Company Quick10K Filing
CRH Public
20-F 2020-12-31 Filed 2021-03-12
20-F 2019-12-31 Filed 2020-03-06
20-F 2018-12-31 Filed 2019-03-08
20-F 2017-12-31 Filed 2018-03-09
20-F 2016-12-31 Filed 2017-03-10
20-F 2015-12-31 Filed 2016-03-16
20-F 2014-12-31 Filed 2015-03-12
20-F 2013-12-31 Filed 2014-03-13
20-F 2012-12-31 Filed 2013-03-27
20-F 2011-12-31 Filed 2012-03-28
20-F 2010-12-31 Filed 2011-03-31
20-F 2009-12-31 Filed 2010-04-01

CRH 20F Annual Report

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CRH Public Earnings 2020-12-31

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

(Mark One)   WASHINGTON, D.C. 20549           

FORM 20-F

 REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

X    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

          For the fiscal year ended: December 31, 2020

OR

  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

          For the transition period from     to

OR

  SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

          Date of event requiring this shell company report

Commission file number: 001-32846

             

CRH public limited company

(Exact name of Registrant as specified in its charter)

             

Republic of Ireland

(Jurisdiction of incorporation or organisation)

             

Stonemason’s Way, Rathfarnham, Dublin 16, Ireland

(Address of principal executive offices)

             

Senan Murphy

Tel: +353 1 404 1000

mail@crh.com

Stonemason’s Way, Rathfarnham, Dublin 16, Ireland

(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)

             

Securities registered or to be registered pursuant to Section 12(b) of the Act.

 

Title of each class   Trading symbol(s)      Name of each exchange on which registered 

CRH plc

       

 

Ordinary Shares/Income Shares of 0.34 each

     

 

New York Stock Exchange*

American Depositary Shares, each representing the right to receive one Ordinary Share   CRH   New York Stock Exchange
CRH America Inc.        
5.750% Notes due 2021 guaranteed by CRH plc   CRH/21   New York Stock Exchange

  *

Not for trading but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act. None

             

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act. None

             

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

 

Ordinary Shares/Income Shares of 0.34 each **  

      

795,140,338

5% Cumulative Preference Shares of 1.27 each  

                50,000

7% ‘A’ Cumulative Preference Shares of 1.27 each   

              872,000

  **

Each Income Share is tied to an Ordinary Share and may only be transferred or otherwise dealt with in conjunction with such Ordinary Share.

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes X No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes No X

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  X   No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “large accelerated filer”, “accelerated filer”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  X  Accelerated filer    Non-accelerated filer    Emerging Growth Company  

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  X

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP      International Financial Reporting Standards as issued by the    Other   
     International Accounting Standards Board   X       

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. Item 17 Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No X


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Table of Contents

LOGO

 

    

2020 Annual Report

and Form 20-F

 

 
50 years of performance and growth               

 

 


Table of Contents

LOGO

 

    

         Contents   
  Overview   
  CRH at a glance      2  
  Chairman’s Introduction      4  
  Strategy Review   
  Why Invest in CRH      8  
  Our Executive Leadership      9  
  Chief Executive’s Review      10  
  Market Backdrop      12  
  Our Strategy      14  
  Business Model      16  
  Measuring Performance      18  
  Sustainability      20  
  Risk and Resilience      26  
  Business Performance   
  Finance Director’s Review      32  
  Segmental Reviews      38  
  Governance   
  Board of Directors      54  
  Corporate Governance Report      58  
  Directors’ Remuneration Report      74  
  Directors’ Report      100  
  Financial Statements   
  Independent Auditors’ Reports      126  
  Consolidated Financial Statements      132  
  Accounting Policies      137  
  Notes on Consolidated Financial Statements      147  
  Supplementary 20-F Disclosures      210  
  Shareholder Information      236  
  Other Information      248  
  Cross Reference to Form 20-F      257  
  Index      260  

 

   
         LOGO   View the Report on our website:
www.crh.com/investors/annual-reports/
 

This document constitutes the Annual Report and Financial Statements in accordance with Irish and UK requirements and the Annual Report on Form 20-F in accordance with the US Securities Exchange Act of 1934, for CRH plc for the year ended 31 December 2020. A cross reference to Form 20-F requirements is included on page 257.

 

The Directors’ Statements (comprising the Statement of Directors’ Responsibilities, the Viability Statement and the Directors’ Compliance Statement on pages 102 to 104), the Principal Risks and Uncertainties (on pages 106 to 111), the Independent Auditors’ Reports (on pages 114 to 125) and the Parent Company financial statements of CRH plc (on pages 205 to 209) do not form part of CRH’s Annual Report on Form 20-F as filed with the Securities and Exchange Commission (SEC).

 

Forward-Looking Statements

 

This document contains forward-looking statements, which by their nature involve risk and uncertainty. Please see Disclaimer/Forward-Looking Statements on page 101 for more information about these statements and certain factors that may cause them to prove inaccurate.

 

A production team member at Oldcastle Infrastructure, Cape Coral, Florida which is part of CRH’s Building Products Division. Oldcastle Infrastructure is one of North America’s largest manufacturers of utility products and construction accessories for the telecommunications, energy, transportation, building structures and water markets. The Cape Coral plant produces box culverts, utility box vaults, wall boxes and panels, drainage systems and catch basins.


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LOGO

CRH is the leading building materials business in the world Our products can be found throughout the built environment in a wide range of construction projects from major public infrastructure to commercial buildings and residential structures. 2020 Performance Highlights SALES $27.6 billion -2% $28.1bn 2019 $27.6bn 2020 PROFIT AFTER TAX $1.2 billion -29% $1.6bn 2019 $1.2bn 2020 EBITDA (as defined)* $4.6 billion +3% $4.5bn 2019 $4.6bn 2020 EARNINGS PER SHARE 142.9 cent -30% 203.0c 2019 142.9c 2020 OPERATING PROFIT $2.3 billion -19% $2.8bn 2019 $2.3bn 2020 DIVIDEND PER SHARE 115.0 cent +25% 92.0c 2019 115.0c 2020 PRE-IMPAIRMENT1 PROFIT AFTER TAX $2.0 billion +18% $1.7bn 2019 $2.0bn 2020 EARNINGS PER SHARE 243.3 cent +19% 203.8c 2019 243.3c 2020 All references to income statement data are on a continuing basis throughout the Overview, Strategy Review and Business Performance sections (pages 2 to 51). * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. 1. Details of how non-GAAP measures are calculated are set out on pages 213 to 217.


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LOGO

CRH at a glance CRH operates across three integrated platforms of scale comprising Americas Materials, Europe Materials and Building Products. A Global Leader 30 Countries 3,110 Locations 77,100 People A Sustainable Business 46% Revenue from Sustainable Products (Products with enhanced sustainability attributes) 42% Female Directors on CRH Board 1 million Tonnes CO2 emissions prevented in 2020 Readymixed Infrastructural Products & Services Index Aggregates Cement Lime Asphalt Concrete Concrete


Table of Contents

LOGO

Three Divisions Americas Materials SALES $11.3 billion -3% 2019: $11.6 billion c. 27,400 employees c. 1,475 operating locations 46 US states, six Canadian Provinces and Southeast Brazil Products & Services Europe Materials SALES $9.1 billion -4% 2019: $9.5 billion c. 26,800 employees c. 1,155 operating locations 21 Countries Products & Services Building Products SALES $7.2 billion +3% 2019: $7.0 billion c. 22,900 employees c. 480 operating locations 19 Countries Products & Services Paving & Construction Infrastructure Architectural Construction Building Envelope Services Products Products Accessories


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  4  
Chairman’s Introduction1    LOGO

 

LOGO

  

Underpinned by CRH’s clear, focused strategy, its robust business model and the calibre of its people, CRH’s business performance proved to be extremely resilient in 2020.”

 

Richie Boucher

Chairman

 

As was the case for people and businesses throughout the world, 2020 for CRH was overshadowed by the COVID-19 pandemic. Working with management, your Board’s overarching priority was and is the health and safety of our employees, whilst protecting the business and successfully steering CRH through, and emerging strongly from, this global crisis.

Health & Safety an Overarching Priority During 2020

 

 

CRH operates in accordance with the pandemic management policies of national and local governments where our businesses are based. In doing so, we leverage CRH’s safety culture, robust policies and “Safety First“ practices, to ensure that employees and contractors who work in our plants, sites or offices can do so in a safe environment. Your Board has oversight of company-wide and business unit-level initiatives and communication programmes to support the physical and mental health of employees, which are informed by the close monitoring of COVID-19 related metrics and comparing CRH’s experiences and actions against those of the wider population and best practice.

Regrettably CRH employees and their families are being impacted by COVID-19, with a number suffering adverse health outcomes including, tragically, bereavement. The Board offers its deepest sympathy to employees and the families of CRH employees who have lost loved ones.

Other aspects of the physical safety of our employees, contractors and third parties working in and from CRH‘s many businesses, continues to receive the Board’s ongoing input and attention. This includes close scrutiny, through the Board’s Safety, Environment and Social Responsibility (SESR) Committee, of accidents and “near

misses“. Very sadly there were three workplace related fatalities during 2020 involving one employee and two contractors. The Board offers its sympathy to the families of the deceased. The background to each accident was carefully examined by the Committee, with its findings being reported to the Board. Any applicable lessons from accidents and “near misses” are appropriately shared across the organisation.

Further detail on CRH’s response to the health issues associated with the COVID-19 pandemic and on the management and oversight of safety throughout CRH are set out on pages 70 to 73.

CRH’s Business Model and Business Performance

 

 

Underpinned by CRH’s clear, focused strategy, strong business model and the calibre of its people, CRH’s business performance proved to be extremely resilient in 2020, notwithstanding the unprecedented challenges of the COVID-19 pandemic.

The key components of the Group’s robust operational and business performance are set out on pages 10 and 11 in the Chief Executive’s Review and on pages 32 to 34 of the Business Performance section. This performance follows the implementation over many years of strategic decisions to simplify and re-focus the Group on developed markets with attractive fundamentals and sustainable growth prospects. It also reflects

 

 

1.

See cautionary statement regarding forward-looking statements on page 101.

 


Table of Contents
2020 Annual Report and Form 20-F
    
    
    

 

 

 

initiatives to increase cost flexibility within the business model, combined with decisive actions taken during 2020 by CRH’s highly experienced, committed management team under the oversight of the Board. CRH’s strategy and business model are described in detail on pages 14 to 17.

During 2020, there was also further progress on business improvement initiatives, combined with ongoing active portfolio management including the announced agreement to divest our business in Brazil. While acquisition activity was muted, there is a strong pipeline of development opportunities within the Group’s strategic footprint. In the process of portfolio assessment and portfolio management the Board has reflected the longer-term changing business landscape with a non-cash impairment charge of $0.8 billion (2019: $8 million), which pre-dominantly relates to our assets in the United Kingdom (UK) and our associate investment in China.

Amongst the core elements of CRH’s strategy are financial discipline and the sustainable generation of cash from our activities. A particular feature of the business performance during a challenging 2020 was the quality and quantum of cash generation, supporting investment in the business, a further strengthening of the balance sheet and continued significant distributions to CRH’s shareholders.

A Continued Focus on

Returns for Shareholders

 

 

Since 1970, compound annual Total Shareholder Return (TSR)1 has been 15.1% (2019: 15.6%). CRH’s long-standing record of increased or maintaining dividends continued in 2020 with dividends paid to shareholders in respect of the 2019 financial year of 92.0c per share, representing an increase of 12% from 2018 (2018: 82.0c).

The COVID-19 pandemic has not yet abated, and the pace and nature of economic recovery is uncertain, making it difficult at this stage to provide forward-looking guidance on CRH’s financial performance over the short term. Nonetheless, reflecting your Board’s confidence in CRH’s strategy, business model, financial strength and cash generation capacity, along with its resilience and ability to sustainably grow over the medium term, the Board is recommending a final dividend of 93.0c per share, resulting in a total of dividend of 115.0c per share for 2020 (2019: 92.0c) which represents an increase of 25% on 2019. The Board also intends to recommence the Group’s share buyback programme following a pause in response to high levels of market volatility in 2020, with a further tranche of $0.3 billion to be completed by the end of June 2021.

Challenging Targets for

Safety, the Environment

and Inclusion & Diversity

 

 

As outlined in CRH’s 2020 Sustainability Report, the Board has approved challenging targets in the areas of safety, the environment, our people and products for our customers. The attainment of these objectives, which include a focus on zero fatalities, carbon reduction, sustainable products and on Inclusion and Diversity (I&D) as set out in further detail on page 70 to 73, are underpinned by a comprehensive range of plans and initiatives. Supported by the SESR Committee, the Board actively inputs into the development of these plans and initiatives and carefully monitors their progress.

Continued Planned

Board Renewal

 

 

In last year’s report, I set out my priorities in relation to the ongoing Board renewal process. These were informed by valuable feedback from shareholders. In line with these priorities, we are very pleased that Mr. Rick Fearon and Mr. Lamar McKay have joined your Board. Their backgrounds, experiences and capabilities are set out in the Governance section on pages 54 to 57. They will retire at the 2021 Annual General Meeting (AGM) and, along with all eligible Directors, are seeking to be re-elected by shareholders.

Further information on CRH’s approach to Board renewal, including with respect to diversity, is set out in the Nomination & Corporate Governance Committee Report to shareholders on page 64.

Ms. Heather Ann McSharry and Ms. Lucinda Riches, who joined the Board in 2012 and 2015 respectively, are not seeking re-election at the AGM. Heather Ann and Lucinda have shown exceptional commitment and have made very positive contributions to the Board and CRH. We are grateful to each of them for their tremendous service and stewardship throughout their tenure.

CRH’s Finance Director, Senan Murphy, advised the Board in September 2020 that he would retire from the Board during 2021. Consequently, he is not seeking re-election to the Board at the AGM. He will remain as full time Finance Director pending the appointment and transition to the role of his successor, the process for which is well advanced. Senan has been CRH’s Finance Director since 2016 and has played a pivotal role in the evolution of CRH in that time. He has been an exemplary colleague and we wish him well for his future.

Shareholder Engagement

and Priorities for 2021

 

 

I have had the benefit of significant engagement with shareholders since the announcement of my appointment as Chairman, which has been invaluable to me in understanding shareholders’ views and discussing progress against the priorities for 2020 which I set out in the 2019 Annual Report. Amongst the priorities for 2021 will be:

 

  a continuing focus on safety, I&D, succession planning for the Board and the senior management team
  continuing to assess our strategy, business model and ongoing business performance to make sure that they are driving sustainable growth and value creation
  monitoring the progress of our environmental initiatives
  ensuring that shareholders’ capital and the cash that CRH generates from its activities is appropriately allocated to maximise long-term sustainable value for our stakeholders, thereby providing good capital growth and cash returns for our shareholders.

