7th Mar 2006 07:01
CRH PLC07 March 2006 CRH plc 2005 RESULTS Year ended 31st December 2005 2005 2004 % change euro m euro m • Sales 14,449 12,755 +13%• Operating profit * 1,392 1,220 +14%• Profit before tax 1,279 1,104 +16% euro cent euro cent • Earnings per share 186.7 163.6 +14%• Cash earnings per share 292.5 261.8 +12%• Dividend 39.0 33.0 +18% * Under IFRS, operating profit for both 2005 and 2004 does not reflect any charge for goodwill amortisation and is stated before profit on disposal of fixed assets. • CRH once again produced record sales and profits, a combination of strong underlying organic growth and good incremental contributions from acquisitions. • Total operating profit from European operations improved 7% to euro 676 million. • In Europe Materials, operating profit improved 18% to euro 377 million reflecting a full-year share of profit from Secil (acquired June 2004) in Portugal and a strong underlying advance. • Europe Products was impacted by generally subdued trading and a sharp decline in results from Insulation activities. Operating profit fell 8% to euro 176 million. • Operating profit of euro 123 million from Europe Distribution was just ahead of 2004 against a background of subdued Dutch retail demand and poor weather early in the year. • Total operating profit for the Americas operations increased by 22% to euro 716 million. • Americas Materials achieved significant success in recovering higher energy costs with a 20% increase in operating profit to euro 328 million and a welcome improvement in margin. • With continuing strong US residential construction and ongoing recovery in non-residential construction, Americas Products delivered a 23% increase in operating profit to euro 308 million. • Americas Distribution performed particularly strongly reporting a 27% increase in operating profit to euro 80 million, while operating profit margin improved to 7.0% (2004: 6.2%). • Total dividend has been increased by 18.2% making 2005 the 22nd consecutive year of dividend increase. This follows a 17.4% increase in 2004. • Total development activity amounted to euro 1.45 billion. Liam O'Mahony, Chief Executive, said today: "CRH continued to move forward on many fronts in 2005, once again producing newrecord sales and profits, with strong underlying profit growth and goodcontributions from acquisitions. The Group also delivered substantialdevelopment success, especially in the second half of the year. While as always risks remain, the current business outlook is on the wholepositive and we enter 2006 with good momentum. A gradual pick-up in Europeaneconomies seems broadly under way, which if maintained should bring goodbenefits. In the US , while housing may moderate at strong levels,non-residential construction should continue to recover and highway markets areunderpinned by passage of the new Highway Bill. With a continuing focus onoperational effectiveness and ongoing acquisition benefits, we look to 2006 withconfidence." Announced Tuesday, 7th March 2006 RESULTS HIGHLIGHTS CRH continued to move forward on many fronts in 2005, once again producing newrecord sales and profits; a combination of strong underlying organic growth andgood contributions from acquisitions. We also delivered substantial developmentsuccess particularly in the second half of the year. Despite heightened awareness of the budget and trade deficits, the devastatingimpact of Hurricane Katrina which decimated New Orleans and ongoing nationalsecurity costs, the United States economy continued to grow relatively robustlyin 2005. In contrast, while activity in some European countries picked upsomewhat, overall Eurozone growth was still disappointing, with continuingweakness in the Netherlands and Germany . Energy prices rose further, but ourbusinesses coped well with this challenge. The US Dollar stabilised, leading tominimal overall currency impact relative to the previous year. The results highlights for 2005, reported under International FinancialReporting Standards (IFRS), are set out below. The results reflect theproportionate consolidation of joint ventures in the Group's income statement,cash flow statement and balance sheet while the Group's share of profit aftertax of associates is included as a single line item in arriving at Group profitbefore tax. • Sales: euro 14,449 million, up 13% • Operating profit*: euro 1,392 million, up 14% • Profit before tax: euro 1,279 million, up 16% • Basic earnings per share: 186.7c, up 14% • Cash earnings per share: 292.5c, up 12% * Before profit on disposal of fixed assets. Note 5 on page 16 analyses the key components of 2005 performance. All 2004figures presented for comparative purposes in this Preliminary ResultsAnnouncement are restated in accordance with IFRS and accordingly the profitnumbers for both 2004 and 2005 do not include any charge for goodwillamortisation. Under IFRS, amortisation of intangible assets amounted to euro9.1 million (2004: euro 4.1 million). DIVIDENDS The Board is recommending a final dividend of 27.75c per share, an increase of18.6% on the 2004 final dividend of 23.4c. This gives a total dividend for theyear of 39.0c, an increase of 18.2%, representing the twenty-second consecutiveyear of dividend growth. It is proposed to pay the final dividend on 8th May2006 to shareholders registered at the close of business on 17th March 2006. A scrip dividend alternative is being offered to shareholders. Segment Review EUROPE - MATERIALS Analysis of change Total Acquisitionseuro million 2005 2004 change Exchange 2004 2005 Organic Sales 2,646 2,307 +339 +28 +107 +24 +180% change +15% +1% +5% +1% +8%Operating profit* 377 320 +57 +4 +17 +3 +33% change +18% +1% +5% +1% +11%Margin 14.2% 13.9% * Operating profit is before profit on disposal of fixed assets. Europe Materials benefited from generally improved market conditions in allmajor regions and