UNITED STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington, DC
20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A - 16 OR 15D - 16 OF
THE SECURITIES EXCHANGE ACT OF 1934
1 March 2018
Commission
File No. 001-32846
____________________________
CRH
public limited company
(Translation of registrant's name into English)
____________________________
Belgard Castle, Clondalkin,
Dublin 22, Ireland.
(Address of principal executive offices)
____________________________
Indicate
by check mark whether the registrant files or will file annual
reports
under
cover of Form 20-F or Form 40-F:
Form
20-F X Form
40-F___
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by
Regulation
S-T Rule 101(b)(1):_________
Indicate
by check mark if the registrant is submitting the Form 6-K in paper
as permitted by
Regulation
S-T Rule 101(b)(7):________
2017 Full Year Results
Key
Points
●
Another year of
profit growth
●
Focus on
performance improvement and operational delivery
●
Margins and returns
ahead in all American and European Divisions
●
Strong balance
sheet with good cash generation supporting active year of
development
Trading Highlights1
●
Sales of
€27.6 billion, 2% ahead of 2016; like-for-like sales up
2%
●
EBITDA2
up 6% to €3.3 billion; like-for-like EBITDA up
3%
●
EBITDA margin of
12.0%, up from 11.5% in 2016
●
Cash inflow of
€2.2 billion from operating activities
●
Basic EPS of 226.8c
was 51% ahead of 2016; excluding certain one-off gains adjusted
EPS2 was
166.2c or 11% ahead
Strategic
Highlights
●
Return on Net
Assets (RONA2)
10.6%, up from 9.7% in 2016
●
Delivering value
through efficient capital management
●
Net
debt/EBITDA2
at 1.8x after €1.7 billion net development
activity
●
Full year dividend
per share increased by 5% to 68.0c, covered 3.3 times
|
|
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Continuing and
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|
|
Continuing Operations
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|
|
Discontinued Operations
|
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Year ended 31 December
|
2017
|
2016
|
|
|
2017
|
2016
|
|
|
€m
|
€m
|
|
|
€m
|
€m
|
Change
|
|
|
|
|
|
|
|
|
Sales
revenue
|
25,220
|
24,789
|
|
|
27,563
|
27,104
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+2%
|
EBITDA
|
3,146
|
2,980
|
|
|
3,310
|
3,130
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+6%
|
EBITDA
margin
|
12.5%
|
12.0%
|
|
|
12.0%
|
11.5%
|
+50bps
|
|
|
|
|
|
|
|
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Operating
profit (EBIT)
|
2,095
|
1,908
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|
|
2,238
|
2,027
|
|
|
|
|
|
|
|
|
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Profit
before tax
|
1,867
|
1,620
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|
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2,013
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1,741
|
|
|
|
|
|
|
|
|
|
|
€ cent
|
€
cent
|
|
|
€ cent
|
€
cent
|
|
Basic
earnings per share
|
214.0
|
140.4
|
|
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226.8
|
150.2
|
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Dividend
per share
|
68.0
|
65.0
|
|
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68.0
|
65.0
|
|
|
|
|
|
|
|
|
|
2017 EBITDA includes a one-off past service credit of €81
million due to changes in the Group’s pension scheme in
Switzerland.
|
2017 EPS includes the one-off benefit of a €447 million
reduction in the Group’s net deferred tax liabilities due to
changes in United States tax legislation.
|
Albert Manifold, Chief Executive, said today:
“2017
was a year of continued profit growth for CRH. We benefited from
increases in underlying demand in the Americas and positive
momentum in Europe, and with focus on performance improvement and
operational delivery, margins and returns were ahead of last year
in our American and European Divisions. Supported by strong
operational cash generation, we continued to deliver value through
efficient capital management. With a balanced portfolio of
businesses CRH is well positioned to capitalise on ongoing economic
recovery and our focus remains on consolidating and building upon
the gains made in 2017. Against this backdrop, we believe that 2018
will be a year of continued growth for the
Group.”
Announced
Thursday, 1 March 2018
1 For
the first three pages of this document all income statement figures
refer to combined results from continuing and discontinued
operations unless otherwise stated.
2 See
pages 31 to 36 for glossary of alternative performance measures
(including EBITDA, RONA, net debt/EBITDA and adjusted EPS) used
throughout this report.
2017 Full Year Results
Overview
2017
was a year of growth for CRH with increases in underlying demand in
the Americas, and continued positive momentum in Europe, while very
competitive market conditions remained in Asia. With a constant
focus on performance in all our businesses, coupled with our
vertically integrated business model for heavyside materials, good
operational leverage underpinned improved margins and returns in
our American and European Divisions.
Sales
of €27.6 billion for the period were 2% ahead of 2016 and 2%
ahead on a like-for-like basis, reflecting different dynamics in
each of the Group’s regions and Divisions.
Despite
hurricane activity and record levels of rainfall during the year,
our Americas operations benefited from the continuation of stable
market fundamentals in the United States (US) and good underlying
demand. An organic sales increase of 3% in our Americas Materials
Division was supported by continued growth in the residential and
non-residential sectors, while infrastructure remained relatively
stable in our markets. In Americas Products, sales were broadly in
line with prior year as good growth along the West Coast and parts
of the South and Southeast were partly offset by more modest
trading in Canada and parts of the Northern US. Americas
Distribution, which has been classified as discontinued operations
for reporting purposes, benefited from good underlying demand,
particularly for Exterior Products.
In
Europe, total sales were up 1% compared with 2016 and organic sales
were 2% ahead due to continued recovery in key markets. Europe
Heavyside’s outturn was positive, with a broad-based recovery
in Ireland, France, Poland and Finland more than offsetting more
subdued activity in Switzerland and the United Kingdom (UK). Europe
Lightside experienced a year of further progress as good
performances in a number of our main markets resulted in sales
finishing 3% ahead of 2016. The backdrop at Europe Distribution was
stable as a strong contribution from the Netherlands together with
solid demand in Belgium and Germany was partly offset by continued
challenges in Switzerland.
In
Asia, economic growth and market fundamentals remained robust in
the Philippines, with both residential and non-residential demand
stable, though infrastructure investment was slower than expected
and pricing remained very competitive. In India, a favourable
economic backdrop continued to drive demand, while reduced
construction activity in China had a negative impact on volumes but
this was more than offset by stronger pricing.
For
2017 as a whole, higher sales and good cost control supported
improved profits and margins across the Group with EBITDA ahead 6%.
The underlying EBITDA for the year was augmented by a one-off past
service credit of €81 million due to changes in the
Group’s pension scheme in Switzerland. On a like-for-like
basis, excluding the one-off credit, EBITDA was 3% ahead of prior
year, 5% ahead in both the Americas and Europe while Asia was
behind.
Depreciation
and amortisation charges in 2017 amounted to €1.07 billion
(2016: €1.08 billion). There were no impairment charges
recognised in the year (2016: €23 million).
Divestments
and asset disposals during the year generated total profit on
disposals of €59 million (2016: €55 million) as the
ongoing recycling of capital continues to be embedded in the
business.
The
Group’s €65 million share of profits from equity
accounted investments was ahead of the prior year (2016: €42
million) reflecting better performance in China.
After
net finance costs of €349 million (2016: €383 million),
the Group reported profit before tax of €2.01 billion in 2017
(2016: €1.74 billion). Earnings per share for the period were
51% higher than last year at 226.8c (2016: 150.2c). Excluding the
one-off impact of changes in corporate tax rates in the US and the
Swiss pension plan past service credit, adjusted earnings per share
for the year were 166.2c, 11% ahead of 2016.
Note 2
on page 18 analyses the key components of 2017 performance on a
continuing operations basis.
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.
Further
to the 4% dividend increase in 2016, an interim dividend of 19.2c
(2016: 18.8c) per share was paid in November 2017. The Board is
recommending a final dividend of 48.8c per share. This would give a
total dividend of 68.0c for the year (2016: 65.0c), an increase of
5% over last year. The earnings per share for the year were 226.8c,
representing a cover of 3.3 times the proposed dividend for the
year. Excluding the one-off impact of changes in corporate tax
rates in the US and the past service credit from the Swiss pension
plan amendment, adjusted earnings per share for the year were
166.2c, representing a cover of 2.4 times the proposed dividend for
2017.
It is
proposed to pay the final dividend on 4 May 2018 to shareholders
registered at the close of business on 9 March 2018. A scrip
dividend alternative will be offered to shareholders.
While
the Board continues to believe that a progressive dividend policy
is appropriate for the Group, our target is to build dividend cover
to 3 times before one-off items over the medium-term and
accordingly, any dividend increases in coming years will lag
increases in earnings per share.
Finance
Total
net finance costs of €349 million were lower than last year
(2016: €383 million) as the one-off cost of
€18 million for early redemption of a portion of the US$
bonds maturing in 2018 was more than offset by the lower costs
resulting from reduced average net debt. Finance costs included
discount unwinding and pension-related financial expenses of
€42 million (2016: €66 million). Excluding these
non-cash expenses and the one-off charge, net debt-related interest
amounted to €289 million (2016: €317
million).
The tax
charge of €94 million for the year (2016: €471 million)
equated to an effective tax rate (tax charge as a % of pre-tax
profit) of 4.7%, compared with 27.1% in 2016. The 2017 effective
tax rate was influenced by a one-off reduction of €447
million in the Group’s net deferred tax liabilities due to
changes in tax legislation related to the enactment of the
“Tax Cuts and Jobs Act” in the US during 2017;
excluding this, the underlying effective tax rate for 2017 was
26.9%.
Reflecting
our relentless focus on cash management, the Group generated net
cash flow from operating activities of €2.2 billion for the
year (2016: €2.3 billion). Year-end net debt of €5.8
billion (2016: €5.3 billion) was below the guidance provided
in November, benefiting from strong inflows from operations and
disciplined capital expenditure. Net debt to EBITDA was 1.8x (2016:
1.7x) and, based on net debt-related interest costs, EBITDA net
interest cover for 2017 was 11.5x (2016: 9.9x).
In May
2017, the Group successfully issued a total of US$1.0 billion
dollar bonds comprised of a US$0.6 billion 10-year bond at a coupon
rate of 3.4% and a US$0.4 billion 30-year bond at a coupon rate of
4.4%. Concurrently, an any-and-all tender offer was made for the
US$0.65 billion bond due in 2018, with the final result being that
US$0.36 billion were validly tendered and accepted for purchase,
which gave rise to the one-off charge of €18 million, and
results in overall interest savings for the Group in 2017 and 2018.
The bond issue reflects CRH’s commitment to prudent
management of our debt and the timing of the related maturities and
also to maintaining an investment grade credit rating.
The
Group ended 2017 with total liquidity of €5.7 billion
comprising €2.1 billion of cash and cash equivalents on hand
and almost €3.6 billion of undrawn committed facilities,
which are available until 2022. At year-end, the cash balances were
enough to meet all maturing debt obligations for the next 3.6 years
and the weighted average maturity of the remaining term debt was
10.5 years.
Capital Efficiency
In
2017, the Group spent a total of €1.9 billion (including
deferred and contingent consideration in respect of prior year
acquisitions) (2016: €0.2 billion) on 34 (2016: 24)
acquisition/investment transactions. On the divestment front, the
Group realised business and asset disposal proceeds of €0.2
billion (2016: €0.3 billion).
2017 Acquisitions
In the
Americas, c. €1.3 billion was spent on 21 acquisitions and
one investment. Our Materials Division completed the largest 2017
acquisition at the end of November with the acquisition of Suwannee
American Cement together with certain other materials assets in
Florida. The total assets acquired consist of a 1 million tonne
cement plant in North Central Florida, 18 readymixed concrete
plants, an aggregates quarry, two block plants and nine gunite
facilities. The Materials Division also completed 12 further
bolt-on acquisitions, including two in Canada, adding c .2.5
billion tonnes of additional aggregates reserves. The Products
Division completed eight acquisitions and one investment in 2017 at
a cost of c .€0.2 billion.
In
Europe, c. €0.6 billion was spent on ten acquisitions and two
investments. This is split between eight acquisitions and one
investment in Europe Heavyside and two acquisitions and one
investment in Europe Distribution. The largest acquisition in
Europe in 2017 was that of the Fels lime business which was
acquired at the end of October 2017. Fels has significant
high-quality limestone reserves and 11 production locations; nine
in Germany and one in both the Czech Republic and Russia. The
majority of production capacity is situated in the Harz region of
East Germany, providing a strong platform for future
growth.
2017 Divestments and disposals
Business
divestments during 2017, all in Europe, generated net proceeds of
c. €85 million. The remaining clay products businesses in
Europe (Belgium, Germany, Netherlands and Poland) were divested and
our Heavyside Division also sold its civil prefabricated concrete
businesses in the Benelux, along with seven other small non-core
businesses. In addition to these business divestments, the Group
realised proceeds of c. €137 million from the disposal of
surplus property, plant and equipment.
Other transactions
As
previously announced, CRH completed the sale of its Americas
Distribution business on 2 January 2018 for proceeds of US$2.6
billion. In addition, we reached an agreement with the Board of Ash
Grove Cement to acquire a portfolio of cement and other materials
assets. The deal is scheduled to close in 2018 and will give CRH a
market leadership position in the North American cement market for
the first time.
Outlook
In the US, GDP growth in 2018 is expected to be similar to 2017
supported by steady gains in overall job creation, improving
consumer confidence and a slight easing of credit terms. We
anticipate continued growth in US housing construction and that
non-residential construction will also improve. While the
infrastructure market remains broadly stable, there is upside
potential due to the growing economy and increased state spending
on transportation improvements. With
a continuing favourable pricing environment, a sustained emphasis
on operating efficiency and benefits from our recent development
activity, we expect progress to continue in 2018 in our Americas
business.
In Europe, we expect that economic recovery will gather momentum in
most countries in 2018. Against a backdrop of increasing demand,
particularly in the residential sector, our focus is building upon
pricing improvements and efficiency gains achieved in 2017 and as a
result, we expect our European business to advance further in 2018.
In Asia, with expectations for continued economic growth in the
Philippines, we anticipate some stabilisation of the cement market
in 2018, however results from our business will remain
challenged.
With a balanced portfolio of businesses, CRH is well positioned to
capitalise on ongoing economic growth and our focus remains on
consolidating and building upon the gains made in 2017. Against
this backdrop, we believe 2018 will be a year of further progress
for the Group.
