Final Results
CRH PLC
04 March 2003
CRH results for the year ended 31st December 2002
Announced Tuesday, 4th March 2003
2002 2001 % change
euro m euro m
Sales 10,794 10,444 +3%
Operating profit * 1,048 1,020 +3%
Profit before tax 856 803 +7%
euro cent euro cent
Earnings per share - before goodwill amortisation 132.54 127.32 +4%
Earnings per share - after goodwill amortisation 119.22 115.32 +3%
Cash earnings per share 219.82 213.73 +3%
Dividend 25.40 23.00 +10%
* Operating profit including share of joint ventures but before goodwill
amortisation and profit on sale of fixed assets.
Construction activity in the Republic of Ireland gained momentum in the second
half of the year following a sharp decline during the first six months, and
finished 4% down on 2001. Against this background, operating profit dropped by
2% to euro 131 million.
In Britain and Northern Ireland, operating profit fell by 10% to euro 56
million, with the impact of modest price increases at Ibstock not sufficient to
offset energy cost hikes and generally weaker activity in Northern Ireland.
In the Materials Division in Mainland Europe, the full year impact of 2001
acquisitions largely offset the impact of rationalisation costs in Poland and
generally weaker construction markets, with operating profits down only 1% to
euro 126 million. The Products & Distribution Division recorded a 65% increase
in operating profits to euro 107 million, reflecting the incremental impact of
acquisitions and the benefits of the ongoing restructuring and efficiency
improvement measures.
Results for the Americas operations were ahead in dollar terms but were
adversely affected by a 5% weakening of the US dollar versus the euro. Operating
profit in the Materials Division dropped by 3% to euro 336 million with the
impact of currency, weak markets and high bitumen costs only partly offset by
cost reduction programmes and contributions from acquisitions. In a challenging
market and economic environment for all of its product groups, the Products &
Distribution Division benefited from acquisitions, achieving a 2% increase in
operating profits to euro 292 million.
Total acquisition and investment activity spend amounted to euro 1 billion on 45
deals.
Liam O'Mahony, Chief Executive, said today:
'Against a difficult market backdrop in 2002, the Group has again demonstrated
its ability to deliver record earnings. Trading conditions are likely to remain
difficult in most of our markets for the immediate future. However, with our
strong focus on cost control and on optimising cash flow by rigorous management
of working capital and capital expenditure, and with a uniquely strong balance
sheet, we are well positioned to develop the Group further through our
continuing programme of acquisitions where we see value and good strategic fit.
We remain committed to our twin goals - performance and growth.'
Contact at Dublin 404 1000 (+353.1.4041000)
Liam O'Mahony Chief Executive
Harry Sheridan Finance Director
Myles Lee Finance Director Designate
* * * * * * * *
RESULTS
Highlights
The results highlights for 2002 are set out below.
Sales: euro 10,794 million, up 3%
Operating profit before goodwill and profit on sale of assets: euro 1,048
million, up 3%
Basic earnings per share before goodwill amortisation: 132.54c, up 4%
Cash earnings per share: 219.82c, up 3%
The average number of shares in issue increased by 3.6% to 522.8 million (2001:
504.7 million) reflecting the full year impact of the March 2001 Rights Issue.
Goodwill amortisation (including share of joint ventures) amounted to 69.6
million (2001: euro 60.6 million). Spending on acquisitions and investments in
2002 amounted to euro 1 billion (2001: euro 1.1 billion). The Group profit and
loss account on page 10 separately discloses the impact of acquisitions made
during 2002.
Dividends
The Board is recommending a final net dividend of 17.97c net per share, an
increase of 11% on the 2001 final dividend of 16.25c. This makes a total net
dividend for the year of 25.40c, an increase of 10%.
It is proposed to pay the final dividend on 12th May 2003 to shareholders
registered at close of business on 14th March 2003. A scrip dividend alternative
is being offered to shareholders.
Development
2002 saw continued progress with our add-on development strategy with 45
individual deals completed during the year spread across all regions and
Divisions. Total acquisition and investment spend amounted to euro 1 billion.
The Europe Materials Division continued a series of small bolt-on acquisitions
in Ireland, Finland, Poland and Switzerland building on its existing platforms,
spending a total of euro 32 million.
During 2002, the Europe Products & Distribution Division completed nine deals in
seven countries, investing a total of euro 242 million. The largest deal was the
euro 155 million acquisition in May of the EHL Group, the German leader in
concrete paving and landscape walling products. In August the Concrete Products
Group acquired Belgian hollowcore flooring producer, Douterloigne. In August,
the Fencing & Security Group acquired Geoquip, a leading manufacturer of
electronic intrusion detection systems based in Derbyshire in the UK. The
Insulation Group bought out the remaining 50% of EcoTherm in the Netherlands in
October, while the acquisition of Mabo Aumek represented the Division's first
step in Estonia.
The Distribution Group in Europe completed four acquisitions during 2002,
including Vicom Baubedarf and BBH Baubedarf in Switzerland which together
brought our network of locations in the German-speaking area of Switzerland to
45.
Another busy development year for the Americas Materials Division saw
significant add-ons to existing operations with a combined spend of euro 439
million on 20 deals. The largest acquisitions completed during the year were US
Aggregates' operations in Idaho, Utah, and Alabama, two sand & gravel pits and
four quarries in Ohio, and Nuckolls Concrete in Iowa. The Utah, Idaho and Ohio
deals have been integrated into our existing operations in these states, while
Alabama represents a new region for the Division. With the acquisition of
Nuckolls, the leading readymixed concrete producer in central and western Iowa,
we have created a substantial vertically integrated materials business in Iowa
following our initial aggregate and asphalt acquisitions in this area in
mid-2001. We increased our investment in Montana with the acquisition of
Maronick Construction and Nupac in the western part of that state. Other add-ons
completed in 2002 complement the Division's existing operations and continue its
focus on acquiring strategically located, high quality aggregate reserves.
