Interim Results

CRH PLC 4 September 2001 2001 INTERIM RESULTS Six months ended 30th June, 2001 Announced Tuesday, 4th September, 2001 Sales - euro 4,496 m up 23% Before goodwill After goodwill amortisation amortisation Trading profit - euro 308 m up 11% 281 m up 8% Profit before tax - euro 213 m up 8% 186 m up 3% Earnings per share - cent 32.91 c down 3%* 27.36 c down 8%* Cash earnings per share - 75.75 c up 8%* cent Dividend per share - cent 6.75 c up 11%* * Percentage changes in per share amounts are based on 2000 figures adjusted for the March 2001 Rights Issue. Trading profit in the Republic of Ireland increased to euro 80 million with continued good economic and construction activity boosted by an increase of euro 12.6 million in profit on disposal of fixed assets. Trading profit excluding profit on disposal increased by 15%. In Britain and Northern Ireland, trading profits fell slightly by 2% to euro 32 million against a background of a weak UK housing market. In Mainland Europe, our operations were affected by mixed trading patterns and profits were reduced by rationalisation costs of euro 5.9 million and by a euro 5.1 million loss on disposal of Vebofoam (primarily goodwill previously written-off against reserves). Total trading profit fell by 17% to euro 59 million. Excluding the impact of rationalisation and the Vebofoam loss trading profits declined by 2%. Trading profit in the Americas increased by 12% to euro 110 million. The impact of the first-time inclusion of the traditionally loss-making winter period for 2000 Materials acquisitions and varied demand patterns in certain Products & Distribution markets were more than offset by the benefits of lower bitumen costs, contributions from current year acquisitions and favourable translation effects. Development activity continued with euro 515 million spent on over 20 acquisitions. Liam O'Mahony, Chief Executive, said today: 'Overall, current conditions in our various markets are less favourable than in recent years. Nevertheless, supported by our balanced spread of operations and contributions from 2000 and 2001 acquisitions, we look forward to a year of further progress in 2001.' CONTACT: +353 (0) 1 404 1000 Liam O'Mahony, Chief Executive Harry Sheridan, Finance Director Myles Lee, General Manager - Finance Interim statement Highlights The results highlights for the first six months of 2001 are set out below. Sales: euro 4,496 million, up 23.3% Trading profit before goodwill amortisation: euro 308 million, up 10.6% Basic earnings per share before goodwill amortisation: 32.91c, down 3.0% Cash earnings per share: 75.75c, up 8.4% Following the March 2001 Rights Issue, the average number of shares in issue increased by 13.4% to 488.6 million (2000: 430.8 million). Percentage changes in per share amounts are based on 2000 figures adjusted for the Rights Issue. Translation effects in the first six months of 2001 arising from the strengthening of the US Dollar versus the euro had a positive impact of euro 4 million on profit before tax compared with the first half of 2000. In addition, shareholders' funds were enhanced by euro 239 million due to translation effects. Goodwill amortisation amounted to euro 27.1 million (2000: euro 17.7 million). Spending on acquisitions and investments in the first half of 2001 amounted to euro 515 million (2000: euro 931 million). Dividends The Board has decided to pay an interim dividend of 6.75c per share, an increase of 10.7% on the 2000 interim dividend (adjusted for the effect of the March 2001 Rights Issue) of 6.10c. Dividends will be paid on 9th November, 2001 to shareholders registered at the close of business on 14th September, 2001. A scrip dividend alternative is being offered to shareholders. Regional review REPUBLIC OF IRELAND Sales euro 338.2 million up 10.7% Trading profit* euro 80.1 million up 36.0% * Trading profit after including: 2001 2000 - Goodwill amortisation charge nil nil - Profit on disposal of fixed assets euro 14.5 million euro 1.9 million Following good growth in the first quarter, general activity levels in the second quarter were more subdued reflecting both the impact of measures to prevent the spread of foot and mouth disease and a decline in residential construction activity. However, the infrastructure sector remained buoyant and trading profit (excluding profit on disposals) advanced by 15%. The profit on disposal of fixed assets arises primarily on the sale of surplus lands. BRITAIN AND NORTHERN IRELAND Sales euro 335.4 million down 