Blueprint
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
01
March 2017
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):________
2016
Full Year Results
Key
Points
●
Continued profit growth
●
Margins and returns ahead in all divisions
●
Strong cash generation; de-leveraging target exceeded and balance
sheet restored
●
Dividend increased
Trading
Highlights
● Sales
of €27.1 billion, 15% ahead of 2015; up 4% on a
proforma1 basis
●
EBITDA up 41% to €3.1 billion, ahead of November guidance;
proforma EBITDA up 10%
●
EBITDA margin 11.5% up from 9.4% in 2015
● Cash
inflow of €2.3 billion from operating activities
Strategic
Highlights
●
Return on net assets (RONA1) 9.7% up from 7.6%
in 2015
●
Delivering value through capital allocation and reallocation at
attractive multiples
●
Year-end net debt reduced by €1.3 billion to €5.3
billion; Net debt/EBITDA is 1.7x
● Full
year dividend per share increased by 4% to 65.0c, covered 2.3
times
|
|
|
|
|
|
|
|
Year ended 31 December
|
2016
|
2015
|
Reported
|
Proforma
|
|
|
|
€ m
|
€
m
|
Change
|
Change
|
|
|
|
|
|
|
|
|
|
Sales
revenue
|
27,104
|
23,635
|
+15%
|
+4%
|
|
|
EBITDA
|
3,130
|
2,219
|
+41%
|
+10%
|
|
|
EBITDA
Margin
|
11.5%
|
9.4%
|
+210bps
|
+60bps
|
|
|
|
|
|
|
|
|
|
Operating
profit (EBIT)
|
2,027
|
1,277
|
+59%
|
|
|
|
|
|
|
|
|
|
|
Profit
before tax
|
1,741
|
1,033
|
+69%
|
|
|
|
|
|
|
|
|
|
|
|
€ cent
|
€
cent
|
|
|
|
|
Basic
earnings per share
|
150.2
|
89.1
|
+69%
|
|
|
|
Dividend
per share
|
65.0
|
62.5
|
+4%
|
|
|
|
|
|
|
|
|
|
Albert Manifold, Chief Executive, said today:
"2016
was a year of significant profit growth for CRH, with margins and
returns ahead of last year in every division. We benefited from
positive momentum in the Americas, and also in Europe, particularly
in the Northern and Eastern regions where we operate. The focus on
cash management resulted in our year-end debt metrics being ahead
of target and below normalised levels. In addition to organic
growth, we continue to develop CRH through acquisitions, having
completed eight transactions already this year. With our balanced
portfolio of businesses, CRH is well positioned to capitalise on
the ongoing economic recovery and we see continued growth for the
Group in 2017."
Announced
Wednesday, 1 March 2017
1See pages 30 to 33 for glossary of alternative performance
measures (including proforma and RONA) used throughout this
report.
2016 Full Year Results
Overview
The
overall trading backdrop in 2016 was positive with momentum in both
the Americas and Europe, albeit at different paces, supported by a
good performance from our newly established Asia Division. This was
augmented by favourable weather patterns across most of our key
markets in the Americas at the start of the year. With a relentless
focus on performance in all our businesses, coupled with our
vertically integrated business model for heavyside materials, our
good operational leverage underpinned an improvement in both
margins and returns.
Sales
of €27.1 billion for the period were 15% ahead of 2015
reflecting the inclusion of full year results from the LH Assets
and C.R. Laurence ("CRL") acquisitions which were completed in the
third quarter of 2015. On a proforma basis (at constant currency,
including full year 2015 trading of the LH Assets and CRL
acquisitions and excluding all divested entities and certain
one-off items - see pages 28 and 29) sales increased 4% due to the
positive backdrop in the Group's major markets. A proforma increase
of 5% in the Americas, reflecting favourable early weather with
more normalised demand patterns experienced in the second half, was
due to the continued positive construction markets supported by low
interest rates and increasing employment. Proforma sales in Europe
were 4% ahead of 2015 on the back of continued recovery in some key
markets. The Asia Division reflects results from the Philippines
operations acquired in the second half of 2015 as part of the LH
Assets, together with CRH Asia's divisional costs. In the
Philippines, proforma sales increased 1% as construction demand
continued to be supported by good economic growth, strong domestic
consumption and low inflation. For 2016 as a whole, higher sales
and good cost control supported improved profits and margins across
the Group with proforma EBITDA in the Americas 15% ahead of 2015,
Europe up 3% and Asia in line.
Depreciation
and amortisation charges in 2016 amounted to €1.08 billion
(2015: €898 million). In addition, an impairment charge of
€23 million was recognised in 2016 in respect of the carrying
value of intangible assets.
Divestments
and asset disposals during the year generated total profit on
disposals of €55 million (2015: €101 million) as
the ongoing recycling of capital continues to be embedded in the
business.
The
Group's €42 million share of profits from equity accounted
entities was slightly lower than 2015 reflecting the full year
impact of 2015 divestments partly offset by improved results in
certain markets.
After
net finance costs of €383 million (2015: €389 million),
the Group reported profit before tax of €1.74 billion
in 2016 (2015: €1,033 million). Earnings per share for the
period were 69% higher than last year at 150.2c (2015:
89.1c).
Note 2
on page 17 analyses the key components of 2016
performance.
Dividend
CRH's
capital allocation policy reflects the Group's strategy of
generating industry leading returns through value-accretive
investments while delivering long-term dividend growth for
shareholders. For the period 1984 to 2009 the Group maintained a
progressive dividend policy delivering dividend growth in each of
these years. The Group maintained the dividend at 62.5c per share
for each of the subsequent six years.
An
interim 2016 dividend of 18.8c (2015: 18.5c) per share was paid in
November 2016. The Board is recommending a final dividend of 46.2c
per share (2015: 44.0c). This would give a total dividend of 65.0c
for the year, an increase of 4% over last year (2015: 62.5c). The
earnings per share for the year were 150.2c representing a cover of
2.3 times the proposed dividend for the year.
It is
proposed to pay the final dividend on 5 May 2017 to shareholders
registered at the close of business on 10 March 2017. 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 over the medium-term, and accordingly any dividend
increases in coming years will lag increases in earnings per
share.
Major Acquisition Synergies
On
announcing the two major acquisitions in 2015, the Group outlined
detailed multi-year synergy targets for both. For the LH Assets the
original target was €90 million over three years, this
estimate was subsequently raised in March 2016 to €120
million, while the target for CRL was US$40 million over two years.
Due to the acceleration of initiatives, total synergies achieved in
2016 amounted to €89 million, with €71 million
attributable to the LH Assets, while a further €18 million
was achieved from the integration of CRL with our existing
Oldcastle BuildingEnvelope® business. The
Group remains committed to maximising the synergies from the two
acquisitions and expects to exceed the targets for
both.
Finance
Total
net finance costs of €383 million were broadly similar to
last year (2015: €389 million) as the cost of the higher
average debt during this year was offset by the non-recurrence in
2016 of a one-off charge of €38 million in 2015 for the early
redemption of a portion of US dollar bonds. Finance costs included
discount unwinding and pension-related financial expenses of
€66 million (2015: €56 million). Excluding these
non-cash expenses and the one-off charge in 2015, net debt-related
interest amounted to €317 million (2015: €295
million).
The tax
charge of €471 million for the year (2015: €304
million) equated to an effective tax rate (tax charge as a % of
pre-tax profit) of 27.1%, compared with 29.4% in 2015. The 2015
effective tax rate was influenced by one-off charges related to the
LH Assets transaction that were substantially non tax deductible;
excluding these, the underlying effective tax rate for 2015 was
25.8%.
Reflecting
our relentless focus on cash management, the Group generated net
cash flow from operating activities of €2.3 billion for the
year (2015: €2.2 billion). Year-end net debt of €5.3
billion was below the guidance provided in November and was
€1.3 billion lower than year-end 2015, benefiting from the
strong inflows from operations, disciplined capital expenditure and
the use of disposal proceeds to fund acquisition spend. Net debt to
EBITDA was 1.7x (2015: 3.0x) and, based on net debt-related
interest costs, EBITDA net interest cover for 2016 was 9.9x (2015:
7.5x).
The
Group successfully completed one eurobond issue in 2016, raising
€600 million in October through the issue of a 12-year bond
with a coupon of 1.375%, our longest tenor in the Eurobond market
and an historical low rate for the Group. Proceeds from the bond
were partly used to repay the remaining bank term loan financing
put in place to fund the purchase of the LH Assets. 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 2016 with total liquidity of €5.5 billion
comprising almost €2.5 billion of cash and cash equivalents
on hand and €3.0 billion of undrawn committed facilities,
€2.7 billion of which do not mature until 2021. At year-end
the cash balances were enough to meet all maturing debt obligations
for the next 4.3 years and the weighted average maturity of the
remaining term debt was 10.1 years.
Capital Efficiency
During
2016, the Group completed 21 bolt-on acquisitions and three
investment transactions for a total spend of €213 million
(including deferred and contingent consideration in respect of
prior year acquisitions). On the divestment front, the Group
completed 13 transactions and realised total business and asset
disposal proceeds of €283 million.
2016 Acquisitions
In
Europe, eight acquisitions and two investments with a total spend
of c.€43 million were completed. Our Heavyside business
acquired 11 readymixed concrete plants in the United Kingdom (UK),
three quarries in Ireland, an aggregates terminal in Belgium and
entered into a sand & gravel joint venture in France, adding
reserves of 11 million tonnes. Further investments were also made
to buy-out a minority position in Spain and add to an existing
joint venture in Ireland. Our Lightside Division completed two
acquisitions in the UK: a supplier of composite products, which is
highly complementary to our Network Access Products business, and a
strategic bolt-on to our UK shutters business. The Distribution
Division acquired a small builders merchant in
Austria.
In the
Americas, c.€170 million was spent on 13 acquisitions and one
investment. Our Materials Division completed eight bolt-on
acquisitions and one investment in 2016. The principal acquisition
was of a significant aggregates and asphalt operation in Utah.
Seven further bolt-on acquisitions in New Mexico, New Jersey,
Michigan, Ohio, Washington and Canada were completed. In total 93
million tonnes of permitted reserves were added during the year.
The Products Division completed five acquisitions, the largest of
which was of a Canadian exterior surfaces company which is a strong
addition to the core hardscape business of our Architectural
Products Group (APG). Three precast bolt-on operations were
acquired in Colorado, Louisiana and California. Finally, a glass
hardware company was added in Perth, Australia, which will
significantly enhance our CRL operations in Western
Australia.
2016 Divestments and disposals
Business
divestments during the year generated net proceeds of €123
million. In Europe, our Distribution Division disposed of a roofing
products company in the Netherlands while the Heavyside business
divested a precast concrete operation in Poland, a small aggregates
business in Switzerland and a roof tile operation in Romania. Two
small joint venture holdings in France and Germany were also
divested. The Americas Materials Division disposed of select
aggregates and asphalt operations in Missouri, a small
waterproofing business in Michigan and a readymixed concrete
operation in Iowa/Minnesota. Certain aggregates assets in
Oregon/Montana were also disposed in a cash neutral swap. Finally,
our Americas Products Division disposed of a pavement products
operation in North Carolina, certain precast operations in Canada
and the assets of a burial vaults business. In addition to these
business divestments, the Group realised proceeds of €160
million from the disposal of surplus property, plant and
equipment.
Outlook
In
2017, we see continued positive momentum in the United States (US)
construction sector. We expect that residential construction, which
has still not returned to long-term average levels, will advance,
while non-residential activity will also improve. For US
infrastructure, we anticipate that the funding stability provided
by the FAST Act (which authorises moderate year-on-year increases
in federal funding for highways), together with expected increases
in state spending on transportation improvements, will result in a
positive trend for volumes, particularly in the second half of the
year. Overall we expect our Americas business to advance further in
2017.
In
Europe, we anticipate that most countries will continue to
experience the modest impact of early-stage economic recovery.
While the UK's vote to leave the European Union, together with the
forthcoming elections in a number of countries, has created a level
of uncertainty for the medium-term, we expect progress to continue
in 2017.
In
Asia, we expect further improvement in economic and construction
activity in the Philippines in 2017.