delivered an 18% increase in operating profit. Ireland : 2005 construction output on the island increased by approximately 5%.The housing sector remained the main driver in the Republic of Ireland withcompletions ahead of last year at approximately 81,000 units. The NationalDevelopment Plan continued to deliver road construction activity and thecommercial and industrial sectors improved with the sustained growth in theeconomy. In Northern Ireland , the commercial and public sectors were verystrong although this was partly offset by a decline in housing activity due todelays in the planning process. Despite very competitive markets, it was anothergood year for CRH in Ireland with an increase of approximately 5% in our totalcement volumes and profits ahead of 2004. Finland/Baltics: After a flat start to the year, construction activity inFinland recovered in the second half resulting in overall growth ofapproximately 3%. This was evident across all sectors of the market with ourcement volumes also exceeding 2004 levels by approximately 3%. The Balticregion, including St. Petersburg , enjoyed strong growth. Profits for the yearadvanced due to increased second half demand, better margins and tight costcontrol. Poland/Ukraine: The extended winter in Poland reduced sales of all products atthe start of the year; however, cement demand in the second half provedexceptionally strong leaving cement volumes just ahead of 2004 by year-end. Ouraggregates and blacktop businesses benefited most from increased road buildingactivity. Readymixed concrete and concrete pavers experienced higher demandwhile sales volumes in aerated concrete and lime were lower than in 2004.Overall, Polish profits improved. In Ukraine , cement sales increasedsignificantly resulting in a substantial profit increase. Switzerland : Construction output increased with growth in housing andcontinuing good infrastructure spend more than compensating for modest declinesin other sectors. Our aggregates operations performed well while our cementoperations enjoyed a volume increase of approximately 6%. Despite strongcompetition, profit performance was in line with the high level of 2004. Thiswas due to overall efficiency improvements and greater use of alternative fuelsin the Wildegg cement plant. Iberia : In Spain , the residential market was the main driver for ourreadymixed concrete businesses, together with strong infrastructural investmentin the Madrid and Catalonia markets. Sales and profits were ahead of 2004. InPortugal , construction output moderated in the second half of the year due toreduced housing activity and constraints on public expenditure. Cement volumesat our joint venture Secil, in which we acquired a 49% stake in June 2004,showed a slight reduction on full-year 2004 levels. Higher input costs wereoffset by good cost control and pricing discipline in our main regional markets.Overall the Secil group performed in line with expectations. EUROPE - PRODUCTS Analysis of change Total Acquisitions Re-org.euro million 2005 2004 change Exchange 2004 2005 costs Organic Sales 2,533 2,245 +288 +9 +124 +137 - +18% change +13% - +6% +6% - +1%Operating profit* 176 191 -15 - +11 +4 -7 -23% change -8% - +6% +2% -4% -12%Margin 6.9% 8.5% * Operating profit is before profit on disposal of fixed assets and includesre-organisation costs of euro 10 million (2004: euro 3 million). Our Products operations faced generally subdued markets and trading conditionsthroughout 2005 and operating profit fell, largely due to a sharp decline inresults from our Insulation activities. Concrete Products: The group reported similar profits with contributions fromacquisitions offsetting heritage declines in challenging markets. InArchitectural Products (pavers, tiles and blocks), our Dutch and Belgianbusinesses faced tough competition due to market over-capacity and downwardprice pressure. In Germany , lower volumes and higher raw material costs led toa decline in profitability. However, our business in Slovakia performed aheadof expectations and profits advanced. A softening housing market adverselyimpacted our results in the UK . Stradal, the leading landscaping andinfrastructural products business in France acquired in August, performed inline with expectations. In Structural Products (floor & wall elements, beams,vaults and drainage products), our Belgian operations turned in an excellentperformance with synergies being realised from recent acquisitions. Thebusinesses in France and Poland performed strongly with robust markets andbenefits from cost-cutting actions. Dutch operations performed in line with 2004against a weak commercial backdrop. Our Danish businesses grew strongly andprofits were well up on 2004. Sales and profits from our Sand-Lime Brickbusiness in the Netherlands advanced with the upturn in housing. However,trading conditions for our 45% Cementbouw Joint Venture in materials trading andreadymixed concrete in the Netherlands remained tough and its profits declined. Clay Products: Brick industry volumes in the UK continued to decline due tofalls in both the new residential and RMI sectors while energy prices increasedsignificantly, particularly towards the end of the year. Nevertheless, profitsremained at similar levels to last year supported by strong pricing, improvedfactory and energy efficiencies and good cost control. Overall profitability inour Mainland Europe activities in the Netherlands , Belgium , Germany and Polandremained stable despite higher energy costs. Building Products: This group now comprises four product segments: Insulation,Fencing & Security, Daylight & Ventilation and Construction Accessories. OurInsulation operations suffered from severe volatility in energy-related inputcosts in the first half of the year and, despite making good progress withrestructuring initiatives and delivering a more stable second-half