2002 development activity in the Americas Products & Distribution Division
included 12 deals at a total cost of euro 279 million. The Architectural
Products Group (APG) acquired Anchor Concrete Products, a major masonry producer
in New Jersey, in March. Towards year-end APG acquired the Specialty Minerals
Group and Dixie Cut Stone & Marble, which together established a platform for
APG in decorative stone and related products in the important New York/New
Jersey market and in the Midwest. The Precast Group completed four acquisitions,
including Christy Concrete Products, which was acquired in August and two add-on
deals in Texas and Pennsylvania. Precast Group also purchased the Shelter
Division assets of Andrew Corporation with factories in Georgia and Kansas,
making it the largest producer of communication enclosures in North America. In
July, the Glass Group formed a joint venture to supply proprietary
blast-mitigation windows and curtain wall systems to US Government agencies
worldwide. The Distribution Group in the Americas completed three acquisitions
as part of its strategy to augment market presence in major metropolitan areas,
bringing its network of specialist merchanting branches to 117 in 26 states.
Finance
The strong cash generation characteristics of the Group combined with a
favourable translation adjustment of euro 248 million, primarily as a result of
a weaker US dollar during 2002, resulted in a euro 184 million reduction in net
debt despite spending a total of euro 1.36 billion on acquisitions, investments
and capital projects. The weaker dollar was also the principal factor in the
negative translation impacts of euro 28 million on profit before tax compared
with 2001, and of euro 514 million in shareholders' funds.
The lower interest charge in 2002 (euro 138 million, compared with euro 173
million in 2001), reflects a full year's interest income on the proceeds of euro
1.1 billion from the March 2001 Rights Issue, plus the benefits of lower
interest rates worldwide, partly offset by the additional financing costs of
significant 2001 and 2002 development activity. EBITDA interest cover for the
year was very comfortable at 11.3 times (2001: 8.5 times).
The total pension charge for the Group in 2002, computed in accordance with
Statement of Standard Accounting Practice 24, amounted to euro 107.9 million
(2001: euro 95.8 million). Full implementation of Financial Reporting Standard
17 - Retirement Benefits (FRS 17), which prescribes different accounting rules
for defined benefit schemes (a majority of the Group's employees are in defined
contribution schemes), has been indefinitely deferred by the Accounting
Standards Board, except for the detailed disclosure required in the notes to the
financial statements. Under FRS 17, the pension charge for the year would have
been euro 85.0 million. As at 31st December 2002, the net FRS 17 pension
liability of the Group amounted to euro 130.0 million; this compares with an
asset of euro 119.3 million as at 31st December 2001, and reflects primarily the
decline, compared with year-end 2001, in the market value of the equity portion
of the assets of the Group's defined benefit pension schemes. The net liability
as at year-end 2002 represents just 2% of the Group's market capitalisation at
that date.
Against a difficult market backdrop, the Group has again demonstrated its
ability to deliver record earnings combined with a strong level of free cash
flow and an active acquisition programme across its four Divisions. Our US$1
billion Global Bond Issue completed in March 2002, combined with the benefits of
the euro 1.1 billion Rights Issue in March 2001, places CRH in an exceptionally
strong position to avail of attractive acquisition opportunities as they arise
in our various geographic, product and sectoral markets.
Regional review
REPUBLIC OF IRELAND
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions
euro million 2002 2001 change Exchange 2001 2002 Organic
Sales 714 704 +10 - +1 - +9
% change +1% +1%
Operating profit* 131 134 -3 - - - -3
% change -2% -2%
Margin 18.3% 19.0%
* Operating profit is arrived at before goodwill amortisation charges and
profit on sale of fixed assets.
Construction activity gained momentum in the second half of the year following a
sharp decline during the first six months, and finished the year 4% down on
2001. Residential construction was stronger than in 2001 and road construction
work benefited from activity on a number of major National Development Plan
projects. Public sector building work also remained buoyant. However, the
commercial and industrial sectors in Dublin were very weak with volumes falling
by up to 30%. Overall, operating profits were marginally behind 2001.
Our cement business once again achieved excellent production levels and
substantially completed a number of efficiency improvement projects including a
new process control system at Limerick and a new shale crusher/blender at
Platin. The aggregate and asphalt operations continued to develop their
businesses with the construction of new blacktop plants in Cork and Kildare to
supply major road contract jobs and a new precast walling project in Dublin.
BRITAIN AND NORTHERN IRELAND
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions
euro million 2002 2001 change Exchange 2001 2002 Organic
Sales 699 680 +19 -8 +8 +5 +14
% change +3% -1% +1% +1% +2%
Operating profit* 56 62 -6 -1 +1 +1 -7
% change -10% -1% +1% +1% -11%
Margin 8.0% 9.1%
* Operating profit is arrived at before goodwill amortisation charges and profit
on sale of fixed assets.
UK housing starts and brick deliveries were marginally up on the previous year.
Ibstock Brick achieved a modest improvement in both volumes and prices and cash
generation remained strong; however, margins suffered due to an increase in
natural gas costs. The major €9 million investment at four brickworks to realign
production capacity between wire-cut and soft mud products was successfully
completed.
