TIDMCRH
RNS Number : 6173W
CRH PLC
20 August 2020
2020 Interim Results
Key Highlights
-- Health & safety remains our number one priority
-- Robust performance in a challenging environment
-- Decisive reaction to evolving market backdrop
-- EBITDA and margin ahead despite lower sales
-- Record cash generation; further underpinning financial strength & flexibility
-- $3.8bn improvement in net debt position; $10bn of available liquidity
-- Continued dividend delivery; interim dividend in line with prior year
H1 Summary Financials 2020 LFL
Sales Revenue $12.2bn -3%
EBITDA $1.6bn +2%
EBITDA Margin 13.0% +70bps
Operating Cash Flow $1.0bn +$0.7bn
-- Q3 EBITDA is expected to be in line with prior year
-- Limited visibility for Q4 and into 2021
-- Focused on continuing to improve profitability, margins & cash
Albert Manifold, Chief Executive, said today:
"Our first-half performance is testament to the hard work and
dedication of all our people during a very challenging and
uncertain period. As ever, health and safety is our number one
priority and our primary focus is to provide a safe working
environment for all of our employees. As a Group we took swift and
comprehensive action in response to the COVID-19 crisis, and our
ability to flex our cost base and deliver improved profitability,
margins and cash generation in a rapidly evolving environment
demonstrates the strength and resilience of our business. The
outlook for the rest of the year and into 2021 remains uncertain
and is dependent on an improving health situation across our
markets."
Announced Thursday, 20 August 2020
2020 Interim Results
Health & Safety
The health and safety of our people remains our number one
priority and our approach to workplace safety is uncompromising in
our response to the COVID-19 pandemic. In this regard, our primary
focus is to ensure that we provide a safe working environment for
our employees, contractors and customers, enabling them to carry
out their activities in accordance with the various health and
safety protocols currently in place across our markets.
Trading Overview
The global COVID-19 pandemic had a material impact across the
construction markets in which we operate. First-half sales for the
Group were 5% behind, with like-for-like (1) sales 3% behind the
first half of 2019, as a positive performance in the first quarter
was followed by significant disruption in the second quarter.
-- First-half like-for-like sales for our Americas Materials
operations were 1% behind 2019 as the impact of COVID-19 related
shutdowns in our North region was partly offset by strong demand in
our West region, which experienced more favourable weather
conditions than prior year, and improved pricing.
-- In Europe Materials, a solid start to the year was offset by
the impact of COVID-19 related government restrictions across a
number of key markets in Europe and in Asia. As a result, sales in
the first half were down 11% on a like-for-like basis against the
same period in 2019.
-- Like-for-like sales in Building Products were 2% ahead of
2019. Strong residential repair, maintenance & improvement
(RMI) demand in North America resulted in positive volumes together
with pricing progress across most platforms. This was partly offset
by the impact of COVID-19 restrictions on a number of our
operations in Europe and North America, particularly those serving
the non-residential construction sector.
With a strong focus on cost rationalisation to mitigate the
financial impacts of the pandemic, EBITDA of $1.59 billion was
slightly behind 2019 (H1 2019: $1.62 billion) and was impacted by
$65 million of one-off costs primarily due to COVID-19 related
restructuring items. On a like-for-like basis Group EBITDA was 2%
ahead of 2019, while the like-for-like EBITDA margin increased
70bps.
-- Solid price progression, good cost control and lower energy
costs resulted in like-for-like EBITDA in Americas Materials up
20%.
-- In Europe Materials, like-for-like EBITDA was 28% behind
primarily reflecting the significant impact of COVID-19
restrictions in the United Kingdom (UK), other Western European
markets and the Philippines.
-- Strong operating leverage on increased sales in Building
Products, reflected good commercial discipline, cost
rationalisation and ongoing profit improvement initiatives.
Like-for-like EBITDA was 11% ahead.
First-half profit before tax was $518 million, compared with a
profit of $717 million in the first half of 2019 primarily
reflecting lower profit on divestments compared with the first half
of 2019. Note 2 on page 18 analyses the key components of the
first-half 2020 performance.
Mitigating Actions
In response to the COVID-19 crisis, the Group took immediate and
decisive actions to right-size our cost base in line with evolving
demand levels. These actions included:
-- Suspension of all non-essential and discretionary expenditure;
-- $0.2 billion reduction in fixed costs;
-- $0.8 billion improvement in working capital outflow;
-- $0.2 billion reduction in capital expenditure; and
-- Consolidation of operating locations to adapt to lower levels of activity.
The Group continued to support our businesses by investing in
operational improvements and capacity increases to serve growing
demand in markets which were less affected by pandemic
restrictions.
Outlook
The near-term outlook for economic and construction activity
across our markets remains uncertain and is dependent on an
improving health situation. Based on recent trading trends we
expect like-for-like sales in the third quarter to be slightly
behind the same period in 2019, with Americas Materials slightly
behind, Building Products broadly in line, while Europe Materials
is expected to be behind prior year levels. Overall EBITDA for the
third quarter is expected to be in line with the third quarter in
2019. There is limited visibility for the fourth quarter of the
year and as a result the Group is not in a position to provide
full-year guidance at this time. The longer-term prospects for CRH
remain positive, benefiting from significant financial strength and
resilience together with a portfolio of high-quality assets in
attractive markets.
[1] See pages 35 to 37 for glossary of alternative performance
measures (including EBITDA, like-for-like (LFL)/organic and Net
Debt/EBITDA) used throughout this report. Operating cash flow is
net cash inflow from operating activities as reported in the
Condensed Consolidated Statement of Cash Flows on page 14.
Americas Materials
Analysis of change
=============== ====== ============================================================== =================
$ million 2019 Exchange Acquisitions Divestments One-offs(1) Organic 2020 % change
=============== ====== ========= ============= ============ ============ ======== ====== =========
Sales revenue 4,533 -21 +22 -20 - -35 4,479 -1%
EBITDA 567 +1 +4 +1 -21 +115 667 +18%
Operating
profit 189 +4 +1 +2 -21 +114 289 +53%
EBITDA/sales 12.5% 14.9%
Operating
profit/sales 4.2% 6.5%
=============== ====== ========= ============= ============ ============ ======== ====== =========
(1) One-offs primarily due to COVID-19 related restructuring
costs
Against the backdrop of regional variations in pandemic
restrictions and generally more favourable weather conditions than
prior year, Americas Materials reported first-half like-for-like
sales 1% behind 2019. Despite the modest decline in sales,
like-for-like operating profit was 59% ahead of 2019, as price
progression, lower energy costs and strong cost control offset
volume challenges. As a result, margins increased compared with the
first half of 2019. The reduction in sales was primarily driven by
COVID-19 restrictions in the second quarter which impacted volumes
across all lines of business particularly in our Northern regions
of Quebec, New York, Pennsylvania and Washington following a strong
first quarter performance; however good like-for-like sales growth
in all products in our West region was experienced due to strong
demand, solid backlogs and mild weather.
Aggregates
Total and like-for-like aggregates volumes were in line with
2019. Strong demand in West was offset by lower activity in North
which was impacted by COVID-19 restrictions and in South due to
unfavourable weather. Total and like-for-like prices increased by
2%, with mid-single digit increases in North and South and flat
pricing in West, influenced by sales mix, which resulted in good
margin expansion overall.
Asphalt
A reduction in asphalt volumes in the second quarter, as higher
volumes in West were unable to offset volume challenges in North
and South, resulted in first-half total and like-for-like volumes
5% behind 2019. Average prices were flat however margins expanded
benefiting from lower liquid asphalt costs, good cost control and
operational efficiencies.
Readymixed Concrete
Readymixed concrete volumes were 4% behind 2019 on a
like-for-like basis with strong demand in certain areas in West
offset by lower volumes in North and South; overall average prices
increased 6% compared with same period in 2019. Strong price
increases were experienced particularly in our North and West
regions supported by commercial excellence initiatives.
Paving and Construction Services
Paving and construction services revenues were 4% behind the
first half of 2019 on a total and like-for-like basis with mixed
activity levels across our regions. Profitability benefited from
higher margin projects in our South region.
Cement
Sales volumes in the United States (US) were 4% ahead of 2019 on
a total and like-for-like basis, as strong volume trends in West
supported by growth in our downstream businesses drove performance.
Strong price realisation across all markets, operational
improvements and synergy delivery resulted in improved operating
profits.
Operations in Canada were impacted by COVID-19 related lockdown
measures from the beginning of April. The timing and impact of
restrictions varied across regions with volumes behind prior year.
Prices were ahead of prior year with all regions showing positive
or flat prices.
Demand for cement in Brazil has been resilient to the impacts of
the pandemic and volumes and prices were ahead of prior year.
Europe Materials
Analysis of change
=============== ====================================================================== =================
$ million 2019 Exchange Acquisitions Divestments One-offs(1) Organic 2020 % change
=============== ====== ========= ============= ============ ============ ======== ====== =========
Sales revenue 4,615 -103 +35 - - -477 4,070 -12%
EBITDA 521 -10 +4 - -32 -145 338 -35%
Operating
profit 236 -5 - - -32 -137 62 -74%
EBITDA/sales 11.3% 8.3%
Operating
profit/sales 5.1% 1.5%
=============== ====== ========= ============= ============ ============ ======== ====== =========
(1) One-offs primarily due to COVID-19 related restructuring
costs
Despite a strong start to the year, Europe Materials
like-for-like sales and like-for-like operating profit fell by 11%
and 59% respectively, reflecting the impact of site closures from
mid-March to late-May as a result of COVID-19 in the UK, Ireland,
France and the Philippines, in particular. Germany, Switzerland,
the Benelux and most of Eastern Europe were less impacted as
construction activity continued and in certain cases was boosted by
government projects and increased local demand.
UK
Widespread plant shutdowns in the UK during March, April and May
as a result of COVID-19 resulted in volumes finishing behind in all
products compared to 2019 with aggregates volumes showing the most
resilience and readymixed concrete being impacted the most.
Favourable cement and lime pricing and cost savings did not
compensate for the lower volumes and sales and operating profit in
the UK finished well behind the first half of 2019.
Western Europe
Construction in Ireland was severely impacted by government
restrictions in response to COVID-19 with volumes in all products
behind prior year. Pricing remained resilient with improvements on
prior year and, despite a significant pick-up in demand in June,
sales and operating profit for the first half of the year finished
behind 2019. In France , volumes were down across the materials
businesses due to the impact of COVID-19 lockdowns. Price
improvements, strong volumes in our precast business at the
beginning of the year and stringent cost control partly offset the
impacts on sales and operating profit, which finished behind 2019.
Sales in the Benelux were ahead of 2019 reflecting higher volumes
in the Dutch structural business and robust pricing across all
products. This was only partly offset by lower volumes across the
materials businesses from the COVID-19 related closures of
construction sites in Belgium. Strong pricing, combined with cost
savings initiatives resulted in operating profit ahead of the first
half of 2019. In Denmark, like-for-like sales and operating profit
were behind 2019 due to pressure on volumes in our structural
business. The continued positive impact of project activity on
aggregates volumes in Finland , improved pricing on solid cement
volumes and unusually mild weather in the first quarter of 2020
resulted in increased sales and operating profit despite a slowdown
in the residential sector and lower volumes in readymixed concrete.
In Switzerland , price progress in cement and readymixed concrete
and a focus on cost savings initiatives partly compensated for a
decline in volumes due to challenging market conditions;
consequently like-for-like sales and operating profit finished
behind 2019. With
limited impact from COVID-19, cement volumes and pricing in Germany improved.
Eastern Europe
Poland benefited from a mild winter, maintaining solid cement
volumes and higher aggregates and asphalt volumes. Price growth
offset lower readymixed concrete volumes delivering like-for-like
sales and operating profit ahead of 2019. In Ukraine , improved
cement pricing more than offset lower cement volumes which were
impacted by competitive pressure from imports and a decline in
residential construction. Lower input costs and tight cost control
further contributed to higher operating profit than 2019. A strong
performance was achieved in Romania , with sales and operating
profit ahead of 2019 driven by robust pricing, cost savings
initiatives and higher volumes due to favourable weather in the
first quarter of the year, a strong pipeline of projects and
increased demand in the residential sector. In Hungary and
Slovakia, like-for-like sales and operating profit increased from
the first half of 2019, with price progression and good cement
volumes driven by strong infrastructure demand and mild weather
earlier in the year. Cement volumes were in line with 2019 in
Serbia due to a strong first quarter which offset lower volumes in
the second quarter. Improved pricing and cost savings initiatives
positively impacted operating profit which finished ahead of
2019.