As your Chairman I will continue this proactive engagement, so as to ensure that the Board understands shareholders’ views on CRH’s strategy and strategy implementation. In addition, the Board’s SESR Committee, which I chair, will also continue to actively work to understand the views of other stakeholders, including CRH’s employees, in order that the Board can take them into account in its decision making.

Conclusion

 

 

This has been and remains a challenging period for CRH. However, under the dedicated, determined, highly professional and supportive leadership of CRH’s Chief Executive, Albert Manifold, his colleagues throughout CRH have ably risen to this challenge and are successfully navigating through it. Your Board and I very much appreciate the effort and achievements in 2020 of our people throughout CRH and are very encouraged for the future by this emphatic demonstration of their qualities and character.

Richie Boucher

Chairman

3 March 2021

 

 

 

1.

TSR represents the total accumulated value delivered to shareholders (via gross dividends reinvested and share appreciation). Details of how non-GAAP measures are calculated are set out on pages 213 to 217.

 

    
5
 


Table of Contents

LOGO

    

Our ambition to play a leadership role in

our industry’s transition to carbon neutrality

is underpinned by a strategy to grow and

improve our business in a sustainable and

responsible way.

 

 


Table of Contents
2020 Annual Report and Form 20-F

 

 

LOGO

 

Strategy Review

 

 

 

Why Invest in Us      8  
Our Executive Leadership      9  
Chief Executive’s Review      10  
Market Backdrop      12  
Our Strategy      14  
Business Model      16  
Measuring Performance      18  
Sustainability      20  
Risk and Resilience      26  

 

 

Watershed, a seven storey, 72,000 square foot commercial office building in Seattle, Washington uses 25% less energy than a code-compliant building. Self-tinting electrochromic glass reduces solar heat gain and glare while maximizing thermal comfort and maintaining views and daylighting. Oldcastle BuildingEnvelope® (OBE), part of CRH’s Building Products Division, worked in close collaboration with the design and install teams in Weber Thompson Architects and Mission Glass Glazier on the building envelope which features OBE architectural curtain wall.

 

 

    
7
 


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LOGO

Why Invest in CRH * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax. 1. Operating cash flow refers to net cash inflows from operating activities as reported in the Consolidated Statement of Cash Flows on page 136. CRH is the largest building materials business in North America and Europe. 30Countries Globally Scale in attractive markets CRH builds and grows successful businesses by regularly acquiring small to midsized companies that complement our portfolio and adding larger strategic deals to create further platforms for growth. Unique acquisition model $7.8 bn Development Spend since 2016 CRH’s world class leadership team has a proven track record of performance delivery, underpinned by ongoing talent development and succession planning. 33%2030 Target For Females in Senior Leadership Experienced leadership & strong talent pipeline Strong financial discipline is a hallmark of CRH. We have a proven, robust track record in cash generation and returns. +52%Operating Cash Flow1 growth since 2016 Proven trackrecord in cash generation & returns There is a natural demand for CRH products driven by population and economic growth and the need to continually build and maintain the built environment. +17% Long term growth opportunity Revenue Growth since 2016 To create longterm value, we embed sustainability principles in all areas of our strategy and business model. 2020 Revenue from Products with Enhanced Sustainability Attributes $9.8 bn Sustainable business model CRH has an extensive network of quarry locations in attractive local markets in North America and Europe which is difficult for others to replicate. 22.3billion tonnes - Proven and Probable Reserves 2020 Our reserves EBITDA (as defined)* Margin Improvement 2016 to 2020 CRH is relentlessly focused on building better businesses through operational and commercial excellence, coordinated and driven from the centre and delivered locally by our businesses around the world. 350 bps Continuous improvement CRH’s product range enables us to service infrastructure, residential and nonresidential demand for repair, maintenance and new build construction projects. Balanced portfolio 36% Infrastructure 32% Residential 32% NonResidential Since formation in 1970 CRH has delivered an industryleading compound annual Total Shareholder Return (TSR) of 15.1% (2019: 15.6%). 100 invested in CRH shares in 1970, with dividends reinvested, would now be worth 118,000. Industry Leading Value & Returns +15.1% Total Shareholder Return 8


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2020 Annual Report and Form 20-F
    
    
    

 

Our Executive Leadership

 

LOGO

 

 

Executive Biographies are included on page 255.

 

    
9
 


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  10  
Chief Executive’s Review1    LOGO
LOGO   

The unprecedented, challenging backdrop of 2020 brought out the best in CRH, as we worked together to keep our people safe, deliver for our customers, create value and maintain performance excellence.”

 

Albert Manifold

Chief Executive

For 50 years CRH has gone from strength to strength to become the global leader it is today. We have consistently grown and improved our business, maintained our focus on value creation, and endured through challenge and change whenever we faced it.

 

The unprecedented, challenging backdrop of 2020 brought out the best in CRH as we worked together to keep our people safe, deliver for our customers, create value and maintain performance excellence.

 

COVID-19

    

 

As Chief Executive I am grateful for and proud of the extraordinary dedication and resilience of our employees who worked diligently throughout the pandemic to observe public health protocols and keep each other safe while going about their work. Where permitted to do so we were able to keep our operations open and maintain essential supply needed to keep important parts of society functioning.

       

We also played our part in the communities in which we operate by donating much needed personal protective equipment (PPE) and other essential supplies to local hospitals and health services.

 

Evolving our Business

    

 

CRH has been significantly re-shaped and repositioned in recent years. We have become a narrower, deeper and more integrated business, leveraging our scale in the attractive and growing markets of Europe and North America.

 

We have continued to evolve, adapting our business model to address the changing needs of our customers and the growing demand for integrated building solutions to reduce the impact of construction on our world.

 

We have also structurally improved our business; through our relentless focus on continuous business improvement, we have delivered significantly higher levels of profitability, cash generation and returns.

 

Performance Highlights

    

 

We acted swiftly in response to the COVID-19 crisis, taking decisive action to control costs, improve operational efficiencies and conserve cash amid lower activity levels.

  

In doing so we maintained our strategic focus on improving performance, growing our business and creating value. This has enabled CRH to emerge from the crisis stronger and more resilient than ever before.

 

Against this backdrop we saw sales decrease by 2% to $27.6 billion (2019: $28.1 billion) reflecting lower volumes in our materials businesses in certain European and North American markets as public health restrictions resulted in reduced construction activity. This was partially offset by increased sales in our Building Products Division driven by a strong residential sector in the United States (US), particularly in Repair, Maintenance and Improvement (RMI) activity.

 

Our ability to flex our cost base and deliver improved organic2 profitability, EBITDA (as defined)* margins and cash generation in a rapidly evolving environment demonstrates the strength and resilience of our business. With a strong focus on cost rationalisation to mitigate the financial impacts of the pandemic, EBITDA (as defined)* of $4.6 billion (2019: $4.5 billion) was ahead despite $122 million of one-off costs primarily due to COVID-19 related restructuring items.

 

On a like-for-like2 basis Group EBITDA (as defined)* was 5% ahead of 2019, while EBITDA (as defined)* margin of 16.8% (2019: 15.9%) increased by 90 basis points.

 

 

*

EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.

1.

See cautionary statement regarding forward-looking statements on page 101.

2.

Details of how non-GAAP measures are calculated are set out on pages 213 to 217.

 


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2020 Annual Report and Form 20-F
    
    
    

 

 

Net debt1 of $5.9 billion at year end was $1.6 billion lower than the prior year (2019: $7.5 billion) reflecting strong operating cashflow and robust financial discipline. The Group’s Net Debt/EBITDA (as defined)*1 was 1.3x (2019: 1.7x) at year end. In light of the uncertainty regarding the severity and duration of the pandemic, the Group took the prudent and precautionary decision to draw down its 3.5 billion revolving credit facility in April 2020 to further strengthen its liquidity position. The drawdowns were fully repaid in the second half of the year and the revolving credit facility remains available for re-use.

Profit after tax was $1.2 billion (2019: $1.6 billion) primarily reflecting the impact of non-cash impairment charges of $0.8 billion (2019: $8 million) and the related tax impact. Excluding these charges profit after tax of $2.0 billion was 18% ahead of 2019 (2019: $1.7 billion).

Our ongoing focus on continuous business improvement resulted in a further increase in returns. Return on Net Assets (RONA)2 for the year was 10.1% (2019: 10.0%).

Earnings per share (EPS) for the year was 142.9c (2019: 203.0c). Excluding the non-cash impairment charges and the related tax impact, EPS was 243.3c, 19% higher than prior year (2019: 203.8c).

Operational Highlights

    

 

In Americas Materials solid price progression, good cost control and lower energy costs resulted in EBITDA (as defined)* of $2.4 billion (2019: $2.2 billion) up 10% on a like-for-like basis, despite lower sales of $11.3 billion (2019: $11.6 billion).

In Europe Materials, EBITDA (as defined)* of $1.1 billion (2019: $1.2 billion) on sales of $9.1 billion (2019: $9.5 billion) was 7% behind on a like-for-like basis primarily reflecting the significant impact of COVID-19 restrictions across our Western European markets.

Strong operating leverage on increased sales in Building Products, reflected good commercial discipline, cost rationalisation and ongoing profit improvement initiatives. The Division reported sales of $7.2 billion (2019: $7.0 billion) with EBITDA (as defined)* of $1.2 billion (2019: $1.1 billion) 8% ahead of 2019 on a like-for-like basis.

Portfolio Management and

Capital Allocation

    

 

Despite the disruption of the COVID-19 pandemic the Group invested $0.4 billion (2019: $0.7 billion) on 17 bolt-on acquisitions in 2020. These

businesses will be integrated with existing operations to further expand our ability to deliver for customers in key construction markets.

Total proceeds from business divestments and asset disposals was $0.3 billion (2019: $2.3 billion). In October CRH reached an agreement to divest its cement business in Brazil for a total consideration of $0.2 billion.

Sustainability

    

 

Sustainability is a strategic imperative for our business. As global efforts to address the challenge of climate change increase, we are evolving our business to take advantage of the many opportunities presented by a rise in demand for more sustainable forms of construction. CRH is already a global leader in sustainable building materials and a significant contributor to the circular economy. We have set ambitious targets for the Group to 2030 (see page 21) as we aim to ensure a long-term sustainable future for our business and a positive impact on the world around us. We are also leading our industry’s response to the challenge of climate change through the Global Cement and Concrete Association’s (GCCA) ‘2050 Climate Ambition’ which aspires to deliver society with carbon neutral concrete by 2050.

In 2020, CRH became a supporter of the Financial Stability Board’s ‘Task Force on Climate-Related Financial Disclosures’ (TCFD), underlining our commitment to transparency on the financial aspects of climate change risks and opportunities. I am also particularly pleased with the appointment of our first Chief Innovation and Sustainability Officer, an executive leadership role that will help CRH to drive value creation through the development of sustainable products, processes and building solutions.

Safety Focus

    

 

Throughout 2020 we continued our relentless focus on safety and ensuring that despite the pandemic, where safe and lawful to do so, our employees could continue to come to work, perform their duties in a safe environment and return home safely to their families each day.

The new reality of COVID-19 presented significant additional challenges for our health and safety teams, requiring additional procedures, protocols and training to be put in place to help keep our employees, contractors and customers safe.

While doing so we continued our focus on ensuring our sites remained free from accidents

and I am pleased to report that in 2020, 94% of our locations were accident-free. Regrettably and despite our best efforts there were three fatalities on our sites during the year. We will continue our determined approach to ensuring we achieve our target of zero harm at all of our operations.

Inclusion & Diversity

    

 

As Chief Executive of a global business with operations in 30 countries around the world it is important for me that our businesses reflect and represent the communities we operate in. Companies which embrace diversity as a positive force in their business do better. They are more creative, innovative and attract more top talent. I want to ensure that CRH is doing everything it can to become a truly inclusive and diverse place to work and for that reason in 2020 I took on the role of Chair of our Inclusion & Diversity (I&D) Council, setting our strategic approach and overseeing our work programme in the areas of communication, education, people practices, data and measures. CRH has a strong track record in meeting ambitious targets. We have already improved gender diversity at Board level in recent years and I am confident that we will make significant progress in both Inclusion and Diversity over the coming decade to 2030.

Outlook

    

 

Although the near-term outlook for economic and construction activity across our markets remains uncertain, market recovery is expected to continue across North America and Europe as the health situation improves. Our Americas Materials Division benefits from strong market positions and a positive demand backdrop for the infrastructure and residential sectors. Although the outlook for non-residential activity remains mixed our Building Products Division is expected to benefit from positive residential demand. In our Europe Materials Division, we have significant exposure to growing economies in Eastern Europe and strong, stable markets in Western Europe. Overall, with the strength of our balance sheet and our unique portfolio of businesses, we are well positioned to capitalise on the growth opportunities that lie ahead. We remain committed to the execution of our long-term growth strategy and the delivery of further margin expansion, superior cash generation and enhanced returns for shareholders.

Albert Manifold

Chief Executive

3 March 2021

 

 

 

*

EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.

1.

Net Debt and Net Debt/EBITDA (as defined)* are non-GAAP measures as defined on page 215. The GAAP figures that are most directly comparable to the components of Net Debt/EBITDA (as defined)* include: interest-bearing loans and borrowings: (2020: $12,215 million; 2019: $15,827 million) and profit after tax (2020: $1,165 million; 2019: $1,647 million).

2.

RONA is a non-GAAP measure as defined on page 214. The GAAP figures that are most directly comparable to the components of RONA include: Group operating profit (2020: $2,263 million; 2019: $2,793 million), impairment of property, plant and equipment and intangible assets (2020: $673 million; 2019: $8 million) and total assets and total liabilities (2020: $44,944 million and $24,596 million respectively; 2019: $47,612 and $27,977 million respectively).

 

    
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Market Backdrop

Population and economic growth along with the need to continually build and maintain the built environment are among the fundamentals driving demand for CRH’s materials and products.

 

Building materials help to shape the world around us and are essential for human habitation right around the world.

As the leading building materials business in the world CRH manufactures and supplies materials, products and innovative solutions that meet the needs of a broad range of customers across the built environment in construction markets globally.

Our products can be found in a wide range of construction projects from major public

infrastructure to commercial buildings and residential structures.

Balancing our portfolio on the basis of geography, sector and end-use exposure helps to insulate our business from the impact of cyclical fluctuations in any one of our markets.

Demand for CRH’s products and solutions is typically underpinned by three primary demand fundamentals: population growth, economic development and the need to continually repair and maintain the built environment.

LOGO

 

 

Demand Fundamentals

 

 

 

Population Growth

 

The world’s population is projected to grow by c. two billion people by 2050, with urban areas expected to account for the majority of this increase. By 2050 68% of the world’s population will live in urban environments, an increase of 12% on todays numbers.

 

Our materials and products play in an important role in shaping the built environment around the world. This means there is a natural market for our products wherever there is growth in population and the associated construction demand can be expected to drive day-to-day organic growth for our businesses.