We
expect the generally positive economic backdrop to continue this
year. With our balanced portfolio, CRH is well positioned to
capitalise on this improved market environment and we see continued
growth for the Group in 2017.
Europe Heavyside
|
|
|
Analysis of change
|
|
|
|
€ million
|
2015
|
Exchange
|
Acquisitions
|
Divestments
|
LH Costs
|
Organic
|
2016
|
% change
|
|
Sales
revenue
|
5,256
|
-228
|
+2,129
|
-111
|
-
|
+350
|
7,396
|
+41%
|
|
EBITDA
|
460
|
-21
|
+299
|
-11
|
+89
|
-2
|
814
|
+77%
|
|
Operating
profit
|
135
|
-8
|
+183
|
-7
|
+89
|
+5
|
397
|
+194%
|
|
EBITDA/sales
|
8.8%
|
|
|
|
|
|
11.0%
|
|
|
Operating
profit/sales
|
2.6%
|
|
|
|
|
|
5.4%
|
|
|
LH integration costs of €32 million were incurred in 2016
(2015: €121 million)
|
Trends
remained mixed across our major European markets in 2016 with more
challenging conditions in our businesses in Switzerland and Poland
contrasted by evident market recovery in Ireland, Ukraine, Finland
and the Netherlands. Sales and operating profit were well ahead of
2015, reflecting stable results in our heritage businesses and a
full year's trading and synergy benefits of 2015 acquisitions.
Organic profit in the heritage businesses was assisted by volume
improvements and by ongoing cost saving and efficiency measures
which largely offset the impact of a challenging pricing
environment in some of our key markets. The segment was organised
into six primarily geographical regions at the beginning of 2016,
and the commentary below reflects this new
organisation.
Tarmac (UK)
With a
full year of trading included in the results, volumes in our
aggregates and readymixed concrete business lines in the UK grew in
2016 against a stable construction backdrop. Price increases were
achieved in all products except asphalt where the impact of lower
prices was compensated by lower input (bitumen) costs. Despite
recent uncertainty surrounding the UK construction market in light
of the decision of the electorate in June to exit the European
Union, 2016 was a year of progress for Tarmac.
UK Cement & Lime, Ireland and Spain
Despite
an overall backdrop of modest growth in the cement market, the UK
Cement & Lime operations delivered strong volumes and prices in
all product categories. Together with the Irish and Spanish cement
businesses, the focus on network optimisation resulted in the
achievement of synergies in 2016. In Ireland, while cement volumes
grew strongly (18%), domestic pricing in particular remained under
pressure due to overcapacity in the market. With the benefit of
improved cement pricing on exports to the UK, stronger overall
volumes and improved domestic concrete and aggregates prices,
operating profit was ahead of 2015. In Spain, the macro-economic
situation remained weak but stable, with some regional recovery.
Prices remained under pressure, and despite some improvement in
cement and readymixed concrete volumes, operating profit was lower
than last year.
France, Benelux and Denmark
Our
French cement operations delivered growth in volumes, primarily due
to the inclusion of a full year of ownership of the LH Assets, as
well as the positive impact of synergies with CRH heritage
businesses and a modest recovery in the cement market, although
prices remained under pressure due to strong competition and
overcapacity. Continued challenging pricing also impacted our
precast business in France, although a focus on cost reduction
initiatives across the business more than offset the underlying
operating profit impact. In the Netherlands, strong recovery of the
residential market and an increase in centrally funded
infrastructure projects delivered higher volumes in our readymixed
and structural concrete operations. Readymixed concrete prices
remained under continued pressure. There was some improvement in
volumes and prices in Belgium. In Denmark, with the benefit of a
strong non-residential market and a year of growth in new
residential construction, both volumes and prices in our structural
business improved. Sales and operating profit were well ahead of
2015.
Switzerland and Germany
Stable
economic and construction output combined with an early start to
the season in Switzerland led to growth in readymixed concrete
volumes. However, cement prices declined against a backdrop of
continued pricing pressure arising from imports, and sales and
operating profit were below 2015. Strong cement volumes in our
German operations reflected a full year of ownership of the LH
Assets and growth in construction output, boosted mainly by new
build multi-family housing. However, pricing remained under
pressure in both our cement and concrete landscaping products
businesses.
North East
In
Poland, weaker than expected activity adversely affected pricing in
our cement, readymixed concrete and paving products. Both sales and
operating profit were behind prior year due to the significant
decline in cement volumes year-on-year. In Finland construction
activity recovered strongly in 2016, and all our product categories
reported growth in volumes; pricing remained under pressure due to
overcapacity in readymixed concrete and increased cement imports.
With the benefit of continued cost and efficiency initiatives,
overall operating profit was ahead of 2015. Despite the ongoing
political conflict, construction activity in Ukraine increased
year-on-year and our operations delivered strong trading, and
operating profit was ahead of 2015. Cement volumes were up 11%,
with prices also increasing during the year. Inflation stabilised
somewhat, positively impacting costs and operating
profit.
South East
After a
promising start, 2016 was a mixed year in Romania, and mid-year
construction activity slowed as a result of lower government
spending and unfavourable weather conditions. Continued strong
growth in volumes and prices was delivered by our cement operations
in Serbia due to ongoing large motorway projects in the south of
the country. Similar to 2015, overcapacity and import pressure
remained a threat in the region. Although both Hungary and Slovakia
experienced a drop in infrastructure spend, growth was solid in the
residential market, with improved cement volumes and
prices.
Europe Lightside
|
|
|
Analysis of change
|
|
|
€ million
|
2015
|
Exchange
|
Acquisitions
|
Divestments
|
Organic
|
2016
|
% change
|
|
Sales
revenue
|
961
|
-28
|
+30
|
-50
|
+28
|
941
|
-2%
|
|
EBITDA
|
100
|
-4
|
+2
|
-3
|
+9
|
104
|
+4%
|
|
Operating
profit
|
75
|
-4
|
+2
|
-1
|
+9
|
81
|
+8%
|
|
EBITDA/sales
|
10.4%
|
|
|
|
|
11.1%
|
|
|
Operating
profit/sales
|
7.8%
|
|
|
|
|
8.6%
|
|
Although
reported sales declined 2% driven by exchange and divestments, 2016
was a year of good underlying sales growth for Europe Lightside due
to strong performances in key markets combined with some favourable
weather patterns in the first-half of the year. Our UK-based
businesses continued to benefit from strong activity levels, with a
robust residential construction sector in particular. In the
Netherlands and France, recovery in construction activity was
evident. Swiss market circumstances were challenging, while Germany
and Belgium were ahead. Operating profit increased through a
combination of growing demand, continuous product innovation,
delivery on cost optimisation initiatives and margin expansion
activities.
Construction Accessories
Like-for-like
sales in the Construction Accessories platform grew by 5%, mainly
resulting from a combination of continued innovation in key product
lines and strong demand in some of our main markets, such as the UK
and Germany. While competitive pressure in Switzerland intensified,
activity levels in our other European markets and Australia picked
up, resulting in strong organic growth across the platform. Our
Southeast Asia business recorded a solid performance despite
challenging trading conditions. Overall operating profit progressed
well, reflecting a combination of organic sales growth and the
positive impact arising from internal efficiency improvement
initiatives undertaken during the year.
Shutters & Awnings
The
Shutters & Awnings business recorded flat like-for-like sales
in 2016. The German Awnings business saw an increase in sales
through a combination of benign weather patterns and the
introduction of a number of new products to the market. The German
Shutters business delivered a solid performance in relatively flat
markets, increasing profitability as a result of the impact of
continued performance optimisation measures. The UK business
reported a stable organic performance, which was further aided by a
complementary acquisition. Despite a decline in like-for-like
sales, the Netherlands showed solid profit performance as margins
increased in a competitive environment.
Perimeter Protection & Network Access Products
The
permanent Perimeter Protection business saw a decline in sales, but
still showed improvement in performance and continued progress
following the restructuring of both its German and UK businesses.
Our mobile fencing operation benefited from good demand
particularly in its export business with a resultant increase in
sales and profitability. Network Access Products, with operations
in the UK, Ireland and Australia and a broad export base, recorded
an increase in both organic sales and operating profit through
positive demand trends in the UK market in particular. Results were
also supported by a positive contribution from its newly acquired
UK-based business.
Europe Distribution
|
|
|
Analysis of change
|
|
|
€ million
|
2015
|
Exchange
|
Divestments
|
Swiss Fine
|
Organic
|
2016
|
% change
|
|
Sales
revenue
|
4,158
|
-24
|
-53
|
-
|
-15
|
4,066
|
-2%
|
|
EBITDA
|
171
|
-1
|
-2
|
+32
|
+6
|
206
|
+20%
|
|
Operating
profit
|
94
|
-1
|
-1
|
+32
|
+6
|
130
|
+38%
|
|
EBITDA/sales
|
4.1%
|
|
|
|
|
5.1%
|
|
|
Operating
profit/sales
|
2.3%
|
|
|
|
|
3.2%
|
|
Europe
Distribution was impacted in 2016 by mixed market circumstances in
its main geographies, resulting in slightly reduced sales. However,
performance improvement initiatives, strong cost control across the
Division and the non-recurrence in 2016 of a one-off provision of
€32 million in 2015 for a Swiss Competition Commission fine
led to an increase in overall profitability. The Netherlands
continued to show positive momentum in the new build residential
market, while Belgium improved and Germany remained generally
stable compared to 2015. The Swiss business faced a challenging
market backdrop, with competitive pressures and the impact of new
laws on second homes.
General Builders Merchants
Overall,
like-for-like sales for our General Builders Merchants business
declined in 2016 but operating profit remained stable. Challenging
market circumstances in the Swiss business, where margin
improvements and strong cost control could not fully compensate for
lower sales levels, resulted in a decline in profitability. Trading
in the Netherlands was strong as a result of increasing overall
demand and delivery on performance improvement projects. Sales at
our German business were stable in line with market circumstances.
Despite a recovering trend in the new residential market,
performance in the French business was impacted by unfavourable
weather patterns (including flooding) in the Paris area and a
competitive market which resulted in a decline in sales and
profitability compared to 2015. In Austria, improvements in pricing
and product mix, as well as the closure of some branches led to
improved results.
DIY (Do-It-Yourself)
Our DIY
business operates in the Netherlands, Germany and Belgium. Strong
competitive pressures resulted in lower sales, but overall
operating profit improved. In the Netherlands, DIY is more exposed
to the late-cycle RMI market, therefore it did not benefit from an
improving new residential market to the same extent as the builders
merchants business. Although consumer confidence has improved,
competition has also increased, in part due to new entrants.
Despite lower sales levels, operating profit increased due to a
range of performance improvement measures. The Belgian business
suffered from reduced consumer confidence in 2016, leading to lower
sales and operating profit. The German DIY business experienced
flat sales and profitability, which was in line with market
developments.
Sanitary, Heating and Plumbing (SHAP)
Sales
for our SHAP business were flat compared to 2015, with good
progress in Belgium and Germany offset by the challenging market
backdrop in Switzerland. Significant cost reductions were realised
in Switzerland, which partially compensated for the lower sales.
Operating profit in the German and Belgian businesses improved,
benefiting from higher sales levels in addition to operational
improvements and procurement initiatives.
Americas Materials
|
|
|
Analysis of change
|
|
|
|
€ million
|
2015
|
Exchange
|
Acquisitions
|
Divestments
|
LH Costs
|
Organic
|
2016
|
% change
|
|
Sales
revenue
|
7,018
|
-4
|
+715
|
-78
|
-
|
-53
|
7,598
|
+8%
|
|
EBITDA
|
955
|
-
|
+72
|
-7
|
+50
|
+134
|
1,204
|
+26%
|
|
Operating
profit
|
620
|
-
|
+23
|
-3
|
+50
|
+128
|
818
|
+32%
|
|
EBITDA/sales
|
13.6%
|
|
|
|
|
|
15.8%
|
|
|
Operating
profit/sales
|
8.8%
|
|
|
|
|
|
10.8%
|
|
|
LH integration costs of €7 million were incurred in 2016
(2015: €57 million)
|
With
continuing volume improvement, operational efficiencies and reduced
energy costs, Americas Materials had another year of good profit
growth in 2016 and delivered a strong organic operating profit.
