2022 Annual Report
and Form 20-F
Overview
CRH at a Glance
Why Invest in CRH
Our Purpose
Chairman's Introduction
Strategy Report
Our Strategic Framework
Chief Executive's Review
Market Backdrop
Business Model
Strategy in Action
2
4
6
8
12
14
16
20
22
Solutions for a Sustainable Future 24
- Decarbonisation
- Waste
- Water
- Natural World
- People & Communities
- Responsible Business
Risk Management
TCFD Executive Summary
Business Performance
and Segmental Reviews
Chief Financial Officer's Review
Americas Materials
Building Products
Europe Materials
Governance
Board of Directors
Global Leadership Team
Governance Framework
Corporate Governance Report
Audit Committee Report
Nomination & Corporate
26
32
34
36
38
46
50
56
62
68
72
76
82
86
87
88
92
Governance Committee Report
98
Safety, Environment & Social
Responsibility Committee Report 104
Directors' Remuneration Report
Directors' Report
108
134
Principal Risks and Uncertainties 139
Focus on Climate Risks and
150
Opportunities
Financial Statements
Independent Auditors' Reports
160
Consolidated Financial
Statements
Accounting Policies
Notes on Consolidated
Financial Statements
Supplemental 20-F
and Other Disclosures
Shareholder Information
Other Information
Cross Reference to Form 20-F
Index
176
181
191
255
277
289
297
298
We stand
together
to reinvent
the way our
world is built
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 2022. A cross reference to Form 20-F
requirements is included on page 297.
The Directors’ Statements (comprising the Statement of
Directors’ Responsibilities, the Viability Statement and the
Directors’ Compliance Statement on pages 136 to 138),
certain sections of the Principal Risks and Uncertainties (on
pages 139 to 148), certain sections of the Climate Risks
and Opportunities (on pages 151 to 153), the Independent
Auditors’ Reports (on pages 160 to 171), the Parent Company
financial statements of CRH plc (on pages 248 to 252) and EU
Taxonomy (on pages 270 to 273) do not form part of CRH’s
Annual Report disclosures 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 135 for
more information about these statements and certain factors
that may cause them to prove inaccurate.
www.crh.com/investors/annual-reports/
This copy of the statutory annual report of CRH plc for the year ended 31 December 2022 is not presented in the
ESEF-format as specified in the Regulatory Technical Standards on ESEF (Delegated Regulation (EU) 2019/815).
The ESEF annual report is available at: www.crh.com/investors/annual-reports/
2022 Performance Highlights
Positive financial and non-financial
performance improvements
Sales
$32.7bn
+12%
Profit After Tax1
$3.9bn
+48%
EBITDA (as defined)*2
$5.6bn
+13%
$32.7bn
$29.2bn
2021
2022
$3.9bn
$2.6bn
$5.0bn
$5.6bn
2021
2022
2021
2022
Operating profit
$3.9bn
+17%
Earnings per share
Dividend per share
$3.50
+14%
$1.27
+5%
$3.9bn
$3.3bn
$3.50
$3.06
2021
2022
2021
2022
$1.27
$1.21
2021
2022
Inclusion and Diversity
Circular Economy
15%
+1% women in senior management
42.4
+8%
million tonnes
of alternative fuels and
raw materials recycled
Sustainable products
$12.6
+10%
billion revenue
from products with enhanced
sustainability attributes2
15%
14%
42.4mt
39.5mt
$12.6bn
$11.4bn
2021
2022
2021
2022
2021
2022
During 2022 the Oldcastle Building Envelope business was classified as discontinued operations under IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations (refer to note 3
to the Consolidated Financial Statements for further information). Accordingly, all references to income statement data are on a continuing operations basis throughout the Overview, Strategy
Report and Business Performance and Segmental Reviews sections (pages 2 to 79), unless otherwise stated.
1. Group profit for the financial year as per the Consolidated Income Statement on page 176.
2. Details of how non-GAAP measures are calculated are set out on pages 257 to 260.
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
2
CRH at a Glance
The leading building materials
business in the world
CRH is the leading provider of building materials solutions that build, connect and improve
our world. We help to make constructing the built environment easier, safer and more sustainable.
We are the essential partner for transport and critical utility infrastructure projects, commercial real
estate development and home construction.
By combining our materials, products and services, including recycled end-of-life materials, into
integrated solutions which can be delivered more efficiently and sustainably, CRH is uniquely
positioned to meet the changing needs of its customers, address the evolving trends in global
construction markets and contribute to a more sustainable built environment.
What we do
Build
Sustainable and resilient communities
through structures that provide protection,
shelter, warmth and safety as well as
enabling transport and commerce.
Connect
People and locations through
infrastructure that moves people,
property, information, energy and water.
Improve
A built environment that is stronger,
more durable, more efficient, more
economical and more effective.
Materials, products
and services
Integrated building
solutions
We manufacture and supply a range of materials,
products and services that are used extensively in
a wide range of construction applications.
We combine and connect materials, products
and services to provide customers with
complete end-to-end building solutions.
• Aggregates
• Cement & Lime
• Asphalt
• Paving & Construction
• Architectural Products
• Infrastructure Products
• Construction Accessories
• Road and Transport Infrastructure Solutions
• Water Infrastructure Solutions
• Urban Construction Solutions
• Renewable Energy Infrastructure
• Utilities and Communications Infrastructure
2022 Annual Report and Form 20-F
29 Countries
c. 3,160 Locations
#1 Europe
c. 75,800 People
#1 North America
32%
44%
24%
Sales by Division
Americas Materials
Building Products
Europe Materials
45%
55%
Sales by End-Use
New Build
Repair, Maintenance & Improvement
(RMI)
Sales by Sector
Infrastructure
Residential
Non-residential
Sustainable products
and solutions
The solutions we provide help to shape a more
sustainable built environment.
Innovation
We are constantly innovating to improve
existing and develop new technologies that
will empower more sustainable forms of
construction in the future.
Collaboration and
partnership
We understand the importance of collaboration
and the need to work in partnership with
others in order to realise our ambition in areas
such as sustainability.
• Low-carbon materials e.g. concrete
• CRH Ventures – Launched in 2022
• Recycled asphalt and low-carbon mixes
• Innovation Fund – Established in 2022
• Recycled masonry products
• Recycled composite decking products
• Sustainable stormwater solutions
• Modular and off-site manufacturing solutions
• Innovation Centre for Sustainable
Construction (ICSC) – over 100 research and
innovation projects underway
• Global Cement and Concrete Association
(GCCA) – Net-zero Concrete Roadmap
• National Asphalt Paving Association (NAPA)
– Net-zero Asphalt Pavements Roadmap
• Shell – Memorandum of Understanding
(MOU) to develop decarbonisation solutions
and technologies
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information35%25%40% 4
Why Invest in CRH?
Consistent long-term value creation
CRH has a strong track record of delivering for its
shareholders and is well positioned for future growth.
Strong Fundamentals
Sustainability at the Core
PROVEN STRATEGY
Our integrated solutions strategy
enables us to provide value-
added materials, products and
services across the construction
project lifecycle, better serving our
customers’ needs and delivering
superior value for our shareholders.
LEADING POSITIONS IN
ATTRACTIVE MARKETS
We have developed leading market
positions in North America and
Europe, providing us with an
attractive mix of high growth markets
complemented by more mature and
highly cash generative regions.
RESILIENCE THROUGH THE
CYCLE
We have repositioned towards more
resilient sectors of the construction
market, reducing the cyclicality
of our business by increasing
our exposure to publicly funded
construction and repair, maintenance
and improvement activity.
EXPERIENCED AND TALENTED
LEADERSHIP TEAM
CRH has a world class leadership team
with a proven track record of performance
through multiple economic cycles. We also
have a strong pipeline of talent in place to
develop the next generation of CRH leaders
and a clear commitment to Inclusion and
Diversity with specific targets in place to
2030.
#1
in North America
and Europe
Resilience
Cyclicality
1. Refer to page 27 for further detail on our decarbonisation targets.
SUSTAINABLE BUSINESS MODEL
Sustainability is deeply embedded
in all aspects of our business. We
continue to enhance our offering
of integrated sustainable solutions
to address the changing needs of
our customers while innovating to
create a higher-performing and more
sustainable built environment.
$12.6bn
(2021: $11.4bn)
Revenue from products
with enhanced
sustainability attributes
in 2022
DECARBONISATION
We have an industry-leading target to
deliver a 30% reduction in absolute
carbon emissions by 2030 (from a
2021 base year) which is aligned with
our ambition to be a net-zero business
by 2050. The Science Based Targets
initiative (SBTi) has validated our near-
term science-based carbon emissions
reduction targets1 in line with a 1.5°C
pathway.
CIRCULARITY
We are continuing to advance
our contribution to the circular
economy, preserving scarce natural
resources and using more recycled
materials in construction.
30%
Reduction in absolute
emissions by 20301
1 in 4 miles of road built
with recycled materials in
North America
INNOVATION
We are accelerating investment in
innovation to develop a higher-performing
and more sustainable built environment.
Through our $250 million venturing
and innovation fund we are supporting
the development of new technologies
and innovative solutions to meet the
increasingly complex needs of customers
and evolving trends in construction.
$250m
Venturing & Innovation
Fund
2022 Annual Report and Form 20-F
Superior Performance
Shareholder Value
CONTINUOUS BUSINESS
IMPROVEMENT
CRH is relentlessly focused
on building better businesses
through operational and
commercial excellence
programmes, coordinated
and driven from the centre
and delivered locally by our
businesses around the world.
Improved Returns
13.3%
Return on Net Assets (RONA)1
+340bps since 2018 (2021: 12.3%)
Return on net segment assets
13.7% (GAAP equivalent measure)
+540bps since 2018 (2021: 12.1%)
STRONG CASH
GENERATION
Operating Cash Flow2
Our financial discipline combined
with strong cash generation
enables us to continue to invest
in our business for further growth
and increase cash returns to our
shareholders.
$18bn
2018 - 2022
EFFICIENT & DISCIPLINED
CAPITAL ALLOCATION
Capital Allocation
2018 - 2022
2x
EPS growth since 2018
STRONG LONG-TERM
EARNINGS GROWTH
CRH has a strong track record
of delivering for its shareholders.
Backed by its experienced
management team, continued
execution of strategy and
disciplined capital allocation,
earnings per share from continuing
operations has more than doubled
since 2018.
CONSISTENT DIVIDEND
DELIVERY
The group has a consistent
record of uninterrupted
dividend delivery, with the
dividend growing or stable
each year since 1983.
Dividend per share
$1.27
$1.21
$1.15
$0.92
$0.82
We have a disciplined approach
to capital allocation which is
focused on maximising value for
our shareholders. In the last five
years we have allocated ~60%
of our capital to value-accretive
acquisitions and internal growth
investments while ~40% was
returned to shareholders in the
form of dividends and share
buybacks. Our strong and flexible
balance sheet provides us with
significant opportunities for future
value creation.
Cash
Returns
Growth
Investments
2018
2019
2020
2021
2022
INDUSTRY LEADING
RETURNS
Since formation in 1970 CRH
has delivered an industry-
leading compound annual Total
Shareholder Return (TSR)3
of 14.8% (2021: 15.5%).
In the last decade CRH's
total shareholder return has
exceeded the primary equity
indices in which the company
is included.
Total Shareholder
Return (last ten years)
+219%
+103%
+69%
FTSE
100
Eurofirst
300
CRH
1 RONA is a non-GAAP measure as defined on page 260. The GAAP figures that are most directly comparable to the components of RONA include: Group operating profit (2022: $3,894 million
2021: $3,331 million) and segment assets and segment liabilities (2022: $38,396 million and $9,517 million respectively, 2021: $37,935 million and $9,971 million respectively).
2 Operating cash flow refers to net cash inflow from operating activities as reported in the Consolidated Statement of Cash Flows on page 180.
3 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 257 to 260.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information40%60%40%60%40%60%
6
Our Purpose
Introducing a unifying
purpose for CRH
In 2022 we concluded an extensive project to unearth, articulate and communicate CRH’s
purpose.
In response to ever-increasing complexity in the world, where societal
interests and the demands of stakeholders continue to evolve, being a
Purpose-driven organisation provides CRH with a clear strategic focus,
enabling us to adapt and thrive while also contributing towards a brighter
future.
We’ve always had a culture of reinvention and continuous improvement.
Individually our businesses enable the world to be built around us. Together,
CRH can reinvent the way it’s done and have a larger, collective impact
on the world, contributing to a more sustainable and climate-resilient built
environment for the future.
In 2022 we completed a project to unearth and articulate our Purpose. We
began by talking to our employees, to explore and fully understand what
CRH is at its very best.
Our Purpose, 'We Stand Together to Reinvent the Way Our World is Built'
is why we exist; our Vision is where we are going; our Pillars are the actions
we will take to win; and our Values guide our behaviours every day.
We continued by looking out into the world to better understand the needs
in the world that CRH can fulfil. With insight from experts from a wide range
of fields, we developed a broad view of the impact that CRH has, beyond
what we make and sell - how we contribute to a better built world.
At CRH what we make is essential to life and living, because our materials,
products and solutions define how our world is built. We help make homes,
buildings and infrastructure that stand the test of time.
We have a relentless drive and a capability that can be applied to solving
some of the major challenges of our time.
VISION GRAPHIC
2022 Annual Report and Form 20-F Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Our unifying framework
8
Chairman's Introduction
Purpose sets the path for future
evolution and success
Introduction
I am pleased to introduce CRH’s Annual Report for 2022. The last
12 months have represented another challenging year for the world
and for the building materials sector. The Chief Executive and Chief
Financial Officer reviews on page 14 and 62 respectively outline the key
operational highlights and drivers of CRH’s performance in what has
been another record year for the Group despite these challenges.
Purpose
During 2022, we launched our Purpose. We also took the opportunity
to review and revise the wording of our values to strengthen and align
with our Purpose. The Purpose statement and the revised values are
set out on page 6.
The process to articulate our Purpose included input from our
employees through focus groups and test panels across all
geographies, divisions and organisational levels. We also took on board
valuable insights from global experts in a range of fields. I was present
at the launch of our Purpose last year and was struck by the extent
to which the newly articulated Purpose resonated with those present,
by encapsulating what has driven the success of CRH to date and
underpinning how we will build the CRH of the future.
The feedback we received on our Purpose during our engagement
with employees during the year, details of which are included in the
Corporate Governance Report on page 88, was similarly positive.
Our Purpose is currently being shared with our whole organisation
and is being embedded in our operational and strategic processes,
demonstrating our commitment to guiding and nurturing the culture of
the organisation.
Our Purpose is currently being shared with
all of our employees and is being embedded
in our operational and strategic processes,
demonstrating our commitment to guiding and
nurturing the culture of the organisation.
2022 Annual Report and Form 20-F Chairman's Introduction
Ukraine
Sustainability
Amidst the turbulence impacting global economies, your Board’s primary
focus has been on the safety and well-being of our colleagues in Ukraine.
I am pleased to report that our employees and their families are physically
safe and have received our help and support, including evacuation from risk
areas, accommodation and financial assistance. I am also immensely proud
of the response of our people across the Group in their support for the
humanitarian effort in Ukraine, as is further outlined in the Chief Executive’s
review on page 14.
The Group is working towards delivery of its ambition to become a net-zero
business by 2050, with an industry-leading target of a 30% reduction in
absolute carbon emissions by 2030 and continued investment in ground-
breaking technologies. Further information on these and other initiatives
in areas such as circularity, climate resilience, our $250 million venturing
and innovation fund to support the development of pioneering sustainable
building solutions and our strategic alliances are set out in the Solutions for
a Sustainable Future section on page 24.
Safety
Conclusion
Very regrettably, there were five reportable fatalities in 2022 involving one
employee and four contractors. As outlined in the Safety, Environment and
Social Responsibility (SESR) Committee report on page 104, following
detailed reports to the Board on the background circumstances of
these incidents, the SESR Committee received follow-up reports on the
investigations into the root causes in each case. Your Board remains
steadfast in its determination to work towards zero harm and CRH
continues to invest in safety initiatives and technologies to support this.
Further information on our work in the area of safety is set out in the People
& Communities section on page 38.
On behalf of the Board, I would like to express our appreciation to all of our
employees for their commitment and efforts during this challenging year
and to the management team led by our Chief Executive, Albert Manifold.
I am confident that our clearly defined Purpose, which is directly aligned
with our clear strategy, focus on operational performance and development
of our employees whilst providing commercial solutions for our customers’
needs, provides a valuable underpin for the Company’s evolution and future
success of the Group.
Richie Boucher
Chairman
1 March 2023
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 10
Chief Executive’s Review
Market Backdrop
In 2022 CRH delivered
a resilient performance
supported by our solutions
strategy.
The factors driving demand
in the marketplace for our
materials, products and
value-added solutions.
Read our Chief Executive’s Review on page 14
Read our market backdrop on page 16
2022 Annual Report and Form 20-F Strategy Report
Strategy Report
Our Strategic Framework
Our Strategic Framework
12
12
26
32
34
Chief Executive’s Review
Chief Executive’s Review
Market Backdrop
Market Backdrop
Business Model
Strategy in Action
Business Model
14
16
20
22
Solutions for a Sustainable Future 24
Strategy in Action
– Decarbonisation
14
16
20
22
Solutions for a Sustainable Future 24
– Waste
– Water
– Decarbonisation 26
– Natural World
– Waste
– People & Communities
– Responsible Business
– Water
Risk Management
– Natural World
TCFD Executive Summary
– People and Communities
36
38
32
46
34
50
56
36
38
– Responsible Business 46
Risk Management
TCFD Executive Summary
50
56
[IMAGE]
[IMAGE]
Solutions for a
Lorem Ipsum Lorem
sustainable future
Risk management driving
Lorem Ipsum Lorem
better decision making
Creating value by reinventing
Lorem Ipsum Lorem Ipsum
the way the world is built
Lorem Ipsum
Effective management of
Lorem Ipsum Lorem Ipsum
risks and opportunities is
Lorem Ipsum
fundamental to the realisation
of our strategic objectives
Read more on page 24
Read about our approach to risk management on page 50
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
12
Our Strategic Framework
A strategy anchored in purpose
CRH is the leading provider of building materials solutions that build, connect and improve our
world. Our unifying strategic framework guides and frames our strategy and decision-making to
realise the potential and opportunities available to our business, while also providing clarity and
focus as we live our purpose and work to achieve our vision.
V A L U E S
W H A T G U I D E S U S
P U R P O S E
W H Y W E E X I S T
People
are our priority
We build enduring
relationships and we
care for each other’s
safety and well-being
Character
is our strength
We do what we say, we
live by our word and we
collaborate to deliver as
one team
Performance
is our commitment
We achieve impact
globally through local
delivery, entrepreneurial
drive and environmental
stewardship
Innovation
is our way forward
We strive to shape
the next generation
of sustainable
building materials and
solutions
V I S I O N
W H E R E W E A R E G O I N G
To d e v e l o p s u s t a i n a b l e s o l u t i o n s
t h a t b u i l d , c o n n e c t a n d i m p r o v e o u r W o r l d
2022 Annual Report and Form 20-F
In 2022 we completed work on the development of a new Sustainability Framework for CRH. This
framework sets out our key priorities that will guide how we execute on our targets and how we
focus on opportunities to create value for both CRH and for stakeholders throughout society.
Further information on our Sustainability Framework is included on page 24.
P I L L A R S
H O W W E W I L L W I N
Our framework for a Sustainable future
We will create value for all by developing sustainable
solutions that build, connect and improve our world
and help to solve three global challenges for society
and the built environment.
Empowered Talent
Customer Connected
Investing in our people
and growing our skills to
drive our business
Creating preferred solutions
with our materials, products
and services, that exceed our
customers’ expectations
Focused Growth
Sustainability Leadership
Expanding and building
our strength through
scale, shape and making
businesses better
Actively improving the built
environment by integrating
sustainability into everything
we do
Further information on our Sustainability
Framework is included on page 24.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder InformationDECARBONISATIONWASTEWATER Innovating for a low-carbon future World Communities Business Natural People & Responsible
14
Chief Executive’s Review1
Resilient performance supported
by our solutions strategy
CRH reported further growth in sales, EBITDA
(as defined)* and margin amid a challenging and
volatile cost environment, reflecting the resilience
of our business and the benefits of our integrated
and sustainable solutions strategy.
4
Introduction
At CRH our vision is to develop sustainable solutions that build,
connect and improve our world. In recent years we have reshaped
and repositioned our business to help realise that vision and to deliver
superior growth and performance. We have a clear strategy in place
which has sharpened our competitive advantage, strengthened our
resilience and enabled CRH to deliver a strong performance during
2022, despite an increasingly challenging and volatile cost environment
globally.
Solutions Strategy
Integrating our materials and products with value-added services that
can be delivered as solutions in multiple markets uniquely positions
CRH to capture additional value across the entire construction value
chain. By deepening our relationships with customers, removing
reasons to switch and improving our pricing power we can capture
more business from each individual customer, deliver greater
production and logistical efficiencies and achieve higher utilisation rates
on our asset base.
In 2022 we continued to develop our solutions proposition with a strong
focus on enhancing the ability of our businesses to solve problems and
address new and emerging challenges that customers are facing. This
included the acquisition of businesses that complement and enhance
our existing offerings and enable us to deliver more complete solutions
for customers.
CRH spent a total of $3.3 billion on acquisitions and investments in
2022 (2021: $1.5 billion). The most significant of which was our $1.9
billion acquisition of Barrette Outdoor Living (Barrette), North America’s
leading provider of fencing and railing systems for the outdoor living
space. Integrating Barrette with our existing outdoor living businesses
enables us to provide a complete suite of sustainable outdoor living
solutions for our customers.
We are also seeing increasing demand for integrated solutions in major
infrastructure and commercial projects in key markets across each of
our Divisions. In 2022 this included areas such as drainage and waste-
water systems, energy and telecoms infrastructure, manufacturing
facilities and data centres. CRH is uniquely positioned to meet this
demand through our extensive operational footprint and ability to
combine multiple materials, products and services at a level of scale
required to deliver these projects on-time and on-budget.
This helped CRH to deliver a strong financial performance during 2022
which saw sales 12% and EBITDA (as defined)* 13% ahead of the
prior year, while EBITDA (as defined)* margin increased despite the
significant inflationary cost environment.
Sustainability Leadership
4 *EBITDA is defined as earnings from continuing operations 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 135.
2. Refer to page 27 for further detail on our decarbonisation targets.
We continued to make progress in decarbonising our business and,
in 2022 announced an industry-leading absolute carbon emissions
reduction target. In early 2023, the SBTi validated our revised targets2
in line with the updated 1.5°C science-based framework which now
2022 Annual Report and Form 20-F equate to a 30% reduction in absolute carbon emissions by 2030 (from a
2021 base year). This is aligned with our ambition to be a net-zero business
by 2050.
We are innovating to improve circularity and climate resilience in the built
environment. This includes the development of new low-impact products
and solutions that are less carbon intensive and help to mitigate and adapt
to climate change while reducing its environmental and social effects.
This is an area where we see increasing opportunities as public policy
changes begin to drive an increase in demand for products such as low-
carbon concretes and asphalt. In 2022 assisted by our Innovation Centre
for Sustainable Construction (ICSC), our businesses continued to introduce
new low-carbon concretes.
Customer Connected
There are currently over 100 projects being undertaken by the ICSC as
part of our innovation agenda. In 2022 we further increased our investment
in innovation, launching a new venture capital unit, CRH Ventures, and
establishing a $250 million venturing and innovation fund. CRH Ventures will
partner with construction technology and climate technology companies,
across the construction value chain, investing in the development of new
technologies and innovative solutions to meet the increasingly complex
needs of customers and evolving trends in construction.
CRH is particularly well positioned with the technical capabilities, knowledge
and expertise of a global industry leader, to pilot and scale new technologies
and innovations that will enable safer, smarter and more sustainable
construction. We also have the benefit of deep market insights and strong
customer relationships which provide CRH with a unique understanding of
the evolving needs of the industry and the changing nature of construction.
Maintaining our ability to solve our customers’ complex construction
challenges is critical to our continued commercial and operational success
and we are investing to strengthen our market leadership.
Empowered Talent
At CRH people are our priority. We pride ourselves on the enduring
relationships that we build and the care we take for each other’s safety and
wellbeing.
We took early and decisive action to protect our colleagues in Ukraine
and their families in February 2022 and I remain deeply moved by the
efforts of our people. We also stood together as a company to support
the humanitarian effort in Ukraine including raising and donating over $1.7
million to UNICEF.
We continue to put safety first and to drive our culture of safety and
wellness towards ensuring zero harm. Regrettably, despite our best efforts,
we fell short in delivering on our safety target in 2022 with five fatalities
recorded during the year. This is unacceptable and has further strengthened
our resolve to achieve our ambition of zero harm and target of zero fatalities.
Our thoughts are with the families of the deceased.
Our people are essential to unlocking the full potential of CRH’s solutions-
focused business model. Through our global talent strategy and
development programmes we are investing in our people to grow their skills
and drive our business forward. This helps us to identify and attract talent
and empower the next generation of leaders to reinvent the way our world
is built.
Focused Growth
Our integrated solutions strategy is the engine which will drive future growth
in CRH and will allow our business to reach its full potential, fuelling our
innovation, creativity and entrepreneurship, while delivering significantly
higher margins, returns and industry-leading cash generation.
To deliver this strategy and fully capitalise on the opportunities in the market
requires an enhanced organisational structure capable of better serving our
customers through increased cross-company collaboration and innovation.
This will also help to unlock additional improvements in productivity, growth
and financial performance. For this reason, effective 1 January 2023 we
have reorganised CRH into two distinct Divisions, CRH Americas and CRH
Europe.
CRH Americas will bring together our existing Americas Materials
businesses with our Architectural Products and Infrastructure Products
businesses in North America. CRH Europe will bring together our
existing Europe Materials businesses with our Architectural Products and
Infrastructure Products businesses in Europe, as well as our global Leviat
business.
Bringing these businesses together in the Americas and Europe will
establish two strong growth platforms that position CRH to lead the
way in integrated, sustainable construction solutions that are scalable
and replicable across multiple markets. This is another important step in
achieving our vision to build, connect and improve our world.
Outlook
Overall, we expect resilient demand and increased pricing in 2023 despite
macroeconomic uncertainties and ongoing cost inflation. Our operations
in North America will benefit from strong pricing and robust infrastructure
demand being underpinned by significant increases in funding at both
federal and state level. The non-residential sector is supported by
government funding initiatives in clean energy and the onshoring of critical
manufacturing, while the residential new-build sector will experience
short-term weakness as a result of rising interest rates. In Europe we
expect positive pricing momentum to offset lower volumes. Construction
activity in Central and Eastern Europe will continue to be supported by
EU infrastructure funds, while our businesses in Western Europe remain
underpinned by resilient repair, maintenance and improvement (RMI)
activity and stable infrastructure demand. Notwithstanding a number of
macroeconomic risks and uncertainties, CRH remains well positioned for
another year of progress in 2023 due to our uniquely integrated, value-
added solutions strategy together with a strong and flexible balance sheet.
In 2022 we continued to deliver our Inclusion & Diversity (I&D) strategy by
appointing a new executive committee sponsor for I&D strategy setting and
a new Chief Culture and People Officer (CCPO) at executive committee
level, to elevate the strategic focus on culture and people at CRH.
Albert Manifold
Chief Executive
1 March 2023
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 16
Market Backdrop
Positioned to meet the changing
needs of construction
There are a number of factors which are driving demand in the marketplace
for our materials, products and value-added solutions.
Over several decades CRH has developed a strong core business focused
on building materials, value-added products and services. This business is
underpinned by a portfolio of well-located assets in attractive construction
markets in North America, Europe and Asia-Pacific. Our business addresses
the needs of customers with both new build and RMI requirements in
infrastructure, residential, non-residential and construction markets.
Demand for our materials, products and services is driven by a number of
important market fundamentals, while sector specific trends are creating
challenges and opportunities that will shape the way in which we meet that
demand now and in the future.
Through its broad base of high-quality businesses and leadership positions
in local construction markets, CRH is well positioned to capitalise on
future growth potential, both organic and inorganic. Our business is also
positioned to align with the major demand fundamentals in key global
markets which enables CRH to take advantage of the opportunities
presented by the changing nature of construction. This has involved moving
our business away from being solely a supplier of base materials and has
helped CRH deliver superior performance.
Demand Fundamentals
Construction demand continues to be driven by a number of factors
including significant infrastructure needs, long-term residential under-build
and a resurgence in non-residential demand.
In the US we have orientated our operating footprint to benefit from
resilient RMI activity in the North East and Midwest along with new-build
expansion driven by migration and population growth in the South and
West.
In Europe we have seen resilient RMI demand and advancements in
sustainable construction in the more stable and developed markets of
Western Europe. This is in addition to significant new-build infrastructure
and residential needs coupled with a supportive regulatory environment for
sustainable solutions in the higher growth markets in the East.
In both geographies we have seen significant government support for
infrastructure, through state and federal funding in the US and EU funding
in Eastern Europe.
2022 Annual Report and Form 20-F Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Key macro trends, challenges
and opportunities
Population growth and the rise
of cities
The global population is projected to grow by approximately 2 billion
by 2050, when it is estimated that approximately 70% of people will
live in urban environments, driving increased demand for construction.
Economic Development
The global economy is forecast to more than double in size by
2050 with economic development continuing to drive investment in
infrastructure, residential and commercial projects.
Sustainability
Sustainability, environmental and planning regulations along with
resource scarcity are among a range of factors driving the transition to
a more sustainable built environment.
Recurring RMI needs
There is an ongoing and continuous need to repair, maintain and
upgrade the ever-growing built environment as existing buildings and
infrastructure age and wear.
CASE STUDY
Providing solutions to complex
and demanding commercial
projects
Population growth and economic development are two trends driving
an increase in demand for essential technologies like 5G, artificial
intelligence (AI) and high-performance computing (HPC), which
depend on the global semiconductor industry. Among the large
commercial projects which CRH has been helping to deliver in this
area is a new $17 billion manufacturing facility for Samsung near
Austin, Texas. The project involved CRH providing a bespoke solution
to ensure the supply of approximately 920,000 m3 of concrete to the
site within a highly demanding six month timeline.
18
Market Backdrop continued
Positioning CRH to seize the opportunities
Solutions for a Sustainable Future
CRH sees opportunity in many of the challenges our industry is facing,
including: accelerating demand growth, resource scarcity, sustainability
considerations, political and economic volatility, energy availability and
costs, along with the changing role of technology.
Our customers are demanding more in terms of solutions that are holistic
and can reduce cost and complexity, save time and improve environmental
performance. CRH is uniquely positioned to deliver solutions which meet
these and other demands.
Our ability to combine materials, products and services provides CRH
with a competitive advantage and an opportunity to strengthen and scale
our position in key construction markets. We can sustain that competitive
advantage by building on our core strengths with renewed focus on the
customer, sustainability, and innovation.
Our integrated approach is allowing us to take great strides in providing the
solutions needed by our customers and communities.
1. Decarbonisation: Including designing-out embodied and operational
carbon, reuse of carbon we cannot avoid, providing support infrastructure
for energy transition and developing energy efficiency solutions.
2. Waste: This includes the recycling and reuse of construction and other
waste, enabling resilient, resource-efficient buildings and infrastructure,
building more circular supply chains.
3. Water: Conserving water across the value chain and advancing solutions
that enhance resilience to flooding, upgrading water infrastructure and
ground water recharging.
While these themes are highly complex, we recognise that they are of
growing importance for society and for communities around the world. This
is why, at CRH, we are actively addressing them and embracing the value
creation opportunities they present.
For further information on how we are addressing these themes please see
pages 26 to 35.
2022 Annual Report and Form 20-F CASE STUDY
How the US Infrastructure
Investment and Jobs Act is
driving demand for our solutions
The US Government’s $1.2 trillion Infrastructure Investment and Jobs Act
is the single largest long-term investment in infrastructure and economy in
the history of the US and provides $550 billion in funding between 2022
through 2026 for infrastructure, including roads, bridges, mass transit, water
infrastructure, climate resilience, and broadband. In 2022 CRH’s operating
companies across the US helped to deliver multiple infrastructure projects
receiving funding under the Act. State level funding for infrastructure
projects is also an important driver of CRH’s business in the US where CRH
is the largest road paver and undertakes significant road construction and
repair and maintenance work on behalf of local and state governments.
Industry specific trends
Challenges and
opportunities
In addition to important macro trends, there are a number
of construction industry specific trends that are shaping
how CRH evolves to meet the needs of its customers and
which are having an impact at all levels of the value chain.
1. Climate Change
The changing climate will require a more resilient built
environment. This will drive demand for the rebuilding of
critical infrastructure and the retrofitting of homes and
other buildings. In addition the need for regulatory changes
aimed at decarbonising our industry will stimulate demand
for circularity and sustainable materials and products.
CASE STUDY
2. Changing customer preferences
How regulatory certification is
helping to develop the market for
sustainable cements in France
Our Europe Materials business Eqiom, received NF certification (which
indicates compliance with French, European and International standards)
for its new reduced CO2 cement range in 2022 following the launch of
a new standard designation by France’s Scientific and Technical Center
for Building (CSTB). The new certification will allow the cement’s use in
structural concrete for the first time. This change represents a significant
opportunity for Eqiom as it expands the market opportunity for low CO2
cement solutions.
Customers' needs are evolving and there is increasing
demand for more holistic solutions and services. In addition
increasing reporting requirements on product attributes and
increased digitalisation in distribution and retail is driving
go-to-market innovation.
3. Supply side shifts
A range of factors including labour shortages, automation,
migration, retraining, and wage inflation is driving supply
side change that is shaping our industry, while increasing
investment in technology and digital solutions is creating
significant value.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 20
Business Model
How we create value
We have continued to evolve our
business model to address the future
needs of construction and to help deliver
a more resilient built environment.
What We Do
We provide building materials solutions
that build, connect and improve our world.
Our Inputs &
Resources
Capital and Net Debt1
$26.8bn
Tonnes of Reserves
22.8bn
Raw Materials1
$7.4bn
Employees
c. 75,800
Intellectual
Property
Business
Systems
Our Value Chain
Reserves &
Raw Materials
We add value
by turning our
mineral reserves
and raw materials
into products
for market,
leveraging our
customer insights,
engineering and
architectural
experience and
know-how to do
so.
Design and
Specification
Processing and
Production
We put our
customers’ needs
at the heart of
everything we
do, looking to
understand,
anticipate and solve
their challenges
and to deliver for
them. In this way,
we become more
deeply connected
with our customers
and increase the
barriers to switching.
Our vertically integrated
business model
enables us to create
and capture value
throughout the supply
chain. Materials
produced by our
aggregates and cement
businesses for example
can be supplied to
our downstream
businesses for use
in products such as
asphalt, readymixed
concrete and concrete
products.
1. Capital and Net Debt of $26.8 billion (2021: $26.5 billion) and raw materials spend of $7.4 billion (2021: $6.3 billion) as outlined in notes 22
and 4 to the Consolidated Financial Statements, respectively on pages 225 and 196. Net Debt is a non-GAAP measure as defined on page
260.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit
on disposals and the Group’s share of equity accounted investments’ profit after tax
2022 Annual Report and Form 20-F
We help make constructing the built
environment easier, safer and more
sustainable.
Construction and
Maintenance
We provide materials
solutions that build,
connect and improve
the world. We help
make constructing
the built environment
easier, safer and
more sustainable.
Circularity and
Innovation
Value-added
Solutions
We work with
customers across
the entire project
lifecycle from design,
manufacture,
installation and
maintenance through
to end-of-life,
innovating to provide
better materials,
products, services
and processes
while incorporating
circularity through
recycling and re-use
of materials.
Through integration
we can provide
customers with more
complete end-to-
end solutions which
combine different
materials, value-
added products
and services.
This provides
customers with a
value enhancing
one-stop-shop,
reducing complexity,
improving efficiency
and helping CRH to
deepen customer
relationships and
increase the spend
from each customer.
Value Created
Profit After Tax
$3.9bn
EBITDA (as defined)*
$5.6bn
Operating Cash Flow
$4.0bn
2021: $2.6bn
2021: $5.0bn
2021: $4.2bn
Benefits to Stakeholders
For Investors: Growth and Returns
For Customers: Materials and Solutions
For Governments: Infrastructure and Taxes
For People: Careers and Professional Development
For Society: A Better Built Environment
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
22
Strategy in Action
Delivering on our vision
OUR STRATEGIC PILLARS
WHY IS IT IMPORTANT TO US?
WHAT ARE WE DOING?
Strategic pillar #1
Empowered
talent
Investing in our people and growing
our skills
Strategic pillar #2
Customer
connected
Creating preferred solutions using our
materials, products and services, that
exceed our customers’ expectations
Strategic pillar #3
Focused
growth
Expanding and building our strength
through scale, shape and making our
businesses better
Strategic pillar #4
Sustainability
leadership
Actively improving the built environment
by integrating sustainability into
everything we do
Our people are what drives our business. We are
therefore committed to nurturing and empowering
talent at all levels of the organisation, to ensure our
continued success into the future.
CRH provides a range of training and
development supports and resources across
our business which help us to identify and
develop talent at various levels.
The construction industry is evolving and customers'
needs are changing rapidly. Our integrated business
model enables us to partner with our customers to
create and deliver preferred solutions.
We are constantly listening to our customers and
gaining new insights while adapting our business to
improve our ability to deliver sustainable products and
solutions that address the real underlying needs of
customers.
Our customers have an increasing need for more
holistic solutions, CRH can maximise its overall growth
potential by focusing on its ability to deliver solutions
that meet this growing need.
We are focused on delivering our integrated
solutions strategy and to do so we are working
to better connect our people, capabilities, assets
and customers across businesses, markets and
geographies.
We recognise the impact of construction on our world
and CRH's unique ability to create value through
action on sustainability and integrating our materials,
products and services into solutions that contribute to
a more sustainable built environment.
In 2022 we developed a new sustainability framework
which prioritises three rapidly emerging and hard to
solve global challenges for the built environment and
society - decarbonisation, waste and water. CRH is
well placed to help address these challenges. Through
our sustainability framework we will drive actions to
continuously improve our sustainability performance,
further develop our integrated portfolio of products,
services and solutions and invest in innovation to
create significant value for our business and for
society.
2022 Annual Report and Form 20-F
Delivering on our vision, living our values
Solutions strategy
CRH has shaped, reshaped and continues to evolve its business to improve
performance, deliver for our stakeholders and respond to the ever-changing
needs of our customers. Our solutions strategy will enable us to realise our
vision of providing the world with sustainable solutions that build, connect
and improve the built environment. In line with this, during 2022 we refined
and refreshed the four strategic pillars that guide our approach:
1. Empowered Talent
2. Customer Connected
3. Focused Growth
4. Sustainability Leadership
These retain some of the core concepts of our previous pillars around
empowering talent and focused growth. They also include an enhanced
focus on sustainability leadership and customer connectedness.
CRH has a unique set of capabilities in the markets in which we operate
along with decades of experience and deep customer relationships and
understanding. We leverage our scale and best practice across the Group
to provide value-added materials, products and services as end-to-end
solutions that solve complex problems for our customers.
These solutions allow us to embed more deeply with our customers which
drives significant commercial and operational benefits. We can leverage
production and logistics efficiencies to drive increased profitability and
asset utilisation. We can reduce waste and advance the sustainability of
construction. It also makes our business less capital intensive and drives
a higher rate of return delivering superior long-term value and structurally
higher growth.
WHAT DID WE ACHIEVE IN 2022?
HOW DO WE MEASURE?
In 2022 more than 4,100 leaders from the frontline of our operations
to senior executives around the globe participated in a variety of
leadership development activities. Approximately 2,789 leaders from
our frontline successfully completed leadership training. 16 new
formal mentoring partnerships were formed and over 1,300 leaders
and employees participated in leadership development programmes
and/or soft-skill capabilities training, including 250 senior leaders who
took part in an inclusive leadership development programme.
We are engaged in a range of initiatives to deliver better for our
customers. This includes measures to ensure we have the people
and talent needed to deliver, including talent acquisition initiatives,
skills training and development as well as the development of digital
solutions for commercial and logistics applications.
• Number of employees attending training
• Total numbers of training hours
• Share of revenue from solutions business
• Customer relationship dynamics
•
Level of investment in R&D projects
• Customer service training undertaken
• Customer perception surveys
• Percentage of products with enhanced
sustainability attributes
By investing in our people and
growing their skills we can reduce
the potential impacts on the Group
of both our People Management (see
page 139) and Health and Safety
Performance (see page 143) risks.
Placing a strong focus on customer
connectivity ensures differentiation
from competitors and helps us
manage our Commodity Products
and Substitution (see page 140) risk.
Through our disciplined and growth focused approach to capital
allocation CRH invested $3.3 billion on 29 acquisitions and
investments while recycling capital from divestments into platforms
with higher growth opportunities. The acquisition of Barrette which
was completed in 2022 by our Architectural Products business
strategically enhanced our offering of sustainable outdoor living
solutions in North America. This is an area where we see potential
to create further value for our customers, our business and our
shareholders.
• Share of revenue in target growth markets
•
•
•
Level of CapEx including development
CapEx
Internal Rate of Return (IRR) on
acquisitions
Increase in RONA across base and
acquired businesses
• Portfolio optimisation and capital
allocation
Constantly working to improve the
scale, shape and quality of our
business, as well as ensuring our
activities are orientated towards
markets with the best longer-term
opportunities, helps us to better
manage our Industrial Cyclicality
and Economic Conditions (see
page 139) risk.
CRH was once again included in the Dow Jones Sustainability Indices
(DJSI), based on the Corporate Sustainability Assessment issued by
S&P Global, ranking us among the top large companies in the world
when it comes to sustainability. In particular, we continue to be the
only member of our industry to be included on the DJSI European
Index. This recognition highlights our ongoing commitment to
delivering a sustainable built environment.
• Ranking by leading ESG rating agencies
• Benchmarking against peers
• Progress on our 2030 targets (see page 24)
• Alignment with UN Sustainable Development
Goals (SDGs)
By integrating sustainability into
everything we do, we can ensure that
we are better positioned to effectively
monitor and respond to our Climate
Change and Policy (see page 142),
Health and Safety Performance (see
page 143) and Sustainability and
Corporate Social Responsibility (see
page 144) risks.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
24
Solutions for a Sustainable Future
Creating value by reinventing
the way our world is built
For over 50 years, CRH has continually transformed, adapted
and reinvented, while delivering sustainable value and
creating integrated solutions that contribute to a better built
environment. The products we make and the services we
provide are essential to life and living, contributing to safer,
cleaner and more sustainable homes, cities and critical
infrastructure.
However, the world that we see emerging today is more complex than ever.
The global population is currently 8 billion and is expected to increase by
2 billion people in the next 30 years, with much of this growth predicted in
urban areas. With cities already at capacity, there are significant demands
on the built environment and the infrastructure needed to support these
expanding populations. To meet these demands, society must move
quickly to plan for growth and provide the efficient and resilient buildings,
infrastructure and utilities, such as clean water, affordable energy, transport
and telecommunications, that are essential for modern life.
In addition to developing this essential infrastructure, we must also address
the increasing demands being put on our world’s resources. To ensure that
we protect vital global resources, both public and private sector leaders
need to take bold action to support and invest in sustainable and resilient
urban infrastructure.
At CRH, we recognise the need to change what is built and how we build
it, as well as addressing the challenges facing our own business and
industry. We are continuously focused on advancing the performance of
our business, which positions sustainability matters front and centre, as we
accelerate the delivery of integrated solutions that our customers need now,
and in the future.
As the provider of the materials, products and services that are constructing
the world of tomorrow, we see significant opportunities for our business
to lead the way in construction solutions to help tackle the sustainability
challenges faced by the built environment and position CRH for future
growth and improved performance.
We are embracing our responsibility to society and evolving as a business
to successfully address the macro trends that are redefining our industry.
Our new sustainability framework identifies three rapidly emerging and
hard to address global challenges for the built environment and society -
decarbonisation, waste and water. CRH is well placed to help solve these
challenges by taking action within our own operations and beyond, and
thereby helping to improve the quality of the world we live in.
We are creating value-added solutions for each of these global challenges
to ensure that we can continue to drive growth and value for our business
and design our products and solutions based on the needs of our
customers and society. By positioning sustainability at the core of modern
construction, CRH is helping to create and maintain healthy, low-carbon
and more circular buildings, infrastructure and communities, while also
supporting the United Nations Sustainable Development Goals (SDGs).
2022 Annual Report and Form 20-F Our Framework for a Sustainable Future
We will create value for all by developing sustainable solutions
that build, connect and improve our world and help to solve
three global challenges for society and the built environment.
D E C A RBONISATION
Innovating for a
low-carbon future
E
T
S
A
W
Reimagining
how
materials
are used
to drive
circularity
Advancing
solutions
to solve
global
water
challenges
W
A
T
E
R
SUPPORTED
BY OUR STRONG
SUSTAINABILITY
FOUNDATIONS
Safety &
Wellbeing
Inclusion &
Diversity
Empowered
Employees
Community &
Social Impact
People & Commun i t i e s
Environmental
Action
Biodiversity
N
atural W
orld
Governance
& Ethics
Responsible
Sourcing
s i b l e B
n
o
p
s
R e
e s s
sin
u
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
D E C A RBONISATION
D E C A RBONISATION
Innovating for a
low-carbon future
E
T
S
A
W
W
A
T
E
R
N
W
atural People &
orld Communiti e s
s i b le
s
s
e
n
o
s i n
p
s
R e
B u
26
Decarbonisation
Innovating for a
low-carbon
future
To combat climate change and protect the lives of people and
wildlife, the world needs to deliver absolute carbon emissions
reductions and the construction sector has a central role to
play. The built environment, including the homes, buildings and
infrastructure on which we rely, accounts for approximately
40% of global carbon emissions. The major contributor is
the energy that is used to heat, cool and operate buildings
year-round, followed by emissions from the manufacturing
of the materials used in construction. There is a significant
opportunity to design, construct and renovate the urban
landscape to provide the efficient, resilient, net-zero buildings,
infrastructure and utilities our communities need to minimise
the impacts of and adapt to the risks posed by climate
change.
Reinventing the Way we Build
Extreme weather events and their impact on populations, infrastructure
and economic output of affected regions are increasing in frequency and
magnitude. In addition, the built environment requires a significant transition
to address the challenges of increased urbanisation whilst providing
affordable, resilient and energy efficient homes and infrastructure. At CRH,
we believe we have a responsibility to reduce carbon emissions from our
business, manage our own exposure to the impacts of climate change and
also provide the sustainable integrated solutions our customers and society
need.
The transition to a low-carbon economy provides the opportunity to
help solve the challenges of decarbonisation and create value through
the delivery of high-performance buildings and infrastructure, including
solutions to improve the energy efficiency of buildings and provision of clean
energy infrastructure. To accomplish this, the construction sector must use
materials efficiently at every point in supply chains, improve energy efficiency
and tackle carbon emissions throughout the entire life-cycle of construction
projects and the buildings and infrastructure they create.
At CRH, we continuously strive to build strong connections with our
customers and suppliers across every business activity, recognising the role
we play in responding to the demands of our customers and communities
to develop the innovative solutions needed to transform the way we build.
As a global leader in the supply of sustainable materials and solutions, all
aspects of our business strive for low-carbon and low-impact production,
products and services to mitigate and adapt to climate change and combat
its environmental and societal effects.
2022 Annual Report and Form 20-F
31% (2021: 27%)
Revenue from products used in certified
building standards in 20221
Decarbonisation
30%
Absolute reduction in group-
wide carbon emissions by
2030 (on a 2021 baseline)2
CASE STUDY
Creating a more
sustainable, decarbonised
built environment
As a large materials provider, we can play a significant
role in creating a more sustainable, decarbonised built
environment. Eqiom, part of our Europe Materials Division,
is supporting the construction of the first carbon-free district
in Paris, France – the “Triangle Evangile” district. The multi-
product real estate project covers approximately 34,000 m²
and consists of up to 80% low-carbon concrete, supplied
by Eqiom, resulting in CO2 savings of approximately 40%
overall. The complex will house offices, a hotel, housing,
shops and a sports centre. Decarbonisation projects
such as this one help to create a more sustainable urban
landscape and align with Eqiom’s ‘Eqiom R’ programme,
which focuses on concrete actions to reduce the impact of
construction on the environment with solutions for builders.
One of the key features of the decarbonisation of society is the energy
transition. With society moving away from fossil fuels, we are proud to be
laying the foundations for the clean energy transition through our provision
of sustainable integrated solutions for the infrastructure that is needed, for
example, to support solar and wind energy installations and electric vehicle
charging stations.
Whether harnessing power from inland or coastal waters, or switching to
wind-derived renewable electricity generation, all forms of low and zero-
carbon energy require one or more of the CRH product range. In addition,
we recognise the contribution that many of our products make to ensuring
better quality, sustainable buildings, helping customers achieve higher
scores in green building rating schemes, such as BREEAM®, DGNB and
LEED®. This includes thermal mass properties of concrete for improved
building energy efficiency.
Committing to Climate Action
As an industry, we must take a whole-life approach to carbon and take
responsibility for reducing our direct and indirect emissions as we help
prepare society for a changing environment. At CRH, we are working
to ensure that our businesses, products and the assets built from them
are part of the solution to climate change. We are committed to further
reducing carbon from our operations and supply chain and ensuring that
the vital products we provide help us to deliver on our ambition to be
net-zero by 2050. CRH has a long and proud history of setting ambitious
carbon reduction targets and achieving them ahead of schedule. In 2021,
we accelerated our target to decrease the carbon intensity of our cement
production, bringing forward our cement specific net3 CO2 emissions per
tonne of cementitious product target of 520kg from 2030 to 2025.
Recognising the ongoing need for absolute emissions reductions across
our activities, in 2022 we announced an industry-leading ambition to reduce
our absolute carbon emissions by 25% by 2030 (from a 2020 base year). In
early 2023, the SBTi validated our revised targets4 in line with the updated
1.5°C science-based framework which now equate to a 30% reduction in
absolute carbon emissions by 20305 (from a 2021 base year). This target
applies to our group-wide gross carbon emissions and covers our total
footprint across Scope 1, 2 and 3. It is also inclusive of organic business
growth.
We also joined the Business Ambition for 1.5°C initiative in 2021, which
aims to achieve net-zero global emissions by no later than 2050 in order
to limit global warming to 1.5°C. See page 31 for more information on our
progress against our carbon reduction targets.
1. External revenue from products that can be used for credits in sustainable construction
certifications – such as BREEAM®, Green Globes®, LEED®, IC-700, etc. Products may
qualify for points as a result of certifications such as ISO14001, BES6001, local sourcing,
recycle content and other characteristics. This excludes contracting, distribution, and other
services, plus products not used directly in structures (e.g., intermediary products, such as
cement and lime).
2. Covers total footprint across Scope 1, 2 and 3.
3. Total direct CO2 emissions net: gross CO2 emissions minus CO2 emissions from alternative
fossil fuels.
4. SBTi validated target wording: CRH commits to reduce gross Scope 1 and Scope 2
Greenhouse Gas (GHG) emissions 33.5% per tonne of cementitious product by 2030 from a
2021 base year*. CRH also commits to reduce absolute gross Scope 1 and Scope 2 GHG
emissions from other activities 42.0% by 2030 from a 2021 base year*. CRH further commits
to reduce gross Scope 3 GHG emissions 23.5% from purchased clinker and cement per
tonne purchased over the same timeframe. *The target boundary includes land-related
emissions and removals from bioenergy feedstocks.
5. CRH is not relying on carbon offsetting to achieve its 2030 emission reduction target and is
committed to decarbonising our operations and value chain. We are involved in a number of
initiatives with a goal of removing carbon emissions from the atmosphere. In the longer-term,
carbon offsets may become more relevant for residual emissions.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
28
Decarbonisation continued
Advancing Low-carbon Technologies
We have developed a decarbonisation roadmap to 2030, an important
milestone of our strategy towards achieving our ambition to be net-zero by
2050.
A significant portion of the actions required to deliver on the 2030 roadmap
are based on known technologies, well-established operational excellence
programmes and activities in which CRH has a proven track record of
delivering. Our decarbonisation roadmap is business-led and executed
through locally managed plans. There is central oversight and co-ordination
that builds on our significant experience in carbon reduction across different
geographies, functions and business types, where for many years our
dedicated team of experts have been active. For example, technical experts
within our Group Technical Services team are key enablers in delivering our
decarbonisation roadmap across our cement activities, which represent the
largest share of Group Scope 1 and Scope 2 emissions. Our 2025 cement
specific net CO2 emissions per tonne of cementitious product reduction
target is a component of the 2030 roadmap and the actions and costs to
achieve this target have been fully reflected in the roadmap. Accelerating
decarbonisation efforts to meet our 2050 net-zero ambition will require
collaboration across governments, industries and society to develop the
technologies, supporting infrastructure and the right policy environment
needed to achieve global carbon reductions. Some of these technologies
are well known but require further scaling-up and deployment. Others
require further research and development before they can be implemented
across production processes.
Our Decarbonisation Roadmap Levers
KEY ACTIONS
Low-carbon products
Designing and formulating low-carbon products
Low-carbon fuels
Maximising the use of lower-carbon fuels, including
waste biomass, as alternative sources of heat
Recycled materials
Increasing the use of recovered and recycled material
inputs for our processes, products and solutions
Clean electricity
Switching to clean electrical energy, improving our
demand management and increasing our generation
capability
Transport and mobile equipment
Decarbonising our ‘on-road’ and ‘off-road’ vehicles
and mobile equipment
Responsible sourcing
Business optimisation
Reducing emissions in the goods and services we
consume by acquiring, purchasing and sourcing
responsibly
Implementing the best available techniques in
our manufacturing operations and optimising the
emissions footprint of the activities in our network
Next generation technologies
Focusing investment on new, low-carbon technologies,
and solutions across the group operations
2022 Annual Report and Form 20-F CRH has been actively involved in the development of the GCCA 'Roadmap
for Net Zero Concrete', CEMBUREAU, the European Cement Association,
'2050 Carbon Neutrality Roadmap', the National Asphalt Pavement
Association (NAPA) roadmap 'Towards Net Zero Carbon Emissions', as well
as the Portland Cement Association (PCA) 'Roadmap for Carbon Neutrality'.
We are also involved in the GCCA's innovation programme, 'Innovandi',
which supports research and development on emerging technologies to
help the industry decarbonise and produce net-zero concrete by 2050.
Our decarbonisation roadmap levers, highlighted below, focus on
the key technological and operational areas to drive net-zero aligned
decarbonisation.
EXAMPLES OF PROGRESS DURING 2022
We continue to drive carbon emission reduction in our cement and concrete products through the replacement of high CO2 clinker with traditional
supplementary materials such as limestone, slag and fly ash. In addition, new materials such as natural pozzolans and calcined clay were introduced
into our wider product mix, a result of our Group-led research over previous years.
We are an industry leader in the use of low-carbon and alternative fuels. Our in-house technical experts continue to develop knowledge and guide our
businesses in using alternative and waste biomass fuels to reduce carbon emissions. For example, Jura Cement, part of our Europe Materials Division,
is using 80% waste-derived alternative fuels. In addition, in 2022 numerous trials were undertaken with external partners in North America and Europe
to replace fossil fuels, such as diesel, with Hydrotreated Vegetable Oil (HVO) in our operations and on-site mobile equipment and develop new innovative
solutions to reduce CO2 emissions.
We are an industry-leading recycler of asphalt and the largest recycler of building materials in North America. Approximately 25% of every mile of road
we build is from recycled materials. In addition, our MoistureShield decking product from Oldcastle APG, part of our Building Products Division, is made
with 95% recycled content. In Finland, Rudus, part of our Europe Materials Division, offers recycled alternatives to virgin concretes and aggregates.
Up to 30% of natural aggregates in our Uuma-concrete products can be replaced with recycled aggregates, hence substantially contributing to CO2
reduction and saving of scarce natural resources.
We actively continue to target an increase of renewable energy across our operations. We are increasingly focused on procuring power from renewable
sources, such as on-site solar installations at Leviat’s production site in Melbourne, Australia, part of our Building Products Division, which will cut
energy costs on-site by 35%. We are also supporting the global transition to clean electricity. For example, Staker Parson, part of our Americas
Materials Division, collaborated to install a wind farm at its Gomex Pit location in Utah, reducing pressures on the national power infrastructure.
Delivering an increasingly sustainable transport model across road, rail and water is a key part of our transition to a low-carbon economy. This includes
the electrification of vehicles and mobile equipment. For example, Tarmac, part of our Europe Materials Division, has committed to transitioning its fleet
of corporate cars and vans to electric vehicles by 2030. In 2022 Tarmac acquired the first electric battery concrete mixer truck in the United Kingdom
(UK) at its Washwood Heath site in Birmingham, marking a significant milestone for both the business and wider UK construction industry as part of a
continued drive towards net-zero.
We are increasing our efforts to reduce the CO2 emissions throughout our entire value chain, with specific focus on emissions from purchased goods
and materials, transportation, and fuels and energy. We actively participate in cross-industrial cooperation to drive decarbonisation across all levers. In
2022 CRH and Shell created a strategic alliance to explore decarbonisation opportunities across transport, operations, and materials. The solutions
include, but are not limited to, vehicle electrification and charging infrastructure to reduce transport emissions; deploying low-carbon fuels for off-road
equipment and renewable electricity to power facilities.
We continue to invest in and guide our plants in achieving best-in-class production efficiency and operational excellence and pride ourselves on
continuously measuring and improving our operations. For example, within our cement businesses, we work to improve kiln energy efficiency and
specific power consumption across our locations. Further efficiency is achieved through the internal integration of our operations and resources. For
example, at Tarmac’s Tunstead site, part of our Europe Materials Division, there is one established quarry servicing co-located aggregates, cement and
lime production, resulting in optimised materials efficiency.
CRH continues to place itself at the forefront of innovative solutions. In 2022 we introduced a Group-wide $250 million venturing and innovation fund
to support our decarbonisation journey. With the support of this fund we have expanded both the number and range of research initiatives across our
entire Group, including hydrogen use, CO2 mineralisation projects, novel cements, AI technology and Carbon Capture Utilisation and Storage (CCUS).
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 30
Decarbonisation continued
Investing in Innovative Technologies
To accelerate progress on decarbonisation, CRH is placing itself at the
forefront of innovative solutions. As well as identifying new sources of
alternative fuels and materials, our ICSC continues to develop novel,
ground-breaking decarbonisation technologies to help realise our ambition
of becoming net-zero by 2050. Developing carbon capture, utilisation and
storage solutions, piloting new technologies to reduce carbon emissions
during manufacturing, utilising concrete’s ability to absorb CO2, as well
as developing new solutions for the built environment, such as electric
vehicle charging infrastructure, continue to be priorities in our innovation
programme.
By decarbonising our business, we are not only accelerating our own
actions to reduce carbon emissions, but we are also contributing to the
decarbonisation efforts and net-zero ambitions across our industry and
society. To further drive actions in this area, we have established a $250
million venturing and innovation fund, to help our operating companies
and functions develop new ideas and bring value creating solutions to
the market. Through CRH Ventures, our new venture capital unit, we are
investing in, and partnering with, construction technology and climate
technology companies to pilot and scale new technologies and innovations
that will enable safer, smarter, and more sustainable construction. Our
venturing and innovation fund supports our decarbonisation journey and
demonstrates our continued commitment to investing in new technologies
that will shape the built environment of tomorrow. This follows a strong
record of innovation investment of approximately $1 billion every 10 years
and builds on the numerous ongoing innovation projects that are being
carried out across our operations.
Climate-related Financial Planning
Addressing climate change is central to the Group’s strategy. Our financial
planning is targeted at solving the challenges that the built environment and
society face now and in the future. We aim to play a pivotal role in providing
a lower impact and climate-resilient built environment through the creation
of long-term financial and societal value.
CRH’s strategy and financial planning process is designed to identify,
evaluate, and manage significant risks and threats that could inhibit the
Group from operating in a stable and sustainable manner. For more
information on climate-related risk and opportunities, including impacts,
time periods and influence on strategy, see pages 150 to 156. The
Sustainability, Risk and Finance teams work closely to ensure that climate-
related considerations are integrated into the financial planning process
to ensure that adequate capital expenditure, investments and operational
capital is directed to achieving the organisation's financial and environmental
objectives. Where opportunities arise in our businesses and markets, we
are uniquely positioned to maximise the environmental and business benefit.
We are creating value-added solutions to address the impacts of climate
change to ensure that we can continue to drive growth and value for our
business and support our customers and society in the transition to net-
zero.
Our 2030 decarbonisation roadmap will require an incremental capital
expenditure of approximately $150 million per annum to implement and
execute. Further investment will be required beyond 2030 to deliver our
net-zero ambition. In regions and countries where carbon trading schemes
are in operation, facilities that fall within the scope of this legislation comply
with CO2 “cap and trade” and carbon tax schemes, including the European
Union (EU) Emissions Trading Scheme and other regional schemes. With
a disciplined approach, alongside strict internal investment criteria, the net
business benefit is expected to increase revenue and profitability, whilst
safeguarding against future CO2 costs and simultaneously creating superior
customer and societal value. For further detail on our strategy for managing
climate-related risks and opportunities see our TCFD Executive Summary
on pages 56 to 59.
As part of our Enterprise Risk Management (ERM) programme, we
assess the climate-related risks and opportunities on a timeline relevant
to the Group’s science-based decarbonisation ambition. Our climate risk
assessment and decarbonisation roadmap ensure the business is prepared
and ready to manage and adapt to the challenges ahead. For further detail
on our risk management processes for managing climate-related risks and
opportunities see page 53.
Measuring our Performance
We continue to develop our disclosure practices to better measure and
improve our performance across the value chain. CRH uses a variety
of reliable, verifiable and objective metrics and targets to measure and
manage our climate-related risks and opportunities. Internally, these inform
the Group’s risk governance, strategy, and management processes and
help identify best practices and key improvement areas. We are also
a long-term participant in CDP and were awarded an A- for our 2022
climate disclosures. As part of our reporting, we have included targets
and performance against our targets for each climate-related risk and
opportunity to illustrate our progress. This includes our non-financial KPI
on Greenhouse Gas Emissions1 Scope 1 and 2 absolute carbon emissions
which has decreased by 7% in 2022. Our carbon emissions have reduced
in the year as we execute against the levers in our decarbonisation
roadmap, and lower clinker production (partially related to the temporary
closing of our operations in Ukraine). We also saw an improvement in our
cement specific net CO2 emissions per tonne of cementitious product which
reduced to 566kg (from 586kg in 2021).
EU Taxonomy
In Europe, operations are subject to national environmental laws and
regulations, most of which now emanate from EU Directives and
Regulations. The EU Taxonomy regulation is part of the EU’s overall
efforts to implement the European Green Deal. It is intended to serve as
a standardised and mandatory classification system to determine which
economic activities are considered as “environmentally sustainable” by the
EU. For CRH, only cement manufacturing is eligible under the taxonomy.
On page 272 to 273 we report the proportion of total revenues, CapEx and
operational expenditure in accordance with the eligibility and alignment to
technical screening criteria.
NON-FINANCIAL KPI
NON-FINANCIAL KPI
1.0 kg/$ Revenue (2021: 1.2 kg/$) Greenhouse
Gas Emissions Scope 1 and Scope 2 CO2e
Emissions (kg/$ Revenue)
1 CO2 emissions subject the final verification under the European Union Emissions Trading Scheme (EU ETS). For further detail on our CO2 metrics and targets, as well as calculation methodology, see
page 31.
2022 Annual Report and Form 20-F
Our carbon footprint
Scope 1
2022 31.2m
2021
2020
33.4m
32.4m
tonnes of direct CO2e emissions
from use of fuels, chemical
decarbonisation from cement and
lime production and transport
of raw materials and finished
products in our own vehicles
Tonnes of indirect
CO2e emissions
from purchased
electricity
Scope 2
2022 2.4m
2021
2020
2.6m
2.6m
Scope 3
2022 12.9m
2021
2020
12.0m
10.9m
tonnes of indirect
CO2e emissions
from other activities
Scope 3 Downstream
0.5m
Tonnes of indirect
CO2e emissions from
customer transport
Scope 3 Upstream
12.4m
Tonnes of indirect CO2e emissions
from sources including:
• purchased goods
• fuel and energy related activities
• contracted transport
• waste generated
• employee commuting
Alternative fuels
2.2 million tonnes
of carbon neutral biomass and non-fossil fuels
used in our cement plants (2021: 2.1 million
tonnes), providing 36% of fuel requirements for
cement at a Group level, 53% in the EU alone.
Recycled materials
8.4 million tonnes of waste materials and by-
products used to replace virgin materials and
clinker in our cement manufacturing
(2021: 8.0 million tonnes).
Physical climate risk
<1% of our active locations are identified as
being in areas under “High” risk of drought
severity.
Research and innovation
>100 research projects ongoing across the
Group in partnership with the industry and
academic institutions to develop new and
innovative technologies.
Climate-related targets
30% reduction in absolute group-wide carbon
emissions by 2030 (from a 2021 baseline of
48.0 million tonnes).
520kg net CO2 emissions per tonne cementitious
product is our target for our cement plants
(from a 1990 baseline of 777kg CO2 per tonne),
accelerated from 2030 and expected to be
achieved by 2025.
50% product revenue from products with
enhanced sustainability attributes by 2025
(from a 2018 baseline of 42%).
For reporting Scope 1 CO2 cement emissions we use the GCCA 'Sustainability Guidelines for the monitoring and reporting of CO2 from cement manufacturing' and the accompanying Excel
spreadsheet, ‘Cement CO2 and Energy Protocol, Version 3.1, CO2 Emissions and Energy Inventory’. For reporting Scope 1 CO2 lime emissions we use the Directive 2003/87/EC of the European
Parliament and of the Council and amending Commission Regulation (EU) No 601/2012 and 2006 IPCC Guidelines for National Greenhouse Gas Inventories. We calculate Scope 1 CO2e emissions
from other activities using appropriate emission factors and in line with the World Resources Institute Greenhouse Gas Protocol (Revised Edition). These methodologies consider CO2e emissions from
biomass fuels as climate neutral.
We calculate Scope 2 CO2e emissions from electricity in line with the method of the World Resources Institute Greenhouse Gas Protocol Scope 2 Guidance (2015), using 'International Energy
Agency (2022) Emissions Factors' (published in 2022) and eGRID2020 'Summary Table' for emissions factors (published in 2022).
Following a materiality analysis on sources of Scope 3 CO2e emissions, CRH has reaffirmed that the six categories listed above are the most relevant for our business. We calculate Scope 3 CO2e
emissions estimations in line with the GHG Protocol's Scope 3 Standard and the GHG Protocol's Scope 3 Standard for cement companies, using the UK Government 'GHG conversion factors for
company reporting 2022'. Reported Scope 3 CO2e emissions include the most relevant emissions categories for CRH operating company activities.
CRH defines its organisational boundary on a financial control approach (entity driver based), and our Scope 1 and 2 CO2e emissions are reported on this basis.
All 2020 and 2021 numbers above are presented on a 'As Reported' basis consistent with CRH Sustainability Reports. In 2022 in order to better reflect our decisions on where we source power, we
adopted market based Scope 2 carbon emissions approach (location-based equivalent is 2.3 million tonnes). Note the 2021 and 2020 Scope 2 emissions have not been restated from location-
based.
For the purposes of this report, all references to carbon emissions (CO2) relate to CO2 equivalent (CO2e), which include the six Greenhouse gases listed in the Kyoto Protocol: carbon dioxide (CO2);
methane (CH4); nitrous oxide (N2O); hydrofluorocarbons (HFCs); perfluorocarbons (PFCs); and sulphur hexafluoride (SF6). The only exception relates to our cement specific net CO2 emissions per
tonne of cementitious product metric, which is specifically CO2 only in line with the GCCA guidelines referenced above.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
D E C A RBONISATION
W
A
T
E
R
s i b le
s
s
e
n
o
s i n
p
s
R e
B u
N
W
atural People &
orld Communiti e s
32
Waste
Reimagining how
materials are used
to drive circularity
E
T
S
A
W
E
T
S
A
W
Rapid economic growth, urbanisation and a growing
population are leading to unsustainable global resource
consumption and contributing to the waste management
challenges that communities are facing worldwide. To
help address these challenges, we must pursue innovative
opportunities that embrace the circular economy.
Minimising the Impact of Construction
The building materials industry is playing an important role in moving
towards a more sustainable circular economy model. At CRH, we take
an end-to-end approach to sustainable construction, working with our
customers and across our industry to consider how our products are used
in the built environment.
Our dedicated workforce has the experience, entrepreneurial spirit, creativity
and connections to lead the way in providing the innovation that meets the
needs of our customers. Our collaborative approach starts with how we
design our products and processes to eliminate waste, maximise resource
efficiency and enhance longevity. This includes developing products,
services and solutions that reduce waste from the construction process
and avoid unnecessary use of resources. Our core products of aggregates,
cement, concrete and asphalt are recyclable and offer longevity by design,
as well as end-of-life opportunities for reuse, repurposing and recycling,
ensuring that key resources are kept in valuable use for as long as possible.
By rethinking and redesigning our products and components, we can
improve the life-cycle performance of buildings and infrastructure, extending
their life through enhanced durability and providing end-of-life solutions for
our products.
2022 Annual Report and Form 20-F
42.4 million tonnes
(2021: 39.5 million tonnes) alternative fuels
and raw materials recycled in 20221
c. 25% (2021: c. 25%)
Raw materials requirements for our US asphalt
business are met by recycled asphalt pavement (RAP)
and shingles
We also see an opportunity to lead by example and promote a circular
approach in the wider industry and society. This includes developing more
circular designs through our modular and off-site manufacturing solutions,
allowing for less complex product replacement and enhancement due to
the design of the modular structures. In addition, off-site solutions also
offer many other benefits, including improved time and cost predictability,
reduced noise and traffic disruption during construction, and improved
health and safety rates.
Enhancing Value Through Increased Circularity
Minimising waste, using materials efficiently and using recycled waste,
by-products and renewable resources are key components of CRH's
sustainability framework and contribute to improving circularity in the built
environment. We are a leader in the recycling and use of waste and by-
products from other industries as raw materials and fuels in our processes
and products. We have an opportunity to increase further the use of
renewable and recyclable materials to enable the resilient, resource efficient
infrastructure and buildings needed to enhance modern living.
Our operations use waste and by-products from both our own and other
construction and industrial processes, such as recycled asphalt pavement
(RAP) and recycled asphalt shingles (RAS), construction and demolition
(C&D) waste, fly ash, ground granulated blast-furnace slag (GGBS), as well
as using various wastes as fuel. For example, approximately 25% of every
mile of road we build in North America is made from recycled materials. In
addition, we work closely with partners, such as the World Building Council
for Sustainable Development (WBCSD) and the GCCA, to help develop the
innovative technologies and processes needed for the efficient reuse of by-
products in the most cost-effective way.
CASE STUDY
Contributing to a more
circular economy
At CRH, our ambition is to deliver innovative products and
solutions to drive progress towards a circular, net-zero built
environment. Michigan Paving & Materials, part of our CRH
Americas Materials Division, is leading the Interstate 69 Design
Build project, consisting of 23 miles of divided interstate
reconstruction in Southern Michigan. This involves the removal
of approximately 1.5 million tonnes of concrete and converting
it into recycled road base aggregates. The recycled aggregates
are then reincorporated into the construction of the interstate.
In addition, approximately 141,000 tonnes of Hot Mix Asphalt
(HMA) will be removed from the existing interstate and
recycled to produce the new HMA pavement required for the
reconstruction. By taking a circular approach, we can reduce
the use of primary resources in construction projects, leading to
less intensive and more cost-effective development practices.
1. Alternative raw materials and fuels are selected wastes and by-products which can be used
to replace natural substances and fossil fuels. This metric demonstrates to investors our
focus on the circular economy. We monitor this KPI in order to evaluate our performance in
contributing to the circular economy which, as noted above, represents a growth opportunity
for CRH.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
34
Water
Advancing solutions to solve
global water challenges
Population growth, urbanisation and climate change
are accelerating the pressure on water resources and
increasing the need for flood resilience and resistance in
the built environment. Extreme weather patterns associated
with climate change, including droughts, floods and
freezing events, are putting increasing pressure on our
built environment and the water systems that support our
cities, towns and communities. As a result, access to water
resources, water scarcity and water management, including
flood management, are among the most significant risks facing
society today.
Delivering Solutions for Water Management
At CRH, we are committed to playing our part to overcome the global
challenges associated with water management by conserving water
at our own operations, as well as providing solutions to upgrade water
infrastructure and enhance resilience to flooding.
In many regions vital water management infrastructure is old and designed
for a climate that no longer exists. There is also the increasing demand for
new water infrastructure to support growing communities. Continuing to
deliver safe drinking water to millions of homes and businesses will require
investment in the construction, maintenance and upgrading of water
infrastructure to enhance the resilience of communities.
At CRH, we are committed to helping to solve the global challenges
associated with water management and distribution. We have a significant
role to play through our solutions to capture, treat, manage and distribute
water resources efficiently. We continue to invest in the development of
innovative new products and solutions to enhance further our end-to-end
solutions offerings to our customers. For example, our acquisition in 2021
of NPP, Inc., a water, energy and infrastructure solutions business in the
US, has increased our offering of safer, sustainable and effective solutions
for water transmission and distribution, as well as sewer and wastewater
infrastructure.
Enhancing Resilience to Extreme Weather Events
In addition to solving the challenges faced by water transmission and
distribution, society is looking for enhanced sustainable solutions that
help strengthen the resilience of cities and the wider built environment
against coastal erosion and storm surges. CRH has a significant role
to play in protecting communities through our products and solutions
that enable effective management of water. This includes products used
in flood defences, stormwater management systems and permeable
paving products to manage urban stormwater run-off more effectively.
We also work to protect and rebuild our communities in the wake
of extreme weather events. Concrete is inherently resilient, and the
products and solutions offered by CRH are effective in protecting against
flooding and helping to improve the storage capacities of flood water
temporarily in stormwater systems during flood events. By replacing
essential infrastructure, such as that needed to protect against coastal
erosion, and designing products for resilient construction, we can
help protect vulnerable coastlines and reduce the potential damage to
properties, economic activities and infrastructure from flooding.
In addition to flood management, our products and solutions help to
address challenges in drought-sensitive areas, through water capture,
treatment and distribution, as well as through engineering measures
to increase groundwater recharge, alleviating problems related to the
extraction of groundwater.
Promoting Responsible Water Use
We practice and promote responsible water management across our
operations, continuously aiming to reduce, reuse and recycle water
and ensure that our activities do not endanger local surface water or
groundwater. We continue to invest in new technologies and innovative
processes to reduce water intake from utility sources and protect
valuable local water resources. In addition, we were awarded an A- by
CDP for our 2022 water security disclosures.
1 As reported number in 2021 46% and restated in 2022 to reflect impact of discontinued operations.
2 Products with enhanced sustainability attributes are defined as those products that incorporate any, or a combination of; recycled materials; are produced using alternative energy and fuel
sources; have a lower-carbon footprint as compared to those produced using traditional manufacturing processes; and/or are designed to specifically benefit the environment (i.e. water
treatment and management systems, products with strong thermal mass/U-values).
.
2022 Annual Report and Form 20-F D E C A RBONISATION
E
T
S
A
W
W
A
T
E
R
W
A
T
E
R
N
W
atural People &
orld Communiti e s
s i b le
s
s
e
n
o
s i n
p
s
R e
B u
47% (2021: 47%)1
Product revenue derived from products
with enhanced sustainability attributes2
Sustainable Products
50%
Product revenue from
products with enhanced
sustainability attributes by
2025
CASE STUDY
Providing solutions to upgrade
water infrastructure in our
communities
Access to safe and clean drinking water is an absolute necessity
and is key to ensuring good public health. At CRH, we support
the development and improvement of water infrastructure to
enhance the quality of life in our communities. NPP, Inc., part of our
Building Products Division, are using their PVC pipes to solve water
challenges for communities across North America. For example,
NPP enhanced access to drinking water for the rural communities
by supplying pipe infrastructure in the Town of Arcadia and Wayne
County, New York, a projected funded by the US Department of
Agriculture (USDA) Rural Development Water and Waste Disposal
Loan and Grants programme. As part of this project, NPP products
were installed in over 24,000 feet of new water line, enabling critical
infrastructural advancements to be made that support the local
communities.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
D E C A RBONISATION
E
T
S
A
W
W
A
T
E
R
N
W
atural People &
orld Communit i e s
si b le
s s
e
R e
o
n
s i n
p
u
s
B
36
Natural World
Positively
impacting the
natural world
With our global scope and influence, we have a responsibility
to lead our industry in protecting the environment and helping
to solve challenges for the natural world, such as air quality,
land use and biodiversity. By investing in nature-based
solutions, we reduce our potential negative impacts on nature
and help develop the technology, innovation and resources
needed to reverse nature loss.
Environmental Action
For decades we have worked with stakeholders to manage environmental
risks, drive improvements in performance and promote emissions reduction
and resource efficiency. It is our goal to protect the environment in which we
operate.
We practice and promote responsible management and use of resources
such as water, energy and land. Additionally, we monitor and control our
emissions to air, water and land in order to protect further the health of
our environment and of society. For further detail on how we monitor our
Environmental Policy see page 47.
With regard to possible environmental liabilities associated with CRH’s
activities, at 17 February 2023, 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.
Biodiversity
As a large-scale landholder, we have a responsibility to continue to preserve
and protect biodiversity. By restoring and managing lands and wetlands at
quarries and other locations, we strive to enhance and rehabilitate natural
habitats and help reverse nature loss.
We actively manage biodiversity at over 550 locations, and we ensure that
restoration plans are in place at all relevant extractive locations. In addition,
we have signed up to support Business for Nature’s ‘Call to Action’, calling
on governments to adopt policies to reverse nature loss in this decade.
We continue to collaborate with internal specialists and expert organisations
to drive best practices and support the acceleration towards a nature-
positive economy.
2022 Annual Report and Form 20-F
c. 100% (2021: c. 100%)
of our relevant locations have restoration
plans in place
CASE STUDY
Protecting and enhancing
biodiversity
At CRH, we are committed to protecting and enhancing
biodiversity across our locations. Since 2004, our Americas
Materials Division has partnered with the Wildlife Habitat Council
(WHC), a non-profit group that collaborates with corporations
to advance biodiversity and sustainability. In 2022 two of our
businesses in North America were recognised by the WHC for their
excellence in corporate conservation. Dufferin Aggregates’ Acton
Quarry in Halton Hills, Ontario received the Reptiles & Amphibians
Project Award for creating the first known man-made wetland in
Ontario, Canada, in which the endangered Jefferson salamander
has successfully bred. In addition, APAC Central’s Gravette Quarry
in Arkansas received the Invasive Species Project Award for efforts
to remove invasive plant species from the site to facilitate natural
regeneration of native trees. These are two of the many projects
demonstrating our ongoing commitment to preserve and protect
biodiversity across our locations.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 38
People and Communities
Building a culture of
safety and inclusion
around our people
D E C A RBONISATION
E
T
S
A
W
W
A
T
E
R
N
W
atural People &
orld Communit i e s
si b le
s s
e
R e
o
n
s i n
p
s
B
u
The success of CRH relies on our c. 75,800 employees across
29 countries. People are our priority and we are committed to
building a safe, inclusive work environment that empowers and
inspires our global workforce to live our Purpose and deliver
our strategy.
Safety and Wellbeing
The safety of those working for CRH continues to be our number one
priority, driven by our ambition of zero harm and target of zero fatalities, in
any year. We strive to address risks and eliminate accidents to ensure that
the wellbeing of those who interact with our operations is protected.
Our Health and Safety Policy and Life Saving Rules are key to achieving a
culture of safety excellence at CRH. Our global networks of safety officers
work closely with our businesses in implementing policy and practice. For
further detail on how we monitor our Health and Safety Policy see page 47.
To further support our employees, our health and wellbeing programmes
provide tools, social support and strategies for physical and mental health.