Asia
Cement volumes in the Philippines declined as a result of
COVID-19 related plant shutdowns. Reduced volumes and lower prices
resulted in sales and operating profit behind the first half of
2019; however, the impact on profitability was partly offset by
lower costs. The Group also has a share of profit after tax from
its stake in Yatai Building Materials in China which is reported
within the Group's share of equity accounted investments' results.
Despite continued pricing pressure in Yatai Building Materials,
sales and operating profit were ahead of the first half of 2019 due
to higher volumes driven by government stimulus packages and
reduced costs.
Building Products
Analysis of change
=============== ====== ============================================================== =================
$ million 2019 Exchange Acquisitions Divestments One-offs(1) Organic 2020 % change
=============== ====== ========= ============= ============ ============ ======== ====== =========
Sales revenue 3,699 -29 +174 -257 - +79 3,666 -1%
EBITDA 533 -2 +34 -25 -12 +57 585 +10%
Operating
profit 371 -1 +16 -11 -12 +50 413 +11%
EBITDA/sales 14.4% 16.0%
Operating
profit/sales 10.0% 11.3%
=============== ====== ========= ============= ============ ============ ======== ====== =========
(1) One-offs primarily due to COVID-19 related restructuring
costs
In the first half of the year Building Products experienced
solid pricing and improved volumes supported by robust homecenter
demand, particularly in North America, along with more favourable
early season weather in North America and Europe. The positive
performance was partly offset by the business disruption as a
result of COVID-19, as our European operations were particularly
impacted by government restrictions from mid-March to late-May
along with shutdowns in certain areas of North America. Reduced
construction activity in the non-residential sector was more than
offset by higher demand in residential RMI as people were confined
to their homes during the pandemic. As a result, like-for-like
sales were 2% ahead of 2019.
Rapid actions to mitigate the impact of the pandemic, commercial
and operational initiatives along with improved selling prices
helped deliver margin improvement and like-for-like operating
profit was 14% ahead of 2019.
Architectural Products
With significant volume growth in both North America and Europe
along with solid pricing, like-for-like sales in Architectural
Products increased 12% compared with the first half of 2019,
reflecting year-on-year increases in most major markets and product
lines. Following steady demand in the first quarter supported by
mild weather conditions and selling price increases, our operations
in North America experienced a significant increase in demand in
the second quarter across hardscapes, dry-mix as well as lawn and
garden products as people remained at home during government
restrictions. Trading in Europe benefited from volume growth in
Germany and Poland.
Operating profit exceeded the same period last year with margin
expansion due to volume efficiencies and benefits from profit
improvement initiatives including actions taken to control fixed
cost overheads during the COVID-19 crisis.
Building Envelope
Lower sales volumes across our C.R. Laurence and architectural
glass operations as a result of the COVID-19 crisis resulted in
like-for-like revenue 10% behind the first half of 2019. Pricing
remained stable. C.R. Laurence was impacted due to a number of US
"shelter in place" orders which adversely affected many small
customers in the residential, interior and RMI segments.
Operating profit was behind 2019 due to the lower volumes partly
offset by cost management initiatives to ensure input and labour
costs remained in line with reductions in volumes.
Infrastructure Products
Selling price increases and volume growth in the North American
utility enclosures business which was buoyed by strong demand from
the communications sector, were offset by lower volumes in the
European and Australian businesses; like-for-like sales were flat.
The European operations, particularly in the UK and France, were
impacted by COVID-19 restrictions while the Australian business was
affected by a downturn in the telecoms market.
With a strong focus on cost control including plant
rationalisation, performance improvement measures and good pricing,
operating profit was ahead of the first half of 2019.
Construction Accessories
Like-for-like sales were 9% behind the first half of 2019 as a
result of COVID-19 related business disruption which significantly
impacted our operations in the UK, France and Belgium from
mid-March. Mild weather conditions in the first quarter along with
a strong order backlog in Germany partly offset the weaker trading.
The US operations were also impacted by COVID-19 restrictions along
with some challenging market conditions.
Operating profit was behind 2019 impacted by the lower volumes
but partly offset by performance initiatives including production
efficiencies, commercial excellence, procurement savings and
overhead cost control.
Other Financial Items
As announced on 28 February 2020, the Group has changed the
currency in which it presents its financial results from euro to US
Dollar.
Depreciation and amortisation charges of $826 million were in
line with 2019.
Divestments and asset disposals during the period generated
total profit on disposals of $9 million (H1 2019: $166 million)
which primarily related to the divestment of precast concrete
production assets in our Building Products Division. The profit of
$166 million in 2019 primarily reflected the profit on the
divestment of the European Shutters & Awnings business.
The Group's $3 million share of losses from equity accounted
investments was behind the first half of 2019 (H1 2019: $16 million
profit) mainly due to the divestment of the Indian cement joint
venture in 2019 along with weaker performances in a number of
operations due to COVID-19 restrictions.
Net finance costs for the period were lower than the first six
months of 2019 at $252 million (H1 2019: $261 million) primarily
due to lower interest rates introduced by central banks globally to
deal with the economic impact of the COVID-19 pandemic.
First-half profit before tax was $518 million (H1 2019: $717
million) and the interim tax charge, which represents an effective
tax rate of 21.6% of profit before tax, has been estimated, as in
prior years, based on current expectations of the full year tax
charge. Earnings per share were 25% lower than last year at 51.3c
(H1 2019: 68.1c), primarily reflecting lower profit on divestments
compared with the first half of 2019.
Dividend and Share Buyback
In light of the Group's resilient first-half performance and
despite the disruption of COVID-19 across our markets, the Board
has decided to maintain the interim dividend, now declared in US
Dollar, at 22.0c per share. It is proposed to pay the interim
dividend wholly in cash on 25 September 2020 to shareholders
registered at the close of business on 4 September 2020. Further
details on the dividend process, including the default payment
currency and currency election options, are set out in note 7 on
page 24.
In March 2020, the Group completed the most recent tranche of
its share buyback programme, returning a further $220 million of
cash to shareholders. This brings total cash returned to
shareholders under the Group's share buyback programme to $2
billion since its commencement in May 2018. Share buyback decisions
are based on an ongoing assessment of the capital needs of the
business and general market conditions. In light of the recent
market volatility, the Board has paused the Group's share buyback
programme until further notice.
Balance Sheet and Liquidity
Net debt of $7.8 billion at 30 June 2020 was $3.8 billion lower
than the figure reported at 30 June 2019 (H1 2019: $11.6 billion).
A first-half cash inflow from operating activities of $1.0 billion
is an improvement of $0.7 billion over prior year (H1 2019: $0.3
billion) primarily due to strong working capital control. As in
prior years, we expect a strong operating cash inflow in the second
half of 2020 and for year-end 2020 debt metrics to show an
improvement on prior year (Year-end 2019 Net Debt/EBITDA 1.7x).
In April 2020, the Group drew down its EUR3.5 billion revolving
credit facility further strengthening its cash position. In April
2020, the Group successfully issued a total of EUR2 billion in euro
denominated bonds at a weighted average maturity of seven years and
with a weighted average interest rate of 1.35%. As at 30 June 2020,
the Group had $10 billion of cash with sufficient liquidity to meet
all maturing debt obligations for the next 4.9 years.
The Group continues to maintain its strong balance sheet and a
strong investment grade credit rating with a BBB+ or equivalent
rating with each of the three main rating agencies.
Acquisitions and Divestments
In H1 2020, the Group invested $129 million on eight
acquisitions (including deferred and contingent consideration in
respect of prior year acquisitions).
On the divestment front, the Group completed four transactions
and realised total business and asset disposal proceeds of $184
million, inclusive of $115 million relating to the receipt of
deferred proceeds from prior year divestments.
H1 2020 Acquisitions and Investments
The Building Products Division completed three bolt-on
acquisitions in H1 2020 amounting to a total spend of $69 million.
The largest acquisition was in Infrastructure Products where it
acquired the assets of Highline Products in Tennessee providing
increased participation in the enclosures market and an attractive
geographic presence in the polymer concrete market.
The Americas Materials Division completed two bolt-on
acquisitions in the US for a total spend of $23 million, while the
Europe Materials Division completed three small acquisitions for an
investment of $5 million.
In addition, the Group paid $32 million of deferred and
contingent consideration in H1 2020.
H1 2020 Divestments and Disposals
The largest divestment in H1 2020 was the sale of precast
concrete production assets located in Spokane, Washington completed
by our Building Products Division, which received $18 million in
proceeds . Americas Materials divested of its asphalt and
construction business in the Florida Panhandle for total proceeds
of $12 million. Two smaller divestments were completed in our
Europe Materials Division.
In addition to these business divestments, the Group realised
proceeds of $39 million from the disposal of surplus property,
plant and equipment and other non-current assets. Furthermore, $115
million cash proceeds were received in H1 2020 relating to prior
year divestments, of which $92 million related to deferred
consideration for the Group's previous equity interest in My Home
Industries Ltd., India.
Condensed Interim
Financial Statements
and
Summarised Notes
Six months ended 30 June 2020
Condensed Consolidated Income Statement
Unaudited Year ended
Six months ended 31 December
30 June
Restated Restated
(i) (ii) (i)
2020 2019 2019
$m $m $m
----------------- ---------- ------------
Revenue 12,215 12,847 28,132
Cost of sales (8,365) (8,729) (18,859)
----------------- ---------- ------------
Gross profit 3,850 4,118 9,273
Operating costs (3,086) (3,322) (6,480)
----------------- ---------- ------------
Group operating profit 764 796 2,793
Profit/(loss) on disposals 9 166 (189)
----------------- ---------- ------------
Profit before finance costs 773 962 2,604
Finance costs (206) (207) (387)
Finance income 2 8 22
Other financial expense (48) (62) (125)
Share of equity accounted investments'
(loss)/profit (3) 16 67
----------------- ---------- ------------
Profit before tax from continuing
operations 518 717 2,181
Income tax expense - estimated at
interim (112) (159) (534)
----------------- ---------- ------------
Group profit for the financial period
from continuing operations 406 558 1,647
Profit after tax for the financial
period from discontinued operations - 44 91
----------------- ---------- ------------
Group profit for the financial period 406 602 1,738
Profit attributable to:
Equity holders of the Company
From continuing operations 403 551 1,627
From discontinued operations - 43 90
Non-controlling interests
From continuing operations 3 7 20
From discontinued operations - 1 1
----------------- ---------- ------------
Group profit for the financial period 406 602 1,738
================= ========== ============
Basic earnings per Ordinary Share 51.3c 73.5c 214.3c
Diluted earnings per Ordinary Share 51.0c 73.1c 212.6c
================= ========== ============
Basic earnings per Ordinary Share
from continuing operations 51.3c 68.1c 203.0c
Diluted earnings per Ordinary Share
from continuing operations 51.0c 67.8c 201.4c
(i) Restated throughout to be presented in US Dollar. See note 1
and note 18 for further details.
(ii) Restated to show the results of our former Europe
Distribution segment in discontinued operations. See note 9 for
further details.