   

 

LOGO

 

 

LOGO

 

 

Economic Development

 

Construction-related spending currently accounts for c.13% of global GDP. Economic development and growth drives investment in residential, infrastructure and commercial projects from the houses, roads, bridges, ports and airports that serve our growing cities to office blocks, retail centres and industrial and leisure complexes.

      

 

 

 

Ongoing Repair & Maintenance

 

There is a recurring need to continually repair and maintain the existing built environment as structures age over time. At CRH we aim to have a portfolio which is appropriately exposed to each of these primary demand fundamentals, thereby ensuring we benefit from growth and value-creation opportunities associated with each.

    LOGO
 


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Market Development

    

 

CRH focuses on markets where these fundamental demand drivers are present and can be expected to persist in the medium to long-term. Where appropriate, CRH operates a vertically integrated business model. This in turn broadens our ability to complement organic growth by identifying suitable businesses which can be acquired and integrated into CRH through bolt-on acquisitions. We acquire established businesses with a proven track record of performance and a capacity to hold strong leadership positions in local markets.

The extensive footprint of our materials businesses in Europe and North America sees us well positioned to capitalise on value creating opportunities for market consolidation and expansion of existing operations.

North America

In North America, which includes the world’s largest economy, the US, CRH is the largest building materials business. Growth in North America is underpinned by a population that grows by 25 million people every decade, driving associated construction growth. The market for materials remains largely unconsolidated. For example the top ten aggregates businesses account for less than one third of production.

In recent years we have reshaped and redirected our businesses in the US to increase CRH’s exposure to positive demand fundamentals in the southern and western areas of the country.

Europe

CRH is a leading building materials business in Europe where the European Union (EU) is the largest economic bloc in the world.

In Europe, there is an attractive mix of stable developed markets which continue to deliver along with less developed higher growth markets which offer opportunities for organic growth and acquisition activity.

Other Markets

Our Building Products Division produces high-value added, highly engineered products some of which can be economically transported longer-distances, opening up important export markets for CRH beyond our core geographic footprint.

Ongoing innovation and product development ensures that we meet the needs of customers today and also address the longer-term opportunities presented by economic development, changing demographics and investments in a sustainable future.

Future Trends: Growth in Sustainable Products

 

LOGO

An asphalt plant at Alvarado, Texas. CRH is the largest producer of asphalt in North America. As a 100% recyclable product it helps to make CRH a significant contributor to the circular economy.

 

As the leading global building materials business CRH closely monitors the trends shaping the nature of construction in the future. These include increasing urbanisation and the growth of cities, demand for more sustainable forms of construction and the influence of technology and digitisation.

Growing demand for more sustainable forms of construction is an area of particular focus for CRH. Our businesses have a long history of producing high-performing, climate-friendly materials and products which play an important role in shaping a more sustainable built environment.

Today our businesses are at the forefront of a changing construction market globally where demand for sustainable products and solutions continues to grow and evolve. This evolving demand environment is driven by trends including climate change, urbanisation, demographic and environmental consciousness and underpinned by policy commitments made by countries under international agreements and targets including the EU’s European Green Deal, the Paris Climate Agreement and the United Nations (UN) Sustainable Development Goals (SDGs).

These factors are helping to shape the future of our market and our business. CRH is acutely aware of the potential presented by these developments and the associated

opportunities to grow our business and capitalise on potential new value creation opportunities for our shareholders.

In response to this CRH is working closely with its customers to better understand existing, evolving and emerging demand for sustainable solutions. This includes an ongoing focus on product innovation and development, working with specialist end-users to develop environmentally superior design-solutions and practices.

In 2020, products with enhanced sustainability attributes accounted for 46% of product revenue. These are products which incorporate recycled materials, use alternative fuel or energy sources in production, have sustainability end-uses, or a lower-carbon footprint. We have set a target of generating 50% of all product revenue from products with enhanced sustainability attributes by 2025.

Closely aligning product development and specifications with evolving policy and environmental standards helps to create points of differentiation for CRH. An increasing number of our products are also helping customers achieve higher scores in green building rating schemes such as BREEAM®, DGNB, and LEED®. In 2020 25% of our relevant product revenue is from products that can be used in certified sustainable building schemes.

 

 

    
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Our Strategy

Maximising long-term value and delivering superior returns

 

CRH is the leading building materials business in the world. Our focus is on creating long-term value and delivering superior returns for all our stakeholders.

Our strategy is to continue to grow and improve our business in a sustainable and responsible way. We do this through a relentless focus on performance improvement, focused growth and long-term value creation for the benefit of our shareholders and for society.

The successful implementation of our strategy is directed by four strategic objectives, which drive our ability to generate superior margins, returns and cash on a continuous basis.

 

 

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Our Strategic Focus on Sustainability

We believe that a sustainable business is one that can successfully deliver its strategy over the long term, which is why the principles of discipline, responsible operations and innovation are core to our strategic approach. In executing our strategy, CRH is at all times focused on ensuring every lever we utilise to create value for our shareholders is done so in accordance with these principles thereby mitigating potential risks.

 

LOGO

 

    
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Business Model

How we maximise value and deliver superior returns

CRH’s vertically integrated business model benefits from the efficient allocation of capital and continuous business improvements across the Group.

 

LOGO

 

1.

Capital and Net Debt of $25.6 billion (2019: $26.6 billion) and raw materials spend of $5.8 billion (2019: $5.8 billion) as outlined in notes 24 and 4 to the Consolidated Financial Statements, respectively on pages 182 and 152. Net Debt is a non-GAAP measures as defined on page 215.

 
 


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LOGO

 

  *

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.

 

    
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Measuring Performance

CRH uses a number of financial and non-financial Key Performance Indicators (KPIs) to measure performance across our business. KPIs are a consistent feature of how we operate and fundamental to how we track progress towards achieving our strategic objectives.

 

Sustainability Performance

We believe sustainability and corporate social responsibility are fundamental to CRH being the leading building materials business in the world. We understand that a strong sustainability performance is a key driver in a competitive market and can lead to increased business opportunities. We are committed to reporting on the breadth of our sustainability performance. A selection of KPIs relating to three of our sustainability priority areas are below:

 

LOGO

 

 

 

1.

CO2 emissions subject to final verification under the European Union Emissions Trading Scheme (EU ETS). CO2 emissions data includes Scope 1 2020: 32.4m tonnes (2019: 33.9m tonnes, 2018: 35.4m tonnes,) and Scope 2 2020: 2.6m tonnes (2019: 2.6m tonnes, 2018: 2.7m tonnes) emissions. Scope 1 and Scope 2 emissions are as defined by the World Resources Institute Greenhouse Gas Protocol.

2.

Please refer to page 23 for further information on inclusion and diversity, including additional indicators.

 


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Financial Performance

As part of our strategic focus on continuous improvement, CRH uses financial KPIs to measure our progress and foster positive performance behaviour. A selection of KPIs relating to four of our financial priority areas are below:

    

 

LOGO

 

 

*

EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.

1.

EBITDA (as defined)* Net Interest Cover is a non-GAAP measure as defined on page 215. The GAAP figures that are most directly comparable to the components of EBITDA (as defined)* Net Interest Cover include: profit after tax: $1,165 million (2019: $1,647 million), finance costs: $389 million (2019: $387 million) and finance income: $nil million (2019: $22 million). Details of how non-GAAP measures are calculated are set out on pages 213 to 217.

2.

Operating cash flow refers to net cash inflow from operating activities as reported in the Consolidated Statement of Cash Flows on page 136.

 

    
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Sustainability

Delivering long-term value for the environment and society

 

We believe that our commitment to sustainability will help ensure that CRH continues to prosper and grow in the years ahead. In driving continuous improvement across all areas of sustainability, we aim to create financial and non-financial value for all stakeholders and to have a positive impact on the world around us.

 

Focusing on Long-Term Sustainability                

 

 

At CRH, we strive to use our leadership position as the world’s leading building materials business to help advance the global sustainability agenda. By developing value-added products and services for sustainable building solutions, we contribute positively to society, address potentially negative impacts and achieve the greatest value for our stakeholders.

Driving our Sustainability Agenda

 

 

Operating in a sustainable manner is fundamental to our business and sustainability principles are fully embedded in our business strategy. We leverage our global knowledge and scale to establish best practices and common processes worldwide, in order to operate more effectively and create sustainable value.

We continue to develop our products and components to improve the life-cycle performance of buildings, provide innovative solutions for our customers and drive more sustainable outcomes in the built environment. We are a global leader in concrete, the world’s most sustainable building material when evaluated on a lifecycle basis. In addition to being essential for modern living, concrete offers opportunities for permanent storage of carbon and we are working to further develop the ability of concrete to become a solution to the climate challenge.

Our actions are intended to contribute to the delivery of key initiatives, such as the UN SDGs and the Paris Agreement. We are a member of the World Business Council for Sustainable Development (WBCSD) and GCCA. Many of our operating companies have achieved awards for excellence in sustainability. CRH is a leader in our sector, as determined by the major Environmental, Social and Governance (ESG) rating agencies. We are a constituent member of indices including the MSCI Leaders ESG Indexes, FTSE4Good Index, the STOXX® Global ESG Leaders Index and the Dow Jones Sustainability Index as well as a long-term participant in CDP (formerly Carbon Disclosure Project).

Managing our Sustainability Performance

 

 

Sustainability is a matter of high importance for our Board and management. We regularly review our non-financial policies and take a collaborative and strategic approach in responding to global trends in ESG areas including climate change, resource scarcity, biodiversity impacts, demographic changes and technological advancements. Risks related to sustainability are recognised in our Enterprise Risk Management (ERM) Framework, described on pages 26 and 27, and details of sustainability risks are included on pages 108 and 109. Our non-financial due diligence processes are well established and we made no material changes to these in 2020.

We continually advance our commitment to sustainability through a range of internal and external processes to identify the ESG issues that are most relevant to our business, society and key stakeholders. These include annual sustainability reporting by our businesses to Group, review of issues raised through ERM processes and regular formal materiality assessment reviews, the outcomes of which inform our strategy and reporting.

Ensuring Transparency

 

 

We are committed to reporting on the breadth of our sustainability performance in key sustainability areas. We publish an annual independently assured Sustainability Report, which is prepared in line with the Global Reporting Initiative (GRI) standards. In addition, the Sustainability Accounting Standards Board (SASB) Standards will be used in the preparation of the independently-assured CRH 2020 Sustainability Report. This includes additional information on social and employee matters. The 2020 Sustainability Report will be published in March 2021 on www.crh.com.

We are a supporter of the Financial Stability Board’s ‘Task Force on Climate-related Financial Disclosures’ (TCFD). This means that we are committed to being transparent on the financial

aspects of climate change risks and opportunities from the transition to a low-carbon economy. Further information on risks relating to climate change and our approach to TCFD is included on page 27. As best practice evolves, we will continue to develop our own disclosure practices.

 

 

Our Six Sustainability

Priority Areas:

 

LOGO

 

 

 

LOGO

We have assessed the detailed targets behind each of the 17 SDGs and identified the four that most closely align to where we, as a building materials business, can have the most impact and influence.

    

 
 


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CRH 2030 ambitions and targets

 

2030 Ambitions    CRH targets    Our progress
LOGO    Our ambition is to have a culture of safety and wellness working towards zero harm   

Zero

fatalities, in any year

  

We continue to drive our ambition of zero harm through embedding a culture of safety and wellbeing across all operations

LOGO    Our ambition is to play our part in addressing climate change as we strive for carbon neutrality along the cement and concrete value chain by 2050   

33%

reduction to <520kg net CO2/tonne cementitious product by 2030

  

We continue to invest in people, innovation and partnerships to progress our climate commitments and increase awareness around sustainability to further drive climate action

LOGO    Our ambition is to be a business where everyone has the same opportunity to develop and progress   

33%

female senior leadership by 2030

  

We continue to roll out training across CRH on inclusive leadership behaviours, as well as develop people practice guidelines in order to improve inclusion and diversity in our workforce

LOGO    Our ambition is to deliver innovative products and sustainable solutions to drive progress towards a resilient, net zero built environment   

50%

revenue from products with enhanced

sustainability attributes by 2025

  

We continue to focus on innovation, research and development and collaboration across the construction value chain, to ensure our products deliver sustainable building solutions and contribute to a net zero built environment

 

LOGO

A production team member at Oldcastle Infrastructure, Cape Coral, Florida which is part of CRH’s Building Products Division. All CRH employees are treated with integrity and fairness as part of our culture of acceptance, trust, respect and teamwork and our efforts to promote a creative and thriving environment in the workplace. Inclusion and diversity is key to achieving this, by creating a pipeline of strong talent representing a broad range of ethnicities, backgrounds and experiences to build a better CRH.

 

    
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LOGO

 

 

*   Accident frequency rate is the number of accidents per million work-hours

 


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LOGO

 

 

 

*

Products with enhanced sustainability attributes are defined as products that incorporate recycled materials or use alternative energy/fuel sources; products that have sustainability end-uses; products that have environmental benefits in production – lower carbon footprint than alternatives.

**

Products that can be used in structures certified to sustainability standards are defined as products that can be used in structures certified to BREEAM®, Green Globes®, LEED®, IC-700, etc.

 

    
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LOGO

 


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  26  

Risk and Resilience

 

Integrated and effective risk management supports the realisation of our strategic objectives and the continued success of our business. Our Enterprise Risk Management framework enables us to proactively respond to stresses and uncertainty, which are often complex and interlinked, and provides us a foundation on which to build a performance and growth-oriented culture across the Group. Understanding the complexities of our risks also allows us to pursue the upside of risks and capture change opportunities, as they arise.

 

Influencing Decision-Making

    

    

 

ERM in CRH is a forward-looking, strategy centric approach to managing the risks inherent in decision-making. It is a tool readily employed by the Board and the wider business leadership, firstly, when considering and setting strategic objectives, and secondly, during strategic execution to ensure we are dynamic and responsive to threats and opportunities for the Group.

 

Risk informed strategic planning is fundamentally important to successfully address the variety of challenges we face in our relentless focus on value creation. Our framework facilitates a collective understanding of our risks, which is integrated into strategic planning processes to ensure resilient delivery. Despite ongoing challenges, such as the COVID-19 pandemic, our performance continues to highlight the resilience of our people, our business model and our proven record of delivery through uncertainty.

 

As the leading building materials business in the world we hold ourselves to stringent standards, governed by our robust ERM framework. Our framework allows us to add new depth to our understanding of our customers and markets, so we can buy better, run our assets better and sell better. It also gives us insight to strengthen our existing platforms and confidence to undertake investments and step into new markets.

 

         

 

 

Risk Management Framework

  

LOGO

 

    

 

ERM Framework

    

  

 

Integrated Risk Process

    

    

 

Our framework, embedded across the Group, ensures a standardised, global system of identification, management and reporting of risks and sets out a structured and consistent approach to threats and opportunities throughout all our operations.

 

We employ the Three Lines of Defence governance model to support the Board in its responsibilities for risk management. Clarity of ownership and responsibility is pervasive throughout the Group, supported by a robust governance structure.

