CRH Annual Report 2019 | Quarterlytics

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2019 Annual Report and Form 20-F OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex→→2019 Performance HighlightsOVERVIEWSALES€28.3billion +6%€28.3bn2019€26.8bn2018SALES€25.1billion +8%€25.1bn2019€23.2bn2018PROFIT AFTER TAX€1.6billion +22%€1.6bn2019€1.3bn2018EBITDA (as defined)*€4.2billion +25%€4.2bn2019€3.4bn2018EBITDA (as defined)*€4.0billion +24%€4.0bn2019€3.2bn2018EARNINGS PER SHARE202.2 cent +25%202.2c2019161.2c2018OPERATING PROFIT€2.6billion +19%€2.6bn2019€2.2bn2018OPERATING PROFIT€2.5billion +20%€2.5bn2019€2.1bn2018DIVIDEND PER SHARE83.0cent +15%83.0c201972.0c2018CONTINUING & DISCONTINUED OPERATIONS1CONTINUING OPERATIONSContentsThis 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 2019. A cross reference to Form 20-F requirements is included on page 267.The Directors’ Statements (comprising the Statement of Directors’ Responsibilities, the Viability Statement and the Directors’ Compliance Statement on pages 104 to 106), the Principal Risks and Uncertainties (on pages 108 to 113), the Independent Auditor’s Report (on pages 116 to 124) and the Parent Company financial statements of CRH plc (on pages 216 to 221) do not form part of CRH’s Annual Report on Form 20-F as filed with the Securities and Exchange Commission (SEC). Forward-Looking Statements This document contains forward-looking statements, which by their nature involve risk and uncertainty. Please see Disclaimer/Forward-Looking Statements on page 103 for more information about these statements and certain factors that may cause them to prove inaccurate.Overview CRH at a glance 2Chairman’s Introduction 4Strategy Review Why Invest in Us 8Our Executive Leadership 9Chief Executive’s Review 10Market Backdrop 12Strategy 14Business Model 16Measuring Performance 18Sustainability 20Risk Governance 26Business Performance Business Overview 32Finance Director’s Review 33Segmental Reviews 40Governance Board of Directors 56Corporate Governance Report 60Directors’ Remuneration Report 74Directors’ Report 102Principal Risks and Uncertainties 108Financial Statements Independent Auditor’s Reports 116Consolidated Income Statements 128Accounting Policies 133Notes on Consolidated Financial Statements 145Supplementary 20-F Disclosures 224Shareholder Information 248Other Information 260Cross Reference to Form 20-F 267Index 270View the Report on our website: www.crh.com/investors/annual-reports/CRH is the leading building materials business in the world. Our global footprint spans 30 countries, employing c. 80,300 people at over 3,100 operating locations, serving customers across the breadth of the building materials spectrum.Our BusinessErgon, part of CRH's Europe Materials Division, supplied 10,300m² of hollow-core floor slabs and 289 concrete beams and columns for the construction of a new 15,000m² plumbing and heating distribution centre in Merelbeke, Belgium.1CRH ANNUAL REPORT AND FORM 20-F I 2019During 2019 the Europe Distribution business was classified as discontinued operations under IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations (refer to note 3 to the Consolidated Financial Statements for further information). Accordingly, all references to income statement data are on a continuing operations basis throughout the Overview, Strategy Review and Business Performance sections (pages 2 to 51), unless otherwise stated.* 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. Details of how non-GAAP measures are calculated are set out on pages 225 to 228.OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex→→2CRH ANNUAL REPORT AND FORM 20-F I 2019OVERVIEW2CRH ANNUAL REPORT AND FORM 20-F I 2019Our global business operates across three Divisions: Americas Materials, Europe Materials and Building Products.CRH at a glanceAMERICAS MATERIALSProducts & ServicesSALES €10.4 billion Growth +16%2018: €9.0 billion c. 28,600 employeesc. 1,450 operating locations46 US states, six Canadian Provinces and Southeast BrazilPRODUCT AND SERVICES INDEX:41%Global SalesBUILDING PRODUCTSProducts & ServicesSALES €6.2 billion Growth 0%2018: €6.2 billion c. 24,450 employeesc. 490 operating locations19 countries25%Global SalesAggregatesAsphaltReadymixed ConcreteArchitectural ProductsConstruction AccessoriesPaving & Construction ServicesBuilding EnvelopeInfrastructure ProductsLimeEUROPE MATERIALSSALES €8.5 billion Growth +6%2018: €8.0 billion c. 27,250 employeesc. 1,160 operating locations21 countries34%Global SalesProducts & ServicesCementLimeOVERVIEWInfrastructural ConcreteOverviewOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex→→OverviewOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex5CRH ANNUAL REPORT AND FORM 20-F I 20194CRH ANNUAL REPORT AND FORM 20-F I 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 103.2. Net Debt/EBITDA (as defined)* is a non-GAAP measure as defined on page 227. The GAAP figures that are most directly comparable to the components of Net Debt/EBITDA (as defined)* include: interest-bearing loans and borrowings (2019: €9,014 million; 2018: €9,316 million) and profit after tax (2019: €1,638 million; 2018: €1,345 million). In line with the purpose of the metric, as set out on page 228, to “assess the Company’s level of indebtedness relative to its profitability and cash-generating capabilities”, the 2019 calculation is based on a continuing operations basis. For 2018, the Group net debt position includes debt related to operations discontinued in 2019 and therefore for comparability purposes the 2018 calculation uses EBITDA (as defined)* from continuing and discontinued operations. * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.I succeeded Nicky Hartery as Chairman on 1 January 2020. On behalf of the Board and my fellow shareholders, I would like to pay tribute to Nicky for his leadership and commitment in his seven and a half years as Chairman and to thank him for the advice and support which he has generously provided to me during the transition process. During Nicky's tenure as Chairman, CRH’s market capitalisation increased from €11 billion to €28 billion. CRH also achieved significant profits in 2019 and is well set for further growth.My PrioritiesOn taking over the role of Chairman my priorities are as follows:• Supporting the continued successful implementation of CRH’s strategy, which has been communicated previously and which is set out on pages 14 to 17 of the Strategy Review section;• Ensuring that your Board and Management continue to keep this strategy under review so that it remains appropriate in a constantly evolving external environment and enables long-term sustainable value creation;• Ensuring that the ongoing Board renewal process, which is discussed in the Nomination & Corporate Governance Committee Report on pages 68 to 70, is aligned with the strategic priorities of the business and that the Board is composed of Directors with the necessary qualities, capabilities, experience and dedication to protect and promote your interests and those of other stakeholders in CRH;• Providing constructive challenge to, and support for, CRH’s committed, capable and dynamic management team, while at the same time having a robust succession planning process in place for senior executive roles;• Enabling a continued strong focus on safety, sustainability and CRH’s purpose and values for the benefit of our shareholders, our customers, employees, suppliers and wider stakeholders; and• Ongoing engagement with stakeholders, particularly shareholders, to ensure that their perspectives are understood.2019 Performance 2019 was another year of strong delivery on a range of strategic and operational initiatives, whilst maintaining momentum for further value creation. We continued to reshape the portfolio through the divestment of our Europe Distribution business and our 50% interest in My Home Industries Limited (MHIL), a cement manufacturer based in India. These divestments were in line with our focus on reallocating capital to sectors, geographies and businesses more aligned with our current strategy and business model. During the year there was also a continued focus on successfully integrating recent acquisitions, such as Ash Grove Cement Company (Ash Grove), and rigorous attention to continually improving CRH’s operational performance and customer offerings with a comprehensive range of initiatives being implemented.The reshaping of our portfolio in 2019, ongoing business improvement programmes and trading performance in the year led to operating cash generation of €3.5 billion in 2019, of which €1.2 billion was deployed on maintenance and expansionary/development capital expenditure, €0.7 billion on acquisitions and €1.4 billion was distributed to shareholders via dividends and share buybacks. At the same time, CRH’s balance sheet strength was enhanced resulting in a Net Debt/EBITDA (as defined)*2 ratio of 1.7x at the year end.Reflecting the strong performance in 2019, CRH’s robust financial position and our confidence for future sustainable growth, your Board is recommending that a final dividend of 63.0c per share be paid, subject to shareholder approval at the Annual General Meeting (AGM). If approved, this would represent a 15% increase in the full year dividend to 83.0c.The EnvironmentFollowing the announcement of my appointment as Chairman Designate in September 2019, I met with a number of shareholders representing c. 30% of CRH’s share capital. One of the principal themes in those meetings was investors’ keen interest in understanding CRH’s approach Richie BoucherChairman2019 In Numbers2019 was another year of strong delivery on a range of strategic and operational initiatives, whilst maintaining momentum for further value creation.Chairman’s Introduction1Operating Cash Flow€3.5Net Debt/EBITDA (as defined)*at 31 December 2019Cash Returns to Shareholders through Dividends and Share BuybacksEBITDA (as defined)*€4.044%%%of Reserves23.1Female Directors on CRH Board at 31 December 20191.7 x42of Revenue from Products with Enhanced Sustainability AttributesZero-Accident Locations in 201994 €1.4billionbillionbillionbillion tonnesto environmental matters. In 2018, the Board created a new Safety, Environment and Social Responsibility (SESR) Committee. The operation of this Committee and its work in 2019 on environmental sustainability is highlighted in the Corporate Governance Report on pages 60 to 63. In addition, the excellent work of our sustainability team in this area is outlined in detail on pages 20 to 25.CRH is on track to achieve a range of targets underpinning its sustainability performance by year-end 2020. The Group has already achieved its target to reduce specific CO2 emissions by 25% compared to 1990 levels. Utilising our own experience, expert advice and relevant external benchmarks, further ambitious targets and goals have been set for 2030 and will be overseen by the Board and the SESR Committee. Further details in relation to these stretch targets are set out on page 21.Your BoardHenk Rottinghuis and Pat Kennedy, who joined the Board in 2014 and 2015 respectively, are not seeking re-election and will be stepping down from the Board at the conclusion of the 2020 AGM. The Company and Board are grateful to Henk and Pat for their significant contributions and exemplary service during a period of transformational change for CRH.During 2019, Johan Karlström and Shaun Kelly joined your Board. Johan’s most recent executive role was as Chief Executive Officer of Skanska AB, the international construction company, whilst Shaun was until September 2019 Chief Operating Officer of KPMG International, based in the United States (US). Both Johan and Shaun bring very strong skill sets and relevant global experience to complement the Board and support the Group.CRH EmployeesThe significant profit which CRH achieved in 2019 reflects the skills, initiative, qualities and commitment of CRH’s employees, led by our Chief Executive, Albert Manifold. Your Board is grateful to Albert and his colleagues for all of their contributions and their relentless drive to continue to deliver sustainable value.Richie BoucherChairman27 February 2020→→Strategy Review 8-29 Why Invest in Us Our Executive Leadership Chief Executive’s Review Market Backdrop Strategy Business Model Measuring Performance Sustainability Risk Governance 8 9 10 12 14 16 18 20 26 Inclusion and diversity is an important focus area for all CRH operating companies. Staker Parson Materials & Construction, part of CRH’s Americas Materials Division, supports an inclusive and diverse environment at its operations in Ogden, Utah, where it employs 300 people. Strategy ReviewStrategy ReviewOverviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex→→Strategy ReviewStrategy ReviewOverviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex9CRH ANNUAL REPORT AND FORM 20-F I 20198CRH ANNUAL REPORT AND FORM 20-F I 2019Industry Leading Value & Returns+15.6%Total Shareholder ReturnSince 1970 CRH has delivered an industry-leading compound Total Shareholder Return (TSR)1 of 15.6%. €100 invested in CRH shares in 1970, with dividends reinvested, would now be worth €121,000.* 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.1. TSR represents the total accumulated value delivered to shareholders (via gross dividends reinvested and share appreciation).Why Invest in UsOur Executive LeadershipSenan MurphyGroup Finance Director Appointed to the Board: January 2016Senan has over 30 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.Keith HaasPresident, Building ProductsKeith began his business career as an engineer at Amoco Chemical Company and joined CRH’s North American business in 1995. While at CRH, he has served in a number of business development and executive leadership roles, including President of our Architectural Products Group and subsequently President of our Americas Products Division between 2012 and 2018. Keith is also on the Board of Directors of the National Association of Manufacturers in the US. Qualifications: BE (Mechanical), MBA.David DillonPresident, Global Strategy & Business DevelopmentDavid joined CRH in 1998 in the US, where he was Controller of the Americas Materials Division. He returned to Europe in 2003, initially as Development Manager for the Europe Materials Division. He has since held a number of senior operational and leadership roles across the Group, including Country Manager Finland in the Europe Materials Division and Managing Director Europe Lightside. He was Divisional President of Europe Lightside & Distribution until the end of 2018. Prior to joining CRH he held various financial roles in the airline industry. Qualifications: BComm, FCA.Jim MinternExecutive Vice President, Chief of Staff to the Chief ExecutiveJim has over 30 years' experience in the building materials industry, nearly 20 years of which have been with CRH. Jim joined CRH as Finance Director for Roadstone and since then has held a number of positions across the Group, including Managing Director of each of the Western and Eastern regions of our Europe Materials Division and prior to that as Country Manager for Ireland. Working closely with Divisional and operational leadership, Jim has oversight of our Performance, Group Technical Services, and Safety activities. Qualifications: BComm, FCA.Albert ManifoldGroup Chief ExecutiveAppointed to the Board: January 2009Albert was appointed a CRH Board Director in January 2009. He joined CRH in 1998. Prior to this, he was Chief Operating Officer of 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.Randy LakePresident, Americas MaterialsRandy joined CRH in the Americas in 1996 and has held several senior operating positions across multiple CRH businesses, initially in Architectural Products, then in Materials. In 2008 he was appointed President of our Americas Materials Performance group, and prior to his current role he led the launch of our Building Solutions business. Randy is actively involved in the Materials industry in North America and served as Chairman of the US National Stone, Sand & Gravel Association in 2018. Qualifications: BS (Business Administration), MBA.Onne van der WeijdePresident, Europe MaterialsOnne joined CRH in January 2018 as Chief Operating Officer for our Europe Materials Division and was appointed Divisional President in July 2018 with responsibility for our cement, lime, asphalt, aggregates and concrete operations in mainland Europe and in Asia. Onne has extensive cement industry experience, having worked across four continents, including roles as the CEO of Dangote Cement in Nigeria and CEO of Ambuja Cements Ltd. in India, prior to joining CRH. Qualifications: Bachelor of Economics and Accounting, MBA.Edwin BouwmanChief Human Resources OfficerEdwin joined CRH in 2009 as CFO of our Products and Distribution businesses in Europe and later as CFO Europe. Edwin became a member of CRH’s global leadership team in 2014, was appointed Chief Administrative Officer in 2018 and in August 2019 took on the role of Chief Human Resources Officer. Prior to joining CRH, Edwin’s career included a number of senior leadership roles in multi-operating company, multi-country environments (such as Royal Dutch Shell), and later as CFO and Board Member for Roto Smeets Group, a listed company in the Netherlands. Qualifications: Drs. Economics.Unique acquisition model CRH builds and grows successful businesses by regularly acquiring small to mid-sized companies that complement our portfolio and adding larger strategic deals to create further platforms for growth. €14.0 billion Development Spend since 2015Long-term growth opportunityThere is natural demand for CRH products driven by population and economic growth and the need to continually build and maintain the built environment.+41% Revenue Growth since 2015Continuously improving CRH is relentlessly focused on building better businesses through operational and commercial excellence, coordinated and driven from the centre and delivered locally by our businesses around the world.500bps EBITDA (as defined)* Margin Improvement 2015 to 2019Experienced leadership and strong talent pipeline CRH’s world class leadership team has a proven track record of performance delivery, underpinned by ongoing talent development and succession planning.Proven track-record in cash generation and returnsStrong financial discipline is a hallmark of CRH. We have a proven, robust track record in cash generation and returns. +11% Operating Cash Flows CAGR since 2015Scale in attractive marketsCRH is the largest building materials company in North America and a leading heavyside business in Europe.30 Countries GloballyBack Row / Front Row / L to R as per biographies below. Sustainable business modelTo create long-term value, we embed sustainability principles in all areas of our strategy and business model. €8.1 billion2019 Revenue from Products with Enhanced Sustainability AttributesBalanced portfolioCRH’s product range enables us to service infrastructure, residential and non-residential demand for repair, maintenance and new build construction projects.35% Infrastructure30% Residential35% Non-ResidentialReservesCRH has an extensive network of quarry locations in attractive local markets in North America and Europe which is difficult for others to replicate.23.1 Proven and Probable Reserves 2019billion tonnes2030target33% Females in Senior Leadership→→Strategy ReviewStrategy ReviewOverviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex11CRH ANNUAL REPORT AND FORM 20-F I 201910CRH ANNUAL REPORT AND FORM 20-F I 2019As the leading building materials business in the world, CRH has a long and proven track record of consistently delivering for our shareholders through the cycle. Our ability to do so is underpinned by three core principles: improving performance, growing our business and creating value. Our relentless focus on these principles supports the continuous delivery of superior margins, returns and cash for our shareholders. Our strong performance in 2019, with significant profit growth and positive momentum across our business, has been made possible by the strategic reshaping of CRH over recent years. In 2019 we significantly reshaped our business into three Divisions: Americas Materials, Europe Materials and a new global Building Products Division, ensuring CRH is better positioned to meet the changing needs of construction. We also continued our focus on refining and reshaping our portfolio to position our business for higher growth and more sustainable returns. CRH generated €2.1 billion of proceeds from divestments in the year (2018: €3.0 billion) which included €1.6 billion from the divestment of our Europe Distribution business at an attractive valuation.Our new structure provides us with a narrower and deeper focus, enabling us to better leverage our global scale and drive value above and beyond the sum of our individual businesses.Our ongoing strong cash generation capabilities and balance sheet strength gives us significant optionality, facilitating the return of €1.4 billion (2018: €1.3 billion) of cash to shareholders in 2019 through dividends and our share buyback programme. We invested €1.9 billion (2018: €4.7 billion) in our business through bolt-on acquisitions (€0.7 billion) and capital investment (€1.2 billion), as well as significantly reducing our year-end Net Debt/EBITDA (as defined)* to 1.7x (2018: 2.1x).We saw further benefits from our ongoing focus on continuous margin improvement, particularly in the second half of the year. The business achieved an EBITDA (as defined)* margin expansion of 230 basis points from continuing and discontinued operations during the year and we expect further progress in 2020.Performance HighlightsRevenue from continuing and discontinued operations increased by 6% to €28.3 billion (2018: €26.8 billion) driven by positive underlying construction demand and a favourable pricing environment in our core markets in Europe and North America. EBITDA (as defined)* from continuing and discontinued operations was ahead of 2018, increasing by 25% to €4.2 billion (2018: €3.4 billion). Reported profit after tax was €1.9 billion (2018: €2.5 billion), reflecting a further year of progress for the Group given the prior year included an after-tax gain of €1.1 billion on certain divestment activity. Continuous business improvement and good commercial management resulted in improved returns. Return on Net Assets (RONA)2 for the year was 10.1% (2018: 9.6%).Earnings per share (EPS) for the year advanced 25% to 202.2c (2018: 161.2c) and the Board has proposed to increase the dividend to 83.0c per share, an increase of 15% on the previous year’s level of 72.0c per share.Operational HighlightsSupported by a positive economic backdrop in the US, our businesses experienced good momentum in underlying construction activity. Sales in our Americas Materials Division increased by 16% to €10.4 billion (2018: €9.0 billion) and EBITDA (as defined)* increased by 31% to €2.0 billion (2018: €1.5 billion).The Division has good exposure to the infrastructure, residential and non-residential sectors and performed well across key markets despite increased raw material costs. Weather-related headwinds experienced in the first half of the year were offset by a good performance in the second half of the year, driven by volumes improvement, commercial and operational initiatives and pricing progress.Our US cement operations performed well in 2019 with strong price realisation across major markets and good synergy delivery. The integration of Ash Grove is now complete and the business is performing well.In Europe, despite higher input costs, Western European markets performed well. * 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 103.2. RONA is a non-GAAP measure as defined on page 226. The GAAP figures that are most directly comparable to the components of RONA include: Group operating profit (2019: €2,494 million; 2018: €2,071 million), total assets and total liabilities, respectively (2019: €37,310 million and €19,830 million respectively; 2018: €35,173 million and €18,619 million respectively). Details of how non-GAAP measures are calculated are set out on pages 225 to 228. * 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. Details of how non-GAAP measures are calculated are set out on pages 225 to 228.Albert Manifold Chief ExecutiveOur strong performance in 2019, with significant profit growth and positive momentum across our business, has been made possible by the strategic reshaping of CRH over recent years.Chief Executive’s Review1Eastern Europe benefited from higher levels of growth, particularly in new build activity. Construction activity in the United Kingdom (UK) declined amidst Brexit-related uncertainty.Overall, our Europe Materials Division experienced a positive year with sales increasing by 6% to €8.5 billion (2018: €8.0 billion). Price increases and a strong contribution from performance improvement initiatives implemented across the Division supported an increase of 15% in EBITDA (as defined)* to €1.1 billion (2018: €0.9 billion). Against a solid demand backdrop in both North America and Europe, as well as a focus on commercial excellence, our newly established Building Products Division reported sales of €6.2 billion (2018: €6.2 billion), 2% ahead on a like-for-like1 basis.With an emphasis on continuous business improvement across the Division, we saw positive performances across all four product groups which supported an increase of 22% in EBITDA (as defined)* to €1.0 billion (2018: €0.8 billion).Portfolio Management and Capital AllocationOngoing portfolio management is an embedded practice at CRH which allows us to reallocate capital to higher growth markets where we see greater value-creation opportunities. The acquisition of Ash Grove for €2.9 billion in 2018 strengthened our footprint in high growth regions of the US and provided a platform for future bolt-on activity. Our focus in 2019 was on integrating Ash Grove into our existing operations while continuing to leverage synergies and drive value for our shareholders.Bolt-on acquisitions are a fundamental part of CRH’s growth strategy, generating above average returns and complementing the organic growth within our business. We completed 62 small and medium sized bolt-on deals for €0.7 billion in 2019 (2018: €0.7 billion) at attractive valuations.Our vertically integrated business model ensures that these deals enable us to provide a full range of products and services to our customers, while offering significant synergy potential, delivering operational efficiencies and driving value through the supply chain.The majority of our divestment activity in 2019 related to the sale of our Europe Distribution business in October for €1.6 billion. In addition, we also completed the divestment of our European Shutters & Awnings business for €0.3 billion and our Perimeter Protection business for €0.1 billion. In December we divested our share of MHIL, our Indian joint venture, for a total deferred consideration of €0.3 billion. Future FocusWe continue to actively invest in and allocate capital to initiatives which improve our existing businesses, including investment in capacity upgrades and efficiency improvements. The further refinement of our portfolio in 2019, in addition to the establishment of our new Building Products Division has resulted in a narrower, deeper and more focused Group and together with ongoing performance improvement initiatives across our businesses, positively positions CRH to capitalise on opportunities as they arise in the future. Management is focused on using every lever available to create further value for our shareholders in 2020 and beyond.Building a Sustainable FutureCRH is a global leader in sustainable building materials and has a long history of producing high-performing, climate-friendly materials and products which play an important role in shaping a more sustainable built environment. This includes our concrete which is among the most sustainable building materials in existence when evaluated on a full life-cycle basis. Concrete is fundamental to human development and will continue to shape the world we live in for generations to come. As part of our longstanding focus on improving the environmental performance of our materials and products we have committed to further reducing the CO2 intensity of our cement to 520kg CO2 /tonne of cementitious product by 2030. This represents a 33% reduction in specific net CO2 emissions compared with 1990 levels and covers the portfolio of cement plants owned by CRH in 2019. In addition, the Group has set an ambition to achieve carbon neutrality along the cement and concrete value chain by 2050 and we are committed to playing our part in delivering a carbon neutral future. We are also committed to partnering with our customers to deliver sustainable solutions and have set a target of generating 50% of all product revenue from products with enhanced sustainability attributes by 2025. These are products which incorporate recycled materials, use alternative fuels or energy sources, have sustainability end-use, or a lower carbon footprint. See page 21 for full details of CRH’s 2030 sustainability targets. SafetyAt all of our sites, the number one priority is the safety of our people and our approach to workplace safety is uncompromising. I am pleased to report that in 2019, 94% of our locations were accident-free. We deeply regret that there was one third-party fatality during the year which underlines the need for us to do even more to ensure the safety of anyone coming into contact with our operations. We are determined to continue to do all we can to achieve our target of zero harm at our operations. OutlookIn our Americas Materials Division, supported by continuing favourable economic conditions, we expect growth in the US residential and non-residential market sectors with positive momentum in infrastructure activity, underpinned by state and federal funding.In our Europe Materials Division, we anticipate positive construction demand in key markets with steady progress in Western Europe and good growth in Eastern Europe. While Brexit has created uncertainty in the UK construction market, we expect some stabilisation in 2020.Against a positive backdrop in North America and Europe, we expect further growth in Building Products aided by ongoing commercial and operational performance initiatives.For the Group overall, with a continued focus on portfolio refinement, margin expansion, cash generation and enhanced returns for shareholders, we believe that 2020 will be a year of further progress.Albert ManifoldChief Executive 27 February 2020→→Strategy ReviewStrategy ReviewOverviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex13CRH ANNUAL REPORT AND FORM 20-F I 201912CRH ANNUAL REPORT AND FORM 20-F I 2019Our Balanced PortfolioBuilding a balanced portfolio is a core constituent of our strategy and helps to insulate our business from the impact of cyclical fluctuations in any one of our markets. CRH manufactures and supplies a range of building materials, products and innovative solutions for the construction industry.From primary materials that we extract, process and supply, to products that are highly engineered and high-value added, CRH is uniquely positioned to address evolving trends in global construction markets.Our products can be found throughout the built environment in a wide range of construction projects from major public infrastructure to commercial buildings and residential structures.Demand for CRH’s materials and products is driven by three primary demand fundamentals: population growth, economic development and the need to continually repair and maintain the built environment.Population Growth Our materials and products are an essential enabler of the built environment around the world. This means there is a natural market for our products wherever there is growth in population and the associated construction demand can be expected to drive day-to-day organic growth for our businesses.Economic DevelopmentThere is a strong correlation between population growth and economic growth in developed markets around the world. In addition, economic development and growth drives investment in residential, infrastructure and commercial projects from the houses, roads, bridges, ports and airports that serve our growing cities to office blocks, retail centres and industrial and leisure complexes.Ongoing Repair and Maintenance There is a recurring need to continually repair and maintain the existing built environment as structures age over time.At CRH we aim to have a portfolio which is appropriately exposed to each of these primary demand fundamentals, thereby ensuring we benefit from growth and value-creation opportunities associated with each. Future Trends in Construction In addition to the primary market fundamentals driving our business today, CRH also monitors the trends shaping the nature of construction in the future. These include increasing urbanisation and the growth of cities, demand for more sustainable forms of construction and the influence of technology and digitisation. Adapting our business to the opportunities and challenges created by these trends is a constant focus for CRH and an important factor in how we allocate our resources. Market BackdropThere is a natural demand for CRH’s materials and products which is driven by population and economic growth and the need to continually build and maintain the built environment.Three demand fundamentals2. ECONOMIC DEVELOPMENT3. REPAIR AND MAINTENANCE1. POPULATION GROWTHThe nature of construction is changing as the industry evolves to meet the demands of economic growth, shifting demographics and sustainable development. Labour constraints mean that businesses need to adapt and bring products to market that ease and speed up the pace of construction while an increasing demand for more sustainable, integrated and value-added solutions is driving innovation, productivity and technological advancement across the industry. As a leading supplier of building products globally, CRH is at the forefront of that change. 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. Recognising the changing needs of construction and the impact of those changes on demand for our products, CRH has established a new Building Products Division to bring together related products businesses across Europe, North America and Asia Pacific into one global platform, providing greater alignment on strategies for performance improvement, development and growth. By establishing a single Division built upon clusters of excellence across Architectural Products, Building Envelope, Infrastructure Products and Construction Accessories, we can leverage our scale and network capabilities to build upon our well-established positions in existing markets and across our core product groups.The new Division will also increase vertical integration and collaboration opportunities not only within the Division itself but also with our materials businesses in Europe and North America.A key feature of the Division is its exposure to attractive end-use markets offering higher growth prospects and balance through the cycle, while the lower capital intensity of these businesses delivers superior returns and good cash conversion. The Building Products Division is well positioned to adapt and grow as markets continue to evolve.Introducing Building ProductsOldcastle BuildingEnvelope®, part of CRH’s Building Products Division, supplied skylight and architectural glass for the Leadership in Energy and Environmental Design (LEED©) gold-certified Tepper School of Business at Carnegie Mellon University in Pittsburgh. The products were critical to achieve the thermal performance needed for the building’s LEED© certification.Market Development Where appropriate, CRH operates a vertically integrated business model. Organic growth is complemented by identifying suitable businesses which can be acquired and integrated into CRH through bolt-on acquisitions. Backed by a reserves network (23.1 billion tonnes) that is difficult to replicate and strong leadership positions in local markets, our materials businesses are well positioned to capitalise on value creating opportunities for consolidation and expansion of existing operations. Our biggest market, the US, is largely unconsolidated. For example the top ten aggregates businesses account for less than one third of production. Fragmentation across the industry creates opportunities for consolidation through acquisitions which provide the potential to drive further growth and value creation for our shareholders.North America In North America, which includes the world’s largest economy, the US, CRH is the largest building materials business. Growth in North America is underpinned by solid fundamentals and positive demographics with the population growing by 30 million people every decade, driving associated construction growth.In recent years we have reshaped and redirected our businesses in the US to increase our exposure to positive demand fundamentals in the southern and western areas of the country.EuropeIn Europe, where the European Union (EU) is the largest economic bloc in the world, CRH is a leading heavyside building materials business. In Western Europe, there is an attractive mix of stable developed markets which continue to deliver. In Eastern Europe higher growth markets offer opportunities for growth through acquisition activity.Other MarketsCRH is a leading building products business globally. This business produces high-value-added, highly engineered products that can be economically transported longer-distances, opening up important export markets for CRH beyond our core geographic footprint.By Division41% Americas MaterialsPercentages based on 2019 Group SalesBy End-Use35% Infrastructure35%Non-Residential30% ResidentialPercentages based on 2019 Group SalesNew Build vs RMI55% New Build45% Repair,Maintenance & Improvement (RMI)Percentages based on 2019 Group Sales34% Europe Materials25% Building Products→→Strategy ReviewStrategy ReviewOverviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex15CRH ANNUAL REPORT AND FORM 20-F I 201914CRH ANNUAL REPORT AND FORM 20-F I 2019* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.CRH is the leading building materials business in the world. Our focus is on creating long-term value and delivering superior returns for our shareholders. StrategyTargeting superior growth and returnsOUR STRATEGY Our strategy is to grow and improve our business in a sustainable and responsible way, through a relentless focus on performance improvement, focused growth and value creation for the benefit of all our stakeholders.DRIVING PERFORMANCE, GROWTH AND VALUETAKING A RESPONSIBLE AND SUSTAINABLE APPROACHIn executing our strategy, CRH is at all times focused on ensuring every lever we utilise to create value for our shareholders is done so in a disciplined, responsible and sustainable manner, thereby mitigating potential risks.FOUR PILLARSCRH’s strategy is underpinned by four strategic objectives, which drive our ability to generate superior margins, returns and cash on a continuous basis.STRATEGY IN ACTION 2019We are relentlessly focused on driving continuous business improvement and value realisation through operational, commercial and financial excellence initiatives.For example in 2019 our UK Cement & Lime business undertook a Supply Chain Excellence (SCE) review covering six areas: customer service offering, network optimisation, order taking and scheduling model, distribution road fleet strategy, value-adding technology and organisational design. The main outcome was a number of efficiency improvements to the businesses’ transport operating model where it expanded the scope of its own fleet operations and moved from one national transport partner to six regional partners. The SCE review resulted in distribution cost savings as well as improved customer service levels, safety improvements, increased network resilience and capacity for growth. Continuous ImprovementWe continuously work to optimise our portfolio of businesses through an ongoing and rigorous review and assessment process. This informs our decisions to allocate and reallocate capital and reshape our business in response to changing market conditions and opportunities. Since 2014 we have divested in excess of €6.8 billion of businesses and surplus assets, reallocating capital to higher growth areas. In 2019 we continued to actively divest businesses which were no longer a strategic fit for the Group including our Europe Distribution business, our Shutters & Awnings and Perimeter Protection businesses in Europe and our cement joint venture in India. These divestments, together with strategic acquisitions and capital investment in our businesses, serve to support our efforts to transform CRH into a business with a narrower and deeper focus in attractive markets.Focused GrowthBenefits of Scale and IntegrationOur global scale and integrated business model enables CRH to benefit from savings associated with centralising experience, expertise, knowledge and insight.During 2019 we continued to integrate and harmonise procurement at a global level enabling us to deliver procurement programmes in a more efficient and effective way across the Group. CRH procures c. €14 billion in products and services annually in key areas such as raw materials, energy, logistics, production services, consumables and mobile plant. By broadening the scope and depth of centralised procurement across the Group we have made significant progress in 2019 positively impacting Group EBITDA (as defined)*.In 2019 we continued our emphasis on training and development through the continuous evolution of our leadership programmes. These were attended by a range of top talent from different parts of our business, ensuring that there is a diverse, capable and expanding leadership pool across all levels within the organisation. We piloted a frontline leadership programme to build fundamental leadership capabilities deep into the operations of our business for the coming years. We also broadened our development offering to include critical experiences such as stretch assignments, global collaboration projects and exposure to one-to-one coaching as well as strengthening inclusion and diversity training across our leadership programmes and senior leadership teams. These initiatives support our overall talent development approach and position us to deliver on our business strategy into the future.Developing LeadersAt any one time we are engaged in multiple initiatives to improve our business through operational, commercial and financial excellence.Continuous ImprovementWe allocate and reallocate capital in a disciplined and focused way to optimise the shape of our business to drive maximum value for our shareholders.Focused GrowthWe build leadership positions which allow us to integrate operations and drive value through harnessing the benefits of scale and integration.Benefits of Scale and IntegrationWe continuously develop the next generation of performance orientated, innovative and entrepreneurial leaders.Developing Leaders→→Strategy ReviewStrategy ReviewOverviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex17CRH ANNUAL REPORT AND FORM 20-F I 201916CRH ANNUAL REPORT AND FORM 20-F I 2019We continually focus on building better businesses through operational and commercial excellence initiatives designed to maximise performance.Continuous ImprovementWe take a disciplined and focused approach to capital allocation and reallocation, to ensure our capital is deployed to where we see optimum opportunity for growth. Dynamic Capital Management Central Coordination / Local DeliveryOur relentless focus on performance is strategically coordinated and driven from the centre and delivered locally by our operating businesses. Disciplined Financial ManagementOur financial strength allows us to benefit from a lower cost of capital.We have a proven ability to identify high-potential businesses to integrate into our Group that complement our existing portfolio and create further platforms for growth at attractive valuations. Proven Acquisition ModelCRH uses a dynamic Enterprise Risk Management (ERM) framework to identity, manage and report risk in a manner that supports our strategic planning processes, allowing us to conduct business in a sustainable manner.Risk MitigationBenefits of Scale and Integration CRH’s global scale and integrated business model allow us to harness cost savings and synergies across our Group.Our business is balanced across materials, products and end-use, servicing the breadth of construction and mitigating the impact of cyclical changes in our industry.Balanced Portfolio Business Model Our ResourcesWe aim to optimise our return on the resources we use including:How we create value and growthCRH’s vertically integrated business model benefits from the efficient allocation of capital and continuous business improvements across the Group.How We Create Value We create value in a variety of ways including: Capital and Net Debt€23.6bnTonnes Reserves23.1bn€5.2bnRaw Materials Spendc. 80,300EmployeesIntellectual PropertyBusiness SystemsWhy It MattersThe value created benefits both CRH and our stakeholders: Value Created in 2019We create tangible value for our stakeholders:€4.0bnEBITDA (as defined)*€325mTaxes Paid€1.6bnProfit After Tax202.2cEPS10.1%RONACO2 Prevented1.6mtonnesBenefits to CRHFinancial strengthTo support resilience, flexibility and optionalityInvestmentTo drive continuous improvement and optimise returnsLower capital costsSupports our ability to fund value-creating investmentsShareholder returnsThrough dividends, share buybacks and share price appreciationCustomer solutionsSustainable products that meet the needs of our customersPartner to suppliersResilient and reliable business partnerJob creationResponsible employer in local communitiesTaxation contributionTaxes paid to GovernmentsBenefits to Society* 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.→→Strategy ReviewStrategy ReviewOverviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex19CRH ANNUAL REPORT AND FORM 20-F I 201918CRH ANNUAL REPORT AND FORM 20-F I 2019€0.6bnMeasuring PerformanceCRH 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.We believe sustainability and corporate social responsibility are fundamental to CRH being the leading building materials business in the world. We understand that a strong sustainability performance is a key driver in a competitive market and can lead to increased business opportunities. To drive transparency and progress, we are committed to reporting on the breadth of our sustainability performance. A selection of KPIs relating to three of our sustainability priority areas are below:Sustainability Performance1. CO2 emissions subject to final verification under the European Union Emissions Trading Scheme (EU ETS). CO2 emissions data includes Scope 1 (2019: 33.9m tonnes, 2018: 35.4m tonnes, 2017: 25.6m tonnes) and Scope 2 (2019: 2.6m tonnes, 2018: 2.7m tonnes, 2017: 2.6m 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. Please refer to page 23 for further information on inclusion and diversity, including additional indicators.Our focus for 2020As we deliver our vision and work towards our 2030 target for 33% females in senior leadership, our inclusion and diversity strategy will focus on four key areas: communication, education, people practices, data and measures.How did we do?We recognise the real impact of an inclusive workforce. The percentage of females in senior management increased in 2019 and as at 31 December 2019, 42% of the Directors of CRH plc were female.What do we measure?We are committed to building an inclusive and diverse organisation. We measure a range of KPIs in the area, including the percentage of females in senior management.11%10%9%201820192017People% Females in Senior Management211%1.3kg/€1.4kg/€1.1kg/€201820192017EnvironmentGreenhouse Gas Emissions1 Scope 1 and Scope 2 CO2 Emissions (kg/€ Revenue)1.3kg/€ 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.1. EBITDA (as defined)* Net Interest Cover is a non-GAAP measure as defined on page 227. The GAAP figures that are most directly comparable to the components of EBITDA (as defined)* Net Interest Cover include: profit after tax: €1,638 million (2018: €1,345 million), finance costs: €346 million (2018: €339 million) and finance income: €20 million (2018: €34 million). Details of how non-GAAP measures are calculated are set out on pages 225 to 228.Financial PerformanceAs part of our strategic focus on continuous improvement, CRH uses financial KPIs to measure our progress and foster positive performance behaviour. A selection of KPIs relating to four of our financial priority areas are below:94%94%94%201820192017Safety% Zero-Accident Locations94%What do we measure?A strong safety culture is a key element of our business strategy. We measure a wide range of health and safety KPIs including the percentage of locations that had zero accidents.How did we do?We continued to achieve a high level (94%) of zero-accident locations due to an ongoing focus on safety culture, investment and training.Our focus for 2020Continued focus on supervision, contractor management, energy safety and consequence management, with the overall aim of realising a culture of safety and wellness and working towards zero harm.How did we do?In 2019 we exceeded our CO2 reduction commitment, achieving a 26% decrease compared with 1990 levels through focusing on lower carbon products, together with Group-wide energy and resource efficiency programmes. Our focus for 2020Our ambitious 2030 target is 520kg CO2/tonne of cementitious product, a 33% specific net CO2 reduction on 1990 levels. We have also set an ambition to achieve carbon neutrality along the cement and concrete value chain by 2050.What do we measure? Energy efficiency and carbon reduction are imperatives. We measure direct and indirect CO2 emissions as well as specific indicators of efficiency, including progress towards targets.Cash Generation Operating Cash Flow (OCF)Our focus for 2020Continued focus on prudent management of working capital and capital expenditure to generate strong operating cash flows in 2020.How did we do?OCF was ahead in 2019 due to strong cash generation, prudent management of working capital and other cash flows, combined with the non-reoccurrence of tax paid on the divestment of our Americas Distribution business in 2018.What do we measure?A measure of cash flows generated to fund organic and acquisitive growth, dividends to shareholders, share buybacks and debt repayment.€3.5bn€1.9bn€2.2bn201820192017€3.5bnOur focus for 2020We will continue our focus on improving performance, growing our business and creating value. A further share buyback tranche of €0.2 billion is underway and a final dividend of 63.0c was recommended by the Board, a 15% increase on 2018's full year dividend.How did we do?Our share buyback programme continued in 2019 and a further €0.8 billion was returned to shareholders. Dividends of €0.6 billion were paid during the year. Since 1970, CRH has delivered a compound annual total shareholder return of 15.6%.What do we measure?Among a range of measures of shareholder returns, we measure cash returned to shareholders each year. This includes dividends paid during the year and additional cash returned to shareholders through our share buyback programme. €1.4bn€1.3bn€0.5bn€1.4bn 20182019€0.5bn€0.5bn2017Dividends PaidShares Re-purchasedShareholder ReturnsCash Paid to Shareholders€0.8bnFinancial Discipline EBITDA (as defined)* Net Interest Cover1Our focus for 2020Maintain financial discipline to ensure Net Interest Cover remains strong. We remain committed to protecting our investment-grade credit ratings.How did we do?EBITDA (as defined)* Net Interest Cover at 12.3x improved in 2019 due to improved profitability and Net Debt/EBITDA (as defined)* finished at 1.7x reflecting robust financial discipline.What do we measure?EBITDA (as defined)* Net Interest Cover is a measure of financial liquidity and capital resources which underpins investment-grade credit ratings and the ability to access finance.10.5x201810.1x201712.3x12.3x2019Value CreationReturn on Net Assets (RONA) Our focus for 2020Improving RONA through effective margin management, continued enhancement of operating efficiencies and tight working capital management.How did we do?RONA at 10.1% in 2019 reflected continued enhancement of operating efficiencies and improved profit margins.What do we measure?RONA is a measure of pre-tax returns through excellence in operational performance.10.1%9.6%10.6%20182019201710.1%€0.8bn→→Strategy ReviewStrategy ReviewOverviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex21CRH ANNUAL REPORT AND FORM 20-F I 201920CRH ANNUAL REPORT AND FORM 20-F I 2019Our key sustainability priorities are determined through a range of internal and external processes to identify the ESG issues that are most relevant to our business, society and key stakeholders. These include annual sustainability reporting by our businesses to Group, review of issues raised through ERM processes and regular formal materiality assessment reviews. In 2019, we completed a formal materiality assessment review, the outcome of which will inform our reporting and our evolving approach.How We Report on Our PerformanceWe 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. The 2019 Sustainability Report will be published in March 2020. Key performance indicators on sustainability are included on page 18 and throughout this section.How We View SustainabilityWe aim to positively contribute to society through the delivery of materials and products that enhance the sustainability of structures and consider the needs of our communities. We believe that meeting these needs in a manner that respects sustainability principles and addresses potentially negative impacts will create lasting value for all our stakeholders, including investors, customers, employees, partners, suppliers and local communities. Sustainability is fundamental to achieving our vision and is embedded in our business strategy and approach.How We Create Sustainable ValueOur objective is to create sustainable value by providing industry-leading products and solutions to meet 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 positive impact on wider society and the environment while increasing our ability to drive profits and long-term value. As well as being beneficial for our business, these ambitions also have an outward focus. Our actions are intended to contribute to the delivery of key initiatives, such as the UN Sustainable Development Goals (SDGs) and the Paris Climate Agreement. 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 Index and the Dow Jones Sustainability Index as well as a long-term participant in CDP (formerly Carbon Disclosure Project). In addition, many of our operating companies have achieved awards for excellence in sustainability.How We Manage SustainabilityWe take a risk-based, collaborative and strategic approach to responding to global trends in ESG areas including climate change, urbanisation, resource scarcity, demographic changes and technological advancements. We regularly review our non-financial policies and these were updated in 2019. Risks related to sustainability are recognised in our ERM Framework, described on pages 26 and 27, and details of sustainability risks are included on pages 110 and 111. Our non-financial due diligence processes are well established, and we made no material changes to these in 2019.Developing a more sustainable built environment is one of the biggest contributions we can make to society. Our ambition is to continue to drive improvement and growth across all areas of sustainability, creating financial and non-financial value. SustainabilityDelivering long-term valueTo ensure that we continue to create sustainable value, we have set ambitious targets that are aligned to the issues of most importance to our businesses and stakeholders. These ambitions represent the areas in which we believe we can effect the most change. CRH 2030 ambitionsPublished 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. Our ambition is to have a culture of safety and wellness working towards zero harmWhy is This Important?There are multiple hazards associated with our industry. Because of this we integrate an emphasis on safety into everything we do. We are focused on eliminating fatalities and accidents in our activities and on working with others to drive safety improvements across our industry.Our target: Zero fatalities in any yearOur ambition is to play our part in addressing climate change as we strive for carbon neutrality along the cement and concrete value chain by 2050Why is This Important?As society comes to terms with the urgency and challenges of climate change, we believe we have a responsibility to create high-performance, low-carbon materials and products to deliver a more climate-resilient world. Our CO2 emissions reduction roadmap is a science-based target (SBT) at a 2o scenario that has been independently verified to be in line with the Paris Climate Agreement objectives. Our target: 33% CO2 reduction to 520kg net CO2 / tonne cementitious product by 2030, compared with 1990 levelsOur ambition is to be a business where everyone has the same opportunity to develop and progressWhy is This Important?We recognise inclusion and diversity as critical to sustaining competitive advantage and long-term success. We are committed to building an organisation where inclusion and diversity is a core leadership value, bringing new ideas, perspectives and ways of engaging with people. Therefore, it is vital we understand the barriers to inclusion and diversity and create purposeful change that benefits us all. Our target: 33% female senior leadership by 2030Our ambition is to offer more solutions that contribute to a sustainable built environmentWhy is This Important?Our customers are shaping the sustainable built environment of the future. There is a demand on us to provide the innovative materials and solutions that will enhance the customer’s vision for sustainability while ensuring a practical approach to construction. Our target: 50% revenue from products with enhanced sustainability attributes by 2025Our Six Sustainability Priority Areas:CustomersSafetyCollaborationEnvironmentIntegrityPeople→→Strategy ReviewStrategy ReviewOverviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex23CRH ANNUAL REPORT AND FORM 20-F I 201922CRH ANNUAL REPORT AND FORM 20-F I 2019Sustainability - continuedManaging our key priority areasWe embed a culture of safety across all operations, as a pre-requisite to addressing safety risks and eliminating accidents. Our recently updated Health and Safety Policy is applied across all operating locations. This is complemented by our CRH Life Saving Rules, which are a cornerstone of our safety strategy. Our global network of safety officers works closely with our businesses in implementing policy and practice, which is informed by the recommendations from our external advisory panel. SafetyWe work in an industry with many safety risks. Because of this, health and safety is our top priority. The health and safety of our employees and contractors is paramount. • In 2019 94% of locations were accident-free • Our accident frequency rate (number of accidents per million manhours) has reduced by an average of 10% per annum over the last decade • We had zero employee or contractor fatalities to report in 2019. This was the first year since 2015 that there were zero employee fatalities, and the first year since 2004 that there were zero contractor fatalities. However, we deeply regret that one third-party fatality occurred in 2019. We extend our sincere sympathies to their family. We independently investigate all fatalities and share the lessons learned as we focus on our zero fatality target • We continue to invest in safety initiatives and in the past five years over €220 million has been invested in this area. Focus areas include further development of our front line leadership programme, contractor management and safety culture, as well as electrical and machine safety• We continued to implement health and wellbeing programmes, providing tools, social support and strategies on physical and mental health We work with stakeholders, including customers and the wider building materials industry, to promote emissions reduction and resource efficiency. We apply our recently updated Environmental Policy across all operating companies and new acquisitions. Our climate strategy, which is integrated with our business strategy, seeks to provide more building solutions that reduce emissions and promote climate resilience as well as reduce emissions within our own operations. Further information on risks relating to climate, including our approach to the Task Force on Climate-related Financial Disclosures (TCFD), is included on page 27. EnvironmentHow We Manage ItHow We Are PerformingWith 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.• In 2019 we achieved our 2020 CO2 reduction commitment. We are now committing to an ambitious target of 520kg CO2/tonne of cementitious product by 2030, covering the portfolio of cement plants owned by CRH in 2019. This target is among the most ambitious in our industry, representing a 33% reduction in specific net cement CO2 compared with 1990 levels. Our CO2 emissions reduction roadmap is a science-based target (SBT) at a 2˚ scenario that has been independently verified to be in line with the Paris Climate Agreement objectives. We are committed to playing our part towards delivering a carbon neutral future with our ambition to achieve carbon neutrality along the cement and concrete value chain by 2050• We are contributing to the circular economy and providing end-of-product-life solutions for our customers. In 2019, we reduced our reliance on virgin raw materials by 35m tonnes (2018: 32m tonnes). We used 2.2m tonnes of alternative fuels (2018: 2.1m tonnes); providing 33% of fuel requirements for our cement plants (2018: 30%)• We encourage biodiversity and 99% (2018: 98%) of our locations have restoration plansOPTERRA, part of CRH's Europe Materials Division, supplied concrete for this 'green bridge' on the Bundesstraße motorway project in Southern Bavaria, Germany. The project, which runs through a forest area, includes a new motorway as well as 14 additional structures. The green bridge, completed in May 2019, will enable wildlife to cross the busy motorway, thus reducing the impact of the project on the area's biodiversity.We continue with our focus on inclusion and diversity and have 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. We endeavour to ensure equal access to rewarding career and personal development experiences for employees worldwide. We place an emphasis on training and skills learning, as well as developing and recruiting talented leaders to guide our evolving and growing company. We apply our updated Social Policy across all our operating companies.With 80,300 employees in 30 countries, CRH is a multinational and multicultural organisation. 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 2019 14% of employees were female. Of operational staff, 7% were female, of clerical and administrative staff, 45% were female, while within senior management, 11% were female • In recognition of our ambition to have greater gender representation at senior levels of our organisation, we have set a target of 33% female senior leadership by 2030 (2019: 15%)• We continue with our employee engagement processes. We collect information on the level of engagement at Group level and findings are actioned by management at operating company levelPeopleHow We Manage ItHow We Are PerformingHow We Manage ItHow We Are Performing→→Strategy ReviewStrategy ReviewOverviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex25CRH ANNUAL REPORT AND FORM 20-F I 201924CRH ANNUAL REPORT AND FORM 20-F I 2019We take a wide view on our stakeholder landscape which includes investors, customers, employees, NGOs, local communities, assessment organisations, advocacy groups and other interested parties. We interact with legislative and regulatory authorities at company level, product group or regional level, as appropriate. 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. How We Manage ItHow We Are PerformingWe engage with many different stakeholders around the world. 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.• In 2019 our Group companies hosted over 1,400 stakeholder events• 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. In 2019 we made donations to various organisations and initiatives, including community development and environment, education and research and job creation• Our Supplier Code of Conduct was reviewed and updated in 2019. We continue to 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 • In 2019 we published our annually-updated ‘Commitment to Human Rights: Modern Slavery Statement of CRH plc’ on www.crh.comSustainability - continuedWe work with our customers in the design, delivery and application of sustainable products through construction, building materials and technical support. We place a focus on the development of climate-friendly building materials, such as lower carbon cements and recycled aggregates, to reduce CO2 emissions, improve resource efficiency and minimise construction waste.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 positive impact on wider society and the environment while meeting customer demands and delivering profitable growth. • In 2019 44% of our product revenue came from products with enhanced sustainability attributes, such as products that incorporate recycled material or that have a lower carbon footprint. We have set a target that 50% of our product revenue will come from products with enhanced sustainability attributes by 2025• Recycled asphalt pavement (RAP) and shingles provided a fifth of raw materials requirements in our US asphalt business (2018: 22%) • We also focus on contributing to sustainable buildings and 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 LEED© and BREEAM® (2018: 24%)CollaborationWe embrace a “Speak-up” culture where employees, customers, suppliers and other stakeholders are encouraged to raise any good faith concerns they may have relevant to the Code of Business Conduct (CoBC), inappropriate or illegal behaviour or violations of any CRH policies or local laws. Our comprehensive CoBC, underpinned by our policies including our Anti-Bribery Policy, explicitly states that CRH does not tolerate any form of bribery. At year end, senior management complete an Annual Compliance Certification confirming that procedures at their business complied with our CoBC and accompanying policies.How We Manage ItHow We Are PerformingWe 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. • All new employees are provided with the CoBC and training is provided on a regular basis to relevant employees. In 2019, c. 34,600 employees completed CoBC training• Certain employees, determined according to the risk profile of their role, undertake annual advanced compliance training (ACT) covering Anti-Bribery, Antitrust, Anti-Fraud and Anti-Theft. In 2019 c. 9,800 employees completed ACT training• 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 USIntegrityCustomersHow We Manage ItHow We Are PerformingEmployeesLocal CommunitiesInvestorsCustomersSuppliersGovernment and RegulatorsAcademic and Scientific CommunityMediaNGOs and Pressure GroupsStakeholderHow We Engage With Our Stakeholders• Ongoing daily interactions • Employee surveys • Town hall meetings • Employee newsletters • Business performance and strategy • Health and safety • Inclusion and diversity • One-to-one meetings • Open days • Site tours • Participation in local events • Potential local impact • ESG • Annual General Meeting • One-to-one meetings and calls • Surveys • Investor conferences and roadshows • Ratings • Business performance • ESG • Board and Executive remuneration • Customer surveys • Contractual meetings • Formal market research • Media and websites • Packaging • Exhibitions • Quality and delivery • Health and safety • Sustainable products • Customer relations • Supplier surveys • Contractual meetings• Tender quotations• Information requests• Contract performance• Human rights• Health and safety • Briefings • Multi-stakeholder platforms • Industry associations• Audits• Open days• Environment and climate• Corporate governance• Potential local impacts• Standard setters • One-to-one meetings • Seminars and lectures • Presentations• Round table discussions• Intern, graduate and apprenticeship programmes• Product innovation• Graduates and apprentices• Eco-efficiency • Media surveys • Interviews • Press releases • Media briefings • Social media • Health and safety • Business performance • ESG • Inclusion and diversity • One-to-one meetings • Presentations • Participation in events • Open days • Environment and climate • Human rightsKey Methods of EngagementKey Interests→→Strategy ReviewStrategy ReviewOverviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex27CRH ANNUAL REPORT AND FORM 20-F I 201926CRH ANNUAL REPORT AND FORM 20-F I 2019Adding Value to Decision-MakingERM in CRH is a forward-looking, strategy-centric approach to managing the risks inherent in decision-making. It is a tool readily employed by the Board and the wider business leadership, firstly, when considering and setting strategic objectives, and secondly, during strategic execution to ensure we are dynamic and responsive to threats and opportunities for the Group. Risk informed strategic planning is fundamentally important to successfully address the myriad of challenges we face in our relentless focus on value creation. We are becoming a narrower, deeper, more focused Group and strategic decisions, such as the divestment of our Europe Distribution business, are comprehensively analysed with a risk lens during consideration and execution.As the leading building materials business in the world we hold ourselves to stringent standards, governed by our robust ERM framework. Our framework allows us to add new depth to our understanding of our customers and markets, so we can buy better, run our assets better and sell better than anyone else. It also gives us insight to strengthen our existing platforms and confidence to step into new markets. ERM FrameworkOur framework, embedded across the Group, ensures a standardised, global system of identification, management and reporting of risks and sets out a structured and consistent approach to threats and opportunities throughout all our operations. We employ the Three Lines of Defence governance model to support the Board in its responsibilities for risk management. Clarity of ownership and responsibility is pervasive throughout the Group, supported by a robust governance structure.Our risk framework is reinforced by integrated processes which harness the collective risk intelligence of the Group. The maturity of our risk structures has integrated our bottom, middle and top line perspectives, ensuring transparency of threats, opportunities and controls in the context of individually and collectively held strategic objectives. Risk GovernanceEffective risk governance supports the realisation of our strategic objectives and the continued success of our business. Our ERM framework is a core component of our performance orientated culture, with leadership guided by a clear line of sight on risks and opportunities across the strategic planning horizon. Embedding ERM into our business processes creates an environment where leaders take a disciplined and focused view on risks to inform and hone our strategy.Risk Management FrameworkRisk IdentificationViability ImpactRisk AppetiteMonitoringReportingRisk GovernanceRisk StrategyRisk IntelligenceRisk ProcessIntegrated Risk ProcessGiven 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.Uncertainties that present themselves as downside risks are assessed in line with the Group's risk appetite and those which present themselves as opportunities are sufficiently explored and captured, where possible.To 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 and Risk Committee meetings, supplemented, for example, by seminars and regional risk champion forums.At CRH we believe we realise reward when we manage risk effectively.Climate-related DisclosuresWith our global presence and industry leadership positions, we are very aware of our role in maintaining sustainability principles while we fulfil the needs of each communities’ stakeholders. We welcome the development of recommendations for improving climate-related disclosures and an increasing focus from both regulators and shareholders on our non-financial performance. As a Group we will continue to be diligent in ensuring transparency and responsiveness to climate-related risks and opportunities.CRH is participating in a World Business Council for Sustainable Development (WBCSD) and Task Force on Climate- related Financial Disclosures (TCFD) convened “Preparer Forum” for the construction sector to review current levels of disclosure and develop guidelines for the sector with respect to TCFD reporting.We take a risk-based, collaborative and strategic approach to responding to climate change. The identification, assessment and effective management of climate-related risks and opportunities are fully embedded in our dynamic risk management process and our Climate Change and Policy Principal Risk is described in detail on pages 110 and 236.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.First Line of DefenceOperating company/business leaders are responsible for risk identification, management and ensuring that the control environment is robust.Second Line of DefenceCRH has various oversight functions which are responsible for providing subject matter expertise, defining standards and ensuring adherence.Third Line of DefenceGroup Internal Audit provides independent assurance over the control environment on a continuous basis.2019 HighlightsRisk CommitteeRisk Champion NetworkRisk OversightRisk StrategyRobust schedule with executive representation, fostering wide-ranging discussion and informing strategy.The Risk Committee provides oversight, leadership and challenge to the processes in place across the Group to identify, assess and manage risks inherent in strategic decision-making and execution.Redefined five year risk strategy setting a roadmap for improvement in risk management frameworks, principles and practices.Five key themes have been identified to achieve our targeted maturity, bringing risk closer to our businesses, improving risk governance and delivering value creation. c. 3,000 risks being managed through our global ERM framework, enabling full visibility, capability and execution of strategy.Our bottom-up reporting process garners comprehensive risk insights to ensure appropriate execution of risk management and that opportunities to leverage scale are identified and acted upon.c. 90 Risk Champions appointed at all levels of the Group to support and coordinate risk management activities.Our networks enhance the maturity of the ERM framework locally and globally by sharing risk profiles, mitigation strategies and best practice from around the Group. Physical forums and virtual tools ensure robust supports for this cooperative community.Responsible for monitoring and providing challenge on the principal risks and uncertainties facing the Group. Receives regular updates on risk management strategies, mitigation and action plans.Executive committee responsible for setting risk strategy and overseeing our Three Lines of Defence and how we identify, assess and manage the principal and emerging global risks the Group encounters in the pursuit of our strategic objectives.Responsible for identifying and managing divisional risks, ensuring risk management frameworks are operating effectively and capturing upside of risk, where possible.Embedded across businesses, functions and divisions. Responsible for integration of risk management frameworks, regular reporting of risks and sharing best practice mitigation.Ultimately responsible for risk management across CRH. Sets the risk appetite and ensures risks are managed within appetite. Delegates responsibility to Audit Committee.BoardAudit CommitteeRisk CommitteeRegional LeadershipRisk ChampionsRisk Governance Framework→→Strategy ReviewStrategy ReviewOverviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex29CRH ANNUAL REPORT AND FORM 20-F I 201928CRH ANNUAL REPORT AND FORM 20-F I 2019StrategicLink between Principal Risks and Strategic ObjectivesContinuous ImprovementFocused GrowthBenefits of Scale and IntegrationDeveloping LeadersPRINCIPAL STRATEGIC RISKS AND UNCERTAINTIESIndustry Cyclicality and Adverse Economic ConditionsPortfolio ManagementCommodity Products and SubstitutionGeopolitical and/or Social InstabilityStrategic Mineral ReservesBrexitPeople ManagementJoint Ventures and Associates OperationalPRINCIPAL OPERATIONAL RISKS AND UNCERTAINTIESClimate Change and PolicyHealth and Safety Performance Sustainability and Corporate Social ResponsibilityInformation Technology and/or Cyber SecurityCompliancePRINCIPAL COMPLIANCE RISKS AND UNCERTAINTIESLaws and RegulationsFinancialPRINCIPAL FINANCIAL AND REPORTING RISKS AND UNCERTAINTIESFinancial Instruments Defined Benefit Pension Schemes and Related ObligationsTaxation Charge and Balance Sheet ProvisioningForeign Currency TranslationGoodwill ImpairmentChangesClimate Change and Policy has been created as a separate risk, having previously been disclosed as part of our sustainability risk. Following detailed analysis and internal assessment carried out by the Risk Committee, and an increased focus on business continuity management, Operational Continuity has been removed as a principal risk, with the risk being downgraded to a divisional risk. Risk Governance - continuedAppropriate stress testing of certain key performance, solvency and liquidity assumptions, such as EBITDA (as defined)* margins, Net Debt/EBITDA (as defined)*, and EBITDA (as defined)* Net Interest Cover, 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. Formal and systematic analysis of risk scenarios is a core focus of the Risk Committee and is supplemented by the sensitivity analysis focused on the three core scenarios modelled above.The sensitivity analysis presumed the availability and effectiveness of various mitigating actions, such as the reduction of capital expenditure and cost rationalisation, 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.ConclusionWhile the Board acknowledges that the potential severity, complexity and velocity of the risks assessed may change, based on their assessment of viability as described, 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 to 31 December 2022.Longer Term Viability StatementOur 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 2018.The Board has carried out a robust assessment of our current position and the principal risks facing the Group, including those which would threaten its business model, future performance, solvency or liquidity. The nature of the strategies, practices and controls to mitigate those risks are addressed in the Principal Risks and Uncertainties section on pages 108 to 113.The Board’s consideration of the long-term viability of the Group is an extension of the strategic planning process. This process includes regular budget reviews as part of the internal reporting cycle, financial forecasting and performance reviews, a comprehensive enterprise risk management assessment and scenario planning involving our principal risks and uncertainties. Our business strategy is to deliver sustainable value for our stakeholders by maintaining financial and operational discipline for the long term.Period of Viability StatementIn accordance with Provision 31 of the UK Corporate Governance Code 2018, the Board has reviewed the length of time to be covered by the Viability Statement, particularly given its primary purpose of providing investors with a view of financial viability that goes beyond the period of the Going Concern Statement. 