Interim Results
CRH PLC
30 August 2005
2005 INTERIM RESULTS
Six months ended 30th June 2005
2005 2004 % change
euro m euro m
• Sales 6,329 5,608 +13%
• Operating profit * 445 370 +20%
• Profit before tax 383 319 +20%
euro cent euro cent
• Earnings per share 56.0 47.8 +17%
• Cash earnings per share 105.4 95.0 +11%
• Dividend 11.25 9.6 +17%
* Operating profit before profit on disposal of fixed assets.
• Total operating profit for our Europe operations, including acquisition contributions, grew by 2% to euro
277 million.
• In Europe Materials, operating profit improved 12% to euro 141 million reflecting a full first half share
of profit from Secil (acquired June 2004) in Portugal.
• Europe Products was impacted by generally subdued trading and severe March weather. Operating profit fell
10% to euro 86 million, principally due to a sharp decline in results from Insulation activities.
• Operating profit of euro 50 million from Europe Distribution was 2% ahead of 2004 against a background of
subdued Dutch retail demand and poor weather early in the year.
• Total operating profit for the Americas operations increased by 68% to euro 168 million.
• Americas Materials exceeded expectations with good volume and price improvements delivering a significant
reduction in the traditional first half trading loss from euro 32 million in 2004 to euro 4 million.
• With continuing strong US residential construction and ongoing recovery in non-residential construction,
Americas Products delivered a 26% increase in operating profit to euro 144 million.
• Americas Distribution performed particularly strongly reporting a 58% increase in operating profit to euro
28 million.
• Currency translation effects had a euro 2 million adverse impact at profit before tax level.
• The interim dividend has been increased by 17%. This follows a 17% increase in the full year 2004 dividend
making 2005 the 22nd consecutive year of dividend increase.
• Total first half development spend amounted to euro 231 million.
Liam O'Mahony, Chief Executive, said today:
'CRH has had a strong first half profit outcome with good organic growth from
the Americas significantly outweighing a decline in Europe, and a satisfactory
incremental contribution from 2004 and 2005 acquisitions.
The Group will continue to benefit in the second half from strong markets in its
American operations and from a sustained focus on input cost recovery and
operational performance. Although this will be offset to some extent by the
recent surge in energy costs we nevertheless expect to make further progress in
the more important second half of the year.'
Announced Tuesday, 30th August 2005
Contact at Dublin 404 1000 (+353 1 404 1000)
Liam O'Mahony Chief Executive
Myles Lee Finance Director
Maeve Carton Group Controller
INTERIM STATEMENT
Highlights
The results highlights for the first six months of 2005, reported under
International Financial Reporting Standards, are set out below.
• Sales: euro 6,329 million, up 13%
• Operating profit*: euro 445 million, up 20%
• Profit before tax: euro 383 million, up 20%
• Basic earnings per share: 56.0c, up 17%
• Cash earnings per share: 105.4c, up 11%
* Operating profit before profit on disposal of fixed assets.
Our American operations have performed very strongly through the first half of
2005 and this, combined with incremental contributions from 2004 and 2005
acquisitions, has resulted in a strong increase in Group sales, profits and
earnings, despite the impact of generally subdued markets and adverse early
weather on our European businesses.
The average first half US Dollar exchange rate was 5% weaker versus the euro
than in the corresponding period in 2004. This had an adverse impact of euro 2
million on profit before tax reflecting the traditionally low US profitability
in the first half of the year.
Profit on disposal of fixed assets amounted to euro 10.0 million (2004: euro 6.0
million).
Note 5 on page 14 analyses the key components of first half 2005 performance.
Dividends
The Board has decided to pay an interim dividend of 11.25c per share, an
increase of 17% on the 2004 interim dividend of 9.60c. This follows an increase
of 17% in the full year 2004 dividend. The Interim dividend will be paid on 4th
November 2005 to shareholders registered at the close of business on 9th
September 2005.
A scrip dividend alternative is being offered to shareholders.
Segment review
EUROPE - MATERIALS
Analysis of change
Total Acquisitions
euro million 2005 2004 change Exchange 2004 2005 Organic
Sales 1,216 1,022 +194 +14 +106 +3 +71
% change +19% +1% +11% - +7%
Operating profit* 141 126 +15 +2 +17 - -4
% change +12% +2% +13% -3%
Margin 11.6% 12.3%
* Operating profit is before profit on disposal of fixed assets.
In Ireland, growth in residential construction and continuing recovery in
commercial and industrial construction resulted in good overall volume
increases. However, phased price increases were not sufficient to fully recover
higher first half input costs and overall profit on the island was slightly
below 2004 levels.
Our activities in Finland and the Baltic states recovered well from a poor first
quarter to leave first half cement and concrete volumes in line with 2004 levels
and profit largely unchanged.