5.3% Trading profit* euro 32.0 million down 2.4% * Trading profit after including: 2001 2000 - Goodwill amortisation charge euro 2.7 million euro 2.5 million - Profit on disposal of fixed assets nil euro 0.2 million The weakness in the UK housing sector, Ibstock Brick's key market, which was exacerbated by exceptionally wet weather in the early months of the year, resulted in lower brick deliveries. However, price increases and efficiency gains helped Ibstock offset the volume declines. Forticrete's concrete masonry business was adversely impacted by weather conditions, but our insulation activities benefited from lower input costs and from the integration of the Springvale operations acquired in May 2000 with Combat, our legacy expanded polystyrene insulation company in Britain. In Northern Ireland, good Private Finance Initiative (PFI) demand was offset by weaker demand in residential markets. MAINLAND EUROPE Sales euro 1,242.4 million up 34.1% Trading profit* euro 59.2 million down 17.0% * Trading profit after including: 2001 2000 - Goodwill amortisation charge euro 11.7 million euro 8.7 million - (Loss)/profit on disposal of fixed euro (4.5) million euro 0.8 million assets These results reflect the first-time inclusion of the January-June results for the Jura Group's materials and distribution activities in Switzerland (acquired at end-November 2000). Trading patterns in Mainland Europe in the first half of the year were mixed. The Europe Materials Division's operations in Spain enjoyed further volume increases in a good market. In Poland, construction activity in the first half was significantly lower than 2000 and profits declined. The Finnish market also saw lower demand, particularly for aggregates and readymixed concrete in the Helsinki region, resulting in lower profits. In Switzerland, Jura's materials operations met expectations in a growing market. Our Distribution businesses in the Netherlands, France and Portugal all reported improved results. In the Concrete Products Group, modest improvements in our existing Dutch and Belgian operations and strong initial contributions from recent acquisitions were more than offset by tough trading conditions together with rationalisation costs of euro 2.4 million in our French operations. Results from the Clay Products Group declined sharply with further difficult trading conditions in Holland and Germany and rationalisation costs of euro 3.5 million associated with the closure of production capacity at AKA in Germany. In the Building Products Group, results for the Heras Fencing & Security operations were slightly below 2000 levels, while the Insulation and Rooflights & Ventilation divisions reported similar profits in difficult markets. The loss on sale of fixed assets includes euro 5.1 million (primarily goodwill previously written-off against reserves) arising on the transfer of our Vebofoam insulation business to the Gefinex Jackon joint venture in which CRH acquired a 49% stake. THE AMERICAS Sales euro 2,580.2 million up 25.3% Trading profit* euro 109.6 million up 12.1% * Trading profit after including: 2001 2000 - Goodwill amortisation charge euro 12.7 million euro 6.5 million - Profit on disposal of fixed assets euro 2.7 million euro 2.6 million In the Materials Division, market demand generally in the first half reflected the ongoing gradual pick-up in TEA-21 funded activity. Better pricing and lower bitumen costs resulted in underlying gains compared with first half 2000, but these benefits were largely offset by the first-time inclusion of winter losses from acquisitions completed during 2000, in particular The Shelly Group (acquired February 2000) and Dolomite (acquired June 2000). Markets in the Northeast generally saw strong activity levels with a good initial contribution from New Jersey-based Mount Hope Rock Products which was acquired at end-April. In the Midwest, while Thompson-McCully operations in Michigan benefited from better demand, Shelly's West Virginia operations were adversely impacted by slower state spending. The Mountain states remain depressed, but operations in the Northwest performed well. Overall, the traditional first half loss in the Materials Division was lower than in 2000. Profits from our Products & Distribution Division in North America advanced with acquisition benefits compensating for underlying declines. The Precast Group was adversely impacted by difficulties in the telecommunications sector and the electrical utility market in California. Although order backlogs in the