performance,profits declined sharply. Fencing & Security had another year of progress with astrong performance in the Netherlands and continuing good UK results more thanoffsetting fierce competitive pressure in Germany . Daylight & Ventilationfaced strong competition in both Germany and the Netherlands but benefited fromthe February acquisition of the Laubeuf group which added to market positions inFrance and Belgium . Construction Accessories heritage operations deliveredhigher profits, successfully passing on steel price increases. Acquisitions inSwitzerland in June and in France/Germany in October contributed strongly toprofits. EUROPE - DISTRIBUTION Analysis of change Total Acquisitions Re-org.euro million 2005 2004 change Exchange 2004 2005 costs Organic Sales 2,193 1,904 +289 +2 +186 +70 - +31% change +15% - +10% +3% - +2%Operating profit* 123 121 +2 - +5 - - -3% change +2% - +4% - - -2%Margin 5.6% 6.4% * Operating profit is before profit on disposal of fixed assets. Operatingprofit relating to 2004 acquisitions is after euro 3 million of integrationcosts. Operating profit includes re-organisation costs related to ongoingoperations of euro 2 million (2004: euro 2 million). Overall, operating profit in Europe Distribution was similar to 2004. Continuedsubdued Dutch retail demand and poor weather early in the year led to a slightdecline in organic profits. This was more than offset by contributions fromacquisitions. DIY: Reduced consumer confidence led to generally weak retail sales resulting ina slow-moving Benelux market. With its extensive network throughout theNetherlands and growing presence in Belgium , our DIY business had anothersatisfactory year, although profits were somewhat below a record 2004. Our jointventure in Portugal delivered a good advance in sales supported by the openingof five new stores, bringing the total network to 21. Builders Merchants: Although the number of new house completions increased, ourDutch general builders merchants business faced increased competition. However,rigorous cost control and benefits from 2004 acquisition activity resulted in aprofit increase, despite restructuring costs. Our businesses in Ile-de-Francehad an improved year while the Doras joint venture made further progress inlacklustre markets in the Burgundy and Franche-Comte regions. Swiss operationsbenefited from good market conditions and, helped by the positive impact ofinternal improvement programmes, delivered an excellent year with furtherprogress in sales and profits. The acquisition of Quester in Austria wascompleted in mid-October and its post-acquisition performance had only minimalimpact on the 2005 outcome. In late December, the group acquired a 47.8% stake in BauKing, a leadingbuilders merchant and DIY operator in northern Germany . Given the timing ofthis transaction, no sales or profits for BauKing are included in our 2005figures. AMERICAS - MATERIALS Analysis of change Total Acquisitionseuro million 2005 2004 change Exchange 2004 2005 Organic Sales 3,165 2,823 +342 - +54 +109 +179% change +12% - +2% +4% +6%Operating profit* 328 274 +54 - +6 +8 +40% change +20% - +2% +3% +15%Margin 10.4% 9.7% * Operating profit is before profit on disposal of fixed assets. Another year of rapidly escalating energy costs created a challengingenvironment for our operations. Bitumen costs increased by 13%; energy used atour asphalt plants, consisting of fuel oil, recycled oil and natural gas, had acomposite cost increase of 25%, while diesel fuel and gasoline used to power ourmobile fleet increased by 37%. We achieved significant success in recoveringthese higher costs with strong price improvements and delivered good organicgrowth and a welcome improvement in operating profit and margin. Highway markets were generally favourable with increases in Federal and Statespending. However, the strong product price increases somewhat constrained thevolume of asphalt paving work available in the final quarter. The FederalHighway Bill, SAFETEA-LU, was signed by President Bush in August but came toolate to impact 2005 activity levels. Residential markets remained strong, buoyedby low interest rates, while non-residential construction continued to improve.Total volumes, including acquisition effects, increased 3% in aggregates, 6% inreadymixed concrete and 1% in asphalt. Overall prices increased 7% inaggregates, 9% in readymixed concrete and 11% in asphalt, reflecting thesuccessful effort to recover higher energy costs. However, the higher prices,combined with cement shortages in some western markets late in the year hamperedheritage demand, with flat volumes in aggregates and readymixed concrete and a3% decline in asphalt. New England: New Hampshire and Vermont enjoyed better trading in improvingmarkets. These gains were partially offset by declines in Maine and Connecticutwhere volumes were stable but price increases did not fully recover sharplyhigher input costs. Massachusetts performed well with a solid highway programme,the benefit of which was partially offset by higher energy costs. New York/New Jersey: Our New York/New Jersey businesses saw improved resultscompared with 2004 as the Gallo acquisition was integrated with heritageoperations in the New York metro area. Significant price increases for allproducts did not fully offset higher energy costs. In Upstate New York, ourAlbany operations increased profits in good markets while Rochester resultsdeclined once again, as the market continued to contract, with many large localemployers continuing to scale back their activities. Central: Overall operating profit increased in the region. West Virginia had astrong year benefiting from good highway markets and success in recoveringhigher input costs. Michigan saw some improvement, but our primary highwaymarket remains depressed with both state and private markets continuing todeteriorate. Ohio