Annual Report • Mar 11, 2022
Annual Report
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CRH PUBLIC LIMITED COMPANY 549300MIDJNNTH068E74 2021-01-01 2021-12-31 549300MIDJNNTH068E74 2020-01-01 2020-12-31 549300MIDJNNTH068E74 2019-01-01 2019-12-31 549300MIDJNNTH068E74 2021-12-31 549300MIDJNNTH068E74 2020-12-31 549300MIDJNNTH068E74 2019-12-31 549300MIDJNNTH068E74 2018-12-31 549300MIDJNNTH068E74 2019-01-01 2019-12-31 ifrs-full:RetainedEarningsMember 549300MIDJNNTH068E74 2019-01-01 2019-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300MIDJNNTH068E74 2019-01-01 2019-12-31 ifrs-full:NoncontrollingInterestsMember 549300MIDJNNTH068E74 2019-01-01 2019-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 549300MIDJNNTH068E74 2019-01-01 2019-12-31 ifrs-full:OtherReservesMember 549300MIDJNNTH068E74 2019-01-01 2019-12-31 ifrs-full:TreasurySharesMember 549300MIDJNNTH068E74 2019-01-01 2019-12-31 ifrs-full:IssuedCapitalMember 549300MIDJNNTH068E74 2019-01-01 2019-12-31 crh:IFRS16Member 549300MIDJNNTH068E74 2020-01-01 2020-12-31 ifrs-full:RetainedEarningsMember 549300MIDJNNTH068E74 2020-01-01 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300MIDJNNTH068E74 2020-01-01 2020-12-31 ifrs-full:NoncontrollingInterestsMember 549300MIDJNNTH068E74 2020-01-01 2020-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 549300MIDJNNTH068E74 2020-01-01 2020-12-31 ifrs-full:OtherReservesMember 549300MIDJNNTH068E74 2020-01-01 2020-12-31 ifrs-full:TreasurySharesMember 549300MIDJNNTH068E74 2020-01-01 2020-12-31 ifrs-full:IssuedCapitalMember 549300MIDJNNTH068E74 2021-01-01 2021-12-31 ifrs-full:RetainedEarningsMember 549300MIDJNNTH068E74 2021-01-01 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300MIDJNNTH068E74 2021-01-01 2021-12-31 ifrs-full:NoncontrollingInterestsMember 549300MIDJNNTH068E74 2021-01-01 2021-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 549300MIDJNNTH068E74 2021-01-01 2021-12-31 ifrs-full:OtherReservesMember 549300MIDJNNTH068E74 2021-01-01 2021-12-31 ifrs-full:TreasurySharesMember 549300MIDJNNTH068E74 2021-01-01 2021-12-31 ifrs-full:SharePremiumMember 549300MIDJNNTH068E74 2021-01-01 2021-12-31 ifrs-full:IssuedCapitalMember 549300MIDJNNTH068E74 2018-12-31 ifrs-full:IssuedCapitalMember 549300MIDJNNTH068E74 2018-12-31 ifrs-full:SharePremiumMember 549300MIDJNNTH068E74 2018-12-31 ifrs-full:TreasurySharesMember 549300MIDJNNTH068E74 2018-12-31 ifrs-full:OtherReservesMember 549300MIDJNNTH068E74 2018-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 549300MIDJNNTH068E74 2018-12-31 ifrs-full:RetainedEarningsMember 549300MIDJNNTH068E74 2018-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300MIDJNNTH068E74 2018-12-31 ifrs-full:NoncontrollingInterestsMember 549300MIDJNNTH068E74 2019-12-31 ifrs-full:IssuedCapitalMember 549300MIDJNNTH068E74 2019-12-31 ifrs-full:SharePremiumMember 549300MIDJNNTH068E74 2019-12-31 ifrs-full:TreasurySharesMember 549300MIDJNNTH068E74 2019-12-31 ifrs-full:OtherReservesMember 549300MIDJNNTH068E74 2019-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 549300MIDJNNTH068E74 2019-12-31 ifrs-full:RetainedEarningsMember 549300MIDJNNTH068E74 2019-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300MIDJNNTH068E74 2019-12-31 ifrs-full:NoncontrollingInterestsMember 549300MIDJNNTH068E74 2020-12-31 ifrs-full:IssuedCapitalMember 549300MIDJNNTH068E74 2020-12-31 ifrs-full:SharePremiumMember 549300MIDJNNTH068E74 2020-12-31 ifrs-full:TreasurySharesMember 549300MIDJNNTH068E74 2020-12-31 ifrs-full:OtherReservesMember 549300MIDJNNTH068E74 2020-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 549300MIDJNNTH068E74 2020-12-31 ifrs-full:RetainedEarningsMember 549300MIDJNNTH068E74 2020-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300MIDJNNTH068E74 2020-12-31 ifrs-full:NoncontrollingInterestsMember 549300MIDJNNTH068E74 2021-12-31 ifrs-full:IssuedCapitalMember 549300MIDJNNTH068E74 2021-12-31 ifrs-full:TreasurySharesMember 549300MIDJNNTH068E74 2021-12-31 ifrs-full:OtherReservesMember 549300MIDJNNTH068E74 2021-12-31 ifrs-full:ReserveOfExchangeDifferencesOnTranslationMember 549300MIDJNNTH068E74 2021-12-31 ifrs-full:RetainedEarningsMember 549300MIDJNNTH068E74 2021-12-31 ifrs-full:EquityAttributableToOwnersOfParentMember 549300MIDJNNTH068E74 2021-12-31 ifrs-full:NoncontrollingInterestsMember iso4217:USD iso4217:USD xbrli:shares Annual Report and Form 20-F 2021 CRH is the leading building materials business in the world Our materials, products and integrated building solutions can be found thr oughout the built envir onment in a wide range o f construct ion project s from major publi c infrastruct ure t o homes and comme rcial buildings. V alues Our values unite us in the way we work, every day , all over the world. We put safety rst, we continuously create value, we do what we say , we lead with integrity , we build enduring relationships and we operate locally , but act as one company globally . Sustainability Sustainability is a strategic imperative for our business. We ar e committed to growing and improving in a way that creates nancial and non‑nancial value for all stakeholders and that has a positive impact on the world around us. Strategy Our strategy is to continue to grow and impr ove our business and in doing so to maximise long‑term value and deliver superior returns for our shareholders and for society . This document constitutes the Annual Report and Financial Statements in accordance with Irish and UK requir ements and the Annual Report on Form 20‑F in accordance with the US Securities Exchange Act of 1934, for CRH plc for the year ended 31 December 2021. A cross refer ence to Form 20‑F requirements is included on page 269. Th e Di re cto rs’ St ate me nts (c om pr is in g the S ta tem en t of Directors ’ Responsibilities , the Viability St atement and the Di re ctor s’ Co mp li an ce S tate me nt o n pa ge s 1 12 to 1 1 4), the Pr inc ip al R is ks a nd U nc er t ai nti es (o n pag e s 1 16 to 1 21) , the I nd ep en de nt A ud itor s' Re po r ts (on p ag es 12 4 to 134) , the P are nt C om pa ny n an ci al s tate m ent s of CR H pl c (on pag e s 21 1 to 21 5) an d EU T a xo no my (on p ag e 243) do no t for m pa r t of C RH’s An nu al R ep or t o n For m 20 ‑F a s l ed with t he Securities and E xchange Commi ssion (SEC) . Forward-Looking Statements This document con tains forward‑looking stat ements, wh ic h by th ei r nat ure i nvo lve r is k an d un ce r ta in t y . Pl e ase se e Di sc la im er/Fo r wa rd‑ Loo k in g Sta tem en ts on p ag e 1 1 1 for m or e inf or mat io n ab ou t the se s ta tem en ts an d ce r t ain fac tor s th at ma y ca use t he m to pro ve in ac cu rate. Governance Board of Dir ectors 56 Corporate Governance Report 60 Directors’ Remuneration Report 80 Directors’ Report 110 Principal Risks and Uncertainties 116 Financial Statements Independent Auditors' Reports 124 Consolidated Financial Statements 140 Accounting Policies 145 Notes on Consolidated Financial Statements 155 Supplemental 20-F and Other Disclosures 216 Shareholder Information 246 Other Information 258 Cross Refer ence to Form 20‑F 269 Index 270 Overview Our business at a glance 2 Chairman’ s Introduction 4 Strategy Review Why Invest in CRH 8 Chief Executive’ s Review 10 Market Backdrop 12 Our Strategy 14 Business Model 16 Key Performance Indicators 18 Sustainability 20 Risk Management 32 Business Performance and Segmental Reviews Finance Director’ s Review 38 Americas Materials 42 Europe Materials 46 Building Products 50 Contents View the Report on our website: www .crh.com/investors/annual-reports/ 2021 Annual Report and Form 20-F 1 Our 2021 Performance Highlights * EBITDA is dened as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, pr ot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. 2020 $4.6bn 2021 $5.35bn 2020 142.9c 2021 328.8c EBITDA (AS DEFINED) $ 5. 3 5 billio n +16% EARNINGS PER SHARE 328 . 8 c e nt +130% $ 3 1. 0 billio n +12% SALES PROFIT AFTER T AX $ 2. 6 billio n +125% 2020 $27.6bn 2021 $31.0bn 2020 $1.2bn 2021 $2.6bn +58% $ 3 .6 billio n OPERA TING PROFIT DIVIDEND PER SHARE +5% 12 1. 0 c e nt 2020 $2.3bn 2021 $3.6bn 2020 115.0c 2021 121.0c CIRCULAR ECONOMY SUST AINABLE PRODUCTS 2020 36.5mt 2021 39.5mt 2020 $9.8bn 2021 $11.5bn 3 9. 5 millio n tonn es of al te rn ati ve fu el s an d raw mat er ials recycled 8% $ 11 . 5 17% billio n revenu e from products with enhanced sustainability a ttr ib ute s 2020 16% 2021 22% 2020 1.3kg CO 2 /$ 2021 1.2kg CO 2 /$ 22 % PEOPLE females in senior leadership 6% 1. 2 CLIMA TE -8% kg C O 2 / $ re ven ue Greenhouse Gas Emissions Scope 1 an d Sc op e 2 CO 2 Emissions 2021 Annual Report and Form 20-F 3 2 Our business at a glance Our Integrated Building Solutions Story Mineral Reserves and Resources Our mineral reserves and r esources are found in our extensive network of quarry locations. Building Products We also pr oduce and supply a wide range of products for construction markets globally including Architectural Pr oducts, Building Envelope Products, Infrastructur e Products and Construction Accessories. We ar e organised as three operating Divisions of scale comprising Americas Materials, Europe Materials and Building Pr oducts. Building Materials We pr ocess our mineral reserves to produce primary building materials including cement, lime, aggregates, asphalt and r eadymixed concrete. Our Thr ee Operating Divisions Americas Materials + 10% 2020: $11.3 billion c. 28,300 employees c. 1,605 operating locations 46 US states, six Canadian provinces Products & Services Aggregates • Cement • Paving and Construction Services • Readymixed Concrete • Asphalt SALES $ 12 . 4 billion 26% GLOBAL SALES 40% GLOBAL SALES 34% GLOBAL SALES Europe Materials +16% 2020: $9.1 billion c. 25,600 employees c. 1,120 operating locations 20 Countries Products & Services Aggregates • Cement • Lime • Pavi ng a nd Con stru ction Services • Infrastructural Concrete • Readymixed Concr ete • Asphalt SALES $ 10 . 6 billio n Building Products +11% 2020: $7.2 billion c. 23,500 employees c. 510 operating locations 19 Countries Products & Services Architectural Pr oducts • Building Envelope Infrastructure Pr oducts • Construction Accessories SALES $ 8 .0 b illion 2021 Annual Report and Form 20-F 3 2 Residential Solutions We then add value to the building materials and products, supplying a range of integrated solutions for use in homes. Utility Solutions We combine and bundle building materials and products to create highly engineer ed systems to collect, connect & protect vital utility infrastructur e. T ransport Infrastructure Solutions We design, manufactur e, install, maintain and recycle end‑to‑end infrastructur e solutions which connect communities using uniquely integrating materials, products, solutions and services. Commercial Solutions We work with ar chitects, contractors and building owners to design, engineer , test and manufacture solutions for the building envelope including curtain walls, storefr onts and architectural glass. The leading building materials business in the world 28 Countries c. 77,400 People c. 3,235 Locations North America Eur ope 2021 Annual Report and Form 20-F 5 4 A Record Financial Performance 2021 saw a recor d nancial performance for CRH, attributable to the hard work of our employees, the consistent execution of our clear , focused strategy , the resilience and exibility of the Gr oup’ s business model and ongoing initiatives to enhance and improve business and operational performance. These results also r eect the value which customers place on the depth and breadth of CRH's pr oducts and the expertise with which its skilled employees provide solutions for customers' needs in a fast‑evolving construction environment. CRH grew its r evenues, prot, margins, cash generation and returns on capital during 2021 with Operating Cash Flow 2 of $4.2 billion (2020: $3.9 billion) arising from r ecord EBITDA (as dened) of $5.35 billion (2020: $4.6 billion), enabling, amongst other investment activities, capital expenditure of $1.6 billion (2020: $1.0 billion) in existing businesses. CRH continues to actively manage its portfolio of businesses, assessing the ability of each business to continue to contribute to CRH’ s long‑term strategy and evaluating the potential for acquisitions to enhance our business platforms through the provision of value‑added solutions for customers. The strength of CRH’ s business model, balance sheet and cash generation provide the Boar d with signicant optionality to invest in businesses which t our clearly dened strategy and which can generate enhanced value for our shareholders. During 2021, CRH invested $1.5 billion (2020: $0.4 billion) on acquisitions and we have a strong pipeline of development opportunities. Further details on the recor d performance in 2021 and implementation of CRH’ s value creation strategy are set out in the Chief Executive’ s report on pages 10 to 11. Delivering Cash Returns And Capital Growth For Shar eholders Dividends paid to CRH shareholders with r espect to the 2020 nancial year of 115.0c per share repr esented an increase of 25% compared to the total dividends per share declar ed for the 2019 nancial year . In addition, during 2021 CRH continued its share buyback pr ogramme, investing $0.9 billion (2020: $0.2 billion). Reecting your Board’ s condence in CRH and its future pr ospects, and our objective of continuing to have a sustainable, progr essive dividend policy , the Board is r ecommending a nal dividend of 98.0c for the 2021 nancial year . This repr esents a total dividend of 121.0c per share for the 2021 nancial year , an increase of 5% compar ed to 2020. Since 1970 CRH's compound annual T otal Shareholder Return ('TSR') 3 has been 15.5% (2020: 15.1%). At the 2022 Annual General Meeting, the Board will seek a renewal of the annual authority enabling the Board to continue with the shar e buyback programme. Chairman's Intr oduction 1 CRH successfully managed through the challenges of the ongoing COVID-19 pandemic during 2021, continuing to leverage our safety-rst culture and practices as well as operating in accordance with pandemic-r elated guidance and policies of national and local health agencies. Management provided compr ehensive support for the physical and mental well-being of our employees during this challenging period. * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. 1. See cautionary statement regarding forwar d‑looking statements on page 111. 2. Operating cash ow refers to net cash inow from operating activities as r eported in the Consolidated Statement of Cash Flows on page 144. 3. TSR represents the total accumulated value deliver ed to shareholders (via gross dividends r einvested and share appreciation). Details of how non‑GAAP measures ar e calculated are set out on pages 219 to 223. 2021 Annual Report and Form 20-F 5 Health & Safety A Continuing Priority In relation to COVID-19, the Boar d regularly monitored CRH’ s approach, initiatives and the outcomes therefr om against available research, best practice and the experiences of the wider populations where our businesses ar e located. The safety of our employees and contractors continued to receive attention during the year . Through the Boar d’ s Safety , Environment and Social Responsibility (SESR) Committee we inputted into policies and practices relating to safety , culture and monitored performance. Notwithstanding this focus, very sadly , there wer e four workplace related fatalities in 2021. The backgr ound to, and the potential learnings from, each accident was carefully examined by the SESR Committee and the full Board. The Board of fers its sympathy to the families of any CRH employees and contractors who suffer ed bereavement as a r esult of COVID-19 or any other illness or as a consequence of a workplace accident. During 2021 CRH conducted a comprehensive Group-wide employee survey seeking insights into a wide range of matters relating to their experiences as employees. This survey was complemented by a series of direct engagements, with similar objectives, between the SESR Committee and groups of employees from acr oss CRH. In assessing the relevant information gather ed from the survey and direct engagement, the Committee was able to report to the Boar d that safety , employee health and well-being were r ecognised by employees as being very important priorities for CRH and that this, including how CRH has supported employees throughout the COVID-19 pandemic, is appr eciated and valued. The Board is actively monitoring the very r ecent developments in Ukraine with a focus on the safety and security of the c.800 people who work in our Ukrainian operations. Delivering Against Challenging ESG T argets CRH is, and will continue to be, a leader in providing solutions in the built envir onment for the challenges and opportunities arising from mitigating and managing the impact of climate change and supporting environmentally sustainable economic growth. Our 2020 Sustainability Report set out challenging targets for mitigating our environmental impact, enhancing the contributions our products and customer -solutions make to the circular economy and sustainable economic growth, ensuring the safety of our people and progr essing our inclusion and diversity (I&D) agenda. During 2021 we made positive progr ess against these targets and I am pleased to advise that we expect to deliver on our decarbonisation target ahead of schedule. As a result, the SESR Committee has agreed with management and the Group has adopted an updated 2030 Gr oup-wide carb on reduction target as set out on page 21. In addition, to support our ongoing transparency on these matters, the Audit Committee oversaw the signicant expansion of our disclosures in this document in line with the expectations of the T ask Force on Climate-Related Financial Disclosur e (TCFD), the emerging EU T axonomy and further disclosures in r espect of relevant accounting estimates and judgements. In relation to diversity , as we develop our future leaders, we are focused on ensuring that CRH benets from people with diverse backgr ounds and experiences and has the structures in place to support them as they develop during their careers in the Group. Y our Board Making A Positive Contribution As Chairman I am pleased to report that your Boar d continues to operate very effectively and cohesively in the ongoing assessment of strategy and business performance, the purpose and culture of CRH and the quality and contributions of its people. This is due to the experience and attributes of individual Directors and the collective ef forts of a diverse team of people. The performance of the Board was evaluated by an external evaluator in 2021. This process similarly concluded that the Boar d was performing very effectively . During the year , Caroline Dowling and Badar Khan joined your Board bringing their r elevant backgrounds, experiences and qualities to enhance the Board’ s overall makeup and ability to contribute. After a thorough pr ocess supported by an independent third party , which identied and assessed potential external and inter nal candidates for the role, the Boar d unanimously decided to appoint Jim Mintern to the role of Finance Director of CRH and to the Board in June 2021. Since his appointment, the Group has beneted from the considerable strategic, nancial and operational experience which Jim brings to the role. As is CRH’ s policy and practice, Caroline, Badar and Jim will retir e at the AGM and along with all other current members of the Boar d will stand for re-election by shar eholders. The background and experience of each Board member , along with CRH’ s policies and approach to ongoing Board assessment and renewal ar e covered in more detail in the Nomination and Governance Committee’ s Report on pages 70 to 75. Long-term succession planning for senior executive roles continued to be a cor e focus for the Board in 2021. Details in relation to the Boar d’ s approach to this important topic is set out in the Nomination & Corporate Governance Report on page 71. Shareholder Engagement And Board Priorities I have again had the benet of considerable engagement with CRH shareholders over the past 12 months, discussing with them progr ess against the Board’ s priorities. This has enabled me to gain a detailed understanding of their perspectives and thoughts on CRH. Reports of all shareholder engagements are shar ed with my colleagues on the Board. Informed by this shareholder engagement and the Board’ s deliberations, the Board’ s priorities during 2022 will include: - A continued focus on the ongoing safety of our people, monitoring and assessing the alignment of CRH’ s culture with our values and purpose, overseeing talent management and succession planning and ensuring that people with diverse backgrounds and experiences ar e actively encouraged and supported; - Ensuring that CRH continues to be a leader in managing the challenges and opportunities arising from the impact of climate change and contributing to environmentally sustainable economic pr ogress; - Encouraging and assessing management’ s ongoing initiatives to enhance and improve CRH’ s businesses and business performance, including the contributions of businesses working together in the provision of compr ehensive customer - focused solutions; - Continuing to ensure that CRH has the appropriate, clearly communicated and shareholder -endorsed strategy and business model and capital allocation policy to support continued success and value creation. Delivery against these priorities will support CRH’ s responsibility to continue to pr ovide attractive cash returns and capital growth to CRH’ s shareholders over the short, medium and long term. I look forward to continued engagement with CRH shareholders over the next year to r eport on and hear their views on progr ess against these priorities. Conclusion Despite considerable external challenges, 2021 was another year of very strong delivery by CRH against its strategic and nancial objectives and goals. This delivery was made possible by the dedication, skill and quality of CRH‘s people working together as a team and beneting from the commitment, focus, inclusiveness, and strategic insights of our CEO, Albert Manifold. The Board is very appr eciative of the contributions of all of the people in CRH to its success and is very encouraged for the future given their commitment to CRH and their capabilities and potential. Richie Boucher Chairman 2 March 2022 2021 Annual Report and Form 20-F 7 Our ambit ion t o play a leadership role in our indus tr y’ s tr ansit ion t o carbon neut rality is underpi nned by a s tra t egy t o gro w and impr ov e our busin es s in a sus tainable and responsible w ay . 2021 Annual Report and Form 20-F 7 An employee at Standard Materials Group, part of CRH’ s America’ s Materials Division and a leading provider of readymixed concr ete and materials transportation in Northwest Arkansas and Oklahoma. CRH’ s Americas Materials Division employs 28,300 people in the United States and Canada. Why Invest in Us 8 Chief Executive’ s Review 10 Market Backdr op 12 Our Strategy 14 Business Model 16 Key Performance Indicators 18 Sustainability 20 Risk Management 32 Strategy Review 2021 Annual Report and Form 20-F 7 6-35 2021 Annual Report and Form 20-F 9 8 Why Invest in CRH The ways in which we maximise shareholder value. Our disciplined, value focused approach to capital allocation, made possible by our industry leading balance sheet strength pr ovides us with optionality and the ability to return cash to shareholders thr ough dividends and buybacks. Cash returned to shareholders via shar e buybacks and dividends since 2017 Capital allocation recor d CRH continues to demonstrate consistent growth and impr ovement in our returns, driven by a relentless focus on margin management, operating efciencies and tight working capital management. 12.3 % Return on Net Assets (RONA) 1 +160 bps since 2017 Operational and commercial ef ciency $ 6.5 billion T o create long-term value, we embed sustainability principles in all areas of our strategy and business model. CRH has set a target of 50% r evenue from products with sustainability attributes by 2025. 2021 Revenue from Pr oducts with Enhanced Sustainability Attributes $ 11. 5 billion Sustainability strategy embedded Our commitment to tackle climate change and decarbonise our operations includes a Science Based T argets Initiative (SBTi) approved r eduction in absolute group-wide Scope 1 and Scope 2 CO 2 emissions. W e have also set an ambition to become a net-zero business by 2050. T argeted reduction in absolute group-wide emissions by 2030 25 % SBTi approved climate target CRH’ s breadth of materials, products and services, together with its balanced exposure to construction end use demand, provides a unique opportunity to deliver integrated solutions for customers. Unique solutions capability 35% Infrastructure 32% Residential 33% Non-Residential Albert Manifold Group Chief Executive Gina Jardine Chief Human Resources Ofcer Jim Mintern Group Finance Director David Dillon Executive Vice President, Chief of Staff Randy Lake Chief Operating Ofcer Experienced leadership CRH’ s world class leadership team has a proven track r ecord of performance delivery , underpinned by ongoing talent development and succession planning. 1. RONA is a non‑GAAP measure as dened on page 222. The GAAP gures that ar e most directly comparable to the components of RONA include: Group operating prot (2021: $3,585 million, 2020: $2,263 million), impairment of property , plant and equipment and intangible assets (2021: $nil million, 2020: $673 million) and total assets and total liabilities (2021: $44,670 million and $23,756 million respectively; 2020: $44,944 million and $24,596 million respectively). 2021 Annual Report and Form 20-F 9 8 Th ere i s a nat ura l de ma nd fo r CRH pro du cts d ri ven by po pul ati on an d ec ono mi c grow th a nd th e ne ed to continually build and maintain the built environment. Long-term growth fundamentals 27 % Revenue Growth since 2017 CRH builds and grows successful businesses by regularly acquiring small to mid-sized companies that complement our portfolio and adding larger strategic deals to cr eate further platforms for growth. $ 9 .1 billion Development Spend since 2017 Proven acquisition model Strong nancial discipline and an unrelenting focus on value cr eation are hallmarks of CRH. W e have a proven, robust track r ecord in cash generation. 70 % Operating Cash Flow growth since 2017 Cash generation track-recor d CRH is relentlessly focused on building better businesses through operational and commercial excellence, coordinated and driven fr om the centre and deliver ed locally by our businesses around the world. 370 bps Continuous business improvement EBITDA (as dened) Margin Improvement 2017 to 2021 Dan Stover President, Americas Materials Juan Pablo San Agustin Chief Innovation & Sustainability Ofcer Isabel Foley Group General Counsel Nathan Creech President, Building Products Onne van der Weijde President, Europe Materials Since formation in 1970 CRH has delivered an industry-leading compound annual TSR of 15.5% (2020: 15.1%). €100 invested in CRH shares in 1970, with dividends r einvested, would now be worth €165,000. Industry Leading Retur ns + 15.5 % Compound Annual T otal Shareholder Return * EBITDA is dened as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, pr ot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. Executive Leadership T eam as of 2 March 2022. Biographies included on page 265. 10 Chief Executive’ s Review 1 CRH delivered a r ecord nancial performance in 2021, driven by the strategic reshaping and r epositioning of our business over recent years. CRH has been transformed fr om a sole supplier of commodity products and base materials to a fully integrated provider of value-added pr oducts and integrated building solutions, which are mor e sustainable and help to reduce the impact of construction on our world. An Evolving CRH Market demand and societal expectation for building materials and products is evolving. As our climate changes there is an incr eased emphasis on the sustainability performance of structures and buildings on a full life‑cycle basis. By combining our materials, products and services, including recycled end‑of‑life materials, into integrated solutions which can be delivered mor e efciently and sustainably , we can better serve the emerging needs of customers and support them in meeting the challenges of modern construction. We continue to build out our integrated solutions strategy across our materials and pr oducts businesses. It is increasingly a dif ferentiating feature of CRH's offering as we work closely with our customers to better understand and align with their specic challenges. At the same time we continue our focus on innovation to deliver value added solutions that improve the life cycle performance of buildings and climate resilient infrastructur e. This in turn has helped us to identify additional opportunities for growth and value cr eation. As a result, CRH continues to be a str ong and resilient business, delivering a recor d nancial performance, with continued improvement in sales, pr otability and cash generation. Climate Change In many of our markets CRH has become a valued partner in the delivery of a safer and more r esilient built environment that helps to mitigate the impacts of climate change on communities. We also r ecognise the importance of decarbonisation in addressing the challenges of climate change. We have a long track r ecord in successful emissions reduction initiatives and we recently set ourselves a new , industry leading target to reduce our Gr oup's absolute carbon emissions by 25% by 2030. For further information on this target please refer to page 21. We will continue to strive for further impr ovements across our operating footprint in support of our ambition to become a net‑zero business by 2050. As CRH and the world around us transitions to a low carbon economy over the coming decades, how we navigate climate‑related risks and opportunities will be increasingly important. Information on how our disclosures meet the requir ements of the TCFD is included on pages 28 to 31. Performance Highlights In 2021 CRH beneted from r ecovering market demand as economies reopened and construction activity returned to more normal levels. Positive underlying demand drove incr eased sales volumes in North America and Europe, while a continued focus on price improvements, coupled * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. 1. See cautionary statement regarding forwar d‑looking statements on page 111. 2. Net Debt and Net Debt/EBITDA (as dened) are non‑GAAP measures as dened on page 222. The GAAP gur es that are most directly comparable to the components of Net Debt/EBITDA (as dened) include: inter est‑bearing loans and borrowings: (2021: $10,487 million, 2020: $12,215 million) and prot after tax (2021: $2,621 million, 2020: $1,165 million). 3. Net of cash disposed and including deferred consideration proceeds in r espect of prior year divestments. 2021 Annual Report and Form 20-F 11 with decisive action taken to control costs and improve operational ef ciencies, helped improve our margins despite an inationary input cost environment. Sa le s inc rea se d 1 2% to $3 1 .0 bil lio n (2020: $27.6 million) and EBITDA (as dened) of $5.35 billion (2020: $4.6 billion) increased by 16% reecting the benets of our integrated solutions strategy along with strong demand gr owth and continued commercial discipline. On a like‑for ‑like 1 basis EBITDA (as dened) was 11% ahead of 2020, while EBITDA (as dened) margin of 17.3% (2020: 16.8%) increased by 50 basis points. Net debt of $6.3 billion at year end (2020: $5.9 billion) reects str ong inows from operations, disciplined capital expenditure and value focused investments. The Group’ s Net Debt/EBITDA (as dened) 2 was 1.2x (2020: 1.3x) at year end. Prot after tax was signicantly ahead of 2020 at $2.6 billion (2020: $1.2 billion) driven by a strong trading performance and the non‑recurr ence of non‑cash impairment charges and one‑off restructuring costs in the prior year . Ear nings per share (EPS) for the year was 130% higher than 2020 at 328.8c (2020: 142.9c), reecting a str ong trading performance and the non‑recurr ence of non‑cash impairment charges and restructuring charges in the prior year . This repr esented a 35% increase on a pr e‑impairment basis (2020 EPS pre‑impairment: 243.3c). Our r elentless focus on continuous business improvement helped contribute to a further increase in r etur ns. RONA for the year was 12.3% (2020: 10.1%). Operational Highlights In our Americas Materials Division, solid volumes, pricing progr ession and good operating performance resulted in EBITDA (as dened) of $2.6 billion (2020: $2.4 billion) up 7% on a like‑for ‑like basis with sales of $12.4 billion (2020: $11.3 billion). In Europe Materials, EBITDA (as dened) of $1.4 billion (2020: $1.1 billion) on sales of $10.6 billion (2020: $9.1 billion) was 22% ahead of prior year on a like‑for ‑like basis reecting good volume growth and price pr ogress against a prior year comparative that was heavily impacted by the COVID‑19 pandemic. Strong demand for r esidential construction drove incr eased sales across all platforms in our Building Products Division, which r eported sales of $8.0 billion (2020: $7.2 billion) with EBITDA (as dened) of $1.4 billion (2020: $1.2 billion) 8% ahead on a like‑for ‑like basis. Across all of our divisions positive pricing actions, cost savings and performance initiatives helped to minimise the impact of a challenging inationary environment. Portfolio Management And Capital Allocation We continued to maintain our disciplined and value‑focused approach to capital allocation. Development activity returned to more normal levels as visibility improved and COVID‑19 r elated disruption eased. During the year the Group invested $1.5 billion (2020: $0.4 billion) in 20 bolt‑on acquisitions. This included the addition of businesses such as National Pipe & Plastics (NPP) in the United States (US) which further enhance our end‑to‑end solutions offering to our customers. T otal proceeds from business divestments and asset disposals 3 was $0.5 billion (2020: $0.3 billion) including the sale of our Brazil cement operations for a total consideration of $0.2 billion. We also continued our shar e buyback programme with a further $0.9 billion (2020: $0.2 billion) of shares r epurchased during 2021, reecting CRH's strong nancial position and commitment to returning cash to shareholders. On 28 February 2022, the Group enter ed into a binding agreement to divest of its Building Envelope business to KPS Capital Partners, LP for an enterprise value of $3.8 billion. The transaction is subject to customary conditions and regulatory approvals. The decision to divest, at an attractive valuation, follows a comprehensive r eview of the business and demonstrates CRH’ s active approach to portfolio management, the efcient allocation of capital and the creation of a simpler and mor e focused Group. Sustainability Sustainability is deeply embedded in our business strategy , ensuring that CRH continues to prosper and grow in the long term. W e believe that our actions have a positive impact on the world around us. In 2021 this included further increases in our use of alternative and recycled materials in our products and integrated building solutions, and increasing the amount of r evenue attributable to sustainable products. Safety We continue to maintain our uncompr omising approach to ensuring the health and safety of our employees, contractors, customers and the general public. In 2021 this included the further development of best practice safety management systems and health and wellbeing programmes across all our locations. Despite our best efforts I r egret to report that ther e were four workplace r elated fatalities in 2021, one of which involved an employee at one of our facilities and three r oad trafc incidents involving the fatality of a contractor and two third parties. Our People The recor d performance achieved in 2021 is testament to the hard work, commitment and resilience of each and every one of our employees, who despite the challenging backdrop of the ongoing COVID‑19 pandemic, continued to deliver for the customers and communities that depend on us. We ar e fortunate to have an exceptionally talented and diverse team operating across our global business. As our business evolves, so do the demands on our leadership team. T o deliver differ ently we must organise differently . In 2021 Randy Lake was appointed Chief Operating Ofcer , responsible for ongoing business impr ovement, formulating and executing our climate strategy , ensuring we align our teams and processes to drive innovation, and positioning CRH for further growth and the achievement of its full potential. I am also pleased to report that 2021 saw CRH continue to make progr ess on building a more inclusive company , one which fosters a sense of belonging and empowers people to be their best. Our agenda for change in this area is Chief Executive led and remains a top priority for CRH. Outlook We expect the underlying demand and pricing backdrop to r emain favourable in 2022 albeit against an inationary input cost environment and continued supply chain challenges. Our Americas Materials Division benets from continuing favourable economic conditions and strong market positions. Federal funding for infrastructure is underpinned by the passing of the $1.2 trillion infrastructure package by the US Congr ess, while the residential market is expected to continue to grow driven by r obust demand. The backdrop in Europe is expected to be positive with continued growth in our key markets. In our Eur ope Materials Division, we continue to benet from strong market positions in gr owing economies in Eastern Europe and attractive markets in Western Europe. Although cost ination headwinds ar e anticipated to continue in the near ‑term, we expect to deliver further progr ess in 2022 supported by good demand and commercial discipline. W e expect our Building Products Division to deliver further growth supported by good commer cial management, increased activity and continued cost saving initiatives. Although there ar e a number of challenges and uncertainties across our markets, CRH’ s uniquely integrated and value‑added solutions strategy , together with a strong and exible balance sheet, leaves us well positioned for another year of progr ess. Albert Manifold Chief Executive 2 March 2022 2021 Annual Report and Form 20-F 13 12 Market Backdr op Building materials play an essential role in shaping the world ar ound us. Market fundamentals including population and economic growth, drive demand for CRH's materials, pr oducts and solutions. CRH is the global leader in building materials, serving the needs of the construction industry in 28 countries around the world. We support the delivery of critical infrastructur e requir ed for society to function. As communities develop, populations grow and economic activity increases, so too does demand for our materials, products and customer ‑focused solutions. CRH is ideally positioned to service the demand requir ements of construction projects in local markets through its extensive network of mineral reserves, pr oduction, manufacturing and logistics assets which are strategically located in matur e attractive construction markets globally . Economic Development Construction‑related spending curr ently accounts for c. 13% of global GDP . Economic development and growth drives investment in residential, infrastructure and commer cial projects from the houses, r oads, bridges, ports and airports that serve our growing cities to ofce blocks, r etail centres and industrial and leisure complexes. Ongoing Repair & Maintenance There is a r ecurring need to continually repair and maintain the existing built environment as structur es age over time. Population Growth By 2050 an estimated additional two billion people will have been added to the global population. The majority of these people will live in towns and cities as part of the estimated 68% of the world's population that will live in towns and cities by then. Our materials, products and solutions play an important r ole in shaping the built environment in these urban ar eas. This means there is a natural market for our products wherever ther e is growth in population. The associated construction demand can be expected to drive day‑to‑day organic growth for our businesses. Demand Fundamentals At CRH we aim to have a portfolio which is appropriately exposed to each of of the following three primary demand fundamentals, ther eby ensuring we benet from growth and value‑creation opportunities associated with each. 2021 Annual Report and Form 20-F 13 12 Market Development CRH maintains a consistent focus on continuously shaping, reshaping and optimising our footprint in the markets where we do business. We prudently allocate capital to the parts of our business that are positively exposed to fundamental demand drivers that can be expected to persist and create value for CRH in the medium to long‑term. Our vertically integrated business model and unique integrated solutions strategy enhances our ability to complement organic growth by identifying suitable businesses which can be acquired and seamlessly integrated into CRH. Through our enduring r elationships and deep market insight we identify and acquire established businesses with a proven track recor d of performance and a capacity to hold strong leadership positions in local markets. The extensive footprint of our materials businesses in North America and Europe sees us well positioned to capitalise on value creating opportunities for market consolidation and expansion of existing operations. North America In North America, which includes the world’ s largest economy , the US, CRH is the largest building materials business. Growth in North America is underpinned by a population that grows by 25 million people every decade, driving associated construction growth. The market for materials remains largely unconsolidated. For example, the top ten aggregates businesses account for less than one third of pr oduction. In recent years we have r eshaped and redirected our businesses in the US to increase CRH’ s exposure to positive demand fundamentals in the southern and wester n areas of the country . Europe CRH is a leading building materials business in Europe wher e the European Union (EU) is the largest economic bloc in the world. In Europe, there is an attractive mix of stable, developed markets which continue to deliver along with less developed, higher growth markets which of fer opportunities for organic growth and acquisition activity . Other Markets Our Building Products Division pr oduces high value‑added, highly engineered pr oducts some of which can be economically transported over long distances, opening up important export markets for CRH beyond our core geographic footprint. Ongoing innovation and product development ensures that we meet the needs of customers today and also addresses the longer ‑term opportunities presented by economic development, changing demographics and investments in a sustainable future. As the nature of construction changes customers are incr easingly demanding more holistic solutions which r educe cost, time and complexity and can improve the overall environmental performance of a project. The ‘building site’ has evolved into the ‘assembly site' with more and mor e of the actual construction carried out in specialised locations off‑site befor e completed structural elements are transported and lifted into place on‑site. Because of the breadth of materials we produce, CRH is uniquely positioned to service the demand to develop these customer focused solutions, which integrate multiple differ ent materials to service the more complex needs of our customers. Our effectiveness in meeting this evolving demand has become a major driver of growth and pr otability for CRH. A signicant portion of our business today can be categorised as either value‑added products or integrated building solutions. This means for the bulk of our customers, CRH is no longer a provider of a single type of product or a particular material. Instead we are pr oviding complete or integrated solutions, incorporating multiple materials and value‑added expertise. This in turn broadens our exposure along the value chain, and importantly opens up new opportunities for growth and value creation, as construction continues to change and demand for integrated building solutions increases. The move from individual pr oducts to integrated building solutions requir es a breadth of expertise, businesses and products, as well as market scale and customer insight. CRH is uniquely positioned in this regar d and consequently holds a signicant competitive advantage. Our Integrated Solutions Strategy 2021 Annual Report and Form 20-F 15 14 Our Strategy Maximising long-term value and delivering superior r etur ns At CRH we are focused on creating long-term value and delivering superior returns for all our stakeholders. Our strategy is driven through four cor e pillars: continuously improving our business, focused growth, harnessing the benets of scale and integration and developing the leaders that will deliver the value creation and superior r etur ns for CRH into the future. The successful implementation of our strategy is directed by these four strategic pillars, which drive our ability to generate superior margins, returns and cash on a continuous basis. Strategic Focus T o continue to serve the societal need for building materials pr oducts and integrated solutions and in doing so cr eate long-term value and deliver superior r etur ns for all our stakeholders. Strategic Pillars Developing Future Leaders Identifying and developing the next generation of performance orientated, innovative and entrepr eneurial leaders. Continuous Improvement Improving the operational, commer cial, sustainability and nancial performance of our business to maximise long‑term value and deliver superior returns. Benets o f Scale and Integration Scale and market leadership positions allow us to drive value by harnessing the benets of integrating operations. 1 3 4 Focused Growth Optimising our business for maximum long‑term value through the disciplined and focused allocation of capital. 2 2021 Annual Report and Form 20-F 15 14 Futur e Focus • Continue to take a group‑wide view of our business, leveraging our core str engths and collective capabilities in operating integrated and value‑adding businesses to whic h we can a ppl y a centrally coordinated focus on improving ef ciency , sustainability , pr oduct ivity and cost saving measur es. • Further roll‑out of the global FLP across the US and mainland Europe with extensive design, train‑the‑trainer and tran slati on investments made to support fur the r de liv ery . • Diversify further training and lear ning capability into remote live sessions and digital eLearning to facilitate scalable lear ning for all. • Further inclusive leadership skill‑building training to be delivered. • We will continue to adjust our asset base, allocating and reallocating capital to higher growth ar eas with more sustainable returns. • Investing in our existing businesses to build capacity and improve ef ciency . • Monitor evolving market trends and developments to ensure CRH is positioned for long‑term sustainable growth. Strategy in Action in 2021 • Through a range of operational excellence initiatives including energy and alternative fuel optimisation, process impr ovements and logistics‑ related initiatives aimed at impr oving operational performance, our Europe Materials Division delivered c. $81 million of savings in 2021. • CRH's Group T echnical Services (GTS) unit provides advice and expertise to businesses across our cement portfolio, supporting our plants around the world to optimise their performance and to develop and deliver their capital investment pipeline. In 2021 GTS worked with our cement businesses to improve performance in areas such as Reserve Management and Alternative Fuel utilisation where CRH is the global leader at 33% substitution and to manage a portfolio of capital projects. • 2,600 employees in 17 countries participated in our Frontline Leadership Pr ogram (FLP). • Over 5,000 leaders and managers have received their initial I&D awareness training. • 175 high potential global leaders participating in over 1,200 1:1 coaching hours. • Over 3,000 hours of virtual training, aimed at building soft‑skill capabilities was successfully delivered to more than 420 employees. • In 2021 we invested $1.5 billion (2020: $0.4 billion) in 20 bolt‑on acquisitions. The majority of these businesses are part of the ongoing development of our integrated solutions strategy . • We also invested $1.6 billion (2020: $1.0 billion) in capital expenditure pr ojects to support further organic growth in our existing businesses. Our strategy guides the continuous improvement and enhancement of our business while building resilience and futur e‑ proong CRH in the face of evolving market demand. In recent years our impr oved performance has been underpinned by a focus on higher growth markets in the South and West of the US and Central and Eastern Europe. Positive demand fundamentals and signicant long‑term infrastructure needs in particular in these markets provide optimum conditions for superior growth and performance. In addition, our scale in these markets has enabled us to bundle individual materials and products into value‑added integrated solutions, changing the way CRH delivers for its customers as their requir ements evolve. Our integrated solutions strategy which now accounts for a signicant portion of sales, increases our exposur e to large‑ scale infrastructure construction and deepens customer relationships, safeguar ding existing business and market share. Strategy in Action • We will continue to rigorously monitor and measure performance acr oss our businesses while implementing our detailed plans to make our businesses better through incr emental improvement initiatives to structurally improve our margins, cash and returns year ‑after ‑year . KPIs V alue creation Cash Generation Shareholder Returns Environment Safety Leadership V alue creation Cash Generation Shareholder Returns Environment Safety Leadership V alue creation Cash Generation Financial Discipline Shareholder Returns Environment Safety Leadership V alue creation Cash Generation Shareholder Returns Environment Safety Leadership 2021 Annual Report and Form 20-F 17 16 Business Model How we maximise value and deliver superior r etur ns Through disciplined capital management and operational ef ciency CRH creates value for both its shareholders and for society . Why it Matters 1. Capital and Net Debt of $26.5 billion (2020: $25.6 billion) and raw materials spend of $6.9 billion (2020: $5.8 billion) as outlined in notes 22 and 4 to the Consolidated Financial Statements, respectively on pages 189 and 160. Net Debt is a non‑GAAP measures as dened on page 222. Benets to CRH Financial Strength T o support resilience, exibility and optionality Investment T o drive continuous improvement and optimise returns Lower Capital Costs Supports our ability to fund value‑creating investments Shareholder Returns Through dividends, shar e buybacks and share price appr eciation $ 6.9 bn Raw Materials Spend 1 Intellectual Property Business Systems T onnes Reserves 2021 2 2. 8 bn Employees c . 7 7, 4 0 0 Capital and Net Debt 1 $ 26 . 5 bn How W e Create V alue Our Resour ces 1. Continuous Impr ovement 2. Focused Gr owth 3. Benets of Scale and Integration 4. Developing Futur e Leaders Our Strategy How we manage our business Our nancial strength allows us to benet from a lower cost of capital. Disciplined Financial Management Our business is balanced across materials, products and end‑use, servicing the breadth of construction and mitigating the impact of cyclical changes in our industry . Balanced Portfolio CRH uses a dynamic Enterprise Risk Management (ERM) framework to identity , manage and report risk in a manner that supports our strategic planning processes, allowing us to conduct business in a sustainable manner . Risk Mitigation We take a disciplined and focused appr oach to capital allocation and reallocation to ensure our capital is deployed to wher e we see optimum opportunity for growth. Dynamic Capital Management 2021 Annual Report and Form 20-F 17 16 Why it Matters * EBITDA is dened as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, pr ot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. Customer Focused Solutions Sustainable products that meet the needs of our customers Partner to Suppliers Resilient and reliable business partner Job Creation Responsible employer in local communities T axation Contribution T axes paid to Governments Benets to Society $ 4. 2 bn Operating Cash Flow 2020: $3.9bn $ 0 .6 bn T axes Paid 2020: $0.6bn $ 2.6 bn Prot After T ax 2020: $1.2 billion 12 . 3 % RONA 2020: 10.1% $5.35 bn EBITDA (as dened) 2020: $4.6 billion V alue Created in 2021 Our relentless focus on performance is strategically coordinated and driven from the centre and deliver ed locally by our operating businesses. Central Coordination / Local Delivery We continually focus on building better businesses through operational and commercial excellence initiatives designed to maximise performance. Continuous Improvement How we operate our businesses CRH’ s global scale and integrated business model allow us to harness cost savings and synergies across our Group. Benets of Scale and Integration We have a pr oven ability to identify high‑potential businesses to integrate into our Group that complement our existing portfolio and create further platforms for growth at attractive valuations. Proven Acquisition Model 2021 Annual Report and Form 20-F 19 18 CRH measures its progress in ach ieving it s strategic ob jectives t hrough the use of s pe cic nanci al and non-nancial key performance indicators (KPIs). KPIs are a consistent featur e of how we operate our business and fundamental to how we track progr ess. CRH regularly r eviews these KPIs to ensure they remain appr opriate for its business. 1. CO 2 emissions subject to nal verication under the European Union Emissions T rading Scheme (EU ETS). For further detail on our CO 2 metrics and targets as well as calculation methodology see page 31. 2. Due to the impact of the divestment of our cement assets in Brazil on our net CO 2 emissions per tonne of cementitious product, we are pr oviding the 2020 gure excluding Brazil as a prior year comparator . The previously reported gure for 2020, including Brazil, was 573kg. 3. Please refer to page 24 for further information on I&D, including additional indicators. Key Performance Indicators Sustainability is a strategic imperative for CRH as we strive to create both nancial and non-nancial value for all our stakeholders. W e view strong sustainability performance as a key driver in a competitive market and one which can lead to increased business opportunities. W e are committed to reporting on the breadth of our sustainability performance. A selection of KPIs relating to thr ee of our sustainability priority areas is set out on this page: Sustainability Performance 14 % People What do we measure? A strong safety cultur e is a key element of our business strategy . W e measure a wide range of health and safety KPIs including the percentage of locations that had zer o accidents. How did we do? In 2021, we continued to achieve a high level (94%) of zero accident locations and continued to integrate COVID-19 protection measur es into our existing safe systems of work. Our focus for 2022 W e continue to invest in safety initiatives and technologies, with the overall aim of realising a cultur e of safety and wellness while working towards zer o harm. 94 % % Zero-Accident in our Locations Safety What do we measure? W e recognise the need to r educe our direct emissions and contribute to the circular economy . W e measure direct and indir ect CO 2 emissions as well as specic indicators of efciency , including progress towar ds targets. How did we do? While our Scope 1 and 2 CO 2 emissions increased, kg CO 2 /$ decreased by 8% and we maintained our progr ess towards our cement emissions reduction tar get of 520kg net CO 2 /tonne cementitious product by 2025 (2021: 586kg; 2020: 586kg 2 ). Our focus for 2022 In line with our new targets, we will continue to accelerate our carbon reduction pr ogramme to drive our ambition and ensure that the vital produc ts we provide can be delivered on a carbon neutral basis by 2050. 1. 2 k g /$ Reven ue Greenhouse Gas Emissions 1 Scope 1 and Scope 2 CO 2 Emissions (kg/$ Revenue) Envir onment 2021 2020 2019 1.2kg/$ 1.3kg/$ 1.2kg/$ 2021 2020 2019 94% 94% 94% 2021 2020 2019 11% 13% 14% % Females in Senior Management 3 What do we measure? As part of our focus on building a more inclusive and diverse CRH, we closely monitor the percentage of females in senior management, in pursuit of our target of 33% female senior leadership by 2030. How did we do? The percentage of females in senior management was 14% in 2021 and as of 31 December 2021, 33% of the Directors of CRH plc and 22% of senior leadership were female. W e continued to focus on executing our I&D strategy across the Gr oup. Our focus for 2022 W e continue to focus on increasing the shar e of females in senior management and build on our ambition to be a business where everyone has the same opportunity to develop and progr ess. 2021 Annual Report and Form 20-F 19 18 2021 2020 2019 10.0% 10.1% 12.3% CRH uses a bala nced set of nancial KPIs to measure our strategic progress, foster positive per formance behaviour , ev aluate operating effec tiv ene ss and ma k e strategic nancial de cisions. KPIs relating t o four of our nancial priorit y area s are set out below: Financial Performance * EBITDA is dened as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, pr ot on disposals and the Group’ s share of equity accounted investments’ prot after tax. 1. EBITDA (as dened) Net Interest Cover is a non‑GAAP measur e as dened on page 221. The GAAP gures that are most dir ectly comparable to the components of EBITDA (as dened) Net Interest Cover include: prot after tax: $2,621 million (2020: $1,165 million), and nance costs: $311 million (2020: $389 million). Details of how non‑GAAP measures ar e calculated are set out on pages 219 to 223. 2. Operating cash ow refers to net cash inow from operating activities as reported in the Consolidated Statement of Cash Flows on page 144. What do we measure? Cash returned to shareholders each year thr ough dividends and our share buyback pr ogramme are among a range of shareholder returns we measure. How did we do? W e returned a further $0.9 billion to shareholders thr ough our share buyback programme in addition to dividends of $0.9 billion paid during the year . Since formation in 1970, CRH has delivered a compound annual total shareholder r etur n of 15.5% (2020: 15.1%). Our focus for 2022 W e will continue our focus on improving performance, gr owing our business and creating value. A further shar e buyback tranche of $0.3 billion is underway and a nal dividend of 98.0c was recommended by the Board, a 5% incr ease on 2020's full year dividend. Dividends Paid Shares Re‑pur chased 12 . 3 % $ 1. 8 bn Return on Net Assets (RONA) Cash Paid to Shareholders Cr eating V alue Financial Discipline Shar eholder Retur ns What do we measure? W e measure cash ows generated to fund or ganic and acquisitive growth, dividends to shar eholders, share buybacks and debt repayment. How did we do? OCF was ahead in 2021 due to strong cash generation, prudent management of working capital and other cash ows. Our focus for 2022 Continued focus on prudent management of working capital and other cash ows to maintain strong operating cash ows in 2022. $ 4. 2 bn Operating Cash Flow (OCF) 2 Cash Generation What do we measure? EBITDA (as dened) Net Interest Cover is a measur e of nancial liquidity and capital resour ces which underpins investment-grade credit ratings and the ability to access nance. How did we do? EBITDA (as dened) Net Interest Cover at 17.2x impr oved in 2021 due to improved pr otability and Net Debt/EBITDA (as dened) nished at 1.2x (2020: 1.3x) reecting r obust nancial discipline. Our focus for 2022 Maintain nancial discipline to ensure Net Inter est Cover remains strong. W e remain committed to pr otecting our investment-grade credit ratings of B BB+, Baa1, BBB+ fr om Standard & Poors, Moody's and Fitch respectively . 1 7. 2 x EBITDA (as dened) Net Interest Cover 1 2019 $3.9bn 2020 $3.9bn 2021 $4.2bn 2019 12.3x 2020 11.9x 2021 17.2x 2021 $1.8bn $0.9bn $0.9bn 2019 $1.6bn $0.9bn $0.7bn 2020 $0.9bn $0.7bn $0.2bn What do we measure? RONA is a measure of pr e-tax and pre-impairment returns through excellence in operational performance. How did we do? The Group achieved a RONA of 12.3% (2020 10.1%) which r eected continued enhancement of operating efciencies and impr oved prot margins. Our focus for 2022 A continued and relentless focus on mar gin management, operating efciencies and tight working capital management. 