Polish construction activity was particularly strong in the first half of last
year due to accelerated demand ahead of the 1st May 2004 increase in VAT on
construction products which coincided with EU entry. In the first half of this
year, our Polish operations were affected by late winter weather and, with
cement volumes 17% lower than in 2004, profit declined. Sales volumes and
profits in our Ukrainian cement operation were in line with 2004 levels.
In Switzerland, the final phase of concreting works on the major Loetschberg
tunnel project resulted in further good volume increases for our cement
operations. However, demand for concrete products and aggregates was impacted by
poor early weather and overall profit was lower in a competitive marketplace.
In Iberia, our Spanish operations enjoyed very busy first half trading
conditions and with improvements in volumes and prices reported higher profit.
Secil, the Portuguese cement, concrete products and aggregates producer, in
which CRH acquired a 49% stake in June 2004, had a positive start to the year
and accounted for almost all of the incremental impact of 2004 acquisitions
shown in the table above.
Overall, operating profit improved reflecting a full first half share of profit
from Secil.
EUROPE - PRODUCTS
Analysis of change
Total Acquisitions Re-org.
euro million 2005 2004 change Exchange 2004 2005 costs Organic
Sales 1,189 1,090 +99 +1 +86 +14 - -2
% change +9% - +8% +1% -
Operating profit* 86 96 -10 - +8 - -3 -15
% change -10% +8% -3% -15%
Margin 7.2% 8.8%
* Operating profit is before profit on disposal of fixed assets and includes
re-organisation costs of euro 4 million (2004: euro 1 million).
Our Products operations continued to experience generally subdued trading in the
first half of 2005 and were not helped by severe March weather. Insulation
activities faced continuing tough conditions and were responsible for the bulk
of the first half organic profit decline.
In Concrete Products, overall results increased largely due to incremental
contributions from 2004 acquisitions. Our architectural operations (pavers,
tiles, sand-lime brick and blocks) in the Benelux, Germany and Britain were
impacted by weather and weak demand. Structural operations (floor & wall
elements, beams, vaults and drainage products) were less severely affected,
helped by some improvement in Dutch housing activity and good underlying demand
in Belgium and Denmark.
In Clay Products, brick volumes in Britain were below 2004 levels; however,
further price improvements were achieved offsetting the impact of sharp energy
cost increases and resulting in a modest improvement in profit. Although clay
operations in Mainland Europe benefited from better pricing and productivity,
profits were flat in continuing difficult markets.
Our Insulation businesses experienced a very tough first half due to continuing
volatility in energy-related input costs and also incurred costs associated with
re-organisation of activities to deal with the challenging environment. Results
were significantly lower than in 2004.
In Building Products, the overall outcome was similar to 2004. Daylight &
Ventilation faced disappointing sales in Germany and the Netherlands resulting
in lower profit. Our Fencing & Security business reported similar results to
2004, while Construction Accessories enjoyed an improvement in profitability
partly helped by some acquisition contributions.
EUROPE - DISTRIBUTION
Analysis of change
Total Acquisitions Re-org.
euro million 2005 2004 Change Exchange 2004 2005 costs Organic
Sales 1,016 895 +121 +4 +121 - -4
% change +13% - +13% -
Operating profit* 50 48 +2 - +1 - +1 -
% change +2% +1% +1%
Margin 4.9% 5.4%
* Operating profit is before profit on disposal of fixed assets. Operating
profit relating to 2004 acquisitions is after euro 3 million of integration
costs. Operating profit includes re-organisation costs related to ongoing
operations of nil (2004: euro 1 million).
First half operating profit in Europe Distribution was just ahead of 2004.
DIY: Despite subdued Dutch retail demand which resulted in little change in
overall sales, our DIY homecentre business in the Benelux delivered good cost
control and continued to drive benefits from the October 2003 Cementbouw
acquisition resulting in a similar overall outcome. Our Max- Mat joint venture
in Portugal reported further sales and profit progress.
Builders Merchants: Poor weather in March affected trading in our Dutch and
French businesses to leave underlying sales and profits slightly below 2004
levels. Incremental contributions from 2004 acquisitions - Doras joint venture
in France and NCD Builders Merchants in Holland - were satisfactory, although
NCD results were impacted by once-off post-acquisition costs associated with its
integration into our existing merchanting activities. Profits in our Swiss
general and specialist merchants continued to improve.
AMERICAS - MATERIALS
Analysis of change
Total Acquisitions
euro million 2005 2004 Change Exchange 2004 2005 Organic
Sales 1,065 947 +118 -43 +30 +14 +117
% change +13% -4% +3% +1% +13%
Operating loss* (4) (32) +28 +2 +3 +1 +22
% change +87% +6% +9% +3% +69%
Margin -0.4% -3.3%
* Operating loss is before profit on disposal of fixed assets.
