30th Aug 2005 07:02
CRH PLC30 August 2005 2005 INTERIM RESULTS Six months ended 30th June 2005 2005 2004 % change euro m euro m • Sales 6,329 5,608 +13% • Operating profit * 445 370 +20% • Profit before tax 383 319 +20% euro cent euro cent • Earnings per share 56.0 47.8 +17% • Cash earnings per share 105.4 95.0 +11% • Dividend 11.25 9.6 +17% * Operating profit before profit on disposal of fixed assets. • Total operating profit for our Europe operations, including acquisition contributions, grew by 2% to euro 277 million. • In Europe Materials, operating profit improved 12% to euro 141 million reflecting a full first half share of profit from Secil (acquired June 2004) in Portugal. • Europe Products was impacted by generally subdued trading and severe March weather. Operating profit fell 10% to euro 86 million, principally due to a sharp decline in results from Insulation activities. • Operating profit of euro 50 million from Europe Distribution was 2% ahead of 2004 against a background of subdued Dutch retail demand and poor weather early in the year. • Total operating profit for the Americas operations increased by 68% to euro 168 million. • Americas Materials exceeded expectations with good volume and price improvements delivering a significant reduction in the traditional first half trading loss from euro 32 million in 2004 to euro 4 million. • With continuing strong US residential construction and ongoing recovery in non-residential construction, Americas Products delivered a 26% increase in operating profit to euro 144 million. • Americas Distribution performed particularly strongly reporting a 58% increase in operating profit to euro 28 million. • Currency translation effects had a euro 2 million adverse impact at profit before tax level. • The interim dividend has been increased by 17%. This follows a 17% increase in the full year 2004 dividend making 2005 the 22nd consecutive year of dividend increase. • Total first half development spend amounted to euro 231 million. Liam O'Mahony, Chief Executive, said today: "CRH has had a strong first half profit outcome with good organic growth fromthe Americas significantly outweighing a decline in Europe, and a satisfactoryincremental contribution from 2004 and 2005 acquisitions. The Group will continue to benefit in the second half from strong markets in itsAmerican operations and from a sustained focus on input cost recovery andoperational performance. Although this will be offset to some extent by therecent surge in energy costs we nevertheless expect to make further progress inthe more important second half of the year." Announced Tuesday, 30th August 2005 Contact at Dublin 404 1000 (+353 1 404 1000) Liam O'Mahony Chief Executive Myles Lee Finance Director Maeve Carton Group Controller INTERIM STATEMENT Highlights The results highlights for the first six months of 2005, reported underInternational Financial Reporting Standards, are set out below. • Sales: euro 6,329 million, up 13% • Operating profit*: euro 445 million, up 20% • Profit before tax: euro 383 million, up 20% • Basic earnings per share: 56.0c, up 17% • Cash earnings per share: 105.4c, up 11% * Operating profit before profit on disposal of fixed assets. Our American operations have performed very strongly through the first half of2005 and this, combined with incremental contributions from 2004 and 2005acquisitions, has resulted in a strong increase in Group sales, profits andearnings, despite the impact of generally subdued markets and adverse earlyweather on our European businesses. The average first half US Dollar exchange rate was 5% weaker versus the eurothan in the corresponding period in 2004. This had an adverse impact of euro 2million on profit before tax reflecting the traditionally low US profitabilityin the first half of the year. Profit on disposal of fixed assets amounted to euro 10.0 million (2004: euro 6.0million). Note 5 on page 14 analyses the key components of first half 2005 performance. Dividends The Board has decided to pay an interim dividend of 11.25c per share, anincrease of 17% on the 2004 interim dividend of 9.60c. This follows an increaseof 17% in the full year 2004 dividend. The Interim dividend will be paid on 4thNovember 2005 to shareholders registered at the close of business on 9thSeptember 2005. 