20 Building a more sustainable future At CRH, we strive to contribute to a safer , more climate resilient world. W e play a leading role in the building materials industry by leveraging our global knowledge and scale to help establish best practices worldwide. By developing value‑added sustainable products and integrated building solutions, we contribute positively to society , address negative potential impacts and cr eate long‑term value for our stakeholders. We ar e reducing the impact of construction on our world. T o achieve this, we continue to develop our products to impr ove the life‑cycle performance of buildings, provide innovative solutions for climate‑resilient infrastructur e and projects, and support our customers to meet the changing needs of modern construction. Driving our sustainability agenda Sustainability continues to be at the core of our strategy . CRH is a sustainability leader in our sector , as determined by the major Environmental, Social and Governance (ESG) rating agencies. We ar e a constituent member of indices including the MSCI Leaders ESG Indexes, FTSE4Good Index, the STOXX ® Global ESG Leaders Index and the Dow Jones Sustainability Index. We ar e also a long‑term participant in CDP (formerly Carbon Disclosure Pr oject) and were awarded an A‑ for both our 2021 climate and water security disclosures. Partnering for sustainable progr ess We advance with intent and contribute to the delivery of global goals, such as the United Nations Sustainable Development Goals (UN SDGs) and the Paris Agreement. W e recognise that partnership is key to progr ess in these areas. By collaborating across the value chain with a wide range of stakeholders, we are helping to advance our shared priorities. For example we are a member of the W orld Business Council for Sustainable Development (WBCSD) and the Global Cement and Concrete Association (GCCA). In responding to ESG tr ends, we also use our inuence and scale to promote sustainability initiatives by collaborating with non‑governmental organisations (NGOs) and charitable organisations. In doing so we strengthen local r elationships and champion the causes most important to society . Our contributions have been recognised and many of our operating companies have achieved awards for excellence in sustainability . Sustainability Cr eating long-term envir onmental, social and economic value By innovating across all ar eas of sustainability , we aim to create nancial and non-nancial value for all stakeholders and to have a positive impact on the world around us. Our Sustainability Priority Areas: Safety People Products Collaboration Integrity Environment 2021 Annual Report and Form 20-F 21 Managing risks and performance We r egularly review our sustainability policies and take a strategic approach in r esponding to global trends, including climate change, biodiversity impacts, demographic changes and technological advancements. Risks related to sustainability ar e recognised and managed in our Enterprise Risk Management (ERM) Framework. Our non‑nancial due diligence processes ar e well established in our business and supply chains, and we made no material changes to these in 2021. Our performance is monitored using KPIs across the ar eas of health and safety , social and environment. Our most r elevant KPIs are provided on pages 18 and 20 to 26. W e provide training to our employees to raise awareness of our performance standards and the importance of upholding them across our business. Our training and awareness tools include our non‑ nancial policies and our Code of Business Conduct (CoBC). Prioritising sustainability We addr ess the changing needs of society and the environment by identifying the most important ESG issues through a range of internal and external processes. These include annual sustainability reporting by our businesses to the Group, r eview of issues raised through ERM processes and r egular formal materiality assessment reviews, the outcomes of which guide our strategy and reporting. This helps us respond to our customers' needs and develop the solutions needed to reduce the impact of construction on the environment. These internal and exter nal processes allow us to monitor opportunities and risks and articulate what matters most to society . They also assist us in identifying the areas in which we can cr eate the most value and mitigate potential negative impacts that our operations may cause. V aluing transparency We ar e committed to reporting on the breadth of our performance in key sustainability areas. This includes information on environmental, social and employee matters, respect for human rights, anti‑ corruption and bribery matters. We comply with the EU Non‑Financial Reporting Directive and the EU T axonomy Regulation and we make disclosures consistent with TCFD. Our Sustainability Report is prepar ed in line with the Global Reporting Initiative (GRI) standards and the Sustainability Accounting Standards Board (SASB). Our independently‑assur ed 2021 Sustainability Report will be published in March 2022 on www .crh.com. Additionally , our ‘Commitment to human rights’ Modern Slavery Statement is published annually and discloses our risks, progr ess and targets related to pr eventing moder n slavery within our operations. For more detail on our sustainability risks see pages 32 to 35, 118 to 119 and 235 to 237 For more on our stakeholder engagement see pages 26 and 27 For more on our disclosur es consistent with TCFD see pages 28 to 31 * The SBT i’ s T arget V alidation T eam has classied our Scope 1 and 2 target ambition and has determined that it is in line with a well‑below 2°C trajectory . The target boundary includes biogenic emissions and removals from bioenergy feedstocks. ** Products with enhanced sustainability attributes are dened as products that incorporate r ecycled materials, products for which alternative energy/fuel sources are used in pr oduction, products which have a lower carbon footprint, and products that addr ess sustainability challenges in the built environment. Our ambitions and tar gets Our a mbit ion is to have a cultu re of s afet y and well nes s work ing toward s zero h ar m Ta r g e t : Zero f ata liti es, i n any ye ar Our ambition is to address climate change as we strive for carbon neutrality along the cement and concrete value chain by 2050 Ta r g e t : In e ar ly 2022, the G rou p ado pted a ne w SBT i ap prove d ta rget fo r a 25 % a bso lute re du cti on in gro up‑w id e Sco pe 1 a nd S cop e 2 CO 2 emissions by 2030 (on a 2020 bas el ine); this i s su ppo r ted by o ur ta rge t for o ur ce me nt pl ants to re du ce e mis si ons to 520kg C O 2 /tonne cementitious product by 202 5 ( accele rat ed from 2 030) Our a mbit ion is to be a b usin ess w her e ever yone ha s the s ame o ppor tunit y to dev elop and p rogres s Ta r g e t : 33% fem al e sen io r le ade rs hi p by 2030 Our a mbit ion is to de liver innovati ve produ cts and s olut ions to dr ive pro gre ss towar ds a resilient, net- zero built environment Ta r g e t : 50% product re venue from pr oducts with enhance d sustainabilit y attributes b y 202 5 Envir onment People Pr oducts Sa fet y 2021 Annual Report and Form 20-F 23 22 Sustainability - continued Embedding sustainability across our business Safety Leading with our commitment to safety The safety of those working for CRH continues to be our number one priority . We strive to addr ess risks and eliminate accidents to ensure that the wellbeing of all those who interact with our operations is protected. Key to achieving a culture of safety excellence are our Health and Safety Policy and Life Saving Rules. Our global network of safety ofcers works closely with our businesses in implementing policy and practice. Our health and wellbeing programmes pr ovide tools, social support and strategies for physical and mental health to support our employees as we move towards a post COVID‑19 world. T argeting zero harm Achieving our ambition of zero harm is an ongoing challenge. We deeply r egret to report that one employee fatality occurred at one of our facilities in 2021. In addition, three r oad trafc accidents r esulted in one contractor and two third‑party fatalities. W e extend our sincere sympathies to their families. We thor oughly investigate all fatalities and share the lessons learned as we focus on our zero fatality target. 8% average annual reduction in accident frequency rate over the last decade >$300 million Invested in safety initiatives in the past 5 years Our Health and Safety Policy Our Health and Safety Policy aims to equip everyone at CRH with the training and authority necessary to uphold our culture of health and safety excellence, to comply with applicable legislation and to lead the way in industry best practice. * Accident frequency rate is the number of accidents per million work‑hours 2021 Annual Report and Form 20-F 23 22 Envir onment Implementing environmental management systems For decades we have worked with stakeholders to manage environmental risks, drive improvements in performance and pr omote emissions reduction and r esource efciency . It is our goal to protect the envir onment in which we operate. Strengthening envir onmental stewardship We practice and pr omote responsible waste management and use of resour ces such as water , energy and land. Our operations have a focus on reducing and r ecycling waste and water where possible. Additionally , we monitor and control our air emissions in or der to preserve air quality to further protect the health of our environment and of society . $207 million Invested in environmental initiatives in 2021 (2020: $173 million) 100% Of our locations have restoration plans in place For more on our disclosur es consistent with TCFD see pages 28 to 31 W e have assessed the detailed targets behind each of the 17 SDGs and identied the four that most closely align to where we, as a building materials business, can have the most impact and inuence. Read more about how we ar e supporting the UN SDGs on crh.com/sustainability Investing in biodiversity Our aim is to protect and conserve biodiversity . We strive to enhance and r ehabilitate natural habitats through internal initiatives and through partnerships with environmental NGOs. We actively manage biodiversity at over 500 locations. Additionally , we ensure that r estoration plans are in place at all r elevant extractive locations. Committing to carbon reduction At CRH, we are striving to achieve carbon neutrality across our value chain by 2050. In working towards this ambition, in 2021 we accelerated our target to decrease the carbon intensity of our cement production, bringing forward our 2030 target for 520kg CO 2 /tonne cementitious product to 2025. W e also recognised the need for absolute emissions reductions and have r ecently adopted an SBT i approved target, for a 25% absolute gr oup‑wide reduction in Scope 1 and 2 CO 2 emissions by 2030 on a 2020 baseline. Our Environmental Policy Our Environmental Policy aims to addr ess climate change and work towards a healthier environment by supplying sustainable products, enhancing biodiversity and ensuring environmental protection thr oughout our business in order to r educe our emissions and comply with all applicable legislation. 2021 Annual Report and Form 20-F 25 24 People Encouraging inclusion and diversity We stri ve to deve lop a m ore d ive rs e an d inc lu sive w ork e nv iron me nt a nd to bui ld aware ne ss a t all l eve ls of th e org ani sat ion. Ou r Gl oba l I&D C oun ci l, cha ire d by ou r Chief Executiv e, is responsible for driving the s trateg y an d ac cou nta bi lit y o n I&D acro ss C RH. I& D co mmi t tee s have al so be en e sta bl ish ed a cro ss o ur thr ee d iv isi ons an d our c or po rate of c es, a nd m any of o ur ope ra ting c om pan ie s now h ave the ir ow n I&D p lan s in p lac e at lo ca l leve l. In ad dit ion, Emp loye e Re sou rce G rou ps (ER Gs) have b ee n established t o fur ther drive an inclusive culture. 14% of senior management were female (2020: 13%) 46% of clerical and administrative staff were female (2020: 45%) 7% of operational staff were female (2020: 7%) 15% Female employees (2020: 14%) Our Social Policy Our social policy outlines our goal to respect, empower , and protect our people by supporting freedom of association, valuing merit above all else, and prohibiting modern slavery in all its forms across our entire supply chain. Sustainability - continued Embedding sustainability across our business Empowering our employees Our employee engagement processes help us to understand our employees' needs. We collect information on levels of engagement and ndings are actioned by management. We have an ongoing focus on training to enable employees to acquire the attributes necessary to support performance, growth and success. During 2021, we conducted an organisational health survey across our business which highlighted our overall good performance and identied priority areas for impr ovement. We are developing action plans in line with these priority areas, which will be implemented acr oss the business. Throughout the COVID‑19 pandemic, CRH has ensured r egular inter nal communication across the business on regulatory updates, workplace changes and health and wellbeing. 2021 Annual Report and Form 20-F 25 24 Developing value-added solutions We work w ith o ur cu stom er s in th e de si gn, delivery and application of sustainable pr oducts and solutions through con struction, building mate ria ls a nd te chn ic al s upp or t. We of fe r multiple pr oducts and building solut ions with en ha nce d su sta in abi li ty a ttr ib ute s, and m any of our products can help customers achieve higher scores in gr een building rating schemes such as BREEAM ® , DGNB, and LEED ® . Our ranges of products with enhanced sustainability attributes inc lu de co nc rete pro du cts u sed i n water management syst ems, products containing rec ycle d co nten t and p rod uc ts that d el ive r sustainability benets for the built environment . Creating carbon solutions Concrete has a r ole to play in delivering a net‑zero built envir onment. We are collaborating across the construction value chain and Pr oducts 28% relevant pr oduct revenue fr om products used in certified building standards (2020: 25%) 46% of product r evenue is derived from pr oducts with enhanced sustainability attributes (2020: 46%) of our raw materials requir ements for our US asphalt business are met by r ecycled asphalt pavement (RAP) and shingles c. 25% of alternative fuels and raw materials recycled (2020: 36.5m tonnes) 39.5 million tonnes * Alter native raw materials and fuels are selected wastes and by‑products which can be used to r eplace natural substances and fossil fuels. This metric demonstrates to investors our focus on the circular economy . We monitor this KPI in order to evaluate our performance in contributing to the circular economy which, as noted above, r epresents a growth opportunity for CRH. ** External revenue from pr oducts that can be used directly in structures certied to BREEAM ® , Green Globes ® , LEED ® , IC‑700, etc. Products may qualify for points as a result of certications such as ISO14001, BES6001, local sourcing, recycle content and other characteristics. the w ide r sc ie nti c co mm uni t y to provi de lower ‑carbon products , infrastructur e and bui ldi ng s olu tio ns to sh ap e the pa th toward s ca rb on ne ut ral it y . For ex am pl e, we are invo lve d in co ll ab orat ive in iti ativ es a nd re se arc h pro jec ts to prog res s ca rb on c aptu re, uti lis ati on a nd storage ( CCUS) solutions. Driving resour ce efciency Th e cir cul ar e co nom y rep res ent s a grow th opp or t uni t y for C RH. We are a lre ad y a signicant cont ributor t o the circular economy . For exa mp le, ap prox ima tely 25% of ever y mil e of roa d we bui ld is m ad e fro m rec ycle d mate ria ls. We a im to deve lop b ui ldi ng ma ter ial s to impr ove res ou rce ef cie ncy, minim ise construction waste and progress the circular ec ono my by co ns ide ri ng th e fu ll li fe‑ cyc le of our p rod uc ts. It is o ur go al to de li ver m ore sustainable out comes for our customers. 2021 Annual Report and Form 20-F 27 26 Collaboration Strengthening our stakeholder engagement We aim to develop and str engthen positive relationships with our stakeholders thr ough open communication. Our stakeholders include investors, customers, employees, suppliers, NGOs, communities, assessment organisations, advocacy groups and other inter ested parties. We engage and align suppliers with our cor e values, driving improvement actions at the point where we have most inuence. Creating positive change Our policy is to be a good neighbour and we contribute to local communities through employment, educational development and supporting local businesses. Despite COVID‑19 constraints, we made donations in 2021 to areas including community relations and development, environment and conservation, education and employment, health and wellness, arts and culture and pr ovision of shelter . Reinforcing our appr oach to human rights We develop our appr oach to human rights through the identication of salient human rights related to CRH operations. Key human rights risks faced by CRH include the health and safety of those working on our sites, the health of neighbouring communities and the labour rights of workers in our extended supply chain. Risk assessment and management processes play a critical role in driving our human rights performance. Additionally , we apply the UN Guiding Principles on Business and Human Rights to support our human rights approach. T aking action for human rights Actions we have taken to protect human rights include improved training and awar eness through our Modern Slavery e‑module, the updating of our Code of Business Conduct (CoBC) and of our Supplier Code of Conduct (SCoC) and the identication of salient human rights issues. In response to supply chain risks, we incr ease our assurance and due diligence processes as requir ed. By engaging with industry partnership schemes, we aim to help improve standar ds across industry sectors. We monitor our pr ogress regar ding human rights using KPIs, which include zero harm measur es and increased training and awar eness. We publish our CRH Modern Slavery Statement annually , available on www .crh.com. $7.1 million Donated to local organisations and initiatives in 2021 (2020: $8.3 million) c. 1,100 stakeholder engagement events hosted by Group companies in 2021 (2020: c. 800) Integrity Leading with integrity At CRH, we are committed to conducting business in the right way , complying with the law and working responsibly . A “Speak‑up” culture encourages employees, customers, suppliers and other stakeholders to raise good faith concerns through the CRH hotline. Practicing good business conduct Our refr eshed Code of Business Conduct (CoBC) was launched in 2021. Our CoBC applies to all employees. We take a zer o‑ tolerance approach to bribery , corruption and fraud. Globally our senior management complete an Annual Compliance Certication, conrming their business’ s compliance with our CoBC and accompanying policies. c. 32,600 employees completed CoBC training in 2021 (2020: c. 32,100) c. 8,500 employees completed ACT training in 2021 (2020: c. 9,000) For more on our stakeholder engagement see page 27 Sustainability - continued Embedding sustainability across our business Regular training on our CoBC is provided to relevant employees. Certain employees, based on risk prole, undertake annual advanced compliance training (ACT) covering Anti‑Bribery , Competition/Antitrust, Anti‑Fraud and Anti‑Theft. Following the update of our Supplier Code of Conduct (SCoC), we have further developed our core due diligence pr ocesses to increase the visibility and insights we get into our suppliers. These actions are taken with the goal of ensuring that good business practices are upheld throughout our supply chain. Complying with applicable legislation CRH is committed to the highest level of legal, ethical and moral standards. It does not tolerate any illegal behaviour and all CRH companies respect and comply with the laws and obligations in the countries and regions in which they operate. CRH applies this same approach to political contributions. For example, in the US, CRH supports the rights of employees to participate in the political process thr ough employee‑funded Political Action Committees (P ACs) and CRH's US operations provide administrative support (consistent with applicable laws) to their afliated federal and state P ACs. 2021 Annual Report and Form 20-F 27 26 How we engage with our stakeholders Feedback from stakeholder engagement is r eported to, and carefully consider ed by , the SESR Committee and the Board. Employees Local communities Investors Customers Suppliers Governments and regulators Academic and scientic community Media NGOs and pressur e groups Key areas of interest • Business performance • Health, safety & wellbeing • Inclusion & diversity • Corporate governance • Human rights • Potential local impact • Community issues • Planning matters • Potential local impact • Sustainability • Business performance • Strategic growth • Capital allocation • ESG topics • Board and Executive remuneration • Inclusion & diversity • Building solutions • Customer relations & contracts • Health & safety • Sustainable products • Pr oduct innovation • Quality & delivery • Collaboration • Quality & delivery • Health & safety • Contract performance • Local impacts • Corporate governance • Human rights • Envir onment & climate • Health & safety • Envir onment & climate • Corporate governance • Planning matters • Natural capital • Pr oduct standards • Envir onment & climate • Pr oduct efciency & innovation • Human rights • Natural capital • Graduates & apprentices • Business performance • Health & safety • Inclusion & diversity • Environment & climate • Product innovation • Corporate governance • Corporate governance • Envir onment & climate • Human rights • Eco‑efciency Key methods of engagement • T eam meetings • Employee newsletters • Performance reviews • T own Hall meetings • Employee surveys • One‑to‑one meetings/ briengs • One‑to‑one meetings • Open days • Site tours and virtual events • Participation in local events • Employee engagement processes • Results presentations • Annual General Meeting • One‑to‑one meetings & calls • Surveys • Investor & ESG conferences & roadshows • Customer surveys • Formal market resear ch • Negotiations • Exhibitions • Product information on packaging • Customer relationship development • Company websites & social media • Supplier surveys and audits • Contractual meetings • T enders • Information requests • E‑tendering platforms • Assessment and due diligence • Industry associations • Briengs & direct meetings • Audits • Open days • Multi‑ stakeholder forums • One‑to‑one meetings • Seminars & lectures • Round table discussions • Pr esentations • Intern, graduate & apprenticeship programmes • Media surveys • Media briengs • Pr ess releases • Social media • Interviews • One‑to‑one meetings • Participation in events • Pr esentations • Open days 2021 Outcomes Improved engagement with employees Th is h el ps to at tra ct, d eve lo p, retai n an d motiva te our work force , sustaining our co mp eti tive a dv ant ag e an d lon g‑te rm su cc es s. In 20 21 , i t al so he lp ed u s stre n gth en o ur a pp roa ch to in cl us io n an d diversity across our businesses. Understood and met customer requir ements Engaging with our customers ensures we listen to their needs and help them to meet their sustainability commitments. In 2021, we continued to work with our customers on sustainable product development. Progr ess in research and development, innovation and sustainability By engaging with academic and scientic institutions during 2021, we continued to support partnerships and collaborations on resear ch development, championing innovative advances and collaborating on innovative products that contribute to a more sustainable built envir onment. Further improved our community relationships Engaging with our local communities during 2021 ensured that we incr eased our understanding of their needs and priorities, addressed any concerns and identied areas for value creation. Engaging with suppliers to drive best practices We engage with suppliers to develop a responsible and sustainable supply chain needed to deliver innovative and sustainable products. During 2021, we worked with our suppliers to drive improvements acr oss sustainability priority areas including health and safety and environment. Engagement with media We continued to impr ove our engagement with media to ensure that specic sustainability issues were addr essed appropriately and ef fectively . During 2021, engagement focused on how we are addressing climate change and delivering integrated solutions. Continued engagement with investors Engagement with investors helps us understand their expectations of our risk management and our nancial and ESG performance. During 2021, investor focus continued around emissions r eduction, employee engagement and innovation. Continued engagement with governments and regulators In 2021, our engagement with local and national regulators, governments and industry associations, ensured that we contributed appropriately to issues r elevant to our activities, improved our sustainable performance and compliance and progr essed projects for the enhancement of society . Productive engagement with NGOs Through our memberships and partnerships with NGOs we continue to be involved in developing industry best practices across a range of established sustainability topics and collaborating on integrated solutions across the value chain. 2021 Annual Report and Form 20-F 29 28 Go vernance Board oversight The Board is r esponsible for promoting the long‑term sustainable success of the Group, generating value for shareholders and ensuring that the Group makes a positive contribution to wider society . Its role is to pr ovide leadership; to establish and monitor the Group’ s purpose, values and strategy; to set the Group’ s risk appetite; and to ensure that ther e is a robust framework of effective contr ols to enable risks and opportunities, including those related to climate change, to be successfully assessed and managed. Sustainability , including the impact of climate change, is embedded in the Group’ s strategy and business model. The Board r ecognises the importance of decarbonisation in addressing the challenges of climate change and believes that the Group’ s integrated strategy of value‑added products and innovative solutions have a key role to play in delivering a mor e resilient and sustainable built environment. Climate change and sustainability are fr equent discussion topics at Board and Committee meetings, with the Board and its Committees discussing various aspects of the Group’ s climate strategy , the linkage between the Group’ s remuneration policies and practices and the Group’ s sustainability (and climate‑ related) objectives, stakeholder expectations, the regulatory envir onment and CRH’ s carbon reduction targets during 2021. In addition, climate change and sustainability‑related matters form an integral part of discussions on the Group’ s strategy and business model, capital allocation and risk management. The SESR Committee, to which the Board has delegated primary responsibility for monitoring developments related to sustainability , including climate, and providing strategic dir ection, oversight and support to the Board on these important topics, meets every quarter and provides a detailed r eport of discussion and recommendations to the Boar d following the conclusion of each meeting. Fur th er d eta ils i n rel atio n to the ro le a nd res po nsi bil iti es of th e Bo ard a nd i ts ve pe rm an ent C om mit te es a re set o ut i n the Gove rn an ce Re po r t on p ag es 6 0 to 1 09. Th is in clu de s de tai ls of pr opo se d revi si ons to the Gr oup’ s Remuneration Policy t o include sustainability metrics , including a climate‑ rel ated m etr ic, in th e Gro up’ s lon g‑ter m per formance share plan. Management responsibility The Chief Executive is responsible for the operational and prot performance of the Gr oup and is accountable to the Board for all authority delegated to executive management. The Chief Executive executes strategy agreed with the Board and r egularly reports to the Board on the progr ess and performance of the Group, including in relation to climate‑r elated matters. The Chief Executive is supported by the Group Leadership T eam, which is responsible for implementing strategy , pursuing performance delivery and progr essing the Group’ s sustainability and climate‑related agenda. Responsibility for formulating and executing our climate strategy sits with the Chief Operating Ofcer (COO). As detailed in the table below , the Group Leadership T eam receives support from various executive‑level committees and other working groups and functions on sustainability and climate‑related issues. We have a long-term commitment to transpar ency for our investors and stakeholders on how we are managing climate-r elated risks and opportunities in the transition to a low-carbon economy . In this section, we provide information consistent with the T ask Force on Climate-r elated Financial Disclosures (TCFD) r ecommendations and recommended disclosur es. T ransparency on Climate T ask Force on Climate-related Financial Disclosur es Chief Executive Group Leadership T eam Risk Committee: sets the Group’ s risk strategy and oversees the Group’ s risk governance model and how the Group identies, assesses and manages the principal and emerging risks the Group encounters in pursuit of its strategic objectives. Climate Change Committee: is chaired by the COO, and is r esponsible for considering and developing climate strategies for consideration by the Group Leadership T eam and Board and for ensuring that they are fully embedded in the Group’ s corporate priorities. Capital Markets & ESG T eam: co‑ordinating stakeholder engagement on climate‑related matters and monitoring climate targets and KPIs through the Annual Sustainability Review process. Strategy , Sustainability & Innovation T eam: focusing on our longer ‑term group strategy , with a particular emphasis on the sustainability and climate change agenda, and to drive value creation thr ough the development of sustainable products, processes and building solutions. Group Divisions & Operating Companies: participate in and support central initiatives by considering and developing strategy pr oposals, reporting progress on sustainability and climate‑related metrics, identifying and managing risks, and ensuring that risk management frameworks ar e operating effectively and that the control environment is r obust. Board oversight of climate-related risks and opportunities Board Safety , Environment & Social Responsibility Committee (SESR): Audit Committee: Remuneration Committee: Nomination & Corporate Governance Committee: Acquisitions, Divestments & Finance Committee: Monitoring developments related to sustainability , including climate, and providing strategic dir ection, oversight and support to the Board. Monitoring and assessing the Group's risk management processes (including climate risk) and internal control systems across the Gr oup. Designing incentive structures which support the achievement of the key strategic priorities such as our climate and sustainability objectives. Monitoring the Board's structur e, size, composition and balance of skills to ensure that the Boar d can meet its strategic objectives and regulatory r esponsibilities. Reviewing the strategic rationale and impact of proposed acquisitions, disposals and large capital expenditure pr ojects. Management’ s role in assessing and managing climate-related risks and opportunities As required by the FCA Listing Rule 9.8.6R(8) which applies to issuers with a pr emium listing on the London Stock Exchange. 2021 Annual Report and Form 20-F 29 28 Strategy How climate change impacts our strategy CRH is a global leader in sustainable building materials and addressing climate change is a cornerstone of our approach to sustainability . We strive to be a leader in the pr oduction of high‑performing, climate‑friendly materials and products aimed at climate adaptation and mitigation. By developing value‑added products and services for sustainable building solutions, we aim to contribute to a better built environment, addr ess potentially negative impacts of climate change and ensure the creation of long‑term nancial and societal value. We have pr ovided two illustrative examples of how climate‑related issues impact our businesses, strategy and nancial planning on the right of this page. Strategic management of risks Potential strategic risks to CRH, including climate, are identied, assessed and managed in line with our dened ERM to determine materiality and the potential timelines over which the strategic impact may materialise. In considering the impact, we utilise our strategic planning horizon (and split these internally into short‑term (<1 year), medium‑term (1 ‑ 3 years) and long‑term exposures (3 ‑ 5 years) Risks may be evaluated as emerging (e.g. expected to occur over materially longer periods or exposures wher e the impact cannot yet be fully understood) informing, for example, the management of risks related to climate change and our associated 2050 ambition as well as our 2030 targets. Using the risk identication process outlined in ‘Risk Management’ on page 32, we have identied several climate‑related risks and opportunities within our strategic planning horizon. A selection of these can be seen in our climate scenario analysis disclosure on page 30. Additional strategic climate impacts, which may occur over the short‑, medium‑ and long‑term, including, acute, chronic, technology , legal, regulatory , market and reputation can be seen as part of our Form 20‑F disclosure on page 235. The process used to determine which risks and opportunities could have a material nancial impact can be seen in our Risk Management disclosure on this page. Further information is included as part of our Risk Governance reporting on page 32. Risk Management Identifying climate-related risks and opportunities Risks are identied thr ough a number of different forums such as risk workshops, risk champion forums and engagement with senior leaders and other stakeholders. During 2021, as part of our continued commitment to understanding the potential climate‑related risks and opportunities that CRH faces, we undertook a number of risk workshops focused on where climate‑r elated risks could adversely impact the Group, and where we see potential opportunities for CRH to create value and contribute to the development of a more r esilient built environment and a more sustainable future. The outputs of our workshops are included as part of our climate scenario analysis disclosure on page 30. A robust risk catalogue is used to inform our bottom‑up risk identication processes and ensure our businesses consider the full br eadth of climate‑related risks and opportunities. Assessing climate-related risks and opportunities Climate‑related risks and opportunities ar e considered over our short‑, medium‑ and long‑term horizons. The Group operates a bottom‑ up and top‑down risk assessment process, thereby allowing risk information ows fr om our Operating Companies to inform our Group‑wide assessment and allowing key risk topics from a Group perspective to lter down and inform local risk identication and assessment. Common risk criteria and topic hierarchies ar e used to assess and consistently categorise risks and opportunities which helps identify and manage aggregate exposures that may be mor e effectively managed centrally . The size and signicance of each risk is determined according to the pr oduct of its assessed impact on the organisation and its likelihood of occurrence, with consideration of factors such as impact velocity , for example, informing the prioritisation of risks for subsequent management to within agreed acceptable levels. Our disclosur e of climate‑ related risks (see page 235) distinguishes between transitional and physical risks and associated risks within each category . While climate‑related risks and opportunities ar e a specic focus for CRH, they form part of a range of interconnected risks that the Gr oup manages through our ERM framework. T o understand more about our processes for identifying, assessing and managing risk, please see our Risk Governance section on page 32. Future-pr oong our business Throughout our business ther e is a constant focus on making our business more r esilient and sustainable. This includes reducing emissions, incr easing the use of alternative materials, accelerating sustainable product innovation and anticipating the evolving ne ed s o f ou r customers in response to the changing climate and weather patterns. Evidence of our on‑going commitment to deliver a more r esilient built environment was the strategic acquisition of NPP , Inc. during the year . This transaction strengthens CRH’ s ability to provide fully integrated solutions that connect and protect critical utility infrastructure and enhance the built environment. Integration in our processes We prioritise r esource efciency , the use of recycled materials and the r ecyclability of products at end‑of‑life. For example, we support the circular economy thr ough investment in our asphalt plants and processes to deliver higher levels of recycled asphalt pavement (RAP) into asphalt mixes. In addition, we use an internal carbon price in relevant capital expenditur e approval and strategic planning processes, with the aim of dir ecting investments towards ef ciency , optimisation and lower ‑carbon solutions. 2021 Annual Report and Form 20-F 31 30 T ransition Physical As part of our analysis, we looked at climate-related risks and opportunities associated with these categories: Risk Opportunity Risk Opportunity Examples Carbon Pricing Innovation Extreme Acute and Chronic W eather Events Resilient Building Materials Which may lead to: Increased carbon pricing regulation Increased demand for cir cular products Greater chance of disruption due to acute and chronic weather events (e.g. storms and hurricanes) Increased customer demand for sustainable products How this may impact: Increased cost of pur chasing allowances or credits to meet carbon emission caps Reduced direct costs as a result of r esource efciency , and the emphasis on recycling in our pr oducts Increased indir ect costs for clean‑up and mitigation activities Increased r evenues from products which deliver climate adaptation How we are managing: We ar e committed to reducing our emissions through transitioning to low carbon energy technologies and reducing the carbon footprint of our products We ar e committed to advancing circularity in our businesses. For example, we plan to use 100 million tonnes of RAP by 2030 Our balanced portfolio provides some natural mitigation and through an annual assessment of our key locations We will continue to bring sustainable products to the market and advance resear ch through our Innovation Centr e for Sustainable Construction This initial assessment identied a number of transition and physical risks and opportunities which may adversely or positively impact the operational and nancial performance of the Group, without considering any mitigation or adaptation actions CRH may take. CRH continually assesses its strategy , business model and ongoing business performance to make sure that they ar e driving sustainable growth and value creation for its stakeholders. As CRH continues to assess and re‑assess its strategy and associated risks and opportunities, new risks and opportunities may become appar ent attributable to climate, sustainability , or other topics that the Group considers as part of its strategic planning. Should such risks and opportunities be identied, CRH’ s approach enables the Group to r efresh elements of its strategy . Based on this initial assessment of the risks and opportunities that need to be managed, the Group do not believe that its business model would need to materially change. For more information on the Gr oup's nancial resilience, including its viability statement, see page 35. For more information on climate‑r elated risks and opportunities, see pages 118 and 235. Market Reputational Policy Changing Weather Patterns Extreme Weather Events Rising Sea Levels Drought T echnological $ 1. Intergover nmental Panel on Climate Change’ s (IPCC) Shared Socioeconomic Pathway 1 scenario expects net‑zero after 2050 with temperatur es stabilising around 1.8C higher by the end of the century . 2. Representative Concentration Pathway 2.6 is a "very stringent" pathway which expects carbon dioxide (CO 2 ) emissions to start declining by 2020 and go to zero by 2100. 3. Inter national Energy Agency’ s Energy T echnology Perspectives 2020 scenario expects the global energy system to achieve net‑zero emissions by 2070. 4. Intergover nmental Panel on Climate Change’ s Shared Socioeconomic Pathway 5 scenario expects low international priority for addressing environmental concerns. 5. Representative Concentration Pathway 8.5 expects emissions to continue to rise throughout the 21st century . Since the IPCC's 5th Assessment Report was published, this has been thought to be very unlikely , but still possible as feedbacks are not well understood. Climate scenario analysis In line with the recommendations of TCFD, we undertook a qualitative assessment to identify climate risks and opportunities, potential impacts on our nancial position and consider how our business strategy may perf orm . In line with TCFD guidance, we used the following two warming scenarios (with time‑horizons between 2020 and 2100) which are suf ciently diverse to capture key impacts and uncertainties: • A wel l be low 2 o C wor ld – w h e re tra nsi tio n imp act s are l ikel y to be mo st impactful as society act s rapidly t o limit greenhouse gas emissions . Based on t he IPCC' s SSP1 1 ‑RCP2. 6 2 wi th refe ren ce to the IE A ET P20 3 . • 4 o C world – where physical impacts ar e likely to be most impactful as climate policy is less ambitious. Based on the IPCC's SSP3 4 ‑RCP8.5 5 . Below is an illustration of certain impacts that could arise under each warming scenario together with their relevant potential impact on our nancial position and business strategy . T ransparency on Climate - continued T ask Force on Climate-related Financial Disclosur es 2021 Annual Report and Form 20-F 31 30 For reporting CO 2 emissions we use the GCCA 'Sustainability Guidelines for the monitoring and reporting of CO 2 from cement manufacturing' and the accompanying Excel spreadsheet, ‘Cement CO 2 and Energy Protocol, V ersion 3.1, CO 2 Emissions and Energy Inventory’. In this methodology , CO 2 from biomass fuels is considered climate neutral. W e calculate CO 2 emissions from other activities using appropriate emission factors and in line with the World Resour ces Institute Greenhouse Gas Protocol (Revised Edition). W e calculate Scope 2 emissions from electricity in line with the location‑based method of the World Resources Institute Gr eenhouse Gas Protocol Scope 2 Guidance (2015), using 'International Energy Agency (2021) Emissions Factors' (published in 2021) and eGRID2019 'Summary T able' for emissions factors (published in 2020). We calculate Scope 3 emissions estimations in line with the GHG Protocol's Scope 3 Standar d and the GHG Protocol's Scope 3 Standard for cement companies, using the UK Government 'GHG conversion factors for company reporting 2021'. Reported Scope 3 emissions include the most relevant emissions categories for CRH operating company activities. As a leader in our industry , we strive to address the climate‑r elated risks and opportunities that arise as we transition to a low‑carbon economy . In line with our continuous improvement philosophy , we will continue to develop our disclosure practices to better measure and improve our performance acr oss the value chain. We pr ovide reliable, veriable and objective climate‑related metrics to ef fectively measure our progr ess against climate‑related targets. tonnes of indirect emissions from other activities Indirect CO 2 emissions from pur chased electricity tonnes of direct CO 2 emissions from use of fuels, chemical decarbonisation from cement and lime production and transport of raw materials and nished pr oducts in our own vehicles 0.3m T onnes of indirect emissions from customer transport Scope 3 Downstream 11.7m T onnes of indirect emissions from sour ces including: • pur chased goods • fuel and energy r elated activities • contracted transport • waste generated • employee commuting Scope 3 Upstream Scope 1 2021 33.4m 2020 32.4 m 2019 33.9 m Scope 2 2021 2.6 m 2020 2.6 m 2019 2.6 m Scope 3 2021 12.0 m 2020 10.9 m 2019 13.6 m Alternative fuels 2.1 million tonnes of carbon neutral biomass and non‑fossil fuels used in our cement plants (2020: 2.1 million tonnes), providing 33% of fuel requir ements for cement on a Group level, 50% in the EU alone. Recycled materials 8.0 million tonnes of waste materials and by‑products used to replace virgin materials and clinker in our cement manufacturing (2020: 8.5 million tonnes). Physical climate risk <1% of our active locations are identied as being in areas under “High” or “Extr emely High” risk of drought severity . Research and innovation >60 resear ch projects ongoing across the Group in partnership with the industry and academic institutions to develop new and innovative technologies. Climate-related targets 25% reduction in absolute gr oup‑wide Scope 1 and Scope 2 CO 2 emissions by 2030 (from a 2020 baseline). 520kg CO 2 per tonne cementitious product is our target for our cement plants, accelerated from 2030 and expected to be achieved by 2025. 50% product r evenue from products with enhanced sustainability attributes by 2025. For more information on our tar gets including progr ess, see pages 21 to 26. Metrics and T argets 2021 Annual Report and Form 20-F 33 32 Enterprise Risk Process Key elements of our Framework Risk & Strategy 2 Framework & Process 3 Appetite & T olerance 4 Culture & Governance 1 Ownership & Reporting 5 Making Better Decisions ERM is a process embedded thr oughout the Group which pr ovides a structured and consistent global approach to identifying, assessing and managing our most material threats and opportunities. Ultimately , the purpose of ERM is to assist our people in making better decisions by focusing decision‑makers on taking the right risk for the right rewar d, encouraging the effective and informed interaction with risk to protect and gr ow our business. Our framework, which is aligned to the Committee of Sponsoring Organisations of the T readway Commission (COSO) principles, is embedded across the Gr oup and is a key element in our decision‑making practices. Our risk intelligent culture is key to embedding ERM into decision‑making, and whilst accountability for the effective management of risk sits with leadership throughout the Gr oup, all employees are encouraged to be risk managers and proactively manage risk. We bel ieve th at th e key to ensu ri ng r isk i s ma nag ed ef fecti vel y is to in tegr ate ERM in to our businesses ' day ‑t o‑day decision‑making activities. While formally considered as part of our stra tegic planning and budge ting processes, regular discussion on risk at manageme nt meetings driv es day‑ to‑da y operational decision ‑ ma ki ng an d en ab le s our r is k fr am ewor k to be truly value‑adding . Risk workshops, facilitated by Group Risk, bring together leaders from acr oss the Group to identify risks and opportunities, and dene mitigation. Uncertainties that present themselves as downside risks are assessed in line with the Group's risk appetite and those which pr esent themselves as opportunities are suf ciently explored and captur ed, where possible. Our risk appetite and tolerance framework is a critical element of our overall ERM framework, dening key risk parameters within which strategic decision‑making takes place and assi sti ng with our objectives of disciplined and focused growth. The Boar d determines our risk appetite against our strategic objectives and approves the framework on an annual basis in line with good corporate gover nance practice. ERM in Action ERM is applied to strengthen our portfolio management processes to further enhance our condence to undertake investments and step into new markets, such as our purchase of Pebble T echnology Inter national which represented strategic entry into a new adjacent outdoor category for our Architectural Pr oducts Group. Our framework allows us to add depth to our understanding of our customers and markets and generate new ways to meet their needs, and despite ongoing challenges, such as the ongoing COVID‑19 pandemic, our performance continues to highlight the resilience and agility of our people, our business model and our proven recor d of delivery through uncertainty . Risk Management Integrat e d and ef fective risk management suppor ts the realisation o f our strategic objec tiv es a nd the continued succe ss of our busines s. Lik e all busines ses, CRH face s a lev el of uncer tainty in ex ecuting on our strategic objectives, inherently creating risks and oppor tunities. Our Enterprise Risk Manageme nt (ERM) framework is a critical tool in managing the uncer tainties our busine ss faces in our relentles s focus on value-c reation, prot ec ting our people and gene rating long-t er m, sustainable growth. Businesses undertake bottom‑up and top‑down risk identication activity to identify and quantify the risks and opportunities that could impact the delivery of strategic objectives, or the interests of our key stakeholder groups (e.g. our suppliers, shareholders, employees, customers, communities, environment and climate). Risks are evaluated against our appetite thresholds, objectively informing any subsequent response and/or r equired escalation to the relevant management and/or Board oversight committee. Formal processes ar e in place to monitor critical risks which feed into our risk reporting practices. Our enterprise risks are reported to the Risk Committee quarterly , as well as to the Audit Committee throughout the year . Any risks that warrant attention at other committees are discussed and decisions made at those committees (internal control and Sustainability risks, for example, being discussed at the Audit and SESR Committees respectively). Identication Identied ‘severe, but plausible risk events’ are consistently assessed on inherent and residual bases acr oss a number of risk lenses such as Health & Safety , Environmental, Climate and Financial, with equally weighted impact criteria thresholds dened for each. Consistent likelihood criteria are equally applied group wide. Assessment Management Reporting 2021 Annual Report and Form 20-F 33 32 First Line of Defence Operating company/business leaders are r esponsible for risk identication, management and ensuring that the control envir onment is robust. Second Line of Defence CRH has various oversight functions which are r esponsible for providing subject matter expertise, dening standards and ensuring adher ence. Third Line of Defence Group Internal Audit provides independent assurance over the control environment on a continuous basis. Safety , Environment & Social Responsibility Committee (SESR) Responsible for monitoring developments related to sustainability risks including safety , health, environment, climate and social performance, and providing strategic direction, oversight and risk assurance. Other CRH Committees Committees include: Acquisitions, Divestments & Finance; Nomination & Corporate Governance; and Remuneration. Refer to the Governance section on page 54 for further information. Board Ultimately responsible for strategy , risk and gover nance across CRH. Sets the risk appetite and ensures risks ar e managed within appetite. Delegates responsibility to Audit Committee. Audit Committee Responsible for monitoring and assessing the Group’ s risk management and internal control systems. Receives regular updates on risk management strategies, mitigation and action plans. Global Leadership T eam (GL T) Responsible for setting strategy , pursuing performance delivery and progr essing our ambitious sustainability agenda. Delegates responsibility for risk strategy , oversight and governance to the Risk Committee. Risk Committee Responsible for setting risk strategy and overseeing our governance model and how we identify , assess and manage the principal and emerging global risks the Group encounters in the pursuit of our strategic objectives. Other Leadership Councils Responsible for overseeing aspects of strategy , policy , targets and objectives related to a particular priority ar ea for the Group, such as health and safety , climate and information security . Regional Leadership Responsible for identifying and managing divisional risks, ensuring risk management frameworks are operating ef fectively and capturing upside of risk, where possible. Risk Champion Network Embedded across businesses, functions and divisions. Responsible for integration of risk management frameworks, regular r eporting of risks and sharing best practice mitigation. Risk Gover nance Structur e A dynamic threat watchlist is maintained to enable early recognition of thr eats which could impact the long‑term performance of many areas of our business. The watchlist is consolidated using data received fr om our businesses, subject matter experts, risk champion network and external providers of thought leadership. Whilst the watchlist is primarily utilised as a mechanism to monitor emerging risks, the Group understands that associated opportunities may arise from developing a deep understanding of our emerging risks. We dene an emerging risk to be a potentially signicant threat wher e the impact can’t yet be fully understood, restricting our ability to condently dene a strategy and build capabilities to signicantly inuence the materiality of the risk. While considered as part of our identication processes, the assessment of such risks can be difcult to quantify due to a lack of data or longer time horizons. While emerging risks are generally new and unknown, they can be known risks that have evolved to present new challenges to the Gr oup. The Risk Committee reviews the watchlist and deems certain threats to be accepted risks, which are integrated into our risk r egister and are subject to oversight by the Risk and Audit Committees. Key emerging risks in this category include extreme weather events, which can pr esent physical barriers to work onsite, dampen demand and hinder performance, and labour model disruption, where tightening labour pools materialise within our industry due to a negative convergence of demographic, educational and economic trends. Emerging Risks 2021 Annual Report and Form 20-F 35 34 Strategic Link between Principal Risks and Strategic Objectives Continuous Improvement Focused Growth Benets of Scale and Integration Developing Future Leaders Industry Cyclicality and Economic Conditions People Management Commodity Products and Substitution Portfolio Management Public Policy & Geopolitics Strategic Mineral Reserves Operational Climate Change and Policy Information T echnology and/or Cyber Security Health and Safety Performance Sustainability and Corporate Social Responsibility COVID‑19 Pandemic Compliance Laws, Regulations and Business Conduct Financial and Reporting T axation Charge and Balance Sheet Provisioning Financial Instruments Goodwill Impairment Foreign Curr ency T ranslation Changes Brexit was r emoved as a principal risk as the effects of the United Kingdom's decision to leave the European Union became clear er , along with the improvement in performance for our United Kingdom businesses during the course of 2021. Our Dened Benet and Pension Schemes risk has been downgraded as an enterprise risk as mitigation brings the risk under Group materiality thr esholds. Our principal risks and uncertainties, presented below and dened in mor e detail on pages 116 to 121 and 232 to 240, are reviewed r egularly and represent the key risks faced by the Gr oup at the time of publication. The Risk Committee helps ensure the risks highlighted in this report r eect those risks which could have the most material impact on the Group achieving its strategic objectives. These risks form the basis of Board and Audit Committee communications and discussions. Principal Risks and Uncertainties Risk Management - continued Activities of the Risk Committee Over the course of 2021, the Risk Committee continued to play a pivotal role in risk strategy , performance and oversight. The activities that the committee focused on included: The committee undertook risk challenge sessions with our key Divisions to ensure that the risks being faced within our businesses are being ef fectively managed within the Group’ s risk appetite. First Line of Defence The committee received r egular updates from our second line functions, including Group Sustainability , Legal & Compliance, Information Security , T ax, T reasury and Security , to name a few. Second Line of Defence Updates were pr ovided by the Group Head of Internal Audit, including an independent assessment of the risk environment and the Internal Audit plans which were designed on a risk-based methodology . Third Line of Defence The committee received r egular updates on risk projects including our updated Risk Appetite framework, Risk Ownership, Risk Charter and other corporate governance items that fall under committee remit. Framework Enhancements 2021 Annual Report and Form 20-F 35 34 Longer T erm Viability Statement Our Viability Statement, which does not form part of the Annual Report and Form 20‑F as led with the SEC, has been prepar ed in accordance with the UK Corporate Governance Code 2018. Assessment of Prospects The Board has carried out a r obust assessment of our current position and the principal risks facing the Group, including those which would threaten its strategy , business model, future performance, solvency or liquidity . Each of the above is dealt with in the following sections of this Annual Report and Form 20‑F: Current Position ‑> Why Invest in CRH, page 8 ‑> Market Backdrop, page 12 Strategy & Business Model ‑> Our Strategy , page 14 ‑> Business Model, page 16 Principal Risks ‑> Key Performance Indicators, page 18 ‑> Principal Risks & Uncertainties, page 116 The Board’ s consideration of the long‑term prospects of the Gr oup is an extension of the strategic planning process. This pr ocess includes regular budget r eviews as part of the internal reporting cycle, nancial forecasting and performance reviews, a compr ehensive enterprise risk management assessment and scenario planning involving our principal risks and uncertainties. Our business strategy is focused on creating long‑term value and delivering superior returns for all our stakeholders through disciplined capital management and operational efciency . Viability Assessment: Period The Board has r eviewed the length of time to be covered by the Viability Statement, particularly given its primary purpose of providing investors with a view of nancial viability that goes beyond the period of the Going Concern Statement. Using the Group Strategic Plan (the ‘Plan’), which is prepar ed annually on a bottom‑up basis and is approved by the Boar d, the viability of the Group has been assessed over a three‑year period fr om 1 January 2022 to 31 December 2024 inclusive. The Board believes that a thr ee‑year viability statement is appropriate for the following reasons: • It aligns with our normal strategic planning time horizon; • Construction activity , and therefore demand for the Group’ s products, is inherently cyclical as it is inuenced by global and national economies; • It aligns with our long‑term management incentives, such as the deferred element of the Annual Performance‑related Incentive Plan; and • Uncertainty increases inherently with expanding time horizons potentially impacting the large number of external variables that need to be factored. Overall, a three‑year period is deemed to achieve a suitable balance between long and short‑term inuence. * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. Viability Assessment: Approach The viability of the Group is assessed against the Plan and projections considering the Gr oup’ s cash ows, committed funding and liquidity positions, forecast futur e funding requirements, other key nancial ratios, including those relevant to maintaining the Group’ s investment grade credit ratings and the Gr oup’ s 2025 climate targets. In conducting the viability assessment, the Board has consider ed our strong balance sheet and cash ow generation, our dynamic capital allocation model underpinned by comprehensive portfolio reviews and capital appraisals, and our philosophy of continuous improvement. Appropriate str ess testing of certain key performance, solvency and liquidity assumptions, such as EBITDA (as dened) margins and Net Debt/EBITDA (as dened), underlying the Plan has been conducted taking account of the principal risks and uncertainties faced and possible severe but plausible combinations of those risks and uncertainties. For more detail on our principal risks and uncertainties, how they could impact the Group and how the Gr oup manages these risks, see pages 116 to 121 of the Governance report. Conclusion While the Board acknowledges that the potential severity , complexity and velocity of the risks assessed may change, based on their assessment of viability as described, the Board has a reasonable expectation that the Gr oup will be able to continue in operation and meet its liabilities as they fall due over the aforementioned three‑year period to 31 December 2024. Scenario 1: Recessionary environment Economic slowdown/recession r esulting in revenue r eductions and margin compression In assessing the viability of the Group, three separate sever e but plausible scenarios were modeled taking account of the principal risks and uncertainties faced by the Group. The scenarios were designed to r eect a material reduction in gr owth, the impact of a potential one‑off expense and a scenario where both overlap. • Industry Cyclicality and Economic Conditions • Portfolio Management • Public Policy and Geopolitics • COVID‑19 Pandemic Scenario 2: One-Off Expense Impact of a potential large event, ne and/or penalty • Laws, Regulations and Business Conduct • Public Policy and Geopolitics • Information T echnology and/or Cyber Security Scenario 3: Combination (1 and 2) Combination of prior scenarios overlapping or occurring simultaneously • Combination of relevant risks from prior scenarios Scenario Modelled Relevant Principal Risks The per formance o f our business is enabled b y the skills an d talent o f our 7 7 , 400 emplo yees in 2 8 coun tries . W e striv e t o creat e a collabo rat ive , div erse and inclusiv e working envir onment t o stimula t e our global work force t o deliver our s tra t egy . 