First half activity in the Americas Materials Division exceeded expectations
with good volume improvements. As anticipated, energy input costs were sharply
higher; nevertheless, focussed pricing initiatives and efficiency savings
resulted in improved margins and a significant reduction in the traditional
first half US Dollar operating loss.
The average US Dollar income statement translation rate for the first half of
2005 was US$1.2847 to the euro versus US$1.2273 in the first half of 2004. This
movement gives rise to an adverse translation impact on sales and a favourable
impact at operating level due to the seasonal loss.
While operations in New England delivered improved results, the advance was less
marked than in other regions due to subdued highway markets in Connecticut. Our
New York/New Jersey business had a good first half with strong demand in New
Jersey and improved trading in our Upstate New York operations. Despite
continuing weakness in Michigan, the Central region also reported a good
improvement helped by firmer demand in Ohio and West Virginia. In the West,
demand was strong resulting in a significant advance in profitability across our
operations.
Excluding the impact of recent acquisitions, our heritage companies saw volume
increases of approximately 7% in aggregates, 3% in asphalt and 3% in readymixed
concrete although, as always, there were regional variations.
AMERICAS - PRODUCTS
Analysis of change
Total Acquisitions
euro million 2005 2004 change Exchange 2004 2005 Organic
Sales 1,337 1,208 +129 -47 +45 +17 +114
% change +11% -4% +4% +1% +10%
Operating profit* 144 114 +30 -5 +1 +2 +32
% change +26% -5% +1% +2% +28%
Margin 10.7% 9.4%
* Operating profit is before profit on disposal of fixed assets.
With continuing strong US residential construction and on-going recovery in
non-residential activity, our Americas Products businesses delivered a
substantial first half operating profit advance and a significant margin
improvement.
Our Precast operations continued to progress with strong demand particularly in
western and southern states. Improved pricing and overhead cost savings resulted
in further good margin improvement. Architectural Products saw good demand for
construction, retail and hardscape products and further gains from its brick
operations, where better volumes and prices more than compensated for higher
energy costs. In an increasingly competitive market, the Glass Group benefited
from a strong first half sales advance with a shift in product mix towards
higher value insulated and fabricated items. Our South American clay operations
coped well with higher energy costs to limit the decline in profitability.
AMERICAS - DISTRIBUTION
Analysis of change
Total Acquisitions
euro million 2005 2004 change Exchange 2004 2005 Organic
Sales 506 446 +60 -20 +6 +9 +65
% change +13% -4% +1% +2% +14%
Operating profit* 28 18 +10 -1 +1 +1 +9
% change +58% -8% +8% +8% +50%
Margin 5.6% 4.0%
* Operating profit is before profit on disposal of fixed assets.
The Distribution Group performed particularly strongly through the first half of
the year continuing to build on the progress of recent years. Markets in Florida
were buoyant reflecting both significant maintenance and repair work in the
aftermath of the devastating hurricanes experienced during 2004 and substantial
new-build activity. Demand in the Western states was generally strong with the
Midwest region being the main exception to a favourable trading backdrop.
Acquisitions completed in 2004 and in early 2005 contributed positively to the
overall outcome.
Finance and taxation
The higher first half interest charge in 2005 principally reflects the impact of
2004 and 2005 acquisitions.
As in prior years, the interim taxation charge is an estimate based on the
current expected full year tax rate.
Exchange rate movements between year-end 2004 and 30th June 2005, mainly the
weakening of the euro from US$1.3621 to US$1.2092, increased the euro amount of
foreign currency net debt by euro 144 million while shareholders' funds were
increased by euro 338 million.
Net debt at 30th June amounted to euro 3,268 million (June 2004: euro 3,493
million), which included euro 254 million (June 2004: euro 258 million) in
respect of the Group's share of net debt in joint venture undertakings.
A strong balance sheet and robust cash generation characteristics continue to
underpin the Group's financial capacity to avail of attractive acquisition
opportunities as they arise in our various geographic, product and sectoral
markets.
Development
Development expenditure in the first half of 2005 amounted to euro 231 million.
Although this pace of spend was lower than in recent years, we continue to work
actively on opportunities for acquisitions across all our operations and remain
committed to completing transactions at prices that will contribute to long-term
value creation for our shareholders.
Since the end of June the Group has spent a further euro 190 million on
acquisitions. This total includes the purchase of the French concrete products
producer, Stradal, the acquisition of which was completed on August 16th.
Outlook
In Europe Materials, demand in the Irish market remains strong while recent
months have seen improved trading in Poland. In Switzerland, second half cement
demand is likely to be lower as the major tunnel project winds down. Trading
patterns in other markets are expected to show little change and overall the
Division expects to deliver an improvement in underlying second half operating
profit.
The short term economic outlook for Europe Products remains generally subdued in
our core countries. As a result it is unlikely that the profit decline
experienced in the first half of the year can be offset in the second half and
full year operating profit is expected to be lower than in 2004.