Achieving our ambition of zero harm is an ongoing challenge. In 2022 we
continued to achieve a high level (94%) of zero accident locations and
continued to implement best-in-class safety measures into our existing safe
systems of work. However, we deeply regret to report that one employee
was fatally injured as a result of a road traffic accident in 2022. In addition,
four contractors were fatally injured carrying out work for CRH in 2022. We
extend our sincere sympathies to their families. We thoroughly investigate
all fatalities and share the lessons learned as we focus on our zero fatality
target. We continue to invest in safety initiatives and technologies, with
the overall aim of realising a culture of safety and wellbeing while working
towards zero harm.
1. Accident frequency rate is the number of accidents per million work-hours.
2022 Annual Report and Form 20-F
7% (2021: 8%)
average annual reduction in accident
frequency rate over the last decade1
NON-FINANCIAL KPI
94% (2021: 94%)
Locations with zero accidents
in 2022
Safety & Wellbeing
Ongoing target
Zero fatalities, in any year
CASE STUDY
Improving safety
performance across our
businesses
CASE STUDY
We are constantly striving to achieve our ambition of zero harm
and seeking out the most advanced technology to assist us in
improving our safety performance. For example, businesses
across our Europe Materials Division have been using AI software
to assist in managing critical hazards in high-risk activities where
there is no permanent supervision. The technology automatically
identifies at risk behaviours and breaches in safety rules in real-
time, allowing preventative actions to be taken to mitigate risks.
The AI generated outputs are used for the coaching of employees
to raise their awareness. In that way it helps to deliver a positive
behavioural change and a better understanding of risks to reduce
the number of incidents.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
40
People and Communities continued
Inclusion and Diversity
We aspire to develop a more inclusive and diverse work environment and to
build awareness at all levels of the organisation.
CRH’s Inclusion & Diversity (I&D) strategy is built on a firm commitment to
nurture inclusion as a core capability, fostering a workplace and culture
that is inclusive, and ensuring our workforce and leadership reflect the
communities in which we operate. Our Global I&D Council, chaired by our
Chief Executive, is responsible for driving the strategy and accountability
for I&D across CRH. In addition, our I&D strategy is sponsored at executive
level through the Group General Counsel and the newly appointed CCPO.
We have many initiatives underway to continue to build inclusion and
address structural barriers in the workplace, such as gender equality. We
have established I&D Committees across our Divisions and corporate
offices to lead and embed change throughout CRH. In addition, many of our
operating companies now have their own I&D plans in place at a local level.
In addition, Employee Resource Groups (ERGs) have been established in
some of our businesses to further embed our inclusive culture.
We closely monitor participation of women in our workforce as a whole
and are committed to increasing the representation of women across the
organisation. The percentage of women in senior management was 15%
in 2022. In addition, we continued to focus on executing our I&D strategy
across the Group. This is supported, for example, by our target of 33%
women in senior leadership by 2030. As of 31 December 2022, 33% of the
Directors of CRH plc and 19% of senior leadership were women.
The Board and management are committed to building an inclusive and
diverse organisation, in which talented people of all backgrounds can work
in an environment which enables them to perform at their best. Further
details on how the Board is prioritising I&D are set out on page 104.
2022 Annual Report and Form 20-F NON-FINANCIAL KPI
15% (2021: 14%)
of senior management were women
16% (2021: 15%)
of total employees were women
47% (2021: 46%)
of clerical and administrative staff were
women
7% (2021: 7%)
of operational staff were women
Inclusion &
Diversity
33%
women in senior
leadership by 2030
CASE STUDY
Strengthening our inclusive
workforce
At CRH, we are committed to building an inclusive workplace
where our employees feel safe and encouraged to bring their full
selves to work. Pride month is celebrated annually throughout
CRH and acts as an important platform for us to support our
LGBTQ+ colleagues and friends. In 2022 we provided Pride
toolkits to operating companies and educational workshops
were delivered across the month. In addition, across our
organisation operating companies have implemented their own
policies, including transgender policies, to support the LGBTQ+
community, demonstrating the value in cultivating an inclusive
working environment. By empowering all of our employees
equally, we can create a strong and unified workforce.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 42
People & Communities
People and Communities continued
Empowered Employees
Community and Social Impact
We understand that people are at the heart of what we do at CRH. The
skills and expertise of our employees drive performance and growth and
help us deliver on the key agendas of decarbonisation, building a circular
economy and providing sustainable solutions for society.
We invest in talent development across our businesses, supporting our
employees across all levels of education and employment to grow their
careers through personal and professional development opportunities.
We have an ongoing focus on training to enable employees to acquire the
attributes and skills needed in our dynamic industry to support performance
and growth and help us deliver our decarbonisation roadmap while
continuing to provide sustainable solutions for society.
We aim to develop and strengthen positive relationships with our
stakeholders and want to further enhance this with open and meaningful
communications. Our stakeholders include investors, customers,
employees, suppliers, Non-Governmental Organisations (NGOs),
communities, assessment organisations, advocacy groups, media and other
interested parties. Further details on our engagement with our stakeholders
are set out on pages 44 to 45.
We contribute to local communities through employment, educational
development and supporting local businesses, as well as through
our donations and other support in areas such as environment and
conservation, health and wellness, arts and culture, and provision of shelter.
We respect the rights of our employees to form and join trade unions
and take part in collective bargaining. We also take care that employee
representatives do not suffer discrimination.
The SESR Committee has been delegated responsibility for management
of stakeholder engagement, including with employees, to ensure that the
views of all stakeholders are understood and taken into consideration in
its decision-making process. Further details on the Board's engagement
with employees are set out on pages 88 to 89. Focused engagement with
employees helps us to understand our employees' needs. We regularly
monitor employee engagement, to continually advance progress and
understand what matters most to our employees.
During 2022 we conducted an organisational health pulse survey across
our business, which highlighted our overall good performance and identified
priority areas for improvement. We are continuing to progress action plans
in line with priority areas, which are being implemented across the business.
In addition to supporting our employees, we believe that to unlock the
potential of societal change, we need to empower our young people with
the skills and education they require to work in our industry. Our goal,
through harnessing the knowledge and skills of our employees, is to
develop a diverse talent pipeline, encouraging young people to participate in
STEM (science, technology, engineering and maths) subjects from an early
age and ensuring they have the skills needed for our industry.
We are committed to respecting internationally recognised human rights
– as set out in the International Bill of Human Rights and the International
Labour Organisation’s Core Labour Principles – across our operations and
extended supply chain. In addition, we are a signatory of the UN Global
Compact and apply the UN Guiding Principles on Business and Human
Rights. We develop our approach to human rights through the identification
of salient human rights related to CRH operations, including the health
and safety of those working on our sites, the health of neighbouring
communities and the labour rights of workers in our extended supply
chain. Risk assessment and management processes play a critical role in
improving our human rights performance.
In the shift to a low-carbon economy the Paris Agreement on Climate
Change calls for “a just transition of the workforce and the creation of
decent work and quality jobs”. At CRH, we recognise that decarbonisation
of our business must be fair and equitable. Many of the existing just
transition principles, such as those in the Paris Agreement and International
Labour Organisation’s Guidelines, are already embedded in our business,
and we take a holistic and collaborative approach to managing the social
impacts of our decarbonisation strategy on our people and communities.
Actions we have taken to protect human rights include improved training
and awareness through our Modern Slavery e-module, the updating of our
Code of Business Conduct (CoBC) and of our Supplier Code of Conduct
(SCoC). In response to supply chain risks, we increase our assurance and
due diligence processes as required. By engaging with industry partnership
schemes, we aim to help improve standards across industry sectors.
We monitor our progress regarding human rights using KPIs, which
include zero-harm measures and increased training and awareness. Our
‘Commitment to human rights’ Modern Slavery Statement is published
annually on the CRH website, www.crh.com1 and discloses our risks,
progress and targets related to preventing modern slavery within our
operations and supply chain. For further detail on how we monitor our
Social Policy see page 47.
1. Our most recent Modern Slavery Statement is available at www.crh.com/media/4207/
modern-slavery-act-statement-for-the-year-ending-31-december-2021.pdf.
1. Our most recent Modern Slavery Statement is available at www.crh.com/media/4207/
modern-slavery-act-statement-for-the-year-ending-31-december-2021.pdf.
2022 Annual Report and Form 20-F c. 1,500 (2021: c. 1,100)
stakeholder engagement events were hosted by
Group companies in 2022
$7.2 million (2021: $7.1 million)
donated to local organisations and initiatives in
2022
CASE STUDY
Partnering for positive change
We are constantly striving to create a more inclusive and diverse
workforce. By providing opportunities for a broader group of young
people to access college learning, we help create pathways for
them to gain the skills needed in our industry and to advance a more
equitable future for their communities. One such example is that our
Building Products Division established an internship and mentoring
program targeting students from Historically Black Colleges and
Universities (HBCUs). They also participated in the Thurgood
Marshall College Fund’s Annual Leadership Institute, offering
development sessions to the 400 participants. TMCF is the largest
organization in the US exclusively representing the Black College
Community, it provides assistance to students and member-schools
from HBCUs and PBIs. We value these partnerships and recognise
that attracting people with different perspectives and life experiences
will help us to be more innovative and creative.
CASE STUDY
Creating value for our
communities
Our goal is to have a positive impact on our communities by creating
opportunities and pathways for local people. For example, in 2022
Tarmac, part of our Europe Materials Division, was awarded the
Purpose Business Coalition Levelling Up Award in the ‘Infrastructure
for Opportunity’ category, recognising its achievements in helping
to improve social mobility across the UK. The award recognises
companies that help communities overcome barriers to opportunity,
such as digital connectivity, good health and wellbeing. The
accolade demonstrates our ongoing commitment to creating
a lasting, positive influence through employment and training
opportunities.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 44
Engaging With Our Stakeholders
Feedback from stakeholder engagement is reported to, and carefully considered by, the SESR Committee and the Board.
EMPLOYEES
LOCAL COMMUNITIES
INVESTORS
CUSTOMERS
Key areas
of interest
We engage with our
employees to continually
drive progress and
understand what matters
most.
We strive to promote
positive neighbourly
relations to understand
the needs and priorities
of our local communities.
Key areas of interest for
our employees include:
Key areas of interest for
local communities include:
– Community issues
– Planning matters
– Potential local impact
– Sustainability
We are continuously striving to
meet evolving customer needs
and exceed expectations.
Key areas of interest for our
customers include:
– Health & safety
– Building solutions
– Customer relations & contracts
– Sustainable products
– Product innovation
– Quality & delivery
Engagement with
investors helps us
better understand their
expectations for our
financial and sustainability
performance.
Key areas of interest for
investors include:
– Business performance
– Strategic growth
– Capital allocation
– Environmental, Social
and Governance (ESG)
topics
– Board and Executive
remuneration
– I&D
Key methods
of engagement
2022
Outcomes
We interact with our local
communities through
various different channels,
including:
We regularly engage with
the investor community
through various different
channels, including:
– One-to-one meetings
– Results presentations
– Open days
– One-to-one meetings
– Performance reviews
events
– Town Hall meetings
– Participation in local
– Site tours and virtual
events
– Employee engagement
processes
and calls
– Investor & ESG
roadshows
– Investor & ESG
conferences
– Annual General
Meetings
– Surveys
We interact with our customers
across multiple channels, including:
– Customer surveys
– Formal market research
– Negotiations
– Exhibitions
– Product information
on packaging
– Customer relationship
development
– Company websites
& social media
Engaging with our local
communities during 2022
ensured that we increased
our understanding of
their needs and priorities,
addressed any concerns
and identified areas for
value creation.
During 2022 investor
focus continued around
financial performance
and growth opportunities,
capital allocation priorities,
emissions reduction, I&D
and innovation.
In 2022 we continued to work
with our customers on sustainable
product development and
innovation, ensuring that we can
continue to help them meet their
sustainability commitments.
– Health, safety
& wellbeing
– Business and personal
performance
– I&D
– Corporate governance
– Human rights
– Potential local impact
Regular engagement
is maintained with
employees through
different methods
including:
– Team meetings
– Employee newsletters
– Management
conferences
– Employee surveys
– One-to-one meetings/
briefings
In 2022 we continued to
build on our engagement
with employees, including
through our employee
pulse survey. This
ensures we can continue
to attract, develop,
retain and motivate our
workforce, sustaining our
competitive advantage
and long-term success.
It also helps us strengthen
our approach to inclusion
and diversity across our
businesses.
2022 Annual Report and Form 20-F SUPPLIERS
GOVERNMENTS AND
REGULATORS
ACADEMIC AND
SCIENTIFIC COMMUNITY
MEDIA
NGOS AND PRESSURE
GROUPS
We work closely with
our suppliers to identify
potential issues and
provide added value in key
areas.
We engage with
governments and
regulators to advance
progress for our businesses
and industry.
We actively engage with
the academic and scientific
community to promote
innovation across our
industry and beyond.
Key areas of interest for our
suppliers include:
– Health & safety
– Quality & delivery
– Contract performance
– Local impacts
– Corporate governance
– Human rights
– Environment & climate
Key areas of interest
for governments and
regulators include:
Key areas of interest for
the academic community
include:
– Health & safety
– Environment & climate
– Environment & climate
– Product efficiency &
innovation
– Human rights
– Natural capital
– Sustainability
– Corporate governance
– Planning matters
– Natural capital
– Product standards
It is important to maintain
good media relations
to build trust and help
strengthen relationships
with our stakeholders,
customers and the
community.
Key areas of interest for
media include:
– Business performance
– Health & safety
– I&D
– Environment & climate
We partner with NGOs
and similar groups to help
create large-scale positive
change for society and the
environment.
Key areas of interest
for NGOs include:
– Corporate governance
– Environment & climate
– Human rights
– Eco-efficiency
– Graduates & apprentices
– Product innovation
– Corporate governance
We regularly engage
with suppliers across our
value chain using different
methods, including:
We interact with
governments and
regulators across multiple
channels, including:
– Supplier surveys & audits
– Industry associations
– Contractual meetings
– Briefings & direct
– Tenders
– Information requests
– E-tendering platforms
– Assessment & due
diligence
meetings
– Audits
– Open days
– Multi-stakeholder forums
We engage with the
academic and scientific
community through
various different channels,
including:
– One-to-one meetings
– Seminars & lectures
– Round table discussions
– Presentations
– Intern, graduate
& apprenticeship
programmes
We regularly engage
with the media through
various different channels,
including:
We interact with NGOs
and other pressure groups
across multiple channels,
including:
– Media surveys
– Media briefings
– Press releases
– Social media
– Interviews
– One-to-one meetings
– Participation in events
– Presentations
– Open days
During 2022 we worked
with our suppliers to
implement improvements
across sustainability priority
areas including health and
safety and environment to
advance the responsible
and sustainable supply
chain needed to deliver
innovative and sustainable
products.
In 2022 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.
By engaging with academic
and scientific institutions
during 2022 through
our ICSC and operating
companies, we continued
to support partnerships and
collaborations on research
development, championing
innovative advances and
collaborating on innovative
products that contribute
to a more sustainable built
environment.
During 2022 engagement
with the media focused
on how we are addressing
climate change and
delivering integrated
solutions. We continue to
improve our engagement
with the media to ensure
that specific sustainability
issues are addressed
appropriately and
effectively.
Through our memberships
and partnerships with
NGOs, in 2022 we
continued to be involved
in developing industry best
practices across a range
of established sustainability
topics and collaborating on
integrated solutions across
the value chain.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information D E C A RBONISATION
E
T
S
A
W
W
A
T
E
R
N
W
atural People &
orld Communiti e s
s i b l e
s
s
e
o
n
s i n
p
R e s
B u
46
Responsible Business
Upholding our
values across
our business
At CRH, we do the right things in the right way, which is
reflected by our industry-leading performance in ESG ratings
and indices. Our businesses are united through responsible
leadership as we navigate the changing world.
We advance with intent and contribute to the delivery of global goals, such
as the United Nations SDGs and the Paris Agreement. 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 (DJSI). We recognise that partnership is key to progress
in these areas. By collaborating across the value chain with a wide range of
stakeholders, we are helping to advance our shared priorities.
In responding to ESG trends, we also use our influence and scale to
promote sustainability initiatives by collaborating with NGOs and charitable
organisations. In doing so we strengthen local relationships and champion
the causes most important to society. Our contributions have been
recognised and many of our operating companies have achieved awards for
excellence in sustainability.
Driving our Sustainability Performance
The Board has delegated responsibility for CRH's sustainability
performance to management through the Chief Executive. This includes
ensuring sustainability policies are implemented in all business lines. We
regularly review our sustainability policies and take a strategic approach
in responding to global trends. Daily responsibility for ensuring that the
Group’s Environmental, Health and Safety and Social policies are effectively
implemented lies with individual location managers, assisted by a network
of Group specialists across the areas of environment, health and safety and
human resources. In addition, we provide training to our employees to raise
awareness of our performance standards and our sustainability policies and
the importance of upholding them across our business.
2022 Annual Report and Form 20-F
Environmental
Statement of
Policy
- 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
- Maintain positive relationships with
stakeholders through engagement and
consultation, always striving to be good
neighbours in every community in which
we operate
Health
& Safety
Statement of
Policy
- Comply, at a minimum, with all applicable
health and safety legislation by developing
a culture of health and safety excellence,
continuously striving to meet or exceed
industry best practice standards
- Ensure that our companies provide
a healthy and safe workplace for all
employees and contractors and take
due care of stakeholders such as
customers, visitors and communities at
all our locations, monitoring and reporting
performance to ensure Policy compliance
- Maintain open communications and
require all employees and contractors to
work in a safe manner as mandated
- Ensure that appropriate resources, training
and supervision are provided
- Ensure that everyone working at CRH has
the authority and responsibility to stop
unsafe work on a no-reprisals basis
Social
Statement of
Policy
- Comply at a minimum, with all applicable
legislation and continuously improve our
social stewardship, aiming at all times to
meet or exceed industry best practice
standards
- Support freedom of association and
recognise the right to collective bargaining
- Apply the principle of equal opportunity,
valuing diversity regardless of age, gender,
disability, creed, ethnic origin or sexual
orientation, while insisting that merit is
the ultimate basis for recruitment and
selection decisions
- Manage our businesses in a fair and
equitable manner, meeting all our
social responsibilities including working
conditions, as both a direct and indirect
employer
- Ensure that we deal responsibly with our
suppliers and customers in accordance
with our Code of Business Conduct,
Supplier Code of Conduct and proper
business practice
- Prohibit forced, compulsory and child
labour in all forms including modern
slavery
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
48
Responsible Business continued
Our sustainability performance is monitored using KPIs across the areas of
environment, safety and wellbeing, and social and employee matters. We
have identified the most important ESG topics and KPIs for CRH through a
range of internal and external processes. These include annual sustainability
reporting by our businesses to the Group, review of issues raised through
ERM processes and regular formal materiality assessment reviews, the
outcomes of which guide our strategy and reporting. An overview of our
materiality assessment process and outcomes will be included in our 2022
Sustainability Performance Report, which will be published in March 2023
on the CRH website, www.crh.com.
These internal and external processes allow us to monitor opportunities
and risks and articulate what matters most to society. Our non-financial due
diligence processes are well established in our business and supply chains,
and we made no material changes to these in 2022.
Our most relevant sustainability KPIs are provided on pages 24 to 49. We
provide training to our employees to raise awareness of our performance
standards and the importance of upholding them across our business.
Our training and awareness tools include our non-financial policies and our
CoBC. We comply with the EU Non-Financial Reporting Directive (see page
134 for more information) and the EU Taxonomy Regulation (see pages
270 to 273 for more information) and we make disclosures consistent with
TCFD (see pages 56 to 59 for more information). In addition, our annual
independently assured Sustainability Performance Report is prepared in line
with the Global Reporting Initiative (GRI) standards and in accordance with
the Sustainability Accounting Standards Board (SASB) reporting standards.
This includes additional information on environmental performance and
social and employee matters.
Governance and Ethics
CRH is committed to the highest level of legal, ethical and moral standards,
complying with the law and working responsibly. We do not tolerate any
illegal behaviour and all CRH companies respect and comply with the
laws and obligations in the countries and regions in which they operate.
A “Speak-up” culture encourages employees, customers, suppliers and
other stakeholders to raise good faith reportable concerns through a
number of secure channels, including the CRH Hotline, where, if needed,
the reporters can remain anonymous. Employees can speak to members
of their management team, Legal and Compliance team or, in the case of
fraud and theft, also to a dedicated Fraud Point of Contact in their business.
We are strongly focused on protecting "Speak-up" reporters from retaliation,
in accordance with the CRH "Speak-up" Policy and requirements of local
laws.
Our CoBC, available on crh.com/sustainability/codes-of-conduct, outlines
clear expectations for employees related to business conduct. We take
a zero-tolerance approach to bribery, corruption and fraud. Regular
training on our CoBC is provided to all employees. Certain employees,
based on risk profile, undertake annual Advanced Compliance Training
(ACT), covering Anti-Bribery, Competition/Antitrust, Anti-Fraud and Anti-
Theft. Globally our senior management complete an Annual Compliance
Certification, confirming their business’s compliance with our CoBC and
accompanying policies. Further detail on the CRH Hotline and CoBC
awareness and training is set out on page 101.
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.
2022 Annual Report and Form 20-F Responsible Sourcing
We expect our suppliers, both direct and indirect, to share our
commitment to ethical business practices and meet the standards
set out in our SCoC, including respect for human rights, health and
safety and environmental stewardship. We engage with suppliers to
develop a responsible and sustainable supply chain needed to deliver
innovative, sustainable products and solutions.
Through our SCoC, we continue to operate our core supplier
due diligence processes to increase visibility and insights into our
suppliers. These actions are taken with the goal of ensuring that
good business practices are upheld throughout our supply chain.
We continue to review our supply chain risks through our ERM
Framework (see page 50 for more information).
c. 10,700 (2021: c. 8,500)
employees completed ACT training in 2022
c. 31,500 (2021: c. 32,600)
employees completed CoBC training in 2022
CASE STUDY
Supporting the transition
to more sustainable supply
chains
We are passionate about sustainable and resilient supply chains.
For example, in 2022 Tarmac, part of our Europe Materials
Division, launched its second Supplier Sustainability Week to
drive the net-zero and wider sustainability agenda in partnership
with its supply chain. This event consists of digital events and
meetings covering everything from strategic industry insights
to specialist presentations on areas such as I&D, renewable
energy and sustainable packaging. The event also provided a
platform to announce the winner of the Tarmac 2022 Innovation
Challenge, which has been running since 2019. The focus of this
year’s challenge was ‘energy efficiency or innovation resulting in
improvements for the industry’. The winning entry was submitted
by Prior Power Solutions for a hydrogen introduction system
that can be fitted onto new or existing diesel engines that offers
CO2 reductions of up to 8%, which will be brought to life in
partnership with Tarmac.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
50
Risk Management
Driving Better
Decision-making
Our Risk Framework
ERM is a process embedded across the Group that provides a structured
and consistent global approach to identifying, assessing and managing our
most material threats and opportunities. Ultimately, the purpose of ERM is
to assist our people in making better decisions by focusing decision-makers
on taking the right risk for the right reward, encouraging effective and
informed interaction with risk to protect and grow our business.
Our ERM framework, aligned with Committee of Sponsoring Organizations
of the Treadway Commission (COSO) principles, provides a clear approach
for our people to comprehensively identify and effectively manage the
uncertainty our businesses face as they strive to create value for the Group.
The Board, supported by its sub-committees, is ultimately accountable for
ensuring the Group takes the right risks aligned to our objectives, owning
and approving the Group’s risk management and internal control systems,
and defining the Group’s risk appetite.
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. To
maximise value, ERM is integrated into our formal strategic planning and
budgeting processes, and also at key day-to-day decision points. Doing so
drives a risk-intelligent culture and underpins more informed and confident
decision-making closer to the customer. Performance is our commitment
and encouraging all employees to proactively manage risk creates a more
agile and resilient organisation, which is reflected in this year’s strong
financial performance.
The Group Risk team supports the business by continuing to enhance
our risk framework, processes and practices. In line with our pillar of
empowered talent, the Group Risk team is supported by a network of risk
champions, comprising senior leaders from every business, to provide
continuous process advocacy and support formal activity, such as risk
reporting and analysis. Strong tone at the top and robust governance
structures ensure that risks and opportunities are reported in a timely
manner and processes are implemented to minimise risks and maximise
opportunities.
Our framework enables us to be customer connected, allowing us to add
depth to our understanding of our customers and markets and generate
new ways to meet their needs. This is evident in how our integrated
solutions strategy works with customers to find solutions to their challenges,
minimising risks associated with large scale development, and allowing the
Group to capture opportunities.
For a full overview of risk governance structures and key steps in our risk
process, please see page 94 of the Audit Committee Report.
2022 Annual Report and Form 20-F 2022 Highlights and Plans for 2023
Framework and Process:
2022: 14 risk workshops, with engagement of
over 140 senior leaders from across the Group,
focusing on topics such as climate, resilience
and business performance
2023: Further embed tracking of Key
Risk Indicators to enhance early warning
capabilities, facilitated by developed risk
analytics and reporting
Appetite and Tolerance:
2022: Definition and articulation of updated risk
appetite across perceived key risk areas
2023: Cascade of updated risk appetite across
Group operations
ERM
Culture and Governance:
2022: 600+ people trained on enterprise risk
management fundamentals and requirements
across all geographies and business levels
2023: Facilitate risk champion forums,
bringing our risk champions together to foster
relationships and promote knowledge sharing
Risk and Strategy:
2022: Integration of outputs from our risk
reporting processes into business strategic
and financial planning processes
2023: Further enhancement of our emerging
risk framework and integration of outputs
into operating company and Group strategic
planning
Ownership and Reporting:
2022: Group-wide deployment of our new
Risk Management Information System (RMIS),
which is driving transparency and actionable
business insights
2023: Formal assignment of all risks,
mitigations and actions to specified owners
that are subsequently held accountable for
their management/delivery
Principal Risk Focus Areas for 2022 Reporting
The conflict in Ukraine resulted in the closing of our operations in the
country in February 2022. With our primary focus being the safety of our
colleagues and their families, we worked to support the evacuation of
those wishing to leave the country. Since then, operations have resumed
and we continue to monitor the situation closely.
With global supply chain issues already impacting most industries, the
conflict in Ukraine has exacerbated these challenges with supply chain
continuity being added as a principal risk for 2022. Whilst the Group has
been relatively successful in managing continuity-related issues, we may
face increasing challenges sourcing required raw materials (e.g. flyash,
petcoke and energy) at economic rates.
Highly volatile exchange rates also continue as a principal risk, given the
significant volatility in 2022 in the performance of many of the Group’s
currencies relative to USD, the Group’s reporting currency.
Whilst Group capacity and financial performance remained strong in 2022
in the face of a challenging and volatile cost environment, and while we
expect resilient demand and increased pricing in 2023, industry cyclicality
and economic conditions may continue to present risks to the Group
in 2023.
Our people are our priority and ensuring we have diverse and
empowered talent at all levels of the organisation is core to
the successful delivery of the Group’s strategy. The Group has
continued to focus on our people management programmes in
2022, implementing new programmes to mitigate challenges with
attracting and retaining talent which could impact the Group’s ability to
successfully deliver on that strategy.
Whilst we did not experience any material cyber-related incidents
during the year, it remains a principal risk in light of the continually
growing threat and an area in which the Group is directing additional
resource (see case study on page 53).
More detailed information on our principal risks, their potential impact
on the Group and how they are being mitigated can be found on
pages 139 to 148 of the Directors' Report.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 52
Principal Risks
Our principal risks and uncertainties, presented below and defined in more detail on pages 139 to 148, 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 reflect those risks which could have
the most material impact on the Group achieving its strategic objectives. These risks form the basis of Board and Audit Committee communications and
discussions.
Risks linkages to Strategic Pillars
Strategic
Industry Cyclicality and
Economic Conditions
People Management
Commodity Products
and Substitution
Portfolio Management
Public Policy and Geopolitics
Strategic Mineral Reserves
Climate Change and Policy
Information Technology
and Cyber Security
Operational
Health and Safety Performance
Sustainability and Corporate Social
Responsibility
Supply Chain Continuity
Compliance
Laws, Regulations
and Business Conduct
Taxation Charge and Balance Sheet
Provisioning
Financial
& Reporting
Financial Instruments
Goodwill Impairment
Foreign Currency Translation
Empowered Talent
Customer
Connected
Focused Growth
Sustainability
Leadership
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
a
2022 Annual Report and Form 20-F Emerging Risks
Tackling Cyber Risk
Our framework also promotes the effective management of emerging risk,
defined as a potentially significant threat where the impact cannot yet be
fully understood, restricting our ability to confidently define a management
strategy and build capabilities to significantly influence the materiality of
the risk. While considered as part of our identification processes, the
assessment of such risks can be difficult to quantify due to a lack of data or
longer time horizons.
While emerging risks are generally new and unknown (e.g. potentially
relating to slowly evolving climate events, disruptive technologies etc.), they
can also be known risks that have evolved to present new challenges for
the Group.
A dynamic watchlist of these exposures is maintained to enable early
recognition of those threats that could impact the long-term performance
of our business. Risks are tracked, with potential subsequent desktop
research and/or engagement of internal and external subject matter experts
and risk champions, with a focus on developing a better understanding of
each exposure and beginning to build a strategy to more effectively manage
the risk.
The Risk Committee reviews the watchlist and deems certain threats to be
accepted risks, which are integrated into our risk register and are subject
to oversight by the Risk and Audit Committees. Whilst the watchlist is
primarily utilised as a mechanism to monitor emerging risks, the Group
understands that associated opportunities may arise from developing a
deep understanding of our emerging risks.
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. A detailed description of
emerging climate risks is disclosed on pages 150 to 156.
Managing our Climate Risks and Opportunities
Four climate focused risk workshops, each facilitated by the Group Risk
team, were undertaken with senior leaders across our Group functions
and Divisions. Drawing on their deep sector, product and environmental
experience, participants proposed perceived material risks and
opportunities across 1.5°C and 4°C warming scenarios, for collective
debate and assessment. The risks and opportunities were categorised
using the TCFD framework, and classified as short (<3yrs), medium (to
2030) or long-term (to 2050), with mitigation and capture plans defined
for those perceived most material. Outputs from the respective sessions
have been consolidated and analysed, with insights to be used to inform
business unit strategy planning and underpin scenario analysis for the
climate-related disclosures contained on pages 155 to 156.
With the ever-evolving nature and frequency of cyber-attacks affecting
organisations of all sizes, the Group has directed renewed focus on
the management of potential exposures. 2022 has continued to see a
significant increase in external threats with the manufacturing industry one
of the key sectors targeted. With increasing threats, enhanced compliance
requirements and a growing risk to industrial control and enterprise
systems, CRH continues to invest significant resources in our cyber security
defences, including:
• the creation of a Global Information Security Council, which oversees
cyber risk and key initiatives seeking to reduce associated threats;
• the review and update of our cyber risk appetite, clarifying requirements in
situations where it previously may have been unclear;
• establishing a multi-year Cyber Essentials programme, setting out
minimum standards across key areas, including user training, privilege
access management, system patching, network segregation, etc.; and
• a comprehensive assessment of our cyber controls environment to
identify and prioritise vulnerabilities
Re-defining our Risk Appetite
Our risk appetite defines the amount and types of risk that CRH is
prepared to take to deliver on its objectives. Given the constantly evolving
external risk environment as well as a shifting organisational focus to offer
our customers sustainable integrated solutions, work was undertaken
throughout 2022 to enhance our existing risk appetite framework.
Focused on key areas of perceived risk, Group Risk engaged with senior
stakeholders and subject matter experts from across the Group to identify
areas of potential decision-making uncertainty where risks and opportunities
for the Group may materialise. In articulating an acceptable risk appetite
for each area, a Global Leadership Team member took ownership of each
risk area and oversaw their definition utilising a combination of qualitative
statements, and metrics. The new framework was approved by the Board in
February 2023 and will be cascaded throughout Group leadership in 2023
to support decision-making.
Purpose
Values
Strategy
Risk Appetite
Culture and
Behaviours
Performance
and Growth
Resilience
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 54
Enhancing Decision-Making with Risk Data
Over the course of 2022, the Group deployed a new RMIS, which has been
integrated into businesses and functions across our global operations.
Developed in conjunction with our businesses, the system enables real-time
capture and visibility of risk data, promoting transparency, accountability,
and awareness of exposures that could have material implications for
our business. We continued to invest in our people and to grow the skills
required to drive our business, training over 600 employees to use this risk
technology during 2022.
Algorithms built into dashboards automatically filter risks to help leaders
effectively prioritise those for review, and provide risk owners with a
‘point in time’ view of exposures and the effectiveness of mitigation
activity, supporting the management of risks to within our defined risk
appetite levels. The system underpins our bottom-up risk reporting, easily
consolidating risks at all levels throughout the Group and has helped
provide a more time-sensitive analysis of risk, expanding and building our
strength through scale, and shaping and making our businesses better.
Turning Risk into Reward
Rapidly changing political, social, economic and environmental factors
inherently present material uncertainty for our business and major
stakeholders. Our ERM framework provides a structured approach for our
people to consistently manage risk, whilst positioning us to capitalise on
identified opportunities.
Deep Stakeholder Collaboration
CRH recognises that climate change presents significant risks and
opportunities that may materially affect the Group’s operational and
financial performance, and that collaboration across internal and external
stakeholders is integral to our ability to move at speed to deliver our
sustainability targets and ambitions. The agreement CRH signed with
Shell in 2022 exemplifies this commitment, and will see the businesses
collaborate and share learnings across Europe, North America and
Asia-Pacific to explore, develop and deploy decarbonisation solutions
and technologies at scale, including vehicle electrification and charging
infrastructure, low-carbon fuels and asphalt solutions, and renewable
electricity generation.
Driving Continuous Innovation
Rapidly evolving construction trends present material opportunity for
those able to anticipate and quickly move to meet customers’ increasingly
complex needs. In seeking to capitalise this opportunity, CRH Ventures
was established in 2022 with access to a $250 million venturing and
innovation fund to innovate, pilot and scale cutting-edge technologies and
solutions with the potential to reinvent the built environment. One of its early
investments was in AICrete, which combines data and artificial intelligence
to create a unique ‘recipe-as-a-service’ platform to optimise local materials
and minimise the amount of cement used, reducing CO2 emissions and the
cost of concrete production. Recognising that there can be no opportunity
without risk, the Group continues to cultivate a ‘safe to innovate’ culture,
creating space for teams to be courageous and creative in their pursuit of
transformative market solutions.
2022 Annual Report and Form 20-F OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 56
TCFD Executive Summary
Task Force
on Climate-
related Financial
Disclosures
statement
Our climate-related disclosures and details of the risks, opportunities
and actions that we are taking are consistent with all of the Task Force
on Climate-related Financial Disclosures (TCFD) recommendations
and recommended disclosures*. We comply with the four TCFD
recommendations and the 11 recommended disclosures as set out in
Figure 4 of Section C of the report entitled 'Recommendations of the Task
Force on Climate-related Financial Disclosures' published in June 2017 by
the TCFD. These are detailed throughout this Annual Report and a cross-
referencing map can be seen on page 59.
Governance
The Board is responsible for promoting the long-term success of the Group, generating
value for shareholders and ensuring we make a positive contribution to society. Its role
includes providing leadership; establishing and monitoring the Group’s purpose, values,
and strategy; setting the Group’s risk appetite; and ensuring there is a robust framework
of effective controls to enable risks and opportunities, including those related to climate
change, to be successfully assessed and managed.
Sustainability, including the impacts of climate change, is embedded in the Group’s
strategy and business model. The Board recognises the importance of decarbonisation to
address the challenges of climate change and believes the Group’s integrated strategy of
value-added products and innovative solutions have a key role to play in delivering a more
resilient and sustainable built environment. Our Governance Report beginning on page 80,
provides our framework for addressing climate-related issues. Our Safety, Environment &
Social Responsibility Committee report on pages 104 to 105 and Audit Committee report
on pages 92 to 97 provides further information on the Board’s oversight of climate-related
risks and opportunities.
The Chief Executive is responsible for the operational and profit performance of the Group
and is accountable to the Board for all authority delegated to executive management.
The Chief Executive executes strategy agreed with the Board and regularly reports to the
Board on the progress and performance of the Group, including in relation to climate-
related matters. The Chief Executive is supported by the Global Leadership Team,
which is responsible for implementing strategy, performance delivery and progressing
the Group’s sustainability and climate-related agenda. Responsibility for formulating and
* As required by the FCA Listing Rule 9.8.6(R) which applies to issuers with a premium listing on the London
Stock Exchange.
2022 Annual Report and Form 20-F executing our climate strategy sits with the Chief Operating Officer
(COO), while the Global Leadership Team receives support from various
executive-level committees and other working groups and functions on
sustainability and climate-related issues. For more information on the
management of climate change see pages 150 to 154.
Strategy
The Group’s strategy and financial planning is designed to identify,
evaluate, and manage significant risks that could inhibit the group from
successfully operating. Our financial planning takes into consideration
the multidimensional impacts of climate change on the Group’s
activities. For more information on how climate considerations are
incorporated into the Group’s strategy, see pages 150 to 154.
The Group has identified climate-related risks and opportunities that
could impact us in the short (<3 years), medium (to 2030) and long-
term (to 2050) using the TCFD’s framework. We assessed these factors
qualitatively, informed by warming scenario key assumptions and
supported where possible with top-down quantitative assessments.
We have provided an overview of the material climate-related risks
and opportunities and how they impact our businesses, strategy and
financial planning in our risks and opportunities disclosure on pages
150 to 154.
Building on our climate-related risk and opportunity analysis, CRH
also conducted in 2022 a detailed quantitative assessment on two
of these risks; carbon pricing and adverse weather, as a first step in
undertaking detailed quantification of all risks and opportunities. For
more information on the processes, assumptions, and outputs of the
Group’s climate scenario analysis, see pages 155 and 156.
The overall assessment identified a number of transitional and physical
risks and opportunities, which may adversely or positively impact
the operational and financial performance of the Group. The impacts
were considered both with and without any mitigation or adaptation
actions CRH may take. CRH continually assesses its strategy, business
model and ongoing business performance to make sure that they
are driving sustainable growth and value creation for its stakeholders.
Based on this assessment, the Group believes it has sufficient flexibility
and resilience to successfully manage its climate-related risks and
opportunities.
CASE STUDY
Advancing innovative
solutions for carbon
reduction
We use innovative processes to reinvent our products and to
support our ambition to decarbonise our operations and the built
environment. For example, Tarmac, part of our Europe Materials
Division, has become a sector leader through the use of its
ULTILOW products, a range of high performing, durable, warm-
mix asphalts which use lower temperatures in the manufacturing
process to reduce carbon by up to 15%. In 2022 Tarmac have led
the way in the UK market by making ULTILOW the default asphalt
for virtually all road surfacing applications instead of the traditional
hot-mix option.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
58
TCFD Executive Summary continued
Risk Management
Metrics and Targets
CRH operates a bottom-up and top-down risk assessment process, where
information from our operating companies informs our Group-wide risk
assessments, and Group-level risk analysis informs local risk identification
and assessment.
A robust risk catalogue is used to inform our bottom-up risk identification
processes and ensure our businesses consider the full breadth of climate-
related risks and opportunities.
Common criteria and topic hierarchies are used to assess and consistently
categorise risks and opportunities, which helps CRH to identify and manage
aggregate exposures that may be more effectively managed centrally.
More broadly, climate-related risks and opportunities are managed using our
ERM framework. To understand more about our processes for identifying,
assessing, and managing risk, please see our Risk Governance section on
pages 50 to 54.
Risks are identified through a number of different forums, such as
champion forums, engagement with senior leaders and other stakeholders
and through other channels. During 2022, CRH undertook a number of
workshops across our three Divisions to identify how climate-related risks
could adversely impact the Group and how potential opportunities could
create value and contribute to a more resilient built environment. The size
and significance of each risk is determined according to assessed impact
on the organisation and its likelihood of occurrence. A list of the climate-
related risks and opportunities identified can be seen on pages 150 to 154.
1: Refer to page 27 for further detail on our decarbonisation targets.
CRH uses a variety of metrics and targets to measure and manage our
climate-related risks and opportunities. Internally, these inform the Group’s
risk governance, strategy, and management processes. Externally, they
allow investors and other stakeholders to assess the Group’s performance
over time and provide a sound basis for comparison with industry peers.
Our climate-related targets are set by the Global Leadership Team and
approved by our SESR Committee, which evaluates these targets annually.
In 2022, CRH adopted its industry-leading SBTi validated target 25%
reduction in absolute carbon emissions by 2030 (from a 2020 base year). In
early 2023, the SBTi validated our revised targets1 in line with the updated
1.5°C science-based framework which now equate to a 30% reduction
in absolute carbon emissions by 2030 (from a 2021 base year). For more
information see page 31.
Our climate-related targets are linked to our remuneration policy. For our
2022 Performance Share Plan (PSP), 15% relates to ESG metrics, of
which 10% are specific to climate. Our PSP is an effective mechanism
for incentivising progress towards a more sustainable built environment,
recognising the long-term nature of our targets.
To monitor performance and the implementation of our sustainability
strategy, where appropriate key performance indicators and related targets
are defined for each climate-related risk and opportunity. To facilitate
comparative and trend analysis, our climate-related metrics are disclosed
consistently from year to year and our targets have a defined time horizon.
See more on pages 150 to 154.
The Corporate Sustainability Reporting team is responsible for monitoring
the Group’s climate-related metrics and progress being made towards
targets through our Annual Sustainability Review process.
2022 Annual Report and Form 20-F TCFD Recommendations
Recommended Disclosures
Location of Information
Pages
Governance
Disclose the organisation’s governance around climate-related risks and opportunities
Board’s oversight of climate-related risks and
opportunities
Risk Governance Framework; Audit Committee
Report; Nomination & Corporate Governance
Committee Report; SESR Committee Report
87, 92 to 97, 98 to 99,
104 to 105
Management’s role
Strategy
Risk Governance Framework; Audit Committee
Report; Nomination & Corporate Governance
Committee Report; SESR Committee Report;
Directors' Remuneration Report; Focus on
Climate Risk & Opportunities
87, 94, 95, 98 to 99,
104 to 105, 110, 122,
123, 150 to 154
Disclose the actual and potential impacts of climate-related risks and opportunities on the organisation’s businesses, strategy,
and financial planning
Risks and opportunities for the short, medium,
and long-term
Focus on Climate Risk & Opportunities
150 to 154
Impact on business, strategy and financial
planning
Decarbonisation Roadmap; SESR Committee
Report; Focus on Climate Risk & Opportunities
28 to 31, 104 to 106,
150 to 154
Resilient strategy and scenario planning
Climate Scenario Analysis
155 to 156
Risk management
Disclose how the organisation identifies, assesses, and manages climate-related risks
Climate-related risk identification and
assessment
Audit Committee Report; Focus on Climate
Risk & Opportunities
92 to 97, 150 to 154
Climate-related risk management
Audit Committee Report; Focus on Climate
Risk & Opportunities
92 to 97, 150 to 154
Integration of processes into overall risk
management
Audit Committee Report; Key Operational
Risks; Focus on Climate Risk & Opportunities
92 to 97, 142, 150
to 154
Metrics and targets
Disclose the metrics and targets used to assess and manage relevant climate-related risks and opportunities
Climate-related metrics
Solutions for a Sustainable Future; Focus on
Climate Risk & Opportunities
31, 150 to 154
Disclose Scope 1, 2 and 3 emissions
and related risks
Solutions for a Sustainable Future
31
Climate-related targets
Solutions for a Sustainable Future; Focus on
Climate Risk & Opportunities
31, 150 to 154
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information Chief Financial Officer's
Review
Americas Materials
In 2022 CRH recorded
a strong financial
performance reflecting the
strength and resilience of
our integrated solutions
strategy.
Our Americas Materials
Division provides solutions
for the construction and
RMI of public infrastructure,
homes and commercial
buildings in North America.
Read our Chief Financial Officer's Review on page 62
Read more about its 2022 Performance on page 68
Business Performance
and Segmental Reviews
Chief Financial Officer's Review
Chief Financial Officer's Review
62
Americas Materials
Americas Materials
Building Products
Building Products
Europe Materials
Europe Materials
68
72
76
62
68
72
76
Building Products
Europe Materials
Our Building Products
Division manufactures,
supplies and delivers
high quality, value-added,
innovative solutions to
shape and enhance the
built environment for
modern communities in
major economies in North
America, Europe and Asia.
Our Europe Materials
Division provides solutions
for the construction
of public infrastructure,
homes and commercial
buildings to customers
in construction markets
across 19 countries in
Europe and 2 countries in
Asia.
Read more about its 2022 Performance on page 72
Read more about its 2022 Performance on page 76
62
Chief Financial Officer's Review 20221
Strong result reflecting the
strength & resilience of our
integrated solutions strategy
Group sales of $32.7 billion (2021: $29.2 billion) were 12% ahead of
2021 reflecting solid commercial progress, resilient underlying demand
and the strength of our business model. Year-end net debt of $5.1
billion (2021: $6.3 billion) was reflective of our continued strong cash
generation, and efficient allocation and reallocation of capital. Net
acquisition spend totalled $3.3 billion (2021: $1.5 billion) in the year and
total distributions to shareholders were $2.1 billion (2021: $1.8 billion).
Net Debt/EBITDA (as defined)*2 was 0.9x (2021: 1.3x).
Segmental Reviews
The sections on pages 68 to 79 outline the scale of CRH's operations
in 2022 and provide a more detailed review of performance in each of
CRH's reporting segments. A review of the Building Envelope business,
which was divested in April 2022 and has been classified within
discontinued operations, is also included on page 75.
Key Components of 2022 Performance
Americas Materials delivered a strong performance with total sales 15%
above 2021 levels and like-for-like sales3 12% ahead driven primarily by
solid price progression across all lines of business.
Building Products maintained good activity levels as demand for critical
utility infrastructure and outdoor living solutions remained resilient. This,
together with strong performances from recent acquisitions, delivered
total sales growth of 26%. Like-for-like sales were 11% ahead of 2021.
Europe Materials like-for-like sales were also 11% ahead reflecting
continued strong pricing progress which offset the impact of lower
activity levels. Total sales were in line with 2021 due to the impact of
adverse currency translation effects.
Group EBITDA (as defined)* of $5.6 billion (2021: $5.0 billion) was
13% ahead despite the backdrop of significant cost inflation, reflecting
the benefits of our integrated solutions strategy together with resilient
demand and continued commercial progress.
This improved profitability, coupled with our ongoing focus on balance
sheet optimisation, resulted in a further increase in returns with RONA
increasing by 100 basis points (bps) to 13.3% (2021: 12.3%).
Reported profit after tax was ahead of 2021 at $3.9 billion (2021: $2.6
billion) driven by the strong trading performance and with this year’s
profit augmented by the profit on disposal of the Building Envelope
business.
In 2022 CRH delivered another strong
result despite a challenging and volatile
cost environment in both North America
and Europe. Our performance reflects the
continued execution of our integrated and
sustainable solutions strategy.
Net Debt/EBITDA (as defined)*
Interest-bearing loans and
borrowings/Profit after tax
Return on net assets (RONA)
Return on net segment assets
2022
0.9x
2.5x
13.3%
13.7%
2021
1.3x
4.0x
12.3%
12.1%
1 See cautionary statement regarding Forward-Looking Statements on page 135.
2 Net Debt/EBITDA (as defined)* is a non-GAAP measure as defined on page 260. The GAAP figures that are most directly comparable to the components of Net Debt/EBITDA (as defined)*
include: interest-bearing loans and borrowings: (2022: $9,636 million, 2021: $10,487 million) and profit after tax (2022: $3,874 million, 2021: $2,621 million).
3 Details of how non-GAAP measures are calculated are set out on pages 257 to 260.
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
2022 Annual Report and Form 20-F
Key Components of 2022 Performance
$ million
2021
Exchange effects
2021 at 2022 rates
Incremental impact in 2022 of:
- 2021/2022 acquisitions
- 2021/2022 divestments
- Organic
2022
% Total change
% Organic change
Sales
revenue
EBITDA (as
defined)*
Operating
profit
Profit/(loss)
on disposals
Finance
costs (net)
Assoc. and
JV PAT (i)
Pre-tax
profit
29,206
(1,359)
27,847
1,739
(108)
3,245
32,723
12%
12%
4,990
(168)
4,822
402
(17)
408
5,615
13%
8%
3,331
(82)
3,249
275
(13)
383
3,894
17%
12%
116
(2)
114
—
(177)
14
(49)
(399)
19
(380)
(55)
47
12
(376)
55
(3)
52
—
—
(52)
—
3,103
(68)
3,035
220
(143)
357
3,469
12%
12%
(i) CRH’s share of after-tax results of joint ventures and associated undertakings
Earnings per share from continuing operations for the year was 14% higher
than last year at $3.50 (2021: $3.06). Including the trading contribution and
profit on disposal of our discontinued operations, total earnings per share
was $5.07 (2021: $3.29).
Liquidity and Capital Resources – 2022 compared with 2021
The comments that follow refer to the major components of the Group's
cash flows for 2022 and 2021 as shown in the Consolidated Statement of
Cash Flows on page 180.
The US Dollar strengthened against most major currencies
during 2022 resulting in the average US Dollar/euro rate strengthening
from 0.8460 in 2021 to 0.9518 in 2022 and likewise the US Dollar/Pound
Sterling rate strengthening from an average of 0.7270 in 2021 to 0.8120 in
2022. Overall currency movements resulted in an unfavourable net foreign
currency translation impact on our results as shown in the table above.
The average and year-end 2022 exchange rates of the major currencies
impacting on the results of the Group are set out on page 190.
Sales Revenue
35.0
30.0
25.0
20.0
15.0
10.0
5.0
0
$bn
11.3
5.5
9.1
12.4
6.2
10.6
14.3
7.8
10.6
2020
2021
2022
Americas Materials
Building Products
Europe Materials
2022 marked another year of strong cash generation for the Group, with
net cash inflow from operating activities of $4.0 billion (2021: $4.2 billion)
lower than prior year as a result of higher tax outflows related to profits on
divestments. The net movement in inventories, receivables, payables and
provisions was an outflow of $518 million (2021: $228 million outflow).
Working capital was $2.9 billion at year-end (2021: $2.5 billion) representing
8.8% (2021: 8.5%) of sales. CRH believes that its working capital levels are
sufficient for the Group's present requirements.
In 2022 focused investment in development and replacement capital
expenditure amounted to $1.5 billion (2021: $1.6 billion). This investment
is made in anticipation of increasing demand in future years, together
with incremental capital expenditure investment related to the delivery of
our absolute gross carbon emissions reduction target. Spend in 2022
represented 109% of depreciation on owned assets (2021: 110%).
Reflective of the continued execution of the Group's strategy and the
creation of value through the efficient allocation and reallocation of capital
during 2022, the Group invested $3.3 billion (2021: $1.5 billion) in strategic
acquisitions which was financed by divestment and disposal proceeds1 of
$3.9 billion (2021: $0.5 billion).
Reflecting our strong financial position and commitment to returning cash to
shareholders the Group continued its ongoing share buyback programme
in 2022 repurchasing 29.8 million (2021: 17.8 million) ordinary shares for a
total consideration of $1.2 billion (2021: $0.9 billion).
These buybacks, together with cash dividend payments of $0.9 billion
(2021: $0.9 billion), reflect the Group's continued commitment to returning
cash to shareholders.
Interest-bearing loans and borrowings were $9.6 billion (2021: $10.5 billion)
at 31 December 2022 and corresponding year-end net debt of $5.1 billion
(2021: $6.3 billion) reflects healthy inflows from operations and proceeds
from the Building Envelope divestment. The Group is in a strong financial
position and is well funded.
1 Net of cash disposed and including deferred consideration proceeds in respect of prior year divestments.
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
64
Chief Financial Officer's Review 2022 continued
The Group ended 2022 with $5.9 billion of cash and cash equivalents on
hand and $3.7 billion of undrawn committed facilities which are available
until 2026. At year-end, the Group had sufficient cash balances to meet all
maturing debt obligations (including leases) for the next five years and the
weighted average maturity of the remaining term debt was 12.2 years.
A CHF330 million Swiss Franc denominated bond was repaid on maturity in
September 2022.
The Group also has a $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 as required.
Contractual obligations and off-Balance Sheet arrangements are disclosed
on page 274 of this Annual Report and Form 20-F.
Jim Mintern
Chief Financial Officer
Development Review
2022
The Group invested $3.3 billion on 29 acquisitions in 2022 (including
deferred and contingent consideration in respect of prior year acquisitions)
and a further $1.5 billion on development and replacement capital
expenditure projects. On the divestment front, the Group completed nine
transactions and realised total business and asset disposal proceeds of
$3.9 billion, primarily relating to the proceeds from the Building Envelope
divestment.
The largest acquisition in 2022 was in our Building Products Division where
the Group completed its acquisition of Barrette, North America’s leading
provider of residential fencing and railing solutions, for $1.9 billion. This
acquisition complements and enhances our offering of sustainable outdoor
living solutions in North America. In addition, Building Products completed
a further seven acquisitions in the US and two in Europe amounting to a
total spend of $2.7 billion. The Americas Materials Division completed ten
solutions-focused acquisitions in the US for a total spend of $0.5 billion,
and the Europe Materials Division completed nine bolt-on acquisitions for
$0.1 billion, the largest of which was the acquisition of a precast business in
Denmark.
The largest divestment in 2022 was the Building Envelope business for
cash proceeds of $3.5 billion (enterprise value of $3.8 billion including
lease liabilities transferred of $0.3 billion). A further eight divestments were
completed across the Group realising total proceeds of $0.2 billion. In
addition to these business divestments, the Group realised proceeds of
$0.1 billion from the disposal of surplus property, plant and equipment and
other non-current assets.
Furthermore, $52 million cash proceeds were received during the year
relating to divestments in prior years, of which $49 million related to deferred
consideration received for the divestment of the Group’s equity interest in
My Home Industries (MHIL) in India.
2022 Annual Report and Form 20-F
Key Performance Indicators
We track and measure progress through the use of specific financial and non-financial Key
Performance Indicators (KPIs). We regularly review these KPIs to ensure they remain appropriate
for our business. In 2022 we measured our progress across the following KPIs:
N O N - F I N A N C I A L K P Is
SAFETY
% ZERO ACCIDENTS IN OUR LOCATIONS
ENVIRONMENT
KG/$ REVENUE GREENHOUSE GAS EMISSIONS
SCOPE 1 AND SCOPE 2 CO2e EMISSIONS1
INCLUSION & DIVERSITY
% WOMEN IN SENIOR MANAGEMENT
2022
94%
2022
1.0 kg/$
2022
15%
2021
2020
94%
94%
2021
2020
1.2 kg/$
1.3 kg/$
2021
2020
14%
13%
In 2022 we continued to achieve a high level 94%
of zero-accident locations. For detail on our safety
performance see page 38.
In 2022 our Scope 1 and Scope 2 CO2e emissions
decreased as we maintained our progress towards
our cement emissions reduction target. For detail
on our CO2 emissions reductions see page 26.
The percentage of women in senior management was
15% in 2022 and we continued to focus on executing
our I&D strategy across the Group. For detail on our
I&D performance see page 40.
F I N A N C I A L K P Is
CASH GENERATION
OPERATING CASH FLOW (OCF)
PROFITABILITY
EARNINGS PER SHARE (EPS)
SHAREHOLDER RETURNS
CASH PAID TO SHAREHOLDERS
Dividends Shares Repurchased
2022
$4.0bn
2022
$3.50
2022
$0.9bn
$1.2bn
$2.1bn
Dividends Shares Repurchased
2021
$4.2bn
2021
$3.06
2021
$0.9bn
$0.9bn
$1.8bn
2020
$3.9bn
2020
$1.23
2020
$0.7bn
$0.2bn
$0.9bn
We measure cash flows generated to fund organic and
acquisitive growth, dividends to shareholders, share
buybacks and debt repayment. OCF was behind in
2022 due to higher tax outflows related to profits on
divestments.
EPS serves as an indicator of profitability on a per-share
basis. In 2022, basic EPS increased by 14% to $3.50,
reflecting a strong trading performance despite a
challenging and volatile cost environment.
Cash returned to shareholders each year through
dividends and our share buyback programme are
among a range of shareholder returns we measure.
In 2022, we returned $2.1 billion to our shareholders
with $1.2 billion being returned through share
buybacks and $0.9 billion through dividends.
FINANCIAL DISCIPLINE
INTEREST-BEARING LOANS AND
BORROWINGS/PROFIT AFTER TAX
FINANCIAL DISCIPLINE
NET DEBT/EBITDA (AS DEFINED)*
CREATING VALUE
RETURN ON NET ASSETS
2022 2.5x
2021
4.0x
2020
10.5x^
2022
0.9x
2021
2020
1.3x
1.4x
Interest-bearing Loans and Borrowings/Profit After Tax
is a GAAP equivalent measure of Net Debt/EBITDA
(as defined)*
^ 2020 metric includes the impact of non-cash
impairment charges of $0.8 billion.
Net Debt/EBITDA (as defined)* is a measure of
financial leverage and ability to service debt. It
underpins investment-grade credit ratings and the
ability to access finance. Net Debt/EBITDA (as
defined)* improved to 0.9x (2021: 1.3x) as a result
of lower net debt levels.
RONA Return on Net Segment Assets
13.3%
13.7%
RONA Return on Net Segment Assets
12.3%
12.1%
10.1%
7.4%
2022
2021
2020
RONA is a measure of pre-tax and pre-impairment
returns through excellence in operational
performance. The Group achieved a RONA of
13.3% (2021: 12.3%) which reflected continued
enhancement of operating efficiencies and improved
profit margins.
1.CO2 emissions subject to final verification under the European Union Emissions Trading Scheme (EU ETS). For further detail on our CO2 metrics and targets, as well as calculation methodology,
see page 31.
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
66
Chief Financial Officer's Review 2021
Key Components of 2021 Performance
$ million
2020
Exchange effects
2020 at 2021 rates
Incremental impact in 2021 of:
- 2020/2021 acquisitions
- 2020/2021 divestments
- One-offs (ii)
- Impairments
- Organic
2021
% Total change
% Organic change
Sales
revenue
EBITDA
(as defined)*
Operating
profit
Profit on
disposals
Finance
costs (net)
Assoc. and
JV PAT (i)
Pre-tax
profit
25,888
551
26,439
813
(182)
—
—
2,136
29,206
13%
8%
4,293
49
4,342
101
(58)
118
—
487
2,026
10
2,036
56
(51)
118
673
499
17
1
18
—
97
—
—
1
(471)
(9)
(480)
(3)
—
—
—
84
4,990
3,331
116
(399)
16%
11%
64%
25%
(118)
—
(118)
—
—
—
154
19
55
1,454
2
1,456
53
46
118
827
603
3,103
113%
41%
(i) CRH’s share of after-tax results of joint ventures and associated undertakings
(ii) One-offs primarily due to 2020 COVID-19 related restructuring costs
2021 was another year of growth for CRH underpinned by our integrated
solutions strategy and reflected positive underlying momentum in North
America and Europe.
currencies resulting in the average US Dollar/euro rate weakening from
0.8771 in 2020 to 0.8460 in 2021 and likewise the US Dollar/Pound Sterling
weakening from an average 0.7798 in 2020 to 0.7270 in 2021.
Group sales of $29.2 billion (2020: $25.9 billion) were 13% ahead of 2020
reflecting improved pricing and volume growth. Year-end net debt of $6.3
billion (2020: $5.9 billion) was reflective of our continued strong cash
generation, disciplined capital expenditure and value-focused investments.
Net acquisition spend totalled $1.5 billion (2020: $0.4 billion) and total
distributions to shareholders were $1.8 billion (2020: $0.9 billion). Net Debt/
EBITDA (as defined)* was 1.3x (2020: 1.4x).
Key Components of 2021 Performance
Americas Materials benefited from increased construction activity in
2021 due to strong residential demand in North America. Underlying
good operating performance offset the impacts of higher input costs and
inclement weather. Like-for-like sales in 2021 increased by 6% against
2020, due to positive volume growth and pricing progression.
Building Products delivered like-for-like sales 7% ahead of 2020, driven
by strong demand for residential construction and a moderate recovery
in the non-residential sector. Building Envelope, which is classified within
discontinued operations for reporting purposes, saw sales increase by 4%
in 2021 driven by strong pricing and good demand due to early signs of
recovery in the non-residential market.
Europe Materials saw like-for-like sales 11% ahead of 2021 reflecting good
volume growth, and pricing progress against a 2020 comparative which
was heavily impacted by pandemic restrictions. Positive pricing actions and
strong fixed cost control offset cost inflation headwinds.
EBITDA (as defined)* of $5.0 billion (2020: $4.3 billion) was 16% ahead
reflecting the benefits of our integrated solutions strategy together with
strong demand growth and continued commercial discipline.
Reported profit after tax was significantly ahead of 2020 at $2.6 billion
(2020: $1.2 billion) driven by a strong trading performance and the non-
recurrence of non-cash impairment charges and one-off restructuring costs
in 2020.
The US Dollar strengthened against most major currencies by the end of
2021. However, during 2021 the US Dollar weakened against most major
Overall currency movements resulted in a favourable net foreign currency
translation impact on our results as shown in the table above. The average
and year-end 2021 exchange rates of the major currencies impacting on the
Group are set out on page 190.
Liquidity and Capital Resources – 2021 compared with 2020
The comments that follow refer to the major components of the Group's
cash flows for 2021 and 2020 as shown in the Consolidated Statement of
Cash Flows on page 180.
Despite significantly increased trading activity compared to 2020, the Group
remained focused on cash management. Management delivered a net
working capital outflow of $228 million (2020: $196 million inflow) and the
Group's operating cash flow increased to $4.2 billion (2020: $3.9 billion).
Working capital was $2.5 billion at year-end (2020: $2.4 billion) representing
8.5% of sales (2020: 9.3%).
Focused investment in property, plant and equipment in markets and
businesses with increased demand and efficiency requirements, resulted in
higher cash outflows of $1.6 billion (2020: $1.0 billion), with spend in 2021
representing 110% of depreciation on owned assets (2020: 74%).
Reflective of the ongoing strategy of active portfolio management, the
Group invested $1.5 billion in bolt-on acquisitions (2020: $0.4 billion) which
was partly financed by divestment and disposal proceeds1 of $0.5 billion
(2020: $0.3 billion).
Reflecting our strong financial position and commitment to returning cash
to shareholders, the Group continued its share buyback programme in
2021 repurchasing 17.8 million (2020: 6.0 million) ordinary shares for a total
consideration of $0.9 billion (2020: $0.2 billion). These buybacks, together
with cash dividend payments of $0.9 billion (2020: $0.7 billion), reflect the
Group's continued commitment to returning cash to shareholders.
Year-end interest-bearing loans and borrowings were $10.5 billion (2020:
$12.2 billion) and year-end net debt of $6.3 billion (2020: $5.9 billion)
reflects strong inflows from operations and an increase in disciplined capital
expenditure and value-focused investments.
2022 Annual Report and Form 20-F
Development Review
2021
The Group invested $1.5 billion in 19 bolt-on acquisitions in 2021 (including
deferred and contingent consideration in respect of prior acquisitions).
2020
The Americas Materials Division completed seven bolt-on acquisitions
across the US and Canada for a total spend of $163 million.
The largest of these in 2021 was the acquisition of Angel Brother
Enterprises, an asphalt paving and infrastructure solutions business in
Texas. In addition, the Americas Materials Division completed a further
seven bolt-on acquisitions across the US and Canada for a total spend of
$0.7 billion.
The Building Products Division completed seven acquisitions amounting
to a total spend of c. $0.7 billion including NPP, a water and energy
infrastructure solutions business in the eastern region of the US.
The Europe Materials Division completed four acquisitions, with a total
spend of c. $17 million.
The Group also paid $33 million of deferred and contingent consideration
related to prior acquisitions.
On the divestment front, the Group completed 11 transactions and realised
total business and asset disposal cash proceeds of $0.5 billion, inclusive
of $0.1 billion relating to the receipt of deferred proceeds from prior
divestments, the majority of which related to the divestment of the Group's
equity interest in MHIL in India. The sale of the Brazil cement operations by
the Americas Materials Division represented the largest divestment during
2021, with a further 10 other divestments completed across the Group.
In addition to these business divestments, the Group realised proceeds of
$0.1 billion from the disposal of surplus property, plant and equipment and
other non-current assets.
The Building Products Division completed six bolt-on acquisitions
amounting to a total spend of $182 million including the acquisition of
Martin Enterprises.
Europe Materials completed four acquisitions, with a total spend of $7
million for the Division.
The Group also paid $54 million of deferred and contingent consideration
related to prior 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 previous
divestments of which $95 million related to the divestment of the Group's
equity interest in MHIL.
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 Reunion 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.
1 Net of cash disposed and including deferred consideration proceeds in respect of prior year divestments.
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 68
Americas Materials
Strong growth delivered
by a uniquely integrated and
value-added solutions strategy1
2022 Performance Highlights
Sales
EBITDA (as defined)*
Operating Profit
Net Assets1
Size and Scale:
$ million
% of Group
14,324
2,748
1,909
14,775
44%
49%
49%
49%
c. 29,100
employees
c. 1,605
locations
44 US states and 6
Canadian provinces
EBITDA (as defined)* growth
Sales by end-use2
Repair Maintenance
and Improvement
(RMI)
New
Build
+6%
+8%
$2.4
bn
$2.6
bn
$2.7
bn
Sales by sector2
Residential
Infrastructure
3.5
3.0
2.5
2.0
1.5
1.0
0.5
$bn
2020
2021
2022
Non-
residential
Annualised Sales Volumes3
Cement:
12.7m tonnes
Readymixed
Concrete: 12.6m m3
Aggregates:
196.8m tonnes
Asphalt:
48.0m tonnes
CRH is the largest building materials business in North America where our
Americas Materials business provides solutions for the construction and
RMI of public infrastructure, homes and commercial buildings.
The Markets We Serve
Our Americas Materials Division serves the needs of the construction
industry across North America where positive market fundamentals,
including strong population growth, drive demand for our materials,
products and services.
Our operating footprint includes attractive locations in the Northeast and
Midwest where RMI activity is most resilient and the South and West
where migration is driving new-build growth.
In recent years we have expanded our presence in the higher-growth
US southern states to increase our exposure to the favourable demand
fundamentals of higher population growth and positive migration trends.
Approximately 50% of the Division's sales relates to the infrastructure
sector, a significant proportion of which is awarded by public tender.
These construction projects include federal, provincial, state, and local
government authority road and infrastructure projects.
Demand momentum in 2022 was underpinned in particular by federal-
and state-level infrastructure funding along with continued residential and
commercial activity, including robust warehouse construction activity.
Creating Value
CRH has built leadership positions in attractive construction markets
across the US and Canada. These positions are supported by a network
of strong reserves at quarry locations predominantly adjacent to and
serving urban areas where demand is strongest. Our local businesses
leverage their strong market knowledge, deep industry expertise and
extensive array of essential materials to implement our differentiated
strategy, offering value-add, end-to-end solutions which combine different
types of materials, products, and services to satisfy multiple customer
segment needs. This enables us to provide a unique, value enhancing,
one-stop-shop experience saving time and reducing logistical complexity
for our customers. This helps deepen our relationships and increase the
share of wallet our customers spend with us.
In addition, our operations are vertically integrated enabling us to optimise
production throughout the value chain. Essential materials produced by
our aggregates and cement businesses for example are supplied to our
downstream materials businesses for use in products such as readymixed
concrete and asphalt.
1 Net Assets at 31 December 2022 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 260.
2 Sector exposure and end-use balance are based on sales.
3 Throughout this document annualised volumes have been used which reflect the full-year impact of development activity during the year and may vary from actual volumes sold.
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
2022 Annual Report and Form 20-F50%50%50%30%20% Empowering Sustainable Solutions
CRH’s vision is to develop sustainable solutions that build, connect,
and improve our world. In 2022 we joined the NAPA 'The Road
Forward' initiative which aims to achieve net-zero carbon emission
asphalt pavements.
Increasing our use of RAP will be critical to reducing emissions and
in 2022 we further expanded our use of RAP in Michigan where our
Cadillac Asphalt business began to utilise RAP for the first time.
In addition to improving the sustainability attributes of our asphalt
products, we also continued to make progress in other areas.
For example, our American Rock Products business developed a
specialised new sustainable readymixed concrete mix which can lower
the carbon footprint of concrete used in data centres in Oregon by up
to 23%.
CASE STUDY
This approach is fundamental to our development strategy and sets
CRH apart within our industry. The largely unconsolidated US building
materials market presents further opportunities for value creation by
allowing us to continue to identify and acquire businesses that can be
efficiently integrated into our existing network and support our strong
culture of safety and ongoing efforts towards a more inclusive and diverse
workforce. An example of how we have been doing this is by collaborating
with educational institutions to equip younger generations with the core
skills needed within our industry and enable underrepresented individuals
to access university. The CRH Canada Bridge Scholarship Program builds
equity, diversity and inclusion by providing financial aid to students from
underrepresented and underserved communities. In 2022 there were nine
recipients from across Canada who were awarded a CRH Canada Bridge
Scholarship, an example of how CRH also creates social value in the
communities in which it operates.
How our Integrated Solutions
Strategy Enhanced a Transport
Infrastructure Project
CRH provided a uniquely integrated highway construction solution which
helped the Michigan Department of Transport (MDOT) reduce cost,
decrease complexity, and save time when replacing 120 lane miles of
freeway, and rehabilitating and replacing 27 bridges on Interstate Highway
I-69. CRH employed its specialised design and engineering expertise to
help MDOT create a single end-to-end design plan, integrating a variety
of materials, products, and services into a single efficient construction
solution, shortening the construction time from eight years to just three.
The customer also benefited from CRH’s extensive experience in water
management infrastructure. Our team worked with project architects
and engineers to devise and implement an environmentally friendly
solution which incorporated culverts and drainage systems from
CRH’s Infrastructure Products Group. CRH also helped to enhance
the sustainability attributes of the project by providing recycled asphalt
and innovative asphalt mix designs. These technologies will ensure the
road surface performs above specification for the complex freeze-thaw
requirements of MDOT due to Michigan’s harsh climate.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 70
Operations Review - Americas Materials2
Prior Year 2021
Results
$ million
Sales revenue
EBITDA (as defined)*
Operating profit
EBITDA (as defined)*/sales
Operating profit/sales
Analysis of change
2020
Exchange Acquisitions Divestments
Impairment/
One-offs1
Organic
2021
11,273
2,405
1,631
21.3%
14.5%
+73
+5
-2
+468
+30
+3
-96
-48
-45
—
+24
+28
+689
+172
+173
12,407
2,588
1,788
20.9%
14.4%
%
change
10%
8%
10%
1One-offs primarily due to 2020 COVID-19 related restructuring costs
Regional Performance
Sales in the Northeast were ahead as volumes improved following 2020
which was impacted by COVID-19 restrictions. Higher volumes and pricing
across all lines of business were offset by higher input costs resulting in
operating profit in line with 2020.
Great Lakes sales were ahead of 2020 driven by solid residential and
commercial demand. Operating profit growth was led by good commercial
and operational performance offsetting higher input costs.
South sales were ahead of 2020 driven primarily by positive pricing and
continued growth in readymixed concrete volumes in our Florida and Texas
markets. Operating profit marginally declined as an improved commercial
and operational performance was offset by the impacts of unfavourable
weather and higher input costs.
Sales in the West were well ahead of 2020, driven by robust demand and
positive pricing across all lines of business. Operating profit improved as
higher volumes and prices coupled with cost saving initiatives offset higher
input costs.
Cement
Our cement business delivered a strong performance driven by a growth
in sales which were 12% and 11% ahead of 2020 on a total and like-for-
like basis respectively. Operating profit was ahead of 2020 driven by a 5%
increase in volume, strong price realisation and cost saving measures which
offset increases in input costs. Both US and Canada volumes were ahead
of 2020 due to good market demand and strong backlog execution.
Americas Materials generated sales of $12.4 billion and EBITDA (as
defined)* of $2.6 billion, 10% and 8% ahead of 2020 respectively. Operating
profit was 10% ahead of 2020. Solid volume and pricing progression across
all lines of business coupled with operating efficiencies offset the inflationary
input cost environment. Like-for-like sales were 6% ahead of 2020, while
like-for-like EBITDA (as defined)* increased by 7%.
US construction activity recovered in 2021 with increased residential
demand along with a moderate recovery in non-residential markets.
Infrastructure funding levels were maintained at similar levels to 2020.
Canada experienced continued strong demand within its residential sector.
During 2021 Americas Materials completed eight acquisitions in the US
and Canada for a total spend of $0.7 billion, the largest of which was
the acquisition of Angel Brothers Enterprises, an asphalt paving and
infrastructure solutions business in Texas. The divestment of the Brazil
cement operations was completed in the first half of 2021 for consideration
of $0.2 billion.
Materials
Aggregates volumes were 3% ahead of 2020 on a like-for-like basis driven
by good demand in our Northeast, Great Lakes and West divisions. The
South division was negatively impacted by adverse weather particularly in
the first half of 2021. Our selling prices improved 4% on a mix-adjusted
basis, resulting in good margin expansion overall.
Like-for-like asphalt volumes were 2% ahead of 2020, while like-for-like
average prices also increased. Good market conditions in the Northeast,
Great Lakes and West offset unfavourable weather conditions in the South.
Readymixed concrete volumes were 4% ahead on a total and like-for-like
basis as residential demand remained strong; good commercial discipline
delivered price increases of 5%.
Paving and construction revenues were 7% ahead of 2020, and 1% behind
on a like-for-like basis, due to unfavourable weather in the South and a
slower start to the season in both Great Lakes and Northeast. Revenues
were higher in the West driven by an early start to the construction season
and solid underlying demand. Construction margins were ahead of 2020.
2
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
2022 Annual Report and Form 20-F Current Year 20223
Results
$ million
Sales revenue
EBITDA (as defined)*
Operating profit
EBITDA (as defined)*/sales
Operating profit/sales
Analysis of change
2021
Exchange Acquisitions Divestments
Organic
2022
% change
12,407
2,588
1,788
20.9%
14.4%
-41
-4
-2
+511
+44
-11
-60
-13
-11
+1,507
14,324
+133
+145
2,748
1,909
19.2%
13.3%
15%
6%
7%
Regional Performance
Sales in the Northeast division were 10% ahead of 2021 as prices improved
across all lines of business offsetting lower volumes due to less favourable
weather. Operating profit increased, driven by improved pricing which offset
lower volumes and higher input costs.
Great Lakes sales were 20% ahead of 2021, led by improved pricing across
all lines of business and solid construction demand. Growth in operating
profit was achieved through strong commercial management and ongoing
cost control, offsetting input cost inflation.
South division sales were 26% ahead of 2021 with volumes ahead of
prior year. Pricing was strong across all lines of business. Operating profit
marginally declined as strong pricing was offset by increases in energy and
bitumen costs.
The West division delivered 10% sales growth, driven primarily by
disciplined commercial management across all lines of business and strong
construction revenues. Unfavourable weather and a late start to the season
impacted volumes. Operating profit was slightly ahead of 2021 as lower
volumes were offset by improved pricing.
Cement
Our cement division delivered sales growth of 8% driven primarily by price
realisation of 12% which offset slightly lower volumes compared with 2021.
Operating profit was ahead driven by strong price progression amid an
inflationary cost environment.
Americas Materials sales were 15% ahead driven primarily by solid price
progression across all lines of business which was partly offset by lower
volumes impacted by unfavourable weather. EBITDA (as defined)* of $2.7
billion and operating profit of $1.9 billion were 6% and 7% ahead of 2021
respectively, as positive pricing was impacted by higher input costs. Like-
for-like sales and EBITDA (as defined)* were 12% and 5% ahead of 2021
respectively.
Construction market growth remained positive in 2022, primarily driven by
strong infrastructure activity, supported by increases in federal, state and
local transportation funding. The non-residential market remained resilient,
while parts of the new-build residential market faced challenges from rising
interest rates and affordability constraints. Canada experienced solid growth
in most provinces; however, rising interest rates and inflationary pressures
negatively impacted the residential market.
During 2022, Americas Materials completed ten solutions-focused
acquisitions across the US with a total spend of $0.5 billion. The largest
of these was the acquisition of Hinkle Contracting Company, a vertically
integrated materials and road solutions business in Kentucky.
Materials
Aggregates volumes declined by 1% compared to 2021 as strong volumes
in the South and Great Lakes divisions were offset by unfavourable weather
which impacted activity in the Northeast and West divisions. Aggregates
prices increased by 10%, driven by strong commercial management.
Asphalt volumes were 3% ahead, driven by increases in the Great Lakes
and South divisions, while volumes were lower in the Northeast and West
divisions. Asphalt prices increased by 20% compared to prior year.
Readymixed concrete volumes were 6% behind 2021 levels, impacted by
less favourable weather conditions in the West and the Northeast. Strong
commercial discipline delivered higher prices across all divisions, 14%
ahead of 2021, which offset raw materials and energy cost inflation.
Paving and construction revenues were 25% ahead of 2021 due to a strong
order book and good project execution.
3
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 72
Building Products
Consistent, solutions-focused
delivery1
2022 Performance Highlights
Sales
EBITDA (as defined)*
Operating Profit
Net Assets1
Size and Scale:
$ million
% of Group
7,823
1,510
1,161
7,588
24%
27%
30%
25%
c. 20,500
employees
c. 460
locations
43 US states and
5 Canadian provinces,
17 European and Asian countries
Our Building Products Division manufactures, supplies and delivers high
quality, value-added, innovative products and solutions to shape and
enhance the built environment for modern communities. This includes
Architectural Products, Infrastructure Products and Construction
Accessories.
The Markets We Serve
Our Building Products Division is a global business which operates in
attractive construction markets in major economies in North America,
Europe and Asia. This Division serves the growing demand across the
construction value chain for building products and solutions that are
innovative, high quality and value added.
Many of these products can be packaged and integrated to meet
increasingly complex requirements in areas such as residential and
utilities infrastructure.
In 2022 our platforms continued to see good demand across all
business lines with strong Infrastructure Products activity, further growth
in Architectural Products and Construction Accessories performing well.
EBITDA (as defined)* growth
Sales by end-use2
Creating Value
2.5
2.0
1.5
1.0
0.5
Repair Maintenance
and Improvement
(RMI)
New
Build
+52%
+19%
Sales by sector2
Residential
Infrastructure
$0.8
$1.0
$1.5
$bn
2020
2021
2022
Non-
residential
Product Range:
Architectural
Products
Infrastructure
Products
Construction
Accessories
By anticipating market trends including increasing urbanisation,
the growth of cities and the demand for more sustainable forms of
construction, along with evolving customer demand, we devise and
provide solutions that solve complex construction-related challenges
across a range of project areas.
Our focus on packaging and bundling multiple products and services
into customer-orientated solutions has allowed us to build out existing
product platforms and broaden our differentiated product portfolio.
This further enhances the quality and effectiveness of the solutions we
provide and helps us to capitalise on new growth opportunities along the
construction value chain.
We take an innovation-led approach to the development of integrated
building products and solutions and our ability to customise and
create bespoke products and end-to-end solutions drives competitive
advantage and helps to deliver sustainable growth.
1 Net Assets at 31 December 2022 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 260.
2 Sector exposure and end-use balance are based on sales.
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
2022 Annual Report and Form 20-F50%50%15%30%55% Sustainable Living
In 2022 our Architectural Products business expanded its
MoistureShield plant in Arkansas, doubling the plant’s manufacturing
capacity. MoistureShield is a decking product made with up to 95%
recycled materials, reducing the consumption of limited natural
resources, making valuable use of waste and curbing carbon
emissions. The expansion into its supply chain is helping CRH to
further integrate recycled materials to its supply chain while helping
to meet the growing demand for sustainable outdoor living products
in the North American market.
CRH sees significant opportunity in the increasing demand for
sustainable infrastructure solutions. In Europe, NAL Limited, a CRH
company which is based in the UK and specialises in transport
infrastructure solutions launched an innovative new Electric Vehicle
(EV) charging solution which allows for the installation of EV charging
points which are future-proofed for rapid future evolution in EV
charging technology.
CASE STUDY
All our products and solutions are designed to exceed our customers’
expectations by solving their most pressing challenges and each of
our businesses approach their market with a "customer-first" attitude,
focusing on providing solutions alongside our customers.