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 OrganicSales 1,216 1,022 +194 +14 +106 +3 +71% change +19% +1% +11% - +7%Operating profit* 141 126 +15 +2 +17 - -4% change +12% +2% +13% -3%Margin 11.6% 12.3% * Operating profit is before profit on disposal of fixed assets. In Ireland, growth in residential construction and continuing recovery incommercial and industrial construction resulted in good overall volumeincreases. However, phased price increases were not sufficient to fully recoverhigher first half input costs and overall profit on the island was slightlybelow 2004 levels. Our activities in Finland and the Baltic states recovered well from a poor firstquarter to leave first half cement and concrete volumes in line with 2004 levelsand profit largely unchanged. Polish construction activity was particularly strong in the first half of lastyear due to accelerated demand ahead of the 1st May 2004 increase in VAT onconstruction products which coincided with EU entry. In the first half of thisyear, our Polish operations were affected by late winter weather and, withcement volumes 17% lower than in 2004, profit declined. Sales volumes andprofits in our Ukrainian cement operation were in line with 2004 levels. In Switzerland, the final phase of concreting works on the major Loetschbergtunnel project resulted in further good volume increases for our cementoperations. However, demand for concrete products and aggregates was impacted bypoor early weather and overall profit was lower in a competitive marketplace. In Iberia, our Spanish operations enjoyed very busy first half tradingconditions and with improvements in volumes and prices reported higher profit.Secil, the Portuguese cement, concrete products and aggregates producer, inwhich CRH acquired a 49% stake in June 2004, had a positive start to the yearand accounted for almost all of the incremental impact of 2004 acquisitionsshown in the table above. Overall, operating profit improved reflecting a full first half share of profitfrom Secil. EUROPE - PRODUCTS Analysis of change Total Acquisitions Re-org.euro million 2005 2004 change Exchange 2004 2005 costs OrganicSales 1,189 1,090 +99 +1 +86 +14 - -2% change +9% - +8% +1% -Operating profit* 86 96 -10 - +8 - -3 -15% change -10% +8% -3% -15%Margin 7.2% 8.8% * Operating profit is before profit on disposal of fixed assets and includesre-organisation costs of euro 4 million (2004: euro 1 million). Our Products operations continued to experience generally subdued trading in thefirst half of 2005 and were not helped by severe March weather. Insulationactivities faced continuing tough conditions and were responsible for the bulkof the first half organic profit decline. In Concrete Products, overall results increased largely due to incrementalcontributions from 2004 acquisitions. Our architectural operations (pavers,tiles, sand-lime brick and blocks) in the Benelux, Germany and Britain wereimpacted by weather and weak demand. Structural operations (floor & wallelements, beams, vaults and drainage products) were less severely affected,helped by some improvement in Dutch housing activity and good underlying demandin Belgium and Denmark. In Clay Products, brick volumes in Britain were below 2004 levels; however,further price improvements were achieved offsetting the impact of sharp energycost increases and resulting in a modest improvement in profit. Although clayoperations in Mainland Europe benefited from better pricing and productivity,profits were flat in continuing difficult markets. Our Insulation businesses experienced a very tough first half due to continuingvolatility in energy-related input costs and also incurred costs associated withre-organisation of activities to deal with the challenging environment. Resultswere significantly lower than in 2004. In Building Products, the overall outcome was similar to 2004. Daylight &Ventilation faced disappointing sales in Germany and the Netherlands resultingin lower profit. Our Fencing & Security business reported similar results to2004, while Construction Accessories enjoyed an improvement in profitabilitypartly helped by some acquisition contributions. EUROPE - DISTRIBUTION Analysis of change Total Acquisitions Re-org.euro million 2005 2004 Change Exchange 2004 2005 costs OrganicSales 1,016 895 +121 +4 +121 - -4% change +13% - +13% -Operating profit* 50 48 +2 - +1 - +1 -% change +2% +1% +1%Margin 4.9% 5.4% * Operating profit is before profit on disposal of fixed assets. Operatingprofit relating to 2004 acquisitions is after euro 3 million of integrationcosts. Operating profit includes re-organisation costs related to ongoingoperations of nil (2004: euro 1 million). First half operating profit in Europe Distribution was just ahead of 2004. DIY: Despite subdued Dutch retail demand which resulted in little change inoverall sales, our DIY homecentre business in the Benelux delivered good costcontrol and continued to drive benefits from the October 2003 Cementbouwacquisition resulting in a similar overall outcome. Our Max- Mat joint venturein Portugal reported further sales and profit progress. Builders Merchants: Poor weather in March affected trading in our Dutch andFrench businesses to leave underlying