Interim Results
CRH PLC
28 August 2007
2007 INTERIM RESULTS
Six months ended 30th June 2007
2007 2006 % change
euro m euro m
Revenue 9,698 8,028 + 21%
EBITDA* 1,141 925 + 23%
Operating profit* 771 613 + 26%
Profit on disposal of fixed assets 22 17 + 29%
Profit before tax 670 526 + 27%
euro cent euro cent
Earnings per share 92.8 73.7 + 26%
Cash earnings per share 160.9 131.7 + 22%
Dividend 20.0 13.5 + 48%
* EBITDA and operating profit are stated before profit on disposal of fixed assets.
• With a particularly strong performance in Europe
significantly outweighing more challenging conditions in the Americas, profit
before tax for the six months to 30th June increased by 27% to euro 670 million
while earnings per share grew by 26% to 92.8 cent.
• Operating profit in Europe advanced by euro 165 million to
euro 495 million, an increase of 50%. Organic growth, which accounted for euro
120 million or 73% of the first half increase, is substantially ahead of the
full year 2006 organic growth of euro 81 million.
• Operating profit in the Americas declined by euro 7
million (2.5%) to euro 276 million. Robust organic performances in our Materials
and Products activities plus an excellent contribution from APAC were outweighed
by lower profits in Distribution and the impact of a weaker US$.
• Profit on disposal of fixed assets at euro 22 million was
ahead of Interim 2006 (euro 17 million). It is anticipated that profit on
disposal of fixed assets for the full year will exceed last year's euro 40
million and that disposal of surplus properties will be an ongoing feature of
the Group's activities.
• EBITDA/net interest cover remains high at over 9 times for
the twelve months to June 2007, well above the Group's comfort level of
approximately 6 times. CRH is committed to optimising the use of its balance
sheet while maintaining an investment grade credit rating.
• The 48% interim dividend increase reflects both the
ongoing adjustment in dividend cover from 4.8 times in 2005 to a target of 3.5
times in 2008 and the broad re-establishment of the traditional split between
interim and final dividends.
• First half expenditure on acquisitions and investments
totalled almost euro 1 billion including the purchase of publicly-quoted Swiss
builders merchant Getaz Romang and CRH's first transactions in China and Turkey.
Liam O'Mahony, Chief Executive, said today:
'CRH's geographic, sectoral and product balance continues to deliver in 2007
both in terms of overall trading performance and development activity. With an
ongoing focus on price and cost effectiveness driving organic performance,
benefits from the record 2006 acquisition spend and a sustained development
emphasis, we expect strong full year profit growth.'
Announced Tuesday, 28th August 2007
This 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 statement and other factors discussed in our
Annual Report on Form 20-F filed with the SEC.
Contact CRH at Dublin 404 1000 (+353 1 404 1000)
Liam O'Mahony Chief Executive
Myles Lee Finance Director
Eimear O'Flynn Head of Investor Relations
Maeve Carton Group Controller
INTERIM STATEMENT
HIGHLIGHTS
With a particularly strong start in Europe significantly outweighing more
challenging conditions in the Americas profit before tax for the six months to
30th June increased by euro 144 million (+27%) compared with the reported 2006
outcome of euro 526 million.
The results include the proportionate consolidation of joint ventures in the
Group's income statement, cash flow statement and balance sheet while the
Group's share of profit after tax of associates is included as a single line
item in arriving at Group profit before tax.
• Sales revenue: euro 9,698 million, up 21%
• EBITDA*: euro 1,141 million, up 23%
• Operating profit*: euro 771 million, up 26%
• Profit on disposal of fixed assets: euro 22 million, up 29%
• Profit before tax: euro 670 million, up 27%
• Basic earnings per share: 92.8c, up 26%
• Cash earnings per share: 160.9c, up 22%
• Dividend per share: 20.0c, up 48%
* EBITDA (earnings before interest, tax, depreciation and amortisation) and
operating profit do not include any profit on disposal of fixed assets
The average first half US Dollar exchange rate was 7.5% weaker versus the euro
than in the corresponding period in 2006. This had a negative impact of euro 16
million on profit before tax.
Note 3 on page 14 analyses the key components of first half 2007 performance.
DIVIDEND
In March 2007, the Board announced a full year 2006 dividend of 52.0c (up 33%
versus the previous year) with dividend cover of 4.3 times. This comprised an
interim dividend of 13.5c (up 20%) and a final dividend of 38.5c (up 39%) and
represented a first step in a phased adjustment in dividend cover from 4.8 times
in 2005 to a targeted 3.5 times for 2008.
In line with this policy, and to re-establish the traditional split between
interim and final dividends, the Board has decided to pay an interim dividend of
20.0c per share, an increase of 48% on the 2006 interim dividend of 13.5c.
DEVELOPMENT
First half acquisition and investment expenditure amounted to approximately euro
1 billion. This included the purchase of publicly-quoted Swiss builders merchant
Getaz Romang, completed in May, in addition to CRH's first acquisitions in China
and Turkey. In February, CRH completed the acquisition of a modern 650,000
tonne cement plant in Heilongjiang province in northeast China while April saw
the purchase of 50% of Denizli Cement, an integrated cement and readymixed
concrete business with a modern 1.8 million tonne cement plant and extensive
limestone reserves operating in the Aegean region of south-western Turkey. In
addition, the Group completed more than 30 other transactions across its various
product segments.