Condensed Consolidated Statement of Comprehensive Income
Unaudited Year ended
Six months ended 31 December
30 June
Restated Restated
2020 2019 2019
$m $m $m
----------------- --------- ----------------
Group profit for the financial period 406 602 1,738
----------------- --------- ----------------
Other comprehensive income
Items that may be reclassified to profit or loss in subsequent
periods:
Currency translation effects (298) 63 472
(Losses)/gains relating to cash flow
hedges (1) 33 27
Tax relating to cash flow hedges - (4) (4)
----------------- --------- ----------------
(299) 92 495
----------------- --------- ----------------
Items that will not be reclassified to profit or loss in subsequent
periods:
Remeasurement of retirement benefit
obligations (84) (148) (19)
Tax relating to retirement benefit
obligations 16 17 (4)
----------------- --------- ----------------
(68) (131) (23)
----------------- --------- ----------------
Total other comprehensive income
for the financial period (367) (39) 472
----------------- --------- ----------------
Total comprehensive income for the
financial period 39 563 2,210
================= ========= ================
Attributable to:
Equity holders of the Company 30 545 2,174
Non-controlling interests 9 18 36
----------------- --------- ----------------
Total comprehensive income for the
financial period 39 563 2,210
================= ========= ================
Condensed Consolidated Balance Sheet
Unaudited Unaudited As at
As at 30 As at 31 December
June 30 June
Restated Restated
2020 2019 2019
$m $m $m
ASSETS
Non-current assets
Property, plant and equipment 19,099 20,308 19,574
Intangible assets 9,378 9,702 9,475
Investments accounted for using the
equity method 737 1,344 775
Other financial assets 13 26 13
Other receivables 299 205 356
Derivative financial instruments 190 89 85
Deferred income tax assets 85 77 76
---------- ---------- --------------
Total non-current assets 29,801 31,751 30,354
---------- ---------- --------------
Current assets
Inventories 2,940 3,673 3,080
Trade and other receivables 4,917 5,984 4,231
Current income tax recoverable 29 24 22
Derivative financial instruments 27 10 7
Cash and cash equivalents 10,088 1,592 4,218
Total current assets 18,001 11,283 11,558
---------- ---------- --------------
Total assets 47,802 43,034 41,912
========== ========== ==============
EQUITY
Capital and reserves attributable
to the Company ' s equity holders
Equity share capital 335 352 335
Preference share capital 1 1 1
Share premium account 7,493 7,493 7,493
Treasury Shares and own shares (540) (1,378) (360)
Other reserves 393 351 411
Foreign currency translation reserve (506) (606) (202)
Retained income 11,108 11,578 11,350
---------- ---------- --------------
Capital and reserves attributable
to the Company's equity holders 18,284 17,791 19,028
Non-controlling interests 642 620 607
---------- ---------- --------------
Total equity 18,926 18,411 19,635
---------- ---------- --------------
LIABILITIES
Non-current liabilities
Lease liabilities 1,326 1,709 1,393
Interest-bearing loans and borrowings 15,108 10,022 9,211
Derivative financial instruments 5 - 1
Deferred income tax liabilities 2,609 2,518 2,627
Other payables 626 541 545
Retirement benefit obligations 569 652 480
Provisions for liabilities 865 832 854
---------- ---------- --------------
Total non-current liabilities 21,108 16,274 15,111
---------- ---------- --------------
Current liabilities
Lease liabilities 283 407 304
Trade and other payables 5,031 5,773 4,916
Current income tax liabilities 612 560 565
Interest-bearing loans and borrowings 1,329 1,164 916
Derivative financial instruments 18 25 17
Provisions for liabilities 495 420 448
Total current liabilities 7,768 8,349 7,166
---------- ---------- --------------
Total liabilities 28,876 24,623 22,277
---------- ---------- --------------
Total equity and liabilities 47,802 43,034 41,912
========== ========== ==============
Condensed Consolidated Statement of Changes in Equity
Attributable to the equity holders of
the Company
-----------------------------------------------------------------
Treasury Foreign
Issued Share Shares/ currency Non-
share premium own Other translation Retained controlling Total
capital account shares reserves reserve income interests equity
$m $m $m $m $m $m $m $m
-------- -------- --------- --------- ------------ --------- ------------ -------
For the financial period ended 30
June 2020 (unaudited)
At 1 January 2020 336 7,493 (360) 411 (202) 11,350 607 19,635
Group profit for
the financial period - - - - - 403 3 406
Other comprehensive
income - - - - (304) (69) 6 (367)
-------- -------- --------- --------- ------------ --------- ------------ -------
Total comprehensive
income - - - - (304) 334 9 39
Share-based payment
expense - - - 47 - - - 47
Shares acquired
by CRH plc (Treasury
Shares) - - (220) - - - - (220)
Treasury Shares/own
shares reissued - - 4 - - (4) - -
Shares acquired
by the Employee
Benefit Trust (own
shares) - - (29) - - - - (29)
Shares distributed
under the Performance
Share Plan Awards - - 65 (65) - - - -
Tax relating to
share-based payment
expense - - - - - (7) - (7)
Share option exercises - - - - - 3 - 3
Dividends - - - - - (537) (5) (542)
Transactions involving
non-controlling
interests - - - - - (31) 31 -
At 30 June 2020 336 7,493 (540) 393 (506) 11,108 642 18,926
======== ======== ========= ========= ============ ========= ============ =======
For the financial period ended 30 June 2019 (unaudited)
At 1 January 2019
(restated) 353 7,493 (920) 378 (659) 11,705 602 18,952
Group profit for
the financial period - - - - - 594 8 602
Other comprehensive
income - - - - 53 (102) 10 (39)
---- ------ -------- ----- ------ ------- ---- -------
Total comprehensive
income - - - - 53 492 18 563
Share-based payment
expense - - - 43 - - - 43
Shares acquired
by CRH plc (Treasury
Shares) - - (492) - - (128) - (620)
Treasury Shares/own
shares reissued - - 32 - - (32) - -
Shares acquired
by the Employee
Benefit Trust (own
shares) - - (68) - - - - (68)
Shares distributed
under the Performance
Share Plan Awards - - 70 (70) - - - -
Tax relating to
share-based payment
expense - - - - - 1 - 1
Share option exercises - - - - - 17 - 17
Dividends - - - - - (477) (6) (483)
Non-controlling
interests arising
on acquisition of
subsidiaries - - - - - - 2 2
Transactions involving
non-controlling
interests - - - - - - 4 4
---- ------ -------- ----- ------ ------- ---- -------
At 30 June 2019
(restated) 353 7,493 (1,378) 351 (606) 11,578 620 18,411
==== ====== ======== ===== ====== ======= ==== =======
Condensed Consolidated Statement of Changes in Equity -
continued
Attributable to the equity holders of
the Company
-----------------------------------------------------------------
Treasury Foreign
Issued Share Shares/ currency Non-
share premium own Other translation Retained controlling Total
capital account shares reserves reserve income interests Equity
$m $m $m $m $m $m $m $m
-------- -------- --------- --------- ------------ --------- ------------ -------
For the financial year ended 31 December
2019
At 1 January 2019
(restated) 353 7,493 (920) 378 (659) 11,705 602 18,952
Group profit for
the financial year - - - - - 1,717 21 1,738
Other comprehensive
income - - - - 457 - 15 472
-------- -------- --------- --------- ------------ --------- ------------ -------
Total comprehensive
income - - - - 457 1,717 36 2,210
Share-based payment
expense - - - 86 - - - 86
Shares acquired
by CRH plc (Treasury
Shares) - - (886) - - - - (886)
Treasury Shares/own
shares reissued - - 42 - - (42) - -
Shares acquired
by the Employee
Benefit Trust (own
shares) - - (68) - - - - (68)
Shares distributed
under the Performance
Share Plan Awards - - 70 (70) - - - -
Cancellation of
Treasury Shares (17) - 1,402 17 - (1,402) - -
Tax relating to
share-based payment
expense - - - - - 11 - 11
Share option exercises - - - - - 22 - 22
Dividends - - - - - (652) (11) (663)
Disposal of non-controlling
interests - - - - - - (9) (9)
Non-controlling
interests arising
on acquisition of
subsidiaries - - - - - - 1 1
Transactions involving
non-controlling
interests - - - - - (9) (12) (21)
At 31 December 2019
(restated) 336 7,493 (360) 411 (202) 11,350 607 19,635
======== ======== ========= ========= ============ ========= ============ =======
Condensed Consolidated Statement of Cash Flows
Unaudited Year ended
Six months ended 30 31 December
June
Restated Restated
2020 2019 2019
$m $m $m
-------------------- --------- ------------
Cash flows from operating activities
Profit before tax from continuing
operations 518 717 2,181
Profit before tax from discontinued
operations - 56 117
-------------------- --------- ------------
Profit before tax 518 773 2,298
Finance costs (net) 252 266 498
Share of equity accounted investments'
loss/(profit) 3 (23) (81)
(Profit)/loss on disposals (9) (168) 191
-------------------- --------- ------------
Group operating profit 764 848 2,906
Depreciation charge 789 859 1,721
Amortisation of intangible assets 37 33 66
Impairment charge - - 9
Share-based payment expense 47 43 86
Other (primarily pension payments) 8 8 (3)
Net movement on working capital and
provisions (356) (1,132) (71)
---------
Cash generated from operations 1,289 659 4,714
Interest paid (including leases) (209) (228) (469)
Corporation tax paid (72) (125) (364)
---------
Net cash inflow from operating activities 1,008 306 3,881
-------------------- --------- ------------
Cash flows from investing activities
Proceeds from disposals (net of cash
disposed and deferred proceeds) 69 415 2,343
Interest received 2 8 22
Dividends received from equity accounted
investments 10 16 39
Purchase of property, plant and equipment (514) (718) (1,374)
Acquisition of subsidiaries (net
of cash acquired) (96) (322) (727)
Other investments and advances (1) (9) (32)
Deferred and contingent acquisition
consideration paid (32) (30) (54)
Deferred and contingent divestment 115 - -
consideration received
-------------------- --------- ------------
Net cash (outflow)/inflow from investing
activities (447) (640) 217
-------------------- --------- ------------
Cash flows from financing activities
Proceeds from exercise of share options 3 17 22
Transactions involving non-controlling
interests - 4 (21)
Increase in interest-bearing loans
and borrowings 6,174 1,077 106
Net cash flow arising from derivative
financial instruments 51 (11) (40)
Repayment of interest-bearing loans
and borrowings (26) (592) (640)
Repayment of lease liabilities* (132) (190) (356)
Treasury Shares/own shares purchased (249) (560) (954)
Dividends paid to equity holders
of the Company (537) (477) (652)
Dividends paid to non-controlling
interests (5) (6) (11)
-------------------- --------- ------------
Net cash inflow/(outflow) from financing
activities 5,279 (738) (2,546)
-------------------- --------- ------------
Increase/(decrease) in cash and cash
equivalents 5,840 (1,072) 1,552
==================== ========= ============
Reconciliation of opening to closing
cash and cash equivalents
Cash and cash equivalents at 1 January 4,218 2,686 2,686
Translation adjustment 30 (22) (20)
Increase/(decrease) in cash and cash
equivalents 5,840 (1,072) 1,552
-------------------- --------- ------------
Cash and cash equivalents at 30 June 10,088 1,592 4,218
==================== ========= ============
* Repayment of lease liabilities capitalised under IFRS 16
Leases in the period to 30 June 2020 amounted to $167 million (30
June 2019: $229 million; 31 December 2019: $433 million), of which
$35 million (30 June 2019: $39 million; 31 December 2019: $77
million) related to interest paid which is presented in cash flows
from operating activities.
Supplementary Information
Selected Explanatory Notes to the Condensed Consolidated Interim
Financial Statements
1. Basis of Preparation and Accounting Policies
Basis of Preparation
The financial information presented in this report has been
prepared in accordance with the Group's accounting policies under
International Financial Reporting Standards (IFRS) as approved by
the European Union, as issued by the International Accounting
Standards Board (IASB) and in accordance with IAS 34 Interim
Financial Reporting.
These Condensed Consolidated Interim Financial Statements do not
include all the information and disclosures required in the Annual
Consolidated Financial Statements and should be read in conjunction
with the Group's 2019 Annual Report and Form 20-F.
The accounting policies and methods of computation employed in
the preparation of the Condensed Consolidated Interim Financial
Statements are the same as those employed in the preparation of the
Annual Consolidated Financial Statements in respect of the year
ended 31 December 2019, except for the change in presentation
currency and adoption of new standards, interpretations and
standard amendments effective as of 1 January 2020 as set out
below.
Change in presentation currency
On 28 February 2020 the Group announced that from the beginning
of the current financial year it would be changing the currency in
which it presents its financial results from euro to US Dollar.
Within our current portfolio of businesses, our euro denominated
earnings, while sizeable, are a relatively lower proportion of
overall earnings. To reduce the potential for foreign exchange
volatility in our future reported earnings, the Board determined
that, with effect from 1 January 2020, CRH will present its results
in US Dollar. Given the current composition of the Group's
activities, this change is expected to reduce the impact of
currency movements on reported results.