Architectural Products Group continued strong, mixed weather conditions and economic uncertainty resulted in a varied pattern of order drawdown. Plant start-ups and increases in the cost of natural gas impacted profitability. The Glass Group continued to perform well despite softness in some regional markets and benefited from a good contribution from the Hoffer's acquisition completed in September 2000. The Distribution Group reported similar profits in its seasonally less profitable first half. Despite very difficult economic circumstances, our operations in South America reported improved results. Acquisitions and disposals First half total acquisition and investment expenditure of euro 515 million includes expenditure of euro 154 million on Mount Hope Rock Products in North America while the remaining euro 361 million includes the cost of over 20 small to medium-sized deals in Europe and North America. Proceeds from disposal of fixed assets and from the sale of Vebofoam to Gefinex Jackon amounted to euro 52 million. Finance and taxation The higher first half interest charge reflects the financing costs of significant 2000 and first half 2001 development activity, partly offset by interest income on the proceeds of euro 345 million from the 5% share placing in September 2000 and from the 1 for 4 Rights Issue completed in March which raised approximately euro 1.1 billion (net of expenses). These equity issues ensure that the Group is not constrained in its plans to take full advantage of attractive acquisition opportunities as they arise in our various geographic, product and sectoral markets. As in prior years, the interim taxation charge is an estimate based on the current expected full year tax rate. Outlook In the Republic of Ireland, although the pace of growth in both economic and construction activity has slowed significantly, underlying demand is supported by a strong infrastructural investment programme. In Britain, the outlook remains flat with a continuing focus on achieving efficiency and price improvements. In Mainland Europe, while Spain and Switzerland remain generally positive, we face slowing demand in our markets in the Benelux, France and Finland as well as very difficult conditions in Germany and Poland. In North America, our Materials operations should continue to benefit from the positive impact of TEA-21, and the current outlook for bitumen and energy costs is more favourable than in 2000. For our Products & Distribution operations, despite economic uncertainties, the demand outlook remains reasonably steady. Stable energy costs and normal weather patterns remain key to the full year outcome. Overall, current conditions in our various markets are less favourable than in recent years. Nevertheless, supported by our balanced spread of operations and contributions from 2000 and 2001 acquisitions, we look forward to a year of further progress in 2001. Group profit and loss account for the six months ended 30th June, 2001 (unaudited) Continuing operations Acquisitions Total 2001 2001 2001 2000 % euro m euro m euro m euro m Change Sales, including share of joint 4,396.2 100.0 4,496.2 3,645.7 +23.3 ventures Less: share of joint ventures (75.8) (2.3) (78.1) (89.0) Group sales 4,320.4 97.7 4,418.1 3,556.7 +24.2 Cost of sales (3,063.6) (70.2) (3,133.8)(2,482.8) Gross profit 1,256.8 27.5 1,284.3 1,073.9 Operating costs (983.6) (13.4) (997.0) (808.3) Goodwill amortisation (26.0) (1.1) (27.1) (17.7) Group operating profit 247.2 13.0 260.2 247.9 Share of joint ventures' operating 8.0 - 8.0 7.4 profit Operating profit, including share of 255.2 13.0 268.2 255.3 joint ventures Profit on disposal of fixed assets 12.7 - 12.7 5.5 Trading profit, including share of 267.9 13.0 280.9 260.8 +7.7 joint ventures Group interest payable (net) (94.3) (80.1) Share of joint ventures' net interest (0.7) (0.5) Profit on ordinary activities before taxation 185.9 180.2 +3.2 Taxation on profit on ordinary activities (52.0) (50.5) Profit on ordinary activities after taxation 133.9 129.7 Profit applicable to equity minority interests (0.2) (1.2) Preference dividends - - Profit for the period attributable to ordinary 133.7 128.5 +4.0 shareholders Ordinary dividends (35.1) (26.5) Profit retained for the financial period 98.6 102.0 Earnings per share for the period Basic - Including goodwill amortisation 27.36c 29.83c* -8.3 - Excluding goodwill amortisation 32.91c 33.94c* -3.0 Diluted 27.09c 29.49c* -8.1 Cash flow per share for the period 75.75c 69.89c* +8.4 Dividend per share 