REG - CRH PLC - 2023 Interim Results
24/08/2023 12:15
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RNS Number : 2716K CRH PLC 24 August 2023
2023 Interim Results
Key Highlights
• Strong H1 delivery; further growth across all key metrics
• $0.6bn acquisitions year-to-date; robust pipeline of opportunities
• Strong & flexible balance sheet; significant optionality for
future value creation
• Overwhelming support for transition to US primary listing;
effective 25 September
• Increasing cash returns; interim dividend +4% & $3bn share
buyback underway
• Positive outlook … expect FY EBITDA of c. $6.2bn
Summary Financials(1) H1 2023 Change
Sales $16.1bn +8%
EBITDA $2.5bn +14%
EBITDA Margin 15.6% +90bps
Operating Cash Flow $1.0bn +61%
EPS $1.58 +31%
Albert Manifold, Chief Executive, said today:
"I am pleased to report a strong first half performance reflecting the
continued delivery of our differentiated strategy, further commercial progress
across our businesses and good contributions from acquisitions. The strength
of our balance sheet together with our relentless focus on disciplined capital
allocation will enable us to invest in future growth and value creation
opportunities for our business."
Announced Thursday, 24 August 2023
( )
1 Prior year income statement information is presented on a continuing
operations basis, excluding the results of the Building Envelope business
which was divested in April 2022 and has been classified within discontinued
operations.
2023 Interim Results
Trading Overview
CRH delivered a robust first half performance with strong pricing offsetting
cost inflation, significant contributions from prior year acquisitions and
good underlying demand in key end-use markets. First-half sales of $16.1
billion (H1 2022: $15.0 billion) were 8% ahead of the same period last year,
or 4% ahead on a like-for-like basis(2). Supported by our continued focus on
commercial management and operational efficiencies, EBITDA of $2.5 billion was
14% ahead of 2022 (H1 2022: $2.2 billion) reflecting further margin expansion.
Like-for-like EBITDA was 7% ahead of H1 2022.
• Americas Materials Solutions delivered a strong performance with
sales 9% above 2022 levels driven primarily by solid price progression across
all lines of business. EBITDA was 13% ahead, as good commercial management
offset the impact of higher input costs and lower volumes resulting from
unfavourable weather in certain regions.
• Americas Building Solutions sales were 21% ahead of 2022, as strong
contributions from prior year acquisitions and good commercial progress offset
the impact of unfavourable weather on first-half activity levels. EBITDA was
25% ahead as a result of continued progress on pricing, cost control and
production efficiencies.
• Europe Materials Solutions sales were in line with 2022 reflecting
continued strong pricing progress which offset the impact of lower activity
levels. EBITDA was 13% ahead, supported by good commercial discipline across
all markets which, together with a continued focus on cost savings, more than
offset cost inflation.
• Europe Building Solutions sales were 4% behind the same period in
2022, impacted by extended winter weather conditions and softer residential
demand. EBITDA was 15% behind the prior year.
First-half profit after tax of $1.2 billion was 26% ahead of 2022 (H1 2022:
$0.9 billion) driven by a robust trading performance and the contribution from
prior year acquisitions. Earnings per share (EPS) for the period was 31%
higher than 2022 at $1.58 (H1 2022: $1.21 from continuing operations). Note 2
on page 17 analyses the key components of the first-half 2023 performance.
Capital Allocation
Consistent with our progressive dividend policy and our strong financial
position, the Board has decided to increase the interim dividend(3) to $0.25
per share, an increase of 4% on the prior year. On 2 March 2023, the Group
announced its intention to substantially increase its share buyback programme
through the repurchase of up to $3 billion of shares over the next 12 months.
The increase in our share buyback programme demonstrates our confidence in the
outlook for our business and our continued strong cash generation, while
retaining the financial flexibility to invest in further growth and value
creation opportunities for our shareholders. The Group completed the most
recent tranche of the increased share buyback programme in June, bringing
total share repurchases to $1 billion in the first half of the year. On 30
June 2023 the Group announced a further $1 billion tranche to be completed no
later than 22 September 2023.
Sustainability
We remain committed to continuously improving our sustainability performance
by providing integrated sustainable solutions for our customers, increasing
circularity in construction, and innovating to create a more sustainable built
environment. Earlier this year, we announced an industry-leading target to
deliver a 30% reduction in group-wide absolute carbon emissions by 2030. The
Science Based Targets initiative (SBTi) has validated our 2030 decarbonisation
targets in line with a 1.5°C pathway. Dedicated teams across our business
continue to make progress delivering against detailed bottom-up roadmaps,
which keep us on the pathway to achieving our overall ambition of becoming a
net-zero business by 2050.
Trading Outlook
Looking ahead to the remainder of the year, our operations in North America
are expected to be supported by robust infrastructure demand, underpinned by
significant increases in US federal and state funding, as well as good
activity in key non-residential segments, supported by government funding
initiatives in clean energy and onshoring of critical manufacturing. Although
residential construction activity is expected to remain subdued across many of
our markets in the current interest rate environment, the underlying
fundamentals are attractive and supportive of robust long-term growth. Our
businesses in Europe are expected to benefit from solid infrastructure demand,
good non-residential activity and positive pricing momentum, while the
residential market is expected to remain challenging. Overall, assuming normal
weather patterns for the remainder of the year and absent any major
dislocations in the macroeconomic environment, we expect full-year Group
EBITDA of approximately $6.2 billion (2022: $5.6 billion), full-year net cash
inflow from operating activities of approximately $5 billion (2022: $4.0
billion) and a year-end net debt to EBITDA ratio of between 1.1x and 1.3x
(2022: 0.9x).
2 See pages 35 to 36 for glossary of alternative performance measures
(including EBITDA, like-for-like (LFL)/organic and net debt/EBITDA), used
throughout this report. Operating Cash Flow is net cash inflow from operating
activities as reported in the Consolidated Statement of Cash Flows on page 14.
3 Further details on the dividend process, including the relevant dates,
payment currency and currency election options, are set out in note 7 on page
23.
Americas Materials Solutions
Analysis of
change
$ million 2022 Exchange Acquisitions Divestments Organic 2023 % change
Sales revenue 5,546 -26 +111 - +428 6,059 9%
EBITDA 820 -2 +11 - +96 925 13%
Operating profit 405 - -1 - +106 510 26%
EBITDA/sales 14.8% 15.3%
Operating profit/sales 7.3% 8.4%
Americas Materials Solutions first-half sales were 9% ahead of 2022 driven
primarily by solid price progression across all lines of business which was
partly offset by lower activity levels due to unfavourable weather in certain
regions. EBITDA and operating profit were 13% and 26% ahead of prior year
respectively, supported by good commercial progress across all markets and
strong operational efficiencies offsetting cost inflation. On a like-for-like
basis, sales increased by 8% and EBITDA by 12% compared to the first half of
2022.
Solutions Lines
Essential Materials
Aggregates volumes were 2% behind 2022, with decreases in the West and South
regions due to unfavourable weather partly offset by good demand in the Great
Lakes and Northeast which benefited from higher levels of infrastructure
funding. Aggregates prices increased by 15%, driven by strong commercial
management. Our cement business delivered robust sales growth driven by strong
price progression of 17%, while volumes were 5% behind due to adverse weather
early in the year, primarily in Texas and the West.
Road Solutions
Paving and construction sales were 8% ahead of 2022 due to improved pricing
and good project execution on a strong order book. Asphalt volumes were
broadly in line with the prior year as robust demand in the Northeast, Great
Lakes and West regions was offset by inclement weather impacting activity
levels in the South. Asphalt prices increased by 13% compared to the prior
year. Readymixed concrete volumes were 3% behind 2022 levels, impacted by
softer new-build residential demand in the South and unfavourable weather in
the West, while demand in the Great Lakes and Northeast improved. Readymixed
concrete prices increased by 14%.
Regional Performance
Sales in the Northeast region were 7% ahead of 2022 supported by solid price
progression as well as improved volumes underpinned by robust construction
demand. Operating profit increased, driven by improved pricing and cost saving
measures which offset higher input costs.
Great Lakes region sales were 12% ahead of 2022, led by improved pricing and
good construction demand in key markets, supported by favourable weather.
Growth in operating profit was achieved through strong commercial management
and ongoing cost control.
South region sales were 11% ahead of 2022 with strong price progression across
all lines of business and increased construction revenues. Volumes were behind
the prior year in most lines of business, impacted by inclement weather.
Operating profit improved with improved pricing and cost saving measures
offsetting the impact of input cost inflation.
The West region delivered 7% sales growth, driven primarily by disciplined
commercial management with strong pricing across all lines of business as well
as higher construction revenues; however, unfavourable weather impacted
volumes in certain markets. Operating profit was ahead of 2022 due to strong
price progression combined with cost saving measures partly offset by lower
volumes and input cost inflation.
Americas Building Solutions
Analysis of
change
$ million 2022 Exchange Acquisitions Divestments Organic 2023 % change
Sales revenue 3,150 -13 +626 - +46 3,809 21%
EBITDA 646 -3 +145 - +22 810 25%
Operating profit 534 -2 +97 - +4 633 19%
EBITDA/sales 20.5% 21.3%
Operating profit/sales 17.0% 16.6%
The table above excludes the 2022 trading performance of Building Envelope
which, following its divestment, has been classified within discontinued
operations.
Americas Building Solutions delivered sales growth of 21% in the first half of
the year reflecting the benefits of our integrated solutions strategy, strong
commercial progress and the contribution from prior year acquisitions; sales
were 1% ahead on a like-for-like basis. Sales growth, combined with a
continued focus on cost control and production efficiencies resulted in EBITDA
25% ahead of the prior year, 3% ahead on a like-for-like basis. Operating
profit was 19% ahead of the prior year, 1% ahead on a like-for-like basis.
Solutions Lines
Outdoor Living Solutions
Sales were ahead of the first half of 2022 driven by good commercial progress,
solid underlying demand and the contribution from Barrette Outdoor Living
which was acquired in July 2022 and is performing in line with expectations.
Building & Infrastructure Solutions
Sales benefited from increased demand and robust public funding in the
telecommunications, water and energy utility markets. Demand remained positive
with good commercial management across all geographies and product lines
offsetting increased raw material and production costs.
Europe Materials Solutions
Analysis of
change
$ million 2022 Exchange Acquisitions Divestments Organic 2023 % change
Sales revenue 4,772 -146 +21 -86 +231 4,792 -
EBITDA 555 -10 +3 +2 +75 625 13%
Operating profit 308 -4 - +7 +72 383 24%
EBITDA/sales 11.6% 13.0%
Operating profit/sales 6.5% 8.0%
Europe Materials Solutions sales were in line with 2022, and 5% ahead on a
like-for-like basis, driven by strong pricing which offset the impact of lower
activity levels in most regions. Improved pricing, commercial and operational
excellence initiatives and a continued focus on cost savings resulted in
EBITDA 13% ahead of 2022, or 14% ahead on a like-for-like basis. Operating
profit was 24% ahead of the prior year.
Solutions Lines
Essential Materials
Total sales were ahead of 2022, primarily driven by good pricing progress
across all markets. Activity levels were impacted by unfavourable weather,
subdued new-build residential demand amid higher interest rates and ongoing
cost inflation.