Accordingly, to satisfy the requirements of IAS 21The Effects of
Changes in Foreign Exchange Rates, the reported results for the six
months ended 30 June 2019 and for the year ended 31 December 2019
have been translated from euro to US Dollar using the following
procedures:
-- Assets and liabilities denominated in non-US Dollar
currencies were translated into US Dollars at the relevant closing
rates of exchange;
-- The trading results of subsidiaries where the functional
currency was other than US Dollar were translated into US Dollar at
the relevant average rates of exchange;
-- Movements in other reserves were translated into US Dollar at
the relevant average rates of exchange;
-- Significant business divestments were translated at the spot
rates prevailing on the date of divestment;
-- Share capital, share premium, Treasury Shares/own shares and
dividends were translated at the historic rates prevailing on the
date of each transaction; and
-- The cumulative translation reserve was set to nil at 1
January 2004, the date of transition to IFRS, and has been restated
on the basis that the Group has reported in US Dollars since that
date.
A change in presentation currency represents a change in
accounting policy which is accounted for retrospectively. The
average and closing rates used for this exercise are provided
overleaf.
1. Basis of Preparation and Accounting Policies - continued
Translation of Foreign Currencies
The financial information is presented in US Dollar. Results and
cash flows of operations based in non-US Dollar countries have been
translated into US Dollar at average exchange rates for the period,
and the related balance sheets have been translated at the rates of
exchange ruling at the balance sheet date. The principal rates used
for translation of results, cash flows and balance sheets into US
Dollar were:
Average Period end
Six months ended Year ended Six months ended Year ended
30 June 31 December 30 June 31 December
USD 1 = 2020 2019 2019 2020 2019 2019
Brazilian Real 4.9150 3.8429 3.9423 5.4045 3.8235 4.0197
Canadian Dollar 1.3650 1.3338 1.3269 1.3682 1.3087 1.2994
Chinese Renminbi 7.0331 6.7869 6.9098 7.0742 6.8704 6.9615
Euro 0.9078 0.8851 0.8933 0.8932 0.8787 0.8902
Hungarian Forint 313.4895 283.6075 290.5732 318.2500 284.1740 294.2229
Indian Rupee 74.1511 70.0336 70.4208 75.5102 69.0018 71.3788
Philippine Peso 50.6487 52.2047 51.7955 49.8210 51.2610 50.6498
Polish Zloty 4.0073 3.7989 3.8389 3.9795 3.7343 3.7892
Pound Sterling 0.7939 0.7732 0.7841 0.8150 0.7879 0.7573
Romanian Leu 4.3733 4.1970 4.2388 4.3228 4.1602 4.2576
Serbian Dinar 106.7435 104.5147 105.2592 105.0205 103.6340 104.8813
Swiss Franc 0.9658 0.9997 0.9937 0.9516 0.9758 0.9662
Ukrainian Hryvnia 26.0077 26.9013 25.8045 26.6989 26.1626 23.8007
Adoption of IFRS and International Financial Reporting
Interpretations Committee (IFRIC) interpretations
The following standard amendments became effective for the Group
as of 1 January 2020:
-- Amendments to IFRS 3 Business Combinations - Definition of a business
-- Amendments to IFRS 9 Financial instruments, IAS 39 Financial
instruments: Recognition and measurement and IFRS 7 Financial
instruments: Disclosures - Interest Rate Benchmark Reform
-- Amendments to IAS 1 Presentation of Financial Statements and
IAS 8 Accounting Policies, Changes in Accounting Estimates and
Errors - Definition of material
-- Amendments to References to the Conceptual Framework in IFRS Standards
The standard amendments did not result in a material impact on
the Group's results.
The following standard amendment was issued in May 2020
effective for annual reporting periods beginning on or after 1 June
2020 with earlier application permitted:
-- Amendments to IFRS 16 Leases - COVID-19-related rent
concessions. The amendment, which would not have been material for
the Group for the first half of 2020, has not yet been adopted.
IFRS and IFRIC interpretations being adopted in subsequent
years
-- IFRS 17 Insurance Contracts is expected to be effective for
reporting periods beginning on or after 1 January 2023, with
presentation of comparative figures required. The Group is
currently evaluating the impact of this standard on future
periods.
There are no other IFRS or IFRIC interpretations that are
effective subsequent to the CRH 2020 financial year end that would
have a material impact on the results or financial position of the
Group.
1. Basis of Preparation and Accounting Policies - continued
Significant Estimates, Assumptions and Judgements
The preparation of the Condensed Consolidated Interim Financial
Statements in accordance with IFRS requires management to make
certain estimates, assumptions and judgements that affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. Management believes that
the estimates, assumptions and judgements upon which it relies are
reasonable based on the information available to it at the time
that those estimates, assumptions and judgements are made.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Changes in accounting estimates may be necessary if there
are changes in the circumstances or experiences on which the
estimate was based or as a result of new information.
The significant judgements, the key sources of estimation
uncertainty and underlying assumptions applied in the preparation
of the Condensed Consolidated Interim Financial Statements were the
same as those applied in preparing the Consolidated Financial
Statements for the year ended 31 December 2019 with the addition of
assessing the impact of the COVID-19 pandemic as set out below.
COVID-19
The current health emergency caused by the global spread of
COVID-19 has significant implications for the economies and
construction markets in which we operate, and the Group has taken
measures in response to the pandemic as outlined on page 2.
The Group has considered the impact of these measures with
respect to all significant estimates, assumptions and judgements it
makes in the application of the Group's accounting policies and is
discussed further below.
Impairment
As at 30 June 2020, the Group performed a review for potential
indicators of impairment relating to goodwill of $9.0 billion (30
June 2019: $9.3 billion) allocated to cash-generating units
("CGUs"). When reviewing for indicators of impairment in interim
periods, the Group considers, amongst others, the results of the
last annual impairment test, the level of headroom and financial
performance in the first half of the year.
For the current interim period this review also considered the
impact of COVID-19 on the long-term outlook for our businesses
which currently remains positive and supports our CGU valuations.
As a result, no impairment indicators were identified. The carrying
values of items of property, plant and equipment were also reviewed
for indicators of impairment. These reviews did not give rise to
any impairment charges in the first half of 2020 (H1 2019: $nil
million).
While we have not identified any impairments, uncertainty
remains in relation to the pace and extent of recovery in some
challenging markets (particularly in our Europe Materials segment)
with the medium-term outlook dependent on an improving health
situation. We will continue to monitor our assessment of the
economic environments and in particular the impact of the COVID-19
pandemic and our consequential management actions, to determine
whether they have an impact on the long-term valuation of our CGUs.
Accordingly, we will update our impairment reviews as part of the
finalisation of the full-year Consolidated Financial Statements for
2020.
Other significant estimates and judgements
The impact of COVID-19 on the significant judgements, key
sources of estimation uncertainty and underlying assumptions
applied in provisions for liabilities, retirement benefit
obligations and taxation has also been considered and the impacts
are not considered material in the context of the 2020 Condensed
Consolidated Interim Financial Statements.
Going Concern
The time period that the Directors have considered in evaluating
the appropriateness of the going concern basis in preparing the
2020 Condensed Consolidated Interim Financial Statements is a
period of at least twelve months from the date of approval of these
financial statements (the 'period of assessment').
The Group has considerable financial resources and a large
number of customers and suppliers across different geographic areas
and industries. The increase in cash and liquidity available to the
Group including our ongoing ability to access the debt markets, the
quantum of our liquidity facilities, the absence of financial
covenants associated with our debt obligations and the continuing
maintenance of strong investment grade credit ratings demonstrate
the significant financial strength and resilience of the Group. No
concerns or material uncertainties have been identified as part of
our assessment, which also considered the impact of the COVID-19
pandemic.
Having assessed the relevant business risks including the
pandemic risk identified and discussed in our Principal Risks and
Uncertainties on page 38, the Directors believe that the Group is
well placed to manage these risks successfully and they have a
reasonable expectation that CRH plc, and the Group as a whole, has
adequate financial and other resources to continue in operational
existence for the period of assessment with no material
uncertainties. For this reason, the Directors continue to adopt the
going concern basis in preparing the Condensed Consolidated Interim
Financial Statements.
2. Key Components of Performance for the First Half of 2020
Continuing operations
Operating Profit on Finance costs Assoc. and Pre-tax
$ million Sales revenue EBITDA profit disposals (net) JV PAT (i) profit
First half
2019 12,847 1,621 796 166 (261) 16 717
Exchange
effects (153) (11) (2) (1) 2 - (1)
-------------- ------- -------------- ------------- -------------- ------------- --------------
2019 at 2020
rates 12,694 1,610 794 165 (259) 16 716
Incremental
impact in 2020
of:
2019/2020
acquisitions 231 42 17 - (6) - 11
2019/2020
divestments (277) (24) (9) (127) (2) (7) (145)
One-offs - (65) (65) - - - (65)
Organic (433) 27 27 (29) 15 (12) 1
First half
2020 12,215 1,590 764 9 (252) (3) 518
============== ======= ============== ============= ============== ============= ==============
% Total change -5% -2% -4% -28%
% Organic
change -3% 2% 3% -
(i) CRH's share of after-tax result of joint ventures and associated undertakings.
3. Seasonality
Activity in the construction industry is characterised by
cyclicality and is dependent to a considerable extent on the
seasonal impact of weather in the Group ' s operating locations,
with activity in some markets reduced significantly in winter due
to inclement weather. As shown in the table above, the Group ' s
operations exhibit a high degree of seasonality and can be
significantly impacted by the timing of acquisitions and
divestments; for example first half EBITDA from continuing
operations in the 2019 financial period accounted for 36% of the
EBITDA from continuing operations reported for the full year of
2019. Due to the impact of COVID-19, the performance of the Group
in the second half of 2020 will also be dependent on an improving
health situation across our markets.
4. Revenue
Disaggregated revenue
In the following tables, revenue is disaggregated by primary
geographic market and by principal activities and products. Due to
the diversified nature of the Group, the basis on which management
reviews its businesses varies across the Group. Geography is the
primary basis for the Americas Materials and Europe Materials
businesses; while activities and products are used for the Building
Products businesses.
Revenue from external customers (as defined in IFRS 8 Operating
Segments) attributable to the country of domicile and all foreign
countries of operation greater than 10% are included below. Further
operating segment disclosures are set out in note 5.
Six months ended 30 June 2020 - Unaudited Six months ended 30 June 2019 - Unaudited
-------------------------------------------- ---------------------------------------------
Americas Europe Building Total Americas Europe Building Total
Materials Materials Products Materials Materials Products
$m $m $m $m $m $m $m $m
---------- ----------- ---------- ------- ---------- ----------- ----------- -------
Primary geographic
markets
Continuing operations
Republic of Ireland
(Country of domicile) - 243 - 243 - 320 - 320
United Kingdom - 1,368 79 1,447 - 1,707 138 1,845
Rest of Europe (i) - 2,238 484 2,722 - 2,311 661 2,972
United States 4,023 - 2,858 6,881 4,050 - 2,663 6,713
Rest of World (ii) 456 221 245 922 483 277 237 997
---------- ----------- ---------- ------- ---------- ----------- ----------- -------
Total Group from
continuing operations 4,479 4,070 3,666 12,215 4,533 4,615 3,699 12,847
========== =========== ========== ========== =========== ===========
Discontinued
operations
Rest of Europe (i) -
Europe Distribution - 2,086
------- -------
Total Group 12,215 14,933
======= =======
Footnotes (i) and (ii) appear on page 20.
4. Revenue - continued
Six months ended 30 June 2020 - Unaudited Six months ended 30 June 2019 - Unaudited
------------------------------------------------ ------------------------------------------------
Americas Europe Building Total Americas Europe Building Total
Materials Materials Products Materials Materials Products
(iii) (iii) (iii) (iii)
$m $m $m $m $m $m $m $m
----------- ------------ ------------ ------- ----------- ------------ ------------ -------
Principal
activities and
products
Continuing
operations
Cement, lime
and cement
products 615 1,327 - 1,942 608 1,445 - 2,053
Aggregates,
asphalt and
readymixed
products 2,353 1,370 - 3,723 2,351 1,687 - 4,038
Construction
contract
activities* 1,511 746 82 2,339 1,574 855 104 2,533
Architectural
products - 548 1,808 2,356 - 528 1,703 2,231
Infrastructure
products (iv) - 79 663 742 - 100 673 773
Construction
accessories
(iv) - - 302 302 - - 333 333
Architectural
glass and
glazing
systems and
wholesale
hardware
distribution - - 811 811 - - 886 886
----------- ------------ ------------ ------- ----------- ------------ ------------ -------
Total Group
from
continuing
operations 4,479 4,070 3,666 12,215 4,533 4,615 3,699 12,847
=========== ============ ============ =========== ============ ============
Discontinued
operations
General
Builders
Merchants, DIY
Germany and
Sanitary,
Heating &
Plumbing -
Europe
Distribution - 2,086
------- -------
Total Group 12,215 14,933
======= =======
* Revenue principally recognised over time. Construction
contracts are generally completed within the same financial
reporting year.