benefited from steady markets and the integration of recentacquisitions while Pennsylvania and Delaware improved due to management actionin generating cost efficiencies. Mountain Companies, which was acquired in lateOctober, had a modest impact on overall profitability in the year. West: Strong local economies and exposure to the housing market combined todeliver an outstanding year. Once again, Utah and Idaho saw significant profitgains as our operations benefited from buoyant markets for all products. InWashington , results improved despite increasing competition. Our Iowaoperations had another good year. Good progress was also made in Wyoming ,Montana , South Dakota , Colorado and New Mexico . AMERICAS - PRODUCTS Analysis of change Total Acquisitionseuro million 2005 2004 change Exchange 2004 2005 Organic Sales 2,756 2,462 +294 +11 +58 +58 +167% change +12% +1% +2% +2 % +7%Operating profit* 308 251 +57 +2 +2 - +53% change +23% +1% +1% - +21%Margin 11.2% 10.2% * Operating profit is before profit on disposal of fixed assets. Despite the challenge of rising input costs, particularly cement, energy andpetroleum-based materials, our three products businesses reported healthyincreases in sales and operating profit. Internal initiatives to manage costsand prices, combined with strong residential activity and a continuing recoveryin the non-residential building sector, contributed to growth and improvedperformance. Architectural Products (APG): Despite higher energy, transport and raw materialprices, and some regional softness in RMI sector demand, APG achieved goodoperational improvements along with targeted price increases which, with thebenefit of acquisition contributions, delivered double-digit percentage growthin sales and operating profit for the year. The West and South regions performedparticularly well and clay brick producer Glen-Gery also advanced, although theimpact of higher second-half natural gas costs somewhat eroded its strongfirst-half gains. Precast: Continued strength in the residential construction sector, togetherwith recovery in non-residential and modest improvement in telecommunicationsconstruction, resulted in record volumes from our legacy operations. Thecombination of cost control, product mix and a disciplined pricing policyresulted in good margin improvement and record profits for the group. Backloghas increased both in volume and margin terms compared with the same time lastyear, setting the foundation for continued progress in 2006. Glass: The group achieved another year of strong organic sales and profit growthdespite only modest improvements in a number of our markets. Robust demand forhigh-performance, solar-control insulating glass products provided the groupwith further gains in market share in this higher-margin segment. Ourhurricane-resistant product StormGlass(R) also achieved record sales followingadoption of more demanding building codes along the Atlantic and Gulf coasts. AMERICAS - DISTRIBUTION Analysis of change Total Acquisitionseuro million 2005 2004 change Exchange 2004 2005 Organic Sales 1,156 1,014 +142 - +7 +50 +85% change + 14% - +1% +5% +8%Operating profit* 80 63 +17 - +1 +3 +13% change + 27% - +1% +5% +21%Margin 7.0% 6.2% * Operating profit is before profit on disposal of fixed assets. As in the latter months of 2004, our Distribution operations benefitedsubstantially in the first half of 2005 from significant repair work in Floridain the aftermath of the devastating 2004 hurricanes. This additional Floridademand moderated somewhat through the second half of 2005 and the late 2004gains arising from steep price increases for many of the products handled bythese businesses were not repeated. Despite the tougher second-halfcomparatives, our Distribution operations delivered further organic growthhelped by robust markets in southern California and Hawaii . It also benefitedfrom good acquisition contributions and the significant expansion of itsInterior Products operations (gypsum wallboard, steel studs and acousticalceiling systems). As a result, full-year operating profit from AmericasDistribution advanced strongly with a further healthy improvement in overalloperating margin. FINANCE AND TAX The higher interest charge in 2005 principally reflects the impact of 2004 and2005 acquisitions. EBITDA interest cover for the year, including share of jointventures, was a very comfortable 12.7 times (2004: 12.3 times). Profit aftertax from associates of euro 25.9 million (2004: euro 19.4 million) increasedprincipally due to an improved performance in our cement associate in Israel andfrom our investments in distribution in the Netherlands and France . The taxcharge at 21.8% of Group profit before tax, excluding share of associates'after-tax profits, was similar to 2004 (21.4%). After three years of decline in the average US Dollar exchange rate versus theeuro, the average rate of 1.2438 in 2005 was little changed compared with 2004(1.2439). Average exchange rates for the Group's other major operatingcurrencies also showed little change with the exception of the Polish Zloty andthe Canadian Dollar, which were respectively 12% and 7% stronger versus theeuro. As a result, after three consecutive years of significant adversetranslation effects on profit before tax, the Group benefited in 2005 from amodest positive impact of euro 4 million. Net debt increased by just euro 690 million despite a total spend of euro 1,950million on acquisitions, investments and capital projects and a euro 165 millionnegative translation impact mainly due to the stronger US Dollar. Net debt atyear-end 2005 amounted to euro 3,448 million (2004: euro 2,758 million). Thefavourable euro 413 million translation impact on total equity was principallydue to the effect of the stronger US Dollar. DEVELOPMENT 2005 was a year of considerable success on the development front with totalactivity