 

Our risk framework is reinforced by integrated processes which harness the collective risk intelligence of the Group. The maturity of our risk structures has enabled us to integrate our bottom, middle and top line perspectives, ensuring transparency of threats, opportunities and controls in the context of individually and collectively held strategic objectives.

 

We leverage tools and technologies to ensure we are a risk intelligent organisation, enabling quicker and better decision-making within the Group.

  

 

Embedding ERM into our business processes, at all levels of the Group, creates an environment where leaders take a disciplined and focused view on risks. Integration with strategy and performance agendas, in addition to ongoing management processes, ensures a robust and effective risk environment assisting in maximising the performance of our businesses.

 

Risk workshops, facilitated by Group Risk, bring together leaders from across the Group to identify risks and opportunities, and define mitigation. Uncertainties that present themselves as downside risks are assessed in line with the Group’s risk appetite and those which present themselves as opportunities are sufficiently explored and captured, where possible. Our risk appetite framework is a critical tool to integrate our view of risk and maximise our risk governance structure, defining the key risk parameters within which strategic decision-making takes place and assisting with our objectives of disciplined and focused growth. The Board approves the framework on an annual basis in line with good corporate governance practice.

 

    

Our ERM Framework acts as a Bedrock of Resilience, helping the Group to mitigate uncertainties in strategy execution.

 

 
 
 
 
 
 


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Risk Governance Structure

 

LOGO

Task Force on Climate Related Financial Disclosure (TCFD)

 

 

 

The cement industry’s ability to reduce its CO2 emissions and the potential economic implications of that have become a key focus for investors. As a Group, we will continue to be diligent in ensuring transparency and providing our investors and stakeholders with insights into how we are building resilience to climate related risks while capturing emerging opportunities.

In 2020, CRH became a supporter of TCFD, committing to being transparent on the financial aspects of climate change risks

and opportunities. With five other leading companies and in collaboration with WBCSD, we participated in a TCFD Preparer Forum for the Construction and Building Materials sector, which published its report in 2020.

We take a risk-based collaborative and strategic approach to responding to climate change. The identification, assessment and effective management of climate-related risks and opportunities are fully embedded in our dynamic risk management process and our Climate

Change and Policy risk is described in detail on pages 108 and 227.

We are committed to reporting on the breadth of our sustainability performance and to publishing performance indicators, ambitions and outcomes in key sustainability areas. Further information on our sustainability performance and how we support the TCFD recommendations can be found in the annual CRH Sustainability Report available on www.crh.com.

 

 

    
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Risk and Resilience - continued

 

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LOGO

 

    

The performance of our business is enabled

by the skills and talent of our 77,100

employees in 30 countries. We strive to

create a collaborative, inclusive working

environment and a culture of shared ideas.

 

 


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LOGO

 

Business

Performance

 
   
 

Finance Director’s Review

  32

Segmental Reviews

  38

    

 

Icon Materials, part of CRH’s Americas Materials Division completed a pavement rehabilitation project at Terminal 46 for the Port of Seattle. The project included using High Density Polyurethane Foam to level out sunken parts of the pier, milling out and paving back c.14,500 tonnes of asphalt, and striping. The project was completed by the end of September 2020. The Port of Seattle and Port of Tacoma as the Northwest Seaport Alliance is one of the largest container gateways in the United States.

 

 

    
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    Finance Director’s Review 20201

 

    
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LOGO

 

Sales revenue

 

 

 

LOGO

2020 was a challenging year for CRH due to significant COVID-19 related disruption in the economies and construction markets of North America and Europe.

Notwithstanding the difficult backdrop, CRH delivered overall sales of $27.6 billion (2019: $28.1 billion) 2% behind 2019. Year-end net debt of $5.9 billion (2019: $7.5 billion) was reflective of our focus on operating cash generation, lower spend on property plant and equipment and a pause in the Group’s share buyback programme. This was partly offset by the non-recurrence of significant disposal proceeds in 2020 with net acquisition spend after disposal proceeds of $0.1 billion (2019 inflow: $1.5 billion) and total distributions to shareholders of $0.9 billion (2019: $1.6 billion). Net Debt/EBITDA (as defined)* was 1.3x (2019: 1.7x).

Change in Reporting

Currency to US Dollar

 

 

As announced on 28 February 2020, the Group has changed the currency in which it presents its financial results from euro to US Dollar, in consideration of the current portfolio and business mix which has now significantly higher US Dollar exposure.

 

LOGO

2020 marked a year

of further business

improvement with

advances in margin

and cash generation

despite a particularly

challenging market

backdrop.”

 

Senan Murphy

Finance Director

Segmental Reviews

 

 

The sections on pages 38 to 51 outline the scale of CRH’s operations in 2020 and provide a more detailed review of performance in each of CRH’s reporting segments.

Key Components

of 2020 Performance

 

 

Economic activity in North America was impacted by the global pandemic, partly offset by government stimulus efforts. Like-for-like sales in Americas Materials declined by 3% compared to 2019, mainly impacted by COVID-19 restrictions, project delays in some of our key states and unfavourable weather in the first half of the year.

In Europe Materials, volume recovery in the second half of the year along with good price discipline did not fully mitigate the negative impact of COVID-19 related shutdowns earlier in the year and like-for-like sales finished 5% behind 2019.

Building Products benefited from strong residential RMI activity in North America, offsetting lower activity levels in non-residential markets. Together with price progress across most platforms, the Division delivered like-for-like sales 4% ahead of 2019.

 

 

 

 

*  EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.

1.  See cautionary statement regarding forward-looking statements on page 101.


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Key Components of 2020 Performance

 

                                                                                                                                                                                                   
$ million   

Sales

revenue

    

EBITDA

(as defined)*

    

Operating

profit

    

Profit/(Loss) on

disposals

    

Finance

costs (net)

    

Assoc. and

JV PAT (i)

    

Pre-tax

profit

 
2019      28,132        4,478        2,793        (189)        (490)        67        2,181  
Exchange effects      82        12        5        -        (3)        -        2  
2019 at 2020 rates      28,214        4,490        2,798        (189)        (493)        67        2,183  
Incremental impact in 2020 of:                     

- 2019/2020 acquisitions

     368        65        32        -        (8)        (5)        19  

- 2019/2020 divestments

     (413)        (33)        (14)        205        (4)        (10)        177  

- One-offs (ii)

     -        (122)        (122)        -        -        -        (122)  

- Impairments

     -        -        (665)        -        -        (154)        (819)  

- Organic

     (582)        230        234        (7)        15        (16)        226  
2020      27,587        4,630        2,263        9        (490)        (118)        1,664  
                    
% Total change      -2%        3%        -19%                                   -24%  
% Organic change      -2%        5%        8%                                   10%  

 

(i)

CRH’s share of after-tax results of joint ventures and associated undertakings.

 

(ii)

One-offs primarily due to COVID-19 related restructuring costs.

 

EBITDA (as defined)* of $4.6 billion was 3% ahead of 2019 (2019: $4.5 billion) reflecting a strong focus on cost rationalisation and actions taken to mitigate the financial impact of the pandemic. EBITDA (as defined)* was 5% ahead on a like-for-like basis, before one-off costs of $122 million primarily due to COVID-19 related restructuring.

As previously announced, arising from the Group’s impairment testing process and as a result of the combined economic impacts of COVID-19 and Brexit, non-cash impairment charges of $0.8 billion were recognised in 2020 (2019: $8 million); $0.7 billion was reported in operating profit, primarily related to our UK business, and a further $0.15 billion recognised on the Group’s associate investment in China which is reflected in the Group’s share of losses from equity accounted investments.

Profit after tax of $1.2 billion was behind prior year (2019: $1.6 billion). Excluding the non-cash impairment charges of $0.8 billion (2019: $8 million) and the related tax impact, profit after tax of $2.0 billion was 18% ahead of 2019 (2019: $1.7 billion).

The US Dollar weakened against most major currencies during 2020 resulting in the average US Dollar/euro rate strengthening from 0.8933 in 2019 to 0.8771 in 2020 and the Pound Sterling strengthening from an average 0.7841 in 2019 to 0.7798 in 2020. Overall currency movements

 

resulted in a favourable net foreign currency translation impact on our results as shown on the table above. The average and year-end 2020 exchange rates of the major currencies impacting on the Group are set out on page 146.

Liquidity and Capital Resources

- 2020 compared with 2019

 

 

The comments that follow refer to the major components of the Group’s cash flows for 2020 and 2019 as shown in the Consolidated Statement of Cash Flows on page 136.

Throughout 2020, the Group remained focused on cash management, improving working capital outflows and reducing investment in property, plant and equipment. Management delivered a net working capital inflow of $196 million (2019: $71 million outflow) and operating cash flow of $3.9 billion (2019: $3.9 billion).

Working capital was $2.4 billion at year end (2019: $2.4 billion) representing 8.7% of sales (2019: 8.5%). CRH believes that its current working capital is sufficient for the Group’s present requirements.

Disciplined investment in property, plant and equipment in response to lower activity levels, resulted in lower cash outflows of $1.0 billion (2019: $1.4 billion), with spend in 2020 representing 74% of depreciation on owned assets (2019: 102%).

Reflective of the ongoing strategy of active portfolio management, the Group invested $0.4 billion on 17 transactions (2019: $0.8 billion) which was partly financed by divestment and disposal cash proceeds of $0.3 billion (net of cash disposed and including deferred consideration proceeds in respect of prior year divestments) (2019: $2.3 billion).

During 2020, the Group returned a further $0.2 billion (2019: $0.9 billion) of cash to shareholders under its share buyback programme but due to high levels of market volatility, the Board paused the programme in March 2020. However, given the Group’s strong financial position and its continued commitment to returning excess cash to shareholders, the Group intends to recommence the programme and complete a further $0.3 billion tranche by the end of June 2021. Cash dividend payments of $0.7 billion (2019: $0.7 billion), further reflect the Group’s continued commitment to returning excess cash to shareholders.

Year-end interest-bearing loans and borrowings were $12.2 billion. At year end, the weaker US Dollar against most other currencies had a negative translation impact on net debt.

 

 

 

 

*

EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.

 

    
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       Finance Director’s Review 2020 - continued

 

 

    
  34  

Reflecting all these movements, net debt of $5.9 billion at 31 December 2020 was $1.6 billion lower than year-end 2019 ($7.5 billion). The Group is in a good financial position. It is well funded and Net Interest Cover (EBITDA (as defined)*/net debt related interest costs) is 11.9x (2019: 12.3x).

The Group ended 2020 with total liquidity of $12.1 billion, comprising $7.7 billion of cash and cash equivalents on hand and $4.4 billion of undrawn committed facilities which are available until 2025. At year end, the Group had sufficient cash balances to meet all maturing debt obligations (including leases) for the next 6.4 years and the weighted average maturity of the remaining term debt was 12.9 years.

In April 2020, the Group successfully issued a total of 2.0 billion in euro denominated bonds at a weighted average maturity of seven years and with a weighted average interest rate of 1.35%. A 0.75 billion euro denominated bond due to mature in October was repaid early using a 3 month par-call option.

The Group also has a US$2.0 billion US Dollar Commercial Paper Programme and a 1.5 billion Euro Commercial Paper Programme of which there were no outstanding issued notes at year end. The purpose of these programmes is to provide short-term liquidity at attractive terms.

Contractual obligations and Off-Balance Sheet arrangements are disclosed on page 219 of this Annual Report and Form 20-F.

    
 
Development Review
    
 

2020

    

  
    

The Group spent $405 million on 17 acquisitions in 2020 (including deferred and contingent consideration in respect of prior year acquisitions).

 

The most significant acquisition in 2020 was the December acquisition of Barriere Construction, a vertically integrated asphalt and paving operation in southern Louisiana. In addition, the Americas Materials Division completed a further six bolt-on acquisitions across the US and Canada for a total spend of $163 million.

 

The Building Products Division completed six bolt-on acquisitions amounting to a total spend of c. $180 million including the acquisition of Martin Enterprises. This acquisition strengthens CRH’s exposure to the communications enclosures market across the US.

 

Europe Materials completed four acquisitions, with a total spend of c. $8 million for the Division. The Group also paid $54 million of deferred and contingent consideration related to prior year acquisitions.

 

On the divestment front, the Group completed 12 transactions and realised total business and asset disposal cash proceeds of $307 million, inclusive of $123 million relating to the receipt of deferred proceeds from prior year divestments.

  

The sale of precast concrete production assets located in Spokane, Washington represented the largest divestment in 2020 and was completed by our Building Products Division. The divestment of the building materials business in La Réunion was the second largest divestment, completed by our Europe Materials Division, with 10 other divestments completed across the Divisions.

 

In addition to these business divestments, the Group realised proceeds of $128 million from the disposal of surplus property, plant and equipment and other non-current assets. Cash proceeds of $123 million were received relating to prior year divestments, of which $95 million related to the divestment of the Group’s equity interest in My Home Industries (MHIL) in India.

 

The agreement to sell our Brazil operations for consideration of $0.2 billion is currently subject to competition authority review and the divestment is expected to close in the first half of 2021.

 
 
 


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2020 Annual Report and Form 20-F
    
    
    

 

Finance Director’s Review 2019

 

2019 was another year of growth for CRH, supported by a positive demand backdrop in the Americas and in key regions in Europe. With good contributions from acquisitions sales of $28.1 billion for 2019 were 2% ahead of 2018.

Year-end 2019 net debt of $7.5 billion (2018: $8.0 billion) was reflective of our strong operating cash generation and continued portfolio refinement with net disposal proceeds after acquisition spend of $1.5 billion (2018 outflow: $0.5 billion) offset by total distributions to shareholders of $1.6 billion (2018: $1.5 billion). Net Debt/EBITDA (as defined)* was 1.7x (2018: 2.0x)1.

Key Components of 2019 Performance

 

 

Economic growth continued in the US in 2019, with improvements in the infrastructure sector and solid fundamentals in key residential and non-residential markets. Headwinds driven by flooding and wet weather in the first half of 2019 were offset by a stronger second half and like-for-like sales in Americas Materials for 2019 increased 4% over 2018.

In Europe Materials, organic sales were 5% ahead due to good activity in key markets and pricing progress across all product lines. Performance was positive for our businesses

in Eastern and Western Europe, which offset challenging trading conditions in the UK as construction activity declined amidst Brexit-related uncertainty.

Building Products saw continued improvements in 2019 reflecting a positive demand and pricing backdrop and like-for- like sales were 2% ahead of 2018. Underlying trends in residential and non-residential activity were positive in the West Coast and Southern regions of the US and our main markets in Europe also experienced good demand.

Our Europe Distribution business was divested at the end of October 2019 and was classified as discontinued operations for reporting purposes. The business experienced continued demand in mainland Europe aided by milder weather conditions, partly offset by challenges in Switzerland.