sales and profits slightly below 2004levels. Incremental contributions from 2004 acquisitions - Doras joint venturein France and NCD Builders Merchants in Holland - were satisfactory, althoughNCD results were impacted by once-off post-acquisition costs associated with itsintegration into our existing merchanting activities. Profits in our Swissgeneral and specialist merchants continued to improve. AMERICAS - MATERIALS Analysis of change Total Acquisitionseuro million 2005 2004 Change Exchange 2004 2005 OrganicSales 1,065 947 +118 -43 +30 +14 +117% change +13% -4% +3% +1% +13%Operating loss* (4) (32) +28 +2 +3 +1 +22% change +87% +6% +9% +3% +69%Margin -0.4% -3.3% * Operating loss is before profit on disposal of fixed assets. First half activity in the Americas Materials Division exceeded expectationswith good volume improvements. As anticipated, energy input costs were sharplyhigher; nevertheless, focussed pricing initiatives and efficiency savingsresulted in improved margins and a significant reduction in the traditionalfirst half US Dollar operating loss. The average US Dollar income statement translation rate for the first half of2005 was US$1.2847 to the euro versus US$1.2273 in the first half of 2004. Thismovement gives rise to an adverse translation impact on sales and a favourableimpact at operating level due to the seasonal loss. While operations in New England delivered improved results, the advance was lessmarked than in other regions due to subdued highway markets in Connecticut. OurNew York/New Jersey business had a good first half with strong demand in NewJersey and improved trading in our Upstate New York operations. Despitecontinuing weakness in Michigan, the Central region also reported a goodimprovement helped by firmer demand in Ohio and West Virginia. In the West,demand was strong resulting in a significant advance in profitability across ouroperations. Excluding the impact of recent acquisitions, our heritage companies saw volumeincreases of approximately 7% in aggregates, 3% in asphalt and 3% in readymixedconcrete although, as always, there were regional variations. AMERICAS - PRODUCTS Analysis of change Total Acquisitionseuro million 2005 2004 change Exchange 2004 2005 OrganicSales 1,337 1,208 +129 -47 +45 +17 +114% change +11% -4% +4% +1% +10%Operating profit* 144 114 +30 -5 +1 +2 +32% change +26% -5% +1% +2% +28%Margin 10.7% 9.4% * Operating profit is before profit on disposal of fixed assets. With continuing strong US residential construction and on-going recovery innon-residential activity, our Americas Products businesses delivered asubstantial first half operating profit advance and a significant marginimprovement. Our Precast operations continued to progress with strong demand particularly inwestern and southern states. Improved pricing and overhead cost savings resultedin further good margin improvement. Architectural Products saw good demand forconstruction, retail and hardscape products and further gains from its brickoperations, where better volumes and prices more than compensated for higherenergy costs. In an increasingly competitive market, the Glass Group benefitedfrom a strong first half sales advance with a shift in product mix towardshigher value insulated and fabricated items. Our South American clay operationscoped well with higher energy costs to limit the decline in profitability. AMERICAS - DISTRIBUTION Analysis of change Total Acquisitionseuro million 2005 2004 change Exchange 2004 2005 OrganicSales 506 446 +60 -20 +6 +9 +65% change +13% -4% +1% +2% +14%Operating profit* 28 18 +10 -1 +1 +1 +9% change +58% -8% +8% +8% +50%Margin 5.6% 4.0% * Operating profit is before profit on disposal of fixed assets. The Distribution Group performed particularly strongly through the first half ofthe year continuing to build on the progress of recent years. Markets in Floridawere buoyant reflecting both significant maintenance and repair work in theaftermath of the devastating hurricanes experienced during 2004 and substantialnew-build activity. Demand in the Western states was generally strong with theMidwest region being the main exception to a favourable trading backdrop.Acquisitions completed in 2004 and in early 2005 contributed positively to theoverall outcome. Finance and taxation The higher first half interest charge in 2005 principally reflects the impact of2004 and 2005 acquisitions. As in prior years, the interim taxation charge is an estimate based on thecurrent expected full year tax rate. Exchange rate movements between year-end 2004 and 30th June 2005, mainly theweakening of the euro from US$1.3621 to US$1.2092, increased the euro amount offoreign currency net debt by euro 144 million while shareholders' funds wereincreased by euro 338 million. Net