In Europe Distribution, weak Dutch consumer spending patterns continue to
constrain our DIY activities. However, our builders merchanting operations are
proving more robust and we expect to deliver continuing operating profit
progress in the second half of the year.
Our Americas Materials operations are performing well and have good backlogs in
hand for the remaining months of the year. While recent higher energy costs are
absorbing more of the benefits of achieved price improvements than in the first
half, we currently expect some overall margin increase and higher full year
profit in US$ terms.
Although the pace of advance for Americas Products has moderated slightly over
the summer months the demand backdrop remains broadly positive with continuing
strong housing demand and ongoing recovery in our non-residential markets. We
expect a good second half out-turn from these operations and a full year profit
advance.
Americas Distribution faces tough comparatives for the second half due to
significant 2004 post-hurricane demand in Florida and gains arising from steep
price increases for many of the products handled by this business. However, with
a generally favourable trading backdrop we expect higher second half 2005 US$
operating profit.
A continuation of the current US dollar/euro exchange rate of US$ 1.23 would
result in a full year average rate of US$ 1.2550 (2004: US$ 1.2439) and a
minimal full year translation impact compared with 2004.
CRH has had a strong first half profit outcome with good organic growth from the
Americas significantly outweighing a decline in Europe, and a satisfactory
incremental contribution from 2004 and 2005 acquisitions.
The Group will continue to benefit in the second half from strong markets in its
American operations and from a sustained focus on input cost recovery and
operational performance. Although this will be offset to some extent by the
recent surge in energy costs we nevertheless expect to make further progress in
the more important second half of the year.
* * * *
This interim results announcement contains certain forward-looking statements as
defined under US legislation. By their nature, such statements involve
uncertainty; as a consequence, actual results and developments may differ from
those expressed in or implied by such statements depending on a variety of
factors including the specific factors identified in this interim results
announcement and other factors discussed in our Annual Report on Form 20-F filed
with the SEC.
Group Income Statement
Six months Six months Year ended
ended 30th ended 30th 31st
June 2005 June 2004 December
2004
Unaudited Unaudited Audited
euro m euro m euro m
Revenue 6,329.3 5,607.9 12,754.5
Cost of sales (4,397.4) (3,913.3) (8,717.4)
Gross profit 1,931.9 1,694.6 4,037.1
Operating costs (1,487.1) (1,324.4) (2,816.9)
Group operating profit 444.8 370.2 1,220.2
Profit on disposal of fixed assets 10.0 6.0 10.8
Profit before finance costs 454.8 376.2 1,231.0
Finance costs (net) (77.8) (64.1) (146.4)
Group share of associates' profit after tax 6.3 7.3 19.4
Profit before tax 383.3 319.4 1,104.0
Income tax expense (estimated at interim) (81.0) (63.5) (232.2)
Group profit for the financial period 302.3 255.9 871.8
Profit attributable to:
Equity holders of the Company 298.7 252.4 866.1
Minority interest 3.6 3.5 5.7
Group profit for the financial period 302.3 255.9 871.8
Earnings per share for the period
Basic 56.0c 47.8c 163.6c
Diluted 55.7c 47.4c 162.7c
Cash earnings per share for the period 105.4c 95.0c 261.8c
Dividend per share 11.25c 9.6c 33.0c
Group Balance Sheet
As at 30th As at 30th As at 31st
June 2005 June 2004 December 2004
Unaudited Unaudited Audited
ASSETS euro m euro m euro m
Non-current assets
Property, plant and equipment 6,336.8 5,987.9 5,830.6
Intangible assets 1,935.4 1,836.5 1,774.1
Investments in associates 210.3 180.6 178.8
Derivative financial instruments 254.4 159.1 173.2
Other financial assets 102.7 93.4 113.2
Deferred income tax assets 425.1 340.8 335.3
Total non-current assets 9,264.7 8,598.3 8,405.2
Current assets
Inventories 1,616.2 1,405.7 1,308.9
Trade and other receivables 2,594.4 2,327.1 1,973.1
Derivative financial instruments 6.5 25.0 1.1
Liquid investments 445.2 318.1 311.7
Cash and cash equivalents 799.5 679.7 1,072.0
Total current assets 5,461.8 4,755.6 4,666.8
Total assets 14,726.5 13,353.9 13,072.0
EQUITY
Capital and reserves attributable to the Company's equity holders
Equity share capital 181.8 180.1 181.0
Non-equity share capital 1.2 1.2 1.2
Share premium account 2,184.4 2,114.8 2,149.3
Other reserves 30.0 17.9 23.5
Foreign currency translation reserve 157.9 107.5 (179.9)
Retained income 2,830.2 2,292.7 2,770.1
5,385.5 4,714.2 4,945.2
Minority interest 28.8 38.6 34.2
Total equity 5,414.3 4,752.8 4,979.4
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings 4,063.1 3,738.2 3,802.4
Derivative financial instruments 3.4 155.8 51.9
Deferred income tax liabilities 1,075.3 1,010.5 987.4
Trade and other payables 134.2 113.1 122.0
Retirement benefit obligations 524.3 253.9 349.7
Provisions for liabilities and charges 228.5 188.4 182.3
Capital grants 11.9 13.8 12.4