Residential and non-residential demand continued to improve, while
publicly funded infrastructure activity remained stable resulting
in an overall improvement in trading conditions in the US. Organic
sales were down 1% but like-for-like operating profit increased
21%, with positive real price improvements experienced across all
products. 2016 also represented the first full year of results from
the LH Assets acquired during 2015, which saw mixed regional
results from Canada alongside more challenging market conditions in
Brazil.
Total
volumes, including acquisition effects, increased 9% for
aggregates, 3% for asphalt and 22% for readymixed concrete. This
volume growth, together with a 3% average price increase in
aggregates, a 4% average price increase in readymixed concrete in
the US and efficient cost control resulted in margin improvements
in the year. Despite price declines of 8% in asphalt, strong
leverage on increased volumes and the beneficial impact of lower
energy prices contributed to margin expansion. Construction sales
increased 6%, driven by the Canadian business as bidding continued
to be competitive in the US despite limited increased
infrastructure spending across some states. Good cost control
enabled margin expansion. Demand in our North American cement
markets increased as declines in Western Canada were more than
offset by increases in Quebec and the US market. Average prices
were steady despite strong external downward pricing pressures in
the Canadian regions.
While
the main focus during 2016 was on successfully integrating our
Canadian and Brazilian acquired assets, eight bolt-on acquisitions
and one investment were also completed in 2016 at a total cost of
€112 million. The principal acquisition was of a significant
aggregates and asphalt operation in Utah which added three asphalt
plants, one readymixed concrete plant and lease rights to 16
aggregates sites. In total 93 million tonnes of permitted reserves
were added during the year. Business and asset disposals in 2016
generated proceeds of €107 million, continuing the
optimisation of our strategic footprint.
United States
Like-for-like
aggregates volumes rose 4% from 2015 while average prices increased
by 3%. Asphalt volumes increased 1% on a like-for-like basis while
input cost decreases more than offset like-for-like price declines
of 8% compared to 2015. US readymixed concrete volumes increased 4%
compared with 2015 and average prices increased 4%. Like-for-like
sales in our paving and construction services business decreased
3%, but this was offset by overall margin expansion of 140 basis
points in 2016. Performance was positively impacted by the lower
energy cost environment experienced throughout the
year.
Operations
in the US were reorganised at the beginning of 2016 into four
divisions; North, South, Central and West. The North division
comprises operations in 13 states, the most important of which are
Ohio, New York, New Jersey and Michigan. Overall the division's
sales were down from 2015; however, with the benefit of operating
efficiencies, strong cost controls and lower energy costs,
operating profit in the North division improved significantly
during 2016. The South division comprises operations in 11 states,
with key operations in Florida, North Carolina and West Virginia.
Heritage sales in the South division were 1% ahead during 2016,
despite record flooding in West Virginia and Kentucky, and the
impact of hurricane Matthew. Operating profit was also well ahead
in the division with increased volumes contributing to margin
growth. The Central division has operations in nine states, with
the key states being Texas, Kansas and Arkansas. With resilient
market growth in Texas in both the public and private sectors, the
Central division delivered a heritage sales increase of 8% along
with strong margin improvement. Like-for-like volumes in the
division were ahead of 2015, with Texas in particular showing
strong growth. The West division has operations in ten states, the
most important of which are Utah, Idaho, Washington and Colorado.
With strong operating and overhead cost management across each
product line, the division reported heritage sales 2% ahead of 2015
along with margin and operating profit increases.
Canada
Sales
and operating profit were ahead of 2015 with the impact of a full
year of ownership of the LH Assets in 2016 augmented by a series of
major projects including the Highway 407 extension in Ontario and
the Turcot Highway Interchange in Montreal as well as strong
backlogs. There were mixed results across different product lines
and regions, with improvements in our core markets of Ontario and
Quebec partially offset by margin pressures and weaker demand in
our Western Canada businesses.
Brazil
The
construction market weakened in 2016 as a result of deteriorating
macroeconomic and political conditions, with overall cement
consumption down 12% in the Southeast region and selling prices
under continued pressure in a very competitive
environment.
Americas Products
|
|
|
Analysis of change
|
|
|
€ million
|
2015
|
Exchange
|
Acquisitions
|
Divestments
|
Organic
|
2016
|
% change
|
|
Sales
revenue
|
3,862
|
-48
|
+390
|
-214
|
+290
|
4,280
|
+11%
|
|
EBITDA
|
391
|
-3
|
+80
|
-6
|
+81
|
543
|
+39%
|
|
Operating
profit
|
249
|
+2
|
+58
|
-1
|
+103
|
411
|
+65%
|
|
EBITDA/sales
|
10.1%
|
|
|
|
|
12.7%
|
|
|
Operating
profit/sales
|
6.4%
|
|
|
|
|
9.6%
|
|
Our
Products business in the Americas is mainly located in the US and
Canada. 2016 saw good progress especially in the first-half, helped
by an ongoing pick-up in US macroeconomic fundamentals, including
stronger labour markets and good consumer sentiment, which have
strengthened private new residential construction and RMI. There
was good growth in the South, East Coast and West Coast markets due
to an improving non-residential construction sector. Input cost
inflation was more than offset by the effects of improved
operational efficiencies, procurement initiatives, favourable
product mix and targeted price increases. Benefiting from strong
acquisition trading results and synergies from the CRL acquisition,
as well as good organic growth across the Division, Americas
Products achieved a 65% increase in operating profit and margins
improved.
The
acquisition of Techniseal, a manufacturer of packaged products for
hardscapes installation, added a product capability complementary
to APG's core hardscape business. In addition, four other small
bolt-on acquisitions were completed and APG divested its non-core
Gemseal business, a manufacturer and supplier of pavement
maintenance products, along with two other smaller
divestments.
Architectural Products (APG)
With
the benefit of favourable weather early in 2016, APG showed
increased activity in the RMI sector, with continuing improvement
from residential and commercial construction. Sales volumes were
strong across the US but were more steady in Canada. The favourable
selling environment, together with product innovation and
commercial initiatives, drove gains across all major product
categories and channels resulting in an increase in like-for-like
sales compared with 2015. APG focused on both product portfolio
management and cost reduction efforts to maximise returns. Overall,
APG recorded a strong improvement in operating profit for the
year.
BuildingEnvelope®
(OBE)
In
2016, non-residential building activity experienced increases in
both institutional and commercial markets, though contract square
footage decreased slightly. Sales growth was driven by favourable
glass pricing and product mix, and enhanced production capabilities
in architectural glass. These, coupled with actions to
differentiate the business through innovative products and
technology, enabled OBE to achieve substantial growth in margins
and operating profit.
Integration
of the CRL and OBE businesses has been very successful and both CRL
and OBE have continued to benefit from significant synergies
through an increased common customer base and fixed cost
efficiencies. With a full year of ownership, CRL had strong sales
and profit growth and has shown an improvement in margins in
2016.
Precast
In
2016, strong sales growth was achieved as specific commercial
initiatives continued to deliver, along with improved demand for
both private construction and public infrastructure. Operating
profit increases were achieved in most markets across all concrete
product lines with a particularly strong performance in the West.
Overall, like-for-like sales increased, operating profit advanced
significantly and backlogs remained strong.
Americas Distribution
|
|
|
Analysis of change
|
|
|
|
€ million
|
2015
|
Exchange
|
Organic
|
2016
|
% change
|
|
Sales
revenue
|
2,229
|
+5
|
+81
|
2,315
|
+4%
|
|
EBITDA
|
140
|
-
|
+10
|
150
|
+7%
|
|
Operating
profit
|
111
|
-
|
+8
|
119
|
+7%
|
|
EBITDA/sales
|
6.3%
|
|
|
6.5%
|
|
|
Operating
profit/sales
|
5.0%
|
|
|
5.1%
|
|
2016
was another year of solid profit delivery on increased sales for
our distribution business trading as Allied. Our Exterior Products
and Interior Products divisions each advanced and recorded sales
and profit growth. Strong demand in the Florida, Chicago and
Atlantic markets, focused growth in our Iowa, Ohio and Michigan
markets and storm driven demand in Texas were the drivers of
performance in our Exterior Products division. Against a strong
performance in 2015, sales in our Northeast markets were marginally
behind prior year. The Interior Products division continued to
experience volume growth throughout the year. The strongest gains
were in Western markets, particularly California and Hawaii where
increased demand continued to be driven by robust multi-family
construction, offsetting softer Carolinas markets.
In
2016, Allied management remained highly focused on gross margins in
a very competitive environment through improved procurement
initiatives, both internal and leveraging the resources of the CRH
network. We continued to maintain margin discipline and optimised
working capital while growing organically. Technology investments
made in 2016 included a customer relationship management tool, a
transportation management tracking system and a highly functional
mobile application for our customers, all of which serve to
differentiate Allied in the marketplace. Our regional service area
model continues to mature, and our drive towards simplifying our
business processes through continuous improvement all add to the
potential for greater economies of scale as our business
expands.
Although
no acquisitions were completed in 2016, the opening of five new
locations continued to strengthen our greenfield and service centre
strategy. This continued focus allows us to improve in the area of
customer service, cost control and more efficiently leveraging
existing assets. Sales and product offerings of our Tri-Built
private label brand continued to grow in 2016. This, combined with
our investments in technology and the ongoing effort and expansion
of our service centre network, continue to differentiate Allied in
the marketplace.
Exterior Products
Commercial
roofing continued to experience modest industry-wide growth while
growth in the residential sector was largely due to the high level
of hail storm activity experienced in specific markets in the US,
particularly in Texas. While most of our residential roofing
markets grew in line with the market, concentrated efforts resulted
in an improved residential product mix. The Exterior Products
division reported solid sales and improved operating profits in
2016.
Interior Products
Performance
in this business was strong in most markets with increased demand
of core products contributing to higher sales and operating profit.
The strong growth of multi-family construction and a shift towards
more urbanisation led to particularly strong results in the
Southeast and West Coast markets. Focused investments in new
locations and operational excellence initiatives helped to achieve
solid sales growth and higher operating margins.
Asia
|
|
|
Analysis of change
|
|
|
€ million
|
2015
|
Exchange
|
Acquisitions
|
LH Costs
|
Organic
|
2016
|
% change
|
|
Sales
revenue
|
151
|
-6
|
+360
|
-
|
+3
|
508
|
+236%
|
|
EBITDA
|
2
|
-
|
+93
|
+13
|
+1
|
109
|
n/m
|
|
Operating
profit/(loss)
|
-7
|
-
|
+71
|
+13
|
-6
|
71
|
n/m
|
|
EBITDA/sales
|
1.3%
|
|
|
|
|
21.5%
|
|
|
Operating
profit/sales
|
-4.6%
|
|
|
|
|
14.0%
|
|
|
n/m not meaningful percentage movements
|
LH integration costs of €6 million were incurred in 2016
(2015: €19 million)
|
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
The
construction market remains strong in the Philippines, with growth
in cement demand in 2016 largely due to increased construction
activities in the private sector and government infrastructure
spending. Despite competitive markets, operating profit was ahead
due to higher selling prices and lower variable costs which
benefited from a decrease in the price of imported clinker and
lower prices of fuel and power.
China and India
Yatai
Building Materials continued to be affected by lower volumes and
selling prices. Cement prices were down 3% due to lower levels of
construction activities and overcapacity in the
market.
In
2016, sales at MHIL decreased by 8% due to lower cement prices,
increased competition and new capacities in the region. This
coupled with lower clinker exports was only partly offset by
improved cement volumes, and operating profit was lower in
2016.