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 2020 to 31 December 2022 inclusive. The Board believes that a three-year viability statement is appropriate for the following reasons:• It aligns with our normal strategic planning time horizon and associated principal risks and uncertainties; • Construction activity, and therefore demand for the Group’s products, is inherently cyclical as it is influenced by global and national economic circumstances, creating uncertainty for long-term forecasting; • It aligns with our long-term management incentives, such as the deferred element of the Annual Performance-related Incentive Plan which links the value of executive Directors’ reward with the long-term performance of the CRH share price; and• Uncertainty increases inherently with expanding time horizons potentially impacting the large number of external variables that need to be factored in to establish a reasonable and robust forecast of the Group’s business.Overall, a three-year period is deemed to achieve a suitable balance between long and short-term influences on performance.Approach to Assessing ViabilityThe prospects of the Group are assessed against the Plan and projections consider the Group’s cash flows, committed funding and liquidity positions, forecast future funding requirements and other key financial ratios, including those relevant to maintaining the Group’s investment grade credit ratings.In conducting the viability assessment, the Board has considered our strong balance sheet and cash flow generation, our dynamic capital allocation model underpinned by comprehensive portfolio reviews and capital appraisals, and our philosophy of continuous improvement. Scenario 1: Economic EnvironmentGlobal downturn prompting revenue reduction and margin compressionScenario 2: One-Off ExpenseImpact of a potential large event, fine and/or penalty- Industry Cyclicality and Adverse Economic Conditions- Portfolio Management- Brexit- Laws and Regulations- Geopolitical and/or Social Instability- Information Technology and/or Cyber Security- Industry Cyclicality and Adverse Economic Conditions- Portfolio Management- Brexit - Laws and Regulations- Geopolitical and/or Social Instability- Information Technology and/or Cyber SecurityScenario 3: Combination (1 and 2)Combination of prior scenarios overlapping or occurring simultaneouslyRelevant Principal RisksScenario ModelledThe risks and uncertainties presented below, supplemented by a broader discussion on pages 108 to 113 and 233 to 241, are reviewed regularly and represent the principal risks and uncertainties faced by the Group at the time of compilation of the 2019 Annual Report and Form 20-F.The Risk Committee helps ensure the risks highlighted in this report are reflective of the potential barriers to the realisation of our business strategy and that senior executives actively engage with risk, and provide strategic direction. These risks form the basis of Board and Audit Committee communications and discussions.Principal RisksEmerging RisksThe Group considers emerging risks as part of our comprehensive ERM framework. We define an emerging risk to be a potentially significant threat where the impact can’t yet be fully understood, restricting our ability to confidently define a strategy and build capabilities to significantly influence the materiality of the risk.A dynamic threat watchlist is maintained to enable early recognition of threats which could impact the long-term performance of many areas of our business. The Risk Committee regularly reviews the watchlist and deems certain threats to be accepted emerging risks, which are integrated into our risk register and are subject to oversight by the Audit Committee. Risk Appetite FrameworkThe Risk Appetite 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 Framework on an annual basis in line with good corporate governance practice.* 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 ReviewGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness PerformanceBusiness Overview 32Finance Director’s Review 33Segmental Reviews 38Business PerformanceThe Joliette cement plant in Quebec, Canada, part of CRH’s Americas Materials Division, supplies more than ten types of cement to customers across Canada and the Northeastern US. The plant has 180 employees and has been in operation for more than 50 years. It is a pioneer in the use of Alternative Fuels and Raw Material (AFR) in the cement production process, with more than 30% of fossil fuels replaced by alternative fuels.→→OverviewStrategy ReviewGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance32CRH ANNUAL REPORT AND FORM 20-F I 20192019 was another year of growth for CRH, supported by a positive demand backdrop in the Americas and in key regions in Europe. With good contributions from acquisitions and tailwinds from currency exchange movements, sales of €28.3 billion from continuing and discontinued operations for the period were 6% ahead of 2018.Year-end net debt of €6.7 billion (2018: €7.0 billion) was reflective of our strong operating cash generation and continued portfolio refinement with net disposal proceeds after acquisition spend of €1.4 billion (2018 outflow: €0.6 billion) offset by total distributions to shareholders of €1.4 billion (2018: €1.3 billion). Net Debt/EBITDA (as defined)* was 1.7x (2018: 2.1x).Key Components of 2019 PerformanceEconomic growth continued in the US in 2019, with improvements in the infrastructure sector and solid fundamentals in key residential and non-residential markets. Headwinds driven by flooding and wet weather in the first half of the year were offset by a stronger second half and like-for-like sales in Americas Materials for the full year increased 4% over 2018. In Europe Materials, organic sales were 5% ahead due to good activity in key markets and pricing progress across all product lines. Performance was positive for our businesses in Eastern and Western Europe, which offset challenging trading conditions in the UK as construction activity declined amidst Brexit-related uncertainty.Building Products saw continued improvements in 2019 reflecting a positive demand and pricing backdrop and like-for-like sales were 2% ahead of 2018. Underlying trends in residential and non-residential activity were positive in the West Coast and Southern regions of the US and our main markets in Europe also experienced good demand. Our Europe Distribution business was divested at the end of October 2019 and was classified as discontinued operations for reporting purposes. The business experienced continued demand in mainland Europe aided by milder weather conditions, partly offset by challenges in Switzerland. EBITDA (as defined)* from continuing and discontinued operations of €4.2 billion was 25% ahead of 2018 (2018: €3.4 billion) with the benefit of solid underlying growth, continued focus on operational and commercial performance, margin-enhancing acquisition activity and the impact of IFRS 16 Leases2. Reported profit after tax was €0.6 billion behind 2018 at €1.9 billion (2018: €2.5 billion), as the prior year’s profit after tax was augmented by the €1.1 billion after tax profit on disposal on the sale of our Americas Distribution business.* 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 103.2. The impact of IFRS 16 Leases on EBITDA (as defined)* is €378 million from continuing and discontinued operations.The euro weakened against most major currencies during 2019 resulting in the average euro/US Dollar rate strengthening from 1.1810 in 2018 to 1.1195 in 2019 and the Pound Sterling strengthening from an average 0.8847 in 2018 to 0.8778 in 2019. Overall currency movements resulted in a favourable net foreign currency translation impact on our results as shown on the table on page 34. The average and year-end 2019 exchange rates of the major currencies impacting on the Group are set out on page 144.Change in Reporting Currency to US DollarWithin our current portfolio of businesses, our euro denominated earnings, while sizeable, are a relatively lower proportion of overall earnings. To reduce the potential for foreign exchange volatility in our future reported earnings, the Group has decided to change its reporting currency to US Dollar effective from 1 January 2020.Business OverviewAn overview of Group revenue and operating profit for each of the reporting segments for 2017, 2018 and 2019 is as follows:(i) As set out in note 2 to the Consolidated Financial Statements on page 147 the Group has three reporting segments; Americas Materials, Europe Materials and Building Products. Comparative segment amounts for 2017 and 2018 have been restated where required to reflect the new format for segmentation.(ii) During 2019 the Europe Distribution business was classified as discontinued operations. Comparative amounts for 2017 and 2018 have been restated. Finance Director’s Review 20191Senan Murphy Finance Director2019 was a year of continuing business improvement with strong profit delivery, expansion in margin and increased cash generation.Revenue 2017 (i) (ii) 2018 (i) (ii) 2019Americas MaterialsEurope MaterialsBuilding Products€30 billion€25 billion€20 billion€15 billion€10 billion€5 billion0Operating Profit€3.0 billion€2.5 billion€2.0 billion€1.5 billion€1.0 billion€0.5 billion02017 (i) (ii) 2018 (i) (ii) 2019Americas MaterialsEurope MaterialsBuilding Products→→OverviewStrategy ReviewGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance34CRH ANNUAL REPORT AND FORM 20-F I 201935CRH ANNUAL REPORT AND FORM 20-F I 2019In April 2019, the Group successfully carried out an amendment and extension of its €3.5 billion revolving credit facility. The Group also has a US$2 billion US Dollar Commercial Paper Programme and a €1.5 billion Euro Commercial Paper Programme of which there were no outstanding issued notes at year end. The purpose of these programmes is to provide short-term liquidity at attractive terms. Contractual obligations and Off-Balance Sheet arrangements are disclosed on page 229 of this Annual Report and Form 20-F.Segmental ReviewsThe sections on pages 38 to 51 outline the scale of CRH’s continuing operations in 2019 and provide a more detailed review of performance in each of CRH’s reporting segments. A review of the discontinued operations, Europe Distribution, is also included on pages 49 and 52 for information.2019Demonstrating CRH’s strategy of active portfolio management, the Group invested €0.7 billion in 62 acquisition/investment transactions in 2019 (including deferred and contingent consideration in respect of prior year acquisitions).The Building Products Division completed a total of 16 bolt-on acquisitions at a cost of c. €460 million. Four of these acquisitions were completed in Europe and one in Australia at a cost of €65 million, while the remaining 11 were completed in North America for consideration of c. €395 million. One of the largest acquisitions in 2019 was the November acquisition of Torrent Resources, Inc. for c. €75 million. This acquisition strengthens CRH’s storm water and water management presence in Western US and offers significant commercial and operational synergy potential to our Infrastructure Products business. The Americas Materials Division completed 27 bolt-on acquisitions and two investments at a cost of c. €210 million, the majority of which were designed to bolster our operational footprint through the addition of c. 260 million tonnes of mineral reserves. The most significant acquisition in Americas Materials was that of Windsor Rock Products for c. €30 million. Windsor Rock Development Review Products is a strong fit with our existing operations in Oregon and adds c. 25 million tonnes of reserves to our portfolio. The Europe Materials Division completed 15 bolt-on acquisitions and two investments at a cost of c. €55 million. On the divestment front, the Group completed 11 transactions and realised business and asset disposal proceeds of €2.1 billion. The majority of divestment proceeds related to the divestment of the Europe Distribution business in October 2019 for a final agreed consideration of €1.6 billion. Other transactions in 2019 included the divestment of the European Shutters & Awnings business for a total consideration of €0.3 billion in June, the divestment of the Perimeter Protection business in Europe in September 2019 for €0.1 billion together with seven smaller business divestments completed in the US and UK. On 31 December 2019, the Group divested of its share of the Indian joint venture, MHIL, for a total deferred consideration of €0.3 billion.In addition to these business divestments, the Group realised proceeds of €0.1 billion from the disposal of surplus property, plant and equipment.Key Components of 2019 Performance€ millionSales revenueEBITDA (as defined)*Operating profit Loss on disposalsFinance costs (net)Assoc. and JV PAT (i)Pre-tax profit201823,2413,2162,071(27)(351)481,741Exchange effects764127911(12)2822018 at 2019 rates24,0053,3432,162(26)(363)501,823Incremental impact in 2019 of: - 2018/2019 acquisitions92316470-(44)-26 - 2018/2019 divestments(629)(52)(18)342-18 - Leases (ii)-31140-(62)-(22) - Organic 830234240(9)2910270201925,1294,0002,494(1)(438)602,115% Total change8%24%20%21%% Organic change3%7%11%15%(i) CRH’s share of after-tax profits of joint ventures and associated undertakings.(ii) Excludes the impact of IFRS 16 Leases on discontinued operations which is €67 million on EBITDA (as defined)*, €4 million on operating profit and €7 million on finance costs.Liquidity and Capital Resources - 2019 compared with 2018The comments that follow refer to the major components of the Group’s cash flows for 2019 and 2018 as shown in the Consolidated Statement of Cash Flows on page 132.Throughout 2019, the Group remained focused on cash management, targeting working capital in particular. Management delivered a net working capital outflow of €64 million (2018: €463 million), and together with 2019’s improved profitability and the positive impact of the non-reoccurrence of cash outflows related to the Americas Distribution discontinued operation (primarily the tax paid on the profit on disposal) the Group’s operating cash flow increased to €3.5 billion (2018: €1.9 billion). Working capital was €2.1 billion at year end (2018: €2.5 billion) representing 8.5% of continuing sales (2018: 9.4% on a continuing and discontinued basis). CRH believes that its current working capital is sufficient for the Group’s present requirements. Finance Director’s Review 2019 - continuedFocused investment in property, plant and equipment in markets and businesses with increased demand backdrop and efficiency requirements, resulted in higher cash outflows of €1.2 billion (2018: €1.1 billion), with spend in 2019 representing 102% of depreciation on owned assets (2018: 105%).Reflective of the ongoing strategy of active portfolio management, the Group invested €0.7 billion on 62 transactions (2018: €3.6 billion) which was financed by divestment and disposal proceeds of €2.1 billion (net of cash disposed and deferred proceeds) (2018: €3.0 billion).The Group continued its share buyback programme and, in 2019, 27.4 million (2018: 27.9 million) ordinary shares were repurchased on the London Stock Exchange (LSE) and Euronext Dublin for a total consideration of €0.8 billion (2018: €0.8 billion), at an average price of €28.87 (2018: €28.24) per share. The Group announced a further €0.2 billion tranche of the share buyback programme on 7 January 2020 to be completed no later than 31 March 2020. These buybacks, together with cash dividend payments of €0.6 billion (2018: €0.5 billion), reflect the Group’s continued commitment to returning excess cash to shareholders. Year-end interest-bearing loans and borrowings decreased by €0.3 billion to €9.0 billion (2018: €9.3 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 €6.7 billion at 31 December 2019 was €0.3 billion lower than year-end 2018 (€7.0 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 12.3x (2018: 10.5x).The Group ended 2019 with total liquidity of €7.4 billion, comprising €3.8 billion of cash and cash equivalents on hand and €3.6 billion of undrawn committed facilities which are available until 2024. At year end, the Group had sufficient cash balances to meet all maturing debt obligations (including leases) for the next four years and the weighted average maturity of the remaining term debt was 11.6 years.* 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 ReviewGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance36CRH ANNUAL REPORT AND FORM 20-F I 201937CRH ANNUAL REPORT AND FORM 20-F I 2019Liquidity 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 132.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 2018 of €463 million (2017: €209 million outflow) reflected trends in overall sales, seasonal weather patterns and the impact of acquisitions.Focused spending on property, plant and equipment in markets and businesses with increased demand backdrop and efficiency requirements, resulted in higher cash outflows of €1.1 billion (2017: €1.0 billion).During 2018 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).Between 2 May and 31 December 2018, 27.9 million ordinary shares were repurchased on the LSE and Euronext Dublin for a total of €789 million, at an average price of €28.24 per share. This buyback, together with cash dividend payments of €533 million in 2018 (2017: €477 million) reflected the Group’s continued focus on returns to shareholders. Net proceeds from share issues in 2018 was €11 million (2017: €42 million).Year-end 2018 interest-bearing loans and borrowings increased by €1.3 billion to €9.3 billion (2017: €8.0 billion). At year end 2018, the weaker euro against the US Dollar had a negative translation impact on net debt.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. The most significant acquisition in 2018 was the June acquisition of Ash Grove, which gave 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. Our Europe Materials Division completed ten acquisitions across the UK, Ireland and France, and one investment in Poland for a total spend of c. €60 million. Our Building Products Division completed an acquisition in the UK, Germany, Belgium and Australia, in addition to six bolt-on acquisitions in the US at a total cost of c. €220 million. The acquisitions of Coral Industries and SIGCO extended Building Envelope'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. The majority of divestment proceeds related to the divestment of our Americas Distribution business in January 2018 for a final agreed consideration of c. €2.4 billion. In July 2018, 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.Development Review 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. The Group realised business and asset disposal proceeds of €0.2 billion.Our Americas 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 Americas Materials Division also completed 12 further bolt-on acquisitions, including two in Canada, adding c. 2.5 billion tonnes of additional aggregates reserves resulting in a total spend of c. €1.1 billion in 2017. Our Europe Materials Division spent c. €0.6 billion on eight acquisitions and one investment, including the largest acquisition in Europe 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.The Building Products Division completed eight acquisitions and one investment in the US in addition to two acquisitions and one investment in Europe in 2017 at a total cost of c. €0.2 billion.Business divestments during 2017, all in Europe Materials, generated net proceeds of c. €85 million. The remaining clay products businesses in Europe (Belgium, Germany, Netherlands and Poland) were divested and the 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. €0.1 billion from the disposal of surplus property, plant and equipment. Finance Director’s Review 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.1. Net deferred tax liabilities of €447 million is stated on a continuing (€440 million) and discontinued (€7 million) basis. The overall trading environment for the Group in 2018 was positive with good demand and 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 2018. The Group continued to focus on cash generation and appropriate deployment of capital. Operating cash flow for 2018 amounted to €1.9 billion (2017: €2.2 billion) impacted by the tax paid on the divestment of Americas Distribution. Year-end 2018 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 2018 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 2018, our Americas Materials’ operations benefited from a positive macroeconomic backdrop and good underlying demand in the US. An organic sales increase of 4% was supported by growth across all sectors in our markets. Organic sales were up 5% in Europe Materials, with a positive performance for our operations in Ireland, the Benelux, Denmark and Poland partly offset by more challenging trading conditions in the UK, due to continued Brexit uncertainty. The Philippine economy continued to perform amidst inflationary pressures. However, the resultant volume and price progress was more than offset by cost increases, particularly in energy.Building Products saw growth in the US 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. With organic sales 3% ahead of 2017, it was a year of progress for the Division further boosted by acquisitions in all of the product groups. Europe Distribution, which was classified as discontinued operations for reporting purposes, had a mixed performance with positive momentum in the Netherlands, partly offset by first half challenges in Switzerland and Belgium.EBITDA (as defined)* for 2018 amounted to €3.2 billion, a 10% increase on 2017 (2017: €2.9 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 2018 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 due to changes in a Swiss pension scheme and a €440 million reduction in the Group’s net deferred tax liabilities1 due to changes in tax legislation in the US. 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 in the table below. The average and year-end 2018 exchange rates of the major currencies which impacted on the Group are set out on page 144.Key Components of 2018 Performance€ millionSales revenueEBITDA (as defined)*Operating profit(Loss)/profit on disposalsFinance costs (net)Assoc. and JV PAT (i)Pre-tax profit201721,6532,9301,92754(348)521,685Exchange effects(644)(98)(67)(2)9(2)(62)2017 at 2018 rates21,0092,8321,86052(339)501,623Incremental impact in 2018 of: - 2017/2018 acquisitions1,746355225-(57)-168 - 2017/2018 divestments(348)(36)(26)(72)2-(96) - Swiss pension past service credit (ii)-(20)(20)---(20) - Early bond redemption----17-17 - Organic8348532(7)26(2)49201823,2413,2162,071(27)(351)481,741% Total change7%10%7%3%% Organic change4%3%2%3%(i) CRH’s share of after-tax profits of joint ventures and associated undertakings.(ii) 2018 included the impact of the non-reoccurrence of a one-off past service credit of €81 million in 2017 due to Swiss pension plan amendments, €20 million classified as continuing operations with the remaining €61 million classified as discontinued operations.→→OverviewStrategy ReviewGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance38CRH ANNUAL REPORT AND FORM 20-F I 2019Americas Materials 40Europe Materials 44Building Products 48Segmental ReviewsRoadstone, part of CRH's Europe Materials Division, developed over 4,500m³ of high-strength concrete for The Rose Fitzgerald Kennedy Bridge in Ireland, which opened in January 2020. The three-tower, 887m extrados bridge is the longest of its type in the world. Extending more than 230m over the River Barrow, and with a 36-metre clearance, it provides vital connectivity for surrounding communities and for shipping navigation to the Port of New Ross.→→OverviewStrategy ReviewGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance40CRH ANNUAL REPORT AND FORM 20-F I 201941CRH ANNUAL REPORT AND FORM 20-F I 2019 Our Vertically Integrated BusinessOur vertically integrated business model helps us capture value at multiple points along the value chain. Selling materials internally to other CRH businesses helps us drive company-wide growth and efficiency while ensuring that we are maximising the use of our assets. Materials produced by our aggregates and cement businesses for example are purchased by our downstream materials businesses for products such as readymixed concrete and asphalt. This focus on vertical integration is embedded in our development strategy and we typically concentrate our acquisition activity on businesses which can be quickly integrated within our existing network. The US building materials sector is largely unconsolidated; the top ten aggregates businesses account for less than one third of production. Backed by a reserves network that is very difficult to replicate and strong leadership positions in local markets, our materials businesses are well positioned to capitalise on value creating opportunities for consolidation and expansion of existing integrated operations. The recent expansion of the Division’s footprint in the North American cement market for example allows for greater integration with our existing aggregates and readymixed concrete businesses. It also increases our exposure to the high growth states in the Southern and Western US where there is high population growth and demand for our materials. How We Structure our Operations Our Americas Materials Division operates across three countries (the US, Canada and Brazil). The Division has a network of close to 1,450 operating locations and employs approximately 28,600 people across 46 US states, six Canadian provinces and three Brazilian states. Annualised Sales Volumes3: Aggregates: 192.2m tonnes; Cement: 15.0m tonnes; Readymixed Concrete: 13.2m m3; Asphalt: 45.5m tonnesAGGREGATES Aggregates are naturally occurring mineral deposits such as granite, limestone and sandstone. Our businesses extract these deposits and process them for sale.ASPHALTAsphalt is primarily used in road surfacing and other transport infrastructure including airport runways.CEMENTCement is the primary binding agent in the production of concrete products for the construction industry.RESERVESReserves comprise mineral deposits including limestone, granite and sandstone are found within our extensive network of quarry locations in attractive local markets throughout North America. For additional information on the Group’s mineral reserves, see page 231. READYMIXED CONCRETEReadymixed concrete is a highly versatile building material comprised of aggregates bound together with cement and water.Americas MaterialsCRH’s Americas Materials Division is the leading building materials business in North America with operations in 46 US states, six Canadian provinces and three Brazilian states. What We DoOur Americas Materials Division is a vertically integrated supplier of building materials used widely in construction projects throughout North America. Typically, these materials are resource-backed in mineral deposits found within our extensive network of quarry locations where they are processed for supply as aggregates, asphalt, cement and readymixed concrete. Our operating companies across North America supply these materials to customers including national, regional and local governments, contractors, homebuilders, homeowners and sub-contractors, for use in a broad range of construction projects including major public infrastructure, commercial buildings and residential structures. Over several decades CRH has built up market leading positions throughout North America in aggregates and readymixed concrete while currently being the largest producer of asphalt. CRH is also a leading producer of cement in North America with operations across Florida, Texas, the Midwest and Western US, and Canada. In addition, the Division is a leading supplier to highway construction projects in the US and a significant proportion of our business is awarded by public tender for federal, provincial, state and local government authority road and infrastructure projects. How We Create ValueOur Americas Materials businesses have established strong relationships with customers in local markets and a deep market knowledge that drives performance. This focus on operational excellence at the local level is supported by strategic oversight provided through a lean centre which allows CRH to leverage talent, procurement synergies, cost management and operational excellence.* 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. Geography, sector exposure and end-use balance are based on sales. 2. Net Assets at 31 December 2019 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 226.3. Throughout this document annualised volumes have been used which reflect the full-year impact of development activity during the year and may vary from actual volumes sold.51%Operating Profit1,2711,96012,32949%EBITDA (as defined)*47%Net Assets2% of Group41%Sales10,385€ million20%50%ResidentialInfrastructureNon-Residential30%SECTOR EXPOSURE1END-USE1RMINew45%55%AMERICAS MATERIALSGEOGRAPHY188% United States 11% Canada1%BrazilPAVING & CONSTRUCTION SERVICESCRH is the leading supplier of product for road construction and repair/maintenance demand in North America. Annually, our crews complete approximately €4.1 billion in paving and construction projects.→→OverviewStrategy ReviewGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance42CRH ANNUAL REPORT AND FORM 20-F I 201943CRH ANNUAL REPORT AND FORM 20-F I 2019ResultsAnalysis of change€ million2018ExchangeAcquisitionsDivestmentsLeasesOrganic2019% changeSales revenue 8,951 +460 +657 -26 - +343 10,38516%EBITDA (as defined)*1,493+84+135-5+98+155 1,960 31%Operating profit1,009 +60 +61 -4 +9+136 1,271 26%EBITDA (as defined)*/sales 16.7%18.9% Operating profit/sales11.3%12.2% Current Year 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.2019 was a strong year for Americas Materials, generating operating profit of €1.3 billion, 26% ahead of 2018. Headwinds driven by wet weather and increased raw materials costs in the first half of the year were offset by a stronger second-half performance reflecting increased volumes, positive pricing and reduced operating expenses. Organic sales were 4% ahead of 2018, while organic operating profit grew 13%. Economic activity in the US remained favourable during 2019 with the infrastructure sector supported by the FAST Act as well as a significant number of local and state funded transportation projects. The Canadian market experienced growth during the year and economic expansion is expected to continue at a moderate pace. Americas Materials completed 29 acquisitions/investments in 2019 at a cost of c. €210 million, strengthening its operational footprint through the addition of c. 260 million tonnes of mineral reserves.Building MaterialsTotal aggregates volumes benefited from acquisitions and finished 5% ahead of prior year, while like-for-like volumes were 1% ahead as a strong performance in the West was partly offset by a focused reduction in lower margin contracts in the South division. Average prices increased 5% on a like-for-like basis and 4% overall compared with 2018 and margins were maintained against a backdrop of increased input costs.Like-for-like and total asphalt volumes were 1% behind 2018 as flooding and tropical storms negatively impacted our Central and South divisions, partly offset by strong demand in the North. Like-for-like prices improved 5%, more than offsetting higher input costs and resulted in strong margin expansion.Total readymixed concrete volumes were 9% ahead of 2018 and prices improved 4%. Like-for-like volumes were 2% ahead as poor weather in the first half of the year for Central and West was offset by strong volumes in the South division. Readymixed concrete margins were impacted by increased input costs.Total paving and construction services revenues were 3% ahead, 2% on a like-for-like basis, as overall margins improved driven by favourable regional mix and increased higher margin work in the South and West divisions, partly offset by challenging first-half weather in Canada.Regional PerformanceThe North division comprises operations in 13 states, with key operations in Ohio, New York, New Jersey and Michigan. Total sales in the North division increased 5% primarily due to favourable volumes and prices across our product range, as well as greater construction revenue. This improved revenue coupled with strong cost control resulted in a good operating profit performance.The South division comprises operations in 12 states with key operations in Florida, West Virginia and North Carolina. Total sales in the division increased 1% with improved pricing in all products largely offset by lower construction revenue due to the timing of major projects in key states. Strong pricing together with focused management of operating expenses resulted in a solid operating profit performance.The Central division has operations in ten states, with key operations in Texas, Arkansas and Kansas. Weather challenges continued in the division with flooding and record levels of rainfall in the first half of the year; however, a strong performance later in the year and contributions from acquisitions helped drive a total sales increase of 20%, 7% ahead on a like-for-like basis. Like-for-like operating profit finished ahead of prior year as weather challenges were offset by favourable second-half volumes and pricing.The West division has operations in ten states with key operations in Utah, Idaho, Washington and Colorado. Strong pricing across all products and volumes growth in aggregates and readymixed concrete supported the West division’s total sales increase of 5%, 2% on a like-for-like basis. Despite challenges from weather and higher input costs, mainly bitumen and labour, favourable pricing across all products and tight cost control resulted in operating profit well ahead of 2018.CementLike-for-like sales volumes in our US operations were ahead in 2019. Despite adverse weather, strong price realisation across major markets and good synergy delivery supported robust operating profits. The integration of Ash Grove is now complete and the business is performing well.Despite poor weather conditions in the first half of the year, cement volumes and prices in Canada were ahead of 2018, driven by solid market conditions. Cement consumption in Southeast Brazil improved in 2019 enabling CRH to achieve volumes growth supported by a consistent focus on key customer segments. A strong emphasis on logistics optimisation and price realisation drove improved performance.Operations Review - Americas MaterialsPrior 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 2017. Organic sales were 4% ahead of 2017, while organic operating profit grew 3% as 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. Continued economic growth in the US residential, non-residential and infrastructure sectors drove underlying demand. Canada had moderate GDP growth in 2018, with solid jobs growth. The economy lost some momentum in the second half of 2018 due to a slowdown in business and government spending.Continued political uncertainty in Brazil, 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.Together with the Ash Grove acquisition, Americas Materials spent €3.3 billion in 2018 on 24 bolt-on transactions, adding c. 1.6 billion tonnes of reserves to the business.Building MaterialsTotal 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 2018. Input cost pressure, particularly in raw materials and energy, negatively impacted overall margins in 2018.Regional Performance Like-for-like sales in the North division increased 4%, mainly due to improved US aggregates volumes and prices, as well as greater construction sales. Adverse weather however impacted volumes across all businesses in Canada. This together with increased input costs resulted in operating profit finishing behind 2017.Like-for-like South division 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 2018.With record levels of rainfall and flooding in the Central division, like-for-like sales decreased 4%. Reduced volumes and margin pressure resulted in operating profit finishing behind 2017.With strong pricing across all products and volumes growth aided by acquisitions, West division 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.CementThe 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.Our US 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.Cement volumes and prices in Canada 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. CRH Brazil cement volumes were stable, in line with consumption trends in the Southeast region. Selling price increases were achieved in a higher input cost environment.ResultsAnalysis of change€ million2017ExchangeAcquisitionsDivestmentsOrganic2018% changeSales revenue7,970-356+1,026-26+3378,95112%EBITDA (as defined)*1,270-56+267-12+241,49318%Operating profit858-37+176-9+211,00918%EBITDA (as defined)*/sales15.9%16.7%Operating profit/sales10.8%11.3%→→OverviewStrategy ReviewGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance44CRH ANNUAL REPORT AND FORM 20-F I 201945CRH ANNUAL REPORT AND FORM 20-F I 2019In 2019, the Division was reorganised to include Asia, which comprises cement operations in the Philippines where we are the second biggest producer, along with an equity-accounted investment in Northeast China. How We Create ValueValue creation is an area of continuous focus for our Europe Materials Division and we place great emphasis on performance improvement initiatives and collaboration across the Division. In addition to understanding and meeting the unique needs of local customers, our deep market knowledge drives performance and our extensive network allows us to leverage talent, synergies for procurement, cost and logistics management and drive both commercial and operational excellence. Our vertically integrated business model means that we can maximise the use of our assets through a combination of self-supply to our downstream operations as well as sales to our customers. With a strong pipeline of opportunities across regions, our development strategy is focused on identifying and integrating bolt-on acquisitions for synergies, reserves and further vertical integration, in addition to opportunities to extend and strengthen existing regional positions.We have a strong track record in adding businesses for vertical integration and to strengthen regional positions, ensuring we are competitive in all individual product lines and our combined business delivers a stronger return on assets and generates more cash.How We Structure Our Operations Our Europe Materials Division spans 19 countries in Europe and two in Asia and is organised across five operational clusters (Tarmac (UK), Europe North, Europe West, Europe East and Asia). Europe Materials employs approximately 27,250 people at over 1,160 locations. A further 5,650 people are employed in our equity accounted investment in China. Annualised Sales Volumes3: Aggregates: 115.0m tonnes; Cement: 33.5m tonnes; Readymixed Concrete: 18.1m m3; Asphalt: 11.6m tonnes; Lime: 7.4m tonnes; Concrete Products: 6.7m tonnesWhere Our Products Are UsedEurope MaterialsWith market leading positions across a broad geographic footprint and a highly integrated portfolio of businesses, our Europe Materials Division is a leading heavyside materials business in Europe. What We DoOur Europe Materials Division manufactures and supplies a broad range of materials for use in construction projects including aggregates, cement, lime, asphalt, readymixed concrete and concrete products. This vertically integrated business is founded in resource-backed assets engaged in the production and supply of cement and aggregates along with downstream material products such as readymixed concrete, concrete products and asphalt. These materials are used extensively in a wide range of construction applications from major public infrastructure projects to commercial buildings and residential structures. Our businesses are established players in local markets and have long-standing relationships with customers which typically range from national, regional and local governments, to building contractors and other construction product and service providers. With an extensive network in the strong and stable markets of Western Europe, a strong footprint in growing Eastern European markets and an attractive position in Asia, the Division is geographically balanced and has broad exposure to residential, non-residential and infrastructure sectors. We have leading positions and a broad range of well-established brands in most markets across Western Europe, from Ireland and the UK to France, Germany, Denmark, Finland, Switzerland and Benelux. In Eastern Europe, we have built up a strong portfolio of businesses across eight different countries. While cement is our core product in these Eastern European markets, we have also developed strong positions in the lime, readymixed concrete, precast and aggregates sectors in recent years. * 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. Geography, sector exposure and end-use balance are based on sales. 2. Net Assets at 31 December 2019 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 226.3. Throughout this document annualised volumes have been used which reflect the full-year impact of development activity during the year and may vary from actual volumes sold.READYMIXED CONCRETEConcrete is the most used man-made material on earth. It forms the foundations of buildings and homes, roads, tunnels and bridges, clean water systems and clean energy structures. Readymixed concrete is the most commonly used form of concrete. CEMENTCement is a binding agent produced from limestone reserves and used in concrete products including readymixed concrete, precast concrete and mortars which are used extensively throughout the built environment. Cement is produced for both sale in local markets or can be shipped by road, rail and water to other markets.ASPHALTAsphalt, which consists of aggregates bound together with bitumen is widely used as a surface material in transport infrastructure including, roads, bridges, runways, footpaths along with amenities such as racetracks, tennis courts and playgrounds. In recent years, the use of recycled material in asphalt has increased considerably. AGGREGATESOur businesses extract, process and supply a range of aggregates products including sand, gravel, crushed limestone and crushed granite. Typically aggregates are used in building foundations, underpinning road and rail infrastructure and in the production of products including concrete and asphalt.INFRASTRUCTURAL CONCRETEWhile readymixed concrete is supplied to customers for on-site casting, our infrastructural concrete businesses produce and supply precast and pre-stressed concrete products such as floor and wall elements, beams and vaults, pipes and manholes. These products are delivered to and assembled at construction sites. They are used widely throughout the modern built environment.PAVING & CONSTRUCTION SERVICESIn addition to the supply of asphalt and other materials to road construction and maintenance projects, in certain markets we also provide installation services including crews, equipment and specialist expertise needed for preparation, paving and maintenance of traffic flows on projects including roads, roundabouts and interchanges, car parks and airport runways.LIMECRH’s Lime businesses in Germany, Poland, Russia, Czech Republic, UK and Ireland produce lime for use by multiple industries including iron and steel, building materials, sugar, agriculture and forestry. Lime can be found in a variety of everyday products and materials including toothpaste, drinking water, windows and garden soil. 32% Tarmac (UK)Operating ProfitEBITDA (as defined)*Net Assets2% of GroupSales€ million35%35%ResidentialInfrastructureNon-Residential30%SECTOR EXPOSURE1END-USE1RMINew75%25%EUROPE MATERIALSGEOGRAPHY130%Europe West22%27%8,4945551,0798,72133%34%16% Europe East5% Asia17% Europe North→→OverviewStrategy ReviewGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance46CRH ANNUAL REPORT AND FORM 20-F I 201947CRH ANNUAL REPORT AND FORM 20-F I 2019Current Year 2019Overall Europe Materials experienced a positive year with good sales growth and particularly strong performances in Eastern Europe, the Philippines, France and Ireland. Operating profit was ahead of 2018 as price increases and a good contribution from performance improvement initiatives offset higher input costs and the impact of more challenging trading conditions in the UK.Tarmac (UK)Ongoing political and economic uncertainty as a result of Brexit negatively impacted Tarmac’s trading environment as volumes in our aggregates and asphalt businesses finished lower than 2018. Operating profit declined as progress from performance improvement initiatives was offset by challenging market conditions and input cost inflation.Europe NorthSales and operating profit in our UK cement and lime business were behind 2018 as Brexit uncertainty impacted activity levels. In Ireland, sales and operating profit were well ahead of 2018 as the business benefited from continued market growth, underpinned by strong demand and some large projects in the Dublin region. Good volumes and price growth for all key products was achieved. Sales and operating profit in Finland were behind 2018 impacted by reduced demand in the residential and infrastructure sectors. Lower cement and readymixed concrete volumes were partly offset by project-related aggregates sales growth.Europe WestSales and operating profit in France benefited from favourable trading conditions as good underlying demand in the non-residential and civil engineering sectors resulted in volumes growth and a positive pricing environment for key products. Ongoing performance improvement initiatives and cost savings also positively impacted profitability. Sales in the Benelux were ahead of 2018, with a positive contribution from our Dutch precast businesses reflecting good demand in the residential sector, while improved readymixed concrete pricing was partly offset by weaker volumes in the Belgian precast business. Excluding the impact of one-off income in 2018, operating profit finished ahead of prior year.In Denmark, sales were ahead of 2018, as the business benefited from good demand aided by additional production capacity together with progress in pricing. Operating profit finished broadly in line with prior year impacted by the non-recurrence of one-off income in 2018. In Spain, increased demand resulted in improved readymixed concrete volumes and prices and despite lower cement volumes, sales and operating profit finished ahead of 2018. Lower cement and readymixed concrete volumes resulted in lower sales for Switzerland; however, operating profit benefited from cost savings and good delivery of performance initiatives. In Germany, sales were marginally ahead of 2018 while operating profit was behind as cement pricing progress was offset by lower volumes in our lime business.Europe EastTrading in Poland was strong with a good overall performance for 2019. Robust cement volumes and positive pricing supported by cost savings initiatives resulted in operating profit ahead of 2018. In Ukraine, continued growth in cement volumes reflected good market demand. Strong price progression was partly offset by slightly higher input costs and sales and operating profit finished ahead of 2018.Stable economic and construction growth in 2019 contributed to improved sales in Hungary and Slovakia. Operating profit was ahead of 2018, mainly as a result of advances in pricing, cost optimisation and savings initiatives across the businesses. In Serbia, sales and operating profit were ahead of 2018 with higher cement volumes driven by continued strong construction activity, pricing progress and cost benefits of enhanced production facilities. In Romania, results were ahead of 2018 due to improved pricing combined with stronger volumes in cement and readymixed concrete.AsiaDomestic demand for cement in the Philippines remained strong; however, delays in government infrastructure spending impacted cement volumes. While overall sales were in line with prior year, advances in pricing, performance improvement initiatives and cost savings resulted in operating profit well ahead of 2018.CRH’s operations include a 26% stake in Yatai Building Materials in North Eastern China. Strong volumes growth was only partly offset by lower prices, driven by intense local competition and lower margins on exports, resulting in higher operating profit than prior year. On 31 December 2019, the Group divested of its share of the Indian joint venture, MHIL, for a total deferred consideration of €0.3 billion. During the year, reduced demand in housing negatively impacted cement demand in MHIL’s key markets in Andhra Pradesh and Telangana; despite this, operating profit was ahead of prior year as pricing improved.* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.Operations Review - Europe MaterialsPrior 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 the Europe Materials Division was mixed with positive results in our operations in Ireland, the Benelux, Denmark and Poland, with more challenging trading conditions in the Philippines and UK. The year-on-year organic sales growth reflected continued price progression, however cost inflation, which was a feature across all markets resulted in a decrease in operating profit.Tarmac (UK)Despite challenging weather conditions earlier in 2018 and ongoing political and economic uncertainty as to the impact on construction activity following the Brexit vote, sales in our Tarmac business were ahead of 2017, underpinned by growth in contracting sales and more modest growth in other materials. Overall, operating profit was behind compared with 2017 as continued progress on performance improvement measures was offset by increased input costs and a challenging market environment.Europe 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 2017, as the business benefited from good underlying demand and progress in pricing achieved during 2018. In Spain, results advanced on 2017, with improved pricing in cement and readymixed concrete partly offset by lower cement volumes, due to severe weather at the beginning of 2018 and the conclusion of a major project during 2018.Despite a significant increase in cement volumes in Switzerland, benefiting from solid construction growth, sales and operating profit were behind 2017 due to a decline in cement and readymixed concrete prices, reflecting strong competition. In Germany, improved cement pricing as well as the contribution of our lime business Fels, resulted in sales and operating profit ahead of 2017.Europe EastTrading in Poland was ahead of 2017 with good performance in all businesses. Healthy volumes were supported by the economy and the construction sector, which continued to grow at high rates. In addition, good price development was achieved across all activities in a competitive market, contributing to the positive performance in 2018. In Ukraine, pricing improved in all businesses in 2018 resulting in organic sales finishing 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 2017, mainly as a result of higher volumes across the businesses.In Serbia, cement and readymixed concrete volumes increased compared to 2017 and overall sales and operating profit were ahead, supported by performance improvement initiatives. In Romania, after a slow start to 2018, affected by very poor weather conditions, cement volumes recovered and were ahead of 2017. In addition good pricing and margin progression contributed to sales and operating profit growth.AsiaAgainst a backdrop of strong domestic demand and accelerated government infrastructure spending, the Philippine economy continued to perform despite inflationary pressures and tighter global financial conditions. Organic revenue performance advanced due to positive prices and ongoing demand from all segments. However, notwithstanding this, operating profit was significantly behind 2017 primarily due to higher fuel and power costs, which were only partially offset by continued commercial excellence and operational performance initiatives.Cement demand remained subdued in Northeast China. Price increases partially offset lower volumes and increased coal prices, however Yatai Building Materials’ 2018 performance was lower than 2017. Strong growth in MHIL volumes in India was driven mainly by a sustained pick up in infrastructure spend in Andhra Pradesh and Telangana. However, prices continued to be under pressure due to competition and large institutional sales. Increased fuel prices were exacerbated by adverse foreign exchange rates. As a result, MHIL ended 2018 with operating profit lower than 2017. ResultsAnalysis of change€ million2017ExchangeAcquisitionsDivestmentsPension Credit1Organic2018% changeSales revenue7,338-90+511-53-+3368,04210%EBITDA (as defined)*891-16+65-1-20+179365%Operating profit493-10+36--20-12487-1%EBITDA (as defined)*/sales12.1%11.6%Operating profit/sales6.7%6.1%1Swiss pension plan service credit of €20 million in 2017ResultsAnalysis of change€ million2018ExchangeAcquisitionsDivestmentsLeasesOrganic2019% changeSales revenue 8,042 +70 +35 -27 - +374 8,4946%EBITDA (as defined)*936+10+2+1+113+17 1,079 15%Operating profit487 +6 -1+2+16+45 55514%EBITDA (as defined)*/sales 11.6%12.7% Operating profit/sales6.1%6.5% →→OverviewStrategy ReviewGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance48CRH ANNUAL REPORT AND FORM 20-F I 201949CRH ANNUAL REPORT AND FORM 20-F I 2019Our businesses have deep technical expertise and the ability to customise solutions with international market reach. With leadership positions in high growth segments, our strategy is to build and grow scalable businesses, balanced across products, geographies and end-use sectors, increasing the penetration of our range of value-added products and creating competitive advantage through strong customer relationships, brand leadership and service. Our development focus aims to deepen our position in existing business product groups and to broaden our differentiated product portfolio through new growth platforms that are exposed to global megatrends. By operating as one global Building Products Division we can adapt and grow as our markets continue to evolve. How We Structure Our Operations Our Building Products Division is structured around four core product groups: Architectural Products, Building Envelope, Infrastructure Products and Construction Accessories. The Division employs approximately 24,450 people at over 490 locations across 19 countries. Creating Value Through Our Global ScaleOUR NEW GLOBAL DIVISIONIn 2019, CRH simplified its global organisation structure to three operating Divisions; Americas Materials, Europe Materials and a new global Division for Building Products. Forming this new global Division, CRH recognised the significant value creation potential of bringing together related businesses from different parts of the world under a more unified strategy and structure for performance improvement, growth and people development.CONSTRUCTION ACCESSORIESOur Construction Accessories are high-value innovative products and engineered solutions for challenging construction projects. 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.BUILDING ENVELOPEOur Building Envelope 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.ARCHITECTURAL PRODUCTSOur Architectural Products business is a leading supplier of concrete masonry, hardscape and related products for residential, commercial & DIY construction markets. This includes pavers, kerbs, retaining walls and slabs, patio products and decking, lawn and garden products as well as bagged dry-mix cements for both private and public use.INFRASTRUCTURE PRODUCTSCRH’s Infrastructure Products businesses manufacture 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.CRH’s Europe Distribution businesses supplied building materials to professional builders, specialist heating and plumbing contractors, and DIY customers through a network of trusted local and regional brands across a number of mature markets in Western Europe.In July 2019, following a comprehensive strategic review, the Group entered into a sales agreement to divest of its Europe Distribution business. The transaction closed on 31 October 2019. In accordance with IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations, the business is reported as discontinued operations for 2019 (see note 3 to the Consolidated Financial Statements). Europe Distribution consisted of three primary business areas: German DIY (Do-It-Yourself), General Builders Merchants (GBM) and Sanitary, Heating and Plumbing (SHAP). Building Products (Discontinued Operations) Building Products CRH’s Building Products Division is a leading manufacturer and supplier of highly engineered and high value-added building products in 19 countries around the world. What We DoBuilding Products is a new Division established by CRH in 2019 as part of our strategy to create a more simplified and focused business which is better positioned to exploit opportunities presented by economic development, changing demographics, sustainability and other evolving trends in construction markets globally.The Division brings together related products businesses in Europe, North America and Asia Pacific across four strategic product groups for growth: Architectural Products, Building Envelope, Infrastructure Products and Construction Accessories.These businesses are leading suppliers of a wide range of high quality, value-added, innovative building products and solutions, spanning multiple construction applications from residential and commercial structures to public spaces and infrastructure. Typically, they involve a high focus on understanding the needs of our customer, more process and product innovation and a portfolio of products that is exportable to a range of markets globally. From the glazing systems that hold glass in place, to the masonry supports that keep walls standing, our products play a vital role in completing construction projects big and small. They include the products that house the electronics that keep roads moving and connect water and electricity to homes, offices and factories. We supply the pavers, blocks and patio products used to create outdoor living spaces and pave city centres.Bringing these related products together under one Division provides important opportunities to better leverage our scale, capabilities and people to bring more consistent focus on value. How We Create ValueEstablishing a single Building Products Division enables us to place a consistent focus on value creation and drive sustainable growth. The Division is organised around similar product groups designed to leverage scale, drive strategy and performance excellence and advance our digital and innovation capabilities globally. 27%Operating Profit66824%EBITDA (as defined)*96120%Net Assets25,187% of Group25%Sales6,250€ millionResidentialInfrastructureNon-ResidentialSECTOR EXPOSURE1END-USE1BUILDING PRODUCTSPRODUCTS145% Architectural Products 10% Construction Accessories20% InfrastructureProducts25%Building Envelope* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.1. Products, sector exposure and end-use balance are based on sales.2. Net Assets at 31 December 2019 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 226.45%10%45%RMINew55%45%→→OverviewStrategy ReviewGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance50CRH ANNUAL REPORT AND FORM 20-F I 201951CRH ANNUAL REPORT AND FORM 20-F I 2019Current Year 2019Operations Review - Building Products Prior Year 2018(Continuing Operations)* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.The commentary below excludes the trading performance of Europe Distribution which, following its divestment, has been classified as a discontinued operation. Its trading performance is detailed on page 52.Following the disposal of Europe’s DIY business in Benelux, Building Products sales declined 2% in 2018. However, the Division experienced underlying growth, with organic sales 3% ahead of 2017. Targeted price increases, operational efficiencies, procurement initiatives and overhead cost reductions all helped deliver improved margins despite cost increases in raw materials, labour, and logistics. Operating profit increased by 4% on an organic basis as a result of the improved sales performance and a continued focus on cost optimisation and margin enhancement.Construction activity in the US benefited from the improved macroeconomic backdrop; however, US volumes were impacted by bad winter and wet fall weather, continued supply-side factors such as labour and construction cost inflation, and competitive markets. Growth was seen along the West Coast of the US and in parts of the South due to good residential and non-residential construction activity, partly offset by softness in Canada and parts of the Northern US, due to weather and slower growth markets. The Netherlands saw a significant improvement in performance as the economy expanded. Activity levels in Australia were good and the Polish market also benefited from a strong increase in demand. Sales in the key markets of Germany and the UK remained stable, where the UK incurred some headwinds on profitability driven by the under-performance of the now divested Plaka UK business and a changing customer mix.Architectural ProductsIn North America, Architectural Products saw modest sales growth in 2018, benefiting from healthy residential RMI demand, but volumes were limited by adverse weather, as well as contract labour shortages. Demand for most products was particularly strong along the West Coast, which together with commercial initiatives, drove a small increase in like-for-like sales compared with 2017. Overall, the business saw solid operating profit growth due to acquisition results and cost reduction initiatives, which more than offset the unfavourable impacts from rising logistics and input costs.As a result of a favourable economic environment in certain key markets, sales and operating profit in Europe finished ahead of 2017. In Poland, operations experienced strong demand and an improvement in performance, through increased sales of higher margin products and overall price improvement. Despite the disruptive weather conditions early in 2018, sales in the German business finished ahead of 2017, however, operational challenges and an unfavourable sales mix resulted in operating profit below 2017. The French business was divested in November. The Benelux operations benefited from higher demand in public markets.The Shutters & Awnings business recorded a 1% increase in sales compared with 2017, whilst operating profit remained flat. Operations in the Netherlands were assisted by a positive economic environment, supported by favourable weather conditions, while a focus on improvement initiatives and an increased online presence in the UK business resulted in sales and margin growth. Our German businesses were impacted by lower margins due to increased input and labour costs in a more competitive environment.Building EnvelopeNon-residential building activity in 2018 was muted by higher building materials costs, increasingly tight skilled labour markets and higher interest rates. Building Envelope saw relatively flat organic revenue in 2018 because of a strategic shift away from larger projects. However, increased operating profits were achieved due to improved trading results at its metals and glazing hardware businesses and the inclusion of acquisition results, which more than offset the effects of higher labour and raw material costs.Infrastructure ProductsSales growth in North America advanced in 2018 due to good demand for both private construction and public infrastructure, particularly in the Southeast, West and Mountain states of the US. Our Infrastructure Products business recorded significantly increased operating profits, due to reductions in fixed overheads, better operational execution, and good acquisition performance. Infrastructure Products was also able to pass on price increases to offset input cost inflation, and the business saw backlog growth in 2018.Network Access Products had another year of growth in sales and operating profit. The Australian business experienced growth driven by a robust construction market. The French market also saw improvements, while the underlying performance in the UK was behind 2017 due to a change in customer mix, which was partly offset by an acquisition in the second quarter of 2018. The Perimeter Protection business showed a solid increase in sales and operating profit. In the permanent fencing business, performance was driven by the Netherlands, which benefited from the strong economy, while improvement in the mobile fencing business was driven by strong trading across most of our key markets.Construction AccessoriesIt was another year of solid organic sales and operating profit growth, primarily driven by improvements in Western European markets. In Germany, labour shortages on building sites and resulting project delays impacted overall performance. Excluding the divested Plaka business, trade in our UK business saw growth. The Australian business benefited from demand in the high-rise residential market and was boosted by an acquisition earlier in 2018. The export market remained important but challenging due to further project delays, however performance in the Chinese and US markets improved.DIYWhile DIY sales in the Benelux 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. The business was divested in July 2018.The table above and commentary below exclude the trading performance of Europe Distribution which, following its divestment, has been classified as a discontinued operation. Its trading performance is detailed on page 52.Building Products saw continued organic growth in 2019, with sales 2% ahead of 2018, while operating profit increased organically by 10% as a result of increased sales and continued emphasis on margin optimisation. Initiatives, which included production efficiencies, commercial excellence, procurement savings and overhead cost control also helped to deliver improved margins. Solid macroeconomic conditions in the US continued to provide a positive backdrop for construction demand. Volumes growth, especially new residential construction activity, was limited by higher interest rates entering 2019, as well as continued supply-side factors such as labour availability and construction cost inflation. Similar to prior years, growth primarily occurred along the West Coast, Southeast and South Central US due to good non-residential construction activity and positive residential RMI demand. In Europe, markets in the Netherlands and Poland continued to benefit from good demand. Despite Brexit uncertainties, our businesses in the UK showed resilience with solid performances in the residential and telecoms sectors. Results in Germany were impacted by slower markets and increased competition.2019 saw further refinement of the portfolio, including the divestment of Europe Distribution, the Shutters & Awnings and Perimeter Protection businesses in Europe, together with 16 bolt-on acquisitions, primarily at our Infrastructure and Architectural Products businesses.Architectural ProductsArchitectural Products in North America experienced good sales growth, capitalising on solid residential RMI demand and favourable weather in most markets, especially in Eastern US. Product mix optimisation and targeted selling prices helped to recover input cost inflation in most markets, but trading was partly offset by challenging market conditions in Canada. Overall, the business delivered strong operating profit growth, bolstered by operating efficiencies, contributions from recent acquisitions and cost reduction initiatives.The European businesses recorded strong sales and profits in the first half of 2019, supported by good weather, operational improvements and selling price advancement. Demand slowed during the second-half in Western Europe, with wet weather being a contributory factor. Overall sales and profits for the year were mixed, with a strong performance in Poland partly offset by some softness in Western Europe. The Shutters & Awnings business, which was divested in June, recorded results similar to the comparable period in the prior year, with the positive impact of more benign weather conditions in the first half of the year offset by increased competition in Germany.Building EnvelopeBuilding Envelope saw like-for-like sales growth driven by good demand and increased selling prices in our C.R. Laurence and aluminium glazing businesses. Sales growth was limited by competitive markets in the fabricated glass business. In addition to revenue growth, higher operating profits were achieved due to more stable aluminium input costs, a strategic shift away from larger lower margin projects and focus on self-help initiatives.Infrastructure ProductsOur Infrastructure Products business in North America recorded healthy sales growth in 2019 due to good demand for both private construction and public infrastructure, particularly in the Southeast and West regions of the US. Building on progress from the prior year, Infrastructure Products was successful at delivering price increases in excess of input cost inflation. The business recorded significantly increased operating profit due to improved operational efficiencies, commercial initiatives and overhead cost control. The business also experienced another year of backlog growth in 2019.Our European and Australian business (formerly Network Access Products) delivered another year of solid growth. Performance in Europe was well ahead of the prior year due to increased sales to the telecom and rail sectors. However, Australian sales were below prior year due to challenging market conditions in the telecom sector. Overall operating profit finished ahead of 2018. The Perimeter Protection business was divested in September. Compared with the same period in 2018, the business recorded lower sales while operating profits advanced due to cost improvements.Construction AccessoriesThe US business achieved strong organic sales and operating profit growth due to increased volumes and prices against the backdrop of a solid US non-residential market. The Construction Accessories business in Europe recorded a 4% increase in like-for-like sales compared with prior year, along with higher operating profit, driven by commercial excellence initiatives and positive market trends in certain geographies. Revenue growth was driven by the UK, France, the Netherlands and Switzerland. Our German business was impacted by increased competition and market uncertainty during the second half of the year. ResultsAnalysis of change€ million2017ExchangeAcquisitionsDivestmentsOrganic2018% changeSales revenue6,345-198+209-269+1616,248-2%EBITDA (as defined)*769-26+23-23+447872%Operating profit576-20+13-17+23575-EBITDA (as defined)*/sales 12.1%12.6%Operating profit/sales9.1%9.2% ResultsAnalysis of change€ million2018ExchangeAcquisitionsDivestmentsLeasesOrganic2019% changeSales revenue 6,248 +234 +231 -576 - +113 6,250-EBITDA (as defined)*787+33+27-48+100+6296122%Operating profit575 +25 +10-16+15+59 66816%EBITDA (as defined)*/sales 12.6%15.4% Operating profit/sales9.2%10.7% →→OverviewStrategy ReviewGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexBusiness Performance52CRH ANNUAL REPORT AND FORM 20-F I 201953CRH ANNUAL REPORT AND FORM 20-F I 2019Stradus, part of CRH’s Building Products Division, supplied c.1,000 Hydro Lineo XL grass tiles to pave the surroundings of an office complex in Doornik, Belgium. The lattice structure allows water to slowly drain away, keeping the surface free from water while not overloading drainage systems.Operations Review - Building Products Prior Year 2018Europe 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 2018. Operating profit was further impacted by the non-recurrence of the one-off Swiss pension scheme credit in 2018.General Builders MerchantsOur 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 2017 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 2018 and increased competition from new entrants.Sanitary, Heating and Plumbing Our SHAP business in Germany continued to realise growth and gained further market share, benefiting from 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 2017, due to continued challenges in the residential market and increased competition.Our SHAP business completed acquisitions in Germany and Belgium in the second half of 2018. These bolt-on acquisitions had a modest impact on sales and operating profit in 2018.DIY In Germany, our DIY business recovered from the inclement weather conditions in the beginning of 2018 and realised stable sales and profit levels.(Discontinued Operations)Current Year 2019The commentary below refers to the trading results of Europe Distribution for the first ten months of 2019 prior to its divestment on 31 October 2019.Europe Distribution experienced modest sales and profit growth during 2019 but with mixed performances across the businesses. Overall sales were slightly ahead with a strong contribution from the GBM business in Germany, which benefited from increased end-user demand. In addition, the SHAP businesses in Germany and Belgium continued to gain market share in consolidating markets. These positive developments were partly offset by difficult market conditions in Switzerland and slowing residential demand in the Netherlands. General Builders MerchantsThe GBM business showed 2% sales growth in the first ten months of 2019, with stable operating profit. Despite slowing residential demand in the Netherlands, overall sales in the Dutch business were marginally ahead of 2018 and, with continued focus on performance improvement projects, operating profit was also ahead. The German business showed sales growth against an improving RMI market backdrop; however, with an increasing portion of demand coming from lower margin direct sales, margins were under pressure which resulted in operating profit being slightly behind. Market conditions in Switzerland remained challenging as increased competition on trade margins more than offset stabilising demand. The French business benefited from an improving residential sector while sales in the Austrian business declined due to market pressure in all channels; however, operating profit improved due to continued focus on our cost base. Sanitary, Heating & PlumbingContinued sales growth from additional pick-up locations and further investments in showrooms led to market share improvement in our German and Belgian SHAP businesses. Operating profit was ahead, benefiting from increased volumes together with operational improvement and procurement initiatives, partly offset by declining results in Switzerland.DIYThe substantial part of our European DIY footprint was disposed in July 2018. The remaining business, part of our overall German Distribution operations, was divested with the wider Europe Distribution business in October. Results in 2019 prior to disposal were positive with like-for-like sales ahead of 2018 for the ten months to October.