Europe Heavyside
|
|
Analysis of change
|
|
|
€ million
|
2016*
|
Exchange
|
Acquisitions
|
Divestments
|
LH costs1/
Pension credit
|
Organic
|
2017
|
% change
|
Sales
revenue
|
6,945
|
-203
|
+95
|
-110
|
-
|
+175
|
6,902
|
-1%
|
EBITDA
|
781
|
-26
|
+3
|
-17
|
+52
|
+46
|
839
|
+7%
|
Operating
profit
|
386
|
-16
|
-3
|
-14
|
+52
|
+73
|
478
|
+24%
|
EBITDA/sales
|
11.2%
|
|
|
|
|
|
12.2%
|
|
Operating
profit/sales
|
5.6%
|
|
|
|
|
|
6.9%
|
|
Swiss pension plan past service credit of €20 million in
2017
LH integration costs of €32 million were incurred in
2016
|
*During
2017, our dedicated European landscaping businesses previously
included within our Europe Heavyside segment were reorganised to
form a new platform, Architectural Products, within our Europe
Lightside segment. Comparative segment amounts for 2016 have been
restated where necessary to reflect the new format for
segmentation.
The
commentary below excludes the impact of a past service credit due
to pension plan amendments in Switzerland.
Overall
the 2017 outturn for Heavyside was positive with market recovery in
Ireland, France, Poland and Finland in particular compensating for
more subdued trading conditions in Switzerland and the UK. Although
total sales declined, modest year-on-year organic growth resulted
in improved operating profit, due to strong operating leverage
arising from volume growth in some key countries, signs of progress
on pricing and a continued focus on performance improvement
initiatives and synergies.
Tarmac (UK)
Despite ongoing political and economic uncertainty in the UK,
organic sales in our Tarmac business were ahead of 2016, with
growth in building products and contracting sales and modest
improvements in pricing for aggregates, asphalt and readymixed
concrete compensating for a slight decline in overall volumes.
Operating profit was slightly behind the prior year, with increased
bitumen costs in the asphalt division not fully compensated by
increased sales and the impact of performance improvement
initiatives.
UK Cement & Lime, Ireland and Spain
The UK
cement and lime operations maintained stable pricing against a
backdrop of modest economic growth, while improvements in
production processes and synergies, achieved through network
optimisation, further contributed to operating profit growth. In
Ireland, both sales and operating profit were ahead of 2016 mainly
due to market recovery, particularly in the residential and
commercial sectors, and the resulting growth in cement, aggregates
and readymixed concrete volumes; positive trends on pricing across
key products also contributed to sales and operating profit. The
performance in Spain advanced on prior year, with an improving
macroeconomic situation.
France, Benelux and Denmark
Both
sales and operating profits in France benefited from increased
volumes in all major products, particularly cement and readymixed
concrete, driven by growth in the residential sector, although
pricing remained challenging. Organic sales in the Benelux grew in
2017 with a strong contribution from some larger projects in the
Belgian structural business and continued growth in the Dutch
residential sector; operating profit declined, impacted by a
one-off cost in the structural business. The 2017 outturn in
Denmark was positive, with sales and operating profit significantly
ahead of prior year supported by residential construction in major
cities, some large non-residential projects and overall modest
economic growth.
Switzerland and Germany
Both
sales and organic operating profit were behind prior year in
Switzerland due to difficult market conditions, with overall
domestic cement consumption also impacted by poor weather early in
the year. With continued pricing
pressure arising from imports, cement prices declined. Lower
cement volumes were experienced in our German operations due to
reduced demand in key rural markets, a competitive landscape and
individual project delays; results were behind 2016. Our new lime
acquisition, Fels, performed in line with
expectations.
North East
Improvement
in the residential sector and an overall positive economic backdrop
resulted in cement volumes in Finland finishing ahead of 2016 and,
despite competition from importers negatively affecting cement
pricing, operating profit increased. Overall economic growth was
experienced in Poland, driven by private consumption and supported
by EU-financed public spending. In addition, execution of
previously delayed infrastructure projects resulted in growth in
cement volumes and both sales and operating profit were well ahead
of 2016. Both sales and operating profit in Ukraine increased in
2017, with pricing improvement mitigating the impact of inflation
and compensating for a decline in cement volumes, which were
affected by an increased level of imports.
South East
Our
operations in Hungary and Slovakia benefited from solid economic
and construction growth in 2017. Improved sales and operating
profits were driven by higher cement and readymixed concrete
volumes, some positive signs on pricing and an emphasis on
performance improvement. Although the mix of products and projects
in Serbia negatively affected cement pricing, overall sales and
operating profit were ahead of 2016, supported by both ongoing
infrastructure projects and some residential growth. Organic sales
in Romania were slightly ahead of 2016, with poor weather in the
early part of the year and slower than anticipated
commencement of major infrastructure projects compensated by
stronger volumes in the last quarter. Operating profits were ahead
of 2016, positively impacted by continued price improvement and by
performance improvement initiatives.
1 The LH integration costs refers to the businesses acquired
from LafargeHolcim in 2015.
Europe Lightside
|
|
Analysis of change
|
|
€ million
|
2016*
|
Exchange
|
Acquisitions
|
Organic
|
2017
|
% change
|
Sales
revenue
|
1,392
|
-15
|
+7
|
+56
|
1,440
|
+3%
|
EBITDA
|
137
|
-2
|
+1
|
+7
|
143
|
+4%
|
Operating
profit
|
92
|
-2
|
+1
|
+11
|
102
|
+11%
|
EBITDA/sales
|
9.8%
|
|
|
|
9.9%
|
|
Operating
profit/sales
|
6.6%
|
|
|
|
7.1%
|
|
*During
2017, our dedicated European landscaping businesses previously
included within our Europe Heavyside segment were reorganised to
form a new platform, Architectural Products, within our Europe
Lightside segment. Comparative segment amounts for 2016 have
been restated where necessary to reflect the new format for
segmentation.
Europe Lightside experienced a year of further growth as good
performances in a number of key markets resulted in total sales for
the Division finishing 3% ahead of 2016. Strong activity levels in
the UK market underpinned demand, particularly for our Construction
Accessories and Network Access Products businesses. Economic
recovery continued in the Netherlands and Poland resulting in good
growth, while activity in other key markets, including Belgium and
Germany, was stable. Against this overall favourable market
backdrop, a focus on continued cost optimisation and margin
enhancement resulted in an 11% operating profit increase for the
Division.
Construction Accessories
The year was one of progress for the Construction Accessories
platform with strong organic sales due to robust activity levels
across core markets and further product innovation. Operating
profit also expanded, despite restructuring charges taken as part
of the platform’s optimisation of its production
network. Our UK-based engineered accessories business
experienced strong demand for its products, supported by good
activity levels and both sales and operating profit were ahead of
prior year. In Germany, the business
also advanced, as positive trading conditions resulted in increased
demand. For our Swiss business, reasonable activity levels saw
sales finish ahead of prior year. Activities in the Netherlands and
France benefited from ongoing economic recovery while sales in our
Belgian business advanced in competitive markets. Our export
markets proved challenging as project delays impacted performance,
though our Australian business saw organic growth due to good
demand for its products.
Shutters & Awnings
The Shutters & Awnings business recorded a 3% increase in sales
compared with the prior year. The Netherlands, supported by
underlying market activity and benefiting from operational
improvements, reported a good trading performance. Our German
businesses experienced challenges arising from tighter labour
markets and increasing input costs; however, sales across the
businesses advanced. The UK business reported a solid trading
performance despite currency pressure. Operating profit for the
platform remained in line with 2016.
Network Access Products & Perimeter Protection
The Network Access Products business, with operations in the UK,
Ireland and Australia and a growing export base, had another year
of growth in both sales and operating profit. Positive underlying
infrastructure demand continued, particularly in its UK-based
business; in addition, ongoing focus on optimising costs and
product profile resulted in positive margin development for the
business.
The permanent fencing business overall had a positive year as it
reported both sales and operating profit ahead of prior year.
Continued cost focus at our UK businesses resulted in improved
sales and profitability and margins advanced in the Netherlands,
despite competitive markets. The mobile fencing business, after a
strong prior year, experienced another year of growth benefiting
from improved building activity in its core markets.
Architectural Products
Despite a good demand backdrop across the platform’s main
markets and sales progression, operating profit finished behind
last year as a result of a lower margin product profile in some
markets. In the Benelux, trading advanced in an overall positive
economic environment. For our German business, trading
was broadly in line with last year while results were
positively impacted by improved pricing and operational
performance. In Poland, our operations experienced strong demand,
albeit for some lower margin products, and with good volume growth
sales finished ahead of the prior year.
Europe Distribution
|
|
Analysis of change
|
|
€ million
|
2016
|
Exchange
|
Acquisitions
|
Pension credit
|
Organic
|
2017
|
% change
|
Sales
revenue
|
4,066
|
-20
|
+28
|
-
|
+71
|
4,145
|
+2%
|
EBITDA
|
206
|
-1
|
-
|
+61
|
+3
|
269
|
+31%
|
Operating
profit
|
130
|
-1
|
-
|
+61
|
+17
|
207
|
+59%
|
EBITDA/sales
|
5.1%
|
|
|
|
|
6.5%
|
|
Operating
profit/sales
|
3.2%
|
|
|
|
|
5.0%
|
|
Swiss pension past service credit of €61 million in
2017
|
The commentary below excludes the impact of a past service
credit due to pension plan amendments in
Switzerland.
Europe Distribution experienced stable sales and profit development
but with mixed performances across our businesses. Overall sales
were slightly ahead with a strong contribution from our General
Builders Merchants business in the Netherlands which benefited from
an increase in residential building volumes. In addition, our SHAP
businesses in Germany and Belgium continued to gain market share in
consolidating markets. These positive developments were partly
offset by difficult market conditions in Switzerland.
General Builders Merchants
Our General Builders Merchants business showed 3% sales growth in
2017, with stable operating profit excluding depreciation.
Continued increasing demand in the Netherlands combined with
delivery on performance improvement projects resulted in further
growth of the Dutch operating profit. Our German business showed
sales growth against a flat RMI market backdrop, with profit
impacted by acquisition-related costs. Market conditions in
Switzerland remained challenging due to sluggish residential
demand, and cost savings initiatives could not fully offset the
impact of lower sales and increased pressure on trade margins. Our
French business benefited from an improving residential sector and
the performance in our Austrian business improved due to continued
focus on our cost base.
DIY (Do-It-Yourself)
Our DIY business operates in the Netherlands, Belgium and Germany.
Despite improving consumer confidence in these countries,
competitive pressures and an increasing trend towards online sales
contributed to declining store sales. Operating profit in our
Netherlands business improved due to a continued focus on overhead
costs and personnel productivity initiatives. Despite the opening
of a new store in the Brussels area, sales and operating profit
remained stable in a competitive environment. Our German DIY
business performed in line with 2016, although trading was impacted
by some unfavourable weather conditions at the beginning of the
year.
Sanitary, Heating and Plumbing (SHAP)
Continued sales growth from additional pick-up locations and
further investments in showrooms led to market share improvement in
our German and Belgian SHAP businesses. Operating profit decreased
due to declining results in Switzerland, which were partly offset
by operational improvement, procurement initiatives and growth in
Belgium and Germany.
Americas Materials
|
|
Analysis of change
|
|
|
€ million
|
2016
|
Exchange
|
Acquisitions
|
Divestments
|
LH costs1
|
Organic
|
2017
|
% change
|
Sales
revenue
|
7,598
|
-123
|
+379
|
-80
|
-
|
+196
|
7,970
|
+5%
|
EBITDA
|
1,204
|
-24
|
+46
|
-5
|
+7
|
+42
|
1,270
|
+5%
|
Operating
profit
|
818
|
-19
|
+12
|
-2
|
+7
|
+42
|
858
|
+5%
|
EBITDA/sales
|
15.8%
|
|
|
|
|
|
15.9%
|
|
Operating
profit/sales
|
10.8%
|
|
|
|
|
|
10.8%
|
|
2017 was a year of progress in Americas Materials, supported by
continued economic growth across residential and non-residential
sectors, while infrastructure remained stable in our markets.
Despite record levels of rainfall during the year and hurricane
activity experienced in Florida and Texas, both sales and operating
profit increased 5%, as selling price increases were achieved
across all products in North America.
Aggregates had a strong finish to 2017 and together with the
positive impact of acquisitions during the year, total volumes were
7% ahead, while like-for-like volumes were flat. Average price
increases of 6% on a like-for-like basis combined with efficient
cost control resulted in margin expansion. Margin improvement was
also experienced in our readymixed concrete operations as
like-for-like volumes increased 4% while overall volumes were 3%
ahead, impacted by 2016 divestments in our Central division. Both
like-for-like and total average prices increased by 3%. Although
like-for-like asphalt volumes increased 2% and 6% on an overall
basis, asphalt margins were under pressure with like-for-like
average price increases unable to offset higher input costs. With
pockets of increased state infrastructure spending, like-for-like
sales for paving and construction services increased 1% with
overall sales 7% ahead. Construction margin improved slightly in
2017, despite the ongoing competitive bidding environment. Our
cement business in North America saw total volumes 3% ahead and
marginal price increases, supported by stronger demand in the US.
Against the backdrop of a favourable US price environment, Americas
Materials continued to optimise its terminal network and market
penetration by repositioning more volumes to the US from Canada,
where competitive market conditions remain, especially in
Quebec.
Americas Materials continued to strengthen its position in existing
and complementary markets throughout North America in 2017 and
completed 13 acquisitions for a combined total of €1.1
billion. The principal acquisition, which was completed at the end
of November 2017 and therefore had a limited contribution to
current year trading, was Suwannee American Cement together with
certain other materials assets; consisting of a 1 million tonne
cement plant in Florida, 18 readymixed concrete plants, an
aggregates quarry, two block plants and nine gunite
facilities.
United States
Trading benefited from solid demand in the US and, despite some
unfavourable weather, total volumes and prices increased across all
products. Like-for-like sales saw a resulting 4% increase in 2017.
Operating profit also increased though margin expansion in
aggregates and readymixed concrete was partly offset by a decline
in asphalt margins due to higher bitumen prices, a key component of
asphalt mix.
Our US operations are divided into four main divisions: North,
South, Central and West. The North division comprises operations in
13 states, with key operations in Ohio, New York, New Jersey and
Michigan. With significant precipitation as well as softer markets
in Michigan and Connecticut, volumes were down across all products,
although increased pricing and improved construction sales resulted
in a like-for-like sales increase. Operating profit was further
impacted by increased input costs, and margin declined. The South
division comprises operations in 12 states with key operations in
Florida, North Carolina and West Virginia. Like-for-like South
division sales and operating profit were ahead 7% and 14%
respectively, despite the impact of hurricane Irma which caused
downtime at several locations in Florida and Georgia. Improvements
were mainly driven by increased construction activity and margin,
as well as price increases across all products. The Central
division has operations in nine states, with the key states being
Texas, Arkansas and Minnesota. Like-for-like Central division sales
were down 3% mainly due to
unfavourable weather during the summer which continued into autumn,
along with the impact of hurricane Harvey; however, with strong
cost control and the benefit of operating efficiencies, overall
operating profit improved over prior year. The West division has
operations in ten states, the most important of which are Utah,
Idaho, Washington and Colorado. Overall demand was strong across
the division, with improved volumes across all product lines
resulting in like-for-like sales up 11% compared with the prior
year. Operating profit was also well ahead in the division, with
aggregates and readymixed concrete price increases taking hold and
driving increased margin.