Primary Financial Statements and Summarised Notes
Year ended 31 December 2016
Consolidated Income Statement
For the financial year ended 31 December 2016
|
|
2016
|
|
2015
|
|
|
€ m
|
|
€ m
|
|
|
|
|
|
|
Revenue
|
27,104
|
|
23,635
|
|
Cost of sales
|
(18,267)
|
|
(16,394)
|
|
Gross profit
|
8,837
|
|
7,241
|
|
Operating costs
|
(6,810)
|
|
(5,964)
|
|
Group operating profit
|
2,027
|
|
1,277
|
|
Profit on disposals
|
55
|
|
101
|
|
Profit before finance costs
|
2,082
|
|
1,378
|
|
Finance costs
|
(325)
|
|
(303)
|
|
Finance income
|
8
|
|
8
|
|
Other financial expense
|
(66)
|
|
(94)
|
|
Share of equity accounted investments' profit
|
42
|
|
44
|
|
Profit before tax
|
1,741
|
|
1,033
|
|
Income tax expense
|
(471)
|
|
(304)
|
|
Group profit for the financial year
|
1,270
|
|
729
|
|
|
|
|
|
|
Profit attributable to:
|
|
|
|
|
Equity holders of the Company
|
1,243
|
|
724
|
|
Non-controlling interests
|
27
|
|
5
|
|
Group profit for the financial year
|
1,270
|
|
729
|
|
|
|
|
|
|
Earnings per Ordinary Share
|
|
|
|
|
Basic
|
150.2c
|
|
89.1c
|
|
Diluted
|
149.1c
|
|
88.7c
|
|
|
|
|
|
|
Consolidated Statement of Comprehensive Income
For the financial year ended 31 December 2016
|
|
Group profit for the financial year
|
1,270
|
|
729
|
|
Other comprehensive income
|
|
Items that may be reclassified to profit or loss in subsequent
years:
|
|
Currency translation effects
|
(82)
|
|
661
|
|
Gains/(losses) relating to cash flow hedges
|
14
|
|
(2)
|
|
|
(68)
|
|
659
|
|
Items that will not be reclassified to profit or loss in subsequent
years:
|
|
Remeasurement of retirement benefit obligations
|
(61)
|
|
203
|
|
Tax on items recognised directly within other comprehensive
income
|
3
|
|
(30)
|
|
|
(58)
|
|
173
|
|
|
|
|
|
|
Total other comprehensive income for the financial
year
|
(126)
|
|
832
|
|
Total comprehensive income for the financial year
|
1,144
|
|
1,561
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
Equity holders of the Company
|
1,128
|
|
1,538
|
|
Non-controlling interests
|
16
|
|
23
|
|
Total comprehensive income for the financial year
|
1,144
|
|
1,561
|
Consolidated Balance Sheet
As at 31 December 2016
|
|
2016
|
|
2015
|
|
|
€ m
|
|
€ m
|
|
ASSETS
|
|
|
|
|
Non-current assets
|
|
|
|
|
Property, plant and equipment
|
12,690
|
|
13,062
|
|
Intangible assets
|
7,761
|
|
7,820
|
|
Investments accounted for using the equity method
|
1,299
|
|
1,317
|
|
Other financial assets
|
26
|
|
28
|
|
Other receivables
|
212
|
|
149
|
|
Derivative financial instruments
|
53
|
|
85
|
|
Deferred income tax assets
|
159
|
|
149
|
|
Total non-current assets
|
22,200
|
|
22,610
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
Inventories
|
2,939
|
|
2,873
|
|
Trade and other receivables
|
3,979
|
|
3,977
|
|
Current income tax recoverable
|
4
|
|
5
|
|
Derivative financial instruments
|
23
|
|
24
|
|
Cash and cash equivalents
|
2,449
|
|
2,518
|
|
Total current assets
|
9,394
|
|
9,397
|
|
|
|
|
|
|
Total assets
|
31,594
|
|
32,007
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
Capital and reserves attributable to the Company's equity
holders
|
|
|
|
|
Equity share capital
|
284
|
|
281
|
|
Preference share capital
|
1
|
|
1
|
|
Share premium account
|
6,237
|
|
6,021
|
|
Treasury Shares and own shares
|
(14)
|
|
(28)
|
|
Other reserves
|
286
|
|
240
|
|
Foreign currency translation reserve
|
629
|
|
700
|
|
Retained income
|
6,472
|
|
5,800
|
|
Capital and reserves attributable to the Company's equity
holders
|
13,895
|
|
13,015
|
|
Non-controlling interests
|
548
|
|
529
|
|
Total equity
|
14,443
|
|
13,544
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Interest-bearing loans and borrowings
|
7,515
|
|
8,465
|
|
Derivative financial instruments
|
-
|
|
5
|
|
Deferred income tax liabilities
|
2,008
|
|
2,023
|
|
Other payables
|
461
|
|
410
|
|
Retirement benefit obligations
|
591
|
|
588
|
|
Provisions for liabilities
|
678
|
|
603
|
|
Total non-current liabilities
|
11,253
|
|
12,094
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
4,815
|
|
4,761
|
|
Current income tax liabilities
|
394
|
|
401
|
|
Interest-bearing loans and borrowings
|
275
|
|
756
|
|
Derivative financial instruments
|
32
|
|
19
|
|
Provisions for liabilities
|
382
|
|
432
|
|
Total current liabilities
|
5,898
|
|
6,369
|
|
Total liabilities
|
17,151
|
|
18,463
|
|
|
|
|
|
|
Total equity and liabilities
|
31,594
|
|
32,007
|
Consolidated Statement of Changes in Equity
For the financial year ended 31 December 2016
|
|
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 2016
|
282
|
6,021
|
(28)
|
240
|
700
|
5,800
|
529
|
13,544
|
|
Group
profit for 2016
|
-
|
-
|
-
|
-
|
-
|
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
interest 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
|
|
|
|
|
|
|
|
|
|
|
|
For the
financial year ended 31 December 2015
|
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2015
|
254
|
4,324
|
(76)
|
213
|
57
|
5,405
|
21
|
10,198
|
|
Group
profit for 2015
|
-
|
-
|
-
|
-
|
-
|
724
|
5
|
729
|
|
Other
comprehensive income
|
-
|
-
|
-
|
-
|
643
|
171
|
18
|
832
|
|
Total
comprehensive income
|
-
|
-
|
-
|
-
|
643
|
895
|
23
|
1,561
|
|
Issue
of share capital (net of expenses)
|
28
|
1,697
|
-
|
-
|
-
|
-
|
-
|
1,725
|
|
Share-based
payment expense
|
-
|
-
|
-
|
27
|
-
|
-
|
-
|
27
|
|
Treasury/own
shares reissued
|
-
|
-
|
51
|
-
|
-
|
(51)
|
-
|
-
|
|
Shares
acquired by the Employee Benefit Trust (own shares)
|
-
|
-
|
(3)
|
-
|
-
|
-
|
-
|
(3)
|
|
Tax
relating to share-based payment expense
|
-
|
-
|
-
|
-
|
-
|
5
|
-
|
5
|
|
Share
option exercises
|
-
|
-
|
-
|
-
|
-
|
57
|
-
|
57
|
|
Dividends
(including shares issued in lieu of dividends)
|
-
|
-
|
-
|
-
|
-
|
(511)
|
(4)
|
(515)
|
|
Non-controlling
interest arising on acquisition of subsidiaries
|
-
|
-
|
-
|
-
|
-
|
-
|
489
|
489
|
|
At 31
December 2015
|
282
|
6,021
|
(28)
|
240
|
700
|
5,800
|
529
|
13,544
|
Consolidated Statement of Cash Flows
For the financial year ended 31 December 2016
|
|
2016
|
|
2015
|
|
|
€ m
|
|
€
m
|
|
Cash flows from operating activities
|
|
|
|
|
Profit
before tax
|
1,741
|
|
1,033
|
|
Finance
costs (net)
|
383
|
|
389
|
|
Share
of equity accounted investments' profit after tax
|
(42)
|
|
(44)
|
|
Profit
on disposals
|
(55)
|
|
(101)
|
|
Group operating profit
|
2,027
|
|
1,277
|
|
Depreciation
charge
|
1,009
|
|
843
|
|
Amortisation
of intangible assets
|
71
|
|
55
|
|
Impairment
charge
|
23
|
|
44
|
|
Share-based
payment expense
|
46
|
|
27
|
|
Other
(primarily pension payments)
|
(65)
|
|
(47)
|
|
Net
movement on working capital and provisions
|
56
|
|
585
|
|
Cash generated from operations
|
3,167
|
|
2,784
|
|
Interest
paid (including finance leases)
|
(346)
|
|
(302)
|
|
Corporation
tax paid
|
(481)
|
|
(235)
|
|
Net cash inflow from operating activities
|
2,340
|
|
2,247
|
|
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
|
Proceeds
from disposals (net of cash disposed and deferred
proceeds)
|
283
|
|
889
|
|
Interest
received
|
8
|
|
8
|
|
Dividends
received from equity accounted investments
|
40
|
|
53
|
|
Purchase
of property, plant and equipment
|
(853)
|
|
(882)
|
|
Acquisition
of subsidiaries (net of cash acquired)
|
(149)
|
|
(7,296)
|
|
Other
investments and advances
|
(7)
|
|
(19)
|
|
Deferred
and contingent acquisition consideration paid
|
(57)
|
|
(59)
|
|
Net cash outflow from investing activities
|
(735)
|
|
(7,306)
|
|
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
|
Proceeds
from issue of shares (net)
|
52
|
|
1,593
|
|
Proceeds
from exercise of share options
|
-
|
|
57
|
|
Increase
in interest-bearing loans, borrowings and finance
leases
|
600
|
|
5,633
|
|
Net
cash flow arising from derivative financial
instruments
|
(5)
|
|
47
|
|
Premium
paid on early debt redemption
|
-
|
|
(38)
|
|
Treasury/own
shares purchased
|
(4)
|
|
(3)
|
|
Repayment
of interest-bearing loans, borrowings and finance
leases
|
(2,015)
|
|
(2,744)
|
|
Dividends
paid to equity holders of the Company
|
(352)
|
|
(379)
|
|
Dividends
paid to non-controlling interests
|
(8)
|
|
(4)
|
|
Net cash (outflow)/inflow from financing activities
|
(1,732)
|
|
4,162
|
|
Decrease in cash and cash equivalents
|
(127)
|
|
(897)
|
|
|
|
|
|
|
Reconciliation of opening to closing cash and cash
equivalents
|
|
|
|
|
Cash and cash equivalents at 1 January
|
2,518
|
|
3,295
|
|
Translation
adjustment
|
58
|
|
120
|
|
Decrease
in cash and cash equivalents
|
(127)
|
|
(897)
|
|
Cash and cash equivalents at 31 December
|
2,449
|
|
2,518
|
|
|
|
|
|
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.
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 2016, including the Annual Improvements
2011-2014 Cycle and amendments to IAS 1 Presentation of Financial
Statements. 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 ended 31 December
|
|
euro 1 =
|
2016
|
2015
|
|
2016
|
2015
|
|
|
|
|
|
|
|
|
Brazilian
Real
|
3.8561
|
3.7004
|
|
3.4305
|
4.3117
|
|
Canadian
Dollar
|
1.4659
|
1.4186
|
|
1.4188
|
1.5116
|
|
Chinese
Renminbi
|
7.3522
|
6.9733
|
|
7.3202
|
7.0608
|
|
Hungarian
Forint
|
311.4379
|
309.9956
|
|
309.8300
|
315.9800
|
|
Indian
Rupee
|
74.3717
|
71.1956
|
|
71.5935
|
72.0215
|
|
Philippine
Peso
|
52.5555
|
50.5217
|
|
52.2680
|
50.9990
|
|
Polish
Zloty
|
4.3632
|
4.1841
|
|
4.4103
|
4.2639
|
|
Pound
Sterling
|
0.8195
|
0.7258
|
|
0.8562
|
0.7340
|
|
Romanian
Leu
|
4.4904
|
4.4454
|
|
4.5390
|
4.5240
|
|
Serbian
Dinar
|
123.1356
|
120.7168
|
|
123.4600
|
121.5612
|
|
Swiss
Franc
|
1.0902
|
1.0679
|
|
1.0739
|
1.0835
|
|
Ukrainian
Hryvnia
|
28.2812
|
24.3693
|
|
28.6043
|
26.1434
|
|
US
Dollar
|
1.1069
|
1.1095
|
|
1.0541
|
1.0887
|
1. Basis of Preparation and Accounting Policies -
continued
Operating Segments
During 2016, the Group completed its integration of the businesses
acquired from Lafarge S.A. and Holcim Limited in Q3 2015 (the "LH
Assets"). In light of this, CRH has revisited its operating segment
disclosures to ensure that they continue to reflect the Group's
organisational structure and the nature of the financial
information reported to and assessed by the Group Chief Executive
and Finance Director, who are together determined to fulfil the
role of Chief Operating Decision Maker (as defined by IFRS 8
Operating
Segments). As a result, a new
operating segment for Asia has been identified and activities
reported from date of acquisition in Q3 2015 in the LH Assets
operating segment have been reallocated within the Europe
Heavyside, Americas Materials and new Asia
segments.