of approximately euro 1.45 billion. This involved value-enhancingacquisitions across all segments together with a number of major capitalprojects. These will add to the future performance and growth of the Group, andonce again demonstrate the success of CRH's well-proven development strategy. Europe Materials committed euro 50 million to four add-on deals and twodevelopment capital projects. Just before year-end we acquired control of a26.3% stake in Corporacion Uniland S.A., a Spanish cement, aggregates andreadymixed concrete producer with interests in Tunisia and South America, forapproximately euro 300 million. It was a very active year for Europe Products with a total commitment of euro236 million. This included acquisitions by Concrete Products in Belgium , Franceand Denmark , additions to our growing Construction Accessories business in anumber of countries, together with bolt-on transactions in our Clay, Fencing &Security and Daylight & Ventilation businesses. We significantly enhanced our Europe Distribution network during 2005 through acombination of greenfield expansion, add-on acquisitions and its firstacquisitions in Austria and Germany for a total commitment of euro 169 million. For Americas Materials, in addition to committing some euro 72 million to 17add-on deals, the highlight was the euro 344 million purchase of MountainCompanies, an integrated aggregates and asphalt player in Kentucky, WestVirginia and Virginia, and a 50% stake in Bizzack, its heavy constructionaffiliate, together with Southern Minnesota Construction. Americas Products spent a total of euro 206 million, again a combination ofcapital projects and add-on acquisitions. The Architectural Products Group wasparticularly active completing six transactions, which included a significantexpansion of its growing bagged soil and mulch homecentre business, togetherwith capital projects aimed at supplying growing demand for pavers, blocks andbagged stone products. Americas Distribution invested a total of euro 73 million on the completion ofeight transactions during the year. Five of these were in the fast-growinginterior products segment with the remaining three in the roofing and sidingsegment. OUTLOOK CRH delivered a strong profit and development performance in 2005. Key to thatperformance was the effective recovery of significant energy cost increases;this looks likely to continue to be crucial in the year ahead. The market outlook for Europe Materials in 2006 is broadly positive. Whilehousing output in Ireland is expected to ease from current record levels, thisis likely to be offset by increased non-residential activity and continued highlevels of infrastructure and public projects. Further growth is forecast for ourFinland and Baltic operations, while prospects for construction activity levelsin Poland are also positive, particularly so for EU-funded infrastructureprojects. The outlook for overall construction activity in Switzerland is stablealthough some infrastructure projects in our markets are now complete. In Iberia, a small decline in Portuguese construction activity seems likely while weexpect activity in Spain to continue at current high levels. Against thisbackdrop, and with capital expenditure programmes focused on cost reduction andproductivity improvement beginning to feed through to the bottom line, we lookto further organic growth for Europe Materials in 2006. This, combined with thebenefit of 2005 development initiatives, should deliver another year ofprogress. Forecasts for construction output in the major markets for Europe Products &Distribution are showing some growth in 2006, with the exception of Germany ,where no construction recovery is expected before 2007, and the UK where thehousing market has slowed. For the Netherlands , we anticipate a pick-up in theeconomy, with continued growth in new housing construction and strengtheningconsumer confidence from the low 2005 levels, while Belgium and France shouldalso advance. We look to an improved performance in our Europe Productsbusinesses in 2006 with ongoing recovery in Insulation and good benefits from2005 Concrete and Construction Accessories acquisitions. Europe Distribution isexpected to benefit from improving Dutch consumer confidence, continuingbenefits from internal improvement programmes in our Swiss businesses and recentacquisitions in Austria and Germany . The re-authorisation of the Federal Highway funding programme, SAFETEA-LU, andimproving state finances, should lead to strengthening 2006 US highway markets,the most important sector for our Americas Materials Division representing 65%of its end-use demand. While housing at 15% of Americas Materials demand isforecast to soften slightly, it should be more than offset by a continuedrecovery in non-residential building markets which represent 20% of demand.Together these factors should lead to moderate volume growth. Pricing strategyfor this Division will continue to focus on the recovery of higher input costsand, with benefits from 2005 development activity, we look forward to furtherprogress in this Division in 2006. Although some softening in the current strong level of US housing constructionis generally forecast for 2006, good employment levels, strong demographics andmoderate interest rates continue to support underlying demand in this sector.Non-residential construction, which in real terms is still well below its peakof the early 2000's, is expected to continue its recovery in 2006. We alsoexpect our Canadian and South American operations to see further progress.Against this backdrop we look to a further operating profit advance for ourProducts operations and, although its margins may ease from current high levels,our Distribution business should also deliver improved profits in 2006. While as always risks remain, the current business outlook is on the wholepositive