→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE54CRH ANNUAL REPORT AND FORM 20-F I 201955CRH ANNUAL REPORT AND FORM 20-F I 2019HALFEN, part of CRH’s Building Products Division, supplied 200 panel anchors to affix the facade of the new Pavilion 6 of the Paris Expo Porte de Versailles exhibition centre. The centre, which is Europe’s largest conference venue, welcomes more than 7.5 million visitors and hosts 200 events each year.Board of Directors 56 Corporate Governance Report 60 Directors’ Remuneration Report 74Directors’ Report 102 Principal Risks and Uncertainties 10856 - 113GOVERNANCE→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE56CRH ANNUAL REPORT AND FORM 20-F I 201957CRH ANNUAL REPORT AND FORM 20-F I 2019Board of DirectorsSkills 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. Senior Independent DirectorAppointed to the Board: January 2017Nationality: Canadian Age: 66Committee membership:Gillian L. Platt N R SSkills 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, and Eurobank Ergasias S.A., a bank based in Athens, Greece which has operations in Greece and several other European counties.Non-listed: Not applicable. Chairman Appointed to the Board: March 2018Nationality: Irish Age: 61Committee membership:Richie BoucherAq F NS RSkills and experience: Albert joined CRH in 1998. Prior to joining CRH, he was Chief Operating Officer with a private equity group. While at CRH he has held a variety of senior positions, including Finance Director of the Europe Materials Division, Group Development Director and Managing Director of Europe Materials. He became Chief Operating Officer in January 2009 and was appointed Group Chief Executive with effect from 1 January 2014.Qualifications: FCPA, MBA, MBS.External appointments: Listed: Non-executive Director of LyondellBasell Industries N.V., one of the largest plastics, chemicals and refining companies in the world.Non-listed: Not applicable.Albert ManifoldChief Executive Appointed to the Board: January 2009Nationality: Irish Age: 57Committee membership: S AqSenan MurphySkills and experience: Senan has extensive experience in international business across financial services, banking and renewable energy. He joined CRH from Bank of Ireland Group plc where he was the Chief Operating Officer and a member of the Group’s Executive Committee. He previously held positions as Chief Operating Officer and Finance Director at Ulster Bank, Chief Financial Officer at Airtricity and numerous senior financial roles in GE, both in Ireland and the US. Qualifications: Fellow of Chartered Accountants Ireland. Senan also holds a Bachelor of Commerce and Diploma in Professional Accounting from University College Dublin.External appointments: Listed: Not applicable. Non-listed: Not applicable. Group Finance Director Appointed to the Board: January 2016Nationality: Irish Age: 51Committee membership: F Aq *Audit Committee Financial Expert as determined by the Board.Non-executive Director Appointed to the Board: December 2019Nationality: Dual United States and Irish Age: 60 Committee membership:Shaun KellySkills and experience: Shaun was until September 2019, the Global Chief Operating Officer of KPMG International, where he was responsible for the execution of the firm’s global strategy and for the delivery of various global initiatives. Over a thirty-year career with KPMG, the majority of which was spent in the US, he held a variety of senior leadership positions, including Partner in Charge, US Transaction Services (2001-2005), Vice Chair and Head of US Tax (2005 to 2010) and Vice Chair Operations and Chief Operating Officer Americas (2010 to 2015), before his appointment as Global Chief Operating Officer in 2015.Qualifications: Fellow of Chartered Accountants Ireland and a US Certified Public Accountant. Shaun also holds a Bachelor of Commerce and Diploma in Professional Accounting from University College Dublin and an honorary doctorate from Queen’s University Belfast.External appointments: Listed: Not applicable. Non-listed: Shaun holds a number of non-profit board memberships. * ANon-executive Director Appointed to the Board: September 2019Nationality: Swedish Age: 63Committee membership:Johan KarlströmSkills and experience: Johan was President and Chief Executive Officer of Skanska AB, a leading multinational construction and project development company until 2017. Over a thirty-year career with Skanska, he held a variety of leadership roles in Europe and America, before becoming President and Chief Executive in 2008. He also served as President and Chief Executive Officer of BPA (now Bravida), a listed mechanical and installation group from 1996 to 2000.Qualifications: Masters degree in Engineering from the KTH Royal Institute of Technology, Sweden.External appointments: Listed: Non-executive Director of Sandvik AB. Non-listed: Not applicable. A R SBOARD COMMITTEES A F AqAcquisitionsAuditFinance Nomination & Corporate Governance Remuneration N R SSafety, Environment & Social ResponsibilityCommittee Chairman→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE58CRH ANNUAL REPORT AND FORM 20-F I 201959CRH ANNUAL REPORT AND FORM 20-F I 2019 *Audit Committee Financial Expert as determined by the Board.Board of Directors - continued *Audit Committee Financial Expert as determined by the Board.Skills and experience: Mary is Chairman, Chief Executive Officer and President of Johns Manville Corporation, a Berkshire Hathaway company, which is a leading global manufacturer of premium-quality building products and engineered specialty materials. Over nearly 40 years with Johns Manville she has held a wide range of global leadership roles, encompassing responsibility for business management and strategic business development and was also Chief Financial Officer. Mary was until recently a non-executive Director of Ply Gem Holdings Inc., a leader in exterior building products in North America, and lead Director of CoBiz Financial Inc.Qualifications: Bachelor’s degree in Finance from the University of Colorado; MBA from the University of Denver.External appointments: Listed: Not applicable. Non-listed: Chairman, Chief Executive Officer and President of Johns Manville Corporation and member of the Board of Trustees of the University of Denver.Non-executive Director Appointed to the Board: October 2018Nationality: United States Age: 61Committee membership:Mary K. RhinehartSkills and experience: Siobhán is Group Managing Director of Glanbia plc, a global nutrition company with operations in 32 countries, a position she has held since 2013. She has been a member of the Glanbia Board since 2009 and was previously Finance Director, a role which encompassed responsibility for Glanbia’s strategic planning. Prior to joining Glanbia, she worked with PricewaterhouseCoopers in Dublin and Sydney.Qualifications: Fellow of Chartered Accountants Ireland; Bachelor of Commerce; Diploma in Professional Accounting from University College Dublin.External appointments: Listed: Group Managing Director of Glanbia plc. Non-listed: Director of the Irish Business Employers Confederation (IBEC). Non-executive Director Appointed to the Board: December 2018Nationality: Irish Age: 56Committee membership:Siobhán Talbot*Non-executive Director Appointed to the Board: January 2015Nationality: Irish Age: 66Committee membership:Patrick J. KennedySkills 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. N R S A N SSkills and experience: Lucinda spent the majority of her career in investment banking, including 21 years in UBS Investment Bank and its predecessor firms where she worked until 2007. She held senior management positions in the UK and the US, including Global Head and Chairman of UBS’ Equity Capital Markets Group and Vice Chairman of the Investment Banking Division.Qualifications: Masters in Philosophy, Politics and Economics and a Masters in Political Science.External appointments: Listed: Non-executive Director of Ashtead Group plc, Greencoat UK Wind plc and ICG Enterprise Trust plc. Non-listed: Non-executive Director of the British Standards Institution. Non-executive Director Appointed to the Board: March 2015Nationality: British Age: 58Committee membership:Lucinda J. Riches A F AqSkills and experience:Henk has a background in distribution, wholesale and logistics. Until 2010, he was Chief Executive Officer at Pon Holdings B.V., a large, privately held international company which is focused on the supply and distribution of passenger cars and trucks, and equipment for the construction and marine sectors. He was also a member of the Supervisory Boards of the Royal Bank of Scotland N.V., the food-retail group Detailresult Groep, the retail group Blokker Holding B.V. and Chairman of the Supervisory Board of Stork Technical Services B.V.Qualifications: Masters degree in Dutch Law; PMD Harvard Business School.External appointments: Listed: Not applicable. Non-listed: Chairman of Koole Terminals B.V. Henk also holds several non-profit board memberships.Non-executive Director Appointed to the Board: February 2014Nationality: Dutch Age: 64Committee membership:Henk Th. Rottinghuis A S Aq A F Aq*Skills and experience: Heather Ann is a former Managing Director Ireland of Reckitt Benckiser and Boots Healthcare and was previously a non-executive Director of Bank of Ireland plc and IDA Ireland.Qualifications: BComm, MBS.External appointments: Listed: Non-executive Director of Greencore Group plc, Jazz Pharmaceuticals plc and Uniphar Group plc.Non-listed: Director of the Institute of Directors in Ireland. Non-executive Director Appointed to the Board: February 2012Nationality: Irish Age: 58Committee membership:Heather Ann McSharry R A NBOARD COMMITTEES A F AqAcquisitionsAuditFinance Nomination & Corporate Governance Remuneration N R SSafety, Environment & Social ResponsibilityCommittee Chairman→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE61CRH ANNUAL REPORT AND FORM 20-F I 2019SESR Committee TopicsTable 1SafetySustainabilitySocial ResponsibilityReportingExamples of CRH Sustainability InitiativesTable 2Corporate Governance ReportThe Board believes that sustainability and corporate social responsibility are fundamental to CRH being the leading building materials business in the world.Chairman’s OverviewThe Corporate Governance report contains details of CRH’s governance structures and highlights areas of focus for the Board and its Committees during 2019. In keeping with prior years, details of CRH’s general governance practices are available in the governance appendix on CRH’s website, www.crh.com (the ‘Governance Appendix’)1. CRH implemented the 2018 UK Corporate Governance Code (the ‘2018 Code’) and this Report explains how the principles of the 2018 Code have been applied. A copy of the 2018 Code can be obtained from the Financial Reporting Council’s website, www.frc.org.uk.Shareholder EngagementAs Chairman, a core part of my role is shareholder engagement. Therefore, following the announcement of my appointment as Chairman Designate in September 2019, I contacted CRH’s largest shareholders, representing over 50% of CRH’s issued share capital, offering to meet with them. In addition to an initial introduction, the purpose was to set out my thinking in relation to the main areas of focus for the Board and, equally importantly, to gain an understanding of their perspectives on CRH. I very much appreciate that a significant number of shareholders, representing around 30% of the shares in issue, gave freely of their time for this engagement. The priority areas of Board focus that I discussed with shareholders in those meetings are set out in my introduction to this Annual Report and Form 20-F on page 4. The feedback I received was consistent in a number of respects, with support for CRH’s strategy and a widespread view that CRH had a strong and effective management team led by our Chief Executive, Albert Manifold, alongside a recognition of the importance of having succession plans in place for key executive roles. Shareholders also expressed a range of views on topics such as the optimal approach to capital allocation, the Group’s organisation structure and portfolio, and CRH’s remuneration structures. There was a good understanding of the Board’s approach to sustainability, and I was particularly pleased to hear that shareholders were very complimentary in respect of our approach to this critical area and positive regarding the opportunities for CRH to differentiate itself from other companies in the sector. The detailed feedback from the meetings has been considered by the Board and relevant Committees.Safety, Environment and Social Responsibility Committee In last year’s Corporate Governance Report, Nicky Hartery reported that the Board had set up a new permanent Committee, the Safety, Environment & Social Responsibility (SESR) Committee, to ensure that sufficient time, energy and focus was allocated to these strategically important matters. A detailed summary of the principal topics considered by the Committee in 2019 is set out in table 1. During 2019, the Board and the SESR Committee monitored developments in the area of safety, including considering reports on the background to (and learnings from) serious accidents, the implementation of recommendations from an external advisory panel, the rollout of CRH’s frontline leadership programme, the implementation of policies in relation to contractor management and energy isolation and the ongoing work to reinforce roles, responsibilities and expectations in the area of safety. Further details on the Group’s approach to safety, and our ongoing objective of zero fatalities and ambition of zero harm at every location across our business, are set out in the Sustainability section on pages 20 to 25.Given that the topic of sustainability has become a key element of shareholder and wider stakeholder engagement, and the increased focus on workforce engagement and corporate purpose following the introduction of the 2018 Code, the section below highlights some of the important initiatives in these areas that fall under the remit of the SESR Committee. The various ways in which CRH engages with its stakeholders is summarised in the Sustainability section on page 25. Feedback from stakeholder engagement is reported to, and carefully considered by, the Board.Sustainability The Board believes that sustainability and corporate social responsibility are fundamental to CRH being the leading building materials business in the world. CRH is ranked amongst industry leaders by ESG rating agencies. In addition, many of our operating companies have been recognised for excellence in this area. Our 2030 sustainability targets, which have recently been agreed, are set out on page 21 in the Sustainability section.I am pleased to report that we have achieved one year ahead of time our 2020 target of a 25% reduction in specific net CO2 cement plant emissions, compared with 1990 levels. Looking forward, our stretching and industry leading 2030 CO2 reduction targets have been independently verified to be in line with the Paris Climate Agreement. Our Chief Executive, Albert Manifold was the inaugural president of the Global Cement & Concrete Association (GCCA). Sustainable development of our industry is at the core of the GCCA’s work. We strongly believe that collaboration like this, both within and outside of our industry, is key to addressing global construction challenges and sustainable development goals while ensuring the value of concrete as a sustainable construction material is recognised.Inclusion & DiversityCRH’s inclusion and diversity (I&D) vision is set out in table 4 on page 62. The SESR Committee is responsible for working with management, and monitoring progress, in relation to I&D below Board level. The approach to I&D is based on four initial workstreams: • Communication; • Education & Awareness; • People & Practices; and • Data & Measures and includes the development of programmes to address unconscious bias, toolkits to supplement recruitment guidelines, best practices and KPIs. The Committee receives regular reports on progress towards each priority objective on the I&D roadmap. Workforce EngagementThe Board has designated the SESR Committee with responsibility for stakeholder engagement, including with the workforce. Given the footprint of CRH with c. 80,300 employees in 30 countries, we believe this is the best and most effective way of ensuring that the views of employees are understood and are taken into consideration in our decision-making process.1. The Governance Appendix is published in conjunction with the Directors’ Report in compliance with Section 1373 of the Companies Act 2014. For the purposes of Section 1373(2) of the Companies Act 2014, the Governance Appendix and the risk management disclosures on pages 26 to 29 and 108 to 113 form part of, and are incorporated by reference into, this Corporate Governance Report. The primary (premium) listing of CRH plc is on the 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 72.Richie BoucherChairman• Regular safety updates covering policies, action plans, and the background, impact and required remediation actions in relation to any serious incidentsSwitzerland• At one of our Jura Cement plants, over 80% of the fuel needed for cement manufacture is supplied by alternative fuels• 2020 and 2030 sustainability targets• The role of industry groups in the area of sustainability• Trends in the built environment• Inclusion & Diversity• Stakeholder engagement roadmap, including workforce engagement• Corporate purpose• Annual Sustainability Reports• Updates in relation to stakeholder and regulatory expectationsCanada• We are working with an organisation named Carbon8 on trialling an accelerated carbonation project to generate a lightweight aggregate by using cement plant flue gas in combination with cement kiln dust, where the CO2 in the flue gas is reacted with the cement kiln dust and pelletised to form lightweight aggregateNetherlands• Our subsidiary Cementbouw through its ‘Concrete remains Concrete’ initiative is recycling construction waste in its products and aims to reuse 100% of available concrete rubble by 2025, which would replace up to 1 million tonnes of sand and gravelUK• Our subsidiary Tarmac is a participant in LEILAC, Low Emissions Intensity Lime and Cement, an EU project developing a breakthrough calciner to directly separate and capture 95% of the CO2 released from limestone when being transformed into clinker→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE62CRH ANNUAL REPORT AND FORM 20-F I 201963CRH ANNUAL REPORT AND FORM 20-F I 2019Our ValuesTable 3At CRH, our values unite us in the way we work, every day, all over the world.To facilitate its work in this area, which will evolve over time, the Committee has identified a number of key areas for regular updates and reporting.The SESR Committee has also commenced a number of important initiatives:• In addition to the interaction Board members have with employees during visits to operations in Europe and the US, the Committee utilised the opportunity during a Board visit to operations in Spain to pilot a session with employees in an open forum to discuss their views of CRH. The conversation focussed on the importance of safety, training and development, I&D, the environment and engaging with the community. It is intended that there will be similar engagements in other countries or regions to focus on themes relevant to employees, and on culture and values in particular;• A workforce engagement project team, made up of a cross section of employees from across our global business, has been established under the Chief Executive’s sponsorship. This is a key initiative as only a small number of such projects operate globally each year to address critical business issues or opportunities. The team has been tasked with recommending priorities and developing an implementation plan. The outputs will be reported to the SESR Committee; and• During 2020, members of the SESR Committee will have opportunities to attend employee development programmes, forums, conferences and other events in their local regions. Additional information on training provided to employees on the CoBC and relevant compliance policies and on the role of Internal Audit in investigating material matters raised by employees, is set out on page 72.Corporate PurposeCRH's purpose is expressed in our values, set out in table 3 below, and is delivered through our strategy, which is summarised on page 14. It encompasses many different aspects, ranging from propositions for investors, employees, suppliers and customers, to the sustainable operations of our companies and the products we manufacture. Connected to all of these elements, and to the articulation of CRH's purpose, is CRH's brand. The SESR Committee is currently working with management on a project to connect these different but complementary concepts. The aim is to set out CRH's purpose in a way that captures our aspirations beyond financial returns, communicates the unique nature of CRH, inspires our people, guides our actions, is true to our culture and underpins our dialogue with our stakeholders. In addition, the work on corporate Corporate Governance Report - continuedpurpose, together with CRH's approach to I&D and employee engagement, will further facilitate the Board's assessment of the alignment of CRH's purpose, values and strategy with our culture.Re-election of DirectorsI have evaluated the performance of each Director standing for re-election and am satisfied that each Director is committed to their role, provides constructive challenge and devotes sufficient time and energy to contribute effectively to the performance of the Board.Table 11 on page 69 provides a summary of competencies, important to the long-term success of the Group, that each Director seeking re-election at the 2020 AGM brings to the Board. Their full biographies are set out on pages 56 to 59. I recommend that shareholders vote in favour of the re-appointment of each Director going forward for re-election at the 2020 AGM.ConclusionThe Board is committed to ensuring that CRH is an industry leader in areas such as CO2 emissions reduction and to making the investments in technology and knowledge required to achieve this. We are also committed to continuing our focus on safety, I&D and stakeholder engagement and on the alignment of CRH's purpose, values and culture. I strongly believe that CRH is well positioned to meet our challenges and to grasp strategic opportunities for the benefit of our shareholders and stakeholders.Richie BoucherChairman27 February 2020Put safety firstContinuously create valueDo what we say and lead with integrityOperate locally, but act as one companyBuild enduring relationshipsTalented people of all backgrounds are welcome -Differences are embracedEveryone has a fair and equal opportunity - To develop and progressOur working environment supports people -In being themselves, performing at their best Inclusion & Diversity Table 4 We're committed to building an inclusive and diverse organisation where:The Board met on six occasions during 2019. This included site visits to Cementos Lemona S.A. in Spain and Tilcon New York Inc in the US. Such visits are an important opportunity for the Board to meet and interact with management and employees at our operating businesses as well as in our central support functions.→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE65CRH ANNUAL REPORT AND FORM 20-F I 2019Chairman’s Overview I was appointed to the Board and as Chairman of the Audit Committee in December 2019. I would like to thank Bill Teuber, who chaired the Committee from February 2018 until June 2019 and Heather Ann McSharry who acted as Interim Audit Committee Chair until my appointment and with whom I have worked closely since my appointment.On behalf of the Committee, I am pleased to introduce the Audit Committee Report for the year ended 31 December 2019. The purpose of this report is to provide shareholders with an insight into the workings of, and principal matters considered by, the Committee in 2019. General details in relation to the roles and responsibilities of the Committee, its operation and the policies applied by it, can be found in the Governance Appendix. Table 5 outlines the key areas that the Committee focused on in 2019.Audit Committee MembershipThe Committee currently consists of seven non-executive Directors considered by the Board to be independent1. The biographical details of each member are set out on pages 57 to 59. Together, the members of the Committee bring a broad range of relevant experience and expertise from a variety of industries which is vital in supporting effective governance. Mary Rhinehart, Siobhán Talbot and I have been designated by the Board as the Committee’s financial experts and meet the specific requirements for recent and relevant financial experience, as set out in the 2018 Code.External AuditorsChange of External AuditorsA key focus for the Committee for 2019 was monitoring the plans and progress in relation to the transition of the external audit from EY to Deloitte with effect from the financial year commencing 1 January 2020.During 2019, we had regular discussions and interactions with management, EY and Deloitte on the status of work being undertaken across the Group to ensure that Deloitte are well prepared for their engagement as external auditors. Briefly, the audit transition work has included the following:• Meetings across the Group between management, Deloitte and EY, in order to increase Deloitte’s knowledge and understanding of CRH;• Deloitte completing a review of EY’s working papers in respect of the 2018 year-end audit (Deloitte will also review, in due course, the relevant papers from the 2019 year-end audit); and• Regular updates and reports from management to the Committee on the status of the transition process and activities, including the work to monitor the termination of services previously provided by Deloitte, which will be prohibited when Deloitte become CRH’s external auditor. Deloitte has confirmed to the Committee that it has achieved the relevant independence status. On behalf of the Committee and the wider Board, I would like to take this opportunity to thank EY for their professional approach over the years, and for their ongoing engagement during the transition period. Effectiveness The Committee, on behalf of the Board, is responsible for the relationship with the external auditors 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. In addition, we consider the experience and knowledge of the external 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 the external auditor. Further details in relation to the external auditors, including information on how auditor objectivity and independence are maintained, are included in Section 2 of the Governance Appendix.All of the above procedures indicated a high level of satisfaction with the services provided by EY to CRH during 2019. Non-audit FeesIn order to ensure auditor independence and objectivity, the Committee has a policy governing the provision of audit and non-audit services by the external auditor. In 2019, EY provided a number of audit services, including Sarbanes-Oxley Section 404 attestation2, and non-audit services, including due diligence services associated with proposed acquisitions and disposals. EY was also engaged during 2019 in a number of jurisdictions in which the Group operates to provide help with local tax compliance, advice on taxation laws and other 1. 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) and Provision 10 of the 2018 Code.2. A copy of Section 404 of the Sarbanes Oxley Act 2002 can be obtained from the SEC's website, www.sec.gov. Audit Committee ReportShaun KellyChairman of Audit CommitteeA key focus for the Committee for 2019 was monitoring the plans and progress in relation to the transition of the external audit from EY to Deloitte with effect from the financial year commencing 1 January 2020.Key Areas of Focus in 2019Table 5Change in Reporting CurrencyExternal AuditorsWhat did we do? EY has been the Group’s external auditors since 1988. Pat O’Neill has been the Group’s lead audit engagement partner since the financial year beginning 1 January 2016.As outlined in the 2018 Annual Report and Form 20-F, following the conclusion of a competitive tender process during 2018 the Board selected, subject to confirmation at the 2020 AGM, Deloitte for appointment as the external auditor with effect from the financial year commencing 1 January 2020. Richard Muschamp will be the Group’s lead audit engagement partner. During 2019, a key area of focus for the Committee was monitoring the plans and progress in relation to the audit transition. Financial Reporting & External AuditWhat did we do? We reviewed the 2019 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 2019 external audit plan. Table 6 on page 66 outlines the key areas identified as being potentially significant and how we addressed these during the year.Impairment TestingWhat did we do? 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. Further details in relation to the impairment outcome for 2019 are outlined in table 6.Enterprise RiskManagementWhat did we do? The Committee continued to monitor and review the Group’s Enterprise Risk Management framework, the principal risks and uncertainties facing the Group, and the methodology and process underlying the Viability Statement included on page 29 of our Risk Governance section. We also considered an assessment of the Group’s risk management and internal control systems. This had regard to risk management strategies and all material controls, including financial, operational and compliance controls that could affect the Group’s business.IT Governance & Cyber SecurityWhat did we do? We continued to monitor the Group’s IT governance and information security programme and ability to address cyber security threats.What did we do? Having regard to the structural shift in the Group's exposure to US dollars over recent years and the benefit of reducing the potential for volatility in the Group's reported earnings (arising from foreign exchange translation) together with reviewing the proposed implementation plan and related controls, the Committee was satisfied with the appropriateness of this change.New Accounting StandardsWhat did we do? The Committee considered and discussed with management the impact (including disclosure) of the implementation of the new accounting standard in relation to IFRS 16 Leases. Please see pages 133 and 134 for further information on the impact of IFRS 16.→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE66CRH ANNUAL REPORT AND FORM 20-F I 201967CRH ANNUAL REPORT AND FORM 20-F I 2019related matters; assignments which typically involve relatively low fees. The Committee is satisfied that the external auditors’ knowledge of the Group was an important factor in choosing them to provide these services. The Committee is also satisfied that the fees paid to EY for non-audit work in 2019, which amounted to €1.1 million and represented 6% of the total fees for the year, did not compromise their independence or objectivity. Details of the amounts paid to the external auditors during the year for audit and other services are set out in note 5 to the Consolidated Financial Statements on page 153 (see also table 7 on page 66). 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 2018, the Committee received and approved the Internal Audit Charter and audit plan for 2019. 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.External Quality Assessments of Internal Audit are conducted periodically to ensure that the Internal Audit function continues to work efficiently and effectively and in compliance with good practice standards.Audit Committee Effectiveness and Priorities for 2020During 2019, 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 2019. Looking ahead to 2020, the Committee will continue to focus on external audit planning, and specifically the change of external auditors from EY to Deloitte, together with the key ongoing areas outlined in table 5 page 65.Shaun KellyChairman of Audit Committee 27 February 2020In 2019 our Americas Materials Division launched a communications campaign to celebrate the people and teams across the Division that collectively make it successful. The campaign featured six employees and their families in a three-part video series, and profiled this Environmental Health & Safety (EHS) Coordinator from ICON Materials in Auburn, Washington, who has been with the company for over 30 years.Audit Committee Report - continuedWhat did we do? Through a review of the relevant management papers and in conjunction with both management and EY, we reviewed management's impairment testing methodology and processes. For the purposes of its impairment testing process, the Group assesses the recoverable amount of each of CRH’s cash-generating units (see details in note 16 to the Consolidated Financial Statements) based on a value-in-use computation. Following its deliberations, the 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 GoodwillWhat did we do? In addition to the goodwill impairment testing process discussed above, the Group also undertook its assessment of the potential for impairment of other non-current assets (property, plant & equipment and financial assets) as and when indicators of impairment arise. The Committee considered the methodology used by management in that process and was satisfied that the accounting treatment (including the associated disclosures) was appropriate.Impairment of Property, Plant & Equipment, and Financial AssetsWhat did we do? IFRS 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. 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. Following discussion with management and EY, recognising that the majority of contracts were completed within the financial year, the Committee was satisfied that the recognition of contract revenue (including the associated disclosures) was appropriate for the Group in 2019.Contract Revenue RecognitionWhat did we do? During 2019, the Group completed 62 acquisitions and investments at a total cost of c. €0.7 billion. On the divestment front, the Group completed 11 transactions and realised business and asset disposal proceeds of c. €2.1 billion. Following discussion with management and EY, the Committee was satisfied that the accounting treatment (including the associated disclosures) applied to all acquisitions and divestments during 2019 was appropriate.Accounting for Acquisitions & DivestmentsAudit ServicesNon-audit Services20196%94%20186%94%201711%89%Areas Identified for Focus during the 2019 External Audit Planning ProcessTable 6Percentage of Audit and Non-audit FeesTable 7→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE69CRH ANNUAL REPORT AND FORM 20-F I 2019Chairman’s OverviewFollowing my appointment as CRH Chairman, the Board appointed me as Chairman of the Nomination & Corporate Governance Committee with effect from 1 January 2020 and I am pleased to present the report of the Committee for the year ended 31 December 2019. The report outlines the main areas of focus of the Committee in the past year and the areas of priority going forward. The Board has designated responsibility to the SESR Committee for working with management and monitoring improvements in I&D below Board level. The SESR Committee’s work in this area is summarised on pages 60 to 63.Committee MembershipThe Committee currently consists of five non-executive Directors, considered by the Board to be independent. The biographical details of each member are set out on pages 56 to 58. The Chief Executive normally attends meetings of the Committee.Board Composition & RenewalRenewal of the CRH Board is an ongoing and dynamic process, with the focus of the Committee being on ensuring that the Board includes a diverse group of individuals based on a broad set of factors and that renewal is aligned with CRH's strategy and the needs of the business.During 2019, the Committee recommended to the Board that the following be appointed as non-executive Directors:• Johan Karlström (September 2019); and• Shaun Kelly (December 2019) Johan Karlström was President and Chief Executive Officer of Skanska AB, a leading multinational construction and project development company until 2017. Over a thirty-year career with Skanska, he held a variety of leadership roles in Europe and America, before becoming President and Chief Executive in 2008. His background and his knowledge of our industry will be an important addition to the collective skills and experience of the Board.Shaun Kelly was, until September 2019, the Global Chief Operating Officer of KPMG International, where he was responsible for the execution of the firm’s global strategy and for the delivery of various global initiatives. Over a thirty-year career with KPMG, the majority of which was spent in the US, he held a variety of senior leadership positions. Through his career with KPMG, Shaun has extensive knowledge and experience in auditing, financial reporting, strategic development and operational management.Following a recommendation from the Committee the Board asked Gillian Platt, who has completed her initial three-year term as a non-executive Director, to serve a second term.At the conclusion of the 2020 AGM, Pat Kennedy and Henk Rottinghuis will retire from the Board. In addition to Nicky Hartery, who retired at year end, during 2019 Don McGovern and Bill Teuber stepped down from the Board. I would like to thank each of them for their service and commitment to CRH.Going forward, ensuring that the Board continues to have the requisite skills to support the Company’s strategy will be a priority for my tenure as Chairman. A particular area of focus for renewal in the next two to three years will be on further enhancing the Board’s expertise through having additional colleagues, from diverse backgrounds, join the Board who have extensive experience of capital intensive businesses with similar activities in North America or Europe.As shown in table 9, the Board is balanced in terms of tenure with five non-executive Directors in their first term of three years; four in their second term and one undertaking a third term of three years.The Committee uses the services of external search agents for Board searches. The agencies used for the appointments of Johan Karlström and Shaun Kelly were Egon Zehnder and Leaders Mores. Neither firm has any other connection with CRH other than, in the case of Egon Zehnder, the provision of executive recruitment services from time to time and in connection with the Chairman succession process outlined below.Chairman SuccessionNicky Hartery retired as Chairman on 31 December 2019. The process which resulted in my appointment as Chairman was led by Gillian Platt, Senior Independent Director, who chaired the Nomination & Corporate Governance Committee and the Board when Chairman succession was being dealt with. As part of that process, a specification for the role of Chairman was developed by the Board and both internal and external candidates were considered. Gillian met with a number of shareholders prior to the Board's decision on the next Chairman to hear their views on the process and the key attributes required for the role. Their feedback was considered by the Committee and the Board.Nomination & Corporate Governance Committee ReportEnsuring that the Board continues to have the requisite skills to support the Company’s strategy will be a priority for my tenure as Chairman.Richie BoucherChairmanAccounting, Internal Control & Financial ExpertiseFinancial ServicesGovernanceIndustry ExpertiseIT & Cyber SecurityM&A, Private Equity, Emerging MarketsOrg change, succession planning, talent managementRemunerationSafety & SustainabilityStrategyR. BoucherJ. KarlströmS. KellyP.J. KennedyH.A. McSharryA. ManifoldS. MurphyG.L. PlattM.K. RhinehartL.J. RichesH.Th. RottinghuisS. TalbotSummary of Director CompetenciesTable 11Gender Diversity - % of Female Directors (as at 31 December)Table 10201315%201423%201529%201633%201730%201838%42%201950%40%30%20%10%0%Membership of the CRH Board (as at 31 December 2019)Table 983%Non-Independent17%Independent Independence (determined by CRH Board annually)Geographical Spread (by residency)Tenure of Non-executive Directors 10%6-9 years50%0-3 years40%3-6 years17%Mainland Europe25%North America8%UK Board of Directors50%IrelandSummary of Board Changes - 2019/2020Table 8Retirement/Resignation:Don McGovern - April 2019Bill Teuber - June 2019Nicky Hartery - December 2019Appointments:Johan Karlström - September 2019Shaun Kelly - December 2019Renewal of Three Year Terms:Gillian Platt - February 2020Not seeking re-election at 2020 AGM:Patrick Kennedy - April 2020Henk Rottinghuis - April 2020→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE70CRH ANNUAL REPORT AND FORM 20-F I 201971CRH ANNUAL REPORT AND FORM 20-F I 2019Attendance at Meetings during the year ended 31 December 2019Table 13NameBoardAcquisitionsAuditFinanceNomination (i)RemunerationSESR (ii) TotalAttendedTotalAttendedTotalAttendedTotalAttendedTotalAttendedTotalAttendedTotal AttendedR. Boucher6677--44--66--J. Karlström (iii)22--11----1111S. Kelly (iv)11--11--------N. Hartery6677--441313--55P.J. Kennedy66------13126655D.A. McGovern, Jr. (v)11--11--5522--H.A. McSharry66--66--131365--A. Manifold6677--------55S. Murphy6676--44------G.L. Platt66------13136655M.K. Rhinehart66--55--1111--43L.J. Riches66776644------H. Th. Rottinghuis667666------55S. Talbot65663333----22W.J. Teuber, Jr. (vi) 32--1111------(i) Nomination & Corporate Governance Committee.(ii) Safety, Environment & Social Responsibility Committee. (iii) Appointed September 2019. (iv) Appointed December 2019.(v) Retired April 2019.(vi) Resigned June 2019.Board of DirectorsMembership Structure of the BoardWe consider the current size and composition of the Board to be within a range which is appropriate. The spread of nationalities of the Directors reflects the geographical reach of the Group and we consider that the Board as a whole has the appropriate blend of skills, knowledge and experience, from a wide range of industries, regions and backgrounds, necessary to lead the Group. Section 1 of the Governance Appendix 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 ResponsibilitiesThe 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 12.The Group’s strategy, which is regularly reviewed by the Board, and business model are summarised on pages 14 to 17. The Board has delegated some of its responsibilities to Committees of the Board. While responsibility for monitoring the effectiveness of the Group’s risk management and internal control systems has been delegated to the Audit Committee1, the Board retains ultimate responsibility for determining the Group’s risk appetite and tolerance, and annually considers a report in relation to the monitoring, controlling and reporting of identified risks and uncertainties. In addition, the Board receives regular reports from the Chairman of the Audit Committee in relation to the work of that Committee in the area of risk management. Individual Directors may seek independent professional advice, at the expense of the Company, in the furtherance of their duties as a Director. The Group has a Directors’ and Officers’ liability insurance policy in place.Independence of Directors The Nomination & Corporate Governance Committee has reviewed the interests of each Director and the Board has determined that each non-executive Director remains independent. ChairmanRichie Boucher was appointed Chairman of the Group with effect from 1 January 2020. On his appointment as Chairman, he met the independence criteria set out in the 2018 Code. Although he holds other directorships, the Board has satisfied itself that these do not adversely impact on his role as Chairman.Policy on Diversity We are committed to ensuring that the Board is sufficiently diverse and appropriately balanced. In its work in the area of Board renewal and succession planning, the Nomination & Corporate Governance Committee looks at the following four criteria when considering non-executive Director roles:• international business experience, particularly in the regions in which the Group operates or into which it intends to expand;Inclusion and DiversityInclusion and diversity are key factors in the specifications given to search agents when developing long and short lists of candidates for consideration by the Committee. The percentage of women directors has increased from 15% in 2013 to 42% at 31 December 2019 and will be 50% at the conclusion of the 2020 AGM. In addition to gender, the Board’s focus on diversity includes social and ethnic backgrounds, business and geographic experience, as well as cognitive and personal strengths. This objective is embedded in the Board’s policy on diversity which is set out on pages 71 and 72.Committee CompositionDuring the year, the Committee considered and made recommendations to the Board regarding changes to the composition of the Board’s Committees. On the recommendation of the Committee, Shaun Kelly was appointed as permanent Audit Committee Chairman on his appointment to the Board. Heather Ann McSharry acted as interim Audit Committee Chair in the period between Bill Teuber’s resignation from the Board and Shaun’s appointment. Heather Ann McSharry has succeeded me as Chairman of the Remuneration Committee. She was a member of the Remuneration Committee for a number of years prior to her appointment as the CRH Remuneration Committee Chairman. The current committee memberships of each Director are set out on pages 56 to 59.Senior Executive Succession The area of senior executive succession is a priority for the Board. An external agency is currently working with the management team and provides updates to the Board on assessment and development programmes for c. 100 CRH individuals, with the objective of ensuring maximum flexibility when considering appointments for key roles. Consideration of the benefits of the recruitment of external hires to complement and enhance our management teams is an important component of CRH's strategy to ensure the Company has a management team of the highest calibre and quality. In addition, the Nomination & Corporate Governance Committee is leading, on behalf of the Board, a related process in relation specifically to senior executive succession. The overall approach of the Committee is to consider succession planning over short, medium and long term timelines. Board EffectivenessAs reported in the 2018 Annual Report and Form 20-F, the most recent external evaluation of the effectiveness of the Board and its Committees was carried out by Independent Audit, which met Board members, the Head of Internal Audit, the Company Secretary and a number of the senior executive management team in one-to-one interviews. During 2019, as part of the annual internal Board evaluation, the Senior Independent Director undertook an internal Board evaluation review which built upon the priorities identified as part of the Independent Audit review, reinforced the areas of focus for future Board renewal outlined above, and identified ways to further enhance the strategic planning process and the efficient workings of the Board.Additional DirectorshipsThe Chief Executive, Albert Manifold, was appointed as a non-executive Director of LyondellBasell Industries N.V., one of the world’s largest plastics, chemicals and refining companies in April 2019. Prior to him accepting the position he discussed the requirements of the role with the Nomination & Corporate Governance Committee and the Board. The Committee and the Board were satisfied that this external position would not have an adverse impact on his responsibilities as CRH Chief Executive and was of the view that the additional perspectives obtained would be beneficial to him and to the Company. The Board also considered the appointments of Heather Ann McSharry and Lucinda Riches as non-executive Directors of Uniphar Group plc and Greencoat UK Wind plc, respectively, during 2019 and was satisfied that the responsibilities resulting from these new positions would not adversely impact on their time commitment to CRH. Corporate GovernanceThe Committee is responsible for reviewing the independence of Board members and has recommended to the Board that all of the non-executive directors be deemed to be independent. The Committee also monitors developments in best practice in relation to corporate governance and makes recommendations to the Board in relation to changes and enhancements to current procedures. Each year the Chairman, Senior Independent Director and Remuneration Committee undertake an extensive engagement with shareholders prior to the AGM to hear their views on AGM proposals and on governance topics of interest to shareholders. In 2019, shareholders representing 20% of the share register took up the offer of a meeting. The Committee and the Board considered the feedback from these sessions and from other shareholder interactions during the year. Richie BoucherChairman of the Nomination & Corporate Governance Committee 27 February 2020Nomination Committee Report - continued1. In accordance with Section 167(7) of the Companies Act 2014.Matters Reserved to the Board Table 12• 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 results→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE72CRH ANNUAL REPORT AND FORM 20-F I 201973CRH ANNUAL REPORT AND FORM 20-F I 2019• 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 During the ongoing process of Board renewal, each, or a combination, of these factors can take priority. To date, the Board has not set any policy regarding age. The ages of the Directors range from 51 to 66, which the Nomination & Corporate Governance Committee believes is appropriate at the current time. CommitteesThe 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 2019 are provided in table 14 below. The Company has not been advised of any changes in holdings since 31 December 2019.Stock Exchange Listings CRH, which is incorporated in Ireland and subject to Irish company law, has a premium listing on the London Stock Exchange (LSE), a secondary listing on Euronext Dublin (formerly the Irish Stock Exchange) and its American Depositary Shares are listed on the New York Stock Exchange (NYSE).Legal and Compliance CRH's Legal and Compliance programmes support the Group in operating sustainably and consistently with its values. CRH's Legal and Compliance team provides advice, guidance and support to executive and operational management and works closely with them to provide training to our employees. Legal and Compliance provides support on a range of matters including establishing policies and procedures, providing compliance training and communications, providing legal advice on compliance and business issues, monitoring and investigating Hotline calls, competition/antitrust law, and ensuring the Group is informed of any changes to regulation and/or reporting requirements. During 2019, Legal and Compliance priorities included antitrust/competition law, international trade compliance, Hotline awareness and policy refresh.Code of Business Conduct The foundation of Legal and Compliance programmes is the Code of Business Conduct (CoBC) and supporting policies, which sets out our standards of legal, honest and ethical behaviour. The CoBC 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 CoBC is applicable to all employees of the CRH Group, including the Chief Executive and senior financial officers. A detailed review and benchmarking exercise has resulted in recommendations for refresh and the CoBC will be updated in the first half of 2020. CRH's Internal Audit function works side-by-side with Legal and Compliance in monitoring compliance with the CoBC and supporting policies, and in providing an integrated approach to assurance. This cross-functional collaboration supports CRH's goal: to ensure CRH leads with integrity. Awareness and Training In line with our commitment to maintain high ethical business conduct standards, the CoBC and Advanced Compliance Training (which includes Anti-bribery, Anti-fraud, Anti-theft and Competition/Antitrust topics) e-Learning modules were enhanced to include both a first time and refresher element to the programme in 23 languages.CRH HotlineCRH engages an external service provider to administer an independent 24/7 multi-lingual confidential “Hotline” facility. The CRH Hotline allows employees, customers, suppliers and or other external stakeholders to raise good faith concerns that may be relevant to the CoBC, inappropriate or illegal behaviour or violations of any CRH policies or local laws. All concerns are handled discreetly and are professionally investigated with appropriate actions taken based on investigation findings. CRH is committed to creating an atmosphere where employees feel empowered to speak up when they have good faith concerns. Retaliation or reprisals are not tolerated at CRH.Communications with Shareholders Communications with shareholders are given high priority and the Group devotes considerable time and resources each year to shareholder engagement. We recognise the importance of effective dialogue as an integral element of good corporate governance. The Investor Relations team, together with the Chief Executive, Finance Director and other senior executives, regularly meet with institutional shareholders (each year covering over 60% of the shareholder base). Detailed reports on the issues covered in those meetings and the views of shareholders are circulated to the Board after each group of meetings. Table 16 provides a brief outline of the nature of the activities undertaken by our Investor Relations team.In addition to the above, major acquisitions and disposals are notified to the Stock Exchanges in accordance with the requirements of the Listing Rules and development updates, giving details of other acquisitions or disposals completed and major capital expenditure projects, are issued periodically.During 2019, the former Chairman, Senior Independent Director and Company Secretary again participated in a number of meetings with some of the Group’s major shareholders, in advance of the 2019 AGM. Also, as outlined on page 60, Mr Boucher met with a significant portion of the Group's shareholders following his appointment as Chairman designate. There was also continued engagement with the Group's major shareholders on remuneration matters.1. The Terms of Reference of these Committees comply fully with the 2018 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.US Listing - Additional InformationTable 15Additional 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 of the 2018 Annual Report and Form 20-F.The following are available on www.crh.comTable 17 Corporate Governance Investors• Governance Appendix• Directors’ Remuneration Policy• Terms of Reference of the Acquisitions, Audit, Finance, Nomination & Corporate Governance, Remuneration and Safety, Environment & Social Responsibility Committees • Memorandum and Articles of Association of the Company• Pre-approval policy for non-audit services provided by the auditors • Compliance & Ethics statement, Code of Business Conduct and Hotline contact numbers• Annual and Interim Reports, the Annual Report and Form 20-F (separate documents up to 2015) and the annual Sustainability Report• News releases• Webcast recordings of results briefings• General Meeting dates, notices, shareholder circulars, presentations and poll results• Answers to Frequently Asked Questions, including questions regarding dividends and shareholder rights in respect of general meetingsInvestor Relations ActivitiesTable 16• Formal Announcements: including the release of the annual and interim results and the issuance of trading statements. These announcements are typically accompanied by presentations and webcasts or conference calls • Investor Roadshows: typically held following the release of formal announcements, provide an opportunity for the management team to meet existing and/or potential investors in a concentrated set of meetings• Industry Conferences: attendance at key sector and investor conferences affords members of the senior management team the opportunity to engage with key investors and analysts• Investor Briefings: in addition to regular contact with investors and analysts during the year, the Company periodically holds capital market days, which include presentations on various aspects of CRH’s operations and strategy and provides an opportunity for investors and analysts to meet with CRH’s wider management team• Media Briefings: each year, the Company provides media briefings on numerous issuesSubstantial Holdings Table 14As at 31 December 2019, the Company had received notiﬁcation of the following interests in its Ordinary Share capital, which were equal to, or in excess of, 3%: 31 December 201931 December 201831 December 2017NameHolding/Voting Rights% at year endHolding/ Voting Rights% at year endHolding/ Voting Rights% at year endBlackRock, Inc. (i)53,813,2736.8265,387,2078.0175,119,2868.95Standard Life Aberdeen plc.Holding below 3%Holding below 3%25,643,7473.05UBS AG26,380,6043.3426,380,6043.2326,380,6043.16(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.→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE75CRH ANNUAL REPORT AND FORM 20-F I 2019Chair’s OverviewIntroductionI succeeded Richie Boucher as Committee Chair in January 2020 following his appointment as Group Chairman. On behalf of the Remuneration Committee, I am pleased to introduce the Directors’ Remuneration Report (the ‘Report’) for the year ended 31 December 2019. Similar to prior years, the Report is split into three sections: • this Chair’s Statement (pages 74 to 78), which sets out: –the Committee’s approach to setting remuneration; and –a high-level summary of the Group's performance in 2019, related remuneration outcomes and the way in which we intend to implement remuneration in 2020• a summary of the Directors’ Remuneration Policy (the ‘Policy’) (pages 80 to 86), which was approved by shareholders at the 2019 AGM and is available at www.crh.com; and • the Annual Report on Remuneration (pages 88 to 100), which sets out in detail the remuneration paid to Directors in respect of 2019 and how the Policy will operate for 2020.Committee’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 also seeks to ensure that updates to the Policy take into account the views of shareholders and evolving best practice.The Board and the Committee are regularly updated on the perspectives of our employees and take these perspectives into account when making remuneration decisions. Further details in relation to workforce engagement on remuneration matters are set out on page 96.The Committee also has oversight of remuneration policy across the Group and endeavours to keep the principles and structure of remuneration consistent in so far as is possible given CRH's international footprint. Generally speaking, total remuneration is more variable (and, in particular, weighted towards long-term performance) for roles with greater levels of responsibility and scope. In setting the remuneration policy and practices for executive Directors, the Committee also takes into consideration the six pillars outlined in the 2018 Code; clarity, simplicity, risk, predictability, proportionality and alignment to culture, and is satisfied that the Policy addresses each of these areas.2019 Performance 2019 was a year of significant profit growth and positive momentum across our businesses, with EBITDA (as defined)* from continuing and discontinued operations of €4.2 billion (+25%). A total of €0.8 billion was returned to shareholders via the ongoing share repurchase programme while the full year dividend per share was increased by 15%. At the same time, CRH's balance sheet strength was enhanced with the ratio of Net Debt to EBITDA (as defined)* of 1.7x as at 31 December 2019 (2018: 2.1x). Incentive Outcomes for 2019The Group’s strong performance in 2019 is reflected in the executive Directors’ remuneration for 2019, which is summarised on table 22 on page 79 and set out in detail on pages 88 to 100. Directors’ Remuneration Report2019 Performance HighlightsRETURN ON NET ASSETSEARNINGS PER SHARE202.2 cent25%10.1%50bps€3.5bn83%€35.6754%The Committee believes that the remuneration paid to the executive Directors in respect of 2019 is appropriate and is well aligned with the performance of the Company and the value delivered for shareholders.Heather Ann McSharryChair of the Remuneration Committee* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.OtherUpdates to Remuneration ApproachAnnual Bonus PlanPerformance Share Plan (PSP)SalaryWhat did we do? We approved a 2.75% increase in salary for executive Directors in 2020, which is within the range of the average workforce increases in CRH's core countries (2.5% to 3%). What did we do? We reviewed performance against the 2019 Annual Bonus Plan targets, taking into consideration the impact of 'one-off' items and of accounting changes, as applicable, and approved the 2019 bonus payments (see table 28 on page 89 for more details).We also reviewed and approved the 2020 Annual Bonus Plan structure, which is similar to the structure of the 2019 Annual Bonus Plan (see page 77 for more details).What did we do? We reviewed the performance of the PSP award granted in 2017 against the applicable performance conditions and approved the vesting outcome of 70.7% of maximum (see table 31 on page 91 for more details).We also reviewed and approved the metrics and targets for the PSP awards granted in 2019 and to be granted in 2020 (see tables 33 and 39 on pages 91 and 96 respectively).What did we do? We considered investor views and evolving market practice in relation to pension contributions for executive Directors, post-employment shareholdings and the operation of the PSP (see page 77 for further details, including the changes that have been introduced following consultation with shareholders).We reviewed and considered workforce remuneration across the Group and the alignment with the remuneration for executive Directors. We have disclosed our Chief Executive pay ratio (see page 97 for further details). What did we do? We carried out a review of our external remuneration consultant arrangements and, following the completion of this process, approved the reappointment of Mercer Kepler as our advisers. We also considered and approved this 2019 Directors’ Remuneration Report.Summary of Key Decisions ActivitiesTable 18OPERATING CASH FLOW SHARE PRICE→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE76CRH ANNUAL REPORT AND FORM 20-F I 201977CRH ANNUAL REPORT AND FORM 20-F I 2019Chair's Overview - continuedIncentive Outcomes for 2019 - continuedIn respect of 2019, the Committee determined that, based on the achievement of performance targets, the annual bonus plan should pay out at 86% of the maximum opportunity for the Chief Executive and the Finance Director. Further details in relation to the annual bonus plan, including the relevant targets on which the 2019 plan was based, are set out on page 88. The Committee also determined that 70.7% of the maximum awards made in 2017 under the PSP will vest, based on the achievement of relevant performance criteria for the period 2017-2019. Further details in relation to the 2017 Awards, including details of the applicable targets and performance for each of the components of the 2017 Awards, are set out on page 90. In assessing performance against the relevant metrics for the annual bonus plan and PSP, consistent with prior years we excluded certain non-recurring 'one-off' items.Following consideration of the financial performance referred to above, and the Company's underlying performance, the Remuneration Committee did not exercise any discretion over the incentive outcomes for 2019 and is satisfied that the outcomes are appropriate and balanced.Alignment between Pay, Performance and StrategyThe Committee is satisfied that there was a strong alignment between the pay outcomes outlined above and the execution of our value creation strategy and the achievement of strategic objectives. The connections between the metrics used by the Committee to incentivise management and CRH's strategy are summarised in table 21.Approach to Remuneration from 2020PensionsIn 2019, CRH’s Remuneration Policy was updated 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 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% to 12% of base salary depending on the rules of the relevant scheme. There was a recognition at the time, in our discussions with shareholders prior to the 2019 AGM, that addressing this issue for new hires was more achievable than seeking to change the contracts for incumbent executive Directors, although we committed to keeping the matter under review.Since the 2019 AGM, there has been an evolution in investor views on the issue of pension contributions/allowances for incumbent executives. The Chief Executive has considered the matter and has voluntarily offered to reduce the monetary value of the pension contribution/allowance to which he is contractually entitled by 10% per annum in 2020 and 2021, with a further reduction such that his pension allowance will be below 25% of salary in January 2022. His pension entitlement will cease in August 2022 when he reaches age 60. The Finance Director’s pension contribution is currently 25% of salary. Taking into account his continued strong performance and the positioning of his total remuneration, which is lower quartile compared to the FTSE 50 excluding financial services companies which CRH uses for benchmarking purposes, the Committee was of the view that a change to his pension contribution would not be fair and balanced in the circumstances. Nevertheless, having considered the matter, the Finance Director has voluntarily offered to permanently cap his entitlement at the monetary level due in respect of 2020. The Committee has accepted the Chief Executive’s and Finance Director’s waiver of their contractual entitlements and welcomes their positive initiative in this regard. Post-employment shareholdings The 2018 Code requires companies to develop policies for post-employment shareholding requirements. Prior to the 2019 AGM, we discussed with shareholders the Committee's view that the current holding period on our vested PSP awards provides a considerable de facto post-employment shareholding requirement as it continues to apply post-cessation of employment.Since then investor views on approaches to post-employment shareholdings for executive Directors have also evolved. Having considered the matter in detail, we have decided to introduce a new requirement whereby the Chief Executive will be required to hold shares equivalent to two times salary for a period of two years post-employment. Until the two times limit is achieved, commencing in 2020, Deferred Share or PSP awards which vest will be transferred on a net of tax basis to a third party to be held in trust for Mr. Manifold’s benefit. The shares will be held in trust on a rolling basis, until his employment ceases and a subsequent two-year period has elapsed. The Committee will retain discretion on a case by case basis to release these shares in exceptional circumstances. A similar structure will apply to the Finance Director, except that the requirement in his case will be one times salary.2020 Remuneration Salary For 2020, Mr. Manifold and Mr. Murphy will each receive a 2.75% increase, which is broadly in line with average workforce increases in CRH’s core countries. Annual BonusThe structure and metrics for the 2020 annual bonus are unchanged from 2019, and are set out in table 20 on page 76. The targets will be disclosed in the 2020 Annual Report and Form 20-F.PensionsAs outlined above, the monetary value of the pension contribution/allowance for Mr. Manifold will be reduced by 10% in 2020 such that his allowance will be c. €600,000 (2019: €667,000) and the contributions/allowance for Mr. Murphy will be capped permanently at €204,000 (25% of his 2020 salary). Performance Share PlanIn 2019, the Committee introduced RONA as a metric in the long-term PSP, to reflect a strong desire amongst shareholders for the introduction of a returns measure. A range of views had been expressed regarding the form of returns measure to be used. The Committee chose RONA as it is the metric used in the business and the measure that the management team communicate to shareholders. Following the 2019 AGM, we received feedback from a small number of shareholders that they would prefer an alternative returns measure. The Committee has also considered this matter further. Recognising that there are arguments in favour of other methodologies, the Committee continues to strongly believe that RONA is the most appropriate measure in an incentive context and has decided to retain it as the returns metric for PSP awards in 2020. Executive Directors’ Remuneration SummaryPerformance Related Variable RemunerationAlignment of Executive Remuneration with StrategyTable 21Performance MeasureAnnual BonusPSPReason for SelectionEPSEPS is a key measure of the underlying profitabilityCash FlowOperating cashflow is a key measure of CRH’s ability to generate cash to fund organic and acquisitive growth and provide returns to our shareholders via dividends and share buybacksRONARONA is a key measure of CRH’s ability to create value through excellence in operational performanceTSRTSR is a key measure of CRH’s returns to shareholders through the cyclePersonal Strategic ObjectivesPersonal strategic objectives enable a focus on specific factors aligned with CRH’s short and medium-term strategic objectives that promote long-term performance2019 Remuneration Snapshot (full details of 2019 remuneration are set out in table 22 on page 79)Table 19Fixed DirectorSalaryAnnual Bonus (% of Max)2017 PSP Award (i) (% of Max)Albert Manifold€1,522,50086%70.7%Senan Murphy€794,50086%70.7%(i) The awards, for which performance was measured over the three-year period to end 2019, will vest at 70.7% in 2022 following the completion of a two-year holding period. Further details in relation to the estimated value of the awards, split between the value created for performance and the value created through share price growth, are included in table 22 on page 79. The market value per share on the date of award (in March 2017) was €30.97.2020 Remuneration SnapshotTable 20 DirectorSalaryMax. Annual Bonus (% of salary)Metrics for 2020 Bonus Award2020 PSP Award (% of Salary)Metrics for 2020 PSP AwardAlbert Manifold€1,564,400 (+2.75%)225%EPS (25%)RONA (25%)Operating Cashflow (30%)Personal Strategic (20%)365%Cashflow (50%)TSR (25%)RONA (25%)Senan Murphy€816,350 (+2.75%)150%225%→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE78CRH ANNUAL REPORT AND FORM 20-F I 201979CRH ANNUAL REPORT AND FORM 20-F I 2019The Committee has also considered feedback from some shareholders on the peer group used to measure TSR performance in relation to whether consideration should be given to the introduction of certain companies, that compete in individual markets in which CRH operates but do not operate internationally, into the peer group. Other shareholders asked whether the relatively small market capitalisation of some companies in the peer group could unduly influence the performance outcome. The Committee has considered these views. It is satisfied that the existing peer group achieves a robust measurement of TSR performance against industry peers that have similar geographic exposure to CRH. In addition, the peer group is weighted by market capitalisation to reduce the influence of smaller companies. Therefore, it is proposed to retain the existing peer group for PSP awards in 2020. However, shareholder views will be kept under review for future awards.In engagement with shareholders and wider stakeholders on sustainability matters, the potential for introducing an environmental target into the PSP was raised. As outlined in the Sustainability section on page 21, the Board has set a series of ambitious environmental targets which are in line with the Paris Climate Agreement. However, given the very long-term nature of those sustainability targets, the Committee determined that it was not currently feasible to develop robust, measurable and stretching performance targets on an annual or three-year performance cycle at this time. However, this will be kept under review going forward. Further details in relation to the structure, metrics and targets for the PSP awards to be made in 2020 are set out in table 39 on page 96.Non-executive DirectorsNo changes are proposed to the fees paid to the Chairman or the non-executive Directors in 2020. Details of the fees currently payable are set out in table 37 on page 95.Individual Executive Remuneration for the year ended 31 December 2019 (Audited)Table 22Albert ManifoldSenan Murphy201920182017201920182017Fixed Pay€000€000€000€000€000€000Basic Salary (i)1,5231,4851,442794775706Benefits (ii)435535272525Retirement Benefit Expense (iii)667684677199194176Total Fixed Pay2,2332,2242,1541,020994907Performance-related PayAnnual Bonus (iv):Cash Element1,9642,0422,338683710762Deferred Shares982681779342237254Total Annual Bonus2,9462,7233,1171,0259471,016Long-term Incentives (v):Performance Share Plan- value delivered through performance3,8343,2382,7201,028792-- value delivered through share price growth298456688011-Total Long-term Incentives4,1323,2833,3881,108803-Total Performance-related Pay7,0786,0066,5052,1331,7501,016Total Single Figure 9,3118,2308,6593,1532,7441,923(fixed and performance-related)(i) Basic Salary.(ii) Benefits: For executive Directors these relate principally to the use of company cars, medical insurance and life assurance and, where relevant, the value of the non-taxable discount on the grant of options under the Group’s 2010 SAYE Scheme. (iii) Retirement Benefit Expense: As noted on page 94, Albert Manifold receives a supplementary 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 annual compensation allowances. Senan Murphy receives a taxable non-pensionable cash supplement equivalent to 25% of his annual base salary in lieu of a pension contribution.(iv) Annual Bonus Plan: Under the executive Directors’ Annual Bonus Plan for 2019, a bonus was payable for meeting clearly defined and stretch targets and strategic goals. The structure of the 2019 Plan, together with details of the performance against targets and payouts in respect of 2019, are set out on pages 88 and 89. A third of the 2019 bonuses to be paid to executive Directors will be deferred into shares for a period of three years, with no additional performance conditions. For 2018 and 2017 bonuses, 25% of executive Directors’ bonuses were paid in Deferred Shares, vesting after three years, with no additional performance conditions.