mNumeratorcomputationsGroupprofitforthefinancialyear2,5211,9191,270Profitattributabletonon-controllinginterests(4)(24)(27)ProfitattributabletoequityholdersoftheCompany2,5171,8951,243Preferencedividends---ProfitattributabletoordinaryequityholdersoftheCompany-numeratorforbasic/dilutedearningsperOrdinaryShare2,5171,8951,243Profitaftertaxforthefinancialyearfromdiscontinuedoperations1,08510781ProfitattributabletoordinaryequityholdersoftheCompany-numeratorforbasic/dilutedearningsperOrdinarySharefromcontinuingoperations1,4321,7881,162DenominatorcomputationsWeightedaveragenumberofOrdinaryShares(millions)outstandingfortheyear(i)832.4835.6827.8EffectofdilutivepotentialOrdinaryShares(employeeshareoptions)(millions)(i)and(ii)4.25.26.1DenominatorfordilutedearningsperOrdinaryShare836.6840.8833.9BasicearningsperOrdinaryShare302.4c226.8c150.2cDilutedearningsperOrdinaryShare300.9c225.4c149.1cBasicearningsperOrdinarySharefromcontinuingoperations172.0c214.0c140.4cDilutedearningsperOrdinarySharefromcontinuingoperations171.2c212.7c139.4c(i)TheweightedaveragenumberofOrdinarySharesincludedinthecomputationofbasicanddilutedearningsperOrdinarySharehasbeenadjustedtoexcludesharesheldbytheEmployeeBenefitTrustandOrdinarySharesrepurchasedandheldbytheCompany(CRHplc)asTreasurySharesgiventhatthesesharesdonotrankfordividend.ThenumberofOrdinarySharessoheldatthebalancesheetdateisdetailedinnote31.(ii)ContingentlyissuableOrdinaryShares(totalling7,274,916at31December2018,5,710,247at31December2017and3,095,404at31December2016)areexcludedfromthecomputationofdilutedearningsperOrdinarySharewheretheconditionsgoverningexercisabilityhavenotbeensatisfiedasattheendofthereportingperiodortheyareantidilutivefortheperiodspresented.157OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201815.Property,PlantandEquipmentLandandbuildings(i)€mPlantandmachinery€mAssetsincourseofconstruction€mTotal€mAt31December2018Cost/deemedcost9,33515,53562925,499Accumulateddepreciation(andimpairmentcharges)(2,363)(7,339)(36)(9,738)Netcarryingamount6,9728,19659315,761At1January2018,netcarryingamount6,2246,31955113,094Reclassifiedfromheldforsale(ii)22793104Translationadjustment1391128259Reclassifications71386(457)-Additionsatcost745415061,121Arisingonacquisition(note32)8321,759232,614Disposalsatnetcarryingamount(158)(161)(5)(324)Depreciationchargeforyear(iii)(232)(839)-(1,071)Impairmentchargeforyear(iv)--(36)(36)At31December2018,netcarryingamount6,9728,19659315,761Theequivalentdisclosurefortheprioryearisasfollows:At31December2017Cost/deemedcost8,47213,15755122,180Accumulateddepreciation(andimpairmentcharges)(2,248)(6,838)-(9,086)Netcarryingamount6,2246,31955113,094At1January2017,netcarryingamount6,1576,03549812,690Translationadjustment(483)(460)(33)(976)Reclassifications60348(408)-Additionsatcost874814761,044Arisingonacquisition(note32)703812211,536Disposalsatnetcarryingamount(53)(37)-(90)Depreciationchargeforyear(iii)(225)(781)-(1,006)Reclassifiedasheldforsale(22)(79)(3)(104)At31December2017,netcarryingamount6,2246,31955113,094At1January2017Cost/deemedcost8,43813,18249822,118Accumulateddepreciation(andimpairmentcharges)(2,281)(7,147)-(9,428)Netcarryingamount6,1576,03549812,690(i)Thecarryingvalueofmineral-bearinglandincludedinthelandandbuildingscategoryaboveamountedto€3,112millionatthebalancesheetdate(2017:€2,831million).(ii)Reflectsamountsat1January2018relatingtoassetsheldforsaleat31December2017whichweresubsequentlydivestedin2018.Refertonote3forfurtherdetails.(iii)Thedepreciationchargefortheyearincludes€nilmillion(2017:€16million;2016:€22million)relatingtodiscontinuedoperations.(iv)Theimpairmentchargeof€36million(2017:€nilmillion;2016:€nilmillion)relatestothewrite-downofidleproperty,plantandequipmentinEuropeHeavysideto€nilmillion.Futurepurchasecommitmentsforproperty,plantandequipment2018€m2017€mContractedforbutnotprovidedinthefinancialstatements449346AuthorisedbytheDirectorsbutnotcontractedfor366491158CRHAnnualReportandForm20-F|201816.IntangibleAssetsOtherintangibleassetsGoodwill€mMarketing-related€mCustomer-related(i)€mContract-based€mTotal€mAt31December2018Cost/deemedcost8,400138592799,209Accumulatedamortisation(andimpairmentcharges)(284)(62)(375)(55)(776)Netcarryingamount8,11676217248,433At1January2018,netcarryingamount6,90575204307,214Reclassifiedfromheldforsale(ii)363-81372Translationadjustment137381149Reclassifications--(2)2-Arisingonacquisition(note32)1,50465111,562Disposals(773)-(9)(1)(783)Amortisationchargeforyear(iii)-(8)(43)(10)(61)Impairmentchargeforyear(iv)(20)---(20)At31December2018,netcarryingamount8,11676217248,433Theequivalentdisclosurefortheprioryearisasfollows:At31December2017Cost/deemedcost7,198129535807,942Accumulatedamortisation(andimpairmentcharges)(293)(54)(331)(50)(728)Netcarryingamount6,90575204307,214At1January2017,netcarryingamount7,39689229477,761Translationadjustment(593)(10)(22)(4)(629)Arisingonacquisition(note32)4874511543Disposals(22)-(1)-(23)Amortisationchargeforyear(iii)-(8)(45)(13)(66)Reclassifiedasheldforsale(363)-(8)(1)(372)At31December2017,netcarryingamount6,90575204307,214At1January2017Cost/deemedcost7,701142659878,589Accumulatedamortisation(andimpairmentcharges)(305)(53)(430)(40)(828)Netcarryingamount7,39689229477,761(i)Thecustomer-relatedintangibleassetsrelatepredominantlytonon-contractualcustomerrelationships.(ii)Reflectsamountsat1January2018relatingtoassetsheldforsaleat31December2017whichweresubsequentlydivestedin2018.Refertonote3forfurtherdetails.(iii)Theamortisationchargefortheyearincludes€nilmillion(2017:€5million;2016:€9million)inrespectofdiscontinuedoperations,whichprimarilyrelatestocustomer-relatedintangibleassets.(iv)InJuly2018,theGroupdivestedofitsDIYbusinessintheNetherlandsandBelgium,togetherwithcertainrelatedpropertyassets,whichformedpartoftheEuropeDistributionsegmentfortotalconsiderationof€0.5billion.Thedecisiontodivestresultedintherecognitionofanimpairmentchargeof€20million.Therecoverableamount,atthedateofimpairment,wasbasedonfairvaluelesscostsofdisposal.ThefairvaluewasdeterminedusingLevel2inputsinaccordancewiththefairvaluehierarchy,asamarketpricewasagreedandpaid.159OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201816.IntangibleAssets-continuedAnnualgoodwilltestingThenetbookvalueofgoodwillcapitalisedunderpreviousGAAP(IrishGAAP)asatthetransitiondatetoIFRS(1January2004)hasbeentreatedasdeemedcost.Goodwillarisingonacquisitionsincethatdateiscapitalisedatcost.Cash-generatingunitsGoodwillacquiredthroughbusinesscombinationactivityhasbeenallocatedtocash-generatingunits(CGUs)thatareexpectedtobenefitfromsynergiesinthatcombination.TheCGUsrepresentthelowestlevelwithintheGroupatwhichtheassociatedgoodwillismonitoredforinternalmanagementpurposes,andarenotlargerthantheoperatingsegmentsdeterminedinaccordancewithIFRS8.Atotalof26(2017:25)CGUshavebeenidentifiedandtheseareanalysedbetweenthesixbusinesssegmentsandAmericasDistributionbelow.AllbusinesseswithinthevariousCGUsexhibitsimilarand/orconsistentprofitmarginandassetintensitycharacteristics.Assets,liabilities,deferredtaxandgoodwillhavebeenassignedtotheCGUsonareasonableandconsistentbasis.Cash-generatingunitsGoodwill201820172018€m2017€mEuropeHeavyside15141,8211,770EuropeLightside11367365EuropeDistribution11373671Europe17162,5612,806AmericasMaterials763,4412,082AmericasProducts111,6551,555AmericasDistribution-1--Americas885,0963,637Asia11459462TotalGroup26258,1166,905ImpairmenttestingmethodologyandresultsGoodwillissubjecttoimpairmenttestingonanannualbasis.Therecoverableamountof26CGUsisdeterminedbasedonavalue-in-usecomputation,usingLevel3inputsinaccordancewiththefairvaluehierarchy.Thecashflowforecastsareprimarilybasedonafive-yearstrategicplandocumentformallyapprovedbytheBoardofDirectorsandspecificallyexcludetheimpactoffuturedevelopmentactivity.Thesecashflowsareprojectedforwardforanadditionalfiveyearstodeterminethebasisforanannuity-basedterminalvalue,calculatedonthesamebasisastheGroup’sacquisitionmodellingmethodology.Asinprioryears,theterminalvalueisbasedona20-yearannuity,withtheexceptionofcertainlong-livedcementassets,whereanassumptionofa30-yearannuityhasbeenused.Projectedcashflowsbeyondtheinitialevaluationperiodhavebeenextrapolatedusingrealgrowthratesrangingfrom0.7%to1.9%inEurope,1.2%to1.9%intheAmericasand4.1%inAsia.Suchrealgrowthratesdonotexceedthelong-termaveragegrowthratesforthecountriesinwhicheachCGUoperates.Thevalue-in-userepresentsthepresentvalueofthefuturecashflows,includingtheterminalvalue,discountedatarateappropriatetoeachCGU.Therealpre-taxdiscountratesusedrangefrom7.0%to9.2%(2017:7.0%to10.3%);theseratesareinlinewiththeGroup’sestimatedweightedaveragecostofcapital,arrivedatusingtheCapitalAssetPricingModel.OtherthantheimpairmentrecognisedinourDIYbusiness,the2018annualgoodwillimpairmenttestingprocessresultedinnofurtherintangibleassetimpairments(2017:€nilmillion).KeysourcesofestimationuncertaintyThecashflowshavebeenarrivedattakingaccountoftheGroup’sstrongfinancialposition,itsestablishedhistoryofearningsandcashflowgenerationandthenatureofthebuildingmaterialsindustry,whereproductobsolescenceisverylow.However,expectedfuturecashflowsareinherentlyuncertainandarethereforeliabletomaterialchangeovertime.ThekeyassumptionsemployedinarrivingattheestimatesoffuturecashflowsfactoredintoimpairmenttestingaresubjectiveandincludeprojectedEBITDA(asdefined)*margins,netcashflows,discountratesusedandthedurationofthediscountedcashflowmodel.Significantunder-performanceinanyofCRH’smajorCGUsmaygiverisetoamaterialwrite-downofgoodwillwhichwouldhaveasubstantialimpactontheGroup’sincomeandequity,howevergiventheexcessheadroomonthemodelsthelikelihoodofthishappeningisnotconsideredarealisticpossibility.160*EBITDAisdefinedasearningsbeforeinterest,taxes,depreciation,amortisation,assetimpairmentcharges,profitondisposalsandtheGroup’sshareofequityaccountedinvestments’profitaftertax.CRHAnnualReportandForm20-F|2018SignificantgoodwillamountsThegoodwillallocatedtotheUSCement(AmericasMaterialssegment)andtheAmericasBuildingProducts(AmericasProductssegment)CGUsaccountforbetween17%and20%ofthetotalcarryingamountshownonpage159.ThegoodwillallocatedtoeachoftheremainingCGUsislessthan10%ofthetotalcarryingvalueinallothercases.TheadditionaldisclosuresrequiredforthetwoCGUswithsignificantgoodwillareasfollows:UnitedStatesCementAmericasBuildingProducts201820182017Goodwillallocatedtothecash-generatingunitatbalancesheetdate€1,412m€1,655m€1,555mDiscountrateappliedtothecashflowprojections(realpre-tax)8.2%9.1%10.3%AverageEBITDA(asdefined)*marginovertheinitial5-yearperiod37.9%15.3%15.1%Value-in-use(presentvalueoffuturecashflows)€5,579m€6,753m€5,628mExcessofvalue-in-useovercarryingamount€2,594m€3,412m€2,152mThekeyassumptionsandmethodologyusedinrespectofthesetwoCGUsareconsistentwiththosedescribedabove.ThevaluesappliedtoeachofthekeyestimatesandassumptionsarespecifictotheindividualCGUsandwerederivedfromacombinationofinternalandexternalfactorsbasedonhistoricalexperienceandtookintoaccountthecashflowsspecificallyassociatedwiththesebusinesses.Thecashflowsandannuity-basedterminalvaluewereprojectedinlinewiththemethodologydisclosedabove.TheUSCementandAmericasBuildingProductsCGUsarenotincludedintheCGUsreferredtointhe‘Sensitivityanalysis’sectionbelow.Giventhemagnitudeoftheexcessofvalue-in-useovercarryingamount,andourbeliefthatthekeyassumptionsarereasonable,managementbelievesthatitisnotreasonablypossiblethattherewouldbeachangeinthekeyassumptionssuchthatthecarryingamountwouldexceedthevalue-in-use.Consequentlynofurtherdisclosuresrelatingtosensitivityofthevalue-in-usecomputationsfortheUSCementorAmericasBuildingProductsCGUsareconsideredtobewarranted.SensitivityanalysisSensitivityanalysishasbeenperformedandresultsinadditionaldisclosuresinrespectoftwoofthetotal26CGUs.Thekeyassumptions,methodologyusedandvaluesappliedtoeachofthekeyassumptionsforthetwoCGUsareinlinewiththoseoutlinedabove(a30-yearannuityperiodhasbeenused).ThetwoCGUshadaggregategoodwillof€630millionatthedateoftesting.ThetablebelowidentifiestheamountsbywhicheachofthefollowingassumptionsmayeitherdeclineorincreasetoarriveatazeroexcessofthepresentvalueoffuturecashflowsoverthebookvalueofnetassetsinthetwoCGUsselectedforsensitivityanalysisdisclosures:Twocash-generatingunitsReductioninEBITDA(asdefined)*margin2.2to3.1percentagepointsReductioninprofitbeforetax16.2%to22.3%Reductioninnetcashflow13.6%to19.6%Increaseinpre-taxdiscountrate1.1to2.0percentagepointsTheaverageEBITDA(asdefined)*marginfortheaggregateofthesetwoCGUsovertheinitialfive-yearperiodwas18.1%.Thevalue-in-use(beingthepresentvalueofthefuturenetcashflows)was€1,609millionandthecarryingamountwas€1,349million,resultinginanexcessofvalue-in-useovercarryingamountof€260million.*EBITDAisdefinedasearningsbeforeinterest,taxes,depreciation,amortisation,assetimpairmentcharges,profitondisposalsandtheGroup’sshareofequityaccountedinvestments’profitaftertax.161OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201817.FinancialAssetsInvestmentsaccountedforusingtheequitymethod(i.e.jointventuresandassociates)Shareofnetassets€mLoans€mTotal€mOther€mAt1January20181,1231251,24825Translationadjustment(18)(3)(21)-Investmentsandadvances112-Investmentandloantoassociateinlieuofcashproceeds355085-Jointventuresbecomingsubsidiaries(note32)(13)(107)(120)-Disposalsandrepayments(39)(5)(44)(2)Arisingonacquisition(note32)1-1-Shareofprofitaftertax60-60-Dividendsreceived(48)-(48)-At31December20181,102611,16323Theequivalentdisclosurefortheprioryearisasfollows:At1January20171,1521471,29926Translationadjustment(67)(16)(83)(1)Investmentsandadvances5611-Disposalsandrepayments(1)(12)(13)-Shareofprofitaftertax65-65-Dividendsreceived(31)-(31)-At31December20171,1231251,24825SummarisedfinancialinformationfortheGroup’sinvestmentinjointventuresandassociateswhichareaccountedforusingtheequitymethodisasfollows:JointVenturesAssociatesTotal2018€m2017€m2018€m2017€m2018€m2017€mNon-currentassets7117527757541,4861,506Currentassets220209468492688701Non-currentliabilities(331)(348)(115)(73)(446)(421)Currentliabilities(140)(115)(486)(548)(626)(663)Netassets4604986426251,1021,123Alistingoftheprincipalequityaccountedinvestmentsiscontainedonpage257.TheGroupholdsa21.13%stake(2017:21.13%)inSamseS.A.,apublicly-listeddistributorinFrancewhichisaccountedforasanassociateinvestmentabove.Thefairvalueofthisinvestmentatthebalancesheetdate,calculatedbasedonthenumberofsharesheldmultipliedbytheclosingsharepriceat31December2018(Level1inputinthefairvaluehierarchy),was€96million(2017:€125million).162CRHAnnualReportandForm20-F|201818.Inventories2018€m2017€mRawmaterials1,149885Work-in-progress(i)10992Finishedgoods1,8031,738Totalinventoriesatthelowerofcostandnetrealisablevalue3,0612,715(i)Work-in-progressincludes€3million(2017:€2million)inrespectofthecumulativecostsincurred,netofamountstransferredtocostofsalesunderpercentage-of-completionaccounting,forconstructioncontractsinprogressatthebalancesheetdate.AnanalysisoftheGroup’scostofsalesexpenseisprovidedinnote4tothefinancialstatements.Write-downsofinventoriesrecognisedasanexpensewithincostofsalesamountedto€23million(2017:€31million;2016:€17million).19.TradeandOtherReceivables2018€m2017€mCurrentTradereceivables2,7612,456Amountsreceivableinrespectofconstructioncontracts(i)878773Totaltradereceivables,gross3,6393,229Lossallowance(133)(131)Totaltradereceivables,net3,5063,098Amountsreceivablefromequityaccountedinvestments98Prepaymentsandotherreceivables559524Total4,0743,630Non-currentOtherreceivables181156Tradeandotherreceivablesaremeasuredatamortisedcost(lessanylossallowance)astheGroup’sbusinessmodelisto“holdtocollect”contractualcashflows,andthecashflowsarisingfromtradeandotherreceivablesaresolelypaymentsofprincipalandinterest.(i)Includesunbilledrevenueandretentionsheldbycustomersinrespectofconstructioncontractsatthebalancesheetdateamountingto€245millionand€168millionrespectively(2017:€176millionand€154millionrespectively).163OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201819.TradeandOtherReceivables-continuedValuationandqualifyingaccounts(lossallowance)Themovementsinthelossallowanceforreceivablesduringthefinancialyearwereasfollows:2018€m2017€m2016€mAt1January131152161Reclassifiedfrom*/(as)heldforsale6(6)-Translationadjustment-(7)(1)Providedduringyear353243Disposedofduringyear(3)-(1)Writtenoffduringyear(30)(36)(43)Arisingonacquisition(note32)632Recoveredduringyear(12)(7)(9)At31December133131152GiventhecommonprofileofCRH’scustomers,howcustomercreditriskismanagedatappropriategrouplocations,andthebreadthandscaleofitsinternationaloperations,adisclosureofconcentrationsofcreditriskbygeographiclocationbestenablesusersoffinancialstatementstoassessCRH’screditriskexposure.Thefollowingtablesetsoutthegrosscarryingvalueoftradereceivablesandlossallowancebysegment:GrosscarryingvalueoftradereceivablesLossallowance2018€m2017€m2016€m2018€m2017€m2016€mEuropeHeavyside1,1441,0841,109616768EuropeLightside1741841768910EuropeDistribution409391374272526Europe1,7271,6591,65996101104AmericasMaterials1,3221,0541,004191721AmericasProducts566495573151013AmericasDistribution--303--10Americas1,8881,5491,880342744Asia242126334TotalGroup3,6393,2293,565133131152164*Reflectsamountsat1January2018relatingtoassetsheldforsaleat31December2017whichweresubsequentlydivestedin2018.Refertonote3forfurtherdetails.CRHAnnualReportandForm20-F|2018Customercreditriskismanagedaccordingtoestablishedpolicies,proceduresandcontrols.Customercreditqualityisassessedinlinewithstrictcreditratingcriteriaandcreditlimitsareestablishedwhereappropriate.Outstandingcustomerbalancesareregularlymonitoredandareviewforindicatorsofimpairment(evidenceoffinancialdifficultyofthecustomer,paymentdefault,breachofcontractetc.)iscarriedoutateachreportingdate.Significantbalancesarereviewedindividuallywhilesmallerbalancesaregroupedandassessedcollectively.Receivablesbalancesareingeneralunsecuredandnon-interest-bearing.ThetradereceivablesbalancesdisclosedabovecomprisealargenumberofcustomersspreadacrosstheGroup’sactivitiesandgeographieswithbalancesclassifiedas“neitherpastduenorimpaired”representing64%ofthetotaltradereceivablesbalanceatthebalancesheetdate(2017:64%).TherehavebeennosignificantchangestotheGroup’screditriskparametersortothecompositionoftheGroup’stradereceivablesportfolioduringthefinancialyear.TheGroupappliesthesimplifiedapproachtoprovidingforexpectedcreditlosses(ECL)permittedbyIFRS9FinancialInstruments,whichrequiresexpectedlifetimelossestoberecognisedfrominitialrecognitionofthereceivables.ReceivablessuchasthosewhichrelatetobondedgovernmentcontractsandreceivableswhichfallundercreditinsuranceareconsideredlowriskandwouldnotattractamaterialECL.Giventhepositiveeconomicoutlook(e.g.forecastGrossDomesticProduct)forthenext12monthsinthemajorityoftheeconomiesinwhichweoperateweconsiderthatourECLadequatelyrepresentstheriskofdefaultonourreceivablebalances.Tradereceivablesarewritten-offwhenthereisnoreasonableexpectationofrecovery,suchasadebtorfailingtoengageinarepaymentplanwiththecompany.Whererecoveriesaremade,thesearerecognisedintheConsolidatedIncomeStatement.AgedanalysisTheagedanalysisoftradereceivablesandamountsreceivableinrespectofconstructioncontractsatthebalancesheetdatewasasfollows:2018€m2017€mNeitherpastduenorimpaired2,3192,070Pastduebutnotimpaired:-lessthan60days922832-60daysorgreaterbutlessthan120days169129-120daysorgreater9667Impaired(partialorfullprovision)133131Total3,6393,229Tradereceivablesandamountsreceivableinrespectofconstructioncontractsareingeneralreceivablewithin90daysofthebalancesheetdate.165OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201820.TradeandOtherPayables2018€m2017€mCurrentTradepayables2,4532,304Constructioncontract-relatedpayables(i)218217Deferredandcontingentacquisitionconsideration(ii)48167Accrualsandotherpayables1,8871,802Amountspayabletoequityaccountedinvestments344Total4,6094,534Non-currentOtherpayables181128Deferredandcontingentacquisitionconsideration(ii)29198Total472226(i)Constructioncontract-relatedpayablesincludebillingsinexcessofrevenue,togetherwithadvancesreceivedfromcustomersinrespectofworktobeperformedunderconstructioncontractsandforeseeablelossesthereon.€192millionwasrecognisedintheConsolidatedIncomeStatementduring2018whichwasincludedinthecontract-relatedpayablesbalanceintheprioryear.Otherthandeferredandcontingentconsideration,thecarryingamountsoftradeandotherpayablesapproximatetheirfairvaluelargelyduetotheshort-termmaturitiesandnatureoftheseinstruments.(ii)Thefairvalueoftotalcontingentconsiderationis€220million(2017:€118million),(Level3inputinthefairvaluehierarchy)anddeferredconsiderationis€119million(2017:€147million).Onanundiscountedbasis,thecorrespondingfuturepaymentsrelatingtocontingentconsideration,forwhichtheGroupmaybeliable,rangesfrom€263millionto€396million.Thisisbasedonarangeofestimatedpotentialoutcomesoftheexpectedpaymentamounts.Themovementindeferredandcontingentconsiderationduringthefinancialyearwasasfollows:2018€m2017€mAt1January265301Reclassifiedfrom*/(as)heldforsale2(2)Translationadjustment19(36)Arisingonacquisitionsandinvestmentsduringyear(note32)10345Changesinestimate(8)3Disposals(2)-Paidduringyear(55)(53)Discountunwinding157At31December339265166*Reflectsamountsat1January2018relatingtoliabilitiesheldforsaleat31December2017whichweresubsequentlydivestedin2018.Refertonote3forfurtherdetails.CRHAnnualReportandForm20-F|201821.MovementinWorkingCapitalandProvisionsforLiabilitiesInventories€mTradeandotherreceivables€mTradeandotherpayables€mProvisionsforliabilities€mTotal€mAt1January20182,7153,786(4,760)(1,064)677Reclassifiedfromheldforsale(i)266334(306)-294Translationadjustment5257(71)(10)28Arisingonacquisition(note32)255318(224)(84)265Disposals(405)(390)2933(499)Deferredandcontingentacquisitionconsideration:-arisingonacquisitionsduringyear(note32)--(103)-(103)-paidduringyear--55-55Deferredproceedsarisingondisposalsduringyear-10--10Interestaccrualsanddiscountunwinding--(21)(21)(42)Increaseinworkingcapitalandprovisionsforliabilities1781405689463At31December20183,0614,255(5,081)(1,087)1,148Theequivalentdisclosurefortheprioryearsisasfollows:At1January20172,9394,191(5,276)(1,060)794Translationadjustment(218)(286)34872(84)Arisingonacquisition(note32)114129(149)(49)45Disposals(34)(16)201(29)Deferredandcontingentacquisitionconsideration:-arisingonacquisitionsduringyear(note32)--(45)-(45)-paidduringyear--53-53Deferredproceedsarisingondisposalsduringyear-3--3Interestaccrualsanddiscountunwinding-1-(24)(23)Reclassification(3)(14)65-48Increase/(decrease)inworkingcapitalandprovisionsforliabilities183112(82)(4)209Reclassifiedasheldforsale(266)(334)306-(294)At31December20172,7153,786(4,760)(1,064)677At1January20162,8734,126(5,171)(1,035)793Translationadjustment20(12)262660Arisingonacquisition(note32)928(14)1841Disposals(18)(15)81(24)Deferredandcontingentacquisitionconsideration:-arisingonacquisitionsduringyear(note32)--(22)-(22)-paidduringyear--57-57Deferredproceedsarisingondisposalsduringyear-7--7Interestaccrualsanddiscountunwinding--(24)(30)(54)Transfertoproperty,plantandequipment-(8)--(8)Increase/(decrease)inworkingcapitalandprovisionsforliabilities5565(136)(40)(56)At31December20162,9394,191(5,276)(1,060)794(i)Reflectsamountsat1January2018relatingtoassets/(liabilities)heldforsaleat31December2017whichweresubsequentlydivestedin2018.Refertonote3forfurtherdetails.167OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201822.AnalysisofNetDebtComponentsofnetdebtNetdebtisanon-GAAPmeasurewhichweprovidetoinvestorsaswebelievetheyfindituseful.Netdebtcomprisescashandcashequivalents,derivativefinancialinstrumentassetsandliabilitiesandinterest-bearingloansandborrowingsandenablesinvestorstoseetheeconomiceffectsoftheseintotal(seenote23fordetailsofthecapitalandriskmanagementpoliciesemployedbytheGroup).NetdebtiscommonlyusedincomputationssuchasNetDebtasa%oftotalequityandNetDebtasa%ofmarketcapitalisation.Asat31December2018Asat31December2017Fairvalue(i)€mBookvalue€mFairvalue(i)€mBookvalue€mCashandcashequivalents(note24)2,3462,3462,1352,135Interest-bearingloansandborrowings(note25)(9,223)(9,316)(8,421)(7,981)Derivativefinancialinstruments(net)(note26)(14)(14)5050Groupnetdebt(6,891)(6,984)(6,236)(5,796)(i)Allinterest-bearingloansandborrowingsareLevel2fairvaluemeasurements.Reconciliationofopeningtoclosingnetdebt2018€m2017€m2016€mAt1January(5,796)(5,297)(6,618)Debtinacquiredcompanies(note32)(74)(12)(3)Increaseininterest-bearingloans,borrowingsandfinanceleases(1,434)(1,010)(600)Netcashflowarisingfromderivativefinancialinstruments(6)(169)5Repaymentofinterest-bearingloans,borrowingsandfinanceleases2463432,015Increase/(decrease)incashandcashequivalents194(153)(127)Mark-to-marketadjustment2921Translationadjustment(116)49310At31December(6,984)(5,796)(5,297)Thefollowingtableshowstheeffectiveinterestratesonperiod-endfixed,grossandnetdebt:Asat31December2018Asat31December2017€mInterestrateWeightedaveragefixedperiodYears€mInterestrateWeightedaveragefixedperiodYearsInterest-bearingloansandborrowingsnominal-fixedrate(i)(9,107)(7,844)Derivativefinancialinstruments-fixedrate1,7261,505Netfixedratedebtincludingderivatives(7,381)3.5%9.8(6,339)3.3%9.2Interest-bearingloansandborrowingsnominal-floatingrate(ii)(157)(70)Adjustmentofdebtfromnominaltobookvalue(i)(52)(67)Derivativefinancialinstruments-currencyfloatingrate(1,740)(1,455)Grossdebtincludingderivativefinancialinstruments(9,330)3.6%(7,931)4.2%Cashandcashequivalents-floatingrate(note24)2,3462,135Groupnetdebt(6,984)(5,796)Cashatbankandinhandreclassifiedasheldforsale(note24)-(20)Bankoverdraftsreclassifiedasheldforsale(note25)-5Groupnetdebtexcludingnetdebtreclassifiedasheldforsale(6,984)(5,811)(i)OftheGroup’snominalfixedratedebtat31December2018,€1,726million(2017:€1,505million)ishedgedtofloatingrateusinginterestrateswaps.(ii)Floatingratedebtcomprisesbankborrowingsandfinanceleasesbearinginterestatratessetinadvanceforperiodsrangingfromovernighttolessthanoneyearlargelybyreferencetointer-bankinterestrates.168CRHAnnualReportandForm20-F|2018CurrencyprofileThecurrencyprofileoftheGroup’snetdebtandnetworth(capitalandreservesattributabletotheCompany’sequityholders)asat31December2018and31December2017isasfollows:euro€mUSDollar€mPoundSterling€mCanadianDollar€mPhilippinePeso€mPolishZloty€mSwissFranc€mOther(i)€mTotal€mCashandcashequivalents(note24)1,077646214691390811562,346Interest-bearingloansandborrowings(note25)(3,824)(4,332)(495)(2)(354)-(302)(7)(9,316)Derivativefinancialinstruments(net)(note26)1,826(399)(340)(440)(60)(198)(299)(104)(14)Netdebtbymajorcurrencyincludingderivativefinancialinstruments(921)(4,085)(621)(373)(401)(108)(520)45(6,984)Non-debtassetsandliabilitiesanalysedasfollows:Non-currentassets4,65013,0072,4611,3751,3522837411,76325,632Currentassets1,8843,2227464581171422972847,150Non-currentliabilities(669)(2,275)(276)(203)(137)(5)(164)(95)(3,824)Currentliabilities(1,696)(1,820)(836)(309)(156)(136)(182)(285)(5,420)Non-controllinginterests(51)(61)--(384)-(11)(18)(525)CapitalandreservesattributabletotheCompany’sequityholders3,1977,9881,4749483911761611,69416,029Theequivalentdisclosurefortheprioryearisasfollows:Cashandcashequivalents(note24)*7437142151404399611002,115Interest-bearingloansandborrowings(note25)*(3,827)(3,097)(465)(2)(293)-(281)(11)(7,976)Derivativefinancialinstruments(net)(note26)2,078(908)(157)(480)(17)(171)(247)(48)50Netdebt*bymajorcurrencyincludingderivativefinancialinstruments(1,006)(3,291)(407)(342)(267)(72)(467)41(5,811)Non-debtassetsandliabilities(includingcashandbankoverdraftsreclassifiedasheldforsale)analysedasfollows:Non-currentassets5,0308,8152,4001,4661,2923107151,80421,832Currentassets1,9353,7186924541101383022737,622Non-currentliabilities(713)(1,311)(295)(206)(153)(5)(181)(98)(2,962)Currentliabilities(1,745)(2,093)(806)(322)(137)(130)(186)(285)(5,704)Non-controllinginterests(49)(14)--(391)-(11)(21)(486)CapitalandreservesattributabletotheCompany’sequityholders3,4525,8241,5841,0504542411721,71414,491(i)TheprincipalcurrenciesincludedinthiscategoryaretheChineseRenminbi,theRomanianLeu,theIndianRupee,theUkrainianHryvniaandtheSerbianDinar.*Excluding€20millioncashand€5millionbankoverdraftsreclassifiedasheldforsalewhichareanalysedbymajorcurrencyincurrentassetsandliabilitiesabove.169OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201822.AnalysisofNetDebt-continuedLiquidityandcapitalresourcesThefollowingtableprovidescertaininformationrelatedtoourcashgenerationandchangesinourcashandcashequivalentsposition:2018€m2017€m2016€mNetcashinflowfromoperatingactivities1,8992,1892,340Netcashoutflowfrominvestingactivities(1,592)(2,685)(735)Netcash(outflow)/inflowfromfinancingactivities(113)343(1,732)Increase/(decrease)incashandcashequivalents194(153)(127)Cashandcashequivalentsatbeginningofyear,excludingoverdrafts(note24)2,1352,4492,518Effectofexchangeratechanges17(161)58Cashandcashequivalentsatendofyear,excludingoverdrafts(note24)2,3462,1352,449Bankoverdrafts(113)(71)(78)Borrowings(9,203)(7,910)(7,712)Derivativefinancialinstruments(14)5044Totalliabilitiesfromfinancingactivities(9,330)(7,931)(7,746)Netdebtatendofyear(6,984)(5,796)(5,297)Cashatbankandinhandreclassifiedasheldforsale(note24)-(20)-Bankoverdraftsreclassifiedasheldforsale(note25)-5-Groupnetdebtexcludingnetdebtreclassifiedasheldforsale(6,984)(5,811)(5,297)PartoftheGroup’sfinancingstrategyobjectivesincludemaintenanceofadequatefinancialresourcesandliquidity.During2018theGroup’stotalnetcashinflowfromoperatingactivitiesof€1.9billionlessnetcashoutflowfromfinancingactivitiesof€0.1billionfundedinvestingactivitiesof€1.6billion.TheGroupbelievesthatitsfinancialresources(operatingcashtogetherwithcashandcashequivalentsof€2.3billionandundrawncommittedloanfacilitiesof€3.6billion)willbesufficienttocovertheGroup’scashrequirements.At31December2018,euroandUSDollardenominatedcashandcashequivalentsrepresented46%(2017:35%)and27%(2017:34%)oftotalcashandcashequivalentsrespectively.170CRHAnnualReportandForm20-F|2018SignificantborrowingsThemainsourcesofGroupdebtfundingarepublicbondmarketsinEuropeandNorthAmerica.Thefollowingbondswereoutstandingasat31December2018:AnnualcouponsOutstandingmillionsFinalmaturityeurobonds5.000%€5002019eurobonds2.750%€7502020USDollarbonds5.750%US$4002021eurobonds1.750%€6002021SwissFrancbonds1.375%CHF3302022eurobonds3.125%€7502023eurobonds1.875%€6002024USDollarbonds3.875%US$1,2502025USDollarbonds3.400%US$6002027USDollarbonds3.950%US$9002028eurobonds1.375%€6002028PoundSterlingbonds4.125%£4002029USDollarbonds(i)6.400%US$2132033USDollarbonds5.125%US$5002045USDollarbonds4.400%US$4002047USDollarbonds4.500%US$6002048(i)TheUS$300millionbondwasissuedinSeptember2003,andattimeofissuancethebondwaspartiallyswappedtofloatinginterestrates.InAugust2009andDecember2010,US$87.445millionoftheissuednoteswereacquiredbyCRHplcaspartofliabilitymanagementexercisesundertakenandtheinterestratehedgewasclosedout.At31December2018,theremainingfairvalueonthehedgeditemontheConsolidatedBalanceSheetwasUS$45million(2017:US$48million).171OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201823.CapitalandFinancialRiskManagementCapitalmanagementOverallsummaryTheprimaryobjectivesofCRH’scapitalmanagementstrategyaretoensurethattheGroupmaintainsastrongcreditratingtosupportitsbusinessandtocreateshareholdervaluebymanagingthedebtandequitybalanceandthecostofcapital.TheGroupiscommittedtooptimisingtheuseofitsbalancesheetwithintheconfinesoftheoverallobjectivetomaintainaninvestmentgradecreditrating.ThecapitalstructureoftheGroup,whichcomprisesnetdebtandcapitalandreservesattributabletotheCompany’sequityholders,maybesummarisedasfollows:2018€m2017€mCapitalandreservesattributabletotheCompany’sequityholders16,02914,491Netdebt6,9845,796Capitalandnetdebt23,01320,287TheBoardperiodicallyreviewsthecapitalstructureoftheGroup,includingthecostofcapitalandtherisksassociatedwitheachclassofcapital.TheGroupmanagesand,ifnecessary,adjustsitscapitalstructuretakingaccountofunderlyingeconomicconditions;anymaterialadjustmentstotheGroup’scapitalstructureintermsoftherelativeproportionsofdebtandequityareapprovedbytheBoard.Inordertomaintainoradjustthecapitalstructure,theGroupmayissuenewshares,disposeofassets,amendinvestmentplans,alterdividendpolicyorreturncapitaltoshareholders.Dividendcoverfortheyearended31December2018amountedto4.20x(2017:3.34x).Nochangesweremadeintheobjectivesorpoliciesduring2018.Processesmaychangetoaccomodatetransactionssuchasasharebuybackprogramme.FinancialriskmanagementobjectivesandpoliciesTheGroupusesfinancialinstrumentsthroughoutitsbusinesses:interest-bearingloansandborrowings,cashandcashequivalentsandfinanceleasesareusedtofinancetheGroup’soperations;tradereceivablesandtradepayablesarisedirectlyfromoperations;andderivatives,principallyinterestrateandcurrencyswapsandforwardforeignexchangecontracts,areusedtomanageinterestraterisksandcurrencyexposuresandtoachievethedesiredprofileofborrowings.TheGroupdoesnottradeinfinancialinstrumentsnordoesitenterintoanyleveragedderivativetransactions.TheGroup’scorporatetreasuryfunctionprovidesservicestothebusinessunits,co-ordinatesaccesstodomesticandinternationalfinancialmarkets,andmonitorsandmanagesthefinancialrisksrelatingtotheoperationsoftheGroup.TheGroupTreasurerreportstotheGeneralManagerofFinanceandtheactivitiesofthecorporatetreasuryfunctionaresubjecttoregularinternalaudit.SystemsandprocessesareinplacetomonitorandcontroltheGroup’sliquidityrisks.TheGroup’snetdebtpositionformspartofthemonthlydocumentationpresentedtotheBoard.TheGroup’shedgingactivityisbasedonobservableeconomicrelationships,whenthereisconfidencethatsuchrelationshipswillcontinuefortheforseeablefuture.Matchingcriticaltermssuchasnotionalamount,tenure,timingandcurrency,theGroupestablishesrelationshipsbetweenahedgeitemandhedgeinstrumentwheredirectionalresponsetochangesinfairvalue,drivenbyunderlyingeconomicconditions,areopposingandproportionalinequalmeasurebeinganeconomicrelationshipunderIFRS9.Hedgingratiosofonetooneareusedthroughoutallhedgingactivityasthehedgeitemandhedgeinstrumentareofthesametypeandcurrency.Thehedgesemployedmitigateidentifiedrisksandhaveconsistentlydemonstratedcloseeconomicrelationships.IneffectivenessbetweenthehedgeitemandhedgeinstrumentareimmaterialintheoverallcontextoftheGroup.ThemainrisksattachingtotheGroup’sfinancialinstrumentsareinterestraterisk,foreigncurrencyrisk,creditrisk,liquidityriskandcommoditypricerisk.TheBoardreviewsandagreespoliciesfortheprudentmanagementofeachoftheserisksasdocumentedbelow.InterestrateriskTheGroup’sexposuretomarketriskforchangesininterestratesstemspredominantlyfromitslong-termdebtobligations.Interestcostismanagedusingamixoffixedandfloatingratedebt.Withtheobjectiveofmanagingthismixinacost-efficientmanner,theGroupentersintointerestrateswaps,underwhichtheGroupcontractstoexchange,atpredeterminedintervals,thedifferencebetweenfixedandvariableinterestamountscalculatedbyreferencetoapre-agreednotionalprincipal.SuchcontractsenabletheGrouptomitigatetheriskofchanginginterestratesonthefairvalueofissuedfixedratedebtandthecashflowexposuresofissuedfloatingratedebt.ThemajorityoftheseswapsaredesignatedunderIFRS9tohedgeunderlyingdebtobligationsandqualifyforhedgeaccountingtreatment;undesignatedfinancialinstrumentsaretermed“notdesignatedashedges”intheanalysisofderivativefinancialinstrumentspresentedinnote26.TheGroup’sinterestratehedgingstrategyandactivityemploysthepremisethatchangesinmacro-economicfactorsarereflectedincurrentinterestrates.Intheeconomicrelationshiptherelativevalueofthefixedrateatwhichabondwasissuedwillchangeinlinewithmarketinterestratesandafloatingrateswapwillcounterbalancechangesinthebond’sfairvalue.Ahypotheticalderivativeisusedtoreplicatetheimpactthatchangesinmarketinterestratescouldhaveonthefixedratebond(hedgeditem)whichismeasuredagainsttheinterestrateswap(hedgeinstrument).Ahedgeratioofonetooneisestablished.Potentialsourcesofineffectivenesscomprisethetimingoffloatingrateresetsandcounterpartycreditadjustmentstotheinterestrateswap.Pastobservationsoninterestratemovementsprovideevidencethatsuchrelationshipswillcontinuefortheforeseeablefuture.Thenotionalamountofinterestrateswapsissetoutinnote22.172CRHAnnualReportandForm20-F|2018Thefollowingtabledemonstratestheimpactonprofitbeforetaxandtotalequityofarangeofpossiblechangesintheinterestratesapplicabletonetfloatingrateborrowings,withallothervariablesheldconstant.Theseimpactsarecalculatedbasedontheclosingbalancesheetfortherelevantperiodandassumeallfloatinginterestratesandinterestcurveschangebythesameamount.Forprofitbeforetax,theimpactshownistheimpactonclosingbalancesheetfloatingratenetdebtforafullyearwhilefortotalequitytheimpactshownistheimpactonthevalueoffinancialinstruments.Percentagechangeincostofborrowings+/-1%Impactonprofitbeforetax2018+/-€4m2017+/-€6m2016+/-€6mImpactontotalequity2018-/+€6.7m2017-/+€0.4m2016-/+€1.0mForeigncurrencyriskDuetothenatureofbuildingmaterials,whichingeneralhavealowvalue-to-weightratio,theGroup’sactivitiesareconductedprimarilyinthelocalcurrencyofthecountryofoperationresultinginlowlevelsofforeigncurrencytransactionrisk;variancesarisinginthisregardarereflectedinoperatingcostsorcostofsalesintheConsolidatedIncomeStatementintheperiodinwhichtheyarise.GiventheGroup’spresencein32countriesworldwide,theprincipalforeignexchangeriskarisesfromfluctuationsintheeurovalueoftheGroup’snetinvestmentinawidebasketofcurrenciesotherthantheeuro;suchchangesarereportedseparatelywithintheConsolidatedStatementofComprehensiveIncome.AcurrencyprofileoftheGroup’snetdebtandnetworthispresentedinnote22.TheGroup’sestablishedpolicyistospreaditsnetworthacrossthecurrenciesofitsvariousoperationswiththeobjectiveoflimitingitsexposuretoindividualcurrenciesandthuspromotingconsistencywiththegeographicalbalanceofitsoperations.Inordertoachievethisobjective,theGroupmanagesitsborrowings,wherepracticableandcosteffective,tohedgeaportionofitsforeigncurrencyassets.Hedgingisdoneusingcurrencyborrowingsinthesamecurrencyastheassetsbeinghedgedorthroughtheuseofotherhedgingmethodssuchascurrencyswaps.TheGroup’sforeignexchangehedgingstrategyandactivityisbasedontheassumptionthatchangesininternationaleconomicfactorsarereflectedincurrentforeignexchangeratesandimpactsthetranslationoftheGroup’snon-euronetassets.Theeconomicrelationship,beingthetranslationimpactoftheGroup’snetinvestmentinnon-eurosubsidiaries(hedgeitem)ishedgedagainstaforeigncurrencyswap(hedgeinstrument)tocounterbalancemovementsinforeigncurrencyrates.TheGroupidentifiescertainportionsofforeigncurrencynetinvestmentswhereforeigncurrencytranslationmovementscanbemitigatedthroughtheuseofcurrencyswapsinthesamecurrencypairing.Ahedgeratioofonetooneisestablished.Asat31December2018,thenotionalamountofhedgednetinvestmentswas€942million(2017:€927million).Thefairvaluemovementsofthehedgeinstrumentsareinversetotheimpactofthetranslationofthehedgednetassetsbecausethecriticaltermsmatch.ThisreducestheGroup’sexposuretofluctuationsonthetranslationoftheGroup’ssubsidiarieswithanon-eurofunctionalcurrencyintoeuro.Potentialsourcesofineffectivenessareforwardpoints,recordedthroughtheConsolidatedIncomeStatement.Pasttrendsindicatethattheeconomicrelationshipdescribedwillcontinuefortheforeseeablefuture.Thefairvaluesandmaturityanalysisofthehedgeinstrumentsaresetoutinnote26.Thefollowingtabledemonstratesthesensitivityofprofitbeforetaxandequitytoselectedmovementsintherelevanteuro/USDollarexchangerate(withallothervariablesheldconstant);theUSDollarhasbeenselectedastheappropriatecurrencyforthisanalysisgiventhematerialityoftheGroup’sactivitiesintheUS.Theimpactonprofitbeforetaxisbasedonchangingtheeuro/USDollarexchangerateusedincalculatingprofitbeforetaxfortheperiod.Theimpactontotalequityandfinancialinstrumentsiscalculatedbychangingtheeuro/USDollarexchangerateusedinmeasuringtheclosingbalancesheet.Percentagechangeinrelevant€/US$exchangerate+/-5%Impactonprofitbeforetax2018-/+€149m2017-/+€53m2016-/+€54mImpactontotalequity*2018-/+€399m2017-/+€291m2016-/+€275m*Includestheimpactonfinancialinstrumentswhichisasfollows:2018+/-€204m2017+/-€165m2016+/-€146mFinancialinstrumentsincludedeposits,moneymarketfunds,commercialpapers,bankloans,medium-termnotesandotherfixedtermdebt,interestrateswaps,commodityswapsandforeignexchangecontracts.Theyexcludetradereceivablesandtradepayables.Credit/counterpartyriskInadditiontocashatbankandinhand,theGroupholdssignificantcashbalanceswhichareinvestedonashort-termbasisandareclassifiedascashequivalents(seenote24).Thesedepositsandotherfinancialinstruments(principallycertainderivativesandloansandreceivablesincludedwithinfinancialassets)giverisetocreditriskonamountsduefromcounterpartyfinancialinstitutions(stemmingfromtheirinsolvencyoradowngradeintheircreditratings).Creditriskismanagedbylimitingtheaggregateamountanddurationofexposuretoanyonecounterpartyprimarilydependingonitscreditratingandbyregularreviewoftheseratings.Acceptablecreditratingsarehighinvestment-graderatings-ingeneral-counterpartieshaveratingsofA3/A-orhigherfromMoody’s/Standard&Poor’sratingsagencies.Themaximumexposurearisingintheeventofdefaultonthepartofthecounterparty(includinginsolvency)isthecarryingvalueoftherelevantfinancialinstrument.173OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201823.CapitalandFinancialRiskManagement-continuedInitsworldwideinsuranceprogramme,theGroupcarriesappropriatelevelsofinsurancefortypicalbusinessrisks(includingproductliability)withvariousleadinginsurancecompanies.However,intheeventofthefailureofoneormoreofitsinsurancecounterparties,theGroupcouldbeimpactedbylosseswhererecoveryfromsuchcounterpartiesisnotpossible.CreditriskarisinginthecontextoftheGroup’soperationsisnotsignificantwiththetotallossallowanceatthebalancesheetdateamountingto3.7%ofgrosstradereceivables(2017:4.1%).InformationinrelationtotheGroup’screditriskmanagementoftradereceivablesisprovidedinnote19.Amountsreceivablefromrelatedparties(notes19and34)areimmaterial.FactoringandcreditguaranteearrangementsareemployedincertainoftheGroup’soperationswheredeemedtobeofbenefitbyoperationalmanagement.LiquidityriskTheprincipalliquidityrisksfacedbytheGroupstemfromthematurationofdebtobligationsandderivativetransactions.AdowngradeofCRH’screditratingsmaygiverisetoincreasesinfundingcostsinrespectoffuturedebtandmayimpairtheGroup’sabilitytoraisefundsonacceptableterms.TheGroup’scorporatetreasuryfunctionensuresthatsufficientresourcesareavailabletomeetsuchliabilitiesastheyfallduethroughacombinationofcashandcashequivalents,cashflowsandundrawncommittedbankfacilities.Flexibilityinfundingsourcesisachievedthroughavarietyofmeansincluding(i)maintainingcashandcashequivalentsonlywithadiversegroupofhighly-ratedcounterparties;(ii)limitingtheannualmaturityofsuchbalances;(iii)borrowingthebulkoftheGroup’sdebtrequirementsundercommittedbanklinesorothertermfinancing;and(iv)havingsurpluscommittedlinesofcredit.TheundrawncommittedfacilitiesavailabletotheGroupasatthebalancesheetdatearequantifiedinnote25;thesefacilitiesspanawidenumberofhighly-ratedfinancialinstitutionsthusminimisinganypotentialexposurearisingfromconcentrationsinborrowingsources.Therepaymentschedule(analysedbymaturitydate)applicabletotheGroup’soutstandinginterest-bearingloansandborrowingsasatthebalancesheetdateisalsopresentedinnote25.TheGrouphasan€8.0billionEuroMedium-TermNote(EMTN)Programmeinplace,whichalongwitha€1.5billionEuroCommercialPaperProgrammeandaUS$1.5billionUSDollarCommercialPaperProgrammemeanswehaveframeworkprogrammesinthecapitalandmoneymarketsinplacethatallowtheGrouptoissueintherelevantmarketswithinashortperiodoftime.CommoditypriceriskTheprincipalcommoditypricerisksareidentifiedinavarietyofhighlyprobableandactivecommoditycontractswhereasignificantpartofthepricetobepaidreliesonareferencetospecificfloatingpriceindices(usuallyUSDollar)foraspecificperiod.Programmesareinplacetohedgethequantitiesandqualitiesofcommodityproducts,includingcoal,highsulphurfueloil,diesel,electricityandsteel.TheaimoftheprogrammesaretoneutralisethevariabilityintheConsolidatedIncomeStatementasaresultofchangesinassociatedcommodityindicesoveratimeframeofapproximatelythreeyears.Ahedgeratioofonetooneisestablished.Fixedpriceswapcontractsintheentity’soperatingcurrencyareusedtohedgethesamespecificfloatingindexriskandcurrencyriskwhereitisdeterminedthatthoserisksarebettermanagedatafixedpriceratherthanbeingexposedtouncontrollablepricefluctuationsduetothefloatingpriceindexelementofthecontract.Sourcesofineffectivenesscanrelatetotimingofcashflowsandcounterpartycreditriskadjustments.ThederivativecontractsqualifyforcashflowhedgeaccountingunderIFRS9andthefairvaluesbymaturityaresetoutinnote26.Thenotionalandfairvaluesinrespectofderivativecontractsasat31December2018and31December2017wereasfollows:ProfileofcommodityproductsAsat31December2018Asat31December2017Notionalvalue€mFairvalue€mNotionalvalue€mFairvalue€mCommoditycontracts162-49-Derivative(liability)/asset-(27)-11174Thetablesbelowshowtheprojectedcontractualundiscountedtotalcashoutflows(principalandinterest)arisingfromtheGroup’stradeandotherpayables,grossdebtandderivativefinancialinstruments.Thetablesalsoincludethegrosscashinflowsprojectedtoarisefromderivativefinancialinstruments.Theseprojectionsarebasedontheinterestandforeignexchangeratesapplyingattheendoftherelevantfinancialyear.Within1year€mBetween1and2years€mBetween2and3years€mBetween3and4years€mBetween4and5years€mAfter5years€mTotal€mAt31December2018Financialliabilities-cashoutflowsTradeandotherpayables4,6091603018113485,176Financeleases53322621Otherinterest-bearingloansandborrowings6207529533757535,8569,309Interestpaymentsonfinanceleases-----22Interestpaymentsonotherinterest-bearingloansandborrowings(i)3282972652482242,0223,384Cross-currencyswaps-grosscashoutflows2,3202----2,322Otherderivativefinancialinstruments302----32Grossprojectedcashoutflows7,9121,2161,2516439908,23420,246Derivativefinancialinstruments-cashinflowsInterestrateswaps-netcashinflows(ii)(11)(9)(9)(9)(4)(1)(43)Cross-currencyswaps-grosscashinflows(2,346)(2)----(2,348)Otherderivativefinancialinstruments(3)(2)(1)---(6)Grossprojectedcashinflows(2,360)(13)(10)(9)(4)(1)(2,397)Theequivalentdisclosurefortheprioryearisasfollows:At31December2017Financialliabilities-cashoutflowsTradeandotherpayables4,534126382016364,770Financeleases32211312Otherinterest-bearingloansandborrowings3205017519343625,0827,950Interestpaymentsonfinanceleases1----23Interestpaymentsonotherinterest-bearingloansandborrowings(i)2832602312001841,3812,539Cross-currencyswaps-grosscashoutflows2,391-----2,391Grossprojectedcashoutflows7,5328891,0221,1555636,50417,665Derivativefinancialinstruments-cashinflowsInterestrateswaps-netcashinflows(ii)(26)(14)(13)(13)(13)(16)(95)Cross-currencyswaps-grosscashinflows(2,399)-----(2,399)Grossprojectedcashinflows(2,425)(14)(13)(13)(13)(16)(2,494)(i)At31December2018and31December2017,aportionoftheGroup’slong-termdebtcarriedvariableinterestrates.TheGroupusestheinterestratesineffecton31Decembertocalculatetheinterestpaymentsonthelong-termdebtfortheperiodsindicated.(ii)TheGroupusesinterestrateswapstohelpmanageitsinterestcost.UnderthesecontractstheGrouphasagreedtoexchangeatpredeterminedintervals,thedifferencebetweenfixedandvariableinterestamountscalculatedbyreferencetoapre-agreednotionalprincipal.TheGroupusestheinterestratesineffecton31Decembertocalculatethenetinterestreceiptsorpaymentsonthesecontracts.175CRHAnnualReportandForm20-F|2018OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201824.CashandCashEquivalentsCashandcashequivalentsbalancesarespreadacrossawidenumberofhighly-ratedfinancialinstitutions.Thecreditriskattachingtotheseitemsisdocumentedinnote23.CashandcashequivalentsareincludedintheConsolidatedBalanceSheetatamortisedcostandareanalysedasfollows:2018€m2017€mCashatbankandinhand814737Investments(short-termdeposits)1,5321,378Total2,3462,115Cashatbankearnsinterestatfloatingratesbasedondailydepositbankrates.Short-termdeposits,whichincludebankandmoneymarketdeposits,aremadeforvaryingperiodsofbetweenonedayandthreemonthsdependingontheimmediatecashrequirementsoftheGroup,andearninterestattherespectiveshort-termdepositrates.CashandcashequivalentsatamortisedcostincludethefollowingforthepurposesoftheConsolidatedStatementofCashFlows:2018€m2017€mCashatbankandinhand814737Investments(short-termdeposits)1,5321,378Cashatbankandinhandreclassifiedasheldforsale-20Total2,3462,13525.Interest-bearingLoansandBorrowingsLoansandborrowingsoutstanding2018€m2017€mBankoverdrafts11366Bankloans356295Financeleases2112Bonds8,8257,602Other11Interest-bearingloansandborrowings9,3167,976Bankoverdraftsreclassifiedasheldforsale-5Total9,3167,981Interest-bearingloansandborrowingsincludeloansof€5million(2017:€2million)securedonspecificitemsofproperty,plantandequipment;thesefiguresdonotincludefinanceleases.176CRHAnnualReportandForm20-F|201825.Interest-bearingLoansandBorrowings-continuedMaturityprofileofloansandborrowingsandundrawncommittedfacilitiesAsat31December2018Asat31December2017Loansandborrowings€mUndrawncommittedfacilities€mLoansandborrowings€mUndrawncommittedfacilities€mWithinoneyear618-316-Betweenoneandtwoyears748-498-Betweentwoandthreeyears94815746-Betweenthreeandfouryears37050930-Betweenfourandfiveyears7763,5003593,554Afterfiveyears5,856185,127-Total9,3163,5837,9763,554Bankoverdraftsreclassifiedasheldforsale--5-Total9,3163,5837,9813,554TheGroupmanagesitsborrowingabilitybyenteringintocommittedborrowingagreements.RevolvingcommittedbankfacilitiesaregenerallyavailabletotheGroupforperiodsofuptofiveyearsfromthedateofinception.TheundrawncommittedfacilitiesfiguresshowninthetableaboverepresentthefacilitiesavailabletobedrawnbytheGroupat31December2018.InMarch2018,theGroupexercisedthefirstofitsoptionstoextendthe€3.5billionsyndicatedfacilityto2023.GuaranteesTheCompanyhasgivenlettersofguaranteetosecureobligationsofsubsidiaryundertakingsasfollows:€8.9billioninrespectofloansandborrowings,bankadvances,derivativeobligationsandfutureleaseobligations(2017:€7.7billion)and€0.3billioninrespectoflettersofcredit(2017:€0.2billion).AnyIrishregisteredwholly-ownedsubsidiaryoftheCompanymayavailoftheexemptionfromfilingitsstatutoryfinancialstatementsfortheyearended31December2018aspermittedbysection357oftheCompaniesAct2014andifanIrishregisteredwholly-ownedsubsidiaryoftheCompanyelectstoavailofthisexemption,therewillbeinforceanirrevocableguaranteefromtheCompanyinrespectofallcommitmentsenteredintobysuchwholly-ownedsubsidiary,includingamountsshownasliabilities(withinthemeaningofsection357(1)(b)oftheCompaniesAct2014)insuchwholly-ownedsubsidiary’sstatutoryfinancialstatementsfortheyearended31December2018.LendercovenantsTheGroup’smajorbankfacilitiesrequiretheGrouptomaintaincertainfinancialcovenants.Non-compliancewithfinancialcovenantswouldgivetherelevantlenderstherighttoterminatefacilitiesanddemandearlyrepaymentofanysumsdrawnthereunderthusalteringthematurityprofileoftheGroup’sdebtandtheGroup’sliquidity.Calculationsforfinancialcovenantsarecompletedfortwelve-monthperiodshalf-yearlyon30Juneand31December.TheGroupwasinfullcompliancewithitsfinancialcovenantsthroughouteachoftheperiodspresented.TheGroupisnotawareofanystatedeventsofdefaultasdefinedintheAgreements.Thefinancialcovenantsare:(1)MinimuminterestcoverdefinedasPBITDA/NetInterest(allasdefinedintherelevantagreement)coveratnolowerthan4.5x(2017:4.5x;2016:4.5x).Asat31December2018theratiowas11.2x(2017:11.6x;2016:10.1x);(2)Minimumnetworthdefinedastotalequityplusdeferredtaxliabilitiesandcapitalgrantslessrepayablecapitalgrantsbeinginaggregatenolowerthan€5.1billion(2017:€6.2billion)(suchminimumbeingadjustedforforeignexchangetranslationimpacts).Asat31December2018networth(asdefinedintherelevantagreement)was€18.8billion(2017:€16.6billion).177OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201826.DerivativeFinancialInstrumentsThefairvaluesofderivativefinancialinstrumentsareanalysedbyyearofmaturityandbyaccountingdesignationasfollows:Fairvaluehedges€mCashflowhedges€mNetinvestmenthedges€mNotdesignatedashedges€mTotal€mAt31December2018DerivativeassetsWithinoneyear-currentassets-310215Betweenoneandtwoyears-2--2Betweentwoandthreeyears-1--1Betweenfourandfiveyears24---24Afterfiveyears3---3Non-currentassets273--30Totalderivativeassets27610245DerivativeliabilitiesWithinoneyear-currentliabilities-(32)(2)(7)(41)Betweenoneandtwoyears-(2)--(2)Afterfiveyears(16)---(16)Non-currentliabilities(16)(2)--(18)Totalderivativeliabilities(16)(34)(2)(7)(59)Netasset/(liability)arisingonderivativefinancialinstruments11(28)8(5)(14)Theequivalentdisclosurefortheprioryearisasfollows:At31December2017DerivativeassetsWithinoneyear-currentassets21119234Betweenoneandtwoyears-1-34Afterfiveyears26---26Non-currentassets261-330Totalderivativeassets281219564DerivativeliabilitiesWithinoneyear-currentliabilities-(1)(10)-(11)Afterfiveyears(3)---(3)Non-currentliabilities(3)---(3)Totalderivativeliabilities(3)(1)(10)-(14)Netassetarisingonderivativefinancialinstruments25119550178CRHAnnualReportandForm20-F|2018At31December2018and2017,theGrouphadnomasternettingorsimilararrangements,collateralpostingrequirements,orenforceablerightofset-offagreementswithanyofitsderivativecounterparts.Fairvaluehedgesconsistofinterestrateswapsandcurrencyswaps.Theseinstrumentshedgerisksarisingfromchangesinasset/liabilityfairvaluesduetointerestrateandforeignexchangeratemovements.Cashflowhedgesconsistofforwardforeignexchangeandcommoditycontractsandinterestrateandcurrencyswaps.Theseinstrumentshedgerisksarisingtofuturecashflowsfrommovementsinforeignexchangerates,commoditypricesandinterestrates.Cashflowhedgesareexpectedtoaffectprofitandlossovertheperiodtomaturity.Netinvestmenthedgescomprisecross-currencyswapsandhedgechangesinthevalueofnetinvestmentsduetocurrencymovements.The(loss)/profitarisingonfairvalue,cashflow,netinvestmenthedgesandrelatedhedgeditemsreflectedintheConsolidatedIncomeStatementisshownbelow:2018€m2017€m2016€mFairvalueofhedgeinstruments(12)(16)(11)Fairvalueofthehedgeditems111813Componentsofothercomprehensiveincome-cashflowhedges(Losses)/gainsarisingduringtheyear:-Commodityforwardcontracts(38)914-Currencyforwardcontracts(2)(1)-Total(40)814Fairvaluehierarchy2018Level2€m2017Level2€mAssetsmeasuredatfairvalueFairvaluehedges-cross-currencyandinterestrateswaps2728Netinvestmenthedges-cross-currencyswaps1019Cashflowhedges-cross-currency,interestrateswapsandcommodityforwards612Notdesignatedashedges(heldfortrading)-interestrateswaps25Total4564LiabilitiesmeasuredatfairvalueFairvaluehedges-cross-currencyandinterestrateswaps(16)(3)Netinvestmenthedges-cross-currencyswaps(2)(10)Cashflowhedges-cross-currency,interestrateswapsandcommodityforwards(34)(1)Notdesignatedashedges(heldfortrading)-interestrateswaps(7)-Total(59)(14)At31December2018and2017therewerenoderivativesvaluedusingLevel1orLevel3fairvaluetechniques.179OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201827.ProvisionsforLiabilitiesAt1January€mTranslationadjustment€mArisingonacquisition(note32)€mProvidedduringyear€mUtilisedduringyear€mDisposedduringyear€mReversedunused€mDiscountunwinding€mAt31December€m31December2018Insurance(i)29210795(71)-(61)7279Environmentandremediation(ii)441-7528(26)(2)(43)11484Rationalisationandredundancy(iii)25--30(31)-(1)-23Other(iv)306-275(32)(1)(52)3301Total1,0641084228(160)(3)(157)211,087Analysedas:Non-currentliabilities693719Currentliabilities371368Total1,0641,087Theequivalentdisclosurefortheprioryearisasfollows:31December2017Insurance(i)286(28)3101(61)-(19)10292Environmentandremediation(ii)430(25)4327(29)-(14)9441Rationalisationandredundancy(iii)23--32(27)-(3)-25Other(iv)321(19)3106(37)(1)(72)5306Total1,060(72)49266(154)(1)(108)241,064Analysedas:Non-currentliabilities678693Currentliabilities382371Total1,0601,064(i)Thisprovisionrelatestoobligationsarisingundertheself-insurancecomponentsoftheGroup’sinsurancearrangementswhichcompriseemployers’liability(workers’compensationintheUS),publicandproductsliability(generalliabilityintheUS),automobileliability,propertydamage,businessinterruptionandvariousotherinsurances;asubstantialproportionofthetotalprovisionpertainstoclaimswhichareclassifiedas“incurredbutnotreported”.Duetotheextendedtimeframeassociatedwithmanyoftheinsurances,asignificantproportionofthetotalprovisionissubjecttoperiodicactuarialvaluation.Theprojectedcashflowsunderlyingthediscountingprocessareestablishedthroughtheapplicationofactuarialtriangulations,whichareextrapolatedfromhistoricalclaimsexperience.ThetriangulationsappliedinthediscountingprocessindicatethattheGroup’sinsuranceprovisionshaveanaveragelifeoffiveyears(2017:5.5years).(ii)Thisprovisioncomprisesobligationsgoverningsiteremediation,restorationandenvironmentalworkstobeincurredincompliancewitheitherlocalornationalenvironmentalregulationstogetherwithconstructiveobligationsstemmingfromestablishedbestpractice.Whilstasignificantelementofthetotalprovisionwillreverseinthemedium-term(twototenyears),thoselegalandconstructiveobligationsapplicabletolong-livedassets(principallymineral-bearingland)willunwindovera30-yeartimeframe.Indiscountingtherelatedobligations,expectedfuturecashoutflowshavebeendeterminedwithdueregardtoextractionstatusandanticipatedremaininglife.(iii)Theseprovisionsrelatetoirrevocablecommitmentsundervariousrationalisationandredundancyprogrammes,noneofwhichareindividuallymaterialtotheGroup.In2018,€30million(2017:€32million;2016:€23million)wasprovidedinrespectofrationalisationandredundancyactivitiesasaconsequenceofundertakingvariouscostreductioninitiativesacrossalloperations.Theseinitiativesincludedremovingexcesscapacityfrommanufacturinganddistributionnetworksandscalingoperationstomatchmarketsupply;backofficerationalisation;andtheconsolidationofcertainregionalsupportfunctionsintocentralandmorecoordinatedhubs.TheGroupexpectsthattheseprovisionswillprimarilybeutilisedwithinonetotwoyearsofthebalancesheetdate(2017:onetotwoyears).(iv)Otherprovisionsprimarilyrelatetolegalclaims,onerouscontracts,guaranteesandwarrantiesandemployeerelatedprovisions.TheGroupexpectsthemajorityoftheseprovisionswillbeutilisedwithintwotofiveyearsofthebalancesheetdate(2017:twotofiveyears);howeverduetothenatureofthelegalprovisionsthereisalevelofuncertaintyinthetimingofsettlementastheGroupgenerallycannotdeterminetheextentanddurationofthelegalprocess.18028.DeferredIncomeTaxThedeductibleandtaxabletemporarydifferencesinrespectofwhichdeferredtaxhasbeenrecognisedareasfollows:2018€m2017€mReportedinbalancesheetafteroffsetDeferredtaxliabilities2,2091,666Deferredtaxassets(71)(95)Netdeferredincometaxliability2,1381,571Deferredincometaxassets(deductibletemporarydifferences)DeficitsonGroupretirementbenefitobligations(note29)9572Revaluationofderivativefinancialinstrumentstofairvalue137Taxlosscarryforwards153132Share-basedpaymentexpense2129Provisionsforliabilitiesandworkingcapital-relateditems266157Otherdeductibletemporarydifferences39145Total587542Deferredincometaxassetshavebeenrecognisedinrespectofalldeductibletemporarydifferences,withtheexceptionofsometaxlosscarryforwards.TheamountoftaxlosseswhererecoveryisnotprobableandisthereforenotrecognisedintheConsolidatedBalanceSheetis€1.5billion(2017:€1.5billion).Thevastmajorityeitherdonotexpirebasedoncurrenttaxlegislationortheyexpirepost2023(2017:2022).Deferredincometaxliabilities(taxabletemporarydifferences)Taxabletemporarydifferencesprincipallyattributabletoacceleratedtaxdepreciationandfairvalueadjustmentsarisingonacquisition(i)2,7012,089Revaluationofderivativefinancialinstrumentstofairvalue1111Rolled-overcapitalgains1313Total2,7252,113MovementinnetdeferredincometaxliabilityAt1January1,5711,849Reclassifiedfrom*/(as)heldforsale14(14)Translationadjustment47(173)Netexpense/(income)fortheyear(ii)111(265)Arisingonacquisition(note32)411132Disposal(16)2MovementindeferredtaxrecognisedintheConsolidatedStatementofComprehensiveIncome(4)33MovementindeferredtaxrecognisedintheConsolidatedStatementofChangesinEquity47At31December2,1381,571(i)Fairvalueadjustmentsarisingonacquisitionprincipallyrelatetoproperty,plantandequipment.(ii)Thenetexpense/(income)fortheyearincludesanexpenseof€8million(2017:€1million)relatingtodiscontinuedoperations.*Reflectsamountsat1January2018relatingtoliabilitiesheldforsaleat31December2017whichweresubsequentlydivestedin2018.Refertonote3forfurtherdetails.181CRHAnnualReportandForm20-F|2018OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201829.RetirementBenefitObligationsTheGroupoperateseitherdefinedbenefitordefinedcontributionpensionschemesinallofitsprincipaloperatingareas.ThedisclosuresincludedbelowrelatetoallpensionschemesintheGroup.TheGroupoperatesdefinedbenefitpensionschemesinBelgium,Brazil,Canada,France,Germany,Italy,theNetherlands,thePhilippines,theRepublicofIreland,Romania,Serbia,Slovakia,Switzerland,theUKandtheUS.TheGrouphasamixtureoffundedandunfundeddefinedbenefitpensionschemes.Thenetliabilityofthefundedschemesis€113million(netofsurplusesof€51million)(2017:€175million).Unfundedobligations(includingjubilee,post-retirementhealthcareobligationsandlong-termservicecommitments)compriseofanumberofschemesinBrazil,Canada,France,Germany,Italy,theNetherlands,thePhilippines,Romania,Serbia,Slovakia,SwitzerlandandtheUS,totallinganetliabilityof€311million(2017:€202million).FundeddefinedbenefitschemesintheRepublicofIreland,SwitzerlandandtheUKareadministeredbyseparatefundsthatarelegallydistinctfromtheGroupunderthejurisdictionofTrustees.TheTrusteesofthesepensionfundsarerequiredbylawandbytheirArticlesofAssociationtoactinthebestinterestsoftheschemeparticipantsandareresponsibleforthedefinitionofinvestmentstrategyandforschemeadministration.Otherschemesarealsoadministeredinlinewiththelocalregulatoryenvironment.Thelevelofbenefitsavailabletomostmembersdependsonlengthofserviceandeithertheiraveragesalaryovertheirperiodofemploymentortheirsalaryinthefinalyearsleadinguptoretirement.TheGroup’spensionschemesinSwitzerlandarecontribution-basedschemeswithguaranteestoprovidefurthercontributionsintheeventthatcertaintargetsarenotmet,largelyinrelationtoinvestmentreturnandtheannuityconversionfactoronretirement.Definedbenefitpensionschemes-principalrisksThroughitsdefinedbenefitpensionandjubileeschemes,long-termservicecommitmentsandpost-retirementhealthcareplans,theGroupisexposedtoanumberofrisks,themostsignificantofwhicharedetailedbelow:Assetvolatility:UnderIAS19EmployeeBenefits,theassetsoftheGroup’sdefinedbenefitpensionschemesarereportedatfairvalue(usingbidprices,whererelevant).Themajorityoftheschemes’assetscompriseequities,bondsandproperty,allofwhichmayfluctuatesignificantlyinvaluefromperiodtoperiod.Giventhatliabilitiesarediscountedtopresentvaluebasedonbondyieldsandthatbondpricesareinverselyrelatedtoyields,anincreaseintheliabilitydiscountrate(whichwouldreduceliabilities)wouldreducebondvalues,thoughnotnecessarilybyanequalmagnitude.GiventhematurityofcertainoftheGroup’sfundeddefinedbenefitpensionschemes,de-riskingframeworkshavebeenintroducedtomitigatedeficitvolatilityandenablebettermatchingofinvestmentreturnswiththecashoutflowsrelatedtobenefitobligations.Theseframeworksentailtheusageofasset-liabilitymatchingtechniques,wherebytriggersaresetfortheconversionofequityholdingsintobondsofsimilaraveragedurationtotherelevantliabilities.Discountrates:Thediscountratesemployedindeterminingthepresentvalueoftheschemes’liabilitiesaredeterminedbyreferencetomarketyieldsatthebalancesheetdateonhigh-qualitycorporatebondsofacurrencyandtermconsistentwiththecurrencyandtermoftheassociatedpost-employmentbenefitobligations.Changesindiscountratesimpactthequantumofliabilitiesasdiscussedabove.Inflationrisk:AsignificantamountoftheGroup’spensionobligationsarelinkedtoinflation;higherinflationwillleadtohigherliabilities(althoughinmostcases,capsonthelevelofinflationaryincreasesareinplacetoprotecttheschemesagainstextremeinflation).Longevityrisk:Inthemajorityofcases,theGroup’sdefinedbenefitpensionschemesprovidebenefitsforlifewithspousalanddependentchildreversionaryprovisions;increasesinlifeexpectancy(decreasesinmortalityassumptions)willthereforegiverisetohigherliabilities.AggregationForthepurposesofthedisclosureswhichfollow;theschemesinBelgium,France,Germany,Italy,theNetherlands,theRepublicofIrelandandSlovakiahavebeenaggregatedintoa“Eurozone”categoryonthebasisofcommoncurrencyandfinancialassumptions;schemesinBrazil,thePhilippines,Romania,SerbiaandtheUKhavebeenaggregatedintoan“Other”category.182CRHAnnualReportandForm20-F|2018Financialassumptions-schemeliabilitiesThemajorlong-termassumptionsusedbytheGroup’sactuariesinthecomputationofschemeliabilitiesandpost-retirementhealthcareobligationsareasfollows:EurozoneSwitzerlandUnitedStatesandCanada2018%2017%2016%2018%2017%2016%2018%2017%2016%Rateofincreasein:-salaries3.503.593.411.501.251.253.383.273.28-pensionsinpayment1.621.701.50------Inflation1.651.751.501.000.750.752.002.002.00Discountrate2.122.051.860.850.700.654.103.524.01Medicalcosttrendraten/an/an/an/an/an/a1.556.335.98ThemortalityassumptionsemployedindeterminingthepresentvalueofschemeliabilitiesunderIAS19representactuarialbestpracticeintherelevantjurisdictions,takingaccountofmortalityexperienceandindustrycircumstances.ForschemesintheRepublicofIrelandandtheUK,themortalityassumptionsusedareinaccordancewiththeunderlyingfundingvaluations.FortheGroup’smostmaterialschemes,thefuturelifeexpectationsfactoredintotherelevantvaluations,basedonretirementat65yearsofageforcurrentandfutureretirees,areasfollows:RepublicofIrelandSwitzerlandUnitedStatesandCanada201820172016201820172016201820172016Currentretirees-male22.422.722.522.522.422.320.120.620.5-female24.124.424.324.524.424.322.623.123.0Futureretirees-male24.925.525.424.724.624.622.022.322.3-female26.427.026.926.726.626.624.524.724.7Theabovedataallowsforfutureimprovementsinlifeexpectancy.183OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 201829.RetirementBenefitObligations-continuedImpactonConsolidatedIncomeStatementThetotalretirementbenefitexpensefromcontinuingoperationsintheConsolidatedIncomeStatementisasfollows:2018€m2017€m2016€mTotaldefinedcontributionexpense235237232Totaldefinedbenefitexpense/(credit)61(1)75TotalexpenseinConsolidatedIncomeStatement296236307At31December2018,€90million(2017:€78million)wasincludedinotherpayablesinrespectofdefinedcontributionpensionliabilities.Analysisofdefinedbenefitexpense/(credit)ChargedinarrivingatGroupprofitbeforefinancecosts:Currentservicecost646261Administrationexpenses444Pastservicecredit(net)(17)(78)(2)Subtotal51(12)63Includedinfinanceincomeandfinancecostsrespectively:Interestincomeonschemeassets(59)(49)(58)Interestcostonschemeliabilities696070Netinterestexpense101112Netexpense/(credit)toConsolidatedIncomeStatement61(1)75Thecompositionofthenetexpense/(credit)totheConsolidatedIncomeStatementisasfollows:Eurozone232518Switzerland25(49)37UnitedStatesandCanada61411Other799Total61(1)75Pastservicecreditin2017includesagainof€81millionduetoplanamendmentsinSwitzerland.Theprincipalamendmentrelatedtothereductionoftheannuityconversionfactoronretirementfrom6.4%to5.0%ofaccumulatedsavings.184CRHAnnualReportandForm20-F|2018CRHAnnualReportandForm20-F|2018Reconciliationofschemeassets(bidvalue)2018€m2017€mAt1January2,6222,556MovementinyearInterestincomeonschemeassets5949Arisingonacquisition(note32)3375Remeasurementadjustments-returnonschemeassetsexcludinginterestincome(137)112Employercontributionspaid118123Contributionspaidbyplanparticipants1414Benefitandsettlementpayments(130)(114)Administrationexpenses(4)(4)Translationadjustment34(119)At31December2,9132,622Thecompositionofschemeassetsisasfollows:Eurozone1,1811,184Switzerland808781UnitedStatesandCanada728448Other196209Total2,9132,622ReconciliationofactuarialvalueofliabilitiesAt1January(2,999)(3,147)MovementinyearCurrentservicecost(64)(62)Pastservicecredit(net)1778Interestcostonschemeliabilities(69)(60)Arisingonacquisition(note32)(452)(57)Disposals6-Remeasurementadjustments-experiencevariations111-actuarialgain/(loss)fromchangesinfinancialassumptions120(29)-actuarialgainfromchangesindemographicassumptions2620Contributionspaidbyplanparticipants(14)(14)Benefitandsettlementpayments130114Translationadjustment(39)147At31December(3,337)(2,999)Thecompositionoftheactuarialvalueofliabilitiesisasfollows:Eurozone(1,318)(1,384)Switzerland(829)(819)UnitedStatesandCanada(946)(540)Other(244)(256)Total(3,337)(2,999)Recoverabledeficitinschemes(424)(377)Relateddeferredincometaxasset9572Netpensionliability(329)(305)Thecompositionofthenetpensionliabilityisasfollows:Eurozone(113)(168)Switzerland(17)(30)UnitedStatesandCanada(162)(68)Other(37)(39)Total(329)(305)185OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201829.RetirementBenefitObligations-continuedAUKHighCourtrulinginOctober2018relatingtotheequalisationofguaranteedminimumpensionsformenandwomendidnotmateriallyimpacttheliabilityassociatedwiththeGroup’sUKdefinedbenefitpensionschemes.SensitivityanalysisTheimpactofamovement(asindicatedbelow)intheprincipalactuarialassumptionswouldbeasfollows:Eurozone2018€mSwitzerland2018€mUnitedStatesandCanada2018€mOther2018€mTotalGroup2018€mSchemeliabilitiesat31December2018(1,318)(829)(946)(244)(3,337)RevisedliabilitiesDiscountrateIncreaseby0.25%(1,263)(797)(918)(233)(3,211)Decreaseby0.25%(1,375)(865)(975)(256)(3,471)InflationrateIncreaseby0.25%(1,370)(832)(951)(253)(3,406)Decreaseby0.25%(1,268)(827)(942)(236)(3,273)MortalityassumptionIncreaseby1year(1,272)(802)(921)(238)(3,233)Decreaseby1year(1,363)(856)(971)(251)(3,441)Theabovesensitivityanalysisarederivedthroughchangingtheindividualassumptionwhileholdingallotherassumptionsconstant.Splitofschemeassets2018€m2017€mInvestmentsquotedinactivemarketsEquityinstruments(i)862828Debtinstruments(ii)1,5961,413Property109120Cashandcashequivalents3426Investmentfunds995Assetsheldbyinsurancecompany123-UnquotedinvestmentsEquityinstruments22Debtinstruments(iii)98Property11292Cashandcashequivalents4013Assetsheldbyinsurancecompany1725Totalassets2,9132,622(i)Equityinstrumentsprimarilyrelatetodevelopedmarkets.(ii)Quoteddebtinstrumentsaremadeupof€845million(2017:€831million)and€751million(2017:€582million)ofnon-governmentandgovernmentinstrumentsrespectively.