and we enter 2006 with good momentum. A gradual pick-up in Europeaneconomies seems broadly under way, which if maintained should bring goodbenefits. In the US , while housing may moderate at strong levels,non-residential construction should continue to recover and highway markets areunderpinned by passage of the new Highway Bill. With a continuing focus onoperational effectiveness and ongoing acquisition benefits, we look to 2006 withconfidence. ****** This results announcement contains certain forward-looking statements as definedunder US legislation. By their nature, such statements involve uncertainty; as aconsequence, actual results and developments may differ from those expressed inor implied by such statements depending on a variety of factors including thespecific factors identified in this results announcement and other factorsdiscussed in our Annual Report on Form 20-F filed with the SEC. GROUP INCOME STATEMENTFor the year ended 31st December 2005 2005 2004 euro m euro m Revenue 14,449.3 12,754.5Cost of sales (9,901.7) (8,717.4) Gross profit 4,547.6 4,037.1Operating costs (3,155.3) (2,816.9) Group operating profit 1,392.3 1,220.2Profit on disposal of fixed assets 19.8 10.8 Profit before finance costs 1,412.1 1,231.0Finance costs (297.4) (264.3)Finance revenue 138.3 117.9Group share of associates' profit after tax 25.9 19.4 Profit before tax 1,278.9 1,104.0Income tax expense (272.6) (232.2) Group profit for the financial year 1,006.3 871.8 Profit attributable to:Equity holders of the Company 997.9 866.1Minority interest 8.4 5.7 Group profit for the financial year 1,006.3 871.8 Earnings per Ordinary ShareBasic 186.7c 163.6cDiluted 185.2c 162.7c Cash earnings per Ordinary Share 292.5c 261.8c GROUP BALANCE SHEETAs at 31st December 2005 2005 2004ASSETS euro m euro mNon-current assetsProperty, plant and equipment 6,823.5 5,830.6Intangible assets 2,252.5 1,774.1Investments in associates 527.6 178.8Derivative financial instruments 154.8 173.2Other financial assets 106.9 113.2Deferred income tax assets 466.5 335.3 Total non-current assets 10,331.8 8,405.2 Current assetsInventories 1,722.6 1,308.9Trade and other receivables 2,476.4 1,973.1Derivative financial instruments 30.7 1.1Liquid investments 342.5 311.7Cash and cash equivalents 1,148.6 1,072.0 Total current assets 5,720.8 4,666.8 Total assets 16,052.6 13,072.0 EQUITYEquity share capital 182.3 181.0Non-equity share capital 1.2 1.2Share premium account 2,208.3 2,149.3Other reserves 37.4 23.5Foreign currency translation reserve 233.5 (179.9)Retained income 3,532.7 2,770.1 6,195.4 4,945.2Minority interest 38.3 34.2 Total equity 6,233.7 4,979.4 LIABILITIESNon-current liabilitiesInterest-bearing loans and borrowings 4,524.5 3,802.4Derivative financial instruments 13.5 51.9Deferred income tax liabilities 1,184.5 987.4Trade and other payables 187.6 122.0Retirement benefit obligations 450.5 349.7Provisions for liabilities and charges 223.0 182.3Capital grants 12.1 12.4 Total non-current liabilities 6,595.7 5,508.1 Current liabilitiesTrade and other payables 2,254.4 1,742.1Current income tax liabilities 271.5 284.5Interest-bearing loans and borrowings 582.3 251.4Derivative financial instruments 4.6 210.4Provisions for liabilities and charges 110.4 96.1 Total current liabilities 3,223.2 2,584.5 Total liabilities 9,818.9 8,092.6 Total equity and liabilities 16,052.6 13,072.0 GROUP CASH FLOW STATEMENTFor the year ended 31st December 2005 2005 2004 euro m euro mCash flows from operating activitiesGroup operating profit 1,392.3 1,220.2Depreciation charge 555.8 515.9Employee share options expense 13.9 9.7Amortisation of intangible assets 9.1 4.1Net movement on provisions 11.8 (12.0)Increase in working capital (149.4) (78.6)Amortisation of capital grants (2.0) (2.2)Other non-cash movements 2.9 (10.3) Cash generated from operations 1,834.4 1,646.8Interest paid (including finance leases) (184.0) (156.5)Income taxes paid:- Irish corporation tax (13.3) (17.1)- Overseas corporation tax (246.2) (188.1) Net cash inflow from operating activities 1,390.9 1,285.1 Cash flows from investing activitiesInflowsProceeds from disposal of fixed assets 102.8 102.3Interest received 43.4 22.6Capital grants received 1.5 0.2Dividends received from associates 14.2 8.0 161.9 133.1 OutflowsPurchase of property, plant and equipment (652.1) (550.7)Repayment of capital grants - (0.5)Acquisition of subsidiaries and joint ventures (808.3) (711.4)Investments in and advances to associates (298.9) (6.0)Advances to joint ventures and purchase of trade investments (7.7) (5.0)Deferred and contingent acquisition consideration paid (45.3) (57.3) (1,812.3) (1,330.9) Net cash outflow from investing activities (1,650.4) (1,197.8) Cash flows from financing activitiesInflowsProceeds from issue of shares 39.5 36.6Shares issued to minority interests 0.3 -Increase in interest-bearing loans and borrowings 796.8 584.2Increase in finance lease liabilities 6.5 56.2Net cash movement in derivative financial instruments (102.8) (62.2) 740.3 614.8 OutflowsExpenses paid in respect of share issues (0.2) (0.3)Increase in liquid investments (15.0) (25.2)Repayment of interest-bearing loans and borrowings (250.0) (477.8)Repayment of finance lease liabilities (12.9) (24.4)Dividends paid to equity holders of the Company (164.2) (119.6)Dividends paid to minority interests (9.4) (2.6) (451.7) (649.9) Net cash inflow / (outflow) from financing activities 288.6 (35.1) Change in cash and cash equivalents 29.1 52.2Translation adjustment 47.5 (20.1)Joint venture becoming an associate - (1.0)Cash and cash equivalents at beginning of year 1,072.0 1,040.9 Cash and cash equivalents at end of year 1,148.6 1,072.0 GROUP STATEMENT OF RECOGNISED INCOME AND EXPENSE 2005 2004 euro m euro mItems of income/(expense) recognised directly within equity:Currency translation effects 413.4 (179.9)Group defined benefit pension