While each of our platforms executes a specific strategy, all are
focused on reaching their full potential by leveraging our collective core
competencies and integrating I&D initiatives. By way of example, Leviat,
part of our Construction Accessories platform, formed an Inclusion and
Diversity Council to help build a more inclusive workplace and culture
across its businesses, and to reflect the communities in which it operates.
Leviat developed a roadmap of initiatives in support of the Council that
includes a calendar of events to raise awareness of local customs and
traditions of its employees globally and a network of I&D champions to
support its I&D priorities. By celebrating diversity, Leviat aims to cultivate
the inclusive culture that will help it build a stronger global organisation.
This helps Leviat to differentiate itself in the market and ultimately adds
value for Leviat's customers.
Customer Collaboration on
Complex Challenges
One of the ways that CRH is living its Purpose and reinventing the way
the world is built is by being connected with our customers. In the US,
where CRH is a market leader in water infrastructure solutions, our
businesses collaborated with the owners of Los Angeles International
Airport (LAX) to design a bespoke stormwater management solution
that could capture, clean and infiltrate 45,000 cubic feet of stormwater
to meet strict local stormwater quality requirements. The unique system
which was required to collect, treat, and detain stormwater before it
can leave the site needed to meet complex requirements such as site-
specific constraints and compliance requirements at the world’s third
busiest airport.
CRH worked closely with the customer and its architects and engineers
to understand the unique needs of the project and design and install
a custom-built stormwater solution that is helping to change how LAX
handles stormwater. CRH provided a one-stop-shop and single point of
contact delivering value for the customer at several different phases of
the project.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 74
Operations Review - Building Products
Prior Year 20212
Results
$ million
Sales revenue
EBITDA (as defined)*
Operating profit
EBITDA (as defined)*/sales
Operating profit/sales
Analysis of change
2020
Exchange Acquisitions Divestments
Impairment/
One-offs1
Organic
2021 % change
5,474
833
585
15.2%
10.7%
+75
+10
+5
+337
+71
+53
-29
-5
-4
—
+11
+15
+361
+72
+75
14%
19%
25%
6,218
992
729
16.0%
11.7%
The table above excludes the trading performance of Building Envelope which, following its divestment, has been classified within discontinued operations.
1 One-offs primarily due to 2020 COVID-19 related restructuring costs
Construction Accessories
Like-for-like sales in Construction Accessories were ahead of 2020 driven
by strong volumes as the business benefited from higher residential demand
and project activity. Sales growth was primarily led by North America, the
UK and France. Increased sales and continued cost saving initiatives more
than offset input cost inflation, resulting in like-for-like operating profit ahead
of 2020.
Building Envelope (Discontinued Operations)
Building Envelope's sales increased driven by strong pricing and early signs
of recovery in the non-residential market. Operating profit was ahead of
2020 driven by improved pricing, operational excellence initiatives and other
cost savings, partly offset by input cost inflation.
Building Products delivered sales growth of 14% due to strong demand for
residential construction, particularly in North America, along with a good
recovery in certain parts of the non-residential sector. Ongoing business
improvement initiatives delivered higher margins through production
efficiencies, good commercial management, procurement savings and
overhead cost control. EBITDA (as defined)* increased by 19% while
operating profit was 25% ahead. Like-for-like sales were 7% ahead of 2020,
while like-for-like EBITDA (as defined)* increased by 9%.
During 2021 Building Products completed seven bolt-on acquisitions,
primarily in the US and across all product platforms, at a total spend of $0.7
billion. The largest acquisition was Infrastructure Products' purchase of NPP,
a water, energy and infrastructure solutions business.
Architectural Products
Architectural Products in North America delivered strong sales growth in
2021, reflecting positive market demand and robust residential RMI activity.
Operating profit increased due to improved pricing and volume growth,
a continued focus on operational improvements and strong overhead
cost control. Sales in our European businesses were slightly ahead, with
operating profit growth driven by operational and commercial excellence
initiatives and improved product mix.
Infrastructure Products
Infrastructure Products experienced strong sales growth in 2021. Sales
to the communications and utilities sectors were resilient and demand for
IT infrastructure was strong. The business delivered increased operating
profit due to continued performance improvement measures and good cost
control. Total sales and operating profit also benefited from the acquisition
of NPP in the third quarter. Our European businesses contributed to
the strong sales growth and operating profit was ahead. Our Australian
business experienced lower sales due to COVID-19 restrictions which
hindered production and limited deliveries.
2
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
2022 Annual Report and Form 20-F Current Year 20223
Results
$ million
Sales revenue
EBITDA (as defined)*
Operating profit
EBITDA (as defined)*/sales
Operating profit/sales
Analysis of change
2021
Exchange Acquisitions Divestments
Organic
2022
% change
6,218
992
729
16.0%
11.7%
-167
+1,121
-7
-1
+350
+285
-4
—
—
+655
+175
+148
26%
52%
59%
7,823
1,510
1,161
19.3%
14.8%
The table above excludes the trading performance of Building Envelope which, following its divestment, has been classified as discontinued operations.
Construction Accessories
Proactive pricing actions by our Construction Accessories business
resulted in sales ahead of prior year across all regions, with growth primarily
driven by the UK, Germany and North America. Operating profit finished
well ahead of prior year as commercial excellence measures successfully
mitigated the impact of cost inflation.
Building Envelope (Discontinued Operations)
The commentary below refers to the trading results of Building Envelope,
prior to its divestment in April 2022, compared to the same period in 2021.
Building Envelope delivered sales growth driven by C.R. Laurence and the
aluminium glazing business. EBITDA (as defined)* was ahead of 2021 as a
result of increased sales and margin expansion achieved through operating
efficiencies.
Building Products delivered sales growth of 26%, 11% ahead on a
like-for-like basis, due to strong demand for critical utility infrastructure
and outdoor living solutions. This, combined with continued strong cost
control and production efficiencies resulted in EBITDA (as defined)* 52%
ahead of prior year and operating profit 59% ahead, 18% ahead and 20%
ahead respectively on a like-for-like basis. This demonstrates the strong
contribution from both the underlying businesses and recent acquisitions
underpinned by our integrated solutions strategy.
Building Products completed ten acquisitions during 2022, mainly in the US,
for a total spend of c. $2.7 billion. The largest acquisition was the purchase
in July 2022 of Barrette, North America’s leading provider of fencing and
railing solutions for the outdoor living space.
Architectural Products
Architectural Products in North America delivered strong sales growth in
2022, as sustained RMI activity offset the impact of rising interest rates
on certain parts of new-build residential construction activity. Underlying
demand in our European businesses was solid, particularly in Poland;
however total sales were slightly behind 2021 due to currency headwinds.
Pricing progress, improved operational performance and contributions from
acquisitions resulted in operating profit ahead of prior year in both North
America and Europe despite cost inflation and raw materials shortages.
The integration of Barrette is progressing well with trading in line with
expectations and good synergy delivery.
Infrastructure Products
Infrastructure Products experienced strong sales growth in 2022,
particularly in North America, with robust demand in the communications,
energy, water and transportation sectors as well as strong contributions
from recent acquisitions. This resulted in operating profit well ahead of prior
year as higher activity levels combined with pricing progress and disciplined
cost control offset higher energy and materials costs, as well as labour
market constraints.
3
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 76
Europe Materials
Emerging opportunities for
solutions-focused growth1
CRH's Europe Materials Division provides solutions for the construction
of public infrastructure, homes and commercial buildings to customers
in construction markets across 19 countries in Europe and 2 countries in
Asia.
The Markets We Serve
In Europe our business is structured across five operational clusters,
namely UK & Ireland, Europe North, Europe West, Europe East and Asia.
Our businesses in Western Europe operate in markets that are stable
and developed with resilient demand for RMI, while in Eastern Europe,
less developed markets offer higher growth potential through strong
infrastructure and new-build residential activity underpinned in part by EU
funding mechanisms.
We are experiencing emerging demand across both Western Europe and
Eastern Europe for our integrated end-to-end solutions.
Our Europe Materials Division also has responsibility for our business in
the Philippines, where CRH is the second largest producer of cement, and
our business in north-eastern China.
Creating Value
An extensive network of quarry and production locations adjacent to
attractive local construction markets underpins our business in Western
and Eastern Europe. We have also extensively integrated our operations
enabling us to provide essential materials, value-added products and
services and integrated solutions to customers on a one-stop-shop basis.
We have used this integration to establish CRH as a market leader,
particularly in Eastern Europe where our vertically integrated cement,
aggregates and readymixed concrete have been further integrated with
legacy precast and concrete product businesses enabling strong value
creation through commercial excellence and performance improvement
initiatives.
2022 Performance Highlights
Sales
EBITDA (as defined)*
Operating Profit
Net Assets1
Size and Scale:
$ million
% of Group
10,576
1,357
824
7,835
32%
24%
21%
26%
c. 26,200
employees
c. 1,095
locations
19 countries in Europe,
2 countries in Asia
EBITDA (as defined)* growth
Sales by end-use2
2.5
2.0
1.5
1.0
0.5
-4%
+34%
$1.1
$1.4
$1.4
Repair Maintenance
and Improvement
(RMI)
New
Build
Sales by sector2
Residential
Infrastructure
$bn
2020
2021
2022
Non-residential
Annualised Sales Volumes3
Cement:
31.5m tonnes
Aggregates:
101.3m tonnes
Concrete Products:
6.7m tonnes
Readymixed
Concrete:
15.8m m3
Asphalt:
9.8m tonnes
Lime:
7.5m tonnes
1 Net Assets at 31 December 2022 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 260.
2 Sector exposure and end-use balance are based on sales.
3 Throughout this document annualised volumes have been used which reflect the full-year impact of development activity during the year and may vary from actual volumes sold.
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
2022 Annual Report and Form 20-F75%25%35%30%35% Empowering Sustainable Solutions
CRH understands the vital role circularity will play in ensuring a more
sustainable future for our planet. We also view it as an important
growth opportunity and have embraced circularity across our
business. During 2022 our Europe Materials businesses continued
to increase their use of recycled materials, including in Jura Cement,
based in Switzerland. Jura Cement's use of alternative fuels include
used tyres, plastics, solvent chemical waste, automotive oils,
biomass and grains which made up 80% of its overall fuel mix and
helped to minimise emissions from fossil fuels in 2022.
In addition to using recycled waste as a fuel, our businesses also
use recycled raw materials. In 2022 our Rudus business, based
in Finland, continued to roll out its ‘Betoroc’ and ‘Uuma-betoni’
concretes, which use recycled materials including crushed concrete
and recycled aggregates.
In the UK, Tarmac began trials of a new low-carbon concrete on the
High Speed 2 (HS2) rail project during 2022, reducing CO2 per cubic
metre by approx. 60%. In 2022 Tarmac also successfully trialled
hydrogen as a fuel in the production of lime. The combustion of
hydrogen produces no CO2, emitting just water vapour and is likely to
play a key role in the road to net-zero.
CASE STUDY
These initiatives are supported by our inclusive and diverse workforce
across Europe Materials and our people remain a key driver to creating
value which is why we strive to create working environments that
empower, respect and support our employees. In 2022, this ambition
was showcased by Eqiom in France which was certified as a Top
Employer and celebrated a decade-long membership of the Top
Employers Institute in France. According to the results of Eqiom’s latest
Quality at Life survey, the working relationships developed within the
company are a highlight for satisfied workers and contribute to their
commitment to the company.
Our International Insights Help
Deliver Enhanced Solutions Locally
In Poland, where CRH is the largest provider of building materials, our
local businesses drew on CRH’s extensive international experience
to provide an integrated solution that met the uniquely challenging
requirements of the landmark Warsaw Hub commercial tower complex.
CRH employed its significant expertise in materials technology to work
with designers and planners to adapt materials specifications in order to
simplify logistics, improve scheduling and lower costs for the customer.
This included the provision of off-site manufacturing solutions which
helped to minimise the impact of the project on the local community
and specialised techniques to facilitate the pouring of high volumes of
concrete at heights of over 200 metres in sub-zero temperatures and
high winds.
The solution provided by CRH played a key role in accelerating the
construction work and facilitated the completion of this major project
ahead of schedule. By providing insights from its work in other markets
CRH was able to influence the approach taken by the contractor and the
way in which parts of the structure were ultimately constructed. This is
another example of CRH living its purpose and reinventing the way the
world is built.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
78
Operations Review - Europe Materials
Prior Year 20212
Results
$ million
Sales revenue
EBITDA (as defined)*
Operating (loss)/profit
EBITDA (as defined)*/sales
Operating (loss)/profit/sales
Analysis of change
2020
Exchange Acquisitions Divestments
+403
+34
+7
+8
—
—
-57
-5
-2
9,141
1,055
-190
11.5%
(2.1)%
Impairment1/
One-offs2
—
+83
+748
Organic
2021
+1,086
10,581
+243
+251
%
change
16%
34%
1,410
814
528%
13.3%
7.7%
1 Includes $0.7 billion 2020 impairment charge
2 One-offs primarily due to 2020 COVID-19 related restructuring costs
Europe Materials benefited from continued growth in Eastern Europe and
strong market recovery following the easing of COVID-19 restrictions in
many of our key markets. Europe Materials generated sales of $10.6 billion
and EBITDA (as defined)* of $1.4 billion, 16% and 34% ahead of 2020
respectively with an operating profit of $0.8 billion. Like-for-like sales were
11% ahead of 2020, while EBITDA (as defined)* increased by 22%. Energy
market volatility resulted in increased cost inflation but positive pricing
actions and a continued focus on cost savings and performance initiatives
delivered margin expansion.
Europe East
Europe East (Poland, Ukraine, Romania, Hungary, Slovakia, and Serbia)
experienced mild weather in the fourth quarter and robust demand
throughout the year, which resulted in cement volumes ahead of 2020
and continued growth in downstream products. Operating profit in Poland
was significantly ahead of 2020 due to good volume and price increases
combined with strong cost control. Despite rising energy cost inflation in the
second half of the year, overall operating profit was well ahead of 2020 with
good cost control and strong price increases across all markets.
Asia
Sales and operating profit in the Philippines were significantly ahead of
2020, which was severely impacted by COVID-19 restrictions. Cement
volumes were well ahead in 2021 as the market recovered. Despite
a competitive pricing environment and rising input costs, operational
improvements and cost containment initiatives resulted in operating profit
ahead of 2020.
CRH's operations include a 26% stake in Yatai Building Materials in China,
where strong price increases offset lower volumes to deliver significantly
improved operating profit in 2021.
UK & Ireland
UK & Ireland sales were well ahead of 2020 reflecting an improved trading
environment following significant COVID-19 disruption in 2020. Operating
profit was also significantly ahead due to improved volumes across all
product lines but also assisted by cost saving and restructuring initiatives
which commenced in 2020. Significant pricing actions were undertaken
in the second half of the year to offset input cost inflation, which also
contributed to the strong 2021 performance.
Europe North
Despite prolonged winter weather, demand in Europe North (Finland,
Germany and Switzerland) improved as the year progressed. Cement
and lime volumes were ahead of 2020 which, combined with strong price
increases, resulted in increased sales. Europe North experienced significant
energy cost inflation, particularly in the second half, but additional pricing
actions and a continued focus on cost saving initiatives resulted in operating
profit well ahead of 2020 levels.
Europe West
Europe West (France, Benelux, Denmark and Spain) delivered a good
trading performance with higher cement volumes combined with continued
pricing progress across all markets. France in particular experienced a
strong recovery as a result of improved underlying trading conditions which,
together with significant cost saving actions implemented in 2020, have
resulted in like-for-like operating profit well ahead of 2020. Our precast
operations also delivered sales and operating profit ahead of 2020 despite
experiencing significant raw material and energy cost inflation. Overall,
continued cost saving actions and commercial initiatives resulted in
operating profit well ahead of 2020.
2
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
3
2022 Annual Report and Form 20-F Current Year 20223
Results
$ million
Sales revenue
EBITDA (as defined)*
Operating profit
EBITDA (as defined)*/sales
Operating profit/sales
Analysis of change
2021
Exchange Acquisitions Divestments
Organic
2022
% change
10,581
-1,151
+107
-157
-79
+8
+1
1,410
814
13.3%
7.7%
-44
-4
-2
+1,083
10,576
+100
+90
1,357
824
12.8%
7.8%
—%
-4%
1%
Europe East
Sales in Europe East (Poland, Ukraine, Romania, Hungary, Slovakia, Serbia,
and Croatia) were ahead of prior year due to a strong focus on commercial
actions to offset significant cost inflation. Poland, in particular, delivered
sales and operating profit strongly ahead of 2021. Activity levels in Ukraine
were impacted by the ongoing conflict and we continue to prioritise the
support of our employees during this challenging time. Total operating profit
in Europe East was behind prior year.
Asia
Sales in the Philippines ended the year behind 2021. Construction activity
was impacted by a pre-election ban on construction and high cost
inflation which slowed large infrastructure project activity. Price increases
largely offset weaker volumes; however, operating profit was impacted
by high energy and transportation costs which resulted in operating profit
significantly below 2021.
CRH's operations include a 26% stake in Yatai Building Materials (reported
within the Group’s share of equity accounted investments) in China where
the government’s COVID-19 restrictions impacted many areas of the
economy, including the construction sector. This resulted in sales and
operating profit below 2021.
Europe Materials benefited from commercial management initiatives across
all countries, which, along with a continued focus on cost savings, helped
to mitigate significant energy and other input cost inflation, as well as
the impact of the conflict in Ukraine. Like-for-like sales were 11% ahead
reflecting continued strong pricing progress which offset the impact of lower
activity levels. In 2022, EBITDA (as defined)* was $1.4 billion, 8% ahead on
a like-for-like basis and operating profit was $0.8 billion, 12% ahead like-for-
like. Unfavourable currency translation effects resulted in total sales in line
with 2021, EBITDA (as defined)* -4% behind 2021, and operating profit 1%
ahead.
UK & Ireland
UK & Ireland sales and operating profit were well ahead of 2021 driven by
strong pricing and ongoing performance optimisation initiatives. In the UK,
aggregates and asphalt volumes were behind prior year due to lower paving
activity, while readymixed concrete volumes benefited from an increase
in project activity. Ireland primarily benefited from improved construction
activity and pricing progress.
Europe North
Sales in Europe North (Finland, Germany and Switzerland) were in line with
2021 driven mainly by price increases which offset lower volumes, and a
strong performance in our lime business. Like-for-like operating profit ended
ahead of 2021 as improved pricing and cost savings actions compensated
for an inflationary and volatile energy cost environment.
Europe West
Europe West (France, Benelux, Denmark and Spain) delivered sales slightly
below 2021 due to softening volumes. Higher raw materials, energy and
freight costs in all countries were offset by higher pricing, which, along with
continued cost saving actions and commercial initiatives, saw like-for-like
operating profit ahead of 2021.
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 80
Audit Committee Report
Our Audit Committee
Chairman, Shaun Kelly,
provides an overview and
insight into the workings
of, and principal matters
considered by, the Audit
Committee in 2022,
including the Group’s
reporting on climate-related
risks which was a particular
area of focus in 2022.
Nomination & Corporate
Governance Committee
Report
Our Chairman, Richie
Boucher, summarises
the areas of focus for the
Nomination & Corporate
Governance Committee
during 2022, including
Board composition and
renewal (including diversity),
Board Committee
composition and
responsibilities, and
executive Director
succession planning.
Read the Audit Committee Report on page 92
Read the Nomination & Corporate Governance
Committee Report on page 98
Governance
Board of Directors
82
Global Leadership Team 86
Governance Framework 87
Chairman’s Introduction 88
Audit Committee Report 92
Nomination & Corporate
Governance Committee Report
98
Safety, Environment & Social
Responsibility Committee Report 104
Directors’ Remuneration Report 108
Directors’ Report 134
Principal Risks and Uncertainties 139
Safety, Environment &
Social Responsibility
Committee Report
Directors'
Remuneration Report
Our SESR Committee
Chairman, Mary Rhinehart,
provides an update on the
remit and focus of the
SESR Committee during
2022, including updates
on topics such as Safety,
Purpose, I&D and employee
engagement, as well as
CRH’s 2030 sustainability
targets and decarbonisation
roadmap.
Our Remuneration
Committee Chairman,
Lamar McKay, introduces
the remuneration policy
updated and approved
by shareholders in 2022,
and the Annual Report
on Remuneration, which
contains details of CRH's
remuneration arrangements
and related disclosures.
Read the SESR Committee Report on page 104
Read the Directors' Remuneration Report
on page 108
82
2022 Annual Report and Form 20-F
Board of Directors
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
Richie Boucher
Chairman
Albert Manifold
Chief Executive
Appointed to the Board: March 2018
Nationality: Irish Age: 64
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.
Committee membership:
ADF (Chair); NCG (Chair); REM; and
SESR
Appointed to the Board: January
2009
Nationality: Irish Age: 60
Skills and experience:
Albert joined CRH in 1998. Prior to
joining CRH, he was Chief Operating
Officer with a private equity group.
While at CRH he has held a variety
of senior positions, including Finance
Director of the Europe Materials
Division, Group Development
Director and Managing Director of
Europe Materials. He became Chief
Operating Officer in January 2009
and was appointed Group Chief
Executive with effect from 1 January
2014.
Qualifications: FCPA, MBA, MBS.
External appointments:
Listed: Non-executive Director of
LyondellBasell Industries N.V., one
of the largest plastics, chemicals and
refining companies in the world.
Non-listed: Not applicable.
Committee membership:
ADF and SESR
Jim Mintern
Chief Financial Officer
Appointed to the Board: June 2021
Nationality: Irish Age: 55
Skills and experience:
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 several
senior positions across the Group,
including Country Manager for
Ireland, Managing Director of each
of the Western and Eastern regions
of our Europe Materials Division and
Chief of Staff to the Chief Executive.
He was appointed to the Board and
became Chief Financial Officer with
effect from 1 June 2021.
Qualifications: Fellow of Chartered
Accountants Ireland; Bachelor of
Commerce from University College
Dublin.
External appointments
Listed: Not applicable.
Non-listed: Not applicable.
Committee membership:
ADF
Lamar McKay
Senior Independent Director
Appointed to the Board: December
2020
Nationality: United States Age: 64
Skills and experience:
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 Organization and Chief
Executive Officer for BP’s worldwide
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 Chairman of
APA Corporation.
Non-listed: Not applicable.
Committee membership:
ADF; NCG; REM (Chair); and SESR
Board Committees
Acquisitions, Divestments
and Finance Committee
ADF
Audit Committee
Nomination & Corporate
Governance Committee
AUDIT
NCG
Remuneration Committee REM
Safety, Environment &
Social Responsibility
Committee
SESR
82
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Caroline Dowling
Non-executive Director
Richard Fearon
Non-executive Director
Johan Karlström
Non-executive Director
Appointed to the Board: September
2019
Nationality: Swedish Age: 66
Skills and experience:
Johan was President and Chief
Executive Officer of Skanska AB, a
leading multinational construction
and project development company
until 2017. Over a thirty-year career
with Skanska, he held a variety
of leadership roles in Europe and
America, before becoming President
and Chief Executive in 2008. He
also served as President and Chief
Executive Officer of BPA (now
Bravida), a listed mechanical and
installation group from 1996 to 2000.
Qualifications: Masters degree in
Engineering from the KTH Royal
Institute of Technology, Sweden.
External appointments:
Listed: Not applicable.
Non-listed: Non-executive Director of
Nimlas AB.
Committee membership:
ADF; REM; and SESR
Appointed to the Board: March 2021
Nationality: Irish Age: 55
Skills and experience:
Caroline was, until her retirement in
February 2018, a Business Group
President of Flex, an industry
leading Fortune 500 company, with
operations in 30 countries. In this
role she led the Telecommunications,
Enterprise Compute, Networking
and Cloud Data Centre and was
also responsible for managing the
Global Services Division, supporting
complex supply chains. Prior to
this, Caroline held a range of senior
executive roles in Flex, including
responsibility for development &
strategy, marketing, retail & technical
services and global sales.
External appointments:
Listed: Non-executive Director of
DCC plc and IMI plc.
Non-listed: Non-executive Director
of Orion SCM, Inc., a US-based
software firm.
Committee membership:
ADF; REM; and SESR
Appointed to the Board: December
2020
Nationality: United States Age: 66
Skills and experience:
Richard was, until March 2021, the
Vice Chairman and Chief Financial
and Planning Officer of Eaton
Corporation plc, a global power
management company, roles he held
since 2009 and 2002, respectively.
He had 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. Prior to joining
Eaton, he worked at several large
diversified companies, including
Transamerica Corporation, NatSteel
Ltd, and The Walt Disney Company.
He also served as a management
consultant with Booz Allen &
Hamilton and The Boston Consulting
Group.
Qualifications: Bachelor of Arts in
Economics from Stanford University;
Masters of Business Administration
from Harvard Business School; and
a Juris Doctor from Harvard Law
School.
External appointments:
Listed: Non-executive and Lead
Director of Avient Corporation;
non-executive Director of Crown
Holdings, Inc and non-executive and
Lead Director of Hennessy Capital
Investment Corp. VI.
Non-listed: Not applicable.
Committee membership:
ADF; AUDIT*; and SESR
*Audit Committee Financial Expert as
determined by the Board
Shaun Kelly
Non-executive Director
Appointed to the Board: December
2019
Nationality: Dual Irish & United States
Age: 63
Skills and experience:
Shaun was until September 2019,
the Global Chief Operating Officer of
KPMG International, where he was
responsible for the execution of the
firm’s global strategy and for the
delivery of various global initiatives.
Over a thirty-year career with KPMG,
the majority of which was spent in
the US, he held a variety of senior
leadership positions, including
Partner in Charge, US Transaction
Services (2001 to 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.
Committee membership:
ADF; AUDIT* (Chair); and REM
*Audit Committee Financial Expert as
determined by the Board
84
84
2022 Annual Report and Form 20-F
2022 Annual Report and Form 20-F
Board of Directors continued
Overview
Overview
Strategy
Strategy
Report
Report
Business Performance
Business Performance
& Segmental Reviews
& Segmental Reviews
Governance
Governance
Financial
Financial
Statements
Statements
Supplemental 20-F
Supplemental 20-F
Shareholder
Shareholder
and Other Disclosures
and Other Disclosures
Information
Information
Badar Khan
Non-executive Director
Gillian L. Platt
Non-executive Director
Mary K. Rhinehart
Non-executive Director
Siobhán Talbot
Non-executive Director
Appointed to the Board: October 2021
Nationality: Dual British & United States
Age: 51
Skills and experience:
Badar is currently a Senior Advisor with
Global Infrastructure Partners, a leading
global independent infrastructure fund
manager. He was, until June 2022,
President of National Grid US, a major
business segment of the leading energy
transmission and distribution company,
National Grid plc. Prior to this, he
held a variety of roles in National Grid,
including responsibility for strategy and
innovation. Before joining National Grid
he worked at Centrica plc (2003 to
2017), a leading international energy
services and solutions company, where
he held a variety of senior executive
positions in the UK and US, and
has prior experience in marketing,
consulting and project management.
Qualifications: Bachelor of Engineering
from Brunel University and an MBA
from The Wharton School of the
University of Pennsylvania.
External appointments:
Listed: Non-executive Director of EVgo
Inc.
Non-listed: Not applicable.
Committee membership:
AUDIT and SESR
Appointed to the Board: January 2017
Nationality: Canadian Age: 69
Skills and experience:
During the course of her executive
career, Gillian 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 of
Interfor Corporation, a Canadian listed
company, which is one of the world’s
largest providers of lumber.
Non-listed: Not applicable.
Committee membership:
NCG; REM; and SESR
Appointed to the Board: October 2018
Nationality: United States Age: 64
Skills and experience:
Mary is non-executive Chairman of
Johns Manville Corporation, a Berkshire
Hathaway company, which is a leading
global manufacturer of premium-quality
building products and engineered
speciality materials. Over nearly 40
years with Johns Manville she has
held a wide range of global leadership
roles, encompassing responsibility for
business management and strategic
business development and was also
Chief Financial Officer. Mary was
formerly 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: Non-executive Director of
Graphic Packaging Holding Company.
Non-listed: Non-executive Chairman
of Johns Manville Corporation; and
member of the Board of Trustees of the
University of Denver.
Committee membership:
NCG; REM; and SESR (Chair)
Appointed to the Board: December
2018
Nationality: Irish Age: 59
Skills and experience:
Siobhán is Group Managing Director
of Glanbia plc, a global nutrition
company with operations in 32
countries, a position she has held
since 2013. She has been a member
of the Glanbia Board since 2009 and
was previously Finance Director, a role
which encompassed responsibility
for Glanbia’s strategic planning. Prior
to joining Glanbia, she worked with
PricewaterhouseCoopers in Dublin and
Sydney.
Qualifications: Fellow of Chartered
Accountants Ireland; Bachelor
of Commerce; 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).
Committee membership:
ADF; AUDIT*; and NCG
*Audit Committee Financial Expert as
determined by the Board
Board Committees
Acquisitions, Divestments
and Finance Committee
ADF
Audit Committee
Nomination & Corporate
Governance Committee
AUDIT
NCG
Remuneration Committee REM
Safety, Environment &
Social Responsibility
Committee
SESR
84
84
2022 Annual Report and Form 20-F
2022 Annual Report and Form 20-F
Overview
Overview
Strategy
Strategy
Report
Report
Business Performance
Business Performance
& Segmental Reviews
& Segmental Reviews
Governance
Governance
Financial
Financial
Statements
Statements
Supplemental 20-F
Supplemental 20-F
and Other Disclosures
and Other Disclosures
Shareholder
Shareholder
Information
Information
Membership of CRH Board (as at 31 December 2022)
Table 1
Independence (determined by CRH Board
annually)
17%
Tenure of Non-executive Directors
40%
60%
83%
■ Independent ■ Non-Independent
■ 0-3 years ■ 3-6 years
Geographical Spread (by residency)
42%
50%
8%
■ N. America
■ Mainland Europe
■ Ireland
Ethnicity (based on information provided by Directors
in line with the Parker Review)
8%
92%
■ White ■ Asian
Gender Diversity
Percentage of Female Directors at 31 December
33%
67%
■ Male ■ Female
23%29%33%30%38%42%42%33%33%201420152016201720182019202020212022
Overview
Overview
Strategy
Strategy
Report
Report
Business Performance
Business Performance
& Segmental Reviews
& Segmental Reviews
Governance
Governance
Financial
Financial
Statements
Statements
Supplemental 20-F
Supplemental 20-F
Shareholder
Shareholder
and Other Disclosures
and Other Disclosures
Information
Information
86
86
2022 Annual Report and Form 20-F
2022 Annual Report and Form 20-F
Global Leadership Team
Albert Manifold
Chief Executive
Biography on page 82.
Nathan Creech
President,
Americas Division
Isabel Foley
Group General Counsel
Skills and experience
Skills and experience
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 and President of our new Americas Division
in January 2023.
Qualifications: BS (Business), MBA.
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 mediator.
Qualifications: BCL, Law Society of Ireland, CEDR
Accredited Mediator.
Jim Mintern
Chief Financial Officer
Biography on page 82.
Randy Lake
Chief Operating Officer
David Dillon
President,
Europe Division
Juan Pablo San Agustín
Group Executive, Group
Strategic Planning,
Innovation and Venturing
Skills and experience
Skills and experience
Skills and experience
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 and Group Executive, Strategic Operations
from 2020 to 2021. 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.
David joined CRH in 1998 in the United States where
he was Controller for the Americas Materials Division,
and he returned to Europe in 2003 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, Managing
Director of Europe Lightside, Divisional President of
Europe Lightside & Distribution, President Global
Strategy & Business Development and Executive Vice
President, Chief of Staff. Prior to joining CRH he held
various financial roles in the airline industry. He was
appointed to his current position in January 2023.
Qualifications: BS (Business Administration), MBA.
Qualifications: BComm, FCA.
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.
Bob Feury, Jr.
Chief Culture and People
Officer
John Lydon
Director of Development
Skills and experience
Skills and experience
Bob joined CRH in 1996 with the acquisition of his
family’s business, Allied Building Products, which later
became Americas Distribution. Upon the divestment of
Americas Distribution in 2018, he served as Executive
Vice President of Strategy and Development for CRH’s
Building Products Division. In 2023, Bob joined CRH’s
Executive Team on his appointment as Chief Culture
& People Officer (CCPO), a new role established to
elevate strategic focus on culture and people.
Qualifications: BS (Finance and Financial Management).
John joined CRH’s Executive Team in November 2022,
in the new role of Director of Development, reporting
to the Group Chief Executive. John spent over 20
years in the investment banking industry, working with
leading corporates in Europe, Asia and North America
with JPMorgan and Deutsche Bank covering M&A,
capital markets and strategic advisory. Immediately
prior to CRH, he was Head of Capital Markets at Davy,
Ireland’s largest wealth manager and corporate advisor.
Qualifications: BA (Business and Legal Studies), MA
(Finance).
86
86
2022 Annual Report and Form 20-F
2022 Annual Report and Form 20-F
Overview
Overview
Strategy
Strategy
Report
Report
Business Performance
Business Performance
& Segmental Reviews
& Segmental Reviews
Governance
Governance
Financial
Financial
Statements
Statements
Supplemental 20-F
Supplemental 20-F
and Other Disclosures
and Other Disclosures
Shareholder
Shareholder
Information
Information
Governance Framework
Board of Directors
Collectively responsible for promoting the long-term sustainable success of the Group, generating value for shareholders and
contributing to wider society. Its role is to provide leadership; to establish and monitor the Group’s purpose, values and strategy;
to set the Group’s risk appetite and ensure that there is a robust framework of prudent and effective controls to enable risks and
opportunities (including those related to climate change) to be assessed and managed; and to ensure that there is effective dialogue
with shareholders and stakeholders on all relevant matters.
Our purpose
Our strategy
See pages
6 to 7
See pages
11 to 59
Our principal risks
& uncertainties
See pages
139 to 148
Our stakeholder
engagement processes
See pages
44 to 45
Our key Board
activities during 2022
See pages
88 to 132
The Board has established five permanent Committees to assist in the execution of its responsibilities.
The terms of reference of each Committee are available on the CRH website, www.crh.com
Audit
Committee
Safety, Environment
& Social Responsibility
Committee
Nomination &
Corporate Governance
Committee
Remuneration
Committee
Supports the Board
by providing
governance and oversight
of the Group’s financial
reporting and monitoring
and assessing the
Group’s risk management
and internal control
systems.
Supports the Board by
monitoring and assessing
performance in the areas
of safety, climate change
and sustainability and
inclusion & diversity.
Supports the Board by
monitoring the Board's
structure, size,
composition and balance
of skills to ensure that the
Board can meet its
strategic objectives and
regulatory responsibilities.
It is also responsible for
monitoring corporate
governance developments
and, with effect from
January 2023, human
capital management and
employee engagement.
Supports the Board
by setting and ensuring
that the Group’s
Remuneration Policies
are fair and responsible
and that they incentivise
and retain talent.
The Committee also
approves the
remuneration packages
for the Executive
Directors, senior
executives and the
Chairman.
Acquisitions,
Divestments & Finance
Committee
Supports the Board by
reviewing the strategic
rationale and impact of
proposed acquisitions,
divestments, large
capital expenditure
projects and advising
the Board on the
financial requirements of
the Group and on
appropriate funding
arrangements.
See pages 92 to 97
See pages 104 to 105
See pages 98 to 99
See pages 108 to 132
See the
Governance Appendix
The Board has delegated responsibility for the management of the Group, through the Chief Executive, to executive management
Chief Executive
The Chief Executive has responsibility for full day-to-day operational and profit performance of the Group and accountability to the Board
for all authority delegated to executive management. He is also responsible for executing strategy agreed with the Board and reporting
regularly on the progress and performance of the Group, including in relation to climate-related matters.
See pages 14 to 15
The Global Leadership Team supports the Chief Executive in executing his responsibilities
Global Leadership Team
The Global Leadership Team is responsible for pursuing performance delivery and progressing
the Group’s integrated solutions and climate-related strategy agenda.
Members
Our Business Model
Our Performance
See page 86
See pages 20 to 21
See pages 62 to 79
Our Sustainability
Strategy
See pages 22 to 59
Our Principal Risks
& Uncertainties
See pages 139 to 148
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
88
2022 Annual Report and Form 20-F
Corporate Governance Report
Richie Boucher
Introduction
This section of the Annual Report provides an overview of the way in which
your Board and its Committees operated in the past year, highlights the
primary areas of focus and outlines the way in which the principles of the
2018 UK Corporate Governance Code (the "2018 Code") are implemented.
CRH’s general governance practices are detailed in the governance
appendix on CRH’s website, www.crh.com (the ‘Governance Appendix’)1.
Our People
The success of CRH derives from the efforts, expertise and collaboration
of the c.75,800 people who work for the Company. Accordingly, the Board
and management are committed to building a safe, inclusive and diverse
organisation.
During 2021, CRH conducted an organisational health survey across its
businesses, which highlighted an overall good performance and identified
areas for improvement. Action plans in line with these areas were developed
and implemented. In the last quarter of 2022, a pulse survey was issued to
broadly the same population to ascertain progress on the areas identified
for improvement. There was a 76% response rate to the survey, which
was very encouraging. All organisational health areas where improvements
had been focused showed improvement. In terms of inclusion practices,
there was a range of trends. In order to understand the underlying drivers
of those trends tailored focus groups of employees will be set up. In
addition, as outlined in the Directors' Remuneration Report on page 108,
an improvement in CRH’s Inclusion Assessment, based on an externally
validated Enterprise Score from engagement surveys, was included as a
metric in our long-term incentive plans.
Also during 2022, led by members of the SESR Committee, we continued
our process of direct employee engagement through an in-person
discussion with a cross-section of local employees in Houston, Texas
during a Board visit. This was supplemented by separate virtual sessions
with employees from across our European and Americas businesses.
On behalf of the Board, I would like to take the opportunity to thank
those employees who engaged openly with us on their experiences and
perspectives of CRH across a broad range of topics, including:
"The Board is responsible for setting the Group’s
strategy. Each year the Board focuses on a
number of key strategic topics for in depth
review. In the past year the main areas of focus
were on our solutions strategy, innovation and
sustainability."
Richie Boucher
Chairman
Governance Appendix - Further Information
Further general information in relation to the following Board-related
governance practices is contained in the Governance Appendix:
• safety;
• CRH’s culture;
• the operation of the Board
• the respective responsibilities of the Chairman, Chief Executive,
Senior Independent Director and non-executive Directors
• how the Chairman is appointed
• the induction process to support newly appointed non-executive
Directors
• the processes in place for appraising the performance of Directors
and for evaluating the effectiveness of the Board and its Committees
• how often the Board meets
• the requirements for director retirements and re-election
• how Board agendas are determined
• how the Board assesses whether disclosures are fair, balanced
and understandable
• the provisions in place in relation to shareholder meetings
• the Company's Constitution
• awareness of the Code of Business Conduct and the extent to which
employees feel empowered to speak-up through the CRH Hotline or
otherwise when they have good faith concerns;
• career progression and personal development;
• performance transparency in relation to the link between individual roles
and the performance of businesses;
• the integration process for newly-acquired businesses;
• CRH’s employee benefit programmes;
• our newly articulated corporate Purpose; and
• the benefits of collaboration and innovation for employees and CRH
We also had an opportunity during these engagements to explain our
remuneration structures and the alignment of incentives with the Group's
strategic priorities. In relation to I&D, we noted that progress and many
positive improvements are becoming evident across the organisation along
with a common view that this will be a long journey.
The feedback from both the surveys and our direct engagement with
employees has enabled us to conclude that there is a positive alignment
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 50 to 54 and 139 to 148 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 101.
88
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
between our performance culture, training and career development
opportunities, our strong safety culture, our corporate Purpose, the initiatives
in place to support I&D and our strategy.
Having robust talent management processes is a vital component of
continued success. In that regard, the Board receives regular updates on
talent reviews, which provide us with detailed insights into emerging talent
within the organisation, the development programmes in place to support
individuals and the plans to close any potential gaps in role succession or
capability. We also receive regular reports on progress in relation to identified
actions and key metrics in the area of talent management such as gender and
diversity pipelines. In addition, during visits to operations in Europe and the
US, which in 2022 were to Copenhagen, Denmark and, as noted above, to
Houston, Texas, the Board had the opportunity to engage with the Divisional
and local management teams, collectively and individually. Furthermore, I had
the opportunity to attend management conferences held during the year.
Following a suggestion made in the external Board evaluation report,
conducted by Christopher Saul Associates in 2021, the outcome of which
was reported in the 2021 Annual Report, the remit of the Nomination &
Corporate Governance Committee has been expanded by the Board to
include human capital management to the extent that this is not a Board
agenda item. In line with this, and to balance more evenly the workload of
the Committees, the Board has also decided that responsibility for employee
engagement will transfer from the SESR Committee to the Nomination
& Corporate Governance Committee with effect from January 2023.
Strategy
The Board is responsible for setting the Group’s strategy. Each year the
Board focuses on a number of key strategic topics for in depth review. In the
past year the main areas of focus were on our solutions strategy, innovation
and sustainability. Further information on the Group's strategy and business
model is included on pages 11 to 59.
Solutions & Innovation
A primary area of focus for the Board over the past 12 months has been
on our accelerating solutions journey in the context of evolving construction
trends. This included leveraging the Board site visits in Copenhagen and
Houston to gain a detailed understanding of the opportunities and challenges
that arise from developing, and expanding upon, the solutions CRH currently
provides. The interaction between the execution of our solutions strategy
and our work in the area of portfolio management is outlined in the Chief
Executive’s Review on pages 14 and 15.
In 2022, the Board considered and approved a $250 million venturing and
innovation fund to identify new technologies and business models, and to
foster innovation across the organisation. The operational and governance
structures to support the fund, which will invest in internal projects and
external partnerships, have been put in place and a number of initiatives are
underway. The Board receives regular updates on the operation of the fund.
Further information on the venturing and innovation fund is contained in the
Strategy Report on page 30.
During the year, the Board also considered, and approved, an updated
organisation structure for the Group, resulting in two distinct Divisions, CRH
Americas and CRH Europe. This new structure will support CRH in taking
advantage of the opportunities resulting from the changing construction
environment while retaining the strengths of the existing model.
Sustainability
Another area of significant focus for the Board in the past year was CRH’s
decarbonisation roadmap. In particular, our industry leading absolute carbon
emissions reduction target by 2030 which is aligned with our ambition to be a
net-zero business by 2050. In early 2023, the SBTi validated that our revised
targets1 are in line with the updated 1.5oC science-based framework which
now equate to a 30% reduction in absolute carbon emissions by 2030
(from a 2021 base year).
1. Refer to page 27 for further detail on our decarbonisation targets.
Further details in relation to the Board’s oversight of CRH's sustainability
initiatives are set out in the SESR Committee Report on pages 104 and 105.
In addition, the Directors' Remuneration Report on page 110 sets out the way
in which sustainability has been integrated into CRH’s incentive plans.
Business Performance and Capital Expenditure
The Board has in place robust procedures to monitor business
performance, against approved financial budgets, and in respect of
the approval of capital expenditure projects and development activity.
Significant projects and opportunities are brought to the attention of the
Board early in the process so that the Board can provide feedback to
management prior to a formal proposal being considered. In addition,
each year the ADF Committee reports to the Board on a detailed review
of acquisitions and capital expenditure after three years of performance
following approval of the proposal. Table 2 sets out the limits which apply
to projects that can be approved by the Board, the ADF Committee and
management respectively.
Limits for Acquisitions, Divestments
and Capital Expenditure Projects
Table 2
Board
ADF
Management/CEO
>€/$100m
€/$30-100m*
<€/$30m
*For new regions the limit is €/$50 million
Dividends and Share Buybacks
The Board is responsible for setting CRH’s dividend policy and decisions
on the level and duration of the Group’s share buyback programme.
In determining our approach to shareholder distributions, we take into
consideration the views of shareholders received through the engagement
processes outlined below.
Stakeholder Engagement
During the past 12 months, supported by other Committee Chairs and
the Company Secretary as appropriate, I held meetings with shareholders
holding c.35% of CRH’s issued share capital. These meetings provided a
valuable opportunity for me to outline the Board’s priorities and perspectives
on certain matters and to ascertain shareholders' views on a wide range
of topics such as Board composition, succession planning, our strategy,
capital allocation policies, our approach to sustainability and remuneration.
The feedback from these meetings, which was broadly in line with the
Board's priorities and perspectives, was provided to the Board and relevant
Committees and factored into the Board's decision-making processes.
The Board also regularly receives detailed reports from related engagement
activities carried out by management.
As noted above, the Board has transferred responsibility for employee
engagement to the Nomination & Corporate Governance Committee from
the SESR Committee with effect from January 2023. Given the footprint of
CRH, the Board believes that having a Committee responsible for employee
engagement is the 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 feedback from employee engagement
sessions, the results from organisational health surveys and reports from
CRH’s Hotline also enable us to assess CRH’s culture.
During both Board site visits in 2022, the Board had an opportunity to
meet with, and hear directly from, customers with whom CRH is working
on large scale projects. Customer perspectives on our water, road and
urban construction solutions were also represented in our investor update
in April 2022.
We also engage with stakeholder and investor groups in relation to
sustainability matters and take their views into account when considering
the disclosures to be included in the Annual and Sustainability Reports.
90
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
Modern Slavery
Each year CRH publishes a Modern Slavery statement on the CRH website,
www.crh.com, which sets out the measures CRH and its subsidiaries have
taken during the relevant financial year to ensure that slavery or human
trafficking is not taking place within CRH’s business or its supply chains.
Our Legal & Compliance department work with our Procurement and
Sustainability teams to update the Statement annually and keep it under
review. The outcome of the review is reported to the Board, which approves
the statement for publication.
Dematerialisation of Shares
Under the EU Central Securities Depositories Regulation (EU) 909/2014
(CSDR) there is a requirement for all shares in Irish issuers to be held in
book-entry form. The period by which this transition must happen is from
1 January 2023 for new issues of shares and from 1 January 2025 for all
remaining shares. Book-entry form means an electronic record of ownership
such as an entry in an electronic register, without any further document
such as a share certificate.
In last year’s report, I noted that the Irish market was considering fully
dispensing with share certificates with effect from 1 January 2023 to
avoid potential confusion and complications that might arise in some
circumstances by having two systems running in parallel. However,
following further consideration, market participants no longer intend to
accelerate the transition. Therefore, certificated shareholders will experience
no change with respect to their existing shares in 2023 and 2024 and their
share certificates will remain valid until 2025.
Conclusion
I hope that this report and the reports from the Board’s Committees provide
shareholders with a good level of insight into the activities of the Board, the
priority areas on which we are focused and the structures in place to enable
the Board to fulfil our governance responsibilities to you.
Richie Boucher
Chairman
1 March 2023
As noted in last year’s Annual Report, following engagement with
stakeholders, we undertook a review of climate change lobbying practices
to ensure that there is an alignment between those practices and the
expectations of the Board and our stakeholders. We also published the
CRH Group Tax Strategy, which sets out the tax objectives, strategy and
governance framework of the Group, due to the increasing importance
for tax transparency across a number of different stakeholders, including
Governments, sustainability analysts and investors.
A summary of the full range in which we engage with our stakeholders,
including the main areas of interest and outcomes of the various
engagement processes in 2022, is set out on pages 44 and 45.
Board Committees
The Board has five permanent committees: the Acquisitions, Divestments
& Finance Committee, the Audit Committee, the Nomination & Corporate
Governance Committee, the Remuneration Committee and the Safety,
Environment & Social Responsibility Committee. Reports from the Chairs of
each of the main Committees are set out on pages 92 to 132.
Detailed reports of all Committee meetings are provided to the Board,
while Committee minutes and papers are available to all Board members
electronically.
The terms of reference of each Committee are available on the CRH
website, www.crh.com.
Board Training
The Board has a programme of regular training in areas such as
Compliance & Ethics and the Board’s responsibilities in respect of Market
Abuse. In addition, an extensive tailored induction programme is put in
place for newly appointed Directors.
Litigation & Compliance
The Group General Counsel regularly updates the Board on relevant legal
and compliance matters and provides reports on any material matters that
arise requiring Board decisions or detailed consideration.
External Appointments
During the year Badar Khan sought clearance to join the Board of EVgo
Inc., the largest public fast charging network for electric vehicles in the US.
Badar and the Board were satisfied that this would not impact on his time
commitment to CRH or create any conflict of interests.
Re-election of Directors
Table 7 on page 100 provides a summary of competencies, important to
the long-term success of the Group, that each Director seeking re-election
at the 2023 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 2023 AGM.
90
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
UK Corporate Governance 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:
• Board Leadership & Corporate Purpose
• Division of Responsibilities
• Composition, Succession & Evaluation
• Audit, Risk & Internal Controls
• Remuneration
As demonstrated by the disclosures in this Report and the details of CRH’s general governance practices in the Governance Appendix, CRH applied the principles
and complied with the provisions of the 2018 Code in 2022.
A copy of the 2018 Code can be obtained from the Financial Reporting Council’s website, www.frc.org.uk.
Further information on how we applied the principles, and supporting provisions, can be found as follows:
Board Leadership &
Corporate Purpose
The Board’s primary objective is to promote the long-term sustainable success of CRH. Further details on CRH’s
purpose, values and strategy, and how the Board ensures that these are aligned with CRH’s culture, including how
the Board engages with all of its stakeholders, are set out in the following sections:
• Purpose
• Strategy Report
• Engaging with our Stakeholders
• Corporate Governance Report – Chairman’s Introduction
Pages
6 – 7
11 - 59
44 - 45
88 - 90
Division of Responsibilities
The Board consists of two executive Directors and ten independent non-executive Directors (including the
Chairman). The respective responsibilities of the Board, Chairman, Chief Executive, Chief Financial Officer, Senior
Independent Director and non-executive Directors are set out in the Governance Appendix.
Governance
Appendix
Composition, Succession &
Evaluation
The Nomination & Corporate Governance Committee Report provides details on the Board renewal processes and
on the structure of the annual evaluation of the Board and its Committees. Additional details are included in the
Governance Appendix.
98 - 99
Audit, Risk & Internal
Controls
Remuneration
The Board has delegated responsibility for monitoring the effectiveness of the Group’s risk management and internal
control systems to the Audit Committee1. The Audit Committee Report describes the primary areas of focus for
the Audit Committee in 2022 and how it discharged its various responsibilities, including those in relation to the
monitoring of the Group’s risk and internal control frameworks. Additional details are included in the Governance
Appendix.
92 - 97
The Directors’ Remuneration Report describes the work of the Remuneration Committee and sets out how
executive remuneration is aligned to the Company’s purpose, values and strategy. It also describes how the
Committee considers workforce remuneration and related policies in its decision-making regarding executive
remuneration.
108 - 132
1. In accordance with Section 167(7) of the Companies Act 2014.
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
92
2022 Annual Report and Form 20-F
Audit Committee Report
Shaun Kelly
"A particular area of focus for the Committee
in its review of the 2022 Annual Report and
Form 20-F was the Group's reporting on
climate-related risks. This included the impact
on the Group's accounting judgements,
disclosures and financial statements, including
their alignment with CRH's carbon emissions
reduction targets."
Shaun Kelly
Audit Committee Chairman
Committee Members
Shaun Kelly (Chairman)
Rick Fearon
Badar Khan
Siobhán Talbot
Governance Appendix - Further Information
Further general information in relation to the following Audit
Committee related topics is contained in the Governance Appendix:
• the typical Audit Committee calendar, including agenda and attendees
• the Audit Committee's responsibility with regard to monitoring the
effectiveness of the Group's risk management and internal controls
systems
• the processes in place for safeguarding and monitoring the
independence of the external auditor
• the Group's policy on the provision of non-audit services by the
external auditor
Introduction
On behalf of the Committee, I am pleased to introduce the Audit Committee
Report for the financial year ended 31 December 2022. The purpose of this
report is to provide shareholders with an insight into the workings of, and
principal matters considered by, the Committee in 2022, together with how
the Committee has discharged its responsibilities and provided assurance
on the integrity of the 2022 Annual Report and Form 20-F.
The responsibilities of the Committee are set out in full in its Terms of
Reference, which is available on our website, www.crh.com.
The Committee has an extensive agenda which focuses on monitoring the
effectiveness of risk management within the Group as well as ensuring the
integrity of the Group’s financial reporting, that any judgements made are
appropriate, that the external auditor is effective in its role and that
the Group has an effective internal control framework. Table 3 on page
93 provides a high-level summary of the main activities of the Committee
in 2022.
Risk Management & Internal Control
During 2022, the Committee continued to monitor and assess the Group’s
ERM framework and the principal and emerging risks and uncertainties
facing the Group, including those that could threaten its business model,
future performance, solvency or liquidity. This included discussion with
both management and the external auditor, Deloitte, on the impact of
climate-related risks on the Group’s accounting judgements, disclosures
and financial statements.
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 and concluded that the Group's
internal control environment continued to be effective.
In addition, in the context of ever-evolving cyber security threats, we
continued to monitor and discuss with management the Group’s IT
governance and information security programme and the Group’s ability
to address and mitigate against evolving cyber security threats.
Further details on the Group’s risk governance and risk assessment
processes are included on pages 94 and 95 respectively. Further details
on the Group's ERM framework are included on pages 50 to 54.
Financial Reporting
A key area of responsibility and focus of the Committee each year is to
monitor the financial reporting process and the integrity of the financial
statements, and to review significant financial reporting issues and
judgements exercised in preparation thereof. Accordingly, during the past
year, the Committee spent significant time reviewing and considering the
interim and full year results statements and the 2022 Annual Report and
Form 20-F, together with supporting reports from the Group Finance
function highlighting all key estimates, judgements and disclosures made by
management. This included consideration and discussion with management
and Deloitte of the potential accounting and disclosure implications arising
from:
• the current volatile macroeconomic environment;
• the ongoing conflict in Ukraine; and
• engagement with stakeholders and relevant regulators in relation to
potential additions to the climate-related disclosures included in the
2021 Annual Report and Form 20-F
Through discussions with both management and Deloitte, we also reviewed
management's impairment testing methodology and processes, including
key judgement areas, assumptions and alignment with our carbon emissions
reduction targets, 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
testing process for 2022 are outlined in Table 5 on page 97.
92
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
A particular area of focus for the Committee in its review of the 2022
Annual Report and Form 20-F was the Group's reporting on climate-related
risks. This included the impact on the Group's accounting judgements,
disclosures and financial statements, their alignment with CRH's carbon
emissions reduction targets, and its approach with regard to compliance
with the recommendations of various regulatory bodies, the TCFD and EU
Taxonomy requirements. We received a number of specific climate-related
updates from management during 2022 and reviewed the climate-related
disclosures, including the TCFD and EU Taxonomy disclosures included
within the 2022 Annual Report and Form 20-F, and agreed that these are
appropriate and that the assumptions used in the financial statements were
consistent with these disclosures.
We also considered and discussed with management and Deloitte various
accounting and reporting changes that impacted on the 2022 Annual
Report and Form 20-F and may impact future financial periods. This
included discussion on the implications of the changes to the Group’s
operating segments, which will be an area of focus for the Committee in
2023 (see page 193 for more details).
In addition, we reviewed the Going Concern and Viability Statements (see
page 136), including the underlying assumptions (including alignment with
the Group's carbon emissions reduction targets) and analysis to support the
statements. We found the methodology and processes to be robust and
recommended to the Board that it approve both statements.
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. 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 June 2022, we met with Deloitte to agree the 2022 external audit plan.
This included robust discussion and challenge with both Deloitte and
management on the scope, materiality thresholds and the structure of
the 2022 external audit plan. Table 5 on page 97 outlines the key areas
identified as being potentially significant and how these were addressed
during the year.
Audit Committee - Key Points
• The Audit Committee consists of four independent non-executive
Directors who bring a broad range of relevant experience and
expertise from a variety of industries
• Richard Fearon, Shaun Kelly and Siobhán Talbot have been
designated by the Board as the Audit Committee’s financial experts
• The Audit Committee met six times during 2022 in order to discharge
its duties and responsibilities, with meetings held around the financial
reporting cycle
• The Chief Financial Officer, Head of Internal Audit and representatives
of the Group’s external auditor, Deloitte, typically attend Committee
meetings, with other senior personnel (such as the Head of Group
Finance, Head of Group Risk, Chief Information Security Officer and
Head of Compliance) attending meetings to provide updates on
certain key areas of the business, as appropriate
• The Chairman of the Committee is available to all Board members to
discuss any audit or risk related issues they may have and also meets
with Deloitte and the Head of Internal Audit on a regular basis, in order
to discuss any issues which may have arisen
• Deloitte was appointed as the Group’s external auditor with effect
from 1 January 2020. Richard Muschamp is the Group’s lead audit
engagement partner
• During 2022, the Audit Committee and the Board reviewed the
operation, performance and effectiveness of the Committee and were
satisfied that the Audit Committee continues to operate effectively
Summary of Committee Activities during 2022 Table 3
Financial Reporting
External Auditors
• Recommended to the Board that it approve the interim and full year
results statements and the 2022 Annual Report and Form 20-F
• Reviewed and recommended to the Board that it approve the Going
Concern and Viability Statements (see page 136)
• Reviewed and discussed with management and Deloitte the Group's
reporting on climate-related risks, including the impact on the Group's
accounting judgements, disclosures and financial statements, including
their alignment with CRH's carbon emissions reduction targets
• Reviewed management's impairment testing methodology and
processes, including key judgement areas, assumptions and alignment
with our carbon emissions reduction targets
• Reviewed the appropriateness, prominence, definition and consistency
of Alternative Performance Measures (APMs) and Non-GAAP Measures
included in the 2022 Annual Report and Form 20-F
• Considered and discussed with management and Deloitte various
accounting and reporting changes that impacted on the 2022 Annual
Report and Form 20-F and which may impact future financial periods
• Discussed with management and Deloitte the potential implications of
the changes to the Group's operating segments during the first quarter
of 2023
• Approved the remuneration of Deloitte in respect of the 2022 financial
year (see note 5 of the Consolidated Financial Statements on page 197)
• Having received confirmation of their willingness to continue in office,
recommended to the Board Deloitte's continuance in office for the
2023 financial year. Their continuance will be subject to a non-binding
advisory vote at the 2023 AGM
Internal Audit
• Approved the Internal Audit Charter and audit plan for 2022
• Received regular updates from the Head of Internal Audit on the delivery
of the 2022 internal audit plan
• Considered and approved the Internal Audit Strategy for the 5-year
period 2023 to 2027
Risk Management & Internal Controls
• Reviewed an assessment by management of the effectiveness 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
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
94
2022 Annual Report and Form 20-F
Risk Governance
Ultimately responsible for strategy, risk and governance across CRH. Sets the risk appetite and
ensures risks are being managed within appetite. Delegates responsibility to the Audit Committee.
Board of Directors
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.
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.
Global Leadership Team
Risk 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, such
as health and safety, climate and
information security.
Regional Leadership
Risk Champion Network
Responsible for identifying and managing
divisional risks, ensuring risk management
frameworks are operating effectively and
capturing upside of risk, where possible.
Embedded across businesses, functions and
divisions. Responsible for integration of risk
management frameworks, regular reporting of
risks and sharing best practice mitigation.
First Line of Defence
Second Line of Defence
Third Line of Defence
Operating company/business leaders
are responsible for risk identification,
management and ensuring that the
control environment is robust.
CRH has various oversight functions
which are responsible for providing
subject matter expertise, defining
standards and ensuring adherence.
Group Internal Audit provides
independent assurance over the
control environment on a continuous
basis.
94
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
96
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
External Auditor - continued
Conclusion
We met with Deloitte at each Committee meeting during 2022 to monitor
progress in relation to the 2022 external audit plan and to discuss and
consider their views on various matters, including:
•
•
•
the appropriateness of the Group’s accounting practices and policies;
the key estimates, judgements and disclosures made by management;
and
evolving regulatory requirements and other corporate governance
developments
In February 2023, we received and considered a report from Deloitte on its
key audit findings, including the key risks and significant areas of judgement,
prior to making a recommendation to the Board in relation to the approval
of this 2022 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
the Governance Appendix.
Non-Audit Services
In order to ensure auditor independence and objectivity, we have adopted
a policy which sets out the types of permitted and non-permitted non-audit
services and those which require explicit prior approval. In 2022 Deloitte
provided a number of audit services, including Sarbanes-Oxley Section 404
attestation. Deloitte was also engaged during 2022 on a limited number of
non-audit services mainly in relation to potential divestments, as well as to
provide 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 2022, which amounted to $1.6 million and represented c.7% of
the total audit 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 197 (see also Table 4).
Internal Audit
In December 2021, the Committee received and approved the Internal
Audit Charter and audit plan for 2022. During the year, we received regular
updates from the Head of Internal Audit on the delivery of the 2022 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.
During 2022, the Committee also considered and approved the proposed
Internal Audit strategy for the next five years, which included detailed
consideration of the focus, structure and resources required by the Internal
Audit function.
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.
I would like to thank my fellow Committee members for their commitment
and input to the work of the Committee during 2022.
Looking ahead to 2023, the Committee will continue to focus on the key
ongoing areas outlined in Table 3 on page 93, and will also continue to
monitor and assess the potential impact of the principal and emerging risks
and uncertainties (including climate change) on the Group's Consolidated
Financial Statements.
Shaun Kelly
Chairman of Audit Committee
1 March 2023
Percentage of Audit and Non-audit Fees
Table 4
2020
1%
2021
99%
9%
2022
7%
91%
93%
■ Audit fees
■ Non-audit fees
96
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Areas Identified for Focus during 2022 External Audit Process Table 5
Impairment of Goodwill
Contract Revenue Recognition
For the purposes of its annual impairment testing process, the Group assesses the recoverable amount of each of
CRH's cash-generating units (CGUs—see details in note 14 to the Consolidated Financial Statements) based on a
value-in-use computation. The annual goodwill impairment testing was conducted by management, and papers outlining
the methodology and assumptions used in, and the results of, that assessment were presented to the Committee. This
included review of key judgement areas and assumptions such as CGU determination, discount rates, growth rates,
alignment with the Group's carbon emissions reduction targets and the impact of the ongoing conflict in Ukraine on our
Ukrainian business. 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 14, were
appropriate.
As outlined in note 14, no impairment charge was recorded in 2022 (2021: $nil).
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, recognising that the majority of contracts were completed within one year, the
Committee was satisfied that the recognition of contract revenue (including the associated disclosures) was appropriate
for the Group in 2022.
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
98
2022 Annual Report and Form 20-F
Nomination & Corporate Governance Committee Report
Richie Boucher
Image placeholder
"A primary area of focus for Board renewal over
the last year was identifying potential candidates
who would further enhance the Board's
experience in capital intensive industries of a
scale and scope similar to CRH, and in meeting
the challenges of, and unlocking the value from,
the transition to a low-carbon environment,
while also enhancing diversity on the Board."
Richie Boucher
Nomination & Corporate Governance
Committee Chairman
Committee Members
Richie Boucher (Chairman)
Lamar McKay
Gillian L. Platt
Mary K. Rhinehart
Siobhán Talbot
Governance Appendix - Further Information
Further general information in relation to the following
governance-related topics is contained in the Governance Appendix:
• the operation of the Nomination & Corporate Governance Committee
• how the Board plans for succession
• the criteria used to determine the independence of non-executive
Directors
• the tenure of non-executive Directors
• the responsibilities delegated to the Committee by the Board
Introduction
The Nomination & Corporate Governance Committee consists of five
non-executive Directors, considered by the Board to be independent. The
biographical details of each member are set out on pages 82 to 84. The
Chief Executive normally attends meetings of the Committee.
This report to shareholders summarises the areas of focus for the
Committee over the course of the last year, which were primarily: Board
composition and renewal, including diversity; Board Committee composition
and responsibilities; and executive Director succession planning.
Board Composition, Renewal and Diversity
The Board currently comprises two executive Directors and 10
non-executive Directors. Following considerable refreshment over the past
number of years, four non-executive Directors have been appointed in the
last three years, while six have between three and six years’ experience on
the Board.
As can be seen from the biographies of each Director on pages 82 to 84
and the Tables outlining the Board’s composition and competencies on
pages 85 and 100, your Board is diverse in terms of skills and experience,
age, gender and ethnicity. 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.
A primary area of focus for Board renewal over the last year has been on
identifying potential candidates who would further enhance the Board's
experience in capital intensive industries of a scale and scope similar to
CRH, and in meeting the challenges of, and unlocking the value from, the
transition to a low-carbon environment, while also enhancing diversity on
the Board.
Gender diversity on the Board, which has recently fallen below the year
end levels of 2019 and 2020 when more than 40% of the Board was
composed of women, continues to be a core criterion when providing
role specifications to external agents engaged to identify candidates for
consideration by the Committee. The Board's policy on diversity in respect
of director appointments is set out on page 99. Details of Board gender and
ethnicity are set out on page 85.
The Nomination & Corporate Governance Committee and the SESR
Committee work collectively with management on the I&D agenda at below
Board level across CRH and monitor progress against agreed Group
objectives and targets such as the Board’s target of having a minimum of
33% of senior leaders being women by 2030. Details of the current gender
balance across the Group, including of the senior leadership team and their
direct reports, is set out on page 1.
Board Committee Composition and Responsibilities
The Board appointed Mary Rhinehart as Chairman of the SESR Committee
during the year. Mary’s report on the operation of the SESR Committee is
set out on pages 104 and 105. Other changes to committee composition
during the year are set out in Table 6 on page 99.
As outlined in the introduction to the Corporate Governance Report, the
Board has extended the remit of the Nomination & Corporate Governance
Committee to include oversight of CRH’s human capital management. In
addition, responsibility for employee engagement has been transferred
to the Nomination & Corporate Governance Committee from the SESR
Committee with effect from January 2023.
98
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Summary of Committee Composition changes Table 6
Name
R. Fearon
L. McKay
Chairman
Joined
SESR
Ceased
Audit
In advance of the completion of my initial three-year term as Chairman
at the 2023 AGM, the Senior Independent Director engaged with my
colleagues on the Board, individually and collectively, to ascertain whether
the Board wished me to continue in the role. The Senior Independent
Director also chaired this Committee when it considered this issue. I am
delighted to have been invited to serve for a further three years and have
accepted, subject, of course, to my continued annual re-election to the
Board by shareholders.
Senior Independent Director
During the year, following a recommendation from the Committee, the
Board appointed Lamar McKay as Senior Independent Director in place of
Gillian Platt who had held the position since 2018. The responsibilities of the
Senior Independent Director are set out in the Governance Appendix.
Executive Director Succession Planning
A priority of the Board and the Committee over the past number of years
has been enhancing our long-term succession planning for the executive
Directors and this is typically an agenda item at each meeting of the
Committee and most Board meetings.
Whilst our Chief Executive, Albert Manifold, has a contract of employment
currently until age 62 and no decisions have been taken in relation to the
timing of succession for this role or potential candidates, the Committee
has continued to support the Board in relation to the long-term process of
planning for Chief Executive succession. Working in the context of a number
of planning scenarios, development programmes for potential internal
candidates, which are supported by Egon Zehnder1, are in place and
external candidate pools are regularly reviewed. Emergency arrangements
are also in place for unexpected events.
Internal Board Evaluation
The Senior Independent Director undertook an internal Board performance
evaluation, which built upon the findings of the externally facilitated
evaluation conducted in 2021. The process, which included consideration
of Board dynamics, composition and diversity, the relationship between
management and the Board and areas of focus from a non-executive
Director perspective, involved a series of one to one meetings, with a report
of the feedback being considered by the Board. A number of suggestions
were included in the report, including in relation to board composition
priorities, strategic topics for in depth review, succession planning, agenda
structures and meeting pre-read materials.
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, where appropriate.
Policy on Board 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
Director roles:
• International business experience, particularly in the regions in which
the Group operates or into which it intends to expand;
• Skills, knowledge and expertise (including education or professional
background) in areas relevant to the operation of the Board;
• Diversity in all aspects, including nationality, gender, social and ethnic
backgrounds, cognitive and personal strengths; and
• The need for an appropriately sized Board
During the ongoing process of Board renewal, each, or a combination,
of these factors can take priority. To date, the Board has not set any
policy regarding age. The ages of the Directors range from 51 to 69,
which the Nomination & Corporate Governance Committee believes is
appropriate at the current time.
Non-executive Director Appointment Process
• Non-executive Director recruitment processes are supported by an
external recruitment agent
• A skills matrix is maintained to identify particular skills that would
enhance the Board or which might need to be replaced following
planned Board retirements
• Potential candidate lists are collated based on specifications agreed
following input from the Nomination & Corporate Governance
Committee
• The Nomination & Corporate Governance Committee reviews
candidate lists and selects individuals for interview
• Once a preferred candidate is identified other members of the Board
are invited to meet with them prior to formal consideration of their
appointment to the Board
Pre-emption Rights
The Pre-emption Group in the UK published a revised statement of
principles on the disapplication of pre-emption rights in November 2022,
which increased the guideline threshold for annual pre-emption rights
authorities from 10% to 20% of the issued share capital, with some
additional flexibility for follow up offers of up to a maximum of an additional
4% in certain circumstances. Having considered the matter, the Committee
recommended to the Board that it seek a pre-emption authority of up to
a maximum of 10% of the issued share capital at the 2023 AGM, which is
in line with the authorities received in prior years. The Committee will keep
under review evolving best practice and shareholders' perspectives in this
area. Further details on the authorities to be sought at the 2023 AGM are
set out in the Directors' Report on page 137.
Richie Boucher
Chairman of the Nomination &
Corporate Governance Committee
1 March 2023
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.
100
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
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
(including climate
change)
Strategy
Global
Experience
R. Boucher
C. Dowling
R. Fearon
J. Karlström
S. Kelly
B. Khan
A. Manifold
J. Mintern
L. McKay
G.L. Platt
M.K. Rhinehart
S. Talbot
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
▲
Attendance at Scheduled Meetings during the year ended 31 December 2022 Table 8
Name
Board
ADF (i)
Audit
Nomination (ii)
Remuneration
SESR (iii)
Total
Attended
Total
Attended
Total
Attended
Total
Attended
Total
Attended
Total
Attended
R. Boucher
C. Dowling
R. Fearon
J. Karlström (iv)
S. Kelly
B. Khan
A. Manifold
J. Mintern
L. McKay
G.L. Platt
M.K. Rhinehart (iv)
S. Talbot
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
4
5
5
5
5
5
5
5
5
2
2
1
2
2
2
2
2
2
2
2
1
2
2
2
2
2
2
6
6
6
2
6
6
6
6
2
6
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
5
4
4
2
4
4
4
4
4
4
4
4
2
4
4
4
4
4
3
(i) Acquisitions, Divestments & Finance Committee.
(ii) Nomination & Corporate Governance Committee.
(iii) Safety, Environment & Social Responsibility Committee.
(iv) Johan Karlström and Mary Rhinehart were unable to attend one scheduled meeting each during the course of 2022 due to diary conflicts.
100
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Substantial Holdings
Table 9
As at 31 December 2022, the Company had received notification of the interests outlined in the table below 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 2022
31 December 2021
31 December 2020
Holding/Voting
Rights
% at
year end
Holding/Voting
Rights
% at
year end
Holding/
Voting Rights
% at
year end
59,927,029
30,545,474
26,380,604
8.05
4.10
3.34
56,891,415
27,534,705
26,380,604
7.38
3.57
3.34
59,047,330
27,534,705
26,380,604
7.52
3.51
3.34
(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.
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 2022 are
provided in Table 9.
Stock Exchange Listings
CRH, which is incorporated in Ireland and subject to Irish company law, has
a premium listing on the London Stock Exchange (LSE), a secondary listing
on Euronext Dublin (formerly the Irish Stock Exchange) and its American
Depositary Shares are listed on the New York Stock Exchange (NYSE).
Legal and Compliance
CRH's Legal and Compliance function supports the Group in operating
consistently with its values, providing advice and guidance to executive
and operational management and working closely with them 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. CRH’s Legal and
Compliance structure comprises experienced and qualified professionals.
Operating companies exercise local Legal and Compliance oversight, and
management ensures adequate resources are in place.
Code of Business Conduct
Our culture as a company is built on our commitment to uphold the CRH
Values. At CRH, our values unite us in the way we work, every day, all
over the world. They are the foundation of our culture — they show what’s
important to us and are central to our success as a company.
At CRH, we do the right things in the right way, with respect for one another
and for the law. This has always been our approach and as we continually
reshape and improve our business, the one thing that will never change is
our character – that combination of integrity, honesty and dependability that
is a real strength of CRH.
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. A refreshed CoBC and an enhanced training
module was launched during 2021 and in 2022 both the CoBC and the
training module were further updated to reflect the Group's refreshed
values.
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 on an ongoing basis. 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.
CRH Hotline
In 2022, CRH launched a Speak Up Policy which is available on
www.crh.com in 22 languages. To provide guidance to reporters on our
Speak Up channels and processes, Speak Up FAQs are also available to
all employees in 22 languages. CRH engages an external service provider
to administer an independent 24/7 multi-lingual confidential “Hotline” facility
that allows reporters to make an anonymous report, if they wish. CRH
is committed to supporting all persons, including current and potential
employees, customers, independent contractors, 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. Our Speak Up Policy outlines CRH’s commitment to
providing various ways to speak up, handling those reports appropriately
and confidentially and treating all reporters with fairness and respect to
ensure they are comfortable when speaking up. 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 and feel comfortable to
speak up when they have good faith concerns. The Policy also affirms
our zero-tolerance approach to retaliation or any form of penalisation for
Speaking Up.
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, Chief Financial Officer 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 11 on page 102 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 2022, the Chairman, Remuneration Committee Chairman and
Company Secretary again participated in a number of meetings with some
of the Group’s major shareholders in advance of the 2022 AGM and as part
of the Group's ongoing engagement processes. We respond throughout
the year to correspondence from shareholders on a wide range of issues.
102
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
US Listing - Additional Information
Table 10
Additional details in relation to CRH’s general corporate governance practices are set out in the Governance Appendix, which is included 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
Section 2 - Operation of the Board’s Committees
• Page 2: For what period are non-executive Directors appointed?
• Page 5: Audit Committee: Role and Responsibilities
• Page 3: What are the requirements regarding the retirement and re-election of
• Page 5: Audit Committee: Meetings and Structure of Committee
Directors?
• Page 6: Audit Committee: Non-audit Fees
• Details of the executive Directors’ service contracts and the policy for loss of
office are set out in the section entitled 'Service Contracts' on page 95 of the
2021 Annual Report and Form 20-F
Investor Relations Activities
Table 11
• 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
• 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
• 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
issues
The following are available on www.crh.com
Table 12
Governance
• Governance Appendix
• Directors’ Remuneration Policy
• Terms of Reference of the Acquisitions, Divestments & Finance, Audit,
Nomination & Corporate Governance, Remuneration and Safety, Environment &
Social Responsibility Committees
Investors
• Annual and Interim Reports, the Annual Report and Form 20-F and the Annual
Sustainability Report
• News releases
• Webcast recordings of results briefings
• General Meeting dates, notices, shareholder circulars, presentations
• Memorandum and Articles of Association of the Company
and poll results
• Pre-approval policy for non-audit services provided by the external auditor
• Answers to Frequently Asked Questions, including questions regarding dividends
• Compliance & Ethics statement, Code of Business Conduct and Hotline
contact numbers
and shareholder rights in respect of general meetings
102
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
104
2022 Annual Report and Form 20-F
Safety, Environment & Social Responsibility Committee Report
Mary K. Rhinehart
"During the past 12 months, the Committee
received updates at each meeting on topics
such as Safety, Purpose, I&D and employee
engagement, monitored progress against the
Group’s ambitious 2030 sustainability targets
and, together with the Board, considered CRH’s
decarbonisation roadmap in depth."
Mary K. Rhinehart
Chairman of the Safety, Environment & Social
Responsibility Committee
Committee Members
Mary K. Rhinehart (Chairman)
Richie Boucher
Caroline Dowling
Rick Fearon
Johan Karlström
Badar Khan
Albert Manifold
Lamar McKay
Gillian L. Platt
Governance Appendix - Further Information
Further general information in relation to the following topics is
contained in the Governance Appendix:
• the operation of the Safety, Environment & Social Responsibility
Committee
• the responsibilities delegated to the Committee by the Board
Introduction
The SESR Committee currently consists of nine Directors, including the
Chief Executive. The biographical details of each Committee member
are set out on pages 82 to 84. The Chief Operating Officer, whose remit
includes responsibility for sustainability, typically attends meetings. Other
executives attend as required.
During the past 12 months, the Committee received updates at
each meeting on topics such as Safety, Purpose, I&D and employee
engagement, monitored progress against the Group’s ambitious 2030
sustainability targets and, together with the Board, considered CRH’s
decarbonisation roadmap in depth. The Committee also received reports
on environmental, health & safety and social reviews, climate lobbying
practices, hotline reports on issues that fall within the Committee’s remit,
the roll-out of the refreshed Code of Business Conduct and related training,
and developments in relation to external reporting requirements.
Safety
Health, safety and well-being, and managing health and safety risks within
our businesses, is our top priority in terms of our employees, contractors
and customers. We are committed to going beyond industry-minimum
requirements to create an empowering safety culture. Our ambition is to
have a culture of safety and wellness working towards zero harm, with a
target of zero fatalities in any year.
As the Chairman mentioned in the introduction to the Annual Report,
there were five reportable fatalities in 2022 involving one employee and
four contractors. The Board received detailed reports on the background
circumstances of these incidents. The Committee also received follow-up
reports on the investigations into the root causes in each case. We are
satisfied that none of the incidents were attributable to a lack of applicable
training, deficient safety procedures or defective equipment being used.
Furthermore, through detailed analysis and discussion of a range of
measures, as well as through engagement with employees, we are satisfied
that the appropriate safety culture is in place across the Group and that
employees are, for example, comfortable to stop a work process if they
believe unsafe practices are being employed. Nevertheless, management
considers on an ongoing basis whether learnings or enhancements are
possible, particularly in challenging areas such as road logistics and
specialist contractors working from heights. The Committee advised the
Remuneration Committee that it did not consider that there were any issues
arising from its safety reviews that would require an override of remuneration
incentive outcomes in 2022.
We also receive regular reports in relation to trends in leading and lagging
safety indicators. Leading indicators relate to reporting of serious safety
incidents, safety audits and safety culture assessments. In addition,
learnings from serious injury and fatal incidents are shared across the Group
as soon as possible.
Purpose
Good progress has been made in sharing our newly articulated Purpose to
all employees following its launch in 2022, and we will monitor the plans to
embed our Purpose into all company processes. Further details in relation
to CRH's Purpose are set out on pages 6 and 7.
Inclusion & Diversity
The Committee monitors the implementation of CRH's I&D strategy,
including the roll-out of related initiatives such as the content of, and
feedback from, a programme put in place for senior leaders across the
organisation to provide them with tools to meet common I&D challenges,
and the progress being made in relation to our 2030 targets.
Employee Engagement
As mentioned earlier in the Corporate Governance section, with effect from
January 2023, the Nomination & Corporate Governance Committee has
assumed responsibility for employee engagement. An update on employee
engagement during 2022 is set out on page 88.
104
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Climate Change and Sustainability
As reported last year, our 2030 absolute carbon emissions reduction
target was put in place as part of our ambition to be a net-zero business
by 2050 in accordance with the Paris Agreement. In early 2023, the
SBTi validated that our revised targets1 are in line with the updated
1.5oC science-based framework which now equate to a 30% reduction
in absolute carbon emissions by 2030 (on a 2021 base year). It will take
some time for the many initiatives in areas such as low-carbon products,
business optimisation, low-carbon fuels, transport and mobile equipment,
clean electricity, new technologies etc. to take effect. To support delivery
of our 2030 roadmap, we expect to invest approximately $150 million per
annum in incremental capital expenditure. In addition, we have put in place
a $250 million venturing and innovation fund referred to on page 30. This
work is supported by our target for our cement plants to reduce cement
specific net CO2 emissions per tonne of cementitious product to 520kg by
2025 (accelerated from 2030). For more information on our decarbonisation
journey, please see pages 26 to 31.
As a large scale landholder, we have a responsibility to continue to preserve
and protect biodiversity. A core part of our Environmental Policy is to
“Support and enhance biodiversity, ensuring responsible land use and
biodiversity management”. CRH operates at approximately 1,200
quarries/pits covering c.130,000 hectares and has a responsibility to
enhance and restore natural habitats while mitigating potential negative
impacts. CRH adheres to all relevant biodiversity legislation at each
operating location and engages in collaborative initiatives to enhance
biodiversity. During the year we received and considered updates on
progress in relation to the achievement of our 2030 target and the work
in developing CRH’s biodiversity framework. For more information on our
biodiversity policies and targets, please see pages 36 and 37.