(iii)Unquoteddebtinstrumentsprimarilyrelatetogovernmentdebtinstruments.186CRHAnnualReportandForm20-F|2018Actuarialvaluations-fundingrequirementsandfuturecashflowsInaccordancewithstatutoryrequirementsintheRepublicofIrelandandminimumfundingrequirementsintheUK,additionalannualcontributionsandlump-sumpaymentsarerequiredtocertainoftheschemesinplaceinthosejurisdictions.ThefundingrequirementsinrelationtotheGroup’sdefinedbenefitschemesareassessedinaccordancewiththeadviceofindependentandqualifiedactuariesandvaluationsarepreparedinthisregardeitherannually,wherelocalrequirementsmandatethatthisbedone,orattriennialintervalsatamaximuminallothercases.IntheRepublicofIrelandandtheUK,eithertheattainedageorprojectedunitcreditmethodsareusedinthevaluations.IntheNetherlandsandSwitzerland,theactuarialvaluationsreflectthecurrentunitmethod,whilethevaluationsareperformedinaccordancewiththeprojectedunitcreditmethodologyinGermany.IntheUS,valuationsareperformedusingavarietyofactuarialcostmethodologies-currentunit,projectedunitandaggregatecost.InCanada,theprojectedunitcreditmethodisusedinvaluations.ThedatesofthefundingvaluationsrangefromMarch2016toDecember2018.Ingeneral,fundingvaluationsarenotavailableforpublicinspection;however,theresultsofvaluationsareadvisedtothemembersofthevariousschemesonrequest.TheGroup’scontractedpayments(onadiscountedbasis)tocertainschemesis€nilmillion(2017:€18million;2016:€35million)intheRepublicofIrelandand€14million(2017:€16million;2016:€20million)intheUK.ThematurityprofileoftheGroup’scontractedpayments(onadiscountedbasis)isasfollows:2018€m2017€m2016€mWithinoneyear21920Betweenoneandtwoyears2219Betweentwoandthreeyears222Betweenthreeandfouryears122Betweenfourandfiveyears112Afterfiveyears6810Total143455Employercontributionspayableinthe2019financialyearincludingminimumfundingpayments(expressedusingyearendexchangeratesfor2018)areestimatedat€71million.AveragedurationandschemecompositionEurozoneSwitzerlandUnitedStatesandCanada201820172016201820172016201820172016Averagedurationofdefinedbenefitobligation(years)17.117.817.116.417.218.612.112.213.1Allocationofdefinedbenefitobligationbyparticipant:Activeplanparticipants71%72%63%83%84%84%46%40%41%Deferredplanparticipants9%9%12%---18%16%17%Retirees20%19%25%17%16%16%36%44%42%187OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201830.CommitmentsunderOperatingandFinanceLeasesOperatingleasesTheGrouphasenteredintooperatingleasesforarangeofassets,principallyrelatingtoproperty.Leasecommitmentsareprovidedforuptotheearliestbreakclauseinthelease.Thesepropertyleaseshavevaryingterms,renewalrightsandescalationclauses,includingperiodicrentreviewslinkedwithaconsumerpriceindexand/orotherindices.TheGroupalsoleasesplantandmachinery,vehiclesandequipmentunderoperatingleases.ThetermsandconditionsoftheseoperatingleasesdonotimposeanysignificantfinancialrestrictionontheGroup.2018€m2017€m2016€mWithinoneyear353419402Afteroneyearbutnotmorethanfiveyears769962978Morethanfiveyears7898107911,9112,1912,171Thecommitmentsaboveinclude€nilmillionofoperatingleasecommitments(2017:€252million;2016:€237million)relatingtodiscontinuedoperations.FinanceleasesFutureminimumleasepaymentsunderfinanceleasesarenotmaterialfortheGroup.18831.ShareCapitalandReservesEquitysharecapital20182017OrdinarySharesof€0.32each(i)IncomeSharesof€0.02each(ii)OrdinarySharesof€0.32each(i)IncomeSharesof€0.02each(ii)AuthorisedAt1Januaryand31December(€m)4002540025NumberofSharesat1Januaryand31December(millions)1,2501,2501,2501,250Allotted,called-upandfullypaidAt1January(€m)2711526915PerformanceSharePlanAwards1-1-Issueofscripsharesinlieuofcashdividends(iii)--1-At31December(€m)2721527115Themovementinthenumberofshares(expressedinmillions)duringthefinancialyearwasasfollows:At1January839839833833PerformanceSharePlanAwards2222Issueofscripsharesinlieuofcashdividends(iii)2233Shareoptionsandshareparticipationschemes--11At31December843843839839(i)TheOrdinarySharesrepresent93.73%ofthetotalissuedsharecapital.(ii)TheIncomeShares,whichrepresent5.86%ofthetotalissuedsharecapital,werecreatedon29August1988fortheexpresspurposeofgivingshareholdersthechoiceofreceivingdividendsoneithertheirOrdinarySharesorontheirIncomeShares(bynoticeofelectiontotheCompany).TheIncomeSharescarriedadifferenttaxcredittotheOrdinaryShares.ThecreationoftheIncomeShareswasachievedbytheallotmentoffullypaidIncomeSharestoeachshareholderequaltohis/herholdingofOrdinarySharesbuttheshareholderisnotentitledtoanIncomeSharecertificate,asacertificateforOrdinarySharesisdeemedtoincludeanequalnumberofIncomeSharesandashareholdermayonlysell,transferortransmitIncomeShareswithanequivalentnumberofOrdinaryShares.IncomeSharescarrynovotingrights.DuetochangesinIrishtaxlegislationsincethecreationoftheIncomeShares,dividendsontheCompany’ssharesnolongercarryataxcredit.AselectionsmadebyshareholderstoreceivedividendsontheirholdingofIncomeShareswerenolongerrelevant,theArticlesofAssociationwereamendedon8May2002tocancelsuchelections.(iii)Issueofscripsharesinlieuofcashdividends:NumberofsharesPricepershare201820172016201820172016May2018-Final2017dividend(2017:Final2016dividend;2016:Final2015dividend)1,841,430433,0465,301,827€27.47€33.08€24.69September2018-Interim2018dividend*(2017:Interim2017dividend;2016:Interim2016dividend)-2,130,4961,243,042-€29.24€29.41Total1,841,4302,563,5426,544,869ShareschemesTheaggregatenumberofshareswhichmaybecommittedforissueinrespectofanyshareoptionscheme,savings-relatedshareoptionscheme,shareparticipationscheme,performanceshareplanoranysubsequentoptionschemeorshareplan,maynotexceed10%oftheissuedordinarysharecapitalfromtimetotime.*TheInterim2018dividendwaspaidwhollyincash.189CRHAnnualReportandForm20-F|2018OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201831.ShareCapitalandReserves-continuedShareoptionschemesDetailsofshareoptionsgrantedundertheCompany’sShareOptionSchemesandthetermsattachingtheretoareprovidedinnote9tothefinancialstatements.Undertheseschemes,optionsoveratotalof796,944OrdinaryShareswereexercisedduringthefinancialyear(2017:1,589,335;2016:2,223,574).Numberofshares201820172016Optionsexercisedduringtheyear(satisfiedbytheissueofnewshares)496,6611,589,3352,209,638Optionsexercisedduringtheyear(satisfiedbythereissueofTreasuryShares)300,283-13,936Total796,9441,589,3352,223,574ShareparticipationschemesAsat31December2018,8,025,732(2017:7,862,416)OrdinaryShareshadbeenappropriatedtoparticipationschemes.Inthefinancialyearended31December2018,theappropriationof163,316shareswassatisfiedbytheissueof59,666(2017:133,004)newsharesandthere-issueof103,650(2017:noshares)treasuryshares.TheOrdinarySharesappropriatedpursuanttotheseschemeswereissuedatmarketvalueonthedatesofappropriation.ThesharesissuedpursuanttotheseschemesareexcludedfromthescopeofIFRS2andarehencenotfactoredintotheexpensecomputationandtheassociateddisclosuresinnote9.Preferencesharecapital5%CumulativePreferenceSharesof€1.27each7%‘A’CumulativePreferenceSharesof€1.27eachNumberofShares‘000s€mNumberofShares‘000s€mAuthorisedAt1January2018and31December2018150-8721Allotted,called-upandfullypaidAt1January2018and31December201850-8721Therewasnomovementinthenumberofcumulativepreferencesharesineitherthecurrentortheprioryear.Theholdersofthe5%CumulativePreferenceSharesareentitledtoafixedcumulativepreferencedividendatarateof5%perannumandpriorityinawinding-uptorepaymentofcapital,buthavenofurtherrighttoparticipateinprofitsorassetsandarenotentitledtobepresentorvoteatgeneralmeetingsunlesstheirdividendisinarrears.Dividendsonthe5%CumulativePreferenceSharesarepayablehalf-yearlyon15Apriland15Octoberineachyear.The5%CumulativePreferenceSharesrepresent0.02%ofthetotalissuedsharecapital.Theholdersofthe7%‘A’CumulativePreferenceSharesareentitledtoafixedcumulativepreferencedividendatarateof7%perannum,andsubjecttotherightsoftheholdersofthe5%CumulativePreferenceShares,priorityinawinding-uptorepaymentofcapital,buthavenofurtherrighttoparticipateinprofitsorassetsandarenotentitledtobepresentorvoteatgeneralmeetingsunlesstheirdividendisinarrearsorunlessthebusinessofthemeetingincludescertainmatters,whicharespecifiedintheArticlesofAssociation.Dividendsonthe7%‘A’CumulativePreferenceSharesarepayablehalf-yearlyon5Apriland5Octoberineachyear.The7%‘A’CumulativePreferenceSharesrepresent0.39%ofthetotalissuedsharecapital.TreasuryShares/ownshares2018€m2017€mAt1January(15)(14)NewsharesallottedtotheEmployeeBenefitTrust(ownshares)(56)(63)OwnsharesreleasedbytheEmployeeBenefitTrustunderthe2014PerformanceSharePlan5663SharesacquiredbyCRHplc(TreasuryShares)(i)(ii)(789)-SharesacquiredbyEmployeeBenefitTrust(ownshares)(3)(3)TreasuryShares/ownsharesreissued152At31December(792)(15)Notes(i)to(ii)aresetoutbelow.190CRHAnnualReportandForm20-F|2018ThemovementinthenumberofTreasuryShares/ownsharesduringthefinancialyearwasasfollows:20182017At1January391,757368,403NewsharesallottedtotheEmployeeBenefitTrust(ownshares)2,034,1121,890,668OwnsharesreleasedbytheEmployeeBenefitTrustunderthe2014PerformanceSharePlan(2,034,112)(1,890,668)SharesacquiredbyCRHplc(TreasuryShares)(i)(ii)27,901,471-SharesacquiredbyEmployeeBenefitTrust(ownshares)108,37796,783TreasuryShares/ownsharesreissued(iii)(557,678)(73,429)At31December27,843,927391,757SplitofTreasury/ownshares(iv)TreasuryShares27,551,38653,848Ownshares292,541337,90927,843,927391,757(i)InApril2018,CRHannounceditsintentiontointroduceasharerepurchaseprogrammetorepurchaseOrdinaryShares(includingIncomeShares)ofupto€1billion(the‘Programme’).CRHsubsequentlyannouncedinMay2018andAugust2018thatithadenteredintoarrangementswithUBSA.G.,LondonBranchand,inNovember2018withMerrilLynchInternational,torepurchaseOrdinarySharesonCRH’sbehalf.At31December2018thetotalcostofsharesrepurchasedundertheprogrammewas€789million.(ii)On2January2019,CRHcommencedPhase4oftheProgrammethrougharrangements,foranadditional€200million,withUBSA.G.,LondonBranch.Thiswillcompletethesharebuybackprogramme.(iii)ThesereissuedTreasuryShareswerepreviouslypurchasedatanaveragepriceof€27.96(2017:€15.89).(iv)Asatthebalancesheetdate,thenominalvalueoftheTreasurySharesandownshareswas€9.4millionand€0.1millionrespectively(2017:€nilmillionand€0.1millionrespectively).DividendshavebeenwaivedbytheTrusteesoftheownshares.Reconciliationofsharesissuedtonetproceeds2018€m2017€m2016€mSharesissuedatnominalamount:-PerformanceSharePlanAwards11--scripsharesissuedinlieuofcashdividends-12-shareoptionsandshareparticipationschemes--1Premiumonsharesissued117180216Totalvalueofsharesissued118182219Issueofscripsharesinlieuofcashdividends(note13)(51)(77)(167)SharesallottedtotheEmployeeBenefitTrust(v)(56)(63)-Netproceedsfromissueofshares114252(v)Duringtheyear,shareswereallottedtotheEmployeeBenefitTrusttosatisfythevestingandreleaseofawardsunderthe2014PerformanceSharePlantoqualifyingemployees.AnincreaseinnominalShareCapitalandSharePremiumof€56million(2017:€63million)aroseontheallotmenttotheEmployeeBenefitTrust.Sharepremium2018€m2017€mAt1January6,4176,237Premiumarisingonsharesissued117180At31December6,5346,417191OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201832.BusinessCombinationsTheacquisitionscompletedduringtheyearended31December2018byreportablesegment,togetherwiththecompletiondates,aredetailedbelow;thesetransactionsentailedtheacquisitionofaneffective100%stakeexceptwhereindicatedtothecontrary:EuropeHeavyside:France:BellefleurGroup(1July);Ireland:landadjacenttoGooigQuarry(10December)andlandadjacenttoCastlemineQuarry(19December);IsleofMan:MiniMixConcreteLimited(19September);andUK:AlunGriffithsContractorsLtd.(4January),HopkinsConcreteLtd.(13April),certainassetsofBreedonplc(1July),landadjacenttoKingsleyQuarry(16thJuly),landadjacenttoLangfordQuarry(21September)andKeele&KingsleyQuarries(16November).EuropeLightside:Australia:ConnollyKeyJointPtyLtd.(30April);andUK:NALDevelopmentsLtd.(3April).EuropeDistribution:Belgium:FlorisanNV(1August);andGermany:Bergmann&FranzNach.GmbH&Co.KG(1November).AmericasMaterials:Substantialacquisition:On20June,CRHacquiredAshGroveCementCompany(AshGrove),aleadingUScementmanufacturerheadquarteredinOverlandPark,Kansas,US.AshGroveoperateseightcementplantsacrosseightstates,combinedwithextensivereadymixedconcrete,aggregates,packagedproducts(managedwithinourAmericasProductssegmentpost-acquisition)andassociatedlogisticsassetsacrosstheUS.Arkansas:Sharp’sProperty(26June);Canada:certainassetsofSeegmillerCompanies(9May);Florida:AmericanCementCompany,LLC.(17April);Georgia:assetsofMartinMarietta’sForsythQuarry(27April);Idaho:assetsofValleyPavingCompany(2April);Maine:assetsofBruceA.Manzer,Inc.andNorthCountryConcrete,LLC.(2February);Michigan:MaybeeProperty(5April)andDennistonProperty(10April);Mississippi:HazlehurstProperty(29November);Ohio:EastLibertyProperty(20February),certainassetsofAllardExcavation,LLC.anditsaffiliateMaeMaterials,LLC.(16May)andNewConklinProperty(14December);Oklahoma:assetsofGlover&Associates(6June),certainassetsofMid-ContinentConcreteCompanyandAllianceTransportation,Inc.(22June)andRobertsQuarry(19November);Tennessee:SandProductsofMonterey,LLC.(21September);Texas:RobinsonProperty(9April),PeralesProperty(3July)andcertainassetsofTex-Mix(18September);Virginia:certainassetsofPoundingMillQuarryCorporation(2July);Washington:assetsofAmericanRockProducts(2March)andassetsofSpokaneRockProducts(2March);andWestVirginia:DavidHillConcrete(24August).AmericasProducts:Alabama:CoralIndustries,Inc.(10April);Canada:LesDistributionsVimac,Inc.(31July);Idaho:ValleyPrecast,Inc.(6November);Illinois:ConcreteSpecialtiesCompany,Inc.(15August);Maine:SIGCO,LLC.(6July);andUtah:assetsofRobertsonManufacturing,Inc.(22March).192CRHAnnualReportandForm20-F|2018Theidentifiablenetassetsacquired,includingadjustmentstoprovisionalfairvalues,wereasfollows:AshGroveOtheracquisitionsTotal2018€m2018€m2018€m2017€m2016€mASSETSNon-currentassetsProperty,plantandequipment2,0765382,6141,53619Intangibleassets-58585614Equityaccountedinvestments1-1--Totalnon-currentassets2,0775962,6731,59233CurrentassetsInventories183722551149Tradeandotherreceivables(i)19112731812928Cashandcashequivalents4821691744Totalcurrentassets42222064241741LIABILITIESTradeandotherpayables(94)(130)(224)(149)(14)Provisionsforliabilities(81)(3)(84)(49)18Retirementbenefitobligations(114)(1)(115)(52)(1)Interest-bearingloansandborrowingsandfinanceleases(32)(42)(74)(12)(3)Currentincometaxliabilities(8)(7)(15)(22)4Deferredincometaxliabilities(365)(46)(411)(132)35Totalliabilities(694)(229)(923)(416)39Totalidentifiablenetassetsatfairvalue1,8055872,3921,593113Goodwillarisingonacquisition(ii)1,2043001,50448771Jointventuresbecomingsubsidiaries-(120)(120)--Non-controllinginterests*(48)-(48)(20)(9)Totalconsideration2,9617673,7282,060175Considerationsatisfiedby:Cashpayments2,9616133,5742,015153Assetexchange-1212--Deferredconsideration(statedatnetpresentcost)-10104521Contingentconsideration(iii)-9393-1Profitonstepacquisition(iv)-3939--Totalconsideration2,9617673,7282,060175NetcashoutflowarisingonacquisitionCashconsideration2,9616133,5742,015153Less:cashandcashequivalentsacquired(48)(21)(69)(174)(4)TotaloutflowintheConsolidatedStatementofCashFlows2,9135923,5051,841149Notes(i)to(iv)aresetoutoverleaf.*Non-controllinginterestsaremeasuredattheproportionateshareofnetassets.193OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201832.BusinessCombinations-continuedCRHperformsadetailedquantitativeandqualitativeassessmentofeachacquisitioninordertodeterminewhetheritismaterialforthepurposesofseparatedisclosureunderIFRS3BusinessCombinations.TheacquisitionofAshGroveisdeemedtobeamaterialacquisition.Noneoftheremainingacquisitionscompletedduringthefinancialyearwereconsideredsufficientlymaterialtowarrantseparatedisclosureoftheattributablefairvalues.DuetothesizeandscaleoftheAshGroveacquisition,thedeterminationofthefairvaluesofidentifiableassetsacquiredandliabilitiesassumedasdisclosedonpage193areprovisional(principallyinrespectofproperty,plantandequipment,provisionsforliabilitiesandtheassociatedgoodwillanddeferredtaxaspects).Thefairvalueassignedtoidentifiableassetsandliabilitiesacquiredisbasedonestimatesandassumptionsmadebymanagementatthetimeofacquisition.CRHmayreviseitspurchasepriceallocationduringthesubsequentreportingwindowaspermittedunderIFRS3.(i)TradeandotherreceivablesGrosscontractualamountsdueLossallowanceFairvalue2018€m2017€m2016€m2018€m2017€m2016€m2018€m2017€m2016€mAshGrove194--(3)--191--Otheracquisitions13013230(3)(3)(2)12712928TotalGroup32413230(6)(3)(2)31812928(ii)TheprincipalfactorcontributingtotherecognitionofgoodwillonacquisitionsenteredintobytheGroupistherealisationofcostsavingsandothersynergieswithexistingentitiesintheGroupwhichdonotqualifyforseparaterecognitionasintangibleassets.Duetotheasset-intensivenatureofoperationsintheEuropeHeavysideandAmericasMaterialsbusinesssegments,nosignificantseparatelyidentifiableintangibleassetsarerecognisedonbusinesscombinationsinthesesegments.€277millionofthegoodwillrecognisedinrespectofacquisitionscompletedin2018isexpectedtobedeductiblefortaxpurposes(2017:€260million;2016:€15million).(iii)Thefairvalueofcontingentconsiderationof€93millionisarrivedatthroughdiscountingtheexpectedpayment(basedonscenariomodelling)topresentvalue.Onanundiscountedbasis,thecorrespondingfuturepaymentsoncurrentyearacquisitions,forwhichtheGroupmaybeliable,rangesfrom€136millionto€206million.Thisisbasedonarangeofestimatedpotentialoutcomesoftheexpectedpaymentamounts.(iv)TheprofitonstepacquisitionrelatestotheacquisitionofacontrollingstakeinAmericanCementCompany,LLC.Againof€39millionwasrecognisedfromremeasuringthe50%equityinterestintheacquireeheldbytheGrouppriortothebusinesscombinationtoitsacquisitiondatefairvalueof€52million.ThegainisrecognisedwithintheprofitondisposalslineintheConsolidatedIncomeStatement.Acquisition-relatedcosts2018€m2017€m2016€mAshGrove13--Otheracquisitions7112TotalGroup20112Theaboveacquisition-relatedcosts,whichexcludepost-acquisitionintegrationcosts,havebeenincludedinoperatingcostsintheConsolidatedIncomeStatement(note4).194CRHAnnualReportandForm20-F|2018Thefollowingtableanalysesthe44acquisitionscompletedin2018(2017:31acquisitions;2016:21acquisitions)byreportablesegmentandprovidesdetailsofthegoodwillandconsiderationfiguresarisingineachofthosesegments:NumberofacquisitionsGoodwillConsiderationReportablesegments201820172016201820172016201820172016€m€m€m€m€m€mEuropeHeavyside10854615528669815EuropeLightside2-214-734-22EuropeDistribution221-17-3330-Europe1410860172915372837AmericasMaterials(i)241381,353239103,3981,17197AmericasProducts(i)6856076717716233Americas3021131,413315173,5751,333130TotalGroup4431211,473487263,7282,061167Adjustmentstoprovisionalfairvaluesofprioryearacquisitions31-45-(1)8Total1,504487713,7282,060175(i)TheacquisitionofAshGroveisincludedwithintheAmericasMaterialssegmentwithaportionofgoodwillandconsiderationbeingallocatedtotheAmericasProductssegmenttoreflecttheacquiredpackagedproductsbusiness.Thepost-acquisitionimpactofacquisitionscompletedduringtheyearontheGroup’sprofitforthefinancialyearwasasfollows:AshGrove2018€mOtheracquisitions2018€mTotal2018€m2017€m2016€mRevenue6335951,228532101Profit/(loss)beforetaxforthefinancialyear11925144(2)1TherevenueandprofitoftheGroupforthefinancialyeardeterminedinaccordancewithIFRSasthoughtheacquisitionseffectedduringtheyearhadbeenatthebeginningoftheyearwouldhavebeenasfollows:Pro-forma20182018acquisitions€mCRHGroupexcluding2018acquisitions€mCRHGroupincluding2018acquisitions€mRevenue2,09525,56227,657Profitbeforetaxforthefinancialyear1901,7181,908195OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201833.Non-controllingInterestsThetotalnon-controllinginterestat31December2018is€525million(2017:€486million)ofwhich€384million(2017:€391million)relatestoRepublicCement&BuildingMaterials(RCBM),Inc.andRepublicCementLand&Resources(RCLR),Inc.Thenon-controllinginterestsinrespectoftheGroup’sothersubsidiariesarenotconsideredtobematerial.NamePrincipalactivityCountryofincorporationEconomicownershipinterestheldbynon-controllinginterestRepublicCement&BuildingMaterials,Inc.Manufacture,developmentandPhilippines45%andRepublicCementLand&ResourcesInc.saleofcementandbuildingmaterialsThefollowingissummarisedfinancialinformationforRCBMandRCLRpreparedinaccordancewithIFRS12DisclosureofInterestsinOtherEntities.ThisinformationisbeforeintragroupeliminationswithotherGroupcompanies.Summarisedfinancialinformation2018€m2017€m(Loss)/profitfortheyear(11)14Currentassets153159Non-currentassets1,3511,292Currentliabilities(160)(140)Non-currentliabilities(712)(663)Netassets632648Cashflowsfromoperatingactivities369Therewerenodividendspaidtonon-controllinginterestsduringthecurrentortheprioryear.CRHholds40%oftheequitysharecapitalinRCBMandRCLRandhasaneconomicinterestof55%ofthecombinedPhilippinesbusiness.Non-controllinginterestrelatestoanotherpartywhoholds60%oftheequitysharecapitalinRCBMandRCLRandhasaneconomicinterestof45%ofthecombinedPhilippinesbusiness.CRHhasobtainedcontrol(asdefinedunderIFRS10ConsolidatedFinancialStatements)byvirtueofcontractualarrangementswhichgiveCRHpowertodirecttherelevantnon-nationalisedactivitiesofthebusiness,incompliancewithPhilippinelaw.19634.RelatedPartyTransactionsTheprincipalrelatedpartyrelationshipsrequiringdisclosureintheConsolidatedFinancialStatementsoftheGroupunderIAS24RelatedPartyDisclosurespertainto:theexistenceofsubsidiaries,jointventuresandassociates;transactionswiththeseentitiesenteredintobytheGroup;theidentificationandcompensationofkeymanagementpersonnel;andleasearrangements.Subsidiaries,jointventuresandassociatesTheConsolidatedFinancialStatementsincludethefinancialstatementsoftheCompany(CRHplc,theultimateparent)anditssubsidiaries,jointventuresandassociatesasdocumentedintheaccountingpoliciesonpages128to138.TheGroup’sprincipalsubsidiaries,jointventuresandassociatesaredisclosedonpages252to257.Salestoandpurchasesfromjointventuresandassociatesareasfollows:JointVenturesAssociates2018€m2017€m2016€m2018€m2017€m2016€mSales10711188405156Purchases315554193400401LoansextendedbytheGrouptojointventuresandassociates(seenote17)areincludedinfinancialassets.Amountsreceivablefromandpayabletoequityaccountedinvestments(arisingfromtheaforementionedsalesandpurchasestransactions)asatthebalancesheetdateareincludedasseparatelineitemsinnotes19and20totheConsolidatedFinancialStatements.Termsandconditionsoftransactionswithsubsidiaries,jointventuresandassociatesIngeneral,thetransferpricingpolicyimplementedbytheGroupacrossitssubsidiariesismarket-based.Salestoandpurchasesfromjointventuresandassociatesareconductedintheordinarycourseofbusinessandontermsequivalenttothosethatprevailinarms-lengthtransactions.Theoutstandingbalancesincludedinreceivablesandpayablesasatthebalancesheetdateinrespectoftransactionswithjointventuresandassociatesareunsecuredandsettlementarisesincash.Noguaranteeshavebeeneitherrequestedorprovidedinrelationtorelatedpartyreceivablesandpayables.Loanstojointventuresandassociates(asdisclosedinnote17)areextendedonnormalcommercialtermsintheordinarycourseofbusinesswithinterestaccruingand,ingeneral,paidtotheGroupatpredeterminedintervals.KeymanagementpersonnelForthepurposesofthedisclosurerequirementsofIAS24,theterm“keymanagementpersonnel”(i.e.thosepersonshavingauthorityandresponsibilityforplanning,directingandcontrollingtheactivitiesoftheCompany)comprisestheBoardofDirectorswhichmanagesthebusinessandaffairsoftheCompany.Keymanagementremunerationamountedto:2018€m2017€m2016€mShort-termbenefits8913Post-employmentbenefits111Share-basedpayments-calculatedinaccordancewiththeprinciplesdisclosedinnote9433Total131317Otherthanthesecompensationentitlements,therewerenoothertransactionsinvolvingkeymanagementpersonnel.LeasearrangementsCRHhasanumberofleasearrangementsinplacewithrelatedpartiesacrosstheGroup,whichhavebeennegotiatedonanarms-lengthbasisatmarketrates.Wedonotconsiderthesearrangementstobematerialeitherindividuallyorcollectivelyinthecontextofthe2018,2017and2016ConsolidatedFinancialStatements.35.BoardApprovalTheBoardofDirectorsapprovedandauthorisedforissuethefinancialstatementsonpages123to206inrespectoftheyearended31December2018on27February2019.197CRHAnnualReportandForm20-F|2018OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201836.SupplementalGuarantorInformationThefollowingconsolidatinginformationpresentsCondensedConsolidatedBalanceSheetsasat31December2018and2017andCondensedConsolidatedIncomeStatementsandCondensedConsolidatedStatementsofComprehensiveIncomeandCondensedConsolidatedStatementsofCashFlowfortheyearsended31December2018,2017and2016oftheCompanyandCRHAmerica,Inc.asrequiredbyArticle3-10(c)ofRegulationS-X.ThisinformationispreparedinaccordancewithIFRSwiththeexceptionthatthesubsidiariesareaccountedforasinvestmentsundertheequitymethodratherthanbeingconsolidated.CRHAmerica,Inc.is100%ownedbytheCompany.TheGuaranteesoftheGuarantorarefullandunconditional.CRHplcalsofullyandunconditionallyguaranteessecuritiesissuedbyCRHAmericaFinance,Inc.,whichisa100%ownedfinancesubsidiaryofCRHplc.CRHAmerica,Inc.(the‘Issuer’)hasthefollowingnoteswhicharefullyandunconditionallyguaranteedbyCRHplc(the‘Guarantor’):US$400million5.750%Notesdue2021–listedontheNYSEUS$1,250million3.875%Notesdue2025–listedonEuronextDublinUS$300million6.40%Notesdue2033–listedonEuronextDublin(i)US$500million5.125%Notesdue2045–listedonEuronextDublin(i)OriginallyissuedasaUS$300millionbondinSeptember2003.SubsequentlyinAugust2009andDecember2010,US$87.445millionoftheissuednoteswereacquiredbyCRHplcaspartofliabilitymanagementexercisesundertaken.198CRHAnnualReportandForm20-F|2018SupplementalCondensedConsolidatedBalanceSheetasat31December2018Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mASSETSNon-currentassetsProperty,plantandequipment--15,761-15,761Intangibleassets--8,433-8,433Subsidiaries14,8925721,682(17,146)-Investmentsaccountedforusingtheequitymethod--1,163-1,163Advancestosubsidiariesandparentundertakings-3,550-(3,550)-Otherfinancialassets--23-23Otherreceivables--181-181Derivativefinancialinstruments--30-30Deferredincometaxassets--71-71Totalnon-currentassets14,8924,12227,344(20,696)25,662CurrentassetsInventories--3,061-3,061Tradeandotherreceivables--4,074-4,074Advancestosubsidiariesandparentundertakings1,233-507(1,740)-Currentincometaxrecoverable--15-15Derivativefinancialinstruments--15-15Cashandcashequivalents411-1,935-2,346Totalcurrentassets1,644-9,607(1,740)9,511Totalassets16,5364,12236,951(22,436)35,173EQUITYCapitalandreservesattributabletotheCompany’sequityholders16,0291,95015,196(17,146)16,029Non-controllinginterests--525-525Totalequity16,0291,95015,721(17,146)16,554LIABILITIESNon-currentliabilitiesInterest-bearingloansandborrowings-2,0986,600-8,698Derivativefinancialinstruments-162-18Deferredincometaxliabilities--2,209-2,209Otherpayables--472-472Advancesfromsubsidiaryandparentundertakings--3,550(3,550)-Retirementbenefitobligations--424-424Provisionsforliabilities--719-719Totalnon-currentliabilities-2,11413,976(3,550)12,540CurrentliabilitiesTradeandotherpayables-214,588-4,609Advancesfromsubsidiaryandparentundertakings507-1,233(1,740)-Currentincometaxliabilities--443-443Interest-bearingloansandborrowings-37581-618Derivativefinancialinstruments--41-41Provisionsforliabilities--368-368Totalcurrentliabilities507587,254(1,740)6,079Totalliabilities5072,17221,230(5,290)18,619Totalequityandliabilities16,5364,12236,951(22,436)35,173199OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201836.SupplementalGuarantorInformation-continuedSupplementalCondensedConsolidatedBalanceSheetasat31December2017Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mASSETSNon-currentassetsProperty,plantandequipment--13,094-13,094Intangibleassets--7,214-7,214Subsidiaries8,6584581,682(10,798)-Investmentsaccountedforusingtheequitymethod--1,248-1,248Advancestosubsidiariesandparentundertakings-3,627-(3,627)-Otherfinancialassets--25-25Otherreceivables--156-156Derivativefinancialinstruments--30-30Deferredincometaxassets--95-95Totalnon-currentassets8,6584,08523,544(14,425)21,862CurrentassetsInventories--2,715-2,715Tradeandotherreceivables-43,626-3,630Advancestosubsidiariesandparentundertakings6,141-704(6,845)-Currentincometaxrecoverable--165-165Derivativefinancialinstruments-430-34Cashandcashequivalents401-1,714-2,115Assetsheldforsale--1,112-1,112Totalcurrentassets6,542810,066(6,845)9,771Totalassets15,2004,09333,610(21,270)31,633EQUITYCapitalandreservesattributabletotheCompany’sequityholders14,4911,7979,001(10,798)14,491Non-controllinginterests--486-486Totalequity14,4911,7979,487(10,798)14,977LIABILITIESNon-currentliabilitiesInterest-bearingloansandborrowings-2,0205,640-7,660Derivativefinancialinstruments-3--3Deferredincometaxliabilities--1,666-1,666Otherpayables--226-226Advancesfromsubsidiaryandparentundertakings--3,627(3,627)-Retirementbenefitobligations--377-377Provisionsforliabilities--693-693Totalnon-currentliabilities-2,02312,229(3,627)10,625CurrentliabilitiesTradeandotherpayables3294,502-4,534Advancesfromsubsidiaryandparentundertakings704-6,141(6,845)-Currentincometaxliabilities--458-458Interest-bearingloansandborrowings224470-316Derivativefinancialinstruments--11-11Provisionsforliabilities--371-371Liabilitiesassociatedwithassetsclassifiedasheldforsale--341-341Totalcurrentliabilities70927311,894(6,845)6,031Totalliabilities7092,29624,123(10,472)16,656Totalequityandliabilities15,2004,09333,610(21,270)31,633200CRHAnnualReportandForm20-F|2018SupplementalCondensedConsolidatedIncomeStatementYearended31December2018Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mRevenue--26,790-26,790Costofsales--(18,152)-(18,152)Grossprofit--8,638-8,638Operatingincome/(costs)1,741-(8,202)-(6,461)Groupoperatingprofit1,741-436-2,177Lossondisposals(15)-(9)-(24)Profitbeforefinancecosts1,726-427-2,153Financecosts-(224)(346)231(339)Financeincome123133(231)34Otherfinancialexpense--(46)-(46)Shareofsubsidiaries’profitbeforetax71115-(186)-Shareofequityaccountedinvestments’profit60-60(60)60Profitbeforetaxfromcontinuingoperations1,858122128(246)1,862Incometaxexpense(426)(32)(394)426(426)Groupprofitforthefinancialyearfromcontinuingoperations1,43290(266)1801,436Profitaftertaxforthefinancialyearfromdiscontinuedoperations1,085-1,085(1,085)1,085Groupprofitforthefinancialyear2,51790819(905)2,521Profitattributableto:EquityholdersoftheCompanyFromcontinuingoperations1,43290(270)1801,432Fromdiscontinuedoperations1,085-1,085(1,085)1,085Non-controllinginterestsFromcontinuingoperations--4-4Groupprofitforthefinancialyear2,51790819(905)2,521SupplementalCondensedConsolidatedStatementofComprehensiveIncomeGroupprofitforthefinancialyear2,51790819(905)2,521OthercomprehensiveincomeItemsthatmaybereclassifiedtoprofitorlossinsubsequentyears:Currencytranslationeffects27763213(277)276Lossesrelatingtocashflowhedges(40)-(40)40(40)Taxrelatingtocashflowhedges5-5(5)524263178(242)241Itemsthatwillnotbereclassifiedtoprofitorlossinsubsequentyears:Remeasurementofretirementbenefitobligations10-10(10)10Taxrelatingtoretirementbenefitobligations(1)-(1)1(1)9-9(9)9Totalothercomprehensiveincomeforthefinancialyear25163187(251)250Totalcomprehensiveincomeforthefinancialyear2,7681531,006(1,156)2,771Attributableto:EquityholdersoftheCompany2,7681531,003(1,156)2,768Non-controllinginterests--3-3Totalcomprehensiveincomeforthefinancialyear2,7681531,006(1,156)2,771201OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201836.SupplementalGuarantorInformation-continuedSupplementalCondensedConsolidatedIncomeStatementYearended31December2017Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mRevenue--25,220-25,220Costofsales--(16,903)-(16,903)Grossprofit--8,317-8,317Operatingincome/(costs)22-(6,244)-(6,222)Groupoperatingprofit22-2,073-2,095Profitondisposals--56-56Profitbeforefinancecosts22-2,129-2,151Financecosts-(235)(308)242(301)Financeincome224210(242)12Otherfinancialexpense--(60)-(60)Shareofsubsidiaries’profitbeforetax1,75483-(1,837)-Shareofequityaccountedinvestments’profit65-65(65)65Profitbeforetaxfromcontinuingoperations1,843901,836(1,902)1,867Incometaxexpense(55)(29)(26)55(55)Groupprofitforthefinancialyearfromcontinuingoperations1,788611,810(1,847)1,812Profitaftertaxforthefinancialyearfromdiscontinuedoperations107-107(107)107Groupprofitforthefinancialyear1,895611,917(1,954)1,919Profitattributableto:EquityholdersoftheCompanyFromcontinuingoperations1,788611,786(1,847)1,788Fromdiscontinuedoperations107-107(107)107Non-controllinginterestsFromcontinuingoperations--24-24Groupprofitforthefinancialyear1,895611,917(1,954)1,919SupplementalCondensedConsolidatedStatementofComprehensiveIncomeGroupprofitforthefinancialyear1,895611,917(1,954)1,919OthercomprehensiveincomeItemsthatmaybereclassifiedtoprofitorlossinsubsequentyears:Currencytranslationeffects(1,015)(186)(890)1,015(1,076)Gainsrelatingtocashflowhedges8-8(8)8(1,007)(186)(882)1,007(1,068)Itemsthatwillnotbereclassifiedtoprofitorlossinsubsequentyears:Remeasurementofretirementbenefitobligations114-114(114)114Taxonitemsrecogniseddirectlywithinothercomprehensiveincome(33)-(33)33(33)81-81(81)81Totalothercomprehensiveincomeforthefinancialyear(926)(186)(801)926(987)Totalcomprehensiveincomeforthefinancialyear969(125)1,116(1,028)932Attributableto:EquityholdersoftheCompany969(125)1,153(1,028)969Non-controllinginterests--(37)-(37)Totalcomprehensiveincomeforthefinancialyear969(125)1,116(1,028)932202CRHAnnualReportandForm20-F|2018SupplementalCondensedConsolidatedIncomeStatementYearended31December2016Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mRevenue--24,789-24,789Costofsales--(16,566)-(16,566)Grossprofit--8,223-8,223Operatingincome/(costs)20-(6,335)-(6,315)Groupoperatingprofit20-1,888-1,908Profitondisposals--53-53Profitbeforefinancecosts20-1,941-1,961Financecosts-(266)(334)275(325)Financeincome22756(275)8Otherfinancialexpense--(66)-(66)Shareofsubsidiaries’profitbeforetax1,52995-(1,624)-Shareofequityaccountedinvestments’profit42-42(42)42Profitbeforetaxfromcontinuingoperations1,5931041,589(1,666)1,620Incometaxexpense(431)(41)(390)431(431)Groupprofitforthefinancialyearfromcontinuingoperations1,162631,199(1,235)1,189Profitaftertaxforthefinancialyearfromdiscontinuedoperations81-81(81)81Groupprofitforthefinancialyear1,243631,280(1,316)1,270Profitattributableto:EquityholdersoftheCompanyFromcontinuingoperations1,162631,172(1,235)1,162Fromdiscontinuedoperations81-81(81)81Non-controllinginterestsFromcontinuingoperations--27-27Groupprofitforthefinancialyear1,243631,280(1,316)1,270SupplementalCondensedConsolidatedStatementofComprehensiveIncomeGroupprofitforthefinancialyear1,243631,280(1,316)1,270OthercomprehensiveincomeItemsthatmaybereclassifiedtoprofitorlossinsubsequentyears:Currencytranslationeffects(71)49(131)71(82)Gainsrelatingtocashflowhedges14-14(14)14(57)49(117)57(68)Itemsthatwillnotbereclassifiedtoprofitorlossinsubsequentyears:Remeasurementofretirementbenefitobligations(61)-(61)61(61)Taxonitemsrecogniseddirectlywithinothercomprehensiveincome3-3(3)3(58)-(58)58(58)Totalothercomprehensiveincomeforthefinancialyear(115)49(175)115(126)Totalcomprehensiveincomeforthefinancialyear1,1281121,105(1,201)1,144Attributableto:EquityholdersoftheCompany1,1281121,089(1,201)1,128Non-controllinginterests--16-16Totalcomprehensiveincomeforthefinancialyear1,1281121,105(1,201)1,144203OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201836.SupplementalGuarantorInformation-continuedSupplementalCondensedConsolidatedStatementofCashFlowYearended31December2018Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mCashflowsfromoperatingactivitiesProfitbeforetaxfromcontinuingoperations1,858122128(246)1,862Profitbeforetaxfromdiscontinuedoperations1,558-1,558(1,558)1,558Profitbeforetax3,4161221,686(1,804)3,420Financecosts(net)(1)(7)359-351Shareofsubsidiaries’profitbeforetax(1,629)(115)-1,744-Shareofequityaccountedinvestments’profit(60)-(60)60(60)Loss/(profit)ondisposals15-(1,554)-(1,539)Groupoperatingprofit1,741-431-2,172Depreciationcharge--1,071-1,071Amortisationofintangibleassets--61-61Impairmentcharge--56-56Share-basedpayment(income)/expense(13)-80-67Other(primarilypensionpayments)--(67)-(67)Netmovementonworkingcapitalandprovisions-(4)(459)-(463)Cashgeneratedfromoperations1,728(4)1,173-2,897Interestpaid(includingfinanceleases)-(224)(342)231(335)Corporationtaxpaid-(32)(631)-(663)Netcashinflow/(outflow)fromoperatingactivities1,728(260)2002311,899CashflowsfrominvestingactivitiesProceedsfromdisposals(netofcashdisposedanddeferredproceeds)--3,009-3,009Interestreceived123133(231)34Dividendsreceivedfromequityaccountedinvestments--48-48Purchaseofproperty,plantandequipment--(1,121)-(1,121)Advancesfromsubsidiaryandparentundertakings(184)241238(295)-Acquisitionofsubsidiaries(netofcashacquired)--(3,505)-(3,505)Otherinvestmentsandadvances--(2)-(2)Deferredandcontingentacquisitionconsiderationpaid--(55)-(55)Netcash(outflow)/inflowfrominvestingactivities(183)472(1,355)(526)(1,592)CashflowsfromfinancingactivitiesProceedsfromissueofshares(net)11---11Proceedsfromexerciseofshareoptions7---7Advancestosubsidiaryandparentundertakings(238)-(57)295-Increaseininterest-bearingloans,borrowingsandfinanceleases-311,403-1,434Netcashflowarisingfromderivativefinancialinstruments--6-6Treasury/ownsharespurchased(792)---(792)Repaymentofinterest-bearingloans,borrowingsandfinanceleases(2)(243)(1)-(246)DividendspaidtoequityholdersoftheCompany(521)---(521)Dividendspaidtonon-controllinginterests--(12)-(12)Netcash(outflow)/inflowfromfinancingactivities(1,535)(212)1,339295(113)Increaseincashandcashequivalents10-184-194ReconciliationofopeningtoclosingcashandcashequivalentsCashandcashequivalentsat1January401-1,734-2,135Translationadjustment--17-17Increaseincashandcashequivalents10-184-194Cashandcashequivalentsat31December411-1,935-2,346204CRHAnnualReportandForm20-F|2018SupplementalCondensedConsolidatedStatementofCashFlowYearended31December2017Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mCashflowsfromoperatingactivitiesProfitbeforetaxfromcontinuingoperations1,843901,836(1,902)1,867Profitbeforetaxfromdiscontinuedoperations146-146(146)146Profitbeforetax1,989901,982(2,048)2,013Financecosts(net)(2)(7)358-349Shareofsubsidiaries’profitbeforetax(1,900)(83)-1,983-Shareofequityaccountedinvestments’profit(65)-(65)65(65)Profitondisposals--(59)-(59)Groupoperatingprofit22-2,216-2,238Depreciationcharge--1,006-1,006Amortisationofintangibleassets--66-66Share-basedpayment(income)/expense(1)-66-65Other(primarilypensionpayments)--(186)-(186)Netmovementonworkingcapitalandprovisions-(11)(198)-(209)Cashgeneratedfromoperations21(11)2,970-2,980Interestpaid(includingfinanceleases)-(236)(323)242(317)Corporationtaxpaid-(29)(445)-(474)Netcashinflow/(outflow)fromoperatingactivities21(276)2,2022422,189CashflowsfrominvestingactivitiesProceedsfromdisposals(netofcashdisposedanddeferredproceeds)--222-222Interestreceived22429(242)11Dividendsreceivedfromequityaccountedinvestments--31-31Purchaseofproperty,plantandequipment--(1,044)-(1,044)Advancesfromsubsidiaryandparentundertakings407356-(763)-Acquisitionofsubsidiaries(netofcashacquired)--(1,841)-(1,841)Otherinvestmentsandadvances--(11)-(11)Deferredandcontingentacquisitionconsiderationpaid--(53)-(53)Netcashinflow/(outflow)frominvestingactivities409598(2,687)(1,005)(2,685)CashflowsfromfinancingactivitiesProceedsfromissueofshares(net)42---42Transactionsinvolvingnon-controllinginterests--(37)-(37)Advancestosubsidiaryandparentundertakings--(763)763-Increaseininterest-bearingloans,borrowingsandfinanceleases-61,004-1,010Netcashflowarisingfromderivativefinancialinstruments-11158-169Premiumpaidonearlydebtredemption-(18)--(18)Treasury/ownsharespurchased(3)---(3)Repaymentofinterest-bearingloans,borrowingsandfinanceleases-(321)(22)-(343)DividendspaidtoequityholdersoftheCompany(469)---(469)Dividendspaidtonon-controllinginterests--(8)-(8)Netcash(outflow)/inflowfromfinancingactivities(430)(322)332763343Decreaseincashandcashequivalents--(153)-(153)ReconciliationofopeningtoclosingcashandcashequivalentsCashandcashequivalentsat1January401-2,048-2,449Translationadjustment--(161)-(161)Decreaseincashandcashequivalents--(153)-(153)Cashandcashequivalentsat31December401-1,734-2,135205OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|201836.SupplementalGuarantorInformation-continuedSupplementalCondensedConsolidatedStatementofCashFlowYearended31December2016Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mCashflowsfromoperatingactivitiesProfitbeforetaxfromcontinuingoperations1,5931041,589(1,666)1,620Profitbeforetaxfromdiscontinuedoperations121-121(121)121Profitbeforetax1,7141041,710(1,787)1,741Financecosts(net)(2)(9)394-383Shareofsubsidiaries’profitbeforetax(1,650)(95)-1,745-Shareofequityaccountedinvestments’profit(42)-(42)42(42)Profitondisposals--(55)-(55)Groupoperatingprofit20-2,007-2,027Depreciationcharge--1,009-1,009Amortisationofintangibleassets--71-71Impairmentcharge--23-23Share-basedpayment(income)/expense(3)-49-46Other(primarilypensionpayments)--(65)-(65)Netmovementonworkingcapitalandprovisions-(1)57-56Cashgeneratedfromoperations17(1)3,151-3,167Interestpaid(includingfinanceleases)-(266)(355)275(346)Corporationtaxpaid-(41)(440)-(481)Netcashinflow/(outflow)fromoperatingactivities17(308)2,3562752,340CashflowsfrominvestingactivitiesProceedsfromdisposals(netofcashdisposedanddeferredproceeds)--283-283Interestreceived22756(275)8Dividendsreceivedfromequityaccountedinvestments--40-40Purchaseofproperty,plantandequipment--(853)-(853)Advancesfromsubsidiaryandparentundertakings287644-(931)-Acquisitionofsubsidiaries(netofcashacquired)--(149)-(149)Otherinvestmentsandadvances--(7)-(7)Deferredandcontingentacquisitionconsiderationpaid--(57)-(57)Netcashinflow/(outflow)frominvestingactivities289919(737)(1,206)(735)CashflowsfromfinancingactivitiesProceedsfromissueofshares(net)52---52Advancestosubsidiaryandparentundertakings--(931)931-Increaseininterest-bearingloans,borrowingsandfinanceleases--600-600Netcashflowarisingfromderivativefinancialinstruments-25(30)-(5)Treasury/ownsharespurchased(4)---(4)Repaymentofinterest-bearingloans,borrowingsandfinanceleases(9)(636)(1,370)-(2,015)DividendspaidtoequityholdersoftheCompany(352)---(352)Dividendspaidtonon-controllinginterests--(8)-(8)Netcash(outflow)/inflowfromfinancingactivities(313)(611)(1,739)931(1,732)Decreaseincashandcashequivalents(7)-(120)-(127)ReconciliationofopeningtoclosingcashandcashequivalentsCashandcashequivalentsat1January408-2,110-2,518Translationadjustment--58-58Decreaseincashandcashequivalents(7)-(120)-(127)Cashandcashequivalentsat31December401-2,048-2,449206CompanyBalanceSheetasat31December20182018€m2017€mNotesFixedassets3Financialassets8,0772,882Currentassets4Debtors1,2336,141Cashatbankandinhand411401Totalcurrentassets1,6446,542Creditors(amountsfallingduewithinoneyear)5Tradeandothercreditors507707Bankloansandoverdrafts-2Totalcurrentliabilities507709Netcurrentassets1,1375,833Netassets9,2148,715Capitalandreserves8Called-upsharecapital2872868Preferencesharecapital11Sharepremiumaccount6,5386,4218TreasurySharesandownshares(792)(15)9Revaluationreserve4242Otherreserves2862759Profitandlossaccount(i)2,8521,705Totalequity9,2148,715(i)Inaccordancewithsection304oftheCompaniesAct2014,theprofitforthefinancialyearoftheCompanyamountedto€1,727million(2017:€24million).N.Hartery,A.Manifold,Directors207CRHAnnualReportandForm20-F|2018OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|2018CompanyStatementofChangesinEquityforthefinancialyearended31December2018Issuedsharecapital€mSharepremiumaccount€mTreasuryShares/ownshares€mRevaluationreserve€mOtherreserves€mProfitandlossaccount€mTotalequity€mAt1January20182876,421(15)422751,7058,715Profitforthefinancialyear-----1,7271,727Totalcomprehensiveincome-----1,7271,727Issueofsharecapital(netofexpenses)-62----62Share-basedpaymentexpense----67-67SharesacquiredbyCRHplc(TreasuryShares)--(789)---(789)Treasury/ownsharesreissued--15--(15)-SharesacquiredbyEmployeeBenefitTrust(ownshares)--(3)---(3)SharesdistributedunderthePerformanceSharePlanAwards155--(56)--Shareoptionexercises-----77Dividends(includingsharesissuedinlieuofdividends)-----(572)(572)At31December20182886,538(792)422862,8529,214At1January20172856,241(14)422762,2299,059Profitforthefinancialyear-----2424Totalcomprehensiveincome-----2424Issueofsharecapital(netofexpenses)1118----119Share-basedpaymentexpense----62-62Treasury/ownsharesreissued--2--(2)-SharesacquiredbyEmployeeBenefitTrust(ownshares)--(3)---(3)SharesdistributedunderthePerformanceSharePlanAwards162--(63)--Dividends(includingsharesissuedinlieuofdividends)-----(546)(546)At31December20172876,421(15)422751,7058,715208NotestotheCompanyBalanceSheet1.BasisofPreparationThefinancialstatementshavebeenpreparedonagoingconcernbasisunderthehistoricalcostconventioninaccordancewiththeCompaniesAct2014andGAAPintheRepublicofIreland(FinancialReportingStandard101ReducedDisclosureFramework(FRS101)).Note2overleafdescribestheprincipalaccountingpoliciesunderFRS101,whichhavebeenappliedconsistently.InthesefinancialstatementstheCompanyhasappliedtheexemptionsavailableunderFRS101inrespectofthefollowingdisclosures:•StatementofCashFlows;•Disclosuresinrespectoftransactionswithwholly-ownedsubsidiaries;•CertainrequirementsofIAS1PresentationofFinancialStatements;•DisclosuresrequiredbyIFRS7FinancialInstrumentDisclosures;•DisclosuresrequiredbyIFRS13FairValueMeasurement;and•TheeffectsofnewbutnotyeteffectiveIFRSsTheCompany’sinvestmentinsharesinitssubsidiarieswasrevaluedat31December1980toreflectthesurplusonrevaluationofcertainproperty,plantandequipment(landandbuildings)ofsubsidiaries.Theoriginalhistoricalcostofthesharesequatedtoapproximately€9million.Theanalysisoftheclosingbalancebetweenamountscarriedatvaluationandatcostisasfollows:2018€m2017€mAtvaluation31December19804747Atcostpost31December19807,6752,516Total7,7222,563Deemedcostinrespectoftheinvestmentinthesesubsidiariesamountedto€400millionatthedateoftransitiontoFRS101.209CRHAnnualReportandForm20-F|2018OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRHAnnualReportandForm20-F|20183.FinancialAssetsTheCompany’sinvestmentinitssubsidiariesisasfollows:Shares€mOther€mTotal€mAt1January2018atcost2,5633192,882Capitalcontributioninrespectofshare-basedpayments-5151Additions5,159-5,159Disposals-(15)(15)At31December2018atcost7,7223558,077Theequivalentdisclosurefortheprioryearisasfollows:At1January2017atcost2,5632552,818Capitalcontributioninrespectofshare-basedpayments-6464At31December2017atcost2,5633192,882TheadditionsintheyearrelatetotheCompany’sinvestmentinitssubsidiariesAgriculturalLimestoneLimited,CRHInternationalUnlimitedCompanyandCRHNorthAmericaLimited.TheCompany’sprincipalsubsidiaries,jointventuresandassociatesaredisclosedonpages252to257.PursuanttoSection348(4)oftheCompaniesAct2014,afulllistofsubsidiaries,jointventuresandassociatedundertakingswillbeannexedtotheCompany’sannualreturntobefiledintheCompaniesRegistrationOfficeinIreland.4.Debtors2018€m2017€mAmountsowedbysubsidiaryundertakings1,2336,141Amountsowedbysubsidiaryundertakingsarerepayableondemand.5.CreditorsAmountsfallingduewithinoneyear2018€m2017€mAmountsowedtosubsidiaryundertakings507704Accrualsandotherpayables-3507707Amountsowedtosubsidiaryundertakingsarerepayableondemand.6.Auditor’sRemuneration(MemorandumDisclosure)InaccordancewithSection322oftheCompaniesAct2014,thefeespaidin2018tothestatutoryauditorforworkengagedbytheParentCompanycomprisedauditfeesof€20,000(2017:€20,000)andotherassuranceservicesof€nil(2017:€nil).211CRHAnnualReportandForm20-F|2018NotestotheCompanyBalanceSheet-continued2.AccountingPoliciesGeneralinformationCRHplc(the‘Company’)anditssubsidiaries(togetherthe‘Group’)isaglobaldiversifiedbuildingmaterialsgroupwhichmanufacturesanddistributesadiverserangeofbuildingmaterialsandproductsforthebuiltenvironment.TheCompanyisapubliclimitedcompanywhosesharesarepubliclytraded.TheCompanyisincorporatedanddomiciledintheRepublicofIreland.TheCompany’sregisterednumberis12965andregisteredofficeaddressis42FitzwilliamSquare,Dublin2,Ireland.Keyaccountingpolicieswhichinvolveestimates,assumptionsandjudgementsPreparationofthefinancialstatementsrequiresmanagementtomakesignificantjudgementsandestimates.Theitemsinthefinancialstatementswherethesejudgementsandestimateshavebeenmadeinclude:FinancialassetsInvestmentsinsubsidiaries,arestatedatcostlessanyaccumulatedimpairmentandarereviewedforimpairmentifthereareindicationsthatthecarryingvaluemaynotberecoverable.ImpairmentassessmentisconsideredaspartoftheGroup’soverallimpairmentassessment.LoansreceivableandpayableIntercompanyloansreceivableandpayableareinitiallyrecognisedatfairvalue.Thesearesubsequentlymeasuredatamortisedcost,lessanylossallowance.OthersignificantaccountingpoliciesOperatingincomeandexpenseOperatingincomeandexpensearisesfromtheCompany’sprincipalactivitiesasaholdingandfinancingcompanyfortheGroupandareaccountedforonanaccrualsbasis.ForeigncurrenciesThefunctionalandpresentationcurrencyoftheCompanyiseuro.Transactionsinforeigncurrenciesaretranslatedattheratesofexchangerulingatthetransactiondate.Monetaryassetsandliabilitiesdenominatedinforeigncurrenciesaretranslatedintoeuroattheratesofexchangerulingatthebalancesheetdate,withacorrespondingchargeorcredittotheprofitandlossaccount.ShareissueexpensesandsharepremiumaccountCostsofshareissuesarewrittenoffagainstthepremiumarisingonissuesofsharecapital.Share-basedpaymentsTheCompanyhasappliedtherequirementsofSection8ofFRS101.Theaccountingpolicyapplicabletoshare-basedpaymentsisaddressedindetailonpages134and135oftheConsolidatedFinancialStatements.TreasurySharesandownsharesTreasurySharesOwnequityinstruments(i.e.OrdinaryShares)acquiredbytheCompanyaredeductedfromequityandpresentedonthefaceoftheCompanyBalanceSheet.Nogainorlossisrecognisedinprofitorlossonthepurchase,sale,issueorcancellationoftheCompany’sOrdinaryShares.OwnsharesOrdinarySharespurchasedbytheEmployeeBenefitTrustonbehalfoftheCompanyunderthetermsofthePerformanceSharePlanarerecordedasadeductionfromequityonthefaceoftheCompanyBalanceSheet.DividendsDividendsonOrdinarySharesarerecognisedasaliabilityintheCompany’sFinancialStatementsintheperiodinwhichtheyaredeclaredbytheCompany.DividendincomeDividendincomeisrecognisedwhentherighttoreceivepaymentisestablished.CashandcashequivalentsCashandcashequivalentscomprisecashbalancesheldforthepurposeofmeetingshort-termcashcommitmentsandinvestmentswhicharereadilyconvertibletoaknownamountofcashandaresubjecttoaninsignificantriskofchangeinvalue.BankoverdraftsareincludedwithincreditorsfallingduewithinoneyearintheCompanyBalanceSheet.210OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexFinancial StatementsCRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018NotestotheCompanyBalanceSheet-continued7.DividendsProposed(MemorandumDisclosure)Detailsinrespectofdividendsproposedof€425million(2017:€409million)anddividendspaidduringtheyeararepresentedinthedividendsnote(note13)onpage156ofthenotestotheConsolidatedFinancialStatements.8.Called-upShareCapitalDetailsinrespectofcalled-upsharecapital,preferencesharecapital,TreasurySharesandownsharesarepresentedinthesharecapitalandreservesnote(note31)onpages189to191ofthenotestotheConsolidatedFinancialStatements.9.ReservesRevaluationReserveTheCompany’srevaluationreservearoseontherevaluationofcertaininvestmentspriortothetransitiontoFRS101.InaccordancewithSection304oftheCompaniesAct2014,theCompanyisavailingoftheexemptionfrompresentingitsindividualprofitandlossaccounttotheAGMandfromfilingitwiththeRegistrarofCompanies.ThereservesoftheCompanyavailablefordistributionarerestrictedbytheamountoftheconsiderationpaidfortheTreasurySharesandownsharesheldbytheCompany,€792millionasat31December2018(2017:€15million).10.Share-basedPaymentsThetotalexpenseof€67million(2017:€65million)reflectedintheConsolidatedFinancialStatementsattributabletoemployeeshareoptionsandperformanceshareawardshasbeenincludedasacapitalcontributioninfinancialassets(note3)inadditiontoanypaymentsto/fromsubsidiaries.11.Section357GuaranteesAnyIrishregisteredwholly-ownedsubsidiaryoftheCompanymayavailoftheexemptionfromfilingitsstatutoryfinancialstatementsfortheyearended31December2018aspermittedbySection357oftheCompaniesAct2014andifanIrishregisteredwholly-ownedsubsidiaryoftheCompanyelectstoavailofthisexemption,therewillbeinforceanirrevocableguaranteefromtheCompanyinrespectofallcommitmentsenteredintobysuchwholly-ownedsubsidiary,includingamountsshownasliabilities(withinthemeaningofSection357(1)(b)oftheCompaniesAct2014)insuchwholly-ownedsubsidiary’sstatutoryfinancialstatementsfortheyearended31December2018.DetailsinrelationtootherguaranteesprovidedbytheCompanyareprovidedintheinterest-bearingloansandborrowingsnote(note25)onpage177ofthenotestotheConsolidatedFinancialStatements.12.Directors’EmolumentsDirectors’emolumentsandinterestsarepresentedintheDirectors’RemunerationReportonpages68to97ofthisAnnualReportandForm20-F.13.BoardApprovalTheBoardofDirectorsapprovedandauthorisedforissuetheCompanyFinancialStatementsonpages207to212inrespectoftheyearended31December2018on27February2019.212CRHAnnualReportandForm20-F|2018In 2018 CRH opened a new production hall at its hollow core plant near Copenhagen, Denmark, enabling it to meet growing customer demand for 240cm hollow core slabs and strengthening its position as the leading structural concrete producer in the country.213OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexSupplementary 20-F Disclosures214215CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018215SUPPLEMENTARY20-F DISCLOSURESSelected Financial Data 216Non-GAAP Performance Measures 217Contractual Obligations 221Property, Plants and Equipment 222Mineral Reserves 223Risk Factors 225Corporate Governance Practices 234The Environment and Government Regulations 236Other Disclosures 237214CRL, part of CRH’s Americas Products Division, opened a new, state-of-the-art service centre in Perth, Australia in 2018. The 50,000-square-foot facility allows CRL to boost its distribution capabilities, increase stock inventories and provide shorter lead times to customers in Western Australia. The Perth facility is located in Canning Vale and forms part of CRL’s network of service centres with locations in Sydney and Melbourne. CRL has over 40 service centres spread across Australia, North America, and Europe.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexSupplementary 20-F Disclosures216217CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Year ended 31 December (amounts in millions, except per share data)2018 2017 201620152014 €m€m€m€m€mConsolidated Income Statement dataRevenue 26,790 25,22024,78921,40617,136Group operating profit 2,177 2,0951,9081,166834Profit attributable to equity holders of the Company 1,432 1,788 1,162639520Basic earnings per Ordinary Share 172.0c 214.0c 140.4c 78.7c70.4cDiluted earnings per Ordinary Share171.2c212.7c 139.4c78.3c70.4cDividends paid during calendar year per Ordinary Share 68.4c 65.4c62.8c62.5c62.5cAverage number of Ordinary Shares outstanding (i)832.4835.6827.8812.3737.6All data relates to continuing operationsConsolidated Balance Sheet dataTotal assets35,17331,63331,59432,00722,017Net assets (ii) 16,554 14,97714,44313,54410,198Ordinary shareholders’ equity 16,028 14,49013,89413,01410,176Equity share capital287 286284281253Number of Ordinary Shares (i)843.4839.0832.8823.9744.5Number of Treasury Shares and own shares (i)27.80.40.41.33.8Number of Ordinary Shares net of Treasury Shares and own shares (i)815.6838.6832.4822.6740.7 (i) All share numbers are shown in millions of shares.(ii) Net assets is calculated as the sum of total assets less total liabilities.Selected Financial DataThe Consolidated Financial Statements of CRH plc have been prepared in accordance with IFRS as issued by the International Accounting Standards Board. Selected financial data is presented below for the five years ended on 31 December 2018. For the three years ended 31 December 2018, the selected financial data is qualified in its entirety by reference to, and should be read in conjunction with, the audited Consolidated Financial Statements, the related Notes and the Business Performance section included elsewhere in this Annual Report and Form 20-F.Reconciliation of Revenue, EBITDA (as defined)* and Operating Profit by segment Year ended 31 December Revenue Group EBITDA (as defined)*Depreciation, amortisation and impairmentGroup operating profit (i)20182017 2016 20182017 2016 20182017201620182017 2016€m€m€m€m€m€m€m€m€m€m€m€mContinuing operationsEurope Heavyside 7,611 6,902 6,945 911 839781 410 361395 501 478386Europe Lightside 1,508 1,440 1,392 152 143137 42 4145 110 10292Europe Distribution 3,856 4,145 4,066 181 269206 69 6276 112 207130Europe 12,975 12,487 12,403 1,244 1,2511,124 521 464516 723 787608Americas Materials 8,951 7,970 7,598 1,493 1,2701,204 484 412386 1,009 858818Americas Products 4,433 4,327 4,280 603 573543 144 138132 459 435411Americas 13,384 12,297 11,878 2,096 1,8431,747 628 550518 1,468 1,2931,229Asia431 436 508 2552109393738(14)1571Total Group from continuing operations 26,790 25,220 24,789 3,365 3,1462,980 1,188 1,0511,072 2,177 2,0951,908Discontinued operationsAmericas Distribution 7 2,343 2,315 (5)164150-2131(5)143119Total Group 26,797 27,563 27,104 3,360 3,3103,130 1,188 1,0721,103 2,172 2,2382,027Group operating profit from continuing operations 2,177 2,0951,908(Loss)/profit on disposals(24)5653Finance costs less income(305) (289)(317)Other financial expense(46)(60)(66)Share of equity accounted investments’ profit 60 6542Profit before tax from continuing operations 1,862 1,8671,620Income tax expense(426)(55)(431)Group profit for the financial year from continuing operations 1,436 1,8121,189Profit after tax for the financial year from discontinued operations 1,085 10781Group profit for the financial year 2,521 1,9191,270(i) Throughout this document, Group operating profit is reported as shown in the Consolidated Income Statement and excludes profit on disposals. Non-GAAP Performance MeasuresCRH uses a number of non-GAAP performance measures to monitor financial performance. These measures are referred to throughout the discussion of our reported financial position and operating performance and are measures which are regularly reviewed by CRH management. These performance measures may not be uniformly defined by all companies and accordingly they may not be directly comparable with similarly titled measures and disclosures by other companies. Certain information presented is derived from amounts calculated in accordance with IFRS but is not itself an expressly permitted GAAP measure. The non-GAAP performance measures as summarised below should not be viewed in isolation or as an alternative to the equivalent GAAP measure. * 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.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexSupplementary 20-F Disclosures218219CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Return on Net Assets 2018 (i)20172016€m€m€mGroup operating profit from continuing operations2,1772,0951,908Group operating profit from discontinued operations-143119Group operating profit (numerator for RONA computation)2,1772,2382,027Current yearSegment assets (ii)31,51026,80927,581Segment liabilities (ii)(6,592)(6,201)(6,927)Group segment net assets24,91820,60820,654Assets held for sale- 1,112 - Liabilities associated with assets classified as held for sale-(341) - Group net assets (including net assets held for sale)24,918 21,379 20,654 Prior yearSegment assets (ii)26,80927,58127,881Segment liabilities (ii)(6,201)(6,927)(6,794)Group segment net assets20,60820,65421,087Average net assets including net assets held for sale (denominator for RONA computation)22,76321,01720,871RONA9.6%10.6%9.7%(i) In line with the purpose of the metric, as set out on page 220, to “measure management’s ability to generate profits from the net assets required to support that business”, for the 2018 calculation, as the net segment assets classified as held for sale at 31 December 2017 were disposed of on 2 January 2018, these have been excluded from the prior year element. For consistency, the related immaterial operating loss of €5 million is also excluded.Reconciliation of Segment Assets and Liabilities to Group Assets and Liabilities2018201720162015€m€m€m€mAssetsSegment assets (ii)31,51026,80927,58127,881Reconciliation to total assets as reported in the Consolidated Balance Sheet:Investments accounted for using the equity method 1,163 1,2481,2991,317Other financial assets 23 252628Derivative financial instruments (current and non-current) 45 6476109Income tax assets (current and deferred) 86 260163154Cash and cash equivalents 2,346 2,1152,4492,518Assets held for sale - 1,112--Total assets as reported in the Consolidated Balance Sheet35,17331,63331,59432,007LiabilitiesSegment liabilities (ii) 6,592 6,2016,9276,794Reconciliation to total liabilities as reported in the Consolidated Balance Sheet:Interest-bearing loans and borrowings (current and non-current) 9,316 7,9767,7909,221Derivative financial instruments (current and non-current) 59 143224Income tax liabilities (current and deferred)2,6522,1242,4022,424Liabilities associated with assets classified as held for sale - 341--Total liabilities as reported in the Consolidated Balance Sheet18,61916,65617,15118,463(ii) Segment assets and liabilities as disclosed in note 2 to the Consolidated Financial Statements.Calculation of Net Debt/EBITDA (as defined)* 20182017€m€mNet debtCash and cash equivalents (i) 2,346 2,115Interest-bearing loans and borrowings (i)(9,316)(7,976)Derivative financial instruments (net) (i)(14)50Group net debt excluding net debt reclassified as held for sale (i) (ii)(6,984)(5,811)EBITDA (as defined)* from continuing operations 3,365 3,146 TimesNet Debt divided by EBITDA (as defined)* from continuing operations (ii)2.11.8 (i) These items appear in notes 22 to 26 to the Consolidated Financial Statements.(ii) Net debt/EBITDA (as defined)* from continuing and discontinued operations was 2.1x (2017: 1.8x). 2017 Group net debt including net debt reclassified as held for sale of €15 million was €5,796 million.Non-GAAP Performance Measures - continuedCalculation of EBITDA (as defined)* Net Interest Cover201820172016€m€m€mInterestFinance costs (i)339301325Finance income (i)(34)(12)(8)Net interest305289317EBITDA (as defined)* from continuing operations 3,365 3,146 2,980 TimesEBITDA (as defined)* Net Interest Cover (EBITDA (as defined)* divided by net interest)11.0 10.99.4 (i) These items appear on the Consolidated Income Statement on page 123.* 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.Adjusted Basic Earnings per Ordinary Share2017€mNumerator for basic and diluted earnings per Ordinary Share (i)1,895One-off Swiss pension past service credit (net of tax) (ii)(59)One-off deferred tax credit (including credit relating to discontinued operations)(447)Numerator for adjusted basic EPS excluding one-off gains per Ordinary Share from continuing and discontinued operations1,389Average shares (i)835.6Adjusted basic earnings per Ordinary Share - continuing and discontinued operations166.2cDividend declared for the year68.0cDividend cover (adjusted basic earnings per share/dividend declared per share) 2.4x(i) These items appear in note 14 to the Consolidated Financial Statements.(ii) The one-off Swiss pension past service credit was €81 million before a tax charge of €22 million.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexSupplementary 20-F Disclosures220221CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018EBITDA (as defined). EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax and is quoted by management in conjunction with other GAAP and non-GAAP financial measures, to aid investors in their analysis of the performance of the Group and to assist investors in the comparison of the Group’s performance with that of other companies. EBITDA (as defined)* and operating profit by segment are monitored by management in order to allocate resources between segments and to assess performance. Given that net finance costs and income tax are managed on a centralised basis, these items are not allocated between operating segments for the purpose of the information presented to the Chief Operating Decision Maker. EBITDA (as defined)* margin is calculated by expressing EBITDA (as defined)* as a percentage of sales.Net Debt. Net debt is used by management as it gives a more complete picture of the Group’s current debt situation than total interest-bearing loans and borrowings. Net debt is provided to enable investors to see the economic effect of gross debt, related hedges and cash and cash equivalents in total. Net debt is a non-GAAP measure and comprises current and non-current interest-bearing loans and borrowings, cash and cash equivalents and current and non-current derivative financial instruments. Net Debt/EBITDA (as defined)* is monitored by management and is useful to investors in assessing the Company’s level of indebtedness relative to its profitability and cash-generating capabilities. It is the ratio of Net Debt to EBITDA (as defined)* and is calculated on page 219.EBITDA (as defined)* Net Interest Cover. EBITDA (as defined)* Net Interest Cover is used by management as a measure which matches the earnings and cash generated by the business to the underlying funding costs. EBITDA (as defined)* Net Interest Cover is presented to provide investors with a greater understanding of the impact of CRH’s debt and financing arrangements. It is the ratio of EBITDA (as defined)* to Net Interest and is calculated on page 219. The definitions and calculations used as a metric in lender covenant agreements include certain specified adjustments to the amounts included in the Consolidated Financial Statements. The ratios as calculated on the basis of the definitions in those covenants are disclosed in note 25 to the Consolidated Financial Statements.RONA. Return on Net Assets is a key internal pre-tax measure of operating performance throughout the CRH Group and can be used by management and investors to measure the relative use of assets between CRH’s business segments and to compare to other businesses. The metric measures management’s ability to generate profits from the net assets required to support that business, focusing on both profit maximisation and the maintenance of an efficient asset base; it encourages effective fixed asset maintenance programmes, good decisions regarding expenditure on property, plant and equipment and the timely disposal of surplus assets, and also supports the effective management of the Group’s working capital base. RONA is calculated by expressing total Group operating profit as a percentage of average net assets. Net assets comprise total assets by segment (including assets held for sale) less total liabilities by segment (including liabilities associated with assets classified as held for sale) as shown on page 218 and detailed in note 2 to the Consolidated Financial Statements, and excludes equity accounted investments and other financial assets, net debt (as previously defined) and tax assets & liabilities. The average net assets for the year is the simple average of the opening and closing balance sheet figures.Organic Revenue, Organic Operating Profit and Organic EBITDA (as defined)*. CRH pursues a strategy of growth through acquisitions and investments, with €3,562 million spent on acquisitions and investments in 2018 (2017: €1,905 million). Acquisitions completed in 2017 and 2018 contributed incremental sales revenue of €1,855 million, operating profit of €226 million and EBITDA (as defined)* of €357 million in 2018. Proceeds from divestments and non-current asset disposals amounted to €3,009 million (net of cash disposed and deferred proceeds) (2017: €222 million). The sales impact of divested activities in 2018 was a negative €348 million and the impact at an operating profit and EBITDA (as defined)* level was a negative €26 million and €36 million respectively.The euro strengthened against most major currencies during 2018 resulting in the average euro/US Dollar rate weakening from 1.1297 in 2017 to 1.1810 in 2018 and the Pound Sterling weakening from an average 0.8767 in 2017 to 0.8847 in 2018. Overall currency movements resulted in an unfavourable net foreign currency translation impact on our results as shown on the table on page 28.Because of the impact of acquisitions, divestments, exchange translation and other non-recurring items on reported results each year, the Group uses organic revenue, organic operating profit and organic EBITDA (as defined)* as additional performance indicators to assess performance of pre-existing (also referred to as underlying, heritage, like-for-like or ongoing) operations each year.Organic revenue, organic operating profit and organic EBITDA (as defined)* is arrived at by excluding the incremental revenue, operating profit and EBITDA (as defined)* contributions from current and prior year acquisitions and divestments, the impact of exchange translation and the impact of any non-recurring items. In the Business Performance section on pages 24 to 51, changes in organic revenue, organic operating profit and organic EBITDA (as defined)* are presented as additional measures of revenue, operating profit and EBITDA (as defined)* to provide a greater understanding of the performance of the Group. A reconciliation of the changes in organic revenue, organic operating profit and organic EBITDA (as defined)* to the changes in total revenue, operating profit and EBITDA (as defined)* for the Group and by segment, is presented with the discussion of each segment’s performance in tables contained in the segment discussion commencing on page 32.Revenue from continuing and discontinued operations, EBITDA (as defined)* from continuing and discontinued operations and Operating Profit from continuing and discontinued operations. As detailed in note 3 to the Consolidated Financial Statements, our Americas Distribution segment has been classified as discontinued operations in accordance with IFRS 5. In certain instances throughout the Annual Report and Form 20-F we refer to revenue, EBITDA (as defined)* and operating profit from continuing and discontinued operations. Information presented on this basis is useful to investors as (i) it provides a greater understanding of the Group’s performance and (ii) assists investors in the comparison of the Group’s performance with that of other companies. A reconciliation of each of these measures is detailed in note 2 to the Consolidated Financial Statements and on page 217.Adjusted Basic Earnings per Ordinary Share. In 2017, adjusted basic earnings per Ordinary Share was used by management as it presented a more accurate picture of the profit attributable to equity holders of the Group, before certain one-off items (net of related tax). As these were one-off items, relating to 2017 only, no adjusted basic earnings per Ordinary Share is presented for 2018.Contractual ObligationsPayments due by periodTotalLess than 1 year1-3 years3-5 yearsMore than 5 years€m€m€m€m€mInterest-bearing loans and borrowings (i) 9,309 620 1,705 1,128 5,856 Finance leases 21 5 6 4 6 Estimated interest payments on contractually-committed debt and finance leases (ii) 3,386 328 562 472 2,024 Deferred and contingent acquisition consideration 339 48 47 18 226 Operating leases 1,911 353 483 286 789 Purchase obligations (iii) 1,416 719 218 127 352 Retirement benefit obligation commitments (iv)142426Total16,3962,0753,0252,0379,259(i) Of the €9.3 billion total gross debt, €0.1 billion is drawn on revolving facilities which may be repaid and redrawn up to the date of maturity. The interest payments are estimated assuming these loans are repaid on facility maturity dates.