Total non-current liabilities 6,040.7 5,473.7 5,508.1
Current liabilities
Trade and other payables 2,149.9 1,942.2 1,742.1
Current income tax liabilities 319.3 288.2 284.5
Interest-bearing loans and borrowings 584.0 748.9 251.4
Derivative financial instruments 123.6 32.2 210.4
Provisions for liabilities and charges 94.7 115.9 96.1
Total current liabilities 3,271.5 3,127.4 2,584.5
Total liabilities 9,312.2 8,601.1 8,092.6
Total equity and liabilities 14,726.5 13,353.9 13,072.0
Group Cash Flow Statement
Six months Six months Year ended
ended 30th ended 30th 31st
June 2005 June 2004 December 2004
Unaudited Unaudited Unaudited
euro m euro m euro m
Cash flows from operating activities
Group operating profit 444.8 370.2 1,220.2
Depreciation charge 260.1 247.8 515.9
Share-based payments expense 6.5 4.1 9.7
Amortisation of intangible assets 3.3 1.5 4.1
Increase in working capital (357.6) (307.8) (119.4)
Amortisation of capital grants (1.4) (1.0) (2.2)
Cash generated from operations 355.7 314.8 1,628.3
Interest paid (85.2) (76.5) (160.3)
Income taxes paid:
- Irish corporation tax (1.6) (8.6) (17.1)
- Overseas corporation tax (57.4) (75.7) (188.3)
Net cash inflow from operating activities 211.5 154.0 1,262.6
Cash flows from investing activities
Inflows
Proceeds from disposal of fixed assets 44.8 59.2 101.8
Interest received 14.3 12.7 22.6
Capital grants received 0.9 - 0.1
Dividends received from associates 8.5 2.9 8.5
68.5 74.8 133.0
Outflows
Purchase of property, plant and equipment (346.8) (262.5) (550.7)
Acquisition of subsidiaries and joint ventures (168.0) (660.7) (850.9)
Investments in and advances to associates (5.5) (4.8) (5.8)
Deferred acquisition consideration paid (31.4) (29.2) (57.3)
(551.7) (957.2) (1,464.7)
Net cash outflow from investing activities (483.2) (882.4) (1,331.7)
Cash flows from financing activities
Inflows
Proceeds from issue of shares 19.2 5.5 36.6
Increase in interest-bearing loans and borrowings 223.6 322.1 261.4
Increase in finance lease liabilities 2.4 56.2 56.2
Net movement in derivative financial instruments (25.4) 71.7 (30.4)
219.8 455.5 323.8
Outflows
Expenses paid in respect of share issues (0.1) (0.1) (0.3)
Repayment of interest-bearing loans and borrowings (25.2) (10.3) (31.9)
Increase in liquid investments (113.1) (16.2) (25.2)
Repayment of finance lease liabilities (1.4) (6.9) (24.4)
Dividends paid to equity holders of the Company (108.2) (73.4) (119.6)
Dividends paid to minority interests (4.1) (1.4) (2.1)
(252.1) (108.3) (203.5)
Net cash (outflow)/inflow from financing activities (32.3) 347.2 120.3
Change in cash and cash equivalents (304.0) (381.2) 51.2
Translation adjustment 31.5 20.0 (20.1)
Cash and cash equivalents at beginning of period 1,072.0 1,040.9 1,040.9
Cash and cash equivalents at end of period 799.5 679.7 1,072.0
Group Statement of Recognised Income and Expense
Six months Six months Year ended
ended 30th ended 30th 31st
June 2005 June 2004 December 2004
Unaudited Unaudited Audited
euro m euro m euro m
Items of income/(expense) recognised directly within equity:
Currency translation effects 337.8 107.5 (179.9)
Group defined benefit pension schemes:
- Actuarial loss (151.2) (5.9) (119.2)
- Deferred tax asset 36.4 2.7 31.3
Gains/(losses) relating to cash flow hedges 1.2 0.4 (0.3)
Net income/(expense) recognised directly within 224.2 104.7 (268.1)
equity
Group profit for the financial period 302.3 255.9 871.8
Total recognised income and expense for the period 526.5 360.6 603.7
Equity holders of the Company 520.2 355.7 599.8
Minority interest 6.3 4.9 3.9
Total recognised income and expense for the period 526.5 360.6 603.7
Group Statement of Changes in Equity
Six months ended Six months ended Year ended
30th June 2005 30th June 2004 31st December 2004
Unaudited Unaudited Unaudited
euro m euro m euro m
At beginning of period 4,979.4 4,447.0 4,447.0
Issue of shares:
- Share options and 19.2 5.5 36.6
participation schemes
- Issued in lieu of 16.8 31.7 36.4
dividends
- Expenses in respect of (0.1) (0.1) (0.3)
share issues
Adjustment re share options 6.5 4.1 9.7
expense
Dividends paid (125.0) (105.1) (156.0)
Movement in minority (5.4) 12.6 8.0
interest
Items of income/(expense) recognised directly within equity:
Currency translation 337.8 107.5 (179.9)
effects
Group defined benefit (114.8) (3.2) (87.9)
schemes
Gains/(losses) relating to 1.2 0.4 (0.3)
cash flow hedges
Profit for the period attributable to 298.7 252.4 866.1
equity holders
At end of period 5,414.3 4,752.8 4,979.4
Supplementary Information
1. International Financial Reporting Standards
Basis of preparation
The financial information presented in this Interim Report has been prepared
in accordance with the Group's accounting policies under International
Financial Reporting Standards (IFRS). The transition date for implementation
of IFRS by the Group was 1st January 2004. The financial statements for the
six months ended 30th June 2004 and for the year ended 31st December 2004,
which were prepared in accordance with accounting practice generally
accepted in the Republic of Ireland, have been restated under IFRS with
effect from the transition date.
