2020 Annual Report
and Form 20-F
50 years of performance and growth
Contents
Overview
CRH at a glance
Chairman’s Introduction
2
4
Strategy Review
8
Why Invest in CRH
9
Our Executive Leadership
10
Chief Executive’s Review
12
Market Backdrop
14
Our Strategy
16
Business Model
18
Measuring Performance
20
Sustainability
Risk and Resilience
26
Business Performance
32
Finance Director’s Review
38
Segmental Reviews
Governance
54
Board of Directors
58
Corporate Governance Report
74
Directors’ Remuneration Report
100
Directors’ Report
106
Principal Risks and Uncertainties
Financial Statements
Independent Auditors' Reports
114
Consolidated Financial
Statements
Accounting Policies
Notes on Consolidated
Financial Statements
132
137
147
Supplementary
20-F Disclosures
Shareholder Information
Other Information
Cross Reference to Form 20-F
Index
210
236
248
257
260
View the Report on our website:
www.crh.com/investors/annual-reports/
This 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 2020. A cross reference to
Form 20-F requirements is included on page 257.
The Directors’ Statements (comprising the
Statement of Directors’ Responsibilities, the
Viability Statement and the Directors’ Compliance
Statement on pages 102 to 104), the Principal
Risks and Uncertainties (on pages 106 to 111),
the Independent Auditors' Reports (on pages
114 to 125) and the Parent Company financial
statements of CRH plc (on pages 205 to 209) 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 101 for more
information about these statements and certain
factors that may cause them to prove inaccurate.
A production team member at Oldcastle Infrastructure, Cape Coral, Florida which is part of CRH’s Building Products Division.
Oldcastle Infrastructure is one of North America’s largest manufacturers of utility products and construction accessories for the
telecommunications, energy, transportation, building structures and water markets. The Cape Coral plant produces box culverts,
utility box vaults, wall boxes and panels, drainage systems and catch basins.
CRH is the leading building materials business in the world
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.
2020 Performance Highlights
PRE-IMPAIRMENT1
SALES
$27.6
billion
$28.1bn
$27.6bn
PROFIT AFTER TAX
PROFIT AFTER TAX
$1.2
billion
-2%
2019
$1.6bn
2020
$1.2bn
-29%
2019
2020
$2.0
billion
$1.7bn
$2.0bn
+18%
2019
2020
EBITDA (as defined)*
EARNINGS PER SHARE
EARNINGS PER SHARE
$4.6
billion
$4.5bn
$4.6bn
142.9
cent
+3%
2019
203.0c
2020
142.9c
-30%
2019
2020
243.3
cent
203.8c
243.3c
+19%
2019
2020
OPERATING PROFIT
DIVIDEND PER SHARE
$2.3
billion
$2.8bn
$2.3bn
115.0
cent
-19%
2019
92.0c
2020
115.0c
+25%
2019
2020
All references to income statement
data are on a continuing basis
throughout the Overview, Strategy
Review and Business Performance
sections (pages 2 to 51).
* 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 213
to 217.
CRH at
a glance
CRH operates across three
integrated platforms of scale
comprising Americas Materials,
Europe Materials and Building
Products.
2
A Global
Leader
A Sustainable
Business
46%
Revenue
from Sustainable Products
(Products with enhanced
sustainability attributes)
42%
Female
Directors on CRH Board
1 million
Tonnes CO2
emissions prevented
in 2020
Products & Services Index
Aggregates
Cement
Lime
Readymixed
Concrete
Asphalt
Infrastructural
Concrete
3
Three
Divisions
Americas Materials
SALES
$11.3 billion
Europe Materials
SALES
$9.1 billion
Building Products
SALES
$7.2 billion
-3% 2019: $11.6 billion
-4% 2019: $9.5 billion
c. 27,400 employees
c. 1,475 operating locations
46 US states, six Canadian
Provinces and Southeast Brazil
c. 26,800 employees
c. 1,155 operating locations
21 Countries
+3% 2019: $7.0 billion
c. 22,900 employees
c. 480 operating locations
19 Countries
Products & Services
Products & Services
Products & Services
Paving & Construction
Services
Infrastructure
Products
Architectural
Products
Building Envelope
Construction
Accessories
Chairman's Introduction1
4
Underpinned by CRH’s
clear, focused strategy,
its robust business
model and the calibre
of its people, CRH’s
business performance
proved to be extremely
resilient in 2020.”
Richie Boucher
Chairman
As was the case for people
and businesses throughout
the world, 2020 for CRH
was overshadowed by the
COVID-19 pandemic. Working
with management, your
Board’s overarching priority
was and is the health and
safety of our employees, whilst
protecting the business and
successfully steering CRH
through, and emerging strongly
from, this global crisis.
Health & Safety an Overarching
Priority During 2020
CRH operates in accordance with the pandemic
management policies of national and local
governments where our businesses are based.
In doing so, we leverage CRH’s safety culture,
robust policies and “Safety First“ practices, to
ensure that employees and contractors who
work in our plants, sites or offices can do so in
a safe environment. Your Board has oversight of
company-wide and business unit-level initiatives
and communication programmes to support the
physical and mental health of employees, which
are informed by the close monitoring of COVID-19
related metrics and comparing CRH’s experiences
and actions against those of the wider population
and best practice.
Regrettably CRH employees and their families
are being impacted by COVID-19, with a number
suffering adverse health outcomes including,
tragically, bereavement. The Board offers
its deepest sympathy to employees and the
families of CRH employees who have lost
loved ones.
Other aspects of the physical safety of our
employees, contractors and third parties working
in and from CRH‘s many businesses, continues to
receive the Board’s ongoing input and attention.
This includes close scrutiny, through the Board’s
Safety, Environment and Social Responsibility
(SESR) Committee, of accidents and “near
misses“. Very sadly there were three workplace
related fatalities during 2020 involving one
employee and two contractors. The Board offers
its sympathy to the families of the deceased.
The background to each accident was carefully
examined by the Committee, with its findings
being reported to the Board. Any applicable
lessons from accidents and "near misses" are
appropriately shared across the organisation.
Further detail on CRH’s response to the health
issues associated with the COVID-19 pandemic
and on the management and oversight of safety
throughout CRH are set out on pages 70 to 73.
CRH’s Business Model and
Business Performance
Underpinned by CRH’s clear, focused strategy,
strong business model and the calibre of its
people, CRH’s business performance proved to
be extremely resilient in 2020, notwithstanding
the unprecedented challenges of the COVID-19
pandemic.
The key components of the Group's robust
operational and business performance are set
out on pages 10 and 11 in the Chief Executive's
Review and on pages 32 to 34 of the Business
Performance section. This performance follows
the implementation over many years of strategic
decisions to simplify and re-focus the Group on
developed markets with attractive fundamentals
and sustainable growth prospects. It also reflects
1. See cautionary statement regarding forward-looking statements on page 101.
5
4
initiatives to increase cost flexibility within the
business model, combined with decisive actions
taken during 2020 by CRH’s highly experienced,
committed management team under the oversight
of the Board. CRH’s strategy and business model
are described in detail on pages 14 to 17.
During 2020, there was also further progress
on business improvement initiatives, combined
with ongoing active portfolio management
including the announced agreement to divest
our business in Brazil. While acquisition activity
was muted, there is a strong pipeline of
development opportunities within the Group’s
strategic footprint. In the process of portfolio
assessment and portfolio management the Board
has reflected the longer-term changing business
landscape with a non-cash impairment charge of
$0.8 billion (2019: $8 million), which pre-dominantly
relates to our assets in the United Kingdom (UK)
and our associate investment in China.
Amongst the core elements of CRH’s strategy
are financial discipline and the sustainable
generation of cash from our activities. A particular
feature of the business performance during a
challenging 2020 was the quality and quantum
of cash generation, supporting investment in the
business, a further strengthening of the balance
sheet and continued significant distributions to
CRH’s shareholders.
A Continued Focus on
Returns for Shareholders
Since 1970, compound annual Total Shareholder
Return (TSR)1 has been 15.1% (2019: 15.6%).
CRH’s long-standing record of increased or
maintaining dividends continued in 2020 with
dividends paid to shareholders in respect of the
2019 financial year of 92.0c per share, representing
an increase of 12% from 2018 (2018: 82.0c).
The COVID-19 pandemic has not yet abated,
and the pace and nature of economic recovery is
uncertain, making it difficult at this stage to provide
forward-looking guidance on CRH’s financial
performance over the short term. Nonetheless,
reflecting your Board’s confidence in CRH’s
strategy, business model, financial strength and
cash generation capacity, along with its resilience
and ability to sustainably grow over the medium
term, the Board is recommending a final dividend
of 93.0c per share, resulting in a total of dividend
of 115.0c per share for 2020 (2019: 92.0c) which
represents an increase of 25% on 2019. The Board
also intends to recommence the Group's share
buyback programme following a pause in response
to high levels of market volatility in 2020, with a
further tranche of $0.3 billion to be completed by
the end of June 2021.
Challenging Targets for
Safety, the Environment
and Inclusion & Diversity
As outlined in CRH’s 2020 Sustainability Report,
the Board has approved challenging targets in
the areas of safety, the environment, our people
and products for our customers. The attainment
of these objectives, which include a focus on zero
fatalities, carbon reduction, sustainable products
and on Inclusion and Diversity (I&D) as set out in
further detail on page 70 to 73, are underpinned
by a comprehensive range of plans and initiatives.
Supported by the SESR Committee, the Board
actively inputs into the development of these
plans and initiatives and carefully monitors their
progress.
Continued Planned
Board Renewal
In last year’s report, I set out my priorities in
relation to the ongoing Board renewal process.
These were informed by valuable feedback from
shareholders. In line with these priorities, we
are very pleased that Mr. Rick Fearon and Mr.
Lamar McKay have joined your Board. Their
backgrounds, experiences and capabilities are
set out in the Governance section on pages
54 to 57. They will retire at the 2021 Annual
General Meeting (AGM) and, along with all
eligible Directors, are seeking to be re-elected
by shareholders.
Further information on CRH’s approach to Board
renewal, including with respect to diversity, is set
out in the Nomination & Corporate Governance
Committee Report to shareholders on page 64.
Ms. Heather Ann McSharry and Ms. Lucinda
Riches, who joined the Board in 2012 and 2015
respectively, are not seeking re-election at the
AGM. Heather Ann and Lucinda have shown
exceptional commitment and have made very
positive contributions to the Board and CRH. We
are grateful to each of them for their tremendous
service and stewardship throughout their tenure.
CRH's Finance Director, Senan Murphy, advised
the Board in September 2020 that he would
retire from the Board during 2021. Consequently,
he is not seeking re-election to the Board at the
AGM. He will remain as full time Finance Director
pending the appointment and transition to the
role of his successor, the process for which is
well advanced. Senan has been CRH's Finance
Director since 2016 and has played a pivotal role
in the evolution of CRH in that time. He has been
an exemplary colleague and we wish him well for
his future.
5
Shareholder Engagement
and Priorities for 2021
I have had the benefit of significant engagement
with shareholders since the announcement of
my appointment as Chairman, which has been
invaluable to me in understanding shareholders'
views and discussing progress against the
priorities for 2020 which I set out in the 2019
Annual Report. Amongst the priorities for 2021
will be:
• a continuing focus on safety, I&D, succession
planning for the Board and the senior
management team
• continuing to assess our strategy, business
model and ongoing business performance to
make sure that they are driving sustainable
growth and value creation
• monitoring the progress of our environmental
initiatives
• ensuring that shareholders' capital and the
cash that CRH generates from its activities is
appropriately allocated to maximise long-term
sustainable value for our stakeholders, thereby
providing good capital growth and cash
returns for our shareholders.
As your Chairman I will continue this proactive
engagement, so as to ensure that the Board
understands shareholders’ views on CRH’s
strategy and strategy implementation. In addition,
the Board’s SESR Committee, which I chair, will
also continue to actively work to understand the
views of other stakeholders, including CRH’s
employees, in order that the Board can take them
into account in its decision making.
Conclusion
This has been and remains a challenging
period for CRH. However, under the dedicated,
determined, highly professional and supportive
leadership of CRH’s Chief Executive, Albert
Manifold, his colleagues throughout CRH have
ably risen to this challenge and are successfully
navigating through it. Your Board and I very
much appreciate the effort and achievements
in 2020 of our people throughout CRH and are
very encouraged for the future by this emphatic
demonstration of their qualities and character.
Richie Boucher
Chairman
3 March 2021
1. TSR represents the total accumulated value delivered to shareholders (via gross dividends reinvested and share appreciation). Details of how non-GAAP measures are calculated are set out on
pages 213 to 217.
2020 Annual Report and Form 20-F 6
7
Our ambition to play a leadership role in
our industry’s transition to carbon neutrality
is underpinned by a strategy to grow and
improve our business in a sustainable and
responsible way.
6
Strategy Review
Why Invest in Us
Our Executive Leadership
Chief Executive’s Review
Market Backdrop
Our Strategy
Business Model
Measuring Performance
Sustainability
Risk and Resilience
7
8
9
10
12
14
16
18
20
26
Watershed, a seven storey, 72,000 square foot commercial office building in Seattle,
Washington uses 25% less energy than a code-compliant building. Self-tinting
electrochromic glass reduces solar heat gain and glare while maximizing thermal
comfort and maintaining views and daylighting. Oldcastle BuildingEnvelope® (OBE),
part of CRH’s Building Products Division, worked in close collaboration with the
design and install teams in Weber Thompson Architects and Mission Glass Glazier
on the building envelope which features OBE architectural curtain wall.
2020 Annual Report and Form 20-F Why Invest in CRH
Scale in attractive
markets
Proven track-record in
cash generation & returns
Our
reserves
30 Countries
Globally
CRH is the largest building materials
business in North America and Europe.
8
+52%
Operating Cash
Flow1 growth
since 2016
Strong financial discipline is a hallmark
of CRH. We have a proven, robust track
record in cash generation and returns.
22.3 billion tonnes
Reserves 2020
- Proven and Probable
CRH has an extensive network of quarry
locations in attractive local markets in North
America and Europe which is difficult for
others to replicate.
9
Unique acquisition
model
$7.8 bn
Development
Spend since
2016
Long-term growth
opportunity
+17%
Revenue
Growth
since 2016
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.
There is a natural demand for CRH
products driven by population and
economic growth and the need to
continually build and maintain the built
environment.
Continuous
improvement
350 bps
EBITDA (as defined)*
Margin Improvement
2016 to 2020
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.
Experienced leadership
& strong talent pipeline
Sustainable
business model
Balanced
portfolio
33%
2030 Target
For Females in
Senior Leadership
CRH’s world class leadership team has
a proven track record of performance
delivery, underpinned by ongoing talent
development and succession planning.
$9.8 bn
2020 Revenue
from Products
with Enhanced
Sustainability Attributes
36%
32%
32%
Infrastructure
Residential
Non-Residential
To create long-term value, we embed
sustainability principles in all areas of our
strategy and business model.
CRH’s product range enables us to service
infrastructure, residential and non-residential
demand for repair, maintenance and new
build construction projects.
Industry Leading Value & Returns +15.1%
Since formation in 1970 CRH has delivered an industry-leading
compound annual Total Shareholder Return (TSR) of 15.1% (2019: 15.6%).
€100 invested in CRH shares in 1970, with dividends reinvested,
would now be worth €118,000.
Total Shareholder Return
* 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. Operating cash flow refers to net cash inflows from operating activities as reported in the Consolidated Statement of Cash Flows on page 136.
Our Executive Leadership
8
Albert Manifold
Group Chief Executive
Senan Murphy
Group Finance Director
Gina Jardine
Chief Human Resources Officer
9
Randy Lake
Group Executive,
Strategic Operations
Keith Haas
Group Executive,
Commercial
David Dillon
President,
Global Strategy & Business Development
Dan Stover
President,
Americas Materials
Nathan Creech
President,
Building Products
Onne van der Weijde
President,
Europe Materials
Isabel Foley
Group General Counsel
Juan Pablo San Agustin
Chief Innovation &
Sustainability Officer
Jim Mintern
Executive-Vice President,
Chief of Staff to the Chief Executive
Executive Biographies are included on page 255.
2020 Annual Report and Form 20-F Chief Executive’s Review1
10
The unprecedented,
challenging backdrop
of 2020 brought out
the best in CRH, as
we worked together
to keep our people
safe, deliver for our
customers, create
value and maintain
performance
excellence.”
Albert Manifold
Chief Executive
For 50 years CRH has gone
from strength to strength to
become the global leader it is
today. We have consistently
grown and improved our
business, maintained our focus
on value creation, and endured
through challenge and change
whenever we faced it.
The unprecedented, challenging backdrop
of 2020 brought out the best in CRH as we
worked together to keep our people safe, deliver
for our customers, create value and maintain
performance excellence.
COVID-19
As Chief Executive I am grateful for and proud
of the extraordinary dedication and resilience of
our employees who worked diligently throughout
the pandemic to observe public health protocols
and keep each other safe while going about their
work. Where permitted to do so we were able to
keep our operations open and maintain essential
supply needed to keep important parts of society
functioning.
We also played our part in the communities in
which we operate by donating much needed
personal protective equipment (PPE) and other
essential supplies to local hospitals and health
services.
In doing so we maintained our strategic focus on
improving performance, growing our business and
creating value. This has enabled CRH to emerge
from the crisis stronger and more resilient than
ever before.
Evolving our Business
CRH has been significantly re-shaped and
repositioned in recent years. We have become a
narrower, deeper and more integrated business,
leveraging our scale in the attractive and growing
markets of Europe and North America.
We have continued to evolve, adapting our
business model to address the changing needs
of our customers and the growing demand for
integrated building solutions to reduce the impact
of construction on our world.
We have also structurally improved our business;
through our relentless focus on continuous
business improvement, we have delivered
significantly higher levels of profitability, cash
generation and returns.
Performance Highlights
We acted swiftly in response to the COVID-19
crisis, taking decisive action to control
costs, improve operational efficiencies and
conserve cash amid lower activity levels.
Against this backdrop we saw sales decrease by
2% to $27.6 billion (2019: $28.1 billion) reflecting
lower volumes in our materials businesses in
certain European and North American markets
as public health restrictions resulted in reduced
construction activity. This was partially offset by
increased sales in our Building Products Division
driven by a strong residential sector in the United
States (US), particularly in Repair, Maintenance
and Improvement (RMI) activity.
Our ability to flex our cost base and deliver
improved organic2 profitability, EBITDA (as
defined)* margins and cash generation in a rapidly
evolving environment demonstrates the strength
and resilience of our business. With a strong focus
on cost rationalisation to mitigate the financial
impacts of the pandemic, EBITDA (as defined)* of
$4.6 billion (2019: $4.5 billion) was ahead despite
$122 million of one-off costs primarily due to
COVID-19 related restructuring items.
On a like-for-like2 basis Group EBITDA (as
defined)* was 5% ahead of 2019, while EBITDA
(as defined)* margin of 16.8% (2019: 15.9%)
increased by 90 basis points.
* 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 101.
2. Details of how non-GAAP measures are calculated are set out on pages 213 to 217.
11
10
11
Net debt1 of $5.9 billion at year end was $1.6 billion
lower than the prior year (2019: $7.5 billion)
reflecting strong operating cashflow and robust
financial discipline. The Group’s Net Debt/EBITDA
(as defined)*1 was 1.3x (2019: 1.7x) at year end.
In light of the uncertainty regarding the severity
and duration of the pandemic, the Group took
the prudent and precautionary decision to draw
down its €3.5 billion revolving credit facility in April
2020 to further strengthen its liquidity position. The
drawdowns were fully repaid in the second half of
the year and the revolving credit facility remains
available for re-use.
Profit after tax was $1.2 billion (2019: $1.6 billion)
primarily reflecting the impact of non-cash
impairment charges of $0.8 billion (2019: $8 million)
and the related tax impact. Excluding these charges
profit after tax of $2.0 billion was 18% ahead of
2019 (2019: $1.7 billion).
Our ongoing focus on continuous business
improvement resulted in a further increase in
returns. Return on Net Assets (RONA)2 for the year
was 10.1% (2019: 10.0%).
Earnings per share (EPS) for the year was 142.9c
(2019: 203.0c). Excluding the non-cash impairment
charges and the related tax impact, EPS was
243.3c, 19% higher than prior year (2019: 203.8c).
Operational Highlights
In Americas Materials solid price progression, good
cost control and lower energy costs resulted in
EBITDA (as defined)* of $2.4 billion (2019: $2.2
billion) up 10% on a like-for-like basis, despite lower
sales of $11.3 billion (2019: $11.6 billion).
In Europe Materials, EBITDA (as defined)*
of $1.1 billion (2019: $1.2 billion) on sales of
$9.1 billion (2019: $9.5 billion) was 7% behind on a
like-for-like basis primarily reflecting the significant
impact of COVID-19 restrictions across our
Western European markets.
Strong operating leverage on increased sales in
Building Products, reflected good commercial
discipline, cost rationalisation and ongoing profit
improvement initiatives. The Division reported sales
of $7.2 billion (2019: $7.0 billion) with EBITDA (as
defined)* of $1.2 billion (2019: $1.1 billion) 8%
ahead of 2019 on a like-for-like basis.
Portfolio Management and
Capital Allocation
Despite the disruption of the COVID-19 pandemic
the Group invested $0.4 billion (2019: $0.7
billion) on 17 bolt-on acquisitions in 2020. These
businesses will be integrated with existing
operations to further expand our ability to deliver
for customers in key construction markets.
Total proceeds from business divestments
and asset disposals was $0.3 billion
(2019: $2.3 billion). In October CRH reached an
agreement to divest its cement business in Brazil
for a total consideration of $0.2 billion.
Sustainability
Sustainability is a strategic imperative for our
business. As global efforts to address the
challenge of climate change increase, we are
evolving our business to take advantage of the
many opportunities presented by a rise in demand
for more sustainable forms of construction.
CRH is already a global leader in sustainable
building materials and a significant contributor
to the circular economy. We have set ambitious
targets for the Group to 2030 (see page 21)
as we aim to ensure a long-term sustainable
future for our business and a positive impact on
the world around us. We are also leading our
industry's response to the challenge of climate
change through the Global Cement and Concrete
Association's (GCCA) ‘2050 Climate Ambition’
which aspires to deliver society with carbon
neutral concrete by 2050.
In 2020, CRH became a supporter of the
Financial Stability Board’s ‘Task Force on
Climate-Related Financial Disclosures’ (TCFD),
underlining our commitment to transparency on
the financial aspects of climate change risks and
opportunities. I am also particularly pleased with
the appointment of our first Chief Innovation and
Sustainability Officer, an executive leadership
role that will help CRH to drive value creation
through the development of sustainable products,
processes and building solutions.
Safety Focus
Throughout 2020 we continued our relentless
focus on safety and ensuring that despite the
pandemic, where safe and lawful to do so, our
employees could continue to come to work,
perform their duties in a safe environment and
return home safely to their families each day.
The new reality of COVID-19 presented significant
additional challenges for our health and safety
teams, requiring additional procedures, protocols
and training to be put in place to help keep our
employees, contractors and customers safe.
While doing so we continued our focus on
ensuring our sites remained free from accidents
and I am pleased to report that in 2020, 94% of
our locations were accident-free. Regrettably and
despite our best efforts there were three fatalities
on our sites during the year. We will continue our
determined approach to ensuring we achieve our
target of zero harm at all of our operations.
Inclusion & Diversity
As Chief Executive of a global business with
operations in 30 countries around the world it
is important for me that our businesses reflect
and represent the communities we operate in.
Companies which embrace diversity as a positive
force in their business do better. They are more
creative, innovative and attract more top talent. I
want to ensure that CRH is doing everything it can
to become a truly inclusive and diverse place to
work and for that reason in 2020 I took on the role
of Chair of our Inclusion & Diversity (I&D) Council,
setting our strategic approach and overseeing our
work programme in the areas of communication,
education, people practices, data and measures.
CRH has a strong track record in meeting
ambitious targets. We have already improved
gender diversity at Board level in recent years
and I am confident that we will make significant
progress in both Inclusion and Diversity over the
coming decade to 2030.
Outlook
Although the near-term outlook for economic and
construction activity across our markets remains
uncertain, market recovery is expected to continue
across North America and Europe as the health
situation improves. Our Americas Materials Division
benefits from strong market positions and a
positive demand backdrop for the infrastructure
and residential sectors. Although the outlook
for non-residential activity remains mixed our
Building Products Division is expected to benefit
from positive residential demand. In our Europe
Materials Division, we have significant exposure to
growing economies in Eastern Europe and strong,
stable markets in Western Europe. Overall, with
the strength of our balance sheet and our unique
portfolio of businesses, we are well positioned
to capitalise on the growth opportunities that lie
ahead. We remain committed to the execution of
our long-term growth strategy and the delivery of
further margin expansion, superior cash generation
and enhanced returns for shareholders.
Albert Manifold
Chief Executive
3 March 2021
* 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 Debt and Net Debt/EBITDA (as defined)* are non-GAAP measures as defined on page 215. The GAAP figures that are most directly comparable to the components of Net Debt/EBITDA (as defined)*
include: interest-bearing loans and borrowings: (2020: $12,215 million; 2019: $15,827 million) and profit after tax (2020: $1,165 million; 2019: $1,647 million).
2. RONA is a non-GAAP measure as defined on page 214. The GAAP figures that are most directly comparable to the components of RONA include: Group operating profit (2020: $2,263 million; 2019:
$2,793 million), impairment of property, plant and equipment and intangible assets (2020: $673 million; 2019: $8 million) and total assets and total liabilities (2020: $44,944 million and $24,596 million
respectively; 2019: $47,612 and $27,977 million respectively).
2020 Annual Report and Form 20-F Market Backdrop
Population and economic growth along with the need to continually build and maintain the built
environment are among the fundamentals driving demand for CRH’s materials and products.
Building materials help to shape the world around
us and are essential for human habitation right
around the world.
As the leading building materials business in the
world CRH manufactures and supplies materials,
products and innovative solutions that meet the
needs of a broad range of customers across the
built environment in construction markets globally.
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Our products can be found in a wide range
of construction projects from major public
infrastructure to commercial buildings and
residential structures.
Balancing our portfolio on the basis of geography,
sector and end-use exposure helps to insulate our
business from the impact of cyclical fluctuations in
any one of our markets.
Demand for CRH’s products and solutions is
typically underpinned by three primary demand
fundamentals: population growth, economic
development and the need to continually repair and
maintain the built environment.
68%
Global population will live
in urban areas by 2050
(12% increase on 2020)
Demand Fundamentals
Population Growth
The world's population is projected to grow by c. two billion people by 2050, with
urban areas expected to account for the majority of this increase. By 2050 68%
of the world's population will live in urban environments, an increase of 12% on
todays numbers.
Our materials and products play in an important role in shaping 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 Development
Construction-related spending currently accounts for c.13% of global
GDP. 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 & 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.
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12
Market Development
CRH focuses on markets where these fundamental
demand drivers are present and can be expected
to persist in the medium to long-term. Where
appropriate, CRH operates a vertically integrated
business model. This in turn broadens our ability to
complement organic growth by identifying suitable
businesses which can be acquired and integrated
into CRH through bolt-on acquisitions. We acquire
established businesses with a proven track record
of performance and a capacity to hold strong
leadership positions in local markets.
The extensive footprint of our materials
businesses in Europe and North America sees
us well positioned to capitalise on value creating
opportunities for market consolidation and
expansion of existing operations.
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 a population that
grows by 25 million people every decade, driving
associated construction growth. The market for
materials remains largely unconsolidated. For
example the top ten aggregates businesses
account for less than one third of production.
In recent years we have reshaped and redirected
our businesses in the US to increase CRH’s
exposure to positive demand fundamentals in the
southern and western areas of the country.
Europe
CRH is a leading building materials business in
Europe where the European Union (EU) is the
largest economic bloc in the world.
In Europe, there is an attractive mix of stable
developed markets which continue to deliver
along with less developed higher growth markets
which offer opportunities for organic growth and
acquisition activity.
Other Markets
Our Building Products Division produces high-value
added, highly engineered products some of which
can be economically transported longer-distances,
opening up important export markets for CRH
beyond our core geographic footprint.
Ongoing innovation and product development
ensures that we meet the needs of customers
today and also address the longer-term
opportunities presented by economic
development, changing demographics and
investments in a sustainable future.
Future Trends: Growth in Sustainable Products
13
An asphalt plant at Alvarado, Texas. CRH is the largest producer of asphalt in North America. As a 100% recyclable
product it helps to make CRH a significant contributor to the circular economy.
As the leading global building materials
business CRH closely 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.
Growing demand for more sustainable
forms of construction is an area of particular
focus for CRH. Our businesses have a
long history of producing high-performing,
climate-friendly materials and products
which play an important role in shaping a
more sustainable built environment.
Today our businesses are at the forefront
of a changing construction market
globally where demand for sustainable
products and solutions continues to
grow and evolve. This evolving demand
environment is driven by trends including
climate change, urbanisation, demographic
and environmental consciousness and
underpinned by policy commitments made
by countries under international agreements
and targets including the EU’s European
Green Deal, the Paris Climate Agreement
and the United Nations (UN) Sustainable
Development Goals (SDGs).
These factors are helping to shape the
future of our market and our business. CRH
is acutely aware of the potential presented
by these developments and the associated
opportunities to grow our business and
capitalise on potential new value creation
opportunities for our shareholders.
In response to this CRH is working closely
with its customers to better understand
existing, evolving and emerging demand
for sustainable solutions. This includes
an ongoing focus on product innovation
and development, working with specialist
end-users to develop environmentally
superior design-solutions and practices.
In 2020, products with enhanced
sustainability attributes accounted for 46%
of product revenue. These are products
which incorporate recycled materials,
use alternative fuel or energy sources in
production, have sustainability end-uses,
or a lower-carbon footprint. We have set
a target of generating 50% of all product
revenue from products with enhanced
sustainability attributes by 2025.
Closely aligning product development
and specifications with evolving policy
and environmental standards helps to
create points of differentiation for CRH. An
increasing number of our products are also
helping customers achieve higher scores
in green building rating schemes such as
BREEAM®, DGNB, and LEED®. In 2020
25% of our relevant product revenue is
from products that can be used in certified
sustainable building schemes.
2020 Annual Report and Form 20-F Our Strategy
Maximising long-term value and delivering superior returns
CRH is the leading building
materials business in the
world. Our focus is on creating
long-term value and delivering
superior returns for all our
stakeholders.
14
Our strategy is to continue to grow and improve
our business in a sustainable and responsible
way. We do this through a relentless focus on
performance improvement, focused growth and
long-term value creation for the benefit of our
shareholders and for society.
The successful implementation of our strategy is
directed by four strategic objectives, which drive
our ability to generate superior margins, returns
and cash on a continuous basis.
15
1
2
3
4
Our Four Strategic Pillars
Continuous Improvement
We are continuously improving our business through a broad range of
operational, commercial and financial excellence initiatives that allow us to
maximise long-term value and deliver superior returns.
Focused Growth
We optimise the shape of our business through a disciplined and focused
approach to capital allocation which helps us to minimise risk while driving
maximum long-term value for our shareholders and stakeholders.
Benefits of Scale and Integration
In developing our business we seek to achieve market leadership positions which
allow us to integrate operations and drive value through harnessing the benefits
of scale and integration.
Developing Future Leaders
An ongoing focus on identifying and developing the next generation of
performance orientated, innovative and entrepreneurial leaders is central to the
delivery of our strategy.
14
15
Strategy in Action 2020
Future Focus
Our Strategic Focus on Sustainability
We believe that a sustainable business is one that can successfully deliver its strategy over the long
term, which is why the principles of discipline, responsible operations and innovation are core to our
strategic approach. In 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 accordance with these principles thereby
mitigating potential risks.
• Through a range of commercial excellence initiatives our Europe Materials
Division delivered c. $42 million of benefits in 2020 through the use of new
digital tools, assessment processes, training and planning related initiatives
aimed at improving commercial performance.
• The appointment of a new Chief Innovation and Sustainability Officer in
2020 is helping CRH to drive future value creation through the development
of sustainable products, processes and building solutions.
• Continuing to optimise our portfolio through divestments and asset
disposals including reaching an agreement to divest our Brazil cement
business for consideration of $0.2 billion.
• Further enhancement of our portfolio of high-quality assets in attractive
markets through the addition of 17 bolt-on acquisitions for a total spend
of $0.4 billion (2019: $0.7 billion).
• Through a number of capital expenditure initiatives we invested a total
of $1.0 billion (2019: $1.4 billion) to continue to support growth in our
business in 2020.
•
In 2020 CRH brought its Construction Accessories businesses together
globally under one new brand 'Leviat' to allow them to benefit from the
synergies that come from being part of an integrated, global construction
accessories company, including collaboration on sales, marketing and
product development.
• CRH's 'Innovation Centre for Sustainable Construction' helps our cement
and concrete businesses around the world to benefit from a centralised
hub for research into technologies that will help improve the sustainability
performance of our products in the future.
• We will continue to rigorously
monitor and measure performance
across our businesses while
implementing our detailed plans to
make our businesses better through
incremental improvement initiatives
to structurally improve our margins,
cash and returns year-after-year.
• We will continue to adjust our asset
base, allocating and reallocating
capital to higher growth areas with
more sustainable returns.
•
Investing in our existing businesses to
build capacity and improve efficiency.
• Monitor evolving market trends and
developments to ensure CRH is
positioned for long term sustainable
growth.
• Continue to take a group-wide
view of our business, leveraging
our core strengths and collective
capabilities in operating integrated
and value-adding businesses to
which we can apply a centrally
coordinated focus on improving
efficiency, productivity and cost
saving measures.
•
In 2020 we deployed a new Frontline Leadership Program (FLP) in the United
States, Ireland, Germany, Slovakia and the Ukraine. The programme aims to
build fundamental leadership capabilities into the operations of our business.
Over 220 CRH managers were upskilled as Global FLP facilitators.
• We piloted a new remote development offering aimed at building soft-skill
capabilities for teams across Europe.
• As part of our ongoing focus on building a more inclusive and diverse
business, over 837 leaders received I&D education and awareness training
across our global business.
• Further roll-out of the global FLP
across the US and mainland Europe
with extensive design, train-the-trainer
and translation investments made to
support further delivery.
• Diversify further training and learning
capability into remote live sessions
and digital eLearning to facilitate
scalable learning for all.
2020 Annual Report and Form 20-F Business Model
How we maximise value and deliver superior returns
CRH’s vertically integrated business model benefits from the efficient allocation of capital and
continuous business improvements across the Group.
Our Resources
Our Strategy
How We Create Value
16
17
1. Continuous Improvement
2. Focused Growth
3. Benefits of Scale
and Integration
4. Developing Future
Leaders
Continuous
Improvement
We continually focus on building
better businesses through
operational and commercial
excellence initiatives designed
to maximise performance.
Balanced
Portfolio
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.
$25.6bn
Capital and Net Debt1
22.3bn
Tonnes Reserves
$5.8bn
Raw Materials Spend1
c.77,100
Employees
Intellectual
Property
Business
Systems
Why it Matters
Benefits to CRH
Financial Strength
To support resilience,
flexibility and optionality
Lower Capital Costs
Supports our ability to fund
value-creating investments
Investment
To drive continuous improvement
and optimise returns
Shareholder Returns
Through dividends, share buybacks
and share price appreciation
1. Capital and Net Debt of $25.6 billion (2019: $26.6 billion) and raw materials spend of $5.8 billion (2019: $5.8 billion) as outlined in notes 24 and 4 to the Consolidated Financial Statements,
respectively on pages 182 and 152. Net Debt is a non-GAAP measures as defined on page 215.
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17
Value Created in 2020
Dynamic Capital
Management
We 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.
Proven
Acquisition Model
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.
Disciplined Financial
Management
Our financial strength allows
us to benefit from a lower cost
of capital.
Risk
Mitigation
CRH 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.
Benefits of Scale
and Integration
CRH’s global scale and integrated
business model allow us to harness
cost savings and synergies across
our Group.
Central Coordination/
Local Delivery
Our relentless focus on performance
is strategically coordinated and
driven from the centre and delivered
locally by our operating businesses.
$4.6bn
EBITDA (as defined)*
2019: $4.5 billion
$1.2bn
Profit After Tax
2019: $1.6 billion
$3.9bn
Operating Cash Flow
2019: $3.9bn
10.1%
RONA
2019: 10.0%
$0.6bn
Taxes Paid
2019: $0.4bn
tonnes
CO2 Emissions Prevented
2019: 1.6 million tonnes
Benefits to Society
Customer Solutions
Sustainable products that meet
the needs of our customers
Job Creation
Responsible employer in
local communities
Partner to Suppliers
Resilient and reliable business partner
Taxation Contribution
Taxes paid to Governments
* 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.
2020 Annual Report and Form 20-F Measuring Performance
CRH 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.
Sustainability Performance
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. 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:
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Safety
% Zero-Accident Locations
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 leveraged our strong
culture of safety to ensure
we quickly adapted to
new ways of working to
mitigate against the risk of
COVID-19. We continued to
achieve a high level (94%)
of zero accident locations.
Our focus for 2021
Continued focus on
supervision, contractor
management, energy
safety and consequence
management, with the overall
aim of realising a culture of
safety and wellness while
working towards zero harm.
94%
Environment
Greenhouse Gas Emissions1 Scope 1 and Scope 2 CO2 Emissions (kg/$ Revenue)
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.
1.3kg/$
Revenue
How did we do?
We continued to focus on
lowering the carbon footprint of
our operations and products. Our
kg CO2/$ increased slightly in
2020 despite total CO2 emissions
decreasing. We met our 2020 CO2
reduction commitment in 2019
and 2020 specific emissions were
573 kg CO2/tonne cementitious
product (2019: 590 kg).
Our focus for 2021
As we work towards achieving
carbon neutrality along the
cement and concrete value
chain by 2050, we continue to
focus on our 2030 target of a
33% reduction in specific net
CO2 emissions to 520kg CO2/
tonne cementitious product,
compared with 1990 levels.
People
% Females in Senior Management2
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.
How did we do?
The percentage of females
in senior management
increased in 2020 and as at
31 December 2020, 42%
of the Directors of CRH plc
were female.
Our focus for 2021
We continue to focus on
increasing the share of females
in senior management as we
work towards our 2030 target
for 33% females in senior
leadership.
13%
94%
94%
94%
1.3kg/$
1.2kg/$
1.2kg/$
13%
11%
10%
2020
2019
2018
2020
2019
2018
2020
2019
2018
1. CO2 emissions subject to final verification under the European Union Emissions Trading Scheme (EU ETS). CO2 emissions data includes Scope 1 2020: 32.4m tonnes (2019: 33.9m tonnes,
2018: 35.4m tonnes,) and Scope 2 2020: 2.6m tonnes (2019: 2.6m tonnes, 2018: 2.7m tonnes) emissions. Scope 1 and Scope 2 emissions are as defined by the World Resources Institute
Greenhouse Gas Protocol.
2. Please refer to page 23 for further information on inclusion and diversity, including additional indicators.
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18
Financial Performance
As 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:
Value Creation
Return on Net Assets (RONA)
What do we measure?
RONA is a measure of
pre-tax and pre-impairment
returns through excellence in
operational performance.
How did we do?
RONA at 10.1% in 2020
reflected continued
enhancement of operating
efficiencies and improved
profit margins despite a
challenging backdrop.
Our focus for 2021
Improving RONA through
effective margin management,
continued enhancement
of operating efficiencies
and tight working capital
management.
10.1%
Financial Discipline EBITDA (as defined)* Net Interest Cover1
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.
11.9x
How did we do?
EBITDA (as defined)* Net Interest
Cover was 11.9x in 2020 due to
lower finance income, despite
similar finance costs and higher
EBITDA (as defined)*. Net Debt/
EBITDA (as defined)* was 1.3x
a marked improvement on 2019
(2019: 1.7x) reflecting robust
financial discipline.
Our focus for 2021
Maintain financial discipline
to ensure Net Interest Cover
remains strong. We remain
committed to maintaining
our investment-grade credit
ratings.
Cash Generation Operating Cash Flow (OCF)2
10.1%
10.0%
9.9%
11.9x
12.3x
10.6x
What do we measure?
A measure of cash flows
generated to fund organic and
acquisitive growth, dividends to
shareholders, share buybacks
and debt repayment.
How did we do?
OCF was slightly ahead
(+1%) in 2020 due to strong
cash generation, prudent
management of working capital
and other cash flows.
Our focus for 2021
Continued focus on prudent
management of working
capital and other cash flows to
maintain strong operating cash
flows in 2021.
$3.9bn
$3.9bn
$3.9bn
19
2020
2019
2018
2020
2019
2018
2020
2019
2018
$2.2bn
Shareholder Returns Cash Paid to Shareholders
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.
How did we do?
Our share buyback programme
returned a further $0.2 billion
to shareholders in addition to
dividends of $0.7 billion paid
during the year. Since formation
in 1970, CRH has delivered
a compound annual total
shareholder return of 15.1%
(2019: 15.6%).
$0.9bn
Our focus for 2021
We will continue our focus on
improving performance, growing
our business and creating value.
A final dividend of 93.0c was
recommended by the Board,
a 25% increase on 2019’s
full year dividend.
$0.9bn
$ 0.2bn
$1.6bn
$0.9bn
$1.5bn
$0.9bn
2020
$0.7bn
2019
$0.7bn
2018
$0.6bn
Shares Re-purchased
Dividends Paid
* 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 215. The GAAP figures that are most directly comparable to the components of EBITDA (as defined)*
Net Interest Cover include: profit after tax: $1,165 million (2019: $1,647 million), finance costs: $389 million (2019: $387 million) and finance income: $nil million (2019: $22 million). Details of how non-GAAP
measures are calculated are set out on pages 213 to 217.
2. Operating cash flow refers to net cash inflow from operating activities as reported in the Consolidated Statement of Cash Flows on page 136.
2020 Annual Report and Form 20-F Sustainability
Delivering long-term value for the environment and society
We believe that our commitment to sustainability will help ensure that CRH continues to prosper and grow
in the years ahead. In driving continuous improvement across all areas of sustainability, we aim to create
financial and non-financial value for all stakeholders and to have a positive impact on the world around us.
20
Focusing on Long-Term
Sustainability
Managing our Sustainability
Performance
At CRH, we strive to use our leadership position
as the world's leading building materials
business to help advance the global sustainability
agenda. By developing value-added products
and services for sustainable building solutions,
we contribute positively to society, address
potentially negative impacts and achieve the
greatest value for our stakeholders.
Driving our Sustainability Agenda
Operating in a sustainable manner is
fundamental to our business and sustainability
principles are fully embedded in our business
strategy. We leverage our global knowledge and
scale to establish best practices and common
processes worldwide, in order to operate more
effectively and create sustainable value.
We continue to develop our products and
components to improve the life-cycle performance
of buildings, provide innovative solutions for our
customers and drive more sustainable outcomes
in the built environment. We are a global leader in
concrete, the world’s most sustainable building
material when evaluated on a lifecycle basis.
In addition to being essential for modern living,
concrete offers opportunities for permanent
storage of carbon and we are working to further
develop the ability of concrete to become a
solution to the climate challenge.
Our actions are intended to contribute to the
delivery of key initiatives, such as the UN SDGs
and the Paris Agreement. We are a member
of the World Business Council for Sustainable
Development (WBCSD) and GCCA. Many of our
operating companies have achieved awards for
excellence in sustainability. CRH is a leader in our
sector, as determined by the major Environmental,
Social and Governance (ESG) rating agencies.
We are a constituent member of indices including
the MSCI Leaders ESG Indexes, 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).
Sustainability is a matter of high importance for
our Board and management. We regularly review
our non-financial policies and take a collaborative
and strategic approach in responding to
global trends in ESG areas including climate
change, resource scarcity, biodiversity impacts,
demographic changes and technological
advancements. Risks related to sustainability are
recognised in our Enterprise Risk Management
(ERM) Framework, described on pages 26 and
27, and details of sustainability risks are included
on pages 108 and 109. Our non-financial due
diligence processes are well established and we
made no material changes to these in 2020.
We continually advance our commitment to
sustainability 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, the outcomes of which
inform our strategy and reporting.
Ensuring Transparency
We are committed to reporting on the breadth of
our sustainability performance in key sustainability
areas. We publish an annual independently
assured Sustainability Report, which is prepared
in line with the Global Reporting Initiative
(GRI) standards. In addition, the Sustainability
Accounting Standards Board (SASB)
Standards will be used in the preparation of the
independently-assured CRH 2020 Sustainability
Report. This includes additional information
on social and employee matters. The 2020
Sustainability Report will be published in March
2021 on www.crh.com.
We are a supporter of the Financial Stability
Board’s ‘Task Force on Climate-related Financial
Disclosures’ (TCFD). This means that we are
committed to being transparent on the financial
aspects of climate change risks and opportunities
from the transition to a low-carbon economy.
Further information on risks relating to climate
change and our approach to TCFD is included
on page 27. As best practice evolves, we will
continue to develop our own disclosure practices.
Our Six Sustainability
Priority Areas:
Safety
Environment
People
Products
Collaboration
Integrity
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 business, can
have the most impact and influence.
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20
CRH 2030 ambitions and targets
2030 Ambitions
CRH targets
Our progress
Our ambition is to have a
culture of safety and wellness
working towards zero harm
Zero
fatalities, in any year
We continue to drive our ambition of zero harm
through embedding a culture of safety and
wellbeing across all operations
Safety
Our ambition is to play our part
in addressing climate change as
we strive for carbon neutrality
along the cement and concrete
value chain by 2050
33%
reduction to <520kg net CO2/tonne
cementitious product by 2030
Environment
We continue to invest in people, innovation
and partnerships to progress our climate
commitments and increase awareness around
sustainability to further drive climate action
21
Our ambition is to be a
business where everyone
has the same opportunity to
develop and progress
People
33%
female senior leadership by 2030
We continue to roll out training across CRH
on inclusive leadership behaviours, as well as
develop people practice guidelines in order to
improve inclusion and diversity in our workforce
Our ambition is to deliver
innovative products and
sustainable solutions to drive
progress towards a resilient, net
zero built environment
50%
revenue from products with enhanced
sustainability attributes by 2025
Products
We continue to focus on innovation, research
and development and collaboration across
the construction value chain, to ensure our
products deliver sustainable building solutions
and contribute to a net zero built environment
A production team member at Oldcastle Infrastructure, Cape Coral, Florida which is part of CRH’s Building Products Division. All CRH employees are treated with integrity and fairness as part
of our culture of acceptance, trust, respect and teamwork and our efforts to promote a creative and thriving environment in the workplace. Inclusion and diversity is key to achieving this, by
creating a pipeline of strong talent representing a broad range of ethnicities, backgrounds and experiences to build a better CRH.
2020 Annual Report and Form 20-F
What we focus on
What we do to deliver value
Value delivered
Safety
22
Environment
Leading with our commitment to safety
• COVID-19 has reinforced our commitment to the health
and safety of our people and all those who interact with
our operations and products.
• We embed a culture of health and safety throughout
CRH as a pre-requisite to addressing risks and
eliminating accidents.
• Our Health and Safety Policy and Life Saving Rules
are the cornerstone of our safety strategy and applied
across all our locations.
• Our global network of safety officers work closely with
our businesses in implementing policy and practice.
• Our health and wellbeing programmes provide tools,
social support and strategies on physical and mental
health.
Targeting zero harm
• Achieving our ambition of zero harm is an ongoing
challenge. We deeply regret to report that one employee
and two contractor fatalities occurred in 2020. We extend
our sincere sympathies to their families.
• We independently investigate all fatalities and share the
lessons learned as we focus on our zero fatality target.
Implementing environmental management systems
• For decades we have worked with stakeholders to
manage environmental risks, drive improvements in
performance and promote emissions reduction and
resource efficiency.
• We apply our Environmental Policy across all operating
companies.
Strengthening environmental stewardship
• We promote responsible waste management and use of
water, energy, land and other resources.
• We actively manage biodiversity at over 500 locations,
striving to enhance natural habitats.
Committing to carbon reduction
• As we strive for carbon neutrality along the cement
and concrete value chain by 2050, we continue to
work collaboratively with stakeholders in developing
technologies, strategies and policies.
• We have committed to a target of <520kg CO2 per
tonne of cementitious product by 2030. Our 2030 CO2
emissions reduction target is a science-based target
(SBT) at a 2˚ scenario that has been independently
verified using Science Based Targets initiative (SBTi)
methodologies to be in line with the Paris Agreement
objectives.
• Our plan to deliver our 2030 target includes increasing
the use of alternative raw materials to reduce the carbon
intensity and quantity of clinker in cement, together with
replacing carbon-intensive fossil fuels with biomass and
alternative fuels, as well as further improving operational
eco-efficiency.
8%
reduction in accident
frequency rate over the
last decade*
$260 million
invested in safety
initiatives in the past
5 years
94%
CRH locations accident
free in 2020 (2019: 94%)
573kg CO2
per tonne of cementitious
product; targeting <520kg
CO2 per tonne cementitious
product by 2030
2.1m tonnes
of alternative fuels used in
2020 (2019: 2.2m tonnes)
34.4m tonnes
of alternative materials used
in 2020 (2019: 35.3m tonnes)
100%
of our locations have
restoration plans in place
(2019: 99%)
34%
of fuel requirements
for cement plants were
provided by alternative
fuels (2019: 33%)
* Accident frequency rate is the number of accidents per million work-hours
23
22
What we focus on
What we do to deliver value
Value delivered
People
Products
Advancing our inclusion and diversity programme
• We strive to create a collaborative environment and
culture of shared ideas, recognising that people are
critical to sustaining competitive advantage and
long-term success.
• We have a pragmatic programme aimed at developing
a more inclusive organisation. Our Global I&D Council,
chaired by our Chief Executive, is responsible for driving
the strategy and accountability on I&D across CRH.
Connecting with our employees
• We apply our Social Policy across all our businesses.
• Our employee engagement processes help us
to understand our employees' needs. We collect
information on levels of engagement and findings are
actioned by management.
• We focus on training to enable employees to acquire
the attributes necessary to support performance,
growth and success.
• We leverage various avenues at regional, company and
global level to communicate with employees.
• Throughout the COVID-19 pandemic, CRH has ensured
regular internal communication across the business on
regulatory updates, workplace changes and health and
wellbeing.
Developing sustainable solutions for customers
• We work with our customers in the design, delivery
and application of sustainable products through
construction, building materials and technical support.
• We offer multiple products and building solutions with
enhanced sustainability attributes.
• Many of our products can help customers achieve
higher scores in green building rating schemes such
as BREEAM®, DGNB, and LEED®
Innovating for carbon efficiency
• Concrete has the ability to become a CO2 solution.
• We are collaborating across the construction value
chain and the wider scientific community to provide
lower-carbon products and structures.
• We are involved in the research and development of
technologies to progress carbon capture, utilisation and
storage (CCUS) solutions and promote the long-term
benefits of concrete for the circular economy.
Promoting a circular economy
• By considering the full life-cycle of our products and
innovating to drive more sustainable outcomes in the
built environment, we aim to meet customer demands
and have a positive impact on wider society and the
environment.
• We aim to develop sustainable building materials to
improve resource efficiency, minimise construction
waste and contribute to the circular economy.
16%
female senior leadership
(2019: 15%); targeting
33% by 2030
14%
of employees were female
in 2020 (2019: 14%)
13%
of senior management
were female (2019: 11%)
23
45%
of clerical and
administrative staff were
female (2019: 45%)
7%
of operational staff were
female (2019: 7%)
46%
product revenue from
products with enhanced
sustainability attributes*
(2019: 44%); targeting
50% by 2025
25%
of revenue from products
used in structures certified
to sustainability standards**
(2019: 24%)
>100 million
tonnes
of recycled asphalt paving
will be used over the next
10 years
1/5th
of our raw materials
requirements for our US
asphalt business are met by
recycled asphalt pavement
(RAP) and shingles
* Products with enhanced sustainability attributes are defined as products that incorporate recycled materials or use alternative energy/fuel sources; products that have sustainability end-uses;
products that have environmental benefits in production – lower carbon footprint than alternatives.
** Products that can be used in structures certified to sustainability standards are defined as products that can be used in structures certified to BREEAM®, Green Globes®, LEED®, IC-700, etc.
2020 Annual Report and Form 20-F What we focus on
What we do to deliver value
Value delivered
Collaboration
24
Integrity
c. 800
stakeholder engagement
events hosted by Group
companies in 2020 (2019:
c. 1,000)
$
$
$
$8.3 million
donated to local
organisations and initiatives
in 2020 (2019: $7.4m)
c. 32,100
employees completed
CoBC training in 2020
(2019: 34,600)
c. 9,000
employees completed
ACT training in 2020
(2019: 9,800)
Growing our stakeholder engagement
• We maintain positive relationships with our stakeholders
through ongoing engagement and consultation.
• Our stakeholders include investors, customers, employees,
suppliers, NGOs, communities, assessment organisations,
advocacy groups and other interested parties.
• We engage and align suppliers with our core values,
driving improvement actions at the point where we have
most influence.
Creating value for communities
• Our policy is to be a good neighbour and we contribute
to local communities through employment, educational
development and supporting local businesses.
• Areas we made donations to in 2020 include community
relations and development, environment and conservation,
education and employment, health and wellness, arts and
culture and provision of shelter.
Further strengthening our human rights approach
• Respect for human rights is ingrained within our culture,
and we apply the UN Guiding Principles on Business and
Human Rights in our approach
• We support the principles of the UN’s Universal
Declaration of Human Rights and the International Labour
Organisation’s Core Labour Principles. We publish
our ‘Commitment to Human Rights’ Modern Slavery
Statement annually, available on www.crh.com.
Leading with integrity
• We are committed to meeting the highest standards of
business conduct.
• A“Speak-up” culture encourages employees, customers,
suppliers and other stakeholders to raise good faith
concerns.
Upholding good business conduct
• All employees are covered by our Code of Business
Conduct (CoBC).
• Our Anti-Bribery Policy explicitly states that CRH does not
tolerate any form of bribery.
• Our global senior management complete an Annual
Compliance Certification, confirming their business’s
compliance with our CoBC and accompanying policies.
• All new employees are provided with the CoBC.
Regular training is provided to relevant employees.
• Certain employees, based on risk profile, undertake annual
advanced compliance training (ACT) covering Anti-Bribery,
Competition/Antitrust, Anti-Fraud and Anti-Theft.
Respecting legislation regarding political donations
• CRH is averse to any illegal behaviour and all CRH
companies respect and comply with the laws in the
countries and regions in which they operate, including
regarding political contributions.
•
In the US, CRH supports the rights of employees to
participate in the political process through employee-funded
Political Action Committees (PACs) and CRH's US
operations provide administrative support (consistent with
applicable laws) to their affiliated federal and state PACs.
25
How we engage with our stakeholder groups
Feedback from stakeholder engagement is reported to, and carefully considered by, the SESR Committee and the Board.
Employees
Local
communities
Investors
Customers
Suppliers
Governments
and regulators
Academic
and scientific
community
Media
NGOs and
pressure
groups
Key areas
of interest
• Business
• Community
• Business
performance
issues
performance
• Health &
safety
• Planning
matters
• Strategic
growth
• Quality &
delivery
• Health &
safety
• Quality &
delivery
• Health &
safety
• Health &
safety
• Environment
and climate
• Business
• Corporate
performance
governance
• Environment
and climate
• Human rights
• Health &
safety
• Environment
& climate
• Inclusion &
diversity
• Potential
local impact
• Capital
allocation
• Sustainable
products
• Contract
performance
• Corporate
governance
• Natural
capital
• Inclusion &
diversity
• Human
rights
24
• Corporate
governance
• Human
rights
• Potential
local impact
Key
methods of
engagement
• Team
meetings
• CEO blog
• Employee
newsletters
• Podcasts
• Sustainability
• ESG topics
• Product
innovation
• Local
impacts
• Planning
matters
• Graduates &
apprentices
• Environment
& climate
• Eco-efficiency
25
• Board and
Executive
remuneration
• Inclusion &
diversity
• Collaboration
• Corporate
governance
• Natural
capital
• Product
efficiency &
innovation
• Customer
relations &
contracts
• Human
rights
• Product
standards
• One-to-one
meetings
• Results
presentations
• Customer
surveys
• Supplier
surveys
• Industry
associations
• One-to-one
meetings
• Open
days
• Site
tours
• Annual General
• Formal market
Meeting
research
• Contractual
meetings
• Briefings &
direct meetings
• Seminars &
lectures
• One-to-one
• Negotiations
• Tender
• Audits
meetings & calls
• Round table
discussions
• Product
innovation
• Corporate
governance
• Media
surveys
• Media
briefings
• Press
releases
• One-to-one
meetings
• Participation
in events
• Presentations
quotations
• Information
requests
• E-tendering
platforms
• Open days
• Presentations
• Social media • Open days
• Multi-
stakeholder
forums
• Intern, graduate
& apprenticeship
programmes
• Interviews
• Participation
in local events
• Surveys
• Exhibitions
• Performance
• Employee
engagement
processes
reviews
• Town Hall
meetings
• Employee
surveys
• One-to-one
meetings/
briefings
• Investor & ESG
conferences &
roadshows
• Product
information on
packaging
• Customer
relationship
development
• Company
websites &
social media
2020
Outcomes
Improved engagement with employees
This helps to attract, develop, retain and
motivate our workforce, sustaining our
competitive advantage and long-term
success. In 2020, it also allowed us to help
protect our employees and their families
during COVID-19.
Further improved our community
relationships
Engaging with our local communities
during 2020 ensured that we increased
our understanding of their needs and
priorities, addressed any concerns and took
responsibility for potential impacts.
Investor clarity in relation to COVID-19
Engagement with investors helps us understand
their expectations of our risk management and
our financial and ESG performance. During 2020,
investor focus included assurance that measures
being taken as a result of COVID-19 were
protecting employees, society and the business.
Understood and met customer
requirements
Engaging with our customers ensures
we listen to their needs and innovate
solutions required to meet their sustainability
commitments. In 2020, we focused on
ensuring we continued to meet customer
requirements throughout COVID-19.
Progress in research and development,
innovation and sustainability
By engaging with academic and scientific
institutions during 2020, we continued to
support partnerships and collaborations
on research development, championing
innovative advances and collaborating on
sustainability solutions.
Suppliers standards maintained
during COVID-19
We engage with suppliers to develop a
responsible and sustainable supply chain
needed to deliver innovative and sustainable
products. During 2020, we worked with
our suppliers to ensure that practices such
as safety and business conduct were not
impacted by COVID-19.
Continued engagement with governments
and regulators
In 2020, our engagement with local and
national regulators, governments and industry
associations, ensured that we contributed
appropriately to issues relevant to our activities,
improved our sustainable performance and
compliance and progressed projects for the
enhancement of society.
Continued engagement with media
We continued to improve our engagement
with media to ensure that specific
sustainability issues were addressed
appropriately and effectively. During
2020, engagement focused on how we
are addressing climate change and the
positive impacts of our industry in facing
the challenges of COVID-19.
Productive engagement with NGOs
Through our memberships and partnerships
with NGOs we continue to be involved in
developing industry best practices across a
range of established sustainability topics and
collaborating on sustainable solutions across
the value chain.
2020 Annual Report and Form 20-F Risk and Resilience
Integrated and effective risk management supports the realisation of our strategic objectives and
the continued success of our business. Our Enterprise Risk Management framework enables us to
proactively respond to stresses and uncertainty, which are often complex and interlinked, and provides
us a foundation on which to build a performance and growth-oriented culture across the Group.
Understanding the complexities of our risks also allows us to pursue the upside of risks and capture
change opportunities, as they arise.
26
Influencing Decision-Making
ERM 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 variety
of challenges we face in our relentless focus
on value creation. Our framework facilitates a
collective understanding of our risks, which is
integrated into strategic planning processes
to ensure resilient delivery. Despite ongoing
challenges, such as the COVID-19 pandemic,
our performance continues to highlight the
resilience of our people, our business model and
our proven record of delivery through uncertainty.
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. It also gives us insight to strengthen our
existing platforms and confidence to undertake
investments and step into new markets.
Our ERM Framework
acts as a Bedrock of
Resilience, helping
the Group to mitigate
uncertainties in
strategy execution.
Risk Management
Framework
e
c
n
a
n
r
e
v
o
G
k
s
i
R
O u r Framework
O u r Process
Risk
Analysis
Risk
Monitoring
Risk
Appetite
R
i
s
k
I
n
t
e
l
l
i
g
e
n
c
e
Risk
Management
Risk Stra t e g y
ERM Framework
Integrated Risk Process
Our 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 enabled us to integrate our bottom,
middle and top line perspectives, ensuring
transparency of threats, opportunities and controls
in the context of individually and collectively held
strategic objectives.
We leverage tools and technologies to ensure we
are a risk intelligent organisation, enabling quicker
and better decision-making within the Group.
Embedding ERM into our business processes,
at all levels of the Group, creates an environment
where leaders take a disciplined and focused
view on risks. 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.
Risk workshops, facilitated by Group Risk,
bring together leaders from across the Group
to identify risks and opportunities, and define
mitigation. 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. Our risk
appetite framework is a critical tool to integrate
our view of risk and maximise our risk governance
structure, defining the key risk parameters within
which strategic decision-making takes place
and assisting with our objectives of disciplined
and focused growth. The Board approves the
framework on an annual basis in line with good
corporate governance practice.
27
26
Risk Governance Structure
Board
Ultimately responsible for strategy, risk and governance across CRH.
Sets the risk appetite and ensures risks are managed within appetite.
Delegates responsibility to Audit Committee.
Safety, Environment & Social
Responsibility Committee (SESR)
Responsible for monitoring developments
related to sustainability risks including safety,
health, environment, climate and social
performance, and providing strategic direction,
oversight and risk assurance.
Audit Committee
Responsible for monitoring and assessing the
Group’s risk management and internal control
systems. Receives regular updates on risk
management strategies, mitigation and action plans.
Other CRH
Committees
Committees include: Acquisitions,
Divestments & Finance; Nomination &
Corporate Governance; and Remuneration.
Refer to the Governance section on
page 52 for further information.
27
Global Leadership Team (GLT)
Executive leadership team responsible for setting strategy, pursuing performance
delivery and progressing our ambitious sustainability agenda. Delegates
responsibility for risk strategy, oversight and governance to the Risk Committee.
Risk Committee
Executive committee responsible for setting risk strategy and
overseeing our governance model and how we identify, assess
and manage the principal and emerging global risks the Group
encounters in the pursuit of our strategic objectives.
Other Leadership Councils
Responsible for overseeing aspects of strategy, policy,
targets and objectives related to a particular priority area
for the Group, including for example safety.
Regional Leadership
Responsible for identifying and managing divisional risks,
ensuring risk management frameworks are operating effectively
and capturing upside of risk, where possible.
Risk Champion Network
Embedded across businesses, functions and divisions.
Responsible for integration of risk management frameworks,
regular reporting of risks and sharing best practice mitigation.
First Line of Defence
Operating company/business leaders
are responsible for risk identification,
management and ensuring that the
control environment is robust.
Second Line of Defence
CRH has various oversight functions
which are responsible for providing
subject matter expertise, defining
standards and ensuring adherence.
Third Line of Defence
Group Internal Audit provides
independent assurance over the control
environment on a continuous basis.
Task Force on Climate Related Financial Disclosure (TCFD)
The cement industry’s ability to reduce its
CO2 emissions and the potential economic
implications of that have become a key focus
for investors. As a Group, we will continue to be
diligent in ensuring transparency and providing
our investors and stakeholders with insights into
how we are building resilience to climate related
risks while capturing emerging opportunities.
In 2020, CRH became a supporter of TCFD,
committing to being transparent on the
financial aspects of climate change risks
and opportunities. With five other leading
companies and in collaboration with WBCSD,
we participated in a TCFD Preparer Forum for
the Construction and Building Materials sector,
which published its report in 2020.
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 risk is described in detail on
pages 108 and 227.
We are committed to reporting on the breadth of
our sustainability performance and to publishing
performance indicators, ambitions and outcomes
in key sustainability areas. Further information
on our sustainability performance and how we
support the TCFD recommendations can be
found in the annual CRH Sustainability Report
available on www.crh.com.
2020 Annual Report and Form 20-F Risk and Resilience - continued
Principal and Emerging Risks
Our principal risks and uncertainties, defined in more detail on pages 106 to 111 and 223 to 231, and emerging risks,
presented below, are reviewed regularly and represent the key risks faced by the Group at the time of publication. 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.
28
Link between Principal Risks
and Strategic Objectives
Industry Cyclicality and Economic Conditions
Strategic
Portfolio Management
Continuous
Improvement
Focused
Growth
Benefits of
Scale and
Integration
Developing
Future
Leaders
Public Policy & Geopolitics
Commodity Products and Substitution
People Management
Strategic Mineral Reserves
Brexit
COVID-19 Pandemic
Climate Change and Policy
Operational
Health and Safety Performance
Sustainability and Corporate Social Responsibility
Information Technology and/or Cyber Security
Compliance
Laws and Regulations
Goodwill Impairment
Financial Instruments
Financial &
Reporting
Taxation Charge and Balance Sheet Provisioning
Defined Benefit Pension Schemes and Related Obligations
Foreign Currency Translation
Changes
Emerging
Risks
COVID-19 Pandemic has been added as a principal risk as the world, our industry and our business respond to the challenges
the virus poses. Our Joint Ventures and Associates risk has been demoted from a principal risk due to divestments of our share
in certain businesses which were no longer a strategic fit for the Group. Our Public Policy & Geopolitics risk replaces Geopolitical
and/or Social Instability, in recognition of the influence of public policy on our objectives and broader changes in our risk
landscape.
The 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. Key emerging risks in this category include extreme weather events, which can present physical
barriers to work onsite, dampen demand and hinder performance, and labour model disruption, where tightening labour pools
materialise within our industry due to a negative convergence of demographic, educational and economic trends.
29
28
Longer Term Viability Statement
Our Viability Statement, which does not form
part of the Annual Report and Form 20-F, as filed
with the SEC, has been prepared in accordance
with the UK Corporate Governance Code 2018.
Assessment of Prospects
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 strategy, business model, future
performance, solvency or liquidity.
Current Position
-> Why Invest in CRH, page 8
-> Market Backdrop, page 12
Strategy & Business Model
-> Our Strategy, page 14
-> Business Model, page 16
Principal Risks
-> Measuring Performance, page 18
-> Principal Risks & Uncertainties, page 106
The Board’s consideration of the long-term
prospects 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.
Viability Assessment: Period
In 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 viability of the Group
has been assessed over a three-year period from
1 January 2021 to 31 December 2023 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;
Scenario Modelled
Relevant Principal Risks
Scenario 1: COVID-19
Shutdowns & Recessionary
Environment
Deterioration in COVID-19
situation and a depressed
economic environment
Scenario 2:
One-Off Expense
Impact of a potential large
event, fine and/or penalty
Scenario 3:
Combination (1 and 2)
Combination of prior scenarios
overlapping or occurring
simultaneously
- COVID-19 Pandemic
- Laws and Regulations
- Industry Cyclicality and Economic Conditions
- Portfolio Management
- Public Policy and Geopolitics
- Brexit
- Laws and Regulations
- Public Policy and Geopolitics
- Information Technology and/or Cyber
Security
29
- Combination of relevant risks from
prior scenarios
•
•
•
Construction activity, and therefore demand
for the Group’s products, is inherently
cyclical as it is influenced by global and
national economies;
It aligns with our long-term management
incentives, such as the deferred element of
the Annual Performance-related Incentive
Plan; and
Uncertainty increases inherently with
expanding time horizons potentially impacting
the large number of external variables that
need to be factored.
Overall, a three-year period is deemed to achieve
a suitable balance between long and short-term
influence.
Viability Assessment: Approach
The viability of the Group is 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.
Appropriate 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 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.
Conclusion
While 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 2023.
* 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.
2020 Annual Report and Form 20-F 30
The performance of our business is enabled
by the skills and talent of our 77,100
employees in 30 countries. We strive to
create a collaborative, inclusive working
environment and a culture of shared ideas.
Business
Performance
Finance Director’s Review
Segmental Reviews
31
32
38
Icon Materials, part of CRH’s Americas Materials Division completed a pavement
rehabilitation project at Terminal 46 for the Port of Seattle. The project included
using High Density Polyurethane Foam to level out sunken parts of the pier, milling
out and paving back c.14,500 tonnes of asphalt, and striping. The project was
completed by the end of September 2020. The Port of Seattle and Port of Tacoma
as the Northwest Seaport Alliance is one of the largest container gateways in the
United States.
2020 Annual Report and Form 20-F Finance Director’s Review 20201
32
Sales revenue
$30
$25
$20
$15
$10
$5
$0
$bn
7.4
9.5
10.6
7.0
9.5
7.2
9.1
11.6
11.3
2018
2019
2020
Americas Materials
Europe Materials
Building Products
2020 marked a year
of further business
improvement with
advances in margin
and cash generation
despite a particularly
challenging market
backdrop.”
Senan Murphy
Finance Director
Segmental Reviews
The sections on pages 38 to 51 outline the scale
of CRH’s operations in 2020 and provide a more
detailed review of performance in each of CRH’s
reporting segments.
Key Components
of 2020 Performance
Economic activity in North America was
impacted by the global pandemic, partly offset by
government stimulus efforts. Like-for-like sales in
Americas Materials declined by 3% compared to
2019, mainly impacted by COVID-19 restrictions,
project delays in some of our key states and
unfavourable weather in the first half of the year.
In Europe Materials, volume recovery in the
second half of the year along with good price
discipline did not fully mitigate the negative
impact of COVID-19 related shutdowns earlier
in the year and like-for-like sales finished
5% behind 2019.
Building Products benefited from strong
residential RMI activity in North America, offsetting
lower activity levels in non-residential markets.
Together with price progress across most
platforms, the Division delivered like-for-like sales
4% ahead of 2019.
2020 was a challenging year
for CRH due to significant
COVID-19 related disruption
in the economies and
construction markets of
North America and Europe.
Notwithstanding the difficult backdrop,
CRH delivered overall sales of $27.6 billion
(2019: $28.1 billion) 2% behind 2019. Year-end
net debt of $5.9 billion (2019: $7.5 billion)
was reflective of our focus on operating cash
generation, lower spend on property plant and
equipment and a pause in the Group's share
buyback programme. This was partly offset by the
non-recurrence of significant disposal proceeds
in 2020 with net acquisition spend after disposal
proceeds of $0.1 billion (2019 inflow: $1.5 billion)
and total distributions to shareholders of
$0.9 billion (2019: $1.6 billion). Net Debt/EBITDA
(as defined)* was 1.3x (2019: 1.7x).
Change in Reporting
Currency to US Dollar
As announced on 28 February 2020, the Group
has changed the currency in which it presents
its financial results from euro to US Dollar, in
consideration of the current portfolio and business
mix which has now significantly higher US
Dollar exposure.
* 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 101.
33
EBITDA (as defined)* of $4.6 billion was
3% ahead of 2019 (2019: $4.5 billion) reflecting
a strong focus on cost rationalisation and actions
taken to mitigate the financial impact of the
pandemic. EBITDA (as defined)* was 5% ahead
on a like-for-like basis, before one-off costs of
$122 million primarily due to COVID-19 related
restructuring.
As previously announced, arising from the
Group’s impairment testing process and as a
result of the combined economic impacts of
COVID-19 and Brexit, non-cash impairment
charges of $0.8 billion were recognised in 2020
(2019: $8 million); $0.7 billion was reported
in operating profit, primarily related to our UK
business, and a further $0.15 billion recognised
on the Group’s associate investment in China
which is reflected in the Group’s share of losses
from equity accounted investments.
Profit after tax of $1.2 billion was behind
prior year (2019: $1.6 billion). Excluding the
non-cash impairment charges of $0.8 billion
(2019: $8 million) and the related tax impact,
profit after tax of $2.0 billion was 18% ahead
of 2019 (2019: $1.7 billion).
The US Dollar weakened against most major
currencies during 2020 resulting in the average
US Dollar/euro rate strengthening from 0.8933 in
2019 to 0.8771 in 2020 and the Pound Sterling
strengthening from an average 0.7841 in 2019
to 0.7798 in 2020. Overall currency movements
resulted in a favourable net foreign currency
translation impact on our results as shown on
the table above. The average and year-end
2020 exchange rates of the major currencies
impacting on the Group are set out on page 146.
Liquidity and Capital Resources
- 2020 compared with 2019
The comments that follow refer to the major
components of the Group’s cash flows for
2020 and 2019 as shown in the Consolidated
Statement of Cash Flows on page 136.
Throughout 2020, the Group remained focused
on cash management, improving working capital
outflows and reducing investment in property,
plant and equipment. Management delivered
a net working capital inflow of $196 million
(2019: $71 million outflow) and operating cash
flow of $3.9 billion (2019: $3.9 billion).
Working capital was $2.4 billion at year end
(2019: $2.4 billion) representing 8.7% of sales
(2019: 8.5%). CRH believes that its current
working capital is sufficient for the Group’s
present requirements.
Disciplined investment in property, plant and
equipment in response to lower activity levels,
resulted in lower cash outflows of $1.0 billion
(2019: $1.4 billion), with spend in 2020
representing 74% of depreciation on owned
assets (2019: 102%).
Reflective of the ongoing strategy of active
portfolio management, the Group invested
$0.4 billion on 17 transactions (2019: $0.8 billion)
which was partly financed by divestment
and disposal cash proceeds of $0.3 billion
(net of cash disposed and including deferred
consideration proceeds in respect of prior year
divestments) (2019: $2.3 billion).
During 2020, the Group returned a further
$0.2 billion (2019: $0.9 billion) of cash
to shareholders under its share buyback
programme but due to high levels of market
volatility, the Board paused the programme in
March 2020. However, given the Group’s strong
financial position and its continued commitment
to returning excess cash to shareholders, the
Group intends to recommence the programme
and complete a further $0.3 billion tranche by
the end of June 2021. Cash dividend payments
of $0.7 billion (2019: $0.7 billion), further reflect
the Group’s continued commitment to returning
excess cash to shareholders.
Year-end interest-bearing loans and borrowings
were $12.2 billion. At year end, the weaker
US Dollar against most other currencies had a
negative translation impact on net debt.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
2020 Annual Report and Form 20-FKey Components of 2020 Performance$ millionSales revenueEBITDA (as defined)*Operating profitProfit/(Loss) on disposalsFinance costs (net)Assoc. and JV PAT (i)Pre-tax profit201928,1324,4782,793(189)(490)672,181Exchange effects82125-(3)-22019 at 2020 rates28,2144,4902,798(189)(493)672,183Incremental impact in 2020 of: - 2019/2020 acquisitions3686532-(8)(5)19 - 2019/2020 divestments(413)(33)(14)205(4)(10)177 - One-offs (ii)-(122)(122)---(122) - Impairments--(665)--(154)(819) - Organic(582)230234(7)15(16)226202027,5874,6302,2639(490)(118)1,664% Total change-2%3%-19%-24%% Organic change-2%5%8%10%(i) CRH’s share of after-tax results of joint ventures and associated undertakings.(ii) One-offs primarily due to COVID-19 related restructuring costs. Finance Director’s Review 2020 - continued
34
Reflecting all these movements, net debt
of $5.9 billion at 31 December 2020 was
$1.6 billion lower than year-end 2019
($7.5 billion). The Group is in a good financial
position. It is well funded and Net Interest Cover
(EBITDA (as defined)*/net debt related interest
costs) is 11.9x (2019: 12.3x).
The Group ended 2020 with total liquidity of
$12.1 billion, comprising $7.7 billion of cash and
cash equivalents on hand and $4.4 billion of
undrawn committed facilities which are available
until 2025. At year end, the Group had sufficient
cash balances to meet all maturing debt
obligations (including leases) for the next 6.4
years and the weighted average maturity of the
remaining term debt was 12.9 years.
In April 2020, the Group successfully issued a
total of €2.0 billion in euro denominated bonds at
a weighted average maturity of seven years and
with a weighted average interest rate of 1.35%.
A €0.75 billion euro denominated bond due
to mature in October was repaid early using
a 3 month par-call option.
The Group also has a US$2.0 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 219 of this
Annual Report and Form 20-F.
Development Review
2020
The Group spent $405 million on 17
acquisitions in 2020 (including deferred and
contingent consideration in respect of prior
year acquisitions).
The most significant acquisition in 2020
was the December acquisition of Barriere
Construction, a vertically integrated
asphalt and paving operation in southern
Louisiana. In addition, the Americas
Materials Division completed a further six
bolt-on acquisitions across the US and
Canada for a total spend of $163 million.
The Building Products Division completed
six bolt-on acquisitions amounting to a
total spend of c. $180 million including
the acquisition of Martin Enterprises. This
acquisition strengthens CRH’s exposure
to the communications enclosures market
across the US.
Europe Materials completed four
acquisitions, with a total spend of
c. $8 million for the Division. The Group
also paid $54 million of deferred and
contingent consideration related to prior
year acquisitions.
On the divestment front, the Group
completed 12 transactions and realised
total business and asset disposal cash
proceeds of $307 million, inclusive
of $123 million relating to the receipt
of deferred proceeds from prior
year divestments.
The sale of precast concrete production
assets located in Spokane, Washington
represented the largest divestment in 2020
and was completed by our Building Products
Division. The divestment of the building
materials business in La Réunion was the
second largest divestment, completed by
our Europe Materials Division, with 10 other
divestments completed across the Divisions.
In addition to these business divestments,
the Group realised proceeds of $128 million
from the disposal of surplus property, plant
and equipment and other non-current assets.
Cash proceeds of $123 million were received
relating to prior year divestments, of which
$95 million related to the divestment of the
Group’s equity interest in My Home Industries
(MHIL) in India.
The agreement to sell our Brazil operations
for consideration of $0.2 billion is currently
subject to competition authority review and
the divestment is expected to close in the
first half of 2021.
Finance Director’s Review 2019
2019 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 sales of
$28.1 billion for 2019 were 2% ahead of 2018.
Year-end 2019 net debt of $7.5 billion
(2018: $8.0 billion) was reflective of our strong
operating cash generation and continued
portfolio refinement with net disposal
proceeds after acquisition spend of $1.5 billion
(2018 outflow: $0.5 billion) offset by total
distributions to shareholders of $1.6 billion
(2018: $1.5 billion). Net Debt/EBITDA (as
defined)* was 1.7x (2018: 2.0x)1.
Key Components of 2019
Performance
Economic 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
2019 were offset by a stronger second half and
like-for-like sales in Americas Materials for 2019
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)* of $4.5 billion was 18%
ahead of 2018 (2018: $3.8 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 Leases.
Reported profit after tax was $1.2 billion behind
2018 at $1.7 billion (2018: $2.9 billion), as 2018’s
profit after tax was augmented by the $1.3 billion
after tax profit on disposal on the sale of our
Americas Distribution business.
35
The US Dollar strengthened against most major
currencies during 2019 resulting in the average
US Dollar/euro rate weakening from 0.8467 in
2018 to 0.8933 in 2019 and the Pound Sterling
weakening from an average 0.7491 in 2018 to
0.7841 in 2019. Overall currency movements
resulted in an unfavourable net foreign currency
translation impact on our results as shown on
the table below. The average and year-end 2019
exchange rates of the major currencies impacting
on the Group are set out on page 146.