Comparative segment amounts for 2015 have been restated where
necessary to reflect the new format for segmentation. The Group now
reports across the following seven operating segments:
● Europe Heavyside
● Europe Lightside
● Europe Distribution
● Americas Materials
● Americas Products
● Americas Distribution
● Asia
In
note 4 beginning on page 18, comparative amounts for full year
2015, and at year-end 2015, have been restated where necessary to
reflect the new format of segmentation.
2. Key Components of 2016 Performance
|
€
million
|
Sales revenue
|
EBITDA
|
Operating profit
|
Profit on disposals
|
Finance costs (net)
|
Assoc. and JV PAT
|
Pre-tax profit
|
|
|
|
|
|
|
|
|
|
|
2015
|
23,635
|
2,219
|
1,277
|
101
|
(389)
|
44
|
1,033
|
|
Exchange
effects
|
(333)
|
(29)
|
(11)
|
(7)
|
3
|
1
|
(14)
|
|
2015
at 2016 rates
|
23,302
|
2,190
|
1,266
|
94
|
(386)
|
45
|
1,019
|
|
-
Incremental impact in 2016 of:
|
|
|
|
|
|
|
|
|
-
2015/2016 acquisitions
|
3,624
|
546
|
337
|
-
|
(33)
|
2
|
306
|
|
-
2015/2016 divestments
|
(506)
|
(29)
|
(13)
|
(51)
|
3
|
(14)
|
(75)
|
|
- LH
Assets integration costs (i)
|
-
|
152
|
152
|
-
|
-
|
-
|
152
|
|
-
Swiss fine
|
-
|
32
|
32
|
-
|
-
|
-
|
32
|
|
-
Early bond redemption
|
-
|
-
|
-
|
-
|
38
|
-
|
38
|
|
-
Organic
|
684
|
239
|
253
|
12
|
(5)
|
9
|
269
|
|
2016
|
27,104
|
3,130
|
2,027
|
55
|
(383)
|
42
|
1,741
|
|
|
|
|
|
|
|
|
|
|
%
Total change
|
15%
|
41%
|
59%
|
|
|
|
69%
|
(i)
LH Assets integration costs of
€45 million were incurred in 2016 (2015: €197
million).
3. Seasonality
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 accounted for 47% of full-year 2016 (2015: 40%),
while EBITDA for the first six months of 2016 represented 36% of
the full-year out-turn (2015: 25%).
4. Segment Information
|
|
2016
|
|
2015
|
|
|
€ m
|
%
|
|
€
m
|
%
|
|
Revenue
|
|
|
|
|
|
|
Europe
Heavyside
|
7,396
|
27.3
|
|
5,256
|
22.3
|
|
Europe
Lightside
|
941
|
3.5
|
|
961
|
4.1
|
|
Europe
Distribution
|
4,066
|
15.0
|
|
4,158
|
17.6
|
|
Americas
Materials
|
7,598
|
28.0
|
|
7,018
|
29.7
|
|
Americas
Products
|
4,280
|
15.8
|
|
3,862
|
16.3
|
|
Americas
Distribution
|
2,315
|
8.5
|
|
2,229
|
9.4
|
|
Asia
|
508
|
1.9
|
|
151
|
0.6
|
|
|
27,104
|
100.0
|
|
23,635
|
100.0
|
|
EBITDA
|
|
|
|
|
|
|
Europe
Heavyside
|
814
|
26.0
|
|
460
|
20.8
|
|
Europe
Lightside
|
104
|
3.3
|
|
100
|
4.5
|
|
Europe
Distribution
|
206
|
6.6
|
|
171
|
7.7
|
|
Americas
Materials
|
1,204
|
38.5
|
|
955
|
43.0
|
|
Americas
Products
|
543
|
17.3
|
|
391
|
17.6
|
|
Americas
Distribution
|
150
|
4.8
|
|
140
|
6.3
|
|
Asia
|
109
|
3.5
|
|
2
|
0.1
|
|
|
3,130
|
100.0
|
|
2,219
|
100.0
|
|
Depreciation,
amortisation and impairment
|
|
Europe
Heavyside
|
417
|
37.8
|
|
325
|
34.4
|
|
Europe
Lightside
|
23
|
2.1
|
|
25
|
2.6
|
|
Europe
Distribution
|
76
|
6.9
|
|
77
|
8.2
|
|
Americas
Materials
|
386
|
35.0
|
|
335
|
35.6
|
|
Americas
Products
|
132
|
12.0
|
|
142
|
15.1
|
|
Americas
Distribution
|
31
|
2.8
|
|
29
|
3.1
|
|
Asia
|
38
|
3.4
|
|
9
|
1.0
|
|
|
1,103
|
100.0
|
|
942
|
100.0
|
|
Operating
profit
|
|
|
|
|
|
|
Europe
Heavyside
|
397
|
19.6
|
|
135
|
10.5
|
|
Europe
Lightside
|
81
|
4.0
|
|
75
|
5.9
|
|
Europe
Distribution
|
130
|
6.4
|
|
94
|
7.3
|
|
Americas
Materials
|
818
|
40.3
|
|
620
|
48.6
|
|
Americas
Products
|
411
|
20.3
|
|
249
|
19.5
|
|
Americas
Distribution
|
119
|
5.9
|
|
111
|
8.7
|
|
Asia
|
71
|
3.5
|
|
(7)
|
(0.5)
|
|
|
2,027
|
100.0
|
|
1,277
|
100.0
|
|
Profit/(loss)
on disposals
|
|
|
|
|
|
|
Europe
Heavyside
|
24
|
|
|
101
|
|
|
Europe
Lightside
|
1
|
|
|
(23)
|
|
|
Europe
Distribution
|
13
|
|
|
8
|
|
|
Americas
Materials
|
(19)
|
|
|
24
|
|
|
Americas
Products
|
34
|
|
|
(11)
|
|
|
Americas
Distribution
|
2
|
|
|
2
|
|
|
Asia
|
-
|
|
|
-
|
|
|
|
55
|
|
|
101
|
|
|
|
|
|
|
|
|
|
4. Segment Information - continued
|
|
2016
|
|
|
2015
|
|
|
|
€ m
|
|
|
€
m
|
|
|
Reconciliation
of Group operating profit to profit before tax:
|
|
|
Group
operating profit (analysed on page 18)
|
2,027
|
|
|
1,277
|
|
|
Profit
on disposals
|
55
|
|
|
101
|
|
|
Profit
before finance costs
|
2,082
|
|
|
1,378
|
|
|
Finance
costs less income
|
(317)
|
|
|
(295)
|
|
|
Other
financial expense
|
(66)
|
|
|
(94)
|
|
|
Share
of equity accounted investments' profit
|
42
|
|
|
44
|
|
|
Profit
before tax
|
1,741
|
|
|
1,033
|
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
|
€ m
|
%
|
|
€
m
|
%
|
|
Total
assets
|
|
|
|
|
|
|
Europe
Heavyside
|
8,736
|
31.7
|
|
9,224
|
33.1
|
|
Europe
Lightside
|
731
|
2.7
|
|
767
|
2.8
|
|
Europe
Distribution
|
2,160
|
7.8
|
|
2,238
|
8.0
|
|
Americas
Materials
|
8,970
|
32.5
|
|
8,780
|
31.5
|
|
Americas
Products
|
4,275
|
15.5
|
|
4,146
|
14.9
|
|
Americas
Distribution
|
1,152
|
4.2
|
|
1,095
|
3.9
|
|
Asia
|
1,557
|
5.6
|
|
1,631
|
5.8
|
|
|
27,581
|
100.0
|
|
27,881
|
100.0
|
|
Reconciliation
to total assets as reported in the
Consolidated
Balance Sheet:
|
|
|
Investments
accounted for using the equity method
|
1,299
|
|
|
1,317
|
|
|
Other
financial assets
|
26
|
|
|
28
|
|
|
Derivative
financial instruments (current and non-current)
|
76
|
|
|
109
|
|
|
Income
tax assets (current and deferred)
|
163
|
|
|
154
|
|
|
Cash
and cash equivalents
|
2,449
|
|
|
2,518
|
|
|
Total
assets
|
31,594
|
|
|
32,007
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
|
|
|
|
Europe
Heavyside
|
2,701
|
39.0
|
|
2,773
|
40.8
|
|
Europe
Lightside
|
245
|
3.5
|
|
261
|
3.8
|
|
Europe
Distribution
|
642
|
9.3
|
|
647
|
9.5
|
|
Americas
Materials
|
1,725
|
24.9
|
|
1,582
|
23.3
|
|
Americas
Products
|
998
|
14.4
|
|
952
|
14.0
|
|
Americas
Distribution
|
392
|
5.7
|
|
364
|
5.4
|
|
Asia
|
224
|
3.2
|
|
215
|
3.2
|
|
|
6,927
|
100.0
|
|
6,794
|
100.0
|
|
Reconciliation
to total liabilities as reported in the
Consolidated
Balance Sheet:
|
|
Interest-bearing
loans and borrowings (current and non-current)
|
7,790
|
|
|
9,221
|
|
|
Derivative
financial instruments (current and non-current)
|
32
|
|
|
24
|
|
|
Income
tax liabilities (current and deferred)
|
2,402
|
|
|
2,424
|
|
|
Total
liabilities
|
17,151
|
|
|
18,463
|
|
|
|
|
|
|
|
|
5. Earnings per Ordinary Share
The
computation of basic and diluted earnings per Ordinary Share is set
out below:
|
|
2016
|
|
2015
|
|
Numerator computations
|
€ m
|
|
€
m
|
|
Group profit for the financial year
|
1,270
|
|
729
|
|
Profit attributable to non-controlling interests
|
(27)
|
|
(5)
|
|
Numerator for basic and diluted earnings per Ordinary
Share
|
1,243
|
|
724
|
|
|
|
|
|
|
|
Number of
|
|
Number
of
|
|
Denominator computations
|
Shares
|
|
Shares
|
|
Weighted average number of Ordinary Shares (millions) outstanding
for the year
|
827.8
|
|
812.3
|
|
Effect of dilutive potential Ordinary Shares (share options)
(millions)
|
6.1
|
|
3.6
|
|
Denominator for diluted earnings per Ordinary Share
(millions)
|
833.9
|
|
815.9
|
|
|
|
|
|
|
Earnings per Ordinary Share
|
€ cent
|
|
€
cent
|
|
- basic
|
150.2
|
|
89.1
|
|
- diluted
|
149.1
|
|
88.7
|
6. Dividends
|
|
2016
|
|
2015
|
|
Net dividend paid per share (€ cent)
|
62.8
|
|
62.5
|
|
Net dividend declared for the year (€ cent)
|
65.0
|
|
62.5
|
|
Dividend cover (Earnings per share/Dividend declared per
share)
|
2.3x
|
|
1.4x
|
7. Net Finance Costs
|
|
2016
|
|
2015
|
|
|
€ m
|
|
€ m
|
|
Finance
costs
|
325
|
|
303
|
|
Finance
income
|
(8)
|
|
(8)
|
|
Other
financial expense
|
66
|
|
94
|
|
Total net finance costs
|
383
|
|
389
|
|
|
|
|
|
|
The
overall total is analysed as follows:
|
|
|
|
|
Net
finance costs on interest-bearing loans and borrowings and cash and
cash equivalents
|
319
|
|
294
|
|
Net
(credit)/cost re change in fair value of derivatives and fixed rate
debt
|
(2)
|
|
1
|
|
Net
debt-related interest costs
|
317
|
|
295
|
|
Premium
paid on early debt redemption
|
-
|
|
38
|
|
Net
pension-related finance cost
|
12
|
|
17
|
|
Charge
to unwind discount on provisions/deferred and contingent
consideration
|
54
|
|
39
|
|
Total net finance costs
|
383
|
|
389
|
|
|
|
|
|
8.