Footnotes to revenue disaggregation on pages 19 & 20
(i) The Rest of Europe principally includes Austria, Belgium,
Czech Republic, Denmark, Estonia, Finland, France, Germany,
Hungary, Luxembourg, Netherlands, Poland, Romania, Serbia,
Slovakia, Spain, Sweden, Switzerland and Ukraine.
(ii) The Rest of World principally includes Australia, Brazil,
Canada and the Philippines.
(iii) Americas Materials and Europe Materials both operate
vertically integrated businesses, which are founded in
resource-backed cement and aggregates assets and which support the
manufacture and supply of aggregates, asphalt, cement, readymixed
and precast concrete and landscaping products. Accordingly, for the
purpose of disaggregation of revenue we have included certain
products together, as this is how management review and evaluate
this business line.
(iv) Comparative amounts for 2019 have been restated where
necessary to reflect the disaggregation of revenue for our
construction accessories business.
5. Segment Information
Unaudited Year ended
Six months ended 30 June 31 December
2020 2019 2019
$m % $m % $m %
------- ------ ------- ------ --------- -------
Revenue
Continuing operations
Americas Materials 4,479 36.7 4,533 30.4 11,626 36.7
Europe Materials 4,070 33.3 4,615 30.9 9,509 30.0
Building Products 3,666 30.0 3,699 24.8 6,997 22.1
Total Group from continuing
operations 12,215 100.0 12,847 86.1 28,132 88.8
Discontinued operations - Europe
Distribution - - 2,086 13.9 3,557 11.2
Total Group 12,215 100.0 14,933 100.0 31,689 100.0
======= ====== ======= ====== ========= =======
Group EBITDA
Continuing operations
Americas Materials 667 41.9 567 32.6 2,194 46.7
Europe Materials 338 21.3 521 29.9 1,208 25.7
Building Products 585 36.8 533 30.7 1,076 22.8
Total Group from continuing
operations 1,590 100.0 1,621 93.2 4,478 95.2
Discontinued operations - Europe
Distribution - - 119 6.8 224 4.8
------- ------ ------- ------ --------- -------
Total Group 1,590 100.0 1,740 100.0 4,702 100.0
======= ====== ======= ====== ========= =======
Depreciation, amortisation
and impairment
Continuing operations
Americas Materials 378 45.8 378 42.5 771 42.9
Europe Materials 276 33.4 285 31.9 586 32.6
Building Products 172 20.8 162 18.1 328 18.3
Total Group from continuing
operations 826 100.0 825 92.5 1,685 93.8
Discontinued operations - Europe
Distribution - - 67 7.5 111 6.2
------- ------ ------- ------ --------- -------
Total Group 826 100.0 892 100.0 1,796 100.0
======= ====== ======= ====== ========= =======
Group operating profit
Continuing operations
Americas Materials 289 37.8 189 22.3 1,423 49.0
Europe Materials 62 8.1 236 27.8 622 21.4
Building Products 413 54.1 371 43.8 748 25.7
Total Group from continuing
operations 764 100.0 796 93.9 2,793 96.1
Discontinued operations - Europe
Distribution - - 52 6.1 113 3.9
------- ------ ------- ------ --------- -------
Total Group 764 100.0 848 100.0 2,906 100.0
======= ====== ======= ====== ========= =======
5. Segment Information - continued
Unaudited Year ended
Six months ended 30 31 December
June
2020 2019 2019
$m $m $m
---------------- --------------- ------------
Reconciliation of Group operating
profit to profit before tax:
Group operating profit from
continuing operations (analysed
on page 21) 764 796 2,793
Profit/(loss) on disposals (i) 9 166 (189)
---------------- --------------- ------------
Profit before finance costs 773 962 2,604
Finance costs less income (204) (199) (365)
Other financial expense (48) (62) (125)
Share of equity accounted investments'
(loss)/profit (3) 16 67
---------------- --------------- ------------
Profit before tax from continuing
operations 518 717 2,181
================ =============== ============
(i) Profit/(loss) on disposals
- continuing operations
Americas Materials (1) 10 (2)
Europe Materials 3 18 (283)
Building Products 7 138 96
---------------- --------------- ------------
Total Group 9 166 (189)
================ =============== ============
Unaudited Unaudited As at
As at 30 As at 30 31 December
June June
2020 2019 2019
$m % $m % $m %
---------- ------ ---------- ------ ------------ ------
Total assets
Americas Materials 16,586 45.3 17,106 42.9 16,410 44.7
Europe Materials 12,565 34.3 12,973 32.5 13,109 35.7
Building Products 7,482 20.4 9,793 24.6 7,197 19.6
Total Group 36,633 100.0 39,872 100.0 36,716 100.0
====== ====== ======
Reconciliation to total assets
as reported in the Condensed
Consolidated Balance Sheet:
Investments accounted for using
the equity method 737 1,344 775
Other financial assets 13 26 13
Derivative financial instruments
(current and non-current) 217 99 92
Income tax assets (current and
deferred) 114 101 98
Cash and cash equivalents 10,088 1,592 4,218
Total assets 47,802 43,034 41,912
========== ========== ============
6. Earnings per Ordinary Share
The computation of basic and diluted earnings per Ordinary Share
is set out below:
Unaudited Year ended
Six months ended 31 December
30 June
2020 2019 2019
$m $m $m
----------------- ------- ------------
Numerator computations
Group profit for the financial period 406 602 1,738
Profit attributable to non-controlling
interests (3) (8) (21)
----------------- ------- ------------
Profit attributable to ordinary equity
holders of the Company - numerator
for basic/diluted earnings per Ordinary
Share 403 594 1,717
Profit after tax for the financial
period from discontinued operations
- attributable to equity holders of
the Company - 43 90
----------------- ------- ------------
Profit attributable to ordinary equity
holders of the Company - numerator
for basic/diluted earnings per Ordinary
Share from continuing operations 403 551 1,627
----------------- ------- ------------
Number Number Number
of of of
Shares Shares Shares
----------------- ------- ------------
Denominator computations
Weighted average number of Ordinary
Shares (millions) outstanding for
the financial period 785.4 808.7 801.3
Effect of dilutive potential Ordinary
Shares (employee share options) (millions) 4.8 4.4 6.4
----------------- ------- ------------
Denominator for diluted earnings per
Ordinary Share 790.2 813.1 807.7
----------------- ------- ------------
Earnings per Ordinary Share
- basic 51.3c 73.5c 214.3c
- diluted 51.0c 73.1c 212.6c
Earnings per Ordinary Share from continuing
operations
- basic (i) 51.3c 68.1c 203.0c
- diluted 51.0c 67.8c 201.4c
================= ======= ============
(i) Basic earnings per Ordinary Share from continuing operations
were 25% lower than prior year at 51.3c (H1 2019: 68.1c), primarily
reflecting lower profit on divestments.
7. Dividends
Unaudited Year ended
Six months ended 30 31 December
June
2020 2019 2019
-------------------- ------ ------------
Net dividend paid per share (i) 70.0c 59.2c 81.2c
Net dividend declared for the period
(i) 22.0c 22.0c 92.0c
Dividend cover (Earnings per share/Dividend
declared per share) - continuing
and discontinued operations 2.3x 3.3x 2.3x
Dividend cover - continuing operations 2.3x 3.1x 2.2x
(i) The dividends per share disclosed above are presented in US
Dollar. 2019 Interim and final dividends per share declared
previously in euro have been translated to US Dollar using the
dividend record date exchange rate. All future dividends will be
declared in US Dollar.
The Board has decided to maintain the interim dividend at 22.0c
per share in line with prior year. It is proposed to pay the
interim dividend on 25 September 2020 to shareholders registered at
the close of business on 4 September 2020.
The interim dividend will be paid wholly in cash. If
shareholders receive dividend payments in euro or Pounds Sterling,
the exchange rate is expected to be set on Friday, 11 September
2020.
Existing currency elections and currency payment defaults will
remain in place unless revoked or otherwise amended by
shareholders. Therefore, the interim dividend will be paid in euro,
Pounds Sterling and US Dollar to shareholders in accordance with
their existing payment instructions. If no such instructions are in
place, the currency for dividend payments will be based on
shareholders' addresses on CRH's Share Register, or will, in the
case of shares held in the CREST system, continue to be paid
automatically in euro, unless a currency election is made. In
respect of the interim dividend, the latest date for receipt of
currency elections is 4 September 2020.
With effect from the 2020 interim dividend, shareholders holding
their shares in the CREST system will have the option to elect to
receive dividends electronically via the CREST system. CREST
holders wishing to avail of this facility should follow the
applicable procedures in the CREST Operating Manual.
8. Share of Equity Accounted Investments' (Loss)/Profit
Continuing operations
The Group's share of joint ventures' and associates' result
after tax is equity accounted and is presented as a single line
item in the Condensed Consolidated Income Statement; it is analysed
as follows between the principal Condensed Consolidated Income
Statement captions:
Unaudited Year ended
Six months ended 30 31 December
June
2020 2019 2019
$m $m $m
-------------------- ----- ------------
Group share of:
Revenue 479 587 1,399
EBITDA 35 59 153
Operating profit 8 28 87
(Loss)/profit after tax (i) (3) 16 67
==================== ===== ============
Analysis of Group share of (loss)/profit
after tax:
Share of joint ventures' profit after
tax 1 17 46
Share of associates' (loss)/profit
after tax (4) (1) 21
-------------------- ----- ------------
Share of equity accounted investments'
(loss)/profit after tax (3) 16 67
==================== ===== ============
(i) Share of profit after tax including discontinued operations
amounted to $23 million for the six months ended 30 June 2019 (31
December 2019: $81 million).
9. Assets Held for Sale and Discontinued Operations
As disclosed in our 2019 Annual Report and Form 20-F, in October
2019, the Group completed the divestment of its Europe Distribution
business, formerly part of our Building Products segment. With the
exception of our Europe Distribution business in 2019, no other
businesses divested in 2020 or 2019 are considered to be either
separate major lines of business or geographical areas of operation
and therefore do not constitute discontinued operations as defined
in IFRS 5 Non-Current Assets Held for Sale and Discontinued
Operations.
Assets and liabilities that met the IFRS 5 criteria at 30 June
2020 and 30 June 2019 have not been separately disclosed as held
for sale as they were not considered material in the context of the
Group.