(ii) These interest payments have been estimated on the basis of the following assumptions: (a) no change in variable interest rates; (b) no change in exchange rates; (c) that all debt is repaid as if it falls due from future cash generation; and (d) none is refinanced by future debt issuance.(iii) Purchase obligations include contracted for capital expenditure. A summary of the Group’s future purchase commitments as at 31 December 2018 for capital expenditure is set out in note 15 to the Consolidated Financial Statements. These expenditures for replacement and new projects are in the ordinary course of business and will be financed from internal resources.(iv) These retirement benefit commitments comprise the contracted payments related to our pension schemes in the UK. See further details in note 29 to the Consolidated Financial Statements.Quantitative and Qualitative Information about Market RiskCRH addresses the sensitivity of the Group’s interest rate swaps and debt obligations to changes in interest rates in a sensitivity analysis technique that measures the estimated impacts on the income statement and on equity of either an increase or decrease in market interest rates or a strengthening or weakening in the US Dollar against all other currencies, from the rates applicable at 31 December 2018, for each class of financial instrument with all other variables remaining constant. The technique used measures the estimated impact on profit before tax and on total equity arising on net year-end floating rate debt and on year-end equity, based on either an Contractual Obligationsincrease/decrease of 1% in floating interest rates or a 5% strengthening/weakening in the euro/US Dollar exchange rate. The euro/US Dollar rate has been selected for this sensitivity analysis given the materiality of the Group’s activities in the US. This analysis, set out in note 23 to the Consolidated Financial Statements, is for illustrative purposes only as in practice interest and foreign exchange rates rarely change in isolation. Quantitative and qualitative information and sensitivity analysis of market risk is contained in notes 22 to 26 to the Consolidated Financial Statements.Off-Balance Sheet ArrangementsCRH does not have any off-balance sheet arrangements that have, or are reasonably likely to have a current or future effect on CRH’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.An analysis of the maturity profile of debt, finance and operating leases, purchase obligations, deferred and contingent acquisition consideration and pension scheme contribution commitments at 31 December 2018 is as follows:* 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.Non-GAAP Performance Measures - continuedOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexSupplementary 20-F Disclosures222223CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Property, Plants and EquipmentSignificant Locations – Clinker CapacitySubsidiaryCountryNumber of plantsClinker capacity (tonnes per hour)Ash GroveUnited States8934Republic CementPhilippines5613Grupa OżarówPoland1342Podilsky Cement PJSCUkraine1325TarmacUnited Kingdom3306CRH RomaniaRomania2305CRH CanadaCanada2292CRH SlovakiaSlovakia2290Irish CementIreland2288OpterraGermany2268EqiomFrance3243CRH BrazilBrazil3200At 15 February 2019, CRH had a total of 3,152 building materials production locations and 553 Merchanting and DIY locations. 1,528 locations are leased, with the remaining 2,177 locations held on a freehold basis.The significant subsidiary locations as at 31 December 2018 are the cement facilities in the US, Philippines, Poland, Ukraine, the UK, Romania, Canada, Slovakia, Ireland, Germany, France and Brazil. The clinker (the key intermediate product in the manufacture of cement) capacity for these locations is set out in the table below. Further details on locations and products manufactured are provided on pages 258 and 259. None of CRH’s individual properties is of material significance to the Group.CRH believes that all the facilities are in good condition, adequate for their purpose and suitably utilised according to the individual nature and requirements of the relevant operations. CRH has a continuing programme of improvements and replacements to properties when considered appropriate to meet the needs of the individual operations. Further information in relation to the Group’s accounting policy and process governing any impairment of property, plant and equipment is given on page 135 and in note 15 to the Consolidated Financial Statements on page 158.Sources and Availability of Raw MaterialsCRH generally owns or leases the real estate on which its main raw materials, namely aggregates, are found. CRH is a significant purchaser of certain important materials or resources such as cement, bitumen, steel, gas, fuel and other energy supplies, the cost of which can fluctuate significantly and consequently have an adverse impact on CRH’s business. CRH is not generally dependent on any one source for the supply of these materials or resources, other than in certain jurisdictions with regard to the supply of gas and electricity. Competitive markets generally exist in the jurisdictions in which CRH operates for the supply of cement, bitumen, steel and fuel.Mine Safety DisclosuresThe information concerning mine safety violations and other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act is included in Exhibit 16 to CRH’s Annual Report on Form 20-F, as filed with the Securities and Exchange Commission (SEC).Activities with Reserves Backing (i)Property acreage (hectares) (ii)% of mineral reserves by rock typePhysical locationNo. of quarries /pitsOwnedLeasedProven & probable reserves (iii)Years to depletion (iv)Hard rockSand & gravelOther2018 Annualised extraction (v)Europe HeavysideCementFrance3512-893290%-10%2.9Germany 3314-15355100%--2.9Ireland2260-20576100%--2.9Poland2293-2977393%6%1%4.4Romania62208982375683%-17%4.7Serbia25741107135100%--0.9Slovakia53314729913892%-8%2.0Spain134-85231100%--0.4Switzerland3936221792%-8%1.0Ukraine2240-1254478%-22%2.8United Kingdom117001542746897%-3%4.1AggregatesFinland1035264211851670%30%-12.0France516369172422770%30%-8.6Ireland1235,182741,0967085%15%-17.0Poland32431014648100%--3.5Romania14120325543296%4%-1.5Spain11118641055699%1%-2.0United Kingdom 16011,2593,4201,4033486%14%-40.2Other423515621862172%28%-8.6LimeCzech Republic, Ireland, Poland, United Kingdom 41551111534100%--3.5Germany97791026337100%--7.2Subtotals56022,4236,9605,68888%10%2%Americas MaterialsBrazil 31,072-14977100%--2.0CementCanada2717-29093100%--3.1United States92,323-59163100%--9.4AggregatesCanada465,8656627213982%18%-20.1United States82849,79821,07215,41310075%25%-168.0Subtotals88859,77521,73417,16477%23%-AsiaCementPhilippines142,2471741160100%--7.2AggregatesPhilippines1-1762134100%--0.3Subtotals152,24734473100%--Group totals1,46384,44528,72823,32580%20%-(i) The disclosures made in this category refer to those facilities which are engaged in on-site processing of reserves in the various forms.(ii) 1 hectare equals approximately 2.47 acres.(iii) Where reserves are leased, the data presented above is restricted to include only that material which can be produced over the life of the contractual commitment inherent in the lease; the totals shown pertain only to amounts which are proven and probable. All of the proven and probable reserves are permitted and are quoted in millions of tonnes.(iv) Years to depletion is based on the average of the most recent three years annualised production.(v) Annualised extraction is quoted in millions of tonnes.Mineral ReservesOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexSupplementary 20-F Disclosures224225CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018The Group’s reserves for the production of primary building materials (which encompasses cement, lime, aggregates (stone, sand and gravel), asphalt, readymixed concrete and concrete products) fall into a variety of categories spanning a wide number of rock types and geological classifications – see the table on the previous page setting out the activities with reserves backing.Reserve estimates are generally prepared by third-party experts (i.e. geologists or engineers) prior to acquisition; this procedure is a critical component in the Group’s due diligence process in connection with any acquisition. Subsequent to acquisition, estimates are typically updated by company engineers and/or geologists and are reviewed annually by corporate and/or divisional staff. However, where deemed appropriate by management, in the context of large or strategically important deposits, the services of third-party consultant geologists and/or engineers may be employed to validate reserves quantities outside of the aforementioned due diligence framework on an ongoing basis.The Group has not employed third-parties to review reserves over the three-year period ending 31 December 2018 other than in business combination activities and specific instances where such a review was warranted.Reserve estimates are subject to annual review by each of the relevant operating entities across the Group. The estimation process distinguishes between owned and leased reserves segregated into permitted and unpermitted as appropriate and includes only those permitted reserves which are proven and probable. The term “permitted” reserves refers to those tonnages which can currently be mined without any environmental or legal constraints. Permitted owned reserve estimates are based on estimated recoverable tonnes whilst permitted leased reserve estimates are based on estimated total recoverable tonnes which may be extracted over the term of the lease contract.Proven and probable reserve estimates are based on recoverable tonnes only and are thus stated net of estimated production losses and other matters factored into the computation (e.g. required slopes/benches). In order for reserves to qualify for inclusion in the “proven and probable” category, the following conditions must be satisfied:• the reserves must be homogeneous deposits based on drill data and/or local geology; and• the deposits must be located on owned land or on land subject to leaseNone of CRH’s mineral-bearing properties is individually material to the Group.This section describes the key risk factors that could affect the Group’s business. If any of these risks occur, the Group’s business, financial condition, results of operations and prospects could be materially adversely affected. The risk factors listed below should be considered in connection with any forward-looking statements in this Annual Report and Form 20-F and the cautionary statements contained in Corporate Governance - Disclaimer/Forward-Looking Statements on page 99.The risk factors presented below are reviewed on an annual basis and represent the key risk factors faced by the Group at the time of compilation of the 2018 Annual Report and Form 20-F. During the course of 2019, new risk factors may materialise attributable to changes in markets, regulatory environments and other factors and existing risk factors may become less relevant.The Risk Factors have been grouped to focus on key strategic, operational, compliance and financial and reporting risks.Risk FactorsIndustry Cyclicality and Adverse Economic Conditions RiskDiscussionDescription:Construction activity, and therefore demand for the Group’s products, is inherently cyclical as it is influenced by global and national economic circumstances, governments’ ability to fund infrastructure projects, consumer sentiment and weather conditions. The Group may also be negatively impacted by unfavourable swings in fuel and other commodity/raw material prices.Impact:Failure to predict and plan for cyclical events or adverse economic conditions could negatively impact financial performance.The Group’s operating and financial performance is influenced by general economic conditions and the state of the residential, industrial, commercial and infrastructure construction markets in the countries in which it operates.In general, economic uncertainty exacerbates negative trends in construction activity leading to postponement of orders. Construction markets are inherently cyclical and are affected by many factors that are beyond the Group’s control, including:• the price of fuel and principal energy-related raw materials such as bitumen and steel (which accounted for approximately 9% of annual Group sales revenues in 2018);• the performance of the national economies in the countries in which the Group operates, across Europe, the Americas and Asia;• monetary policies in the countries in which the Group operates — for example, an increase in interest rates typically reduces the volume of mortgage borrowings thus adversely impacting residential construction activity;• the allocation of government funding for public infrastructure programmes, such as the development of highways in the US under the Fixing Americas Surface Transportation Act (FAST Act); and• the level of demand for construction materials and services, with sustained adverse weather conditions leading to potential disruptions or curtailments in outdoor construction activityThe adequacy and timeliness of the actions taken by the Group’s management team are of critical importance in maintaining financial performance at appropriate levels.Each of the above factors could have a material adverse effect on the Group’s operating results and the market price of CRH plc’s Ordinary Shares.Mineral Reserves - continuedKey Strategic Risk FactorsOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexSupplementary 20-F Disclosures226227CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Geopolitical and/or Social InstabilityRiskDiscussionDescription:Adverse and fast changing economic, social, and political situations in any country in which the Group operates could lead to business interruption, restrictions on repatriation of earnings or a loss of plant access. Impact:Changes in these conditions may adversely affect the Group’s business, results of operations, financial condition or prospects.The UK’s decision to withdraw from the European Union, together with the effects of unwinding the sustained monetary stimulus in the US, the ECB’s plans to scale back quantitative easing in the Eurozone and ongoing tensions in the Ukraine, where the Group has significant business interests, have collectively contributed to heightened uncertainty, with possible upside and downside economic consequences. The Group currently operates mainly in Western Europe and North America as well as, to a lesser degree, in developing countries/emerging markets in Eastern Europe, the Philippines, Brazil, China and India. The economies of these countries are at varying stages of socioeconomic and macroeconomic development which could give rise to a number of risks, uncertainties and challenges that could include the following:• changes in political, social or economic conditions;• trade protection measures and import or export licensing requirements;• potentially negative consequences from changes in tax laws;• labour practices and differing labour regulations;• procurement which contravenes ethical considerations;• unexpected changes in regulatory requirements;• state-imposed restrictions on repatriation of funds; and• the outbreak of armed conflictBrexitRiskDiscussionDescription:Uncertainties resulting from the UK’s withdrawal from the European Union could pose challenges with currency devaluations, a fall in construction activity in the UK, challenges in labour resources accessing the UK, movement of goods and services and repatriating earnings. Impact:Failure by the Group to manage the uncertainties posed by Brexit could result in adverse financial performance and a fall in the Group’s net worth.The uncertainties around the UK’s withdrawal from the European Union leaves businesses potentially open to significant risks, which will be intensified should the UK leave without a formal agreement.Any significant economic shock caused by Brexit, the uncertainty around the process or negative consumer sentiment could have an adverse impact on the performance of the UK’s economy, leading to a fall in demand for the Group’s products. Commercial projects could be delayed or cancelled as businesses decide whether to invest in the UK market or not. Mortgage interest rates could rise and credit could tighten which would adversely impact the residential sector and government investments, infrastructure projects or initiatives may be delayed or cancelled as government funds tighten. Further, uncertainty around Brexit has created, and will continue to create, volatility for the Pound Sterling. Any significant fall in the value of the Pound Sterling against the euro (the Group’s reporting currency) could adversely impact consolidated results and net worth. For additional information on the impact of foreign exchange movements on the Consolidated Financial Statements for the Group for the year ended 31 December 2018, see the Business Performance section commencing on page 24. Commodity Products and SubstitutionRiskDiscussionDescription:Many of the Group’s products are commodities, which face strong volume and price competition, and may be replaced by substitute products which the Group does not produce or distribute. Further, the Group must maintain strong customer relationships to ensure changing consumer preferences are addressed. Impact:Failure to differentiate and innovate could lead to market share decline, thus adversely impacting financial performance.The competitive environment in which the Group operates can be significantly impacted by general economic conditions in combination with local factors including the number of competitors, the degree of utilisation of production capacity and the specifics of product demand. Many of the Group’s products are commodities and competition in such circumstances is driven largely by price. Across the multitude of largely local markets in which the Group conducts business, downward pricing pressure is experienced from time to time, and the Group may not always be in a position to recover increased operating expenses (caused by factors such as increased fuel and raw material prices) through higher sale prices.The cement business, in particular, is capital intensive resulting in significant fixed and semi-fixed costs. The Group’s profits are therefore sensitive to changes in volume, which is driven by highly competitive markets, and impacted by ongoing capital expenditure needs.A number of the products sold by the Group (both those manufactured internally and those distributed) compete with other building products that do not feature in the Group’s existing product range. Any significant shift in demand preference from the Group’s existing products to substitute products, which the Group does not produce or distribute, could adversely impact market share and results of operations.Reserves Availability and PlanningRiskDiscussionDescription:Appropriate reserves are an increasingly scarce commodity and licences and/or permits required to enable operation are becoming harder to secure. There are numerous uncertainties inherent in reserves estimation and in projecting future rates of production.Impact:Failure by the Group to plan for reserve depletion, or to secure permits, may result in operation stoppages, adversely impacting financial performance.Continuity of the cash flows derived from the production and sale of the related heavyside materials and products is dependent on satisfactory reserves planning and on the presence of appropriate long-term arrangements for replacement. There can be no assurance that the required licences and permits will be forthcoming at the appropriate juncture or that relevant operating entities will continue to satisfy the many terms and conditions under which such licences and permits are granted. The failure to plan adequately for current and future extraction and utilisation or to ensure ongoing compliance with the requirements of issuing authorities could lead to withdrawal of the related licence or permit and consequential disruption to operations.Key Strategic Risk Factors - continuedPortfolio ManagementRiskDiscussionDescription:The Group may engage in acquisition and divestment activity during the year as part of the Group’s active portfolio management which presents risks around due diligence, execution and integration of assets. Additionally, the Group may be liable for liabilities of companies it has acquired or divested. Impact:Failure to identify and execute deals in an efficient manner may limit the Group’s growth potential and impact financial performance. The Group’s acquisition strategy focuses on value-enhancing mid-sized acquisitions, largely in existing markets, supplemented from time to time by larger strategic acquisitions into new markets or new building products. In addition, as part of its ongoing commitment to active portfolio management, the Group may, from time to time, divest businesses which are evaluated to be non-core or underperforming.The realisation of the Group’s acquisition strategy is dependent on the ability to identify and acquire suitable assets at appropriate prices thus satisfying the stringent cash flow and return on investment criteria underpinning such activities. The Group may not be able to identify such companies, and, even if identified, may not be able to acquire them because of a variety of factors including the outcome of due diligence processes, the ability to raise funds (as required) on acceptable terms, the need for competition authority approval in certain instances and competition for transactions from peers and other entities exploring acquisition opportunities in the building materials sector. In addition, situations may arise where the Group may be liable for the past acts, omissions or liabilities of companies acquired, or may remain liable in cases of divestment; for example, the potential environmental liabilities addressed under the “Sustainability, Corporate Social Responsibility and Climate Change” Risk Factor on page 228.The Group’s ability to realise the expected benefits from acquisition activity depends, in large part, on its ability to integrate newly-acquired businesses in a timely and effective manner. Even if the Group is able to acquire suitable companies, it still may not achieve the growth synergies or other financial and operating benefits it expected to achieve, and the Group may incur write-downs, impairment charges or unforeseen liabilities that could negatively affect its operating results or financial position or could otherwise harm the Group’s business. Further, integrating an acquired business, product or technology could divert management time and resources from other matters.Joint Ventures and Associates RiskDiscussionDescription:The Group does not have a controlling interest in certain of the businesses (i.e. joint ventures and associates) in which it has invested and may invest, which gives rise to increased governance complexity and a need for proactive relationship management.Impact:The lack of a controlling interest could impair the Group’s ability to manage joint ventures and associates effectively and/or realise its strategic goals for these businesses.Due to the absence of full control of joint ventures and associates, important decisions such as the approval of business plans and the timing and amount of cash distributions and capital expenditures, for example, may require the consent of partners or may be approved without the Group’s consent. In addition, the lack of controlling interest may give rise to the non-realisation of operating synergies and lower cash flows than anticipated at the time of investment, thereby increasing the likelihood of impairment of goodwill or other assets.These limitations could impair the Group’s ability to manage joint ventures and associates effectively and/or realise its strategic goals for these businesses. In addition, improper management or ineffective policies, procedures or controls for non-controlled entities could adversely affect the business, results of operations or financial condition of the relevant investment and, by corollary, the Group.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexSupplementary 20-F Disclosures228229CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Key Operational Risk FactorsPeople Management RiskDiscussionDescription:Existing processes around people management (such as attracting, retaining and developing people, leadership succession planning, as well as dealing with collective representation groups) may not deliver, inhibiting the Group achieving its strategy.Impact:Failure to effectively manage talent and plan for leadership succession could impede the realisation of strategic objectives.The identification and subsequent assessment, management, development and deployment of talented individuals is of major importance in continuing to deliver on the Group’s strategy and in ensuring that succession planning objectives for key executive roles throughout its international operations are satisfied. As well as ensuring the Group identify, hire, integrate, develop and promote talent, the Group must navigate talent and front-line labour shortages, promote mobility and hire a diverse workforce. The maintenance of positive employee and trade/labour union relations is key to the successful operation of the Group. Some of the Group’s employees are represented by trade/labour unions under various collective agreements. For unionised employees, the Group may not be able to renegotiate satisfactorily the relevant collective agreements upon expiration and may face tougher negotiations and higher wage demands than would be the case for non-unionised employees. In addition, existing labour agreements may not prevent a strike or work stoppage, with any such activity creating reputational risk and potentially having a material adverse effect on the results of operations and financial condition of the Group.Sustainability, Corporate Social Responsibility and Climate ChangeRiskDiscussionDescription:The Group may face challenges associated with developing and providing innovative building products and solutions that help deliver a more sustainable environment while meeting our social responsibilities, the stringent and ever evolving laws and regulations that govern the climate change agenda and changing consumer demand.Impact:Failure to innovate, keep up with current technological changes or changing consumer preferences may result in falling demand for the Group’s products, adversely impacting financial performance. The Group recognises that the demand for sustainable products is undoubtedly increasing and seeks opportunities to deliver sustainable products, buildings and infrastructure at reduced environmental cost throughout their lifetime. Customers, from architects and construction companies to public bodies, have an immediate need for sustainable solutions which respond to climate change. In order to be involved in the green agenda, the Group needs to work with customers to innovate around design, delivery and application of products. If the Group fails to identify and execute on areas for improved sustainable performance, the demand for the Group’s products may fall. If customer’s sustainability expectations are not satisfied, the Group’s product portfolio will be of reduced relevance and the Group will experience a deterioration in financial performance. The impact of climate change may over time affect the operations of the Group and the markets in which the Group operates. This could include acute and chronic changes in weather, technological development, policy and regulatory change, and market and economic responses. Efforts to address climate change through laws and regulations, for example by requiring reductions in emissions of greenhouse gases (GHGs), can create economic risks and uncertainties for the Group’s businesses. Such risks could include the cost of purchasing allowances or credits to meet GHG emission caps, the cost of installing equipment to reduce emissions to comply with GHG limits or required technological standards, decreased profits or losses arising from decreased demand for the Group’s goods and higher production costs resulting directly or indirectly from the imposition of legislative or regulatory controls. The Group is subject to a broad and increasingly stringent range of existing and evolving laws, regulations, standards and best practices with respect to governance, the environment and social performance in each of the jurisdictions in which it operates giving rise to significant compliance costs, potential legal liability exposure and potential obligations for the development of its operations. These laws, regulations, standards and best practices relate to, amongst other things, climate change, noise, emissions to air, water and soil, the use and handling of hazardous materials and waste disposal practices. Key Operational Risk Factors - continuedKey Strategic Risk Factors - continuedHealth and Safety Performance RiskDiscussionDescription:The Group’s businesses operate in an industry where health and safety risks are inherently prominent. Further, the Group is subject to stringent regulations from a health and safety perspective in the various jurisdictions in which it operates. Impact:A significant health and safety incident could have a serious impact on the Group’s operational and financial performance, as well as the Group’s reputation.The Group’s industry involves dangerous work and a failure to maintain the focus on making its workplaces safe for our people could result in a deterioration in the Group’s safety performance and ultimately fatalities. Building materials production and distribution can be hazardous and particular hazards are associated with heavy vehicles, working at height and using mechanised processes. Additionally, the Group’s safety risks are not limited to facility sites but extend to paving and construction sites and regular encounters with stakeholder sites. This presents a complex challenge which requires safe behaviours and engagement from employees that match the Group’s robust policies and procedures.The Group is subject to a broad and stringent range of existing and evolving laws, regulations, standards and best practices with respect to health and safety in each of the jurisdictions in which it operates. Should the health and safety frameworks, processes and controls implemented throughout the Group to protect our people fail, the Group would be exposed to significant potential legal liabilities and penalties. Further, high numbers of accidents could pose additional challenges in recruiting new employees, ensuring operational continuity and maintaining licenses and permits. For additional information on the Group’s health and safety performance, see page 14 of the Strategy Review section.Operational Continuity RiskDiscussionDescription:The Group’s operating entities are subject to a wide range of operating risks and hazards including climatic conditions, technical failures, interruptions to power supplies, industrial accidents and disputes, environmental hazards, fire and crime.Impact:The occurrence of a significant adverse event could lead to prolonged operational interruption, negatively impacting financial performance or the Group’s prospects.Responsibility for business continuity management is vested in operating entity management throughout the Group to ensure that the circumstances likely to give rise to material operational disruption are addressed in a manner appropriate to the relevant operating entity.The insurance coverage provided for operating entities includes property damage and business interruption, public and products liability/general liability, employers’ liability/workers’ compensation, environmental impairment liability, automobile liability and directors’ and officers’ liability. Adequate coverage at reasonable rates is not always commercially available to cover all potential risks and no assurance can be given that the insurance arrangements in place would be sufficient to cover all losses or liabilities to which the Group might be exposed. As at 31 December 2018, the total insurance provision, which is subject to periodic actuarial valuation and is discounted, amounted to €279 million (2017: €292 million); a substantial proportion of this figure pertained to claims which are classified as “incurred but not reported”.