Our markets in concrete masonry and rooftiles were more buoyant. Increased sales
of innovative roofing products combined with the benefits of consolidation of
production facilities enabled us to achieve a significant increase in profits.
Our rooflight, fencing and insulation activities in the UK reported improved
overall results, with incremental profits from acquisitions offsetting the
impact of increased input costs.
In our Materials Division, construction activity in Northern Ireland was down 7%
on last year in a very competitive market and profits declined. However, road
maintenance activity improved in the last quarter of 2002 and looks promising
for 2003. Our construction division benefited from a number of major projects in
the water treatment sector commencing in 2002.
MAINLAND EUROPE - MATERIALS
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions Re-org.
euro million 2002 2001 change Exchange 2001 2002 costs Organic
Sales 967 908 +59 -13 +50 +14 - +8
% change +6% -1% +5% +1% +1%
Operating profit* 126 127 -1 -2 +8 +1 -7 -1
% change -1% -1% +7% +1% -7% -1%
Margin 13.0% 14.0%
* Operating profit is arrived at before goodwill amortisation charges and profit
on sale of fixed assets.
While underlying sales for the Europe Materials Division were up on 2001,
profits were marginally down.
In Spain, construction activity continued to grow, expanding by about 7%. Major
infrastructure investment was the main driver while the residential sector
maintained a high level of output. Sales and profits advanced in a very
competitive market.
The economy in Poland continued to experience difficulties and GDP growth at
just over 1% was well below the level required to revitalise the construction
industry. As a result output stagnated with increases in infrastructure and
repairs, maintenance and improvement (RMI) offset by decreases in commercial and
residential completions. In this difficult market volumes in our cement
operations increased only marginally. Operating performance at the Ozarow
facility exceeded expectations and with a lower cost base resulting from the
euro 7 million rationalisation programme implemented early in the year, the
cement operations achieved significant improvement in underlying profitability
and are now well placed to benefit from any upturn in the economy. Our concrete
products and aggregates companies continued to be affected by very competitive
conditions in their markets with margins under pressure and profits down on last
year. Overall, profits excluding rationalisation costs were broadly in line with
2001.
In Finland, the economy grew by about 1.6% in 2002 and inflation remained low.
While overall construction activity was relatively stable, a 4% reduction in
non-residential activity affected demand for our products. Our operations in the
Baltic States enjoyed an excellent performance helped by continuing strong
activity in St. Petersburg and Estonia. This, combined with improved operational
efficiency in our Finnish operations, held overall operating profits in line
with 2001.
The construction industry in Switzerland slowed substantially from mid-year and
construction volumes for 2002 were lower as a result. Demand for cement and
concrete was affected by this slowdown and by delays on major infrastructure
projects, particularly in the second half. The decline in volumes affected
profitability but cost reductions and increased use of alternative fuel helped
to reduce the impact.
In Israel, despite the difficult political situation our joint venture Mashav
performed to expectations in its first full year with the Group. The Israeli
cement market was unchanged from 2001, while the West Bank and Gaza markets were
25% lower due to the additional security controls.
MAINLAND EUROPE - PRODUCTS & DISTRIBUTION
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions Re-org.
euro million 2002 2001 change Exch. 2001 2002 Disposals costs Organic
Sales 2,053 1,744 +309 +4 +136 +257 -45 - -43
% change +18% +8% +14% -2% -2%
Operating profit* 107 65 +42 - +12 +24 - +3 +3
% change +65% +18% +37% +5% +5%
Margin 5.2% 3.7%
Operating profit is arrived at before goodwill amortisation charges and profit
on sale of fixed assets, and includes re-organisation costs of euro 5 million
(2001: euro 8 million).
Construction output was weak in 2002 in most of the major markets for the Europe
Products & Distribution Division. New residential building continued to be the
most depressed sector. Fortunately, the RMI sector, in which we have significant
presence, remained firm. Against this difficult backdrop, the Division recorded
increases in both sales and operating profits due to the impact of acquisitions
and the benefits of the ongoing restructuring and efficiency improvement
measures taken in 2002 and earlier years.
In the Concrete Products Group, our operations in the Netherlands continued to
suffer from the contraction in construction output, particularly in new housing.
Cost reduction measures mitigated the profit impact of reduced volumes.
Zoontjens, the concrete roof paver business acquired at the end of 2001, has
settled well into our Dutch concrete group and met our profit expectations. In
Belgium, our paving and utility businesses performed well and returned improved
profits. Our structural products operations faced more difficult markets and
showed a slight profit decline. Douterloigne, which was acquired in August 2002,
has fitted well into our network of concrete businesses in Belgium. In France,
BMI, the precast utility products manufacturer acquired in April 2001, completed
its first full year within CRH. Although the market is weak, particularly the
infrastructure sector, results were ahead of the previous year thanks to
stringent cost control and to the introduction of innovative new products. The
EHL Group, the major German concrete paving and landscape walling products
manufacturer acquired in May 2002, has integrated successfully into CRH and
profits for the eight months since acquisition exceeded our expectations. We are
working to realise fully the synergies between EHL and the other CRH businesses
involved in the paving/landscaping sector in the Netherlands, Belgium and the
US.
Conditions in the Mainland Europe brick markets remained difficult with no
recovery in Poland and Germany and a further decline in the Dutch market. The
cost saving measures implemented in 2001 contributed to improved results, with
our Dutch and German brick companies both showing better bottom lines, partially
offset by a further deterioration in Poland.