R esults of discontinued operations
The results of the discontinued operations included in the Group
profit for the financial period are set out as follows:
Unaudited
Six months ended 30 June
2019
$m
------
Revenue 2,086
======
EBITDA 119
Depreciation (66)
Amortisation (1)
------
Operating profit 52
Profit on disposals 2
------
Profit before finance costs 54
Finance costs (5)
Share of equity accounted investments' profit 7
------
Profit before tax 56
Attributable income tax expense (12)
------
Profit after tax for the financial period from discontinued
operations 44
======
Profit attributable to:
Equity holders of the Company 43
Non-controlling interests 1
------
Profit for the financial period from discontinued operations 44
======
Basic earnings per Ordinary Share from discontinued
operations 5.4c
Diluted earnings per Ordinary Share from discontinued
operations 5.3c
======
Cash flows from discontinued operations
Net cash inflow from operating activities 20
Net cash outflow from investing
activities (10)
Net cash outflow from financing
activities (46)
------
Net cash outflow (36)
======
10. Future Purchase Commitments for Property, Plant and
Equipment
Unaudited Year ended
Six months ended 31 December
30 June
2020 2019 2019
$m $m $m
----------------- ----- ------------
Contracted for but not provided in
these Condensed Consolidated Interim
Financial Statements 309 568 419
================= ===== ============
11. Net Finance Costs
Continuing operations
Unaudited Year ended
Six months ended 31 December
30 June
2020 2019 2019
$m $m $m
----------------- ----- ------------
Finance costs 206 207 387
Finance income (2) (8) (22)
Other financial expense 48 62 125
----------------- ----- ------------
Total net finance costs 252 261 490
================= ===== ============
The overall total is analysed as
follows:
Net finance costs on interest-bearing
loans and borrowings and cash and
cash equivalents 203 196 367
Net cost/(credit) re change in fair
value of derivatives and fixed rate
debt 1 3 (2)
----------------- ----- ------------
Finance costs less income 204 199 365
Unwinding of discount element of
lease liabilities 35 34 69
Unwinding of discount element of
provisions for liabilities 10 13 25
Unwinding of discount applicable
to deferred and contingent acquisition
consideration 11 8 16
Unwinding of discount applicable (14) - -
to deferred and contingent divestment
proceeds
Unwinding of discount applicable 1 - -
to leased mineral reserves
Pension-related finance costs (net) 5 7 15
Total net finance costs 252 261 490
================= ===== ============
12. Net Debt
Components of net debt
Net debt is a non-GAAP measure which we provide to investors as
we believe they find it useful. Net debt comprises lease
liabilities under IFRS 16, cash and cash equivalents, derivative
financial instrument assets and liabilities and interest-bearing
loans and borrowings and enables investors to see the economic
effects of these in total. Net debt is commonly used in
computations such as Net Debt as a % of total equity and Net Debt
as a % of market capitalisation.
Unaudited Unaudited As at
As at 30 As at 30 31 December
June June
2020 2019 2019
$m $m $m
---------- ---------- ------------
Lease liabilities under IFRS 16 (1,609) (2,116) (1,697)
Interest-bearing loans and borrowings (16,437) (11,186) (10,127)
Derivative financial instruments 194 74 74
Cash and cash equivalents 10,088 1,592 4,218
---------- ---------- ------------
Group net debt (7,764) (11,636) (7,532)
========== ========== ============
Unaudited Unaudited As at
As at 30 As at 30 31 December
June June
2020 2019 2019
Reconciliation of opening to closing $m $m $m
net debt:
---------- ---------- ------------
At 1 January (7,532) (7,998) (7,998)
Movement in period
Effect of adopting IFRS 16 - (2,237) (2,237)
Debt, including lease liabilities,
in acquired companies (9) (31) (81)
Debt, including lease liabilities,
in disposed companies - 43 463
Increase in interest-bearing loans
and borrowings (6,174) (1,077) (106)
Net increase in lease liabilities
under IFRS 16 (65) (62) (184)
Net cash flow arising from derivative
financial instruments (51) 11 40
Repayment of interest-bearing loans
and borrowings 26 592 640
Repayment of lease liabilities under
IFRS 16 132 190 356
Mark-to-market adjustment (4) 30 28
Translation adjustment on financing
activities 43 (3) 15
---------- ---------- ------------
Increase in liabilities from financing
activities (6,102) (2,544) (1,066)
Translation adjustment on cash and
cash equivalents 30 (22) (20)
Increase/(decrease) in cash and cash
equivalents 5,840 (1,072) 1,552
At 30 June (7,764) (11,636) (7,532)
========== ========== ============
12. Net Debt - continued
Unaudited Unaudited As at
As at 30 As at 30 31 December
June June
Fair Book Fair Book Fair Book
value value value value Value value
(i) (i) (i)
2020 2019 2019
Net debt $m $m $m $m $m $m
--------- --------- --------- --------- -------- --------
Non-current assets
Derivative financial instruments 190 190 89 89 85 85
Current assets
Derivative financial instruments 27 27 10 10 7 7
Cash and cash equivalents 10,088 10,088 1,592 1,592 4,218 4,218
Non-current liabilities
Interest-bearing loans
and borrowings (15,740) (15,108) (10,375) (10,022) (9,838) (9,211)
Derivative financial instruments (5) (5) - - (1) (1)
Lease liabilities under
IFRS 16 (1,326) (1,326) (1,709) (1,709) (1,393) (1,393)
Current liabilities
Interest-bearing loans
and borrowings (1,329) (1,329) (1,164) (1,164) (916) (916)
Derivative financial instruments (18) (18) (25) (25) (17) (17)
Lease liabilities under
IFRS 16 (283) (283) (407) (407) (304) (304)
--------- --------- --------- --------- -------- --------
Group net debt (8,396) (7,764) (11,989) (11,636) (8,159) (7,532)
========= ========= ========= ========= ======== ========
(i) All interest-bearing loans and borrowings are Level 2 fair value measurements.
Unaudited Unaudited As at
As at As at 31 December
30 June 30 June
2020 2019 2019
Gross debt, net of derivatives, matures $m $m $m
as follows:
---------- ---------- ------------
Within one year 1,603 1,586 1,230
Between one and two years 915 1,566 1,319
Between two and three years 1,520 939 628
Between three and four years 1,376 1,482 994
Between four and five years 5,290 846 798
After five years 7,148 6,809 6,781
---------- ---------- ------------
Total 17,852 13,228 11,750
========== ========== ============
In April 2020, the Group successfully issued a total of EUR2.0
billion in euro denominated bonds at a weighted average maturity of
7 years and with a weighted average interest rate of 1.35%. In July
2020, the Group exercised a par-call option to repay a EUR750
million bond originally due to mature in October 2020.
Market capitalisation
Market capitalisation, calculated as the period-end share price
multiplied by the number of Ordinary Shares in issue, is as
follows:
Unaudited Unaudited As at
As at As at 31 December
30 June 30 June
2020 2019 2019
$m $m $m
---------- ---------- ------------
Market capitalisation - Euronext Dublin
(i) 26,795 26,149 31,640
========== ========== ============
(i) The market capitalisation figure of EUR23.9 billion (30 June
2019: EUR23.0 billion and 31 December 2019: EUR28.2 billion), based
on the euro denominated share price per CRH's listing on Euronext
Dublin, was translated to US Dollar using the relevant closing
rates as noted in the principal foreign exchange rates table in
note 1.
12. Net Debt - continued
Liquidity information - borrowing facilities
The Group manages its borrowing ability by entering into
committed borrowing agreements. Revolving committed bank facilities
are generally available to the Group for periods of up to five
years from the date of inception. The undrawn committed facilities
figures shown in the table below represent the facilities available
to be drawn by the Group at 30 June 2020.
Unaudited Unaudited As at
As at As at 31 December
30 June 30 June
2020 2019 2019
$m $m $m
---------- ---------- ------------
Between one and two years 11 - 13
Between two and three years 5 15 5
Between three and four years - 62 57
Between four and five years - 3,983 3,932
After five years 29 - 48
---------- ---------- ------------
Total 45 4,060 4,055
========== ========== ============
The Group successfully carried out an amendment of its EUR3.5
billion revolving credit facility in March 2020 whereby the Group
extended the maturity date of the facility for a further year to
2025. In April 2020, as a liquidity precaution against the evolving
COVID-19 pandemic, the EUR3.5 billion revolving credit facility was
drawn down in full. EUR1.75 billion has been repaid since the
balance sheet date.
Guarantees
The Company has given letters of guarantee to secure obligations
of subsidiary undertakings as follows: $15.8 billion in respect of
loans and borrowings, bank advances and derivative obligations (30
June 2019: $10.6 billion and 31 December 2019: $9.6 billion) and
$0.4 billion in respect of letters of credit (30 June 2019: $0.4
billion and 31 December 2019: $0.4 billion).
Net debt metrics
The net debt metrics based on net debt as shown on page 27,
EBITDA as defined on page 35 and net debt-related interest as shown
in note 11 are as follows:
Unaudited Year ended
Six months ended 31 December
30 June
2020 2019 2019
----------------- ----- ------------
EBITDA net interest cover
(times) - - six months
continuing operations to 30 June 7.8 8.1 -
- rolling 12
months 12.0 10.7 12.3
EBIT net interest cover
(times) - - six months
continuing operations to 30 June 3.7 4.0 -
- rolling 12
months 7.5 6.7 7.7
Net debt as a percentage
of market capitalisation 29% 45% 24%
Net debt as a percentage
of total equity 41% 63% 38%
13. Fair Value of Financial Instruments
The table below sets out the valuation basis of financial
instruments held at fair value by the Group:
Level 2 (i) Level 3 (i)
---------------------------- ----------------------------
Unaudited As at Unaudited As at
As at 30 As at 30
June 31 December June 31 December
2020 2019 2019 2020 2019 2019
$m $m $m $m $m $m
------ ------ ------------ ------ ------ ------------
Assets measured at fair
value
Fair value hedges - interest
rate swaps 189 87 84 - - -
Cash flow hedges - currency
and commodity forwards 13 9 4 - - -
Net investment hedges -
currency swaps 9 3 3 - - -
Not designated as hedges
(held for trading) - currency
swaps and forwards 6 - 1 - - -
------ ------ ------------ ------ ------ ------------
Total 217 99 92 - - -
====== ====== ============ ====== ====== ============
Liabilities measured at
fair value
Cash flow hedges - currency
and commodity forwards (20) (9) (10) - - -
Net investment hedges -
currency swaps (3) (12) (4) - - -
Not designated as hedges
(held for trading) - currency
swaps and forwards - (4) (4) - - -
Contingent consideration - - - (295) (264) (278)
------ ------ ------------ ------ ------ ------------
Total (23) (25) (18) (295) (264) (278)
====== ====== ============ ====== ====== ============
The carrying amount of trade and other payables approximate
their fair value largely due to the short-term maturities and
nature of these instruments. There were no transfers between Levels
2 and 3 during the periods.
There were no significant changes in contingent consideration
recognised in profit or loss or other comprehensive income in the
current period. Further details in relation to the inputs into
valuation models for contingent consideration are available in the
Group's 2019 Annual Report and Form 20-F.
(i) For financial reporting purposes, fair value measurements
are categorised into Level 1, 2 or 3 based on the degree to which
inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurement in its
entirety.
14. Business Combinations
The acquisitions completed during the period ended 30 June 2020
by reportable segment, together with the completion dates, are
detailed below; these transactions entailed the acquisition of an
effective 100% stake except where indicated to the contrary:
Americas Materials:
Georgia: Chester White Construction, Inc. (12 June); and
Mississippi: WG Construction (19 February).
Europe Materials:
France: Calexy (21 January) and Bras-Panon (31 March); and
Spain: Formigons Palafolls S.L. (10 January).
Building Products:
Colorado: US Mix Co. (21 February);
Minnesota: Suttle Solutions (11 March); and
Tennessee: Highline Products (13 January).
The acquisition balance sheet presented on the following page
reflects the identifiable net assets acquired in respect of
acquisitions completed during 2020, together with adjustments to
provisional fair values (to the extent identified as of 30 June
2020) in respect of acquisitions completed during 2019. The
measurement period for a number of acquisitions completed in 2019,
closed in 2020 with no material adjustments identified.
14. Business Combinations - continued
The identifiable net assets acquired, including adjustments to
provisional fair values, were as follows:
Unaudited Year ended
Six months ended 30 June 31 December
2020 2019 2019
ASSETS $m $m $m
------------------------- ----- ------------
Non-current assets
Property, plant and equipment 35 169 358
Intangible assets 12 38 103
Total non-current assets 47 207 461
------------------------- ----- ------------
Current assets
Inventories 9 27 65
Trade and other receivables (i) 7 31 73
Cash and cash equivalents - 2 11
------------------------- ----- ------------
Total current assets 16 60 149
------------------------- ----- ------------
LIABILITIES
Trade and other payables (3) (33) (82)
Provisions for liabilities - - (7)
Retirement benefit obligations - (1) (1)
Lease liabilities (9) (26) (71)
Interest-bearing loans and borrowings - (5) (10)
Current income tax liabilities - 1 10
Deferred income tax liabilities - (5) -
------------------------- ----- ------------
Total liabilities (12) (69) (161)
------------------------- ----- ------------
Total identifiable net assets at
fair value 51 198 449
Goodwill arising on acquisition
(ii) 52 141 310
Non-controlling interests* - (2) (1)
------------------------- ----- ------------
Total consideration 103 337 758
========================= ===== ============
Consideration satisfied by:
Cash payments 96 324 738
Deferred consideration (stated
at net present cost) 7 9 12
Contingent consideration - 4 8
Total consideration 103 337 758
========================= ===== ============
Net cash outflow arising on acquisition
Cash consideration 96 324 738
Less: cash and cash equivalents
acquired - (2) (11)
------------------------- ----- ------------
Total outflow in the Condensed
Consolidated Statement of Cash
Flows 96 322 727
========================= ===== ============
* Non-controlling interests are measured at the proportionate
share of net assets.