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexSupplementary 20-F Disclosures230231CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Information Technology and/or Cyber SecurityRiskDiscussionDescription:The Group is dependent on information technology systems to support its business activities. Any significant operational event, whether caused by external attack, insider threat or error, could lead to loss of access to systems or data, adversely impacting business operations. Impact:Security breaches, IT interruptions or data loss could result in reputational damage and regulatory penalties and significant financial costs in remediation. Security and cyber incidents are becoming increasingly sophisticated and are continually evolving. The Group’s systems for protecting against cyber security risks may not be sufficient. As cyber incidents continue to evolve, the Group may be required to expend additional resources to continue to modify or enhance protection measures or to investigate and remediate any vulnerability to cyber incidents. Such attacks may result in interference with production software, corruption or theft of sensitive data, manipulation of financial data accessible through digital infrastructure, or reputational losses as a result of misrepresentation via social media and other websites. There can be no assurance that future attacks will not be successful due to their increasing sophistication and the difficulties in detecting and defending against them in a timely fashion.Key Compliance Risk FactorsLaws and RegulationsRiskDiscussionDescription:The Group is subject to a wide variety of local and international laws and regulations across the many jurisdictions in which it operates, which vary in complexity, application and frequency of change. Impact:Potential breaches of local and international laws and regulations could result in the imposition of significant fines or sanctions and may inflict reputational damage.The Group is subject to various statutes, regulations and laws applicable to businesses generally in the countries and markets in which it operates. These include statutes, regulations and laws affecting land usage, zoning, labour and employment practices, competition, financial reporting, taxation, anti-bribery, anti-corruption, governance and other matters. The Group mandates that its employees comply with its Code of Business Conduct which stipulates best practices in relation to regulatory matters. The Group cannot guarantee that its employees will at all times successfully comply with all demands of regulatory agencies in a manner which will not materially adversely affect its business, results of operations, financial condition or prospects.There can be no assurance that the Group’s policies and procedures will afford adequate protection against fraudulent and/or corrupt activity and any such activity could have a material adverse effect on the Group’s business, results of operations, financial condition or prospects.Key Operational Risk Factors - continuedKey Financial and Reporting Risk FactorsFinancial Instruments RiskDiscussionDescription:The Group uses financial instruments throughout its businesses giving rise to interest rate and leverage, foreign currency, counterparty, credit rating and liquidity risks. In addition, the Group must maintain a certain minimum interest coverage ratio and a certain minimum level of net worth.Impact:A downgrade of the Group’s credit ratings or inability to maintain certain financial ratios may give rise to increases in future funding costs and may impair the Group’s ability to raise funds on acceptable terms. In addition, insolvency of the financial institutions with which the Group conducts business may adversely impact the Group’s financial position.Interest rate and leverage risks: The Group’s exposures to changes in interest rates result from investing and borrowing activities undertaken to manage liquidity and capital requirements and stem predominantly from long-term debt obligations. Borrowing costs are managed through employing a mix of fixed and floating rate debt and interest rate swaps, where appropriate. As at 31 December 2018, the Group had outstanding net indebtedness of approximately €7.0 billion (2017: €5.8 billion). Recent acquisition activity may impair its operating and financial flexibility over the longer term and could adversely affect its business, results of operations and financial position. This relatively high level of indebtedness could give rise to the Group dedicating a substantial portion of its cash flow to debt service thereby reducing the funds available in the longer term for working capital, capital expenditure, acquisitions, distributions to shareholders and other general corporate purposes and limiting its ability to borrow additional funds and to respond to competitive pressures. In addition, the Group’s level of indebtedness may give rise to a general increase in interest rates borne and there can be no assurance that the Group will not be adversely impacted by increases in borrowing costs in the future.The prescribed minimum PBITDA/Net Interest Cover ratio (all as defined in the relevant agreements as discussed in note 25 to the Consolidated Financial Statements), which is the Group’s principal financial covenant, is 4.5x and the prescribed minimum net worth, which is the Group’s other financial covenant, is €5.1 billion. For the year ended 31 December 2018, PBITDA/Net Interest was 11.2x (2017: 11.6x) and the Group’s net worth was €18.8 billion (2017: €16.6 billion). In both instances, there is a significant level of headroom.Foreign currency risks: If the euro, which is the Group’s reporting currency, weakens relative to the basket of foreign currencies in which net debt is denominated (principally the US Dollar, Canadian Dollar, Swiss Franc, Philippine Peso and Pound Sterling), the net debt balance would increase; the converse would apply if the euro was to strengthen. The Group may not succeed in managing these foreign currency risks.Counterparty risks: Insolvency of the financial institutions with which the Group conducts business, or a downgrade in their credit ratings, may lead to losses in derivative assets and cash and cash equivalents balances or render it more difficult either to utilise existing debt capacity or otherwise obtain financing for operations. The maximum exposure arising in the event of default on the part of the counterparty (including insolvency) is the carrying amount of the relevant financial instrument.The Group holds significant cash balances on deposit with a variety of highly-rated financial institutions (typically invested on a short-term basis) which, together with cash and cash equivalents at 31 December 2018, totalled €2.3 billion (2017: €2.1 billion). In addition to the above, the Group enters into derivative transactions with a variety of highly-rated financial institutions giving rise to derivative assets and derivative liabilities; the relevant balances as at 31 December 2018 were €45 million and €59 million respectively (2017: €64 million and €14 million respectively). The counterparty risks inherent in these exposures may give rise to losses in the event that the relevant financial institutions suffer a ratings downgrade or become insolvent. In addition, certain of the Group’s activities (e.g. highway paving in the US) give rise to significant amounts receivable from counterparties at the balance sheet date; at year end 2018, this balance was €0.9 billion (2017: €0.8 billion). In the business environment, there is increased exposure to counterparty default, particularly as regards bad debts.Credit rating risks: A downgrade of the Group’s credit ratings may give rise to increases in funding costs in respect of future debt and may, among other concerns, impair its ability to access debt markets or otherwise raise funds or enter into letters of credit, for example, on acceptable terms. Such a downgrade may result from factors specific to the Group, including increased indebtedness stemming from acquisition activity, or from other factors such as general economic or sector-specific weakness or sovereign credit rating ceilings.Liquidity risks: The principal liquidity risks stem from the maturation of debt obligations and derivative transactions. The Group aims to achieve flexibility in funding sources through a variety of means including (i) maintaining cash and cash equivalents with a number of highly-rated counterparties; (ii) limiting the annual maturity of such balances; (iii) meeting the bulk of debt requirements through committed bank lines or other term financing; and (iv) having surplus committed lines of credit. However, market or economic conditions may make it difficult at times to realise this objective. For additional information on the above risks see note 23 to the Consolidated Financial Statements.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexSupplementary 20-F Disclosures232233CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Key Financial and Reporting Risk Factors - continuedDefined Benefit Pension Schemes and Related ObligationsRiskDiscussionDescription:The assets and liabilities of defined benefit pension schemes, in place in certain operating jurisdictions, exhibit significant period-on-period volatility attributable primarily to asset values, changes in bond yields/discount rates and anticipated longevity.Impact:Significant cash contributions may be required to remediate deficits applicable to past service. Fluctuations in the accounting surplus/deficit may adversely impact the Group’s credit metrics thus harming its ability to raise funds.The assumptions used in the recognition of pension assets, liabilities, income and expenses (including discount rates, rate of increase in future compensation levels, mortality rates and healthcare cost trend rates) are updated based on market and economic conditions at the respective balance sheet date and for any relevant changes to the terms and conditions of the pension and post-retirement plans. These assumptions can be affected by (i) the discount rate, changes in the rates of return on high-quality fixed income investments; (ii) future compensation levels, future labour market conditions and anticipated inflation; (iii) mortality rates, changes in the relevant actuarial funding valuations or changes in best practice; and (iv) healthcare cost trend rates, the rate of medical cost inflation in the relevant regions. The weighted average actuarial assumptions used and sensitivity analysis in relation to the significant assumptions employed in the determination of pension and other post-retirement liabilities are disclosed on pages 182 to 187. A prolonged period of financial market instability or other adverse changes in the assumptions mentioned above would have an adverse impact on the valuations of pension scheme assets.In addition, a number of the defined benefit pension schemes in operation throughout the Group have reported material funding deficits thus necessitating remediation either in accordance with legislative requirements or as agreed with the relevant regulators. These obligations are reflected in the contracted payments disclosure on page 221. The extent of such contributions may be exacerbated over time as a result of a prolonged period of instability in worldwide financial markets or other adverse changes in the assumptions mentioned above.Taxation Charge and Balance Sheet ProvisioningRiskDiscussionDescription:The Group is exposed to uncertainties stemming from governmental actions in respect of taxes paid and payable in all jurisdictions of operation. In addition, various assumptions are made in the computation of the overall tax charge and in balance sheet provisions which may not be borne out in practice. Impact:Changes in tax regimes or findings in future audits that additional taxes are due could result in incremental tax liabilities which could have a material adverse effect on cash flows, financial condition and results of operations.The Group’s income tax charge is based on reported 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 in which it operates. The determination of the Group’s provision for income tax requires certain judgements and estimates in relation to matters where the ultimate tax outcome may not be certain. The recognition of deferred tax assets also requires judgement as it involves an assessment of the future recoverability of those assets. In addition, the Group is subject to tax audits which can involve complex issues that could require extended periods to conclude, the resolution of which is often not within its control. Although management believes that the estimates included in the Consolidated Financial Statements and the Group’s tax return positions are reasonable, there can be no assurance that the final outcome of these matters will not differ from estimates reflected in the Group’s historical income tax provisions and accruals. As a multinational corporation, the Group is subject to various taxes in all jurisdictions of operation. Due to economic and political conditions, tax rates in these jurisdictions may be subject to significant change. For example, the 2017 US Tax Cuts and Jobs Act has made significant changes to US tax rules. The Group’s future effective income tax rate could be affected (positively or negatively) by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets or changes in tax laws or their interpretation.In addition, recent developments, including the European Commission’s investigations on illegal state aid as well as the Organisation for Economic Co-operation and Development project on Base Erosion and Profit Shifting may result in changes to long-standing tax principles, which could adversely affect the Group’s effective tax rate or result in higher cash tax liabilities. If the Group’s effective income tax rate was to increase, its cash flows, financial condition and results of operations could be adversely affected.Foreign Currency TranslationRiskDiscussionDescription:The principal foreign exchange risks to which the Consolidated Financial Statements are exposed pertain to (i) adverse movements in reported results when translated into euro and (ii) declines in the euro value of net investments which are denominated in a wide basket of currencies other than the euro. Impact:Adverse changes in the exchange rates will continue to negatively affect retained earnings. The annual impact is reported in the Consolidated Statement of Comprehensive Income. Given the geographic diversity of the Group, a significant proportion of its revenues, expenses, assets and liabilities are denominated in currencies other than the euro, principally US Dollar, Canadian Dollar, Swiss Franc, Polish Zloty, Philippine Peso and Pound Sterling. From year to year, adverse changes in the exchange rates used to translate these and other foreign currencies into euro have impacted and will continue to impact consolidated results and net worth. For additional information on the impact of foreign exchange movements on the Consolidated Financial Statements for the Group for the year ended 31 December 2018, see the Business Performance section commencing on page 24 and note 23 to the Consolidated Financial Statements.Goodwill ImpairmentRiskDiscussionDescription:Significant under-performance in any of the Group’s major cash-generating units or the divestment of businesses in the future may give rise to a material write-down of goodwill.Impact:A write-down of goodwill could have a substantial impact on the Group’s income and equity. An acquisition generates goodwill to the extent that the price paid exceeds the fair value of the net assets acquired. Under IFRS, goodwill and indefinite-lived intangible assets are not amortised but are subject to annual impairment testing. Other intangible assets deemed separable from goodwill arising on acquisitions are amortised. A detailed discussion of the impairment testing process, the key assumptions used, the results of that testing and the related sensitivity analysis is contained in note 16 to the Consolidated Financial Statements on pages 159 to 161. While a goodwill impairment charge does not impact cash flow, a full write-down at 31 December 2018 would have resulted in a charge to income and a reduction in equity of €8.1 billion (2017: €6.9 billion).OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexSupplementary 20-F Disclosures234235CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Compliance StatementNon-US companies such as CRH are exempt from most of the corporate governance rules of the NYSE. In common with companies listed on the LSE and Euronext Dublin, CRH’s corporate governance practices reflect, inter alia, compliance with (a) domestic company law; (b) the Listing Rules of the UK Listing Authority and Euronext Dublin; and (c) the 2016 UK Corporate Governance Code, which is appended to the listing rules of the LSE and Euronext Dublin.The Board of CRH has adopted a robust set of governance principles, which reflect the Code and its principles-based approach to corporate governance. Accordingly, the way in which CRH makes determinations of Directors’ independence differs from the NYSE rules. The Board has determined that, in its judgement, all of the non-executive Directors are independent. In doing so, however, the Board did not explicitly take into consideration the independence requirements outlined in the NYSE’s listing standards.Shareholder Approval of Equity Compensation PlansThe NYSE rules require that shareholders must be given the opportunity to vote on all equity-compensation plans and material revisions to those plans with certain limited exceptions. CRH complies with Irish requirements, which are similar to the NYSE rules. The Board, however, does not explicitly take into consideration the NYSE’s detailed definition on what are considered “material revisions”.Risk Management and Internal ControlThe Board has delegated responsibility for monitoring the effectiveness of the Group’s risk management and internal control systems to the Audit Committee1. Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and, in the case of internal control systems, can provide only reasonable and not absolute assurance against material misstatement or loss. The Consolidated Financial Statements are prepared subject to oversight and control of the Finance Director, who seeks to ensure that data is captured from Group locations and all required information for disclosure in the Consolidated Financial Statements is provided. An appropriate control framework has been put in place around the recording of appropriate consolidation journals and other adjustments. The Consolidated Financial Statements are reviewed by the internal CRH Financial Reporting and Disclosure Group prior to being reviewed by the Finance Director and Audit Committee and approved by the Board of Directors.Group management has responsibility for major strategic development and financing decisions. Responsibility for operational issues is devolved, subject to limits of authority, to product group and operating company management. Management at all levels is responsible for internal control over the business functions that have been delegated. This embedding of the system of internal control throughout the Group’s operations is designed to enable the organisation to respond quickly to evolving business risks, and to ensure that significant internal control issues, should they arise, are reported promptly to appropriate levels of management.Management’s Report on Internal Control over Financial ReportingIn accordance with the requirements of Rule 13a-15 of the US Securities Exchange Act, the following report is provided by management in respect of the Company’s internal control over financial reporting. As defined by the SEC, internal control over financial reporting is a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers, or persons performing similar functions, and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Consolidated Financial Statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;• provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Consolidated Financial Statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorisations of management and Directors of the Company; and• provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the Company’s assets that could have a material effect on the Consolidated Financial StatementsOur management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the US Securities Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our Company’s published Consolidated Financial Statements for external purposes under generally accepted accounting principles.In connection with the preparation of the Company’s annual Consolidated Financial Statements, management has undertaken an assessment of the effectiveness of the Company’s internal control over financial reporting as of 31 December 2018, based on criteria established in Internal Control - Integrated Framework (2013), issued by the Committee of Sponsoring Organisations of the Treadway Commission.Corporate Governance Practices 1. In accordance with Section 167(7) of the Companies Act 2014.As permitted by the SEC, the Company has elected to exclude an assessment of the internal controls of acquisitions made during the year 2018. These acquisitions, which are listed in note 32 to the Consolidated Financial Statements, constituted 9.5% and 14.6% of total and net assets respectively, as of 31 December 2018 and 4.6% and 4.2% of revenue and Group profit, respectively, for the financial year then ended. Of these acquisitions, the acquisition of Ash Grove represented 7.1% and 10.9% of total and net assets, respectively, and 2.4% and 3.5% of revenue and Group profit, respectively, for the financial year then ended. Management’s assessment included an evaluation of the design of the Company’s internal control over financial reporting and testing of the operational effectiveness of those controls. Based on this assessment, management has concluded and hereby reports that as of 31 December 2018, the Company’s internal control over financial reporting is effective.Our auditors, EY, a registered public accounting firm, who have audited the Consolidated Financial Statements for the year ended 31 December 2018, have audited the effectiveness of the Company’s internal controls over financial reporting. Their report, on which an unqualified opinion is expressed thereon, is included on page 122.Changes in Internal Control over Financial ReportingDuring 2018, there has been no change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15 that occurred during the period covered by this Annual Report and Form 20-F that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.Acquisitions excluded from the 2017 assessment of internal control over financial reporting were all successfully integrated into the CRH internal control systems in 2018.Evaluation of Disclosure Controls and ProceduresManagement has evaluated the effectiveness of the design and operation of the disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) as of 31 December 2018. Based on that evaluation, the Chief Executive and the Finance Director have concluded that these disclosure controls and procedures were effective as of such date at the level of providing reasonable assurance.In designing and evaluating our disclosure controls and procedures, management, including the Chief Executive and the Finance Director, recognised that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgement in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexSupplementary 20-F Disclosures236237CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018The Environment and Government RegulationsThe most important government regulations relevant to CRH as a building materials company are environmental laws and regulations relevant to extractive and production processes. In the European Union, operations are subject to national environmental laws and regulations, most of which now emanate from European Union Directives and Regulations. In North America, operations may be subject to federal, state, provincial and local environmental laws and regulations. In other jurisdictions, national environmental and local laws apply.Environmental Compliance PolicyIn order to comply with environmental regulations, CRH has developed the following Group environmental policy, approved by the Board and applied across all Group companies, which is to:• comply, as a minimum, with all applicable environmental legislation and continuously improve our environmental stewardship, aiming all the time to meet or exceed industry best practice;• ensure that our employees and contractors respect their environmental responsibilities;• address proactively the challenges and opportunities of climate change;• optimise our use of energy and all resources;• promote environmentally driven product innovation and new business opportunities and;• develop positive relationships and strive to be good neighbours in every community in which we operateAchieving the Group’s environmental policy objectives at all locations is a management imperative; this line responsibility continues right up to Board level where there is also a dedicated Safety, Environment & Social Responsibility (SESR) Committee. Daily responsibility for ensuring that the Group’s environmental policy is effectively implemented lies with individual location managers, assisted by a network of Environmental Liaison Officers (ELOs). At each year end, the ELOs assist the Group Sustainability team in carrying out a detailed assessment of Group environmental performance, which is reviewed by the SESR Committee and the Board.Addressing Climate ChangeCRH has evaluated the risks and opportunities arising from climate change and has put in place a management strategy to address these. In striving to reduce its emissions, CRH delivers carbon, energy and financial efficiencies for its businesses and helps to address climate change on a societal level. There is a focus on reducing the carbon footprint of products during manufacture and on increasing their contribution to reducing emissions during their lifetime. There are value creation opportunities for the Group, including opportunities for sales of products aimed at climate adaptation, such as sustainable drainage systems, flood defences, and more resilient structures. CRH continues to be a member of the World Business Council for Sustainable Development (WBCSD) and is a founding member of the Global Cement and Concrete Association (GCCA), which is dedicated to developing and strengthening the sector’s contribution to sustainable construction.Having achieved its initial CO2 reduction commitment three years ahead of target in 2012, CRH is on-track for its 2020 CO2 reduction commitment. This is for a 25% reduction in specific net CO2 emissions on 1990 levels, and covers the portfolio of cement plants owned by CRH in 2013 when the target was set.Through its membership of the GCCA, WBCSD and regional industry associations including the European Cement Association (CEMBUREAU) and the European Lime Association (EuLA) in Europe and the National Asphalt Pavement Association (NAPA) and the Portland Cement Association (PCA) in the US, CRH is actively involved in global and regional discussions on the climate change agenda. Relevant facilities comply with CO2 “cap and trade” schemes including the European Union Emissions Trading Scheme and other regional schemes. CRH acknowledges the “Paris Climate Agreement” to limit global temperature rise to 2˚C (with efforts towards 1.5˚C), made at the 21st Conference of the Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) in 2015. CRH has implemented capital expenditure programmes in its cement operations to reduce carbon emissions in the context of international and national commitments to reduce greenhouse gas emissions. The European Union has binding targets to reduce greenhouse gases, on 1990 levels, by 20% by 2020 and by 40% by 2030. In addition, the European Commission has suggested an objective to reduce emissions by 80% by 2050 compared to 1990. Achieving such reductions would represent a significant extra constraint on cement operations in Europe. US federal, state and local laws continue to develop to address carbon emissions. The Group may incur costs in monitoring and reporting emissions. Ultimately a “cap and trade” scheme may be implemented in the US and Canada; depending on the scope of the legislation, this could significantly impact certain operations in North America. As of 15 February 2019, the Group is not aware of any schemes that would materially affect its US operations, however, CRH continuously monitors developments in regulations and greenhouse gas initiatives involving local, provincial, state or federal governments.Possible Environmental LiabilitiesAt 15 February 2019, there were no material pending legal proceedings relating to site remediation which are anticipated to have a material adverse effect on the financial position or results of operations or liquidity of the Group, nor have internal reviews revealed any situations of likely material environmental liability to the Group. Governmental PoliciesThe overall level of government capital expenditures and the allocation by state entities of available funds to different projects, as well as interest rate and tax policies, directly affect the overall levels of construction activity. The terms and general availability of government permits required to conduct Group business also has an impact on the scope of Group operations. As a result such governmental decisions and policies can have a significant impact on the operating results of the Group. * 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.Other DisclosuresHistory, Development and Organisational Structure of the Company CRH is the leading building materials business in the world. Our global footprint spans 32 countries, employing 90,000 people at over 3,700 operating locations, serving customers across the entire building materials spectrum, on five continents.CRH is the largest building materials company in North America and has leadership positions in Europe, where it is the largest heavyside materials business, along with established strategic positions in the emerging economic regions of Asia and South America. CRH manufactures and distributes a diverse range of superior building materials and products for the built environment. From foundations, to frame and roofing, to fitting out the interior space and improving the exterior aesthetic, to on-site works and infrastructural projects including roads and bridges, our materials and products are used extensively in construction projects of all sizes, all across the world.The Group resulted from the merger in 1970 of two leading Irish public companies, Cement Limited (established in 1936) and Roadstone Limited (incorporated in 1949). Cement Limited manufactured and supplied cement while Roadstone Limited was primarily involved in the manufacture and supply of aggregates, readymixed concrete, mortar, coated macadam, asphalt and contract surfacing to the Irish construction industry.As a result of planned geographic diversification since the mid-1970s, the Group has expanded by acquisition and organic growth into an international manufacturer and supplier of building materials. The Company is incorporated and domiciled in the Republic of Ireland. CRH is a public limited company operating under the Companies Act of Ireland 2014. The Group’s worldwide headquarters is located in Dublin, Ireland. Our principal executive offices are located at Belgard Castle, Clondalkin, Dublin 22 (telephone: +353 1 404 1000). The Company’s registered office is located at 42 Fitzwilliam Square, Dublin 2, Ireland and our US agent is CRH Americas, Inc., 900 Ashwood Parkway, Suite 600, Atlanta, Georgia 30338.The Company is the holding company of the Group, with direct and indirect share and loan interests in subsidiaries, joint ventures and associates. From Group headquarters, a small team of executives exercise strategic control over our decentralised operations.In the detailed description of CRH’s business on pages 24 to 51, estimates of the Group’s various aggregates and stone reserves have been provided by engineers employed by the individual operating companies. Details of product end-use by sector for each reporting segment are based on management estimates.A listing of the principal subsidiary undertakings and equity accounted investments is contained on pages 252 to 257.Statements Regarding Competitive Position and Construction ActivityStatements made in the Business Performance section and elsewhere in this document referring to the Group’s competitive position are based on the Group’s belief, and in some cases rely on a range of sources, including investment analysts’ reports, independent market studies and the Group’s internal assessment of market share based on publicly available information about the financial results and performance of market participants. Unless otherwise specified, references to construction activity or other market activity relate to the relevant market as a whole and are based on publicly available information from a range of sources, including independent market studies, construction industry data and economic forecasts for individual jurisdictions.Exchange RatesIn this Annual Report and Form 20-F, references to “US$”, “US Dollars” or “US cents” are to the United States currency, references to “euro”, “euro cent”,“cent”, “c” or “€” are to the euro currency and “Stg£” or “Pound Sterling” are to the currency of the United Kingdom of Great Britain and Northern Ireland (UK). Other currencies referred to in this Annual Report and Form 20-F include Polish Zloty (PLN), Swiss Franc (CHF), Canadian Dollar (CAD), Chinese Renminbi (RMB), Indian Rupee (INR), Ukrainian Hryvnia (UAH), Philippine Peso (PHP), Romanian Leu (RON) and Serbian Dinar (RSD). For a discussion on the effects of exchange rate fluctuations on the financial condition and results of the operations of the Group, see the Business Performance section beginning on page 24.Legal ProceedingsGroup companies are parties to various legal proceedings, including some in which claims for damages have been asserted against the companies. Having taken appropriate advice, we believe that the aggregate outcome of such proceedings will not have a material effect on the Group’s financial condition, results of operations or liquidity.In 2015, the Swiss Competition Commission imposed fines on the Association of Swiss Wholesalers of the Sanitary Industry and on major Swiss wholesalers including certain Swiss CRH subsidiaries; the fine attributable to these subsidiaries was CHF34 million. While the Group remains of the view that the fine is unjustified and it has appealed to the Swiss Federal Appeals Court, a provision of €30 million (2017: €29 million) is recorded in the Group’s Consolidated Balance Sheet.Research and DevelopmentResearch and development is not a significant focus of the Group. CRH’s policy is to expense all research and development costs as they occur.EmployeesThe average number of employees for the past three financial years is disclosed in note 7 to the Consolidated Financial Statements on page 149. No significant industrial disputes have occurred at any of CRH’s factories or plants during the past five years. The Group believes that relations with its employees and labour unions are satisfactory.SeasonalityActivity in the construction industry is characterised by cyclicality and is dependent to a considerable extent on the seasonal impact of weather in CRH’s operating locations, with activity in some markets reduced significantly in winter due to inclement weather. First-half sales accounted for 45% of full-year 2018 (2017: 47%), while EBITDA (as defined)* for the first six months of 2018 represented 34% of the full-year out-turn (2017: 36%).Significant ChangesNo significant changes have occurred since the balance sheet date.Latest Practical InformationWhere referenced in the Supplementary 20-F Disclosures and Shareholder Information sections, information is provided at the latest practicable date, 15 February 2019.