Road Solutions
Despite strong pricing in the United Kingdom (UK), Ireland and Poland, total
sales were behind 2022 as demand was impacted by adverse weather conditions in
the first half of the year.
Regional Performance
Western Europe (UK, Ireland, Finland, France, Benelux, Denmark and Spain)
Sales were well ahead of 2022 driven by the UK, Ireland and France with
positive pricing across all major products offsetting lower volumes. Activity
levels were lower across most countries in Western Europe as cost inflation
and high interest rates impacted new-build residential activity. Operating
profit was ahead of the first half of 2022.
Central & Eastern Europe (Poland, Romania, Ukraine, Slovakia, Hungary,
Switzerland, Germany, Serbia and Croatia)
Strong pricing across all countries in the region more than offset softer
demand resulting in sales in Central & Eastern Europe ahead of 2022.
Adverse weather conditions at the start of the year and subdued new-build
residential demand across a number of key markets negatively impacted activity
levels. Operating profit was ahead of the prior year supported by strong
pricing coupled with easing energy costs. In Ukraine, the construction market
is gradually recovering despite the ongoing conflict. The safety &
wellbeing of our employees continues to be our number one priority and we are
doing everything we can to support our employees and their families in Ukraine
at this very challenging time.
The Philippines
Sales in the Philippines were behind 2022 as a result of challenging trading
conditions impacted by delays in the commencement of government related
projects. While lower volumes were partially mitigated by higher pricing and
cost containment initiatives, operating profit decreased compared to the prior
year.
Europe Building Solutions
Analysis of
change
$ million 2022 Exchange Acquisitions Divestments Organic 2023 % change
Sales revenue 1,530 -23 +55 - -86 1,476 -4%
EBITDA 189 -3 +4 - -30 160 -15%
Operating profit 138 -2 -2 - -33 101 -27%
EBITDA/sales 12.4% 10.8%
Operating profit/sales 9.0% 6.8%
First-half sales in Europe Building Solutions were 4% behind the prior year,
6% behind on a like-for-like basis, driven by lower volumes due to extended
winter weather conditions and subdued new-build residential activity. A robust
performance from Infrastructure Products was offset by slower markets in
Outdoor Living Solutions and Construction Accessories. EBITDA and operating
profit were 15% and 27% behind the prior year, respectively.
Solutions Lines
Outdoor Living Solutions
Sales declined in the first half of 2023, reflecting a slower start to the
year due to unfavourable weather and a strong prior year comparative. Market
demand in Germany, Belgium and Slovakia slowed, whilst Poland remained stable.
Public sector order books in the Netherlands and Belgium were more positive,
partly offsetting a slowdown in the private market.
Building & Infrastructure Solutions
Infrastructure Products experienced robust sales growth in the first half of
2023 with good market activity and increased pricing in Europe. Volume growth
in our Australian businesses was supported by good demand in both
non-residential and infrastructure markets.
Demand for Precast Products was negatively impacted by slower markets and a
downturn in the new-build residential market in Finland. In Benelux and
Denmark, lower market demand and postponed projects also resulted in lower
volumes which were partly offset by commercial progress.
Our Construction Accessories business was negatively impacted by lower
new-build activity in certain markets, particularly in Germany.
Other Financial Items
Depreciation and amortisation charges of $0.9 billion were higher than the
prior year (H1 2022: $0.8 billion) due to the impact of acquisitions.
Net finance costs of $147 million were lower than 2022 (H1 2022: $197 million)
primarily as a result of higher interest income.
The Group's share of profit from equity-accounted investments of $7 million
was behind 2022 (H1 2022: $8 million), primarily driven by the performance of
the Group's associate in China.
The Group reported profit before tax of $1.5 billion (H1 2022: $1.2 billion).
The interim tax charge which represents an effective tax rate of 22.0%, has
been estimated, as in prior years, based on current expectations of the
full-year tax charge.
Transition to US Primary Listing
On 2 March 2023, CRH announced that following a review of its listing
structure, the Board had concluded that it is in the best interests of our
business and our shareholders to pursue a US primary listing, together with US
equity index inclusion as soon as possible. At an Extraordinary General
Meeting (EGM) on 8 June 2023, shareholders overwhelmingly approved the
transition to a US primary listing on the New York Stock Exchange (NYSE), with
the changes expected to take effect on or around 25 September 2023.
North America currently represents approximately 75% of Group EBITDA and is
expected to be a key driver of future growth for CRH. We believe a US primary
listing will bring increased commercial, operational and acquisition
opportunities for our business, further accelerating our successful integrated
solutions strategy and delivering even higher levels of profitability, returns
and cash for our shareholders.
Balance Sheet and Liquidity
Net debt of $6.9 billion at 30 June 2023 was $2.6 billion higher than at
30 June 2022 (H1 2022: $4.3 billion). The Group's net debt position at the
end of H1 2022 reflected the proceeds received from the divestment of Building
Envelope in H1 2022; debt levels increased in the second half of 2022 with the
acquisition of Barrette Outdoor Living in July 2022 for $1.9 billion.
A first-half cash inflow from operating activities of $1.0 billion was $0.4
billion ahead of the prior year (H1 2022: $0.6 billion) primarily due to
increased profitability and lower investment in working capital.
In July 2023, the Group accessed the euro debt capital markets and raised €2
billion in funding across three tranches in 4-year, 8-year and 12-year tenors
at a weighted average coupon of 4.13%. A €0.75 billion bond was repaid in
April 2023 from existing cash resources. As at 30 June 2023, the Group had
$4.3 billion of cash with sufficient liquidity to meet all maturing debt
obligations for the next 3 years.
The Group continues to maintain its robust balance sheet and a strong
investment grade credit rating with a BBB+ or equivalent rating with each of
the three main rating agencies.
Development Activity
2023 Acquisitions
The Group spent $0.2 billion on eight acquisitions in the first half of the
year, the largest of which was the acquisition of Ulricehamns Betong AB in
Sweden by Europe Building Solutions, expanding our precast concrete solutions
offering in an attractive market.
Post 30 June 2023, the Group completed four more acquisitions, the most
significant being the acquisition of Hydro International, a leading provider
of stormwater products, wastewater treatment products, wastewater services,
and data solutions. This acquisition represents an excellent strategic fit for
our existing business, supporting our vision to be a leading provider of
solutions in the circular water economy and complementing our Building &
Infrastructure Solutions businesses in both North America and Europe.
2023 Divestments and Disposals
During the first half of 2023, the Group realised proceeds of $42 million from
the disposal of surplus property, plant and equipment and other non-current
assets. There were no business divestments completed during the period.
Condensed Interim
Financial Statements
and
Summarised Notes
Six months ended 30 June 2023
Condensed Consolidated Income Statement
Year ended
Six months ended 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
$m $m $m
Revenue 16,136 14,998 32,723
Cost of sales (10,855) (10,243) (21,844)
Gross profit 5,281 4,755 10,879
Operating costs (3,654) (3,370) (6,985)
Group operating profit 1,627 1,385 3,894
Profit/(loss) on disposals 23 7 (49)
Profit before finance costs 1,650 1,392 3,845
Finance costs (203) (184) (401)
Finance income 76 7 65
Other financial expense (20) (20) (40)
Share of equity accounted investments' profit 7 8 -
Profit before tax from continuing operations 1,510 1,203 3,469
Income tax expense - estimated at interim (332) (265) (785)
Group profit for the financial period from continuing operations 1,178 938 2,684
Profit after tax for the financial period from discontinued operations - 1,168 1,190
Group profit for the financial period 1,178 2,106 3,874
Profit attributable to:
Equity holders of the Company
From continuing operations 1,168 926 2,657
From discontinued operations - 1,168 1,190
Non-controlling interests
From continuing operations 10 12 27
Group profit for the financial period 1,178 2,106 3,874
Basic earnings per Ordinary Share $1.58 $2.74 $5.07
Diluted earnings per Ordinary Share $1.57 $2.72 $5.03
Basic earnings per Ordinary Share from continuing operations $1.58 $1.21 $3.50
Diluted earnings per Ordinary Share from continuing operations $1.57 $1.20 $3.48
Condensed Consolidated Statement of Comprehensive Income
Year ended
Six months ended 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
$m $m $m
Group profit for the financial period 1,178 2,106 3,874
Other comprehensive income
Items that may be reclassified to profit or loss in subsequent periods:
Currency translation effects 173 (562) (641)
(Loss)/gain relating to cash flow hedges (9) 71 66
Tax relating to cash flow hedges 4 (12) (14)
168 (503) (589)
Items that will not be reclassified to profit or loss in subsequent periods:
Remeasurement of retirement benefit obligations 16 297 279
Tax relating to retirement benefit obligations (1) (64) (63)
15 233 216
Total other comprehensive income for the financial period 183 (270) (373)
Total comprehensive income for the financial period 1,361 1,836 3,501
Attributable to:
Equity holders of the Company 1,345 1,866 3,520
Non-controlling interests 16 (30) (19)
Total comprehensive income for the financial period 1,361 1,836 3,501
Condensed Consolidated Balance Sheet
As at
As at 30 June As at 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
$m $m $m
ASSETS
Non-current assets
Property, plant and equipment 19,322 18,298 18,921
Intangible assets 10,399 8,726 10,287
Investments accounted for using the equity method 672 655 649
Other financial assets 42 12 14
Other receivables 171 212 164
Retirement benefit assets 282 284 261
Derivative financial instruments 3 5 3
Deferred income tax assets 83 56 88
Total non-current assets 30,974 28,248 30,387
Current assets
Inventories 4,276 3,792 4,194
Trade and other receivables 6,360 5,818 4,569
Current income tax recoverable 90 40 63
Derivative financial instruments 8 112 39
Cash and cash equivalents 4,275 6,826 5,936
Total current assets 15,009 16,588 14,801
Total assets 45,983 44,836 45,188
EQUITY
Capital and reserves attributable to the Company's equity holders
Equity share capital 302 309 302
Preference share capital 1 1 1
Treasury Shares and own shares (1,140) (644) (297)
Other reserves 329 322 380
Cash flow hedging reserve 16 - 5
Foreign currency translation reserve (525) (617) (692)
Retained income 21,712 21,424 21,992
Capital and reserves attributable to the Company's equity holders 20,695 20,795 21,691
Non-controlling interests 651 640 646
Total equity 21,346 21,435 22,337
LIABILITIES
Non-current liabilities
Lease liabilities 1,081 1,014 1,059
Interest-bearing loans and borrowings 7,563 8,584 8,145
Derivative financial instruments 83 26 77
Deferred income tax liabilities 2,936 2,623 2,868
Other payables 647 700 691
Retirement benefit obligations 277 296 277
Provisions for liabilities 823 879 845
Total non-current liabilities 13,410 14,122 13,962
Current liabilities
Lease liabilities 266 246 260
Trade and other payables 7,448 6,172 5,872
Current income tax liabilities 747 982 702
Interest-bearing loans and borrowings 2,185 1,364 1,491
Derivative financial instruments 39 8 51
Provisions for liabilities 542 507 513
Total current liabilities 11,227 9,279 8,889
Total liabilities 24,637 23,401 22,851