2021 Annual Report and Form 20-F 37 Finance Dir ector’ s Review 38 Americas Materials 42 Eur ope Materials 46 Building Pr oducts 50 Business Performance and Segmental Reviews 36-53 An operator at a T exasBit asphalt plant. Part of CRH’ s America’s Materials Division, T exasBit provides asphalt and paving solutions to a variety of contractors, businesses, municipalities, and government agencies in the growing Dallas-Fort W orth and T yler areas of T exas, United States. * EBITDA is dened as ear nings before interest, taxes, depreciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ prot after tax. 1. See cautionary statement regarding forwar d-looking statements on page 111. Gro up s ale s of $ 3 1 .0 bil li on (2020: $27 .6 bil lio n) were 1 2% ah ea d of 2020 re ect ing i mp roved pr ici ng a nd vol um e grow th. Y e ar e nd ne t de bt of $6.3 b ill ion (2020: $ 5.9 bill io n) was re ec tive of our c on tinu ed s tron g ca sh g en era tion, disciplined capital expenditure and value foc use d inve stm ent s. Net a cqu is iti on sp en d total ed $1 .5 b ill ion (2020: $ 0.4 bill ion) a nd total distributions to shareho lders of $ 1 .8 billion (2020: $0.9 bil lio n). Net De bt /EBI TDA (as de ne d) was 1 .2 x (2020: 1 .3x ). Segmental reviews The sections on pages 42 to 53 outline the scale of CRH's operations in 2021 and provide a mor e detailed review of performance in each of CRH's reporting segments. Key Components of 2021 Performance Americas Materials beneted from incr eased construction activity in 2021 due to strong residential demand in North America. Underlying good operating performance offset the impacts of higher input costs and inclement weather . Like- for -like sales in 2021 increased by 6% against 2020, due to positive volume growth and pricing progr ession. Europe Materials saw like-for -like sales 11% ahead of 2020 reecting good volume gr owth, and pricing progr ess against a prior year comparative which was heavily impacted by pandemic restrictions. Positive pricing actions and strong xed cost contr ol offset cost ination headwinds. Building Products deliver ed like-for -like sales 5% ahead of 2020 driven by strong demand for residential construction and a moderate r ecovery in the non-residential sector . EBITDA (as dened) of $5.35 billion was 16% ahead (2020: $4.6 billion) reecting the benets of our integrated solutions strategy with strong demand growth and continued commer cial discipline. Prot after tax was signicantly ahead of 2020 at $2.6 billion (2020: $1.2 billion) driven by a strong trading performance and the non-recurr ence of non-cash impairment charges and one-off r estructuring costs in the prior year . The US Dollar strengthened against most major currencies by the end of 2021. However , during 2021 the US Dollar weakened against most major currencies r esulting in the average US Dollar/Euro rate weakening fr om 0.8771 in 2020 Finance Dir ector’ s Review 2021 1 2021 was another year of growth for CRH driven by our integrated solutions strategy and positive underlying momentum in North America and Europe. 38 2021 Annual Report and Form 20-F 39 * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. 1. Net of cash disposed and including deferred consideration proceeds in r espect of prior year divestments Key Components of 2021 Performance (i) $ million Sales revenue EBITDA (as dened) Operating prot Prot on disposals Finance costs (net) Assoc. and JV P A T (ii) Pre-tax prot 2020 27,587 4,630 2,263 9 (490) (118) 1,664 Exchange effects 563 50 11 1 (9) - 3 2020 at 2021 rates 28,150 4,680 2,274 10 (499) (118) 1,667 Incremental impact in 2021 of: - 2020/2021 acquisitions 856 101 52 - (3) - 49 - 2020/2021 divestments (182) (58) (51) 102 - - 51 - One-offs (iii) - 122 122 - - - 122 - Impairments - - 673 - - 154 827 - Organic 2,157 505 515 7 85 19 626 2021 30,981 5,350 3,585 119 (417) 55 3,342 % T otal change 12% 16% 58% 101% % Organic change 8% 11% 23% 38% (i) For a discussion of our results of operations for the year ended 31 December 2020 compared to the year ended 31 December 2019, please see our Annual Report on Form 20-F for the scal year ended 31 December 2020. (ii) CRH’ s share of after -tax results of joint ventures and associated undertakings. (iii) One-offs primarily due to 2020 COVID-19 related r estructuring costs. to 0.8460 in 2021 and likewise the US Dollar/ Pound Sterling weakening from an average 0.7798 in 2020 to 0.7270 in 2021. Overall currency movements r esulted in a favourable net foreign curr ency translation impact on our results as shown in the table above. The average and year end 2021 exchange rates of the major currencies impacting on the Gr oup are set out on page 154. Liquidity and Capital Resources - 2021 compared with 2020 The comments that follow refer to the major components of the Group’ s cash ows for 2021 and 2020 as shown in the Consolidated Statement of Cash Flows on page 144. Despite signi cantly increased tr ading activity co mpa red to 2020, the G rou p re mai ne d focused on cash management . Management de live re d a net wo rk in g ca pi tal o ut ow of $228 mil lio n (2020: $1 9 6 mil lio n in ow) an d the G rou p’ s o pe rati ng ca sh ow inc re ase d to $4.2 billion (202 0: $3. 9 billion) . Working capital was $2.5 billion at year end (2020: $2.4 billion) repr esenting 8.0% of sales (2020: 8.7%). CRH believes that its current working capital is sufcient for the Gr oup’ s present r equirements. Focused investment in property , plant and equipment in markets and businesses with increased demand and ef ciency requirements, resulted in higher cash outows of $1.6 billion (2020: $1.0 billion), with spend in 2021 repr esenting 110% of depreciation on owned assets (2020: 74%). Reective of the ongoing strategy of active portfolio management, the Group invested $1.5 billion in bolt-on acquisitions (2020: $0.4 billion) which was partly nanced by divestment and disposal proceeds 1 of $0.5 billion (2020: $0.3 billion). Reecting o ur strong nancial position and co mmi tme nt to retu rn ing c as h to sha re hol de rs, the G rou p co ntin ue d its s har e buy ba ck programme in 202 1 repur chasing 1 7 .8 million (2020: 6.0 mill ion) or din ar y shar es fo r a total co nsi de rati on of $ 0.9 bill ion (2020: $ 0.2 bi lli on). Th e Gro up a nno un ce d a fu r the r $0.3 b ill ion tra nch e of the o ng oin g sh are b uy bac k pro gra mm e on 24 Dece mb er 20 2 1 to be co mpl eted n o late r tha n 30 M arc h 2022. Th es e bu yba cks, tog eth er w ith c as h di vid en d paym en ts of $0.9 bi lli on (2020: $ 0. 7 bil li on), reect t he Group ’ s continued commitment t o retu rni ng c as h to sha reh ol de rs. Y e ar e nd i ntere st-be ar ing l oa ns a nd bo rrow in gs were $1 0.5 bi lli on (2020: $1 2.2 bil lio n) and yea r -e nd n et de bt of $6. 3 bil lio n ($5.9 bi lli on) ree ct s stro ng in ows f rom o pe rati ons a nd a n inc re ase i n dis ci pli ne d ca pit al ex pe nd itur e an d val ue -focu se d inve stme nts. T he G rou p is i n a goo d n an cia l po sit ion. It i s wel l fu nde d a nd EBITDA (as dened) Net Interest Cover is 17.2x (2020: 1 1 .9 x). Th e Gro up e nde d 2021 with tota l li qui di ty of $9. 8 billion, comprising $5. 8 billion o f cash an d cas h eq ui val ent s on ha nd a nd $ 4.0 billi on of undr awn committed fa cilities which are avai lab le u ntil 2026. At ye ar e nd, th e Gro up h ad suf cie nt c as h bal an ce s to mee t all m atu rin g debt obliga tions (including leases) for the next ve ye ar s an d the we ig hted ave rag e matu ri t y of the re ma in ing te rm d ebt wa s 1 1 .9 ye ar s. Sales revenue Americas Materials Europe Materials Building Products $bn $0 $5 $10 $15 $20 $25 $30 2021 8.0 12.4 10.6 2019 11.6 9.5 7.0 2020 11.3 9.1 7.2 40 Finance Dir ector’ s Review 2021 - continued A $400 million US dollar denominated bond was repaid on maturity in January 2021 and a €0.6 billion euro denominated bond due to matur e in July was repaid early in April after exer cising a three month par -call option. The Group also has a $2.0 billion US Dollar Commercial Paper Pr ogramme and a €1.5 billion Euro Commer cial Paper Programme of which there wer e no outstanding issued notes at year end. The purpose of these programmes is to provide short-term liquidity at attractive terms. Contractual obligations and Off-Balance Sheet arrangements are disclosed on page 244 of this Annual Report and Form 20-F . Jim Mintern Finance Director 2021 The Group invested $1.5 billion in 20 bolt-on acquisitions in 2021 (including deferred and contingent consideration in respect of prior year acquisitions). The largest of these in 2021 was the acquisition of Angel Brother Enterprises, an asphalt paving and infrastructure solutions business in T exas. In addition, the Americas Materials Division completed a further seven bolt-on acquisitions across the US and Canada for a total spend of $0.7 billion. The Building Products Division completed eight acquisitions amounting to a total spend of c. $0.8 billion including NPP a water and energy infrastructure solutions business in the eastern region of the US. This acquisition will further enhance our end-to-end solutions offering to our customers. The Europe Materials Division completed four acquisitions, with a total spend of c. $ 17 mill ion . The Group also paid $33 million of deferred and contingent consideration related to prior year acquisitions. On the divestment front, the Gr oup completed 11 transactions and realised total business and asset disposal cash proceeds of $0.5 billion, inclusive of $0.1 billion relating to the receipt of deferr ed proceeds from prior year divestments, the majority of which related to the divestment of the Gr oup's equity interest in My Home Industries (MHIL), in India. The sale of the Brazil cement operations by the Americas Materials Division repr esented the largest divestment during the year , with a further 10 other divestments completed across the Gr oup. In addition to these business divestments, the Group r ealised proceeds of $0.1 billion from the disposal of surplus property , plant and equipment and other non-current assets. Development Review 2020 The Americas Materials Division completed seven bolt-on acquisitions across the US and Canada for a total spend of $163 million. The Building Products Division completed six bolt- on acquisitions amounting to a total spend of c. $180 million including the acquisition of Martin Enterprises. Europe Materials completed four acquisitions, with a total spend of c. $8 million for the Division. The Group also paid $54 million of deferred and contingent consideration related to prior year acquisitions. On the divestment front, the Gr oup completed 12 transactions and realised total business and asset disposal cash proceeds of $307 million, inclusive of $123 million relating to the receipt of deferr ed proceeds from prior year divestments. The sale of precast concrete pr oduction assets located in Spokane, W ashington represented the largest divestment in 2020 and was completed by our Building Products Division. The divestment of the building materials business in La Réunion was the second largest divestment, completed by our Europe Materials Division, with 10 other divestments completed across the Divisions. In addition to these business divestments, the Group r ealised proceeds of $128 million from the disposal of surplus pr operty , plant and equipment and other non-current assets. Cash proceeds of $123 million wer e received relating to prior year divestments, of which $95 million related to the divestment of the Gr oup’ s equity interest in MHIL. Angel Brother Enterprises and Gulf Coast delivered a 4,700 foot four -lane concrete boulevard including double bridges over Little Cypress Creek, near Houston, T exas. The Creek plays an important role in the area’ s essential food risk mitigation systems and the new bridges will allow the local community to traverse the Creek without compromising its drainage featur es and detention basins. The bridge will improve mobility for the local community and provide faster access for emer gency services. 2021 Annual Report and Form 20-F 41 42 Our Americas Materials Di vision comprises v er tically in tegrat ed businesses which produce an d supply bu ilding m aterials and services for use in const ruction projects th roughout th e US and Canada. Americas Materials Our integrated materials, products and services Where we ar e located Aggregates Aggregates r efers to crushed stone, produced from naturally occurring mineral deposits. Our businesses process these materials for sale to customers. Asphalt Asphalt is an aggregates based pr oduct, used primarily in road surfacing and other transport infrastructure including airport runways. Readymixed Concrete Readymixed concrete is a highly versatile building material comprised of aggregates bound together with cement and water . Paving & Construction Services CRH is the leading supplier of product for r oad construction and repair/maintenance demand in North America. Annually , our crews complete approximately $4.7 billion in paving and construction projects. Reserves and Resources Reserves comprise mineral deposits found within our extensive network of quarry locations in attractive local markets throughout North America. For additional information on the Group’ s mineral reserves and resources see page 226. Cement Cement is the primary binding agent in the production of concr ete products for the construction industry . What we do CRH’ s Americas Materials Division is the largest building materials business in North America, serving customers in attractive local construction markets across 46 US states and six Canadian provinces. Our businesses utilise an extensive network of reserve backed quarry locations, to pr oduce and supply a range of materials including cement, aggregates, r eadymixed concrete and asphalt. These materials are used widely in a variety of construction projects including public infrastructure, homes and commer cial buildings. Over several decades CRH has built up market leading positions throughout North America in aggregates and r eadymixed concrete while currently being the largest pr oducer of asphalt. CRH is a leading producer of cement in North America. CRH is also the leading supplier of products for r oad construction and repair and maintenance in the US. Approximately 50% of the Division's business relates to the construction of infrastructure, a signicant proportion of which is awar ded by public tender for federal, provincial, state and local government authority road and infrastructure projects. Through innovation, r ecycling, and the use of alternative materials, many of our materials have enhanced sustainability attributes which help address the changing needs of construction, including the need for a more resilient and sustainable built envir onment. How we create value CRH’ s vertically integrated business model enables us to create value thr oughout the supply chain. Materials produced by our aggregates and cement businesses can be supplied to our downstream materials businesses for use in products such as readymixed concr ete and asphalt. By integrating our operations we can also provide customers with mor e complete end-to-end solutions which bundle differ ent materials, value-added products and services to provide customers with a value enhancing one-stop-shop. This helps to reduce logistical complexity and save the customer time and money , while allowing CRH to deepen its relationships and incr ease the spend from each customer . This approach is fundamental to our development strategy and sets CRH apart within its industry . In recent years we have gr own our presence in higher growth southern states in the US to increase CRH’ s exposure to the favourable demand fundamentals of higher population growth and positive migration tr ends, which underpin good demand for our materials. The largely unconsolidated US building materials market presents further opportunities for value creation by allowing us to identify businesses that can be integrated efciently into our existing network. How we are structur ed CRH combines the exibility , speed, close customer relationships and in-depth market knowledge of local businesses with the strength, shar ed expertise and operational excellence of a national network. This focus on operational excellence and local knowledge is supported by a strong strategic centr e which enables CRH to leverage talent, procur ement synergies and efciencies acr oss the Division. During 2021 our Americas Materials Division was re-organised fr om three to four geographical regions (Gr eat Lakes, Northeast, South and West). W e also have a cement platform which spans North America. The Great Lakes division comprises operations in seven states and two Canadian provinces, the Northeast division comprises operations in 11 states, the South division operates across 11 states, while the West division has operations in 19 states. The cement platform operates across 20 states and six Canadian pr ovinces. In total, the Division has a network of 1,605 operating locations and employs approximately 28,300 people. 2021 Annual Report and Form 20-F 43 2021 Performance Highlights 48% EBITDA (as dened) Operating Prot % of Group $ million Sales 12,407 40% 49% 50% 2,588 1,788 Net Assets 1 14,153 SALES BY END-USE 2 New Build 50% Repair , Maintenance and Improvement (RMI) 50% * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ prot after tax. 1. Net Assets at 31 December 2021 comprise segment assets less segment liabilities excluding lease liabilities as dened on page 222. 2. Geography , sector exposure and end-use balance are based on sales. 3. Throughout this document annualised volumes have been used which reect the full-year impact of development activity during the year and may vary from actual volumes sold. 10% Canada 90% United States SALES BY GEOGRAPHY 2 SALES BY SECTOR 2 50% Infrastructure Non-Residential 30% Residential 20% Annualised Sales V olumes 3 Aggregates: 200.7m tonnes Cement: 13.0m tonnes Readymixed Concrete: 13.3m m 3 Asphalt: 47.9m tonnes 2021 Annual Report and Form 20-F 45 44 Results Analysis of change $ million 2019 Exchange Acquisitions Divestments Impairment/ One-offs 1 Organic 2020 % change Sales revenue 11,626 -37 +43 -39 - -320 11,273 -3% EBITDA (as dened) 2,194 -2 +8 +2 -24 +227 2,405 10% Operating prot 1,423 +1 +5 +5 -25 +222 1,631 15% EBITDA (as dened)/sales 18.9% 21.3% Operating prot/sales 12.2% 14.5% 1 One-offs primarily due to COVID-19 related r estructuring costs Operations Review - Americas Materials Prior Y ear 2020 * EBITDA is dened as earnings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. Americas Materials generated EBITDA (as dened) of $2.4 billion, 10% ahead of 2019 and operating prot of $1.6 billion, 15% ahead of 2019 despite lower sales which were 3% behind. COVID-19 restrictions negatively impacted sales volumes in the second quarter , particularly in the Northeast and Great Lakes divisions, with sales in the South division impacted by project delays in key states. Solid price progr ession, operational efciencies, focused cost containment and lower energy costs drove margin expansion acr oss all regions and pr oduct lines. Strong demand in the central and western parts of the US resulted in like-for -like sales growth acr oss all lines of business in the West r egion. Overall economic and construction activity across our markets was impacted by the global pandemic; however , government stimulus to help support the US economy was implemented, while infrastructure investment was underpinned by a one-year extension of the US F AST Act. During 2020 Americas Materials completed seven acquisitions in the US and Canada including aggregates, asphalt, r eadymixed concrete, paving and construction operations at a total cost of $163 million. These acquisitions in addition to several mineral reserve pur chases in the US will continue to support future gr owth in key markets. Materials On a like-for -like basis, aggregates volumes were 2% lower but margins impr oved as prices were 4% higher compar ed to 2019. V olumes in the Northeast and Great Lakes divisions wer e predominantly impacted by COVID-19 r estrictions in the second quarter of the year while the South division experienced lower demand primarily due to unfavourable weather in the rst half of the year . Solid underlying business activity in the West division generated sales gr owth during the year . Prices were favourable acr oss all divisions with the strongest contributions fr om the Northeast and South divisions. Asphalt volumes were 6% lower on a like-for -like basis due to the impact of COVID-19 restrictions in the Northeast and Great Lakes divisions and slower project bidding in key states in the South. V olumes in the West division wer e ahead of 2019 with a strong or der book of business supported by more favourable weather . Asphalt margins improved, beneting fr om good commercial management, lower input costs, operational efciencies and str ong cost control. Readymixed concrete volumes wer e 4% behind 2019 levels on both a total and like-for -like basis as higher volumes in the South division during the second half of the year did not fully offset lower volumes in the Northeast, Great Lakes and West. Str ong commercial discipline delivered total and like-for -like prices up 6%, more than offsetting lower sales volumes, r esulting in improved margins. Paving and construction revenues wer e 6% behind 2019 levels on a total and like-for -like basis. COVID-19 impacted the Northeast and Great Lakes divisions thr ough gover nment mandated restrictions, while the South experienced delayed bidding on projects in key markets due to uncertainty in state and local funding sources. The W est division experienced signicant growth in r evenues driven by strong demand in the Central West and Mountain W est regions. Overall construction margins nished ahead of 2019. Regional Performance Like-for -like sales for the Northeast division were 8% lower than 2019 as COVID-19 restrictions impacted volumes across the business. Operating prot for the Northeast division was negatively impacted by lower volumes, partly offset by str ong prices and lower input costs. Great Lakes sales wer e 8% behind 2019, as a result of lower volumes due to rising prices, which was offset by lower input costs and savings initiatives. The South division’ s total sales were 3% behind 2019 driven by lower asphalt and construction volumes in key states as projects wer e delayed. Like-for -like readymixed concr ete volumes were higher than 2019 levels as gr owth in our core Florida and T exas markets continued. Commercial and operational excellence acr oss all product lines supported str ong operating prot performance. Th e West d iv isi on i ncr ea sed tota l sa le s by 3% by execu tin g on st rong b ac kl ogs w ith s up por t from fa vourable w eather in comparison to the r st ha lf of 201 9. Goo d in cre me nta l volumes coupled with stron g price discipline an d cos t co ntrol r esu lte d in op er atin g pro t impr ovemen ts. Cement Ou r ce me nt bu sin es s de li vere d op er atin g pro t grow th i n 2020, dr ive n pr ima ri ly by st rong pr ice r ea lis atio n, pe r for ma nc e im prove me nt ini tiat ive s an d cos t sav ing m ea su res. S al es volu me s in th e US op er atio ns we re 2% ahe ad of 201 9 o n a total a nd li ke-for-like bas is as s tron g de ma nd in th e wes t mo re tha n of f set C OVID - 1 9 rel ated i mpa cts in ot he r reg io ns. Volum es i n Can ada w ere b eh ind 201 9 du e to the im pac t of COVI D- 19 restr ic tio ns, pa r tic ul ar ly du ri ng th e rs t ha lf of th e yea r . Cement consumption in Southeast Brazil increased in 2020 enabling CRH to achieve volume growth combined with incr eased prices which resulted in operating pr ot improvement. 2021 Annual Report and Form 20-F 45 44 Results Analysis of change $ million 2020 Exchange Acquisitions Divestments Impairment/ One-offs 1 Organic 2021 % change Sales revenue 11,273 +73 +468 -96 - +689 12,407 10% EBITDA (as dened) 2,405 +5 +30 -48 +24 +172 2,588 8% Operating prot 1,631 -2 +3 -45 +28 +173 1,788 10% EBITDA (as dened)/sales 21.3% 20.9% Operating prot/sales 14.5% 14.4% 1 One-offs primarily due to 2020 COVID-19 related r estructuring costs Curr ent Y ear 2021 * EBITDA is dened as earnings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. Americas Materials generated sales of $12.4 billion and EBITDA (as dened) of $2.6 billion, 10% and 8% ahead of prior year respectively . Operating prot was 10% ahead of 2020. Solid volume and pricing progr ession across all lines of business coupled with operating efciencies of fset the inationary input cost environment. Like-for -like sales were 6% ahead of 2020, while like-for -like EBITDA (as dened) increased by 7%. US construction activity recover ed in 2021 with increased r esidential demand along with a moderate recovery in non-r esidential markets. Infrastructure funding levels wer e maintained at similar levels to prior year ahead of the recently approved multi-year federal infrastructur e package. Canada experienced continued strong demand within its residential sector . During 2021 Americas Materials completed eight acquisitions in the US and Canada for a total spend of $0.7 billion, the largest of which was the acquisition of Angel Brothers Enterprises, an asphalt paving and infrastructure solutions business in T exas. The divestment of the Brazil cement operations was completed in the rst half of 2021 for consideration of $0.2 billion. Materials Aggregates volumes wer e 3% ahead of 2020 on a like-for -like basis driven by good demand in our Northeast, Great Lakes and W est divisions. The South division was negatively impacted by adverse weather particularly in the rst half of 2021. Our selling prices improved 4% on a mix-adjusted basis, resulting in good margin expansion overall. Like-for -like asphalt volumes were 2% ahead of 2020, while like-for -like average prices also increased. Good market conditions in the Northeast, Great Lakes and W est offset unfavourable weather conditions in the South. Readymixed concrete volumes wer e 4% ahead on a total and like-for -like basis as residential demand remained str ong; good commercial discipline delivered price incr eases of 5%. Paving and construction revenues wer e 7% ahead of 2020, and 1% behind on a like-for -like basis, due to unfavourable weather in the South and a slower start to the season in both Great Lakes and Northeast. Revenues wer e higher in the West driven by an early start to the construction season and solid underlying demand. Construction margins were ahead of 2020. Regional Performance Sales in the Northeast were ahead of 2020 as volumes improved following a prior year which was impacted by COVID-19 restrictions. Higher volumes and pricing across all lines of business were of fset by higher input costs resulting in operating prot in line with 2020. Great Lakes sales wer e ahead of 2020 driven by solid residential and commer cial demand. Operating prot gr owth was led by good commercial and operational performance offsetting higher input costs. Sou th s ale s we re ah ea d of 2020 dr ive n pr ima ri ly by pos iti ve pr ic ing a nd c onti nu ed gr ow th in rea dy mi xed co nc rete vol ume s in o ur Fl or id a an d T exa s ma rkets . Op era ting p rot m arg in all y de cli ne d as a n imp roved c om me rci al a nd ope ra tion al p er form anc e was of fset by th e imp act s of unf avora bl e weat her a nd h ig her input costs. Sales in the West wer e well ahead of 2020, driven by robust demand and positive pricing across all lines of business. Operating pr ot improved as higher volumes and prices coupled with cost saving initiatives offset higher input costs. Cement Ou r ce me nt bu sin es s de li vere d a stro ng pe r for ma nc e dr ive n by a grow th i n sa le s wh ich we re 1 2% and 1 1 % a he ad of p ri or ye ar on a tota l and l ike-fo r -li ke bas is re sp ec tive ly. Op er atin g pro t was a he ad of 2020 dr ive n by a 5% incre ase i n vol ume, s tron g pr ice r ea lis atio n an d cos t sav ing m ea su res w hi ch of f set inc re ase s in i npu t co sts. B oth US a nd Ca nad a volu me s wer e ah ead of 2020 d ue to go od ma rket d em and a nd s tron g bac kl og exe cut ion. 46 Our Eur ope Mat erials Division manuf actures and supp lies a broad range o f material s for use in con- struction pr ojects in E urope and par ts of Asia. Eur ope Materials What we do Our Europe Materials Division is the leading building materials business in Europe, serving customers in construction markets across 18 countries in Europe and two countries in Asia. Our materials, including aggregates, cement, lime, readymixed concr ete, concrete products and asphalt are used extensively in a wide range of construction applications, from major public road and infrastructur e projects, to the development and refurbishment of homes and commercial buildings. Utilising an extensive network of resour ce backed assets including our quarry and pit locations, the Division has regional leadership positions in aggregates and r eadymixed concrete and is a leading pr oducer of cement and lime in Europe. Within Asia, it is the largest producer of cement in the Philippines and has a regional leadership position in northeastern China. Our businesses leverage their valuable market insights and long-term relationships to service the evolving needs of customers including national, regional and local governments, building contractors and other construction product and service pr oviders. Our businesses work closely with their customers to understand and adapt to emerging market needs including the increasing r equirement for innovative products which contribute to a mor e resilient and sustainable built environment. We ar e continually improving the environmental performance of our operations through actions including extending our use of alternative fuels, alternative raw materials and other technologies to produce and deliver mor e sustainable building materials for our customers. How we create value Our businesses are vertically integrated which allows us to use materials produced at our quarry locations to self-supply to our own downstream operations as well as in sales to our customers. This enables us to create value throughout the supply chain and also allows us to develop end-to-end solutions for our customers which increase the overall volume of materials supplied to individual construction projects. This appr oach enables our businesses to leverage the benets of scale and best practice, while differ entiating themselves in local markets by understanding and meeting the unique needs of local customers. We seek out opportunities to extend and strengthen our positions in r egional markets through identifying bolt-on and new acquisition opportunities which can be efciently integrated with existing operations. This enables us to capitalise on growth opportunities and further expand our offering to local customers. Our strong track r ecord in acquiring businesses that provide vertical integration opportunities helps ensure that we ar e competitive in all product lines and well positioned to deliver a strong return on our assets. We place a gr eat emphasis on commercial and operational excellence across our extensive network leveraging talent, synergies for procur ement, cost and logistics management. How we are structur ed Our Europe Materials Division operates in 18 countries in Europe and two in Asia and during 2021 was re-organised acr oss ve operational clusters (UK & Ireland, Eur ope North, Europe West, Eur ope East and Asia). The Division employs approximately 25,600 people at 1,120 locations. A further 5,810 people are employed in our equity accounted investment in China. Where we ar e located Where our pr oducts are used Paving & Construction Services In certain markets we provide installation services including cr ews, equipment and specialist expertise needed for preparation, paving and maintenance on pr ojects including roads, roundabouts and inter changes, car parks and airport runways. Aggregates Aggregates ar e typically used in building foundations, underpinning road and rail infrastructure and in the pr oduction of products including concr ete and asphalt. Cement Cement is a binding agent used in concrete products including r eadymixed concrete, precast concr ete and mortars which are used extensively throughout the built environment. Asphalt Asphalt is widely used as a surface material in transport infrastructure including, r oads, bridges, runways, footpaths along with amenities such as racetracks, tennis courts and playgrounds. Lime In addition to its use in building materials, lime is used in multiple industries including iron and steel, sugar , agriculture and for estry . Readymixed Concrete Concrete is the most used man-made material on earth. It forms the foundations of buildings and homes, roads, tunnels and bridges, clean water systems and clean energy structures. Infrastructural Concrete Infrastructural Concrete includes pr ecast and pre-str essed concrete products such as oor and wall elements, beams and vaults, pipes and manholes. These products ar e delivered to and assembled at construction sites. 2021 Annual Report and Form 20-F 47 2021 Performance Highlights 30% EBITDA (as dened) Operating Prot % of Group $ million Sales 10,581 34% 26% 23% 1,410 814 Net Assets 1 8,784 New Build 70% RMI 30% * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ prot after tax. 1. Net Assets at 31 December 2021 comprise segment assets less segment liabilities excluding lease liabilities as dened on page 222. 2. Geography , sector exposure and end-use balance are based on sales. 3. Throughout this document annualised volumes have been used which reect the full-year impact of development activity during the year and may vary from actual volumes sold. Annualised Sales V olumes 3 Aggregates: 108.8m tonnes Cement: 35.8m tonnes Readymixed Concrete: 16.9m m 3 Asphalt: 10.8m tonnes Lime: 7.7m tonnes Concrete Products: 7.9m tonnes 6% Asia 13% Europe North 15% Europe East 21% Europe W est 45% UK & Ireland SALES BY END-USE 2 SALES BY GEOGRAPHY 2 SALES BY SECTOR 2 35% Infrastructure Non-Residential 30% Residential 35% 2021 Annual Report and Form 20-F 49 48 Results Analysis of change $ million 2019 Exchange Acquisitions Divestments Impairment/ One-offs 1 Organic 2020 % change Sales revenue 9,509 +105 +63 -27 - -509 9,141 -4% EBITDA (as dened) 1,208 +14 +7 -3 -83 -88 1,055 -13% Operating prot/(loss) 622 +5 +1 -2 -743 -73 -190 -131% EBITDA (as dened)/sales 12.7% 11.5% Operating prot/(loss)/sales 6.5% -2.1% 1 One-offs primarily due to COVID-19 related r estructuring costs Operations Review - Eur ope Materials Prior Y ear 2020 * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. Europe Materials experienced a challenging year as the recovery in the second half of the year could not fully mitigate the signicant impact of COVID-19 related r estrictions in the second quarter . Overall sales, EBITDA (as dened) and operating performance nished below 2019 levels as strong performances in our Eastern European businesses wer e offset by a more challenging backdrop in a number of countries across W ester n Europe. A combination of volume growth, pr ogress in pricing, good cost control and performance improvement initiatives dr ove some recovery in the second half of the year . Arising from the Gr oup’ s impairment testing process and as a r esult of the combined economic impacts of COVID-19 and Brexit, total non-cash impairment charges of $0.8 billion were recognised in 2020. Eur ope Materials recorded impairment charges of $0.7 billion in its operating prot, primarily r elated to its UK business. A further $0.15 billion impairment charge was recor ded on the Group’ s associate investment in China. UK & Ireland In our UK & Ireland businesses, strict COVID-19 restrictions r esulted in widespread plant shutdowns during the second quarter which signicantly impacted volumes during this period. T rading recover ed as the year progressed, with strong cement volumes and incr eased paving activity in the second half of the year supporting improved aggr egates and asphalt volumes; however , readymixed concr ete volumes were slower to recover due to market uncertainty . Operating prot, impacted by the lower volumes, impairment charges and restructuring costs, nished below 2019 levels. Europe Nort h Euro pe No r th (F in lan d, Ge rm any a nd Sw it zer la nd) b us ine s ses d id n ot exp er ie nc e sig ni c ant C OVID - 1 9 re late d sh utdow ns a nd over all s al es i n Euro pe No r th e nd ed a he ad of 201 9 l evel s sup po r ted by so me l arg er aggregat es projects. Howev er , operating pr ot fel l be low 201 9 d ue to a le s s favou rab le p rod uct mi x and h ig he r inp ut a nd re str uc tur ing c os ts. De sp ite a go od le vel of p ric in g pro gre ss a nd cos t sav in g ini tiat ive s they we re not e no ug h to of fs et th e lowe r ce me nt, lim e and r ead ym ixe d co ncre te volu me s an d inc rea se d co sts. Europe West De sp ite a go od re cove r y in t he se co nd h alf of the ye ar a nd a ro bus t pe r for ma nc e thro ug hou t the ye ar i n our P rec as t bus in es se s, Euro pe West (Fr anc e, Be ne lu x, De nma r k and S pa in) sa le s en de d the ye ar d own o n 201 9 as t radi ng was s ign i ca ntly i mpa cted by C OVID - 19 res tri cti ons i n the rst h al f of the ye ar . Volu me s in Fra nce w ere s ever el y imp acte d by the COVID - 19 restr ic tio ns in th e se co nd qu ar te r of 2020 as c em ent, ag gre gate s an d rea dy mi xed co ncre te volu me s were s ig ni ca ntl y be low 201 9 l evel s. Pri ce i ncre a ses a nd c ost s av ing acti on s were i mp lem en ted to imp rove tra din g pe r for ma nc e, but ove ra ll op er atin g pro t en de d the ye ar b el ow 201 9. Europe East Europe East (Poland, Ukraine, Romania, Hungary , Slovakia and Serbia) trading continued robustly in 2020 with cement volumes and sales ahead of 2019. Strong cost contr ol, lower fuel costs and positive pricing all contributed to operating prot nishing str ongly ahead of 2019 levels. Romania, in particular , experienced a very positive trading performance in 2020 with sales and operating prot both signicantly ahead of 2019, as a continuation of infrastructure projects, the positive impact of local and national elections and increased r esidential repair works contributed to growing cement demand with pricing above 2019 levels. Overall, with minimal COVID-19 restrictions, positive underlying trading conditions combined with business improvement initiatives, Europe East saw a continuation of growth in sales and operating pr ot performance in 2020. Asia Domestic demand for cement in the Philippines was severely impacted between mid-Mar ch and May as COVID-19 restrictions r esulted in plant shutdowns. Despite this challenging backdrop and lower pricing, operating prot nished well ahead of 2019 due to cost savings, performance improvement initiatives and impr oved volumes in the second half of the year . CRH's operations include a 26% stake in Y atai Building Materials in China where, despite a severe COVID-19 impact in the rst quarter , full year cement volumes ended ahead of 2019. Pricing remained challenging in the r egion which, in addition to the non-cash impairment charge resulted in operating pr ot below 2019 levels. 2021 Annual Report and Form 20-F 49 48 Results Analysis of change $ million 2020 Exchange Acquisitions Divestments Impairment 1 / One-offs 2 Organic 2021 % change Sales revenue 9,141 +403 +8 -57 - +1,086 10,581 16% EBITDA (as dened) 1,055 +34 - -5 +83 +243 1,410 34% Operating (loss)/prot -190 +7 - -2 +748 +251 814 528% EBITDA (as dened)/sales 11.5% 13.3% Operating (loss)/prot/sales -2.1% 7.7% 1 Includes $0.7 billion 2020 impairment charge ²One-offs primarily due to 2020 COVID-19 related r estructuring costs Curr ent Y ear 2021 * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. Europe Materials beneted fr om continued growth in Eastern Europe and strong market r ecovery following the easing of COVID-19 restrictions in many of our key markets. Europe Materials generated sales of $10.6 billion and EBITDA (as dened) of $1.4 billion, 16% and 34% ahead of prior year respectively with an operating pr ot of $0.8 billion. Like-for -like sales were 11% ahead of 2020, while EBITDA (as dened) increased by 22%. Energy market volatility resulted in incr eased cost ination but positive pricing actions and a continued focus on cost savings and performance initiatives delivered margin expansion. UK & Ireland UK & Ireland sales wer e well ahead of prior year reecting an impr oved trading environment following signicant COVID-19 disruption in 2020. Operating prot was also signicantly ahead due to improved volumes acr oss all product lines but also assisted by cost saving and restructuring initiatives which commenced in 2020. Signicant pricing actions were undertaken in the second half of the year to offset input cost ination, which also contributed to the strong 2021 performance. Europe North Despite prolonged winter weather , demand in Europe North (Finland, Germany and Switzerland) improved as the year pr ogressed. Cement and lime volumes were ahead of prior year which, combined with strong price incr eases, resulted in increased sales. Eur ope North experienced signicant energy cost ination, particularly in the second half, but additional pricing actions and a continued focus on cost saving initiatives resulted in operating prot well ahead of 2020 levels. Europe W est Europe W est (France, Benelux, Denmark and Spain) delivered a good trading performance with higher cement volumes combined with continued pricing progr ess across all markets. France in particular experienced a strong r ecovery as a result of impr oved underlying trading conditions which, together with signicant cost saving actions implemented in 2020, have resulted in like-for -like operating prot well ahead of 2020. Our precast operations also deliver ed sales and operating prot ahead of 2020 despite experiencing signicant raw material and energy cost ination. Overall, continued cost saving actions and commercial initiatives r esulted in operating prot well ahead of prior year . Europe East Europe East (Poland, Ukraine, Romania, Hungary , Slovakia and Serbia) experienced mild weather in the fourth quarter and robust demand throughout the year , which resulted in cement volumes ahead of 2020 and continued growth in downstream pr oducts. Operating prot in Poland was signicantly ahead of prior year due to good volume and price increases combined with strong cost contr ol. Despite rising energy cost ination in the second half of the year , overall operating prot was well ahead of 2020 with good cost control and str ong price increases across all markets. Asia Sales and operating prot in the Philippines were signicantly ahead of 2020, which was severely impacted by COVID-19 r estrictions. Cement volumes were well ahead in 2021 as the market recover ed. Despite a competitive pricing environment and rising input costs, operational improvements and cost containment initiatives resulted in operating pr ot ahead of 2020. CRH's operations include a 26% stake in Y atai Building Materials in China, where str ong price increases of fset lower volumes to deliver signicantly improved operating pr ot in 2021. 50 Building Pr oducts Our Building Products Division comprises businesses which manufactur e, supply and deliver a wide range of high quality , value-added, innovative products and integrated solutions globally . What we do CRH’ s Building Products Division is a leading manufacturer and supplier of high value- added building products for use primarily in both residential and non-r esidential construction projects globally . Our diverse range of products includes brickwork supports that keep walls standing, glazing systems that hold glass in place, products that collect, connect and pr otect vital utility infrastructure and pavers, blocks and patio products used to pave our city centres and cr eate unique outdoor living spaces. The Division operates across 19 countries and is comprised of four strategic product platforms: Architectural Pr oducts, Building Envelope, Infrastructure Pr oducts and Construction Accessories (operating under the Leviat brand). The Division has leading positions, across multiple markets, in all four product ar eas. Our businesses combine deep customer understanding with an innovation focused mind set to deliver solutions that ar e tailored to meet current market demand while also working with customers to innovate and develop new solutions that address longer -term opportunities presented by economic development, changing demographics, sustainable development and other evolving global construction trends. How we create value Our global division, balanced across geographies and end-use sectors allows us to leverage scale, talent, brands, customer relationships and technical expertise, to cr eate value and deliver superior performance. An innovation-led approach to the development of integrated building products and solutions is a key characteristic of our business, while our ability to customise and create bespoke pr oducts and end-to-end solutions creates competitive advantage and helps to drive sustainable growth. Our strategy is to build and grow scalable businesses and to adapt and grow as our markets evolve. Our development focus aims to deepen our position in existing business platforms and to broaden our dif ferentiated product portfolio. We assess development opportunities through the lens of pr oviding access to growth markets that are favourably exposed to global megatrends including incr easing urbanisation, the growth of cities and the demand for mor e sustainable forms of construction. How we are structur ed Our Building Products Division is structur ed around four cor e product groups: Architectural Pr oducts, Building Envelope, Infrastructure Pr oducts and Construction Accessories (operating under the Leviat brand). The Division employs approximately 23,500 people at close to 510 locations across 19 countries. Where we ar e located Our products Building Envelope Our Building Envelope products include architectural glass, stor efront systems, custom engineered curtain and window wall, architectural glazing systems and related hardwar e. Infrastructure Pr oducts CRH’ s Infrastructure Pr oducts’ range of precast concr ete, PVC and polymer -based products include stormwater products, undergr ound vaults, drainage pipe and structures, utility enclosures and modular precast structur es. Construction Accessories Our Construction Accessories products include a br oad range of engineered anchoring, xing and connection solutions as well as lifting systems, formwork accessories and general accessories for construction applications. Architectural Pr oducts Our Architectural Pr oducts include pavers, blocks and kerbs, retaining walls and slabs, patio products and decking, lawn and garden pr oducts as well as bagged dry-mix cements for both private and public use. 2021 Annual Report and Form 20-F 51 2021 Performance Highlights 22% EBITDA (as dened) Operating Prot % of Group $ million Sales 7,993 26% 25% 27% 1,352 983 Net Assets 1 6,698 SALES BY END-USE 2 New Build 55% RMI 45% SALES BY SECTOR 2 10% Infrastructure Non-Residential 40% Residential 50% * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ prot after tax. 1. Net Assets at 31 December 2021 comprise segment assets less segment liabilities excluding lease liabilities as dened on page 222. 2. Products, sector exposure and end-use balance ar e based on sales. 9% Construction Accessories 48% Architectural Products 22% Building Envelope 21% Infrastructure Products SALES BY PRODUCT GROUP 2 2021 Annual Report and Form 20-F 53 52 Operations Review - Building Pr oducts Prior Y ear 2020 * EBITDA is dened as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, prot on disposals and the Gr oup’ s share of equity accounted investments’ prot after tax. In 2020, Building Products r ecorded like-for -like sales growth of 4% due to str ong residential RMI demand, especially in North America, which more than of fset the effect of a more subdued non-residential sector . Ongoing business improvement initiatives and COVID-19 mitigating actions delivered higher margins thr ough production ef ciencies, commercial excellence, procur ement savings and overhead cost control. On a like-for -like basis EBITDA (as dened) increased by 8% and operating pr ot by 11%, as a result of the impr oved sales growth and continued progr ess with cost reductions. Following a strong start to the year , economic conditions in North America and Europe wer e signicantly impacted by COVID-19. The pandemic particularly affected non-r esidential construction activity while the residential sector was bolstered by incr eased home improvement activity . Activity levels in North America were impacted by COVID-19 restrictions fr om the rst quarter of 2020, mostly affecting the W est Coast, Northeastern US, and Canada. In Europe, construction markets showed resilience in Central and Eastern European countries, while much of Western Europe, notably the UK, France, and Belgium, saw more sever e volume impacts from lockdown r estrictions, particularly in the rst half of the year . T wo divestments and six bolt-on acquisitions were completed in 2020. Building Pr oducts’ largest acquisitions were two manufactur ers of underground enclosur es in T ennessee and T exas, both within Infrastructure Products. Results Analysis of change $ million 2019 Exchange Acquisitions Divestments Impairment/ One-offs 1 Organic 2020 % change Sales revenue 6,997 +14 +262 -347 - +247 7,173 3% EBITDA (as dened) 1,076 - +50 -32 -15 +91 1,170 9% Operating prot 748 -1 +26 -17 -19 +85 822 10% EBITDA (as dened)/sales 15.4% 16.3% Operating prot/sales 10.7% 11.5% 1 One-offs primarily due to COVID-19 related r estructuring costs Architectural Pr oducts Architectural Pr oducts in North America delivered strong sales gr owth in 2020, reecting positive market demand across all pr oduct groups and regions. With North America seeing heightened residential RMI demand, sales thr ough both our retail and pr ofessional channels increased. The businesses delivered signicant margin expansion from the continued focus on operational excellence, as well as modest price growth and tight overhead cost contr ol. Sales in our European businesses wer e ahead mainly due to volume growth in Germany and Poland. Building Envelope Building Envelope’ s sales were lower than 2019, with COVID-19 restrictions unfavourably impacting volumes across key pr oducts and geographies, particularly at C.R. Laurence. V olumes were impacted by the softening of non-residential markets, with a number of projects being delayed or cancelled, while the selling price environment r emained competitive. As restrictions eased, the rate of sales decline lessened over the course of the second half. Operating prot was behind 2019 as a r esult of lower volumes, partly offset by cost management initiatives. Infrastructure Pr oducts Like-for -like sales were lower than 2019 because of reduced demand as a number of non-r esidential and public infrastructure pr ojects were delayed or cancelled due to COVID-19. However , sales of key products to the communications sector and electric utilities proved to be r esilient as demand for IT infrastructure was str ong. The business recor ded increased like-for -like operating prot due to continued performance improvement measur es and focused cost control. Eur ope recorded lower like-for -like sales in 2020 because of COVID-19 restrictions in key markets, particularly the UK. In Australia, like-for -like sales were below 2019 due to continued challenges in the telecom sector in the country . Construction Accessories Like-for -like sales were lower than 2019 because of COVID-19 shutdowns affecting project activity particularly in the rst half. In Europe, sales wer e worst affected in Western Europe, with Central and Eastern European markets experiencing more r esilient demand. Sales in Australia beneted from several large infrastructure pr ojects, while North America recor ded lower like-for -like sales due to increased competition, further compounded by COVID-19. Operating prot was lower in 2020, as the unfavourable volume impact was only partly offset by overhead cost savings and benets from ongoing pr ocurement, commercial and operational initiatives. 2021 Annual Report and Form 20-F 53 52 Curr ent Y ear 2021 * EBITDA is dened as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, prot on disposals and the Gr oup’ s share of equity accounted investments’ prot after tax. Building Products deliver ed sales growth of 11% due to strong demand for r esidential construction, particularly in North America, along with a good recovery in certain parts of the non-r esidential sector . Ongoing business improvement initiatives delivered higher margins thr ough production efciencies, good commer cial management, procur ement savings and overhead cost control. EBITDA (as dened) increased by 16% while operating prot was 20% ahead. Like-for -like sales were 5% ahead of 2020, while like-for -like EBITDA (as dened) increased by 8%. During 2021 Building Products completed eight bolt-on acquisitions, primarily in the US and across all pr oduct platforms, at a total spend of $0.8 billion. The largest acquisition was Infrastructure Pr oducts’ purchase of NPP , a water , energy and infrastructure solutions business. Architectural Pr oducts Architectural Pr oducts in North America delivered str ong sales growth in 2021, reecting positive market demand and robust r esidential RMI activity . Operating prot incr eased due to improved pricing and volume gr owth, a continued focus on operational improvements and strong overhead cost contr ol. Sales in our European businesses wer e slightly ahead, with operating prot gr owth driven by operational and commercial excellence initiatives and impr oved product mix. Building Envelope Building Envelope’ s sales increased driven by strong pricing and early signs of r ecovery in the non-residential market. Operating pr ot was ahead of prior year driven by improved pricing, operational excellence initiatives and other cost savings, partly offset by input cost ination. Infrastructure Pr oducts Infrastructure Pr oducts experienced strong sales growth in 2021. Sales to the communications and utilities sectors were r esilient and demand for IT infrastructure was str ong. The business delivered incr eased operating prot due to continued performance improvement measur es and good cost control. T otal sales and operating prot also beneted fr om the acquisition of NPP in the third quarter . Our European businesses contributed to the strong sales gr owth and operating prot was ahead. Our Australian business experienced lower sales due to COVID-19 restrictions which hinder ed production and limited deliveries. Construction Accessories Like-for -like sales in Construction Accessories were ahead of 2020 driven by str ong volumes as the business beneted from higher r esidential demand and project activity . Sales growth was primarily led by North America, the UK and France. Increased sales and continued cost saving initiatives more than of fset input cost ination, resulting in like-for -like operating prot ahead of prior year . Results Analysis of change $ million 2020 Exchange Acquisitions Divestments Impairment/ One-offs 1 Organic 2021 % change Sales revenue 7,173 +87 +380 -29 - +382 7,993 11% EBITDA (as dened) 1,170 +11 +71 -5 +15 +90 1,352 16% Operating prot 822 +6 +49 -4 +19 +91 983 20% EBITDA (as dened)/sales 16.3% 16.9% Operating prot/sales 11.5% 12.3% 1 One-offs primarily due to 2020 COVID-19 related r estructuring costs Through a values-driven cult ure w e striv e t o main tain t he highest standards o f cor porat e gov er nance and responsible leadership . A t CRH , our cult ure o f et hical behaviour allows us t o build trust wit h our stak eholders and crea t e long- t erm sustainable value. 