debt at 30th June amounted to euro 3,268 million (June 2004: euro 3,493million), which included euro 254 million (June 2004: euro 258 million) inrespect of the Group's share of net debt in joint venture undertakings. A strong balance sheet and robust cash generation characteristics continue tounderpin the Group's financial capacity to avail of attractive acquisitionopportunities as they arise in our various geographic, product and sectoralmarkets. Development Development expenditure in the first half of 2005 amounted to euro 231 million.Although this pace of spend was lower than in recent years, we continue to workactively on opportunities for acquisitions across all our operations and remaincommitted to completing transactions at prices that will contribute to long-termvalue creation for our shareholders. Since the end of June the Group has spent a further euro 190 million onacquisitions. This total includes the purchase of the French concrete productsproducer, Stradal, the acquisition of which was completed on August 16th. Outlook In Europe Materials, demand in the Irish market remains strong while recentmonths have seen improved trading in Poland. In Switzerland, second half cementdemand is likely to be lower as the major tunnel project winds down. Tradingpatterns in other markets are expected to show little change and overall theDivision expects to deliver an improvement in underlying second half operatingprofit. The short term economic outlook for Europe Products remains generally subdued inour core countries. As a result it is unlikely that the profit declineexperienced in the first half of the year can be offset in the second half andfull year operating profit is expected to be lower than in 2004. In Europe Distribution, weak Dutch consumer spending patterns continue toconstrain our DIY activities. However, our builders merchanting operations areproving more robust and we expect to deliver continuing operating profitprogress in the second half of the year. Our Americas Materials operations are performing well and have good backlogs inhand for the remaining months of the year. While recent higher energy costs areabsorbing more of the benefits of achieved price improvements than in the firsthalf, we currently expect some overall margin increase and higher full yearprofit in US$ terms. Although the pace of advance for Americas Products has moderated slightly overthe summer months the demand backdrop remains broadly positive with continuingstrong housing demand and ongoing recovery in our non-residential markets. Weexpect a good second half out-turn from these operations and a full year profitadvance. Americas Distribution faces tough comparatives for the second half due tosignificant 2004 post-hurricane demand in Florida and gains arising from steepprice increases for many of the products handled by this business. However, witha generally favourable trading backdrop we expect higher second half 2005 US$operating profit. A continuation of the current US dollar/euro exchange rate of US$ 1.23 wouldresult in a full year average rate of US$ 1.2550 (2004: US$ 1.2439) and aminimal full year translation impact compared with 2004. CRH has had a strong first half profit outcome with good organic growth from theAmericas significantly outweighing a decline in Europe, and a satisfactoryincremental contribution from 2004 and 2005 acquisitions. The Group will continue to benefit in the second half from strong markets in itsAmerican operations and from a sustained focus on input cost recovery andoperational performance. Although this will be offset to some extent by therecent surge in energy costs we nevertheless expect to make further progress inthe more important second half of the year. * * * * This interim results announcement contains certain forward-looking statements asdefined under US legislation. By their nature, such statements involveuncertainty; as a consequence, actual results and developments may differ fromthose expressed in or implied by such statements depending on a variety offactors including the specific factors identified in this interim resultsannouncement and other factors discussed in our Annual Report on Form 20-F filedwith the SEC. Group Income Statement Six months Six months Year ended ended 30th ended 30th 31st June 2005 June 2004 December 2004 Unaudited Unaudited Audited euro m euro m euro m Revenue 6,329.3 5,607.9 12,754.5Cost of sales (4,397.4) (3,913.3) (8,717.4)Gross profit 1,931.9 1,694.6 4,037.1Operating costs (1,487.1) (1,324.4) (2,816.9)Group operating profit 444.8 370.2 1,220.2Profit on disposal of fixed assets 10.0 6.0 10.8Profit before finance costs 454.8 376.2 1,231.0Finance costs (net) (77.8) (64.1) (146.4)Group share of associates' profit after tax 6.3 7.3 