In order to play our part in driving positive change, CRH works with
regulators to establish improved legislative frameworks and industry
standards for a net-zero built environment and the Committee receives
regular updates on our climate lobbying practices.
During the course of the next year, we will continue to focus on CRH’s
initiatives and achievement against our 2030 sustainability targets.
Examples of Best Practice Initiatives
Safety
Automatic Fire Protection System for Mobile Equipment
Summary
• We are committed to implementing the systems and processes
necessary to create a culture of safety excellence
• For example, Romcim, part of our Europe Materials Division in
Romania, implemented an automatic fire protection system for mobile
equipment at their Hoghiz location
Outcome
• The detection and suppression system prevents injuries and damages
that could arise from potentially hard to detect and intense engine
fires. Preventative action like this will reduce risks for employees at the
Hoghiz plant and help to ensure they are able to complete their work
safely
Inclusion & Diversity
Inclusive Leadership Development Programme
Summary
• More than 250 senior leaders (including the Global Leadership Team)
across CRH participated in the programme
• It took place virtually over six months and was made up of three
modules and three peer coaching sessions totalling 14 hours
• The programme aimed to create lasting and sustainable change,
developing inclusive leadership skills and habits
• Participants also came away with a toolkit of nine practical tools that
can be applied in day-to-day interactions and processes
Incorporating ESG Metrics in CRH's Remuneration Incentive
Structures
Outcome
The Remuneration Committee has incorporated sustainability and I&D
metrics into CRH’s incentive structures. Further details are set out on page
110.
Regulatory Environment
In 2021, CRH introduced new and enhanced disclosures in relation
to both the TCFD and the EU Taxonomy Regulations. The TCFD
framework requires disclosure on climate-related governance, strategy,
risk management, as well as metrics and targets. CRH previously
used the TCFD framework on a voluntary basis, and in line with our
commitment to transparency, our disclosures are now consistent with
TCFD recommendations and recommended disclosures. EU Taxonomy,
which is an EU regulatory classification system that defines environmentally
sustainable activities by providing “technical screening criteria” thresholds
for activities to be reported as 'sustainable', requires CRH to disclose the
percentage of activities that are taxonomy-eligible. TCFD and EU Taxonomy
related disclosures in respect of 2022 have been further enhanced and are
set out on pages 56 to 59 and 270 to 273 respectively.
Mary K. Rhinehart
Chairman of the Safety, Environment & Social Responsibility Committee
1 March 2023
• Significant investment of leader's time, helping to develop their
capability to build and lead a more inclusive organisation
Contributing to a more Circular Economy
Innovative Products & Solutions
Summary
• Our ambition is to deliver innovative products and solutions to drive
progress towards a circular, net-zero built environment
• CRH’s structural concrete business in Belgium, part of our Europe
Materials Division, is collaborating with a Belgian start-up to establish
a project involving the reuse of building insulation products
• As part of this collaboration, CRH’s structural concrete business in
Belgium is supplying recycled materials which are then converted into
innovative insulation products
Outcome
• By continuously investing in sustainable solutions, we are driving
toward our goal of 50% revenue coming from products with enhanced
sustainability attributes by 2025 and contributing to a more circular
economy
1. Refer to page 27 for further detail on our decarbonisation targets.
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
106
2022 Annual Report and Form 20-F
TCFD – Sustainability Governance
Board Oversight
Sustainability, including addressing the impact of climate change, is
embedded in the Group’s strategy and business model. The Board
recognises the importance of decarbonisation in addressing the challenges
of climate change and believes that the Group’s integrated strategy of
value-added products and innovative solutions have a key role to play in
delivering a more resilient and sustainable built environment.
Climate change and sustainability are frequent discussion topics at Board
and Board Committee meetings, with the Board and its Committees
discussing various aspects of the Group’s climate strategy, the linkage
between the Group’s remuneration policies and practices and the Group’s
sustainability (and climate-related) objectives, stakeholder expectations,
the regulatory environment and CRH’s carbon emissions reduction targets
at the majority of meetings during 2022. In addition, climate change
and sustainability-related matters form an integral part of discussions
on the Group’s strategy and business model, capital allocation and risk
management. The SESR Committee, to which the Board has delegated
primary responsibility for monitoring developments related to sustainability,
including climate, and providing strategic direction, oversight and support
to the Board on these important topics, meets every quarter. The Board
monitors and oversees progress against climate-related targets and goals
through detailed reports of discussions and recommendations which are
presented to it by the SESR Committee following the conclusion of each
meeting.
Table 13 provides a high-level summary of the Board’s oversight of
climate-related risks and opportunities during 2022. Further information
is also included in the Governance Report on page 89 and in the SESR
Committee Report on page 105. Further details in relation to the role
and responsibilities of the Board and its Committees are set out in the
Governance Report on pages 88 to 132.
Management Responsibility
The Chief Executive is responsible for the operational and profit
performance of the Group and is accountable to the Board for all authority
delegated to executive management. The Chief Executive executes strategy
agreed with the Board and regularly reports to the Board on the progress
and performance of the Group, including in relation to climate-related
matters.
The Chief Executive is supported by the Global Leadership Team, which is
responsible for implementing strategy, pursuing performance delivery and
progressing the Group’s sustainability and climate-related agenda.
Responsibility for formulating and executing our climate strategy sits with
the Chief Operating Officer. The Global Leadership Team receives support
from various executive-level committees and other working groups and
functions on sustainability and climate-related issues.
For more information on the Group's organisation structure, including how
responsibilities feed through each level, please see our Risk Governance
Framework on page 94.
Board and Committees Activities during 2022 Table 13
Climate-related Roles &
Responsibilities
Principal Actions during 2022
Board
Ultimate responsibility for all risks,
including climate-related risks and
opportunities, and the delivery of our
environmental targets
Reviewing the strategic rationale and
impact of proposed acquisitions,
disposals and large capital expenditure
projects
ADF Committee
Audit Committee
• Put in place an industry leading-target of a 25% reduction in absolute group-wide
carbon emissions by 2030. In early 2023, the SBTi validated that our revised
targets1 are in line with the updated 1.5°C science-based framework which now
equate to a 30% reduction in absolute carbon emissions by 2030 (from a 2021
base year)
• A $250 million venturing and innovation fund was put in place to identify new
technologies and business models, and to foster innovation across the organisation
• Considered and approved the Group’s Risk Appetite & Tolerance Framework
• Considered and approved a number of acquisitions and divestments, which further
enhance our integrated sustainable solutions strategy
Monitoring and assessing the Group's
risk management processes (including
climate risk) and internal control
systems across the Group
• Received and considered regular updates on the Group’s principal and emerging
risks and uncertainties, including those that could threaten its business model,
future performance, solvency or liquidity. This included detailed discussion on the
impact of climate-related risks on the Group’s accounting judgements, disclosures,
processes and financial statements
Nomination & Corporate
Governance Committee
Remuneration Committee
SESR Committee
Monitoring the Board's structure, size,
composition and balance of skills to
ensure that the Board can meet its
strategic objectives and regulatory
responsibilities
Designing incentive structures which
support the achievement of the key
strategic priorities such as our climate
and sustainability objectives
Monitoring developments related to
sustainability, including climate, and
providing strategic direction, oversight
and support to the Board
1. Refer to page 27 for further detail on our decarbonisation targets.
• Actively reviewed and monitored the structure, size, composition and balance of
skills on the Board
• Following consultation with shareholders, considered and finalised appropriate
ESG-related targets for inclusion in the Group’s Performance Share Plan. This
included a specific component related to decarbonisation
• Received and considered updates on the Group’s sustainability and climate-related
targets, actions and performance
106
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Board and Committees Activities during 2022 Table 13
Climate-related Roles &
Responsibilities
Principal Actions during 2022
• Put in place an industry leading-target of a 25% reduction in absolute group-wide
carbon emissions by 2030. In early 2023, the SBTi validated that our revised
targets1 are in line with the updated 1.5°C science-based framework which now
equate to a 30% reduction in absolute carbon emissions by 2030 (from a 2021
Board
Ultimate responsibility for all risks,
including climate-related risks and
opportunities, and the delivery of our
base year)
environmental targets
• A $250 million venturing and innovation fund was put in place to identify new
technologies and business models, and to foster innovation across the organisation
• Considered and approved the Group’s Risk Appetite & Tolerance Framework
ADF Committee
impact of proposed acquisitions,
• Considered and approved a number of acquisitions and divestments, which further
disposals and large capital expenditure
enhance our integrated sustainable solutions strategy
Reviewing the strategic rationale and
projects
Audit Committee
Monitoring and assessing the Group's
risk management processes (including
climate risk) and internal control
systems across the Group
• Received and considered regular updates on the Group’s principal and emerging
risks and uncertainties, including those that could threaten its business model,
future performance, solvency or liquidity. This included detailed discussion on the
impact of climate-related risks on the Group’s accounting judgements, disclosures,
processes and financial statements
Nomination & Corporate
Governance Committee
• Actively reviewed and monitored the structure, size, composition and balance of
skills on the Board
Remuneration Committee
• Following consultation with shareholders, considered and finalised appropriate
ESG-related targets for inclusion in the Group’s Performance Share Plan. This
included a specific component related to decarbonisation
SESR Committee
sustainability, including climate, and
• Received and considered updates on the Group’s sustainability and climate-related
providing strategic direction, oversight
targets, actions and performance
and support to the Board
Monitoring the Board's structure, size,
composition and balance of skills to
ensure that the Board can meet its
strategic objectives and regulatory
responsibilities
Designing incentive structures which
support the achievement of the key
strategic priorities such as our climate
and sustainability objectives
Monitoring developments related to
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
108
2022 Annual Report and Form 20-F
Directors’ Remuneration Report
Lamar McKay
"Despite a challenging and volatile cost
environment in both North America and Europe,
CRH delivered another strong result in 2022,
with increased sales, profits and margins driven
by the continued execution of our integrated
and sustainable solutions strategy."
Lamar McKay,
Chairman of the Remuneration Committee
Committee Members
Lamar McKay (Chairman)
Richie Boucher
Caroline Dowling
Johan Karlström
Shaun Kelly
Gillian L. Platt
Mary K. Rhinehart
Governance Appendix - Further Information
Further general information in relation to the following topics is
contained in the Governance Appendix:
• the operation of the Remuneration Committee
• the responsibilities delegated to the Committee by the Board
Introduction
I am delighted to introduce, on behalf of my colleagues on the
Remuneration Committee and on the Board, the Remuneration Report to
shareholders, which is split into three sections: this introductory overview, a
summary of the remuneration policy updated and approved by shareholders
in 2022, and the Annual Report on Remuneration, which contains details
of CRH's remuneration arrangements and includes various legislative,
regulatory and best practice disclosures.
Context and Performance in 2022
Despite a challenging and volatile cost environment in both North America
and Europe, CRH delivered another strong result in 2022, with increased
sales, profits and margins driven by the continued execution of our
integrated and sustainable solutions strategy. The dividend for 2022 was
increased by 5% and we continued our buyback programme returning
$1.2 billion to shareholders, which brings the total returned to shareholders
through the share buyback programme to over $4.1 billion. The Group’s
disciplined approach to capital allocation provides further opportunities for
value creation.
Remuneration Policy
I would like to thank shareholders for their strong support of CRH’s updated
remuneration policy at the 2022 AGM. The updated policy provided for
the enhancement of our long-term incentive scorecard by incorporating
important metrics related to sustainability and our people, while retaining the
broad structure of the previous policies which have served the Company
well. A summary of the updated policy is set out on pages 113 to 118.
We believe that our remuneration structures are fully aligned with and
support CRH’s strategic priorities, our Purpose to reinvent the way that the
world is built and our core values that people are our priority, character is
our strength, performance is our commitment and innovation is our way
forward. The alignment with strategy is summarised in Table 17 on page
110. Further details on our Purpose and our values are contained on pages
6 and 7.
Executive Directors' Remuneration
Base Salary
As reported in last year’s Remuneration Report, the Committee approved
salary increases of 2.75% for the executive Directors in respect of 2022.
This was in line with the increases for the wider workforce in Ireland and the
UK. Increases in salary for employees across the Group in 2023 will depend
on a range of factors specific to a region or business. In Ireland increases
will generally be 4.25%, while increases in the UK will be c.4.5%. For the
executive Directors, salary increases have been set at a lower level of 3.5%.
Pension Entitlements
In line with the planned phased reduction, the contractual pension
entitlements of our Chief Executive, Albert Manifold, ceased in full in August
2022 when he reached aged 60. As previously advised, the Chief Financial
Officer’s pension contribution is aligned with the rate which is available to
the wider workforce in Ireland and the UK.
2022 Annual Bonus Plan
Reflecting the strong performance in 2022, the financial metrics for the
annual bonus plan, which accounted for 80% of the overall opportunity
were achieved in full. The Committee also assessed the performance of
the Chief Executive and Chief Financial Officer against their personal and
strategic objectives (which represent 20% of the overall opportunity), which
the Committee concluded were met to the fullest extent possible. However,
notwithstanding the outperformance during the year, in the context of the
uncertain economic climate and backdrop of high inflation and rising costs,
both management and the Committee judged that it would be appropriate
to cap the bonus outcome at 85% of maximum.
108
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
2022 Performance Highlights
Table 14
OPERATING CASH FLOW
RETURN ON NET ASSETS
EARNINGS PER SHARE
$4.0bn
6%
(2021: $4.2bn)
(2020: $3.9bn)
$32.7bn
SALES
12%
(2021: $29.2bn)
(2020: $25.9bn)
13.3%
100 bps
(2021: 12.3%)
(2020: 10.1%)
$3.50
14%
(2021: $3.06)
(2020: $1.23)
EBITDA (as defined)*
DIVIDEND PER SHARE
$5.6bn
13%
(2021: $5.0bn)
(2020: $4.3bn)
$1.27
5%
(2021: $1.21)
(2020: $1.15)
In determining this outcome, the Committee considered input from the
SESR Committee that, following an in-depth review of safety performance
and, in particular, reportable fatalities which occurred during 2022, the
exercise of downward discretion on bonus outcomes would not be
warranted in its view. In reaching that conclusion, the SESR Committee was
satisfied that none of the reportable fatalities was attributable to a lack of
applicable training, deficient safety procedures or defective equipment being
used. Furthermore, through detailed analysis and discussion of a range
of measures, as well as through engagement with employees, the SESR
Committee was satisfied that the appropriate safety culture is in place across
the Group. Following discussion, the Committee concurred with the SESR
Committee and concluded that downward discretion on these 2022 bonus
outcomes should not be applied. Further details in relation to achievements
against the financial and personal/strategic targets are set out on page 120.
2020 Performance Share Plan Award
Performance Share Plan (PSP) Awards are made to c.750 executives across
the organisation. The PSP Award made in 2020 has been assessed against
the cashflow, RONA and TSR targets set by the Committee in February
2020. Performance against these targets, which were set before the onset of
the COVID-19 pandemic and were not subsequently adjusted, has resulted
in a 100% vesting level. The reference price used for the award level (€33.10)
was set in early March 2020, before the onset of the pandemic resulted in
a significant impact on equity markets generally and CRH’s share price for
a time. Taking into account the very strong performance of the Company
over the three years of the award, with sustained increases in sales, profits
and margins, increased dividends and the continuation of the share buyback
programme, the Committee is satisfied that the 100% vesting of the award
is appropriate and that the increase in share price over the period is due to
the Company’s underlying performance rather than a ‘windfall’ gain resulting
from market volatility caused by the COVID-19 pandemic.
2023 Incentive Plan Targets
The targets for the 2023 Bonus Plan will continue to be based on financial
targets of EPS, cashflow and RONA, representing 80% of the opportunity,
with the remaining 20% relating to personal and strategic objectives. The
2023 targets and the performance against those targets will be disclosed in
the 2023 Directors’ Remuneration Report.
The targets for the 2023 PSP award are set out in Table 35 on page 126.
In line with the policy approved by shareholders at the 2022 AGM and the
2022 PSP award, the metrics are a mix of financial targets (Cashflow, RONA
and TSR) (being 85% of the award) and non-financial targets (15%) which
are focused on decarbonisation, sustainability and I&D.
In setting the targets for the annual bonus plan and PSP awards in 2023,
the Committee has made a number of assumptions in relation to the
macro-economic environment. In keeping with prior practice, these
assumptions will be kept under review and, if appropriate, the Committee
may adjust the targets or exercise its discretion at the time of vesting to
ensure pay outcomes remain aligned with performance, particularly if the
targets become less stretching than intended when they were set.
Chairman and Non-executive Directors
Fee increases of 3.5% will apply for 2023 for the Chairman and
non-executive Directors.
Employee Engagement
As outlined in the Chairman’s introduction to the Corporate Governance
section on page 88, the Board led by members of the SESR Committee
engaged with a cross section of employees during the past 12 months
through a mixture of in-person and video conference calls. These were
interactive sessions, which provided an opportunity for employees to
discuss with Board members a wide range of topics and for us to gain
a direct insight in relation to their perspectives on CRH. In relation to
remuneration, we received comments on the positive nature in which local
employee benefit programmes were valued and appreciated, particularly in
the case of the employees of newly acquired companies. We also had an
opportunity to explain CRH’s overall remuneration structures, including the
components of executive Director remuneration, and importantly how they
linked to the metrics by which CRH as a whole is managed and the key
strategic targets set by the Board.
Overall, the feedback we received was that there was an understanding
of CRH’s executive remuneration structures and the link with long-term
organisational priorities, and that including incentives for non-financial
performance was a positive step to help ensure the long-term future of
CRH.
Gender Pay Gap Reporting
In the UK, our subsidiaries have reported on gender pay for a number of
years. In Ireland, this requirement was implemented for the first time in
2022. Three subsidiaries, with a combined total of 1,319 employees, have
published reports under the new legislation. The mean gender pay gap
across the three Irish CRH companies is 12%, while the median pay gap
is 15% (the latter in favour of women). A number of initiatives have been
implemented to seek to address the gap identified.
Conclusion
2022 was another year of very strong performance for the Group in
challenging circumstances. The Committee believes that the way in which
we have implemented the remuneration policy outlined in this report is
appropriate taking into account a range of factors, including the strong
performance in 2022, the continued value created for shareholders and the
experience of wider stakeholders. As usual, this Remuneration Report will
be included on the agenda of the 2023 AGM. We look forward to receiving
your support for the Report.
Lamar McKay
Chairman of the Remuneration Committee
1 March 2023
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
110
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
Remuneration Committee - Key Points Table 15
Policy
• Updated in 2022. Approved by 90% of shareholders at the 2022 AGM
Base Salary
• 2023 salary increases for Irish & UK workforce were 4.25% and 4.5% respectively; 3.5% for executive Directors
Pensions
Annual Bonus Plan
• The Chief Executive’s entitlement ceased in August 2022. The Chief Financial Officer’s pension remains aligned with that of the
Irish and UK workforce
• Payout of 85% of maximum. As explained on page 108, performance exceeded the stretch financial targets and personal/
strategic goals warranting 100% payout. However, both management and the Committee judged that it would be appropriate
to cap the bonus outcome at 85% of maximum, in the context of the uncertain economic climate and backdrop of high
inflation, and rising costs
Performance Share Plan
• 100% vesting for 2020 PSP award; opportunity calibrated using a reference price – and performance targets – set prior to
COVID-19 impact on markets and macro-economic environment; 2022 and 2023 PSP scorecard includes ESG metrics
aligned to our sustainability and I&D priorities.
Non-executive Directors
• Fees increased by 3.5% for 2023
2022 Remuneration Snapshot (full details of 2022 remuneration are set out in Table 20 on page 112)
Table 16
Director
Fixed
Salary
Albert Manifold
€1,651,635
Jim Mintern
€861,045
Performance-related Variable Remuneration
Annual Bonus (i) (% of Max)
2020 PSP Award (ii) (% of Max)
85%
85%
100%
100%
(i) For the reasons outlined on page 108, the Committee and the executive Directors judged that the payout under the 2022 annual bonus plan should be capped at 85% of
maximum.
(ii) The awards, for which performance was measured over the three-year period to end 2022, will vest at 100%. The award for Mr. Mintern, which was granted before his
appointment to the Board, is not subject to an additional holding period and will vest in April 2023. The award for Mr. Manifold is subject to an additional two-year holding
period and, therefore, will vest in 2025. 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 20 on page 112. The market value per share on the date of award (in March 2020) was €33.10.
Alignment of Executive Remuneration with Strategy Table 17
Performance Measure (i)
Annual Bonus
PSP
Reason for Selection
EPS
Cash Flow
RONA
TSR
Sustainability and I&D
Personal/Strategic
Objectives
✔
✔
✔
✔
EPS is a key measure of underlying profitability
✔
✔
✔
✔
Cash flow 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
Sustainability is deeply embedded in all aspects of the Group's strategy and business model. We
recognise the importance of decarbonisation in addressing the challenges of climate change and we are
fully committed to achieving our ambition to be a net-zero business by 2050. We also believe that our
integrated model of value-added products and innovative solutions strategy has a key part to play in the
delivery of a more resilient built environment and a more sustainable future. Furthermore, we consider
that an inclusive working environment, policies and practices will assist in further developing the diversity
of our workforce and leadership teams, which will positively contribute to growing shareholder value over
the longer term
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 26 and 27 on pages 120 and 121 respectively for further information on the operation of the financial metrics for the purposes of the
Group's incentive schemes.
110
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Committee’s Approach to Remuneration
Table 18
The key principles underpinning the Committee’s approach are to set remuneration at a level that:
Is fair and balanced
Is market competitive, enabling the Company to recruit and retain talented executives
Incentivises executives in a way that focuses on delivering the Company’s strategic objectives
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 stakeholders 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.
In particular, the Remuneration Committee has oversight of remuneration policy across the Group and endeavours to keep the structure of remuneration
consistent as far as possible, 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. Further details in relation to workforce engagement on remuneration matters
are set out on page 109.
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 2022 Policy addresses each of these areas (see page
113 for further details).
Most Recent Remuneration Related Votes
Table 19
Year of AGM % in Favour
% Against
No. of
Votes Withheld
Total No. of Votes Cast
(incl. Votes Withheld)
% of Issued Share
Capital Voted
Directors’ Remuneration Report
(“Say on Pay”)
2022
86.10%
13.90%
644,289
539,302,198
70.4%
Directors’ Remuneration Policy
2022
90.38%
9.62%
661,221
538,931,361
70.4%
112
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
Individual Executive Remuneration for the year ended 31 December 2022 (Audited)
Albert Manifold
Jim Mintern (i)
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
2022
€000
1,652
31
413
2021
€000
1,607
23
551
2020
€000
1,469
27
612
2,096
2,181
2,108
2,106
1,053
3,159
6,191
625
6,816
2,049
1,025
3,074
5,992
2,659
8,651
2,018
1,009
3,027
5,075
990
6,065
9,092
Table 20
2020
€000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2022
€000
861
32
86
979
976
488
1,464
1,179
119
1,298
2,762
3,741
26%
74%
2021
€000
489
21
49
559
554
277
831
1,146
509
1,655
2,486
3,045
18%
82%
Total Performance-related Pay
9,975
11,725
Total Single Figure
(fixed and performance-related)
Total Fixed v. Total Remuneration
Total Variable v. Total Remuneration
12,071
13,906
11,200
17%
83%
16%
84%
19%
81%
(i) Mr. Mintern was appointed as Chief Financial Officer and to the Board with effect from 1 June 2021. Accordingly, his 2021 remuneration reflected in the above Table
relates to remuneration for the period 1 June 2021 to 31 December 2021.
(ii) Basic Salary: As outlined on page 108, the Directors received a salary increase of 2.75% in 2022 in recognition of their strong performance, contribution and
leadership of CRH. The increase was in line with the increase for the general workforce in Ireland and the UK.
(iii) Benefits: For executive Directors these relate principally to the use of company cars (or car allowances), 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) As noted on page 114, Albert Manifold received a supplementary taxable non-pensionable cash allowance, in lieu of prospective pension benefits foregone. This
allowance was similar in value to the reduction in the Company’s liability represented by the pension benefit foregone. It was 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 the 2019 Directors' Remuneration Report, was continued in 2022, with his payment
being reduced to 25% of salary as at 1 January 2022. The compensation allowance for Mr. Manifold reduced to zero in August 2022. Mr. Mintern receives a
supplementary taxable non-pensionable cash supplement equivalent to 10% of his annual base salary in lieu of a pension contribution.
(v) Annual Bonus Plan: Under the executive Directors’ Annual Bonus Plan for 2022, a bonus was payable for meeting clearly defined and stretch targets and strategic
goals. The structure of the 2022 Plan, together with details of the performance against targets and payouts in respect of 2022, are set out on pages 119 and 120.
A third of the 2022 bonuses to be paid to executive Directors will be deferred into shares for a period of three years, with no additional performance conditions. In
the case of Mr. Mintern, the 2021 bonus disclosed in the above Table reflects the portion attributable to his tenure as an executive Director.
(vi) In February 2023, the Remuneration Committee determined that 100% of the maximum PSP awards made in 2020 will vest, based on performance. The award
for Mr. Manifold is subject to a further two-year holding period and will vest in 2025. The award for Mr. Mintern, which was granted prior to his appointment to
the Board, is not subject to an additional holding period and will vest in April 2023. For the purposes of this table, the value of these has been estimated using a
share price of €36.44, being the three-month average share price to 31 December 2022. Amounts in the long-term incentive column for 2021 reflect the value of
long-term incentive awards with a performance period ending in 2021 (i.e. the PSP awards granted in 2019), which the Remuneration Committee determined
in February 2022 had met the applicable performance targets. The award for Mr. Manifold is scheduled to vest in 2024 following the completion of a two-year
holding period. The award for Mr. Mintern, which was granted prior to his appointment to the Board, vested in April 2022 (the value of the award on vesting was
€1,422,028). For the purposes of this table, the value of these awards has been estimated using a share price of €43.11, being the three-month average share
price to 31 December 2021. Amounts in the long-term incentive column for 2020 reflect the value of long-term incentive awards with a performance period ending
in 2020 (i.e. the PSP awards granted in 2018), which the Remuneration Committee determined in February 2021 had met the applicable performance targets.
The award is scheduled to vest in 2023 following the completion of a two-year holding period. For the purposes of this table, the value of these awards has been
estimated using a share price of €33.01, being the three-month average share price to 31 December 2020.
112
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Directors' Remuneration Policy
2022 Directors’ Remuneration Policy
CRH’s Approach to Remuneration
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
2022 AGM, is available on the Group's website, www.crh.com, and was
included in full in the 2021 Annual Report and Form 20-F. As the Company
is not seeking shareholder approval for any revision of the Policy in 2023,
the full text of the Policy has not been reproduced in this report. The
following paragraphs and Tables 21 to 25 on pages 114 to 118 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.
The Committee is mindful of managing any conflicts of interest. Therefore,
no individual is involved in determining his/her own remuneration
arrangements. The Committee determines the remuneration of the
Chairman and the executive Directors, with neither the Chairman nor
any executive Director being present when their respective individual
remuneration is being considered or approved. The remuneration of the
non-executive Directors, including the Committee members, is determined
by a committee of the Chairman and the executive Directors.
Regulatory Backdrop
Under the Shareholder Rights Directive 2017/2018 which was transposed into
Irish law by the EU (Shareholders' Rights) Regulations 2020 ("SRD II"), public
limited companies must submit a remuneration policy to an advisory vote at
least every four years or earlier if there is a proposed material change to the
approved policy. In order to continue alignment with general practice in the UK,
the Committee intends to seek approval from shareholders to renew/update the
policy every three years.
The purpose of the 2022 Directors' Remuneration Policy is to:
Reward and motivate executives to perform in the long-term
interests of the shareholders
Attract and retain executives of the highest calibre
Foster entrepreneurship within the Group by rewarding the
creation of shareholder value through organic and acquisitive
growth
Provide an appropriate blend of fixed and variable remuneration
and short and long-term incentives
Reflect the spread of the Group’s operations so that
remuneration packages in each geography are appropriate and
competitive for that area
Reflect the risk policies and appetite of the Group
In formulating the 2022 Policy, the Committee sought to ensure that it
and the Group's remuneration practices were consistent with the six
factors set out in Provision 40 of the 2018 Code:
Clarity
The 2022 Policy is designed to be sustainable and simple.
Simplicity
The 2022 Policy utilises market standard annual bonus and long-term
incentive plans, the operation of both of which are clearly explained in detail
and well-understood by participants.
Risk
The 2022 Policy has been designed to ensure that inappropriate risk taking is
discouraged with a balanced use of annual and longer term incentives; best
practice measures such as significant in-employment and post-employment
shareholding requirements to align the long-term interests of executives and
shareholders; and the use of clawback and malus provisions. In addition, the
Committee retains discretion to override formulaic outcomes; any use of such
discretion will be disclosed in the relevant Remuneration Report.
Predictability
The possible outcomes under the 2022 Policy are quantifiable. Illustrations
of potential outcomes under various scenarios are included in this report.
Proportionality
The 2022 Policy has been designed to ensure that there is a clear link between
pay outcomes and the delivery of the Group's strategy and performance.
A significant proportion of the executive Directors' potential remuneration is
'at risk' and is subject to clearly defined and stretching performance targets.
Alignment to Culture
The 2022 Policy is designed to promote the long-term sustainable success
of the Group. The performance metrics and targets used in the annual and
long-term incentive plans reflect our values and key strategic priorities.
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
114
2022 Annual Report and Form 20-F
2022 Policy Table
Further details regarding the operation of the 2022 Policy for the 2022 and 2023 financial years can be found on pages 119 to 132 of the Directors’ Remuneration Report.
Policy Table
Table 21
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 effectively in
its markets
• Pension arrangements provide competitive and appropriate retirement plans
• Given the long-term nature of the business, pension is an important part of the
remuneration package to support creation of value and succession planning
Operation
• Base salaries are set by the Committee taking into account:
• Irish-based executive Directors may participate in a contributory defined
- the size and scope of the executive Director’s role and responsibilities;
- the individual’s skills, experience and performance;
- salary levels at FTSE listed companies of a similar size and complexity
to CRH and other international construction and building materials
companies; and
- pay and conditions elsewhere in the Group
• Base salary is normally reviewed annually with changes generally
effective on 1 January, although the Committee may make an out-of-
cycle increase if it considers it to be appropriate
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 appointed 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
Maximum
opportunity
• Base salaries are set at a level which the Committee considers to
be appropriate taking into consideration the factors outlined in the
“operation” section above
• While there is no maximum base salary, normally increases will be
in line with the typical level of increase awarded to other employees
in the Group but may be higher in certain circumstances. These
circumstances may include:
- where a new executive Director has been appointed at a lower
salary, higher increases may be awarded over an initial period as the
executive Director gains in experience and the salary is moved to
what the Committee considers is an appropriate positioning;
- where there has been a significant increase in the scope or
responsibility of an executive Director’s role or where an individual has
been internally promoted, higher salary increases may be awarded;
and
- where a larger increase is considered necessary to reflect significant
changes in market practice
• The entitlement of individuals participating in defined contribution schemes
reflects the accumulated individual and matching company contributions paid
into the schemes. At present no Ireland-based executive Directors are members
of a defined contribution scheme
• In relation to Mr. Manifold, who joined the Group prior to 31 December 2011,
the defined benefit pension is provided through an Irish-revenue approved
retirement benefit scheme (the ‘Scheme’). Accrued benefits for service to 31
December 2011 were 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 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 123 for more details).
This allowance was similar in value to the reduction in the Company’s liability
represented by the pension benefit foregone. Whilst there was no absolute
maximum to the quantum of these payments they were 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 voluntarily reduced the monetary value of the pension
contribution/allowance so that it was reduced to 25% of his base salary as at
1 January 2022. His contractual entitlement to compensation in lieu of pension
payments ceased in August 2022 when he reached age 60
Performance
measure
• Not applicable
• Not applicable
114
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Fixed Benefits
Performance-related pay - Annual Bonus
Table 21
• To provide a market competitive level of benefits for executive Directors
• The Annual Performance-related Incentive Plan is designed to reward the creation of
shareholder value through operational excellence and organic and acquisitive growth.
The Plan incentivises executive Directors to deliver Group and individual goals that
support long-term value creation
• A Deferred Annual Performance-related Incentive Plan element links the value of
executive Directors' reward with the long-term performance of the CRH share price
and aligns the interests of executive Directors with those of shareholders
• "Malus" and clawback provisions enable the Company to mitigate risk
• The Committee’s policy is to set benefit provision at an appropriate market competitive
• The Annual Performance-related Incentive Plan rewards executive Directors for
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
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
• 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
award)
• For 2023:
• 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
• 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 benefit
– 66.7% of the bonus will be paid in cash; and
– 33.3% will be paid in shares
• In future years, the Committee may determine that a different balance between cash
and shares is appropriate and adjust the relevant payments accordingly
• When assessing performance and determining bonus payouts the Committee
also considers the underlying financial performance of the business to ensure it is
consistent with the overall award level
• The deferred element of the bonus will be structured as a conditional share award or
nil-cost option and will normally vest after three years from grant (or a different period
determined by the Committee). Deferred share awards may be settled in cash in
exceptional circumstances
• 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 annual opportunity of 225% of base salary
• For 2023, the intended maximum award levels are:
– 225% of base salary for Chief Executive; and
– 200% of base salary for the Chief Financial Officer
• Not applicable
• The performance-related incentive plan is based on achieving clearly defined and
stretching annual targets and strategic goals set by the Committee each year based on
key business priorities
• The performance metrics used are a mix of financial targets including return goals
and personal/strategic objectives generally. Currently 80% of the bonus is based on
financial performance measures
• The Committee may vary the weightings of measures but no less than 50% shall be
based on financial performance measures
• A portion of the bonus metrics for any Director may be linked to his/her specific area of
responsibility
• Up to 50% of the maximum bonus will be paid for achieving target levels of
performance
116
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
Policy Table - continued
Element
Performance-related pay - 2014 Performance Share Plan
Table 21
Purpose and
link to strategy
• The purpose of the 2014 Performance Share Plan is to align the interest of key management across different regions and nationalities with those of
shareholders through an interest in CRH shares and by incentivising the achievement of long-term performance goals
• “Malus” and clawback provisions enable the Company to mitigate risk
Operation
• Awards (in the form of conditional share awards or nil-cost options) normally vest based on performance over a period of not less than three years. Awards
may also be settled in cash in exceptional circumstances
• Awards are normally subject to an additional holding period ending on the fifth anniversary of the grant date (or another date determined by the Committee)
• Dividend equivalents may be paid on PSP awards that vest in respect of dividends paid during the vesting period until the end of the holding period. These
payments may be made in cash or shares and may assume reinvestment on a cumulative basis
• “Malus” and clawback provisions (as set out in the rules of the 2014 Plan) will apply to awards
Maximum
opportunity
• Maximum annual opportunity of up to 365% of base salary
• For 2023, the intended award levels are:
– 365% of base salary for Chief Executive; and
– 250% of base salary for Chief Financial Officer
Performance
measure
• Awards to be granted in 2023 will vest based on cumulative cash flow (45%), a relative TSR test compared to a tailored group of key peers (20%),
RONA (20%) and a number of Sustainability & Diversity measures (15%)
• For threshold levels of performance, 25% of the award vests
• Where applicable, when determining vesting under the PSP the Committee reviews whether the TSR performance has been impacted by unusual
events and whether it therefore, reflects the underlying performance of the business
• The Committee may adjust the weightings of the measures at the start of each cycle, with no measure’s weighting falling below 15%
• 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
116
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Remuneration Policy for Non-executive Directors
Table 22
Service Contracts for Executive Directors
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 to CRH
• Fees are reviewed annually
Basis of Fees
• Fees are paid in cash
• Non-executive Director fees policy is to pay:
- a basic fee for membership of the Board;
- an additional fee for chairing a Committee;
- an additional fee for the role of Senior Independent Director;
- an additional fee to reflect committee work (combined fee for all committee
roles); and
- an additional fee based on the location of the Director to reflect time spent
travelling to Board meetings
• Other fees may also be paid to reflect other Board roles or responsibilities
• In accordance with the Articles of Association, shareholders set the
maximum aggregate amount of the fees payable to non-executive Directors.
The current limit of €1,200,000 was set by shareholders at the Annual
General Meeting held in 2022
Other Items
• 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
• Where relevant, the Group Chairman may 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 125) may be provided if, in the view of the
Board (for non-executive Directors or for the Chairman), this is considered
appropriate. The Company may gross up any expenses so that the non-
executive Directors are not at a net loss after deduction of tax. Details
regarding any benefit provided will be disclosed in the relevant year of receipt
The Chief Executive and Chief Financial Officer have entered into service
contracts, details of which are summarised on page 95 of the 2021 Annual
Report and Form 20-F. All incentive arrangements remain at the discretion
of the Committee.
Under Irish company law, CRH is not required to make service contracts
available for inspection as the notice period is no more than 12 months.
Service contracts will only be available with the executive Directors' consent
due to data protection reasons.
Non-executive Directors - Letters of Appointment
Non-executive Directors serve under letters of appointment, copies of which
are available for inspection at the Company's Registered Office and at the
AGM.
In line with the 2018 Code, all non-executive Directors submit themselves
for re-election by shareholders every year at the AGM. All non-executive
Director appointments can be terminated by either party without notice.
There is no payment in lieu of notice provided.
Shareholding Guideline for Executive Directors
Executive Directors are required to build up (and maintain) a minimum
holding in CRH shares. The shareholding guidelines for the Chief Executive
and Chief Financial Officer are 3.5 times basic salary and 2.5 times basic
salary respectively, with the guidelines to be achieved by 31 December
2023 and 1 June 2024, respectively.
For the purposes of determining the number of shares held by the executive
Directors, the relevant calculation will include shares beneficially owned
by the executive Directors, annual bonus awards which are deferred
into shares for three years and PSP awards that have met the financial
performance criteria but are subject to a two-year holding period prior to
release (on a net of tax basis). The deferred share awards and PSP awards
subject to a two-year hold period are not subject to any further performance
criteria other than continued employment with the Group. In the event that
the shareholding guidelines are not met by the applicable deadlines, the
Remuneration Committee will consider what action to take at that time.
Post-employment Holding Requirements
The Chief Executive and Chief Financial Officer are required to hold shares
equivalent to 2 times and 1.5 times basic salary respectively for a period of
two years post-employment in a third-party trust. Until the limit is achieved,
an agreed portion of any Deferred Share or PSP awards which vest will
be transferred on a net of tax basis to the third-party to be held in trust for
their benefit. The shares will be held in trust on a rolling basis, until their
employment ceases and a subsequent two-year period has elapsed.
External Board Appointments
Executive Directors may accept external non-executive directorships with
the prior approval of the Board. The Board recognises the benefits that
such appointments can bring both to the Company and to the Director in
terms of broadening their knowledge and experience. Whether any related
fees are retained by the individual or remitted to the Group is considered on
a case-by-case basis.
Considering Employee Views
The Board is regularly kept abreast of employees’ perspectives and takes
them into account when making decisions. In particular, the Remuneration
Committee has oversight of remuneration policy across the Group and
endeavours to keep the structure of remuneration consistent as far as
possible. Further details of how the Committee seeks and takes into
account employee views when setting remuneration for the executive
Directors is set out on page 109.
118
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
Consulting with Shareholders
Remuneration Outcomes in different Performance Scenarios
The Committee believes that it is very important to maintain open dialogue
with shareholders on remuneration matters. CRH consults regularly with
shareholders and engaged extensively with shareholders in relation to the
2022 Policy. Shareholder views, and broad indications of support, were
important in shaping the 2022 Policy.
The Committee will continue to liaise with shareholders regarding
remuneration matters more generally and CRH arrangements as
appropriate. It is the Committee’s intention to continue to consult with major
shareholders in advance of making any material changes to remuneration
arrangements.
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 25 shows hypothetical values of the remuneration package for
executive Directors under four assumed performance scenarios (based
on 2023 proposals). No share price growth or the payment of dividend
equivalents has been assumed in these scenarios (other than where
specified). Potential benefits under all-employee share schemes have not
been included.
Remuneration Outcomes in different Performance Scenarios
Table 23
Performance Scenario
Payout Level
Minimum
• Fixed pay (see Table 24 for each executive Director)
• No bonus payout
• No vesting under the Performance Share Plan
On-target performance
• Fixed pay (see Table 24 for each executive Director)
• 50% annual bonus payout (112.5% of salary for the Chief Executive and 100% for the Chief Financial Officer)
• 25% vesting under the Performance Share Plan (91.25% of salary for the Chief Executive and 62.5% for the Chief
Financial Officer)
Maximum performance
(at constant share prices and
assuming a 50% increase in
share price)
• Fixed pay (see Table 24 for each executive Director)
• 100% annual bonus payout (225% of salary for the Chief Executive and 200% of salary for the Chief Financial Officer)
• 100% Performance Share Plan vesting (365% of salary for the Chief Executive and 250% for the Chief Financial
Officer)
Hypothetical Remuneration Values
Chief Executive (Albert Manifold)
Chief Financial Officer (Jim Mintern)
Salary
With effect from
1 January 2023
€1,709,442
€891,182
Benefits
Level paid
in 2022 (i)
€31,000
€32,000
Estimated
Pension (ii)
NIL
€89,118
(i) Based on 2022 expenses.
(ii) See page 123 for details in relation to retirement benefit arrangements.
Performance-related Remuneration Outcomes
€m
€m
Table 24
Total
Fixed Pay
€1,740,442
€1,012,300
Table 25
53%
32%
15%
62%
26%
12%
30%
37%
33%
100%
45%
35%
20%
55%
29%
16%
23%
36%
41%
100%
■ Fixed Pay ■ Annual Bonus ■ Long-term Incentives
Chief Executive€1,740€5,222€11,823€14,942MinimumOn-target performanceMaximum Constant share pricePerformance Share price +50%€0€2,000€4,000€6,000€8,000€10,000€12,000€14,000Chief Financial Officer€1,012€2,460€5,022€6,135MinimumOn-target performanceMaximum Constant share pricePerformance Share price +50%€0€1,000€2,000€3,000€4,000€5,000€6,000
118
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Annual Report on Remuneration
The Remuneration Committee
The Remuneration Committee consists of seven 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 82
to 84. A schedule of attendance at Committee meetings is set out in Table 8
on page 100.
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 29 countries, in geographic
regions which are often at different stages in the economic cycle.
The Committee also engages regularly with shareholders and employees on
the structure of the remuneration policy and executive incentives (see pages
118 and 109 respectively for more details).
Remuneration received by executive Directors in respect of 2022
Details of individual remuneration for executive Directors for the year ended
31 December 2022, including explanatory notes, are given in Table 20 on
page 112. Details of Directors’ remuneration charged against profit in the
year are given in Table 45 on page 132.
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.
2022 Annual Bonus Plan
CRH’s Annual Bonus Plan for 2022 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 2022 was for the achievement of 92.5%
of budget, whereas maximum payout is achieved for stretch performance
of 107.5% of budget. The relative weighting of the components of the 2022
plan are set out in Table 26 on page 120.
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
outside of management's control and 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 2022 annual bonus plan, which represent 80%
of the potential bonus opportunity, were set in early 2022. As a result of
the record financial performance of the Group in 2022 and the highest ever
EBITDA (as defined)* outturn of $5.6 billion, the maximum target under each
of the financial metrics was exceeded, resulting in a calculated payout level
of 100%. Further details are set out in Table 26 on page 120.
The remaining 20% of the 2022 Annual Bonus Plan was linked to
performance against key personal and strategic objectives. The
Remuneration Committee assessed the achievements under the objectives
set for 2022, as outlined in Table 26 on page 120, and concluded that they
were met to the fullest extent possible.
Notwithstanding the outperformance of the target ranges set for the financial
metrics during the year, and the personal/strategic goals being met to the
fullest extent possible, in the context of the uncertain economic climate
and backdrop of high inflation and rising costs, both management and the
Committee judged that it would be appropriate to cap the bonus outcome at
85% of maximum.
In determining this outcome, the Committee considered input from the SESR
Committee that, following an in-depth review of safety performance and,
in particular, reportable fatalities which occurred during 2022, the exercise
of downward discretion on bonus outcomes would not be warranted in
its view. In reaching that conclusion, the SESR Committee was satisfied
that none of the reportable fatalities was attributable to a lack of applicable
training, deficient safety procedures or defective equipment being used.
Furthermore, through detailed analysis and discussion of a range of
measures, as well as through engagement with employees, the SESR
Committee was satisfied that the appropriate safety culture is in place across
the Group. Following discussion, the Committee concurred with the SESR
Committee and concluded that downward discretion on the 2022 bonus
outcomes outlined above should not be applied.
In accordance with the Policy, 33.3% of the bonus amounts for Albert
Manifold and Jim Mintern 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).
Long-term Incentives
Performance Share Plan — 2020 awards
In 2020, the executive Directors were granted conditional awards under the
2014 Performance Share Plan. The awards were based on TSR (25% of the
award) against a tailored group of key peers (see Table 29 on page 121),
Cumulative Cash Flow (50% of the award) and RONA (25% of the award),
and performance was measured over the three-year period 1 January 2020
to 31 December 2022. In respect of the TSR element, CRH's TSR over
the period ranked in the top quartile of the tailored peer group weighted
by market capitalisation and warrants 100% vesting for the TSR element.
In respect of the cumulative cash flow element, the actual outturn over the
period was $8.7 billion, resulting in 100% vesting for the cash flow element.
In respect of the RONA element, the actual outturn was 13.5%, resulting
in 100% vesting for the RONA element. Table 27 on page 121 sets out the
targets for cashflow and RONA set by the Committee in 2020.
When reviewing performance against the targets, the Committee considered
a number of adjustments consistent with best practice, for example, to
neutralise the impact of significant acquisitions and divestments, and the
impairment of subsidiaries in 2020 (as described in the 2020 Annual Report
and Form 20-F).
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
120
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
As outlined in the Chairman's introduction on page 109, the Committee
considers that the vesting outcome is reflective of the Company’s
underlying performance over the performance period. In accordance
with the Policy, the 2020 award to Albert Manifold will vest in 2025 on
completion of an additional two-year holding period. The 2020 award for
Jim Mintern was granted prior to his appointment as Chief Financial Officer
and, under the terms of the award, is not subject to an additional holding
period. Accordingly, the award will vest in April 2023. Vested awards will be
adjusted to accrue dividend equivalents based on dividends in the period
from grant to the applicable date of vesting. Table 27 on page 121 sets out
details of the relevant targets. Table 28 on page 121 sets out details of the
awards.
2022 Annual Bonus Plan - Achievement
Table 26
Measure
CRH EPS (iii)
CRH Cash Flow (iii)
CRH RONA (iii)
Personal/Strategic
Total
2022 Targets - Performance needed for payout at (i) (ii)
Weighting
(% of total bonus)
Threshold
Target
Maximum
2022 Performance
Achieved (iii)
Percentage of Maximum
Awarded (iv)
25%
30%
25%
20%
100%
251.7c
272.1c
292.6c
369.3c
$2,954m
$3,194m
$3,433m
$4,020m
9.7%
10.5%
11.3%
13.5%
See below
21.25%
25.50%
21.25%
17.00%
85.00%
Objectives
Achievements
2022 Personal and Strategic Objectives
Refining strategy for an increasingly solutions
oriented CRH business (v)
• Setting transformation and implementation roadmaps and defining future foundations to sustain such operating
models (e.g. talent, technology, functions), and gaining Board support for these
• Working closely with the Board, senior leadership team and employees across the Group to understand, define,
articulate and clearly communicate our Purpose (see pages 6 and 7 for more details);
Defining a framework for the continuous
development of the next-generation of CRH
leaders (v)
• Providing leadership on the development and roll-out of our global talent strategy and development programmes,
which help our people to grow their skillset and helps us to identify and attract talent and empower the next
generation of leaders
• Aligning leaders across the Group around the enablers that will deliver on our strategy to become a solutions-driven
organisation and the critical role that our people, culture and mindsets will play in our future success
Defining a framework for the continuous
development of the next-generation of
CRH leaders (v)
• Implementation of organisation structure changes resulting in two distinct Divisions, CRH Americas and CRH
Europe, with effect from January 2023
Continue the reorganization and design
of CRH to reflect the strategic needs of
the business (vi)
• Setting up of US Investor Relations office in New York and provision of support for US investors and analysts
• Supporting the Board during 2022 in its continued assessment of the Group’s listing structures
(i) 0% of each element is earned at threshold, 50% at target and 100% at maximum, with a straight-line payout schedule between these points.
(ii) Targets have been adjusted to reflect the impact of the share buyback programme and major development activity.
(iii) For the purposes of the Annual Bonus Plan, the EPS outcome in the Table above differs from that disclosed elsewhere in this Report as it excludes profits and losses on
divestments. 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.
(iv) For the reasons outlined on page 108 the Committee and the executive Directors judged that the payout under the 2022 annual bonus plan should be capped at 85%.
(v) Applies to both the Chief Executive and Chief Financial Officer.
(vi) Chief Executive only.
(vii) Chief Financial Officer only.
120
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
2020 Performance Share Plan Award Metrics
Table 27
Cumulative cash flow
(50% of award) (i)
100%
Vesting Level
25%
0%
$5.4bn
$6.6bn
$8.7bn
)
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)
RONA
(25% of award) (iii)
)
t
n
e
m
e
e
l
f
o
%
(
g
n
i
t
s
e
V
100%
Vesting Level
25%
0%
Median
Upper quartile
)
t
n
e
m
e
e
l
f
o
%
(
g
n
i
t
s
e
V
100%
Vesting Level
25%
0%
9.4%
11.6%
13.5%
Element vested at 100% (iv)
Element vested at 100% (iv)
Element vested at 100% (iv)
(i) Further information on how cash flow is calculated for PSP awards is set out on page 123.
(ii) The methodology for calculating TSR assumes all dividends are reinvested on the ex-dividend date at the closing 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. For the 2020 awards, TSR
performance is assessed on a weighted market capitalisation basis.
(iii) RONA is also defined as reported internally and differs from the RONA reported in the Non-GAAP Performance Measure in this report as it reflects seasonality and timing impact of
development activity.
(iv) For the purposes of the 2020 Award, the cumulative cash flow for the three years to end 31 December 2022 was $8.7 billion. TSR performance was in the top quartile against the
tailored peer group (see Table 29). RONA at 31 December 2022 was 13.5%.
2020 Performance Share Plan Award Vesting Details (i)
Table 28
Executive Director
Interests Held
Vesting Outcome
(% of max)
Interests Due to Vest
Date of Vesting
Assumed Share Price
Estimated Value
Albert Manifold
187,059
Jim Mintern
35,632
100%
100%
187,059
March 2025
35,632
April 2023
€36.44
€36.44
€6,816,430
€1,298,430
(i) Interests disclosed above include accrued dividend equivalents. 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 2022, has been estimated using a share price of €36.44, being the three-month average share price
to 31 December 2022.
Peer Group for Performance Share Plan Awards (i)
Table 29
ACS
Boral
Cemex
Martin Marietta
Titan Cement
Heidelberg Cement
Saint Gobain
Vulcan Materials
Wienerberger
Buzzi Unicem
Holcim
Skanska
(i) Martin Marietta and Vulcan Materials were added to the peer group with effect from the PSP awards made in 2021.
Vicat
Vinci
122
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
2022 Performance Share Plan Award Metrics
Table 30
Cumulative cash flow
(45% of award) (i)
TSR vs. tailored peer group
(20% of award) (ii)
RONA (2024)
(20% of award) (iii)
100%
25%
0%
)
t
n
e
m
e
e
l
f
o
%
(
g
n
i
t
s
e
V
$7.1bn
$8.2bn
)
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% 11.2%
13.0%
Sustainability and Inclusion & Diversity scorecard (15% of award)
Measure
Baseline
Threshold (25% vesting)
Stretch (iv) (100% vesting)
Reason for selection
5% - Driving to Carbon Neutrality
• Delivery of roadmap for target of 25%
emissions reduction by 2030
33.7mt
of CO2
This element will be based on a qualitative assessment by the
Committee (and feedback from the SESR Committee) in early 2025 in
relation to the development and implementation of a strategy to meet
this ambition. Assessment will be informed by a range of criteria, which
will be disclosed fully in the relevant Remuneration Report
Aligns with the Group’s revised
SBTi approved target (v) for a 25%
reduction in absolute Scope 1 and
Scope 2 CO2e emissions by 2030
(from a 2020 baseline)
• Embedding sustainability programmes in relevant operating companies:
- for waste management (1/3)
- for biodiversity (1/3)
- for water management (1/3)
95%
91%
80%
5% - Progress Toward a Net Zero Built Environment
• Revenue from Products with Enhanced
Sustainability Attributes
46%
5% - Creating an Inclusive & Diverse Company
• Representation of Women in Senior
Management
14%
96%
92%
81%
47%
16%
• Improvement in Inclusion Assessment
68
70
98%
94%
91%
49%
19%
73
Aligns directly with progress
towards stated targets for 2030
(waste management target reflects
acceleration of ambition to 2025)
Aligns directly with our ambition to
achieve 50% by 2025
Aligns directly with our roadmap to
our stated 2030 Ambition
Consistent with CRH’s focus on
inclusion as a driver of diversity and
enabler of innovation. Quantitative
assessment based on an externally
validated Enterprise Score from
engagement surveys
(i), (ii) and (iii) see Table 27 on page 121.
(iv) Vesting between threshold and stretch will be calculated on a straight-line sliding scale basis.
(v) The SBTi's Target Validation Team has classified CRH's Scope 1 and Scope 2 target ambition and has determined that it is in line with a well-below 2oC trajectory. The target
boundary includes biogenic emissions and removals from bioenergyy feedstocks.
2022 Performance Share Plan Award - Grant Details
Table 31
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
Jim Mintern
3 May 2022
3 May 2022
158,310
56,528
€38.08
€38.08
€6,028,445
€2,152,586
365%
250%
122
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Performance Share Plan — 2022 awards
During 2022, awards under the 2014 Performance Share Plan were made
to the executive Directors, details of which are summarised in Table 31 on
page 122. 45% of each award granted in 2022 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 and movements in working capital;
•
•
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 to align with the performance targets, or 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.
20% of each award is subject to a TSR metric, with performance being
measured against a tailored peer group and on a market capitalisation
weighted basis (see Table 29 on page 121).
20% of each award is subject to a RONA metric, a key measure used by
management to assess investment opportunities and to run the business.
The remaining 15% of each award is subject to performance over key
sustainability & diversity metrics, including the drive to carbon neutrality
(5%), revenue from products with enhanced sustainability attributes (5%)
and inclusion and diversity (5%). Performance for the awards made in 2022
will be assessed over the three-year period to 31 December 2024. Details of
the performance targets are set out in Table 30 on page 122.
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.
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 is open to all Irish and UK
employees, although at present there is currently no financial services
provider supporting new awards under Irish SAYE schemes following the
exit from the market of the provider in 2021. 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 33
on page 124.
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 Jim
Mintern participated in the Participation Scheme in 2022.
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 salary (defined as basic salary and
excludes any fluctuating emoluments) for each year of pensionable service
and is designed to provide two-thirds of career average salary at retirement
for full service. Albert Manifold will become entitled to a deferred pension,
payable from Normal Retirement Age, if he leaves service prior to Normal
Retirement Age. The Finance Act 2006 established a cap on pension
provisions by introducing a penalty tax charge on pension assets in excess
of the higher of €5.4 million (in the Finance Act 2011, this threshold was
reduced to €2.3 million and reduced further to €2 million by the Finance
(No. 2) Act 2013) or the value of individual accrued pension entitlements as
at 7 December 2005.
As a result of these legislative changes, the Remuneration Committee
decided that executive Directors should have the option of continuing
to accrue pension benefits as previously, or of choosing an alternative
arrangement—by accepting pension benefits limited by the cap—with
a similar overall cost to the Group. Albert Manifold has opted for an
arrangement whereby his pension is capped in line with the provisions
of the Finance Act 2006 and receives a supplementary taxable non-
pensionable cash supplement in lieu of pension benefits foregone. There
was, therefore, no additional accrual in 2022. The cash pension supplement
for 2022 is detailed in Table 20 on page 112. This supplement was similar
in value to the reduction in the Company’s liability represented by the
pension benefits foregone. It was 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 was reduced by a further
10% in 2021 and was reduced to 25% in January in 2022. His contractual
entitlement to compensation in lieu of pension payments ceased in August
2022 when he reached age 60. The contributory defined benefit plan in
which Albert Manifold participates closed to new entrants at the end of
2011. Details regarding the pension entitlements of Albert Manifold are set
out in Table 32.
Jim Mintern receives a taxable non-pensionable cash payment of 10% of
salary in lieu of a pension contribution in line with that available to the wider
UK and Irish workforce.
Pension Entitlements - Defined Benefit (Audited)
Table 32
Executive Director
Albert Manifold
Increase in accrued personal pension during 2022 (i)
€000
-
Transfer value of increase in dependants
pension (i)
€000
Total accrued personal pension at year
end (ii)
€000
100
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 2022 in the event
of Mr. Manifold leaving service.
(ii) The accrued pension shown is that which would be payable annually from the normal retirement date.
124
2022 Annual Report and Form 20-F
Summary of Outstanding Share Incentive Awards (Audited)
Year of
Award
Performance
Period
Release
Date
Market
Value at
Date of
Award
Exercise
Price
Balance
at 31
December
2021
Granted
in 2022
Released
in 2022
Exercised
in 2022
Lapsed
in 2022
Albert Manifold
Annual Bonus Plan
(Deferred Share
Awards) (i)
2019
2020
2021
2022
01/01/18-
31/12/2018
01/01/19-
31/12/2019
01/01/20-
31/12/2020
01/01/21-
31/12/2021
2022
€24.90
n/a
27,337
2023
€33.38
n/a
29,419
2024
€33.01
n/a
30,568
-
-
-
2025
€43.11
n/a
-
23,770
2014 Performance
Share Plan (ii)
2017
01/01/17-
31/12/2019
2022
€32.24
n/a
115,380
2010 Savings-
Related Share
Option Scheme
Jim Mintern
Annual Bonus Plan
(Deferred Share
Awards) (i)
2018
n/a
2023
n/a
€23.39
1,293
2018
2019
2020
2021
2022
01/01/18-
31/12/2020
01/01/19-
31/12/2021
01/01/20-
31/12/2022
01/01/21-
31/12/2023
01/01/22-
31/12/2024
2020
2021
2022
01/01/19-
31/12/2019
01/01/20-
31/12/2020
01/01/21-
31/12/2021
2020
2021
2022
01/01/20-
31/12/2022
01/01/21-
31/12/2023
01/01/22-
31/12/2024
2023
€27.62
n/a
170,321
2024
€29.86
n/a
186,106
2025
€33.10
n/a
172,509
2026
€36.95
n/a
158,785
2027
€38.08
n/a
-
158,310
2023
€33.38
n/a
4,206
2024
€33.01
n/a
4,393
2025
€43.11
n/a
-
7,837
2023
€33.10
n/a
32,860
2024
€36.95
n/a
30,280
2027
€38.08
n/a
-
56,528
2014 Performance
Share Plan (ii)
2019
01/01/19-
31/12/2021
2022
€29.86
n/a
35,612
27,337
-
-
-
115,380
-
-
-
-
-
-
-
-
-
35,612
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
Table 33
Balance
at 31
December
2022
Dividends
Awarded
& Released
Market Value
on Date of
Exercise/
Released
-
2,139
€35.29
29,419
30,568
23,770
-
-
-
-
-
-
-
14,755
€35.29
170,321
186,106
172,509
158,785
158,310
1,293
4,206
4,393
7,837
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,638
€36.23
32,860
30,280
56,528
1,247
-
-
-
-
-
-
-
-
2010 Savings-
Related Share
Option Scheme
2019
n/a
2024
n/a
€24.24
1,247
-
The market price of the Company's shares at 31 December 2022 was €37.01 and the range during 2022 was €32.05 and €48.03.
(i) The Remuneration Committee has determined that dividend equivalents should accrue on deferred 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.
124
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Shareholding Guideline for Executive Directors
Table 34 illustrates the current shareholdings of the executive Directors as a
multiple of base salary.
Proposed Implementation of Remuneration in 2023
Basic Salary and Benefits
Details of the executive Directors' salaries for 2023 compared with
2022 are set out in the Committee Chairman's Overview on page 108.
The Committee has reviewed the executive Directors' base salaries
and concluded that salary increases of 3.5% should be awarded to
the executive Directors in 2023 in recognition of their continued strong
performance, contribution and leadership of CRH.
Increases in salary for employees across the Group in 2023 will depend on
a range of factors specific to a region or business. In Ireland increases will
generally be 4.25%, while increases in the UK will be c. 4.5%.
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 Remuneration Committee Chairman's overview on
page 108, the monetary value of the pension contribution/allowance for
Mr. Manifold ceased in August 2022. The annual pension contribution/
allowance for Jim Mintern remains at 10% of his base salary.
2023 Annual Bonus Plan
The Remuneration Committee has determined that the 2023 Annual Bonus
Plan will be operated broadly in line with the 2022 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. The targets attaching to the 2023 bonus will be disclosed in the
2023 Annual Report and Form 20-F.
2023 Performance Share Plan Awards
For the 2023 PSP awards, awards will be assessed over the three-year
period to 31 December 2025. The metrics, weightings and opportunity for
the 2023 PSP awards are summarised in Table 35 on page 126.
Fees Paid to Former Directors
The 2013 Large and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment Regulations) Regulations in the UK, require disclosure
of payments to former Directors in certain circumstances. No payments
have been made to individual former Directors in those circumstances
which exceed the de minimis threshold of €20,000 per annum set by the
Remuneration Committee. For the purposes of Section 1110N of the
Companies Act 2014, details of the payments made to former Directors are
included in Table 45 on page 132.
Senan Murphy retired from the Board following the 2021 AGM and as
Finance Director on 1 June 2021. He continued as an employee until
May 2022 to facilitate the completion of a number of projects/initiatives.
Following his retirement in May 2022, the Remuneration Committee
determined that Mr. Murphy be treated as a 'good leaver'. Accordingly,
the Deferred Shares in respect of the bonuses granted in 2020, 2021 and
2022 were released to him, and his unvested award under the 2014 PSP
(i.e. the award made in 2021) will be released on its normal release date
subject to performance (to be measured at the normal time) and the normal
two-year holding period. His vested PSP awards (i.e. the awards made in
2018, 2019 and 2020) will be released at the normal release date following
the completion of the two-year hold period. Further details of Mr. Murphy's
awards were set out on pages 102 and 103 of the 2021 Annual Report
and Form 20-F. In line with our Policy, he also remains subject to a post-
employment holding requirement.
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.
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.
As outlined on page 89, responsibility for employee engagement transferred
from the SESR Committee to the Nomination & Corporate Governance
Committee in January 2023. The Remuneration Committee members are
kept up to date on the feedback from employee engagement activities,
including in relation to remuneration. Further details in relation to the
engagement with employees on remuneration matters during 2022 is
included on page 109.
Executive Director Shareholdings as a % of 2023 Base Salary (i)
Guideline (%
of Salary)
To be
achieved by
Holdings as of 1 March 2023
A. Manifold
350%
2023
187%
91%
410%
Value of shares
(% of salary)
0%
100%
200%
300%
400%
500%
600%
700%
J. Mintern
250%
2024
139%
34%
Value of shares
(% of salary)
0%
50%
100%
150%
200%
■ Beneficially Owned Shares (as at 1 March 2023)
■
■
Estimated after tax value of Deferred Share awards made in 2020, 2021 and 2022, 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 2022 (€36.44).
Table 34
Total Interests
(% of Salary)
688%
173%
126
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
Performance Share Plan Metrics - 2023 Awards
Table 35
Cumulative cash flow
(45% of award) (i)
TSR vs. tailored peer group
(20% of award) (ii)
RONA (2025)
(20% of award) (iii)
100%
25%
0%
)
t
n
e
m
e
e
l
f
o
%
(
g
n
i
t
s
e
V
$6.8bn
$7.9bn
)
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% 10.3%
11.9%
Sustainability and Inclusion & Diversity scorecard (15% of award)
Measure
5% - Driving to Net Zero
Baseline
Threshold (25% vesting)
Stretch (iv) (100% vesting)
Reason for selection
• Delivery of roadmap for target of 30%
emissions reduction by 2030
36.1mt
of CO2
This element will be based on a qualitative assessment by the
Committee (and feedback from the SESR Committee) in early 2026 in
relation to the development and implementation of a strategy to meet
this ambition. Assessment will be informed by a range of criteria, which
will be disclosed fully in the relevant Remuneration Report
• Embedding sustainability programmes in relevant operating companies:
- for waste management (1/3)
- for biodiversity (1/3)
- for water management (1/3)
96%
92%
81%
5% - Progress Toward a Net Zero Built Environment
• Revenue from Products with Enhanced
Sustainability Attributes
47%
5% - Creating an Inclusive & Diverse Company
• Representation of Women in Senior
Management
15%
97%
93%
82%
48%
17%
• Improvement in Inclusion Assessment
66
70
99%
95%
92%
50%
20%
73
Aligns with the Group’s target for a
30% reduction in absolute Scope
1 and Scope 2 CO2 emissions by
2030 (from a 2021 baseline) which
has been validated by the SBTi (v)
under the new 1.5°C science-based
framework
Aligns directly with progress
towards stated targets for 2030
(waste management target reflects
acceleration of ambition to 2025)
Aligns directly with our ambition to
achieve 50% by 2025
Supports our roadmap to our stated
2030 Ambition
Consistent with CRH’s focus on
inclusion as a driver of diversity and
enabler of innovation. Quantitative
assessment based on an externally
validated Enterprise Score from
engagement surveys
(i), (ii) and (iii) see Table 27 on page 121.
(iv) Vesting between threshold and stretch will be calculated on a straight-line sliding scale basis.
(v) The SBTi's Target Validation Team has classified CRH's Scope 1 and Scope 2 target ambition and has determined that it is in line with a 1.5°C trajectory. The target boundary
includes biogenic emissions and removals from bioenergy feedstocks.
126
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Non-executive Directors
Total Shareholder Return
The remuneration of non-executive Directors is determined by the Board
of Directors. A Committee of the Chairman and the executive Directors
considered and approved a 3.5% increase in the fees of the non-executive
Directors with effect from 1 January 2023. The Remuneration Committee
considered and approved a 3.5% increase for the Chairman. Both increases
are in line with the increase received by the executive Directors (see Table
36 for details of the fees applicable with effect from 1 January 2023). Details
of the remuneration paid to non-executive Directors in 2022 are set out in
Table 37.
Changes in the remuneration of the Directors
Table 44 on page 131 shows the annual percentage change in the
executive and non-executive Directors' salary/fees, benefits and bonus
between 2020 and 2022 compared to the change in total average
employment costs in respect of employees in the Group as a whole
between 2020 and 2022.
The value at 31 December 2022 of €100 invested in CRH in 2012,
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 38
on page 128.
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
14.8% (2021: 15.5%).
Remuneration paid to Chief Executive 2013 – 2022
Table 39 on page 128 shows the total remuneration paid to the Chief
Executive in the period 2013 to 2022 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.
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 Chairman
Audit Committee Chairman
Combined Senior Independent Director and Committee Chairman
SESR Committee Chairman
Fee for Europe-based non-executive Directors
Fee for US-based non-executive Directors
Table 36
2023
2022
€669,750
€647,250
€93,400
€90,250
€33,900
€32,750
€26,400
€25,500
€31,825
€30,750
€41,400
€41,400
€31,825
€40,000
€40,000
€30,750
€15,500
€15,000
€31,000
€30,000
Individual Remuneration for Non-executive Directors for the year ended 31 December 2022 (Audited) Table 37
Non-executive Directors
R. Boucher
C. Dowling (iv)
R. Fearon (v)
J. Karlström
S. Kelly
B. Khan (vi)
L. McKay (v)
G.L. Platt
M.K. Rhinehart
S. Talbot
Basic fees (i)
€000
Benefits (ii)
€000
Other fees (iii)
€000
Total
€000
2022
2021
2022
2021
2022
2021
2022
2021
2020
90
90
90
90
90
90
90
90
90
90
88
69
88
88
88
4
88
88
88
88
4
3
–
–
–
–
–
–
–
3
5
3
–
–
–
–
–
–
–
3
572
557
48
63
48
37
62
47
103
101
63
97
72
83
48
10
62
92
62
47
666
141
153
138
193
153
187
162
173
141
650
109
150
135
189
14
150
180
150
138
605
–
10
127
178
–
10
165
141
127
900
777
10
11
1,197
1,077
2,107
1,865
1,363
(i) Further information in relation to the non-executive Director fee structure is set out in Table 36.
(ii) Includes the cost of hotel accommodation for Irish based non-executive Directors in respect of meetings held in Ireland which have been grossed up for Irish tax purposes.
(iii) Other Remuneration: Includes remuneration for Chairman, Board Committee work and allowances for non-executive Directors.
(iv) Caroline Dowling became a Director on 22 March 2021.
(v) Rick Fearon and Lamar McKay became Directors on 3 December 2020.
(vi) Badar Khan became a Director on 27 October 2021.
128
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
TSR Performance (2012-2022)
Table 38
CRH (DUB)
FTSE 100
Eurofirst 300
400
350
300
250
200
150
100
50
0
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Remuneration paid to Chief Executive (2013-2022)
Table 39
2013
Single figure Remuneration (€m) (i)
€4.2m
Annual Bonus (% of max)
30%
2014
€4.3m
100%
2015
€5.4m
100%
2016
2017
2018
2019
2020
2021
2022
€9.9m
€8.7m
€8.2m
€9.3m
€11.2m
€13.9m
€12.1m
98%
96%
81%
86%
86%
85%
85%
Long-term incentive
award vesting (% of max)
PSP: 49%
PSP: 0%
PSP: 78%
LTIP: 34%
Options: 75%
Options: 37%
100%
79%
59%
71%
87%
100%
100%
(i) Single figure remuneration comprises the total fixed pay, annual bonus and the value of long-term incentives vesting in respect of each year.
128
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Chief Executive Pay Ratio compared to UK-based Employees
As required by the reporting regulations with which CRH complies, Table
40 summarises the ratio of the Chief Executive’s remuneration compared
with the UK workforce (which represents only 13% of the Group’s c.75,800
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 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 keeping with our remuneration philosophy and policy, a significant
proportion of the total remuneration for executive Directors is derived from
variable, performance-based remuneration. Total remuneration for the Chief
Executive— and therefore the pay ratio— is likely to vary year-on-year
based on the Group's performance, as illustrated in the scenario charts on
page 118. Noting that the total remuneration pay ratio will be volatile over
time, the Committee has elected to continue also disclosing the pay ratio
for base salary. In line with the Committee's policy that executive Directors'
base salaries will normally increase in line with the typical level of increase
awarded to other employees in the Group, it is anticipated that this ratio will
be more stable – and representative of relative changes in fixed pay - over
time.
The median total remuneration pay ratio for 2022 of 259:1 demonstrates
continued alignment of the Chief Executive's remuneration with the
performance of CRH over the longer-term. A significant proportion (56%) of
the Chief Executive's total remuneration for 2022 is derived from the vesting
of the 2020 PSP award, which was based on the delivery of sustained
financial performance and above-market shareholder returns over the last
three years. Through the denomination of this award in CRH shares, its
value also directly reflects CRH's share price performance over this period;
16% of the PSP value reported in the Single Figure of Total Remuneration
table derives from share price appreciation and accrued dividends (i.e. total
shareholder return). These shares cannot be sold for a further two years,
further aligning the Chief Executive's interests with those of shareholders
over the longer-term.
Chief Executive Pay Ratios
Total Remuneration Pay Ratios compared to UK-based Employees
Table 40
P25 (lower quartile)
P50 (median)
P75 (upper quartile)
Chief Executive
Year
2022
2021
2020
2019
Calculation
Methodology
C
C
C
C
Total
remuneration
€35,000
€35,700
€30,400
€32,200
Ratio
345:1
390:1
368:1
289:1
Total
remuneration
€46,600
€48,200
€42,000
€44,900
Ratio
259:1
289:1
267:1
207:1
Total
remuneration
€59,700
€62,400
€54,600
€58,900
Ratio
Total remuneration
202:1
223:1
205:1
158:1
€12,071,100
€13,906,922
€11,200,211
€9,311,400
Table 41
Salary Pay Ratios compared to UK-based Employees
Year
2022
2021
2020
2019
Calculation
Methodology
C
C
C
C
P25 (lower quartile)
P50 (median)
P75 (upper quartile)
Chief Executive
Salary
€30,200
€26,900
€28,200
€28,500
Ratio
55:1
60:1
52:1
53:1
Salary
€37,300
€36,800
€37,800
€42,400
Ratio
44:1
44:1
39:1
36:1
Total
remuneration
€46,900
€54,400
€46,800
€49,900
Ratio
35:1
30:1
31:1
31:1
Salary
€1,651,600
€1,607,400
€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 2022 this rate was
0.87:1 (2021: 0.85:1; 2020: 0.90:1; 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 considered the pay data for the three individuals identified and believes that they fairly reflect pay at the relevant quartiles amongst the UK
employee population, albeit noting the exact figures are likely to vary slightly year-on-year due to changes in the employee population and thus the identified
individuals by the selection methodology. The Committee reviewed the underlying rationale for the year-on-year change in the quartile figures for the identified UK
employees. The total remuneration outcomes reflect another year of strong performance by our UK businesses (which forms the basis of bonus payouts for eligible
employees in this sample), with increasing variability in the package observed at the P75 level; for which a greater proportion of the package is performance-
based. The Committee also notes the year-on-year variance in salaries at the quartiles, which reflects the fact that the individuals were selected based on total
remuneration and the pay mix differs by role, location and operating company. On a like-for-like basis, the budgeted salary increase across the UK workforce in
2022 was 2.75%.
130
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
Relative Importance of Spend on Pay
Relative Importance of Spend on Pay Table 42
Table 42 sets out the amount paid by the Group in remuneration to
employees compared to the amount returned to shareholders as part of the
share buyback programme and dividend distributions made to shareholders
in 2021 and 2022. 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 2022, Ellason acted as the Committee's independent remuneration
consultants. The Committee has satisfied itself that the advice provided by
Ellason is robust and independent and that the Ellason engagement partner
and team that provide remuneration advice to the Committee do not have
connections with CRH plc that may impair their independence. Ellason
are signatories to the Voluntary Code of Conduct in relation to executive
remuneration consulting in the UK. During 2022, Ellason 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 2022, the total fees paid to Ellason were £54,162.
2022 Annual General Meeting
The voting outcome in respect of the remuneration-related votes at the
2022 AGM is set out in Table 19 on page 111.
Lamar McKay
Chair of Remuneration Committee
1 March 2023
Share Buyback/
Dividends
Remuneration
received by all
employees
EBITDA (as
defined)*
2022
2021
2022
2021
2022
2021
$1.2bn
$0.9bn
$0.9bn
$0.9bn
Total:
$2.1 billion
Total:
$1.8 billion
Shares Repurchased
Dividends Paid
$6.4bn
$6.2bn
$5.6bn
$5.0bn
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
130
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Shareholdings of Directors and Company Secretary
Table 43
Name
Executive Directors
A. Manifold (ii)
J. Mintern (ii)
Non-executive Directors
R. Boucher
C. Dowling
R. Fearon (iii)
J. Karlström
S. Kelly (iii)
B. Khan (iii)
L. McKay (iii)
G.L. Platt
M.K. Rhinehart (iii)
S. Talbot
Company Secretary
N. Colgan
Total
Beneficially Owned (i)
31 December 2022
31 December 2021
87,692
33,957
23,450
1,000
5,000
2,000
1,000
1,000
4,000
1,108
1,000
1,550
5,441
168,198
89,727
33,603
23,300
1,000
5,000
2,000
1,000
1,000
4,000
1,082
1,000
1,550
5,087
169,349
(i) Excludes awards of Deferred Shares, details of which are disclosed on page 124. The Directors and Company Secretary do not have any special voting rights.
(ii) The total interests of the executive Directors, using the methodology set out in the Shareholding Guidelines section on page 117, are illustrated in Table 34 on page 125.
(iii) Holdings in the form of American Depositary Receipts (ADRs).
Changes in the Remuneration of the Directors
Table 44
Percentage change from prior year
Salary/Fees
Benefits
Bonus
2022
2021
2020
2022
2021
2020
2022
2021
2020
Executive Directors
A. Manifold
J. Mintern (i)
Non-executive Directors
R. Boucher
C. Dowling (ii)
R. Fearon
J. Karlström
S. Kelly
B. Khan (iii)
L. McKay
G.L. Platt
M.K. Rhinehart
S. Talbot
+3%
+3%
+3%
+2%
+2%
+2%
+2%
+2%
+25%
-10%
+15%
+2%
+9%
n/a
+6%
n/a
+6%
+6%
+6%
n/a
+6%
+6%
+6%
+6%
Average Workforce Costs (iv)
-1.6%
+4.9%
-4%
n/a
-6%
n/a
n/a
-6%
-6%
n/a
n/a
-6%
-6%
-6%
+1%
+35%
+52%
-20%
-
n/a
n/a
n/a
n/a
n/a
n/a
n/a
-
-15%
n/a
-37%
n/a
+3%
+3%
+2%
n/a
+3%
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
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
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
(i) Appointed with effect from 1 June 2021. Increase in 2022 shown on a full year equivalent basis.
(ii) Appointed with effect from 22 March 2021. Increase in 2022 shown on a full year equivalent basis.
(iii) Appointed with effect from 27 October 2021. Increase in 2022 shown on a full year equivalent basis.
(iv) For the purposes of Section 1110N(2)(e)(ii), CRH plc had no employees in each of the financial years from 2017 to 2022.
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
132
2022 Annual Report and Form 20-F
Details of Remuneration Charged against Profit in 2022 (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
2022
€000
2,513
3,082
1,541
499
63
7,698
2.0
900
1,197
10
2,107
10
9
9,814
2021
€000
2,376
2,841
1,421
668
50
7,356
1.92
835
1,118
11
1,964
9.58
9
9,329
Table 45
2020
€000
2,237
2,707
1,353
816
40
7,153
2.00
730
995
1,725
8.83
40
8,918
(i) See analysis of 2022 remuneration by individual in Tables 20 and 37 on pages 112 and 127 respectively.
(ii) Consulting and other fees paid to a number of former directors.
For the purposes of Section 305 of the Companies Act 2014, the total aggregate of "emoluments" paid or received by Directors in respect of qualifying services was €9.8 million;
the total gains on the exercise of shares options was €nil; the aggregate value of shares received by Directors under the long-term incentive scheme was €8.1 million (see page
112 for more details); the aggregate amount of contributions paid to a retirement benefit scheme was €nil; and there were no payments in respect of loss of office. Details of
share-based payments charges through P&L can be found in note 8 on page 200.
132
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
134
2022 Annual Report and Form 20-F
Directors’ Report
The Directors submit their report and the audited Consolidated Financial
Statements for the year ended 31 December 2022.
Principal Activity, Results for the Year and Review of Business
CRH is the leading building materials business in the world, employing
c.75,800 people at c.3,160 locations in 29 countries. CRH manufactures
and supplies a range of building materials, products and innovative
solutions for the construction industry. From primary materials, to products
that are highly engineered and high-value-added, to integrated building
solutions that enable faster, more sustainable construction, 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 homes and
commercial buildings. The Group has c.900 subsidiary, joint venture and
associate undertakings; the principal ones as at 31 December 2022 are
listed on pages 290 to 293.
The Group's strategy, business model and development activity are
summarised on pages 11 to 79 and are deemed to be incorporated in
this part of the Directors' Report. As set out in the Consolidated Income
Statement on page 176, the Group reported a profit before tax for the
year of $3.5 billion from continuing operations. Comprehensive reviews of
the financial and operating performance of the Group during 2022 are set
out in the Business Performance section on pages 61 to 79; key financial
performance indicators are set out on page 65.
The treasury policy and objectives of the Group are set out in detail in note
22 to the Consolidated Financial Statements.