2021 Annual Report and Form 20-F 55 Heembeton, part of CRH’ s Europe Materials Division based in the Netherlands, is a leading producer of prefab building systems and solutions including pr efab concrete walls and facades which enable quicker and more efcient construction of both commercial and residential structur es. Boar d of Directors 56 Corporate Gover nance Report 60 Audit Committee Report 64 Nomination & Corporate Governance Committee Report 70 Safety , Environment & Social Responsibility Committee Report 76 Dir ectors' Remuneration Report 80 Dir ectors' Report 110 Principal Risks and Uncertainties 116 Gover nance 54-121 2021 Annual Report and Form 20-F 57 56 Skills and experience: Richie has extensive experience in all aspects of nancial services and was Chief Executive of Bank of Ireland Gr oup plc between February 2009 and October 2017. He also held a number of key senior management roles within Bank of Ir eland, Royal Bank of Scotland and Ulster Bank. He is a past President of the Institute of Banking in Ireland and of the Irish Banking Federation. Qualications: Bachelor of Arts (Economics) from T rinity College, Dublin; Fellow of the Institute of Banking in Ireland. External appointments: Listed: Director of Kennedy-Wilson Holdings, Inc., a global real estate investment company . Non-listed: Non-executive Director of Clonbio Group Limited, which manufactures sustainable bio pr oducts and produces r enewable energy . Skills and experience: Albert joined CRH in 1998. Prior to joining CRH, he was Chief Operating Ofcer with a private equity group. While at CRH he has held a variety of senior positions, including Finance Director of the Eur ope Materials Division, Group Development Dir ector and Managing Director of Eur ope Materials. He became Chief Operating Ofcer in January 2009 and was appointed Group Chief Executive with effect fr om 1 January 2014. Qualications: FCP A, MBA, MBS. External appointments: Listed: Non-executive Director of L yondellBasell Industries N.V ., one of the largest plastics, chemicals and rening companies in the world. Non-listed: Not applicable. Chairman Appointed to the Board: Mar ch 2018 Nationality: Irish Age: 63 Committee membership: Richie Boucher ADF N S R Albert Manifold Chief Executive Appointed to the Board: January 2009 Nationality: Irish Age: 59 Committee membership: ADF Boar d of Dir ectors Skills and experience: Jim has over 30 years' experience in the building materials industry , nearly 20 years of which have been with CRH. Jim joined CRH as Finance Director for Roadstone and since then has held several senior positions across the Gr oup, including Country Manager for Ireland, Managing Director of each of the W ester n and Eastern regions of our Eur ope Materials Division and most recently Chief of Staf f to the Chief Executive, where he worked closely with divisional and operational leadership and had oversight of the Group's Performance, Safety and Special Projects activities and led a number of Performance Improvement initiatives in recent years. He was appointed to the Board and became Gr oup Finance Director with ef fect from 1 June 2021. Qualications: Fellow of Chartered Accountants Ireland. Jim also holds a Bachelor of Commerce fr om University College Dublin. External appointments: Listed: Not applicable. Non-listed: Not applicable. Jim Mintern Group Finance Dir ector Appointed to the Board: June 2021 Nationality: Irish Age: 54 Committee membership: ADF S Board Committees Audit A Acquisitions, Divestments & Finance ADF Nomination & Corporate Governance N Remuneration R Committee Chairman S Safety, Environment & Social Responsibility 2021 Annual Report and Form 20-F 57 56 Skills and experience: During the course of her executive career , Gillian has held a number of senior leadership positions in a variety of industries, geographies and roles including human resour ces, corporate affairs and strategy . Most recently she was Executive Vice President and Chief Human Resources Ofcer at Finning International, Inc. (the world’ s largest Caterpillar equipment dealer) with global responsibility for human resour ces, talent development and communications. She previously held senior executive roles at A viva, the multinational insurance company , as Executive Vice President Human Resour ces and Executive Vice President Strategy and Corporate Development. Qualications: Bachelor of Arts from the University of Western Ontario and a Masters of Education from the University of T oronto. External appointments: Listed: Non-executive Director of Interfor Corporation, a Canadian listed company , which is one of the world’ s largest providers of lumber . Non-listed: Not applicable. Senior Independent Director Appointed to the Board: January 2017 Nationality: Canadian Age: 68 Committee membership: Gillian L. Platt N R S Skills and experience: Caroline was, until her r etirement in February 2018, a Business Group Pr esident of Flex, an industry leading Fortune 500 company , with operations in 30 countries. In this role she led the T elecommunications, Enterprise Compute, Networking and Cloud Data Centre and was also r esponsible for managing the Global Services Division, supporting complex supply chains. Prior to this, Caroline held a range of senior executive roles in Flex, including responsibility for development & strategy , marketing, retail & technical services and global sales. External appointments: Listed: Non-executive Director of DCC plc and IMI plc. Non-listed: Non-executive Director of Orion SCM, Inc., a US-based software rm. Non-executive Director Appointed to the Board: Mar ch 2021 Nationality: Irish Age: 54 Committee membership: Caroline Dowling ADF R S Skills and experience: Richard was, until Mar ch 2021, the Vice Chairman and Chief Financial and Planning Ofcer of Eaton Corporation plc, a global power management company , roles he held since 2009 and 2002, respectively . He had responsibility and oversight for a number of key operational and strategic functions at Eaton, including accounting, control, corporate development, information systems, internal audit, investor relations, strategic planning, tax and treasury functions. Prior to joining Eaton, he served in development and strategic planning management positions at several large diversied companies, including as Senior Vice President of Corporate Development at T ransamerica Corporation, General Manager of Corporate Development for Singapore-based NatSteel Ltd and Director of Strategic Planning at The W alt Disney Company . He has also served as a management consultant at the Boston Consulting Group, Booz Allen Hamilton and Willow Place Partners. Qualications: Bachelor of Arts in Economics from Stanfor d University; Masters of Business Administration from Harvard Business School; and a Juris Doctor from Harvar d Law School. External appointments: Listed: Non-executive and Lead Director of Avient Corporation; non-executive Dir ector of Crown Holdings, Inc and non-executive and Lead Director of Hennessy Capital Investment Corp. VI. Non-listed: Not applicable. Non-executive Director Appointed to the Board: December 2020 Nationality: United States Age: 65 Committee membership: Richard Fear on A ADF Audit Committee Financial Expert as determined by the Board 2021 Annual Report and Form 20-F 59 58 Boar d of Dir ectors - continued Skills and experience: Badar is currently Pr esident of National Grid US, a major business segment of the leading energy transmission and distribution company , National Grid plc. Prior to this, he held a variety of roles in National Grid, including responsibility for strategy and innovation. Before joining National Grid he worked at Centrica plc (2003 to 2017), a leading international energy services and solutions company , where he held a variety of senior executive positions in the UK and US, and has prior experience in marketing, consulting and project management. Qualications: Bachelor of Engineering from Brunel University and an MBA fr om The Wharton School of the University of Pennsylvania. External appointments: Listed: Not applicable. Non-listed: Non-executive Director of the American Gas Board. Non-executive Director Appointed to the Board: October 2021 Nationality: Dual British & United States Age: 50 Committee membership: Badar Khan S Audit Committee Financial Expert as determined by the Board Skills and experience: Shaun was until September 2019, the Global Chief Operating Ofcer of KPMG International, where he was responsible for the execution of the rm’ s global strategy and for the delivery of various global initiatives. Over a thirty-year career with KPMG, the majority of which was spent in the US, he held a variety of senior leadership positions, including Partner in Charge, US T ransaction Services (2001 to 2005), Vice Chair and Head of US T ax (2005 to 2010) and Vice Chair Operations and Chief Operating Ofcer Americas (2010 to 2015), before his appointment as Global Chief Operating Ofcer in 2015. Qualications: Fellow of Chartered Accountants Ireland and a US Certied Public Accountant; Bachelor of Commerce and Diploma in Professional Accounting from University College Dublin; and an honorary doctorate from Queen’ s University Belfast. External appointments: Listed: Not applicable. Non-listed: Non-executive Director of Park Indemnity Limited. Shaun holds a number of non-prot boar d memberships. Non-executive Director Appointed to the Board: December 2019 Nationality: Dual United States & Irish Age: 62 Committee membership: Shaun Kelly A ADF R A Skills and experience: Johan was President and Chief Executive Ofcer of Skanska AB, a leading multinational construction and project development company until 2017. Over a thirty-year career with Skanska, he held a variety of leadership roles in Eur ope and America, before becoming Pr esident and Chief Executive in 2008. He also served as President and Chief Executive Of cer of BP A (now Bravida), a listed mechanical and installation group fr om 1996 to 2000. Qualications: Masters degree in Engineering from the KTH Royal Institute of T echnology , Sweden. External appointments: Listed: Not applicable. Non-listed: Non-executive Director of Sandbacken AB. Non-executive Director Appointed to the Board: September 2019 Nationality: Swedish Age: 65 Committee membership: Johan Karlström ADF R S Board Committees Audit A Acquisitions, Divestments & Finance ADF Nomination & Corporate Governance N Remuneration R Committee Chairman S Safety, Environment & Social Responsibility 2021 Annual Report and Form 20-F 59 58 Audit Committee Financial Expert as determined by the Board Skills and experience: Mary became non-executive Chairman of Johns Manville Corporation in September 2020, prior to which she held the role of Chairman, Chief Executive Ofcer and President. Johns Manville is a Berkshir e Hathaway company , which is a leading global manufacturer of pr emium quality building products and engineer ed specialty materials. Over nearly 40 years with Johns Manville she has held a wide range of global leadership roles, encompassing responsibility for business management and strategic business development and was also Chief Financial Ofcer . Mary was until recently a non-executive Dir ector of Ply Gem Holdings Inc., a leader in exterior building products in North America and Lead Director of CoBiz Financial Inc. Qualications: Bachelor’ s degree in Finance from the University of Colorado; MBA from the University of Denver . External appointments: Listed: Non-executive Director of Graphic Packaging Holding Company . Non-listed: Non-executive Chairman of Johns Manville Corporation; and member of the Board of T rustees of the University of Denver . Non-executive Director Appointed to the Board: October 2018 Nationality: United States Age: 63 Committee membership: Mary K. Rhinehart N R S Skills and experience: Lamar was until July 2020 Chief T ransition Ofcer of BP plc. During a 40 year car eer in Amoco and subsequently with BP , following the merger of the two companies, Lamar held a variety of senior executive roles, including responsibility for BP’ s interests in the TNK-BP joint venture, Chairman and CEO of BP Americas (during which period he acted as President of the Gulf Coast Restoration Organisation and Chief Executive Ofcer for BP’ s world-wide Upstream Division). Fr om April 2016 to February 2020 he was Deputy Group Chief Executive Ofcer of BP , a role in which he had a wide range of accountabilities, including safety , operational risk, legal affairs, technology , economic insight, long range planning and strategy with the latter responsibilities particularly inuencing capital allocation planning and BP’ s sustainability initiatives. Qualications: Bachelor of Science from Mississippi State University . External appointments: Listed: Non-executive Director of AP A Corporation. Non-listed: Not applicable. Non-executive Director Appointed to the Board: December 2020 Nationality: United States Age: 63 Committee membership: Lamar McKay A S ADF Skills and experience: Siobhán is Group Managing Dir ector of Glanbia plc, a global nutrition company with operations in 32 countries, a position she has held since 2013. She has been a member of the Glanbia Board since 2009 and was previously Finance Dir ector , a role which encompassed r esponsibility for Glanbia’ s strategic planning. Prior to joining Glanbia, she worked with PricewaterhouseCoopers in Dublin and Sydney . Qualications: Fellow of Chartered Accountants Ireland; Bachelor of Commerce; and a Diploma in Pr ofessional Accounting from University College Dublin. External appointments: Listed: Group Managing Dir ector of Glanbia plc. Non-listed: Director of the Irish Business Employers Confederation (IBEC). Non-executive Director Appointed to the Board: December 2018 Nationality: Irish Age: 58 Committee membership: Siobhán T albot A ADF N N R The Corporate Governance Report contains details of CRH’ s governance structures and highlights areas of focus for the Board over the last year . In keeping with prior years, details of CRH’ s general gover nance practices are available in the governance appendix on CRH’ s website, www .crh.com (the ‘Governance Appendix’) 1 . CRH implemented the 2018 UK Corporate Governance Code (the ‘2018 Code’) and this Report explains how the principles of the 2018 Code have been applied. Corporate Gover nance Report 60 Operation of the Board Following the onset of COVID-19, the Board met virtually for a period of 18 months up to mid-2021. Whilst this worked well, and did not hinder the Board in fullling its r esponsibilities and duties, I am pleased to report that we r ecommenced in-person meetings with suitable safety protocols in place in the second half of the year . This has enhanced the richness of discussion at Board and Committee meetings, and non-executive Director sessions. It has also helped forge relationships between the four directors appointed since Mar ch 2020 and existing Board members, and has led to increased and mor e in-depth interactions with the senior management team. During the course of 2022, we intend to recommence our twice-yearly site visits to operations in Europe and the US. Senior Executive Succession Senior executive succession planning continued to be an area of focus for the Boar d and Nomination & Corporate Governance Committee. Details on activity in this area during 2021 ar e set out on page 71. The Board also r eceived regular updates on the bench strength and diversity of the senior management team, together with detailed plans for development generally and by individual role. Board Committees Detailed reports on the ar eas of focus for the Audit, Nomination & Corporate Governance, Remuneration and Safety , Environment and Social Responsibility (SESR) Committees are included on pages 64 to 109. The performance of the Board’ s Committees was assessed as part of the external Board evaluation process r eferred to below . During 2021, the Board appr oved minor changes to the T erms of Reference of the Audit, Nomination & Corporate Governance, Remuneration and SESR Committees. The changes were primarily to align the T erms of Reference with curr ent Board practices and terminology and to ensure they r emain aligned with evolving best practice, where r elevant. The updated T erms of Reference are available on the CRH website, www .crh.com. 1. The Gover nance Appendix is published in conjunction with the Directors’ Report in compliance with Section 1373 of the Companies Act 2014. For the purposes of Section 1373(2) of the Companies Act 2014, the Governance Appendix and the risk management disclosures on pages 32 to 35 and 116 to 121 form part of, and are incorporated by refer ence into, this Corporate Governance Report. The primary (premium) listing of CRH plc is on the LSE, with the listing on Euronext Dublin characterised as secondary . For this reason, CRH plc is not subject to the same ongoing listing requirements as would apply to an Irish company with a primary listing on Euronext Dublin. For further information, shareholders should consult their nancial adviser . Further details on the Group’ s listing arrangements, including its premium listing on the LSE, are set out on page 74. 2021 Annual Report and Form 20-F 61 Richie Bo ucher Chairman In l ine w ith prio r y ears, ther e was regul ar and extensive engagement on go vernan ce mat t er s during the pa st y ear wit h more than 20 meetings with sharehol der s rep res enting jus t o v er 35 % of t he issue d share capital. " Board Evaluation During 2021, the Board engaged Christopher Saul Associates to undertake an external board performance evaluation. The report pr esented to the Board (the '2021 Report') concluded that the Board is operating ef fectively . It is collegiate and well-led, it operates to high standards of professionalism and benets fr om quality support. The Committees observed work diligently and effectively and ar e well-integrated into Board processes. The r elationship between the Board and management is respectful and constructive. It also contained recommendations to further enhance our effectiveness including in r elation to: • Board paper content and circulation; • Giving consideration to whether the Nomination & Corporate Governance Committee could broaden and deepen its activities, for example, in relation to human capital management without undue overlap with the SESR Committee and separately undertaking a review of the br eadth of the SESR Committee's responsibilities; and • Enhancing Board interaction further , leveraging on the experience of the non-executive Directors and looking at incr easing the regularity of non-executive Dir ector sessions Whilst no particular skill or diversity gaps were identied, the 2021 Report included considerations to take into account to developing Board composition priorities. The internal and exter nal board performance evaluation processes ar e one element in the process for identifying strategic themes for discussion by the Board. The 2021 Report highlighted topics that were curr ently front of mind for the non-executive Directors. The pr ocess used for the evaluation is set out on page 72 in the Nomination & Corporate Governance Committee Report. External Board Appointments The external directorships of each Director ar e detailed in their biographies on pages 56 to 59. Richard Fear on and Johan Karlström sought and received appr oval to take up additional Board roles during 2021. The Boar d was satised that these new commitments do not impinge on their non-executive duties on the CRH Board. Corporate Purpose As reported last year , a project has been underway to more fully articulate CRH's purpose - a purpose which captures our aspirations beyond nancial returns, inspires our people and guides our day-to-day operations, our culture, and our strategy . The framework used during the project utilised insights from CRH's V alues, work on CRH brands, historical documents, focus groups and test panels of employees across the geographies and Divisions of CRH, along with insights from a range of external experts from a number of specialist elds. This work is now complete and will be launched with our employees during 2022. As part of the purpose project, our V alues have been rened, to align and further support the organisation in living our purpose. Stakeholder Engagement The Board has delegated r esponsibility for workforce engagement to the SESR Committee. Given the footprint of CRH with c.77,400 employees in 28 countries, we believe this is the best and most effective way of ensuring that the views of employees are understood and are taken into consideration in the Boar d’ s decision-making processes. The Boar d receives regular updates and r ecommendations from the SESR Committee, the work of which is described in detail on pages 76 to 79. Board members also attended a seminar of management from acr oss the Group held during the year with appropriate social r estrictions and safety protocols, which focused on key issues facing the Group, including, sustainability challenges and opportunities, the work of exploration groups made up of high potential talented employees who were focused on horizon scanning in relation to the futur e of the construction industry , the work ongoing to embed customer perspectives in our approach to business and the project to articulate CRH’ s purpose referr ed to above. In line with prior years, there was r egular and extensive engagement on governance matters during the past year with more than 20 meetings with shareholders r epresenting just over 35% of the issued share capital. T ypically the meetings covered topics such as the safety of our employees, particularly in the context of COVID-19, Board r enewal priorities, executive succession planning, strategy , capital allocation, the oversight of the Board in r elation to business improvement initiatives, the ar eas of focus for the Board in r elation to sustainability and remuneration arrangements. Shar eholder 2018 Code – Compliance Statement The principles set out in the 2018 Code emphasise the value of good corporate governance to the long-term sustainable success of listed companies. These principles, and the supporting provisions, cover ve broad themes: 1. Board Leadership and Corporate Purpose 2. Division of Responsibilities 3. Composition, Succession and Evaluation 4. Audit, Risk and Internal Controls 5. Remuneration As demonstrated by the disclosures in this Report and the details of CRH's general governance practices in the Governance Appendix, CRH applied the principles and complied with the provisions of the 2018 Code in 2021, with the exception of the following provision: • Provision 38: alignment of pension contribution rates with wider workforce – see page 101 for more details. A copy of the 2018 Code can be obtained from the Financial Reporting Council’ s website, www .frc.org.uk. 2021 Annual Report and Form 20-F 63 62 engagement is a regular topic on Boar d agendas and feedback from these meetings is cir culated with Board papers in or der that all Directors have a comprehensive understanding of shar eholder perspectives on these topics when making Board decisions. In a separate consultation process, we sought feedback from shar eholders representing just over 50% of the issued share capital in r elation to proposals for the updated r emuneration policy to be considered at the 2022 AGM. I am pleased to report that c.60% of the shar eholders contacted provided us with their consider ed perspectives on the Remuneration Committee’ s proposals. Full details of the consultation process and the nal remuneration policy pr oposals are set out in the Directors' Remuneration Report on pages 80 to 97. Following engagement with investor groups, during the year we undertook a review of climate change lobbying practices to ensure ther e is an alignment between those practices and the expectations of the Board and our stakeholders. Further detail is set out on page 79 in the SESR Committee Report. We also published the CRH Group T ax Strategy , which sets out the tax objectives, strategy and governance framework of the Group due to the incr easing importance for tax transparency acr oss a number of differ ent stakeholders including Gover nments, sustainability analysts and investors. The full range of ways in which we engage with our stakeholders are set out on page 27, which also includes a summary of each stakeholder’ s main areas of inter est and the outcomes of the various engagement processes in 2021. Litigation and Compliance The Group General Counsel r egularly updates the Board on r elevant legal and compliance matters and provides r eports on any material matters that arise requiring Boar d decisions or detailed consideration. Dematerialisation of Share Certicates Under the EU Central Securities Depositories Regulation (EU) 909/2014 (CSDR), there is a requir ement for all shares in Irish issuers to be held in book-entry form. The period by which this transition must happen is between January 2023 and January 2025. Book-entry form means an electronic r ecord of ownership such as an entry in an electronic r egister , without any further or other document such as a share certicate. The Irish market is intending to dispense with share certicates with ef fect from 1 January 2023. Therefor e, from that date all CRH share certicates in issue will be cancelled. However , this will be the only change as these holdings are currently r ecorded in electronic form on the CRH register of members. The removal of shar e certicates will bring benets to shareholders by r educing the paperwork associated with share transactions such as sales or share transfers and by r emoving the need for expensive insurance cover in the event that share certicates have been lost or mislaid. Industry participants, such as brokers and r egistrars, are currently updating their systems to ensur e there is no impact on shareholders who curr ently hold share certicates. We understand that the Irish government is planning to introduce legislation to update Irish company law in a way that will override refer ences in the Articles of Association of all Irish issuers to share certicates. Once this legislation is in place, we will seek shareholder appr oval to align the Articles of Association with the new legislation. Re-election of Directors T able 6 on page 72 provides a summary of competencies, important to the long-term success of the Group, that each Dir ector seeking re-election at the 2022 AGM brings to the Boar d. I have evaluated the performance of each Director and am satised that each Director is committed to their role, pr ovides constructive challenge and devotes sufcient time and energy to contribute effectively to the performance of the Boar d. I strongly r ecommend that shareholders vote in favour of the re-appointment of each Dir ector going forward for r e-election at the 2022 AGM. Conclusion The CRH Board and its Committees continued to perform effectively in the past year and I very much appreciate the individual and collective efforts of my executive and non-executive colleagues. I am satised that we have made good progr ess on our key gover nance priorities in the areas of succession planning, boar d renewal, mor e comprehensively articulating CRH's purpose, sustainability and ensuring we understand the views and perspectives of our stakeholders when making decisions. Y our Board is also committed to ensuring that CRH continues to be a leader in managing the challenges and opportunities arising from the impact of climate change and to transparently r eporting on our progr ess in this important area. Richie Boucher Chairman 2 March 2022 Corporate Gover nance Report - continued 2021 Annual Report and Form 20-F 63 62 Oldcastle Infrastructure, part of CRH’ s Building Products Division, is one of North America’ s largest manufacturers of infrastructure pr oducts for the telecommunications, energy , transportation, and water markets, including solutions for stormwater management and drainage, wastewater , irrigation, marine and potable water . Audit Committee Report On behalf of the Committee, I am pleased to introduce the Audit Committee Report for the year ended 31 December 2021. The purpose of this report is to pr ovide shareholders with an insight into the workings of, and principal matters considered by , the Committee in 2021, together with how the Committee has dischar ged its responsibilities and pr ovided assurance on the integrity of the 2021 Annual Report and Form 20-F . 64 Introduction The responsibilities of the Committee ar e set out in full in its T erms of Reference, which is available on our website, www .crh.com. General details in relation to the r ole and responsibilities of the Committee, its operation and the policies applied by it, can be found in the Governance Appendix, which is also available on our website. While the Committee continued to focus on monitoring the effectiveness of the Gr oup's nancial reporting and Enterprise Risk Management framework and the integrity of the Group's internal and external audit processes during 2021, we also spent time considering and discussing with management CRH's reporting on climate-related risks, including the impact on the Group's accounting judgements, disclosur es and nancial statements and their alignment with CRH's carbon reduction targets, and its approach with r egard to compliance with the recommendations of various r egulatory bodies (International Accounting Standards Board, International Audit and Assurance Standards Board, Financial Reporting Council, Eur opean Securities and Markets Authority), the T ask Force on Climate-related Financial Disclosur es (TCFD') and the emerging EU T axonomy requirements. The Committee, and indeed the wider Board and management team, take the issue of climate change very seriously and, as we work towards our ambition of carbon neutrality by 2050, we understand the importance of ensuring transparency for all stakeholders on our plans and progr ess. Further details on the impact of climate change on CRH can be found on pages 28 to 31. T able 1 on pages 66 and 67 outlines the principal areas that the Committee focused on in 2021. Audit Committee Membership The Committee currently consists of ve non-executive Directors consider ed by the Board to be independent. The biographical details of each member are set out on pages 57 to 59. T ogether , the members of the Committee bring a broad range of r elevant experience and expertise from a variety of industries which is vital in supporting effective governance and enabling the Committee to discharge its responsibilities. Richard Fear on, Siobhán T albot and I have been designated by the Board as the Committee’ s nancial experts and meet the specic requir ements for recent and relevant nancial experience, as set out in the 2018 Code. Audit Committee Meetings During 2021, the Committee held eight meetings in order to discharge its duties and responsibilities. Meetings of the Committee are generally scheduled ar ound the nancial 2021 Annual Report and Form 20-F 65 Shau n K elly Chairman of Audit Committee The Co mmit t e e spe nt time consi dering and discussing with manage ment the Grou p ' s repor ti ng on climate-related risks, including the impact on the Group ' s accounting judgements, disclosures and fin ancial s t a te m e n t s ... " reporting cycle to allow the Committee to discharge its duties in relation to the Gr oup’ s nancial statements and generally take place in advance of Board meetings to enable me to provide the Boar d with a detailed update on the key items discussed at each Committee meeting. The Board also r eceives copies of the minutes of all Committee meetings. The Finance Director , Head of Inter nal Audit and repr esentatives of the Group’ s exter nal auditors, Deloitte, typically attend Committee meetings. Other senior nance personnel attend Committee meetings to provide updates on certain key areas of the business, as appr opriate. As Chairman of the Committee, I am available to all Board members to discuss any audit or risk related issues they may have. I meet with Deloitte and the Head of Internal Audit on a regular basis, in or der to discuss any issues which may have arisen. External Auditor Deloitte was appointed as the Group’ s external auditor with effect fr om 1 January 2020 following the completion of a competitive tender process in 2018. Richard Muschamp is the Gr oup’ s lead audit engagement partner . Effectiveness The Committee, on behalf of the Board, is responsible for the r elationship with the exter nal auditor and for monitoring the effectiveness and quality of the external audit process and the independence of the auditor . The Committee’ s primary means of assessing the effectiveness of the external audit process is by monitoring performance against the agreed audit plan. The Committee also considers the experience and knowledge of the external audit team and the results of post-audit interviews with management and the Audit Committee Chairman. These annual procedur es are supplemented by periodic formal reviews of the performance of the external auditor . In June 2021, the Committee met with Deloitte to agree the 2021 external audit plan. T able 2 on page 68 outlines the key areas identied as being potentially signicant and how these were addressed during the year . The Committee met regularly with Deloitte during 2021 to monitor progr ess in relation to the 2021 plan. In February 2022, the Committee received and consider ed a report fr om Deloitte on its key audit ndings, including the key risks and signicant areas of judgement, prior to making a recommendation to the Board in r elation to the approval of this 2021 Annual Report and Form 20-F . Further details in relation to the external auditor , including information on how auditor objectivity and independence are maintained, ar e included in Section 2 of the Governance Appendix. Following consideration of the above processes, the Committee is satised with the services provided by Deloitte to CRH during 2021. Non-audit Fees In order to ensur e auditor independence and objectivity , the Committee has a policy governing the provision of audit and non-audit services by the external auditor . In 2021, Deloitte provided a number of audit services, including Sarbanes-Oxley Section 404 attestation 1 . Deloitte was also engaged during 2021 on a limited number of non-audit services mainly in relation to potential divestments, as well as to provide help with local tax compliance, advice on taxation laws and other related matters, assignments which typically involve relatively low fees. The Committee is satised that the external auditors’ knowledge of the Group was an important factor in choosing them to provide these services. The Committee is also satised that the fees paid to Deloitte for non-audit work in 2021, which amounted to $1.8 million and repr esented less than 9% of the total fees for the year , did not compromise their independence or objectivity . Details of the amounts paid to the external auditor during the year for audit and other services are set out in note 5 to the Consolidated Financial Statements on page 161 (see also T able 3 on page 68). Further details in relation to the Gr oup’ s policy regar ding non-audit fees are set out in Section 2 of the Governance Appendix. Internal Audit Effectiveness In December 2020, the Committee received and considered the Internal Audit Charter and audit plan for 2021. During the year , the Committee was updated regularly by the Head of Internal Audit on the delivery of the 2021 plan and on the principal ndings from the work of Internal Audit and management’ s responses thereto. External Quality Assessments of Inter nal Audit are conducted periodically to ensur e that the Internal Audit function continues to work efciently and effectively and in compliance with good practice standards, with the latest assessment being conducted during 2021 by KPMG. The assessment included interviews with key stakeholders across the Gr oup (including the members of the Committee) and the examination of the information provided to the Committee. The results identied some ar eas where the effectiveness of the function could continue to be enhanced. A detailed action plan to address the recommendations has been agr eed and will be implemented in 2022. Audit Committee Effectiveness and Priorities for 2022 During 2021, the Board undertook an externally facilitated Board ef fectiveness review , which assessed our performance as a Committee. I am happy to conrm that the evaluation concluded that the Committee continues to operate effectively . I would like to thank my fellow Committee members, the management team, Internal Audit and Deloitte for their commitment and input to the work of the Committee during 2021. Looking ahead to 2022, the Committee will continue to focus on the key ongoing areas outlined in T able 1 on pages 66 and 67, and will also continue to monitor and assess the potential impact of the principal and emerging risks and uncertainties (including climate change) on the Group's Consolidated Fnancial Statements. Shaun Kelly Chairman of Audit Committee 2 March 2022 1. A copy of Section 404 of the Sarbanes Oxley Act 2002 can be obtained from the SEC's website, www .sec.gov. 2021 Annual Report and Form 20-F 67 66 Audit Committee Report - continued Key Areas of Focus in 2021 T able 1 Through discussions with both management and Deloitte, we r eviewed management's impairment testing methodology and processes, including key judgement ar eas, assumptions and alignment with our 2025 carbon reduction targets, as well as the relevant accounting and disclosur e requirements. W e found the methodology to be robust and the results of the testing process appr opriate. Further details in relation to the impairment outcome for 2021 are outlined in T able 2 on page 68. Impairment T esting In addition to the Committee's responsibilities under section 167(7) of the Companies Act 2014, the key ar eas of focus for the Committee in 2021 included the following: Deloitte has been the Group’ s external auditors since 2020. Richard Muschamp has been the Group’ s lead audit engagement partner since Deloitte’ s appointment as exter nal auditor . Following an assessment of Deloitte’ s continued independence, objectivity and performance, and having received conrmation of their willingness to continue in of ce, the Committee has recommended to the Boar d their continuance in ofce for the 2022 nancial year . Their continuance in ofce will be subject to a non-binding advisory vote at the 2022 AGM. We also consider ed and approved the remuneration of Deloitte. Further details of the r emuneration received by Deloitte in 2021 are set out in note 5 of the Consolidated Financial Statements on page 161. External Auditor We r eviewed the 2021 Annual Report and Form 20-F and the appropriateness of the Group's accounting principles, practices and policies, including the key estimates, judgements and disclosures made by management, together with the annual and half-year nancial statements, and recommended them to Boar d for approval. In June 2021, we met with Deloitte to agree the 2021 external audit plan. This included robust discussion and challenge with both Deloitte and management on the scope, materiality thresholds and structur e of the 2021 exter nal audit plan. T able 2 on page 68 outlines the key areas identied as being potentially signicant and how we addr essed these during the year . We met with Deloitte in February 2022 to discuss Deloitte's ndings, observations and recommendations arising fr om the 2021 external audit. Financial Reporting & External Audit We consider ed and discussed with management and Deloitte various accounting and reporting changes that impacted on the 2021 Annual Report and Form 20-F and/or future nancial periods, including: • The new SEC mining property reporting requir ements effective for the year ended 31 December 2021 (see pages 226 to 231 for more details); and • The new requirements under the EU T ransparency Dir ective and European Single Electronic Format (ESEF) Regulation effective for 2021 in r elation to the preparation and publication of annual reports in a single, structur ed, electronic format that aremachine-r eadable' Accounting & Regulatory Developments Climate Change A particular area of focus for the Committee in its r eview of the 2021 Annual Report and Form 20-F was the Group's reporting on climate-r elated risks, including the impact on the Group's accounting judgements, disclosures and nancial statements, including their alignment with CRH's carbon reduction targets, and its appr oach with regard to compliance with the recommendations of various r egulatory bodies (Inter national Accounting Standards Boar d, Inter national Audit and Assurance Standards Boar d, Financial Reporting Council, European Securities and Markets Authority), the T ask Force on Climate-related Financial Disclosur es (TCFD) and the emerging EU T axonomy requir ements. In conjunction with the SESR Committee, which took a lead role in analysing the TCFD r ecommendations and EU T axonomy regulations and the Company's response ther eto, the Committee reviewed the climate disclosures including the TCFD disclosur es on pages 28 to 31 and agreed that these ar e appropriate and that the assumptions used in the nancial statements were consistent with these disclosures. 2021 Annual Report and Form 20-F 67 66 We consider ed the requirements of the Irish Companies Act 2014 in r elation to the Directors’ Compliance Statement and received a r eport from management on the review undertaken during the nancial year of the compliance structur es and arrangements in place to ensure the Company’ s material compliance with its relevant obligations. On the basis of this review , we conrmed to the Board that the Company , in our opinion, is in material compliance with its relevant obligations. Directors’ Compliance Statements During the year , we received r egular updates from the Head of Internal Audit on delivery of the 2021 Inter nal Audit Plan and on the principal ndings from the work of Internal Audit and management’ s responses thereto. In December 2021, the Committee considered and appr oved the proposed Internal Audit plan and approach for 2022, together with the Internal Audit Charter . We also consider ed the results of an independent external assessment of the Inter nal Audit function which was conducted by KPMG during 2021. The assessment included interviews with key stakeholders across the Gr oup (including the members of the Committee) and the examination of the information provided to the Committee. The r esults, which were generally very positive, identied some areas wher e the effectiveness of the function could be enhanced. A detailed action plan to address the recommendations has been agr eed and will be implemented in 2022. Internal Audit Key Areas of Focus in 2021 - continued T able 1 We continued to monitor and discuss with management the Gr oup’ s IT governance and information security programme and the Group’ s ability to address evolving cyber security threats. IT Governance and Cyber Security We continued to monitor and assess the Gr oup’ s Enterprise Risk Management framework and the principal and emerging risks and uncertainties facing the Group, including those that could thr eaten its business model, future performance, solvency or liquidity . This included discussion on the impact of climate-related risks on the Gr oup’ s accounting judgements, disclosures, pr ocesses and nancial statements. We also consider ed an assessment of the Group’ s risk management and inter nal control systems. This had regar d to risk management strategies and all material controls, including nancial, operational and compliance contr ols that could affect the Group’ s business. Following this review , we concluded that the Company’ s systems of risk management and internal control were ef fective and appropriate in the context of the Group. Risk Management & Internal Control We r eviewed the Going Concer n Statement (see page 112), including the underlying assumptions (including alignment with the Group's 2025 carbon r eduction targets) and analysis to support the Going Concer n Statement, and recommended to the Board that it appr ove the Going Concer n Statement. We also r eviewed and discussed with management the methodology and processes underlying the Viability Statement, including the alignment with the Group's 2025 carbon r eduction targets, as set out on page 35. We found the methodology and processes to be r obust and recommended to the Board that it appr ove the Viability Statement. Going Concern & Viability Statements 2021 Annual Report and Form 20-F 69 68 Audit Services Non-audit Services 2021 - Deloitte 91% 9% 2020 - Deloitte 99% 1% 2019 - EY 94% 6% Percentage of Audit and Non-audit Fees (i) T able 3 Audit Committee Report - continued For the purposes of its annual impairment testing process, the Gr oup assesses the recoverable amount of each of CRH's cash-generating units (CGUs—see details in note 14 to the Consolidated Financial Statements) based on a value-in-use computation. The annual goodwill impairment testing was conducted by management, and papers outlining the methodology and assumptions used in, and the results of, that assessment wer e presented to the Committee. This included review of key judgement areas and assumptions such as CGU determination, discount rates, gr owth rates and alignment with the Group's 2025 carbon reduction targets. Following its deliberations, the Committee was satised that the methodology used by management (which was consistent with prior years) and the results of the assessment, together with the disclosur es in note 14, were appr opriate. As outlined in note 14, no impairment charge was recor ded in 2021 (2020: $0.4 billion). Impairment of Goodwill IFRS 15 Revenue from Contracts with Customers requir es revenue and expenses to be recognised on uncompleted contracts, with the underlying principle that, once the outcome of a long-term construction contract can be reliably estimated, revenue and expenses associated with that contract should be r ecognised by reference to the per centage of completion. If it is anticipated that the contract will be onerous (i.e. its unavoidable cost exceeds the economic benet of the contract), a pr ovision is created. Following discussion with management, recognising that the majority of contracts wer e completed within one year , the Committee was satised that the recognition of contract r evenue (including the associated disclosures) was appropriate for the Group in 2021. Contract Revenue Recognition Areas Identied for Focus During the 2021 External Audit Process T able 2 (i) Following a formal and extensive audit tender process, Deloitte replaced EY as the Gr oup's external auditor with effect from the nancial year commencing 1 January 2020. 2021 Annual Report and Form 20-F 69 68 A road grader working with aggregates in pr eparation for surfacing works and paving. Staker Parson Materials & Construction, part of CRH’ s Americas Materials Division, is a leading producer of quality sand, rock, landscape pr oducts, readymixed concrete and asphalt serving customers in Utah, Idaho, Nevada, and Arizona, United States. The company is also a leading general contractor specialising in road and highway construction, site development, excavating and demolition. 70 Nomination & Corporate Gover nance Committee Report On behalf of the Committee, I am pleased to present the Nomination & Corporate Governance Committee Report to shareholders, which summarises the ar eas of focus for the Committee over the course of the last year . In line with previous years, general details in relation to the r ole and responsibilities of the Committee, its operation and the policies applied by it, can be found in the Governance Appendix, available on our website, www .crh.com. Div e rsity was a core co mponen t fo r the e x ecutiv e and non- ex ecutiv e search proces ses cond ucted b y or o v er seen b y the Commit tee in the pas t 1 2 months. " Richie Bo ucher Chairman Committee Membership and Operation The Committee currently consists of ve non-executive Directors, consider ed by the Board to be independent. The biographical details of each member are set out on pages 56 to 59. The Chief Executive normally attends meetings of the Committee. The Chief Human Resources Of cer attends meetings, as required. Detailed reports of Committee discussions and recommendations ar e provided to the Board following the conclusion of each meeting. The Committee’ s papers and the minutes of its meetings are available to all Boar d Directors. Board Renewal In March 2021 and October 2021 r espectively , Caroline Dowling and Badar Khan joined the Board following r ecommendations from the Committee. They have extensive operational experience as senior executives in global businesses, knowledge of US markets and enhance the Board’ s skills in the areas of technology , capital-intensive industries and in providing solutions for climate change. Their detailed biographies are set out on pages 57 and 58 respectively . 2021 Annual Report and Form 20-F 71 1. Egon Zehnder provide executive recruitment and support services as and when r equested. Otherwise, they do not have any connection with CRH or individual directors. Membership of the CRH Board (as at 31 December 2021) T able 4 Female Male 67% 33% Gender Diversity White Asian 92% 8% Ethnicity (based on information provided by Directors in line with the Parker Review) 2014 2015 2016 2017 2018 2019 2020 23% 29% 33% 30% 38% 42% 42% 2021 Percentage of Female Directors at 31 December 33% Independence (determined by CRH Board annually) Independent Non-Independent 83% 17% Tenure of Non-executive Directors 3-6 years 0-3 years 60% 40% Geographical Spread (by residency) Mainland Europe N. America Ireland 42% 50% 8% These non-executive recruitment pr ocesses were supported by Egon Zehnder 1 . Potential candidate lists are collated based on specications agreed following Committee input and reviews of a skills matrix maintained to identify particular skills that would enhance the Board or which might need to be r eplaced following planned Board r etirements. The Committee reviews candidate lists and selects individuals for interview . Once a preferr ed candidate is identied other members of the Board ar e invited to meet with them prior to formal consideration of their appointment to the Board. During 2021, the Committee also recommended to the Board that Mary Rhinehart and Siobhán T albot, both of whom had completed their initial three-year term as a non-executive Dir ector , be appointed for a second three-year term. Following the AGM in April 2021, Heather Ann McSharry and Lucinda Riches retir ed from the Board after nine and six years r espectively . Senan Murphy also retir ed as a Director after the conclusion of the 2021 AGM. Following an extensive process, supported by Spencer Stuart, which considered both internal and external candidates, the Committee recommended to the Board that Jim Mintern succeed Senan as Finance Director . Jim, who has over 30 years of experience in the building materials industry , nearly 20 years of which have been with CRH, was appointed Finance Director and joined the Board with ef fect from 1 June 2021. His detailed biography is set out on page 56. Details of the remuneration arrangements put in place for Jim Mintern as Finance Director are set out in the Directors’ Remuneration Report on page 83. Executive Director Succession Planning Enhancing our long-term succession planning has been an area of particular focus in r ecent years. During the past year the Committee managed the Finance Director succession pr ocess noted above. Although our Chief Executive, Albert Manifold, has a contract of employment currently until age 62, the Committee also continued to support the Board during the year in r elation to the long-term process of planning for Chief Executive succession. We have worked with Egon Zehnder , which was selected for this purpose following a tender process, on the development of deliverables for the Board’ s consideration in relation to r ole specication, development plans for potential internal candidates, exter nal candidate pools and the identication of key attributes and traits for a successful transition. Whilst the Committee and the Board have developed a number of planning scenarios, including emergency arrangements for unexpected events, no decisions have been taken in relation to timing or potential candidates. Succession planning is typically an agenda item at each meeting of the Committee and most Board meetings. Board Committee Structur e and Composition As part of a planned succession for the Remuneration Committee Chairman role, Lamar McKay joined the Committee in August 2021 and was appointed Committee Chairman with effect fr om February 2022. Lamar's non-executive experience as a member of CRH's Remuneration Committee and the Management Development and Compensation Committee of AP A Corporation, coupled with his experience on the CRH Board and as Deputy Group C hief Executive Ofcer and Chief T ransition Ofcer at BP , provide him with very extensive knowledge of remuneration matters and, in particular , EU and UK legislative requir ements, UK Code provisions and stakeholder perspectives. As part of the transition process, Gillian Platt, an experienced Remuneration Committee member , was asked to serve as an interim Chair and provide leadership in supporting the work of the Remuneration Committee in preparing an updated remuneration policy for consideration by shareholders at the 2022 AGM. Details of the proposed updated r emuneration policy are set out in the Directors' Remuneration Report on page 80 to 97. A summary of Committee composition changes for current Boar d members in the past 12 months is set out in T able 5 on page 72. In 2018, the Board constituted a new Committee to focus on important initiatives in the areas of safety , the environment and social r esponsibility 2021 Annual Report and Form 20-F 73 72 Summary of Director Competencies T able 6 Accounting, Internal Control & Financial Expertise Financial Services Governance M&A Building Materials or Capital Intensive Industry Experience IT & Cyber Security T alent Management Remuneration Safety & Sustainability (including climate) Strategy Global Experience R. Boucher ▲ ▲ ▲ ▲ ▲ ▲ C. Dowling ▲ ▲ ▲ ▲ ▲ R. Fearon ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ J. Karlström ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ S. Kelly ▲ ▲ ▲ ▲ ▲ ▲ ▲ B. Khan ▲ ▲ ▲ ▲ A. Manifold ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ J. Mintern ▲ ▲ ▲ ▲ ▲ ▲ ▲ L. McKay ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ G. Platt ▲ ▲ ▲ ▲ ▲ M.K. Rhinehart ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ ▲ S. T albot ▲ ▲ ▲ ▲ ▲ ▲ ▲ Nomination Committee Report - continued – the SESR Committee. Since then, the work of this Committee has become embedded as a key component of the Board’ s structures. The Committee has recommended to the Boar d that it would be appropriate for Mary Rhinehart to succeed me as Chair of the SESR Committee after the conclusion of the 2022 AGM. Senior Independent Director Gillian Platt is the Board appointed Senior Independent Director . The responsibilities of the Senior Independent Director ar e set out in the Governance Appendix. Diversity Board r enewal and senior management succession are a constant pr ocess. As such, the priorities for renewal and succession evolve over time. Diversity is a core criteria of the Boar d's renewal policy , which is set out on page 74, and work in overseeing senior management succession. Accordingly , diversity , including but not limited to gender and ethnicity , is an integral part of developing short lists of internal and external candidates and is part of the search specication agreed with external agents. In particular , diversity was a core component for the executive and non-executive search processes conducted by or overseen by the Committee in the past 12 months. The Committee and the SESR Committee collectively work with management on the Inclusion & Diversity agenda at below Board level across CRH and monitor pr ogress against agreed Gr oup objectives and targets such as the Board’ s target of having a minimum of 33% of senior leaders being women by 2030. Details of Board gender and ethnicity ar e set out in T able 4 on page 71. Details of the current gender balance acr oss the group, including of the senior leadership team and their direct r eports is set out on page 18. 2. Christopher Saul Associates does not have any connection with CRH or individual Directors. External Board Evaluation The Committee recommended to the Boar d that Christopher Saul Associates 2 be engaged to conduct an evaluation of the effectiveness of the Board and its Committees in 2021. Christopher Saul, who led the evaluation, was Senior Partner at Slaughter and May from 2008 to 2016 and has extensive experience as a business leader , board adviser , practitioner in corporate transactions and in governance best practice. The outcome of the evaluation, which involved in-person interviews with each Director and members of the senior management team, reviews of Boar d papers and observing Board and Committee meetings, is summarised on page 61. Corporate Governance The Committee is responsible for r eviewing the independence of Board members and has recommended to the Boar d that all of the non-executive Directors be deemed to be independent. The Committee also monitors developments in best practice in relation to corporate governance and makes recommendations to the Boar d in relation to changes and enhancements to current procedur es, where appropriate. Richie Boucher Chairman of the Nomination & Corporate Governance Committee 2 March 2022 Summary of Committee composition changes T able 5 Name Joined Ceased C. Dowling ADF , Remuneration and SESR J. Karlström Audit S. Kelly Remuneration B. Khan Audit and SESR L. McKay Remuneration and Nomination J. Mintern ADF M. K. Rhinehart Audit S. T albot Nomination 2021 Annual Report and Form 20-F 73 72 Attendance at Scheduled Meetings during the year ended 31 December 2021 T able 8 Name Board ADF Audit Nomination (i) Remuneration SESR (ii) T otal Attended T otal Attended T otal Attended T otal Attended T otal Attended T otal Attended R. Boucher 5 5 5 5 - - 8 8 8 8 4 4 C. Dowling (iii) 4 4 3 3 - - - - 5 5 2 2 R. Fearon 5 5 4 4 5 5 - - - - - - J. Karlström (vi) 5 5 4 4 3 2 - - 8 7 4 4 S. Kelly 5 5 5 5 8 8 - - 6 6 - - B. Khan (iv) 1 1 - - - - - - - - - - A. Manifold 5 5 5 5 - - - - - - 4 4 J. Mintern 3 3 3 3 - - - - - - - - S. Murphy (v) 1 1 1 1 - - - - - - - - L. McKay 5 5 4 4 5 5 - - 2 2 3 3 H.A. McSharry (v) 1 1 - - 3 2 2 2 2 2 - - G. Platt 5 5 - - - - 8 8 8 8 4 4 M.K. Rhinehart (vi) 5 5 - - 3 3 8 8 6 5 4 4 L.J. Riches (v) 1 1 1 1 3 3 - - - - S. T albot (vi) 5 5 5 4 8 5 6 6 - - - - (i) Nomination & Corporate Gover nance Committee. (ii) Safety , Environment & Social Responsibility Committee. (iii) Appointed March 2021. (iv) Appointed October 2021. (v) Retired April 2021. (vi) Johan Karlström, Mary Rhinehart and Siobhán T albot were unable to attend some meetings during the course of 2021 due to diary conicts. Boar d of Directors Membership Structure of the Board We consider the curr ent size and composition of the Board to be within a range which is appropriate. The spr ead of nationalities of the Directors r eects the geographical reach of the Group and we consider that the Boar d as a whole has the appropriate blend of skills, knowledge and experience, from a wide range of industries, regions and backgr ounds, necessary to lead the Group. Section 1 of the Governance Appendix on the CRH website (www .crh.com) contains further details on the Board’ s structures and the Board’ s policies with regar d to the appointment and retir ement of Directors. Role and Responsibilities The Board is r esponsible for the leadership, oversight, control, development and long-term success of the Group. It is also r esponsible for instilling the appropriate cultur e, values and behaviour throughout the organisation. Ther e is a formal schedule of matters reserved to the Boar d for consideration and decision. This includes the matters set out in T able 7. The Group’ s strategy , which is regularly reviewed by the Boar d, and business model are summarised on pages 14 to 17. The Boar d has delegated some of its responsibilities to Committees of the Board. While r esponsibility for monitoring the effectiveness of the Gr oup’ s risk management and internal control systems has been delegated to the Audit Committee 3 , the Board r etains ultimate responsibility for determining the Group’ s risk appetite and tolerance, and annually considers a report in relation to the monitoring, contr olling and reporting of identied risks and uncertainties. In addition, the Board r eceives regular reports from the Chairman of the Audit Committee in relation to the work of that Committee in the area of risk management. Individual Dir ectors may seek independent professional advice, at the expense of the Company , in the furtherance of their duties as a Director . The Group has a Directors’ and Of cers’ Liability insurance policy in place. Directors ar e provided with access to all Board and Committee papers in advance of each meeting. If any Director cannot attend a meeting, they can communicate their opinions and comments on the matters to be considered via the Chairman or the relevant Committee Chairman prior to the relevant meeting. Matters Reserved to the Board T able 7 • Appointment of Directors • Strategic plans for the Group • Annual budget • Major acquisitions and disposals • Signicant capital expenditure • Approval of full-year results and the Annual Report and Form 20-F • Approval of the interim results Independence of Directors The Board has determined that each non-executive Director r emains independent. Chairman Richie Boucher was appointed Chairman of the Group with ef fect from 1 January 2020. On his appointment as Chairman, he met the independence criteria set out in the 2018 Code. Although he holds other directorships, the Boar d has satised itself that these do not adversely impact on his role as Chairman. 3. In accordance with Section 167(7) of the Companies Act 2014. 2021 Annual Report and Form 20-F 75 74 Substantial Holdings T able 9 As at 31 December 2021, the Company had received notification of the inter ests outlined in the table below in its Ordinary Share capital, which were equal to, or in excess of, 3%. Between 31 December 2021 and 2 March 2022, the Company was advised by Baillie Gif ford & Co. that its holding in CRH was 23,157,274 (3.01%). 