obligations:- Actuarial loss (86.1) (119.2)- Deferred tax asset 21.7 31.3Deferred tax asset on employee share schemes 12.3 -Gains/(losses) relating to cash flow hedges 2.7 (0.3)Deferred tax liability on cash flow hedges (0.7) - Net income/(expense) recognised directly within equity 363.3 (268.1)Group profit for the financial year 1,006.3 871.8 Total recognised income and expense for the year 1,369.6 603.7 Equity holders of the Company 1,360.4 599.8Minority interest 9.2 3.9 Total recognised income and expense for the year 1,369.6 603.7 GROUP STATEMENT OF CHANGES IN EQUITY 2005 2004 euro m euro m Total equity at beginning of year 4,979.4 4,447.0Issue of shares:- Share options and participation schemes 39.5 36.6- Issued in lieu of dividends 21.0 36.4- Expenses in respect of share issues (0.2) (0.3) Employee share options expense 13.9 9.7Dividends (185.2) (156.0)Movement in minority interest 4.1 8.0Items of income/(expense) recognised directly within equity:Currency translation effects 413.4 (179.9)Group defined benefit pension obligations (64.4) (87.9)Deferred tax asset on employee share schemes 12.3 -Cash flow hedges 2.0 (0.3)Profit for the year attributable to equity holders 997.9 866.1 Total equity at end of year 6,233.7 4,979.4 Supplementary Information 1 International Financial Reporting Standards Basis of preparation The financial information presented in this report has been prepared inaccordance with the Group's accounting policies under International FinancialReporting Standards (IFRS). The transition date for implementation of IFRS bythe Group was 1st January 2004. The financial statements for the year ended 31stDecember 2004, which were prepared in accordance with generally acceptedaccounting practice in the Republic of Ireland (Irish GAAP), have been restatedunder IFRS with effect from the transition date. Full details of the accounting policies adopted by the Group on implementationof IFRS, and of the impact on the reported results and balance sheet of theGroup of the transition to IFRS, were published on 31st May 2005 and areavailable on the Group's website www.crh.com. Approved IFRS The Group's accounting policies under IFRS are based on the InternationalFinancial Reporting Standards and Interpretations issued by the InternationalAccounting Standards Board (IASB) and on International Accounting Standards(IAS) and Standing Interpretations Committee Interpretations approved by thepredecessor International Accounting Standards Committee that have beensubsequently authorised by the IASB and remain in effect. 2 Translation of Foreign Currencies This financial information is presented in euro. Results and cash flows ofsubsidiaries, joint ventures and associates based in non-euro countries havebeen translated into euro at average exchange rates for the period, and therelated balance sheets have been translated at the rates of exchange ruling atthe balance sheet date. Adjustments arising on translation of the results ofnon-euro subsidiaries, joint ventures and associates at average rates, and onrestatement of the opening net assets at closing rates, are dealt with in aseparate translation reserve within equity, net of differences on relatedcurrency borrowings. All other translation differences are taken to the incomestatement. Rates used for translation of results and balance sheets into eurowere as follows: Average Year endedeuro 1 = 2005 2004 2005 2004 US Dollar 1.2438 1.2439 1.1797 1.3621Pound Sterling 0.6838 0.6787 0.6853 0.7051Polish Zloty 4.0224 4.5268 3.8600 4.0845Swiss Franc 1.5483 1.5438 1.5551 1.5429Argentine Peso 3.6356 3.6572 3.5868 4.0488 3 Analysis of Revenue and Operating Profit by Business 2005 2004 euro m % euro m %RevenueEurope Materials 2,646.2 18.3 2,306.8 18.1Europe Products 2,533.4 17.5 2,245.0 17.6Europe Distribution 2,192.9 15.2 1,904.1 14.9Americas Materials 3,164.7 21.9 2,823.2 22.1Americas Products 2,755.9 19.1 2,461.6 19.3Americas Distribution 1,156.2 8.0 1,013.8 8.0 14,449.3 100 12,754.5 100 Operating profitEurope Materials 377.0 27.1 320.2 26.2Europe Products 175.6 12.6 190.7 15.6Europe Distribution 123.4 8.9 121.4 9.9Americas Materials 328.2 23.5 273.9 22.5Americas Products 307.6 22.1 250.7 20.6Americas Distribution 80.5 5.8 63.3 5.2 1,392.3 100 1,220.2 100 Profit on disposal of fixed assetsEurope Materials 8.8 0.2Europe Products 1.8 0.8Europe Distribution (0.8) (2.2)Americas Materials 9.7 5.7Americas Products (0.1) 4.8Americas Distribution 0.4 1.5 19.8 10.8 Depreciation chargeEurope Materials 129.0 125.5Europe Products 126.8 114.1Europe Distribution 31.6 30.0Americas Materials 164.8 151.3Americas Products 93.4 86.1Americas Distribution 10.2 8.9 555.8 515.9 Amortisation of intangible assetsEurope Materials - -Europe Products 1.5 0.3Europe Distribution 0.4 0.3Americas Materials - -Americas Products 5.8 2.8Americas Distribution 1.4 0.7 9.1 4.1 4 Geographical Analysis of Revenue and Operating Profit 2005 2004 euro m % euro m %RevenueIreland * 1,164.1 8.1 1,056.2 8.3Benelux 2,468.6 17.1 2,166.8 17.0Rest of Europe 3,733.8 25.8 3,221.8 25.2Americas 7,082.8 49.0 6,309.7 49.5 14,449.3 100 12,754.5 100 Operating profitIreland * 148.4 10.7 142.7 11.7Benelux 186.2 13.3 195.1 16.0Rest of Europe 340.6 24.5 293.4 24.0Americas 717.1 51.5 589.0 48.3 1,392.3 100 1,220.2 100 Profit on disposal of fixed assetsIreland * 8.1 0.6Benelux 0.4 0.6Rest of Europe 1.3 (2.4)Americas 10.0 12.0 19.8 10.8 Depreciation chargeIreland * 44.5 44.0Benelux 78.9 75.4Rest of Europe 164.0 150.2Americas 268.4 246.3 555.8 515.9 Amortisation of intangible assetsIreland * - -Benelux 1.2 0.1Rest of Europe 0.7 0.5Americas 7.2 3.5 9.1 4.1 * Total island of Ireland 5 Key Components of 2005 Performance Operating Profit on Trading Finance Assoc. Pre-tax Revenue profit disposals profit costs PAT profiteuro million 2004 as reported 12,755 1,220 11 1,231 (146) 19 1,104Exchange effects 50 6 - 6 (2) - 4 2004 