During the year ended 31 December 2022, 29,755,861 ordinary shares
were repurchased on the Euronext Dublin for a total of $1.2 billion, at an
average price of $39.22 per share. Further details in relation to the buyback
programme and the Company's profits available for distribution are set on
pages 137 and 241 respectively.
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 5% dividend increase in 2021, an interim dividend of
$0.24 (2021: $0.23) per share was paid in October 2022. The Board is
recommending a final dividend of $1.03 per share. This would give a total
dividend of $1.27 for the year (2021: $1.21), an increase of 5% over last
year. The earnings per share for the year were $3.50, representing a cover
of 2.8x the proposed dividend for the year. It is proposed to pay the final
dividend on 4 May 2023 to shareholders registered at the close of business
on 17 March 2023. 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.
2023 Outlook
The 2023 outlook set out in the Chief Executive’s Review on page 15 is
deemed to be incorporated in this part of the Directors’ Report.
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 139 to 148 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 should 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 46 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 46
Reporting Requirement
Relevant Policies (i)
Location of Information (ii)
Pages
Environmental and Climate-Related
Matters
Environmental Policy
Sustainability, Transparency on Climate,
Risk, Governance
24 to 49, 56 to 59, 104 to 105, 142
and 150 to 156
Social & Employee Matters
Health & Safety Policy, Social Policy
Sustainability, SESR Committee Report
and Principal Risks
24 to 49, 104 to 105 and 139 to 148
Human Rights
Social Policy, Code of Business Conduct
Sustainability
24 to 49, and 101
Anti-bribery & Corruption
Code of Business Conduct
Sustainability and Risk Factors
24 to 49, and 145
Business Model
Non-financial KPIs
Principal Risks
–
–
–
Business Model
Key Performance Indicators
Risk Management
Principal Risks and Uncertainties
20 and 21
65
50 to 54
139 to 148
(i) Policies are available on CRH’s website, www.crh.com.
(ii) The referenced sections are deemed to be incorporated within this Directors’ Report.
134
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Regulatory Information1 Table 47
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 80 to 132, 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 50 to 54 and 139 to 148, 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 8 and 29 to the Consolidated Financial Statements on pages 200 to 202 and 239 to 241 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 Chief Financial Officer have entered into service contracts, the principal terms of which are summarised in the 2022 Directors’ Remuneration
Policy on page 95 of the 2021 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.
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 8 and 9, the
Strategy Report on pages 11 to 59, the Principal Risks and Uncertainties section on pages 139 to 148, the Business Performance section on pages
61 to 79, the information on inclusion and diversity on pages 38 to 43, the details of earnings per Ordinary Share in note 12 to the Consolidated
Financial Statements, the details of derivative financial instruments in note 25, the details of the reissue of Treasury Shares in note 29 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: “Chairman's Introduction”, “Strategy Report – Chief Executive's Review”, "Governance – Directors' Report" and “Strategy
Review - Our Strategic Framework”, in each case regarding the Group's strategy, plans and expectations for future growth and delivery; "Strategy
Report – Solutions for a Sustainable Future", “Strategy Report – Decarbonisation” and “Strategy Report – TCFD Executive Summary” with regard
to our sustainability priorities and ambitions, our strategies for decarbonisation and reaching other sustainability-related targets, policy, and legal
and regulatory developments that may affect CRH and our climate-related risks and opportunities; “Business Performance and Segmental Reviews
- Chief Financial Officer's Review” with respect to our belief that the Group has sufficient resources to meet its debt obligations, working capital,
and capital and other expenditure requirements in the short and long terms, and the Group’s execution of its strategy; “Business Performance and
Segmental Reviews” with respect to our expectations regarding economic activity and fiscal developments in our operating regions, our expectations
for the residential, non-residential and infrastructure markets, and our strategies for individual segments and business lines; “Governance – Safety,
Environmental & Social Responsibility Committee Report” with regard to our environment, social, and governance strategies, priorities and initiatives;
“Governance – Directors' Remuneration Report” with regard to growth forecasts; “Governance – Directors’ Report”, “Governance – Principal Risks
and Uncertainties” and "Strategy Report – Risk Management" with respect to the potential impact and evolving nature of risk as well as the direction
risk may be trending; and “Financial Statements” regarding projected financial metrics and the expected impact of climate change and carbon
reduction targets.
These forward-looking statements may generally, but not always, be identified by the use of words such as “will”, “anticipates”, “should”, “could”,
“would”, “targets”, “aims”, “may”, “continues”, “expects”, “is expected to”, “estimates”, “believes”, “intends” or similar expressions. These forward-
looking statements include all matters that are not historical facts or matters of fact at the time of this document.
By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may or
may not occur in the future and reflect the Company’s current expectations and assumptions as to such future events and circumstances that may
not prove accurate. A number of material factors could cause actual results and developments to differ materially from those expressed or implied
by these forward-looking statements, certain of which are beyond our control and which include, among other things: the COVID-19 pandemic;
macroeconomic, financial conditions and changes in consumer preferences; interest rates, inflation, price volatility, availability of labour and/or
materials shortages, 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; approval or allocation of funding for infrastructure programmes; adverse political developments
in various countries and regions; failure to complete or successfully integrate acquisitions; adverse changes to laws and regulations, including in
relation to climate change and sustainability; the direct and indirect effects of climate change and related regulations on our business, as well as the
impact of unfavorable weather and other physical impacts on our operations; consumer sentiment, political stability and economic growth in relevant
areas of the world; wars, political conflict and acts of terrorism; cyber-attacks or sabotage; and the specific factors identified in the discussions
accompanying such forward-looking statements and in the Principal Risks and Uncertainties included on pages 139 to 148 of the Directors’ Report
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
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 241 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.
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
•
the financial position of the Group, its cash flows, liquidity position and
borrowing facilities which are described in the Business Performance
Review on pages 60 to 79. In addition, notes 21 to 25 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
Appropriate stress testing of certain key performance, solvency and
liquidity assumptions, such as continuing operations EBITDA (as defined)*
margins and Net Debt/EBITDA (as defined)*, 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.
For more detail on our principal risks and uncertainties, how they could
impact the Group and how the Group manages these risks, see pages 139
to 148.
Scenario Modelled
Relevant Principal Risks
136
2022 Annual Report and Form 20-F
Directors’ Report continued
Going Concern and Viability Statements
The Group continues to serve the societal need for building materials
products and integrated solutions and in doing so creating long-term
value and delivering superior returns for all our stakeholders. The Directors
have reviewed the long-term prospects of the Group to assess its viability,
carrying out a robust assessment of our current position and the principal
risks (pages 139 to 148) facing the Group, including those which would
threaten its strategy (page 12 to 19), business model (page 20 and 21),
future performance, solvency or liquidity.
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 focused on creating long-term value
and delivering superior returns for all our stakeholders through disciplined
capital management and operational efficiency.
Going Concern
The Group’s going concern assessment focuses on immediately available
sources of liquidity to fund our anticipated trading pattern, plus anticipated
acquisition spend, returns to shareholders and capital investment, ensuring
appropriate headroom. The Directors are required to evaluate that the
Group has adequate resources to continue in operational existence for
a period of at least 12 months from the date of approval of the financial
statements (the 'period of assessment').
Viability
Scenario 1: Recessionary
Environment
Economic slowdown/recession
resulting in revenue reductions and
margin compression
Scenario 2: One-off Expense
Impact of a potential large event,
fine and/or penalty
• Industry Cyclicality and
Economic Conditions
• Portfolio Management
• Public Policy and Geopolitics
• Laws, Regulations and Business
Conduct
• Public Policy and Geopolitics
• Information Technology and
Cyber Security
• Combination of relevant risks
from prior scenarios
The Group’s viability assessment focuses on the expected future
solvency or liquidity of the Group in the face of more severe, but plausible,
unexpected events. The Directors have 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 assessment. A three-year period is considered
appropriate for this viability statement for the following reasons:
Scenario 3:
Combination (1&2)
Combination of prior scenarios
overlapping or occurring
simultaneously
•
it aligns with our normal strategic planning time horizon;
Conclusion
• 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
Assessment of Going Concern and Viability
In carrying out their assessment of going concern and viability, the Directors
considered a wide range of information, including:
•
•
the Group's business activities together with the factors likely to affect
its future development, performance and position which are set out in
the Strategy Review and in this report on pages 11 to 59;
the Group’s Strategic plan (“the plan”) and projections and the financial
position of the Group considering the Group’s cash flows, committed
funding and liquidity positions, forecast future funding requirements,
other key financial ratios, including those relevant to maintaining the
Group’s investment grade credit ratings and the Group’s 2030 climate
targets; and
While the Board acknowledges that the potential severity, complexity and
velocity of the risks assessed may change, based on its review of the
Group's activities, cash flows, liquidity position and borrowing facilities for
the period of assessment, and having assessed the principal risks facing
the Group, the Board has 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 and will be able to
meet its liabilities as they fall due over the aforementioned 12-month going
concern period and three-year viability assessment period to 31 December
2025. For this reason, the Directors continue to adopt the going concern
basis in preparing the Consolidated Financial Statements.
Risk Management and Internal Control1
The Directors confirm that, in addition to the monitoring carried out by the
Audit Committee under its Terms of Reference, they have reviewed the
effectiveness of the Group’s risk management and internal control systems
up to and including the date of approval of the financial statements. This
review had regard to all material controls, including financial, operational and
compliance controls that could affect the Group’s business.
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 Supplemental 20-F and
Other Disclosures section on page 269.
*EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
136
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Directors’ Compliance Statement
Disapplication of Pre-emption Rights
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
Resolution 3 to be proposed at the 2023 AGM deals with the 2022
Directors’ Remuneration Report (excluding the Remuneration Policy
summary), as set out on pages 108 to 132, which is being presented to
shareholders for the purposes of a non-binding advisory vote in line with the
requirements of Section 1110N(6) of the Companies Act, 2014.
Changes to the Board of Directors
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 2018 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 their 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 2023 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 2023 AGM (Resolution 7) to renew the annual
authority for that purpose. The authority will be for an amount which
represents just under 50% of the issued Ordinary Share capital as at 1
March 2023. 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.
If approved, this authority will expire on the earlier of the date of the AGM in
2024 or 26 July 2024.
Resolution 8 is a special resolution which, if approved by shareholders,
will renew the annual authority of the Directors to disapply statutory pre-
emption rights in relation to allotments of Ordinary Shares for cash in certain
circumstances.
In November 2022, the Pre-Emption Group published a revised Statement
of Principles, which increased the guideline threshold for the annual
disapplication of pre-emption rights authorities from 10% to 20% of a
company’s issued share capital, with some additional flexibility for follow-on
offers of up to a maximum of an additional 4% of a company’s issued share
capital in specified circumstances. Having considered the matter, the Board
has decided to seek authority under Resolution 8 for the disapplication
of pre-emption rights up to a maximum of 10% of the Company’s issued
share capital and will keep this under review in future years. This proposal
is in line with the authorities received by the Company in prior years. The
10% limit includes any Treasury Shares reissued by the Company while the
authority in Resolution 8 remains operable.
Transactions in Own Shares
Under the share buyback programme, a total of 29,755,861 Ordinary
Shares, equivalent to 3.96% of the Company’s issued share capital,
were repurchased during 2022, at an average price of $39.22 per share.
22,000,000 Ordinary Shares, equivalent to 2.92% of the Company’s issued
share capital were cancelled on 22 December 2022 as part of the Group's
management of its Treasury Share requirements.
As at 1 March 2023, 9,819,256 shares were held as Treasury Shares,
equivalent to 1.32% of the Ordinary Shares in issue (excluding Treasury
Shares). The Treasury Share balance at 31 December 2022 was 7,398,112,
equivalent to 0.98% of the Ordinary Shares in issue (2021: 3,476,859 (0.5%)).
During 2022, 3,834,608 (2021: 3,439,904) Treasury Shares were reissued
under the Group’s employee share schemes.
A special resolution will be proposed at the 2023 AGM (resolution 9) 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 2024 or 26 July 2024. As at 1 March 2023, options
to subscribe for a total of 1,132,656 Ordinary Shares are outstanding,
representing 0.15% of the issued Ordinary Share capital (excluding Treasury
Shares). If the authority to purchase Ordinary Shares was used in full, the
options would represent 0.17% of the remaining shares in issue.
As outlined on page 65, during 2022 the Group returned a further $1.2
billion of cash to shareholders under its share buyback programme. A
further buyback tranche of $300 million is underway and is scheduled to
complete by 30 March 2023.
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.
Events after the Balance Sheet Date
Details of post-Balance Sheet events are outlined in the Accounting Policies
and notes 2 and 29 to the Consolidated Financial Statements on pages
181, 193 and 241 respectively.
138
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
Annual General Meeting
The Notice of Meeting for the 2023 AGM will be published in March on the
CRH website (www.crh.com) and is expected to be posted to shareholders
on 29 March 2023.
Statement of Directors’ Responsibilities
The Directors as at the date of this report, whose names are listed on pages
82 to 84, are responsible for preparing the Annual Report and Form 20-F
and Consolidated Financial Statements in accordance with applicable laws
and regulations.
The Directors have appointed appropriate accounting personnel, including
a professionally qualified Chief Financial Officer, 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
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’).
• 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 2022; and
• the Directors' Report contained on page 134 to 138 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
Each of the Directors also confirm that they consider that the Annual Report
and Form 20-F and Consolidated Financial Statements, taken as a whole, is
fair, balanced and understandable and provides the information necessary
for shareholders to assess the Company's position, performance, business
model and strategy.
For the purposes of Section 330 of the Companies Act 2014, each of the
Directors also confirms that:
• so far as they are aware, there is no relevant audit information of which
the Company’s statutory 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
1 March 2023
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 2022 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 248 to 252), 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.
138
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
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 are reviewed on an
annual basis and represent the principal risks and uncertainties faced by the
Group at the time of compilation of the 2022 Annual Report and Form 20-F.
During the course of 2023, new risks and uncertainties may materialise
attributable to changes in markets, regulatory environments and other
factors and existing risks and uncertainties may become less relevant.
Principal Strategic Risks and Uncertainties
Industry Cyclicality and Economic Conditions
Description
How We Manage the Risk
Construction activity, and therefore demand for the Group’s products, is inherently
cyclical and influenced by multiple factors, including global and national economic
circumstances (particularly those affecting the infrastructure and construction
markets), monetary policy, consumer sentiment, swings in fuel and other input costs,
and weather conditions that may disrupt outdoor construction activity.
In general, economic uncertainty exacerbates negative trends in construction activity leading
to postponement of orders, and rising interest rates typically adversely impact construction
activity and demand for building materials and services. The Group may also be adversely
impacted by fluctuations in the price of fuel and principal energy-related raw materials
such as bitumen and steel (which accounted for approximately 13% of annual Group sales
revenues in 2022 (10% in 2021)), and monetary and public policies in the countries in which
the Group operates.
There is no guarantee that any future actions taken by Group management will be effective
in managing these risks and maintaining financial performance in the face of current changes
in economic conditions. In addition, there is no guarantee that the Group will continue to be
able to absorb the inflationary pressures we are currently facing across fuel, energy, labour
and transport, among other inputs, in many of our major markets. Failure to manage 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.
• Market diversification strategies, in addition to the Group’s multiple
end-use sectors
• Constant focus on cost control, use of hedging instruments to
control input increases, strong cash generation and disciplined
financial management
• Disciplined and focused approach to capital allocation and
reallocation to ensure our capital is deployed to where we see
optimum opportunity for growth
Developments During 2022
• Strong commercial management and disciplined cost control has
enabled the Group to maintain robust performance amid significant
inflationary pressures
• The continued execution of the Group’s integrated and sustainable
solutions strategy has enabled the Group to offer a differentiated
value-adding strategy
• The solutions strategy has also created a more resilient business
which, due to the sector breadth of our customer base, is more
agile and flexible and less exposed to cyclical economic activity
Risk trend:
People Management
Description
The Group may not achieve its strategic objectives if it is not successful in attracting,
engaging, retaining and developing employees, planning for leadership succession,
developing a diverse and inclusive workforce, and building constructive relationships
with collective representation groups.
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, engages, develops and promotes talent, the Group must attract and retain a
diverse workforce and maintain an inclusive working environment.
The Group operates in a labour-intensive industry and can face frontline labour shortages
that impact the Group's ability to produce goods, operate facilities and install products.
Additionally, any significant loss of employee resources for a sustained period of time due
to sickness or a public health emergency could impact the Group’s ability to maintain
operations.
The Group must also maintain constructive relationships with the trade/labour unions that
represent certain employees under collective agreements. Failure to do so could mean
that the Group cannot renegotiate on appropriate terms the relevant collective agreements
upon expiration or may face strikes or work stoppages. Poor labour relations could create
reputational risk for the Group and impact operational continuity, which could have a
material adverse effect on the results of operations and financial condition of the Group.
Risk trend:
How We Manage the Risk
• Global I&D Council, chaired by our Chief Executive, with I&D
Committees at a Division and corporate levels, and local I&D plans
and/or ERGs across many operating companies
• Talent management programmes (e.g. succession planning, I&D
leadership development programme etc.) are deployed across
our operating companies, with oversight and support from Group
Human Resources
• Development interventions are in place including enterprise-wide
leadership development training
• Positive employee and trade/labour union relations are maintained
Developments During 2022
• Established a formal mentorship programme for our top talent and
specific programmes targeting our early in career talent
• Continued roll out of our Front Line Leadership programme across
all operating companies
• More than 250 of our most senior leaders participated in a six-
month training programme on inclusive leadership development
to ensure that they have the capability to build inclusive working
environments
140
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
Commodity Products and Substitution
Description
How We Manage the Risk
Many of the Group’s products are commodities that face strong volume and price
competition. Such products may also face competition from substitute products,
including new products, that the Group does not produce. The Group must maintain
strong customer relationships to ensure it can respond to changing consumer
preferences and approaches to construction. Failure to differentiate and innovate
could lead to market share decline, thus adversely impacting financial performance.
The Group operates in a competitive environment in which pricing is impacted by
macroeconomic conditions, the number of competitors, the degree of utilisation of
production capacity and the specifics of product demand, among other factors. The
Group’s local competitors are increasingly innovative and cost competitive. The Group
experiences downward pricing pressure from time to time across its different markets, and
the Group may not always be able to raise prices to offset increased operating expenses
and inflationary pressures. The Group’s profits are particularly sensitive to changes in
volume, as the cement business is capital-intensive and thus has significant fixed and semi-
fixed costs.
Many Group products compete with building products that the Group does not produce.
Any significant shift in demand preference to these alternate products could adversely
impact market share and results of operations.
If the Group falls behind its competitors in developing new products which respond to
customer needs, such as innovative, sustainable products, demand for the Group’s
products might decline, which could impact our financial performance.
• Our integrated building solutions focused business model and a
strong focus on customer connectivity 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. For more information please see our
Solutions for a Sustainable Future section on page 24
• Robust cost management practices and production process
innovation, ensuring competitive product pricing
Developments During 2022
•
•
Further development of our integrated solutions model, prompting
enhanced customer collaboration to develop more value-added
solutions and building practices
Integrating products and services (e.g. base materials, water
management and utility services, engineering and technical
expertise) to offer solutions that drive higher value relationships
with customers, and associated commercial and operational
benefits
• The Group continues to invest in innovation, announcing a $250
million venturing and innovation fund in 2022
Risk trend:
Portfolio Management
Description
The Group engages in acquisition and divestment activity as part of 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. Failure to efficiently identify and execute deals may limit the
Group’s growth potential and impact financial performance.
The Group’s acquisition strategy depends on successfully identifying and acquiring suitable
assets at prices that satisfy our stringent cash flow and return on investment criteria. 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 required funds on acceptable terms, regulatory approvals
(including in certain instances from competition authorities) and competition for transactions
from peers and other entities acquiring companies in the building materials sector. In
addition, situations may arise where the Group may be liable for the past acts, omissions or
liabilities of acquired companies, or may remain liable in cases of divestment; for example,
the potential environmental liabilities addressed under the Sustainability and Corporate
Social Responsibility risk on page 144.
In addition, the Group’s ability to realise the expected benefits from acquisitions depends
in part on its ability to integrate newly-acquired businesses. If the Group fails to integrate
acquisitions, it may not achieve expected growth synergies or other financial and operating
benefits, and it may incur write-downs, impairment charges or unforeseen liabilities that
could negatively affect its operating results or financial position or could otherwise harm
its business. Further, integrating an acquired business, product or technology could divert
management time and resources from other matters.
Risk trend:
How We Manage the Risk
• Expertise in identifying and evaluating targets, conducting due
diligence (supported by external specialists when necessary) and
executing integration. Many core markets are fragmented and
continue to offer focused growth opportunities
• The Group maintains a portfolio of diverse solutions-orientated
businesses which can be scaled to create new growth
opportunities and advance our decarbonisation journey
Developments During 2022
• Continued execution of the Group’s strategy to create value
through the efficient allocation and reallocation of capital, with
divestment of the Building Envelope business for $3.8 billion and
investment of $3.3 billion in acquisitions, including Barrette in July
2022 for an enterprise value of $1.9 billion - see note 30 to the
Consolidated Financial Statements for more details
• Our acquisition pipeline remains strong, and our significant balance
sheet capacity provides optionality to capitalise on opportunities
that create shareholder value
•
For more information on our portfolio management activity during
the year refer to the Chief Financial Officer's Review on page 62
140
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Public Policy and Geopolitics
Description
How We Manage the Risk
Adverse public policy, economic, social and political situations in any country in
which the Group operates could lead to health and safety risks for the Group's
people, a fall in demand for the Group’s products, business interruption, restrictions
on repatriation of earnings or a loss of plant access.
Public policy, as well as the financial resources and investment strategy of government
bodies in our markets, affect demand for our products. The allocation of government
funding for public infrastructure programmes is a key driver for our markets, such as the
infrastructure and utilities elements of the Build Back America bill in the US. However,
government budget deficits might reduce government infrastructure investment and reduce
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 market demand, adversely
impacting financial performance.
The Group currently operates mainly in Europe and North America, as well as, to a lesser
extent, in less developed emerging markets in Eastern Europe, the Philippines and China.
The economies of these countries are at varying stages of development, which could
present multiple risks and uncertainties, including:
• Changes in political, social or economic conditions;
• New or strengthened trade protection measures, currency controls or import or export
• Mitigation strategies to protect CRH’s people and assets are in
place in high-risk areas
• Senior management and Board monitoring of economic indicators
and commentaries
• Two-phase budgeting process with prevailing economic and
market forecasts factored in
Developments During 2022
• As the conflict in Ukraine escalated, following Russia's invasion in
February 2022, the primary focus of the Group was on the health
and safety of our people. Our crisis management structures were
put into immediate effect, with our focus on getting our people and
their families out of conflict zones and to safety in neighbouring
countries
•
Increased hygiene and sanitation procedures continued across our
businesses, as some regions experienced fresh waves of different
strains of COVID-19
licensing requirements;
• Political unrest and currency shocks;
• Activism and civil disturbance, triggered by natural disasters, terrorist events or outbreak
of armed conflict, among other potential causes;
• Labour and procurement practices which contravene ethical considerations and
regulatory requirements;
• Unexpected changes in regulatory and tax requirements; and
• Lockdowns or other restrictions due to public health emergencies, such as pandemics
In addition, CRH has people and assets in Ukraine and neighbouring countries. The ongoing
geopolitical conflict in Ukraine poses potential physical risks to our people and operations
and continues to create economic uncertainty. The Board is actively monitoring the situation
in Ukraine, with the priority being the safety and security of our people.
Risk trend:
Strategic Mineral Reserves
Description
Appropriate reserves are increasingly scarce, and licences and permits required
for operations are becoming harder to secure. Numerous uncertainties are inherent
in estimating reserves and projecting production rates of the minerals used in the
Group’s products. Failure of the Group to plan for reserve depletion and secure or
maintain permits may result in operation stoppages, adversely impacting financial
performance.
Continuity of the cash flows derived from the production and sale of building materials
depends on satisfactory reserves planning, including appropriate long-term arrangements
for their replacement. The Group cannot guarantee its ability to secure new reserves and
plan for reserve depletion.
In addition, the Group may not be able to obtain the required licences and permits for its
mining operations, and cannot guarantee that it 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 requirements of issuing authorities could lead to operational
disruptions and negatively affect our financial results.
For additional information on the Group’s reserve position, see pages 262 to 267.
Risk trend:
How We Manage the Risk
• Planning for reserves enlargement and security of permits is a key
focus area for our businesses
• Robust mine planning to maximise the lifetime of permitted
reserves under the Group’s control
•
Implementation of operational best practices ensure mineral
extraction in line with permit requirements, while minimising the
impact of our operations on local environments
Developments During 2022
• The updating of existing plans and the development of new mine
plans progressed further in 2022, with formalised mine plans
projected to increase from 49% to 64% of our cement raw material
sites. A similar effort and increase is planned for 2023
• A programme to upskill internal CRH personnel and provide them
with specialised mine planning software was further rolled out in
2022
• Exploration drilling and updating of block models continues, with a
focus on increasing raw material reserves at key sites
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
142
2022 Annual Report and Form 20-F
Principal Operational Risks and Uncertainties
Climate Change and Policy
Description
How We Manage the Risk
The impact of climate change may adversely affect the Group’s operations and
cost base and the stability of markets in which the Group operates. Risks related to
climate change that could affect the Group’s operations and financial performance
include both physical risks (such as acute and chronic changes in weather) and
transitional risks (such as technological development, policy and regulation change
and market and economic responses).
Physical Risks include:
• The Group is working towards delivery of its ambition to become
a net-zero business by 2050, with an industry leading target of a
30% reduction in absolute carbon emissions by 2030 (on a 2021
base year)
• Operational improvements at plants, such as the use of alternative
fuels that reduce CO2 emissions, deliver financial efficiencies and
support the circular economy
• Acute: A once-off weather event, such as a hurricane or flooding. An increase in these
• Acquisitions are assessed through our ESG due diligence
types of events may disrupt CRH’s production rates as facilities are damaged or closed;
and
processes to identify potential risks and upon acquiring are
incorporated into our ERM processes
• The Group publishes an annual independently-assured
Sustainability Report, which is available on www.crh.com
Developments During 2022
• Our Scope 1 and 2 absolute carbon emissions decreased by 7%
in 2022 as we execute against the levers in our decarbonisation
roadmap and lower clinker production
• We also saw an improvement in our cement specific net CO2
emissions per tonne of cementitious product which reduced to
566kg (from 586kg in 2021)
• Continued progress towards our 2025 target of 50% of product
revenue from products with enhanced sustainability attributes,
which was 47% of product revenue in 2022
• Chronic: Sustained weather events, such as increased precipitation which may lead to
higher sea levels. An increase in these types of events can disrupt CRH’s supply chain
and transport logistics
These physical risks may reduce product revenues and increase costs of maintaining the
integrity of facilities. Operational productivity and demand for the Group’s products may be
reduced during these weather events leading to reduced financial performance.
Transition Risks include:
• Technology: The failure to keep up with the pace of technological change may lead to
increased operational costs and financial loss through the inability to supply products
to customers who require innovative and low-carbon sustainable solutions. Failure
to leverage innovation and other sustainability initiatives, for example transitioning to
innovative lower-carbon products such as lower-carbon cements, recycled asphalt
pavement (RAP), permeable paving solutions and other high-performance sustainability
solutions, may shorten product life cycles or give rise to early product obsolescence
thus impairing financial performance and/or future value creation;
•
Legal and Regulatory: Changes to climate-related laws or regulation could increase
risks and costs related to compliance and litigation related to CRH’s operations. Efforts
to address climate change through laws and regulations, for example by requiring
reductions in emissions of GHGs such as CO2 and additional disclosures of GHG
emissions among other changes 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 and higher direct and indirect costs from the
imposition of legislative or regulatory controls;
• Reputation: The building materials industry is, by its nature, energy intensive and
stakeholder expectations with regard to climate change continue to increase. Failing to
reduce emissions arising from our operations or failing to meet investor expectations
with regard to emissions reductions may adversely impact the Group's reputation; and
• Market: Continued focus on climate change by investors and lenders may affect their
preferences and sentiments, which could affect the Group’s access to capital markets,
cost of capital, and potential investors, each of which could potentially increase the
Group’s financing costs and affect its financial performance. In terms of operating
markets, failure to transition to lower-carbon products could result in early product
obsolescence thus impairing financial performance and/or future value creation
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
assurance that more extensive carbon cost mechanisms will not be introduced that could
potentially impact the Group’s financial performance. Further, although the Group continues
to engage with stakeholders to fully understand their expectations in relation to climate
change, such expectations continue to evolve rapidly and the Group cannot guarantee that
all stakeholders’ expectations will continue to be met. Please refer to page 150 to 156 for
further details.
Risk trend:
142
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Information Technology and Cyber Security
Description
How We Manage the Risk
The Group is dependent on information and operational technology systems
(including those for which third-parties are in whole or in part responsible) to
support its business activities. Security incidents and cyber-attacks are becoming
increasingly sophisticated, and our systems for protecting our assets and data
against cyber security risks may be insufficient. Security breaches, IT interruptions
or data loss could result in significant business disruption, loss of production,
reputational damage and/or regulatory penalties.
The Group collects, processes, and retains potentially sensitive and confidential information
about our customers, suppliers, employees and business performance, and has been
subject to cyber security attacks. Despite the security measures we have in place, and
those of third party suppliers and vendors with which we do business, attacks or other
significant IT interruptions or errors may result in interference with production software,
corruption or theft of sensitive customer or employee data, manipulation of financial data
and/or reputational losses.
In addition, as cyber security threats 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. The Group likewise may incur significant
remediation costs following any major cyber security incident.
Risk trend:
Health and Safety Performance
Description
The Group’s businesses operate in an industry with inherent health and safety risks,
including operation of heavy vehicles, working at height, and use of mechanised
processes. Failure to ensure safe workplaces could result in a deterioration in the
Group’s safety performance and related adverse regulatory action or legal liability.
Health and safety incidents could significantly impact the Group’s operational and
financial performance, as well as its reputation.
The Group’s safety risks extend to sites not wholly within our control, including outdoor
paving and construction sites. This environment presents a complex challenge which
requires safe behaviours and engagement from employees as well as robust Group policies
and procedures. A high number of accidents may pose additional challenges in recruiting
new employees, ensuring operational continuity and maintaining licences and permits.
Further, 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 Group’s health and safety frameworks,
processes and controls fail to comply with such regulations, the Group could be exposed to
significant potential legal liabilities and penalties.
In addition, potential health and safety issues with products could lead to welfare and
security issues for our broad range of stakeholders including our employees, contractors,
customers and communities.
The COVID-19 pandemic has presented and continues to present additional health and
safety challenges due to potential transmission of 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 or other viral infections at our sites and
locations.
Risk trend:
• Ongoing strategic and tactical efforts to address the evolving
nature of cyber threats and the associated challenges, including
enhancing existing information and cyber security practices
to promote best practice across our people, processes and
technology
• Ongoing investment and development of risk management and
governance associated with cyber security and information
technology
• Global Information Security Council oversees cyber risk and
strategic matters related to the implementation and ongoing
monitoring of information security across the Group, focused on
high-impact cyber risks
Developments During 2022
• Cross-functional collaboration across the Group to ensure
continued emphasis on the core domains of cyber security which
have the greatest impact on our ability to protect, detect and
respond to security events
• Our cyber risk appetite was reviewed and updated, with further
investment in controls to ensure alignment with appetite
• A new Cyber Essentials programme setting mandatory minimum
cyber security standards was rolled out across the Group
How We Manage the Risk
• 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 company
complies with the Hierarchy of Control and implements the Life
Saving Rules with a 'no compromises' approach
• The Group monitors the performance of its health and safety
framework and takes immediate and decisive action where non-
adherence is identified. The company complies with product
specifications and standards as a minimum
• The maintenance of a strong safety and wellness culture is driven
by management and employees at every level and is a core part of
doing business with integrity and our ambition of zero harm
Developments During 2022
• Continued rollout of our Global Frontline Leadership programme
which is being delivered to all CRH Frontline leaders and their
managers
• We continue to implement the Life Saving Rules across our
businesses, integrating acquisitions into our safety management
systems
• We continue to commit significant resources to ensure that
employees receive training to complete their work safely
144
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
Sustainability and Corporate Social Responsibility
Description
How We Manage the Risk
The nature of the Group’s activities poses certain environmental and social risks,
which are also subject to an evolving regulatory framework and changing societal
expectations. 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.
Customers are increasingly demanding sustainable products, particularly products with
reduced lifetime carbon emissions. If the Group fails to offer products with improved
sustainability performance, demand for the Group’s products may fall and the Group will
experience a deterioration in financial performance. Failing to leverage innovation and other
sustainability initiatives may also shorten product life cycles or give rise to early product
obsolescence thus impairing financial performance and/or future value creation.
The Group is also subject to a broad and increasingly stringent range of laws, regulations,
standards and best practices with respect to ESG performance, including new regulations
related to climate change and pollution. As a result of this new regulatory environment, the
Group faces rising compliance costs, potential new legal liability exposure and could be
subject to an obligation to adapt certain of its current operations.
Risk trend:
Supply Chain Continuity
Description
The Group must reliably and economically source various raw materials, equipment
and other inputs from various third-party suppliers and then transport finished
products to satisfy customer demands and meet contractual requirements. Our
ability to balance maintaining resilient supply chains with optimising our working
capital and inventory levels is critical to the continuity and strong financial returns of
our operations. Failure to manage any material disruption in our supply chains could
adversely impact our ability to service our customers and result in a deterioration in
operational and/or financial performance.
Like many other industries, the global building materials industry has been adversely
impacted by disruptions and threats to supply chains caused by the COVID-19 pandemic,
and subsequently the conflict in Ukraine. Additionally, the inflationary environment within the
Group’s major markets has resulted in increased cost and reduced availability of some key
inputs and transportation.
Some of the raw materials, equipment, transport and other inputs that the Group requires
are limited to a small number of suppliers from which the Group can economically and/or
practically source, which often have long lead times. Any of our suppliers may experience
temporary, prolonged or even permanent operational disruption, which could have an
adverse impact on the Group’s operations, financial performance and reputation. In
addition, in certain markets in which the Group operates, including markets for steel,
cement, bitumen and supplementary cementitious materials, contracted market demand
can far outstrip supply, which may restrict the Group’s ability to obtain alternative suppliers
or additional volumes where necessary. Our focus on responsible sourcing practices and
other ESG considerations may also limit the pool of acceptable suppliers from which we
may choose to source.
Risk trend:
• 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 considers the
needs of our communities
• 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
• We focus on maintaining good labour relations and work to limit
the impacts of seasonality and provide assistance to employees
and managers with retirement planning and downsizing when it is
necessary
Developments During 2022
•
In 2022, CRH tied the monetary and non-monetary remuneration
of the Chief Executive, executive board members, senior
executives and business unit managers, to a range of ESG
measures, including organisational performance on GHG
emissions. Please see Directors' Remuneration Report on pages
108 to 132
How We Manage the Risk
• Source from and build close relationships/partnerships
with established, reputable suppliers, maintaining regular
communication on potential supply chain challenges
• Wide range of supplier risk management practices, which enable
CRH to identify and manage critical supply chain challenges
• Risk scenarios on potential risks to CRH’s supply chain and
strategies to alleviate these risks, if they occur
• Robust demand forecasting to ensure appropriate inventory levels
are maintained
Developments During 2022
• Creation of a central team focused on procurement risk and
market intelligence to build strategies for managing supply chain
risks and implementing these strategies across global supply
chains and local operations
• A procurement response team was formed to minimise any
disruption to our operations associated with the conflict in Ukraine,
with global category teams working closely with local teams, and a
renewed focus on innovative solutions
144
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Principal Compliance Risks and Uncertainties
Laws, Regulations and Business Conduct
Description
How We Manage the Risk
The Group is subject to a wide variety of local and international laws and regulations.
There can be no assurance that the Group’s policies and procedures afford adequate
protection against compliance failures or other fraudulent and/or corrupt activities.
Potential breaches of local and international laws and regulations could result in
litigation or investigations, the imposition of significant fines, sanctions, adverse
operational impact (to include an inability to operate in key markets/debarment) and
reputational damage.
As an Irish incorporated company, with a premium listing on the LSE, a secondary listing
on Euronext Dublin and an ADR listing on the NYSE, CRH must comply with various laws
and regulations including, among others, the Irish Companies Acts, the UK and Euronext
Dublin Listing Rules, the Market Abuse Regulation, the Irish Transparency Regulation, and
reporting obligations under US securities laws. The Group is also subject to various statutes,
regulations and laws affecting land usage, zoning, labour and employment practices,
competition/anti-trust, financial reporting, taxation, anti-fraud and theft, anti-bribery, anti-
corruption, governance, data protection and data privacy and security, environmental, health
and safety, and international trade and sanctions laws, among other matters.
Despite mandating that its employees comply with its Code of Business Conduct the Group
cannot guarantee that its employees will comply with all demands of regulatory agencies.
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.
• Robust governance, including oversight by the Global Legal and
Compliance function and other relevant Group functions that report
to the Board, Audit Committee and/or SESR
• CRH’s Code of Business Conduct, which is available on www.crh.
com
• Proactive engagement throughout the Group, including an
extensive training programme on CRH’s Code of Business
Conduct and Advanced Compliance Training
• Global Speak Up Programme with a dedicated whistleblowing
hotline (the results of which are reported to the Audit and SESR
Committees)
Developments During 2022
• Enhancements to the Speak Up Programme, including a new
Speak Up Policy, Speak Up FAQ Guidance, investigator toolkit,
Speak Up Point of Contact manual and training materials
• Enhanced Fraud and Theft Policy and reporting procedures,
training improvement projects, including development of bespoke
e-learning modules
Risk trend:
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
146
2022 Annual Report and Form 20-F
Principal Financial and Reporting Risks and Uncertainties
Taxation Charge and Balance Sheet Provisioning
Description
How We Manage the Risk
The Group is exposed to uncertainties stemming from governmental actions in
respect of taxes paid or payable in the future 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 need to be adjusted over time. Changes in
tax regimes or assessment of additional tax liabilities in future tax audits could result
in incremental tax liabilities which could have a material adverse effect on cash flows
and the financial 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
Developments During 2022
• We continue to monitor the evolution in global and domestic tax
policies to better understand how current proposals could impact
our business and in parallel perform analyses to understand and
estimate the impact of potential changes as currently understood
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.
As a multinational corporation, the Group is subject to various taxes in all jurisdictions in
which it operates. Economic and political conditions, tax rates and the interpretation of tax
rules in these jurisdictions may be subject to significant change, particularly during periods
of administrative change or fiscal deficit. For example, the introduction of a Global Minimum
Tax as developed by the OECD could result in increased tax liabilities in respect of some
jurisdictions. 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 and the financial results of
operations could be adversely affected.
Risk trend:
146
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
How We Manage the Risk
• 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 at least two of S&P/Moody's/Fitch
• Please see note 22 to the Consolidated Financial Statements for
further detail
Developments During 2022
• The Group's liquidity metrics remained strong with the leverage
ratio improving from 1.3x Group Net Debt to 0.9x at the end of
2022. While the Group made $3.3 billion of acquisitions during the
year, these were funded by disposals of $3.8 billion with the cash
proceeds recycled into the new acquisitions
• Despite the economic uncertainty, the Group received positive
reports from the credit rating agencies who affirmed CRH's
existing ratings of BBB+/Baa1/BBB+ from S&P, Moody's, and
Fitch
• Given the high level of fixed rate debt (100% of net debt), a rising
interest rate is interest cash flow positive as deposits are now
earning interest income
• Counterparty risk remains under watch and the Group is
continuing with its cash and cash equivalent policy (deposits <3
months)
Financial Instruments
Description
The Group uses financial instruments throughout its businesses giving rise to
interest rate and leverage, foreign currency, counterparty, credit rating and liquidity
risks. A downgrade of the Group’s credit ratings 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: As at 31 December 2022, the Group had outstanding gross
indebtedness, including leases, of approximately $11.0 billion (2021: $12.0 billion) and cash
and cash equivalents of approximately $5.9 billion (2021: $5.8 billion). The Group uses
interest rate swaps to convert a portion of its fixed rate debt to floating rate. While current
leverage is low, acquisition activity could adversely impact operating and financial flexibility
as well as financial position. There can be no assurance that the Group will not be adversely
impacted by increases in borrowing costs in the future. During 2021, the Group transitioned
from some IBOR backed rates linked to its main banking facilities to alternative benchmark
rates. These alternative benchmark rates are backward looking meaning the related interest
charges would not be fully known until close to the end of the interest period. This transition
process will continue until June 2023 after which US dollar IBOR rates will cease to be
available.
Foreign currency risks: If the Group’s reporting currency weakens relative to the basket of
foreign currencies in which net debt is denominated (including the 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.
Where economically feasible, net debt is maintained in the same relative ratio as capital
employed to act as an economic hedge of the underlying currency assets.
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 the cash balances that
the Group holds with such financial institutions or losses in derivative transactions that the
Group has entered into with these parties and may render it more difficult for the Group
to utilise existing debt capacity or otherwise obtain financing for operations. The Group
holds significant cash and cash equivalents on deposit and derivative transactions with a
variety of highly rated financial institutions which at 31 December 2022, totalled $5.9 billion
(2021: $5.8 billion) and $(86) million (2021: $122 million) respectively. In addition, certain of
the Group’s activities give rise to significant amounts receivable from counterparties at the
balance sheet date; at 31 December 2022, this balance was $3.9 billion (2021: $4.0 billion).
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 lines 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 22 to the Consolidated Financial
Statements on pages 225 to 228.
Risk trend:
148
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
Goodwill Impairment
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. While a non-cash item, a material write-down of goodwill could have a
substantial impact on the Group’s income and equity.
Under IFRS, goodwill and indefinite-lived intangible assets are subject to annual impairment
testing. 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 14 to the
Consolidated Financial Statements on pages 210 to 212.
While a goodwill impairment charge does not impact cash flow, a full write-down at 31
December 2022 would have resulted in a charge to income and a reduction in equity of $9.2
billion (2021: $9.5 billion).
Risk trend:
Foreign Currency Translation
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. Adverse changes in the exchange rates could negatively affect
retained earnings.
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 2022,
see the Business Performance and Segmental Reviews section commencing on page 61
and note 22 to the Consolidated Financial Statements on pages 225 to 228.
Risk trend:
How We Manage the Risk
• 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 2022 impairment
testing process, please refer to note 14 to the Consolidated
Financial Statements on pages 210 to 212
Developments During 2022
• We reconfirmed the appropriateness of goodwill testing levels
• We reviewed and revised discount rates to ensure continued
inclusion of appropriate levels of risk
• We extended procedures performed with respect to climate
change risk. These procedures included reviewing cost of carbon
assumptions, capital expenditure requirements to meet climate
targets and asset useful lives
How We Manage the Risk
• The Group changed to US Dollar reporting currency effective
1 January 2020, in consideration of the current portfolio and
business mix which has a significant US Dollar exposure
• The Group’s established policy is to spread its net worth across
the currencies of the various operations with the objective of
limiting its exposure to individual currencies and thus promoting
consistency with the geographical balance of its operation
• The Group’s activities are conducted primarily in the local currency
of operation, resulting in low levels of foreign currency transactional
risk
Developments During 2022
• The value of the US Dollar has strengthened relative to most of
the other functional currencies that CRH operates in, resulting in a
currency loss being reported through the Consolidated Statement
of Comprehensive Income (this is an accounting loss rather than a
cash flow loss)
• The Group continues to monitor its currency spread of net debt
to ensure that it reflects the currency spread of capital employed
and thus acts as a natural hedge and minimises the overall net
currency risk
148
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
150
2022 Annual Report and Form 20-F
Focus on Climate Risks and Opportunities
Management
Every individual in CRH is responsible for managing risk and a core value
in CRH is accountability. Every risk across the Group is assigned a risk
owner who is responsible for ensuring that appropriate attention is directed
towards that risk whether through current mitigation or future planning.
Not all risks can be managed at the point of identification and as such the
risk owner is responsible for the implementation of mitigation strategies
that could be enacted should a risk materialise. Common risk criteria and
topic hierarchies are used to assess and consistently categorise risks and
opportunities, which helps identify and manage aggregate exposures that
may be managed centrally more effectively. The size and significance of
each risk is determined according to the product of its assessed impact
on the organisation and its likelihood of occurrence, with consideration of
factors such as impact velocity, for example, informing the prioritisation of
risks for subsequent management to within agreed acceptable levels.
In order to highlight the Group’s commitment towards managing our
climate risks, from 2022, a portion of the Group’s Performance Share Plan
is directly linked to specific actions related to managing climate change
and the achievement of certain climate-related targets, such as delivery of
our carbon emissions reduction target and embedding sustainability into
relevant operating companies.
Monitoring and Reporting
All risks identified in CRH are recorded in the Group’s RMIS which facilitates
the effective allocation of responsibility, tracking of risk performance and
monitoring of mitigation activities. Our RMIS is integrated across the Group
and enables the efficient reporting of risks through our bottom-up process,
from operations up to the Board. Risks are reported to the Risk Committee
from all divisions and functions on a rotational basis ensuring that all risks
are presented, discussed and challenged in an appropriate forum.
The Risk Committee sets the Group’s risk strategy and oversees the
Group’s risk governance model and how the Group identifies, assesses
and manages the principal and emerging risks the Group encounters in
pursuit of its strategic objectives. Additionally, climate-related risks and
opportunities are reported to our Climate Action Council, which reports
to the Chief Operating Officer, and is responsible for considering and
developing climate strategies for consideration by the Global Leadership
Team and Board and for ensuring that they are fully embedded in the
Group’s corporate priorities. For further information on risk governance
structures, please see pages 94 and 95.
The outputs of our climate-related workshops are included as part of our
climate scenario analysis disclosure on page 156 and inform our strategy
and risk planning going forward.
CRH’s ERM framework supports risk identification, assessment and
reporting activities across the Group; the below information is an example of
how our ERM framework was applied to manage our climate risk.
Identification
As part of our continued commitment to understanding the potential
climate-related risks and opportunities that CRH faces, during 2022 we
undertook a number of risk workshops focused on where climate-related
risks could adversely impact the Group, and where we see potential
opportunities for CRH to create value and contribute to the development of
a more resilient built environment and a more sustainable future.
These sessions involved bringing senior leaders from across our business
together to discuss, challenge and prioritise what participants believed to be
the most material climate risks and opportunities the Group may face. Our
sessions were facilitated by the Group Risk team with the support of other
corporate functions who challenged the perceptions and opinions of the
participants to ensure a robust discussion.
Assessment
While our traditional ERM process assesses risks over our strategic planning
horizon, with longer-term risks being embedded into our emerging risk
categories, the longer-term horizons over which we assessed the Group’s
climate risks and opportunities necessitated redefining our time horizons
to take a longer-term view. The climate risk and opportunity assessment
process defined the business-relevant time horizons as:
Short-term: The risks, opportunities and actions reasonably foreseeable up
to 2025 (3-year window) and for which business planning has the highest
degree of visibility.
Medium-term: The period between 2025 and 2030 which represents the
period up to our publicly disclosed group-wide target of reducing our
absolute emissions by 30% by 2030 and a transitional period between
current planning and the longer-term strategic goals for the Group.
Long-term: The 2030 to 2050 period where transitioning to net-zero is fully
embedded in the business structure and performance with climate driven
solutions at the forefront of value creation.
Our bottom-up analysis of risks and opportunities was complemented, and
expanded upon, by feedback from stakeholders and expert advisors. The
exercise included assessing emerging best practice in TCFD disclosures
to ensure we provide a comprehensive and transparent disclosure. The
Sustainability, Risk and Finance teams have created an extensive library
of potential and wide-ranging climate-related risk impacts and their
significance. As part of each workshop, these issues were categorised on
a five-point scale from negligible to severe. Where one or more of the risk
criteria were met our method categorises the risk in the higher impact band.
Given the nature of climate change, it is viewed as both a current principal
risk and an emerging risk for CRH. Some climate risks are near-term and
acute and are treated as current enterprise risks, whereas other risks and
challenges are longer-term and potentially enduring if left unmanaged and
would be seen as emerging risks. Similarly, some opportunities are available
now and in the near-term whereas others require facilitating action such as
policy change or physical infrastructure to fully realise the benefits over the
longer-term.
150
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Climate Risks and Opportunities
Climate Change and Policy is identified under our existing ERM process as
a Principal Risk on page 142 of Principal Risks and Uncertainties. Using the
TCFD’s framework, CRH has considered climate risks and opportunities
that could impact us in the short-, medium- and long-term covering all
TCFD categories of transition and physical risks as well as opportunities;
regulatory risks; market risks; physical environmental risks; innovative
products and services opportunities; and resource efficiency, resilience,
and market opportunities. We have assessed these factors qualitatively
to understand the implications of different climate scenarios over different
timeframes.
This analysis was informed by third-party warming scenarios key
assumptions and supported, where appropriate, with high-level quantitative
assessments.
This assessment identified a number of transitional and physical risks and
opportunities that may adversely or positively impact the operational and
financial performance of the Group, without considering any mitigation or
adaptation actions CRH may take.
The table below details the priority climate risks and opportunities identified
and the high-level assessment from an impact and probability basis.
Table 48. Potential probability and impact of climate-related risks and opportunities
Impact
Probability
Low
Medium
High
Low
Medium
High
Low
Medium
High
Low
Medium
High
Risk
Carbon Pricing
Unfavourable Policy Environment
Reliance on Technological Advancements
Adverse Weather
Corporate Reputation
Opportunity
Climate Driven Solutions
Low-carbon Fuels
Circularity
On-site and Clean Electricity
Impact for the risk refers to CRH's exposure to the specific risk.
Impact for the opportunity is the value CRH can gain on the opportunity.
Discussion of most material climate risks
Carbon Pricing
Category
Timeline
Description
How we Manage the Risk
Policy and Legal Medium-term
Regulations across CRH’s markets could lead to increased
direct and indirect carbon emission costs.
CRH participates in Emissions Trading Schemes (ETS) in the
EU and other regions. The EU ETS is CRH’s largest emissions
trading market and changes are currently being evaluated
as part of the European Commission's “Fit for 55” with the
intention of phasing out free carbon allowances over time.
A tightening of the EU ETS poses a risk of carbon leakage to
jurisdictions with lower environmental standards. In response,
the EU has proposed a Carbon Border Adjustment Mechanism
(CBAM) to create a level playing field on carbon costs between
domestic producers and importers.
Carbon in CRH's supply chain is also a significant transition
risk for the Group. Unless abated through lower carbon
consumption, these regulatory changes will over time lead to
increased costs of producing cement. Cement which accounts
for 81% of the Group's total direct CO2 emissions contributes
13% of external revenue.
Metric
Target
46.5mt (2022):
Absolute Scope
1, 2 and 3 CO2
Emissions
30% reduction in
absolute carbon
emissions by
2030 (from a 2021
base year)
48.0mt baseline
in 2021 (Scope
1, 2 and 3 CO2
Emissions)
CRH's decarbonisation roadmap will support CRH to be a
resilient business as well as enabling the low-carbon economy.
CRH has set an industry-leading absolute carbon emissions
reduction target by 2030 which includes investing approximately
$150 million of incremental capital expenditure to enable delivery
of this objective. The Group also has a robust decarbonisation
strategy (see more information on page 26) to become a net-
zero business by 2050.
A key lever in the medium- and long-term will be scaling
technologies such as Carbon Capture, Use and Storage (CCUS).
To accelerate progress, CRH is building partnerships with CCUS
technology stakeholders.
A growing number of carbon pricing and other tax-related
measures, will also act as drivers for CRH to decarbonise. The
new CBAM should facilitate decarbonisation while maintaining
competitiveness. The purchase of carbon allowances is
managed by a central unit which buys forward to secure supply
and de-risk the cost base ahead in time. This helps provide the
Group with near-term certainty on carbon prices and associated
costs. CRH has extensive experience in absorbing increases in
carbon costs through pricing and enhancing its margins.
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
152
2022 Annual Report and Form 20-F
Unfavourable Policy Environment
Category
Timeline
Description
How we Manage the Risk
Policy and Legal Short-term
Metric
Target
Ensure CRH
and Trade
Group Advocacy
aligns with Paris
Agreement Goals
Complete Climate
Advocacy Review
annually to
validate corporate
lobbying
approach
Regulation and industry standards provide a predictable
operating environment, but there are also risks with
unfavourable regulation, such as:
• Reduced competitiveness due to ‘carbon leakage’ (e.g.
importing carbon intensive materials from jurisdictions with
low environmental regulations or lack of a carbon price)
• Policies that set inappropriate benchmarks or introduce
unwarranted biases that may lead to sub-optimal building
materials choices and designs
• Misunderstanding & poor accounting of the full lifecycle of
products
• Lack of financial incentives for Research & Development
(R&D) and low-carbon investments
CRH primarily operates in Europe and North America and as such
is subject to well established regulations.
CRH's ambition is to be a net-zero business by 2050.
Constructive collaboration between members of the industry and
policymakers to create a regulatory environment that supports the
green transition by promoting innovation and healthy competition
will be required to realise this ambition.
As such, CRH engages in responsible and transparent corporate
advocacy to support the development of an effective regulatory
regime. We also ensure our direct advocacy and trade groups’
(such as the GCCA and CEMBUREAU) advocacy both align with
the Paris Agreement.
For more information, please see our Climate Advocacy review at
www.crh.com
Reliance on Technological Advancements
Category
Timeline
Description
How we Manage the Risk
Technology
Medium-term
R&D solutions will play a pivotal role in CRH's ambition to be
net-zero by 2050.
As part of our decarbonisation roadmap, we are targeting
carbon reductions across all activities through a number of
levers, ranging from operational efficiencies and business
optimisations, to low-carbon fuels, products and transport.
The most significant reductions are available in our cement and
lime activities through CCUS technologies, which are evaluated
based on costs, technical feasibility, compatibility with CO2
usage opportunities and scalability. However, not every solution
will be scalable, may have associated high energy demands
(such as carbon capture), as well as challenges around
transportation and infrastructure.
Not successfully mitigating these challenges could reduce the
company’s competitiveness.
Metric
Target
Fund Spend
Carbon-
related capital
expenditure
spend
$250 million
venturing and
innovation fund
Roadmap capital
expenditure plan
Baseline from 2022
Adverse Weather
CRH has a Group Technical Services (GTS) team to share
technology knowledge and expertise and support projects
(including developing and piloting our approach to CCUS). The
GTS team collaborates with our Innovation Centre for Sustainable
Construction, which works to develop ground-breaking
decarbonisation technologies.
Priorities include developing CCUS solutions; reducing carbon
emissions during cement and lime manufacturing; and utilising
minerals to absorb CO2 and enhance climate resilience. The
Group has also established Task-Force teams to speed-up
delivery of R&D projects.
CRH has established a $250 million venturing and innovation fund
to commercialise new technologies, products, processes and
customer solutions which will support our solutions strategy.
Category
Timeline
Description
How we Manage the Risk
Physical
Medium to Long-
term
Metric
Target
100% by 2030
81% (2022)
of relevant
companies
with water
management
plans
75% baseline in
2020 (first year
target set)
Adverse weather can negatively impact CRH’s production
processes. For example, in sustained high temperatures it may
not be safe for workers to be outdoors. Heavy rainfall impacts
ready-mix concrete and paving operations, which depend on
favourable weather conditions. In the event of drought, CRH
might not be able to maintain production at impacted sites.
Although less than 1% of locations are in 'high risk' areas of
drought severity, this figure is projected to increase according
to climate change warming scenarios.
Operations and supply chains may also be affected by floods
and rising water levels that could lead to damaged or closed
facilities. All of these events impede the ability to service
customers and could lead to increased costs for CRH.
To effectively mitigate disruption or loss associated with
physical risks the geo-locations of most CRH sites are mapped
against geographic natural catastrophe and weather/climate
vulnerabilities to identify those at higher risk.
Business Impact Assessments (BIA) are conducted at our sites to
ensure the safety of our people and business continuity.
Crisis management plans have been implemented to ensure
CRH sites can restore operations following any adverse weather
events.
152
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
Corporate Reputation
Category
Timeline
Description
How we Manage the Risk
Reputational
Short-term
Metric
Target
Third-party ESG
Rating scores
Industry leader
in ESG Rating
scores
Baseline:
See 'External
Benchmarks and
Recognition' in the
CRH Sustainability
Report, 2021 and
2022
Increasing stakeholder expectations regarding climate ambition
and environmental performance need to be constantly
monitored. To avoid a negative perception it is important that
the Group continues to illustrate its efforts in a proactive and
transparent way.
CRH actively engages with ESG analysts and rating agencies to
ensure accurate and timely communication to stakeholders.
This is underpinned by actions CRH is taking to lead its industry
in setting the ESG agenda while reflecting the trends shaping the
future of construction.
For example, cement production continues to be seen as a
high emissions process. This could negatively affect CRH in
several ways, such as:
• Reduced access to capital
• Challenges retaining/attracting talent
• Local community opposition to cement production sites
• Inability to secure licensing permits
The Group has tied executive remuneration to progress on key
sustainability goals, including our decarbonisation roadmap.
CRH is committed to continuously improving its ESG disclosures
and reporting for increased transparency about our sustainability
strategy.
Discussion of most material climate opportunities
Climate Solutions
Category
Timeline
Description
How we Realise the Opportunity
Markets
Medium-term
Creating sustainable cities is an imperative for net-zero living,
especially as the global population continues to grow.
Metric
Target
• Increasing customer demand for low-carbon, sustainable,
climate-resilient products and solutions
50% by 2025
• Major investment is needed in addressing water scarcity,
temperature extremes and flood management in the built
environment
• Infrastructure for clean energy, energy-efficient buildings,
smart public transport networks and green infrastructure are
also central to building more sustainable urban centres
47% (2022)
product revenue
derived from
products with
enhanced
sustainability
attributes
42% baseline in
2018 (first year
reported externally)
CRH already has in its portfolio a range of climate solutions as
demonstrated by our progress on product revenue derived from
products with enhanced sustainability attributes.
CRH will continue to invest in solutions that strengthen circularity
and climate-resilience in the built environment (see Solutions for a
Sustainable Future beginning on page 24).
CRH is a leader in sustainable products and our ICSC works to
catalyse sustainable innovation opportunities. Currently, there are
around >100 research projects ongoing across CRH to develop
new innovative technologies.
CRH has established a $250 million venturing and innovation
fund.
Low-carbon Fuels
Category
Timeline
Description
How we Realise the Opportunity
Energy Source Medium-term
Metric
Target
36% (2022)
Alternative and
Bio-based Fuels
in Energy Mix
(Cement)
Increase usage
aligned to
decarbonisation
roadmap
33% baseline in
2021 (based upon
decarbonisation
roadmap)
As a large energy consumer there is an opportunity for CRH
to further reduce its reliance on fossil fuels by transitioning to
alternative low-carbon fuel sources.
With ongoing technological advancements and CRH’s
relentless drive to limit its environmental impact, the scope
for incremental fuel substitution continues to expand, which
in turns creates new opportunities to reduce the release of
harmful emissions in our production processes.
CRH is an industry-leader in using low-carbon energy sources.
For example, we are the leading user of alternative fuels in the
cement sector and continue to work with suppliers on fuel
substitution to low-carbon sources.
The Group is also collaborating with partners in its own and other
industries (one example being Shell in 2022) on decarbonisation
opportunities across the value chain that will benefit transport,
operations and sourcing materials and energy.
Substituting traditional fuels with low-carbon alternatives is also
proving a competitive advantage for CRH as it reduces our
costs, diversifies supply, and limits the impact of volatile energy
prices on our operations.
154
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
Shareholder
and Other Disclosures
Information
Circularity
Category
Timeline
Description
How we Realise the Opportunity
Products &
Services
Medium-term
Metric
Target
Advancing the circular economy is not only contributing to
reducing carbon emissions, but it also protects scarce natural
resources, prolongs the life of reserves and creates financial
value.
CRH is a leading recycler worldwide and recycled over 40 million
tonnes in 2022 and over 110 million tonnes of materials over the
last three years. These figures make CRH the leading recycler of
building materials in North America.
c. 25% (2022) of
roads we build in
US are made from
recycled materials
50% in the next
decade
By embedding a consistent circularity approach across our
value chain, the Group will be able to rely less on higher-
emission fuels, use fewer natural resources, reduce the carbon
intensity of our products, aid the environment, and manage
operating costs more efficiently.
25% baseline in
2021
On-site and Clean Electricity
CRH has successfully redirected alternative raw materials into
its production processes across its product range (e.g. cement,
concrete & asphalt). For example by using Recycled Asphalt
Pavement (RAP), fewer virgin aggregates are required and a lower
level of bitumen is used in the production of asphalt which leads
to a more sustainable built environment.
CRH works closely with its customers to increase their use of our
recycled materials and products. We also work with regulators
to help establish improved industry standards and regulatory
frameworks for a more circular built environment.
Category
Timeline
Description
How we Realise the Opportunity
Energy Source
Short-term
Metric
Target
25% (2022)
of electricity is
renewable
Increase usage
aligned to
decarbonisation
roadmap
23% baseline in
2021 (based upon
decarbonisation
roadmap)
We are transforming our business and finding new
opportunities in electricity generated by solar and wind power,
and charging for electric vehicles. As more processes transition
to electrification - currently 25% of purchased electricity comes
from renewable sources. This includes grid mix renewable
sources. CRH, as a large landowner, can utilise its scale to
capitalise on this in its real estate and production facilities.
There are financial benefits for CRH, as self-sufficiency
in energy production can insulate our Group from cost
fluctuations in wholesale energy markets. It is also an
opportunity to further reduce our carbon emissions.
CRH has been installing renewable energy sources at some of our
locations and Power Purchase Agreements (PPAs) are used at
operating company level. The Group is investigating opportunities
to engage with community energy generation schemes that can
supply renewable energy for adjacent industries.
CRH is also decarbonising its transport. For example, a subsidiary
based in Europe, was the first company in its sector to sign up to
EV100 - a global initiative committed to accelerating the transition
to electric vehicles. Through this initiative, Tarmac has committed
to transitioning its fleet of corporate cars and vans to electric
vehicles by 2030.
Notes on how to interpret the 'Climate Risk and Opportunities' section
The timelines identified for climate risk and opportunities represent when the
most material impacts are most likely to occur.
The baselines above are based upon when a target was originally
established. In some cases, these baselines have been updated based on
actual performance in 2022.
All climate-related risks and opportunities have been categorised in line with
the TCFD's terminology, with all impacts having been considered from both
a (i) transitional; and (ii) physical, perspective.
CRH has outlined metrics and targets consistent with the requirements of
the TCFD and its supplemental guidance for the Construction Materials
sector on these pages and within the 'Solutions for a Sustainable Future’ on
pages 24 to 49.
Additional metrics and targets which illustrate CRH’s climate performance,
progress and ambition, are available within the 2021 & 2022 Sustainability
Reports.
Information in relation to the potential climate impact on the Group's
businesses, strategy, and financial planning, including its: Supply and Value
Chain; Products and Services; Operations; Acquisitions and Divestments;
and, Access to Capital is given throughout the 'Climate Risk and
Opportunities' section.
Information on subsequent adaption and mitigation activities, as well as how
the Group's strategy may be affected, is given in the 'How we Manage the
Risk' and 'How we Realise the Opportunity' sections.
Information on the potential impact of climate-related issues on financial
performance and position is given qualitatively throughout the 'Climate
Risks and Opportunities' section, in both the 'How we Manage the Risk'
and 'How we Realise the Opportunity' sections.
154
2022 Annual Report and Form 20-F
Overview
Strategy
Report
Business Performance
& Segmental Reviews
Governance
Financial
Statements
Supplemental 20-F
and Other Disclosures
Shareholder
Information
TCFD Supplementary Guidance for the Construction Sector
Relevant Guidance
CRH Response
Discussion of how climate issues are integrated into current decision-
making and strategy formulation in the following areas:
(a) R&D and adoption of new technology.
(b) Existing and committed future activities such as investments,
restructuring, write-downs, or impairment of assets.
(c) Critical planning assumptions around legacy assets.
(d) How GHG emissions, energy, and water and other physical risk
exposures, if applicable, are considered in capital planning and
allocation.
(e) The organisation’s flexibility in positioning/repositioning capital to
address emerging climate-related risks and opportunities.
CRH has considered the supplemental guidance for the Strategy
pillar, where additional information is available within our Annual
Report at the following:
(a) See decarbonisation strategy on pages 27 to 29.
(b) See decarbonisation roadmap levers on pages 28 and 29 and
investment & financial planning on page 30. See pages 186 and 211
of the Consolidated Financial Statements on how any existing and
future activities have been considered.
(c) See 'Our Climate Risks and Opportunities' on pages 150 to 154.
(d) Climate investments in technology discussed in relation to
financial planning on page 30.
(e) See statement of Strategic Resilience on page 156.
Organisations should consider providing metrics:
(a) That support scenario analysis and strategic planning processes.
(b) Related to GHG emissions, energy, water and other physical
risk exposures, land use, and, if relevant, investments in climate
adaptation and mitigation.
CRH has considered the supplemental guidance for the Metrics
and Targets pillar, where additional information is available within our
Annual Report at the following:
(a) See the results of the Group's climate scenario analysis on page
156.
(c) Historical trends and forward-looking projections (by relevant
country and/or jurisdiction, business line, or asset type).
(b) (c) (d) See metrics and targets given in the 'Our Climate Risks and
Opportunities' and the subsequent Note on pages 150 to 154.
(d) In line with Tables A1.1 and A2.1 and targets in line with Table
A2.2.
Strategy
Metrics and Targets
Conducting Climate Scenario Analysis
Scenario selection
Climate scenario analysis
In 2022, CRH conducted a quantitative scenario analysis on the potential
impacts of climate change to help us enhance our strategies and financial
planning related to carbon and physical risks, including flooding (coastal and
fluvial), wind and extreme temperature. The Group also tested its strategic
resilience to climate change. We anticipate that in future Annual Reports we
will further refine our approach to quantitative assessments and expand this
analysis to other material risks and opportunities.
For the modelling of transitional risks, the International Energy Agency (IEA)
and the Network for Greening of the Financial System (NGFS) were chosen
due to their close alignment with the TCFD’s recommendations. For the
modelling of physical risks, the Intergovernmental Panel on Climate Change
(IPCC) was chosen. Their Representative Concentration Pathways (RCPs)
are the common framework for physical scenarios and are recommended
by the TCFD. In line with the TCFD’s recommendations, information on
scenario selections can be seen in Table 49 below, which provides some
context on the Group’s modelling results.
In 2022, as new scientific evidence was released by the IPCC and the
SBTi released its 1.5°C guidance for the cement sector, we extended our
scenario analyses to assess the impacts of a 1.5°C temperature increase
above pre-industrial levels (by 2100) on our business in 2030 and 2050.
Table 49. Information on scenario selection and warming scenarios
Warming Pathway
Transition Scenarios
Physical Scenarios
1.5oC
< 2.0oC
3-4oC
IEA WEO
NGFS
Net Zero Emissions by 2050 (NZE)
Orderly; Disorderly
IPCC
N/A
Announced Pledges Scenario (APS)
Orderly; Disorderly
Stated Policies Scenario (STEPS)
Current Policies (“Hot house world”)
RCP 2.6 (combined with Shared
Socioeconomic Pathway 1)
RCP 8.5 (combined with Shared
Socioeconomic Pathway 5)
Approach to detailed quantitative scenario assessments
The quantitative scenario analysis of the risks and opportunities were
completed for two material risks of Carbon Pricing and Adverse Weather.
We used IEA-sector and scenario-level data to frame the analysis as well as
other datasets including internally generated data.
The scenario analysis for both risks involved a third-party specialist, platform
and external data sets for risk analysis. The following table outlines the
process CRH undertook to complete quantitative climate scenario analysis
on its business during the reporting year.
156
156
2022 Annual Report and Form 20-F
2022 Annual Report and Form 20-F
Overview
Overview
Strategy
Strategy
Report
Report
Business Performance
Business Performance
& Segmental Reviews
& Segmental Reviews
Governance
Governance
Financial
Financial
Statements
Statements
Supplemental 20-F
Supplemental 20-F
Shareholder
Shareholder
and Other Disclosures
and Other Disclosures
Information
Information
Transition - Carbon Pricing
Physical - Adverse Weather
Risk
background
The risk of increased carbon pricing was modelled across all three
warming scenarios and identified as most significant under a 1.5°C
scenario. This was due to the high probability of increased operational
costs associated with purchasing allowances or credits to meet carbon
emission caps. Although the EU ETS remains CRH’s largest emissions
trading market, accounting for 47% of the Group’s direct carbon
emissions, CRH also participates in ETS arrangements in other regions,
including: the Canadian Federal System, Quebec, the UK and San
Francisco. There may be further carbon pricing mechanisms and other
forms of taxations introduced in other regions in which we operate.
100% of Group Scope 1, 2 and 3 emissions were used during the
analysis. The compliance markets currently only regulate direct emission
(Scope 1), predominantly for cement and lime. The Group wanted to
understand the implications if all of CRH’s Scope 1, 2 and 3 emissions
would potentially be covered by carbon pricing mechanisms.
Process
As part of the Group’s decarbonisation strategy, emission reduction
roadmaps are available for all activities and were included in the analysis.
The projected carbon emissions were multiplied by a range of potential
regional carbon prices using the IEA published carbon price assumptions
under different scenarios to generate a spectrum of potential future
financial implications.
The risk of adverse weather can impact CRH’s production processes.
For example, sustained high temperatures may affect the health and
safety of our staff, as it may not be safe for operational workers to be
outdoors.
There may also be implications for product lines such as ready-mix
concrete and asphalt, as these are dependent on favourable weather
conditions and any adverse changes in temperatures could affect
production efficiencies. CRH facilities could also be damaged or closed,
which would lead to increased operating costs to maintain the integrity of
our production sites.
This involved selection of representative CRH locations based upon a
number of different criteria and undertaking detailed quantitative analysis
of those locations using a third-party platform and data set for asset-level
physical risks analysis.
The selection criteria included regional analysis and selection according to
materiality to the Group, based on revenue and operating profit earned in
each country in 2021. In total, 106 locations were selected, representing
an estimated $6.8 billion of revenue, or c. 22% of 2021 Group revenue.
Revenue per location (if not readily available) was calculated by either
production data or extracted volumes and the average selling price of the
relevant product for the applicable country/region/business.
• A $0/t carbon price in 2020 was used as a starting point for the
• Business interruption risk has been considered
Assumptions
Outcomes
from
Quantitative
Analysis
purposes of interpolation to future time periods where published IEA
carbon prices were used. For Net Zero Emissions by 2050 scenario the
following carbon prices were adopted: 2030 $25/t - $140/t, 2040 $85/t
- $205/t, 2050 $180/t - $250/t
• Carbon prices follow a linear interpolation between the IEA published
10-year intervals
• Freely allocated emissions rights for cement and lime activities -
assumed to end by 2030 in the EU - were factored into the analysis
• Gross costs to the business were modelled before considering any
mitigation measures
• Existing controls for the risks were then identified and included in the
risk assessment and financial modelling where relevant
The IEA model projects that under each scenario there is an expectation
that carbon pricing will increase from current prevailing levels, whereby
the costs associated with carbon are most impactful within the 2030 to
2040 transition timeframe. While the overall impact and probability are
high, under the IEA's 'Stated Policy' warming scenario, the projected
increase will be gradual. This mostly impacts our cement activities which
account for 13% of external revenue.
Reducing GHG emissions is a key component of CRH’s climate change
strategy. Based upon our analysis, CRH’s target of a 30% reduction in
absolute carbon emissions by 2030 against 2021 levels falls within the
range of emissions reductions required in this timeframe to be considered
aligned with the goals of the Paris Agreement.
The impacts of carbon pricing will also provide opportunities for
accelerated development of technologies and increased demand for
energy efficient and lower-carbon products and services.
• The financial quantification of the risks in 2022 focused on the revenue
implications of business disruption. Property damage and equipment
damage have not been included in this analysis
• Gross costs to the business were modelled before considering any
mitigation measures
• Existing controls for the risks were then identified and included in the
risk assessment and financial modelling where relevant
The results of the assessment indicated the overall risk profile for the
locations and physical risks modelled was at the lower range of impact
while risk of occurrence of more extreme adverse weather events was
high.
The analysis highlighted that the risk to specific types of weather events
varies significantly based upon the business activities and different
geographic regions where CRH operates. The models did highlight
higher impact geographies including Western Europe and Eastern North
America.
A more in-depth analysis will be undertaken covering more CRH
locations. The results of the assessment will be used to guide actions to
increase resilience to physical risks within CRH’s operations and value
chain.
1. In assessing capital investment projects and to facilitate strategic planning, CRH uses an internal carbon price, in regions where such a system is in place. The Group's near-term internal
carbon price is primarily based upon already purchased carbon allocations whereas longer-term assumptions are based on IEA projections for the respective region. For example, for 2023 in
Europe a price of $89 per tonne of CO2 was used with increases each year thereafter.
Statement of Strategic Resilience
We stress tested our business strategy against the risks that we believe are most likely to impact us by conducting scenario analysis to see the implications on our costs, revenue
and profitability. We have qualitatively described the output from this process above and found that the probability of adverse weather events occurring is high, while the risk
from carbon pricing increasing is high under some scenarios. However, we already have a plan and targets in place and we are on track to mitigate against these impacts and
decarbonise our business, so the residual level of risk is at an acceptable level for our business strategy. We recognise the importance of understanding our risk and opportunity
landscape in guiding CRH’s climate strategy. Based on this assessment, the Group believes it has sufficient flexibility and resilience to successfully manage its climate risks and
opportunities. As CRH continues to assess its strategy, new climate risks and opportunities may become apparent, which the Group may consider as part of its planning. CRH
will further deepen its climate-related initiatives in the coming years to help ensure CRH plays a leading role in shaping a sustainable future. For more information on the Group's
financial resilience, including its viability statement, see page 134.
156
156
2022 Annual Report and Form 20-F
2022 Annual Report and Form 20-F
Overview
Overview
Strategy
Strategy
Report
Report
Business Performance
Business Performance
& Segmental Reviews
& Segmental Reviews
Governance
Governance
Financial
Financial
Statements
Statements
Supplemental 20-F
Supplemental 20-F
and Other Disclosures
and Other Disclosures
Shareholder
Shareholder
Information
Information
158
Financial
Statements
Independent Auditors’ Reports
160
Consolidated Income Statement 176
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
177
178
179
180
181
191
160
2022 Annual Report and Form 20-F
160
Independent Auditor’s Irish Report
to the members of CRH plc
Report on the audit of the European Single Electronic Format financial statements (the ‘financial statements’)
Opinion on the financial statements of CRH plc (the ‘Company’) and its 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 2022 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.
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 33, 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.
2022 Annual Report and Form 20-F Summary of our audit approach
Summary of our audit approach
Key audit matters
Key audit matters
Materiality
Materiality
Scoping
Scoping
2022 Annual Report and Form 20-F
2022 Annual Report and Form 20-F
161
161
The key audit matters that we identified in the current year were:
The key audit matters that we identified in the current year were:
• Intangible assets—assessment of the carrying value of goodwill associated with selected cash
• Intangible assets—assessment of the carrying value of goodwill associated with selected cash
generating units; and
generating units; and
• Revenue recognition for certain in-progress long-term contracts
• Revenue recognition for certain in-progress long-term contracts
• Within this report, any new key audit matters are identified with
• Within this report, any new key audit matters are identified with
and any key audit matters
and any key audit matters
which are the same as the prior year identified with
which are the same as the prior year identified with
• The Group materiality that we used in the current year was $170 million, which was
• The Group materiality that we used in the current year was $170 million, which was
determined on the basis of profit before tax from continuing operations as the primary
determined on the basis of profit before tax from continuing operations as the primary
benchmark.
benchmark.
• The materiality that we used for the Company financial statements was determined on the
• 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.
basis of total equity/net assets and represents approximately 1% of that metric.
• We structured our approach to the audit to reflect how the Group is organised as well as
• 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.
ensuring our audit was both effective and risk-focused.
• Our scope covered 35 components. Of these, 3 were full-scope audits, 17 were subject to
• Our scope covered 35 components. Of these, 3 were full-scope audits, 17 were subject to
specific procedures on certain account balances by component audit teams or the Group
specific procedures on certain account balances by component audit teams or the Group
audit team, and the remaining 15 were subject to substantive analytical procedures performed
audit team, and the remaining 15 were subject to substantive analytical procedures performed
centrally by the Group audit team.
centrally by the Group audit team.
Significant changes in our approach
Significant changes in our approach
There have been no significant changes in our approach from the prior year audit.
There have been no significant changes in our approach from the prior year audit.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 162
2022 Annual Report and Form 20-F
162
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 relevant controls over the development and approval of the projections and assumptions used in the cash flow
forecasts to support the going concern assumption and testing the operating effectiveness of these controls;
• testing the clerical accuracy of the cash flow forecast model;
• performing an assessment of the financing facilities, including the nature of facilities and their maturity profile;
• completing an assessment and challenging the consistency of the forecasts with other areas of our audit, such as the models used in the assessment of the
carrying value of goodwill;
• 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 Group’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 directors 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.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
163
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 14, the goodwill balance was $9.2 billion as at 31 December 2022 (2021: $9.5
billion). The Group did not record an impairment charge during the year.
How the scope of our
audit responded to the
key audit matter
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 relating to
discount rates, short-term forecasts and long-term growth rates (“key assumptions”). Changes in these key assumptions could have a
significant impact on the recoverable amount, the amount of any goodwill impairment charge, or both.
With the assistance of our valuation and sustainability specialists, we performed risk assessment procedures and performed
sensitivities on management’s key assumptions, to identify certain CGUs of interest. We focused on CGUs where the recoverable
amount did not exceed its carrying value by a significant amount and on CGUs which had a significant reduction in cash flow forecasts
compared to prior year (“selected CGUs”). Within the selected CGUs we focused on those assumptions which were most sensitive
based on the individual facts and circumstances, which we determined to be discount rates and short-term forecasts of sales growth
and energy costs.
We determined that the assessment of the carrying value of goodwill of the selected CGUs was a key audit matter because it required
a high degree of auditor judgement and an increased extent of effort when performing audit procedures to evaluate the
reasonableness of management’s key assumptions.
The Audit Committee discussion of this key audit matter is set out on page 97.
Our audit procedures related to the discount rates and short-term forecasts of sales growth and energy costs of the selected CGUs,
used by management to estimate the recoverable amount of the selected CGUs included the following, among others:
• We tested the effectiveness of relevant controls over management’s determination of discount rates, and the short-term forecasts of
revenues and energy costs used to determine the recoverable amount of the selected CGU.
• With the assistance of our valuation specialists, we evaluated the reasonableness of the valuation methodology and discount rate
for each selected CGU by:
• assessing the valuation methodology compared to generally accepted valuation practices and accounting standards; and
• developing a range of independent estimates and comparing those to the discount rate selected by management.
• We agreed the underlying cash flow forecasts to the Board approved projections and we evaluated management’s ability to
accurately forecast future revenues and energy costs by:
• performing a look-back analysis and comparing actual results to management’s historical forecasts;
• assessing the reasonableness of the impact of 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.
• We compared the actual results for the year ended 31 December 2022 to management’s forecasts at the date of the annual
impairment test to determine if any indicators of impairment existed.
• We considered the potential impact of climate change on the carrying value of goodwill by holding discussions with management,
with our sustainability specialists, and within the Group and component engagement teams. These discussions identified the areas
in which climate change, and, in particular, the Group’s 2030 CO₂ emissions reduction target, may impact future projections. These
projections include assumptions on cost of carbon and future climate-related capital expenditure required to meet the Group's 2030
CO2 emissions reduction target.
• We reviewed the disclosures related to intangible assets and assessed the assumptions used in the impairment assessment for
consistency with the impairment models and other information presented in the Annual Report.
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 Group Financial Statements are appropriate.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
164
2022 Annual Report and Form 20-F
164
Independent Auditor’s Irish Report continued
Revenue recognition for certain in-progress 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 24% ($8.0
billion) of the total revenue in 2022 (2021: 23% ($6.8 billion)).
How the scope of our
audit responded to the
key audit matter
The Group recognises long-term contract revenue over the contract term as the work progresses because transfer of control and the
fulfilment of performance obligations to the customer is continuous. Revenue derived from long-term contracts in-progress at the
balance sheet date involves judgement, particularly as it relates to the process of estimating revenue to be recognised, and total
estimated costs of the contract.