31 December 2021 31 December 2020 31 December 2019 Name Holding/ V oting Rights % at year end Holding/ V oting Rights % at year end Holding/ V oting Rights % at year end BlackRock, Inc. (i) 56,891,415 7.38 59,047,330 7.52 53,813,273 6.82 Cevian Capital II GP Limited 27,534,705 3.57 27,534,705 3.51 - - UBS AG 26,380,604 3.34 26,380,604 3.34 26,380,604 3.34 (i) BlackRock, Inc. has advised that its interests in CRH shares arise by r eason of discretionary investment management arrangements entered into by it or its subsidiaries. Policy on Diversity We ar e committed to ensuring that the Board is sufciently diverse and appr opriately balanced. In its work in the area of Boar d renewal and succession planning, the Nomination & Corporate Governance Committee looks at the following four criteria when considering non-executive Director roles: • inter national business experience, particularly in the regions in which the Gr oup operates or into which it intends to expand; • skills, knowledge and expertise (including education or professional backgr ound) in areas relevant to the operation of the Boar d; • diversity in all aspects, including nationality , gender , social and ethnic backgrounds, cognitive and personal strengths; and • the need for an appropriately sized Board During the ongoing process of Boar d renewal, each, or a combination, of these factors can take priority . T o date, the Board has not set any policy regar ding age. The ages of the Directors range from 50 to 68, which the Nomination & Corporate Governance Committee believes is appropriate at the current time. Committees The Board has established ve permanent Committees to assist in the execution of its responsibilities. The curr ent permanent Committees are: • Acquisitions, Divestments & Finance; • Audit; • Nomination & Corporate Gover nance; • Remuneration; and • Safety , Environment & Social Responsibility Ad-hoc Committees are formed fr om time to time to deal with specic matters. Each of the permanent Committees has T erms of Reference 1 , under which authority is delegated to them by the Board. The Chairman of each Committee reports to the Boar d on its deliberations and minutes of all Committee meetings are circulated to all Dir ectors. The Chairmen of the Committees attend the AGM and are available to answer questions from shar eholders. Each of the Committees reviewed their r espective T erms of Reference during 2021 and minor changes were made to the T erms of Reference of the Audit, Nomination & Corporate Governance, Remuneration and SESR Committees in order to align these with current Boar d practices and terminology and to ensure that they r emain aligned to evolving best practice. The T erms of Reference of each Committee are available on the CRH website, www .crh.com. Substantial Holdings The Company is not owned or controlled dir ectly or indirectly by any government or by any corporation or by any other natural or legal person severally or jointly . The major shareholders do not have any special voting rights. Details of the substantial holdings as at 31 December 2021 are pr ovided in T able 9. Stock Exchange Listings CRH, which is incorporated in Ireland and subject to Irish company law , has a premium listing on the London Stock Exchange (LSE), a secondary listing on Euronext Dublin (formerly the Irish Stock Exchange) and its American Depositary Shares are listed on the New Y ork Stock Exchange (NYSE). Legal and Compliance CRH's Legal and Compliance function supports the Group in operating consistently with its values, providing advice, guidance and support to executive and operational management and working closely with them to provide compliance training to our employees. Legal and Compliance provides support on a range of matters including establishing policies and procedur es, providing compliance training and communications, providing legal advice on compliance and business issues, monitoring and investigating Hotline calls, competition/antitrust law , and ensuring the Group is informed of any changes to regulation and/or r eporting requirements. Code of Business Conduct Our culture as a company is built on our commitment to upholding the CRH V alues and in particular , doing what we say and leading with integrity . This means we do the right things in the right way , comply with the law and work responsibly . The foundation of the Legal and Compliance programme is the Code of Business Conduct (CoBC) and supporting policies, which set out our standards of legal, honest and ethical behaviour . The CoBC complies with the applicable code of ethics regulations of the SEC arising from the Sarbanes-Oxley Act. The CoBC is applicable to all employees of the CRH Group, including the Chief Executive, our Global Leadership T eam and senior nancial ofcers. A refr eshed CoBc was launched during 2021. CRH's Internal Audit function works si de- by-s ide with Legal and Compliance in monitoring compliance with the CoBC and supporting policies, and in providing an integrated appr oach to assurance. This cross-functional collaboration supports CRH's goal: to ensure CRH leads with integrity . Awar eness and T raining In line with our commitment to maintain high ethical business conduct standards, we continue to update and improve awar eness and training efforts. All new employees ar e provided with the CoBC and relevant employees undertake CoBC training and Advanced Compliance T raining on a regular basis. Additional training modules ar e developed for more focused topics and audiences where necessary . 1. The T erms of Reference of these Committees comply fully with the 2018 Code. 2021 Annual Report and Form 20-F 75 74 Investor Relations Activities T able 11 • Formal Announcements: including the release of the annual and interim r esults and the issuance of trading statements. These announcements are typically accompanied by presentations and webcasts or conference calls • Investor Roadshows: typically held following the release of formal announcements, provide an opportunity for the management team to meet existing and/or potential investors in a concentrated set of meetings • Industry Conferences: attendance at key sector and investor conferences af fords members of the senior management team the opportunity to engage with key investors and analysts • Investor Briengs: in addition to regular contact with investors and analysts during the year , the Company periodically holds capital market days, which include presentations on various aspects of CRH’ s operations and strategy and provides an opportunity for investors and analysts to meet with CRH’ s wider management team • Media Briengs: each year , the Company provides media briengs on various issues US Listing - Additional Information T able 10 Additional details in relation to CRH’ s general corporate governance practices are set out in the Governance Appendix, which is included as an exhibit to the Annual Report on Form 20-F as led with the SEC. For the purposes of the Annual Report on Form 20-F , the Gover nance Appendix, and in particular the following sections thereof, ar e incorporated by reference her ein: Section 1 - Frequently Asked Questions • Page 2: For what period are non-executive Directors appointed? • Page 3: What are the requir ements regar ding the retirement and r e-election of Directors? Section 2 - Operation of the Board’ s Committees • Page 5: Audit Committee: Role and Responsibilities • Page 5: Audit Committee: Meetings • Page 6: Audit Committee: Non-audit Fees Details of the executive Directors’ service contracts and the policy for loss of ofce ar e set out in the section entitled 'Service Contracts' on page 95. CRH Hotline CRH engages an external service provider to administer an independent 24/7 multi-lingual condential “Hotline” facility . The CRH Hotline allows employees, customers, suppliers and/ or other external stakeholders to raise good faith concerns that may be relevant to the CoBC, inappropriate or illegal behaviour or violations of any CRH policies or local laws. All concerns are handled discr eetly and are professionally investigated with appropriate actions taken based on investigation ndings. CRH is committed to creating an atmospher e where employees feel empowered to speak up when they have good faith concerns. Retaliation or reprisals are not tolerated at CRH. Communications with Shareholders Communications with shareholders ar e given high priority and the Group devotes considerable time and resour ces each year to shareholder engagement. We r ecognise the importance of effective dialogue as an integral element of good corporate governance. The Investor Relations team, together with the Chief Executive, Finance Director and other senior executives, r egularly meet with institutional shareholders (each year covering over 60% of the shareholder base). Detailed reports on the issues cover ed in those meetings and the views of shareholders ar e circulated to the Boar d after each group of meetings. T able 11 provides a brief outline of the nature of the activities undertaken by our Investor Relations team. In addition to the above, major acquisitions and disposals are notied to the Stock Exchanges in accordance with the r equirements of the Listing Rules and development updates, giving details of other acquisitions or disposals completed and major capital expenditure pr ojects, are issued periodically . During 2021, the Chairman, Remuneration Committee Chair and Company Secretary again participated in a number of meetings with some of the Group’ s major shareholders in advance of the 2021 AGM and as part of the Group's ongoing engagement processes. Also, as outlined in the Remuneration Committee Chairman’ s introduction to the Directors’ Remuneration Report on pages 81 and 82, there was extensive engagement with the Group’ s major shareholders in 2021 on the Remuneration Committee’ s proposals regarding the 2022 Directors’ Remuneration Policy . We r espond throughout the year to correspondence fr om shareholders on a wide range of issues. The following are available on www .crh.com T able 12 Governance Investors • Gover nance Appendix • Directors’ Remuneration Policy • T erms of Reference of the Acquisitions, Divestments & Finance, Audit, Nomination & Corporate Governance, Remuneration and Safety , Environment & Social Responsibility Committees • Memorandum and Articles of Association of the Company • Pre-approval policy for non-audit services provided by the external auditor • Compliance & Ethics statement, Code of Business Conduct and Hotline contact numbers • Annual and Interim Reports, the Annual Report and Form 20-F (separate documents up to 2015) and the annual Sustainability Report • News releases • Webcast recor dings of results briengs • General Meeting dates, notices, shareholder cir culars, presentations and poll results • Answers to Frequently Asked Questions, including questions regar ding dividends and shareholder rights in r espect of general meetings 76 Safety , Envir onment & Social Responsibility Committee Report Sustainabi lity has been deeply embe dde d in all as pects of our st rat egy and busines s m odel fo r man y years. " Richie Bo ucher Chairman Committee Membership and Operation The Committee currently consists of seven non-executive Directors and the Chief Executive. T ypically , new Board members join this Committee in order that they can gain an understanding of the important issues as they relate to CRH and its industry . This approach also enables the Boar d to quickly leverage their expertise in these key matters, and particularly in relation to climate change. The biographical details of each member of the Committee are set out on pages 56 to 59. The Committee meets every quarter and provides a detailed r eport of discussion and recommendations to the Boar d following the conclusion of each meeting. The Committee’ s papers and the minutes of its meetings are available to all Board Dir ectors. Climate Change and Sustainability Sustainability has been deeply embedded in all aspects of our strategy and business model for many years. We r ecognise the importance of decarbonisation in addressing the challenges of climate change and believe that our integrated strategy of value-added products and innovative solutions has an important part to play in the delivery of a more r esilient built environment and a more sustainable futur e. In 2021, we announced that we expect to achieve our 2030 carbon emissions reduction target by 2025. The Committee has, therefor e, worked with management to put in place updated stretching targets for 2030 as part of our stated ambition to achieve carbon neutrality by 2050 in accordance with the Paris Agreement. Those updated str etch targets are set out on page 21. I am pleased to introduce the Safety , Environment & Social Responsibility (SESR) Committee Report to shareholders. The report sets out the primary focus ar eas for the Committee in the areas of safety , climate change and sustainability , Inclusion & Diversity and workforce matters. 2021 Annual Report and Form 20-F 77 The Group continues to r eview carbon roadmaps in the context of technical, r egulatory , environmental and other developments, as carbon reduction is an important near -term component of the Group's carbon neutrality ambition by 2050. In this regar d, the Group is active with a broad range of stakeholders such as the Global Cement and Concrete Association (GCCA), Science Based T arget initiative (SBT i) and others to develop resour ces and innovations that will ultimately support cement manufacturing transition to a lower carbon production pr ocess. For example, CRH is a member of the SBTi's expert working group to develop the necessary resour ces to help companies producing cement to align with the goals of the Paris agreement. There is also signicant participation by the Group in initiatives aimed at further developing the circular economy , supporting and beneting from sustainable gr owth and climate neutrality . This presents signicant opportunities for CRH, as we focus on producing a new generation of Key Areas of Focus in 2021 T able 13 Employee Engagement: In line with the authority delegated to the Committee by the Board, we undertook a series of employee engagement exercises and consider ed and reported to the Board on the feedback r eceived from employees. Inclusion & Diversity: We r eceived and considered updates from management on the status of the ongoing work in the ar ea of Inclusion & Diversity . Corporate Purpose: We continued to monitor and r eview progress in r elation to the ongoing project to more fully dene and articulate the Group’ s corporate purpose (see page 61 for more details). Climate Lobbying: We undertook a r eview of CRH's climate-related lobbying practices to ensure that ther e is alignment between those practices and the expectations of the Board and our stakeholders. Social Responsibility We worked with management to put in place updated str etching targets for 2030 as part of our stated ambition to achieve carbon neutrality by 2050 in accordance with the Paris Agr eement. The updated targets are set out on page 21. In the context of the importance of concrete as a sustainable building m aterial, we also considered and discussed CRH’ s energy usage, including the plans and initiatives in place to reduce CRH’ s CO 2 emissions. We continued to r eview and consider reports on the outcomes of operational sustainability audits. We also worked with the Remuneration Committee in r elation to the incorporation of Sustainability and Inclusion & Diversity metrics into the Group's Performance Shar e Plan (see T able 40 on page 105 for more details). Sustainability /Environment We r eceived and discussed with management regular updates covering the Group’ s safety performance, policies, action plans, and the background, impact and r equired remediation actions in r elation to any serious incidents. Safety We consider ed and approved the Group’ s 2020 Sustainability Report, which was released in March 2021, and the various non-nancial disclosures included in this Report on pages 20 to 31. W e also reviewed and considered the pr oposed structure and format of the 2021 Sustainability Report, which will be published in March 2022. We also consider ed and discussed with management the work undertaken to ensure CRH's compliance with the new TCFD and EU taxonomy requir ements applicable for 2021 (see pages 26 to 31 and 243 for more details). Reporting low-carbon, sustainable building solutions for the built environment. By considering the full lifecycle of products and innovating to drive mor e sustainable outcomes - such as using waste materials and alternative fuels and renewable energy in providing products and solutions for our customers' needs - we can both meet changing customer demands and protect the envir onment. While CRH's continuous improvement pr ocesses will continue to deliver improvements for sustainability , new technologies will be requir ed to reach our net zer o aim, which do not currently exist in commercial form. T o support this, the Board will be putting in place an innovation fund of $250 million to support this work within CRH. Through the GCCA, the Gr oup is taking a leading role at industry level in setting the cement and concrete industry r oadmap for net zero concrete. Public policy is central to these efforts and ther e is a need for a comprehensive policy framework to make low-carbon cement manufacturing investable, to stimulate demand for low-carbon products and to cr eate a circular infrastructure and net zero manufacturing envir onment. The GCCA is actively working in partnership with policymakers, investors, resear chers and customers. Oversight and Assurance The Committee receives r eports on the outcomes of operational sustainability audits, which includes reports fr om Group Sustainability as well as from Internal Audit on any safety and environmental observations when completing an audit programme. In addition, DNV , one of the world's leading certication bodies, reviews management systems, interviews management, engages with external stakeholders and identies opportunities for improvement as part of the independent assurance of the CRH Sustainability Report. 2021 Annual Report and Form 20-F 79 78 SESR Committee - continued Incorporating ESG Metrics in CRH’ s Remuneration Incentive Structures The Remuneration Committee has consulted with shareholders on the incorporation of Sustainability and Inclusion & Diversity metrics, into the long-term Performance Share Plan. The targets proposed for the rst cycle of awar ds in 2022 using these measures wer e reviewed and recommended by the SESR Committee. Details of the proposed targets ar e set out in the Directors’ Remuneration Report on page 82. Employee W elfare and Engagement In 2021, the Board and management continued to focus attention on the adherence to health guidelines, and the needs of employees, customers and suppliers in relation to COVID-19 and our organisational health index. The Board is satised that CRH's experience during the pandemic is reective of the experience in wider society in the jurisdictions and geographies in which we operate. The Committee and the Board r eceive regular updates in relation to fatalities of employees and colleagues with conrmed cases of COVID-19 and on cases across the Gr oup. In relation to safety generally , the Committee receives r egular reports on lagging safety indicators, such as frequency and severity ratios, and on leading indicators, such as high potential learning events, safety audits and safety culture assessments. We very much r egret that there wer e four reportable fatalities in 2021 involving one employee, one contractor and two third-parties. The Committee received and consider ed detailed reports on each incident and discussed with the Divisional Presidents r esponsible for each business safety training and work processes and safety culture in the operations concerned. The Committee reports the ndings of its r eviews to the Board. Learnings from accidents and “near misses” are shar ed across the organisation. The Committee advised the Remuneration Committee that it did not consider that there wer e any issues arising from its safety r eviews that would require an override of remuneration incentive outcomes in 2021. During the year management undertook an extensive employee survey . Just under 38,000 employees were invited to participate, with a very strong r esponse rate of 65%. The ndings, which were consistent acr oss the organisation, showed a strong organisation health scor e. Areas for potential improvement have been identied and action plans have been put in place. However , the Committee and the Board noted that no fundamental or critical issues had been identied. The Board also undertook an employee engagement exercise, led by the Committee and supported by the Human Resources team, whereby we engaged with employees fr om Europe and the US in a number of two-way sessions. Due to COVID-19 restrictions, these sessions were held virtually . We discussed a range of topics under the broad themes of safety & compliance, performance (including remuneration policies) & development and people & culture. The sessions provided valuable insights into the lived experiences, perceptions and opinions of the Group’ s employees. The consolidated feedback, which was considered by the Committee and shared with the Boar d, was closely aligned to the outcome of the employee survey referr ed to above. A majority of the members of the Remuneration Committee was involved in the sessions and, as outlined on page 82, our employees' views of remuneration matters was considered by that Committee. Common areas identied in both the employee survey and engagement sessions were that: • Professional standards and values are homogenously understood and practiced across the Gr oup; • Employees feel a strong sense of connection to the Group but would welcome a dened organisational purpose (see also the section on corporate purpose on page 61); • There is an opportunity to strengthen employees' understanding of the link between their performance and organisational performance; • Employees believe that the organisation is making progr ess on Inclusion & Diversity , and noted many positive steps so far , but understand that this is an area wher e continued focus must remain Overall, the Committee and the Board believes the outcome of both exercises pr ovide positive support for its view that there is good alignment between CRH’ s values, strategy and culture and that this will further benet from the curr ent project to mor e comprehensively articulate CRH’ s corporate purpose. The Committee also continued to review and consider reports arising fr om the Group's 'Hotline' facility , including trends by category of hotline reports, the status of investigations into those reports, outcomes and actions taken. Regulatory environment CRH has a long-established commitment to transparency on sustainability and the Committee monitors regulatory and other r equirements in relation to climate-based disclosur es. During 2021, we noted further developments in this area, including the establishment of the International Sustainability Standards Boar d by the IFRS Foundation T rustees, the EU's proposed Corporate Sustainability Reporting Directive as well as further development in relation to the Securities and Exchange Commission's potential climate- related disclosur e rules. In respect of new r equirements for 2021 Reporting, the Committee reviewed r eports on work completed in relation to both the T ask Force on Climate-related Financial Disclosur es (TCFD) and the EU T axonomy Regulation. The TCFD standards r equire disclosure on climate-r elated governance, strategy , risk management as well as metrics and targets. CRH previously used TCFD standards on a voluntary basis, and in line with our commitment to transparency , our disclosures are now consistent with TCFD r ecommendations and recommended disclosur es. EU T axonomy , which is an EU regulatory classication system that denes environmentally sustainable activities by providing “technical screening criteria” thr esholds for activities to be reported as 'sustainable', r equires CRH to disclose the percentage of activities that ar e taxonomy-eligible in 2021. TCFD and EU T axonomy related disclosures have been reviewed by the Committee and ar e set out on pages 28 to 31 and 243 respectively . 2021 Annual Report and Form 20-F 79 78 Climate Lobbying We r ecognise that a supportive climate policy environment is essential for the Gr oup to deliver its 2050 ambition and ensure its business activities align with the Paris Agreement. The CRH Boar d and management are committed to transpar ency on climate lobbying activities, both in respect of direct advocacy and indir ect representation via our trade associations and rmly believe that lobbying must be consistent with the highest professional and legal standards. Public policy is central to efforts to deliver a net zer o built environment and there is a need for a compr ehensive policy framework to make low-carbon cement manufacturing investable, to stimulate demand for low-carbon products and to cr eate a circular infrastructure and net zer o manufacturing environment. The GCCA is actively working in partnership with policymakers, investors, resear chers and customers. During 2021, we undertook a review of CRH's climate-related lobbying practices. The purpose was to ensure ther e is an alignment between those practices and the expectations of the Board and our stakeholders. The Group will publish a report on the outcome of this r eview in conjunction with the publication of the 2021 Sustainability Report. The review did not identify material dir ect climate-related lobbying or any inconsistencies between our climate positions and those of our main trade associations. Inclusion & Diversity The Board and management ar e committed to building an inclusive and diverse organisation in which talented people of all backgrounds ar e welcome and can work in an environment which supports them in performing at their best. This is supported by a specic target of having a minimum of 33% of senior leaders being women by 2030. The Committee uses a dashboard to track progr ess against this target and diversity generally in relation to executive r oles. Inclusion & Diversity is also a standing item on SESR Committee agendas, with the Committee receiving r egular updates in relation to initiatives to build an inclusive culture in each Division and global function, and progr ess in the areas of learning and development such as mentorship programmes and I&D modules in training programmes. Following signicant pr ogress in 2021 around 5,000 leaders and managers have participated in I&D awareness training. In addition, a video series designed for all employees has been piloted and modules have been developed for our Frontline Leadership Pr ogramme. Richie Boucher Chairman of the Safety , Environment & Social Responsibility Committee 2 March 2022 On behalf of the Remuneration Committee, I am pleased to introduce the Dir ectors' Remuneration Report (the Report') for the nancial year ended 31 December 2021. Dir ectors’ Remuneration Report 80 202 1 was a nothe r y ear of r ecord deli ver y fo r th e Group, with full- year EBITD A ( as dened ) * of $5.35bn. " La mar Mc Kay Chairman of the Remuneration Committee Chairman's Overview Similar to prior years, this Report is split into three sections: • this introductory Overview (pages 80 to 86), which sets out the key issues dealt with by the Committee in the last year and summarises the way in which the Committee implemented CRH’ s remuneration policy in respect of 2021, the consultation process undertaken in r espect of proposed updates to CRH’ s remuneration policy and how we intend to implement the policy in 2022; • the proposed updated 2022 remuneration policy , which will be submitted to shareholders for approval at the 2022 AGM (pages 88 to 97); and • the Annual Report on Remuneration (pages 98 to 109), which contains details of CRH's remuneration arrangements and includes various legislative, regulatory and best practices disclosures Context and Performance in 2021 2021 was another year of recor d delivery for the Group, with full-year EBITDA (as dened)* of $5.35 billion. Our uniquely integrated solutions strategy supported further margin expansion across our businesses, while our str ong cash generation and disciplined approach to capital allocation provides further opportunities to cr eate value for all of our stakeholders. * EBITDA is dened as ear nings before interest, taxes, depreciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ prot after tax. 2021 Annual Report and Form 20-F 81 The key outcomes of CRH’ s performance in 2021 are summarised in T able 14. This is a tribute to all of our people and the leadership of our senior management team. Reecting its continued condence in CRH's nancial position, business performance and future pr ospects, the Board has pr oposed an increase of 5% in the dividend for the full year of 2021. Remuneration Policy Review and Shareholder Consultation Shareholders appr oved the current remuneration policy at the 2019 AGM, with 87% of the votes cast in favour of the resolution. This policy expir es at the conclusion of the 2022 AGM. Therefor e, an updated policy will be put forward to shar eholders for consideration at the 2022 AGM. It is intended that the updated policy will apply for a period of up to three years fr om that date. In developing proposals for the updated policy , the Committee conducted a review of the curr ent policy to ensure it r emains t-for -purpose, and continues to deliver against its stated purpose to: • Motivate and r eward executives to perform in the long-term interests of the shar eholders; • Attract and r etain executives of the highest calibre; • Reect the spr ead of the Group’ s operations so that remuneration packages in each geography are appr opriate and competitive for that talent market; • Foster entr epreneurship by rewar ding value creation for shar eholders through organic and acquisitive growth; • Pr ovide an appropriate blend of xed and variable remuneration and short and long-term incentives; and • Reect the risk policies and appetite of the Group We r eviewed performance against the 2021 Annual Bonus Plan targets and approved the 2021 bonus payments (see T able 32 on page 98 for more details). W e also reviewed and approved the 2022 Annual Bonus Plan structure, which is similar to the structur e of the 2021 Annual Bonus Plan (see page 104 for more details). Annual Bonus Plan Performance Share Plan (PSP) We r eviewed the performance of the Performance Share Plan award granted in 2019 against the applicable performance conditions and approved the vesting outcome (see T able 33 on page 99 for more details). W e also reviewed and appr oved the metrics and targets for the PSP awards granted in 2021 and to be granted in 2022. We consider ed and approved the remuneration arrangements for Jim Mintern, who was appointed to the Board and as Finance Dir ector with effect from 1 June 2021 (see T able 17 on page 83 for more details). Finance Director Remuneration Arrangements Salary We appr oved a 2.75% increase in salary for executive Directors in 2022. The approved incr ease is in line with the general workforce increase in Ireland and the UK. We consulted with stakeholders on the r enewal of the Group's remuneration policy and proposals to incorporate sustainability and diversity measur es into our incentive plans (see T able 40 on page 105 for more details). The 2022 Policy will be submitted to shareholders for appr oval at the 2022 AGM (see pages 88 to 97). Remuneration Review /Stakeholder Engagement Summary of Key Decisions/Activities T able 15 * EBITDA is dened as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. ** Comparative amounts are Earnings per Share pre-impairment which is a non-GAAP measure as calculated on page 222. Ear ni ng s p er Share as reported in the Consolidated Income Statement on page 140 ar e 2020: 142.9 cent and 2019: 203.0 cent. 2021 Performance Highlights T able 14 $ 31. 0 b n SALES 12 1. 0 c DIVIDEND PER SHARE $5.35bn EBITDA (AS DEFINED)* EARNINGS PER SHARE** 32 8.8 c RETURN ON NET ASSETS 12 . 3 % OPERA TING CASH FLOW $ 4 . 2b n 12% (2020: $ 27 .6 bn) (201 9: $28. 1bn) 3 5% (2020: 243. 3c) (201 9: 203 .8c) 220 bp s (2020: 10. 1 %) (201 9: 10.0 %) 5% (2020: 1 15.0c) (201 9: 92.0 c) 16% (2020: $ 4.6b n) (201 9: $4. 5b n) 7% (2020: $ 3.9 bn) (201 9: $3 .9b n) 2021 Annual Report and Form 20-F 83 82 The PSP is viewed as being the most effective vehicle for incentivising progr ess towards our sustainability ambition, recognising the long-term nature of our targets. The PSP is cascaded to c. 775 participants across the organisation on consistent terms, reinfor cing collective behaviours to deliver our goals. The Committee considered alternative approaches to accommodating this additional performance category to the PSP scorecar d, but concluded that the proposed weightings strike an appr opriate balance between ensuring a meaningful focus on sustainability and broadly maintaining the existing relative weighting of our nancial metrics. The Committee also considered including safety performance as a PSP measure. However , the Committee believes that safety should remain an override consideration when assessing outcomes under the short-term annual bonus plan. The targets for these Sustainability & Diversity measures for the 2022 cycle, which wer e developed by the SESR Committee in conjunction with management, are set out on in T able 40 on page 105. Shareholder Consultation In November 2021, we shared details of the proposed policy update with shar eholders, requesting their feedback on this. In total we contacted investors holding just over 50% of CRH’ s share capital, with responses received repr esenting in excess of 30% of our share capital. Overall, the proposals wer e positively received. The Committee and the Board was appr eciative of shareholders’ engagement thr ough the consultation, and the feedback received. The Committee considered specic comments fr om two shareholders about the r elative weighting of TSR compared to the other nancial measur es and whether this was at the right level, and whether the sustainability measures could be upweighted by incentivising the I&D measure in the annual bonus plan rather than the PSP . In weighing up this feedback, the Committee particularly noted the strong level of support for the proposals which formed the basis of the consultation. Therefor e, while noting the small number of suggestions regar ding reweighting In line with the commitment made in the Directors’ Remuneration Report submitted to the 2021 AGM, the Committee also reviewed CRH’ s incentive structures to ensure they are appropriately aligned with the Boar d’ s strategic ESG priorities and ambitions, including those related to sustainability and diversity . Having reected on feedback fr om shareholders during the Board's on-going and r egular shareholder engagement pr ocess, considered the evolving external environment (including the perspectives of wider stakeholder groups), and reviewed the curr ent policy in the context of CRH’ s overall strategy and the priorities and ambitions mentioned above, the Committee concluded that the core elements of the curr ent policy continue to be appropriate for CRH at this time. W e, therefore, invited feedback from shar eholders on a proposal to submit for approval a largely unchanged policy , with the exception of a proposed r eduction in the minimum weighting for any measure in the Performance Share Plan (PSP) scor ecard to 15% of the award opportunity (curr ently 25%). This proposed change pr ovides greater exibility around measur e selection for future award cycles and allows for the inclusion of sustainability and diversity measures for the 2022 awar d as outlined below . All other aspects of the current policy (and our approach to its implementation) will r emain unchanged. Proposed 2022 PSP scor ecard Following the review r eferred to above, the proposed change to our policy will enable the Committee to incorporate sustainability and diversity metrics into the PSP for 2022, with a weighting of 15% of the total award opportunity . This would supplement the current nancial metrics which we propose to r eweight as set out in T able 16. For 2022, it is proposed that the Sustainability & Diversity component would comprise three subcategories of 5% each: • Driving towards carbon neutrality; • Revenue from Products with Enhanced Sustainability Attributes; and • Inclusion & Diversity various measures, the Committee has concluded that the structure outlined above r emains appropriate for the 2022 awar d cycle. This position will continue to be kept under review for futur e awards under the PSP , to ensure the scor ecard continues to align closely with our strategic priorities. W orkforce Engagement As outlined in the SESR Committee report on page 78, the SESR Committee, whose members include the majority of the members of the Remuneration Committee, undertook an employee engagement exercise, supported by the Group’ s Human Resources team, with employees from Eur ope and the US in a number of sessions promoting two-way dialogue. Fr om a remuneration perspective, we explained the Group’ s approach to remuneration, which for r oles with greater levels of responsibility has a higher emphasis on performance related pay (and, in particular , long-term performance), and the way in which incentive structures ar e cascaded through the organisation generally . The broad feedback fr om employees was that our remuneration structur es support a focus on long-term sustainable success and there was an appr eciation that the signicant level of variable pay , a signicant proportion of which is payable in CRH shares and subject to deferral periods and potential clawback, incentivises long-term value creation and a str ong alignment with the interests of shar eholders and other stakeholders. Employees also told us that there was str ong support for the proposals to incorporate Sustainability & Diversity measures into the remuneration policy , given the importance of those initiatives to the workforce and wider society more generally . Group Finance Dir ector The Board appointed a new Finance Dir ector , Jim Mintern, on 1 June 2021. Jim was previously Chief of Staff in the Of ce of the Chief Executive and has held various senior operational and nancial roles in CRH since he joined the Gr oup in 2002. Details of the remuneration package agr eed by the Committee for Jim with effect fr om his date of appointment are set out in T able 17 on page 83. The Committee was mindful of ensuring that this package is in keeping with our principles (as set out earlier) of being motivational, fair and providing an appropriate blend of xed r emuneration, short and long-term incentives, that aligns closely with shareholder inter ests. T o inform this decision, the Committee reviewed the internal equity of the package and, with the support of our external adviser benchmarked it relative to other FTSE50 companies (excluding nancial services, and on Chairman's Overview - continued Proposed 2022 PSP scor ecard T able 16 Measure 2021 PSP 2022 PSP (proposed) Cash Flow 50% 45% RONA 25% 20% Relative TSR 25% 20% Sustainability & Diversity - 15% 2021 Annual Report and Form 20-F 83 82 which basis the package is broadly median). T aking into account these additional reference points, the Committee believes that the package is appropriate. Senan Murphy retir ed from the Board following the 2021 AGM and as Finance Director on 1 June 2021. He continued as an executive in order to support the successful transition of the Finance Director r ole and will remain for a time as an employee to facilitate the completion of a number of ongoing projects/initiatives. He is expected to retir e from CRH in 2022 and relevant r emuneration details will be disclosed at the appropriate time. 2021 Remuneration The Committee's approach to r emuneration, and the way in which the metrics selected by the Committee incentivise management are aligned with CRH's strategy and support the long-term performance of the Group, ar e summarised in T ables 19 and 21 on pages 85 and 86 respectively . A summary of 2021 remuneration is set out in T able 18 on page 85. Fixed Pay As reported in the 2020 Dir ectors’ Remuneration Report, salary increases of 2.75% wer e awarded to the executive Directors in January 2021, in line with the average increase awar ded to the general workforce. Jim Mintern - Remuneration Arrangements (i) T able 17 Component Level Context 2021 Salary €838,000 p.a. (pro-rated) In line with previous Finance Dir ector , and reective of 20+ years' senior operational and nance experience in CRH Pension 10% of salary Aligned to the wider workforce in Ir eland and the UK Annual Bonus Maximum opportunity: 200% of salary Within policy limits; 33% of payout will be satised by share awards deferred for three years PSP opportunity (2022 onwards) Awar d opportunity: 250% of salary Within policy limits; vested awards are subject to a two-year holding period Holding Requirements In post: 250% of salary , to be achieved by 1 June 2024 In line with policy Post-employment: 150% of salary for a period of two years post-employment In line with policy (i) Mr . Minter n was appointed Finance Director and to the Board with ef fect from 1 June 2021. The planned phased reduction of the Chief Executive’ s payment in lieu of pension contributions continued to be implemented in 2021, with a further 10% reduction in the amount that would otherwise have been paid. It has been reduced further fr om 1 January 2022 to below 25% of his 2022 salary , reducing to zero in August 2022 in line with his contractual arrangements. Incentive T argets in 2021 As was noted in the 2020 Directors’ Remuneration Report, the targets for the 2021 annual bonus plan and the 2021 PSP awards wer e set in early 2021 in the context of unprecedented uncertainty presented by the COVID-19 pandemic. Therefor e, we noted that, in the event that certain assumptions underlying the process of setting those targets did not transpire, r evised targets might be requir ed to appropriately assess the underlying performance of the Group. 2021 Annual Bonus Plan As visibility improved on the impact of COVID-19 on the economies and construction markets in which CRH operates, mid-way through the year the Committee reviewed and r evised upwards the nancial targets for the 2021 annual bonus plan. Performance against these revised targets determined the outcome of the nancial element of the bonus, which repr esents 80% of the potential bonus opportunity . As a result of the r ecord nancial performance of the Group in 2021 and highest ever EBITDA (as dened)* outturn of $5.35 billion, the maximum target under each of the nancial metrics was exceeded, resulting in a calculated payout level of 100%. Details of the revised targets for 2021 for each of the EPS, operating cash ow and RONA metrics, and the very strong performance against those targets, are set out in T able 32 on page 98. The remaing 20% of the annual bonus plan r elated to personal and strategic objectives. These are outlined on page 99. Notwithstanding the outperformance during the year , both management and the Committee recognise the ongoing economic and social impact of the pandemic, and in that context judged that it would be appropriate to cap the bonus outcome in respect of the 2021 Annual Bonus Plan at 85% of maximum. In line with CRH's remuneration policy , 33% of the earned bonus payments will be deferred into shares for a period of thr ee years. For Jim Minter n, a deferral of 25% applied for the period up to his appointment as Finance Director in June 2021. * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. 2021 Annual Report and Form 20-F 85 84 As outlined previously , the metrics for the PSP awards in 2022 will comprise cash ow , TSR, RONA and Sustainability & Diversity measures. The targets are set out in T able 40 on page 105. Non-executive Directors A Committee of the Chairman and the executive Directors r ecommended that the fees of the non-executive Directors be incr eased with effect from 1 January 2022 by r eference to the wider workforce incr ease of 2.75% in Ireland and the UK. The non-exe cutive Director fee structure to apply under the 2022 Policy is set out in T able 41 on page 105. Group Chairman The Committee has reviewed the fee level for the Group Chairman, taking into account the performance of the Chairman since his appointment in 2020 and the nature and extent of his time commitment to full his responsibilities. We also r eviewed CRH’ s fee level relative to other FTSE50 companies (excluding nancial services). The Committee has increased the Chairman’ s fee from €630,000, the amount set for the r ole when the current policy was appr oved by Shareholders in 2019, to €647,250 with effect fr om 1 January 2022 by refer ence to the increase for the wider workforce in Ir eland and the UK of 2.75%. 2022 AGM At the 2022 AGM, shareholder appr oval will be sought in respect of thr ee separate remuneration related r esolutions: • the Directors’ Remuneration Report, which is an advisory vote on the way in which our remuneration policy was implemented in 2021, and the Committee’ s proposed approach to its implementation in 2022; • the updated 2022 remuneration policy , which includes the policy changes outlined above; and • a resolution to increase the limit on Directors’ fees. In accordance with the Articles of Association of the Company and Irish company law , shareholders set the maximum aggr egate amount of the fees (basic salary) payable to non-executive Directors. The curr ent limit of €1,000,000 was set by shareholders at the 2019 AGM. Approval will be sought at the 2022 AGM to increase the limit to €1,200,000. This change is requir ed as a result of an increased number of non-executive Dir ectors on the Board and to pr ovide exibility for fee increases over time. Conclusion As set out above, 2021 was another year of strong performance and value cr eation for shareholders due to the ef forts of our employees and the leadership of the senior executive team. The Committee strongly believes ther e is a very close alignment between this performance and the remuneration outcomes for the executive Directors. W e also believe that the enhancements to the remuneration policy will support and incentivise the achievement of our strategic priorities and the long-term sustainable success of the Group, and ar e in line with the expectations of our shareholders and wider stakeholders. We look forwar d to your support for the remuneration-r elated resolutions on the agenda of the 2022 AGM. Lamar McKay Chairman of the Remuneration Committee 2 March 2022 2021 PSP Awar d The Committee also reviewed the targets for the 2021 PSP awards mid-way thr ough the year and revised upwar ds the targets for the RONA and cash ow metrics (see T able 36 on page 100 for more details). 2019 PSP Awar d The vesting of the 2019 PSP award, which covered the thr ee nancial years from 2019 to 2021 inclusive, has been assessed by the Committee against the cash ow , TSR and RONA targets which were set in early 2019. CRH's strong performance against these measur es resulted in the vesting of 100% of these awar ds (see T able 33 on page 99 for more details). Overall incentive outcome The Committee is satised that there is a very strong alignment between the incentive outcomes outlined above for 2021 and the performance of the Company . The Committee also took into account a number of factors, including, feedback from other Committees in r elation to matters such as safety performance, whether any extraneous factors outside the control of management had unduly inuenced the outcome and considered progr ess in relation to strategic objectives not captured by the nancial measur es used for remuneration purposes, and the experience of key stakeholder groups (including employees). The Committee concluded that there was no requir ement to use its discretion to adjust incentive outcomes in respect of any of these matters. Implementation of Remuneration Policy in 2022 Fixed Pay The Committee has reviewed the executive Directors' base salaries and concluded that salary increases of 2.75% should also be awar ded to Albert Manifold and Jim Mintern in 2022 in recognition of their continued str ong performance, contribution and leadership of CRH. The approved increase is in line with the general workfor ce increase in Ir eland and the UK. Incentives The 2022 annual bonus plan will continue to reect the structur e, weightings and metrics used in prior years: EPS, operating cash ow , RONA and personal/strategic objectives. The targets attaching to the 2022 bonus will be disclosed in the 2022 Directors’ Remuneration Report. Chairman's Overview - continued 2021 Annual Report and Form 20-F 85 84 2021 Remuneration Snapshot (full details of 2021 remuneration ar e set out in T able 22 on page 87) T able 18 Fixed Performance-related V ariable Remuneration Director Salary Annual Bonus (iii) (% of Max) 2019 PSP Awar d (iv) (% of Max) Albert Manifold €1,607,430 85% 100% Jim Mintern (i) €488,833 85% 100% Senan Murphy (ii) €279,600 85% 100% (i) Appointed as Finance Dir ector and to the Board with effect fr om 1 June 2021. Accordingly , the salary in the T able above covers the period fr om 1 June 2021 to 31 December 2021. Details of Mr . Mintern's remuneration arrangements as Finance Director are set out in T able 17 on page 83. (ii) Retired from the Board on 29 April 2021. Accor dingly , the salary in the T able above is pro-rated for service from 1 January 2021 to 29 April 2021. The equivalent salary for 12 months would be €838,800. Mr . Murphy remains a current executive to facilitate the completion of some outstanding pr ojects/initiatives. He is expected to retir e from CRH during 2022 and details of his remuneration arrangements on retir ement will be disclosed in due course. (iii) For the reasons outlined on page 83, the Committee and the executive Directors judged that the payout under the 2021 annual bonus plan should be capped at 85% of maximum. (iv) The awards, for which performance was measured over the thr ee-year period to end 2021, will vest at 100%. The award for Mr . Mintern, which was granted before his appointment to the Board, is not subject to an additional holding period and will vest in April 2022. The awar ds for Mr . Manifold and Mr . Murphy are subject to an additional two-year holding period and, therefor e, will vest in 2024. Further details in relation to the estimated value of the awards, split between the value created for performance and the value created thr ough share price growth, are included in T able 22 on page 87. The market value per share on the date of award (in Mar ch 2019) was €29.86. Alignment of Executive Remuneration with Strategy T able 19 Performance Measure (i) Annual Bonus PSP Reason for Selection EPS EPS is a key measure of the underlying pr otability Cash Flow Cash ow is a key measure of CRH’ s ability to generate cash to fund organic and acquisitive growth and provide returns to our shareholders via dividends and shar e buybacks RONA RONA is a key measure of CRH's ability to cr eate value through excellence in operational performance TSR TSR is a key measure of CRH's r etur ns to shareholders thr ough the cycle Sustainability & Diversity Sustainability is deeply embedded in all aspects of the Group's strategy and business model. W e recognise the importance of decarbonisation in addressing the challenges of climate change and we ar e fully committed to achieving our ambition of carbon neutrality by 2050. We also believe that our integrated model of value-added products and innovative solutions strategy has a key part to play in the delivery of a mor e resilient built environment and a mor e sustainable future. Furthermore, we consider that an inclusive working environment, policies and practices will assist in further developing the diversity of our workforce and leadership teams, which will positively contribute to growing shar eholder value over the longer term Personal/Strategic Objectives Personal strategic objectives enable a focus on specic factors aligned with CRH's short and medium-term strategic objectives that promote long-term performance (i) Please see the footnotes to T ables 32 and 33 on pages 98 and 99 respectively for further information on the operation of the nancial metrics for the purposes of the Group's incentive schemes. Most Recent Remuneration Related V otes T able 20 Y ear of AGM % in Favour % Against No. of V otes Withheld T otal No. of V otes Cast (incl. V otes Withheld) % of Issued Share Capital V oted Directors’ Remuneration Report (“Say on Pay”) 2021 91.46% 8.54% 655,868 530,703,797 67.61% Directors’ Remuneration Policy Report 2019 86.73% 13.27% 4,846,043 496,827,532 61.43% 2021 Annual Report and Form 20-F 87 86 The key principles underpinning the Committee’ s approach to setting remuneration at a level that: Committee’ s Approach to Remuneration T able 21 The Committee also seeks to ensure that updates to the Policy take into account the views of stakeholders and evolving best practice. The Boar d and the Committee are regularly updated on the perspectives of our employees and take these perspectives into account when making r emuneration decisions. Further details in relation to workforce engagement on r emuneration matters are set out on page 82. The Committee also has oversight of remuneration policy acr oss the Group and endeavours to keep the principles and structure of remuneration consistent in so far as is possible given CRH's international footprint. Generally speaking, total remuneration is mor e variable (and, in particular , weighted towards long-term performance) for roles with greater levels of r esponsibility and scope. In setting the remuneration policy and practices for executive Dir ectors, the Committee also takes into consideration the six pillars outlined in the 2018 Code; clarity , simplicity , risk, predictability , proportionality and alignment to cultur e, and is satised that the 2022 Policy addresses each of these areas (see page 88 for further details). Is fair and balanced Is market competitive, enabling the Company to recruit and r etain talented executives Incentivises executives in a way that focuses on delivering the Company’ s strategic objectives Aligns the interests of the executive team with those of shar eholders Chairman's Overview - continued 2021 Annual Report and Form 20-F 87 86 Individual Executive Remuneration for the year ended 31 December 2021 (Audited) T able 22 Albert Manifold Jim Minter n (i) Senan Murphy (ii) 2021 2020 2019 2021 2020 2019 2021 2020 2019 Fixed Pay €000 €000 €000 €000 €000 €000 €000 €000 €000 Basic Salary (iii) 1,607 1,469 1,523 489 - - 280 768 794 Benets (iv) 23 27 43 21 - - 6 13 27 Retirement Benet Expense (v) 551 612 667 49 - - 68 204 199 T otal Fixed Pay 2,181 2,108 2,233 559 - - 354 985 1,020 Performance-related Pay Annual Bonus (vi): Cash Element 2,049 2,018 1,964 554 - - 238 689 683 Deferred Shar es 1,025 1,009 982 277 - - 119 344 342 T otal Annual Bonus 3,074 3,027 2,946 831 - - 357 1,033 1,025 Long-term Incentives (vii): Performance Share Plan - value delivered thr ough performance 5,992 5,075 3,834 1,146 - - 1,928 1,632 1,028 - value delivered thr ough share price growth 2,659 990 298 509 - - 855 319 80 T otal Long-term Incentives 8,651 6,065 4,132 1,655 - - 2,783 1,951 1,108 T otal Performance-related Pay 11,725 9,092 7,078 2,486 - - 3,140 2,984 2,133 T otal Single Figure 13,906 11,200 9,311 3,045 - - 3,494 3,969 3,153 (xed and performance-related) T otal Fixed v . T otal Remuneration 16% 19% 24% 18% - - 10% 25% 32% T otal V ariable v . T otal Remuneration 84% 81% 76% 82% - - 90% 75% 68% (i) Mr . Minter n was appointed as Finance Director and to the Boar d with effect from 1 June 2021. Accor dingly , his remuneration reected in the above T able relates to remuneration for the period 1 June 2021 to 31 December 2021. Full details of Mr . Mintern's remuneration arrangements for this period are in line with the 2019 Remuneration Policy (and the proposed 2022 Remuneration Policy) and ar e set out in T able 17 on page 83. (ii) Mr . Murphy retir ed as Finance Director and from the Boar d with effect from 29 April 2021. Accordingly , his remuneration reected in the above T able relates to remuneration for the period 1 January 2021 to 29 April 2021. Mr . Murphy remains employed by CRH and is anticipated to r etire from CRH during 2022. Full details of Mr . Murphy's remuneration arrangements on retir ement will be disclosed in due course. (iii) Basic Salary: As outlined on page 74 of the 2020 Annual Report and Form 20-F , the executive Directors voluntarily waived 25% of their salaries for a period of thr ee months in 2020. (iv) Benets: For executive Directors these relate principally to the use of company cars (or car allowances), medical insurance and life assurance and, wher e relevant, the value of the non-taxable discount on the grant of options under the Group’ s 2010 SA YE Scheme. (v) Retirement Benet Expense: As noted on page 101, Albert Manifold receives a supplementary taxable non-pensionable cash allowance, in lieu of pr ospective pension benets foregone. This allowance is similar in value to the r eduction in the Company’ s liability represented by the pension benet for egone. It is calculated based on actuarial advice as the equivalent of the reduction in the Company’ s liability to Mr . Manifold and spread over the term to retirement as annual compensation allowances. The phased reduction of Mr . Manifold's allowance, details of which were outlined in the 2019 Dir ectors' Remuneration Report, continued to be implemented in 2021, with a 10% reduction in the amount that would otherwise have been paid. Senan Murphy r eceived a supplementary taxable non-pensionable cash supplement equivalent to 25% of his 2020 base salary in lieu of a pension contribution (see page 101 for more details). Mr . Mintern receives a supplementary taxable non-pensionable cash supplement equivalent to 10% of his annual base salary in lieu of a pension contribution, in line with that available to the Irish and UK workforce. (vi) Annual Bonus Plan: Under the executive Directors’ Annual Bonus Plan for 2021, a bonus was payable for meeting clearly dened and stretch targets and strategic goals. The structure of the 2021 Plan, together with details of the performance against targets and payouts in r espect of 2021, are set out on pages 98 and 99. In the case of Mr . Mintern and Mr . Murphy , the bonuses disclosed in the above T able reect the portion attributable to their tenure as an executive Dir ector . A third of the 2021 bonuses to be paid to executive Directors will be deferr ed into shares for a period of three years, with no additional performance conditions. For Mr . Mintern, for the period up to his appointment as Finance Director on 1 June 2021 a deferral of 25% applies. For 2019 and 2020 bonuses, a third of executive Directors’ bonuses r espectively were paid in Deferred Shares, vesting after thr ee years, with no additional performance conditions. (vii) Long-term Incentives: In February 2022, the Remuneration Committee determined that 100% of the maximum PSP awards made in 2019 will vest, based on performance. The awards for Mr . Manifold and Mr . Murphy are subject to a further two-year holding period and will vest in 2024. The awar d for Mr . Minter n, which was granted prior to his appointment as Finance Director , is not subject to an additional holding period and will vest in April 2022. For the purposes of this T able, the value of these has been estimated using a share price of €43.11, being the thr ee-month average share price to 31 December 2021. Amounts in the long-term incentive column for 2020 for Mr . Manifold and Mr . Murphy reect the value of long-term incentive awards with a performance period ending in 2020 (i.e. the PSP awards granted in 2018), which the Remuneration Committee determined in February 2021 had met the applicable performance targets. The awar ds are scheduled to vest in 2023 following the completion of a two-year holding period. For the purposes of this T able, the value of these awards has been estimated using a shar e price of €33.01, being the three-month average shar e price to 31 December 2020. Amounts in the long-term incentive column for 2019 reect the value of long-term incentive awards with a performance period ending in 2019 (i.e. the PSP awar ds granted in 2017), which the Remuneration Committee determined in February 2020 had met the applicable performance targets. The awards ar e scheduled to vest in 2022 following the completion of a two-year holding period. For the purposes of this T able, the value of these awards has been estimated using a shar e price of €33.38, being the three-month average share price to 31 December 2019. 