Net
Debt
|
|
Fair value
|
Book
value
|
|
Fair
value
|
Book
value
|
|
|
2016
|
|
2015
|
|
Net debt
|
€ m
|
€ m
|
|
€
m
|
€
m
|
|
Non-current assets
|
|
|
|
|
|
|
Derivative
financial instruments
|
53
|
53
|
|
85
|
85
|
|
Current assets
|
|
|
|
|
|
|
Derivative
financial instruments
|
23
|
23
|
|
24
|
24
|
|
Cash
and cash equivalents
|
2,449
|
2,449
|
|
2,518
|
2,518
|
|
Non-current liabilities
|
|
|
|
|
|
|
Interest-bearing
loans and borrowings
|
(7,961)
|
(7,515)
|
|
(8,737)
|
(8,465)
|
|
Derivative
financial instruments
|
--
|
-
|
|
(5)
|
(5)
|
|
Current liabilities
|
|
|
|
|
|
|
Interest-bearing
loans and borrowings
|
(275)
|
(275)
|
|
(789)
|
(756)
|
|
Derivative
financial instruments
|
(32)
|
(32)
|
|
(19)
|
(19)
|
|
Group net debt
|
(5,743)
|
(5,297)
|
|
(6,923)
|
(6,618)
|
|
|
|
|
|
|
|
|
Gross debt, net of derivatives, matures as follows:
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
€ m
|
|
|
€
m
|
|
Within
one year
|
|
284
|
|
|
751
|
|
Between
one and two years
|
|
615
|
|
|
778
|
|
Between
two and five years
|
|
2,220
|
|
|
2,600
|
|
After
five years
|
|
4,627
|
|
|
5,007
|
|
Total
|
|
7,746
|
|
|
9,136
|
|
Reconciliation of opening to closing net debt:
|
|
|
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
|
€ m
|
|
|
€
m
|
|
At 1 January
|
|
(6,618)
|
|
|
(2,492)
|
|
Debt in
acquired companies
|
|
(3)
|
|
|
(175)
|
|
Debt in
disposed companies
|
|
-
|
|
|
20
|
|
Increase
in interest-bearing loans, borrowings and finance
leases
|
|
(600)
|
|
|
(5,633)
|
|
Net
cash flow arising from derivative financial
instruments
|
|
5
|
|
|
(47)
|
|
Repayment
of interest-bearing loans, borrowings and finance
leases
|
|
2,015
|
|
|
2,744
|
|
Decrease
in cash and cash equivalents
|
|
(127)
|
|
|
(897)
|
|
Mark-to-market
adjustment
|
|
21
|
|
|
(1)
|
|
Translation
adjustment
|
|
10
|
|
|
(137)
|
|
At 31 December
|
|
(5,297)
|
|
|
(6,618)
|
Market
capitalisation
Market
capitalisation, calculated as the year-end share price multiplied
by the number of Ordinary Shares in issue, is as
follows:
|
|
2016
|
|
2015
|
|
|
€ m
|
|
€
m
|
|
Market
capitalisation at year-end
|
27,442
|
|
21,977
|
8. Net Debt - continued
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:
|
|
2016
|
|
2015
|
|
|
€ m
|
|
€
m
|
|
Within
one year
|
197
|
|
31
|
|
Between
one and two years
|
-
|
|
220
|
|
Between
two and five years
|
2,837
|
|
2,837
|
|
After
five years
|
-
|
|
-
|
|
|
3,034
|
|
3,088
|
Lender covenants
The
Group's major bank facilities and debt issued pursuant to Note
Purchase Agreements in private placements 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 (2015: 4.5 times). As
at 31 December 2016, the ratio was 10.1 times (2015: 8.5
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 (2015: €5.6 billion) (such minimum being
adjusted for foreign exchange translation impacts). As at 31
December 2016, net worth (as defined in the relevant agreement) was
€16.4 billion (2015: €15.6 billion).
Net debt metrics
The net
debt metrics based on net debt as shown in note 8, EBITDA as
defined on page 30 and net debt-related interest as shown in note 7
are as follows:
|
|
|
2016
|
|
2015
|
|
EBITDA
net interest cover (times)
|
-
|
9.9
|
|
7.5
|
|
EBIT
net interest cover (times)
|
|
6.4
|
|
4.3
|
|
|
|
|
|
|
|
Net
debt as a percentage of market capitalisation
|
19%
|
|
30%
|
|
Net
debt as a percentage of total equity
|
37%
|
|
49%
|
9. 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:
|
|
2016
|
|
2015
|
|
|
€ m
|
|
€
m
|
|
Group share of:
|
|
|
|
|
Revenue
|
1,249
|
|
1,457
|
|
EBITDA
|
137
|
163
|
|
Operating
profit
|
71
|
|
81
|
|
Profit
after tax
|
42
|
|
44
|
|
Analysis of Group share of profit after tax:
|
|
|
|
|
Share
of joint ventures' profit after tax
|
51
|
|
41
|
|
Share
of associates' (loss)/profit after tax
|
(9)
|
3
|
|
Share
of equity accounted investments' profit after tax
|
42
|
44
|
10. Acquisitions
The
acquisitions completed during the year ended 31 December 2016 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:
Belgium: Ghent Marine Aggregates
Terminal (31 December);
Ireland: Carrigtwohill Quarry (11 March), Fountain Cross
and Copestown Quarries (11 November);
Spain: increased stake in Morteros
Bizkor to 100% ownership (12 July); and
UK: certain assets of Hope Construction
Materials and Breedon Aggregates (1 August).
Europe Lightside:
UK: Alluguard Limited (3 May); MCL
Group Industries Limited (3 May).
Europe Distribution:
Austria: Jung & Sohn (15
July).
Americas
Materials:
Canada: certain assets of TecMix Ready
Mix Inc. (6 July), certain assets of Inter County Concrete Product
Inc. (15 December);
Michigan: Winchester/Dykstra Property
(22 August);
New Jersey: Meer Property (26
February);
New Mexico: assets of Consolidated
Constructors (9 December);
Ohio: Lower Property (22
December);
Utah: selected assets of Nielson
Construction (1 February); and
Washington: certain assets of Knife
River Corporation (30 December).
Americas
Products:
Australia: Neil Bennett Pty, Ltd. (1
February);
California: certain assets of Cell
Blocks, Inc (1 December);
Canada: Techniseal Products, Inc. (20
May);
Colorado: selected assets of Colorado
Precast Concrete, Inc. (7 March); and
Louisiana: ModX (51%, 12 May).
The
following table analyses the 21 acquisitions (2015: 19
acquisitions) by reportable segment and provides details of the
goodwill and consideration figures arising in each of those
segments:
|
Reportable segments
|
Number
of acquisitions
|
|
Goodwill
|
|
Consideration
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
€ m
|
|
€ m
|
|
€ m
|
|
€ m
|
|
Europe
Heavyside
|
5
|
|
1
|
|
2
|
|
-
|
|
15
|
|
5
|
|
Europe
Lightside
|
2
|
|
2
|
|
7
|
|
6
|
|
22
|
|
12
|
|
Europe
Distribution
|
1
|
|
1
|
|
-
|
|
-
|
|
-
|
|
1
|
|
Europe
|
8
|
|
4
|
|
9
|
|
6
|
|
37
|
|
18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas
Materials
|
8
|
|
10
|
|
10
|
|
32
|
|
97
|
|
80
|
|
Americas
Products
|
5
|
|
3
|
|
7
|
|
9
|
|
33
|
|
65
|
|
Americas
|
13
|
|
13
|
|
17
|
|
41
|
|
130
|
|
145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LH
Assets
|
-
|
|
1
|
|
-
|
|
2,307
|
|
-
|
|
6,561
|
|
CRL
|
-
|
|
1
|
|
-
|
|
833
|
|
-
|
|
1,169
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Group
|
21
|
|
19
|
|
26
|
|
3,187
|
|
167
|
|
7,893
|
|
Adjustments
to provisional fair values of prior year acquisitions
|
|
|
|
|
45
|
|
-
|
|
8
|
|
-
|
|
Total
|
|
|
|
|
71
|
|
3,187
|
|
175
|
|
7,893
|
10. Acquisitions - continued
The
identifiable net assets acquired, including adjustments to
provisional fair values, were as follows:
|
|
2016
|
|
2015
|
|
ASSETS
|
€ m
|
|
€
m
|
|
Non-current assets
|
|
|
|
|
Property,
plant and equipment
|
19
|
|
5,413
|
|
Intangible
assets
|
14
|
|
298
|
|
Equity
accounted investments
|
-
|
|
24
|
|
Other
financial assets
|
-
|
|
5
|
|
Total non-current assets
|
33
|
|
5,740
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
Inventories
|
9
|
|
621
|
|
Trade
and other receivables (i)
|
28
|
|
1,533
|
|
Cash
and cash equivalents
|
4
|
|
494
|
|
Total current assets
|
41
|
|
2,648
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
Trade
and other payables
|
(14)
|
|
(1,549)
|
|
Provisions
for liabilities
|
18
|
|
(581)
|
|
Retirement
benefit obligations
|
(1)
|
|
(87)
|
|
Interest-bearing
loans and borrowings and finance leases
|
(3)
|
|
(175)
|
|
Current
income tax liabilities
|
4
|
|
(149)
|
|
Deferred
income tax liabilities
|
35
|
|
(627)
|
|
Total liabilities
|
39
|
|
(3,168)
|
|
|
|
|
|
|
Total identifiable net assets at fair value
|
113
|
|
5,220
|
|
Goodwill
arising on acquisition (ii)
|
71
|
|
3,187
|
|
Joint
ventures becoming subsidiaries
|
-
|
|
(25)
|
|
Non-controlling
interests*
|
(9)
|
|
(489)
|
|
Total consideration
|
175
|
|
7,893
|
|
|
|
|
|
|
Consideration satisfied by:
|
|
|
|
|
Cash
payments
|
153
|
|
7,790
|
|
Deferred
consideration (stated at net present cost)
|
21
|
|
97
|
|
Contingent
consideration
|
1
|
|
-
|
|
Profit
on step acquisition
|
-
|
|
6
|
|
Total consideration
|
175
|
|
7,893
|
|
|
|
|
|
|
NET CASH OUTLFOW ARISING ON ACQUISITIONS
|
|
|
|
|
Cash
consideration
|
153
|
|
7,790
|
|
Less:
cash and cash equivalents acquired
|
(4)
|
|
(494)
|
|
Total outflow in the Consolidated Statement of Cash Flows
(iii)
|
149
|
|
7,296
|
*Non-controlling interests are measured at the proportionate share
of net assets in 2016 and fair value in 2015.
Footnotes (i), (ii)
and (iii) appear on page 25.
10. Acquisitions - continued
The acquisition balance sheet presented on the previous page
reflects the identifiable net assets acquired in respect of
acquisitions completed during 2016, together with adjustments to
provisional fair values in respect of acquisitions completed during
2015. The impact of measurement period adjustments on the
acquisition balance sheet, including the two most significant
acquisitions (LH Assets and CRL) were as follows:
|
Measurement period adjustments
|
|
2016
|
|
|
|
€m
|
|
Total
identifiable net assets acquired
|
|
(30)
|
|
Goodwill
arising on acquisition (ii)
|
|
45
|
|
Non-controlling
interests
|
|
(7)
|
|
Total consideration
|
|
8
|
In
accordance with the terms of the acquisition agreements, CRH and
LafargeHolcim continue to engage in a process to finalise the
post-completion consideration for the acquisition of the LH Assets
which completed in Q3 2015. No financial adjustment has been made
in this respect in our 2016 Consolidated Financial Statements. The
position is under continuous review and financial adjustments will
be reflected when there is sufficient evidence to do
so.