In the Building Products Group, our Fencing & Security operations were adversely
impacted by difficult market circumstances in both the Netherlands and Germany
and reported lower profits. The Daylight & Ventilation business also had another
challenging year in Germany, its major market, while its operations in the
Benelux produced sound results; although total sales were down on 2001, tight
control on costs enabled it to report higher profits.
The Insulation Group had an excellent year with profits strongly ahead.
ThermiSol, the Nordic leader in expanded polystyrene insulation acquired late in
2001, has integrated very well into the group and profits have met our
expectations.
In difficult markets, further strong advances in sales and operating profits
were returned by the Distribution Group. The DIY operations in the Benelux and
Portugal reported increased profits, aided by acquisitions and new store
openings. The merchanting businesses in the Netherlands had a disappointing year
and a rigorous restructuring programme has been initiated to scale these
businesses back to address the reduced market. In Switzerland, good progress has
been made with the integration of the two 2002 acquisitions into the legacy
Richner business acquired with the Jura acquisition in 2000.
THE AMERICAS - MATERIALS
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions
euro million 2002 2001 change Exchange 2001 2002 Organic
Sales 3,072 3,168 -96 -167 +100 +241 -270
% change -3% -5% +3% +8% -9%
Operating profit* 336 346 -10 -18 +1 +40 -33
% change -3% -5% +11% -9%
Margin 10.9% 10.9%
* Operating profit is arrived at before goodwill amortisation charges and profit
on sale of fixed assets.
The Americas Materials Division suffered from weak markets and high bitumen
costs in 2002 resulting in a -9% decline in underlying profits for the Division
compared with 2001. Particularly wet weather in May and June, combined with more
normal weather conditions in the final quarter of the year in contrast with the
unseasonably dry and warm equivalent period of 2001, also impacted results.
These factors were partly offset by a major cost reduction programme across the
Division and positive contributions from our 2002 development initiatives.
Volumes in all of our key markets were depressed in 2002. Blacktop volumes
declined from the record levels experienced in 2001, although development
initiatives led to increases in overall aggregate and readymixed concrete
volumes. Excluding the impact of recent acquisitions, our heritage companies saw
volume declines of approximately 7% in both aggregates and asphalt and of over
14% in readymixed concrete year-on-year.
After a reduction in 2001, bitumen costs increased once again with a material
impact on profits. This was mitigated to some extent by our investments in
winter storage facilities and the Division's strategic purchasing arrangements,
which allowed us to secure bitumen supplies at somewhat cheaper winter rates.
TEA-21, the Federal highway spending program, was strong in 2002 at US$31.8
billion but some projects were delayed due to the uncertainty surrounding 2003
funding levels and the worsening conditions in the finances of some states.
Across our operations, residential markets remained strong, buoyed by continued
low interest rates. Non-residential construction fell, especially in certain
sectors such as office and hotel development, reflecting the slower economy.
2002 was a satisfactory year for the New England Group despite profits declining
from record 2001 levels. The Vermont paving program was reduced, with several
large highway jobs displacing funds usually directed towards road maintenance.
Our operations in Massachusetts continue to experience slight improvements as
less funds are tied up in Boston's Big Dig project than in previous years.
Rigorous cost control and focused marketing resulted in a strong year at Tilcon
Connecticut's operations.
Our New York/New Jersey businesses had mixed results. Excellent results in the
New York metro area due to solid demand, and a satisfactory performance in our
upstate operations based in Albany, contrasted with a weak Rochester market,
with overall operating profits behind 2001. The integration of our 2001
acquisition of Mount Hope exceeded expectations despite a competitive
construction market in New Jersey.
In the Central Group, our Mid-Atlantic (Pennsylvania and Delaware) operations
were impacted by high bitumen costs and a weak private construction market
resulting in lower volumes and profits. We took appropriate action to bring
costs into line with our reduced volumes. Our operations in Michigan, Ohio and
West Virginia performed below expectations. Volumes were lower in our Michigan
markets, particularly in Detroit, but results were supported by benefits
accruing from our bitumen storage facilities. Ohio was impacted by poor rural
resurfacing markets, although results were improved by the acquisition of
Chesterhill in central Ohio, four quarries in the Columbus, Ohio area and R.H.
Armstrong in West Virginia.
The West Group comprises a wide geographic area, with over 270 locations in 11
states west of the Mississippi River. While markets in southern Idaho and Utah
slowed significantly during 2002, the successful integration of US Aggregates
with our existing operations, combined with major overhead cost reductions, had
a positive impact on our results in 2002. In eastern Washington and northern
Idaho we had another solid performance in somewhat softer markets. Our business
in Seattle was impacted by local economic problems arising from recent aerospace
and technology sector layoffs.
THE AMERICAS - PRODUCTS & DISTRIBUTION
Including share of joint ventures Analysis of year-on-year change
Total Acquisitions
euro million 2002 2001 change Exchange 2001 2002 Organic
Sales 3,289 3,240 +49 -206 +141 +161 -47
% change +2% -6% +5% +5% -2%
Operating profit* 292 286 +6 -17 +12 +14 -3
% change +2% -6% +4% +5% -1%
Margin 8.9% 8.8%
Operating profit is arrived at before goodwill amortisation charges and profit
on sale of fixed assets.
2002 presented a challenging market place resulting in added pressure on each of
the product groups in the Americas Products & Distribution Division. Key
elements of this environment were the lingering effects of the September 11
tragedy exacerbating an already weakened commercial market and a collapse of the
telecommunications industry. Relatively low interest rates prevailed throughout
the year supporting continued strength in the housing market. The Division's
operations in the Northeast and Southeast were the most adversely affected by
weak markets and demanding competitive conditions, while the difficulties in the
telecommunications industry were a key reason for the decline in profits in the
Precast Group.