Canada
The overall Canadian economy expanded in 2017, led by robust gains
in the core markets of Ontario, Quebec and Alberta. The pace
of growth was largely fuelled by improvements in oil prices and
continued spending by Canadian consumers. Despite the positive environment and increases of
volumes across all products, like-for-like sales were muted by
regional variations in pricing and the performance within the
construction business, which was impacted by adverse weather
conditions and the non-recurrence of key
projects.
Brazil
Weakness in the construction market continued during 2017 due to
the unfavourable economic and political situation; however, more
recently, lower interest rates and a reduction in inflation have
started to have a positive impact. While cement consumption was
down 5% in the Southeast region, CRH saw volume improvements
through a focus on key customer segments; however, selling prices
continued to fall below 2016 levels.
1 The LH integration costs
refers to the businesses acquired from LafargeHolcim in
2015.
Americas Products
|
|
Analysis of change
|
|
|
€ million
|
2016
|
Exchange
|
Acquisitions
|
Divestments
|
Organic
|
2017
|
% change
|
Sales
revenue
|
4,280
|
-79
|
+87
|
-14
|
+53
|
4,327
|
+1%
|
EBITDA
|
543
|
-10
|
+10
|
+1
|
+29
|
573
|
+6%
|
Operating
profit
|
411
|
-8
|
+4
|
+2
|
+26
|
435
|
+6%
|
EBITDA/sales
|
12.7%
|
|
|
|
|
13.2%
|
|
Operating
profit/sales
|
9.6%
|
|
|
|
|
10.1%
|
|
Continued improvement in macroeconomic conditions positively
impacted construction; however, activity was limited by
historically high levels of precipitation in 2017, supply-side
factors such as the shortage of skilled construction labour and
competitive markets. Americas Products saw good growth along the
West Coast and parts of the South and Southeast due to improving
residential and non-residential construction, partly offset by more
modest trading in Canada and parts of the Northern US.
Contributions from improved operational efficiencies, improved
product and project mix, procurement initiatives and targeted price
increases more than offset the impact of input cost inflation.
Benefiting from the contribution of acquisitions and continued
synergies from the CRL acquisition, Americas Products achieved a 6%
increase in operating profit and margins improved.
Americas Products completed eight acquisitions and one joint
venture investment for total consideration of €0.2 billion.
The acquisition of Advanced Environmental Recycling Technologies,
Inc. (AERT), a manufacturer of composite decking, added an outdoor
living product complementary to APG’s Belgard hardscapes and
retaining wall products. Also, the acquisition of Block USA
extended APG’s masonry footprint into Alabama, Mississippi
and the Gulf Coast.
Architectural Products (APG)
With the benefit of acquisitions, APG saw increased activity,
especially in the residential RMI sector. Growth was at a more
measured pace than last year, with volumes affected by unfavourable
weather and installation labour shortages. Activity was good across
most of the US but more moderate in Canada. Solid demand from major
products and distribution channels, together with product
innovation and commercial initiatives, drove a modest increase in
like-for-like sales compared with 2016. APG continued to focus on
operating cost reduction efforts to maximise returns. Overall, APG
saw good operating profit growth for the year.
BuildingEnvelope®
(OBE)
In 2017, non-residential building activity saw continued
advancement but at a slower pace than prior years. OBE experienced
relatively flat sales revenue in 2017 because of more challenging
market conditions, more selective bidding on larger projects and
tighter skilled labour markets. However, OBE recorded improved
operating profits because of better sales mix, improved operational
performance and continued synergies from the integration of the CRL
and OBE businesses.
Precast
Sales growth was achieved in 2017 but was limited by unfavourable
weather and relatively slower demand growth for both private
construction and public infrastructure in certain markets. Precast
recorded increased operating profits, due to better operational
performance at construction project businesses, partly offset by
margin impacts from increased input costs. In addition, backlogs
remained strong in 2017.
Asia
|
|
Analysis of change
|
|
|
€ million
|
2016
|
Exchange
|
LH costs1
|
Organic
|
2017
|
% change
|
Sales
revenue
|
508
|
-39
|
-
|
-33
|
436
|
-14%
|
EBITDA
|
109
|
-11
|
+6
|
-52
|
52
|
-52%
|
Operating
profit
|
71
|
-7
|
+6
|
-55
|
15
|
-79%
|
EBITDA/sales
|
21.5%
|
|
|
|
11.9%
|
|
Operating
profit/sales
|
14.0%
|
|
|
|
3.4%
|
|
|
|
The
Asia Division was formed following the acquisition of the
Philippines operations as part of the LH Assets transaction in
2015. The table above includes the results from these operations
together with CRH Asia’s divisional costs.
In
addition to our subsidiary businesses in the Philippines, the Group
also has a share of profit after tax from our stakes in Yatai
Building Materials in China and My Home Industries Limited (MHIL)
in India, which are reported within the Group’s equity
accounted investments as part of profit before tax.
Philippines
While economic growth and market fundamentals remain robust, with
both residential and non-residential demand stable, major
infrastructure projects progressed at a slower pace in 2017.
Despite this, the long-term outlook for the construction industry
in the Philippines remains strong.
Although volumes increased in 2017, driven by a strong performance
in the Visayas and Mindanao (VisMin) housing sector, overall sales
were behind, as prices were impacted by additional capacities in
the market and aggressive competitor pricing. The impact of lower
selling prices combined with increased fuel and power costs
resulted in lower operating profit than 2016.
China and India
Despite volumes being under pressure in Northeast China, prices
significantly recovered in the market, with both cement and clinker
prices in Yatai Building Materials well ahead of 2016. The higher
prices more than offset increased coal prices and resulted in
improved performance in 2017.
Despite recording higher cement volumes and marginally higher
prices, MHIL ended 2017 with operating profit behind prior year due
to increased fuel prices, as well as lower sales of power to third
parties.
1 The LH integration costs
refers to the businesses acquired from LafargeHolcim in
2015.
Americas Distribution (Discontinued Operations)
Solid revenue and strong operating profit growth was achieved in
2017, predominantly in the Exterior Products division. Sales in the
Interior Products business, while remaining healthy, finished the
year behind prior year levels.
Demand for Exterior Products, specifically residential roofing, was
very strong in the hail-affected markets of Minnesota, Colorado,
Maryland, Virginia and Chicago. Continued economic improvement and
focused growth in the Northeast markets (New York, New Jersey,
Pennsylvania), Michigan and Florida were additional performance
drivers for the Exterior Products division. Following a very robust
2016 multi-family demand in the Hawaiian Interior Products market,
2017 sales volumes returned to a more normalised level. This was
partly offset by gains in the California and Colorado Interior
Products markets. Recent facility investments in the Solar business
fuelled growth in that segment also.
In 2017, management remained highly focused on cost control and
maintaining gross margin through improved procurement initiatives
and the persistent monitoring of non-essential expenses. Business
process improvements and the regional service area model continued
to mature, enabling further economies of scale. Five new greenfield
locations were opened in 2017 and the Tri-Built private label
business continued to be developed.
Exterior Products
Most of the residential roofing products continued to grow in 2017,
both in line with the market and due to concentrated efforts to
improve the residential product mix. The storm-affected areas
experienced significant roofing growth and overall the Exterior
Products division reported solid sales and improved operating
profits in 2017.
Interior Products
Sales in this division were tempered in most markets compared with
prior year, with the largest slowdown in the Hawaiian market coming
off a very robust 2016. A focused approach to cost control and
gross margin improvement enabled operating profits to remain in
line with prior year.
Primary Financial Statements
and
Summarised Notes
Year ended 31 December 2017
Consolidated Income Statement
for the financial year ended 31 December 2017
|
|
|
Restated1
|
|
2017
|
|
2016
|
|
€m
|
|
€m
|
|
|
|
|
Revenue
|
25,220
|
|
24,789
|
Cost of sales
|
(16,903)
|
|
(16,566)
|
Gross profit
|
8,317
|
|
8,223
|
Operating costs
|
(6,222)
|
|
(6,315)
|
Group operating profit
|
2,095
|
|
1,908
|
Profit on disposals
|
56
|
|
53
|
Profit before finance costs
|
2,151
|
|
1,961
|
Finance costs
|
(301)
|
|
(325)
|
Finance income
|
12
|
|
8
|
Other financial expense
|
(60)
|
|
(66)
|
Share of equity accounted investments’ profit
|
65
|
|
42
|
Profit before tax from continuing operations
|
1,867
|
|
1,620
|
Income tax expense
|
(55)
|
|
(431)
|
Group profit for the financial year from continuing
operations
|
1,812
|
|
1,189
|
Profit after tax for the financial year from discontinued
operations
|
107
|
|
81
|
Group profit for the financial year
|
1,919
|
|
1,270
|
|
|
|
|
Profit attributable to:
|
|
|
|
Equity holders of the Company
|
|
|
|
From
continuing operations
|
1,788
|
|
1,162
|
From
discontinued operations
|
107
|
|
81
|
Non-controlling interests
|
|
|
|
From
continuing operations
|
24
|
|
27
|
Group profit for the financial year
|
1,919
|
|
1,270
|
|
|
|
|
Basic earnings per Ordinary Share
|
226.8c
|
|
150.2c
|
Diluted earnings per Ordinary Share
|
225.4c
|
|
149.1c
|
|
|
|
|
Basic earnings per Ordinary Share from continuing
operations
|
214.0c
|
|
140.4c
|
Diluted earnings per Ordinary Share from continuing
operations
|
212.7c
|
|
139.4c
|
1
Restated to show the
results of our Americas Distribution segment in discontinued
operations. See note 8 for further details.
Consolidated Statement of Comprehensive Income
for the financial year ended 31 December 2017
|
2017
|
|
2016
|
|
€m
|
|
€m
|
|
|
|
|
Group profit for the financial year
|
1,919
|
|
1,270
|
Other comprehensive income
|
Items that may be reclassified to profit or loss in subsequent
years:
|
Currency translation effects
|
(1,076)
|
|
(82)
|
Gains relating to cash flow hedges
|
8
|
|
14
|
|
(1,068)
|
|
(68)
|
Items that will not be reclassified to profit or loss in subsequent
years:
|
Remeasurement of retirement benefit obligations
|
114
|
|
(61)
|
Tax on items recognised directly within other comprehensive
income
|
(33)
|
|
3
|
|
81
|
|
(58)
|
|
|
|
|
Total other comprehensive income for the financial
year
|
(987)
|
|
(126)
|
Total comprehensive income for the financial year
|
932
|
|
1,144
|
|
|
|
|
Attributable to:
|
|
|
|
Equity holders of the Company
|
969
|
|
1,128
|
Non-controlling interests
|
(37)
|
|
16
|
Total comprehensive income for the financial year
|
932
|
|
1,144
|
Consolidated Balance Sheet
as at 31 December 2017
|
2017
|
|
2016
|
|
€m
|
|
€m
|
ASSETS
|
|
|
|
Non-current assets
|
|
|
|
Property, plant and equipment
|
13,094
|
|
12,690
|
Intangible assets
|
7,214
|
|
7,761
|
Investments accounted for using the equity method
|
1,248
|
|
1,299
|
Other financial assets
|
25
|
|
26
|
Other receivables
|
156
|
|
212
|
Derivative financial instruments
|
30
|
|
53
|
Deferred income tax assets
|
95
|
|
159
|
Total non-current assets
|
21,862
|
|
22,200
|
|
|
|
|
Current assets
|
|
|
|
Inventories
|
2,715
|
|
2,939
|
Trade and other receivables
|
3,630
|
|
3,979
|
Current income tax recoverable
|
165
|
|
4
|
Derivative financial instruments
|
34
|
|
23
|
Cash and cash equivalents
|
2,115
|
|
2,449
|
Assets held for sale
|
1,112
|
|
-
|
Total current assets
|
9,771
|
|
9,394
|
|
|
|
|
Total assets
|
31,633
|
|
31,594
|
|
|
|
|
EQUITY
|
|
|
|
Capital and reserves attributable to the Company's equity
holders
|
|
|
|
Equity share capital
|
286
|
|
284
|
Preference share capital
|
1
|
|
1
|
Share premium account
|
6,417
|
|
6,237
|
Treasury Shares and own shares
|
(15)
|
|
(14)
|
Other reserves
|
285
|
|
286
|
Foreign currency translation reserve
|
(386)
|
|
629
|
Retained income
|
7,903
|
|
6,472
|
Capital and reserves attributable to the Company's equity
holders
|
14,491
|
|
13,895
|
Non-controlling interests
|
486
|
|
548
|
Total equity
|
14,977
|
|
14,443
|
|
|
|
|
LIABILITIES
|
|
|
|
Non-current liabilities
|
|
|
|
Interest-bearing loans and borrowings
|
7,660
|
|
7,515
|
Derivative financial instruments
|
3
|
|
-
|
Deferred income tax liabilities
|
1,666
|
|
2,008
|
Other payables
|
226
|
|
461
|
Retirement benefit obligations
|
377
|
|
591
|
Provisions for liabilities
|
693
|
|
678
|
Total non-current liabilities
|
10,625
|
|
11,253
|
|
|
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
4,534
|
|
4,815
|
Current income tax liabilities
|
458
|
|
394
|
Interest-bearing loans and borrowings
|
316
|
|
275
|
Derivative financial instruments