2021 Annual Report and Form 20-F 89 88 CRH’ s Approach to Remuneration The purpose of the 2022 Policy is to: Proposed 2022 Dir ectors’ Remuneration Policy As outlined in the Committee Chairman’ s Statement on page 81, the Committee carried out a detailed review of the Gr oup’ s remuneration arrangements during 2021. In doing so, the Committee took into account the strong support fr om shareholders for the 2019 Policy and our approach to its implementation over its life, as well as feedback from shar eholders during the year . The Committee also noted the support from employees in various engagement sessions during 2021 for the introduction of ESG targets in the long-term performance share plan. The principal proposed changes to the 2019 Policy , which was approved by shar eholders at the 2019 AGM, are set out on page 82. The following sets out the full updated 2022 Policy (the "2022 Policy"). The 2022 Policy , if approved, will pr ovide the framework for remuneration decisions made by the Remuneration Committee. It is the Company’ s intention that the 2022 Policy will apply until the 2025 AGM, unless the Remuneration Committee seeks shareholder appr oval for a renewed policy at an earlier date. The Remuneration Committee’ s aim is to make sure that CRH’ s pay structures are fair , responsible and competitive, in order that CRH can attract and r etain staff of the calibr e necessary for it to compete in all of its markets. The Group’ s remuneration structures ar e designed to drive performance and link rewar d to the responsibilities and individual contribution of executives, while at the same time reecting the risk policies of the Group. It is our policy to grant participation in the Group’ s performance-related plans to key management to encourage alignment with shareholders’ inter ests. In setting remuneration levels, the Remuneration Committee takes into consideration the remuneration practices of other international companies of similar size and scope and trends in executive remuneration generally , in each of the regions in which the Company operates. The Committee is mindful of managing any conicts of interest. Ther efore, no individual is involved in determining his/her own remuneration arrangements. The Committee determines the remuneration of the Chairman and the executive Directors, with neither the Chairman nor any executive Director being being pr esent when their respective individual r emuneration is being considered or appr oved. The remuneration of the non-executive Directors, including the Committee members, is determined by a committee of the Chairman and the executive Directors. Provide an appr opriate blend of xed and variable remuneration and short and long-term incentives Reect the spread of the Gr oup’ s operations so that remuneration packages in each geography are appr opriate and competitive for that area In for mu lati ng th e 2022 Po licy, the Com mit te e sou gh t to ens ure t hat i t and t he G rou p' s rem une ra tio n pr act ice s we re co nsi ste nt wi th the s ix fa cto rs s et o ut in Pr ovis ion 4 0 of the 201 8 Co de: Clarity The 2022 Policy is designed to be sustainable and simple. The policy updates in 2022 are few in number and focused on enabling alignment with clearly dened and communicated strategic priorities Simplicity The 2022 Policy utilises market standard annual bonus and long-term incentive plans, the operation of both of which are clearly explained in detail and well-understood by participants Risk The 2022 Policy has been designed to ensure that inappr opriate risk taking is discouraged with a balanced use of annual and longer term incentives, best practice measures such as signicant in-employment and post-employment shareholding r equirements to align the long-term interests of executives and shareholders; and the use of clawback and malus pr ovisions. In addition, the Committee retains discr etion to override formulaic outcomes; any use of such discretion will be disclosed in the relevant Remuneration Report Predictability The possible outcomes under the 2022 Policy are quantiable. Illustrations of potential outcomes under various scenarios are included in this r eport Proportionality The 2022 Policy has been designed to ensure that ther e is a clear link between pay outcomes and the delivery of the Group's strategy and performance. A signicant pr oportion of the executive Directors' potential remuneration isat risk' and is subject to clearly dened and str etching performance targets Alignment to Culture The 2022 Policy is designed to promote the long-term sustainable success of the Gr oup. The performance metrics and targets used in the annual and long-term incentive plans reect our values and key strategic priorities Reect the risk policies and appetite of the Group Reward and motivate executives to perform in the long-term inter ests of the shareholders Attract and retain executives of the highest calibr e Foster entrepr eneurship within the Group by rewar ding the creation of shareholder value through organic and acquisitive gr owth Dir ectors' Remuneration Report 2021 Annual Report and Form 20-F 89 88 Policy T able T able 23 Element Fixed Base Salary Fixed Pension Purpose and link to strategy • Competitive salaries help to attract and retain staff with the experience and knowledge requir ed to enable the Group to compete effectively in its markets • Pension arrangements provide competitive and appropriate r etirement plans • Given the long-term nature of the business, pension is an important part of the remuneration package to support cr eation of value and succession planning Operation • Base salaries are set by the Committee taking into account: – the size and scope of the executive Director’ s r ole and responsibilities; – the individual’ s skills, experience and performance; – salary levels at FTSE listed companies of a similar size and complexity to CRH and other international construction and building materials companies; and – pay and conditions elsewhere in the Group • Base salary is normally reviewed annually with changes generally effective on 1 January , although the Committee may make an out-of-cycle increase if it considers it to be appropriate • Irish-based executive Directors may participate in a contributory dened benet scheme or , if they joined the Group after 1 January 2012, in a dened contribution scheme as the dened benet scheme which the Directors participate in is closed to new entrants • For new appointments to the Board the Committee may determine that alternative pension provisions will operate (for example a cash contribution). When determining pension arrangements for new appointments the Committee will give regar d to existing entitlements, the cost of the arrangements, market practice and the pension arrangements received elsewhere in the Gr oup. Pension contribution rates for any newly appointed executive Directors will not exceed the norm for pension r elated contributions/allowances for new recruits, acr oss the general workforce, in the individual’ s home jurisdiction or , if applicable, the jurisdiction in which the individual is to be based in their executive Director r ole Maximum opportunity • Base salaries are set at a level which the Committee considers to be appropriate taking into consideration the factors outlined in the “operation” section above • While there is no maximum base salary , normally increases will be in line with the typical level of increase awar ded to other employees in the Group but may be higher in certain circumstances. These cir cumstances may include: – Where a new executive Director has been appointed at a lower salary , higher increases may be awarded over an initial period as the executive Director gains in experience and the salary is moved to what the Committee considers is an appropriate positioning; – Where there has been a signicant incr ease in the scope or responsibility of an executive Dir ector’ s role or where an individual has been internally promoted, higher salary increases may be awar ded; and – Where a larger increase is consider ed necessary to reect signicant changes in market practice • The entitlement of individuals participating in dened contribution schemes reects the accumulated individual and matching company contributions paid into the schemes. At present no Ir eland-based executive Directors are members of a dened contribution scheme • In relation to Mr . Manifold, who joined the Group prior to 31 December 2011, the dened benet pension is provided thr ough an Irish-revenue approved r etirement benet scheme (the ‘Scheme’). Accrued benets for service to 31 December 2011 are based on pensionable salary and years of service as at that date (annual accrual of 1/60 th ), with this tranche being revalued annually at the Consumer Price Index subject to a 5% ceiling. For service subsequent to that date a career -average revalued earnings system was introduced with each year of service being subject to annual revaluation on the same basis as outlined above. Mr . Manifold has elected to cease accruing pension benets and to receive a supplementary taxable non-pensionable cash allowance in lieu of pension benets foregone as a result of the pension cap (see page 101 for mor e details). This allowance is similar in value to the reduction in the Company’ s liability represented by the pension benet foregone. Whilst ther e is no absolute maximum to the quantum of these payments they are calculated based on actuarial advice as the equivalent of the reduction in the liability the Company would otherwise have had under the Scheme in respect of Mr . Manifold’ s benets and spread over the term to r etirement as annual compensation allowances. Mr . Manifold has voluntarily reduced the monetary value of the pension contribution/allowance so that it is below 25% of his base salary as at 1 January 2022. His contractual entitlement to compensation in lieu of pension payments will cease in August 2022 when he reaches age 60 Performance measure • Not applicable • Not applicable Future Policy T able Further details regar ding the operation of the 2022 Policy for the 2022 nancial year can be found on pages 98 to 109 of the Directors’ Remuneration Report. Under the Shareholder Rights Dir ective 2017/2018 which was transposed into Irish law by the EU (Shareholders' Right) Regulations 2020 ("SRD II"), public limited companies must submit a remuneration policy to an advisory vote at least every four years or earlier if ther e is a proposed material change to the approved policy . In order to continue alignment with general practice in the UK, the Committee intends to seek approval from shar eholders to renew/ update the policy every three years. Regulatory Backdrop 2021 Annual Report and Form 20-F 91 90 Policy T able | continued Element Fixed Benets Purpose and link to strategy • T o provide a market competitive level of benets for executive Dir ectors Operation • The Committee’ s policy is to set benet provision at an appr opriate market competitive level taking into account market practice, the level of benets provided for other employees in the Gr oup, the individual’ s home jurisdiction and the jurisdiction in which the individual is based • Employment-related benets include the use of company cars (or a car allowance), medical insurance for the executive Director and his/her family and life assurance • In the event that the Chief Executive falls ill or is injured in such a way as which would constitute ill-health or disablement so that the Chief Executive could not work for a period of more than six months, in lieu of the early ill-health r etirement provisions in the pension scheme which would otherwise operate in such cases, he shall be entitled to receive a disability salary of €1,000,000 per annum. Such payment would cease when the Chief Executive reaches age 60, r etur ns to work or if the service agreement is terminated • Benets may also be provided in relation to legal fees incurred in respect of agreeing service contracts, or similar agreements (for which the Company may settle any tax incurred by the executive Dir ector) and a gift on retirement • The Committee may remove benets that executive Directors r eceive or introduce other benets if it is considered appr opriate to do so. The Company may also pay the tax due on benets if it considers that it is appropriate to do so • All-employee share schemes - executive Directors ar e eligible to participate in the Company’ s all-employee share schemes on the same terms as other employees. Executive Directors may also r eceive other benets which are available to employees generally • Re-location policy - where executive Directors ar e required to r e-locate to take up their role, the Committee may determine that they should receive appr opriate re-location and ongoing expatriate benets. The level of such benets would be determined based on individual circumstances taking into account typical market practice Maximum opportunity • The level of benet provided will depend on the cost of providing individual items and the individual’ s circumstances, and therefor e the Committee has not set a maximum level of benets Performance measure • Not applicable Dir ectors’ Remuneration Report - continued 2021 Annual Report and Form 20-F 91 90 Policy T able | continued Performance-related pay - Annual Bonus Performance-related pay - 2014 Performance Shar e Plan • The Annual Performance-related Incentive Plan is designed to rewar d the creation of shar eholder value through operational excellence and organic and acquisitive growth. The Plan incentivises executive Dir ectors to deliver Group and individual goals that support long-term value creation • A Deferred Annual Performance-related Incentive Plan element links the value of executive Directors’ r eward with the long-term performance of the CRH share price and aligns the inter ests of executive Directors with those of shareholders • “Malus” and clawback provisions enable the Company to mitigate risk • The purpose of the 2014 Performance Share Plan is to align the interest of key management across dif ferent regions and nationalities with those of shareholders thr ough an interest in CRH shares and by incentivising the achievement of long-term performance goals • “Malus” and clawback provisions enable the Company to mitigate risk • The Annual Performance-related Incentive Plan rewar ds executive Directors for meeting Company performance goals over a nancial year of the Company . T argets are set annually by the Committee • The annual bonus is paid in a mix of cash and shares (structured as a deferr ed share awar d) • For 2022: – 66.7% of the bonus will be paid in cash; and – 33.3% will be paid in shares • In future years, the Committee may determine that a differ ent balance between cash and shares is appr opriate and adjust the relevant payments accordingly • When assessing performance and determining bonus payouts the Committee also considers the underlying nancial performance of the business to ensure it is consistent with the overall award level • The deferred element of the bonus will be structured as a conditional shar e award or nil-cost option and will normally vest after thr ee years from grant (or a differ ent period determined by the Committee). Deferred share awards may be settled in cash in exceptional circumstances • Dividend equivalents may be paid on deferred share awar ds in respect of dividends paid during the vesting period. These payments may be made in cash or shares and may assume the r einvestment of dividends on a cumulative basis • For deferred awards, “malus” pr ovisions apply . Cash bonus payments are subject to clawback of the net amount paid for a period of three years fr om payment • Awards (in the form of conditional shar e awards or nil-cost options) normally vest based on performance over a period of not less than three years. Awar ds may also be settled in cash in exceptional circumstances • Awards ar e normally subject to an additional holding period ending on the fth anniversary of the grant date (or another date determined by the Committee) • Dividend equivalents may be paid on PSP awards that vest in respect of dividends paid during the vesting period until the end of the holding period. These payments may be made in cash or shares and may assume reinvestment on a cumulative basis • “Malus” and clawback provisions (as set out in the rules of the 2014 Plan) will apply to awards • Maximum annual opportunity of 225% of base salary • For 2022, the intended maximum award levels are: – 225% of base salary for Chief Executive; and – 200% of base salary for the Finance Director • Maximum annual opportunity of up to 365% of base salary • For 2022, the intended award levels are: – 365% of base salary for Chief Executive; and – 250% of base salary for Finance Director • The performance-related incentive plan is based on achieving clearly dened and stretching annual targets and strategic goals set by the Committee each year based on key business priorities • The performance metrics used are a mix of nancial targets including return goals and personal/strategic objectives generally . Currently 80% of the bonus is based on nancial performance measures • The Committee may vary the weightings of measures but no less than 50% shall be based on nancial performance measures • A portion of the bonus metrics for any Director may be linked to his/her specic area of r esponsibility • Up to 50% of the maximum bonus will be paid for achieving target levels of performance • Awards to be granted in 2022 will vest based on cumulative cash ow (45%), a relative TSR test compar ed to a tailored group of key peers (20%), RONA (20%) and a number of Sustainability & Diversity measures (15%) • For threshold levels of performance, 25% of the award vests • Where applicable, when determining vesting under the PSP the Committee reviews whether the TSR performance has been impacted by unusual events and whether it therefor e, reects the underlying performance of the business • The Committee may adjust the weightings of the measures at the start of each cycle, with no measure’ s weighting falling below 15% • The Committee may amend the performance conditions if an event occurs that causes it to consider that an amended performance condition would be more appr opriate and would not be materially less difcult to satisfy 2021 Annual Report and Form 20-F 93 92 Notes to Policy T able Changes to 2019 Remuneration Policy Proposed changes to the 2019 Policy ar e outlined in the Remuneration Committee Chairman's Overview on pages 80 to 84. Plan Rules The 2014 Deferred Shar e Bonus Plan and the 2014 Performance Share Plan form part of the 2022 Policy and shall be operated in accordance with the relevant plan rules. A wards may be (i) adjusted in accordance with the rules in the event of a variation of the Company’ s share capital, merger , de-merger , special dividend or other event that, in the opinion of the Committee, materially affects the price of shar es; and (ii) amended in accordance with the plan rules. Clawback/Malus For Deferred Annual Performance-r elated Incentive plan awards and Performance Shar e Plan awards, the Committee has the discr etion to reduce or impose further conditions on awar ds prior to vesting in certain circumstances, including but not limited to: • a material misstatement of the Group’ s audited nancial results; • a material failure of risk management; or • serious reputational damage to the Group or one of its businesses as a result of a participant’ s misconduct or otherwise Cash bonus payments are subject to clawback of the net amount paid for a period of three years from payment in the cir cumstances outlined. V ested PSP awards ar e subject to clawback for a period of three years fr om the date of vesting. Other elements of remuneration ar e not subject to clawback or malus provisions. General The Committee reserves the right to make any remuneration payments and payments for loss of ofce (including exer cising any discretions available to it in connection with such payments) notwithstanding that they are not in line with the policy set out above where the terms of the payment were agr eed (i) before 7 May 2014 (the date the Company’ s rst shareholder -approved Directors’ Remuneration Policy came into ef fect); (ii) before the policy set out above came into effect, pr ovided that the terms of the payment were consistent with the shar eholder -approved Directors’ Remuneration Policy in for ce at the time they were agr eed; (iii) at a time when the relevant individual was not a dir ector of the Company and, in the opinion of the Committee, the payment was not in consideration for the individual becoming a director of the Company; or (iv) in settlement of statutory employment rights. For these purposes “payments” includes the Committee satisfying awards of variable remuneration and, in r elation to an award over shares, the terms of the payment ar e “agreed” at the time the award is granted. Minor Amendments The Committee may make minor changes to the 2022 Policy for regulatory , exchange control, tax or administrative purposes or to take account of a change in legislation without seeking shareholder approval for that amendment. Information Supporting the Policy T able Selection of Performance Measures and T argets (i) Annual bonus Annual incentive plan targets are selected each year to incentivise executive Directors to achieve annual nancial, operational, strategic and personal goals across a range of metrics which are consider ed important for delivering long-term performance excellence. (ii) Performance share plan The ultimate goal of our strategy is to provide growth and long-term sustainable value for all of our shareholders. Performance measur es are selected each year . For PSP awards to be granted in 2022, the measures ar e, therefore, focused on generating cash in the business, achieving relative outperformance of TSR against our key peers, generating a return on net assets and promoting the achievement of the Gr oup's key sustainability and diversity objectives. T argets and measures for the annual bonus and PSP are set each cycle by the Committee taking into account internal plans and exter nal expectations. T argets are calibrated to be stretching but motivational to management and to be aligned with the long-term creation of shareholder value. Remuneration Ar rangements Throughout the Group CRH operates signicant operations in c. 3,235 locations in 28 countries with approximately 77,400 employees across the globe. Remuneration arrangements throughout the organisation, therefor e, differ depending on the specic role being undertaken, the level of seniority and responsibilities, the location of the role and local market practice. However , remuneration arrangements ar e designed based on a common set of principles: that rewar d should be set at a level which is appropriate to retain and motivate individuals of the necessary calibre to full the r oles without paying more than is considered necessary . The reward framework is designed to incentivise employees to deliver the requir ements of their roles and add value for shareholders. The Group operates shar e participation plans and savings-related shar e option schemes for eligible employees, including executive Directors, in all regions wher e the regulations permit the operation of such plans. Remuneration Policy for New Hires CRH has a strong history of succession planning and developing internal executive talent. The Committee ’ s ke y principle when determining appr opriate remunerat ion ar ran ge me nts fo r a new exe cut ive D ire ctor (appoin ted from within the organisation or ex ter nal ly) i s that a rr an ge me nts ar e in the b es t inte res ts of both C RH a nd its s ha re hol de rs wi thou t pay ing m ore t han i s co nsi de red ne ce ss ar y by t he Co mm it tee to re cr uit a n execu tive o f the re qu ire d ca lib re to deve lop a nd deliver the business strat egy . Dir ectors’ Remuneration Report - continued 2021 Annual Report and Form 20-F 93 92 Remuneration Policy for Non-Executive Directors T able 24 Approach to Setting Fees Basis of Fees Other Items • The remuneration of non-executive Directors is determined by a Board committee of the Chairman and the executive Directors • The Remuneration Committee determines the remuneration of the Chairman within the framework or broad policy agr eed with the Board • Remuneration is set at a level which will attract individuals with the necessary experience and ability to make a substantial contribution to the Company’ s affairs and r eect the time and travel demands of Board duties • Fees are set taking into account typical practice at other companies of a similar size and complexity to CRH • Fees are reviewed annually • Fees are paid in cash • Non-executive Director fees policy is to pay: – a basic fee for membership of the Board; – an additional fee for chairing a Committee; – an additional fee for the role of Senior Independent Director; – an additional fee to reect committee work (combined fee for all committee roles); and – an additional fee based on the location of the Director to r eect time spent travelling to Board meetings • Other fees may also be paid to reect other Board roles or r esponsibilities • In accordance with the Articles of Association, shareholders set the maximum aggr egate amount of the fees payable to non-executive Directors. The current limit of €1,000,000 was set by shareholders at the Annual General Meeting held in 2019. Approval will be sought at the 2022 AGM to increase the limit to €1,200,000. • The non-executive Directors do not participate in any of the Company’ s performance-related incentive plans or shar e schemes • Non-executive Directors do not receive pensions • Where relevant, the Gr oup Chairman may be reimbursed for expenses incurr ed in travelling from his r esidence to his CRH ofce on a gross up basis so that he is not at a net loss after deduction of tax • Benets including retirement gifts (pr ovided they do not exceed the de minimis threshold outlined on page 104) may be provided if, in the view of the Board (for non-executive Directors or for the Chairman), this is considered appr opriate. The Company may gross up any expenses so that the non-executive Directors ar e not at a net loss after deduction of tax. Details regar ding any benet provided will be disclosed in the relevant year of r eceipt The Committee would generally seek to align the remuneration package of fered with our remuneration policy outlined in T able 23 on pages 89 to 91. When determining appropriate remuneration arrangements the Committee will take into account all relevant factors including (among others) the level of opportunity , the type of remuneration opportunity being forfeited and the jurisdiction the candidate was recruited fr om. Any remuneration of fered would be within the limit on variable pay outlined in this 2022 Policy . V ariable remuneration in r espect of an executive Director’ s appointment shall be limited to 590% of base salary measured at the time of awar d. This limit is in line with the plan maximum outlined in T able 23 on pages 89 to 91. This limit excludes any awards made to compensate the Director for awar ds forfeited from his or her previous employer . The Committee ma y make awards on ap poi ntin g an exe cut ive D ire ctor to “b uy-o ut ” rem un era tio n term s for f ei ted on l eav in g a previous employer . In doing so the Committ ee wil l ta ke acc oun t of rel eva nt fac tors i ncl ud ing any performance conditions attached to these award s, the fo rm i n wh ich t hey we re gr ante d (e. g. c ash o r sh are s) an d the ti me ove r whi ch they wo ul d have ve sted. T he C omm it tee’ s key pr inc ipl e is th at ge ne ra lly b uy- ou t award s wil l be made on a comparable basis t o those forfeited. T o f aci lit ate award s ou tlin ed a bove, th e Committee ma y grant aw ards under Compan y inc en tive s che me s or u nd er U K Li stin g Rul e 9.4 .2 w hi ch al lows f or th e gra ntin g of awar ds, to faci lit ate, in un usu al c irc ums tan ce s, the rec ru itm ent o f an exec uti ve Di rec tor , wit hou t se ek in g pri or s ha reh old er a pp roval o r un de r other relevant compan y incentive plans. The use of L is tin g Rul e 9.4 .2 s ha ll be l im ited to bu y- out awa rds. In the e vent t hat a n inte rn al c and id ate is pro moted to the B oa rd, le ga cy ter ms a nd conditions will normally be honoured, incl uding any outs tanding incentive a wards. In the e vent of t he a ppo intm en t of a new Chairman or non-e xecutive Director , remuner ation arrangement s will normally reect t he policy outl ined in T able 2 4. Other rem un era tio n ar ran ge me nts may b e prov id ed to a new Chairman or non-ex ecutive Direct or if these arrangements are considered appropriate in ac co rda nc e wit h the p rin ci ple s se t out i n T able 2 4. 2021 Annual Report and Form 20-F 95 94 Remuneration Outcomes in differ ent Performance Scenarios T able 25 Performance Scenario Payout Level Minimum • Fixed pay (see T able 26 for each executive Director) • No bonus payout • No vesting under the Performance Share Plan On-target performance • Fixed pay (see T able 26 for each executive Director) • 50% annual bonus payout (112.5% of salary for the Chief Executive and 100% for the Finance Director) • 25% vesting under the Performance Share Plan (91.25% of salary for the Chief Executive and 62.5% for the Finance Director) Maximum performance (at constant share prices and assuming a 50% increase in shar e price) • Fixed pay (see T able 26 for each executive Director) • 100% annual bonus payout (225% of salary for the Chief Executive and 200% of salary for the Finance Director) • 100% Performance Share Plan vesting (365% of salary for the Chief Executive and 250% for the Finance Director) Hypothetical Remuneration V alues T able 26 Salary With effect fr om 1 January 2022 Benets Level paid in 2021 (i) Estimated Pension (ii) T otal Fixed Pay Chief Executive (Albert Manifold) €1,651,635 €23,000 €412,500 €2,087,135 Finance Director (Jim Mintern) €861,045 €21,000 €86,105 €968,150 (i) Based on 2021 expenses. (ii) See page 101 for details in relation to r etirement benet arrangements. Remuneration Outcomes in differ ent Performance Scenarios Remuneration at CRH consists of xed pay (salary , pension and benets), short-term variable pay and long-term variable pay . A signicant portion of executive Directors’ r emuneration is linked to the delivery of key business goals over the short and long-term and the creation of shareholder value. T able 27 shows hypothetical values of the remuneration package for executive Dir ectors under four assumed performance scenarios (based on 2022 proposals). No share price gr owth or the payment of dividend equivalents has been assumed in these scenarios (other than where specied). Potential benets under all-employee share schemes have not been included. Performance-related Remuneration Outcomes T able 27 Fixed Pay Annual Bonus Long-term incentives €m €15.0 €14.0 €12.0 €10.0 €8.0 €6.0 €4.0 €2.0 €0 Chief Executive €2,087 100% €5,454 34% 28% 38% €11,835 18% 31% 51% €14,850 14% 25% 61% €m €6.0 €5.0 €4.0 €3.0 €2.0 €1.0 €0 Finance Director €968 100% €2,367 36% 23% 41% €4,843 20% 36% 44% €5,919 16% 29% 55% Minimum On-target performance Minimum On-target performance Constant share price Share price +50% Maximum Constant share price Share price +50% Maximum Performance Performance Dir ectors’ Remuneration Report - continued 2021 Annual Report and Form 20-F 95 94 Executive Director Service Contracts and Policy on Payment for Loss of Ofce When determining leaving arrangements for an executive Director the Committee takes into account any contractual agreements (including any incentive arrangements) and the performance and conduct of the individual. Service Contracts The Chief Executive and Finance Director have entered into service contracts with the Company . The summaries in T ables 28 and 29 set out the key remuneration terms of those contracts. All incentive arrangements remain at the discretion of the Committee. The Committee reserves the right to make any other payments in connection with a director’ s cessation of ofce or employment wher e the payments are made in good faith in discharge of an existing legal obligation (or by way of damages for breach of such an obligation) or by way of a compromise or settlement of any claim arising in connection with the cessation of a director’ s ofce or employment. Under Irish company law , CRH is not requir ed to make service contracts available for inspection as the notice period is not more than 12 months. Service contracts will only be available with the executive Director’ s consent due to data protection r easons. Annual Cash Bonus Executive Directors may , at the discretion of the Committee, remain eligible to r eceive an annual bonus award for the nancial year in which they leave employment. Such awards will be determined by the Committee taking into account time in employment and performance. Share Plan Rules – Leaver Pr ovisions The treatment of outstanding shar e awards in the event that an executive Director leaves is governed by the relevant share plan rules. T able 30 on page 96 summarises leaver provisions under the executive shar e plans. “Good leaver” circumstances ar e dened in the 2014 Performance Share Plan and deferr ed annual performance-related incentive plans as ill-health, injury , disability , the participant’ s employing company or business being sold out of the Group or any other r eason at the Committee’ s absolute discretion (except where a participant is summarily dismissed). Chief Executive Service Contract T able 28 Notice period • 12 months’ notice by the Company or the executive Expiry date • Indenite duration • T erms of contract will automatically terminate on the executive’ s 62 nd birthday T ermination payments • On lawful termination of employment, the Committee may , at its absolute discretion, make a termination payment in lieu of 12 months’ notice based on base salary , benets and pension contribution due during that period • Where the Company terminates the contract lawfully without notice then no payment in lieu of notice shall be due • If, in the event of a change of control, there is a diminution in the r ole and responsibilities of the Chief Executive he may terminate the contract; on such termination a payment equal to one year’ s remuneration (being salary , pension, other benets and vested incentive awards) will be made to the executive Disability • In the event that the Chief Executive falls ill or is injured in such a way as which would constitute ill-health or disablement so that the Chief Executive could not work for a period of more than six months, in lieu of the early ill-health r etirement provisions in the pension scheme which would otherwise operate in such cases, he shall be entitled to receive a disability salary of €1,000,000 per annum. Such payment would cease when the Chief Executive reaches age 60, r etur ns to work or if the service agreement is terminated Other information • The Company retains the ability to suspend the executive from employment on full salary and to requir e the executive to observe a period of “garden leave” of up to 12 months on full salary , contractual benets and pension contribution Group Finance Dir ector Service Contract T able 29 Notice period • 12 months’ notice by the Company or the executive Expiry date • Indenite duration • T erms of contract will automatically terminate on the executive’ s 65 th birthday T ermination payments • On lawful termination of employment, the Committee may , at its absolute discretion, make a termination payment in lieu of 12 months’ notice based on base salary , benets and pension contribution due during that period • Where the Company terminates the contract lawfully without notice then no payment in lieu of notice shall be due Disability • In the event that the Finance Dir ector falls ill or is injured in such a way as which would constitute ill-health or disablement so that the Finance Director could not work for a period of more than six months, in lieu of the early ill-health r etirement provisions in the pension scheme which would otherwise operate in such cases, he shall be entitled to receive a disability salary equivalent to two-thir ds of basic salary per annum. Such payment would cease when the Finance Director r eaches age 65, returns to work or if the service agreement is terminated Other information • The Company retains the ability to suspend the executive from employment on full salary and to requir e the executive to observe a period of “garden leave” of up to 12 months on full salary , contractual benets and pension contribution Where an individual leaves by mutual agr eement the Committee has discretion to determine the treatment of outstanding shar e awards. Individuals who are dismissed for gr oss misconduct would not be treated as “good leavers”. Awar ds under the Savings-related Share Option Scheme are tr eated in accordance with the rules. The rules provide that awar ds may be exercised by a participant’ s executor within 12 months of the date of death, and six months from the date of termination of employment in other circumstances where options automatically become exer cisable, for example in the case of retir ement. Where an executive ceases employment on his own volition or as a result of summary dismissal they will normally forfeit outstanding share incentive awards. 2021 Annual Report and Form 20-F 97 96 Leaver Provisions T able 30 Death “Good Leavers” as determined by the Committee in accordance with the plan rules Leavers in other circumstances Deferred Annual Performance Incentive Plan 2014 • Unvested awards vest, unless the Committee determines otherwise, to the extent determined by the Committee • Awards in the form of nil-cost options may be exercised for 12 months fr om death (or another period determined by the Committee) • Awards shall normally vest in full at the normal vesting date. Alternatively , the Committee may determine that awards should vest at the time the individual leaves, subject to the Committee determining that the individual has a shareholding suf cient to meet the post-employment shareholding r equirement • Where awards vesting in such cir cumstances are granted in the form of nil-cost options participants shall have six months from vesting to exercise their awar d • Where awards have alr eady vested at cessation of employment, participants shall have six months from cessation of employment to exercise their option • Unvested Awar ds will lapse on the individual’ s cessation of ofce or employment Performance Share Plan 2014 • Unvested awards shall vest as soon as practicable following death unless the Committee determines otherwise. The number of shares vesting shall be determined by the Committee taking into account the extent to which the performance condition has been met and, if the Committee determines, the length of time that has elapsed since the award was granted until the date of death (or if death occurs during an applicable holding period, to the beginning of the holding period) • Awards in the form of nil-cost options may be exercised for 12 months fr om death (or another period determined by the Committee) • Awards shall normally vest at the normal vesting date. Alternatively the Committee may determine that awards should vest at the time the individual leaves, subject to the Committee determining that the individual has a shareholding suf cient to meet the shareholding requir ement post-cessation • The level of vesting shall be determined by the Committee taking into account the extent to which the performance condition has been met and, unless the Committee determines otherwise, the period of time that has elapsed since the date of grant until the date of cessation (or if cessation occurs during an applicable holding period, to the beginning of the holding period) • Awards vesting in such cir cumstances in the form of nil-cost options may be exercised for six months fr om vesting (or another period determined by the Committee). Where a nil-cost option was alr eady vested at cessation of employment, participants may exercise such options for six months from cessation (or another period determined by the Committee) • Unvested Awar ds will lapse on the individual’ s cessation of ofce or employment The Committee may allow awards to vest early at its discretion in the event an executive Dir ector is to be transferred to a jurisdiction wher e he would suffer a tax disadvantage or he would be subject to restrictions in connection with his award, the underlying shar es or the sales proceeds. Change of Control In the event of a change in control of the Company , the Committee will consider whether it would be appropriate for awar ds to be exchanged for equivalent awards in the purchaser’ s shares. Unless the Committee determines otherwise, in the event of a change in control of the Company: • awards granted under the 2014 Plan will vest taking into account the extent to which any performance condition has been satised and, unless the Committee determines otherwise the period of time that has elapsed since grant and the relevant event (or if the event occurs during an applicable holding period, to the beginning of the holding period); and • awards granted under the 2014 Deferred Annual Performance-related Incentive Plan may , at the discretion of the Committee, vest in full If the Company is wound up or there is a de-merger , de-listing, special dividend or other similar event which the Committee considers may affect the price of the Company’ s shares: • awards granted under the 2014 Plan may , at the Committee’ s discretion, vest taking into account the extent to which any performance condition has been satised and, unless the Committee determines otherwise, the period of time that has elapsed since the date of grant and the relevant event (or if the event occurs during an applicable holding period, to the beginning of the holding period); and • awards granted under the 2014 Deferred Annual Performance-related Incentive Plan will vest to the extent the Committee determines Shareholding Guideline for Executive Directors Executive Directors ar e required to build up (and maintain) a minimum holding in CRH shares. The shareholding guidelines for the Chief Executive and Finance Director ar e 3.5 times basic salary and 2.5 times basic salary respectively , with the guidelines to be achieved by 31 December 2023 and 1 June 2024, respectively . For the purposes of determining the number of shares held by the executive Dir ectors, the relevant calculation will include shar es benecially owned by the executive Directors, annual bonus awards which ar e deferred into shares for three years and PSP awar ds that have met the nancial performance criteria but are subject to a two-year holding period prior to release (on a net of tax basis). The deferred shar e awards and PSP awards subject to a two-year hold period are not subject to any further performance criteria other than continued employment with the Group. Dir ectors’ Remuneration Report - continued 2021 Annual Report and Form 20-F 97 96 In the event that the shareholding guidelines are not met by the applicable deadlines, the Remuneration Committee will consider what action to take at that time. Post-employment Holding Requirements The Chief Executive and Finance Director ar e requir ed to hold shares equivalent to 2 times and 1.5 times basic salary respectively for a period of two years post-employment in a third party trust. Until the limit is achieved, an agreed portion of any Deferred Shar e or PSP awards which vest will be transfered on a net of tax basis to the third party to be held in trust for their benet. The shares will be held in T rust on a rolling basis, until their employment ceases and a subsequent two year period has elapsed. External Board Appointments Executive Directors may accept external non-executive directorships with the prior approval of the Boar d. The Board recognises the benets that such appointments can bring both to the Company and to the Director in terms of broadening their knowledge and experience. Whether any related fees ar e retained by the individual or remitted to the Gr oup is considered on a case-by-case basis. Non-executive Director – Letters of Appointment Non-executive Directors serve under letters of appointment, copies of which are available for inspection at the Company’ s Registered Ofce and at the AGM. In line with the 2018 Code, all non-executive Directors submit themselves for r e-election by shareholders every year at the AGM. All non-executive Director appointments can be terminated by either party without notice. There is no payment in lieu of notice provided. Considering Employee Views The Board is r egularly kept abreast of employees’ perspectives and takes them into account when making decisions. In particular , the Remuneration Committee has Executive Director Shar eholdings as a % of 2022 Base Salary (i) T able 31 Guideline (% of Salary) T o be achieved by Holdings as of 2 March 2022 T otal Interests (% of Salary) A. Manifold 350% 2023 748% J. Mintern 250% 2024 189% Benecially Owned Shares (as at 2 Mar ch 2022). Estimated after tax value of Deferred Shar e Awards made in 2019, 2020 and 2021, as appropriate. Estimated after tax value of PSP awards subject to a two-year hold period only . (i) For the purposes of this table, the interests have been valued using the thr ee-month average share price to 31 December 2021 (€43.11). 234% 168% 115% 21% 399% 0% 800% 400% 300% 200% 100% V alue of shares (% of salary) 0% 250% 200% 150% 100% 50% V alue of shares (% of salary) oversight of remuneration policy acr oss the Group and endeavours to keep the structur e of remuneration consistent as far as possible. Further details of how the Committee seeks and takes into account employee views when setting remuneration for the executive Dir ectors is set out on page 82. Consulting with Shareholders The Committee believes that it is very important to maintain open dialogue with shareholders on remuneration matters. CRH consults r egularly with shareholders and engaged extensively with shareholders in r elation to the 2022 Policy . Shareholder views, and br oad indications of support, were important in shaping the nal proposals outlined in the 2022 Policy . The Committee will continue to liaise with shareholders r egarding remuneration matters more generally and CRH arrangements as appropriate. It is the Committee’ s intention to continue to consult with major shareholders in advance of making any material changes to remuneration arrangements. 500% 600% 700% 2021 Annual Report and Form 20-F 99 98 The Remuneration Committee The Remuneration Committee consists of seven non-executive Directors consider ed by the Board to be independent. They bring the range of experience of large organisations and public companies, including experience in the area of senior executive remuneration, to enable the Committee to full its role. Their biographical details are set out on pages 56 to 59. A schedule of attendance at Committee meetings is set out in T able 8 on page 73. The main focus of the Committee is to: • determine and agree with the Board the Group’ s policy on executive remuneration; • seek shareholder approval for the Directors’ Remuneration Policy at least every three years; • ensure that CRH’ s remuneration structur es are fair and responsible; and • consider and approve salaries and other terms of the remuneration packages for the executive Directors and the fee for the Chairman In addition, the Committee: • recommends and monitors the level and structure of r emuneration for senior management; and • oversees the preparation of this Directors’ Remuneration Report In considering remuneration levels for executive Directors particularly , the Committee takes into account remuneration tr ends across the CRH Group, which has a diverse range of operations in 28 countries, in geographic regions which ar e often at differ ent stages in the economic cycle. The Committee also engages regularly with shareholders and (via the SESR Committee - see page 78 for more details) employees on the structure of the r emuneration policy and executive incentives. Remuneration Received by Executive Directors in Respect of 2021 Details of individual remuneration for executive Directors for the year ended 31 December 2021, including explanatory notes, are given in T able 22 on page 87. Details of Directors’ r emuneration charged against prot in the year ar e given in T able 49 on page 109. The Group changed its r eporting currency from euro to US Dollar with ef fect from 1 January 2020. Notwithstanding this, as the executive Directors ar e paid in euro, the Committee considers it appropriate that the r emuneration gures disclosed in this Report continue to be presented in eur o. 2021 Annual Bonus Plan CRH’ s Annual Bonus Plan for 2021 was based on a combination of nancial targets and personal/strategic goals. The metrics for target payout, which is up to a maximum of 50% of the total annual bonus opportunity , are based on achieving the budget set by the Board in respect of each metric. The thr eshold level for bonus payouts in 2021 was for the achievement of 92.5% of budget, whereas maximum payout is achieved for stretch performance of 107.5% of budget. The relative weighting of the components of the 2021 plan are set out in T able 32. When setting the targets for the annual bonus plan, the Committee makes assumptions regar ding exchange rates and development activity . The Committee also compares the proposed targets to the outturn for the previous year to ensure that the targets ar e sufciently stretching. In this r egard, it is important to note that the metrics in the plan are inuenced by the economic cycle and other factors, such as ongoing portfolio management, government infrastructure spending pr ogrammes and items outside of management's control and which may not continue into the next nancial year . When reviewing performance against the bonus plan, the Committee typically makes a number of routine adjustments to the nancial targets, for example, to reect, signicant development activity and actual share buyback activity during the year . Annual Report on Remuneration 2021 Annual Bonus Plan - Achievement T able 32 2021 T ar gets - Performance needed for payout at (i) (ii) Measure W eighting (% of total bonus) Threshold T arget Maximum 2021 Performance Achieved (iii) Percentage of Maximum Awar ded (iv) CRH EPS (iii) 25% 247.2c 267.3c 287.3c 320.8c 21.25% CRH Cash Flow (iii) 30% $3,000m $3,244m $3,487m $3,874m 25.50% CRH RONA (iii) 25% 9.9% 10.7% 11.5% 12.4% 21.25% Personal/Strategic 20% See page 99 17.00% T otal 100% 85.00% (i) 0% of each element is earned at threshold, 50% at target and 100% at maximum, with a straight-line payout schedule between these points. For the reasons outlined on page 83, the nancial targets which were originally set in early 2021 wher e reviewed and revised upwards mid-way thr ough the year . The revised targets are set out in the T able above. (ii) T argets have been adjusted to reect the impact of the share buyback pr ogramme and major development activity . (iii) For the purposes of the annual bonus plan, the EPS outcome in the T able above differs from that disclosed elsewher e in this Report as it excludes prots on divestments. Operating cash ow and RONA have been dened as reported internally . For cash ow the gure differs fr om the net cash inow from operating activities reported in the Consolidated Statement of Cash Flows, primarily because it is calculated after deducting cash outows on the pur chase of property , plant and equipment (PP&E), net proceeds fr om the disposal of PP&E, and before deducting interest and tax payments. Similarly , RONA as reported internally differs from the RONA r eported in the Non-GAAP Performance Measures in this report as it reects seasonality and the timing impact of development activity . (iv ) For the r easons outlined on page 83, the Committee and the executive Directors judged that the payout under the 2021 annual bonus plan should be capped at 85%. 2021 Annual Report and Form 20-F 99 98 As outlined in the Remunera tion Committee Cha ir ma n' s over view o n pag e 83, th e tar gets for th e 2021 Annu al B on us Pl an we re set i n ea rl y 2021 in the co ntex t of un pre ce de nted unc er tain ty p re sen ted by the C OVID - 19 pan de mi c. As vi sib il it y im prove d on th e impact o f COVID- 1 9 on the economies and co nstr uc tio n mar kets i n whi ch C RH op er ates, mid-w ay thr ough the y ear the Committee revi ewe d an d revi se d upwa rds th e na nc ia l tar gets fo r the 20 21 annu al bo nu s pla n. Per fo rm an ce ag ai nst th es e rev ise d ta rge ts determined the outcome of the nancial el em ent of th e bo nus, w hi ch re pre se nts 8 0% of the p otenti al b onu s op por tunit y. As a resu lt of t he record nancial per formance of the Gro up in 20 21 and hig he st eve r EBI TDA (as de ne d) out tu rn of $ 5.35 bi lli on, th e ma x im um tar get u nd er e ach of t he n an cia l me tri cs wa s exce ede d, re sul tin g in a c alc ul ated payo ut leve l of 1 0 0%. Det ai ls of the r evi se d targ ets for 2021 for e ach of th e EPS, o pe rati ng ca sh ow a nd RO NA m etri cs, a nd th e ver y stron g pe r for ma nc e aga in st tho se ta rg ets, ar e set o ut in T ab le 32 on p age 9 8. Th e rem ai nin g 20% of the 2021 An nua l Bo nus Pla n was l inke d to per form anc e ag ain st key pe rs ona l an d stra tegi c obj ec tive s, in clu di ng inclusion & diversity , organsiati onal change management and management succession and s t r a te g y. Achievements in relation to these objectives included: • advancing the I&D agenda, driving "tone from the top" actions and supporting inclusive behaviours across the senior leadership team, communicating CRH's vision and aspirations in this area, ensuring capability training was delivered and that the pr oper structures and supports are in place to drive towar ds CRH's 2030 targets in this area; • providing leadership together with the senior leadership team to drive organisational change programmes acr oss the Group and working closely with the Board in r elation to designing the process for the long-term CEO succession process and senior management succession generally; and • the continued assessment of strategic alternatives for the Group and working closely with the senior leadership team to align the organisational structure of CRH with its evolving strategy Notwithstanding the outperformance during the year , both management and the Committee recognise the ongoing economic and social impact of the pandemic, and in that context judged that it would be appropriate to cap the bonus outcome in respect of the nancial metrics and personal strategic measures at 85% of maximum. Further details are set out in T able 32 on page 98. In line with CRH's remuneration policy , 33% of the earned bonus payments will be deferred into shares for a period of thr ee years. For Mr . Mintern, for the period up to his appointment as Finance Director on 1 June 2021 a deferral of 25% applies. Long-term Incentives Performance Share Plan — 2019 awards In 2019, the executive Directors wer e granted conditional awards under the 2014 Performance Share Plan. The awar ds were based on TSR (25% of the award) against a tailor ed group of key peers (see T able 37 on page 100, Cumulative Cash Flow (50% of the award) and RONA (25% of the award), and performance was measur ed over the three-year period 1 January 2019 to 31 December 2021. In respect of the TSR element, CRH's TSR over the period is ranked in the top quartile of the tailored peer gr oup weighted by market capitalisation and warrants 100% vesting for the TSR element. In respect of the cumulative cash ow element, the actual outturn over the period was $7.9 billion, which exceeded the stretch target of $5.5 billion, r esulting in 100% vesting for the cash ow element. In respect of the RONA element, the RONA outturn was 12.4%, resulting in 100% vesting for the RONA element. When reviewing performance against the metrics, the Committee considered a number of adjustments, for example, to neutralise the impact of signicant acquisitions and divestments, to reect the Gr oup's change in reporting currency from eur o to US Dollar with effect from 1 January 2020, the impact of the implementation of IFRS 16 Leases and the impairment of subsidiaries in 2020. 2019 Performance Share Plan A ward Metrics T able 33 (i) Further information on how cash ow is calculated for PSP awards is set out on page 101. (ii) The methodology for calculating TSR assumes all dividends are reinvested on the ex-dividend date at the closing shar e price on that day; the open and close price is based on the three-month average closing price on the last day befor e the start of the performance period and the nal day of the performance period respectively . For the 2019 awards, TSR performance is assessed on a weighted market capitalisation basis. (iii) RONA is also dened as reported internally and differs fr om the RONA reported in the Non-GAAP Performance Measure in this report as it r eects seasonality and timing impact of development activity . (iv) For the purposes of the 2019 Award, TSR performance was in the top quartile against the tailor ed peer group (see T able 37 on page 100). The cumulative cash ow for the three years to end 31 December 2021 was $7.9 billion. RONA at 31 December 2021 was 12.4%. Element vested at 100% (iv) 25% 0% 8.7% 11.2% 100% RONA (2021) (25% of award) (iii) V esting (% of element) Element vested at 100% (iv) 25% 0% $4.2bn $5.5bn $7.9bn 100% Cumulative cash ow (50% of award) (i) V esting Level V esting (% of element) Element vested at 100% (iv) V esting Level V esting (% of element) Median Upper quartile 25% 0% 100% TSR vs. tailored peer gr oup (25% of award) (ii) V esting Level 12.4% * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. 2021 Annual Report and Form 20-F 101 100 2021 Performance Share Plan A ward - Grant Details T able 38 Executive Director Date of Grant Number of Shares Market Price on which Awar d was Based Face V alue at Date of Awar d Face V alue on which Award was Based (% of salary) Albert Manifold 9 March 2021 158,785 €36.95 €5,867,106 365% Jim Mintern (i) 9 March 2021 30,280 €36.95 €1,118,846 n/a Senan Murphy 9 March 2021 51,080 €36.95 €1,887,406 225% (i) A ward granted in early 2021 prior to Mr . Minter n's appointment as Finance Director and not in r elation to his appointment. 2021 Performance Share Plan A ward Metrics T able 36 (i) See footnotes to T able 33 on page 99. 25% 0% 10.8% 12.6% 100% RONA (2023) (25% of award) (i) V esting (% of element) 25% 0% $6.5 bn $7.5bn 100% Cumulative cash ow (50% of award) (i) V esting (% of element) 25% 0% Median Upper Quartile 100% TSR vs. tailored peer gr oup (25% if award) (i) V esting (% of element) Peer Group for Performance Shar e Plan Awar ds T able 37 ACS Boral Buzzi Unicem Cemex Heidelberg Cement Holcim Martin Marietta Saint Gobain Skanska Titan Cement Vicat Vinci V ulcan Materials Wienerberger (i) Martin Marietta and V ulcan Materials were added to the peer group with ef fect from the PSP awards made in 2021. Annual Report on Remuneration - continued 2019 Performance Share Plan A ward V esting Details T able 35 Executive Director Interests Held V esting Outcome (% of max) Interests Due to V est Date of V esting Assumed Share Price (i) Estimated V alue Albert Manifold 200,671 100% 200,671 March 2024 €43.11 €8,650,927 Jim Mintern 38,399 100% 38,399 April 2022 €43.11 €1,655,381 Senan Murphy 64,552 100% 64,552 March 2024 €43.11 €2,782,837 (i) As the share price on the date of vesting is not yet known, for the purposes of this T able, the value of these awards, which wer e subject to a three-year performance period ending in 2021, has been estimated using a share price of €43.11, being the thr ee-month average share price to 31 December 2021. Pension Entitlements - Dened Benet (Audited) T able 34 Executive Director Increase in accrued personal pension during 2021 (i) €000 T ransfer value of increase in dependants pension (i) €000 T otal accrued personal pension at year end (ii) €000 Albert Manifold - 167 273 (i) As noted above, the pension of Albert Manifold has been capped in line with the provisions of the Irish Finance Acts. However , dependants’ pensions continue to accrue resulting in Gr eenbury transfer values which have been calculated on the basis of actuarial advice. These amounts do not represent sums paid out or due in 2021 in the event of Mr . Manifold leaving service. (ii) The accrued pensions shown are those which would be payable annually from normal r etirement date. 2021 Annual Report and Form 20-F 101 100 The Committee considers that the vesting outcome is reective of the Company’ s underlying performance over the performance period. In accordance with the Policy , the 2019 awards to Albert Manifold and Senan Murphy will vest in 2024 on completion of an additional two-year holding period. The 2019 award for Jim Mintern was granted prior to his appointment as Group Finance Director and, under the terms of the award, is not subject to an additional holding period. Accordingly , the award will vest in April 2022. V ested awards will be adjusted to accrue dividend equivalents based on dividends in the period from grant to the applicable date of vesting. T able 33 on page 99 sets out details of the relevant targets. T able 35 sets out details of the awards. Performance Share Plan — 2021 awards During 2021, awards under the 2014 Performance Share Plan wer e made to the executive Directors, details of which ar e summarised in T able 38. 50% of each award granted in 2021 is subject to a cumulative cash ow metric. The denition of cash ow , which applies to the cash metric for all PSP awards, is the net increase/decr ease in cash and cash equivalents adjusted to exclude: • dividends to shareholders; • acquisition/investment expenditure; • proceeds from divestments and movements in working capital; • share issues (scrip dividend, share options, other); • nancing cash ows (new loans/repayments); • back funding pension schemes; and • foreign exchange translation The Remuneration Committee considers that it is appropriate to make these adjustments to align with the performance targets, or to remove items that do not reect the quality of management’ s operational performance, or are largely outside of the Company’ s control. The Remuneration Committee will also make adjustments that may be requir ed to cash ows, for example, as a result of acquisitions/divestments completed during the performance period or a signicant underspend or delay in budgeted capital expenditure, both ordinary and extraor dinary . 