None of the acquisitions completed during the
financial period was considered sufficiently material to warrant
separate disclosure of the attributable fair values. The initial
assignment of fair values to identifiable net assets 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 sales impact of acquisitions completed during the
year amounted to €101 million; the profit impact was not
material. The revenue and profit of the Group determined in
accordance with IFRS for the year ended 31 December 2016 would not
have been materially different than reported on page 12 if the
acquisition date for all business combinations completed during the
year had been as of the beginning of that year.
Development update
There have been no acquisitions completed subsequent to the balance
sheet date which would be individually material to the Group,
thereby requiring disclosure under either IFRS 3 or IAS 10
Events after the
Balance Sheet Date. Development
updates, giving details of acquisitions which do not require
separate disclosure on the grounds of materiality, are published
periodically.
Acquisition-related costs
Acquisition-related
costs, excluding post-acquisition integration costs, amounting to
€2 million (2015: €152 million) have been included in
operating costs in the Consolidated Income Statement.
Footnotes to the acquisition balance sheet on page 24
(i)
The gross contractual value of trade
and other receivables as at the respective dates of acquisition
amounted to €30 million (2015: €1,588 million). The
fair value of these receivables is €28 million (all of which
is expected to be recoverable) (2015: €1,533
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 intangible assets are recognised
on business combinations in these segments. €15 million of
the goodwill recognised in respect of acquisitions completed in
2016 is expected to be deductible for tax purposes (2015:
€254 million).
(iii)
The total cash outflow of €149
million arising on acquisitions (2015: €7,296 million) is
reported in the Consolidated Statement of Cash Flows on page 15. In
addition the Group made other investments and advances of €7
million during the year (2015: €19 million). These amounts,
combined with deferred and contingent consideration of €57
million paid in 2016 in respect of acquisitions in prior years
(2015: €59 million) result in total acquisition and
investment spend for the year of €213 million (2015:
€7,374 million).
11. Future Purchase Commitments for Property, Plant and
Equipment
|
|
2016
|
|
2015
|
|
|
€ m
|
|
€
m
|
|
|
|
|
|
|
Contracted for but not provided in the financial
statements
|
309
|
|
311
|
|
Authorised by the Directors but not contracted for
|
467
|
|
118
|
12. Related Party Transactions
There have been no related party transactions or changes in related
party transactions that could have had a material impact on the
financial position or performance of the Group during the 2016 and
2015 financial years. Sales to and purchases from associates during
the financial year ended 31 December 2016 amounted to €56
million (2015: €48 million) and €401 million (2015:
€422 million) respectively. Amounts receivable from and
payable to equity accounted investments as at the balance sheet
date are not material and are included in trade and other
receivables and payables in the Consolidated Balance
Sheet.
13. Swiss Competition Commission
Investigation
In
2015, the Swiss Competition Commission imposed fines on the
Association of Swiss Wholesalers of the Sanitary Industry and
on major Swiss wholesalers including certain Swiss CRH
subsidiaries; the fine attributable to these subsidiaries was CHF34
million. While the Group remains of the view that the fine is
unjustified and it has appealed to the Swiss Federal Appeals Court,
a provision of €32 million (2015: €32 million) is
recorded in the Group's Consolidated Balance Sheet.
14. 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 post-retirement healthcare obligations
and long-term service commitments, 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 actuarial valuations conducted during
the year.
Financial assumptions
The
financial assumptions employed in the valuation of all scheme
assets and liabilities for the current and prior year were as
follows:
|
|
Eurozone
|
|
Switzerland
|
|
United
States &
Canada
|
|
|
2016
|
2015
|
|
2016
|
2015
|
|
2016
|
2015
|
|
|
%
|
%
|
|
%
|
%
|
|
%
|
%
|
|
Rate of
increase in:
|
|
|
|
|
|
|
|
|
|
-
salaries
|
3.41
|
3.64
|
|
1.25
|
1.75
|
|
3.28
|
3.29
|
|
- pensions
in payment
|
1.50
|
1.75
|
|
-
|
-
|
|
-
|
-
|
|
Inflation
|
1.50
|
1.75
|
|
0.75
|
0.75
|
|
2.00
|
2.00
|
|
Discount
rate
|
1.86
|
2.61
|
|
0.65
|
0.85
|
|
4.01
|
4.22
|
|
Medical
cost trend rate
|
n/a
|
n/a
|
|
n/a
|
n/a
|
|
5.98
|
6.21
|
|
|
|
|
|
|
|
|
|
|
14. Retirement Benefit Obligations -
continued
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
|
|
|
2016
|
2015
|
|
2016
|
2015
|
|
2016
|
2015
|
|
|
€ m
|
€
m
|
|
€ m
|
€
m
|
|
€ m
|
€
m
|
|
At 1
January
|
2,399
|
2,046
|
|
(2,987)
|
(2,757)
|
|
(588)
|
(711)
|
|
Administration
expenses
|
(4)
|
(2)
|
|
-
|
-
|
|
(4)
|
(2)
|
|
Current
service cost
|
-
|
-
|
|
(61)
|
(63)
|
|
(61)
|
(63)
|
|
Past
service costs
|
-
|
-
|
|
2
|
1
|
|
2
|
1
|
|
Interest income on
scheme assets
|
58
|
50
|
|
-
|
-
|
|
58
|
50
|
|
Interest cost on
scheme liabilities
|
-
|
-
|
|
(70)
|
(67)
|
|
(70)
|
(67)
|
|
Gain on
settlements
|
-
|
-
|
|
-
|
4
|
|
-
|
4
|
|
Arising
on acquisition
|
-
|
254
|
|
(1)
|
(341)
|
|
(1)
|
(87)
|
|
Remeasurement
adjustments:
|
|
|
|
|
|
|
|
|
|
-return on scheme assets excluding interest income
|
81
|
5
|
|
-
|
-
|
|
81
|
5
|
|
-experience variations
|
-
|
-
|
|
20
|
53
|
|
20
|
53
|
|
-actuarial (loss)/gain from changes in financial
assumptions
|
-
|
-
|
|
(176)
|
121
|
|
(176)
|
121
|
|
-actuarial gain from changes in demographic
assumptions
|
-
|
-
|
|
14
|
24
|
|
14
|
24
|
|
Employer
contributions paid
|
133
|
113
|
|
-
|
-
|
|
133
|
113
|
|
Contributions paid
by plan participants
|
14
|
14
|
|
(14)
|
(14)
|
|
-
|
-
|
|
Benefit
and settlement payments
|
(130)
|
(122)
|
|
130
|
122
|
|
-
|
-
|
|
Translation
adjustment
|
5
|
152
|
|
(4)
|
(184)
|
|
1
|
(32)
|
|
Divestments
|
-
|
(111)
|
|
-
|
114
|
|
-
|
3
|
|
At 31
December
|
2,556
|
2,399
|
|
(3,147)
|
(2,987)
|
|
(591)
|
(588)
|
|
Related
deferred income tax asset
|
|
|
|
|
|
|
119
|
126
|
|
Net
retirement benefit obligations
|
|
|
|
|
|
|
(472)
|
(462)
|
15. 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 2016 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 2015, prepared in accordance with IFRS and
containing an unqualified audit report, have been delivered to the
Registrar of Companies.
16. Annual Report and Form 20-F and Annual General
Meeting (AGM)
The 2016 Annual Report and Form
20-F is expected to be published on the CRH website,
www.crh.com,
on 10 March 2017 and posted on 29 March 2017 to those shareholders
who have requested a paper copy, together with details of the Scrip
Dividend Offer in respect of the final 2016 dividend. A paper copy
of the Annual Report and Form 20-F may be obtained at the Company's
registered office from 29 March 2017. The Company's AGM is
scheduled to be held in the Royal Marine Hotel, Dun Laoghaire, Co.
Dublin at 11:00 a.m. on 27 April 2017.
17. Board Approval
This
announcement was approved by the Board of Directors of CRH plc on
28 February 2017.
2015 Proforma Sales and EBITDA
|
|
|
|
|
Exclude
|
|
|
|
|
CRH
|
LH Assets/CRL
|
CRH incl.
|
Divested
|
One-off
|
Currency
|
Proforma
|
|
|
Reported
|
Proforma (i)
|
LH Assets/CRL
|
entities
|
items (ii)
|
Translation (iii)
|
FY 2015
|
|
Sales
|
€ m
|
€ m
|
€ m
|
€ m
|
€ m
|
€ m
|
€ m
|
|
|
|
|
|
|
|
|
|
|
Europe
Heavyside
|
5,256
|
2,260
|
7,516
|
(115)
|
|
(407)
|
6,994
|
|
Europe
Lightside
|
961
|
-
|
961
|
(50)
|
|
(28)
|
883
|
|
Europe
Distribution
|
4,158
|
-
|
4,158
|
(53)
|
|
(24)
|
4,081
|
|
|
10,375
|
2,260
|
12,635
|
(218)
|
|
(459)
|
11,958
|
|
|
|
|
|
|
|
|
|
|
Americas
Materials
|
7,018
|
526
|
7,544
|
(157)
|
|
(23)
|
7,364
|
|
Americas
Products
|
3,862
|
346
|
4,208
|
(272)
|
|
(47)
|
3,889
|
|
Americas
Distribution
|
2,229
|
-
|
2,229
|
-
|
|
5
|
2,234
|
|
|
13,109
|
872
|
13,981
|
(429)
|
|
(65)
|
13,487
|
|
|
|
|
|
|
|
|
|
|
Asia
|
151
|
371
|
522
|
-
|
|
(20)
|
502
|
|
|
23,635
|
3,503
|
27,138
|
(647)
|
|
(544)
|
25,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
€ m
|
€ m
|
€ m
|
€ m
|
€ m
|
€ m
|
€ m
|
|
|
|
|
|
|
|
|
|
|
Europe
Heavyside
|
460
|
309
|
769
|
(11)
|
121
|
(51)
|
828
|
|
Europe
Lightside
|
100
|
-
|
100
|
(3)
|
-
|
(4)
|
93
|
|
Europe
Distribution
|
171
|
-
|
171
|
(2)
|
32
|
(1)
|
200
|
|
|
731
|
309
|
1,040
|
(16)
|
153
|
(56)
|
1,121
|
|
|
|
|
|
|
|
|
|
|
Americas
Materials
|
955
|
45
|
1,000
|
(9)
|
57
|
(2)
|
1,046
|
|
Americas
Products
|
391
|
81
|
472
|
(10)
|
-
|
(5)
|
457
|
|
Americas
Distribution
|
140
|
-
|
140
|
-
|
-
|
-
|
140
|
|
|
1,486
|
126
|
1,612
|
(19)
|
57
|
(7)
|
1,643
|
|
|
|
|
|
|
|
|
|
|
Asia
|
2
|
98
|
100
|
-
|
19
|
(4)
|
115
|
|
|
2,219
|
533
|
2,752
|
(35)
|
229
|
(67)
|
2,879
|
(i)
The LH Assets and CRL acquisitions
were completed in the third quarter of 2015, and accordingly the
reported full year 2015 numbers for CRH included only the results
from the post-acquisition period. The adjustment column includes
the proforma adjustment to 2015 sales and EBITDA generated by these
businesses to provide meaningful comparatives with the consolidated
full year 2016 Group numbers.
(ii)
Two significant "one-off" costs were
incurred by CRH in 2015: (i) expenses of €197 million
associated with the acquisition of the LH Assets, and (ii) a
provision of €32 million in respect of a fine imposed on CRH
by the Swiss Competition Commission ("ComCo") following an
investigation by ComCo into the sanitary (bathroom fixtures and
fittings) distribution industry in Switzerland.
(iii)
This column reflects the adjustments
required to restate proforma FY 2015 numbers on a constant currency
basis at 2016 rates to provide a meaningful comparative with the
results for full year 2016.