|
11
|
|
32
|
Provisions for liabilities
|
371
|
|
382
|
Liabilities associated with assets classified as held for
sale
|
341
|
|
-
|
Total current liabilities
|
6,031
|
|
5,898
|
Total liabilities
|
16,656
|
|
17,151
|
|
|
|
|
Total equity and liabilities
|
31,633
|
|
31,594
|
Consolidated Statement of Changes in Equity
for the financial year ended 31 December 2017
|
Attributable to the equity holders of the Company
|
|
|
|
|
|
Treasury
|
|
Foreign
|
|
|
|
|
Issued
|
Share
|
Shares/
|
|
currency
|
|
Non-
|
|
|
share
|
premium
|
own
|
Other
|
translation
|
Retained
|
controlling
|
Total
|
|
capital
|
account
|
shares
|
reserves
|
reserve
|
income
|
interests
|
equity
|
|
€m
|
€m
|
€m
|
€m
|
€m
|
€m
|
€m
|
€m
|
|
|
|
|
|
|
|
|
|
At 1 January 2017
|
285
|
6,237
|
(14)
|
286
|
629
|
6,472
|
548
|
14,443
|
Group
profit for the financial year
|
-
|
-
|
-
|
-
|
-
|
1,895
|
24
|
1,919
|
Other
comprehensive income
|
-
|
-
|
-
|
-
|
(1,015)
|
89
|
(61)
|
(987)
|
Total
comprehensive income
|
-
|
-
|
-
|
-
|
(1,015)
|
1,984
|
(37)
|
932
|
Issue
of share capital (net of expenses)
|
1
|
118
|
-
|
-
|
-
|
-
|
-
|
119
|
Share-based
payment expense
|
-
|
-
|
-
|
62
|
-
|
-
|
-
|
62
|
Treasury/own
shares reissued
|
-
|
-
|
2
|
-
|
-
|
(2)
|
-
|
-
|
Shares
acquired by the Employee Benefit Trust (own shares)
|
-
|
-
|
(3)
|
-
|
-
|
-
|
-
|
(3)
|
Shares
distributed under the Performance Share Plan Awards
|
1
|
62
|
-
|
(63)
|
-
|
-
|
-
|
-
|
Tax
relating to share-based payment expense
|
-
|
-
|
-
|
-
|
-
|
(5)
|
-
|
(5)
|
Dividends
(including shares issued in lieu of dividends)
|
-
|
-
|
-
|
-
|
-
|
(546)
|
(8)
|
(554)
|
Non-controlling
interests arising on acquisition of subsidiaries
|
-
|
-
|
-
|
-
|
-
|
-
|
20
|
20
|
Transactions
involving non-controlling interests
|
-
|
-
|
-
|
-
|
-
|
-
|
(37)
|
(37)
|
At 31 December 2017
|
287
|
6,417
|
(15)
|
285
|
(386)
|
7,903
|
486
|
14,977
|
|
|
|
|
|
|
|
|
|
for the financial year ended 31 December 2016
|
|
|
|
|
|
|
|
|
|
At 1 January 2016
|
282
|
6,021
|
(28)
|
240
|
700
|
5,800
|
529
|
13,544
|
Group
profit for the financial year
|
-
|
-
|
-
|
-
|
-
|
1,243
|
27
|
1,270
|
Other
comprehensive income
|
-
|
-
|
-
|
-
|
(71)
|
(44)
|
(11)
|
(126)
|
Total
comprehensive income
|
-
|
-
|
-
|
-
|
(71)
|
1,199
|
16
|
1,144
|
Issue
of share capital (net of expenses)
|
3
|
216
|
-
|
-
|
-
|
-
|
-
|
219
|
Share-based
payment expense
|
-
|
-
|
-
|
46
|
-
|
-
|
-
|
46
|
Treasury/own
shares reissued
|
-
|
-
|
18
|
-
|
-
|
(18)
|
-
|
-
|
Shares
acquired by the Employee Benefit Trust (own shares)
|
-
|
-
|
(4)
|
-
|
-
|
-
|
-
|
(4)
|
Tax
relating to share-based payment expense
|
-
|
-
|
-
|
-
|
-
|
12
|
-
|
12
|
Dividends
(including shares issued in lieu of dividends)
|
-
|
-
|
-
|
-
|
-
|
(519)
|
(8)
|
(527)
|
Non-controlling
interests arising on acquisition of subsidiaries
|
-
|
-
|
-
|
-
|
-
|
-
|
9
|
9
|
Transactions
involving non-controlling interests
|
-
|
-
|
-
|
-
|
-
|
(2)
|
2
|
-
|
At 31 December 2016
|
285
|
6,237
|
(14)
|
286
|
629
|
6,472
|
548
|
14,443
|
Consolidated Statement of Cash Flows
for the financial year ended 31 December 2017
|
2017
|
|
2016
|
|
€m
|
|
€m
|
Cash flows from operating activities
|
|
|
|
Profit
before tax from continuing operations
|
1,867
|
|
1,620
|
Profit
before tax from discontinued operations
|
146
|
|
121
|
Profit
before tax
|
2,013
|
|
1,741
|
Finance
costs (net)
|
349
|
|
383
|
Share
of equity accounted investments’ profit
|
(65)
|
|
(42)
|
Profit
on disposals
|
(59)
|
|
(55)
|
Group operating profit
|
2,238
|
|
2,027
|
Depreciation
charge
|
1,006
|
|
1,009
|
Amortisation
of intangible assets
|
66
|
|
71
|
Impairment
charge
|
-
|
|
23
|
Share-based
payment expense
|
65
|
|
46
|
Other
(primarily pension payments)
|
(186)
|
|
(65)
|
Net
movement on working capital and provisions
|
(209)
|
|
56
|
Cash generated from operations
|
2,980
|
|
3,167
|
Interest
paid (including finance leases)
|
(317)
|
|
(346)
|
Corporation
tax paid
|
(474)
|
|
(481)
|
Net cash inflow from operating activities
|
2,189
|
|
2,340
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
Proceeds
from disposals (net of cash disposed and deferred
proceeds)
|
222
|
|
283
|
Interest
received
|
11
|
|
8
|
Dividends
received from equity accounted investments
|
31
|
|
40
|
Purchase
of property, plant and equipment
|
(1,044)
|
|
(853)
|
Acquisition
of subsidiaries (net of cash acquired)
|
(1,841)
|
|
(149)
|
Other
investments and advances
|
(11)
|
|
(7)
|
Deferred
and contingent acquisition consideration paid
|
(53)
|
|
(57)
|
Net cash outflow from investing activities
|
(2,685)
|
|
(735)
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
Proceeds
from issue of shares (net)
|
42
|
|
52
|
Transactions
involving non-controlling interests
|
(37)
|
|
-
|
Increase
in interest-bearing loans, borrowings and finance
leases
|
1,010
|
|
600
|
Net
cash flow arising from derivative financial
instruments
|
169
|
|
(5)
|
Premium
paid on early debt redemption
|
(18)
|
|
-
|
Treasury/own
shares purchased
|
(3)
|
|
(4)
|
Repayment
of interest-bearing loans, borrowings and finance
leases
|
(343)
|
|
(2,015)
|
Dividends
paid to equity holders of the Company
|
(469)
|
|
(352)
|
Dividends
paid to non-controlling interests
|
(8)
|
|
(8)
|
Net cash inflow/(outflow) from financing activities
|
343
|
|
(1,732)
|
Decrease in cash and cash equivalents
|
(153)
|
|
(127)
|
|
|
|
|
Reconciliation of opening to closing cash and cash
equivalents
|
|
|
|
Cash and cash equivalents at 1 January
|
2,449
|
|
2,518
|
Translation
adjustment
|
(161)
|
|
58
|
Decrease
in cash and cash equivalents
|
(153)
|
|
(127)
|
Cash and cash equivalents at 31 December
|
2,135
|
|
2,449
|
|
|
|
|
Supplementary Information
Selected Explanatory Notes to the Consolidated Financial
Statements
1.
Basis of Preparation and Accounting Policies
Basis
of Preparation
The
financial information presented in this report has been prepared in
accordance with the Group’s accounting policies under
International Financial Reporting Standards (IFRS) as adopted by
the European Union and as issued by the International Accounting
Standards Board (IASB).
Certain
prior year disclosures have been amended to conform to current year
presentation. The presentation of financial information pertaining
to discontinued operations has been restated retrospectively
(including the Consolidated Income Statement and corresponding
prior year income statement notes).
Adoption
of IFRS and International Financial Reporting Interpretations
Committee (IFRIC) interpretations
The Group has applied those new standards and
interpretations that apply from 1 January 2017, including the
Annual Improvements 2014-2016 Cycle and amendments to IAS 7
Statement of Cash
Flows and to IAS 12
Income
Taxes. These amendments
principally related to clarifications and presentation and their
application did not result in material changes to the Group’s
Consolidated Financial Statements.
Translation
of Foreign Currencies
The
financial information is presented in euro. Results and cash flows
of operations based in non-euro countries have been translated into
euro at average exchange rates for the year and the related balance
sheets have been translated at the rates of exchange ruling at the
balance sheet date. The principal rates used for translation of
results, cash flows and balance sheets into euro were:
|
Average
|
|
Year-end
|
euro 1 =
|
2017
|
2016
|
|
2017
|
2016
|
|
|
|
|
|
|
Brazilian
Real
|
3.6054
|
3.8561
|
|
3.9729
|
3.4305
|
Canadian
Dollar
|
1.4647
|
1.4659
|
|
1.5039
|
1.4188
|
Chinese
Renminbi
|
7.6290
|
7.3522
|
|
7.8044
|
7.3202
|
Hungarian
Forint
|
309.1933
|
311.4379
|
|
310.3300
|
309.8300
|
Indian
Rupee
|
73.5324
|
74.3717
|
|
76.6055
|
71.5935
|
Philippine
Peso
|
56.9734
|
52.5555
|
|
59.7950
|
52.2680
|
Polish
Zloty
|
4.2570
|
4.3632
|
|
4.1770
|
4.4103
|
Pound
Sterling
|
0.8767
|
0.8195
|
|
0.8872
|
0.8562
|
Romanian
Leu
|
4.5688
|
4.4904
|
|
4.6585
|
4.5390
|
Serbian
Dinar
|
121.3232
|
123.1356
|
|
118.3086
|
123.4600
|
Swiss
Franc
|
1.1117
|
1.0902
|
|
1.1702
|
1.0739
|
Ukrainian
Hryvnia
|
30.0341
|
28.2812
|
|
33.6769
|
28.6043
|
US
Dollar
|
1.1297
|
1.1069
|
|
1.1993
|
1.0541
|
2.
Key Components of 2017 Performance
Continuing operations
€
million
|
Sales revenue
|
EBITDA
|
Operating profit
|
Profit on disposals
|
Finance costs (net)
|
Assoc. and JV PAT (i)
|
Pre-tax profit
|
|
|
|
|
|
|
|
|
2016
|
24,789
|
2,980
|
1,908
|
53
|
(383)
|
42
|
1,620
|
Exchange
effects
|
(479)
|
(74)
|
(53)
|
(1)
|
6
|
1
|
(47)
|
2016
at 2017 rates
|
24,310
|
2,906
|
1,855
|
52
|
(377)
|
43
|
1,573
|
Incremental impact in 2017 of:
|
|
|
|
|
|
|
|
2016/2017
acquisitions
|
596
|
60
|
14
|
-
|
(8)
|
-
|
6
|
2016/2017
divestments
|
(204)
|
(21)
|
(14)
|
(3)
|
1
|
-
|
(16)
|
LH
Assets integration costs (ii)
|
-
|
45
|
45
|
-
|
15
|
-
|
60
|
Swiss
pension past service credit (iii)
|
-
|
81
|
81
|
-
|
-
|
-
|
81
|
Early
bond redemption
|
-
|
-
|
-
|
-
|
(18)
|
-
|
(18)
|
Organic
|
518
|
75
|
114
|
7
|
38
|
22
|
181
|
2017
|
25,220
|
3,146
|
2,095
|
56
|
(349)
|
65
|
1,867
|
|
|
|
|
|
|
|
|
%
Total change
|
2%
|
6%
|
10%
|
|
|
|
15%
|
%
Organic change
|
2%
|
3%
|
6%
|
|
|
|
12%
|
(i)
CRH’s
share of after-tax profits of joint ventures and associated
undertakings.
(ii)
LH
Assets integration costs of €45 million were incurred in
2016. In addition, following the related debt restructuring,
finance costs reduced by €15 million in 2017.
(iii)
In
2017, a past service credit of €81 million was recognised due
to Swiss pension plan amendments.
Activity
in the construction industry is characterised by cyclicality and is
dependent to a considerable extent on the seasonal impact of
weather in the Group's operating locations, with activity in some
markets reduced significantly in winter due to inclement weather.
First-half sales from continuing operations accounted for 47% of
full-year 2017 (2016: 47%), while EBITDA from continuing operations
for the first six months of 2017 represented 36% of the full-year
out-turn (2016: 36%).
4.
Share of Equity Accounted Investments’ Profit
The
Group’s share of joint ventures’ and associates’
profit after tax is equity accounted and is presented as a single
line item in the Consolidated Income Statement; it is analysed as
follows between the principal Consolidated Income Statement
captions:
|
2017
|
|
2016
|
|
€m
|
|
€m
|
Group share of:
|
|
|
|
Revenue
|
1,398
|
|
1,249
|
EBITDA
|
154
|
137
|
Operating
profit
|
87
|
|
71
|
Profit
after tax
|
65
|
|
42
|
Analysis of Group share of profit after tax:
|
|
|
|
Share
of joint ventures’ profit after tax
|
43
|
|
51
|
Share
of associates’ profit/(loss) after tax
|
22
|
(9)
|
Share
of equity accounted investments’ profit after
tax
|
65
|
42
|
|
2017
|
|
2016
(i)
|
|
€m
|
%
|
|
€m
|
%
|
Revenue
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
Europe
Heavyside
|
6,902
|
25.1
|
|
6,945
|
25.6
|
Europe
Lightside
|
1,440
|
5.2
|
|
1,392
|
5.2
|
Europe
Distribution
|
4,145
|
15.0
|
|
4,066
|
15.0
|
Americas
Materials
|
7,970
|
28.9
|
|
7,598
|
28.0
|
Americas
Products
|
4,327
|
15.7
|
|
4,280
|
15.8
|
Asia
|
436
|
1.6
|
|
508
|
1.9
|
Total
Group from continuing operations
|
25,220
|
91.5
|
|
24,789
|
91.5
|
Discontinued
operations – Americas Distribution
|
2,343
|
8.5
|
|
2,315
|
8.5
|
Total
Group
|
27,563
|
100.0
|
|
27,104
|
100.0
|
EBITDA
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
Europe
Heavyside
|
839
|
25.4
|
|
781
|
24.9
|
Europe
Lightside
|
143
|
4.3
|
|
137
|
4.4
|
Europe
Distribution
|
269
|
8.1
|
|
206
|
6.6
|
Americas
Materials
|
1,270
|
38.4
|
|
1,204
|
38.5
|
Americas
Products
|
573
|
17.3
|
|
543
|
17.3
|
Asia
|
52
|
1.6
|
|
109
|
3.5
|
Total
Group from continuing operations
|
3,146
|
95.1
|
|
2,980
|
95.2
|
Discontinued
operations – Americas Distribution
|
164
|
4.9
|
|
150
|
4.8
|
Total
Group
|
3,310
|
100.0
|
|
3,130
|
100.0
|
Depreciation,
amortisation and impairment
|
Continuing operations
|
|
|
|
|
|
Europe
Heavyside
|
361
|
33.7
|
|
395
|
35.8
|
Europe
Lightside
|
41
|
3.8
|
|
45
|
4.1
|
Europe
Distribution
|
62
|
5.8
|
|
76
|
6.9
|
Americas
Materials
|
412
|
38.4
|
|
386
|
35.0
|
Americas
Products
|
138
|
12.9
|
|
132
|
12.0
|
Asia
|
37
|
3.4
|
|
38
|
3.4
|
Total
Group from continuing operations
|
1,051
|
98.0
|
|
1,072
|
97.2
|
Discontinued
operations – Americas Distribution
|
21
|
2.0
|
|
31
|
2.8
|
Total
Group
|
1,072
|
100.0
|
|
1,103
|
100.0
|
Operating
profit
|
|
|
|
|
|
Continuing operations
|
|
|
|
|
|
Europe
Heavyside
|
478
|
21.4
|
|
386
|
19.1
|
Europe
Lightside
|
102
|
4.6
|
|
92
|
4.5
|
Europe
Distribution
|
207
|
9.2
|
|
130
|
6.4
|
Americas
Materials
|
858
|
38.3
|
|
818
|
40.3
|
Americas
Products
|
435
|
19.4
|
|
411
|
20.3
|
Asia
|
15
|
0.7
|
|
71
|
3.5
|
Total
Group from continuing operations
|
2,095
|
93.6
|
|
1,908
|
94.1
|
Discontinued
operations – Americas Distribution
|
143
|
6.4
|
|
119
|
5.9
|
Total
Group
|
2,238
|
100.0
|
|
2,027
|
100.0
|
Profit/(loss)
on disposals – continuing operations
|
|
|
|
|
|
Europe
Heavyside
|
19
|
|
|
24
|
|
Europe
Lightside
|
-
|
|
|
1
|
|
Europe
Distribution
|
4
|
|
|
13
|
|
Americas
Materials
|
29
|
|
|
(19)
|
|
Americas
Products
|
4
|
|
|
34
|
|
Asia
|
-
|
|
|
-
|
|
Total Group (ii)
|
56
|
|
|
53
|
|
Footnotes
(i) and (ii) appear on page 21
5.