We identified revenue recognition for certain long-term contracts in-progress at the balance sheet date (“certain long-term contracts”)
as a key audit matter because of the judgements made by management to recognise revenue for certain long-term contracts in certain
components whether due to bias or otherwise. This required extensive audit effort due to the complexity of certain long-term contracts
and required a high degree of auditor judgement when performing audit procedures to audit management’s estimates and evaluating
the results of those procedures. We focused a proportion of our audit effort on a number of contracts where we consider there to be
the highest degree of management judgement required and designed procedures to mitigate the associated risks.
The Audit Committee discussion of this key audit matter is set out on page 97.
Our audit procedures related to management’s recognition of revenue for certain long-term contracts at the balance sheet date in
certain components included the following, among others:
• We tested the effectiveness of relevant controls over long-term contract revenue, including management’s controls over the
estimates of total costs for performance obligations, and over the assessment of the recoverability of uncertified work in progress
(“WIP”) and aged debt.
• We selected a sample of long-term contracts and:
• assessed 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 and challenged 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 accurately estimate the total cost by performing corroborating inquiries with the
Group’s project managers and engineers, and comparing the estimates to management’s work plans, engineering
specifications, and supplier contracts;
• comparing management’s estimates for the selected contracts to costs of similar performance obligations, when
applicable; and
• considering whether there were any indicators of bias in arriving at the Group’s reported position
• tested the accuracy of WIP held on contracts at the balance sheet date by obtaining supporting documentation including
customer agreement and subsequent certification and payment;
• 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
Based on the procedures performed, we are satisfied that revenue recognised at the balance sheet date in respect of long-term
contracts in-progress 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.
2022 Annual Report and Form 20-F
2022 Annual Report and Form 20-F
165
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:
Group financial statements
Company financial statements
Materiality
$170 million (2021: $140 million)
$83 million (2021: $103 million)
Basis for determining
materiality
The materiality that we used for the Group financial statements was
determined on the basis of profit before tax from continuing
operations and represents 4.9% of that metric.
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.
Rationale for the benchmark
applied
We conducted an assessment to determine the financial statement
items of most importance to investors and analysts by reading
analyst reports and CRH’s communication to shareholders. This
resulted in us selecting profit before tax from continuing operations
as the most appropriate benchmark.
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 most appropriate metric.
Moreover, profit before tax from continuing operations is
traditionally considered the most appropriate benchmark for listed
entities. Group materiality represents:
Metric
%
PBT from continuing operations
4.90%
EBITDA (as defined)*
Revenue
3.03%
0.50%
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 166
2022 Annual Report and Form 20-F
166
Independent Auditor’s Irish Report continued
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 80% of each of Group and Company materiality for the 2022 audit (2021: 80%). In
determining the current year performance materiality, we considered the following factors:
a.
b.
c.
d.
e.
The quality of the control environment and whether we were able to rely on controls,
the amount and nature of control deficiencies,
the nature, volume and size of misstatements (corrected and/or uncorrected) in the previous audit,
prior period adjustments or errors found in the current year,
our assessment of engagement risk.
Error reporting threshold
We agreed with the Audit Committee that we would report to them any audit differences in excess of $8.5 million (2021: $7 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; it has a decentralised structure and an international footprint. 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 from continuing
operations.
• We focused our Group audit scope primarily on the audit of 3 components (5 components in 2021) which were subject to full scope integrated audit procedures
performed by local audit teams to a component materiality (Scope A). 17 components (23 components in 2021) were subject to specified integrated audit
procedures on prescribed balances and specific controls that have been performed by component teams or the Group audit team to component materiality (Scope
B), and the remaining 15 (20 components in 2021) were subject to defined audit procedures consisting of focused risk assessments and analytical reviews
performed centrally by the Group audit team (Scope C).
•
Data analytics were performed centrally and used extensively in selecting the components and addressing the residual entities 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 $45 million to $120 million.
Working with other auditors
The Group audit team planned its site 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); and
risk assessment discussions and detailed workpaper reviews.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
167
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.
A combination of physical, where possible, and virtual site visits were performed at key locations during the year.
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.
We classify components according to the following scoping categories:
1) 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 include risks relevant to the Group audit.
2) 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. The Scope B
entities are not individually financially significant to the Group.
3) Scope C – Defined audit procedures consisting of focused risk assessments and analytical reviews have been performed by the Group audit team. The
Scope C entities are not individually financially significant to the Group.
4) 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.
Our consideration of the control environment
We tested the effectiveness of internal controls over financial reporting across all in-scope entities and entity level controls at the Group level. Given the importance of
information technology (IT) to the recording of financial information and transactions, we have tested General IT controls relating to certain of the Group’s IT systems
where relevant to our audit work. We were able to place reliance on controls where planned and it was more efficient.
Our consideration of climate-related risks
In planning our audit, we have considered the potential impacts of the climate-related risks identified by management on the Group’s business and its financial
statements.
The Group has set out their 2030 carbon reduction target on page 27. The Group have also identified climate change and policy as part of their principal
operational risks and uncertainties on page 142. They have set out the potential impacts of their physical risks and transitional risks on their business on page
142 and their Taxonomy eligible economic activities on page 270.
As part of our audit, we have obtained management’s climate-related risk assessment and made inquiries of management to understand their process for considering
the impact of climate-related risks. The Group reflected the impact of stated 2030 carbon reduction target on assumptions used in setting key estimates recorded in the
financial statements in accordance with IFRS requirements.
We have performed our own risk assessment of the potential impact of the 2030 carbon reduction target outlined by the Group and how they may affect judgements
and estimates included in the financial statements. The main climate-related implications considered as part of our audit relate to the impact of climate change on cash
flow projections underlying intangible assets. These projections include assumptions on costs of carbon and future capital expenditure required to meet the 2030
carbon reduction target. Our audit procedures were performed with the involvement of our sustainability and valuation specialists. We also challenged how the directors
considered climate change in their assessment of going concern and viability.
We assessed if the assumptions used by the directors in the financial statements were consistent with their 2030 carbon reduction target and as set out in their
accounting policies, on pages 181 to 190. In early 2023, the Group adopted an updated target of a 30% reduction in CO2 emissions (Scope 1 and Scope 2) by 2030
compared to 2021 levels and we considered the directors' disclosure as set out on page 181.
We have also read the Group’s disclosure of climate-related information in the front half of the annual report, including the TCFD disclosures listed on pages 56 to 59.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 168
2022 Annual Report and Form 20-F
168
Independent Auditor’s Irish Report continued
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.
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.
A further description of our responsibilities for the audit of the financial statements is located on IAASA’s website at:
https://iaasa.ie/publications/description-of-the-auditors-responsibilities-for-the-audit-of-the-financial-statements/
This description forms part of our auditor’s report.
Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to
detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is
detailed below.
Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, we
considered the following:
•
•
•
•
•
the nature of the industry and sector, control environment and business performance including the design of the Group’s remuneration policies, key drivers
for directors’ remuneration, bonus levels and performance targets;
the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error that was approved by the board and presented to
the Audit Committee on 14 February 2023;
results of our enquiries of management, internal audit and the audit committee about their own identification and assessment of the risks of irregularities;
any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
•
identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
• detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
•
the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
the matters discussed among the audit engagement team including significant component audit teams and relevant internal specialists, including tax,
valuations, pensions, IT, mineral reserves and sustainability specialists regarding how and where fraud might occur in the financial statements and any
potential indicators of fraud.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
169
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and identified the greatest potential for
fraud in the following areas: Revenue recognition for certain in-progress long term contracts.
In common with all audits under ISAs (Ireland), we are required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory frameworks that the Group and the Company operates in, focusing on provisions of those laws
and regulations that had a direct effect on the determination of material amounts and disclosures in the financial statements. The key laws and regulations we
considered in this context included the Irish Companies Act 2014, the UK Listing Rules, the Euronext Dublin Listing Rules, the Market Abuse Regulation, the Irish
Transparency Regulation, and reporting obligations under US securities laws. The Group is also subject to various statutes, regulations, and laws applicable to
businesses generally in the countries and markets in which it operates.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with which may be
fundamental to the Group and Company’s ability to operate or to avoid a material penalty. These include statutes, regulations and laws affecting land usage,
zoning, labour and employment practices, competition/anti-trust, financial reporting, taxation, anti-fraud and theft, anti-bribery, anti-corruption, international trade
compliance, governance, data protection and data privacy and security, environmental, health and safety, and international trade and sanctions laws and other
matters.
Audit response to risks identified
As a result of performing the above, we identified 'Revenue recognition for certain in-progress long-term contracts' as a key audit matter related to the potential
risk of fraud. The key audit matters section of our report explains the matter in more detail and also describes the specific procedures we performed in response
to that key audit matter.
In addition to the above, our procedures to respond to risks identified included the following:
•
•
•
•
•
reviewing the financial statement disclosures and testing to supporting documentation to assess compliance with provisions of relevant laws and regulations
described as having a direct effect on the financial statements;
enquiring of management, the audit committee and in-house legal counsel concerning actual and potential litigation and claims;
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
reading minutes of meetings of those charged with governance, reviewing internal audit reports and reviewing correspondence with the tax authorities; and
in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other adjustments; assessing
whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business rationale of any significant
transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including internal specialists and
significant component audit teams, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
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.
In our opinion, information and returns adequate for our audit have been received from branches of the company not visited by us.
The Company Balance Sheet is in agreement with the accounting records.
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 88 to 107 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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 170
2022 Annual Report and Form 20-F
170
Independent Auditor’s Irish Report continued
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 136;
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 136;
the directors’ statement on fair, balanced and understandable set out on page 138;
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
139 to 148;
the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 136;
the section describing the work of the Audit Committee set out on pages 92 to 97.
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 those parts of the directors’ report as specified for our review.
The Companies Act 2014 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 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.
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
We were appointed by the shareholders of CRH plc on 23 April 2020 to audit the financial statements for the financial year ended 31 December 2020 and
subsequent financial years. The period of total uninterrupted engagement of the firm is 3 years, covering the financial years ending 31 December 2020 to 31
December 2022.
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.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
171
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
1 March 2023
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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 172
2022 Annual Report and Form 20-F
172
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 sheets of CRH plc and subsidiaries (the ‘Company’) as at 31 December 2022 and 2021, the related
consolidated income statements and consolidated statements of comprehensive income, changes in equity and cash flows, for each of the three years in the
period ended 31 December 2022, 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 at 31 December 2022 and 2021, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended 31 December 2022, in conformity with International Financial Reporting Standards
as issued by the International Accounting Standards Board.
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 at 31 December 2022, 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 1 March 2023, 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.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
173
Intangible Assets – Assessment of the carrying value of goodwill associated with selected cash generating units – Refer to accounting
policies and note 14 to the financial statements
Critical Audit Matter Description
As described in the accounting policies and note 14, the goodwill balance was $9.2 billion as at 31 December 2022 (2021: $9.5 billion). The Company did not
record an impairment charge during the year.
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 relating to discount rates, short-term forecasts and long-term
growth rates ("key assumptions”). Changes in these key assumptions could have a significant impact on the recoverable amount, the amount of any goodwill
impairment charge, or both.
With the assistance of our valuation and sustainability specialists, we performed risk assessment procedures and performed sensitivities on management’s key
assumptions, to identify certain CGUs of interest. We focused on CGUs where the recoverable amount did not exceed its carrying value by a significant amount
and on CGUs which had a significant reduction in cash flow forecasts compared to prior year (“selected CGUs”). Within the selected CGUs we focused on those
assumptions which were most sensitive based on the individual facts and circumstances, which we determined to be discount rates and short-term forecasts of
sales growth and energy costs.
We determined that the assessment of the carrying value of goodwill of the selected CGUs was a critical audit matter because it required a high degree of auditor
judgement and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s key assumptions.
The Audit Committee discussion of this critical audit matter is set out on page 97.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the discount rates and short-term forecasts of sales growth and energy costs of the selected CGUs, used by management to
estimate the recoverable amount of the selected CGUs included the following, among others:
• We tested the effectiveness of relevant controls over management’s determination of discount rates, and the short-term forecasts of revenues and energy
costs used to determine the recoverable amount of the selected CGU.
• With the assistance of our valuation specialists, we evaluated the reasonableness of the valuation methodology and discount rate for each selected CGU by:
• assessing the valuation methodology compared to generally accepted valuation practices and accounting standards; and
• developing a range of independent estimates and comparing those to the discount rate selected by management.
• We agreed the underlying cash flow forecasts to the Board approved projections and we evaluated management’s ability to accurately forecast future
revenues and energy costs by:
• performing a look-back analysis and comparing actual results to management’s historical forecasts;
• assessing the reasonableness of the impact of 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.
• We compared the actual results for the year ended 31 December 2022 to management’s forecasts at the date of the annual impairment test to determine if
any indicators of impairment existed.
• We considered the potential impact of climate change on the carrying value of goodwill by holding discussions with management, with our sustainability
specialists and within the Company and component engagement teams. These discussions identified the areas in which climate change, and in particular the
Company’s 2030 CO₂ emissions reduction target, may impact future projections. These projections include assumptions on cost of carbon and future
climate-related capital expenditure required to meet the Company’s 2030 CO₂ emissions reduction target.
• We reviewed the disclosures related to intangible assets and assessed the assumptions used in the impairment assessment for consistency with the
impairment models and other information presented in the Annual Report.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 174
2022 Annual Report and Form 20-F
174
Independent Auditor’s US Reports continued
Revenue recognition for certain in-progress long-term contracts – Refer to accounting policies and note 1 to the financial statements
Critical Audit Matter Description
As described in the accounting policies and note 1, the Company’s revenues derived from long-term contracts accounted for 24% ($8.0 billion) of the total
revenue in 2022 (2021: 23% ($6.8 billion)).
The Company recognises long-term contract revenue over the contract term as the work progresses because transfer of control and the fulfilment of
performance obligations to the customer is continuous. Revenue derived from long-term contracts in-progress at the balance sheet date involves judgement,
particularly as it relates to the process of estimating revenue to be recognised, and total estimated costs of the contract.
We identified revenue recognition for certain long-term contracts in-progress at the balance sheet date (“certain long-term contracts”) as a critical audit matter
because of the judgements made by management to recognise revenue for certain long-term contracts in certain components whether due to bias or otherwise.
This required extensive audit effort due to the complexity of certain long-term contracts and required a high degree of auditor judgement when performing audit
procedures to audit management’s estimates and evaluating the results of those procedures. We focused a proportion of our audit effort on a number of
contracts where we consider there to be the highest degree of management judgement required and designed procedures to mitigate the associated risks.
The Audit Committee discussion of this critical audit matter is set out on page 97.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to management’s recognition of revenue for certain long-term contracts at the balance sheet date in certain components included
the following, among others:
• We tested the effectiveness of relevant controls over long-term contract revenue, including management’s controls over the estimates of total costs for
performance obligations, and over the assessment of the recoverability of uncertified work in progress (“WIP”) and aged debt.
• We selected a sample of long-term contracts and:
• assessed 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 and challenged 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 accurately estimate the 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;
• comparing management’s estimates for the selected contracts to costs of similar performance obligations, when applicable; and
• considering whether there were any indicators of bias in arriving at the Company’s reported position.
• tested the accuracy of WIP held on contracts at the balance sheet date by obtaining supporting documentation including customer agreement and
subsequent certification and payment;
• 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
1 March 2023
The first accounting period we audited was 31 December 2020. In 2019, we began preparing for audit firm transition.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
175
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 at 31 December 2022, 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 at 31 December 2022, based on criteria established in Internal
Control – Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance
sheets of CRH plc as at 31 December 2022 and 2021, the related consolidated income statements and consolidated statements of comprehensive income,
changes in equity and cash flows for each of the three years in the period ended 31 December 2022, and the related notes (collectively referred to as the
‘financial statements’) of the Company and our report dated 1 March 2023, 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 at Barrette Outdoor Living Inc., which was acquired on 8 July 2022, and whose financial statements constitute 5.0% and 3.4% of net and total assets,
respectively, 1.1% of revenues, and its loss reduced Group profit by 1.0% in the consolidated financial statement amounts as of and for the year ended
31 December 2022. Accordingly, our audit did not include the internal control over financial reporting at Barrette Outdoor Living Inc.
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
1 March 2023
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 176
2022 Annual Report and Form 20-F
176
Consolidated Income Statement
for the financial year ended 31 December 2022
Notes
1,2
Revenue
4
4
Cost of sales
Gross profit
Operating costs
2,5,7
Group operating profit
2,6
(Loss)/profit on disposals
Profit before finance costs
Finance costs
Finance income
Other financial expense
Share of equity accounted investments’ profit/(loss)
Profit before tax from continuing operations
9
9
9
2
2
10
Income tax expense
Group profit for the financial year from continuing operations
3
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
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
12
12
12
12
2022
$m
32,723
(21,844)
10,879
(6,985)
3,894
(49)
3,845
(401)
65
(40)
-
3,469
(785)
2,684
1,190
3,874
2,657
1,190
27
3,874
$5.07
$5.03
$3.50
$3.48
Restated (i)
Restated (i)
2021
$m
29,206
(19,350)
9,856
(6,525)
3,331
116
3,447
(357)
-
(42)
55
3,103
(661)
2,442
179
2,621
2,386
179
56
2,621
$3.29
$3.26
$3.06
$3.03
2020
$m
25,888
(17,323)
8,565
(6,539)
2,026
17
2,043
(438)
-
(33)
(118)
1,454
(445)
1,009
156
1,165
966
156
43
1,165
$1.43
$1.42
$1.23
$1.22
(i) Restated to show the results of our former Building Envelope business in discontinued operations. See note 3 for further details.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
177
Consolidated Statement of Comprehensive Income
for the financial year ended 31 December 2022
Notes
25
10
28
10
Group profit for the financial year
3,874
2,621
1,165
2022
$m
2021
$m
2020
$m
Other comprehensive income
Items that may be reclassified to profit or loss in subsequent years:
Currency translation effects
Gains 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
Total comprehensive income for the financial year
Attributable to:
Equity holders of the Company
Non-controlling interests
Total comprehensive income for the financial year
(641)
66
(14)
(589)
279
(63)
216
(373)
3,501
3,520
(19)
3,501
(338)
34
(8)
(312)
264
(36)
228
(84)
440
7
-
447
(33)
11
(22)
425
2,537
1,590
2,516
21
2,537
1,515
75
1,590
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 178
2022 Annual Report and Form 20-F
178
Consolidated Balance Sheet
as at 31 December 2022
Notes
13
14
15
15
17
28
25
27
16
17
25
23
29
29
29
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments accounted for using the equity method
Other financial assets
Other receivables
Retirement benefit assets
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
Treasury Shares and own shares
Other reserves
Cash flow hedging reserve
Foreign currency translation reserve
Retained income
Capital and reserves attributable to the Company’s equity holders
31
Non-controlling interests
20
24
25
27
18
28
26
20
18
24
25
26
Total equity
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
R. Boucher, A. Manifold, Directors
2022
$m
2021
$m
18,921
10,287
649
14
164
261
3
88
19,502
9,848
653
12
239
166
97
109
30,387
30,626
4,194
4,569
63
39
5,936
14,801
45,188
302
1
(297)
380
5
(692)
21,992
21,691
646
22,337
1,059
8,145
77
2,868
691
277
845
3,611
4,569
42
39
5,783
14,044
44,670
309
1
(195)
445
-
(97)
19,770
20,233
681
20,914
1,374
9,938
-
2,734
717
475
937
13,962
16,175
260
5,872
702
1,491
51
513
8,889
22,851
45,188
297
5,692
550
549
14
479
7,581
23,756
44,670
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
179
Consolidated Statement of Changes in Equity
for the financial year ended 31 December 2022
Attributable to the equity holders of the Company
Issued
share
capital
Share
premium
account
Treasury
Shares/
own
shares
Other
reserves
Cash flow
hedging
reserve
Foreign
currency
translation
reserve
$m
$m
$m
$m
$m
$m
Retained
income
$m
Total
$m
Non-
controlling
interests
Total
equity
$m
$m
Notes
8
29
29
29
29
29
10
10
At 1 January 2022
Group profit for the financial year
Other comprehensive income
Total comprehensive income
Reclassifications
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
Hedging gains transferred to inventory
Tax relating to cash flow hedges
Tax relating to share-based payment expense
Share option exercises
11
Dividends
Transactions involving non-controlling interests
At 31 December 2022
for the financial year ended 31 December 2021
At 1 January 2021
Group profit for the financial year
Other comprehensive income
Total comprehensive income
8
29
29
29
29
29
29
29
10
11
8
10
11
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
Reduction in Share Premium
Cancellation of Income Shares
Cancellation of Treasury Shares
Tax relating to share-based payment expense
Share option exercises
Dividends
At 31 December 2021
for the financial year ended 31 December 2020
At 1 January 2020
Group profit for the financial year
Other comprehensive income
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
Tax relating to share-based payment expense
Share option exercises
Dividends
Disposal of non-controlling interests
Transactions involving non-controlling interests
At 31 December 2020
310
-
-
-
-
-
-
-
-
-
(7)
-
-
-
-
-
-
303
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(195)
445
-
-
-
-
-
(1,170)
24
(8)
173
879
-
-
-
-
-
-
-
-
-
-
101
-
-
-
(173)
7
-
-
-
-
-
-
(297)
380
334
7,493
(386)
444
-
-
-
-
-
-
-
-
-
(16)
(8)
-
-
-
310
-
-
-
-
-
-
-
-
(7,493)
-
-
-
-
-
-
-
-
-
-
(880)
19
(16)
117
-
-
951
-
-
-
(195)
-
-
-
110
-
-
-
(117)
-
-
8
-
-
-
445
336
7,493
(360)
411
-
-
-
-
-
-
-
-
(2)
-
-
-
-
-
334
-
-
-
-
-
-
-
-
-
-
-
-
-
-
7,493
-
-
-
-
(220)
8
(29)
65
150
-
-
-
-
-
(386)
-
-
-
96
-
-
-
(65)
2
-
-
-
-
-
444
-
-
66
66
35
-
-
-
-
-
-
(96)
-
-
-
-
-
5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(97)
19,770
20,233
681
20,914
-
3,847
3,847
(595)
(595)
202
(327)
4,049
3,520
27
(46)
(19)
3,874
(373)
3,501
-
101
(1,153)
-
(8)
-
-
(96)
17
(3)
11
(35)
-
-
101
17
(1,153)
(24)
-
-
(879)
-
17
(3)
11
-
(8)
-
-
(96)
17
(3)
11
-
-
-
-
-
-
-
-
-
-
-
(931)
(931)
-
-
(13)
(3)
(944)
(3)
(692)
21,992
21,691
646
22,337
206
11,565
19,656
692
20,348
-
2,565
2,565
(303)
(303)
254
(49)
2,819
2,516
-
-
-
-
-
-
-
-
-
-
-
-
(281)
(19)
-
-
7,493
16
(951)
24
13
(909)
110
(1,161)
-
(16)
-
-
-
-
24
13
(909)
(97)
19,770
20,233
56
(35)
21
-
-
-
-
-
-
-
-
-
-
(32)
681
2,621
(84)
2,537
110
(1,161)
-
(16)
-
-
-
-
24
13
(941)
20,914
(202)
11,350
19,028
607
19,635
-
408
408
-
-
-
-
-
-
-
-
-
-
-
206
1,122
(15)
1,107
-
-
(8)
-
-
(150)
1
6
(710)
-
(31)
11,565
1,122
393
1,515
96
(220)
-
(29)
-
-
1
6
(710)
-
(31)
19,656
43
32
75
-
-
-
-
-
-
-
-
(15)
(6)
31
692
1,165
425
1,590
96
(220)
-
(29)
-
-
1
6
(725)
(6)
-
20,348
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 180
2022 Annual Report and Form 20-F
180
Consolidated Statement of Cash Flows
for the financial year ended 31 December 2022
Restated (i)
Restated (i)
Notes
Cash flows from operating activities
9
6
13,20
14
Group profit for the financial year
Finance costs (net)
Share of equity accounted investments’ (profit)/loss
Profit on disposals
Depreciation charge
Amortisation of intangible assets
13,14,20
Impairment charge
8
Share-based payment expense
Income tax expense
Other
19
Net movement in inventories, receivables, payables and provisions
Cash generated from operations
Interest paid (including leases)
Corporation tax paid
Net cash inflow from operating activities
6
9
15
13
30
15
21
19
19
21
21
21
20
29
11
11
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
Net cash flow arising from derivative financial instruments
Deferred and contingent acquisition consideration paid
Deferred divestment consideration received
Net cash outflow from investing activities
Cash flows from financing activities
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 and borrowings
Repayment of lease liabilities (ii)
Treasury Shares/own shares purchased
Dividends paid to equity holders of the Company
Dividends paid to non-controlling interests
Net cash (outflow)/inflow from financing activities
Increase/(decrease) in cash and cash equivalents
Reconciliation of opening to closing cash and cash equivalents
Cash and cash equivalents at 1 January
Translation adjustment
Increase/(decrease) in cash and cash equivalents
23
Cash and cash equivalents at 31 December
(i) See the Accounting Policies on page 181 for further details.
2022
$m
3,874
382
-
(1,422)
1,644
113
-
101
1,155
42
(518)
5,371
(374)
(1,043)
3,954
3,827
65
36
(1,523)
(3,253)
(45)
(11)
(32)
52
(884)
11
(3)
38
(11)
(364)
(249)
(1,178)
(917)
(13)
(2,686)
384
5,783
(231)
384
5,936
2021
$m
2,621
417
(55)
(119)
1,691
74
-
110
721
21
(228)
5,253
(401)
(642)
4,210
387
-
32
(1,554)
(1,494)
(4)
-
(33)
120
2020
$m
1,165
490
118
(9)
1,624
70
673
96
499
6
196
4,928
(432)
(558)
3,938
184
-
35
(996)
(351)
(1)
-
(54)
123
(2,546)
(1,060)
13
-
-
(37)
(1,183)
(264)
(896)
(906)
(32)
(3,305)
(1,641)
7,721
(297)
(1,641)
5,783
6
-
6,427
26
(4,943)
(258)
(249)
(707)
(15)
287
3,165
4,218
338
3,165
7,721
(ii) Repayment of lease liabilities amounted to $297 million (2021: $328 million; 2020: $326 million), of which $48 million (2021: $64 million; 2020: $68 million) related to
interest paid which is presented in cash flows from operating activities.
2022 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 Consolidated Financial Statements have been prepared on a going concern
basis. The Directors acknowledge that based on their review of the Group's
activities, cash flows, liquidity position and borrowing facilities for the financial
year ended 31 December 2022, and having assessed the principal risks facing
the Group, the Board of Directors has a reasonable expectation that CRH plc,
and the Group as a whole, has adequate financial and other resources to
continue in operational existence and will be able to meet its liabilities as they fall
due over the 12-month going concern period.
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.
Certain prior year disclosures have been amended to conform to current year
presentation. An amount of $46 million relating to the unwinding of the discount
element of lease liabilities has been reclassified from other financial expense to
finance costs in the period ended 31 December 2021 (31 December 2020: $49
million) to align with current year presentation. This has no impact on total net
finance costs or any other financial statement line items for any of the periods
presented.
In accordance with Section 304 of the Companies Act 2014, the Company is
availing of the exemption from presenting its individual profit and loss account to
the Annual General Meeting and from filing it with the Registrar of Companies.
Adoption of IFRS and International Financial
Reporting Interpretations Committee (IFRIC) interpretations
The following standard amendments became effective for the Group as of 1
January 2022:
• Amendments to IFRS 3 Business Combinations – Reference to the Conceptual
Framework
• Amendments to IAS 16 Property, Plant and Equipment – Proceeds before
Intended Use
• Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent
Assets – Onerous Contracts – Costs of Fulfilling a Contract
• Annual Improvements 2018 – 2020 Cycle
The standard amendments did not result in a material impact on the Group’s
results.
IFRS and IFRIC interpretations being adopted in subsequent
years
IFRS 17 Insurance Contracts
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
2022 Annual Report and Form 20-F
181
figures required. The Group has evaluated the impact of this standard on future
periods and it is not expected to be material.
There are no other IFRS or IFRIC interpretations that are effective subsequent to
the CRH 2022 financial year-end that are expected to have a material impact on
the results or financial position of the Group.
Impact of Climate Change and Carbon Emissions Reduction
Targets
Climate change risks including the impact of achieving the Group's carbon
emissions reduction targets and the risks identified in the TCFD disclosures on
pages 56 to 59 have been considered and assessed in the preparation of the
Consolidated Financial Statements for the year ended 31 December 2022. There
has been no material impact identified on the estimates and underlying
assumptions made in the preparation of the Group’s Consolidated Financial
Statements as a result of climate change risks. In line with the application of our
accounting policies, estimates and underlying assumptions are reviewed on an
ongoing basis as we continue to develop and implement our strategy to meet our
carbon emissions reduction targets. The table below provides details of where
further information has been provided in these Consolidated Financial
Statements.
Climate Change and Carbon Emissions Reduction Targets
References
Pages
Impairment testing of goodwill and property, plant and equipment
182, 211
Useful lives of assets
Provisions for liabilities
Inventories
Retirement Benefit Obligations
186, 209
183
187
234
The Directors are aware of the ever-changing risks attached to climate change
and regularly assess these risks against judgements and estimates made in the
preparation of the Group’s Consolidated Financial Statements.
In early 2023, the Science Based Targets initiative (SBTi) validated the alignment
of our existing Scope 1 and Scope 2 carbon emissions reduction target to a
1.5°C warming scenario. The target previously aligned to a well below 2.0°C
scenario. The Group’s assessment is that the impact of the adoption of this
updated target will not have a material impact on the estimates, judgements and
assumptions set out in the relevant disclosures referenced above. The overall
absolute Scope 1 and Scope 2 carbon emissions reduction target by 2030 is
consistent with the previous target.
Voluntary Change in Accounting Policy
For the period ended 31 December 2022, the Group retrospectively adopted a
voluntary change in accounting policy in accordance with IAS 8 Accounting
Policies, Changes in Accounting Estimates and Errors with respect to the
presentation of operating cash flows under IAS 7 Statement of Cash Flows. The
impact of this change is to replace “Profit before tax” with “Group profit for the
financial year” as the starting point for the reconciliation to net cash flows from
operating activities in the Consolidated Statement of Cash Flows. The new
presentation reconciles net cash flows from operating activities on a total Group
basis, including both continuing and discontinued operations. This has no impact
on net cash inflow from operating activities or any other financial statement line
items for the period ended 31 December 2022 or any comparative periods
presented.
Key Accounting Policies which involve Estimates, Assumptions
and Judgements
The preparation of the Consolidated Financial Statements in accordance with
IFRS requires management to make certain estimates, assumptions and
judgements that affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expenses. Management believes that
the estimates, assumptions and judgements upon which it relies are reasonable
based on the information available to it at the time 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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 182
2022 Annual Report and Form 20-F
182
Accounting Policies continued
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 13 and 14
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 (as
defined)* margin, long-term growth and pre-tax discount rates
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 net cash flow forecasts are extrapolated using long-term
growth rates to determine the basis for an annuity-based terminal value.
These net cash flow forecasts reflect volume, price and cost (including the
cost of carbon where applicable) assumptions in addition to other cash flow
movements. EBITDA (as defined)* margin is deemed an appropriate
measure for assessing the estimation uncertainty associated with price and
cost assumptions. Future cash flows, including the terminal value, 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. 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.
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 14 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.
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. Consideration is also
given to climate change and policy risks and uncertainties as set out on page
142, as well as to the actions required to deliver the Group’s carbon emissions
reduction targets when reviewing assets for potential impairment. A detailed
discussion on this consideration is provided in note 13 to the Consolidated
Financial Statements.
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.
Retirement benefit obligations – Note 28
Costs arising in respect of the Group’s defined contribution pension schemes are
charged to the Consolidated Income Statement in the period in which they are
incurred. The Group has no legal or constructive obligation to pay further
contributions in the event that the fund does not hold sufficient assets to meet its
benefit commitments.
The liabilities and costs associated with the Group’s defined benefit pension
schemes (both funded and unfunded) are assessed on the basis of the projected
unit credit method by professionally qualified actuaries and are arrived at using
actuarial assumptions based on market expectations at the balance sheet date.
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 rates, changes in the
rates of return on high-quality corporate bonds; (ii) for future compensation
levels, future labour market conditions and (iii) for healthcare cost trend
rates, the rate of medical cost inflation in the relevant regions. The weighted
average actuarial assumptions used and sensitivity analysis in relation to the
significant assumptions employed in the determination of pension and other
post-retirement liabilities are contained in note 28 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.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group's share of equity
accounted investments' profit after tax.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
183
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 26 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.
The impact of climate change and policy risks and uncertainties as set out on
page 142 on environmental and remediation provisions has been considered,
specifically the impact on timing and extent of costs and cash outflows. Changes
to legislation, including those relating to climate change, are factored into the
assessment of provisions when the legislation is virtually certain to be enacted.
The Group’s carbon emissions reduction targets is also considered in these
judgements. The measurement of our provisions is based on reasonable and
supportable assumptions that represent management’s current best estimate of
the range of economic conditions that will exist in the foreseeable future. These
assumptions do not have a significant risk of resulting in a material adjustment to
the carrying value of these provisions within the next financial year and therefore
do not represent a major source of estimation uncertainty.
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 recognition of additional, or release of,
provisions in future accounting periods.
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 each of the Group’s defined benefit
pension 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, the return on plan
assets (excluding net interest) and changes in the effect of the asset ceiling (if
any, 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.
Defined benefit pension surpluses are recognised as assets to the extent that
they are considered recoverable, which is generally by way of a refund or lower
future employer contributions. Where there is no unconditional right to a refund
or reduction in future contributions, we restrict the assets of the scheme by
applying the asset ceiling test, which limits the net defined benefit surplus to the
present value of available refunds and reductions in 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 26
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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 184
2022 Annual Report and Form 20-F
184
Accounting Policies continued
Other Significant Accounting Policies
Basis of consolidation
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 – Note 15
An associate is an entity over which the Group has significant influence.
Significant influence is the power to participate in the financial and operating
policy decisions of an entity, but is not control or joint control over those policies.
A joint venture is a type of joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets of the joint venture. Joint
control is the contractually agreed sharing of control of the arrangement, which
exists only when decisions about the relevant activities require unanimous
consent of the parties sharing control.
The Group’s investments in its associates and joint ventures are accounted for
using the equity method from the date significant influence/joint control is
deemed to arise until the date on which significant influence/joint control ceases
to exist or when the interest becomes classified as an asset held for sale.
The Consolidated Income Statement reflects the Group’s share of 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 in the Consolidated
Balance Sheet. The Group applies IFRS 9 Financial Instruments, 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 supplies 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
year and are generally fixed price, but may be subject to indexation and/or
escalation clauses that can either increase or decrease the final transaction 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 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 revenue is recognised in the period subsequent to the
contracted work being completed when there is final certainty over the remaining
element of variable consideration.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
185
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 17). 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 18); 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 16). 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 8
The Group operates a number of equity-settled share-based payment plans.
Details of these plans, together with the nature of the underlying market and non-
market performance and other vesting conditions are outlined in note 8. 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
20% 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 (2020 and 2021: 25%). 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.
The remaining awards granted under the 2014 Performance Share Plan are
subject to non-market-based vesting conditions; 45% are subject to a
cumulative cash flow target (2020 and 2021: 50%) and 20% are subject to a
RONA metric (2020 and 2021: 25%). In 2022 a new sustainability and diversity
scorecard metric of 15% was introduced for awards made in 2022 (a non-
market-based vesting condition). The fair value of the awards is calculated as the
market price of the shares at the date of grant. No expense is recognised for
awards that do not ultimately vest. At the balance sheet date the estimate of the
level of vesting is reviewed and any adjustment necessary is recognised in the
Consolidated Income Statement.
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.
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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 186
2022 Annual Report and Form 20-F
186
Accounting Policies continued
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 10 and 27
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 13
The carrying value of property, plant and equipment (excluding leased right-of-
use assets) of $17,663 million at 31 December 2022 represents 39% 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 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.
Amongst other factors, consideration is given to climate change and policy risks
and uncertainties as set out on page 142 when determining the useful lives of
assets. The determination of useful lives also considers the Group’s carbon
emissions reduction targets. Capital expenditure will continue to be required for
ongoing projects and the useful lives of future capital expenditure may differ from
current assumptions, however there were no significant changes in the estimates
of useful lives during the current financial year.
Future developments in technology may also result in a risk of obsolescence for
the Group’s current portfolio of plant and machinery assets, however the
expected timeframe for these developments is not currently anticipated to impact
their remaining useful lives as the majority of the Group’s plant and machinery
assets will be fully depreciated within ten years.
Depreciation and depletion is calculated to write off the book value of each item
of property, plant and equipment over its useful economic life on a straight-line
basis at the following rates:
Land and buildings
The book value of mineral-bearing land, less an estimate of its residual value, is
depleted over the period of the mineral extraction in the proportion which
production for the year bears to the latest estimates of proven and probable
mineral reserves. Land, other than mineral-bearing land, is not depreciated. In
general, buildings are depreciated at 2.5% per annum (p.a.).
Plant and machinery
These are depreciated at rates ranging from 3.3% p.a. to 20% p.a. depending on
the type of asset. Plant and machinery includes transport vehicles which are, on
average, depreciated at 20% p.a.
Business combinations – Note 30
The Group applies the acquisition method in accounting for business
combinations. The cost of an acquisition is measured as the aggregate of the
consideration transferred (excluding amounts relating to the settlement of pre-
existing relationships), the amount of any non-controlling interest in the acquiree
and, in a business combination achieved in stages, the acquisition date fair value
of the acquirer’s previously-held equity interest in the acquiree. Transaction costs
that the Group incurs in connection with a business combination are expensed
as incurred.
To the extent that settlement of all or any part of consideration for a business
combination is deferred, the fair value of the deferred component is determined
through discounting the amounts payable to their present value at the date of
exchange. The discount component is unwound as an interest charge in the
Consolidated Income Statement over the life of the obligation. Any contingent
consideration is recognised at fair value at the acquisition date and included in
the cost of the acquisition. The fair value of contingent consideration at
acquisition date is arrived at through discounting the expected payment 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
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
187
recognised in profit or loss unless the contingent consideration is classified as
equity, in which case it is not remeasured and settlement is accounted for within
equity.
The assets and liabilities arising on business combination activity are measured at
their acquisition-date fair values. Contingent liabilities assumed in business
combination activity are recognised as of the acquisition date, where such
contingent liabilities are present obligations arising from past events and their fair
value can be measured reliably. In the case of a business combination achieved
in stages, the acquisition date fair value of the acquirer’s previously-held equity
interest in the acquiree is remeasured to fair value as at the acquisition date
through profit or loss. When the initial accounting for a business combination is
determined provisionally, any adjustments to the provisional values allocated to
the consideration, identifiable assets or liabilities (and contingent liabilities, if
relevant) are made within the measurement period, a period of no more than one
year from the acquisition date.
Goodwill – Note 14
Goodwill arising on a business combination is initially measured at cost, being the
excess of the cost of an acquisition over the 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 14
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, based on the
current composition of definite-lived intangible assets, the useful lives for
customer-related intangible assets range from five to twenty years and the useful
lives for marketing related intangible assets range from ten to thirty years.
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 13 and 20
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.
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.
Inventories – Note 16
Inventories are stated at the lower of cost and net realisable value. Cost is based
on the first-in/first-out principle (and weighted average, where appropriate) and
includes all expenditure incurred in acquiring the inventories and bringing them to
their present location and condition. Raw materials are valued on the basis of
purchase cost on a first-in/first-out basis. In the case of finished goods and work-
in-progress, cost includes direct materials, direct labour and attributable
overheads based on normal operating capacity and excludes borrowing costs.
Net realisable value is the estimated proceeds of sale less all further costs to
completion, and less all costs to be incurred in marketing, selling and distribution.
Estimates of net realisable value are based on the most reliable evidence
available at the time the estimates are made, taking into consideration
fluctuations of price or cost directly relating to events occurring after the end of
the period, the likelihood of short-term changes in buyer preferences, product
obsolescence or perishability (all of which are generally low given the nature of
the Group’s products) and the purpose for which the inventory is held.
Climate change and policy risks and uncertainties as set out on page 142 may
also result in additional costs, changes to selling prices or product obsolescence
impacting the valuation of inventories in future years. However, due to the short
inventory turnover cycle there were no material write-downs of inventories
required in this regard during the current financial year.
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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 188
2022 Annual Report and Form 20-F
188
Accounting Policies continued
Trade and other receivables – Note 17
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.
The Group assesses on a forward looking basis the expected credit losses
associated with trade and other receivables at each balance sheet date. The
expected credit loss is estimated as the difference between the asset’s carrying
amount and the present value of the future cash flows the Group expects to
receive. Where the present value of such cash flows is lower than the carrying
value, the carrying value of the asset is adjusted, with the impairment gain or loss
recognised in the Consolidated Income Statement.
Further detail on the Group's methodology for providing for expected credit
losses is provided in note 17.
Cash and cash equivalents – Note 23
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.
Interest-bearing loans and borrowings – Note 24
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 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 25
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 forwards and
currency swaps). 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.
Fair value and cash flow hedges
The Group uses fair value hedges and cash flow hedges in its treasury activities.
For the purposes of hedge accounting, hedges are classified either as fair value
hedges (which entail hedging the exposure to movements in the fair value of a
recognised asset or liability or an unrecognised firm commitment that could affect
profit or loss) or cash flow hedges (which hedge exposure to fluctuations in future
cash flows derived from a particular risk associated with a recognised asset or
liability, or a highly probable forecast transaction that could affect profit or loss).
Where the conditions for hedge accounting are satisfied and the hedging
instrument 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
Where foreign currency swaps 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 29 and 11
Treasury Shares and own shares
Ordinary Shares acquired by the Parent Company through the share buyback
programme (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. A financial liability is recorded if a contractual
obligation to repurchase shares exists at the balance sheet date.
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.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
189
Other Reserves
Other Reserves primarily comprise reserves relating to the Group’s share-based
payments expense.
Foreign currency translation
Items included in the financial statements of each of the Group’s entities are
measured using the currency of the primary economic environment in which the
entity operates (the functional currency). The Consolidated Financial Statements
are presented in 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 in effect
at the date of the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange in effect 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 in effect 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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 190
2022 Annual Report and Form 20-F
190
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
Euro
Hungarian Forint
Indian Rupee
Philippine Peso
Polish Zloty
Pound Sterling
Romanian Leu
Serbian Dinar
Swiss Franc
Ukrainian Hryvnia
Average
Year-end
2022
5.1648
1.3017
6.7334
7.0805
0.9518
2021
5.3968
1.2538
6.4493
6.2919
0.8460
2020
5.1568
1.3412
6.9010
6.5388
0.8771
2022
5.2794
1.3535
6.8987
6.9662
0.9368
2021
5.5716
1.2716
6.3513
6.5652
0.8829
373.1682
303.3739
307.9331
375.1400
325.9300
78.6295
54.5318
4.4631
0.8120
4.6930
73.9391
49.2983
3.8633
0.7270
4.1641
74.1177
49.6071
3.8971
0.7798
4.2432
82.7211
55.7290
4.3881
0.8310
4.6357
74.3009
50.9800
4.0579
0.7417
4.3692
111.7836
99.4732
103.1510
109.8553
103.7590
0.9551
0.9145
0.9387
0.9230
0.9119
32.6730
27.2588
26.9857
36.9172
27.2850
2022 Annual Report and Form 20-F Notes on Consolidated Financial Statements
2022 Annual Report and Form 20-F
191
1. Revenue
CRH is the leading provider of building materials solutions that build, connect and
improve our world. As the essential partner for road and critical utility
infrastructure, commercial building projects and outdoor living solutions, CRH's
unique offering of materials, products and value-added services helps to deliver a
more resilient and sustainable built environment.
The Group has three operating segments (as identified under IFRS 8 Operating
Segments) generating revenue through the following activities:
Our Americas Materials businesses provide solutions for the construction and
RMI of public infrastructure, homes and commercial buildings across North
America. Our businesses in the US and Canada utilise an extensive network of
reserve backed quarry locations, to provide asphalt paving services and to
produce and supply a range of materials including cement, aggregates,
readymixed concrete and asphalt. This segment also includes the Group’s
cement operations in Brazil, which was divested in April 2021.
Our Building Products segment manufactures, supplies and delivers high quality,
value-added innovative products and solutions to shape and enhance the built
environment for modern communities. This includes Architectural Products,
Infrastructure Products and Construction Accessories. This is a global business
operating in attractive construction markets in major economies in North
America, Europe and Asia. The divestment of our Building Envelope business,
formerly part of the Building Products segment, was completed in April 2022. As
a result, it has been classified as discontinued operations in the current year; its
performance in this year and comparative years is therefore part of discontinued
operations.
Our Europe Materials businesses provides solutions for the construction of
public infrastructure, homes and commercial buildings to customers in
construction markets across 19 countries in Europe and 2 countries in Asia. An
extensive network of quarry and production locations adjacent to attractive local
construction markets produce cement, lime, aggregates, asphalt, readymixed
concrete and concrete products, as well as providing paving and construction
services.
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.
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.
Year ended 31 December
Americas
Materials
Building
Products
Europe
Materials
2022
$m
2022
$m
2022
$m
Total
2022
$m
Americas
Materials
Building
Products
Europe
Materials
2021
$m
2021
$m
2021
$m
Total
2021
$m
Americas
Materials
Building
Products
Europe
Materials
2020
$m
2020
$m
2020
$m
Total
2020
$m
-
-
-
13,050
1,274
-
238
1,074
6,038
473
801
4,003
5,219
801
4,241
6,293
-
-
-
-
19,088
11,172
553
2,300
1,235
-
220
1,073
4,446
479
706
3,979
5,243
706
4,199
6,316
-
15,618
653
2,367
-
-
-
9,984
1,289
-
161
982
3,946
385
632
3,157
4,841
632
3,318
5,823
-
13,930
511
2,185
Primary geographic markets
Continuing operations
Republic of Ireland (country of domicile)
United Kingdom
Rest of Europe (i)
United States
Rest of World (ii)
Total Group from continuing operations
14,324
7,823
10,576
32,723
12,407
6,218
10,581
29,206
11,273
5,474
9,141
25,888
Discontinued operations
United Kingdom - Building Envelope
Rest of Europe (i) - Building Envelope
United States - Building Envelope
Rest of World (ii) - Building Envelope
Total Group from discontinued operations
-
-
-
-
-
7
4
576
58
645
-
-
-
-
-
7
4
576
58
645
-
-
-
-
-
24
12
1,575
164
1,775
-
-
-
-
-
24
12
1,575
164
1,775
-
-
-
-
-
19
10
1,533
137
1,699
-
-
-
-
-
19
10
1,533
137
1,699
(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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 192
2022 Annual Report and Form 20-F
192
1. Revenue continued
Americas
Materials
(iii)
Building
Products
Europe
Materials
(iii)
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
2022
$m
1,554
6,979
5,791
-
-
-
Year ended 31 December
Americas
Materials
(iii)
Building
Products
Europe
Materials
(iii)
2021
$m
2021
$m
2021
$m
Total
2022
$m
Americas
Materials
(iii)
Building
Products
Europe
Materials
(iii)
2020
$m
2020
$m
2020
$m
Total
2021
$m
Total
2020
$m
2022
$m
2022
$m
-
-
88
4,409
2,531
795
3,481
5,035
1,483
3,515
10,494
2,101
1,308
171
-
7,980
5,717
2,702
795
6,262
4,662
-
-
-
-
-
92
3,790
1,605
731
3,463
4,946
1,403
3,606
2,065
1,264
183
-
9,868
6,819
5,054
1,788
731
5,604
4,266
-
-
-
-
-
131
3,439
1,278
626
2,974
4,377
3,100
1,732
1,166
169
-
8,704
6,129
4,605
1,447
626
Total Group from continuing operations
14,324
7,823
10,576
32,723
12,407
6,218
10,581
29,206
11,273
5,474
9,141
25,888
Discontinued operations
Construction contract activities* -
Building Envelope
Architectural glass and glazing systems
and related hardware - Building Envelope
Total Group from discontinued operations
-
-
-
16
629
645
-
-
-
16
629
645
-
-
-
83
1,692
1,775
-
-
-
83
1,692
1,775
-
-
-
37
1,662
1,699
-
-
-
37
1,662
1,699
(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 32. 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 16, 17 and 18. 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.
C. Unsatisfied long-term construction contracts and other performance
obligations
Revenue yet to be recognised from long-term construction contracts, primarily
within our Americas Materials and Europe Materials businesses, amounted to
$3,742 million at 31 December 2022 (2021: $3,177 million; 2020: $2,604 million).
The Group has applied the practical expedient set out in 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 2022 will close and revenue will be
recognised within 12 months of the balance sheet date.
* Revenue principally recognised over time. Construction contracts are generally completed within the same financial reporting year.
* Revenue principally recognised over time. Construction contracts are generally completed within the same financial reporting year.
2022 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 in 2022 and the nature of the financial
information reported to and assessed by the Group Chief Executive, Chief
Financial Officer and Chief Operating Officer, who are together determined to fulfil
the role of Chief Operating Decision Maker (as defined in IFRS 8).
Effective 1 January 2022, following the appointment of the Chief Operating
Officer and a resultant change in the reporting line of the “segment managers” as
outlined in IFRS 8, the Group has determined that the Group Chief Executive,
Chief Financial Officer and Chief Operating Officer (formerly the Group Chief
Executive and Chief Financial Officer) together fulfil the role of Chief Operating
Decision Maker (as defined in IFRS 8). This did not result in any change to the
Group’s operating segments. No operating segments have been aggregated to
form these reportable segments.
Effective 1 January 2023 the Group restructured into two Divisions, CRH
Americas and CRH Europe. During the first quarter of 2023, the Group's
reportable segments increased from three to the following four segments:
Americas Materials Solutions, Americas Building Solutions, Europe Materials
Solutions and Europe Building Solutions. This realignment reflects the way
resources are allocated and performance is assessed by the Chief Operating
Decision Maker.
In the Group's financial reporting for 2023 comparative information for 2021 and
2022 will be restated to reflect the changes in reportable segments. Segmental
information presented in these financial statements is based on the segment
structure as at 31 December 2022 being Americas Materials, Building Products
and Europe Materials.
2022 Annual Report and Form 20-F
193
The change in segment reporting post year end does not have a financial impact
on the Group's Consolidated Financial Statements.
The principal factors employed in the identification of the three segments
reflected in this note include:
• the Group’s organisational structure in 2022 (during 2022 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 evaluated using EBITDA (as defined)*.
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.
A. Operating segments disclosures—Consolidated Income Statement data
Continuing operations
Americas Materials
Building Products
Europe Materials
Total Group from continuing operations
Discontinued operations
Building Products - Building Envelope
Total Group from discontinued operations
Continuing operations
EBITDA (as defined)*
Depreciation, amortisation and impairment (i)
Group operating profit
(Loss)/profit on disposals (ii)
Finance costs less income
Other financial expense
Share of equity accounted investments’ profit/(loss) (iii)
Profit before tax from continuing operations
Year ended 31 December
Revenue
EBITDA (as defined)*
2022
$m
2021
$m
2020
$m
2022
$m
2021
$m
2020
$m
14,324
12,407
11,273
7,823
6,218
10,576
10,581
5,474
9,141
2,748
1,510
1,357
2,588
2,405
992
833
1,410
1,055
32,723
29,206
25,888
5,615
4,990
4,293
645
645
1,775
1,775
1,699
1,699
131
131
360
360
337
337
5,615
4,990
4,293
(1,721)
(1,659)
(2,267)
3,894
3,331
2,026
(49)
(336)
(40)
-
116
(357)
(42)
55
17
(438)
(33)
(118)
3,469
3,103
1,454
Continuing operations
Americas Materials
Building Products
Europe Materials
Total
(i) Depreciation,
amortisation and
impairment
2022
$m
(839)
(349)
(533)
2021
$m
(800)
(263)
(596)
(1,721)
(1,659)
2020
$m
(774)
(248)
(1,245)
(2,267)
(ii) (Loss)/profit on
disposals
(note 6)
(iii) Share of equity
accounted investments’
profit/(loss)
2022
$m
38
3
(90)
(49)
2021
$m
126
(27)
17
116
2020
2022
$m
8
21
(12)
17
$m
10
15
(25)
-
2021
$m
17
17
21
55
2020
$m
34
(4)
(148)
(118)
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group's share of equity
accounted investments' profit after tax.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 194
2022 Annual Report and Form 20-F
194
2. Segment Information continued
B. Operating segments disclosures - Consolidated Balance Sheet data
Americas Materials
Building Products
Europe Materials
Total Group
Reconciliation to total assets as reported in the Consolidated Balance Sheet:
Investments accounted for using the equity method
Other financial assets
Derivative financial instruments (current and non-current)
Income tax assets (current and deferred)
Cash and cash equivalents
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
As at 31 December
Total assets
Total liabilities
2022
$m
17,609
9,165
11,622
38,396
649
14
42
151
5,936
45,188
2021
$m
17,064
8,504
12,367
37,935
653
12
136
151
5,783
44,670
2022
$m
3,227
2,045
4,245
9,517
2021
$m
3,292
2,579
4,100
9,971
9,636
128
3,570
22,851
10,487
14
3,284
23,756
Year ended 31 December
Property, plant and
equipment (i) (note 13, 20)
Financial assets
(note 15)
Total Group
2022
$m
2021
$m
2020
$m
2022
$m
2021
$m
2020
$m
2022
$m
2021
$m
2020
$m
Continuing operations
Americas Materials
Building Products
Europe Materials
752
377
529
750
355
607
527
215
384
Total Group from continuing operations
1,658
1,712
1,126
Discontinued operations
Building Products - Building Envelope
Total Group
29
62
50
1,687
1,774
1,176
43
-
2
45
-
45
4
-
-
4
-
4
1
-
-
1
-
1
795
377
531
754
355
607
528
215
384
1,703
1,716
1,127
29
62
50
1,732
1,778
1,177
(i) Additions to property, plant and equipment include $10 million (2021: $10 million; 2020: $14 million) relating to leased mineral reserves which fall outside the scope
of IFRS 16.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
195
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*
2022
$m
530
2,268
18,399
8,660
29,857
2021
$m
544
2,595
17,304
9,560
30,003
3. Assets Held for Sale and Discontinued Operations
A. Profit on disposal of discontinued operations
In April 2022, the Group completed the divestment of its Building Envelope business, formerly part of our Building Products segment. With the exception of our Building
Envelope business, no other businesses divested during 2022 are considered to be either separate major lines of business or geographical areas of operation and
therefore do not constitute discontinued operations as defined in IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations.
No businesses met the IFRS 5 held for sale criteria at 31 December 2022.
The table below sets out the proceeds and related profit recognised on divestment which were included in profit after tax for the financial year from discontinued
operations.
Assets/(liabilities) disposed of at net carrying amount:
- non-current assets*
- cash and cash equivalents
- inventories, receivables, payables and provisions
- lease liabilities
- interest-bearing loans and borrowings
- deferred tax
- retirement benefit obligations
Net assets disposed
Reclassification of currency translation effects on disposal
Total
Proceeds from disposal (net of disposal costs)
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
2022
$m
2,016
27
406
(338)
(6)
(42)
(14)
2,049
5
2,054
3,525
1,471
3,525
(27)
3,498
* Non-current assets comprise property, plant and equipment, intangible assets and investments accounted for using the equity method.
* Non-current assets comprise property, plant and equipment, intangible assets and investments accounted for using the equity method.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 196
2022 Annual Report and Form 20-F
196
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 year are set out as follows:
Revenue
Cost of sales (i)
Gross profit
Operating costs (i)
Operating profit
Profit/(loss) on disposals
Profit before finance costs
Finance costs
Profit before tax
Attributable income tax expense (ii)
Profit after tax for the financial year from discontinued operations
Profit attributable to:
Equity holders of the Company
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 (outflow)/inflow from operating activities (iii)
Net cash inflow/(outflow) from investing activities (iv)
Net cash outflow from financing activities
2022
$m
645
(412)
233
(138)
95
1,471
1,566
(6)
1,560
(370)
1,190
1,190
1,190
$1.57
$1.55
(435)
3,446
(6)
2021
$m
1,775
(1,143)
632
(378)
254
3
257
(18)
239
(60)
179
179
179
$0.23
$0.23
234
(102)
(28)
2020
$m
1,699
(1,102)
597
(360)
237
(8)
229
(19)
210
(54)
156
156
156
$0.20
$0.20
326
(60)
(22)
(i) The depreciation and amortisation charge for discontinued operations amounted to $26 million and $10 million respectively (2021: $78 million and $28 million;
2020: $74 million and $26 million).
(ii) 2022 attributable income tax expense includes $347 million relating to the profit on disposal of discontinued operations.
(iii)
Includes the corporation tax paid on the sale of discontinued operations.
(iv)
Includes the proceeds from the disposal of discontinued operations.
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
2022
$m
2021
$m
2020
$m
7,446
3,978
2,106
1,230
1,389
(655)
6,350
6,304
3,770
1,513
1,158
1,379
(392)
5,618
5,137
3,565
1,241
1,080
1,577
33
4,690
21,844
19,350
17,323
5,003
1,982
6,985
4,613
1,912
6,525
4,235
2,304
6,539
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
197
(i) Depreciation, amortisation and impairment analysis
Cost of sales
Operating costs
Total
2022
2021
2020
2022
2021
2020
2022
2021
2020
Depreciation and depletion (note 13, 20)
Amortisation of intangible assets (note 14)
Impairment of property, plant and equipment (note 13, 20) (ii)
Impairment of intangible assets (note 14) (ii)
$m
$m
$m
1,389
1,379
1,323
-
-
-
-
-
-
-
254
-
$m
229
103
-
-
$m
234
46
-
-
Total
1,389
1,379
1,577
332
280
$m
227
44
9
410
690
$m
$m
$m
1,618
1,613
1,550
103
-
-
46
-
-
44
263
410
1,721
1,659
2,267
(ii) Total impairment charges for the year ended 31 December 2022 amounted to $nil million (2021: $nil million, 2020: $827 million, including a charge of
$154 million related to equity accounted investments).
5. Auditor’s Remuneration
Continuing operations
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 (ii)
Tax advisory services (ii)
Total
Deloitte Ireland
(statutory auditor)
Deloitte
(network firms)
Total
2022
2021
2020
2022
2021
2020
2022
2021
2020
$m
$m
$m
7
1
-
8
7
-
-
7
6
-
-
6
$m
15
-
-
15
$m
13
-
-
13
$m
11
-
-
11
$m
22
1
-
23
$m
20
-
-
20
$m
17
-
-
17
(i) Audit of the Group accounts includes the audit of internal control over financial reporting and parent and subsidiary statutory audit fees, but excludes $2 million
(2021: $3 million; 2020: $3 million) paid to auditors other than Deloitte.
(ii)
In accordance with the Companies Act 2014, audit fees including discontinued operations, amounted to $22 million (2021: $21 million; 2020: $18 million). Other
audit-related assurance fees, including discontinued operations, amounted to $1 million (2021: $1 million; 2020: $nil million) and tax advisory services, including
discontinued operations, amounted to $nil million (2021: $nil million; 2020: $nil million).
There were no other fees for services provided by the Group’s independent auditor (2021: $nil million; 2020: $nil million).
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 198
2022 Annual Report and Form 20-F
198
6. Business and Non-Current Asset Disposals
Continuing operations
Assets/(liabilities) disposed of at net carrying amount:
- non-current assets
- cash and cash equivalents
- inventories, receivables, payables and provisions
- 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)
(Loss)/profit on disposals from continuing operations
Discontinued operations
Business disposals
Disposal of other non-
current assets
Total
2022
2021
2020
2022
2021
2020
2022
2021
2020
$m
$m
$m
$m
$m
$m
$m
$m
$m
344
135
4
10
(4)
(22)
(11)
-
321
(4)
317
218
(99)
31
25
(3)
1
(1)
-
188
29
217
295
78
69
7
29
(12)
(3)
(1)
(6)
83
13
96
77
(19)
91
-
-
97
124
-
-
-
-
(26)
(17)
(32)
-
-
-
65
-
65
115
50
-
-
-
80
-
80
118
38
-
-
-
92
-
92
128
36
435
4
10
(30)
(22)
(11)
-
386
(4)
382
333
(49)
232
31
25
(20)
1
(1)
-
268
29
297
413
116
193
7
29
(44)
(3)
(1)
(6)
175
13
188
205
17
Profit/(loss) on disposals from discontinued operations (note 3)
1,471
-
(5)
-
3
(3)
1,471
3
(8)
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 19)
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
218
(4)
-
214
3,498
3,712
295
(31)
(1)
263
-
263
77
(7)
(14)
56
-
56
115
118
128
-
-
-
-
-
-
115
118
128
333
(4)
-
329
-
115
6
124
-
128
3,498
3,827
413
(31)
(1)
381
6
387
205
(7)
(14)
184
-
184
2022 Annual Report and Form 20-F 7. Employment
Continuing operations
The average number of employees is as follows:
Americas Materials
Building Products
Europe Materials
Total
2022 Annual Report and Form 20-F
199
Year ended 31 December
2022
29,092
20,527
26,219
75,838
2021
28,272
17,069
25,636
70,977
2020
27,412
16,389
26,785
70,586
In accordance with the Companies Act 2014, the average number of employees, including discontinued operations, was 77,520 (2021: 77,446; 2020: 77,099).
Employment costs charged in the Consolidated Income Statement for continuing operations are analysed as follows:
Wages and salaries
Social welfare costs
Redundancy, healthcare and other employment benefit costs
Share-based payment expense (note 8)
Total retirement benefits expense (note 28)
Total (i)
Total charge analysed between:
Cost of sales
Operating costs
Finance costs (net) - applicable to retirement benefit obligations (note 9)
Total
2022
$m
4,669
480
603
100
372
2021
$m
4,457
464
600
108
368
2020
$m
4,177
432
662
93
348
6,224
5,997
5,712
3,978
2,240
6
6,224
3,770
2,217
10
5,997
3,565
2,136
11
5,712
(i)
In accordance with the Companies Act 2014, employment costs 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 8)
Total retirement benefits expense (note 28)
Total
4,821
491
622
101
378
6,413
4,873
495
656
110
381
6,515
4,573
461
723
96
359
6,212
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 200
2022 Annual Report and Form 20-F
200
8. Share-based Payment Expense
Continuing operations
Performance Share Plans expense
Share option expense
Total share-based payment expense (i)
2022
2021
$m
97
3
100
$m
106
2
108
2020
$m
90
3
93
(i)
The total share-based payment expense excludes $1 million (2021: $2 million; 2020: $3 million) relating to discontinued operations.
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 is reflected in operating costs in the Consolidated Income Statement.
2014 Performance Share Plan
Details of the awards made under the 2014 Performance Share Plan are summarised below. An expense of $97 million was recognised in 2022 (2021: $106 million;
2020: $90 million).
Details of awards granted under the 2014 Performance Share Plan
Granted in 2022
Granted in 2021
Granted in 2020
Share price at date of
award
Period to earliest release
date
Initial award (i)
Net outstanding at 31
December 2022
€38.37
€39.79
€31.50
3 years
3 years
3 years
3,678,505
3,261,885
3,428,021
3,616,475
2,988,795
3,102,591
Number of shares
(i) Numbers represent the initial awards including those granted to employees of Building Envelope in 2021 and 2020. 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.
20% of each award made is subject to TSR performance measured against a
tailored peer group; 20% is subject to a RONA metric; 15% is subject to a new
sustainability and diversity scorecard metric introduced in 2022; with the
remaining 45% subject to a cumulative cashflow metric (2021 and 2020: 25% of
each award made 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). Performance for the awards will be assessed over
a three-year period.
The fair values assigned to the portion of awards which are subject to TSR
performance against peers was €19.04 (2021: €22.23; 2020: €18.52).
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 (%)
2022
0.51
36.9
2021
(0.56)
35.1
2020
(0.61)
22.1
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) the portion of awards subject to a RONA metric; (iii) and from 2022 the portion of awards
subject to a sustainability and diversity scorecard metric; and (iv) the awards with no performance conditions (which are subject to a two year service period) was
calculated as the closing CRH share price at the date the award was granted.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
201
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
Number of
options
price
€16.19
€16.19
€16.19
€16.19
€16.19
2022
145,731
(47,058)
(1,116)
97,557
97,557
Weighted average
exercise
price
Number of
options
2021
Weighted average
exercise
price
Number of
options
2020
€16.19
€16.19
-
€16.19
€16.19
197,253
(51,522)
-
145,731
145,731
€16.19
€16.19
€16.19
€16.19
€16.19
278,349
(77,748)
(3,348)
197,253
197,253
(i)
The weighted average share price at the date of exercise of these options was €35.03 (2021: €42.10; 2020: €31.70).
(ii) All options granted have a life of ten years. All outstanding options are denominated in euro and have an exercise price of €16.19 (2021: €16.19; 2020: €16.19).
Weighted average remaining contractual life for the share options outstanding at
31 December (years)
2022
0.30
2021
1.30
2020
2.30
2010 and 2021 Savings-related Share Option Schemes
In April 2021, shareholders approved the adoption of the 2021 savings-related share option schemes, which replaced the schemes approved by shareholders in May
2010. Under both 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
Number of
options
Weighted average
exercise
Number of
options
Weighted average
exercise
Number of
options
price
2022
price
2021
price
2020
Outstanding at beginning of year
€24.28/Stg£25.42
1,085,163
€23.83/Stg£19.69
1,173,507
€23.67/Stg£20.17
1,508,862
Exercised (i)
Lapsed
Granted (ii)
€24.58/Stg£20.44
(402,645)
€22.77/Stg£18.69
(470,001)
€23.21/Stg£22.37
(178,773)
€23.60/Stg£29.38
(209,916)
€24.75/Stg£21.49
(73,411)
€23.25/Stg£21.54
(156,582)
Stg£25.55
571,528
Stg£31.04
455,068
-
-
Outstanding at end of year
€24.20/Stg£26.52
1,044,130
€24.28/Stg£25.42
1,085,163
€23.83/Stg£19.69
1,173,507
Exercisable at end of year
€25.75/Stg£20.28
18,941
€23.27/Stg£20.56
14,197
€24.66/Stg£24.51
16,528
(i)
The weighted average share price at the date of exercise of these options was €34.99 (2021: €42.53; 2020: €31.70).
(ii) Pursuant to the 2010 and 2021 Savings-related Share Option Schemes operated by the Group, employees were granted options over 571,528 of CRH plc’s
Ordinary Shares in October 2022 (2021: 455,068 share options in October 2021; 2020: nil). This figure comprises options over 476,454 (2021: 346,237; 2020: nil)
shares and 95,074 (2021: 108,831; 2020: nil) 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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 202
2022 Annual Report and Form 20-F
202
8. Share-based Payment Expense continued
Continuing operations
Weighted average remaining contractual life for the share options outstanding
at 31 December (years)
euro-denominated options outstanding at end of year (number)
2022
2.45
2021
1.81
2020
1.14
79,910
132,769
214,826
Range of exercise prices (€)
23.39-27.86
20.83-27.86
20.83-27.86
Pound Sterling-denominated options outstanding at end of year (number)
964,220
952,394
958,681
Range of exercise prices (Stg£)
20.11-31.04
16.16-31.04
16.16-24.51
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:
Granted in 2022 (October)
Granted in 2021 (October)
The fair value of these options were determined using the following assumptions:
3-year
5-year
€8.08
€6.78
€8.47
€7.05
Weighted average exercise price (€)
Risk free interest rate (%)
Expected dividend payments over the expected life (€)
Expected volatility (%)
Expected life in years
2022
2021
3-year
5-year
3-year
5-year
October
October
29.28
29.28
2.08
4.06
26.4
3
2.24
7.05
24.2
5
36.83
(0.61)
3.25
23.5
3
36.83
(0.43)
5.65
21.2
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.
2022 Annual Report and Form 20-F 9. Finance Costs and Finance Income
Continuing operations
Finance costs
Interest payable on borrowings
Net cost/(income) on interest rate and currency swaps
Mark-to-market of derivatives and related fixed rate debt:
- interest rate swaps (i)
- currency forwards and currency swaps
- fixed rate debt (i)
Net loss/(gain) on non-derivative financial instruments
Interest payable on cash and cash equivalents and other
Unwinding of discount element of lease liabilities
Finance costs
Finance income
Interest receivable on cash and cash equivalents and other
Finance income
Finance costs less income
Other financial expense
Unwinding of discount element of provisions for liabilities (note 26)
Unwinding of discount applicable to deferred and contingent acquisition consideration (note 18)
Unwinding of discount applicable to deferred divestment proceeds
Unwinding of discount applicable to leased mineral reserves
Pension-related finance cost (net) (note 28)
Net other financial expense
Total net finance costs (ii)
2022 Annual Report and Form 20-F
203
2022
$m
328
8
154
4
(159)
24
-
42
401
(65)
(65)
336
16
20
(8)
6
6
40
376
2021
$m
2020
$m
344
(31)
85
1
(90)
(4)
6
46
357
-
-
381
2
(97)
2
80
21
-
49
438
-
-
357
438
18
20
(12)
6
10
42
399
21
21
(24)
4
11
33
471
(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 excludes $6 million (2021: $18 million; 2020: $19 million) relating to discontinued operations.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 204
2022 Annual Report and Form 20-F
204
10. 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 expense/(income)
Income tax reported in the Consolidated Income Statement
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
Deferred tax - cash flow hedges
Income tax recognised outside the Consolidated Income Statement
2022
$m
34
731
765
(4)
1
(4)
27
20
785
(63)
(14)
(77)
7
(10)
17
14
(63)
2021
$m
2020
$m
15
548
563
2
(6)
2
100
98
661
(36)
(8)
(44)
14
10
-
24
(20)
23
520
543
(9)
(2)
-
(87)
(98)
445
11
-
11
2
(1)
-
1
12
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
205
Reconciliation of applicable tax rate to effective tax rate
Continuing operations
Profit before tax ($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)
2022
2021
2020
3,469
3,103
1,454
22.1 %
22.6 %
18.1 %
21.3 %
37.3 %
30.6 %
The following table reconciles the applicable Republic of Ireland statutory tax rate to the effective tax rate (current and deferred) of the Group:
% of profit before tax
12.5
9.8
-
0.3
22.6
12.5
9.6
-
(0.8)
21.3
12.5
10.4
9.4
(1.7)
30.6
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
Effective tax rate
The 2022 effective tax rate is 22.6% (2021: 21.3%; 2020: 30.6%).
The tax charge associated with discontinued operations 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.
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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 206
2022 Annual Report and Form 20-F
206
11. Dividends
The dividends paid and proposed in respect of each class of share capital are as follows:
Dividends to shareholders (i)
Equity
Final - paid $0.98 per Ordinary Share (2021: $0.93; 2020: $0.70) (ii)
Interim - paid $0.24 per Ordinary Share (2021: $0.23; 2020: $0.22)
Total
Reconciliation to Consolidated Statement of Cash Flows
Dividends to shareholders
Translation adjustment (iii)
Dividends paid to equity holders of the Company
Dividends paid by subsidiaries to non-controlling interests
Total dividends paid
Dividends proposed (memorandum disclosure)
Equity
2022
$m
2021
$m
2020
$m
750
181
931
931
(14)
917
13
930
730
179
909
909
(3)
906
32
938
537
173
710
710
(3)
707
15
722
Final 2022 - proposed $1.03 per Ordinary Share (2021: $0.98; 2020: $0.93) (ii)
765
751
730
(i)
In 2022 the 5% Cumulative Preference Shares paid a dividend of €3,175 (2021: €3,175; 2020: €3,175) and the 7% ‘A’ Cumulative Preference Shares paid a
dividend of €77,521 (2021: €77,521; 2020: €77,521).
(ii) Dividends per share declared previously in euro have been translated to US Dollar using the dividend record date exchange rate.
(iii) Translation adjustment arising from US Dollar declared dividends paid in non-US Dollar currencies.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
207
12. Earnings per Ordinary Share
The computation of basic and diluted earnings per Ordinary Share is set out below:
Numerator computations
Group profit for the financial year
Profit attributable to non-controlling interests
Profit attributable to equity holders of the Company
Preference dividends
Profit attributable to ordinary equity holders of the Company - numerator for basic/diluted
earnings per Ordinary Share
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 awards) (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
2022
$m
3,874
(27)
3,847
-
2021
$m
2,621
(56)
2,565
-
2020
$m
1,165
(43)
1,122
-
3,847
2,565
1,122
1,190
179
2,657
2,386
758.3
5.8
764.1
$5.07
$5.03
$3.50
$3.48
780.2
6.6
786.8
$3.29
$3.26
$3.06
$3.03
156
966
785.1
6.0
791.1
$1.43
$1.42
$1.23
$1.22
(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 29.
(ii) Ordinary shares, that would only be issued contingent on certain conditions (totalling 4,209,404 at 31 December 2022, 3,630,633 at 31 December 2021 and
4,053,377 at 31 December 2020) 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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 208
2022 Annual Report and Form 20-F
208
13. Property, Plant and Equipment
At 31 December 2022
Owned
Cost/deemed cost
Accumulated depreciation (and impairment charges)
Net carrying amount
At 1 January 2022, net carrying amount
Translation adjustment
Reclassifications
Transfer from leased assets (note 20)
Additions at cost
Additions to leased mineral reserves (note 19) (i)
Arising on acquisition (note 30)
Disposals at net carrying amount
Depreciation charge for year (ii)
At 31 December 2022, net carrying amount
Leased right-of-use assets (iii)
At 31 December 2022, net carrying amount (note 20)
Total property, plant and equipment
The equivalent disclosure for the prior year is as follows:
At 31 December 2021
Owned
Cost/deemed cost
Accumulated depreciation (and impairment charges)
Net carrying amount
At 1 January 2021, net carrying amount
Translation adjustment
Reclassifications
Transfer from leased assets (note 20)
Additions at cost
Additions to leased mineral reserves (note 19) (i)
Arising on acquisition (note 30)
Disposals at net carrying amount
Depreciation charge for year (ii)
At 31 December 2021, net carrying amount
Leased right-of-use assets (iii)
At 31 December 2021, net carrying amount (note 20)
Total property, plant and equipment
Mineral-
bearing land
Land and
buildings
Plant and
machinery
Assets in
course of
construction
$m
$m
$m
$m
4,831
(1,278)
3,553
3,646
(89)
8
-
23
10
76
(20)
(101)
3,553
5,786
(1,860)
3,926
3,961
(150)
69
-
89
-
258
(156)
(145)
3,926
19,577
(10,443)
9,134
9,394
(319)
547
5
607
-
426
(375)
(1,151)
9,134
Land and
buildings
Plant and
machinery
$m
930
$m
302
1,090
(40)
1,050
937
(48)
(624)
-
804
-
39
(58)
-
1,050
Other
$m
26
Mineral-
bearing land
Land and
buildings
Plant and
machinery
Assets in
course of
construction
$m
$m
$m
$m
4,890
(1,244)
3,646
3,698
(59)
28
-
13
10
81
(11)
(114)
3,646
5,865
(1,904)
3,961
4,081
(111)
20
-
94
-
86
(63)
(146)
3,961
19,754
(10,360)
9,394
9,416
(146)
449
10
564
-
346
(92)
(1,153)
9,394
Land and
buildings
Plant and
machinery
$m
1,195
$m
313
977
(40)
937
572
(22)
(501)
-
883
-
8
(3)
-
937
Other
$m
56
Total
$m
31,284
(13,621)
17,663
17,938
(606)
-
5
1,523
10
799
(609)
(1,397)
17,663
1,258
18,921
Total
$m
31,486
(13,548)
17,938
17,767
(338)
(4)
10
1,554
10
521
(169)
(1,413)
17,938
1,564
19,502
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
209
Owned
At 1 January 2021
Cost/deemed cost
Accumulated depreciation (and impairment charges)
Net carrying amount
Mineral-
bearing land
Land and
buildings
Plant and
machinery
Assets in
course of
construction
$m
$m
$m
$m
Total
$m
4,874
(1,176)
3,698
5,928
(1,847)
4,081
19,400
(9,984)
9,416
612
(40)
572
30,814
(13,047)
17,767
(i) Additions relating to leased mineral reserves which fall outside the scope of IFRS 16.
(ii) The depreciation charge includes $15 million (2021: $44 million; 2020: $41 million) relating to discontinued operations.
(iii) See note 20 for more detailed information on right-of-use assets and lease liabilities of the Group.
Climate risk and impairment of property, plant and equipment
Property, plant and equipment (PP&E) is reviewed for potential impairment by
applying a series of external and internal indicators including climate-related risks.
Specific climate-related considerations during 2022 included:
•
•
considering potential future business optimisation levers that may occur and
the impact on useful lives;
assessing the useful lives of transport and mobile equipment in the context
of decarbonisation of our transport and mobile equipment, this being
identified as one of our decarbonisation roadmap levers. It is assumed that
transport and mobile equipment will be transitioned to lower carbon emitting
units in line with normal asset retirement timelines;
•
•
assessing the impact of the capital expenditure required to meet the Group’s
carbon emissions reduction targets on the useful lives of existing PP&E. The
nature of the proposed projects required to deliver our targets, including
technology advancements, and their impact on existing PP&E was also
considered; and
assessing the impact of physical risk to PP&E, in the context of the exposure
of the Group’s locations to potential future adverse weather impacts
Capital expenditure will continue to be required to deliver our targets and mitigate
potential physical risks. Therefore, the useful lives of future capital expenditure
may differ from current assumptions. However, as a result of the assessments
set out above, there were no significant changes in the estimates of useful lives
or asset values during the current financial year.
Future purchase commitments for property, plant and equipment
2022
2021 (iv)
Contracted for but not provided in the financial statements
Authorised by the Directors but not contracted for
$m
862
530
$m
628
417
(iv)
Includes contracted for but not provided for and authorised by the Directors but not contracted for commitments of $11 million and $25 million respectively relating
to discontinued operations.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 210
2022 Annual Report and Form 20-F
210
14. Intangible Assets
At 31 December 2022
Cost/deemed cost
Accumulated amortisation (and impairment charges)
Net carrying amount
At 1 January 2022, net carrying amount
Translation adjustment
Arising on acquisition (note 30) (ii)
Disposals
Amortisation charge for year (iii)
At 31 December 2022, net carrying amount
The equivalent disclosure for the prior year is as follows:
At 31 December 2021
Cost/deemed cost
Accumulated amortisation (and impairment charges)
Net carrying amount
At 1 January 2021, net carrying amount
Translation adjustment
Arising on acquisition (note 30)
Disposals
Amortisation charge for year (iii)
At 31 December 2021, net carrying amount
At 1 January 2021
Cost/deemed cost
Accumulated amortisation (and impairment charges)
Net carrying amount
Goodwill
Marketing-related
Customer-related (i)
Contract-based
Other intangible assets
$m
9,890
(691)
9,199
9,451
(239)
1,320
(1,333)
-
9,199
10,251
(800)
9,451
9,032
(221)
679
(39)
-
9,451
9,790
(758)
9,032
$m
286
(78)
208
104
-
177
(57)
(16)
208
202
(98)
104
87
(1)
32
-
(14)
104
172
(85)
87
$m
1,202
(369)
833
282
(3)
763
(115)
(94)
833
705
(423)
282
240
-
99
(1)
(56)
282
601
(361)
240
$m
92
(45)
47
11
(1)
47
(7)
(3)
47
77
(66)
11
14
1
-
-
(4)
11
75
(61)
14
Total
$m
11,470
(1,183)
10,287
9,848
(243)
2,307
(1,512)
(113)
10,287
11,235
(1,387)
9,848
9,373
(221)
810
(40)
(74)
9,848
10,638
(1,265)
9,373
(i)
The customer-related intangible assets relate predominantly to non-contractual customer relationships.
(ii) Marketing-related, customer-related and contract-based intangible assets of $174 million, $594 million and $41 million respectively arose on the acquisition of
Barrette Outdoor Living (Barrette) in July 2022. These primarily related to brand names, patents and non-contractual customer relationships.