SEGMENT REVIEW
EUROPE - MATERIALS
Analysis of change
___________________________________________________
Total Acquisitions
euro million 2007 2006 Change Organic 2006 2007 Exchange
Sales revenue 1,686 1,334 +352 +307 +21 +27 -3
% change +26% +22% +2% +2% -
Operating profit* 222 152 +70 +59 +5 +6 -
% change +46% +39% +3% +4% -
Margin 13.2% 11.4%
*Operating profit is before profit on disposal of fixed assets
With a continuing positive demand and pricing environment in most major markets
and with favourable seasonal weather conditions in the early months, Europe
Materials has delivered a significant increase in first half operating profit
and margin primarily driven by organic growth.
Ireland: Lower residential activity in the first half was offset by improved
non-residential construction and accelerating infrastructure investment. The
changes in sectoral demand compared with 2006 resulted in strong volume
increases in stone and blacktop, similar cement and readymixed concrete volumes
and a decline in concrete block sales. Price increases broadly kept pace with
rising input costs while our Northern Ireland contracting activities had a
particularly busy six months. Overall profits were maintained while margins
declined reflecting the changing mix of activity.
Finland/Baltics: Broad-based strength in Finnish construction activity
contributed to double-digit percentage advances in cement, aggregates and
readymixed concrete volumes. This combined with positive price development
resulted in a very good uplift in operating profit in Finland. Our operations in
Estonia, Latvia and St. Petersburg also benefited from strong demand and all
reported improvements in operating performance.
Central/Eastern Europe: Construction demand in Poland was exceptionally strong
driven mainly by the industrial and commercial sectors. All our activities
benefited from this positive backdrop most particularly our cement operations.
First half volumes increased by approximately 40% having benefited from
exceptionally good weather. The market in Ukraine also enjoyed strong growth and
our cement volumes increased by just over 20%. Significant savings were achieved
from the new coal mill which has reduced dependence on high-priced natural gas.
Operating profit from this region showed a very substantial increase.
Switzerland: First half cement volumes showed a good advance compared with
2006, helped by demand from a number of large projects. Our downstream
aggregates and readymixed concrete activities also experienced good activity
levels in the residential and non-residential sectors and overall operating
profit was well ahead of the previous year's levels.
Iberia: Although readymixed concrete volumes were slightly lower than in the
first half of 2006, our Spanish readymixed concrete and concrete products
operations delivered improvements in both operating profit and margin through
good recovery of higher input costs which adversely impacted margins in 2006.
Results from Spanish cement producer Corporacion Uniland, in which CRH has a
26.3% stake, are included in share of associates' profit after tax; no interim
profits were recognised from Uniland in 2006. Our Secil joint venture
experienced further reductions in Portuguese construction activity. However,
strong cement exports, good demand in its Tunisian operations and benefits from
Secil's increased shareholding in Lebanese cement producer Ciment de Sibline
resulted in operating profit levels being maintained.
Eastern Mediterranean: In April CRH acquired a 50% stake in Denizli Cement, a
leading cement and readymixed concrete producer in the Aegean region of
south-western Turkey. Denizli's performance in its first three months with the
Group was well up to expectations. In Israel our 25% associate reported an
improved performance despite the continuing very difficult political situation
in the region.
EUROPE - PRODUCTS
Analysis of change
___________________________________________________
Total Acquisitions
euro million 2007 2006 Change Organic 2006 2007 Exchange
Sales revenue 1,826 1,486 +340 +122 +185 +28 +5
% change +23% +8% +13% +2% -
Operating profit* 180 112 +68 +44 +21 +3 -
% change +61% +39% +19% +3% -
Margin 9.9% 7.5%
*Operating profit is before profit on disposal of fixed assets
Improving economies and favourable building conditions through the winter months
have contributed to a marked uplift in operating performance and significant
margin advance for our Europe Products operations.
Concrete Products: The group, which accounts for approximately half of Europe
Products' operating profit, enjoyed a substantial advance in its Architectural
operations (pavers, tiles and blocks) as well as good growth across its
Structural operations (floor & wall elements, beams, vaults and drainage
products). Architectural operations benefited from a strong pick-up in
profitability in concrete paving and landscape walling activities in Germany
where a lower cost structure and a more favourable product mix coupled with
price improvements contributed to a strong uplift in margins. Our UK operations
were boosted by the inclusion of six months trading for Supreme Concrete which
was acquired in April 2006. Architectural activities in France, Denmark and
Slovakia all improved while trading in the Benelux was somewhat mixed with good
demand in landscaping products offset by slower order drawdown in other
segments. Structural operations also experienced some delays in order off-take
in the Netherlands; however, this was more than compensated by improvements in
underlying operations in Belgium and Denmark. The Structural out-turn was
enhanced by good contributions from acquisitions in Belgium, France, Denmark and
Poland. Overall first half profitability in Concrete Products advanced
strongly.
Clay Products: First half operating profit was substantially ahead of last year
reflecting in particular the absence of the extensive production shut-downs
which affected performance in our UK and German activities in early 2006. In
the UK, Ibstock brick volumes were lower than in 2006 impacted by a tough first
quarter and considerable disruption to deliveries as a result of the very heavy
rainfall in the second half of June. However, with a better cost profile and the
benefit of full production runs, profits recovered strongly. Exceptionally
strong construction demand in Poland contributed to volume and price
improvements and our clay operations delivered a very significant uplift in
profitability. The Netherlands had a satisfactory first half with strength in
clay paver demand offset by some softness in clay brick shipments. Our clay
operations in Germany turned in an improved performance helped by the mild
winter and increased exports to the Polish market.