(v) Long-term Incentives: In February 2020, the Remuneration Committee determined that 70.7% of the maximum PSP awards made in 2017 will vest, based on performance. The awards are subject to a further two-year holding period and will vest in 2022. For the purposes of this table, the values of these awards have been estimated using a share price of €33.38, being the three-month average share price to 31 December 2019, as the share price on the date of vesting is not yet known. Amounts in the long-term incentive column for 2018 reflect the value of long-term incentive awards with a performance period ending in 2018 (i.e. the PSP awards granted in 2016), which the Remuneration Committee determined in February 2019 had met the applicable performance targets. The awards are scheduled to vest in 2021 following the completion of a two-year holding period. For the purposes of this table, the value of these awards have been estimated using a share price of €24.90, being the three-month average share price to 31 December 2018. Amounts in the long-term incentive column for 2017 reflect the value of long-term incentive awards with a performance period ending in 2017 (i.e. the PSP awards granted in 2015), which the Remuneration Committee determined in February 2018 had met the applicable performance targets. The awards are scheduled to vest in 2020 following the completion of a two-year holding period. For the purposes of this table, the value of these awards have been estimated using a share price of €30.42, being the three-month average share price to 31 December 2017.Chair's Overview - continuedTarmac, part of CRH's Europe Materials Division, was responsible for resurfacing the world-famous racetrack at Silverstone, home of the British Grand Prix, where Lewis Hamilton clinched a record sixth British Grand Prix victory in 2019. The surface was designed specifically to withstand the extremes of braking and cornering generated by high-performance racing cars and motorbikes. Tarmac used cutting-edge technology and processes to complete the project, including the first use of 3D GPS-guided asphalt planing in the UK as well as state-of-the-art BPO ASPHALT management system software.Conclusion The Committee believes that the remuneration paid to the executive Directors in respect of 2019 is appropriate and is well aligned with the performance of the Company and the value delivered for shareholders. We hope to receive your support for the Annual Report on Remuneration at the 2020 AGM. Heather Ann McSharryChair of the Remuneration Committee 27 February 2020→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE80CRH ANNUAL REPORT AND FORM 20-F I 201981CRH ANNUAL REPORT AND FORM 20-F I 20192019 Directors’ Remuneration PolicyThe Remuneration Committee’s aim is to make sure that CRH’s pay structures are fair, responsible and competitive, in order that CRH can attract and retain staff of the calibre necessary for it to compete in all of its markets.CRH’s Remuneration Policy, which was approved by shareholders at the 2019 AGM is available on the Group’s website, www.crh.com, and was included in full in the 2018 Annual Report and Form 20-F. As the Company is not seeking shareholder approval for any revision of the Policy in 2019, the full text of the Policy has not been reproduced in this report. The following paragraphs and tables 23 to 27 on pages 81 and 86 provide a summary of key elements of the Policy. The Policy is consistent with that shown last year, save the changes to the performance scenario charts, the addition of post-exit shareholding guidelines and the update to the Finance Director's service contract.The Group’s remuneration structures are designed to drive performance and link reward to the responsibilities and individual contribution of executives, while at the same time reflecting the risk policies of the Group. It is our policy to grant participation in the Group’s performance-related plans to key management to encourage alignment with shareholders’ interests and to create a community of common interest among different regions and nationalities. In setting remuneration levels, the Remuneration Committee takes into consideration the remuneration practices of other international companies of similar size and scope and trends in executive remuneration generally, in each of the regions in which the Company operates. The Remuneration Committee is cognisant that the pending legislation resulting from the updated Shareholder Rights Directive will introduce new provisions in relation to remuneration, which the Committee will consider in due course. Remuneration Policy Summary Future Policy TableThe purpose, operation and opportunity for the five components of executive Directors’ remuneration are summarised in table 23 below. Further details and explanatory notes are included in the full Policy, a copy of which is available on the Group’s website, www.crh.com. The components of remuneration comprise three fixed elements: basic salary, pension and benefits, and two variable elements: annual bonus and PSP. Details regarding the implementation of the Policy in 2019 can be found on pages 88 to 100 of the Annual Report on Remuneration.Policy TableTable 23ElementFixed 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 applicableThe purpose of the Policy is to:CRH’s Approach to RemunerationAttract and retain executives of the highest calibreMotivate and reward executives to perform in the long-term interests of the shareholdersProvide an appropriate blend of fixed and variable remuneration and short and long-term incentivesFoster 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 →→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE82CRH ANNUAL REPORT AND FORM 20-F I 201983CRH ANNUAL REPORT AND FORM 20-F I 2019Policy TableTable 23 - 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 applicableRemuneration Policy Summary - continuedPolicy TableTable 23 - continuedElementPerformance-related pay - Annual BonusPerformance-related pay - Performance Share PlanPurpose and link to strategy• The Annual Performance-related Incentive Plan (the "Plan") is designed to reward the creation of shareholder value through operational excellence and organic and acquisitive growth. The Plan incentivises executive Directors to deliver Group and individual goals that support long-term value creation• A deferred element of the Plan links the value of executive Directors’ reward with the long-term performance of the CRH share price and aligns the interests of executive Directors with shareholders' interest• “Malus” and clawback provisions enable the Company to mitigate risk• The purpose of the 2014 Plan is to align the interest of key management across different regions and nationalities with those of shareholders through an interest in CRH shares and by incentivising the achievement of long-term performance goals • “Malus” and clawback provisions enable the Company to mitigate riskOperation• The Annual Performance-related Incentive Plan rewards executive Directors for meeting Company performance goals over a financial year of the Company. Targets are set annually by the Committee• The annual bonus is paid in a mix of cash and shares (structured as a deferred share award)• For 2020: –66.7% of the bonus will be paid in cash; and –33.3% will be paid in shares• In future years, the Committee may determine that a different balance between cash and shares is appropriate and adjust the relevant payments accordingly• When assessing performance and determining bonus payouts the Committee also considers the underlying financial performance of the business to ensure it is consistent with the overall award level• The deferred element of the bonus will be structured as a conditional share award 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” and clawback provisions (as set out in the rules of the 2014 Plan) will apply to awardsMaximum opportunity• Maximum annual opportunity of 225% of base salary• For 2020, the intended maximum award levels are: –225% of base salary for the Chief Executive; and –150% of base salary for the Finance Director• Maximum annual opportunity of up to 365% of base salary• For 2020, the intended award levels are: –365% of base salary for the Chief Executive; and –225% of base salary for the Finance DirectorPerformance Measure• The performance-related incentive plan is based on achieving clearly defined and stretching annual targets and strategic goals set by the Committee each year based on key business priorities• The performance metrics used are a mix of financial targets including return goals and personal/strategic objectives generally. Currently 80% of the bonus is based on financial performance measures• The Committee may vary the weightings of measures but no less than 50% shall be based on financial performance measures• A portion of the bonus metrics for any Director may be linked to his/her specific area of responsibility • Up to 50% of the maximum bonus will be paid for achieving target levels of performance• Awards to be granted in 2020 will vest based on cumulative cash flow (50%), a relative TSR test compared to a tailored group of key peers (25%) and RONA (25%)• For threshold levels of performance, 25% of the award vests • Where applicable, when determining vesting under the PSP the Committee reviews whether the TSR performance has been impacted by unusual events and whether it therefore, reflects the underlying performance of the business• The Committee may adjust the weightings of the measures at the start of each cycle, with no measure’s weighting falling below 25%• The Committee may amend the performance conditions if an event occurs that causes it to consider that an amended performance condition would be more appropriate and would not be materially less difficult to satisfy→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE84CRH ANNUAL REPORT AND FORM 20-F I 201985CRH ANNUAL REPORT AND FORM 20-F I 2019Remuneration Policy Summary - continuedRemuneration Outcomes in different Performance ScenariosTable 24Performance ScenarioPayout LevelMinimum• Fixed pay (see table 25 for each executive Director)• No bonus payout• No vesting under the Performance Share PlanOn-target performance• Fixed pay (see table 25 for each executive Director)• 50% annual bonus payout (112.5% of salary for the Chief Executive and 75% for the Finance Director)• 25% vesting under the Performance Share Plan (91.25% of salary for the Chief Executive and 56.25% for the Finance Director)Maximum performance ((i) at constant share prices; and (ii) assuming a 50% increase in share prices)• Fixed pay (see table 25 for each executive Director)• 100% annual bonus payout (225% of salary for the Chief Executive and 150% of salary for the Finance Director)• 100% Performance Share Plan vesting (365% of salary for the Chief Executive and 225% for the Finance Director)Hypothetical Remuneration ValuesTable 25Salary With effect from 1 January 2020Benefits Level paid in 2019 (i)Estimated Pension (ii)Total Fixed PayChief Executive (Albert Manifold)€1,564,40043,000600,000€2,207,400Finance Director (Senan Murphy)€816,35027,000204,000€1,047,350(i) Based on 2019 expenses.(ii) See page 77 for details in relation to retirement benefit arrangements.Remuneration 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 26 shows hypothetical values of the remuneration package for executive Directors under four assumed performance scenarios.No share price growth or the payment of dividend equivalents has been assumed in these scenarios, with the exception of the maximum +50% share price growth scenario. Potential benefits under all-employee share schemes have not been included.Remuneration Arrangements Throughout the GroupCRH operates significant operations in over 3,100 locations in 30 countries with c. 80,300 employees across the globe. Remuneration arrangements throughout the organisation, therefore, differ depending on the specific role being undertaken, the level of seniority and responsibilities, the location of the role and local market practice. However, remuneration arrangements are designed based on a common set of principles: that reward should be set at a level which is appropriate to retain and motivate individuals of the necessary calibre to fulfil the roles without paying more than is considered necessary. The reward framework is designed to incentivise employees to deliver the requirements of their roles and add value for shareholders. The Group operates share participation plans and savings-related share option schemes for eligible employees, including executive Directors, in all regions where the regulations permit the operation of such plans. Service ContractsAs 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 was for a period of up to 12 months. An addendum to the Finance Director’s service contract has since been executed amending the notice periods to 12 months in each case.Shareholding 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 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 RequirementsAs outlined in the Chair’s Overview on page 77, the Remuneration Committee has decided to introduce a requirement whereby the Chief Executive will be required to hold shares equivalent to two times salary for a period of two years post-employment. Accordingly, commencing in 2020, until the two times limit is achieved, any Deferred Share or PSP awards which vest will be transferred on a net of tax basis to a third party to be held in trust for the Chief Executive’s benefit. The shares will be held in Trust on a rolling basis, until his employment ceases and a subsequent two year period has elapsed. A similar structure will apply to the Finance Director, except that the requirement in his case will be one times salary.15,00013,00011,0009,0007,0005,0003,0001,00006,0005,0004,0003,0002,0001,00004,1072,1181,04714,28911,435MinimumMinimumOn-targetOn-targetMaximumMaximumMaximum(+50%)Maximum(+50%)2,2075,394Performance-related Remuneration OutcomesTable 26Fixed Pay Annual Bonus Long-term incentives5,025Chief ExecutiveFinance Director100%22%29%49%25%30%45%55%24%21%60%50%31%26%32%42%100%19%25%15%→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE86CRH ANNUAL REPORT AND FORM 20-F I 201987CRH ANNUAL REPORT AND FORM 20-F I 2019CRH is a leading provider of structural concrete to the Danish market. In 2019, CRH Denmark, part of our Europe Materials Division, supplied 15,000m² of materials to the ‘Karré 31’ project in the town of Holbaek, north-east of Copenhagen. Products included hollow-core floor slabs, walls and facades for the 17-story apartment building.Remuneration Policy Summary - continuedGOVERNANCERemuneration Policy for Non-Executive DirectorsTable 27• 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 basic fees payable to non-executive Directors. The current limit of €1,000,000 was set by shareholders at 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 policy allows for the Group Chairman to be 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 96) 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 receipt• 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 intervalsApproach to Setting FeesBasis of FeesOther Items→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE88CRH ANNUAL REPORT AND FORM 20-F I 201989CRH ANNUAL REPORT AND FORM 20-F I 2019The 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 56 to 59. A schedule of attendance at Committee meetings is set out in table 13 on page 71.The main focus of the Committee is to: • determine and agree with the Board the Group’s policy on executive remuneration; • seek shareholder approval for the Directors’ Remuneration Policy at least every three years; • ensure that CRH’s remuneration structures are fair and responsible; and• consider and approve salaries and other terms of the remuneration packages for the executive Directors and the fee for the 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 30 countries, in geographic regions which are often at different stages in the economic cycle. Annually, the Chairman of the Remuneration Committee reviews with the Audit Committee the Group’s remuneration structures from a risk perspective. Remuneration Received by Executive Directors in Respect of 2019 Details of individual remuneration for executive Directors for the year ended 31 December 2019, including explanatory notes, are given in table 22 on page 79. Details of Directors’ remuneration charged against profit in the year are given in table 46 on page 100. 2019 Annual Bonus PlanCRH’s Annual Bonus Plan for 2019 was based on a combination of financial targets and personal/strategic goals. The metrics for target payout, which is up to a maximum of 50% of the total annual bonus opportunity, are based on achieving the budget set by the Board in respect of 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 2019 plan, together with details of the applicable targets and performance for each measure is given in table 28 on page 89.When setting the targets for the annual bonus plan, the Committee makes assumptions regarding exchange rates and development activity. The Committee also compares the proposed targets to the outturn for the previous year to ensure that the targets are sufficiently stretching. In this regard, it is important to note that the metrics in the plan are influenced by the economic cycle and other factors, such as ongoing portfolio management. For example, the RONA target for 2019 was less than the 2018 outturn primarily due to the impact of the Group's acquisition of Ash Grove Cement as such long term value-creating acquisitions are generally returns dilutive in the initial years post acquisition.When reviewing performance against the bonus plan, the Committee typically makes a number of routine adjustments to the financial targets, for example, to reflect actual exchange rates, major development activity and actual share buyback activity during the year. For the 2019 bonus plan, the financial targets were also adjusted to reflect the impact of the implementation of IFRS16 Leases. When assessing the outturn for 2019, the Committee excluded exceptional items which were one-off in nature and are not expected to recur. This had the impact of reducing the formulaic outcome for the financial element under the 2019 bonus plan.Details of each executive Director’s personal and strategic objectives and their achievement against these objectives are set out in table 29 on page 89.Overall, the combination of the performance by the Group in 2019 and the achievement against personal and strategic objectives translated to annual bonus payouts of 86% of the maximum opportunity for Albert Manifold and Senan Murphy, with total bonus payments of 194% of salary and 129% of salary respectively.In accordance with the Policy, 33% of the bonus amounts for Albert Manifold and Senan Murphy will be deferred into shares for a period of three years. Deferred Share awards are not subject to any additional performance conditions during the deferral period and are adjusted for dividend equivalents based on dividends paid by CRH. Annual bonus awards are subject to recovery provisions for three years from the date of payment (cash awards) or grant (deferred awards). 2019 Plan - Personal/Strategic AchievementTable 29DirectorsWeighting (% of total bonus)AchievementsPercentage of Maximum AwardedAlbert Manifold20%Safety: Supporting the launch of a safety front-line leadership programme and the implementation of recommendations from a review by an external advisory panel of experts, including updating policies and guidelines for contractor management, energy isolation and consequence management. Performance: Continued monitoring, assessment and challenge of performance improvement across the business.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.17.0%Senan Murphy20%Safety: Supporting the launch of a safety front-line leadership programme and the implementation of recommendations from a review by an external advisory panel of experts, including updating policies and guidelines for contractor management, energy isolation and consequence management. Performance: Continued monitoring, assessment and challenge of performance improvement across the business.Talent Management: Development of new processes and procedures to aid career pathing, talent review and talent development in order to meet the longer term CRH leadership needs. Leadership and Strategy: Working across all business and functional areas to facilitate, develop and progress CRH strategy and other key cross CRH priorities.17.0%2019 Plan - AchievementTable 282019 Targets - Performance needed for payout at (i)MeasureWeighting (% of total bonus)ThresholdTarget (ii)Maximum2019 Performance Achieved (iii)Percentage of Maximum AwardedCRH EPS25%183c199c209c205c20.5%CRH Cash Flow (iv)30%€2,553m€2,775m€2,914m€3,050m30.0%CRH RONA (iv)25%8.0%8.7%9.4%9.1%18.5%Personal/Strategic20%See table 2917.0%Total100%86.0%(i) 0% of each element is earned at threshold, 50% at target and 100% at maximum, with a straight-line payout schedule between these points. (ii) Targets have been adjusted to reflect actual exchange rates, the actual timing of development activity, the impact of the share buyback programme and the impact of the implementation of IFRS 16 Leases. (iii) The outturn achieved for 2019 excludes exceptional items which were one-off in nature and not expected to recur.(iv) For the purposes of the annual bonus plan, operating cash flow and RONA have been defined as reported internally. For cash flow the figure differs from the net cash inflow from operating activities reported in the Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows on the purchase of property, plant and equipment (PP&E), net proceeds from the disposal of PP&E, and before deducting interest and tax payments. Similarly, RONA as reported internally differs from the RONA reported in the Non-GAAP Performance Measures in this report as it reflects seasonality and the timing impact of development activity.Annual Report on Remuneration Annual Bonus 2019→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE90CRH ANNUAL REPORT AND FORM 20-F I 201991CRH ANNUAL REPORT AND FORM 20-F I 2019Long-term IncentivesPerformance Share Plan - 2017 awardsIn 2017, the executive Directors were granted conditional awards under the 2014 PSP. The awards were based on TSR (50% of the award) – 25% against a tailored group of key peers (see table 30 below) and 25% against the 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 2017 to 31 December 2019. In respect of the TSR element, CRH's TSR over the period of 15.6% ranked between the 50th and 75th percentile as compared with the tailored peer group, but was below the TSR of the FTSE All-World Construction & Materials Index. Accordingly, 20.7% out of 50% will vest for the TSR element. In respect of the cumulative cash flow element, actual outturn over the period was €4.5 billion, which exceeded the stretch target of €3.7 billion, resulting in 100% vesting for the cash flow element.The Committee considers that the vesting outcome is reflective of the Company’s underlying performance over the performance period. In particular, the Committee considered RONA performance since 2017 as an underpin to the TSR component. As the RONA target in each of the annual bonus plans for 2017, 2018 and 2019 was met, the Committee determined that the TSR vesting outcome was appropriate and did not need to be adjusted. In accordance with the Policy, the 2017 awards to executive Directors will vest in 2022 on completion of an 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 2022. Table 31 on page 91 sets out details of the relevant targets. Table 32 on page 91 sets out details of the awards.Performance Share Plan - 2019 awardsDuring 2019, awards under the 2014 PSP were made to the executive Directors, details of which are summarised in table 34. 50% of each award granted in 2019 is subject to a cumulative cash flow metric. The definition of cash flow is the net increase/decrease in cash and cash equivalents adjusted to exclude:• dividends to shareholders;• acquisition/investment expenditure;• proceeds from divestments;• share issues (scrip dividend, share options, other);• financing cash flows (new loans/repayments);• back funding pension schemes; and• foreign exchange 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. 25% of each award is subject to a TSR metric, with performance being measured against a tailored peer group (see table 30 below). The remaining 25% of each award is subject to a RONA metric, a key measure used by management to assess investment opportunities and to run the business.Performance for the awards made in 2019 will be assessed over the three-year period to 31 December 2021. Details of the performance targets are set out in table 33. Awards, to the extent that they vest, will be adjusted for dividend equivalents based on dividends in the period from grant to the date of vesting in 2023. “Malus” and clawback provisions apply to the awards.2017 Award Vesting DetailsTable 32Executive DirectorInterests HeldVesting Outcome (% of max)Interests Due to VestDate of VestingAssumed Share Price (i)Estimated ValueAlbert Manifold175,09570.7%123,792March 2022€33.38€4,132,182Senan Murphy46,95470.7%33,196March 2022€33.38€1,108,098(i) As the share price on the date of vesting is not yet known, for the purposes of this table, the value of these awards, which were subject to a three-year performance period ending in 2019, has been estimated using a share price of €33.38, being the three-month average share price to 31 December 2019.Long-term Incentives - Performance Share Plan Awards2017 Award MetricsTable 31(i) For the purposes of the PSP, operating cash flow is defined as reported internally. The figure differs from the net cash inflow from operating activities reported in the Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outflows on the purchase of property, plant and equipment (PP&E), net proceeds from the disposal of PP&E, and before deducting interest and tax payments. (ii) The methodology for calculating TSR assumes all dividends are reinvested on 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 2017 Award, TSR performance was above the median against the tailored peer group (see table 30 on page 90) and below the FTSE All-World Construction & Materials Index. TSR performance was subject to a RONA underpin (see page 90). The cumulative cash flow for the three years to end 31 December 2019 was €4.5 billion. Vesting LevelVesting (% of element)MedianUpper quartile25%0%100%TSR vs. tailored peer group(25% of award) (ii)Element vested at 82.7% (iii)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€3.7bn€4.5bn100%Cumulative cash flow(50% of award) (i)Vesting LevelElement vested at 100% (iii)80%€3.25bnVesting (% of element)2019 Award - Grant Details Table 34Executive DirectorDate of GrantNumber of SharesMarket Price on which Award was BasedFace Value at Date of AwardFace Value at Date of Award(% of salary) Albert Manifold7 May 2019186,106€29.86€5,557,125365%Senan Murphy7 May 201959,867€29.86€1,787,628225%2019 Award MetricsTable 33(i) and (ii) see footnotes to table 31 above.(iii) RONA is also defined as reported internally and differs from the RONA reported in the Non-GAAP Performance Measures in this report as it excludes one-off items and reflects seasonality and timing impact of development activity. 25%0%€3.3bn€4.3bn100%Cumulative cash flow (50% of award) (i)25%0%MedianUpper Quartile100%TSR vs. tailored peer group (25% if award) (ii)25%0%9%11.5%100%RONA (2021) (25% of award) (iii)Vesting (% of element)Vesting (% of element)Vesting (% of element)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 35 on pages 92 and 93. The Participation Scheme is an Irish Revenue approved plan and is open to all employees in Ireland. Grants can be made to participants up to a maximum of €12,700 annually in CRH shares. Albert Manifold and Senan Murphy participated in the Participation Scheme in 2019.Peer Group for Performance Share Plan Awards (i)Table 30ACSBoralBuzzi UnicemCemexHeidelberg CementLafargeHolcimSaint Gobain SkanskaTitan CementVicatVinciWienerberger(i) For the purposes of the PSP awards made in 2017 and 2018, the peer group also includes Braas Monier and Rockwool82.7%Annual Report on Remuneration - continued→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE92CRH ANNUAL REPORT AND FORM 20-F I 201993CRH ANNUAL REPORT AND FORM 20-F I 2019Annual Report on Remuneration - continuedSummary of Outstanding Share Incentive Awards (Audited)Table 35Year of AwardPerformance PeriodRelease DateMarket Value at Date of AwardExercise PriceBalance at 31 December 2018Granted in 2019Released in 2019Exercised in 2019Lapsed in 2019Balance at 31 December 2019Dividends Awarded & ReleasedMarket Value on Date of Exercise/ReleasedAlbert ManifoldAnnual Bonus Plan (Deferred Share Awards) (i)201601/01/15-31/12/20152019€25.60n/a18,900-18,900---1,351€28.04201701/01/16-31/12/20162020€30.97n/a25,007----25,007--201801/01/17-31/12/20172021€30.42n/a25,619----25,619--201901/01/18-31/12/20182022€24.90n/a-27,337---27,337-2014 Performance Share Plan (ii)201401/01/14-31/12/20162019€20.49n/a142,900-142,900---19,007€28.04201501/01/15-31/12/20172020€24.42n/a103,934----103,934--201601/01/16-31/12/20182021€24.56n/a208,104---85,052123,052--201701/01/17-31/12/20192022€32.24n/a163,254----163,254--201801/01/18-31/12/20202023€27.62n/a196,278----196,278--201901/01/19-31/12/20212024€29.86n/a-186,106---186,106--2010 Savings-Related Share Option Scheme2018n/a2023n/a€23.391,293----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/a8,352----8,352--201901/01/18-31/12/20182022€24.90n/a-9,510---9,510--2014 Performance Share Plan (i)201601/01/16-31/12/20182021€24.56n/a50,906---20,80530,101--201701/01/17-31/12/20192022€32.24n/a43,779----43,779--201801/01/18-31/12/20202023€27.62n/a63,134---63,134--201901/01/19-31/12/20212024€29.86n/a-59,867--59,867--The market price of the Company’s shares at 31 December 2019 was €35.67 and the range during 2019 was €22.89 to €36.25. (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.→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE94CRH ANNUAL REPORT AND FORM 20-F I 201995CRH ANNUAL REPORT AND FORM 20-F I 2019Annual Report on Remuneration - continuedRetirement 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 2019. The cash pension supplement for 2019 is detailed in table 36 below. This supplement is similar in value to the reduction in the Company’s liability represented by the pension benefits foregone. It is calculated based on actuarial advice as the equivalent of the reduction in the Company’s liability to Mr. Manifold and spread over the term to retirement as annual compensation allowances.The contributory defined benefit plan in which Albert Manifold participates closed to new entrants at the end of 2011. Senan Murphy receives a 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 36 below. Details of the pension arrangements that will apply for 2020 are set out on page 77.Shareholding Guideline for Executive DirectorsPursuant to the Policy, executive Directors are required to build up (and maintain) a minimum holding in CRH shares. The current shareholding guideline for the Chief Executive is 3.5x basic salary and 2.0x basic salary for the Finance Director, to be achieved by 31 December 2023 and 31 December 2022 respectively.The current shareholdings of executive Directors as a multiple of basic salary are shown in table 45 on page 99. The table includes, for illustrative purposes, shares beneficially owned by the executive Directors as at 27 February 2020, the estimated after tax vesting of PSP awards subject to a two-year hold period only, which will be released in 2020 and 2021 respectively, and the estimated after tax vesting of Deferred Share awards granted in respect of 2017, 2018 and 2019, as appropriate.Non-executive DirectorsThe remuneration of non-executive Directors is determined by the Board of Directors. The fees were increased in 2019 (see table 37 for details of the current fees). Details of the remuneration paid to non-executive Directors in 2019 are set out in table 38.Proposed Implementation of Remuneration in 2020Basic Salary and Benefits Details of the executive Directors’ salaries for 2020 compared with 2019 are set out in the Committee Chair's Overview on page 76. These increases are within the range of the average workforce increases in CRH's core countries (2.5% to 3%).Executive Directors will receive benefits in line with the 2019 Policy in 2020. The level of benefits provided will depend on the cost of providing individual items and the individual circumstances.Retirement Benefit ExpenseAs outlined in the Chair's Overview on page 77, the monetary value of pension contribution/allowance for Mr. Manifold will be reduced by 10% in 2020 such that his allowance will be c. €600,000 (2019: €667,000) and the contribution/allowance for Mr. Murphy will be capped permanently at €204,000 (25% of his 2020 salary). 2020 Annual Bonus PlanThe Remuneration Committee has determined that the 2020 Annual Bonus Plan will be operated broadly in line with the 2019 Annual Bonus Plan. 80% of the bonus will be based on financial targets and the remaining 20% on individual objectives aligned to key strategic areas for each executive Director. Pension Entitlements - Defined Benefit (Audited)Table 36Executive DirectorIncrease in accrued personal pension during 2019 (i) €000Transfer value of increase in dependants pension (i) €000Total accrued personal pension at year end (ii) €000Albert Manifold-122273(i) As noted above, the pension of Albert Manifold has been capped in line with the provisions of the Irish Finance Acts. However, dependants’ pensions continue to accrue resulting in Greenbury transfer values which have been calculated on the basis of actuarial advice. These amounts do not represent sums paid out or due in 2019 in the event of Mr. Manifold leaving service.(ii) The accrued pensions shown are those which would be payable annually from normal retirement date.Individual Remuneration for the year ended 31 December 2019 (Audited) Table 38Basic fees (i) €000Benefits (ii) €000Other fees (iii) €000Total €000201920182019201820192018201920182017Non-executive Directors R. Boucher (iv)88 65 - - 77 34 165 99 - N. Hartery 88 78 7 1 557 512 652 591 591 J. Karlström (v)23 - - - 13 - 36 - - S. Kelly (vi)7---8-15-- P.J. Kennedy 88 78 - - 47 42 135 120 120 D.A. McGovern Jr. (vii)28 78 - - 20 86 48 164 174 H.A. McSharry88 78 - - 63 42 151 120 120 G.L. Platt 88 78 - - 87 63 175 141 131 M.K. Rhinehart (vii)88 20 -62 7 150 27 - L.J. Riches88 78 - - 47 42 135 120 120 H.Th. Rottinghuis 88 78 - - 47 42 135 120 120 S. Talbot (ix)88 7 2-47 1 137 8 - W.J. Teuber, Jr. (x)44 78 - - 51 90 95 168 135 894 716 9 1 1,126 961 2,029 1,678 1,511 (i) Further information in relation to the non-executive Director fee structure are set out in table 37 above.(ii) Benefits: Reflects the reimbursement of taxable travel expenses.(iii) Other Fees: Includes fees for Chairman, Board Committee work and travel allowances for non-executive Directors based outside of Ireland. (iv) Richie Boucher became a Director on 1 March 2018.(v) Johan Karlström became a Director on 25 September 2019.(vi) Shaun Kelly became a Director on 3 December 2019.(vii) Don McGovern retired as a Director on 25 April 2019.(viii) Mary Rhinehart became a Director on 1 October 2018.(ix) Siobhan Talbot became a Director on 1 December 2018.(x) Bill Teuber resigned as a Director on 25 June 2019.Non-executive Directors Fee StructureTable 37RoleGroup Chairman (including non-executive Director salary and fees for Committee work)€630,000Basic non-executive Director fee€88,000 Committee fee€32,000 Additional feesSenior Independent Director€25,000 Remuneration Committee Chair€30,000Audit Committee Chairman€39,000 Fee for Europe-based non-executive Directors€15,000 Fee for US-based non-executive Directors€30,0001. Salary is defined as basic annual salary and excludes any fluctuating emoluments.→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE96CRH ANNUAL REPORT AND FORM 20-F I 201997CRH ANNUAL REPORT AND FORM 20-F I 2019TSR Performance (2009-2019) Table 402014201520162017201320122011201020092018300250200150100500 CRH (DUB) FTSE100 Eurofirst 300 2019€2020 Performance Share Plan AwardsFor the 2020 PSP awards, awards will be assessed over the three-year period to 31 December 2022. The metrics, weightings and opportunity for the 2020 PSP awards are summarised in table 39 below. The Committee believes that the targets are robust and stretching, with a significant increase in the level of stretch required for the cashflow and RONA metrics compared to 2019.Fees Paid to Former 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.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 2019 of €100 invested in CRH in 2009, compared with the value of €100 invested in the Eurofirst 300 Index and the FTSE100 Index (which CRH joined in December 2011) is shown in table 40 on page 97.TSR performance has been compared against the FTSE100 and the Eurofirst 300 as these are broad general market indices of which CRH is a constituent. The Committee, therefore, considers that they offer a reasonable comparison for performance. Compound TSR since the formation of the Group in 1970 (assuming the reinvestment of dividends) is 15.6%. Workforce EngagementEngagement of our workforce is at the heart of what we do at CRH. The proximity of our senior leaders to daily operations across CRH is a key reason for the Company's continued success and growth. The Company operates an annual talent and performance review process, where colleagues and their managers work together to review performance and set annual goals. The outcome of the review process is closely aligned to remuneration, both in terms of any increase in base salary for the next year, and any variable remuneration component. In order to guide our leaders' discussions with employees across the group on remuneration structures, there is a reward policy section, which is based on the principles of remuneration applied by the Remuneration Committee and remuneration policy approved by shareholders, in policy documents issued to the managing directors of our operating companies. The SESR Committee has taken formal responsibility for workforce engagement. Its work in this area, which will evolve over time, is explained further in the Chairman's Overview on pages 60 to 63. Remuneration Committee members are kept up-to-date on the workings of the SESR Committee and the feedback it receives from employees on all matters including remuneration. Remuneration Paid to Chief Executive 2010 – 2019Table 41 shows the total remuneration paid to the Chief Executive in the period 2010 to 2019 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 2018 and 2019 was as follows:• Salary +2.5%• Benefits -22%• Bonus +8%The combined percentage change was 6%. There was a 5% increase in the total average employment costs in respect of employees in the Group as a whole between 2018 and 2019.Chief Executive Pay RatioTable 42 sets out the ratio of Chief Executive’s total pay in 2019 in comparison to the 25th, 50th and 75th percentile remuneration received by the Group’s UK employees in 2019. Total remuneration for the lower quartile, median and upper quartile employees were determined using the ‘single figure’ methodology. This methodology was chosen as it provides a like-for-like comparison between the Chief Executive and other employees. For practical reasons (primarily relating to the number of employing entities and employees covered by this analysis), the ranking of employees to identify the three individuals representing 25th (P25), 50th (P50) and 75th (P75) percentile was conducted in November 2019. Given the timing, for the purpose of the ranking exercise, total remuneration was defined as the sum of base salary, employer pension contributions and other taxable benefits for the period 1 January to 31 October 2019, and 2018 incentive values. All elements of remuneration were calculated on a full-time and full-year equivalent basis. In January 2020, total remuneration was recalculated for the three employees representing P25, P50 and P75 using the same single figure methodology used to report the Chief Executive's remuneration. The Committee has considered the pay data for the three individuals identified and believes that it fairly reflects pay at the relevant quartiles amongst the UK employee population. Each of the three individuals identified was a full-time employee during the year and none received an exceptional incentive award which would otherwise inflate their pay figures. No adjustments or assumptions were made by the Committee, with the total remuneration of these employees calculated in accordance with the methodology used to calculate the single figure of the Chief Executive. With this being the first year of being expected to publish a Chief Executive's pay ratio, there is no comparative data against which to compare the pay ratios detailed below. Going forward, the Committee will monitor both the absolute remuneration ratios and the trend over time, and seek to understand the underlying drivers of these. In light of the expectation that the total remuneration pay ratio will be volatile over time (driven in large part by the upweighting in the Chief Executive’s package of variable, performance-based remuneration), the Committee has also elected to calculate and disclose the pay ratio for base salary alone. In line with the Committee’s policy that executive Directors’ base salaries will normally increase in line with the typical level of increase awarded to other employees in the Group, it is anticipated that this ratio will be more stable – and representative of relative changes in fixed pay over time.Annual Report on Remuneration - continuedPerformance Share Plan Metrics – 2020 AwardsTable 39(i), (ii), (iii) See Table 33 on page 91.25%0%€4.8bn€5.9bn100%Cumulative cash flow (50% of award) (i)25%0%MedianUpper Quartile100%TSR vs. tailored peer group (2020-2022) (25% of award) (ii)25%0%9.4%11.6%100%RONA (2022)(25% of award) (iii)Vesting (% of element)Vesting (% of element)Vesting (% of element)Remuneration 2009 to 2019 inclusiveTable 412010201120122013201420152016201720182019Single figure Remuneration (€m) (i)€2.6m €2.9m€2.5m€4.2m€4.3m€5.4m€9.9m€8.7m€8.2m€9.3mAnnual Bonus (% of max)21%39%28%30%100%100%98%96%81%86%Long-term incentive award vesting (% of max)46%17%0%PSP: 49%LTIP: 34%PSP: 0%Options: 75%PSP: 78%Options: 37%100%79%59%71%(i) Single figure remuneration comprises the total fixed pay, annual bonus and the value of long-term incentives vesting in respect of each year.Chief Executive's RemunerationPay RatioTable 42Financial YearCalculation MethodP25 (lower quartile)P50 (median)P75 (upper quartile)Chief Executive2019CTotal remuneration pay ratio289:1207:1158:1Total remuneration (€)32,20044,90058.9009,311,400Base salary pay ratio53:136:131:1Base salary (€)28,50042,40049,9001,522,500→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE98CRH ANNUAL REPORT AND FORM 20-F I 201999CRH ANNUAL REPORT AND FORM 20-F I 2019Annual Report on Remuneration - continuedRelative Importance of Spend on PayTable 43 sets out the amount paid by the Group in remuneration to employees compared to the amount returned to shareholders as part of the share repurchase programme and dividend distributions made to shareholders in 2018 and 2019. 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 CommitteeDuring 2019, the Committee carried out a review of our external remuneration consultant arrangements and, following the completion of this process, Mercer Kepler were reappointed as the Committee's independent remuneration consultants. The Committee has satisfied itself that the advice provided by Mercer Kepler is robust and independent and that the Mercer Kepler engagement partner and team that provide remuneration advice to the Committee do not have connections with CRH plc that may impair their independence.Relative Importance of Spend on PayTable 43€m 6,0005,0004,0003,0002,0001,000201920185%5%25%Remuneration received by all employeesEBITDA (as defined)*Share Buyback/DividendsShareholdings of Directors and Company SecretaryTable 44 Beneficially Owned (i)Name31 December 201931 December 2018Executive DirectorsA. Manifold (ii)1,29721,310S. Murphy (ii)1,9701,520Non-executive DirectorsR. Boucher 13,8001,790J. Karlström2,000(iii)S. Kelly (v)1,000(iv)P.J. Kennedy2,0002,000H.A. McSharry4,1704,170G.L. Platt1,0591,038M.K. Rhinehart (v)1,0001,000L.J. Riches5,0005,000H.Th. Rottinghuis1,0001,000S. Talbot1,5501,550Company SecretaryN. Colgan11,36510,915Total47,21151,293(i) Excludes awards of Deferred Shares, details of which are disclosed on pages 92 and 93. The Directors and Company Secretary do not have any special voting rights.(ii) The total interests of the executive Directors, using the methodology set out in the Shareholding Guideline section on page 94, are illustrated in table 45 below.(iii) Appointed with effect from 25 September 2019.(iv) Appointed with effect from 3 December 2019(v) Holdings in the form of American Depositary Receipts (ADRs).Mercer Kepler are signatories to the Voluntary Code of Conduct in relation to executive remuneration consulting in the UK. During 2019, 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 2019, Mercer Kepler’s parent, the MMC Group, provided pensions advice and related services to the Company. In 2019, the total fees paid to Mercer Kepler were Stg£63,110.2019 Annual General MeetingThe voting outcome in respect of the remuneration-related votes at the 2019 AGM is set out in table 47 on page 100.On behalf of the BoardHeather Ann McSharryChair of Remuneration Committee27 February 2020* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.No. of sharesNo. of shares0%50%100%150%200%250%300%350%0%50%100%150%200%Executive Director Shareholdings as a % of 2020 Base Salary (i)Table 45Guideline (% of Salary)To be achieved by Holdings as of 27 February 2020Total Interests (% of Salary)A. Manifold350%2023 345%S. Murphy200%2022110%(i) For the purposes of this table, the interests have been valued using the three-month average share price to 31 December 2019 (€33.38).Beneficially Owned Shares (as at 27 February 2020).Estimated after tax value of Deferred Share Awards made in 2017, 2018 and 2019, as appropriate.Estimated after tax value of PSP awards subject to a two-year hold period only.3%8%84%37%258%65%→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE100CRH ANNUAL REPORT AND FORM 20-F I 2019101CRH ANNUAL REPORT AND FORM 20-F I 2019Remuneration Related Votes 2019Table 47 Year 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”)201984.5215.486,358,488496,833,13261.43Directors’ Remuneration Policy Report201986.7313.274,846,043496,827,53261.43Part of CRH's Americas Materials Division and in operation since January 2005, Texas Materials' plant at Seward Junction, located in the Greater Austin metropolitan area, includes a rail terminal to facilitate delivery of aggregates from the company’s nearby quarry in Marble Falls. The rail terminal was expanded in 2016 to help meet strong demand in what is the fastest growing large city in the US.GOVERNANCEDirectors’ Remuneration (i) (Audited) Table 462019 €0002018 €0002017 €000Executive Directors Basic Salary2,3172,2602,618Performance-related Incentive Plan- cash element2,6472,7523,734- deferred shares element1,3249181,033Retirement Benefits Expense866878988Benefits708078Total executive Directors’ remuneration7,2246,8888,451Average number of executive Directors2.002.002.67Non-executive DirectorsFees894716702Other remuneration1,124961967Benefits911Total non-executive Directors’ remuneration2,0291,6781,670Average number of non-executive Directors10.169.169.00Payments to former Directors (ii)9149Total Directors’ remuneration9,2628,58010,130(i) See analysis of 2019 remuneration by individual in tables 22 and 38 on pages 79 and 95 respectively. (ii) Consulting and other amounts paid to a number of former Directors.Details of Remuneration Charged against Profit in 2019Annual Report on Remuneration - continued→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE102CRH ANNUAL REPORT AND FORM 20-F I 2019103CRH ANNUAL REPORT AND FORM 20-F I 2019The Directors submit their report and the audited Consolidated Financial Statements for the year ended 31 December 2019.Principal Activity, Results for the Year and Review of BusinessCRH is a leading global diversified building materials business in the world, employing c. 80,300 people at 3,100 locations worldwide. We manufacture and supply a diverse range of superior building materials and products for use in the construction and maintenance of infrastructure, housing and commercial projects. Our materials and products are used extensively, in construction projects of all sizes, all across the world. The Group has over 1,000 subsidiary, joint venture and associate undertakings; the principal ones as at 31 December 2019 are listed on pages 260 to 264. The Group's strategy, business model and development activity are summarised on pages 8 to 29 and 32 to 52 and are deemed to be incorporated in this part of the Directors' Report. As set out in the Consolidated Income Statement on page 128, the Group reported a profit before tax for the year of €2.1 billion from continuing operations. Comprehensive reviews of the financial and operating performance of the Group during 2019 are set out in the Business Performance section on pages 32 to 52; key financial performance indicators are set out on pages 18 and 19. The treasury policy and objectives of the Group are set out in detail in note 24 to the Consolidated Financial Statements.During the year ended 31 December 2019, 27,357,116 million ordinary shares were repurchased on the London Stock Exchange and Euronext Dublin for a total of €0.8 billion, at an average price of €28.87 per share. On 7 January 2020, the Group announced its intention to repurchase ordinary shares on CRH's behalf for a maximum consideration of €200 million (the “Buyback”). The Buyback commenced on 7 January 2020 and will end no later than 31 March 2020. Further details in relation to the buyback programme and the Company's profits available for distribution are set on pages 105 and 221 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 6% dividend increase in 2018, an interim dividend of 20.0c (2018: 19.6c) per share was paid in September 2019. The Board is recommending a final dividend of 63.0c per share. This would give a total dividend of 83.0c for the year (2018: 72.0c), an increase of 15% over last year. The earnings per share for the year were 240.7c, representing a cover of 2.9x the proposed dividend for the year while continuing operations earnings per share for the year were 202.2c, representing a cover of 2.4x the proposed dividend for 2019. It is proposed to pay the final dividend on 28 April 2020 to shareholders registered at the close of business on 13 March 2020. In connection with the share buyback programme, CRH announced the suspension of the scrip dividend scheme on 2 May 2018. Therefore the final dividend will be paid wholly in cash. While the Board continues to believe that a progressive dividend policy is appropriate for the Group, our target is to build dividend cover to 3.0x 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. 2020 OutlookThe 2020 outlook set out in the Chief Executive’s Review on page 11 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 108 to 113 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 Directors’ ReportNon-Financial ReportingTable 48Reporting RequirementRelevant Policies (i)Location of Information (ii)PagesEnvironmental and Climate Related MattersEnvironmental PolicySustainability and Risk Governance20 to 29Social & Employee MattersHealth & Safety Policy, Social PolicySustainability 20 to 25Human RightsSocial Policy, Code of Business ConductSustainability 20 to 25Anti-bribery & CorruptionCode of Business ConductSustainability 20 to 25Business Model–Business Model16 to 17Non-financial KPIs–Managing Performance18 to 19Principal Risks–Risk Governance26 to 29Principal Risks and Uncertainties108 to 113(i) Policies are available on CRH’s website, www.crh.com. (ii) The referenced sections are deemed to be incorporated within this Directors’ Report.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.Regulatory Information1Table 49Companies Act 2014For the purpose of Section 1373, the Corporate Governance Report on pages 60 to 73, together with the Governance Appendix located on the CRH website (www.crh.com), which contains the information required by Section 1373(2) of the Companies Act 2014 and the risk management disclosures on pages 26 to 29 and 108 to 113, are deemed to be incorporated in the Directors’ Report and form part of the corporate governance statement required by Section 1373 of the Companies Act. Details of the Company’s employee share schemes and capital structure can be found in notes 9 and 31 to the Consolidated Financial Statements on pages 156 to 158 and 198 to 200 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 which is available on the CRH website (www.crh.com) and are deemed to be incorporated in this part of the Directors’ Report. The Company’s Memorandum and Articles of Association, which are available on the CRH website, are also deemed to be incorporated in this part of the Directors’ Report. The Group has certain banking facilities and bond issues outstanding which may require repayment in the event that a change in control occurs with respect to the Company. In addition, the Company’s Share Option Schemes and Performance Share Plan contain change of control provisions which can allow for the acceleration of the exercisability of share options and the vesting of share awards in the event that a change of control occurs with respect to the Company.2007 Transparency 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 pages 4 and 5, the Strategy Review section on pages 8 to 29, the Principal Risks and Uncertainties section on pages 108 to 113, the Business Performance section on pages 32 to 52, the information on inclusion and diversity on pages 70 to 72, the details of earnings per Ordinary Share in note 14 to the Consolidated Financial Statements, the details of derivative financial instruments in note 27, 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 US 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; “Strategy Review – Measuring Performance” with regard to our focus for 2020; "Strategy Review – Sustainability" with regard to our strategies for our sustainability priorities; “Business Performance – Finance Director’s Review” with respect to our belief that the Group has sufficient resources to meet its debt obligations and capital and other expenditure requirements in 2020; “Business Performance” with respect to our expectations regarding economic activity and fiscal developments in our operating regions; and our expectations for the residential, non-residential and infrastructure markets; the statements relating to our strategies for individual segments and business lines in the section entitled “Segmental Reviews”; “Governance – Directors’ Remuneration Report” with regard to growth forecasts for the coming years; and “Governance – Principal Risks and Uncertainties” with respect to the potential impact and evolving nature of risk as well as the direction risk may be trending.These forward-looking statements may generally, but not always, be identified by the use of words such as “will”, “anticipates”, “should”, “could”, “would”, “targets”, “aims”, “may”, “continues”, “expects”, “is expected to”, “estimates”, “believes”, “intends” or similar expressions. These forward-looking statements include all matters that are not historical facts or matters of fact at the time of this document.By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future and reflect the Company’s current expectations and assumptions as to such future events and circumstances that may not prove accurate. A number of material factors could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, certain of which are beyond our control and which include, among other things: economic and financial conditions generally in various countries and regions where we operate; the pace of growth 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 108 to 113 of the Directors’ Report and in the Risk Factors included on pages 233 to 241 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 Disclosure: The Trustees of the Employee Benefit Trust have elected to waive dividends in respect of certain holdings of CRH shares. See page 200 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).→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE104CRH ANNUAL REPORT AND FORM 20-F I 2019105CRH ANNUAL REPORT AND FORM 20-F I 2019stakeholders necessary to provide them with an understanding of the Company’s development, performance, position and impact of its activity. Table 48 on page 102 provides more details on the information required to be provided by the Non-Financial Regulations and where this information has been provided in this Annual Report and Form 20-F.Going ConcernThe time period that the Directors have considered in evaluating the appropriateness of the going concern basis in preparing the financial statements for 2019 is a period of at least twelve months from the date of approval of these financial statements (the 'period of assessment').The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the Strategy Review and in this report on pages 8 to 29 and pages 108 to 113. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Business Performance Review on pages 32 to 52. In addition, notes 23 to 27 to the Consolidated Financial Statements include the Group's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit, currency and liquidity risks.The Group has considerable financial resources and a large number of customers and suppliers across different geographic areas and industries. In addition, the local nature of building materials means that the Group's products are not usually shipped cross-border.Having assessed the relevant business risks, the Directors believe that the Group is well-placed to manage these risks successfully and they have a reasonable expectation that CRH plc, and the Group as a whole, has adequate resources to continue in operational existence for the period of assessment with no material uncertainties. For this reason, the Directors continue to adopt the going concern basis in preparing the Consolidated Financial Statements.Viability StatementThe viability statement set out on page 29 is deemed to be incorporated in this section of the Directors' Report.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 2020 AGM deals with the 2019 Directors’ Remuneration Report (excluding the Remuneration Policy Section), as set out on pages 74 to 100, 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.Changes to the Board of Directors• Mr. D.A. McGovern, Jr. retired from the Board with effect from 25 April 2019; • Mr. W.J. Teuber resigned from the Board with effect from 25 June 2019;• Mr. J. Karlström was appointed to the Board with effect from 25 September 2019;• Mr. S. Kelly was appointed to the Board with effect from 3 December 2019; and• Mr. N. Hartery retired from the Board with effect from 31 December 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. As outlined in the Audit Committee Report on pages 64 and 67, following a comprehensive and competitive tender process in 2018, the Board has selected Deloitte to replace Ernst & Young as the Company’s auditor with effect from the 2020 financial year. An ordinary resolution confirming the appointing of Deloitte will be proposed at the 2020 AGM (Resolution 6).Authority to Allot Shares The Directors require the authority of the shareholders to allot any unissued Ordinary Share capital of the Company. Accordingly, an ordinary resolution will be proposed at the 2020 AGM (Resolution 7) to renew the annual authority for that purpose. The authority will be for an amount which represents just under 50% of the issued Ordinary Share capital as at 27 February 2020. 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. 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 242.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 2021 or 22 July 2021.Disapplication of Pre-emption RightsResolutions 8 and 9 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 8 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 €13,593,000. This amount represents approximately 5% of the issued Ordinary Share capital as at 27 February 2020, being the latest practicable date prior to publication of this document. Resolution 8 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 9 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 2020. The power conferred by Resolution 9 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 8 and 9 include any Treasury Shares reissued by the Company during the same period.The Directors confirm that in respect of Resolutions 8 and 9, 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 27,357,116 Ordinary/Income Shares, equivalent to 3.42% of the Company’s issued share capital were repurchased during 2019, at an average price of €28.87 per share. 43,750,000 Ordinary/Income Shares, equivalent to 5.18% of the Company’s issued share capital were cancelled on 16 December 2019. As at 27 February 2020, 14,784,464 shares were held as Treasury Shares, equivalent to 1.88% of the Ordinary Shares in issue (excluding Treasury Shares) (2019: 32,063,844 shares).During 2019, 1,147,149 (2018: 403,933) Treasury Shares were reissued under the Group’s employees’ share schemes. A special resolution will be proposed at the 2020 AGM (Resolution 10) to renew the authority of the Company, or any of its subsidiaries, to purchase up to 10% of the Company’s Ordinary/Income Shares in issue at the date of the AGM.If approved, the minimum price which may be paid for shares purchased by the Company shall not be less than the nominal value of the shares and the maximum price will be 105% of the higher of the last independent trade in the Company’s shares (or current independent bid, if higher) and the average market price of such shares over the preceding five days. A special resolution (Resolution 11) will also be proposed for the purpose of renewing the authority to set the maximum and minimum prices at which Treasury Shares (effectively shares purchased and not cancelled) may be reissued off-market by the Company. If granted, both of these authorities will expire on the earlier of the date of the AGM in 2021 or 22 July 2021. As at 27 February 2020, options to subscribe for a total of 1,769,860 Ordinary/Income Shares are outstanding, representing 0.23% of the issued Ordinary/Income Share capital (excluding Treasury Shares). If the authority to purchase Ordinary/lncome Shares was used in full, the options would represent 0.25% of the remaining shares in issue.The ongoing share buyback programme is scheduled to expire on 31 March 2020. While no decision has been made to extend the programme, the Board believes that the Company should retain the ability to buyback its own shares so that it can be used in the best interests of shareholders generally.Authority to Offer Scrip 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 2021, this authority shall expire at the close of business on 22 July 2021.Annual General MeetingThe Notice of Meeting for the 2020 AGM is available on the CRH website (www.crh.com) and is expected to be posted to shareholders on 25 March 2020. Statement of Directors’ ResponsibilitiesThe Directors as at the date of this report, whose names are listed on pages 56 to 59, 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 →→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE106CRH ANNUAL REPORT AND FORM 20-F I 2019107CRH ANNUAL REPORT AND FORM 20-F I 2019the going concern basis unless it is inappropriate to presume that the Group will continue in businessThe Directors are required by the Central Bank (Investment Market Conduct) Rules 2019 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 2019 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 216 to 221), 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.The Directors have appointed appropriate accounting personnel, including a professionally qualified Finance Director, in order to ensure that those requirements are met. The books and accounting records of the Company are maintained at the 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, R. Boucher, A. Manifold Directors 27 February 2020Directors’ Report - continuedIn July 2019, OPTERRA, part of CRH’s Europe Materials Division and one of the leading cement producers in Germany, officially inaugurated a new exhaust gas purification system at its Karsdorf cement plant near Leipzig. The new filter technology, which includes a state-of-the-art AUTONOX® Low Dust System installed on the existing kilns, enables the factory to comply with new limits for dust, ammonia and nitrogen oxide emissions.GOVERNANCE→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE108CRH ANNUAL REPORT AND FORM 20-F I 2019109CRH ANNUAL REPORT AND FORM 20-F I 2019Under 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 233 to 241, are reviewed on an annual basis and represent the principal risks and uncertainties faced by the Group at the time of compilation of the 2019 Annual Report and Form 20-F. During the course of 2020, 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 UncertaintiesPortfolio 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 necessaryIndustry 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 growthPrincipal Strategic Risks and UncertaintiesLink to strategic objective Benefits of Scale and Integration Continuous Improvement Focused Growth Developing LeadersCommodity 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. 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 productsBrexit 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 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 plansPrincipal Strategic Risks and Uncertainties - continuedStrategic Mineral Reserves 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 materials businesses• Efficient and economic extraction and utilisation of mineral reserves are constantly monitoredGeopolitical and/or Social Instability DescriptionImpactHow we Manage the RiskAdverse and fast changing economic, social, political and public health situations in any country in which the Group operates could lead to business interruption, restrictions on repatriation of earnings or a loss of plant access.Risk trend: Changes in these conditions may adversely affect the Group’s business, results of operations, financial condition or prospects.• Mitigation strategies to protect CRH’s people and assets are in place in high risk areas• Senior management and Board monitoring of commentaries and economic indicators• Two-phase budgeting process with prevailing economic and market forecasts factored in→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE110CRH ANNUAL REPORT AND FORM 20-F I 2019111CRH ANNUAL REPORT AND FORM 20-F I 2019Principal Strategic Risks and Uncertainties - continuedJoint 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 growthClimate Change and Policy DescriptionImpactHow we Manage the RiskThe cement industry has recognised the impact of climate change and its responsibilities in transitioning to a lower carbon economy. The Group is exposed to financial, reputational and market risks arising from changes to CO2 policies and regulations.Risk trend: Should the Group not reduce its greenhouse gases (GHGs) emissions by its identified targets, the Group may be subject to increased costs, adverse financial performance and reputational damage. • The Group has delivered on a CO2 reduction programme from 2007 to 2020. A revised CO2 reduction programme has been developed to 2030, details of which can be found on page 21 of this Annual Report and Form 20-F. This initiative encompasses all cement plants in our portfolio at present • Operational improvements at plants are focused on reducing the CO2 footprint of our businesses• For more information please refer to page 21 in this Annual Report and Form 20-F or to our independently-assured Sustainability Report, which is prepared in line with the Global Reporting Initiative Standards and is available on www.crh.comPrincipal Operational Risks and UncertaintiesHealth 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 serious health and safety incident could have a significant 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 integritySustainability and Corporate Social Responsibility DescriptionImpactHow we Manage the RiskThe nature of our activities poses inherent environmental, social and governance (ESG) risks, which are also subject to an evolving regulatory framework and changing societal expectations.Risk trend: Failure to embed sustainability principles within the Group's businesses and strategy may result in non-compliance with relevant regulations, standards and best practices and lead to adverse stakeholder sentiment and reduced 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 continues to be subject to rigorous external evaluation. The Group’s achievements have been recognised through its inclusion in a variety of leading global sustainability indicesPrincipal Operational Risks and Uncertainties - continuedInformation Technology and/or Cyber Security DescriptionImpactHow we Manage the RiskThe Group is dependent on information and operational technology systems to support its business activities. Any significant operational event, whether caused by external attack, insider threat or error, could lead to loss of access to systems or data, adversely impacting business operations.Risk trend: Security breaches, IT interruptions or data loss could result in significant business disruption, loss of production, reputational damage and/or regulatory penalties. Significant financial costs in remediation are also likely in a major cyber security incident. • 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 technologyPeople 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 Development• Succession planning and talent management initiatives implemented across the Group• Positive employee and trade/labour union relations are maintained→→OverviewStrategy ReviewBusiness PerformanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexGovernanceGOVERNANCE112CRH ANNUAL REPORT AND FORM 20-F I 2019113CRH ANNUAL REPORT AND FORM 20-F I 2019Principal Financial and Reporting Risks and Uncertainties - continuedDefined 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 the 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 entrantsForeign 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 the reporting currency; and (ii) declines in the reporting currency value of net investments which are denominated in a wide basket of currencies other than the reporting currency.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 has decided to change to US Dollar reporting currency effective 1 January 2020, in consideration of the current portfolio and business mix which has now significantly higher US Dollar exposure• 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 166 to 168Principal Financial and Reporting Risks and UncertaintiesFinancial 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.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 weekly 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 and/or Moody's • Please see note 24 to the Consolidated Financial Statements for further detailPrincipal 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 practices in relation to legal, compliance and ethical 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 ConductTaxation 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 assessment of additional tax liabilities in future audits 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 and Transfer Pricing Guidelines and SOX controls 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 required→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndexIndependent Auditor’s Reports 116 Consolidated Income Statement 128Consolidated Statement of Comprehensive Income 129 Consolidated Balance Sheet 130 Consolidated Statement of Changes in Equity 131 Consolidated Statement of Cash Flows 132 Accounting Policies 133 Notes on Consolidated Financial Statements 145116 - 221FinancialsFINANCIALSOldcastle Infrastructure, part of CRH’s Building Products Division, is supplying 2.1 miles of pre-fabricated concrete box culverts to a storm water drainage project in downtown Tampa, Florida. The project will reduce flooding and provide enhanced safety for pedestrians and vehicles. Construction is expected to be completed in 2021.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex116CRH ANNUAL REPORT AND FORM 20-F I 2019117CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS116CRHANNUALREPORTANDFORM20-F|2019IndependentAuditor’sIrishReporttothemembersofCRHplcOpinionWehaveauditedthefinancialstatementsofCRHplc(‘theCompany’)anditssubsidiaries(together‘theGroup’)fortheyearended31December2019,whichcomprisetheConsolidatedIncomeStatement,theConsolidatedStatementofComprehensiveIncome,theConsolidatedBalanceSheet,theConsolidatedStatementofChangesinEquity,theConsolidatedStatementofCashFlows,theCompanyBalanceSheet,theCompanyStatementofChangesinEquity,theAccountingPoliciesincludingthesummaryofSignificantAccountingPoliciessetoutonpages133to144andnotestothefinancialstatements.ThefinancialreportingframeworkthathasbeenappliedintheirpreparationisIrishlawandInternationalFinancialReportingStandards(IFRS)asadoptedbytheEuropeanUnionand,asregardstheCompanyfinancialstatements,AccountingStandardsincludingFRS101ReducedDisclosureFramework(IrishGenerallyAcceptedAccountingPractice).Inouropinion:•theGroupfinancialstatementsandtheCompanyfinancialstatementsgiveatrueandfairviewoftheassets,liabilitiesandfinancialpositionoftheGroupandtheCompanyasat31December2019andoftheGroup’sprofitfortheyearthenended;•theGroupfinancialstatementshavebeenproperlypreparedinaccordancewithIFRSasadoptedbytheEuropeanUnion;•theCompanyfinancialstatementshavebeenproperlypreparedinaccordancewithIrishGenerallyAcceptedAccountingPractice;and•theGroupfinancialstatementsandtheCompanyfinancialstatementshavebeenproperlypreparedinaccordancewiththerequirementsoftheCompaniesAct2014and,asregardstheGroupfinancialstatements,Article4oftheIASRegulationBasisforopinionWeconductedourauditinaccordancewithInternationalStandardsonAuditing(Ireland)(ISAs(Ireland))andapplicablelaw.OurresponsibilitiesunderthosestandardsarefurtherdescribedintheAuditor’sResponsibilitiesfortheAuditoftheFinancialStatementssectionofourreport.WeareindependentoftheGroupandCompanyinaccordancewithethicalrequirementsthatarerelevanttoourauditoffinancialstatementsinIreland,includingtheEthicalStandardasappliedtopublicinterestentitiesissuedbytheIrishAuditingandAccountingSupervisoryAuthority(IAASA),andwehavefulfilledourotherethicalresponsibilitiesinaccordancewiththeserequirements.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouropinion.OverviewofourauditapproachKeyauditmatters•Assessmentofthecarryingvalueofgoodwill•Assessmentofthecarryingvalueofproperty,plantandequipmentandfinancialassets•Revenuerecognitionforconstructioncontracts•AccountingforacquisitionsandbusinessdisposalsAuditscope•Weperformedanauditofthecompletefinancialinformationof14componentsandperformedauditproceduresonspecificbalancesforafurther32components•Weperformedproceduresatafurther19componentsthatwerespecifiedbytheGroupauditteaminresponsetospecificriskfactors•Thecomponentswhereweperformedeitherfullorspecificauditproceduresaccountedfor89%ofProfitbeforetaxfromcontinuingoperations,87%ofRevenueand86%ofTotalAssets•‘Components’representbusinessunitsacrosstheGroupconsideredforauditscopingpurposesMateriality•OverallGroupmaterialitywasassessedtobe€100millionwhichrepresentsapproximately5%ofProfitbeforetaxfromcontinuingoperationsWhathaschanged?•Intheprioryear,ourauditor’sreportincludedariskofmaterialmisstatementinrelationtothepurchasepriceallocationforproperty,plantandequipment(PP&E)andprovisionsinconnectionwiththeAshGroveCementCompany(AshGrove)acquisition.Inthecurrentyear,wehaveremovedthisriskofmaterialmisstatementastheAshGroveacquisitionwasaspecific2018event•AsdiscussedintheAccountingPoliciestotheConsolidatedFinancialStatements(page133),theGroupchangeditsmethodofaccountingforleasesin2019duetotheadoptionofIFRS16LeasesCRHANNUALREPORTANDFORM20-F|2019117KeyauditmattersKeyauditmattersarethosemattersthat,inourprofessionaljudgement,wereofmostsignificanceinourauditofthefinancialstatementsofthecurrentperiodandincludethemostsignificantassessedrisksofmaterialmisstatement(whetherornotduetofraud)thatweidentified,includingthosewhichhadthegreatesteffecton:ouroverallauditstrategy,theallocationofresourcesintheauditanddirectingoftheeffortsoftheengagementteam.Thesematterswereaddressedinthecontextofourauditofthefinancialstatementsasawhole,andinformingouropinionthereon,andwedonotprovideaseparateopiniononthesematters.RiskOurresponsetotheriskKeyobservationscommunicatedtotheAuditCommitteeAssessmentofthecarryingvalueofgoodwillAt31December2019,theGroup’scarryingvalueofgoodwillwas€8.1billion.Goodwillissubjecttoimpairmenttestingonanannualbasisandatanytimeduringtheyearifanindicatorofimpairmentexists.Goodwillacquiredthroughbusinesscombinationactivityhasbeenallocatedtocash-generatingunits(CGUs).TherecoverableamountoftheCGUsisdeterminedbasedonavalue-in-usecomputation.Auditingmanagement’sannualgoodwillimpairmenttestisconsideredariskareaasitiscomplexandinvolveskeyjudgementsbymanagementduetothesignificantestimationrequiredindeterminingthefairvalueofeachCGUespeciallywhereanindicatorofimpairmentexists.Inparticular,judgementalaspectsincludeassumptionsoffutureprofitability,revenuegrowth,marginsandforecastcashflows,andtheselectionofappropriatediscountrates,allofwhichmaybesubjecttomanagementoverride.Therehasbeennochangeinthisriskfromtheprioryear.RefertotheAuditCommitteeReport(page64);AccountingPolicies(page133);andnote16oftheConsolidatedFinancialStatements(page166).Weobtainedanunderstanding,evaluatedthedesignandtestedtheoperatingeffectivenessofcontrolsovertheGroup’sgoodwillimpairmentreviewprocess.Forexample,wetestedcontrolsovertheCompany’sreviewofsignificantassumptions,includingfutureprofitability,revenuegrowth,marginsandforecastcashflows,andtheselectionofappropriatediscountrates,amongothers.TotesttheestimatedfairvalueoftheCGUswhereindicatorsofimpairmentexisted,weperformedauditproceduresthatincluded,amongothers,assessingfairvaluemethodologiesandtestingthesignificantassumptionsdiscussedaboveandtheunderlyingdatausedbytheGroupinitsanalysis.Wecomparedthesignificantassumptionsusedbymanagementtoexternaleconomicforecastsandconstructionactivitymeasures,theGroup’shistoricalresults,andevaluatedwhetherchangesintheGroup’sbusinesswouldaffectthesignificantassumptions.Weassessedthehistoricalaccuracyofmanagement’sestimatesandperformedsensitivityanalysesofsignificantassumptionstoevaluatethechangeinthefairvalueoftheCGUsresultingfromchangesintheseassumptions.Weinvolvedvaluationspecialiststoassistinourevaluationofthevaluationmethodologyandcomparisonofkeyinputstoexternalmarketdata(principallyrisk-freerates,countryriskpremiumandinflationrates)usedbymanagementincalculatingdiscountrates.Weconsideredtheadequacyofmanagement’sdisclosuresinrespectofimpairmenttestingandwhetherthedisclosuresappropriatelycommunicatetheunderlyingsensitivities.TheaboveprocedureswereperformedpredominantlybytheGroupauditteam.Wecompletedourplannedauditprocedureswithnoexceptionsnoted.Consistentwiththepreviousyear,twoCGUshadallocatedgoodwillbalancesofbetween10%and25%oftotalgoodwillwhichtheGroupconsideredsignificantandthereforewarrantedseparatedisclosure.OneCGUwasdeterminedtobesensitiveinrespectoftheexcessofvalue-in-useoveritscarryingvalue.