19.4Profit before tax 383.3 319.4 1,104.0Income tax expense (estimated at interim) (81.0) (63.5) (232.2)Group profit for the financial period 302.3 255.9 871.8 Profit attributable to:Equity holders of the Company 298.7 252.4 866.1Minority interest 3.6 3.5 5.7Group profit for the financial period 302.3 255.9 871.8 Earnings per share for the periodBasic 56.0c 47.8c 163.6cDiluted 55.7c 47.4c 162.7cCash earnings per share for the period 105.4c 95.0c 261.8cDividend per share 11.25c 9.6c 33.0c Group Balance Sheet As at 30th As at 30th As at 31st June 2005 June 2004 December 2004 Unaudited Unaudited AuditedASSETS euro m euro m euro mNon-current assetsProperty, plant and equipment 6,336.8 5,987.9 5,830.6Intangible assets 1,935.4 1,836.5 1,774.1Investments in associates 210.3 180.6 178.8Derivative financial instruments 254.4 159.1 173.2Other financial assets 102.7 93.4 113.2Deferred income tax assets 425.1 340.8 335.3Total non-current assets 9,264.7 8,598.3 8,405.2Current assetsInventories 1,616.2 1,405.7 1,308.9Trade and other receivables 2,594.4 2,327.1 1,973.1Derivative financial instruments 6.5 25.0 1.1Liquid investments 445.2 318.1 311.7Cash and cash equivalents 799.5 679.7 1,072.0Total current assets 5,461.8 4,755.6 4,666.8Total assets 14,726.5 13,353.9 13,072.0EQUITYCapital and reserves attributable to the Company's equity holdersEquity share capital 181.8 180.1 181.0Non-equity share capital 1.2 1.2 1.2Share premium account 2,184.4 2,114.8 2,149.3Other reserves 30.0 17.9 23.5Foreign currency translation reserve 157.9 107.5 (179.9)Retained income 2,830.2 2,292.7 2,770.1 5,385.5 4,714.2 4,945.2Minority interest 28.8 38.6 34.2Total equity 5,414.3 4,752.8 4,979.4LIABILITIESNon-current liabilitiesInterest-bearing loans and borrowings 4,063.1 3,738.2 3,802.4Derivative financial instruments 3.4 155.8 51.9Deferred income tax liabilities 1,075.3 1,010.5 987.4Trade and other payables 134.2 113.1 122.0Retirement benefit obligations 524.3 253.9 349.7Provisions for liabilities and charges 228.5 188.4 182.3Capital grants 11.9 13.8 12.4Total non-current liabilities 6,040.7 5,473.7 5,508.1Current liabilitiesTrade and other payables 2,149.9 1,942.2 1,742.1Current income tax liabilities 319.3 288.2 284.5Interest-bearing loans and borrowings 584.0 748.9 251.4Derivative financial instruments 123.6 32.2 210.4Provisions for liabilities and charges 94.7 115.9 96.1Total current liabilities 3,271.5 3,127.4 2,584.5Total liabilities 9,312.2 8,601.1 8,092.6Total equity and liabilities 14,726.5 13,353.9 13,072.0 Group Cash Flow Statement Six months Six months Year ended ended 30th ended 30th 31st June 2005 June 2004 December 2004 Unaudited Unaudited Unaudited euro m euro m euro mCash flows from operating activitiesGroup operating profit 444.8 370.2 1,220.2Depreciation charge 260.1 247.8 515.9Share-based payments expense 6.5 4.1 9.7Amortisation of intangible assets 3.3 1.5 4.1Increase in working capital (357.6) (307.8) (119.4)Amortisation of capital grants (1.4) (1.0) (2.2)Cash generated from operations 355.7 314.8 1,628.3Interest paid (85.2) (76.5) (160.3)Income taxes paid:- Irish corporation tax (1.6) (8.6) (17.1)- Overseas corporation tax (57.4) (75.7) (188.3)Net cash inflow from operating activities 211.5 154.0 1,262.6Cash flows from investing activitiesInflowsProceeds from disposal of fixed assets 44.8 59.2 101.8Interest received 14.3 12.7 22.6Capital grants received 0.9 - 0.1Dividends received from associates 8.5 2.9 8.5 68.5 74.8 133.0OutflowsPurchase of property, plant and equipment (346.8) (262.5) (550.7)Acquisition of subsidiaries and joint ventures (168.0) (660.7) (850.9)Investments in and advances to associates (5.5) (4.8) (5.8)Deferred acquisition consideration paid (31.4) (29.2) (57.3) (551.7) (957.2) (1,464.7)Net cash outflow from investing activities (483.2) (882.4) (1,331.7)Cash flows from financing activitiesInflowsProceeds from issue of shares 19.2 5.5 36.6Increase in interest-bearing loans and borrowings 223.6 322.1 261.4Increase in finance lease liabilities 2.4 56.2 56.2Net movement in derivative financial instruments (25.4) 71.7 (30.4) 219.8 455.5 323.8OutflowsExpenses paid in respect of share issues (0.1) (0.1) (0.3)Repayment of interest-bearing loans and borrowings (25.2) (10.3) (31.9)Increase in liquid investments (113.1) (16.2) (25.2)Repayment of finance lease liabilities (1.4) (6.9) (24.4)Dividends paid to equity holders of the Company (108.2) (73.4) (119.6)Dividends paid to minority interests (4.1) (1.4) (2.1) (252.1) (108.3) (203.5)Net cash (outflow)/inflow from financing activities (32.3) 347.2 120.3Change in cash and cash equivalents (304.0) (381.2) 51.2Translation adjustment 31.5 20.0 (20.1)Cash and cash equivalents at beginning of period 1,072.0 1,040.9 1,040.9Cash and cash equivalents at end