Building Products: The Building Products Group comprises three broad product
segments: Construction Accessories, Insulation and the Building Envelope
businesses which comprise Fencing & Security (F&S), Daylight & Ventilation (D&V)
and Roller Shutters & Awnings (RSA). The Construction Accessories business,
enlarged through the acquisition of Halfen in May 2006, outperformed with very
favourable trading as a result of good demand across this mainly non-residential
oriented business. Our Insulation business has continued its strong recovery
delivering further improvements particularly in its Dutch and German activities,
which had declined significantly in 2005, and in its Polish operations which
enjoyed very strong growth. In improving markets our F&S and D&V operations
delivered good organic growth in both sales and operating profit while our RSA
business, acquired in August 2006, continued to perform well.
EUROPE - DISTRIBUTION
Analysis of change
___________________________________________________
Total Acquisitions
euro million 2007 2006 Change Organic 2006 2007 Exchange
Sales revenue 1,559 1,319 +240 +83 +25 +140 -8
% change +18% +6% +2% +11% -1%
Operating profit* 93 66 +27 +17 +1 +9 -
% change +41% +26% +1% +14% -
Margin 6.0% 5.0%
*Operating profit is before profit on disposal of fixed assets
The first half of 2007 has seen a much improved performance across the Europe
Distribution business segment.
Builders Merchants: Our Builders Merchanting activities recorded overall organic
sales growth of approximately 5%. Operations in the Netherlands performed
particularly well and good underlying progress was also achieved in our various
French and German businesses. Sales in our Austrian activities showed some
improvement but margins still lag our original expectations. First half
acquisitions in the Netherlands, France and Germany contributed positively to
the overall Builders Merchants result. Swiss operations benefited from organic
growth in the German-speaking eastern half of the country and a strong initial
contribution from Getaz Romang, the former publicly-quoted leader in
French-speaking western Switzerland, which was acquired in May.
DIY: Following moderate growth in 2006, underlying sales in Benelux DIY
operations increased by over 8% and underlying operating profit advanced
strongly. Bauking's DIY activities in Germany performed well and benefited from
the February acquisition of Mobau whose turnover is split approximately
one-third DIY/two-thirds Builders Merchanting. Costs associated with the opening
of four new stores by our Portuguese joint venture resulted in similar operating
profit. This business now operates from 26 locations throughout Portugal.
Overall, results from Europe Distribution were well up on the 2006 outcome with
good margin progress in both Builders Merchanting and DIY activities.
AMERICAS - MATERIALS
Analysis of change
___________________________________________________
Total Acquisitions
euro million 2007 2006 Change Organic 2006 2007 Exchange
Sales revenue 2,181 1,393 +788 +93 +791 +8 -104
% change +57% +7% +57% - -7%
Operating profit* 66 35 +31 +2 +31 +1 -3
% change +89% +6% +89% +3% -9%
Margin 3.0% 2.5%
*Operating profit is before profit on disposal of fixed assets
The severe weather conditions in many of Americas Materials' markets in the
first four months of 2007 contrasted with the mild weather which facilitated
early 2006 private sector construction activity. Our heritage companies saw
aggregates volumes decline by 7% with readymixed concrete volumes down 12% and
asphalt volumes 16% lower. Despite the tough volume backdrop, overall prices
increased 6% for aggregates, 9% for readymixed concrete and 17% for asphalt, the
product most impacted by input cost increases. The advances in pricing and
continuing benefits from cost reduction efforts maintained underlying operating
profit and this was augmented by a strong initial first half contribution from
APAC, which was acquired at end-August 2006.
New England: First half activity levels were hampered by poor early weather and
by a low level of highway construction in Massachusetts and Rhode Island.
However, a more favourable backdrop in Connecticut combined with good price and
cost management helped contain the decline in operating profit in this region.
New York/New Jersey: These operations were also impacted by weather conditions
and by slower demand in commercial and residential markets in Upstate New York.
However, our businesses in the greater New York Metro region were less affected
and, with improved margins, first half operating profit was broadly in line with
the 2006 outcome.
Central: Good markets in Pennsylvania combined with effective cost management
helped to more than compensate for a mixed demand backdrop across Ohio and
Michigan contributing to an improvement in operating profit compared with 2006.
West: This region has continued to benefit from generally strong demand with
increased commercial and public construction only partly offset by declining
home building activity. Markets in Utah, Idaho, Oregon and Washington were
particularly busy. The main exception to this positive picture was Iowa where
weaker residential activity and the lack of major highway projects has impacted
demand. Overall, the region recorded a strong increase in operating profit.
APAC: Despite exceptionally poor weather conditions in the mid-western states
of Kansas, Oklahoma and Missouri, first half trading at APAC was ahead of our
expectations buoyed by strong performances in Florida, Kentucky and West
Virginia. Excellent progress was achieved on the ongoing realisation of
synergies and implementation of pricing initiatives across APAC's operations.
AMERICAS - PRODUCTS
Analysis of change
___________________________________________________
Total Acquisitions
euro million 2007 2006 Change Organic 2006 2007 Exchange
Sales revenue 1,796 1,813 -17 -109 +222 +6 -136
% change -1% -6% +12% - -7%
Operating profit* 180 202 -22 -7 - - -15
% change -11% -3% - - -8%
Margin 10.0% 11.1%
*Operating profit is before profit on disposal of fixed assets
The first six months of 2007 have been much more challenging than the first half
of 2006 with the significant decline in residential markets since mid-2006 and
poor early weather leading to tough comparatives. However, despite this
difficult backdrop, continuing growth in non-residential construction and
effective cost reduction measures across these operations delivered first half
operating profit only slightly lower in US$ terms than in the first half of
2006.