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex118CRH ANNUAL REPORT AND FORM 20-F I 2019119CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS118CRHANNUALREPORTANDFORM20-F|2019IndependentAuditor’sIrishReport-continuedRiskOurresponsetotheriskKeyobservationscommunicatedtotheAuditCommitteeAssessmentofthecarryingvalueofproperty,plantandequipmentandfinancialassetsIn2019theGroup’scarryingvalueofPP&Eandfinancialassetswas€17.4billionand€0.7billionrespectively.ThecarryingvaluesofPP&Eandfinancialassetsarereviewedforindicatorsofimpairmentateachreportingdateandaresubjecttoimpairmenttestingwheneventsorchangesincircumstancesindicatethatthecarryingvaluesmaynotberecoverable.Foranassetthatdoesnotgeneratelargelyindependentcashinflows,therecoverableamountisdeterminedbyreferencetotheCGUtowhichtheassetbelongs.Auditingmanagement’simpairmenttestisconsideredariskareaasitiscomplexandinvolveskeyjudgementsbymanagementduetothesignificantestimationrequiredindeterminingthefairvaluesoftheCGUs.Judgementalaspectsincludeassumptionsoffutureprofitability,revenuegrowth,marginsandforecastcashflows,andtheselectionofappropriatediscountrates,allofwhichmaybesubjecttomanagementoverride.Therehasbeennochangeinthisriskfromtheprioryear.RefertotheAuditCommitteeReport(page64);AccountingPolicies(page133);andnote15andnote17oftheConsolidatedFinancialStatements(pages164and169).Weobtainedanunderstanding,evaluatedthedesignandtestedtheoperatingeffectivenessofcontrolsovertheGroup’simpairmentreviewprocess.Forexample,wetestedcontrolsovertheCompany’sreviewofsignificantassumptions,includingfutureprofitability,revenuegrowth,marginsandforecastcashflows,andtheselectionofappropriatediscountrates,amongothers.TotesttheestimatedfairvalueoftheCGUswhereindicatorsofimpairmentexisted,weperformedauditproceduresthatincluded,amongothers,evaluationoftheinternalandexternalindicatorsofimpairmentusedwithintheGroup’sassessment,assessingfairvaluesmethodologiesandtestingthesignificantassumptionsdiscussedaboveandtheunderlyingdatausedbytheGroupinitsanalysis.Wecomparedthesignificantassumptionsusedbymanagementtoexternaleconomicforecastsandconstructionactivitymeasures,theGroup’shistoricalresults,andevaluatedwhetherchangesintheGroup’sbusinesswouldaffectthesignificantassumptions.Weassessedthehistoricalaccuracyofmanagement’sestimatesandperformedsensitivityanalysesofsignificantassumptionstoevaluatethechangeinthefairvalueofthereportingunitsresultingfromchangesintheseassumptions.Weinvolvedvaluationspecialiststoassistinourevaluationofthevaluationmethodologyandcomparisonofkeyinputstoexternalmarketdata(principallyrisk-freerates,countryriskpremiumandinflationrates)usedbymanagementincalculatingdiscountrates.Weperformedtheaboveproceduresin29componentsrepresenting92%oftotalPP&Eandfinancialassetcarryingvalues.Ourplannedauditprocedureswerecompletedwithoutexception.CRHANNUALREPORTANDFORM20-F|2019119RiskOurresponsetotheriskKeyobservationscommunicatedtotheAuditCommitteeRevenuerecognitionforconstructioncontractsAt31December2019,theGroup’srevenueforconstructioncontractswas€5.9billionwhichrepresents23%oftheGroup’srevenuein2019.Revenueyettoberecognisedfromfixed-pricelong-termconstructioncontracts,primarilywithintheEuropeMaterialsandAmericasMaterialsbusinesses,amountedto€1.9billionat31December2019.ThemajorityoftheGroup’sconstructioncontractshaveamaturitywithinoneyear.Auditingmanagement’srevenuerecognitionforconstructioncontractsiscomplexandjudgementalassuchrecognitionismateriallyaffectedbychangesinassumptionsregardingthedeterminationofthestageofcompletion,thetimingofrevenuerecognitionandthecalculationunderthepercentage-of-completionmethod.Inparticular,judgementalaspectsincludeassumptionsoftheestimatedmaterials,hours,andothercostsrequiredtofulfilcontractualperformanceobligations.Thenatureofthesejudgementsresultsinthembeingsusceptibletomanagementoverride.Thereissignificantseasonalityastowhenservicesarerenderedundertheseconstructioncontracts,withthemajorityoftheworkhistoricallyperformedinthesummermonthsand,consequently,mostarecompletedpriortotheyearend.Therehasbeennochangeinthisriskfromtheprioryear.RefertotheAuditCommitteeReport(page64);AccountingPolicies(page133);andnote1oftheConsolidatedFinancialStatements(page145).Weobtainedanunderstanding,evaluatedthedesignandtestedtheoperatingeffectivenessofcontrolsovertheGroup’srevenuerecognitionforconstructioncontractsprocess.Forexample,wetestedcontrolsovertheCompany’sprocessforevaluatingtheestimatedcontractvalue,estimatedandactualcostsuponcompletion,includingtheestimationofunitsofmeasurement,andtheamountofprofitorlosstoberecognisedinaccordancewithIFRS15RevenuefromContractswithCustomers.TotesttherevenuerecognisedbytheGroup,weperformedauditproceduresthatincluded,amongothers,testingasampleofcontractsandevaluatingtheoriginalexecutedcontractincludinganychangeorders.Forthesecontracts,wetestedkeycomponentsofthecosttocompleteestimatesandactualcoststodate,includingvouchingmaterials,hours,andsubcontractorcoststosourcedocumentation,andconductedinterviewswithandinspectedquestionnairespreparedbyprojectpersonnel.WerecalculatedrevenuesrecognisedandassessedcompliancewithIFRS15.Inaddition,ourauditproceduresincludedperformingaretrospectivereviewofestimatedprofitandcoststocompleteandenquiringofkeypersonnelregardingadjustmentsforjobcostingandpotentialcontractlosses.Weperformedtheaboveproceduresin8componentswhere96%ofconstructioncontractrevenuewasrecognisedduringtheyear.Ourplannedauditprocedureswerecompletedwithoutexception.Ourobservationsincludedanoutlineoftherangeofauditproceduresperformed,thekeyjudgementsmadebymanagementinrecognisingrevenue,marginandprovisioningonloss-makingcontractsandtheresultsofourtesting.AccountingforacquisitionsandbusinessdisposalsDuring2019,theGroupcompleted58acquisitionsatacostof€0.7billionandrealisedtotalbusinessdisposalproceedsof€2.4billionacross11disposals.AcquisitionsandbusinessdisposalscontinuetobeasignificantfocusareafortheGroupandanareawhereweallocatesignificantresourcesindirectingtheeffortsoftheengagementteam.RefertotheAuditCommitteeReport(page64);AccountingPolicies(page133);andnotes3,6and32oftheConsolidatedFinancialStatements(pages150,154and201).Weobtainedanunderstanding,evaluatedthedesignandtestedtheoperatingeffectivenessofcontrolsovertheGroup’saccountingforacquisitionsandbusinessdisposalprocesses.Ourvaluationspecialistswithintheengagementteamassessedmanagement’spurchasepriceallocationadjustments,deferredconsiderationandtheidentificationandvaluationofacquiredintangibleassets.Intestingtheaccountingforbusinessdisposals,weverifiedvariousfactorsincludingconsideration,netassetcarryingvalueofthebusinessdisposed,disposalcostsandforeignexchangereserverecycling.Wealsoconsideredtheadequacyoftherelateddisclosures(note3,6and32).TheaboveproceduresareperformedbothlocallyandbytheGroupauditteam,andcovered38%ofacquisitionspendand98%ofdisposalproceeds.Ourproceduresinrespectofcurrentyearacquisitionswerefocusedon5acquisitionswhichtogethercomprised38%oftotalacquisitionspendand4businessdisposalswhichcomprised98%oftotalbusinessdisposalproceeds.Substantialauditresourceswereallocatedtotheseprocedures,inparticularwithrespecttothepurchasepriceallocationsforthebusinessesacquired,theauditoftheopeningandclosingbalancesheetsbycomponentteamsandforeigncurrencyrecyclingonbusinessdisposals.Ourplannedauditproceduresinrespectofacquisitionswerecompletedwithoutexception.Whilstanumberofbusinessesweredisposedofduringtheyear,themostsignificantdisposalwasthedisposaloftheEuropeDistributionbusiness.Ourauditproceduresinrespectofthisandallothermaterialdisposals,wereperformedasplannedandwithoutexception.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex120CRH ANNUAL REPORT AND FORM 20-F I 2019121CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS120CRHANNUALREPORTANDFORM20-F|2019IndependentAuditor’sIrishReport-continuedOurapplicationofmaterialityWeapplytheconceptofmaterialityinplanningandperformingtheaudit,inevaluatingtheeffectofidentifiedmisstatementsontheauditandinformingourauditopinion.MaterialityThemagnitudeofanomissionormisstatementthat,individuallyorintheaggregate,couldreasonablybeexpectedtoinfluencetheeconomicdecisionsoftheusersofthefinancialstatements.Materialityprovidesabasisfordeterminingthenatureandextentofourauditprocedures.WedeterminedmaterialityfortheGrouptobe€100million(2018:€95million),whichisapproximately5%ofGroupProfitbeforetaxfromcontinuingoperations.ProfitbeforetaxisakeyperformanceindicatorfortheGroupandisalsoakeymetricusedbytheGroupintheassessmentofmanagement’sperformance.WethereforeconsideredProfitbeforetaxtobethemostappropriateperformancemetriconwhichtobaseourmaterialitycalculationasweconsiderittobethemostrelevantperformancemeasuretothestakeholdersoftheGroup.WedeterminedmaterialityfortheCompanytobe€94million(2018:€92million),whichisapproximately1%(2018:1%)oftotalequity.Duringthecourseofouraudit,wereassessedinitialmaterialityandconsideredthatnofurtherchangestomaterialitywerenecessary.PerformancematerialityPerformancematerialityistheapplicationofmaterialityattheindividualaccountorbalancelevel.Itissetatanamounttoreducetoanappropriatelylowleveltheprobabilitythattheaggregateofuncorrectedandundetectedmisstatementsexceedsmateriality.Onthebasisofourriskassessments,togetherwithourassessmentoftheGroup’soverallcontrolenvironment,ourjudgementwasthatperformancematerialityshouldbesetat75%(2018:75%)ofourplanningmateriality,namely€75million(2018:€71million).Wehavere-assessedperformancematerialityinthecurrentyearbasedonourpastexperienceoftheriskofmisstatements,bothcorrectedanduncorrected.Auditworkatcomponentlocationsforthepurposeofobtainingauditcoverageoversignificantfinancialstatementaccountsisundertakenbasedonapercentageoftotalperformancemateriality.TheperformancematerialitysetforeachcomponentisbasedontherelativescaleandriskofthecomponenttotheGroupasawholeandourassessmentoftheriskofmisstatementatthatcomponent.Inthecurrentyear,therangeofperformancematerialityallocatedtocomponentswas€15millionto€48million(2018:€14millionto€46million).ReportingthresholdAnamountbelowwhichidentifiedmisstatementsareconsideredasbeingclearlytrivial.WeagreedwiththeAuditCommitteethatwewouldreporttothemalluncorrectedauditdifferencesinexcessof€5.0million(2018:€4.75million),whichissetatapproximately5%ofplanningmateriality,aswellasdifferencesbelowthatthresholdthat,inourview,warrantedreportingonqualitativegrounds.Weevaluateanyuncorrectedmisstatementsagainstboththequantitativemeasuresofmaterialitydiscussedaboveandinlightofotherrelevantqualitativeconsiderationsinformingouropinion.AnoverviewofthescopeofourauditreportTailoringthescopeOurassessmentofauditrisk,ourevaluationofmaterialityandourallocationofperformancematerialitydetermineourauditscopeforeachentitywithintheGroup.Takentogether,thisenablesustoformanopinionontheConsolidatedFinancialStatements.IndeterminingthosecomponentsintheGrouptowhichweperformauditprocedures,weutilisedsizeandriskcriteriainaccordancewithISAs(Ireland).InassessingtheriskofmaterialmisstatementtotheGroupfinancialstatements,andtoensurewehadadequatequantitativecoverageofsignificantaccountsinthefinancialstatements,weselected46(2018:52)componentscoveringentitiesacrossEuropeandtheAmericas,aswellasthePhilippines,whichrepresenttheprincipalbusinessunitswithintheGroup.Ofthe46componentsselected,weperformedanauditofthecompletefinancialinformationof14(2018:18)components(‘fullscopecomponents’)whichwereselectedbasedontheirsizeorriskcharacteristics.Fortheremaining32(2018:34)components(‘specificscopecomponents’),weperformedauditproceduresonspecificaccountswithinthatcomponentthatweconsideredhadthepotentialforthegreatestimpactonthesignificantaccountsinthefinancialstatementseitherbecauseofthesizeoftheseaccountsortheirriskprofile.Inadditiontothe46componentsdiscussedabove,weselectedafurther19(2018:22)componentswhereweperformedproceduresatthecomponentlevelthatwerespecifiedbytheGroupauditteaminresponsetospecificriskfactors.Also,weperformedreviewproceduresatanadditional17(2018:24)components.Thereportingcomponentswhereweperformedeitherfullorspecificscopeauditproceduresaccountedfor89%(2018:97%)oftheGroup’sProfitbeforetaxfromcontinuingoperations,87%(2018:83%)oftheGroup’sRevenueand86%(2018:89%)oftheGroup’sTotalAssets.Forthecurrentyear,thefullscopecomponentscontributed86%(2018:90%)oftheGroup’sProfitbeforetaxfromcontinuingoperations,79%(2018:75%)oftheGroup’sRevenueand75%(2018:79%)oftheGroup’sTotalAssets.Thespecificscopecomponentscontributed3%(2018:7%)oftheGroup’sProfitbeforetaxfromcontinuingoperations,8%(2018:8%)oftheGroup’sRevenueand11%(2018:10%)oftheGroup’sTotalAssets.ThecomponentswhereweeitherperformedproceduresthatwerespecifiedbytheGroupauditteaminresponsetospecificriskfactorsorreviewscopeprocedurescontributed2%and5%(2018:0%and2%)respectivelyoftheGroup’sProfitbeforetaxfromcontinuingoperations,1%and4%(2018:2%and6%)respectivelyoftheGroup’sRevenueand7%and2%(2018:4%and2%)respectivelyoftheGroup’sTotalAssets.TheauditscopeofthesecomponentsmaynothaveincludedtestingofallsignificantaccountsofthecomponentbutwillhavecontributedtothecoverageofsignificantriskstestedfortheGroup.Oftheremainingcomponents,whichtogetherrepresent4%(2018:1%)oftheGroup’sProfitbeforetaxfromcontinuingoperations,noneisindividuallygreaterthan5%oftheGroup’sProfitbeforetaxfromcontinuingoperations.Forthesecomponents,weperformedotherprocedures,includinganalyticalreview,confirmationofcashbalances,testingofconsolidationjournalsandintercompanyeliminationsandforeigncurrencytranslationrecalculationstorespondtoanypotentialrisksofmaterialmisstatementtotheConsolidatedFinancialStatements.CRHANNUALREPORTANDFORM20-F|2019121Thechartsbelowillustratethecoverageobtainedfromtheworkperformedbyourauditteamsbasedoncontinuingoperations.Profit before tax fromcontinuing operations86% Fullscope3% Specificscope2% Specifiedprocedures5% Reviewscope4% OtherproceduresRevenue79% Fullscope8% Specificscope1% Specifiedprocedures4% Reviewscope8% OtherproceduresTotal Assets75% Full scope11% Specific scope7% Specifiedprocedures2% Review scope5% Other proceduresInvolvementwithcomponentteamsInestablishingouroverallapproachtotheGroupaudit,wedeterminedthetypeofworkthatneededtobeundertakenateachofthecomponentsbyus,astheGroupauditteam,orbycomponentauditorsfromotherEYglobalnetworkfirmsoperatingunderourinstruction.Forthefullscopeandspecificscopecomponents,wheretheworkwasperformedbycomponentauditors,wedeterminedtheappropriatelevelofinvolvementtoenableustodeterminethatsufficientauditevidencehadbeenobtainedasabasisforouropinionontheGroupasawhole.WeissueddetailedinstructionstoeachcomponentauditorinscopefortheGroupaudit,withspecificauditrequirementsandrequestsacrosskeyareas.TheGroupauditteamcontinuedtoperformaprogrammeofsitevisitsatkeylocationsacrosstheGroup,visiting9componentteamsduring2019andvisiting50componentteamsinthepastfiveyears.Thevisitsconductedduringtheyearinvolveddiscussingwiththecomponentteamtheauditapproachandanyissuesarisingfromtheirwork,meetingwithlocalmanagement,attendingplanningandclosingmeetingsandreviewingkeyauditworkingpapersonriskareas.TheGroupauditteaminteractedregularlywithallcomponentteamswhereappropriateduringvariousstagesoftheaudit,reviewedkeyworkingpapersandwereresponsibleforthescopeanddirectionoftheauditprocess.This,togetherwiththeadditionalproceduresperformedatGrouplevel,gaveusappropriateevidenceforouropinionontheConsolidatedFinancialStatements.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex122CRH ANNUAL REPORT AND FORM 20-F I 2019123CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS122CRHANNUALREPORTANDFORM20-F|2019IndependentAuditor’sIrishReport-continuedConclusionsrelatingtoprincipalrisks,goingconcernandviabilitystatementWehavenothingtoreportinrespectofthefollowinginformationintheannualreport,inrelationtowhichtheISAs(Ireland)requireustoreporttoyouwhetherwehaveanythingmaterialtoaddordrawattentionto:•thedisclosuresintheAnnualReportsetoutonpages108to113thatdescribetheprincipalrisksandexplainhowtheyarebeingmanagedormitigated;•theDirectors’confirmationsetoutonpage104intheAnnualReportthattheyhavecarriedoutarobustassessmentoftheprincipalrisksfacingtheGroupandtheCompany,includingthosethatwouldthreatenitsbusinessmodel,futureperformance,solvencyorliquidity;•theDirectors’statementsetoutonpage104intheAnnualReportaboutwhethertheDirectorsconsidereditappropriatetoadoptthegoingconcernbasisofaccountinginpreparingthefinancialstatementsandtheDirectors’identificationofanymaterialuncertaintiestotheGroup’sandtheCompany’sabilitytocontinuetodosooveraperiodofatleast12monthsfromthedateofapprovalofthefinancialstatements;•whethertheDirectors’statementrelatingtogoingconcernrequiredundertheListingRulesofEuronextDublinandtheUKListingAuthorityismateriallyinconsistentwithourknowledgeobtainedintheaudit;or•theDirectors’explanationsetoutonpage104intheAnnualReportastohowtheyhaveassessedtheprospectsoftheGroupandtheCompany,overwhatperiodtheyhavedonesoandwhytheyconsiderthatperiodtobeappropriate,andtheirstatementastowhethertheyhaveareasonableexpectationthattheGroupandtheCompanywillbeabletocontinueinoperationandmeetitsliabilitiesastheyfalldueovertheperiodoftheirassessment,includinganyrelateddisclosuresdrawingattentiontoanynecessaryqualificationsorassumptionsOtherinformationTheDirectorsareresponsiblefortheotherinformation.TheotherinformationcomprisestheinformationincludedintheAnnualReportotherthanthefinancialstatementsandourauditor’sreportthereon.Ouropiniononthefinancialstatementsdoesnotcovertheotherinformationand,excepttotheextentotherwiseexplicitlystatedinourreport,wedonotexpressanyformofassuranceconclusionthereon.Inconnectionwithourauditofthefinancialstatements,ourresponsibilityistoreadtheotherinformationand,indoingso,considerwhethertheotherinformationismateriallyinconsistentwiththefinancialstatementsorourknowledgeobtainedintheauditorotherwiseappearstobemateriallymisstated.Ifweidentifysuchmaterialinconsistenciesorapparentmaterialmisstatements,wearerequiredtodeterminewhetherthereisamaterialmisstatementinthefinancialstatementsoramaterialmisstatementoftheotherinformation.If,basedontheworkwehaveperformed,weconcludethatthereisamaterialmisstatementofthisotherinformation,wearerequiredtoreportthatfact.Wehavenothingtoreportinthisregard.Inthiscontext,wealsohavenothingtoreportinregardtoourresponsibilitytospecificallyaddressthefollowingitemsintheotherinformationandtoreportasuncorrectedmaterialmisstatementsoftheotherinformationwhereweconcludethatthoseitemsmeetthefollowingconditions:•Fair,balancedandunderstandable(setoutonpage106)–thestatementgivenbytheDirectorsthattheyconsidertheAnnualReportandfinancialstatementstakenasawholeisfair,balancedandunderstandableandprovidestheinformationnecessaryforshareholderstoassesstheGroup’sandtheCompany’sperformance,businessmodelandstrategy,ismateriallyinconsistentwithourknowledgeobtainedintheaudit;or•AuditCommitteereporting(setoutonpage64)–thesectiondescribingtheworkoftheAuditCommitteedoesnotappropriatelyaddressmatterscommunicatedbyustotheAuditCommitteeismateriallyinconsistentwithourknowledgeobtainedintheaudit;or•Directors’statementofcompliancewiththeUKCorporateGovernanceCode(setoutonpage60)–thepartsoftheDirectors’statementrequiredundertheListingRulesrelatingtotheCompany’scompliancewiththeUKCorporateGovernanceCodecontainingprovisionsspecifiedforreviewbytheauditorinaccordancewiththeListingRulesofEuronextDublinandtheUKListingAuthoritydonotproperlydiscloseadeparturefromarelevantprovisionoftheUKCorporateGovernanceCodeOpinionsonothermattersprescribedbytheCompaniesAct2014Basedsolelyontheworkundertakeninthecourseoftheaudit,wereportthat:•inouropinion,theinformationgivenintheDirectors’Report,otherthanthosepartsdealingwiththenon-financialstatementpursuanttotherequirementsofS.I.No.360/2017onwhichwearenotrequiredtoreportinthecurrentyear,isconsistentwiththefinancialstatements;and•inouropinion,theDirectors’Report,otherthanthosepartsdealingwiththenon-financialstatementpursuanttotherequirementsofS.I.No.360/2017onwhichwearenotrequiredtoreportinthecurrentyear,hasbeenpreparedinaccordancewiththeCompaniesAct2014Wehaveobtainedalltheinformationandexplanationswhichweconsidernecessaryforthepurposesofouraudit.InouropiniontheaccountingrecordsoftheCompanyweresufficienttopermitthefinancialstatementstobereadilyandproperlyauditedandtheCompanyBalanceSheetisinagreementwiththeaccountingrecords.CRHANNUALREPORTANDFORM20-F|2019123MattersonwhichwearerequiredtoreportbyexceptionBasedontheknowledgeandunderstandingoftheGroupandtheCompanyanditsenvironmentobtainedinthecourseoftheaudit,wehavenotidentifiedmaterialmisstatementsintheDirectors’Report,excludingthosepartsdealingwiththenon-financialstatementpursuanttotherequirementsofS.I.No.360/2017onwhichwearenotrequiredtoreportinthecurrentyear.TheCompaniesAct2014requiresustoreporttoyouif,inouropinion,thedisclosuresofDirectors’remunerationandtransactionsrequiredbysections305to312oftheActarenotmade.Wehavenothingtoreportinthisregard.RespectiveresponsibilitiesRespectiveresponsibilitiesofDirectorsforthefinancialstatementsAsexplainedmorefullyintheStatementofDirectors’Responsibilitiessetoutonpage105,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.Ourapproachwasasfollows:•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.pdfThisdescriptionformspartofourauditor’sreport.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex124CRH ANNUAL REPORT AND FORM 20-F I 2019125CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS124CRHANNUALREPORTANDFORM20-F|2019IndependentAuditor’sIrishReport-continuedOthermatterswhichwearerequiredtoaddressWewereappointedbytheBoardofDirectorsfollowingtheAGMheldon25April2019toauditthefinancialstatementsfortheyearended31December2019.Theperiodoftotaluninterruptedengagementincludingpreviousrenewalsandre-appointmentsofthefirmis32years.Thenon-auditservicesprohibitedbyIAASA’sEthicalStandardwerenotprovidedtotheGroupandweremainindependentoftheGroupinconductingouraudit.OurauditopinionisconsistentwiththereporttotheAuditCommittee.ThepurposeofourauditworkandtowhomweoweourresponsibilitiesOurreportismadesolelytotheCompany’smembers,asabody,inaccordancewithsection391oftheCompaniesAct2014.OurauditworkhasbeenundertakensothatwemightstatetotheCompany’smembersthosematterswearerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheCompanyandtheCompany’smembers,asabody,forourauditwork,forthisreport,orfortheopinionswehaveformed.PatO’NeillforandonbehalfofErnst&YoungCharteredAccountantsandStatutoryAuditFirmDublin27February2020CRHANNUALREPORTANDFORM20-F|2019125IndependentAuditor’sUSReportsREPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRMTotheShareholdersandtheBoardofDirectorsofCRHpubliclimitedcompany(CRHplc):OpinionontheFinancialStatementsWehaveauditedtheaccompanyingConsolidatedBalanceSheetsofCRHplc(‘theCompany’)asof31December2019and2018,therelatedConsolidatedIncomeStatementsandConsolidatedStatementsofComprehensiveIncome,ChangesinEquityandCashFlowsforeachofthethreeyearsintheperiodended31December2019,andtherelatednotes(collectivelyreferredtoasthe‘financialstatements’).Inouropinion,thefinancialstatementspresentfairly,inallmaterialrespects,theconsolidatedfinancialpositionoftheCompanyat31December2019and2018,andtheconsolidatedresultsofitsoperationsanditscashflowsforeachofthethreeyearsintheperiodended31December2019,inconformitywithInternationalFinancialReportingStandardsasissuedbytheInternationalAccountingStandardsBoard.Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)(PCAOB),theCompany’sinternalcontroloverfinancialreportingasof31December2019,basedoncriteriaestablishedinInternalControl-IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganisationsoftheTreadwayCommission(2013Framework)andourreportdated27February2020expressedanunqualifiedopinionthereon.AdoptionofNewAccountingStandardAsdiscussedintheAccountingPoliciestothefinancialstatements,theCompanychangeditsmethodofaccountingforleasesin2019duetotheadoptionofIFRS16Leases.BasisforOpinionThesefinancialstatementsaretheresponsibilityoftheCompany’smanagement.OurresponsibilityistoexpressanopinionontheCompany’sfinancialstatementsbasedonouraudits.WeareapublicaccountingfirmregisteredwiththePCAOBandarerequiredtobeindependentwithrespecttotheCompanyinaccordancewiththeUSfederalsecuritieslawsandtheapplicablerulesandregulationsoftheSecuritiesandExchangeCommissionandthePCAOB.WeconductedourauditsinaccordancewiththestandardsofthePCAOB.Thosestandardsrequirethatweplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreeofmaterialmisstatement,whetherduetoerrororfraud.Ourauditsincludedperformingprocedurestoassesstherisksofmaterialmisstatementofthefinancialstatements,whetherduetoerrororfraud,andperformingproceduresthatrespondtothoserisks.Suchproceduresincludedexamining,onatestbasis,evidenceregardingtheamountsanddisclosuresinthefinancialstatements.Ourauditsalsoincludedevaluatingtheaccountingprinciplesusedandsignificantestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.Webelievethatourauditsprovideareasonablebasisforouropinion.CriticalAuditMattersThecriticalauditmatterscommunicatedbelowaremattersarisingfromthecurrentperiodauditofthefinancialstatementsthatwerecommunicatedorrequiredtobecommunicatedtotheAuditCommitteeandthat:(1)relatetoaccountsordisclosuresthatarematerialtothefinancialstatementsand(2)involvedourespeciallychallenging,subjective,orcomplexjudgements.Thecommunicationofcriticalauditmattersdoesnotalterinanywayouropiniononthefinancialstatements,takenasawhole,andwearenot,bycommunicatingthecriticalauditmattersbelow,providingseparateopinionsonthecriticalauditmattersorontheaccountsordisclosurestowhichtheyrelate.AssessmentofthecarryingvalueofgoodwillDescriptionoftheMatterAt31December2019,theCompany’scarryingvalueofgoodwillwas€8.1billion.Asdiscussedinnote16ofthefinancialstatements,goodwillissubjecttoimpairmenttestingonanannualbasisandatanytimeduringtheyearifanindicatorofimpairmentexists.TheCompany’sGoodwillacquiredthroughbusinesscombinationactivityhasbeenallocatedtocash-generatingunits(CGUs).TherecoverableamountoftheCGUsisdeterminedbasedonavalue-in-usecomputation.Auditingmanagement’sannualgoodwillimpairmenttestiscomplexandjudgementalduetothesignificantestimationrequiredindeterminingthefairvalueofeachCGUespeciallywhereanindicatorofimpairmentexists.Inparticular,judgementalaspectsincludeassumptionsoffutureprofitability,revenuegrowth,marginsandforecastcashflows,andtheselectionofappropriatediscountrates.HowWeAddressedtheMatterinOurAuditWeobtainedanunderstanding,evaluatedthedesignandtestedtheoperatingeffectivenessofcontrolsovertheCompany’sgoodwillimpairmentreviewprocess.Forexample,wetestedcontrolsovertheCompany’sreviewofsignificantassumptions,includingfutureprofitability,revenuegrowth,marginsandforecastcashflows,andtheselectionofappropriatediscountrates,amongothers.TotesttheestimatedfairvalueoftheCompany’sCGUswhereindicatorsofimpairmentexisted,weperformedauditproceduresthatincluded,amongothers,assessingfairvaluesmethodologiesandtestingthesignificantassumptionsdiscussedaboveandtheunderlyingdatausedbytheCompanyinitsanalysis.Wecomparedthesignificantassumptionsusedbymanagementtoexternaleconomicforecastsandconstructionactivitymeasures,theCompany’shistoricalresults,andevaluatedwhetherchangesintheCompany’sbusinesswouldaffectthesignificantassumptions.Weassessedthehistoricalaccuracyofmanagement’s→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex126CRH ANNUAL REPORT AND FORM 20-F I 2019127CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS126CRHANNUALREPORTANDFORM20-F|2019IndependentAuditor’sUSReports-continuedestimatesandperformedsensitivityanalysisofsignificantassumptionstoevaluatethechangeinthefairvalueoftheCGUsresultingfromchangesintheseassumptions.Weinvolvedvaluationspecialiststoassistinourevaluationofthevaluationmethodologyandcomparisonofkeyinputstoexternalmarketdata(principallyrisk-freerates,countryriskpremiumandinflationrates)usedbymanagementincalculatingdiscountrates.Wealsoevaluatedmanagement’sdisclosuresinrespectofimpairmenttesting.Assessmentofthecarryingvalueofproperty,plantandequipmentandfinancialassetsDescriptionoftheMatterAt31December2019,theCompany’scarryingvalueofproperty,plantandequipment(PP&E)andfinancialassetswas€17.4billionand€0.7billionrespectively.Asdiscussedinnotes15and17ofthefinancialstatements,thecarryingvaluesofPP&Eandfinancialassetsarereviewedforindicatorsofimpairmentateachreportingdateandaresubjecttoimpairmenttestingwheneventsorchangesincircumstancesindicatethatthecarryingvaluesmaynotberecoverable.Foranassetthatdoesnotgeneratelargelyindependentcashinflows,therecoverableamountisdeterminedbyreferencetotheCGUtowhichtheassetbelongs.Auditingmanagement’simpairmenttestiscomplexandjudgementalduetothesignificantestimationrequiredindeterminingthefairvalueoftheCGUs.Inparticular,judgementalaspectsincludeassumptionsoffutureprofitability,revenuegrowth,marginsandforecastcashflows,andtheselectionofappropriatediscountrates.HowWeAddressedtheMatterinOurAuditWeobtainedanunderstanding,evaluatedthedesignandtestedtheoperatingeffectivenessofcontrolsovertheCompany’simpairmentreviewprocess.Forexample,wetestedcontrolsovertheCompany’sreviewofsignificantassumptions,includingfutureprofitability,revenuegrowth,marginsandforecastcashflows,andtheselectionofappropriatediscountrates,amongothers.TotesttheestimatedfairvalueoftheCompanyCGUswhereindicatorsofimpairmentexisted,weperformedauditproceduresthatincluded,amongothers,evaluationoftheinternalandexternalindicatorsofimpairmentusedwithintheCompany’sassessment,assessingfairvaluesmethodologiesandtestingthesignificantassumptionsdiscussedaboveandtheunderlyingdatausedbytheCompanyinitsanalysis.Wecomparedthesignificantassumptionsusedbymanagementtoexternaleconomicforecastsandconstructionactivitymeasures,theCompany’shistoricalresults,andevaluatedwhetherchangesintheCompany’sbusinesswouldaffectthesignificantassumptions.Weassessedthehistoricalaccuracyofmanagement’sestimatesandperformedsensitivityanalysisofsignificantassumptionstoevaluatethechangeinthefairvalueofthereportingunitsresultingfromchangesintheseassumptions.Weinvolvedvaluationspecialiststoassistinourevaluationofthevaluationmethodologyandcomparisonofkeyinputstoexternalmarketdata(principallyrisk-freerates,countryriskpremiumandinflationrates)usedbymanagementincalculatingdiscountrates.RevenuerecognitionforconstructioncontractsDescriptionoftheMatterAt31December2019,theCompany’srevenueforconstructioncontractswas€5.9billion.Asdiscussedinnote1ofthefinancialstatements,revenueyettoberecognisedfromfixed-pricelong-termconstructioncontracts,primarilywithintheEuropeMaterialsandAmericasMaterialsbusinesses,amountedto€1.9billionat31December2019.ThemajorityoftheCompany’sconstructioncontractshaveamaturitywithinoneyear.Auditingmanagement’srevenuerecognitionforconstructioncontractsiscomplexandjudgementalassuchrecognitionismateriallyaffectedbychangesinassumptionsregardingthedeterminationofthestageofcompletion,thetimingofrevenuerecognitionandthecalculationunderthepercentage-of-completionmethod.Inparticular,judgementalaspectsincludeassumptionsoftheestimatedmaterials,hours,andothercostsrequiredtofulfilcontractualperformanceobligations.HowWeAddressedtheMatterinOurAuditWeobtainedanunderstanding,evaluatedthedesignandtestedtheoperatingeffectivenessofcontrolsovertheCompany’srevenuerecognitionforconstructioncontractsprocess.Forexample,wetestedcontrolsovertheCompany’sprocessforevaluatingtheestimatedcontractvalue,estimatedandactualcostsuponcompletion,includingtheestimationofunitsofmeasurement,andtheamountofprofitorlosstoberecognisedinaccordancewithIFRS15.TotesttherevenuerecognisedbytheCompany,weperformedauditproceduresthatincluded,amongothers,testingasampleofcontractsandevaluatingtheoriginalexecutedcontractincludinganychangeorders.Forthesecontracts,wetestedkeycomponentsofthecosttocompleteestimatesandactualcoststodate,includingvouchingmaterials,hours,andsubcontractorcoststosourcedocumentation,andconductedinterviewswithandinspectedquestionnairespreparedbyprojectpersonnel.WerecalculatedrevenuesrecognisedandassessedcompliancewithIFRS15.Inaddition,ourauditproceduresincludedperformingaretrospectivereviewofestimatedprofitandcoststocompleteandenquiringofkeypersonnelregardingadjustmentsforjobcostingandpotentialcontractlosses.ERNST&YOUNGWehaveservedastheCompany’sauditorsince1988.Dublin,Ireland27February2020CRHANNUALREPORTANDFORM20-F|2019127REPORTOFINDEPENDENTREGISTEREDPUBLICACCOUNTINGFIRMTotheShareholdersandtheBoardofDirectorsofCRHpubliclimitedcompany(CRHplc):OpiniononInternalControloverFinancialReportingWehaveauditedCRHplc’sinternalcontroloverfinancialreportingasof31December2019,basedoncriteriaestablishedinInternalControl-IntegratedFrameworkissuedbytheCommitteeofSponsoringOrganisationsoftheTreadwayCommission(2013Framework)(the‘COSOcriteria’).Inouropinion,CRHplc(‘theCompany’)maintained,inallmaterialrespects,effectiveinternalcontroloverfinancialreportingasof31December2019,basedontheCOSOcriteria.AsindicatedintheaccompanyingManagement’sReportonInternalControloverFinancialReporting,management’sassessmentofandconclusionontheeffectivenessofinternalcontroloverfinancialreportingdidnotincludetheinternalcontrolsofbusinesscombinationsduringtheyearended31December2019,whichareincludedinthe2019ConsolidatedFinancialStatementsoftheCompanyandconstituted1.5%and2.3%oftotalandnetassets,respectively,asof31December2019and0.8%and0.1%ofrevenueandgroupprofit,respectively,fortheyearthenended.OurauditofinternalcontroloverfinancialreportingoftheCompanyalsodidnotincludeanevaluationoftheinternalcontroloverfinancialreportingofbusinesscombinationscompletedduringtheyearended31December2019.Wealsohaveaudited,inaccordancewiththestandardsofthePublicCompanyAccountingOversightBoard(UnitedStates)(PCAOB),theConsolidatedBalanceSheetsofCRHplcasof31December2019and2018,therelatedConsolidatedIncomeStatementsandConsolidatedStatementsofComprehensiveIncome,ChangesinEquityandCashFlowsforeachofthethreeyearsintheperiodended31December2019,andtherelatednotes(collectivelyreferredtoasthe“financialstatements”)oftheCompanyandourreportdated27February2020expressedanunqualifiedopinionthereon.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,Ireland27February2020→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex128CRH ANNUAL REPORT AND FORM 20-F I 2019129CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS128CRHANNUALREPORTANDFORM20-F|2019ConsolidatedIncomeStatementforthefinancialyearended31December20192019€mRestated(i)2018€mRestated(i)2017€mNotes1,2Revenue25,12923,24121,6534Costofsales(16,846)(15,572)(14,275)Grossprofit8,2837,6697,3784Operatingcosts(5,789)(5,598)(5,451)2,5,7,8Groupoperatingprofit2,4942,0711,9272,6(Loss)/profitondisposals(1)(27)54Profitbeforefinancecosts2,4932,0441,98110Financecosts(346)(339)(301)10Financeincome20341210Otherfinancialexpense(112)(46)(59)11Shareofequityaccountedinvestments’profit6048522Profitbeforetaxfromcontinuingoperations2,1151,7411,68512Incometaxexpense(477)(396)(12)Groupprofitforthefinancialyearfromcontinuingoperations1,6381,3451,6733Profitaftertaxforthefinancialyearfromdiscontinuedoperations3101,176246Groupprofitforthefinancialyear1,9482,5211,919Profitattributableto:EquityholdersoftheCompanyFromcontinuingoperations1,6201,3421,650Fromdiscontinuedoperations3091,175245Non-controllinginterestsFromcontinuingoperations18323Fromdiscontinuedoperations111Groupprofitforthefinancialyear1,9482,5211,91914BasicearningsperOrdinaryShare240.7c302.4c226.8c14DilutedearningsperOrdinaryShare238.8c300.9c225.4c14BasicearningsperOrdinarySharefromcontinuingoperations202.2c161.2c197.4c14DilutedearningsperOrdinarySharefromcontinuingoperations200.6c160.4c196.2c(i)RestatedtoshowtheresultsofourformerEuropeDistributionsegmentindiscontinuedoperations.Seenote3forfurtherdetails.CRHANNUALREPORTANDFORM20-F|2019129ConsolidatedStatementofComprehensiveIncomeforthefinancialyearended31December20192019€m2018€m2017€mNotesGroupprofitforthefinancialyear1,9482,5211,919OthercomprehensiveincomeItemsthatmaybereclassifiedtoprofitorlossinsubsequentyears:Currencytranslationeffects343276(1,076)27Gains/(losses)relatingtocashflowhedges24(40)812Taxrelatingtocashflowhedges(3)5-364241(1,068)Itemsthatwillnotbereclassifiedtoprofitorlossinsubsequentyears:30Remeasurementofretirementbenefitobligations(17)1011412Taxrelatingtoretirementbenefitobligations(3)(1)(33)(20)981Totalothercomprehensiveincomeforthefinancialyear344250(987)Totalcomprehensiveincomeforthefinancialyear2,2922,771932Attributableto:EquityholdersoftheCompany2,2492,768969Non-controllinginterests433(37)Totalcomprehensiveincomeforthefinancialyear2,2922,771932→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex130CRH ANNUAL REPORT AND FORM 20-F I 2019131CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS130CRHANNUALREPORTANDFORM20-F|2019ConsolidatedBalanceSheetasat31December20192019€m2018€mNotesASSETSNon-currentassets15Property,plantandequipment17,42415,76116Intangibleassets8,4348,43317Investmentsaccountedforusingtheequitymethod6901,16317Otherfinancialassets122319Otherreceivables31718127Derivativefinancialinstruments763029Deferredincometaxassets6771Totalnon-currentassets27,02025,662Currentassets18Inventories2,7423,06119Tradeandotherreceivables3,7674,074Currentincometaxrecoverable201527Derivativefinancialinstruments61525Cashandcashequivalents3,7552,346Totalcurrentassets10,2909,511Totalassets37,31035,173EQUITYCapitalandreservesattributabletotheCompany’sequityholders31Equitysharecapital27228731Preferencesharecapital1131Sharepremiumaccount6,5346,53431TreasurySharesandownshares(325)(792)Otherreserves326296Foreigncurrencytranslationreserve210(109)Retainedincome9,9229,812CapitalandreservesattributabletotheCompany’sequityholders16,94016,02933Non-controllinginterests540525Totalequity17,48016,554LIABILITIESNon-currentliabilities22Leaseliabilities1,240-26Interest-bearingloansandborrowings8,1998,69827Derivativefinancialinstruments11829Deferredincometaxliabilities2,3382,20920Otherpayables48547230Retirementbenefitobligations42742428Provisionsforliabilities760719Totalnon-currentliabilities13,45012,540Currentliabilities22Leaseliabilities271-20Tradeandotherpayables4,3764,609Currentincometaxliabilities50344326Interest-bearingloansandborrowings81561827Derivativefinancialinstruments164128Provisionsforliabilities399368Totalcurrentliabilities6,3806,079Totalliabilities19,83018,619Totalequityandliabilities37,31035,173R.Boucher,A.Manifold,DirectorsCRHANNUALREPORTANDFORM20-F|2019131ConsolidatedStatementofChangesinEquityforthefinancialyearended31December2019AttributabletotheequityholdersoftheCompanyIssuedsharecapital€mSharepremiumaccount€mTreasuryShares/ownshares€mOtherreserves€mForeigncurrencytranslationreserve€mRetainedincome€mNon-controllinginterests€mTotalequity€mNotesAt1January20192886,534(792)296(109)9,81252516,554Groupprofitforthefinancialyear-----1,929191,948Othercomprehensiveincome----319124344Totalcomprehensiveincome----3191,930432,2929Share-basedpaymentexpense---77---7731SharesacquiredbyCRHplc(TreasuryShares)--(791)----(791)31TreasuryShares/ownsharesreissued--35--(35)--31SharesacquiredbyEmployeeBenefitTrust(ownshares)--(61)----(61)31SharesdistributedunderthePerformanceSharePlanAwards--62(62)----31CancellationofTreasuryShares(15)-1,22215-(1,222)--12Taxrelatingtoshare-basedpaymentexpense-----9-9Shareoptionexercises-----20-2013Dividends-----(584)(10)(594)3Disposalofnon-controllinginterests------(8)(8)32Non-controllinginterestsarisingonacquisitionofsubsidiaries------11Transactionsinvolvingnon-controllinginterests-----(8)(11)(19)At31December20192736,534(325)3262109,92254017,480forthefinancialyearended31December2018At1January20182876,417(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)31TreasuryShares/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)932Issueofsharecapital(netofexpenses)1118-----119Share-basedpaymentexpense---62---62TreasuryShares/ownsharesreissued--2--(2)--SharesacquiredbyEmployeeBenefitTrust(ownshares)--(3)----(3)SharesdistributedunderthePerformanceSharePlanAwards162-(63)----12Taxrelatingtoshare-basedpaymentexpense-----(5)-(5)13Dividends(includingsharesissuedinlieuofdividends)-----(546)(8)(554)32Non-controllinginterestsarisingonacquisitionofsubsidiaries------2020Transactionsinvolvingnon-controllinginterests------(37)(37)At31December20172876,417(15)285(386)7,90348614,977→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex132CRH ANNUAL REPORT AND FORM 20-F I 2019133CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS132CRHANNUALREPORTANDFORM20-F|2019ConsolidatedStatementofCashFlowsforthefinancialyearended31December20192019€m2018€m2017€mNotesCashflowsfromoperatingactivitiesProfitbeforetaxfromcontinuingoperations2,1151,7411,6853Profitbeforetaxfromdiscontinuedoperations3331,679328Profitbeforetax2,4483,4202,01310Financecosts(net)44535134911Shareofequityaccountedinvestments’profit(72)(60)(65)6Profitondisposals(226)(1,539)(59)Groupoperatingprofit2,5952,1722,23815,22Depreciationcharge1,5381,0711,00616Amortisationofintangibleassets59616615,16Impairmentcharge856-9Share-basedpaymentexpense776765Other(primarilypensionpayments)(3)(67)(186)21Netmovementonworkingcapitalandprovisions(64)(463)(209)Cashgeneratedfromoperations4,2102,8972,980Interestpaid(includingleases)(i)(419)(335)(317)Corporationtaxpaid(325)(663)(474)Netcashinflowfromoperatingactivities3,4661,8992,189Cashflowsfrominvestingactivities6Proceedsfromdisposals(netofcashdisposedanddeferredproceeds)2,0963,009222Interestreceived20341117Dividendsreceivedfromequityaccountedinvestments35483115Purchaseofproperty,plantandequipment(1,229)(1,121)(1,044)32Acquisitionofsubsidiaries(netofcashacquired)(650)(3,505)(1,841)17Otherinvestmentsandadvances(29)(2)(11)21Deferredandcontingentacquisitionconsiderationpaid(48)(55)(53)Netcashinflow/(outflow)frominvestingactivities195(1,592)(2,685)Cashflowsfromfinancingactivities31Proceedsfromissueofshares(net)-1142Proceedsfromexerciseofshareoptions207-Transactionsinvolvingnon-controllinginterests(19)-(37)23Increaseininterest-bearingloansandborrowings911,4341,01023Netcashflowarisingfromderivativefinancialinstruments(36)616910Premiumpaidonearlydebtredemption--(18)23Repaymentofinterest-bearingloans,borrowingsandfinanceleases(ii)(572)(246)(343)22Repaymentofleaseliabilities(iii)(317)--31TreasuryShares/ownsharespurchased(852)(792)(3)13DividendspaidtoequityholdersoftheCompany(584)(521)(469)13Dividendspaidtonon-controllinginterests(10)(12)(8)Netcash(outflow)/inflowfromfinancingactivities(2,279)(113)343Increase/(decrease)incashandcashequivalents1,382194(153)ReconciliationofopeningtoclosingcashandcashequivalentsCashandcashequivalentsat1January2,3462,1352,449Translationadjustment2717(161)Increase/(decrease)incashandcashequivalents1,382194(153)25Cashandcashequivalentsat31December3,7552,3462,135(i)LeasesincludefinanceleasespreviouslycapitalisedunderIAS17Leasesin2018and2017andallcapitalisedleasesincludedasleaseliabilitiesunderIFRS16Leasesin2019.(ii)FinanceleasesaspreviouslycapitalisedunderIAS17in2018and2017.(iii)RepaymentofleaseliabilitiescapitalisedunderIFRS16in2019amountedto€386million,ofwhich€69millionrelatedtointerestpaidwhichispresentedincashflowsfromoperatingactivities.CRHANNUALREPORTANDFORM20-F|2019133AccountingPolicies(includingkeyaccountingestimatesandassumptions)ThisdocumentconstitutesboththeAnnualReportandtheFinancialStatementsinaccordancewiththeIrishandUKrequirements,andtheAnnualReportonForm20-FinaccordancewiththeUSSecuritiesExchangeActof1934.BasisofPreparationTheConsolidatedFinancialStatementsofCRHplchavebeenpreparedinaccordancewithInternationalFinancialReportingStandards(IFRS)asadoptedbytheEuropeanUnion,whichcomprisestandardsandinterpretationsapprovedbytheInternationalAccountingStandardsBoard(IASB).IFRSasadoptedbytheEuropeanUniondifferincertainrespectsfromIFRSasissuedbytheIASB.However,theConsolidatedFinancialStatementsforthefinancialyearspresentedwouldbenodifferenthadIFRSasissuedbytheIASBbeenapplied.TheConsolidatedFinancialStatementsarealsopreparedincompliancewiththeCompaniesAct2014andArticle4oftheEUIASRegulation.CRHplc,theParentCompany,isapubliclytradedlimitedcompanyincorporatedanddomiciledintheRepublicofIreland.TheConsolidatedFinancialStatements,whicharepresentedineuromillions,havebeenpreparedunderthehistoricalcostconventionasmodifiedbythemeasurementatfairvalueofshare-basedpayments,retirementbenefitobligationsandcertainfinancialassetsandliabilitiesincludingderivativefinancialinstruments.TheaccountingpoliciessetoutbelowhavebeenappliedconsistentlybyalloftheGroup’ssubsidiaries,jointventuresandassociatestoallperiodspresentedintheConsolidatedFinancialStatements.InaccordancewithSection304oftheCompaniesAct2014,theCompanyisavailingoftheexemptionfrompresentingitsindividualprofitandlossaccounttotheAnnualGeneralMeetingandfromfilingitwiththeRegistrarofCompanies.AdoptionofIFRSandInternationalFinancialReportingInterpretationsCommittee(IFRIC)interpretationsThefollowingnewstandards,interpretationsandstandardamendmentsbecameeffectivefortheGroupasof1January2019:•IFRS16Leases•IFRIC23UncertaintyoverIncomeTaxTreatments•AmendmentstoIFRS9FinancialInstruments•AmendmentstoIAS19EmployeeBenefits•AmendmentstoIAS28InvestmentsinAssociatesandJointVentures•AnnualImprovements2015–2017CycleThenewstandards,interpretationsandstandardamendmentsdidnotresultinamaterialimpactontheGroup’sresults,withtheexceptionofIFRS16whichisdetailedbelow.IFRS16LeasesIFRS16replacesIAS17Leases.CRHadoptedIFRS16byapplyingthemodifiedretrospectiveapproachonthetransitiondateof1January2019.TheGroupappliedtherecognitionexemptionforbothshort-termleasesandleasesoflow-valueassets.TheGroupdidnotavailofthepracticalexpedientnottoseparatenon-leasecomponentsfromleasecomponentsorthepracticalexpedientallowingleasespreviouslyclassifiedasoperatingleasesandendingwithin12monthsofthedateoftransition,tobeaccountedforasshort-termleases.Theright-of-useassethasbeencalculatedastheleaseliabilityat1January2019adjustedforanyprepayments,accrualsandonerousleaseprovisionswithnoadjustmenttoopeningretainedearnings.TheGroupreliedonitsassessmentofwhetherleasesareonerousapplyingIAS37Provisions,ContingentLiabilitiesandContingentAssetsimmediatelybeforethedateofinitialapplicationasanalternativetoperforminganimpairmentreview.TheadoptionofIFRS16hadamaterialimpactontheGroup’sConsolidatedFinancialStatementsandcertainkeyfinancialmetrics,whichisquantifiedandfurtherexplainedinthetableoverleaf.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex134CRH ANNUAL REPORT AND FORM 20-F I 2019135CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS134CRHANNUALREPORTANDFORM20-F|2019AccountingPolicies-continuedPrimarystatementlineitem/financialmetricAsat1January2019€mConsolidatedBalanceSheetProperty,plantandequipment(i)(ii)+1,939Leaseliabilities;netdebt(i)(ii)+1,954Fortheyearended31December2019€mConsolidatedIncomeStatementDepreciation(i)+334Financecosts+69EPS(i)(iii)-3cConsolidatedStatementofCashFlowsNetcashflowfromoperatingactivities+317Netcashflowfromfinancingactivities-317(i)TheoperatingprofitanddepreciationimpactofIFRS16ondiscontinuedoperationsincludedaboveare+€4millionand+€63millionrespectivelyfortheyearended31December2019.Theright-of-useassetanddiscountedleaseliabilityrelatedtodiscontinuedoperationsare€398millionasat1January2019.(ii)TheimpactoftheadoptionofIFRS16onproperty,plantandequipmentandnetdebtisnetofexistingfinanceleases(€23millionat31December2018)whichhavebeenrecordedaspartoftheright-of-useassetsandleaseliabilitiesattheirpreviouscarryingamountson1January2019.(iii)TheimpactoftheadoptionofIFRS16onoperatingprofitfortheyearended31December2019is€0.05billionandhasbeencalculatedbasedonlyontheportfolioofleaseswhichexistedat1January2019.IncomeStatementCostofsalesandoperatingcosts(excludingdepreciation)havedecreased,astheGrouppreviouslyrecognisedoperatingleaseexpensesineithercostofsalesoroperatingcosts(dependingonthenatureoftherelevantoperationsandofthelease).TheGroup’soperatingleaseexpensefortheyearended31December2018fromcontinuingoperationswas€533million(2017:€513million).Paymentsforleaseswhichmeettherecognitionexemptioncriteriaandcertainotherleasepaymentswhichdonotmeetthecriteriaforcapitalisation(excludingdepreciation)havebeenrecordedasanexpensewithincostofsalesandoperatingcosts.Duetobusinessseasonality,certainassetsareleasedonashort-termbasis(i.e.12monthsorless)todealwithpeakdemand.Accordingly,aportionofcostspreviouslyclassifiedasoperatingleaseexpenseshavenotbeencapitalisedontheGroup’sConsolidatedBalanceSheetandcontinuetobeexpensedintheGroup’sConsolidatedIncomeStatement(seenote22).Depreciationandfinancecostshaveincreasedduetothecapitalisationofaright-of-useassetunderIFRS16whichisdepreciatedoverthetermoftheleasewithanassociatedfinancecostappliedannuallytotheleaseliability.BalanceSheetTheGrouphasidentifiedtheminimumleasepaymentsoutstanding(includingpaymentsforrenewaloptionswhicharereasonablycertaintobeexercised)andhasappliedtheappropriatediscountratetocalculatethepresentvalueoftheleaseliabilityandright-of-useassetrecognisedontheConsolidatedBalanceSheet.ThediscountratesappliedwerearrivedatusingamethodologytocalculatetheincrementalborrowingratesacrosstheGroup.Theweightedaverageincrementalborrowingrateappliedtoleaseliabilitiesonthebalancesheetwas3.95%at1January2019.AreconciliationoftheoperatingleasecommitmentpreviouslyreportedunderIAS17tothediscountedleaseliabilityasat1January2019underIFRS16isasfollows:Asat1January2019€mOperatingleasecommitmentunderIAS171,911Leaseextensionsbeyondbreakdate632Leasesthatarecancellableatanytime35ExistingIAS17financeleases(i)23OtherleasepaymentsnotincludedindiscountedleaseliabilityunderIFRS16(ii)(108)UndiscountedleaseliabilityunderIFRS162,493Lessimpactofdiscounting(516)DiscountedleaseliabilityunderIFRS161,977(i)ExistingIAS17financeleasesarepresentedatdiscountedamountsastheimpactofdiscountingontheseleasesisnotconsideredmaterial.(ii)OtherleasepaymentsnotincludedinthediscountedleaseliabilityunderIFRS16includepaymentsrelatedtoshort-termandlow-valueleaseswhichwereincludedintheoperatingleasecommitmentunderIAS17butareexemptfromcapitalisationunderIFRS16.CRHANNUALREPORTANDFORM20-F|2019135IFRSandIFRICinterpretationsbeingadoptedinsubsequentyearsIFRS17InsuranceContractsInMay2017,theIASBissuedIFRS17.Itisexpectedtobeeffectiveforreportingperiodsbeginningonorafter1January2022,withpresentationofcomparativefiguresrequired.TheGroupiscurrentlyevaluatingtheimpactofthisstandardonfutureperiods.IFRS3BusinessCombinationsInOctober2018,theIASBissuedamendmentstoIFRS3,regardingthedefinitionofabusiness.Theamendmentsclarifythattheprocessrequiredtomeetthedefinitionofabusiness(togetherwithinputstocreateoutputs)mustbesubstantive;and,thattheinputsandprocessmusttogethersignificantlycontributetocreatingoutputs.Thedefinitionofoutputshasbeennarrowedtofocusongoodsandservicesprovidedtocustomersandotherincomefromordinaryactivities.Inaddition,theamendmentsindicatethatanacquisitionofprimarilyasingleassetorgroupofsimilarassetsisunlikelytomeetthedefinitionofabusiness.Theamendmentswillbeappliedprospectivelyforbusinesscombinationsandassetacquisitionsoccurringonorafter1January2020.TheGroupisfinalisingitsreviewoftheimpactofthisamendment,butdoesnotexpecttheclarificationtohaveamaterialimpactonthevalueofacquisitionsoradditionstoproperty,plantandequipment.DisclosureInitiative–DefinitionofMaterial(AmendmentstoIAS1andIAS8)InOctober2018,theIASBissuedDefinitionofMaterial(AmendmentstoIAS1PresentationofFinancialStatementsandIAS8AccountingPolicies,ChangesinAccountingEstimatesandErrors),whichwillbeappliedprospectivelyfrom1January2020.Theamendmentsclarifyandalignthedefinitionof“material”tothedefinitionusedintheConceptualFrameworkandotherIFRSstandards.Informationisnowconsideredmaterialifomitting,misstatingorobscuringitcouldreasonablybeexpectedtoinfluencedecisionsthattheprimaryusersofgeneralpurposefinancialstatementsmakeonthebasisofthosefinancialstatements,whichprovidefinancialinformationaboutaspecificreportingentity.ThisamendmentisnotexpectedtohaveanimpactontheGroup.InterestRateBenchmarkReform–AmendmentstoIFRS9,IAS39andIFRS7InSeptember2019,theIASBissuedamendmentstoIFRS9,IAS39FinancialInstruments:RecognitionandMeasurementandIFRS7FinancialInstruments:Disclosures,whichconcludesphaseoneofitsworktorespondtotheeffectsofInterbankOfferedRates(IBOR)reformonfinancialreporting.Theamendmentsprovidemandatorytemporaryreliefswhichenablehedgeaccountingtocontinueduringtheperiodofuncertaintybeforethereplacementofanexistinginterestratebenchmarkwithanalternativenearlyrisk-freeinterestrate(anRFR).TotheextentthatahedginginstrumentisalteredsothatitscashflowsarebasedonanRFR,butthehedgeditemisstillbasedonIBOR(orviceversa),thereisnorelieffrommeasuringandrecordinganyineffectivenessthatarisesduetodifferencesintheirchangesinfairvalue.Theamendmentsareeffectivefrom1January2020andmustbeappliedretrospectively.However,anyhedgerelationshipsthathavepreviouslybeende-designatedcannotbereinstateduponapplication,norcananyhedgerelationshipsbedesignatedwiththebenefitofhindsight.TheGroupiscurrentlyevaluatingtheimpactofthisamendment,butdoesnotexpecttheamendmenttohaveamaterialimpact.TherearenootherIFRSorIFRICinterpretationsthatareeffectivesubsequenttotheCRH2019financialyear-endthatwouldhaveamaterialimpactontheresultsorfinancialpositionoftheGroup.KeyAccountingPolicieswhichinvolveEstimates,AssumptionsandJudgementsThepreparationoftheConsolidatedFinancialStatementsinaccordancewithIFRSrequiresmanagementtomakecertainestimates,assumptionsandjudgementsthataffecttheapplicationofaccountingpoliciesandthereportedamountsofassets,liabilities,incomeandexpenses.Managementbelievesthattheestimates,assumptionsandjudgementsuponwhichitreliesarereasonablebasedontheinformationavailabletoitatthetimethatthoseestimates,assumptionsandjudgementsaremade.Insomecases,theaccountingtreatmentofaparticulartransactionisspecificallydictatedbyIFRSanddoesnotrequiremanagement’sjudgementinitsapplication.Managementconsidersthattheiruseofestimates,assumptionsandjudgementsintheapplicationoftheGroup’saccountingpoliciesareinter-relatedandthereforediscussthemtogetherbelow.Estimatesandunderlyingassumptionsarereviewedonanongoingbasis.Changesinaccountingestimatesmaybenecessaryiftherearechangesinthecircumstancesorexperiencesonwhichtheestimatewasbasedorasaresultofnewinformation.Thecriticalaccountingpolicieswhichinvolvesignificantestimates,assumptionsorjudgements,theactualoutcomeofwhichcouldhaveamaterialimpactontheGroup’sresultsandfinancialpositionoutlinedbelow,areasfollows:Impairmentofgoodwill–Note16Intheyearinwhichabusinesscombinationiseffectedandwheresomeorallofthegoodwillallocatedtoaparticularcash-generatingunitaroseinrespectofthatcombination,thecash-generatingunitistestedforimpairmentpriortotheendoftherelevantannualperiod.Goodwillissubjecttoimpairmenttestingonanannualbasisandatanytimeduringtheyearifanindicatorofimpairmentisconsideredtoexist.Wherethecarryingvalueexceedstheestimatedrecoverableamount(beingthegreateroffairvaluelesscostsofdisposalandvalue-in-use),animpairmentlossisrecognisedbywritingdowngoodwilltoitsrecoverableamount.Inassessingvalue-in-use,theestimatedfuturecashflowsarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheassetforwhichthefuturecashflowestimateshavenotbeenadjusted.Theestimatesoffuturecashflowsexcludecashinflowsoroutflowsattributabletofinancingactivitiesandincometax.Therecoverableamountofgoodwillisdeterminedbyreferencetothecash-generatingunittowhichthegoodwillhasbeenallocated.Impairmentlossesarisinginrespectofgoodwillarenotreversedoncerecognised.Goodwillrelatingtoassociatesandjointventuresisincludedinthecarryingamountoftheinvestmentandisneitheramortisednorindividuallytestedforimpairment.WhereindicatorsofimpairmentofaninvestmentariseinaccordancewiththerequirementsofIFRS9,thecarryingamountistestedforimpairmentbycomparingitsrecoverableamountwithitscarryingamount.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex136CRH ANNUAL REPORT AND FORM 20-F I 2019137CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS136CRHANNUALREPORTANDFORM20-F|2019AccountingPolicies-continuedTheimpairmenttestingprocessrequiresmanagementtomakesignificantjudgementsandestimatesregardingthefuturecashflowsexpectedtobegeneratedbycash-generatingunitstowhichgoodwillhasbeenallocated.Futurecashflowsrelatingtotheeventualdisposalofthesecash-generatingunitsandotherfactorsmayalsoberelevanttodeterminethefairvalueofgoodwill.Managementperiodicallyevaluatesandupdatestheestimatesbasedontheconditionswhichinfluencethesevariables.AdetaileddiscussionoftheimpairmentmethodologyappliedandkeyassumptionsusedbytheGroupinthecontextofgoodwillisprovidedinnote16totheConsolidatedFinancialStatements.Theassumptionsandconditionsfordeterminingimpairmentsofgoodwillreflectmanagement’sbestassumptionsandestimates,buttheseitemsinvolveinherentuncertaintiesdescribedabove,manyofwhicharenotundermanagement’scontrol.Asaresult,theaccountingforsuchitemscouldresultindifferentestimatesoramountsifmanagementuseddifferentassumptionsorifdifferentconditionsoccurinfutureaccountingperiods.Retirementbenefitobligations–Note30CostsarisinginrespectoftheGroup’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,inthecaseofpublishedquotedsecurities;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-retirementliabilitiesarecontainedinnote30totheConsolidatedFinancialStatements.Whilstmanagementbelievesthattheassumptionsusedareappropriate,differencesinactualexperienceorchangesinassumptionsmayaffecttheobligationsandexpensesrecognisedinfutureaccountingperiods.Theassetsandliabilitiesofdefinedbenefitpensionschemesmayexhibitsignificantperiod-on-periodvolatilityattributableprimarilytochangesinbondyieldsandlongevity.Inadditiontofutureservicecontributions,significantcashcontributionsmayberequiredtoremediatepastservicedeficits.Asensitivityanalysisofthechangeintheseassumptionsisprovidedinnote30.Provisionsforliabilities–Note28AprovisionisrecognisedwhentheGrouphasapresentobligation(eitherlegalorconstructive)asaresultofapastevent,itisprobablethatatransferofeconomicbenefitswillberequiredtosettletheobligationandareliableestimatecanbemadeoftheamountoftheobligation.WheretheGroupanticipatesthataprovisionwillbereimbursed,thereimbursementisrecognisedasaseparateassetonlywhenitisvirtuallycertainthatthereimbursementwillarise.TheexpenserelatingtoanyprovisionispresentedintheConsolidatedIncomeStatementnetofanyreimbursement.Provisionsaremeasuredatthepresentvalueoftheexpendituresexpectedtoberequiredtosettletheobligation.Theincreaseintheprovisionduetothepassageoftimeisrecognisedasaninterestexpense.Contingentliabilitiesarisingonbusinesscombinationsarerecognisedasprovisionsifthecontingentliabilitycanbereliablymeasuredatitsacquisitiondatefairvalue.Provisionsarenotrecognisedforfutureoperatinglosses.Managementisnotawareofanypotentialchangestokeyassumptionsthathaveasignificantriskofcausingamaterialadjustmenttothecarryingvalueofprovisionswithinthenextfinancialyear;howeverduetothenatureofsomeofourprovisions,estimatesmaydependontheoutcomeoffutureeventsandneedtoberevisedascircumstanceschangeinfutureaccountingperiods.Refertonote28fortheexpectedtimingofoutflowsbyprovisionscategory.CRHANNUALREPORTANDFORM20-F|2019137EnvironmentalandremediationprovisionsThemeasurementofenvironmentalandremediationprovisionsisbasedonanevaluationofcurrentlyavailablefactswithrespecttoeachindividualsiteandconsidersfactorssuchasexistingtechnology,currentlyenactedlawsandregulationsandpriorexperienceinremediationofsites.Inherentuncertaintiesexistinsuchevaluationsprimarilyduetounknownconditions,changinggovernmentalregulationsandlegalstandardsregardingliability,theprotractedlengthoftheclean-upperiodsandevolvingtechnologies.TheenvironmentalandremediationliabilitiesprovidedforintheConsolidatedFinancialStatementsreflectthejudgementappliedbymanagementinrespectofinformationavailableatthetimeofdeterminingtheliabilityandareadjustedperiodicallyasremediationeffortsprogressorasadditionaltechnicalorlegalinformationbecomesavailable.Duetotheinherentuncertaintiesdescribedabove,manyofwhicharenotundermanagement’scontrol,actualcostsandcashoutflowscoulddifferifmanagementuseddifferentassumptionsorifdifferentconditionsoccurinfutureaccountingperiods.LegalcontingenciesThestatusofeachsignificantclaimandlegalproceedinginwhichtheGroupisinvolvedisreviewedbymanagementonaperiodicbasisandtheGroup’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–Notes12and29Currenttaxrepresentstheexpectedtaxpayable(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’sincometaxchargeisbasedonreportedprofitandenactedstatutorytaxrates,whichreflectvariousallowancesandreliefsandtaxplanningopportunitiesavailabletotheGroupinthemultipletaxjurisdictionsinwhichitoperates.ThedeterminationoftheGroup’sprovisionforincometaxrequirescertainjudgementsandestimatesinrelationtomatterswheretheultimatetaxoutcomemaynotbecertain.Therecognitionornon-recognitionofdeferredtaxassetsasappropriatealsorequiresjudgementasitinvolvesanassessmentofthefuturerecoverabilityofthoseassets.Inaddition,theGroupissubjecttotaxauditswhichcaninvolvecomplexissuesthatcouldrequireextendedperiodstoconclude,theresolutionofwhichisoftennotwithinthecontroloftheGroup.AlthoughmanagementbelievesthattheestimatesincludedintheConsolidatedFinancialStatementsanditstaxreturnpositionsarereasonable,thereisnocertaintythatthefinaloutcomeofthesematterswillnotbedifferentthanthatwhichisreflectedintheGroup’shistoricalincometaxprovisionsandaccruals.Whilstitispossible,theGroupdoesnotcurrentlyanticipatethatanysuchdifferencescouldhaveamaterialimpactontheincometaxprovisionandprofitfortheperiodinwhichsuchadeterminationismadenordoesitexpectanysignificantimpactonitsfinancialpositioninthenearterm.ThisisbasedontheGroup’sknowledgeandexperience,aswellastheprofileoftheindividualcomponentswhichhavebeenreflectedinthecurrenttaxliability,thestatusofthetaxaudits,enquiriesandnegotiationsinprogressateachyear-end,previousclaimsandanyfactorsspecifictotherelevanttaxenvironments.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex138CRH ANNUAL REPORT AND FORM 20-F I 2019139CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS138CRHANNUALREPORTANDFORM20-F|2019AccountingPolicies-continuedOtherSignificantAccountingPoliciesBasisofconsolidationTheConsolidatedFinancialStatementsincludethefinancialstatementsoftheParentCompanyandallsubsidiaries,jointventuresandassociates,drawnupto31Decembereachyear.Thefinancialyear-endsoftheGroup’ssubsidiaries,jointventuresandassociatesareco-terminous.SubsidiariesSubsidiariesareallentitiesoverwhichtheGrouphascontrol.TheGroupcontrolsanentitywhentheGroupisexposedto,orhasrightsto,variablereturnsfromitsinvolvementwiththeentityandhastheabilitytoaffectthosereturnsthroughitspowerovertheentity.SubsidiariesarefullyconsolidatedfromthedateonwhichcontrolistransferredtotheGroup.Theyaredeconsolidatedfromthedatethatcontrolceases.Achangeintheownershipinterestofasubsidiarywithoutachangeincontrolisaccountedforasanequitytransaction.WhentheGroupholdslessthanthemajorityofvotingrights,otherfactsandcircumstancesincludingcontractualarrangementsthatgivetheGrouppowerovertheinvesteemayresultintheGroupcontrollingtheinvestee.TheGroupreassesseswhetheritcontrolsaninvesteeif,andwhen,factsandcircumstancesindicatethattherearechangestotheelementsevidencingcontrol.Non-controllinginterestsrepresenttheportionoftheequityofasubsidiarynotattributableeitherdirectlyorindirectlytotheParentCompanyandarepresentedseparatelyintheConsolidatedIncomeStatementandwithinequityintheConsolidatedBalanceSheet,distinguishedfromParentCompanyshareholders’equity.Acquisitionsofnon-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(asdefinedbyIFRS15RevenuefromContractswithCustomers).AcrosstheGroup,goodsareoftensoldwithdiscountsorrebatesbasedoncumulativesalesoveraperiod.Thisvariableconsiderationisonlyrecognisedwhenitishighlyprobablethatitwillnotbesubsequentlyreversedandisrecognisedusingthemostlikelyamountorexpectedvaluemethods,dependingontheindividualcontractterms.Intheapplicationofappropriaterevenuerecognition,judgementisexercisedbymanagementinthedeterminationofthelikelihoodandquantumofsuchitemsbasedonexperienceandhistoricaltradingpatterns.TheGroupisdeemedtobeaprincipaltoanarrangementwhenitcontrolsapromisedgoodorservicebeforetransferringthemtoacustomer;andaccordinglyrecognisesrevenueonagrossbasis.WheretheGroupisdeterminedtobeanagenttoatransaction,basedontheprincipalofcontrol;thenetamountretainedafterthedeductionofanycoststotheprincipalisrecognisedasrevenue.Withinthenon-constructioncontractbusinessesnoelementoffinancingisdeemedpresentastransactionsareallmadewithaveragecreditterms(usually90days),consistentwithmarketpractice.CRHANNUALREPORTANDFORM20-F|2019139RevenuederivedfromconstructioncontractsTheGroupentersintoanumberofconstructioncontracts,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).RetentionsarealsoacommonfeatureofconstructioncontractsandarerecognisedasacontractassetwithinTradeandOtherReceivableswhenwehavearighttoconsiderationinexchangeforthecompletionofthecontract.Retentionsareconsistentwithindustrynormsandthepurposeoftheseisnottoprovideaformoffinancing.Apartfromretentions,theGroupdoesnothaveanyconstructioncontractswheretheperiodbetweenthetransferofthepromisedgoodstothecustomerandpaymentbythecustomerexceedsoneyear.Asaconsequence,theGroupappliesthepracticalexpedientinIFRS15anddoesnotadjustanyofitstransactionpricesforthetimevalueofmoney.Whenconsiderationisreceivedinadvanceofworkbeingperformed,orwehavebilledanamounttoacustomerthatisinexcessofrevenuerecognisedonthecontract;thisisrecognisedasacontractliabilitywithinTradeandOtherPayables(note20);andtherevenueisgenerallyrecognisedinthesubsequentperiodwhentherighttorecogniserevenuehasbeendetermined.Asaresult,advancepaymentsreceivedforconstructioncontractarrangementsarenotconsideredasignificantformoffinancing.Cumulativecostsincurred,netofamountstransferredtocostofsales,afterdeductingonerousprovisions,provisionsforcontingenciesandpaymentsonaccountnotmatchedwithrevenue,areincludedasconstructioncontractbalancesininventories(note18).CostincludesallexpendituredirectlyrelatedtospecificprojectsandanallocationoffixedandvariableoverheadsincurredintheGroup’scontractactivitiesbasedonnormaloperatingcapacity.TheGroup’scontractsgenerallyareforadurationoflessthanoneyearandthereforetheGroupdoesnotcapitaliseincrementalcontractcosts;insteadexpensingasincurred,aspermittedbythepracticalexpedientunderIFRS15.OnerouscontractsandwarrantiesWhenacontractisidentifiedasbeingonerous(i.e.itsunavoidablecostexceedstheeconomicbenefitofthecontract),aprovisioniscreated;beingthelowerofcoststocompletethecontractandthecostofexitingthecontract.TheGrouprecognisesaprovisionforassurance-type(standard)warrantiesofferedacrosstheGroupunderitstermsandconditionsinaccordancewithIAS37.TheGroupprovidesassurance-typewarrantiesforgeneralrepairsanddoesnottypicallyprovideservice-type(extended)warranties.Segmentreporting–Note2OperatingsegmentsarereportedinamannerconsistentwiththeinternalorganisationalandmanagementstructureandtheinternalreportinginformationprovidedtotheChiefOperatingDecisionMakerwhoisresponsibleforallocatingresourcesandassessingperformanceoftheoperatingsegments.Assetsandliabilitiesheldforsale–Note3Non-currentassetsanddisposalgroupsclassifiedasheldforsalearemeasuredatthelowerofcarryingamountandfairvaluelesscoststosell.Non-currentassetsanddisposalgroupsareclassifiedasheldforsaleiftheircarryingamountswillberecoveredthroughasaletransactionratherthanthroughcontinuinguse.Thisconditionisregardedasmetonlywhenthesaleishighlyprobableandtheassetordisposalgroupisavailableforimmediatesaleinitspresentconditionsubjectonlytotermsthatareusualandcustomaryforsalesofsuchassets.Managementmustbecommittedtothesale,whichshouldbeexpectedtoqualifyforrecognitionasacompletedsalewithin12monthsfromthedateofclassificationasheldforsale.Property,plantandequipmentandintangibleassetsarenotdepreciatedoramortisedonceclassifiedasheldforsale.TheGroupceasestousetheequitymethodofaccountingfromthedateonwhichaninterestinajointventureorassociatebecomesheldforsale.Non-currentassetsclassifiedasheldforsaleandliabilitiesdirectlyassociatedwiththoseassetsarepresentedseparatelyascurrentitemsintheConsolidatedBalanceSheet.Discontinuedoperations–Note3DiscontinuedoperationsarereportedwhenacomponentoftheGroup,thatrepresentsaseparatemajorlineofbusinessorgeographicalareaofoperation,hasbeendisposedof,orwhenasaleishighlyprobable;anditsoperationsandcashflowscanbeclearlydistinguished,operationallyandforfinancialreportingpurposes,fromtherestoftheGroupandisclassifiedasheldforsaleorhasbeendisposedof.TheGroupclassifiesanon-currentassetordisposalgroupasheldfordisposalifitscarryingvaluewillberecoveredthroughasalestransactionordistributiontoshareholdersratherthancontinuinguse.IntheConsolidatedIncomeStatement,discontinuedoperationsareexcludedfromtheresultsofcontinuingoperationsandarepresentedasasingleamountasprofitorlossaftertaxfromdiscontinuedoperations.CorrespondingnotestotheConsolidatedIncomeStatementexcludeamountsfordiscontinuedoperations,unlessstatedotherwise.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex140CRH ANNUAL REPORT AND FORM 20-F I 2019141CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS140CRHANNUALREPORTANDFORM20-F|2019AccountingPolicies-continuedShare-basedpayments–Note9TheGroupoperatesanumberofequity-settledshare-basedpaymentplans.Itspolicyinrelationtothegrantingofshareoptionsandawardsundertheseplans,togetherwiththenatureoftheunderlyingmarketandnon-marketperformanceandothervestingconditions,areaddressedintheDirectors’RemunerationReportonpage74.TheGrouphasnomaterialexposureinrespectofcash-settledshare-basedpaymenttransactionsandshare-basedpaymenttransactionswithcashalternatives.AwardsunderthePerformanceSharePlans25%oftheawardsunderthe2014PerformanceSharePlanaresubjecttoaTSR(andhencemarket-based)vestingconditionmeasuredagainstatailoredsectorpeergroup(2018and2017:50%;with25%beingmeasuredagainstatailoredsectorpeergroupand25%againsttheFTSEAll-WorldConstruction&MaterialsIndex).Accordingly,thefairvalueassignedtotherelatedequityinstrumentsatthegrantdateisderivedusingaMonteCarlosimulationtechniquetomodelthecombinationofmarket-basedandnon-market-basedperformanceconditionsintheplan;andisadjustedtoreflecttheanticipatedlikelihoodasatthegrantdateofachievingthevestingcondition.Awardsaretreatedasvestingirrespectiveofwhetherornotthemarketconditionissatisfied,providedthatallotherperformanceand/orserviceconditionsaresatisfied.In2019anewRONAmetricof25%wasintroducedforawardsmadein2019.Theremaining50%ofawardsgrantedunderthe2014PerformanceSharePlanaresubjecttoacumulativecashflowtarget(non-market-based)vestingcondition.Thefairvalueoftheawardsiscalculatedasthemarketpriceofthesharesatthedateofgrant.Noexpenseisrecognisedforawardsthatdonotultimatelyvest.AtthebalancesheetdatetheestimateofthelevelofvestingisreviewedandanyadjustmentnecessaryisrecognisedintheConsolidatedIncomeStatement.Ifawardswhichvestunderthe2014PerformanceSharePlanareallottedtoanEmployeeBenefitTrust,anincreaseinnominalsharecapitalandsharepremiumarerecognisedaccordinglyonallotment.Savings-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,plantandequipment(excludingleasedright-of-useassets)of€15,954millionat31December2019represents43%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,usefullivesandresidualvaluesarereviewedateachfinancialyear-end.Changesintheexpectedusefullifeortheexpectedpatternofconsumptionoffutureeconomicbenefitsembodiedintheassetareaccountedforbychangingthedepreciationperiodormethodasappropriateonaprospectivebasis.Impairmentofproperty,plantandequipmentThecarryingvaluesofitemsofproperty,plantandequipmentarereviewedforindicatorsofimpairmentateachreportingdateandaresubjecttoimpairmenttestingwheneventsorchangesincircumstancesindicatethatthecarryingvaluesmaynotberecoverable.CRHANNUALREPORTANDFORM20-F|2019141Property,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.Contingentliabilitiesassumedinbusinesscombinationactivityarerecognisedasoftheacquisitiondate,wheresuchcontingentliabilitiesarepresentobligationsarisingfrompasteventsandtheirfairvaluecanbemeasuredreliably.Inthecaseofabusinesscombinationachievedinstages,theacquisition-datefairvalueoftheacquirer’spreviously-heldequityinterestintheacquireeisremeasuredtofairvalueasattheacquisitiondatethroughprofitorloss.Whentheinitialaccountingforabusinesscombinationisdeterminedprovisionally,anyadjustmentstotheprovisionalvaluesallocatedtotheconsideration,identifiableassetsorliabilities(andcontingentliabilities,ifrelevant)aremadewithinthemeasurementperiod,aperiodofnomorethanoneyearfromtheacquisitiondate.Goodwill–Note16Goodwillarisingonabusinesscombinationisinitiallymeasuredatcost,beingtheexcessofthecostofanacquisitionoverthefairvalueofthenetidentifiableassetsandliabilitiesassumedatthedateofacquisitionandrelatestothefutureeconomicbenefitsarisingfromassetswhicharenotcapableofbeingindividuallyidentifiedandseparatelyrecognised.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,expectedpatternsofconsumptionandresidualvaluesarereviewedateachfinancialyear-end.Changesintheexpectedusefullifeortheexpectedpatternofconsumptionoffutureeconomicbenefitsembodiedintheassetareaccountedforbychangingtheamortisationperiodormethodasappropriateonaprospectivebasis.Leases–Notes15and22TheGroupentersintoleasesforarangeofassets,principallyrelatingtoproperty.Thesepropertyleaseshavevaryingterms,renewalrightsandescalationclauses,includingperiodicrentreviewslinkedwithaconsumerpriceindexand/orotherindices.TheGroupalsoleasesplantandmachinery,vehiclesandequipment.ThetermsandconditionsoftheseleasesdonotimposesignificantfinancialrestrictionsontheGroup.Acontractcontainsaleaseifitisenforceableandconveystherighttocontroltheuseofaspecifiedassetforaperiodoftimeinexchangeforconsideration,whichisassessedatinception.Aright-of-useassetandleaseliabilityarerecognisedatthecommencementdateforcontractscontainingalease,withtheexceptionofleaseswithatermof12monthsorlesswhichdonotcontainapurchaseoption,leaseswheretheunderlyingassetisoflowvalueandleaseswithassociatedpaymentsthatvarydirectlyinlinewithusageorsales.ThecommencementdateisthedateatwhichtheassetismadeavailableforusebytheGroup.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex142CRH ANNUAL REPORT AND FORM 20-F I 2019143CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS142CRHANNUALREPORTANDFORM20-F|2019AccountingPolicies-continuedTheleaseliabilityisinitiallymeasuredatthepresentvalueofthefutureminimumleasepayments,discountedusingtheincrementalborrowingrateortheinterestrateimplicitinthelease,ifthisisreadilydeterminable,overtheremainingleaseterm.Leasepaymentsincludefixedpaymentslessanyleaseincentivesreceivable,variablepaymentsthataredependentonarateorindexknownatthecommencementdate,amountsexpectedtobepaidunderresidualvalueguaranteesandanypaymentsforanoptionalrenewalperiodandpurchaseandterminationoptionpayments,iftheGroupisreasonablycertaintoexercisethoseoptions.Theleasetermisthenon-cancellableperiodoftheleaseadjustedforanyrenewalorterminationoptionswhicharereasonablycertaintobeexercised.Variableleasepaymentsthatdonotdependonanindexorarateandrentalsrelatingtolowvalueorshort-termleasesarerecognisedasanexpenseintheperiodinwhichtheyareincurred.Managementappliesjudgementindeterminingwhetheritisreasonablycertainthatarenewal,terminationorpurchaseoptionwillbeexercised.Incrementalborrowingratesarecalculatedusingaportfolioapproach,basedontheriskprofileoftheentityholdingtheleaseandthetermandcurrencyofthelease.Afterinitialrecognition,theleaseliabilityismeasuredatamortisedcostusingtheeffectiveinterestmethod.ItisremeasuredwhenthereisachangeinfutureminimumleasepaymentsorwhentheGroupchangesitsassessmentofwhetheritisreasonablycertaintoexerciseanoptionwithinthecontract.Acorrespondingadjustmentismadetothecarryingamountoftheright-of-useasset.Theright-of-useassetisinitiallymeasuredatcost,whichcomprisestheleaseliabilityadjustedforanypaymentsmadeatorbeforethecommencementdate,initialdirectcostsincurred,leaseincentivesreceivedandanestimateofthecosttodismantleorrestoretheunderlyingassetorthesiteonwhichitislocatedattheendoftheleaseterm.Theright-of-useassetisdepreciatedovertheleasetermor,whereapurchaseoptionisreasonablycertaintobeexercised,overtheusefuleconomiclifeoftheassetinlinewithdepreciationratesforownedproperty,plantandequipment.Theright-of-useassetistestedperiodicallyforimpairmentifanimpairmentindicatorisconsideredtoexist.Non-leasecomponentsinacontractsuchasmaintenanceandotherservicechargesareseparatedfromminimumleasepaymentsandareexpensedasincurred.Regardingthecomparatives,leaseswherethelessorretainssubstantiallyalltherisksandrewardsofownershipareclassifiedasoperatingleases.