Liquidity and Capital Resources
- 2019 compared with 2018
The 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 136.
Throughout 2019, the Group remained focused
on cash management, targeting working capital
in particular. Management delivered a net
working capital outflow of $71 million in 2019
(2018: $547 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
$3.9 billion (2018: $2.2 billion).
* 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 Debt/EBITDA (as defined)* is a non-GAAP measure as defined on page 215. For 2018, the Group net debt position ($7,998 million) 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 ($3,969 million).
2020 Annual Report and Form 20-FKey Components of 2019 Performance$ millionSales revenueEBITDA (as defined)*Operating profitLoss on disposalsFinance costs (net)Assoc. and JV PAT (i)Pre-tax profit201827,4493,7992,446(121)(414)571,968Exchange effects(574)(57)(26)(1)9(1)(19)2018 at 2019 rates26,8753,7422,420(122)(405)561,949Incremental impact in 2019 of: - 2018/2019 acquisitions1,03418378-(49)-29 - 2018/2019 divestments(704)(59)(20)(56)2-(74) - Leases-34945-(69)-(24) - Organic927263270(11)3111301201928,1324,4782,793(189)(490)672,181% Total change2%18%14%11%% Organic change3%7%11%15%(i) CRH’s share of after-tax profits of joint ventures and associated undertakings. 36
Focused investment in property, plant and
equipment in markets and businesses with
increased demand backdrop and efficiency
requirements, resulted in higher cash outflows of
$1.4 billion (2018: $1.3 billion).
Reflective of the ongoing strategy of active
portfolio management, the Group invested
$0.8 billion on 62 transactions in 2019 (including
deferred and contingent consideration in respect
of prior year acquisitions) (2018: $4.1 billion).
This was financed by divestment and disposal
proceeds of $2.3 billion (net of cash disposed
and deferred proceeds) (2018: $3.6 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 $0.9 billion (2018: $0.9 billion),
at an average price of $32.31 (2018: $32.80)
per share. These buybacks, together with
cash dividend payments of $0.7 billion
(2018: $0.6 billion), reflected the Group’s
continued commitment to returning excess
cash to shareholders.
Year-end 2019 interest-bearing loans and
borrowings were $15.8 billion. At year end 2019,
the weaker euro against the US Dollar had a
favourable translation impact on net debt.
Development Review
2019
2018
The Building Products Division completed
a total of 16 bolt-on acquisitions at a
cost of c. $514 million. Four of these
acquisitions were completed in Europe and
one in Australia at a cost of $75 million,
while the remaining 11 were completed
in North America for consideration
of c. $439 million. One of the largest
acquisitions in 2019 was the November
acquisition of Torrent Resources, Inc. for
c. $84 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. $235 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. $36 million. The
Europe Materials Division completed 15
bolt-on acquisitions and two investments
at a cost of c. $64 million.
On the divestment front, the Group
completed 11 transactions and realised
business and asset disposal proceeds of
$2.3 billion. The majority of divestment
proceeds related to the divestment of the
Europe Distribution business in October
2019 for a final agreed consideration of
$1.7 billion. Other transactions in 2019
included the divestment of the European
Shutters & Awnings business for a total
consideration of $0.3 billion in June 2019,
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 $0.2 billion from the disposal of surplus
property, plant and equipment.
In 2018, the Group spent a total of
c. $4.1 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. $3.6 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. $435 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. $73 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. $259 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. $2.8 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.
37
The new Hôtel ibis Styles Liège Guillemins in Belgium is a 102-bedroom modern 3 star hotel with a unique and fun comic book themed interior decorative concept throughout. Prefaco, part
of CRH’s Europe Materials Division provided a range of precast concrete solutions to the project including 16,000 m² shuttering slabs, 10,000 m² double walls, 30 m³ beams and 102 stairs.
2020 Annual Report and Form 20-F 38
Across our businesses an uncompromising
approach to workplace safety ensures that
our people are protected from potential
hazards as they go about their work and
focus on delivering for our customers in
the markets where we operate.
2020 Annual Report and Form 20-F
Segmental
Reviews
Americas Materials
Europe Materials
Building Products
39
40
44
48
A construction traffic utility team member directing subcontracted traffic labourers
while establishing a safe work zone for this project on Route 16, Jackson, New
Hampshire. Pike Industries, part of CRH’s Americas Materials Division was the Prime
General Contractor on the paving project which involved the supply of c. 18,000
tonnes of hot mix asphalt. Safety is CRH’s top priority and our businesses demand the
highest standards in pursuit of our target of zero harm across all our locations.
Americas Materials
Our Americas Materials Division
is the leading building materials
business in North America,
supplying materials and providing
paving and construction services
in 46 US states and six Canadian
provinces.
What We Do
40
As a vertically integrated supplier of building
materials including cement, aggregates,
readymixed concrete and asphalt, our
businesses supply a broad range of construction
projects including major public infrastructure,
commercial buildings and residential structures.
For over 35 years our materials have helped to
construct many of the structures that underpin
everyday life including highways and bridges,
schools and hospitals, workplaces and homes.
Our extensive reserves and network of
well-located quarries are ideally positioned to
enable us to service construction markets in
regions with strong demand fundamentals.
CRH is the largest producer of aggregates
and asphalt in North America and has
leadership positions in readymixed concrete.
It is the leading supplier of products for road
construction and repair and maintenance
demand in the US with 50% of our business
related to infrastructure, a significant proportion
of which is awarded by public tender for federal,
provincial, state and local government authority
road and infrastructure projects.
In addition, CRH is a leading producer of
cement, with a footprint spanning Canada,
Florida, Texas, the Midwest and Western US. In
2020, CRH adopted the Ash Grove name for all
its North American cement businesses, unifying
its 12 cement plants and 42 cement terminals
under one recognised brand.
Americas Materials
GEOGRAPHY1
1%
Brazil
11%
Canada
88%
United States
$ million
% of Group
Sales
11,273
51%
41%
EBITDA
(as defined)*
Operating
Profit
Net
Assets2
2,405
52%
1,631
51%72%
13,620
48%
SECTOR EXPOSURE1
Residential
Non-Residential
Infrastructure
END-USE1
New
RMI
20%
30%
50%
45%
55%
How We Create Value
Annualised Sales Volumes3
CRH combines the flexibility, speed, close
customer relationships and in-depth market
knowledge of local businesses with the strength,
shared expertise and operational excellence of a
national network.
This focus on operational excellence and local
knowledge is supported by a strong strategic
centre which enables CRH to leverage talent,
procurement synergies and efficiencies across
the Division.
Aggregates:
Cement:
189.1m
tonnes
15.3m
tonnes
Readymixed
Concrete:
12.8m m3
Asphalt:
44.0m
tonnes
* 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 2020 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 214.
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.
Our vertically integrated business model sets us
apart in the industry and is fundamental to the
Division’s development strategy, enabling us to
create value throughout the supply chain.
For instance, materials produced by our
aggregates and cement businesses are
purchased by external customers as well as
our own downstream materials businesses for
products such as readymixed concrete and
asphalt. By identifying businesses that can be
integrated efficiently into our existing network,
we create further opportunities for value creation
and growth in what is a largely unconsolidated
US building materials market.
In recent years we have grown our presence
in higher growth southern states in the US to
increase CRH’s exposure to the positive demand
fundamentals in the southern and western areas
of the country where there is higher population
growth and good demand for our materials.
Throughout our business there is a constant
focus on making our business more resilient and
sustainable. This includes reducing emissions,
increasing the use of alternative materials,
accelerating sustainable product innovation and
anticipating the evolving needs of our customers
in response to the changing climate and
weather patterns.
How We Structure
our Operations
Our materials businesses are organised
geographically by region (North, South and
West) and our cement platform across North
America and Brazil. The North division comprises
operations in 13 states and two Canadian
provinces, the South division operates across 14
states, while the West division has operations in
19 states. The cement platform operates across
20 states, six Canadian provinces and three
Brazilian states. In October 2020, the Group
entered into a sales agreement to divest of its
100% holding in CRH Brazil. The transaction is
expected to close in the first half of 2021.
In total, the Division has a network of 1,475
operating locations and employs approximately
27,400 people across 46 US states, six
Canadian provinces and three Brazilian states.
Our Vertically Integrated Business
Reserves
Reserves 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 221.
41
Cement
Cement is the primary binding agent in
the production of concrete products for
the construction industry.
Aggregates
Aggregates are naturally occurring mineral
deposits such as granite, limestone and
sandstone. Our businesses extract these
deposits and process them for sale.
Readymixed Concrete
Readymixed concrete is a highly versatile
building material comprised of aggregates
bound together with cement and water.
Asphalt
Asphalt is primarily used in road surfacing
and other transport infrastructure including
airport runways.
Paving & Construction Services
CRH is the leading supplier of product for road construction and repair/maintenance
demand in North America. Annually, our crews complete approximately $4.3 billion in
paving and construction projects.
2020 Annual Report and Form 20-F
Operations Review - Americas Materials
Prior Year 2019
Results
$ million
Sales revenue
EBITDA (as defined)*
Operating profit
EBITDA (as defined)*/sales
Operating profit/sales
2018
Exchange
Acquisitions
Divestments
Leases
Organic
2019
% change
Analysis of change
10,572
1,763
1,192
16.7%
11.3%
-35
+2
+5
+736
+151
+68
-29
-6
-4
-
+110
+10
+382
+174
+152
10%
24%
19%
11,626
2,194
1,423
18.9%
12.2%
Cement
Like-for-like sales volumes in our US operations
were ahead in 2019. Despite adverse weather,
strong price realisation across major markets
and good synergy delivery supported robust
operating profits. The integration of Ash
Grove is now complete and the business is
performing well.
Despite poor weather conditions in the 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.
42
2019 was a strong year for Americas Materials,
generating operating profit of $1.4 billion, 19%
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. $235 million, strengthening its operational
footprint through the addition of c. 260 million
tonnes of mineral reserves.
Building Materials
Total 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 division
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 West 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 the West
division 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 Performance
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.
Total sales in the South division increased
7% with improved volumes and pricing in all
products. Strong pricing together with focused
management of operating expenses resulted in a
solid operating profit performance.
Strong pricing across all products, volumes
growth in aggregates and readymixed concrete
combined with contributions from acquisitions
supported the West division’s total sales increase
of 8%, 1% on a like-for-like basis. Despite
challenges from weather, with flooding and
record levels of rainfall in the first half of the year,
and higher input costs, mainly bitumen and
labour, favourable pricing across all products
and tight cost control resulted in operating profit
ahead of 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.
Current Year 2020
Results
$ million
Sales revenue
EBITDA (as defined)*
Operating profit
EBITDA (as defined)*/sales
Operating profit/sales
2019
Exchange
Acquisitions
Divestments
Analysis of change
-37
-2
+1
+43
+8
+5
-39
+2
+5
11,626
2,194
1,423
18.9%
12.2%
Impairment/
One-offs1
-
-24
-25
Organic
2020
% change
-320
+227
+222
11,273
2,405
1,631
21.3%
14.5%
-3%
10%
15%
1One-offs primarily due to COVID-19 related restructuring costs
year as growth in our core Florida and Texas
markets continued. Commercial and operational
excellence across all product lines supported
strong operating profit performance.
43
The West division increased total sales by 3% by
executing on strong backlogs with support from
favourable weather in comparison to the first half
of 2019. Good incremental volumes coupled
with strong price discipline and cost control
resulted in operating profit improvements.
Cement
Our cement business delivered operating profit
growth in 2020, driven primarily by strong price
realisation, performance improvement initiatives
and cost saving measures. Sales volumes in
the US operations were 2% ahead of prior
year on a total and like-for-like basis as strong
demand in the west more than offset COVID-19
related impacts in other regions. Volumes in
Canada were behind 2019 due to the impact of
COVID-19 restrictions, particularly during the first
half of the year.
Cement consumption in Southeast Brazil
increased in 2020 enabling CRH to achieve
volume growth combined with increased prices
which resulted in operating profit improvements.
Americas Materials generated EBITDA (as
defined)* of $2.4 billion, 10% ahead of prior year
and operating profit of $1.6 billion, 15% ahead
of prior year despite lower sales which were
3% behind. COVID-19 restrictions negatively
impacted sales volumes in the second quarter,
particularly in the North division, with sales in
the South division impacted by project delays in
key states. Solid price progression, operational
efficiencies, focused cost containment and lower
energy costs drove margin expansion across
all regions and product lines. Strong demand in
the central and western parts of the US resulted
in like-for-like sales growth across all lines of
business in the West region.
Overall economic and construction activity
across our markets was impacted by the global
pandemic; however, government stimulus to
help support the US economy was implemented,
while infrastructure investment was underpinned
by a one-year extension of the US FAST Act.
During 2020 Americas Materials completed
seven acquisitions in the US and Canada
including aggregates, asphalt, readymixed
concrete, paving and construction operations at
a total cost of $163 million. These acquisitions
in addition to several mineral reserve purchases
in the US will continue to support future growth
in key markets.
Building Materials
On a like-for-like basis, aggregates volumes were
2% lower but margins improved as prices were
4% higher compared to 2019. Volumes in the
North division were predominantly impacted by
COVID-19 restrictions in the second quarter of
the year while the South division experienced
lower demand primarily due to unfavourable
weather in the first half of the year. Solid
underlying business activity in the West division
generated sales growth during the year. Prices
were favourable across all divisions with the
strongest contributions from the North and
South divisions.
Asphalt volumes were 6% lower on a like-for-like
basis due to the impact of COVID-19 restrictions
on the North division and slower project bidding
in key states in the South. Volumes in the
West division were ahead of prior year with a
strong order book of business supported by
more favourable weather compared to 2019.
Asphalt margins improved, benefiting from good
commercial management, lower input costs,
operational efficiencies and strong cost control.
Readymixed concrete volumes were 4% behind
prior year on both a total and like-for-like
basis as higher volumes in the South division
during the second half of the year did not fully
offset lower volumes in the North and West.
Strong commercial discipline delivered total
and like-for-like prices up 6%, more than
offsetting lower sales volumes, resulting in
improved margins.
Paving and construction revenues were 6%
behind prior year on a total and like-for-like basis.
COVID-19 impacted the North division through
government mandated restrictions, while the
South experienced delayed bidding on projects
in key markets due to uncertainty in state
and local funding sources. The West division
experienced significant growth in revenues
driven by strong demand in the Central West
and Mountain West regions. Overall construction
margins finished ahead of prior year.
Regional Performance
Like-for-like sales for the North division were
6% lower than 2019 as COVID-19 restrictions
impacted volumes across the business.
Favourable prices and lower input costs offset
lower volumes and delivered operating profit
improvements for the North division across the
product range.
The South division’s total sales were 7%
behind prior year driven by lower asphalt
and construction volumes in key states as
projects were delayed. Like-for-like readymixed
concrete volumes were higher than the prior
* 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.
2020 Annual Report and Form 20-F Heilongjiang
Jilin
Liaoning
Europe Materials
Our Europe Materials Division is the
leading building materials business
in Europe with a broad geographic
reach spanning 19 countries across
Western and Eastern Europe.
What We Do
Our Europe Materials businesses manufacture
and supply a range of building materials
including aggregates, cement, lime, asphalt,
readymixed concrete, infrastructural concrete, as
well as paving and construction services.
44
The Division operates primarily across Western
and Eastern Europe as well as in Southeast
Asia, supplying a broad range of construction
projects from public infrastructure to commercial
and residential projects. Its customers include
national, regional and local governments,
building contractors and other construction
product and service providers.
The Division has exposure across each of the
residential, non-residential and infrastructure
sectors with operations geographically balanced
across the European continent.
As with CRH’s materials businesses in North
America, the Europe Materials Division
is vertically integrated and founded in
resource-backed aggregates and cement assets.
The Division has regional leadership positions in
aggregates and readymixed concrete and is a
leading producer of cement and lime in Europe.
Within Asia, it is the second largest producer of
cement in the Philippines.
In Western Europe, we have grown our
businesses and market leadership positions
steadily over decades with a broad range of
well-established materials businesses, across all
product types, operating in 11 countries.
In Eastern Europe we have built up a strong
portfolio of businesses across eight countries
with our traditionally strong cement operations
complemented by lime, aggregates, readymixed
concrete, asphalt and infrastructural concrete in
many regional markets.
Europe Materials
GEOGRAPHY1
31%
Europe West
27%
Tarmac (UK)
5%
Asia
16%
Europe East
21%
Europe North
$ million
% of Group
Sales
9,141
51%
33%
EBITDA
(as defined)*
Operating
Loss
Net
Assets2
1,055
23%
(190)
51%-8%
9,306
32%
SECTOR EXPOSURE1
Residential
Non-Residential
Infrastructure
END-USE1
New
RMI
35%
30%
35%
75%
25%
Annualised Sales Volumes3
Aggregates:
Cement:
104.1m
tonnes
32.4m
tonnes
Readymixed
Concrete:
15.7m m3
Asphalt:
10.3m
tonnes
Lime:
7.3m
tonnes
Concrete
Products:
7.5m tonnes
* 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 2020 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 214.
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.
How We Create Value
Where Our Products Are Used
Our Europe Materials businesses are
differentiated in local markets by deep market
knowledge which drives performance, and
a proven track record of serving the unique
needs of local customers. Value creation is a
continuous focus for the Division.
With a strong and stable core market in Western
Europe and an increasingly important growth
market in Eastern Europe, we are constantly
focused on identifying opportunities to extend
and strengthen our positions in regional markets.
We do this through identifying bolt-on and
new acquisition opportunities which can be
efficiently integrated with existing operations
and which enable us to capitalise on growth
opportunities and further expand our offering to
local customers.
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
external customers.
Our strong track record in acquiring businesses
that provide vertical integration opportunities
helps ensure that we are competitive in all
product lines and well positioned to deliver a
strong return on our assets.
We place a great emphasis on commercial and
operational excellence across our extensive
network leveraging talent, synergies for
procurement, cost and logistics management.
We recognise the efficiencies that can be
realised in our materials businesses through
improving the environmental performance of our
operations. We are continually extending our use
of alternative fuels, alternative raw materials and
other technologies to produce and deliver more
sustainable building materials for our customers.
How We Structure
Our Operations
Our Europe Materials Division operates in
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).
The Division employs approximately 26,800
people at over 1,155 locations. A further 5,820
people are employed in our equity accounted
investment in China.
Aggregates
Our businesses extract, process and supply a range
of aggregates products including sand, gravel, 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.
Lime
CRH’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.
45
Cement
Cement 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.
Readymixed Concrete
Concrete 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.
Asphalt
Asphalt, 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.
Infrastructural Concrete
While 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 Services
In 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.
2020 Annual Report and Form 20-F
Operations Review - Europe Materials
Prior Year 2019
Results
$ million
Sales revenue
EBITDA (as defined)*
Operating profit
EBITDA (as defined)*/sales
Operating profit/sales
2018
Exchange
Acquisitions
Divestments
Leases
Organic
2019
% change
Analysis of change
9,498
1,106
575
11.6%
6.1%
-417
-47
-24
+39
+2
-1
-30
+1
+2
-
+127
+18
+419
+19
+52
-
9%
8%
9,509
1,208
622
12.7%
6.5%
the businesses. In Serbia, sales and operating
profit were ahead of 2018 with higher cement
volumes driven by continued strong construction
activity, pricing progress and cost benefits of
enhanced production facilities. In Romania,
results were ahead of 2018 due to improved
pricing combined with stronger volumes in
cement and readymixed concrete.
Asia
Domestic demand for cement in the Philippines
remained strong; however, delays in government
infrastructure spending impacted cement
volumes. While overall sales were in line with
2018, advances in pricing, performance
improvement initiatives and cost savings resulted
in operating profit well ahead of 2018.
In Yatai Building Materials, 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 2018.
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 2018
as pricing improved.
46
Overall Europe Materials experienced a positive
year with good organic 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 North
Sales and operating profit in our UK cement
and lime business were behind 2018 as Brexit
uncertainty impacted activity levels. In Ireland,
sales and operating profit were well ahead of
2018 as the business benefited from continued
market growth, underpinned by strong demand
and some large projects in the Dublin region.
Good volumes and price growth for all key
products was achieved.
Sales and operating profit in Finland were
behind 2018 impacted by reduced demand
in the residential and infrastructure sectors.
Lower cement and readymixed concrete
volumes were partly offset by project-related
aggregates sales growth.
Europe West
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 2018.
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 2018 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 East
Trading in Poland was strong with a good overall
performance for 2019. Robust cement volumes
and positive pricing supported by cost savings
initiatives resulted in operating profit ahead of
2018. In Ukraine, continued growth in cement
volumes reflected good market demand. Strong
price progression was partly offset by slightly
higher input costs and sales and operating profit
finished ahead of 2018.
Sales 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
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
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
Current Year 2020
Results
$ million
Sales revenue
EBITDA (as defined)*
Operating profit/(loss)
EBITDA (as defined)*/sales
Operating profit/(loss)/sales
2019
9,509
1,208
622
12.7%
6.5%
Europe Materials experienced a challenging
year as the recovery in the second half of the
year could not fully mitigate the significant
impact of COVID-19 related restrictions in
the second quarter. Overall sales, EBITDA (as
defined)* and operating performance finished
below 2019 levels as strong performances in
our Eastern European businesses were offset
by a more challenging backdrop in a number of
countries across Western Europe. A combination
of volume growth, progress in pricing, good
cost control and performance improvement
initiatives drove some recovery in the second
half of the year.
Arising from the Group’s impairment testing
process and as a result of the combined
economic impacts of COVID-19 and Brexit, total
non-cash impairment charges of $0.8 billion
were recognised in 2020. Europe Materials
recorded impairment charges of $0.7 billion in
its operating profit, primarily related to its UK
business. A further $0.15 billion impairment
charge was recorded on the Group’s associate
investment in China.
Tarmac (UK)
Strict COVID-19 restrictions resulted in
widespread plant shutdowns during the second
quarter which significantly impacted volumes
during this period. Trading recovered as the
year progressed, with increased paving activity
in the second half of the year supporting
improved aggregates and asphalt volumes;
however, readymixed concrete volumes were
slower to recover due to market uncertainty.
Operating profit, impacted by the lower volumes,
impairment charges and restructuring costs,
finished below 2019 levels.
Exchange
Acquisitions
Divestments
Impairment One-offs1
Organic
2020 % change
Analysis of change
+105
+14
+5
+63
+7
+1
-27
-3
-2
-
-
-660
-
-83
-83
-509
-88
-73
-4%
-13%
-131%
9,141
1,055
-190
11.5%
-2.1%
Europe North
Europe East
47
1One-offs primarily due to COVID-19 related restructuring costs
In our UK cement and lime business, sales
and operating profit were behind 2019 despite
positive pricing as COVID-19 restrictions
impacted activity levels. Ireland also experienced
significant COVID-19 related restrictions in the
second quarter of 2020; however, strong cement
volumes in the second half of the year, cost
savings initiatives and robust pricing across all
product lines saw operating profit outperform
2019. Sales in Finland were ahead of prior
year, but operating profit was impacted by less
favourable product mix.
Europe West
In France, cement volumes recovered in the
second half of the year and good pricing was
maintained across all products; however,
overall volumes were significantly impacted
by COVID-19 restrictions in the first half of
the year. Sales and operating profit in France
were below 2019 levels despite ongoing
performance improvement and cost savings
initiatives. Like-for-like operating profit in
the Benelux finished ahead of 2019, with a
positive contribution from our Dutch structural
businesses partly offset by lower cement and
structural concrete volumes in Belgium.
In Denmark, sales and operating profit finished
behind 2019, due to weaker new residential
construction partially offset by strong cost
control. Sales volumes and operating profit in
Spain were affected by COVID-19 restrictions
despite focused cost control actions.
Challenging cement and readymixed concrete
volumes in Switzerland were partially offset
by cement price increases, good aggregates
volumes and cost savings initiatives but
operating profit finished behind 2019 levels. In
Germany, sales were broadly in line with 2019
levels, as increases in cement pricing offset
slightly lower lime volumes. Operating profit
finished behind 2019 due to the impact of
higher input costs.
Cement sales in Poland were slightly ahead
of 2019 as positive cement pricing more than
offset lower volumes, and overall operating
profit was ahead due to good cost control
and lower fuel costs. Operating profit was also
ahead of 2019 in Ukraine despite a challenging
pricing environment as cost savings initiatives
and lower fuel and logistics costs resulted
in improved performance. In Romania, sales
and operating profit both strongly exceeded
prior year, as a continuation of infrastructure
projects, the positive impact of local and national
elections and increased residential repair works
contributed to growing cement demand with
pricing above 2019 levels.
Positive pricing in both Slovakia and Hungary
coupled with good cost control contributed to
operating profit ahead of 2019 despite both
economies being impacted by COVID-19 and an
overall decline in construction output. In Serbia,
sales and operating profit were ahead of 2019
with higher cement volumes, positive pricing and
business improvement initiatives.
Asia
Domestic demand for cement in the Philippines
was severely impacted between mid-March and
May as COVID-19 restrictions resulted in plant
shutdowns. Despite this challenging backdrop
and lower pricing, operating profit finished well
ahead of 2019 due to cost savings, performance
improvement initiatives and improved volumes in
the second half of the year.
CRH's operations include a 26% stake in Yatai
Building Materials in China where, despite a
severe COVID-19 impact in the first quarter, full
year cement volumes ended ahead of 2019.
Pricing remained challenging in the region which,
in addition to the non-cash impairment charge
resulted in operating profit below 2019 levels.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
2020 Annual Report and Form 20-F Building Products
48
CRH’s Building Products Division
operates across 19 countries and is
a leading manufacturer and supplier
of high quality, value-added,
innovative products and solutions
for construction markets globally.
What We Do
Established in 2019, the Building Products
Division has brought together CRH’s related
products businesses in Europe, North America
and Asia Pacific. These businesses are involved
in the manufacture and supply of a wide range
of products and solutions for use primarily in
residential and non-residential construction
projects globally.
Building Products is comprised of four strategic
product groups: Architectural Products,
Building Envelope, Infrastructure Products
and Construction Accessories. Together these
businesses provide solutions that are tailored to
meet current market demand while also working
with customers to innovate and develop new
solutions that address longer-term opportunities
presented by economic development, changing
demographics, sustainable development and
other evolving global construction trends.
The Division has leading positions, across
multiple markets, in all four product groups.
From glazing systems to concrete masonry and
hardscapes for residential and non-residential
developments, to infrastructure precast
Building Products
PRODUCTS1
24%
Building
Envelope
48%
Architectural
Products
$ million
% of Group
Sales
7,173
51%
26%
19%
Infrastructure
Products
9%
Construction
Accessories
EBITDA
(as defined)*
Operating
Profit
Net
Assets2
1,170
25%
822
51%36%
5,791
20%
SECTOR EXPOSURE1
Residential
Non-Residential
Infrastructure
END-USE1
New
RMI
50%
40%
10%
55%
45%
products supplied to utilities and transportation,
to connecting, fixing and anchoring products
for challenging construction applications;
our products shape and enhance the built
environment and play a vital role in construction
projects big and small.
Working closely with customers to understand
their unique needs and challenges, innovating
at both process and product level, and the
relative ease with which certain products can be
transported and applied are all key features of
our Building Products businesses.
How We Create Value
CRH’s Building Products Division is uniquely
placed to meet the needs of evolving
construction demand. By combining
the strengths of our individual products
businesses into one global platform, balanced
across geographies and end-use sectors, we
leverage our scale, talent, brands, customer
relationships and technical expertise, to create
value and deliver superior performance.
* 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 2020 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 214.
The Division’s exposure to attractive end-use
markets provides for higher growth prospects
and balance through the cycle, while lower
capital intensity of these businesses supports
superior returns and good cash conversion.
An innovation-led approach to the development
of sustainable building products and solutions
is a key characteristic of our business, while
our ability to customise solutions and create
bespoke products creates competitive
advantage and helps to drive sustainable growth.
Our strategy is to build and grow scalable
businesses and to adapt and grow as our
markets evolve. For example, in 2020 we united
all our Construction Accessories businesses
across four continents under one global
brand, Leviat.
By bringing these businesses together under
one name, we are better equipped to leverage
our full design and manufacturing capabilities,
establishing a world leader in connecting, fixing
and anchoring technology to accelerate the
launch of new, game-changing innovations in
construction accessories.
Our development focus aims to deepen our
position in existing business platforms and to
broaden our differentiated product portfolio. We
assess development opportunities through the
lens of providing access to growth markets that
are favourably exposed to global megatrends.
These include increasing urbanisation, the
growth of cities and the demand for more
sustainable forms of construction.
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
22,900 people at close to 480 locations
across 19 countries.
Creating Value Through Our Global Scale
A 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.
49
Architectural Products
Our Architectural Products business is a
leading supplier of concrete masonry, hardscape
and related products for residential, commercial
& DIY construction markets. This includes pavers,
blocks and 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.
Building Envelope
Our 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 glazing systems and related
hardware.
Construction Accessories
Our 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.
Infrastructure Products
CRH’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.
2020 Annual Report and Form 20-F Operations Review - Building Products
Prior Year 2019
Results
$ million
Sales revenue
EBITDA (as defined)*
Operating profit
EBITDA (as defined)*/sales
Operating profit/sales
2018
Exchange
Acquisitions
Divestments
Leases
Organic
2019
% change
Analysis of change
7,379
930
679
12.6%
9.2%
-122
-12
-7
+259
+30
+11
-645
-54
-18
-
+112
+17
+126
+70
+66
-5%
16%
10%
6,997
1,076
748
15.4%
10.7%
50
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 Products
Architectural Products in North America
experienced good sales growth, capitalising on
solid residential RMI demand and favourable
weather in most markets, especially in Eastern
US. Product mix optimisation and targeted
selling prices helped to recover input cost
inflation in most markets, but trading was partly
offset by challenging market conditions in
Canada. Overall, the business delivered strong
operating profit growth, bolstered by operating
efficiencies, contributions from 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 2018, with the positive
impact of more benign weather conditions in
the first half of the year offset by increased
competition in Germany.
Building Envelope
Building Envelope 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 Products
Our 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 in 2018,
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 a year of
solid growth. Performance in Europe was well
ahead of 2018 due to increased sales to the
telecom and rail sectors. However, Australian
sales were below 2018 due to challenging
market conditions in the telecom sector. Overall
operating profit finished ahead of 2018.
The Perimeter Protection business was divested
in September. Compared with the same
period in 2018, the business recorded lower
sales while operating profits advanced due to
cost improvements.
Construction Accessories
The US business achieved strong organic
sales and operating profit growth due to
increased volumes and prices against the
backdrop of a solid US non-residential market.
The Construction Accessories business in
Europe recorded a 4% increase in like-for-like
sales compared with 2018, 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.
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
Current Year 2020
Results
$ million
Sales revenue
EBITDA (as defined)*
Operating profit
EBITDA (as defined)*/sales
Operating profit/sales
2019
Exchange
Acquisitions
Divestments
Analysis of change
+14
-
-1
+262
+50
+26
-347
-32
-17
6,997
1,076
748
15.4%
10.7%
Impairment/
One-offs1
-
-15
-19
Organic
2020
% change
+247
+91
+85
7,173
1,170
822
16.3%
11.5%
3%
9%
10%
1 One-offs primarily due to COVID-19 related restructuring costs
Construction Accessories
51
Like-for-like sales were lower than 2019
because of COVID-19 shutdowns affecting
project activity particularly in the first half. In
Europe, sales were worst affected in Western
Europe, with Central and Eastern European
markets experiencing more resilient demand.
Sales in Australia benefited from several large
infrastructure projects, while North America
recorded lower like-for-like sales due to
increased competition, further compounded
by COVID-19. Operating profit was lower in
2020, as the unfavourable volume impact was
only partly offset by overhead cost savings and
benefits from ongoing procurement, commercial
and operational initiatives.
margin expansion from the continued focus on
operational excellence, as well as modest price
growth and tight overhead cost control. Sales in
our European businesses were ahead mainly due
to volume growth in Germany and Poland.
Building Envelope
Building Envelope’s sales were lower than
2019, with COVID-19 restrictions unfavourably
impacting volumes across key products and
geographies, particularly at C.R. Laurence.
Volumes were impacted by the softening of
non-residential markets, with a number of
projects being delayed or cancelled, while the
selling price environment remained competitive.
As restrictions eased, the rate of sales decline
lessened over the course of the second
half. Operating profit was behind 2019 as a
result of lower volumes, partly offset by cost
management initiatives.
Infrastructure Products
Like-for-like sales were lower than 2019
because of reduced demand as a number
of non-residential and public infrastructure
projects were delayed or cancelled due to
COVID-19. However, sales of key products
to the communications sector and electric
utilities proved to be resilient as demand for IT
infrastructure was strong. The business recorded
increased like-for-like operating profit due to
continued performance improvement measures
and focused cost control. Europe recorded lower
like-for-like sales in 2020 because of COVID-19
restrictions in key markets, particularly the UK.
In Australia, like-for-like sales were below prior
year due to continued challenges in the telecom
sector in the country.
In 2020, Building Products recorded like-for-like
sales growth of 4% due to strong residential
RMI demand, especially in North America, which
more than offset the effect of a more subdued
non-residential sector. Ongoing business
improvement initiatives and COVID-19 mitigating
actions delivered higher margins through
production efficiencies, commercial excellence,
procurement savings and overhead cost control.
On a like-for-like basis EBITDA (as defined)*
increased by 8% and operating profit by 11%,
as a result of the improved sales growth and
continued progress with cost reductions.
Following a strong start to the year, economic
conditions in North America and Europe were
significantly impacted by COVID-19. The
pandemic particularly affected non-residential
construction activity while the residential
sector was bolstered by increased home
improvement activity.
Activity levels in North America were impacted
by COVID-19 restrictions from the first quarter
of 2020, mostly affecting the West Coast,
Northeastern US, and Canada. In Europe,
construction markets showed resilience in
Central and Eastern European countries, while
much of Western Europe, notably the UK,
France, and Belgium, saw more severe volume
impacts from lockdown restrictions, particularly
in the first half of the year.
Two divestments and six bolt-on acquisitions
were completed in 2020. Building Products’
largest acquisitions were two manufacturers
of underground enclosures in Tennessee and
Texas, both within Infrastructure Products.
Architectural Products
Architectural Products in North America
delivered strong sales growth in 2020, reflecting
positive market demand across all product
groups and regions. With North America seeing
heightened residential RMI demand, sales
through both our retail and professional channels
increased. The businesses delivered significant
* 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.
2020 Annual Report and Form 20-F 52
52
Through a values-driven culture we strive to
maintain the highest standards of corporate
governance and ethical business conduct.
We are transparent in our processes and
outcomes, believing this builds trust and
ensures responsible leadership.
Governance
Board of Directors
Corporate Governance
Report
Chairman's Introduction
Audit Committee Report
Nomination & Corporate
Governance Committee Report
53
54
58
58
60
64
Safety, Environmental & Social
Responsibility Committee Report 70
Directors’ Remuneration
Report
Directors’ Report
Principal Risks and
Uncertainties
74
100
106
An employee of TexasBit, part of CRH’s America’s Materials Division at a paving
project in Waco, Texas. Masks are a common feature of personal protective
equipment (PPE) used by employees in a variety of work environments. During the
pandemic CRH businesses have donated masks and other PPE to hospitals and
health services in local communities around the world.
2020 Annual Report and Form 20-F Board of Directors
54
Richie Boucher
Chairman
Appointed to the Board: March 2018
Nationality: Irish Age: 62
Committee membership:
Albert Manifold
Chief Executive
Appointed to the Board: January 2009
Nationality: Irish Age: 58
Committee membership:
Senan Murphy
Group Finance Director
Appointed to the Board: January 2016
Nationality: Irish Age: 52
Committee membership:
ADF
N
R
S
ADF
S
ADF
Skills and experience:
Skills and experience:
Skills and experience:
Richie has extensive experience in all
aspects of financial services and was
Chief Executive of Bank of Ireland Group
plc between February 2009 and October
2017. He also held a number of key senior
management roles within Bank of Ireland,
Royal Bank of Scotland and Ulster Bank.
He is a past President of the Institute of
Banking in Ireland and of the Irish Banking
Federation.
Qualifications: Bachelor of Arts
(Economics) from Trinity College, Dublin;
Fellow of the Institute of Banking in Ireland.
External appointments:
Listed: Director of Kennedy-Wilson
Holdings, Inc., a global real estate
investment company.
Non-listed: Non-executive Director
of Clonbio Group Limited, which
manufactures sustainable bio products and
produces renewable energy.
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.
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; Bachelor of
Commerce; and a Diploma in Professional
Accounting from University College Dublin.
External appointments:
Listed: Not applicable.
Non-listed: Not applicable.
Board Committees
ADF
Acquisitions,
Divestments & Finance
A
Audit
N
R
Nomination & Corporate
Governance
S Safety, Environment
& Social Responsibility
Remuneration
Committee Chairman
Gillian L. Platt
Senior Independent Director
Appointed to the Board: January 2017
Nationality: Canadian Age: 67
Committee membership:
Richard Fearon
Non-executive Director
Appointed to the Board: December 2020
Johan Karlström
Non-executive Director
Appointed to the Board: September 2019
Nationality: United States Age: 64
Nationality: Swedish Age: 64
Committee membership:
Committee membership:
N
R
S
A
ADF
A
R
S
Skills and experience:
Skills and experience:
Skills and experience:
55
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.
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.
Richard is currently the Vice Chairman
and Chief Financial and Planning Officer
of Eaton Corporation plc, a global power
management company, roles he has held
since 2009 and 2002, respectively. He has
responsibility and oversight for a number
of key operational and strategic functions
at Eaton, including accounting, control,
corporate development, information
systems, internal audit, investor relations,
strategic planning, tax and treasury
functions. He will retire as an executive
and from the Board of Eaton at the end
of March 2021. Prior to joining Eaton,
he served in development and strategic
planning management positions at
several large diversified companies,
including as Senior Vice President of
Corporate Development at Transamerica
Corporation, General Manager of Corporate
Development for Singapore-based NatSteel
Ltd and Director of Strategic Planning at
The Walt Disney Company. He has also
served as a management consultant at
the Boston Consulting Group, Booz Allen
Hamilton and Willow Place Partners.
Qualifications: Bachelor of Arts in
Economics from Stanford University;
Masters of Business Administration from
Harvard Business School; and a Juris
Doctorate from Harvard Law School.
External appointments:
Listed: Director of Eaton Corporation
plc; Non-executive and Lead Director of
Avient Corporation; and Director of Crown
Holdings, Inc.
Non-listed: Not applicable.
2020 Annual Report and Form 20-F
Board of Directors - continued
56
Shaun Kelly
Non-executive Director
Appointed to the Board: December 2019
Lamar McKay
Non-executive Director
Appointed to the Board: December 2020
Heather Ann McSharry
Non-executive Director
Appointed to the Board: February 2012
Nationality: Dual United States and Irish
Nationality: United States Age: 62
Age: 61 Committee membership:
Committee membership:
Nationality: Irish Age: 59
Committee membership:
A
ADF
A
ADF
S
A
N
R
Skills and experience:
Skills and experience:
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
International Consolidated Airlines Group,
S.A. and Jazz Pharmaceuticals plc.
Non-listed: Not applicable.
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; 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: Non-executive Director of Park
Indemnity Limited. Shaun holds a number
of non-profit board memberships.
Audit Committee Financial Expert as determined by the Board
Lamar was until July 2020 Chief Transition
Officer of BP plc. During a 40 year career in
Amoco and subsequently with BP, following
the merger of the two companies, Lamar
held a variety of senior executive roles,
including responsibility for BP’s interests
in the TNK-BP joint venture, Chairman
and CEO of BP Americas (during which
period he acted as President of the Gulf
Coast Restoration Organisation and Chief
Executive Officer for BP’s world-wide
Upstream Division). From April 2016 to
February 2020 he was Deputy Group Chief
Executive Officer of BP, a role in which
he had a wide range of accountabilities,
including safety, operational risk, legal
affairs, technology, economic insight, long
range planning and strategy with the latter
responsibilities particularly influencing
capital allocation planning and BP’s
sustainability initiatives.
Qualifications: Bachelor of Science
from Mississippi State University.
External appointments:
Listed: Non-executive Director
of Apache Corporation.
Non-listed: Not applicable.
Board Committees
ADF
Acquisitions,
Divestments & Finance
A
Audit
N
R
Nomination & Corporate
Governance
S Safety, Environment
& Social Responsibility
Remuneration
Committee Chairman
Mary K. Rhinehart
Non-executive Director
Appointed to the Board: October 2018
Nationality: United States Age: 62
Committee membership:
Lucinda J. Riches
Non-executive Director
Appointed to the Board: March 2015
Nationality: British Age: 59
Committee membership:
Siobhán Talbot
Non-executive Director
Appointed to the Board: December 2018
Nationality: Irish Age: 57
Committee membership:
A
N
S
A
ADF
A
ADF
Skills and experience:
Skills and experience:
Skills and experience:
57
Mary is Chairman of Johns Manville
Corporation, a Berkshire Hathaway
company, which is a leading global
manufacturer of premium-quality building
products and engineered specialty
materials. Over 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 of Johns Manville
Corporation; non-executive Director of
Graphic Packaging Holding Company and
member of the Board of Trustees of the
University of Denver.
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 from the
University of Oxford; and a Masters in
Political Science from the University of
Pennsylvania.
External appointments:
Listed: Non-executive Director of Ashtead
Group plc, Greencoat UK Wind plc and
ICG Enterprise Trust plc.
Non-listed: Not applicable.
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; and a Diploma in Professional
Accounting from University College Dublin.
External appointments:
Listed: Group Managing Director of
Glanbia plc.
Non-listed: Director of the Irish Business
Employers Confederation (IBEC).
Audit Committee Financial Expert as determined by the Board.
Audit Committee Financial Expert as determined by the Board
2020 Annual Report and Form 20-F Corporate Governance Report
58
The safety and well-
being of our people
was our main priority
in the last 12 months.”
Richie Boucher
Chairman
The Corporate Governance
Report contains details of
CRH’s governance structures
and highlights areas of focus
for the Board over the last
year. 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.
Operation of the Board in the
context of COVID-19
Since the onset of the COVID-19 pandemic,
the Board has met remotely through the use of
video technology. Whilst the lack of in-person
interaction, both in formal and informal settings,
presents challenges I am pleased to report that
the cohesiveness of the Board was not adversely
impacted. In addition, we were able to support
the management team in navigating through an
unprecedented crisis and focus on the objectives
the Board had set itself for the year.
As outlined in other sections of this Annual Report,
the safety and well-being of our people was our
main priority in the last 12 months. The Board
received regular reports on the impact of COVID-19
on our employees and provided oversight in relation
to the many initiatives to support and communicate
with them. In addition, we reviewed and considered
the impact of CRH's payment policies on our
customers and suppliers. We also spent a
significant amount of time on the Company’s
strategy, with an in-depth focus on areas such as
vertical integration, the assessment of our portfolio
of businesses and the way they are organised, and
government infrastructure funding.
Despite the challenges of COVID-19 restrictions,
our ongoing process of Board renewal is
continuing. Our work in this area since last year’s
report is outlined in detail in the Nomination &
Corporate Governance Committee’s report to
shareholders on pages 64 to 66.
Stakeholder Engagement
Prior to the 2020 Annual General Meeting
(AGM), we actively engaged with CRH’s major
shareholders on the AGM agenda and general
governance matters. This process, which has been
in place for many years, was especially valuable in
understanding investor perspectives and priorities in
the context of the COVID-19 pandemic.
As mentioned in my introduction to this Annual
Report on page 5, I have also engaged extensively
with shareholders on progress in relation to my
priorities as Chairman and we have actively
engaged with investor groups on various important
matters, including sustainability.
In addition, the Board receives recommendations
from the Safety, Environmental and Social
Responsibility (SESR) Committee in relation to
the areas within its remit, which includes overall
responsibility for employee engagement. The work
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 106 to 111 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 68.
of the SESR Committee is described in detail on
pages 70 to 73.
The full range of ways in which we engage with our
stakeholders are set out on page 25, which also
includes a summary of each stakeholder’s main
areas of interest and the outcomes of the various
engagement processes in 2020.
Feedback from all engagement activities is
regularly considered by the Board as part of its
decision-making processes.
Organisation Structure and Senior
Executive Succession
The Board approved a revised organisational
structure for management, which took effect
in January 2021. The new structure will bolster
the leadership team, further drive performance,
enhance strategic insights and implementation,
provide increased exposure of the wider executive
team to the Board and support succession
planning for our senior leaders.
The Board has also appointed an external firm to
work with it in the area of long-term succession
planning, which includes assessing internal and
external executives against the specifications for
senior roles, designing individual development plans
and supporting transition processes.
As detailed further in the Nomination & Corporate
Governance Committee report on page 64, the
process for the appointment of Senan Murphy’s
successor as Finance Director is well advanced.
External Board Appointments
During 2020, I was invited to join the Board of
Clonbio Group Limited as a non-executive Director.
The CRH Board, chaired by the Senior Independent
Director for this purpose, approved my taking
up this role. In doing so, they were satisfied that
there would be no adverse impact on my time
commitment to CRH or on my ability to fulfil the
responsibilities of my role as Chairman.
Lamar McKay, Heather Ann McSharry and Mary
Rhinehart also sought and received approval to
take up additional Board roles. The Board was also
satisfied in each case that their new commitments
will not impinge on their non-executive duties on the
CRH Board.
The external directorships of each Director are
detailed in their biographies on pages 54 to 57.
Board Performance Evaluation
Annually the Senior Independent Director conducts
a Board Performance Evaluation (BPE) and reports
the outcome to the Board. Actions taken in respect
of recommendations are actively monitored.
2018 Code – Compliance Statement
The principles set out in the 2018 Code emphasise the value of good corporate governance to the
long-term sustainable success of listed companies. These principles, and the supporting provisions,
cover five broad themes:
1. Board Leadership and Corporate Purpose
2. Division of Responsibilities
3. Composition, Succession and Evaluation
4. Audit, Risk and Internal Controls
5. Remuneration
As demonstrated by this Report, CRH applied the principles and complied with the provisions of
the 2018 Code in 2020, save that for the reasons outlined on page 72 the Board has delegated
responsibility to the SESR Committee for workforce engagement. A copy of the 2018 Code can be
obtained from the Financial Reporting Council’s website, www.frc.org.uk.
59
The 2020 BPE involved one to one meetings,
held by video call, with feedback being provided
on strategy, the operation of the Board and its
Committees, the management of the Board in
the context of COVID-19, talent management,
succession planning for the Board and senior
management and the process for my transition into
the role of Chairman. The report contained a small
number of recommendations to further enhance
the performance of the Board, including suggested
future areas of focus in relation to strategy,
Committee refreshment and the ongoing long-term
senior executive succession process referred to
above. In relation to the Board’s renewal priorities,
the report also reinforced the focus on diversity,
including gender and ethnicity.
An external firm will be engaged to conduct
an externally facilitated review of the Board’s
effectiveness during 2021.
Migration of CRH Shares to
Euroclear Bank
In February 2021, an Extraordinary General Meeting
(EGM) of shareholders was held, at which Ordinary
and Preference shareholders approved resolutions
to authorise the migration of CRH’s Ordinary
and Preference shares held electronically in the
UK-based CREST settlement system to Euroclear
Bank (the 'Migration'), the simplification of CRH’s
share capital by the surrender and cancellation
of the Income Shares and various changes to
the Articles of Association. Class meetings of the
Company’s Preference shareholders were also
held, at which changes in preference share rights
resulting from the Migration were approved.
In order to facilitate shareholder engagement
at the EGM in the context of COVID-19 related
restrictions, shareholders were able to participate
and ask questions on a real-time basis via a live
audio-cast.
The Board has since confirmed CRH’s
implementation of the Migration. Accordingly,
settlement of share trades in Euroclear Bank will
commence on 15 March 2021.
Litigation and Compliance
The Group General Counsel regularly updates
the Board and Committees on relevant legal and
compliance matters and provides reports on any
material matters that arise requiring Board decisions
or detailed consideration.
Re-election of Directors
Table 7 on page 65 provides a summary of
competencies, important to the long-term success
of the Group, that each Director seeking re-election
at the 2021 AGM brings to the Board.
I have evaluated the performance of each Director
and am satisfied that each Director is committed
to their role, provides constructive challenge and
devotes sufficient time and energy to contribute
effectively to the performance of the Board.
I strongly recommend that shareholders vote in
favour of the re-appointment of each Director going
forward for re-election at the 2021 AGM.
Conclusion
In a challenging year, I am satisfied that the CRH
Board continued to perform effectively and that its
corporate governance processes are robust. The
Board continues to actively review strategy and
oversees the achievement of, and progress towards
meeting, agreed strategic targets and objectives.
The importance of our people, our values and our
culture to achieving our strategic aims was evident
in the strong performance of the Group in the most
challenging of circumstances in 2020. Diversity,
including gender and ethnicity, are an important
focus for Board renewal, senior management
succession and generally throughout the Company
and I look forward to updating you on progress in
this area.
Richie Boucher
Chairman
3 March 2021
2020 Annual Report and Form 20-F Audit Committee Report
60
On behalf of the Committee,
I am pleased to introduce the
Audit Committee Report for the
year ended 31 December 2020.
The purpose of this report
is to provide shareholders
with an insight into the
workings of, and principal
matters considered by, the
Committee in 2020. 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, available on our
website, www.crh.com.
While the Committee continued to focus
on its core responsibilities of monitoring the
effectiveness of the Group's financial reporting
and Enterprise Risk Management framework and
the integrity of the Group's internal and external
audit processes during 2020, the Committee
also spent significant time:
• considering and discussing with management
the impact of COVID-19 on the Group's
operations, financial reporting and Enterprise
Risk Management framework;
•
reviewing the impact of the change in the
Group's reporting currency from euro to
US Dollar with effect from 1 January 2020,
including the release of re-translated financial
information for 2018 and 2019 in US Dollar
in April 2020 in order to provide analysts and
investors with comparable US Dollar historical
information and the audited US Dollar financial
statements for 2018 and 2019 included within
this 2020 Annual Report and Form 20-F;
• discussing and challenging with management
the outcome of the impairment testing process
which resulted in a non-cash impairment
charge of $0.8 billion for the financial
year-ended 31 December 2020, including
understanding and challenging key judgement
areas and assumptions;
The Committee
continued to focus on
its core responsibilities
of monitoring the
effectiveness of the
Group's financial
reporting and enterprise
risk management
framework and the
integrity of the Group's
internal and external
audit processes.”
Shaun Kelly
Chairman of Audit Committee
• monitoring Deloitte's performance of the 2020
external audit plan, their first since succeeding
EY as the Group's external auditor with effect
from 1 January 2020.
Table 1 summarises the key areas that the
Committee focused on in 2020.
Audit Committee Membership
The Committee currently consists of eight
non-executive Directors considered by the Board
to be independent. The biographical details of
each member are set out on pages 55 to 57.
Together, the members of the Committee bring a
broad range of relevant experience and expertise
from a variety of industries which is vital in
supporting effective governance. 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.
Key Areas of Focus in 2020
Table 1
In addition to the Committee's responsibilities under section 167(7) of the Companies Act 2014, the key areas of focus for the Committee in 2020 included
the following:
COVID-19
External
Auditor
What did we do?
We considered and discussed with management the impact of the COVID-19 pandemic on the Group's operations and
consolidated financial statements. This included consideration of the impact, if any, on the Group's Going Concern and
Viability Statements, the Group's internal controls and risk management systems and on the operation and effectiveness
of the Group's Internal Audit function.
We also engaged extensively with Deloitte on the delivery of the 2020 external audit plan in a predominantly remote
working environment.
What did we do?
Following a formal and competitive external audit tender process, details of which were set out in the 2018 Annual Report
and Form 20-F, Deloitte replaced EY as the Group's external auditor with effect from the financial year commencing
1 January 2020. A key area of focus for the Committee during 2020 was, therefore, monitoring the audit transition process
and Deloitte's delivery of the 2020 external audit plan. Richard Muschamp is the Group's lead audit engagement partner.
Following an assessment of Deloitte's continued independence, objectivity and performance, and having received
confirmation of their willingness to continue in office, the Committee has recommended to the Board Deloitte's continuance
in office for the financial year commencing 1 January 2021. Their continuance in office will be subject to a non-binding
advisory vote at the 2021 AGM.
61
Financial
Reporting &
External Audit
What did we do?
We reviewed the 2020 Annual Report and Form 20-F and the appropriateness of the Group's accounting principles,
practices and policies and prior year restatement, together with the annual and half-year financial statements and the Going
Concern and Viability Statements, and recommended them to Board for approval.
In July 2020, we met with Deloitte to agree the 2020 external audit plan. This included robust discussion and challenge with
both Deloitte and management on the scope, materiality thresholds and structure of the 2020 external audit plan. Table 2
on page 62 outlines the key areas identified as being potentially significant and how we addressed these during the year.
Impairment
Testing
Change in
Reporting
Currency
Enterprise Risk
Management
IT Governance
& Cyber Security
What did we do?
Through discussions with both management and Deloitte, we reviewed management's impairment testing methodology
and processes, including key judgement areas and assumptions as well as the relevant accounting and disclosure
requirements. We found the methodology to be robust and the results of the testing process appropriate. Further details in
relation to the impairment outcome for 2020 are outlined in table 2 on page 62.
What did we do?
We reviewed the impact of the change in the Group's reporting currency from euro to US Dollar with effect from 1 January
2020, including the release of re-translated financial information for 2018 and 2019 in US Dollar in April 2020 in order
to provide analysts and investors with comparable US Dollar historical information and the audited US Dollar financial
statements for 2018 and 2019 included in this 2020 Annual Report and Form 20-F.
What did we do?
We continued to monitor and assess the Group’s Enterprise Risk Management framework, the principal and emerging
risks and uncertainties facing the Group and the methodology and processes underlying the Viability Statement
included on page 29 of our Risk and Resilience section, including the impact of COVID-19 and the impact of material
climate-related and other emerging risks. 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.
What did we do?
We continued to monitor the Group’s IT governance and information security programme and ability to address cyber
security threats, including the potential increased risks arising from predominantly remote working arrangements in the
context of the ongoing COVID-19 pandemic.
2020 Annual Report and Form 20-F Audit Committee Report - continued
Areas Identified for Focus during the 2020 External Audit Planning Process
Table 2
Impairment
of Goodwill
62
Impairment of
Property, Plant &
Equipment, and
Financial Assets
What did we do?
For the purposes of its annual impairment testing process, the Group assesses the recoverable amount of each
of CRH's cash-generating units (CGUs—see details in note 16 to the Consolidated Financial Statements) based
on a value-in-use computation. The annual goodwill impairment testing was conducted by management, and
papers outlining the methodology and assumptions used in, and the results of, that assessment were presented
to the Committee. This included review of key judgement areas and assumptions such as CGU determination,
discount rates and growth rates. Following its deliberations, the Committee was satisfied that the methodology
used by management (which was consistent with prior years) and the results of the assessment, together with
the disclosures in note 16, were appropriate.
As noted elsewhere in this report, an impairment charge of $0.8 billion, of which $0.4 billion relates to goodwill,
has been recognised in the 2020 Consolidated Financial Statements. The charge in respect of impairment of
goodwill relates to our UK business.
What 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. Papers outlining the methodology and assumptions used
in, and the results of, that assessment were presented to the Committee. This included review of key judgement
areas and assumptions such as CGU determination, discount rates and growth rates. Following its deliberations,
the Committee was satisfied that the methodology used by management (which was consistent with prior years)
and the results of the assessment, together with the disclosures in notes 11 and 15, were appropriate. As noted
elsewhere in this report, an impairment charge of $0.8 billion has been recognised in the 2020 Consolidated
Financial Statements, of which $0.4 billion related to property, plant and equipment and financial assets. The
charge in respect of impairment of property, plant and equipment relates primarily to our European business,
while the impairment in respect of financial assets relates to our associate investment in China.
Contract Revenue
Recognition
What 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 Deloitte, 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 2020.
Percentage of Audit and Non-audit Fees(i)
Table 3
2018 - EY
6%
2019 - EY
6%
2020 - Deloitte
1%
94%
94%
99%
(i) Following a formal and extensive audit tender process, Deloitte replaced EY as the Group's external auditor with effect from the financial year commencing 1 January 2020.
Audit Services
Non-audit Services
Audit Committee Effectiveness
and Priorities for 2021
During 2020, 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 2020.
Looking ahead to 2021, the Committee will
continue to focus on the key ongoing areas
outlined in table 1 page 61, and will also continue
to monitor and assess the potential impact of the
principal and emerging risks and uncertainties on
the Group's consolidated financial statements.
63
Shaun Kelly
Chairman of Audit Committee
3 March 2021
External Auditor
Effectiveness
The Committee, on behalf of the Board, is
responsible for the relationship with the external
auditor and for monitoring the effectiveness and
quality of the external audit process and the
independence of the auditor. Following a formal
and extensive audit tender process, Deloitte was
appointed as the Group's external auditor with
effect from 1 January 2020. The Committee’s
primary means of assessing the effectiveness
of the external audit process is by monitoring
performance against the agreed audit plan.
The Committee also considers 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.
In advance of the commencement of the 2020
external audit, the Committee reviewed and
approved Deloitte's letter of engagement, which
set out confirmation of Deloitte's independence
within the meaning of the applicable regulations
and professional standards. In July, the
Committee met with Deloitte to agree the 2020
external audit plan. Table 2 on page 62 outlines
the key areas identified as being potentially
significant and how these were addressed
during the year. The Committee met regularly
with Deloitte during 2020 to monitor progress
in relation to the 2020 plan, which included
meetings in the absence of management to
discuss any issues that Deloitte wished to raise
directly with the Committee. In February 2021, the
Committee received and considered a report from
Deloitte on its key audit findings, including the key
risks and significant areas of judgements, prior to
making a recommendation to the Board in relation
to the approval of this 2020 Annual Report and
Form 20-F.
Further details in relation to the external auditor,
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 Deloitte to CRH during 2020.
Non-audit Fees
In 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 2020, Deloitte provided a number of audit
services, including Sarbanes-Oxley Section
404 attestation1, and a limited number of
non-audit services, including the provision of help
with local tax compliance, advice on taxation laws
and other related matters; assignments which
typically involve relatively low fees. The Committee
is satisfied that the external auditors’ knowledge
of the Group was an important factor in choosing
them to provide these services. The Committee
is also satisfied that the fees paid to Deloitte for
non-audit work in 2020, which amounted to
$0.1 million and represented less than 1% of
the total fees for the year, did not compromise
their independence or objectivity. Details of the
amounts paid to the external auditor 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 3 on page 62).
Further details in relation to the Group’s policy
regarding non-audit fees are set out in Section 2
of the Governance Appendix.
Internal Audit Effectiveness
In December 2019, the Committee received and
approved the Internal Audit Charter and audit plan
for 2020. During the year, the Committee received
regular updates from the Head of Internal Audit
on the impact of COVID-19 on the delivery of
the 2020 plan and on 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.
The Head of Internal Audit has direct access to
me as Chairman of the Audit Committee and
the Committee meets with the Head of Internal
Audit on a regular basis without the presence of
management.
1. A copy of Section 404 of the Sarbanes Oxley Act 2002 can be obtained from the SEC's website, www.sec.gov.
2020 Annual Report and Form 20-F Nomination & Corporate
Governance Committee Report
64
Diversity is a core
criteria of the Board's
renewal policy and
work in overseeing
senior management
succession.”
Richie Boucher
Chairman
On behalf of the Committee,
I am pleased to present the
Nomination & Corporate
Governance Committee
Report to shareholders.
The purpose of this report
is to outline the workings
of, and principal matters
considered by, the Committee
in the last 12 months. 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, available on our
website, www.crh.com.
Committee Membership
The Committee currently consists of four
non-executive Directors, considered by the
Board to be independent. The biographical
details of each member are set out on pages
54 to 57. The Chief Executive normally attends
meetings of the Committee.
Board Renewal
In last year's report I highlighted that one of my
priorities is enhancing the Board's expertise
by 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.
Following an extensive search, supported by
Egon Zehnder1, the Committee recommended
to the Board that Rick Fearon and Lamar McKay
join the Board as non-executive Directors with
effect from 3 December 2020. Rick and Lamar
bring deep financial and operational expertise
from their senior executive roles in capital
intensive, global industrial businesses. Their
intimate knowledge of the markets in which CRH
operates, including North America, together with
experience in risk management and sustainable
business practices, will be a valuable resource
for our Board as we continue to execute on our
strategy and to drive shareholder value. Their
detailed biographies are set out on pages 55 and
56 respectively.
Following nine and six years on the Board
respectively, Heather Ann McSharry and Lucinda
Riches are not seeking re-election at the 2021
AGM and, therefore, will retire as Directors at the
conclusion of that meeting. I would like to thank
each of them for their exceptional service and
commitment to CRH.
Finance Director
In September 2020, Senan Murphy advised the
Board of his intention to retire from the Board and
as an executive during 2021. He is not seeking
re-election as a Director and consequently will
retire from the Board following the conclusion of
the 2021 AGM. He will, however, continue to act
as Group Finance Director in a full-time capacity
for a period of time to support the transition to
his successor. The succession process, which
is being conducted with the support of Spencer
Stuart, is well-advanced.
1. Egon Zehnder provide executive recruitment and support services as and when requested. Otherwise, they do not have any connection with CRH or individual directors.
Summary of Board Changes
Retirement/Resignation:
Patrick Kennedy - April 2020
Henk Rottinghuis - April 2020
Appointments:
Richard Fearon - December 2020
Lamar McKay - December 2020
Table 4
Not seeking re-election at 2021 AGM:
Heather Ann McSharry - April 2021
Senan Murphy - April 2021
Lucinda Riches - April 2021
Membership of the CRH Board (as at 31 December 2020)
Independence (determined
by CRH Board annually)
Tenure of Non-executive
Directors
Geographical Spread
(by residency)
Table 5
65
17%
10%
70%
20%
83%
8%
42%
42%
8%
Non-Independent
Independent
6-9 years
United Kingdom
Mainland Europe
3-6 years
0-3 years
N. America
Ireland
Gender Diversity - % of Female Directors (as at 31 December)
Table 6
2013
2014
2015
2016
2017
2018
2019
2020
15%
23%
29%
33%
30%
38%
42%
42%
Female
Male
Summary of Director Competencies
Table 7
Accounting,
Internal
Control &
Financial
Expertise
Financial
Services
Governance M&A
Building
Materials or
Capital
Intensive
Industry
Experience
IT & Cyber
Security
Talent
Management
Remuneration
Safety &
Sustainability
Strategy
Global
Experience
R. Boucher
R. Fearon
J. Karlström
S. Kelly
L. McKay
H.A. McSharry
A. Manifold
S. Murphy
G.L. Platt
M.K. Rhinehart
L.J. Riches
S. Talbot
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2020 Annual Report and Form 20-F Nomination Committee Report - continued
Diversity
Board renewal and senior management
succession are a constant process. As such, the
priorities for renewal and succession evolve over
time. Diversity is a core criteria of the Board's
renewal policy, which is set out on page 68,
and work in overseeing senior management
succession. Accordingly, diversity, including but
not limited to gender and ethnicity, is an integral
part of developing short lists of internal and
external candidates and is part of the search
specification agreed with external agents. In
addition, the Board has set a target of a minimum
of 33% of senior leaders being women by 2030.
The Committee and the SESR Committee
collectively work with management on the
inclusion and diversity agenda at below Board
level across CRH and monitor progress against
agreed Group objectives and targets.
66
Board Committee Structure
and Composition
Committees will be implemented following the
conclusion of the 2021 AGM.
During 2020, following a review of the Board's
Committees we recommended to the Board
that the Acquisitions Committee and the Finance
Committee be merged into a new combined
Acquisitions, Divestments and Finance (ADF)
Committee. The terms of reference of the new
ADF Committee are available on the CRH
website, www.crh.com.
The Committee also recommended some
updates to its own terms of reference in relation
to the Committee's duties and responsibilities,
including emphasising the importance of the
development of diverse pipeline candidates in
succession processes. The updated terms of
reference are also available on the CRH website,
www.crh.com.
On the Committee's recommendation, the Board
has appointed Rick Fearon to the ADF Committee
and the Audit Committee and Lamar McKay to
the ADF Committee, Audit Committee and SESR
Committee. Further changes to the Board's
Corporate Governance
The 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. As in prior years, there was extensive
engagement with shareholders during 2020 on
governance matters.
Richie Boucher
Chairman of the Nomination
& Corporate Governance Committee
3 March 2021
Staker Parson Materials & Construction, part of CRH’s Americas Materials Division is a leading provider of paving, concrete, construction services and landscaping in Utah. CRH is the
largest producer of asphalt in North America. The material is 100% recyclable which helps make CRH a significant contributor to the circular economy.
Board of Directors
Membership Structure
of the Board
We consider the current size and composition
of the Board to be within a range which is
appropriate. The spread of nationalities of the
Directors reflects the geographical reach of the
Group and we consider that the Board as a whole
has the appropriate blend of skills, knowledge
and experience, from a wide range of industries,
regions and backgrounds, necessary to lead the
Group. Section 1 of the Governance Appendix on
the CRH website (www.crh.com) contains further
details on the Board’s structures and the Board’s
policies with regard to the appointment and
retirement of Directors.
Role and Responsibilities
The Board is responsible for the leadership,
oversight, control, development and long-term
success of the Group. It is also responsible for
instilling the appropriate culture, values and
behaviour throughout the organisation. There is a
formal schedule of matters reserved to the Board
for consideration and decision. This includes the
matters set out in table 8.
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. Directors are provided with access to
all Board and Committee papers in advance of
each meeting. If any Director cannot attend a
meeting, they can communicate their opinions
and comments on the matters to be considered
via the Chairman or the relevant Committee
Chairman prior to the relevant meeting.
Matters Reserved
to the Board
Table 8
• 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
67
Independence of Directors
The Board has determined that each non-executive
Director remains independent.
Chairman
Richie Boucher was appointed Chairman of
the Group with effect from 1 January 2020.
On his appointment as Chairman, he met the
independence criteria set out in the 2018 Code.
Although he holds other directorships, the Board
has satisfied itself that these do not adversely
impact on his role as Chairman.
Attendance at Meetings during the year ended 31 December 2020
Table 9
Name
Board
Total Attended
ADF (i)
Audit
Total
Attended
Total
Attended
Nomination (ii)
Total Attended
Remuneration
Total Attended
SESR (iii)
Total
Attended
R. Boucher
R. Fearon (iv)
J. Karlström
S. Kelly
P.J. Kennedy (v)
L. McKay (iv)
H.A. McSharry
A. Manifold
S. Murphy
G.L. Platt
M.K. Rhinehart
L.J. Riches
H. Th. Rottinghuis (v)
S. Talbot (vi)
6
1
6
6
1
1
6
6
6
6
6
6
1
6
6
1
6
6
1
1
6
6
6
6
6
6
1
6
6
-
-
4
-
-
-
6
6
-
-
6
1
6
6
-
-
4
-
-
-
6
6
-
-
6
1
5
-
-
7
7
-
-
7
-
-
-
7
7
1
7
-
-
7
7
-
-
7
-
-
-
7
7
1
6
7
-
-
-
1
-
7
-
-
7
7
-
-
-
7
-
-
-
1
-
7
-
-
7
7
-
-
-
4
-
4
-
1
-
4
-
-
4
-
-
-
-
4
-
4
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1
-
4
-
-
4
-
-
-
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5
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5
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2
-
(i)
As outlined on page 66, the Acquisitions Committee and Finance Committee were combined to form a new Acquisitions, Divestments and Finance Committee with effect
from 1 May 2020.
(ii) Nomination & Corporate Governance Committee.
(iii) Safety, Environment & Social Responsibility Committee.
(iv) Appointed December 2020.
(v) Retired April 2020.
(vi) Siobhan Talbot was unable to attend some meetings during the course of 2020 due to diary conflicts.
1. In accordance with Section 167(7) of the Companies Act 2014.
2020 Annual Report and Form 20-F 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:
68
•
international business experience, particularly in
the regions in which the Group operates or into
which it intends to expand;
• skills, knowledge and expertise (including
education or professional background) in areas
relevant to the operation of the Board;
• diversity in all aspects, including nationality,
gender, social and ethnic backgrounds,
cognitive and personal strengths; and
•
the need for an appropriately sized Board
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 52 to 67, which the Nomination & Corporate
Governance Committee believes is appropriate at
the current time.
Committees
The Board has established five permanent
Committees to assist in the execution of
its responsibilities. The current permanent
Committees are:
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 Holdings
The Company is not owned or controlled directly
or indirectly by any government or by any
corporation or by any other natural or legal person
severally or jointly. The major shareholders do
not have any special voting rights. Details of the
substantial holdings as at 31 December 2020 are
provided in table 10 below. The Company has not
been advised of any changes in holdings since
31 December 2020.
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).
• Acquisitions, Divestments & Finance;
Legal and Compliance
• Audit;
• Nomination & Corporate Governance;
• Remuneration; and
• Safety, Environment & Social Responsibility
Ad-hoc Committees are formed from time to time
to deal with specific matters.
CRH's Legal and Compliance function supports
the Group in operating consistently with its
values, providing advice, guidance and support
to executive and operational management and
working closely with them to provide compliance
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.
Code of Business Conduct
Our culture as a company is built on our
commitment to upholding the CRH Values and
in particular, doing what we say and leading
with integrity. This means we do the right things
in the right way, comply with the law and work
responsibly. The foundation of the Legal and
Compliance programme is the Code of Business
Conduct (CoBC) and supporting policies,
which set 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. The
CoBC is applicable to all employees of the CRH
Group, including the Chief Executive, our Global
Leadership Team and senior financial officers.
During the year, the CoBC was refreshed and will
be launched in 2021.
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, we continue
to update and improve awareness and training
efforts. All new employees are provided with the
CoBC and relevant employees undertake CoBC
training and Advanced Compliance Training on
a regular basis. Additional training modules are
developed for more focused topics and audiences
where necessary.
Substantial Holdings
Table 10
As at 31 December 2020, the Company had received notification of the following interests in its Ordinary Share capital, which were equal to, or in excess of, 3%:
Name
BlackRock, Inc. (i)
Cevian Capital II GP Limited
UBS AG
31 December 2020
31 December 2019
31 December 2018
Holding/
Voting Rights
% at
year end
Holding/
Voting Rights
% at
year end
Holding/
Voting Rights
% at
year end
59,047,330
27,534,705
26,380,604
7.52
3.51
3.34
53,813,273
6.82
65,387,207
-
-
-
26,380,604
3.34
26,380,604
8.01
-
3.23
(i)
BlackRock, Inc. has advised that its interests in CRH shares arise by reason of discretionary investment management arrangements entered into by it or
its subsidiaries.
1. The Terms of Reference of these Committees comply fully with the 2018 Code.
CRH Hotline
CRH engages an external service provider to
administer an independent 24/7 multi-lingual
confidential “Hotline” facility. The CRH Hotline
allows employees, customers, suppliers and or
other external stakeholders to raise good faith
concerns that may be relevant to the CoBC,
inappropriate or illegal behaviour or violations
of any CRH policies or local laws. All concerns
are handled discreetly and are professionally
investigated with appropriate actions taken based
on investigation findings. CRH is committed to
creating an atmosphere where employees feel
empowered to speak up when they have good
faith concerns. Retaliation or reprisals are not
tolerated at CRH.
Communications
with Shareholders
Communications with shareholders are given
high priority and the Group devotes considerable
time and resources each year to shareholder
engagement. We recognise the importance of
effective dialogue as an integral element of good
corporate governance. The Investor Relations
team, together with the Chief Executive, Finance
Director and other senior executives, regularly
meet with institutional shareholders (each year
covering over 60% of the shareholder base).
Detailed reports on the issues covered in those
meetings and the views of shareholders are
circulated to the Board after each group of
meetings. Table 12 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 2020, the Chairman, Remuneration
Committee Chair and Company Secretary
again participated in a number of meetings
with some of the Group’s major shareholders in
advance of the 2020 AGM as part of the Group's
ongoing engagement processes. There was also
continued engagement with the Group's major
shareholders on remuneration and governance
matters throughout 2020.
US Listing - Additional Information
Table 11
Additional details in relation to CRH’s general corporate governance practices are set out in the
Governance Appendix, which has been filed as an exhibit to the Annual Report on 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 2: For what period are non-executive
Directors appointed?
• Page 4: What are the requirements
regarding the retirement and re-election
of Directors?
Section 2 - Operation of the Board’s
Committees
• Page 5: Audit Committee: Role and
Responsibilities
• Page 5: Audit Committee: Meetings
• Page 7: Audit Committee: Non-audit Fees
Details of the executive Directors’ service
contracts and the policy for loss of office are
set out under the section entitled 'Service
Contracts' on page 81 of the 2018 Annual
Report and Form 20-F as filed with the SEC
and the section entitled 'Service Contracts' on
page 85 of the 2019 Annual Report and Form
20-F as filed with the SEC. Both such sections
entitled 'Service Contracts' are deemed to be
incorporated by reference herein.
69
Investor Relations Activities
Table 12
•
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 various issues
•
•
•
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
The following are available on www.crh.com
Table 13
Governance
Investors
• Governance Appendix
• Annual and Interim Reports, the Annual
• Directors’ Remuneration Policy
• Terms of Reference of the Acquisitions,
Divestments & Finance, Audit, 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 external auditor
•
Compliance & Ethics statement, Code
of Business Conduct and Hotline
contact numbers
Report and Form 20-F (separate
documents up to 2015) and the
annual Sustainability Report
• News releases
• Webcast recordings of results briefings
•
General Meeting dates, notices,
shareholder circulars, presentations
and poll results
• Answers to Frequently Asked Questions,
including questions regarding dividends
and shareholder rights in respect of general
meetings
2020 Annual Report and Form 20-F Safety, Environment & Social
Responsibility Committee
70
I am pleased to introduce the
Safety, Environment & Social
Responsibility Committee
Report to shareholders. The
report sets out the primary
focus areas for the Committee
in the areas of safety, climate
change and sustainability,
inclusion and diversity and
workforce matters.
The SESR Committee
is a key forum for
engagement with
management and the
provision of support
for, and oversight of,
non-financial initiatives
which are vital to the
success of CRH.”
Richie Boucher
Chairman
Committee Membership
The Committee currently consists of five
non-executive Directors and the Chief Executive.
The biographical details of each member of the
Committee are set out on pages 54 to 57.
Safety
Safety is a priority for the Board and the SESR
Committee. In 2020, there was a particular focus
on the impact of COVID-19 on the health and
well-being of our employees. We worked closely
with management in relation to the initiatives and
supports put in place for employees affected
by the pandemic and monitored closely our
experience compared to industry best practice
and trends in society generally.
We deeply regret that there was one employee
fatality and two contractor work place fatalities
during 2020 and we extend our sincere
sympathies to their families. The background to
each accident was carefully examined by the
Committee, discussed with the senior leaders
responsible for the businesses concerned and
reported to the Board. Learnings from accidents
and “near misses“ are appropriately shared
across the organisation. We also regularly monitor
important safety indicators to establish if there are
any trends that require investigation and receive
updates on the findings from internal and external
safety audits. In addition to the existing indicators
which track safety performance, new leading
indicators in each Division have been identified
and these will be reported on to the Committee on
a regular basis going forward.
The Group Global Safety Council continued to
provide oversight and coordination of group safety
initiatives and best practice sharing. Together
with management, we are resolutely focused
on doing all that we can to achieve our ongoing
target of zero harm and reinforcing the Group’s
strong safety culture across all of our operations.
To that end, our Frontline Leadership program is a
significant people development initiative covering
c.10,000 operational frontline staff. The initiative
represents a strong investment in leadership and
culture to enable the human performance element
of a robust safety and operational management
framework. It will support the development of
high performing, effective Frontline Leaders who
continuously create value in our businesses.
Development and rollout continued to progress
safely in 2020 despite the challenges presented by
COVID-19.
Climate Change and Sustainability
The CRH Board is strongly of the view that while
there are undeniable challenges arising from
the transition to a low carbon economy there
are significant opportunities in addressing those
Key Areas of Focus in 2020
Table 14
Safety
What did we do?
We received and discussed with management regular updates covering the Group’s safety performance, policies, action plans,
and the background, impact and required remediation actions in relation to any serious incidents.
Sustainability
/ Environment
What did we do?
We considered and reviewed performance against the Group’s 2030 sustainability targets, details of which were announced in
our 2019 Annual Report and Form 20-F and are summarised on page 21.
71
In the context of the importance of concrete as a sustainable building material, we also considered and discussed CRH’s
energy usage, including the plans and initiatives in place to reduce CRH’s CO2 emissions.
Social
Responsibility
Reporting
Reporting
What did we do?
Inclusion & Diversity: We received and considered updates from management on the status of the ongoing work in the area of
I&D, including the roll-out of I&D training and the governance structures being put in place to support and drive improvements in
I&D across the Group.
Employee Engagement: While the ongoing COVID-19 pandemic impacted on our 2020 workforce engagement plans, workforce
engagement remained a key priority area during 2020, with a particular focus being on the ways in which CRH could support
the health & well-being of employees in the current environment.
Corporate Purpose: We continued to monitor and review progress in relation to the ongoing project to fully define and articulate
the Group’s corporate purpose (see page 73 for more details).
What did we do?
We considered and approved the Group’s 2019 Sustainability Report, which was released in March 2020, and the various
non-financial disclosures included in this Report on pages 20 to 25. We also reviewed and considered the proposed structure
and format of the 2020 Sustainability Report, which will be published later this month.
During 2020, underlying our commitment to transparent and leading practice reporting, we were delighted to become a
supporter of the Financial Stability Board’s ‘Task Force on Climate-Related Financial Disclosures’ (TCFD), which requires
transparency on the financial aspects of climate change risks and opportunities from the transition to the low-carbon economy.
challenges. Our products, including concrete,
building envelope solutions and architectural
products for example are essential for sustainable
construction and in creating a carbon neutral built
environment.
The Committee has also reviewed in detail the
Group’s energy usage requirements and the
challenges, risks and opportunities in increasing
the amount of alternative energy sources in the
production of building products.
Following the early achievement of our 2020
emissions reduction target, in 2020 the
Committee and the Board approved an updated
science-based carbon emission reduction
roadmap, targeting an ambitious <520kg of
CO2 per tonne of cementitious material by
2030. In addition, we have set a target of having
50% of revenue from products with enhanced
sustainability attributes by 2025. Further details in
relation to these targets are set out on page 21.
The Committee has considered with management
the plans and initiatives to achieve these targets
and is satisfied, in particular, that the related capital
expenditure requirements are integrated into the
processes for developing the Group’s capital
investment programme. Progress towards the
achievement of the targets is monitored regularly.
In addition to the 2030 targets referred to above,
CRH has set out its ambition to achieve carbon
neutrality along the cement and concrete value
chain by 2050. Work to research, develop and
apply new technologies in areas including carbon
capture, storage and use (CCUS), re-carbonation,
alternative materials and process changes that will
be required to achieve this ambition is ongoing.
Through the Global Cement and Concrete
Association (GCCA), which has set out a similar
goal of carbon neutrality, we are working closely
with other companies with a global footprint and
the wider community on a detailed roadmap to
set out a clear plan for linking the technologies,
strategies, policies and levers to achieve that
vision, as well as actions and measurable
milestones.