Total equity and liabilities 45,983 44,836 45,188
Condensed Consolidated Statement of Changes in Equity
Attributable to the equity holders of the Company
Treasury Foreign
Issued Shares/ Cash flow currency Non-
share own Other hedging translation Retained controlling Total
capital shares reserves reserve reserve income interests equity
$m $m $m $m $m $m $m $m
For the financial period ended 30 June 2023 (unaudited)
At 1 January 2023 303 (297) 380 5 (692) 21,992 646 22,337
Group profit for the financial period - - - - - 1,168 10 1,178
Other comprehensive income - - - (9) 167 19 6 183
Total comprehensive income - - - (9) 167 1,187 16 1,361
Share-based payment expense - - 60 - - - - 60
Shares acquired by CRH plc (Treasury Shares) - (954) - - - (704) - (1,658)
Treasury Shares/own shares reissued - 5 - - - (5) - -
Shares acquired by Employee Benefit Trust (own shares) - (5) - - - - - (5)
Shares distributed under the Performance Share Plan Awards - 111 (111) - - - - -
Hedging losses transferred to inventory - - - 20 - - - 20
Tax relating to cash flow hedges - - - - - (4) - (4)
Tax relating to share-based payment expense - - - - - 4 - 4
Share option exercises - - - - - 3 - 3
Dividends - - - - - (761) (11) (772)
At 30 June 2023 303 (1,140) 329 16 (525) 21,712 651 21,346
For the financial period ended 30 June 2022 (unaudited)
At 1 January 2022 310 (195) 445 - (97) 19,770 681 20,914
Group profit for the financial period - - - - - 2,094 12 2,106
Other comprehensive income - - - - (520) 292 (42) (270)
Total comprehensive income - - - - (520) 2,386 (30) 1,836
Share-based payment expense - - 50 - - - - 50
Shares acquired by CRH plc (Treasury Shares) - (626) - - - 39 - (587)
Treasury Shares/own shares reissued - 12 - - - (12) - -
Shares acquired by Employee Benefit Trust (own shares) - (8) - - - - - (8)
Shares distributed under the Performance Share Plan Awards - 173 (173) - - - - -
Tax relating to share-based payment expense - - - - - (15) - (15)
Share option exercises - - - - - 6 - 6
Dividends - - - - - (750) (8) (758)
Transactions involving non-controlling interests - - - - - - (3) (3)
At 30 June 2022 310 (644) 322 - (617) 21,424 640 21,435
Condensed Consolidated Statement of Changes in Equity - continued
Attributable to the equity holders of the Company
Treasury Foreign
Issued Shares/ Cash flow currency Non-
share own Other hedging translation Retained controlling Total
capital shares reserves reserve reserve income interests equity
$m $m $m $m $m $m $m $m
for the financial year ended 31 December 2022 (audited)
At 1 January 2022 310 (195) 445 - (97) 19,770 681 20,914
Group profit for the financial year - - - - - 3,847 27 3,874
Other comprehensive income - - - 66 (595) 202 (46) (373)
Total comprehensive income - - - 66 (595) 4,049 (19) 3,501
Reclassifications - - - 35 - (35) - -
Share-based payment expense - - 101 - - - - 101
Shares acquired by CRH plc (Treasury Shares) - (1,170) - - - 17 - (1,153)
Treasury/own shares reissued - 24 - - - (24) - -
Shares acquired by Employee Benefit Trust (own shares) - (8) - - - - - (8)
Shares distributed under the Performance Share Plan Awards - 173 (173) - - - - -
Cancellation of Treasury Shares (7) 879 7 - - (879) - -
Hedging gains transferred to inventory - - - (96) - - - (96)
Tax relating to cash flow hedges - - - - - 17 - 17
Tax relating to share-based payment expense - - - - - (3) - (3)
Share option exercises - - - - - 11 - 11
Dividends - - - - - (931) (13) (944)
Transactions involving non-controlling interests - - - - - - (3) (3)
At 31 December 2022 303 (297) 380 5 (692) 21,992 646 22,337
Condensed Consolidated Statement of Cash Flows
Year ended
Six months ended 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
$m $m $m
Cash flows from operating activities
Group profit for the financial period 1,178 2,106 3,874
Finance costs (net) 147 203 382
Share of equity accounted investments' profit (7) (8) -
Profit on disposals (23) (1,464) (1,422)
Depreciation charge 824 821 1,644
Amortisation of intangible assets 69 40 113
Share-based payment expense 60 50 101
Income tax expense 332 643 1,155
Other (3) 7 42
Net movement in inventories, receivables, payables and provisions (1,081) (1,365) (518)
Cash generated from operations 1,496 1,033 5,371
Interest paid (including leases) (221) (179) (374)
Corporation tax paid (277) (233) (1,043)
Net cash inflow from operating activities 998 621 3,954
Cash flows from investing activities
Proceeds from disposals (net of cash disposed and deferred proceeds) 42 3,579 3,827
Interest received 76 7 65
Dividends received from equity accounted investments 12 16 36
Purchase of property, plant and equipment (771) (596) (1,523)
Acquisition of subsidiaries (net of cash acquired) (198) (886) (3,253)
Other investments and advances (62) (14) (45)
Net cash flow arising from derivative financial instruments 7 (15) (11)
Deferred and contingent acquisition consideration paid (12) (19) (32)
Deferred divestment consideration received - 53 52
Net cash (outflow)/inflow from investing activities (906) 2,125 (884)
Cash flows from financing activities
Proceeds from exercise of share options 3 6 11
Transactions involving non-controlling interests - (3) (3)
Increase in interest-bearing loans and borrowings 855 49 38
Net cash flow arising from derivative financial instruments 4 (16) (11)
Repayment of interest-bearing loans and borrowings (849) - (364)
Repayment of lease liabilities (i) (127) (132) (249)
Treasury Shares/own shares purchased (959) (634) (1,178)
Dividends paid to equity holders of the Company (761) (732) (917)
Dividends paid to non-controlling interests (11) (8) (13)
Net cash outflow from financing activities (1,845) (1,470) (2,686)
(Decrease)/increase in cash and cash equivalents (1,753) 1,276 384
Reconciliation of opening to closing cash and cash equivalents
Cash and cash equivalents at 1 January 5,936 5,783 5,783
Translation adjustment 92 (233) (231)
(Decrease)/increase in cash and cash equivalents (1,753) 1,276 384
Cash and cash equivalents at 30 June 4,275 6,826 5,936
(i) Repayment of lease liabilities in the period to 30 June 2023 amounted
to $149 million (30 June 2022: $159 million; 31 December 2022: $297 million),
of which $22 million (30 June 2022: $27 million; 31 December 2022: $48
million) related to interest paid which is presented in cash flows from
operating activities.
Supplementary Information
Selected Explanatory Notes to the Condensed Consolidated Interim Financial
Statements
1. Basis of Preparation and Accounting Policies
Basis of Preparation
The financial information presented in this report has been prepared in
accordance with the Group's accounting policies under International Financial
Reporting Standards (IFRS) as adopted by the European Union, as issued by the
International Accounting Standards Board (IASB) and in accordance with IAS 34
Interim Financial Reporting.
These Condensed Consolidated Interim Financial Statements do not include all
the information and disclosures required in the Annual Consolidated Financial
Statements and should be read in conjunction with the Group's 2022 Annual
Report and Form 20-F.
The accounting policies and methods of computation employed in the preparation
of the Condensed Consolidated Interim Financial Statements are the same as
those employed in the preparation of the Annual Consolidated Financial
Statements in respect of the year ended 31 December 2022, unless stated
otherwise below.
Adoption of IFRS and International Financial Reporting Interpretations
Committee (IFRIC) interpretations
In May 2017, the IASB issued IFRS 17 Insurance Contracts which is effective
for reporting periods beginning on or after 1 January 2023, with presentation
of comparatives figures required.
In addition, the following standard amendments became effective for the Group
as of 1 January 2023:
• Amendments to IAS 1 Presentation of Financial Statements and IFRS
Practice Statement 2 Making Materiality Judgements - Disclosure of Accounting
Policies
• Amendments to IAS 12 Income Taxes - Deferred tax related to assets and
liabilities arising from a single transaction
• Amendments to IAS 12 Income Taxes - International tax reform - pillar
two model rules
• Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates
and Errors - Definition of Accounting Estimates
The new standard and standard amendments did not result in a material impact
on the Group's results.
IFRS and IFRIC interpretations being adopted in subsequent years
The Group is currently evaluating the impact of the following standard
amendments which will become effective for the Group as of 1 January 2024:
• Amendments to IFRS 16 Leases - Leases Liability in a Sale-and-Leaseback
• Amendments to IAS 1 Presentation of Financial Statements -
Classification of Liabilities as Current or Non-current and Non-current
Liabilities with Covenants
• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosure - Supplier Finance Arrangements
There are no other IFRS or IFRIC interpretations that are effective subsequent
to the CRH 2023 financial year end that are expected to have a material impact
on the results or financial position of the Group.
Significant Estimates, Assumptions and Judgements
The preparation of the Condensed Consolidated Interim Financial Statements in
accordance with IFRS requires management to make certain estimates,
assumptions and judgements that affect the application of accounting policies
and the reported amounts of assets, liabilities, income and expenses.
Management believes that the estimates, assumptions and judgements upon which
it relies are reasonable based on the information available to it at the time
that those estimates, assumptions and judgements are made.
Estimates and underlying assumptions are reviewed on an ongoing basis. Changes
in accounting estimates may be necessary if there are changes in the
circumstances or experiences on which the estimate was based or as a result of
new information.
The significant judgements, the key sources of estimation uncertainty and
underlying assumptions applied in the preparation of the Condensed
Consolidated Interim Financial Statements were the same as those applied in
preparing the Consolidated Financial Statements for the year ended 31 December
2022.
1. Basis of Preparation and Accounting Policies - continued
Impairment
As at 30 June 2023, the Group performed a review for potential indicators of
impairment relating to goodwill of $9.3 billion (30 June 2022: $8.5 billion)
allocated to cash-generating units ("CGUs"). When reviewing for indicators of
impairment in interim periods, the Group considers, amongst others, the
results of the last annual impairment test, the level of headroom and
financial performance in the first half of the year. The carrying values of
items of property, plant and equipment were also reviewed for indicators of
impairment. These reviews did not give rise to any impairment charges in the
first half of 2023 (30 June 2022: $nil million). As part of our annual
process, we will update our impairment reviews prior to the finalisation of
the full year Consolidated Financial Statements for 2023.
Going Concern
The time period that the Directors have considered in evaluating the
appropriateness of the going concern basis in preparing the 2023 Condensed
Consolidated Interim Financial Statements is a period of at least twelve
months from the date of approval of these financial statements (the "period of
assessment").
The Group has considerable financial resources and a large number of customers
and suppliers across different geographic areas and industries, and the local
nature of building materials means that the Group's products are not usually
shipped cross-border. The level of cash and liquidity available to the Group
including our ongoing ability to access the debt markets, the quantum of our
liquidity facilities, the absence of financial covenants associated with our
debt obligations and the continuing maintenance of strong investment grade
credit ratings demonstrate the significant financial strength and resilience
of the Group. No concerns or material uncertainties have been identified as
part of our assessment.