Segment Information – continued
|
2017
|
|
|
2016
|
|
|
€m
|
|
|
€m
|
|
Reconciliation
of Group operating profit to profit before tax – continuing
operations:
|
|
Group
operating profit from continuing operations (analysed on page
19)
|
2,095
|
|
|
1,908
|
|
Profit
on disposals
|
56
|
|
|
53
|
|
Profit
before finance costs
|
2,151
|
|
|
1,961
|
|
Finance
costs less income
|
(289)
|
|
|
(317)
|
|
Other
financial expense
|
(60)
|
|
|
(66)
|
|
Share
of equity accounted investments’ profit
|
65
|
|
|
42
|
|
Profit
before tax from continuing operations
|
1,867
|
|
|
1,620
|
|
|
|
|
|
|
|
|
2017
|
|
2016
(i)
|
|
€m
|
%
|
|
€m
|
%
|
Total
assets
|
|
|
|
|
|
Europe
Heavyside
|
8,932
|
33.3
|
|
8,383
|
30.4
|
Europe
Lightside
|
1,100
|
4.1
|
|
1,084
|
4.0
|
Europe
Distribution
|
2,178
|
8.1
|
|
2,160
|
7.8
|
Americas
Materials
|
9,180
|
34.3
|
|
8,970
|
32.5
|
Americas
Products
|
4,017
|
15.0
|
|
4,275
|
15.5
|
Americas
Distribution (iii)
|
-
|
-
|
|
1,152
|
4.2
|
Asia
|
1,402
|
5.2
|
|
1,557
|
5.6
|
Subtotal
|
26,809
|
100.0
|
|
27,581
|
100.0
|
Reconciliation
to total assets as reported in the Consolidated Balance
Sheet:
|
|
Investments
accounted for using the equity method
|
1,248
|
|
|
1,299
|
|
Other
financial assets
|
25
|
|
|
26
|
|
Derivative
financial instruments (current and non-current)
|
64
|
|
|
76
|
|
Income
tax assets (current and deferred)
|
260
|
|
|
163
|
|
Cash
and cash equivalents
|
2,115
|
|
|
2,449
|
|
Assets
held for sale
|
1,112
|
|
|
-
|
|
Total
assets as reported in the Consolidated Balance Sheet
|
31,633
|
|
|
31,594
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
|
|
|
Europe
Heavyside
|
2,641
|
42.6
|
|
2,633
|
38.0
|
Europe
Lightside
|
302
|
4.9
|
|
313
|
4.5
|
Europe
Distribution
|
563
|
9.1
|
|
642
|
9.3
|
Americas
Materials
|
1,628
|
26.2
|
|
1,725
|
24.9
|
Americas
Products
|
895
|
14.4
|
|
998
|
14.4
|
Americas
Distribution (iii)
|
-
|
-
|
|
392
|
5.7
|
Asia
|
172
|
2.8
|
|
224
|
3.2
|
Subtotal
|
6,201
|
100.0
|
|
6,927
|
100.0
|
Footnotes
(i) and (iii) appear on page 21
5.
Segment Information – continued
|
2017
|
|
2016
|
|
|
€m
|
|
€m
|
|
Reconciliation
to total liabilities as reported in the Consolidated Balance
Sheet:
|
Total
segment liabilities (analysed on page 20)
|
6,201
|
|
6,927
|
|
Interest-bearing
loans and borrowings (current and non-current)
|
7,976
|
|
7,790
|
|
Derivative
financial instruments (current and non-current)
|
14
|
|
32
|
|
Income
tax liabilities (current and deferred)
|
2,124
|
|
2,402
|
|
Liabilities
associated with assets classified as held for sale
|
341
|
|
-
|
|
Total
liabilities as reported in the Consolidated Balance
Sheet
|
16,656
|
|
17,151
|
|
Footnotes to segment information on pages 19 and 20
(i)
During
2017, our dedicated European landscaping businesses previously
included within our Europe Heavyside segment were reorganised to
form a new platform, Architectural Products, within our Europe
Lightside segment. Comparative segment amounts for 2016 have been
restated where necessary to reflect the new format for
segmentation.
(ii)
For
profit on disposal from discontinued operations refer to note 8 on
page 22.
(iii)
During 2017, the Americas Distribution segment was
classified as held for sale under IFRS 5 Non-Current Assets Held for
Sale and Discontinued Operations (refer to note 8 for further information).
Accordingly its total assets and total liabilities have not been
presented for 2017.
6.
Earnings per Ordinary Share
The
computation of basic and diluted earnings per Ordinary Share is set
out below:
|
2017
|
|
2016
|
Numerator computations
|
€m
|
|
€m
|
Group
profit for the financial year
|
1,919
|
|
1,270
|
Profit
attributable to non-controlling interests
|
(24)
|
|
(27)
|
Numerator for basic and diluted earnings per Ordinary
Share
|
1,895
|
|
1,243
|
Profit
after tax for the financial year from discontinued
operations
|
107
|
|
81
|
Numerator for basic and diluted earnings per Ordinary Share from
continuing operations
|
1,788
|
|
1,162
|
|
|
|
|
|
Number of
|
|
Number
of
|
Denominator computations
|
Shares
|
|
Shares
|
Weighted
average number of Ordinary Shares (millions) outstanding for the
year
|
835.6
|
|
827.8
|
Effect
of dilutive potential Ordinary Shares (employee share options)
(millions)
|
5.2
|
|
6.1
|
Denominator for diluted earnings per Ordinary Share
|
840.8
|
|
833.9
|
|
|
|
|
Earnings per Ordinary Share
|
|
|
|
-
basic
|
226.8c
|
|
150.2c
|
-
diluted
|
225.4c
|
|
149.1c
|
|
|
|
|
Earnings per Ordinary Share from continuing operations
|
|
|
|
-
basic
|
214.0c
|
|
140.4c
|
-
diluted
|
212.7c
|
|
139.4c
|
|
2017
|
|
2016
|
Net
dividend paid per share
|
65.4c
|
|
62.8c
|
Net
dividend declared for the year
|
68.0c
|
|
65.0c
|
Dividend
cover (Earnings per share/Dividend declared per share) –
continuing and discontinued operations
|
3.3x
|
|
2.3x
|
Dividend
cover – continuing operations
|
3.1x
|
|
2.2x
|
8.
Assets Held for Sale and Discontinued Operations
In
August 2017, the Group entered into a sales agreement with Beacon
Roofing Supply Inc. to dispose of its 100% holding in Allied
Building Products, the trading name of our Americas Distribution
segment, for a consideration of US$2.6 billion. The transaction
closed on 2 January 2018. The assets associated with this
transaction met the ‘held for sale’ criteria set out in
IFRS 5 and the relevant assets and liabilities have accordingly
been reclassified as assets and liabilities held for sale as set
out in the table below. The proceeds of the sale exceeded the
carrying amount of the related net assets and, accordingly, no
impairment loss was recognised on the reclassification of Americas
Distribution as held for sale.
The
businesses divested in 2017 are not considered to be either
separate major lines of business or geographical areas of operation
and therefore do not constitute discontinued operations as defined
by IFRS 5.
A.
Discontinued operations
The
results of the discontinued operations included in the Group profit
for the financial year are set out below.
|
2017
|
|
2016
|
|
€m
|
|
€m
|
Revenue
|
2,343
|
|
2,315
|
|
|
|
EBITDA
|
164
|
150
|
Depreciation
|
(16)
|
|
(22)
|
Amortisation
|
(5)
|
|
(9)
|
Operating profit
|
143
|
|
119
|
Profit
on disposals
|
3
|
|
2
|
Profit before tax
|
146
|
|
121
|
Attributable
income tax expense (i)
|
(39)
|
|
(40)
|
Profit after tax
|
107
|
|
81
|
|
|
|
|
Basic
earnings per Ordinary Share from discontinued
operations
|
12.8c
|
|
9.8c
|
Diluted
earnings per Ordinary Share from discontinued
operations
|
12.7c
|
|
9.7c
|
|
|
|
|
Cash flows from discontinued operations
|
|
|
|
Net
cash inflow from operating activities
|
111
|
|
123
|
Net
cash outflow from investing activities
|
(27)
|
|
(22)
|
Net
cash inflow/(outflow) from financing activities
|
1
|
|
(1)
|
Net
cash inflows
|
85
|
|
100
|
|
|
|
|
(i)
The 2017
attributable income tax expense includes a non-cash deferred tax
credit of €7 million related to the enactment of the
“Tax Cuts and Jobs Act” in the US during the
year.
B.
Assets held for sale
|
|
2017
|
Assets
|
|
€m
|
Property,
plant and equipment
|
|
104
|
Intangible
assets
|
|
372
|
Deferred
income tax assets
|
|
16
|
Inventories
|
|
266
|
Trade
and other receivables
|
|
334
|
Cash
and cash equivalents
|
|
20
|
Assets
held for sale
|
|
1,112
|
|
|
|
Liabilities
|
|
|
Trade
and other payables
|
|
306
|
Interest-bearing
loans and borrowings
|
|
5
|
Deferred
income tax liabilities
|
|
30
|
Liabilities
associated with assets classified as held for sale
|
|
341
|
|
|
|
Net
assets held for sale
|
|
771
|
Total
gains recognised in other comprehensive income and accumulated in
equity relating to assets held for sale amounted to €32
million at 31 December 2017.
Continuing operations
|
2017
|
|
2016
|
|
€m
|
|
€m
|
|
|
|
|
Finance
costs
|
301
|
|
325
|
Finance
income
|
(12)
|
|
(8)
|
Other
financial expense
|
60
|
|
66
|
Total net finance costs
|
349
|
|
383
|
|
|
|
|
The overall total is analysed as follows:
|
|
|
|
Net
finance costs on interest-bearing loans and borrowings and cash and
cash equivalents
|
290
|
|
319
|
Net
credit re change in fair value of derivatives and fixed rate
debt
|
(1)
|
|
(2)
|
Net
debt-related interest costs
|
289
|
|
317
|
Premium
paid on early debt redemption
|
18
|
|
-
|
Net
pension-related finance cost
|
11
|
|
12
|
Charge
to unwind discount on provisions/deferred and contingent
consideration
|
31
|
|
54
|
Total net finance costs
|
349
|
|
383
|
|
2017
|
|
2016
|
|
Fair value
|
Book
value
|
|
Fair
value
|
Book
Value
|
Net
debt
|
€m
|
€m
|
|
€m
|
€m
|
Non-current assets
|
|
|
|
|
|
Derivative
financial instruments
|
30
|
30
|
|
53
|
53
|
Current assets
|
|
|
|
|
|
Derivative
financial instruments
|
34
|
34
|
|
23
|
23
|
Cash
and cash equivalents (i)
|
2,135
|
2,135
|
|
2,449
|
2,449
|
Non-current liabilities
|
|
|
|
|
|
Interest-bearing
loans and borrowings
|
(8,100)
|
(7,660)
|
|
(7,961)
|
(7,515)
|
Derivative
financial instruments
|
(3)
|
(3)
|
|
-
|
-
|
Current liabilities
|
|
|
|
|
|
Interest-bearing
loans and borrowings (ii)
|
(321)
|
(321)
|
|
(275)
|
(275)
|
Derivative
financial instruments
|
(11)
|
(11)
|
|
(32)
|
(32)
|
Group
net debt
|
(6,236)
|
(5,796)
|
|
(5,743)
|
(5,297)
|
|
|
|
|
|
|
(i)
Included
within cash and cash equivalents is cash at bank and in hand
reclassified as held for sale of €20 million.
(ii)
Included
within interest-bearing loans and borrowings is bank overdrafts
reclassified as held for sale amounting to €5
million.