EBITDA (as defined)* of $4.5 billion was 18% ahead of 2018 (2018: $3.8 billion) with the benefit of solid underlying growth, continued focus on operational and commercial performance, margin-enhancing acquisition activity and the impact of IFRS 16 Leases. Reported profit after tax was $1.2 billion behind 2018 at $1.7 billion (2018: $2.9 billion), as 2018’s profit after tax was augmented by the $1.3 billion after tax profit on disposal on the sale of our Americas Distribution business.

The US Dollar strengthened against most major currencies during 2019 resulting in the average US Dollar/euro rate weakening from 0.8467 in 2018 to 0.8933 in 2019 and the Pound Sterling weakening from an average 0.7491 in 2018 to 0.7841 in 2019. Overall currency movements resulted in an unfavourable net foreign currency translation impact on our results as shown on the table below. The average and year-end 2019 exchange rates of the major currencies impacting on the Group are set out on page 146.

Liquidity and Capital Resources

- 2019 compared with 2018

 

 

The comments that follow refer to the major components of the Group’s cash flows for 2019 and 2018 as shown in the Consolidated Statement of Cash Flows on page 136.

Throughout 2019, the Group remained focused on cash management, targeting working capital in particular. Management delivered a net working capital outflow of $71 million in 2019 (2018: $547 million), and together with 2019’s improved profitability and the positive impact of the non-reoccurrence of cash outflows related to the Americas Distribution discontinued operation (primarily the tax paid on the profit on disposal) the Group’s operating cash flow increased to $3.9 billion (2018: $2.2 billion).

 

 

                                                                                                                                                                              

Key Components of 2019 Performance

 

                 
$ million   

Sales

revenue

    

EBITDA

(as defined)*

    

Operating

profit

    

Loss on

disposals

    

Finance

costs (net)

    

Assoc. and

JV PAT (i)

    

Pre-tax

profit

 
2018      27,449        3,799        2,446        (121)        (414)        57        1,968  
Exchange effects      (574)        (57)        (26)        (1)        9        (1)        (19)  
2018 at 2019 rates      26,875        3,742        2,420        (122)        (405)        56        1,949  
Incremental impact in 2019 of:                     
- 2018/2019 acquisitions      1,034        183        78        -        (49)        -        29  
- 2018/2019 divestments      (704)        (59)        (20)        (56)        2        -        (74)  
- Leases      -        349        45        -        (69)        -        (24)  
- Organic      927        263        270        (11)        31        11        301  
2019      28,132        4,478        2,793        (189)        (490)        67        2,181  
% Total change      2%        18%        14%                                   11%  
% Organic change      3%        7%        11%                                   15%  

 

(i)

CRH’s share of after-tax profits of joint ventures and associated undertakings.

 

 

*

EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.

1.

Net Debt/EBITDA (as defined)* is a non-GAAP measure as defined on page 215. For 2018, the Group net debt position ($7,998 million) includes debt related to operations discontinued in 2019 and therefore for comparability purposes the 2018 calculation uses EBITDA (as defined)* from continuing and discontinued operations ($3,969 million).

 

    
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Focused investment in property, plant and equipment in markets and businesses with increased demand backdrop and efficiency requirements, resulted in higher cash outflows of $1.4 billion (2018: $1.3 billion).

Reflective of the ongoing strategy of active portfolio management, the Group invested $0.8 billion on 62 transactions in 2019 (including deferred and contingent consideration in respect of prior year acquisitions) (2018: $4.1 billion). This was financed by divestment and disposal proceeds of $2.3 billion (net of cash disposed and deferred proceeds) (2018: $3.6 billion).

The Group continued its share buyback programme and, in 2019, 27.4 million (2018: 27.9 million) ordinary shares were repurchased on the London Stock Exchange (LSE) and Euronext Dublin for a total consideration of $0.9 billion (2018: $0.9 billion), at an average price of $32.31 (2018: $32.80) per share. These buybacks, together with cash dividend payments of $0.7 billion (2018: $0.6 billion), reflected the Group’s continued commitment to returning excess cash to shareholders.

Year-end 2019 interest-bearing loans and borrowings were $15.8 billion. At year end 2019, the weaker euro against the US Dollar had a favourable translation impact on net debt.

      

 

Development Review

    
 

2019

    

  

2018

    

 

The Building Products Division completed a total of 16 bolt-on acquisitions at a cost of c. $514 million. Four of these acquisitions were completed in Europe and one in Australia at a cost of $75 million, while the remaining 11 were completed in North America for consideration of c. $439 million. One of the largest acquisitions in 2019 was the November acquisition of Torrent Resources, Inc. for c. $84 million. This acquisition strengthens CRH’s storm water and water management presence in Western US and offers significant commercial and operational synergy potential to our Infrastructure Products business.

 

The Americas Materials Division completed 27 bolt-on acquisitions and two investments at a cost of c. $235 million, the majority of which were designed to bolster our operational footprint through the addition of c. 260 million tonnes of mineral reserves. The most significant acquisition in Americas Materials was that of Windsor Rock products for c. $36 million. The Europe Materials Division completed 15 bolt-on acquisitions and two investments at a cost of c. $64 million.

 

On the divestment front, the Group completed 11 transactions and realised business and asset disposal proceeds of $2.3 billion. The majority of divestment proceeds related to the divestment of the Europe Distribution business in October 2019 for a final agreed consideration of $1.7 billion. Other transactions in 2019 included the divestment of the European Shutters & Awnings business for a total consideration of $0.3 billion in June 2019, the divestment of the Perimeter Protection business in Europe in September 2019 for $0.1 billion together with seven smaller business divestments completed in the US and UK.

 

On 31 December 2019, the Group divested of its share of the Indian joint venture, MHIL, for a total deferred consideration of $0.3 billion. In addition to these business divestments, the Group realised proceeds of $0.2 billion from the disposal of surplus property, plant and equipment.

  

In 2018, the Group spent a total of c. $4.1 billion (including deferred and contingent consideration in respect of prior year acquisitions) on 46 acquisition/ investment transactions. On the divestment front, the Group realised business and asset disposal proceeds of c. $3.6 billion.

 

The most significant acquisition in 2018 was the June acquisition of Ash Grove, which gave CRH a market leadership position in the North America cement market, allowing for greater vertical integration with our existing aggregates, asphalt and readymixed concrete businesses. In addition to the acquisition of Ash Grove, our Americas Materials Division completed 23 bolt-on acquisitions and one investment throughout the US and Canada for consideration of c. $435 million.

 

Our Europe Materials Division completed ten acquisitions across the UK, Ireland and France, and one investment in Poland for a total spend of c. $73 million. Our Building Products Division completed an acquisition in the UK, Germany, Belgium and Australia, in addition to six bolt-on acquisitions in the US at a total cost of c. $259 million. The acquisitions of Coral Industries and SIGCO extended Building Envelope’s geographic footprint and product offerings in the Southeast and Northeast US, respectively. Similarly, the Concrete Specialties acquisition and the Ash Grove packaging division added geographic exposure to Central US markets.

 

The majority of divestment proceeds related to the divestment of our Americas Distribution business in January 2018 for a final agreed consideration of c. $2.8 billion. In July 2018, the Group completed the divestment of our DIY business in the Netherlands and Belgium, together with certain related property assets, for total consideration of c. $0.5 billion. A further 18 smaller business divestments were completed across all segments demonstrating our continued focus on portfolio management. In addition to these business divestments, the Group realised proceeds of c. $0.1 billion from the disposal of surplus property, plant and equipment.

    
    
 


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2020 Annual Report and Form 20-F
    
    
    

 

LOGO

The new Hôtel ibis Styles Liège Guillemins in Belgium is a 102-bedroom modern 3 star hotel with a unique and fun comic book themed interior decorative concept throughout. Prefaco, part of CRH’s Europe Materials Division provided a range of precast concrete solutions to the project including 16,000 m² shuttering slabs, 10,000 m² double walls, 30 m³ beams and 102 stairs.

 

    
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LOGO

    

Across our businesses an uncompromising approach to workplace safety ensures that our people are protected from potential hazards as they go about their work and focus on delivering for our customers in the markets where we operate.

 

 


Table of Contents
2020 Annual Report and Form 20-F

 

LOGO

Segmental

Reviews

 

 

Americas Materials      40  
Europe Materials      44  
Building Products      48  

 

 

 

A construction traffic utility team member directing subcontracted traffic labourers while establishing a safe work zone for this project on Route 16, Jackson, New Hampshire. Pike Industries, part of CRH’s Americas Materials Division was the Prime General Contractor on the paving project which involved the supply of c. 18,000 tonnes of hot mix asphalt. Safety is CRH’s top priority and our businesses demand the highest standards in pursuit of our target of zero harm across all our locations.

 

 

    
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Americas Materials

 

    
  40  

Our Americas Materials Division is the leading building materials business in North America, supplying materials and providing paving and construction services in 46 US states and six Canadian provinces.

What We Do

 

 

As a vertically integrated supplier of building materials including cement, aggregates, readymixed concrete and asphalt, our businesses supply a broad range of construction projects including major public infrastructure, commercial buildings and residential structures.

For over 35 years our materials have helped to construct many of the structures that underpin everyday life including highways and bridges, schools and hospitals, workplaces and homes.

Our extensive reserves and network of well-located quarries are ideally positioned to enable us to service construction markets in regions with strong demand fundamentals.

CRH is the largest producer of aggregates and asphalt in North America and has leadership positions in readymixed concrete. It is the leading supplier of products for road construction and repair and maintenance demand in the US with 50% of our business related to infrastructure, a significant proportion of which is awarded by public tender for federal, provincial, state and local government authority road and infrastructure projects.

In addition, CRH is a leading producer of cement, with a footprint spanning Canada, Florida, Texas, the Midwest and Western US. In 2020, CRH adopted the Ash Grove name for all its North American cement businesses, unifying its 12 cement plants and 42 cement terminals under one recognised brand.

How We Create Value

 

 

CRH combines the flexibility, speed, close customer relationships and in-depth market knowledge of local businesses with the strength, shared expertise and operational excellence of a national network.

This focus on operational excellence and local knowledge is supported by a strong strategic centre which enables CRH to leverage talent, procurement synergies and efficiencies across the Division.

LOGO

 

 

 

* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.

1. Geography, sector exposure and end-use balance are based on sales.

2. Net Assets at 31 December 2020 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 214.

3. Throughout this document annualised volumes have been used which reflect the full-year impact of development activity during the year and may vary from actual volumes sold.


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2020 Annual Report and Form 20-F
    
    
    
    
    

 

Our vertically integrated business model sets us apart in the industry and is fundamental to the Division’s development strategy, enabling us to create value throughout the supply chain.

For instance, materials produced by our aggregates and cement businesses are purchased by external customers as well as our own downstream materials businesses for products such as readymixed concrete and asphalt. By identifying businesses that can be integrated efficiently into our existing network, we create further opportunities for value creation and growth in what is a largely unconsolidated US building materials market.

In recent years we have grown our presence in higher growth southern states in the US to increase CRH’s exposure to the positive demand fundamentals in the southern and western areas of the country where there is higher population growth and good demand for our materials.

Throughout our business there is a constant focus on making our business more resilient and sustainable. This includes reducing emissions, increasing the use of alternative materials, accelerating sustainable product innovation and anticipating the evolving needs of our customers in response to the changing climate and weather patterns.

How We Structure

our Operations

 

 

Our materials businesses are organised geographically by region (North, South and West) and our cement platform across North America and Brazil. The North division comprises operations in 13 states and two Canadian provinces, the South division operates across 14 states, while the West division has operations in 19 states. The cement platform operates across 20 states, six Canadian provinces and three Brazilian states. In October 2020, the Group entered into a sales agreement to divest of its 100% holding in CRH Brazil. The transaction is expected to close in the first half of 2021.

In total, the Division has a network of 1,475 operating locations and employs approximately 27,400 people across 46 US states, six Canadian provinces and three Brazilian states.

Our Vertically Integrated Business

 

LOGO

 

    
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Operations Review - Americas Materials

Prior Year 2019

 

                                                                                                                                                                                                       
Results            Analysis of change                  
$ million    2018        Exchange      Acquisitions      Divestments      Leases      Organic      2019      % change  
Sales revenue      10,572          -35        +736        -29        -        +382        11,626        10%  
EBITDA (as defined)*      1,763          +2        +151        -6        +110        +174        2,194        24%  
Operating profit      1,192          +5        +68        -4        +10        +152        1,423        19%  
EBITDA (as defined)*/sales      16.7%                         18.9%     
Operating profit/sales      11.3%                                                       12.2%           

 

2019 was a strong year for Americas Materials, generating operating profit of $1.4 billion, 19% ahead of 2018. Headwinds driven by wet weather and increased raw materials costs in the first half of the year were offset by a stronger second-half performance reflecting increased volumes, positive pricing and reduced operating expenses. Organic sales were 4% ahead of 2018, while organic operating profit grew 13%.

Economic activity in the US remained favourable during 2019 with the infrastructure sector supported by the FAST Act as well as a significant number of local and state funded transportation projects. The Canadian market experienced growth during the year and economic expansion is expected to continue at a moderate pace.

Americas Materials completed 29 acquisitions/ investments in 2019 at a cost of c. $235 million, strengthening its operational footprint through the addition of c. 260 million tonnes of mineral reserves.

Building Materials

 

 

Total aggregates volumes benefited from acquisitions and finished 5% ahead of prior year, while like-for-like volumes were 1% ahead as a strong performance in the West division was partly offset by a focused reduction in lower margin contracts in the South division. Average prices increased 5% on a like-for-like basis and 4% overall compared with 2018 and margins were maintained against a backdrop of increased input costs.

Like-for-like and total asphalt volumes were 1% behind 2018 as flooding and tropical storms negatively impacted our West and South divisions, partly offset by strong demand in the North. Like-for-like prices improved 5%, more than offsetting higher input costs and resulted in strong margin expansion.

Total readymixed concrete volumes were 9% ahead of 2018 and prices improved 4%. Like-for-like volumes were 2% ahead as poor weather in the first half of the year for the West division was offset by strong volumes in the South division. Readymixed concrete margins were impacted by increased input costs.

Total paving and construction services revenues were 3% ahead, 2% on a like-for-like basis, as overall margins improved driven by favourable regional mix and increased higher margin work in the South and West divisions, partly offset by challenging first-half weather in Canada.

Regional Performance

Total sales in the North division increased 5% primarily due to favourable volumes and prices across our product range, as well as greater construction revenue. This improved revenue coupled with strong cost control resulted in a good operating profit performance.

Total sales in the South division increased 7% with improved volumes and pricing in all products. Strong pricing together with focused management of operating expenses resulted in a solid operating profit performance.

Strong pricing across all products, volumes growth in aggregates and readymixed concrete combined with contributions from acquisitions supported the West division’s total sales increase of 8%, 1% on a like-for-like basis. Despite challenges from weather, with flooding and record levels of rainfall in the first half of the year, and higher input costs, mainly bitumen and labour, favourable pricing across all products and tight cost control resulted in operating profit ahead of 2018.