Footnotes (i) and (ii) appear on page 32.
14. Business Combinations - continued
CRH performs a detailed quantitative and qualitative assessment
of each acquisition in order to determine whether it is material
for the purposes of separate disclosure under IFRS 3. None of the
acquisitions completed during the financial period were considered
sufficiently material to warrant separate disclosure of the
attributable fair values. The initial assignment of the fair values
to identifiable assets acquired and liabilities assumed as
disclosed are provisional (principally in respect of property,
plant and equipment) in respect of certain acquisitions due to
timing of close. The fair value assigned to identifiable assets and
liabilities acquired is based on estimates and assumptions made by
management at the time of acquisition. CRH may revise its purchase
price allocation during the subsequent reporting window as
permitted under IFRS 3.
Footnotes to the acquisition balance sheet on page 31
(i) The gross contractual value of trade and other receivables
as at the respective dates of acquisition amounted to $7 million
(30 June 2019: $31 million). The fair value of these receivables is
$7 million (30 June 2019: $31 million), all of which is expected to
be recoverable.
(ii) The principal factor contributing to the recognition of
goodwill on acquisitions entered into by the Group is the
realisation of cost savings and other synergies with existing
entities in the Group which do not qualify for separate recognition
as intangible assets. Due to the asset-intensive nature of
operations in the Americas Materials and Europe Materials business
segments, no significant separately identifiable intangible assets
are recognised on business combinations in these segments. $45
million of the goodwill recognised in respect of acquisitions
completed in 2020 is expected to be deductible for tax purposes (30
June 2019: $109 million).
Acquisition-related costs
Acquisition-related costs, which exclude post-acquisition
integration costs, amounting to $1 million (H1 2019: $2 million)
have been included in operating costs in the Condensed Consolidated
Income Statement.
The following table analyses the 8 acquisitions completed in
2020 (H1 2019: 25 acquisitions) by reportable segment and provides
details of the goodwill and consideration figures arising in each
of those segments:
Six months ended 30 June - Unaudited
-------------------------------------------------------------------
Number of acquisitions Goodwill Consideration
2020 2019 2020 2019 2020 2019
Reportable segments $m $m $m $m
------------- ---------- -------- -------- ------- -------
Continuing operations
Americas Materials 2 16 10 35 23 154
Europe Materials 3 1 - - 6 5
Building Products 3 7 32 83 70 174
Total Group from continuing operations 8 24 42 118 99 333
Discontinued operations
Europe Distribution - 1 - - - 4
Total Group 8 25 42 118 99 337
Adjustments to provisional fair values of prior period acquisitions 10 23 4 -
Total 52 141 103 337
Post-acquisition impact
The post-acquisition impact of acquisitions completed during the
period on the Group's profit for the financial period was as
follows:
Unaudited
Six months ended
30 June
2020 2019
Continuing operations $m $m
Revenue 35 54
Profit before tax for the financial period 2 2
14. Business Combinations - continued
The revenue and profit of the Group for the financial period
determined in accordance with IFRS as though the acquisitions
effected during the period had been at the beginning of the period
would have been as follows:
Pro-forma 2020
CRH Group Pro-forma
2020 excluding Consolidated
2020
acquisitions acquisitions Group
$m $m $m
------------- -------------
Revenue 42 12,180 12,222
Profit before tax for the financial period 3 516 519
There have been no acquisitions completed subsequent to the
balance sheet date which would be individually material to the
Group, thereby requiring disclosure under either IFRS 3 or IAS 10
Events after the Balance Sheet Date. Development updates, giving
details of acquisitions which do not require separate disclosure on
the grounds of materiality, are published periodically.
15. Related Party Transactions
There have been no related party transactions or changes in the
nature and scale of the related party transactions described in the
2019 Annual Report and Form 20-F that could have had a material
impact on the financial position or performance of the Group in the
first six months of 2020.
16. Retirement Benefit Obligations
The Group operates either defined benefit or defined
contribution pension schemes in all of its principal operating
areas.
In consultation with the actuaries to the various defined
benefit pension schemes (including jubilee schemes, long-term
service commitments and post-retirement healthcare obligations,
where relevant), the valuations of the applicable assets and
liabilities have been marked-to-market as at the end of the
financial period, taking account of prevailing bid values, actual
investment returns, corporate bond yields and other matters such as
updated actuarial valuations conducted during the period.
Financial assumptions - scheme liabilities
The discount rates used by the Group's actuaries in the
computation of the pension scheme liabilities and post-retirement
healthcare obligations are as follows:
Unaudited Year ended
Six months ended 30 31 December
June
2020 2019 2019
% % %
Eurozone 1.57 1.46 1.43
United States and Canada 2.57 3.30 3.14
Switzerland 0.35 0.40 0.30
16. Retirement Benefit Obligations - continued
The following table provides a reconciliation of scheme assets
(at bid value) and the actuarial value of scheme liabilities (using
the aforementioned assumptions):
Six months ended 30 June - Unaudited
Assets Liabilities Net liability
2020 2019 2020 2019 2020 2019
$m $m $m $m $m $m
--------
At 1 January 3,013 3,335 (3,493) (3,821) (480) (486)
Administration expenses (i) (2) (2) - - (2) (2)
Current service cost (i) - - (26) (36) (26) (36)
Interest income on scheme assets
(i) 28 39 - - 28 39
Interest cost on scheme liabilities
(i) - - (33) (46) (33) (46)
Arising on acquisition - - - (1) - (1)
Remeasurement adjustments:
-return on scheme assets excluding
interest income (10) 246 - - (10) 246
-actuarial loss from changes
in financial assumptions - - (74) (394) (74) (394)
Employer contributions paid 20 30 - - 20 30
Contributions paid by plan participants 4 8 (4) (8) - -
Benefit and settlement payments (72) (73) 72 73 - -
Translation adjustment (26) 12 34 (14) 8 (2)
At 30 June 2,955 3,595 (3,524) (4,247) (569) (652)
Related deferred income tax
asset 120 128
-------
Net pension liability (449) (524)
(i) The net expense to the Condensed Consolidated Income
Statement for the six months ended 30 June 2019 includes an expense
of $11 million relating to discontinued operations.
17. Taxation
The taxation expense for the interim period is an estimate based
on the expected full year effective tax rate on full year
profits.
18. Statutory Accounts and Audit Opinion
The financial information presented in this interim report does
not represent full statutory accounts as defined by the Companies
Act 2014 and has not been reviewed or audited by the Company's
auditors, Deloitte Ireland LLP. A copy of the full statutory
accounts for the year ended 31 December 2019 presented in euro and
prepared in accordance with IFRS, have been filed with the
Registrar of Companies. Ernst & Young, the Company's previous
auditors, reported on the 31 December 2019 full statutory accounts
and have issued an unqualified audit report. Ernst & Young will
issue an audit opinion on the re-presented US Dollar 2019 financial
statements, as part of the completion of the 2020 statutory
financial statements.
19. Board Approval
This announcement was approved by the Board of Directors of CRH
plc on 19 August 2020.
20. Distribution of Interim Report
This interim report is available on the Group's website
(www.crh.com). A printed copy is available to the public at the
Company's registered office.
Glossary of Alternative Performance Measures
CRH uses a number of alternative performance measures (APMs) to
monitor financial performance. These measures are referred to
throughout the discussion of our reported financial position and
operating performance and are measures which are regularly reviewed
by CRH management.
The APMs as summarised below should not be viewed in isolation
or as an alternative to the equivalent GAAP measure.
The APMs may not be uniformly defined by all companies and
accordingly they may not be directly comparable with similarly
titled measures and disclosures by other companies. Certain
information presented is derived from amounts calculated in
accordance with IFRS but is not itself an expressly permitted GAAP
measure.
EBITDA
EBITDA is defined as earnings before interest, taxes,
depreciation, amortisation, asset impairment charges, profit on
disposals and the Group's share of equity accounted investments'
result after tax. It is quoted by management, in conjunction with
other GAAP and non-GAAP financial measures, to aid investors in
their analysis of the performance of the Group and to assist
investors in the comparison of the Group's performance with that of
other companies.
EBITDA and operating profit by segment are monitored by
management in order to allocate resources between segments and to
assess performance. Given that net finance costs and income tax are
managed on a centralised basis, these items are not allocated
between operating segments for the purpose of the information
presented to the Chief Operating Decision Maker (Group Chief
Executive and Finance Director). EBITDA margin is calculated by
expressing EBITDA as a percentage of revenue.
Operating profit (EBIT) is defined as earnings before interest,
taxes, profit on disposals and the Group's share of equity
accounted investments' result after tax.
A reconciliation of Group profit before tax to EBITDA is
presented below.
Continuing Operations
Unaudited Year ended
Six months ended 30 June 31 December
2020 2019 2019
$m $m $m
Group profit for the financial period 406 558 1,647
Income tax expense - estimated at interim 112 159 534
Profit before tax 518 717 2,181
Share of equity accounted investments' loss/(profit) 3 (16) (67)
Other financial expense 48 62 125
Finance costs less income 204 199 365
Profit before finance costs 773 962 2,604
(Profit)/loss on disposals (9) (166) 189
Group operating profit 764 796 2,793
Depreciation charge 789 793 1,613
Amortisation of intangibles 37 32 64
Impairment charge - - 8
EBITDA 1,590 1,621 4,478
Glossary of Alternative Performance Measures - continued
EBITDA Net Interest Cover
EBITDA net interest cover is used by management as a measure
which matches the earnings and cash generated by the business to
the underlying funding costs. EBITDA net interest cover is
presented to provide investors with a greater understanding of the
impact of CRH's debt and financing arrangements.
It is calculated below:
Continuing Operations
Unaudited Year ended
Six months ended 31 December
30 June
2020 2019 2019
$m $m $m
-------------
Interest
Finance costs (i) 206 207 387
Finance income (i) (2) (8) (22)
Net interest 204 199 365
EBITDA 1,590 1,621 4,478
EBITDA net interest cover (EBITDA divided
by net interest) 7.8x 8.1x 12.3x
Unaudited
Rolling 12 months
ended 30 June
2020 2019
$m $m
--------- --------
Interest - continuing operations
Net interest - full year prior year (2019
and 2018) 365 360
Net interest - H1 prior year (2019 and
2018) (199) (174)
Net interest - H2 prior year (2019 and
2018) 166 186
Net interest - H1 current year (2020
and 2019) 204 199
Net interest - rolling 12 months to
30 June 370 385
EBITDA - continuing operations
EBITDA - full year prior year (2019 and
2018) 4,478 3,799
EBITDA - H1 prior year (2019 and 2018) (1,621) (1,299)
EBITDA - H2 prior year (2019 and 2018) 2,857 2,500
EBITDA - H1 current year (2020 and 2019) 1,590 1,621
EBITDA - rolling 12 months to 30 June 4,447 4,121
Times Times
EBITDA net interest cover (EBITDA divided
by net interest) 12.0 10.7
(i) These items appear on the Condensed Consolidated Income
Statement on page 9.
EBIT net interest cover is the ratio of EBIT to net debt-related
interest costs.
Glossary of Alternative Performance Measures - continued
Net Debt and Net Debt/EBITDA
Net debt is used by management as it gives a more complete
picture of the Group's current debt situation than total
interest-bearing loans and borrowings. Net debt is provided to
enable investors to see the economic effect of gross debt, related
hedges and cash and cash equivalents in total. Net debt is a
non-GAAP measure and comprises current and non-current
interest-bearing loans and borrowings, lease liabilities under IFRS
16, cash and cash equivalents and current and non-current
derivative financial instruments.