Gross
debt, net of derivatives, matures as follows:
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
€m
|
|
€m
|
|
|
|
|
|
Within
one year
|
|
298
|
|
284
|
Between
one and two years
|
|
494
|
|
615
|
Between
two and five years
|
|
2,035
|
|
2,220
|
After
five years
|
|
5,104
|
|
4,627
|
Total
|
|
7,931
|
|
7,746
|
Reconciliation
of opening to closing net debt:
|
|
|
|
|
|
|
2017
|
|
2016
|
|
|
€m
|
|
€m
|
|
|
|
|
|
At
1 January
|
|
(5,297)
|
|
(6,618)
|
Debt in
acquired companies
|
|
(12)
|
|
(3)
|
Increase in
interest-bearing loans, borrowings and finance leases
|
|
(1,010)
|
|
(600)
|
Net
cash flow arising from derivative financial
instruments
|
|
(169)
|
|
5
|
Repayment of
interest-bearing loans, borrowings and finance leases
|
|
343
|
|
2,015
|
Decrease in cash
and cash equivalents
|
|
(153)
|
|
(127)
|
Mark-to-market
adjustment
|
|
9
|
|
21
|
Translation
adjustment
|
|
493
|
|
10
|
At
31 December
|
|
(5,796)
|
|
(5,297)
|
Market
capitalisation
Market
capitalisation, calculated as the year-end share price multiplied
by the number of Ordinary Shares in issue, is as
follows:
|
2017
|
|
2016
|
|
€m
|
|
€m
|
Market
capitalisation at year-end
|
25,129
|
|
27,442
|
Liquidity
information - borrowing facilities
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
available as at the balance sheet date, in respect of which all
conditions precedent had been met, mature as follows:
|
2017
|
|
2016
|
|
€m
|
|
€m
|
Within
one year
|
-
|
|
197
|
Between
one and two years
|
-
|
|
-
|
Between
two and five years
|
3,554
|
|
2,837
|
After
five years
|
-
|
|
-
|
|
3,554
|
|
3,034
|
Lender
covenants
The
Group's major bank facilities require the Group to maintain certain
financial covenants. Non-compliance with financial covenants would
give the relevant lenders the right to terminate facilities and
demand early repayment of any sums drawn thereunder thus altering
the maturity profile of the Group's debt and the Group's liquidity.
Calculations for financial covenants are completed for twelve-month
periods half-yearly on 30 June and 31 December. The Group was in
full compliance with its financial covenants throughout each of the
periods presented. The Group is not aware of any stated events of
default as defined in the Agreements.
The
financial covenants are:
(1)
Minimum interest cover defined as
PBITDA/net interest (all as defined in the relevant agreement)
cover at no lower than 4.5 times (2016: 4.5 times). As at 31
December 2017, the ratio was 11.6 times (2016: 10.1
times).
(2)
Minimum net worth defined as total
equity plus deferred tax liabilities and capital grants less
repayable capital grants being in aggregate no lower than
€6.2 billion (2016: €6.2 billion) (such minimum being
adjusted for foreign exchange translation impacts). As at 31
December 2017, net worth (as defined in the relevant agreement) was
€16.6 billion (2016: €16.4 billion).
Net
debt metrics
The net
debt metrics based on net debt as shown in note 10, EBITDA as
defined on page 31 and net debt-related interest as shown in note 9
are as follows:
|
|
2017
|
|
2016
|
|
|
|
|
|
EBITDA
net interest cover (EBITDA divided by net interest) –
continuing operations
|
|
10.9x
|
|
9.4x
|
EBIT
net interest cover (EBIT divided by net interest) –
continuing operations
|
|
7.2x
|
|
6.0x
|
|
|
|
|
|
Net
debt as a percentage of market capitalisation
|
23%
|
|
19%
|
Net
debt as a percentage of total equity
|
39%
|
|
37%
|
11.
Operating Lease Rentals
Continuing operations
|
2017
|
|
2016
|
|
€m
|
|
€m
|
|
|
|
|
Hire
of plant and machinery
|
292
|
|
262
|
Land
and buildings
|
258
|
|
250
|
Other
operating leases
|
56
|
|
57
|
Total
|
606
|
|
569
|
12.
Commitments under Operating and Finance Leases
Operating
leases
The
Group has entered into operating leases for a range of assets
principally relating to property across the US and Europe. Lease
commitments are provided for up to the earliest break clause in the
lease. These property leases have varying terms, escalation clauses
and renewal rights including periodic rent reviews linked with a
consumer price index and/or other indices. The Group also leases
plant and machinery, vehicles and equipment under operating leases.
The terms and conditions of these operating leases do not impose
any significant financial restriction on the Group.
|
2017
|
|
2016
|
|
€m
|
|
€m
|
|
|
|
|
Within
one year
|
419
|
|
402
|
After
one year but not more than five years
|
962
|
|
978
|
More
than five years
|
810
|
|
791
|
|
2,191
|
|
2,171
|
The
commitments above include €252 million of operating lease
commitments (2016: €237 million) relating to discontinued
operations.
Finance
leases
Future
minimum lease payments under finance leases are not material for
the Group.
13.
Future Purchase Commitments for Property, Plant and
Equipment
|
2017
|
|
2016
|
|
€m
|
|
€m
|
|
|
|
|
Contracted
for but not provided in the financial statements
|
346
|
|
309
|
Authorised
by the Directors but not contracted for
|
491
|
|
467
|
14.
Business Combinations
The
acquisitions completed during the year ended 31 December 2017 by
reportable segment, together with the completion dates, are
detailed below; these transactions entailed the acquisition of an
effective 100% stake except where indicated to the
contrary:
Europe Heavyside:
Germany: Fels (31 October) and land
adjacent to Saal Quarry (27 December);
Ireland: certain assets of Kilsaran RMC
Ltd. (14 September); and
UK: J.B. Riney & Co. Ltd. (12 May),
increased stake in Scotash Ltd. to 100% (19 July), assets of East
Antrim Mini Mix (1 August), Fields Farm (15 December) and increased
stake in Newhaven Roadstone Ltd. to 100% (29
December).
Europe Distribution:
Germany: AGP Bauzentrum GmbH (31
August) and Kruger and Scharnberg GmbH (30 October).
Americas
Materials:
Canada: Carrières St-Jacques Inc.
(22 February) and K.J. Beamish Construction Co. Ltd. (26
May);
Colorado: Connell Resources (24
February);
Connecticut: Costello Industries, Inc.
(4 January);
Florida: Suwannee American Cement Co.,
Inc., Prestige Concrete Products, Inc. and A. Mining Group, LLC (30
November);
Idaho: certain assets of Hardcore Ready
Mix (12 July);
Indiana: Mulzer Crushed Stone, Inc. (10
February);
Minnesota: Hardrives, Inc. (24
February) and Chard Tiling and Excavating and Rivers Edge (24
February);
New Jersey: Byram Quarry (4
December);
Oklahoma: United Materials (28
September);
Texas: assets of Henderson Asphalt (30
August); and
Washington: Columbia Asphalt (13
February).
Americas
Products:
Alabama: Block USA (29
September);
Arkansas: Advanced Environmental
Recycling Technologies, Inc. (1 May);
Illinois: certain assets of Elston
Materials, LLC (13 September);
Oregon: Advantage Precast, Inc. (12
July), Hansen Architectural Systems, Inc. (8 August) and Spec
Industries, Inc. (14 November);
Pennsylvania: Behney Corp. (31 July);
and
Texas: Duravault, Inc. (11
May).
The
following table analyses the 31 acquisitions completed in 2017
(2016: 21 acquisitions) by reportable segment and provides details
of the goodwill and consideration figures arising in each of those
segments:
|
Number of acquisitions
|
|
Goodwill
|
|
Consideration
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Reportable
segments
|
|
|
|
|
€m
|
|
€m
|
|
€m
|
|
€m
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe
Heavyside
|
8
|
|
5
|
|
155
|
|
2
|
|
698
|
|
15
|
Europe
Lightside
|
-
|
|
2
|
|
-
|
|
7
|
|
-
|
|
22
|
Europe
Distribution
|
2
|
|
1
|
|
17
|
|
-
|
|
30
|
|
-
|
Europe
|
10
|
|
8
|
|
172
|
|
9
|
|
728
|
|
37
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Materials
|
13
|
|
8
|
|
239
|
|
10
|
|
1,171
|
|
97
|
Americas
Products
|
8
|
|
5
|
|
76
|
|
7
|
|
162
|
|
33
|
Americas
|
21
|
|
13
|
|
315
|
|
17
|
|
1,333
|
|
130
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Group
|
31
|
|
21
|
|
487
|
|
26
|
|
2,061
|
|
167
|
Adjustments
to provisional fair values of prior year acquisitions
|
-
|
|
45
|
|
(1)
|
|
8
|
Total
|
487
|
|
71
|
|
2,060
|
|
175
|
14.
Business Combinations – continued
The
identifiable net assets acquired, including adjustments to
provisional fair values, were as follows:
|
2017
|
|
2016
|
ASSETS
|
€m
|
|
€m
|
Non-current assets
|
|
|
|
Property,
plant and equipment
|
1,536
|
|
19
|
Intangible
assets
|
56
|
|
14
|
Total non-current assets
|
1,592
|
|
33
|
|
|
|
|
Current assets
|
|
|
|
Inventories
|
114
|
|
9
|
Trade
and other receivables (i)
|
129
|
|
28
|
Cash
and cash equivalents
|
174
|
|
4
|
Total current assets
|
417
|
|
41
|
|
|
|
|
LIABILITIES
|
|
|
|
Trade
and other payables
|
(149)
|
|
(14)
|
Provisions
for liabilities
|
(49)
|
|
18
|
Retirement
benefit obligations
|
(52)
|
|
(1)
|
Interest-bearing
loans and borrowings and finance leases
|
(12)
|
|
(3)
|
Current
income tax liabilities
|
(22)
|
|
4
|
Deferred
income tax liabilities
|
(132)
|
|
35
|
Total liabilities
|
(416)
|
|
39
|
|
|
|
|
Total
identifiable net assets at fair value
|
1,593
|
|
113
|
Goodwill
arising on acquisition (ii)
|
487
|
|
71
|
Non-controlling
interests*
|
(20)
|
|
(9)
|
Total consideration
|
2,060
|
|
175
|
|
|
|
|
Consideration satisfied by:
|
|
|
|
Cash
payments
|
2,015
|
|
153
|
Deferred
consideration (stated at net present cost)
|
45
|
|
21
|
Contingent
consideration
|
-
|
|
1
|
Total consideration
|
2,060
|
|
175
|
|
|
|
|
NET CASH OUTFLOW ARISING ON ACQUISITIONS
|
|
|
|
Cash
consideration
|
2,015
|
|
153
|
Less:
cash and cash equivalents acquired
|
(174)
|
|
(4)
|
Total outflow in the
Consolidated Statement of Cash Flows (iii)
|
1,841
|
|
149
|
|
|
|
|
Footnotes (i), (ii)
and (iii) appear on page 28.
*Non-controlling interests are measured at the proportionate share
of net assets.
14.
Business Combinations – continued
None of the acquisitions completed during the
financial year were considered sufficiently material to warrant
separate disclosure of the attributable fair values. The initial
assignment of fair values to identifiable net assets (most
significantly, property, plant and equipment) acquired has been
performed on a provisional basis in respect of certain
acquisitions; any amendments to these fair values made during the
subsequent reporting window (within the measurement period imposed
by IFRS 3 Business Combinations)
will be subject to subsequent
disclosure.
Post-acquisition impact
The
post-acquisition impact of acquisitions completed during the year
on the Group’s profit for the financial year were as
follows:
|
2017
|
|
2016
|
|
€m
|
|
€m
|
|
|
|
|
Revenue
|
532
|
|
101
|
(Loss)/profit
before tax for the financial year
|
(2)
|
|
1
|
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:
|
|
|
CRH Group H
|
|
CRH Group H
|
|
2017
|
|
excluding 2017
|
|
including 2017
|
|
acquisitions
|
|
acquisitions
|
|
acquisitions
|
|
€m
|
|
€m
|
|
€m
|
|
|
|
|
|
|
Revenue
|
1,188
|
|
24,688
|
|
25,876
|
Profit
before tax for the financial year
|
38
|
|
1,869
|
|
1,907
|
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.
Acquisition-related costs
Acquisition-related
costs, excluding post-acquisition integration costs, amounting to
€11 million (2016: €2 million) have been included in
operating costs in the Consolidated Income Statement.
Footnotes to the acquisition balance sheet on page 27
(i)
The
gross contractual value of trade and other receivables as at the
respective dates of acquisition amounted to €132 million
(2016: €30 million). The fair value of these receivables
is €129 million (all of which is expected to be recoverable)
(2016: €28 million).
(ii)
The
principal factor contributing to the recognition of goodwill on
acquisitions entered into by the Group is the realisation of cost
savings and other synergies with existing entities in the Group
which do not qualify for separate recognition as intangible assets.
Due to the asset-intensive nature of operations in the Europe
Heavyside and Americas Materials business segments, no significant
identifiable intangible assets are recognised on business
combinations in these segments. €260 million of the goodwill
recognised in respect of acquisitions completed in 2017 is expected
to be deductible for tax purposes (2016: €15
million).
(iii)
The
total cash outflow of €1,841 million arising on acquisitions
(2016: €149 million) is reported in the Consolidated
Statement of Cash Flows on page 16. In addition, the Group made
other investments and advances of €11 million during the year
(2016: €7 million). These amounts, combined with deferred and
contingent consideration of €53 million paid in 2017 in
respect of acquisitions in prior years (2016: €57 million)
result in total acquisition and investment spend for the year of
€1,905 million (2016: €213 million).
15.
Retirement Benefit Obligations
The
Group operates either defined benefit or defined contribution
pension schemes in all of its principal operating
areas.
In
consultation with the actuaries to the various defined benefit
pension schemes (including jubilee schemes, long-term service
commitments and post-retirement healthcare obligations, where
relevant), the valuations of the applicable assets and liabilities
have been marked-to-market as at the end of the financial year
taking account of prevailing bid values, actual investment returns,
corporate bond yields and other matters such as updated funding
valuations conducted during the year.