of period 799.5 679.7 1,072.0 Group Statement of Recognised Income and Expense Six months Six months Year ended ended 30th ended 30th 31st June 2005 June 2004 December 2004 Unaudited Unaudited Audited euro m euro m euro mItems of income/(expense) recognised directly within equity:Currency translation effects 337.8 107.5 (179.9)Group defined benefit pension schemes:- Actuarial loss (151.2) (5.9) (119.2)- Deferred tax asset 36.4 2.7 31.3Gains/(losses) relating to cash flow hedges 1.2 0.4 (0.3)Net income/(expense) recognised directly within 224.2 104.7 (268.1)equityGroup profit for the financial period 302.3 255.9 871.8Total recognised income and expense for the period 526.5 360.6 603.7Equity holders of the Company 520.2 355.7 599.8Minority interest 6.3 4.9 3.9Total recognised income and expense for the period 526.5 360.6 603.7 Group Statement of Changes in Equity Six months ended Six months ended Year ended 30th June 2005 30th June 2004 31st December 2004 Unaudited Unaudited Unaudited euro m euro m euro m At beginning of period 4,979.4 4,447.0 4,447.0Issue of shares:- Share options and 19.2 5.5 36.6participation schemes- Issued in lieu of 16.8 31.7 36.4dividends- Expenses in respect of (0.1) (0.1) (0.3)share issuesAdjustment re share options 6.5 4.1 9.7expenseDividends paid (125.0) (105.1) (156.0)Movement in minority (5.4) 12.6 8.0interestItems of income/(expense) recognised directly within equity:Currency translation 337.8 107.5 (179.9)effectsGroup defined benefit (114.8) (3.2) (87.9)schemesGains/(losses) relating to 1.2 0.4 (0.3)cash flow hedgesProfit for the period attributable to 298.7 252.4 866.1equity holdersAt end of period 5,414.3 4,752.8 4,979.4 Supplementary Information 1. International Financial Reporting Standards Basis of preparation The financial information presented in this Interim Report has been prepared in accordance with the Group's accounting policies under International Financial Reporting Standards (IFRS). The transition date for implementation of IFRS by the Group was 1st January 2004. The financial statements for the six months ended 30th June 2004 and for the year ended 31st December 2004, which were prepared in accordance with accounting practice generally accepted in the Republic of Ireland, have been restated under IFRS with effect from the transition date. Full details of the accounting policies adopted by the Group on implementation of IFRS, and of the impact on the reported results and balance sheet of the Group of the transition to IFRS, were published on 31st May 2005 and are available on the Group's website www.crh.com. Approved IFRS The Group's accounting policies under IFRS are based on the Financial Reporting Standards and Interpretations issued by the International Accounting Standards Board (IASB) and on International Accounting Standards (IAS) and Standing Interpretations Committee Interpretations approved by the predecessor International Accounting Standards Committee that have been subsequently authorised by the IASB and remain in effect. The majority of the IASs/IFRSs have been approved by the European Commission. However, a number of IASs/IFRSs remain to be approved at the date of publication of this document, and failure to approve these outstanding standards in time for 2005 financial reporting could lead to changes in the basis of accounting or in the basis of presentation of certain financial information from that adopted for the purposes of this Interim Report. Furthermore, the financial information provided in this document is subject to the issuance by the International Accounting Standards Board of additional Interpretations prior to the end of 2005 which may have retrospective impact and thus require to be applied in the 2005 financial statements and the related 2004 comparatives. As a result, it is possible that further changes may be required to the full year 2004 financial information contained in this document prior to its inclusion as comparative data in the published 2005 year-end consolidated financial statements under IFRS. The financial instruments accounting policy applied in preparing this financial information takes full account of the revised version of IAS 39 approved by the European Commission under which the fair valuation of financial liabilities is prohibited. In addition, the European Commission has yet to approve the Amendment to IAS 19 Actuarial Gains and Losses, Group Plans and Disclosures enabling the recognition of actuarial gains and losses in the Statement of Recognised Income and Expense in the same manner as FRS 17 under Irish GAAP. CRH has elected to adopt this Amendment prior to its effective date in relation to accounting for actuarial gains and losses arising on the Group's defined benefit pension schemes and similar arrangements after 1st January 2004. 