(iii) The amortisation charge includes $10 million (2021: $28 million; 2020: $26 million) in respect of discontinued operations, which primarily relates to customer-related
intangible assets.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
211
Annual goodwill testing
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
(2021:22) CGUs have been identified and these are analysed between the three
business segments below. 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
Goodwill
2022
2021
2022
2021
5
1
16
22
5
1
16
22
$m
$m
4,407
4,292
2,895
2,964
1,897
2,195
9,199
9,451
Americas Materials
Building Products
Europe Materials
Total Group
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 (VIU) computation.
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 and capital expenditure that would
enhance the assets' performance. To align with the Group’s acquisition
modelling methodology, these cash flows are extrapolated out for an additional
five years, using externally sourced growth rates, to determine the basis for an
annuity-based terminal value. The methodology allows, in very limited
circumstances, to adjust cash flows past the strategic plan horizon, where
deemed appropriate.
No adjustments were made to years 6-10 cash flows for the purpose of the 2022
impairment testing.
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 1.9% in the
Americas, 0.8% to 3.0% in Europe and 3.0% in Asia. Such real growth rates do
not exceed the long-term average growth rates for the countries in which each
CGU operates. The VIU 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 rate used for purposes of impairment testing on Ukraine
CGU was 16.9%. Excluding Ukraine, the real pre-tax discount rates used range
from 6.0% to 9.5% (2021: 6.5% to 8.6%). These rates are in line with the
Group’s estimated weighted average cost of capital, arrived at using the Capital
Asset Pricing Model. The 2022 annual goodwill impairment testing process has
resulted in no intangible asset impairments (2021: $nil million).
Climate risk and impairment testing
The impact of climate change risks including the risks identified as part of the
TCFD disclosures on pages 56 to 59, with a particular focus on carbon costs,
has been considered as part of the impairment testing process through net cash
flow estimations and the duration of discounted cash flow models. In addition,
the capital expenditure required to meet our carbon emissions reduction targets
was also incorporated into our net cash flows.
Our Cement and Lime businesses represent our largest contributor to CO2
emissions and consequently have the largest exposure to carbon costs. The net
cash flows included in VIU assessments, reflect carbon costs that are reasonably
estimated to be incurred over the assessment period, based on current
Emissions Trading Schemes (ETS) in place at the date of testing and known
changes to regulations over the strategic plan horizon. The internal carbon prices
applied in VIU assessments reflect the most recent carbon credits purchased by
the Group along with the latest International Energy Agency (IEA) carbon price
projections for the applicable regions where the Group operates.
The purchase of carbon allowances is managed by a central unit which buys
forward to secure supply and de-risk the cost bases ahead of time. This helps
provide the Group with near-term certainty on carbon prices and associated
costs.
While none of the significant CGUs identified on page 212 currently has a
material exposure to carbon costs and as such carbon costs are not deemed a
key assumption, the Directors are aware of the ever-changing risks attached to
climate change and will regularly assess these risks against judgements and
estimates made in future VIU assessments.
While no adjustments in relation to carbon costs were made to years 6-10 cash
flows for the purposes of impairment testing, on the basis of assumed cost
recovery through pricing, CRH completed a scenario analysis that was aligned to
the Paris Agreement to assess the potential impacts of higher carbon costs past
the strategic plan period. Key variables included carbon prices based upon the
IEA Net Zero scenario (which assumes $140 per tonne in 2030 increasing to
$250 per tonne in 2050) and higher costs arising from the EU’s introduction of
the Carbon Border Adjustment Mechanism. The impact of increasing carbon
prices and declining free allowances (where applicable) was analysed across our
material Cement and Lime CGUs in combination with forecast levels of cost
recovery through pricing. The analysis concluded there was no material impact
on any of the CGUs reviewed primarily due to the levels of headroom in these
CGUs and an assumption of cost recovery through pricing. The Group continues
to monitor the emergence of CO2 regulatory pronouncements which will be
factored into strategic plans once enacted.
Key sources of estimation uncertainty
The cash flows have been arrived at by 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. 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, long-term growth and discount rates used and the
duration of the discounted cash flow model.
While carbon costs are considered a climate-related risk under our TCFD
disclosures, they are not considered a major source of estimation uncertainty on
their own for 2022. The impact of this risk from an impairment perspective is
reflected through EBITDA (as defined)* margin which as set out on page 182 is a
major source of estimation uncertainty.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 212
2022 Annual Report and Form 20-F
212
14. Intangible Assets continued
Significant goodwill amounts
The goodwill allocated to the Americas Cement, AMAT South (Americas Materials segment) and the Building Products (Building Products segment) CGUs account for
between 11% and 32% of the total carrying amount shown on page 210.
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
AMAT South
Building Products
2022
2021
2022
2021
2022
2021
Goodwill allocated to the cash-generating unit at balance sheet date
$2,125m
$2,157m
$981m
$944m
$2,895m
$2,964m
Discount rate applied to the cash flow projections (real pre-tax)
8.1%
7.5%
8.2%
8.3%
8.4%
8.3%
Average EBITDA (as defined)* margin over the initial 5-year period
48.3%
53.8%
15.4%
17.9%
20.1%
19.1%
Value-in-use (present value of future cash flows)
$10,050m $10,749m
$5,936m
$5,041m
$18,050m $14,831m
Excess of value-in-use over carrying amount
$5,199m
$5,953m
$3,524m
$2,749m
$11,363m
$9,191m
Long-term growth rates
1.9%
1.8%
1.9%
1.8%
1.9%
1.8%
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 ‘Sensitivity analysis’ section below. Given the magnitude of the
excess of VIU 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 VIU.
Consequently no further disclosures relating to sensitivity of the value-in-use
computations for the Americas Cement, AMAT South or Building Products CGUs
are considered to be warranted.
Sensitivity analysis
A qualitative and quantitative assessment has been performed and results in
additional sensitivity disclosures for two of the total 22 CGUs. 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 two CGUs have aggregate goodwill of $665
million at the date of testing. The table below identifies the amounts by which
each of the following assumptions may either decline or increase to arrive at a
zero excess of the present value of future cash flows over the book value of net
assets in the two CGUs selected for sensitivity analysis disclosures:
two cash-generating units
Reduction in EBITDA (as defined)* margin
2.6 and 3.8 percentage points
Reduction in long-term growth rate
2.7 and 3.2 percentage points
Increase in pre-tax discount rate
2.0 and 2.1 percentage points
The average EBITDA (as defined)* margin for the aggregate of these two CGUs
over the initial five-year period was 17.4%. The VIU (being the present value of
the future net cash flows) was $2,474 million and the carrying amount was
$1,960 million, resulting in an excess of value-in-use over carrying amounts of
$514 million.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
213
15. Financial Assets
Investments accounted for
using the equity method
(i.e. joint ventures and associates)
Share of net
assets (i)
Loans
Total
Other
$m
640
(34)
40
28
-
(36)
638
609
10
-
-
(2)
55
(32)
640
$m
13
-
3
-
(5)
-
11
17
(1)
4
(7)
-
-
-
13
$m
653
(34)
43
28
(5)
(36)
649
626
9
4
(7)
(2)
55
(32)
653
$m
12
-
2
-
-
-
14
13
-
-
(1)
-
-
-
12
At 1 January 2022
Translation adjustment
Investments and advances
Arising on acquisition (note 30)
Disposals and repayments
Dividends received
At 31 December 2022
The equivalent disclosure for the prior year is as follows:
At 1 January 2021
Translation adjustment
Investments and advances
Disposals and repayments
Return of share capital
Share of profit after tax
Dividends received
At 31 December 2021
(i)
The Group’s share of joint ventures and associates profit/(loss) after tax is equity accounted and is presented as a single line item in the Consolidated Income
Statement. It is analysed as follows; profit after tax from joint ventures: $8 million (2021: $11 million; 2020: $22 million), loss after tax from associates: $8 million
(2021: profit after tax of $44 million; 2020: loss after tax of $140 million).
A listing of the principal equity accounted investments is contained on page 293.
16. Inventories
Raw materials
Work-in-progress (i)
Finished goods
Total inventories at the lower of cost and net realisable value
2022
$m
1,988
181
2,025
4,194
2021
$m
1,737
136
1,738
3,611
(i) Work-in-progress includes $4 million (2021: $9 million) in respect of the cumulative costs incurred, net of amounts transferred to cost of sales under percentage-of-
completion accounting, for construction contracts in progress at the balance sheet date.
An analysis of the Group’s cost of sales expense is provided in note 4 to the financial statements.
Write-downs of inventories recognised as an expense within cost of sales amounted to $17 million (2021: $2 million; 2020: $9 million).
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 214
2022 Annual Report and Form 20-F
214
17. Trade and Other Receivables
Current
Trade receivables
Construction contract assets (i)
Total trade receivables and construction contract assets, gross
Loss allowance
Total trade receivables and construction contract assets, net
Amounts receivable from equity accounted investments
Prepayments
Other receivables
Total
Non-current
Other receivables
2022
$m
3,435
606
4,041
(125)
3,916
37
269
347
2021
$m
3,586
565
4,151
(131)
4,020
31
251
267
4,569
4,569
164
239
(i)
Includes unbilled revenue and retentions held by customers in respect of construction contracts at the balance sheet date amounting to $402 million and $204
million respectively (2021: $361 million and $204 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 year
Received from customers
Written off during the year
Disposals
At 31 December
Unbilled revenue
Retentions
2022
$m
361
(19)
348
(279)
-
-
(9)
402
2021
$m
297
(4)
318
(239)
-
(11)
-
361
2022
2021
$m
204
(9)
144
-
(135)
-
-
204
$m
202
(1)
130
-
(125)
-
(2)
204
Trade receivables, construction contract assets and deferred divestment consideration, which is included in other receivables, 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, construction contract assets 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
Translation adjustment
Disposed of during year
Written off during year
Arising on acquisition (note 30)
Net remeasurement of expected credit loss allowance
At 31 December
2022
2021
2020
$m
131
(8)
(5)
(19)
2
24
125
$m
140
(5)
(1)
(14)
1
10
131
$m
133
5
(4)
(23)
-
29
140
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
215
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 construction contract assets and expected credit loss allowance by segment:
Americas Materials
Building Products (i)
Europe Materials
Total Group
(i) Analysis of Building Products segment by geographic location:
Americas
Europe
Total
Trade receivables and construction
contract assets, gross
2022
$m
1,764
914
1,363
4,041
747
167
914
2021
$m
1,735
989
1,427
4,151
821
168
989
2020
$m
1,475
830
1,403
3,708
676
154
830
Expected credit loss allowance
2022
2021
2020
$m
22
22
81
125
16
6
22
$m
27
25
79
131
19
6
25
$m
34
23
83
140
17
6
23
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 and construction contract assets amounts to
3.1% of the Group’s gross trade receivables and construction contract assets
(2021: 3.2%). The Group considers the ageing of past due receivables a key
factor in assessing credit risk. The trade receivables and construction contract
assets 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 69% of the total gross trade receivables and
construction contract assets balance at the balance sheet date (2021: 68%).
There have been no significant changes to the Group’s credit risk parameters or
to the composition of the Group’s trade receivables and construction contract
assets portfolio during the financial year.
The Group applies the simplified approach to providing for expected credit losses
(ECL) permitted by IFRS 9 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.
Aged analysis
The aged analysis of net trade receivables and construction contract assets at the balance sheet date was as follows:
Americas
Materials
Building
Products
Europe
Materials
Americas
Materials
Building
Products
Europe
Materials
Not past due
Past due:
- less than 60 days
- 60 days or greater but less than 120 days
- 120 days or greater
Total trade receivables, net
2022
$m
1,225
415
73
29
1,742
2022
$m
584
190
76
42
892
2022
$m
988
218
42
34
Total
2022
$m
2,797
823
191
105
2021
$m
1,139
469
74
26
2021
$m
626
227
74
37
964
2021
$m
1,050
223
44
31
Total
2021
$m
2,815
919
192
94
1,282
3,916
1,708
1,348
4,020
Trade receivables and construction contract assets are in general receivable within 90 days of the balance sheet date.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 216
2022 Annual Report and Form 20-F
216
18. Trade and Other Payables
Current
Trade payables
Construction contract-related payables (i)
Deferred and contingent acquisition consideration (ii)
Accruals
Other payables
Amounts payable to equity accounted investments
Total
Non-current
Other payables
Deferred and contingent acquisition consideration (ii)
Total
2022
$m
2,927
344
30
2,132
436
3
5,872
392
299
691
2021
$m
2,727
336
33
2,184
410
2
5,692
389
328
717
(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. $308 million was recognised in the Consolidated Income Statement during 2022 which was included
in the contract-related payables balance at 31 December 2021. 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
2022
2021
$m
56
(5)
41
(55)
-
37
$m
31
(3)
58
(30)
-
56
Billings in excess of
revenue
2022
$m
274
(8)
264
(253)
(1)
276
2021
$m
283
(5)
255
(258)
(1)
274
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 $293 million (2021: $317 million) (Level 3 in the fair value hierarchy), and deferred consideration is $36 million
(2021: $44 million). On an undiscounted basis, the corresponding future payments relating to contingent consideration, for which the Group may be liable, ranges
from $296 million to $448 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 $231 million to $351 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 30)
Changes in estimate
Paid during year
Discount unwinding
At 31 December
2022
$m
361
(1)
14
(33)
(32)
20
329
2021
$m
364
(1)
1
10
(33)
20
361
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
217
19. Movement in Inventories, Receivables, Payables and Provisions
Trade and
other
receivables
Trade and
other
payables
Provisions
for liabilities
Inventories
At 1 January 2022
Translation adjustment
Arising on acquisition (note 30)
Disposals
Deferred and contingent acquisition consideration:
- arising on acquisitions during year (note 30)
- paid during year
Deferred divestment consideration:
- received during year
Interest accruals and discount unwinding
Additions to leased mineral reserves
Increase/(decrease) in inventories, receivables, payables and provisions
At 31 December 2022
The equivalent disclosure for the prior years is as follows:
At 1 January 2021
Translation adjustment
Arising on acquisition (note 30)
Disposals
Deferred and contingent acquisition consideration:
- arising on acquisitions during year (note 30)
- paid during year
Deferred divestment consideration:
- arising on disposals during year
- received during year
Shares to be acquired by CRH plc (Treasury Shares) (note 29)
Interest accruals and discount unwinding
Reclassification
Additions to leased mineral reserves
Increase/(decrease) in inventories, receivables, payables and provisions
At 31 December 2021
At 1 January 2020
Translation adjustment
Arising on acquisition (note 30)
Disposals
Deferred and contingent acquisition consideration:
- arising on acquisitions during year (note 30)
- 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 inventories, receivables, payables and provisions
At 31 December 2020
$m
3,611
(122)
375
(325)
-
-
-
-
-
655
4,194
3,117
(84)
157
(22)
-
-
-
-
-
-
4
-
439
3,611
3,080
71
23
(14)
-
-
-
-
-
20
-
(63)
3,117
$m
4,808
(183)
227
(295)
-
-
(52)
19
-
209
4,733
4,411
(102)
191
(20)
-
-
1
(120)
-
11
-
-
436
4,808
4,587
107
47
(37)
-
-
14
(123)
4
(11)
-
(177)
4,411
$m
(6,409)
236
(195)
214
(14)
32
-
(37)
(10)
(380)
(6,563)
$m
(1,416)
69
(19)
(10)
-
-
-
(16)
-
34
Total
$m
594
-
388
(416)
(14)
32
(52)
(34)
(10)
518
(1,358)
1,006
(5,503)
(1,442)
147
(143)
11
(1)
33
-
-
(281)
(7)
(6)
(10)
(649)
37
(1)
6
-
-
-
-
-
(18)
-
-
2
(6,409)
(1,416)
(5,461)
(150)
(1,302)
(43)
(21)
17
(7)
54
-
-
(24)
(22)
(14)
125
(5,503)
-
5
-
-
-
-
(21)
-
-
(81)
(1,442)
583
(2)
204
(25)
(1)
33
1
(120)
(281)
(14)
(2)
(10)
228
594
904
(15)
49
(29)
(7)
54
14
(123)
(41)
(13)
(14)
(196)
583
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 218
2022 Annual Report and Form 20-F
218
20. Leases
Leased right-of-use assets
At 31 December 2022
Cost
Accumulated depreciation (and impairment charges)
Net carrying amount
At 1 January 2022, net carrying amount
Translation adjustment
Transfer to owned assets
Additions at cost
Arising on acquisition (note 30)
Disposals at net carrying amount
Adjustment as a result of remeasurement of lease liability
Depreciation charge for year (i)
At 31 December 2022, net carrying amount
The equivalent disclosure for the prior year is as follows:
At 31 December 2021
Cost
Accumulated depreciation (and impairment charges)
Net carrying amount
At 1 January 2021, net carrying amount
Translation adjustment
Transfer to owned assets
Additions at cost
Arising on acquisition (note 30)
Disposals at net carrying amount
Adjustment as a result of remeasurement of lease liability
Depreciation charge for year (i)
At 31 December 2021, net carrying amount
At 1 January 2021
Cost
Accumulated depreciation
Net carrying amount
Land and
buildings
$m
1,302
(372)
930
1,195
(35)
-
41
96
(289)
41
(119)
930
1,573
(378)
1,195
1,151
(24)
-
96
77
(12)
45
(138)
1,195
1,419
(268)
1,151
Plant and
machinery
$m
609
(307)
302
313
(13)
(5)
101
10
(9)
17
(112)
302
581
(268)
313
342
(9)
(10)
92
11
(5)
9
(117)
313
553
(211)
342
Other
$m
64
(38)
26
56
(3)
-
12
1
(27)
3
(16)
26
105
(49)
56
57
(1)
-
22
-
(1)
2
(23)
56
97
(40)
57
Total
$m
1,975
(717)
1,258
1,564
(51)
(5)
154
107
(325)
61
(247)
1,258
2,259
(695)
1,564
1,550
(34)
(10)
210
88
(18)
56
(278)
1,564
2,069
(519)
1,550
(i)
The depreciation charge includes $11 million (2021: $34 million; 2020: $33 million) relating to discontinued operations.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
219
Lease liabilities
At 1 January 2022
Translation adjustment
Addition of right-of-use assets
Arising on acquisition (note 30)
Disposals
Remeasurements
Payments
Discount unwinding (ii)
At 31 December 2022
The equivalent disclosure for the prior year is as follows:
At 1 January 2021
Translation adjustment
Addition of right-of-use assets
Arising on acquisition (note 30)
Disposals
Remeasurements
Payments
Discount unwinding (ii)
At 31 December 2021
Land and
buildings
Plant and
machinery
$m
1,296
(41)
41
96
(332)
41
(147)
38
992
1,228
(24)
96
77
(14)
45
(164)
52
1,296
$m
319
(14)
101
10
(8)
17
(132)
8
301
350
(9)
92
11
(5)
9
(139)
10
319
Other
$m
56
(2)
12
1
(28)
3
(18)
2
26
57
(1)
22
-
(1)
2
(25)
2
56
Total
$m
1,671
(57)
154
107
(368)
61
(297)
48
1,319
1,635
(34)
210
88
(20)
56
(328)
64
1,671
(ii) Discount unwinding includes $6 million (2021: $18 million; 2020: $19 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 2022
As at 31 December 2021
Discounted
Undiscounted
Discounted
Undiscounted
$m
260
196
154
121
92
496
$m
263
205
166
135
106
798
$m
297
241
190
154
126
663
1,319
1,673
1,671
$m
302
254
208
175
150
1,099
2,188
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 220
2022 Annual Report and Form 20-F
220
20. Leases continued
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
2022
2021
$m
273
11
94
378
675
$m
239
8
97
344
674
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
As at
31 December
31 December
2022
$m
5
4
6
6
5
296
322
2021
$m
4
5
6
8
8
568
599
Income from subleasing and gains/losses on sale and leaseback transactions were not material for the Group.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
221
21. Analysis of Net Debt
Components of net debt
Net debt comprises cash and cash equivalents, interest-bearing loans and borrowings, lease liabilities and derivative financial instrument assets and liabilities; it enables
investors to see the economic effects of these in total (see note 22 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 23)
Interest-bearing loans and borrowings (note 24) (i)
Lease liabilities (note 20)
Derivative financial instruments (net) (note 25)
Group net debt
As at 31 December 2022
As at 31 December 2021
Book value
Fair value
Book value
Fair value
$m
5,936
(9,636)
(1,319)
(86)
(5,105)
$m
5,936
(9,001)
(1,319)
(86)
(4,470)
$m
5,783
(10,487)
(1,671)
122
(6,253)
$m
5,783
(11,340)
(1,671)
122
(7,106)
(i) Interest-bearing loans and borrowings are Level 2 instruments whose fair value is derived from quoted market prices.
Reconciliation of opening to closing net debt
Movement Movement
Mark-to-
market
31 December 2022
Cash and cash equivalents
Interest-bearing loans and borrowings
Lease liabilities
Derivative financial instruments - financing
Liabilities from financing activities
Derivative financial instruments - non-financing
Group net debt
The equivalent disclosure for the prior years is as follows:
31 December 2021
Cash and cash equivalents
Interest-bearing loans and borrowings
Lease liabilities
Derivative financial instruments (net)
Group net debt
31 December 2020
Cash and cash equivalents (ii)
Interest-bearing loans and borrowings (ii)
Lease liabilities
Derivative financial instruments (net)
Group net debt
At 1
January
attributable attributable
and other
At 31
to acquired to disposed
non-cash Translation December
Book value
Cash flow companies
companies adjustments adjustment Book value
$m
5,783
(10,487)
(1,671)
122
(12,036)
-
(6,253)
7,721
(12,215)
(1,635)
188
(5,941)
4,218
(10,127)
(1,697)
74
$m
393
326
249
11
586
(58)
921
(1,617)
1,183
264
37
(133)
3,172
(1,484)
258
(26)
(7,532)
1,920
$m
22
(8)
(107)
-
(115)
-
(93)
7
(3)
(88)
-
(84)
-
-
(12)
-
(12)
$m
(31)
6
342
-
348
-
317
(31)
-
3
-
(28)
(7)
-
12
-
5
$m
-
159
(189)
(194)
(224)
38
(186)
-
90
(249)
(52)
(211)
-
(80)
(153)
102
(131)
$m
(231)
$m
5,936
368
57
(9)
416
4
189
(297)
458
34
(51)
144
338
(524)
(43)
38
(191)
(9,636)
(1,319)
(70)
(11,025)
(16)
(5,105)
5,783
(10,487)
(1,671)
122
(6,253)
7,721
(12,215)
(1,635)
188
(5,941)
(ii) 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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 222
2022 Annual Report and Form 20-F
222
21. Analysis of Net Debt continued
The following table shows the effective interest rates on period-end fixed and gross debt:
As at 31 December 2022
As at 31 December 2021
Interest-bearing loans and borrowings nominal - fixed rate (i)
Derivative financial instruments - fixed rate
Net fixed rate debt including derivatives
Interest-bearing loans and borrowings nominal - floating rate (ii)
Cumulative fair value hedge adjustment (i)
Derivative financial instruments - floating rate (i)
Derivative financial instruments (net) - fair value
Gross debt including derivative financial instruments, excluding lease liabilities
Lease liabilities - fixed rate
$m
(9,398)
1,775
(7,623)
(280)
42
(1,775)
(86)
(9,722)
(1,319)
Gross debt including derivative financial instruments, including lease liabilities
(11,041)
Cash and cash equivalents - floating rate (note 23)
Group net debt
5,936
(5,105)
Weighted
average
fixed
period
Interest
Weighted
average
fixed
period
Interest
rate
Years
$m
rate
Years
3.1%
8.1
3.5%
2.9%
8.6
2.8%
(10,052)
1,800
(8,252)
(317)
(118)
(1,800)
122
(10,365)
(1,671)
(12,036)
5,783
(6,253)
(i) Of the Group’s nominal fixed rate debt at 31 December 2022, $1,775 million (2021: $1,800 million) is hedged to a mix of USD LIBOR and EURIBOR floating rates
using interest rate swaps.
(ii) 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.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
223
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 2022 and
31 December 2021 is as follows:
31 December 2022
Cash and cash equivalents (note 23)
Interest-bearing loans and borrowings (note 24)
Lease liabilities (note 20)
Derivative financial instruments (net) (note 25)
US
Dollar
$m
euro
$m
2,309
2,334
(4,508)
(4,213)
(650)
(227)
(23)
1,443
Net debt by major currency including derivative financial instruments
(2,872)
(663)
Non-debt assets and liabilities analysed as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Non-controlling interests
18,849
3,690
4,740
1,496
(3,136)
(656)
2,295
1,065
(315)
(3,065)
(1,634)
(1,185)
(126)
(41)
-
545
(209)
(330)
-
Capital and reserves attributable to the Company’s equity holders
14,390
2,192
1,306
1,481
The equivalent disclosure for the prior year is as follows:
31 December 2021
Cash and cash equivalents (note 23)
Interest-bearing loans and borrowings (note 24)
Lease liabilities (note 20)
Derivative financial instruments (net) (note 25)
2,266
2,386
(4,665)
(4,479)
(856)
(250)
189
1,463
Net debt by major currency including derivative financial instruments
(3,066)
(880)
365
(537)
(255)
(339)
(766)
274
(3)
(150)
(606)
(485)
Pound
Sterling
Canadian
Dollar
Philippine
Peso
Polish
Zloty
Swiss
Franc Other (i)
$m
523
(482)
(204)
(391)
(554)
$m
210
(3)
(99)
(291)
(183)
$m
24
(419)
(6)
(34)
(435)
1,658
1,456
$m
194
-
(48)
(258)
(112)
399
193
(18)
(211)
(2)
249
166
-
(54)
(184)
(72)
371
161
(19)
(178)
-
263
$m
57
-
(42)
(128)
(113)
535
85
(154)
(87)
(8)
258
103
(361)
(47)
-
(305)
608
84
(168)
(83)
(8)
128
Total
$m
5,936
(9,636)
(1,319)
(86)
(5,105)
$m
285
(11)
(43)
(404)
(173)
1,502
30,384
471
(80)
8,826
(4,681)
(381)
(7,087)
(25)
(646)
1,314
21,691
204
5,783
(11)
(10,487)
(51)
(1,671)
(310)
(168)
122
(6,253)
1,606
30,529
377
(71)
8,222
(4,863)
(344)
(6,721)
(25)
(681)
1,375
20,233
231
(113)
(194)
(444)
501
19
(431)
(8)
(91)
(511)
176
(132)
(153)
(498)
503
Non-debt assets and liabilities analysed as follows:
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Non-controlling interests
17,661
4,204
2,614
1,844
1,621
4,369
1,498
(3,115)
(714)
993
(431)
(2,866)
(1,593)
(1,156)
(105)
(45)
-
564
(213)
(348)
-
Capital and reserves attributable to the Company’s equity holders
12,878
2,470
1,254
1,362
(i)
The principal currencies included in this category are Chinese Renminbi, Romanian Leu, Ukrainian Hryvnia, Serbian Dinar and Swedish Krona.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 224
2022 Annual Report and Form 20-F
224
21. Analysis of Net Debt continued
Liquidity and capital resources
The following table provides certain information related to our cash generation and changes in our cash and cash equivalents position:
Net cash inflow from operating activities
Net cash outflow from investing activities
Net cash (outflow)/inflow from financing activities
Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year (note 23)
Effect of exchange rate changes
Cash and cash equivalents at end of year (note 23)
Derivative financial instruments - non-financing
Lease liabilities
Bank overdrafts
Borrowings
Derivative financial instruments - financing
Total liabilities from financing activities
Net debt at end of year
2022
$m
3,954
(884)
(2,686)
384
5,783
(231)
5,936
(16)
(1,319)
(94)
(9,542)
(70)
2021
$m
4,210
(2,546)
(3,305)
(1,641)
7,721
(297)
5,783
2020
$m
3,938
(1,060)
287
3,165
4,218
338
7,721
-
-
(1,671)
(111)
(1,635)
(120)
(10,376)
(12,095)
122
188
(11,025)
(12,036)
(13,662)
(5,105)
(6,253)
(5,941)
The Group believes that its financial resources (operating cash together with cash and cash equivalents of $5.9 billion and undrawn committed loan facilities of $3.7
billion) is sufficient to cover the Group’s cash requirements.
At 31 December 2022, US Dollar and euro denominated cash and cash equivalents represented 39% (2021: 39%) and 39% (2021: 41%) 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
2022:
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
3.125%
0.875%
Outstanding
(millions)
€750
€500
Final
maturity
2023
2023
1.875%
3.875%
1.250%
3.400%
3.950%
1.375%
4.125%
1.625%
6.400%
5.125%
4.400%
4.500%
€600
$1,250
€750
$600
$900
€600
£400
€750
$213
$500
$400
$600
2024
2025
2026
2027
2028
2028
2029
2030
2033
2045
2047
2048
Hedged to
floating
rate
(millions)
€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 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 2022, the remaining fair value hedge adjustment on the hedged item on the Consolidated Balance Sheet was $33 million (2021: $35
million).
2022 Annual Report and Form 20-F 22. Capital and Financial Risk Management
2022 Annual Report and Form 20-F
225
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,
coordinates 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 Head 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 hedged item and
hedging 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 1:1 are used
throughout all hedging activity as the hedged item and hedging instrument are of
the same type and currency. The hedges employed mitigate identified risks and
have consistently demonstrated close economic relationships. Ineffectiveness
between the hedged item and hedging 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.
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.
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.
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
2022
$m
2021
$m
21,691
20,233
5,105
26,796
6,253
26,486
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 2022 amounted to 4x; on a
continuing basis 2.8x (2021: 2.7x; on a continuing basis 2.5x; 2020: 1.2x; on a
continuing basis 1.1x).
No changes were made in the objectives or policies during 2022.
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
currency forwards, are used to manage interest rate risks and currency
exposures and to achieve the desired profile of borrowings.
In accordance with the UK Financial Conduct Authority’s announcement on 5
March 2021, LIBOR benchmark rates were discontinued after 31 December
2022 except for certain US Dollar settings which will be discontinued after 30
June 2023. Those rates that were discontinued were replaced by alternative risk-
free rates (ARR) as part of the inter-bank offer rate (IBOR) reform.
The Group prepared an action plan, encompassing treasury, legal, accounting
and IT functions, to enable a smooth transition to the alternative benchmark
rates. The review identified a range of contracts that reference IBORs, including
credit facilities, derivative instruments, money market deposits, lease
agreements, and supply contract agreements. Action plans were developed for
each of these arrangements to ensure a smooth transition to ARR. None of the
changes had an impact on the Group’s financing or interest rate hedging
strategies, nor did they have a material financial impact.
At 31 December 2022, the notional value of hedging instruments that reference
3-month US LIBOR is $1.4 billion. Whilst the Secured Overnight Financing Rate
(SOFR) benchmark rate has been widely adopted by market participants and
effectively replaced US LIBOR in new contracts since 31 December 2022, a
number of US LIBOR settings, including 3-month and 6-month US LIBOR, will
continue to be published until 30 June 2023. Accordingly, absent any agreement
with counterparties to transition to an ARR before this date, the Group’s existing
USD denominated interest rate swaps with maturity dates beyond 30 June 2023
will only transition to ARR once US LIBOR publication ceases. As at
31 December 2022, the Group has not transitioned any of its existing USD
denominated interest rate swaps to ARRs. The Group’s other interest rate swaps
reference EURIBOR rates and thus are not impacted by the IBOR reforms.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 226
2022 Annual Report and Form 20-F
226
22. Capital and Financial Risk Management continued
Whilst interest rate increases observed in the markets in which the Group
operates were in the range of 2%-4.5% during 2022, the following table
demonstrates the impact on profit before tax as a result of incremental changes
of 1% in the interest rates applicable to floating rate net debt, which operate in a
linear manner, with all other variables held constant. These impacts are
calculated based on the closing balance sheet floating rate net debt for a full year
and assume that all floating interest rates change by the same amount.
Percentage change in relevant $/€
exchange rate strengthening/weakening (i)
Impact on profit before tax
Percentage change in cost of borrowings (i)
Impact on profit before tax
Impact on total equity*
+/-1%
+/-$38m
+/-$38m
+/-$59m
2022
2021
2020
* Includes the impact on financial instruments
which is as follows:
+/- 5%
-/+$5m
-/+$22m
-/+ $19m
+/-$110m
+/-$123m
+/-$157m
-/+$33m
-/+$44m
-/+$27m
2022
2021
2020
2022
2021
2020
2022
2021
2020
(i) Sensitivity analysis for cost of borrowing has been presented for continuing
operations only.
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 29 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 21. 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 act as a
natural foreign currency hedge of a portion of its foreign currency assets.
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 impact the translation of the Group’s non-
euro net assets (euro being the functional currency of the ultimate parent
company). The economic relationship, being the translation impact of the
Group’s net investment in non-euro subsidiaries (hedged item) is hedged against
a foreign currency swap (hedging 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 2022, the notional amount of hedged net
investments was $1,145 million (2021: $726 million). The primary currency pairs
in use are euro versus Canadian Dollar, Pound Sterling, Romanian Leu, Polish
Zloty and Danish Kroner. The fair value movements of the hedging 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-euro functional currency into
euro. Potential sources of ineffectiveness are changes in the interest rate
differentials of the hedged currency pairs, 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 hedging instruments are set out in note 25. Undesignated financial
instruments are termed “not designated as hedges”.
Whilst foreign exchange volatility observed in the markets in which the Group
operates was in the range of +/-10% during 2022, the following table
demonstrates the sensitivity of profit before tax and equity to incremental
movements of 5% in the relevant US Dollar/euro exchange rate, which operate in
a linear manner, 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.
(i) Sensitivity analysis for exchange rates has been presented for continuing
operations only.
Financial instruments include deposits, money market funds, commercial paper,
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 at an entity level.
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 23). 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.
Credit rating of counterparty (Moody’s/Standard & Poor’s/Fitch)
Aaa/AAA/AAA
Aa/AA/AA
A/A/A
Baa/BBB/BBB
or lower
As at 31 December 2022
As at 31 December 2021
$m
279
2,194
3,199
264
5,936
%
5%
37%
54%
4%
100%
$m
2,021
2,394
1,216
152
5,783
%
35%
41%
21%
3%
100%
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 a number of managed
investment funds that hold fixed income euro securities with an average credit
quality of Aaa/AAA. As at 31 December 2022, 95% (2021: 65%) of cash and
cash equivalents was held with higher investment grade bank counterparties,
and 5% (2021: 35%) with the money market funds.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
227
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
Consolidated Income Statement as a result of changes in associated commodity
indices over a timeframe of approximately two years (2021: four 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 25.
The notional and fair values in respect of derivative contracts as at 31 December
2022 and 31 December 2021 were as follows:
Profile of commodity products
As at 31 December 2022
As at 31 December 2021
Notional
value
Fair value
Notional
value
Fair value
$m
435
11
94
540
$m
(30)
20
(10)
(20)
$m
10
12
64
86
$m
-
6
26
32
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 3.1% of gross
trade receivables and construction contract assets (2021: 3.2%). Information in
relation to the Group’s credit risk management of trade receivables is provided in
note 17. Amounts receivable from related parties (notes 17 and 32) 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 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 24; 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 24.
Carbon credits
Electricity
Fuel oil and related
products
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 place in the money markets that allow the Group to issue in the
relevant markets within a short period of time.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 228
2022 Annual Report and Form 20-F
228
22. Capital and Financial Risk Management continued
The tables below show the projected contractual undiscounted total cash outflows (principal and interest) arising from the Group’s trade and other payables, gross debt
and derivative financial instruments. The tables also include the gross cash inflows projected to arise from derivative financial instruments. These projections are based
on the interest and foreign exchange rates applying at the end of the relevant financial year.
At 31 December 2022
Financial liabilities - cash outflows
Trade and other payables
Lease liabilities
Other interest-bearing loans and borrowings
Interest payments on other interest-bearing loans and borrowings (i)
Interest rate swaps - net cash outflows (ii)
Currency forwards and currency swaps - gross cash outflows
Other derivative financial instruments
Gross projected cash outflows
Derivative financial instruments - cash inflows
Currency forwards and 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 2021
Financial liabilities - cash outflows
Trade and other payables
Lease liabilities
Other interest-bearing loans and borrowings
Interest payments on other interest-bearing loans and borrowings (i)
Currency forwards and 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)
Currency forwards and currency swaps - gross cash inflows
Other derivative financial instruments
Gross projected cash inflows
Within 1
year
Between
1 and 2
years
Between
2 and 3
years
Between
3 and 4
years
Between
4 and 5
years
$m
$m
$m
$m
$m
After 5
years
$m
Total
$m
5,878
263
1,502
285
27
1,557
40
356
205
696
262
27
-
-
29
166
1,253
234
16
-
-
26
135
804
210
5
-
-
24
106
893
177
5
-
-
521
798
4,584
1,538
3
-
-
6,834
1,673
9,732
2,706
83
1,557
40
9,552
1,546
1,698
1,180
1,205
7,444
22,625
(1,561)
(17)
(1,578)
-
(3)
(3)
-
-
-
-
-
-
-
-
-
-
-
-
(1,561)
(20)
(1,581)
5,697
302
559
315
1,567
1
196
254
1,420
286
-
-
44
208
683
264
-
-
202
175
1,254
238
-
-
170
150
853
214
-
-
288
1,099
5,666
1,715
-
-
6,597
2,188
10,435
3,032
1,567
1
8,441
2,156
1,199
1,869
1,387
8,768
23,820
(41)
(1,559)
(32)
(1,632)
(34)
-
(1)
(35)
(32)
(22)
(13)
(20)
(162)
-
-
-
-
-
-
-
-
(1,559)
(33)
(32)
(22)
(13)
(20)
(1,754)
(i) At 31 December 2022 and 31 December 2021, a portion of the Group’s long-term debt carried variable interest rates. The Group uses the interest rates in effect
on 31 December to calculate the interest payments on the long-term debt for the periods indicated.
(ii) The Group uses interest rate swaps to help manage its interest cost. Under these contracts the Group has agreed to exchange at predetermined intervals, the 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.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
229
23. 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 22. Cash and cash equivalents are included in the Consolidated Balance Sheet and are analysed as follows:
Cash at bank and in hand
Investments (short-term deposits)
Total
2022
$m
873
5,063
5,936
2021
$m
925
4,858
5,783
Cash at bank earns/pays 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.
24. Interest-bearing Loans and Borrowings
Bank overdrafts
Bank loans
Bonds
Other Debt
Interest-bearing loans and borrowings
2022
$m
94
420
9,118
4
9,636
2021
$m
111
430
9,946
-
10,487
Interest-bearing loans and borrowings include borrowings of $nil million (2021: $nil million) secured on specific items of property, plant and equipment.
Maturity profile of loans and borrowings and undrawn committed facilities
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After five years
Total
As at 31 December 2022
As at 31 December 2021
Loans and
borrowings
Undrawn
committed
facilities
Loans and
borrowings
Undrawn
committed
facilities
$m
1,491
688
1,202
799
890
4,566
9,636
$m
-
-
-
3,736
9
-
$m
549
1,422
676
1,277
845
5,718
3,745
10,487
$m
19
-
-
-
3,964
-
3,983
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 above represent the facilities
available to be drawn by the Group at 31 December 2022.
In September 2022 the Group repaid a CHF 330 million bond upon maturity. A
positive translation adjustment of $0.3 billion and a reduction in cumulative fair
value hedge adjustment of $0.2 billion further reduced the bond balance.
At the end of 2021 a number of LIBOR settings ceased to be published
(including Sterling and Swiss Franc), while certain US Dollar LIBOR settings will
continue to be provided until June 2023. There is no change to the publication of
EURIBOR rates. The Group’s syndicated revolving credit facility (undrawn as at
31 December 2022) previously referenced USD LIBOR, GBP LIBOR and CHF
LIBOR rates. During 2021 the Group negotiated with its Lenders, amendments
to the facility to include market standard LIBOR replacement language. From 1
January 2022 the agreement adopted the Secured Overnight Financing Rate
(SOFR), Sterling Overnight Index Average (SONIA) and Swiss Average Rate
Overnight (SARON) as the alternative benchmark rates in respect of USD, GBP
and CHF LIBOR rates respectively.
Guarantees
The Company has given letters of guarantee to secure obligations of subsidiary
undertakings as follows: $9.3 billion in respect of loans and borrowings, bank
advances and derivative obligations (2021: $10.0 billion) and $0.4 billion in
respect of letters of credit due within one year (2021: $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 2022 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 2022.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 230
2022 Annual Report and Form 20-F
230
25. Derivative Financial Instruments
The fair values of derivative financial instruments are analysed by year of maturity and by accounting designation as follows:
Fair value
hedges
$m
Cash flow
hedges
Net investment
hedges
Not designated
as hedges
$m
$m
$m
At 31 December 2022
Derivative assets
Within one year - current assets
Between one and two years
Non-current assets
Total derivative assets
Derivative liabilities
Within one year - current liabilities
Between two and three years
After five years
Non-current liabilities
Total derivative liabilities
Net (liability)/asset arising on derivative financial instruments
The equivalent disclosure for the prior year is as follows:
At 31 December 2021
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
Total derivative liabilities
Net asset/(liability) arising on derivative financial instruments
6
-
-
6
-
(47)
(30)
(77)
(77)
(71)
-
20
32
44
96
96
-
-
96
17
3
3
20
(43)
-
-
-
(43)
(23)
36
1
-
-
1
37
(2)
(2)
35
15
-
-
15
(8)
-
-
-
(8)
7
1
-
-
-
-
1
(10)
(10)
(9)
1
-
-
1
-
-
-
-
-
1
2
-
-
-
-
2
(2)
(2)
-
Total
$m
39
3
3
42
(51)
(47)
(30)
(77)
(128)
(86)
39
21
32
44
97
136
(14)
(14)
122
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
231
At 31 December 2022 and 2021, 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 currency forwards, currency swaps, commodity
forwards and commodity 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 of currency forwards and 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:
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
Fair value gain/(loss) arising on hedging instruments:
- commodity forwards
- currency forwards
Total
Fair value hierarchy
Assets measured at fair value
Fair value hedges - interest rate swaps
Cash flow hedges - currency forwards, currency swaps, commodity forwards and commodity swaps
Net investment hedges - currency forwards and currency swaps
Not designated as hedges (classified as held for trading) - currency forwards and currency swaps
Total
Liabilities measured at fair value
Fair value hedges - interest rate swaps
Cash flow hedges - currency forwards, currency swaps, commodity forwards and commodity swaps
Net investment hedges - currency forwards and currency swaps
Not designated as hedges (classified as held for trading) - currency forwards and currency swaps
Total
At 31 December 2022 and 2021 there were no derivatives valued using Level 1 or Level 3 fair value techniques.
2022
$m
(154)
156
61
5
66
2021
$m
(85)
87
34
-
34
2020
$m
97
(83)
(2)
9
7
2022
Level 2
$m
2021
Level 2
$m
6
20
15
1
42
(77)
(43)
(8)
-
(128)
96
37
1
2
136
-
(2)
(10)
(2)
(14)
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 232
2022 Annual Report and Form 20-F
232
26. Provisions for Liabilities
At 1
January
Translation
adjustment
31 December 2022
Insurance (i)
Environment and remediation (ii)
Rationalisation and redundancy (iii)
Other (iv)
Total
Analysed as:
Non-current liabilities
Current liabilities
Total
$m
395
681
21
319
1,416
937
479
1,416
The equivalent disclosure for the prior year is as follows:
31 December 2021
Insurance (i)
Environment and remediation (ii)
Rationalisation and redundancy (iii)
Other (iv)
Total
Analysed as:
Non-current liabilities
Current liabilities
Total
349
684
48
361
1,442
953
489
1,442
$m
(6)
(40)
(1)
(22)
(69)
(4)
(18)
(1)
(14)
(37)
Arising on
acquisition
(note 30)
Provided
during year
Utilised
during
year
$m
$m
$m
-
17
-
2
19
1
-
-
-
1
178
(108)
35
16
83
(26)
(11)
(41)
312
(186)
137
49
29
100
315
(76)
(26)
(36)
(63)
(201)
Disposed
during year
Reversed
unused
Discount
unwinding
At 31
December
$m
-
(10)
(2)
22
10
-
(3)
-
(3)
(6)
$m
(44)
(69)
(6)
(41)
(160)
(17)
(15)
(19)
(65)
(116)
$m
6
8
-
2
16
5
10
-
3
18
$m
421
596
17
324
1,358
845
513
1,358
395
681
21
319
1,416
937
479
1,416
(i)
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 (2021: four years).
(ii) This provision comprises obligations governing site remediation, restoration and environmental works to be incurred in compliance with either local or national
environmental regulations together with constructive obligations stemming from established best practice. The value of current obligations is $70 million
(2021: $96 million), whilst $282 million (2021: $310 million) of the total provision will be utilised in the medium-term (two to ten years). The value of legal and
constructive obligations applicable to long-lived assets (principally mineral-bearing land) that will unwind over a 30-year timeframe is $244 million (2021: $275
million). In discounting the related obligations, expected future cash outflows have been determined with due regard to extraction status and anticipated remaining
life. The discount rates used are consistent with the timing of the expected future cash outflows of the provision and the economic environment of the jurisdiction
where the provision will be settled.
(iii) These provisions relate to irrevocable commitments under various rationalisation and redundancy programmes, none of which are individually material to the Group.
In 2022 $16 million (2021: $29 million; 2020: $111 million) was provided in respect of rationalisation and redundancy activities as a consequence of undertaking
various cost reduction initiatives across all operations. These initiatives included removing excess capacity from manufacturing and distribution networks and
scaling operations to match supply and demand. The Group expects that these provisions will primarily be utilised within one to two years of the balance sheet date
(2021: 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 (2021: one 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.
2022 Annual Report and Form 20-F 27. Deferred Income Tax
The deductible and taxable temporary differences in respect of which deferred tax has been recognised are as follows:
Reported in balance sheet after offset
Deferred tax liabilities
Deferred tax assets
Net deferred income tax liability
Deferred income tax assets (deductible temporary differences)
Deficits on Group retirement benefit schemes
Revaluation of derivative financial instruments to fair value
Tax loss carryforwards (primarily income tax losses)
Share-based payment expense
Provisions for liabilities, inventories, receivables and payables
Lease liabilities
Other deductible temporary differences
Total
2022 Annual Report and Form 20-F
233
2022
$m
2,868
(88)
2,780
52
6
87
40
474
263
79
2021
$m
2,734
(109)
2,625
98
4
93
54
446
335
87
1,001
1,117
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 $1.2 billion (2021: $1.2 billion). The vast majority either
do not expire based on current tax legislation or they expire post 2027 (2021: 2026). Of the losses not recognised in the Consolidated Balance Sheet, $0.1 billion
(2021: $0.1 billion) expire within five years, $0.2 billion (2021: $0.4 billion) expire post five years and the remainder of 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)
3,312
3,218
Leased right-of-use assets
Investment in subsidiaries
Surpluses on Group retirement benefit schemes
Revaluation of derivative financial instruments to fair value
Rolled-over capital gains
Total
250
159
30
10
20
314
164
9
15
22
3,781
3,742
Investments in subsidiaries
The aggregate temporary differences in relation to investments in subsidiaries for which deferred tax liabilities have not been recognised is $14.5 billion (2021: $12.1
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)
Arising on acquisition (note 30)
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
At 31 December
(i)
Fair value adjustments arising on acquisition principally relate to property, plant and equipment.
2,625
2,484
(44)
(54)
247
(64)
77
(7)
2,780
(34)
103
37
1
44
(10)
2,625
(ii) The net (income)/expense includes income of $74 million (2021: expense of $5 million; 2020: expense of $3 million) relating to discontinued operations.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 234
2022 Annual Report and Form 20-F
234
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 (which was divested in
April 2021), the Philippines, Romania, Serbia and the UK have been aggregated
into an “Other” category.
28. 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, Canada,
France, Germany, Italy, the Netherlands, the Philippines, the Republic of Ireland,
Romania, Serbia, Slovakia, Switzerland, the UK and the US. The Group also
operated a defined benefit pension scheme in Brazil which was divested in April
2021. The Group has a mixture of funded and unfunded defined benefit pension
schemes. The net surplus of the funded schemes is $221 million (2021: $54
million). Unfunded obligations (including jubilee, post-retirement healthcare
obligations and long-term service commitments) comprise of a number of
schemes in Canada, France, Germany, Italy, the Netherlands, the Philippines,
Romania, Serbia, Slovakia, Switzerland and the US, totalling a net liability of $237
million (2021: $363 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 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 including from fluctuations arising in respect of climate change and
associated risks and uncertainties. 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.
Financial assumptions — scheme liabilities
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
2021
%
2020
%
2.92
1.90
1.90
1.43
n/a
2.52
1.45
1.50
1.14
n/a
2022
%
3.30
2.10
2.30
4.20
n/a
United States
and Canada
2022
%
3.00
-
2.10
5.20
1.87
2021
%
3.03
-
2.00
2.82
5.91
2020
%
3.37
-
2.00
2.34
5.97
Switzerland
2021
%
2020
%
1.25
-
0.75
0.30
n/a
1.00
-
0.50
0.20
n/a
2022
%
2.50
-
2.00
2.20
n/a
Rate of increase in:
- salaries
- pensions in payment
Inflation
Discount rate
Medical cost trend rate
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
235
The mortality assumptions employed in determining the present value of scheme liabilities under IAS 19 represent actuarial guidelines 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:
Current retirees
- men
- women
Future retirees
- men
- women
Republic of Ireland
United States
and Canada
Switzerland
2022
2021
2020
2022
2021
2020
2022
2021
2020
22.7
24.6
25.0
26.9
22.6
24.5
24.9
26.8
22.5
24.4
24.8
26.7
20.5
22.5
22.3
24.2
20.5
22.4
22.2
24.1
20.1
22.2
22.0
23.9
22.7
24.5
25.5
26.9
22.6
24.4
25.4
26.9
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:
Total defined contribution expense (i)
Total defined benefit expense (i)
Total expense in Consolidated Income Statement
2022
2021
2020
$m
316
56
372
$m
297
71
368
$m
279
69
348
(i)
The total defined contribution and defined benefit expense excludes $6 million and $nil million respectively (2021: $12 million and $1 million respectively;
2020: $10 million and $1 million respectively), relating to discontinued operations.
At 31 December 2022, $104 million (2021: $92 million) was included in trade and 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 (credit)/cost net
Loss on settlements
Subtotal
Included in finance income and finance costs respectively:
Interest income on scheme assets
Interest cost on scheme liabilities
Net interest expense
Net expense to Consolidated Income Statement
The composition of the net expense to the Consolidated Income Statement is as follows:
Eurozone
United States and Canada
Switzerland
Other
Total
46
5
(1)
-
50
(52)
58
6
56
25
14
9
8
56
54
4
(3)
6
61
(46)
56
10
71
29
20
10
12
71
52
5
1
-
58
(56)
67
11
69
30
15
12
12
69
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 236
2022 Annual Report and Form 20-F
236
28. Retirement Benefit Obligations continued
Reconciliation of scheme assets (bid value)
At 1 January
Movement in year
Interest income on scheme assets
Remeasurement adjustments
- return on scheme assets excluding interest income
Employer contributions paid
Contributions paid by plan participants
Benefit and settlement payments
Administration expenses
Translation adjustment
Fair value of plan assets
Remeasurement adjustments
- impact of asset ceiling
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
Past service credit net
Loss on settlements
Interest cost on scheme liabilities
Disposals
Remeasurement adjustments
- experience variations
- actuarial gain from changes in financial assumptions
- actuarial (loss)/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
Net pension deficit (i)
Related deferred income tax asset
Net pension asset/(liability)
The composition of the net pension asset/(liability) is as follows:
Eurozone
United States and Canada
Switzerland
Other
Total
(i) Reconciliation to Consolidated Balance Sheet
Retirement benefit assets
Retirement benefit obligations
Net pension deficit
2022
$m
3,174
52
(534)
35
7
(142)
(5)
(144)
2,443
(88)
2,355
1,217
652
303
183
2,355
2021
$m
3,321
46
165
43
7
(258)
(4)
(146)
3,174
-
3,174
1,563
873
460
278
3,174
(3,483)
(3,877)
(46)
1
-
(58)
25
(48)
951
(2)
(7)
142
154
(2,371)
(1,096)
(797)
(296)
(182)
(2,371)
(16)
22
6
106
(109)
6
3
6
261
(277)
(16)
(55)
3
(6)
(56)
1
(7)
70
36
(7)
258
157
(3,483)
(1,671)
(1,093)
(394)
(325)
(3,483)
(309)
89
(220)
(87)
(164)
66
(35)
(220)
166
(475)
(309)
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
237
Sensitivity analysis
The revised liabilities due to the impact of a reasonably possible change (as indicated below) in the principal actuarial assumptions would be as follows:
Scheme liabilities at 31 December
Revised liabilities
Discount rate
Inflation rate
Mortality assumption
Increase by 0.25%
Decrease by 0.25%
Increase by 0.25%
Decrease by 0.25%
Increase by 1 year
Decrease by 1 year
United States
Eurozone
and Canada
Switzerland
Other
Total Group
2022
$m
(1,096)
(1,055)
(1,131)
(1,129)
(1,057)
(1,058)
(1,127)
2022
$m
(797)
(777)
(818)
(799)
(796)
(777)
(817)
2022
$m
(296)
(286)
(306)
(297)
(295)
(287)
(305)
2022
$m
(182)
(176)
(188)
(185)
(180)
(177)
(188)
2022
$m
(2,371)
(2,294)
(2,443)
(2,410)
(2,328)
(2,299)
(2,437)
The above sensitivity analysis is derived through changing the individual assumption while holding all other assumptions constant.
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
2022
$m
504
1,482
113
42
89
2
14
74
13
110
2,443
2021
$m
752
1,874
128
40
129
2
14
71
9
155
3,174
(i)
Equity instruments primarily relate to developed markets.
(ii) Quoted debt instruments are made up of $991 million (2021: $1,317 million) and $491 million (2021: $557 million) of government and non-government instruments
respectively.
(iii) Unquoted debt instruments primarily relate to government debt instruments.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 238
2022 Annual Report and Form 20-F
238
28. Retirement Benefit Obligations continued
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 January 2020 to March 2022.
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 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
2022
$m
2021
$m
2020
$m
3
3
3
3
2
9
2
2
2
2
2
7
23
17
2
2
2
2
2
10
20
Employer contributions payable in the 2023 financial year including minimum funding payments (expressed using year-end exchange rates for 2022) are estimated at
$37 million.
Average duration and scheme composition
Average duration of defined benefit obligation (years)
Allocation of defined benefit obligation by participant:
Eurozone
United States and Canada
Switzerland
2022
14.0
2021
18.3
2020
18.3
2022
10.2
2021
12.3
2020
12.9
2022
13.5
2021
17.0
2020
17.6
Active plan participants
Deferred plan participants
Retirees
70%
10%
20%
69%
10%
21%
70%
10%
20%
47%
15%
38%
49%
15%
36%
43%
12%
45%
76%
—%
24%
74%
—%
26%
74%
—%
26%
2022 Annual Report and Form 20-F 29. Share Capital and Reserves
Equity share capital
Authorised
At 1 January ($m)
Cancellation of Income Shares (ii)
At 31 December ($m)
Number of Shares at 1 January (millions)
Cancellation of Income Shares (ii)
Number of Shares at 31 December (millions)
Allotted, called-up and fully paid
At 1 January ($m)
Cancellation of Income Shares (ii)
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 Income Shares (ii)
Cancellation of Treasury Shares (iii)
At 31 December
2022 Annual Report and Form 20-F
239
2022
Ordinary
Shares of
€0.32 each (i)
2021
Ordinary
Shares of
€0.32 each (i)
Income
Shares of
€0.02 each
491
-
491
1,250
-
1,250
309
-
(7)
302
774
-
(22)
752
491
-
491
1,250
-
1,250
317
-
(8)
309
795
-
(21)
774
28
(28)
-
1,250
(1,250)
-
16
(16)
-
-
795
(795)
-
-
(i)
The Ordinary Shares represent 99.52% of the total issued share capital as at 31 December 2022 (2021: 99.53%).
(ii) The Income Shares were cancelled with effect from 9 February 2021 pursuant to a resolution approved by the Shareholders at an extraordinary general meeting of
the Company held on 9 February 2021.
(iii) During 2022, 22,000,000 Ordinary Shares (2021: 21,000,000) 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 8 to the financial statements. A total
of 449,703 Treasury Shares were re-issued during the financial year to satisfy the exercise of options over Ordinary Shares under these Schemes (2021: 521,523;
2020: 256,521).
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 240
2022 Annual Report and Form 20-F
240
29. Share Capital and Reserves continued
Share participation schemes
As at 31 December 2022, 8,593,666 (2021: 8,444,240) Ordinary Shares had been appropriated to participation schemes. In 2022 the appropriation was satisfied by
the purchase of 149,426 shares (2021: 124,960 satisfied by the purchase of 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 8.
Preference share capital
Authorised
At 1 January 2022 and 31 December 2022
Allotted, called-up and fully paid
At 1 January 2022 and 31 December 2022
5% Cumulative
Preference Shares
of €1.27 each
Number of
Shares
7% 'A' Cumulative
Preference Shares
of €1.27 each
Number of
Shares
‘000s
$m
‘000s
$m
150
50
-
-
872
872
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 0.03% of the total issued share capital as at 31 December 2022 (2021: 0.03%).
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 0.45% of the total issued share capital as at 31 December 2022 (2021: 0.44%).
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.
2022
$m
(195)
173
(1,170)
(8)
24
879
(297)
2021
$m
(386)
117
(880)
(16)
19
951
(195)
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
241
The movement in the number of Treasury Shares/own shares during the financial year is outlined in the table below.
At 1 January
Number of shares
2022
2021
3,720,563
10,320,739
Own Shares released by the Employee Benefit Trust under the 2014 Performance Share Plan
(3,502,924)
(3,254,236)
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
29,755,861
17,829,602
189,088
345,981
(449,703)
(521,523)
(22,000,000)
(21,000,000)
7,712,885
3,720,563
7,398,112
3,476,859
314,773
243,704
7,712,885
3,720,563
(i) During 2022, CRH repurchased a total of 29,755,861 Ordinary Shares returning a further $1.2 billion of cash to shareholders. This brings total cash returned to
shareholders under the share buyback programme (the Programme) to $4.1 billion since its commencement in May 2018.
(ii) These reissued Treasury Shares were previously purchased at an average price of $53.21 (2021: $37.15).
(iii) As at the balance sheet date, the nominal value of the Treasury Shares and own shares was €2.4 million and €0.1 million respectively (2021: €1.1 million and
€0.1 million respectively). Dividends have been waived by the Trustees of the own shares.
Ordinary Shares repurchased during the period (Treasury Shares)
29,755,861
Financial liability as at 31 December
Total
Number of
Shares
Number of
Shares
17,829,602
$m
1,170
281
1,451
$m
880
281
1,161
2022
2021
At 31 December 2022 a financial liability of $281 million (2021: $281 million) was included in other payables in respect of the latest phase of the Programme which was
entered into with Bank of America. This phase will end no later than 30 March 2023. Subsequent to year end, the Board approved the Group’s intention to increase its
share buyback programme through the repurchase of up to $3 billion of CRH shares over the next 12 months subject to market conditions prevailing at the time and on
the formal Shareholder approval of the share buyback authority at the AGM.
Share premium
At 1 January
Reduction of share premium (iv)
At 31 December
2021
$m
7,493
(7,493)
-
(iv) Pursuant to a special resolution approved by shareholders at the Annual General Meeting of the Company held on 29 April 2021 and the subsequent order of the
High Court of Ireland made on 3 June 2021, the capital of the Company was reduced by the entire amount standing to the credit of the Company’s share premium
account as at 31 December 2020, with the reserve resulting from the reduction being treated as profits available for distribution as defined by Section 117 of the
Companies Act 2014. A copy of the aforementioned order of the High Court was filed with the Companies Registration Office in Ireland on 3 June 2021.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 242
2022 Annual Report and Form 20-F
242
30. Business Combinations
The acquisitions completed during the year ended 31 December 2022 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:
Alabama: North Alabama Paving, Inc. (30 June);
Arkansas: Marion County Paving (18 March);
Colorado: Granby Sand & Gravel (31 March);
Florida: certain assets of Kudzue 3 Trucking, Inc. (11 March);
Kentucky: Hinkle Contracting, LLC (13 May);
Mississippi: Krystal Gravel, Inc. (23 December);
Texas: LD Construction Company and PTSS Investments, LLC (2 December) and Moore Brothers Construction Company (16 December);
Utah: Chapman Construction (16 December); and
West Virginia: Jefferson Asphalt Products Company (23 September).
Building Products:
Substantial Acquisition: on 8 July, CRH acquired Barrette Outdoor Living, Inc. (Barrette), North America's leading provider of residential fencing and railing solutions
headquartered in Middleburg Heights, Ohio, US. The assets acquired are all in the US and are expected to enhance our existing offering of sustainable outdoor living
solutions in North America.
Americas
California: Calstone Company (29 March);
Ohio: Normandy Industries, Inc. (21 October);
South Carolina: Sterling Sand, LLC (19 October);
Texas: certain assets of Rinker Materials (18 April); Soil Mender Products (25 July); and Inwesco, Inc. (12 December); and
West Virginia: Grant County Mulch, Inc. (19 December).
Other
Ireland: RS Sockets Ltd. (15 December); and
Poland: certain assets of Libet Company (2 September).
Europe Materials:
Croatia: Thermostone (1 April);
Denmark: Confac Holdings A/S (1 April) and Gunderup (1 December);
Finland: Terrawise Oy Stone Aggregates (31 May);
Poland: Mabau Group (75%, 21 March);
Romania: certain assets of SUT-ICIM and Irca SRL (23 February) and Simbeton SRL (29 July); and
Slovakia: certain assets of U.S. Steel Košice, s.r.o. (1 January) and certain assets of COLAS Slovakia, a.s. (10 January).
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
243
The identifiable net assets acquired, including adjustments to provisional fair values, were as follows:
2021
$m
2020
$m
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets (i)
Equity accounted investments
Total non-current assets
Current assets
Inventories
Trade and other receivables (ii)
Cash and cash equivalents
Total current assets
LIABILITIES
Trade and other payables
Provisions for liabilities
Lease liabilities
Interest-bearing loans and borrowings
Current income tax liabilities
Deferred income tax liabilities
Total liabilities
Total identifiable net assets at fair value
Goodwill arising on acquisition (iii)
Total consideration
Other
Barrette
acquisitions
2022
$m
309
809
-
1,118
247
168
8
423
(148)
(16)
(48)
-
-
(192)
(404)
1,137
774
1,911
2022
$m
597
178
28
803
128
59
14
201
(47)
(3)
(59)
(8)
-
(55)
(172)
832
546
1,378
Total
2022
$m
906
987
28
1,921
375
227
22
624
(195)
(19)
(107)
(8)
-
(247)
(576)
1,969
1,320
3,289
609
131
-
740
157
191
7
355
(143)
(1)
(88)
(3)
-
(37)
(272)
823
679
1,502
Consideration satisfied by:
Cash payments
Deferred consideration (stated at net present cost)
Contingent consideration
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 (iii) are set out overleaf.
1,911
1,364
3,275
1,501
-
-
10
4
10
4
-
1
1,911
1,378
3,289
1,502
1,911
(8)
1,903
1,364
(14)
1,350
3,275
(22)
3,253
1,501
(7)
1,494
134
31
-
165
23
47
-
70
(21)
-
(12)
-
(1)
-
(34)
201
157
358
351
4
3
358
351
-
351
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 244
2022 Annual Report and Form 20-F
244
30. Business Combinations continued
The acquisition balance sheet presented on the previous page reflects the identifiable net assets acquired in respect of acquisitions completed during 2022, together
with adjustments to provisional fair values in respect of acquisitions completed during 2021. The measurement period for a number of acquisitions completed in 2021,
closed in 2022 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. The acquisition of Barrette is deemed to be a material acquisition. None of the remaining acquisitions completed during the
financial year were considered sufficiently material to warrant separate disclosure of the attributable fair values. Due to the size and scale of the Barrette acquisition, the
determination of the fair values of identifiable assets acquired and liabilities assumed as disclosed above are provisional (principally in respect of property, plant and
equipment, provisions for liabilities and the associated goodwill and deferred tax aspects). 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.
(i) Marketing-related, customer-related and contract-based intangible assets of $174 million, $594 million and $41 million respectively arose on the acquisition of
Barrette. These primarily related to brand names, patents and non-contractual customer relationships. Due to the asset-intensive nature of operations in the
Americas Materials and Europe Materials business segments, no significant separately identifiable intangible assets were recognised on business combinations in
these segments.
(ii)
Trade and other receivables
Barrette
Other acquisitions
Total
Gross contractual
amounts due
Loss
allowance
Fair value
2022
2021
2020
2022
2021
2020
2022
2021
2020
$m
169
60
229
$m
-
192
192
$m
-
47
47
$m
$m
$m
1
1
2
-
1
1
-
-
-
$m
168
59
227
$m
-
191
191
$m
-
47
47
(iii) 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. $1,289 million of the goodwill recognised in respect of acquisitions
completed in 2022 is expected to be deductible for tax purposes (2021: $284 million; 2020: $148 million).
Acquisition-related costs
Barrette
Other acquisitions
Total
2022
2021
2020
$m
27
12
39
$m
-
13
13
$m
-
6
6
The above acquisition-related costs, which exclude post-acquisition integration costs, have been included in operating costs in the Consolidated Income Statement
(note 4).
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
245
The following table analyses the 29 acquisitions completed in 2022 (2021: 20 acquisitions; 2020: 17 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
Building Products
Europe Materials
Total Group from continuing operations
Discontinued operations
Building Products - Building Envelope
-
1
-
Adjustments to provisional fair values of prior year acquisitions
Total
Number of
acquisitions
Goodwill
Consideration
2022
2021
2020
2022
2021
2020
2022
2021
2020
10
10
9
29
8
7
4
7
6
4
19
17
$m
172
1,205
34
1,411
-
1,411
(91)
1,320
$m
239
417
1
657
17
674
5
679
$m
53
90
-
143
-
143
14
157
$m
493
2,652
144
$m
694
734
17
3,289
1,445
$m
163
182
7
352
-
56
-
3,289
1,501
352
-
1
3,289
1,502
6
358
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
(Loss)/profit before tax for the financial year
Other
Barrette
acquisitions
2022
2022
$m
347
(33)
$m
414
25
Total
2022
$m
761
(8)
2021
2020
$m
524
55
$m
103
9
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
2022
acquisitions
CRH Group
excluding 2022
acquisitions
$m
1,730
51
$m
31,962
3,477
Consolidated
Group
including
acquisitions
$m
33,692
3,528
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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 246
2022 Annual Report and Form 20-F
246
31. Non-controlling Interests
The total non-controlling interest at 31 December 2022 is $646 million (2021: $681 million) of which $444 million (2021: $498 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.
Manufacture, development and
and Republic Cement Land & Resources, Inc.
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
(Loss)/profit for the year
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
2022
$m
(26)
265
1,455
(267)
(699)
754
2021
$m
61
210
1,618
(240)
(737)
851
Cash flows from operating activities
13
77
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.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
247
32. Related Party Transactions
The principal related party relationships requiring disclosure in the Consolidated Financial Statements of the Group under IAS 24 Related Party Disclosures pertain to:
the existence of subsidiaries, joint ventures and associates; transactions with these entities entered into by the Group; the identification and compensation of key
management personnel; and lease arrangements.
Subsidiaries, joint ventures and associates
The Consolidated Financial Statements include the financial statements of the Company (CRH plc, the ultimate parent) and its subsidiaries as well as its joint ventures
and associates accounted for by applying the equity method as outlined in the accounting policies on pages 181 to 190. The Group’s principal subsidiaries, joint
ventures and associates are disclosed on pages 290 to 293.
Sales to and purchases from joint ventures and associates are as follows:
Continuing operations
Sales
Purchases
Joint ventures
Associates
2022
$m
192
41
2021
$m
157
29
2020
$m
127
24
2022
$m
45
20
2021
$m
42
19
2020
$m
31
15
Loans extended by the Group to joint ventures and associates (see note 15) 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 17 and 18 to
the Consolidated Financial Statements.
Terms and conditions of transactions with subsidiaries, joint ventures and associates
In general, the transfer pricing policy implemented by the Group across its subsidiaries is market-based. Sales to and purchases from joint ventures and associates are
conducted in the ordinary course of business and on terms equivalent to those that prevail in 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
15) are extended on normal commercial terms in the ordinary course of business with interest accruing and, in general, paid to the Group at predetermined intervals.
Key management personnel
For the purposes of the disclosure requirements of IAS 24, the term “key management personnel” (i.e. those persons having authority and responsibility for planning,
directing and controlling the activities of the Company) comprises of the Board of Directors and the Chief Operating Decision Maker (as defined in IFRS 8) which
manage the business and affairs of the Company.
Key management remuneration amounted to:
2022
2021
2020
Short-term benefits
Post-employment benefits
Share-based payments - calculated in accordance with the
principles disclosed in note 8
Total
$m
14
1
9
24
$m
10
1
8
19
$m
9
1
6
16
Other than these compensation entitlements, there were no other transactions involving key management personnel.
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 108 to
132.
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 2022, 2021 and 2020 Consolidated Financial Statements.
33. Board Approval
The Board of Directors approved and authorised for issue the financial statements on pages 176 to 247 in respect of the year ended 31 December 2022 on 1 March
2023.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 248
2022 Annual Report and Form 20-F
248
Company Balance Sheet
as at 31 December 2022
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 (liabilities)/assets
Net assets
Capital and reserves
Called-up share capital
Preference share capital
Treasury Shares and own shares
Revaluation reserve
Other reserves
Foreign currency translation reserve
Profit and loss account (i)
Total equity
8
8
8
9
9
2022
$m
2021
$m
8,699
9,221
158
807
965
1,301
1,301
(336)
8,363
302
1
(297)
62
371
(1,162)
9,086
8,363
822
687
1,509
397
397
1,112
10,333
309
1
(195)
62
436
(542)
10,262
10,333
(i)
In accordance with section 304 of the Companies Act 2014, the profit for the financial year of the Company amounted to $630 million (2021: 1,926 million).
R. Boucher, A. Manifold, Directors
2022 Annual Report and Form 20-F Company Statement of Changes in Equity
for the financial year ended 31 December 2022
2022 Annual Report and Form 20-F
249
At 1 January 2022
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 2022
for the financial year ended 31 December 2021
At 1 January 2021
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
Reduction in Share Premium
Cancellation of Income Shares
Cancellation of Treasury Shares
Share option exercises
Dividends
Translation adjustment
At 31 December 2021
Issued
share
capital
$m
310
-
-
-
-
-
-
-
(7)
-
-
-
303
Share
premium
account
Treasury
Shares/
own shares
$m
$m
Revaluation
reserve
Other
reserves
Foreign
currency
translation
reserve
Profit and
loss
account
$m
$m
$m
Total
equity
$m
$m
62
-
-
-
-
-
-
-
-
-
-
-
(195)
-
-
-
(1,170)
24
(8)
173
879
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(297)
62
371
436
(542)
10,262
10,333
-
-
101
-
-
-
(173)
7
-
-
-
-
-
-
-
-
-
-
-
-
-
(620)
(1,162)
630
630
-
17
(24)
-
-
(879)
11
(931)
-
9,086
630
630
101
(1,153)
-
(8)
-
-
11
(931)
(620)
8,363
334
7,499
(386)
62
435
327
2,968
11,239
-
-
-
-
-
-
-
-
(16)
(8)
-
-
-
310
-
-
-
-
-
-
-
(7,499)
-
-
-
-
-
-
-
-
-
(880)
19
(16)
117
-
-
951
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
110
-
-
-
(117)
-
-
8
-
-
-
(195)
62
436
-
-
-
-
-
-
-
-
-
-
-
-
(869)
(542)
1,926
1,926
-
(281)
(19)
-
-
7,499
16
(951)
13
(909)
-
1,926
1,926
110
(1,161)
-
(16)
-
-
-
-
13
(909)
(869)
10,262
10,333
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 250
2022 Annual Report and Form 20-F
250
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
2. Accounting Policies
General information
The Company and its subsidiaries (together the ‘Group’) is the leading provider of
building materials solutions that build, connect and improve our world. As the
essential partner for road and critical utility infrastructure, commercial building
projects and outdoor living solutions, CRH's unique offering of materials, products
and value-added services helps to deliver a more resilient and sustainable built
environment. 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
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 185 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. A financial liability is recorded if a
contractual obligation to repurchase shares exists at the balance sheet date.
No key accounting judgements or estimates were required in the current year.
Own shares
Other significant accounting policies
Cash and cash equivalents
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.
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.
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.
Financial assets
Dividend income
Dividend income is recognised when the right to receive payment is established.
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.
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.
Foreign currencies
The functional currency of the Company is euro. Transactions in foreign
currencies are translated at the rates of exchange in effect at the transaction date.
Monetary assets and liabilities denominated in foreign currencies are translated
into euro at the rates of exchange in effect 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.
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.
2022 Annual Report and Form 20-F 3. Financial Assets
The Company’s investment in its subsidiaries is as follows:
At 1 January 2022 at cost
Capital contribution in respect of share-based payments
Translation adjustment
At 31 December 2022 at cost
The equivalent disclosure for the prior year is as follows:
At 1 January 2021 at cost
Capital contribution in respect of share-based payments
Translation adjustment
At 31 December 2021 at cost
2022 Annual Report and Form 20-F
251
Shares
$m
8,714
-
(493)
8,221
9,439
-
(725)
8,714
Other
$m
507
11
(40)
478
512
36
(41)
507
Total
$m
9,221
11
(533)
8,699
9,951
36
(766)
9,221
The Company’s principal subsidiaries, joint ventures and associates are disclosed on pages 290 to 293.
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
Other creditors
Corporation tax liability
Amounts owed to subsidiary undertakings are repayable on demand.
2022
$m
158
2021
$m
822
2022
$m
1,007
291
3
1,301
2021
$m
116
281
-
397
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 252
2022 Annual Report and Form 20-F
252
Notes to the Company Balance Sheet continued
6. Auditor’s Remuneration (Memorandum Disclosure)
11. Section 357 Guarantees
In accordance with Section 322 of the Companies Act 2014, the fees paid in
2022 to the statutory auditor Deloitte Ireland LLP (Deloitte) for work engaged by
the Parent Company comprised audit fees of $22,000 (2021: $22,000) and other
assurance services of $nil (2021: $42,000).
The statutory auditor has not provided any tax advisory or other non-audit
services to the Parent Company during the financial year (2021: $nil).
7. Dividends Proposed (Memorandum Disclosure)
Details in respect of dividends proposed of $765 million (2021: $751 million) and
dividends paid during the year are presented in the dividends note (note 11) on
page 206 of the notes to the Consolidated Financial Statements.
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 2022 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 2022.
Details in relation to other guarantees provided by the Company are provided in
the interest-bearing loans and borrowings note (note 24) on page 229 of the
notes to the Consolidated Financial Statements.
8. Called-up Share Capital and Share Premium
12. Directors’ Emoluments
Directors’ emoluments and interests are presented in the Directors’
Remuneration Report on pages 108 to 132 of this Annual Report and Form 20-F.
13. Board Approval
The Board of Directors approved and authorised for issue the Company Financial
Statements on pages 248 to 252 in respect of the year ended 31 December
2022 on 1 March 2023.
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 29) on pages 239 to 241 of the notes to the Consolidated Financial
Statements.
Share Premium
Pursuant to a special resolution approved by shareholders at the Annual General
Meeting of the Company held on 29 April 2021 and the subsequent order of the
High Court of Ireland made on 3 June 2021, the capital of the Company was
reduced by the entire amount standing to the credit of the Company’s share
premium account as at 31 December 2020, with the reserve resulting from the
reduction being treated as profits available for distribution as defined by Section
117 of the Companies Act 2014. A copy of the aforementioned order of the High
Court was filed with the Companies Registration Office in Ireland on 3 June
2021.
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 $34 million (2021: $27 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, $297 million as at 31 December 2022 (2021: $195 million) and
the undenominated share capital of $34 million as at 31 December 2022 (2021:
$27 million).
10. Share-based Payments
The total expense of $101 million (2021: $110 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.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
253
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 254
2022 Annual Report and Form 20-F Supplemental 20-F
and Other Disclosures
Key Financial Data
Non-GAAP Performance
Measures
Supplemental Guarantor
Information
256
257
261
Mineral Reserves and Resources 262
Property, Plants and Equipment 268
Corporate Governance Practices 269
EU Taxonomy
Contractual Obligations
Other Disclosures
270
274
275
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 256
2022 Annual Report and Form 20-F
256
Key Financial Data
The Consolidated Financial Statements of CRH plc have been prepared in
accordance with IFRS as issued by the International Accounting Standards
Board. Key financial data is presented below for the five years ended on
31 December 2022.
As at 31 December 2022 and 2021 and for the three years ended 31 December
2022, 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
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 (ii)
Average number of Ordinary Shares outstanding (iii)
All data relates to continuing operations
Consolidated Balance Sheet data
Total assets
Net assets (iv)
Ordinary shareholders' equity
Equity share capital
Number of Ordinary Shares (iii)
Number of Treasury Shares and own shares (iii)
Number of Ordinary Shares net of Treasury Shares and own shares (iii)
2022
$m
2021 (i)
2020 (i)
2019 (i)
2018 (i)
$m
$m
$m
$m
32,723
29,206
25,888
26,307
25,654
3,894
2,657
$3.50
$3.48
$1.22
758.3
45,188
22,337
21,690
302
752.1
7.7
744.4
3,331
2,386
$3.06
$3.03
$1.16
780.2
44,670
20,914
20,232
309
774.1
3.7
770.4
2,026
966
$1.23
$1.22
$0.92
785.1
44,944
20,348
19,655
333
795.1
10.3
784.8
2,506
1,424
$1.78
$1.76
$0.81
801.3
47,612
19,635
19,027
335
799.6
10.2
789.4
2,199
1,370
$1.65
$1.64
$0.83
832.4
46,777
18,952
18,349
352
843.4
27.8
815.6
(i) Prior year comparative income statement data has been restated to show the results of our Building Envelope business in discontinued operations. See note 3 to
the Consolidated Financial Statements for further details.
(ii)
Interim and final dividends per share declared previously in euro have been translated to US Dollar using the dividends record date exchange rate.
(iii) All share numbers are shown in millions of shares.
(iv) Net assets is calculated as the sum of the total assets less total liabilities.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
257
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 on a continuing operations
basis unless otherwise defined 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.
Prior year comparative non-GAAP performance measures have been restated,
where applicable, to show the results of our Building Envelope business as
discontinued operations.
Reconciliation of Revenue, EBITDA (as defined)* and Operating Profit by segment
Group profit for the financial year
Profit after tax for the financial year from discontinued operations
Group profit for the financial year from continuing operations
Income tax expense
Profit before tax from continuing operations
Share of equity accounted investments' (profit)/loss
Other financial expense
Finance costs less income
Profit before finance costs
Loss/(profit) on disposals
Group operating profit
Depreciation, amortisation and impairment
EBITDA (as defined)*
2022
2021
2020
$m
$m
$m
3,874
2,621
1,165
(1,190)
(179)
(156)
2,684
2,442
1,009
785
661
445
3,469
3,103
1,454
-
40
336
(55)
42
357
118
33
438
3,845
3,447
2,043
49
(116)
(17)
3,894
3,331
2,026
1,721
1,659
2,267
5,615
4,990
4,293
Year ended 31 December
Revenue
operating profit (i)
Group
Depreciation,
amortisation and
impairment
EBITDA
(as defined)*
2022
2021
2020
2022
2021
2020
2022
2021
2020
2022
2021
2020
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
$m
14,324 12,407 11,273
1,909
1,788
1,631
7,823
6,218
5,474
10,576 10,581
9,141
1,161
824
729
814
585
(190)
839
349
533
800
263
596
774
248
2,748
2,588
2,405
1,510
992
833
1,245
1,357
1,410
1,055
32,723 29,206 25,888
3,894
3,331
2,026
1,721
1,659
2,267
5,615
4,990
4,293
Continuing operations
Americas Materials
Building Products
Europe Materials
Discontinued operations
Building Products - Building Envelope
645
1,775
1,699
95
254
237
36
106
100
131
360
337
(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 from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 258
2022 Annual Report and Form 20-F
258
Non-GAAP Performance Measures continued
Return on Net Assets (RONA)
Group operating profit from continuing operations
Group operating profit from discontinued operations
Adjusted for impairment charges (i)
Numerator for RONA computation
Current year
Segment assets (ii)
Segment liabilities (ii)
Lease liabilities (iii)
Prior year
Segment assets (ii)
Segment liabilities (ii)
Lease liabilities (iii)
A
B
C
2022
$m
3,894
95
3,989
-
3,989
38,396
(9,517)
28,879
1,319
30,198
37,935
(9,971)
27,964
1,671
29,635
2021
$m
3,331
254
3,585
-
3,585
37,935
(9,971)
27,964
1,671
29,635
36,218
(9,136)
27,082
1,635
28,717
2020
$m
2,026
237
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
Denominator for RONA computation - average net assets
29,917
29,176
29,095
Return on net segment assets (A divided by average of B and C)
13.7 %
12.1 %
7.4 %
RONA
13.3 %
12.3 %
10.1 %
Reconciliation of Segment Assets and Liabilities to Group Assets and Liabilities
Assets
Segment assets (ii)
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
Liabilities
Segment liabilities (ii)
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
2022
$m
2021
$m
2020
$m
2019
$m
38,396
37,935
36,218
36,716
649
14
42
151
5,936
45,188
653
12
136
151
626
13
201
165
775
13
92
98
5,783
44,670
7,721
44,944
9,918
47,612
9,517
9,971
9,136
8,940
9,636
128
3,570
22,851
10,487
12,215
15,827
14
3,284
23,756
13
3,232
24,596
18
3,192
27,977
(i) Operating profit is adjusted for non-cash impairment charges. Please see note 4 to the Consolidated Financial Statements for further detail on such impairment
charges.