Having assessed the relevant business risks, including the climate change
risk, identified and discussed in our Principal Risks and Uncertainties on
pages 37 and 38, the Directors believe that the Group is well placed to manage
these risks successfully and they have a reasonable expectation that CRH plc,
and the Group as a whole, has adequate financial and other resources to
continue in operational existence for the period of assessment with no
material uncertainties. For this reason, the Directors continue to adopt the
going concern basis in preparing the Condensed Consolidated Interim Financial
Statements.
Translation of Foreign Currencies
The financial information is presented in US Dollar. Results and cash flows of
operations based in non-US Dollar countries have been translated into US
Dollar at average exchange rates for the period, and the related balance
sheets have been translated at the rates of exchange in effect at the balance
sheet date. The principal rates used for translation of results, cash flows
and balance sheets into US Dollar were:
Average Period end
Six months ended 30 June Year ended 31 December Six months ended 30 June Year ended 31 December
US Dollar 1 = 2023 2022 2022 2023 2022 2022
Brazilian Real 5.0728 5.0742 5.1648 4.8543 5.1802 5.2794
Canadian Dollar 1.3479 1.2715 1.3017 1.3270 1.2920 1.3535
Chinese Renminbi 6.9308 6.4808 6.7334 7.2686 6.7029 6.8987
Danish Krone 6.8904 6.8120 7.0805 6.8608 7.1585 6.9662
Euro 0.9253 0.9156 0.9518 0.9212 0.9623 0.9368
Hungarian Forint 352.2330 343.8223 373.1682 342.7400 382.0900 375.1400
Indian Rupee 82.2207 76.2320 78.6295 82.0366 79.0116 82.7211
Philippine Peso 55.2423 52.1510 54.5318 55.2140 54.9850 55.7290
Polish Zloty 4.2796 4.2453 4.4631 4.0888 4.5101 4.3881
Pound Sterling 0.8110 0.7713 0.8120 0.7906 0.8257 0.8310
Romanian Leu 4.5655 4.5283 4.6930 4.5728 4.7601 4.6357
Serbian Dinar 108.5502 107.6546 111.7836 107.9929 112.9686 109.8553
Swiss Franc 0.9119 0.9446 0.9551 0.9011 0.9576 0.9230
Ukrainian Hryvnia 36.9043 29.1905 32.6730 36.9332 29.6067 36.9172
2. Key Components of Performance for the First Half of 2023
Continuing operations
$ million Sales revenue EBITDA Operating profit Profit on disposals Finance costs (net) Assoc. and JV PAT (i) Pre-tax profit
First half 2022 14,998 2,210 1,385 7 (197) 8 1,203
Exchange effects (208) (18) (8) - 2 - (6)
2022 at 2023 rates 14,790 2,192 1,377 7 (195) 8 1,197
Incremental impact in 2023 of:
- 2022/2023 acquisitions 813 163 94 - (53) - 41
- 2022/2023 divestments (86) 2 7 15 28 - 50
Organic 619 163 149 1 73 (1) 222
First half 2023 16,136 2,520 1,627 23 (147) 7 1,510
% Total change 8% 14% 17% 26%
% Organic change 4% 7% 11% 19%
(i) CRH's share of after-tax profit of joint ventures and associated
undertakings.
3. Seasonality
Activity in the construction industry is characterised by cyclicality and is
dependent to a considerable extent on the seasonal impact of weather in the
Group's operating locations, with activity in some markets reduced
significantly in winter due to inclement weather. As shown in the table above,
the Group's operations exhibit a high degree of seasonality and can be
significantly impacted by the timing of acquisitions and divestments.
4. Revenue
A. Disaggregated revenue
In the following tables, revenue is disaggregated by primary geographic market
and by principal activities and products. To further accelerate the
development of the Group's integrated solutions strategy, the Group
transitioned to a new organisational structure, effective from 1 January 2023.
Accordingly, for the purpose of disaggregation of revenue we have included
certain products together, as follows:
Essential Materials manufacture and supply cement, lime (in Europe), and the
full range of construction-grade aggregates.
Road Solutions support the manufacture and supply of readymixed concrete,
asphalt and paving and construction services to build and maintain road,
highway and commercial infrastructure.
Building and Infrastructure Solutions connect, protect and transport critical
water, energy and telecommunications infrastructure and deliver complex
commercial building projects.
Outdoor Living Solutions integrate specialised materials, products and design
features to remodel and enhance the quality of private and public spaces.
Comparative amounts for 2022 have been restated to reflect the new format for
disaggregation of revenue.
Revenue from external customers (as defined in IFRS 8 Operating Segments)
attributable to the country of domicile and all foreign countries of operation
greater than 10% are included below. Further operating segment disclosures are
set out in note 5.
Six months ended 30 June 2023 - Unaudited Six months ended 30 June 2022 - Unaudited
Americas Materials Solutions Americas Building Solutions Europe Materials Solutions Europe Building Solutions Total Americas Materials Solutions Americas Building Solutions Europe Materials Solutions Europe Building Solutions Total
$m $m $m $m $m $m $m $m $m $m
Primary geographic markets
Continuing operations
Republic of Ireland (country of domicile) - - 439 - 439 - - 395 - 395
United Kingdom - - 2,077 122 2,199 - - 2,088 129 2,217
Rest of Europe (i) - - 2,037 1,189 3,226 - - 1,997 1,244 3,241
United States 5,541 3,634 - 81 9,256 5,071 2,957 - 86 8,114
Rest of World (ii) 518 175 239 84 1,016 475 193 292 71 1,031
Total Group from continuing operations 6,059 3,809 4,792 1,476 16,136 5,546 3,150 4,772 1,530 14,998
Discontinued operations
United Kingdom - Building Envelope - - - - - - 8 - - 8
Rest of Europe (i) - Building Envelope - - - - - - 4 - - 4
United States - Building Envelope - - - - - - 576 - - 576
Rest of World (ii) - Building Envelope - - - - - - 59 - - 59
Total Group from discontinued operations - - - - - - 647 - - 647
Footnotes (i) and (ii) appear on page 19.
4. Revenue - continued
Six months ended 30 June 2023 - Unaudited Six months ended 30 June 2022 - Unaudited
Americas Materials Solutions (iii) Americas Building Solutions Europe Materials Solutions (iii) Europe Building Solutions Total Americas Materials Solutions (iii) Americas Building Solutions Europe Materials Solutions (iii) Europe Building Solutions Total
$m $m $m $m $m $m $m $m $m $m
Principal activities and products
Continuing operations
Essential Materials 2,062 - 2,478 - 4,540 1,845 - 2,344 - 4,189
Road Solutions (iv) 3,997 - 2,314 - 6,311 3,701 - 2,428 - 6,129
Building and Infrastructure Solutions (v) - 1,248 - 1,159 2,407 - 1,155 - 1,201 2,356
Outdoor Living Solutions - 2,561 - 317 2,878 - 1,995 - 329 2,324
Total Group from continuing operations 6,059 3,809 4,792 1,476 16,136 5,546 3,150 4,772 1,530 14,998
Discontinued operations
Building and Infrastructure Solutions - Building Envelope - - - - - - 647 - - 647
Total Group from discontinued operations - - - - - - 647 - - 647
Footnotes to revenue disaggregation on pages 18 & 19
(i) The Rest of Europe principally includes Austria, Belgium, Czech
Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Luxembourg, the
Netherlands, Poland, Romania, Serbia, Slovakia, Spain, Sweden, Switzerland and
Ukraine.
(ii) The Rest of World principally includes Australia, Canada and the
Philippines.
(iii) Americas Materials Solutions and Europe Materials Solutions both operate
vertically integrated businesses, which are founded in reserve backed cement
and aggregates assets, and which support the manufacture and supply of
aggregates, asphalt, cement, lime, readymixed and precast concrete and
landscaping products.
(iv) Revenue from contracts with customers in the Road Solutions principal
activities and products category that is recognised over time amounts to
$3,032 million (2022: $2,891 million); Americas Materials Solutions $2,101
million (2022: $1,961 million); Europe Materials Solutions $931 million (2022:
$930 million).
(v) Revenue from contracts with customers in the Building and Infrastructure
Solutions principal activities and products category that is recognised over
time amounts to $206 million (2022: $189 million); Americas Building Solutions
$34 million (2022: $42 million); Europe Building Solutions $172 million (2022:
$147 million).
5. Segment Information
Effective 1 January 2023 the Group restructured into two Divisions, CRH
Americas and CRH Europe. During the first quarter of 2023, the Group's
reportable segments increased from three to the following four segments:
Our Americas Materials Solutions businesses provide solutions for the
construction, repair, maintenance and improvement of public infrastructure,
homes and commercial buildings across North America.
Our Americas Building Solutions segment produces a wide range of architectural
and infrastructural solutions for use in the building and renovation of
critical utility infrastructure, commercial and residential buildings, and
outdoor living spaces.
Our Europe Materials Solutions businesses provide solutions for a wide range
of construction applications, from major public road and infrastructure
projects, to the development and refurbishment of commercial buildings and
homes.
Our Europe Building Solutions segment manufactures, supplies and delivers high
quality, value-added innovative solutions to shape and enhance the built
environment for modern communities.
This realignment reflects the Group's organisational structure in 2023 and the
nature of the financial information reported and assessed by the Group Chief
Executive, Chief Financial Officer and Chief Operating Officer, who are
together determined to fulfil the role of Chief Operating Decision Maker (as
defined in IFRS 8). Comparative segment information for 2022 has been restated
where necessary to reflect the new format for segmentation.