Despite these challenging macroeconomic circumstances, the Division achieved an
8% growth in sales and operating profit before translation effects, helped by
acquisitions.
APG achieved solid growth in sales and profits, aided by the major acquisition
activity during 2001 and 2002. Market conditions for construction-oriented
masonry products were weak in most regions, resulting in lower sales and profits
in this sector than in 2001. A notable exception was the West region, where
sales and profits matched last year in competitive markets. Clay brick producer
Glen-Gery moved ahead in sales reflecting the late-2001 acquisition of Global
Clay, but posted a reduction in profits due to a combination of lower underlying
volumes and particularly competitive markets. Belgard(R), APG's professional
hardscapes product line, and its lawn and garden products achieved strong sales
and profit growth. Results were particularly good in the Northeast with profits
well ahead of last year. Strong sales of Sakrete(R) products to home centers
coupled with aggressive cost reductions moved profits ahead strongly at our
dry-mix operations.
Due to continuing soft non-residential markets and a depression in
telecommunications, sales for the Precast Group were below the record level of
2001, which had a substantial negative effect on profits. Good rebounds in our
California and Maine operations were inadequate to overcome setbacks in
telecommunications and prestressed business in the Northeast and a general
weakness in the Southeast. Aggressive steps have been taken to cut costs, divest
assets and exit non-core markets. In 2002, the two-year rollout of a modern
software system was completed creating a strong foundation for future growth and
efficiencies.
Despite challenging trading conditions in 2002 during which non-residential
architectural glass markets weakened significantly, our Glass Group reported
only a modest decline in sales and operating profits, reflecting the benefits of
a programme of internal cost reduction and volume gains.
Good progress was achieved by our Distribution Group in 2002, with an excellent
performance from our heritage operations. Same-branch sales growth was achieved
and overall growth was enhanced by acquisitions in Chicago, Los Angeles and
northern New Jersey. A significant improvement in operating income resulted
largely from improved gross margins and a successful integration of the three
acquisitions. Effective use of information technology has played a critical role
in optimising profitability and asset management.
A small number of claims regarding alleged asbestos-related injuries have been
received by the Distribution Group in recent years. These claims have multiple
co-defendants. We believe that the outcome of these claims will not have a
material impact on the Group. The total number of claimants was 251 as at 28th
February 2003.
In South America, despite extraordinarily difficult economic conditions in
Argentina, our clay products operations achieved strong profit growth in local
currency terms as a result of very effective domestic marketing and a growing
export business. The Group's glass fabricator in Argentina suffered a
substantial decline in sales and operating profits due to the collapse in the
commercial construction market. Profits in our Chilean glass operation declined
despite aggressive cost reductions due to a challenging construction
environment.
Outlook
In Ireland, we expect some reduction in activity in 2003, with housing remaining
strong but the commercial and industrial sectors likely to weaken further.
Ongoing activity on large infrastructural projects under the National
Development Plan should underpin demand for the first half of 2003, but recently
announced replacement projects are unlikely to pick up momentum until later in
the year. While we expect some growth in construction output in the UK, Spain,
Poland and Finland, declines are expected in Germany and the Netherlands. Little
or no change is expected in France, Belgium and Switzerland.
Construction forecasts for our markets in the Americas indicate slightly weaker
activity than in 2002, with little change in the residential sector and a
sluggish commercial environment expected in most of our markets. Particularly
due to the volatile situation in both Venezuela and Iraq, pricing of energy
input costs and bitumen continues uncertain into 2003.
While the business environment for most of our operations is likely to remain
difficult for the immediate future, CRH is well positioned in the vast majority
of its markets, and while there are risks, there are also opportunities. With a
strong focus on cost control, optimising cash flow by rigorous management of
working capital and capital expenditure, and a uniquely strong balance sheet, we
are well positioned to develop the Group further though our continuing programme
of acquisitions where we see value and good strategic fit. We remain committed
to our twin goals - performance and growth.
Group profit and loss account
for the year ended 31st December 2002
Continuing operations
Acquisitions Total Total
2002 2002 2002
2001
euro m euro m euro m euro m % change
Sales, including share of joint ventures 10,116.4 677.7 10,794.1 10,443.5 +3.3%
Less: share of joint ventures (271.4) (5.5) (276.9) (236.7)
Group sales 9,845.0 672.2 10,517.2 10,206.8 +3.0%
Cost of sales (6,810.4) (483.1) (7,293.5) (7,023.3)
Gross profit 3,034.6 189.1 3,223.7 3,183.5
Operating costs excluding goodwill (2,099.7) (109.4) (2,209.1) (2,189.9)
Group operating profit excluding goodwill 934.9 79.7 1,014.6 993.6
Share of joint ventures' operating profit 33.0 0.5 33.5 26.5 *
Operating profit, including share of joint 967.9 80.2 1,048.1 1,020.1 +2.7%
ventures
Goodwill amortisation (64.3) (5.3) (69.6) (60.6) *
Profit on disposal of fixed assets 15.7 - 15.7 16.7 *
Profit on ordinary activities before interest 919.3 74.9 994.2 976.2
Group interest payable (net) (131.4) (169.7)
Share of joint ventures' net interest (7.1) (3.6)
Profit on ordinary activities before taxation 855.7 802.9 +6.6%
Taxation on profit on ordinary activities (226.8) (217.0)
Profit on ordinary activities after taxation 628.9 585.9
Profit applicable to equity minority interests (5.5) (3.8)
Preference dividends (0.1) (0.1)
Profit for the year attributable to ordinary 623.3 582.0 +7.1%
shareholders
Dividends paid (39.1) (35.3)
Dividends proposed (94.2) (84.7)
Profit retained for the financial year 490.0 462.0
Earnings per share for the year
Basic
- Including goodwill amortisation 119.22c 115.32c +3.4%
- Excluding goodwill amortisation 132.54c 127.32c * +4.1%
Diluted
- Including goodwill amortisation 118.57c 114.25c +3.8%
- Excluding goodwill amortisation 131.81c 126.15c * +4.5%
Cash earnings per share for the year 219.82c 213.73c * +2.8%
Dividend per share 25.40c 23.00c +10.4%
* As stated in note 2 of the supplementary information, prior year amounts for
goodwill amortisation and profit on disposal of fixed assets have been restated
to include CRH's share of joint ventures' goodwill amortisation and profit on
disposal - these amounts were reported as part of CRH share of joint ventures'
operating profit in 2001. Prior year per share amounts before goodwill
amortisation have been restated accordingly.