Architectural Products Group (APG): The impact of the downturn in US residential
construction was most evident in APG's masonry markets where declining demand
more than offset continuing strength in commercial activity. The adverse impact
on masonry operations was partly mitigated by much improved profits from bagged
soil and mulch activities as a result of management action following a
disappointing performance in first half 2006. Despite a sharp volume decline
the Glen-Gery clay brick operation reported improved operating profit helped by
lower energy input costs. Overall, the decline in operating profit was
contained as a result of APG's strength in non-residential business segments and
strong action to reduce costs across its residential-oriented activities.
Precast: This group, which is a leading manufacturer of precast, pre-stressed
and polymer concrete and concrete pipe, continued to benefit from the ongoing
advance in non-residential construction. Strength in western and central
markets more than offset softness in north-eastern and south-eastern regions and
operating profit was ahead of 2006.
Glass: With operations in the US and Canada, the Glass group is the largest
supplier of high-performance glazing products and services in North America.
Despite increased competition arising from the decline in demand from the
residential sector, the group's strong non-residential service-oriented focus
enabled it to maintain underlying sales while delivering a modest improvement in
underlying operating profit.
MMI: MMI, acquired at end-April 2006, is a leading manufacturer and distributor
of mainly non-residential oriented building products in three distinct product
segments: construction accessories, wire products and fencing products. The
downturn in new housing particularly impacted MMI's residential-oriented fencing
activities and overall operating profit for the first six months of 2007 was
very disappointing.
South America: Operating profit for our businesses in Argentina and Chile was
unchanged despite the impact of sharply higher energy costs in our Argentine
clay products operation.
AMERICAS - DISTRIBUTION
Analysis of change
___________________________________________________
Total Acquisitions
euro million 2007 2006 Change Organic 2006 2007 Exchange
Sales revenue 650 683 -33 -107 +122 +3 -51
% change -5% -16% +18% - -7%
Operating profit* 30 46 -16 -24 +11 - -3
% change -35% -52% +24% - -7%
Margin 4.6% 6.8%
*Operating profit is before profit on disposal of fixed assets
Americas Distribution comprises two divisions which supply specialist contractor
groups; Roofing/Siding which accounts for approximately two-thirds of annualised
sales and Interior Products (wallboard, steel studs and acoustical ceiling
systems) which represents approximately one-third of sales.
Roofing/Siding: Underlying sales declined from the record level achieved in 2006
reflecting the downturn in residential construction, both new and remodel, harsh
winter weather in the northeast and the absence of extensive first half 2006
repair activity in Florida following active hurricane seasons in both 2004 and
2005. Heritage sales in this business fell by 16% - with sales in Florida back
to first half 2004 levels - and the operating profit margin declined.
Interior Products: This business had the benefit of a strong first half
contribution from 2006 acquisitions. Although underlying sales declined by 19%,
impacted by the residential downturn and by significant price deflation in
gypsum wallboard, the operating profit margin was only slightly lower due to
good cost containment and an excellent performance in the Hawaiian operations.
As expected, first half Americas Distribution operating profit and margin were
down on a record 2006 with strong acquisition contributions outweighed by an
organic operating profit decline, approximately 40% of which was attributable to
Florida operations. While the overall margin at 4.6% was lower than first half
2006 (6.8%) and first half 2005 (5.6%), which were boosted by extensive
post-hurricane roofing/siding repair work in Florida, it was still ahead of the
4.0% reported for the first half of 2004.
FINANCE
Higher short term interest rates and the substantial development activity
completed over the past eighteen months resulted in an increase in net finance
costs from euro 113 million in the first half of 2006 to euro 150 million in
2007.
As in prior years, the interim taxation charge is an estimate based on the
current expected full year tax rate.
Net debt increased by just under euro 1 billion during the period despite a
total spend of euro 1.5 billion on acquisitions, investments and capital
projects, and amounted to euro 5,450 million at the end of June 2007.
EBITDA/net interest cover remains high at over 9 times for the twelve months to
June 2007, well above the Group's comfort level of approximately 6 times. CRH is
committed to optimising the use of the Group's balance sheet while maintaining
an investment grade credit rating.
As part of its overall financing strategy CRH has established a Euro Medium Term
Note (EMTN) programme which provides the ability to issue bonds in the euro and
Sterling markets when conditions in debt capital markets are favourable.
OUTLOOK
The overall outlook for Europe Materials remains very positive with further
strong progress expected in the second half. In Ireland good activity levels in
non-residential and infrastructure continue to compensate for the decline in
residential construction. While the pace of advance in Finland and the Baltic
states is likely to moderate we nevertheless expect good improvement in the
second half. Poland and Ukraine remain very busy and we anticipate further
strong profit growth in both countries over the coming months. Our Swiss
operations continue to benefit from broad-based construction activity. In Spain
we look to further profit improvement in the second half. The Portuguese market
remains difficult but Secil continues to take advantage of export opportunities
and good growth in its operations in North Africa and Lebanon. Our recent
Turkish joint venture is expected to deliver positively over the remaining
months of 2007.
In Europe Products, favourable weather conditions over the winter period and
strong markets provided a strong impetus to first half organic growth. We expect
continued growth, but at a more moderate pace, in the second half of the year.
The Concrete group benefited in particular from the good weather in the early
months of the year, and further progress is expected in the second half. The
Clay group continues to perform well and our Building Products activities look
to a good second half performance. Comparisons for the second half will benefit
from the absence of 2006's euro 31 million net charge in respect of
non-recurring items.