Cement

 

 

Like-for-like sales volumes in our US operations were ahead in 2019. Despite adverse weather, strong price realisation across major markets and good synergy delivery supported robust operating profits. The integration of Ash Grove is now complete and the business is performing well.

Despite poor weather conditions in the first half of the year, cement volumes and prices in Canada were ahead of 2018, driven by solid market conditions.

Cement consumption in Southeast Brazil improved in 2019 enabling CRH to achieve volumes growth supported by a consistent focus on key customer segments. A strong emphasis on logistics optimisation and price realisation drove improved performance.

 

 

 

*

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.

 

 


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2020 Annual Report and Form 20-F
    
    
    

 

Current Year 2020

 

                                                                                                                                                                                                       
Results            Analysis of change                  
$ million    2019      Exchange      Acquisitions      Divestments     

Impairment/

One-offs1

     Organic      2020      % change  
Sales revenue      11,626        -37        +43        -39        -        -320        11,273        -3%  
EBITDA (as defined)*      2,194        -2        +8        +2        -24        +227        2,405        10%  
Operating profit      1,423        +1        +5        +5        -25        +222        1,631        15%  
EBITDA (as defined)*/sales      18.9%                       21.3%     
Operating profit/sales      12.2%                                                     14.5%           

1One-offs primarily due to COVID-19 related restructuring costs

 

Americas Materials generated EBITDA (as defined)* of $2.4 billion, 10% ahead of prior year and operating profit of $1.6 billion, 15% ahead of prior year despite lower sales which were 3% behind. COVID-19 restrictions negatively impacted sales volumes in the second quarter, particularly in the North division, with sales in the South division impacted by project delays in key states. Solid price progression, operational efficiencies, focused cost containment and lower energy costs drove margin expansion across all regions and product lines. Strong demand in the central and western parts of the US resulted in like-for-like sales growth across all lines of business in the West region.

Overall economic and construction activity across our markets was impacted by the global pandemic; however, government stimulus to help support the US economy was implemented, while infrastructure investment was underpinned by a one-year extension of the US FAST Act.

During 2020 Americas Materials completed seven acquisitions in the US and Canada including aggregates, asphalt, readymixed concrete, paving and construction operations at a total cost of $163 million. These acquisitions in addition to several mineral reserve purchases in the US will continue to support future growth in key markets.

Building Materials

 

 

On a like-for-like basis, aggregates volumes were 2% lower but margins improved as prices were 4% higher compared to 2019. Volumes in the North division were predominantly impacted by COVID-19 restrictions in the second quarter of the year while the South division experienced lower demand primarily due to unfavourable weather in the first half of the year. Solid underlying business activity in the West division generated sales growth during the year. Prices were favourable across all divisions with the strongest contributions from the North and South divisions.

Asphalt volumes were 6% lower on a like-for-like basis due to the impact of COVID-19 restrictions on the North division and slower project bidding in key states in the South. Volumes in the West division were ahead of prior year with a strong order book of business supported by more favourable weather compared to 2019. Asphalt margins improved, benefiting from good commercial management, lower input costs, operational efficiencies and strong cost control.

Readymixed concrete volumes were 4% behind prior year on both a total and like-for-like basis as higher volumes in the South division during the second half of the year did not fully offset lower volumes in the North and West. Strong commercial discipline delivered total and like-for-like prices up 6%, more than offsetting lower sales volumes, resulting in improved margins.

Paving and construction revenues were 6% behind prior year on a total and like-for-like basis. COVID-19 impacted the North division through government mandated restrictions, while the South experienced delayed bidding on projects in key markets due to uncertainty in state and local funding sources. The West division experienced significant growth in revenues driven by strong demand in the Central West and Mountain West regions. Overall construction margins finished ahead of prior year.

Regional Performance

Like-for-like sales for the North division were 6% lower than 2019 as COVID-19 restrictions impacted volumes across the business. Favourable prices and lower input costs offset lower volumes and delivered operating profit improvements for the North division across the product range.

The South division’s total sales were 7% behind prior year driven by lower asphalt and construction volumes in key states as projects were delayed. Like-for-like readymixed concrete volumes were higher than the prior

year as growth in our core Florida and Texas markets continued. Commercial and operational excellence across all product lines supported strong operating profit performance.

The West division increased total sales by 3% by executing on strong backlogs with support from favourable weather in comparison to the first half of 2019. Good incremental volumes coupled with strong price discipline and cost control resulted in operating profit improvements.

Cement

 

 

Our cement business delivered operating profit growth in 2020, driven primarily by strong price realisation, performance improvement initiatives and cost saving measures. Sales volumes in the US operations were 2% ahead of prior year on a total and like-for-like basis as strong demand in the west more than offset COVID-19 related impacts in other regions. Volumes in Canada were behind 2019 due to the impact of COVID-19 restrictions, particularly during the first half of the year.

Cement consumption in Southeast Brazil increased in 2020 enabling CRH to achieve volume growth combined with increased prices which resulted in operating profit improvements.

 

 

 

*

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.

 

    
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Europe Materials

 

Our Europe Materials Division is the leading building materials business in Europe with a broad geographic reach spanning 19 countries across Western and Eastern Europe.

 

What We Do

     

 

Our Europe Materials businesses manufacture and supply a range of building materials including aggregates, cement, lime, asphalt, readymixed concrete, infrastructural concrete, as well as paving and construction services.

 

The Division operates primarily across Western and Eastern Europe as well as in Southeast Asia, supplying a broad range of construction projects from public infrastructure to commercial and residential projects. Its customers include national, regional and local governments, building contractors and other construction product and service providers.

 

The Division has exposure across each of the residential, non-residential and infrastructure sectors with operations geographically balanced across the European continent.

 

As with CRH’s materials businesses in North America, the Europe Materials Division is vertically integrated and founded in resource-backed aggregates and cement assets. The Division has regional leadership positions in aggregates and readymixed concrete and is a leading producer of cement and lime in Europe. Within Asia, it is the second largest producer of cement in the Philippines.

 

In Western Europe, we have grown our businesses and market leadership positions steadily over decades with a broad range of well-established materials businesses, across all product types, operating in 11 countries.

 

In Eastern Europe we have built up a strong portfolio of businesses across eight countries with our traditionally strong cement operations complemented by lime, aggregates, readymixed concrete, asphalt and infrastructural concrete in many regional markets.

    LOGO

 

*   EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.
1.   Geography, sector exposure and end-use balance are based on sales.
2.   Net Assets at 31 December 2020 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 214.
3.   Throughout this document annualised volumes have been used which reflect the full-year impact of development activity during the year and may vary from actual volumes sold.
 


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2020 Annual Report and Form 20-F
    
    
    
    
    

 

How We Create Value

 

 

Our Europe Materials businesses are differentiated in local markets by deep market knowledge which drives performance, and a proven track record of serving the unique needs of local customers. Value creation is a continuous focus for the Division.

With a strong and stable core market in Western Europe and an increasingly important growth market in Eastern Europe, we are constantly focused on identifying opportunities to extend and strengthen our positions in regional markets. We do this through identifying bolt-on and new acquisition opportunities which can be efficiently integrated with existing operations and which enable us to capitalise on growth opportunities and further expand our offering to local customers.

Our vertically integrated business model means that we can maximise the use of our assets through a combination of self-supply to our downstream operations as well as sales to our external customers.

Our strong track record in acquiring businesses that provide vertical integration opportunities helps ensure that we are competitive in all product lines and well positioned to deliver a strong return on our assets.

We place a great emphasis on commercial and operational excellence across our extensive network leveraging talent, synergies for procurement, cost and logistics management.

We recognise the efficiencies that can be realised in our materials businesses through improving the environmental performance of our operations. We are continually extending our use of alternative fuels, alternative raw materials and other technologies to produce and deliver more sustainable building materials for our customers.

How We Structure

Our Operations

 

 

Our Europe Materials Division operates in 19 countries in Europe and two in Asia and is organised across five operational clusters (Tarmac (UK), Europe North, Europe West, Europe East and Asia).

The Division employs approximately 26,800 people at over 1,155 locations. A further 5,820 people are employed in our equity accounted investment in China.

Where Our Products Are Used

 

LOGO

 

    
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Operations Review - Europe Materials

Prior Year 2019

 

                                                                                                                                                                                                       
Results            Analysis of change                  
$ million    2018      Exchange      Acquisitions      Divestments      Leases      Organic      2019      % change  
Sales revenue      9,498        -417        +39        -30        -        +419        9,509        -  
EBITDA (as defined)*      1,106        -47        +2        +1        +127        +19        1,208        9%  
Operating profit      575        -24        -1        +2        +18        +52        622        8%  
EBITDA (as defined)*/sales      11.6%                       12.7%     
Operating profit/sales      6.1%                                                     6.5%           

 

Overall Europe Materials experienced a positive year with good organic sales growth and particularly strong performances in Eastern Europe, the Philippines, France and Ireland. Operating profit was ahead of 2018 as price increases and a good contribution from performance improvement initiatives offset higher input costs and the impact of more challenging trading conditions in the UK.

Tarmac (UK)

 

 

Ongoing political and economic uncertainty as a result of Brexit negatively impacted Tarmac’s trading environment as volumes in our aggregates and asphalt businesses finished lower than 2018. Operating profit declined as progress from performance improvement initiatives was offset by challenging market conditions and input cost inflation.

Europe North

 

 

Sales and operating profit in our UK cement and lime business were behind 2018 as Brexit uncertainty impacted activity levels. In Ireland, sales and operating profit were well ahead of 2018 as the business benefited from continued market growth, underpinned by strong demand and some large projects in the Dublin region. Good volumes and price growth for all key products was achieved.

Sales and operating profit in Finland were behind 2018 impacted by reduced demand in the residential and infrastructure sectors. Lower cement and readymixed concrete volumes were partly offset by project-related aggregates sales growth.

Europe West

 

 

Sales and operating profit in France benefited from favourable trading conditions as good underlying demand in the non-residential and civil engineering sectors resulted in volumes growth and a positive pricing environment for key

products. Ongoing performance improvement initiatives and cost savings also positively impacted profitability. Sales in the Benelux were ahead of 2018, with a positive contribution from our Dutch precast businesses reflecting good demand in the residential sector, while improved readymixed concrete pricing was partly offset by weaker volumes in the Belgian precast business. Excluding the impact of one-off income in 2018, operating profit finished ahead of 2018.

In Denmark, sales were ahead of 2018, as the business benefited from good demand aided by additional production capacity together with progress in pricing. Operating profit finished broadly in line with 2018 impacted by the non-recurrence of one-off income in 2018. In Spain, increased demand resulted in improved readymixed concrete volumes and prices and despite lower cement volumes, sales and operating profit finished ahead of 2018.

Lower cement and readymixed concrete volumes resulted in lower sales for Switzerland; however, operating profit benefited from cost savings and good delivery of performance initiatives. In Germany, sales were marginally ahead of 2018 while operating profit was behind as cement pricing progress was offset by lower volumes in our lime business.

Europe East

 

 

Trading in Poland was strong with a good overall performance for 2019. Robust cement volumes and positive pricing supported by cost savings initiatives resulted in operating profit ahead of 2018. In Ukraine, continued growth in cement volumes reflected good market demand. Strong price progression was partly offset by slightly higher input costs and sales and operating profit finished ahead of 2018.

Stable economic and construction growth in 2019 contributed to improved sales in Hungary and Slovakia. Operating profit was ahead of 2018, mainly as a result of advances in pricing, cost optimisation and savings initiatives across

the businesses. In Serbia, sales and operating profit were ahead of 2018 with higher cement volumes driven by continued strong construction activity, pricing progress and cost benefits of enhanced production facilities. In Romania, results were ahead of 2018 due to improved pricing combined with stronger volumes in cement and readymixed concrete.

Asia

 

 

Domestic demand for cement in the Philippines remained strong; however, delays in government infrastructure spending impacted cement volumes. While overall sales were in line with 2018, advances in pricing, performance improvement initiatives and cost savings resulted in operating profit well ahead of 2018.

In Yatai Building Materials, strong volumes growth was only partly offset by lower prices, driven by intense local competition and lower margins on exports, resulting in higher operating profit than 2018.

On 31 December 2019, the Group divested of its share of the Indian joint venture, MHIL, for a total deferred consideration of $0.3 billion. During the year, reduced demand in housing negatively impacted cement demand in MHIL’s key markets in Andhra Pradesh and Telangana; despite this, operating profit was ahead of 2018 as pricing improved.

 

 

 

*  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.

 

 


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2020 Annual Report and Form 20-F
    
    
    

 

Current Year 2020

 

                                                                                                                                                                                                                                
Results            Analysis of change                  
$ million    2019      Exchange      Acquisitions      Divestments      Impairment      One-offs1      Organic      2020      % change  
Sales revenue      9,509        +105        +63        -27        -        -        -509        9,141        -4%  
EBITDA (as defined)*      1,208        +14        +7        -3        -        -83        -88        1,055        -13%  
Operating profit/(loss)      622        +5        +1        -2        -660        -83        -73        -190        -131%  
EBITDA (as defined)*/sales      12.7%                          11.5%     
Operating profit/(loss)/sales      6.5%                                                              -2.1%           
1One-offs primarily due to COVID-19 related restructuring costs  

 

Europe Materials experienced a challenging year as the recovery in the second half of the year could not fully mitigate the significant impact of COVID-19 related restrictions in the second quarter. Overall sales, EBITDA (as defined)* and operating performance finished below 2019 levels as strong performances in our Eastern European businesses were offset by a more challenging backdrop in a number of countries across Western Europe. A combination of volume growth, progress in pricing, good cost control and performance improvement initiatives drove some recovery in the second half of the year.

Arising from the Group’s impairment testing process and as a result of the combined economic impacts of COVID-19 and Brexit, total non-cash impairment charges of $0.8 billion were recognised in 2020. Europe Materials recorded impairment charges of $0.7 billion in its operating profit, primarily related to its UK business. A further $0.15 billion impairment charge was recorded on the Group’s associate investment in China.

Tarmac (UK)

 

 

Strict COVID-19 restrictions resulted in widespread plant shutdowns during the second quarter which significantly impacted volumes during this period. Trading recovered as the year progressed, with increased paving activity in the second half of the year supporting improved aggregates and asphalt volumes; however, readymixed concrete volumes were slower to recover due to market uncertainty. Operating profit, impacted by the lower volumes, impairment charges and restructuring costs, finished below 2019 levels.

Europe North

 

 

In our UK cement and lime business, sales and operating profit were behind 2019 despite positive pricing as COVID-19 restrictions impacted activity levels. Ireland also experienced significant COVID-19 related restrictions in the second quarter of 2020; however, strong cement volumes in the second half of the year, cost savings initiatives and robust pricing across all product lines saw operating profit outperform 2019. Sales in Finland were ahead of prior year, but operating profit was impacted by less favourable product mix.