Movements on profit and loss account
2002 2001
euro m euro m
At 1st January 2,544.5 1,992.2
Profit retained for the financial year 490.0 462.0
Currency translation effects on results for the year (31.7) 0.5
Currency translation effects on foreign currency net investments (482.5) 83.5
Goodwill written-back on disposal - 6.3
At 31st December 2,520.3 2,544.5
Statement of total recognised gains and losses
for the year ended 31st December 2002
2002 2001
euro m euro m
Profit for the year attributable to ordinary shareholders 623.3 582.0
Currency translation effects on results for the year (31.7) 0.5
Currency translation effects on foreign currency net investments (482.5) 83.5
Total recognised gains and losses for the financial year 109.1 666.0
Group balance sheet
as at 31st December 2002
2002 2001
euro m euro m euro m euro m
Fixed assets
Intangible asset - goodwill 1,154.1 1,153.5
Tangible assets 5,004.4 5,150.5
Financial assets:
Joint ventures
- share of gross assets 366.1 434.6
- share of gross liabilities (141.8) (180.2)
- loans to joint ventures 28.4 27.1
Other investments 22.1 34.3
274.8 315.8
6,433.3 6,619.8
Current assets
Stocks 1,064.0 1,002.1
Debtors 1,525.4 1,693.0
Cash, short-term deposits and liquid resources 1,533.2 1,463.3
4,122.6 4,158.4
Creditors (amounts falling due within one year)
Bank loans and overdrafts 232.8 503.5
Trade and other creditors 1,387.2 1,478.7
Corporation tax 29.6 91.9
Dividends proposed 94.2 84.7
1,743.8 2,158.8
Net current assets 2,378.8 1,999.6
Total assets less current liabilities 8,812.1 8,619.4
Creditors (amounts falling due after more than one year)
Loans 3,010.3 2,853.5
Deferred acquisition consideration 142.5 173.8
Corporation tax 6.6 50.9
3,159.4 3,078.2
Capital grants 14.6 15.7
Provisions for liabilities and charges 779.3 655.0
4,858.8 4,870.5
Capital and reserves
Called-up share capital
Equity share capital 178.2 177.3
Non-equity share capital 1.2 1.2
Equity reserves
Share premium account 2,038.3 2,002.5
Other reserves 9.9 9.9
Profit and loss account 2,520.3 2,544.5
Shareholders' funds 4,747.9 4,735.4
Minority shareholders' equity interest 110.9 135.1
4,858.8 4,870.5
Group cash flow statement
for the year ended 31st December 2002
2002 2001
euro m euro m
Net cash inflow from operating activities 1,553.5 1,383.0
Dividends received from joint ventures 23.5 11.3
Returns on investments and servicing of finance
Interest received 57.7 62.9
Interest paid (183.2) (248.3)
Finance lease interest paid (0.7) (0.5)
Preference dividends paid (0.1) (0.1)
(126.3) (186.0)
Taxation
Irish corporation tax paid (17.2) (15.2)
Overseas tax paid (145.1) (63.9)
(162.3) (79.1)
Capital expenditure
Purchase of tangible assets (367.4) (452.3)
Less: Capital grants received 0.1 0.1
New finance leases - 0.1
Disposal of fixed assets 104.4 89.0
(262.9) (363.1)
Acquisition and disposal of subsidiary undertakings and
joint ventures:
Acquisition of subsidiary undertakings (793.7) (748.7)
Deferred acquisition consideration (80.3) (77.8)
Investment in and advances to joint ventures (22.0) (187.5)
(896.0) (1,014.0)
Equity dividends paid (111.6) (78.9)
Cash inflow/(outflow) before use of liquid resources and 17.9 (326.8)
financing
Cash outflow from management of liquid resources (169.7) (53.1)
Financing
Issue of shares 13.8 1,104.7
Issue of preference shares by a subsidiary to minority - 109.2
interests
Expenses paid in respect of share issues (0.4) (20.6)
Increase/(decrease) in term debt 192.5 (791.4)
Capital element of finance leases repaid (5.1) (6.6)
200.8 395.3
Increase in cash and demand debt in the year 49.0 15.4
Reconciliation of net cash flow to movement in net debt
Increase in cash and demand debt in the year 49.0 15.4
(Increase)/decrease in term debt including finance leases (187.4) 798.0
Cash outflow from management of liquid resources 169.7 53.1
Change in net debt resulting from cash flows 31.3 866.5
Loans and finance leases, net of liquid resources, acquired (95.8) (66.1)
with subsidiaries
New finance leases - (0.1)
(64.5) 800.3
Translation adjustment 248.3 (74.2)
Movement in net debt in the year 183.8 726.1
Net debt at 1st January (1,893.7) (2,619.8)
Net debt at 31st December (1,709.9) (1,893.7)
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 year, 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. All other
translation differences are included in arriving at operating profit.