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–Note25Cashandcashequivalentscomprisecashbalancesheldforthepurposeofmeetingshort-termcashcommitmentsandinvestmentswhicharereadilyconvertibletoaknownamountofcashandaresubjecttoaninsignificantriskofchangeinvalue.Bankoverdraftsareincludedwithincurrentinterest-bearingloansandborrowingsintheConsolidatedBalanceSheet.Wheretheoverdraftsarerepayableondemandandformanintegralpartofcashmanagement,theyarenettedagainstcashandcashequivalentsforthepurposesoftheConsolidatedStatementofCashFlows.Interest-bearingloansandborrowings–Note26Allloansandborrowingsareinitiallyrecordedatthefairvalueoftheconsiderationreceivednetofdirectlyattributabletransactioncosts.Subsequenttoinitialrecognition,currentandnon-currentinterest-bearingloansandborrowingsare,ingeneral,measuredatamortisedcostemployingtheeffectiveinterestmethodology.Fixedratetermloans,whichhavebeenhedgedtofloatingrates(usinginterestrateswaps),aremeasuredatamortisedcostadjustedforchangesinvalueattributabletothehedgedrisksarisingfromchangesinunderlyingmarketinterestrates.Thecomputationofamortisedcostincludesanyissuecostsandanydiscountorpremiummaterialisingonsettlement.GainsandlossesarerecognisedintheConsolidatedIncomeStatementthroughamortisationonthebasisoftheperiodoftheloansandborrowings.Borrowingcostsarisingonfinancialinstrumentsarerecognisedasanexpenseintheperiodinwhichtheyareincurred(unlesscapitalisedaspartofthecostofproperty,plantandequipment).Derivativefinancialinstrumentsandhedgingpractices–Note27Inordertomanageinterestrate,foreigncurrencyandcommodityrisksandtorealisethedesiredcurrencyprofileofborrowings,theGroupemploysderivativefinancialinstruments(principallyinterestrateswaps,currencyswapsandforwardforeignexchangecontracts).Derivativefinancialinstrumentsarerecognisedinitiallyatfairvalueonthedateonwhichaderivativecontractisenteredintoandaresubsequentlyremeasuredatfairvalue.Thecarryingvalueofderivativesisfairvaluebasedondiscountedfuturecashflowsandadjustedforcounterpartyrisk.Futurefloatingratecashflowsareestimatedbasedonfutureinterestrates(fromobservableyieldcurvesattheendofthereportingperiod).Fixedandfloatingratecashflowsarediscountedatfutureinterestratesandtranslatedatperiod-endforeignexchangerates.Shortdatedforwardforeignexchangecontractsareusedtohedgethespotpriceriskoncurrencyexposures.TheforwardpriceelementstothesecontractsareimmaterialandaccountedforintheConsolidatedIncomeStatement.Attheinceptionofaderivativetransaction,theGroupdocumentstherelationshipbetweenthehedgeditemandthehedginginstrumenttogetherwithitsriskmanagementobjectiveandthestrategyunderlyingtheproposedtransaction.TheGroupalsodocumentsitsassessment,bothattheinceptionofthehedgingrelationshipandsubsequentlyonanongoingbasis,oftheeffectivenessofthehedginginstrumentinoffsettingmovementsinCRHANNUALREPORTANDFORM20-F|2019143thefairvaluesorcashflowsofthehedgeditems.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.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex144CRH ANNUAL REPORT AND FORM 20-F I 2019145CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS144CRHANNUALREPORTANDFORM20-F|2019AccountingPolicies-continuedTheprincipalexchangeratesusedforthetranslationofresults,cashflowsandbalancesheetsintoeurowereasfollows:AverageYear-endeuro1=20192018201720192018BrazilianReal4.41344.30853.60544.51574.4440CanadianDollar1.48551.52941.46471.45981.5605ChineseRenminbi7.73557.80817.62907.82057.8751HungarianForint325.2967318.8897309.1933330.5300320.9800IndianRupee78.836180.733273.532480.187079.7298PhilippinePeso57.985162.210156.973456.900060.1130PolishZloty4.29764.26154.25704.25684.3014PoundSterling0.87780.88470.87670.85080.8945RomanianLeu4.74534.65404.56884.78304.6635SerbianDinar117.8377118.2302121.3232117.8237118.3157SwissFranc1.11241.15501.11171.08541.1269UkrainianHryvnia28.888132.098730.034126.737731.6900USDollar1.11951.18101.12971.12341.1450CRHANNUALREPORTANDFORM20-F|2019145NotesonConsolidatedFinancialStatements1.RevenueCRHisaleadingglobaldiversifiedbuildingmaterialsgroupwhichmanufacturesandsuppliesadiverserangeofsuperiorbuildingmaterialsandproductsforuseintheconstructionandmaintenanceofinfrastructure,housingandcommercialproducts.Ourmaterialsandproductsareusedextensively,inconstructionprojectsofallsizes,allacrosstheworld.Asdiscussedinmoredetailinnote2,theGrouphasthreeoperatingsegments(asidentifiedunderIFRS8OperatingSegments)from1January2019;generatingrevenuethroughthefollowingactivities:AmericasMaterialsbusinessesarepredominantlyengagedintheproductionandsaleofaggregates,asphalt,cementandreadymixedconcreteproductsandprovideasphaltpavingservicesintheUSandCanada.ThissegmentalsoincludestheGroup’scementoperationsinBrazil.EuropeMaterialsbusinessesarepredominantlyengagedinthemanufactureandsupplyofcement,lime,aggregates,readymixedandprecastconcreteandasphaltproducts.Thesegmentcomprisesbusinessesoperatingin21countriesacrossWestern,CentralandEasternEuropeaswellasthePhilippinesinAsia.OurBuildingProductssegmentincludesbusinessesoperatingacrossaportfolioofbuildingproductrelatedplatformsincludinginfrastructure,constructionaccessories,BuildingEnvelope,architecturalproductsand,uptotheirdisposalin2019,perimeterprotectionandshutters&awnings.ThissegmentalsoincludedourDo-It-Yourself(DIY)businessesinBelgiumandtheNetherlandswhichweredisposedofin2018.Thesegmentcomprisesbusinessesoperatingin19countriesprimarilyintheUS,CanadaandWesternEurope.ThedivestmentofourEuropeDistributionbusiness(excludingDIYBenelux),formerlypartoftheBuildingProductssegment,wascompletedin2019.Asaresult,ithasbeenclassifiedasdiscontinuedoperationsinthecurrentyear;itsperformanceinthisyearandcomparativeyearsisthereforepartofdiscontinuedoperations.Asreferencedabove,DIYBeneluxwasseparatelydivestedin2018andthereforeitsperformanceuptothedateofdivestmentisshownaspartofcontinuingoperationsin2018and2017.Asaresultofthemoresimplifiedoperatingstructureimplementedon1January2019,theclassificationofreportedrevenueintotheprincipalactivitiesandproductsbelowhasbeenamendedtobetterreflectthebasisonwhichmanagementnowreviewsitsbusinesses.Accordingly,therevenueformerlydisaggregatedacrossperimeterprotection,shutters&awnings,networkaccessproducts,architecturalandprecastproductshasnowbeenreorganisedandpresentedintwonewcategories:architecturalproductsandinfrastructureproducts.Comparativeamountsfor2018havebeenrestatedwherenecessarytoreflectthenewformatfordisaggregationofrevenue.A.DisaggregatedrevenueInthefollowingtables,revenueisdisaggregatedbyprimarygeographicmarketandbyprincipalactivitiesandproducts.DuetothediversifiednatureoftheGroup,thebasisonwhichmanagementreviewsitsbusinessesvariesacrosstheGroup.GeographyistheprimarybasisfortheAmericasMaterialsandEuropeMaterialsbusinesses;whileactivitiesandproductsareusedfortheBuildingProductsbusinesses.Revenuefromexternalcustomers(asdefinedinIFRS8)attributabletothecountryofdomicileandallforeigncountriesofoperationgreaterthan10%areincludedbelow.Furtheroperatingsegmentdisclosuresaresetoutinnote2.Yearended31DecemberAmericasMaterials2019EuropeMaterials2019BuildingProducts2019Total2019AmericasMaterials2018EuropeMaterials2018BuildingProducts2018Total2018Total2017Primarygeographicmarkets€m€m€m€m€m€m€m€m€mContinuingoperationsRepublicofIreland(countryofdomicile)-585-585-468-468435UnitedKingdom-3,1072173,324-3,0452233,2683,023RestofEurope(i)-4,3281,0385,366-4,0981,4695,5675,370UnitedStates9,207-4,54313,7507,896-4,06511,96110,844RestofWorld(ii)1,1784744522,1041,0554314911,9771,981TotalGroupfromcontinuingoperations10,3858,4946,25025,1298,9518,0426,24823,24121,653DiscontinuedoperationsUnitedStates-AmericasDistribution-72,343RestofEurope(i)-EuropeDistribution3,1773,5493,567TotalGroup28,30626,79727,563(i)TheRestofEuropeprincipallyincludesAustria,Belgium,CzechRepublic,Denmark,Finland,France,Germany,Hungary,Luxembourg,Netherlands,Poland,Romania,Serbia,Slovakia,Spain,Sweden,SwitzerlandandUkraine.(ii)TheRestofWorldprincipallyincludesAustralia,Brazil,CanadaandthePhilippines.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex146CRH ANNUAL REPORT AND FORM 20-F I 2019147CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS146CRHANNUALREPORTANDFORM20-F|20191.Revenue-continuedYearended31DecemberAmericasMaterials(iii)2019EuropeMaterials(iii)2019BuildingProducts2019Total2019AmericasMaterials(iii)2018EuropeMaterials(iii)2018BuildingProducts2018Total2018Principalactivitiesandproducts€m€m€m€m€m€m€m€mContinuingoperationsCement,limeandcementproducts1,2222,646-3,8688102,506-3,316Aggregates,asphaltandreadymixedproducts5,0463,061-8,1074,3302,919-7,249Constructioncontractactivities*4,1171,6091655,8913,8111,5422405,593Architecturalproducts-9552,6643,619-9032,5973,500Infrastructureproducts-2231,2391,462-1721,0801,252Constructionaccessories--590590--593593Architecturalglassandglazingsystemsandwholesalehardwaredistribution--1,5921,592--1,4311,431DIY------307307TotalGroupfromcontinuingoperations10,3858,4946,25025,1298,9518,0426,24823,241DiscontinuedoperationsExteriorandinteriorproducts-AmericasDistribution-7GeneralBuildersMerchants,DIYGermanyandSanitary,Heating&Plumbing-EuropeDistribution3,1773,549TotalGroup28,30626,797(iii)AmericasMaterialsandEuropeMaterialsbothoperateverticallyintegratedbusinesses,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,primarilywithinourAmericasMaterialsandEuropeMaterialsbusinesses,amountedto€1,867millionat31December2019(2018:€1,848million).TheGrouphasappliedthepracticalexpedientofIFRS15RevenuefromContractswithCustomerswherebyrevenueyettoberecognisedoncontractsthathadanoriginalexpecteddurationoflessthanoneyearisnotdisclosed.Themajorityofopencontractsat31December2019willcloseandrevenuewillberecognisedwithin12monthsofthebalancesheetdate.*Revenueprincipallyrecognisedovertime.Constructioncontractsaregenerallycompletedwithinthesamefinancialreportingyear.CRHANNUALREPORTANDFORM20-F|20191472.SegmentInformationEffective1January2019theGroupimplementedasimplifiednewstructurereducingitsoperatingsegmentsfromsixtothree:AmericasMaterials,EuropeMaterials(formerlyEuropeHeavysideandAsia),andanewBuildingProductssegment.TheBuildingProductssegmentbringstogetherourformerAmericasProducts,EuropeLightsideand,uptoitsdisposal,EuropeDistributionsegments.Comparativesegmentamountsfor2018and2017havebeenrestatedwherenecessarytoreflectthenewformatforsegmentation.ThesegmentsreflecttheGroup’sorganisationalstructureandthenatureofthefinancialinformationreportedtoandassessedbytheGroupChiefExecutiveandFinanceDirector,whoaretogetherdeterminedtofulfiltheroleofChiefOperatingDecisionMaker(asdefinedinIFRS8).Nooperatingsegmentshavebeenaggregatedtoformthesereportablesegments.Theprincipalfactorsemployedintheidentificationofthethreesegmentsreflectedinthisnoteinclude:•theGroup’sorganisationalstructurein2019(during2019eachdivisionalPresidentfulfilledtheroleof“segmentmanager”asoutlinedinIFRS8);•thenatureofthereportinglinestotheChiefOperatingDecisionMaker(asdefinedinIFRS8);•thestructureofinternalreportingdocumentationsuchasmanagementaccountsandbudgets;and•thedegreeofhomogeneityofproductsandserviceswithineachofthesegmentsfromwhichrevenueisderivedTheChiefOperatingDecisionMakermonitorstheoperatingresultsofsegmentsseparatelyinordertoallocateresourcesbetweensegmentsandtoassessperformance.Segmentperformanceispredominantlyevaluatedbasedonoperatingprofit.Asperformanceisalsoevaluatedusingoperatingprofitbeforedepreciation,amortisationandimpairment(EBITDA(asdefined)*),supplementalinformationbasedonEBITDA(asdefined)*isprovidedoverleaf.Giventhatnetfinancecostsandincometaxaremanagedonacentralisedbasis,theseitemsarenotallocatedbetweenoperatingsegmentsforthepurposesoftheinformationpresentedtotheChiefOperatingDecisionMakerandareaccordinglyomittedfromthedetailedsegmentalanalysisoverleaf.Therearenoasymmetricalallocationstoreportingsegmentswhichwouldrequiredisclosure.*EBITDAisdefinedasearningsbeforeinterest,taxes,depreciation,amortisation,assetimpairmentcharges,profitondisposalsandtheGroup’sshareofequityaccountedinvestments’profitaftertax.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex148CRH ANNUAL REPORT AND FORM 20-F I 2019149CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS148CRHANNUALREPORTANDFORM20-F|20192.SegmentInformation-continuedA.Operatingsegmentsdisclosures-ConsolidatedIncomeStatementdataYearended31DecemberRevenueGroupEBITDA(asdefined)*Depreciation,amortisationandimpairmentGroupoperatingprofit2019€m2018€m2017€m2019€m2018€m2017€m2019€m2018€m2017€m2019€m2018€m2017€mContinuingoperationsAmericasMaterials10,3858,9517,9701,9601,4931,2706894844121,2711,009858EuropeMaterials8,4948,0427,3381,079936891524449398555487493BuildingProducts6,2506,2486,345961787769293212193668575576TotalGroupfromcontinuingoperations25,12923,24121,6534,0003,2162,9301,5061,1451,0032,4942,0711,927DiscontinuedoperationsAmericasDistribution-72,343-(5)164--21-(5)143EuropeDistribution3,1773,5493,567200149216994348101106168TotalGroup28,30626,79727,5634,2003,3603,3101,6051,1881,0722,5952,1722,238Groupoperatingprofitfromcontinuingoperations2,4942,0711,927(Loss)/profitondisposals(i)(1)(27)54Financecostslessincome(326)(305)(289)Otherfinancialexpense(112)(46)(59)Shareofequityaccountedinvestments’profit(ii)604852Profitbeforetaxfromcontinuingoperations2,1151,7411,685(i)(Loss)/profitondisposals(note6)(ii)Shareofequityaccountedinvestments’profit(note11)AmericasMaterials24429382532EuropeMaterials(131)719131818BuildingProducts128(78)6952TotalGroupfromcontinuingoperations(1)(27)54604852*EBITDAisdefinedasearningsbeforeinterest,taxes,depreciation,amortisation,assetimpairmentcharges,profitondisposalsandtheGroup’sshareofequityaccountedinvestments’profitaftertax.CRHANNUALREPORTANDFORM20-F|2019149B.Operatingsegmentsdisclosures-ConsolidatedBalanceSheetdataAsat31DecemberTotalassetsTotalliabilities2019€m2018€m2019€m2018€mAmericasMaterials14,60813,7982,6422,063EuropeMaterials11,66910,5093,4412,787BuildingProducts6,4077,2031,8751,742TotalGroup32,68431,5107,9586,592ReconciliationtototalassetsasreportedintheConsolidatedBalanceSheet:Investmentsaccountedforusingtheequitymethod6901,163Otherfinancialassets1223Derivativefinancialinstruments(currentandnon-current)8245Incometaxassets(currentanddeferred)8786Cashandcashequivalents3,7552,346TotalassetsasreportedintheConsolidatedBalanceSheet37,31035,173ReconciliationtototalliabilitiesasreportedintheConsolidatedBalanceSheet:Interest-bearingloansandborrowings(currentandnon-current)9,0149,316Derivativefinancialinstruments(currentandnon-current)1759Incometaxliabilities(currentanddeferred)2,8412,652TotalliabilitiesasreportedintheConsolidatedBalanceSheet19,83018,619C.Operatingsegmentsdisclosures-otheritemsAdditionstonon-currentassetsYearended31DecemberProperty,plantandequipment(note15,22)Financialassets(note17)TotalGroup2019€m2018€m2017€m2019€m2018€m2017€m2019€m2018€m2017€mContinuingoperationsAmericasMaterials(i)6714293752725698431380EuropeMaterials4914534041--492453404BuildingProducts315209207--6315209213TotalGroupfromcontinuingoperations1,4771,091986282111,5051,093997DiscontinuedoperationsAmericasDistribution--29-----29EuropeDistribution-30291--13029TotalGroup1,4771,1211,044292111,5061,1231,055(i)Additionstoproperty,plantandequipmentinclude€86millionrelatingtoleasedmineralreserveswhichfalloutsidethescopeofIFRS16.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex150CRH ANNUAL REPORT AND FORM 20-F I 2019151CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS150CRHANNUALREPORTANDFORM20-F|20192.SegmentInformation-continuedD.InformationaboutgeographicalareasThenon-currentassets(asdefinedinIFRS8)attributabletothecountryofdomicileandallforeigncountriesofoperation,forwhichrevenueexceeds10%oftotalexternalGrouprevenue,aresetoutbelow.Asat31DecemberNon-currentassets*20192018€m€mRepublicofIreland(countryofdomicile)506495UnitedKingdom2,7722,461UnitedStates14,25912,925Other9,0119,476TotalGroup26,54825,3573.AssetsHeldforSaleandDiscontinuedOperationsA.ProfitondisposalofdiscontinuedoperationsInOctober2019,theGroupcompletedthedivestmentofitsEuropeDistributionbusiness,formerlypartofourBuildingProductssegment.WiththeexceptionofourEuropeDistributionbusiness,nootherbusinessesdivestedin2019areconsideredtobeeitherseparatemajorlinesofbusinessorgeographicalareasofoperationandthereforedonotconstitutediscontinuedoperationsasdefinedinIFRS5Non-CurrentAssetsHeldforSaleandDiscontinuedOperations.InJanuary2018,theGroupcompletedthedivestmentofits100%holdinginAlliedBuildingProducts,thetradingnameofourformerAmericasDistributionsegment,whichwasconsideredadiscontinuedoperationin2018andwasclassifiedaccordingly.AssetsandliabilitiesthatmettheIFRS5criteriaat31December2019havenotbeenseparatelydisclosedasheldforsaleastheywerenotconsideredmaterialinthecontextoftheGroup.Thetableoverleafsetsouttheproceedsandrelatedprofitrecognisedondivestmentwhichisincludedinprofitaftertaxforthefinancialyearfromdiscontinuedoperations.*Non-currentassetscompriseproperty,plantandequipment,intangibleassetsandinvestmentsaccountedforusingtheequitymethod.CRHANNUALREPORTANDFORM20-F|20191512019€m2018€mAssets/(liabilities)disposedofatnetcarryingamount:-non-currentassets1,309472-cashandcashequivalents10018-workingcapitalandprovisions596367-currenttax2--leaseliabilities(367)--deferredtax(28)(14)-retirementbenefitobligations(42)--non-controllinginterests(8)-Netassetsdisposed1,562843Reclassificationofcurrencytranslationeffectsondisposal(123)(27)Total1,439816Proceedsfromdisposal(netofdisposalcosts)1,6632,379Profitondisposalfromdiscontinuedoperations2241,563NetcashinflowarisingondisposalProceedsfromdisposalfromdiscontinuedoperations1,6632,379Less:cashandcashequivalentsdisposed(100)(18)Total1,5632,361B.ResultsofdiscontinuedoperationsTheresultsofthediscontinuedoperationsincludedintheGroupprofitforthefinancialyeararesetoutasfollows:2019€m2018€m2017€mRevenue3,1773,5565,910EBITDA(asdefined)*200144380Depreciation(96)(41)(55)Amortisation(2)(2)(14)Impairment(1)--Operatingprofit101101311Profitondisposals2271,5665Profitbeforefinancecosts3281,667316Financecosts(7)-(1)Shareofequityaccountedinvestments’profit121213Profitbeforetax3331,679328Attributableincometaxexpense(23)(503)(82)Profitaftertaxforthefinancialyearfromdiscontinuedoperations3101,176246Profitattributableto:EquityholdersoftheCompany3091,175245Non-controllinginterests111Profitforthefinancialyearfromdiscontinuedoperations3101,176246BasicearningsperOrdinarySharefromdiscontinuedoperations38.5c141.2c29.4cDilutedearningsperOrdinarySharefromdiscontinuedoperations38.2c140.5c29.2cCashflowsfromdiscontinuedoperationsNetcashinflow/(outflow)fromoperatingactivities(i)32(367)204Netcashinflow/(outflow)frominvestingactivities(ii)1,5422,339(75)Netcashoutflowfromfinancingactivities(71)(19)(13)Netcashinflow1,5031,953116(i)Includesthecorporationtaxpaidonthesaleofdiscontinuedoperations.(ii)Includestheproceedsfromthesaleofdiscontinuedoperations.*EBITDAisdefinedasearningsbeforeinterest,taxes,depreciation,amortisation,assetimpairmentcharges,profitondisposalsandtheGroup’sshareofequityaccountedinvestments’profitaftertax.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex152CRH ANNUAL REPORT AND FORM 20-F I 2019153CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS152CRHANNUALREPORTANDFORM20-F|20194.CostAnalysisContinuingoperations2019€m2018€m2017€mCostofsalesanalysisRawmaterialsandgoodsforresale5,2165,0584,785Employmentcosts(note7)3,4673,1552,869Energyconversioncosts1,3071,2221,004Repairsandmaintenance980882811Depreciation,amortisationandimpairment(i)1,225939830Changeininventory(62)(179)(117)Otherproductionexpenses(primarilysub-contractorcosts)4,7134,4954,093Total16,84615,57214,275OperatingcostsanalysisSellinganddistributioncosts4,0623,8223,561Administrativeexpenses1,7271,7761,890Total5,7895,5985,451(i)Depreciation,amortisationandimpairmentanalysisCostofsalesOperatingcostsTotal2019€m2018€m2017€m2019€m2018€m2017€m2019€m2018€m2017€mDepreciationanddepletion(note15,22)1,2199038302231271211,4421,030951Amortisationofintangibleassets(note16)---575952575952Impairmentofproperty,plantandequipment(note15)636-1--736-Impairmentofintangibleassets(note16)----20--20-Total1,2259398302812061731,5061,1451,003CRHANNUALREPORTANDFORM20-F|20191535.Auditor’sRemunerationContinuingoperationsInaccordancewithstatutoryrequirementsinIreland,feesforprofessionalservicesprovidedbytheGroup’sindependentauditorinrespectofeachofthefollowingcategorieswere:EYIreland(statutoryauditor)EY(networkfirms)Total2019€m2018€m2017€m2019€m2018€m2017€m2019€m2018€m2017€mAuditfees(i)(ii)444141414181818Otheraudit-relatedassurancefees(iii)(iv)----11-11Taxadvisoryservices(iv)---1-11-1Total444151516191920(i)AuditoftheGroupaccountsincludesauditofinternalcontrolsoverfinancialreportingandparentandsubsidiarystatutoryauditfees,butexcludes€2million(2018:€2million;2017:€2million)paidtoauditorsotherthanEY.(ii)Auditfeesincludingdiscontinuedoperationsamountedto€18million(2018:€19million;2017:€20million).(iii)Otherassuranceservicesincludesattestationandduediligenceservicesthatarecloselyrelatedtotheperformanceoftheaudit.(iv)Otheraudit-relatedassurancefeesandtaxadvisoryservicesincludingdiscontinuedoperationsamountedto€nilmillionand€1millionrespectively(2018:€1millionand€nilmillionrespectively;2017:€1millionand€1millionrespectively).TherewerenootherfeesforservicesprovidedbytheGroup’sindependentauditor(2018:€nilmillion;2017:€nilmillion).→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex154CRH ANNUAL REPORT AND FORM 20-F I 2019155CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS154CRHANNUALREPORTANDFORM20-F|20196.BusinessandNon-CurrentAssetDisposalsBusinessdisposalsDisposalofothernon-currentassetsTotal2019€m2018€m2017€m2019€m2018€m2017€m2019€m2018€m2017€mContinuingoperationsAssets/(liabilities)disposedofatnetcarryingamount:-non-currentassets596622471405678736678125-cashandcashequivalents456011---456011-workingcapitalandprovisions8313229---8313229-currenttax(1)(2)----(1)(2)--leaseliabilities(48)--(29)--(77)---deferredtax(3)(2)2---(3)(2)2-retirementbenefitobligations(2)(6)----(2)(6)-Netassetsdisposed670804891115678781860167Reclassificationofcurrencytranslationeffectsondisposal66159---66159Total736819981115678847875176Proceedsfromdisposals(netofdisposalcosts)69969799147100131846797230Assetexchange(note32)-12-----12-Profitonstepacquisition(note32)-39-----39-(Loss)/profitondisposalsfromcontinuingoperations(37)(71)1364453(1)(27)54DiscontinuedoperationsProfitondisposalsfromdiscontinuedoperations(note3)2241,563-3352271,5665TotalGroupprofitondisposals1871,49213947582261,53959NetcashinflowarisingondisposalContinuingoperationsProceedsfromdisposalsfromcontinuingoperations69969799147100131846797230Less:cashandcashequivalentsdisposed(45)(60)(11)---(45)(60)(11)Less:deferredproceedsarisingondisposal(note21)(i)(269)(10)(3)---(269)(10)(3)Less:investmentandloantoassociateinlieuofcashproceeds(note17)(ii)-(85)-----(85)-Netcashinflowarisingondisposalfromcontinuingoperations38554285147100131532642216DiscontinuedoperationsNetcashinflowarisingondisposalfromdiscontinuedoperations(note3)1,5632,361-1661,5642,3676TotalGroupnetcashinflowarisingondisposal1,9482,903851481061372,0963,009222(i)On31December,CRHcompletedthesaleoftheGroup’s50%stakeinitsjointventureinIndia,MHILfordeferredproceedsof€0.3billionwhichwillbereceivedinseveralagreedtranches.ForthepurposesofcompliancewithIndianlawrequirements,CRHisobligedtoretainaminorityshareholdingandassociatedminorityboardrepresentationinMHILbothofwhichwillfurtherreduceasthetranchesarecompleted.TheGroupnolongerhasanyrightstoshareintheprofit/lossofMHILortoreceiveanydividends.CRHhasdeterminedthatMHILhasceasedtobeajointventureoranassociateastheGroupisnolongerexposedtovariabilityofreturnsfromtheperformanceofMHILanddoesnothavesignificantinfluence(asdefinedunderIAS28InterestsinAssociatesandJointVentures)overMHIL.Withtheotherpartnersactinginconcerttoexercisecontrol,CRHeffectivelyretainsonlyprotectivevotingrightsindefinedlimitedcircumstances.Accordingly,theGrouphasdiscontinuedtheuseoftheequitymethodofaccountingforitsinterestinMHILfrom31December2019.ThefairvalueoftheretainedinterestinMHILisrecordedasafinancialassetwithinOtherReceivablesasitrepresentsacontractualrighttoreceivecash.(ii)In2018,aspartofthedivestmentofourDIYbusinessinBelgiumandtheNetherlands(seenote16andnote17forfurtherdetails)weacquiredanequitystakeof22.78%in,andadvancedaloanof€50milliontothepurchaser,Intergamma,whichwasrepaidin2019.CRHANNUALREPORTANDFORM20-F|20191557.EmploymentContinuingoperationsTheaveragenumberofemployeesisasfollows:Yearended31December201920182017AmericasMaterials28,57627,27224,077EuropeMaterials27,23827,21825,832BuildingProducts24,43726,39926,927TotalGroup80,25180,88976,836Theaveragenumberofemployeesincludingdiscontinuedoperationswas86,951(2018:89,831;2017:89,213).EmploymentcostschargedintheConsolidatedIncomeStatementareanalysedasfollows:2019€m2018€m2017€mWagesandsalaries4,1123,8413,629Socialwelfarecosts423407397Redundancy,healthcareandotheremploymentbenefitcosts584540506Share-basedpaymentexpense(note9)746558Totalretirementbenefitsexpense(note30)304268264Total(i)5,4975,1214,854Totalchargeanalysedbetween:Costofsales3,4673,1552,869Operatingcosts2,0171,9561,975Financecosts(net)-applicabletoretirementbenefitobligations(note10)131010Total(i)5,4975,1214,854(i)Employmentcostsincludingdiscontinuedoperationsareanalysedasfollows:Wagesandsalaries4,4554,2264,221Socialwelfarecosts486478483Redundancy,healthcareandotheremploymentbenefitcosts605581576Share-basedpaymentexpense(note9)776765Totalretirementbenefitsexpense(note30)329296243Total5,9525,6485,5888.Directors’EmolumentsandInterestsDirectors’emoluments(whichareincludedinadministrativeexpensesinnote4)andinterestsarepresentedintheDirectors’RemunerationReportonpages74to100.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex156CRH ANNUAL REPORT AND FORM 20-F I 2019157CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS156CRHANNUALREPORTANDFORM20-F|20199.Share-basedPaymentExpenseContinuingoperations2019€m2018€m2017€mPerformanceSharePlansandRestrictedSharePlanexpense716255Shareoptionexpense333Totalshare-basedpaymentexpense(i)746558(i)Thetotalshare-basedpaymentexpenseincludingdiscontinuedoperationsamountedto€77million(2018:€67million;2017:€65million).Share-basedpaymentexpenserelatesprimarilytoawardsgrantedunderthe2014PerformanceSharePlanandtheGroup’sSavings-relatedShareOptionSchemes.Theexpense,whichalsoincludeschargesinrelationtothe2013RestrictedSharePlan,isreflectedinoperatingcostsintheConsolidatedIncomeStatement.2014PerformanceSharePlanThestructureofthe2014PerformanceSharePlanissetoutintheDirectors’RemunerationReportonpage90.Anexpenseof€70millionwasrecognisedin2019(2018:€61million;2017:€54million).Detailsofawardsgrantedunderthe2014PerformanceSharePlanNumberofsharesSharepriceatdateofawardPeriodtoearliestreleasedateInitialaward(i)Netoutstandingat31December2019Grantedin2019€29.443years3,688,0273,578,105Grantedin2018€28.323years3,863,4333,610,323Grantedin2017€33.213years3,342,9002,818,931(i)NumbersrepresenttheinitialawardsincludingthosegrantedtoemployeesofEuropeDistributionin2019,2018and2017andAlliedBuildingProductsin2017.TheRemunerationCommitteehasdeterminedthatdividendequivalentswillaccrueonawardsunderthe2014PerformanceSharePlan.Subjecttosatisfactionoftheapplicableperformancecriteria,suchdividendequivalentswillbereleasedtoparticipantsintheformofadditionalsharesonvesting.25%ofeachawardmadein2019issubjecttoTSRperformancemeasuredagainstatailoredpeergroup;25%issubjecttoanewRONAmetricintroducedin2019;withtheremaining50%subjecttoacumulativecashflowmetric(2018and2017:50%ofeachawardissubjecttoaTSRmeasure,with25%beingmeasuredagainstatailoredsectorpeergroupand25%againsttheFTSEAll-WorldConstruction&MaterialsIndex.Theother50%ofeachawardissubjecttoacumulativecashflowmetric).Furtherdetailsaresetoutonpage90intheDirectors’RemunerationReport.ThefairvaluesassignedtotheportionofawardswhicharesubjecttoTSRperformanceagainstpeersand,inthecaseof2018and2017,theindex,was€18.59(2018:€13.52and€13.18respectively;2017:€17.43and€14.99respectively).ThefairvalueoftheseawardswascalculatedusingaTSRpricingmodeltakingaccountofpeergroupTSR,volatilitiesandcorrelationstogetherwiththefollowingassumptions:201920182017Risk-freeinterestrate(%)(0.37)(0.43)(0.40)Expectedvolatility(%)23.227.430.1TheexpectedvolatilitywasdeterminedusingahistoricalsampleofdailyCRHshareprices.Thefairvalueof(i)theportionofawardssubjecttocashflowperformance;(ii)from2019,theportionofawardssubjecttoaRONAmetric;and(iii)theawardswithnoperformanceconditions(whicharesubjecttoaoneorthree-yearserviceperiod)was€29.44(2018:€28.32;2017:€33.21).ThefairvaluewascalculatedusingtheclosingCRHsharepriceatthedatetheawardwasgranted.CRHANNUALREPORTANDFORM20-F|2019157ShareOptionSchemesThe2010ShareOptionSchemewasreplacedin2014bythe2014PerformanceSharePlan,andaccordinglynooptionshavebeengrantedsince2013.DetailsofmovementandoptionsoutstandingunderShareOptionSchemes(excludingSavings-relatedShareOptionSchemes)WeightedaverageexercisepriceNumberofoptionsWeightedaverageexercisepriceNumberofoptionsWeightedaverageexercisepriceNumberofoptions201920182017Outstandingatbeginningofyear€16.48800,770€17.961,441,779€21.512,997,495Exercised(i)€16.65(520,115)€19.82(634,994)€24.85(1,462,863)Lapsed€16.19(2,306)€17.36(6,015)€24.14(92,853)Outstandingatendofyear(ii)€16.19278,349€16.48800,770€17.961,441,779Exercisableatendofyear€16.19278,349€16.48800,770€17.961,441,779(i)Theweightedaveragesharepriceatthedateofexerciseoftheseoptionswas€29.10(2018:€27.90;2017:€32.24).(ii)Alloptionsgrantedhavealifeoftenyears.201920182017Weightedaverageremainingcontractuallifefortheshareoptionsoutstandingat31December(years)3.302.572.53euro-denominatedoptionsoutstandingatendofyear(number)278,349796,8501,436,115Rangeofexerciseprices(€)16.1916.19-17.3016.19-21.52PoundSterling-denominatedoptionsoutstandingatendofyear(number)-3,9205,664Rangeofexerciseprices(Stg£)-15.3015.30-17.192010Savings-relatedShareOptionSchemesTheGroupoperatesSavings-relatedShareOptionSchemes.Participantsmaysaveupto€500/Stg£500permonthfromtheirnetsalariesforafixedtermofthreeorfiveyearsandattheendofthesavingsperiodtheyhavetheoptiontobuyCRHsharesatadiscountofupto15%ofthemarketpriceonthedateofinvitationofeachsavingscontract.DetailsofoptionsgrantedundertheSavings-relatedShareOptionSchemesWeightedaverageexercisepriceNumberofoptionsWeightedaverageexercisepriceNumberofoptionsWeightedaverageexercisepriceNumberofoptions201920182017Outstandingatbeginningofyear€22.15/Stg£18.741,686,176€21.50/Stg£18.051,556,299€18.63/Stg£15.921,402,174Exercised(i)€19.09/Stg£16.20(627,034)€19.00/Stg£15.26(161,950)€15.73/Stg£14.27(126,472)Lapsed€23.49/Stg£20.85(207,070)€24.62/Stg£20.75(209,264)€21.42/Stg£18.22(123,455)Granted(ii)€24.24/Stg£20.11656,790€23.39/Stg£20.83501,091€27.86/Stg£24.51404,052Outstandingatendofyear€23.67/Stg£20.171,508,862€22.15/Stg£18.741,686,176€21.50/Stg£18.051,556,299Exercisableatendofyear€18.88/Stg£15.8913,065€18.75/Stg£15.5414,059€15.89/n/a15,890(i)Theweightedaveragesharepriceatthedateofexerciseoftheseoptionswas€28.52(2018:€29.54;2017:€31.14).(ii)Pursuanttothe2010Savings-relatedShareOptionSchemesoperatedbytheGroup,employeesweregrantedoptionsover656,790ofCRHplc’sOrdinaryShares(556,493optionsgrantedinApril2019and100,297optionsinMay2019)(2018:501,091shareoptionsinApril2018;2017:404,052shareoptionsinMarch2017).Thisfigurecomprisesoptionsover518,944(2018:379,253;2017:304,492)sharesand137,846(2018:121,838;2017:99,560)shareswhicharenormallyexercisablewithinaperiodofsixmonthsafterthethirdorthefifthanniversaryofthecontract,whicheverisapplicable.Theexercisepriceatwhichtheoptionsaregrantedundertheschemerepresentsadiscountof15%tothemarketpriceonthedateofinvitationofeachsavingscontract.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex158CRH ANNUAL REPORT AND FORM 20-F I 2019159CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS158CRHANNUALREPORTANDFORM20-F|20199.Share-basedPaymentExpense-continuedContinuingoperations201920182017Weightedaverageremainingcontractuallifefortheshareoptionsoutstandingat31December(years)1.871.501.90euro-denominatedoptionsoutstandingatendofyear(number)290,627304,713304,963Rangeofexerciseprices(€)17.67-27.8614.15-27.8613.64-27.86PoundSterling-denominatedoptionsoutstandingatendofyear(number)1,218,2351,381,4631,251,336Rangeofexerciseprices(Stg£)14.94-24.5114.94-24.5112.22-24.51TheweightedfairvaluesassignedtooptionsissuedundertheSavings-relatedShareOptionSchemes,whichwerecomputedinaccordancewiththetrinomialvaluationmethodology,wereasfollows:3-year5-yearGrantedin2019(April)€7.55€7.98Grantedin2019(May)€6.67€7.19Grantedin2018€5.38€5.88Grantedin2017€5.97€6.49Thefairvalueoftheseoptionsweredeterminedusingthefollowingassumptions:2019201820173-year5-year3-year5-year3-year5-yearAprilMayAprilMayAprilAprilMarchMarchWeightedaverageexerciseprice(€)23.3024.2423.3024.2423.3923.3927.8627.86Riskfreeinterestrate(%)(0.56)(0.58)(0.40)(0.41)(0.44)(0.06)(0.72)(0.45)Expecteddividendpaymentsovertheexpectedlife(€)2.342.344.064.062.213.832.073.55Expectedvolatility(%)19.620.021.121.320.020.520.920.6Expectedlifeinyears33553535Theexpectedvolatilitywasdeterminedusingahistoricalsampleof37month-endCRHsharepricesinrespectofthethree-yearsavings-relatedshareoptionsand61month-endsharepricesinrespectofthefive-yearsavings-relatedshareoptions.Theexpectedlivesoftheoptionsarebasedonhistoricaldataandarethereforenotnecessarilyindicativeofexercisepatternsthatmaymaterialise.Otherthantheassumptionslistedabove,nootherfeaturesofoptionsgrantswerefactoredintothedeterminationoffairvalue.ThetermsoftheoptionsissuedundertheSavings-relatedShareOptionSchemesdonotcontainanymarketconditionswithinthemeaningofIFRS2Share-basedPayment.CRHANNUALREPORTANDFORM20-F|201915910.FinanceCostsandFinanceIncomeContinuingoperations2019€m2018€m2017€mFinancecostsInterestpayableonborrowings333335300Netcostoninterestrateandcurrencyswaps1472Mark-to-marketofderivativesandrelatedfixedratedebt:-interestrateswaps(i)(64)1216-currencyswapsandforwardcontracts2(4)--fixedratedebt(i)61(16)(23)Netlossoninterestrateswapsnotdesignatedashedges-56Netfinancecostongrossdebtincludingrelatedderivatives346339301FinanceincomeInterestreceivableonloanstojointventuresandassociates(5)(4)(5)Interestreceivableoncashandcashequivalentsandother(15)(30)(7)Financeincome(20)(34)(12)Financecostslessincome326305289OtherfinancialexpensePremiumpaidonearlydebtredemption--18Unwindingofdiscountelementofleaseliabilities(note22)62--Unwindingofdiscountelementofprovisionsforliabilities(note28)222124Unwindingofdiscountapplicabletodeferredandcontingentacquisitionconsiderationanddivestmentproceeds15157Pension-relatedfinancecost(net)(note30)131010Total1124659Totalnetfinancecosts(ii)438351348(i)TheGroupusesinterestrateswapstoconvertfixedratedebttofloatingrate.Fixedratedebt,whichhasbeenconvertedtofloatingratethroughtheuseofinterestrateswaps,isstatedintheConsolidatedBalanceSheetatadjustedvaluetoreflectmovementsinunderlyingfixedrates.Themovementonthisadjustment,togetherwiththeoffsettingmovementinthefairvalueoftherelatedinterestrateswaps,isincludedinfinancecostsineachreportingperiod.(ii)Netfinancecostsfor2019includingdiscontinuedoperationsamountedto€445million(2018:€351million;2017:€349million).→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex160CRH ANNUAL REPORT AND FORM 20-F I 2019161CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS160CRHANNUALREPORTANDFORM20-F|201911.ShareofEquityAccountedInvestments’ProfitContinuingoperationsTheGroup’sshareofjointventures’andassociates’profitaftertaxisequityaccountedandispresentedasasinglelineitemintheConsolidatedIncomeStatement;itisanalysedasfollowsbetweentheprincipalConsolidatedIncomeStatementcaptions:JointVenturesAssociatesTotal2019€m2018€m2017€m2019€m2018€m2017€m2019€m2018€m2017€mGroupshareof:Revenue6346035176156035341,2491,2061,051EBITDA(asdefined)*705171686358138114129Depreciationandamortisation(24)(22)(27)(35)(34)(33)(59)(56)(60)Operatingprofit462944332925795869Profitondisposals----3--3-Profitbeforefinancecosts462944333225796169Financecosts(net)-1(1)(12)(9)(9)(12)(8)(10)Profitbeforetax463043212316675359Incometaxexpense(5)(1)(4)(2)(4)(3)(7)(5)(7)Profitaftertax(i)412939191913604852Ananalysisoftheprofitaftertaxbyoperatingsegmentispresentedinnote2.Theaggregatedbalancesheetdata(analysedbetweencurrentandnon-currentassetsandliabilities)inrespectoftheGroup’sinvestmentinjointventuresandassociatesispresentedinnote17.(i)Shareofprofitaftertaxfor2019includingdiscontinuedoperationsamountedto€72million(2018:€60million;2017:€65million).12.IncomeTaxExpenseContinuingoperationsRecognisedwithintheConsolidatedIncomeStatement2019€m2018€m2017€m(a)CurrenttaxRepublicofIreland17109Overseas345279275Totalcurrenttaxexpense362289284(b)DeferredtaxOriginationandreversaloftemporarydifferences:Retirementbenefitobligations(1)46Share-basedpaymentexpense(5)4(4)Derivativefinancialinstruments2(1)2Otheritems(2017includesdeferredtaxcreditassociatedwiththe“TaxCutsandJobsAct”)119100(276)Totaldeferredtaxexpense/(income)115107(272)IncometaxreportedintheConsolidatedIncomeStatement47739612*EBITDAisdefinedasearningsbeforeinterest,taxes,depreciation,amortisation,assetimpairmentchargesandprofitondisposals.CRHANNUALREPORTANDFORM20-F|20191612019€m2018€m2017€mRecognisedoutsidetheConsolidatedIncomeStatement(a)WithintheConsolidatedStatementofComprehensiveIncome:Deferredtax-retirementbenefitobligations(3)(1)(33)Deferredtax-cashflowhedges(3)5-(6)4(33)(b)WithintheConsolidatedStatementofChangesinEquity:CurrenttaxCurrenttax-shareoptionexercises422DeferredtaxDeferredtax-share-basedpaymentexpense5(4)(7)9(2)(5)IncometaxrecognisedoutsidetheConsolidatedIncomeStatement32(38)ReconciliationofapplicabletaxratetoeffectivetaxrateProfitbeforetax(€m)2,1151,7411,685Taxchargeexpressedasapercentageofprofitbeforetax(effectivetaxrate):-currenttaxexpenseonly17.1%16.6%16.9%-totalincometaxexpense(currentanddeferred)22.6%22.7%0.7%ThefollowingtablereconcilestheapplicableRepublicofIrelandstatutorytaxratetotheeffectivetaxrate(currentanddeferred)oftheGroup:%ofprofitbeforetaxIrishcorporationtaxrate12.512.512.5Highertaxratesonoverseasearnings12.111.616.3Deferredtaxcreditrelatingtotheenactmentofthe“TaxCutsandJobsAct”--(26.1)Otheritems(primarilycomprisingitemsnotchargeabletotax/expensesnotdeductiblefortax)(2.0)(1.4)(2.0)Totaleffectivetaxrate22.622.70.7OtherdisclosuresEffectivetaxrateThe2019effectivetaxrateis22.6%(2018:22.7%;2017:0.7%).The2017reportedtaxchargeincludedanon-cashdeferredtaxcreditof€440millionrelatedtotheenactmentofthe“TaxCutsandJobsAct”intheUS.The2017effectivetaxrateexcludingtheimpactofthisexceptionaldeferredtaxcreditwas26.8%.Thetaxchargeassociatedwithdiscontinuedoperationsisrecognisedseparatelyin“Profitaftertaxforthefinancialyearfromdiscontinuedoperations”.Seenote3forfurtherdetails.ChangesintaxratesThetotaltaxchargeinfutureperiodswillbeaffectedbyanychangestothetaxratesinforceinthecountriesinwhichtheGroupoperates.ExcessofcapitalallowancesoverdepreciationThecurrenttaxchargewillalsobeimpactedbychangesintheexcessoftaxdepreciation(capitalallowances)overaccountingdepreciation.Basedoncurrentcapitalinvestmentplans,theGroupexpectstocontinuetobeinapositiontoclaimcapitalallowancesinexcessofdepreciationinfutureyears.InvestmentsinsubsidiariesGivenmanagement’sintentionnottounwindtemporarydifferencesinrespectofitsinvestmentinsubsidiariesortaxexemptionsandcreditsbeingavailableinthemajorityofjurisdictionsinwhichtheGroupoperates,theaggregateamountofdeferredtaxliabilitiesontemporarydifferenceswhichhavenotbeenrecognisedwouldbeimmaterial.ProposeddividendsTherearenoincometaxconsequencesfortheCompanyinrespectofdividendsproposedpriortoissuanceoftheConsolidatedFinancialStatementsandforwhichaliabilityhasnotbeenrecognised.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex162CRH ANNUAL REPORT AND FORM 20-F I 2019163CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS162CRHANNUALREPORTANDFORM20-F|201913.DividendsThedividendspaidandproposedinrespectofeachclassofsharecapitalareasfollows:2019€m2018€m2017€mDividendstoshareholdersPreference5%CumulativePreferenceShares€3,175(2018:€3,175;2017:€3,175)---7%‘A’CumulativePreferenceShares€77,521(2018:€77,521;2017:€77,521)---EquityFinal-paid52.40cperOrdinaryShare(2018:48.80c;2017:46.20c)425409386Interim-paid20.00cperOrdinaryShare(2018:19.60c;2017:19.20c)159163160Total584572546ReconciliationtoConsolidatedStatementofCashFlowsDividendstoshareholders584572546Less:issueofscripsharesinlieuofcashdividends(note31)-(51)(77)DividendspaidtoequityholdersoftheCompany584521469Dividendspaidbysubsidiariestonon-controllinginterests10128Totaldividendspaid594533477Dividendsproposed(memorandumdisclosure)EquityFinal2019-proposed63.00cperOrdinaryShare(2018:52.40c;2017:48.80c)495425409CRHANNUALREPORTANDFORM20-F|201916314.EarningsperOrdinaryShareThecomputationofbasicanddilutedearningsperOrdinaryShareissetoutbelow:2019€m2018€m2017€mNumeratorcomputationsGroupprofitforthefinancialyear1,9482,5211,919Profitattributabletonon-controllinginterests(19)(4)(24)ProfitattributabletoequityholdersoftheCompany1,9292,5171,895Preferencedividends---ProfitattributabletoordinaryequityholdersoftheCompany-numeratorforbasic/dilutedearningsperOrdinaryShare1,9292,5171,895Profitaftertaxforthefinancialyearfromdiscontinuedoperations-attributabletoequityholdersoftheCompany3091,175245ProfitattributabletoordinaryequityholdersoftheCompany-numeratorforbasic/dilutedearningsperOrdinarySharefromcontinuingoperations1,6201,3421,650DenominatorcomputationsWeightedaveragenumberofOrdinaryShares(millions)outstandingfortheyear(i)801.3832.4835.6EffectofdilutivepotentialOrdinaryShares(employeeshareoptions)(millions)(i)(ii)6.44.25.2DenominatorfordilutedearningsperOrdinaryShare807.7836.6840.8BasicearningsperOrdinaryShare240.7c302.4c226.8cDilutedearningsperOrdinaryShare238.8c300.9c225.4cBasicearningsperOrdinarySharefromcontinuingoperations202.2c161.2c197.4cDilutedearningsperOrdinarySharefromcontinuingoperations200.6c160.4c196.2c(i)TheweightedaveragenumberofOrdinarySharesincludedinthecomputationofbasicanddilutedearningsperOrdinarySharehasbeenadjustedtoexcludesharesheldbytheEmployeeBenefitTrustandOrdinarySharesrepurchasedandheldbytheCompany(CRHplc)asTreasurySharesgiventhatthesesharesdonotrankfordividend.ThenumberofOrdinarySharessoheldatthebalancesheetdateisdetailedinnote31.(ii)ContingentlyissuableOrdinaryShares(totalling3,618,278at31December2019,7,274,916at31December2018and5,710,247at31December2017)areexcludedfromthecomputationofdilutedearningsperOrdinarySharewheretheconditionsgoverningexercisabilityhavenotbeensatisfiedasattheendofthereportingperiodortheyareantidilutivefortheperiodspresented.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex164CRH ANNUAL REPORT AND FORM 20-F I 2019165CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS164CRHANNUALREPORTANDFORM20-F|201915.Property,PlantandEquipmentLandandbuildings(i)€mPlantandmachinery€mAssetsincourseofconstruction€mTotal€mAt31December2019Cost/deemedcost9,18916,28367426,146Accumulateddepreciation(andimpairmentcharges)(2,322)(7,835)(35)(10,192)Netcarryingamount6,8678,44863915,954At1January2019,netcarryingamount6,9728,19659315,761EffectofadoptingIFRS16(7)(20)4(23)Translationadjustment15520319377Reclassifications101446(547)-Transfer(to)/fromleasedassets(note22)(5)17-12Additionsatcost725905671,229Additionstoleasedmineralreserves(note21)(ii)86--86Arisingonacquisition(note32)152947253Disposalsatnetcarryingamount(405)(120)(4)(529)Depreciationchargeforyear(iii)(251)(953)-(1,204)Impairmentchargeforyear(iv)(3)(5)-(8)At31December2019,netcarryingamount6,8678,44863915,954Landandbuildings€mPlantandmachinery€mOther€mLeasedright-of-useassets(v)At31December2019,netcarryingamount(note22)1,086337471,470Totalproperty,plantandequipment17,424Theequivalentdisclosurefortheprioryearisasfollows:Landandbuildings(i)€mPlantandmachinery€mAssetsincourseofconstruction€mTotal€mAt31December2018Cost/deemedcost9,33515,53562925,499Accumulateddepreciation(andimpairmentcharges)(2,363)(7,339)(36)(9,738)Netcarryingamount6,9728,19659315,761At1January2018,netcarryingamount6,2246,31955113,094Reclassifiedfromheldforsale22793104Translationadjustment1391128259Reclassifications71386(457)-Additionsatcost745415061,121Arisingonacquisition(note32)8321,759232,614Disposalsatnetcarryingamount(158)(161)(5)(324)Depreciationchargeforyear(iii)(232)(839)-(1,071)Impairmentchargeforyear(iv)--(36)(36)At31December2018,netcarryingamount6,9728,19659315,761At1January2018Cost/deemedcost8,47213,15755122,180Accumulateddepreciation(andimpairmentcharges)(2,248)(6,838)-(9,086)Netcarryingamount6,2246,31955113,094CRHANNUALREPORTANDFORM20-F|2019165(i)Thecarryingvalueofmineral-bearinglandincludedinthelandandbuildingscategoryonpage164amountedto€3,272millionatthebalancesheetdate(2018:€3,112million).(ii)RelatestoleasedmineralreserveswhichfalloutsidethescopeofIFRS16.(iii)Thedepreciationchargefortheyearincludes€33million(2018:€41million;2017:€55million)relatingtodiscontinuedoperations.(iv)Theimpairmentchargeof€8million(2018:€36million;2017:€nilmillion)principallyrelatestothewrite-downofproperty,plantandequipmentinAmericasMaterialsandEuropeMaterials.Thechargeincludes€1million(2018:€nilmillion;2017:€nilmillion)relatingtodiscontinuedoperations.(v)Seenote22formoredetailedinformationonright-of-useassetsandleaseliabilitiesoftheGroupunderIFRS16.Futurepurchasecommitmentsforproperty,plantandequipment2019€m2018(vi)€mContractedforbutnotprovidedinthefinancialstatements373449AuthorisedbytheDirectorsbutnotcontractedfor355366(vi)Includescontractedforbutnotprovidedforandauthorisedbutnotcontractedforcommitmentsof€22millionand€6millionrespectivelyrelatingtodiscontinuedoperations.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex166CRH ANNUAL REPORT AND FORM 20-F I 2019167CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS166CRHANNUALREPORTANDFORM20-F|201916.IntangibleAssetsOtherintangibleassetsGoodwill€mMarketing-related€mCustomer-related(i)€mContract-based€mTotal€mAt31December2019Cost/deemedcost8,378148512779,115Accumulatedamortisation(andimpairmentcharges)(284)(64)(276)(57)(681)Netcarryingamount8,09484236208,434At1January2019,netcarryingamount8,11676217248,433Translationadjustment203141209Arisingonacquisition(note32)2781775-370Disposals(503)(1)(15)-(519)Amortisationchargeforyear(ii)-(9)(45)(5)(59)At31December2019,netcarryingamount8,09484236208,434Theequivalentdisclosurefortheprioryearisasfollows:At31December2018Cost/deemedcost8,400138592799,209Accumulatedamortisation(andimpairmentcharges)(284)(62)(375)(55)(776)Netcarryingamount8,11676217248,433At1January2018,netcarryingamount6,90575204307,214Reclassifiedfromheldforsale363-81372Translationadjustment137381149Reclassifications--(2)2-Arisingonacquisition(note32)1,50465111,562Disposals(773)-(9)(1)(783)Amortisationchargeforyear(ii)-(8)(43)(10)(61)Impairmentchargeforyear(iii)(20)---(20)At31December2018,netcarryingamount8,11676217248,433At1January2018Cost/deemedcost7,198129535807,942Accumulatedamortisation(andimpairmentcharges)(293)(54)(331)(50)(728)Netcarryingamount6,90575204307,214(i)Thecustomer-relatedintangibleassetsrelatepredominantlytonon-contractualcustomerrelationships.(ii)Theamortisationchargefortheyearincludes€2million(2018:€2million;2017:€14million)inrespectofdiscontinuedoperations,whichprimarilyrelatestocustomer-relatedintangibleassets.(iii)InJuly2018,theGroupdivestedofitsDIYbusinessintheNetherlandsandBelgium,togetherwithcertainrelatedpropertyassets,whichformedpartoftheformerEuropeDistributionsegment,fortotalconsiderationof€0.5billion.Thedecisiontodivestresultedintherecognitionofanimpairmentchargeof€20million.Therecoverableamount,atthedateofimpairment,wasbasedonfairvaluelesscostsofdisposal.ThefairvaluewasdeterminedusingLevel2inputsinaccordancewiththefairvaluehierarchy,asamarketpricewasagreedandpaid.CRHANNUALREPORTANDFORM20-F|2019167AnnualgoodwilltestingThenetbookvalueofgoodwillcapitalisedunderpreviousGAAP(IrishGAAP)asatthetransitiondatetoIFRS(1January2004)hasbeentreatedasdeemedcost.Goodwillarisingonacquisitionsincethatdateiscapitalisedatcost.Cash-generatingunitsGoodwillacquiredthroughbusinesscombinationactivityhasbeenallocatedtocash-generatingunits(CGUs)thatareexpectedtobenefitfromsynergiesinthatcombination.TheCGUsrepresentthelowestlevelwithintheGroupatwhichtheassociatedgoodwillismonitoredforinternalmanagementpurposes,andarenotlargerthantheoperatingsegmentsdeterminedinaccordancewithIFRS8.Atotalof25(2018:26)CGUshavebeenidentifiedandtheseareanalysedbetweenthethreebusinesssegmentsbelow.AllbusinesseswithinthevariousCGUsexhibitsimilarand/orconsistentprofitmarginandassetintensitycharacteristics.Assets,liabilities,deferredtaxandgoodwillhavebeenassignedtotheCGUsonareasonableandconsistentbasis.Cash-generatingunitsGoodwill201920182019€m2018€mAmericasMaterials773,5583,441EuropeMaterials16162,3542,280BuildingProducts232,1822,395TotalGroup25268,0948,116ImpairmenttestingmethodologyandresultsGoodwillissubjecttoimpairmenttestingonanannualbasis.Therecoverableamountof25CGUsisdeterminedbasedonavalue-in-usecomputation,usingLevel3inputsinaccordancewiththefairvaluehierarchy.Thecashflowforecastsareprimarilybasedonafive-yearstrategicplandocumentformallyapprovedbytheBoardofDirectorsandspecificallyexcludetheimpactoffuturedevelopmentactivity.Thesecashflowsareprojectedforwardforanadditionalfiveyearstodeterminethebasisforanannuity-basedterminalvalue,calculatedonthesamebasisastheGroup’sacquisitionmodellingmethodology.Asinprioryears,theterminalvalueisbasedona20-yearannuity,withtheexceptionofcertainlong-livedcementassets,whereanassumptionofa30-yearannuityhasbeenused.Projectedcashflowsbeyondtheinitialevaluationperiodhavebeenextrapolatedusingrealgrowthratesrangingfrom1.3%to1.8%intheAmericas,0.7%to2.0%inEuropeand3.1%inAsia.Suchrealgrowthratesdonotexceedthelong-termaveragegrowthratesforthecountriesinwhicheachCGUoperates.Thevalue-in-userepresentsthepresentvalueofthefuturecashflows,includingtheterminalvalue,discountedatarateappropriatetoeachCGU.Therealpre-taxdiscountratesusedrangefrom6.6%to8.7%(2018:7.0%to9.2%);theseratesareinlinewiththeGroup’sestimatedweightedaveragecostofcapital,arrivedatusingtheCapitalAssetPricingModel.The2019annualgoodwillimpairmenttestingprocesshasresultedinnointangibleassetimpairments.The2018annualgoodwillimpairmenttestingprocessresultedinanimpairmentof€20millionbeingrecordedinrespectofoneCGUinourBuildingProductssegment.KeysourcesofestimationuncertaintyThecashflowshavebeenarrivedattakingaccountoftheGroup’sstrongfinancialposition,itsestablishedhistoryofearningsandcashflowgenerationandthenatureofthebuildingmaterialsindustry,whereproductobsolescenceisverylow.However,expectedfuturecashflowsareinherentlyuncertainandarethereforeliabletomaterialchangeovertime.ThekeyassumptionsemployedinarrivingattheestimatesoffuturecashflowsfactoredintoimpairmenttestingaresubjectiveandincludeprojectedEBITDA(asdefined)*margins,netcashflows,discountratesusedandthedurationofthediscountedcashflowmodel.Significantunder-performanceinanyofCRH’smajorCGUsmaygiverisetoamaterialwrite-downofgoodwillwhichwouldhaveasubstantialimpactontheGroup’sincomeandequity,howevergiventheexcessheadroomonthemodelsthelikelihoodofthishappeningisnotconsideredarealisticpossibility.*EBITDAisdefinedasearningsbeforeinterest,taxes,depreciation,amortisation,assetimpairmentcharges,profitondisposalsandtheGroup’sshareofequityaccountedinvestments’profitaftertax.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex168CRH ANNUAL REPORT AND FORM 20-F I 2019169CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS168CRHANNUALREPORTANDFORM20-F|201916.IntangibleAssets-continuedSignificantgoodwillamountsThegoodwillallocatedtotheAmericasCement(AmericasMaterialssegment)andtheAmericasBuildingProducts(BuildingProductssegment)CGUsaccountforbetween18%and23%ofthetotalcarryingamountshownonpage166.ThegoodwillallocatedtoeachoftheremainingCGUsislessthan10%ofthetotalcarryingvalueinallothercases.TheadditionaldisclosuresrequiredforthetwoCGUswithsignificantgoodwillareasfollows:AmericasCementAmericasBuildingProducts2019201820192018Goodwillallocatedtothecash-generatingunitatbalancesheetdate€1,450m€1,412m€1,883m€1,655mDiscountrateappliedtothecashflowprojections(realpre-tax)7.6%8.2%8.4%9.1%AverageEBITDA(asdefined)*marginovertheinitial5-yearperiod39.1%37.9%18.3%15.3%Value-in-use(presentvalueoffuturecashflows)€7,031m€5,579m€8,560m€6,753mExcessofvalue-in-useovercarryingamount€3,529m€2,594m€4,938m€3,412mThekeyassumptionsandmethodologyusedinrespectofthesetwoCGUsareconsistentwiththosedescribedabove.ThevaluesappliedtoeachofthekeyestimatesandassumptionsarespecifictotheindividualCGUsandwerederivedfromacombinationofinternalandexternalfactorsbasedonhistoricalexperienceandtookintoaccountthecashflowsspecificallyassociatedwiththesebusinesses.Thecashflowsandannuity-basedterminalvaluewereprojectedinlinewiththemethodologydisclosedabove.TheAmericasCementandAmericasBuildingProductsCGUsarenotincludedintheCGUsreferredtointhe‘Sensitivityanalysis’sectionbelow.Giventhemagnitudeoftheexcessofvalue-in-useovercarryingamount,andourbeliefthatthekeyassumptionsarereasonable,managementbelievesthatitisnotreasonablypossiblethattherewouldbeachangeinthekeyassumptionssuchthatthecarryingamountwouldexceedthevalue-in-use.Consequentlynofurtherdisclosuresrelatingtosensitivityofthevalue-in-usecomputationsfortheAmericasCementorAmericasBuildingProductsCGUsareconsideredtobewarranted.SensitivityanalysisSensitivityanalysishasbeenperformedandresultsinadditionaldisclosuresinrespectofoneofthetotal25CGUs.Thekeyassumptions,methodologyusedandvaluesappliedtoeachofthekeyassumptionsforthisCGUareinlinewiththoseoutlinedabove(a30-yearannuityperiodhasbeenused).TheCGUhadgoodwillof€459millionatthedateoftesting.ThetablebelowidentifiestheamountsbywhicheachofthefollowingassumptionsmayeitherdeclineorincreasetoarriveatazeroexcessofthepresentvalueoffuturecashflowsoverthebookvalueofnetassetsintheCGUselectedforsensitivityanalysisdisclosures:Onecash-generatingunitReductioninEBITDA(asdefined)*margin2.2percentagepointsReductioninprofitbeforetax15.7%Reductioninnetcashflow14.4%Increaseinpre-taxdiscountrate1.3percentagepointsTheaverageEBITDA(asdefined)*marginforthisCGUovertheinitialfive-yearperiodwas20.2%.Thevalue-in-use(beingthepresentvalueofthefuturenetcashflows)was€1,379millionandthecarryingamountwas€1,176million,resultinginanexcessofvalue-in-useovercarryingamountof€203million.*EBITDAisdefinedasearningsbeforeinterest,taxes,depreciation,amortisation,assetimpairmentcharges,profitondisposalsandtheGroup’sshareofequityaccountedinvestments’profitaftertax.CRHANNUALREPORTANDFORM20-F|201916917.FinancialAssetsInvestmentsaccountedforusingtheequitymethod(i.e.jointventuresandassociates)Shareofnetassets€mLoans€mTotal€mOther€mAt1January20191,102611,16323Translationadjustment3-31Investmentsandadvances1215272Disposalsandrepayments(489)(51)(540)(14)Shareofprofitaftertax(i)72-72-Dividendsreceived(35)-(35)-At31December20196652569012Theequivalentdisclosurefortheprioryearisasfollows:At1January20181,1231251,24825Translationadjustment(18)(3)(21)-Investmentsandadvances112-Investmentandloantoassociateinlieuofcashproceeds355085-Jointventuresbecomingsubsidiaries(note32)(13)(107)(120)-Disposalsandrepayments(39)(5)(44)(2)Arisingonacquisition(note32)1-1-Shareofprofitaftertax(i)60-60-Dividendsreceived(48)-(48)-At31December20181,102611,16323(i)Shareofprofitaftertaxincludes€12million(2018:€12million)relatingtodiscontinuedoperations.SummarisedfinancialinformationfortheGroup’sinvestmentinjointventuresandassociateswhichareaccountedforusingtheequitymethodisasfollows:JointVenturesAssociatesTotal2019€m2018€m2019€m2018€m2019€m2018€mNon-currentassets2467116867759321,486Currentassets276220389468665688Non-currentliabilities(164)(331)(91)(115)(255)(446)Currentliabilities(254)(140)(423)(486)(677)(626)Netassets1044605616426651,102Alistingoftheprincipalequityaccountedinvestmentsiscontainedonpage264.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex170CRH ANNUAL REPORT AND FORM 20-F I 2019171CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS170CRHANNUALREPORTANDFORM20-F|201918.Inventories2019€m2018€mRawmaterials1,1421,149Work-in-progress(i)128109Finishedgoods1,4721,803Totalinventoriesatthelowerofcostandnetrealisablevalue2,7423,061(i)Work-in-progressincludes€2million(2018:€3million)inrespectofthecumulativecostsincurred,netofamountstransferredtocostofsalesunderpercentage-of-completionaccounting,forconstructioncontractsinprogressatthebalancesheetdate.AnanalysisoftheGroup’scostofsalesexpenseisprovidedinnote4tothefinancialstatements.Write-downsofinventoriesrecognisedasanexpensewithincostofsalesforcontinuingoperationsamountedto€8million(2018:€10million;2017:€23million).19.TradeandOtherReceivables2019€m2018€mCurrentTradereceivables2,3872,761Amountsreceivableinrespectofconstructioncontracts(i)914878Totaltradereceivables,gross3,3013,639Lossallowance(118)(133)Totaltradereceivables,net3,1833,506Amountsreceivablefromequityaccountedinvestments89Prepaymentsandotherreceivables576559Total3,7674,074Non-currentOtherreceivables317181(i)Includesunbilledrevenueandretentionsheldbycustomersinrespectofconstructioncontractsatthebalancesheetdateamountingto€247millionand€183millionrespectively(2018:€245millionand€168millionrespectively).Tradeandotherreceivablesaremeasuredatamortisedcost(lessanylossallowance)astheGroup’sbusinessmodelisto“holdtocollect”contractualcashflows,andthecashflowsarisingfromtradeandotherreceivablesaresolelypaymentsofprincipalandinterest.CRHANNUALREPORTANDFORM20-F|2019171Valuationandqualifyingaccounts(lossallowance)Themovementsinthelossallowanceforreceivablesduringthefinancialyearwereasfollows:2019€m2018€m2017€mAt1January133131152Reclassifiedfrom/(as)heldforsale-6(6)Translationadjustment2-(7)Providedduringyear453532Disposedofduringyear(30)(3)-Writtenoffduringyear(26)(30)(36)Arisingonacquisition(note32)163Recoveredduringyear(7)(12)(7)At31December118133131GiventhecommonprofileofCRH’scustomers,howcustomercreditriskismanagedatappropriategrouplocations,andthebreadthandscaleofitsinternationaloperations,adisclosureofconcentrationsofcreditriskbysegmentbestenablesusersoffinancialstatementstoassessCRH’screditriskexposure.Thefollowingtablesetsoutthegrosscarryingvalueoftradereceivablesandlossallowancebysegment:GrosscarryingvalueoftradereceivablesLossallowance2019€m2018€m2017€m2019€m2018€m2017€mAmericasMaterials1,3531,3221,054271917EuropeMaterials1,2281,1681,105706470BuildingProducts(i)7201,1491,070215044TotalGroup3,3013,6393,229118133131(i)AnalysisofBuildingProductssegmentbygeographiclocation:2019€m2018€m2017€m2019€m2018€m2017€mAmericas589566495161510Europe13158357553534Total7201,1491,070215044Customercreditriskismanagedaccordingtoestablishedpolicies,proceduresandcontrols.Customercreditqualityisassessedinlinewithstrictcreditratingcriteriaandcreditlimitsareestablishedwhereappropriate.Outstandingcustomerbalancesareregularlymonitoredandareviewforindicatorsofimpairment(evidenceoffinancialdifficultyofthecustomer,paymentdefault,breachofcontractetc.)iscarriedoutateachreportingdate.Significantbalancesarereviewedindividuallywhilesmallerbalancesaregroupedandassessedcollectively.Receivablesbalancesareingeneralunsecuredandnon-interest-bearing.ThetradereceivablesbalancesdisclosedabovecomprisealargenumberofcustomersspreadacrosstheGroup’sactivitiesandgeographieswithbalancesclassifiedas“neitherpastduenorimpaired”representing65%ofthetotaltradereceivablesbalanceatthebalancesheetdate(2018:64%).TherehavebeennosignificantchangestotheGroup’screditriskparametersortothecompositionoftheGroup’stradereceivablesportfolioduringthefinancialyear.TheGroupappliesthesimplifiedapproachtoprovidingforexpectedcreditlosses(ECL)permittedbyIFRS9FinancialInstruments,whichrequiresexpectedlifetimelossestoberecognisedfrominitialrecognitionofthereceivables.ReceivablessuchasthosewhichrelatetobondedgovernmentcontractsandreceivableswhichfallundercreditinsuranceareconsideredlowriskandwouldnotattractamaterialECL.Giventhepositiveeconomicoutlook(e.g.forecastGrossDomesticProduct)forthenext12monthsinthemajorityoftheeconomiesinwhichweoperateweconsiderthatourECLadequatelyrepresentstheriskofdefaultonourreceivablebalances.Tradereceivablesarewrittenoffwhenthereisnoreasonableexpectationofrecovery,suchasadebtorfailingtoengageinarepaymentplanwiththecompany.Whererecoveriesaremade,thesearerecognisedintheConsolidatedIncomeStatement.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex172CRH ANNUAL REPORT AND FORM 20-F I 2019173CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS172CRHANNUALREPORTANDFORM20-F|201919.TradeandOtherReceivables-continuedAgedanalysisTheagedanalysisoftradereceivablesandamountsreceivableinrespectofconstructioncontractsatthebalancesheetdatewasasfollows:2019€m2018€mNeitherpastduenorimpaired2,1402,319Pastduebutnotimpaired:-lessthan60days770922-60daysorgreaterbutlessthan120days186169-120daysorgreater8796Impaired(partialorfullprovision)118133Total3,3013,639Tradereceivablesandamountsreceivableinrespectofconstructioncontractsareingeneralreceivablewithin90daysofthebalancesheetdate.CRHANNUALREPORTANDFORM20-F|201917320.TradeandOtherPayables2019€m2018€mCurrentTradepayables2,2022,453Constructioncontract-relatedpayables(i)229218Deferredandcontingentacquisitionconsideration(ii)4548Accrualsandotherpayables1,8971,887Amountspayabletoequityaccountedinvestments33Total4,3764,609Non-currentOtherpayables195181Deferredandcontingentacquisitionconsideration(ii)290291Total485472(i)Constructioncontract-relatedpayablesincludebillingsinexcessofrevenue,togetherwithadvancesreceivedfromcustomersinrespectofworktobeperformedunderconstructioncontractsandforeseeablelossesthereon.€174millionwasrecognisedintheConsolidatedIncomeStatementduring2019whichwasincludedinthecontract-relatedpayablesbalanceat31December2018.Otherthandeferredandcontingentconsideration,thecarryingamountsoftradeandotherpayablesapproximatetheirfairvaluelargelyduetotheshort-termmaturitiesandnatureoftheseinstruments.(ii)Thefairvalueoftotalcontingentconsiderationis€248million(2018:€220million)(Level3inputinthefairvaluehierarchy),anddeferredconsiderationis€87million(2018:€119million).Onanundiscountedbasis,thecorrespondingfuturepaymentsrelatingtocontingentconsideration,forwhichtheGroupmaybeliable,rangesfrom€267millionto€410million.Thisisbasedonarangeofestimatedpotentialoutcomesoftheexpectedpaymentamounts.Themovementindeferredandcontingentconsiderationduringthefinancialyearwasasfollows:2019€m2018€mAt1January339265Reclassifiedfromheldforsale-2Translationadjustment619Arisingonacquisitionsandinvestmentsduringyear(note32)18103Changesinestimate5(8)Disposals(4)(2)Paidduringyear(48)(55)Discountunwinding1915At31December335339→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex174CRH ANNUAL REPORT AND FORM 20-F I 2019175CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS174CRHANNUALREPORTANDFORM20-F|201921.MovementinWorkingCapitalandProvisionsforLiabilitiesInventories€mTradeandotherreceivables€mTradeandotherpayables€mProvisionsforliabilities€mTotal€mAt1January20193,0614,255(5,081)(1,087)1,148EffectofadoptingIFRS16-311115Translationadjustment6494(107)(17)34Arisingonacquisition(note32)5866(73)(6)45Disposals(520)(669)510-(679)Deferredandcontingentacquisitionconsideration:-arisingonacquisitionsduringyear(note32)--(18)-(18)-paidduringyear--48-48Deferredproceedsarisingondisposalsduringyear-269--269Interestaccrualsanddiscountunwinding-(11)(1)(22)(34)Additionstoleasedmineralreserves--(86)-(86)Increase/(decrease)inworkingcapitalandprovisionsforliabilities7977(64)(28)64At31December20192,7424,084(4,861)(1,159)806Theequivalentdisclosurefortheprioryearsisasfollows:At1January20182,7153,786(4,760)(1,064)677Reclassifiedfromheldforsale266334(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)1,148At1January20172,9394,191(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)677CRHANNUALREPORTANDFORM20-F|201917522.LeasesA.IFRS16LeasesdisclosuresLeasedright-of-useassetsLandandbuildings€mPlantandmachinery€mOther€mTotal€mAt31December2019Cost1,205453671,725Accumulateddepreciation(119)(116)(20)(255)Netcarryingamount1,086337471,470At1January2019,netcarryingamount----EffectofadoptingIFRS161,478424601,962Translationadjustment2712-39Transferfrom/(to)ownedassets5(17)-(12)Additionsatcost478728162Arisingonacquisition(note32)633-66Disposalsatnetcarryingamount(384)(47)(15)(446)Adjustmentasaresultofremeasurementofleaseliability228333Depreciationchargeforyear(i)(172)(133)(29)(334)At31December2019,netcarryingamount1,086337471,470LeaseliabilitiesAt1January2019----EffectofadoptingIFRS161,493425591,977Translationadjustment2910-39Additionofright-of-useassets478728162Arisingonacquisition(note32)631-64Disposals(386)(46)(15)(447)Remeasurements228333Payments(198)(157)(31)(386)Discountunwinding(ii)5512269At31December20191,125340461,511(i)Thedepreciationchargefortheyearincludes€63millionrelatingtodiscontinuedoperations.(ii)Includes€7millionrelatingtodiscontinuedoperations.ThetablebelowshowsamaturityanalysisofthediscountedandundiscountedleaseliabilityarisingfromtheGroup’sleasingactivities.Theprojectionsarebasedontheforeignexchangeratesapplyingattheendoftherelevantfinancialyearandoninterestrates(discountedprojectionsonly)applicabletotheleaseportfolio.Asat31December2019Discounted€mUndiscounted€mWithinoneyear271275Betweenoneandtwoyears219231Betweentwoandthreeyears174193Betweenthreeandfouryears136158Betweenfourandfiveyears112135Afterfiveyears5991,046Total1,5112,038→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex176CRH ANNUAL REPORT AND FORM 20-F I 2019177CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS176CRHANNUALREPORTANDFORM20-F|201922.Leases-continuedTheGroupavailsoftheexemptionfromcapitalisingleasecostsforshort-termleasesandlow-valueassetswheretherelevantcriteriaaremet.Variableleasepaymentsdirectlylinkedtosalesorusagearealsoexpensedasincurred.ThefollowingleasecostshavebeenchargedtotheConsolidatedIncomeStatementasincurred:Continuingoperations2019€mShort-termleases171Leaseoflow-valueassets7Variableleasepaymentsnotincludedintheleaseliability90Total268Totalcashoutflowforleasepayments654Leasecommitmentsforshort-termleasesaresimilartotheportfolioofshort-termleasesforwhichthecosts,asabove,wereexpensedtotheConsolidatedIncomeStatement.Theeffectofexcludingfuturecashoutflowsarisingfromvariableleasepayments,terminationoptions,residualvalueguaranteesandleasesnotyetcommencedfromleaseliabilitieswasnotmaterialfortheGroup.Thepotentialundiscountedfuturecashoutflowsarisingfromtheexerciseofrenewaloptionsthatarenotexpectedtobeexercised(andarethereforenotincludedintheleaseterm)areasfollows:Asat31December2019€mWithinoneyear2Betweenoneandtwoyears3Betweentwoandthreeyears4Betweenthreeandfouryears6Betweenfourandfiveyears7Afterfiveyears483Total505Incomefromsubleasingandgains/lossesonsaleandleasebacktransactionswerenotmaterialfortheGroup.B.IAS17LeasesdisclosuresOperatingleaserentalschargedtotheConsolidatedIncomeStatementfortheyearsended31December2018and31December2017underIAS17wereasfollows:2018€m2017€mContinuingoperationsHireofplantandmachinery308279Landandbuildings174188Otheroperatingleases5146Total533513Leasecommitmentswereprovidedforuptotheearliestbreakclauseinthelease.Asat31December2018€mWithinoneyear353Afteroneyearbutnotmorethanfiveyears769Morethanfiveyears789Total1,911Thecommitmentsaboveinclude€408millionofoperatingleasecommitmentsrelatingtodiscontinuedoperationsin2018.CRHANNUALREPORTANDFORM20-F|201917723.AnalysisofNetDebtComponentsofnetdebtNetdebtisanon-GAAPmeasurewhichweprovidetoinvestorsaswebelievetheyfindituseful.NetdebtcomprisesleaseliabilitiesunderIFRS16,cashandcashequivalents,derivativefinancialinstrumentassetsandliabilitiesandinterest-bearingloansandborrowingsandenablesinvestorstoseetheeconomiceffectsoftheseintotal(seenote24fordetailsofthecapitalandriskmanagementpoliciesemployedbytheGroup).Netdebtiscommonlyusedincomputationssuchasnetdebtasa%oftotalequityandnetdebtasa%ofmarketcapitalisation.Asat31December2019Asat31December2018Fairvalue*€mBookvalue€mFairvalue*€mBookvalue€mLeaseliabilitiesunderIFRS16(note22)(i)(1,511)(1,511)--Interest-bearingloansandborrowings(note26)(ii)(9,572)(9,014)(9,223)(9,316)Derivativefinancialinstruments(net)(note27)6565(14)(14)Cashandcashequivalents(note25)3,7553,7552,3462,346Groupnetdebt(7,263)(6,705)(6,891)(6,984)Reconciliationofopeningtoclosingnetdebt2019€m2018€m2017€mAt1January(6,984)(5,796)(5,297)MovementinyearEffectofadoptingIFRS16(1,954)--Debt,includingleaseliabilities,inacquiredcompanies(note32)(73)(74)(12)Debt,includingleaseliabilities,indisposedcompanies415--Increaseininterest-bearingloansandborrowings(91)(1,434)(1,010)NetincreaseinleaseliabilitiesunderIFRS16(i)(163)--Netcashflowarisingfromderivativefinancialinstruments36(6)(169)Repaymentofinterest-bearingloans,borrowingsandfinanceleases(ii)572246343RepaymentofleaseliabilitiesunderIFRS16(i)317--Mark-to-marketadjustment2529Translationadjustmentonfinancingactivities(214)(133)654Increaseinliabilitiesfromfinancingactivities(1,130)(1,399)(185)Translationadjustmentoncashandcashequivalents2717(161)Increase/(decrease)incashandcashequivalents1,382194(153)At31December(6,705)(6,984)(5,796)Notes(i)and(ii)aresetoutoverleaf.*Allinterest-bearingloansandborrowingsareLevel2fairvaluemeasurements.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex178CRH ANNUAL REPORT AND FORM 20-F I 2019179CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS178CRHANNUALREPORTANDFORM20-F|201923.AnalysisofNetDebt-continuedThefollowingtableshowstheeffectiveinterestratesonperiod-endfixed,grossandnetdebt:Asat31December2019Asat31December2018€mInterestrateWeightedaveragefixedperiodYears€mInterestrateWeightedaveragefixedperiodYearsInterest-bearingloansandborrowingsnominal-fixedrate(iii)(8,743)(9,107)Derivativefinancialinstruments-fixedrate1,5991,726Netfixedratedebtincludingderivatives(7,144)3.4%9.2(7,381)3.5%9.8Interest-bearingloansandborrowingsnominal-floatingrate(iv)(158)(157)Adjustmentofdebtfromnominaltobookvalue(iii)(113)(52)Derivativefinancialinstruments-currencyfloatingrate(1,534)(1,740)Grossdebtincludingderivativefinancialinstruments,excludingleaseliabilities(8,949)3.3%(9,330)3.6%Leaseliabilities-fixedrate(1,511)-Grossdebtincludingderivativefinancialinstruments,includingleaseliabilities(10,460)(9,330)Cashandcashequivalents-floatingrate(note25)3,7552,346Groupnetdebt(6,705)(6,984)(i)AllleasescapitalisedunderIFRS16havebeenincludedasleaseliabilitiesin2019.(ii)Interest-bearingloansandborrowingsin2018includefinanceleasespreviouslycapitalisedunderIAS17.(iii)OftheGroup’snominalfixedratedebtat31December2019,€1,599million(2018:€1,726million)ishedgedtofloatingrateusinginterestrateswaps.(iv)Floatingratedebtcomprisesbankborrowingsbearinginterestatratessetinadvanceforperiodsrangingfromovernighttolessthanoneyearlargelybyreferencetointer-bankinterestrates.CRHANNUALREPORTANDFORM20-F|2019179CurrencyprofileThecurrencyprofileoftheGroup’snetdebtandnetworth(capitalandreservesattributabletotheCompany’sequityholders)asat31December2019and31December2018isasfollows:euro€mUSDollar€mPoundSterling€mCanadianDollar€mPhilippinePeso€mPolishZloty€mSwissFranc€mOther(i)€mTotal€mLeaseliabilitiesunderIFRS16(note22)(ii)(255)(752)(223)(151)(11)(27)(48)(44)(1,511)Cashandcashequivalents(note25)1,935863238175341051682373,755Interest-bearingloansandborrowings(note26)(3,310)(4,444)(469)(9)(439)-(303)(40)(9,014)Derivativefinancialinstruments(net)(note27)1,43893(391)(676)(38)(150)-(211)65Netdebtbymajorcurrencyincludingderivativefinancialinstruments(192)(4,240)(845)(661)(454)(72)(183)(58)(6,705)Non-debtassetsandliabilitiesanalysedasfollows:Non-currentassets4,24214,3402,7831,7411,5073314591,54126,944Currentassets1,2563,315788499150138713126,529Non-currentliabilities(672)(2,417)(314)(205)(150)(19)(121)(112)(4,010)Currentliabilities(1,442)(1,995)(837)(320)(183)(147)(77)(277)(5,278)Non-controllinginterests(48)(50)--(414)-(6)(22)(540)CapitalandreservesattributabletotheCompany’sequityholders3,1448,9531,5751,0544562311431,38416,940Theequivalentdisclosurefortheprioryearisasfollows:Cashandcashequivalents(note25)1,077646214691390811562,346Interest-bearingloansandborrowings(note26)(3,824)(4,332)(495)(2)(354)-(302)(7)(9,316)Derivativefinancialinstruments(net)(note27)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’sequityholders3,1977,9881,4749483911761611,69416,029(i)TheprincipalcurrenciesincludedinthiscategoryaretheChineseRenminbi,theRomanianLeu,theIndianRupee,theUkrainianHryvniaandtheSerbianDinar.(ii)AllleasescapitalisedunderIFRS16havebeenincludedasleaseliabilitiesin2019.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex180CRH ANNUAL REPORT AND FORM 20-F I 2019181CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS180CRHANNUALREPORTANDFORM20-F|201923.AnalysisofNetDebt-continuedLiquidityandcapitalresourcesThefollowingtableprovidescertaininformationrelatedtoourcashgenerationandchangesinourcashandcashequivalentsposition:2019€m2018€m2017€mNetcashinflowfromoperatingactivities3,4661,8992,189Netcashinflow/(outflow)frominvestingactivities195(1,592)(2,685)Netcash(outflow)/inflowfromfinancingactivities(2,279)(113)343Increase/(decrease)incashandcashequivalents1,382194(153)Cashandcashequivalentsatbeginningofyear,excludingoverdrafts(note25)2,3462,1352,449Effectofexchangeratechanges2717(161)Cashandcashequivalentsatendofyear,excludingoverdrafts(note25)3,7552,3462,135LeaseliabilitiesunderIFRS16(1,511)--Bankoverdrafts(41)(113)(71)Borrowings(8,973)(9,203)(7,910)Derivativefinancialinstruments65(14)50Totalliabilitiesfromfinancingactivities(10,460)(9,330)(7,931)Netdebtatendofyear(6,705)(6,984)(5,796)Cashatbankandinhandreclassifiedasheldforsale--(20)Bankoverdraftsreclassifiedasheldforsale--5Groupnetdebtexcludingnetdebtreclassifiedasheldforsale(6,705)(6,984)(5,811)TheGroupbelievesthatitsfinancialresources(operatingcashtogetherwithcashandcashequivalentsof€3.8billionandundrawncommittedloanfacilitiesof€3.6billion)willbesufficienttocovertheGroup’scashrequirements.At31December2019,euroandUSDollardenominatedcashandcashequivalentsrepresented52%(2018:46%)and23%(2018:27%)oftotalcashandcashequivalentsrespectively.CRHANNUALREPORTANDFORM20-F|2019181SignificantborrowingsThemainsourcesofGroupdebtfundingarepublicbondmarketsinEuropeandNorthAmerica.Thefollowingexternalbondswereoutstandingasat31December2019:AnnualcouponsOutstandingmillionsFinalmaturityeurobonds2.750%€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.At31December2019,theremainingfairvalueonthehedgeditemontheConsolidatedBalanceSheetwasUS$42millon(2018:US$45million).