6.75c 6.10c* +10.7 * Prior year per share amounts have been restated for the bonus element of the March 2001 1 for 4 Rights Issue. Movements on profit and loss account for the six months ended 30th June, 2001 (unaudited) 2001 2000 euro m euro m At 1st January 1,992.2 1,496.4 Profit retained for the period 98.6 102.0 Currency translation effects 239.1 57.0 Goodwill written back on disposal of Vebofoam* 5.8 - At 30th June 2,335.7 1,655.4 * In May 2001, as part of the acquisition of the Gefinex insulation business in Germany, the Group transferred its wholly-owned Vebofoam expanded polystyrene business to Gefinex Jackon, a joint venture in which CRH acquired a 49% stake. The loss recognised on this transfer amounted to euro 5.1 million, including euro 5.8 million of goodwill previously written-off against reserves. Statement of total recognised gains and losses for the six months ended 30th June, 2001 (unaudited) 2001 2000 euro m euro m Profit for the period attributable to ordinary shareholders 133.7 128.5 Currency translation effects 239.1 57.0 Total recognised gains and losses for the period 372.8 185.5 Group balance sheet as at 30th June, 2001 (unaudited) 2001 2001 2000 2000 euro m euro m euro m euro m Fixed assets Intangible asset - goodwill 1,062.4 807.8 Tangible assets 5,182.3 4,061.2 Financial assets Investment in joint ventures - share of gross 167.3 115.4 assets - share of gross liabilities (84.4) (60.9) - loans to joint ventures 25.4 12.9 Other investments 42.3 21.0 150.6 88.4 6,395.3 4,957.4 Current assets Stocks 1,093.2 866.4 Debtors 2,099.8 1,514.9 Cash, short-term deposits and liquid resources 1,307.7 885.0 4,500.7 3,266.3 Creditors (amounts falling due within one year) Bank loans and overdrafts 645.8 1,245.2 Trade and other creditors 1,641.6 1,274.5 Corporation tax 63.8 41.7 Dividends proposed 34.2 26.4 2,385.4 2,587.8 Net current assets 2,115.3 678.5 Total assets less current liabilities 8,510.6 5,635.9 Creditors (amounts falling due after more than one year) Loans 3,130.4 2,544.8 Deferred acquisition consideration 212.3 236.6 Corporation tax 41.3 32.2 3,384.0 2,813.6 Capital grants 16.5 18.1 Provisions for liabilities and charges 574.3 391.9 Capital and reserves Called-up share capital Equity share capital 176.8 133.9 Non-equity share capital 1.2 1.2 Equity reserves Share premium account 1,985.9 582.8 Other reserves 9.9 9.9 Profit and loss account 2,335.7 1,655.4 Shareholders' funds 4,509.5 2,383.2 Minority shareholders' equity interest 26.3 29.1 8,510.6 5,635.9 Group cash flow statement for the six months ended 30th June, 2001 (unaudited) 2001 2000 euro m euro m Net cash inflow from operating activities 146.6 109.5 Dividends received from joint ventures 1.6 1.2 Returns on investments and servicing of finance Interest received 33.2 25.4 Interest paid (140.6) (98.2) Finance lease interest paid (0.1) (0.2) (107.5) (73.0) Taxation Irish corporation tax paid (14.4) (11.3) Overseas tax 1.4 (37.8) (13.0) (49.1) Capital expenditure Purchase of tangible assets (246.8) (222.0) Less: Capital grants received 0.1 - New finance leases 0.4 - Disposal of fixed assets 43.6 13.8 (202.7) (208.2) Acquisition and disposal of subsidiary undertakings and joint ventures Acquisition of subsidiary undertakings (407.6) (875.9) Disposal of subsidiary undertaking 8.1 - Deferred acquisition consideration (32.3) (19.0) Advances repaid and investment in joint ventures (16.5) (5.4) (448.3) (900.3) Equity dividends paid (53.7) (41.2) Cash outflow before use of liquid resources and financing (677.0) (1,161.1) Cash inflow from management of liquid resources 72.7 116.7 Financing Issue of shares 1,096.4 7.9 Expenses paid in respect of share issues (19.8) (0.1) (Decrease)/increase in term debt (556.3) 921.1 Capital element of finance leases repaid (2.1) (0.2) 518.2 928.7 Decrease in cash and demand debt in the period (86.1) (115.7) Reconciliation of net cash flow to movement in net debt Decrease in cash and demand debt in the period (86.1) (115.7) Cash outflow/(inflow) from movement in term debt 558.4 (920.9) Cash inflow from management of liquid resources (72.7) (116.7) Change in net debt resulting from cash flows 399.6 (1,153.3) Loans and finance leases, net of liquid resources, (58.7) (30.7) acquired with subsidiaries New finance leases (0.4) - 340.5 (1,184.0) Translation adjustment (189.2) (51.7) Movement in net debt for the period 151.3 (1,235.7) Net debt at 1st January (2,619.8) (1,669.3) Net debt at 30th June (2,468.5) (2,905.0) Supplementary information 1. Translation of