Rates used for translation of results and balance sheets into euro were as
follows:
Average Year-end
euro 1 = 2002 2001 2002 2001
US Dollar 0.9456 0.8956 1.0487 0.8901
Pound Sterling 0.6288 0.6218 0.6505 0.6120
Polish Zloty 3.8574 3.6721 4.0210 3.4953
Swiss Franc 1.4670 1.5104 1.4524 1.4774
Argentine Peso 2.9514 0.8956 3.5289 1.4019
2. Reclassifications of certain prior year figures
Prior year amounts for goodwill amortisation and profit on disposal of fixed
assets in the Group profit and loss account have been restated to include CRH's
share of joint ventures' goodwill amortisation and profit on disposal - these
amounts were reported as part of CRH share of joint ventures' operating profit
in 2001. Prior year per share amounts before goodwill amortisation have been
restated accordingly.
3. Key components of 2002 performance
Incremental Incremental
effect in 2002 effect
of acquisitions Benefits in 2002 of
Exchange and investments of 2001 rationalisation
translation completed during Disposed Rights costs charged in Ongoing
euro million 2001 effects 2001 2002 businesses Issue 2001 2002 operations 2002
Turnover 10,444 (390) 436 678 (45) - - - (329) 10,794
Operating profit 1,020 (38) 34 80 - - 8 (12) (44) 1,048
Goodwill amort. (61) 2 (6) (5) - - - - - (70)
Profit on 17 - - - - - - - (1) 16
disposals
Trading profit 976 (36) 28 75 - - 8 (12) (45) 994
Finance costs (173) 8 (25) (20) - 13 - - 59 (138)
Profit before 803 (28) 3 55 - 13 8 (12) 14 856
tax
Change -3% - +7% - +1% +1% -1% +2% +7%
4. Geographical analysis
Sales 2002 2001
euro m % euro m %
Republic of Ireland 713.9 6.6 703.6 6.7
Britain and Northern Ireland 698.4 6.5 680.0 6.5
Mainland Europe 3,020.6 28.0 2,652.2 25.4
The Americas 6,361.2 58.9 6,407.7 61.4
Total including share of joint ventures 10,794.1 100 10,443.5 100
Less: share of joint ventures (276.9) (236.7)
Total excluding share of joint ventures 10,517.2 10,206.8
Profit before interest 2002
Operating Goodwill Profit on Profit before
profit amortisation disposal interest
% euro m euro m euro m euro m
Republic of Ireland 12.5 131.3 (0.3) 7.8 138.8
Britain and Northern Ireland 5.3 55.8 (5.4) 2.8 53.2
Mainland Europe 22.3 233.5 (28.6) 3.3 208.2
The Americas 59.9 627.5 (35.3) 1.8 594.0
Total including joint ventures 100 1,048.1 (69.6) 15.7 994.2
Less: share of joint ventures (33.5) 2.0 (1.2) (32.7)
Total excluding joint ventures 1,014.6 (67.6) 14.5 961.5
2001 (see note 2)
Operating Goodwill Profit on Profit before
profit amortisation disposal interest
% euro m euro m euro m euro m
Republic of Ireland 13.1 133.9 (0.2) 16.5 150.2
Britain and Northern Ireland 6.0 61.8 (5.2) 4.9 61.5
Mainland Europe 18.9 192.4 (25.2) (4.0) 163.2
The Americas 62.0 632.0 (30.0) (0.7) 601.3
Total including joint ventures 100 1,020.1 (60.6) 16.7 976.2
Less: share of joint ventures (26.5) 1.4 (0.4) (25.5)
Total excluding joint ventures 993.6 (59.2) 16.3 950.7
5. Divisional analysis
Sales 2002 2001
euro m % euro m %
Europe Materials 1,927.0 17.9 1,860.8 17.8
Europe Products & Distribution 2,505.6 23.2 2,175.1 20.8
Americas Materials 3,072.1 28.5 3,168.1 30.4
Americas Products & Distribution 3,289.4 30.4 3,239.5 31.0
Total including share of joint ventures 10,794.1 100 10,443.5 100
Less: share of joint ventures (276.9) (236.7)
Total excluding share of joint ventures 10,517.2 10,206.8
Profit before interest 2002
Operating Goodwill Profit on Profit before
profit amortisation disposal interest
% euro m euro m euro m euro m
Europe Materials 25.4 266.7 (19.9) 11.7 258.5
Europe Products & Distribution 14.7 153.9 (14.4) 2.2 141.7
Americas Materials 32.0 335.8 (19.8) 3.3 319.3
Americas Products & Distribution 27.9 291.7 (15.5) (1.5) 274.7
Total including joint ventures 100 1,048.1 (69.6) 15.7 994.2
Less: share of joint ventures (33.5) 2.0 1.2 (32.7)
Total excluding joint ventures 1,014.6 (67.6) 14.5 961.5
2001 (see note 2)
Operating Goodwill Profit on Profit before
profit amortisation disposal interest
% euro m euro m euro m euro m
Europe Materials 26.6 271.1 (18.9) 17.8 270.0
Europe Products & Distribution 11.5 117.0 (11.7) (0.4) 104.9
Americas Materials 33.9 346.2 (17.0) 1.4 330.6
Americas Products & Distribution 28.0 285.8 (13.0) (2.1) 270.7
Total including joint ventures 100 1,020.1 (60.6) 16.7 976.2
Less: share of joint ventures (26.5) 1.4 (0.4) (25.5)
Total excluding joint ventures 993.6 (59.2) 16.3 950.7
6. Earnings per share
The computation of basic and diluted earnings per share is set out below:
2002 2001
euro m euro m
Numerator for basic and fully diluted earnings per share
Profit for the period attributable to ordinary shareholders 623.3 582.0
Goodwill amortisation, including share of joint ventures 69.6 60.6