Full details of the accounting policies adopted by the Group on
implementation of IFRS, and of the impact on the reported results and
balance sheet of the Group of the transition to IFRS, were published on 31st
May 2005 and are available on the Group's website www.crh.com.
Approved IFRS
The Group's accounting policies under IFRS are based on the Financial
Reporting Standards and Interpretations issued by the International
Accounting Standards Board (IASB) and on International Accounting Standards
(IAS) and Standing Interpretations Committee Interpretations approved by the
predecessor International Accounting Standards Committee that have been
subsequently authorised by the IASB and remain in effect.
The majority of the IASs/IFRSs have been approved by the European
Commission. However, a number of IASs/IFRSs remain to be approved at the
date of publication of this document, and failure to approve these
outstanding standards in time for 2005 financial reporting could lead to
changes in the basis of accounting or in the basis of presentation of
certain financial information from that adopted for the purposes of this
Interim Report.
Furthermore, the financial information provided in this document is subject
to the issuance by the International Accounting Standards Board of
additional Interpretations prior to the end of 2005 which may have
retrospective impact and thus require to be applied in the 2005 financial
statements and the related 2004 comparatives. As a result, it is possible
that further changes may be required to the full year 2004 financial
information contained in this document prior to its inclusion as comparative
data in the published 2005 year-end consolidated financial statements under
IFRS.
The financial instruments accounting policy applied in preparing this
financial information takes full account of the revised version of IAS 39
approved by the European Commission under which the fair valuation of
financial liabilities is prohibited. In addition, the European Commission
has yet to approve the Amendment to IAS 19 Actuarial Gains and Losses, Group
Plans and Disclosures enabling the recognition of actuarial gains and losses
in the Statement of Recognised Income and Expense in the same manner as FRS
17 under Irish GAAP. CRH has elected to adopt this Amendment prior to its
effective date in relation to accounting for actuarial gains and losses
arising on the Group's defined benefit pension schemes and similar
arrangements after 1st January 2004.
2. Translation of Foreign Currencies
These financial statements are presented in euro. Results and cash flows of
subsidiary, joint venture and associated 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, joint venture and
associated undertakings at average rates, and on restatement of the opening
net assets at closing rates, are dealt with in a separate translation
reserve within equity, net of differences on related currency borrowings.