Year ended
Six months ended 30 June 31 December
2023 2022 2022
Unaudited Unaudited Unaudited
$m % $m % $m %
Revenue
Continuing operations
Americas Materials Solutions 6,059 37.5 5,546 37.0 14,324 43.8
Americas Building Solutions 3,809 23.6 3,150 21.0 6,188 18.9
Europe Materials Solutions 4,792 29.7 4,772 31.8 9,349 28.6
Europe Building Solutions 1,476 9.2 1,530 10.2 2,862 8.7
Total Group from continuing operations 16,136 100.0 14,998 100.0 32,723 100.0
Discontinued operations
Americas Building Solutions - Building Envelope - 647 645
Total Group from discontinued operations - 647 645
EBITDA
Continuing operations
Americas Materials Solutions 925 36.7 820 37.1 2,748 48.9
Americas Building Solutions 810 32.1 646 29.2 1,255 22.4
Europe Materials Solutions 625 24.8 555 25.1 1,246 22.2
Europe Building Solutions 160 6.4 189 8.6 366 6.5
Total Group from continuing operations 2,520 100.0 2,210 100.0 5,615 100.0
Discontinued operations
Americas Building Solutions - Building Envelope - 131 131
Total Group from discontinued operations - 131 131
Depreciation and amortisation
Continuing operations
Americas Materials Solutions 415 46.5 415 50.3 839 48.7
Americas Building Solutions 177 19.8 112 13.6 284 16.5
Europe Materials Solutions 242 27.1 247 29.9 497 28.9
Europe Building Solutions 59 6.6 51 6.2 101 5.9
Total Group from continuing operations 893 100.0 825 100.0 1,721 100.0
Group operating profit
Continuing operations
Americas Materials Solutions 510 31.3 405 29.2 1,909 49.0
Americas Building Solutions 633 39.0 534 38.6 971 25.0
Europe Materials Solutions 383 23.5 308 22.2 749 19.2
Europe Building Solutions 101 6.2 138 10.0 265 6.8
Total Group from continuing operations 1,627 100.0 1,385 100.0 3,894 100.0
5. Segment Information - continued
Year ended
Six months ended 30 June 31 December
2023 2022 2022
Unaudited Unaudited Unaudited
$m $m $m
Reconciliation of Group operating profit to profit before tax
Continuing operations
Group operating profit 1,627 1,385 3,894
Profit/(loss) on disposals (i) 23 7 (49)
Profit before finance costs 1,650 1,392 3,845
Finance costs less income (127) (177) (336)
Other financial expense (20) (20) (40)
Share of equity accounted investments' profit 7 8 -
Profit before tax from continuing operations 1,510 1,203 3,469
(i) Profit/(loss) on disposals
Americas Materials Solutions 11 17 38
Americas Building Solutions 1 1 1
Europe Materials Solutions 11 (11) (90)
Europe Building Solutions - - 2
Total Group from continuing operations 23 7 (49)
As at
As at 30 June 31 December
2023 2022 2022
Unaudited Unaudited Unaudited
$m % $m % $m %
Total assets
Americas Materials Solutions 18,566 45.5 18,027 48.6 17,609 45.9
Americas Building Solutions 8,104 19.8 5,597 15.1 7,750 20.2
Europe Materials Solutions 11,580 28.4 11,267 30.3 10,843 28.2
Europe Building Solutions 2,560 6.3 2,239 6.0 2,194 5.7
Total Group 40,810 100.0 37,130 100.0 38,396 100.0
Reconciliation to total assets as reported in the Condensed Consolidated
Balance Sheet:
Investments accounted for using the equity method 672 655 649
Other financial assets 42 12 14
Derivative financial instruments (current and non-current) 11 117 42
Income tax assets (current and deferred) 173 96 151
Cash and cash equivalents 4,275 6,826 5,936
Total assets 45,983 44,836 45,188
6. Earnings per Ordinary Share
The computation of basic and diluted earnings per Ordinary Share is set out
below:
Year ended 31 December
Six months ended 30 June
2023 2022 2022
Unaudited Unaudited Audited
$m $m $m
Numerator computations
Group profit for the financial period 1,178 2,106 3,874
Profit attributable to non-controlling interests (10) (12) (27)
Profit attributable to ordinary equity holders of the Company - numerator for 1,168 2,094 3,847
basic/diluted earnings per Ordinary Share
Profit after tax for the financial period from discontinued operations - - 1,168 1,190
attributable to equity holders of the Company
Profit attributable to ordinary equity holders of the Company - numerator for 1,168 926 2,657
basic/diluted earnings per Ordinary Share from continuing operations
Number of shares Number of shares Number of shares
Denominator computations
Weighted average number of Ordinary Shares (millions) outstanding for the 738.8 765.2 758.3
financial period
Effect of dilutive potential Ordinary Shares (employee share awards) 4.6 4.9 5.8
(millions)
Denominator for diluted earnings per Ordinary Share 743.4 770.1 764.1
Earnings per Ordinary Share
- basic $1.58 $2.74 $5.07
- diluted $1.57 $2.72 $5.03
Earnings per Ordinary Share from continuing operations
- basic $1.58 $1.21 $3.50
- diluted $1.57 $1.20 $3.48
7. Dividends
The dividends paid and proposed in respect of each class of share capital are
as follows:
Year ended
Six months ended 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
Net dividend paid per share $1.03 $0.98 $1.22
Net dividend declared for the period $0.25 $0.24 $1.27
Dividend cover - continuing operations 6.3x 5.0x 2.8x
The Board has decided to pay an interim dividend of $0.25 per share, which
represents an increase of 4% on prior year. The interim dividend which will be
paid wholly in cash, will be paid on 22 November 2023 to shareholders
registered at the close of business on 20 October 2023. The ex-dividend date
will be 19 October 2023. The payment date is later than in prior years to
facilitate shareholders taking any required actions to ensure the continued
efficient management of the receipt of CRH dividends following the transition
to a US primary listing on 25 September 2023 (the "Listing Change").
The 2023 interim dividend and future dividends will be managed by
Computershare Trust Company N.A. ("Computershare"), which has been appointed
as CRH's Transfer Agent and Registrar in place of Link Registrars ("Link").
Following the Listing Change, the default payment currency for dividends will
be US Dollar. Shareholders intending to hold their shares through a Depository
Trust Company ("DTC") participant, whether in the form of Ordinary Shares
which will trade on the NYSE or Depository Instruments which will trade on the
London Stock Exchange, should contact their broker or custodian in relation to
currency payment options. Shareholders who intend to hold their shares in
registered form ("Registered Shareholders"), rather than through a DTC
participant, will have the facility to elect to receive dividend payments in
euro, Pound Sterling or a range of other currencies through a service operated
by Computershare, details of which will be communicated to Registered
Shareholders in due course. Irish Dividend Withholding Tax ("DWT"), currently
25%, will continue to apply to CRH dividend payments following the Listing
Change, unless a shareholder is entitled to an exemption and has submitted a
valid DWT exemption form to Computershare (or previously to Link).
Computershare will also be required to apply US withholding tax of 24% on
dividend payments, unless a US tax certification document known as a W-8 for
non-US shareholders, or a W-9 for US shareholders, is completed and returned
to them.
Currency elections and completed withholding tax documents must be received by
Computershare by 10.00 p.m. (Irish time)/5.00 p.m. (New York time) on
Thursday, 19 October 2023 to apply to the 2023 interim dividend.
Further details regarding dividends and contact details for Computershare are
available on the CRH website, www.crh.com.
8. Assets Held for Sale and Discontinued Operations
A. Profit on disposal of discontinued operations
In April 2022, the Group completed the divestment of its Building Envelope business, formerly part of our Americas Building Solutions segment. With the exception of our Building Envelope business, no other businesses divested during the first half of 2023 or 2022 are considered to be either separate major lines of business or geographical areas of operation and therefore do not constitute discontinued operations as defined in IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations.
No businesses met the IFRS 5 held for sale criteria at 30 June 2023.
The table below sets out the proceeds and related profit recognised on
divestment which were included in profit after tax for the financial period
from discontinued operations.
Year ended
Six months ended 30 June 31 December
2022 2022
Unaudited Audited
$m $m
Net assets disposed 2,066 2,049
Reclassification of currency translation effects on disposal 5 5
Total 2,071 2,054
Proceeds from disposal (net of disposal costs) 3,528 3,525
Profit on disposal from discontinued operations 1,457 1,471
Net cash inflow arising on disposal
Proceeds from disposal from discontinued operations 3,528 3,525
Less: cash and cash equivalents disposed (27) (27)
Total 3,501 3,498
8. Assets Held for Sale and Discontinued Operations - continued
B. Results of discontinued operations
The results of the discontinued operations included in the Group profit for
the financial period are set out as follows:
Year ended
Six months ended 30 June 31 December
2022 2022
Unaudited Audited
$m $m
Revenue 647 645
Cost of sales (i) (413) (412)
Gross profit 234 233
Operating costs (i) (139) (138)
Operating profit 95 95
Profit on disposals 1,457 1,471
Profit before finance costs 1,552 1,566
Finance costs (6) (6)
Profit before tax 1,546 1,560
Attributable income tax expense (ii) (378) (370)
Profit after tax for the financial period from discontinued operations 1,168 1,190
Profit attributable to:
Equity holders of the Company 1,168 1,190
Profit after tax for the financial period from discontinued operations 1,168 1,190
Basic earnings per Ordinary Share from discontinued operations $1.53 $1.57
Diluted earnings per Ordinary Share from discontinued operations $1.52 $1.55
Cash flows from discontinued operations
Net cash outflow from operating activities (iii) (18) (435)
Net cash inflow from investing activities (iv) 3,449 3,446
Net cash outflow from financing activities (6) (6)
(i) The depreciation and amortisation charge for discontinued operations
for 30 June 2022 amounted to $26 million and $10 million respectively (31
December 2022: $26 million and $10 million respectively).
(ii) The attributable income tax expense for 30 June 2022 includes $357
million (31 December 2022: $347 million) relating to the profit on disposal of
discontinued operations.
(iii) Includes the corporation tax paid on the sale of discontinued
operations.
(iv) Includes the proceeds from the disposal of discontinued operations.
9. Net Finance Costs
Continuing operations
Year ended
Six months ended 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
$m $m $m
Finance costs 203 184 401
Finance income (76) (7) (65)
Other financial expense 20 20 40
Total net finance costs 147 197 376
The overall total is analysed as follows:
Net finance costs on interest-bearing loans and borrowings including leases 132 180 337
and cash and cash equivalents
Net credit re change in fair value of derivatives and fixed rate debt (5) (3) (1)
Finance costs less income 127 177 336
Unwinding of discount element of provisions for liabilities 10 8 16
Unwinding of discount applicable to deferred and contingent acquisition 10 10 20
consideration
Unwinding of discount applicable to deferred divestment proceeds (3) (5) (8)
Unwinding of discount applicable to leased mineral reserves 3 3 6
Pension-related finance costs (net) (note 15) - 4 6
Total net finance costs (i) 147 197 376
(i) Net finance costs at 30 June 2022 excludes $6 million (31 December
2022: $6 million) relating to discontinued operations.
10. Net Debt
As at
As at 30 June As at 30 June 31 December
2023 2022 2022
Book value Fair value (i) Book value Fair value (i) Book value Fair value (i)
Unaudited Unaudited Audited
Net debt $m $m $m $m $m $m
Non-current assets
Derivative financial instruments 3 3 5 5 3 3
Current assets
Cash and cash equivalents 4,275 4,275 6,826 6,826 5,936 5,936
Derivative financial instruments 8 8 112 112 39 39
Non-current liabilities
Interest-bearing loans and borrowings (7,563) (6,980) (8,584) (8,253) (8,145) (7,517)
Lease liabilities (1,081) (1,081) (1,014) (1,014) (1,059) (1,059)
Derivative financial instruments (83) (83) (26) (26) (77) (77)
Current liabilities
Interest-bearing loans and borrowings (2,185) (2,172) (1,364) (1,370) (1,491) (1,484)
Lease liabilities (266) (266) (246) (246) (260) (260)
Derivative financial instruments (39) (39) (8) (8) (51) (51)
Group net debt (6,931) (6,335) (4,299) (3,974) (5,105) (4,470)
(i) Interest-bearing loans and borrowings are Level 2 instruments whose
fair value is derived from quoted market prices.
As at
As at 30 June As at 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
Gross debt, net of derivatives, matures as follows: $m $m $m
Within one year 2,482 1,506 1,763
Between one and two years 1,503 1,323 881
Between two and three years 164 1,391 1,403
Between three and four years 1,823 116 920
Between four and five years 1,003 1,755 982
After five years 4,231 5,034 5,092
Total 11,206 11,125 11,041
In April 2023 the Group repaid a €750 million bond upon maturity. In July
2023, the Group accessed the euro debt capital markets and raised €2 billion
in funding across three tranches in 4-year, 8-year and 12-year tenors at a
weighted average coupon of 4.13%.