2. Translation of Foreign Currencies These financial statements are presented in euro. Results and cash flows of subsidiary, joint venture and associated undertakings based in non-euro countries have been translated into euro at average exchange rates for the period, and the related balance sheets have been translated at the rates of exchange ruling at the balance sheet date. Adjustments arising on translation of the results of non-euro subsidiary, joint venture and associated undertakings at average rates, and on restatement of the opening net assets at closing rates, are dealt with in a separate translation reserve within equity, net of differences on related currency borrowings. All other translation differences are taken to the income statement. Rates used for translation of results and balance sheets into euro were as follows: Average Period ended Six months ended Year ended 30th June 31st December 30th June 31st December euro 1 = 2005 2004 2004 2005 2004 2004 US Dollar 1.2847 1.2273 1.2439 1.2092 1.2155 1.3621 Pound Sterling 0.6859 0.6735 0.6787 0.6742 0.6708 0.7051 Polish Zloty 4.0796 4.7324 4.5268 4.0388 4.5236 4.0845 Swiss Franc 1.5462 1.5531 1.5438 1.5499 1.5242 1.5429 Argentine Peso 3.7388 3.5641 3.6572 3.4934 3.5979 4.0488 3. Analysis of Revenue and Operating Profit by Business Six months ended 30th June - Unaudited Year ended 2005 2004 31st December 2004 euro m % euro m % euro m % Revenue Europe Materials 1,215.7 19.2 1,021.8 18.2 2,306.8 18.1 Europe Products 1,188.9 18.8 1,090.0 19.4 2,245.0 17.6 Europe Distribution 1,016.0 16.1 895.4 16.0 1,904.1 14.9 Americas Materials 1,065.3 16.8 946.8 16.9 2,823.2 22.1 Americas Products 1,337.1 21.1 1,207.6 21.5 2,461.6 19.3 Americas Distribution 506.3 8.0 446.3 8.0 1,013.8 8.0 6,329.3 100 5,607.9 100 12,754.5 100 Operating profit Europe Materials 141.3 31.7 125.9 34.0 320.2 26.2 Europe Products 85.9 19.3 95.8 25.9 190.7 15.6 Europe Distribution 49.6 11.1 48.4 13.1 121.4 9.9 Americas Materials (4.1) (0.8) (31.5) (8.5) 273.9 22.5 Americas Products 143.6 32.3 113.6 30.7 250.7 20.6 Americas Distribution 28.5 6.4 18.0 4.8 63.3 5.2 444.8 100 370.2 100 1,220.2 100 Profit on disposal of fixed assets Europe Materials 4.7 1.2 0.2 Europe Products 0.6 0.4 0.8 Europe Distribution (0.6) 0.1 (2.2) Americas Materials 4.7 3.3 5.7 Americas Products 0.2 0.9 4.8 Americas Distribution 0.4 0.1 1.5 10.0 6.0 10.8 4. Geographical Analysis of Revenue and Operating Profit Year ended Six months ended 30th June - Unaudited 31st December 2004 2005 2004 euro m % euro m % euro m % Revenue Ireland* 561.3 8.9 507.7 9.0 1,056.2 8.3 Benelux 1,191.9 18.8 1,057.7 18.9 2,166.8 17.0 Rest of Europe 1,661.8 26.3 1,433.9 25.6 3,221.8 25.2 Americas 2,914.3 46.0 2,608.6 46.5 6,309.7 49.5 6,329.3 100 5,607.9 100 12,754.5 100 Operating profit Ireland* 70.5 15.9 72.8 19.7 142.7 11.7 Benelux 89.7 20.1 88.4 23.9 195.1 16.0 Rest of Europe 116.4 26.2 108.3 29.2 293.4 24.0 Americas 168.2 37.8 100.7 27.2 589.0 48.3 444.8 100 370.2 100 1,220.2 100 Profit on disposal of fixed assets Ireland* 3.3 0.5 0.6 Benelux 0.1 0.6 0.6 Rest of Europe 1.3 0.6 (2.4) Americas 5.3 4.3 12.0 10.0 6.0 10.8 * Total island of Ireland 5. Key Components of First Half 2005 Performance euro million Revenue Operating Profit on Trading Finance Assoc. PBT profit disposals profit costs PAT H1 2004 as reported 5,608 370 6 376 -64 7 319 Exchange effects -91 -2 - -2 - - -2 2004 at H1 2005 rates 5,517 368 6 374 -64 7 317 Incremental impact in 2005 of: - 2004 acquisitions 394 31 - 31 -11 - 20 - 2005 acquisitions 57 4 - 4 -3 - 1 Organic 361 42 4 46 - -1 45 H1 2005 as reported 6,329 445 10 455 -78 6 383 % change v. 2004: As reported 13% 20% 21% 20% At constant 2005 rates 15% 21% 22% 21% 6. Proportionate Consolidation of Joint Ventures Six months ended Year ended 30th June 31st December 2005 Unaudited 2004 Unaudited 2004 Audited euro m euro m euro m Group share of: Revenue 277.5 134.9 474.4 Cost of sales (174.2) (76.8) (301.9) Gross profit 103.3 58.1 172.5 Operating costs (68.2) (43.4) (110.1) Group operating profit 35.1 14.7 62.4 Profit on disposal of fixed assets 0.1 0.5 1.5 Profit before finance costs 35.2 15.2 63.9 Finance costs (net) (6.6) (4.3) (11.7) Profit before tax 28.6 10.9 52.2 7. Earnings per Share The computation of basic, diluted and cash earnings per share is set out below: Six months ended Year ended 31st 30th June December 2005 2004 2004 Unaudited Unaudited euro m euro m euro m Numerator for basic and diluted earnings per share Profit attributable to equity holders of the Company 298.7 252.4 866.1 Preference dividends paid - - (0.1) Profit attributable to Ordinary equity holders 298.7 252.4 866.0 Amortisation of intangibles 3.3 1.5 4.1 Depreciation charge 260.1 247.8 515.9 Numerator for cash earnings per share 562.1 501.7 1,386.0 Number of Number of Number of shares shares shares Denominator for basic earnings per share Weighted average number of shares (millions) in issue 533.4 528.3 529.5 Effect of dilutive potential shares (share options) 2.9 3.8 2.9 Denominator for diluted earnings per share 536.3 532.1 532.4 Earnings per share euro cent euro cent euro cent - basic 56.0c 47.8c 163.6c - diluted 55.7c 47.4c 162.7c Cash earnings per share (i) 105.4c 95.0c 261.8c (i) Cash earnings per share, a non-GAAP financial measure, is presented here for information as management believes it is a useful financial indicator of a company's ability to generate cash from operations. 