All other translation differences are taken to the income statement. Rates
used for translation of results and balance sheets into euro were as
follows:
Average Period ended
Six months ended Year ended
30th June 31st December 30th June 31st December
euro 1 = 2005 2004 2004 2005 2004 2004
US Dollar 1.2847 1.2273 1.2439 1.2092 1.2155 1.3621
Pound Sterling 0.6859 0.6735 0.6787 0.6742 0.6708 0.7051
Polish Zloty 4.0796 4.7324 4.5268 4.0388 4.5236 4.0845
Swiss Franc 1.5462 1.5531 1.5438 1.5499 1.5242 1.5429
Argentine Peso 3.7388 3.5641 3.6572 3.4934 3.5979 4.0488
3. Analysis of Revenue and Operating Profit by Business
Six months ended 30th June - Unaudited Year ended
2005 2004 31st December 2004
euro m % euro m % euro m %
Revenue
Europe Materials 1,215.7 19.2 1,021.8 18.2 2,306.8 18.1
Europe Products 1,188.9 18.8 1,090.0 19.4 2,245.0 17.6
Europe Distribution 1,016.0 16.1 895.4 16.0 1,904.1 14.9
Americas Materials 1,065.3 16.8 946.8 16.9 2,823.2 22.1
Americas Products 1,337.1 21.1 1,207.6 21.5 2,461.6 19.3
Americas Distribution 506.3 8.0 446.3 8.0 1,013.8 8.0
6,329.3 100 5,607.9 100 12,754.5 100
Operating profit
Europe Materials 141.3 31.7 125.9 34.0 320.2 26.2
Europe Products 85.9 19.3 95.8 25.9 190.7 15.6
Europe Distribution 49.6 11.1 48.4 13.1 121.4 9.9
Americas Materials (4.1) (0.8) (31.5) (8.5) 273.9 22.5
Americas Products 143.6 32.3 113.6 30.7 250.7 20.6
Americas Distribution 28.5 6.4 18.0 4.8 63.3 5.2
444.8 100 370.2 100 1,220.2 100
Profit on disposal of fixed assets
Europe Materials 4.7 1.2 0.2
Europe Products 0.6 0.4 0.8
Europe Distribution (0.6) 0.1 (2.2)
Americas Materials 4.7 3.3 5.7
Americas Products 0.2 0.9 4.8
Americas Distribution 0.4 0.1 1.5
10.0 6.0 10.8
4. Geographical Analysis of Revenue and Operating Profit
Year ended
Six months ended 30th June - Unaudited 31st December 2004
2005 2004
euro m % euro m % euro m %
Revenue
Ireland* 561.3 8.9 507.7 9.0 1,056.2 8.3
Benelux 1,191.9 18.8 1,057.7 18.9 2,166.8 17.0
Rest of Europe 1,661.8 26.3 1,433.9 25.6 3,221.8 25.2
Americas 2,914.3 46.0 2,608.6 46.5 6,309.7 49.5
6,329.3 100 5,607.9 100 12,754.5 100
Operating profit
Ireland* 70.5 15.9 72.8 19.7 142.7 11.7
Benelux 89.7 20.1 88.4 23.9 195.1 16.0
Rest of Europe 116.4 26.2 108.3 29.2 293.4 24.0
Americas 168.2 37.8 100.7 27.2 589.0 48.3
444.8 100 370.2 100 1,220.2 100
Profit on disposal of fixed assets
Ireland* 3.3 0.5 0.6
Benelux 0.1 0.6 0.6
Rest of Europe 1.3 0.6 (2.4)
Americas 5.3 4.3 12.0
10.0 6.0 10.8
* Total island of Ireland
5. Key Components of First Half 2005 Performance
euro million Revenue Operating Profit on Trading Finance Assoc. PBT
profit disposals profit costs PAT
H1 2004 as reported 5,608 370 6 376 -64 7 319
Exchange effects -91 -2 - -2 - - -2
2004 at H1 2005 rates 5,517 368 6 374 -64 7 317
Incremental impact in 2005 of:
- 2004 acquisitions 394 31 - 31 -11 - 20
- 2005 acquisitions 57 4 - 4 -3 - 1
Organic 361 42 4 46 - -1 45
H1 2005 as reported 6,329 445 10 455 -78 6 383
% change v. 2004:
As reported 13% 20% 21% 20%
At constant 2005 rates 15% 21% 22% 21%
6. Proportionate Consolidation of Joint Ventures
Six months ended Year ended
30th June 31st December
2005 Unaudited 2004 Unaudited 2004 Audited
euro m euro m euro m
Group share of:
Revenue 277.5 134.9 474.4
Cost of sales (174.2) (76.8) (301.9)
Gross profit 103.3 58.1 172.5
Operating costs (68.2) (43.4) (110.1)
Group operating profit 35.1 14.7 62.4
Profit on disposal of fixed assets 0.1 0.5 1.5
Profit before finance costs 35.2 15.2 63.9
Finance costs (net) (6.6) (4.3) (11.7)
Profit before tax 28.6 10.9 52.2
7. Earnings per Share
The computation of basic, diluted and cash earnings per share is set out
below:
Six months ended Year ended 31st
30th June December
2005 2004 2004
Unaudited Unaudited
euro m euro m euro m
Numerator for basic and diluted earnings per share
Profit attributable to equity holders of the Company 298.7 252.4 866.1
Preference dividends paid - - (0.1)
Profit attributable to Ordinary equity holders 298.7 252.4 866.0
Amortisation of intangibles 3.3 1.5 4.1
Depreciation charge 260.1 247.8 515.9
Numerator for cash earnings per share 562.1 501.7 1,386.0
Number of Number of Number of
shares shares shares
Denominator for basic earnings per share
Weighted average number of shares (millions) in issue 533.4 528.3 529.5
Effect of dilutive potential shares (share options) 2.9 3.8 2.9
Denominator for diluted earnings per share 536.3 532.1 532.4
Earnings per share euro cent euro cent euro cent
- basic 56.0c 47.8c 163.6c
- diluted 55.7c 47.4c 162.7c
Cash earnings per share (i) 105.4c 95.0c 261.8c
(i) Cash earnings per share, a non-GAAP financial measure, is presented here
for information as management believes it is a useful financial indicator of
a company's ability to generate cash from operations.