foreign currencies These financial statements are presented in euro. Results and cash flows of subsidiary and joint venture undertakings based in non-euro countries have been translated into euro 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. Adjustments arising on translation of the results of non-euro subsidiary and joint venture undertakings at average rates, and on restatement of the opening net assets at closing rates, are dealt with in retained profits, net of differences on related currency borrowings. Any other translation differences are included in arriving at trading profit. Rates used for translation of results and balance sheets into euro were as follows: Average for six months to 30th June As at 30th June euro 1 = 2001 2000 2001 2000 US Dollar 0.8983 0.9605 0.8480 0.9556 Pound Sterling 0.6237 0.6124 0.6031 0.6323 Polish Zloty 3.6321 4.0732 3.3696 4.1835 Swiss Franc 1.5308 n/a 1.5228 n/a 2. Geographical analysis 2001 2001 2000 2000 Analysis by destination euro m % euro m % Sales, including share of joint ventures Republic of Ireland 338.2 7.5 305.4 8.4 Britain and Northern Ireland 335.4 7.5 354.1 9.7 Mainland Europe 1,242.4 27.6 926.2 25.4 The Americas 2,580.2 57.4 2,060.0 56.5 4,496.2 100 3,645.7 100 Less: share of joint ventures (78.1) (89.0) Group sales 4,418.1 3,556.7 Trading profit, including share of joint ventures Republic of Ireland 80.1 28.5 58.9 22.6 Britain and Northern Ireland 32.0 11.4 32.8 12.6 Mainland Europe 59.2 21.1 71.3 27.3 The Americas 109.6 39.0 97.8 37.5 Trading profit 280.9 100 260.8 100 Analysis by origin Sales, including share of joint ventures Republic of Ireland 355.8 7.9 320.8 8.8 Britain and Northern Ireland 327.3 7.3 346.7 9.5 Mainland Europe 1,233.6 27.4 918.0 25.2 The Americas 2,579.5 57.4 2,060.2 56.5 4,496.2 100 3,645.7 100 Less: share of joint ventures (78.1) (89.0) Group sales 4,418.1 3,556.7 Trading profit, including share of joint ventures Republic of Ireland 82.6 29.4 62.4 23.9 Britain and Northern Ireland 29.2 10.4 29.9 11.5 Mainland Europe 59.5 21.2 70.7 27.1 The Americas 109.6 39.0 97.8 37.5 Trading profit 280.9 100 260.8 100 3. Summarised cash flow The table below summarises the Group's cash flows for the six months ended 30th June, 2001 and 30th June, 2000. 2001 2000 euro m euro m Inflows Profit before tax 185.9 180.2 Depreciation and goodwill amortisation 236.4 172.6 Disposals 51.7 13.8 Share issues (net of expenses) 1,090.9 22.5 1,564.9 389.1 Outflows Working capital movement 362.3 303.1 Capital expenditure 246.8 222.0 Acquisitions and investments 515.1 931.0 Dividends 68.0 55.9 Tax paid 13.0 49.1 Other 19.2 12.0 1,224.4 1,573.1 Net inflow/(outflow) 340.5 (1,184.0) Translation adjustment (189.2) (51.7) Decrease/(increase) in net debt 151.3 (1,235.7) 4. Movements in shareholders' funds 2001 2000 euro m euro m At 1st January 3,075.1 2,201.7 Retained profit for the period 98.6 102.0 Currency translation effects 239.1 57.0 Issue of ordinary share capital (net of expenses) 1,090.9 22.5 Goodwill written back on disposal of Vebofoam 5.8 - At 30th June 4,509.5 2,383.2 5. Other 2001 2000 EBITDA interest cover (times) - six months to 30th June 5.4 5.4 - rolling 12 months 6.7 7.8 EBIT interest cover (times) - six months to 30th June 3.0 3.2 - rolling 12 months 4.4 5.3 EBITDA = earnings before interest, tax, depreciation and goodwill amortisation, including share of joint ventures EBIT = earnings before interest and tax, including share of joint ventures Average shares in issue (millions) 488.6 430.8 ** Net dividend per share (cent) 6.75 6.10 ** Dividend cover (times) 3.8 4.8 ** 2000 figures are restated for bonus element of March 2001 1 for 4 Rights Issue Depreciation charge - euro m 209.3 154.9 Goodwill amortisation charge - euro m 27.1 17.7 Net debt - euro m 2,468.5 2,905.0 Debt ratio 54% 120% Debt to market capitalisation at 30th June 24% 39% 6. Distribution of Interim Report These Interim Results are available on the Group's website (www.crh.com). A printed copy will be posted to shareholders on Thursday, 6th September, 2001 and will be available to the public from that date at the Company's registered office. Details of the Scrip Dividend Offer in respect of the Interim 2001 dividend will be posted to shareholders on Thursday, 27th September, 2001. CRH plc, Belgard Castle, Clondalkin, Dublin 22, Ireland Telephone: +353.1.4041000 Fax: + 353.1.4041007 Email: mail@crh.com Website: www.crh.com Registered Office: 42 Fitzwilliam Square, Dublin 2, Ireland.

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