Attributable profit, excluding goodwill amortisation 692.9 642.6
Depreciation charge 456.3 436.1
Numerator for cash earnings per share 1,149.2 1,078.7
Denominator for basic earnings per share Number of Number of
shares shares
Weighted average number of shares (millions) in issue (i) 522.8 504.7
Effect of dilutive potential Ordinary Shares (employee share 2.9 4.7
options)
Denominator for diluted earnings per share 525.7 509.4
Basic earnings per Ordinary Share euro cent euro cent
- Including goodwill amortisation 119.22 115.32
- Excluding goodwill amortisation (ii) 132.54 127.32
Diluted earnings per Ordinary Share
- Including goodwill amortisation 118.57 114.25
- Excluding goodwill amortisation (ii) 131.81 126.15
Cash earnings per Ordinary Share (iii) 219.82 213.73
(i) In March 2001, 103,622,311 new Ordinary Shares were issued at euro 10.50 per
share on the basis of one new Ordinary Share for every four existing Ordinary
Shares under the terms of a Rights Issue. The average number of shares in issue
for 2002 reflects the inclusion of the new Rights shares for the full year,
compared with nine months in the corresponding period of 2001.
(ii) As set out in note 2 on page 14, 2001 earnings per Ordinary Share figures
excluding goodwill amortisation presented here for comparative purposes have
been adjusted to add back CRH's share of goodwill amortisation relating to joint
ventures. In the 2001 results announcement, basic and fully diluted earnings per
share figures excluding goodwill (127.05c and 125.87c respectively) were
computed by adding back only subsidiaries' goodwill amortisation.
(iii) Cash earnings per share, a non-GAAP financial measure, is presented here
for information as the Company believes it is a useful financial indicator of a
company's ability to generate cash from operations.
7. Summarised cash flow
This following table summarises the Group's cash flows for 2002 and 2001.
2002 2001
euro m euro m
Inflows
Profit before tax 856 803
Depreciation 456 436
Goodwill amortisation 70 61
Working capital movement 90 (61)
1,472 1,239
Outflows
Tax paid 162 79
Dividends 135 103
Capital expenditure 367 452
Other 21 31
685 665
Operating cash flow 787 574
Acquisitions and investments (992) (1,080)
Disposals 104 89
Share issues (net of expenses) 37 1,108
Issue of preference shares in subsidiary to minority - 109
Translation adjustment 248 (74)
Decrease in net debt 184 726
8. Movements in shareholders' funds
2002 2001
euro m euro m
At 1st January 4,735.4 3,075.1
Profit retained for the financial year 490.0 462.0
Currency translation effects (514.2) 84.0
Issue of ordinary share capital (net of expenses) 36.7 1,108.0
Goodwill written-back on disposal of subsidiary - 6.3
At 31st December 4,747.9 4,735.4
9. Other
2002 2001
Interest cover, excluding joint ventures
- EBITDA (times) 11.3 8.5
- EBIT (times) 7.3 5.6
EBITDA = earnings before interest, tax, depreciation and goodwill amortisation
EBIT = earnings before interest and tax
Interest cover is calculated by dividing EBITDA and EBIT by Group interest payable (net).
522.8 504.7
Average shares in issue (millions)
Net dividend per share (cent) 25.40c 23.00c
Dividend cover (times) 4.68 4.85
Depreciation charge (euro million) 456.3 436.1
Goodwill amortisation charge
- subsidiaries (euro million) 67.6 59.2
- share of joint ventures (euro million) 2.0 1.4
Net debt (euro million) 1,709.9 1,893.7
Debt ratio 36% 40%
Debt to year-end market capitalisation 28% 18%
10. Abbreviated accounts
The results disclosed herein do not represent full accounts. Full accounts for
the year ended 31st December 2002, upon which the Auditors have given an
unqualified audit report, have not yet been filed with the Registrar of
Companies. Full accounts for the year ended 31st December 2001 containing an
unqualified audit report from the Auditors have been delivered to the Registrar
of Companies.
11. Annual Report post-out and Annual General Meeting (AGM)
The 2002 Annual Report is expected to be posted to shareholders on Wednesday,
2nd April 2003 together with details of the Scrip Dividend Offer in respect of
the final 2002 dividend. The 2002 Annual Report will be available to the public
from Thursday, 3rd April 2003 at the Company's registered office. The Group's
AGM is scheduled to be held in Jurys Hotel, Ballsbridge, Dublin on Wednesday,
7th May 2003.
CRH plc Registered office:
Belgard Castle 42 Fitzwilliam Square
Clondalkin Dublin 2
Dublin 22 Ireland
Ireland
Telephone: +353.1.4041000 +353.1.6344340
Fax: +353.1.4041007 +353.1.6765013
e-mail: mail@crh.com
Website www.crh.com
* * * * * * * * * *
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