In line with CRH’s best practice approach to
transparent and leading practice disclosure,
we support the Financial Stability Board’s Task
Force on Climate-Related Financial Disclosures
(TCFD) initiative. Further information on our
sustainability performance and how we support
the TCFD recommendations can be found in the
annual CRH Sustainability Report available on
www.crh.com. The Sustainability Accounting
Standards Board (SASB) Standards will be used in
the preparation of the independently-assured CRH
Sustainability Report 2020, which, as in previous
years, will also be in accordance with the Global
Reporting Initiative (GRI) Standards.
Responsible corporate lobbying is a key principle
underpinning our interactions with policy
makers directly, and indirectly through industry
associations, in relation to all aspects of CRH’s
business, including climate change. As part of the
Committee’s programme of work for 2021, we will
be reviewing our climate lobbying practices and
related disclosures to ensure there is an alignment
between those practices and the expectations of
the Board and our stakeholders. Our intention is to
publish the outcome of this review in due course.
2020 Annual Report and Form 20-F SESR Committee - continued
Inclusion & Diversity
Examples of Sustainability Initiatives
Table 15
The Board and management are committed to
building an inclusive and diverse organisation
in which talented people of all backgrounds are
welcome and work in an environment which
supports them in performing at their best. This
is supported by a specific target of having a
minimum of 33% of senior leaders being women
by 2030. Key activities during 2020 as part of
our strategy to achieve our inclusion and diversity
objectives are highlighted in table 16. The SESR
Committee receives an update on these activities
and progress generally at each meeting.
72
Workforce Engagement
The Board has designated the Committee with
responsibility for workforce engagement. Given
the footprint of CRH with c. 77,100 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 the Board’s decision-making
processes.
The ongoing COVID-19 pandemic impacted the
roll-out of some of our planned initiatives for 2020,
such as employee engagement sessions during
Board site visits. Similarly, there was very limited
opportunity for members of the SESR Committee
to attend employee development programmes,
forums, conferences and other events in their local
regions. However, we did have the opportunity
to join some virtual sessions and I was delighted
to attend the Group’s management conference
which was held early last year.
While our planned programme of work
was disrupted, workforce engagement has
nevertheless remained a key priority and we have
received regular reports on the initiatives put
in place to support and communicate with the
Group’s employees (see table 17). The Committee
also continued to review and consider reports
arising from the Group's 'Hotline' facility, with a
particular focus on any COVID-19 related issues.
During 2021, we will be undertaking an
organisational health survey. The survey, which will
target over half of the workforce, will seek insights
on local businesses and CRH as a whole.
Through our Americas Materials Division, we have worked with the Wildlife Habitat
Council since 2004. This non-profit group combines conservation and business
to develop sites as wildlife habitats. The areas for wildlife habitats may be large
depleted quarries, or small buffer zones between an operating plant and a highway.
Our CRH Innovation Centre for Sustainable Construction (ICSC), located in the
Netherlands, has recently opened a state-of-the-art laboratory for testing materials
and technologies relating to CO2 usage. This specialised R&D laboratory highlights
our commitment to developing sustainable, circular solutions as we work towards
our 2050 ambition for carbon neutrality along the cement and concrete value chain.
We are the largest recycler of building materials in North America. The roads
we pave contain over 20% recycled materials, allowing us to reduce our carbon
emissions, preserve natural resources, avoid waste and support the circular
economy.
Our products help create structures that embody environmentally sustainable
solutions and enhance the overall sustainability performance of buildings. This
includes concrete sustainable urban drainage solutions, energy-efficient building
envelope products and precast concrete building elements.
Inclusion & Diversity
Table 16
We're committed to building an inclusive and diverse organisation where:
Talented people
of all backgrounds
are welcome -
Differences are
embraced
Everyone has a
fair and equal
opportunity -
To develop
and progress
Our working
environment
supports people -
In being themselves,
performing at
their best
Key I&D Activities in 2020
Communication:
• Shared stories of inclusion and resources and best practices
• Celebrated I&D events internally, including International Women’s Day,
Pride and World Mental Health Day
Education & Awareness:
• Trained leaders across the Group on the importance and value of
Inclusion & Diversity in the workplace
People & Practices:
• Updated key ‘People Practice’ guides
Data & Measures:
• Continued to build dashboards to share data and build awareness
Corporate Purpose
Workforce Engagement – 2020 Examples
Table 17
Share newsletters and health & safety guides
Multiple communications from management about Health & Safety, factsheets,
travel guidance ... covered health and science, economic and financial matters
as well as changing work environments
Personal messages to support, motivate and thank our people ...stories
celebrating the resolve and resilience of our people
73
Provision of a series of tips and guides to support managers in managing
through a crisis
Regular video messages from Divisional Presidents and Senior Vice Presidents
...FAQs, talking points, action plans, site toolkits and state-specific response plans
Our Values
Table 18
At CRH, our values unite us in the way we work, every day, all over the world.
Put safety
first
Continuously
create value
Do what we
say and lead
with integrity
Operate locally,
but act as one
company
Build enduring
relationships
CRH’s purpose has, for 50 years, been expressed
through our values, strategy and actions, as we
have leveraged our unique business strengths
to deliver sustainable performance for our
employees, customers, investors and for society.
As CRH has grown, so too have expectations
that leading global organisations like ours have
clarity around how we positively contribute
to both society and the world. The SESR
Committee therefore initiated a project and is
working with management to more fully articulate
CRH’s purpose. A purpose which captures our
aspirations beyond financial returns, inspires our
people and guides our day-to-day operations, our
culture, and our strategy.
This work on corporate purpose, together
with CRH's approach to I&D and employee
engagement, will continue to support the Board's
assessment of the alignment of CRH's purpose,
values and strategy with our culture.
Code of Business Conduct
The Committee has worked with management on
the refreshment of the Group’s Code of Business
Conduct. The updated Code, which will be
launched in 2021, is intended as a practical guide
to upholding CRH’s values and acting ethically
in our workplace, in our business practices and
in our communities. A core theme in the Code is
“It begins with me”, which conveys that living up
to our values as a Group is only possible when
each of us plays our part. This includes keeping
everyone safe, following the law, doing the right
thing and showing respect to others.
Conclusion
The SESR Committee is a key forum for
engagement with management and the provision
of support for, and oversight of, non-financial
initiatives which are vital to the success of CRH.
I am very pleased to report that the Committee
operated very effectively despite the challenges
of the past year and I look forward to updating
shareholders on the outcome of the ongoing
project to articulate our corporate purpose and
the feedback from the upcoming organisational
health survey, and how these will assist the Board
in assessing and ensuring the alignment of our
purpose, values and strategy with our culture.
Richie Boucher
Chairman of the Safety, Sustainability
& Social Responsibility Committee
3 March 2021
2020 Annual Report and Form 20-F Directors’
Remuneration Report
74
Chair's Overview
On behalf of the Remuneration Committee, I am
pleased to introduce the Directors' Remuneration
Report (the `Report') for the financial year ended
31 December 2020.
As usual, this Report includes:
•
this introductory Overview;
• a summary of CRH's Remuneration Policy
(the `Policy', which was approved by
shareholders at the 2019 AGM and is available
at www.crh.com and applies for the three-year
period to 2022), on pages 80 to 86; and
•
the Annual Report on Remuneration on pages
88 to 99. This contains details of CRH's
remuneration arrangements and outcomes for
2020, and also sets out the way in which we
intend to implement our Policy in 2021.
Context and Performance in 2020
I would like to begin this Overview by echoing
the recognition and thanks expressed by Board
colleagues elsewhere in this Annual Report for
the exceptional contribution by all our colleagues
across the organisation in responding to the
unprecedented challenges of the COVID-19
pandemic for our business.
CRH's financial and business performance was
robust in 2020 notwithstanding the challenges
faced. The key elements of that performance are
summarised in table 19 on page 75.
This is a tribute to all of our people, the strength
and resilience of our business model and the
leadership of our senior management team,
whose decision making was decisive and who
continued to focus on commercial and operational
excellence. As the uncertainty at the outset of the
COVID-19 pandemic began to be resolved during
the year we returned all funds received from
government furlough schemes to the relevant
agencies.
The health and well-being of our employees is a
priority for the Board, and the SESR Committee
report on page 70 to 73. describes our work in
relation to the initiatives put in place to support
our employees during the pandemic. The impact
of COVID-19 on our stakeholders (including
our workforce) and how the management have
responded to this, including initiatives such as
supporting the salaries of employees who were
unable to work due to COVID-19 restrictions
and the work of our businesses in supporting
the communities in which we operate, provided
an important context for the Committee in its
decision making regarding executive remuneration
in 2020 (which is summarised in the 2020
Remuneration section below).
The strong
performance, in
the face of the
unprecedented
challenges of 2020,
is a tribute to all our
people across the wider
organisation, and the
leadership of our senior
management team.”
Heather Ann McSharry
Chair of the
Remuneration Committee
The Board's continued confidence in CRH's
financial position, business performance and
future prospects is reflected in a proposed
increase, subject to shareholder approval at the
2021 AGM, of 25% in the dividend for full year
of 2020. This follows an increase of 12% in the
dividend in respect of 2019.
2020 Remuneration
The Committee's approach to remuneration, and
how the metrics selected by the Committee to
incentivise management are aligned with CRH's
strategy and support the long-term performance
of the Group, are summarised in table 23 on
page 78. A summary of 2020 remuneration is set
out in table 21 on page 76.
Fixed Pay
As reported in the 2019 Directors' Remuneration
Report, salary increases were awarded to the
executive Directors in January 2020, in line with
the average increase awarded to the general
workforce. However, following the onset of the
COVID-19 pandemic, the Board and c.200
of the most senior executives in the Group
voluntarily waived 25% of their salaries for a
period of three months in recognition of the
prevailing uncertainty at the time.
2020 Performance Highlights
Table 19
OPERATING
CASH FLOW
RETURN ON
NET ASSETS
$3.9bn
1%
(2019: $3.9bn)
10.1%
10bps
(2019: 10%)
243.3 c
PRE-IMPAIRMENT
EARNINGS
PER SHARE**
19%
(2019: 203.8 cent)
SALES
EBITDA (AS
DEFINED)*
DIVIDEND PER
SHARE
75
$27.6bn
2%
(2019: $28.1bn)
$4.6bn
3%
(2019: $4.5bn)
115.0c
25%
(2019: 92.0c)
Summary of Key Decisions / Activities
Table 20
COVID-19
What did we do?
In evaluating all of our remuneration-related decisions in 2020, we considered and were mindful of the diverse experiences of
all of our stakeholders in light of the COVID-19 pandemic.
Salary
What did we do?
We approved a 2.75% increase in salary for executive Directors in 2021, taking into account the budgeted salary increases
for employees across the Group of an average of c. 3%.
Annual
Bonus Plan
Performance
Share Plan
(PSP)
What did we do?
We reviewed performance against the 2020 Annual Bonus Plan targets and approved the 2020 bonus payments (see table
31 on page 89 for more details). We also reviewed and approved the 2021 Annual Bonus Plan structure, which is similar to
the structure of the 2020 Annual Bonus Plan save that the Committee has determined that, given the uncertainty that remains
in relation to the ongoing impact of COVID-19 related restrictions on the economies and construction markets in which CRH
operates, the performance ranges for the EPS and operating cashflow components should be re-calibrated to increase the
level of outperformance of target required for maximum payout (see page 77 for more details).
What did we do?
We reviewed the performance of the PSP award granted in 2018 against the applicable performance conditions and
approved the vesting outcome of 86.8% of maximum (see table 33 on page 90 for more details).
We also reviewed and approved the metrics and targets for the PSP awards granted in 2020 and to be granted in 2021,
including the addition of Martin Marietta and Vulcan Materials in the TSR Peer Group with effect from the 2021 PSP awards
to reflect the extent of CRH's businesses in the US (see tables 36 and 39 on pages 91 and 94 respectively).
Remuneration
Approach
What did we do?
We considered the impact of the implementation into Irish law of the EU (Shareholders' Rights) Regulations 2020 (SRD II) on
our remuneration policies and procedures and incorporated the required additional disclosures in this Report.
We also reviewed and considered workforce remuneration across the Group and the alignment with the remuneration for
executive Directors (see page 96 for more details).
Other
What did we do?
We considered the feedback from shareholders on the Group's remuneration policies and practices (see page 77 for further
details on the Group's shareholder engagement activities).
We also considered and approved this 2020 Directors’ Remuneration Report.
* 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.
** Pre-impairment Earnings per Share is a non-GAAP measure as calculated on page 216. Earnings per Share as reported in the Consolidated Income Statement on page 132 is 142.9 cent (2019: 203.0 cent).
2020 Annual Report and Form 20-F Chair's Overview - continued
76
The planned phased reduction of the Chief
Executive's payment in lieu of pension
contributions was also implemented in 2020,
with a 10% reduction in the amount that would
otherwise have been paid. This will be reduced
further (by 10%) in 2021 and will be below 25%
of his salary by January 2022, reducing to zero
in August 2022. As previously announced, the
Finance Director will be retiring from the Board
at the 2021 AGM and as an executive during the
year - see Board Changes on page 77. For the
reasons set out in last year's report, his annual
pension contribution was capped permanently
at €204,000 (equivalent to 25% of his 2020 base
salary).
Incentives
The financial targets for the 2020 annual bonus
plan, which represent 80% of the potential bonus
opportunity, were set in early 2020. Performance
has been measured against those original financial
targets and was assessed on a pre-impairment
basis. The non-cash impairment of $0.8 billion,
which has been examined in detail by both the
Audit and Remuneration Committees, reflects
the longer-term changing business landscape
and pre-dominantly relates to our assets in the
UK and our associate investment in China. The
Remuneration Committee was satisfied that it
should not, therefore, impact on remuneration
outcomes. The Audit Committee Chairman’s
report to shareholders on page 62 contains
further information on this matter. Strategic and
personal objectives make up the remaining 20%
of the opportunity. The Committee deferred
slightly the setting of those objectives (until
April 2020) so that priorities for the whole of the
management team from the evolving COVID-19
situation could be captured. The Committee has
assessed performance against theses financial
targets and strategic/personal priorities and has
determined that payouts of 86% of the maximum
opportunity for the Chief Executive and 84.3%
of maximum opportunity for the Finance Director
were warranted. Details of the targets for the
2020 bonus plan are set out in detail on pages 88
to 89. In line with CRH's remuneration policy, 33%
of the earned bonus payments will be deferred
into shares for a period of three years.
The vesting of the 2018 PSP award, which
covered the three financial years from 2018
to 2020 inclusive, has been assessed by the
Committee against the cashflow and TSR targets
set in 2018. CRH's strong performance against
these measures resulted in the vesting of 86.8%
of these awards. The vesting level for each metric
is summarised in table 33 on page 90.
The Committee reviewed the outcomes of the
2020 bonus plan and the 2018 PSP award, in
the wider performance context for the Group and
other strategic objectives including progress in
relation to environmental targets, and concluded
that there was no requirement to use its discretion
to adjust these outcomes. In reaching that
conclusion, the Committee, supported by the
work of other Board Committees, took into
account a number of factors, including, the
strong alignment between pay outcomes and the
performance of the Group and our executives
and whether any extraneous factors, outside the
control of management (and plan participants
more generally), had unduly influenced the
outcome. The Committee also conducted
its annual assessment of the approach to
implementing the Remuneration Policy for the
relevant financial year and concluded that there
were no derogations or deviations required to the
Policy in 2020.
Executive Directors’ Remuneration Summary
2020 Remuneration Snapshot (full details of 2020 remuneration are set out in table 24 on page 79)
Table 21
Fixed (i) (ii)
Performance Related Variable Remuneration
Director
Salary
Albert Manifold
€1,469,125
Senan Murphy
€767,828
Annual Bonus
(% of Max)
86.0%
84.3%
2018 PSP Award (iii) (% of Max)
86.8%
86.8%
(i)
In the context of the COVID-19 pandemic, the executive Directors voluntarily waived 25% of their salaries for a period of three months.
(ii) As announced in February 2020, the Group changed its reporting currency from euro to US Dollar with effect from 1 January 2020. Notwithstanding this, as the
executive Directors are paid in euro, the Committee considers it appropriate that the figures disclosed in this Report continue to be presented in euro.
(iii) The awards, for which performance was measured over the three-year period to end 2020, will vest at 86.8% in 2023 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 24 on page 79. The market value per share on the date of award (in March 2018) was €27.62.
2021 Remuneration Snapshot
Table 22
Director
Salary
Max. Annual Bonus
(% of salary)
Metrics for 2021 Bonus Award
2021 PSP Award
(% of Salary)
Metrics for 2021 PSP Award
Albert Manifold
€1,607,430 (+2.75%)
225%
Senan Murphy (i) €838,800 (+2.75%)
150%
EPS (25%)
RONA (25%)
Operating Cashflow (30%)
Personal/Strategic (20%)
365%
225%
Cashflow (50%)
TSR (25%)
RONA (25%)
(i)
As previously announced, Senan Murphy has indicated his intention to retire as Finance Director and from CRH in 2021. Accordingly, any amounts due to Senan in
respect of 2021 will be pro-rated for service for the period from 1 January 2021 to his date of retirement from CRH.
As noted in the SESR Committee report on
page 72, during 2021 an organisational health
survey will be conducted which will cover over
half of the workforce. This survey will include a
section seeking workforce views on remuneration
matters. The Committee will consider the outputs
from this survey during the coming year.
Savings-related Share Option
Scheme
In 2020, the Group’s 2010 Savings-related Share
Option Scheme expired. Following a review,
and feedback that it was valued by employees
as an important means of acquiring shares in
CRH through a savings plan, the Committee
recommended to the Board that shareholder
approval be sought for a new Scheme. A
resolution for the adoption of the new Scheme will
be included on the agenda of the 2021 AGM.
77
Conclusion
As mentioned above, CRH's financial and
business performance was robust in 2020 in
spite of the unprecedented challenges that were
faced during the year, and which persist into
2021. Taking this performance into account,
as well as the experience of our stakeholders
and the value delivered for shareholders, the
Committee believes that the remuneration paid
to the executive Directors in respect of 2020 is
appropriate. We look forward to receiving your
support for the resolution considering the Annual
Report on Remuneration at the 2021 AGM.
Heather Ann McSharry
Chair of the Remuneration Committee
3 March 2021
Board Changes
In September 2020, Senan Murphy informed the
Board of his intention to retire from the Board
and as Finance Director during 2021. He will
step down as a Director following the conclusion
of the 2021 AGM. However, he will continue as
an executive for a period of time to support the
transition process for his successor as Finance
Director. The process to appoint his successor is
well advanced.
Implementation of Remuneration
Policy in 2021
Fixed Pay
The Committee has reviewed the executive
Directors' base salaries and, taking into account
the budgeted salary increases for employees
across the Group of an average of c. 3%,
concluded that salary increases of 2.75% should
also be awarded to the executive Directors
in 2021.
Incentives
The 2021 bonus plan will continue to be based
on the structure, weightings and metrics used in
prior years: EPS, operating cashflow, RONA and
personal/strategic objectives. However, given the
uncertainty that remains in relation to the ongoing
impact of COVID-19 related restrictions on the
economies and construction markets in which
CRH operates, the Committee has recalibrated
the performance ranges for EPS and operating
cashflow, increasing the level of outperformance
of target required for maximum payouts to be
achieved under these elements. The targets
attaching to the 2021 bonus will be disclosed in
the 2021 Annual Report and Form 20-F.
The metrics for PSP awards in 2021 will also be
unchanged from 2020, comprising cashflow, TSR
and RONA. The targets are set out in table 39
on page 94. Similar to the 2020 bonus plan, the
cashflow and RONA targets for the PSP awards
have been reviewed and set in the context of
a backdrop of unprecedented and ongoing
uncertainty. In relation to the TSR component, the
Committee has decided to expand the peer group
used to assess performance by including two US
companies - Martin Marietta and Vulcan Materials
- to reflect the extent of CRH's business in the
US, and taking into account recent feedback from
some shareholders on this aspect of the peer
group's composition. The peer group will continue
to be weighted by market capitalisation.
In setting the targets for the 2021 PSP awards,
the Committee considered the views of some
shareholders in relation to the inclusion of
sustainability targets, with a particular emphasis
on carbon reduction measures. The Board
announced in 2020 an ambition for CRH to be
carbon neutral by 2050 in line with the Paris
Agreement on climate change and also confirmed
new interim targets for carbon reduction by 2030.
Given the importance of this issue to CRH, our
stakeholders and wider society, and the long
term nature of these targets, we will review the
inclusion of an appropriate environmental measure
(and targets) as part of our consultation during
the formulation of our new remuneration policy for
consideration by shareholders at the 2022 AGM.
As mentioned above, the targets for the 2021
Bonus Plan and the 2021 PSP awards have
been set in the context of unprecedented and
ongoing uncertainty currently presented by the
COVID-19 pandemic. Given this uncertainty and
the possibility that the targets may ultimately
transpire to be inappropriate in the context of the
global economic outturn in 2021, the Committee
has discretion to override formulaic outcomes
(and, for the 2021 PSP cycle, revise the targets)
in the event that certain assumptions underlying
the process of setting the targets at the start of
2021 do not transpire and, therefore, using these
targets would be inappropriate in assessing the
underlying performance of the Group. Any use
of the discretionary mechanism would be fully
explained to shareholders in the relevant annual
report.
Stakeholder Engagement
The Committee places continued importance
on engaging with stakeholders on executive
remuneration. The Committee welcomed the
strong level of shareholder support received at
the 2020 AGM on the 2019 Annual Report on
Remuneration (voting results are summarised
in table 50 on page 99). During 2020, we also
received feedback and correspondence from
investors holding more than one third of the
shares in issue on a range of topics, including the
Group's executive remuneration arrangements.
I appreciate the time taken by shareholders to
engage on this important subject and we remain
available to discuss these matters during the
course of the coming year. Your feedback is
important to us and will continue to be taken
into consideration by the Committee in its
decision-making.
2020 Annual Report and Form 20-F Chair's Overview - continued
Committee’s Approach to Remuneration
Table 23
The key principles underpinning the Committee’s approach to remuneration are that remuneration should be set at a level that:
Is fair and balanced
78
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
Aligns the interests of the executive team with those of shareholders
The Committee also seeks to ensure that updates to the Policy take into account the views of shareholders and evolving best practice.
The Board and the Committee are regularly updated on the perspectives of our employees and take these perspectives into account when making remuneration decisions.
Further details in relation to workforce engagement on remuneration matters are set out on page 96.
The Committee also has oversight of remuneration policy across the Group and endeavours to keep the principles and structure of remuneration consistent in so far as is
possible given CRH's international footprint.
Generally speaking, total remuneration is more variable (and, in particular, weighted towards long-term performance) for roles with greater levels of responsibility and scope.
In setting the remuneration policy and practices for executive Directors, the Committee also 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.
Alignment of Executive Remuneration with Strategy
Performance Measure (i)
Annual Bonus
PSP
Reason for Selection
EPS
Cash Flow
RONA
TSR
EPS is a key measure of the underlying profitability
Operating cashflow is a key measure of CRH’s ability to generate cash to fund organic and acquisitive
growth and provide returns to our shareholders via dividends and share buybacks
RONA is a key measure of CRH’s ability to create value through excellence in operational performance
TSR is a key measure of CRH’s returns to shareholders through the cycle
Personal/Strategic
Objectives
Personal/strategic objectives enable a focus on specific factors aligned with CRH’s short
and medium-term strategic objectives that promote long-term performance
(i)
Please see the footnotes to tables 31 and 33 on pages 89 and 90 respectively for further information on the operation of the financial metrics for the purposes of the
Group's incentive schemes.
Individual Executive Remuneration for the year ended 31 December 2020(i)
Table 24
Albert Manifold
Senan Murphy
Fixed Pay
Basic Salary (ii)
Benefits (iii)
Retirement Benefit Expense (iv)
Total Fixed Pay
Performance-related Pay
Annual Bonus (v):
Cash Element
Deferred Shares
Total Annual Bonus
Long-term Incentives (vi):
Performance Share Plan
- value delivered through performance
- value delivered through share price growth
Total Long-term Incentives
Total Performance-related Pay
Total Single Figure
(fixed and performance-related)
Total Fixed v. Total Remuneration
Total Variable v. Total Remuneration
2020
€000
1,469
27
612
2,108
2,018
1,009
3,027
5,075
990
6,065
9,092
11,200
19%
81%
2019
€000
1,523
43
667
2,233
1,964
982
2,946
3,834
298
4,132
7,078
9,311
24%
76%
2018
€000
1,485
55
684
2,224
2,042
681
2,723
3,238
45
3,283
6,006
8,230
27%
73%
2020
€000
768
13
204
985
689
344
1,033
1,632
319
1,951
2,984
3,969
25%
75%
2019
€000
794
27
199
1,020
683
342
1,025
1,028
80
1,108
2,133
3,153
32%
68%
79
2018
€000
775
25
194
994
710
237
947
792
11
803
1,750
2,744
36%
64%
(i)
As announced in February 2020, the Group changed its reporting currency from euro to US Dollar with effect from 1 January 2020. Notwithstanding this, as the
executive Directors are paid in euro, the Committee considers it appropriate that the figures disclosed in this Report continue to be presented in euro.
(ii) Basic Salary: As outlined on page 74, the executive Directors voluntarily waived 25% of their salaries for a period of three months.
(iii) Benefits: For executive Directors these relate principally to the use of company cars, medical insurance and life assurance and, where relevant, the value of the
non-taxable discount on the grant of options under the Group’s 2010 SAYE Scheme.
(iv) Retirement Benefit Expense: As noted on page 92, 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.
The planned phased reduction of Mr. Manifold's allowance, details of which were outlined in last year's Directors' Remuneration Report, was implemented in 2020, with
a 10% reduction in the amount that would otherwise have been paid. For the reasons set out in last year's report, the annual pension contribution for Senan Murphy
(who will be retiring from the Board at the 2021 AGM and as an executive during 2021) was capped at €204,000 (equivalent to 25% of this 2020 base salary).
(v) Annual Bonus Plan: Under the executive Directors’ Annual Bonus Plan for 2020, a bonus was payable for meeting clearly defined and stretching targets and strategic
goals. The structure of the 2020 Plan, together with details of the performance against targets and payouts in respect of 2020, are set out on pages 88 and 89. A third
of the 2020 bonuses to be paid to executive Directors will be deferred into shares for a period of three years, with no additional performance conditions. For 2019 and
2018 bonuses, 33% and 25% of executive Directors’ bonuses respectively were paid in Deferred Shares, vesting after three years, with no additional performance
conditions.
(vi) Long-term Incentives: In February 2021, the Remuneration Committee determined that 86.8% of the maximum PSP awards made in 2018 will vest, based on
performance. The awards are subject to a further two-year holding period and will vest in 2023. For the purposes of this table, the values of these awards have been
estimated using a share price of €33.01, being the three-month average share price to 31 December 2020, as the share price on the date of vesting is not yet known.
Amounts in the long-term incentive column for 2019 reflect the value of long-term incentive awards with a performance period ending in 2019 (i.e. the PSP awards
granted in 2017), which the Remuneration Committee determined in February 2020 had met the applicable performance targets. The awards are scheduled to vest in
2022 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
€33.38, being the three-month average share price to 31 December 2019. 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.
2020 Annual Report and Form 20-F Remuneration Policy Summary
80
2019 Directors’
Remuneration Policy
The Remuneration Committee’s aim is to
make sure that CRH’s pay structures are fair,
responsible and competitive, in order that
CRH can attract and retain staff of the calibre
necessary for it to compete in all of its markets.
CRH’s Remuneration Policy, which was
approved by shareholders at the 2019 AGM is
available on the Group's website, www.crh.com,
and was included in full in the 2018 Annual
Report and Form 20-F. As the Company is not
seeking shareholder approval for any revision of
the Policy in 2021, the full text of the Policy has
not been reproduced in this report. The following
paragraphs and tables 25 to 30 on pages 81 to
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 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.
CRH’s Approach to Remuneration
The purpose of the Policy is to:
Attract and retain executives of the highest calibre
Motivate and reward executives to perform in the
long-term interests of the shareholders
Provide an appropriate blend of fixed and variable
remuneration and short and long-term incentives
Foster entrepreneurship in regional companies by
rewarding the creation of shareholder value through
organic and acquisitive growth
Reflect the spread of the Group’s operations so that
remuneration packages in each geographical area are
appropriate and competitive for that area
Reflect the risk policies and appetite of the Group
Regulatory Backdrop
CRH is not subject to UK executive remuneration requirements as set out in the Large and
Medium-Sized Companies and Groups (Accounts and Reports) (Amendment) Regulations
2013. Nonetheless, in order to ensure transparency to all of our stakeholders, we have sought
to comply with these requirements on a voluntary basis, to the extent possible under Irish law.
In March 2020, the Shareholder Rights Directive 2017/828 was transposed into Irish law by
the EU (Shareholders’ Rights) Regulations 2020 (‘SRD II’). The provisions of SRD II amend
and supplement the Companies Act 2014 and apply to the Company. Under SRD II, public
limited companies must submit a remuneration policy to an advisory shareholder vote at least
every four years or earlier if there is a proposed material change to the approved policy.
Policy Table
The purpose, operation and opportunity for the five components of executive Directors’ remuneration are summarised in table 25 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
2020 can be found on pages 88 to 99 of the Annual Report on Remuneration.
Table 25
Element
Fixed Base Salary
Fixed Pension
Purpose and link to
strategy
• Competitive salaries help to attract and retain staff with the
experience and knowledge required to enable the Group to
compete in its markets
• Pension arrangements provide competitive and appropriate retirement
plans
• Given the long-term nature of the business, pension is an important
part of the remuneration package to support creation of value and
succession planning
81
Operation
• Base salaries are set by the Committee taking into account:
• Irish-based executive Directors may participate in a contributory
–
–
–
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
Maximum
opportunity
• 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
• 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
defined benefit scheme or, if they joined the Group after
1 January 2012, in a defined contribution scheme as the defined
benefit scheme which the Directors participate in is closed to new
entrants
• For new appointments to the Board the Committee may determine
that alternative pension provisions will operate (for example a cash
contribution). When determining pension arrangements for new
appointments the Committee will give regard to existing entitlements,
the cost of the arrangements, market practice and the pension
arrangements received elsewhere in the Group. Pension contribution
rates for any newly hired executive Directors will not exceed the
norm for pension related contributions/allowances for new recruits,
across the general workforce, in the individual’s home jurisdiction or,
if applicable, the jurisdiction in which the individual is to be based in
their executive Director role
• 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 92 for more details). This
allowance is similar in value to the reduction in the Company’s
liability represented by the pension benefit foregone. Whilst there
is no absolute maximum to the quantum of these payments they
are calculated based on actuarial advice as the equivalent of the
reduction in the liability the Company would otherwise have had under
the Scheme in respect of Mr. Manifold’s benefits and spread over the
term to retirement as annual compensation allowances. Mr. Manifold
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
Performance
Measure
• Not applicable
• Not applicable
2020 Annual Report and Form 20-F Remuneration Policy Summary - continued
Policy Table
Element
Fixed Benefits
Purpose and link to
strategy
• To provide a market competitive level of benefits for executive Directors
Table 25 continued
82
Operation
• The Committee’s policy is to set benefit provision at an appropriate market competitive level taking into account market practice, the level
of benefits provided for other employees in the Group, the individual’s home jurisdiction and the jurisdiction in which the individual is based
• Employment-related benefits include the use of company cars (or a car allowance), medical insurance for the executive Director and his/
her family and life assurance
• In the event that the Chief Executive falls ill or is injured in such a way as which would 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 practice
Maximum opportunity • The level of benefit provided will depend on the cost of providing individual items and the individual’s circumstances, and therefore the
Committee has not set a maximum level of benefits
Performance Measure • Not applicable
Policy Table
Element
Purpose and link to
strategy
Table 25 continued
Performance-related pay -
Annual Bonus
Performance-related pay -
Performance Share Plan
• 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
• The purpose of the 2014 Plan is to align the interest of key
management across different regions and nationalities with
those of shareholders through an interest in CRH shares and
by incentivising the achievement of long-term performance
goals
• A deferred 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
• “Malus” and clawback provisions enable the Company to
mitigate risk
83
Operation
• The 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 2021:
– 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
• 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
• When assessing performance and determining bonus payouts the
• “Malus” and clawback provisions (as set out in the rules of
the 2014 Plan) will apply to awards
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
Maximum opportunity • Maximum annual opportunity of 225% of base salary
• Maximum annual opportunity of up to 365% of base salary
• For 2021, the intended maximum award levels are:
• For 2021, the intended award levels are:
– 225% of base salary for the Chief Executive; and
– 365% of base salary for the Chief Executive; and
– 150% of base salary for the Finance Director
– 225% of base salary for the Finance Director
Performance Measure • The Plan is based on achieving clearly defined and stretching annual
targets and strategic goals set by the Committee each year based on
key business priorities
• Awards to be granted in 2021 will vest based on cumulative
cash flow (50%), a relative TSR test compared to a tailored
group of key peers (25%) and RONA (25%)
• The performance metrics used are a mix of financial targets including
return goals and personal/strategic objectives generally. Currently
80% of the bonus is based on financial performance measures
• The Committee may vary the weightings of measures but no less than
50% shall be based on financial performance measures
• 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
• A portion of the bonus metrics for any Director may be linked to his/
• The Committee may adjust the weightings of the measures
her specific area of responsibility
• Up to 50% of the maximum bonus will be paid for achieving target
levels of performance
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
2020 Annual Report and Form 20-F Remuneration Policy Summary - continued
Remuneration Outcomes in
different Performance Scenarios
Remuneration Outcomes in different
Performance Scenarios
Table 26
Performance Scenario
Payout Level
Minimum
• Fixed pay (see table 27 for each executive Director)
• No bonus payout
• No vesting under the Performance Share Plan
On-target performance
• Fixed pay (see table 27 for each executive Director)
Maximum performance
((i) at constant share prices;
and (ii) assuming a 50%
increase in share prices)
• 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)
• Fixed pay (see table 27 for each executive Director)
• 100% annual bonus payout (225% of salary for the Chief Executive
and 150% of salary for the Finance Director)
• 100% Performance Share Plan vesting (365% of salary for the
Chief Executive and 225% for the Finance Director)
Remuneration at CRH consists of fixed pay
(salary, pension and benefits), short-term variable
pay and long-term variable pay. A significant
portion of executive Directors’ remuneration is
linked to the delivery of key business goals over
the short and long-term and the creation of
shareholder value.
Table 28 shows hypothetical values of the
remuneration package for executive Directors
under four assumed performance scenarios.
84
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.
Hypothetical Remuneration Values
Chief Executive (Albert Manifold)
Finance Director (Senan Murphy)
Table 27
Total
Fixed Pay
€2,184,430
€1,055,800
Table 28
Salary
With effect from
1 January 2021
€1,607,430
€838,800
Benefits
Level paid
in 2020 (i)
€27,000
€13,000
Estimated
Pension (ii)
€550,000
€204,000
(i) Based on 2020 expenses.
(ii) See pages 92 and 93 for details in relation to retirement benefit arrangements.
Performance-related Remuneration Outcomes
Chief Executive
Finance Director
15,000
13,000
11,000
9,000
7,000
5,000
3,000
1,000
0
€14,598
60%
€11,665
50%
€5,458
27%
33%
€2,184
31%
25%
100%
40%
19%
15%
Minimum On-target
Maximum Maximum
(+50%)
6,000
5,000
4,000
3,000
2,000
1,000
0
€5,140
55%
€4,198
45%
€2,155
22%
29%
€1,056
30%
24%
100%
49%
25%
21%
Minimum On-target
Maximum Maximum
(+50%)
Fixed Pay
Annual Bonus
Long-term incentives
Remuneration Arrangements
Throughout the Group
Shareholding Guideline for
Executive Directors
CRH operates significant operations in 3,110
locations in 30 countries with c. 77,100
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.
Executive Directors are required to build up (and
maintain) a minimum holding in CRH shares. The
shareholding guidelines for the Chief Executive
and Finance Director are 3.5x basic salary and
2x basic salary respectively, with the guidelines
to be achieved by 31 December 2023 and
31 December 2022, respectively. As outlined
elsewhere in this Annual Report, the Finance
Director will retire from the Board at the 2021
AGM and as executive during 2021.
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.
Executive Director Shareholdings as a % of 2021 Base Salary (i)
Guideline
(% of Salary)
To be
achieved by
Holdings as of 3 March 2021
In the event that the shareholding guidelines
are not met by the applicable deadlines, the
Remuneration Committee will consider what
action to take at that time.
Post-employment Holding
Requirements
The Chief Executive is required to hold shares
equivalent to two times salary for a period of two
years post-employment. 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 applies to the
Finance Director, except that the requirement in
his case is one times salary.
85
A. Manifold
350%
2023
97%
85%
262%
S. Murphy
200%
2022
No. of shares
0%
50%
100%
150%
200%
250%
300%
350%
24%
56%
128%
0%
50%
100%
150%
200%
250%
No. of shares
Beneficially Owned Shares (as at 3 March 2021).
Estimated after tax value of Deferred Share Awards made in 2018, 2019 and 2020, as appropriate.
Estimated after tax value of PSP awards subject to a two-year hold period only.
(i) For the purposes of this table, the interests have been valued using the three-month average share price to 31 December 2020 (€33.01).
Table 29
Total Interests
(% of Salary)
444%
208%
2020 Annual Report and Form 20-F Remuneration Policy Summary - continued
Remuneration Policy for Non-Executive Directors
Table 30
Approach to
Setting Fees
• 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
86
to CRH
• Fees are reviewed at appropriate intervals
Basis of Fees
Other Items
• 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 94) 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
87
In the UK, Tarmac which is part of CRH’s Europe Materials Division has introduced an innovative new rubber roads technology which uses recycled rubber crumb from waste tyres. In
February 2020, Tower Hamlets became the first London borough to use the product, when approximately 100 recycled tyres were mixed into a new road surface laid by JB Riney, part of
Tarmac's contracting business.
2020 Annual Report and Form 20-F Annual Report on Remuneration
The Remuneration Committee
The Remuneration Committee consists of four
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 54 to 57.
A schedule of attendance at Committee
meetings is set out in table 9 on page 67.
88
The main focus of the Committee is to:
• determine and agree with the Board the
Group’s policy on executive remuneration;
• seek shareholder approval for the Directors’
Remuneration Policy at least every three years;
• ensure that CRH’s remuneration structures are
fair and responsible; and
• consider and approve salaries and other
terms of the remuneration packages for
the executive Directors and the fee for the
Chairman.
In addition, the Committee:
•
recommends and monitors the level
and structure of remuneration for senior
management; and
• oversees the preparation of this Directors’
Remuneration Report.
In considering remuneration levels for executive
Directors particularly, the Committee takes into
account remuneration trends across the CRH
Group, which has a diverse range of operations
in 30 countries, in geographic regions which are
often at different stages in the economic cycle.
Remuneration Received
by Executive Directors
in Respect of 2020
Details of individual remuneration for executive
Directors for the year ended 31 December 2020,
including explanatory notes, are given in table 24
on page 79. Details of Directors’ remuneration
charged against profit in the year are given in
table 49 on page 99.
As announced in February 2020, the Group
changed its reporting currency from euro to
US Dollar with effect from 1 January 2020.
Notwithstanding this, as the executive Directors
are paid in euro, the Committee considers
it appropriate that the remuneration figures
disclosed in this Report continue to be presented
in euro.
2020 Annual Bonus Plan
CRH’s Annual Bonus Plan for 2020 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 in
2020 was 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
2020 plan, together with details of the applicable
targets and performance for each measure is
given in table 31 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, government
infrastructure spending programmes and items
which may not continue into the next financial
year.
When reviewing performance against the bonus
plan, the Committee typically makes a number
of routine adjustments to the financial targets,
for example, to reflect, significant development
activity and actual share buyback activity during
the year. The financial targets for the 2020
annual bonus plan, which represent 80% of the
potential bonus opportunity, were set in early
2020. Performance was measured against those
original financial targets and was assessed on a
pre-impairment basis. The non-cash impairment
of $0.8 billion, which has been examined in
detail by both the Audit and Remuneration
Committees, reflects the longer-term changing
business landscape and pre-dominantly relates
to our assets in the UK and our associate
investment in China. The Remuneration
Committee was satisfied that it should not,
therefore, impact on remuneration outcomes.
Details of each executive Director’s personal
and strategic objectives and their achievement
against these objectives are set out in table
32 on page 89. Overall, the combination of
the performance of the Group in 2020 and
the achievement against personal/strategic
objectives translated to annual bonus payouts of
86% and 84.3% of the maximum opportunity for
Albert Manifold and Senan Murphy respectively,
with total bonus payments of 193.5% of base
salary and 126.5% of base 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).
Annual Bonus 2020
2020 Plan - Achievement
Table 31
Measure
CRH EPS
CRH Cash Flow (iv)
CRH RONA (iv)
Personal/Strategic
Total
2020 Targets - Performance needed for payout at (i)
Weighting
(% of total bonus)
Threshold
Target (ii)
Maximum
2020
Performance
Achieved (iii)
Percentage of
Maximum Awarded
25%
30%
25%
20%
100%
211.8c
230.2c
241.7c
233.0c
$2,764m
$3,004m
$3,154m
$4,087m
8.5%
9.3%
10.0%
9.9%
See table 32
16%
30%
22%
16-18%
84-86%
89
(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. The financial targets
were prepared in euro and translated to US Dollar, in line with the Group's change in reporting currency from euro to US Dollar with effect from 1 January 2020.
(ii) Targets have been adjusted to reflect the impact of the share buyback programme.
(iii) The outturn achieved for 2020 excludes exceptional items which are not expected to recur such as, for example, the non-cash impairment of $0.8 billion (see page 88
for more details) and certain other items which were one off in nature.
(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.
2020 Plan - Personal/Strategic Achievement
The priority areas and achievements in 2020 were as follows:
Table 32
Priority
Achievements
COVID-19 Leadership and Response
Safety
Strategy
In close consultation with the Board, both the Chief Executive and the Finance Director worked very decisively and
effectively, in conjunction with the senior management team, to formulate and implement appropriate plans to
evaluate and respond to the impact of the COVID-19 pandemic on CRH' s businesses, its employees and
stakeholders. Their leadership in this area was a key element underpinning the Group's robust commercial,
operational and financial performance in 2020 as well as supporting our employees during 2020.
The Chief Executive led the launch and roll-out of enhanced safety protocols, training and well-being programmes
to ensure a safe working environment for all CRH employees, contractors and customers in the context of the
COVID-19 pandemic and continued to be a sponsor of key safety initiatives such as our Frontline Leadership
program covering c. 10,000 employees focussed on achieving our ongoing target of zero harm and reinforcing the
Group's strong safety culture across all of our operations. The Finance Director strongly supported these initiatives
across the Group, with a particular focus on implementing the initiatives for, and sponsoring the roll out to, the
finance function across the Group.
In spite of a challenging dynamic environment the executive directors, together with the senior management team,
continued to successfully deliver against a range of comprehensive strategic objectives, including, those related to
capital allocation, the environment, inclusion & diversity, portfolio management and talent management; proactively
engaging with the Board in monitoring progress against these objectives and assessing the appropriateness of
CRH's strategy against an evolving external environment and CRH's long term purpose and goals.
These achievements resulted in 18% and 16.3% of the maximum opportunity of 20% being award to Albert Manifold and Senan Murphy respectively.
2020 Annual Report and Form 20-F Annual Report on Remuneration - continued
Long-term Incentives
Performance Share Plan — 2018 awards
In 2018, 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 35 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 2018 to 31 December 2020. In
respect of the TSR element, CRH's TSR over the
period of 17.8% is ranked in the upper quartile
as compared with the tailored peer group, and
90
c.1.5% above the TSR of the FTSE All-World
Construction & Materials Index. Accordingly,
36.8% out of 50% will vest for the TSR element.
In respect of the cumulative cash flow element,
actual outturn over the period was $6.7 billion,
which exceeded the stretch target of $5.2 billion,
resulting in 100% vesting for the cash flow
element.
When reviewing performance against the
metrics, the Committee considered a number of
adjustments, for example, to reflect significant
acquisitions and divestments and actual share
buyback activity during the period. In respect of
the 2018 awards, the targets were also adjusted
to reflect the Group's change in reporting
currency from euro to US Dollar with effect
from 1 January 2020 and the impact of the
implementation of IFRS 16 Leases.
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 2020 as an underpin to the
TSR component and determined that the TSR
vesting outcome was appropriate and did not
need to be adjusted. In accordance with the
Policy, the 2018 awards to executive Directors
will vest in 2023 on completion of an additional
two-year holding period. Vested awards will
be adjusted for dividend equivalents based on
Long-term Incentives - Performance Share Plan Awards
2018 Award Metrics
Cumulative cash flow
(50% of award) (i)
Vesting Level
100%
80%
25%
0% $4.0bn
$4.6bn
$5.2bn
$6.7bn
Element vested at 100% (iii)
)
t
n
e
m
e
e
l
f
o
%
(
g
n
i
t
s
e
V
TSR vs. tailored peer group
(25% of award) (ii)
100%
Vesting Level
25%
0%
Median
Upper quartile
Element vested at 100% (iii)
)
t
n
e
m
e
e
l
f
o
%
(
g
n
i
t
s
e
V
)
t
n
e
m
e
e
l
f
o
%
(
g
n
i
t
s
e
V
100%
47.2%
25%
0%
Table 33
TSR vs. FTSE All-World Cons
& Materials (25% of award) (ii)
Vesting Level
Index
Index +5% p.a.
Element vested at 47.2% (iii)
(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. The cash flow targets were prepared in euro and translated to US Dollar following the
Group's change in reporting currency from euro to US Dollar with effect from 1 January 2020.
(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 2018 Award, TSR performance was in the upper quartile against the tailored peer group (see table 35 below) and c. 1.5% above the FTSE All-World
Construction & Materials Index. TSR performance was subject to a RONA underpin (see above). The cumulative cash flow for the three years to end 31 December 2020
was $6.7 billion.
2018 Award Vesting Details
Table 34
Executive Director
Interests Held
Vesting Outcome
(% of max)
Interests
Due to Vest
Date of Vesting
Assumed
Share Price (i)
Estimated Value
Albert Manifold
Senan Murphy
211,676
68,088
86.8%
86.8%
183,734
March 2023
59,100
March 2023
€33.01
€33.01
€6,065,059
€1,950,891
(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 2020, has been estimated using a share price of €33.01, being the three-month average share price to 31 December 2020.
Peer Group for Performance Share Plan Awards (i)
Table 35
ACS
Boral
Cemex
Heidelberg Cement
Buzzi Unicem
LafargeHolcim
Saint Gobain
Skanska
Titan Cement
Vicat
Vinci
Wienerberger
With effect from PSP awards made in 2021,
Martian Marietta and Vulcan Materials will be
added to the peer group
(i) For the purposes of the PSP awards made in 2018, the peer group also includes Braas Monier and Rockwool
dividends in the period from grant to the date of
vesting in 2023. Table 33 on page 90 sets out
details of the relevant targets. Table 34 on page
90 sets out details of the awards.
Performance Share Plan — 2020 awards
During 2020, awards under the 2014 PSP were
made to the executive Directors, details of which
are summarised in table 37. 50% of each award
granted in 2020 is subject to a cumulative cash
flow metric. The definition of cash flow, which
applies to the cash metric for all PSP awards,
is the net increase/decrease in cash and cash
equivalents adjusted to exclude:
• dividends to shareholders;
• acquisition/investment expenditure;
• proceeds from divestments;
2020 Award Metrics
• share issues (scrip dividend, share
options, other);
• financing cash flows (new loans/repayments);
• back funding pension schemes; and
•
foreign exchange translation
The Remuneration Committee considers that it is
appropriate to make these adjustments in order
to remove items that do not reflect the quality
of management’s operational performance, or
are largely outside of the Company’s control.
The Remuneration Committee will also make
adjustments that may be required to cash flows,
for example, as a result of acquisitions/divestments
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 35 on page 90).
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 2020
will be assessed over the three-year period to
31 December 2022. Details of the performance
targets are set out in table 36.
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 2025. “Malus” and clawback provisions
apply to the awards.
91
Table 36
Cumulative cash flow
(50% of award) (i)
TSR vs. tailored peer group
(25% if award) (ii)
RONA (2022)
(25% of award) (iii)
)
t
n
e
m
e
e
l
f
o
%
(
g
n
i
t
s
e
V
100%
25%
0% $5.4 bn
$6.6bn
)
t
n
e
m
e
e
l
f
o
%
(
g
n
i
t
s
e
V
100%
25%
0% Median
Upper Quartile
)
t
n
e
m
e
e
l
f
o
%
(
g
n
i
t
s
e
V
100%
25%
0%
9.4%
11.6%
(i)
and (ii) see footnotes to table 33 on page 90.
(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.
2020 Award - Grant Details
Table 37
Executive Director
Date of Grant
Number of Shares
Market Price on which
Award was Based
Face Value at Date
of Award
Face Value on which Award was Based
(% of salary)
Albert Manifold
3 March 2020
172,509
Senan Murphy
3 March 2020
55,492
€33.10
€33.10
€5,710,048
€1,836,785
365%
225%
2020 Annual Report and Form 20-F
Annual Report on Remuneration - continued
Other Employee Share Plans
The executive Directors are eligible to participate
in Irish Revenue approved Savings-related
Option Schemes (the 'SAYE Scheme') and
Share Participation Schemes (the `Participation
Scheme') on consistent terms with all other
employees. The SAYE Scheme approved by
shareholders at the 2010 AGM is open to all
Irish and UK employees. Participants may save
up to €500/£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 38 below.
92
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 2020.
Retirement Benefit Expense
Albert 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
Summary of Outstanding Share Incentive Awards (Audited)
Table 38
Year of
Award
Performance Period
Release
Date
Market Value at
Date of Award
Exercise
Price
Balance at 31
December 2019
Granted
in 2020
Released
in 2020
Exercised
in 2020
Lapsed
in 2020
Balance at 31
December 2020
Dividends Awarded
Market Value on Date
& Released
of Exercise/Released
Albert Manifold
Annual Bonus Plan (Deferred Share Awards) (i)
2014 Performance Share Plan (ii)
2010 Savings-Related Share Option Scheme
Senan Murphy
Annual Bonus Plan (Deferred Share Awards) (i)
2014 Performance Share Plan (i)
2017
2018
2019
2020
2015
2016
2017
2018
2019
2020
2018
2017
2018
2019
2020
2016
2017
2018
2019
2020
01/01/16-31/12/2016
01/01/17-31/12/2017
01/01/18-31/12/2018
01/01/19-31/12/2019
01/01/15-31/12/2017
01/01/16-31/12/2018
01/01/17-31/12/2019
01/01/18-31/12/2020
01/01/19-31/12/2021
01/01/20-31/12/2022
n/a
01/01/16-31/12/2016
01/01/17-31/12/2017
01/01/18-31/12/2018
01/01/19-31/12/2019
01/01/16-31/12/2018
01/01/17-31/12/2019
01/01/18-31/12/2020
01/01/19-31/12/2021
01/01/20-31/12/2022
2020
2021
2022
2023
2020
2021
2022
2023
2024
2025
2023
2020
2021
2022
2023
2021
2022
2023
2024
2025
€30.97
€30.42
€24.90
€33.38
€24.42
€24.56
€32.24
€27.62
€29.86
€33.10
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
€23.39
€30.97
€30.42
€24.90
€33.38
€24.56
€32.24
€27.62
€29.86
€33.10
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
25,007
25,619
27,337
-
103,934
123,052
163,254
196,278
186,106
-
1,293
7,316
8,352
9,510
-
30,101
43,779
63,134
59,867
-
The market price of the Company’s shares at 31 December 2020 was €34.02 and the range during 2020 was €17.43 to €36.50.
(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.
1. Salary is defined as basic annual salary and excludes any fluctuating emoluments.
25,007
1,813
€31.78
29,419
103,934
13,114
€31.78
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
172,509
10,235
55,492
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,874
12,838
25,619
27,337
29,419
-
-
123,052
115,380
196,278
186,106
172,509
1,293
-
8,352
9,510
10,235
30,101
30,941
63,134
59,867
55,492
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,316
531
€31.78
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 2020. The cash pension supplement
for 2020 is detailed in table 24 on page 79. 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. In 2020, Mr. Manifold
agreed to a voluntary reduction of 10% of the
amount that would otherwise have been due to
him. This will be reduced further in 2021 and will
be below 25% of this salary by January 2022,
reducing to zero in August 2022.
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 payment in lieu of a pension contribution,
which, for the reasons set out in last year's report,
is capped at 25% of his 2020 base salary.
Details regarding the pension entitlements of Albert
Manifold are set out in table 40 on page 94.
Shareholding Guideline for
Executive Directors
The shareholding guideline for the executive
Directors is set out on page 85, together with a
table showing the current shareholdings of the
executive Directors as a multiple of base salary.
93
Table 38
Year of
Award
Performance Period
Release
Market Value at
Exercise
Balance at 31
Date
Date of Award
Price
December 2019
Granted
in 2020
Released
in 2020
Exercised
in 2020
Lapsed
in 2020
Balance at 31
December 2020
Dividends Awarded
& Released
Market Value on Date
of Exercise/Released
-
-
-
29,419
-
-
-
-
-
172,509
-
-
-
-
10,235
-
-
-
-
55,492
25,007
-
-
-
103,934
-
-
-
-
-
-
7,316
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
47,874
-
-
-
-
-
-
-
-
-
12,838
-
-
-
-
25,619
27,337
29,419
-
123,052
115,380
196,278
186,106
172,509
1,293
-
8,352
9,510
10,235
30,101
30,941
63,134
59,867
55,492
1,813
€31.78
-
-
-
-
-
13,114
€31.78
-
-
-
-
-
-
-
-
-
-
-
-
531
€31.78
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Summary of Outstanding Share Incentive Awards (Audited)
2010 Savings-Related Share Option Scheme
n/a
n/a
€23.39
1,293
Albert Manifold
Annual Bonus Plan (Deferred Share Awards) (i)
2014 Performance Share Plan (ii)
Senan Murphy
Annual Bonus Plan (Deferred Share Awards) (i)
2014 Performance Share Plan (i)
2017
2018
2019
2020
2015
2016
2017
2018
2019
2020
2018
2017
2018
2019
2020
2016
2017
2018
2019
2020
01/01/16-31/12/2016
01/01/17-31/12/2017
01/01/18-31/12/2018
01/01/19-31/12/2019
01/01/15-31/12/2017
01/01/16-31/12/2018
01/01/17-31/12/2019
01/01/18-31/12/2020
01/01/19-31/12/2021
01/01/20-31/12/2022
01/01/16-31/12/2016
01/01/17-31/12/2017
01/01/18-31/12/2018
01/01/19-31/12/2019
01/01/16-31/12/2018
01/01/17-31/12/2019
01/01/18-31/12/2020
01/01/19-31/12/2021
01/01/20-31/12/2022
2020
2021
2022
2023
2020
2021
2022
2023
2024
2025
2023
2020
2021
2022
2023
2021
2022
2023
2024
2025
€30.97
€30.42
€24.90
€33.38
€24.42
€24.56
€32.24
€27.62
€29.86
€33.10
€30.97
€30.42
€24.90
€33.38
€24.56
€32.24
€27.62
€29.86
€33.10
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
25,007
25,619
27,337
103,934
123,052
163,254
196,278
186,106
7,316
8,352
9,510
30,101
43,779
63,134
59,867
-
-
-
-
The market price of the Company’s shares at 31 December 2020 was €34.02 and the range during 2020 was €17.43 to €36.50.
(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.
2020 Annual Report and Form 20-F
Annual Report on Remuneration - continued
94
Proposed Implementation of
Remuneration in 2021
Basic Salary and Benefits
Details of the executive Directors' salaries for 2021
compared with 2020 are set out in the Committee
Chair's Overview on page 74. The Committee has
reviewed the executive Directors' base salaries
and, taking into account the budgeted salary
increases for employees across the Group of an
average of c. 3%, concluded that salary increases
of 2.75% should also be awarded to the executive
Directors in 2021.
Executive Directors will receive benefits in line
with the 2019 Policy in 2021. The level of benefits
provided will depend on the cost of providing
individual items and the individual circumstances.
Retirement Benefit Expense
As outlined in the Chair's overview on page
76, the monetary value of the pension
contribution/allowance for Albert Manifold will
be reduced by a further 10% in 2021. For
the reasons set out in last year's Directors'
Remuneration Report, the annual pension
contribution / allowance for Senan Murphy (who
will be retiring in 2021) has been set at €204,000
(equivalent to 25% of his 2020 base salary).
2021 Annual Bonus Plan
The Remuneration Committee has determined
that the 2021 Annual Bonus Plan will be operated
broadly in line with the 2020 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.
However, as outlined in the Chair's overview on
page 77, given the uncertainty that remains in
relation to the ongoing impact of COVID-19 related
restrictions on the economies and construction
markets in which CRH operates, the Committee
has recalibrated the performance ranges for the
EPS and operating cashflow metrics, increasing
the level of out performance of target required for
maximum payouts to be achieved under these
elements. The targets attaching to the 2021 bonus
will be disclosed in the 2021 Annual Report and
Form 20-F.
2021 Performance
Share Plan Awards
For the 2021 PSP awards, awards will be
assessed over the three-year period to
31 December 2023. The metrics, weightings
and opportunity for the 2021 PSP awards are
summarised in table 39 below.
Similar to the 2021 Annual Bonus Plan, the
cashflow and RONA targets for the PSP awards
have been reviewed and set in the context of
a backdrop of unprecedented and ongoing
uncertainty. In relation to the TSR component,
the Committee has decided to expand the peer
group used to assess performance by including
two US companies—Martin Marietta and
Vulcan Materials—to reflect the extent of CRH's
business in the US, and taking into account
recent feedback from some shareholders on this
aspect of the peer group's composition. The peer
group will continue to be weighted by market
capitalisation.
Committee Discretion
As mentioned above, the targets for the 2021
Bonus Plan and the 2021 PSP awards have
been set in the context of unprecedented and
ongoing uncertainty currently presented by the
COVID-19 pandemic. Given this uncertainty and
the possibility that the targets may ultimately
transpire to be inappropriate in the context of the
global economic outturn in 2021, the Committee
has discretion to override formulaic outcomes
(and, for the 2021 PSP cycle, revise the targets)
in the event that certain assumptions underlying
the process of setting the targets at the start of
2021 do not transpire and, therefore, using these
targets would be inappropriate in assessing the
underlying performance of the Group. Any use
of the discretionary mechanism would be fully
explained to shareholders in the relevant annual
report.
Fees Paid to Former Directors
The 2013 Large and Medium-sized Companies
and Groups (Accounts and Reports) (Amendment
Performance Share Plan Metrics - 2021 Awards
Table 39
Cumulative cash flow
(50% of award) (i)
TSR vs. tailored peer group
(2021-2023) (25% of award) (ii)
RONA (2023)
(25% of award) (iii)
100%
25%
0%
)
t
n
e
m
e
e
l
f
o
%
(
g
n
i
t
s
e
V
$5.0bn
$5.8bn
(i) and (ii) see table 33 on page 90
(iii) see table 36 on page 91
)
t
n
e
m
e
e
l
f
o
%
(
g
n
i
t
s
e
V
100%
25%
0% Median
Upper Quartile
100%
25%
0%
)
t
n
e
m
e
e
l
f
o
%
(
g
n
i
t
s
e
V
8%
9.4%
Pension Entitlements - Defined Benefit (Audited)
Table 40
Executive Director
Albert Manifold
Increase in accrued personal pension
during 2020 (i)
€000
Transfer value of increase in dependants
pension (i)
€000
Total accrued
personal pension at year end (ii)
€000
-
139
273
(i)
As noted above, the pension of Albert Manifold has been capped in line with the provisions of the Irish Finance Acts. However, dependants’ pensions continue to
accrue resulting in Greenbury transfer values which have been calculated on the basis of actuarial advice. These amounts do not represent sums paid out or due in
2020 in the event of Mr. Manifold leaving service.
(ii) The accrued pensions shown are those which would be payable annually from normal retirement date.
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. For the purposes
of Section 1110N of the Companies Act 2014,
details of the payments made to former Directors
are included in table 49 on page 99.
Executives’ External
Appointments
The executive Directors may accept external
appointments with the prior approval of the
Board provided that such appointments do
not prejudice the individual’s ability to fulfil their
duties at the Group. Whether any related fees
are retained by the individual or remitted to the
Group is considered on a case-by-case basis.
Non-executive Directors
The remuneration of non-executive Directors is
determined by the Board of Directors. The fees
were last increased in 2019 (see table 41 below
for details of the current fees). Details of the
remuneration paid to non-executive Directors in
2020 are set out in table 42 below.
Non-executive Director Fee Structure
Role
Group Chairman (including non-executive Director salary and fees for Committee work)
Basic non-executive Director fee
Committee fee
Additional fees
Senior Independent Director
Remuneration Committee Chair
Audit Committee Chairman
Fee for Europe-based non-executive Directors
Fee for US-based non-executive Directors
Table 41
95
€630,000
€88,000
€32,000
€25,000
€30,000
€39,000
€15,000
€30,000
Individual Remuneration for Non-executive Directors for the year ended 31 December 2020 (Audited)
Table 42
Non-executive Directors
R. Boucher (iv)
R. Fearon (v)
J. Karlström (vi)
S. Kelly (vii)
L. McKay (v)
P.J. Kennedy (viii)
H.A. McSharry
G.L. Platt
M.K. Rhinehart
L.J. Riches
H.Th. Rottinghuis (viii)
S. Talbot
Basic fees (i)
€000
Benefits (ii)
€000
Other fees (iii)
€000
Total
€000
2020
2019
2020
2019
2020
2019
2020
2019
2018
83
7
83
83
7
26
83
83
83
83
26
83
88
-
23
7
-
88
88
88
88
88
88
88
730
734
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2
2
522
3
44
95
3
14
72
82
58
44
14
44
77
-
13
8
-
47
63
87
62
47
47
47
605
10
127
178
10
40
155
165
141
127
40
127
165
99
-
36
15
-
135
151
175
150
135
135
137
-
-
-
-
120
120
141
27
120
120
8
995
498
1,725
1,234
755
(i)
Further information in relation to the non-executive Director fee structure is set out in table 41 above. As outlined on page 74, following the onset of the COVID-19
pandemic, the non-executive Directors voluntarily waived 25% of their fees for a period of three months in recognition of the prevailing uncertainty at the time. The
non-executive Directors do not receive any variable remuneration.
(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 was appointed Chairman with effect from 1 January 2020.
(v) Rick Fearon and Lamar McKay became Directors on 3 December 2020.
(vi) Johan Karlström became a Director on 25 September 2019.
(vii) Shaun Kelly became a Director on 3 December 2019.
(viii) Pat Kennedy and Henk Rottinghuis retired as Directors on 23 April 2020.
2020 Annual Report and Form 20-F Annual Report on Remuneration - continued
96
Total Shareholder Return
The value at 31 December 2020 of €100 invested
in CRH in 2010, 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 43 below.
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 annual TSR since the
formation of the Group in 1970 (assuming the
reinvestment of dividends) is 15.1%.
Workforce Engagement
Engagement of our workforce is at the heart of
what we do at CRH. The proximity of our senior
leaders to daily operations across CRH is a key
reason for the Company's continued success
and growth. The Company operates an annual
talent and performance review process, where
colleagues and their managers work together to
review performance and set annual goals. The
outcome of the review process is closely aligned
to remuneration, both in terms of any increase
in base salary for the next year, and any variable
remuneration component.
In order to guide our leaders' discussions with
employees across the group on remuneration
structures, there is a reward policy section,
which is based on the principles of remuneration
applied by the Remuneration Committee and
remuneration policy approved by shareholders,
in policy documents issued to the managing
directors of our operating companies.
The SESR Committee has taken formal
responsibility for workforce engagement.
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.
In 2021, this will include feedback from an
organisational health survey being issued to
more than half of the workforce.
Changes in the remuneration
of the Directors
Table 45 on page 97 shows the percentage
change in the executive and non-executive
Directors' salary/fees, benefits and bonus
between 2019 and 2020 compared to the change
in total average employment costs in respect
of employees in the Group as a whole between
2019 and 2020. On a like-for-like basis, assuming
full year tenure, there was a 6% reduction in the
salary/fees received by non-executives in 2020.
This was the result of the non-executive Directors
voluntarily waiving 25% of their salary/fees for a
three-month period in 2020 in response to the then
uncertainty regarding the impact of the COVID-19
pandemic on the Group.
Remuneration Paid to
Chief Executive 2011 – 2020
Table 44 shows the total remuneration paid to
the Chief Executive in the period 2011 to 2020
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.
Chief Executive Pay Ratio
compared to UK-based
employees
As required by the reporting regulations with
which CRH complies, Table 46 on page 97
summarises the ratio of the Chief Executive’s
remuneration compared with the UK workforce
(which represents only 13% of the Group’s
c.77,100 employees). In last year’s Report, the
Committee noted an expectation for year-on-year
variations in the reported pay ratio to be driven
by performance-based pay outcomes which,
in line with our remuneration policy, comprise a
significant proportion of the total remuneration
for the Chief Executive. While the majority of
employees across CRH also participate in
performance-related incentives, these typically
comprise a lower proportion of the package (in
line with competitive market practices for these
roles and levels). Consistent with our philosophy
across the Group that incentives should be linked
TSR Performance (2010-2020)
Table 43
CRH (DUB)
FTSE100
Eurofirst 300
€
300
250
200
150
100
50
0
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Remuneration paid to Chief Executive (2011-2020)
Table 44
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Single figure Remuneration (€m) (i)
€2.9m
€2.5m
€4.2m
€4.3m
€5.4m
€9.9m
€8.7m
€8.2m
€9.3m
€11.2m
Annual Bonus (% of max)
39%
28%
30%
100%
100%
98%
96%
81%
86%
86%
Long-term incentive
award vesting (% of max)
17%
0%
PSP: 49%
LTIP: 34%
PSP: 0%
Options:
75%
PSP: 78%
Options:
37%
100%
79%
59%
71%
87%
(i) Single figure remuneration comprises the total fixed pay, annual bonus and the value of long-term incentives vesting in respect of each year.
to performance that an individual can influence,
these more commonly reflect an individual’s own
(and own business unit) performance, compared
with a linkage to Group performance for the Chief
Executive and other senior executives.
In 2020, 81% of the Chief Executive’s total
remuneration was derived from at-risk,
performance-based pay linked to the Group’s
overall performance (highlights of which are
summarised on page 75) and also to CRH’s share
price performance through equity-based elements
of the package. The Committee reviewed the
drivers of the pay ratio, and concluded that the
resulting pay ratio (and increase compared to
2019) reflects the Group’s continued strong and
sustained financial performance. The annual
bonus for the Chief Executive paid out at 86%
of maximum in 2020 (2019: 86%) and the 2018
PSP vested at 86.8% of maximum (2017 PSP:
70.1%). One-third of the bonus is deferred in
shares and the vested PSP shares are subject to
an additional retention period on vesting, further
aligning the remuneration of Chief Executive with
the interests of shareholders over the longer-term.
Noting that the total remuneration pay ratio will be
volatile over time, the Committee has elected to
disclose the pay ratio for base salary. In line with
the Committee’s policy that Executive Directors’
Chief Executive Pay Ratios
Changes in the remuneration of the Directors
Table 45
Percentage change from 2019
Salary / Fees
Benefits
Bonus
Executive Directors
A. Manifold
S. Murphy
Non-executive Directors
R. Boucher (i)
R. Fearon (ii)
J. Karlstrom (iii)
S. Kelly (iv)
L. McKay (ii)
H.A. McSharry
G.L. Platt
M.K. Rhinehart
L.J. Riches
S. Talbot
Average Workforce Costs (v)
-4%
-4%
-6%
n/a
-6%
-6%
n/a
-6%
-6%
-6%
-6%
-6%
+1%
-37%
-52%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
+3%
+1%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
97
Appointed Chairman with effect from 1 January 2020.
(i)
(ii) Appointed with effect from 3 December 2020.
(iii) Appointed with effect from 25 September 2019.
(iv) Appointed with effect from 3 December 2019.
(v) For the purposes of Section 1110N(e)(ii), CRH plc had no employees in each of the financial years from
2016 to 2020.
Total Remuneration Pay Ratios compared to UK-based employees
Table 46
Year
2020
2019
Calculation
Methodology
C
C
P25 (lower quartile)
P50 (median)
P75 (upper quartile)
Chief Executive
Total remuneration
€30,400
€32,200
Ratio
368:1
289:1
Total remuneration
€42,000
€44,900
Ratio
267:1
207:1
Total remuneration
€54,600
€58,900
Ratio
205:1
158:1
Total remuneration
€11,200,211
€9,311,400
Salary Pay Ratios compared to UK-based employees
Year
2020
2019
Calculation
Methodology
C
C
P25 (lower quartile)
P50 (median)
P75 (upper quartile)
Chief Executive
Salary
€28,200
€28,500
Ratio
52:1
53:1
Salary
€37,800
€42,400
Ratio
39:1
36:1
Salary
€46,800
€49,900
Ratio
31:1
31:1
Salary
€1,469,100
€1,522,500
1. Salary and total remuneration figures have been rounded to the nearest 100.
2. Employee remuneration data converted into Euros at the average quarter four EUR:GBP exchange rate (source: Central Bank of Ireland). For 2020 this rate was
0.9:1(2019: 0.86:1).
3. Total remuneration for the lower quartile, median and upper quartile employees are determined using the ‘single figure’ methodology. This methodology was chosen as
it provides a like-for-like comparison between the CEO 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 P25, P50 and P75 is conducted in November each year. Given the
timing, for the purpose of the ranking exercise, total remuneration is defined as the sum of base salary, employer pension contributions and other taxable benefits for
the period 1 January to 31 October, and the incentive paid in the period in respect of the prior year. All elements of remuneration are calculated on a full-time and
full-year equivalent basis. In the following January, total remuneration is updated for the three employees representing P25, P50 and P75 using the same single figure
methodology used to report CEO remuneration.
4. The Committee reviewed the underlying rationale for the year-on-year change in the quartile figures for the identified UK employees. This was due to the impact of
the COVID-19 pandemic on the UK Tarmac business, which employs the majority of our UK workforce. This year-on-year change reflects a variety of factors
including restricted working and reduced overtime of some UK employees during 2020, as well as the linkage of bonus outcomes for these employees to the
performance of the UK-based businesses in which they work (rather than CRH as a whole). Year-on-year fluctuations in the exchange rate used to convert
employee remuneration data into euro can also drive short term fluctuations in the reported ratio.
2020 Annual Report and Form 20-F
Annual Report on Remuneration - continued
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.
Relative Importance
of Spend on Pay
98
Table 47 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 2019
and 2020. 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
Committee
In 2020 Mercer acted as the Committee's
independent remuneration consultants. The
Committee has satisfied itself that the advice
provided by Mercer is robust and independent
and that the Mercer engagement partner and
team that provide remuneration advice to the
Committee do not have connections with CRH
plc that may impair their independence.
Mercer are signatories to the Voluntary Code of
Conduct in relation to executive remuneration
consulting in the UK. During 2020, Mercer
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 2020, Mercer's parent, the MMC Group,
provided pensions advice and related services
to the Company. In 2020, the total fees paid to
Mercer Kepler were Stg£78,538.
2020 Annual General Meeting
The voting outcome in respect of the
remuneration-related votes at the 2020 AGM is
set out in table 50 on page 99.
Heather Ann McSharry
Chair of Remuneration Committee
3 March 2021
Relative Importance of Spend on Pay
Table 47
Share
Buyback/
Dividends
2020
$0.2bn
$0.7bn
Total: $0.9 billion
2019
$0.9bn
$0.7bn
Total: $1.6 billion
Shares Repurchased
Dividends Paid
Remuneration
received by all
employees
2020
2019
EBITDA (as
defined)*
2020
2019
$6.21bn
$6.15bn
$4.6bn
$4.5bn
Shareholdings of Directors and Company Secretary
Table 48
Name
Executive Directors
A. Manifold (ii)
S. Murphy (ii)
Non-executive Directors
R. Boucher
R. Fearon (iii) (iv)
J. Karlström
S. Kelly (iv)
L. McKay (iii)(iv)
H.A. McSharry
G.L. Platt
M.K. Rhinehart (iv)
L.J. Riches
S. Talbot
Company Secretary
N. Colgan
Total
Beneficially Owned (i)
31 December 2020
31 December 2019
47,061
6,068
23,300
1,000
2,000
1,000
4,000
4,170
1,064
1,000
5,000
1,550
4,769
101,982
1,297
1,970
13,800
1,000
2,000
1,000
Nil
4,170
1,059
1,000
5,000
1,550
11,365
45,211
(i)
(ii)
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.
The total interests of the executive Directors, using the methodology set out in the Shareholding
Guideline section on page 85, are illustrated in table 29.
(iii) Appointed with effect from 3 December 2020. Holdings shown in the 2019 column are those as
at the date of appointment.
(iv) Holdings in the form of American Depositary Receipts (ADRs).
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
Details of Remuneration Charged against Profit in 2020
Directors’ Remuneration (i) (Audited)
Executive Directors
Basic Salary
Performance-related Incentive Plan
- cash element
- deferred shares element
Retirement Benefits Expense
Benefits
Total executive Directors’ remuneration
Average number of executive Directors
Non-executive Directors
Fees
Other remuneration
Benefits
Total non-executive Directors’ remuneration
Average number of non-executive Directors
Payments to former Directors (ii)
Total Directors’ remuneration
2020
€000
2,237
2,707
1,353
816
40
7,153
2.00
730
995
-
1,725
8.83
40
8,918
2019
€000
2,317
2,647
1,324
866
70
7,224
2.00
894
1,124
9
2,029
10.16
9
9,262
(i) See analysis of 2020 remuneration by individual in tables 24 and 42 on pages 79 and 95 respectively.
(ii) Consulting and other amounts paid to a number of former Directors.
For the purposes of Section 305(1) of the Companies Act, 2014, the total aggregate of "emoluments" paid or received by Directors in respect of qualifying
services was €8,918 million. Details of share based payments charged through P&L can be found in note 34.
Remuneration Related Votes 2020
99
Table 49
2018
€000
2,260
2,752
918
878
80
6,888
2.00
716
961
1
1,678
9.16
14
8,580
Table 50
Directors’ Remuneration Report (“Say on Pay”)
Directors’ Remuneration Policy Report
2020
2019
90.72
86.73
9.28
13.27
11,758,582
4,846,043
548,766,152
496,827,532
69.92
61.43
Year of
AGM
%
in Favour
%
Against
No. of
Votes Withheld
Total No. of Votes Cast
(incl. Votes Withheld)
% of Issued Share
Capital Voted
2020 Annual Report and Form 20-F
Directors’ Report
100
The Directors submit their report and the audited
Consolidated Financial Statements for the year
ended 31 December 2020.
Principal Activity, Results for the
Year and Review of Business
CRH is the leading building materials business
in the world, employing c. 77,100 people
at over 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 c.1,000 subsidiary, joint
venture and associate undertakings; the principal
ones as at 31 December 2020 are listed on
pages 250 to 254.
The Group's strategy, business model and
development activity are summarised on pages
6 to 51 and are deemed to be incorporated
in this part of the Directors' Report. As set
out in the Consolidated Income Statement on
page 132, the Group reported a profit before
tax for the year of $1.7 billion from continuing
operations. Comprehensive reviews of the
financial and operating performance of the
Group during 2020 are set out in the Business
Performance section on pages 30 to 51; key
financial performance indicators are set out on
pages 18 to 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 2020,
5,951,146 million ordinary shares were
repurchased on the Euronext Dublin for a total
of $0.2 billion, at an average price of $36.96 per
share. Further details in relation to the buyback
programme and the Company's profits available
for distribution are set on pages 103 and 209
respectively.
2021 Outlook
The 2021 outlook set out in the Chief Executive’s
Review on page 11 is deemed to be incorporated
in this part of the Directors’ Report.
Dividend
CRH's capital allocation policy reflects the
Group's strategy of generating industry leading
returns through value-accretive allocation of
capital while delivering long-term dividend
growth for shareholders. The Board continues
to believe that a progressive dividend policy is
appropriate for the Group and further to the 12%
dividend increase in 2019, an interim dividend
of 22.0c (2019: 22.0c) per share was paid in
September 2020. The Board is recommending
a final dividend of 93.0c per share. This would
give a total dividend of 115.0c for the year (2019:
92.0c), an increase of 25% over last year. The
earnings per share for the year were 142.9c,
representing a cover of 1.2x the proposed
dividend for the year while pre-impairment
earnings per share for the year were 243.3c,
representing a cover of 2.1x the proposed
dividend for 2020. It is proposed to pay the
final dividend on 5 May 2021 to shareholders
registered at the close of business on 19 March
2021. 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. Reflecting the resilience of our business
model and continued strong cash generation the
Board believes that a through-the-cycle dividend
cover of 2.0 to 2.5 times is appropriate for the
Group going forward.
Principal Risks and Uncertainties
Pursuant 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
'Transparency Regulations') and the Central
Bank (Investment Market Conduct) Rules 2019,
the principal risks and uncertainties that could
affect the Group’s business are set out on pages
106 to 111 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 Reporting
The European Union (Disclosure of Non-Financial
and Diversity Information by certain large
undertakings and groups) Regulations 2017
(the ‘Non-Financial Regulations’) requires CRH
to provide certain non-financial information to
investors and other stakeholders necessary
to provide them with an understanding of the
Company’s development, performance, position
and impact of its activity. Table 51 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.
Non-Financial Reporting
Table 51
Reporting Requirement
Relevant Policies (i)
Location of Information (ii)
Pages
Environmental and Climate Related Matters
Environmental Policy
Sustainability and Risk Governance
Social & Employee Matters
Health & Safety Policy, Social Policy
Sustainability
Human Rights
Social Policy, Code of Business Conduct
Sustainability
Anti-bribery & Corruption
Code of Business Conduct
Business Model
Non-financial KPIs
Principal Risks
–
–
–
Sustainability
Business Model
Managing Performance
Risk and Resilience
20 to 29
20 to 25
20 to 25
20 to 25
16 to 17
18 to 19
26 to 29
Principal Risks and Uncertainties
106 to 111
(i) Policies are available on CRH’s website, www.crh.com.
(ii) The referenced sections are deemed to be incorporated within this Directors’ Report.
Regulatory Information1
Table 52
Companies
Act 2014
2006 Takeover
Regulations
2007 Transparency
Regulations
Disclaimer/
Forward-
Looking Statements
For the purpose of Section 1373, the Corporate Governance Report on pages 52 to 99, 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 106 to 111, 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 197 to 199 respectively.
For the purpose of Regulation 21 of Statutory Instrument 255/2006 European Communities (Takeover Bids (Directive 2004/25/EC)) Regulations
2006, the rules relating to the appointment and replacement of Directors are summarised in the Governance Appendix. The Chief Executive and
the Finance Director have entered into service 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 in the section entitled 'Service Contracts' on page 54 of the 2019 Annual
Report and Form 20-F 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.