2016 Proforma Sales and EBITDA
|
|
|
Exclude
|
|
|
|
|
|
CRH
|
Divested
|
One-off
|
Proforma
|
Proforma
|
|
|
|
Reported
|
Entities
|
Items (i)
|
FY 2016
|
FY 2015 (ii)
|
Proforma
|
|
Sales
|
€ m
|
€ m
|
€ m
|
€ m
|
€ m
|
% Change
|
|
|
|
|
|
|
|
|
|
Europe
Heavyside
|
7,396
|
(6)
|
|
7,390
|
6,994
|
6%
|
|
Europe
Lightside
|
941
|
-
|
|
941
|
883
|
7%
|
|
Europe
Distribution
|
4,066
|
-
|
|
4,066
|
4,081
|
0%
|
|
|
12,403
|
(6)
|
|
12,397
|
11,958
|
4%
|
|
|
|
|
|
|
|
|
|
Americas
Materials
|
7,598
|
(78)
|
|
7,520
|
7,364
|
2%
|
|
Americas
Products
|
4,280
|
(13)
|
|
4,267
|
3,889
|
10%
|
|
Americas
Distribution
|
2,315
|
-
|
|
2,315
|
2,234
|
4%
|
|
|
14,193
|
(91)
|
|
14,102
|
13,487
|
5%
|
|
|
|
|
|
|
|
|
|
Asia
|
508
|
-
|
|
508
|
502
|
1%
|
|
|
27,104
|
(97)
|
|
27,007
|
25,947
|
4%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
€ m
|
€ m
|
€ m
|
€ m
|
€ m
|
|
|
|
|
|
|
|
|
|
|
Europe
Heavyside
|
814
|
(1)
|
32
|
845
|
828
|
2%
|
|
Europe
Lightside
|
104
|
-
|
-
|
104
|
93
|
12%
|
|
Europe
Distribution
|
206
|
-
|
-
|
206
|
200
|
3%
|
|
|
1,124
|
(1)
|
32
|
1,155
|
1,121
|
3%
|
|
|
|
|
|
|
|
|
|
Americas
Materials
|
1,204
|
(5)
|
7
|
1,206
|
1,046
|
15%
|
|
Americas
Products
|
543
|
(2)
|
-
|
541
|
457
|
18%
|
|
Americas
Distribution
|
150
|
-
|
-
|
150
|
140
|
7%
|
|
|
1,897
|
(7)
|
7
|
1,897
|
1,643
|
15%
|
|
|
|
|
|
|
|
|
|
Asia
|
109
|
-
|
6
|
115
|
115
|
0%
|
|
|
3,130
|
(8)
|
45
|
3,167
|
2,879
|
10%
|
(i)
The significant "one-off" costs
incurred by CRH in 2016 relate to expenses of €45 million
associated with the integration of the LH
Assets.
(ii)
See detailed reconciliation of 2015
reported information to proforma 2015 on page
28.
Glossary of Alternative Performance Measures
CRH uses a number of alternative performance measures (APM) 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 APM 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 APM as summarised below should not be viewed in isolation or as
an alternative to the equivalent GAAP measure.
Proforma
financial information
The proforma financial information on pages 28 and 29 is presented
to provide meaningful comparatives for the 2016 results. For this
purpose, both 2016 and 2015 figures are adjusted to exclude the
results from businesses which have now been divested and also to
exclude certain one-off costs.
The
information for 2015 has also been adjusted to reflect the
following:
● proforma results attributable to the LH Assets and
CRL (both acquired in Q3 2015), and
● a currency translation adjustment in order to
provide comparatives on a constant currency basis with the 2016
figures.
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:
|
|
|
2016
|
|
2015
|
|
|
|
€ m
|
|
€ m
|
|
Group profit for the financial year
|
|
1,270
|
|
729
|
|
Income
tax expense
|
|
471
|
|
304
|
|
Profit before tax
|
|
1,741
|
|
1,033
|
|
Share of equity accounted investments' profit
|
|
(42)
|
|
(44)
|
|
Other financial expense
|
|
66
|
|
94
|
|
Finance costs less income
|
|
317
|
|
295
|
|
Profit before finance costs
|
|
2,082
|
|
1,378
|
|
Profit on disposals
|
|
(55)
|
|
(101)
|
|
Group operating
profit
|
|
2,027
|
|
1,277
|
|
Depreciation
charge
|
|
1,009
|
|
843
|
|
Amortisation
of intangibles
|
|
71
|
|
55
|
|
Impairment charge
|
|
23
|
|
44
|
|
EBITDA
|
|
3,130
|
|
2,219
|
|
|
|
|
|
|
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
less total liabilities by segment as shown in note 4 on page 19 and
exclude equity accounted investments and other financial assets,
net debt (as defined on page 32) and tax assets and liabilities.
The average net assets for the year is the simple average of the
opening and closing balance sheet figures.
The
calculation of RONA is presented below:
|
|
|
2016
|
|
2015
|
|
|
|
€ m
|
|
€ m
|
|
Group
operating profit
|
|
2,027
|
|
1,277
|
|
|
|
|
|
|
|
Current year
|
|
|
|
|
|
Segment
assets (i)
|
|
27,581
|
|
27,881
|
|
Segment
liabilities (i)
|
|
(6,927)
|
|
(6,794)
|
|
Group
segment net assets
|
|
20,654
|
|
21,087
|
|
|
|
|
|
|
|
Prior year (2015 and 2014)
|
|
|
|
|
|
Segment
assets (i)
|
|
27,881
|
|
16,584
|
|
Segment
liabilities (i)
|
|
(6,794)
|
|
(4,258)
|
|
Group
segment net assets
|
|
21,087
|
|
12,326
|
|
|
|
|
|
|
|
Average
net assets
|
|
20,871
|
|
16,707
|
|
RONA
|
|
9.7%
|
|
7.6%
|
(i)
Segment assets and liabilities as disclosed in note 4 on page
19.
Glossary of Alternative Performance Measures -
continued
Net debt
Net debt is used by management as it gives a more complete picture
of the Group's current debt situation than total interest-bearing
loans and borrowings. Net debt is provided to enable investors to
see the economic effect of gross debt, related hedges and cash and
cash equivalents in total. Net debt is a non-GAAP measure and
comprises current and non-current interest-bearing loans and
borrowings, cash and cash equivalents and current and non-current
derivative financial instruments. Net debt/EBITDA is monitored by
management and 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:
|
|
|
2016
|
|
2015
|
|
|
|
€ m
|
|
€ m
|
|
Net Debt
|
|
|
|
|
|
Cash
and cash equivalents (i)
|
|
2,449
|
|
2,518
|
|
Interest-bearing
loans and borrowings (i)
|
|
(7,790)
|
|
(9,221)
|
|
Derivative
financial instruments (net) (i)
|
|
44
|
|
85
|
|
Group net debt
|
|
(5,297)
|
|
(6,618)
|
|
EBITDA
|
|
3,130
|
|
2,219
|
|
|
|
|
|
|
|
|
|
Times
|
|
Times
|
|
Net debt divided by EBITDA
|
|
1.7
|
|
3.0
|
(i)
These items appear in note 8 on page 21.
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 8
on page 22, is a metric used in lender covenants.
It
is the ratio of EBITDA to net interest and is calculated
below:
|
|
|
2016
|
|
2015
|
|
|
|
€ m
|
|
€ m
|
|
Interest
|
|
|
|
|
|
Finance
costs (i)
|
|
325
|
|
303
|
|
Finance
income (i)
|
|
(8)
|
|
(8)
|
|
Net interest
|
|
317
|
|
295
|
|
EBITDA
|
|
3,130
|
|
2,219
|
|
|
|
|
|
|
|
|
|
Times
|
|
Times
|
|
EBITDA net interest cover (EBITDA divided by net
interest)
|
|
9.9
|
|
7.5
|
(i)
These items appear on the Consolidated Income Statement on page
12.
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 8.
EBIT
net interest cover is the ratio of EBIT to net debt-related
interest costs.
Glossary of Alternative Performance Measures -
continued
Organic Revenue, Organic Operating Profit and Organic
EBITDA
The terms 'like-for-like', 'organic', 'underlying' and 'heritage'
are used interchangeably throughout this report.
CRH pursues a strategy of growth through acquisitions and
investments, with €213 million spent on acquisitions and
investments in 2016 (2015: €7.4 billion). Acquisitions
completed in 2015 and 2016 contributed incremental sales revenue of
€3,624 million, operating profit of €337 million and
EBITDA of €546 million in 2016. Proceeds from divestments and
non-current asset disposals amounted to €283 million (net of
cash disposed and deferred proceeds) (2015: €0.9 billion).
The sales impact of divested activities in 2016 was a negative
€506 million and the disposal impact at an operating profit
and EBITDA level was a negative €13 million and a negative
€29 million respectively.
The euro strengthened versus most major currencies during 2016,
particularly the Pound Sterling which weakened from an average
0.7258 in 2015 to 0.8195 in 2016. The effects of these were only
partially offset by a small change in the average euro/US Dollar
rate, which, despite strengthening towards the end of 2016,
averaged 1.1069 for the year and was broadly similar to the prior
year (2015: 1.1095). 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 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.
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.
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, ongoing
austerity programmes in the developed world, 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 beyond its control 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 uncertainty resulting from the outcome of
the referendum in the UK to exit the European Union, could include
political unrest, currency disintegration, strikes, 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. In addition, existing products may be replaced by substitute
products which the Group does not produce or distribute. Against
this backdrop, if the Group fails to generate competitive advantage
through differentiation and innovation across the value chain (for
example, through superior product quality, engendering customer
loyalty or excellence in logistics), market share, and thus
financial performance, may decline.
Acquisition activity: 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 for the past
acts, omissions or liabilities of companies or businesses it has
acquired. 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),
execute full and proper due diligence, raise funds on acceptable
terms, complete such acquisition transactions, integrate the
operations of the acquired businesses 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, those liabilities may either be
unforeseen or greater than anticipated at the time of the relevant
acquisition.
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 the
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: Existing
processes to recruit, develop and retain talented individuals and
promote their mobility 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 strategy of performance 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 with
possible reputational consequences. In the longer term, failure to
manage talent and plan for leadership and succession could impede
the realisation of core strategic objectives around performance and
growth.
Corporate affairs and communications: As
a publicly-listed company, the Group undertakes regular
communications with its stakeholders. Given that these
communications may contain forward-looking statements, which by
their nature involve uncertainty, actual results and developments
may differ from those communicated due to a variety of external and
internal factors giving rise to reputational risk. Failure to
deliver on performance indications and non-financial commitments
communicated to the Group's variety of stakeholders could result in
a reduction in share price, reduced earnings and reputational
damage.
Sustainability and Corporate Social
Responsibility: The Group
is subject to stringent and evolving laws, regulations, standards
and best practices in the area of sustainability (comprising
corporate governance, environmental management and climate change
(specifically capping of emissions), health & safety management
and social performance). Non-adherence to such laws, regulations,
standards and best practices 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.
Information technology and Security/Cyber: The
Group is dependent on the employment of advanced information
systems 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 threat materialise,
it might lead to interference with production processes,
manipulation of financial data, the theft of private data 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.
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, and may inflict reputational
damage.
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 and jubilee/long-term service benefits,
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.
Taxation litigation: The
Group is exposed to uncertainties stemming from governmental
actions in respect of taxes paid and payable in all jurisdictions
of operation. 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 what 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.
Adequacy of insurance arrangements and related counterparty
exposures: The building materials sector is subject to a wide
range of operating risks and hazards, not all of which can be
covered, adequately or at all, by insurance; these risks and
hazards include 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. In its worldwide insurance
programme, the Group provides coverage for its operations at a
level believed to be commensurate with the associated risks. In the
event of failure of one or more of the Group's counterparties, the
Group could be impacted by losses where recovery from such
counterparties is not possible. In addition, losses may materialise
in respect of uninsured events or may exceed insured
amounts.
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.
Inspections by Public Company Accounting
Oversight Board (PCAOB): Our auditors, like other independent registered
public accounting firms operating in Ireland and a number of other
European countries, are not currently permitted to be subject to
inspection by the PCAOB. Investors who rely on the audit report
prepared by the Group's auditors are deprived of the benefits of
PCAOB inspections to assess audit work and quality control
procedures.
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 2015 Annual Report and 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.
CRH public limited company
(Registrant)
Date 01
March 2017
By:___/s/Neil
Colgan___
N.Colgan
Company Secretary