Europe West

 

 

In France, cement volumes recovered in the second half of the year and good pricing was maintained across all products; however, overall volumes were significantly impacted by COVID-19 restrictions in the first half of the year. Sales and operating profit in France were below 2019 levels despite ongoing performance improvement and cost savings initiatives. Like-for-like operating profit in the Benelux finished ahead of 2019, with a positive contribution from our Dutch structural businesses partly offset by lower cement and structural concrete volumes in Belgium.

In Denmark, sales and operating profit finished behind 2019, due to weaker new residential construction partially offset by strong cost control. Sales volumes and operating profit in Spain were affected by COVID-19 restrictions despite focused cost control actions. Challenging cement and readymixed concrete volumes in Switzerland were partially offset by cement price increases, good aggregates volumes and cost savings initiatives but operating profit finished behind 2019 levels. In Germany, sales were broadly in line with 2019 levels, as increases in cement pricing offset slightly lower lime volumes. Operating profit finished behind 2019 due to the impact of higher input costs.

Europe East

 

 

Cement sales in Poland were slightly ahead of 2019 as positive cement pricing more than offset lower volumes, and overall operating profit was ahead due to good cost control and lower fuel costs. Operating profit was also ahead of 2019 in Ukraine despite a challenging pricing environment as cost savings initiatives and lower fuel and logistics costs resulted in improved performance. In Romania, sales and operating profit both strongly exceeded prior year, as a continuation of infrastructure projects, the positive impact of local and national elections and increased residential repair works contributed to growing cement demand with pricing above 2019 levels.

Positive pricing in both Slovakia and Hungary coupled with good cost control contributed to operating profit ahead of 2019 despite both economies being impacted by COVID-19 and an overall decline in construction output. In Serbia, sales and operating profit were ahead of 2019 with higher cement volumes, positive pricing and business improvement initiatives.

Asia

 

 

Domestic demand for cement in the Philippines was severely impacted between mid-March and May as COVID-19 restrictions resulted in plant shutdowns. Despite this challenging backdrop and lower pricing, operating profit finished well ahead of 2019 due to cost savings, performance improvement initiatives and improved volumes in the second half of the year.

CRH’s operations include a 26% stake in Yatai Building Materials in China where, despite a severe COVID-19 impact in the first quarter, full year cement volumes ended ahead of 2019. Pricing remained challenging in the region which, in addition to the non-cash impairment charge resulted in operating profit below 2019 levels.

 

 

 

 

 

*

EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.

 

    
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Building Products

 

   LOGO

 

CRH’s Building Products Division operates across 19 countries and is a leading manufacturer and supplier of high quality, value-added, innovative products and solutions for construction markets globally.

 

What We Do

                                                                                                                                                                                                                                                                                                                                                    

 

Established in 2019, the Building Products Division has brought together CRH’s related products businesses in Europe, North America and Asia Pacific. These businesses are involved in the manufacture and supply of a wide range of products and solutions for use primarily in residential and non-residential construction projects globally.

 

Building Products is comprised of four strategic product groups: Architectural Products, Building Envelope, Infrastructure Products and Construction Accessories. Together these businesses provide solutions that are tailored to meet current market demand while also working with customers to innovate and develop new solutions that address longer-term opportunities presented by economic development, changing demographics, sustainable development and other evolving global construction trends.

 

The Division has leading positions, across multiple markets, in all four product groups. From glazing systems to concrete masonry and hardscapes for residential and non-residential developments, to infrastructure precast

  LOGO
 

 

products supplied to utilities and transportation, to connecting, fixing and anchoring products for challenging construction applications; our products shape and enhance the built environment and play a vital role in construction projects big and small.

 

Working closely with customers to understand their unique needs and challenges, innovating at both process and product level, and the relative ease with which certain products can be transported and applied are all key features of our Building Products businesses.

  

 

How We Create Value

    

 

CRH’s Building Products Division is uniquely placed to meet the needs of evolving construction demand. By combining the strengths of our individual products businesses into one global platform, balanced across geographies and end-use sectors, we leverage our scale, talent, brands, customer relationships and technical expertise, to create value and deliver superior performance.

    
    
    

 

*

EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.

1.

Products, sector exposure and end-use balance are based on sales.

2.

Net Assets at 31 December 2020 comprise segment assets less segment liabilities excluding lease liabilities as defined on page 214.

 


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2020 Annual Report and Form 20-F
    
    
    
    
    

 

The Division’s exposure to attractive end-use markets provides for higher growth prospects and balance through the cycle, while lower capital intensity of these businesses supports superior returns and good cash conversion.

An innovation-led approach to the development of sustainable building products and solutions is a key characteristic of our business, while our ability to customise solutions and create bespoke products creates competitive advantage and helps to drive sustainable growth.

Our strategy is to build and grow scalable businesses and to adapt and grow as our markets evolve. For example, in 2020 we united all our Construction Accessories businesses across four continents under one global brand, Leviat.

By bringing these businesses together under one name, we are better equipped to leverage our full design and manufacturing capabilities, establishing a world leader in connecting, fixing and anchoring technology to accelerate the launch of new, game-changing innovations in construction accessories.

Our development focus aims to deepen our position in existing business platforms and to broaden our differentiated product portfolio. We assess development opportunities through the lens of providing access to growth markets that are favourably exposed to global megatrends. These include increasing urbanisation, the growth of cities and the demand for more sustainable forms of construction.

How we structure

our operations

 

 

Our Building Products Division is structured around four core product groups: Architectural Products, Building Envelope, Infrastructure Products and Construction Accessories.

The Division employs approximately 22,900 people at close to 480 locations across 19 countries.

Creating Value Through Our Global Scale

 

LOGO

 

    
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  50  

Operations Review - Building Products

Prior Year 2019

 

                                                                                                                                                                                                       
Results            Analysis of change                  
$ million    2018      Exchange      Acquisitions      Divestments      Leases      Organic      2019      % change  
Sales revenue      7,379        -122        +259        -645        -        +126        6,997        -5%  
EBITDA (as defined)*      930        -12        +30        -54        +112        +70        1,076        16%  
Operating profit      679        -7        +11        -18        +17        +66        748        10%  
EBITDA (as defined)*/sales      12.6%                       15.4%     
Operating profit/sales      9.2%                                                     10.7%           

 

Building Products saw continued organic growth in 2019, with sales 2% ahead of 2018, while operating profit increased organically by 10% as a result of increased sales and continued emphasis on margin optimisation. Initiatives, which included production efficiencies, commercial excellence, procurement savings and overhead cost control also helped to deliver improved margins.

Solid macroeconomic conditions in the US continued to provide a positive backdrop for construction demand. Volumes growth, especially new residential construction activity, was limited by higher interest rates entering 2019, as well as continued supply-side factors such as labour availability and construction cost inflation. Similar to prior years, growth primarily occurred along the West Coast, Southeast and South Central US due to good non-residential construction activity and positive residential RMI demand.

In Europe, markets in the Netherlands and Poland continued to benefit from good demand. Despite Brexit uncertainties, our businesses in the UK showed resilience with solid performances in the residential and telecoms sectors. Results in Germany were impacted by slower markets and increased competition.

2019 saw further refinement of the portfolio, including the divestment of Europe Distribution, the Shutters & Awnings and Perimeter Protection businesses in Europe, together with 16 bolt-on acquisitions, primarily at our Infrastructure and Architectural Products businesses.

Architectural Products

 

 

Architectural Products in North America experienced good sales growth, capitalising on solid residential RMI demand and favourable weather in most markets, especially in Eastern US. Product mix optimisation and targeted selling prices helped to recover input cost inflation in most markets, but trading was partly offset by challenging market conditions in

Canada. Overall, the business delivered strong operating profit growth, bolstered by operating efficiencies, contributions from acquisitions and cost reduction initiatives.

The European businesses recorded strong sales and profits in the first half of 2019, supported by good weather, operational improvements and selling price advancement. Demand slowed during the second-half in Western Europe, with wet weather being a contributory factor. Overall sales and profits for the year were mixed, with a strong performance in Poland partly offset by some softness in Western Europe.

The Shutters & Awnings business, which was divested in June, recorded results similar to the comparable period in 2018, with the positive impact of more benign weather conditions in the first half of the year offset by increased competition in Germany.

Building Envelope

 

 

Building Envelope saw like-for-like sales growth driven by good demand and increased selling prices in our C.R. Laurence and aluminium glazing businesses. Sales growth was limited by competitive markets in the fabricated glass business. In addition to revenue growth, higher operating profits were achieved due to more stable aluminium input costs, a strategic shift away from larger lower margin projects and focus on self-help initiatives.

Infrastructure Products

 

 

Our Infrastructure Products business in North America recorded healthy sales growth in 2019 due to good demand for both private construction and public infrastructure, particularly in the Southeast and West regions of the US. Building on progress in 2018, Infrastructure Products was successful at delivering price increases in excess of input cost inflation.

The business recorded significantly increased operating profit due to improved operational efficiencies, commercial initiatives and overhead cost control. The business also experienced another year of backlog growth in 2019.

Our European and Australian business (formerly Network Access Products) delivered a year of solid growth. Performance in Europe was well ahead of 2018 due to increased sales to the telecom and rail sectors. However, Australian sales were below 2018 due to challenging market conditions in the telecom sector. Overall operating profit finished ahead of 2018.

The Perimeter Protection business was divested in September. Compared with the same period in 2018, the business recorded lower sales while operating profits advanced due to cost improvements.

Construction Accessories

 

 

The US business achieved strong organic sales and operating profit growth due to increased volumes and prices against the backdrop of a solid US non-residential market. The Construction Accessories business in Europe recorded a 4% increase in like-for-like sales compared with 2018, along with higher operating profit, driven by commercial excellence initiatives and positive market trends in certain geographies. Revenue growth was driven by the UK, France, the Netherlands and Switzerland. Our German business was impacted by increased competition and market uncertainty during the second half of the year.

 

 

 

 

*

EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.

 

 


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2020 Annual Report and Form 20-F
    
    
    

 

Current Year 2020

 

                                                                                                                                                                                                       
Results            Analysis of change               
$ million    2019      Exchange      Acquisitions      Divestments      Impairment/
One-offs1
     Organic     2020    % change  
Sales revenue      6,997        +14        +262        -347        -        +247     7,173      3%  
EBITDA (as defined)*      1,076        -        +50        -32        -15        +91     1,170      9%  
Operating profit      748        -1        +26        -17        -19        +85     822      10%  
EBITDA (as defined)*/sales      15.4%                    16.3%   
Operating profit/sales      10.7%                                                  11.5%         
                   1 One-offs primarily due to COVID-19 related restructuring costs  

 

In 2020, Building Products recorded like-for-like sales growth of 4% due to strong residential RMI demand, especially in North America, which more than offset the effect of a more subdued non-residential sector. Ongoing business improvement initiatives and COVID-19 mitigating actions delivered higher margins through production efficiencies, commercial excellence, procurement savings and overhead cost control. On a like-for-like basis EBITDA (as defined)* increased by 8% and operating profit by 11%, as a result of the improved sales growth and continued progress with cost reductions.

Following a strong start to the year, economic conditions in North America and Europe were significantly impacted by COVID-19. The pandemic particularly affected non-residential construction activity while the residential sector was bolstered by increased home improvement activity.

Activity levels in North America were impacted by COVID-19 restrictions from the first quarter of 2020, mostly affecting the West Coast, Northeastern US, and Canada. In Europe, construction markets showed resilience in Central and Eastern European countries, while much of Western Europe, notably the UK, France, and Belgium, saw more severe volume impacts from lockdown restrictions, particularly in the first half of the year.

Two divestments and six bolt-on acquisitions were completed in 2020. Building Products’ largest acquisitions were two manufacturers of underground enclosures in Tennessee and Texas, both within Infrastructure Products.

Architectural Products

 

 

Architectural Products in North America delivered strong sales growth in 2020, reflecting positive market demand across all product groups and regions. With North America seeing heightened residential RMI demand, sales through both our retail and professional channels increased. The businesses delivered significant

margin expansion from the continued focus on operational excellence, as well as modest price growth and tight overhead cost control. Sales in our European businesses were ahead mainly due to volume growth in Germany and Poland.

Building Envelope

 

 

Building Envelope’s sales were lower than 2019, with COVID-19 restrictions unfavourably impacting volumes across key products and geographies, particularly at C.R. Laurence. Volumes were impacted by the softening of non-residential markets, with a number of projects being delayed or cancelled, while the selling price environment remained competitive. As restrictions eased, the rate of sales decline lessened over the course of the second half. Operating profit was behind 2019 as a result of lower volumes, partly offset by cost management initiatives.

Infrastructure Products

 

 

Like-for-like sales were lower than 2019 because of reduced demand as a number of non-residential and public infrastructure projects were delayed or cancelled due to COVID-19. However, sales of key products to the communications sector and electric utilities proved to be resilient as demand for IT infrastructure was strong. The business recorded increased like-for-like operating profit due to continued performance improvement measures and focused cost control. Europe recorded lower like-for-like sales in 2020 because of COVID-19 restrictions in key markets, particularly the UK. In Australia, like-for-like sales were below prior year due to continued challenges in the telecom sector in the country.

Construction Accessories

 

 

Like-for-like sales were lower than 2019 because of COVID-19 shutdowns affecting project activity particularly in the first half. In Europe, sales were worst affected in Western Europe, with Central and Eastern European markets experiencing more resilient demand. Sales in Australia benefited from several large infrastructure projects, while North America recorded lower like-for-like sales due to increased competition, further compounded by COVID-19. Operating profit was lower in 2020, as the unfavourable volume impact was only partly offset by overhead cost savings and benefits from ongoing procurement, commercial and operational initiatives.

 

 

 

 

*

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.

 

    
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LOGO

 

    

Through a values-driven culture we strive to

maintain the highest standards of corporate

governance and ethical business conduct.

We are transparent in our processes and

outcomes, believing this builds trust and

ensures responsible leadership.

 

 


Table of Contents
 
2020 Annual Report and Form 20-F

 

LOGO

 

 

Governance    

 

        
       
  

Board of Directors

     54  

Corporate Governance Report

     58  

Chairman’s Introduction

     58  

Audit Committee Report

     60  

Nomination & Corporate Governance Committee Report

     64  

Safety, Environmental  & Social Responsibility Committee Report

     70  

Directors’ Remuneration Report

     74  

Directors’ Report

     100  

 

 

 

 

An employee of TexasBit, part of CRH’s America’s Materials Division at a paving project in Waco, Texas. Masks are a common feature of personal protective equipment (PPE) used by employees in a variety of work environments. During the pandemic CRH businesses have donated masks and other PPE to hospitals and health services in local communities around the world.