101
For 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 6 to 29, the Principal Risks and Uncertainties section on pages 106 to 111, the Business
Performance section on pages 30 to 51, the information on inclusion and diversity on pages 66 and 68, 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.
In 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”; "Governance -
Directors' Report"; “Strategy Review” regarding the Group’s strategy for future growth and delivery; “Strategy Review - Measuring Performance”
with regard to our focus for 2021; "Strategy Review - Sustainability" with regard to our strategies for our sustainability priorities; “Business
Performance - Finance Director’s Review 2020” with respect to our belief that the Group has sufficient resources to meet its debt obligations
and capital and other expenditure requirements in 2021; “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; “Governance - Principal Risks and Uncertainties”;
"Strategy Review - Risk and Resilience" and "Supplementary 20-F Disclosures - Risk Factors" 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, such as the ongoing COVID-19 pandemic, 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 106 to 111 of the Directors’ Report and in the Risk
Factors included on pages 223 to 231 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 9.8.4C
Table 53
Listing Rule
Information to be included (i):
LR 9.8.4 (12)
and (13)
Waivers of Dividends Disclosure: The Trustees of the Employee Benefit Trust have elected to waive dividends in respect of certain holdings of CRH
shares. See page 199 to the Consolidated Financial Statements.
(i) No information is required to be disclosed in respect of Listing Rules 9.8.4 (1), (2), (4), (5), (6), (7), (8), (9), (10), (11) and (14).
1. This table contains information which is required to be provided for regulatory purposes.
2. For the purposes of the Company’s Annual Report on Form 20-F as filed with the SEC, the Sustainability Report, and any reference thereto, is explicitly excluded from this Directors’ Report.
2020 Annual Report and Form 20-F Directors’ Report - continued
102
Going Concern
The time period that the Directors have considered
in evaluating the appropriateness of the going
concern basis in preparing the 2020 Consolidated
Financial Statements 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 6 to
29 and pages 106 to 111. The financial position
of the Group, its cash flows, liquidity position and
borrowing facilities are described in the Business
Performance Review on pages 30 to 51. 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. The increase in
cash and liquidity available to the Group including
our ongoing ability to access the debt markets,
the quantum of our liquidity facilities, the absence
of financial covenants associated with our debt
obligations and the continuing maintenance of
strong investment grade credit ratings demonstrate
the significant financial strength and resilience of
the Group. No concerns or material uncertainties
have been identified as part of our assessment,
which also considered the impact of the COVID-19
pandemic.
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 financial
and other 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 Statement
The viability statement set out on page 29 is
deemed to be incorporated in this section of the
Directors' Report.
Risk Management
and Internal Control1
Changes to the
Board of Directors
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 Statement
It 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
In accordance with Section 1110N(6), the 2020
Directors' Remuneration Report (excluding the
Remuneration Policy Report) on pages 74 to 79
with be subject to a non-binding advisory vote at
the 2021 AGM.
• Mr. P.J Kennedy and Mr. H.Th. Rottinghuis
retired from the Board with effect from
23 April 2020;
• Mr. R. Fearon and Mr. L. McKay were
appointed to the Board with effect from
3 December 2020; and
• Ms. H.A. McSharry, Mr. S. Murphy and
Ms. L.J. Riches will retire from the Board at
the conclusion of the AGM to be held on
29 April 2021
Under the Company’s Articles of Association,
co-opted Directors are required to submit
themselves to shareholders for election at
the AGM following their appointment and all
Directors are required to submit themselves
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.
Auditor
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 auditor.
Section 383 of the Companies Act 2014 provides
for the automatic re-appointment of the auditor
of an Irish company at a company’s AGM, unless
the auditor has given notice in writing of his
unwillingness to be re-appointed or a resolution
has been passed at that meeting appointing
someone else or providing expressly that the
incumbent auditor shall not be re-appointed. The
auditor, Deloitte Ireland LLP, is willing to continue
in office.
Notwithstanding the provisions of Irish company
law, the Board has decided to provide
shareholders with an opportunity to have a say on
the continuance in office of Deloitte Ireland LLP and
a non-binding resolution has been included on the
agenda for the 2021 AGM for this purpose.
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 2021 AGM to
renew the annual authority for that purpose. The
authority will be for an amount which represents
1. For more information in relation to the Group’s risk management and internal control systems, please see the Risk Management and Internal Control section in the Supplementary 20-F Disclosures
section on page 232.
just under 50% of the issued Ordinary Share capital
as at 3 March 2021. Any allotment exceeding
33% of the issued Ordinary Share capital will only
be made pursuant to a pre-emptive issue and no
issue of shares will be made which could effectively
alter control of the Company without prior approval
of the Company in General Meeting.
The Directors have no present intention of making
any issue of shares, other than in connection
with the Group’s share incentive plans and, if
applicable, scrip dividend scheme.
If approved, this authority will expire on the earlier
of the date of the AGM in 2022 or 28 July 2022.
Disapplication of
Pre-emption Rights
Two special resolutions will be proposed at the
2021 AGM to 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.
The first resolution 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 €12,722,000. This amount represents
approximately 5% of the issued Ordinary Share
capital as at 3 March 2021, being the latest
practicable date prior to publication of this
document. This resolution 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.
The authority under the second disapplication
resolution 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 3 March 2021. The power conferred by this
resolution 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 the disapplication resolutions
include any Treasury Shares reissued by the
Company during the same period.
The Directors confirm that in respect of these
resolutions, 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 Shares
Under the share buyback programme, a total of
5,951,146 Ordinary/Income Shares, equivalent
to 0.75% of the Company’s issued share capital
were repurchased during 2020, at an average
price of $36.96 per share. 4,500,000 Ordinary/
Income Shares, equivalent to 0.57% of the
Company’s issued share capital were cancelled
on 18 December 2020 as part of the Group's
management of its Treasury Share requirements.
As at 3 March 2021, 10,073,153 shares were
held as Treasury Shares, equivalent to 1.28%
of the Ordinary Shares in issue (excluding
Treasury Shares). The Treasury Share balance at
31 December 2020 was 10,087,161, equivalent
to 1.28% of the Ordinary Shares in issue
(2019: 10,011,353 (1.27%).
During 2020, 1,375,338 (2019: 1,147,149)
Treasury Shares were reissued under the Group’s
employees’ share schemes.
A special resolution will be proposed at the 2021
AGM to renew the authority of the Company, or
any of its subsidiaries, to purchase up to 10% of
the Company’s Ordinary 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 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 2022
or 28 July 2022. As at 3 March 2021, options
to subscribe for a total of 1,356,752 Ordinary
Shares are outstanding, representing 0.17%
of the issued Ordinary Share capital (excluding
Treasury Shares). If the authority to purchase
Ordinary Shares was used in full, the options
would represent 0.19% of the remaining shares
in issue.
As outlined on page 33, during 2020 the
Group returned a further $220 million of cash
to shareholders under its share buyback
programme but, due to high levels of market
volatility, the Board paused the programme in
March 2020. However, as outlined on page
5, the Board has announced its intention to
recommence the programme and complete a
further $0.3 billion tranche during the second
quarter of 2021.
While no decision has been made to extend the
programme beyond this, 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.
103
Authority to Offer Scrip Dividends
The scrip dividend scheme was suspended
during 2018 with the commencement of the
buyback programme. 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 2022, this authority shall expire at
the close of business on 28 July 2022.
New Savings-related Share
Option Scheme
At the 2010 Annual General Meeting shareholders
adopted Savings-relation Share Option Schemes
(the '2010 Schemes'), which were subsequently
approved by the Irish Revenue Commissioners
and HMRC in the United Kingdom. The 2010
Schemes were valid for a period of 10 years
and expired during 2020. Such schemes are an
important means by which share ownership by
the wider workforce in these jurisdictions can
be made facilitated. Accordingly, it is proposed
to seek approval from shareholders at the
2021 Annual General Meeting to establish new
savings-related share option schemes in Ireland
and the United Kingdom, in accordance with the
legislation currently in place in those jurisdictions
and, where applicable, to establish schemes
similar in substance in other jurisdictions (the '2021
Schemes'). There are no material differences
between the 2010 Schemes and 2021 Schemes.
Annual General Meeting
The Notice of Meeting for the 2021 AGM will
be published in March on the CRH website
(www.crh.com) and is expected to be posted to
shareholders on 31 March 2021.
2020 Annual Report and Form 20-F Each of the Directors also confirm that the 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 auditor is 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 auditor is aware of that
information.
On behalf of the Board,
R. Boucher, A. Manifold
Directors
3 March 2021
104
Directors’ Report - continued
Statement of Directors’
Responsibilities
The Directors as at the date of this report,
whose names are listed on pages 54 to 57, are
responsible for preparing the Annual Report and
Form 20-F and Consolidated Financial Statements
in accordance with applicable laws and regulations.
Irish company law requires the Directors to
prepare financial statements for each financial
year which give a true and fair view of the assets,
liabilities, financial position of the Parent Company
and of the Group, and of the profit or loss of
the Group taken as a whole for that period (the
‘Consolidated Financial Statements’).
In preparing the Consolidated Financial
Statements, the Directors are required to:
• select suitable accounting policies and then
apply them consistently;
• make judgements and estimates that are
reasonable and prudent;
• comply with applicable International Financial
Reporting Standards as adopted by the
European Union, subject to any material
departures disclosed and explained in the
financial statements; and
• prepare the financial statements on the going
concern basis unless it is inappropriate to
presume that the Group will continue in
business.
The Directors are required by the Transparency
(Directive 2004/109/EC) Regulations 2017 and
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 2020 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
205 to 209), 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, Ireland.
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, to the best
of their knowledge and belief, and as required by
the Transparency Regulations,
•
•
the Consolidated Financial Statements,
prepared in accordance with IFRS and
the Parent Company Financial Statements
prepared in accordance with FRS 101, give
a true and fair view of the assets, liabilities,
financial position and profit or loss of the
Group for the financial year ended 31
December 2020; and
the Directors' Report contained on page 100
to 104 of this Annual Report and Form 20-F
includes a fair review of the development
and performance of the business and the
position of the Group and Company, together
with a description of the principal risks and
uncertainties that they face.
105
In 2020 CRH brought its construction accessories businesses together globally under one new brand ‘Leviat' to allow them to benefit from the synergies that come from being part of an
integrated, global construction accessories business, including collaboration on sales, marketing and product development. Leviat is part of CRH’s Building Products Division.
2020 Annual Report and Form 20-F Principal Risks and Uncertainties
Under Section 327(1)(b) of the Companies Act 2014 and Regulation 5(4)(c)(ii) of the Transparency (Directive 2004/109/EC) Regulations 2007, the Group is
required to give a description of the principal risks and uncertainties which it faces. These risks and uncertainties reflect the international scope of the Group’s
operations and the Group’s decentralised structure. The risks and uncertainties presented below, which are supplemented by a broader discussion of Risk
Factors set out on pages 223 to 231, are reviewed on an annual basis and represent the principal risks and uncertainties faced by the Group at the time of
compilation of the 2020 Annual Report and Form 20-F. During the course of 2021, 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.
Link to strategic objective
106
Principal Strategic Risks and Uncertainties
Industry Cyclicality and Economic Conditions
Description
Impact
How we Manage the Risk
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
growth
Construction activity, and therefore demand for
the Group’s products, is inherently cyclical as it
is influenced by global and national economic
circumstances, monetary policies, 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:
Portfolio Management
Description
Impact
How we Manage the Risk
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 necessary
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.
Risk trend:
Public Policies and Geopolitics
Description
Impact
How we Manage the Risk
Adverse public policy, economic, social and
political situations in any country in which the
Group operates could lead to a fall in demand
for the Group’s products, 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.
• Senior management and Board monitoring of economic indicators and
commentaries
• Two-phase budgeting process with prevailing economic and market
forecasts factored in
• Mitigation strategies to protect CRH’s people and assets are in place in
high risk areas
Commodity Products and Substitution
Description
Impact
How we Manage the Risk
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.
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 products
107
People Management
Description
Impact
How we Manage the Risk
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.
Risk trend:
Failure to effectively manage talent
and plan for leadership succession
could impede the realisation of
strategic objectives.
• Succession planning and talent management initiatives implemented
across the Group
• Talent management processes are in place within operating companies
with oversight and support from Group Human Resources and Talent
Development
• Positive employee and trade/labour union relations are maintained
Strategic Mineral Reserves
Description
Impact
How we Manage the Risk
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.
Failure by the Group to plan for
reserve depletion, or to secure
permits, may result in operation
stoppages, adversely impacting
financial performance.
• Planning for reserves enlargement and security of permits is a key point
of focus for materials businesses
• Robust mine planning for permitted reserves under the Group’s control
ensures that the lifetime of the mineral reserves is maximised
• The implementation of operational best practice techniques ensures
that the extraction minerals is in line with permit requirements, while
minimising the impact of our operations on local environments
Risk trend:
Brexit
Description
The Group's operations in the UK may face
operational, regulatory and market challenges
resulting from the UK’s withdrawal from the
European Union, potentially impacting supply
chain norms, construction labour availability and
the general economic performance of the UK.
Risk trend:
Impact
How we Manage the Risk
Failure by the Group to manage the
continued uncertainties posed by
Brexit could result in adverse financial
performance and a fall in the Group’s
net worth.
• Executive management receives reports on the ongoing impacts
associated with Brexit and closely monitors the changing economic
situation in the UK
• Contingency plans are in place within UK operations to address the
range of potential economic, financial and operational effects of Brexit
2020 Annual Report and Form 20-F
Principal Operational Risks and Uncertainties
COVID-19 Pandemic
Description
Impact
How we Manage the Risk
Public health emergencies, epidemics or
pandemics, such as the emergence and spread
of the COVID-19 pandemic, have the potential
to significantly impact the Group's operations
through a fall in demand for the Group's
products, a reduction in staff availability and
business interruption.
108
Risk trend:
The emergence and spread of the
COVID-19 pandemic has had a
material impact across the
construction markets in which the
Group operates. The continued
uncertainty around the global
pandemic could have an adverse
effect on the Group's operating
results, cash flows, financial condition
and/or prospects.
• Global crisis management structures and protocols are in place to
enable swift decision-making at times of crisis
• Business continuity management structures and plans enacted with
new working protocols implemented to safeguard our people and
business
• Consistent contact is maintained with various government organisations
Climate Change and Policy
Description
Impact
How we Manage the Risk
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 regulation change and market and
economic responses.
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
• Operational improvements at plants are focused on reducing the CO2
footprint of the Group’s businesses
• For more information please refer to the Sustainability section on page
20 in this Annual Report and Form 20-F or to the Group’s independently
assured Sustainability Report, which is available on www.crh.com
Health and Safety Performance
Description
Impact
How we Manage the Risk
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.
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.
Risk trend:
• 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
integrity
Sustainability and Corporate Social Responsibility
Description
Impact
How we Manage the Risk
The nature of the Group’s 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 aims 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. CRH offers 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 indices
109
Information Technology and/or Cyber Security
Description
Impact
How we Manage the Risk
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.
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 technology
2020 Annual Report and Form 20-F
Principal Compliance Risks and Uncertainties
Laws and Regulations
Description
Impact
How we Manage the Risk
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.
Potential breaches of local and
international laws and regulations
could result in the imposition of
significant fines or sanctions and may
inflict reputational damage.
110
Risk trend:
• 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 in multiple languages 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 and SESR Committees)
and detailed policies and procedures to support the Code of Business
Conduct
Principal Financial and Reporting Risks and Uncertainties
Goodwill Impairment
Description
Impact
How we Manage the Risk
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.
Risk trend:
A material 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 and the results of the 2020 impairment
testing process, please refer to note 16 to the Consolidated Financial
Statements on pages 166 to 168
Financial Instruments
Description
Impact
How we Manage the Risk
The 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 institution 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
detail
Taxation Charge and Balance Sheet Provisioning
Description
Impact
How we Manage the Risk
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.
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 Policy, supporting Tax Guidelines and SOX controls
provide a tax governance framework operable throughout the Group
• Group Tax is managed by a team of in-house specialists with significant
experience. The in-house expertise is supplemented by the assistance of
external advisors where required
111
Risk trend:
Defined Benefit Pension Schemes and Related Obligations
Description
Impact
How we Manage the Risk
The assets and liabilities of defined benefit
pension schemes, in place in certain operating
jurisdictions, may exhibit significant period-on-
period volatility attributable primarily to asset
values, changes in bond yields/discount rates
and anticipated longevity.
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.
Risk trend:
• 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
entrants
Foreign Currency Translation
Description
Impact
How we Manage the Risk
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.
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 changed 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 operation
2020 Annual Report and Form 20-F
112
The circular economy and demand for
more sustainable forms of construction are
presenting new value creation opportunities
for CRH as producer of high‑performing,
climate‑friendly materials and products for
use throughout the built environment.
Financials
Independent Auditors’
Reports
Consolidated Income
Statement
Consolidated Statement
of Comprehensive Income
Consolidated Balance
Sheet
Consolidated Statement
of Changes in Equity
Consolidated Statement
of Cash Flows
Accounting Policies
Notes on Consolidated
Financial Statements
113
114
132
133
134
135
136
137
147
Finnsementti, part of CRH’s Europe Materials Division, played a leading role in the
renovation of the award‑winning Olympic Stadium in Helsinki, Finland. Completed
in 2020, the multipurpose arena has a capacity of 36,200 for sporting events and
50,000 for concerts. The renovation project involved c. 50,000 cubic meters of
concrete. The stadium was awarded both the Finlandia prize of architecture and
the Finnish Association of Civil Engineers RIL‑award in 2020.
2020 Annual Report and Form 20-F Independent Auditor’s Irish Report
to the members of CRH plc
Report on the audit of the financial statements
Opinion on the financial statements of CRH plc (the ‘Company’) and it’s subsidiaries (the ‘Group’)
In our opinion the Group and Company financial statements:
• give a true and fair view of the assets, liabilities and financial position of the Group and Company as at 31 December 2020 and of the profit of the Group for the
financial year then ended; and
• have been properly prepared in accordance with the relevant financial reporting framework and, in particular, with the requirements of the Companies Act 2014
and, as regards the Group financial statements, Article 4 of the IAS Regulation.
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The financial statements we have audited comprise:
the Group financial statements:
•
•
•
•
•
•
the Consolidated Income Statement;
the Consolidated Statement of Comprehensive Income;
the Consolidated Balance Sheet;
the Consolidated Statement of Changes in Equity;
the Consolidated Statement of Cash Flows; and
the related notes 1 to 35, including a summary of significant accounting policies as set out at the beginning of the notes.
the Company financial statements:
•
•
•
the Company Balance Sheet;
the Company Statement of Changes in Equity; and
the related notes 1 to 13, including a summary of significant accounting policies as set out in note 2.
The relevant financial reporting framework that has been applied in the preparation of the Group financial statements is the Companies Act 2014 and International
Financial Reporting Standards (IFRS) as adopted by the European Union (“the relevant financial reporting framework”). The relevant financial reporting framework that
has been applied in the preparation of the company financial statements is the Companies Act 2014 and FRS 101 “Reduced Disclosure Framework” issued by the
Financial Reporting Council (“the relevant financial reporting framework”).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Our responsibilities under those standards
are described below in the “Auditor’s responsibilities for the audit of the financial statements” section of our report.
We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in Ireland,
including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), as applied to public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
2020 Annual Report and Form 20-F
Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
• Assessment of the carrying value of goodwill associated with selected cash generating units;
• Assessment of the carrying value of property plant and equipment (PP&E); and
• Revenue recognition for long-term contracts.
Materiality
• The Group materiality that we used in the current year was $110 million, which was determined on a
composite basis with revenue as the primary benchmark.
Scoping
• We structured our approach to the audit to reflect how the Group is organised as well as ensuring our audit
was both effective and risk focused.
• The Company materiality that we used in the current year was $94 million, which was determined on a net
asset/equity basis.
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First year audit transition
• Our scope covered 48 components. Of these, 5 were full-scope audits, covering 80% of Group revenue, 23
were subject to specific procedures on certain account balances by component audit teams or the Group
audit team, and the remaining 20 were subject to substantive analytical procedures performed centrally by the
Group audit team.
• This is the first year we have been appointed as auditors to the Group. We undertook a number of transitional
procedures to prepare for the audit. Before we commenced our audit, we had to establish our independence
of the Group, which involved ceasing a number of services.
• We became independent of the Group and commenced our audit planning on 1 July 2019. From this date,
we attended all Audit Committee meetings, initially in an observer capacity. We shadowed the former auditor
in certain key audit meetings with management and reviewed their working papers to gain an understanding
of the Group’s processes, their audit risk assessment, the controls on which they relied for the purposes of
issuing their audit opinion, as well as understanding the evidence they obtained on the key complex or
significant judgements which they made. We undertook site visits to gain a deeper understanding of the
Group’s business.
• We followed an intentionally phased approach to the audit, starting with our work on Information Technology
systems, then US operations, European operations and finally Group operations to maximise group team
involvement at each stage and so that learnings could be shared from one phase to the next. In June 2020,
we held various meetings of audit partners and senior staff who would be responsible for undertaking the
audits in the most significant locations in the Group. The main purpose of these meetings was to outline the
centralised aspects of our audit approach including the use of our data analytics tools, discuss possible
significant audit risks and brief our teams on the Group’s key processes, systems and structure.
• During these meetings, we also heard directly from Group management on the changes impacting the
business to inform our audit planning and risk assessment and the Audit Committee Chair briefed the group
and component teams on his focus areas.
• Subsequent strategic meetings were also held as necessary throughout the audit process, with the same
participants to take into account any current period updates (including planning for the implications of
COVID-19) that impacted our audit approach outlined on pages 61 to 62.
• Key audit matters considered by the Group’s auditor in the prior year were broadly aligned with the items
identified above.
2020 Annual Report and Form 20-F Independent Auditor’s Irish Report - continued
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is
appropriate.
Our evaluation of the directors’ assessment of the Group and Company’s ability to continue to adopt the going concern basis of accounting included:
• obtaining an understanding of the Group’s controls over the development and approval of the projections and assumptions used in the cash flow forecasts to
support the going concern assumption and assessing the design, determining the implementation and testing the operating effectiveness of these controls;
•
testing the clerical accuracy of the cash flow forecast model;
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• completing an assessment of the consistency of the models used to prepare the forecasts in line with other areas of our audit;
• performing a look back analysis of the historical accuracy of forecasts prepared by management;
• assessing the appropriateness of the sensitivity analysis prepared by management; and
• assessing the adequacy of the disclosures in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast
significant doubt on the Group and Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are
authorised for issue.
In relation to the Company’s reporting on how they have applied the UK Corporate Governance Code and the Irish Corporate Governance Annex, we have nothing
material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the director’s considered it appropriate to adopt the
going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current financial year
and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on:
the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
2020 Annual Report and Form 20-F
Intangible Assets – Assessment of the carrying value of goodwill associated with selected cash
generating units
Key audit matter
description
As described in the accounting policies and note 16, the goodwill balance was $9.0 billion as at 31 December 2020 and the Group
recorded an impairment charge of $0.4 billion during the year ended 31 December 2020.
The Group’s evaluation of the carrying value of goodwill for impairment involves the comparison of the recoverable amount of goodwill of
each cash generating unit (CGU) to its carrying value. The Group used the value-in-use approach, which deploys a discounted cash flow
model to estimate the recoverable amount. This requires management to make significant estimates and assumptions related to discount
rates, short-term forecasts of future revenues and margins, and long-term growth rates which drive net cash flows. Changes in these
assumptions could have a significant impact on the recoverable amount, the amount of any goodwill impairment charge, or both.
We identified goodwill for certain CGUs as a key audit matter because of the significant judgements made by management to estimate the
recoverable value of certain CGUs and the difference between their recoverable amounts and carrying values. We focused on CGUs
where impairments were recognised in the current year, CGUs identified as sensitive by management as disclosed in note 16 and CGUs
with a significant change in cash flow forecasts in the current year (collectively the “selected CGUs”). This required a high degree of auditor
judgement and increased extent of effort, including the need to involve our valuation specialists, when performing audit procedures to
evaluate the reasonableness of management’s estimates and assumptions as described above.
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The Audit Committee discussion of this key audit matter is set out on page 62.
How the scope of our
audit responded to
the key audit matter
Our audit procedures related to the assumptions, as described above, used by management to estimate the recoverable amounts of the
selected CGUs included the following, among others:
• We tested the operating effectiveness of controls over management’s selection of the discount rates, short-term forecasts of future
revenues and margins, and long-term growth rates used to determine the recoverable amount of each selected CGU.
• We agreed the underlying cash flow forecasts to the Board approved projections and we evaluated management’s ability to accurately
forecast future revenues and margins by:
• performing a look-back analysis and comparing actual results to management’s historical forecasts;
• assessing the reasonableness of the impact of COVID-19 and other macroeconomic activity on short-term cash flows;
• benchmarking management’s forecasts against independent third-party economic and industry projections; and
• comparing internal Group communications to management and the Board against the cash flow forecasts to evaluate for
consistency.
• With the assistance of our valuation specialists, we evaluated the appropriateness of the valuation methodology and discount rates
used for each selected CGU by:
• assessing the reasonableness of the valuation model used by the Group compared to generally accepted valuation practices and
accounting standards;
•
testing the source information underlying the determination of the discount rates through use of observable inputs from
independent external sources; and
• developing a range of independent estimates and comparing those to the discount rates selected by management.
• We compared the long-term growth rates, used by management to grow cash flows from year 5 to year 10 in order to calculate a
terminal value at that point, to independent external sources and developed our own range to assess the reasonableness of these
rates.
• We compared the actual results for the year ended 31 December 2020 to management’s forecasts at the date of the annual
impairment test to determine if any additional indicators of impairment existed.
•
In conjunction with our climate change specialists we assessed how climate related risks had been incorporated into the valuation
models and assessed whether assumptions used in the valuation models were consistent with achieving the Group’s 2030 carbon
reduction targets.
Key observations
Based on the procedures performed, we have determined management’s assumptions used in the assessment of the carrying value of
goodwill associated with selected CGUs to be reasonable.
We concluded that the related disclosures provided in the Consolidated Financial Statements are appropriate.
2020 Annual Report and Form 20-F Independent Auditor’s Irish Report - continued
Property, Plant & Equipment (PP&E) – Assessment of the carrying value of property, plant and
equipment
Key audit matter
description
As described in the accounting policies and note 15, at 31 December 2020, the Group carrying value of PP&E was $19.3 billion. The
Group recorded an impairment charge for the year ended 31 December 2020 of $0.3 billion.
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The Group’s evaluation of PP&E for indicators of impairment is performed annually or when events or changes in circumstances indicate
that the carrying values may not be recoverable. The Group uses a value-in-use model to estimate the recoverable amount, which requires
management to make significant estimates and assumptions related to discount rates, short-term forecasts of future revenues and
margins, and long-term growth rates which drive net cash flows. Changes in these assumptions could have a significant impact on the
recoverable amount, the amount of any impairment charge, or both.
We identified PP&E CGUs with impairment indicators (the ‘identified CGUs’) as a key audit matter because of the significant judgements
made by management to estimate the recoverable value of the identified CGUs and the difference between their recoverable amounts and
carrying values. This required a high degree of auditor judgement and an increased extent of effort, including the need to involve our
valuation specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions as
described above.
The Audit Committee discussion of this key audit matter is set out on page 62.
How the scope of our
audit responded to
the key audit matter
Our audit procedures related to the significant assumptions and estimates used by management to estimate the recoverable amounts of
the identified CGUs as described above included the following, among others:
• We tested the operating effectiveness of controls over management’s selection of the significant assumptions and estimates, as
described above, used to determine the recoverable amount of each identified CGU.
• We agreed the underlying cash flow forecasts to the Board approved projections and we evaluated management’s ability to accurately
forecast short-term future revenues and margins by:
• performing a retrospective review and comparing actual results to management’s historical forecasts;
• assessing the reasonableness of the impact of COVID-19 and other macroeconomic activity on short-term cash flows;
• benchmarking management’s forecasts against independent third-party economic and industry projections; and
• comparing internal Group communications to management and the Board against the cash flow forecasts to ensure consistency.
• We evaluated the appropriateness of the valuation methodology and discount rates used for each identified CGU, with the assistance
of our valuation specialists, by:
• assessing the reasonableness of the valuation model used by the Group compared to generally accepted valuation practices and
accounting standards;
•
testing the source information underlying the determination of the discount rates through use of observable inputs from
independent external sources; and
• developing a range of independent estimates and comparing those to the discount rates selected by management.
• We compared the long-term growth rates, used by management to calculate the terminal value at year five, to independent external
sources and developed our own range to assess the reasonableness of these rates.
•
In conjunction with our climate change specialists we assessed how climate related risks had been incorporated into the valuation
models and assessed whether assumptions used in the valuation models were consistent with achieving the Group’s 2030 carbon
reduction targets.
Key observations
Based on the procedures performed, we have determined management’s assumptions used in the assessment of the carrying value of
PP&E associated with the identified CGUs to be reasonable.
We concluded that the related disclosures provided in the Consolidated Financial Statements are appropriate.
2020 Annual Report and Form 20-F
Revenue recognition for long-term contracts
Key audit matter
description
As described in the accounting policies and note 1 the Group’s revenues derived from long-term contracts accounted for 22% ($6.2
billion) of the total revenue in 2020.
The Group recognises long-term contract revenue over the contract term as the work progresses because transfer of control and the
fulfillment of performance obligations to the customer is continuous. The percentage-of-completion method is used to recognise revenue
and is calculated based on the proportion of the contract costs incurred at the date relative to the total estimated costs of the contract.
The accounting for these contracts involves judgement, particularly as it relates to the process of estimating total costs.
We identified revenue recognition on long-term contracts as a key audit matter because of the judgements necessary for management to
estimate total costs for the performance obligations used to recognise revenue for certain long-term contracts. This required extensive
audit effort due to the complexity of long-term contracts and required a high degree of auditor judgement when performing audit
procedures to audit management’s estimates of total costs and evaluating the results of those procedures.
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The Audit Committee discussion of this key audit matter is set out on page 62.
How the scope of our
audit responded to
the key audit matter
Our audit procedures related to management’s estimates of total costs for the performance obligations used to recognise revenue for
certain long-term contracts included the following, among others:
• We tested the operating effectiveness of controls over long-term contract revenue, including management’s controls over the
estimates of total costs for performance obligations.
• We selected a sample of long-term contracts and:
• evaluated whether the contracts were properly included in management’s calculation of long-term contract revenue based on the
terms and conditions of each contract, including whether continuous transfer of control to the customer occurred as progress was
made toward fulfilling the performance obligation;
•
tested the accuracy and completeness of the costs incurred to date for the performance obligation to supporting documentation;
• evaluated the estimates of total cost for the performance obligation by:
• comparing costs incurred to date to the costs management estimated, at either the inception of the contract or the start of the
reporting period, to be incurred to date;
• evaluating management’s ability to achieve the estimates of total cost by performing corroborating inquiries with the Company’s
project managers and engineers, and comparing the estimates to management’s work plans, engineering specifications, and
supplier contracts; and
• comparing management’s estimates for the selected contracts to costs of similar performance obligations, when applicable.
•
tested the mathematical accuracy of management’s calculation of revenue for the performance obligation.
• We evaluated management’s ability to estimate total costs accurately by comparing actual costs to management’s historical estimates
for performance obligations that have been fulfilled.
Key observations
We are satisfied that management’s estimated percentage-of-completion at the balance sheet date is appropriate and reasonable when
assessed against our own independent expectations and our assessment of the accuracy of historical estimates against actual costs.
Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole, and not to express an opinion on
individual accounts or disclosures. Our opinion on the financial statements is not modified with respect to any of the risks described above, and we do not express an
opinion on these individual matters.
2020 Annual Report and Form 20-F Independent Auditor’s Irish Report - continued
Our application of materiality
Materiality
We define materiality as the magnitude of misstatement that makes it probable that the economic decisions of a reasonably knowledgeable person, relying on the
financial statements, would be changed or influenced. We use materiality both in planning the scope of our audit work and in evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
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Materiality
$110 million
$94 million
Group financial statements
Company financial statements
The materiality that we used for the Company financial statements was
determined on the basis of total equity/net assets and represents
approximately 1% of that metric.
The Company holds the Group’s investments and is not in itself profit-
oriented. The strength of the balance sheet is the key measure of financial
health that is important to shareholders since the primary concern for the
Company is the payment of dividends. Using a benchmark of equity/net
assets is therefore the appropriate metric.
Basis for
determining
materiality
Rationale for the
benchmark
applied
The materiality that we used for the Group financial
statements was determined on the basis of a composite
benchmarking approach. This approach considers revenue
as the primary benchmark with EBITDA (as defined)*, cash
flows from operations and total equity/net assets used as
supporting benchmarks.
Profit before tax is the benchmark traditionally considered
for listed entities. This is largely due to users and analysts
assessing the investment prospects based on the earnings
per share metric. In the current year this was not considered
an appropriate benchmark because it was uncertain and
could not be reliably estimated during the year due to the
impact of COVID-19. In addition, there is a greater emphasis
on revenue in the current year as an indicator of demand
going forward. Group materiality represents:
Metric
PBT
%
6.61%
EBITDA (as defined*)
2.38%
Revenue
0.40%
The materiality used by the former auditor in the audit of the prior year’s Group financial statements was $112 million (€100 million as reported and translated at an
average exchange rate of 0.8933 USD/EURO).
Revenue
$27,587 million
Revenue
Materiality
Materiality $110 million
Component materiality
range $74 million to
$28 million
Audit Committee
reporting threshold
$5.5 million
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
2020 Annual Report and Form 20-F
Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the
materiality for the financial statements. Performance materiality was set at 75% of each of Group and Company materiality for the 2020 audit. In determining
performance materiality, we considered the following factors:
a. Our risk assessment, including our assessment of the Group’s overall control environment and that we consider it appropriate to rely on controls over a number of
business processes;
b.
c.
The fact that this is the first year of our audit tenure; and
The effects of the global COVID-19 pandemic.
Error reporting threshold
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We agreed with the Audit Committee that we would report to them any audit differences in excess of $5.5 million, as well as differences below that threshold which, in
our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure matters that we identified when assessing the overall
presentation of the financial statements.
An overview of the scope of our audit
Identification and scoping of components
• The Group consists of three operating and reporting segments and is highly decentralised in nature, with a presence across 30 countries and over 3,100 operating
entities. As a result a significant portion of audit planning time was spent to ensure that the scope of our work is appropriate to address the Group’s identified risks
of material misstatement.
•
In-scope locations were identified based on their contribution to the applicable benchmarks i.e. revenue, total assets and profit before tax.
• We focused our Group audit scope primarily on the audit of 5 components which were subject to a full audit and 43 components which were subject to specified
audit procedures where the extent of our testing was based on our assessment of the associated risks of material misstatement and of the materiality of the
components operations to the Group. 23 components were subject to specific procedures on certain account balances by component audit teams or the Group
audit team, and the remaining 20 were subject to substantive analytical procedures performed centrally by the Group audit team.
• Data analytics were performed centrally and used extensively in selecting the components and addressing the residual entities which were not in-scope based on
the considerations listed. In addition, we analysed disaggregated financial data related to residual entities not subject to full or specified scope audit procedures in
order to identify any unusual movements or relationships.
• Our audit work for all components were executed at levels of materiality applicable to each individual component which were lower than Group materiality and
ranged from $28 million to $74 million.
• The Group audit team performed certain audit work centrally including the impairment relating to goodwill and the impairment relating to PP&E for a number of
specific components.
2020 Annual Report and Form 20-F Independent Auditor’s Irish Report - continued
Working with other auditors
The Group audit team planned its visits to component auditors based on a variety of factors including size of entity and number of significant risks. Oversight and
guidance is provided to the component auditors through a combination of:
•
issuance of Group referral instructions;
• upfront team briefings to all component teams;
•
•
site visits (physically, where possible and if not virtually due to COVID-19 pandemic restrictions in 2020); and
risk assessment discussions and detailed workpaper reviews.
These are designed so that the Lead Audit Partner or a senior member of the Group audit team visits all key locations across the Group. In addition we assess the
competence of our component auditors.
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Physical site visits were performed at all key locations except Republic Cement in the Philippines where a virtual site visit was performed. Follow up visits for other
locations were carried out virtually due to COVID-19 restrictions.
We held regular meetings with management at a regional and Group level in order to update our understanding of the Group and its environment on an ongoing basis.
PBT from continuing
operations
Revenue
Total Assets
76% Scope A
6% Scope B
9% Scope C
9% Residual
80% Scope A
3% Scope B
11% Scope C
6% Residual
68% Scope A
19% Scope B
8% Scope C
5% Residual
We classify components according to the following scoping categories:
• Scope A – Full scope integrated audit procedures have been performed by local audit teams to a component materiality. These are financially significant to the
Group and includes risks relevant to the Group audit.
• Scope B – Specified integrated audit procedures on prescribed balances and specific controls have been performed by component teams, or the Group audit
team to component materiality. Scope B also contains Risks of Material Misstatements and associated procedures performed at Group level.
• Scope C – Defined audit procedures consisting of focused risk assessments and analytical reviews have been performed by the Group audit team. Not individually
financially significant to the Group.
• Residual – As Risks of Material Misstatements have been determined to be remote for components and balances included in the residual, the Group engagement
team performs analytical procedures, which are not substantive in nature, to determine whether the audit risk has been reduced to an acceptable level.
Other information
The other information comprises the information included in the Annual Report and Form 20-F, other than the financial statements and our auditor’s report thereon.
The directors are responsible for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any
form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we
are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
2020 Annual Report and Form 20-F
Responsibilities of directors
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the financial statements and for being
satisfied that they give a true and fair view and otherwise comply with the Companies Act 2014, and for such internal control as the directors determine is necessary to
enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group and Company’s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and Company or
to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (Ireland), we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
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•
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Group and Company’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the Group and Company’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of the auditor’s report. However, future
events or conditions may cause the entity (or where relevant, the Group) to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the
underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the business activities within the Group to express an opinion on the consolidated
financial statements. The Group auditor is responsible for the direction, supervision and performance of the Group audit. The Group auditor remains solely
responsible for the audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that the auditor identifies during the audit.
For listed entities and public interest entities, the auditor also provides those charged with governance with a statement that the auditor has complied with relevant
ethical requirements regarding independence, including the Ethical Standard for Auditors (Ireland) 2016, and communicates with them all relationships and other
matters that may reasonably be thought to bear on the auditor’s independence, and where applicable, related safeguards.
Where the auditor is required to report on key audit matters, from the matters communicated with those charged with governance, the auditor determines those
matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. The auditor describes these
matters in the auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, the auditor determines
that a matter should not be communicated in the auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the
public interest benefits of such communication.
2020 Annual Report and Form 20-F Independent Auditor’s Irish Report - continued
Report on other legal and regulatory requirements
Opinion on other matters prescribed by the Companies Act 2014
Based solely on the work undertaken in the course of the audit, we report that:
• We have obtained all the information and explanations which we consider necessary for the purposes of our audit.
•
In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited.
• The Company Balance Sheet is in agreement with the accounting records.
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•
In our opinion the information given in those parts of the directors’ report as specified for our review is consistent with the financial statements and the directors’
report has been prepared in accordance with the Companies Act 2014.
Corporate Governance Statement required by the Companies Act 2014
We report, in relation to information given in the Corporate Governance Statement on pages 58 to 73 that:
•
In our opinion, based on the work undertaken during the course of the audit, the information given in the Corporate Governance Statement pursuant to subsections
2(c) and (d) of section 1373 of the Companies Act 2014 is consistent with the Group’s statutory financial statements in respect of the financial year concerned and
such information has been prepared in accordance with the Companies Act 2014.
• Based on our knowledge and understanding of the Group and its environment obtained in the course of the audit, we have not identified any material
misstatements in this information.
•
•
In our opinion, based on the work undertaken during the course of the audit, the Corporate Governance Statement contains the information required by Regulation
6(2) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017; and
In our opinion, based on the work undertaken during the course of the audit, the information required pursuant to section 1373(2)(a),(b),(e) and (f) of the Companies
Act 2014 is contained in the Corporate Governance Statement.
Corporate Governance Statement
The Listing Rules and ISAs (Ireland) require us to review the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate
Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code and Irish Corporate Governance Annex specified
for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance Statement is materially
consistent with the financial statements and our knowledge obtained during the audit:
•
•
•
•
•
•
the directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any material uncertainties identified set out on
page 102;
the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate set out on page 102;
the directors’ statement on fair, balanced and understandable set out on page 104;
the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks and the disclosures in the annual report that describe the
principal risks and the procedures in place to identify emerging risks and an explanation of how they are being managed or mitigated set out on pages 106 to 111;
the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 102; and
the section describing the work of the audit committee set out on pages 60 to 63.
2020 Annual Report and Form 20-F
Matters on which we are required to report by exception
Based on the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit, we have not identified material
misstatements in the directors’ report.
The Companies Act 2014 also requires us to report to you if, in our opinion, the Company has not provided the information required by Regulation 5(2) to 5(7) of the
European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 (as amended) for the 31 December
2020 financial year. We have nothing to report in this regard.
The Companies Act 2014 also requires us to report to you if, in our opinion, the Company has not provided the information required by Section 1110N in relation to its
remuneration report. We have nothing to report in this regard.
We have nothing to report in respect of the provisions in the Companies Act 2014 which require us to report to you if, in our opinion, the disclosures of directors’
remuneration and transactions specified by law are not made.
125
The Listing Rules of the Euronext Dublin require us to review six specified elements of disclosures in the report to shareholders by the Board of Directors’ remuneration
committee. We have nothing to report in this regard.
Other matters which we are required to address
Following the recommendation of the audit committee, we were appointed on 23 April 2020 to audit the financial statements for the financial year ending 31 December
2020. The period of total uninterrupted engagement of the firm is 1 year, covering the year ending 31 December 2020.
The non-audit services prohibited by IAASA’s Ethical Standard were not provided and we remained independent of the Group in conducting the audit.
Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISA (Ireland) 260.
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014. Our audit work has been undertaken
so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Richard Muschamp
For and on behalf of Deloitte Ireland LLP
Chartered Accountants and Statutory Audit Firm
Deloitte & Touche House, Earlsfort Terrace, Dublin 2
3 March 2021
Notes: An audit does not provide assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular on whether any
changes may have occurred to the financial statements since first published. These matters are the responsibility of the directors but no control procedures can
provide absolute assurance in this area.
Legislation in Ireland governing the preparation and dissemination of financial statements differs from legislation in other jurisdictions.
2020 Annual Report and Form 20-F Independent Auditor’s US Reports
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of CRH public limited company (CRH plc)
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of CRH plc and subsidiaries (the ‘Company’) as at 31 December 2020, the related consolidated
income statement and consolidated statements of comprehensive income, changes in equity and cash flows, for the year ended 31 December 2020, and the related
notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the consolidated financial
position of the Company as of 31 December 2020, and the consolidated results of its operations and its cash flows for the year ended 31 December 2020, in
conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
126
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control
over financial reporting as of 31 December 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission and our report dated 3 March 2021, expressed an unqualified opinion on the Company’s internal control over
financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements
based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to
assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be
communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially
challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as
a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures
to which they relate.
2020 Annual Report and Form 20-F
Intangible Assets – Assessment of the carrying value of goodwill associated with selected cash generating
units – Refer to accounting policies and note 16 to the financial statements
Critical Audit Matter Description
The goodwill balance was $9.0 billion as at 31 December 2020 and the Company recorded an impairment charge of $0.4 billion during the year ended 31 December
2020.
The Company’s evaluation of the carrying value of goodwill for impairment involves the comparison of the recoverable amount of goodwill of each cash generating unit
(CGU) to its carrying value. The Company used the value-in-use approach, which deploys a discounted cash flow model to estimate the recoverable amount. This
requires management to make significant estimates and assumptions related to discount rates, short-term forecasts of future revenues and margins, and long-term
growth rates which drive net cash flows. Changes in these assumptions could have a significant impact on the recoverable amount, the amount of any goodwill
impairment charge, or both.
127
We identified goodwill for certain CGUs as a critical audit matter because of the significant judgements made by management to estimate the recoverable value of
certain CGUs and the difference between their recoverable amounts and carrying values. We focused on CGUs where impairments were recognised in the current
year, CGUs identified as sensitive by management as disclosed in note 16 and CGUs with a significant change in cash flow forecasts in the current year (collectively
the “selected CGUs”). This required a high degree of auditor judgement and an increased extent of effort, including the need to involve our valuation specialists, when
performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions as described above.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the assumptions, as described above, used by management to estimate the recoverable amounts of the selected CGUs included the
following, among others:
• We tested the operating effectiveness of controls over management’s selection of the discount rates, short-term forecasts of future revenues and margins, and
long-term growth rates used to determine the recoverable amount of each selected CGU.
• We agreed the underlying cash flow forecasts to the Board approved projections and we evaluated management’s ability to accurately forecast future revenues
and margins by:
• performing a look-back analysis and comparing actual results to management’s historical forecasts;
• assessing the reasonableness of the impact of COVID-19 and other macroeconomic activity on short-term cash flows;
• benchmarking management’s forecasts against independent third-party economic and industry projections; and
• comparing internal Company communications to management and the Board against the cash flow forecasts to evaluate for consistency.
• With the assistance of our valuation specialists, we evaluated the appropriateness of the valuation methodology and discount rates used for each selected CGU by:
• assessing the reasonableness of the valuation model used by the Company compared to generally accepted valuation practices and accounting standards;
•
testing the source information underlying the determination of the discount rates through use of observable inputs from independent external sources; and
• developing a range of independent estimates and comparing those to the discount rates selected by management.
• We compared the long-term growth rates, used by management to grow cash flows from year 5 to year 10 in order to calculate a terminal value at that point, to
independent external sources and developed our own range to assess the reasonableness of these rates.
• We compared the actual results for the year ended 31 December 2020 to management’s forecasts at the date of the annual impairment test to determine if any
additional indicators of impairment existed.
•
In conjunction with our climate change specialists we assessed how climate related risks had been incorporated into the valuation models and assessed whether
assumptions used in the valuation models were consistent with achieving the Company’s 2030 carbon reduction targets.
2020 Annual Report and Form 20-F Independent Auditor’s US Reports - continued
Property, Plant and Equipment (PP&E) – Assessment of the carrying value of property, plant and equipment
– Refer to accounting policies and note 15 to the financial statements
Critical Audit Matter Description
As at 31 December 2020, the Company carrying value of PP&E was $19.3 billion. The Company recorded an impairment charge for the year ended 31 December
2020 of $0.3 billion.
The Company’s evaluation of PP&E for indicators of impairment is performed annually or when events or changes in circumstances indicate that the carrying values
may not be recoverable. The Company uses a value-in-use model to estimate the recoverable amount, which requires management to make significant estimates and
assumptions related to discount rates, short-term forecasts of future revenues and margins, and long-term growth rates which drive net cash flows. Changes in these
assumptions could have a significant impact on the recoverable amount, the amount of any impairment charge, or both.
128
We identified PP&E CGUs with impairment indicators (the ‘identified CGUs’) as a critical audit matter because of the significant judgements made by management to
estimate the recoverable value of the identified CGUs and the difference between their recoverable amounts and carrying values. This required a high degree of auditor
judgement and an increased extent of effort, including the need to involve our valuation specialists, when performing audit procedures to evaluate the reasonableness
of management’s estimates and assumptions as described above.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the significant assumptions and estimates used by management to estimate the recoverable amounts of the identified CGUs as
described above included the following, among others:
• We tested the operating effectiveness of controls over management’s selection of the significant assumptions and estimates, as described above, used to
determine the recoverable amount of each identified CGU.
• We agreed the underlying cash flow forecasts to the Board approved projections and we evaluated management’s ability to accurately forecast short-term future
revenues and margins by:
• performing a retrospective review and comparing actual results to management’s historical forecasts;
• assessing the reasonableness of the impact of COVID-19 and other macroeconomic activity on short-term cash flows;
• benchmarking management’s forecasts against independent third-party economic and industry projections; and
• comparing internal Company communications to management and the Board against the cash flow forecasts to ensure consistency.
• We evaluated the appropriateness of the valuation methodology and discount rates used for each identified CGU, with the assistance of our valuation specialists,
by:
• assessing the reasonableness of the valuation model used by the Company compared to generally accepted valuation practices and accounting standards;
•
testing the source information underlying the determination of the discount rates through use of observable inputs from independent external sources; and
• developing a range of independent estimates and comparing those to the discount rates selected by management.
• We compared the long-term growth rates, used by management to calculate the terminal value at year five, to independent external sources and developed our
own range to assess the reasonableness of these rates.
•
In conjunction with our climate change specialists we assessed how climate related risks had been incorporated into the valuation models and assessed whether
assumptions used in the valuation models were consistent with achieving the Company’s 2030 carbon reduction targets.
2020 Annual Report and Form 20-F
Revenue recognition for long-term contracts – Refer to accounting policies and note 1 to the financial
statements
Critical Audit Matter Description
The Company’s revenues derived from long-term contracts accounted for 22% ($6.2 billion) of the total revenue in 2020.
The Company recognises long-term contract revenue over the contract term as the work progresses because transfer of control and the fulfillment of performance
obligations to the customer is continuous. The percentage-of-completion method is used to recognise revenue and is calculated based on the proportion of the
contract costs incurred at the balance sheet date relative to the total estimated costs of the contract. The accounting for these contracts involves judgement,
particularly as it relates to the process of estimating total costs.
We identified revenue recognition on long-term contracts as a critical audit matter because of the judgements necessary for management to estimate total costs for the
performance obligations used to recognise revenue for certain long-term contracts. This required extensive audit effort due to the complexity of long-term contracts
and required a high degree of auditor judgement when performing audit procedures to audit management’s estimates of total costs and evaluating the results of those
procedures.
129
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s estimates of total costs for the performance obligations used to recognise revenue for certain long-term contracts
included the following, among others:
• We tested the operating effectiveness of controls over long-term contract revenue, including management’s controls over the estimates of total costs for
performance obligations.
• We selected a sample of long-term contracts and:
• evaluated whether the contracts were properly included in management’s calculation of long-term contract revenue based on the terms and conditions of each
contract, including whether continuous transfer of control to the customer occurred as progress was made toward fulfilling the performance obligation;
•
tested the accuracy and completeness of the costs incurred to date for the performance obligation to supporting documentation;
• evaluated the estimates of total cost for the performance obligation by:
•
•
•
comparing costs incurred to date to the costs management estimated, at either the inception of the contract or the start of the reporting period, to be
incurred to date;
evaluating management’s ability to achieve the estimates of total cost by performing corroborating inquiries with the Company’s project managers and
engineers, and comparing the estimates to management’s work plans, engineering specifications, and supplier contracts; and
comparing management’s estimates for the selected contracts to costs of similar performance obligations, when applicable.
•
tested the mathematical accuracy of management’s calculation of revenue for the performance obligation.
• We evaluated management’s ability to estimate total costs accurately by comparing actual costs to management’s historical estimates for performance obligations
that have been fulfilled.
/s/ Deloitte Ireland LLP
Dublin, Ireland
3 March 2021
The first accounting period we audited was 31 December 2020. In 2019, we began preparing for audit firm transition.
2020 Annual Report and Form 20-F Independent Auditor’s US Reports - continued
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of CRH public limited company (CRH plc).
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of CRH plc and subsidiaries (the ‘Company’) as of 31 December 2020, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the
Company maintained, in all material respects, effective internal control over financial reporting as of 31 December 2020, based on criteria established in Internal
Control – Integrated Framework (2013) issued by COSO.
130
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet
of CRH plc as at 31 December 2020, the related consolidated income statement and consolidated statements of comprehensive income, changes in equity and cash
flows for the year ended 31 December 2020, and the related notes (collectively referred to as the “financial statements”) of the Company and our report dated 3 March
2021, expressed an unqualified opinion on those financial statements.
As described in Management’s Report on Internal Control over Financial Reporting, management excluded from its assessment the internal control over financial
reporting of business combinations during the year ended 31 December 2020, which are listed in note 32 of the financial statements of the Company, and whose
financial statements constitute 1.0% and 0.5% of net and total assets, respectively, 0.4% of revenues, and 0.6% of Group profit of the consolidated financial statement
amounts as of and for the year ended 31 December 2020. Accordingly, our audit did not include the internal control over financial reporting of business combinations
completed during the year ended 31 December 2020.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal
control over financial reporting, included in the accompanying management’s report on internal control over financial reporting. Our responsibility is to express an
opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on
the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for
our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
/s/ Deloitte Ireland LLP
Dublin, Ireland
3 March 2021
2020 Annual Report and Form 20-F
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of CRH public limited company (CRH plc):
Opinion on the Financial Statements
We have audited the accompanying Consolidated Balance Sheets of CRH plc (‘the Company’) as of 31 December 2019 and 2018, the related Consolidated Income
Statements and Consolidated Statements of Comprehensive Income, Changes in Equity and Cash Flows for each of the two years in the period ended 31 December
2019, and related notes (collectively referred to as the ‘financial statements’). In our opinion, the financial statements present fairly, in all material aspects, the
consolidated financial position of the Company at 31 December 2019 and 2018, and the consolidated results of its operations and its cash flows for each of the two
years in the period ended 31 December 2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards
Board.
131
Change in Presentation Currency
As discussed in the Accounting Policies to the consolidated financial statements, the Company has elected to change its presentation currency from euro to US Dollar
as of 1 January 2020.
Restatement of the Financial Statements
As discussed in the Accounting Policies and note 25 to the consolidated financial statements, the 2019 and 2018 consolidated financial statements have been
restated to correct a misstatement in respect of the presentation of notional cash pooling arrangements on the Consolidated Balance Sheet.
Adoption of New Accounting Standard
As discussed in the Accounting Policies to the consolidated financial statements, the Company changed its method of accounting for leases in 2019 due to the
adoption of IFRS 16 Leases.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements
based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to
assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that
our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young Chartered Accountants
We served as the Company’s auditor from 1988 to 2019.
Dublin, Ireland
27 February 2020, except for the effects of the change in presentation currency and the restatement discussed in the Accounting Policies to the consolidated financial
statements, as to which the date is 3 March 2021
2020 Annual Report and Form 20-F Consolidated Income Statement
for the financial year ended 31 December 2020
Notes
1,2
Revenue
4
4
Cost of sales
Gross profit
Operating costs
2,5,7,8
Group operating profit
132
2,6
Profit/(loss) on disposals
Profit before finance costs
Finance costs
Finance income
Other financial expense
Share of equity accounted investments’ (loss)/profit
Profit before tax from continuing operations
Income tax expense
Group profit for the financial year from continuing operations
Profit after tax for the financial year from discontinued operations
Group profit for the financial year
Profit attributable to:
Equity holders of the Company
From continuing operations
From discontinued operations
Non-controlling interests
From continuing operations
From discontinued operations
Group profit for the financial year
Basic earnings per Ordinary Share
Diluted earnings per Ordinary Share
Basic earnings per Ordinary Share from continuing operations
Diluted earnings per Ordinary Share from continuing operations
10
10
10
11
2
12
3
14
14
14
14
Restated (i)
2019
$m
Restated (i)
2018
$m
2020
$m
27,587
28,132
27,449
(18,425)
(18,859)
(18,391)
9,162
(6,899)
2,263
9
2,272
(389)
-
(101)
(118)
1,664
(499)
1,165
-
1,165
9,273
(6,480)
2,793
(189)
2,604
(387)
22
(125)
67
2,181
(534)
1,647
91
1,738
1,122
1,627
-
43
-
90
20
1
9,058
(6,612)
2,446
(121)
2,325
(399)
39
(54)
57
1,968
(467)
1,501
1,388
2,889
1,497
1,387
4
1
1,165
1,738
2,889
142.9c
141.8c
142.9c
141.8c
214.3c
212.6c
203.0c
201.4c
346.5c
344.7c
179.8c
178.9c
(i) Restated throughout for presentation in US Dollar. See the Accounting Policies on page 137 for further details.
2020 Annual Report and Form 20-F
Consolidated Statement of Comprehensive Income
for the financial year ended 31 December 2020
Restated (i)
2019
$m
Restated (i)
2018
$m
2020
$m
Notes
27
12
30
12
Group profit for the financial year
1,165
1,738
2,889
Other comprehensive income
Items that may be reclassified to profit or loss in subsequent years:
Currency translation effects
Gains/(losses) relating to cash flow hedges
Tax relating to cash flow hedges
Items that will not be reclassified to profit or loss in subsequent years:
Remeasurement of retirement benefit obligations
Tax relating to retirement benefit obligations
Total other comprehensive income for the financial year
440
7
-
447
(33)
11
(22)
425
472
27
(4)
495
(19)
(4)
(23)
472
(466)
(47)
5
(508)
10
(1)
9
(499)
Total comprehensive income for the financial year
1,590
2,210
2,390
Attributable to:
Equity holders of the Company
Non-controlling interests
Total comprehensive income for the financial year
1,515
75
1,590
2,174
36
2,210
2,413
(23)
2,390
(i) Restated throughout for presentation in US Dollar. See the Accounting Policies on page 137 for further details.
133
2020 Annual Report and Form 20-F Consolidated Balance Sheet
as at 31 December 2020
134
Notes
15
16
17
17
19
27
29
18
19
27
25
31
31
31
31
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments accounted for using the equity method
Other financial assets
Other receivables
Derivative financial instruments
Deferred income tax assets
Total non-current assets
Current assets
Inventories
Trade and other receivables
Current income tax recoverable
Derivative financial instruments
Cash and cash equivalents
Total current assets
Total assets
EQUITY
Capital and reserves attributable to the Company’s equity holders
Equity share capital
Preference share capital
Share premium account
Treasury Shares and own shares
Other reserves
Foreign currency translation reserve
Retained income
Capital and reserves attributable to the Company’s equity holders
33
Non-controlling interests
Total equity
22
26
27
29
20
30
28
22
20
26
27
28
LIABILITIES
Non-current liabilities
Lease liabilities
Interest-bearing loans and borrowings
Derivative financial instruments
Deferred income tax liabilities
Other payables
Retirement benefit obligations
Provisions for liabilities
Total non-current liabilities
Current liabilities
Lease liabilities
Trade and other payables
Current income tax liabilities
Interest-bearing loans and borrowings
Derivative financial instruments
Provisions for liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
2020
$m
19,317
9,373
626
13
325
184
129
29,967
3,117
4,086
36
17
7,721
14,977
44,944
333
1
7,493
(386)
444
206
11,565
19,656
692
20,348
1,339
10,958
1
2,613
711
556
953
17,131
296
4,792
619
1,257
12
489
7,465
24,596
44,944
Restated (i)
2019
$m
Restated (i)
2018
$m
19,574
9,475
775
13
356
85
76
30,354
3,080
4,231
22
7
9,918
17,258
47,612
335
1
7,493
(360)
411
(202)
11,350
19,028
607
19,635
1,393
9,211
1
2,627
545
480
854
15,111
304
4,916
565
6,616
17
448
12,866
27,977
47,612
18,046
9,656
1,332
26
207
34
81
29,382
3,505
4,665
17
17
9,191
17,395
46,777
352
1
7,493
(920)
378
(659)
11,705
18,350
602
18,952
-
9,959
21
2,530
540
486
823
14,359
-
5,277
508
7,213
47
421
13,466
27,825
46,777
(i) Restated throughout for presentation in US Dollar and to reflect a change in the presentation of cash and cash equivalents and bank
overdrafts. See the Accounting Policies on page 137 for further details.
R. Boucher, A. Manifold, Directors
2020 Annual Report and Form 20-F
Consolidated Statement of Changes in Equity
for the financial year ended 31 December 2020
Attributable to the equity holders of the Company
Issued
share
capital
$m
Share
premium
account
$m
Treasury
Shares/
own
shares
$m
Other
reserves
$m
Foreign
currency
translation
reserve
$m
Retained
income
$m
Non-
controlling
interests
$m
Total
equity
$m
Total
$m
Notes
At 1 January 2020
Group profit for the financial year
Other comprehensive income
Total comprehensive income
9 Share-based payment expense
31 Shares acquired by CRH plc (Treasury Shares)
31 Treasury Shares/own shares reissued
31 Shares acquired by Employee Benefit Trust (own shares)
31 Shares distributed under the Performance Share Plan Awards
31 Cancellation of Treasury Shares
12 Tax relating to share-based payment expense
Share option exercises
13 Dividends
6 Disposal of non-controlling interests
Transactions involving non-controlling interests
336
-
-
-
-
-
-
-
-
(2)
-
-
-
-
-
7,493
-
-
-
-
-
-
-
-
-
-
-
-
-
-
At 31 December 2020
334
7,493
for the financial year ended 31 December 2019 (i)
At 1 January 2019 (restated)
Group profit for the financial year
Other comprehensive income
Total comprehensive income
9 Share-based payment expense
31 Shares acquired by CRH plc (Treasury Shares)
31 Treasury Shares/own shares reissued
31 Shares acquired by Employee Benefit Trust (own shares)
31 Shares distributed under the Performance Share Plan Awards
31 Cancellation of Treasury Shares
12 Tax relating to share-based payment expense
Share option exercises
13 Dividends
3 Disposal of non-controlling interests
32 Non-controlling interests arising on acquisition of subsidiaries
Transactions involving non-controlling interests
At 31 December 2019 (restated)
for the financial year ended 31 December 2018 (i)
At 1 January 2018 (restated)
Group profit for the financial year
Other comprehensive income
Total comprehensive income
Issue of share capital
9 Share-based payment expense
Shares acquired by CRH plc (Treasury Shares)
Treasury Shares/own shares reissued
Shares acquired by Employee Benefit Trust (own shares)
Shares distributed under the Performance Share Plan Awards
12 Tax relating to share-based payment expense
Share option exercises
13 Dividends (including shares issued in lieu of dividends)
32 Non-controlling interests arising on acquisition of subsidiaries
At 31 December 2018 (restated)
353
-
-
-
-
-
-
-
-
(17)
-
-
-
-
-
-
336
351
-
-
-
1
-
-
-
-
1
-
-
-
-
353
7,493
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,493
7,350
-
-
-
74
-
-
-
-
69
-
-
-
-
7,493
(360)
-
-
-
-
(220)
8
(29)
65
150
-
-
-
-
-
(386)
(920)
-
-
-
-
(886)
42
(68)
70
1,402
-
-
-
-
-
-
(360)
(18)
-
-
-
-
-
(917)
19
(4)
-
-
-
-
-
(920)
411
-
-
-
96
-
-
-
(65)
2
-
-
-
-
-
444
378
-
-
-
86
-
-
-
(70)
17
-
-
-
-
-
-
411
369
-
-
-
-
79
-
-
-
(70)
-
-
-
-
378
(202)
-
408
408
11,350
1,122
(15)
1,107
19,028
1,122
393
1,515
607 19,635
43 1,165
32
425
75 1,590
-
-
-
-
-
-
-
-
-
-
-
-
-
(8)
-
-
(150)
1
6
(710)
-
(31)
96
(220)
-
(29)
-
-
1
6
(710)
-
(31)
135
-
-
-
-
-
-
-
-
(15)
(6)
31
96
(220)
-
(29)
-
-
1
6
(725)
(6)
-
206
11,565
19,656
692 20,348
(659)
-
457
457
-
-
-
-
-
-
-
-
-
-
-
-
11,705
1,717
-
1,717
-
-
(42)
-
-
(1,402)
11
22
(652)
-
-
(9)
18,350
1,717
457
2,174
86
(886)
-
(68)
-
-
11
22
(652)
-
-
(9)
602 18,952
21 1,738
472
15
36 2,210
-
-
-
-
-
-
-
-
(11)
(9)
1
(12)
86
(886)
-
(68)
-
-
11
22
(663)
(9)
1
(21)
(202)
11,350
19,028
607 19,635
(221)
-
(438)
(438)
-
-
-
-
-
-
-
-
-
-
(659)
9,546
2,884
(33)
2,851
-
-
-
(19)
-
-
(3)
10
(680)
-
11,705
17,377
2,884
(471)
2,413
75
79
(917)
-
(4)
-
(3)
10
(680)
-
18,350
584 17,961
5 2,889
(28)
(499)
(23) 2,390
-
-
-
-
-
-
-
-
(14)
55
75
79
(917)
-
(4)
-
(3)
10
(694)
55
602 18,952
(i) Restated throughout for presentation in US Dollar. See the Accounting Policies on page 137 for further details.
2020 Annual Report and Form 20-F Consolidated Statement of Cash Flows
for the financial year ended 31 December 2020
Notes
3
10
11
6
15,22
16
15,16,22
9
21
136
Cash flows from operating activities
Profit before tax from continuing operations
Profit before tax from discontinued operations
Profit before tax including discontinued operations
Finance costs (net)
Share of equity accounted investments’ loss/(profit)
(Profit)/loss on disposals
Group operating profit
Depreciation charge
Amortisation of intangible assets
Impairment charge
Share-based payment expense
Other
Net movement on working capital and provisions
Cash generated from operations
Interest paid (including leases) (ii)
Corporation tax paid
Net cash inflow from operating activities
6
17
15
32
17
21
21
31
23
23
23
22
31
13
13
Cash flows from investing activities
Proceeds from disposals (net of cash disposed and deferred proceeds)
Interest received
Dividends received from equity accounted investments
Purchase of property, plant and equipment
Acquisition of subsidiaries (net of cash acquired)
Other investments and advances
Deferred and contingent acquisition consideration paid
Deferred divestment consideration received
Net cash (outflow)/inflow from investing activities
Cash flows from financing activities
Proceeds from issue of shares (net)
Proceeds from exercise of share options
Transactions involving non-controlling interests
Increase in interest-bearing loans and borrowings
Net cash flow arising from derivative financial instruments
Repayment of interest-bearing loans, borrowings and finance leases (iii)
Repayment of lease liabilities (iv)
Treasury Shares/own shares purchased
Dividends paid to equity holders of the Company
Dividends paid to non-controlling interests
Net cash inflow/(outflow) from financing activities
2020
$m
1,664
-
1,664
490
118
(9)
2,263
1,624
70
673
96
6
196
4,928
(432)
(558)
3,938
184
-
35
(996)
(351)
(1)
(54)
123
(1,060)
-
6
-
6,427
26
(4,943)
(258)
(249)
(707)
(15)
287
Restated (i)
2019
$m
Restated (i)
2018
$m
2,181
117
2,298
498
(81)
191
2,906
1,721
66
9
86
(3)
(71)
4,714
(469)
(364)
3,881
2,343
22
39
(1,374)
(727)
(32)
(54)
-
217
-
22
(21)
106
(40)
(640)
(356)
(954)
(652)
(11)
(2,546)
1,968
1,982
3,950
414
(71)
(1,727)
2,566
1,265
72
66
79
(79)
(547)
3,422
(394)
(782)
2,246
3,597
40
57
(1,324)
(4,076)
(2)
(64)
-
(1,772)
14
10
-
1,587
8
(291)
-
(921)
(619)
(14)
(226)
Increase in cash and cash equivalents
3,165
1,552
248
Reconciliation of opening to closing cash and cash equivalents
Cash and cash equivalents at 1 January
Translation adjustment
Increase in cash and cash equivalents
25
Cash and cash equivalents at 31 December
4,218
338
3,165
7,721
2,686
(20)
1,552
4,218
2,560
(122)
248
2,686
(i) Restated throughout for presentation in US Dollar. See the Accounting Policies on page 137 for further details.
(ii)
Leases include finance leases previously capitalised under IAS 17 Leases in 2018 and all capitalised leases included as lease liabilities under IFRS 16 Leases in
2019 and 2020.
(iii) Finance leases as previously capitalised under IAS 17 in 2018.
(iv) Repayment of lease liabilities capitalised under IFRS 16 amounted to $326 million (2019: $433 million), of which $68 million (2019: $77 million) related to interest
paid which is presented in cash flows from operating activities.
2020 Annual Report and Form 20-F
Accounting Policies
(including key accounting estimates and assumptions)
This document constitutes both the Annual Report
and the Financial Statements in accordance with
Irish and certain relevant UK requirements, and the
Annual Report on Form 20-F in accordance with the
US Securities Exchange Act of 1934.
Basis of Preparation
The Consolidated Financial Statements of CRH plc
have been prepared in accordance with International
Financial Reporting Standards (IFRS) as adopted by
the European Union, which comprise standards and
interpretations approved by the International
Accounting Standards Board (IASB). IFRS as
adopted by the European Union differ in certain
respects from IFRS as issued by the IASB. However,
the differences have no impact on the Consolidated
Financial Statements for the financial years
presented. The Consolidated Financial Statements
are also prepared in compliance with the Companies
Act 2014 and Article 4 of the EU IAS Regulation.
CRH plc, the Parent Company, is a publicly traded
limited company incorporated and domiciled in the
Republic of Ireland.
The Consolidated Financial Statements, which are
presented in US Dollar millions, have been prepared
under the historical cost convention as modified by
the measurement at fair value of share-based
payments, retirement benefit obligations and certain
financial assets and liabilities including derivative
financial instruments.
The accounting policies set out below have been
applied consistently by all of the Group’s
subsidiaries, joint ventures and associates to all
periods presented in the Consolidated Financial
Statements.
In accordance with Section 304 of the Companies
Act 2014, the Company is availing of the exemption
from presenting its individual profit and loss account
to the Annual General Meeting and from filing it with
the Registrar of Companies.
Change in presentation currency
On 28 February 2020, the Group announced that
with effect from 1 January 2020 it would be
changing the currency in which it presents its
financial results from euro to US Dollar. Within 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 Board determined
that, with effect from 1 January 2020, CRH will
present its results in US Dollar. Given the current
composition of the Group’s activities, this change is
expected to reduce the impact of currency
movements on reported results.
Accordingly, to satisfy the requirements of IAS 21
The Effects of Changes in Foreign Exchange Rates,
the reported results for the years ended
31 December 2019 and 31 December 2018 have
been translated from euro to US Dollar using the
following procedures:
• Assets and liabilities denominated in non-US
Dollar currencies were translated into US Dollar
at the relevant closing rates of exchange;
• The trading results of subsidiaries whose
functional currency was other than US Dollar
were translated into US Dollar at the relevant
average rates of exchange;
• Movements in other reserves were translated
into US Dollar at the relevant average rates of
exchange;
• Significant business divestments were translated
at the spot rates prevailing on the date of
divestment;
• Share capital, share premium, Treasury Shares/
own shares and dividends were translated at the
historic rates prevailing on the date of each
transaction; and
• The cumulative translation reserve was set to nil
at 1 January 2004, the date of transition to IFRS,
and has been restated on the basis that the
Group has reported in US Dollar since that date
A change in presentation currency represents a
change in accounting policy under IAS 8
Accounting Policies, Changes in Accounting
Estimates and Errors which is accounted for
retrospectively. An opening balance sheet has been
presented showing the impact of the change in
presentation currency on 31 December 2018. The
average and closing rates used for this exercise are
provided on page 146.
Prior year restatement
The Group has changed the prior years’ net
presentation of cash and cash equivalents and
current interest-bearing loans and borrowings for
the Group’s notional cash pooling arrangements.
While the Group had the legal right to offset under
the arrangements in these periods, it was
determined that the presentation of cash and cash
equivalents and interest-bearing loans and
borrowings on a gross basis was appropriate in line
with the requirements of IAS 32 Financial
Instruments: Presentation and therefore prior year
comparatives have been restated accordingly to
correct for this misstatement. The impact of this
change is to increase both cash and cash
equivalents and current interest-bearing loans
and borrowings as at 31 December 2019 by $5.7
billion (2018: $6.5 billion) on the Consolidated
Balance Sheet. This has no impact on net assets,
net debt or the Group’s profit for the year ended 31
December 2019.
At 31 December 2020, the Group’s notional cash
pool balances were net settled and accordingly net
presentation of the balances at 31 December 2020
is appropriate.
Adoption of IFRS and
International Financial Reporting
Interpretations Committee
(IFRIC) interpretations
The following new standards, interpretations and
standard amendments became effective for the
Group as of 1 January 2020 and did not result in a
material impact on the Group’s results:
137
•
IFRS 3 Business Combinations – Definition of a
business
• Amendments to IAS 1 Presentation of Financial
Statements and IAS 8 – Definition of material
• Amendments to References to the Conceptual
Framework in IFRS Standards
• Amendments to IFRS 9 Financial Instruments,
IAS 39 Financial Instruments: Recognition and
Measurement and IFRS 7 Financial Instruments:
Disclosures - Interest Rate Benchmark Reform
The following standard amendment was issued in
May 2020 effective for annual reporting periods
beginning on or after 1 June 2020 with earlier
application permitted:
• Amendments to IFRS 16 Leases –
COVID-19-Related Rent Concessions. The
amendment was adopted effective 1 January
2020 and did not result in a material impact on
the Group’s results.
IFRS and IFRIC interpretations
being adopted in subsequent
years
IFRS 17 InsuranceContracts
In May 2017, the IASB issued IFRS 17 which will be
effective for reporting periods beginning on or after
1 January 2023, with presentation of comparative
figures required. The Group is currently evaluating
the impact of this standard on future periods.
There are no other IFRS or IFRIC interpretations that
are effective subsequent to the CRH 2020 financial
year-end that are expected to have a material
impact on the results or financial position of the
Group.
Key Accounting Policies which
involve Estimates, Assumptions
and Judgements
The preparation of the Consolidated Financial
Statements in accordance with IFRS requires
2020 Annual Report and Form 20-F 138
Accounting Policies - continued
management to make certain estimates,
assumptions and judgements that affect the
application of accounting policies and the reported
amounts of assets, liabilities, income and expenses.
Management believes that the estimates,
assumptions and judgements upon which it relies
are reasonable based on the information available to
it at the time that those estimates, assumptions and
judgements are made. In some cases, the
accounting treatment of a particular transaction is
specifically dictated by IFRS and does not require
management’s judgement in its application.
Management considers that their use of estimates,
assumptions and judgements in the application of
the Group’s accounting policies are inter-related and
therefore discuss them together below with the
major sources of estimation uncertainty and
significant judgements separately identified.
Estimates and underlying assumptions are reviewed
on an ongoing basis. Changes in accounting
estimates may be necessary if there are changes in
the circumstances or experiences on which the
estimate was based or as a result of new
information.
The critical accounting policies which involve
significant estimates, assumptions or judgements,
the actual outcome of which could have a material
impact on the Group’s results and financial position
outlined below, are as follows:
Impairment of goodwill and
property, plant and equipment –
Notes 15 and 16
Goodwill
In the year in which a business combination is
effected and where some or all of the goodwill
allocated to a particular cash-generating unit (CGU)
arose in respect of that combination, the CGU is
tested for impairment prior to the end of the relevant
annual period.
Goodwill is subject to impairment testing on an
annual basis and at any time during the year if an
indicator of impairment is considered to exist.
Where the carrying value exceeds the estimated
recoverable amount (being the greater of fair value
less costs of disposal and value-in-use), an
impairment loss is recognised by writing down
goodwill to its recoverable amount.
Major sources of estimation
uncertainty: Projected EBITDA margin,
net cash flows, pre-tax discount rate
The impairment testing process requires
management to make significant judgements and
estimates regarding the future cash flows expected
to be generated by CGUs to which goodwill has
been allocated. In assessing value-in-use, the
estimated future cash flows (considering projected
EBITDA margin and net cash flows) are
discounted to their present value using a pre-tax
discount rate that reflects current market
assessments of the time value of money and the
risks specific to the asset for which the future cash
flow estimates have not been adjusted. The
estimates of future cash flows exclude cash inflows
or outflows attributable to financing activities and
income tax. Future cash flows relating to the
eventual disposal of these CGUs and other factors
may also be relevant to determine the recoverable
amount of goodwill. Management periodically
evaluates and updates the estimates based on the
conditions which influence these variables.
The assumptions and conditions for determining
impairments of goodwill reflect management’s best
assumptions and estimates, but these items involve
inherent uncertainties described above, many of
which are not under management’s control. These
inherent uncertainties include assumptions around
future developments arising due to the COVID-19
pandemic and the expected pace and extent of
recovery in certain markets. As a result, the
accounting for such items could result in different
estimates or amounts if management used different
assumptions or if different conditions occur in
future accounting periods.
A detailed discussion of the impairment
methodology applied, key assumptions used and
related sensitivity analyses by the Group in the
context of goodwill is provided in note 16 to the
Consolidated Financial Statements.
The recoverable amount of goodwill is determined
by reference to the CGU to which the goodwill has
been allocated. Impairment losses arising in respect
of goodwill are not reversed once recognised.
Goodwill relating to associates and joint ventures is
included in the carrying amount of the investment
and is neither amortised nor individually tested for
impairment. Where indicators of impairment of an
investment arise in accordance with the
requirements of IAS 36 Impairment of Assets, the
carrying amount is tested for impairment by
comparing its recoverable amount with its carrying
amount. Details of the impairment charge recorded
in our equity accounted investments are provided in
note 11 to the Consolidated Financial Statements.
Property, plant and equipment
The carrying values of items of property, plant and
equipment are reviewed for indicators of impairment
at each reporting date and are subject to
impairment testing when events or changes in
circumstances indicate that the carrying values may
not be recoverable.
Property, plant and equipment assets are reviewed
for potential impairment by applying a series of
external and internal indicators specific to the assets
under consideration. These indicators encompass
macroeconomic issues including the inherent
cyclicality of the building materials sector, actual
obsolescence or physical damage, a deterioration in
forecast performance in the internal reporting cycle
and restructuring and rationalisation programmes.
Where the carrying value exceeds the estimated
recoverable amount (being the greater of fair value
less costs of disposal and value-in-use), an
impairment loss is recognised by writing down the
assets to their recoverable amount. For an asset
that does not generate largely independent cash
inflows, the recoverable amount is determined by
reference to the CGU to which the asset belongs.
In assessing value-in-use, the estimated future cash
flows are discounted to their present value using a
pre-tax discount rate that reflects current market
assessments of the time value of money and the
risks specific to the CGU for which the future cash
flow estimates have not been adjusted. The
estimates of future cash flows exclude cash inflows
or outflows attributable to financing activities and
income tax. Details of the impairment charge
recorded in our property, plant and equipment
assets are provided in note 15 to the Consolidated
Financial Statements.
Retirement benefit obligations –
Note 30
Costs arising in respect of the Group’s defined
contribution pension schemes are charged to the
Consolidated Income Statement in the period in
which they are incurred. The Group has no legal or
constructive obligation to pay further contributions
in the event that the fund does not hold sufficient
assets to meet its benefit commitments.
The liabilities and costs associated with the Group’s
defined benefit pension schemes (both funded and
unfunded) are assessed either on the basis of the
attained age, the projected unit credit, the current
unit credit or the aggregate cost methods by
professionally qualified actuaries and are arrived at
using actuarial assumptions based on market
expectations at the balance sheet date.
Major sources of estimation
uncertainty: Discount rates
The assumptions underlying the actuarial valuations
(including discount rates, rates of increase in
future compensation levels, mortality rates and
healthcare cost trends), from which the amounts
recognised in the Consolidated Financial
Statements are determined, are updated annually
based on current economic conditions and for any
relevant changes to the terms and conditions of the
pension and post-retirement plans. These
assumptions can be affected by (i) for the
discount rate, changes in the rates of return on
2020 Annual Report and Form 20-F
139
high-quality corporate bonds; (ii) for future
compensation levels, future labour market
conditions and (iii) for healthcare cost trend rates,
the rate of medical cost inflation in the relevant
regions. The weighted average actuarial
assumptions used and sensitivity analysis in relation
to the significant assumptions employed in the
determination of pension and other post-retirement
liabilities are contained in note 30 to the
Consolidated Financial Statements.