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexShareholder information239CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018239238SHAREHOLDERINFORMATIONStock Exchange Listings 240Ownership of Ordinary Shares 240Dividends 242Share Plans 243American Depositary Shares 244Taxation 245Memorandum and Articles of Association 247General Information 249Clogrennane Lime, part of CRH’s Europe Heavyside Division, was one of 200 operating companies worldwide to adopt the brand endorsement ‘A CRH Company’ in 2018. The endorsement enables operating companies to maintain local brand visibility and strength while leveraging CRH’s global reputation and expertise. OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexShareholder information240CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018CRH has a premium listing on the LSE and a secondary listing on Euronext Dublin represented by the ticker symbols CRH and CRG respectively.ADSs, each representing one Ordinary Share, are listed on the NYSE. The ADSs are evidenced by ADRs issued by The Bank of New York Mellon (the ‘Depositary’) as Depositary under an Amended and Restated Deposit Agreement dated 28 November 2006. The ticker symbol for the ADSs on the NYSE is CRH.For further information on CRH shares see note 31 to the Consolidated Financial Statements.Stock Exchange ListingsOwnership of Ordinary Shares - continuedOwnership of Ordinary SharesCRESTTransfer 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.Share price data20182017LSEEuronext DublinNYSELSEEuronext DublinNYSEShare price at 31 December£20.71€23.10$26.35£26.57€29.96$36.09Market capitalisation£16.9bn€18.8bn$21.5bn£22.3bn€25.1bn$30.3bnShare price movement during year:-high£28.57€32.62$38.96£29.20€34.53€37.86-low£19.72€21.84$24.92£25.30€28.48€33.41The Company is not owned or controlled directly or indirectly by any government or by any corporation or by any other natural or legal person severally or jointly. The major shareholders do not have any special voting rights. As at 27 February 2019, the Company had received notification of certain interests in its Ordinary Share capital that were equal to, or in excess of, 3%. These interests are presented in Corporate Governance – Substantial Holdings on page 66.241Shareholdings as at 31 December 2018Geographic location (i)Number of shares held ‘000s% of totalNorth America237,58528.17United Kingdom230,98727.39Europe/Other168,12619.93Retail153,46618.20Treasury (ii)27,5513.27Ireland25,6753.04843,390100(i) This represents a best estimate of the number of shares controlled by fund managers resident in the geographic regions indicated. Private shareholders are classified as retail above.(ii) As detailed in note 31 to the Consolidated Financial Statements.HoldingsNumber of shareholders% of totalNumber of shares held ‘000s% of total1 - 1,00014,83460.684,6890.561,001 - 10,0007,65131.3022,7712.7010,001 - 100,0001,3975.7142,9805.10100,001 - 1,000,0004341.78140,14416.61Over 1,000,0001290.53632,80675.0324,445100843,39010020182017MonthTotal number of share buyback purchasesTotal number of EBT purchasesTotal number of shares purchasedAverage price paid per share (i)MonthTotal number of EBT purchasesAverage price paid per shareMarch-108,377108,377€27.57March90,971€33.21May3,184,696-3,184,696€30.85/£27.07July179€33.33June3,683,973-3,683,973€31.40/£27.62November5,633€31.48July4,490,643-4,490,643€30.14/£26.73August611,038-611,038€28.98/£26.05September4,873,147-4,873,147€27.94/£25.05October6,973,594-6,973,594€27.10/£23.84November1,007,835-1,007,835€24.58/£21.81December3,076,545-3,076,545€23.05/£20.6427,901,471108,377 28,009,848 96,783(i) Where applicable, for shares purchased on the LSE, the average price paid per share in Pound Sterling is disclosed.Other than the above, there were no purchases of equity securities by the issuer and/or affiliated persons during the course of 2018.Purchases of Equity Securities by the Issuer and Affiliated PersonsIn April 2018, CRH announced its intention to introduce a share repurchase programme to repurchase Ordinary Shares (including Income Shares) of up to €1 billion. The table below sets forth the Ordinary Shares repurchased under this programme together with details of the Ordinary Shares purchased by the Employee Benefit Trust (EBT) during 2018. See note 31 to the Consolidated Financial Statements for further details. OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexShareholder information242243CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018The Company has paid dividends on its Ordinary Shares in respect of each fiscal year since the formation of the Group in 1970. Dividends are paid to shareholders on the Register of Members on the record date for the dividend. Record dates are set by the LSE and Euronext Dublin. An interim dividend is normally declared by the Board of Directors in August of each year and is generally paid in September/October. A final dividend is normally recommended by the Board of Directors following the end of the fiscal year to which it relates and, if approved by the shareholders at an AGM, is generally paid in April/May of that year.The payment of future cash dividends will be dependent upon future earnings, the financial condition of the Group and other factors.The below table sets forth the amounts of interim, final and total dividends in euro cent per Ordinary Share declared in respect of each fiscal year indicated. Each amount represents the actual dividend payable. Solely for the convenience of the reader, these dividends have been translated into US cents per ADS using the FRB Noon Buying Rate on the date of payment. An interim dividend of 19.6c was paid in respect of Ordinary Shares on 26 September 2018. The final dividend, if approved at the forthcoming AGM of shareholders to be held on 25 April 2019, will be paid on 30 April 2019 to shareholders on the Register of Members as at the close of business on 15 March 2019 and will bring the full-year dividend for 2018 to 72.0c. The proposed final dividend has been translated using the FRB Noon Buying Rate on 15 February 2019.Dividend Withholding Tax (DWT) must be deducted from dividends paid by an Irish resident company, unless a shareholder is entitled to an exemption and has submitted a properly completed exemption form to the Company’s Registrars, Link Asset Services (the ‘Registrars’). DWT applies to dividends paid by way of cash or by way of shares under a scrip dividend scheme and is deducted at the standard rate of Income Tax (currently 20%). 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. Shareholders who wish to have their dividend paid direct to their bank account, by electronic funds transfer, can do so by logging on to www.signalshares.com, selecting CRH plc and registering for the share portal (the ‘Share Portal’). Shareholders should note that they will need to have their Investor Code (found on their share certificate), and follow the instructions online to register. Alternatively shareholders can complete a paper dividend mandate form and submit it to the Registrars. A copy of the form can be obtained by logging onto the Registrar’s share portal and following the instructions as set out under Registrars on page 249. Tax vouchers will continue to be sent to the shareholder’s registered address under this arrangement. Dividends are generally paid in euro. However, in order to avoid costs to shareholders, dividends are paid in Pound Sterling and US Dollars to shareholders whose shares are not held in the CREST system (see page 241) and whose address, according to the Share Register, is in the UK and the US respectively, unless they require otherwise. In respect of the 2018 final dividend, the latest date for receipt of currency elections is 15 March 2019.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. DividendsThe Group operates share option schemes, performance share plans, share participation schemes and savings-related share option schemes (the ‘Schemes’) for eligible employees in all regions where the regulations permit the operation of such schemes. A brief description of the Schemes is outlined below. Shares issued (whether by way of the allotment of new shares or the reissue of Treasury Shares) in connection with the Schemes rank pari passu in all respects with the Ordinary and Income Shares of the Company. 2000 Share Option SchemesAt the AGM held on 3 May 2000, shareholders approved the adoption of Share Option Schemes (the ‘2000 Share Option Schemes’) to replace schemes which were approved in May 1990. The 2000 Share Option Schemes were replaced by new schemes in May 2010 (see below). Options granted under the 2000 Share Option Schemes vested when EPS growth exceeded the growth on the Irish Consumer Price Index by 5% compounded over a period of at least three years subsequent to the granting of options.Options may be exercised not later than ten years from the date of grant of the option, and not earlier than the expiration of three years from the date of grant. Benefits under the schemes are not pensionable.2010 Share Option SchemesAt the AGM held on 5 May 2010, shareholders approved the adoption of new share option schemes to replace the schemes which were approved in May 2000 (see above). Following the approval by shareholders of the 2014 Performance Share Plan (see below), no further awards will be granted under the 2010 Share Option Schemes. Consequently, the last award under the 2010 Share Option Schemes was made in 2013.The 2010 Share Option Schemes are based on one tier of options with a single vesting test. The performance criteria for the 2010 Share Option Schemes are EPS-based. Vesting only occurs once an initial performance target has been reached and, thereafter, is dependent on performance. In considering the level of vesting based on EPS performance, the Remuneration Committee also considers the overall results of the Group. Subject to the achievement of the EPS performance criteria, options may be exercised not later than ten years from the date of grant of the option, and not earlier than the expiration of three years from the date of grant. Benefits under the schemes are not pensionable.2010 Savings-related Share Option SchemesAt the AGM held on 5 May 2010, shareholders approved the adoption of savings-related share option schemes (the ‘2010 Savings-related Share Option Schemes’) to replace the 2000 Savings-related Share Option Schemes.All employees of a participating subsidiary in the Republic of Ireland or the UK, who have satisfied a required qualifying period, are invited to participate in this scheme. Eligible employees who wish to participate in the scheme enter into a savings contract with a nominated savings institution, for a three or a five-year period, to save a maximum of €500 or Stg£500, as appropriate, per month.At the commencement of each contract period employees are granted an option to acquire Ordinary Shares in the Company at an option price which is equal to the amount proposed to be saved plus the bonus payable by the nominated savings institution at the end of the savings period. The price payable for each Ordinary Share under an option will be not less than the higher of par or 75% (or in the case of the UK scheme 80%) of the market value of a share on the day the invitation to apply for the option is issued.On completion of the savings contract, employees may use the amount saved, together with the bonus earned, to exercise the option.At 27 February 2019, 843,063 Ordinary Shares have been issued2 pursuant to the 2010 Savings-related Share Option Schemes to date. Share Participation SchemesAt the AGM on 13 May 1987, shareholders approved the establishment of Share Participation Schemes for the Company, its subsidiaries and companies under its control. Directors and employees of the companies who have at least one year’s service may elect to participate in these Share Participation Schemes. At 27 February 2019, 8,025,732 Ordinary Shares have been issued2 pursuant to the Share Participation Schemes.2014 Performance Share Plan The 2014 Performance Share Plan was approved by shareholders at the AGM on 7 May 2014. It replaces the 2010 Share Option Schemes and the 2006 Performance Share Plan. See the 2018 Directors’ Remuneration Report on page 84 for more details. Restricted Share PlanIn 2013, the Board approved the adoption of the 2013 Restricted Share Plan. Under the rules of the 2013 Restricted Share Plan, certain senior executives (excluding executive Board Directors) can receive conditional awards of shares. As (i) executive Directors are excluded from awards and (ii) no shares are allotted or reissued to satisfy the awards, the listing rules of the LSE and Euronext Dublin do not require shareholder approval for the 2013 Restricted Share Plan. Share Plans euro cent per Ordinary Share Translated1 into US cents per ADSYears ended 31 DecemberInterimFinalTotalInterimFinalTotal201418.5044.0062.5023.45 49.4672.91201518.5044.0062.5019.8850.2570.13201618.8046.20 65.0020.9150.8071.71201719.2048.8068.0022.3058.3080.60201819.6052.40(i)72.0023.0559.04(i)82.09(i) Proposed.1. At the FRB Noon Buying Rate on the date of payment.2. Whether by way of the allotment of new shares or the reissue of Treasury Shares.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexShareholder information244245CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Persons depositing or withdrawing shares must pay:For:$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)• Issuance of ADSs, including issuances resulting from a distribution of shares or rights or other property• Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)(A fee equivalent to the fee that would be payable if securities distributed had been shares and the shares had been deposited for issuance of ADSs)• Distribution of deposited securities by the Depositary to ADS registered holdersApplicable Registration or Transfer fees• Transfer and registration of shares on our share register to or from the name of the Depositary or its agent when the holder deposits or withdraws sharesApplicable Expenses of the Depositary• Cable, telex and facsimile transmissions• Converting foreign currency to US DollarsApplicable Taxes and other governmental charges the Depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes• As necessaryCategory of expense reimbursed to the CompanyAmount reimbursed for the year ended 31 December 2018 US$New York Stock Exchange listing fees68,000Investor relations expenses65,000Total133,000The table below sets forth the types of expenses that the Depositary has paid to third parties and the amounts reimbursed for the year ended 31 December 2018:Category of expense waived or paid directly to third partiesAmount reimbursed for the year ended 31 December 2018 US$Printing, distribution and administration costs paid directly to third parties in connection with United States shareholder communications and Annual General Meeting related expenses in connection with the American Depositary Share programme745Total745Fees and charges payable by a holder of ADSs.The Depositary collects fees for delivery and surrender of ADSs directly from investors or from intermediaries acting for them depositing shares or surrendering ADSs for the purpose of withdrawal. The Depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may generally refuse to provide fee-attracting services until its fees for those services are paid.Fees and direct/indirect payments made by the Depositary to the CompanyThe Depositary has agreed to reimburse certain Company expenses related to the Company’s ADS programme and incurred by the Company in connection with the ADS programme. For the year ended 31 December 2018 the Depositary reimbursed to the Company, or paid amounts on its behalf to third parties, a total sum of US$133,745. This table sets forth the category of expense that the Depositary has agreed to reimburse to the Company and the amounts reimbursed for the year ended 31 December 2018.The Depositary has also agreed to waive fees for standard costs associated with the administration of the ADS programme and has paid certain expenses directly to third parties on behalf of the Company.Under certain circumstances, including removal of the Depositary or termination of the ADS programme by the Company before November 2021, the Company is required to repay the Depositary, up to a maximum of US$250,000, the amounts waived, reimbursed and/or expenses paid by the Depositary to or on behalf of the Company.American Depositary SharesThe following summary outlines the material aspects of US federal income and Republic of Ireland tax law regarding the ownership and disposition of Ordinary Shares or ADSs. Because it is a summary, holders of Ordinary Shares or ADSs are advised to consult their tax advisors with respect to the tax consequences of their ownership or disposition. The discussion regarding US federal income tax only applies to you if you hold your shares or ADSs as capital assets for US federal income tax purposes. This discussion addresses only US federal income and Republic of Ireland taxation and does not discuss all of the tax consequences that may be relevant to you in light of your individual circumstances, including foreign, state or local tax consequences, estate and gift tax consequences, and tax consequences arising under the Medicare contribution tax on net investment income or the alternative minimum tax. This summary does not take into account the specific circumstances of any particular holders (such as tax-exempt entities, certain insurance companies, broker-dealers, traders in securities that elect to mark-to-market, investors liable for alternative minimum tax, investors that actually or constructively own 10% or more of the stock of the Company (by vote or value), investors that hold Ordinary Shares or ADSs as part of a straddle or a hedging or conversion transaction, investors that hold Ordinary Shares or ADSs as part of a wash sale for tax purposes or investors whose functional currency is not the US Dollar), some of which may be subject to special rules. In addition, if a partnership holds the Ordinary Shares or ADSs, the US federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership and may not be described fully below. Holders of Ordinary Shares or ADSs are advised to consult their tax advisors with respect to US federal, state and local, Republic of Ireland and other tax consequences of owning and disposing of Ordinary Shares and ADSs in their particular circumstances, and in particular whether they are eligible for the benefits of the Income Tax Treaty (as defined below) in respect of their investment in the Ordinary Shares or ADSs.The statements regarding US and Irish laws set forth below are based, in part, on representations of the Depositary and assume that each obligation in the Deposit Agreement and any related agreement will be performed in accordance with their terms.This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed US Treasury regulations, published rulings and court decisions, and the laws of the Republic of Ireland all as currently in effect, as well as the Convention between the Government of the United States of America and the Government of Ireland for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and Capital Gains (the ‘Income Tax Treaty’). These laws are subject to change, possibly on a retroactive basis.In general, holders of ADSs will be treated as the owners of Ordinary Shares represented thereby for the purposes of the Income Tax Treaty and for US federal income tax purposes. Exchanges of Ordinary Shares for ADSs, and ADSs for Ordinary Shares, generally will not be subject to US federal income or Irish tax.As used herein, the term “US holder” means a beneficial owner of an Ordinary Share or ADS who, for US federal income tax purposes: (i) is a US citizen or resident, a US corporation, an estate whose income is subject to US federal income tax regardless of its source, or a trust if a US court can exercise primary supervision over the trust’s administration and one or more US persons are authorised to control all substantial decisions of the trust, and (ii) is not a resident of, or ordinarily resident in, the Republic of Ireland for purposes of Irish taxes.Taxation of Dividends Paid to United States HoldersUnder general Irish tax law, US holders are not liable for Irish tax on dividends received from the Company. On the payment of dividends, the Company is obliged to withhold DWT. The statutory rate at present is 20% of the dividend payable. Dividends paid by the Company to a US tax resident individual will be exempt from DWT provided the following conditions are met:1. the individual (who must be the beneficial owner) is resident for tax purposes in the US (or any country with which Ireland has a double tax treaty) and neither resident nor ordinarily resident in Ireland; and2. the individual signs a declaration to the Company, which states that he/she is a US tax resident individual at the time of making the declaration and that he/she will notify the Company in writing when he/she no longer meets the condition in (1) above; or3. the individual provides the Company with a certificate of tax residency from the US tax authoritiesDividends paid by the Company to a US tax resident company (which must be the beneficial owner) will be exempt from DWT, provided the following conditions are met:1. the recipient company is resident for tax purposes in the US (or any country with which Ireland has a double tax treaty) and not under the control, either directly or indirectly, of Irish resident persons;2. the recipient company is not tax resident in Ireland; and 3. the recipient company provides a declaration to the Company, which states that it is entitled to an exemption from DWT, on the basis that it meets the condition in (1) above at the time of making the declaration, and that it will notify the Company when it no longer meets the condition in (1) aboveFor US federal income tax purposes, and subject to the passive foreign investment company (PFIC) rules discussed below, US holders will include in gross income the gross amount of any dividend paid by the Company out of its current or accumulated earnings and profits (as determined for US federal income tax purposes) as ordinary income when the dividend is actually or constructively received by the US holder, in the case of Ordinary Shares, or by the Depositary, in the case of ADSs. Any Irish tax withheld from this dividend payment must be included in this gross amount even though the amount withheld is not in fact received. Dividends paid to non-corporate US holders that constitute qualified dividend income will be taxed at the preferential rates applicable to long-term capital gains provided certain holding period requirements are met. Dividends the Company pays with respect to Ordinary Shares or ADSs generally will be qualified dividend income.Dividends paid by CRH will not be eligible for the dividends received deduction generally allowed to US corporations in respect of dividends received from other US corporations.The amount of the dividend distribution includable in income of a US holder will be the US Dollar value of the euro payments made, determined at the spot euro/US Dollar rate on the date such dividend distribution is includable in the income of the US holder, regardless of whether the payment is in fact converted to US Dollars. Generally any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is includable in income to the date such payment is converted into US Dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. Such gain or loss will generally be income or loss from sources within the US for foreign tax credit limitation purposes.TaxationOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexShareholder information246247CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Distributions in excess of current and accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as a non-taxable return of capital to the extent of the US holder’s basis in the Ordinary Shares or ADSs and thereafter as capital gain. However, the Company does not calculate earnings and profits in accordance with US federal income tax principles. Accordingly, US holders should expect to generally treat distributions the Company makes as dividends.For foreign tax credit limitation purposes, dividends the Company pays with respect to Ordinary Shares or ADSs will generally be income from sources outside the US, and will, depending on your circumstances, generally be “passive” income for purposes of computing the foreign tax credit allowable to a US holder.Subject to certain limitations, the Irish tax withheld in accordance with the Income Tax Treaty and paid over to the Republic of Ireland will be creditable or deductible against your US federal income tax liability. Special rules apply in determining the foreign tax credit limitation with respect to dividends that are subject to the preferential tax rates. Any Irish tax withheld from distributions will not be eligible for a foreign tax credit to the extent an exemption from the tax withheld is available to the US holder.Capital Gains TaxA US holder will not be liable for Irish tax on gains realised on the sale or other disposition of Ordinary Shares or ADSs unless the Ordinary Shares or ADSs are held in connection with a trade or business carried on by such holder in the Republic of Ireland through a branch or agency. A US holder will be liable for US federal income tax on such gains in the same manner as gains from a sale or other disposition of any other shares in a company.Subject to the PFIC rules below, US holders who sell or otherwise dispose of Ordinary Shares or ADSs will recognise a capital gain or loss for US federal income tax purposes equal to the difference between the US Dollar value of the amount realised on the sale or disposition and the tax basis, determined in US Dollars, in the Ordinary Shares or ADSs.Capital gains of a non-corporate US holder are generally taxed at a preferential rate where the holder has a holding period greater than one year, and the capital gain or loss will generally be US source for foreign tax credit limitation purposes.Capital Acquisitions Tax (Estate/Gift Tax)Although non-residents may hold Ordinary Shares, the shares are deemed to be situated in the Republic of Ireland, because the Company is required to maintain its Share Register in the Republic of Ireland for Irish Capital Gains Tax purposes.Accordingly, holders of Ordinary Shares may be subject to Irish gift or inheritance tax, notwithstanding that the parties involved are domiciled and resident outside the Republic of Ireland. Certain exemptions apply to gifts and inheritances depending on the relationship between the donor and donee.Under the Ireland-US Estate Tax Treaty with respect to taxes on the estates of deceased persons, credit against US federal estate tax is available in respect of any Irish inheritance tax payable in respect of transfers of Ordinary Shares.Additional United States Federal Income Tax ConsiderationsThe Company believes that Ordinary Shares and ADSs should not currently be treated as stock of a PFIC for US federal income tax purposes and does not expect them to become stock of a PFIC in the foreseeable future. However, this conclusion is a factual determination that is made annually and thus may be subject to change. If the Company is treated as a PFIC and you are a US holder that did not make a mark-to-market election, you will be subject to special rules with respect to any gain you realise on the sale or other disposition of your Ordinary Shares or ADSs and any excess distribution that the Company makes to you. Generally, any such gain or excess distribution will be allocated ratably over your holding period for the Ordinary Shares or ADSs, the amount allocated to the taxable year in which you realised the gain or received the excess distribution, or to prior years before the first year in which we were a PFIC with respect to you, will be taxed as ordinary income, the amount allocated to each prior year will be generally taxed as ordinary income at the highest tax rate in effect for each other such year, and an interest charge will be applied to any tax attributable to such gain or excess distribution for the prior years. With certain exceptions, Ordinary Shares or ADSs will be treated as stock in a PFIC if the company was a PFIC at any time during the investor’s holding period in the Ordinary Shares or ADSs. In addition, dividends that you receive from the Company will not constitute qualified dividend income to you if the Company is deemed to be a PFIC either in the taxable year of the distribution or the preceding taxable year, but instead will be taxable at rates applicable to ordinary income.Stamp DutySection 90 Stamp Duties Consolidation Act 1999 exempts from Irish stamp duty transfers of ADSs where the ADSs are dealt in and quoted on a recognised stock exchange in the US and the underlying deposited securities are dealt in and quoted on a recognised stock exchange. The Irish tax authorities regard NASDAQ and the NYSE as recognised stock exchanges. Irish stamp duty will be charged at the rate of 1% of the amount or value of the consideration on any conveyance or transfer on sale of Ordinary Shares (exemption generally available in the case of single transfers with a value of less than €1,000).Taxation - continued The Company’s Memorandum of Association sets out the objects and powers of the Company. The Articles of Association detail the rights attaching to each share class; the method by which the Company’s shares can be purchased or reissued; the provisions which apply to the holding of and voting at general meetings; and the rules relating to the Directors, including their appointment, retirement, re-election, duties and powers. A copy of the current Memorandum and Articles of Association can be obtained from the Group’s website, www.crh.com. The following summarises certain provisions of CRH’s Memorandum and Articles of Association and applicable Irish law.Objects and PurposesCRH is incorporated under the name CRH public limited company and is registered in Ireland with registered number 12965. Clause 4 of CRH’s Memorandum of Association provides that its objects include the business of an investment holding company. Clause 4 also sets out other objects including the business of quarry masters and proprietors and lessees and workers of quarries, sand and gravel pits, mines and the like generally; the business of road-makers and contractors, building contractors, builders merchants and providers and dealers in road making and building materials, timber merchants; and the carrying on of any other business calculated to benefit CRH. The memorandum grants CRH a range of corporate capabilities to effect these objects.DirectorsThe Directors manage the business and affairs of CRH. Directors who are in any way, whether directly or indirectly, interested in contracts or other arrangements with CRH must declare the nature of their interest at a meeting of the Directors, and, subject to certain exemptions, may not vote in respect of any contract or arrangement or other proposal whatsoever in which they have any material interest other than by virtue of their interest in shares or debentures in the Company. However, in the absence of some other material interest not indicated below, a Director is entitled to vote and to be counted in a quorum for the purpose of any vote relating to a resolution concerning the following matters:• the giving of security or indemnity with respect to money lent or obligations taken by the Director at the request or for the benefit of the Company; • the giving of security or indemnity to a third party with respect to a debt or obligation of the Company which the Director has assumed responsibility for under a guarantee, indemnity or the giving of security;Memorandum and Articles of AssociationThe Mesa Community College Performing Arts Centre in Arizona is an acoustically fine-tuned masonry masterpiece with an inner and outer shell of sound-reflective materials featuring Oldcastle APG’s Echelon Masonry and Amerimix products. Oldcastle APG is part of CRH’s Americas Products Division. OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexShareholder information248249CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018• any proposal in which the Director is interested concerning the underwriting of Company shares, debentures or other securities;• any other proposal concerning any other company in which the Director is interested, directly or indirectly (whether as an officer, shareholder or otherwise) provided that the Director is not the holder of 1% or more of the voting interest in the shares of such company; and• proposals concerning the modification of certain retirement benefits under which the Director may benefit and which have been approved or are subject to approval by the Irish Revenue CommissionersThe Directors may exercise all the powers of the Company to borrow money, except that such general power is restricted to the aggregate amount of principal borrowed less cash balances of the Company and its subsidiaries not exceeding an amount twice the aggregate of (i) the share capital of the Company; and (ii) the amount standing to the credit of retained income, foreign currency translation reserve and other reserves, capital grants, deferred taxation and non-controlling interest; less any repayable