The first half of 2007 has seen further very satisfactory organic growth from
our Europe Distribution operations. We expect to deliver continued organic
progress in the second half together with a strong contribution from first half
acquisitions, in particular from Getaz Romang in Switzerland. Second half
trading comparisons in Europe Distribution will of course be affected by the
absence of 2006's euro 19 million non-recurring credit to operating profit.
Overall for Europe, with first half organic operating profit growth already
ahead of that achieved for the full year in 2006, we look to further progress in
the second half of this year augmented by good contributions from acquisitions.
Americas Materials continues to benefit from good price improvements and ongoing
cost reduction measures across its operations and we look to a strong organic
operating profit improvement in the second half of the year. This, combined with
further benefits from the inclusion of APAC, acquired at end-August 2006, and
the absence of last year's APAC integration costs, is expected to lead to a
significant full year US$ profit increase for this Division.
Our Americas Products operations have delivered a resilient performance through
the first half of 2007 with growth in non-residential construction and profit
improvement measures broadly offsetting the impact of the sharp decline in
residential construction. While the recent disruption in financial markets has
contributed to added uncertainty, we anticipate that, with the broad product and
end-use balance of our businesses, full year profits in US$ terms will be
similar to 2006 levels.
After a difficult first half we expect that like-for-like trading comparisons in
Americas Distribution will improve somewhat over the balance of the year. With
acquisition contributions offsetting an organic decline, full year turnover in
US$ terms should be similar to 2006 with an operating profit margin in the range
5% to 5.5% compared with a record 7.1% last year.
Overall for the Americas we expect that continuing growth in non-residential
construction and a broadly favourable backdrop for infrastructure will offset
the impact of lower residential activity, leading to similar full year
underlying operating profit in US$. This will be augmented by positive
acquisition contributions. Notwithstanding the translation impact of a weaker US
Dollar, we expect higher full year profits for the Americas in euro terms.
CRH's geographic, sectoral and product balance continues to deliver in 2007 both
in terms of overall trading performance and development activity. With an
ongoing focus on price and cost effectiveness driving organic performance,
benefits from the record 2006 acquisition spend and a sustained development
emphasis, we expect strong full year profit growth.
GROUP INCOME STATEMENT
Year ended 31st
Six months ended 30th June December
2007 2006 2006
Unaudited Unaudited Audited
euro m euro m euro m
Revenue 9,698 8,028 18,737
Cost of sales (6,868) (5,612) (13,123)
Gross profit 2,830 2,416 5,614
Operating costs (2,059) (1,803) (3,847)
Group operating profit 771 613 1,767
Profit on disposal of fixed assets 22 17 40
Profit before finance costs 793 630 1,807
Finance costs (229) (186) (407)
Finance revenue 79 73 155
Group share of associates' profit after tax 27 9 47
Profit before tax 670 526 1,602
Income tax expense (estimated at interim) (164) (123) (378)
Group profit for the financial period 506 403 1,224
Profit attributable to:
Equity holders of the Company 504 396 1,210
Minority interest 2 7 14
Group profit for the financial period 506 403 1,224
Earnings per Ordinary Share
Basic 92.8c 73.7c 224.3c
Diluted 92.0c 73.0c 222.4c
Cash earnings per Ordinary Share 160.9c 131.7c 352.1c
GROUP BALANCE SHEET
As at 30th As at 30th As at 31st
June 2007 June 2006 December 2006
Unaudited Unaudited Audited
euro m euro m euro m
ASSETS
Non-current assets
Property, plant and equipment 7,974 6,950 7,480
Intangible assets 3,284 2,515 2,966
Investments in associates/other financial assets 646 628 651
Derivative financial instruments 41 59 74
Deferred income tax assets 484 415 489
Total non-current assets 12,429 10,567 11,660
Current assets
Inventories 2,368 2,114 2,036
Trade and other receivables 3,930 3,176 3,172
Derivative financial instruments 7 12 5
Liquid investments 328 435 370
Cash and cash equivalents 741 665 1,102
Total current assets 7,374 6,402 6,685
Total assets 19,803 16,969 18,345
EQUITY
Capital and reserves attributable to the Company's equity holders
Equity share capital 186 184 184
Preference share capital 1 1 1
Share premium account 2,394 2,276 2,318
Treasury shares (22) (15) (14)
Other reserves 60 43 52
Foreign currency translation reserve (218) (14) (137)
Retained income 5,103 3,898 4,659
7,504 6,373 7,063
Minority interest 62 39 41
Total equity 7,566 6,412 7,104
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings 5,545 4,219 5,313
Derivative financial instruments 90 76 47
Deferred income tax liabilities 1,401 1,155 1,301
Trade and other payables 140 180 160
Retirement benefit obligations 47 316 262
Provisions for liabilities 328 226 320
Capital grants 10 11 10
Total non-current liabilities 7,561 6,183 7,413
Current liabilities
Trade and other payables 3,323 2,670 2,788
Current income tax liabilities 283 309 216
Interest-bearing loans and borrowings 896 1,248 645
Derivative financial instruments 36 23 38
Provisions for liabilities 138 124 141
Total current liabilities 4,676 4,374 3,828
Total liabilities 12,237 10,557 11,241
Total equity and liabilities 19,803 16,969 18,345
GROUP CASH FLOW STATEMENT
Year ended
Six months ended 30th June 31st December
2007 2006 2006
Unaudited Unaudited Audited
euro m euro m euro m
Cash flows from operating activities
Profit before tax 670 526 1,602