Components of net debt
Net debt is a non-GAAP measure which we provide to investors as we believe
they find it useful. Net debt comprises cash and cash equivalents,
interest-bearing loans and borrowings, lease liabilities and derivative
financial instrument assets and liabilities; it enables investors to see the
economic effects of these in total. Net debt is commonly used in computations
such as net debt as a % of total equity and net debt as a % of market
capitalisation.
As at
As at 30 June As at 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
$m $m $m
Cash and cash equivalents 4,275 6,826 5,936
Interest-bearing loans and borrowings (9,748) (9,948) (9,636)
Lease liabilities (1,347) (1,260) (1,319)
Derivative financial instruments (net) (111) 83 (86)
Group net debt (6,931) (4,299) (5,105)
10. Net Debt - continued
Reconciliation of opening to closing net debt Mark-to-
Movement Movement market
At 1 attributable attributable and other At 30
January Cash to acquired to disposed non-cash Translation June
Book value flow companies companies adjustments adjustment Book value
30 June 2023 (unaudited) $m $m $m $m $m $m $m
Cash and cash equivalents 5,936 (1,768) 15 - - 92 4,275
Interest-bearing loans and borrowings (9,636) (6) (10) - 3 (99) (9,748)
Lease liabilities (1,319) 127 (5) - (129) (21) (1,347)
Derivative financial instruments (net) (70) (4) - - (3) (4) (81)
Liabilities from financing activities (11,025) 117 (15) - (129) (124) (11,176)
Derivative financial instruments - non-financing (16) (7) - - 7 (14) (30)
Group net debt (5,105) (1,658) - - (122) (46) (6,931)
The equivalent disclosure for the prior period is as follows:
30 June 2022 (unaudited)
Cash and cash equivalents 5,783 1,294 10 (28) - (233) 6,826
Interest-bearing loans and borrowings (10,487) (49) (4) 6 109 477 (9,948)
Lease liabilities (1,671) 132 (30) 341 (90) 58 (1,260)
Derivative financial instruments (net) 122 31 - - (35) (35) 83
Group net debt (6,253) 1,408 (24) 319 (16) 267 (4,299)
Market capitalisation
Market capitalisation, calculated as the period-end share price multiplied by
the number of Ordinary Shares in issue, is as follows:
As at
As at 30 June As at 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
$m $m $m
Market capitalisation - Euronext Dublin (i) 39,908 26,037 29,462
(i) The market capitalisation figure of €36.7 billion (30 June 2022:
€25.1 billion; 31 December 2022: €27.6 billion), based on the euro
denominated share price per CRH's listing on Euronext Dublin, was translated
to US Dollar using the relevant closing rates as noted in the principal
foreign exchange rates table in note 1.
10. Net Debt - continued
Liquidity information - borrowing facilities
The Group manages its borrowing ability by entering into committed borrowing
agreements. Revolving committed bank facilities are generally available to the
Group for periods of up to five years from the date of inception. The undrawn
committed facilities figures shown in the table below represent the facilities
available to be drawn by the Group at 30 June 2023. The Group successfully
carried out an amendment to its €3.5 billion revolving credit facility in
May 2023 whereby the Group extended the maturity date of the facility for a
further 2 years to 2028.
As at
As at 30 June As at 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
$m $m $m
Between two and three years - 36 -
Between three and four years - 3,637 3,736
Between four and five years 3,799 - 9
Total 3,799 3,673 3,745
Guarantees
The Company has given letters of guarantee to secure obligations of subsidiary
undertakings as follows: $9.4 billion in respect of loans and borrowings, bank
advances and derivative obligations (30 June 2022: $9.5 billion; 31 December
2022: $9.3 billion) and $0.4 billion in respect of letters of credit due
within one year (30 June 2022: $0.4 billion; 31 December 2022: $0.4 billion).
Net debt metrics
The net debt metrics based on net debt as shown on page 26, as follows:
Continuing Operations
As at
As at 30 June As at 30 June 31 December
2023 2022 2022
Unaudited Unaudited Unaudited
Net debt as a percentage of market capitalisation 17% 17% 17%
Net debt as a percentage of total equity 32% 20% 23%
11. Fair Value of Financial Instruments
The fair values of derivative financial instruments are analysed by year of
maturity and by accounting designation as follows:
Level 2 (i) Level 3 (i)
As at As at
As at 30 June 31 December As at 30 June 31 December
2023 2022 2022 2023 2022 2022
Unaudited Audited Unaudited Audited
$m $m $m $m $m $m
Assets measured at fair value
Fair value hedges - interest rate swaps - 5 6 - - -
Cash flow hedges - currency forwards, currency swaps, commodity forwards and 6 107 20 - - -
commodity swaps
Net investment hedges - currency forwards and currency swaps 2 3 15 - - -
Not designated as hedges (classified as held for trading) - currency forwards 3 2 1 - - -
and currency swaps
Total 11 117 42 - - -
Liabilities measured at fair value
Fair value hedges - interest rate swaps (82) (26) (77) - - -
Cash flow hedges - currency forwards, currency swaps, commodity forwards and (17) (1) (43) - - -
commodity swaps
Net investment hedges - currency forwards and currency swaps (20) (1) (8) - - -
Not designated as hedges (classified as held for trading) - currency forwards (3) (6) - - - -
and currency swaps
Contingent consideration - - - 306 306 293
Total (122) (34) (128) 306 306 293
The carrying amount of trade and other payables approximate their fair value
largely due to the short-term maturities and nature of these instruments.
There were no transfers between Levels 2 and 3 during the periods.
There were no significant changes in contingent consideration recognised in
profit or loss or other comprehensive income in the current period. Further
details in relation to the inputs into valuation models for contingent
consideration are available in the Group's 2022 Annual Report and Form 20-F.
(i) For financial reporting purposes, fair value measurements are
categorised into Level 1, 2 or 3 based on the degree to which inputs to the
fair value measurements are observable and the significance of the inputs to
the fair value measurement in its entirety.
12. Future Purchase Commitments for Property, Plant and Equipment
Year ended
Six months ended 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
$m $m $m
Contracted for but not provided in the Condensed Consolidated Interim 854 660 862
Financial Statements
13. Business Combinations
The acquisitions completed during the period ended 30 June 2023 by reportable
segment, together with the completion dates, are detailed below; these
transactions entailed the acquisition of an effective 100% stake except where
indicated to the contrary:
Americas Materials Solutions:
New Jersey: certain assets of North State Materials, LLC. (29 June);
Ohio: Trison Concrete (20 January); and
West Virgina: Scary Creek Materials (2 June).
Europe Materials Solutions:
Denmark: Bedsted Lø Grusværker ApS (1 February);
Romania: Bolintin sand and gravel (8 May); and
Slovakia: certain assets of TBG Slovensko a.s. (1 June).
Europe Building Solutions:
Germany: Modersohn (31 January); and
Sweden: Ulricehamns Betong AB (2 January).
13. Business Combinations - continued
The identifiable net assets acquired, including adjustments to provisional
fair values, were as follows:
Year ended
Six months ended 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
$m $m $m
ASSETS
Non-current assets
Property, plant and equipment 130 312 906
Intangible assets 41 65 987
Equity accounted investments - 28 28
Total non-current assets 171 405 1,921
Current assets
Inventories 12 67 375
Trade and other receivables (i) 7 45 227
Current income tax recoverable 1 - -
Cash and cash equivalents 15 10 22
Total current assets 35 122 624
LIABILITIES
Trade and other payables (32) (35) (195)
Provisions for liabilities (2) - (19)
Lease liabilities (5) (30) (107)
Interest-bearing loans and borrowings (10) (4) (8)
Deferred income tax liabilities (14) (8) (247)
Total liabilities (63) (77) (576)
Total identifiable net assets at fair value 143 450 1,969
Goodwill arising on acquisition (ii) 78 453 1,320
Total consideration 221 903 3,289
Consideration satisfied by:
Cash payments 213 896 3,275
Deferred consideration (stated at net present cost) 6 1 10
Contingent consideration 2 6 4
Total consideration 221 903 3,289
Net cash outflow arising on acquisition
Cash consideration 213 896 3,275
Less: cash and cash equivalents acquired (15) (10) (22)
Total outflow in the Consolidated Statement of Cash Flows 198 886 3,253
(i) The gross contractual value of trade and other receivables as at the
respective dates of acquisition amounted to $8 million (30 June 2022: $45
million; 31 December 2022: $229 million). The fair value of these
receivables is $7 million (all of which is expected to be recoverable)
(30 June 2022: $45 million; 31 December 2022: $227 million).
(ii) The principal factor contributing to the recognition of goodwill on
acquisitions entered into by the Group is the realisation of cost savings and
other synergies with existing entities in the Group which do not qualify for
separate recognition as intangible assets. Due to the asset-intensive nature
of operations in the Americas Materials Solutions and Europe Materials
Solutions business segments, no significant separately identifiable intangible
assets were recognised on business combinations in these segments. $7 million
of the goodwill recognised in respect of acquisitions completed in 2023 is
expected to be deductible for tax purposes (30 June 2022: $418 million; 31
December 2022: $1,289 million).
13. Business Combinations - continued
The acquisition balance sheet presented on the previous page reflects the
identifiable net assets acquired in respect of acquisitions completed during
2023, together with adjustments to provisional fair values (to the extent
identified as of 30 June 2023) in respect of acquisitions completed during
2022. The measurement period for a number of acquisitions completed in 2022,
closed in 2023 with no material adjustments identified.
CRH performs a detailed quantitative and qualitative assessment of each
acquisition in order to determine whether it is material for the purposes of
separate disclosure under IFRS 3 Business Combinations. None of the
acquisitions completed during the financial period were considered
sufficiently material to warrant separate disclosure of the attributable fair
values. The initial assignment of the fair values to identifiable assets
acquired and liabilities assumed as disclosed are provisional (principally in
respect of property, plant and equipment and intangible assets) in respect of
certain acquisitions due to timing of close. The fair value assigned to
identifiable assets and liabilities acquired is based on estimates and
assumptions made by management at the time of acquisition. CRH may revise its
purchase price allocation during the subsequent reporting window as permitted
under IFRS 3.
Acquisition-related costs
Acquisition-related costs, which exclude post-acquisition integration costs,
amounting to $2 million (30 June 2022: $4 million) have been included in
operating costs in the Condensed Consolidated Income Statement.