The assumptions that are the most significant to
the measurement of retirement benefit obligations
are the discount rates. The discount rates
employed in determining the present value of the
schemes’ liabilities are determined by reference to
market yields at the balance sheet date on high-
quality corporate bonds of a currency and term
consistent with the currency and term of the
associated post-employment benefit obligations.
Whilst management believes that the assumptions
used are appropriate, differences in actual
experience or changes in assumptions may affect
the obligations and expenses recognised in future
accounting periods. The assets and liabilities of
defined benefit pension schemes may exhibit
significant period-on-period volatility attributable
primarily to changes in bond yields and longevity. In
addition to future service contributions, significant
cash contributions may be required to remediate
past service deficits.
The net surplus or deficit arising on the Group’s
defined benefit pension schemes, together with the
liabilities associated with the unfunded schemes,
are shown either within non-current assets or
non-current liabilities in the Consolidated Balance
Sheet. The deferred tax impact of pension scheme
surpluses and deficits is disclosed separately within
deferred tax assets or liabilities as appropriate.
Remeasurements, comprising actuarial gains and
losses and the return on plan assets (excluding net
interest), are recognised immediately in the
Consolidated Balance Sheet with a corresponding
debit or credit to retained earnings through other
comprehensive income in the period in which they
occur. Remeasurements are not reclassified to
profit or loss in subsequent periods.
The defined benefit pension asset or liability in the
Consolidated Balance Sheet comprises the total for
each plan of the present value of the defined benefit
obligation less the fair value of plan assets out of
which the obligations are to be settled directly. Plan
assets are assets that are held by a long-term
employee benefit fund or qualifying insurance
policies. Fair value is based on market price
information and, in the case of published quoted
securities; it is the published bid price. The value of
any defined benefit asset is limited to the present
value of any economic benefits available in the form
of refunds from the plan and reductions in the future
contributions to the plan.
The Group’s obligation in respect of post-
employment healthcare and life assurance benefits
represents the amount of future benefit that
employees have earned in return for service in the
current and prior periods. The obligation is
computed on the basis of the projected unit credit
method and is discounted to present value using a
discount rate equating to the market yield at the
balance sheet date on high-quality corporate bonds
of a currency and term consistent with the currency
and estimated term of the post-employment
obligations.
Provisions for liabilities – Note 28
A provision is recognised when the Group has a
present obligation (either legal or constructive) as a
result of a past event, it is probable that a transfer of
economic benefits will be required to settle the
obligation and a reliable estimate can be made of
the amount of the obligation.
Significant judgement:
Judgement is required in determining whether the
Group has a present obligation and whether it is
probable that an outflow of economic benefits will
be required to settle this obligation. This judgement
is applied to information available at the time of
determining the liability including but not limited to
judgements around interpretations of legislation,
regulations, case law and insurance contracts
depending on the nature of the provision.
Where the Group anticipates that a provision will be
reimbursed, the reimbursement is recognised as a
separate asset only when it is virtually certain that
the reimbursement will arise. Provisions are
measured at the present value of the expenditures
expected to be required to settle the obligation.
The increase in the provision due to the passage of
time is recognised as an interest expense.
Contingent liabilities arising on business
combinations are recognised as provisions if the
contingent liability can be reliably measured at its
acquisition date fair value. Provisions are not
recognised for future operating losses. Management
is not aware of any potential changes to key
assumptions that have a significant risk of causing a
material adjustment to the carrying value of
provisions within the next financial year; however
due to the nature of some of our provisions,
estimates may depend on the outcome of future
events and need to be revised as circumstances
change in future accounting periods. Refer to note
28 for the expected timing of outflows by provisions
category.
Environmental and remediation
provisions
The measurement of environmental and remediation
provisions is based on an evaluation of
currently available facts with respect to each
individual site and considers factors such as
existing technology, currently enacted laws and
regulations and prior experience in remediation of
sites. Inherent uncertainties exist in such evaluations
primarily due to unknown conditions, changing
governmental regulations and legal standards
regarding liability, the protracted length of the
clean-up periods and evolving technologies. The
environmental and remediation liabilities provided
for in the Consolidated Financial Statements reflect
the judgement applied by management in respect
of information available at the time of determining
the liability and are adjusted periodically as
remediation efforts progress or as additional
technical or legal information becomes available.
Due to the inherent uncertainties described above,
many of which are not under management’s
control, actual costs and cash outflows could differ
if management used different assumptions or if
different conditions occur in future accounting
periods.
Legal contingencies
The status of each significant claim and legal
proceeding in which the Group is involved is
reviewed by management on a periodic basis and
the Group’s potential financial exposure is
assessed. If the potential loss from any claim or
legal proceeding is considered probable, and the
amount can be reliably estimated, a liability is
recognised for the estimated loss. Because of the
uncertainties inherent in such matters, the related
provisions are based on the best information
available at the time; the issues taken into account
by management and factored into the assessment
of legal contingencies include, as applicable, the
status of settlement negotiations, interpretations of
contractual obligations, prior experience with similar
contingencies/claims, and advice obtained from
legal counsel and other third parties. As additional
information becomes available on pending claims,
the potential liability is reassessed and revisions are
made to the amounts accrued where appropriate.
Such revisions in the judgements and estimates of
the potential liabilities could have an impact on the
results of operations and financial position of the
Group in future accounting periods.
Insurance provisions
Insurance provisions are subject to actuarial
valuation and are based on actuarial triangulations
which are extrapolated from historical claims
experience. These provisions include claims which
are classified as “incurred but not reported”, the
status of which are reviewed periodically by
management, in conjunction with appropriately
qualified advisors. Changes in actuarial
methodologies and assumptions, along with the
receipt of new information, could have an impact on
the financial position of the Group through
2020 Annual Report and Form 20-F Accounting Policies - continued
recognition of additional, or release of, provisions in
future accounting periods.
Other Significant Accounting
Policies
Basis of consolidation
140
The Consolidated Financial Statements include the
financial statements of the Parent Company and all
subsidiaries drawn up to 31 December each year,
and the Group’s share of the results of joint
ventures and associates which are accounted for
using the equity method. The financial year-ends of
the Group’s subsidiaries, joint ventures and
associates are coterminous.
Subsidiaries
Subsidiaries are all entities over which the Group
has control. The Group controls an entity when the
Group is exposed to, or has rights to, variable
returns from its involvement with the entity and has
the ability to affect those returns through its power
over the entity. Subsidiaries are fully consolidated
from the date on which control is transferred to the
Group. They are deconsolidated from the date that
control ceases. A change in the ownership interest
of a subsidiary without a change in control is
accounted for as an equity transaction.
When the Group holds less than the majority of
voting rights, other facts and circumstances
including contractual arrangements that give the
Group power over the investee may result in the
Group controlling the investee. The Group
reassesses whether it controls an investee if, and
when, facts and circumstances indicate that there
are changes to the elements evidencing control.
Non-controlling interests represent the portion of
the equity of a subsidiary not attributable either
directly or indirectly to the Parent Company and are
presented separately in the Consolidated Income
Statement and within equity in the Consolidated
Balance Sheet, distinguished from Parent Company
shareholders’ equity. Acquisitions of non-controlling
interests are accounted for as transactions with
equity holders in their capacity as equity holders
and therefore no goodwill is recognised as a result
of such transactions. On an acquisition by
acquisition basis, the Group recognises any
non-controlling interest in the acquiree either at fair
value or at the non-controlling interest’s
proportionate share of the acquiree’s net assets.
Investments in associates and joint
ventures – Notes 11 and 17
An associate is an entity over which the Group has
significant influence. Significant influence is the
power to participate in the financial and operating
policy decisions of an entity, but is not control or
joint control over those policies.
A joint venture is a type of joint arrangement
whereby the parties that have joint control of the
arrangement have rights to the net assets of the
joint venture. Joint control is the contractually
agreed sharing of control of the arrangement, which
exists only when decisions about the relevant
activities require unanimous consent of the parties
sharing control.
The Group’s investments in its associates and joint
ventures are accounted for using the equity method
from the date significant influence/joint control is
deemed to arise until the date on which significant
influence/joint control ceases to exist or when the
interest becomes classified as an asset held for
sale.
The Consolidated Income Statement reflects the
Group’s share of result after tax of the related
associates and joint ventures. Investments in
associates and joint ventures are carried in the
Consolidated Balance Sheet at cost adjusted in
respect of post-acquisition changes in the Group’s
share of net assets, less any impairment in value.
Loans advanced to associates or joint ventures form
part of the net investment in the associate or joint
venture held on the Consolidated Balance Sheet.
The Group applies IFRS 9, including the impairment
requirements, to these loans as the equity method
does not apply. If necessary, impairment losses on
the carrying amount of an investment are reported
within the Group’s share of equity accounted
investments’ results in the Consolidated Income
Statement. If the Group’s share of losses exceeds
the carrying amount of an associate or joint venture,
the carrying amount is reduced to nil and recognition
of further losses is discontinued except to the extent
that the Group has incurred obligations in respect of
the associate or joint venture.
Joint operations
A joint operation is a type of joint arrangement
whereby the parties that have joint control of the
arrangement have rights to the assets and
obligations for the liabilities, relating to the
arrangement.
The Group’s investments in its joint operations are
accounted for by recognising its assets and its
liabilities, including its share of any assets or
liabilities held jointly; its share of the revenue from
the sale of the output by the joint operation; and its
expenses, including its share of any expenses
incurred jointly.
Revenue recognition – Note 1
The Group recognises revenue in the amount of the
price expected to be received for goods and
services supplied at a point in time or over time, as
contractual performance obligations are fulfilled and
control of goods and services passes to the
customer. It excludes trade discounts and value-
added tax/sales tax.
Revenue derived from sale of goods
(sources other than construction
contracts)
The Group manufactures and distributes a diverse
range of building materials and products. Whilst
there are a number of different activities across the
Group; recognition of revenue from the sale of
goods is similar; being at the point in time when
control is deemed to pass to the customer upon
leaving a CRH premises or upon delivery to a
customer depending on the terms of the sale.
Contracts do not contain multiple performance
obligations (as defined by IFRS 15 Revenue from
Contracts with Customers).
Across the Group, goods are often sold with
discounts or rebates based on cumulative sales
over a period. This variable consideration is only
recognised when it is highly probable that it will not
be subsequently reversed and is recognised using
the most likely amount or expected value methods,
depending on the individual contract terms. In the
application of appropriate revenue recognition,
judgement is exercised by management in the
determination of the likelihood and quantum of such
items based on experience and historical trading
patterns.
The Group is deemed to be a principal to an
arrangement when it controls a promised good or
service before transferring them to a customer and
accordingly recognises revenue on a gross basis.
Where the Group is determined to be an agent to a
transaction, based on the principle of control; the
net amount retained after the deduction of any
costs to the principal is recognised as revenue.
Within the non-construction contract businesses no
element of financing is deemed present as
transactions are all made with average credit terms
(usually 90 days), consistent with market practice.
Revenue derived from construction
contracts
The Group enters into a number of construction
contracts, to complete large construction projects.
Contracts usually commence and complete within
one financial period and are generally fixed price.
The Group typically recognises revenue within its
construction contract businesses over time, as it
performs its obligations. Management believe this best
reflects the transfer of control to the customer by
providing a faithful depiction of primarily the
enhancement of a customer controlled asset or the
construction of an asset with no alternative use. The
percentage-of-completion method is used to recognise
revenue when the outcome of a contract can be
estimated reliably. The percentage-of-completion is
calculated using an input method and based on the
proportion of contract costs incurred at the balance
sheet date relative to the total estimated costs of the
contract. In all of our construction contract
2020 Annual Report and Form 20-F
141
arrangements the Group has an enforceable right to
payment for work and performance obligations
completed to date.
Some of the Group’s construction contracts may
contain forms of variable consideration that can
either increase or decrease the transaction price.
Variable consideration is estimated based on the
most likely amount or expected value methods
(depending on the contract terms) and the
transaction price is adjusted to the extent it is highly
probable that a significant reversal of revenue
recognised will not occur.
In some instances a customer can be billed and
revenue recognised in the period subsequent to the
contracted work being completed when items such
as variable consideration are agreed with the
customer.
Recognition of contract assets and
liabilities
In our construction contract businesses, amounts
are billed as work progresses in accordance with
pre-agreed contractual terms. When a performance
obligation is satisfied but a customer has not yet
been billed this is recognised as a contract asset
(unbilled revenue) and included within Trade and
Other Receivables (note 19). Retentions
(representing the percentage of consideration due
which is retained by the customer until certain
contractual activities are completed) are also a
common feature of construction contracts and are
recognised as a contract asset within Trade and
Other Receivables when we have a right to
consideration in exchange for the completion of the
contract. Retentions are consistent with industry
norms and the purpose of these is not to provide a
form of financing. Apart from retentions, the Group
does not have any construction contracts where the
period between the transfer of the promised goods
to the customer and payment by the customer
exceeds one year. As a consequence, the Group
applies the practical expedient in IFRS 15 and does
not adjust any of its transaction prices for the time
value of money.
When consideration is received in advance of work
being performed, or we have billed an amount to a
customer that is in excess of revenue recognised on
the contract; this is recognised as a contract liability
within Trade and Other Payables (note 20); and the
revenue is generally recognised in the subsequent
period when the right to recognise revenue has
been determined. As a result, advance payments
received for construction contract arrangements are
not considered a significant form of financing.
Cumulative costs incurred, net of amounts
transferred to cost of sales, after deducting onerous
provisions, provisions for contingencies and
payments on account not matched with revenue,
are included as construction contract balances in
inventories (note 18). Cost includes all expenditure
directly related to specific projects and an allocation
of fixed and variable overheads incurred in the
Group’s contract activities based on normal
operating capacity. The Group’s contracts generally
are for a duration of less than one year and
therefore the Group does not capitalise incremental
contract costs; instead expensing as incurred, as
permitted by the practical expedient under IFRS 15.
Onerous contracts and warranties
When a contract is identified as being onerous (i.e.
its unavoidable cost exceeds the economic benefit
of the contract), a provision is created; being the
lower of costs to complete the contract and the
cost of exiting the contract. The Group recognises a
provision for assurance-type (standard) warranties
offered across the Group under its terms and
conditions in accordance with IAS 37 Provisions,
Contingent Liabilities and Contingent Assets. The
Group provides assurance-type warranties for
general repairs and does not typically provide
service-type (extended) warranties.
Segment reporting – Note 2
Operating segments are reported in a manner
consistent with the internal organisational and
management structure and the internal reporting
information provided to the Chief Operating
Decision Maker who is responsible for allocating
resources and assessing performance of the
operating segments.
Assets and liabilities held for sale
– Note 3
Non-current assets and disposal groups classified
as held for sale are measured at the lower of
carrying amount and fair value less costs to sell.
Non-current assets and disposal groups are
classified as held for sale if their carrying amounts
will be recovered through a sale transaction rather
than through continuing use. This condition is
regarded as met only when the sale is highly
probable and the asset or disposal group is
available for immediate sale in its present condition
subject only to terms that are usual and customary
for sales of such assets. Management must be
committed to the sale, which should be expected to
qualify for recognition as a completed sale within
12 months from the date of classification as held for
sale.
Property, plant and equipment and intangible assets
are not depreciated or amortised once classified as
held for sale. The Group ceases to use the equity
method of accounting from the date on which an
interest in a joint venture or associate becomes held
for sale. Non-current assets classified as held for
sale and liabilities directly associated with those
assets are presented separately as current items in
the Consolidated Balance Sheet.
Discontinued operations – Note 3
Discontinued operations are reported when a
component of the Group, that represents a
separate major line of business or geographical
area of operation, has been disposed of, or when a
sale is highly probable; its operations and cash
flows can be clearly distinguished, operationally and
for financial reporting purposes, from the rest of the
Group and is classified as held for sale or has been
disposed of. The Group classifies a non-current
asset or disposal group as held for sale if its
carrying value will be recovered through a sales
transaction or distribution to shareholders rather
than continuing use.
In the Consolidated Income Statement,
discontinued operations are excluded from the
results of continuing operations and are presented
as a single amount as profit or loss after tax from
discontinued operations. Corresponding notes to
the Consolidated Income Statement exclude
amounts for discontinued operations, unless stated
otherwise.
Share-based payments – Note 9
The Group operates a number of equity-settled
share-based payment plans. Its policy in relation to
the granting of share options and awards under
these plans, together with the nature of the
underlying market and non-market performance
and other vesting conditions, are addressed in the
Directors’ Remuneration Report on page 74. The
Group has no material exposure in respect of cash-
settled share-based payment transactions and
share-based payment transactions with cash
alternatives.
Awards under Performance Share Plans
25% of the awards under the 2014 Performance
Share Plan are subject to a TSR (and hence
market-based) vesting condition measured against
a tailored sector peer group (2018: 50%; with 25%
being measured against a tailored sector peer
group and 25% against the FTSE All-World
Construction & Materials Index). Accordingly, the
fair value assigned to the related equity instruments
at the grant date is derived using a Monte Carlo
simulation technique to model the market-based
performance conditions; and is adjusted to reflect
the anticipated likelihood as at the grant date of
achieving the vesting condition. Awards are treated
as vesting irrespective of whether or not the market
condition is satisfied, provided that all other
performance and/or service conditions are satisfied.
In 2019 a new RONA metric of 25% was introduced
for awards made in 2019 and 2020. The remaining
50% of awards granted under the 2014
Performance Share Plan are subject to a cumulative
cash flow target (non-market-based) vesting
condition. The fair value of the awards is calculated
as the market price of the shares at the date of
2020 Annual Report and Form 20-F Accounting Policies - continued
grant. No expense is recognised for awards that do
not ultimately vest. At the balance sheet date the
estimate of the level of vesting is reviewed and any
adjustment necessary is recognised in the
Consolidated Income Statement.
If awards which vest under the 2014 Performance
Share Plan are allotted to an Employee Benefit
Trust, an increase in nominal share capital and
share premium are recognised accordingly on
allotment.
142
Savings-related Share Option Scheme
The fair values assigned to options under the
Savings-related Share Option Scheme are derived
in accordance with the trinomial valuation
methodology on the basis that the services to be
rendered by employees as consideration for the
granting of share options will be received over the
vesting period, which is assessed as at the grant
date.
The cost is recognised, together with a
corresponding increase in equity, over the period in
which the performance and/or service conditions
are fulfilled. The cumulative expense recognised at
each reporting date until the vesting date reflects
the extent to which the vesting period has expired
and the Group’s best estimate of the number of
equity instruments that will ultimately vest. The
Consolidated Income Statement expense/credit for
a period represents the movement in cumulative
expense recognised at the beginning and end of
that period. The cumulative charge to the
Consolidated Income Statement is reversed only
where an employee in receipt of share options
leaves service prior to completion of the expected
vesting period and those options forfeit in
consequence.
Where an award is cancelled, it is treated as if it is
vested on the date of cancellation, and any expense
not yet recognised for the award is recognised
immediately. This includes any award where
non-vesting conditions within the control of either
the Company or the employee are not met. All
cancellations of awards are treated equally.
The proceeds received net of any directly
attributable transaction costs are credited to share
capital (nominal value) and share premium when the
options are exercised.
The dilutive effect of outstanding options is reflected
as additional share dilution in the determination of
diluted earnings per share.
Taxation – current and deferred –
Notes 12 and 29
Current tax represents the expected tax payable (or
recoverable) on the taxable profit for the year using
tax rates enacted for the period. Where items are
accounted for outside of profit or loss, the related
income tax is recognised either in other
comprehensive income or directly in equity as
appropriate.
Deferred tax is recognised using the liability method
on temporary differences arising at the balance
sheet date between the tax bases of assets and
liabilities and their carrying amounts in the
Consolidated Financial Statements. However,
deferred tax liabilities are not recognised if they arise
from the initial recognition of goodwill. In addition,
deferred income tax is not accounted for if it arises
from initial recognition of an asset or liability in a
transaction other than a business combination that,
at the time of the transaction, affects neither
accounting nor taxable profit or loss. For the most
part, no provision has been made for temporary
differences applicable to investments in subsidiaries
and joint ventures as the Group is in a position to
control the timing of reversal of the temporary
differences and it is probable that the temporary
differences will not reverse in the foreseeable future.
However, a temporary difference has been
recognised to the extent that specific assets have
been identified for sale or where there is a specific
intention to unwind the temporary difference in the
foreseeable future. Due to the absence of control in
the context of associates (significant influence only),
deferred tax liabilities are recognised where
appropriate in respect of CRH’s investments in
these entities on the basis that the exercise of
significant influence would not necessarily prevent
earnings being remitted by other shareholders in the
undertaking.
Deferred tax is determined using tax rates (and
laws) that have been enacted or substantively
enacted by the balance sheet date and are
expected to apply when the related deferred
income tax asset is realised or the deferred income
tax liability is settled. Deferred tax assets and
liabilities are not subject to discounting. Deferred tax
assets are recognised in respect of all deductible
temporary differences, carry-forward of unused tax
credits and unused tax losses to the extent that it is
probable that taxable profits will be available against
which the temporary differences can be utilised. The
carrying amounts of deferred tax assets are subject
to review at each balance sheet date and are
reduced to the extent that future taxable profits are
considered to be inadequate to allow all or part of
any deferred tax asset to be utilised.
The Group’s income tax charge is based on
reported profit and enacted statutory tax rates,
which reflect various allowances and reliefs 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 or non-recognition of deferred tax assets
as appropriate also requires judgement as it involves
an assessment of the future recoverability of those
assets. In addition, the Group is subject to tax audits
which can involve complex issues that could require
extended periods to conclude, the resolution of
which is often not within the control of the Group.
Although management believes that the estimates
included in the Consolidated Financial Statements
and its tax return positions are reasonable, there is
no certainty that the final outcome of these matters
will not be different than that which is reflected in the
Group’s historical income tax provisions and
accruals. Whilst it is possible, the Group does not
currently anticipate that any such differences could
have a material impact on the income tax provision
and profit for the period in which such a
determination is made nor does it expect any
significant impact on its financial position within the
next 12 months. This is based on the Group’s
knowledge and experience, as well as the profile of
the individual components which have been
reflected in the current tax liability, the status of the
tax audits, enquiries and negotiations in progress at
each year-end, previous claims and any factors
specific to the relevant tax environments.
Property, plant and equipment –
Note 15
The carrying value of property, plant and equipment
(excluding leased right-of-use assets) of
$17,767 million at 31 December 2020 represents
40% of total assets at that date. Property, plant and
equipment are stated at cost less any accumulated
depreciation and any accumulated impairments
except for certain items that had been revalued to
fair value prior to the date of transition to IFRS
(1 January 2004).
Repair and maintenance expenditure is included in
an asset’s carrying amount or recognised as a
separate asset, as appropriate, only when it is
probable that future economic benefits associated
with the item will flow to the Group and the cost of
the item can be measured reliably. All other repair
and maintenance expenditure is charged to the
Consolidated Income Statement during the financial
period in which it is incurred.
Borrowing costs incurred in the construction of
major assets which take a substantial period of time
to complete are capitalised in the financial period in
which they are incurred.
In the application of the Group’s accounting policy,
judgement is exercised by management in the
determination of residual values and useful lives.
Depreciation and depletion is calculated to write off
the book value of each item of property, plant and
equipment over its useful economic life on a
straight-line basis at the following rates:
Land and buildings
The book value of mineral-bearing land, less an
estimate of its residual value, is depleted over the
period of the mineral extraction in the proportion
which production for the year bears to the latest
2020 Annual Report and Form 20-F
143
estimates of proven and probable mineral reserves.
Land, other than mineral-bearing land, is not
depreciated. In general, buildings are depreciated at
2.5% per annum (p.a.).
Plant and machinery
These are depreciated at rates ranging from 3.3%
p.a. to 20% p.a. depending on the type of asset.
Plant and machinery includes transport vehicles
which are on average, depreciated at 20% p.a.
Depreciation methods, useful lives and residual
values are reviewed at each financial year-end.
Changes in the expected useful life or the expected
pattern of consumption of future economic benefits
embodied in the asset are accounted for by
changing the depreciation period or method as
appropriate on a prospective basis.
Business combinations – Note 32
The Group applies the acquisition method in
accounting for business combinations. The cost of
an acquisition is measured as the aggregate of the
consideration transferred (excluding amounts
relating to the settlement of pre-existing
relationships), the amount of any non-controlling
interest in the acquiree and, in a business
combination achieved in stages, the acquisition-
date fair value of the acquirer’s previously-held
equity interest in the acquiree. Transaction costs
that the Group incurs in connection with a business
combination are expensed as incurred.
To the extent that settlement of all or any part of
consideration for a business combination is
deferred, the fair value of the deferred component is
determined through discounting the amounts
payable to their present value at the date of
exchange. The discount component is unwound as
an interest charge in the Consolidated Income
Statement over the life of the obligation. Any
contingent consideration is recognised at fair value
at the acquisition date and included in the cost of
the acquisition. The fair value of contingent
consideration at acquisition date is arrived at
through discounting the expected payment to
present value. In general, in order for contingent
consideration to become payable, pre-defined profit
and/or profit/net asset ratios must be exceeded.
Subsequent changes to the fair value of the
contingent consideration will be recognised in profit
or loss unless the contingent consideration is
classified as equity, in which case it is not
remeasured and settlement is accounted for within
equity.
The assets and liabilities arising on business
combination activity are measured at their
acquisition-date fair values. Contingent liabilities
assumed in business combination activity are
recognised as of the acquisition date, where such
contingent liabilities are present obligations arising
from past events and their fair value can be
measured reliably. In the case of a business
combination achieved in stages, the acquisition-
date fair value of the acquirer’s previously-held
equity interest in the acquiree is remeasured to fair
value as at the acquisition date through profit or
loss. When the initial accounting for a business
combination is determined provisionally, any
adjustments to the provisional values allocated to
the consideration, identifiable assets or liabilities
(and contingent liabilities, if relevant) are made
within the measurement period, a period of no more
than one year from the acquisition date.
Goodwill – Note 16
Goodwill arising on a business combination is
initially measured at cost, being the excess of the
cost of an acquisition over the fair value of the net
identifiable assets and liabilities assumed at the date
of acquisition and relates to the future economic
benefits arising from assets which are not capable
of being individually identified and separately
recognised. Following initial recognition, goodwill is
measured at cost less any accumulated impairment
losses. If the cost of the acquisition is lower than the
fair value of the net assets of the subsidiary
acquired, the identification and measurement of the
related assets and liabilities and contingent liabilities
are revisited and the cost is reassessed with any
remaining balance recognised immediately in the
Consolidated Income Statement.
The carrying amount of goodwill in respect of
associates and joint ventures is included in
investments accounted for using the equity method
(i.e. within financial assets) in the Consolidated
Balance Sheet.
Where a subsidiary is disposed of or terminated
through closure, the carrying value of any goodwill
of that subsidiary is included in the determination of
the net profit or loss on disposal/termination.
Intangible assets (other than
goodwill) arising on business
combinations – Note 16
An intangible asset is capitalised separately from
goodwill as part of a business combination at cost
(fair value at date of acquisition).
Subsequent to initial recognition, intangible assets
are carried at cost less any accumulated
amortisation and any accumulated impairment
losses. The carrying values of definite-lived
intangible assets (the Group does not currently have
any indefinite-lived intangible assets other than
goodwill) are reviewed for indicators of impairment
at each reporting date and are subject to
impairment testing when events or changes in
circumstances indicate that the carrying values may
not be recoverable.
Intangible assets are amortised on a straight-line
basis. In general, definite-lived intangible assets are
amortised over periods ranging from one to ten
years, depending on the nature of the intangible
asset.
Amortisation periods, useful lives, expected
patterns of consumption and residual values are
reviewed at each financial year-end. Changes in the
expected useful life or the expected pattern of
consumption of future economic benefits embodied
in the asset are accounted for by changing the
amortisation period or method as appropriate on a
prospective basis.
Leases – Notes 15 and 22
The Group enters into leases for a range of assets,
principally relating to property. These property
leases have varying terms, renewal rights and
escalation clauses, including periodic rent reviews
linked with a consumer price index and/or other
indices. The Group also leases plant and
machinery, vehicles and equipment. The terms and
conditions of these leases do not impose significant
financial restrictions on the Group.
A contract contains a lease if it is enforceable and
conveys the right to control the use of a specified
asset for a period of time in exchange for
consideration, which is assessed at inception. A
right-of-use asset and lease liability are recognised
at the commencement date for contracts containing
a lease, with the exception of leases with a term of
12 months or less which do not contain a purchase
option, leases where the underlying asset is of low
value and leases with associated payments that
vary directly in line with usage or sales. The
commencement date is the date at which the asset
is made available for use by the Group.
The lease liability is initially measured at the present
value of the future lease payments, discounted
using the incremental borrowing rate or the interest
rate implicit in the lease, if this is readily
determinable, over the remaining lease term. Lease
payments include fixed payments less any lease
incentives receivable, variable payments that are
dependent on a rate or index known at the
commencement date, amounts expected to be
paid under residual value guarantees and any
payments for an optional renewal period and
purchase and termination option payments, if the
Group is reasonably certain to exercise those
options. The lease term is the non-cancellable
period of the lease adjusted for any renewal or
termination options which are reasonably certain to
be exercised. Variable lease payments that do not
depend on an index or a rate and rentals relating to
low value or short-term leases are recognised as an
expense in the period in which they are incurred.
Management applies judgement in determining
whether it is reasonably certain that a renewal,
termination or purchase option will be exercised.
2020 Annual Report and Form 20-F Accounting Policies - continued
144
Incremental borrowing rates are calculated using a
portfolio approach, based on the risk profile of the
entity holding the lease and the term and currency
of the lease.
After initial recognition, the lease liability is measured
at amortised cost using the effective interest
method. It is remeasured when there is a change in
future lease payments or when the Group changes
its assessment of whether it is reasonably certain to
exercise an option within the contract. A
corresponding adjustment is made to the carrying
amount of the right-of-use asset.
The right-of-use asset is initially measured at cost,
which comprises the lease liability adjusted for any
payments made at or before the commencement
date, initial direct costs incurred, lease incentives
received and an estimate of the cost to dismantle or
restore the underlying asset or the site on which it is
located at the end of the lease term. The
right-of-use asset is depreciated over the lease term
or, where a purchase option is reasonably certain to
be exercised, over the useful economic life of the
asset in line with depreciation rates for owned
property, plant and equipment. The right-of-use
asset is tested periodically for impairment if an
impairment indicator is considered to exist.
Non-lease components in a contract such as
maintenance and other service charges are
separated from lease payments and are expensed
as incurred.
The Group adopted IFRS 16 using the modified
retrospective approach on 1 January 2019.
Accordingly, the comparative information for the
year ended 31 December 2018 has not been
restated and continues to be accounted for in
accordance with the Group’s previous accounting
policy under IAS 17 Leases. Under the previous
accounting policy, leases where the lessor retained
substantially all the risks and rewards of ownership
were classified as operating leases. Operating lease
rentals were charged to the Consolidated Income
Statement on a straight-line basis over the lease
term.
Inventories – Note 18
Inventories are stated at the lower of cost and net
realisable value. Cost is based on the first-in/
first-out principle (and weighted average, where
appropriate) and includes all expenditure incurred in
acquiring the inventories and bringing them to their
present location and condition. Raw materials are
valued on the basis of purchase cost on a first-in/
first-out basis. In the case of finished goods and
work-in-progress, cost includes direct materials,
direct labour and attributable overheads based on
normal operating capacity and excludes borrowing
costs.
Net realisable value is the estimated proceeds of
sale less all further costs to completion, and less all
costs to be incurred in marketing, selling and
distribution. Estimates of net realisable value are
based on the most reliable evidence available at the
time the estimates are made, taking into
consideration fluctuations of price or cost directly
relating to events occurring after the end of the
period, the likelihood of short-term changes in buyer
preferences, product obsolescence or perishability
(all of which are generally low given the nature of the
Group’s products) and the purpose for which the
inventory is held. Materials and other supplies held
for use in the production of inventories are not
written down below cost if the finished goods, in
which they will be incorporated, are expected to be
sold at or above cost.
Trade and other receivables –
Note 19
The classification of financial assets depends on the
Group’s business model for managing the financial
assets and the contractual terms of the cash flows.
The Group’s principal financial assets are its trade
and other receivables (including contract assets).
Trade and other receivables are recognised when
the Group becomes a party to the contract and has
a legal right to receive cash. Trade receivables
(including contract assets) are carried at original
invoice amount, which is equivalent to amortised
cost, less an expected credit loss provision. Further
details on the approach the Group applies to
providing for expected credit losses is outlined in
note 19.
Cash and cash equivalents –
Note 25
Cash and cash equivalents comprise cash balances
held for the purpose of meeting short-term cash
commitments and investments which are readily
convertible to a known amount of cash and are
subject to an insignificant risk of change in value.
Cash and cash equivalents are classified as financial
assets measured at amortised cost or, in the case
of certain money market deposits, fair value through
profit or loss. Bank overdrafts are included within
current interest-bearing loans and borrowings in the
Consolidated Balance Sheet. Where the overdrafts
are repayable on demand and form an integral part
of cash management, they are netted against cash
and cash equivalents for the purposes of the
Consolidated Statement of Cash Flows.
settlement. Subsequent to initial recognition, current
and non-current interest-bearing loans and
borrowings are, in general, measured at amortised
cost employing the effective interest methodology.
Fixed rate loans and borrowings, which have been
hedged to floating rates (using interest rate swaps),
are measured at amortised cost adjusted for
changes in value attributable to the hedged risks
arising from changes in underlying market interest
rates.
Borrowing costs arising on financial instruments are
recognised as an expense in the period in which
they are incurred (unless capitalised as part of the
cost of property, plant and equipment).
Derivative financial instruments
and hedging practices – Note 27
In order to manage interest rate, foreign currency
and commodity risks and to realise the desired
currency profile of borrowings, the Group employs
derivative financial instruments (principally interest
rate swaps, currency swaps and forward foreign
exchange contracts). Derivative financial
instruments are recognised initially at fair value on
the date on which a derivative contract is entered
into and are subsequently remeasured at fair value.
The carrying value of derivatives is fair value based
on discounted future cash flows and adjusted for
counterparty risk. Future floating rate cash flows are
estimated based on future interest rates (from
observable yield curves at the end of the reporting
period). Fixed and floating rate cash flows are
discounted at future interest rates and translated at
period-end foreign exchange rates. Short dated
forward foreign exchange contracts are used to
hedge the forward foreign exchange risk on
currency exposures. The forward price elements to
these contracts are excluded from the hedge.
At the inception of a derivative transaction, the
Group documents the relationship between the
hedged item and the hedging instrument together
with its risk management objective and the strategy
underlying the proposed transaction. The Group
also documents its assessment, both at the
inception of the hedging relationship and
subsequently on an ongoing basis, of the
effectiveness of the hedging instrument in offsetting
movements in the fair values or cash flows of the
hedged items. Where derivatives do not fulfil the
criteria for hedge accounting, changes in fair values
are reported in the Consolidated Income Statement
and Consolidated Balance Sheet.
Interest-bearing loans and
borrowings – Note 26
All loans and borrowings are initially recorded at the
fair value of the consideration received net of
directly attributable transaction costs. The
computation of amortised cost includes any issue
costs and any discount or premium materialising on
Fair value and cash flow hedges
The Group uses fair value hedges and cash flow
hedges in its treasury activities. For the purposes of
hedge accounting, hedges are classified either as
fair value hedges (which entail hedging the exposure
to movements in the fair value of a recognised asset
or liability or an unrecognised firm commitment that
2020 Annual Report and Form 20-F
could affect profit or loss) or cash flow hedges
(which hedge exposure to fluctuations in future cash
flows derived from a particular risk associated with a
recognised asset or liability, or a highly probable
forecast transaction that could affect profit or loss).
Where the conditions for hedge accounting are
satisfied and the hedging instrument concerned is
classified as a fair value hedge, any gain or loss
stemming from the remeasurement of the hedging
instrument to fair value is reported in the
Consolidated Income Statement. In addition, any
gain or loss on the hedged item which is attributable
to the hedged risk is adjusted against the carrying
amount of the hedged item and reflected in the
Consolidated Income Statement. Where the
adjustment is to the carrying amount of a hedged
interest-bearing financial instrument, the adjustment
is amortised to the Consolidated Income Statement
with the objective of achieving full amortisation by
maturity.
Where a derivative financial instrument is designated
as a hedge of the variability in cash flows of a
recognised asset or liability or a highly probable
forecast transaction that could affect profit or loss,
the effective part of any gain or loss on the derivative
financial instrument is recognised as other
comprehensive income, net of the income tax effect,
with the ineffective portion being reported in the
Consolidated Income Statement. The associated
gains or losses that had previously been recognised
as other comprehensive income are transferred to
the Consolidated Income Statement
contemporaneously with the materialisation of the
hedged transaction.
Hedge accounting is discontinued when the
hedging instrument expires or is sold, terminated or
exercised, or no longer qualifies for hedge
accounting. At that point in time, any cumulative
gain or loss on the hedging instrument recognised
as other comprehensive income remains there until
the forecast transaction occurs. If a hedged
transaction is no longer anticipated to occur, the net
cumulative gain or loss previously recognised as
other comprehensive income is transferred to the
Consolidated Income Statement in the period.
Net investment hedges
Foreign currency translation
Where foreign currency borrowings provide a hedge
against a net investment in a foreign operation, and
the hedge is deemed to be effective, foreign
exchange differences are taken directly to a foreign
currency translation reserve. The ineffective portion
of any gain or loss on the hedging instrument is
recognised immediately in the Consolidated Income
Statement. Cumulative gains and losses remain in
equity until disposal of the net investment in the
foreign operation at which point the related
differences are transferred to the Consolidated
Income Statement as part of the overall gain or loss
on sale.
Share capital and dividends –
Notes 31 and 13
Treasury Shares and own shares
Ordinary Shares acquired by the Parent Company
(Treasury Shares) or purchased by the Employee
Benefit Trust on behalf of the Parent Company
under the terms of the Performance Share Plans
and the Restricted Share Plan (own shares) are
deducted from equity and presented on the face of
the Consolidated Balance Sheet. No gain or loss is
recognised in profit or loss on the purchase, sale,
issue or cancellation of the Parent Company’s
Ordinary Shares.
Dividends
Dividends on Ordinary Shares are recognised as a
liability in the Consolidated Financial Statements in
the period in which they are declared by the Parent
Company and approved by shareholders in respect
of final dividends.
Other Reserves
Other Reserves primarily comprise reserves relating
to the Group’s share-based payments expense.
145
Items included in the financial statements of each of
the Group’s entities are measured using the
currency of the primary economic environment in
which the entity operates (‘the functional currency’).
The Consolidated Financial Statements are
presented in US Dollar, which is the presentation
currency of the Group. The functional currency of
the Parent Company is euro.
Transactions in foreign currencies are recorded at
the rate of exchange ruling at the date of the
transaction. Monetary assets and liabilities
denominated in foreign currencies are retranslated
at the rate of exchange ruling at the balance sheet
date. All currency translation differences are taken
to the Consolidated Income Statement with the
exception of all monetary items that provide an
effective hedge for a net investment in a foreign
operation. These are recognised in other
comprehensive income until the disposal of the net
investment, at which time they are recognised in the
Consolidated Income Statement.
Results and cash flows of subsidiaries, joint
ventures and associates with non-US Dollar
functional currencies have been translated into
US Dollar at average exchange rates for the year,
and the related balance sheets have been
translated at the rates of exchange ruling at the
balance sheet date. Adjustments arising on
translation of the results and net assets of non-US
Dollar subsidiaries, joint ventures, associates and
joint operations are recognised in a separate
translation reserve within equity, net of differences
on related currency borrowings. All other translation
differences are taken to the Consolidated Income
Statement. Goodwill and fair value adjustments
arising on acquisition of a foreign operation are
regarded as assets and liabilities of the foreign
operation and are translated accordingly.
2020 Annual Report and Form 20-F Accounting Policies - continued
The principal exchange rates used for the translation of results, cash flows and balance sheets into US Dollar were as follows:
US Dollar 1 =
Brazilian Real
Canadian Dollar
Chinese Renminbi
Danish Krone
146
Euro
Hungarian Forint
Indian Rupee
Philippine Peso
Polish Zloty
Pound Sterling
Romanian Leu
Serbian Dinar
Swiss Franc
Ukrainian Hryvnia
Average
2019
3.9423
1.3269
6.9098
6.6691
0.8933
2020
5.1568
1.3412
6.9010
6.5388
0.8771
2018
3.6482
1.2950
6.6114
6.3109
0.8467
Year-end
2019
4.0197
1.2994
6.9615
6.6508
0.8902
2020
5.1941
1.2751
6.5404
6.0650
0.8151
2018
3.8812
1.3629
6.8778
6.5217
0.8734
307.9331
290.5732
270.0167
296.8600
294.2229
280.3319
74.1177
70.4208
68.3600
73.0706
71.3788
69.6330
49.6071
51.7955
52.6758
48.0300
50.6498
52.5004
3.8971
0.7798
4.2432
3.8389
0.7841
4.2388
3.6084
0.7491
3.9407
3.7166
0.7320
3.9683
3.7892
0.7573
4.2576
3.7567
0.7812
4.0729
103.1510
105.2592
100.1102
95.8751
104.8813
103.3325
0.9387
0.9937
0.9780
0.8806
0.9662
0.9842
26.9857
25.8045
27.1793
28.3242
23.8007
27.6769
2020 Annual Report and Form 20-F
Notes on Consolidated Financial Statements
1. Revenue
CRH is the leading building materials business in
the world. It manufactures and supplies a diverse
range of superior building materials and products
for use in the construction and maintenance of
infrastructure, housing and commercial projects of
all sizes, all across the world.
The Group has three operating segments (as
identified under IFRS 8 Operating Segments)
generating revenue through the following activities:
Americas Materials businesses are predominantly
engaged in the production and sale of aggregates,
asphalt, cement and readymixed concrete
products and provide asphalt paving services in
the US and Canada. This segment also includes
the Group’s cement operations in Brazil.
Europe Materials businesses are predominantly
engaged in the manufacture and supply of
cement, lime, aggregates, readymixed and
precast concrete and asphalt products, as well as
paving and construction services. This segment
comprises businesses operating in 21 countries
across Western, Central and Eastern Europe as
well as the Philippines in Asia.
Our Building Products segment includes
businesses operating across a portfolio of building
product related platforms including architectural
products, infrastructure products, construction
accessories and building envelope. This segment
also included up to their disposal in 2019, our
perimeter protection and shutters & awnings
businesses as well as our Do-It-Yourself (DIY)
businesses in Belgium and the Netherlands which
were disposed of in 2018. This segment
comprises businesses operating in 19 countries
primarily in the US, Canada and Western Europe.
2018 was therefore part of discontinued
operations. As referenced above, DIY Benelux
was separately divested in 2018 and therefore its
performance up to the date of divestment is
shown as part of continuing operations in 2018.
A. Disaggregated revenue
In the following tables, revenue is disaggregated
by primary geographic market and by principal
activities and products. Due to the diversified
nature of the Group, the basis on which
management reviews its businesses varies across
the Group. Geography is the primary basis for the
Americas Materials and Europe Materials
businesses; while activities and products are used
for the Building Products businesses.
The divestment of our Europe Distribution
business (excluding DIY Benelux), formerly part of
the Building Products segment, was completed in
2019. As a result, it was classified as discontinued
operations in 2019; its performance in 2019 and
Revenue from external customers (as defined in
IFRS 8) attributable to the country of domicile and
all foreign countries of operation greater than 10%
are included below. Further operating segment
disclosures are set out in note 2.
147
Primary geographic markets
Continuing operations
Republic of Ireland (country of domicile)
United Kingdom
Rest of Europe (i)
United States
Rest of World (ii)
Year ended 31 December
Americas
Materials
2020
$m
Europe
Materials
2020
$m
Building
Products
2020
$m
Americas
Materials
2019
$m
Europe
Materials
2019
$m
Building
Products
2019
$m
Americas
Materials
2018
$m
Europe
Materials
2018
$m
Building
Products
2018
$m
Total
2019
$m
Total
2020
$m
Total
2018
$m
-
-
-
9,984
1,289
632
3,157
4,841
-
511
-
180
992
632
3,337
5,833
5,479 15,463
2,322
522
-
-
-
10,307
1,319
655
3,478
4,845
-
531
-
655
243
3,721
6,007
1,162
5,086 15,393
2,356
506
-
-
-
9,326
1,246
553
3,596
4,840
-
509
-
553
263
3,859
6,575
1,735
4,801 14,127
2,335
580
Total Group from continuing operations
11,273
9,141
7,173 27,587
11,626
9,509
6,997 28,132
10,572
9,498
7,379 27,449
Discontinued operations
United States - Americas Distribution
Rest of Europe (i) - Europe Distribution
Total Group
-
-
27,587
-
3,557
31,689
8
4,191
31,648
(i)
The Rest of Europe principally includes Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Luxembourg, the Netherlands,
Poland, Romania, Serbia, Slovakia, Spain, Sweden, Switzerland and Ukraine.
(ii)
The Rest of World principally includes Australia, Brazil, Canada and the Philippines.
2020 Annual Report and Form 20-F 1. Revenue - continued
148
Principal activities and products
Continuing operations
Cement, lime and cement products
Aggregates, asphalt and
readymixed products
Construction contract activities*
Architectural products
Infrastructure products
Construction accessories
Architectural glass and glazing
systems and wholesale hardware
distribution
DIY
Total Group from continuing
operations
Discontinued operations
Exterior and interior products -
Americas Distribution
General Builders Merchants, DIY
Germany and Sanitary, Heating &
Plumbing - Europe Distribution
Total Group
Year ended 31 December
Americas
Materials (iii)
2020
$m
Europe
Materials (iii)
2020
$m
Building
Products
2020
$m
Americas
Materials (iii)
2019
$m
Europe
Materials (iii)
2019
$m
Building
Products
2019
$m
Total
2020
$m
Americas
Materials (iii)
2018
$m
Europe
Materials (iii)
2018
$m
Building
Products
2018
$m
Total
2019
$m
Total
2018
$m
1,403
2,974
- 4,377
1,368
2,962
- 4,330
957
2,960
- 3,917
5,604
4,266
-
-
-
3,100
1,732
1,166
169
-
- 8,704
168 6,166
3,439 4,605
1,278 1,447
626
626
5,649
4,609
-
-
-
3,427
1,801
1,069
250
-
- 9,076
185 6,595
2,983 4,052
1,387 1,637
660
660
5,114
4,501
-
-
-
3,448
1,821
1,066
203
-
- 8,562
283 6,605
3,067 4,133
1,276 1,479
700
700
-
-
-
-
1,662 1,662
-
-
-
-
-
-
1,782 1,782
-
-
-
-
-
-
1,690 1,690
363
363
11,273
9,141
7,173 27,587
11,626
9,509
6,997 28,132
10,572
9,498
7,379 27,449
-
-
27,587
-
3,557
31,689
8
4,191
31,648
(iii) Americas Materials and Europe Materials both operate vertically integrated businesses, which are founded in resource-backed cement and aggregates assets and
which support the manufacture and supply of aggregates, asphalt, cement, readymixed and precast concrete and landscaping products. Accordingly, for the
purpose of disaggregation of revenue we have included certain products together, as this is how management reviews and evaluates this business line.
There are no material dependencies or
concentrations of individual customers which would
warrant disclosure under IFRS 8. The individual
entities within the Group have a large number of
customers spread across various activities,
end-uses and geographies.
Revenue derived through the supply of services and
intersegment revenue are not material to the Group.
The transfer pricing policy implemented by the
Group between operating segments and across its
constituent entities is described in note 34. In
addition, due to the nature of building materials,
which have a low value-to-weight ratio, the Group’s
revenue streams include a low level of cross-border
transactions.
B. Contract balances
For information on the Group’s construction
contract balances, including movements during the
year, refer to notes 18, 19 and 20. Movements in
our net contract balances are not considered
significant and are primarily driven by the timing of
billing work-in-progress within our construction
contract businesses.
31 December 2020 (2019: $2,097 million; 2018:
$2,116 million). The Group has applied the practical
expedient of IFRS 15 Revenue from Contracts with
Customers whereby revenue yet to be recognised
on contracts that had an original expected duration
of less than one year is not disclosed. The majority
of open contracts at 31 December 2020 will close
and revenue will be recognised within 12 months of
the balance sheet date.
C. Unsatisfied long-term construction contracts
and other performance obligations
Revenue yet to be recognised from fixed-price
long-term construction contracts, primarily within
our Americas Materials and Europe Materials
businesses, amounted to $2,604 million at
2020 Annual Report and Form 20-F
2. Segment Information
As outlined in note 1, the Group has three
operating segments. The segments reflect the
Group’s organisational structure and the nature of
the financial information reported to and assessed
by the Group Chief Executive and Finance
Director, who are together determined to fulfil the
role of Chief Operating Decision Maker (as defined
in IFRS 8). No operating segments have been
aggregated to form these reportable segments.
The principal factors employed in the identification
of the three segments reflected in this note
include:
•
•
•
•
the Group’s organisational structure in 2020
(during 2020 each divisional President fulfilled
the role of “segment manager” as outlined in
IFRS 8);
the nature of the reporting lines to the Chief
Operating Decision Maker (as defined in
IFRS 8);
the structure of internal reporting
documentation such as management
accounts and budgets; and
the degree of homogeneity of products and
services within each of the segments from
which revenue is derived
The Chief Operating Decision Maker monitors the
operating results of segments separately in order
to allocate resources between segments and to
assess performance. Segment performance is
predominantly evaluated using EBITDA (as
defined)*; supplemental operating profit
information is provided below. Given that net
finance costs and income tax are managed on a
centralised basis, these items are not allocated
between operating segments for the purposes of
the information presented to the Chief Operating
Decision Maker and are accordingly omitted from
the detailed segmental analysis below. There are
no asymmetrical allocations to reporting segments
which would require disclosure.
149
A. Operating segments disclosures—Consolidated Income Statement data
Year ended 31 December
Revenue
Group EBITDA
(as defined)*
Depreciation,
amortisation and
impairment
Group
operating profit
2020
$m
2019
$m
2018
$m
2020
$m
2019
$m
2018
$m
2020
$m
2019
$m
2018
$m
2020
$m
2019
$m
2018
$m
11,273 11,626 10,572
9,498
9,509
7,379
6,997
9,141
7,173
2,405
1,055
1,170
2,194
1,208
1,076
1,763
1,106
930
774
1,245
348
771
586
328
571
531
251
1,631
(190)
822
1,423
622
748
1,192
575
679
Continuing operations
Americas Materials
Europe Materials
Building Products
Total Group from continuing operations
27,587 28,132 27,449
4,630
4,478
3,799
2,367
1,685
1,353
2,263
2,793
2,446
Discontinued operations
Americas Distribution
Europe Distribution
Total Group
-
-
-
3,557
8
4,191
-
-
-
224
(6)
176
-
-
-
111
-
50
-
-
-
113
(6)
126
27,587 31,689 31,648
4,630
4,702
3,969
2,367
1,796
1,403
2,263
2,906
2,566
Group operating profit from continuing operations
Profit/(loss) on disposals (i)
Finance costs less income
Other financial expense
Share of equity accounted investments’ (loss)/profit (ii)
Profit before tax from continuing operations
Americas Materials
Europe Materials
Building Products
(i) Profit/(loss) on
disposals
(note 6)
(2)
(283)
96
8
(12)
13
57
6
(184)
Total Group from continuing operations
9
(189)
(121)
2,263
9
(389)
(101)
(118)
1,664
2,793
(189)
(365)
(125)
67
2,181
2,446
(121)
(360)
(54)
57
1,968
(ii) Share of equity
accounted investments’
(loss)/profit (note 11)
34
(148)
(4)
(118)
43
14
10
67
30
21
6
57
* 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.
2020 Annual Report and Form 20-F 2. Segment Information - continued
B. Operating segments disclosures - Consolidated Balance Sheet data
Americas Materials
Europe Materials
Building Products
Total Group
150
Reconciliation to total assets as reported in the Consolidated Balance Sheet:
Investments accounted for using the equity method
Other financial assets
Derivative financial instruments (current and non-current)
Income tax assets (current and deferred)
Cash and cash equivalents
Total assets as reported in the Consolidated Balance Sheet
Reconciliation to total liabilities as reported in the Consolidated Balance Sheet:
Interest-bearing loans and borrowings (current and non-current)
Derivative financial instruments (current and non-current)
Income tax liabilities (current and deferred)
Total liabilities as reported in the Consolidated Balance Sheet
C. Operating segments disclosures - other items
Additions to non-current assets
Property, plant and
equipment (i) (note 15, 22)
2019
$m
2020
$m
2018
$m
Continuing operations
Americas Materials
Europe Materials
Building Products
Total Group from continuing operations
Discontinued operations
Europe Distribution
Total Group
527
384
265
750
549
353
506
536
247
1,176
1,652
1,289
-
-
35
1,176
1,652
1,324
As at 31 December
Total assets
Total liabilities
2020
$m
16,172
12,730
7,316
2019
$m
16,410
13,109
7,197
36,218
36,716
626
13
201
165
7,721
775
13
92
98
9,918
44,944
47,612
2020
$m
2,897
3,971
2,268
9,136
2019
$m
2,968
3,865
2,107
8,940
12,215
13
3,232
15,827
18
3,192
24,596
27,977
Year ended 31 December
Financial assets
(note 17)
2019
$m
2020
$m
2018
$m
1
-
-
1
-
1
30
1
-
31
1
32
2
-
-
2
-
2
Total Group
2020
$m
2019
$m
2018
$m
528
384
265
780
550
353
508
536
247
1,177
1,683
1,291
-
1
35
1,177
1,684
1,326
(i)
Additions to property, plant and equipment include $14 million (2019: $96 million) relating to leased mineral reserves which fall outside the scope of IFRS 16.
2020 Annual Report and Form 20-F
D. Information about geographical areas
The non-current assets (as defined in IFRS 8) attributable to the country of domicile and all foreign countries of operation, for which revenue exceeds 10% of total
external Group revenue, are set out below.
Republic of Ireland (country of domicile)
United Kingdom
United States
Other
Total Group
As at 31 December
Non-current assets*
2020
$m
603
2,594
15,990
10,129
29,316
2019
$m
569
3,114
16,019
10,122
29,824
151
3. Assets Held for Sale and Discontinued Operations
A. (Loss)/Profit on disposal of discontinued operations
In October 2019, the Group completed the
divestment of its Europe Distribution business,
formerly part of our Building Products segment,
and in January 2018, the Group completed the
divestment of its 100% holding in Allied Building
Products, the trading name of our former
Americas Distribution segment. Both of these
transactions were considered to be discontinued
operations as defined in IFRS 5 Non-Current
Assets Held for Sale and Discontinued Operations
and were classified accordingly in 2019 and 2018.
No businesses divested in 2020 are considered to
be either separate major lines of business or
geographical areas of operation and therefore do
not constitute discontinued operations.
Assets and liabilities that met the IFRS 5 criteria at
31 December 2020 have not been separately
disclosed as held for sale as they were not
considered material in the context of the Group.
The table below sets out the proceeds and related
(loss)/profit recognised on divestments which were
included in profit after tax for the financial years
2019 and 2018 from discontinued operations.
Assets/(liabilities) disposed of at net carrying amount:
- non-current assets
- cash and cash equivalents
- working capital and provisions
- current tax
- lease liabilities
- deferred tax
- retirement benefit obligations
- non-controlling interests
Net assets disposed
Reclassification of currency translation effects on disposal
Total
Proceeds from disposal (net of disposal costs)
(Loss)/profit on disposal from discontinued operations
Net cash inflow arising on disposal
Proceeds from disposal from discontinued operations
Less: cash and cash equivalents disposed
Total
2019
$m
1,462
112
665
2
(410)
(32)
(47)
(9)
1,743
117
1,860
1,855
(5)
1,855
(112)
1,743
2018
$m
570
21
443
-
-
(17)
-
-
1,017
-
1,017
2,861
1,844
2,861
(21)
2,840
* Non-current assets comprise property, plant and equipment, intangible assets and investments accounted for using the equity method.
2020 Annual Report and Form 20-F 3. Assets Held for Sale and Discontinued Operations
- continued
B. Results of discontinued operations
The results of the discontinued operations included in the Group profit for the financial years 2019 and 2018 are set out as follows:
Revenue
152
EBITDA (as defined)*
Depreciation
Amortisation
Impairment
Operating profit
(Loss)/profit on disposals
Profit before finance costs
Finance costs
Share of equity accounted investments’ profit
Profit before tax
Attributable income tax expense
Profit after tax for the financial year from discontinued operations
Profit attributable to:
Equity holders of the Company
Non-controlling interests
Profit for the financial year from discontinued operations
Basic earnings per Ordinary Share from discontinued operations
Diluted earnings per Ordinary Share from discontinued operations
Cash flows from discontinued operations
Net cash inflow/(outflow) from operating activities
Net cash inflow from investing activities
Net cash outflow from financing activities
Net cash inflow
4. Cost Analysis
Continuing operations
Cost of sales analysis
Raw materials and goods for resale
Employment costs (note 7)
Energy conversion costs
Repairs and maintenance
Depreciation, amortisation and impairment (i)
Change in inventory
Other production expenses (primarily sub-contractor costs)
Total
Operating costs analysis
Selling and distribution costs
Administrative expenses
Total
2019
$m
3,557
224
(108)
(2)
(1)
113
(2)
111
(8)
14
117
(26)
91
90
1
91
2018
$m
4,199
170
(48)
(2)
-
120
1,848
1,968
-
14
1,982
(594)
1,388
1,387
1
1,388
11.3c
11.2c
166.7c
165.8c
36
1,722
(80)
1,678
(434)
2,814
(23)
2,357
2020
$m
2019
$m
2018
$m
5,757
3,871
1,268
1,103
1,621
63
4,742
5,973
5,840
3,726
3,880
1,444
1,464
1,042
1,097
1,109
1,370
(210)
(70)
5,278
5,307
18,425 18,859 18,391
4,454
2,445
6,899
4,547
1,933
6,480
4,515
2,097
6,612
* 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.
2020 Annual Report and Form 20-F
(i) Depreciation, amortisation and impairment analysis
Depreciation and depletion (note 15, 22)
Amortisation of intangible assets (note 16)
Impairment of property, plant and equipment (note 15, 22) (ii)
Impairment of intangible assets (note 16) (ii)
Total
Cost of sales
2020
$m
1,367
-
254
-
1,621
2019
$m
1,364
-
6
-
1,370
2018
$m
1,066
-
43
-
1,109
Operating costs
2020
$m
2019
$m
2018
$m
257
70
9
410
746
249
64
2
-
315
151
70
-
23
244
2020
$m
1,624
70
263
410
2,367
Total
2019
$m
1,613
64
8
-
1,685
2018
$m
1,217
70
43
23
1,353
(ii)
Total impairment charges for year ended 31 December 2020, including a charge of $154 million related to equity accounted investments as detailed in note 11,
amounted to $827 million (2019: $8 million; 2018: $66 million).
153
5. Auditor’s Remuneration
Continuing operations
With effect from 2020, following a competitive tender process, Deloitte Ireland LLP (Deloitte) was appointed as auditor of the Group, replacing Ernst & Young (EY). In
the table below, auditor’s remuneration for services provided during the year ended 31 December 2020 thus relates to Deloitte and for the years ended 31 December
2019 and 31 December 2018 to EY.
In accordance with statutory requirements in Ireland, fees for professional services provided by the Group’s independent auditor in respect of each of the following
categories were:
Audit fees (i) (ii)
Other audit-related assurance fees (iii) (iv)
Tax advisory services (iv)
Total
Statutory auditor (Ireland)
EY
EY
2018
2019
$m
$m
Deloitte
2020
$m
Network firms
EY
2019
$m
Deloitte
2020
$m
EY
2018
$m
6
-
-
6
4
-
-
4
5
-
-
5
12
-
-
12
16
-
1
17
16
1
-
17
Deloitte
2020
$m
18
-
-
18
Total
EY
2019
$m
20
-
1
21
EY
2018
$m
21
1
-
22
(i)
Audit of the Group accounts includes the audit of internal control over financial reporting and parent and subsidiary statutory audit fees, but excludes $3 million
(2019: $3 million; 2018: $3 million) paid to auditors other than Deloitte (2020) and EY (2019 and 2018).
(ii) Audit fees in 2019 and 2018, including discontinued operations, amounted to $20 million and $23 million respectively.
(iii) Other assurance services include attestation and due diligence services that are closely related to the performance of the audit.
(iv) Other audit-related assurance fees in 2019 and 2018, including discontinued operations, amounted to $nil million and $1 million respectively. Tax advisory
services for the same years, including discontinued operations, amounted to $1 million and $nil million respectively.
There were no other fees for services provided by the Group’s independent auditor (2019: $nil million; 2018: $nil million).
2020 Annual Report and Form 20-F 6. Business and Non-Current Asset Disposals
Business disposals
2020
$m
2019
$m
2018
$m
Disposal of other
non-current assets
2020
$m
2019
$m
2018
$m
2020
$m
Total
2019
$m
2018
$m
127
157
67
201
826
Continuing operations
Assets/(liabilities) disposed of at net carrying amount:
- non-current assets
- cash and cash equivalents
- working capital and provisions
154
- current tax
- lease liabilities
- deferred tax
- retirement benefit obligations
- non-controlling interests
Net assets disposed
Reclassification of currency translation effects on disposal
Total
Proceeds from disposals (net of disposal costs)
Asset exchange (note 32)
Profit on step acquisition (note 32)
725
70
152
(2)
-
(2)
(8)
-
935
112
74
7
29
-
669
50
93
(1)
(12)
(53)
(3)
(2)
-
753
263
(3)
(1)
(6)
88
13
101
77
-
-
1,016
1,047
787
-
-
812
14
48
Profit/(loss) on disposals from continuing operations
(24)
(229)
(173)
Discontinued operations
(Loss)/profit on disposals from discontinued operations (note 3)
Total Group profit/(loss) on disposals
-
(24)
(5)
(234)
1,844
1,671
-
-
-
-
-
-
(32)
(33)
-
-
-
95
-
95
128
-
-
33
-
33
-
-
-
124
-
124
164
-
-
40
3
43
-
-
-
-
-
-
-
67
-
67
119
-
-
52
4
56
Net cash inflow arising on disposal
Continuing operations
Proceeds from disposals from continuing operations
Less: cash and cash equivalents disposed
Less: deferred proceeds arising on disposal (note 21) (i)
77
(7)
787
(50)
(14)
(302)
Less: investment and loan to associate in lieu of cash proceeds (ii)
Net cash inflow arising on disposal from continuing operations
Discontinued operations
Net cash inflow arising on disposal from discontinued operations
Total Group net cash inflow arising on disposal
-
56
-
56
812
(70)
(12)
(99)
631
128
164
119
-
-
-
-
-
-
-
-
-
128
164
119
-
435
1,743
2,178
2,840
3,471
-
128
1
165
7
126
-
184
1,744
2,343
2,847
3,597
(i) On 31 December 2019, CRH completed the sale of the Group’s 50% stake in its joint venture in India, My Home Industries Limited (MHIL), for deferred proceeds
of $0.3 billion which will be received in several agreed tranches.
For the purposes of compliance with Indian law requirements, CRH is obliged to retain a minority shareholding and associated minority board representation in
MHIL both of which will further reduce as the tranches are completed. The Group no longer has any rights to share in the profit/loss of MHIL or to receive any
dividends. CRH has determined that MHIL has ceased to be a joint venture or an associate as the Group is no longer exposed to variability of returns from the
performance of MHIL and does not have significant influence (as defined under IAS 28 Interests in Associates and Joint Ventures ) over MHIL. With the other
partners acting in concert to exercise control, CRH effectively retains only protective voting rights in defined limited circumstances. Accordingly, the Group has
discontinued the use of the equity method of accounting for its interest in MHIL from 31 December 2019. The fair value of the retained interest in MHIL is recorded
as a financial asset within Other Receivables as it represents a contractual right to receive cash.
(ii)
In 2018, as part of the divestment of our DIY business in Belgium and the Netherlands we acquired an equity stake of 22.78% in, and advanced a loan of
$58 million to the purchaser, Intergamma, which was repaid in 2019.
7
29
-
50
93
(1)
(44)
(86)
(3)
(2)
-
877
263
792
70
152
(2)
-
(2)
(8)
-
1,002
112
1,140
1,114
951
-
-
931
14
48
(189)
(121)
(2)
(191)
1,848
1,727
951
(50)
(302)
-
599
931
(70)
(12)
(99)
750
(3)
(1)
(6)
183
13
196
205
-
-
9
-
9
205
(7)
(14)
-
184
2020 Annual Report and Form 20-F
7. Employment
Continuing operations
The average number of employees is as follows:
Americas Materials
Europe Materials
Building Products
Total Group
Year ended 31 December
2020
27,412
26,785
22,902
77,099
2019
28,576
27,238
24,437
80,251
2018
27,272
27,218
26,399
80,889
The average number of employees in 2019 and 2018, including discontinued operations, was 86,951 and 89,831 respectively.
Employment costs charged in the Consolidated Income Statement for continuing operations are analysed as follows:
155
Wages and salaries
Social welfare costs
Redundancy, healthcare and other employment benefit costs
Share-based payment expense (note 9)
Total retirement benefits expense (note 30)
Total (i)
Total charge analysed between:
Cost of sales
Operating costs
Finance costs (net) - applicable to retirement benefit obligations (note 10)
Total
2020
$m
4,573
461
723
96
359
6,212
3,871
2,330
11
6,212
(i)
Employment costs in 2019 and 2018, including discontinued operations, are analysed as follows:
Wages and salaries
Social welfare costs
Redundancy, healthcare and other employment benefit costs
Share-based payment expense (note 9)
Total retirement benefits expense (note 30)
Total
2019
$m
4,604
473
653
83
341
6,154
3,880
2,259
15
6,154
4,988
544
676
86
369
6,663
2018
$m
4,536
480
638
77
317
6,048
3,726
2,310
12
6,048
4,991
564
686
79
350
6,670
8. Directors’ Emoluments and Interests
Directors’ emoluments (which are included in administrative expenses in note 4) and interests are presented in the Directors’
Remuneration Report on pages 74 to 99.
2020 Annual Report and Form 20-F 9. Share-based Payment Expense
Continuing operations
Performance Share Plans and Restricted Share Plan expense
Share option expense
Total share-based payment expense (i)
2020
$m
93
3
96
2019
$m
79
4
83
2018
$m
73
4
77
(i)
The total share-based payment expense in 2019 and 2018, including discontinued operations, amounted to $86 million and $79 million
respectively.
Share-based payment expense relates primarily to awards granted under the 2014 Performance Share Plan and the Group’s Savings-related Share Option Schemes.
The expense, which in 2019 and 2018 also includes charges in relation to the 2013 Restricted Share Plan, is reflected in operating costs in the Consolidated Income
Statement.
156
2014 Performance Share Plan
The structure of the 2014 Performance Share Plan is set out in the Directors’ Remuneration Report on page 90. An expense of $93 million was
recognised in 2020 (2019: $78 million; 2018: $72 million).
Details of awards granted under the 2014 Performance Share Plan
Granted in 2020
Granted in 2019
Granted in 2018
Number of shares
Share price at
date of award
Period to earliest
release date
Initial
award (i)
Net outstanding at
31 December 2020
€31.50
€29.44
€28.32
3 years
3 years
3 years
3,428,021
3,688,027
3,863,433
3,357,421
3,470,729
3,508,468
(i) Numbers represent the initial awards including those granted to employees of Europe Distribution in 2019 and 2018. The Remuneration
Committee has determined that dividend equivalents will accrue on awards under the 2014 Performance Share Plan. Subject to
satisfaction of the applicable performance criteria, such dividend equivalents will be released to participants in the form of additional
shares on vesting.
25% of each award made in 2020 and 2019 is
subject to TSR performance measured against a
tailored peer group; 25% is subject to a RONA
metric; with the remaining 50% subject to a
cumulative cashflow metric (2018: 50% of each
award is subject to a TSR measure, with 25%
being measured against a tailored sector peer
group and 25% against the FTSE All-World
Construction & Materials Index. The other 50% of
each award is subject to a cumulative cashflow
metric). Further details are set out on page 90 in
the Directors’ Remuneration Report.
The fair values assigned to the portion of awards
which are subject to TSR performance against
peers and, in the case of 2018, the index, was
€18.52 (2019: €18.59; 2018: €13.52). The fair
value of these awards was calculated using a TSR
pricing model taking account of peer group TSR,
volatilities and correlations together with the
following assumptions:
Risk-free interest rate (%)
Expected volatility (%)
2020
(0.61)
22.1
2019
(0.37)
23.2
2018
(0.43)
27.4
The expected volatility was determined using a historical sample of daily CRH share prices.
The fair value of (i) the portion of awards subject to cash flow performance; (ii) from 2019, the portion of awards subject to a RONA metric; and (iii) the awards with no
performance conditions (which are subject to a one or three-year service period) was €31.50 (2019: €29.44; 2018: €28.32). The fair value was calculated using the
closing CRH share price at the date the award was granted.
2020 Annual Report and Form 20-F
Share Option Schemes
The 2010 Share Option Scheme was replaced in 2014 by the 2014 Performance Share Plan, and accordingly no options have been granted since 2013.
Details of movement and options outstanding under Share Option Schemes (excluding Savings-related Share Option Schemes)
Outstanding at beginning of year
Exercised (i)
Lapsed
Outstanding at end of year (ii)
Exercisable at end of year
Weighted average
exercise price
€16.19
€16.19
€16.19
€16.19
€16.19
Number of
options
2020
278,349
(77,748)
(3,348)
197,253
197,253
Weighted average
exercise price
€16.48
€16.65
€16.19
€16.19
€16.19
Number of
options
2019
800,770
(520,115)
(2,306)
278,349
278,349
Weighted average
exercise price
€17.96
€19.82
€17.36
€16.48
€16.48
Number of
options
2018
1,441,779
(634,994)
(6,015)
157
800,770
800,770
(i)
The weighted average share price at the date of exercise of these options was €31.70 (2019: €29.10; 2018: €27.90).
(ii) All options granted have a life of ten years.
Weighted average remaining contractual life for the share options outstanding
at 31 December (years)
2020
2019
2.30
3.30
2018
2.57
euro-denominated options outstanding at end of year (number)
Exercise price/range of exercise prices (€)
197,253
16.19
278,349
796,850
16.19 16.19-17.30
Pound Sterling-denominated options outstanding at end of year (number)
Exercise price (Stg£)
-
-
-
-
3,920
15.30
2010 Savings-related Share Option Schemes
The Group operates Savings-related Share Option Schemes. Participants may save up to €500/Stg£500 per month from their net salaries for a fixed term of
three or five years and at the end of the savings period they have the option to buy CRH shares at a discount of up to 15% of the market price on the date of
invitation of each savings contract.
Details of options granted under the Savings-related Share Option Schemes
Weighted average
exercise price
Number of
options
2020
Weighted average
exercise price
Number of
options
2019
Weighted average
exercise price
Number of
options
2018
Outstanding at beginning of year
€23.67/Stg£20.17
1,508,862
€22.15/Stg£18.74
1,686,176
€21.50/Stg£18.05
1,556,299
Exercised (i)
Lapsed
Granted (ii)
Outstanding at end of year
Exercisable at end of year
€23.21/Stg£22.37
€23.25/Stg£21.54
€0.00/Stg£0.00
(178,773)
(156,582)
€19.09/Stg£16.20
€23.49/Stg£20.85
(627,034)
(207,070)
€19.00/Stg£15.26
€24.62/Stg£20.75
-
€24.24/Stg£20.11
656,790
€23.39/Stg£20.83
(161,950)
(209,264)
501,091
€23.83/Stg£19.69
1,173,507
€23.67/Stg£20.17
1,508,862
€22.15/Stg£18.74
1,686,176
€24.66/Stg£24.51
16,528
€18.88/Stg£15.89
13,065
€18.75/Stg£15.54
14,059
(i)
The weighted average share price at the date of exercise of these options was €31.70 (2019: €28.52; 2018: €29.54).
(ii) No options over CRH plc’s Ordinary Shares were granted to employees in 2020 (2019: 556,493 share options in April 2019 and 100,297 share options in May
2019; 2018: 501,091 share options in April 2018). In 2019, this figure comprises options over 518,944 (2018: 379,253) shares and 137,846 (2018: 121,838)
shares which are normally exercisable within a period of six months after the third or the fifth anniversary of the contract, whichever is applicable. The exercise
price at which the options are granted under the scheme represents a discount of 15% to the market price on the date of invitation of each savings contract.
2020 Annual Report and Form 20-F 9. Share-based Payment Expense - continued
Continuing operations
Weighted average remaining contractual life for the share options outstanding
at 31 December (years)
2020
1.14
2019
1.87
2018
1.50
euro-denominated options outstanding at end of year (number)
Range of exercise prices (€)
214,826
20.83-27.86
290,627
17.67-27.86
304,713
14.15-27.86
Pound Sterling-denominated options outstanding at end of year (number)
Range of exercise prices (Stg£)
958,681
16.16-24.51
1,218,235
14.94-24.51
1,381,463
14.94-24.51
The weighted fair values assigned to options issued under the Savings-related Share Option Schemes, which were computed in accordance with the trinomial
valuation methodology, were as follows:
158
Granted in 2019 (April)
Granted in 2019 (May)
Granted in 2018
The fair value of these options were determined using the following assumptions:
3-year
5-year
€7.55
€6.67
€5.38
€7.98
€7.19
€5.88
Weighted average exercise price (€)
Risk free interest rate (%)
Expected dividend payments over the expected life (€)
Expected volatility (%)
Expected life in years
2019
2018
3-year
5-year
3-year
5-year
April
23.30
(0.56)
2.34
19.6
3
May
24.24
(0.58)
2.34
20.0
3
April
23.30
(0.40)
4.06
21.1
5
May
24.24
(0.41)
4.06
21.3
5
April
23.39
(0.44)
2.21
20.0
3
April
23.39
(0.06)
3.83
20.5
5
The expected volatility was determined using a historical sample of 37 month-end CRH share prices in respect of the three-year savings-related share options and 61
month-end share prices in respect of the five-year savings-related share options. The expected lives of the options are based on historical data and are therefore not
necessarily indicative of exercise patterns that may materialise.
Other than the assumptions listed above, no other features of options grants were factored into the determination of fair value.
The terms of the options issued under the Savings-related Share Option Schemes do not contain any market conditions within the meaning of IFRS 2 Share-based
Payment.
2020 Annual Report and Form 20-F
10. Finance Costs and Finance Income
Continuing operations
2020
$m
2019
$m
2018
$m
Finance costs
Interest payable on borrowings
Net cost on interest rate and currency swaps
Mark-to-market of derivatives and related fixed rate debt:
- interest rate swaps (i)
- currency swaps and forward contracts
- fixed rate debt (i)
Net loss on interest rate swaps not designated as hedges
Net loss on non-derivative financial instruments
Net finance cost on gross debt including related derivatives
Finance income
Interest receivable on loans to joint ventures and associates
Interest receivable on cash and cash equivalents and other
Finance income
Finance costs less income
Other financial expense
Unwinding of discount element of lease liabilities (note 22)
Unwinding of discount element of provisions for liabilities (note 28)
Unwinding of discount applicable to deferred and contingent acquisition consideration
Unwinding of discount applicable to deferred divestment proceeds
Unwinding of discount applicable to leased mineral reserves
Pension-related finance cost (net) (note 30)
Net other financial expense
Total net finance costs (ii)
381
2
(97)
2
80
-
21
389
-
-
-
389
68
21
21
(24)
4
11
101
490
374
15
(72)
2
68
-
-
387
(5)
(17)
(22)
365
69
25
16
-
-
15
125
490
393
9
15
(5)
(19)
6
-
399
(4)
(35)
(39)
360
-
24
18
-
-
12
54
414
(i)
The Group uses interest rate swaps to convert fixed rate debt to floating rate. Fixed rate debt, which has been converted to floating rate through the use of
interest rate swaps, is stated in the Consolidated Balance Sheet at adjusted value to reflect movements in underlying fixed rates. The movement on this
adjustment, together with the offsetting movement in the fair value of the related interest rate swaps, is included in finance costs in each reporting period.
(ii) Net finance costs in 2019 and 2018, including discontinued operations, amounted to $498 million and $414 million respectively.
159
2020 Annual Report and Form 20-F 11. Share of Equity Accounted Investments’ (Loss)/Profit
Continuing operations
The Group’s share of joint ventures’ and associates’ result after tax is equity accounted and is presented as a single line item in the Consolidated Income Statement; it
is analysed as follows between the principal Consolidated Income Statement captions:
Group share of:
Revenue
160
EBITDA (as defined)*
Depreciation and amortisation
Impairment (i)
Operating (loss)/profit
Profit on disposals
(Loss)/profit before finance costs
Finance costs (net)
(Loss)/profit before tax
Income tax expense
(Loss)/profit after tax (ii)
Joint Ventures
2019
$m
2020
$m
2018
$m
446
38
(10)
-
28
-
28
(6)
22
-
22
710
78
(27)
-
51
-
51
-
51
(5)
46
713
60
(26)
-
34
-
34
1
35
(1)
34
2020
$m
742
88
(53)
(154)
(119)
-
(119)
(17)
(136)
(4)
(140)
Associates
2019
$m
2018
$m
2020
$m
Total
2019
$m
2018
$m
689
75
(39)
-
36
-
36
(13)
23
(2)
21
712
74
(40)
-
34
4
38
(11)
27
(4)
23
1,188
1,399
1,425
126
(63)
(154)
(91)
-
(91)
(23)
(114)
(4)
(118)
153
(66)
-
87
-
87
(13)
74
(7)
67
134
(66)
-
68
4
72
(10)
62
(5)
57
An analysis of the result after tax by operating segment is presented in note 2. The aggregated balance sheet data (analysed between current and non-current assets
and liabilities) in respect of the Group’s investment in joint ventures and associates is presented in note 17.
(i)
The impairment charge of $154 million (2019: $nil million; 2018: $nil million), principally relates to the write-down of our equity accounted investment in China
which forms part of Europe Materials. Challenging market conditions in Northeast China affecting pricing, combined with an increase in the discount rate and the
economic impact of COVID-19, are the primary drivers of the impairment charge. The recoverable amount of this financial asset is its value-in-use calculated using
a real pre-tax discount rate of 9.2%.
(ii) Share of profit after tax in 2019 and 2018, including discontinued operations, amounted to $81 million and $71 million respectively.
12. Income Tax Expense
Recognised within the Consolidated Income Statement
Continuing operations
(a) Current tax
Republic of Ireland
Overseas
Total current tax expense
(b) Deferred tax
Origination and reversal of temporary differences:
Retirement benefit obligations
Share-based payment expense
Derivative financial instruments
Other items
Total deferred tax (income)/expense
Income tax reported in the Consolidated Income Statement
2020
$m
2019
$m
2018
$m
23
571
594
(9)
(3)
-
(83)
(95)
499
20
385
405
(1)
(6)
2
134
129
534
11
330
341
4
4
(2)
120
126
467
* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges and profit on disposals.