at 2005 rates 12,805 1,226 11 1,237 (148) 19 1,108Incremental impact in 2005 of:- 2004 acquisitions 536 42 - 42 (12) - 30- 2005 acquisitions 448 18 - 18 (14) - 4Organic 660 106 9 115 15 7 137 2005 as reported 14,449 1,392 20 1,412 (159) 26 1,279 % change v. 2004:As reported 13% 14% 14% 16%At constant 2005 rates 13% 13% 14% 15% 6 Proportionate Consolidation of Joint Ventures 2005 2004Group share of: euro m euro m Revenue 617.8 474.4Cost of sales (392.8) (301.9) Gross profit 225.0 172.5Operating costs (143.6) (110.1) Operating profit 81.4 62.4Profit on disposal of fixed assets 0.8 1.5 Profit before finance costs 82.2 63.9Finance costs (net) (13.6) (11.7) Profit before tax 68.6 52.2 7 Earnings per Ordinary Share The computation of basic, diluted and cash earnings per share is set out below: 2005 2004 euro m euro m Profit attributable to equity holders of the Company 997.9 866.1Preference dividends paid (0.1) (0.1) Numerator for basic and diluted earnings per Ordinary Share 997.8 866.0 Amortisation of intangibles 9.1 4.1Depreciation charge 555.8 515.9 Numerator for cash earnings per Ordinary Share 1,562.7 1,386.0 Number NumberDenominator for basic earnings per Ordinary Share of shares of shares Weighted average number of shares (millions) in issue 534.3 529.5Effect of dilutive potential shares (share options) 4.4 2.9 Denominator for diluted earnings per Ordinary Share 538.7 532.4 Earnings per Ordinary Share euro cent euro cent- basic 186.7c 163.6c- diluted 185.2c 162.7cCash earnings per Ordinary Share (i) 292.5c 261.8c (i) Cash earnings per share, a non-GAAP financial measure, is presentedhere for information as management believes it is a useful financial indicatorof a company's ability to generate cash from operations. 8 Net Debt and Finance Costs 2005 2004Net debt euro m euro mNon-current assetsDerivative financial instruments 154.8 173.2Current assetsDerivative financial instruments 30.7 1.1Liquid investments 342.5 311.7Cash and cash equivalents 1,148.6 1,072.0Non-current liabilitiesInterest-bearing loans and borrowings (4,524.5) (3,802.4)Derivative financial instruments (13.5) (51.9)Current liabilitiesInterest-bearing loans and borrowings (582.3) (251.4)Derivative financial instruments (4.6) (210.4) Total net debt (3,448.3) (2,758.1) Including Group share of joint ventures' net debt (271.2) (257.0) Finance costs (net)Net Group finance costs on interest-bearing cash and cashequivalents, loans and borrowings 153.8 139.8Net pensions financing credit (5.4) (8.5)Charge to unwind discount on provisions/deferred consideration 15.6 11.3Net (credit)/charge re change in fair value of derivatives (4.9) 3.8 Total net finance costs 159.1 146.4 Including Group share of joint ventures' net finance costs 13.6 11.7 9 Summarised Cash Flow The table below summarises the Group's cash flows for the years ended 31stDecember 2005 and 31st December 2004. 2005 2004Inflows euro m euro m Profit before tax 1,279 1,104Depreciation 556 516Amortisation of intangibles 9 4Proceeds from disposal of fixed assets 103 102Share issues (net of expenses) 61 73 2,008 1,799 OutflowsWorking capital movement 119 78Capital expenditure 652 551Acquisitions and investments 1,298 1,019Dividends 185 156Tax paid 260 205Other 19 29 2,533 2,038 Net outflow (525) (239)Translation adjustment (165) 36 Increase in net debt (690) (203) 10 Other 2005 2004 EBITDA interest cover (times) 12.7 12.3 EBIT interest cover (times) 9.0 8.6 EBITDA = earnings before interest, tax, depreciation and amortisation, excluding share of joint ventures EBIT = earnings before interest and tax, excluding share of joint ventures Interest excludes share of joint venturesAverage shares in issue 534.3m 529.5mNet dividend per share (euro cent) 39.0c 33.0cDividend cover (Earnings per share/Dividend per share) 4.8x 5.0x Depreciation charge - subsidiaries (euro m) 525.2 494.4Depreciation charge - share of joint ventures (euro m) 30.6 21.5Amortisation of intangibles - subsidiaries (euro m) 9.1 4.1Amortisation of intangibles - share of joint ventures (euro m) - - Share option expense charged in operating profit (euro m) 13.9 9.7 Market capitalisation at year-end (euro m) 13,327.7 10,492.2Total equity at year-end (euro m) 6,233.7 4,979.4Net debt (euro m) 3,448.3 2,758.1Net debt as a percentage of total equity 55% 55%Net debt as a percentage of market capitalisation 26% 26% 11 Statutory Accounts The financial information presented in this report does not represent fullstatutory accounts. Full statutory accounts for the year ended 31st December2005 prepared in accordance with IFRS, upon which the Auditors have given anunqualified audit report, have not yet been filed with the Registrar ofCompanies. Full accounts for the year ended 31st December 2004, prepared inaccordance with Irish GAAP and containing an unqualified audit report, have beendelivered to the Registrar of Companies. 12 Board Approval This results announcement was approved by the Board of Directors of CRH plc on6th March 2006. 13 Annual Report post-out and Annual General Meeting (AGM) The 2005 Annual Report is expected to be posted to shareholders on Friday, 31stMarch 2006 together with details of the Scrip Dividend Offer in respect of thefinal 2005 dividend. The 2005 Annual Report will be available to the public fromMonday, 3rd April 2006 at the Company's registered office. The Company's AGM isscheduled to be held in Jury's Hotel, Ballsbridge, Dublin on Wednesday, 3rd May2006. Contact at Dublin 404 1000 (+353 1 404 1000) Liam O'Mahony Chief Executive Myles Lee Finance Director Eimear O'Flynn Head of Investor Relations Maeve Carton Group Controller CRH plc, Belgard Castle , Clondalkin, Dublin 22, Ireland TELEPHONE +353.1.404 1000 FAX +353.1.404 1007 E-MAIL [email protected] WEBSITE www.crh.com Registered Office, 42 Fitzwilliam Square , Dublin 2, Ireland This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
CRH