→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex182CRH ANNUAL REPORT AND FORM 20-F I 2019183CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS182CRHANNUALREPORTANDFORM20-F|201924.CapitalandFinancialRiskManagementCapitalmanagementOverallsummaryTheprimaryobjectivesofCRH’scapitalmanagementstrategyaretoensurethattheGroupmaintainsastrongcreditratingtosupportitsbusinessandtocreateshareholdervaluebymanagingthedebtandequitybalanceandthecostofcapital.TheGroupiscommittedtooptimisingtheuseofitsbalancesheetwithintheconfinesoftheoverallobjectivetomaintainaninvestmentgradecreditrating.ThecapitalstructureoftheGroup,whichcomprisesnetdebtandcapitalandreservesattributabletotheCompany’sequityholders,maybesummarisedasfollows:2019€m2018€mCapitalandreservesattributabletotheCompany’sequityholders16,94016,029Netdebt6,7056,984Capitalandnetdebt23,64523,013TheBoardperiodicallyreviewsthecapitalstructureoftheGroup,includingthecostofcapitalandtherisksassociatedwitheachclassofcapital.TheGroupmanagesand,ifnecessary,adjustsitscapitalstructuretakingaccountofunderlyingeconomicconditions;anymaterialadjustmentstotheGroup’scapitalstructureintermsoftherelativeproportionsofdebtandequityareapprovedbytheBoard.Inordertomaintainoradjustthecapitalstructure,theGroupmayissuenewshares,disposeofassets,amendinvestmentplans,alterdividendpolicyorreturncapitaltoshareholders.Dividendcoverfortheyearended31December2019amountedto2.90x(2018:4.20x).Nochangesweremadeintheobjectivesorpoliciesduring2019.FinancialriskmanagementobjectivesandpoliciesTheGroupusesfinancialinstrumentsthroughoutitsbusinesses:interest-bearingloansandborrowings,cashandcashequivalentsandleasesareusedtofinancetheGroup’soperations;tradereceivablesandtradepayablesarisedirectlyfromoperations;andderivatives,principallyinterestrateandcurrencyswapsandforwardforeignexchangecontracts,areusedtomanageinterestraterisksandcurrencyexposuresandtoachievethedesiredprofileofborrowings.Withrespecttointerest-bearingloansandborrowingsandinterestrateswaps,theGroupisawareofplanstophaseoutthecurrentbenchmarkforlendingrates(Inter-bankOfferedRates-IBOR),andreplaceitwithalternativebenchmarksorreferencerates.TheGroupiscurrentlyperforminganassessmentoftheimpactofthebenchmarkswitch.TheGroupdoesnottradeinfinancialinstrumentsnordoesitenterintoanyleveragedderivativetransactions.TheGroup’scorporatetreasuryfunctionprovidesservicestothebusinessunits,co-ordinatesaccesstodomesticandinternationalfinancialmarkets,andmonitorsandmanagesthefinancialrisksrelatingtotheoperationsoftheGroup.TheGroupTreasurerreportstotheDirectorofGroupFinanceandtheactivitiesofthecorporatetreasuryfunctionaresubjecttoregularinternalaudit.SystemsandprocessesareinplacetomonitorandcontroltheGroup’sliquidityrisks.TheGroup’snetdebtpositionformspartofthemonthlydocumentationpresentedtotheBoard.TheGroup’shedgingactivityisbasedonobservableeconomicrelationships,whenthereisconfidencethatsuchrelationshipswillcontinuefortheforeseeablefuture.Matchingcriticaltermssuchasnotionalamount,tenor,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”intheanalysisofderivativefinancialinstrumentspresentedinnote27.TheGroup’sinterestratehedgingstrategyandactivityemploysthepremisethatchangesinmacro-economicfactorsarereflectedincurrentinterestrates.Intheeconomicrelationshiptherelativevalueofthefixedrateatwhichabondwasissuedwillchangeinlinewithmarketinterestratesandafloatingrateswapwillcounterbalancechangesinthebond’sfairvalue.Ahypotheticalderivativeisusedtoreplicatetheimpactthatchangesinmarketinterestratescouldhaveonthefixedratebond(hedgeditem)whichismeasuredagainsttheinterestrateswap(hedgeinstrument).Ahedgeratioofonetooneisestablished.Potentialsourcesofineffectivenesscomprisethetimingoffloatingrateresetsandcounterpartycreditadjustmentstotheinterestrateswap.Pastobservationsoninterestratemovementsprovideevidencethatsuchrelationshipswillcontinuefortheforeseeablefuture.Thenotionalamountofinterestrateswapsissetoutinnote23.Thefollowingtabledemonstratestheimpactonprofitbeforetaxandtotalequityofarangeofpossiblechangesintheinterestratesapplicabletonetfloatingrateborrowings,withallothervariablesheldconstant.Theseimpactsarecalculatedbasedontheclosingbalancesheetfortherelevantperiodandassumeallfloatinginterestratesandinterestcurveschangebythesameamount.Forprofitbeforetax,theimpactshownistheimpactonclosingbalancesheetfloatingratenetdebtforafullyearwhilefortotalequitytheimpactshownistheimpactonthevalueoffinancialinstruments.Percentagechangeincostofborrowings(i)+/-1%Impactonprofitbeforetax2019+/-€6m2018+/-€4m2017+/-€6mImpactontotalequity2019-/+€2.5m2018-/+€6.7m2017-/+€0.4m(i)Sensitivityanalysisforcostofborrowinghasbeenpresentedforcontinuingoperationsonly.CRHANNUALREPORTANDFORM20-F|2019183ForeigncurrencyriskDuetothenatureofbuildingmaterials,whichingeneralhavealowvalue-to-weightratio,theGroup’sactivitiesareconductedprimarilyinthelocalcurrencyofthecountryofoperationresultinginlowlevelsofforeigncurrencytransactionrisk;variancesarisinginthisregardarereflectedinoperatingcostsorcostofsalesintheConsolidatedIncomeStatementintheperiodinwhichtheyarise.GiventheGroup’spresencein30countriesworldwide,theprincipalforeignexchangeriskarisesfromfluctuationsintheeurovalueoftheGroup’snetinvestmentinawidebasketofcurrenciesotherthantheeuro;suchchangesarereportedseparatelywithintheConsolidatedStatementofComprehensiveIncome.AcurrencyprofileoftheGroup’snetdebtandnetworthispresentedinnote23.TheGroup’sestablishedpolicyistospreaditsnetworthacrossthecurrenciesofitsvariousoperationswiththeobjectiveoflimitingitsexposuretoindividualcurrenciesandthuspromotingconsistencywiththegeographicalbalanceofitsoperations.Inordertoachievethisobjective,theGroupmanagesitsborrowings,wherepracticableandcosteffective,tohedgeaportionofitsforeigncurrencyassets.Hedgingisdoneusingcurrencyborrowingsinthesamecurrencyastheassetsbeinghedgedorthroughtheuseofotherhedgingmethodssuchascurrencyswaps.TheGroup’sforeignexchangehedgingstrategyandactivityisbasedontheassumptionthatchangesininternationaleconomicfactorsarereflectedincurrentforeignexchangeratesandimpactsthetranslationoftheGroup’snon-euronetassets.Theeconomicrelationship,beingthetranslationimpactoftheGroup’snetinvestmentinnon-eurosubsidiaries(hedgeitem)ishedgedagainstaforeigncurrencyswap(hedgeinstrument)tocounterbalancemovementsinforeigncurrencyrates.TheGroupidentifiescertainportionsofforeigncurrencynetinvestmentswhereforeigncurrencytranslationmovementscanbemitigatedthroughtheuseofcurrencyswapsinthesamecurrencypairing.Ahedgeratioofonetooneisestablished.Asat31December2019,thenotionalamountofhedgednetinvestmentswas€939million(2018:€942million).Thefairvaluemovementsofthehedgeinstrumentsareinversetotheimpactofthetranslationofthehedgednetassetsbecausethecriticaltermsmatch.ThisreducestheGroup’sexposuretofluctuationsonthetranslationoftheGroup’ssubsidiarieswithanon-eurofunctionalcurrencyintoeuro.Potentialsourcesofineffectivenessarechangesintheinterestratedifferentialofthehedgedcurrencypair,recordedthroughtheConsolidatedIncomeStatement.Pasttrendsindicatethattheeconomicrelationshipdescribedwillcontinuefortheforeseeablefuture.Thefairvaluesandmaturityanalysisofthehedgeinstrumentsaresetoutinnote27.Thefollowingtabledemonstratesthesensitivityofprofitbeforetaxandequitytoselectedmovementsintherelevanteuro/USDollarexchangerate(withallothervariablesheldconstant);theUSDollarhasbeenselectedastheappropriatecurrencyforthisanalysisgiventhematerialityoftheGroup’sactivitiesintheUS.Theimpactonprofitbeforetaxisbasedonchangingtheeuro/USDollarexchangerateusedincalculatingprofitbeforetaxfortheperiod.Theimpactontotalequityandfinancialinstrumentsiscalculatedbychangingtheeuro/USDollarexchangerateusedinmeasuringtheclosingbalancesheet.Percentagechangeinrelevant€/US$exchangerate(i)+/-5%Impactonprofitbeforetax2019-/+€83m2018-/+€149m2017-/+€52mImpactontotalequity*2019-/+€448m2018-/+€399m2017-/+€291m*Includestheimpactonfinancialinstrumentswhichisasfollows:2019+/-€212m2018+/-€204m2017+/-€165m(i)Sensitivityanalysisforexchangerateshasbeenpresentedforcontinuingoperationsonly.Financialinstrumentsincludedeposits,moneymarketfunds,commercialpapers,bankloans,medium-termnotesandotherfixedtermdebt,interestrateswaps,commodityswapsandforeignexchangecontracts.Theyexcludetradereceivablesandtradepayables.Credit/counterpartyriskInadditiontocashatbankandinhand,theGroupholdssignificantcashbalanceswhichareinvestedonashort-termbasisandareclassifiedascashequivalents(seenote25).Thesedepositsandotherfinancialinstruments(principallycertainderivativesandloansandreceivablesincludedwithinfinancialassets)giverisetocreditriskonamountsduefromcounterpartyfinancialinstitutions(stemmingfromtheirinsolvencyoradowngradeintheircreditratings).Creditriskismanagedbylimitingtheaggregateamountanddurationofexposuretoanyonecounterpartyprimarilydependingonitscreditratingandbyregularreviewoftheseratings.Acceptablecreditratingsarehighinvestment-graderatings-ingeneral-counterpartieshaveratingsofA3/A-orhigherfromMoody’s/Standard&Poor’sratingsagencies.Themaximumexposurearisingintheeventofdefaultonthepartofthecounterparty(includinginsolvency)isthecarryingvalueoftherelevantfinancialinstrument.Initsworldwideinsuranceprogramme,theGroupcarriesappropriatelevelsofinsurancefortypicalbusinessrisks(includingproductliability)withvariousleadinginsurancecompanies.However,intheeventofthefailureofoneormoreofitsinsurancecounterparties,theGroupcouldbeimpactedbylosseswhererecoveryfromsuchcounterpartiesisnotpossible.CreditriskarisinginthecontextoftheGroup’soperationsisnotsignificantwiththetotallossallowanceatthebalancesheetdateamountingto3.6%ofgrosstradereceivables(2018:3.7%).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.TheundrawncommittedfacilitiesavailabletotheGroupasatthebalancesheetdatearequantifiedinnote26;thesefacilitiesspanawidenumberofhighly-ratedfinancialinstitutionsthusminimisinganypotentialexposurearisingfromconcentrationsinborrowingsources.Therepaymentschedule(analysedbymaturitydate)applicabletotheGroup’soutstandinginterest-bearingloansandborrowingsasatthebalancesheetdateisalsopresentedinnote26.TheGroup’s€1.5billionEuroCommercialPaperProgrammeandUS$2.0billionUSDollarCommercialPaperProgrammemeanswehaveframeworkprogrammesinthemoneymarkets→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex184CRH ANNUAL REPORT AND FORM 20-F I 2019185CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS184CRHANNUALREPORTANDFORM20-F|201924.CapitalandFinancialRiskManagement-continuedinplacethatallowtheGrouptoissueintherelevantmarketswithinashortperiodoftime.TheGroupreinstateditsRegistrationStatementprogrammeintheUSduring2019,whichallowsittoissueSECregisterednotesintheUSDollarDebtCapitalMarkets.CommoditypriceriskTheprincipalcommoditypricerisksareidentifiedinavarietyofhighlyprobableandactivecommoditycontractswhereasignificantpartofthepricetobepaidreliesonareferencetospecificfloatingpriceindices(usuallyUSDollar)foraspecificperiod.Programmesareinplacetohedgethequantitiesandqualitiesofcommodityproducts,includingcoal,highsulphurfueloil,diesel,electricityandcarboncredits.TheaimoftheprogrammesistoneutralisethevariabilityintheConsolidatedIncomeStatementasaresultofchangesinassociatedcommodityindicesoveratimeframeofapproximatelyfiveyears(2018:threeyears).Ahedgeratioofonetooneisestablished.Fixedpriceswapcontractsintheentity’soperatingcurrencyareusedtohedgethesamespecificfloatingindexriskandcurrencyriskwhereitisdeterminedthatthoserisksarebettermanagedatafixedpriceratherthanbeingexposedtouncontrollablepricefluctuationsduetothefloatingpriceindexelementofthecontract.Sourcesofineffectivenesscanrelatetotimingofcashflowsandcounterpartycreditriskadjustments.ThederivativecontractsqualifyforcashflowhedgeaccountingunderIFRS9andthefairvaluesbymaturityaresetoutinnote27.Thenotionalandfairvaluesinrespectofderivativecontractsasat31December2019and31December2018wereasfollows:ProfileofcommodityproductsAsat31December2019Asat31December2018Notionalvalue€mFairvalue€mNotionalvalue€mFairvalue€mCommoditycontracts105-162-Derivativeliability---(27)CRHANNUALREPORTANDFORM20-F|2019185Thetablesbelowshowtheprojectedcontractualundiscountedtotalcashoutflows(principalandinterest)arisingfromtheGroup’stradeandotherpayables,grossdebtandderivativefinancialinstruments.Thetablesalsoincludethegrosscashinflowsprojectedtoarisefromderivativefinancialinstruments.Theseprojectionsarebasedontheinterestandforeignexchangeratesapplyingattheendoftherelevantfinancialyear.Within1year€mBetween1and2years€mBetween2and3years€mBetween3and4years€mBetween4and5years€mAfter5years€mTotal€mAt31December2019Financialliabilities-cashoutflowsTradeandotherpayables4,37613940241652124,956LeaseliabilitiesunderIFRS16(i)2752311931581351,0462,038Otherinterest-bearingloansandborrowings8249623917546025,4298,962Interestpaymentsonotherinterest-bearingloansandborrowings(ii)3072752582332271,8563,156Cross-currencyswaps-grosscashoutflows1,61513----1,628Otherderivativefinancialinstruments41----5Grossprojectedcashoutflows7,4011,6218821,1691,1298,54320,745Derivativefinancialinstruments-cashinflowsInterestrateswaps-netcashinflows(iii)(13)(13)(13)(8)(6)(12)(65)Cross-currencyswaps-grosscashinflows(1,605)(13)----(1,618)Otherderivativefinancialinstruments(4)(1)----(5)Grossprojectedcashinflows(1,622)(27)(13)(8)(6)(12)(1,688)Theequivalentdisclosurefortheprioryearisasfollows:At31December2018Financialliabilities-cashoutflowsTradeandotherpayables4,6091603018113485,176Financeleases(i)53322621Otherinterest-bearingloansandborrowings6207529533757535,8569,309Interestpaymentsonfinanceleases(i)-----22Interestpaymentsonotherinterest-bearingloansandborrowings(ii)3282972652482242,0223,384Cross-currencyswaps-grosscashoutflows2,3202----2,322Otherderivativefinancialinstruments302----32Grossprojectedcashoutflows7,9121,2161,2516439908,23420,246Derivativefinancialinstruments-cashinflowsInterestrateswaps-netcashinflows(iii)(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)(i)Financeleasesin2018relatetoleasespreviouslycapitalisedunderIAS17.AllleasescapitalisedunderIFRS16havebeenincludedasleaseliabilitiesin2019.(ii)At31December2019and31December2018,aportionoftheGroup’slong-termdebtcarriedvariableinterestrates.TheGroupusestheinterestratesineffecton31Decembertocalculatetheinterestpaymentsonthelong-termdebtfortheperiodsindicated.(iii)TheGroupusesinterestrateswapstohelpmanageitsinterestcost.UnderthesecontractstheGrouphasagreedtoexchangeatpredeterminedintervals,thedifferencebetweenfixedandvariableinterestamountscalculatedbyreferencetoapre-agreednotionalprincipal.TheGroupusestheinterestratesineffecton31Decembertocalculatethenetinterestreceiptsorpaymentsonthesecontracts.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex186CRH ANNUAL REPORT AND FORM 20-F I 2019187CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS186CRHANNUALREPORTANDFORM20-F|201925.CashandCashEquivalentsCashandcashequivalentsbalancesarespreadacrossawidenumberofhighly-ratedfinancialinstitutions.Thecreditriskattachingtotheseitemsisdocumentedinnote24.CashandcashequivalentsareincludedintheConsolidatedBalanceSheetatamortisedcostandareanalysedasfollows:2019€m2018€mCashatbankandinhand1,005814Investments(short-termdeposits)2,7501,532Total3,7552,346Cashatbankearnsinterestatfloatingratesbasedondailydepositbankrates.Short-termdeposits,whichincludebankandmoneymarketdeposits,aremadeforvaryingperiodsofbetweenonedayandthreemonthsdependingontheimmediatecashrequirementsoftheGroup,andearninterestattherespectiveshort-termdepositrates.26.Interest-bearingLoansandBorrowings2019€m2018€mBankoverdrafts41113Bankloans465356Bonds8,5088,825Financeleases(i)-21Other-1Interest-bearingloansandborrowings9,0149,316Interest-bearingloansandborrowingsincludeloansof€nilmillion(2018:€5million)securedonspecificitemsofproperty,plantandequipment;thesefiguresdonotincludefinanceleases.(i)Financeleasesin2018relatetoleasespreviouslycapitalisedunderIAS17.Refertonote22forallleasescapitalisedunderIFRS16in2019.CRHANNUALREPORTANDFORM20-F|2019187MaturityprofileofloansandborrowingsandundrawncommittedfacilitiesAsat31December2019Asat31December2018Loansandborrowings€mUndrawncommittedfacilities€mLoansandborrowings€mUndrawncommittedfacilities€mWithinoneyear815-618-Betweenoneandtwoyears95612748-Betweentwoandthreeyears385594815Betweenthreeandfouryears7715037050Betweenfourandfiveyears5983,5007763,500Afterfiveyears5,489435,85618Total9,0143,6109,3163,583TheGroupmanagesitsborrowingabilitybyenteringintocommittedborrowingagreements.RevolvingcommittedbankfacilitiesaregenerallyavailabletotheGroupforperiodsofuptofiveyearsfromthedateofinception.TheundrawncommittedfacilitiesfiguresshowninthetableaboverepresentthefacilitiesavailabletobedrawnbytheGroupat31December2019.InApril2019,theGroupsuccessfullyextendedits€3.5billionsyndicatedcreditfacilitywithagroupofbanklendersandatthesametimemadeanumberofamendmentsincludingtheremovalofallfinancialcovenantswhichimprovedtheflexibilityofthefacility.GuaranteesTheCompanyhasgivenlettersofguaranteetosecureobligationsofsubsidiaryundertakingsasfollows:€8.5billioninrespectofloansandborrowings,bankadvances,derivativeobligationsandfutureleaseobligations(2018:€8.9billion)and€0.4billioninrespectoflettersofcredit(2018:€0.3billion).AnyIrishregisteredwholly-ownedsubsidiaryoftheCompanymayavailoftheexemptionfromfilingitsstatutoryfinancialstatementsfortheyearended31December2019aspermittedbysection357oftheCompaniesAct2014andifanIrishregisteredwholly-ownedsubsidiaryoftheCompanyelectstoavailofthisexemption,therewillbeinforceanirrevocableguaranteefromtheCompanyinrespectofallcommitmentsenteredintobysuchwholly-ownedsubsidiary,includingamountsshownasliabilities(withinthemeaningofsection357(1)(b)oftheCompaniesAct2014)insuchwholly-ownedsubsidiary’sstatutoryfinancialstatementsfortheyearended31December2019.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex188CRH ANNUAL REPORT AND FORM 20-F I 2019189CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS188CRHANNUALREPORTANDFORM20-F|201927.DerivativeFinancialInstrumentsThefairvaluesofderivativefinancialinstrumentsareanalysedbyyearofmaturityandbyaccountingdesignationasfollows:Fairvaluehedges€mCashflowhedges€mNetinvestmenthedges€mNotdesignatedashedges€mTotal€mAt31December2019DerivativeassetsWithinoneyear-currentassets-3216Betweenoneandtwoyears-1--1Betweenthreeandfouryears23---23Afterfiveyears52---52Non-currentassets751--76Totalderivativeassets7542182DerivativeliabilitiesWithinoneyear-currentliabilities-(8)(4)(4)(16)Betweenoneandtwoyears-non-currentliabilities-(1)--(1)Totalderivativeliabilities-(9)(4)(4)(17)Netasset/(liability)arisingonderivativefinancialinstruments75(5)(2)(3)65Theequivalentdisclosurefortheprioryearisasfollows:At31December2018DerivativeassetsWithinoneyear-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)CRHANNUALREPORTANDFORM20-F|2019189At31December2019and2018,theGrouphadnomasternettingorsimilararrangements,collateralpostingrequirements,orenforceablerightofset-offagreementswithanyofitsderivativecounterparts.Fairvaluehedgesconsistofinterestrateswaps.Theseinstrumentshedgerisksarisingfromchangesinasset/liabilityfairvaluesduetointerestratemovements.Cashflowhedgesconsistofforwardforeignexchangeandcommoditycontractsandcurrencyswaps.Theseinstrumentshedgerisksarisingtofuturecashflowsfrommovementsinforeignexchangeratesandcommodityprices.Cashflowhedgesareexpectedtoaffectprofitandlossovertheperiodtomaturity.Netinvestmenthedgescomprisecross-currencyswapsandhedgechangesinthevalueofnetinvestmentsduetocurrencymovements.Theprofit/(loss)arisingonfairvalue,cashflow,netinvestmenthedgesandrelatedhedgeditemsreflectedintheConsolidatedIncomeStatementisshownbelow:2019€m2018€m2017€mFairvalueofhedgeinstruments64(12)(16)Fairvalueofthehedgeditems(64)1118Componentsofothercomprehensiveincome-cashflowhedgesGains/(losses)arisingduringtheyear:-commodityforwardcontracts27(38)9-currencyforwardcontracts(3)(2)(1)Total24(40)8Fairvaluehierarchy2019Level2€m2018Level2€mAssetsmeasuredatfairvalueFairvaluehedges-interestrateswaps7527Cashflowhedges-cross-currencyandcommodityforwards46Netinvestmenthedges-cross-currencyswaps210Notdesignatedashedges(heldfortrading)-cross-currencyswapsandforwardforeignexchangecontracts12Total8245LiabilitiesmeasuredatfairvalueFairvaluehedges-interestrateswaps-(16)Cashflowhedges-cross-currencyandcommodityforwards(9)(34)Netinvestmenthedges-cross-currencyswaps(4)(2)Notdesignatedashedges(heldfortrading)-cross-currencyswapsandforwardforeignexchangecontracts(4)(7)Total(17)(59)At31December2019and2018therewerenoderivativesvaluedusingLevel1orLevel3fairvaluetechniques.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex190CRH ANNUAL REPORT AND FORM 20-F I 2019191CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS190CRHANNUALREPORTANDFORM20-F|201928.ProvisionsforLiabilitiesAt1January€mEffectofadoptingIFRS16€mTranslationadjustment€mArisingonacquisition(note32)€mProvidedduringyear€mUtilisedduringyear€mDisposedduringyear€mReversedunused€mDiscountunwinding€mAt31December€m31December2019Insurance(i)279-5-114(88)-(24)8294Environmentandremediation(ii)484-13641(26)-(8)11521Rationalisationandredundancy(iii)23---29(35)-(3)-14Other(iv)301(1)(1)-108(34)-(46)3330Total1,087(1)176292(183)-(81)221,159Analysedas:Non-currentliabilities719760Currentliabilities368399Total1,0871,159Theequivalentdisclosurefortheprioryearisasfollows:31December2018Insurance(i)292-10795(71)-(61)7279Environmentandremediation(ii)441--7528(26)(2)(43)11484Rationalisationandredundancy(iii)25---30(31)-(1)-23Other(iv)306--275(32)(1)(52)3301Total1,064-1084228(160)(3)(157)211,087Analysedas:Non-currentliabilities693719Currentliabilities371368Total1,0641,087(i)Thisprovisionrelatestoobligationsarisingundertheself-insurancecomponentsoftheGroup’sinsurancearrangementswhichcompriseemployers’liability(workers’compensationintheUS),publicandproductsliability(generalliabilityintheUS),automobileliability,propertydamage,businessinterruptionandvariousotherinsurances;asubstantialproportionofthetotalprovisionpertainstoclaimswhichareclassifiedas“incurredbutnotreported”.Duetotheextendedtimeframeassociatedwithmanyoftheinsurances,asignificantproportionofthetotalprovisionissubjecttoperiodicactuarialvaluation.Theprojectedcashflowsunderlyingthediscountingprocessareestablishedthroughtheapplicationofactuarialtriangulations,whichareextrapolatedfromhistoricalclaimsexperience.ThetriangulationsappliedinthediscountingprocessindicatethattheGroup’sinsuranceprovisionshaveanaveragelifeoffiveyears(2018:fiveyears).(ii)Thisprovisioncomprisesobligationsgoverningsiteremediation,restorationandenvironmentalworkstobeincurredincompliancewitheitherlocalornationalenvironmentalregulationstogetherwithconstructiveobligationsstemmingfromestablishedbestpractice.Whilstasignificantelementofthetotalprovisionwillreverseinthemedium-term(twototenyears),thoselegalandconstructiveobligationsapplicabletolong-livedassets(principallymineral-bearingland)willunwindovera30-yeartimeframe.Indiscountingtherelatedobligations,expectedfuturecashoutflowshavebeendeterminedwithdueregardtoextractionstatusandanticipatedremaininglife.(iii)Theseprovisionsrelatetoirrevocablecommitmentsundervariousrationalisationandredundancyprogrammes,noneofwhichareindividuallymaterialtotheGroup.In2019,€29million(2018:€30million;2017:€32million)wasprovidedinrespectofrationalisationandredundancyactivitiesasaconsequenceofundertakingvariouscostreductioninitiativesacrossalloperations.Theseinitiativesincludedremovingexcesscapacityfrommanufacturinganddistributionnetworksandscalingoperationstomatchmarketsupply;backofficerationalisation;andtheconsolidationofcertainregionalsupportfunctionsintocentralandmorecoordinatedhubs.TheGroupexpectsthattheseprovisionswillprimarilybeutilisedwithinonetotwoyearsofthebalancesheetdate(2018:onetotwoyears).(iv)Otherprovisionsprimarilyrelatetolegalclaims,onerouscontracts,guaranteesandwarrantiesandemployeerelatedprovisions.TheGroupexpectsthemajorityoftheseprovisionswillbeutilisedwithintwotofiveyearsofthebalancesheetdate(2018:twotofiveyears);howeverduetothenatureofthelegalprovisionsthereisalevelofuncertaintyinthetimingofsettlementastheGroupgenerallycannotdeterminetheextentanddurationofthelegalprocess.CRHANNUALREPORTANDFORM20-F|201919129.DeferredIncomeTaxThedeductibleandtaxabletemporarydifferencesinrespectofwhichdeferredtaxhasbeenrecognisedareasfollows:2019€m2018€mReportedinbalancesheetafteroffsetDeferredtaxliabilities2,3382,209Deferredtaxassets(67)(71)Netdeferredincometaxliability2,2712,138Deferredincometaxassets(deductibletemporarydifferences)DeficitsonGroupretirementbenefitobligations(note30)9195Revaluationofderivativefinancialinstrumentstofairvalue713Taxlosscarryforwards152153Share-basedpaymentexpense3221Provisionsforliabilitiesandworkingcapital-relateditems257266Leaseliabilities283-Otherdeductibletemporarydifferences2339Total845587Deferredincometaxassetshavebeenrecognisedinrespectofalldeductibletemporarydifferences,withtheexceptionofsometaxlosscarryforwards.TheamountoftaxlosseswhererecoveryisnotprobableandisthereforenotrecognisedintheConsolidatedBalanceSheetis€1.5billion(2018:€1.5billion).Thevastmajorityeitherdonotexpirebasedoncurrenttaxlegislationortheyexpirepost2024(2018:2023).Deferredincometaxliabilities(taxabletemporarydifferences)Taxabletemporarydifferencesprincipallyattributabletoacceleratedtaxdepreciationandfairvalueadjustmentsarisingonacquisition(i)2,8192,701Leasedright-of-useassets273-Revaluationofderivativefinancialinstrumentstofairvalue1111Rolled-overcapitalgains1313Total3,1162,725MovementinnetdeferredincometaxliabilityAt1January2,1381,571Reclassifiedfromheldforsale-14Translationadjustment5147Netexpensefortheyear(ii)112111Arisingonacquisition(note32)-411Disposal(31)(16)MovementindeferredtaxrecognisedintheConsolidatedStatementofComprehensiveIncome6(4)MovementindeferredtaxrecognisedintheConsolidatedStatementofChangesinEquity(5)4At31December2,2712,138(i)Fairvalueadjustmentsarisingonacquisitionprincipallyrelatetoproperty,plantandequipment.(ii)Thenetexpensefortheyearincludesincomeof€3million(2018:expenseof€4million)relatingtodiscontinuedoperations.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex192CRH ANNUAL REPORT AND FORM 20-F I 2019193CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS192CRHANNUALREPORTANDFORM20-F|201930.RetirementBenefitObligationsTheGroupoperateseitherdefinedbenefitordefinedcontributionpensionschemesinallofitsprincipaloperatingareas.ThedisclosuresincludedbelowrelatetoallpensionschemesintheGroup.TheGroupoperatesdefinedbenefitpensionschemesinBelgium,Brazil,Canada,France,Germany,Italy,theNetherlands,thePhilippines,theRepublicofIreland,Romania,Serbia,Slovakia,Switzerland,theUKandtheUS.TheGrouphasamixtureoffundedandunfundeddefinedbenefitpensionschemes.Thenetliabilityofthefundedschemesis€98million,netofsurplusesof€67million(2018:€113million,netofsurplusesof€51million).Unfundedobligations(includingjubilee,post-retirementhealthcareobligationsandlong-termservicecommitments)compriseofanumberofschemesinBrazil,Canada,France,Germany,Italy,theNetherlands,thePhilippines,Romania,Serbia,Slovakia,SwitzerlandandtheUS,totallinganetliabilityof€329million(2018:€311million).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.Financialassumptions—schemeliabilitiesThemajorlong-termassumptionsusedbytheGroup’sactuariesinthecomputationofschemeliabilitiesandpost-retirementhealthcareobligationsareasfollows:EurozoneSwitzerlandUnitedStatesandCanada2019%2018%2017%2019%2018%2017%2019%2018%2017%Rateofincreasein:-salaries3.373.503.591.501.501.253.373.383.27-pensionsinpayment1.461.621.70------Inflation1.501.651.751.001.000.752.002.002.00Discountrate1.432.122.050.300.850.703.144.103.52Medicalcosttrendraten/an/an/an/an/an/a5.181.556.33CRHANNUALREPORTANDFORM20-F|2019193ThemortalityassumptionsemployedindeterminingthepresentvalueofschemeliabilitiesunderIAS19representactuarialbestpracticeintherelevantjurisdictions,takingaccountofmortalityexperienceandindustrycircumstances.ForschemesintheRepublicofIrelandandtheUK,themortalityassumptionsusedareinaccordancewiththeunderlyingfundingvaluations.FortheGroup’smostmaterialschemes,thefuturelifeexpectationsfactoredintotherelevantvaluations,basedonretirementat65yearsofageforcurrentandfutureretirees,areasfollows:RepublicofIrelandSwitzerlandUnitedStatesandCanada201920182017201920182017201920182017Currentretirees-male23.022.422.722.622.522.420.220.120.6-female24.524.124.424.724.524.422.322.623.1Futureretirees-male25.424.925.524.824.724.622.122.022.3-female26.826.427.026.826.726.624.224.524.7Theabovedataallowsforfutureimprovementsinlifeexpectancy.ImpactonConsolidatedIncomeStatementThetotalretirementbenefitexpensefromcontinuingoperationsintheConsolidatedIncomeStatementisasfollows:2019€m2018€m2017€mTotaldefinedcontributionexpense(i)259225228Totaldefinedbenefitexpense454336TotalexpenseinConsolidatedIncomeStatement304268264At31December2019,€96million(2018:€90million)wasincludedinotherpayablesinrespectofdefinedcontributionpensionliabilities.AnalysisofdefinedbenefitexpenseChargedinarrivingatGroupprofitbeforefinancecosts:Currentservicecost434340Administrationexpenses733Pastservicecredit(net)(iii)(18)(13)(17)Subtotal323326Includedinfinanceincomeandfinancecostsrespectively:Interestincomeonschemeassets(64)(55)(45)Interestcostonschemeliabilities776555Netinterestexpense131010NetexpensetoConsolidatedIncomeStatement454336Thecompositionofthenetexpense/(credit)totheConsolidatedIncomeStatementisasfollows:Eurozone252324Switzerland77(11)UnitedStatesandCanada5614Other879Total454336Notes(i),(ii)and(iii)aresetoutonpage195.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex194CRH ANNUAL REPORT AND FORM 20-F I 2019195CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS194CRHANNUALREPORTANDFORM20-F|201930.RetirementBenefitObligations-continuedReconciliationofschemeassets(bidvalue)2019€m2018€mAt1January2,9132,622MovementinyearInterestincomeonschemeassets(ii)6859Arisingonacquisition(note32)3337Disposals(592)-Remeasurementadjustments-returnonschemeassetsexcludinginterestincome316(137)Employercontributionspaid52118Contributionspaidbyplanparticipants1314Benefitandsettlementpayments(139)(130)Administrationexpenses(ii)(7)(4)Translationadjustment5534At31December2,6822,913Thecompositionofschemeassetsisasfollows:Eurozone1,2831,181Switzerland344808UnitedStatesandCanada845728Other210196Total2,6822,913ReconciliationofactuarialvalueofliabilitiesAt1January(3,337)(2,999)MovementinyearCurrentservicecost(ii)(60)(64)Pastservicecredit(net)(ii)1817Interestcostonschemeliabilities(ii)(81)(69)Arisingonacquisition(note32)(4)(452)Disposals6366Remeasurementadjustments-experiencevariations331-actuarial(loss)/gainfromchangesinfinancialassumptions(384)120-actuarialgainfromchangesindemographicassumptions1826Contributionspaidbyplanparticipants(13)(14)Benefitandsettlementpayments139130Translationadjustment(74)(39)At31December(3,109)(3,337)Thecompositionoftheactuarialvalueofliabilitiesisasfollows:Eurozone(1,425)(1,318)Switzerland(341)(829)UnitedStatesandCanada(1,058)(946)Other(285)(244)Total(3,109)(3,337)Recoverabledeficitinschemes(427)(424)Relateddeferredincometaxasset9195Netpensionliability(336)(329)Thecompositionofthenetpensionliabilityisasfollows:Eurozone(119)(113)Switzerland3(17)UnitedStatesandCanada(160)(162)Other(60)(37)Total(336)(329)CRHANNUALREPORTANDFORM20-F|2019195(i)Thetotaldefinedcontributionexpenseincludingdiscontinuedoperationsamountedto€267million(2018:€235million;2017:€244million).(ii)Thenetdefinedbenefitexpense/(credit)includesthefollowingrelatingtodiscontinuedoperations:ChargedinarrivingatGroupprofitbeforefinancecosts:2019€m2018€m2017€mCurrentservicecost172122Administrationexpenses-11Pastservicecredit(net)(iii)-(4)(61)Subtotal1718(38)Includedinfinanceincomeandfinancecostsrespectively:Interestincomeonschemeassets(4)(4)(4)Interestcostonschemeliabilities445Netinterestexpense--1Netexpense/(credit)toConsolidatedIncomeStatement1718(37)(iii)Pastservicecreditin2017includesagainof€81million(€20millionrelatingtocontinuingoperationsand€61millionrelatingtodiscontinuedoperations)duetoplanamendmentsinSwitzerland.Theprincipalamendmentrelatedtothereductionoftheannuityconversionfactoronretirementfrom6.4%to5.0%ofaccumulatedsavings.AUKHighCourtrulinginOctober2018relatingtotheequalisationofguaranteedminimumpensionsformenandwomendidnotmateriallyimpacttheliabilityassociatedwiththeGroup’sUKdefinedbenefitpensionschemes.SensitivityanalysisTherevisedliabilitiesduetotheimpactofamovement(asindicatedbelow)intheprincipalactuarialassumptionswouldbeasfollows:Eurozone2019€mSwitzerland2019€mUnitedStatesandCanada2019€mOther2019€mTotalGroup2019€mSchemeliabilitiesat31December(1,425)(341)(1,058)(285)(3,109)RevisedliabilitiesDiscountrateIncreaseby0.25%(1,362)(326)(1,026)(273)(2,987)Decreaseby0.25%(1,491)(357)(1,092)(298)(3,238)InflationrateIncreaseby0.25%(1,487)(342)(1,063)(294)(3,186)Decreaseby0.25%(1,367)(340)(1,054)(276)(3,037)MortalityassumptionIncreaseby1year(1,371)(330)(1,026)(278)(3,005)Decreaseby1year(1,479)(352)(1,089)(292)(3,212)Theabovesensitivityanalysisarederivedthroughchangingtheindividualassumptionwhileholdingallotherassumptionsconstant.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex196CRH ANNUAL REPORT AND FORM 20-F I 2019197CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS196CRHANNUALREPORTANDFORM20-F|201930.RetirementBenefitObligations-continuedSplitofschemeassets2019€m2018€mInvestmentsquotedinactivemarketsEquityinstruments(i)746862Debtinstruments(ii)1,5941,596Property93109Cashandcashequivalents2734Investmentfunds1289Assetsheldbyinsurancecompany-123UnquotedinvestmentsEquityinstruments22Debtinstruments(iii)99Property52112Cashandcashequivalents1840Assetsheldbyinsurancecompany1317Totalassets2,6822,913(i)Equityinstrumentsprimarilyrelatetodevelopedmarkets.(ii)Quoteddebtinstrumentsaremadeupof€1,101million(2018:€845million)and€493million(2018:€751million)ofnon-governmentandgovernmentinstrumentsrespectively.(iii)Unquoteddebtinstrumentsprimarilyrelatetogovernmentdebtinstruments.Actuarialvaluations-fundingrequirementsandfuturecashflowsInaccordancewithstatutoryrequirementsintheRepublicofIrelandandminimumfundingrequirementsintheUK,additionalannualcontributionsandlump-sumpaymentsarerequiredtocertainoftheschemesinplaceinthosejurisdictions.ThefundingrequirementsinrelationtotheGroup’sdefinedbenefitschemesareassessedinaccordancewiththeadviceofindependentandqualifiedactuariesandvaluationsarepreparedinthisregardeitherannually,wherelocalrequirementsmandatethatthisbedone,orattriennialintervalsatamaximuminallothercases.IntheRepublicofIrelandandtheUK,eithertheattainedageorprojectedunitcreditmethodsareusedinthevaluations.IntheNetherlandsandSwitzerland,theactuarialvaluationsreflectthecurrentunitmethod,whilethevaluationsareperformedinaccordancewiththeprojectedunitcreditmethodologyinGermany.IntheUS,valuationsareperformedusingavarietyofactuarialcostmethodologies-currentunit,projectedunitandaggregatecost.InCanada,theprojectedunitcreditmethodisusedinvaluations.ThedatesofthefundingvaluationsrangefromMarch2016toJanuary2019.Ingeneral,fundingvaluationsarenotavailableforpublicinspection;however,theresultsofvaluationsareadvisedtothemembersofthevariousschemesonrequest.CRHANNUALREPORTANDFORM20-F|2019197TheGrouphascontractedpayments(presentedonadiscountedbasis)tocertainschemesinthefollowingcountries:2019€m2018€m2017€mRepublicofIreland--18UnitedKingdom191416Total191434ThematurityprofileoftheGroup’scontractedpayments(onadiscountedbasis)isasfollows:2019€m2018€m2017€mWithinoneyear2219Betweenoneandtwoyears222Betweentwoandthreeyears222Betweenthreeandfouryears212Betweenfourandfiveyears211Afterfiveyears968Total191434Employercontributionspayableinthe2020financialyearincludingminimumfundingpayments(expressedusingyear-endexchangeratesfor2019)areestimatedat€45million.AveragedurationandschemecompositionEurozoneSwitzerlandUnitedStatesandCanada201920182017201920182017201920182017Averagedurationofdefinedbenefitobligation(years)18.117.117.817.816.417.212.512.112.2Allocationofdefinedbenefitobligationbyparticipant:Activeplanparticipants74%71%72%74%83%84%44%46%40%Deferredplanparticipants8%9%9%---12%18%16%Retirees18%20%19%26%17%16%44%36%44%→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex198CRH ANNUAL REPORT AND FORM 20-F I 2019199CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS198CRHANNUALREPORTANDFORM20-F|201931.ShareCapitalandReservesEquitysharecapital20192018OrdinarySharesof€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)2721527115CancellationofTreasuryShares(iii)(14)(1)--PerformanceSharePlanAwards--1-At31December(€m)2581427215Themovementinthenumberofshares(expressedinmillions)duringthefinancialyearwasasfollows:At1January843843839839CancellationofTreasuryShares(iii)(44)(44)--PerformanceSharePlanAwards--22Issueofscripsharesinlieuofcashdividends(iv)--22At31December799799843843(i)TheOrdinarySharesrepresent93.71%ofthetotalissuedsharecapital.(ii)TheIncomeShares,whichrepresent5.86%ofthetotalissuedsharecapital,werecreatedon29August1988fortheexpresspurposeofgivingshareholdersthechoiceofreceivingdividendsoneithertheirOrdinarySharesorontheirIncomeShares(bynoticeofelectiontotheCompany).TheIncomeSharescarriedadifferenttaxcredittotheOrdinaryShares.ThecreationoftheIncomeShareswasachievedbytheallotmentoffullypaidIncomeSharestoeachshareholderequaltohis/herholdingofOrdinarySharesbuttheshareholderisnotentitledtoanIncomeSharecertificate,asacertificateforOrdinarySharesisdeemedtoincludeanequalnumberofIncomeSharesandashareholdermayonlysell,transferortransmitIncomeShareswithanequivalentnumberofOrdinaryShares.IncomeSharescarrynovotingrights.DuetochangesinIrishtaxlegislationsincethecreationoftheIncomeShares,dividendsontheCompany’ssharesnolongercarryataxcredit.AselectionsmadebyshareholderstoreceivedividendsontheirholdingofIncomeShareswerenolongerrelevant,theArticlesofAssociationwereamendedon8May2002tocancelsuchelections.(iii)During201943,750,000OrdinaryShares(includingIncomeShares)werecancelled.TheamountpaidtorepurchasetheseshareswasinitiallyrecognisedinTreasuryShares/ownsharesandwastransferredtoretainedincomeoncancellation.(iv)Issueofscripsharesinlieuofcashdividends:NumberofsharesPricepershare2018201720182017May2018:Final2017dividend(2017:Final2016dividend)1,841,430433,046€27.47€33.08September2018:Interim2018dividend(2017:Interim2017dividend)-2,130,496-€29.24Total1,841,4302,563,542In2019,theFinal2018andInterim2019dividendswerepaidwhollyincashinMayandSeptemberrespectively.TheInterim2018dividendswerealsopaidwhollyincashinSeptember2018.ShareschemesTheaggregatenumberofshareswhichmaybecommittedforissueinrespectofanyshareoptionscheme,savings-relatedshareoptionscheme,shareparticipationscheme,performanceshareplanoranysubsequentoptionschemeorshareplan,maynotexceed10%oftheissuedordinarysharecapitalfromtimetotime.CRHANNUALREPORTANDFORM20-F|2019199ShareoptionschemesDetailsofshareoptionsgrantedundertheCompany’sShareOptionSchemesandthetermsattachingtheretoareprovidedinnote9tothefinancialstatements.Undertheseschemes,optionsoveratotalof1,147,149OrdinaryShareswereexercisedduringthefinancialyear(2018:796,944;2017:1,589,335).Numberofshares201920182017Optionsexercisedduringtheyear(satisfiedbytheissueofnewshares)-496,6611,589,335Optionsexercisedduringtheyear(satisfiedbythereissueofTreasuryShares)1,147,149300,283-Total1,147,149796,9441,589,335ShareparticipationschemesAsat31December2019,8,174,578(2018:8,025,732)OrdinaryShareshadbeenappropriatedtoparticipationschemes.In2019,theappropriationwassatisfiedbythepurchaseof148,846shares(2018:59,666satisfiedbytheissueofnewshares;103,650bythere-issueofTreasuryShares).TheOrdinarySharesappropriatedpursuanttotheseschemeswereissuedatmarketvalueonthedatesofappropriation).ThesharesissuedpursuanttotheseschemesareexcludedfromthescopeofIFRS2andarehencenotfactoredintotheexpensecomputationandtheassociateddisclosuresinnote9.Preferencesharecapital5%CumulativePreferenceSharesof€1.27each7%‘A’CumulativePreferenceSharesof€1.27eachNumberofShares‘000s€mNumberofShares‘000s€mAuthorisedAt1January2019and31December2019150-8721Allotted,called-upandfullypaidAt1January2019and31December201950-8721Therewasnomovementinthenumberofcumulativepreferencesharesineitherthecurrentortheprioryear.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’CumulativePreferenceSharesrepresent0.41%ofthetotalissuedsharecapital.TreasuryShares/ownshares2019€m2018€mAt1January(792)(15)NewSharesallottedtotheEmployeeBenefitTrust(ownshares)-(56)OwnSharesreleasedbytheEmployeeBenefitTrustunderthe2014PerformanceSharePlan6256SharesacquiredbyCRHplc(TreasuryShares)(i)(791)(789)SharesacquiredbyEmployeeBenefitTrust(ownshares)(61)(3)TreasuryShares/ownsharesreissued(ii)3515CancellationofTreasuryShares1,222-At31December(325)(792)Notes(i)to(ii)aresetoutoverleaf.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex200CRH ANNUAL REPORT AND FORM 20-F I 2019201CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS200CRHANNUALREPORTANDFORM20-F|201931.ShareCapitalandReserves-continuedThemovementinthenumberofTreasuryShares/ownsharesduringthefinancialyearwasasfollows:Numberofshares20192018At1January27,843,927391,757NewSharesallottedtotheEmployeeBenefitTrust(ownshares)-2,034,112OwnSharesreleasedbytheEmployeeBenefitTrustunderthe2014PerformanceSharePlan(2,256,986)(2,034,112)SharesacquiredbyCRHplc(TreasuryShares)(i)27,357,11627,901,471SharesacquiredbyEmployeeBenefitTrust(ownshares)2,189,448108,377TreasuryShares/ownsharesreissued(ii)(1,147,149)(557,678)CancellationofTreasuryShares(43,750,000)-At31December10,236,35627,843,927SplitofTreasuryShares/ownshares(iii)TreasuryShares10,011,35327,551,386Ownshares225,003292,54110,236,35627,843,927(i)InApril2018,CRHannounceditsintentiontointroduceasharerepurchaseprogramme(the‘Programme’)torepurchaseOrdinaryShares(includingIncomeShares)ofupto€1billion.During2018,CRHrepurchasedatotalof27,901,471OrdinarySharesundertheProgramme,returningatotalof€0.8billionincashtoshareholders.TheProgrammewasextendedin2019,withCRHrepurchasingatotalof27,357,116OrdinarySharesin2019andreturningafurther€0.8billiontoshareholders.Asat31December2019,atotalof€1.6billioncashhasbeenreturnedtoshareholdersundertheProgramme.On7January2020,CRHannouncedafurtherextensionoftheProgrammeforanadditional€200million.(ii)ThesereissuedTreasuryShareswerepreviouslypurchasedatanaveragepriceof€30.56(2018:€27.96).(iii)Asatthebalancesheetdate,thenominalvalueoftheTreasurySharesandownshareswas€3.4millionand€0.1millionrespectively(2018:€9.4millionand€0.1millionrespectively).DividendshavebeenwaivedbytheTrusteesoftheownshares.Reconciliationofsharesissuedtonetproceeds2018€m2017€mSharesissuedatnominalamount:-PerformanceSharePlanAwards11-scripsharesissuedinlieuofcashdividends-1Premiumonsharesissued117180Totalvalueofsharesissued118182Issueofscripsharesinlieuofcashdividends(note13)(51)(77)SharesallottedtotheEmployeeBenefitTrust(vi)(56)(63)Netproceedsfromissueofshares1142(vi)In2018and2017,shareswereallotted/re-issuedtotheEmployeeBenefitTrusttosatisfythevestingandreleaseofawardsunderthe2014PerformanceSharePlantoqualifyingemployees.AnincreaseinnominalShareCapitalandSharePremiumof€56millionand€63million,respectively,aroseontheallotmenttotheEmployeeBenefitTrust.Nosuchallotmentoccuredduring2019.Sharepremium2019€m2018€mAt1January6,5346,417Premiumarisingonsharesissued-117At31December6,5346,534CRHANNUALREPORTANDFORM20-F|201920132.BusinessCombinationsTheacquisitionscompletedduringtheyearended31December2019byreportablesegment,togetherwiththecompletiondates,aredetailedbelow;thesetransactionsentailedtheacquisitionofaneffective100%stakeexceptwhereindicatedtothecontrary:AmericasMaterials:Canada:BeecroftProperty(14March),MirabelProperty(7May)andSpeysideProperty(23December);Colorado:OtterCreekProperty(28March);Connecticut:WallingfordProperty(30January);Florida:GoldenGateProperty(7March)andFortressBlock,LLC(28June);Idaho:HeyrendProperty(26November)andGreenleafProperty(27November);Iowa:KenyonProperty(11January);Kentucky:BrushyCreekStoneLLC(9August);Michigan:OttawaLakeProperty(31January),DeltonProperty(26April)andDinkgraveProperty(29July);Nebraska:TreadwayProperty(25November);NewYork:SolvayRailTerminal(28June);NorthCarolina:CherokeeCountyProperty(18November);Ohio:KMCPaving(8March);Oregon:WindsorRockProducts(1March),TheDallesConcrete,Inc.(29March),HoodRiverSand,GravelandReady-Mix(29March)andPioneerAsphalt(31May);Texas:JLBContracting(25January)andCIGRailUnloadingOperations(3July);Utah:SchmidtProperty(25November)andGrantsvilleProperty(30December);andWashington:ColvilleValleyConcrete(2August).EuropeMaterials:Denmark:RCBetonA/S(1October);Finland:certainassetsofLujabetoniOulu(1September)andÄmmänBetoniOy(31December);France:landadjacenttoDecizeQuarry(19December),landadjacenttoLumbresQuarry(20December)andlandadjacenttoLaVilleneuveauChâtelotQuarry(27December);Poland:landadjacenttoSitkówkaQuarry(13March),landadjacenttoOz˙aro´wQuarry(23September)andAstaldiAsphaltPlant(9December);Romania:certainassetsofPomponioSRL(1October);andUK:landsadjacenttoWhisbyQuarry(13December&20December),landadjacenttoParkQuarry(18December),landadjacenttoBlockFenQuarry(20December)andlandadjacenttoLangfordQuarry(23December).BuildingProducts:AmericasCanada:PrimexTechnologiesInc.(9July)andAbbotsfordConcreteProductsLtd.(31July);Arizona:TorrentResources,Inc.(4November);Florida:SuntreeTechnologies,Inc.(5March)andStandardPrecastInc.(1October);Ohio:BuckeyeResources,Inc.(9May);Texas:Charlotte’sConcrete,Inc.(5August)andcertainassetsofGlassWholesalers,Inc.(13December);Virginia:certainassetsofAlliedConcreteCompany,LLC(28March);andWashington:QualityConcreteProducts,Inc.(15February)andGranitePrecasting&ConcreteInc.(6June).OtherAustralia:AusPitsPtyLtd(30August);Germany:BVGRanck(30April);Netherlands:FiloformB.V.(1May);Poland:LibetS.A.LublinPavingPlant(1March);andUK:IsedioLtd(30September).→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex202CRH ANNUAL REPORT AND FORM 20-F I 2019203CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS202CRHANNUALREPORTANDFORM20-F|201932.BusinessCombinations-continuedTheidentifiablenetassetsacquired,includingadjustmentstoprovisionalfairvalues,wereasfollows:2019€m2018€m2017€mASSETSNon-currentassetsProperty,plantandequipment3192,6141,536Intangibleassets925856Equityaccountedinvestments-1-Totalnon-currentassets4112,6731,592CurrentassetsInventories58255114Tradeandotherreceivables(i)66318129Cashandcashequivalents1069174Totalcurrentassets134642417LIABILITIESTradeandotherpayables(73)(224)(149)Provisionsforliabilities(6)(84)(49)Retirementbenefitobligations(1)(115)(52)Leaseliabilities(64)--Interest-bearingloansandborrowingsandfinanceleases*(9)(74)(12)Currentincometaxliabilities9(15)(22)Deferredincometaxliabilities-(411)(132)Totalliabilities(144)(923)(416)Totalidentifiablenetassetsatfairvalue4012,3921,593Goodwillarisingonacquisition(ii)2781,504487Jointventuresbecomingsubsidiaries-(120)-Non-controllinginterests**(1)(48)(20)Totalconsideration6783,7282,060Considerationsatisfiedby:Cashpayments6603,5742,015Assetexchange-12-Deferredconsideration(statedatnetpresentcost)101045Contingentconsideration893-Profitonstepacquisition-39-Totalconsideration6783,7282,060NetcashoutflowarisingonacquisitionCashconsideration6603,5742,015Less:cashandcashequivalentsacquired(10)(69)(174)TotaloutflowintheConsolidatedStatementofCashFlows6503,5051,841Notes(i)to(ii)aresetoutoverleaf.*Includes€6millionin2018relatingtofinanceleasespreviouslycapitalisedunderIAS17.AllleasescapitalisedunderIFRS16havebeenincludedasleaseliabilitiesin2019.**Non-controllinginterestsaremeasuredattheproportionateshareofnetassets.CRHANNUALREPORTANDFORM20-F|2019203Theacquisitionbalancesheetpresentedonthepreviouspagereflectstheidentifiablenetassetsacquiredinrespectofacquisitionscompletedduring2019,togetherwithadjustmentstoprovisionalfairvaluesinrespectofacquisitionscompletedduring2018.Themeasurementperiodforanumberofacquisitionscompletedin2018,includingAshGroveCementCompany,closedin2019withnomaterialadjustmentsidentified.CRHperformsadetailedquantitativeandqualitativeassessmentofeachacquisitioninordertodeterminewhetheritismaterialforthepurposesofseparatedisclosureunderIFRS3BusinessCombinations.Noneoftheacquisitionscompletedduringtheyearwereconsideredsufficientlymaterialtowarrantseparatedisclosureoftheattributablefairvalues.Theinitialassignmentofthefairvaluestoidentifiableassetsacquiredandliabilitiesassumedasdisclosedareprovisional(principallyinrespectofproperty,plantandequipment)inrespectofcertainacquisitionsduetotimingofclose.Thefairvalueassignedtoidentifiableassetsandliabilitiesacquiredisbasedonestimatesandassumptionsmadebymanagementatthetimeofacquisition.CRHmayreviseitspurchasepriceallocationduringthesubsequentreportingwindowaspermittedunderIFRS3.(i)Thegrosscontractualvalueoftradeandotherreceivablesasattherespectivedatesofacquisitionamountedto€67million(2018:€324million;2017:€132million).Thefairvalueofthesereceivablesis€66million(allofwhichisexpectedtoberecoverable)(2018:€318million;2017:€129million).(ii)TheprincipalfactorcontributingtotherecognitionofgoodwillonacquisitionsenteredintobytheGroupistherealisationofcostsavingsandothersynergieswithexistingentitiesintheGroupwhichdonotqualifyforseparaterecognitionasintangibleassets.Duetotheasset-intensivenatureofoperationsintheEuropeMaterialsandAmericasMaterialsbusinesssegments,nosignificantseparatelyidentifiableintangibleassetsarerecognisedonbusinesscombinationsinthesesegments.€164millionofthegoodwillrecognisedinrespectofacquisitionscompletedin2019isexpectedtobedeductiblefortaxpurposes(2018:€277million;2017:€260million).Acquisition-relatedcostsforcontinuingoperations,whichexcludepost-acquisitionintegrationcosts,amountingto€6million(2018:€18million;2017:€10million)havebeenincludedinoperatingcostsintheConsolidatedIncomeStatement(note4).Thefollowingtableanalysesthe58acquisitionscompletedin2019(2018:44acquisitions;2017:31acquisitions)byreportablesegmentandprovidesdetailsofthegoodwillandconsiderationfiguresarisingineachofthosesegments:NumberofacquisitionsGoodwillConsiderationReportablesegments201920182017201920182017201920182017Continuingoperations€m€m€m€m€m€mAmericasMaterials272413311,3532391613,3981,171EuropeMaterials151083461556486698BuildingProducts15882287476450211162TotalGroupfromcontinuingoperations5742292621,4734706753,6952,031DiscontinuedoperationsEuropeDistribution122--1733330TotalGroup5844312621,4734876783,7282,061Adjustmentstoprovisionalfairvaluesofprioryearacquisitions1631---(1)Total2781,5044876783,7282,060→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex204CRH ANNUAL REPORT AND FORM 20-F I 2019205CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS204CRHANNUALREPORTANDFORM20-F|201932.BusinessCombinations-continuedThepost-acquisitionimpactofacquisitionscompletedduringtheyearontheGroup’sprofitforthefinancialyearwasasfollows:201920182017Continuingoperations€m€m€mRevenue2041,202505Profit/(loss)beforetaxforthefinancialyear2145(1)TherevenueandprofitoftheGroupforthefinancialyeardeterminedinaccordancewithIFRSasthoughtheacquisitionseffectedduringtheyearhadbeenatthebeginningoftheyearwouldhavebeenasfollows:2019acquisitionsCRHGroupexcluding2019acquisitionsPro-formaconsolidatedGroupContinuingoperations€m€m€mRevenue45824,92525,383Profitbeforetaxforthefinancialyear182,1132,131TherehavebeennoacquisitionscompletedsubsequenttothebalancesheetdatewhichwouldbeindividuallymaterialtotheGroup,therebyrequiringdisclosureundereitherIFRS3orIAS10EventsaftertheBalanceSheetDate.Developmentupdates,givingdetailsofacquisitionswhichdonotrequireseparatedisclosureonthegroundsofmateriality,arepublishedperiodically.CRHANNUALREPORTANDFORM20-F|201920533.Non-controllingInterestsThetotalnon-controllinginterestat31December2019is€540million(2018:€525million)ofwhich€414million(2018:€384million)relatestoRepublicCement&BuildingMaterials(RCBM),Inc.andRepublicCementLand&Resources(RCLR),Inc.Thenon-controllinginterestsinrespectoftheGroup’sothersubsidiariesarenotconsideredtobematerial.NamePrincipalactivityCountryofincorporationEconomicownershipinterestheldbynon-controllinginterestRepublicCement&BuildingMaterials,Inc.Manufacture,developmentandPhilippines45%andRepublicCementLand&ResourcesInc.saleofcementandbuildingmaterialsThefollowingissummarisedfinancialinformationforRCBMandRCLRpreparedinaccordancewithIFRS12DisclosureofInterestsinOtherEntities.ThisinformationisbeforeintragroupeliminationswithotherGroupcompanies.Summarisedfinancialinformation2019€m2018€mProfit/(loss)fortheyear19(11)Currentassets190153Non-currentassets1,5041,351Currentliabilities(186)(160)Non-currentliabilities(822)(712)Netassets686632Cashflowsfromoperatingactivities6036Therewerenodividendspaidtonon-controllinginterestsofthecombinedPhilippinesbusinessduringthecurrentortheprioryear.CRHholds40%oftheequitysharecapitalinRCBMandRCLRandhasaneconomicinterestof55%ofthecombinedPhilippinesbusiness.Non-controllinginterestrelatestoanotherpartywhoholds60%oftheequitysharecapitalinRCBMandRCLRandhasaneconomicinterestof45%ofthecombinedPhilippinesbusiness.CRHhasobtainedcontrol(asdefinedunderIFRS10ConsolidatedFinancialStatements)byvirtueofcontractualarrangementswhichgiveCRHpowertodirecttherelevantnon-nationalisedactivitiesofthebusiness,incompliancewithPhilippinelaw.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex206CRH ANNUAL REPORT AND FORM 20-F I 2019207CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS206CRHANNUALREPORTANDFORM20-F|201934.RelatedPartyTransactionsTheprincipalrelatedpartyrelationshipsrequiringdisclosureintheConsolidatedFinancialStatementsoftheGroupunderIAS24RelatedPartyDisclosurespertainto:theexistenceofsubsidiaries,jointventuresandassociates;transactionswiththeseentitiesenteredintobytheGroup;theidentificationandcompensationofkeymanagementpersonnel;andleasearrangements.Subsidiaries,jointventuresandassociatesTheConsolidatedFinancialStatementsincludethefinancialstatementsoftheCompany(CRHplc,theultimateparent)anditssubsidiaries,jointventuresandassociatesasdocumentedintheaccountingpoliciesonpages133to144.TheGroup’sprincipalsubsidiaries,jointventuresandassociatesaredisclosedonpages260to264.Salestoandpurchasesfromjointventuresandassociatesareasfollows:JointventuresAssociatesContinuingoperations2019€m2018€m2017€m2019€m2018€m2017€mSales118107111374051Purchases24315516193400LoansextendedbytheGrouptojointventuresandassociates(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:2019€m2018€m2017€mShort-termbenefits889Post-employmentbenefits111Share-basedpayments-calculatedinaccordancewiththeprinciplesdisclosedinnote9543Total141313Otherthanthesecompensationentitlements,therewerenoothertransactionsinvolvingkeymanagementpersonnel.LeasearrangementsCRHhasanumberofleasearrangementsinplacewithrelatedpartiesacrosstheGroup,whichhavebeennegotiatedonanarms-lengthbasisatmarketrates.Wedonotconsiderthesearrangementstobematerialeitherindividuallyorcollectivelyinthecontextofthe2019,2018and2017ConsolidatedFinancialStatements.35.EventsaftertheBalanceSheetDateWitheffectfrom1January2020,theGroup’sreportingcurrencychangedfromeurotoUSDollartoreducethepotentialforforeignexchangevolatilityinourfuturereportedearnings.36.BoardApprovalTheBoardofDirectorsapprovedandauthorisedforissuethefinancialstatementsonpages128to215inrespectoftheyearended31December2019on27February2020.CRHANNUALREPORTANDFORM20-F|201920737.SupplementalGuarantorInformationThefollowingconsolidatinginformationpresentsCondensedConsolidatedBalanceSheetsasat31December2019and2018andCondensedConsolidatedIncomeStatementsandCondensedConsolidatedStatementsofComprehensiveIncomeandCondensedConsolidatedStatementsofCashFlowfortheyearsended31December2019,2018and2017oftheCompanyandCRHAmerica,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.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex208CRH ANNUAL REPORT AND FORM 20-F I 2019209CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS208CRHANNUALREPORTANDFORM20-F|201937.SupplementalGuarantorInformation-continuedSupplementalCondensedConsolidatedBalanceSheetasat31December2019Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mASSETSNon-currentassetsProperty,plantandequipment--17,424-17,424Intangibleassets--8,434-8,434Subsidiaries15,6217091,682(18,012)-Investmentsaccountedforusingtheequitymethod--690-690Advancestosubsidiariesandparentundertakings-3,549-(3,549)-Otherfinancialassets--12-12Otherreceivables--317-317Derivativefinancialinstruments-2056-76Deferredincometaxassets--67-67Totalnon-currentassets15,6214,27828,682(21,561)27,020CurrentassetsInventories--2,742-2,742Tradeandotherreceivables--3,767-3,767Advancestosubsidiariesandparentundertakings967-106(1,073)-Currentincometaxrecoverable--20-20Derivativefinancialinstruments--6-6Cashandcashequivalents458-3,297-3,755Totalcurrentassets1,425-9,938(1,073)10,290Totalassets17,0464,27838,620(22,634)37,310EQUITYCapitalandreservesattributabletotheCompany’sequityholders16,9402,08715,925(18,012)16,940Non-controllinginterests--540-540Totalequity16,9402,08716,465(18,012)17,480LIABILITIESNon-currentliabilitiesLeaseliabilities--1,240-1,240Interest-bearingloansandborrowings-2,1716,028-8,199Derivativefinancialinstruments--1-1Deferredincometaxliabilities--2,338-2,338Otherpayables--485-485Advancesfromsubsidiaryandparentundertakings--3,549(3,549)-Retirementbenefitobligations--427-427Provisionsforliabilities--760-760Totalnon-currentliabilities-2,17114,828(3,549)13,450CurrentliabilitiesLeaseliabilities--271-271Tradeandotherpayables-204,356-4,376Advancesfromsubsidiaryandparentundertakings106-967(1,073)-Currentincometaxliabilities--503-503Interest-bearingloansandborrowings--815-815Derivativefinancialinstruments--16-16Provisionsforliabilities--399-399Totalcurrentliabilities106207,327(1,073)6,380Totalliabilities1062,19122,155(4,622)19,830Totalequityandliabilities17,0464,27838,620(22,634)37,310CRHANNUALREPORTANDFORM20-F|2019209SupplementalCondensedConsolidatedBalanceSheetasat31December2018Guarantor€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)35,173→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex210CRH ANNUAL REPORT AND FORM 20-F I 2019211CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS210CRHANNUALREPORTANDFORM20-F|201937.SupplementalGuarantorInformation-continuedSupplementalCondensedConsolidatedIncomeStatementYearended31December2019Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mRevenue--25,129-25,129Costofsales--(16,846)-(16,846)Grossprofit--8,283-8,283Operatingincome/(costs)1,531-(7,320)-(5,789)Groupoperatingprofit1,531-963-2,494(Loss)/profitondisposals(13)-12-(1)Profitbeforefinancecosts1,518-975-2,493Financecosts(3)(280)(353)290(346)Financeincome-29020(290)20Otherfinancialexpense--(112)-(112)Shareofsubsidiaries’profitbeforetax522136-(658)-Shareofequityaccountedinvestments’profit60-60(60)60Profitbeforetaxfromcontinuingoperations2,097146590(718)2,115Incometaxexpense(477)(36)(441)477(477)Groupprofitforthefinancialyearfromcontinuingoperations1,620110149(241)1,638Profitaftertaxforthefinancialyearfromdiscontinuedoperations309-310(309)310Groupprofitforthefinancialyear1,929110459(550)1,948Profitattributableto:EquityholdersoftheCompanyFromcontinuingoperations1,620110131(241)1,620Fromdiscontinuedoperations309-309(309)309Non-controllinginterestsFromcontinuingoperations--18-18Fromdiscontinuedoperations--1-1Groupprofitforthefinancialyear1,929110459(550)1,948SupplementalCondensedConsolidatedStatementofComprehensiveIncomeGroupprofitforthefinancialyear1,929110459(550)1,948OthercomprehensiveincomeItemsthatmaybereclassifiedtoprofitorlossinsubsequentyears:Currencytranslationeffects31927316(319)343Gainsrelatingtocashflowhedges24-24(24)24Taxrelatingtocashflowhedges(3)-(3)3(3)34027337(340)364Itemsthatwillnotbereclassifiedtoprofitorlossinsubsequentyears:Remeasurementofretirementbenefitobligations(17)-(17)17(17)Taxrelatingtoretirementbenefitobligations(3)-(3)3(3)(20)-(20)20(20)Totalothercomprehensiveincomeforthefinancialyear32027317(320)344Totalcomprehensiveincomeforthefinancialyear2,249137776(870)2,292Attributableto:EquityholdersoftheCompany2,249137733(870)2,249Non-controllinginterests--43-43Totalcomprehensiveincomeforthefinancialyear2,249137776(870)2,292CRHANNUALREPORTANDFORM20-F|2019211SupplementalCondensedConsolidatedIncomeStatementYearended31December2018Restated(i)Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mRevenue--23,241-23,241Costofsales--(15,572)-(15,572)Grossprofit--7,669-7,669Operatingincome/(costs)1,741-(7,339)-(5,598)Groupoperatingprofit1,741-330-2,071Lossondisposals(15)-(12)-(27)Profitbeforefinancecosts1,726-318-2,044Financecosts-(224)(346)231(339)Financeincome123133(231)34Otherfinancialexpense--(46)-(46)Shareofsubsidiaries’(loss)/profitbeforetax(37)115-(78)-Shareofequityaccountedinvestments’profit48-48(48)48Profitbeforetaxfromcontinuingoperations1,7381227(126)1,741Incometaxexpense(396)(32)(364)396(396)Groupprofitforthefinancialyearfromcontinuingoperations1,34290(357)2701,345Profitaftertaxforthefinancialyearfromdiscontinuedoperations1,175-1,176(1,175)1,176Groupprofitforthefinancialyear2,51790819(905)2,521Profitattributableto:EquityholdersoftheCompanyFromcontinuingoperations1,34290(360)2701,342Fromdiscontinuedoperations1,175-1,175(1,175)1,175Non-controllinginterestsFromcontinuingoperations--3-3Fromdiscontinuedoperations--1-1Groupprofitforthefinancialyear2,51790819(905)2,521(i)RestatedtoshowtheresultsofourformerEuropeDistributionsegmentindiscontinuedoperations.SupplementalCondensedConsolidatedStatementofComprehensiveIncomeGroupprofitforthefinancialyear2,51790819(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)2,771→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex212CRH ANNUAL REPORT AND FORM 20-F I 2019213CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS212CRHANNUALREPORTANDFORM20-F|201937.SupplementalGuarantorInformation-continuedSupplementalCondensedConsolidatedIncomeStatementYearended31December2017Restated(i)Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mRevenue--21,653-21,653Costofsales--(14,275)-(14,275)Grossprofit--7,378-7,378Operatingincome/(costs)22-(5,473)-(5,451)Groupoperatingprofit22-1,905-1,927Profitondisposals--54-54Profitbeforefinancecosts22-1,959-1,981Financecosts-(235)(308)242(301)Financeincome224210(242)12Otherfinancialexpense--(59)-(59)Shareofsubsidiaries’profitbeforetax1,58683-(1,669)-Shareofequityaccountedinvestments’profit52-52(52)52Profitbeforetaxfromcontinuingoperations1,662901,654(1,721)1,685Incometaxexpense(12)(29)1712(12)Groupprofitforthefinancialyearfromcontinuingoperations1,650611,671(1,709)1,673Profitaftertaxforthefinancialyearfromdiscontinuedoperations245-246(245)246Groupprofitforthefinancialyear1,895611,917(1,954)1,919Profitattributableto:EquityholdersoftheCompanyFromcontinuingoperations1,650611,648(1,709)1,650Fromdiscontinuedoperations245-245(245)245Non-controllinginterestsFromcontinuingoperations--23-23Fromdiscontinuedoperations--1-1Groupprofitforthefinancialyear1,895611,917(1,954)1,919(i)RestatedtoshowtheresultsofourformerEuropeDistributionsegmentindiscontinuedoperations.SupplementalCondensedConsolidatedStatementofComprehensiveIncomeGroupprofitforthefinancialyear1,895611,917(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)932CRHANNUALREPORTANDFORM20-F|2019213SupplementalCondensedConsolidatedStatementofCashFlowYearended31December2019Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mCashflowsfromoperatingactivitiesProfitbeforetaxfromcontinuingoperations2,097146590(718)2,115Profitbeforetaxfromdiscontinuedoperations332-333(332)333Profitbeforetax2,429146923(1,050)2,448Financecosts(net)3(10)452-445Shareofsubsidiaries’profitbeforetax(842)(136)-978-Shareofequityaccountedinvestments’profit(72)-(72)72(72)Loss/(profit)ondisposals13-(239)-(226)Groupoperatingprofit1,531-1,064-2,595Depreciationcharge--1,538-1,538Amortisationofintangibleassets--59-59Impairmentcharge--8-8Share-basedpayment(income)/expense(26)-103-77Other(primarilypensionpayments)--(3)-(3)Netmovementonworkingcapitalandprovisions-(1)(63)-(64)Cashgeneratedfromoperations1,505(1)2,706-4,210Interestpaid(includingleases)(3)(280)(426)290(419)Corporationtaxpaid-(36)(289)-(325)Netcashinflow/(outflow)fromoperatingactivities1,502(317)1,9912903,466CashflowsfrominvestingactivitiesProceedsfromdisposals(netofcashdisposedanddeferredproceeds)--2,096-2,096Interestreceived-29020(290)20Dividendsreceivedfromequityaccountedinvestments--35-35Purchaseofproperty,plantandequipment--(1,229)-(1,229)Advancesfromsubsidiaryandparentundertakings(375)70(336)641-Acquisitionofsubsidiaries(netofcashacquired)--(650)-(650)Otherinvestmentsandadvances--(29)-(29)Deferredandcontingentacquisitionconsiderationpaid--(48)-(48)Netcash(outflow)/inflowfrominvestingactivities(375)360(141)351195CashflowsfromfinancingactivitiesProceedsfromexerciseofshareoptions20---20Transactionsinvolvingnon-controllinginterests--(19)-(19)Advancestosubsidiaryandparentundertakings336-305(641)-Increaseininterest-bearingloansandborrowings--91-91Netcashflowarisingfromderivativefinancialinstruments--(36)-(36)Repaymentofinterest-bearingloans,borrowingsandfinanceleases-(43)(529)-(572)Repaymentofleaseliabilities--(317)-(317)TreasuryShares/ownsharespurchased(852)---(852)DividendspaidtoequityholdersoftheCompany(584)---(584)Dividendspaidtonon-controllinginterests--(10)-(10)Netcash(outflow)/inflowfromfinancingactivities(1,080)(43)(515)(641)(2,279)Increaseincashandcashequivalents47-1,335-1,382ReconciliationofopeningtoclosingcashandcashequivalentsCashandcashequivalentsat1January411-1,935-2,346Translationadjustment--27-27Increaseincashandcashequivalents47-1,335-1,382Cashandcashequivalentsat31December458-3,297-3,755→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex214CRH ANNUAL REPORT AND FORM 20-F I 2019215CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS214CRHANNUALREPORTANDFORM20-F|201937.SupplementalGuarantorInformation-continuedSupplementalCondensedConsolidatedStatementofCashFlowYearended31December2018Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mCashflowsfromoperatingactivitiesProfitbeforetaxfromcontinuingoperations1,7381227(126)1,741Profitbeforetaxfromdiscontinuedoperations1,678-1,679(1,678)1,679Profitbeforetax3,4161221,686(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(includingleases)-(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-bearingloansandborrowings-311,403-1,434Netcashflowarisingfromderivativefinancialinstruments--6-6Repaymentofinterest-bearingloans,borrowingsandfinanceleases(2)(243)(1)-(246)TreasuryShares/ownsharespurchased(792)---(792)DividendspaidtoequityholdersoftheCompany(521)---(521)Dividendspaidtonon-controllinginterests--(12)-(12)Netcash(outflow)/inflowfromfinancingactivities(1,535)(212)1,339295(113)Increaseincashandcashequivalents10-184-194ReconciliationofopeningtoclosingcashandcashequivalentsCashandcashequivalentsat1January401-1,734-2,135Translationadjustment--17-17Increaseincashandcashequivalents10-184-194Cashandcashequivalentsat31December411-1,935-2,346CRHANNUALREPORTANDFORM20-F|2019215SupplementalCondensedConsolidatedStatementofCashFlowYearended31December2017Guarantor€mIssuer€mNon-Guarantorsubsidiaries€mEliminateandreclassify€mCRHandsubsidiaries€mCashflowsfromoperatingactivitiesProfitbeforetaxfromcontinuingoperations1,662901,654(1,721)1,685Profitbeforetaxfromdiscontinuedoperations327-328(327)328Profitbeforetax1,989901,982(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(includingleases)-(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-bearingloansandborrowings-61,004-1,010Netcashflowarisingfromderivativefinancialinstruments-11158-169Premiumpaidonearlydebtredemption-(18)--(18)Repaymentofinterest-bearingloans,borrowingsandfinanceleases-(321)(22)-(343)TreasuryShares/ownsharespurchased(3)---(3)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)Cashandcashequivalentsat31December401-1,734-2,135→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex216CRH ANNUAL REPORT AND FORM 20-F I 2019217CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS217216CRHANNUALREPORTANDFORM20-F|2019CompanyBalanceSheetasat31December20192019€m2018€mNotesFixedassets3Financialassets8,0718,077Currentassets4Debtors9671,233Cashatbankandinhand458411Totalcurrentassets1,4251,644Creditors(amountsfallingduewithinoneyear)5Tradeandothercreditors106507Totalcurrentliabilities106507Netcurrentassets1,3191,137Netassets9,3909,214Capitalandreserves8Called-upsharecapital2722878Preferencesharecapital11Sharepremiumaccount6,5386,5388TreasurySharesandownshares(325)(792)9Revaluationreserve4242Otherreserves3162869Profitandlossaccount(i)2,5462,852Totalequity9,3909,214(i)Inaccordancewithsection304oftheCompaniesAct2014,theprofitforthefinancialyearoftheCompanyamountedto€1,515million(2018:€1,727million).R.Boucher,A.Manifold,DirectorsCRHANNUALREPORTANDFORM20-F|2019217CompanyStatementofChangesinEquityforthefinancialyearended31December2019Issuedsharecapital€mSharepremiumaccount€mTreasuryShares/ownshares€mRevaluationreserve€mOtherreserves€mProfitandlossaccount€mTotalequity€mAt1January20192886,538(792)422862,8529,214Profitforthefinancialyear-----1,5151,515Totalcomprehensiveincome-----1,5151,515Share-basedpaymentexpense----77-77SharesacquiredbyCRHplc(TreasuryShares)--(791)---(791)TreasuryShares/ownsharesreissued--35--(35)-SharesacquiredbyEmployeeBenefitTrust(ownshares)--(61)---(61)SharesdistributedunderthePerformanceSharePlanAwards--62-(62)--CancellationofTreasuryShares(15)-1,222-15(1,222)-Shareoptionexercises-----2020Dividends-----(584)(584)At31December20192736,538(325)423162,5469,390At1January20182876,421(15)422751,7058,715Profitforthefinancialyear-----1,7271,727Totalcomprehensiveincome-----1,7271,727Issueofsharecapital(netofexpenses)-62----62Share-basedpaymentexpense----67-67SharesacquiredbyCRHplc(TreasuryShares)--(789)---(789)TreasuryShares/ownsharesreissued--15--(15)-SharesacquiredbyEmployeeBenefitTrust(ownshares)--(3)---(3)SharesdistributedunderthePerformanceSharePlanAwards155--(56)--Shareoptionexercises-----77Dividends(includingsharesissuedinlieuofdividends)-----(572)(572)At31December20182886,538(792)422862,8529,214→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex218CRH ANNUAL REPORT AND FORM 20-F I 2019219CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS218CRHANNUALREPORTANDFORM20-F|2019NotestotheCompanyBalanceSheet1.BasisofPreparationThefinancialstatementshavebeenpreparedonagoingconcernbasisunderthehistoricalcostconventioninaccordancewiththeCompaniesAct2014andGAAPintheRepublicofIreland(FinancialReportingStandard101ReducedDisclosureFramework(FRS101)).Note2overleafdescribestheprincipalaccountingpoliciesunderFRS101,whichhavebeenappliedconsistently.InthesefinancialstatementstheCompanyhasappliedtheexemptionsavailableunderFRS101inrespectofthefollowingdisclosures:•StatementofCashFlows;•Disclosuresinrespectoftransactionswithwholly-ownedsubsidiaries;•CertainrequirementsofIAS1PresentationofFinancialStatements;•DisclosuresrequiredbyIFRS7FinancialInstrumentDisclosures;•DisclosuresrequiredbyIFRS13FairValueMeasurement;and•TheeffectsofnewbutnotyeteffectiveIFRSsTheCompany’sinvestmentinsharesinitssubsidiarieswasrevaluedat31December1980toreflectthesurplusonrevaluationofcertainproperty,plantandequipment(landandbuildings)ofsubsidiaries.Theoriginalhistoricalcostofthesharesequatedtoapproximately€9million.Theanalysisoftheclosingbalancebetweenamountscarriedatvaluationandatcostisasfollows:2019€m2018€mAtvaluation31December19804747Atcostpost31December19807,6467,675Total7,6937,722Deemedcostinrespectoftheinvestmentinthesesubsidiariesamountedto€400millionatthedateoftransitiontoFRS101.CRHANNUALREPORTANDFORM20-F|20192192.AccountingPoliciesGeneralinformationCRHplc(the“Company”)anditssubsidiaries(togetherthe“Group”)isaglobaldiversifiedbuildingmaterialsgroupwhichmanufacturesandsuppliesadiverserangeofsuperiorbuildingmaterialsandproductsforuseintheconstructionandmaintenanceofinfrastructure,housingandcommercialproducts.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-basedpaymentsisaddressedindetailonpage140oftheConsolidatedFinancialStatements.TreasurySharesandownsharesTreasurySharesOwnequityinstruments(i.e.OrdinaryShares)acquiredbytheCompanyaredeductedfromequityandpresentedonthefaceoftheCompanyBalanceSheet.Nogainorlossisrecognisedinprofitorlossonthepurchase,sale,issueorcancellationoftheCompany’sOrdinaryShares.OwnsharesOrdinarySharespurchasedbytheEmployeeBenefitTrustonbehalfoftheCompanyunderthetermsofthePerformanceSharePlanarerecordedasadeductionfromequityonthefaceoftheCompanyBalanceSheet.DividendsDividendsonOrdinarySharesarerecognisedasaliabilityintheCompany’sFinancialStatementsintheperiodinwhichtheyaredeclaredbytheCompany.DividendincomeDividendincomeisrecognisedwhentherighttoreceivepaymentisestablished.CashandcashequivalentsCashandcashequivalentscomprisecashbalancesheldforthepurposeofmeetingshort-termcashcommitmentsandinvestmentswhicharereadilyconvertibletoaknownamountofcashandaresubjecttoaninsignificantriskofchangeinvalue.BankoverdraftsareincludedwithincreditorsfallingduewithinoneyearintheCompanyBalanceSheet.→→Financial StatementsFinancial StatementsOverviewStrategy ReviewBusiness PerformanceGovernanceSupplementary 20-F DisclosuresShareholder InformationIndex220CRH ANNUAL REPORT AND FORM 20-F I 2019221CRH ANNUAL REPORT AND FORM 20-F I 2019FINANCIALS220CRHANNUALREPORTANDFORM20-F|2019NotestotheCompanyBalanceSheet-continued3.FinancialAssetsTheCompany’sinvestmentinitssubsidiariesisasfollows:Shares(i)€mOther€mTotal€mAt1January2019atcost7,7223558,077Capitalcontributioninrespectofshare-basedpayments-4343Disposals(29)(20)(49)At31December2019atcost7,6933788,071Theequivalentdisclosurefortheprioryearisasfollows:At1January2018atcost2,5633192,882Capitalcontributioninrespectofshare-basedpayments-5151Additions5,159-5,159Disposals-(15)(15)At31December2018atcost7,7223558,077(i)During2019theCompanydisposedofitsinvestmentinCRHInternationalFinancialServicesUnlimited.TheCompany’sprincipalsubsidiaries,jointventuresandassociatesaredisclosedonpages260to264.PursuanttoSection348(4)oftheCompaniesAct2014,afulllistofsubsidiaries,jointventuresandassociatedundertakingswillbeannexedtotheCompany’sannualreturntobefiledintheCompaniesRegistrationOfficeinIreland.4.Debtors2019€m2018€mAmountsowedbysubsidiaryundertakings9671,233Amountsowedbysubsidiaryundertakingsarerepayableondemand.5.CreditorsAmountsfallingduewithinoneyear2019€m2018€mAmountsowedtosubsidiaryundertakings106507Amountsowedbysubsidiaryundertakingsarerepayableondemand.6.Auditor’sRemuneration(MemorandumDisclosure)InaccordancewithSection322oftheCompaniesAct2014,thefeespaidin2019tothestatutoryauditorforworkengagedbytheParentCompanycomprisedauditfeesof€20,000(2018:€20,000)andotherassuranceservicesof€nil(2018:€nil).CRHANNUALREPORTANDFORM20-F|20192217.DividendsProposed(MemorandumDisclosure)Detailsinrespectofdividendsproposedof€495million(2018:€425million)anddividendspaidduringtheyeararepresentedinthedividendsnote(note13)onpage162ofthenotestotheConsolidatedFinancialStatements.8.Called-upShareCapitalDetailsinrespectofcalled-upsharecapital,preferencesharecapital,TreasurySharesandownsharesarepresentedinthesharecapitalandreservesnote(note31)onpages198to200ofthenotestotheConsolidatedFinancialStatements.9.ReservesRevaluationReserveTheCompany’srevaluationreservearoseontherevaluationofcertaininvestmentspriortothetransitiontoFRS101.OtherReservesTheCompany’sotherreservesincludes€15millionundenominatedsharecapitalthataroseonthecancellationoftheTreasurySharesin2019.InaccordancewithSection304oftheCompaniesAct2014,theCompanyisavailingoftheexemptionfrompresentingitsindividualprofitandlossaccounttotheAGMandfromfilingitwiththeRegistrarofCompanies.ThereservesoftheCompanyavailablefordistributionarerestrictedbytheamountoftheconsiderationpaidfortheTreasurySharesandownsharesheldbytheCompany,€325millionasat31December2019(2018:€792million)andtheundenominatedsharecapitalof€15million(2018:€nilmillion).10.Share-basedPaymentsThetotalexpenseof€77million(2018:€67million)reflectedintheConsolidatedFinancialStatementsattributabletoemployeeshareoptionsandperformanceshareawardshasbeenincludedasacapitalcontributioninfinancialassets(note3)inadditiontoanypaymentsto/fromsubsidiaries.11.Section357GuaranteesAnyIrishregisteredwholly-ownedsubsidiaryoftheCompanymayavailoftheexemptionfromfilingitsstatutoryfinancialstatementsfortheyearended31December2019aspermittedbySection357oftheCompaniesAct2014andifanIrishregisteredwholly-ownedsubsidiaryoftheCompanyelectstoavailofthisexemption,therewillbeinforceanirrevocableguaranteefromtheCompanyinrespectofallcommitmentsenteredintobysuchwholly-ownedsubsidiary,includingamountsshownasliabilities(withinthemeaningofSection357(1)(b)oftheCompaniesAct2014)insuchwholly-ownedsubsidiary’sstatutoryfinancialstatementsfortheyearended31December2019.DetailsinrelationtootherguaranteesprovidedbytheCompanyareprovidedintheinterest-bearingloansandborrowingsnote(note26)onpage187ofthenotestotheConsolidatedFinancialStatements.12.Directors’EmolumentsDirectors’emolumentsandinterestsarepresentedintheDirectors’RemunerationReportonpages74to100ofthisAnnualReportandForm20-F.13.BoardApprovalTheBoardofDirectorsapprovedandauthorisedforissuetheCompanyFinancialStatementsonpages216to221inrespectoftheyearended31December2019on27February2020.→→Supplementary 20-F DisclosuresSupplementary 20-F DisclosuresOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsShareholder InformationIndexSelected Financial Data 224Non-GAAP Performance Measures 225Contractual Obligations 229Property, Plants and Equipment 230Mineral Reserves 231Risk Factors 233Corporate Governance Practices 242The Environment and Government Regulations 244Other Disclosures 245224 - 245Supplementary 20-F DisclosuresCRH’s office in Atlanta, Georgia underwent a significant redesign of its 80,000 sq. ft workspace in 2019. CRH’s own materials and products feature throughout the three office floors, including aggregates, concrete, hardware, glass and staircases. The project was completed in June 2019, creating a state-of-the-art, open-plan work environment.→→Supplementary 20-F DisclosuresSupplementary 20-F DisclosuresOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsShareholder InformationIndexSUPPLEMENTARIESYear ended 31 December (amounts in millions, except per share data)2019 2018 (i) 2017 (i) 2016 (i)2015 (i)€m€m€m€m€mConsolidated Income Statement dataRevenue25,12923,24121,65321,30817,849Group operating profit2,4942,0711,9271,8131,102Profit attributable to equity holders of the Company1,6201,3421,6501,068588Basic earnings per Ordinary Share202.2c161.2c197.4c129.0c72.4cDiluted earnings per Ordinary Share200.6c160.4c196.2c128.1c72.1cDividends paid during calendar year per Ordinary Share72.4c 68.4c 65.4c62.8c62.5cAverage number of Ordinary Shares outstanding (ii)801.3832.4835.6827.8812.3All data relates to continuing operationsConsolidated Balance Sheet dataTotal assets37,31035,17331,63331,59432,007Net assets (iii)17,480 16,554 14,97714,44313,544Ordinary shareholders’ equity16,93916,02814,49013,89413,014Equity share capital272287 286284281Number of Ordinary Shares (ii)799.6843.4839.0832.8823.9Number of Treasury Shares and own shares (ii)10.227.80.40.41.3Number of Ordinary Shares net of Treasury Shares and own shares (ii)789.4815.6838.6832.4822.6 (i) Prior year comparative income statement data has been restated to show the results of our Europe Distribution segment in discontinued operations. See note 3 to the Consolidated Financial Statements for further details.(ii) All share numbers are shown in millions of shares.(iii) 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 2019. For the three years ended 31 December 2019, the selected financial data is qualified in its entirety by reference to, and should be read in conjunction with, the audited Consolidated Financial Statements, the related Notes and the Business Performance section included elsewhere in this Annual Report and Form 20-F.Reconciliation of Revenue, EBITDA (as defined)* and Operating Profit by segment Year ended 31 DecemberRevenueGroup EBITDA (as defined)*Depreciation, amortisation and impairmentGroup operating profit (i)20192018 2017 20192018 2017 20192018 2017 20192018 2017 €m€m€m€m€m€m€m€m€m€m€m€mContinuing operationsAmericas Materials10,3858,9517,9701,9601,4931,2706894844121,2711,009858Europe Materials8,4948,0427,3381,079936891524449398555487493Building Products6,2506,2486,345961787769293212193668575576Total Group from continuing operations25,12923,24121,6534,0003,2162,9301,5061,1451,0032,4942,0711,927Discontinued operationsAmericas Distribution-72,343-(5)164--21-(5)143Europe Distribution3,1773,5493,567200149216994348101106168Total Group28,30626,79727,5634,2003,3603,3101,6051,1881,0722,5952,1722,238Group operating profit from continuing operations2,4942,0711,927(Loss)/profit on disposals(1)(27)54Finance costs less income(326)(305)(289)Other financial expense(112)(46)(59)Share of equity accounted investments’ profit604852Profit before tax from continuing operations2,1151,7411,685Income tax expense(477)(396)(12)Group profit for the financial year from continuing operations1,6381,3451,673Profit after tax for the financial year from discontinued operations3101,176246Group profit for the financial year1,9482,5211,919(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.224CRH ANNUAL REPORT AND FORM 20-F I 2019225CRH ANNUAL REPORT AND FORM 20-F I 2019→→Supplementary 20-F DisclosuresSupplementary 20-F DisclosuresOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsShareholder InformationIndexSUPPLEMENTARIESReturn on Net Assets 20192018 (iii)2017€m€m€mGroup operating profit from continuing operations2,4942,0711,927Group operating profit from discontinued operations101106311Group operating profit (numerator for RONA computation)2,5952,1772,238Current yearSegment assets (i)32,68431,51026,809Segment liabilities (i)(7,958)(6,592)(6,201)Group segment net assets24,72624,91820,608Lease liabilities (ii)1,511--Assets held for sale--1,112Liabilities associated with assets classified as held for sale--(341)Group segment net assets excluding lease liabilities (including net assets held for sale)26,23724,91821,379Prior yearSegment assets (i)31,51026,80927,581Segment liabilities (i)(6,592)(6,201)(6,927)Group segment net assets24,91820,60820,654Average net assets including net assets held for sale (denominator for RONA computation)25,57822,76321,017RONA10.1%9.6%10.6%Reconciliation of Segment Assets and Liabilities to Group Assets and Liabilities2019201820172016€m€m€m€mAssetsSegment assets (i)32,68431,51026,80927,581Reconciliation to total assets as reported in the Consolidated Balance Sheet:Investments accounted for using the equity method690 1,163 1,2481,299Other financial assets12 23 2526Derivative financial instruments (current and non-current)82 45 6476Income tax assets (current and deferred)87 86 260163Cash and cash equivalents3,755 2,346 2,1152,449Assets held for sale- - 1,112-Total assets as reported in the Consolidated Balance Sheet37,31035,17331,63331,594LiabilitiesSegment liabilities (i)7,958 6,592 6,2016,927Reconciliation to total liabilities as reported in the Consolidated Balance Sheet:Interest-bearing loans and borrowings (current and non-current)9,014 9,316 7,9767,790Derivative financial instruments (current and non-current)17 59 1432Income tax liabilities (current and deferred)2,8412,6522,1242,402Liabilities associated with assets classified as held for sale- - 341-Total liabilities as reported in the Consolidated Balance Sheet19,83018,61916,65617,151(i) Segment assets and liabilities as disclosed in note 2 to the Consolidated Financial Statements.