government grants; less (iii) the aggregate amount of Treasury Shares and own shares held by the Company.The Company in general meeting from time to time determines the fees payable to the Directors. The Board may grant special remuneration to any of its number who being called upon, shall render any special or extra services to the Company or go or reside abroad in connection with the conduct of any of the affairs of the Company.The qualification of a Director is the holding alone and not jointly with any other person of 1,000 Ordinary Shares in the capital of the Company.Voting RightsThe Articles provide that, at shareholders’ meetings, holders of Ordinary Shares, either in person or by proxy, are entitled on a show of hands to one vote and on a poll to one vote per share. No member is entitled to vote at any general meeting unless all calls or other sums immediately payable in respect of their shares in the Company have been paid.Laws, Decrees or other Regulations There are no restrictions under the Memorandum and Articles of Association of the Company or under Irish law that limit the right of non-Irish residents or foreign owners freely to hold their Ordinary Shares or to vote their Ordinary Shares.Liquidation Rights/Return of CapitalIn the event of the Company being wound up, the liquidator may, with the sanction of a shareholders’ special resolution, divide among the holders of the Ordinary Shares the whole or any part of the net assets of the Company (after the return of capital and payment of accrued dividends on the preference shares) in cash or in kind, and may set such values as he deems fair upon any property to be so divided and determine how such division will be carried out. The liquidator may, with a like sanction, vest such assets in trust as he thinks fit, but no shareholders will be compelled to accept any shares or other assets upon which there is any liability. Variation in Class RightsSubject to the provisions of the Companies Act 2014, the rights attached to any class of shares may be varied with the consent in writing of the holders of not less than three fourths in nominal value of the issued shares of that class, or with the sanction of a special resolution passed at a separate general meeting of the holders of those shares.Issue of SharesSubject to the provisions of the Companies Act 2014 and the Articles of Association, the issue of shares is at the discretion of the Directors.DividendsShareholders may by ordinary resolution declare final dividends and the Directors may declare interim dividends but no final dividend may be declared in excess of the amount recommended by the Directors and no dividend may be paid otherwise than out of income available for that purpose in accordance with the Companies Act 2014. There is provision to offer scrip dividends in lieu of cash. The preference shares rank for fixed rate dividends in priority to the Ordinary and Income Shares for the time being of the Company. Any dividend which has remained unclaimed for 12 years from the date of its declaration shall, if the Directors so decide, be forfeited and cease to remain owing by the Company. MeetingsShareholder meetings may be convened by majority vote of the Directors or requisitioned by shareholders holding not less than 5% of the voting rights of the Company. A quorum for a general meeting of the Company is constituted by five or more shareholders present in person and entitled to vote. The passing of resolutions at a meeting of the Company, other than special resolutions, requires a simple majority. A special resolution, in respect of which not less than 21 clear days’ notice in writing must be given, requires the affirmative vote of at least 75% of the votes cast.Disclosure of Shareholders’ InterestsA shareholder may lose the right to vote by not complying with any statutory notice or notice pursuant to Article 14 of the Articles of Association given by the Company requiring an indication in writing of: (i) the capacity in which the shares are held or any interest therein; (ii) the persons who have an interest in the shares and the nature of their interest; or (iii) whether any of the voting rights carried by such shares are the subject of any agreement or arrangement under which another person is entitled to control the shareholder’s exercise of these rights. Preference SharesDetails of the 5% and 7% ‘A’ Cumulative Preference Shares are disclosed in note 31 to the Consolidated Financial Statements.Use of Electronic CommunicationWhenever the Company, a Director, the Secretary, a member or any officer or person is required or permitted by the Articles of Association to give information in writing, such information may be given by electronic means or in electronic form, whether as electronic communication or otherwise, provided that the electronic means or electronic form has been approved by the Directors.Memorandum and Articles of Association - continuedAnnouncement of final results for 201828 February 2019Ex-dividend date 14 March 2019Record date for dividend 15 March 2019Latest date for receipt of completed bank mandates15 March 2019Latest date for revocation of existing bank mandates15 March 2019Annual General Meeting 25 April 2019Dividend payment date 30 April 2019Further updates to the calendar can be found on www.crh.com.Financial CalendarElectronic CommunicationsFollowing the introduction of the 2007 Transparency Regulations, and in order to adopt a more environmentally friendly and cost effective approach, the Company provides the Annual Report and Form 20-F to shareholders electronically via the CRH website, www.crh.com, and only sends a printed copy to those shareholders who specifically request a copy. Shareholders who choose to do so can receive other shareholder communications, for example, notices of general meetings and shareholder circulars, electronically. However, shareholders will continue to receive printed proxy forms, dividend documentation and, if the Company deems it appropriate, other documentation by post. Shareholders can alter the method by which they receive communications by contacting the Registrars.CRH WebsiteInformation on or accessible through our website, www.crh.com, other than the item identified as the Annual Report and Form 20-F, does not form part of and is not incorporated into the Company’s Annual Report on Form 20-F as filed with the SEC (the ‘Form 20-F’). References in this document to other documents on the CRH website, such as the CRH Sustainability Report, are included only as an aid to their location and are not incorporated by reference into the Form 20-F. The Group’s website provides the full text of the Form 20-F, which is filed annually with the SEC, interim reports, trading updates, copies of presentations to analysts and investors and circulars to shareholders. News releases are made available in the News & Events section of the website, immediately after release to the Stock Exchanges.Electronic Proxy VotingShareholders may lodge a proxy form for the 2019 AGM electronically by accessing the Registrars’ website as described below.CREST members wishing to appoint a proxy via CREST should refer to the CREST Manual and the notes to the Notice of the AGM.RegistrarsEnquiries concerning shareholdings should be addressed to the Registrars:Link Asset Services, P.O. Box 7117, Dublin 2, Ireland. Telephone: +353 1 553 0050 Fax: +353 1 224 0700 Website: www.linkassetservices.comShareholders with access to the internet may check their accounts by logging onto www.signalshares.com, selecting CRH plc and registering for the share portal. Shareholders should note that they will need to have their Investor Code (found on their share certificate) and follow the instructions online to register. This facility allows shareholders to check their shareholdings and dividend payments, 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 ReceiptsThe ADR programme is administered by the Bank of New York Mellon and enquiries regarding ADRs should be addressed to:BNY Mellon Shareowner Services, P.O. Box 505000, Louisville, KY 40233-5000, U.S.A. Telephone: Toll Free Number US residents: 1-888-269-2377 International: +1 201-680-6825 E-mail: shrrelations@cpushareownerservices.com Website: www.mybnymdr.comFrequently Asked Questions (FAQs)The Group’s website contains answers to questions frequently asked by shareholders, including questions regarding shareholdings, dividend payments, electronic communications and shareholder rights. The FAQs can be accessed in the Investors section of the website under “Equity Investors”.Exchange ControlsCertain aspects of CRH’s international monetary operations outside the European Union were, prior to 31 December 1992, subject to regulation by the Central Bank of Ireland. These controls have now ceased. There are currently no Irish foreign exchange controls, or other statute or regulations that restrict the export or import of capital, that affect the remittance of dividends, other than dividend withholding tax on the Ordinary Shares, or that affect the conduct of the Company’s operations.Principal Accountant Fees and ServicesDetails of auditors’ fees are set out in note 5 to the Consolidated Financial Statements. For details on the audit and non-audit services pre-approval policy see Corporate Governance – External Auditors on pages 60 and 61.Documents on DisplayIt is possible to read and copy documents referred to in this Form 20-F, that have been filed with the SEC at the SEC’s public reference room located at 100 F Street, NE, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms and their copy charges. The SEC filings are also available to the public from commercial document retrieval services and, for most recent CRH periodic filings only, at the website maintained by the SEC at www.sec.gov.General InformationOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexShareholder information251CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018250OTHER INFORMATIONPrincipal Subsidiary Undertakings 252Principal Equity Accounted Investments 257Our Products and Services Locations 258Exhibits 260Cross Reference to Form 20-F Requirements 261Index 262Signatures 264Suwannee American Cement Company, part of CRH’s Americas Materials Division, uses a dragline to mine limestone. Limestone comprises nearly 80% of the raw materials used to make cement at the Sumterville Plant in Florida. Due to the low peninsula elevation and proximity to the water table, almost all mining is carried out underwater. This equipment can mine 8,000 tonnes of rock per day and 2.9m tonnes per year.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexShareholder information252253CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Europe HeavysideIncorporated and operating in% heldProducts and servicesBelgiumDouterloigne N.V. 100Concrete floor elements, pavers and blocksErgon N.V.100Precast concrete and structural elementsOeterbeton N.V.100Precast concretePrefaco N.V.100Precast concrete structural elementsSchelfhout N.V.100Precast concrete wall elementsVVM N.V.100Cement transport and trading, readymixed concrete, clinker grindingBritain & Northern IrelandNorthstone (NI) Limited (including Farrans Construction Limited, Materials and Cubis divisions)100Aggregates, readymixed concrete, mortar, coated macadam, rooftiles, building and civil engineering contractingPremier Cement Limited100Marketing and distribution of cementSouthern Cement Limited100Sale and distribution of cement Tarmac Aggregates Limited100Aggregates, asphalt, readymixed concrete and contractingTarmac Building Products Limited100Building productsTarmac Cement and Lime Limited100Cement and limeTarmac Trading Limited100Aggregates, asphalt, cement, readymixed concrete and contractingCzech RepublicVapenka Vitosov s.r.o75Production of lime and lime productsDenmarkBetongruppen RBR A/S100Concrete paving manufacturerCRH Concrete A/S100Structural concrete productsFinlandFinnsementti Oy100CementRudus Oy 100Aggregates, readymixed concrete and concrete productsFrance & La RéunionEqiom99.99Aggregates, asphalt, cement and readymixed concreteL’industrielle du Béton S.A.*100Structural concrete productsStradal100Utility and infrastructural concrete productsTeralta Ciment Reunion*82.90CementTeralta Granulat Beton Reunion*93.33Aggregates, readymixed concreteGermanyFels Holding Company GmbH100Holding companyFels Netz GmbH100Logistics and owned railway infrastructure operatorFels Vertriebs und Service GmbH & Co. KG.100Lime and limestone, development of new productsFels-Werke GmbH100Production and sale of lime and limestoneOpterra GmbH100CementHungaryCRH Magyarország Kft.100Cement and readymixed concreteFerrobeton Beton-és Vasbetonelem gyártó Zrt.100Precast concrete structural elementsIrelandClogrennane Lime Limited 100Burnt and hydrated limeIrish Cement Limited100CementRoadstone Limited100Aggregates, readymixed concrete, mortar, coated macadam, concrete blocks and pipes, asphalt, agricultural and chemical limestone and contract surfacingNetherlandsCalduran Kalkzandsteen B.V.100Sand-lime bricks and building elementsCementbouw B.V.100Cement transport and trading, readymixed concrete and aggregatesCRH Structural Concrete B.V.100Precast concrete structural elementsDycore B.V.100Concrete flooring elementsPrincipal Subsidiary Undertakingsas at 31 December 2018Europe HeavysideIncorporated and operating in% heldProducts and servicesPoland Przedsiebiorstwo Produkcji Mas Betonowych Bosta Beton Sp. z o.o. 90.30Readymixed concreteDrogomex Sp. z o.o.*100Asphalt and contract surfacingGrupa Ożarów S.A.100CementMasfalt Sp. z o.o.* 100Asphalt and contract surfacingTrzuskawica S.A. 100 Production of lime and lime productsRomaniaCRH RMX & Agregate S.R.L.100Readymixed concreteCRH Ciment (Romania) S.A.98.61CementElpreco S.A.100Architectural concrete productsFerrobeton Romania SRL100Structural concrete productsRussiaLLC Fels Izvest100Production of lime and lime productsSerbiaCRH (Srbija) d.o.o. 100CementSlovakiaCRH (Slovensko) a.s. 99.70Cement and readymixed concreteSpainBeton Catalan S.A.100Readymixed concreteCementos Lemona S.A.98.75CementSwitzerlandJURA-Holding AG100Cement, aggregates and readymixed concreteUkraineLLC Cement*100Cement and clinker grindingPJSC Mykolaivcement99.27CementPodilsky Cement PJSC99.60CementEurope LightsideAustraliaAncon Building Products Pty Ltd100Construction accessoriesBelgiumPlakabeton N.V.100Construction accessoriesMarlux N.V.100Concrete paving and landscaping productsStradus Infra N.V.100Concrete paving and landscaping productsBritain & Northern IrelandAncon Limited100Construction accessoriesCRH Fencing & Security Group (UK) Limited100Security fencingSecurity Windows Shutters Limited100Physical security, industrial and garage doors, roofing systemsFrancePlaka Group France S.A.S.100Construction accessoriesGermanyAlulux GmbH*100Roller shutter and awning systemsEHL AG100Concrete paving and landscape walling productsERHARDT Markisenbau GmbH*100Roller shutter and awning systemsHalfen GmbH100Construction accessoriesHeras Deutschland GmbH100Security fencing and access controlTenbrink Rolladensysteme GmbH100Roller shutter and awning systemsOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexShareholder information254255CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Europe DistributionAustriaQuester Baustoffhandel GmbH100Builders merchantsBelgiumCreyns N.V.100Builders merchantsBMB Bouwmaterialen BVBA100Builders merchantsLambrechts N.V.100Builders merchantsSax Sanitair N.V.100Sanitary ware, heating and plumbingSchrauwen Sanitair en Verwarming N.V.100Sanitary ware, heating and plumbingFranceCRH Ile-de-France Distribution*100Builders merchantsCRH Normandie Distribution100Builders merchantsCRH TP Distribution100Builders merchantsGermanyAndreas Paulsen GmbH100Sanitary ware, heating and plumbingBauKing AG100Builders merchants, DIY storesBergmann & Franz Gmbh100Building MerchantsNetherlandsCRH Bouwmaten B.V.100Cash & Carry building materialsBMN | Bouwmaterialen B.V.100Builders merchantsSwitzerlandBR Bauhandel AG (trading as BauBedarf and Richner)100Builders merchants, sanitary ware and ceramic tilesRegusci Reco S.A. (trading as Regusci and Reco)100Builders merchantsAmericas MaterialsIncorporated and operating in% heldProducts and servicesCanadaCRH Canada Group Inc.100Aggregates, asphalt, cement and readymixed concrete and provider of construction servicesUnited StatesAPAC Holdings, Inc. and Subsidiaries100Aggregates, asphalt, readymixed concrete and related construction activitiesAsh Grove Cement Company100Aggregates, readymixed concrete and cementCallanan Industries, Inc.100Aggregates, asphalt, readymixed concrete and related construction activitiesCPM Development Corporation100Aggregates, asphalt, readymixed concrete, prestressed concrete and related construction activitiesDolomite Products Company, Inc.100Aggregates, asphalt, readymixed concrete and related construction activitiesMichigan Paving and Materials Company100Aggregates, asphalt and related construction activitiesMountain Enterprises, Inc.100Aggregates, asphalt and related construction activitiesMulzer Crushed Stone100Aggregates, asphalt, readymixed concrete, aggregates distribution and related construction activitiesCRH Americas Materials, Inc. 100Holding companyOldcastle SW Group, Inc.100Aggregates, asphalt, readymixed concrete and related construction activitiesOMG Midwest, Inc.100Aggregates, asphalt, readymixed concrete and related construction activitiesPennsy Supply, Inc.100Aggregates, asphalt, readymixed concrete and related construction activitiesPike Industries, Inc.100Aggregates, asphalt, readymixed concrete and related construction activitiesP.J. Keating Company100Aggregates, asphalt and related construction activitiesPreferred Materials, Inc.100Aggregates, asphalt, readymixed concrete, aggregates distribution and related construction activitiesStaker & Parson Companies100Aggregates, asphalt, readymixed concrete and related construction activitiesSuwannee American Cement Company, LLC80CementTilcon Connecticut Inc.100Aggregates, asphalt, readymixed concrete and related construction activitiesTilcon New York Inc.100Aggregates, asphalt and related construction activitiesThe Shelly Company100Aggregates, asphalt, readymixed concrete and related construction activitiesTrap Rock Industries, LLC*60Aggregates, asphalt and related construction activitiesWest Virginia Paving, Inc.100Aggregates, asphalt and related construction activitiesBrazilCRH Brasil Participações S.A.100Holding companyCRH Sudeste Indústria de Cimentos S.A 100CementPrincipal Subsidiary Undertakings - continuedas at 31 December 2018Europe Lightside - continued Incorporated and operating in% heldProducts and servicesIrelandCubis Systems Limited100Supplier of access chambers and ducting productsNetherlandsB.V. Aluminium Verkoop Zuid100Roller shutter and awning systemsHeras B.V.100Security fencing and perimeter protectionStruyk Verwo Groep B.V.100Concrete paving productsPolandPolbruk S.A.100Concrete paving productsSlovakiaPremac, spol. s.r.o.100Concrete paving and floor elementsSwedenHeras Stängsel AB100Security fencingSwitzerlandF.J. Aschwanden AG*100Construction accessoriesUnited StatesHalfen USA Inc.100Construction accessoriesOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexShareholder information256257CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018Americas ProductsIncorporated and operating in% heldProducts and servicesCanadaOldcastle BuildingEnvelope™ Canada, Inc.100Custom fabricated and tempered glass products and curtain wallOldcastle Building Products Canada, Inc. (trading as Techniseal, Expocrete Concrete Products, Groupe Permacon, Oldcastle Enclosure Solutions)100Specialty masonry, hardscape and patio products, utility boxes and trench systemsUnited StatesAdvanced Environmental Recycling Technologies, Inc.100Composite building productsCRH Americas Products, Inc. 100Holding company CRH America, Inc.100Holding company CRH America Finance, Inc.100Holding companyC.R. Laurence Co., Inc.100Fabrication and distribution of custom hardware products for the glass industry Meadow Burke, LLC100Concrete accessoriesCRH Americas, Inc.100Holding company Oldcastle APG Northeast, Inc. (trading principally as Anchor Concrete Products and Trenwyth Industries)100Specialty masonry, hardscape and patio productsOldcastle APG South, Inc. (trading principally as Adams Products, Georgia Masonry Supply, Northfield Block Company, Anchor Block and Oldcastle Coastal)100Specialty masonry, hardscape and patio productsOldcastle APG West, Inc. (trading principally as Amcor Masonry Products, Central Pre-Mix Concrete Products, Jewell Concrete, and Sierra Building Products and Superlite Block)100Specialty masonry and stone products, hardscape and patio productsOldcastle APG, Inc.100Holding companyOldcastle BuildingEnvelope™, Inc.100Custom fabricated architectural glassOldcastle Building Products, Inc.100Holding companyOldcastle Lawn & Garden, Inc.100Patio products, bagged stone, mulch and stoneOldcastle Infrastructure, Inc.100Precast concrete products, concrete pipe, prestressed plank and structural elementsPrincipal Equity Accounted Investmentsas at 31 December 2018Principal Subsidiary Undertakings - continuedas at 31 December 2018AsiaPhilippines (i)Republic Cement & Building Materials, Inc.40CementRepublic Cement Land & Resources Inc. 40Cement and Building Materials(i) 55% economic interest in the combined Philippines business (see note 33 to the Consolidated Financial Statements).Europe DistributionFranceSamse S.A.*21.13Builders merchantsPortugalModelo Distribuição de Materials de Construção S.A.*50DIY storesAsiaChinaJilin Yatai Group Building Materials Investment Company Limited*26CementIndiaMy Home Industries Limited50CementAmericas MaterialsCanadaBlackbird Infrastructure 407 General Partnership*50Special-purpose entity on highway infrastructure constructionBlackbird Infrastructure 407 CRH GP Inc. 50Special-purpose entity on highway infrastructure construction Mosaic Transit Partners General Partnership33Special-purpose entity on Ontario infrastructure construction Mosaic Transit Constructors General Partnership33Special-purpose entity on Ontario infrastructure construction United StatesAmerican Asphalt of West Virginia, LLC*50Asphalt and related construction activitiesBuckeye Ready Mix, LLC*45Readymixed concreteCadillac Asphalt, LLC*50AsphaltHMA Concrete, LLC*50Readymixed concretePiedmont Asphalt, LLC*50AsphaltSouthside Materials, LLC*50Aggregates* Audited by firms other than Ernst & YoungPursuant 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.Europe HeavysideIncorporated and operating in% heldProducts and servicesIrelandKemek Limited*50Commercial explosivesOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexShareholder information258259CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018258Our Products and Services LocationsCementAggregates LimeReadymixed ConcreteAsphaltPaving & ConstructionInfrastructural Concrete ProductsArchitectural ConcreteProductsGlass & Glazing SystemsCustom Glazing HardwareConstruction AccessoriesNetwork Access Products & Perimeter ProtectionShutters & AwningsGeneral Builders MerchantsSanitary Heating & PlumbingDIYAustraliaAustriaBelgiumBrazilCanadaChina1Czech RepublicDenmarkEstoniaFinlandFranceGermanyHungaryIndia1IrelandItalyMalaysiaNetherlandsNorwayPhilippinesPolandPortugal1RomaniaRussiaSerbiaSlovakiaSpainSwedenSwitzerlandUkraineUnited KingdomUnited States1. Includes the Group’s equity accounted investments. OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexIndex260261CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018The following documents are filed in the SEC’s EDGAR system, as part of this Annual Report on Form 20-F, and can be viewed on the SEC’s website.1. Memorandum and Articles of Association.2.1 Amended and Restated Deposit Agreement dated 28 November 2006, between CRH plc and The Bank of New York Mellon.*2.2 Multicurrency Revolving Facility Agreement originally dated 11 June 2014 (as amended and restated by an Amendment and Restatement Agreement dated 7 April 2017).**†8. Listing of principal subsidiary undertakings and equity accounted investments (included on pages 252 to 257 of this Annual Report and Form 20-F).12. Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Public Company Accounting Reform and Investor Protection Act of 2002.13. Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002.***15.1 Consent of Independent Registered Public Accounting Firm.15.2 Governance Appendix.16. Disclosure of Mine Safety and Health Administration (MSHA) Safety Data.101. eXtensible Business Reporting Language (XBRL). Incorporated by reference to Annual Report on Form 20-F for the year ended 31 December 2006 that was filed by the Company on 3 May 2007. Incorporated by reference to Annual Report on Form 20-F for the year ended 31 December 2017 that was filed by the Company on 9 March 2018. Furnished but not filed. Certain terms omitted pursuant to a request for confidential treatment.ExhibitsPagePART IItem 1.Identity of Directors, Senior Management and Advisorsn/aItem 2.Offer Statistics and Expected Timetablen/a Item 3.Key InformationA - Selected Financial Data216B - Capitalisation and Indebtednessn/aC - Reasons for the Offer and Use of Proceedsn/aD - Risk Factors225Item 4.Information on the CompanyA - History and Development of the Company 2, 3, 29, 31, 237B - Business Overview26, 32C - Organisational Structure237D - Property, Plants and Equipment222Item 4A.Unresolved Staff CommentsNoneItem 5.Operating and Financial Review and ProspectsA - Operating Results 8, 24, 217B - Liquidity and Capital Resources 28, 29, 31,168, 221C - Research and Development, Patents and Licences, etc. 237D - Trend Information9, 27E - Off-Balance Sheet Arrangements221F - Tabular Disclosure of Contractual Obligations221G - Safe Harbor99Item 6.Directors, Senior Management and EmployeesA - Directors and Senior Management 54B - Compensation68C - Board Practices58D - Employees237E - Share Ownership 92, 240, 241Item 7.Major Shareholders and Related Party TransactionsA - Major Shareholders66, 240B - Related Party Transactions197C - Interests of Experts and Counseln/aItem 8.Financial InformationA - Consolidated Statements and Other Financial Information123-206 - Legal Proceedings237 - Dividends242B - Significant Changes237Item 9.The Offer and ListingA - Offer and Listing Details240B - Plan of Distributionn/aC - Markets240D - Selling Shareholdersn/aE - Dilutionn/aF - Expenses of the Issuen/aPageItem 10.Additional InformationA - Share Capitaln/aB - Memorandum and Articles of Association247C - Material ContractsNoneD - Exchange Controls 249E - Taxation245F - Dividends and Paying Agentsn/aG - Statements by Expertsn/aH - Documents on Display249I - Subsidiary Information252Item 11.Quantitative and Qualitative Disclosures about Market Risk221Item 12.Description of Securities Other than Equity SecuritiesA - Debt Securitiesn/aB - Warrants and Rightsn/aC - Other Securitiesn/aD - American Depositary Shares244PART IIItem 13. Defaults, Dividend Arrearages and DelinquenciesNoneItem 14.Material Modifications to the Rights of Security Holders and Use of ProceedsNoneItem 15.Controls and Procedures122, 234Item 16A.Audit Committee Financial Expert56, 57Item 16B.Code of Ethics66Item 16C. Principal Accountant Fees and Services 61, 67, 147, 249Item 16D.Exemptions from the Listing Standards for Audit Committeesn/aItem 16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers241Item 16F.Change in Registrant’s Certifying AccountantNoneItem 16G.Corporate Governance234Item 16H.Mine Safety Disclosures222PART IIIItem 17.Financial Statementsn/aItem 18.Financial Statements123-206Item 19.Exhibits260This table has been provided as a cross reference from the information included in this Annual Report and Form 20-F to the requirements of this 20-F.Cross Reference to Form 20-F Requirements******†OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexIndex262263CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018AAccounting Policies 128Acquisitions Committee 66American Depositary Shares 244Americas Materials 35Americas Products 43Annual General Meeting 102Asia 35Audit Committee 60Auditors (Directors’ Report) 101Auditor’s Remuneration (note 5) 61, 147, 211Auditor’s Report, Independent (Irish) 112Auditor’s Report, Independent (US) 121BBalance Sheet- Company207- Consolidated125Balanced Portfolio2Board Approval of Financial Statements (note 35)197Board Committees66Board Effectiveness64Board of Directors54Board Responsibilities64Business and Non-Current Asset Disposals (note 6)148Business Combinations (note 32)135, 192Business Model12Business Overview26Business Performance24CCapital and Financial Risk Management (note 23)172Cash and Cash Equivalents (note 24)136, 176Cash Flow, Operating15Cash Flow Statement, Consolidated127Chairman’s Introduction5Chief Executive’s Review8Communications with Shareholders67Company Secretary67Compliance and Ethics66Contractual Obligations221Corporate Governance Practices 234Corporate Governance Report58Cost Analysis (note 4)146CREST241DDebt, Analysis of Net (note 22)168Deferred Income Tax- expense (note 12)132, 154- assets and liabilities (note 28)132, 181Depreciation- cost analysis (note 4)146- property, plant and equipment (note 15)135, 158- segment analysis (note 2)141Derivative Financial Instruments (note 26)136, 178Directors’ Emoluments and Interests (note 8)149, 212Directors’ Interests in Share Capital92Directors’ Remuneration Report68Directors’ Report98Directors’ Responsibilities, Statement of102Directors’ Share Options90Discontinued Operations (note 3)145Distribution48Dividend Payments (Shareholder Information)98, 242Dividend per Share1Dividends (note 13)137, 156EEarnings per Ordinary Share (note 14) 157Employees, Average Number (note 7) 149Employment Costs (note 7) 149End-use Exposure 3Equity Accounted Investments’ Profit, Share of (note 11)154Europe Distribution49Europe Heavyside35Europe Lightside43Exchange Rates138Exhibits260FFinance Committee66Finance Costs and Finance Income (note 10)153Finance Director’s Review27Financial Assets (note 17)162Financial Calendar249Financial Statements, Consolidated123Foreign Currency Translations109, 233Frequently Asked Questions249GGlobal Business2Going Concern100Governance52Greenhouse Gas Emissions14Guarantees (note 25; note 11 to Company Balance Sheet)177, 212HHealth and Safety18IndexIInclusion and Diversity14, 63Income Statement, Consolidated123Income Tax Expense (note 12)154Intangible Assets (note 16)136, 159Inventories (note 18)136, 163Investor Relations Activities67KKey Components of 2018 Performance28KPIs, Financial15KPIs, Non-Financial14LLeases, Commitments Under 129, 136, 188 Operating and Finance (note 30)Listing Rule 9.8.4C99Loans and Borrowings, Interest-Bearing (note 25)136, 176MMaterials34Measuring Performance14Memorandum and Articles of Association67, 247NNomination & Corporate Governance Committee63Non-controlling Interests (note 33)196Non-GAAP Performance Measures217Notes on Consolidated Financial Statements139Notes to the Company Balance Sheet 209OOperating Costs (note 4)146Operating Leases (note 30)136, 188Operating Profit Disclosures (note 5)147PPensions, Retirement Benefit Obligations (note 29)131, 182Principal Equity Accounted Investments257Principal Risks and Uncertainties104Principal Subsidiary Undertakings252Products42Profit on Disposals (note 6)148Property, Plant and Equipment (note 15)135, 158 Property, Plants and Equipment 222Provisions for Liabilities (note 27)131, 180Proxy Voting, Electronic249RRegistrars249Regulatory Information99Related Party Transactions (note 34)197Remuneration Committee74Reserves 223Retirement Benefit Obligations (note 29)131, 182Return on Net Assets (RONA)15, 218, 220Revenue (note 1)139Risk Governance22Risk Management and Internal Control100, 234Risk Factors 225SSafety, Environment & Social Responsibility Committee16, 66, 236Sector Exposure and End-Use - Americas Materials35- Americas Products43- Asia35- Europe Distribution49- Europe Heavyside35- Europe Lightside43Segment Information (note 2)134, 141Selected Financial Data216Senior Independent Director55Share-based Payments (note 9)134, 150Share Capital and Reserves (note 31)137, 189Share Options- Directors90- Employees (note 9)150Share Price Data240Shareholder Communication67Shareholdings as at 31 December 2018 66, 240Statement of Changes in Equity, Consolidated126Statement of Changes in Equity, Company208Statement of Comprehensive Income, Consolidated124Statement of Directors’ Responsibilities102Stock Exchange Listings66, 240Strategy 10Substantial Holdings66Supplemental Guarantor Information (note 36)198Sustainability16TTotal Shareholder Return (TSR)4, 15Trade and Other Payables (note 20)166Trade and Other Receivables (note 19) 163VVolumes, Annualised- Materials35WWebsite67, 249Working Capital and Provisions for Liabilities, Movement in (note 21)167OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex264265CRH Annual Report and Form 20-F I 2018CRH Annual Report and Form 20-F I 2018The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorised the undersigned to sign this Annual Report on its behalf. /s/ S. MurphySenan MurphyFinance DirectorDated: 8 March 2019SignaturesCRH public limited company(Registrant)By: Designed and produced by RRD. Printed by Buchdruckerei Lustenau (BuLu).OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexCRH plc Belgard CastleClondalkinDublin 22D22 AV61Ireland Telephone: +353 1 404 1000E-mail: mail@crh.comWebsite: www.crh.comRegistered Office42 Fitzwilliam SquareDublin 2D02 R279IrelandTelephone: +353 1 634 4340Fax: +353 1 676 5013E-mail: crh42@crh.comCRH® is a registered trade mark of CRH plc.Cover image: Ash Grove Cement Company’s Foreman Plant in Arkansas. Ash Grove is a leading cement manufacturer in the United States. Its Foreman Plant was one of eight cement plants, 25 terminals and extensive readymixed concrete and aggregates operations acquired by CRH for €2.9 billion in 2018. CRH plc Belgard CastleClondalkinDublin 22D22 AV61Ireland Telephone: +353 1 404 1000E-mail: mail@crh.comWebsite: www.crh.comRegistered Office42 Fitzwilliam SquareDublin 2D02 R279IrelandTelephone: +353 1 634 4340Fax: +353 1 676 5013E-mail: crh42@crh.comCRH® is a registered trade mark of CRH plc.Cover image: Ash Grove Cement Company’s Foreman Plant in Arkansas. Ash Grove is a leading cement manufacturer in the United States. Its Foreman Plant was one of eight cement plants, 25 terminals and extensive readymixed concrete and aggregates operations acquired by CRH for €2.9 billion in 2018.

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