25% of each award is subject to a TSR metric, with performance being measured against a tailored peer gr oup and on a market capitalisation weighted basis (see T able 37). The remaining 25% of each award is subject to a RONA metric, a key measure used by management to assess investment opportunities and to run the business. Performance for the awards made in 2021 will be assessed over the three-year period to 31 December 2023. As explained in last year’ s Report, the 2021 PSP targets were set in the context of unpr ecedented and ongoing uncertainty currently pr esented by the COVID-19 pandemic. Therefor e, the Committee retained the discr etion to revise the nancial targets (the TSR targets not being impacted) in the event that it subsequently transpired that using these targets would be inappropriate for assessing the underlying performance of the Group. Mid-way thr ough the year (see page 83 for more details), the Committee concluded that the cash ow and RONA targets attaching to the 2021 PSP should be revised upwar ds in light of improved visibility primarily on trading expectations. These revised targets are consider ed to represent signicant stretch compar ed to the Board’ s strategic plan and prevailing macr oeconomic conditions. V esting will remain subject to the Committee’ s discretionary assessment of the formulaic outcome in the context of underlying Group performance. Details of the performance targets are set out in T able 36 on page 100. Awar ds, to the extent that they vest, will be adjusted for dividend equivalents based on dividends in the period from grant to the date of vesting in 2025. “Malus” and clawback provisions apply to the awards. Other Employee Share Plans The executive Directors ar e eligible to participate in Irish Revenue approved Savings-r elated Option Schemes (the 'SA YE Scheme') and Share Participation Schemes (the `Participation Scheme') on consistent terms with all other employees. The SA YE Scheme is open to all Irish and UK employees, although at present ther e is currently no nancial services pr ovider supporting new awards under Irish SA YE schemes following the exit from the market of the curr ent provider in 2021. Participants may save up to €500/£500 a month from their net salaries for a xed term of three or ve years and at the end of the savings period they have the option to buy CRH shares at a discount of up to 15% of the market price on the date of invitation of each savings contract. Details of the outstanding awards of executive Directors under the 2010 SA YE Scheme are set out in T able 39 on page 102. The Participation Scheme is an Irish Revenue approved plan and is open to all employees in Ireland. Grants can be made to participants up to a maximum of €12,700 annually in CRH shares. Albert Manifold, Jim Mintern and Senan Murphy participated in the Participation Scheme in 2021. Retirement Benet Expense Albert Manifold is a participant in a contributory dened benet plan which is based on an accrual rate of 1/60th of salary 1 for each year of pensionable service and is designed to provide two-thirds of car eer average salary at retirement for full service. Albert Manifold will become entitled to a deferred pension, payable fr om Normal Retirement Age, if he leaves service prior to Normal Retirement Age. The Finance Act 2006 established a cap on pension provisions by introducing a penalty tax charge on pension assets in excess of the higher of €5.4 million (in the Finance Act 2011, this threshold was r educed to €2.3 million and reduced further to €2 million by the Finance (No. 2) Act 2013) or the value of individual accrued pension entitlements as at 7 December 2005. As a result of these legislative changes, the Remuneration Committee decided that executive Directors should have the option of continuing to accrue pension benets as previously , or of choosing an alternative arrangement—by accepting pension benets limited by the cap—with a similar overall cost to the Group. Albert Manifold has opted for an arrangement whereby his pension is capped in line with the provisions of the Finance Act 2006 and r eceives a supplementary taxable non-pensionable cash supplement in lieu of pension benets foregone. Ther e was, therefore, no additional accrual in 2021. The cash pension supplement for 2021 is detailed in T able 22 on page 87. This supplement is similar in value to the reduction in the Company’ s liability represented by the pension benets foregone. It is calculated based on actuarial advice as the equivalent of the reduction in the Company’ s liability to Mr . Manifold and spread over the term to r etirement as annual compensation allowances. In 2020, Mr . Manifold agreed to a voluntary r eduction of 10% of the amount that would otherwise have been due to him. This was reduced by a further 10% in 2021 and will be below 25% of salary form 1 January 2022, reducing to zer o in August 2022. The contributory dened benet plan in which Albert Manifold participates closed to new entrants at the end of 2011. Details regar ding the pension entitlements of Albert Manifold are set out in T able 34 on page 100. Senan Murphy receives a taxable non-pensionable cash payment in lieu of a pension contribution, which, for the reasons set out in the pr evious year's report, is capped at 25% of his 2020 base salary . As outlined on page 83, Jim Mintern receives a taxable non-pensionable cash payment of 10% of salary in lieu of a pension contribution in line with that available to the wider UK and Irish workforce. 1. Salary is dened as basic annual salary and excludes any uctuating emoluments. 2021 Annual Report and Form 20-F 103 102 Annual Report on Remuneration - continued Summary of Outstanding Share Incentive A wards (Audited) T able 39 Y ear of Awa rd Performance Period Release Date Market V alue at Date of Awar d Exercise Price Balance at 31 December 2020 Granted in 2021 Released in 2021 Exercised in 2021 Lapsed in 2021 Balance at 31 December 2021 Dividends Awar ded & Released Market V alue on Date of Exercise/Released Albert Manifold Annual Bonus Plan (Deferred Shar e Awards) (i) 2018 01/01/17-31/12/2017 2021 €30.42 n/a 25,619 - 25,619 - - - 2,010 €39.58 2019 01/01/18-31/12/2018 2022 €24.90 n/a 27,337 - - - - 27,337 - - 2020 01/01/19-31/12/2019 2023 €33.38 n/a 29,419 - - - - 29,419 - - 2021 01/01/20-31/12/2020 2024 €33.01 n/a - 30,568 - - - 30,568 - - 2014 Performance Share Plan (ii) 2016 01/01/16-31/12/2018 2021 €24.56 n/a 123,052 - 123,052 - - - 15,670 €39.58 2017 01/01/17-31/12/2019 2022 €32.24 n/a 115,380 - - - - 115,380 - - 2018 01/01/18-31/12/2020 2023 €27.62 n/a 196,278 - - - 25,957 170,321 - - 2019 01/01/19-31/12/2021 2024 €29.86 n/a 186,106 - - - - 186,106 - - 2020 01/01/20-31/12/2022 2025 €33.10 n/a 172,509 - - - - 172,509 - - 2021 01/01/21-31/12/2023 2026 €36.95 n/a - 158,785 - - - 158,785 - - 2010 Savings-Related Share Option Scheme 2018 n/a 2023 n/a €23.39 1,293 - - - - 1,293 - - Jim Mintern (iii) Annual Bonus Plan (Deferred Shar e Awards) (i) 2020 01/01/19-31/12/2019 2022 €33.38 n/a 4,206 - - - - 4,206 - - 2021 01/01/20-31/12/2020 2023 €33.01 n/a - 4,393 - - - 4,393 - - 2014 Performance Share Plan (ii) 2019 01/01/19-31/12/2021 2022 €29.86 n/a 35,612 - - - - 35,612 - - 2020 01/01/20-31/12/2022 2023 €33.10 n/a 32,860 - - - - 32,860 - - 2021 01/01/21-31/12/2023 2024 €36.95 n/a - 30,280 - - - 30,280 - - 2010 Savings-Related Share Option Scheme 2019 n/a 2024 n/a €24.24 1,247 - - - - 1,247 - - Senan Murphy Annual Bonus Plan (Deferred Shar e Awards) (i) 2018 01/01/17-31/12/2017 2021 €30.42 n/a 8,352 - 8,352 - - - 655 €39.58 2019 01/01/18-31/12/2018 2022 €24.90 n/a 9,510 - - - - 9,510 - - 2020 01/01/19-31/12/2019 2023 €33.38 n/a 10,235 - - - - 10,235 - - 2021 01/01/20-31/12/2020 2024 €33.01 n/a - 10,428 - - - 10,428 - - 2014 Performance Share Plan (ii) 2016 01/01/16-31/12/2018 2021 €24.56 n/a 30,101 - 30,101 - - - 3,831 €39.58 2017 01/01/17-31/12/2019 2022 €32.24 n/a 30,941 - - - - 30,941 - - 2018 01/01/18-31/12/2020 2023 €27.62 n/a 63,134 - - - 8,349 54,785 - - 2019 01/01/19-31/12/2021 2024 €29.86 n/a 59,867 - - - - 59,867 - - 2020 01/01/20-31/12/2022 2025 €33.10 n/a 55,492 - - - - 55,492 - - 2021 01/01/21-31/12/2023 2026 €36.95 n/a - 51,080 - - - 51,080 - - The market price of the Company's shares at 31 December 2021 was €46.52 and the range during 2021 was €34.38 and €46.96. (i) The Remuneration Committee has determined that dividend equivalents should accrue on awards under the Annual Bonus Plan. Such dividend equivalents will be released to participants on the date of r elease of the Deferred Shares. (ii) The Remuneration Committee has determined that dividend equivalents should accrue on awards under the 2014 Performance Shar e Plan. Subject to satisfaction of the applicable performance criteria, such dividend equivalents will be released to participants in the form of additional shar es on vesting. (iii) The awards for Mr . Mintern shown in the T able above were granted to him in connection with his former r oles within CRH. 2021 Annual Report and Form 20-F 103 102 Summary of Outstanding Share Incentive A wards (Audited) T able 39 Y ear of Awa rd Performance Period Release Date Market V alue at Date of Awar d Exercise Price Balance at 31 December 2020 Granted in 2021 Released in 2021 Exercised in 2021 Lapsed in 2021 Balance at 31 December 2021 Dividends Awar ded & Released Market V alue on Date of Exercise/Released Albert Manifold Annual Bonus Plan (Deferred Shar e Awards) (i) 2018 01/01/17-31/12/2017 2021 €30.42 n/a 25,619 - 25,619 - - - 2,010 €39.58 2019 01/01/18-31/12/2018 2022 €24.90 n/a 27,337 - - - - 27,337 - - 2020 01/01/19-31/12/2019 2023 €33.38 n/a 29,419 - - - - 29,419 - - 2021 01/01/20-31/12/2020 2024 €33.01 n/a - 30,568 - - - 30,568 - - 2014 Performance Share Plan (ii) 2016 01/01/16-31/12/2018 2021 €24.56 n/a 123,052 - 123,052 - - - 15,670 €39.58 2017 01/01/17-31/12/2019 2022 €32.24 n/a 115,380 - - - - 115,380 - - 2018 01/01/18-31/12/2020 2023 €27.62 n/a 196,278 - - - 25,957 170,321 - - 2019 01/01/19-31/12/2021 2024 €29.86 n/a 186,106 - - - - 186,106 - - 2020 01/01/20-31/12/2022 2025 €33.10 n/a 172,509 - - - - 172,509 - - 2021 01/01/21-31/12/2023 2026 €36.95 n/a - 158,785 - - - 158,785 - - 2010 Savings-Related Share Option Scheme 2018 n/a 2023 n/a €23.39 1,293 - - - - 1,293 - - Jim Mintern (iii) Annual Bonus Plan (Deferred Shar e Awards) (i) 2020 01/01/19-31/12/2019 2022 €33.38 n/a 4,206 - - - - 4,206 - - 2021 01/01/20-31/12/2020 2023 €33.01 n/a - 4,393 - - - 4,393 - - 2014 Performance Share Plan (ii) 2019 01/01/19-31/12/2021 2022 €29.86 n/a 35,612 - - - - 35,612 - - 2020 01/01/20-31/12/2022 2023 €33.10 n/a 32,860 - - - - 32,860 - - 2021 01/01/21-31/12/2023 2024 €36.95 n/a - 30,280 - - - 30,280 - - 2010 Savings-Related Share Option Scheme 2019 n/a 2024 n/a €24.24 1,247 - - - - 1,247 - - Senan Murphy Annual Bonus Plan (Deferred Shar e Awards) (i) 2018 01/01/17-31/12/2017 2021 €30.42 n/a 8,352 - 8,352 - - - 655 €39.58 2019 01/01/18-31/12/2018 2022 €24.90 n/a 9,510 - - - - 9,510 - - 2020 01/01/19-31/12/2019 2023 €33.38 n/a 10,235 - - - - 10,235 - - 2021 01/01/20-31/12/2020 2024 €33.01 n/a - 10,428 - - - 10,428 - - 2014 Performance Share Plan (ii) 2016 01/01/16-31/12/2018 2021 €24.56 n/a 30,101 - 30,101 - - - 3,831 €39.58 2017 01/01/17-31/12/2019 2022 €32.24 n/a 30,941 - - - - 30,941 - - 2018 01/01/18-31/12/2020 2023 €27.62 n/a 63,134 - - - 8,349 54,785 - - 2019 01/01/19-31/12/2021 2024 €29.86 n/a 59,867 - - - - 59,867 - - 2020 01/01/20-31/12/2022 2025 €33.10 n/a 55,492 - - - - 55,492 - - 2021 01/01/21-31/12/2023 2026 €36.95 n/a - 51,080 - - - 51,080 - - The market price of the Company's shares at 31 December 2021 was €46.52 and the range during 2021 was €34.38 and €46.96. (i) The Remuneration Committee has determined that dividend equivalents should accrue on awards under the Annual Bonus Plan. Such dividend equivalents will be released to participants on the date of r elease of the Deferred Shares. (ii) The Remuneration Committee has determined that dividend equivalents should accrue on awards under the 2014 Performance Shar e Plan. Subject to satisfaction of the applicable performance criteria, such dividend equivalents will be released to participants in the form of additional shar es on vesting. (iii) The awards for Mr . Mintern shown in the T able above were granted to him in connection with his former r oles within CRH. 2021 Annual Report and Form 20-F 105 104 Annual Report on Remuneration - continued Shareholding Guideline for Executive Directors The shareholding guideline for the executive Directors is set out on page pages 96 and 97, together with a table showing the current shareholdings of the executive Dir ectors as a multiple of base salary . Proposed Implementation of Remuneration in 2022 Basic Salary and Benets Details of the executive Directors' salaries for 2022 compared with 2021 ar e set out in the Committee Chairman's Overview on page 83. The Committee has reviewed the executive Directors' base salaries and concluded that salary increases of 2.75% should also be awarded to the executive Dir ectors in 2022 in recognition of their continued str ong performance, contribution and leadership of CRH. The approved incr ease is in line with the general workforce incr ease in Ireland and the UK. Executive Directors will r eceive benets in line with the 2022 Policy in 2022. The level of benets provided will depend on the cost of providing individual items and the individual circumstances. Retirement Benet Expense As outlined in the Remuneration Committee Chairman's overview on page 83, the monetary value of the pension contribution/allowance for Mr . Manifold has been reduced to below 25% of his salary for 2022 and will expire in August 2022. The annual pension contribution/allowance for Jim Mintern remains at 10% of his base salary . 2022 Annual Bonus Plan The Remuneration Committee has determined that the 2022 Annual Bonus Plan will be operated broadly in line with the 2021 Annual Bonus Plan. 80% of the bonus will be based on nancial targets and the remaining 20% on individual objectives aligned to key strategic areas for each executive Dir ector . The targets attaching to the 2022 bonus will be disclosed in the 2022 Annual Report and Form 20-F . 2022 Performance Share Plan A wards For the 2022 PSP awards, awar ds will be assessed over the three-year period to 31 December 2024. The metrics, weightings and opportunity for the 2022 PSP awards ar e summarised in T able 40 on page 105. Fees Paid to Former Directors Th e 201 3 L arg e an d Me di um-s ize d Com pa nie s an d Gro ups ( Acc oun ts an d Re por ts) (Amendment Regulations ) Regulations in the U K, re qu ire di sc los ure of p aym ents to for me r Di rec tors i n ce r ta in ci rcu mst an ce s. No paym en ts have b ee n ma de to ind iv idu al fo rm er Di rec tors i n tho se ci rcu mst anc es w hi ch exce e d the d e min im is thr es hol d of €20,0 00 p er a nn um set b y the Remunerat ion Committee. For the pur po se s of Se cti on 1 1 1 0N o f the C omp an ie s Act 201 4, det ai ls of the p aym en ts mad e to for me r Di rec tors a re in clu de d in T ab le 49 o n p a g e 10 9. Executives’ External Appointments The executive Directors may accept external appointments with the prior approval of the Board pr ovided that such appointments do not prejudice the individual’ s ability to full their duties at the Group. Whether any r elated fees are r etained by the individual or remitted to the Group is consider ed on a case-by-case basis. Non-executive Directors The remuneration of non-executive Dir ectors is determined by the Board of Dir ectors. The fees were last incr eased in 2019. As outlined in the Remuneration Committee Chairman's overview on page 84, a Committee of the Chairman and the executive Directors r ecommended that the fees of the non-executive Directors be incr eased with effect fr om 1 January 2022 by reference to the wider workforce incr ease of 2.75% in Ireland and the UK. The fee structur e for non- executive Directors to apply under the 2022 Policy is set out in T able 41 on page 105. T aking into account the performance of the Chairman since his appointment in 2020 and the nature and extent of his time commitment to full his responsibilities, the Committee r eviewed CRH’ s fee levels relative to other FTSE50 companies (excluding nancial services) and recommended that the Chairman’ s fee be increased from €630,000, the amount set for the role when the current policy was appr oved by Shareholders in 2019, to €647,250, with effect fr om 1 January 2022, by refer ence to the increase for the wider workforce of 2.75%. Details of the r emuneration paid to non-executive Directors in 2021 ar e set out in T able 42 on page 106. T otal Shareholder Return The value at 31 December of €100 invested in CRH in 2011, compared with the value of €100 invested in the Eurorst 300 Index and the FTSE100 Index (which CRH joined in December 2011) is shown in T able 45 on page 107. TSR performance has been compared against the FTSE100 and the Eurorst 300 as these ar e broad general market indices of which CRH is a constituent. The Committee, therefor e, considers that they offer a r easonable comparison for performance. Compound annual TSR since the formation of the Group in 1970 (assuming the reinvestment of dividends) is 15.5% (2020: 15.1%). W orkforce Engagement Engagement of our workforce is at the heart of what we do at CRH. The proximity of our senior leaders to daily operations across CRH is a key reason for the Company's continued success and growth. The Company operates an annual talent and performance review pr ocess, where colleagues and their managers work together to review performance and set annual goals. The outcome of the review pr ocess is closely aligned to remuneration, both in terms of any incr ease in base salary for the next year , and any variable remuneration component. In order to guide our leaders' discussions with employees across the gr oup on remuneration structures, ther e is a reward policy section, which is based on the principles of remuneration applied by the Remuneration Committee and remuneration policy appr oved by shareholders, in policy documents issued to the managing directors of our operating companies. The SESR Committee has taken formal responsibility for workfor ce engagement. Remuneration Committee members are kept up-to-date on the workings of the SESR Committee and the feedback it receives fr om employees on all matters including remuneration. Further details in relation to the engagement with employees on remuneration matters during 2021 is included on page 82. Changes in the remuneration of the Directors T able 48 on page 109 shows the percentage change in the executive and non-executive Directors' salary/fees, benets and bonus between 2020 and 2021 compared to the change in total average employment costs in respect of employees in the Gr oup as a whole between 2020 and 2021. 1. Salary is dened as basic annual salary and excludes any uctuating emoluments. 2021 Annual Report and Form 20-F 105 104 Non-executive Director Fee Structur e T able 41 Role 2022 2021 Group Chairman (including non-executive Dir ector salary and fees for Committee work) €647,250 €630,000 Basic non-executive Director fee €90,250 €88,000 Committee fee €32,750 €32,000 Additional fees Senior Independent Director €25,500 €25,000 Remuneration Committee Chairman €30,750 €30,000 Audit Committee Chairman €40,000 €39,000 Combined Senior Independent Director and Committee Chairman €40,000 €39,000 SESR Committee Chairman €30,750 - Fee for Europe-based non-executive Dir ectors €15,000 €15,000 Fee for US-based non-executive Directors €30,000 €30,000 Performance Share Plan Metrics - 2022 A wards T able 40 25% 0% 11.2% 13.0% 100% RONA (2024) (20% of award) (iii) V esting (% of element) 25% 0% $7.1bn $8.2bn 100% Cumulative cash ow (45% of award) (i) V esting (% of element) 25% 0% Median Upper Quartile 100% TSR vs. tailored peer gr oup (20% of award) (ii) V esting (% of element) Sustainability scorecar d (15% of award) Measure Baseline Threshold (25% vesting) Stretch (iv) (100% vesting) Reason for selection 5% - Driving to Carbon Neutrality: • Delivery of roadmap for target of 25% emissions reduction by 2030 33.7mt of CO 2 This element will be based on a qualitative assessment by the Committee (and feedback from the SESR Committee) in early 2025 in relation to the development and implementation of a strategy to meet this ambition. Assessment will be informed by a range of criteria, which will be disclosed fully in the relevant Remuneration Report. Aligns with the Group’ s revised SBTI approved (v) target for a 25% r eduction in absolute Scope 1 and Scope 2 CO 2 emissions by 2030 (from a 2020 baseline) • Embedding sustainability programmes in relevant operating companies: – for waste management (1/3) 95% 96% 98% Aligns directly with pr ogress towards stated targets for 2030 (waste management target reects acceleration of ambition to 2025) – for biodiversity (1/3) 91% 92% 94% – for water management (1/3) 80% 81% 91% 5% - Progr ess T oward a Net Zero Built Envir onment • Revenue from Products with Enhanced Sustainability Attributes 46% 47% 49% Aligns directly with our ambition to achieve 50% by 2025 5% - Creating an Inclusive & Diverse Company • Representation of Women in Senior Management 14% 16% 19% Aligns directly with our roadmap to our stated 2030 Ambition • Improvement in Inclusion Assessment 68 70 73 Consistent with CRH’ s focus on inclusion as a driver of diversity and enabler of innovation. Quantitative assessment based on an externally validated Enterprise Score from engagement surveys (i), (ii) and (iii) see T able 33 on page 99. (iv) V esting between threshold and str etch will be calculated on a straight-line sliding scale basis. (v) The SBT i’ s T arget V alidation T eam has classied CRH's Scope 1 and Scope 2 target ambition and has determined that it is in line with a well-below 2 trajectory . The target boundary includes biogenic emissions and removals fr om bioenergy feedstocks. 2021 Annual Report and Form 20-F 107 106 Annual Report on Remuneration - continued Individual Remuneration for Non-executive Directors for the year ended 31 December 2021 (Audited) T able 42 Basic fees (i) €000 Benets (ii) €000 Other fees (iii) €000 T otal €000 2021 2020 2021 2020 2021 2020 2021 2020 2019 Non-executive Directors R. Boucher 88 83 5 - 557 522 650 605 165 C. Dowling (iv) 69 - 3 - 37 - 109 - - R. Fearon (v) 88 7 - - 62 3 150 10 - J. Karlström (vi) 88 83 - - 47 44 135 127 36 S. Kelly (vii) 88 83 - - 101 95 189 178 15 B. Khan (viii) 4 - - - 10 - 14 - - L. McKay (v) 88 7 - - 62 3 150 10 - H.A. McSharry (ix) 29 83 - - 25 72 54 155 151 G.L. Platt 88 83 - - 92 82 180 165 175 M.K. Rhinehart 88 83 - - 62 58 150 141 150 L.J. Riches (ix) 29 83 - - 16 44 45 127 135 S. T albot 88 83 3 - 47 44 138 127 137 835 678 11 - 1,118 967 1,964 1,645 964 (i) Further information in relation to the non-executive Director fee structure ar e set out in T able 41 on page 105. (ii) Benets: Includes the cost of hotel accommodation for Irish based non-executive Directors in respect of meetings held in Ireland which have been gr ossed up for Irish tax purposes. (iii) Other Remuneration: Includes remuneration for Chairman, Board Committee work and allowances for non-executive Dir ectors based outside of Ireland. (iv) Caroline Dowling became a Dir ector on 22 March 2021 (v) Rick Fearon and Lamar McKay became Dir ectors on 3 December 2020 (vi) Johan Karlström became a Dir ector on 26 September 2019 (vii) Shaun Kelly became a Director on 3 December 2019 (viii) Badar Khan became on Director on 27 October 2021 (ix) Heather Ann McSharry and Lucinda Riches retired as Dir ectors on 29 April 2021 Remuneration Paid to Chief Executive 2012 – 2021 T able 43 on page 107 shows the total remuneration paid to the Chief Executive in the period 2012 to 2021 inclusive and shows bonuses and vested long-term incentive awards as a percentage of the maximum bonus and awar d that could have been received in r espect of each year . Albert Manifold succeeded Myles Lee as Chief Executive in January 2014. Chief Executive Pay Ratio compared to UK-based employees As requir ed by the reporting regulations with which CRH complies, T able 44 on page 107 summarises the ratio of the Chief Executive’ s remuneration compar ed with the UK workforce (which repr esents only 13% of the Group’ s c.77,400 employees). In last year’ s Report, the Committee noted an expectation for year -on-year variations in the reported pay ratio to be driven by performance-based pay outcomes which, in line with our remuneration policy , comprise a signicant proportion of the total r emuneration for the Chief Executive. While the majority of employees across CRH also participate in performance-related incentives, these typically comprise a lower proportion of the package (in line with competitive market practices for these roles and levels). Consistent with our philosophy across the Gr oup that incentives should be linked to performance that an individual can inuence, these more commonly r eect an individual’ s own (and own business unit) performance, compared with a linkage to Group performance for the Chief Executive and other senior executives. In keeping with our remuneration philosophy and policy , a signicant proportion of the total remuneration for Executive Dir ectors is derived from variable, performance-based r emuneration. T otal remuneration for the Chief Executive— and therefor e the pay ratio— is likely to vary year -on-year based on the Group's performance, as illustrated in the scenario charts on page 94. Noting that the total remuneration pay ratio will be volatile over time, the Committee has elected to continue also disclosing the pay ratio for base salary . In line with the Committee's policy that Executive Directors' base salaries will normally increase in line with the typical level of incr ease awarded to other employees in the Gr oup, it is anticipated that this ratio will be more stable - and repr esentative of relative changes in xed pay - over time. The median total remuneration pay ratio for 2021 of 289:1 demonstrates continued alignment of the Chief Executive's remuneration with the performance of CRH over the longer -term. A signicant proportion (62%) of the Chief Executive's total remuneration for 2021 is derived from the vesting of the 2019 PSP awar d, which was based on the delivery of sustained nancial performance and above-market shareholder returns over the last three years. Thr ough the denomination of this award in CRH shar es, its value also reects dir ectly CRH's share price performance over this period; 31% of the PSP value reported in the Single Figur e of T otal Remuneration table derives from shar e price appreciation. These shar es cannot be sold for a further two years, further aligning the Chief Executive's interests with those of shar eholders over the longer -term. 2021 Annual Report and Form 20-F 107 106 Salary Pay Ratios compared to UK-based employees Y ear Calculation Methodology P25 (lower quartile) P50 (median) P75 (upper quartile) Chief Executive Salary Ratio Salary Ratio Salary Ratio Salary 2021 C €26,900 60:1 €36,800 44:1 €54,400 30:1 €1,607,400 2020 C €28,200 52:1 €37,800 39:1 €46,800 31:1 €1,469,100 2019 C €28,500 53:1 €42,400 36:1 €49,900 31:1 €1,522,500 1. Salary and total remuneration gures have been rounded to the near est 100. 2. Employee remuneration data converted into Euros at the average quarter four EUR:GBP exchange rate (sour ce: Central Bank of Ireland). For 2021 this rate was 0.85:1 (2020: 0.90:1; 2019: 0.86:1). 3. T otal remuneration for the lower quartile, median and upper quartile employees ar e determined using the ‘single gure’ methodology . This methodology was chosen as it provides a like-for -like comparison between the CEO and other employees. For practical reasons (primarily relating to the number of employing entities and employees covered by this analysis), the ranking of employees to identify the thr ee individuals representing P25, P50 and P75 is conducted in November each year . Given the timing, for the purpose of the ranking exercise, total r emuneration is dened as the sum of base salary , employer pension contributions and other taxable benets for the period 1 January to 31 October , and the incentive paid in the period in respect of the prior year . All elements of remuneration ar e calculated on a full-time and full-year equivalent basis. In the following January , total remuneration is updated for the three employees r epresenting P25, P50 and P75 using the same single gure methodology used to r eport CEO remuneration. 4. The Committee considered the pay data for the three individuals identied and believes that they fairly r eect pay at the relevant quartiles amongst the UK employee population, albeit noting the exact gures ar e likely to vary slightly year-on-year due to changes in the employee population and thus the identied individuals. The Committee reviewed the underlying rationale for the year -on-year change in the quartile gures. T otal remuneration incr eased year -on-year reecting the resumption of more normal trading conditions, including payment of overtime in the UK businesses. The year -on-year variance in salaries at the quartiles, reects the fact that the individuals were selected based on total r emuneration and the pay mix differs by role and location. On a like-for -like basis, the budgeted salary increase across the UK workforce in 2021 was 2.75%. T otal Remuneration Pay Ratios compared to UK-based employees T able 44 Y ear Calculation Methodology P25 (lower quartile) P50 (median) P75 (upper quartile) Chief Executive T otal remuneration Ratio T otal remuneration Ratio T otal remuneration Ratio T otal remuneration 2021 C €35,700 390:1 €48,200 289:1 €62,400 223:1 €13,906,922 2020 C €30,400 368:1 €42,000 267:1 €54,600 205:1 €11,200,211 2019 C €32,200 289:1 €44,900 207:1 €58,900 158:1 €9,311,400 Chief Executive Pay Ratios Remuneration paid to Chief Executive (2012-2021) T able 43 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Single gure Remuneration (€m) (i) €2.5m €4.2m €4.3m €5.4m €9.9m €8.7m €8.2m €9.3m €11.2m €13.9m Annual Bonus (% of max) 28% 30% 100% 100% 98% 96% 81% 86% 86% 85% Long-term incentive award vesting (% of max) 0% PSP: 49% L TIP: 34% PSP: 0% Options: 75% PSP: 78% Options: 37% 100% 79% 59% 71% 87% 100% (i) Single gure remuneration comprises the total xed pay , annual bonus and the value of long-term incentives vesting in respect of each year . TSR Performance (2011-2021) T able 45 CRH (DUB) FTSE100 Eurorst 300 € 2015 2016 2017 2018 2014 2013 2012 2011 2019 2020 2021 450 400 350 300 250 200 150 100 50 0 2021 Annual Report and Form 20-F 109 108 Annual Report on Remuneration - continued Shareholdings of Dir ectors and Company Secretary T able 47 Benecially Owned (i) Name 31 December 2021 31 December 2020 Executive Directors A. Manifold (ii) 89,727 47,061 J. Mintern (ii) (iii) 33,603 33,603 S. Murphy (iv) n/a 6,068 Non-executive Directors R. Boucher 23,300 23,300 C. Dowling (v) 1,000 Nil R. Fearon (vi) 5,000 1,000 J. Karlström 2,000 2,000 S. Kelly (vi) 1,000 1,000 B. Khan (vii) 1,000 Nil L. McKay (vi) 4,000 4,000 H.A. McSharry (iv) n/a 4,170 G.L. Platt 1,082 1,064 M.K. Rhinehart (vi) 1,000 1,000 L.J. Riches (iv) n/a 5,000 S. T albot 1,550 1,550 Company Secretary N. Colgan 5,087 4,769 T otal 169,349 135,585 (i) Excludes awards of Deferred Shar es, details of which are disclosed on pages 102 and 103. The Directors and Company Secretary do not have any special voting rights. (ii) The total interests of the executive Directors, using the methodology set out in the Shareholding Guidelines section on page 96, are illustrated in T able 31 on page 97. (iii) Appointed with effect from 1 June 2021. Holdings shown in the 2020 column are those as at the date of appointment to the Board. (iv) Retired fr om the Board with effect fr om 29 April 2021. (v) Appointed with effect from 22 Mar ch 2021. Holdings shown in the 2020 column are those as at the date of appointment. (vi) Holdings in the form of American Depositary Receipts (ADRs). (vii) Appointed with effect from 26 October 2021. Holdings shown in the 2020 column are those at the date of appointment * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. Relative Importance of Spend on Pay T able 46 sets out the amount paid by the Group in remuneration to employees compar ed to the amount returned to shareholders as part of the share buyback pr ogramme and dividend distributions made to shareholders in 2020 and 2021. We have also shown the change in EBITDA (as dened) performance year -on-year to provide an indication of the change in prot performance. Advisers to the Remuneration Committee During 2021, the Committee completed a formal tender process for the appointment of its advisor . Following the conclusion of this process, the Committee selected Ellason as its independent remuneration consultants and they succeeded Mercer Kepler with ef fect from June 2021. The Committee has satised itself that the advice provided by Ellason is r obust and independent and that the Ellason engagement partner and team that provide r emuneration advice to the Committee do not have connections with CRH plc that may impair their independence. Ellason are signatories to the V oluntary Code of Conduct in relation to executive r emuneration consulting in the UK. During 2021, Ellason provided the following r emuneration services: • research and advice regar ding remuneration trends, best practice and r emuneration levels for executive and non-executive Directors in companies of similar size and complexity; • advice in relation to remuneration matters generally; and • attendance at Committee meetings, when requir ed In 2021, the total fees paid to Ellason were £52,376. The total fees paid to Mercer Kepler in 2021 were £20,230. 2021 Annual General Meeting The voting outcome in respect of the remuneration-r elated votes at the 2021 AGM is set out in T able 20 on page 85. Lamar McKay Chair of Remuneration Committee 2 March 2022 Relative Importance of Spend on Pay T able 46 Share Buyback/ Dividends Remuneration received by all employees EBITDA (as dened) 2021 $ 6. 52b n 2020 $ 6 . 2 1b n 2021 $5.35bn 2020 $4.6 bn 2021 $0.9 bn $0.9 bn 2020 $ 0. 2b n $0 .7 b n Shares Repur chased Dividends Paid T otal: $0.9 billion T otal: $1.8 billion 2021 Annual Report and Form 20-F 109 108 Details of Remuneration Charged against Prot in 2021 (i) (Audited) T able 49 2021 €000 2020 €000 2019 €000 Executive Directors Basic Salary 2,376 2,237 2,317 Performance-related Incentive Plan - cash element 2,841 2,707 2,647 - deferred shar es element 1,421 1,353 1,324 Retirement Benets Expense 668 816 866 Benets 50 40 70 T otal executive Directors’ r emuneration 7,356 7,153 7,224 Average number of executive Dir ectors 1.92 2.00 2.00 Non-executive Directors Fees 835 730 894 Other remuneration 1,118 995 1,124 Benets 11 9 T otal non-executive Directors’ r emuneration 1,964 1,725 2,027 Average number of non-executive Dir ectors 9.58 8.83 10.16 Payments to former Directors (ii) 9 40 9 T otal Directors’ r emuneration 9,329 8,918 9,260 (i) See analysis of 2021 remuneration by individual in T ables 22 and 42 on pages 87 and 106 respectively . (ii) Consulting and other fees paid to a number of former directors. For the purposes of Section 305 of the Companies Act 2014, the total aggregate of "emoluments" paid or r eceived by Directors in respect of qualifying services was €9.33 million. Details of share-based payments charges thr ough P&L can be found in note 8 on page 164. Changes in the remuneration of the Dir ectors T able 48 Percentage change fr om prior year Salary/Fees Benets Bonus 2021 2020 2021 2020 2021 2020 Executive Directors A. Manifold +9% -4% -15% -37% +2% +3% S. Murphy (i) +9% -4% -54% -52% -65% +1% J. Mintern n/a n/a n/a n/a n/a n/a Non-executive Directors R. Boucher (ii) +6% -6% n/a n/a n/a n/a C. Dowling (iii) n/a n/a n/a n/a n/a n/a R. Fearon (iv) +6% n/a n/a n/a n/a n/a J. Karlström (v) +6% -6% n/a n/a n/a n/a S. Kelly (vi) +6% -6% n/a n/a n/a n/a B. Khan n/a n/a n/a n/a n/a n/a L. McKay (iv) +6% n/a n/a n/a n/a n/a H.A. McSharry (i) +6% -6% n/a n/a n/a n/a G.L. Platt +6% -6% n/a n/a n/a n/a M.K. Rhinehart +6% -6% n/a n/a n/a n/a L.J. Riches (i) +6% -6% n/a n/a n/a n/a S. T albot +6% -6% n/a n/a n/a n/a Average W orkforce Costs (v) +4.9% +1% (i) Retired from the Board with ef fect from 29 April 2021. (ii) Appointed Chairman with effect from 1 January 2020. (iii) Appointed with effect from 22 March 2021. (iv) Appointed with effect fr om 3 December 2020. (v) Appointed with effect fr om 25 September 2019. (vi) Appointed with effect fr om 3 December 2019. (vii) For the purposes of Section 1110N(e)(ii), CRH plc had no employees in each of the nancial years from 2017 to 2021. 2021 Annual Report and Form 20-F 111 110 The Directors submit their r eport and the audited Consolidated Financial Statements for the year ended 31 December 2021. Principal Activity , Results for the Y ear and Review of Business CRH is the leading building materials business in the world, employing c. 77,400 people at over 3,200 locations in 28 countries. CRH manufactures and supplies a range of building materials, products and innovative solutions for the construction industry . From primary materials, to products that ar e highly engineered and high-value-added, to integrated building solutions that enable faster , more sustainable construction, CRH is uniquely positioned to address evolving tr ends in global construction markets. Our products can be found throughout the built envir onment in a wide range of construction projects fr om major public infrastructure to commer cial buildings and residential homes. The Gr oup has c.900 subsidiary , joint venture and associate undertakings; the principal ones as at 31 December 2021 are listed on pages 260 to 264. The Group's strategy , business model and development activity are summarised on pages 6 to 53 and are deemed to be incorporated in this part of the Directors' Report. As set out in the Consolidated Income Statement on page 140, the Group r eported a prot before tax for the year of $3.3 billion from continuing operations. Comprehensive r eviews of the nancial and operating performance of the Group during 2021 are set out in the Business Performance section on pages 36 to 53; key nancial performance indicators are set out on pages 18 to 19. The treasury policy and objectives of the Group ar e set out in detail in note 22 to the Consolidated Financial Statements. During the year ended 31 December 2021, 17,829,602 ordinary shar es were repur chased on the Euronext Dublin for a total of $0.9 billion, at an average price of $49.30 per share. Further details in relation to the buyback pr ogramme and the Company's prots available for distribution are set on pages 113 and 205 r espectively . Dividend CRH's capital allocation policy reects the Group's strategy of generating industry leading returns through value-accr etive allocation of capital while delivering long-term dividend growth for shar eholders. The Board continues to believe that a progr essive dividend policy is appropriate for the Gr oup and further to the 25% dividend increase in 2020, an interim dividend of 23.0c (2020: 22.0c) per share was paid in October 2021. The Board is r ecommending a nal dividend of 98.0c per share. This would give a total dividend of 121.0c for the year (2020: 115.0c), an increase of 5% over last year . The earnings per share for the year were 328.8c, repr esenting a cover of 2.7x the proposed dividend for the year . It is proposed to pay the nal dividend on 5 May 2022 to shareholders register ed at the close of business on 11 March 2022. In connection with the share buyback programme, CRH announced the suspension of the scrip dividend scheme on 2 May 2018. Therefor e, the nal dividend will be paid wholly in cash. Reecting the resilience of our business model and continued strong cash generation the Board believes that a thr ough-the-cycle dividend cover of 2.0 to 2.5 times is appropriate for the Group going forwar d. 2022 Outlook The 2022 outlook set out in the Chief Executive’ s Review on page 11 is deemed to be incorporated in this part of the Directors’ Report. Principal Risks and Uncertainties Pursuant to Section 327(1)(b) of the Companies Act 2014, Regulation 5(4)(c)(ii) of the T ransparency (Directive 2004/109/EC) Regulations 2007 (the 'T ransparency Regulations') and the Central Bank (Investment Market Conduct) Rules 2019, the principal risks and uncertainties that could affect the Gr oup’ s business are set out on pages 116 to 121 and are deemed to be incorporated in this part of the Directors’ Report. These risks and uncertainties reect the international scope of the Group’ s operations and its decentralised structure. If any of these risks occur , the Group’ s business, nancial condition, results of operations, liquidity and/or prospects could be materially adversely affected. Non-Financial Reporting The European Union (Disclosur e of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 (the ‘Non-Financial Regulations’) requir es CRH to provide certain non-nancial information to investors and other stakeholders necessary to provide them with an understanding of the Company’ s development, performance, position and impact of its activity . T able 50 provides more details on the information r equired to be provided by the Non-Financial Regulations and where this information has been pr ovided in this Annual Report and Form 20-F . Dir ectors’ Report Non-Financial Reporting T able 50 Reporting Requirement Relevant Policies (i) Location of Information (ii) Pages Environmental and Climate-Related Matters Environmental Policy Sustainability , T ransparency on Climate, Risk, Governance and The Environment and Government Regulations 20 to 31 and 242 Social & Employee Matters Health & Safety Policy , Social Policy Sustainability , SESR Committee Report and Risk Factors 20 to 31, 76 to 79 and 232 to 240 Human Rights Social Policy , Code of Business Conduct Sustainability 20 to 27 and 74 Anti-bribery & Corruption Code of Business Conduct Sustainability and Risk Factors 20 to 27 and 238 Business Model – Business Model 16 to 17 Non-nancial KPIs – Key Performance Indicators 18 to 19 Principal Risks – Risk Management 32 to 35 Principal Risks and Uncertainties 116 to 121 (i) Policies are available on CRH’ s website, www .crh.com. (ii) The referenced sections ar e deemed to be incorporated within this Directors’ Report. 2021 Annual Report and Form 20-F 111 110 Regulatory Information 1 T able 51 Companies Act 2014 For the purpose of Section 1373, the Corporate Governance Report on pages 55 to 109, together with the Gover nance Appendix located on the CRH website (www .crh.com), which contains the information required by Section 1373(2) of the Companies Act 2014 and the risk management disclosures on pages 32 to 35 and 116 to 121, ar e deemed to be incorporated in the Directors’ Report and form part of the corporate governance statement requir ed by Section 1373 of the Companies Act. Details of the Company’ s employee share schemes and capital structure can be found in notes 8 and 29 to the Consolidated Financial Statements on pages 164 to 166 and 203 to 205 respectively . 2006 T akeover Regulations For the purpose of Regulation 21 of Statutory Instrument 255/2006 European Communities (T akeover Bids (Directive 2004/25/EC)) Regulations 2006, the rules relating to the appointment and r eplacement of Directors are summarised in the Governance Appendix. The Chief Executive and the Finance Director have enter ed into service contracts, the principal terms of which are summarised in the 2022 Directors’ Remuneration Policy on page 95 are deemed to be incorporated in this part of the Dir ectors’ Report. The Company’ s Memorandum and Articles of Association, which are available on the CRH website, are also deemed to be incorporated in this part of the Dir ectors’ Report. The Group has certain banking facilities and bond issues outstanding which may requir e repayment in the event that a change in control occurs with respect to the Company . In addition, the Company’ s Share Option Schemes and Performance Shar e Plan contain change of control provisions which can allow for the acceleration of the exercisability of shar e options and the vesting of share awards in the event that a change of control occurs with r espect to the Company . 2007 T ransparency Regulations For the purpose of Statutory Instrument 277/2007 T ransparency (Directive 2004/109/EC) Regulations 2007, the following sections of this Annual Report and Form 20-F are deemed to be incorporated into this part of the Dir ectors’ Report 2 : the Chairman’ s Introduction on pages 4 and 5, the Strategy Review section on pages 8 to 35, the Principal Risks and Uncertainties section on pages 116 to 121, the Business Performance section on pages 37 to 53, the information on inclusion and diversity on pages 72 and 74, the details of earnings per Ordinary Share in note 12 to the Consolidated Financial Statements, the details of derivative nancial instruments in note 27, the details of the reissue of T reasury Shar es in note 29 and the details of employees in note 7. Disclaimer/ Forward- Looking Statements In order to utilise the “Safe Harbor” pr ovisions of the US Private Securities Litigation Reform Act of 1995, CRH plc (the ‘Company’), and its subsidiaries (collectively , ‘CRH’ or the ‘Group’) is providing the following cautionary statement. This document contains certain statements that are, or may be deemed to be, forwar d-looking statements with respect to the nancial condition, results of operations, business, viability and futur e performance of CRH and certain of the plans and objectives of CRH including, but not limited to, the statements under: “Chairman's Introduction,” “Strategy Review - Chief Executive's Review ,” "Gover nance - Directors' Report" and “Strategy Review - Our Strategy ,” in each case regarding the Gr oup's strategy , plans and expectations for future growth and delivery; “Strategy Review - Key Performance Indicators” with regar d to our focus for 2022; "Strategy Review - Sustainability" with regard to our strategies for our sustainability priorities, our ambitions and targets, and climate-related risks and opportunities; “Business Performance and Segmental Reviews - Finance Director's Review” with r espect to our belief that the Group has sufcient resour ces to meet its debt obligations and capital and other expenditure requir ements in the short and long terms; “Business Performance and Segmental Reviews” with respect to our expectations regarding economic activity and scal developments in our operating regions, our expectations for the r esidential, non-residential and infrastructure markets, and our strategies for individual segments and business lines; “Governance - Safety , Environmental & Social Responsibility Committee Report” with regard to our environment, social, and governance strategies and priorities; “Governance - Directors' Remuneration Report” with regar d to growth forecasts for the coming years; “Governance - Principal Risks and Uncertainties,” "Strategy Review - Risk Management" and "Supplemental 20-F and Other Disclosures - Risk Factors" with r espect to the potential impact and evolving nature of risk as well as the direction risk may be trending; and “Supplemental 20-F and Other Disclosures - The Envir onment and Gover nment Regulations” regar ding policy , legal and regulatory developments that may affect CRH. These forward-looking statements may generally , but not always, be identied 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 ar e not historical facts or matters of fact at the time of this document. By their nature, forwar d-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 r eect the Company’ s current expectations and assumptions as to such future events and cir cumstances that may not prove accurate. A number of material factors could cause actual r esults and developments to differ materially from those expressed or implied by these forward-looking statements, certain of which ar e beyond our control and which include, among other things: the ongoing COVID-19 pandemic; economic and nancial conditions generally in various countries and regions wher e we operate; the pace of growth in the overall construction and building materials sector; demand for infrastructure, r esidential and non-residential construction in our geographic markets; increased competition and its impact on prices; incr eases in energy and/or raw materials costs; adverse changes to laws and regulations; approval or allocation of funding for infrastructure pr ogrammes; adverse political developments in various countries and regions; failure to complete or successfully integrate acquisitions; the effects of climate change and r elated regulations on our business political stability and economic growth in relevant ar eas of the world; wars and acts of terrorism; cyber -attacks or sabotage; and the specic factors identied in the discussions accompanying such forward-looking statements and in the Principal Risks and Uncertainties included on pages 116 to 121 of the Dir ectors’ Report and in the Risk Factors included on pages 232 to 240 of this Annual Report and Form 20-F . Y ou are cautioned not to place undue reliance on any forward-looking statements. These forwar d-looking statements are made as of the date of this Directors’ Report. The Company expressly disclaims any obligation or undertaking to publicly update or revise these forwar d-looking statements other than as required by applicable law . The forward-looking statements in this Annual Report and Form 20-F do not constitute r eports or statements published in compliance with any of Regulations 4 to 8 and 26 of the T ransparency (Directive 2004/109/EC) Regulations 2007. Location of Information requir ed pursuant to Listing Rule 9.8.4C T able 52 Listing Rule Information to be included (i): LR 9.8.4 (12) and (13) W aivers of Dividends Disclosure: The T rustees of the Employee Benet T rust have elected to waive dividends in respect of certain holdings of CRH shares. See page 205 to the Consolidated Financial Statements. (i) No information is required to be disclosed in respect of Listing Rules 9.8.4 (1), (2), (4), (5), (6), (7), (8), (9), (10), (11) and (14). 1. This table contains information which is required to be pr ovided for regulatory purposes. 2. For the purposes of the Company’ s Annual Report on Form 20-F as led with the SEC, the Sustainability Report, and any reference ther eto, is explicitly excluded from this Directors’ Report. 2021 Annual Report and Form 20-F 113 112 Going Concern The time period that the Directors have consider ed in evaluating the appropriateness of the going concern basis in preparing the 2021 Consolidated Financial Statements is a period of at least twelve months from the date of appr oval of these nancial statements (the 'period of assessment'). The Group's business activities, together with the factors likely to affect its futur e development, performance and position are set out in the Strategy Review and in this report on pages 6 to 35 and pages 116 to 121. The nancial position of the Group, its cash ows, liquidity position and borrowing facilities ar e described in the Business Performance Review on pages 36 to 53. In addition, notes 21 to 25 to the Consolidated Financial Statements include the Group's objectives, policies and processes for managing its capital; its nancial risk management objectives; details of its nancial instruments and hedging activities; and its exposures to cr edit, currency and liquidity risks. The Group has considerable nancial resour ces and a large number of customers and suppliers across dif ferent geographic areas and industries and the local nature of building materials means that the Group's pr oducts are not usually shipped cross-bor der . 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 nancial covenants associated with our debt obligations and the continuing maintenance of strong investment grade cr edit ratings demonstrate the signicant nancial strength and r esilience of the Group. No concerns or material uncertainties have been identied as part of our assessment. Having assessed the relevant business risks, including the climate change risk on page 118, the Directors believe that the Gr oup 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 nancial and other resour ces to continue in operational existence for the period of assessment with no material uncertainties. For this reason, the Dir ectors continue to adopt the going concern basis in preparing the Consolidated Financial Statements. Viability Statement The viability statement set out on page 35 is deemed to be incorporated in this section of the Directors' Report. Risk Management and Internal Control 1 The Directors conrm that, in addition to the monitoring carried out by the Audit Committee under its T erms of Reference, they have reviewed the ef fectiveness of the Group’ s risk management and internal control systems up to and including the date of approval of the nancial statements. This review had r egard to all material controls, including nancial, operational and compliance controls that could af fect the Group’ s business. Directors’ Compliance Statement It is the policy of the Company to comply with its relevant obligations (as dened in the Companies Act 2014). The Directors have drawn up a compliance policy statement (as dened in section 225(3)(a) of the Companies Act 2014) and arrangements and structures are in place that ar e, in the Directors’ opinion, designed to secure material compliance with the Company’ s relevant obligations. The Directors conrm that these arrangements and structures were r eviewed during the nancial year . As requir ed by Section 225(2) of the Companies Act 2014, the Directors acknowledge that they are r esponsible for the Company’ s compliance with the relevant obligations. In discharging their responsibilities under Section 225, the Dir ectors relied on the advice both of persons employed by the Company and of persons retained by the Company under contract, who they believe have the requisite knowledge and experience to advise the Company on compliance with its relevant obligations. Directors’ Remuneration Report Resolution 3 to be proposed at the 2022 AGM deals with the 2021 Directors’ Remuneration Report (excluding the Remuneration Policy Report), as set out on pages 80 to 109, which is being presented to shar eholders for the purposes of a non-binding advisory vote in line with the requir ements of Section 1110N(6) of the Companies Act, 2014. Resolution 4 to be proposed at the 2022 AGM deals with the Remuneration Policy , as set out on pages 88 to 97. The 2022 Directors’ Remuneration Policy will, if approved, pr ovide the framework for remuneration decisions made by the Remuneration Committee. It is the Company’ s intention that this will apply until the 2025 AGM, unless the Remuneration Committee seeks shareholder approval for a r enewed policy at an earlier date. Directors' Fees An ordinary r esolution (resolution 5) will be proposed at the 2022 AGM to incr ease the limit of the aggregate fees for non-executive Dir ectors to €1,200,000. The current limit, appr oved at the 2019 AGM, is €1,000,000. The proposed increase is r equired as a result of an incr ease in the number of non-executive Directors. Changes to the Board of Dir ectors • Ms. C. Dowling was appointed to the Board with effect fr om 22 March 2021 ; • Ms. H.A. McSharry , Mr . S. Murphy and Ms. L.J. Riches retir ed from the Board with ef fect from 29 April 2021; and • Mr . B. Khan was appointed to the Board with effect fr om 27 October 2021 Under the Company’ s Articles of Association, co-opted Directors ar e required to submit themselves to shareholders for election at the AGM following their appointment and all Directors ar e required to submit themselves for re-election at intervals of not mor e than three years. However , in accordance with the provisions contained in the UK Corporate Governance Code, the Board has decided that all Directors eligible for r e-election should retire at each AGM and offer themselves for r e-election. Auditor As requir ed under Section 381(1)(b) of the Companies Act 2014, the AGM agenda includes a resolution authorising the Dir ectors to x the remuneration of the auditor . Section 383 of the Companies Act 2014 provides for the automatic re-appointment of the auditor of an Irish company at a company’ s AGM, unless the auditor has given notice in writing of his unwillingness to be re-appointed or a r esolution has been passed at that meeting appointing someone else or providing expr essly that the incumbent auditor shall not be re-appointed. The auditor , Deloitte Ireland LLP , is willing to continue in ofce. Notwithstanding the provisions of Irish company law , the Board has decided to pr ovide shareholders with an opportunity to have a say on the continuance in ofce of Deloitte Ir eland LLP and a non-binding resolution has been included on the agenda for the 2022 AGM for this purpose. Dir ectors’ Report - continued 1. For more information in relation to the Gr oup’ s risk management and internal control systems, please see the Risk Management and Internal Control section in the Supplemental 20-F and Other Disclosures section on page 240. 2021 Annual Report and Form 20-F 113 112 Authority to Allot Shares The Directors r equire the authority of the shareholders to allot any unissued Or dinary Share capital of the Company . Accordingly , an ordinary resolution will be pr oposed at the 2022 AGM (resolution 9) to r enew the annual authority for that purpose. The authority will be for an amount which repr esents just under 50% of the issued Ordinary Share capital as at 2 Mar ch 2022. Any allotment exceeding 33% of the issued Ordinary Shar e capital will only be made pursuant to a pre-emptive issue and no issue of shares will be made which could effectively alter contr ol of the Company without prior approval of the Company in General Meeting. The Directors have no pr esent intention of making any issue of shares, other than in connection with the Group’ s share incentive plans and, if applicable, scrip dividend scheme. If approved, this authority will expir e on the earlier of the date of the AGM in 2023 or 27 July 2023. Disapplication of Pre-emption Rights Resolutions 10 and 11 are special r esolutions which, if approved by shar eholders, will renew the annual authorities of the Directors to disapply statutory pre-emption rights in r elation to allotments of Ordinary Shar es for cash in certain circumstances. Resolution 10 will, if approved, authorise the Directors to allot Or dinary Shares on a non-pre-emptive basis and for cash (otherwise than in connection with a rights issue or similar pre-emptive issue) up to a maximum nominal value of €12,386,000. This amount repr esents approximately 5% of the issued Or dinary Share capital as at 2 March 2022, being the latest practicable date prior to publication of this document. This resolution will also allow the Directors to disapply pr e-emption rights in order to accommodate any regulatory r estrictions in certain jurisdictions where the Company might otherwise wish to undertake a pre-emptive issue. Resolution 11 will, if approved, af ford the Directors with an additional power to allot Ordinary Shar es on a non-pre-emptive basis and for cash up to a further 5% of the issued share capital as at 2 Mar ch 2022. The power conferred by this r esolution can be used only in connection with an acquisition or a specied capital investment which is announced contemporaneously with the issue, or which has taken place in the preceding six-month period and is disclosed in the announcement of the issue. The 5% limits in the disapplication resolutions include any T reasury Shar es reissued by the Company during the same period. The Directors conrm that in r espect of these resolutions, they intend to follow the Statement of Principles updated by the Pre-Emption Gr oup in that allotments of shares for cash and the reissue of T reasury Shares on a non-pre-emptive basis (other than for an open offer or rights issue to Ordinary Shar eholders, the operation of CRH’ s employee share schemes or in connection with an acquisition or specied capital investment) will not exceed 7.5% of the issued Ordinary Shar e capital within a rolling thr ee-year period without prior consultation with shareholders. T ransactions in Own Shares Under the share buyback pr ogramme, a total of 17,829,602 Ordinary Shar es, equivalent to 2.2% of the Company’ s issued share capital, were r epurchased during 2021, at an average price of $49.30 per share. 