Financial
assumptions – scheme liabilities
The
major long-term assumptions used by the Group’s actuaries in
the computation of scheme liabilities for the current and prior
year are as follows:
|
Eurozone
|
|
Switzerland
|
|
United
States
and
Canada
|
|
2017
|
2016
|
|
2017
|
2016
|
|
2017
|
2016
|
|
%
|
%
|
|
%
|
%
|
|
%
|
%
|
Rate of increase in:
|
|
|
|
|
|
|
|
|
-
salaries
|
3.59
|
3.41
|
|
1.25
|
1.25
|
|
3.27
|
3.28
|
- pensions in
payment
|
1.70
|
1.50
|
|
-
|
-
|
|
-
|
-
|
Inflation
|
1.75
|
1.50
|
|
0.75
|
0.75
|
|
2.00
|
2.00
|
Discount
rate
|
2.05
|
1.86
|
|
0.70
|
0.65
|
|
3.52
|
4.01
|
Medical
cost trend rate
|
n/a
|
n/a
|
|
n/a
|
n/a
|
|
6.33
|
5.98
|
The
following table provides a reconciliation of scheme assets (at bid
value) and the actuarial value of scheme liabilities (using the
aforementioned assumptions):
|
Assets
|
|
Liabilities
|
|
Net liability
|
|
2017
|
2016
|
|
2017
|
2016
|
|
2017
|
2016
|
|
€m
|
€m
|
|
€m
|
€m
|
|
€m
|
€m
|
|
|
|
|
|
|
|
|
|
At 1
January
|
2,556
|
2,399
|
|
(3,147)
|
(2,987)
|
|
(591)
|
(588)
|
Administration
expenses
|
(4)
|
(4)
|
|
-
|
-
|
|
(4)
|
(4)
|
Current
service cost
|
-
|
-
|
|
(62)
|
(61)
|
|
(62)
|
(61)
|
Past
service credit (net) (i)
|
-
|
-
|
|
78
|
2
|
|
78
|
2
|
Interest income on
scheme assets
|
49
|
58
|
|
-
|
-
|
|
49
|
58
|
Interest cost on
scheme liabilities
|
-
|
-
|
|
(60)
|
(70)
|
|
(60)
|
(70)
|
Arising
on acquisition
|
5
|
-
|
|
(57)
|
(1)
|
|
(52)
|
(1)
|
Remeasurement
adjustments:
|
|
|
|
|
|
|
|
|
-return on scheme assets excluding interest income
|
112
|
81
|
|
-
|
-
|
|
112
|
81
|
-experience variations
|
-
|
-
|
|
11
|
20
|
|
11
|
20
|
-actuarial loss from changes in financial assumptions
|
-
|
-
|
|
(29)
|
(176)
|
|
(29)
|
(176)
|
-actuarial gain from changes in demographic
assumptions
|
-
|
-
|
|
20
|
14
|
|
20
|
14
|
Employer
contributions paid
|
123
|
133
|
|
-
|
-
|
|
123
|
133
|
Contributions paid
by plan participants
|
14
|
14
|
|
(14)
|
(14)
|
|
-
|
-
|
Benefit
and settlement payments
|
(114)
|
(130)
|
|
114
|
130
|
|
-
|
-
|
Translation
adjustment
|
(119)
|
5
|
|
147
|
(4)
|
|
28
|
1
|
At 31
December
|
2,622
|
2,556
|
|
(2,999)
|
(3,147)
|
|
(377)
|
(591)
|
Related
deferred income tax asset
|
|
|
|
|
|
|
72
|
119
|
Net
pension liability
|
|
|
|
|
|
|
(305)
|
(472)
|
(i)
Past
service credit in 2017 includes a gain of €81 million due to
plan amendments in Switzerland. The principal amendment related to
the reduction of the annuity conversion factor on retirement from
6.4% to 5.0% of accumulated savings.
16.
Related Party Transactions
Sales
to and purchases from associates and joint ventures are as
follows:
|
Associates
|
|
Joint Ventures
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
€m
|
|
€m
|
|
€m
|
|
€m
|
|
|
|
|
|
|
|
|
Sales
|
51
|
|
56
|
|
111
|
|
88
|
Purchases
|
400
|
|
401
|
|
55
|
|
54
|
Loans
extended by the Group to joint ventures and associates 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
in trade and other receivables and trade and other payables
respectively in the Consolidated Balance Sheet.
17.
Statutory Accounts and Audit Opinion
The
financial information presented in this report does not constitute
the statutory financial statements for the purposes of Chapter 4 of
Part 6 of the Companies Act 2014. Full statutory financial
statements for the year ended 31 December 2017 prepared in
accordance with IFRS, upon which the Auditors have given an
unqualified audit report, have not yet been filed with the
Registrar of Companies. Full statutory financial statements for the
year ended 31 December 2016, prepared in accordance with IFRS and
containing an unqualified audit report, have been delivered to the
Registrar of Companies.
18.
Annual Report and Form 20-F and Annual General Meeting
(AGM)
The
2017 Annual Report and Form 20-F is expected to be published on the
CRH website, www.crh.com, on 9 March 2018 and posted on 28 March
2018 to those shareholders who have requested a paper copy,
together with details of the Scrip Dividend Offer in respect of the
final 2017 dividend. A paper copy of the Annual Report and Form
20-F may be obtained at the Company’s registered office from
28 March 2018. The Company’s AGM is scheduled to be held in
the Royal Marine Hotel, Dun Laoghaire, Co. Dublin at 11:00 a.m. on
26 April 2018.
This
announcement was approved by the Board of Directors of CRH plc on
28 February 2018.
Glossary of Alternative Performance Measures
CRH uses a number of alternative performance measures (APMs) to
monitor financial performance. These measures are referred to
throughout the discussion of our reported financial position and
operating performance throughout this document and are measures
which are regularly reviewed by CRH management. The APMs 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 APMs as summarised below should not be viewed in isolation or
as an alternative to the equivalent GAAP measure.
EBITDA
EBITDA is defined as earnings before interest, taxes, depreciation,
amortisation, asset impairment charges, profit on disposals and the
Group’s share of equity accounted investments’ profit
after tax and is quoted by management, in conjunction with other
GAAP and non-GAAP financial measures, to aid investors in their
analysis of the performance of the Group and to assist investors in
the comparison of the Group’s performance with that of other
companies.
EBITDA and operating profit by segment are monitored by management
in order to allocate resources between segments and to assess
performance. Given that net finance costs and income tax are
managed on a centralised basis, these items are not allocated
between operating segments for the purpose of the information
presented to the Chief Operating Decision Maker.
Operating profit (EBIT) is defined as earnings before interest,
tax, profit on disposals and the Group’s share of equity
accounted investments’ profit after tax.
A reconciliation of Group profit before tax to EBITDA is presented
below. The references to EBITDA on pages 1 to 3 inclusive refer to
continuing and discontinued operations. As discontinued operations
related to the Americas Distribution segment only, there is no
difference between continuing operations and the combined results
for continuing and discontinued operations on pages 4 to 9
inclusive. The primary financial statements and summarised notes
refer to continuing operations only, except for specific references
to discontinued operations.
|
|
|
Continuing and
|
|
Continuing Operations
|
|
Discontinued Operations
|
|
2017
|
2016
|
|
2017
|
2016
|
|
€m
|
€m
|
|
€m
|
€m
|
|
|
|
|
|
|
Group profit for the financial year
|
1,812
|
1,189
|
|
1,919
|
1,270
|
Income
tax expense
|
55
|
431
|
|
94
|
471
|
Profit before tax
|
1,867
|
1,620
|
|
2,013
|
1,741
|
Share
of equity accounted investments’ profit
|
(65)
|
(42)
|
|
(65)
|
(42)
|
Other
financial expense
|
60
|
66
|
|
60
|
66
|
Finance
costs less income
|
289
|
317
|
|
289
|
317
|
Profit before finance costs
|
2,151
|
1,961
|
|
2,297
|
2,082
|
Profit
on disposals
|
(56)
|
(53)
|
|
(59)
|
(55)
|
Group operating profit
|
2,095
|
1,908
|
|
2,238
|
2,027
|
Depreciation
charge
|
990
|
987
|
|
1,006
|
1,009
|
Amortisation of
intangibles
|
61
|
62
|
|
66
|
71
|
Impairment
charge
|
-
|
23
|
|
-
|
23
|
EBITDA
|
3,146
|
2,980
|
|
3,310
|
3,130
|
|
|
|
|
|
|
|
Glossary of Alternative Performance Measures –
continued
RONA
Return on Net Assets is a key internal pre-tax measure of operating
performance throughout the CRH Group and can be used by management
and investors to measure the relative use of assets between CRH
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 as a
percentage of average net assets. Net assets comprise total assets
by segment (including assets held for sale) less total liabilities
by segment (including liabilities associated with assets classified
as held for sale) as shown in note 5 on page 20, and exclude equity
accounted investments and other financial assets, net debt (as
defined on page 33) and tax assets and liabilities. The average net
assets for the year is the simple average of the opening and
closing balance sheet figures.
RONA is referred to on page 1 and is calculated based on the
combined results for continuing and discontinued operations. The
calculation of RONA is presented below:
|
|
2017
|
|
2016
|
|
|
€m
|
|
€m
|
|
|
|
|
|
Group
operating profit - continuing operations
|
|
2,095
|
|
1,908
|
Group
operating profit - discontinued operations
|
|
143
|
|
119
|
Group
operating profit (numerator for RONA computation)
|
|
2,238
|
|
2,027
|
|
|
|
|
|
Current year
|
|
|
|
|
Segment
assets (i)
|
|
26,809
|
|
27,581
|
Segment
liabilities (i)
|
|
(6,201)
|
|
(6,927)
|
Group
segment net assets excluding assets held for sale
|
|
20,608
|
|
20,654
|
Assets held for sale
|
|
1,112
|
|
|
Liabilities associated with assets classified as held for
sale
|
|
(341)
|
|
-
|
Group segment net assets
|
|
21,379
|
|
20,654
|
|
|
|
|
|
Prior year (2016 and 2015)
|
|
|
|
|
Segment
assets (i)
|
|
27,581
|
|
27,881
|
Segment
liabilities (i)
|
|
(6,927)
|
|
(6,794)
|
Group
segment net assets (ii)
|
|
20,654
|
|
21,087
|
|
|
|
|
|
Average
net assets (denominator for RONA computation)
|
|
21,017
|
|
20,871
|
RONA
|
|
10.6%
|
|
9.7%
|
(i)
Segment
assets and liabilities as disclosed in note 5 on page
20.
(ii)
Segment
assets and liabilities are not restated for assets classified as
held for sale (net of associated liabilities) in prior
years.
Glossary of Alternative Performance Measures –
continued
Net debt and net debt/EBITDA
Net debt is used by management as it gives a more complete picture
of the Group’s current debt situation than total
interest-bearing loans and borrowings. Net debt is provided to
enable investors to see the economic effect of gross debt, related
hedges and cash and cash equivalents in total. Net debt is a
non-GAAP measure and comprises current and non-current
interest-bearing loans and borrowings, cash and cash equivalents
and current and non-current derivative financial
instruments.
Net debt/EBITDA is monitored by management and is useful to
investors in assessing the Company’s level of indebtedness
relative to its profitability and cash-generating capabilities. It
is the ratio of net debt to EBITDA and is calculated
below:
|
|
2017
|
|
2016
|
|
|
€m
|
|
€m
|
Net debt
|
|
|
|
|
Cash
and cash equivalents (i)
|
|
2,115
|
|
2,449
|
Interest-bearing
loans and borrowings (i)
|
|
(7,976)
|
|
(7,790)
|
Derivative
financial instruments (net) (i)
|
|
50
|
|
44
|
Group net debt excluding net debt reclassified as held for
sale
|
|
(5,811)
|
|
(5,297)
|
Cash at
bank and in hand reclassified as held for sale (ii)
|
|
20
|
|
-
|
Bank
overdrafts reclassified as held for sale (ii)
|
|
(5)
|
|
-
|
Group net debt (i)
|
|
(5,796)
|
|
(5,297)
|
|
|
|
|
|
EBITDA
– continuing and discontinued operations
|
|
3,310
|
|
3,130
|
EBITDA – continuing operations
|
|
3,146
|
|
2,980
|
|
|
|
|
|
|
|
Times
|
|
Times
|
Net debt divided by EBITDA – continuing and discontinued
operations (iii)
|
|
1.8
|
|
1.7
|
Net debt divided by EBITDA – continuing
operations
|
|
1.8
|
|
1.8
|
(i)
These
items appear in note 10 on page 23.
(ii)
Assets
classified as held for sale (net of associated liabilities) are not
restated in prior years.
(iii)
The
references to net debt/EBITDA on pages 1 to 3 make use of the
calculation above for the combined results of continuing and
discontinued operations.
Glossary of Alternative Performance
Measures –
continued
EBITDA net interest cover
EBITDA net interest cover is used by management as a measure which
matches the earnings and cash generated by the business to the
underlying funding costs. EBITDA net interest cover is presented to
provide investors with a greater understanding of the impact of
CRH’s debt and financing arrangements and, as discussed in
note 10, is a metric used in lender covenants.
It is calculated below:
|
|
2017
|
|
2016
|
|
|
€m
|
|
€m
|
Interest
|
|
|
|
|
Finance
costs (i)
|
|
301
|
|
325
|
Finance
income (i)
|
|
(12)
|
|
(8)
|
Net interest (ii)
|
|
289
|
|
317
|
|
|
|
|
|
EBITDA
– continuing and discontinued operations
|
|
3,310
|
|
3,130
|
EBITDA – continuing operations
|
|
3,146
|
|
2,980
|
|
|
|
|
|
|
|
Times
|
|
Times
|
EBITDA net interest cover (EBITDA divided by net interest) –
continuing and discontinued operations (iii)
|
|
11.5
|
|
9.9
|
EBITDA net interest cover (EBITDA divided by net interest) –
continuing operations (iv)
|
|
10.9
|
|
9.4
|
(i)
These
items appear on the Consolidated Income Statement on page
12.
(ii)
Net
interest relating to discontinued operations is
negligible.
(iii)
The
references to EBITDA net interest cover on pages 1 to 3 make use of
the calculation above for the combined results of continuing and
discontinued operations.
(iv)
Note
10 to the summarised financial statements sets out calculations
relating to net debt on a continuing operations basis.
The definitions and calculations used in lender covenant agreements
include certain specified adjustments to the amounts included in
the Consolidated Financial Statements. The ratios as calculated on
the basis of the definitions in those covenants are disclosed in
note 10.
EBIT net interest cover is the ratio of EBIT to net debt-related
interest costs.
Glossary of Alternative Performance
Measures –
continued
Adjusted earnings per Ordinary Share
Adjusted earnings per ordinary share has been used by management as
it presents a more accurate picture of the net profit attributable
to equity holders of the Group, before certain one-off items (net
of related tax). This is a non-GAAP measure as it removes the
impact of the one-off past service credit due to changes in the
Group’s pension scheme in Switzerland and the one-off benefit
of a reduction in the Group’s deferred tax liabilities due to
changes in US tax legislation. As these are one-off items, relating
to 2017, no comparative information is required.
|
|
2017
|
|
|
€m
|
|
|
|
Numerator
for basic and diluted earnings per Ordinary Share (i)
|
|
1,895
|
One-off
Swiss pension past service credit (net of tax) (ii)
|
|
(59)
|
One-off
deferred tax credit (including credit relating to discontinued
operations)
|
|
(447)
|
Numerator for EPS excluding one-off gains per ordinary share from
continuing and discontinued operations (iii)
|
|
1,389
|
|
|
|
Average
shares (i)
|
|
835.6
|
|
|
|
Adjusted earnings per Ordinary Share
|
|
166.2c
|
Dividend declared for the year
|
|
68.0c
|
Dividend cover (Adjusted earnings per share/dividend declared per
share)
|
|
2.4x
|
(i)
These
items appear in note 6 on page 21.
(ii)
The
one-off Swiss pension past service credit was €81 million
before a tax charge of €22 million.
(iii)
The
references to adjusted EPS and adjusted dividend cover on pages 1
to 3 make use of the calculation above for the combined results of
continuing and discontinued operations.