2020 Annual Report and Form 20-F
161
Recognised outside the Consolidated Income Statement
(a) Within the Consolidated Statement of Comprehensive Income:
Deferred tax - retirement benefit obligations
Deferred tax - cash flow hedges
(b) Within the Consolidated Statement of Changes in Equity:
Current tax
Current tax - share option exercises
Deferred tax
Deferred tax - share-based payment expense
Income tax recognised outside the Consolidated Income Statement
Reconciliation of applicable tax rate to effective tax rate
Continuing operations
Profit before tax ($m)
Tax charge expressed as a percentage of profit before tax (effective tax rate):
- current tax expense only
- total income tax expense (current and deferred)
2020
$m
2019
$m
2018
$m
11
-
11
2
(1)
1
12
(4)
(4)
(8)
5
6
11
3
(1)
5
4
2
(5)
(3)
1
1,664
2,181
1,968
35.7%
30.0%
18.6%
24.5%
17.3%
23.7%
The following table reconciles the applicable Republic of Ireland statutory tax rate to the effective tax rate (current and deferred) of the Group:
Irish corporation tax rate
Higher tax rates on overseas earnings
Other items
- arising from 2020 impairment
- other items (primarily comprising items not chargeable to tax/expenses not
deductible for tax)
Total effective tax rate
Other disclosures
12.5
10.6
8.4
(1.5)
30.0
12.5
12.8
-
(0.8)
24.5
12.5
11.8
-
(0.6)
23.7
Effective tax rate
The 2020 effective tax rate is 30.0% (2019: 24.5%;
2018: 23.7%). The impact of the 2020 impairment
charge on the effective tax rate is 8.4%.
Proposed dividends
There are no income tax consequences for the
Company in respect of dividends proposed prior to
issuance of the Consolidated Financial Statements
and for which a liability has not been recognised.
The tax charge associated with discontinued
operations in 2019 and 2018 is recognised
separately in “Profit after tax for the financial year
from discontinued operations”. See note 3 for
further details.
Changes in tax rates
The total tax charge in future periods will be
affected by any changes to the tax rates in force in
the countries in which the Group operates.
2020 Annual Report and Form 20-F 13. Dividends
The dividends paid and proposed in respect of each class of share capital are as follows:
Dividends to shareholders
Preference
5% Cumulative Preference Shares $3,592 (2019: $3,543; 2018: $3,802)
7% ‘A’ Cumulative Preference Shares $87,464 (2019: $86,149; 2018: $92,116)
Equity
162
Final - paid 70.00c per Ordinary Share (2019: 59.20c; 2018: 60.00c) (i)
Interim - paid 22.00c per Ordinary Share (2019: 22.00c; 2018: 22.80c) (i)
Total
Reconciliation to Consolidated Statement of Cash Flows
Dividends to shareholders
Translation adjustment (ii)
Less: issue of scrip shares in lieu of cash dividends (note 31)
Dividends paid to equity holders of the Company
Dividends paid by subsidiaries to non-controlling interests
Total dividends paid
Dividends proposed (memorandum disclosure)
Equity
2020
$m
2019
$m
2018
$m
-
-
537
173
710
710
(3)
-
707
15
722
-
-
477
175
652
652
-
-
652
11
663
-
-
489
191
680
680
-
(61)
619
14
633
Final 2020 - proposed 93.00c per Ordinary Share (2019: 70.00c; 2018: 59.20c) (i)
730
550
481
(i)
(ii)
Interim and final dividends per share declared previously in euro have been translated to US Dollar using the dividend record date exchange rate.
Translation adjustment arising from US Dollar declared dividends paid in non-US Dollar currencies.
14. Earnings per Ordinary Share
The computation of basic and diluted earnings per Ordinary Share is set out below:
Numerator computations
Group profit for the financial year
Profit attributable to non-controlling interests
Profit attributable to equity holders of the Company
Preference dividends
Profit attributable to ordinary equity holders of the Company - numerator for basic/diluted
earnings per Ordinary Share
Profit after tax for the financial year from discontinued operations - attributable to equity holders
of the Company
Profit attributable to ordinary equity holders of the Company - numerator for basic/diluted
earnings per Ordinary Share from continuing operations
Denominator computations
Weighted average number of Ordinary Shares (millions) outstanding for the year (i)
Effect of dilutive potential Ordinary Shares (employee share options) (millions) (i) (ii)
Denominator for diluted earnings per Ordinary Share
Basic earnings per Ordinary Share
Diluted earnings per Ordinary Share
Basic earnings per Ordinary Share from continuing operations
Diluted earnings per Ordinary Share from continuing operations
2020 Annual Report and Form 20-F
2020
$m
1,165
(43)
1,122
-
2019
$m
1,738
(21)
1,717
-
2018
$m
2,889
(5)
2,884
-
1,122
1,717
2,884
163
-
90
1,387
1,122
1,627
1,497
785.1
6.0
791.1
142.9c
141.8c
142.9c
141.8c
801.3
6.4
807.7
214.3c
212.6c
203.0c
201.4c
832.4
4.2
836.6
346.5c
344.7c
179.8c
178.9c
(i)
The weighted average number of Ordinary Shares included in the computation of basic and diluted earnings per Ordinary Share has been adjusted to exclude
shares held by the Employee Benefit Trust and Ordinary Shares repurchased and held by the Company (CRH plc) as Treasury Shares given that these shares do
not rank for dividend. The number of Ordinary Shares so held at the balance sheet date is detailed in note 31.
(ii) Contingently issuable Ordinary Shares (totalling 4,053,377 at 31 December 2020, 3,618,278 at 31 December 2019 and 7,274,916 at 31 December 2018) are
excluded from the computation of diluted earnings per Ordinary Share where the conditions governing exercisability have not been satisfied as at the end of the
reporting period or they are antidilutive for the periods presented.
2020 Annual Report and Form 20-F 15. Property, Plant and Equipment
At 31 December 2020
Owned
Cost/deemed cost
Accumulated depreciation (and impairment charges)
Net carrying amount
164
At 1 January 2020, net carrying amount
Translation adjustment
Reclassifications
Transfer from leased assets (note 22)
Additions at cost
Additions to leased mineral reserves (note 21) (i)
Arising on acquisition (note 32)
Disposals at net carrying amount
Depreciation charge for year
Impairment charge for year (ii)
At 31 December 2020, net carrying amount
Mineral-
bearing land
$m
Land and
buildings
$m
Plant and
machinery
$m
Assets in
course of
construction
$m
Total
$m
4,874
(1,176)
3,698
5,928
(1,847)
4,081
19,400
(9,984)
9,416
3,687
82
52
-
28
14
7
(8)
(108)
(56)
3,698
4,027
109
76
5
42
-
42
(57)
(155)
(8)
4,081
9,490
232
440
2
512
-
72
(60)
(1,082)
(190)
9,416
612
(40)
572
30,814
(13,047)
17,767
718
13
(572)
-
414
-
1
(2)
-
-
17,922
436
(4)
7
996
14
122
(127)
(1,345)
(254)
572
17,767
Land and
buildings
$m
Plant and
machinery
$m
Other
$m
Leased right-of-use assets (iv)
At 31 December 2020, net carrying amount (note 22)
1,151
342
57
1,550
Total property, plant and equipment
19,317
The equivalent disclosure for the prior year is as follows:
At 31 December 2019
Owned
Cost/deemed cost
Accumulated depreciation (and impairment charges)
Net carrying amount
At 1 January 2019, net carrying amount
Effect of adopting IFRS 16
Translation adjustment
Reclassifications
Transfer (to)/from leased assets (note 22)
Additions at cost
Additions to leased mineral reserves (note 21) (i)
Arising on acquisition (note 32)
Disposals at net carrying amount
Depreciation charge for year (iii)
Impairment charge for year (ii)
At 31 December 2019, net carrying amount
Mineral-
bearing land
$m
Land and
buildings
$m
Plant and
machinery
$m
Assets in
course of
construction
$m
Total
$m
4,670
(983)
3,687
3,563
-
8
26
-
43
96
66
(2)
(113)
-
3,687
5,653
(1,626)
4,027
4,419
(8)
13
87
(5)
37
-
105
(450)
(168)
(3)
4,027
18,292
(8,802)
9,490
9,384
(22)
52
499
19
660
-
106
(135)
(1,067)
(6)
9,490
Land and
buildings
$m
Plant and
machinery
$m
757
(39)
718
29,372
(11,450)
17,922
18,046
(26)
82
-
14
1,374
96
284
(591)
(1,348)
(9)
17,922
680
4
9
(612)
-
634
-
7
(4)
-
-
718
Other
$m
Leased right-of-use assets (iv)
At 31 December 2019, net carrying amount (note 22)
1,221
378
53
1,652
Total property, plant and equipment
19,574
2020 Annual Report and Form 20-F
Owned
At 1 January 2019
Cost/deemed cost
Accumulated depreciation (and impairment charges)
Net carrying amount
Mineral-
bearing land
$m
Land and
buildings
$m
Plant and
machinery
$m
Assets in
course of
construction
$m
Total
$m
4,419
(856)
3,563
6,269
(1,850)
4,419
17,787
(8,403)
9,384
720
(40)
680
29,195
(11,149)
18,046
(i)
(ii)
Additions relating to leased mineral reserves which fall outside the scope of IFRS 16.
The combined impairment charge in notes 15 and 22 of $263 million (2019: $9 million; 2018: $43 million) principally relates to the write-down of specific assets
relating to our UK business within our Europe Materials segment following a strategic review of its operational footprint, together with impairments booked in
respect of two CGUs in the same segment. An extended period of lower than anticipated demand and reduced price growth resulting from the combined
economic impacts of Brexit and COVID-19 were the primary drivers of the impairment charge. The recoverable amount of these assets is their value-in-use of
$185 million and is calculated using real pre-tax discount rates ranging from 7.3% to 7.7%. The charge in 2019 and 2018 includes $1 million and $nil million
respectively, relating to discontinued operations.
165
(iii) The depreciation charge in 2019 and 2018 includes $37 million and $48 million respectively, relating to discontinued operations.
(iv) See note 22 for more detailed information on right-of-use assets and lease liabilities of the Group under IFRS 16.
Future purchase commitments for property, plant and equipment
Contracted for but not provided in the financial statements
Authorised by the Directors but not contracted for
2020
$m
423
307
2019
$m
419
399
2020 Annual Report and Form 20-F 16. Intangible Assets
At 31 December 2020
Cost/deemed cost
Accumulated amortisation (and impairment charges)
Net carrying amount
166
At 1 January 2020, net carrying amount
Translation adjustment
Reclassifications
Arising on acquisition (note 32)
Disposals
Amortisation charge for year (ii)
Impairment charge for year (iii)
At 31 December 2020, net carrying amount
The equivalent disclosure for the prior year is as follows:
At 31 December 2019
Cost/deemed cost
Accumulated amortisation (and impairment charges)
Net carrying amount
At 1 January 2019, net carrying amount
Translation adjustment
Arising on acquisition (note 32)
Disposals
Amortisation charge for year (ii)
At 31 December 2019, net carrying amount
At 1 January 2019
Cost/deemed cost
Accumulated amortisation (and impairment charges)
Net carrying amount
Other intangible assets
Goodwill
$m
Marketing-
related
$m
Customer-
related (i)
$m
Contract-
based
$m
Total
$m
9,790
(758)
9,032
9,093
198
-
157
(6)
-
(410)
9,032
9,413
(320)
9,093
9,294
51
310
(562)
-
9,093
9,622
(328)
9,294
172
(85)
87
95
1
-
2
-
(11)
-
87
167
(72)
95
87
-
19
(1)
(10)
95
158
(71)
87
601
(361)
240
265
2
-
29
-
(56)
-
240
575
(310)
265
248
1
84
(17)
(51)
265
678
(430)
248
75
(61)
14
10,638
(1,265)
9,373
22
-
(5)
-
-
(3)
-
14
9,475
201
(5)
188
(6)
(70)
(410)
9,373
87
(65)
22
10,242
(767)
9,475
27
-
-
-
(5)
22
9,656
52
413
(580)
(66)
9,475
91
(64)
27
10,549
(893)
9,656
(i)
(ii)
The customer-related intangible assets relate predominantly to non-contractual customer relationships.
The amortisation charge primarily relates to customer-related intangible assets. The charge in 2019 and 2018 includes $2 million and $2 million respectively,
relating to discontinued operations.
(iii) Further details on note (iii) are set out overleaf.
2020 Annual Report and Form 20-F
Annual goodwill testing
The net book value of goodwill capitalised under
previous GAAP (Irish GAAP) as at the transition date
to IFRS (1 January 2004) has been treated as
deemed cost. Goodwill arising on acquisition since
that date is capitalised at cost.
Cash-generating units
Goodwill acquired through business combination
activity has been allocated to CGUs that are
expected to benefit from synergies in that
combination. The CGUs represent the lowest level
within the Group at which the associated goodwill is
monitored for internal management purposes, and
are not larger than the operating segments
determined in accordance with IFRS 8. A total of
22 (2019: 25) CGUs have been identified and
these are analysed between the three business
segments below. The decrease in the number of
CGUs in 2020 relates to organisational changes in
our Americas Materials and Business Products
segments. All businesses within the various CGUs
exhibit similar and/or consistent profit margin and
asset intensity characteristics. Assets, liabilities,
deferred tax and goodwill have been assigned to
the CGUs on a reasonable and consistent basis.
Number of
cash-generating units
2020
2019
5
16
1
22
7
16
2
25
Goodwill
2020
$m
4,057
2,402
2,573
9,032
2019
$m
3,997
2,645
2,451
9,093
Americas Materials
Europe Materials
Building Products
Total Group
167
Impairment testing methodology and results
Goodwill is subject to impairment testing on an
annual basis. The recoverable amount of 22 CGUs
is determined based on a value-in-use computation,
using Level 3 inputs in accordance with the fair
value hierarchy.
Among other macroeconomic considerations the
impact of the COVID-19 pandemic has been
factored into our impairment testing. The cash flow
forecasts are primarily based on a five-year strategic
plan document formally approved by the Board of
Directors and specifically exclude the impact of
future development activity. To align with the
Group’s acquisition modelling methodology, these
cash flows are projected forward for an additional
five years to determine the basis for an annuity-
based terminal value. As in prior years, the terminal
value is based on a 20-year annuity, with the
exception of certain long-lived cement assets,
where an assumption of a 30-year annuity has been
used. Projected cash flows beyond the initial
evaluation period have been extrapolated using real
growth rates ranging from 1.6% in the Americas,
0.7% to 2.0% in Europe and 3.1% in Asia.
Key sources of estimation uncertainty
Such real growth rates do not exceed the long-term
average growth rates for the countries in which each
CGU operates. The value-in-use represents the
present value of the future cash flows, including the
terminal value, discounted at a rate appropriate to
each CGU. The real pre-tax discount rates used
range from 6.5% to 8.6% (2019: 6.6% to 8.7%);
these rates are in line with the Group’s estimated
weighted average cost of capital, arrived at using the
Capital Asset Pricing Model.
The 2020 annual goodwill impairment testing
process has resulted in our UK CGU in Europe
Materials recording an impairment charge of
$410 million (2019: $nil million). Our UK business
has experienced a sustained period of economic
disruption following the Brexit referendum in 2016,
the impact of the COVID-19 pandemic and the
political uncertainty that presented in the second
half of 2020 prior to the UK’s formal withdrawal
from the EU. When combined, these have had a
significant impact on the growth prospects for this
business, resulting in much slower than previously
anticipated market recovery leading to a significant
reduction in the recoverable amount of this CGU
compared with prior years. The assumptions
underlying the value-in-use model projections
result in a present value (using a real pre-tax
discount rate of 7.6%, 2019: 6.8%) of
$1,782 million and a related goodwill impairment
being recorded of $410 million. A sensitivity
analysis, which represents management’s
assessment of the economic environment in which
this CGU operates is presented below:
Additional impairment that would arise as a result of:
EBITDA (as defined)* margin
Reduction in net cash flow
Pre-tax discount rate
Decrease by 0.5%
Decrease by 5.0%
Increase by 0.5%
UK CGU
2020
$m
69
85
97
The cash flows have been arrived at taking into
account the Group’s strong financial position, its
established history of earnings and cash flow
generation and the nature of the building materials
industry, where product obsolescence is very low.
However, expected future cash flows are
inherently uncertain and are therefore liable to
material change over time. The key assumptions
employed in arriving at the estimates of future
cash flows factored into impairment testing are
subjective and include projected EBITDA (as
defined)* margins, net cash flows, discount rates
used and the duration of the discounted cash flow
model.
Significant under-performance in any of CRH’s
major CGUs may give rise to a material write-
down of goodwill which would have a substantial
impact on the Group’s income and equity,
however given the excess headroom on the
models the likelihood of this happening is not
considered reasonably possible.
* 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.
2020 Annual Report and Form 20-F 16. Intangible Assets - continued
Significant goodwill amounts
The goodwill allocated to the Americas Cement and
AMAT South (Americas Materials segment) and the
Building Products (Building Products segment)
CGUs account for between 11% and 29% of the
total carrying amount shown on page 166. The
goodwill allocated to each of the remaining CGUs is
less than 10% of the total carrying value in all other
cases. The additional disclosures required for the
three CGUs with significant goodwill are as follows:
Americas Cement (i)
2020
2019
AMAT South
2020
Building Products (i)
2020
2019
Goodwill allocated to the cash-generating unit at balance sheet date
$2,155m
$1,629m
Discount rate applied to the cash flow projections (real pre-tax)
168
Average EBITDA (as defined)* margin over the initial 5-year period
Value-in-use (present value of future cash flows)
Excess of value-in-use over carrying amount
Long-term growth rates
7.7%
48.5%
$8,103m
$3,238m
1.6%
7.6%
39.1%
$8,051m
$4,041m
1.8%
$998m
8.0%
17.8%
$2,573m
$2,115m
8.0%
18.3%
8.4%
18.3%
$5,140m
$12,977m
$9,802m
$2,492m
$7,653m
$5,654m
1.6%
1.6%
1.8%
(i)
2019 disclosures represent the prior year CGU classification of Americas Cement and Americas Building Products.
Cement, AMAT South or Building Products CGUs
are considered to be warranted.
The key assumptions and methodology used in
respect of these three CGUs are consistent with
those described above. The values applied to
each of the key estimates and assumptions are
specific to the individual CGUs and were derived
from a combination of internal and external factors
based on historical experience and took into
account the cash flows specifically associated
with these businesses. The cash flows and
annuity-based terminal value were projected in line
with the methodology disclosed above.
The Americas Cement, AMAT South and Building
Products CGUs are not included in the CGUs
referred to in the ‘Sensitivity analysis’ section
below. Given the magnitude of the excess of
value-in-use over carrying amount, and our belief
that the key assumptions are reasonable,
management believes that it is not reasonably
possible that there would be a change in the key
assumptions such that the carrying amount would
exceed the value-in-use. Consequently no further
disclosures relating to sensitivity of the
value-in-use computations for the Americas
Sensitivity analysis
Sensitivity analysis has been performed and
results in additional disclosures in respect of three
of the total 22 CGUs of which one was also
disclosed as sensitive in the prior year. The key
assumptions, methodology used and values
applied to each of the key assumptions for these
CGUs are in line with those outlined above (a
30-year annuity period has been used). The three
CGUs have aggregate goodwill of $915 million at
the date of testing. The table below identifies the
Reduction in EBITDA (as defined)* margin
Reduction in profit before tax
Reduction in net cash flow
Increase in pre-tax discount rate
The average EBITDA (as defined)* margin for the
aggregate of these three CGUs over the initial five-
year period was 22.5%. The value-in-use (being
the present value of the future net cash flows) was
$2,865 million and the carrying amount was
amounts by which each of the following
assumptions may either decline or increase to
arrive at a zero excess of the present value of
future cash flows over the book value of net
assets in the three CGUs selected for sensitivity
analysis disclosures:
Three cash-generating units
1.5 to 3.7 percentage points
9.9% to 23.6%
8.7% to 21.3%
0.9 to 2.2 percentage points
$2,424 million, resulting in an excess of
value-in-use over carrying amounts.
* 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.
2020 Annual Report and Form 20-F
169
17. Financial Assets
Investments accounted for
using the equity method
(i.e. joint ventures and associates)
Share of net
assets
$m
Loans
$m
747
31
-
(10)
(6)
(118)
(35)
609
1,262
(23)
14
(548)
81
(39)
747
28
1
1
(13)
-
-
-
17
70
(1)
16
(57)
-
-
28
Total
$m
775
32
1
(23)
(6)
(118)
(35)
626
1,332
(24)
30
(605)
81
(39)
775
Other
$m
13
-
-
-
-
-
-
13
26
1
2
(16)
-
-
13
At 1 January 2020
Translation adjustment
Investments and advances
Disposals and repayments
Return of Share Capital
Share of loss after tax (i)
Dividends received
At 31 December 2020
The equivalent disclosure for the prior year is as follows:
At 1 January 2019
Translation adjustment
Investments and advances
Disposals and repayments
Share of profit after tax (ii)
Dividends received
At 31 December 2019
(i)
Includes an impairment charge of $154 million. Refer to note 11 for further details.
(ii) Share of profit after tax in 2019 includes $14 million relating to discontinued operations.
Summarised financial information for the Group’s investment in joint ventures and associates which are accounted for using the equity method is as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Net assets
Joint Ventures
Associates
Total
2020
$m
346
263
(309)
(204)
96
2019
$m
276
310
(184)
(285)
117
2020
$m
748
537
(225)
(547)
513
2019
$m
771
437
(102)
(476)
630
2020
$m
1,094
800
(534)
(751)
609
2019
$m
1,047
747
(286)
(761)
747
A listing of the principal equity accounted investments is contained on page 254.
2020 Annual Report and Form 20-F 18. Inventories
Raw materials
Work-in-progress (i)
Finished goods
Total inventories at the lower of cost and net realisable value
2020
$m
1,403
144
1,570
3,117
2019
$m
1,283
144
1,653
3,080
(i) Work-in-progress includes $9 million (2019: $3 million) in respect of the cumulative costs incurred, net of amounts
transferred to cost of sales under percentage-of-completion accounting, for construction contracts in progress at the
balance sheet date.
170
An analysis of the Group’s cost of sales expense is provided in note 4 to the financial statements.
Write-downs of inventories recognised as an expense within cost of sales amounted to $9 million (2019: $9 million; 2018: $12 million).
19. Trade and Other Receivables
Current
Trade receivables
Amounts receivable in respect of construction contracts (i)
Total trade receivables, gross
Loss allowance
Total trade receivables, net
Amounts receivable from equity accounted investments
Prepayments and other receivables (ii)
Total
Non-current
Other receivables (ii)
2020
$m
2,757
951
3,708
(140)
3,568
32
486
4,086
2019
$m
2,682
1,027
3,709
(133)
3,576
9
646
4,231
325
356
(i)
Includes unbilled revenue and retentions held by customers in respect of construction contracts at the balance sheet date amounting to $297 million and
$202 million respectively (2019: $278 million and $206 million respectively). The movements in these balances during the year was as follows:
At 1 January
Translation adjustment
Additional contract balances recognised
Invoiced in the period
Received from customers
Disposals
At 31 December
Unbilled revenue
2020
$m
278
7
238
(226)
-
-
297
2019
$m
281
5
354
(362)
-
-
278
Retentions
2020
$m
206
3
130
-
(137)
-
202
2019
$m
192
4
158
-
(144)
(4)
206
(ii) Principally comprised of prepayments and deferred divestment consideration.
Trade receivables, amounts receivable in respect of construction contracts and deferred divestment consideration are measured at amortised cost (less any expected
credit loss allowance) as the Group’s business model is to “hold to collect” contractual cash flows, and the cash flows arising from trade and other receivables are
solely payments of principal and interest. The carrying amount of trade receivables, amounts receivable in respect of construction contracts and deferred divestment
consideration closely approximate their fair value.
Valuation and qualifying accounts (expected credit loss allowance)
The movements in the expected credit loss allowance for receivables during the financial year were as follows:
At 1 January
Reclassified from held for sale
Translation adjustment
Disposed of during year
Written off during year
Arising on acquisition (note 32)
Net remeasurement of expected credit loss allowance
At 31 December
2020
$m
133
-
5
(4)
(23)
-
29
140
2019
$m
153
-
(1)
(34)
(29)
1
43
133
2018
$m
157
7
(6)
(4)
(35)
6
28
153
2020 Annual Report and Form 20-F
171
Given the common profile of CRH’s customers, how customer credit risk is managed at appropriate Group locations, and the breadth and scale of its international
operations, a disclosure of concentrations of credit risk by segment best enables users of financial statements to assess CRH’s credit risk exposure. The following
table sets out the gross carrying value of trade receivables and expected credit loss allowance by segment:
Trade receivables, gross
2019
$m
2020
$m
2018
$m
Expected credit loss
allowance
2019
$m
2020
$m
2018
$m
Americas Materials
Europe Materials
Building Products (i)
Total Group
(i)
Analysis of Building Products segment by geographic location:
Americas
Europe
Total
1,475
1,403
830
3,708
2020
$m
676
154
830
1,520
1,379
810
3,709
2019
$m
662
148
810
1,514
1,337
1,316
4,167
2018
$m
648
668
1,316
34
83
23
31
78
24
22
74
57
140
133
153
2020
$m
2019
$m
2018
$m
17
6
23
18
6
24
17
40
57
Customer credit risk is managed according to
established policies, procedures and controls.
Customer credit quality is assessed in line with
strict credit rating criteria and credit limits are
established where appropriate. Outstanding
customer balances are regularly monitored for
evidence of customer financial difficulties
including payment default, breach of contract etc.
Significant balances are reviewed individually
while smaller balances are grouped and
assessed collectively. Receivables balances are
in general unsecured and non-interest-bearing.
Customer credit risk arising in the context of the
Group’s receivables is not significant and the total
expected credit loss allowance for impairment of
trade receivables amounts to 3.8% of the
Group’s gross trade receivables (2019: 3.6%).
The Group considers the ageing of past due
receivables a key factor in assessing credit risk.
The trade receivables balances disclosed above
comprise a large number of customers spread
across the Group’s activities and geographies
with balances classified as “not past due”
representing 66% of the total gross trade
receivables balance at the balance sheet date
(2019: 65%).
Due to the global financial uncertainty arising from
the COVID-19 pandemic, consideration has been
given as to whether or not the future credit risk
on trade and other receivables has been elevated
for the year ended 31 December 2020. The
impact of the pandemic is not considered
material due to the Group’s strong record of cash
generation, good working capital management
practices and our assessment of the future
economic outlook. There have been no other
significant changes to the Group’s credit risk
parameters or to the composition of the Group’s
trade receivables portfolio during the financial
year.
The Group applies the simplified approach to
providing for expected credit losses (ECL)
permitted by IFRS 9 Financial Instruments, which
requires expected lifetime losses to be
recognised from initial recognition of the
receivables. Receivables such as those which
relate to bonded government contracts and
receivables which fall under credit insurance are
considered lower risk and would not attract a
material ECL. Considering the uncertain
economic outlook for the next 12 months, our
ECL allowance adequately represents the risk of
default on our receivables balances.
Trade receivables are written off when there is no
reasonable expectation of recovery, such as a
debtor failing to engage in a repayment plan with
the company. Where recoveries are made, these
are recognised in the Consolidated Income
Statement.
2020 Annual Report and Form 20-F 19. Trade and Other Receivables - continued
Aged analysis
The aged analysis of net trade receivables and amounts receivable in respect of construction contracts at the balance sheet date was as follows:
Not past due
Past due:
- less than 60 days
172
- 60 days or greater but less than 120 days
- 120 days or greater
Total trade receivables, net
Americas
Materials
2020
$m
Europe
Materials
2020
$m
Building
Products
2020
$m
Total
2020
$m
Americas
Materials
2019
$m
Europe
Materials
2019
$m
Building
Products
2019
$m
Total
2019
$m
956
958
523
2,437
909
969
526
2,404
396
65
24
1,441
310
32
20
1,320
198
59
27
807
904
156
71
3,568
441
92
47
1,489
270
42
20
1,301
154
75
31
786
865
209
98
3,576
Trade receivables and amounts receivable in respect of construction contracts are in general receivable within 90 days of the balance sheet date.
2020 Annual Report and Form 20-F
173
20. Trade and Other Payables
Current
Trade payables
Construction contract-related payables (i)
Deferred and contingent acquisition consideration (ii)
Accruals and other payables
Amounts payable to equity accounted investments
Total
Non-current
Other payables
Deferred and contingent acquisition consideration (ii)
Total
2020
$m
2,164
318
34
2,273
3
4,792
381
330
711
2019
$m
2,473
258
51
2,131
3
4,916
220
325
545
(i) Construction contract-related payables include billings in excess of revenue, together with advances received from
customers in respect of work to be performed under construction contracts and foreseeable losses thereon. $228 million
was recognised in the Consolidated Income Statement during 2020 which was included in the contract-related payables
balance at 31 December 2019. The movements in these balances during the year was as follows:
At 1 January
Translation adjustment
Additional contract balances recognised
Opening balances recognised as revenue
Disposals
At 31 December
Advances received
2020
$m
2019
$m
12
2
29
(12)
-
31
18
-
12
(18)
-
12
Billings in excess of
revenue
2020
$m
239
6
254
(216)
-
283
2019
$m
226
-
198
(177)
(8)
239
The carrying amounts of trade payables, construction contract-related payables and other payables approximate their fair
value largely due to the short-term maturities and nature of these instruments.
(ii)
The fair value of total contingent consideration is $301 million (2019: $278 million) (Level 3 in the fair value hierarchy), and
deferred consideration is $63 million (2019: $98 million). On an undiscounted basis, the corresponding future payments
relating to contingent consideration, for which the Group may be liable, ranges from $288 million to $444 million. This is
based on a range of estimated potential outcomes of the expected payment amounts primarily dependent on underlying
performance metrics as set out in the relevant agreements. The fair value of contingent consideration is arrived at through
discounting the expected payment to present value. Based on a reasonable possible change in assumptions, the fair value
ranges from $232 million to $359 million on a discounted basis. The movement in deferred and contingent consideration
during the financial year was as follows:
At 1 January
Translation adjustment
Arising on acquisitions and investments during year (note 32)
Changes in estimate
Disposals
Paid during year
Discount unwinding
At 31 December
2020
$m
376
1
7
13
-
(54)
21
364
2019
$m
388
-
20
5
(4)
(54)
21
376
2020 Annual Report and Form 20-F 21. Movement in Working Capital and
Provisions for Liabilities
At 1 January 2020
Translation adjustment
Arising on acquisition (note 32)
Disposals
Deferred and contingent acquisition consideration:
174
- arising on acquisitions during year (note 32)
- paid during year
Deferred divestment consideration:
- arising on disposals during year
- received during year
Interest accruals and discount unwinding
Reclassification
Additions to leased mineral reserves
(Decrease)/increase in working capital and provisions for liabilities
At 31 December 2020
The equivalent disclosure for the prior years is as follows:
At 1 January 2019
Effect of adopting IFRS 16
Translation adjustment
Arising on acquisition (note 32)
Disposals
Deferred and contingent acquisition consideration:
- arising on acquisitions during year (note 32)
- paid during year
Deferred proceeds arising on disposals during year
Interest accruals and discount unwinding
Additions to leased mineral reserves
Increase/(decrease) in working capital and provisions for liabilities
At 31 December 2019
At 1 January 2018
Reclassified from held for sale
Translation adjustment
Arising on acquisition (note 32)
Disposals
Deferred and contingent acquisition consideration:
- arising on acquisitions during year (note 32)
- paid during year
Deferred proceeds arising on disposals during year
Interest accruals and discount unwinding
Increase in working capital and provisions for liabilities
At 31 December 2018
Working Capital
Trade and
other
receivables
$m
Trade and
other
payables
$m
Provisions
for
liabilities
$m
Inventories
$m
3,080
4,587
(5,461)
(1,302)
71
23
(14)
-
-
-
-
-
20
-
(63)
3,117
107
47
(37)
-
-
14
(123)
4
(11)
-
(177)
4,411
-
2
65
3
9
73
(581)
(747)
(150)
(21)
17
(7)
54
-
-
(24)
(22)
(14)
125
(43)
-
5
-
-
-
-
(21)
-
-
13
(8)
(82)
570
(20)
54
-
(1)
(96)
(74)
1
4
(7)
-
-
-
-
(25)
-
(31)
Total
$m
904
(15)
49
(29)
(7)
54
14
(123)
(41)
(13)
(14)
17
7
49
(758)
(20)
54
302
(38)
(96)
71
904
813
353
(10)
309
(81)
(196)
(5,503)
(1,442)
583
3,505
4,872
(5,817)
(1,244)
1,316
-
-
-
-
-
89
3,080
3,257
319
(95)
297
(482)
-
-
-
-
209
3,505
-
-
302
(12)
-
87
401
(151)
373
(467)
-
-
12
(1)
164
4,872
4,587
(5,461)
(1,302)
4,541
(5,709)
(1,276)
(367)
192
(265)
350
(127)
64
-
(25)
70
-
44
(96)
4
(595)
-
-
-
(24)
104
(127)
64
12
(50)
547
(5,817)
(1,244)
1,316
22. Leases
A. IFRS 16 Leases disclosures
Leased right-of-use assets
At 31 December 2020
Cost
Accumulated depreciation (and impairment charges)
Net carrying amount
At 1 January 2020, net carrying amount
Translation adjustment
Transfer to owned assets
Additions at cost
Arising on acquisition (note 32)
Disposals at net carrying amount
Adjustment as a result of remeasurement of lease liability
Depreciation charge for year
Impairment charge for year
At 31 December 2020, net carrying amount
The equivalent disclosure for the prior year is as follows:
At 31 December 2019
Cost
Accumulated depreciation
Net carrying amount
At 1 January 2019, net carrying amount
Effect of adopting IFRS 16
Translation adjustment
Transfer from/(to) owned assets
Additions at cost
Arising on acquisition (note 32)
Disposals at net carrying amount
Adjustment as a result of remeasurement of lease liability
Depreciation charge for year (i)
At 31 December 2019, net carrying amount
2020 Annual Report and Form 20-F
175
Land and
buildings
$m
Plant and
machinery
$m
Other
$m
1,419
(268)
1,151
1,221
28
(5)
59
12
(32)
9
(132)
(9)
1,151
1,354
(133)
1,221
-
1,695
(4)
5
53
70
(430)
25
(193)
1,221
553
(211)
342
378
11
(2)
82
-
(11)
7
(123)
-
342
508
(130)
378
-
486
2
(19)
97
4
(52)
9
(149)
378
97
(40)
57
53
2
-
25
-
(2)
3
(24)
-
57
75
(22)
53
-
65
-
-
32
-
(17)
4
(31)
53
Total
$m
2,069
(519)
1,550
1,652
41
(7)
166
12
(45)
19
(279)
(9)
1,550
1,937
(285)
1,652
-
2,246
(2)
(14)
182
74
(499)
38
(373)
1,652
(i)
The depreciation charge in 2019 includes $71 million relating to discontinued operations.
2020 Annual Report and Form 20-F 22. Leases - continued
Lease liabilities
At 1 January 2020
Translation adjustment
Reclassifications
Addition of right-of-use assets
Arising on acquisition (note 32)
Disposals
176
Remeasurements
Payments
Discount unwinding
At 31 December 2020
The equivalent disclosure for the prior year is as follows:
At 1 January 2019
Effect of adopting IFRS 16
Translation adjustment
Addition of right-of-use assets
Arising on acquisition (note 32)
Disposals
Remeasurements
Payments
Discount unwinding (ii)
At 31 December 2019
Land and
buildings
$m
1,263
30
(6)
59
12
(31)
9
(162)
54
1,228
-
1,711
(4)
53
70
(431)
25
(222)
61
1,263
Plant and
machinery
$m
Other
$m
382
12
5
82
-
(11)
7
(139)
12
350
-
487
2
97
1
(51)
9
(177)
14
382
52
1
1
25
-
(2)
3
(25)
2
57
-
65
-
32
-
(17)
4
(34)
2
52
Total
$m
1,697
43
-
166
12
(44)
19
(326)
68
1,635
-
2,263
(2)
182
71
(499)
38
(433)
77
1,697
(ii) Discount unwinding in 2019 includes $8 million relating to discontinued operations.
The table below shows a maturity analysis of the discounted and undiscounted lease liability arising from the Group’s leasing activities. The projections are based on
the foreign exchange rates applying at the end of the relevant financial year and on interest rates (discounted projections only) applicable to the lease portfolio.
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After five years
Total
As at 31 December 2020
As at 31 December 2019
Discounted
$m
Undiscounted
$m
Discounted
$m
Undiscounted
$m
296
241
189
154
125
630
1,635
301
255
208
177
150
1,085
2,176
304
245
196
153
126
673
1,697
309
259
217
177
152
1,175
2,289
2020 Annual Report and Form 20-F
The Group avails of the exemption from capitalising lease costs for short-term leases and low-value assets where the relevant criteria are met. Variable lease payments
directly linked to sales or usage are also expensed as incurred. The following lease costs have been charged to the Consolidated Income Statement as incurred:
Continuing operations
Short-term leases
Lease of low-value assets
Variable lease payments not included in the lease liability
Total
Total cash outflow for lease payments
2020
$m
210
7
86
303
629
2019
$m
191
8
101
300
733
177
Lease commitments for short-term leases are similar to the portfolio of short-term leases for which the costs, as above, were expensed to the Consolidated Income
Statement. The effect of excluding future cash outflows arising from variable lease payments, termination options, residual value guarantees and leases not yet
commenced from lease liabilities was not material for the Group. The potential undiscounted future cash outflows arising from the exercise of renewal options that are
not expected to be exercised (and are therefore not included in the lease term) are as follows:
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After five years
Total
As at
31 December
2020
$m
As at
31 December
2019
$m
2
5
9
9
10
576
611
2
3
4
7
8
544
568
Income from subleasing and gains/losses on sale and leaseback transactions were not material for the Group.
B. IAS 17 Leases disclosures
Operating lease rentals charged to the Consolidated Income Statement for the year ended 31 December 2018 under IAS 17 was as follows:
Continuing operations
Hire of plant and machinery
Land and buildings
Other operating leases
Total
2018
$m
363
206
60
629
2020 Annual Report and Form 20-F 23. Analysis of Net Debt
Components of net debt
Net debt comprises cash and cash equivalents, interest-bearing loans and borrowings, lease liabilities under IFRS 16 and derivative financial instrument assets and
liabilities; it enables investors to see the economic effects of these in total (see note 24 for details of the capital and risk management policies employed by the Group).
Net debt is commonly used in computations such as net debt as a % of total equity and net debt as a % of market capitalisation.
Cash and cash equivalents (note 25)
Interest-bearing loans and borrowings (note 26)**
178
Lease liabilities under IFRS 16 (note 22) (i)
Derivative financial instruments (net) (note 27)
Group net debt
Reconciliation of opening to closing net debt
As at 31 December 2020
As at 31 December 2019*
Fair value
$m
Book value
$m
Fair value
$m
Book value
$m
7,721
(13,407)
(1,635)
188
(7,133)
7,721
(12,215)
(1,635)
188
(5,941)
9,918
(16,454)
(1,697)
74
(8,159)
9,918
(15,827)
(1,697)
74
(7,532)
At 1 January
Movement in year
Increase in interest-bearing loans and borrowings (ii)
Repayment of interest-bearing loans, borrowings and finance leases (iii) (iv)
Debt, including lease liabilities, in acquired companies (note 32)
Debt, including lease liabilities, in disposed companies
Effect of adopting IFRS 16
Net increase in lease liabilities under IFRS 16 (i)
Repayment of lease liabilities under IFRS 16 (i)
Net cash flow arising from derivative financial instruments
Mark-to-market adjustment
Translation adjustment on financing activities
Increase in liabilities from financing activities
Translation adjustment on cash and cash equivalents
Increase in cash and cash equivalents per Consolidated Statement of Cash Flows
At 31 December
Notes (i) to (iv) are set out overleaf.
2020
$m
2019
$m
2018
$m
(7,532)
(7,998)
(6,953)
(6,427)
4,943
(12)
12
-
(153)
258
(26)
22
(529)
(106)
(1,587)
640
(81)
463
(2,237)
(184)
356
40
28
15
291
(87)
-
-
-
-
(8)
3
217
(1,912)
(1,066)
(1,171)
338
3,165
(5,941)
(20)
1,552
(7,532)
(122)
248
(7,998)
* As disclosed in the Accounting Policies on page 137, cash and cash equivalents and interest-bearing loans and borrowings have been restated to meet the presentation requirements of IAS 32. The
comparative information for the year ended 31 December 2019 has increased cash and cash equivalents from $4.2 billion to $9.9 billion (2018: $2.7 billion to $9.2 billion) and interest-bearing loans and
borrowings (note 26) from $10.1 billion to $15.8 billion (2018: $10.7 billion to $17.2 billion). This has no impact on Group net debt.
** Interest-bearing loans and borrowings are Level 2 instruments in which their fair value are derived from quoted market prices.
2020 Annual Report and Form 20-F
The following table shows the effective interest rates on period-end fixed, gross and net debt:
As at 31 December 2020
As at 31 December 2019
Weighted
average
fixed period
Years
Interest
rate
$m
Interest-bearing loans and borrowings nominal - fixed rate (v)
Derivative financial instruments - fixed rate
Net fixed rate debt including derivatives
Interest-bearing loans and borrowings nominal - floating rate (vi)
Cumulative fair value hedge adjustment (v)
Derivative financial instruments - currency floating rate
Gross debt including derivative financial instruments, excluding lease
liabilities
Lease liabilities - fixed rate
Gross debt including derivative financial instruments, including lease
liabilities
Cash and cash equivalents - floating rate (note 25)
Group net debt
(11,822)
1,835
(9,987)
(184)
(209)
(1,647)
(12,027)
(1,635)
(13,662)
7,721
(5,941)
2.9%
8.4
2.7%
Weighted
average
fixed period
Years
Interest
rate
3.4%
9.2
179
3.3%
$m
(9,821)
1,796
(8,025)
(5,879)
(127)
(1,722)
(15,753)
(1,697)
(17,450)
9,918
(7,532)
(i)
(ii)
(iii)
All leases capitalised under IFRS 16 have been included as lease liabilities in 2020 and 2019.
In April 2020, the Group successfully issued a total of €2.0 billion ($2.3 billion) in euro denominated bonds. In April 2020, as a liquidity precaution against the
evolving COVID-19 pandemic, the €3.5 billion ($4.0 billion) revolving credit facility was drawn down in full.
In July 2020, the Group exercised a par-call option to repay a €0.75 billion ($0.9 billion) bond. The €3.5 billion ($4.0 billion) revolving credit facility was fully repaid
in the second half of the year.
(iv)
Interest-bearing loans and borrowings in 2018 include finance leases previously capitalised under IAS 17.
(v) Of the Group’s nominal fixed rate debt at 31 December 2020, $1,835 million (2019: $1,796 million) is hedged to a mix of USD LIBOR and EURIBOR floating rates
using interest rate swaps.
(vi) Floating rate debt comprises bank borrowings bearing interest at rates set in advance for periods ranging from overnight to less than one year largely by reference
to inter-bank interest rates.
2020 Annual Report and Form 20-F 23. Analysis of Net Debt - continued
Currency profile
The currency profile of the Group’s net debt and net worth (capital and reserves attributable to the Company’s equity holders) as at 31 December 2020 and
31 December 2019 is as follows:
Cash and cash equivalents (note 25)
Interest-bearing loans and borrowings (note 26)
Lease liabilities under IFRS 16 (note 22)
180
Derivative financial instruments (net) (note 27)
Net debt by major currency including derivative financial instruments
Non-debt assets and liabilities analysed as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Non-controlling interests
US Dollar
$m
euro
$m
Pound
Sterling
$m
Canadian
Dollar
$m
Philippine
Peso
$m
Polish
Zloty
$m
Swiss
Franc
$m
Other (i)
$m
Total
$m
1,886
4,586
(5,134)
(5,589)
(797)
(282)
937
736
319
(543)
(247)
(344)
(3,108)
(549)
(815)
319
(6)
(156)
(774)
(617)
62
149
125
275
7,721
(546)
(10)
(25)
(519)
-
(374)
(23)
(12,215)
(31)
(54)
(58)
(1,635)
(111)
-
(231)
188
7
(303)
(37)
(5,941)
16,199
4,614
2,598
1,905
3,586
1,465
(3,094)
(678)
(2,160)
(1,654)
(103)
(54)
871
(391)
(980)
-
1,759
171
(177)
368
155
(22)
553
85
(145)
1,787
29,783
387
(97)
7,239
(4,833)
(165)
(175)
(91)
(337)
(5,900)
519
(229)
(338)
-
(501)
-
(8)
91
(26)
(692)
1,677
19,656
Capital and reserves attributable to the Company’s equity holders
11,320
3,144
1,283
1,240
568
333
The equivalent disclosure for the prior year is as follows:
Cash and cash equivalents (note 25)
Interest-bearing loans and borrowings (note 26)
Lease liabilities under IFRS 16 (note 22)
Derivative financial instruments (net) (note 27)
Net debt by major currency including derivative financial instruments
Non-debt assets and liabilities analysed as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Non-controlling interests
1,512
6,894
(5,535)
(8,443)
(845)
(286)
104
1,615
(4,764)
(220)
422
(682)
(251)
(439)
(950)
235
(49)
(170)
(759)
(743)
39
231
270
315
9,918
(493)
(113)
(422)
(90)
(15,827)
(13)
(42)
(30)
(53)
(49)
(1,697)
(168)
-
(237)
74
(509)
(80)
(205)
(61)
(7,532)
16,110
4,765
3,127
1,956
1,693
3,724
1,411
(2,715)
(755)
(2,241)
(1,620)
(56)
(54)
885
(353)
(941)
-
561
(231)
(360)
-
169
(169)
(206)
(465)
372
155
(21)
(165)
-
516
80
(136)
(87)
(7)
161
1,730
30,269
348
(126)
(309)
(25)
7,333
(4,506)
(5,929)
(607)
1,557
19,028
Capital and reserves attributable to the Company’s equity holders
10,058
3,527
1,768
1,183
513
261
(i)
The principal currencies included in this category are the Chinese Renminbi, the Romanian Leu, the Indian Rupee, the Ukrainian Hryvnia and the Serbian Dinar.
2020 Annual Report and Form 20-F
Liquidity and capital resources
The following table provides certain information related to our cash generation and changes in our cash and cash equivalents position:
Net cash inflow from operating activities
Net cash (outflow)/inflow from investing activities
Net cash inflow/(outflow) from financing activities
Increase in cash and cash equivalents
Cash and cash equivalents at beginning of year (note 25)
Effect of exchange rate changes
Cash and cash equivalents at end of year per Consolidated Statement of Cash Flows (note 25)
Lease liabilities under IFRS 16
Bank overdrafts (excluding those in notional cash pooling arrangements)
Borrowings
Derivative financial instruments
Total liabilities from financing activities
Net debt at end of year
2020
$m
3,938
(1,060)
287
3,165
4,218
338
7,721
(1,635)
(120)
(12,095)
188
(13,662)
(5,941)
2019
$m
3,881
217
(2,546)
1,552
2,686
(20)
4,218
(1,697)
(46)
(10,081)
74
(11,750)
(7,532)
2018
$m
2,246
(1,772)
(226)
248
2,560
(122)
2,686
-
(129)
(10,538)
(17)
(10,684)
(7,998)
181
The Group believes that its financial resources (operating cash together with cash and cash equivalents of $7.7 billion and undrawn committed loan facilities of $4.4
billion) is sufficient to cover the Group’s cash requirements.
At 31 December 2020, US Dollar and euro denominated cash and cash equivalents represented 24% (2019: 15%) and 59% (2019: 70%) of total cash and cash
equivalents respectively.
Significant borrowings
The main sources of Group debt funding are public bond markets in Europe and North America. The following external bonds were outstanding as at 31 December
2020:
US Dollar bonds
euro bonds
Swiss Franc bonds
euro bonds
euro bonds
euro bonds
US Dollar bonds
euro bonds
US Dollar bonds
US Dollar bonds
euro bonds
Pound Sterling bonds
euro bonds
US Dollar bonds (i)
US Dollar bonds
US Dollar bonds
US Dollar bonds
Annual
coupons
Outstanding
(millions)
Final
maturity
Hedged to
floating
rate
(millions)
5.750%
1.750%
1.375%
3.125%
0.875%
1.875%
3.875%
1.250%
3.400%
3.950%
1.375%
4.125%
1.625%
6.400%
5.125%
4.400%
4.500%
$400
€600
CHF330
€750
€500
€600
$1,250
€750
$600
$900
€600
£400
€750
$213
$500
$400
$600
2021
2021
2022
2023
2023
2024
2025
2026
2027
2028
2028
2029
2030
2033
2045
2047
2048
-
-
-
€375
-
-
$875
-
-
$500
-
-
-
-
-
-
-
(i)
The $300 million bond was issued in September 2003, and at the time of issuance the bond was partially swapped to floating interest rates. In
August 2009 and December 2010, $87.445 million of the issued notes were acquired by CRH plc as part of liability management exercises
undertaken and the interest rate hedge was closed out. At 31 December 2020, the remaining fair value hedge adjustment on the hedged item on
the Consolidated Balance Sheet was $38 million (2019: $42 million).
2020 Annual Report and Form 20-F 24. Capital and Financial Risk Management
Capital management
Overall summary
The primary objectives of CRH’s capital management
strategy are to ensure that the Group maintains a
strong credit rating to support its business and to
create shareholder value by managing the debt and
equity balance and the cost of capital. The Group is
committed to optimising the use of its balance sheet
within the confines of the overall objective to maintain
an investment grade credit rating.
182
The capital structure of the Group, which comprises
net debt and capital and reserves attributable to the
Company’s equity holders, may be summarised as
follows:
Capital and reserves
attributable to the Company’s
equity holders
Net debt
Capital and net debt
2020
$m
2019
$m
19,656
19,028
5,941
7,532
25,597
26,560
The Board periodically reviews the capital structure
of the Group, including the cost of capital and the
risks associated with each class of capital. The
Group manages and, if necessary, adjusts its capital
structure taking account of underlying economic
conditions; any material adjustments to the Group’s
capital structure in terms of the relative proportions
of debt and equity are approved by the Board. In
order to maintain or adjust the capital structure, the
Group may issue new shares, dispose of assets,
amend investment plans, alter dividend policy or
return capital to shareholders.
Dividend cover for the year ended 31 December
2020 amounted to 1.2x (2019: 2.3x; on a
continuing basis 2.2x).
No changes were made in the objectives or policies
during 2020.
Financial risk management objectives and policies
The Group uses financial instruments throughout its
businesses: interest-bearing loans and borrowings,
cash and cash equivalents and leases are used to
finance the Group’s operations; trade receivables
and trade payables arise directly from operations;
and derivatives, principally interest rate and
currency swaps and forward foreign exchange
contracts, are used to manage interest rate risks
and currency exposures and to achieve the desired
profile of borrowings.
The London Interbank Offered Rate (LIBOR) and
other benchmark interest rates are expected to be
replaced by alternative risk-free rates by the end of
2021 as part of inter-bank offer rate (IBOR) reform.
The Group’s existing USD LIBOR linked contracts
(see note 23) do not include adequate and robust
fallback provisions for a cessation of the referenced
benchmark interest rate. Regulatory authorities and
private sector working groups have been discussing
alternative benchmark rates for IBOR. The Group
has been closely monitoring the market and the
output from these working parties who are
managing the transition to these new benchmark
interest rates. It is currently anticipated that IBOR
rates will be replaced with backward looking risk-
free rates based on actual transactions.
The Group has assumed that uncertainty arising
from the interest rate benchmark reform will not end
until the Group’s contracts that reference IBORs are
amended to specify the date on which the interest
rate benchmark will be replaced.
The Group is working to prepare and deliver on an
action plan, encompassing treasury, legal, accounting
and IT functions, to enable a smooth transition to the
alternative benchmark rates. At present, it is not
anticipated that these changes will impact the Group’s
financing or interest rate hedging strategies, nor would
they have a material financial impact.
The Group does not trade in financial instruments
nor does it enter into any leveraged derivative
transactions.
The Group’s corporate treasury function provides
services to the business units, co-ordinates access
to domestic and international financial markets, and
monitors and manages the financial risks relating to
the operations of the Group. The Group Treasurer
reports to the Director of Group Finance and the
activities of the corporate treasury function are
subject to regular internal audit. Systems and
processes are in place to monitor and control the
Group’s liquidity risks. The Group’s net debt
position forms part of the monthly documentation
presented to the Board.
The Group’s hedging activity is based on
observable economic relationships, when there is
confidence that such relationships will continue for
the foreseeable future. Matching critical terms such
as notional amount, tenor, timing and currency, the
Group establishes relationships between a hedge
item and hedge instrument where directional
response to changes in fair value, driven by
underlying economic conditions, are opposing and
proportional in equal measure being an economic
relationship under IFRS 9. Hedging ratios of one to
one are used throughout all hedging activity as the
hedge item and hedge instrument are of the same
type and currency. The hedges employed mitigate
identified risks and have consistently demonstrated
close economic relationships. Ineffectiveness
between the hedge item and hedge instrument are
immaterial in the overall context of the Group.
The main risks attaching to the Group’s financial
instruments are interest rate risk, foreign currency
risk, credit risk, liquidity risk and commodity price
risk. The Board reviews and agrees policies for the
prudent management of each of these risks as
documented below.
Interest rate risk
The Group’s exposure to market risk for changes in
interest rates stems predominantly from its long-term
debt obligations. Interest cost is managed using a mix
of fixed and floating rate debt. With the objective of
managing this mix in a cost-efficient manner, the
Group enters into interest rate swaps, under which the
Group contracts to exchange, at predetermined
intervals, the difference between fixed and variable
interest amounts calculated by reference to a
pre-agreed notional principal. Such contracts enable
the Group to mitigate the risk of changing interest
rates on the fair value of issued fixed rate debt and the
cash flow exposures of issued floating rate debt.
These swaps are designated under IFRS 9 to hedge
underlying debt obligations and qualify for hedge
accounting treatment. Undesignated financial
instruments are termed “not designated as hedges”
in the analysis of derivative financial instruments
presented in note 27.
The Group applies hedge accounting where there is
an economic relationship between the hedged item
and the hedging instrument. The existence of an
economic relationship is determined initially by
comparing the critical terms of the hedging instrument
and those of the hedged item and it is prospectively
assessed using linear regression analysis. The Group
issues fixed rate debt and may enter into interest rate
swaps with critical terms that match those of the debt
and on a 1:1 hedge ratio basis. The hedge ratio is
determined by comparing the notional amount of the
derivative with the notional amount of the debt. The
hedge relationship is designated for the full term and
notional value of the debt.
The following table demonstrates the impact on
profit before tax and total equity of a range of
possible changes in the interest rates applicable to
net floating rate borrowings, with all other variables
held constant. These impacts are calculated based
on the closing balance sheet for the relevant period
and assume that all floating interest rates and
interest curves change by the same amount. For
profit before tax, the impact shown is the impact on
closing balance sheet floating rate net debt for a full
year while for total equity the impact shown is the
impact on the value of financial instruments.
Percentage change in cost of
borrowings (i)
Impact on profit before tax
Impact on total equity
+/-1%
+/- $59m
+/-$23m
+/-$5m
-/+ $3m
-/+ $3m
-/+ $8m
2020
2019
2018
2020
2019
2018
(i)
Sensitivity analysis for cost of borrowing has
been presented for continuing operations only.
2020 Annual Report and Form 20-F
183
Foreign currency risk
Due to the nature of building materials, which in
general have a low value-to-weight ratio, the
Group’s activities are conducted primarily in the
local currency of the country of operation resulting
in low levels of foreign currency transaction risk;
variances arising in this regard are reflected in
operating costs or cost of sales in the Consolidated
Income Statement in the period in which they arise.
Given the Group’s presence in 30 countries
worldwide, the principal foreign exchange risk arises
from fluctuations in the US Dollar value of the
Group’s net investment in a wide basket of
currencies other than the US Dollar; such changes
are reported separately within the Consolidated
Statement of Comprehensive Income. A currency
profile of the Group’s net debt and net worth is
presented in note 23. The Group’s established
policy is to spread its net worth across the
currencies of its various operations with the
objective of limiting its exposure to individual
currencies and thus promoting consistency with the
geographical balance of its operations. In order to
achieve this objective, the Group manages its
borrowings, where practicable and cost effective, to
hedge a portion of its foreign currency assets.
Hedging is done using currency borrowings in the
same currency as the assets being hedged or
through the use of other hedging methods such as
currency swaps.
The Group’s foreign exchange hedging strategy and
activity is based on the assumption that changes in
international economic factors are reflected in
current foreign exchange rates and impacts the
translation of the Group’s non-US Dollar net assets.
The economic relationship, being the translation
impact of the Group’s net investment in non-US
Dollar subsidiaries (hedge item) is hedged against a
foreign currency swap (hedge instrument) to
counterbalance movements in foreign currency
rates. The Group identifies certain portions of
foreign currency net investments where foreign
currency translation movements can be mitigated
through the use of currency swaps in the same
currency pairing. A hedge ratio of 1:1 is established.
As at 31 December 2020, the notional amount of
hedged net investments was $1,028 million (2019:
$1,055 million). The fair value movements of the
hedge instruments are inverse to the impact of the
translation of the hedged net assets because the
critical terms match. This reduces the Group’s
exposure to fluctuations on the translation of the
Group’s subsidiaries with a non-US Dollar functional
currency into US Dollar. Potential sources of
ineffectiveness are changes in the interest rate
differential of the hedged currency pair, recorded
through the Consolidated Income Statement. Past
trends indicate that the economic relationship
described will continue for the foreseeable future.
The fair values and maturity analysis of the hedge
instruments are set out in note 27.
The following table demonstrates the sensitivity of
profit before tax and equity to selected movements
in the relevant US Dollar/euro exchange rate (with all
other variables held constant); the euro has been
selected as the appropriate currency for this
analysis given the materiality of the Group’s
activities in euro. The impact on profit before tax is
based on changing the US Dollar/euro exchange
rate used in calculating profit before tax for the
period. The impact on total equity and financial
instruments is calculated by changing the US Dollar/
euro exchange rate used in measuring the closing
balance sheet.
Percentage change in relevant
$/€ exchange rate (i)
Impact on profit before tax
Impact on total equity*
* Includes the impact on financial
instruments which is as follows:
+/- 5%
2020 -/+ $19m
2019
+/- $4m
2018 -/+ $10m
2020 +/-$157m
2019 +/- $177m
2018 +/- $183m
2020 -/+ $27m
2019 -/+ $11m
2018 -/+ $53m
(i)
Sensitivity analysis for exchange rates has been
presented for continuing operations only.
Financial instruments include deposits, money
market funds, commercial papers, bank loans,
medium-term notes and other fixed term debt,
interest rate swaps, commodity swaps and foreign
exchange contracts. They exclude trade receivables
and trade payables on the basis that they are
denominated in the currency of the underlying
operations. The Group minimises the impact of
movements in foreign exchange rates on the
Group’s income statement through matching where
possible, foreign currency monetary assets and
liabilities or the use of derivative contracts.
Credit/counterparty risk
In addition to cash at bank and in hand, the Group
holds significant cash balances which are invested
on a short-term basis and are classified as cash
equivalents (see note 25). These deposits,
investments and other financial instruments
(principally certain derivatives and loans and
receivables included within financial assets) give rise
to credit risk on amounts due from counterparty
financial institutions (stemming from their insolvency
or a downgrade in their credit ratings). Credit risk is
managed by limiting the aggregate amount and
duration of exposure to any one counterparty
primarily depending on its credit rating and by
regular review of these ratings and internal treasury
policies. Acceptable credit ratings for deposits and
other financial instruments are higher investment-
grade ratings – in general, counterparties have
ratings of A3/A-/A- or higher from at least two of
Moody’s/Standard & Poor’s/Fitch ratings agencies.
The maximum exposure arising in the event of
default on the part of the counterparty (including
insolvency) is the carrying value of the relevant
financial instrument. Money market liquidity funds
are managed by external third-party fund managers
to maintain Aaa/AAA long-term ratings and P1/A1
short-term ratings from Moody’s/Standard &
Poor’s. The Group limits its investment in each fund
to a prescribed maximum amount or 5% of the
fund’s assets under management, whichever is the
lower. The Group has two managed investment
funds that hold fixed income euro securities with an
average credit quality of Aaa/AAA. As at 31
December 2020, 88% of cash and cash equivalents
was held with higher investment grade bank
counterparties, and 12% with the money market
funds.
Credit risk arising in the context of the Group’s
operations is not significant with the total loss
allowance at the balance sheet date amounting to
3.8% of gross trade receivables (2019: 3.6%).
Information in relation to the Group’s credit risk
management of trade receivables is provided in
note 19. Amounts receivable from related parties
(notes 19 and 34) are immaterial. Factoring
arrangements and supplier financing arrangements
are employed in certain of the Group’s operations
where deemed to be of benefit by operational
management and are deemed immaterial.
In its worldwide insurance programme, the Group
carries appropriate levels of insurance for typical
business risks (including product liability) with
various leading insurance companies. However, in
the event of the failure of one or more of its
insurance counterparties, the Group could be
impacted by losses where recovery from such
counterparties is not possible.
Liquidity risk
The principal liquidity risks faced by the Group stem
from the maturation of debt obligations and
derivative transactions. A downgrade of CRH’s
credit ratings may give rise to increases in funding
costs in respect of future debt and may impair the
Group’s ability to raise funds on acceptable terms.
The Group’s corporate treasury function ensures
that sufficient resources are available to meet such
liabilities as they fall due through a combination of
cash and cash equivalents, cash flows and
undrawn committed bank facilities. Flexibility in
funding sources is achieved through a variety of
means including (i) maintaining cash and cash
equivalents only with a diverse group of highly-rated
counterparties; (ii) limiting the annual maturity of
such balances; (iii) borrowing the bulk of the
2020 Annual Report and Form 20-F 24. Capital and Financial Risk Management - continued
Group’s debt requirements under committed bank
lines or other term financing; and (iv) having
surplus committed lines of credit.
The undrawn committed facilities available to the
Group as at the balance sheet date are quantified
in note 26; these facilities span a wide number of
highly-rated financial institutions thus minimising
any potential exposure arising from concentrations
in borrowing sources. The repayment schedule
(analysed by maturity date) applicable to the
Group’s outstanding interest-bearing loans and
borrowings as at the balance sheet date is also
presented in note 26.
The Group’s €1.5 billion Euro Commercial Paper
Programme and $2.0 billion US Dollar Commercial
Paper Programme means we have framework
programmes in the money markets in place that
allow the Group to issue in the relevant markets
within a short period of time.
Commodity price risk
The principal commodity price risks are identified
in a variety of highly probable and active
commodity contracts where a significant part of
the price to be paid relies on a reference to
specific floating price indices (usually US Dollar) for
a specific period. Programmes are in place to
hedge the quantities and qualities of commodity
products, including fuel oil and related products,
electricity and carbon credits. The aim of the
programmes is to neutralise the variability in the
184
Consolidated Income Statement as a result of
changes in associated commodity indices over a
timeframe of approximately five years (2019: five
years). A hedge ratio of 1:1 is established. Fixed
price swap contracts in the entity’s operating
currency are used to hedge the same specific
floating index risk and currency risk where it is
determined that those risks are better managed at
a fixed price rather than being exposed to
uncontrollable price fluctuations due to the floating
price index element of the contract. Sources of
ineffectiveness can relate to timing of cash flows
and counterparty credit risk adjustments. The
derivative contracts qualify for cash flow hedge
accounting under IFRS 9 and the fair values by
maturity are set out in note 27.
The notional and fair values in respect of derivative contracts as at 31 December 2020 and 31 December 2019 were as follows:
Profile of commodity products
As at 31 December 2020
As at 31 December 2019
Notional value
$m
Fair value
$m
Notional value
$m
Fair value
$m
Commodity contracts
Derivative liability
85
-
-
(2)
118
-
-
-
2020 Annual Report and Form 20-F
The tables below show the projected contractual undiscounted total cash outflows (principal and interest) arising from the Group’s trade and other payables, gross
debt and derivative financial instruments. The tables also include the gross cash inflows projected to arise from derivative financial instruments. These projections are
based on the interest and foreign exchange rates applying at the end of the relevant financial year.
At 31 December 2020
Financial liabilities - cash outflows
Trade and other payables
Lease liabilities under IFRS 16
Other interest-bearing loans and borrowings
Interest payments on other interest-bearing loans and borrowings (i)
Cross-currency swaps - gross cash outflows
Other derivative financial instruments
Gross projected cash outflows
Derivative financial instruments - cash inflows
Interest rate swaps - net cash inflows (ii)
Cross-currency swaps - gross cash inflows
Other derivative financial instruments
Gross projected cash inflows
The equivalent disclosure for the prior year is as follows:
At 31 December 2019
Financial liabilities - cash outflows
Trade and other payables
Lease liabilities under IFRS 16
Other interest-bearing loans and borrowings
Interest payments on other interest-bearing loans and borrowings (i)
Cross-currency swaps - gross cash outflows
Other derivative financial instruments
Gross projected cash outflows
Derivative financial instruments - cash inflows
Interest rate swaps - net cash inflows (ii)
Cross-currency swaps - gross cash inflows
Other derivative financial instruments
Gross projected cash inflows
Within
1 year
$m
Between
1 and 2
years
$m
Between
2 and 3
years
$m
Between
3 and 4
years
$m
Between
4 and 5
years
$m
After
5 years
$m
Total
$m
4,797
301
1,270
345
2,345
5
171
255
479
328
-
1
49
208
1,538
296
-
-
209
177
741
272
-
-
181
150
371
5,778
1,085
2,176
1,255
6,805
12,088
246
1,952
3,439
-
-
-
-
2,345
6
9,063
1,234
2,091
1,399
1,832
10,213
25,832
185
(40)
(2,350)
(4)
(2,394)
(40)
-
(1)
(41)
(33)
(30)
(22)
(32)
(197)
-
-
-
-
-
-
-
-
(2,350)
(5)
(33)
(30)
(22)
(32)
(2,552)
4,916
309
156
259
6,626
1,081
345
1,814
4
309
14
1
45
217
440
290
-
-
27
177
847
262
-
-
186
152
677
255
-
-
238
5,568
1,175
2,289
6,099
15,770
2,085
3,546
-
-
1,828
5
14,014
1,820
992
1,313
1,270
9,597
29,006
(15)
(1,802)
(4)
(1,821)
(15)
(14)
(1)
(30)
(15)
-
-
(15)
(8)
-
-
(8)
(6)
-
-
(6)
(14)
(73)
-
-
(1,816)
(5)
(14)
(1,894)
(i)
(ii)
At 31 December 2020 and 31 December 2019, a portion of the Group’s long-term debt carried variable interest rates. The Group uses the interest rates in effect
on 31 December to calculate the interest payments on the long-term debt for the periods indicated.
The Group uses interest rate swaps to help manage its interest cost. Under these contracts the Group has agreed to exchange at predetermined intervals, the net
difference between fixed and variable interest amounts calculated by reference to a pre-agreed notional principal. The Group uses the interest rates in effect on
31 December to calculate the net interest receipts or payments on these contracts.
2020 Annual Report and Form 20-F 25. Cash and Cash Equivalents
Cash and cash equivalents balances are spread across a wide number of highly-rated financial institutions. The credit risk attaching to these items is documented in
note 24.
Cash and cash equivalents are included in the Consolidated Balance Sheet at amortised cost and are analysed as follows:
Cash at bank and in hand
Investments (short-term deposits)
Total
2020
$m
1,482
6,239
7,721
2019
$m
6,829
3,089
9,918
186
As disclosed in the Accounting Policies on page 137, cash and cash equivalents and interest-bearing loans and borrowings have been restated to meet the presentation
requirements of IAS 32. The comparative information for the year ended 31 December 2019 has increased cash and cash equivalents from $4.2 billion to $9.9 billion
(2018: $2.7 billion to $9.2 billion) and interest-bearing loans and borrowings (note 26) from $10.1 billion to $15.8 billion (2018: $10.7 billion to $17.2 billion). At 31
December 2020, the Group’s notional cash pool balances were net settled and accordingly net presentation of the balances at 31 December 2020 is appropriate.
Cash at bank earns interest at floating rates based on daily deposit bank rates. Short-term deposits, which include bank and money market deposits, are made for
varying periods of between one day and three months depending on the immediate cash requirements of the Group, earning interest at the respective short-term
deposit rates.
Money market deposits are held at fair value through profit and loss and are Level 1 instruments. The fair values of money market deposits are calculated by
multiplying the net asset value per share by the investment held at the balance sheet date.
For the purposes of the Consolidated Statement of Cash Flows, cash and cash equivalents and bank overdrafts in notional cash pooling arrangements are presented
net as follows:
Cash and cash equivalents
Bank overdrafts - notional cash pooling
arrangements (note 26)
Total
2020
$m
7,721
-
7,721
2019
$m
9,918
(5,700)
4,218
26. Interest-bearing Loans and Borrowings
Bank overdrafts (i)
Bank loans
Bonds
Other
Interest-bearing loans and borrowings
2020
$m
120
541
11,554
-
12,215
2019
$m
5,746
523
9,557
1
15,827
Interest-bearing loans and borrowings include loans of $nil million (2019: $1 million) secured on specific items of property, plant and equipment.
Maturity profile of loans and borrowings and undrawn committed facilities
As at 31 December 2020
As at 31 December 2019
Loans and
borrowings
$m
Undrawn
committed
facilities
$m
Loans and
borrowings
$m
Undrawn
committed
facilities
$m
1,257
467
1,552
733
1,320
6,886
12,215
10
5
61
-
4,294
-
4,370
6,616
1,074
432
867
672
6,166
15,827
-
13
5
57
3,932
48
4,055
Within one year (i)
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After five years
Total
(i)
As disclosed in the Accounting Policies on page 137, cash and cash equivalents and interest-bearing loans and borrowings have been restated to meet the
presentation requirements of IAS 32. The comparative information for the year ended 31 December 2019 has increased cash and cash equivalents from $4.2 billion
to $9.9 billion (2018: $2.7 billion to $9.2 billion) and interest-bearing loans and borrowings from $10.1 billion to $15.8 billion (2018: $10.7 billion to $17.2 billion).
2020 Annual Report and Form 20-F
The Group manages its borrowing ability by
entering into committed borrowing agreements.
Revolving committed bank facilities are generally
available to the Group for periods of up to five years
from the date of inception. The undrawn committed
facilities figures shown in the table on page 186
represent the facilities available to be drawn by the
Group at 31 December 2020.
The Group successfully carried out an amendment
of its €3.5 billion revolving credit facility in March
2020 whereby the Group extended the maturity
date of the facility for a further year to 2025.
In April 2020, the Group successfully issued a total
of €2 billion in euro denominated bonds at a
weighted average maturity of 7 years and with a
weighted average interest rate of 1.35%. In July
2020, the Group exercised a par-call option to
repay a €0.75 billion bond originally due to mature
in October 2020.
Guarantees
The Company has given letters of guarantee to
secure obligations of subsidiary undertakings as
follows: $11.6 billion in respect of loans and
borrowings, bank advances and derivative
obligations (2019: $9.6 billion) and $0.4 billion in
respect of letters of credit (2019: $0.4 billion).
Any Irish registered wholly-owned subsidiary of the
Company may avail of the exemption from filing its
statutory financial statements for the year ended
31 December 2020 as permitted by section 357 of
the Companies Act 2014 and if an Irish registered
wholly-owned subsidiary of the Company elects to
avail of this exemption, there will be in force an
irrevocable guarantee from the Company in respect
of all commitments entered into by such wholly-
owned subsidiary, including amounts shown as
liabilities (within the meaning of section 357 (1) (b) of
the Companies Act 2014) in such wholly-owned
subsidiary’s statutory financial statements for the
year ended 31 December 2020.
187
27. Derivative Financial Instruments
The fair values of derivative financial instruments are analysed by year of maturity and by accounting designation as follows:
At 31 December 2020
Derivative assets
Within one year - current assets
Between one and two years
Between two and three years
Between four and five years
After five years
Non-current assets
Total derivative assets
Derivative liabilities
Within one year - current liabilities
Between one and two years - non-current liabilities
Total derivative liabilities
Net asset/(liability) arising on derivative financial instruments
The equivalent disclosure for the prior year is as follows:
At 31 December 2019
Derivative assets
Within one year - current assets
Between one and two years
Between three and four years
After five years
Non-current assets
Total derivative assets
Derivative liabilities
Within one year - current liabilities
Between one and two years - non-current liabilities
Total derivative liabilities
Net asset/(liability) arising on derivative financial instruments
Fair value
hedges
$m
Cash flow
hedges
$m
Net
investment
hedges
$m
Not
designated
as hedges
$m
Total
$m
-
-
32
74
77
183
183
-
-
-
183
-
-
26
58
84
84
-
-
-
84
7
1
-
-
-
1
8
(6)
(1)
(7)
1
3
1
-
-
1
4
(9)
(1)
(10)
(6)
8
-
-
-
-
-
8
(2)
-
(2)
6
3
-
-
-
-
3
(4)
-
(4)
(1)
2
-
-
-
-
-
2
(4)
-
(4)
(2)
1
-
-
-
-
1
(4)
-
(4)
(3)
17
1
32
74
77
184
201
(12)
(1)
(13)
188
7
1
26
58
85
92
(17)
(1)
(18)
74
2020 Annual Report and Form 20-F 27. Derivative Financial Instruments - continued
At 31 December 2020 and 2019, the Group had no
master netting or similar arrangements, no collateral
posting requirements, or enforceable right of set-off
agreements with any of its derivative counterparts.
Fair value hedges consist of interest rate swaps.
These instruments hedge risks arising from changes
in asset/liability fair values due to interest rate
movements.
Cash flow hedges consist of forward foreign
exchange and commodity contracts and currency
swaps. These instruments hedge risks arising to
future cash flows from movements in foreign
exchange rates and commodity prices. Cash flow
hedges are expected to affect profit and loss over
the period to maturity.
Net investment hedges comprise cross-currency
swaps and hedge changes in the value of net
investments due to currency movements.
The profit/(loss) arising on fair value hedges, cash flow hedges, and related hedged items reflected in the Consolidated Income Statement is shown below:
188
Fair value hedges and related hedged items
Movement in cumulative fair value of the hedge adjustment of hedge instruments
Movement in cumulative fair value of the hedge adjustment of hedged items
Components of other comprehensive income - cash flow hedges
Gains/(losses) arising during the year:
- commodity forwards
- currency forwards
Total
Fair value hierarchy
Assets measured at fair value
Fair value hedges - interest rate swaps
Cash flow hedges - currency and commodity forwards
Net investment hedges - currency swaps
Not designated as hedges (held for trading) - currency swaps and forwards
Total
Liabilities measured at fair value
Cash flow hedges - currency and commodity forwards
Net investment hedges - currency swaps
Not designated as hedges (held for trading) - currency swaps and forwards
Total
2018
$m
(15)
13
(44)
(3)
(47)
2020
$m
97
(83)
(2)
9
7
2019
$m
72
(71)
30
(3)
27
2020
Level 2
$m
2019
Level 2
$m
183
8
8
2
201
(7)
(2)
(4)
(13)
84
4
3
1
92
(10)
(4)
(4)
(18)
At 31 December 2020 and 2019 there were no derivatives valued using Level 1 or Level 3 fair value techniques.
2020 Annual Report and Form 20-F
28. Provisions for Liabilities
At 1
January
$m
Effect of
adopting
IFRS 16
$m
Translation
adjustment
$m
Arising on
acquisition
(note 32)
$m
Provided
during
year
$m
Utilised
during
year
$m
Disposed
during
year
$m
Reversed
unused
$m
Discount
unwinding
$m
At 31
December
$m
31 December 2020
Insurance (i)
Environment and remediation (ii)
Rationalisation and redundancy (iii)
Other (iv)
Total
Analysed as:
Non-current liabilities
Current liabilities
Total
330
585
17
370
1,302
854
448
1,302
The equivalent disclosure for the prior year is as follows:
31 December 2019
Insurance (i)
Environment and remediation (ii)
Rationalisation and redundancy (iii)
Other (iv)
Total
Analysed as:
Non-current liabilities
Current liabilities
Total
319
554
27
344
1,244
823
421
1,244
-
-
-
-
-
-
-
-
(1)
(1)
4
23
2
14
43
(1)
4
-
(7)
(4)
-
-
-
-
-
-
7
-
-
7
162
103
111
125
501
(119)
(15)
(77)
(59)
(270)
128
45
32
121
326
(98)
(29)
(39)
(39)
(205)
-
(5)
-
-
(5)
-
-
-
-
-
(34)
(19)
(5)
(92)
(150)
(27)
(9)
(3)
(51)
(90)
6
12
-
3
21
9
13
-
3
25
189
349
684
48
361
1,442
953
489
1,442
330
585
17
370
1,302
854
448
1,302
(i)
(ii)
This provision relates to obligations arising under the self-insurance components of the Group’s insurance arrangements which comprise employers’ liability
(workers’ compensation in the US), public and products liability (general liability in the US), automobile liability, property damage, business interruption and various
other insurances; a substantial proportion of the total provision pertains to claims which are classified as “incurred but not reported”. Due to the extended
timeframe associated with many of the insurances, a significant proportion of the total provision is subject to periodic actuarial valuation. The projected cash flows
underlying the discounting process are established through the application of actuarial triangulations, which are extrapolated from historical claims experience. The
triangulations applied in the discounting process indicate that the Group’s insurance provisions have an average life of four years (2019: five years).
This provision comprises obligations governing site remediation, restoration and environmental works to be incurred in compliance with either local or national
environmental regulations together with constructive obligations stemming from established best practice. Whilst a significant element of the total provision will
reverse in the medium-term (two to ten years), those legal and constructive obligations applicable to long-lived assets (principally mineral-bearing land) will unwind
over a 30-year timeframe. In discounting the related obligations, expected future cash outflows have been determined with due regard to extraction status and
anticipated remaining life.
(iii) These provisions relate to irrevocable commitments under various rationalisation and redundancy programmes, none of which are individually material to the
Group. In 2020, $111 million (2019: $32 million; 2018: $36 million) was provided in respect of rationalisation and redundancy activities as a consequence of
undertaking various cost reduction initiatives across all operations including initiatives related to the Group’s response to the COVID-19 pandemic. These initiatives
included removing excess capacity from manufacturing and distribution networks and scaling operations to match supply and demand. The Group expects that
these provisions will primarily be utilised within one to two years of the balance sheet date (2019: one to two years).
(iv) Other provisions primarily relate to legal claims and also include onerous contracts, guarantees and warranties and employee related provisions. The Group
expects the majority of these provisions will be utilised within one to five years of the balance sheet date (2019: two to five years); however due to the nature of the
legal provisions there is a level of uncertainty in the timing of settlement as the Group generally cannot determine the extent and duration of the legal process.