(ii) Segment assets and liabilities as disclosed in note 2 to the Consolidated Financial Statements.
(iii) Segment liabilities include lease liabilities which are debt in nature and are therefore adjusted for in the RONA calculation. Segment lease liabilities at 31 December
2022 amounted to: Americas Materials $393 million (2021: $381 million; 2020: $345 million; 2019: $408 million), Building Products $468 million (2021: $773 million;
2020: $743 million; 2019: $735 million) and Europe Materials $458 million (2021: $517 million; 2020: $547 million; 2019: $554 million).
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
259
Calculation of Net Debt/EBITDA (as defined)*
Net debt
Cash and cash equivalents (i)
Interest-bearing loans and borrowings (i)
Lease liabilities (i)
Derivative financial instruments (net) (i)
Group net debt (i)
Profit after Tax
EBITDA (as defined)*
Interest-bearing loans and borrowings divided by profit after tax
Net Debt divided by EBITDA (as defined)*
(i)
These items appear in notes 20 to 25 to the Consolidated Financial Statements.
Total Shareholder Return (TSR)
2022
$m
5,936
(9,636)
(1,319)
(86)
(5,105)
3,874
5,615
2.5
0.9
2021
$m
5,783
(10,487)
(1,671)
122
(6,253)
2,621
4,990
Times
4.0
1.3
2020
$m
7,721
(12,215)
(1,635)
188
(5,941)
1,165
4,293
10.5
1.4
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.
Revenue from products with enhanced sustainability attributes
2022
€100
3,661
€37.01
€136
14.8 %
2021
€100
3,548
€46.52
€165
15.5 %
Group revenue (i)
Adjusted for:
Non-product revenue (ii)
Denominator - Group product revenue
2022
$m
2021
$m
2020
$m
32,723
29,206
25,888
(6,103)
26,620
(5,186)
24,020
(5,669)
20,219
Numerator - Group revenue from products with enhanced sustainability attributes (iii)
12,591
11,408
9,402
Percentage revenue from products with enhanced sustainability attributes
47 %
47 %
47 %
(i) Group revenue as shown in the Consolidated Income Statement on page 176.
(ii) Non-product revenue relates to the sale of services (i.e., contracting, distribution and other services), excluding the component of construction contract activities
that are product-based.
(iii) Product revenue derived from products that incorporate any, or a combination of; recycled materials; are produced using alternative energy and fuel sources; have
a lower-carbon footprint as compared to those produced using traditional manufacturing processes; and/or are designed to specifically benefit the environment (i.e.
water treatment and management systems, products with strong thermal mass/U-values).
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 260
2022 Annual Report and Form 20-F
260
Non-GAAP Performance Measures continued
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, the impact of impairment and the impact of
any one-off items. In the Business Performance section on pages 60 to 79,
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 60.
Revenue from products with enhanced sustainability attributes (i.e., excluding
contracting, distribution, and other services) is defined as product revenue
derived from those products that incorporate any, or a combination of; recycled
materials; are produced using alternative energy and fuel sources; have a lower-
carbon footprint as compared to those produced using traditional manufacturing
processes; and/or are designed to specifically benefit the environment (i.e. water
treatment and management systems, products with strong thermal mass/U-
values). This measure as calculated on page 259 is monitored by management
and is an aid to investors in their analysis of the performance of the Group and
their understanding of how much of the product revenue of the Group meets any
of these attributes.
Cash paid to Shareholders. Cash paid to shareholders is a measure of cash
returned to shareholders representing dividends of $0.9 billion (2021: $0.9 billion)
paid during the year and excess cash of $1.2 billion (2021: $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 259. 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.
EBITDA (as defined)* EBITDA is defined as earnings from continuing operations
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 additional insight into the
Group’s current debt situation less available cash. 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,
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 259.
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 Group operating profit from continuing operations and
Group operating profit from discontinued operations excluding non-cash
impairment charges 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 258 and detailed in note 2 to the
Consolidated Financial Statements, and excludes equity accounted investments
and other financial assets, net debt (as previously defined) and tax assets &
liabilities. The average net assets for the year is the simple average of the
opening and closing balance sheet figures.
Organic Revenue, Organic Operating Profit and Organic EBITDA (as defined)*
CRH pursues a strategy of growth through acquisitions and investments, with
$3.3 billion spent on acquisitions and investments in 2022 (2021: $1.5 billion).
Acquisitions completed in 2021 and 2022 contributed incremental sales revenue
of $1,739 million, operating profit of $275 million and EBITDA (as defined)* of
$402 million in 2022. Cash proceeds from divestments and non-current asset
disposals amounted to $3.9 billion (net of cash disposed and including deferred
consideration proceeds in respect of prior year divestments (2021: $507 million).
The sales impact of divested activities in 2022 was a negative $108 million and
the impact at an operating profit and EBITDA (as defined)* level was a negative
$13 million and $17million respectively.
The US Dollar strengthened against most major currencies during 2022 resulting
in the average US Dollar/euro rate strengthening from 0.8460 in 2021 to 0.9518
in 2022 and likewise the US Dollar/Pound Sterling rate strengthening from an
average of 0.7270 in 2021 to 0.8120 in 2022. Overall currency movements
resulted in an unfavourable net foreign currency translation impact on our results
as shown in the table on page 63. The average and year end 2022 exchange
rates of the major currencies impacting on the Group are set out on page 190.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
261
Supplemental Guarantor Information
Guarantor Financial Information
Basis of Presentation
As of 31 December 2022, CRH plc (the ‘Guarantor’) has fully and unconditionally
guaranteed certain debt securities issued by CRH America, Inc. (the ‘Issuer’),
including:
•
US$300 million 6.40% Notes due 2033 – listed on Euronext Dublin (i) (the
'Notes')
(i) Originally issued as a US$300 million bond in September 2003.
Subsequently in August 2009 and December 2010, US$87 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 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.
The following summarised financial information reflects, on a combined basis, the
Balance Sheet as at 31 December 2022 and the Income Statement for the year
ended 31 December 2022 of CRH America, Inc and CRH plc, which guarantees
the registered debt; collectively the ‘Obligor Group’.
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.
The summarised Income Statement information for the year ended 31 December 2022 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 2022
$m
641
704
636
704
(i) Revenue and Gross Profit for the Obligor Group for the year ended 31 December 2022 amounted to $nil million.
The summarised Balance Sheet information as at the 31 December 2022 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 2022
$m
1,919
158
2,835
2,835
1,312
1,007
2,009
nil
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 262
2022 Annual Report and Form 20-F
262
measured resources, in order of increasing geological confidence. Indicated or
measured resources can be converted to reserves by the application of certain
modifying factors which include, but are not limited to, consideration of mining,
processing, metallurgical, infrastructure, economic, marketing, legal,
environmental compliance, plans, negotiations, or agreements with local
individuals or groups, and governmental factors. There is no certainty that any of
the resources disclosed on page 264 will be converted into reserves. Resources
have not been fully assessed using modifying factors, however, an initial
assessment has been completed in accordance with Subpart 1300.
Internal Controls
CRH has established appropriate governance processes to support the
publication of our 2022 reserves and resources disclosures, reserve and
resource estimates are subject to annual review by each of the relevant operating
companies across the Group in conjunction with the relevant qualified persons.
CRH has established and maintains a number of internal controls to address the
risks inherent in the mineral reserves and resources reporting process. These
internal controls have been embedded into the local control environments and
operate across the business, including controls at an Operating Company,
Divisional and Group level.
As CRH’s reserves and resources are predominantly in production stage
properties, features of the internal controls relating to quality assurance and
quality control (QA/QC) include:
•
•
•
Databases and data repositories for exploration and/or production data that
contain accurate and precise data from which reserves and resources can
be evaluated, and operational plans can be developed;
Verification sampling and testing of known mineralisation. This is generally
required to establish compliance with regulation on product qualities.
Verification testing confirms geological maps prepared during earlier
exploration programmes; and
In the case of cement raw materials, facility laboratories participate in an
externally managed annual review process with ISO 17025 accredited
independent laboratories
When exploration programmes are conducted, QA/QC measures include:
•
Ensuring that surface or drill sampling results in the highest quality sample
possible. This would include down-hole surveying of drill holes as necessary;
• Obtaining pictures of drill sample (e.g. core) for future reference;
• Geological core logging prior to laboratory analysis. Description of sample at
various intervals;
•
•
Ensuring the integrity of samples from point of origin to analytical laboratory;
and
Using nationally or regionally accredited laboratories for all analyses and
tests for exploration programmes in properties containing aggregates
In addition, to provide further assurance over the Group’s mineral reserves and
resources reporting process, the Group’s Internal Audit function completed a
limited scope review across a sample of material reporting entities on the
operation of these internal controls as at 31 December 2022.
Mineral Reserves and Resources
Mineral Reserves and Resources Background
The Group’s mineral reserves (reserves) and mineral resources (resources) for the
production of primary building materials (which encompasses aggregates (stone,
sand and gravel), cement and lime, asphalt, readymixed concrete and concrete
products) fall into a variety of categories spanning a wide number of rock types
and geological classifications. These reserves and resources are found within our
extensive network of quarry locations in attractive local markets globally. This
disclosure of the Group’s mining properties has been prepared in accordance
with the requirements of subpart 1300 of Regulation S-K (“Subpart 1300”). The
Group has 1,235 properties with 90,293 hectares of owned and 38,613 hectares
of leased land, respectively, as disclosed in the table on page 265, the locations
of which are presented by geographic location in the maps on pages 266 to 267.
None of CRH’s mineral-bearing properties are individually material to the Group
as at 31 December 2022. A summary disclosure of CRH’s mining operations is
provided on pages 263 to 267.
As at 31 December 2022, the Group’s reserves and resources estimations of
22.8 billion tonnes and 9.8 billion tonnes, respectively, as disclosed on pages
263 to 264, are calculated in accordance with Subpart 1300. The Group’s
reserves and resources disclosures may not be comparable to similar disclosures
disclosed in accordance with the requirements of other countries and should be
read in conjunction with the disclosures that follow on pages 263 to 267.
CRH operates predominantly production stage properties, with a limited number
of development and exploration stage properties, as such terms are defined in
Subpart 1300. Predominantly, CRH’s production stage properties provide raw
materials for on-site modern cement, lime and aggregates producing facilities.
Almost exclusively, CRH utilises surface mining and, with a very limited number of
exceptions, CRH and its subsidiaries are the only operators of the properties.
Reserves
Reserves are defined in Subpart 1300 as “an estimate of tonnage and grade or
quality of indicated and measured mineral resources that, in the opinion of the
qualified person, can be the basis of an economically viable project. More
specifically, it is the economically mineable part of a measured or indicated
mineral resource, which includes diluting materials and allowances for losses that
may occur when the material is mined or extracted”. Reserves are classified into
two categories, probable and proven reserves, in order of increasing geological
confidence.
The Group’s estimate of 22.8 billion tonnes of reserves, as disclosed on page
263 analysed by rock type (Hard rock, Sand & Gravel and Other), are of
recoverable stone, sand, and gravel of suitable quality for economic extraction,
based on drilling and studies by the Group’s geologists and engineers. These
estimates also consider reasonable economic and operating constraints as to
maximum depth of overburden and stone excavation and are subject to
permitting or other restrictions.
The disclosed reserves and resources estimations which include diluting
materials and allowances for losses that may occur when the mineral is mined,
extracted or processed have been estimated by qualified persons, as such term
is defined within Subpart 1300.
Not all minerals that may be on CRH’s mineral-bearing properties have been
assessed and such properties may be assessed for mineral reserves or
resources in future years, as required by operational needs.
CRH’s properties are subject to a wide variety of permitting procedures and
conditions, which vary between jurisdictions. Many of CRH’s properties require
separate permits from multiple authorities, including but not limited to
environmental, mining, regional and national administrative authorities. The
periods of validity and the conditions of these permits may be different.
Resources
A mineral resource is defined in Subpart 1300 as "a concentration or occurrence
of material of economic interest in or on the Earth's crust in such form, grade or
quality, and quantity that there are reasonable prospects for economic
extraction. A mineral resource is a reasonable estimate of mineralisation, taking
into account relevant factors such as cut-off grade, likely mining dimensions,
location or continuity, that, with the assumed and justifiable technical and
economic conditions, is likely to, in whole or in part, become economically
extractable". Resources are classified into three categories, inferred, indicated or
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
263
The table below presents, by segment and geographic location, the tonnes of proven and probable aggregates, cement and lime mineral reserves as at 31 December
2022 and the related percentages by rock type.
Reserves
Proven
Probable
Total Reserves (i) (ii)
Country
Tonnes
(iii)
Grade: % by rock type
Tonnes
(iii)
Grade: % by rock type
Tonnes
(iii)
Grade: % by rock type
Hard
Rock
Sand &
Gravel
Other
Hard
Rock
Sand &
Gravel
Other
Hard
Rock
Sand &
Gravel
Other
Aggregates
Europe
Materials
Americas
Materials
Subtotal
Cement
Europe
Materials
Americas
Materials
Subtotal
Lime
Europe
Materials
Subtotal
Total
Finland
France
Ireland
Philippines
Poland
Romania
Spain
UK
Other (iv)
Canada
US
France
Germany
Ireland
Philippines
Poland
Romania
Serbia
Slovakia
Spain
Switzerland
Ukraine
UK
Canada
US
Germany
Ireland, Poland, UK,
Czech Republic
165
202
653
80%
58%
94%
49
100%
120
100%
20%
42%
6%
—
—
10
55
605
107
508
6,964
9,438
90%
10%
100%
80%
27%
77%
76%
—
20%
73%
23%
16%
77%
17%
64
19
174
291
132
40
100%
100%
93%
98%
93%
91%
103
100%
76
12
84
68
181
210
524
99%
100%
100%
100%
98%
100%
100%
1,978
98%
202
100%
67
100%
269
100%
—
—
—
—
6%
1%
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
8%
6%
—
—
7%
2%
1%
8%
—
1%
—
—
—
2%
–
—
—
—
—
41
—
81%
19%
—
—
276
54%
46%
5
—
38
24
806
180
192
8,505
100%
—
96%
100%
92%
44%
83%
87%
—
—
4%
—
8%
56%
17%
8%
10,067
85%
10%
—
—
—
—
—
—
—
—
—
—
5%
5%
—
—
2
—
1
194
48
203
—
234
87
—
25
75
22
81
100%
—
43%
97%
93%
93%
—
92%
100%
—
100%
90%
100%
100%
—
—
— 57%
—
6%
6%
—
—
—
—
—
3%
1%
1%
—
8%
—
—
—
— 10%
—
—
—
—
206
202
929
80%
58%
82%
54
100%
120
100%
48
79
95%
100%
1,411
287
700
15,469
19,505
87%
37%
78%
81%
20%
42%
18%
—
—
5%
—
13%
63%
22%
12%
82%
13%
66
19
175
485
180
243
103
310
99
84
93
256
232
605
100%
100%
93%
98%
93%
93%
100%
94%
100%
100%
100%
96%
100%
100%
—
—
—
—
6%
5%
—
—
—
—
—
—
—
—
2%
972
93%
1%
6%
2,950
96%
1%
3%
52
20
100%
100%
—
—
—
—
254
100%
87
100%
—
—
—
11,685
81%
14%
5%
11,111
86%
22,796
83%
12%
72
100%
341
100%
—
9%
—
5%
(i) CRH has no individually material mineral-bearing properties requiring individual property disclosure under Subpart 1300.
(ii) CRH’s point of reference for the estimation of the Group’s mineral reserves is “in-situ” reserves.
(iii) All reserves quantities are quoted in millions of tonnes.
(iv) Other includes Denmark, Slovakia and Switzerland.
CRH’s mineral reserves and resources are used predominantly for the production and sale of aggregates, cement and lime. The average sales price for the period 1
January 2022 to 31 October 2022 for aggregates and cement was $9.3 and $93.8 per tonne, respectively, for our Europe Materials businesses and $14.5 and $133.7
per tonne, respectively, for our Americas Materials businesses. The average sales price for lime within our Europe Materials businesses over this time period was $138.8
per tonne. These prices, which are used for estimation of both mineral reserves and resources, are impacted by product mix, geographic location and foreign currency.
—
—
—
—
—
—
—
—
—
—
7%
5%
—
—
7%
2%
1%
2%
—
6%
—
—
—
4%
—
—
—
—
—
5%
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 264
2022 Annual Report and Form 20-F
264
Mineral Reserves and Resources continued
The table below presents, by segment and geographic location, the tonnes of measured, indicated, and inferred aggregates, cement and lime resources as at
31 December 2022 and the related percentage of these resources by rock type. CRH’s mineral resources in the table below are disclosed exclusive of mineral reserves.
Resources
Measured
Indicated
Total Measured & Indicated
Inferred
Country
Tonnes
(iii)
Grade: % by rock
type
Tonnes
(iii)
Grade: % by rock
type
Tonnes
(iii)
Grade: % by rock
type
Tonnes
(iii)
Grade: % by rock
type
Hard
Rock
Sand
&
Gravel
Other
Hard
Rock
Sand
&
Gravel
Other
Hard
Rock
Sand
&
Gravel
Other
Hard
Rock
Sand
&
Gravel
Other
Total
Resources
(i) (ii)
—
—
—
—
—
—
—
—
—
—
—
Aggregates
Finland
France
Ireland
Europe
Materials
Philippines
Romania
UK
Other (iv)
Canada
US
France
Germany
Ireland
Romania
Slovakia
Americas
Materials
Subtotal
Cement
Europe
Materials
Ukraine
UK
Canada
US
Americas
Materials
Subtotal
Lime
Europe
Materials
Subtotal
Total
1 100%
—
39
90
58%
42%
13%
87%
26 100%
66
96%
—
4%
167
176
255
679
12%
88%
64%
36%
90%
10%
92%
6%
1,499
74%
25%
—
—
—
—
237
95%
2 100%
—
—
5%
—
56
82%
18%
—
—
—
—
—
286
70%
29%
1%
—
46
—
93%
—
7%
1 100%
—
39
58%
42%
327
73%
27%
28 100%
—
90%
10%
—
—
—
—
—
—
—
—
—
110
97%
— 100%
—
—
3%
—
34
83%
17%
48%
51%
1%
202
87%
13%
64%
36%
90%
10%
8
— 100%
273 100%
—
122
453
176
301
—
—
—
—
—
—
—
—
1
39
437
28
156
655
184
574
2%
1%
1,421
86%
13%
2,048
85%
14%
2,100
88%
10%
3,547
80%
19%
3,736
76%
22%
4,363
78%
20%
2%
2%
5,836
7,910
—
—
1%
1%
—
—
—
—
—
—
2%
1%
—
—
—
—
—
—
— 4%
— 13%
4%
—
—
—
— 13%
— 9%
25 100%
4 100%
123 100%
174
150
96%
87%
20
96%
69 100%
49
55
87%
91%
— 100%
—
28
16
—
92%
99%
43 100%
—
—
45 100%
45 100%
2 100%
—
—
8%
—
—
—
— 1%
—
—
—
—
—
—
—
—
—
—
—
—
—
25
4
151
190
193
20
114
94
57
173
1,021
25 100%
4 100%
102 100%
—
—
—
—
—
—
— 100%
—
—
21 100%
87
93%
— 7%
87 100%
—
—
—
—
131
99%
— 1%
Switzerland
20
96%
4%
69 100%
4 100%
—
—
19
—
—
45
—
—
—
— 100%
—
—
—
—
86%
— 14%
54
91%
— 9%
1 100%
14 100%
—
—
29 100%
—
—
—
—
43 100%
—
—
130 100%
510
98%
— 2%
202
87%
— 13%
712
95%
— 5%
309
99%
1%
Germany
484 100%
—
—
207 100%
—
—
691 100%
—
—
111 100%
—
—
802
Ireland,
Poland, UK,
Czech
Republic
28 100%
—
—
—
—
—
—
28 100%
—
—
18 100%
—
—
46
512 100%
—
—
207 100%
—
—
719 100%
—
—
129 100%
—
—
2,521
84%
15%
1%
2,457
86%
12%
2%
4,978
85%
13%
2%
4,801
80%
18%
2%
848
9,779
(i) CRH has no individually material mineral-bearing properties requiring individual property disclosure under Subpart 1300.
(ii) CRH’s point of reference for the estimation of the Group’s mineral resources is “in-situ” resources.
(iii) All resources quantities are quoted in millions of tonnes.
(iv) Other includes Denmark, Slovakia and Switzerland.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
265
The table below outlines the number of facilities by segment and geographic location along with the annualised extraction (in millions of tonnes) for each of the three
years ending 31 December 2022.
Country
No. of Quarries/pits
Surface acreage
(hectares) (i) (ii)
Annualised extraction
(millions of tonnes)
Years to Depletion (iii)
Owned
Leased
2020
2021
2022
Aggregates
Finland
France
Ireland
Philippines
Europe Materials
Poland
Romania
Spain
UK
Other (iv)
Canada
US
France
Germany
Ireland
Philippines
Poland
Romania
Serbia
Slovakia
Spain
Switzerland
Ukraine
UK
Canada
US
Germany
Ireland, Poland, UK,
Czech Republic
Americas Materials
Subtotal
Cement
Europe Materials
Americas Materials
Subtotal
Lime
Europe Materials
Subtotal
Total
93
41
87
1
2
16
8
172
21
36
684
1,161
3
1
3
5
1
6
2
5
2
3
9
10
3
9
62
8
4
12
1,235
1,222
849
5,107
-
207
445
57
8,567
599
6,018
52,525
75,596
706
83
1,128
977
414
301
119
66
78
183
-
1,301
766
7,415
953
1,181
450
178
10
197
110
6,200
261
734
26,023
36,297
31
-
-
212
-
170
41
309
-
25
974
199
7
325
10.8
5.5
13.7
10.0
7.0
19.4
-
-
3.3
1.9
0.9
32.4
4.4
18.9
133.9
225.7
2.5
2.3
3.1
6.7
4.0
4.2
1.2
2.4
0.8
0.9
3.2
4.4
2.4
8.9
3.4
2.1
1.2
42.0
4.8
17.4
177.2
284.5
3.8
2.6
3.3
8.4
4.3
4.8
1.2
2.8
1.0
1.0
3.8
6.0
2.3
9.8
11.3
6.9
20.4
-
3.8
1.5
1.2
37.1
5.8
18.6
184.3
290.9
2.5
1.0
3.9
6.6
4.2
3.4
1.2
2.6
0.8
0.9
1.6
5.8
2.0
9.1
13,537
2,293
47.0
55.1
45.6
680
480
1,160
90,293
10
13
23
6.1
3.1
9.2
5.6
3.5
9.1
5.7
3.1
8.8
38,613
281.9
348.7
345.3
18
29
46
-
31
31
68
38
50
38
84
27
18
45
74
42
73
88
118
123
89
59
44
119
66
45
28
(i)
The disclosures in the table above include the surface area of infrastructure, process plants, waste piles, water storage, water treatment plants and boundary areas
of CRH’s mineral-bearing properties. Remote properties such as offices, distribution facilities and readymixed concrete plants are not included.
(ii) 1 hectare equals approximately 2.47 acres.
(iii) Years to depletion is based on the average of the three years' 2020 to 2022 annualised extraction.
(iv) Other includes Denmark, Slovakia and Switzerland.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 266
2022 Annual Report and Form 20-F
266
CRH Mineral Locations
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
267
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 268
2022 Annual Report and Form 20-F
268
Property, Plants and Equipment
At 17 February 2023, CRH had a total of 3,159 building materials production
locations. 1,043 locations are leased, with the remaining 2,116 locations held on a
freehold basis. The significant subsidiary locations as at 31 December 2022 are
the cement facilities in the US, Philippines, Poland, Ukraine, the UK, Romania,
Canada, Ireland, Slovakia and France. 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 294 and 295. None of CRH’s individual properties is of material significance
to the Group.
CRH believes that all the facilities are in good condition, adequate for their
purpose and suitably utilised according to the individual nature and requirements
of the relevant operations. CRH has a continuing programme of improvements
and replacements to properties when considered appropriate to meet the needs
of the individual operations. Further information in relation to the Group’s
accounting policy and process governing any impairment of property, plant and
equipment is given on page 182 and in note 13 to the Consolidated Financial
Statements on page 208.
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, the cost of which can fluctuate significantly and consequently have an
adverse impact on CRH’s business. CRH is not generally dependent on any one
source for the supply of these materials or resources, other than in certain
jurisdictions with regard to the supply of gas and electricity. Competitive markets
generally exist in the jurisdictions in which CRH operates for the supply of cement,
bitumen, steel and fuel.
Mine Safety 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).
Significant Locations – Clinker Capacity
Subsidiary
Ash Grove
Republic Cement
Grupa Ożarów
Podilsky Cement PJSC
Tarmac
ROMCIM
Ash Grove
Irish Cement
Danucem
Eqiom
Country
Number of plants
Clinker capacity
(tonnes per hour)
United States
Philippines
Poland
Ukraine
United Kingdom
Romania
Canada
Ireland
Slovakia
France
10
1,169
5
1
1
3
2
2
2
2
3
628
342
325
306
305
288
288
277
243
2022 Annual Report and Form 20-F Corporate Governance Practices
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
Financial Conduct 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 2018 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 and 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 Chief Financial Officer, 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 Chief Financial Officer 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
1. In accordance with Section 167(7) of the Companies Act 2014.
2022 Annual Report and Form 20-F
269
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 2022, based on criteria established in the Internal Control
Integrated Framework (2013), issued by the Committee of Sponsoring
Organisations of the Treadway Commission.
As permitted by the SEC, the Company has elected following a qualitative and
quantitative review to exclude an assessment of the internal controls of the
material acquisition made during the year 2022, being Barrette. The acquisition of
Barrette represented 3.4% and 5.0% of total and net Group assets, respectively,
and 1.1% of Group revenue. Its loss reduced Group profit by less than 1.0% 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 2022, the Company’s
internal control over financial reporting is effective. Our auditor, Deloitte, a
registered public accounting firm, who have audited the Consolidated Financial
Statements for the year ended 31 December 2022, 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
175.
Changes in Internal Control over Financial Reporting
During 2022, 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.
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 2022. Based on that evaluation, the Chief Executive and the
Chief Financial Officer have concluded that these disclosure controls and
procedures were effective as of such date at the level of providing reasonable
assurance.
In designing and evaluating our disclosure controls and procedures,
management, including the Chief Executive and the Chief Financial Officer,
recognised that any controls and procedures, no matter how well designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives, and management necessarily was required to apply its judgement in
evaluating the cost-benefit relationship of possible controls and procedures.
Because of the inherent limitations in all control systems, no evaluation of
controls can provide absolute assurance that all control issues and instances of
fraud, if any, within the Company have been detected.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 270
2022 Annual Report and Form 20-F
270
EU Taxonomy
Compliance Statement
The EU Taxonomy regulation (Regulation (EU) 2020/852) is part of the EU's
overall efforts to implement the European Green Deal. It is intended to serve as a
standardised and mandatory classification system to determine which economic
activities are considered as ‘environmentally sustainable’ by the EU.
An assessment was also undertaken that confirmed compliance with the
minimum safeguards. The assessment took into account the four overarching
topics of Human rights (includes labour and consumer rights), Corruption/
Bribery, Taxation and Fair competition.
In June 2021, the European Commission formally adopted the Climate Delegated
Act with its Annexes, establishing the Technical Screening Criteria that define
which activities substantially contribute to the first two, out of six, environmental
objectives of the EU Taxonomy regulation, namely climate change mitigation
(Annex I), and climate change adaptation (Annex II). The Technical Screening
Criteria for the remaining four environmental objectives were expected to be
published in 2022 by the European Commission, however it is now expected to
be published in 2023. The four environmental objectives are:
•
•
•
•
Sustainable use and protection of water and marine resources;
Transition to a circular economy;
Pollution prevention and control; and
Protection and restoration of biodiversity and ecosystems
For the year ended 31 December 2022, the share of Environmentally sustainable
(Taxonomy-aligned), Taxonomy-eligible but not-aligned and Taxonomy non-
eligible economic activities in turnover, capital expenditure (CapEx) and operating
expenditure (OpEx) are required to be disclosed.
The Climate Delegated Act prioritised specific sectors responsible for 94% of
direct greenhouse gas emissions in the EU. A high proportion of CRH’s activities
do not fall into these prioritised sectors and are not included in the EU Taxonomy
regulation.
An assessment was completed by reviewing the Climate Delegated Act which
established the descriptions of activities which are Taxonomy-eligible ((EU)
2021/2139).
CRH is reporting under the environmental objective of climate change mitigation
as our activities primarily contribute to climate change mitigation. This avoids
double counting in the allocation of the numerator to Turnover, CapEx, and OpEx
KPIs across economic activities by only applying one environmental objective.
CRH's assessment of Taxonomy-eligible economic activities
While the Climate Delegated Act ((EU) 2021/2139) does not cover a high
proportion of our economic activities, we have identified the economic activity
"3.7 Manufacture of cement" as a Taxonomy-eligible activity.
Further activities are in scope only for CapEx as outlined in the CapEx table.
Double counting is avoided whereby all CapEx from the cement business is
reported under Activity 3.7 Manufacture of cement.
We also assessed the Delegated Regulation ((EU) 2022/1214) to see if any
activities were Taxonomy-eligible. Some cement plants utilise generators for back
up power generation. This represents an immaterial portion of the Group's
electricity consumption. It is already reported under Activity 3.7 Manufacture of
cement.
CRH's assessment of Taxonomy-aligned economic activities
We reviewed the Technical Screening Criteria to determine which of these eligible
activities met the conditions of being Taxonomy-aligned. As a result of this
assessment, we have identified 4% of economic activity 3.7 Manufacture of
cement as Taxonomy-aligned. The level of alignment is low as the Technical
Screening Criteria set is based upon the 10 lowest emitting cement plants in the
EU. All of CRH's cement plants are part of a roadmap to reduce absolute
emissions by 30% by 2030 (from a 2021 base year) as part of the Group’s
ambition to be a net-zero business by 2050 (see further details on page 27). This
does not meet the CapEx plan requirements under the Taxonomy.
Share of Taxonomy-aligned, Taxonomy-eligible, not aligned, and
Taxonomy non-eligible economic activities
Turnover
Capital
Expenditure
Operating
Expenditure
Proportion
of Total
$bn
Proportion
of Total
$bn
Proportion
of Total
1%
0.0
1%
0.0
1%
0.0
0%
1%
0.0
1%
0.0
12%
0.4
10%
0.3
1%
21%
0.1
4%
$bn
0.2
0.2
4.1
4.1
12%
0.5
14%
0.3
21%
Cement1
Other economic
activities2
Taxonomy-aligned3
Cement1
Other economic
activities4
Taxonomy-eligible,
not aligned
Taxonomy non-eligible 28.4
Group Total
32.7
87%
100%
3.1
3.6
85%
100%
1.3
1.6
78%
100%
Note: numbers are rounded to the nearest $100m and percentages to the
nearest %. Where 0% noted, balance is <0.5% of Total CapEx.
1 Activity 3.7 Manufacture of cement.
2 Comprises Capital Expenditure under economic activities:
4.1 Electricity generation using solar photovoltaic technology;
6.5 Transport by motorbikes, passenger cars and light commercial vehicles;
6.6 Freight transport services by road; and
7.4 Installation, maintenance and repair of charging stations for electric vehicles
in buildings (and parking spaces attached to buildings).
3 Taxonomy-Aligned economic activities comply with the Do no significant harm
criteria and minimum safeguards.
4 Comprises Capital Expenditure under economic activities:
6.5 Transport by motorbikes, passenger cars and light commercial vehicles;
6.6 Freight transport services by road;
7.1 Construction of new buildings;
7.2 Renovation of existing buildings; and
7.7 Acquisition and ownership of buildings.
Turnover KPI
The share of Taxonomy-aligned turnover is calculated by the proportion of
turnover derived from economic activities that are Taxonomy-aligned (numerator)
over total turnover (denominator).
The total turnover represents the consolidated revenue, and amounts to $32.7
billion for the financial year ended 31 December 2022 (as disclosed in our
Consolidated Income Statement on page 176). The proportion of Taxonomy-
eligible activities decreased in 2022 due to a greater share of CRH’s product
portfolio in lower-carbon businesses that are currently not included in the EU
Taxonomy regulation.
In addition, we also identified some CapEx projects as being Taxonomy-aligned.
Details of this are included in the CapEx table.
The accounting policy applicable for revenue recognition is addressed in detail on
page 184 of the Consolidated Financial Statements.
As part of this assessment we verified the share of the economic activity that
qualifies as contributing substantially to climate change mitigation and confirmed
they caused no significant harm to any of the other environmental objectives.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
271
CRH's share of turnover associated with Taxonomy-aligned economic activities
for the year ended 31 December 2022 is 1%. Taxonomy-aligned turnover is
wholly comprised of turnover from the sale of grey cementitious materials to
third-parties.
In addition to the Taxonomy-aligned turnover, CRH’s Taxonomy-aligned
businesses also sold cementitious materials to other Group companies for use in
downstream activities. This represented 20% of total revenue for those
businesses. This is a key driver of CRH’s vertically integrated business model and
helps contribute to the lower-carbon intensity of CRH’s downstream businesses.
Capital Expenditure KPI
The share of Taxonomy-aligned CapEx is calculated by the proportion of CapEx
associated with economic activities that are Taxonomy-aligned (numerator) over
total CapEx (denominator).
Total CapEx includes additions to tangible and intangible assets, considered
before depreciation, amortisation and any re-measurements, and excluding fair
value changes. It also includes additions as a result of business combinations.
Total CapEx involves all additions to Property, Plant and Equipment (PP&E),
Right-of-Use Assets and Intangible Assets. Any acquired goodwill is not
considered.
For the reconciliation of total CapEx please see note 13, note 14 and note 20 to
the Consolidated Financial Statements.
CRH’s share of CapEx associated with Taxonomy-aligned economic activities for
the year ended 31 December 2022 is 1%. Taxonomy-aligned CapEx primarily
comprises additions to owned PP&E. CapEx in the cement business in 2022 was
11% of Group CapEx (2021: 14%). The decrease is primarily due to the addition
of intangible assets on the acquisition of Barrette whose business activities are
currently not included in the current Climate Delegated Act.
CRH continuously invests in technology and efficiency projects across our
operating companies to enhance environmental performance, as well as
investing in the environmental element of major capital investment projects to
ensure we reach our CO2 reduction targets. In 2022 CRH announced investing
approximately $150 million of incremental annual CapEx to meet the Group's
carbon emissions reduction targets. This CapEx does not meet the CapEx plan
requirements under the Taxonomy.
Operating Expenditure KPI
The share of Taxonomy-aligned OpEx is calculated by the proportion of OpEx
associated with economic activities that are Taxonomy-aligned (numerator) over
total OpEx (denominator) as defined by the EU Taxonomy regulation.
EU Taxonomy regulations define total OpEx as the direct non-capitalised costs of
R&D, building renovation measures, short-term leases, repairs and maintenance
and any other direct expenditures relating to the day-to-day servicing of assets of
PP&E.
As the EU Taxonomy regulation has its own definition of OpEx, the reported
OpEx only represents a proportion of the total Group cost of sales and operating
costs, and includes repairs and maintenance, short-term leases and R&D costs.
CRH’s share of OpEx associated with Taxonomy-aligned economic activities for
the year ended 31 December 2022 was 1%. Taxonomy-aligned OpEx comprises
repairs and maintenance costs and some short-term leases.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 272
2022 Annual Report and Form 20-F
272
Proportion of turnover from products or services associated with Taxonomy-aligned economic activities
Substantial
contribution1
DNSH criteria
(‘Does Not Significantly Harm’)
Economic
activities (1)
Code(s)
(2)
Absolute
turnover
(3)
US$
Proportion
of
turnover
(4)
%
Climate
change
mitigation
(5)
%
Climate
change
adaptation
(6)
%
Climate
change
mitigation
(11)
Y/N
Climate
change
adaptation
(12)
Y/N
Water and
marine
resources
(13)
Y/N
Circular
economy
(14)
Y/N
Pollution
(15)
Y/N
Biodiversity
and
ecosystems
(16)
Y/N
Minimum
safeguards
(17)
Y/N
Taxonomy
-aligned
proportion
of turnover
20222
(18)
%
Category
(enabling
activity
or) (20)
E
Category
‘(transitional
activity)’
(21)
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Cement3
Turnover of
Taxonomy-
aligned activities
(A.1)
3.7
0.2
1%
1%
N/A
Y
Y
N/A
Y
Y
Y
1%
T
0.2
1%
1%
1%
A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Cement3
3.7
4.1
12%
Turnover of not
Taxonomy-
aligned activities
(A.2)
4.1
12%
Total (A.1 + A.2)
4.3
13%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover of
Taxonomy-non-
eligible activities
(B)
28.4
87%
Total (A + B)
32.7
100 %
1%
1%
Proportion of OpEx from products or services associated with Taxonomy-aligned economic activities
Substantial
contribution1
DNSH criteria
(‘Does Not Significantly Harm’)
Economic
activities (1)
Code(s)
(2)
Absolute
OpEx
(3)
US$
Proportion
of OpEx
(4)
%
Climate
change
mitigation
(5)
%
Climate
change
adaptation
(6)
%
Climate
change
mitigation
(11)
Y/N
Climate
change
adaptation
(12)
Y/N
Water and
marine
resources
(13)
Y/N
Circular
economy
(14)
Y/N
Pollution
(15)
Y/N
Biodiversity
and
ecosystems
(16)
Y/N
Minimum
safeguards
(17)
Y/N
Taxonomy
-aligned
proportion
of OpEx,
20222
(18)
%
Category
(enabling
activity
or) (20)
E
Category
‘(transitional
activity)’
(21)
T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Cement3
3.7
0.0
1%
1%
N/A
Y
Y
N/A
Y
Y
Y
1%
T
OpEx of
Taxonomy-
aligned activities
(A.1)
0.0
1%
1%
A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Cement3
3.7
0.3
21%
OpEx of not
Taxonomy-
aligned activities
(A.2)
0.3
21%
Total (A.1 + A.2)
0.3
22%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
OpEx of
Taxonomy-non-
eligible activities
(B)
1.3
78%
Total (A + B)
1.6
100 %
1%
1%
Note: numbers are rounded to the nearest $100m and percentages to the nearest %.
1 Water & marine resources, Circular economy, Pollution, and Biodiversity & ecosystems are not included under Substantial contribution criteria as there is no requirement to report under these
criteria for the financial year ended 31 December 2022.
2 No prior year comparative column is included as no prior year comparatives are required for the financial year ended 31 December 2022.
3 Manufacture of cement.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
273
Proportion of CapEx from products or services associated with Taxonomy-aligned economic activities
Substantial
contribution1
DNSH criteria
(‘Does Not Significantly Harm’)
Economic
activities (1)
Code(s)
(2)
Absolute
CapEx
(3)
US$
Proportion
of CapEx
(4)
%
Climate
change
mitigation
(5)
%
Climate
change
adaptation
(6)
%
Climate
change
mitigation
(11)
Y/N
Climate
change
adaptation
(12)
Y/N
Water and
marine
resources
(13)
Y/N
Circular
economy
(14)
Y/N
Pollution
(15)
Y/N
Biodiversity
and
ecosystems
(16)
Y/N
Minimum
safeguards
(17)
Y/N
A. TAXONOMY-ELIGIBLE ACTIVITIES
A.1. Environmentally sustainable activities (Taxonomy-aligned)
Cement3
Solar panels4
Passenger cars5
Road freight6
EV charging
stations7
CapEx of
Taxonomy-
aligned activities
(A.1)
3.7
4.1
6.5
6.6
7.4
0.0
0.0
0.0
0.0
0.0
1%
0%
0%
0%
0%
1%
0%
0%
0%
0%
0.0
1%
1%
N/A
N/A
N/A
N/A
N/A
Y
Y
Y
Y
Y
Y
N/A
N/A
N/A
N/A
N/A
Y
Y
Y
Y
N/A
Y
Y
N/A
N/A
Y
Y
N/A
N/A
N/A
Y
Y
Y
Y
Y
A.2 Taxonomy-Eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)
Taxonomy
-aligned
proportion
of CapEx
20222
(18)
%
Category
(enabling
activity
or) (20)
E
Category
‘(transitional
activity)’
(21)
T
T
E
1%
0%
0%
0%
0%
1%
Cement3
Passenger cars5
Road freight6
Construction of
new buildings
Renovation of
existing buildings
Acquisition and
ownership of
buildings
CapEx of not
Taxonomy-
aligned activities
(A.2)
3.7
6.5
6.6
7.1
0.4
0.0
0.1
0.0
7.2
0.0
10%
1%
2%
1%
0%
7.7
0.0
0%
0.5
14%
Total (A.1 + A.2)
0.5
15%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
CapEx of
Taxonomy-non-
eligible activities
(B)
3.1
85%
Total (A + B)
3.6
100 %
1%
0%
1%
Note: numbers are rounded to the nearest $100m and percentages to the nearest %. Where 0% noted, balance is <0.5% of Total CapEx.
1 Water & marine resources, Circular economy, Pollution, and Biodiversity & ecosystems are not included under Substantial contribution criteria as there is no requirement to report under these
criteria for the financial year ended 31 December 2022.
2 No prior year comparative column is included as no prior year comparatives are required for the financial year ended 31 December 2022.
3 Manufacture of cement.
4 Electricity generation using solar photovoltaic technology.
5 Transport by motorbikes, passenger cars and light commercial vehicles.
6 Freight transport services by road.
7 Installation, maintenance and repair of charging stations for electric vehicles in buildings (and parking spaces attached to buildings).
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 274
2022 Annual Report and Form 20-F
274
Contractual Obligations
An analysis of the maturity profile of debt, leases capitalised, purchase obligations, deferred and contingent acquisition consideration and pension scheme contribution
commitments at 31 December 2022 is as follows:
Payments due by period
Interest-bearing loans and borrowings (i)
Lease liabilities (ii)
Estimated interest payments on
contractually-committed debt (iii)
Deferred and contingent acquisition consideration
Purchase obligations (iv)
Retirement benefit obligation commitments (v)
Total (vi)
Total
$m
9,732
1,673
2,706
329
2,080
23
16,543
Less than 1 year
1-3 years
3-5 years
More than
5 years
$m
1,502
263
285
30
1,282
3
3,365
$m
1,949
371
496
172
360
6
$m
1,697
241
387
2
159
5
$m
4,584
798
1,538
125
279
9
3,354
2,491
7,333
(i) Of the $9.7 billion total gross debt, $0.1 billion is drawn on revolving facilities which may be repaid and redrawn up to the date of maturity. The interest payments
are estimated assuming these loans are repaid on facility maturity dates.
(ii) Lease liabilities are presented on an undiscounted basis as detailed in note 20 and note 22 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 2022 for capital
expenditure is set out in note 13 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 28 to the
Consolidated Financial Statements.
(vi) Over the long term, the Group believes that our available cash and cash equivalents, cash from operating activities, along with the access to borrowing facilities will
be sufficient to fund our long-term contractual obligations, maturing debt obligations and capital expenditures.
Quantitative and Qualitative Information about Market Risk
CRH measures 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
2022, for each class of financial instrument with all other variables remaining
constant. The sensitivity analysis 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 22 to the Consolidated
Financial Statements, is for illustrative purposes only as in practice interest and
foreign exchange rates rarely change in isolation.
Quantitative and qualitative information and sensitivity analysis of market risk is
contained in notes 21 to 25 to the Consolidated Financial Statements.
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.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
275
Other Disclosures
History, Development and Organisational Structure of the
Company
CRH 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 a leading manufacturer and
supplier of building materials, products and integrated solutions with operations
in 29 countries around the world.
The Company is incorporated and domiciled in Ireland. CRH is a public limited
company operating under the Companies Act 2014 of Ireland. 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 America, 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 60 to 79, estimates of
the Group’s various aggregates and stone reserves and resources have been
provided by engineers employed by the individual operating companies. Further
details are included on pages 262 to 267. 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 290 to 293.
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 60.
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.
Possible Environmental Liabilities
At 17 February 2023, 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.
Research and Development
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.
Statements Regarding Competitive Position and Construction
Activity
Employees
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.
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.
The average number of employees for the past three financial years is disclosed
in note 7 to the Consolidated Financial Statements on page 199. 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 accounted for 46% of full-year 2022
(2021: 45%), while EBITDA (as defined)* for the first six months of 2022
represented 39% of the full-year out-turn (2021: 36%).
Significant Change
No significant changes have occurred since the balance sheet date.
Latest Practicable Information
Where referenced in the Supplemental 20-F and Other Disclosures and
Shareholder Information sections, information is provided at the latest practicable
date, 17 February 2023.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
* EBITDA is defined as earnings from continuing operations before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 276
2022 Annual Report and Form 20-F Shareholder
Information
Stock Exchange Listings
Ownership of Ordinary Shares
Dividends
Share Plans
American Depositary Shares
Taxation
Memorandum and Articles of
Association
General Information
278
278
280
281
282
283
285
287
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 278
2022 Annual Report and Form 20-F
278
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
Share price movement during year:
-high
-low
LSE
2022
Euronext
Dublin
NYSE
LSE
2021
Euronext
Dublin
NYSE
£32.99
€37.01
$39.79
£39.00
€46.52
$52.80
£24.6bn
€27.6bn
$29.6bn
£30.1bn
€35.9bn
$40.7bn
£40.02
£27.57
€48.03
€32.05
$54.23
$31.54
£39.32
£30.22
€46.96
€34.38
$53.76
$41.14
For further information on CRH shares see note 29 to the Consolidated Financial Statements.
Ownership of Ordinary Shares
Shareholdings as at 31 December 2022
Geographic location (i)
Number of shares
held '000s
% of total
North America
United Kingdom
Europe/Other
Retail
Ireland
Treasury (ii)
241,393
210,936
145,648
120,764
26,001
7,398
752,140
32.1
28.0
19.3
16.1
3.5
1.0
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 29 to the Consolidated Financial Statements.
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 1 March 2023, 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 101.
Purchase 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 (the ‘Programme’).
During 2021, CRH repurchased a total of 17,829,602 Ordinary Shares and
returned a further $0.9 billion to shareholders. In 2022 CRH repurchased a total
of 29,755,861 Ordinary Shares returning a further $1.2 billion of cash to
shareholders. This brings the total cash returned to shareholders under the share
buyback programme to $4.1 billion since its commencement in May 2018.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
279
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 2021 and 2022. See note 29 to the Consolidated Financial Statements for further details.
Month
January
February
March
April
May
June
July
August
September
October
November
December
Month
March
April
May
June
July
August
September
October
November
December
Total number of share
buyback purchases
Total number of
EBT purchases
Total number of
shares purchased
Average price paid per
share - share buyback (i) (ii)
2022
2,041,616
2,591,235
2,374,256
1,878,811
2,074,234
3,749,982
1,930,667
2,720,057
3,578,967
2,441,593
2,297,355
2,077,088
-
-
86,549
101,166
1,373
-
-
-
-
-
-
-
2,041,616
2,591,235
2,460,805
1,979,977
2,075,607
3,749,982
1,930,667
2,720,057
3,578,967
2,441,593
2,297,355
2,077,088
€45.65
€42.66
€38.13
€36.46
€37.05
€34.92
€33.93
€37.70
€34.75
€33.76
€37.23
€37.48
29,755,861
189,088
29,944,949
Total number of share
buyback purchases
Total number of
EBT purchases
Total number of
shares purchased
Average price paid per share
- share buyback (i) (ii)
2021
1,642,000
1,658,731
1,042,547
1,502,661
2,095,200
1,535,632
2,358,058
2,267,621
2,366,929
1,360,223
307,410
38,571
-
-
-
-
-
-
-
-
1,949,410
1,697,302
1,042,547
1,502,661
2,095,200
1,535,632
2,358,058
2,267,621
2,366,929
1,360,223
17,829,602
345,981
18,175,583
€38.89
€39.81
€41.25
€42.77
€41.66
€43.65
€42.87
€40.46
€43.64
€44.98
(i) Average price paid per share in respect of 2022 EBT purchases; March €37.68, April €35.88 and May €38.81 (2021: March €38.99, April €39.84).
(ii) The average price paid per share in 2022 in respect of the share buyback programme was equal to $39.22 (2021: $49.30).
Other than the above, there were no purchases of equity securities by the issuer and/or affiliated persons during the course of 2022.
.
CREST and Migration to Euroclear Bank
From 1996 to 2021, CREST was the depository for the settlement of Irish
issuers’ equity securities trading in Dublin and/or London. As a result of Brexit,
CREST was no longer available to any Irish incorporated issuers, irrespective of
whether they are listed in Ireland, London or both, and all Irish issuers had to
migrate from CREST to the market’s chosen replacement system, Euroclear
Bank Belgium. An Extraordinary General Meeting was held on 9 February 2021
to seek shareholder approval to the migration of the Company’s securities to
Euroclear Bank’s central securities depository and to approve associated
changes to the Articles of Association. All resolutions were passed and the
migration took effect on 15 March 2021.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 280
Dividends
2022 Annual Report and Form 20-F
280
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 Dollar (2020-2022) and euro (2018-2019) per Ordinary Share in
respect of each fiscal year indicated. Solely for the convenience of the reader,
dividends declared in the years 2018-2019 have been translated into US Dollar
per Ordinary Share at the dividend record date exchange rate. An interim
dividend of $0.24 was paid in respect of Ordinary Shares on 7 October 2022.
The final dividend, if approved at the forthcoming AGM of shareholders to be
held on 27 April 2023, will be paid on 4 May 2023 to shareholders on the
Register of Members as at the close of business on 17 March 2023 and will bring
the full-year dividend for 2022 to $1.27.
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 (EB) or CREST, the owners of
the shares will need to contact the intermediary through whom the shares are
held in order to arrange for their dividends to be exempted.
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 documents issued by the Registrars), 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
Registrars'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 EB or CREST, the dividend will be paid by the Company in
accordance with the instructions received from EB.
Section 5 of the Euroclear Terms and Conditions governing use of the Euroclear
system provides that income/dividends received by EB 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 EB 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.
While dividends are declared in US Dollar, the default payment currency is 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 and whose
address, according to the Share Register, is in the UK and the US respectively,
unless they require otherwise. In respect of the 2022 final dividend, the latest
date for receipt of currency elections is 31 March 2023. Where shares are held in
the EB system, dividends are automatically paid in euro unless a currency
election is made.
Investors holding CREST Depositary Interests (CDIs) 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
2022
2021
2020
Years ended 31 December
2019
2018
(i) Proposed.
US Dollar per Ordinary Share
Interim
$0.24
$0.23
$0.22
Final
$1.03(i)
$0.98
$0.93
euro per Ordinary Share
US Dollar per Ordinary Share(ii)
Interim
€0.20
€0.20
Final
€0.63
€0.52
Total
€0.83
€0.72
Interim
$0.22
$0.23
Final
$0.70
$0.59
Total
$1.27
$1.21
$1.15
Total
$0.92
$0.82
(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.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
281
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.
At the commencement of each contract period employees were granted an
option to acquire Ordinary Shares in the Company at an option price which was
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 was issued.
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 page 119 of the
2022 Directors' Remuneration Report 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 executive Directors are excluded from awards; and 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.
On completion of the savings contract, employees may use the amount saved,
together with the bonus earned, to exercise the option.
At 1 March 2023, 2,515,738 Ordinary Shares have been issued1 pursuant to the
2010 Savings-related Share Option Schemes to date.
2021 Savings-related Share Option Schemes
At the AGM held on 29 April 2021, shareholders approved the adoption of
savings-related share options schemes for the UK and Ireland (the '2021
Savings-related Share Option Schemes') to replace the 2010 Savings-related
Share Option Schemes.
All employees of a participating subsidiary in the Republic of Ireland or the UK,
who have satisfied a required qualifying period, are invited to participate in this
scheme, although at present there is currently no financial services provider
supporting new awards under Irish SAYE schemes following the exit from the
market of the current provider in 2021. Eligible employees who wish to
participate in the scheme enter into a savings contract with a nominated savings
institution, for a three or a five-year period, to save a maximum of €500 or
Stg£500, as appropriate, per month.
At the commencement of each contract period employees are granted an option
to acquire Ordinary Shares in the Company at an option price which is equal to
the amount proposed to be saved plus the bonus payable by the nominated
savings institution at the end of the savings period. The price payable for each
Ordinary Share under an option will not be less than the higher of par or 85% of
the market value of a share on the day the invitation to apply for the option is
issued.
On completion of the savings contract, employees may use the amount saved,
together with the bonus earned, to exercise the option.
At 1 March 2023, 218 Ordinary Shares have been issued1 pursuant to the 2021
Savings-related Share Option Scheme to date.
2010 Savings-related Share Option Schemes
Share Participation 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,
were invited to participate in this scheme.
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 1 March 2023, 8,593,666 Ordinary Shares have been issued1 pursuant to the
Share Participation Schemes.
Eligible employees who wished to participate in the scheme entered 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.
1. Whether by way of the allotment of new shares, the reissue of Treasury Shares or the purchase of Ordinary Shares.
1. Whether by way of the allotment of new shares, the reissue of Treasury Shares or the purchase of Ordinary Shares.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 282
2022 Annual Report and Form 20-F
282
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:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
(A fee equivalent to the fee that would be payable if securities distributed had been shares and the
shares had been deposited for issuance of ADSs)
Applicable Registration or Transfer fees
Applicable Expenses of the Depositary
For:
•
•
•
•
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
Distribution of deposited securities by the Depositary to
ADS 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
• Cable, telex and facsimile transmissions
• Currency conversion
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
•
As necessary
Fees and direct/indirect payments made by the Depositary to the Company
Category of expense reimbursed to the
Company
Amount reimbursed for the year ended
31 December 2022
New York Stock Exchange listing fees
Investor relations expenses
Total
$
80,000
345,000
425,000
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 2022:
Category of expense waived or paid directly to
third parties
Amount reimbursed for the year ended
31 December 2022
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
$
813
813
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 2022 the Depositary reimbursed to the
Company, or paid amounts on its behalf to third-parties,
a total sum of $425,813. 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 2022.
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, 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.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
283
1.
2.
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
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.
2.
3.
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;
the recipient company is not tax resident in Ireland; and
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 overleaf, 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 on the date they are distributed,
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
distributed 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.
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 2022 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:
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 284
2022 Annual Report and Form 20-F
284
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). Exchanges of
Ordinary Shares for ADSs, and ADSs for Ordinary Shares may be subject to Irish
stamp duty in certain circumstances.
Taxation continued
Distributions in excess of current and accumulated earnings and profits, as
determined for US federal income tax purposes, will be treated as a non-taxable
return of capital to the extent of the US holder’s basis in the Ordinary Shares or
ADSs and thereafter as capital gain. However, the Company does not calculate
earnings and profits in accordance with US federal income tax principles.
Accordingly, US holders should expect to generally treat distributions the
Company makes as dividends.
For foreign tax credit limitation purposes, dividends the Company pays with
respect to Ordinary Shares or ADSs will generally be income from sources
outside the US, and will, depending on your circumstances, generally be
“passive” income for purposes of computing the foreign tax credit allowable to a
US holder.
Subject to certain limitations, the Irish tax withheld in accordance with the
Income Tax Treaty and paid over to the Republic of Ireland will be creditable or
deductible against your US federal income tax liability. However, under recently
finalised Treasury regulations, it is possible that the Irish tax may not be
creditable unless you are eligible for and elect to apply the benefits of the Income
Tax Treaty. 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 exemption thresholds 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 gain or excess distribution for the prior years. With certain
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
285
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.
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.
A copy of the current Memorandum and Articles of Association can be obtained
from the Group’s website, www.crh.com.
Laws, Decrees or Other Regulations
The following summarises certain provisions of CRH’s Memorandum and Articles
of Association and applicable Irish law.
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.
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 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.
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
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.
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
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 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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 286
2022 Annual Report and Form 20-F
286
Preference Shares
Details of the 5% and 7% ‘A’ Cumulative Preference Shares are disclosed in note
29 to the Consolidated Financial Statements.
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.
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F
287
General Information
Electronic Communications
American Depositary Receipts
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 holding shares in certificated form 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. Alternatively, such
shareholders can choose to elect to receive email notifications that the
Annual Reports and other Shareholder communications are available
electronically. However, shareholders holding shares in certificated form will
continue to receive printed proxy forms, dividend documentation and, if the
Company deems it appropriate, other documentation by post. Such
shareholders can alter the method by which they receive communications
by contacting the Registrars. If shares are held through the EB system or as
CREST Depository Interests (CDIs), the owners of the shares will need to
contact the intermediary through whom the shares are held if they wish to
make arrangements regarding receipt of the Annual Report and Form 20-F
and other shareholder communications.
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 43006, Providence,
RI 02940-3078, 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.
CRH Website
Exchange Controls
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 2023 AGM electronically by accessing the Registrars’ website
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 EB system or as CREST Depository Interests
(CDIs) should refer to the EB 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 who do not hold their shares in certificated form can vote
electronically at the 2023 AGM are available in the notes to the Notice of the
AGM.
Registrars
Enquiries concerning shareholdings should be addressed to the Registrars:
Link Registrars Limited, P.O. Box 7117, Dublin 2, Ireland. Telephone: +353
1 553 0050 Email: enquiries@linkgroup.ie Website: www.linkgroup.eu
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 documents issued by the Registrar, such as proxy
forms) 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. If shareholders hold their shares through a broker or intermediary,
they should contact their broker directly.
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 for Deloitte Ireland LLP, Dublin Ireland, PCAOB ID
No. 1193 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 Auditor on page 93.
Documents on Display
The SEC maintains an internet site at http://www.sec.gov that contains
reports filed electronically with the SEC, including this Form 20-F and
documents referred to herein. SEC filings are also available to the public
from commercial document retrieval services. This Form 20-F is also
available at CRH's website, www.crh.com.
Financial Calendar
Announcement of final results for 2022
Ex-dividend date
Record date for dividend
2 March 2023
16 March 2023
17 March 2023
Latest date for receipt of completed bank mandates
31 March 2023
Latest date for receipt of currency elections
31 March 2023
Latest date for revocation of existing bank mandates
31 March 2023
Annual General Meeting
Dividend payment date
27 April 2023
4 May 2023
Further updates to the calendar can be found on www.crh.com.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 288288
2022 Annual Report and Form 20-F 2022 Annual Report and Form 20-F DRAFT 289
Other
Information
Principal Subsidiary Undertakings 290
Principal Equity Accounted
Investments
Our Products and
Services Locations
Exhibits
Cross Reference to Form
20-F Requirements
Index
Signatures
293
294
296
297
298
300
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information 290
2022 Annual Report and Form 20-F
290
Principal Subsidiary Undertakings
as at 31 December 2022
Americas Materials
Incorporated and
operating in
Canada
CRH Canada Group Inc.
Ash Grove Cement Company
Callanan Industries, Inc.
CPM Development Corporation
CRH Americas Materials, Inc. and subsidiaries
Dolomite Products Company, Inc.
Michigan Paving and Materials Company
Mountain Enterprises, Inc.
Mulzer Crushed Stone, Inc.
Oldcastle SW Group, Inc.
OMG Midwest, Inc.
United States
P.J. Keating Company
Pennsy Supply, Inc.
Pike Industries, Inc.
Preferred Materials, Inc.
Staker & Parson Companies
Suwannee American Cement Company, LLC (trading as Ash
Grove South)
The Shelly Company
Tilcon Connecticut Inc.
Tilcon New York Inc.
Trap Rock Industries, LLC*
West Virginia Paving, Inc.
% held
100
100
100
Aggregates, asphalt, cement and readymixed concrete and
provider of construction services
Products and services
Aggregates and cement
Aggregates, asphalt, readymixed concrete and related
construction activities
100 Aggregates, asphalt, readymixed concrete, prestressed concrete
and related construction activities
100
100
100
100
100
100
100
100
100
100
100
100
80
100
100
100
60
100
Holding company
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
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 and related
construction activities
Aggregates, asphalt, readymixed concrete and related
construction activities
Aggregates, asphalt, readymixed concrete, aggregates
distribution and related construction activities
Aggregates, asphalt, readymixed concrete and related
construction activities
Cement
Aggregates, asphalt, readymixed 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 and related construction activities
2022 Annual Report and Form 20-F
2022 Annual Report and Form 20-F
291
Building Products
Incorporated and
operating in
Australia
Infrastructure Products Australia Pty Ltd
Leviat Pty Limited
Plakabeton N.V.
Marlux N.V.
Stradus N.V.
Leviat Limited
Belgium
Britain & Northern
Ireland
Canada
France
Germany
Oldcastle Building Products Canada, Inc. (trading as Groupe
Permacon, Expocrete Concrete Products, Techniseal, Oldcastle
BuildingEnvelope, C.R. Laurence of Canada, Oldcastle Enclosure
Solutions)
Plaka Group France S.A.S.
EHL AG
Leviat GmbH
Ireland
Cubis Systems Limited
Netherlands
Struyk Verwo Groep B.V.
Poland
Slovakia
Leviat B.V.
Polbruk S.A.
Premac, spol. s.r.o.*
Switzerland
Leviat AG*
APG Mid-Atlantic, Inc.
Barrette Outdoor Living (Trading as Boyle Transportation
Services, LLC and Barrette Logistics, Inc.)
CRH America Finance, Inc.
CRH America, Inc.
CRH Americas, Inc.
CRH Americas Products, Inc.
Meadow Burke, LLC
MoistureShield, Inc.
United States
National Pipe & Plastics, Inc.
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,
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, Superlite Block and Calstone)
Oldcastle APG, Inc. (trading principally as EP Henry, Pebble
Technology International, and Anchor Wall Systems)
Oldcastle Building Products, Inc.
Oldcastle Infrastructure, Inc.
% held
Products and services
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
Supplier of access chambers and ducting products
Construction accessories
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
Concrete paving and landscape walling products
Construction accessories
Construction accessories
Supplier of access chambers and ducting products
Concrete paving products
Construction Accessories
Concrete paving products
Concrete paving and floor elements
Construction accessories
Specialty masonry, hardscape and patio products
Vinyl and aluminium fencing and railing and transportation
Holding company
Holding company
Holding company
Holding company
Concrete accessories
Composite building products
Pipe Products
Specialty masonry, hardscape and patio products
Specialty masonry, hardscape and patio products
Specialty masonry and stone products, hardscape and patio
products
Specialty masonry and stone products, hardscape, patio
products, aggregate pool finishes and freestanding and retaining
wall systems
Holding company
100 Precast concrete products, concrete pipe, prestressed plank and
structural elements
Oldcastle Lawn & Garden, Inc.
100
Patio products, bagged stone, mulch and stone
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
292
2022 Annual Report and Form 20-F
292
Principal Subsidiary Undertakings continued
as at 31 December 2022
Europe Materials
Incorporated and
Incorporated and
operating in
operating in
Belgium
Ergon N.V.
Oeterbeton N.V.
Prefaco N.V.
Schelfhout N.V.
VVM N.V.*
Northstone (NI) Limited (including Farrans Construction, 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
Betongruppen RBR A/S
Denmark
CRH Concrete A/S
RC Beton A/S
Finland
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*
Hungary
Danucem Magyarország Kft.
Ferrobeton Dunaújvárosi Beton- és Vasbetonelem-gyártó Zrt*
Clogrennane Lime Limited
Irish Cement Limited
Roadstone Limited
Ireland
Calduran B.V.
Netherlands
Cementbouw B.V.
Dycore B.V.
Heembeton B.V.
Philippines (i)
Republic Cement & Building Materials, Inc.
Republic Cement Land & Resources Inc.
Cement Ożarów S.A.
Drogomex Sp. z o.o.*
Poland
Masfalt Sp. z o.o.*
Przedsiebiorstwo Produkcji Mas Betonowych Bosta Beton Sp. z o.o.
Trzuskawica S.A.
% held
100
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
100
Products and services
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
Manufacturer of concrete paving, concrete blocks and
underground products
Cement
Aggregates, readymixed concrete and concrete products
99.99
Aggregates, cement and readymixed concrete
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
40
40
100
100
100
90.3
100
Structural concrete products
Utility and infrastructural concrete product
Holding company
Logistics and owned railway infrastructure operator
Lime and limestone, development of new products
Production and sale of lime and limestone
Cement and readymixed concrete
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
Sand-lime bricks and building elements
Cement transport and trading, readymixed concrete and
aggregates
Concrete flooring elements
Precast concrete structural elements
Cement and Building Materials
Cement
Cement
Asphalt and contract surfacing
Asphalt and contract surfacing
Readymixed concrete
Production of lime and lime products
(i) 55% economic interest in the combined Philippines business (see note 31 to the Consolidated Financial Statements).
2022 Annual Report and Form 20-F
Europe Materials - continued
Incorporated and
operating in
Romania
ROMCIM S.A.
Elpreco S.A.
Ferrobeton Romania SRL*
Serbia
Moravacem d.o.o. Popovac
Slovakia
Spain
Danucem Slovensko a.s.
Ferrobeton Slovensko s.r.o.
Beton Catalan, S.A.
Cementos Lemona, S.A.
Switzerland
JURA-Holding AG*
LLC Cement
Ukraine
PJSC Mykolaivcement
Podilsky Cement PJSC*
Principal Equity Accounted Investments
as at 31 December 2022
Europe Materials
Incorporated and
operating in
China
Ireland
Yatai Building Materials Group Company Limited*
Kemek Limited*
Americas Materials
Airlinx Transit Partners Inc.*
Blackbird Infrastructure 407 General Partnership*
Blackbird Maintenance 407 General Partnership*
Blackbird Constructors 407 General Partnership*
Blackbird Infrastructure 407 CRH GP Inc*
Canada
DAD (Finch West LRT Inc.)*
Kiewit-Dufferin Midtown Partnership*
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*
Camden Materials, LLC*
Asphalt Inc., LLC*
Carrollton River Terminal, LLC*
Nally and Gibson Georgetown, LLC
% held
98.61
100
100
100
99.79
100
100
98.75
100
100
100
100
% held
26
50
50
50
50
50
50
33
35
33
33
45
50
50
50
50
20
50
50
2022 Annual Report and Form 20-F
293
Products and services
Cement
Architectural concrete products
Structural concrete products
Cement
Cement and readymixed concrete
Precast concrete structural elements
Readymixed concrete
Cement
Cement, aggregates and readymixed concrete
Cement
Cement
Cement
Products and services
Cement
Commercial explosives
Special-purpose entity on Ontario infrastructure construction
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
Asphalt
Asphalt and Construction
Liquid Asphalt Storage
Aggregates, Asphalt and Construction
* Audited by firms other than Deloitte.
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.
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
294
2022 Annual Report and Form 20-F
294
Our Products and Services Locations
Our
Locations
Australia
Austria
Belgium
Canada
China1
Croatia
Czech Republic
Denmark
Estonia
Finland
France
Germany
Hungary
Ireland
Italy
Malaysia
Netherlands
Norway
Philippines
Poland
Romania
Serbia
Slovakia
Spain
Sweden
Switzerland
Ukraine
United Kingdom
United States
Cement
Aggregates
Lime
Readymixed Concrete
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
* Includes Infrastructure Products, Architectural Products and Network Access Products.
1. Includes the Group's equity accounted investment.
2022 Annual Report and Form 20-F
2022 Annual Report and Form 20-F
295
Asphalt
Paving & Construction
Concrete Products*
Construction Accessories
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
296
Exhibits
2022 Annual Report and Form 20-F
296
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.
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 290 to 293 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.
13.
Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Public Company Accounting Reform and Investor
Protection Act of 2002.***
Consent of Independent Registered Public Accounting Firm - Deloitte.
Governance Appendix.
Disclosure of Mine Safety and Health Administration (MSHA) Safety Data.
List of Issuers and Guarantors.
15.1
15.3
16.
17.
101.
Inline eXtensible Business Reporting Language (XBRL).
*
Incorporated by reference to Annual Report on Form 20-F for the year ended 31 December 2020 that was filed by the company on 12 March 2021.
**
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.
2022 Annual Report and Form 20-F
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.
2022 Annual Report and Form 20-F
297
PART I
Item 1.
Identity of Directors, Senior
Management and Advisors
Item 2.
Offer Statistics and Expected
Timetable
Item 3.
Key Information
A -
[Reserved]
B - Capitalisation and Indebtedness
C - Reasons for the Offer and Use of
Proceeds
D - Risk Factors
Item 4.
Information on the Company
A - History and Development
of the Company
B - Business Overview
Page
n/a
n/a
n/a
n/a
n/a
Item 9.
The Offer and Listing
A - Offer and Listing Details
B - Plan of Distribution
C - Markets
D - Selling Shareholders
E - Dilution
F - Expenses of the Issue
Item 10.
Additional Information
139-148
2-3, 16, 23, 63-64, 67,
195-196, 198, 208-209,
242-245, 275, 287
2-3, 16, 19, 68-79, 113,
135, 141-146, 156,
191-195, 262, 268, 275
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
C - Organisational Structure
275, 290-293
D - Property, Plants and Equipment
182, 208-209, 262-268
J - Annual Report to Security Holders
Item 11.
Quantitative and Qualitative
Item 4A.
Unresolved Staff Comments
None
Disclosure about Market Risk
Item 5.
Operating and Financial Review and Prospects
Item 12.
Description of Securities Other than Equity Securities
A - Operating Results
B - Liquidity and Capital
Resources
14-16, 30, 51, 62-79,
92-93, 139, 141, 148,
179, 189, 221-228,
230-231, 275
62-67, 147, 180, 188,
191-192, 195-196, 203,
208-209, 216-238, 274
PART II
A - Debt Securities
B - Warrants and Rights
C - Other Securities
D - American Depositary Shares
C - Research and Development,
Patents and Licences, etc.
275
Item 13.
Defaults, Dividend Arrearages and
Delinquencies
D - Trend Information
16, 62-64, 68-79
Item 14.
Material Modifications to the Rights of
E - Critical Accounting Estimates
Supplemental Guarantor Information
n/a
261
Item 6.
Directors, Senior Management and
Employees
Security Holders and Use of Proceeds
Item 15.
Controls and Procedures
Item 16A.
Audit Committee Financial Expert
Item 16B.
Code of Ethics
A - Directors and Senior Management
82-84, 86, 117
Item 16C.
Principle Accountant Fees and Services
B - Compensation
C - Board Practices
D - Employees
E - Share Ownership
108-132, 234-238
Item 16D.
Exemptions from the Listing
82-84, 87, 92-102,
114-117, 132
38, 199, 275
Standards for Audit Committee
Item 16E.
Purchases of Equity Securities by the
278-279
Issuer and Affiliated Purchasers
119-132, 281
Item 16F.
Change in Registrant's Certifying
F - Disclosure of a Registrant’s Action to
n/a
Accountant
Item 7.
Recover Erroneously Awarded Compensation
Major Shareholders and Related Party Transactions
Item 16G.
Corporate Governance
Item 16H. Mine Safety Disclosures
A - Major Shareholders
B - Related Party Transactions
C -
Interests of Experts and Counsel
101, 278
Item 16I.
Disclosure Regarding Foreign
247
n/a
Item 16J.
Jurisdictions that Prevent Inspections
Insider Trading Policies
Item 8.
Financial Information
A - Consolidated Statements and Other
172-247
Financial Information
- Legal Proceedings
- Dividends
B - Significant Changes
275
206, 240, 280, 285
275
PART III
Item 17.
Item 18.
Item 19.
Financial Statements
Financial Statements
Exhibits
Page
278
n/a
278
n/a
n/a
n/a
n/a
285-286
None
287
283-284
n/a
n/a
287
290-293
n/a
274
n/a
n/a
n/a
282
None
None
None
269
268
n/a
n/a
n/a
172-247
296
175, 269
82-84, 93
101
96, 197, 287
n/a
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
298
Index
A
Accounting Policies
Acquisitions, Divestments & Finance
Committee
Alternative Performance Measures
American Depositary Shares
Americas Materials
181
87
257
282
68
Annual General Meeting
130, 138
Audit Committee
Auditors (Directors’ Report)
Auditor’s Remuneration
Auditor’s Report, Independent (Irish)
Auditor’s Report, Independent (US)
92
137
96, 197,
252
160
172
Climate
- Strategy
- Targets
- TCFD
Communications with Shareholders
Company Secretary
Compliance and Ethics
Contractual Obligations
Corporate Governance Practices
Corporate Governance Report
Cost Analysis (note 4)
Credit Ratings
CREST and Migration to Euroclear
Bank
B
Balance Sheet
- Company
- Consolidated
Board Approval of Financial
Statements (note 33)
Board Committees
Board Effectiveness
Board of Directors
Board Responsibilities
Building Products
Business and Non-Current Asset
Disposals (note 6)
248
178
247
D
Debt, Analysis of Net (note 21)
Decarbonisation
Deferred Income Tax
87, 90
- expense (note 10)
99
82
98
72
- assets and liabilities (note 27)
Depreciation
- cost analysis (note 4)
- property, plant and equipment
(note 13)
198
- segment analysis (note 2)
2022 Annual Report and Form 20-F
298
E
Earnings per Ordinary Share (note 12)
Employees, Average Number (note 7)
Employment Costs (note 7)
Environment
Equity Accounted Investments’ Profit,
Share of
Europe Materials
EU Taxonomy
Exchange Rates
Exhibits
F
Finance Costs and Finance Income
(note 9)
Financial Assets (note 15)
Financial Calendar
Financial Statements, Consolidated
Foreign Currency Translation
Frequently Asked Questions
57
58
56
101
101
101
274
269
88
196
226
279
221
26
207
199
199
36
193
76
270
190
296
203
213
287
176
148
287
186, 204
186, 233
G
Global Business
196
Going Concern
182, 186,
208
193
188, 230
Governance
Greenhouse Gas Emissions
Guarantees (note 24; note 11 to
Company Balance Sheet)
2
136, 181
80
30
229, 252
Business Combinations (note 30)
186, 242
Business Model
Business Performance
20
60
Derivative Financial Instruments (note
25)
Directors’ Emoluments and Interests
108, 247
H
Health and Safety
38
C
Capital and Financial Risk
Management (note 22)
Carbon
Directors’ Interests in Share Capital
Directors’ Remuneration Report
225
Directors’ Report
15, 26, 57
Directors’ Responsibilities, Statement
of
Cash and Cash Equivalents (note 23)
188, 229
Directors’ Share Options
131
108
134
138
124
Cash Flow, Operating
Cash Flow Statement, Consolidated
Chairman’s Introduction
Chief Executive’s Review
Chief Financial Officer’s Review
Chief Operating Decision Maker
5
180
8
14
62
193
Discontinued Operations (note 3)
185, 195
Dividend Payments (Shareholder
Information)
Dividend per Share
Dividends (note 11)
280
1
206
2022 Annual Report and Form 20-F
I
P
Inclusion and Diversity
Income Statement, Consolidated
Income Tax Expense (note 10)
Intangible Assets (note 14)
Inventories (note 16)
Investor Relations Activities
Innovation
K
Key Components of 2022
Performance
Key Financial Data
Key Management Personnel
KPIs, Financial
KPIs, Non-Financial
L
Leases (note 20)
Listing Rule 9.8.4C
Loans and Borrowings,Interest-
Bearing (note 24)
M
Measuring Performance
Memorandum and Articles of
Association
40, 104
176
204
187, 210
187, 213
102
3, 4, 30,
89
63
256
247
65
65
187, 218
135
188, 229
Pensions, Retirement Benefit
Obligations (note 28)
People
Principal Equity Accounted
Investments
Principal Risks and Uncertainties
Principal Subsidiary Undertakings
Profit on Disposals (note 6)
Property, Plant and Equipment
(note 13)
Property, Plants and Equipment
182, 234
38, 139
293
139
290
198
182, 186,
208
268
Provisions for Liabilities (note 26)
183, 232
Proxy Voting, Electronic
Purpose
R
Registrars
Regulatory Information
Related Party Transactions (note 32)
Remuneration Committee
Research and Development
Reserves, Mineral
Responsible Business
Resources, Mineral
287
6
287
135
247
119
275
262
46
262
65
Retirement Benefit Obligations
(note 28)
102, 285
Return on Net Assets (RONA)
Movement in Inventories, Receivables,
Payables and Provisions for Liabilities
(note 19)
217
Revenue (note 1)
Revenue from products with
enhanced sustainability attributes
2022 Annual Report and Form 20-F
299
Share-based Payments (note 8)
185, 200
Share Buyback Programme
5, 241,
279
Share Capital and Reserves (note 29)
188, 239
Share Options
- Directors
- Employees (note 8)
Share Premium
Share Price Data
Shareholder Communication
Shareholdings as at 31 December
2022
Solutions
Statement of Changes in Equity,
Consolidated
Statement of Changes in Equity,
Company
Statement of Comprehensive Income,
Consolidated
Statement of Directors’
Responsibilities
124
200
241, 252
278
101
101, 278
23
179
249
177
138
Stock Exchange Listings
101, 278
Strategy
Substantial Holdings
Sustainability
182, 234
5, 65,
258, 260
184, 191
35, 259,
260
T
Task Force on Climate-related
Financial Disclosures (TCFD)
Total Shareholder Return (TSR)
12
101
24
56
4, 65,
127, 259
Risk Governance
94
Trade and Other Payables (note 18)
216
Risk Management and Internal Control
136, 269
Trade and Other Receivables
(note 17)
188, 214
N
Natural World
Net Zero
Nomination & Corporate Governance
Committee
Non-controlling Interests (note 31)
Non-GAAP Performance Measures
Notes on Consolidated Financial
Statements
Notes to the Company Balance Sheet
O
Operating Costs (note 4)
36
9, 26, 105
98
246
257
191
250
196
Risk Factors
S
Safety
Safety, Environment & Social
Responsibility Committee
Science Based Targets Initiative
Sector Exposure and End-Use
- Americas Materials
- Building Materials
- Europe Materials
139
38
104
4, 14, 27,
58, 181
V
Viability Statement
Volumes, Annualised
- Americas Materials
- Europe Materials
68
72
76
W
Waste
Water
Website
Segment Information (note 2)
185, 193
Senior Independent Director
82
136
68
76
32
34
287
OverviewStrategy ReportBusiness Performance & Segmental ReviewsGovernanceFinancial StatementsSupplemental 20-F and Other DisclosuresShareholder Information
300
2022 Annual Report and Form 20-F
300
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.
CRH public limited company
(Registrant)
By:
Dated: 10 March 2023
/s/ J. Mintern
Jim Mintern
Chief Financial Officer
2022 Annual Report and Form 20-F
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: Towering nearly 200 metres and spanning
almost two kilometres across the river Danube, the Brăila
Bridge is the most complex road infrastructure project
undertaken in Romania in recent decades. ROMCIM, a
CRH Company, created innovative new concrete solutions
to meet the unique technical requirements of this
enormous structure, ensuring durability in challenging
environmental conditions. The Bridge demonstrates how,
at CRH, we provide solutions for the built environment,
that will stand the test of time.