 

 

 

    
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  54  

Board of Directors

 

LOGO            LOGO            LOGO

 

Richie Boucher

 

Chairman

 

Appointed to the Board: March 2018

Nationality: Irish Age: 62

Committee membership:

 

LOGO

 

        

 

Albert Manifold

 

Chief Executive

 

Appointed to the Board: January 2009

Nationality: Irish Age: 58

Committee membership:

 

LOGO

 

        

 

Senan Murphy

 

Group Finance Director

 

Appointed to the Board: January 2016

Nationality: Irish Age: 52

Committee membership:

 

LOGO

 

 

Skills and experience:

 

Richie has extensive experience in all aspects of financial services and was Chief Executive of Bank of Ireland Group plc between February 2009 and October 2017. He also held a number of key senior management roles within Bank of Ireland, Royal Bank of Scotland and Ulster Bank. He is a past President of the Institute of Banking in Ireland and of the Irish Banking Federation.

 

Qualifications: Bachelor of Arts (Economics) from Trinity College, Dublin; Fellow of the Institute of Banking in Ireland.

 

External appointments:

 

Listed: Director of Kennedy-Wilson Holdings, Inc., a global real estate investment company.

 

Non-listed: Non-executive Director of Clonbio Group Limited, which manufactures sustainable bio products and produces renewable energy.

 

        

 

Skills and experience:

 

Albert joined CRH in 1998. Prior to joining CRH, he was Chief Operating Officer with a private equity group. While at CRH he has held a variety of senior positions, including Finance Director of the Europe Materials Division, Group Development Director and Managing Director of Europe Materials. He became Chief Operating Officer in January 2009 and was appointed Group Chief Executive with effect from 1 January 2014.

 

Qualifications: FCPA, MBA, MBS.

 

External appointments:

 

Listed: Non-executive Director of LyondellBasell Industries N.V., one of the largest plastics, chemicals and refining companies in the world.

 

Non-listed: Not applicable.

        

 

Skills and experience:

 

Senan has extensive experience in international business across financial services, banking and renewable energy. He joined CRH from Bank of Ireland Group plc where he was the Chief Operating Officer and a member of the Group’s Executive Committee. He previously held positions as Chief Operating Officer and Finance Director at Ulster Bank, Chief Financial Officer at Airtricity and numerous senior financial roles in GE, both in Ireland and the US.

 

Qualifications: Fellow of Chartered Accountants Ireland; Bachelor of Commerce; and a Diploma in Professional Accounting from University College Dublin.

 

External appointments:

 

Listed: Not applicable.

 

Non-listed: Not applicable.

 

                                      
    Board Committees               
             
         LOGO   Acquisitions,    

LOGO

 

  Nomination & Corporate       LOGO    Safety, Environment         
  Divestments & Finance       Governance      & Social Responsibility
             
    LOGO   Audit     LOGO   Remuneration     LOGO    Committee Chairman    
                                      
 


Table of Contents
2020 Annual Report and Form 20-F
    
    
    

 

 

LOGO            LOGO            LOGO

 

Gillian L. Platt

 

Senior Independent Director

 

Appointed to the Board: January 2017

Nationality: Canadian Age: 67

Committee membership:

 

LOGO

 

        

 

Richard Fearon

 

Non-executive Director

 

Appointed to the Board: December 2020

Nationality: United States Age: 64

Committee membership:

 

LOGO

 

        

 

Johan Karlström

 

Non-executive Director

 

Appointed to the Board: September 2019 Nationality: Swedish Age: 64

Committee membership:

 

LOGO

 

 

Skills and experience:

 

During the course of her executive career, Gillian has held a number of senior leadership positions in a variety of industries, geographies and roles including human resources, corporate affairs and strategy. Most recently she was Executive Vice President and Chief Human Resources Officer at Finning International, Inc. (the world’s largest Caterpillar equipment dealer) with global responsibility for human resources, talent development and communications. She previously held senior executive roles at Aviva, the multinational insurance company, as Executive Vice President Human Resources and Executive Vice President Strategy and Corporate Development.

 

Qualifications: Bachelor of Arts from the University of Western Ontario and a Masters of Education from the University of Toronto.

 

External appointments:

 

Listed: Non-executive Director and Chair of the Management Resources & Compensation Committee of Interfor Corporation, a Canadian listed company, which is one of the world’s largest providers of lumber.

 

Non-listed: Not applicable.

 

        

 

Skills and experience:

 

Richard is currently the Vice Chairman and Chief Financial and Planning Officer of Eaton Corporation plc, a global power management company, roles he has held since 2009 and 2002, respectively. He has responsibility and oversight for a number of key operational and strategic functions at Eaton, including accounting, control, corporate development, information systems, internal audit, investor relations, strategic planning, tax and treasury functions. He will retire as an executive and from the Board of Eaton at the end of March 2021. Prior to joining Eaton, he served in development and strategic planning management positions at several large diversified companies, including as Senior Vice President of Corporate Development at Transamerica Corporation, General Manager of Corporate Development for Singapore-based NatSteel Ltd and Director of Strategic Planning at The Walt Disney Company. He has also served as a management consultant at the Boston Consulting Group, Booz Allen Hamilton and Willow Place Partners.

 

Qualifications: Bachelor of Arts in Economics from Stanford University; Masters of Business Administration from Harvard Business School; and a Juris Doctorate from Harvard Law School.

 

External appointments:

 

Listed: Director of Eaton Corporation plc; Non-executive and Lead Director of Avient Corporation; and Director of Crown Holdings, Inc.

 

Non-listed: Not applicable.

        

 

Skills and experience:

 

Johan was President and Chief Executive Officer of Skanska AB, a leading multinational construction and project development company until 2017. Over a thirty-year career with Skanska, he held a variety of leadership roles in Europe and America, before becoming President and Chief Executive in 2008. He also served as President and Chief Executive Officer of BPA (now Bravida), a listed mechanical and installation group from 1996 to 2000.

 

Qualifications: Masters degree in Engineering from the KTH Royal Institute of Technology, Sweden.

 

External appointments:

 

Listed: Non-executive Director of Sandvik AB.

 

Non-listed: Not applicable.

 

    
55
 


Table of Contents
    
    
    
    

 

    
  56  

Board of Directors - continued

 

LOGO              LOGO              LOGO
         

Shaun Kelly

 

Non-executive Director

 

Appointed to the Board: December 2019

 

Nationality: Dual United States and Irish

 

Age: 61 Committee membership:

 

LOGO

 

 

        

Lamar McKay

 

Non-executive Director

 

Appointed to the Board: December 2020

 

Nationality: United States Age: 62

 

Committee membership:

 

LOGO

        

Heather Ann McSharry

 

Non-executive Director

 

Appointed to the Board: February 2012

 

Nationality: Irish Age: 59

 

Committee membership:

 

LOGO

 

Skills and experience:

 

Shaun was until September 2019, the Global Chief Operating Officer of KPMG International, where he was responsible for the execution of the firm’s global strategy and for the delivery of various global initiatives. Over a thirty-year career with KPMG, the majority of which was spent in the US, he held a variety of senior leadership positions, including Partner in Charge, US Transaction Services (2001-2005), Vice Chair and Head of US Tax (2005 to 2010) and Vice Chair Operations and Chief Operating Officer Americas (2010 to 2015), before his appointment as Global Chief Operating Officer in 2015.

 

Qualifications: Fellow of Chartered Accountants Ireland and a US Certified Public Accountant; Bachelor of Commerce and Diploma in Professional Accounting from University College Dublin; and an honorary doctorate from Queen’s University Belfast.

 

External appointments:

 

Listed: Not applicable.

 

Non-listed: Non-executive Director of Park Indemnity Limited. Shaun holds a number of non-profit board memberships.

 

Audit Committee Financial Expert as determined by the Board

 

 

        

 

Skills and experience:

 

Lamar was until July 2020 Chief Transition Officer of BP plc. During a 40 year career in Amoco and subsequently with BP, following the merger of the two companies, Lamar held a variety of senior executive roles, including responsibility for BP’s interests in the TNK-BP joint venture, Chairman and CEO of BP Americas (during which period he acted as President of the Gulf Coast Restoration Organisation and Chief Executive Officer for BP’s world-wide Upstream Division). From April 2016 to February 2020 he was Deputy Group Chief Executive Officer of BP, a role in which he had a wide range of accountabilities, including safety, operational risk, legal affairs, technology, economic insight, long range planning and strategy with the latter responsibilities particularly influencing capital allocation planning and BP’s sustainability initiatives.

 

Qualifications: Bachelor of Science from Mississippi State University.

 

External appointments:

 

Listed: Non-executive Director of Apache Corporation.

 

Non-listed: Not applicable.

        

 

Skills and experience:

 

Heather Ann is a former Managing Director Ireland of Reckitt Benckiser and Boots Healthcare and was previously a non-executive Director of Bank of Ireland plc and IDA Ireland.

 

Qualifications: BComm, MBS.

 

External appointments:

 

Listed: Non-executive Director of International Consolidated Airlines Group, S.A. and Jazz Pharmaceuticals plc.

 

Non-listed: Not applicable.

 

                                      
    Board Committees               
           
         LOGO   Acquisitions,    

LOGO

 

  Nomination & Corporate       LOGO    Safety, Environment         
  Divestments & Finance       Governance      & Social Responsibility
           
    LOGO   Audit     LOGO   Remuneration     LOGO    Committee Chairman    
                                      
 


Table of Contents
2020 Annual Report and Form 20-F
    
    
    

 

LOGO        LOGO        LOGO
         

Mary K. Rhinehart

 

Non-executive Director

 

Appointed to the Board: October 2018

 

Nationality: United States Age: 62

 

Committee membership:

 

LOGO

 

 

        

Lucinda J. Riches

 

Non-executive Director

 

Appointed to the Board: March 2015

 

Nationality: British Age: 59

 

Committee membership:

 

LOGO

 

        

Siobhán Talbot

 

Non-executive Director

 

Appointed to the Board: December 2018

 

Nationality: Irish Age: 57

 

Committee membership:

 

LOGO

 

 

Skills and experience:

 

Mary is Chairman of Johns Manville Corporation, a Berkshire Hathaway company, which is a leading global manufacturer of premium-quality building products and engineered specialty materials. Over 40 years with Johns Manville she has held a wide range of global leadership roles, encompassing responsibility for business management and strategic business development and was also Chief Financial Officer. Mary was until recently a non-executive Director of Ply Gem Holdings Inc., a leader in exterior building products in North America, and lead Director of CoBiz Financial Inc.

 

Qualifications: Bachelor’s degree in Finance from the University of Colorado; MBA from the University of Denver.

 

External appointments:

 

Listed: Not applicable.

 

Non-listed: Chairman of Johns Manville Corporation; non-executive Director of Graphic Packaging Holding Company and member of the Board of Trustees of the University of Denver.

 

 

 

        

 

Skills and experience:

 

Lucinda spent the majority of her career in investment banking, including 21 years in UBS Investment Bank and its predecessor firms where she worked until 2007. She held senior management positions in the UK and the US, including Global Head and Chairman of UBS’ Equity Capital Markets Group and Vice Chairman of the Investment Banking Division.

 

Qualifications: Masters in Philosophy, Politics and Economics from the University of Oxford; and a Masters in Political Science from the University of Pennsylvania.

 

External appointments:

 

Listed: Non-executive Director of Ashtead Group plc, Greencoat UK Wind plc and ICG Enterprise Trust plc.

 

Non-listed: Not applicable.

        

 

Skills and experience:

 

Siobhán is Group Managing Director of Glanbia plc, a global nutrition company with operations in 32 countries, a position she has held since 2013. She has been a member of the Glanbia Board since 2009 and was previously Finance Director, a role which encompassed responsibility for Glanbia’s strategic planning. Prior to joining Glanbia, she worked with PricewaterhouseCoopers in Dublin and Sydney.

 

Qualifications: Fellow of Chartered Accountants Ireland; Bachelor of Commerce; and a Diploma in Professional Accounting from University College Dublin.

 

External appointments:

 

Listed: Group Managing Director of Glanbia plc.

 

Non-listed: Director of the Irish Business Employers Confederation (IBEC).

Audit Committee Financial Expert as determined by the Board.   Audit Committee Financial Expert as determined by the Board

 

    
57
 


Table of Contents
    
    

    Corporate Governance Report

 

    
  58  

LOGO

 

The Corporate Governance Report contains details of CRH’s governance structures and highlights areas of focus for the Board over the last year. In keeping with prior years, details of CRH’s general governance practices are available in the governance appendix on CRH’s website, www.crh.com (the ‘Governance Appendix’)1. CRH implemented the 2018 UK Corporate Governance Code (the ‘2018 Code’) and this Report explains how the principles of the 2018 Code have been applied.

Operation of the Board in the context of COVID-19

 

 

Since the onset of the COVID-19 pandemic, the Board has met remotely through the use of video technology. Whilst the lack of in-person interaction, both in formal and informal settings, presents challenges I am pleased to report that the cohesiveness of the Board was not adversely impacted. In addition, we were able to support the management team in navigating through an unprecedented crisis and focus on the objectives the Board had set itself for the year.

As outlined in other sections of this Annual Report, the safety and well-being of our people was our main priority in the last 12 months. The Board received regular reports on the impact of COVID-19 on our employees and provided oversight in relation to the many initiatives to support and communicate with them. In addition, we reviewed and considered the impact of CRH’s payment policies on our customers and suppliers. We also spent a significant amount of time on the Company’s strategy, with an in-depth focus on areas such as vertical integration, the assessment of our portfolio of businesses and the way they are organised, and government infrastructure funding.

 

LOGO

The safety and well-

being of our people

was our main priority

in the last 12 months.”

Richie Boucher

Chairman

 

 

 

 

Despite the challenges of COVID-19 restrictions, our ongoing process of Board renewal is continuing. Our work in this area since last year’s report is outlined in detail in the Nomination & Corporate Governance Committee’s report to shareholders on pages 64 to 66.

Stakeholder Engagement

 

 

Prior to the 2020 Annual General Meeting (AGM), we actively engaged with CRH’s major shareholders on the AGM agenda and general governance matters. This process, which has been in place for many years, was especially valuable in understanding investor perspectives and priorities in the context of the COVID-19 pandemic.

As mentioned in my introduction to this Annual Report on page 5, I have also engaged extensively with shareholders on progress in relation to my priorities as Chairman and we have actively engaged with investor groups on various important matters, including sustainability.

In addition, the Board receives recommendations from the Safety, Environmental and Social Responsibility (SESR) Committee in relation to the areas within its remit, which includes overall responsibility for employee engagement. The work

 

 

 

 

1.  The Governance Appendix is published in conjunction with the Directors’ Report in compliance with Section 1373 of the Companies Act 2014. For the purposes of Section 1373(2) of the Companies Act 2014, the Governance Appendix and the risk management disclosures on pages 26 to 29 and 106 to 111 form part of, and are incorporated by reference into, this Corporate Governance Report.

   The primary (premium) listing of CRH plc is on the LSE, with the listing on Euronext Dublin characterised as secondary. For this reason, CRH plc is not subject to the same ongoing listing requirements as would apply to an Irish company with a primary listing on Euronext Dublin. For further information, shareholders should consult their financial adviser. Further details on the Group’s lis