The following table analyses the 8 acquisitions completed in 2023 (30 June
2022: 14 acquisitions) by reportable segment and provides details of the
goodwill and consideration figures arising in each of those segments:
Six months ended 30 June - Unaudited
Number of Goodwill Consideration
acquisitions
2023 2022 2023 2022 2023 2022
Reportable segments $m $m $m $m
Continuing operations
Americas Materials Solutions 3 5 11 120 28 318
Americas Building Solutions - 2 - 337 - 485
Europe Materials Solutions 3 7 1 37 44 99
Europe Building Solutions 2 - 72 - 150 -
Total Group from continuing operations 8 14 84 494 222 902
Adjustments to provisional fair values of prior period acquisitions (6) (41) (1) 1
Total 78 453 221 903
Post-acquisition impact
The post-acquisition impact of acquisitions completed during the period on the
Group's profit for the financial period was as follows:
Unaudited
Six months ended 30 June
2023 2022
Continuing operations $m $m
Revenue 46 107
(Loss)/profit before tax for the financial period (2) 3
The revenue and profit of the Group for the financial period determined in
accordance with IFRS as though the acquisitions effected during the period had
been at the beginning of the period would have been as follows:
Unaudited
CRH Group Consolidated
2023 excluding 2023 Group including
acquisitions acquisitions acquisitions
$m $m $m
Revenue 60 16,090 16,150
Profit before tax for the financial period - 1,512 1,512
There have been no acquisitions completed subsequent to the balance sheet date
which would be individually material to the Group, thereby requiring
disclosure under either IFRS 3 or IAS 10 Events after the Balance Sheet Date.
Development updates, giving details of acquisitions which do not require
separate disclosure on the grounds of materiality, are published periodically
14. Related Party Transactions
There have been no related party transactions or changes in the nature and
scale of the related party transactions described in the 2022 Annual Report
and Form 20-F that could have had a material impact on the financial position
or performance of the Group in the first six months of 2023.
15. Retirement Benefit Obligations
The Group operates either defined benefit or defined contribution pension
schemes in all of its principal operating areas.
In consultation with the actuaries to the various defined benefit pension
schemes (including jubilee schemes, long-term service commitments and
post-retirement healthcare obligations, where relevant), the valuations of the
applicable assets and liabilities have been marked-to-market as at the end of
the financial period, taking account of prevailing bid values, actual
investment returns, corporate bond yields and other matters such as updated
actuarial valuations conducted during the period.
Financial assumptions - scheme liabilities
The discount rates used by the Group's actuaries in the computation of the
pension scheme liabilities and post-retirement healthcare obligations are as
follows:
Year ended
Six months ended 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
% % %
Eurozone 4.00 3.32 4.20
United States and Canada 5.15 4.81 5.20
Switzerland 1.80 2.14 2.20
The following table provides a reconciliation of scheme assets (at bid value)
and the actuarial value of scheme liabilities (using the aforementioned
assumptions):
Six months ended 30 June 2023 - Unaudited
Assets Liabilities Total Impact of asset ceiling Net Pension Asset
$m $m $m $m $m
At 1 January 2,443 (2,371) 72 (88) (16)
Administration expenses (1) - (1) - (1)
Current service cost - (13) (13) - (13)
Past service cost - (1) (1) (1)
Interest income on scheme assets 51 - 51 - 51
Interest cost on scheme liabilities - (51) (51) - (51)
Remeasurement adjustments
- experience variations - (4) (4) - (4)
- return on scheme assets excluding interest income 51 - 51 - 51
- actuarial loss from changes in financial assumptions - (42) (42) - (42)
- change in asset ceiling, excluding amounts included in interest expense - - - 11 11
Employer contributions paid 18 - 18 - 18
Contributions paid by plan participants 3 (3) - - -
Benefit and settlement payments (65) 65 - - -
Translation adjustment 42 (40) 2 - 2
At 30 June (i) 2,542 (2,460) 82 (77) 5
Related net deferred income tax asset 20
Net pension asset 25
(i) Reconciliation to Condensed Consolidated Balance Sheet
Retirement benefit assets 282
Retirement benefit obligations (277)
Net pension asset 5
15. Retirement Benefit Obligations - continued
Six months ended 30 June 2022 - Unaudited
Assets Liabilities Total Impact of asset ceiling Net Pension Asset
$m $m $m $m $m
At 1 January 3,174 (3,483) (309) - (309)
Administration expenses (1) - (1) - (1)
Current service cost - (24) (24) - (24)
Interest income on scheme assets 26 - 26 - 26
Interest cost on scheme liabilities - (30) (30) - (30)
Disposals - 14 14 - 14
Remeasurement adjustments
- return on scheme assets excluding interest income (450) - (450) - (450)
- actuarial gain from changes in financial assumptions - 832 832 - 832
- change in asset ceiling, excluding amounts included in interest expense - - - (85) (85)
Employer contributions paid 18 - 18 - 18
Contributions paid by plan participants 4 (4) - - -
Benefit and settlement payments (74) 74 - - -
Translation adjustment (168) 165 (3) - (3)
At 30 June (i) 2,529 (2,456) 73 (85) (12)
Related net deferred income tax asset 24
Net pension asset 12
(i) Reconciliation to Condensed Consolidated Balance Sheet
Retirement benefit assets 284
Retirement benefit obligations (296)
Net pension deficit (12)
16. Share Buyback Programme
During 2023, the Group completed the latest phases of its share buyback
programme (the 'Programme'), returning a further $1.0 billion of cash to
shareholders. This brings total cash returned to shareholders under the
Programme to $5.1 billion since its commencement in May 2018. On 30 June 2023
the Group announced the continuation of the Programme which was extended to
include the further repurchase of Ordinary Shares of up to $1.0 billion in the
period up to 22 September 2023. At 30 June 2023 a financial liability of $985
million (30 June 2022: $252 million; 31 December 2022: $281 million) was
included in other payables in respect of the latest phase of the Programme
which was entered into with Société Générale. This phase will end no later
than 22 September 2023.
17. Taxation
The taxation expense for the interim period is an estimate based on the
expected full year effective tax rate on full year profits.
18. Statutory Accounts and Audit Opinion
The financial information presented in this interim report does not represent
full statutory accounts as defined by the Companies Act 2014 and has not been
reviewed or audited by the Company's auditors. A copy of the full statutory
accounts for the year ended 31 December 2022 prepared in accordance with IFRS,
upon which the auditors have given an unqualified audit report, has been filed
with the Registrar of Companies.
19. Board Approval
This announcement was approved by the Board of Directors of CRH plc on 23
August 2023.
20. Distribution of Interim Report
This interim report is available on the Group's website (www.crh.com
(file:///C%3A/Users/nmagill/Downloads/www.crh.com) ). A printed copy is
available to the public at the Company's registered office.
Glossary of Alternative Performance Measures
CRH uses a number of alternative performance measures (APMs) to monitor
financial performance. These measures are referred to throughout the
discussion of our reported financial position and operating performance and
are measures which are regularly reviewed by CRH management.
The APMs as summarised below should not be viewed in isolation or as an
alternative to the equivalent GAAP measure.
The APMs may not be uniformly defined by all companies and accordingly they
may not be directly comparable with similarly titled measures and disclosures
by other companies. Certain information presented is derived from amounts
calculated in accordance with IFRS but is not itself an expressly permitted
GAAP measure.
EBITDA
EBITDA is defined as earnings from continuing operations before interest,
taxes, depreciation, amortisation, asset impairment charges, profit on
disposals and the Group's share of equity accounted investments' profit after
tax. It is quoted by management, in conjunction with other GAAP and non-GAAP
financial measures, to aid investors in their analysis of the performance of
the Group and to assist investors in the comparison of the Group's performance
with that of other companies.
EBITDA is monitored by management in order to allocate resources between
segments and to assess performance. Given that net finance costs and income
tax are managed on a centralised basis, these items are not allocated between
operating segments for the purpose of the information presented to the Chief
Operating Decision Maker (Group Chief Executive, Chief Financial Officer and
Chief Operating Officer). EBITDA margin is calculated by expressing EBITDA as
a percentage of revenue.
Operating profit is defined as earnings before interest, taxes, profit on
disposals and the Group's share of equity accounted investments' profit after
tax.
A reconciliation of Group profit to EBITDA is presented below.
Continuing Operations
Year ended
Six months ended 30 June 31 December
2023 2022 2022
Unaudited Unaudited Audited
$m $m $m
Group profit for the financial period 1,178 938 2,684
Income tax expense - estimated at interim 332 265 785
Profit before tax 1,510 1,203 3,469
Share of equity accounted investments' profit (7) (8) -
Other financial expense 20 20 40
Finance costs less income 127 177 336
Profit before finance costs 1,650 1,392 3,845
(Profit)/loss on disposals (23) (7) 49
Group operating profit 1,627 1,385 3,894
Depreciation charge 824 795 1,618
Amortisation of intangibles 69 30 103
EBITDA 2,520 2,210 5,615
Glossary of Alternative Performance Measures - continued
Net Debt and Net Debt/EBITDA
Net debt is used by management as it gives additional insight into the Group's
current debt situation less available cash. Net debt is provided to enable
investors to see the economic effect of gross debt, related hedges and cash
and cash equivalents in total. Net debt is a non-GAAP measure and comprises
current and non-current interest-bearing loans and borrowings, lease
liabilities, cash and cash equivalents and current and non-current derivative
financial instruments (net).
Net Debt/EBITDA is monitored by management and is useful to investors in
assessing the Company's level of indebtedness relative to its profitability.
It is the ratio of Net Debt to EBITDA and is calculated below:
Year ended
31 December
2022
$m
Net Debt
Cash and cash equivalents (i) 5,936
Interest-bearing loans and borrowings (i) (9,636)
Lease liabilities (i) (1,319)
Derivative financial instruments (net) (i) (86)
Group net debt (i) (5,105)
EBITDA - from continuing operations 5,615
Times
Net debt divided by EBITDA - from continuing operations 0.9
(i) These items appear in note 10 on page 26.
Organic Revenue, Organic Operating Profit and Organic EBITDA
The terms "like-for-like" (LFL) and "organic" are used interchangeably
throughout this report.
Because of the impact of acquisitions, divestments, exchange translation and
other non-recurring items on reported results each period, the Group uses
organic revenue, organic operating profit and organic EBITDA as additional
performance indicators to assess performance of pre-existing operations each
period.
Organic revenue, organic operating profit and organic EBITDA are arrived at by
excluding the incremental revenue, operating profit and EBITDA contributions
from current and prior year acquisitions and divestments, the impact of
exchange translation and the impact of any non-recurring items. Organic EBITDA
margin is calculated by expressing organic EBITDA as a percentage of organic
revenue.
In the Business Performance (#Section1) review on pages 1 to 7, changes in
organic revenue, organic operating profit and organic EBITDA are presented as
additional measures of revenue, operating profit and EBITDA to provide a
greater understanding of the performance of the Group. A reconciliation of the
changes in organic revenue, organic operating profit and organic EBITDA to the
changes in total revenue, operating profit and EBITDA for the Group and by
segment is presented with the discussion of each segment's performance in
tables contained in the segment discussion commencing on page 3.
Principal Risks and Uncertainties
Under Section 327(1)(b) of the Companies Act 2014 and Regulation 5(4)(c)(ii)
of the Transparency (Directive 2004/109/EC) Regulations 2007, the Group is
required to give a description of the principal risks and uncertainties which
it faces. These risks and uncertainties reflect the international scope of the
Group's operations and the Group's decentralised structure. During the course
of 2023, new risks and uncertainties may materialise attributable to changes
in markets, regulatory environments and other factors and existing risks and
uncertainties may become less relevant.