Finance costs, net 150 113 252
Group share of associates' profit after tax (27) (9) (47)
Profit on disposal of fixed assets (22) (17) (40)
Group operating profit 771 613 1,767
Depreciation charge 354 300 664
Share-based payments expense 10 6 16
Amortisation of intangible assets 16 12 25
Net movement on provisions (7) 9 11
Increase in working capital (330) (502) (132)
Amortisation of capital grants (1) (1) (2)
Other non-cash movements 7 7 10
Cash generated from operations 820 444 2,359
Interest paid (including finance leases) (170) (110) (253)
Irish corporation tax paid - (3) (20)
Overseas corporation tax paid (103) (58) (358)
Net cash inflow from operating activities 547 273 1,728
Cash flows from investing activities
Inflows
Proceeds from disposal of fixed assets 62 60 252
Interest received 28 16 46
Dividends received from associates 13 8 22
103 84 320
Outflows
Purchase of property, plant and equipment (520) (434) (832)
Acquisition of subsidiaries and joint ventures (795) (614) (1,978)
Investments in and advances to associates (1) (4) (7)
Advances to JVs and purchase of trade investments (1) (5) (13)
Deferred/contingent acquisition consideration paid (87) (59) (74)
(1,404) (1,116) (2,904)
Net cash outflow from investing activities (1,301) (1,032) (2,584)
Cash flows from financing activities
Inflows
Proceeds from issue of shares 20 56 87
Shares issued to minority interests - - 3
Increase in interest-bearing loans and borrowings 1,025 1,016 1,708
Increase in finance lease liabilities - - 3
1,045 1,072 1,801
Outflows
Ordinary Shares purchased by Employee Benefit Trust, net (31) (15) (15)
Decrease/(increase) in liquid investments 36 (102) (35)
Repayment of interest-bearing loans and borrowings (464) (622) (656)
Repayment of finance lease liabilities (13) (1) (13)
Net cash movement in derivative financial instruments (24) 103 (29)
Dividends paid to equity holders of the Company (150) (135) (197)
Dividends paid to minority interests (2) (6) (12)
(648) (778) (957)
Net cash inflow from financing activities 397 294 844
Change in cash and cash equivalents (357) (465) (12)
Cash and cash equivalents at beginning of period 1,102 1,149 1,149
Translation adjustment (4) (19) (35)
Cash and cash equivalents at end of period 741 665 1,102
GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE
Year ended
Six months ended 30th June 31st December
2007 2006 2006
Unaudited Unaudited Audited
euro m euro m euro m
Items of income/(expense) recognised directly within equity:
Currency translation effects (81) (248) (371)
Group defined benefit pension obligations:
- Actuarial gain 225 142 155
- Movement in deferred tax asset (55) (31) (42)
Movement in deferred tax asset on employee share schemes (3) 4 27
Gains/(losses) relating to cash flow hedges 2 3 (2)
Net income/(expense) recognised directly within equity 88 (130) (233)
Group profit for the financial period 506 403 1,224
Total recognised income and expense for the period 594 273 991
Equity holders of the company 593 268 980
Minority interest 1 5 11
Total recognised income and expense for the period 594 273 991
GROUP STATEMENT OF CHANGES IN EQUITY
Year ended
Six months ended 30th June 31st December
2007 2006 2006
Unaudited Unaudited Audited
euro m euro m euro m
Total equity at beginning of period 7,104 6,234 6,234
Issue of shares:
- Share option and participation schemes 20 56 87
- Issued in lieu of dividends 58 14 25
Ordinary Shares purchased by Employee Benefit Trust, net (31) (15) (15)
Share-based payment expense 10 6 16
Dividends (208) (149) (222)
Movement in minority interest 21 - 2
Items of income/(expense) recognised directly within equity:
Currency translation effects (81) (248) (371)
Group defined benefit pension obligations 170 111 113
Movement in deferred tax asset on employee share schemes (3) 4 27
Cash flow hedges 2 3 (2)
Profit for the year attributable to equity holders 504 396 1,210
Total equity at end of period 7,566 6,412 7,104
SUPPLEMENTARY INFORMATION
1 Basis of Preparation
The financial information presented in this report has been prepared in
accordance with the Group's accounting policies under International Financial
Reporting Standards as adopted by the EU (IFRS). The transition date for
implementation of IFRS by the Group was 1st January 2004.
The Group's accounting policies under IFRS are based on the International
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.
2 Translation of Foreign Currencies
This financial information is presented in euro. Results and cash flows of
subsidiaries, joint ventures and associates 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 subsidiaries, joint ventures and associates 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 = 2007 2006 2006 2007 2006 2006
US Dollar 1.3291 1.2296 1.2556 1.3505 1.2713 1.3170
Pound Sterling 0.6746 0.6870 0.6817 0.6740 0.6921 0.6715
Polish Zloty 3.8441 3.8901 3.8959 3.7677 4.0546 3.8310
Swiss Franc 1.6318 1.5610 1.5729 1.6553 1.5672 1.6069
Canadian Dollar 1.5078 1.3999 1.4237 1.4245 1.4132 1.5281
Argentine Peso 4.1078 3.7733 3.8623 4.1834 3.9432 4.0373
Israeli Shekel 5.5198 5.6429 5.5928 5.7574 5.6936 5.5623
3 Key Components of Performance for the First Half of 2007
Analysis of Change
_______________________________________
Total Acquisitions
euro million 2007 2006 Change Organic 2006 2007 Exchange
Revenue 9,698 8,028 +1,670 +389 +1,366 +212 -297
Operating Profit 771 613 +158 +91 +69 +19 -21
Profit on disposals 22 17 +5 +5 - - -
Trading Profit 793 630 +163 +96 +69 +19 -21
Finance Costs -150 -113 -37 +14 -49 -7 +5
Associates 27 9 +18 +5 +13* - -
Profit before tax 670 526 +144 +115 +33 +12 -16
PBT % change v. 2006 +27% +22% +6% +2% -3%
* In its reported Interim results for 2006, CRH did not record any share of PAT
in respect of its 26% investment in Uniland (acquired in December 2005).