Net Debt/EBITDA is monitored by management and is useful to
investors in assessing the Company's level of indebtedness relative
to its profitability and cash-generating capabilities. It is the
ratio of Net Debt to EBITDA and is calculated below:
Year ended
31 December
2019
$m
------------
Net debt
Lease liabilities under IFRS 16 (i) (1,697)
Interest-bearing loans and borrowings (i) (10,127)
Derivative financial instruments (net) (i) 74
Cash and cash equivalents (i) 4,218
Group net debt (7,532)
EBITDA - from continuing operations 4,478
Times
------------
Net debt divided by EBITDA - from continuing operations 1.7
============
(i) These items appear in note 12 on page 27.
Organic Revenue, Organic Operating Profit and Organic EBITDA
The terms 'like-for-like' (LFL) and 'organic' are used
interchangeably throughout this report.
Because of the impact of acquisitions, divestments, exchange
translation and other non-recurring items on reported results each
period, the Group uses organic revenue, organic operating profit
and organic EBITDA as additional performance indicators to assess
performance of pre-existing operations each period.
Organic revenue, organic operating profit and organic EBITDA are
arrived at by excluding the incremental revenue, operating profit
and EBITDA contributions from current and prior year acquisitions
and divestments, the impact of exchange translation and the impact
of any non-recurring items. Organic EBITDA margin is calculated by
expressing organic EBITDA as a percentage of organic revenue.
In the Business Performance review on pages 1 to 7, changes in
organic revenue, organic operating profit and organic EBITDA are
presented as additional measures of revenue, operating profit and
EBITDA to provide a greater understanding of the performance of the
Group. A reconciliation of the changes in organic revenue, organic
operating profit and organic EBITDA to the changes in total
revenue, operating profit and EBITDA for the Group and by segment
is presented with the discussion of each segment's performance in
tables contained in the segment discussion commencing on page
3.
Principal Risks and Uncertainties
Under Section 327(1)(b) of the Companies Act 2014 and Regulation
5(4)(c)(ii) of the Transparency (Directive 2004/109/EC) Regulations
2007, the Group is required to give a description of the principal
risks and uncertainties which it faces. These risks and
uncertainties reflect the international scope of the Group's
operations and the Group's decentralised structure. During the
course of 2020, new risks and uncertainties may materialise
attributable to changes in markets, regulatory environments and
other factors and existing risks and uncertainties may become less
relevant.
Principal Strategic Risks and Uncertainties
Industry cyclicality and adverse economic conditions:
Construction activity, and therefore demand for the Group's
products, is inherently cyclical as it is influenced by global and
national economic circumstances, governments' ability to fund
infrastructure projects, consumer sentiment and weather conditions.
The Group may also be negatively impacted by unfavourable swings in
fuel and other commodity/raw material prices. Failure to predict
and plan for cyclical events or adverse economic conditions could
negatively impact financial performance.
Portfolio management: The Group may engage in acquisition and
divestment activity during the year as part of the Group's active
portfolio management which presents risks around due diligence,
execution and integration of assets. Additionally, the Group may be
liable for liabilities of companies it has acquired or divested.
Failure to identify and execute deals in an efficient manner may
limit the Group's growth potential and impact financial
performance.
Brexit: Uncertainties resulting from the UK's withdrawal from
the European Union could pose challenges with currency
devaluations, a fall in construction activity in the UK, challenges
in labour resources accessing the UK, movement of goods and
services and repatriating earnings. Failure by the Group to manage
the uncertainties posed by Brexit could result in adverse financial
performance and a fall in the Group's net worth.
Commodity products and substitution: Many of the Group's
products are commodities, which face strong volume and price
competition, and may be replaced by substitute products which the
Group does not produce. Further, the Group must maintain strong
customer relationships to ensure changing consumer preferences are
addressed. Failure to differentiate and innovate could lead to
market share decline, thus adversely impacting financial
performance.
Geopolitical and/or social instability: Adverse and fast
changing economic, social, political and public health situations
in any country in which the Group operates could lead to business
interruption, restrictions on repatriation of earnings or a loss of
plant access. Changes in these conditions may adversely affect the
Group's business, results of operations, financial condition or
prospects.
Strategic mineral reserves: Appropriate reserves are an
increasingly scarce commodity and licences and/or permits required
to enable operation are becoming harder to secure. There are
numerous uncertainties inherent in reserves estimation and in
projecting future rates of production. Failure by the Group to plan
for reserve depletion, or to secure permits, may result in
operation stoppages, adversely impacting financial performance.
People management: Existing processes around people management
(such as attracting, retaining and developing people, leadership
succession planning, as well as dealing with collective
representation groups) may not deliver, inhibiting the Group
achieving its strategy. Failure to effectively manage talent and
plan for leadership succession could impede the realisation of
strategic objectives.
Joint ventures and associates: The Group does not have a
controlling interest in certain of the businesses (i.e. joint
ventures and associates) in which it has invested and may invest,
which gives rise to increased governance complexity and a need for
proactive relationship management. The lack of a controlling
interest could impair the Group's ability to manage joint ventures
and associates effectively and/or realise its strategic goals for
these businesses.
Principal Operational Risks and Uncertainties
COVID-19 pandemic: The recent emergence and spread of the
COVID-19 pandemic has had a material impact across the construction
markets in which the Group operates. The continued uncertainty
around the global pandemic, which may further adversely impact the
Group's operations through a fall in demand for the Group's
products, a reduction in staff availability and business
interruption, could have a material impact on the Group's operating
results, cashflows, financial condition and/or prospects.
Climate change and policy: The cement industry has recognised
the impact of climate change and its responsibilities in
transitioning to a lower carbon economy. The Group is exposed to
financial, reputational and market risks arising from changes to
CO(2) policies and regulations. Should the Group not reduce its
greenhouse gases (GHGs) emissions by its identified targets, or
should CO(2) policies or regulations change unexpectedly, the Group
may be subject to increased costs, adverse financial performance
and reputational damage.
Health and safety performance: The Group's businesses operate in
an industry where health and safety risks are inherently prominent.
Further, the Group is subject to stringent regulations from a
health and safety perspective in the various jurisdictions in which
it operates. A serious health and safety incident could have a
significant impact on the Group's operational and financial
performance, as well as the Group's reputation.
Sustainability and corporate social responsibility: The nature
of our activities poses inherent environmental, social and
governance (ESG) risks, which are also subject to an evolving
regulatory framework and changing societal expectations. Failure to
embed sustainability principles within the Group's businesses and
strategy may result in non-compliance with relevant regulations,
standards and best practices and lead to adverse stakeholder
sentiment and reduced financial performance.
Principal Risks and Uncertainties - continued
Information technology and/or cyber security: The Group is
dependent on information and operational technology systems to
support its business activities. Any significant operational event,
whether caused by external attack, insider threat or error, could
lead to loss of access to systems or data, adversely impacting
business operations. Security breaches, IT interruptions or data
loss could result in significant business disruption, loss of
production, reputational damage and/or regulatory penalties.
Significant financial costs in remediation are also likely in a
major cyber security incident.
Principal Compliance Risks and Uncertainties
Laws and regulations: The Group is subject to a wide variety of
local and international laws and regulations across the many
jurisdictions in which it operates, which vary in complexity,
application and frequency of change. Potential breaches of local
and international laws and regulations could result in the
imposition of significant fines or sanctions and may inflict
reputational damage.
Principal Financial and Reporting Risks and Uncertainties
Goodwill impairment: Significant under-performance in any of the
Group's major cash-generating units or the divestment of businesses
in the future may give rise to a material write-down of goodwill.
While not impacting cash flows, a write-down of goodwill could have
a material impact on the Group's reported financial income and
equity.
Financial instruments: The Group uses financial instruments
throughout its businesses giving rise to interest rate and
leverage, foreign currency, counterparty, credit rating and
liquidity risks. A downgrade of the Group's credit ratings or
inability to maintain certain financial ratios may give rise to
increases in future funding costs and may impair the Group's
ability to raise funds on acceptable terms. In addition, insolvency
of the financial institutions with which the Group conducts
business may adversely impact the Group's financial position.
Defined benefit pension schemes and related obligations: The
assets and liabilities of defined benefit pension schemes, in place
in certain operating jurisdictions, exhibit significant
period-on-period volatility attributable primarily to asset values,
changes in bond yields/discount rates and anticipated longevity.
Significant cash contributions may be required to remediate
deficits applicable to past service. Fluctuations in the accounting
surplus/deficit may adversely impact the Group's credit metrics
which could increase the cost of, or ultimately, impair the Group's
ability to raise funds.
Taxation charge and balance sheet provisioning: The Group is
exposed to uncertainties stemming from governmental actions in
respect of taxes paid and payable in all jurisdictions of
operation. In addition, various assumptions are made in the
computation of the overall tax charge and in balance sheet
provisions which may not be borne out in practice. Changes in tax
regimes or assessment of additional tax liabilities in future
audits could result in incremental tax liabilities which could have
a material adverse effect on cash flows, financial condition and
results of operations.
Foreign currency translation: The principal foreign exchange
risks to which the Condensed Consolidated Financial Statements are
exposed pertain to (i) adverse movements in reported results when
translated into the reporting currency; and (ii) declines in the
reporting currency value of net investments which are denominated
in a wide basket of currencies other than the reporting currency.
Adverse changes in the exchange rates would negatively affect
retained earnings. The annual impact is reported in the Condensed
Consolidated Statement of Comprehensive Income.
Responsibility Statement
The Directors of CRH plc are responsible for preparing the
interim management report in accordance with the Transparency
(Directive 2004/109/EC) Regulations 2007 as amended and with IAS
34, as adopted by the European Union.
The Directors of CRH plc, being the persons responsible within
CRH plc, confirm that to the best of their knowledge:
1) the Condensed Consolidated Unaudited Financial Statements for
the six months ended 30 June 2020 have been prepared in accordance
with International Accounting Standard 34 Interim Financial
Reporting, the accounting standard applicable to interim financial
reporting adopted pursuant to the procedure provided for under
Article 6 of Regulation (EC) no. 1606/2002 of the European
Parliament and of the Council of 19 July 2002, and give a true and
fair view of the assets, liabilities, financial position and profit
or loss of the Group for the six months ended 30 June 2020;
2) the interim management report includes a fair review of:
I. the important events that have occurred during the first six
months of the financial year, and their impact on the condensed
consolidated set of financial statements;
II. the principal risks and uncertainties for the remaining six months of the financial year;
III. any related parties ' transactions that have taken place in
the first six months of the current financial year that have
materially affected the financial position or the performance of
the enterprise during that period; and
IV. any changes in the related parties ' transactions described
in the 2019 Annual Report and Form 20-F that could have had a
material effect on the financial position or performance of the
enterprise in the first six months of the current financial
year.
Albert Manifold Chief Executive
Senan Murphy Finance Director
Disclaimer / Forward-Looking Statements
In order to utilise the "Safe Harbor" provisions of the United
States Private Securities Litigation Reform Act of 1995, CRH public
limited company (the "Company"), and its subsidiaries
(collectively, "CRH" or the "Group") is providing the following
cautionary statement.
This document contains statements that are, or may be deemed to
be forward-looking statements with respect to the financial
condition, results of operations, business, viability and future
performance of CRH and certain of the plans and objectives of CRH.
These forward-looking statements may generally, but not always, be
identified by the use of words such as "will", "anticipates",
"should", "could", "would", "targets", "aims", "may", "continues",
"expects", "is expected to", "estimates", "believes", "intends" or
similar expressions. These forward-looking statements include all
matters that are not historical facts or matters of fact at the
date of this document.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future and reflect
the Company's current expectations and assumptions as to such
future events and circumstances that may not prove accurate.
A number of material factors could cause actual results and
developments to differ materially from those expressed or implied
by these forward-looking statements, certain of which are beyond
our control, as detailed in the section entitled "Risk Factors" in
our 2019 Annual Report on Form 20-F as filed with the US Securities
and Exchange Commission.
You are cautioned not to place undue reliance on any
forward-looking statements. These forward-looking statements are
made as of the date of this document. The Company expressly
disclaims any obligation or undertaking to publicly update or
revise these forward-looking statements other than as required by
applicable law.
The forward-looking statements in this document do not
constitute reports or statements published in compliance with any
of Regulations 6 to 8 of the Transparency (Directive 2004/109/EC)
Regulations 2007.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR GZGMRFLMGGZM
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August 20, 2020 02:00 ET (06:00 GMT)
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