8. Net Debt and Finance Costs As at 30th June As at 31st Net Debt 2005 2004 December 2004 Unaudited Unaudited Audited euro m euro m euro m Non-current assets Derivative financial instruments 254.4 159.1 173.2 Current assets Derivative financial instruments 6.5 25.0 1.1 Liquid investments 445.2 318.1 311.7 Cash and cash equivalents 799.5 679.7 1,072.0 Non-current liabilities Interest-bearing loans and borrowings (4,063.1) (3,738.2) (3,802.4) Derivative financial instruments (3.4) (155.8) (51.9) Current liabilities Interest-bearing loans and borrowings (584.0) (748.9) (251.4) Derivative financial instruments (123.6) (32.2) (210.4) Total net debt (3,268.5) (3,493.2) (2,758.1) Including Group share of joint ventures' net debt (253.7) (258.3) (257.0) Finance Costs Net Group finance costs on interest-bearing cash and 74.4 67.2 147.4 cash equivalents, loans and borrowings Net pensions financing credit (2.8) (4.2) (8.5) Net charge to unwind discount on provisions 7.0 5.2 11.3 Net credit re change in fair value of derivatives (0.8) (4.1) (3.8) Total net finance costs 77.8 64.1 146.4 Including Group share of joint ventures' costs 6.6 4.3 11.7 9. Summarised Cash Flow The table below summarises the Group's cash flows for the six months ended 30th June 2005 and 30th June 2004 and for the full year ended 31st December 2004. Six months ended Year ended 31st 30th June - Unaudited December 2004 2005 2004 Unaudited Inflows euro m euro m euro m Profit before tax 383 319 1,104 Depreciation 260 248 516 Amortisation of intangibles 3 2 4 Disposals 45 59 102 Share issues (net of expenses) 36 37 73 Other (1) 23 16 726 688 1,815 Outflows Working capital movement 350 308 111 Capital expenditure 347 263 551 Acquisitions and investments 207 802 1,029 Dividends 129 106 158 Tax paid 59 84 205 1,092 1,563 2,054 Net outflow (366) (875) (239) Translation adjustment (144) (63) 36 Increase in net debt (510) (938) (203) 10. Other Six months ended 30th Year ended 31st June - Unaudited December 2004 2005 2004 Unaudited EBITDA interest cover (times) - six months to 30th June 9.4 10.1 - - rolling 12 months 11.8 - 12.3 EBIT interest cover (times) - six months to 30th June 5.9 6.0 - - rolling 12 months 8.4 - 8.7 EBITDA = earnings before interest, tax, depreciation and amortisation, excluding share of joint ventures EBIT = earnings before interest and tax, excluding share of joint ventures Average shares in issue 533.4m 528.3m 529.5m Net dividend per share (euro cent) 11.25c 9.6c 33.0c Dividend cover (Earnings per share/Dividend per share) 4.98x 4.98x 4.96x Depreciation charge (euro m) 260.1 247.8 515.9 Amortisation of intangibles (euro m) 3.3 1.5 4.1 Share option expense charged in operating profit (euro m) 6.5 4.1 9.7 Market capitalisation at period-end (euro m) 11,674.6 9,070.6 10,492.2 Total equity at period-end (euro m) 5,414.3 4,752.8 4,979.4 Net debt (euro m) 3,268.5 3,493.2 2,758.1 Net debt as a percentage of total equity 60% 73% 55% Net debt as a percentage of market capitalisation 28% 39% 26% 11. Statutory Accounts The financial information presented in this Interim Report does not represent full statutory accounts. Full statutory accounts for the year ended 31st December 2004, prepared in accordance with Irish GAAP and containing an unqualified audit report, have been delivered to the Registrar of Companies. 12. Board Approval This Interim Report was approved by the Board of Directors of CRH plc on 29th August 2005. 13. Distribution of Interim Report This Interim Report is available on the Group's website (www.crh.com).A printed copy will be posted to shareholders on Thursday, 1st September 2005and will be available to the public from that date at the Company's registered office. Details ofthe Scrip Dividend Offer in respect of the Interim 2005 dividend will be postedto shareholders on Thursday, 22nd September 2005. CRH plc, Belgard Castle, Clondalkin, Dublin 22, Ireland TELEPHONE +353.1.404 1000 FAX +353.1.404 1007 E-MAIL [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:
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