4 Analysis of Revenue, EBITDA and Operating Profit by Business
Six months ended 30th June - Unaudited Year ended 31st December
2006
2007 2006 Audited
euro m % euro m % euro m %
Revenue
Europe Materials 1,686 17.4 1,334 16.6 2,967 15.8
Europe Products 1,826 18.8 1,486 18.5 3,186 17.0
Europe Distribution 1,559 16.1 1,319 16.4 2,786 14.9
Americas Materials 2,181 22.5 1,393 17.4 4,778 25.5
Americas Products 1,796 18.5 1,813 22.6 3,572 19.1
Americas Distribution 650 6.7 683 8.5 1,448 7.7
9,698 100 8,028 100 18,737 100
EBITDA *
Europe Materials 298 26.1 219 23.7 564 23.0
Europe Products ** 255 22.3 179 19.4 361 14.7
Europe Distribution ** 114 10.0 84 9.1 210 8.5
Americas Materials 192 16.9 127 13.7 695 28.3
Americas Products 242 21.2 262 28.3 506 20.6
Americas Distribution 40 3.5 54 5.8 120 4.9
1,141 100 925 100 2,456 100
Depreciation charge
Europe Materials 76 67 143
Europe Products 70 64 134
Europe Distribution 20 18 37
Americas Materials 126 92 220
Americas Products 55 53 116
Americas Distribution 7 6 14
354 300 664
Amortisation of intangible assets
Europe Materials - - -
Europe Products 5 3 6
Europe Distribution 1 - 1
Americas Materials - - -
Americas Products 7 7 15
Americas Distribution 3 2 3
16 12 25
Operating profit*
Europe Materials 222 28.8 152 24.8 421 23.8
Europe Products ** 180 23.3 112 18.3 221 12.5
Europe Distribution ** 93 12.1 66 10.8 172 9.7
Americas Materials 66 8.6 35 5.6 475 26.9
Americas Products 180 23.3 202 32.9 375 21.2
Americas Distribution 30 3.9 46 7.6 103 5.9
771 100 613 100 1,767 100
Profit on disposal of fixed assets
Europe Materials 12 9 28
Europe Products 2 - 2
Europe Distribution - 2 4
Americas Materials 7 5 2
Americas Products - 1 3
Americas Distribution 1 - 1
22 17 40
* Both EBITDA and Operating profit exclude profit on disposal of fixed
assets.
** Full-year 2006 segment results for Europe Products include a goodwill
impairment loss of euro 50 million relating to the Cementbouw bv joint venture
in the Netherlands, and euro 18.9 million of the total gain of euro 37.7 million
which arose in 2006 on deconsolidation of certain pension schemes in the
Netherlands. The remaining euro 18.8 million of the gain was included in the
segment profit for Europe Distribution.
5 Geographical Analysis of Revenue, EBITDA and Operating Profit
Six months ended 30th June - Unaudited Year ended 31st December
2006
2007 2006 Audited
euro m % euro m % euro m %
Revenue
Ireland* 695 7.2 571 7.1 1,251 6.7
Benelux 1,444 14.9 1,269 15.8 2,628 14.0
Rest of Europe 2,933 30.2 2,293 28.6 5,058 27.0
Americas 4,626 47.7 3,895 48.5 9,800 52.3
9,698 100 8,028 100 18,737 100
EBITDA**
Ireland* 97 8.5 94 10.2 209 8.5
Benelux*** 177 15.5 150 16.2 301 12.3
Rest of Europe 393 34.4 238 25.7 624 25.4
Americas 474 41.6 443 47.9 1,322 53.8
1,141 100 925 100 2,456 100
Depreciation charge
Ireland* 24 22 52
Benelux 40 39 81
Rest of Europe 102 88 181
Americas 188 151 350
354 300 664
Amortisation of intangible assets
Ireland* - - -
Benelux 1 1 2
Rest of Europe 5 2 5
Americas 10 9 18
16 12 25
Operating profit**
Ireland* 73 9.5 72 11.7 157 8.9
Benelux*** 136 17.6 110 18.0 218 12.3
Rest of Europe 286 37.1 148 24.1 438 24.8
Americas 276 35.8 283 46.2 954 54.0
771 100 613 100 1,767 100
Profit on disposal of fixed assets
Ireland* 11 7 23
Benelux 3 - 3
Rest of Europe - 4 8
Americas 8 6 6
22 17 40
* Total island of Ireland.
** EBITDA and Operating profit exclude profit on disposal of fixed
assets.
*** Full-year 2006 segment results for Benelux include a goodwill
impairment loss of euro 50 million relating to the Cementbouw bv joint venture
in the Netherlands, and a gain of euro 37.7 million which arose in 2006 on
deconsolidation of certain pension schemes in the Netherlands.