Principal Strategic Risks and Uncertainties
Industry cyclicality and economic conditions: Construction activity, and
therefore demand for the Group's products, is inherently cyclical and
influenced by multiple factors, including global and national economic
circumstances (particularly those affecting the infrastructure and
construction markets), monetary policy, consumer sentiment, swings in fuel and
other input costs, and weather conditions that may disrupt outdoor
construction activity.
People management: The Group may not achieve its strategic objectives if it is
not successful in attracting, engaging, retaining and developing employees,
planning for leadership succession, developing a diverse and inclusive
workforce, and building constructive relationships with collective
representation groups.
Commodity products and substitution: Many of the Group's products are
commodities that face strong volume and price competition. Such products may
also face competition from substitute products, including new products, that
the Group does not produce. The Group must maintain strong customer
relationships to ensure it can respond to changing consumer preferences and
approaches to construction. Failure to differentiate and innovate could lead
to market share decline, thus adversely impacting financial performance.
Portfolio management: The Group engages in acquisition and divestment activity
as part of active portfolio management which presents risks around due
diligence, execution and integration of assets. Additionally, the Group may be
liable for liabilities of companies it has acquired or divested. Failure to
efficiently identify and execute deals may limit the Group's growth potential
and impact financial performance.
Public policies and geopolitics: Adverse public policy, economic, social and
political situations in any country in which the Group operates could lead to
health and safety risks for the Group's people, a fall in demand for the
Group's products, business interruption, restrictions on repatriation of
earnings or a loss of plant access.
Strategic mineral reserves: Appropriate reserves are increasingly scarce, and
licences and permits required for operations are becoming harder to secure.
Numerous uncertainties are inherent in estimating reserves and projecting
production rates of the minerals used in the Group's products. Failure of the
Group to plan for reserve depletion and secure or maintain permits may result
in operation stoppages, adversely impacting financial performance.
Principal Operational Risks and Uncertainties
Climate change and policy: The impact of climate change may adversely affect
the Group's operations and cost base and the stability of markets in which the
Group operates. Risks related to climate change that could affect the Group's
operations and financial performance include both physical risks (such as
acute and chronic changes in weather) and transitional risks (such as
technological development, policy and regulation change and market and
economic responses).
Information technology and cyber security: The Group is dependent on
information and operational technology systems (including those for which
third-parties are in whole or in part responsible) to support its business
activities. Security incidents and cyber-attacks are becoming increasingly
sophisticated, and our systems for protecting our assets and data against
cyber security risks may be insufficient. Security breaches, IT interruptions
or data loss could result in significant business disruption, loss of
production, reputational damage and/or regulatory penalties.
Health and safety performance: The Group's businesses operate in an industry
with inherent health and safety risks, including operation of heavy vehicles,
working at height, and use of mechanised processes. Failure to ensure safe
workplaces could result in a deterioration in the Group's safety performance
and related adverse regulatory action or legal liability. Health and safety
incidents could significantly impact the Group's operational and financial
performance, as well as its reputation.
Sustainability and corporate social responsibility: The nature of the Group's
activities poses certain environmental and social risks, which are also
subject to an evolving regulatory framework and changing societal
expectations. Failure to embed sustainability principles within the Group's
businesses and strategy may result in non-compliance with relevant
regulations, standards and best practices and lead to adverse stakeholder
sentiment and reduced financial performance.
Supply chain continuity: The Group must reliably and economically source
various raw materials, equipment and other inputs from various third-party
suppliers and then transport finished products to satisfy customer demands and
meet contractual requirements. Our ability to balance maintaining resilient
supply chains with optimising our working capital and inventory levels is
critical to the continuity and strong financial returns of our operations.
Failure to manage any material disruption in our supply chains could adversely
impact our ability to service our customers and result in a deterioration in
operational and/or financial performance.
Principal Risks and Uncertainties - continued
Principal Compliance Risks and Uncertainties
Laws, regulations and business conduct: The Group is subject to a wide variety
of local and international laws and regulations (including those applicable to
it as a listed company). There can be no assurance that the Group's policies
and procedures afford adequate protection against compliance failures or other
fraudulent and/or corrupt activities. The Group's pending transition from a
premium listing to a standard listing on the London Stock Exchange, and the
transition of our primary listing to the New York Stock Exchange, may cause
volatility or a reduction in our share price and/or shareholder base, and may
result in other potential risks. Potential breaches of local and international
laws and regulations could result in litigation or investigations, the
imposition of significant fines, sanctions, adverse operational impact (to
include an inability to operate in key markets/debarment) and reputational
damage.
Principal Financial and Reporting Risks and Uncertainties
Taxation charge and balance sheet provisioning: The Group is exposed to
uncertainties stemming from governmental actions in respect of taxes paid or
payable in the future in all jurisdictions of operation. In addition, various
assumptions are made in the computation of the overall tax charge and in
balance sheet provisions which may need to be adjusted over time. Changes in
tax regimes or assessment of additional tax liabilities in future tax audits
could result in incremental tax liabilities which could have a material
adverse effect on cash flows and the financial results of operations.
Financial instruments: The Group uses financial instruments throughout its
businesses giving rise to interest rate and leverage, foreign currency,
counterparty, credit rating and liquidity risks. A downgrade of the Group's
credit ratings may give rise to increases in future funding costs and may
impair the Group's ability to raise funds on acceptable terms. In addition,
insolvency of the financial institutions with which the Group conducts
business may adversely impact the Group's financial position.
Goodwill impairment: Significant under performance in any of the Group's major
cash-generating units or the divestment of businesses in the future may give
rise to a material write-down of goodwill. While a non-cash item, a material
write-down of goodwill could have a substantial impact on the Group's income
and equity.
Foreign currency translation: The principal foreign exchange risks to which
the Condensed Consolidated Financial Statements are exposed pertain to (i)
adverse movements in reported results when translated into the reporting
currency; and (ii) declines in the reporting currency value of net investments
which are denominated in a wide basket of currencies other than the reporting
currency. Adverse changes in the exchange rates could negatively affect
retained earnings.
Responsibility Statement
The Directors of CRH plc are responsible for preparing the interim management
report in accordance with the Transparency (Directive 2004/109/EC) Regulations
2007 as amended, the Central Bank (Investment Market Conduct) Rules 2019, the
Disclosure Guidance and Transparency Rules of the UK's Financial Conduct
Authority and with IAS 34, as adopted by the European Union.
The Directors of CRH plc, being the persons responsible within CRH plc,
confirm that to the best of their knowledge:
1) the Condensed Consolidated Unaudited Financial Statements (#10) for the
six months ended 30 June 2023 have been prepared in accordance with
International Accounting Standard 34 Interim Financial Reporting, the
accounting standard applicable to interim financial reporting adopted pursuant
to the procedure provided for under Article 6 of Regulation (EC) no. 1606/2002
of the European Parliament and of the Council of 19 July 2002, and give a true
and fair view of the assets, liabilities, financial position and profit or
loss of the Group for the six months ended 30 June 2023;
2) the interim management report includes a fair review of:
I. the important events that have occurred during the first six
months of the financial year, and their impact on the condensed consolidated
set of financial statements;
II. the principal risks and uncertainties for the remaining six
months of the financial year;
III. any related parties' transactions that have taken place in the
first six months of the current financial year that have materially affected
the financial position or the performance of the enterprise during that
period; and
IV. any changes in the related parties' transactions described in the
2022 Annual Report and Form 20-F that could have had a material effect on the
financial position or performance of the enterprise in the first six months of
the current financial year.
For and on behalf of the Board
Albert Manifold Chief Executive
Jim Mintern Chief Financial Officer
Disclaimer / Forward-Looking Statements
In order to utilise the "Safe Harbor" provisions of the United States Private
Securities Litigation Reform Act of 1995, CRH public limited company (the
"Company") and its subsidiaries (collectively, "CRH" or the "Group") are
providing the following cautionary statement.
This document contains statements that are, or may be deemed to be,
forward-looking statements with respect to the financial condition, results of
operations, business, viability and future performance of CRH and certain of
the plans and objectives of CRH. These forward-looking statements may
generally, but not always, be identified by the use of words such as "will",
"anticipates", "should", "could", "would", "targets", "aims", "may",
"continues", "expects", "is expected to", "estimates", "believes", "intends"
or similar expressions. These forward-looking statements include all matters
that are not historical facts or matters of fact at the date of this document.
In particular, the following, among other statements, are all forward looking
in nature: plans and expectations regarding demand outlook, macroeconomic
trends in CRH's markets, government funding initiatives and manufacturing
trends, pricing trends, costs and weather patterns; plans and expectations
regarding business strategy and cash returns for shareholders, including
expectations regarding dividends and share buybacks; plans and expectations
regarding CRH's financial capacity, balance sheet, sales growth, EBITDA,
margin, debt, costs and expenses, capital allocation, acquisition pipeline,
acquisition strategy and effect of operational and commercial excellence
initiatives; plans and expectations regarding the execution and anticipated
benefits of a transition to a US primary listing, including the timing of any
potential inclusion in a US equity index; plans and expectations regarding
CRH's decarbonisation target and delivery of sustainable solutions and
products; and expectations regarding the strategic risks and uncertainties
facing CRH.
By their nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that may or may not
occur in the future and reflect the Company's current expectations and
assumptions as to such future events and circumstances that may not prove
accurate.
A number of material factors could cause actual results and developments to
differ materially from those expressed or implied by these forward-looking
statements, certain of which are beyond our control, and which include, among
other factors: economic and financial conditions, including market turbulence,
high interest rates, inflation, price volatility and/or labour and materials
shortages, in various countries and regions where we operate; the pace of
growth in the sectors in which we operate; demand for infrastructure,
residential and non-residential construction and our products in our
geographic markets; increased competition and its impact on prices; increases
in energy and/or raw materials costs; adverse changes to laws and regulations,
including in relation to climate change and sustainability; the impact of
unfavorable weather, including due to climate change; our ability to
successfully develop and integrate sustainable solutions into our business and
investor and/or consumer sentiment regarding the importance of sustainable
practices and products; approval or allocation of funding for infrastructure
programmes; adverse political developments in various countries and regions,
including acts of terrorism or war, such as the ongoing geopolitical conflict
in Ukraine; failure to complete or successfully integrate acquisitions or make
timely divestments; indirect and direct effects of the COVID-19 pandemic; and
cyber-attacks, sabotage or other incidents and their direct or indirect
effects on our business. There are important factors, risks and uncertainties
that could cause actual outcomes and results to be materially different,
including risks and uncertainties relating to CRH described under "Principal
Risks and Uncertainties" herein, as well as "Principal Risks and Uncertainties
(Risk Factors)" in the Company's 2022 Annual Report on Form 20-F as filed with
the US Securities and Exchange Commission.
You are cautioned not to place undue reliance on any forward-looking
statements. These forward-looking statements are made as of the date of this
document. The Company expressly disclaims any obligation or undertaking to
publicly update or revise these forward-looking statements other than as
required by applicable law.
The forward-looking statements in this document do not constitute reports or
statements published in compliance with any of Regulations 6 to 8 of the
Transparency (Directive 2004/109/EC) Regulations 2007 (as amended).
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