2020 Annual Report and Form 20-F 29. Deferred Income Tax
The deductible and taxable temporary differences in respect of which deferred tax has been recognised are as follows:
Reported in balance sheet after offset
Deferred tax liabilities
Deferred tax assets
Net deferred income tax liability
Deferred income tax assets (deductible temporary differences)
190
Deficits on Group retirement benefit obligations (note 30)
Revaluation of derivative financial instruments to fair value
Tax loss carryforwards (primarily income tax losses)
Share-based payment expense
Provisions for liabilities and working capital-related items
Lease liabilities
Other deductible temporary differences
Total
2020
$m
2,613
(129)
2,484
128
8
176
41
402
330
59
1,144
2019
$m
2,627
(76)
2,551
102
8
170
36
288
318
28
950
Deferred income tax assets have been recognised in respect of all deductible temporary differences, with the exception of some tax loss carryforwards. The amount of
tax losses where recovery is not probable and is therefore not recognised in the Consolidated Balance Sheet is $1.4 billion (2019: $1.7 billion). The vast majority either
do not expire based on current tax legislation or they expire post 2025 (2019: 2024). Of the losses not recognised in the Consolidated Balance Sheet, $0.1 billion
(2019: $0.2 billion) expire within five years, $0.3 billion (2019: $0.2 billion) expire post five years and the remainder of the losses do not expire.
Deferred income tax liabilities (taxable temporary differences)
Taxable temporary differences principally attributable to accelerated tax depreciation and fair value
adjustments arising on acquisition (i)
3,123
3,003
Leased right-of-use assets
Investment in subsidiaries
Revaluation of derivative financial instruments to fair value
Rolled-over capital gains
Total
Investments in subsidiaries
315
161
12
17
307
164
12
15
3,628
3,501
The aggregate temporary differences in relation to investments in subsidiaries for which deferred tax liabilities have not been recognised is $10.9 billion
(2019: $9.3 billion) given the Group is in a position to control the timing of reversal and management’s intention not to unwind these temporary differences.
Participation exemptions and tax credits are available in the majority of jurisdictions in which the Group operates. A deferred tax liability has been recognised in respect
of any temporary differences relating to investments in subsidiaries expected to unwind in the foreseeable future.
Movement in net deferred income tax liability
At 1 January
Translation adjustment
Net (income)/expense for the year (ii)
Disposals
Movement in deferred tax recognised in the Consolidated Statement of Comprehensive Income
Movement in deferred tax recognised in the Consolidated Statement of Changes in Equity
2,551
2,449
41
(95)
(3)
(11)
1
9
126
(35)
8
(6)
At 31 December
2,484
2,551
(i)
Fair value adjustments arising on acquisition principally relate to property, plant and equipment.
(ii)
The net expense in 2019 includes income of $3 million relating to discontinued operations.
2020 Annual Report and Form 20-F
191
30. Retirement Benefit Obligations
The Group operates either defined benefit or
defined contribution pension schemes in all of
its principal operating areas. The disclosures
included below relate to all pension schemes in
the Group.
The Group operates defined benefit pension
schemes in Belgium, Brazil, Canada, France,
Germany, Italy, the Netherlands, the Philippines,
the Republic of Ireland, Romania, Serbia,
Slovakia, Switzerland, the UK and the US. The
Group has a mixture of funded and unfunded
defined benefit pension schemes. The net
liability of the funded schemes is $154 million,
net of surpluses of $111 million (2019:
$110 million, net of surpluses of $75 million).
Unfunded obligations (including jubilee, post-
retirement healthcare obligations and long-term
service commitments) comprise of a number of
schemes in Brazil, Canada, France, Germany,
Italy, the Netherlands, the Philippines, Romania,
Serbia, Slovakia, Switzerland and the US,
totalling a net liability of $402 million (2019:
$370 million).
Funded defined benefit schemes in the Republic
of Ireland, Switzerland and the UK are
administered by separate funds that are legally
distinct from the Group under the jurisdiction of
Trustees. The Trustees are required by law to
act in the best interests of the scheme
participants and are responsible for the
definition of investment strategy and for scheme
administration. Other schemes are also
administered in line with the local regulatory
environment. The level of benefits available to
most members depends on length of service
and either their average salary over their period
of employment or their salary in the final years
leading up to retirement. For Switzerland, the
Financial assumptions—scheme liabilities
level of benefits depends on salary, level of
savings contributions, the interest rate on old
age accounts (which cannot be negative) and
the annuity conversion factor on retirement. The
Group’s pension schemes in Switzerland are
contribution-based schemes with guarantees to
provide further contributions in the event that
the plan assets are insufficient to meet the
benefit obligations.
Defined benefit pension schemes -
principal risks
Through its defined benefit pension and jubilee
schemes, long-term service commitments and
post-retirement healthcare plans, the Group is
exposed to a number of risks, the most
significant of which are detailed below:
Asset volatility: Under IAS 19 Employee
Benefits, the assets of the Group’s defined
benefit pension schemes are reported at fair
value (using bid prices, where relevant). The
majority of the schemes’ assets comprise
equities, bonds and property, all of which may
fluctuate significantly in value from period to
period. Given that liabilities are discounted to
present value based on bond yields and that
bond prices are inversely related to yields, an
increase in the liability discount rate (which
would reduce liabilities) would reduce bond
values, though not necessarily by an equal
magnitude.
Given the maturity of certain of the Group’s
funded defined benefit pension schemes,
de-risking frameworks have been introduced to
mitigate deficit volatility and enable better
matching of investment returns with the cash
outflows related to benefit obligations. These
frameworks entail the usage of asset-liability
matching techniques, whereby triggers are set
for the conversion of equity holdings into bonds
of similar average duration to the relevant
liabilities.
Discount rates: The discount rates employed in
determining the present value of the schemes’
liabilities are determined by reference to market
yields at the balance sheet date on high-quality
corporate bonds of a currency and term
consistent with the currency and term of the
associated post-employment benefit
obligations. Changes in discount rates impact
the quantum of liabilities as discussed above.
Inflation risk: A significant amount of the
Group’s pension obligations are linked to
inflation; higher inflation will lead to higher
liabilities (although in most cases, caps on the
level of inflationary increases are in place to
protect the schemes against extreme inflation).
Longevity risk: In the majority of cases, the
Group’s defined benefit pension schemes
provide benefits for life with spousal and
dependent child reversionary provisions;
increases in life expectancy (decreases in
mortality assumptions) will therefore give rise to
higher liabilities.
Aggregation
For the purposes of the disclosures which
follow; the schemes in Belgium, France,
Germany, Italy, the Netherlands, the Republic of
Ireland and Slovakia have been aggregated into
a “Eurozone” category on the basis of common
currency and financial assumptions; schemes in
Brazil, the Philippines, Romania, Serbia and the
UK have been aggregated into an “Other”
category.
The major long-term assumptions used by the Group’s actuaries in the computation of scheme liabilities and post-retirement healthcare
obligations are as follows:
Eurozone
2019
%
2020
%
2.52
1.45
1.50
1.14
n/a
3.37
1.46
1.50
1.43
n/a
2018
%
3.50
1.62
1.65
2.12
n/a
United States
and Canada
2020
%
2019
%
2018
%
3.37
-
2.00
2.34
5.97
3.37
-
2.00
3.14
5.18
3.38
-
2.00
4.10
1.55
Switzerland
2019
%
2020
%
1.00
-
0.50
0.20
n/a
1.50
-
1.00
0.30
n/a
2018
%
1.50
-
1.00
0.85
n/a
Rate of increase in:
- salaries
- pensions in payment
Inflation
Discount rate
Medical cost trend rate
2020 Annual Report and Form 20-F 30. Retirement Benefit Obligations - continued
The mortality assumptions employed in determining the present value of scheme liabilities under IAS 19 represent actuarial best practice in the
relevant jurisdictions, taking account of mortality experience and industry circumstances. For schemes in the Republic of Ireland and the UK,
the mortality assumptions used are in accordance with the underlying funding valuations. For the Group’s most material schemes, the future life
expectations factored into the relevant valuations, based on retirement at 65 years of age for current and future retirees, are as follows:
Republic of Ireland
2019
2020
2018
United States
and Canada
2020
2019
2018
2020
Switzerland
2019
192
Current retirees
- male
- female
Future retirees
- male
- female
22.5
24.4
24.8
26.7
23.0
24.5
25.4
26.8
22.4
24.1
24.9
26.4
20.1
22.2
22.0
23.9
20.2
22.3
22.1
24.2
20.1
22.6
22.0
24.5
22.6
24.7
24.8
26.8
22.6
24.7
24.8
26.8
The above data allows for future improvements in life expectancy.
Impact on Consolidated Income Statement
The total retirement benefit expense from continuing operations in the Consolidated Income Statement is as follows:
2018
22.5
24.5
24.7
26.7
Total defined contribution expense (i)
Total defined benefit expense
Total expense in Consolidated Income Statement
2020
$m
289
70
359
2019
$m
290
51
341
2018
$m
266
51
317
At 31 December 2020, $105 million (2019: $108 million) was included in other payables in respect of defined contribution pension liabilities.
Analysis of defined benefit expense
Charged in arriving at Group profit before finance costs:
Current service cost
Administration expenses
Past service cost/(credit) net
Subtotal
Included in finance income and finance costs respectively:
Interest income on scheme assets
Interest cost on scheme liabilities
Net interest expense
53
5
1
59
(56)
67
11
48
8
(20)
36
(72)
87
15
51
3
(15)
39
(65)
77
12
Net expense to Consolidated Income Statement
70
51
51
The composition of the net expense to the Consolidated Income Statement is as follows:
Eurozone
United States and Canada
Switzerland
Other
Total
See page 194 for note (i).
30
16
12
12
70
28
6
8
9
51
28
7
8
8
51
Reconciliation of scheme assets (bid value)
At 1 January
Movement in year
Interest income on scheme assets (ii)
Arising on acquisition (note 32)
Disposals
Remeasurement adjustments
- return on scheme assets excluding interest income
Employer contributions paid
Contributions paid by plan participants
Benefit and settlement payments
Administration expenses (ii)
Translation adjustment
At 31 December
The composition of scheme assets is as follows:
Eurozone
United States and Canada
Switzerland
Other
Total
Reconciliation of actuarial value of liabilities
At 1 January
Movement in year
Current service cost (ii)
Past service (cost)/credit net (ii)
Interest cost on scheme liabilities (ii)
Arising on acquisition (note 32)
Disposals
Remeasurement adjustments
- experience variations
- actuarial loss from changes in financial assumptions
- actuarial gain from changes in demographic assumptions
Contributions paid by plan participants
Benefit and settlement payments
Translation adjustment
At 31 December
The composition of the actuarial value of liabilities is as follows:
Eurozone
United States and Canada
Switzerland
Other
Total
Deficit in schemes
Related deferred income tax asset
Net pension liability
The composition of the net pension liability is as follows:
Eurozone
United States and Canada
Switzerland
Other
Total
2020 Annual Report and Form 20-F
193
2020
$m
3,013
56
-
-
174
46
7
(158)
(5)
188
3,321
1,603
1,018
444
256
3,321
2019
$m
3,335
76
3
(660)
354
58
15
(156)
(8)
(4)
3,013
1,441
949
386
237
3,013
(3,493)
(3,821)
(53)
(1)
(67)
-
1
32
(251)
12
(7)
158
(208)
(67)
20
(91)
(4)
709
37
(430)
20
(15)
156
(7)
(3,877)
(3,493)
(1,769)
(1,293)
(425)
(390)
(3,877)
(556)
128
(428)
(138)
(206)
22
(106)
(428)
(1,601)
(1,189)
(383)
(320)
(3,493)
(480)
102
(378)
(134)
(180)
3
(67)
(378)
2020 Annual Report and Form 20-F 30. Retirement Benefit Obligations - continued
UK High Court rulings in October 2018 and November 2020 relating to the equalisation of guaranteed minimum pensions for men and women did not materially impact
the liability associated with the Group’s UK defined benefit pension schemes.
(i)
(ii)
The total defined contribution expense in 2019 and 2018, including discontinued operations, amounted to $299 million and $278 million respectively.
The net expense in 2019 and 2018 includes the following relating to discontinued operations:
Charged in arriving at Group profit before finance costs:
Current service cost
Administration expenses
Past service credit (net)
Subtotal
194
Included in finance income and finance costs respectively:
Interest income on scheme assets
Interest cost on scheme liabilities
Net interest expense
Net expense to Consolidated Income Statement
Sensitivity analysis
2019
$m
2018
$m
19
-
-
19
(4)
4
-
19
25
1
(5)
21
(5)
5
-
21
The revised liabilities due to the impact of a reasonably possible change (as indicated below) in the principal actuarial assumptions would be as follows:
Eurozone
2020
$m
United States
and Canada
2020
$m
Switzerland
2020
$m
Other
2020
$m
Total Group
2020
$m
Scheme liabilities at 31 December
(1,769)
(1,293)
(425)
(390)
(3,877)
Revised liabilities
Discount rate
Inflation rate
Mortality assumption
Increase by 0.25%
Decrease by 0.25% (i)
Increase by 0.25%
Decrease by 0.25%
Increase by 1 year
Decrease by 1 year
(1,690)
(1,852)
(1,846)
(1,697)
(1,707)
(1,833)
(1,251)
(1,334)
(1,295)
(1,289)
(1,253)
(1,331)
(407)
(441)
(427)
(424)
(409)
(441)
(373)
(409)
(403)
(377)
(379)
(401)
(3,721)
(4,036)
(3,971)
(3,787)
(3,748)
(4,006)
(i)
As the discount rate for Switzerland is 0.20% as at 31 December 2020, sensitivity analysis presented for Switzerland is on the basis of a decrease
of 0.20% only.
The above sensitivity analysis are derived through changing the individual assumption while holding all other assumptions constant.
2020 Annual Report and Form 20-F
195
Split of scheme assets
Investments quoted in active markets
Equity instruments (i)
Debt instruments (ii)
Property
Cash and cash equivalents
Investment funds
Unquoted investments
Equity instruments
Debt instruments (iii)
Property
Cash and cash equivalents
Assets held by insurance company
Total assets
2020
$m
862
2,025
106
56
166
2
12
69
6
17
2019
$m
838
1,791
104
30
144
2
10
58
20
16
3,321
3,013
(i)
Equity instruments primarily relate to developed markets.
(ii) Quoted debt instruments are made up of $1,288 million (2019: $1,237 million) and $737 million (2019: $554 million) of government and
non-government instruments respectively.
(iii) Unquoted debt instruments primarily relate to government debt instruments.
Actuarial valuations - funding requirements
and future cash flows
In accordance with statutory requirements in the
Republic of Ireland and funding requirements set by
the Trustees in the UK, additional annual
contributions and lump-sum payments are
determined to get the plans to a fully funded
position (on a funding basis). The funding
requirements in relation to the Group’s defined
benefit schemes are assessed in accordance with
the advice of independent and qualified actuaries
and valuations are prepared in this regard either
annually, where local requirements mandate that
this be done, or at triennial intervals at a maximum
in all other cases. In the Republic of Ireland and the
UK, either the attained age or projected unit credit
methods are used in the valuations. In Canada,
Germany, Switzerland and the US, valuations are
performed in accordance with the projected unit
credit methodology. The dates of the funding
valuations range from April 2018 to July 2020.
In general, funding valuations are not available for
public inspection; however, the results of valuations
are advised to the members of the various schemes
on request.
The Group has contracted payments (presented on
a discounted basis) to certain schemes in the UK of
$20 million (2019: $21 million; 2018: $16 million).
The maturity profile of the Group’s contracted payments (on a discounted basis) is as follows:
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After five years
Total
2020
$m
2019
$m
2018
$m
2
2
2
2
2
10
20
2
2
2
2
2
11
21
2
2
2
1
1
8
16
2020 Annual Report and Form 20-F 30. Retirement Benefit Obligations - continued
Employer contributions payable in the 2021 financial year including minimum funding payments (expressed using year-end exchange rates for 2020) are estimated at
$45 million.
Average duration and scheme composition
Average duration of defined benefit obligation (years)
Allocation of defined benefit obligation by participant:
Eurozone
2019
18.1
2020
18.3
2018
17.1
United States and Canada
Switzerland
2020
12.9
2019
12.5
2018
12.1
2020
17.6
2019
17.8
2018
16.4
196
Active plan participants
Deferred plan participants
Retirees
70%
10%
20%
74%
8%
18%
71%
9%
20%
43%
12%
45%
44%
12%
44%
46%
18%
36%
74%
74%
83%
-
-
-
26%
26%
17%
2020 Annual Report and Form 20-F
31. Share Capital and Reserves
Equity share capital
Authorised
At 1 January and 31 December ($m)
2020
2019
Ordinary
Shares of
€0.32 each (i)
Income
Shares of
€0.02 each (ii)
Ordinary
Shares of
€0.32 each (i)
Income
Shares of
€0.02 each (ii)
491
28
491
28
Number of Shares at 1 January and 31 December (millions)
1,250
1,250
1,250
1,250
Allotted, called-up and fully paid
At 1 January ($m)
Cancellation of Treasury Shares (iii)
At 31 December ($m)
The movement in the number of shares (expressed in millions) during the financial year was as follows:
At 1 January
Cancellation of Treasury Shares (iii)
At 31 December
319
(2)
317
799
(4)
795
16
-
16
799
(4)
795
335
(16)
319
843
(44)
799
197
17
(1)
16
843
(44)
799
(i)
(ii)
The Ordinary Shares represent 93.71% of the total issued share capital as at 31 December 2020 (2019: 93.71%).
The Income Shares, which represent 5.86% of the total issued share capital as at 31 December 2020 (2019: 5.86%) were cancelled with effect from 9 February
2021 pursuant to a resolution approved by shareholders at an extraordinary general meeting of the Company held on 9 February 2021.
The Income Shares were created on 29 August 1988 for the express purpose of giving shareholders the choice of receiving dividends on either their Ordinary
Shares or on their Income Shares (by notice to the Company). The Income Shares carried a different tax credit to the Ordinary Shares. The creation of the Income
Shares was achieved by the allotment of fully paid Income Shares to each shareholder equal to his/her holding of Ordinary Shares but the shareholder is not
entitled to an Income Share certificate, as a certificate for Ordinary Shares was deemed to include an equal number of Income Shares and a shareholder may only
sell, transfer or transmit Income Shares with an equivalent number of Ordinary Shares. Income Shares carry no voting rights. Due to changes in Irish tax legislation
since the creation of Income Shares, dividends on the Company’s shares no longer carried a tax credit. As elections made by shareholders to receive dividends
on their holdings of Income Shares were no longer relevant, the Articles of Association were amended on 8 May 2002 to cancel such elections.
(iii) During 2020, 4,500,000 (2019: 43,750,000) Ordinary Shares (including Income Shares) were cancelled. The amount paid to repurchase these shares was initially
recognised in Treasury Shares/own shares and was transferred to retained income on cancellation.
Share schemes
The aggregate number of shares which may be committed for issue in respect of any share option scheme, savings-related share option scheme, share participation
scheme, performance share plan or any subsequent option scheme or share plan, may not exceed 10% of the issued ordinary share capital from time to time.
Share option schemes
Details of share options granted under the Company’s Share Option Schemes and the terms attaching thereto are provided in note 9 to the financial statements.
Under these schemes, options over a total of 256,521 Ordinary Shares were exercised during the financial year (2019: 1,147,149; 2018: 796,944).
Options exercised during the year (satisfied by the issue of new shares)
Number of shares
2020
2019
2018
-
-
496,661
Options exercised during the year (satisfied by the reissue of Treasury Shares)
256,521 1,147,149
300,283
Total
Share participation schemes
256,521 1,147,149
796,944
As at 31 December 2020, 8,319,280 (2019: 8,174,578) Ordinary Shares had been appropriated to participation schemes. In 2020, the appropriation was satisfied by
the purchase of 144,702 shares (2019: 148,846 satisfied by the purchase of new shares). The Ordinary Shares appropriated pursuant to these schemes were issued
at market value on the dates of appropriation. The shares issued pursuant to these schemes are excluded from the scope of IFRS 2 and are hence not factored into
the expense computation and the associated disclosures in note 9.
2020 Annual Report and Form 20-F 31. Share Capital and Reserves - continued
Preference share capital
Authorised
At 1 January 2020 and 31 December 2020
Allotted, called-up and fully paid
198
At 1 January 2020 and 31 December 2020
5% Cumulative
Preference Shares of
€1.27 each
7% ‘A’ Cumulative
Preference Shares
of €1.27 each
Number of Shares
‘000s
$m
Number of Shares
‘000s
150
50
-
-
872
872
$m
1
1
There was no movement in the number of cumulative preference shares in either the current or the prior year.
The holders of the 5% Cumulative Preference Shares are entitled to a fixed cumulative preference dividend at a rate of 5% per annum and priority in a winding-up to
repayment of capital, but have no further right to participate in profits or assets and are not entitled to be present or vote at general meetings unless their dividend is in
arrears. Dividends on the 5% Cumulative Preference Shares are payable half-yearly on 15 April and 15 October in each year. The 5% Cumulative Preference Shares
represent 0.02% of the total issued share capital as at 31 December 2020 (2019: 0.02%).
The holders of the 7% ‘A’ Cumulative Preference Shares are entitled to a fixed cumulative preference dividend at a rate of 7% per annum, and subject to the rights of
the holders of the 5% Cumulative Preference Shares, priority in a winding-up to repayment of capital, but have no further right to participate in profits or assets and are
not entitled to be present or vote at general meetings unless their dividend is in arrears or unless the business of the meeting includes certain matters, which are
specified in the Articles of Association. Dividends on the 7% ‘A’ Cumulative Preference Shares are payable half-yearly on 5 April and 5 October in each year. The 7%
‘A’ Cumulative Preference Shares represent 0.41% of the total issued share capital as at 31 December 2020 (2019: 0.41%).
Treasury Shares/own shares
At 1 January
Own Shares released by the Employee Benefit Trust under the 2014 Performance Share Plan
Shares acquired by CRH plc (Treasury Shares) (i)
Shares acquired by Employee Benefit Trust (own shares)
Treasury Shares/own shares reissued (ii)
Cancellation of Treasury Shares
At 31 December
Notes (i) to (ii) are set out overleaf.
2020
$m
(360)
65
(220)
(29)
8
150
(386)
2019
$m
(920)
70
(886)
(68)
42
1,402
(360)
2020 Annual Report and Form 20-F
199
The movement in the number of Treasury Shares/own shares (including Income Shares) during the financial year was as follows:
At 1 January
Number of shares
2020
2019
10,236,356
27,843,927
Own Shares released by the Employee Benefit Trust under the 2014 Performance Share Plan
(2,180,467)
(2,256,986)
Shares acquired by CRH plc (Treasury Shares) (i)
Shares acquired by Employee Benefit Trust (own shares)
Treasury Shares/own shares reissued (ii)
Cancellation of Treasury Shares
At 31 December
Split of Treasury Shares/own shares (iii)
Treasury Shares
Own shares
5,951,146
27,357,116
1,070,225
2,189,448
(256,521)
(1,147,149)
(4,500,000)
(43,750,000)
10,320,739
10,236,356
10,087,161
10,011,353
233,578
225,003
10,320,739
10,236,356
(i)
In March 2020 the Group completed the latest phase of its share buyback programme, returning a further $220 million of cash to
shareholders. This brings total cash returned to shareholders under the Group’s share buyback programme to $2 billion since its
commencement in May 2018.
Share buyback decisions are based on an ongoing assessment of the capital needs of the business and general market conditions. In
March 2020 the Board decided to pause the Group’s share buyback programme, however the Board has announced its intention to
recommence the programme and complete a further $0.3 billion tranche by the end of June 2021.
(ii)
These reissued Treasury Shares were previously purchased at an average price of $32.45 (2019: $36.43).
(iii) As at the balance sheet date, the nominal value of the Treasury Shares and own shares was €3.4 million and €0.1 million respectively
(2019: €3.4 million and €0.1 million respectively). Dividends have been waived by the Trustees of the own shares.
Reconciliation of shares issued to net proceeds
Shares issued at nominal amount:
- Performance Share Plan Awards
- scrip shares issued in lieu of cash dividends
Premium on shares issued
Total value of shares issued
Issue of scrip shares in lieu of cash dividends (note 13)
Shares allotted to the Employee Benefit Trust (iv)
Net proceeds from issue of shares
2018
$m
1
1
143
145
(61)
(70)
14
(iv)
In 2018, shares were allotted to the Employee Benefit Trust to satisfy the vesting and release of awards under the 2014 Performance
Share Plan to qualifying employees. An increase in nominal Share Capital and Share Premium of $70 million arose on the allotment to the
Employee Benefit Trust. No such allotment occured during 2020 or 2019.
Share premium
At 1 January and 31 December
2020
$m
7,493
2019
$m
7,493
2020 Annual Report and Form 20-F 32. Business Combinations
The acquisitions completed during the year ended 31 December 2020 by reportable segment, together with the completion dates, are detailed below; these
transactions entailed the acquisition of an effective 100% stake except where indicated to the contrary:
Americas Materials:
Canada: increased stake in Barrie Asphalt Plant to 100% (19 October);
Georgia: Chester White Construction, Inc. (12 June) and American Industries South, LLC. (11 September);
Louisiana: Barriere Construction (31 December);
Mississippi: WG Construction (19 February);
Nebraska: Flinn Paving (6 July); and
Oklahoma: certain assets of GCC (6 November).
200
Europe Materials:
France: Calexy (21 January) and Bras-Panon (31 March);
Spain: Formigons Palafolls S.L. (10 January); and
Ukraine: Odessa Plant (19 October).
Building Products:
Americas
Colorado: US Mix Co. (21 February);
Iowa: B&B Bedding, Inc. (1 July);
Minnesota: acquired assets of Suttle, Inc. from Communication Systems, Inc. (11 March) and select assets of CST Distribution, LLC. (22 December);
Tennessee: Highline Products (13 January); and
Texas: Martin Enterprises (29 December).
2020 Annual Report and Form 20-F
201
2018
$m
3,054
68
1
3,123
297
373
81
751
(265)
(96)
(133)
-
(87)
(18)
(479)
The identifiable net assets acquired, including adjustments to provisional fair values, were as follows:
2020
$m
2019
$m
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Equity accounted investments
Total non-current assets
Current assets
Inventories
Trade and other receivables (i)
Cash and cash equivalents
Total current assets
LIABILITIES
Trade and other payables
Provisions for liabilities
Retirement benefit obligations
Lease liabilities
Interest-bearing loans and borrowings and finance leases*
Current income tax liabilities
Deferred income tax liabilities
Total liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition (ii)
Joint ventures becoming subsidiaries
Non-controlling interests**
Total consideration
Consideration satisfied by:
Cash payments
Asset exchange
Deferred consideration (stated at net present cost)
Contingent consideration
Profit on step acquisition
Total consideration
Net cash outflow arising on acquisition
Cash consideration
Less: cash and cash equivalents acquired
Total outflow in the Consolidated Statement of Cash Flows
Notes (i) to (ii) are set out overleaf.
134
31
-
165
23
47
-
70
(21)
-
-
(12)
-
(1)
-
(34)
201
157
-
-
358
351
-
4
3
-
358
351
-
351
358
103
-
461
65
73
11
149
(82)
(7)
(1)
(71)
(10)
10
-
(161)
(1,078)
449
310
-
(1)
758
738
-
12
8
-
758
738
(11)
727
2,796
1,754
(149)
(55)
4,346
4,157
14
12
115
48
4,346
4,157
(81)
4,076
Includes $8 million in 2018 relating to finance leases previously capitalised under IAS 17. All leases capitalised under IFRS 16 have been included as lease liabilities in 2019 and 2020.
*
** Non-controlling interests are measured at the proportionate share of net assets.
2020 Annual Report and Form 20-F 32. Business Combinations - continued
The acquisition balance sheet presented on the previous page reflects the identifiable net assets acquired in respect of acquisitions completed during 2020, together
with adjustments to provisional fair values in respect of acquisitions completed during 2019. The measurement period for a number of acquisitions completed in 2019,
closed in 2020 with no material adjustments identified.
CRH performs a detailed quantitative and qualitative assessment of each acquisition in order to determine whether it is material for the purposes of separate disclosure
under IFRS 3 Business Combinations. None of the acquisitions completed during the year were considered sufficiently material to warrant separate disclosure of the
attributable fair values. The initial assignment of the fair values to identifiable assets acquired and liabilities assumed as disclosed are provisional (principally in respect
of property, plant and equipment) in respect of certain acquisitions due to timing of close. The fair value assigned to identifiable assets and liabilities acquired is based
on estimates and assumptions made by management at the time of acquisition. CRH may revise its purchase price allocation during the subsequent reporting window
as permitted under IFRS 3.
202
(i)
(ii)
The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to $47 million (2019: $74 million; 2018: $379
million). The fair value of these receivables is $47 million (all of which is expected to be recoverable) (2019: $73 million; 2018: $373 million).
The principal factor contributing to the recognition of goodwill on acquisitions entered into by the Group is the realisation of cost savings and other synergies with
existing entities in the Group which do not qualify for separate recognition as intangible assets. Due to the asset-intensive nature of operations in the Americas
Materials and Europe Materials business segments, no significant separately identifiable intangible assets are recognised on business combinations in these
segments. $148 million of the goodwill recognised in respect of acquisitions completed in 2020 is expected to be deductible for tax purposes (2019: $184 million;
2018: $330 million).
Acquisition-related costs for continuing operations, which exclude post-acquisition integration costs, amounting to $6 million (2019: $7 million; 2018: $21 million) have
been included in operating costs in the Consolidated Income Statement (note 4).
The following table analyses the 17 acquisitions completed in 2020 (2019: 58 acquisitions; 2018: 44 acquisitions) by reportable segment and provides details of the
goodwill and consideration figures arising in each of those segments:
Reportable segments
Continuing operations
Americas Materials
Europe Materials
Building Products
Total Group from continuing operations
Discontinued operations
Europe Distribution
Total Group
Adjustments to provisional fair values of prior year acquisitions
Total
Number of
acquisitions
Goodwill
Consideration
2020
2019
2018
2020
2019
2018
2020
2019
2018
$m
$m
$m
$m
$m
$m
7
4
6
17
-
17
27
15
15
57
1
58
24
10
8
42
2
44
53
-
90
143
-
143
14
157
35
1,575
163
182
3,957
4
253
292
56
87
1,718
7
182
352
71
501
754
103
248
4,308
-
-
-
4
38
292
1,718
352
758
4,346
18
36
310
1,754
6
-
-
358
758
4,346
The post-acquisition impact of acquisitions completed during the year on the Group’s profit for the financial year was as follows:
Continuing operations
Revenue
Profit before tax for the financial year
2020
$m
2019
$m
2018
$m
103
228
1,420
9
2
171
2020 Annual Report and Form 20-F
The revenue and profit of the Group for the financial year determined in accordance with IFRS as though the acquisitions effected during the year had been at the
beginning of the year would have been as follows:
Revenue
Profit before tax for the financial year
2020
acquisitions
$m
CRH Group
excluding 2020
acquisitions
$m
Consolidated
Group
including
acquisitions
$m
393
32
27,484
1,655
27,877
1,687
There have been no acquisitions completed subsequent to the balance sheet date which would be individually material to the Group, thereby requiring disclosure
under either IFRS 3 or IAS 10 Events after the Balance Sheet Date. Development updates, giving details of acquisitions which do not require separate disclosure on the
grounds of materiality, are published periodically.
203
33. Non-controlling Interests
The total non-controlling interest at 31 December 2020 is $692 million (2019: $607 million) of which $501 million (2019: $465 million) relates to Republic Cement &
Building Materials (RCBM), Inc. and Republic Cement Land & Resources (RCLR), Inc. The non-controlling interests in respect of the Group’s other subsidiaries are not
considered to be material.
Name
Principal activity
Country of incorporation
Economic ownership interest
held by non-controlling interest
Republic Cement & Building Materials, Inc.
and Republic Cement Land & Resources, Inc.
Manufacture, development and
sale of cement and building materials
Philippines
45%
The following is summarised financial information for RCBM and RCLR prepared in accordance with IFRS 12 Disclosure of Interests in Other Entities. This information
is before intragroup eliminations with other Group companies.
Summarised financial information
Profit for the year
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
2020
$m
22
250
1,754
(181)
(984)
839
2019
$m
21
213
1,690
(209)
(923)
771
Cash flows from operating activities
38
67
There were no dividends paid to non-controlling interests of the combined Philippines business during the current or the prior year.
CRH holds 40% of the equity share capital in RCBM and RCLR and has an economic interest of 55% of the combined Philippines business. Non-controlling interest
relates to another party who holds 60% of the equity share capital in RCBM and RCLR and has an economic interest of 45% of the combined Philippines business.
CRH has obtained control (as defined under IFRS 10 Consolidated Financial Statements) by virtue of contractual arrangements which give CRH power to direct the
relevant non-nationalised activities of the business, in compliance with Philippine law.
2020 Annual Report and Form 20-F 34. Related Party Transactions
The principal related party relationships requiring disclosure in the Consolidated Financial Statements of the Group under IAS 24 Related Party Disclosures pertain to:
the existence of subsidiaries, joint ventures and associates; transactions with these entities entered into by the Group; the identification and compensation of key
management personnel, and lease arrangements.
Subsidiaries, joint ventures and associates
The Consolidated Financial Statements include the financial statements of the Company (CRH plc, the ultimate parent) and its subsidiaries as well as its joint ventures
and associates accounted for by applying the equity method as documented in the accounting policies on pages 137 to 146. The Group’s principal subsidiaries, joint
ventures and associates are disclosed on pages 250 to 254.
Sales to and purchases from joint ventures and associates are as follows:
204
Continuing operations
Sales
Purchases
Joint ventures
2020
$m
127
24
2019
$m
132
27
2018
$m
126
37
Associates
2019
$m
41
18
2020
$m
31
15
2018
$m
48
228
Loans extended by the Group to joint ventures and associates (see note 17) are included in financial assets. Amounts receivable from and payable to equity accounted
investments (arising from the aforementioned sales and purchases transactions) as at the balance sheet date are included as separate line items in notes 19 and 20 to
the Consolidated Financial Statements.
Terms and conditions of transactions with subsidiaries, joint ventures and associates
In general, the transfer pricing policy implemented by the Group across its subsidiaries is market-based. Sales to and purchases from joint ventures and associates are
conducted in the ordinary course of business and on terms equivalent to those that prevail in arms-length transactions. The outstanding balances included in
receivables and payables as at the balance sheet date in respect of transactions with joint ventures and associates are unsecured and settlement of these arise in
cash. No guarantees have been either requested or provided in relation to related party receivables and payables. Loans to joint ventures and associates (as disclosed
in note 17) are extended on normal commercial terms in the ordinary course of business with interest accruing and, in general, paid to the Group at predetermined
intervals.
Key management personnel
For the purposes of the disclosure requirements of IAS 24, the term “key management personnel” (i.e. those persons having authority and responsibility for planning,
directing and controlling the activities of the Company) comprises of the Board of Directors which manage the business and affairs of the Company.
Key management remuneration amounted to:
Short-term benefits
Post-employment benefits
Share-based payments - calculated in accordance with the
principles disclosed in note 9
Total
2020
$m
2019
$m
2018
$m
9
1
6
16
9
1
6
16
9
1
5
15
Other than these compensation entitlements, there were no other transactions involving key management personnel.
Lease arrangements
CRH has a number of lease arrangements in place with related parties across the Group, which have been negotiated on an arms-length basis at market rates. We do
not consider these arrangements to be material either individually or collectively in the context of the 2020, 2019 and 2018 Consolidated Financial Statements.
35. Board Approval
The Board of Directors approved and authorised for issue the financial statements on pages 132 to 204 in respect of the year ended 31 December 2020 on 3 March
2021.
2020 Annual Report and Form 20-F
205
Company Balance Sheet
as at 31 December 2020
Notes
3
4
Fixed assets
Financial assets
Current assets
Debtors
Cash at bank and in hand
Total current assets
Creditors (amounts falling due within one year)
5
Trade and other creditors
Total current liabilities
Net current assets
Net assets
Capital and reserves
Called-up share capital
Preference share capital
Share premium account
Treasury Shares and own shares
Revaluation reserve
Other reserves
Foreign currency translation reserve
Profit and loss account (ii)
Total equity
8
8
8
9
9
2020
$m
Restated (i)
2019
$m
Restated (i)
2018
$m
9,951
9,067
9,248
786
623
1,409
121
121
1,086
515
1,601
118
118
1,412
471
1,883
580
580
1,288
1,483
1,303
11,239
10,550
10,551
333
1
7,499
(386)
62
435
327
2,968
11,239
335
1
7,499
(360)
62
402
(568)
3,179
10,550
352
1
7,499
(920)
62
369
(372)
3,560
10,551
(i) Restated throughout for presentation in US Dollar. See note 1 for further details.
(ii)
In accordance with section 304 of the Companies Act 2014, the profit for the financial year of the Company
amounted to $651 million (2019: $1,693 million).
R. Boucher, A. Manifold, Directors
2020 Annual Report and Form 20-F Company Statement of Changes in Equity
for the financial year ended 31 December 2020
Issued
share
capital
$m
Share
premium
account
$m
Treasury
Shares/
own shares
$m
Revaluation
reserve
$m
Other
reserves
$m
Foreign
currency
translation
reserve
$m
Profit
and loss
account
$m
Total
equity
$m
At 1 January 2020
Profit for the financial year
Total comprehensive income
206
Share-based payment expense
Shares acquired by CRH plc (Treasury Shares)
Treasury Shares/own shares reissued
Shares acquired by Employee Benefit Trust (own shares)
Shares distributed under the Performance Share Plan Awards
Cancellation of Treasury Shares
Share option exercises
Dividends
Translation Adjustment
336
-
-
-
-
-
-
-
(2)
-
-
-
7,499
-
-
-
-
-
-
-
-
-
-
-
At 31 December 2020
334
7,499
(360)
-
-
-
(220)
8
(29)
65
150
-
-
-
(386)
62
-
-
-
-
-
-
-
-
-
-
-
62
402
-
-
96
-
-
-
(65)
2
-
-
-
435
(568)
-
-
3,179
651
651
10,550
651
651
-
-
-
-
-
-
-
-
895
327
-
-
(8)
-
-
(150)
6
(710)
-
96
(220)
-
(29)
-
-
6
(710)
895
2,968
11,239
for the financial year ended 31 December 2019 (i)
At 1 January 2019 (restated)
Profit for the financial year
Total comprehensive income
Share-based payment expense
Shares acquired by CRH plc (Treasury Shares)
Treasury Shares/own shares reissued
Shares acquired by Employee Benefit Trust (own shares)
Shares distributed under the Performance Share Plan Awards
Cancellation of Treasury Shares
Share option exercises
Dividends
Translation Adjustment
At 31 December 2019 (restated)
353
7,499
(920)
62
369
(372)
3,560
10,551
-
-
-
-
-
-
-
(17)
-
-
-
336
-
-
-
-
-
-
-
-
-
-
-
7,499
-
-
-
(886)
42
(68)
70
1,402
-
-
-
(360)
-
-
-
-
-
-
-
-
-
-
-
62
-
-
86
-
-
-
(70)
17
-
-
-
402
-
-
1,693
1,693
1,693
1,693
-
-
-
-
-
-
-
-
(196)
(568)
-
-
(42)
-
-
(1,402)
22
(652)
-
86
(886)
-
(68)
-
-
22
(652)
(196)
3,179
10,550
(i) Restated throughout for presentation in US Dollar. See note 1 for further details.
2020 Annual Report and Form 20-F
Notes to the Company Balance Sheet
1. Basis of Preparation
The financial statements have been prepared on a going concern basis under the historical cost convention in accordance with the Companies Act 2014 and GAAP in
the Republic of Ireland (Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101)). Note 2 below describes the principal accounting policies under
FRS 101, which have been applied consistently.
In these financial statements the Company has applied the exemptions available under FRS 101 in respect of the following disclosures:
• Statement of Cash Flows;
• Disclosures in respect of transactions with wholly-owned subsidiaries;
• Certain requirements of IAS 1 Presentation of Financial Statements;
• Disclosures required by IFRS 7 Financial Instrument Disclosures;
• Disclosures required by IFRS 13 Fair Value Measurement; and
• The effects of new but not yet effective IFRSs
207
As outlined in the Consolidated Financial Statements on page 137, on 28 February 2020, the Group announced that with effect from 1 January 2020 it would be
changing the currency in which it presents its financial results from euro to US Dollar. CRH plc (the ‘Company’) also changed its presentation currency on this basis.
In accordance with the requirements of FRS 101, the reported results for the year ended 31 December 2019 have been translated from euro to US Dollar using the
procedures disclosed on page 137 of the Consolidated Financial Statements. A change in presentation currency represents a change in accounting policy which is
accounted for retrospectively.
An opening balance sheet has been presented on page 205 showing the impact of the change in presentation currency on 31 December 2018.
2. Accounting Policies
General information
The Company and its subsidiaries (together the
‘Group’) is a diversified building materials business
which manufactures and supplies a diverse range of
superior building materials and products for use in
the construction and maintenance of infrastructure,
housing and commercial projects of all sizes, all
across the world. The Company is a public limited
company whose shares are publicly traded. The
Company is incorporated and domiciled in the
Republic of Ireland. The Company’s registered
number is 12965 and registered office address is 42
Fitzwilliam Square, Dublin 2, Ireland.
Key accounting policies which
involve estimates, assumptions
and judgements
Preparation of the financial statements requires
management to make significant judgements and
estimates. The items in the financial statements
where these judgements and estimates have been
made include:
Financial assets
Investments in subsidiaries, are stated at cost less
any accumulated impairment and are reviewed for
impairment if there are indications that the carrying
value may not be recoverable. Impairment
assessment is considered as part of the Group’s
overall impairment assessment.
Loans receivable and payable
Intercompany loans receivable and payable are
initially recognised at fair value. These are
subsequently measured at amortised cost, less any
loss allowance.
Other significant
accounting policies
Operating income and expense
Operating income and expense arises from the
Company’s principal activities as a holding and
financing company for the Group and are
accounted for on an accruals basis.
Foreign currencies
The functional currency of the Company is euro.
Transactions in foreign currencies are translated at
the rates of exchange ruling at the transaction date.
Monetary assets and liabilities denominated in
foreign currencies are translated into euro at the
rates of exchange ruling at the balance sheet date,
with a corresponding charge or credit to the profit
and loss account.
The presentation currency of the Company is the
US Dollar.
Share-based payments
The Company has applied the requirements of
Section 8 of FRS 101.
The accounting policy applicable to share-based
payments is addressed in detail on page 141 of the
Consolidated Financial Statements.
Treasury Shares and own shares
Treasury Shares
Own equity instruments (i.e. Ordinary Shares)
acquired by the Company are deducted from equity
and presented on the face of the Company Balance
Sheet. No gain or loss is recognised in profit or loss
on the purchase, sale, issue or cancellation of the
Company’s Ordinary Shares.
Own shares
Ordinary Shares purchased by the Employee
Benefit Trust on behalf of the Company under the
terms of the Performance Share Plan are recorded
as a deduction from equity on the face of the
Company Balance Sheet.
Dividends
Dividends on Ordinary Shares are recognised as a
liability in the Company’s Financial Statements in
the period in which they are declared by the
Company and approved by shareholders in respect
of final dividends.
Dividend income
Dividend income is recognised when the right to
receive payment is established.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances
held for the purpose of meeting short-term cash
commitments and investments which are readily
convertible to a known amount of cash and are
subject to an insignificant risk of change in value.
Bank overdrafts are included within creditors falling
due within one year in the Company Balance Sheet.
2020 Annual Report and Form 20-F Notes to the Company Balance Sheet - continued
3. Financial Assets
The Company’s investment in its subsidiaries is as follows:
At 1 January 2020 at cost
Capital contribution in respect of share-based payments
Translation adjustment
208
At 31 December 2020 at cost
The equivalent disclosure for the prior year is as follows:
At 1 January 2019 at cost
Capital contribution in respect of share-based payments
Disposals
Translation adjustment
At 31 December 2019 at cost
Shares (i)
$m
Other
$m
8,642
-
797
9,439
8,841
-
(32)
(167)
8,642
425
45
42
512
407
47
(22)
(7)
425
Total
$m
9,067
45
839
9,951
9,248
47
(54)
(174)
9,067
(i) During 2019 the Company disposed of its investment in CRH International Financial Services Unlimited.
The Company’s principal subsidiaries, joint ventures and associates are disclosed on pages 250 to 254.
Pursuant to Section 348(4) of the Companies Act 2014, a full list of subsidiaries, joint ventures and associated undertakings will be annexed to the Company’s annual
return to be filed in the Companies Registration Office in Ireland.
4. Debtors
Amounts owed by subsidiary undertakings
Amounts owed by subsidiary undertakings are repayable on demand.
5. Creditors
Amounts falling due within one year
Amounts owed to subsidiary undertakings
Corporation tax liability
Amounts owed to subsidiary undertakings are repayable on demand.
2020
$m
786
2020
$m
118
3
121
2019
$m
1,086
2019
$m
118
-
118
2020 Annual Report and Form 20-F
6. Auditor’s Remuneration
(Memorandum Disclosure)
With effect from 2020, following a competitive
tender process, Deloitte Ireland LLP (Deloitte) was
appointed as auditor of the Group and Company,
replacing Ernst & Young (EY). Auditor’s
remuneration for services provided during the year
ended 31 December 2020 thus relates to Deloitte
and for the year ended 31 December 2019 to EY.
In accordance with Section 322 of the Companies
Act 2014, the fees paid in 2020 to the statutory
auditor for work engaged by the Parent Company
comprised audit fees of $22,000 (2019: $22,000)
and other assurance services of $nil (2019: $nil).
The statutory auditor has not provided any tax
advisory or other non-audit services to the Parent
Company during the financial year (2019: $nil).
7. Dividends Proposed
(Memorandum Disclosure)
Details in respect of dividends proposed of $730
million (2019: $550 million) and dividends paid
during the year are presented in the dividends note
(note 13) on page 162 of the notes to the
Consolidated Financial Statements.
8. Called-up Share Capital
Details in respect of called-up share capital,
preference share capital, Treasury Shares and own
shares are presented in the share capital and
reserves note (note 31) on pages 197 to 199 of the
notes to the Consolidated Financial Statements.
9. Reserves
Revaluation Reserve
The Company’s revaluation reserve arose on the
revaluation of certain investments prior to the
transition to FRS 101.
Other Reserves
The Company’s other reserves includes $19 million
(2019: $17 million) undenominated share capital
that arose on the cancellation of the Treasury
Shares.
In accordance with Section 304 of the Companies
Act 2014, the Company is availing of the exemption
from presenting its individual profit and loss account
to the AGM and from filing it with the Registrar of
Companies.
The reserves of the Company available for
distribution are restricted by the amount of the
consideration paid for the Treasury Shares and own
shares held by the Company, $386 million as at
31 December 2020 (2019: $360 million) and the
undenominated share capital of $19 million
(2019: $17 million).
11. Section 357 Guarantees
Any Irish registered wholly-owned subsidiary of the
Company may avail of the exemption from filing its
statutory financial statements for the year ended
31 December 2020 as permitted by Section 357 of
the Companies Act 2014 and if an Irish registered
wholly-owned subsidiary of the Company elects to
avail of this exemption, there will be in force an
irrevocable guarantee from the Company in respect
of all commitments entered into by such wholly-
owned subsidiary, including amounts shown as
liabilities (within the meaning of Section 357 (1)(b) of
the Companies Act 2014) in such wholly-owned
subsidiary’s statutory financial statements for the
year ended 31 December 2020.
Details in relation to other guarantees provided by
the Company are provided in the interest-bearing
loans and borrowings note (note 26) on page 187 of
the notes to the Consolidated Financial Statements.
12. Directors’ Emoluments
Directors’ emoluments and interests are presented
in the Directors’ Remuneration Report on pages 74
to 99 of this Annual Report and Form 20-F.
10. Share-based Payments
13. Board Approval
The total expense of $96 million (2019: $86 million)
reflected in the Consolidated Financial Statements
attributable to employee share options and
performance share awards has been included as a
capital contribution in financial assets (note 3) in
addition to any payments to/from subsidiaries.
The Board of Directors approved and authorised for
issue the Company Financial Statements on pages
205 to 209 in respect of the year ended
31 December 2020 on 3 March 2021.
209
2020 Annual Report and Form 20-F 210
We are committed to accountability and
transparency around our sustainability
performance and use detailed KPIs to
demonstrate progress against a range
of ambitious targets each year.
Supplementary
20-F Disclosures
211
211
Selected Financial Data
Non-GAAP Performance
Measures
Supplemental Guarantor
Information
Contractual Obligations
Property, Plants and
Equipment
Mineral Reserves
Risk Factors
Corporate Governance
Practices
The Environment and
Government Regulations
Other Disclosures
212
213
218
219
220
221
223
232
234
235
A production worker at an Oldcastle BuildingEnvelope® (OBE) facility in Wright City,
St. Louis, Missouri. The facility, one of 66 OBE locations across the US, tempers and
fabricates glass for demountable wall systems and writable surfaces. OBE is part of
CRH’s Building Products Division and is a leading supplier of glazing-focused, interior
and exterior products and services in North America.
2020 Annual Report and Form 20-F Selected Financial Data
The Consolidated Financial Statements of CRH plc
have been prepared in accordance with IFRS as
issued by the International Accounting Standards
Board.
Selected financial data is presented below for the
five years ended on 31 December 2020. As at 31
December 2020 and 2019 and for the three years
ended 31 December 2020, 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.
Year ended 31 December (amounts in millions, except per share data)
Consolidated Income Statement data
Revenue
212
Group operating profit
Profit attributable to equity holders of the Company
Basic earnings per Ordinary Share
Diluted earnings per Ordinary Share
Dividends paid during the calendar year per Ordinary Share (iii)
Average number of Ordinary Shares outstanding (iv)
All data relates to continuing operations
Consolidated Balance Sheet data
Total assets (ii)
Net assets (v)
Ordinary shareholders' equity
Equity share capital
Number of Ordinary Shares (iv)
Number of Treasury Shares and own shares (iv)
Number of Ordinary Shares net of Treasury Shares and own shares (iv)
2020
$m
2019 (i)
2018 (i)
2017 (i)
2016 (i)
$m
$m
$m
$m
27,587
28,132
27,449
24,461
23,586
2,263
1,122
142.9c
141.8c
92.0c
785.1
44,944
20,348
19,655
333
795.1
10.3
784.8
2,793
1,627
203.0c
201.4c
81.2c
2,446
1,497
179.8c
178.9c
82.8c
2,177
1,838
220.0c
218.6c
72.2c
2,008
1,138
137.5c
136.5c
70.0c
801.3
832.4
835.6
827.8
47,612
19,635
19,027
335
799.6
10.2
789.4
46,777
18,952
18,349
352
843.4
27.8
815.6
42,467
17,962
17,377
350
839.0
0.4
838.6
37,208
15,223
14,644
348
832.8
0.4
832.4
(i) Prior year comparative data has been restated to US Dollar. See the Accounting Policies on page 137 for further details.
(ii) Prior year comparative data has been restated to reflect a change in the presentation of cash and cash equivalents and bank overdrafts. See the Accounting
Policies on page 137 for further details.
(iii) Interim and final dividends per share declared previously in euro have been translated to US Dollar using the dividends record date exchange rate.
(iv) All share numbers are shown in millions of shares.
(v) Net assets is calculated as the sum of the total assets less total liabilities.
Non-GAAP Performance Measures
CRH 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.
Reconciliation of Revenue, EBITDA (as defined)* and Operating Profit by segment
Year ended 31 December
Revenue
2019
$m
2020
$m
Group EBITDA
(as defined)*
2018
$m
2020
$m
2019
$m
2018
$m
Depreciation,
amortisation and
impairment
2019
$m
2020
$m
2018
$m
Group
operating profit (i)
2019
$m
2020
$m
2018
$m
213
Continuing operations
Americas Materials
Europe Materials
Building Products
11,273 11,626 10,572
2,405
2,194
1,763
774
9,141
9,509
9,498
1,055
1,208
1,106
1,245
7,173
6,997
7,379
1,170
1,076
930
348
771
586
328
571
531
251
1,631
1,423
1,192
(190)
822
622
748
575
679
Total Group from continuing operations
27,587 28,132 27,449
4,630
4,478
3,799
2,367
1,685
1,353
2,263 2,793
2,446
Discontinued operations
Americas Distribution
Europe Distribution
Total Group
-
-
‑
8
3,557
4,191
-
-
‑
(6)
224
176
-
-
‑
111
‑
50
-
-
‑
(6)
113
126
27,587 31,689 31,648
4,630
4,702
3,969
2,367
1,796
1,403
2,263 2,906
2,566
Group operating profit from continuing operations
Profit/(loss) on disposals
Finance costs less income
Other financial expense
Share of equity accounted investments' (loss)/profit
Profit before tax from continuing operations
Income tax expense
Group profit for the financial year from continuing operations
Profit after tax for the financial year from discontinued operations
Group profit for the financial year
2,263 2,793
2,446
9
(389)
(101)
(118)
(189)
(365)
(125)
67
(121)
(360)
(54)
57
1,664 2,181
1,968
(499)
(534)
(467)
1,165 1,647
1,501
-
91
1,388
1,165 1,738
2,889
(i) Throughout this document, Group operating profit is reported as shown in the Consolidated Income Statement and excludes profit on disposals.
*
EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
2020 Annual Report and Form 20-F Non-GAAP Performance Measures - continued
Return on Net Assets
Group operating profit from continuing operations
Group operating profit from discontinued operations
Group operating profit
Adjusted for impairment charges (iv)
Group operating profit excluding impairment charges (numerator for RONA computation)
Current year
Segment assets (i)
Segment liabilities (i)
214
Group segment net assets
Lease liabilities (ii)
Group segment net assets excluding lease liabilities
Prior year
Segment assets (i)
Segment liabilities (i)
Group segment net assets
Lease liabilities (ii)
Group segment net assets excluding lease liabilities
Average net assets (denominator for RONA computation)
RONA
2020
$m
2,263
-
2,263
673
2,936
36,218
(9,136)
27,082
1,635
28,717
36,716
(8,940)
27,776
1,697
29,473
29,095
10.1%
2019
$m
2,793
113
2,906
8
2,914
36,716
(8,940)
27,776
1,697
29,473
36,079
(7,547)
28,532
‑
28,532
29,003
10.0%
2018 (iii)
$m
2,446
126
2,572
66
2,638
36,079
(7,547)
28,532
‑
28,532
32,152
(7,437)
24,715
‑
24,715
26,624
9.9%
Reconciliation of Segment Assets and Liabilities to Group Assets and Liabilities
Assets
Segment assets (i)
Reconciliation to total assets as reported in the Consolidated Balance Sheet:
Investments accounted for using the equity method
Other financial assets
Derivative financial instruments (current and non‑current)
Income tax assets (current and deferred)
Cash and cash equivalents
Assets held for sale
Total assets as reported in the Consolidated Balance Sheet
Liabilities
Segment liabilities (i)
Reconciliation to total liabilities as reported in the Consolidated Balance Sheet:
Interest‑bearing loans and borrowings (current and non‑current)
Derivative financial instruments (current and non‑current)
Income tax liabilities (current and deferred)
Liabilities associated with assets classified as held for sale
Total liabilities as reported in the Consolidated Balance Sheet
2020
$m
2019
$m
2018
$m
2017
$m
36,218
36,716
36,079
32,152
626
13
201
165
7,721
-
44,944
775
13
92
98
9,918
‑
47,612
1,332
26
51
98
9,191
‑
46,777
1,497
30
77
312
7,065
1,334
42,467
9,136
8,940
7,547
7,437
12,215
13
3,232
-
24,596
15,827
18
3,192
‑
27,977
17,172
68
3,038
‑
27,825
14,095
17
2,547
409
24,505
(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 2020 and 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 2020 amounted
to: Americas Materials $345 million (2019: $408 million), Europe Materials $547 million (2019: $554 million) and Building Products $743 million
(2019: $735 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 $6 million in 2018 is also excluded.
(iv) Operating profit is adjusted for non‑cash impairment charges. Please see note 4 for further detail on such impairment charges.
Calculation of EBITDA (as defined)* Net Interest Cover
Interest
Finance costs (i)
Finance income (i)
Net interest
2020
$m
389
-
389
2019
$m
387
(22)
365
2018
$m
399
(39)
360
EBITDA (as defined)* from continuing operations
4,630
4,478
3,799
EBITDA (as defined)* Net Interest Cover (EBITDA (as defined)* divided by net interest)
11.9
12.3
10.6
215
Times
(i) These items appear on the Consolidated Income Statement on page 132 and in note 10 to the Consolidated Financial Statements.
Calculation of Net Debt/EBITDA (as defined)*
Net debt
Cash and cash equivalents (i)
Interest‑bearing loans and borrowings (i)
Lease liabilities under IFRS 16 (i)
Derivative financial instruments (net) (i)
Group net debt (i)
EBITDA (as defined)* from continuing operations
2020
$m
2019
$m
7,721
(12,215)
(1,635)
188
(5,941)
9,918
(15,827)
(1,697)
74
(7,532)
4,630
4,478
Times
Net Debt divided by EBITDA (as defined)* from continuing operations
1.3
1.7
(i) These items appear in notes 22 to 27 to the Consolidated Financial Statements.
Total Shareholder Return (TSR)
Total shareholder return represents the total accumulated value delivered to shareholders (via gross dividends reinvested
and share appreciation) if €100 was invested in CRH plc shares in 1970.
Investment in CRH plc shares (1970)
Accumulated CRH plc shares (31 December) ‑ based on reinvestment of dividends
Share price (31 December) ‑ Euronext Dublin
Shareholder value (31 December) ‑ '000
Total shareholder return (i)
(i) Calculated using Compound Average Growth Rate (CAGR) methodology
2020
€100
3,465
€34.02
€118
15.1%
2019
€100
3,368
€35.67
€121
15.6%
*
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.
2020 Annual Report and Form 20-F Non-GAAP Performance Measures - continued
Profit after Tax (Pre-impairment)
Group profit for the financial year from continuing operations (i)
Adjusted for:
Impairment of property, plant and equipment and intangible assets (ii)
Impairment of equity accounted investments (iii)
Tax related to impairment charges
Group profit pre‑impairment for the financial year from continuing operations
216
Earnings per Share (Pre-impairment)
Profit attributable to ordinary equity holders of the Company from continuing operations (i) (iv)
Impairment of property, plant and equipment and intangible assets (ii)
Impairment of equity accounted investments (iii)
Tax related to impairment charges
Profit attributable to ordinary equity holders of the Company from continuing operations – pre‑impairment
Weighted average number of Ordinary Shares (millions) outstanding for the year (iv)
Basic earnings per Ordinary Share pre‑impairment from continuing operations
(i) These items appear on the Consolidated Income Statement on page 132.
(ii) See further details in note 4 to the Consolidated Financial Statements on page 152.
(iii) See further details in note 11 to the Consolidated Financial Statements on page 160.
(iv) These items appear in note 14 to the Consolidated Financial Statements on page 163.
2020
$m
2019
$m
2018
$m
1,165
1,647
1,501
673
154
(39)
8
‑
(2)
66
‑
(8)
1,953
1,653
1,559
2020
$m
1,122
673
154
(39)
1,910
785.1
243.3
2019
$m
1,627
8
‑
(2)
1,633
801.3
203.8
2018
$m
1,497
66
‑
(8)
1,555
832.4
186.8
EBITDA (as defined). EBITDA is defined as earnings
before interest, taxes, depreciation, amortisation,
asset impairment charges, profit on disposals and the
Group’s share of equity accounted investments’ profit
after tax and is quoted by management in conjunction
with other GAAP 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)* by segment is
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).
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. It is the ratio of Net Debt to EBITDA (as
defined)* and is calculated on page 215.
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
215.
RONA. Return on Net Assets is a key internal
pre‑tax and pre‑non‑cash impairment 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 excluding
non‑cash impairment charges1 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
214 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 $406 million spent on acquisitions
and investments in 2020 (2019: $813 million).
Acquisitions completed in 2019 and 2020
contributed incremental sales revenue of
$368 million, operating profit of $32 million and
EBITDA (as defined)* of $65 million in 2020. Cash
proceeds from divestments and non‑current asset
disposals amounted to $307 million (net of cash
disposed and including deferred consideration
proceeds in respect of prior year divestments)
(2019: $2,343 million). The sales impact of divested
* 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. To better align to the measure used internally by management we have adjusted our RONA definition to exclude any non‑cash impairment charges. We have accordingly presented our prior period RONA
disclosures on page 214 on a consistent basis; excluding non‑cash impairment charges of $8 million in 2019 and $66 million in 2018.
activities in 2020 was a negative $413 million and
the impact at an operating profit and EBITDA (as
defined)* level was a negative $14 million and
$33 million respectively.
The US Dollar weakened against most major
currencies during 2020 resulting in the average US
Dollar/euro rate strengthening from 0.8933 in 2019
to 0.8771 in 2020 and the Pound Sterling
strengthening from an average 0.7841 in 2019 to
0.7798 in 2020. Overall currency movements
resulted in a favourable net foreign currency
translation impact on our results as shown on the
table on page 33.
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)* are 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 51, changes in organic
revenue, organic operating profit and organic
EBITDA (as defined)* are presented as additional
measures of revenue, operating profit and EBITDA
(as defined)* to provide a greater understanding of
the performance of the Group. Organic change % is
calculated by expressing the organic movement as
a percentage of the prior year (adjusted for exchange
effects). 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 businesses 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
further 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 213.
Cash paid to Shareholders. Cash paid to
shareholders is a measure of cash returned to
shareholders representing dividends of $0.7 billion
(2019: $0.7 billion) paid during the year and excess
cash of $0.2 billion (2019: $0.9 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 monitors the cash paid to shareholders as part
of its overall capital allocation strategy.
Total Shareholder Return (TSR). TSR is a measure of
shareholder returns delivery through the cycle. It
represents the total accumulated value delivered to
shareholders since the formation of the Group in
1970 (via gross dividends reinvested and share
appreciation) and is calculated on page 215. The
metric provides information on total returns for
shareholders and is provided to assist investors in the
comparison of the Group's performance with that of
other companies.
Profit after Tax (Pre-impairment). Profit after Tax
pre‑impairment as calculated on page 216 is a
measure of the Group's profitability from continuing
operations excluding any non‑cash impairment
charges and the related tax impact of such
impairments. Profit after Tax presented on a
pre‑impairment basis is used by management to
evaluate the Group's profitability in a given year and
is useful to investors as it (i) provides an
understanding of the Group's underlying
performance and (ii) assists investors in the
comparison of the Group's performance with that of
other companies.
Earnings per Share (Pre-impairment). Earnings per
Share (EPS) pre‑impairment is a measure of the
Group's profitability per share from continuing
operations excluding any non‑cash impairment
charges and the related tax impact of such
impairments. It is used by management to evaluate
the Group's underlying profitability performance
relative to that of other companies and its own past
performance. EPS information presented on a
pre‑impairment basis is useful to investors as it (i)
provides an insight into the Group's underlying
performance and profitability and (ii) assists investors
in the comparison of the Group's performance with
that of other companies. EPS pre‑impairment is
calculated on page 216 as profit attributable to the
ordinary equity holders of the Company from
continuing operations excluding any non‑cash
impairment charges (and the related tax impact of
such impairments) divided by the weighted average
number of ordinary shares outstanding for the year.
217
MoistureShield®, a division of Oldcastle APG within CRH’s Building Products Division, launched Cold Brew, a new part of its capped composite decking line in 2020. Cold Brew offers
the option of proprietary CoolDeck® technology, which minimizes heat absorption by up to 35%. Oldcastle APG, is a leading manufacturer of outdoor living products in North America
and delivered strong sales growth in 2020, reflecting heightened residential RMI demand.
2020 Annual Report and Form 20-F Intercompany balances and transactions within the
Obligor Group have been eliminated in the
summarised financial information below. Amounts
attributable to the Obligor Group’s investment in
non‑obligor subsidiaries have also been excluded.
Intercompany receivables/payables and transactions
with non‑obligor subsidiaries are separately
disclosed as applicable.
This summarised financial information has been
prepared and presented pursuant to the Securities
and Exchange Commission Regulation S‑X Rule
13‑01 and is not intended to present the financial
position and results of operations of the Obligor
Group in accordance with IFRS.
Supplemental Guarantor Information
Guarantor Financial Information
CRH America, Inc. (the ‘Issuer’) has the following
Notes which are fully and unconditionally
guaranteed by CRH plc (the ‘Guarantor’):
• US$400 million 5.750% Notes due 2021 – listed
on the NYSE
• US$1,250 million 3.875% Notes due 2025 –
listed on Euronext Dublin
• US$300 million 6.40% Notes due 2033 – listed
218
on Euronext Dublin (i)
• US$500 million 5.125% Notes due 2045 – listed
on Euronext Dublin
(i) Originally issued as a US$300 million bond in
September 2003. Subsequently in August 2009
and December 2010, US$87.445 million of the
issued Notes were acquired by CRH plc as part
of liability management exercises undertaken
CRH America, Inc. is 100% owned by the Company
(CRH plc). The Notes are fully and unconditionally
guaranteed by CRH plc as defined in the indentures
governing the Notes.
The Notes are unsecured and rank equally with all
other present and future unsecured and
unsubordinated obligations of CRH America, Inc
and CRH plc, subject to exceptions for obligations
preferred by law.
The guarantee is a full, irrevocable and unconditional
guarantee of the principal, interest, premium, if any,
and any other amounts payable in respect of the
Guaranteed Notes given by CRH plc.
CRH plc also fully and unconditionally guarantees
securities issued by CRH America Finance, Inc., which
is a 100% owned finance subsidiary of CRH plc.
Basis of Presentation
The following summarised financial information
reflects, on a combined basis, the Balance Sheet as
at 31 December 2020 and the Income Statement
for the year ended 31 December 2020 of CRH
America, Inc and CRH plc, which guarantees the
registered debt; collectively the ‘Obligor Group’.
The summarised Income Statement information for the year ended 31 December 2020 is as follows:
Profit before tax from continuing operations (i)
-
of which relates to transactions with non-obligor subsidiaries
Profit for the financial year – all of which is attributable to equity holders of the Company
- of which relates to transactions with non-obligor subsidiaries
For the year ended
31 December 2020
$m
663
761
658
761
(i)
Revenue and Gross Profit for the Obligor Group for the year ended 31 December 2020 amounted to $nil million.
The summarised Balance Sheet information as at the 31 December 2020 is as follows:
Current assets
Current assets – of which is due from non-obligor subsidiaries
Non‑current assets
Non‑current assets – of which is due from non-obligor subsidiaries
Current liabilities
Current liabilities – of which is due to non-obligor subsidiaries
Non‑current liabilities
Non‑current liabilities – of which is due to non-obligor subsidiaries
As at
31 December 2020
$m
1,481
786
4,189
4,115
541
118
2,085
nil
Contractual Obligations
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 2020 is as follows:
Contractual Obligations
Payments due by period
Interest‑bearing loans and borrowings (i)
Lease liabilities under IFRS 16 (ii)
Estimated interest payments on contractually‑committed debt (iii)
Deferred and contingent acquisition consideration
Purchase obligations (iv)
Retirement benefit obligation commitments (v)
Total
Total
$m
12,088
2,176
3,439
364
1,582
20
19,669
Less than
1 year
$m
1,270
301
345
34
862
2
1-3 years
$m
2,017
3-5 years
$m
1,996
463
624
42
266
4
327
518
283
145
4
More than
5 years
$m
6,805
1,085
1,952
5
309
10
219
2,814
3,416
3,273
10,166
(i)
Of the $12.1 billion total gross debt, $0.2 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 2020 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 Risk
CRH addresses the sensitivity of the Group’s
interest rate swaps and debt obligations to changes
in interest rates in a sensitivity analysis technique
that measures the estimated impacts on the income
statement and on equity of either an increase or
decrease in market interest rates or a strengthening
or weakening in the euro against all other
currencies, from the rates applicable at 31
December 2020, 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
increase/decrease of 1% in floating interest rates or
a 5% strengthening/weakening in the US Dollar/euro
exchange rate. The US Dollar/euro rate has been
selected for this sensitivity analysis given the
materiality of the Group’s activities in euro. 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.
Off-Balance Sheet Arrangements
CRH 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.
Quantitative and qualitative information and
sensitivity analysis of market risk is contained
in notes 23 to 27 to the Consolidated
Financial Statements.
2020 Annual Report and Form 20-F Property, Plants and Equipment
At 19 February 2021, CRH had a total of 3,111
building materials production locations. 1,124
locations are leased, with the remaining 1,987
locations held on a freehold basis.
The significant subsidiary locations as at 31
December 2020 are the cement facilities in the US,
Philippines, Poland, Ukraine, the UK, Romania,
Slovakia, Canada, Ireland, Germany, France and
Brazil. The clinker (the key intermediate product in
the manufacture of cement) capacity for these
locations is set out in the table below. Further details
on locations and products manufactured are
provided on pages 258 and 259. None of CRH’s
individual properties is of material significance to
the Group.
CRH believes that all the facilities are in good
condition, adequate for their purpose and suitably
utilised according to the individual nature and
Significant Locations – Clinker Capacity
220
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 142 and in note 15 to the
Consolidated Financial Statements on page 164.
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.
Sources and Availability
of Raw Materials
CRH generally owns or leases the real estate on
which its main raw materials, namely aggregates,
are found. CRH is a significant purchaser of certain
important materials or resources such as cement,
bitumen, steel, gas, fuel and other energy supplies,
Mine Safety Disclosures
The information concerning mine safety violations
and other regulatory matters required by Section
1503(a) of the Dodd‑Frank Wall Street Reform and
Consumer Protection Act is included in Exhibit 16 to
CRH’s Annual Report on Form 20‑F, as filed with the
Securities and Exchange Commission (SEC).
Country
Number of plants
Clinker capacity
(tonnes per hour)
Subsidiary
Ash Grove
Republic Cement
Podilsky Cement PJSC
Tarmac
CRH Romania
CRH Slovakia
CRH Canada
Irish Cement
Opterra
Eqiom
United States
Philippines
Poland
Ukraine
United Kingdom
Romania
Slovakia
Canada
Ireland
Germany
France
8
5
1
1
3
2
2
2
2
2
3
2
3
925
628
342
325
306
305
290
288
288
268
243
223
200
Suwannee American Cement Company
United States
CRH Brazil
Brazil
221
Mineral Reserves
Activities with Reserves Backing (i)
Surface acreage
(hectares) (ii)
% of mineral
reserves by rock type
Physical location
No. of
quarries
/pits Owned
Leased
Proven &
probable
reserves (iii)
Years to
depletion
(iv)
Hard
rock
Sand &
gravel Other
2020
Annualised
extraction (v)
Europe Materials
Cement
Aggregates
Lime
Subtotals
Americas Materials
Cement
Aggregates
Subtotals
Group totals
France
Germany
Ireland
Philippines
Poland
Romania
Serbia
Slovakia
Spain
Switzerland
Ukraine
3
2
3
14
1
6
2
5
2
3
2
778
632
1,128
996
516
795
120
87
78
183
‑
United Kingdom
11
2,105
Finland
France
Ireland
Philippines
Poland
Romania
Spain
United Kingdom
Other
Ireland, Poland,
UK, Czech Republic
Germany
91
49
85
1
2
13
9
189
30
4
9
1,297
716
4,578
‑
211
399
75
9,322
630
472
814
‑
‑
‑
213
‑
475
41
309
‑
26
297
199
874
1,125
372
‑
10
230
110
7,290
368
12
10
75
130
208
468
188
231
105
285
104
86
94
255
208
158
896
62
126
39
90
1,290
136
110
251
Brazil
Canada
United States
Canada
United States
536
25,932
11,961
5,595
3
2
9
1,194
732
2,447
‑
‑
‑
46
659
719
5,583
47,632
57,588
799
19,313
20,112
1,255
83,520
32,073
104
249
577
783
15,041
16,754
22,349
27
50
70
68
45
52
105
126
195
86
31
59
18
21
55
599
36
24
61
35
22
39
39
56
90
62
39
95
100%
100%
100%
100%
93%
80%
100%
74%
100%
100%
65%
96%
78%
71%
92%
100%
100%
90%
100%
89%
39%
100%
100%
90%
100%
100%
100%
82%
73%
70%
75%
‑
‑
‑
‑
6%
‑
‑
‑
‑
‑
‑
‑
22%
29%
8%
‑
‑
10%
‑
11%
‑
‑
‑
‑
1%
20%
‑
26%
‑
‑
35%
4%
‑
‑
‑
‑
‑
‑
‑
‑
32% 29%
‑
‑
10%
‑
‑
‑
18%
27%
30%
25%
‑
‑
‑
‑
‑
‑
‑
‑
-
-
2.5
2.3
3.1
6.7
4.0
4.2
1.2
2.4
0.8
0.9
3.2
4.4
10.8
5.5
13.7
0.0
3.3
1.9
0.9
32.4
6.4
3.1
6.1
1.9
2.4
8.9
18.9
133.9
(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.
2020 Annual Report and Form 20-F
Mineral Reserves - continued
222
The Group’s reserves for the production of primary
building materials (which encompasses cement,
lime, aggregates (stone, sand and gravel), asphalt,
readymixed concrete and concrete products)
fall into a variety of categories spanning a
wide number of rock types and geological
classifications – see the table on the previous page
setting out the activities with reserves backing.
Reserve estimates are generally prepared by
third‑party experts (i.e. geologists or engineers) prior
to acquisition; this procedure is a critical component
in the Group’s due diligence process in connection
with any acquisition. Subsequent to acquisition,
estimates are typically updated by company
engineers and/or geologists and are reviewed
annually by corporate and/or divisional staff.
However, where deemed appropriate by
management, in the context of large or strategically
important deposits, the services of third‑party
consultant geologists and/or engineers may be
employed to validate reserves quantities outside of
the aforementioned due diligence framework on an
ongoing basis.
The Group has not employed third‑parties to review
reserves over the three‑year period ending 31
December 2020 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 lease
None of CRH’s mineral‑bearing properties is
individually material to the Group.
Risk Factors
This section describes the key risk factors that
could affect the Group’s business. If any of these
risks occur, the Group’s business, financial
condition, results of operations and prospects could
be materially adversely affected.
The risk factors listed below should be considered
in connection with any forward‑looking statements
in this Annual Report and Form 20‑F and the
cautionary statements contained in Corporate
Governance ‑ Disclaimer/Forward‑Looking
Statements on page 101.
attributable to changes in markets, regulatory
environments and other factors and existing risk
factors may become less relevant.
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
2020 Annual Report and Form 20‑F. During the
course of 2021, new risk factors may materialise
The Risk Factors have been grouped to focus on
key strategic, operational, compliance and financial
and reporting risks.
223
Key Strategic Risk Factors
Industry Cyclicality and Economic Conditions
Risk
Discussion
Description:
Construction activity, and therefore demand for
the Group’s products, is inherently cyclical as it
is influenced by global and national economic
circumstances, monetary policies, 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 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 level of demand for building materials and services, with sustained adverse weather conditions
leading to potential disruptions or curtailments in outdoor construction activity; and
• The price of fuel and principal energy‑related raw materials such as bitumen and steel (which accounted
for approximately 9% of annual Group sales revenues in 2020 (11% in 2019))
The adequacy and timeliness of the actions taken by the Group’s management team are of critical importance
in maintaining financial performance at appropriate levels. There is no guarantee that any future actions taken
by Group management will be effective in managing these risks. 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.
2020 Annual Report and Form 20-F Key Strategic Risk Factors - continued
Portfolio Management
Risk
Discussion
224
Description:
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 small to 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 228.
The Group’s ability to realise the expected benefits from acquisition activity depends, in large part, on its ability
to integrate newly‑acquired businesses in a timely and effective manner. Even if the Group is able to acquire
suitable companies, it still may not achieve the growth synergies or other financial and operating benefits it
expected to achieve, and the Group may incur write‑downs, impairment charges or unforeseen liabilities that
could negatively affect its operating results or financial position or could otherwise harm the Group’s business.
Further, integrating an acquired business, product or technology could divert management time and resources
from other matters.
Public Policies and Geopolitics
Risk
Discussion
Description:
Adverse public policy, economic, social and political
situations in any country in which the Group operates
could lead to a fall in demand for the Group’s
products, 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.
Our markets and demand for the Group’s products is influenced by public policy and the fiscal ability and
investment strategy of local and national governments in the jurisdictions in which we operate. The allocation
of government funding for public infrastructure programmes is a key driver for our markets, such as the
development of highways in the US under the Fixing Americas Surface Transportation Act (FAST Act), which
has been extended to September 2021. COVID‑19 restrictions and lockdowns increase the demand for
government social expenditure, while having a dampening effect on the receipt of taxes. Any significant local
and national government budget deficits, exacerbated by the effects of the COVID‑19 pandemic, might result in
a reduction in the investment made by local and national governments in infrastructure spending, thus reducing
the demand for the Group’s products. Similarly, any significant change in investment strategy by policy makers
in any of the Group’s key markets could reduce addressable market demand, adversely impacting financial
performance.
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 and China. The economies of these
countries are at varying stages of socioeconomic and macroeconomic development which could give rise to a
number of risks, uncertainties and challenges that could include the following:
• Changes in political, social or economic conditions;
• Trade protection measures and import or export licensing requirements;
• Political unrest and currency disintegration;
• Activism and civil disturbance, triggered by natural disasters, terrorist events, outbreak of
armed conflict, etc.;
• Labour and procurement practices which contravene ethical considerations;
• Unexpected changes in regulatory and tax requirements;
• State‑imposed restrictions on repatriation of funds; and
• Outbreak of public health emergencies/epidemics/pandemics
The challenges and uncertainty posed by COVID‑19, the continued uncertainties posed by Brexit and ongoing
geopolitical tensions in the Ukraine, where the Group has significant business interests, have collectively
contributed to heightened uncertainty with possible downside economic consequences.
Commodity Products and Substitution
Risk
Discussion
Description:
Many of the Group’s products are commodities,
which face strong volume and price competition, and
may be replaced by substitute products which the
Group does not produce. Further, the Group must
maintain strong customer relationships to ensure
changing consumer preferences are addressed.
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.
225
Impact:
Failure to differentiate and innovate could lead to
market share decline, thus adversely impacting
financial performance.
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.
People Management
Risk
Discussion
Description:
Existing processes around people management,
such as attracting, retaining and developing people,
leadership succession planning, as well as dealing
with collective representation groups, may not deliver,
inhibiting the Group achieving its strategy.
Impact:
Failure to effectively manage talent and plan for
leadership succession could impede the realisation of
strategic objectives.
The identification and subsequent assessment, management, development and deployment of talented
individuals is of major importance in continuing to deliver on the Group’s strategy and in ensuring that
succession planning objectives for key executive roles throughout its international operations are satisfied. As
well as ensuring the Group identifies, hires, integrates, develops and promotes talent, the Group must promote
mobility and hire a diverse workforce. The Group operates in a labour‑intensive industry and must navigate
the challenges posed by front‑line labour shortages which may impact the Group's ability to produce goods,
operate facilities and install products.
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.
Strategic Mineral Reserves
Risk
Discussion
Description:
Appropriate reserves are an increasingly scarce
commodity and licences and/or permits required to
enable operation are becoming harder to secure.