6 Proportionate Consolidation of Joint Ventures
Year ended
Six months ended 30th June 31st December
2007 2006 2006
Unaudited Unaudited Audited
euro m euro m euro m
Revenue 493 424 901
Cost of sales (340) (290) (628)
Gross profit 153 134 273
Operating costs (106) (96) (180)
Impairment of Cementbouw bv goodwill - - (50)
Operating profit 47 38 43
Profit on disposal of fixed assets - 2 4
Profit before finance costs 47 40 47
Finance costs (net) (9) (7) (16)
Profit before tax 38 33 31
Income tax expense (11) (9) (18)
Group profit for the financial period 27 24 13
Depreciation 22 19 37
7 Earnings per Ordinary Share
The computation of basic, diluted and cash earnings per share is set out
below:
Year ended
Six months ended 30th June 31st December
2007 2006 2006
Unaudited Unaudited Audited
euro m euro m euro m
Profit attributable to equity holders of the Company 504 396 1,210
Preference dividends paid - - -
Numerator for basic and diluted earnings per Share 504 396 1,210
Amortisation of intangibles 16 12 25
Depreciation charge 354 300 664
Numerator for cash earnings per Ordinary Share 874 708 1,899
Number of Number of Number of
Denominator for basic earnings per Ordinary Share Shares Shares Shares
Weighted average number of shares (millions) in issue 543.2 538.2 539.4
Effect of dilutive potential shares (share options) 4.6 5.1 4.7
Denominator for diluted earnings per Ordinary Share 547.8 543.3 544.1
Earnings per Ordinary Share euro cent euro cent euro cent
- basic 92.8c 73.7c 224.3
- diluted 92.0c 73.0c 222.4
Cash earnings per Ordinary Share (i) 160.9c 131.7c 352.1
(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 31st
As at 30th June - Unaudited December 2006
2007 2006 Audited
Net debt euro m euro m euro m
Non-current assets Derivative financial instruments 41 59 74
Current assets Derivative financial instruments 7 12 5
Liquid investments 328 435 370
Cash and cash equivalents 741 665 1,102
Non-current liabilities Interest-bearing loans and borrowings (5,545) (4,219) (5,313)
Derivative financial (90) (76) (47)
instruments
Current liabilities Interest-bearing loans and (896) (1,248) (645)
borrowings
Derivative financial instruments (36) (23) (38)
Total net debt (5,450) (4,395) (4,492)
Including Group share of joint ventures' net debt (276) (249) (248)
Finance costs (net)
Net Group finance costs on interest-bearing cash and cash
equivalents, loans and borrowings 144 100 234
Net pensions financing credit (8) (5) (12)
Charge to unwind discount on provisions/deferred consideration 16 12 27
Net (credit)/charge re change in fair value of derivatives (2) 6 3
Total net finance costs 150 113 252
Including Group share of joint ventures' net finance costs 9 7 16
9 Summarised Cash Flow
Six months ended Year ended
30th June - Unaudited 31st December
2006
2007 2006 Audited
Inflows euro m euro m euro m
Profit before tax 670 526 1,602
Depreciation 354 300 664
Amortisation of intangibles 16 12 25
Proceeds from disposal of fixed assets 62 60 252
Share issues 78 70 112
1,180 968 2,655
Outflows
Working capital movements 329 474 75
Capital expenditure 520 434 832
Acquisitions and investments 983 901 2,311
Dividends 208 149 222
Ordinary Shares purchased, net 31 15 15
Tax paid 103 61 378
Other 21 18 54
2,195 2,052 3,887
Net outflow (1,015) (1,084) (1,232)
Translation adjustment 57 137 188
Increase in net debt (958) (947) (1,044)
10 Other
Six months ended Year ended
30th June - Unaudited 31st December
2007 2006 2006
Audited
EBITDA* interest cover (times) - six months to 30th June 7.6x 8.2x n/a
- rolling 12 months 9.2x 11.2x 9.7x
EBIT** interest cover (times) - six months to 30th June 5.1x 5.4x n/a
- rolling 12 months 6.7x 8.0x 7.0x
Average shares in issue 543.2m 538.2m 539.4m
Net dividend paid per share (euro cent) 38.50c 27.75c 41.25c
Net dividend declared for the period (euro cent) 20.0c 13.5c 52.0c
Dividend cover (Earnings per share/Dividend declared per share) 4.6x 5.5x 4.3x
Depreciation charge - subsidiaries (euro m) 332 281 627
Depreciation charge - share of joint ventures (euro m) 22 19 37
Amortisation of intangibles - subsidiaries (euro m) 16 12 25
Amortisation of intangibles - share of joint ventures (euro m) - - -
Share-based payment expense (euro m) 10 6 16
Market capitalisation at period-end (euro m) 20,003 13,743 17,120
Total equity at period-end (euro m) 7,566 6,412 7,104
Net debt (euro m) 5,450 4,395 4,492
Net debt as a percentage of total equity 72% 69% 63%
Net debt as a percentage of market capitalisation 27% 32% 26%
* EBITDA = earnings before interest, tax, depreciation and amortisation,
excluding profits on disposal
** EBIT = earnings before interest and tax, excluding profits on disposal
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 2006 prepared in accordance with IFRS, upon which the Auditors have
given an unqualified audit report, have been filed with the Registrar of
Companies.
12 Board Approval
This announcement was approved by the Board of Directors of CRH plc on 27th
August 2007.
13 Distribution of Interim Report
This interim report is available on the Group's website (http://www.crh.com/).
A printed copy will be posted to shareholders on Thursday 30th August 2007 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 2007
dividend will be posted to shareholders on Thursday 20th September 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
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