8. Net Debt and Finance Costs
As at 30th June As at 31st
Net Debt 2005 2004 December 2004
Unaudited Unaudited Audited
euro m euro m euro m
Non-current assets
Derivative financial instruments 254.4 159.1 173.2
Current assets
Derivative financial instruments 6.5 25.0 1.1
Liquid investments 445.2 318.1 311.7
Cash and cash equivalents 799.5 679.7 1,072.0
Non-current liabilities
Interest-bearing loans and borrowings (4,063.1) (3,738.2) (3,802.4)
Derivative financial instruments (3.4) (155.8) (51.9)
Current liabilities
Interest-bearing loans and borrowings (584.0) (748.9) (251.4)
Derivative financial instruments (123.6) (32.2) (210.4)
Total net debt (3,268.5) (3,493.2) (2,758.1)
Including Group share of joint ventures' net debt (253.7) (258.3) (257.0)
Finance Costs
Net Group finance costs on interest-bearing cash and 74.4 67.2 147.4
cash equivalents, loans and borrowings
Net pensions financing credit (2.8) (4.2) (8.5)
Net charge to unwind discount on provisions 7.0 5.2 11.3
Net credit re change in fair value of derivatives (0.8) (4.1) (3.8)
Total net finance costs 77.8 64.1 146.4
Including Group share of joint ventures' costs 6.6 4.3 11.7
9. Summarised Cash Flow
The table below summarises the Group's cash flows for the six months ended
30th June 2005 and 30th June 2004 and for the full year ended 31st December
2004.
Six months ended Year ended 31st
30th June - Unaudited December 2004
2005 2004 Unaudited
Inflows euro m euro m euro m
Profit before tax 383 319 1,104
Depreciation 260 248 516
Amortisation of intangibles 3 2 4
Disposals 45 59 102
Share issues (net of expenses) 36 37 73
Other (1) 23 16
726 688 1,815
Outflows
Working capital movement 350 308 111
Capital expenditure 347 263 551
Acquisitions and investments 207 802 1,029
Dividends 129 106 158
Tax paid 59 84 205
1,092 1,563 2,054
Net outflow (366) (875) (239)
Translation adjustment (144) (63) 36
Increase in net debt (510) (938) (203)
10. Other
Six months ended 30th Year ended 31st
June - Unaudited December 2004
2005 2004 Unaudited
EBITDA interest cover (times) - six months to 30th June 9.4 10.1 -
- rolling 12 months 11.8 - 12.3
EBIT interest cover (times) - six months to 30th June 5.9 6.0 -
- rolling 12 months 8.4 - 8.7
EBITDA = earnings before interest, tax, depreciation and amortisation, excluding share of joint ventures
EBIT = earnings before interest and tax, excluding share of joint ventures
Average shares in issue 533.4m 528.3m 529.5m
Net dividend per share (euro cent) 11.25c 9.6c 33.0c
Dividend cover (Earnings per share/Dividend per share) 4.98x 4.98x 4.96x
Depreciation charge (euro m) 260.1 247.8 515.9
Amortisation of intangibles (euro m) 3.3 1.5 4.1
Share option expense charged in operating profit (euro m) 6.5 4.1 9.7
Market capitalisation at period-end (euro m) 11,674.6 9,070.6 10,492.2
Total equity at period-end (euro m) 5,414.3 4,752.8 4,979.4
Net debt (euro m) 3,268.5 3,493.2 2,758.1
Net debt as a percentage of total equity 60% 73% 55%
Net debt as a percentage of market capitalisation 28% 39% 26%
11. Statutory Accounts
The financial information presented in this Interim Report does not
represent full statutory accounts. Full statutory accounts for the year
ended 31st December 2004, prepared in accordance with Irish GAAP and
containing an unqualified audit report, have been delivered to the Registrar
of Companies.
12. Board Approval
This Interim Report was approved by the Board of Directors of CRH plc on
29th August 2005.
13. Distribution of Interim Report
This Interim Report is available on the Group's website (www.crh.com).
A printed copy will be posted to shareholders on Thursday, 1st September 2005
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 2005 dividend will be posted
to shareholders on Thursday, 22nd September 2005.
CRH plc, Belgard Castle, Clondalkin, Dublin 22, Ireland TELEPHONE +353.1.404
1000 FAX +353.1.404 1007
E-MAIL mail@crh.com WEBSITE www.crh.com Registered Office, 42 Fitzwilliam
Square, Dublin 2, Ireland
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