There are numerous uncertainties inherent in
reserves estimation and in projecting future rates of
production.
Impact:
Failure by the Group to plan for reserve depletion, or
to secure permits, may result in operation stoppages,
adversely impacting financial performance.
The Group’s reserves for the production of primary building materials (which encompasses cement, lime,
aggregates (stone, sand and gravel), asphalt, readymixed concrete and concrete products) fall into a variety
of categories spanning a wide number of rock types and geological classifications and are found within our
extensive network of quarry locations in attractive local markets globally. Continuity of the cash flows derived
from the production and sale of building materials is dependent on satisfactory reserves planning and on the
presence of appropriate long‑term arrangements for their 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.
For additional information on the Group’s reserve position, see page 221 of the Supplementary 20‑F
Disclosures.
2020 Annual Report and Form 20-F Key Strategic Risk Factors - continued
Brexit
Risk
226
Description:
The Group's operations in the UK may face
operational, regulatory and market challenges
resulting from the UK’s withdrawal from the
European Union, potentially impacting supply chain
norms, construction labour availability and the
general economic performance of the UK.
Impact:
Failure by the Group to manage the continued
uncertainties posed by Brexit could result in adverse
financial performance and a fall in the Group’s net
worth.
Discussion
After formally leaving the European Union on 31 January 2020, the UK entered a transition period, to 31
December 2020, during which time the UK remained bound to the rules and regulations of the EU. A Trade and
Cooperation Agreement is provisionally in place from 1 January 2021 which is expected to be ratified by 30
April 2021 and sets out the future trading relationship between the UK and the European Union covering areas
such as trade in goods and services. Uncertainties, however, remain over the challenges which could be posed
by the operation of the trading agreement with delays in the import and export of goods being experienced
at UK ports as customs check and regulatory procedures are carried out. Such checks could impact the
performance of supply chains extending timelines and delaying supplier and customer commitments, while
imposing additional taxes dependent on rules of origin.
Uncertainty remains over the performance of the UK’s economy, which has led to, and may continue to lead 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.
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. Uncertainty around Brexit has created, and might 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 2020, see the Business Performance section commencing on page 30.
Key Operational Risk Factors
COVID-19 Pandemic
Risk
Discussion
Description:
Public health emergencies, epidemics or pandemics,
such as the emergence and spread of the COVID‑19
pandemic, have the potential to significantly impact
the Group’s operations through a fall in demand for
the Group’s products, a reduction in staff availability
and business interruption.
Impact:
The emergence and spread of the COVID‑19
pandemic has had a material impact across the
construction markets in which the Group operates.
The continued uncertainty around the global
pandemic could have an adverse effect on the
Group’s operating results, cash flows, financial
condition and/or prospects.
The global spread of COVID‑19 and the mitigations and practices implemented by governments, such as
restrictions on movement of people, temporary closure of businesses or public works stoppages has led to
and may continue to lead to delays or stoppage of key infrastructure or commercial projects resulting in a fall in
demand for the Group’s products.
Due to the widespread nature and duration of the current COVID‑19 pandemic, the global economy and
many of the economies in which the Group operates have been significantly impacted. Any significant fall
in economic performance can lead to the postponement of orders and a fall in demand for the Group’s
products. Further, funding allocated for infrastructure projects may be re‑directed to deal with the fallout of the
public health emergency. Stay at home orders and site closures, which the Group has experienced across
our European businesses and select US states, have led to, and may continue to lead to delays in project
completion and a postponement of orders.
The Group operates in a labour‑intensive industry where employees’, contractors’ and customers’ activities
can be adversely impacted by the availability of human resources to produce, manufacture or install the
Group’s products. Any significant loss of employee resources for a sustained period of time due to quarantine,
self‑isolation or sickness as a result of a public health emergency could impact the Group’s ability to produce,
manufacture and deliver goods. Similarly, the Group’s customers’ activities, and hence the demand for the
Group’s products, could be adversely impacted by similar employee availability issues.
Responsibility for business continuity planning is vested in operating company management to ensure that the
circumstances likely to give rise to material operational disruption are addressed. While business continuity
plans exist across the Group’s businesses, there can be no guarantees that the implementation of these plans
will be successful and that the plans will have the desired effect in minimising the effects of a public health
emergency.
As the current COVID‑19 pandemic continues, at this time it is not possible to predict the full extent and
duration of any further impacts, including those listed above, and whether the actions taken by our leadership
and people in the future will be successful in managing the risks posed by COVID‑19.
Climate Change and Policy
Risk
Description:
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 regulation change and market and
economic responses.
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.
Discussion
Physical Risks including:
• Acute & Chronic: Acute weather events such as hurricanes or flooding and chronic weather events
such as sea level rise or higher temperatures may have an adverse effect on the Group’s business and
operations. Operational productivity and demand for the Group’s products may be reduced during these
weather events leading to reduced financial performance
Transition Risks including:
227
• Technology: The failure to leverage innovation arising from technological advances related to carbon
efficiencies in products and processes may increase operational costs, shorten product life cycles or give
rise to early product obsolescence, thus impairing financial performance and/or future value creation
• Legal & Regulatory: 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
• Market & Reputation: 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
from financial institutions, investors and other interested stakeholders. 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 due to weakened customer demand, the Group’s reputation may
be harmed through not meeting investor expectations, and the Group could experience a deterioration in
financial performance, such as increased cost of capital
The Group continues to be exposed to costs related to carbon emissions trading schemes. While these costs
do not currently have a material financial impact, there can be no assurances that more extensive carbon
cost mechanisms may be introduced that could potentially impact the Group’s financial performance. Further,
the Group continues to engage with stakeholders to fully understand their expectations in relation to climate
change. However, it is recognised that expectations continue to evolve rapidly and the Group cannot guarantee
that all stakeholders’ expectations will continue to be met.
Please refer to page 234 of this Annual Report and Form 20‑F for further details. In addition, the Group
publishes an annual independently‑assured Sustainability Report, which is available on www.crh.com.
2020 Annual Report and Form 20-F Key Operational Risk Factors - continued
Health and Safety Performance
Risk
Discussion
228
Description:
The Group’s businesses operate in an industry where
health and safety risks are inherently prominent.
Further, the Group is subject to stringent regulations
from a health and safety perspective in the various
jurisdictions in which it operates.
Impact:
A 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.
Further, the COVID‑19 pandemic has presented and continues to present additional health and safety
challenges due to the potential transmission associated with the virus and changes to traditional operating
norms. There is no guarantee that efforts to mitigate the risk of transmission will be effective in preventing the
spread of COVID‑19 at our sites and locations.
For additional information on the Group’s health and safety performance, see page 18 in this Annual Report
and Form 20‑F or refer to the Group’s Independently assured Sustainability Report, which is available on
www.crh.com
Sustainability and Corporate Social Responsibility
Risk
Discussion
Description:
The nature of the Group’s 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 available on www.crh.com.
Information Technology and/or Cyber Security
Risk
Discussion
Description:
The Group is dependent on information and
operational technology systems to support its
business activities. Any significant operational event,
whether caused by external attack, insider threat or
error, could lead to loss of access to systems or data,
adversely impacting business operations.
Impact:
Security breaches, IT interruptions or data loss
could result in significant business disruption, loss of
production, reputational damage 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.
229
Security and cyber incidents are becoming increasingly sophisticated and are continually evolving. As this
threat continues to evolve, the Group may be required to expend additional resources to continue to modify or
enhance protection measures or to investigate and remediate any vulnerability to cyber incidents. There can be
no assurance that future attacks will not be successful due to their increasing sophistication and the difficulties
in detecting and defending against them in a timely fashion.
While the Group has experienced, and expects to continue to experience, these types of threats and incidents,
the Group has not detected any material cyber security events.
Key Compliance Risk Factors
Laws and Regulations
Risk
Discussion
Description:
The Group is subject to a wide variety of local and
international laws and regulations across the many
jurisdictions in which it operates, which vary in
complexity, application and frequency of change.
Impact:
Potential breaches of local and international laws and
regulations could result in the imposition of significant
fines or sanctions and may inflict reputational
damage.
The Group is subject to various statutes, regulations and laws applicable to businesses generally in the
countries and markets in which it operates. These include statutes, regulations and laws affecting land usage,
zoning, labour and employment practices, competition/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 in multiple
languages on www.crh.com
The Group cannot guarantee that its employees will at all times successfully comply with all demands of
regulatory agencies, and there can be no assurance that the Group’s policies and procedures will afford
adequate protection against breaches of these demands, fraudulent and/or corrupt activities. Any such
activities or breaches of external regulations or internal policies could have a material adverse effect on the
Group’s business, results of operations, financial condition or prospects.
Key Financial and Reporting Risk Factors
Goodwill Impairment
Risk
Discussion
Description:
Significant under‑performance in any of the Group’s
major cash‑generating units or the divestment of
businesses in the future may give rise to a material
write‑down of goodwill.
Impact:
A material 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.
Arising from the Group’s impairment testing process and as a result of the combined economic impacts of
COVID‑19 and Brexit, the Group has recognised non‑cash impairment charges of c. $0.8 billion in our full‑year
results for 2020, primarily relating to our UK assets and our associate investment in China.
While a goodwill impairment charge does not impact cash flow, a full write‑down at 31 December 2020 would
have resulted in a charge to income and a reduction in equity of $9.0 billion (2019: $9.1 billion).
2020 Annual Report and Form 20-F Key Financial and Reporting Risk Factors - continued
Financial Instruments
Risk
Discussion
Description:
The Group uses financial instruments throughout its
businesses giving rise to interest rate and leverage,
foreign currency, counterparty, credit rating and
liquidity risks.
•
230
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 2020, the Group had outstanding net
indebtedness of approximately $5.9 billion (2019: $7.5 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 alternative
reference rates 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 rates, 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. The Group is updating all IBOR related contracts to refer
instead to new alternative reference rates. Some of the alternative reference rates are backward looking,
meaning the related interest charges will not be fully known until close to the end of an interest period. At this
time, it is not possible to say whether the alternative reference rates will be more or less volatile than IBOR and
whether the transition to alternative reference rate‑linked contracts will impact CRH’s borrowing costs and
cash flows. Such changes may or may not adversely affect CRH’s financial position.
• Foreign currency risks: Effective 1 January 2020, the Group changed reporting currency from euro to US
Dollar. If the Group’s reporting currency weakens relative to the basket of foreign currencies in which net debt
is denominated (including the euro, 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.
• 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
2020, totalled $7.7 billion (2019: $9.9 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 2020 were $201 million and $13 million respectively (2019:
$92 million and $18 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 2020, this balance was $1 billion (2019:
$1 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) meeting the bulk of
debt requirements through debt capital markets or other term financing; (iii) limiting the annual maturity of such
balances; 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 on pages 182
to 185.
Taxation Charge and Balance Sheet Provisioning
Risk
Discussion
Description:
The Group is exposed to uncertainties stemming from
governmental actions in respect of taxes paid and
payable in all jurisdictions of operation. In addition,
various assumptions are made in the computation of
the overall tax charge and in balance sheet provisions
which may not be borne out in practice.
Impact:
Changes in tax regimes or 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 efficiencies 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.
231
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, heightened during administration changes or periods of fiscal deficit in these
economies. For example, potential tax rate increases in the US under the Biden administration tax policy
proposals. 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, changes to international tax principles, for example at an EU level, 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.
Defined Benefit Pension Schemes and Related Obligations
Risk
Discussion
Description:
The assets and liabilities of defined benefit pension
schemes, in place in certain operating jurisdictions,
may 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 or 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 or 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 in note 30 to the Consolidation Financial Statements on pages
191 to 196. 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.
Foreign Currency Translation
Risk
Discussion
Description:
The principal foreign exchange risks to which the
Consolidated Financial Statements are exposed
pertain to (i) adverse movements in reported results
when translated into 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.
Effective 1 January 2020, the Group changed reporting currency from euro to US Dollar. 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 euro, 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.
For additional information on the impact of foreign exchange movements on the Consolidated Financial
Statements for the Group for the year ended 31 December 2020, see the Business Performance section
commencing on page 30 and note 24 to the Consolidated Financial Statements on page 182 to 185.
2020 Annual Report and Form 20-F Corporate Governance Practices
232
Compliance Statement
Non‑US companies such as CRH are exempt from
most of the corporate governance rules of the
NYSE. In common with companies listed on the
LSE and Euronext Dublin, CRH’s corporate
governance practices reflect, inter alia, compliance
with (a) domestic company law; (b) the Listing Rules
of the UK Listing Authority and Euronext Dublin; and
(c) the 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 the Board did not explicitly take into
consideration the independence requirements
outlined in the NYSE’s listing standards.
However, 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 US Securities Exchange Act of 1934.
Further, CRH considers that the Terms of Reference
for its Audit Committee, Remuneration Committee,
Nomination and Corporate Governance Committee
are generally responsive to the relevant NYSE rules,
but may not address all aspects of such rules.
Shareholder Approval of
Equity Compensation Plans
The NYSE rules require that shareholders
must be given the opportunity to vote on all
equity‑compensation plans and material revisions to
those plans with certain limited exceptions. CRH
complies with Irish requirements, which are similar to
the NYSE rules. The Board, however, does not
explicitly take into consideration the NYSE’s detailed
definition on what are considered “material revisions”.
Risk Management
and Internal Control
The Board has delegated responsibility for
monitoring the effectiveness of the Group’s risk
management and internal control systems to the
Audit Committee1. Such systems are designed to
manage rather than eliminate the risk of failure to
achieve business objectives and, in the case of
internal control systems, can provide only
reasonable and not absolute assurance against
material misstatement or loss.
The Consolidated Financial Statements are
prepared subject to oversight and control of the
Finance Director, who seeks to ensure that data is
captured from Group locations and all required
information for disclosure in the Consolidated
Financial Statements is provided. An appropriate
control framework has been put in place around the
recording of appropriate consolidation journals and
other adjustments. The Consolidated Financial
Statements are reviewed by the internal CRH
Financial Reporting and Disclosure Group prior to
being reviewed by the Finance Director and Audit
Committee and approved by the Board of Directors.
Group management has responsibility for major
strategic development and financing decisions.
Responsibility for operational issues is devolved,
subject to limits of authority, to product group and
operating company management. Management at
all levels is responsible for internal control over the
business functions that have been delegated.
This embedding of the system of internal control
throughout the Group’s operations is designed
to enable the organisation to respond quickly
to evolving business risks, and to ensure that
significant internal control issues, should they arise,
are reported promptly to appropriate levels
of management.
Management’s Report on Internal
Control over Financial Reporting
In accordance with the requirements of 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 Statements
Our 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 2020, based
on criteria established in Internal Control ‑ Integrated
Framework (2013), issued by the Committee of
Sponsoring Organisations of the Treadway
Commission.
1. In accordance with Section 167(7) of the Companies Act 2014.
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.
233
As permitted by the SEC, based on the quantitative
and qualitative risk factors of our acquisitions in 2020,
the Company has elected to exclude an assessment
of the internal controls of acquired business
combinations for the year 2020. Acquisitions, which
are listed in note 32 to the Consolidated Financial
Statements, constituted 0.5% and 1.0% of total and
net assets respectively, as of 31 December 2020 and
0.4% and 0.6% 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 2020, the
Company’s internal control over financial reporting
is effective.
Our auditors, Deloitte, a registered public accounting
firm, who have audited the Consolidated Financial
Statements for the year ended 31 December 2020,
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 130.
Changes in Internal Control
over Financial Reporting
During 2020, 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 2019 assessment of
internal control over financial reporting were all
successfully integrated into the CRH internal control
systems in 2020.
Evaluation of Disclosure
Controls and Procedures
Management has evaluated the effectiveness of the
design and operation of the disclosure controls and
procedures as defined in Exchange Act Rule
13a‑15(e) as of 31 December 2020. 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.
2020 Annual Report and Form 20-F The Environment and Government Regulations
As a building materials company, environmental
laws and regulations relevant to extractive and
production processes are significant to CRH.
In Europe, 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, including the United Kingdom, national
environmental and local laws apply.
234
Environmental Compliance Policy
In order to comply with environmental regulations
and address environmental risks and opportunities,
CRH has developed an environmental policy. The
statement of policy, applied across all Group
companies, is to:
• address proactively the challenges of climate
change, reduce emissions and waste as well as
optimise our use of energy, water, land and other
resources;
• promote sustainable product and process
innovation and new business opportunities;
• support and enhance biodiversity, ensuring
responsible land use and biodiversity
management;
• comply with or exceed all applicable
environmental legislation and continually
implement and improve our environmental
management systems, always striving to meet
or exceed industry best practice standards,
monitoring and reporting performance;
• maintain open communications and ensure that
our employees and contractors are aware of and
adhere to their environmental responsibilities; and
• maintain positive relationships with stakeholders
through engagement and consultation, always
striving to be good neighbours in every
community in which we operate
Environmental Management
and Governance
Achieving the Group’s environmental policy
objectives at all locations is a management
imperative. At Board level there is a dedicated
Safety, Environment & Social Responsibility (SESR)
Committee.
Overseen by the Board, the Group Chief Executive
has overall responsibility for CRH’s sustainability
performance and for ensuring sustainability policies
are implemented in all business lines.
Daily responsibility for ensuring that the Group’s
environmental policy is effectively implemented lies
with individual location managers, assisted by a
network of Group environmental specialists.
At each year end, the Group Sustainability function
carries out a detailed assessment of Group
environmental performance, which is reviewed by
the SESR Committee and the Board.
Through its membership of the GCCA, WBCSD and
various regional industry associations, CRH is
actively involved in global and regional discussions
on the climate change agenda.
The European Union aims to be climate‑neutral,
where there are no net emissions of greenhouse
gases, by 2050. During 2020 European Union
leaders agreed to a more ambitious emissions
reduction target of 55% by 2030, compared to
1990. While CRH has a plan to address carbon
emissions reductions to 2030 in the context of
existing legislation, achieving further reductions
would represent a significant extra constraint on
cement operations in Europe.
CRH operations in the US are subject to a number
of federal and state laws and regulations addressing
climate change. Ultimately more comprehensive
“cap and trade” schemes or other emission
reduction legislation may be implemented in the US
and Canada; depending on the scope of the
legislation, this could significantly impact certain
operations in North America. CRH continuously
monitors developments in regulations and
greenhouse gas initiatives involving local, provincial,
state or federal governments. As of 19 February
2021, the Group is not aware of any such schemes
that would materially affect its US operations.
Possible Environmental Liabilities
At 19 February 2021, there were no pending legal
proceedings relating to site remediation which are
anticipated to have a material adverse effect on the
financial position or results of operations or liquidity
of the Group, nor have internal reviews revealed any
situations of likely material environmental liability to
the Group.
Governmental Policies
The overall level of government capital expenditures
and the allocation by state entities of available funds
to different projects, as well as interest rate and tax
policies, directly affect the overall levels of
construction activity. The terms and general
availability of government permits required to conduct
Group business also has an impact on the scope of
Group operations. As a result such governmental
decisions and policies can have a significant impact
on the operating results of the Group.
Addressing Climate Change
CRH has evaluated the risks associated with climate
change, including physical and transitional risks,
together with opportunities arising from the
transition to a low‑carbon economy. A management
strategy has been put in place to address these
risks and opportunities. This focuses on reducing
the carbon footprint of products during manufacture
as well as contributing to reducing the lifetime
emissions from the built environment. For example,
CRH includes within its offerings multiple products
aimed at climate adaptation and mitigation,
including sustainable drainage systems, concrete
products used in flood defence systems, products
contributing to more resilient structures as well as
products with high levels of recycled content, such
as recycled asphalt pavement (RAP). In delivering
this management strategy, CRH reduces carbon
emissions and energy usage, achieves financial
efficiencies, and, in addition, helps to address the
global challenge of climate change.
CRH has developed an ambition to achieve carbon
neutrality along the cement and concrete value
chain by 2050. Having achieved its 2020 CO2
reduction commitment, CRH committed 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. CRH’s carbon reduction
roadmap is a science‑based target that has been
independently verified using Science Based Targets
initiative (SBTi) methodologies to be in line with the
Paris Agreement objectives at a 2°C scenario.
In order to meet its target, 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
CRH’s own emission reduction programme and
targets discussed above. 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 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.
Other Disclosures
History, 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. 77,100 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 and Europe. It also has positions in
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 51, estimates of the Group’s various
aggregates and stone reserves have been provided
by engineers employed by the individual operating
companies. Details of product end‑use by sector for
each reporting segment are based on
management estimates.
A listing of the principal subsidiary undertakings and
equity accounted investments is contained on
pages 250 to 254.
Legal Proceedings
Group companies are parties to various legal
proceedings, including some in which claims
for damages have been asserted against the
companies. Having taken appropriate advice,
we believe that the aggregate outcome of such
proceedings will not have a material effect on the
Group’s financial condition, results of operations
or liquidity.
Statements Regarding
Competitive Position and
Construction Activity
Statements made in the Business Performance
section and elsewhere in this document referring to
the Group’s competitive position are based on the
Group’s belief, and in some cases rely on a range of
sources, including investment analysts’ reports,
independent market studies and the Group’s
internal assessment of market share based on
publicly available information about the financial
results and performance of market participants.
Unless otherwise specified, references to
construction activity or other market activity relate to
the relevant market as a whole and are based on
publicly available information from a range of
sources, including independent market studies,
construction industry data and economic forecasts
for individual jurisdictions.
Exchange Rates
In this Annual Report and Form 20‑F, references
to “US Dollar”, “US$”, “$”, “US cents”, “cent” or “c”
are, unless otherwise stated, to the United States
currency, references to “euro”, “euro cent” 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.
Research and Development
235
CRH is engaged in ongoing initiatives that advance
its business as part of its relentless focus on
continuous improvement. One of these areas is
research and development, where such costs are
not material in the context of the Consolidated
Income Statement. CRH’s policy is to expense such
costs as they occur.
Employees
The average number of employees for the past
three financial years is disclosed in note 7 to the
Consolidated Financial Statements on page 155. No
significant industrial disputes have occurred at any
of CRH’s factories or plants during the past five
years. The Group believes that relations with its
employees and labour unions are satisfactory.
Seasonality
Activity in the construction industry is characterised
by cyclicality and is dependent to a considerable
extent on the seasonal impact of weather in CRH’s
operating locations, with activity in some markets
reduced significantly in winter due to inclement
weather. First‑half sales from continuing operations
accounted for 44% of full‑year 2020 (2019: 46%),
while EBITDA (as defined)* from continuing
operations for the first six months of 2020
represented 34% of the full‑year out‑turn
(2019: 36%).
Significant Changes
No significant changes have occurred since the
balance sheet date.
Latest Practical Information
Where referenced in the Supplementary 20‑F
Disclosures and Shareholder Information sections,
information is provided at the latest practicable date,
19 February 2021.
* 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.
2020 Annual Report and Form 20-F 236236236
As the leading building business in the world, we
want to make a positive difference for people, society
and the environment. We continue to develop and
strengthen relationships with all of our stakeholders
through ongoing and proactive engagement.
Shareholder
Information
Stock Exchange Listings
238
237
237
Ownership of
Ordinary Shares
Dividends
Share Plans
238
240
241
American Depositary Shares
242
Taxation
Memorandum and
Articles of Association
General Information
243
245
247
Tarmac’s Thrislington Quarry provides an essential supply of aggregates
to customers in the construction and steel industries in County Durham,
in the North East of England. The 255-acre quarry, which also produces
Tarmac’s trademark ‘Midas’ sand has been in operation since 1956 and is
an important employer in the area.
2020 Annual Report and Form 20-F Stock Exchange Listings
CRH has a premium listing on the LSE and a
secondary listing on Euronext Dublin represented by
the ticker symbols CRH and CRG respectively.
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.
Share price data
Share price at 31 December
Market capitalisation
238
Share price movement during year:
-high
-low
LSE
£30.58
£24.0bn
£31.67
£15.74
2020
Euronext Dublin
€34.02
NYSE
$42.58
€26.7bn
$33.4bn
€36.50
€17.43
$42.82
$18.64
LSE
£30.42
£24.0bn
£31.00
£20.72
2019
Euronext Dublin
€35.67
€28.2bn
NYSE
$40.33
$31.8bn
€36.25
€22.89
$40.36
$26.05
For further information on CRH shares see note 31 to the Consolidated Financial Statements.
Ownership of Ordinary Shares
Shareholdings as at 31 December 2020
Geographic location (i)
United Kingdom
North America
Europe/Other
Retail
Ireland
Treasury (ii)
Number of shares
held ‘000s
% of total
247,592
234,821
166,812
107,818
28,010
10,087
795,140
31.1
29.5
21.0
13.6
3.5
1.3
100.0
(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.
Holdings
1 - 1,000
1,001 - 10,000
10,001 - 100,000
100,001 - 1,000,000
Over 1,000,000
Number of
shareholders
14,527
7,044
1,399
473
125
% of
total
61.7
29.9
5.9
2.0
0.5
Number
of shares
held ‘000s
4,408
21,001
42,166
143,785
583,780
% of
total
0.6
2.6
5.3
18.1
73.4
23,568
100.0
795,140
100.0
The Company is not owned or controlled directly or
indirectly by any government or by any corporation
or by any other natural or legal person severally or
jointly. The major shareholders do not have any
special voting rights.
As at 3 March 2021, 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 68.
239
Ownership of Ordinary Shares - continued
Purchases of Equity Securities by
the Issuer and Affiliated Persons
In April 2018, CRH announced its intention to
introduce a share repurchase programme to
repurchase Ordinary Shares (including Income
Shares) of up to €1 billion (the ‘Programme’).
During 2018, CRH repurchased a total of 27,901,471
Ordinary Shares under the Programme, returning a
total of $0.9 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 $0.9 billion to
shareholders.
On 7 January 2020, CRH announced a further
extension of the Programme and in March 2020 the
Group completed the latest phase of its share
repurchase programme with CRH repurchasing
5,951,146 shares and returning a further $0.2 billion
of cash to shareholders. This brings the total cash
returned to shareholders under the Programme to
$2.0 billion since its commencement in 2018.
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 2020 and
2019.
See note 31 to the Consolidated Financial
Statements for further details.
2020
Total number of share
buyback purchases
1,850,167
Total number of
EBT purchases
-
Total number of
shares purchased
1,850,167
Average price paid per
share - share buyback (i)
€34.72
3,210,214
890,765
5,951,146
265,820
804,405
1,070,225
3,476,034
1,695,170
7,021,371
€33.78
€30.67
Total number of share
buyback purchases
2,933,611
1,599,462
3,087,817
-
4,211,110
4,015,079
2,032,600
1,904,650
3,050,181
2,179,962
1,636,369
706,275
2019
Total number of
EBT purchases
-
429,272
1,500,000
248,750
11,426
-
-
-
-
-
-
-
Total number of
shares purchased
2,933,611
Average price paid per
share - share buyback (i) (ii)
€24.56/£21.80
2,028,734
4,587,817
248,750
4,222,536
4,015,079
2,032,600
1,904,650
3,050,181
2,179,962
1,636,369
706,275
€27.02/£23.55
€27.44/£23.56
-
€28.80/£25.09
€28.45/£25.41
€29.58/£26.70
€28.54/£26.16
€30.81
€30.55
€33.46
€34.48
Month
January
February
March
Month
January
February
March
April
May
June
July
August
September
October
November
December
27,357,116
2,189,448
29,546,564
(i)
Average price paid per share in respect of 2020 EBT purchases; February €30.68 and March €21.94
(2019: February €28.74, March €27.11, April €28.44 and May €28.54).
(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 2020.
CREST and Migration to
Euroclear Bank
Since 1996, it has been possible to transfer shares
in the Company through the CREST system and
approximately 95% of the Company’s issued share
capital are transferred in this way.
As a result of the withdrawal of the UK from the EU
(Brexit), and following the end of the Brexit transition
period on 31 December 2020, Euroclear UK &
Ireland Limited (EUI) as the operator of the CREST
system is no longer subject to EU law and,
therefore, will cease to provide certain services in
respect of Irish securities from March 2021.
CREST will be replaced by a central securities
depository system (CSD) operated by Euroclear
Bank SA/NV, an international CSD incorporated in
Belgium (Euroclear Bank), as the long-term CSD for
Irish securities settlement. As it is essential for the
Company that electronic settlement of trading of its
shares can continue on the LSE and on Euronext
Dublin, shareholder approval was obtained at an
EGM held on 9 February 2021 for the migration of
the Company's shares from the CREST system to
the CSD system operated by Euroclear Bank.
2020 Annual Report and Form 20-F 240
Dividends
The Company has paid dividends on its Ordinary
Shares in respect of each fiscal year since the
formation of the Group in 1970. Dividends are paid to
shareholders on the Register of Members on the
record date for the dividend. Record dates are set in
accordance with the rules of 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 declared in US cents (2020)
and euro cent (2016-2019) per Ordinary Share in
respect of each fiscal year indicated. Solely for the
convenience of the reader, dividends declared in the
years 2016-2019 have been translated into US
cents per Ordinary Share at the dividend record
date exchange rate. An interim dividend of 22.00
US cents was paid in respect of Ordinary Shares on
25 September 2020. The final dividend, if approved
at the forthcoming AGM of shareholders to be held
on 29 April 2021, will be paid on 5 May 2021 to
shareholders on the Register of Members as at the
close of business on 19 March 2021 and will bring
the full-year dividend for 2020 to 115.0 US cents.
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 Registrars
Limited (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 (25%). Non-resident
shareholders located in countries with a double tax
treaty with Ireland 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 specified deadline notified
when a dividend is announced. Individuals who are
resident in the Republic of Ireland for tax purposes
are not entitled to an exemption. If shares are held
via Euroclear Bank or CREST, the owners of the
shares will need to contact the intermediary through
whom the shares are held in order to arrange for the
submission of the completed form.
Shareholders holding Ordinary Shares in certificated
form 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 such shareholders can complete a
paper dividend mandate form and submit it to the
Registrars. A copy of the form can be obtained on
the Registrar’s Share Portal or can be requested
directly from the Registrars. Tax vouchers will
continue to be sent to the shareholder’s registered
address under this arrangement.
If shares are held via Euroclear Bank or CREST, the
dividend will be paid by the Company in accordance
with the instructions received from Euroclear Bank.
Section 5 of the Euroclear Terms and Conditions
governing use of the Euroclear system provides that
income/dividends received by Euroclear Bank will
be distributed pro-rata to the holders of the relevant
securities (i.e. the relevant EB Participants). Further
details on the process of collection, distribution and
payment of dividends are provided for in section 5.3
of the EB Operating Procedures, with reference to
the Online Market Guides for market specific
operational elements (currently the EB Service
Description). All material information regarding the
manner in which receipt of dividends and
participation in corporate actions is processed is
described in section 5 of the EB Services
Description- (Version 4) – Custody - Income and
Corporate Actions. The owners of the shares held
via Euroclear Bank or CREST will need to contact
the intermediary through whom the shares are held
in order to arrange for the onward payment of the
dividend to them.
On 22 January 2021, EUI announced that by 29
March 2021 it expects to have in place new
arrangements for how settlement banks provide
their euro liquidity to EUI. In the same
announcement, EUI confirmed that these
arrangements will not impact how CREST
participants instruct euro settlements nor the
settlement process itself. In the announcement, EUI
confirmed that it expects to publish details of the
new euro settlement arrangements in the coming
weeks. CREST participants are encouraged to
speak to their settlement banks (who are fully aware
of these changes) to consider what (if any) impact
the new arrangements will have on their euro
settlement activity with them.
To reflect the change in reporting currency from euro
to US Dollar with effect from 1 January 2020, the
2020 interim dividend and all future dividends are
declared in US Dollar. However, they are generally
paid in euro. In order to avoid costs to shareholders,
dividends are paid in Pound Sterling and US Dollar to
shareholders whose shares are held in certificated
form (see page 239) and whose address, according
to the Share Register, is in the UK and the US
respectively, unless they require otherwise. In respect
of the 2020 final dividend, the latest date for receipt
of currency elections is 31 March 2021. Where
shares are held in the Euroclear Bank system,
dividends are automatically paid in euro unless a
currency election is made.
Investors holding CREST Depositary Interests
(“CDI”s) should refer to the CREST International
Service Description for information on currency
elections in respect of CDIs.
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.
Year ended 31 December
2020
Years ended 31 December
2019
2018
2017
2016
(i) Proposed.
US cents per Ordinary Share
Interim
22.00
Final
93.00(i)
euro cent per Ordinary Share
US cents per Ordinary Share(ii)
Interim
20.00
19.60
19.20
18.80
Final
63.00
52.40
48.80
46.20
Total
83.00
72.00
68.00
65.00
Interim
22.00
22.80
23.20
21.20
Final
70.00
59.20
60.00
49.00
Total
115.0
Total
92.00
82.00
83.20
70.20
(ii) Interim and final dividends per Ordinary Share declared previously in euro have been translated to US Dollar using the dividend record date exchange rate.
At 3 March 2021, 1,648,641 Ordinary Shares have
been issued1 pursuant to the 2010 Savings-related
Share Option Schemes to date.
It is proposed to seek approval from shareholders at
the 2021 AGM to establish new savings-related
share option schemes. The principal features of the
proposed 2021 Schemes will be set out in the
Circular containing the notice for the 2021 AGM.
There are no material differences between the 2010
Schemes and 2021 Schemes.
Share Participation Schemes
241
At the AGM on 13 May 1987, shareholders
approved the establishment of Share Participation
Schemes for the Company, its subsidiaries and
companies under its control. Directors and
employees of the companies who are tax resident in
Ireland and have at least one year’s service may
elect to participate in these Share Participation
Schemes.
At 3 March 2021, 8,319,280 Ordinary Shares have
been issued1 pursuant to the Share Participation
Schemes.
Share Plans
The Group operates share option schemes,
performance share plans, share participation
schemes and savings-related share option schemes
(the ‘Schemes’) for eligible employees in all regions
where the regulations permit the operation of such
schemes. A brief description of the Schemes is
outlined below. Shares issued (whether by way of
the allotment of new shares or the reissue of
Treasury Shares) in connection with the Schemes
rank pari passu in all respects with the existing
shares in the Company.
2010 Share Option Schemes
At the AGM held on 5 May 2010, shareholders
approved the adoption of new share option
schemes to replace the schemes which were
approved in May 2000 (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, exercise was dependent on
continued employment in the Group. 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.
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 Scheme. See the
2020 Directors’ Remuneration Report on page 88
for more details.
Restricted Share Plan
In 2013, the Board approved the adoption of
the 2013 Restricted Share Plan. Under the rules
of the 2013 Restricted Share Plan, certain senior
executives (excluding executive Board Directors)
can receive conditional awards of shares. As
(i) executive Directors are excluded from awards and
(ii) no shares are allotted or reissued to satisfy the
awards, the listing rules of the LSE and Euronext
Dublin do not require shareholder approval for the
2013 Restricted Share Plan.
2010 Savings-related
Share Option Schemes
At the AGM held on 5 May 2010, shareholders
approved the adoption of savings-related share
option schemes for the UK and Ireland (the ‘2010
Savings-related Share Option Schemes’) to replace
the 2000 Savings-related Share Option Schemes.
These schemes expired in May 2020.
Prior to the expiry of these schemes, all employees
of a participating subsidiary in the Republic of
Ireland or the UK, who had satisfied a required
qualifying period, would be invited to participate in
this scheme.
Eligible employees who wished to participate in
the scheme would 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 would have been 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 could not be 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.
1. Whether by way of the allotment of new shares, the reissue of Treasury Shares or the purchase of Ordinary Shares.
2020 Annual Report and Form 20-F American Depositary Shares
Fees and charges payable
by a holder of ADSs
The Depositary collects fees for delivery and
surrender of ADSs directly from investors or from
intermediaries acting for them depositing shares or
surrendering ADSs for the purpose of withdrawal.
The Depositary collects fees for making distributions
to investors by deducting those fees from the
amounts distributed or by selling a portion of
distributable property to pay the fees. The
Depositary may generally refuse to provide
fee-attracting services until its fees for those
services are paid.
Persons depositing or withdrawing shares must pay:
For:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
242
•
Issuance of ADSs, including issuances resulting from a distribution
of shares or rights or other property
• Cancellation of ADSs for the purpose of withdrawal, including if the
deposit agreement terminates
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
• Distribution of deposited securities by the Depositary to ADS
(A fee equivalent to the fee that would be payable if securities distributed
had been shares and the shares had been deposited for issuance of ADSs)
Applicable Registration or Transfer fees
registered holders
• Transfer and registration of shares on our share register to or from
the name of the Depositary or its agent when the holder deposits or
withdraws shares
Applicable Expenses of the Depositary
• Cable, telex and facsimile transmissions
Applicable Taxes and other governmental charges the Depositary or
the custodian have to pay on any ADS or share underlying an ADS,
for example, stock transfer taxes, stamp duty or withholding taxes
• Currency conversion
• As necessary
Fees and direct/indirect payments made
by the Depositary to the Company
Category of expense reimbursed to the Company
New York Stock Exchange listing fees
Investor relations expenses
Total
Amount reimbursed for the year ended
31 December 2020
$
71,000
107,119
178,119
The table below sets forth the types of expenses that the Depositary has paid to third parties and the
amounts reimbursed for the year ended 31 December 2020:
Category of expense waived or paid
directly to third parties
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 programme
Total
Amount reimbursed for the year ended
31 December 2020
$
695
695
The Depositary has agreed to reimburse certain
Company expenses related to the Company’s ADS
programme and incurred by the Company
in connection with the ADS programme. For the
year ended 31 December 2020 the Depositary
reimbursed to the Company, or paid amounts on its
behalf to third parties, a total sum of $178,814. 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 2020.
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 $250,000, the
amounts waived, reimbursed and/or expenses paid
by the Depositary to or on behalf of the Company.
Taxation
The following summary outlines the material aspects
of US federal income and Republic of Ireland tax law
regarding the ownership and disposition of Ordinary
Shares or ADSs. Because it is a summary, holders
of Ordinary Shares or ADSs are advised to consult
their tax advisors with respect to the tax
consequences of their ownership or disposition. The
discussion regarding US federal income tax only
applies to you if you hold your shares or ADSs as
capital assets for US federal income tax purposes.
This discussion addresses only US federal income
and Republic of Ireland taxation and does not
discuss all of the tax consequences that may be
relevant to you in light of your individual
circumstances, including foreign, state or local tax
consequences, estate and gift tax consequences,
and tax consequences arising under the Medicare
contribution tax on net investment income or the
alternative minimum tax. This summary does not
take into account the specific circumstances of any
particular holders (such 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 Holders
Under general Irish tax law, US holders are not liable
for Irish tax on dividends received from the
Company. On the payment of dividends, the
Company is obliged to withhold DWT. The statutory
rate during 2020 was 25% of the dividend payable.
Dividends paid by the Company to a US tax resident
individual will be exempt from DWT provided the
following conditions are met:
1. the individual (who must be the beneficial owner)
is resident for tax purposes in the US (or any
country with which Ireland has a double tax
treaty) and neither resident nor ordinarily resident
in Ireland; and
2. the individual signs a declaration to the
Company, which states that he/she is a US
tax resident individual at the time of making
the declaration and that he/she will notify the
Company in writing when he/she no longer
meets the condition in (1) above; or
3. the individual provides the Company with a
certificate of tax residency from the US tax
authorities
Dividends paid by the Company to a US tax resident
company (which must be the beneficial owner) will
be exempt from DWT, provided the following
conditions are met:
1. the recipient company is resident for tax
purposes in the US (or any country with which
Ireland has a double tax treaty) and not under
the control, either directly or indirectly, of Irish
resident persons;
243
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) above
For US federal income tax purposes, and subject to
the passive foreign investment company (PFIC) rules
discussed below, US holders will include in gross
income the gross amount of any dividend paid by
the Company out of its current or accumulated
earnings and profits (as determined for US federal
income tax purposes) as ordinary income when the
dividend is actually or constructively received by the
US holder, in the case of Ordinary Shares, or by the
Depositary, in the case of ADSs. Any Irish tax
withheld from this dividend payment must be
included in this gross amount even though the
amount withheld is not in fact received. Dividends
paid 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 dividends declared, regardless of whether the
US holder elects to receive the payment in a
currency other than US Dollars. If the US holder
elects to receive the payment in a currency other
than 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
received 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.
2020 Annual Report and Form 20-F gain or excess distribution for the prior years. With
certain exceptions, Ordinary Shares or ADSs will be
treated as stock in a PFIC if the company was a
PFIC at any time during the investor’s holding period
in the Ordinary Shares or ADSs. In addition,
dividends that you receive from the Company will
not constitute qualified dividend income to you if the
Company is deemed to be a PFIC either in the
taxable year of the distribution or the preceding
taxable year, but instead will be taxable at rates
applicable to ordinary income.
Stamp Duty
Section 90 Stamp Duties Consolidation Act 1999
exempts from Irish stamp duty transfers of ADSs
where the ADSs are dealt in and quoted on a
recognised stock exchange in the US and the
underlying deposited securities are dealt in and
quoted on a recognised stock exchange. The Irish
tax authorities regard NASDAQ and the NYSE as
recognised stock exchanges. Irish stamp duty will
be charged at the rate of 1% of the amount or value
of the consideration on any conveyance or transfer
on sale of Ordinary Shares (exemption generally
available in the case of single transfers with a value
of less than €1,000).
Taxation - continued
244
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 Tax
A US holder will not be liable for Irish tax on
gains realised on the sale or other disposition
of Ordinary Shares or ADSs unless the Ordinary
Shares or ADSs are held in connection with a trade
or business carried on by such holder in the
Republic of Ireland through a branch or agency. A
US holder will be liable for US federal income tax on
such gains in the same manner as gains from a sale
or other disposition of any other shares in a
company.
Subject to the PFIC rules below, US holders who
sell or otherwise dispose of Ordinary Shares or
ADSs will recognise a capital gain or loss for US
federal income tax purposes equal to the difference
between the US Dollar value of the amount realised
on the sale or disposition and the tax basis,
determined in US Dollars, in the Ordinary Shares or
ADSs.
Capital gains of 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 Considerations
The Company believes that Ordinary Shares and
ADSs should not currently be treated as stock of a
PFIC for US federal income tax purposes and does
not expect them to become stock of a PFIC in the
foreseeable future. However, this conclusion is a
factual determination that is made annually and thus
may be subject to change. If the Company is
treated as a PFIC and you are a US holder that did
not make 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
Memorandum and Articles of Association
The Company’s Memorandum of Association sets
out the objects and powers of the Company. The
Articles of Association detail the rights attaching to
each share class; the method by which the
Company’s shares can be purchased or reissued;
the provisions which apply to the holding of and
voting at general meetings; and the rules relating to
the Directors, including their appointment,
retirement, re-election, duties and powers.
A copy of the current Memorandum and Articles of
Association can be obtained from the Group’s
website, www.crh.com.
The following summarises certain provisions of
CRH’s Memorandum and Articles of Association
and applicable Irish law.
Objects and Purposes
CRH is incorporated under the name CRH public
limited company and is registered in Ireland with
registered number 12965. Clause 4 of CRH’s
Memorandum of Association provides that its
objects include the business of an investment
holding company. Clause 4 also sets out other
objects including the business of quarry masters
and proprietors and lessees and workers of
quarries, sand and gravel pits, mines and the like
generally; the business of road-makers and
contractors, building contractors, builders
merchants and providers and dealers in road
making and building materials, timber merchants;
and the carrying on of any other business calculated
to benefit CRH. The memorandum grants CRH a
range of corporate capabilities to effect these
objects.
Directors
The Directors manage the business and affairs
of CRH.
Directors who are in any way, whether directly or
indirectly, interested in contracts or other
arrangements with CRH must declare the nature of
their interest at a meeting of the Directors, and,
subject to certain exemptions, may not vote in
respect of any contract or arrangement or other
proposal whatsoever in which they have any
material interest other than by virtue of their interest
in shares or debentures in the Company. However,
in the absence of some other material interest not
indicated below, a Director is entitled to vote and to
be counted in a quorum for the purpose of any vote
relating to a resolution concerning the following
matters:
•
•
the giving of security or indemnity with respect to
money lent or obligations taken by the Director at
the request or for the benefit of the Company;
the giving of security or indemnity to a third
party with respect to a debt or obligation of
the Company which the Director has assumed
245
TexasBit, part of CRH’s Americas Materials Division completed this asphalt overlay project in the City of Waco, central Texas.
The project involved the supply of c.220 tonnes of asphalt to upgrade the quality of the existing road surface. TexasBit’s crews
worked to minimise disruption to local traffic flows while paving the new surface.
2020 Annual Report and Form 20-F Memorandum and Articles of Association - continued
246
•
•
•
responsibility for under a guarantee, indemnity or
the giving of security;
any proposal in which the Director is interested
concerning the underwriting of Company shares,
debentures or other securities;
any other proposal concerning any other
company in which the Director is interested,
directly or indirectly (whether as an officer,
shareholder or otherwise) provided that the
Director is not the holder of 1% or more of the
voting interest in the shares of such company;
and
proposals concerning the modification of certain
retirement benefits under which the Director
may benefit and which have been approved or
are subject to approval by the Irish Revenue
Commissioners
The Directors may exercise all the powers of the
Company to borrow money, except that such general
power is restricted to the aggregate amount of
principal borrowed less cash balances of the
Company and its subsidiaries not exceeding an
amount twice the aggregate of (i) the share capital of
the Company; and (ii) the amount standing to the
credit of retained income, foreign currency translation
reserve and other reserves, capital grants, deferred
taxation 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 Rights
The Articles provide that, at shareholders’ meetings,
holders of Ordinary Shares, either in person or by
proxy, are entitled to one vote on a show of hands
and one vote per share on a poll. No member is
entitled to vote at any general meeting unless all
calls or other sums immediately payable in respect
of 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 Capital
In the event of the Company being wound up, the
liquidator may, with the sanction of a shareholders’
special resolution, divide among the holders of the
Ordinary Shares the whole or any part of the net
assets of the Company (after the return of capital
and payment of accrued dividends on the
preference shares) in cash or in kind, and may set
such values as he deems fair upon any property to
be so divided and determine how such division will
be carried out. The liquidator may, with a like
sanction, vest such assets in trust as he thinks fit,
but no shareholders will be compelled to accept any
shares or other assets upon which there is any
liability.
Variation of Rights
Subject to the provisions of the Companies Act 2014,
the rights attached to any class of shares may be
varied with the consent in writing of the holders of not
less than three fourths in nominal value of the issued
shares of that class, or with the sanction of a special
resolution passed at a separate general meeting of the
holders of those shares.
Issue of Shares
more shareholders present in person and entitled to
vote. The passing of resolutions at a meeting of the
Company, other than special resolutions, requires a
simple majority. A special resolution, in respect of
which not less than 21 clear days’ notice in writing
must be given, requires the affirmative vote of at
least 75% of the votes cast.
Disclosure of
Shareholders’ Interests
A shareholder may lose the right to vote by not
complying with any statutory notice or notice
pursuant to Article 14 of the Articles of Association
given by the Company requiring an indication in
writing of: (i) the capacity in which the shares are
held or any interest therein; (ii) the persons who
have an interest in the shares and the nature of their
interest; or (iii) whether any of the voting rights
carried by such shares are the subject of any
agreement or arrangement under which another
person is entitled to control the shareholder’s
exercise of these rights.
Preference Shares
Details of the 5% and 7% ‘A’ Cumulative Preference
Shares are disclosed in note 31 to
the Consolidated Financial Statements.
Subject to the provisions of the Companies Act
2014 and the Articles of Association, the issue of
shares is at the discretion of the Directors.
Use of Electronic
Communication
Whenever the Company, a Director, the Secretary, a
member or any officer or person is required or
permitted by the Articles of Association to give
information in writing, such information may be given
by electronic means or in electronic form, whether as
electronic communication or otherwise, provided that
the electronic means or electronic form has been
approved by the Directors.
Dividends
Shareholders may by ordinary resolution declare
final dividends and the Directors may declare interim
dividends but no final dividend may be declared in
excess of the amount recommended by the
Directors and no dividend may be paid otherwise
than out of income available for that purpose in
accordance with the Companies Act 2014. There is
provision to offer scrip dividends in lieu of cash. The
preference shares rank for fixed rate dividends in
priority to the Ordinary and Income Shares for the
time being of the Company. Any dividend which has
remained unclaimed for 12 years from the date of its
declaration shall, if the Directors so decide, be
forfeited and cease to remain owing by the
Company.
Meetings
Shareholder meetings may be convened by majority
vote of the Directors or requisitioned by
shareholders holding not less than 5% of the voting
rights of the Company. A quorum for a general
meeting of the Company is constituted by two or
General Information
Electronic Communications
Following the introduction of the 2007 Transparency
Regulations, and in order to adopt a more
environmentally friendly and cost effective approach,
the Company provides shareholders with hard copy
notifications that the Annual Report and Form 20-F
and other shareholder communications are available
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 elect to receive email
notifications that the Annual Reports and other
Shareholder communications are available
electronically. However, shareholders will continue to
receive printed proxy forms, dividend documentation
and, if the Company deems it appropriate, other
documentation by post. Shareholders can alter the
method by which they receive communications by
contacting the Registrars.
CRH Website
Information on or accessible through our website,
www.crh.com, other than the item identified as the
Annual Report and 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 section of the website,
immediately after release to the Stock Exchanges.
Electronic Proxy Voting
Shareholders holding shares in certificated form
may lodge a proxy form for the 2021 AGM
electronically by accessing the Registrars’ website
Financial Calendar
Announcement of final results for 2020
Ex-dividend date
Record date for dividend
Latest date for receipt of completed bank mandates
Latest date for receipt of currency elections
Latest date for revocation of existing bank mandates
Annual General Meeting
Dividend payment date
www.signalshares.com and entering CRH plc in the
company name field. Shareholders will need to
register for Signal Shares by clicking on "registration
section" (if you have not registered previously) and
following the registration instructions.
Investors who hold their interests in the Company's
shares through either the Euroclear Bank system or
as CREST Depository Interests ("CDI"s) should refer
to the Euroclear Bank Service Description or the
CREST International Manual respectively or to the
broker or custodian through whom they hold their
shares to give their voting instructions.
Further details on how shareholders holding shares
in uncertificated form can vote electronically at the
2021 AGM are available in the notes to the Notice of
the AGM.
Registrars
Enquiries 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.com
Shareholders with access to the internet may
check their accounts by logging onto
www.signalshares.com, selecting CRH plc and
registering for the share portal. Shareholders should
note that they will need to have their Investor Code
(found on their share certificate) and follow the
instructions online to register. This facility allows
shareholders to check their shareholdings and
dividend payments, 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.
4 March 2021
18 March 2021
19 March 2021
31 March 2021
31 March 2021
31 March 2021
29 April 2021
5 May 2021
Further updates to the calendar can be found on www.crh.com.
247
American Depositary Receipts
The ADR programme is administered by the Bank of
New York Mellon and enquiries regarding ADRs
should be addressed to:
BNY Mellon Shareowner Services,
P.O. Box 505000, Louisville,
KY 40233-5000, U.S.A.
Telephone: Toll Free Number
US residents: 1-888-269-2377
International: +1 201-680-6825
E-mail: shrrelations@cpushareownerservices.com
Website: www.mybnymdr.com
Frequently Asked Questions
(FAQs)
The Group’s website contains answers to questions
frequently asked by shareholders, including
questions regarding shareholdings, dividend
payments, electronic communications and
shareholder rights. The FAQs can be accessed in
the Investors section of the website under
Shareholder Centre.
Exchange Controls
Certain aspects of CRH’s international monetary
operations outside the European Union were, prior
to 31 December 1992, subject to regulation by the
Central Bank of Ireland. These controls have now
ceased. There are currently no Irish foreign
exchange controls, or other statute or regulations
that restrict the export or import of capital, that
affect the remittance of dividends, other than
dividend withholding tax on the Ordinary Shares, or
that affect the conduct of the Company’s operations.
Principal Accountant
Fees and Services
Details of auditors’ fees are set out in note 5 to the
Consolidated Financial Statements. For details on
the audit and non-audit services pre-approval policy
see Corporate Governance – External Auditors on
page 63.
Documents on Display
It 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.
2020 Annual Report and Form 20-F 248
248
Our commitment to sustainable business
practices has been documented in our
CRH Sustainability Report each year since
2004. This report can be found in the
sustainability section of the CRH website.
Other
Information
249
249
Principal Subsidiary
Undertakings
Principal Equity Accounted
Investments
Executive Leadership
Biographies
Exhibits
Cross Reference to Form 20-F
Requirements
Our Products and
Services Locations
Index
Signatures
250
254
255
256
257
258
260
262
Oldcastle BuildingEnvelope® (OBE), part of CRH’s Building Products Division,
provided a number of products which contributed to the 2020 expansion of
York University’s Schulich School of Business in Ontario, Canada. OBE also
contributed to the project's LEED gold target, including 6500 Series stick
curtain wall utilized around the building, 2020 Series SSG vents which were
incorporated into the chimney and the Reliance® Cassette curtain wall on the
angular facade.
2020 Annual Report and Form 20-F Principal Subsidiary Undertakings
as at 31 December 2020
Europe Materials
Incorporated
and operating in
Ergon N.V.*
Oeterbeton N.V.*
Belgium
Prefaco N.V.*
250
Schelfhout N.V.*
VVM N.V.*
Northstone (NI) Limited (including Farrans
Construction Limited, Materials and Cubis divisions)
Britain &
Northern Ireland
Premier Cement Limited
Southern Cement Limited
Tarmac Aggregates Limited
Tarmac Building Products Limited
Tarmac Cement and Lime Limited
Tarmac Trading Limited
Czech Republic Vapenka Vitosov s.r.o*
Denmark
Finland
Betongruppen RBR A/S
CRH Concrete A/S
Finnsementti Oy
Rudus Oy
Eqiom
France
L’industrielle du Béton S.A.*
Stradal*
Fels Holding GmbH
Fels Netz GmbH
Germany
Fels Vertriebs und Service GmbH & Co. KG.
Fels-Werke GmbH
Opterra GmbH
CRH Magyarország Kft.
Hungary
Ferrobeton Dunaújvárosi Beton- és
Vasbetonelem-gyártó Zrt
Clogrennane Lime Limited
Ireland
Irish Cement Limited
Roadstone Limited
Netherlands
Calduran Kalkzandsteen B.V.
Cementbouw B.V.
Heembeton B.V.
Dycore B.V.
Philippines (i)
Republic Cement & Building Materials, Inc.
Republic Cement Land & Resources Inc.
% held
Products and services
100
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
Precast concrete and structural elements
Precast concrete
Precast concrete structural elements
Precast concrete wall elements
Clinker grinding and cement production
Aggregates, readymixed concrete, mortar, coated macadam,
rooftiles, building and civil engineering contracting
Marketing and distribution of cement
Sale and distribution of cement
Aggregates, asphalt, readymixed concrete and contracting
Building products
Cement and lime
Aggregates, asphalt, cement, readymixed concrete and contracting
Production of lime and lime products
Concrete paving manufacturer
Structural concrete products
Cement
Aggregates, readymixed concrete and concrete products
99.99
Aggregates, asphalt, cement and readymixed concrete
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
40
40
Structural concrete products
Utility and infrastructural concrete products
Holding company
Logistics and owned railway infrastructure operator
Lime and limestone, development of new products
Production and sale of lime and limestone
Cement
Cement and readymixed concrete
Precast concrete structural elements
Burnt and hydrated lime
Cement
Aggregates, readymixed concrete, mortar, coated macadam, concrete
blocks and pipes, asphalt, agricultural and chemical limestone and
contract surfacing
Cement transport and trading, readymixed concrete and aggregates
Sand-lime bricks and building elements
Precast concrete structural elements
Concrete flooring elements
Cement and Building Materials
Cement
Europe Materials - continued
Incorporated
and operating in
Przedsiebiorstwo Produkcji Mas Betonowych
Bosta Beton Sp. z o.o.
Poland
Romania
Russia
Serbia
Slovakia
Spain
Drogomex Sp. z o.o.*
Cement Ożarów S.A.
Masfalt Sp. z o.o.*
Trzuskawica S.A.
CRH RMX & Agregate S.R.L.
CRH Ciment (Romania) S.A.
Elpreco S.A.
Ferrobeton Romania SRL
Fels Izvest OOO*
CRH (Srbija) d.o.o.
CRH (Slovensko) a.s.
Beton Catalan S.A.
Cementos Lemona S.A.
Switzerland
JURA-Holding AG*
LLC Cement*
Ukraine
PJSC Mykolaivcement*
Podilsky Cement PJSC
% held
Products and services
90.30
100
100
100
100
98.61
98.61
100
100
100
100
99.78
100
98.75
100
100
100
100
Readymixed concrete
Asphalt and contract surfacing
Cement
Asphalt and contract surfacing
251
Production of lime and lime products
Readymixed concrete
Cement
Architectural concrete products
Structural concrete products
Production of lime and lime products
Cement and readymixed concrete
Cement
Readymixed concrete
Cement
Cement, aggregates and readymixed concrete
Cement and clinker grinding
Cement
Cement
(i) 55% economic interest in the combined Philippines business (see note 33 to the Consolidated Financial Statements).
2020 Annual Report and Form 20-F Principal Subsidiary Undertakings - continued
as at 31 December 2020
Americas Materials
Incorporated
and operating in
Brazil
Canada
CRH Brasil Participações S.A.
CRH Sudeste Indústria de Cimentos S.A
CRH Canada Group Inc.
Ash Grove Cement Company
252
Callanan Industries, Inc.
CPM Development Corporation
Dolomite Products Company, Inc.
Michigan Paving and Materials Company
Mountain Enterprises, Inc.
Mulzer Crushed Stone
CRH Americas Materials, Inc. and subsidiaries
Oldcastle SW Group, Inc.
OMG Midwest, Inc.
United States
Pennsy Supply, Inc.
Pike Industries, Inc.
P.J. Keating Company
Preferred Materials, Inc.
Staker & Parson Companies
Suwannee American Cement Company, LLC
Tilcon Connecticut Inc.
Tilcon New York Inc.
The Shelly Company
Trap Rock Industries, LLC*
West Virginia Paving, Inc.
% held
Products and services
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
100
100
100
60
100
Holding company
Cement
Aggregates, asphalt, cement and readymixed concrete
and provider of construction services
Aggregates, readymixed concrete and cement
Aggregates, asphalt, readymixed concrete
and related construction activities
Aggregates, asphalt, readymixed concrete, prestressed
concrete and related construction activities
Aggregates, asphalt, readymixed concrete
and related construction activities
Aggregates, asphalt and related construction activities
Aggregates, asphalt and related construction activities
Aggregates, asphalt, readymixed concrete, aggregates
distribution and related construction activities
Holding company
Aggregates, asphalt, readymixed concrete
and related construction activities
Aggregates, asphalt, readymixed concrete
and related construction activities
Aggregates, asphalt, readymixed concrete
and related construction activities
Aggregates, asphalt, readymixed concrete
and related construction activities
Aggregates, asphalt and related construction activities
Aggregates, asphalt, readymixed concrete, aggregates
distribution and related construction activities
Aggregates, asphalt, readymixed concrete
and related construction activities
Aggregates, asphalt, readymixed concrete
and related construction activities
Cement
Aggregates, asphalt and related construction activities
Aggregates, asphalt, readymixed concrete
and related construction activities
Aggregates, asphalt and related construction activities
Aggregates, asphalt and related construction activities
Building Products
Incorporated
and operating in
Australia
Belgium
Britain &
Northern Ireland
Canada
Ancon Building Products Pty Ltd
Cubis Systems Australia Pty Ltd*
Plakabeton N.V.
Marlux N.V.
Stradus N.V.
Ancon Limited
Oldcastle Building Products Canada, Inc. (trading as Groupe
Permacon, Expocrete Concrete Products, Techniseal,
Abbotsford Concrete Products, Oldcastle BuildingEnvelope,
C.R. Laurence of Canada, Oldcastle Enclosure Solutions)
France
Plaka Group France S.A.S.
Germany
EHL AG
Halfen GmbH
Ireland
Cubis Systems Limited
Netherlands
Struyk Verwo Groep B.V.
Poland
Slovakia
Polbruk S.A.
Premac, spol. s.r.o.*
Switzerland
F.J. Aschwanden AG*
MoistureShield, Inc.
CRH Americas Products, Inc.
CRH America, Inc.
CRH America Finance, Inc.
C.R. Laurence Co., Inc.
Meadow Burke, LLC
CRH Americas, Inc.
United States
Oldcastle APG Northeast, Inc. (trading principally as Anchor
Concrete Products)
Oldcastle APG South, Inc. (trading principally as Adams
Products, Georgia Masonry Supply, Northfield Block Company,
Anchor Block and Oldcastle Coastal)
Oldcastle APG West, Inc. (trading principally as Amcor Masonry
Products, Central Pre-Mix Concrete Products, Jewell Concrete,
Sierra Building Products, US Mix and Superlite Block)
Oldcastle APG, Inc.
APG Mid-Atlantic, Inc.
Oldcastle BuildingEnvelope™, Inc.
Oldcastle Building Products, Inc.
Oldcastle Lawn & Garden, Inc.
Oldcastle Infrastructure, Inc.
% held
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Products and services
Construction accessories
Supplier of access chambers and ducting products
Construction accessories
Concrete paving and landscaping products
Concrete paving and landscaping products
Construction accessories
Specialty masonry, hardscape and patio products, custom
fabricated glass, architectural glazing systems and hardware for
glass industry, utility boxes and trench systems
253
Concrete paving and landscape walling products
Construction accessories
Construction accessories
Supplier of access chambers and ducting products
Concrete paving products
Concrete paving products
Concrete paving and floor elements
Construction accessories
Composite building products
Holding company
Holding company
Holding company
Fabrication and distribution of custom
hardware products for the glass industry
Concrete accessories
Holding company
Specialty masonry, hardscape and patio products
Specialty masonry, hardscape and patio products
Specialty masonry and stone products,
hardscape and patio products
Holding company
Specialty masonry, hardscape and patio products
Custom fabricated architectural glass and
architectural glazing systems
Holding company
Patio products, bagged stone, mulch and stone
Precast concrete products, concrete pipe,
prestressed plank and structural elements
2020 Annual Report and Form 20-F Principal Equity Accounted Investments
as at 31 December 2020
Europe Materials
Incorporated
and operating in
China
Ireland
Jilin Yatai Group Building Materials Investment Company Limited*
Kemek Limited*
254
Americas Materials
Blackbird Infrastructure 407 General Partnership*
Blackbird Maintenance 407 General Partnership*
Blackbird Constructors 407 General Partnership*
Canada
Blackbird Infrastructure 407 CRH GP Inc*
DAD (Finch West LRT Inc.)*
Mosaic Transit Partners General Partnership*
Mosaic Transit Constructors General Partnership*
United States
Buckeye Ready Mix, LLC*
Cadillac Asphalt, LLC*
Piedmont Asphalt, LLC*
Southside Materials, LLC*
* Audited by firms other than Deloitte
% held
Products and services
26
50
50
50
50
50
33
33
33
45
50
50
50
Cement
Commercial explosives
Special-purpose entity on highway infrastructure construction
Construction
Construction
Special-purpose entity on highway infrastructure construction
Special-purpose entity on Ontario infrastructure construction
Special-purpose entity on Ontario infrastructure construction
Construction
Readymixed concrete
Asphalt
Asphalt
Aggregates
Pursuant to Sections 314-316 of the Companies Act 2014, a full list of subsidiaries, joint ventures and associated undertakings will be annexed to the
Company’s Annual Return to be filed in the Companies Registration Office in Ireland.
Executive Leadership Biographies
Albert Manifold
Group Chief Executive
Appointed to the Board January 2009
Senan Murphy
Group Finance Director
Appointed to the Board January 2016
Gina Jardine
Chief Human Resources Officer
Albert was appointed a CRH Board Director in
January 2009. He joined CRH in 1998. Prior to
joining CRH, he was Chief Operating Officer with
a private equity group. While at CRH he has held
a variety of senior positions, including Finance
Director of the Europe Materials Division, Group
Development Director and Managing Director of
Europe Materials. He became Chief Operating
Officer in January 2009 and was appointed Group
Chief Executive with effect from 1 January 2014.
Senan has over 28 years’ experience in international
business across financial services, banking and
renewable energy. He joined CRH from Bank of
Ireland Group plc where he was the Chief Operating
Officer and a member of the Group’s Executive
Committee. He previously held positions as Chief
Operating Officer and Finance Director at Ulster
Bank, Chief Financial Officer at Airtricity and
numerous senior financial roles in GE, both in Ireland
and the US.
Gina joined CRH in July 2019 as Senior Vice
President, HR for our Building Products division,
before being appointed Chief Human Resources
Officer in January 2021. Gina has over 25 years’
experience in Global Human Resource roles
spanning large scale industries including Building
Products, Mining, Logistics & Warehousing,
Telecommunications and Automotive. Immediately
prior to CRH, she served as CHRO at Toronto-
based Kinross Gold Corporation.
Qualifications: FCPA, MBA, MBS.
Qualifications: BComm, FCA.
Qualifications: BA (Social Science), MBA.
255
Randy Lake
Group Executive, Strategic Operations
Keith Haas
Group Executive, Commercial
Randy 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 subsequently led the
launch of our Building Solutions business. Prior to
his current appointment, Randy served as President
of Americas Materials from 2016 to 2020. 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.
Keith began his business career as an engineer
at Amoco Chemical Company and joined CRH’s
North American business in 1995. Prior to his
current role, Keith has served in a number of
business development and executive leadership
roles, including President of our Architectural
Products Group, President of Americas Products
from 2012 to 2018 and President of our global
Building Products Division from 2018 to 2020. Keith
is also a member of the National Association of
Manufacturers Board of Directors in the US.
Qualifications: BE (Mechanical), MBA.
David Dillon
President, Global Strategy & Business Development
David joined CRH in 1998 in the United States,
where he was Controller for 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, and until the end of 2018 he
was Divisional President of Europe Lightside &
Distribution. Prior to joining CRH he held various
financial roles in the airline industry.
Qualifications: BComm, FCA.
Dan Stover
President, Americas Materials
Nathan Creech
President, Building Products
Onne van der Weijde
President, Europe Materials
Before joining CRH in the Americas in 1999, Dan
held various operating positions in the construction
materials sector. At CRH, he has served in a
number of roles including President of our Michigan
business, President of Americas Materials northeast
division and most recently, President of Americas
Materials north division. Dan was appointed
President of Americas Materials in 2021.
Qualifications: BS (Civil Engineering), MBA.
Nathan joined CRH in the Americas in 2011. Prior to
joining CRH, he held various operating and strategy
roles in the building materials industry. At CRH, he
has served in a number of business development
and executive leadership roles, including Vice
President US Strategy & Development, Senior Vice
President, Central Division of Americas Materials
and most recently as President of CRH’s Building
Envelope business. Nathan was appointed
President of Building Products in 2021.
Qualifications: BS (Business), MBA.
Onne 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.
Isabel Foley
Group General Counsel
Juan Pablo San Agustín
Chief Innovation & Sustainability Officer
Jim Mintern
EVP, Chief of Staff to the Chief Executive
Isabel joined CRH in 2020 in the newly created role
of Group General Counsel. Isabel was previously a
partner at Arthur Cox, one of Ireland's top-tier law
firms, and is recognised globally as a leader in her
field. She has advised State entities, multinationals
and domestic corporations, and their boards, on
business-critical risk, exposure and litigation arising
from transactions and disputes as well as regulatory
compliance and competition issues. Isabel is also
an accredited mediator and an experienced and
active mentor.
Qualifications: BCL, Law Society of Ireland, CEDR
Accredited Mediator.
Juan Pablo joined CRH in October 2020 to take
up the newly created role of Chief Innovation
& Sustainability Officer. He has over 25 years'
experience working in the building materials
industry across the Americas and Europe. His
areas of expertise cover strategic planning, M&A,
venture capital, digital innovation, and marketing.
Immediately prior to CRH, he served as EVP of
Strategic Planning and New Business Development
at CEMEX.
Qualifications: BS, MBA.
Jim 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, Safety and Special Projects activities.
Qualifications: BComm, FCA.
2020 Annual Report and Form 20-F Exhibits
The 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.
2.1
2.2
8.
12.
13.
256
Memorandum and Articles of Association.
Amended and Restated Deposit Agreement dated 28 November 2006, between CRH plc and The Bank of New York Mellon.*
Description of securities registered under Section 12 of the Exchange Act.
Listing of principal subsidiary undertakings and equity accounted investments (included on pages 250 to 254 of this Annual Report and Form 20-F).
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.
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 - Deloitte.
15.2
Consent of Independent Registered Public Accounting Firm - EY.
15.3
Governance Appendix.
16.
17.
Disclosure of Mine Safety and Health Administration (MSHA) Safety Data.
List of Issuers and Guarantors.
101.
eXtensible Business Reporting Language (XBRL).
Incorporated by reference to Annual Report on Form 20-F for the year ended 31 December 2006 that was filed by the Company on 3 May 2007.
*
** 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.
Cross Reference to Form 20-F Requirements
This 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.
PART I
Item 1.
Item 2.
Item 3.
Identity of Directors, Senior Management
and Advisors
Offer Statistics and Expected Timetable
Key Information
A - Selected Financial Data
B - Capitalisation and Indebtedness
C - Reasons for the Offer and Use of
Proceeds
D - Risk Factors
Page
n/a
n/a
212
n/a
n/a
223
Item 4.
Information on the Company
A - History and Development
of the Company
B - Business Overview
C - Organisational Structure
D - Property, Plants and Equipment
Item 4A.
Unresolved Staff Comments
2, 3, 34, 36,
235
32, 38, 220, 234, 235
235, 250
220
None
Item 5.
Operating and Financial Review and
Prospects
A - Operating Results
10, 32, 182, 213, 234
B - Liquidity and Capital Resources
C - Research and Development,
Patents and Licences, etc.
D - Trend Information
E - Off-Balance Sheet Arrangements
F
- Tabular Disclosure of Contractual
Obligations
G - Safe Harbor
Item 6.
Supplemental Guarantor Information
Directors, Senior Management and
Employees
A - Directors and Senior Management
32, 33, 35, 174,
178-188, 219
235
10, 32
219
219
101
218
9, 54, 255
74
B - Compensation
C - Board Practices
D - Employees
E - Share Ownership
56, 57, 58, 60, 69, 74
235
98, 241
Item 7.
Major Shareholders and Related Party Transactions
A - Major Shareholders
B - Related Party Transactions
C - Interests of Experts and Counsel
68, 238
204
n/a
Item 8.
Financial Information
A - Consolidated Statements and Other
132-204
Financial Information
- Legal Proceedings
- Dividends
B - Significant Changes
Item 9.
The Offer and Listing
A - Offer and Listing Details
B - Plan of Distribution
235
240
235
238
n/a
C - Markets
D - Selling Shareholders
E - Dilution
F
- Expenses of the Issue
Item 10.
Additional Information
A - Share Capital
B - Memorandum and Articles of
Association
C - Material Contracts
D - Exchange Controls
E - Taxation
F
- Dividends and Paying Agents
G - Statements by Experts
H - Documents on Display
I
- Subsidiary Information
Page
238
n/a
n/a
n/a
n/a
245
None
247
243
n/a
n/a
247
250
257
Item 11.
Item 12.
Quantitative and Qualitative Disclosures
about Market Risk
Description of Securities Other than Equity Securities
219
A - Debt Securities
B - Warrants and Rights
C - Other Securities
D - American Depositary Shares
PART II
Item 13.
Item 14.
Item 15.
Defaults, Dividend Arrearages and
Delinquencies
Material Modifications to the Rights of
Security Holders and Use of Proceeds
Controls and Procedures
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D. Exemptions from the Listing Standards
Item 16E.
for Audit Committees
Purchases of Equity Securities by the
Issuer and Affiliated Purchasers
Change in Registrant’s Certifying
Accountant
Item 16G. Corporate Governance
Item 16F.
Item 16H. Mine Safety Disclosures
PART III
Item 17.
Item 18.
Item 19.
Financial Statements
Financial Statements
Exhibits
n/a
n/a
n/a
242
None
None
130, 232, 233
56, 57
68
63, 69,
153, 247
n/a
239
None
232
220
n/a
132-204
256
2020 Annual Report and Form 20-F
Our Products and Services Locations
Cement
Aggregates
Lime
Readymixed
Concrete
Asphalt
Australia
Austria
Belgium
258
Brazil
Canada
China1
Czech Republic
Denmark
Estonia
Finland
France
Germany
Hungary
Ireland
Italy
Malaysia
Netherlands
Norway
Philippines
Poland
Romania
Russia
Serbia
Slovakia
Spain
Sweden
Switzerland
Ukraine
United Kingdom
United States
Includes Infrastructure Products, Architecture Products and Network Access Products
*
1. Includes the Group's equity accounted investment
Paving &
Construction
Concrete
Products*
Glass & Glazing
Systems
Custom Glazing
Hardware
Construction
Accessories
259
2020 Annual Report and Form 20-F Index
A
Accounting Policies
Acquisitions Committee
American Depositary Shares
Americas Materials
Annual General Meeting
Audit Committee
137
68
242
40
98
60
Chief Executive’s Review
Communications with Shareholders
Company Secretary
Compliance and Ethics
Contractual Obligations
Corporate Governance Practices
Auditors (Directors’ Report)
102
Corporate Governance Report
260
Auditor’s Remuneration
63, 153, 209
Cost Analysis (note 4)
10
69
69
68
219
232
58
152
239
E
Earnings per Ordinary Share (note 14)
Employees, Average Number (note 7)
Employment Costs (note 7)
Equity Accounted Investments’ Profit,
Share of (note 11)
Europe Materials
Exchange Rates
Exhibits
F
Finance Committee
Finance Costs and Finance Income
(note 10)
163
155
155
160
44
146
256
68
159
32
169
247
132
CREST and Migration to
Euroclear Bank
D
Auditor’s Report, Independent (Irish)
Auditor’s Report, Independent (US)
B
Balance Sheet
- Company
- Consolidated
Board Approval of Financial
Statements (note 35)
Board Committees
Board Effectiveness
Board of Directors
Board Responsibilities
Building Products
Business and Non-Current Asset
Disposals (note 6)
114
126
205
134
204
68
59
54
67
48
154
Business Combinations (note 32)
143, 200
Business Model
Business Performance
C
Capital and Financial Risk
Management (note 24)
Cash and Cash Equivalents
(note 25)
Cash Flow, Operating
Cash Flow Statement, Consolidated
Chairman’s Introduction
Debt, Analysis of Net (note 23)
178
Deferred Income Tax
- expense (note 12)
- assets and liabilities (note 29)
Depreciation
Finance Director’s Review
Financial Assets (note 17)
Financial Calendar
142, 160
142, 190
Financial Statements, Consolidated
- cost analysis (note 4)
152
- property, plant and equipment 138, 142, 164
Foreign Currency Translation
Frequently Asked Questions
111, 231
247
(note 15)
- segment analysis (note 2)
Derivative Financial Instruments
(note 27)
Directors’ Emoluments and Interests
(note 8)
Directors’ Interests in Share Capital
Directors’ Remuneration Report
Directors’ Report
Directors’ Responsibilities,
Statement of
Directors’ Share Options
Discontinued Operations (note 3)
16
30
182
144, 186
Dividend Payments
(Shareholder Information)
Dividend per Share
Dividends (note 13)
19
136
4
149
G
144, 187
155, 209
Global Business
Going Concern
Governance
Greenhouse Gas Emissions
Guarantees (note 26; note 11
to Company Balance Sheet)
2
102
52
18
187, 209
H
Health and Safety
18
98
74
100
104
92
141, 151
100, 240
1
145, 162
I
Inclusion and Diversity
Income Statement, Consolidated
Income Tax Expense (note 12)
Intangible Assets (note 16)
Inventories (note 18)
Investor Relations Activities
K
Key Components of 2020 Performance
KPIs, Financial
KPIs, Non-Financial
L
Leases (note 22)
Listing Rule 9.8.4C
Loans and Borrowings,
Interest-Bearing (note 26)
M
Measuring Performance
Memorandum and Articles of
Association
N
Nomination & Corporate Governance
Committee
Non-controlling Interests (note 33)
Non-GAAP Performance Measures
Notes on Consolidated Financial
Statements
18, 71
132
160
143, 166
144, 170
69
33
19
18
143, 175
101
144, 186
18
69, 245
64
203
213
147
O
Operating Costs (note 4)
152
P
Pensions, Retirement Benefit
Obligations (note 30)
Principal Equity Accounted
Investments
Principal Risks and Uncertainties
Principal Subsidiary Undertakings
Profit on Disposals (note 6)
138, 191
Share Capital and Reserves
(note 31)
145, 197
254
106
250
154
Share Options
- Directors
- Employees (note 9)
Share Price Data
Shareholder Communication
92
156
238
69
Property, Plant and Equipment 138, 142, 164
(note 15)
Property, Plants and Equipment
220
Provisions for Liabilities (note 28)
139, 189
Proxy Voting, Electronic
R
Registrars
Regulatory Information
Related Party Transactions (note 34)
Remuneration Committee
Reserves, Mineral
247
247
101
204
88
221
Shareholdings as at 31 December 2020
68, 238
261
Statement of Changes in Equity,
Consolidated
Statement of Changes in Equity,
Company
Statement of Comprehensive
Income, Consolidated
Statement of Directors’ Responsibilities
135
206
133
104
Stock Exchange Listings
68, 238
Strategy
Substantial Holdings
Sustainability
Retirement Benefit Obligations
(note 30)
138, 191
T
Return on Net Assets (RONA)
19, 214, 216
Total Shareholder Return (TSR)
Revenue (note 1)
Risk Governance
140, 147
Trade and Other Payables (note 20)
26
Trade and Other Receivables (note 19)
144, 170
Risk Management and Internal Control
102, 232
Risk Factors
S
Safety, Environment & Social
Responsibility Committee
Sector Exposure and End-Use
223
V
Volumes, Annualised
- Americas Materials
20, 70, 234
- Europe Materials
40
44
48
W
Website
Working Capital and Provisions for
Liabilities, Movement in (note 21)
- Europe Materials
- Building Products
Segment Information (note 2)
141, 149
Selected Financial Data
Senior Independent Director
212
55
Share-based Payments (note 9)
141, 156
14
68
20
8, 19
173
40
44
69, 247
174
Notes to the Company Balance Sheet
207
- Americas Materials
2020 Annual Report and Form 20-F
Signatures
The 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.
262
Dated: 12 March 2021
CRH public limited company
(Registrant)
By:
/s/ S. Murphy
Senan Murphy
Group Finance Director
Notes
263
2020 Annual Report and Form 20-F Notes
264
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CRH plc
Stonemason’s Way
Rathfarnham
Dublin 16
D16 KH51
Ireland
Telephone: +353 1 404 1000
E-mail: mail@crh.com
Website: www.crh.com
Registered Office
42 Fitzwilliam Square
Dublin 2
D02 R279
Ireland
Telephone: +353 1 634 4340
E-mail: crh42@crh.com
CRH® is a registered trade mark
of CRH plc.
Cover image: Silver Tower, Noordstation, Sint-Joost-ten-Node,
Brussels. The elliptical structure is 136m tall with 33 floors above
ground and was completed in 2020. Ergon, part of CRH’s Europe
Materials Division provided columns, beams, prestressed vaulting
and other concrete elements for the project.