Glossary of
Alternative Performance Measures –
continued
Organic revenue, organic operating profit and organic
EBITDA
CRH pursues a strategy of growth through acquisitions and
investments, with €1,905 million spent on acquisitions and
investments in 2017 (2016: €213 million). Acquisitions
completed in 2016 and 2017 contributed incremental sales revenue of
€596 million, operating profit of €14 million and
EBITDA of €60 million in 2017. Proceeds from divestments and
non-current asset disposals amounted to €222 million (net of
cash disposed and deferred proceeds) (2016: €283 million).
The sales impact of divested activities in 2017 was a negative
€204 million and the disposal impact at an operating profit
and EBITDA level was a negative €14 million and €21
million respectively. As the largest acquisitions undertaken in
2017 closed in the last quarter of the year, the full impact of
incremental sales revenue, operating profit and EBITDA will be more
pronounced in 2018.
The euro strengthened against most major currencies during 2017,
particularly towards the end of the year resulting in the average
euro/Pound Sterling rate weakening from 0.8195 in 2016 to 0.8767 in
2017 and the US Dollar weakening from 1.1069 in 2016 to 1.1297 in
2017. Overall currency movements resulted in an unfavourable net
foreign currency translation impact on our results as shown on the
table on page 17.
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 additional performance indicators to assess
performance of pre-existing (also referred to as underlying,
like-for-like or ongoing) operations each year.
Organic revenue, organic operating profit and organic EBITDA is
arrived at by excluding the incremental revenue, operating profit
and EBITDA contributions from current and prior year acquisitions
and divestments, the impact of exchange translation and the impact
of any non-recurring items.
In the Business Performance review on pages 1 to 10, changes in
organic revenue, organic operating profit and organic EBITDA are
presented as additional measures of revenue, operating profit and
EBITDA to provide a greater understanding of the performance of the
Group. A reconciliation of the changes in organic revenue, organic
operating profit and organic EBITDA to the changes in total
revenue, operating profit and EBITDA 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 4.
The references to like-for-like sales and EBITDA on pages 1 to 3
are presented for combined results of continuing and discontinued
operations. The calculation of these is below:
|
Continuing and
|
|
Discontinued Operations
|
|
Sales revenue
|
|
EBITDA
|
|
€m
|
|
€m
|
|
|
|
|
2016
|
27,104
|
|
3,130
|
Exchange
effects
|
(526)
|
|
(77)
|
2016
at 2017 rates
|
26,578
|
|
3,053
|
Incremental impact in 2017 of:
|
|
|
|
2016/2017
acquisitions
|
596
|
|
60
|
2016/2017
divestments
|
(204)
|
|
(21)
|
LH
Assets integration costs
|
-
|
|
45
|
Swiss
pension past service credit
|
-
|
|
81
|
Organic
|
593
|
|
92
|
2017
|
27,563
|
|
3,310
|
|
|
|
|
%
Total change
|
2%
|
|
6%
|
%
Organic change
|
2%
|
|
3%
|
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. During
the course of 2018, 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: The level of construction activity in
local and national markets is inherently cyclical, being influenced
by a wide variety of factors including global and national economic
circumstances, governments’ ability to fund infrastructure
projects, consumer sentiment and weather conditions. Financial
performance may also be negatively impacted by unfavourable swings
in fuel and other commodity/raw material prices. Failure of the
Group to respond on a timely basis and/or adequately to
unfavourable events may adversely affect financial
performance.
Political and economic uncertainty: As
an international business, the Group operates in many countries
with differing, and in some cases, potentially fast-changing
economic, social and political conditions. These conditions, which
may be heightened by the uncertainties resulting from the
commencement of proceedings for the UK to exit the European Union,
in addition to continued instability in Brazil, Philippines and
Ukraine, could include political unrest, currency disintegration,
strikes, restrictions on repatriation of earnings, changes in law
and policies, activism and civil disturbance; and may be triggered
or worsened by other forms of instability including natural
disasters, epidemics, widespread transmission of diseases and
terrorist attacks. These factors are of particular relevance in
developing/emerging markets. Changes in these conditions, or in the
governmental or regulatory requirements in any of the countries in
which the Group operates, may adversely affect the Group’s
business, results of operations, financial condition or prospects,
thus leading to possible impairment of financial performance and/or
restrictions on future growth opportunities.
Commodity products and substitution: The
Group faces strong volume and price competition across its product
lines, stemming from the fact that many of the Group’s
products are commodities. In addition, existing products may be
replaced by substitute products which the Group does not produce or
distribute, or new construction techniques may be devised. Against
this backdrop, if the Group fails to generate competitive advantage
through differentiation and innovation, market share and thus
financial performance, may decline.
Reserves availability and planning: Certain
of the Group’s businesses require long-term reserves backing
necessitating detailed utilisation planning. Appropriate reserves
are an increasingly scarce commodity and licences and/or permits
are required to enable operation. There are numerous uncertainties
inherent in reserves estimation and in projecting future rates of
production. Failure by the Group to plan adequately for depletion
may result in sub-optimal or uneconomic utilisation, giving rise to
unplanned capital expenditure or acquisition activity, lower
financial performance and the need to obtain new licences and/or
permits to operate. Operating entities may fail to obtain or renew
or may experience material delays in securing the requisite
government approvals, licences and permits for the conduct of
business.
Business portfolio management: Growth
through acquisition and active management of the Group’s
business portfolio are key elements of the Group’s strategy,
with the Group’s balanced portfolio growing year on year
through bolt-on activity occasionally supplemented by larger and/or
step-change transactions. In addition, the Group may be liable or
remain liable for the past acts, omissions or liabilities of
companies or businesses it has acquired or divested. The Group may
not be able to continue to grow as contemplated in its business
plans if it is unable to identify attractive targets (including
potential new platforms for growth), divest non-core or
underperforming entities, execute full and proper due diligence,
raise funds on acceptable terms, complete such acquisition
transactions, integrate the operations of the acquired businesses,
retain key staff and realise anticipated levels of profitability
and cash flows. If the Group is held liable for the past acts,
omissions or liabilities of companies or businesses it has
acquired, or remains liable in cases of divestment, those
liabilities may either be unforeseen or greater than anticipated at
the time of the relevant acquisition or
divestment.
Joint ventures and associates: The Group does not have
a controlling interest in certain of the businesses (i.e. joint
ventures and associates) in which it has invested and may invest.
The absence of a controlling interest gives rise to increased
governance complexity and a need for proactive relationship
management, which may restrict the Group’s ability to
generate adequate returns and to develop and grow these businesses.
These limitations could impair the Group’s ability to manage
joint ventures and associates effectively and/or realise its
strategic goals for these businesses. In addition, improper
management or ineffective policies, procedures or controls for
non-controlled entities could adversely affect the business,
results of operations or financial condition of the relevant
investment.
Human resources and talent management: Existing processes to
recruit, develop and retain talented individuals and promote their
mobility within a decentralised organisation may be inadequate thus
giving rise to employee/management attrition, difficulties in
succession planning and inadequate “bench strength”,
potentially impeding the continued realisation of the core
strategic objectives of value creation and growth. In addition, the
Group is exposed to various risks associated with collective
representation of employees in certain jurisdictions; these risks
could include strikes and increased wage demands. In the longer
term, failure to manage talent and plan for leadership and
succession could impede the realisation of core strategic
objectives.
Principal Risks and Uncertainties - continued
Principal Operational Risks and Uncertainties
Operational continuity: The
Group’s operating entities are subject to a wide range of
operating risks and hazards including climatic conditions such as
floods and hurricanes/cyclones, seismic activity, technical
failures, interruptions to power supplies, industrial accidents and
disputes, environmental hazards, fire and crime. The occurrence of
a significant adverse event could lead to prolonged disruption of
business activities and, as a result, could have a material impact
on the business, results of operations, financial condition or
prospects of the Group.
Sustainability, corporate social responsibility and climate
change: The
Group is subject to stringent and evolving laws, regulations,
standards and best practices from a sustainability perspective. The
Group’s use of the term "sustainability" comprises Health
& Safety management (i.e. embedding a culture of safety and
ensuring safe working environments), conducting business with
integrity, protecting the environment, preparing for and managing
the impact of climate change on business activities, managing
stakeholders, attaining strong social performance credentials and,
lastly, using the foregoing to generate innovation and other
business opportunities to create value. Against this backdrop, the
nature of the Group's activities pose or create certain inherent
risks, responsibility for which is vested with operating entity
management, Group and Divisional management and the Board of
Directors. Non-adherence to the many laws, regulations, standards
and best practices in the sustainability arena may give rise to
increased ongoing remediation and/or other compliance costs and may
adversely affect the Group's business, results of operations,
financial condition and/or prospects. Failure to leverage
innovation and other sustainability initiatives may shorten product
life cycles or give rise to early product obsolescence, thus
impairing financial performance and/or future value creation. In
addition, the failure to embed sustainability principles across the
Group's businesses and in the Group's strategy may lead to adverse
investor sentiment or reduced investor interest in CRH plc's
Ordinary Shares.
Information technology and security/cyber: The
Group is dependent on the employment of advanced information
systems (digital infrastructure, applications and networks) to
support its business activities, and is exposed to risks of failure
in the operation of these systems. Further, the Group is exposed to
security threats to its digital infrastructure through cyber-crime.
Such attacks are by their nature technologically sophisticated and
may be difficult to detect and defend in a timely fashion. Should a
security breach or other incident materialise, it could lead to
interference with production processes, manipulation of financial
data, the theft of private data or intellectual property,
misappropriation of funds, or misrepresentation of information via
digital media. In addition to potential irretrievability or
corruption of critical data, the Group could suffer reputational
losses, regulatory penalties and incur significant financial costs
in remediation.
Principal Compliance Risks and Uncertainties
Laws and regulations: The
Group is subject to many local and international laws and
regulations, including those relating to competition law,
corruption and fraud, across many jurisdictions of operation and is
therefore exposed to changes in those laws and regulations and to
the outcome of any investigations conducted by governmental,
international or other regulatory authorities. Potential breaches
of local and international laws and regulations in the areas of
competition law, corruption and fraud, among others, could result
in the imposition of significant fines and/or sanctions for
non-compliance, including the withdrawal of operating licences, and
may inflict reputational damage.
Principal Financial and Reporting Risks and
Uncertainties
Financial instruments (interest rate and leverage, foreign
currency, counterparty, credit ratings and
liquidity): The
Group uses financial instruments throughout its businesses, giving
rise to interest rate and leverage, foreign currency, counterparty,
credit rating and liquidity risks. A significant portion of the
cash generated by the Group from operational activity is currently
dedicated to the payment of principal and interest on indebtedness.
In addition, the Group has entered into certain financing
agreements containing restrictive covenants requiring it to
maintain a certain minimum interest coverage ratio and a certain
minimum net worth. A downgrade of the Group’s credit ratings
may give rise to increases in funding costs in respect of future
debt and may impair the Group’s ability to raise funds on
acceptable terms. In addition, insolvency of the financial
institutions with which the Group conducts business (or a downgrade
in their credit ratings) may lead to losses in derivative assets
and cash and cash equivalents balances or render it more difficult
for the Group either to utilise existing debt capacity or otherwise
obtain financing for operations.
Defined benefit pension schemes and related
obligations: The
Group operates a number of defined benefit pension schemes and
schemes with related obligations (for example, termination
indemnities, post-retirement healthcare obligations and
jubilee/long-term service commitments, which are accounted for as
defined benefit) in certain of its operating jurisdictions. The
assets and liabilities of defined benefit pension schemes may
exhibit significant period-on-period volatility attributable
primarily to asset values, changes in bond yields/discount rates
and anticipated longevity. In addition to the contributions
required for the ongoing service of participating employees,
significant cash contributions may be required to remediate
deficits applicable to past service. Further, fluctuations in the
accounting surplus/deficit may adversely impact the Group's credit
metrics thus harming its ability to raise funds.
Principal Risks and Uncertainties - continued
Principal Financial and Reporting Risks and Uncertainties -
continued
Taxation charge and balance sheet provisioning: The
Group is exposed to uncertainties stemming from governmental
actions in respect of taxes paid and payable in all jurisdictions
of operation. In addition, various assumptions are made in the
computation of the overall tax charge and in balance sheet
provisions which may not be borne out in practice. Changes in the
tax regimes and related government policies and regulations in the
countries in which the Group operates could adversely affect its
results and its effective tax rate. The final determination of tax
audits or tax disputes may be different from that which is
reflected in the Group's historical income tax provisions and
accruals. If future audits find that additional taxes are due, the
Group may be subject to incremental tax liabilities, possibly
including interest and penalties, which could have a material
adverse effect on cash flows, financial condition and results of
operations.
Foreign currency translation: The
principal foreign exchange risks to which the Consolidated
Financial Statements are exposed pertain to adverse movements in
reported results when translated into euro (which is the
Group’s reporting currency), together with declines in the
euro value of net investments which are denominated in a wide
basket of currencies other than the euro. Adverse changes in the
exchange rates used to translate foreign currencies into euro have
impacted and will continue to impact retained earnings. The annual
impact is reported in the Consolidated Statement of Comprehensive
Income.
Goodwill impairment: 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. A write-down of goodwill
could have a substantial impact on the Group’s income and
equity.
Disclaimer
In
order to utilise the “Safe Harbor” provisions of the
United States Private Securities Litigation Reform Act of 1995, CRH
public limited company (the “Company”), and its
subsidiaries (collectively, “CRH” or the
“Group”) is providing the following cautionary
statement.
This
document contains certain forward-looking statements with respect
to the financial condition, results of operations, business,
viability and future performance of CRH and certain of the plans
and objectives of CRH. These forward-looking statements may
generally, but not always, be identified by the use of words such
as "will", "anticipates", "should", "expects", "is expected to",
"estimates", "believes", "intends" or similar
expressions.
By
their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future and reflect
the Company's current expectations and assumptions as to such
future events and circumstances that may not prove
accurate.
A
number of material factors could cause actual results and
developments to differ materially from those expressed or implied
by these forward-looking statements, certain of which are beyond
our control, as detailed in the section entitled “Risk
Factors” in our 2016 Annual Report on Form 20-F as filed with
the US Securities and Exchange Commission.
You
should not place undue reliance on any forward-looking statements.
These forward-looking statements are made as of the date of this
document. The Company expressly disclaims any obligation to update
these forward-looking statements other than as required by
law.
The
forward-looking statements in this document do not constitute
reports or statements published in compliance with any of
Regulations 6 to 8 of the Transparency (Directive 2004/109/EC)
Regulations 2007.
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
|
CRH public limited company
|
|
(Registrant)
|
|
|
Date
1 March 2018
|
|
|
By:___/s/Neil
Colgan___
|
|
N.Colgan
|
|
Company Secretary
|