(ii) Segment liabilities include lease liabilities capitalised under IFRS 16 in 2019 which are debt in nature and are therefore adjusted for in arriving at the calculation of Group segment net assets for the calculation of RONA. Segment lease liabilities at 31 December 2019 amounted to; America Materials €363 million, Europe Materials €493 million and Building Products €655 million. (iii) For the 2018 calculation, as the net segment assets classified as held for sale at 31 December 2017 were disposed of on 2 January 2018, these have been excluded from the prior year element. For consistency, the related immaterial operating loss of €5 million in 2018 is also excluded.Calculation of Net Debt/EBITDA (as defined)* 20192018€m€mNet debtLease liabilities under IFRS 16 (i)(1,511)-Interest-bearing loans and borrowings (i)(9,014)(9,316)Derivative financial instruments (net) (i)65(14)Cash and cash equivalents (i)3,7552,346Group net debt (i)(6,705)(6,984)EBITDA (as defined)* from continuing operations4,0003,216EBITDA (as defined)* from discontinued operations200144EBITDA (as defined)* from continuing and discontinued operations4,2003,360 TimesNet Debt divided by EBITDA (as defined)* from continuing operations (ii)1.7Net Debt divided by EBITDA (as defined)* from continuing and discontinued operations (ii)2.1(i) These items appear in notes 22 to 27 to the Consolidated Financial Statements.(ii) In line with the purpose of the metric, as set out on page 228, to “assess the Company’s level of indebtedness relative to its profitability and cash-generating capabilities”, the 2019 calculation is based on a continuing operations basis. For 2018, the Group net debt position includes debt related to operations discontinued in 2019 and therefore for comparability purposes the 2018 calculation uses EBITDA (as defined)* from continuing and discontinued operations. Non-GAAP Performance Measures - continuedCalculation of EBITDA (as defined)* Net Interest Cover201920182017€m€m€mInterestFinance costs (i)346339301Finance income (i)(20)(34)(12)Net interest326305289EBITDA (as defined)* from continuing operations4,0003,2162,930 TimesEBITDA (as defined)* Net Interest Cover (EBITDA (as defined)* divided by net interest)12.310.510.1(i) These items appear on the Consolidated Income Statement on page 128.* 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.226CRH ANNUAL REPORT AND FORM 20-F I 2019227CRH ANNUAL REPORT AND FORM 20-F I 2019→→Supplementary 20-F DisclosuresSupplementary 20-F DisclosuresOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsShareholder InformationIndexSUPPLEMENTARIESEBITDA (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, lease liabilities under IFRS 16, 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 227.EBITDA (as defined)* Net Interest Cover. EBITDA (as defined)* Net Interest Cover is used by management as a measure which matches the earnings and cash generated by the business to the underlying funding costs. EBITDA (as defined)* Net Interest Cover is presented to provide investors with a greater understanding of the impact of CRH’s debt and financing arrangements. It is the ratio of EBITDA (as defined)* to Net Interest and is calculated on page 227. 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 (excluding lease liabilities and including liabilities associated with assets classified as held for sale) as shown on page 226 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 €727 million spent on acquisitions and investments in 2019 (2018: €3,562 million). Acquisitions completed in 2018 and 2019 contributed incremental sales revenue of €923 million, operating profit of €70 million and EBITDA (as defined)* of €164 million in 2019. Proceeds from divestments and non-current asset disposals amounted to €2,096 million (net of cash disposed and deferred proceeds) (2018: €3,009 million). The sales impact of divested activities in 2019 was a negative €629 million and the impact at an operating profit and EBITDA (as defined)* level was a negative €18 million and €52 million respectively.The euro weakened against most major currencies during 2019 resulting in the average euro/US Dollar rate strengthening from 1.1810 in 2018 to 1.1195 in 2019 and the Pound Sterling strengthening from an average 0.8847 in 2018 to 0.8778 in 2019. Overall currency movements resulted in a favourable net foreign currency translation impact on our results as shown on the table on page 34.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 38 to 52, changes in organic revenue, organic operating profit and organic EBITDA (as defined)* are presented as additional measures of revenue, operating profit and EBITDA (as defined)* to provide a greater understanding of the performance of the Group. A reconciliation of the changes in organic revenue, organic operating profit and organic EBITDA (as defined)* to the changes in total revenue, operating profit and EBITDA (as defined)* for the Group and by segment, is presented with the discussion of each segment’s performance in tables contained in the segment discussion commencing on page 30.Revenue from continuing and discontinued operations, EBITDA (as defined)* from continuing and discontinued operations and Operating Profit from continuing and discontinued operations. As detailed in note 3 to the Consolidated Financial Statements, our Europe Distribution and our Americas Distribution segments have 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 225.Cash paid to Shareholders. Cash paid to shareholders is a measure of cash returned to shareholders representing dividends of €0.6 billion (2018: €0.5 billion) paid during the year and excess cash of €0.8 billion (2018: €0.8 billion) returned through the share buyback programme. The metric provides information on dividend growth for shareholders and is reflective of CRH’s continued commitment to return excess cash to shareholders. CRH monitor the cash paid to shareholders as part of their overall capital allocation strategy.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)8,9628241,3531,3565,429Lease liabilities under IFRS 16 (ii)2,0382754242931,046Estimated interest payments on contractually-committed debt (iii)3,1563075334601,856Deferred and contingent acquisition consideration3354546120124Purchase obligations (iv)1,398700218141339Retirement benefit obligation commitments (v)192449Total15,9082,1532,5782,3748,803(i) Of the €9.0 billion total gross debt, €0.1 billion is drawn on revolving facilities which may be repaid and redrawn up to the date of maturity. The interest payments are estimated assuming these loans are repaid on facility maturity dates.(ii) Lease liabilities are presented on an undiscounted basis as detailed in note 22 and note 24 to the Consolidated Financial Statements.(iii) These interest payments have been estimated on the basis of the following assumptions: (a) no change in variable interest rates; (b) no change in exchange rates; (c) that all debt is repaid as if it falls due from future cash generation; and (d) none is refinanced by future debt issuance.(iv) Purchase obligations include contracted for capital expenditure. A summary of the Group’s future purchase commitments as at 31 December 2019 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.(v) These retirement benefit commitments comprise the contracted payments related to our pension schemes in the UK. See further details in note 30 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 2019, for each class of financial instrument with all other variables remaining constant. The technique used measures the estimated impact on profit before tax and on total equity arising on 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 24 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 23 to 27 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, leases capitalised under IFRS 16, purchase obligations, deferred and contingent acquisition consideration and pension scheme contribution commitments at 31 December 2019 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 - continued228CRH ANNUAL REPORT AND FORM 20-F I 2019229CRH ANNUAL REPORT AND FORM 20-F I 2019→→Supplementary 20-F DisclosuresSupplementary 20-F DisclosuresOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsShareholder InformationIndexSUPPLEMENTARIESProperty, Plants and EquipmentSignificant Locations – Clinker CapacitySubsidiaryCountryNumber of plants Clinker capacity (tonnes per hour)Ash GroveUnited States8925Republic CementPhilippines5628Grupa OżarówPoland1342Podilsky Cement PJSCUkraine1325TarmacUnited Kingdom3306CRH RomaniaRomania2305CRH SlovakiaSlovakia2290CRH CanadaCanada2288Irish CementIreland2288OpterraGermany2268EqiomFrance3243Suwannee American Cement CompanyUnited States2223CRH BrazilBrazil3200At 14 February 2020, CRH had a total of 3,102 building materials production locations. 1,069 locations are leased, with the remaining 2,033 locations held on a freehold basis.The significant subsidiary locations as at 31 December 2019 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 268 and 269. None of CRH’s individual properties is of material significance to the Group.CRH believes that all the facilities are in good condition, adequate for their purpose and suitably utilised according to the individual nature and requirements of the relevant operations. CRH has a continuing programme of improvements and replacements to properties when considered appropriate to meet the needs of the individual operations. Further information in relation to the Group’s accounting policy and process governing any impairment of property, plant and equipment is given on page 140 and in note 15 to the Consolidated Financial Statements on page 164.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)Surface acreage (hectares) (ii)% of mineral reserves by rock typePhysical locationNo. of quarries /pitsOwnedLeasedProven & probable reserves (iii)Years to depletion (iv)Hard rockSand & gravelOther2019 Annualised extraction (v)Europe MaterialsCementFrance3778-8329100%--2.9Germany 3462-1525698%-2%2.4Ireland2484-20272100%--2.9Philippines1499621347570100%--6.7Poland1409-2906893%6%1%4.2Romania65881662335474%-26%4.3Serbia212041106121100%--1.0Slovakia53039628713092%-8%2.3Spain134-84210100%--0.4Switzerland3183268773100%--1.1Ukraine2-2971224477%-23%3.1United Kingdom111,6761992706496%-4%4.4AggregatesFinland1011,3599192001777%23%-12.5France477371,1712332770%30%-8.2Ireland1225,098841,0346187%13%-18.3Philippines1-1762214100%--0.0Poland21601013039100%--3.9Romania14402217523492%8%-1.4Spain101067810859100%--1.5United Kingdom 15110,7167,3111,3663488%12%-39.0Other434704521461762%38%-8.8LimeCzech Republic, Ireland, Poland, United Kingdom 43541211335100%--3.2Germany98141025738100%--5.9Subtotals55726,24911,3196,09290%10%-Americas MaterialsBrazil 31,194-1065691%-9%1.8CementCanada2732-28595100%--2.9United States92,447-5819199%1%-9.8AggregatesCanada425,4876947323781%19%-20.9United States67750,09622,21215,2879374%26%-173.0Subtotals73359,95622,90616,99180%20%-Group totals1,29086,20534,225 23,08383%17%-(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 Reserves230CRH ANNUAL REPORT AND FORM 20-F I 2019231CRH ANNUAL REPORT AND FORM 20-F I 2019→→Supplementary 20-F DisclosuresSupplementary 20-F DisclosuresOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsShareholder InformationIndexSUPPLEMENTARIESThe 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 2019 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 could be economically and legally extracted or produced at the time of the reserve determination. Permitted owned reserve estimates are based on estimated recoverable tonnes whilst permitted leased reserve estimates are based on estimated total recoverable tonnes which may be extracted over the term of the lease contract.Proven and probable reserve estimates are based on recoverable tonnes only and are thus stated net of estimated production losses and other matters factored into the computation (e.g. required slopes/benches). In order for reserves to qualify for inclusion in the “proven and probable” category, the following conditions must be satisfied:• the reserves must be homogeneous deposits based on drill data and/or local geology; and• the deposits must be located on owned land or on land subject to 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 103.The risk factors presented below are reviewed on an annual basis and represent the key risk factors faced by the Group at the time of compilation of the 2019 Annual Report and Form 20-F. During the course of 2020, 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 ConditionsRiskDiscussionDescription: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 infrastructure, residential and non-residential sectors in the countries in which it operates. In general, economic uncertainty exacerbates negative trends in construction activity leading to postponement of orders. Construction markets are inherently cyclical and are affected by many factors that are beyond the Group’s control, including:• the price of fuel and principal energy-related raw materials such as bitumen and steel (which accounted for approximately 11% of annual Group sales revenues in 2019);• the performance of the national economies in the countries in which the Group operates, across Europe, the Americas and Asia;• monetary policies in the countries in which the Group operates — for example, an increase in interest rates typically reduces the volume of mortgage borrowings thus adversely impacting residential construction activity;• the allocation of government funding for public infrastructure programmes, such as the development of highways in the US under the Fixing Americas Surface Transportation Act (FAST Act); and• the level of demand for construction materials and services, with sustained adverse weather conditions leading to potential disruptions or curtailments in outdoor construction 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 - continued232CRH ANNUAL REPORT AND FORM 20-F I 2019233CRH ANNUAL REPORT AND FORM 20-F I 2019Key Strategic Risk Factors→→Supplementary 20-F DisclosuresSupplementary 20-F DisclosuresOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsShareholder InformationIndexSUPPLEMENTARIESGeopolitical and/or Social InstabilityRiskDiscussionDescription:Adverse and fast changing economic, social, political and public health situations in any country in which the Group operates could lead to business interruption, restrictions on repatriation of earnings or a loss of plant access. Impact:Changes in these conditions may adversely affect the Group’s business, results of operations, financial condition or prospects.The Group currently operates mainly in Western Europe and North America as well as, to a lesser degree, in developing countries/emerging markets in Eastern Europe, the Philippines, Brazil and China. The economies of these countries are at varying stages of socioeconomic and macroeconomic development which could give rise to a number of risks, uncertainties and challenges that could include the following:• changes in political, social or economic conditions;• trade protection measures and import or export licensing requirements;• political unrest and currency disintegration;• activism and civil disturbance, triggered by natural disasters, terrorist events, outbreak of armed conflict, etc.;• labour and procurement practices which contravene ethical considerations;• unexpected changes in regulatory and tax requirements;• state-imposed restrictions on repatriation of funds; and• outbreak of public health emergencies/epidemics/pandemicsWhile economic trends are positive across many of the Group’s major markets, the ongoing uncertainty around the UK’s decision to withdraw from the European Union, together with the effects of US and China trade negotiations and ongoing tensions in the Ukraine, where the Group has significant business interests, have collectively contributed to heightened uncertainty, with possible upside and downside economic consequences.BrexitRiskDiscussionDescription:Uncertainties resulting from the UK’s withdrawal from the European Union could pose challenges with currency devaluations, a fall in construction activity in the UK, challenges in labour resources accessing the UK, movement of goods and services and repatriating earnings. Impact:Failure by the Group to manage the uncertainties posed by Brexit could result in adverse financial performance and a fall in the Group’s net worth.The uncertainties around the UK’s withdrawal from the European Union leave businesses potentially open to significant risks, which may be intensified should the UK leave without a formal agreement. Having formed a majority Conservative government, the UK left the European Union on 31 January 2020, entering into a transition period until 31 December 2020. Uncertainties remain throughout the transition period, and if a deal is not agreed before 31 December 2020, the default position will be a no-deal Brexit.Any significant economic shock caused by Brexit, the uncertainty around the process or negative consumer sentiment could have an adverse impact on the performance of the UK’s economy, leading to a fall in demand for the Group’s products. Commercial projects could be delayed or cancelled as businesses decide whether to invest in the UK market or not. Mortgage interest rates could rise, and credit could tighten which may adversely impact the residential sector leading to a fall in demand for residential housing and as such, a fall in demand for the Group’s products. Further, government investments, infrastructure projects or initiatives may be delayed or cancelled as government funds tighten leading to the delay or cancellation of contracts which may have an adverse impact on the financial position of the Group. Further, uncertainty around Brexit has created, and will continue to create, volatility for the Pound Sterling. Any significant fall in the value of the Pound Sterling against the Group’s reporting currency could adversely impact consolidated results and net worth. For additional information on the impact of foreign exchange movements on the Consolidated Financial Statements for the Group for the year ended 31 December 2019, see the Business Performance section commencing on page 30. 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. 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 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, could adversely impact market share and results of operations.Strategic Mineral ReservesRiskDiscussionDescription: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 and Corporate Social Responsibility Risk Factor on page 237.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.People 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 identifies, hires, integrates, develops and promotes talent, the Group must navigate talent and front-line labour shortages, promote mobility and hire a diverse workforce. The 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. 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.234CRH ANNUAL REPORT AND FORM 20-F I 2019235CRH ANNUAL REPORT AND FORM 20-F I 2019→→Supplementary 20-F DisclosuresSupplementary 20-F DisclosuresOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsShareholder InformationIndexSUPPLEMENTARIESKey Operational Risk FactorsSustainability and Corporate Social ResponsibilityRiskDiscussionDescription:The nature of our activities poses inherent environmental, social and governance (ESG) risks, which are also subject to an evolving regulatory framework and changing societal expectations.Impact:Failure to embed sustainability principles within the Group’s businesses and strategy may result in non-compliance with relevant regulations, standards and best practices and lead to adverse stakeholder sentiment and reduced 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 and vendors 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 customers’ and other stakeholders’ 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 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. Please refer to pages 20 to 25 of this Annual Report and Form 20-F for further details. In addition, the Group publishes an annual independently-assured Sustainability Report, which is prepared in line with the Global Reporting Initiative Standards and available on www.crh.com.Climate Change and PolicyRiskDiscussionDescription:The cement industry has recognised the impact of climate change and its responsibilities in transitioning to a lower carbon economy. The Group is exposed to financial, reputational and market risks arising from changes to CO2 policies and regulations.Impact:Should the Group not reduce its greenhouse gases (GHGs) emissions by its identified targets, the Group may be subject to increased costs, adverse financial performance and reputational damage.The impact of climate change may over time affect the operations of the Group and the markets in which the Group operates. This could include physical risks such as acute and chronic changes in weather and/or transitional risks such as technological development, policy and regulatory change, and market and economic responses. Efforts to address climate change through laws and regulations, for example by requiring reductions in emissions of GHGs such as CO2, can create economic risks and uncertainties for the Group’s businesses. Such risks could include the cost of purchasing allowances or credits to meet GHG emissions caps, the cost of installing equipment to reduce emissions to comply with GHG limits or required technological standards, decreased profits or losses arising from decreased demand for the Group’s goods and higher production costs resulting directly or indirectly from the imposition of legislative or regulatory controls. Manifestation of these increased costs may increase the underlying cost of production of the Group’s products which may adversely impact the financial performance of the Group.Stakeholder expectations in relation to climate change continue to increase. The Group is subject to a broad range of additional environmental product information requests by customers in certain regions and increasing levels of disclosure regarding climate-related environmental performance. The Group includes within its offerings products aimed at climate adaptation, including sustainable drainage systems, flood defences and more resilient structures, as well as products that lower the operational carbon footprint of buildings, including high performance glass and glazing products that incorporate innovative thermal break technologies for superior thermal performance, precast concrete flooring and walling elements delivering energy savings, and balcony connector products that reduce thermal bridging, delivering energy saving. If customers’ and other stakeholders’ sustainability expectations are not satisfied, the Group’s product portfolio may be of reduced relevance, the Group’s reputation may be harmed and the Group could experience a deterioration in financial performance. Please refer to page 244 of this Annual Report and Form 20-F for further details. In addition, the Group publishes an annual independently-assured Sustainability Report, which is prepared in line with the Global Reporting Initiative Standards and available on www.crh.com.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 serious health and safety incident could have a significant 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 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 18 of the Strategy Review section.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.236CRH ANNUAL REPORT AND FORM 20-F I 2019237CRH ANNUAL REPORT AND FORM 20-F I 2019→→Supplementary 20-F DisclosuresSupplementary 20-F DisclosuresOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsShareholder InformationIndexSUPPLEMENTARIESInformation Technology and/or Cyber SecurityRiskDiscussionDescription:The Group is dependent on information and operational technology systems to support its business activities. Any significant operational event, whether caused by external attack, insider threat or error could lead to loss of access to systems or data, adversely impacting business operations.Impact:Security breaches, IT interruptions or data loss could result in significant business disruption, loss of production, reputational damage and/or regulatory penalties. Significant financial costs in remediation are also likely in a major cyber security incident.The Group employs numerous operational technology and information technology systems, networks and services, many of which are managed, hosted, provided and/or used by third parties, to assist in conducting our business. The proper functioning of our technology and systems is critical to the efficient operation and management of our business. The Group’s systems for protecting our assets against cyber security risks may not always be sufficient. As part of our business, the Group collects, processes, and retains potentially sensitive and confidential information about our customers, suppliers, employees and business performance. Despite the security measures we have in place, and those of third-party suppliers and vendors with which we do business, the Group may be subject to cyber security attacks. Such attacks may result in interference with production software, corruption or theft of sensitive data, manipulation of financial data accessible through digital infrastructure, or reputational losses as a result of misrepresentation via social media and other websites.Security and cyber incidents are becoming increasingly sophisticated and are continually evolving. As this threat continues to evolve, the Group may be required to expend additional resources to continue to modify or enhance protection measures or to investigate and remediate any vulnerability to cyber incidents. There can be no assurance that future attacks will not be successful due to their increasing sophistication and the difficulties in detecting and defending against them in a timely fashion.While the Group has experienced, and expects to continue to experience, these types of threats and incidents, the Group has not detected any material cyber security events.Key Compliance Risk 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/anti-trust, financial reporting, taxation, anti-bribery, anti-corruption, international trade compliance, governance and other matters. The Group mandates that its employees comply with its Code of Business Conduct which stipulates best practices in relation to legal, compliance and ethical matters amongst other issues. The Code of Business Conduct is available on www.crh.com.The Group cannot guarantee that its employees will at all times successfully comply with all demands of regulatory agencies in a manner which will not materially adversely affect its business, results of operations, financial condition or prospects. There can be no assurance that the Group’s policies and procedures will afford adequate protection against fraudulent and/or corrupt activity and any such activity could have a material adverse effect on the Group’s business, results of operations, financial condition or prospects.Key Operational Risk Factors - continuedKey Financial and Reporting Risks FactorsFinancial InstrumentsRiskDiscussionDescription:The Group uses financial instruments throughout its businesses giving rise to interest rate and leverage, foreign currency, counterparty, credit rating and liquidity risks.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 2019, the Group had outstanding net indebtedness of approximately €6.7 billion (2018: €7.0 billion). 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 high level of absolute indebtedness could give rise to the Group dedicating a substantial portion of its cash flow to debt service thereby reducing the funds available in the longer term for working capital, capital expenditure, acquisitions, distributions to shareholders and other general corporate purposes and limiting its ability to borrow additional funds and to respond to competitive pressures. In addition, the Group’s level of indebtedness may give rise to a general increase in interest rates borne and there can be no assurance that the Group will not be adversely impacted by increases in borrowing costs in the future. The Group has a number of material interest rate derivatives and finance contracts linked to the Inter-Bank Offered Rate (“IBOR”) which may be impacted by the transition away from IBOR linked rates to a risk-free rate as IBOR is phased out in 2021. At this time, it is not possible to predict the effect any discontinuance, modification or other reforms to IBOR or any other reference rate, the establishment of alternative reference rates or the transition away from IBOR will have on contracts linked to IBOR or the broader financial markets. Such reforms could have a significant impact on the financial markets and may impact CRH’s borrowing costs and cash flows. Such changes may or may not adversely affect CRH’s financial position.Foreign currency risks: If the Group’s reporting currency weakens relative to the basket of foreign currencies in which net debt is denominated (including the Canadian Dollar, Swiss Franc, Polish Zloty, Philippine Peso and Pound Sterling), the net debt balance would increase; the converse would apply if the Group’s reporting currency was to strengthen. The Group may not succeed in managing these foreign currency risks. Effective 1 January 2020, the Group has decided to change reporting currency from euro to US Dollar.Counterparty risks: Insolvency of the financial institutions with which the Group conducts business, or a downgrade in their credit ratings, may lead to losses in derivative assets and cash and cash equivalents balances or render it more difficult either to utilise existing debt capacity or otherwise obtain financing for operations. The maximum exposure arising in the event of default on the part of the counterparty (including insolvency) is the carrying amount of the relevant financial instrument.The Group holds significant cash balances on deposit with a variety of highly-rated financial institutions (typically invested on a short-term basis) which, together with cash and cash equivalents at 31 December 2019, totalled €3.8 billion (2018: €2.3 billion). In addition to the above, the Group enters into derivative transactions with a variety of highly-rated financial institutions giving rise to derivative assets and derivative liabilities; the relevant balances as at 31 December 2019 were €82 million and €17 million respectively (2018: €45 million and €59 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 2019, this balance was €0.9 billion (2018: €0.9 billion). In the business environment, there is increased exposure to counterparty default, particularly as regards bad debts.Credit rating risks: A downgrade of the Group’s credit ratings may give rise to increases in funding costs in respect of future debt and may, among other concerns, impair its ability to access debt markets or otherwise raise funds or enter into letters of credit, for example, on acceptable terms. Such a downgrade may result from factors specific to the Group, including increased indebtedness stemming from acquisition activity, or from other factors such as general economic or sector-specific weakness or sovereign credit rating ceilings.Liquidity risks: The principal liquidity risks stem from the maturation of debt obligations and derivative transactions. The Group aims to achieve flexibility in funding sources through a variety of means including (i) maintaining cash and cash equivalents with a number of highly-rated counterparties; (ii) limiting the annual maturity of such balances; (iii) meeting the bulk of debt requirements through debt capital markets or other term financing; and (iv) having surplus committed bank lines of credit. However, market or economic conditions may make it difficult at times to realise this objective.For additional information on the above risks see note 24 to the Consolidated Financial Statements.238CRH ANNUAL REPORT AND FORM 20-F I 2019239CRH ANNUAL REPORT AND FORM 20-F I 2019→→Supplementary 20-F DisclosuresSupplementary 20-F DisclosuresOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsShareholder InformationIndexSUPPLEMENTARIESKey Financial and Reporting Risks 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 192 to 197. A prolonged period of financial market instability or other adverse changes in the assumptions mentioned above would have an adverse impact on the valuations of pension scheme assets.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 assessment of additional tax liabilities in future audits 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 profits and 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 equal the estimates reflected in the Group’s historical income tax provisions and accruals. As a multinational corporation, the Group is subject to various taxes in all jurisdictions of operation. Due to economic and political conditions, tax rates and the interpretation of tax rules in these jurisdictions may be subject to significant change. For example, the 2017 US Tax Cuts and Jobs Act has made significant changes to US tax rules. In addition, the Group’s future effective income tax rate could be affected (positively or negatively) by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets or changes in tax laws or their interpretation.Finally, 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 international tax principles, which could adversely affect the Group’s effective tax rate or result in higher cash tax liabilities. If the Group’s effective income tax rate was to increase, its cash flows, financial condition and results of operations could be adversely affected.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 the reporting currency and (ii) declines in the reporting currency value of net investments which are denominated in a wide basket of currencies other than the reporting currency.Impact:Adverse changes in the exchange rates will continue to negatively affect retained earnings. The annual impact is reported in the Consolidated Statement of Comprehensive Income.Given the geographic diversity of the Group, a significant proportion of its revenues, expenses, assets and liabilities are denominated in currencies other than the Group’s reporting currency, including the Canadian Dollar, Swiss Franc, Polish Zloty, Philippine Peso and Pound Sterling. From year to year, adverse changes in the exchange rates used to translate these and other foreign currencies into the reporting currency have impacted and will continue to impact consolidated results and net worth. Effective 1 January 2020, the Group has decided to change reporting currency from euro to US Dollar.For additional information on the impact of foreign exchange movements on the Consolidated Financial Statements for the Group for the year ended 31 December 2019, see the Business Performance section commencing on page 30 and note 24 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 166 to 168.While a goodwill impairment charge does not impact cash flow, a full write-down at 31 December 2019 would have resulted in a charge to income and a reduction in equity of €8.1 billion (2018: €8.1 billion).240CRH ANNUAL REPORT AND FORM 20-F I 2019241CRH ANNUAL REPORT AND FORM 20-F I 2019→→Supplementary 20-F DisclosuresSupplementary 20-F DisclosuresOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsShareholder InformationIndexSUPPLEMENTARIESCompliance 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 2018 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 2019, 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, based on the quantitative and qualitative risk factors of our acquisitions in 2019, the Company has elected to exclude an assessment of the internal controls of these acquisitions for the year 2019. These acquisitions, which are listed in note 32 to the Consolidated Financial Statements, constituted 1.5% and 2.3% of total and net assets respectively, as of 31 December 2019 and 0.8% and 0.1% of revenue and Group profit, respectively, for the financial year then ended. Management’s assessment included an evaluation of the design of the Company’s internal control over financial reporting and testing of the operational effectiveness of those controls. Based on this assessment, management has concluded and hereby reports that as of 31 December 2019, the Company’s internal control over financial reporting is effective.Our auditors, EY, a registered public accounting firm, who have audited the Consolidated Financial Statements for the year ended 31 December 2019, have audited the effectiveness of the Company’s internal controls over financial reporting. Their report, on which an unqualified opinion is expressed thereon, is included on page 127.Changes in Internal Control over Financial ReportingDuring 2019, 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 2018 assessment of internal control over financial reporting (including the 2018 acquisition of Ash Grove) were all successfully integrated into the CRH internal control systems in 2019.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 2019. Based on that evaluation, the Chief Executive and the Finance Director have concluded that these disclosure controls and procedures were effective as of such date at the level of providing reasonable assurance.In designing and evaluating our disclosure controls and procedures, management, including the Chief Executive and the Finance Director, recognised that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgement in evaluating the cost-benefit relationship of possible controls and procedures. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.Change In Registrant’s Certifying Accountant Following the issuance of a Request for Proposal (RFP) in April 2018, the Audit Committee recommended to the Board that Deloitte Ireland LLP be appointed to succeed Ernst & Young as CRH’s auditor, with effect from the financial year commencing 1 January 2020.As a result, following completion of the audit of our financial statements as of and for the year ended 31 December 2019 and the audit of the effectiveness of internal control over financial reporting as of 31 December 2019, Deloitte Ireland LLP will become CRH’s external auditor, subject to a confirmatory advisory vote at the 2020 AGM.Ernst & Young’s reports on our Consolidated Financial Statements for the two years ended 31 December 2019, did not contain an adverse opinion or disclaimer of opinion or report, nor was any report qualified or modified as to uncertainty, audit scope or accounting principles.During our two most recent fiscal years and to 6 March 2020, there were no disagreements with Ernst & Young whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreement, if not resolved to the satisfaction of Ernst & Young, would have caused Ernst & Young to make a reference to the subject matter of the disagreement in connection with any reports it would have issued, and there were no “reportable events” as that term is defined in Item 16F(a)(1)(v) of Form 20-F. We have provided Ernst & Young with a copy of the foregoing disclosure, and we have requested that it furnish us with a letter addressed to the SEC stating whether or not it agrees with the above disclosures. A copy of this letter is filed as Exhibit 15.3 to CRH’s Annual Report on Form 20-F, as filed with the SEC.We did not consult Deloitte Ireland LLP during our two most recent fiscal years or to 6 March 2020 regarding (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements; or (ii) any matter that was the subject of a disagreement as that term is used in Item 16F(a)(1)(iv) of Form 20-F or a “reportable event” as described in Item 16F(a)(1)(v) of Form 20-F.242CRH ANNUAL REPORT AND FORM 20-F I 2019243CRH ANNUAL REPORT AND FORM 20-F I 2019→→Supplementary 20-F DisclosuresSupplementary 20-F DisclosuresOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsShareholder InformationIndexSUPPLEMENTARIESThe 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, which was reviewed and updated during 2019. The statement of policy, applied across all Group companies, is to: • comply, at a minimum, with all applicable environmental legislation and continually improve environmental management, always striving to meet or exceed industry best practice standards, monitoring and reporting performance to ensure Policy compliance;• maintain open communications and ensure that our employees and contractors adhere to their environmental responsibilities;• proactively address the challenges of climate change;• reduce emissions and optimise our use of energy, water, land and other resources;• promote sustainable product and process innovation and new business opportunities and;• develop positive relationships with stakeholders and strive to be good neighbours in every community in which we 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. For example, CRH includes within its offerings products aimed at climate adaptation, including sustainable drainage systems, flood defences, and more resilient structures. Having achieved its 2020 CO2 reduction commitment, CRH is now committing to a target of 520kg CO2/tonnes of cementitious product by 2030, covering the portfolio of cement plants owned by CRH in 2019. This target represents a 33% reduction in specific net cement CO2 compared with 1990 levels. We have also set an ambition to achieve carbon neutrality along the cement and concrete value chain by 2050. CRH continues to be a member of the World Business Council for Sustainable Development (WBCSD) and is a founding member of the Global Cement and Concrete Association (GCCA), which is dedicated to developing and strengthening the sector’s contribution to sustainable construction. 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. In regions and countries where trading schemes are in operation, facilities that fall within this scope of this legislation comply with CO2 “cap and trade” schemes including the European 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 as well as its emission reduction programme. In 2019 the European Commission announced the European Green Deal, a roadmap with actions to reach net-zero greenhouse gas emissions by 2050. As part of this plan, the European Union has political commitments to reduce greenhouse gases, on 1990 levels, by 50-55% by 2030. 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 14 February 2020, the Group is not aware of any such schemes that would materially affect its US operations, however, CRH continuously monitors developments in regulations and greenhouse gas initiatives involving local, provincial, state or federal governments. Possible Environmental LiabilitiesAt 14 February 2020, there were no material pending legal proceedings relating to site remediation which are anticipated to have a material adverse effect on the financial position or results of operations or liquidity of the Group, nor have internal reviews revealed any situations of likely material environmental liability to the Group. Governmental 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 30 countries, employing c. 80,300 people at over 3,100 operating locations, serving customers across the breadth of the building materials spectrum.CRH is the largest building materials business in North America, a leading heavyside materials business in Europe and has positions in both Asia and South America.CRH manufactures and supplies a range of building materials, products and innovative solutions for the construction industry. From primary materials that we extract, process and supply, to products that are highly engineered and high-value-added, CRH is uniquely positioned to address evolving trends in global construction markets. Our products can be found throughout the built environment in a wide range of construction projects from major public infrastructure to commercial buildings and residential structures.The Group resulted from the merger in 1970 of two leading Irish public companies, Cement Limited (established in 1936) and Roadstone Limited (incorporated in 1949). Cement Limited manufactured and supplied cement while Roadstone Limited was primarily involved in the manufacture and supply of aggregates, readymixed concrete, mortar, coated macadam, asphalt and contract surfacing to the Irish construction industry.As a result of planned geographic diversification since 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 Stonemason’s Way, Rathfarnham, Dublin 16, Ireland (telephone: +353 1 404 1000). The Company’s registered office is located at 42 Fitzwilliam Square, Dublin 2, Ireland and our US agent is CRH Americas, Inc., 900 Ashwood Parkway, Suite 600, Atlanta, Georgia 30338.The Company is the holding company of the Group, with direct and indirect share and loan interests in subsidiaries, joint ventures and associates. From Group headquarters, a small team of executives exercise strategic control over our decentralised operations.In the detailed description of CRH’s business on pages 30 to 52, 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 260 to 264.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 30.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 €31 million (2018: €30 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 155. No significant industrial disputes have occurred at any of CRH’s factories or plants during the past five years. The Group believes that relations with its employees and labour unions are satisfactory.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 2019 (2018: 44%), while EBITDA (as defined)* for the first six months of 2019 represented 36% of the full-year out-turn (2018: 33%).Significant ChangesOther than as disclosed in note 35 to the Consolidated Financial Statements on page 206 no significant changes have occurred since the balance sheet date.Latest Practical InformationWhere referenced in the Supplementary 20-F Disclosures and Shareholder Information sections, information is provided at the latest practicable date, 14 February 2020.244CRH ANNUAL REPORT AND FORM 20-F I 2019245CRH ANNUAL REPORT AND FORM 20-F I 2019→→Shareholder InformationShareholder informationOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresIndexStock Exchange Listings 248Ownership of Ordinary Shares 248Dividends 250Share Plans 251American Depositary Shares 252Taxation 253Memorandum and Articles of Association 255General Information 257248 - 257Shareholder InformationPolbruk, part of CRH’s Building Products Division, supplied products for this school in Rzeszów, Poland. Urbanika 60 slabs covered the courtyard and main entrance and a range of other products finished off areas around the buildings, comprising over 5,000m2 of products in total.→→Shareholder InformationShareholder informationOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresIndexCRH has a premium listing on the LSE and a secondary listing on Euronext Dublin represented by the ticker symbols CRH and CRG respectively.American Depositary Shares (ADSs), each representing one Ordinary Share, are listed on the NYSE. The ADSs are evidenced by ADRs issued by The Bank of New York Mellon (the ‘Depositary’) as Depositary under an Amended 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 data20192018LSEEuronext DublinNYSELSEEuronext DublinNYSEShare price at 31 December£30.42€35.67$40.33£20.71€23.10$26.35Market capitalisation£24.0bn€28.2bn$31.8bn£16.9bn€18.8bn$21.5bnShare price movement during year:-high£31.00€36.25$40.36£28.57€32.62$38.96-low£20.72€22.89$26.05£19.72€21.84$24.92The 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 2020, the Company had received notification of certain interests in its Ordinary Share capital that were equal to, or in excess of, 3%. These interests are presented in Corporate Governance – Substantial Holdings on page 72.Shareholdings as at 31 December 2019Geographic location (i)Number of shares held ‘000s% of totalUnited Kingdom246,77330.9North America226,94328.4Europe/Other164,44520.6Retail128,45916.0Ireland23,0092.9Treasury (ii)10,0111.2799,640100.0(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 - 1,00014,43161.04,4760.51,001 - 10,0007,25430.721,6142.710,001 - 100,0001,4146.043,6195.5100,001 - 1,000,0004311.8132,42616.6Over 1,000,0001270.5597,50574.723,657100.0799,640100.02019MonthTotal number of share buyback purchasesTotal number of EBT purchasesTotal number of shares purchasedAverage price paid per share - share buyback (i) (ii) January2,933,611-2,933,611€24.56/£21.80February1,599,462429,2722,028,734€27.02/£23.55March3,087,8171,500,0004,587,817€27.44/£23.56April-248,750248,750-May4,211,11011,4264,222,536€28.80/£25.09June4,015,079-4,015,079€28.45/£25.41July2,032,600-2,032,600€29.58/£26.70August1,904,650-1,904,650€28.54/£26.16September3,050,181-3,050,181€30.81October2,179,962-2,179,962€30.55November1,636,369-1,636,369€33.46December706,275-706,275€34.4827,357,1162,189,44829,546,564Purchases 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 ‘Programme’). During 2018, CRH repurchased a total of 27,901,471 Ordinary Shares under the Programme, returning a total of €0.8 billion in cash to shareholders. The Programme was extended in 2019, with CRH repurchasing a total of 27,357,116 Ordinary Shares in 2019 and returning a further €0.8 billion to shareholders. As at 31 December 2019, a total of €1.6 billion cash has been returned to shareholders under the Programme.On 7 January 2020, CRH announced a further extension of the Programme for an additional €200 million.The tables below sets forth the Ordinary Shares repurchased under this programme together with details of the Ordinary Shares purchased by the Employee Benefit Trust (EBT) during 2019 and 2018. See note 31 to the Consolidated Financial Statements for further details. 2018MonthTotal number of share buyback purchasesTotal number of EBT purchasesTotal number of shares purchasedAverage price paid per share - share buyback (i) (ii) March-108,377108,377-May3,184,696-3,184,696€30.85/£27.07June3,683,973-3,683,973€31.40/£27.62July4,490,643-4,490,643€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 (i) Average price paid per share in respect of 2019 EBT purchases; February €28.74, March €27.11, April €28.44 and May €28.54 (2018: March €27.57).(ii) Where applicable, for shares purchased on the LSE, the average price paid per share in Pound Sterling is disclosed.Other than the above, there were no purchases of equity securities by the issuer and/or affiliated persons during the course of 2019.248CRH ANNUAL REPORT AND FORM 20-F I 2019249CRH ANNUAL REPORT AND FORM 20-F I 2019→→Shareholder InformationShareholder informationOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresIndexThe 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 20.0c was paid in respect of Ordinary Shares on 25 September 2019. The final dividend, if approved at the forthcoming AGM of shareholders to be held on 23 April 2020, will be paid on 28 April 2020 to shareholders on the Register of Members as at the close of business on 13 March 2020 and will bring the full-year dividend for 2019 to 83.0c. The proposed final dividend has been translated using the FRB Noon Buying Rate on 14 February 2020.Dividend Withholding Tax (DWT) must be deducted from dividends paid by an Irish resident company, unless a shareholder is entitled to an exemption and has submitted a properly completed exemption form to the Company’s Registrars, Link Asset Services (the ‘Registrars’). DWT applies to dividends paid by way of cash or by way of shares under a scrip dividend scheme and is deducted at the standard rate of Income Tax (20% throughout 2019, increased to 25% effective 1 January 2020). Non-resident shareholders and certain Irish companies, trusts, pension schemes, investment undertakings and charities may be entitled to claim exemption from DWT. Copies of the exemption form may be obtained from the Registrars. Shareholders should note that DWT will be deducted from dividends in cases where a properly completed form has not been received by the record date for a dividend. Individuals who are resident in the Republic of Ireland for tax purposes are not entitled to an exemption. Holders of Ordinary Shares who wish to have their dividend paid direct to their bank account, by electronic funds transfer, can do so by logging on to www.signalshares.com, selecting CRH plc and registering for the share portal (the ‘Share Portal’). Shareholders should note that they will need to have their Investor Code (found on their share certificate), and follow the instructions online to register. Alternatively shareholders can complete a paper dividend mandate form and submit it to the Registrars. A copy of the form can be obtained by logging onto the Registrar’s share portal and following the instructions as set out under Registrars on page 257. Tax vouchers will continue to be sent to the shareholder’s registered address under this arrangement. Dividends are generally paid in euro. However, in order to avoid costs to shareholders, dividends are paid in Pound Sterling and US Dollars to shareholders whose shares are not held in the CREST system (see page 249) and whose address, according to the Share Register, is in the UK and the US respectively, unless they require otherwise. In respect of the 2019 final dividend, the latest date for receipt of currency elections is 13 March 2020.Dividends in respect of 7% ‘A’ Cumulative Preference Shares are paid half-yearly on 5 April and 5 October. Dividends in respect of 5% Cumulative Preference Shares are paid half-yearly on 15 April and 15 October. 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. 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 (2000 share option schemes). Following the approval by shareholders of the 2014 Performance Share Plan (see below), no further awards will be granted under the 2010 Share Option Schemes. Consequently, the last award under the 2010 Share Option Schemes was made in 2013.The 2010 Share Option Schemes were based on one tier of options with a single vesting test. The performance criteria for the 2010 Share Option Schemes was EPS-based. Vesting only occurred once an initial performance target had been reached and, thereafter, was dependent on performance. In considering the level of vesting based on EPS performance, the Remuneration Committee also considered 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 2020, 1,463,688 Ordinary Shares have been issued1 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 2020, 8,175,310 Ordinary Shares have been issued1 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 2019 Directors’ Remuneration Report on page 88 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 DecemberInterimFinalTotalInterimFinalTotal201518.5044.0062.5019.8850.2570.13201618.8046.20 65.0020.9150.8071.71201719.2048.8068.0022.3058.3080.60201819.6052.4072.0023.0558.6981.74201920.0063.00(i)83.0021.9068.29(i)90.19(i) Proposed.1. At the FRB Noon Buying Rate on the date of payment.1. Whether by way of the allotment of new shares, the reissue of Treasury Shares or the purchase of Ordinary Shares.250CRH ANNUAL REPORT AND FORM 20-F I 2019251CRH ANNUAL REPORT AND FORM 20-F I 2019→→Shareholder InformationShareholder informationOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresIndexPersons 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$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)(A fee equivalent to the fee that would be payable if securities distributed had been shares and the shares had been deposited for issuance of ADSs)• Distribution of deposited securities by the Depositary to ADS registered holdersApplicable Registration or Transfer fees• Transfer and registration of shares on our share register to or from the name of the Depositary or its agent when the holder deposits or withdraws sharesApplicable Expenses of the Depositary• Cable, telex and facsimile transmissions• Converting foreign currency to US DollarsApplicable Taxes and other governmental charges the Depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes• As necessaryCategory of expense reimbursed to the CompanyAmount reimbursed for the year ended 31 December 2019 US$New York Stock Exchange listing fees71,000Investor relations expenses94,108Total165,108The table below sets forth the types of expenses that the Depositary has paid to third parties and the amounts reimbursed for the year ended 31 December 2019:Category of expense waived or paid directly to third partiesAmount reimbursed for the year ended 31 December 2019 US$Printing, distribution and administration costs paid directly to third parties in connection with US shareholder communications and Annual General Meeting related expenses in connection with the American Depositary Share programme947Total947Fees and charges payable by a holder of ADSsThe 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 2019 the Depositary reimbursed to the Company, or paid amounts on its behalf to third parties, a total sum of US$166,055. This table sets forth the category of expense that the Depositary has agreed to reimburse to the Company and the amounts reimbursed for the year ended 31 December 2019.The Depositary has also agreed to waive fees for standard costs associated with the administration of the ADS programme and has paid certain expenses directly to third parties on behalf of the Company.Under certain circumstances, including removal of the Depositary or termination of the ADS programme by the Company before November 2021, the Company is required to repay the Depositary, up to a maximum of US$250,000, the amounts waived, reimbursed and/or expenses paid by the Depositary to or on behalf of the Company.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 US 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 during 2019 was 20% (increased to 25% effective 1 January 2020) of the dividend payable. Dividends paid by the Company to a US tax resident individual will be exempt from DWT provided the following conditions are met:1. the individual (who must be the beneficial owner) is resident for tax purposes in the US (or any country with which Ireland has a double tax treaty) and neither resident nor ordinarily resident in Ireland; 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.Taxation252CRH ANNUAL REPORT AND FORM 20-F I 2019253CRH ANNUAL REPORT AND FORM 20-F I 2019→→Shareholder InformationShareholder informationOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresIndexTaxation - continued Distributions 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 US 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).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 AssociationMarlux, part of CRH’s Building Products Division, contributed to a home makeover programme on Belgian television in 2019, supplying its Mosaic Victoria tiling solution to pave a back yard. The decorative yet durable tiles can be custom patterned for individual distributors.254CRH ANNUAL REPORT AND FORM 20-F I 2019255CRH ANNUAL REPORT AND FORM 20-F I 2019→→Shareholder InformationShareholder informationOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresIndex• 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 201928 February 2020Ex-dividend date 12 March 2020Record date for dividend 13 March 2020Latest date for receipt of completed bank mandates13 March 2020Latest date for revocation of existing bank mandates13 March 2020Annual General Meeting 23 April 2020Dividend payment date 28 April 2020Further 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 2020 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 1110 Maynooth, Co. Kildare, 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 page 64.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 Information256CRH ANNUAL REPORT AND FORM 20-F I 2019257CRH ANNUAL REPORT AND FORM 20-F I 2019→→Shareholder InformationShareholder informationOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresIndexPrincipal Subsidiary Undertakings 260Principal Equity Accounted Investments 264Exhibits 266Cross Reference to Form 20-F Requirements 267Our Products and Services Locations 268Index 270Signatures 272260 - 272Other informationRudus, part of CRH’s Europe Materials Division, is a leading manufacturer of stone-based building materials in Finland. The Sammonmäki plant in Tuusula produces a range of concrete stair elements. With a dedicated product design team at the plant, Rudus ensures an efficient and seamless design and production process, delivering high-quality, tailored products to its customers.→→Shareholder InformationShareholder informationOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresIndexGermanyFels Holding 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 aggregatesHeembeton B.V.100Precast concrete structural elementsDycore B.V.100Concrete flooring elementsPhilippines (i)Republic Cement & Building Materials, Inc.40CementRepublic Cement Land & Resources Inc. 40Cement and Building MaterialsPoland Przedsiebiorstwo Produkcji Mas Betonowych Bosta Beton Sp. z o.o. 90.30Readymixed concreteDrogomex Sp. z o.o.*100Asphalt and contract surfacingCement Ożarów S.A.100CementMasfalt Sp. z o.o.* 100Asphalt and contract surfacingTrzuskawica S.A. 100 Production of lime and lime productsEurope MaterialsIncorporated 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*82.94CementTeralta Granulat Beton Reunion*93.35Aggregates, readymixed concretePrincipal Subsidiary Undertakingsas at 31 December 2019Europe Materials - continuedIncorporated and operating in% heldProducts and servicesRomaniaCRH RMX & Agregate S.R.L.98.61Readymixed 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. 99.78Cement and readymixed concreteSpainBeton Catalan S.A.100Readymixed concreteCementos Lemona S.A.98.75CementSwitzerlandJURA-Holding AG100Cement, aggregates and readymixed concreteUkraineLLC Cement*100Cement and clinker grindingPJSC Mykolaivcement100CementPodilsky Cement PJSC100Cement(i) 55% economic interest in the combined Philippines business (see note 33 to the Consolidated Financial Statements).260CRH ANNUAL REPORT AND FORM 20-F I 2019261CRH ANNUAL REPORT AND FORM 20-F I 2019→→Shareholder InformationShareholder informationOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresIndexAmericas MaterialsIncorporated and operating in% heldProducts and servicesBrazilCRH Brasil Participações S.A.100Holding companyCRH Sudeste Indústria de Cimentos S.A 100CementCanadaCRH Canada Group Inc.100Aggregates, asphalt, cement and readymixed concrete and provider of construction servicesUnited StatesAsh 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. and subsidiaries 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 activitiesPrincipal Subsidiary Undertakings - continuedas at 31 December 2019Building ProductsIncorporated and operating in% heldProducts and servicesAustraliaAncon Building Products Pty Ltd100Construction accessoriesCubis Systems Australia Pty Ltd*100Supplier of access chambers and ducting productsBelgiumPlakabeton N.V.100Construction accessoriesMarlux N.V.100Concrete paving and landscaping productsStradus Infra N.V.100Concrete paving and landscaping productsBritain & Northern IrelandAncon Limited100Construction accessoriesCanadaOldcastle BuildingEnvelope™ Canada, Inc.100Custom fabricated and tempered glass products and curtain wallOldcastle Building Products Canada, Inc. (trading as Abbotsford Concrete Products, Techniseal, Expocrete Concrete Products, Groupe Permacon, Oldcastle Enclosure Solutions)100Specialty masonry, hardscape and patio products, utility boxes and trench systemsFrancePlaka Group France S.A.S.100Construction accessoriesGermanyEHL AG100Concrete paving and landscape walling productsHalfen GmbH100Construction accessoriesIrelandCubis Systems Limited100Supplier of access chambers and ducting productsNetherlandsStruyk Verwo Groep B.V.100Concrete paving productsPolandPolbruk S.A.100Concrete paving productsSlovakiaPremac, spol. s.r.o.*100Concrete paving and floor elementsSwitzerlandF.J. Aschwanden AG*100Construction accessoriesUnited StatesMoistureShield, 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)100Specialty masonry, hardscape and patio productsOldcastle APG South, Inc. (trading principally as Adams Products, Georgia Masonry Supply, Northfield Block Company, Anchor Block, Allied Concrete Company 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 elements262CRH ANNUAL REPORT AND FORM 20-F I 2019263CRH ANNUAL REPORT AND FORM 20-F I 2019→→Shareholder InformationShareholder informationOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresIndexPrincipal Equity Accounted Investmentsas at 31 December 2019Americas MaterialsCanadaBlackbird Infrastructure 407 General Partnership*50Special-purpose entity on highway infrastructure constructionBlackbird Maintenance 407 General Partnership*50Construction Blackbird Constructors 407 General Partnership*50ConstructionBlackbird Infrastructure 407 CRH GP Inc*50Special-purpose entity on highway infrastructure constructionMosaic Transit Partners General Partnership*33Special-purpose entity on Ontario infrastructure construction Mosaic Transit Constructors General Partnership*33Construction United StatesAmerican Asphalt of West Virginia, LLC*50Asphalt and related construction activitiesBuckeye Ready Mix, LLC*45Readymixed concreteCadillac Asphalt, LLC*50AsphaltPiedmont 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 MaterialsIncorporated and operating in% heldProducts and servicesChinaJilin Yatai Group Building Materials Investment Company Limited*26CementIrelandKemek Limited*50Commercial explosivesCRH’s Building Products Division acquired Filoform B.V. in May 2019. The business, which is headquartered in Geldermalsen in the Netherlands, manufactures components and systems for network infrastructure solutions and exports to over 40 countries. 264CRH ANNUAL REPORT AND FORM 20-F I 2019265CRH ANNUAL REPORT AND FORM 20-F I 2019→→Shareholder InformationShareholder informationOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresIndexThe 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 Description of securities registered under Section 12 of The Exchange Act.8. Listing of principal subsidiary undertakings and equity accounted investments (included on pages 260 to 264 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.15.3 Letter from Ernst & Young, dated 6 March 2020, regarding the Change in Certifying Accountant.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 2018 that was filed by the Company on 8 March 2019. ** 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.*** Furnished but not filed.The total amount of long-term debt of the Registrant and its subsidiaries authorised under any one instrument does not exceed 10% of the total assets of CRH plc and its subsidiaries on a consolidated basis.The Company agrees to furnish copies of any such instrument to the SEC upon request.ExhibitsPagePART IItem 1.Identity of Directors, Senior Management and Advisorsn/aItem 2.Offer Statistics and Expected Timetablen/a Item 3.Key InformationA - Selected Financial Data224B - Capitalisation and Indebtednessn/aC - Reasons for the Offer and Use of Proceedsn/aD - Risk Factors233Item 4.Information on the CompanyA - History and Development of the Company2, 3, 35, 37, 245B - Business Overview32, 38, 244C - Organisational Structure245D - Property, Plants and Equipment230Item 4A.Unresolved Staff CommentsNoneItem 5.Operating and Financial Review and ProspectsA - Operating Results10, 30, 225B - Liquidity and Capital Resources 33, 34, 37, 177, 229C - Research and Development, Patents and Licences, etc. 245D - Trend Information10, 33E - Off-Balance Sheet Arrangements229F - Tabular Disclosure of Contractual Obligations229G - Safe Harbor103Item 6.Directors, Senior Management and EmployeesA - Directors and Senior Management 56B - Compensation74C - Board Practices60D - Employees245E - Share Ownership 99, 248, 249, 251Item 7.Major Shareholders and Related Party TransactionsA - Major Shareholders72, 248B - Related Party Transactions206C - Interests of Experts and Counseln/aItem 8.Financial InformationA - Consolidated Statements and Other Financial Information128–215 - Legal Proceedings245 - Dividends250B - Significant Changes245Item 9.The Offer and ListingA - Offer and Listing Details248B - Plan of Distributionn/aC - Markets248D - Selling Shareholdersn/aE - Dilutionn/aF - Expenses of the Issuen/aPageItem 10.Additional InformationA - Share Capitaln/aB - Memorandum and Articles of Association255C - Material ContractsNoneD - Exchange Controls257E - Taxation253F - Dividends and Paying Agentsn/aG - Statements by Expertsn/aH - Documents on Display257I - Subsidiary Information260Item 11.Quantitative and Qualitative Disclosures about Market Risk229Item 12.Description of Securities Other than Equity SecuritiesA - Debt Securitiesn/aB - Warrants and Rightsn/aC - Other Securitiesn/aD - American Depositary Shares252PART IIItem 13. Defaults, Dividend Arrearages and DelinquenciesNoneItem 14.Material Modifications to the Rights of Security Holders and Use of ProceedsNoneItem 15.Controls and Procedures127, 242Item 16A.Audit Committee Financial Expert57, 58, 59Item 16B.Code of Ethics72Item 16C. Principal Accountant Fees and Services 64, 73, 153, 257Item 16D.Exemptions from the Listing Standards for Audit Committeesn/aItem 16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers249Item 16F.Change in Registrant’s Certifying Accountant243Item 16G.Corporate Governance242Item 16H.Mine Safety Disclosures230PART IIIItem 17.Financial Statementsn/aItem 18.Financial Statements128–215Item 19.Exhibits266This 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 Requirements266CRH ANNUAL REPORT AND FORM 20-F I 2019267CRH ANNUAL REPORT AND FORM 20-F I 2019→→Shareholder InformationShareholder informationOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresIndexOur Products and Services Locations1. Includes the Group’s equity accounted investments. CementAggregatesLimeReadymixed ConcreteAsphaltPaving & ConstructionInfrastructural Concrete ProductsArchitectural ProductsGlass & Glazing SystemsCustom Glazing HardwareConstruction AccessoriesNetwork Access Products AustraliaAustriaBelgiumBrazilCanadaChina1Czech RepublicDenmarkEstoniaFinlandFranceGermanyHungaryIrelandItalyMalaysiaNetherlandsNorwayPhilippinesPolandRomaniaRussiaSerbiaSlovakiaSpainSwedenSwitzerlandUkraineUnited KingdomUnited States268CRH ANNUAL REPORT AND FORM 20-F I 2019269CRH ANNUAL REPORT AND FORM 20-F I 2019→→IndexIndexOverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationAAccounting Policies 133Acquisitions Committee 72American Depositary Shares 252Americas Materials 40Annual General Meeting 105Audit Committee 64Auditors (Directors’ Report) 104Auditor’s Remuneration 64, 153, 220Auditor’s Report, Independent (Irish) 116Auditor’s Report, Independent (US) 125BBalance Sheet- Company216- Consolidated130Balanced Portfolio12Board Approval of Financial Statements (note 36)206Board Committees72Board Effectiveness70Board of Directors56Board Responsibilities71Building Products48Business and Non-Current Asset Disposals (note 6)154Business Combinations (note 32)141, 201Business Model16Business Overview32Business Performance30CCapital and Financial Risk Management (note 24)182Cash and Cash Equivalents (note 25)142, 186Cash Flow, Operating19Cash Flow Statement, Consolidated132Chairman’s Introduction4Chief Executive’s Review10Communications with Shareholders73Company Secretary73Compliance and Ethics72Contractual Obligations229Corporate Governance Practices 242Corporate Governance Report60Cost Analysis (note 4)152CREST249DDebt, Analysis of Net (note 23)177Deferred Income Tax- expense (note 12)137, 160- assets and liabilities (note 29)137, 191Depreciation- cost analysis (note 4)152- property, plant and equipment (note 15)140, 164- segment analysis (note 2)147Derivative Financial Instruments (note 27)142, 188Directors’ Emoluments and Interests (note 8)155, 221Directors’ Interests in Share Capital99Directors’ Remuneration Report74Directors’ Report102Directors’ Responsibilities, Statement of105Directors’ Share Options92Discontinued Operations (note 3)150Dividend Payments (Shareholder Information)102, 250Dividend per Share1Dividends (note 13)143, 162EEarnings per Ordinary Share (note 14) 163Employees, Average Number (note 7) 155Employment Costs (note 7) 155End-use Exposure 12Equity Accounted Investments’ Profit, Share of (note 11)160Europe Materials44Events After the Balance Sheet Date (note 35)206Exchange Rates144Exhibits266FFinance Committee72Finance Costs and Finance Income (note 10)159Finance Director’s Review33Financial Assets (note 17)169Financial Calendar257Financial Statements, Consolidated128Foreign Currency Translation113, 241Frequently Asked Questions257GGlobal Business2Going Concern104Governance54Greenhouse Gas Emissions18Guarantees (note 26; note 11 to Company Balance Sheet)187, 221HHealth and Safety18IndexIInclusion and Diversity18, 61Income Statement, Consolidated128Income Tax Expense (note 12)160Intangible Assets (note 16)141, 166Inventories (note 18)142, 170Investor Relations Activities73KKey Components of 2019 Performance33KPIs, Financial19KPIs, Non-Financial18LLeases (note 22) 133, 141, 175Listing Rule 9.8.4C103Loans and Borrowings, Interest-Bearing (note 26)142, 186MMeasuring Performance18Memorandum and Articles of Association73, 255NNomination & Corporate Governance Committee68Non-controlling Interests (note 33)205Non-GAAP Performance Measures225Notes on Consolidated Financial Statements145Notes to the Company Balance Sheet 218OOperating Costs (note 4)152PPensions, Retirement Benefit Obligations (note 30)136, 192Principal Equity Accounted Investments264Principal Risks and Uncertainties108Principal Subsidiary Undertakings260Profit on Disposals (note 6)154Property, Plant and Equipment (note 15)140, 164Property, Plants and Equipment 230Provisions for Liabilities (note 28)136, 190Proxy Voting, Electronic257RRegistrars257Regulatory Information103Related Party Transactions (note 34)206Remuneration Committee88Reserves, Mineral 231Retirement Benefit Obligations (note 30)136, 192Return on Net Assets (RONA)19, 226, 228Revenue (note 1)145Risk Governance26Risk Management and Internal Control104, 242Risk Factors 233SSafety, Environment & Social Responsibility Committee20, 60, 244Sector Exposure and End-Use - Americas Materials40- Europe Materials44- Building Products48Segment Information (note 2)139, 147Selected Financial Data224Senior Independent Director57Share-based Payments (note 9)140, 156Share Capital and Reserves (note 31)143, 198Share Options- Directors92- Employees (note 9)156Share Price Data248Shareholder Communication73Shareholdings as at 31 December 2019 72, 248Statement of Changes in Equity, Consolidated131Statement of Changes in Equity, Company217Statement of Comprehensive Income, Consolidated129Statement of Directors’ Responsibilities105Stock Exchange Listings72, 248Strategy 14Substantial Holdings72Supplemental Guarantor Information (note 37)207Sustainability20TTotal Shareholder Return (TSR)8, 19Trade and Other Payables (note 20)173Trade and Other Receivables (note 19) 170VVolumes, Annualised- Americas Materials41- Europe Materials 45WWebsite73, 257Working Capital and Provisions for Liabilities, Movement in (note 21)174270CRH ANNUAL REPORT AND FORM 20-F I 2019271CRH ANNUAL REPORT AND FORM 20-F I 2019→→OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndexThe 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 MurphyGroup Finance DirectorDated: 6 March 2020SignaturesCRH public limited company(Registrant)By: 272CRH ANNUAL REPORT AND FORM 20-F I 2019→→CRH plc CRH Stonemason’s Way Rathfarnham Dublin 16 D16 KH51 Ireland Telephone: +353 1 404 1000 E-mail: mail@crh.com Website: www.crh.com Registered Office 42 Fitzwilliam Square Dublin 2 D02 R279 Ireland Telephone: +353 1 634 4340 Fax: +353 1 676 5013 E-mail: crh42@crh.com CRH® is a registered trade mark of CRH plc. Designed and produced by Paragon-CC. Printed by Buchdruckerei Lustenau (BuLu). Cover image: Oldcastle Infrastructure, part of CRH’s Building Products Division, designed bespoke floating concrete slabs for the Los Angeles Metro Rail project in California. The slabs reduce vibration and noise from trains passing under the Disney Concert Hall. When complete, over 500 slabs will support a section of track around three-quarters of a mile long. OverviewStrategy ReviewBusiness PerformanceGovernanceFinancial StatementsSupplementary 20-F DisclosuresShareholder InformationIndex→→

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