21,000,000 Or dinary Shares, equivalent to 2.6% of the Company’ s issued share capital wer e cancelled on 29 December 2021 as part of the Group's management of its T reasury Shar e requirements. As at 2 March 2022, 8,240,813 shar es were held as T reasury Shar es, equivalent to 1.06% of the Ordinary Shar es in issue (excluding T reasury Shar es). The T reasury Share balance at 31 D ece mber 20 21 was 3,476,859, equivalent to 0.5% of the Ordinary Shar es in issue (2020: 10,087,161 (1.28%)). During 2021, 3,439,904 (2020: 1,375,338) T reasury Shar es were reissued under the Gr oup’ s employees’ share schemes. A special resolution will be pr oposed at the 2022 AGM (resolution 12) to r enew the authority of the Company , or any of its subsidiaries, to purchase up to 10% of the Company’ s Ordinary Shares in issue at the date of the AGM. If approved, the minimum price which may be paid for shares pur chased by the Company shall not be less than the nominal value of the shares and the maximum price will be 105% of the higher of the last independent trade in the Company’ s shares (or current independent bid, if higher) and the average market price of such shares over the pr eceding ve days. A special resolution will also be pr oposed for the purpose of renewing the authority to set the maximum and minimum prices at which T reasury Shar es (effectively shar es purchased and not cancelled) may be reissued of f-market by the Company . If granted, both of these authorities will expire on the earlier of the date of the AGM in 2023 or 27 July 2023. As at 2 March 2022, options to subscribe for a total of 1,217,351 Ordinary Shares ar e outstanding, representing 0.16% of the issued Ordinary Shar e capital (excluding T reasury Shar es). If the authority to purchase Ordinary Shar es was used in full, the options would repr esent 0.17% of the remaining shares in issue. As ou tli ne d on pa ge 19 , du ri ng 2021 the Gro up ret ur ned a f ur ther $ 0.9 bil lio n of ca sh to sha reh ol de rs un de r its s ha re bu yb ack pro gra mm e. A fur ther b uy bac k tra nc he of $0.3 bi lli on i s und er way and is s ch ed ule d to co mpl ete by 30 M arc h 2022. While no decision has been made to extend the programme beyond this, the Boar d believes that the Company should retain the ability to buyback its own shares so that it can be used in the best interests of shar eholders generally . Annual General Meeting The Notice of Meeting for the 2022 AGM will be published in March on the CRH website (ww w .crh .c om) and is expected to be posted to shareholders on 30 M ar ch 2 02 2. Statement of Directors’ Responsibilities The Directors as at the date of this r eport, whose names are listed on pages 56 to 59, ar e responsible for pr eparing the Annual Report and Form 20-F and Consolidated Financial Statements in accordance with applicable laws and r egulations. Irish company law requir es the Directors to prepar e nancial statements for each nancial year which give a true and fair view of the assets, liabilities, nancial position of the Parent Company and of the Group, and of the pr ot or loss of the Group taken as a whole for that period (the ‘Consolidated Financial Statements’). In preparing the Consolidated Financial Statements, the Directors ar e required to: • select suitable accounting policies and then apply them consistently; • make judgements and estimates that are reasonable and prudent; • comply with applicable Inter national Financial Reporting Standards as adopted by the European Union, subject to any material departures disclosed and explained in the nancial statements; and • prepare the nancial statements on the going concern basis unless it is inappropriate to presume that the Gr oup will continue in business 2021 Annual Report and Form 20-F 115 114 The Directors ar e required by the T ransparency (Directive 2004/109/EC) Regulations 2017 and the Central Bank (Investment Market Conduct) Rules 2019 to include a management report containing a fair review of the development and performance of the business and the position of the Parent Company and of the Gr oup taken as a whole and a description of the principal risks and uncertainties facing the Group. The Directors conrm that to the best of their knowledge they have complied with the above requir ements in preparing the 2021 Annual Report and Form 20-F and Consolidated Financial Statements. The considerations set out above for the Group are also r equired to be addressed by the Directors in pr eparing the nancial statements of the Parent Company (which ar e set out on pages 211 to 215), in respect of which the applicable accounting standards ar e those which are generally accepted in Ireland. The Directors have elected to pr epare the Company Financial Statements in accordance with Irish law and accounting standards issued by the Financial Reporting Council and promulgated by the Institute of Charter ed Accountants in Ireland (Generally Accepted Accounting Practice in Ireland), including FRS 101 Reduced Disclosure Framework . The Directors ar e responsible for keeping adequate accounting recor ds which disclose with reasonable accuracy at any time the nancial position of the Parent Company and which enable them to ensure that the Consolidated Financial Statements are pr epared in accordance with applicable International Financial Reporting Standards as adopted by the European Union and comply with the pr ovisions of the Companies Act 2014 and Article 4 of the IAS Regulation. The Directors have appointed appr opriate accounting personnel, including a professionally qualied Finance Director , in order to ensure that those requir ements are met. The books and accounting recor ds of the Company are maintained at the Gr oup’ s administrative head ofces located at Stonemason’ s Way , Rathfarnham, Dublin 16, Ireland. The Directors ar e also responsible for safeguarding the assets of the Gr oup and hence for taking reasonable steps for the pr evention and detection of fraud and other irregularities. Each of the Directors conrms that, to the best of their knowledge and belief, and as requir ed by the T ransparency Regulations, • the Consolidated Financial Statements, prepar ed in accordance with IFRS and the Parent Company Financial Statements prepar ed in accordance with FRS 101, give a true and fair view of the assets, liabilities, nancial position and prot or loss of the Group for the nancial year ended 31 December 2021; and • the Directors' Report contained on page 110 to 114 of this Annual Report and Form 20-F includes a fair review of the development and performance of the business and the position of the Group and Company , together with a description of the principal risks and uncertainties that they face Each of the Directors also conrm that they consider that the Annual Report and Form 20-F and Consolidated Financial Statements, taken as a whole, is fair , balanced and understandable and provides the information necessary for shareholders to assess the Company's position, performance, business model and strategy For the purposes of Section 330 of the Companies Act 2014, each of the Directors also conrms that: • so far as they are aware, there is no r elevant audit information of which the Company’ s statutory auditor is unaware; and • they have taken all the steps that they ought to have taken as Directors in or der to make themselves aware of any r elevant audit information and to establish that the Company’ s statutory auditor is aware of that information. On behalf of the Board, R. Boucher , A. Manifold Directors 2 March 2022 Dir ectors’ Report - continued 2021 Annual Report and Form 20-F 115 114 Cold feed bins at a Gulf Coast plant in Houston, T exas, United States. Gulf Coast is part of the T exas Region in CRH’ s Americas Materials Division and provides asphalt/paving, construction services, industrial and builder’ s products to the Southeast T exas region’ s growing economy . 2021 Annual Report and Form 20-F 117 116 Under Section 327(1)(b) of the Companies Act 2014 and Regulation 5(4)(c)(ii) of the T ransparency (Dir ective 2004/109/EC) Regulations 2007, the Group is requir ed to give a description of the principal risks and uncertainties which it faces. These risks and uncertainties reect the international scope of the Group’ s operations and the Group’ s decentralised structure. The risks and uncertainties presented below (a br oader discussion of which is set out on pages 232 to 240) are r eviewed on an annual basis and represent the principal risks and uncertainties faced by the Gr oup at the time of compilation of the 2021 Annual Report and Form 20-F . During the course of 2022, 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 Risks and Uncertainties Industry Cyclicality and Economic Conditions Description Impact How we Manage the Risk Construction activity , and therefore demand for the Group’ s products, is inherently cyclical as it is inuenced by global and national economic circumstances, monetary policies, consumer sentiment and weather conditions. The Group may also be negatively impacted by unfavourable swings in fuel and other input costs. Risk trend: Failure to pr edict and plan for cyclical events or adverse economic conditions could negatively impact nancial performance. • Market diversication strategies, in addition to the Group’ s multiple end-use sectors • Constant focus on cash control, strong cash generation and disciplined nancial management • Disciplined and focused approach to capital allocation and reallocation to ensur e our capital is deployed to where we see optimum opportunity for growth Principal Strategic Risks and Uncertainties People Management Description Impact How we Manage the Risk Existing processes ar ound people management, such as attracting, retaining and developing people, leadership succession planning, developing a diverse and inclusive workforce as well as dealing with collective repr esentation groups, may not deliver , inhibiting the Group achieving its strategy . Risk trend: Failure to ef fectively manage talent and plan for leadership succession could impede the realisation of strategic objectives. • T alent management, succession planning and inclusion & diversity programmes ar e in place within operating companies with oversight and support from Gr oup Human Resources and T alent Development • Development interventions are in place including enterprise-wide leadership development training, skill building training, coaching & mentoring programmes, and our Fr ont Line Leadership Program • Positive employee and trade/labour union relations ar e maintained Risk considered as part of scenarios modeled in Viability Statement assessment Link to strategic objective Continuous Improvement Benets of Scale and Integration Developing Future Leaders Focused Growth 2021 Annual Report and Form 20-F 117 116 Commodity Products and Substitution Description Impact How we Manage the Risk Many of the Group’ s products are commodities, which face strong volume and price competition, and may be replaced by substitute pr oducts which the Group does not pr oduce. Further , the Group must maintain strong customer r elationships to ensure changing consumer prefer ences and approaches to construction are addr essed. Risk trend: Failure to dif ferentiate and innovate could lead to market share decline, thus adversely impacting nancial performance. • Our integrated building solutions focused business model and a strong focus on customer service ensures dif ferentiation from competitors • Business-led innovation and Research and Development services aimed at ensuring the Group aligns its pr oducts and services to the demands of customers • Robust cost management practices and innovation in production pr ocesses ensure competitively priced products Portfolio Management Description Impact How we Manage the Risk The Group may engage in acquisition and divestment activity during the year as part of active portfolio management which presents risks ar ound due diligence, execution and integration of assets. Additionally , the Group may be liable for liabilities of companies it has acquired or divested. Risk trend: Failure to identify and execute deals in an efcient manner may limit the Gr oup’ s growth potential and impact nancial performance. • Expertise in identifying and evaluating targets, conducting due diligence and executing integration • Many core markets are fragmented and continue to offer gr owth opportunities • The Group’ s detailed due diligence programmes are supported by external specialists when necessary Public Policy and Geopolitics Description Impact How we Manage the Risk Adverse public policy , economic, social and political situations in any country in which the Group operates could lead to a fall in demand for the Group’ s products, business interruption, r estrictions on repatriation of earnings or a loss of plant access. The ongoing geopolitical conict in Ukraine has contributed to heightened uncertainty . Risk trend: Changes in these conditions may adversely affect the Gr oup's people, business, results of operations, nancial condition or prospects. • Mitigation strategies to protect CRH’ s people and assets are in place in high-risk ar eas • Senior management and Board monitoring of economic indicators and commentaries • T wo-phase budgeting process with pr evailing economic and market forecasts factor ed in Strategic Mineral Reserves Description Impact How we Manage the Risk Appropriate r eserves are an increasingly scarce commodity and licences and/or permits requir ed to enable operation are becoming har der to secure. There ar e numerous uncertainties inherent in reserves estimation and in pr ojecting future rates of production. Risk trend: Failure by the Gr oup to plan for reserve depletion, or to secure permits, may r esult in operation stoppages, adversely impacting nancial performance. • Planning for reserves enlargement and security of permits is a key point of focus for materials businesses • Robust mine planning for permitted reserves under the Group’ s control ensures that the lifetime of the mineral reserves is maximised • The implementation of operational best practice techniques ensures that the extraction of minerals is in line with permit requir ements, while minimising the impact of our operations on local environments 2021 Annual Report and Form 20-F 119 118 Principal Operational Risks and Uncertainties Climate Change and Policy Description Impact How we Manage the Risk The impact of climate change may over time affect the operations and cost base of the Group and the markets in which the Group operates. This could include physical risks, such as acute and chronic changes in weather and/or transitional risks such as technological development, policy and regulation change and market and economic responses. Risk trend: Should the Group not r educe its greenhouse gases (GHGs) emissions by its identied targets, the Group may be subject to incr eased costs, adverse nancial performance and reputational damage. • The Group is working towards delivery of its ambition for carbon neutrality along the cement and concrete value chain by 2050, and has set further carbon reduction targets, details of which are set out on page 23 of this Annual Report and Form 20-F • Operational improvements at plants are focused on reducing the CO 2 footprint of the Group’ s businesses • For more information please refer to the Sustainability section on page 20 in this Annual Report and Form 20-F or to the Group’ s independently assured Sustainability Report, which is available on www .crh.com Health and Safety Performance Description Impact How we Manage the Risk The Group’ s businesses operate in an industry where health and safety risks are inher ently prominent. Further , the Group is subject to stringent regulations from a health and safety perspective in the various jurisdictions in which it operates. Risk trend: A serious health and safety incident could have a signicant impact on the Group’ s operational and nancial performance, as well as the Group’ s reputation. • A robust health and safety framework is implemented throughout the Gr oup’ s operations requiring all employees to complete formal health and safety training on a regular basis • The Group monitors the performance of its health and safety framework, and takes immediate and decisive action where non-adherance is identied • The development of a strong safety culture is driven by management and employees at every level and is a core part of doing business with integrity . The ambition is to have a culture of safety and wellness working towards zer o harm across the Gr oup Information T echnology and/or Cyber Security Description Impact How we Manage the Risk The Group is dependent on information and operational technology systems to support its business activities. Any signicant operational event, whether caused by external attack, insider threat or error , could lead to loss of access to systems or data, adversely impacting business operations. Risk trend: Security breaches, IT interruptions or data loss could result in signicant business disruption, loss of production, r eputational damage and/or regulatory penalties. Signicant nancial costs in remediation ar e also likely in a major cyber security incident. • Ongoing strategic and tactical efforts to address the evolving nature of cyber thr eats and the challenges posed, including enhancement of existing information and cyber security practices towards best practices for organisational assets, which include people, processes and technology • Ongoing investment and development of risk management and governance associated with cyber security and information technology • Global Information Security Council oversees cyber risk and strategic matters related to the implementation and ongoing monitoring of information security across the Gr oup, focused on high-impact cyber risks 2021 Annual Report and Form 20-F 119 118 Sustainability and Corporate Social Responsibility Description Impact How we Manage the Risk The nature of the Gr oup’ s activities poses inherent environmental, social and governance (ESG) risks, which are also subject to an evolving r egulatory framework and changing societal expectations. Risk trend: Failure to embed sustainability principles within the Group's businesses and strategy may r esult in non-compliance with relevant r egulations, standards and best practices and lead to adverse stakeholder sentiment and reduced nancial performance. • CRH’ s strategy and business model are built around sustainable, r esponsible and ethical performance. CRH aims to positively contribute to society through the delivery of materials and products that enhance the sustainability of structures and consider the needs of our communities. CRH offers multiple pr oducts and integrated building solutions that enhance the environmental performance of the built environment • Sustainability performance continues to be subject to rigorous external evaluation. The Group’ s achievements have been recognised through its inclusion in a variety of leading global sustainability indices COVID-19 Pandemic Description Impact How we Manage the Risk Public health emergencies, epidemics or pandemics, such as the emergence and spread of the COVID-19 pandemic, have the potential to signicantly impact the Group's operations thr ough a fall in demand for the Group's pr oducts, a reduction in staff availability and business interruption. Risk trend: The emergence and spread of the COVID-19 pandemic has had a material impact across the construction markets in which the Group operates. The continued uncertainty around the global pandemic could have an adverse effect on the Group's operating r esults, cash ows, nancial condition and/or prospects. • Global crisis management structures and protocols ar e in place to enable swift decision- making at times of crisis • Business continuity management structures and plans enacted with new working protocols implemented to safeguard our people and business • Consistent contact is maintained with various government organisations 2021 Annual Report and Form 20-F 121 120 Principal Financial and Reporting Risks and Uncertainties Financial Instruments Description Impact How we Manage the Risk The Group uses nancial instruments thr oughout its businesses giving rise to interest rate and leverage, foreign curr ency , counterparty , credit rating and liquidity risks. Risk trend: A downgrade of the Group’ s credit ratings may give rise to increases in futur e funding costs and may impair the Group’ s ability to raise funds on acceptable terms. In addition, insolvency of the nancial institutions with which the Group conducts business may adversely impact the Group’ s nancial position. • The Group seeks to ensure that suf cient resour ces are available to meet the Group’ s liabilities as they fall due through a combination of cash and cash equivalents, cash ows and undrawn committed bank facilities. Systems are in place to monitor and contr ol the Group’ s liquidity risks, which are r eported to the Board on a monthly basis. Cash ow forecasting is provided to executive management on a weekly basis • All of the Group’ s nancial institution counterparties are leading nancial institutions of international scope with a strong investment grade credit rating with S&P and/or Moody's • Please see note 22 to the Consolidated Financial Statements for further detail Principal Compliance Risks and Uncertainties Laws, Regulations and Business Conduct Description Impact How we Manage the Risk The Group is subject to a wide variety of local and international laws and regulations (to include those applicable to it as a listed company) across the many jurisdictions in which it operates, which vary in complexity , application and frequency of change. Further discussion on this risk can be found on page 238. Risk trend: Potential breaches of local and international laws and regulations could r esult in litigation or investigations, the imposition of signicant nes, sanctions, adverse operational impact and reputational damage. • Robust governance including oversight by Global Legal and Compliance function and other relevant Gr oup functions who report to the Board, Audit Committee and/or SESR • CRH’ s Code of Business Conduct, which is in effect mandatorily acr oss the Group, and is available on www .crh.com • Proactive engagement throughout the Gr oup, to include, an extensive training programme, a global speak up programme with a dedicated whistleblowing hotline (the results of which ar e reported to the Audit and SESR Committees), risk assessments, increased data analytics and ongoing development of policies and procedur es T axation Charge and Balance Sheet Provisioning Description Impact How we Manage the Risk 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. Risk trend: Changes in tax regimes or assessment of additional tax liabilities in future tax audits could result in incr emental tax liabilities which could have a material adverse effect on cash ows and the nancial results of operations. • The Group T ax Policy , supporting T ax Guidelines and SOX controls pr ovide a tax gover nance framework operable throughout the Gr oup • Group T ax is managed by a team of in-house specialists with signicant experience. The in-house expertise is supplemented by the assistance of external advisors where requir ed 2021 Annual Report and Form 20-F 121 120 Foreign Curr ency T ranslation Description Impact How we Manage the Risk The principal foreign exchange risks to which the Consolidated Financial Statements are exposed pertain to (i) adverse movements in reported r esults when translated into the reporting curr ency; and (ii) declines in the reporting curr ency value of net investments which are denominated in a wide basket of currencies other than the r eporting currency . Risk trend: Adverse changes in the exchange rates will continue to negatively affect r etained ear nings. The annual impact is reported in the Consolidated Statement of Comprehensive Income. • The Group changed to US Dollar reporting currency ef fective 1 January 2020, in consideration of the current portfolio and business mix which has now signicantly higher US Dollar exposure • The Group’ s established policy is to spread its net worth across the curr encies of the various operations with the objective of limiting its exposure to individual curr encies and thus promoting consistency with the geographical balance of its operation • The Group’ s activities are conducted primarily in the local currency of operation r esulting in low levels of foreign curr ency transactional risk Goodwill Impairment Description Impact How we Manage the Risk Signicant 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. Risk trend: While a non-cash item, a material write-down of goodwill could have a substantial impact on the Group’ s income and equity . • Economic indicators of goodwill impairment are monitor ed closely through the monthly reporting pr ocess. Detailed impairment testing is undertaken prior to year end • The goodwill impairment assessment is subject to regular r eview by the Audit Committee • For further information on how the Group manages the risk posed by goodwill impairment and the results of the 2021 impairment testing process, please r efer to note 14 to the Consolidated Financial Statements on pages 174 to 176 The cir cular econom y and demand for mor e sustainable forms of const ruction are pr ese nt ing new value crea tion oppor tunities fo r CRH as a pr oducer of high‑ per forming , climat e ‑r esilient mat e rials and products f or use thr oughout the bui lt e n vironment . 2021 Annual Report and Form 20-F 123 In 2021 CRH’ s business in Slovakia, Hungary and Austria rebranded to Danucem, A CRH Company , as part of CRH’s brand endorsement strategy which leverages the strengths of local market brands supported by the endorsement of a leading international parent company . Danucem is part of CRH’s Eur ope Materials Division and a leading supplier of cement, concrete, aggregates and pr ecast elements. Independent Auditors’ Reports 124 Consolidated Income Statement 140 Consolidated Statement of Compr ehensive Income 141 Consolidated Balance Sheet 142 Consolidated Statement of Changes in Equity 143 Consolidated Statement of Cash Flows 144 Accounting Policies 145 Notes on Consolidated Financial Statements 155 Financials 122-215 124 Independent Auditor’s Irish Report to the members of CRH plc Report on the audit of the European Single Electronic Format financial statements (the ‘financial statements’) Opinion on the financial statements of CRH plc (the ‘Company’) and its subsidiaries (the ‘Group’) In our opinion the Group and Company financial statements: • give a true and fair view of the assets, liabilities and financial position of the Group and Company as at 31 December 2021 and of the profit of the Group for the financial year then ended; and • have been properly prepared in accordance with the relevant financial reporting framework and, in particular, with the requirem ents of the Companies Act 2014 and, as regards the Group financial statements, Article 4 of the IAS Regulation. The financial statements we have audited comprise: the Group financial statements: • the Consolidated Income Statement; • the Consolidated Statement of Comprehensive Income; • the Consolidated Balance Sheet; • the Consolidated Statement of Changes in Equity; • the Consolidated Statement of Cash Flows; and • the related notes 1 to 33, including a summary of significant accounting policies as set out at the beginning of the notes. the Company financial statements: • the Company Balance Sheet; • the Company Statement of Changes in Equity; and • the related notes 1 to 13, including a summary of significant accounting policies as set out in note 2. The relevant financial reporting framework that has been applied in the preparation of the Group financial statements is the Co mpanies Act 2014 and International Financial Reporting Standards (IFRS) as adopted by the European Union (“the relevant financial reporting framework”). The relev ant financial reporting framework that has been applied in the preparation of the Company financial statements is the Companies Act 2014 and FRS 101 “Reduced Disclosu re Framework” issued by the Financial Reporting Council (“the relevant financial reporting framework”). Basis for opinion We conducted our audit in accordance with International Standards on Auditing (Ireland) (ISAs (Ireland)) and applicable law. Ou r responsibilities under those standards are described below in the “ Auditor’s responsibilities for the audit of the financial statements ” section of our report. We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the f inancial statements in Ireland, including the Ethical Standard issued by the Irish Auditing and Accounting Supervisory Authority (IAASA), as applied to public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. 2021 Annual Report and Form 20-F 125 Summary of our audit approach Key audit matters The key audit matters that we identified in the current year were: • Intangible assets—assessment of the carrying value of goodwill associated with selected cash generating units; and • Revenue recognition for long-term contracts • Within this report, any new key audit matters are identified with and any key audit matters which are the same as the prior year identified with . Materiality • The Group materiality that we used in the current year was $140 million, which was determined on the basis of profit before tax as the primary benchmark. Scoping • We structured our approach to the audit to reflect how the Group is organised as well as ensuring our audit was both effective and risk focused. • Our scope covered 48 components. Of these, 5 were full-scope audits, covering 82% of Group revenue, 23 were subject to specific procedures on certain account balances by component audit teams or the Group audit team, and the remaining 20 were subject to substantive analytical procedures performed centrally by the Group audit team. Significant changes in our approach • The key audit matter presented in the prior year relating to the ‘Assessment of the carrying value of property, plant and equipment (PP&E)’ has been removed based on our audit risk assessment, which included consideration of the fact that the assessment of the carrying value of PP&E is no longer identified as a significant risk and of the more stable macroeconomic outlook and business performance in comparison to the prior year. • We adopted a different basis to determine materiality in the current year. In the prior year, materiality was determined on the basis of a composite benchmark approach considering revenue as the primary benchmark with EBITDA (as defined), cash flows from operations and total equity/net assets used as supporting benchmarks. This year we used profit before tax, which is a focus area of investors and analysts and is the benchmark traditionally considered for listed entities. Given the future economic outlook, the reduction in uncertainty arising from COVID-19 and the stability in the performance of the Group, we consider profit before tax to be an appropriate benchmark in the current year. * EBITDA is defined as earnings before inte rest, taxes, depreciation, am ortisation, asset im pairment charges, profit on disposa ls and the Group’s share of equity accounted investments’ profit after tax. 126 Independent Auditor’s Irish Report - continued Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group and Company’s ability to continue to adopt the going concern basis of accounting included: • obtaining an understanding of the Group’s controls over the development and approval of the projections and assumptions used in the cash flow forecasts to support the going concern assumption and testing the operating effectiveness of these controls; • testing the clerical accuracy of the cash flow forecast model; • performing an assessment of the financing facilities, including the nature of facilities and their maturity profile; • completing an assessment of the consistency of the models used to prepare the forecasts in line with other areas of our audit, such as the models used in the assessment of the carrying value of goodwill; • performing a look back analysis of the historical accuracy of forecasts prepared by management; • assessing the appropriateness of the sensitivity analysis prepared by management; and • assessing the adequacy of the disclosures in the financial statements. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, i ndividually or collectively, may cast significant doubt on the Group and Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In relation to the Group’s reporting on how they have applied the UK Corporate Governance Code and the Irish Corporate Governan ce Annex, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the dire ctors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sect ions of this report. Key Audit Matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financia l statements of the current financial year and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These m atters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. The key audit matter presented in the prior year relating to the ‘Assessment of the carrying value of PP&E’ has been removed ba sed on our audit risk assessment. 2021 Annual Report and Form 20-F 127 Intangible assets – assessment of the carrying value of goodwill associated with selected cash generating units Key audit matter description As described in the accounting policies and note 14, the goodwill balance was $9.5 billion as at 31 December 2021 (2020: $9.0 b illion). The Group did not record an impairment charge during the year. The Group’s evaluation of the carrying value of goodwill for impairment involves the comparison of the recoverable amount of go odwill of each cash generating unit (CGU) to its carrying value. The Group used the value-in-use approach, which deploys a discounted cas h flow model to estimate the recoverable amount. This requires management to make significant estimates and assumptions related to dis count rates, short-term forecasts of revenues and margins, and long-term growth rates which drive net cash flows. Changes in these assumptions could have a significant impact on the recoverable amount, the amount of any goodwill impairment charge, or both. We focused on CGUs where the recoverable amount exceeded its carrying value by an insignificant amount and on CGUs which had a significant change in cash flow forecasts compared to the prior year. Based on these procedures we identified certain CGUs of i nterest and performed sensitivities on key management estimates and assumptions, with the assistance of our valuation specialists. We determined that the assessment of the carrying value of goodwill of one selected CGU was a key audit matter because it required a high degree of auditor judgement and an increased extent of effort when performing audit procedures to evaluate the reasonableness o f management’s estimates and assumptions related to short-term forecasts of revenues and long-term growth rates. The Audit Committee discussion of this key audit matter is set out on page 68. How the scope of our audit responded to the key audit matter Our audit procedures related to the short-term forecasts of revenues and long-term growth rates of one CGU, as described above, used by management to estimate the recoverable amount of the selected CGU included the following, among others: • We tested the operating effectiveness of controls over management’s determination of the short-term forecasts of revenues and long-term growth rates used to determine the recoverable amount of the selected CGU. • We agreed the underlying cash flow forecasts to the Board approved projections and we evaluated management’s ability to accurat ely forecast future revenues by: • performing a look-back analysis and comparing actual results to management’s historical forecasts; • assessing the reasonableness of the impact of macroeconomic activity on short-term cash flows; • benchmarking management’s forecasts against independent third-party economic and industry projections; and • comparing internal Group communications to management and the Board against the cash flow forecasts to evaluate for consistency. • We compared the long-term growth rates, used by management to grow cash flows from year 5 to year 10 in order to calculate a terminal value at that point, to independent external sources and developed our own range to assess the reasonableness of these rates. • We compared the actual results for the year ended 31 December 2021 to management’s forecasts at the date of the annual impairment test to determine if any indicators of impairment existed. Key observations Based on the procedures performed, we have determined management’s assumptions used in the assessment of the carrying value of goodwill associated with selected CGUs to be reasonable. We concluded that the related disclosures provided in the Group Financial Statements are appropriate. 128 Independent Auditor’s Irish Report - continued Revenue recognition for long-term contracts Key audit matter description As described in the accounting policies and note 1, the Group’s revenues derived from long-term contracts accounted for 22% ($6.9 billion) of the total revenue in 2021 (2020: $6.2 billion). The Group recognises long-term contract revenue over the contract term as the work progresses because transfer of control and t he fulfillment of performance obligations to the customer is continuous. The percentage-of-completion method is used to recognise revenue and is calculated based on the proportion of the contract costs incurred at the balance sheet date relative to the total estima ted costs of the contract. The accounting for these contracts involves judgement, particularly as it relates to the process of estimating to tal costs. We identified revenue recognition for long-term contracts as a key audit matter because of the judgements made by management to estimate total costs for the performance obligations used to recognise revenue for certain long-term contracts in certain compo nents. This required extensive audit effort due to the complexity of long-term contracts and required a high degree of auditor judgement wh en performing audit procedures to audit management’s estimates of total costs and evaluating the results of those procedures. The Audit Committee discussion of this key audit matter is set out on page 68. How the scope of our audit responded to the key audit matter Our audit procedures related to management’s estimates of total costs for the performance obligations used to recognise revenue for certain long-term contracts in selected components included the following, among others: • We tested the operating effectiveness of controls over long-term contract revenue, including management’s controls over the estimates of total costs for performance obligations. • We selected a sample of long-term contracts and: • evaluated whether the contracts were properly included in management’s calculation of long-term contract revenue based on the terms and conditions of each contract, including whether continuous transfer of control to the customer occurred as progress wa s made toward fulfilling the performance obligation; • tested the accuracy and completeness of the costs incurred to date for the performance obligation to supporting documentation; • evaluated the estimates of total cost for the performance obligation by: • comparing costs incurred to date to the costs management estimated, at either the inception of the contract or the start of the reporting period, to be incurred to date; • evaluating management’s ability to accurately estimate the total cost by performing corroborating inquiries with the Group’s project managers and engineers, and comparing the estimates to management’s work plans, engineering specifications, and supplier contracts; and • comparing management’s estimates for the selected contracts to costs of similar performance obligations, when applicable. • tested the mathematical accuracy of management’s calculation of revenue for the performance obligation. • We evaluated management’s ability to estimate total costs accurately by comparing actual costs to management’s historical estim ates for performance obligations that have been fulfilled. Key observations Based on the procedures performed, we are satisfied that management’s estimated percentage-of-completion at the balance sheet d ate is appropriate and reasonable when assessed against our own independent expectations and our assessment of the accuracy of hist orical estimates against actual costs. Our audit procedures relating to these matters were designed in the context of our audit of the financial statements as a whole , and not to express an opinion on individual accounts or disclosures. Our opinion on the financial statements is not modified with respect to any of the risks de scribed above, and we do not express an opinion on these individual matters. 2021 Annual Report and Form 20-F 129 Our application of materiality Materiality We define materiality as the magnitude of misstatement that makes it probable that the economic decisions of a reasonably knowl edgeable person, relying on the financial statements, would be changed or influenced. We use materiality both in planning the scope of our audit work and in ev aluating the results of our work. Based on our professional judgement, we determined materiality for the financial statements as a whole as follows: Group financial statements Company financial statements Materiality $140 million (2020: $110 million) $103 million (2020: $94 million) Basis for determining materiality The materiality that we used for the Group financial statements was determined on the basis of profit before tax and represents 4.19% of that metric. The materiality that we used for the Company financial statements was determined on the basis of total equity/net assets and represents approximately 1% of that metric. We adopted a different basis to determine materiality in the current year. In the prior year materiality was determined on the basis of a composite benchmark approach considering revenue as the primary benchmark with EBITDA (as defined), cash flows from operations and total equity/net assets used as supporting benchmarks. Given the future economic outlook, the reduction in uncertainty arising from COVID-19 and the stability in the performance of the Group, we consider profit before tax to be an appropriate benchmark in the current year. Rationale for the benchmark applied We conducted an assessment to determine the financial statement items of most importance to investors and analysts by reading analyst reports and CRH’s communication to shareholders. This resulted in us selecting profit before tax as the most appropriate benchmark. Moreover, profit before tax is traditionally considered the most appropriate benchmark for listed entities. Group materiality represents: The Company holds the Group’s investments and is not in itself profit- oriented. The strength of the balance sheet is the key measure of financial health that is important to shareholders since the primary concern for the Company is the payment of dividends. Using a benchmark of equity/net assets is therefore the appropriate metric. Metric % PBT 4.19% EBITDA (as defined) 2.62% Revenue 0.45% * EBITDA is defined as earnings before inte rest, taxes, depreciation, am ortisation, asset im pairment charges, profit on disposa ls and the Group’s share of equity accounted investments’ profit after tax. 130 Independent Auditor’s Irish Report - continued Materiali ty $140 mi llio n Component materiality range $100 million to $40 million Audit Committee reporting threshold $7 million Profit before tax $3,342 million Profit before tax Materiality Performance materiality We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected misstatements exceed the materiality for the financial statements. Performance materiality was set at 80% of each of Group and Company materiality for t he 2021 audit (2020: 75%). In the prior year, a lower level of performance materiality was set due to the fact that it was the first year of our audit tenure and due t o the effects of the COVID-19 pandemic. In determining the current year performance materiality, we considered the following factors: a. our risk assessment, including our assessment of the Group’s overall control environment and that we consider it appropriate to rely on controls over a number of business processes; b. our experience from the prior year audit; and c. the level of corrected and uncorrected misstatements identified in the prior period. Error reporting threshold We agreed with the Audit Committee that we would report to them any audit differences in excess of $7 million (2020: $5.5 milli on), as well as differences below that threshold which, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on disclosure m atters that we identified when assessing the overall presentation of the financial statements. An overview of the scope of our audit Identification and scoping of components • The Group consists of three operating and reporting segments and is highly decentralised in nature, with a presence across 28 countries and over 3,200 operating entities. As a result a significant portion of audit planning time was spent to ensure that the scope of our work is appropriat e to address the Group’s identified risks of material misstatement. • In-scope locations were identified based on their contribution to the applicable benchmarks i.e. revenue, total assets and prof it before tax. • We focused our Group audit scope primarily on the audit of 5 components which were subject to a full audit and 43 components wh ich were subject to specified audit procedures where the extent of our testing was based on our assessment of the associated risks of material misstatement a nd of the materiality of the components operations to the Group. 23 components were subject to specific procedures on certain account balances by component audit teams or the Group audit team, and the remaining 20 were subject to substantive analytical procedures performed centrally by the Group audit team. • Data analytics were performed centrally and used extensively in selecting the components and addressing the residual entities w hich were not in-scope based on the considerations listed. In addition, we analysed disaggregated financial data related to residual entities not subject to fu ll or specified scope audit procedures in order to identify any unusual movements or relationships. • Our audit work for all components were executed at levels of materiality applicable to each individual component which were low er than Group materiality and ranged from $40 million to $100 million. Working with other auditors The Group audit team planned its site visits to component auditors based on a variety of factors including size of entity and n umber of significant risks. Oversight and guidance is provided to the component auditors through a combination of: • issuance of Group referral instructions; • upfront team briefings to all component teams; • site visits (physically, where possible and if not virtually); and • risk assessment discussions and detailed workpaper reviews. 2021 Annual Report and Form 20-F 131 These are designed so that the Lead Audit Partner or a senior member of the Group audit team visits all key locations across th e Group. In addition we assess the competence of our component auditors. A combination of physical, where possible, and virtual site visits were performed at key locations during the year. We held regular meetings with management at a regional and Group level in order to update our understanding of the Group and it s environment on an ongoing basis. PBT 73% Scope A 4% Scope B 13% Scope C 10% Residual 82% Scope A 2% Scope B 10% Scope C 6% Residual Revenue 73% Scope A 13% Scope B 8% Scope C 6% Residual Total Assets We classify components according to the following scoping categories: 1) Scope A – Full scope integrated audit procedures have been performed by local audit teams to a component materiality. These are financially significant to the Group and include risks relevant to the Group audit. 2) Scope B – Specified integrated audit procedures on prescribed balances and specific controls have been performed by componen t teams or the Group audit team to component materiality. Scope B also contains Risks of Material Misstatements and associated procedures performed at Group le vel. The Scope B entities are not individually financially significant to the Group. 3) Scope C – Defined audit procedures consisting of focused risk assessments and analytical reviews have been performed by the Group audit team. The Scope C entities are not individually financially significant to the Group. 4) Residual – As Risks of Material Misstatements have been determined to be remote for components and balances included in the residual, the Group engagement team performs analytical procedures, which are not substantive in nature, to determine whether the audit risk has been reduced to an acceptable level. Our consideration of climate-related risks In planning our audit, we have considered the potential impacts of the climate-related risks identified by management on the Gr oup’s business and its financial statements. The Group has set out their 2025 carbon reduction targets in their sustainability review on page 21. The Group have also identi fied climate change and policy as part of their principal operational risks and uncertainties on page 118. They have set out the potential impacts of their physical risk s and transitional risks on their business on page 118 and their Taxonomy eligible economic activities on page 243. As part of our audit, we have obtained management’s climate-related risk assessment and made inquiries of management to underst and their process for considering the impact of climate-related risks. The Group reflected the impact of stated 2025 carbon reduction targets on assumptions used in setting key estimates recorded in the financial statements in accordance with IFRS requirements. We have performed our own risk assessment of the potential impact of the 2025 carbon reduction climate targets outlined by the Group and how they may affect judgements and estimates included in the financial statements. The main climate-related implications considered as part of our audit relate to the impact of climate change on cash flow projections underlying intangible assets. These projections include assumptions on costs of carbon and futu re climate-related capital expenditure required to meet the 2025 carbon reduction targets. Our audit procedures were performed with the involvement of our sustainabil ity and valuation specialists. We also challenged how the directors considered climate change in their assessment of going concern and viability. We assessed if the assumptions used by management in the financial statements were consistent with their 2025 carbon reduction targets and as set out in their accounting policies, on pages 145 to 154. In early 2022, the Group adopted a new target of a 25% reduction in CO 2 emissions (Scope 1 and Scope 2) by 2030 compared to 2020 levels and we considered management’s disclosure as set out on page 145. We have also read the Group’s disclosure of climate-related information in the front half of the annual report, including the T CFD disclosures listed on pages 28 to 31. Other information The other information comprises the information included in the Annual Report and Form 20-F, other than the financial statement s and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly sta ted in our report, we do not express any form of assurance conclusion thereon. 132 Independent Auditor’s Irish Report - continued Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inco nsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies o r apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of th e other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of directors As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of t he financial statements and for being satisfied that they give a true and fair view and otherwise comply with the Companies Act 2014, and for such internal control a s the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the Group and Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group and Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material miss tatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is no t a guarantee that an audit conducted in accordance with ISAs (Ireland) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the b asis of these financial statements. As part of an audit in accordance with ISAs (Ireland), we exercise professional judgement and maintain professional scepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and p erform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not d etecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepr esentations, or the override of internal control. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in t he circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group and Company’s internal control. • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. • Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group and Company’s ability to contin ue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosur es in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of t he auditor’s report. However, future events or conditions may cause the entity (or where relevant, the Group) to cease to continue as a going concern. • Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether th e financial statements represent the underlying transactions and events in a manner that achieves fair presentation. • Obtain sufficient appropriate audit evidence regarding the financial information of the business activities within the Group to express an opinion on the consolidated financial statements. The Group auditor is responsible for the direction, supervision and performance of the Group audit. The G roup auditor remains solely responsible for the audit opinion. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that the auditor identifies during the audit. For listed entities and public interest entities, the auditor also provides those charged with governance with a statement that the auditor has complied with relevant ethical requirements regarding independence, including the Ethical Standard for Auditors (Ireland), and communicates with them all relationships and other matters that may reasonably be thought to bear on the auditor’s independence, and where applicable, related safeguards. Where the auditor is required to report on key audit matters, from the matters communicated with those charged with governance, the auditor determines those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. The auditor describes these matters in the auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rar e circumstances, the auditor determines that a matter should not be communicated in the auditor’s report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 2021 Annual Report and Form 20-F 133 Report on other legal and regulatory requirements Opinion on other matters prescribed by the Companies Act 2014 Based solely on the work undertaken in the course of the audit, we report that: • We have obtained all the information and explanations which we consider necessary for the purposes of our audit. • In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and prope rly audited. • The Company Balance Sheet is in agreement with the accounting records. • In our opinion the information given in those parts of the directors’ report as specified for our review is consistent with the financial statements and the directors’ report has been prepared in accordance with the Companies Act 2014. Corporate Governance Statement required by the Companies Act 2014 We report, in relation to information given in the Corporate Governance Statement on pages 60 to 79 that: • In our opinion, based on the work undertaken during the course of the audit, the information given in the Corporate Governance Statement pursuant to subsections 2(c) and (d) of section 1373 of the Companies Act 2014 is consistent with the Group’s statutory financial statements in respect of the financial year concerned and such information has been prepared in accordance with the Companies Act 2014. Based on our knowledge and understanding of the G roup and its environment obtained in the course of the audit, we have not identified any material misstatements in this information. • In our opinion, based on the work undertaken during the course of the audit, the Corporate Governance Statement contains the in formation required by Regulation 6(2) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Reg ulations 2017; and • In our opinion, based on the work undertaken during the course of the audit, the information required pursuant to section 1373( 2)(a),(b),(e) and (f) of the Companies Act 2014 is contained in the Corporate Governance Statement. Corporate Governance Statement The Listing Rules and ISAs (Ireland) require us to review the directors’ statement in relation to going concern, longer-term vi ability and that part of the Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code and Irish Corpo rate Governance Annex specified for our review. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Gover nance Statement is materially consistent with the financial statements and our knowledge obtained during the audit: • the directors’ statement with regards the appropriateness of adopting the going concern basis of accounting and any material un certainties identified set out on page 112; • the directors’ explanation as to its assessment of the Group’s prospects, the period this assessment covers and why the period is appropriate set out on page 112; • the directors’ statement on fair, balanced and understandable set out on page 114; • the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks and the disclosures in the annual report that describe the principal risks and the procedures in place to identify emerging risks and an explanation of how they are being managed or miti gated set out on pages 116 to 121. • the section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on page 112; • the section describing the work of the Audit Committee set out on pages 64 to 69 . 134 Independent Auditor’s Irish Report - continued Matters on which we are required to report by exception Based on the knowledge and understanding of the Group and the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the directors’ report. The Companies Act 2014 also requires us to report to you if, in our opinion, the Company has not provided the information requi red by Regulation 5(2) to 5(7) of the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 201 7 (as amended) for the 31 December 2021 financial year. We have nothing to report in this regard. The Companies Act 2014 also requires us to report to you if, in our opinion, the Company has not provided the information requi red by Section 1110N in relation to its remuneration report. We have nothing to report in this regard. We have nothing to report in respect of the provisions in the Companies Act 2014 which require us to report to you if, in our o pinion, the disclosures of directors’ remuneration and transactions specified by law are not made. The Listing Rules of the Euronext Dublin require us to review six specified elements of disclosures in the report to shareholde rs by the Board of Directors’ remuneration committee. We have nothing to report in this regard. Other matters which we are required to address We were appointed by the shareholders of CRH plc on 23 April 2020 to audit the financial statements for the financial year ende d 31 December 2020 and subsequent financial years. The period of total uninterrupted engagement of the firm is 2 years, covering the financial years ending 31 De cember 2020 and 31 December 2021. The non-audit services prohibited by IAASA’s Ethical Standard were not provided and we remained independent of the Group in con ducting the audit . Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with ISA (Ireland) 260. Use of our report This report is made solely to the Company’s members, as a body, in accordance with Section 391 of the Companies Act 2014. Our a udit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for n o other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s members as a bod y, for our audit work, for this report, or for the opinions we have formed. Richard Muschamp For and on behalf of Deloitte Ireland LLP Chartered Accountants and Statutory Audit Firm Deloitte & Touche House, Earlsfort Terrace, Dublin 2 2 March 2022 Notes: An audit does not provide assurance on the maintenance and integrity of the website, including controls used to achieve this, and in particular on whether any changes may have occurred to the financial statements since first published. These matters are the responsibility of the direct ors but no control procedures can provide absolute assurance in this area. Legislation in Ireland governing the preparation and dissemination of financial statements differs from legislation in other ju risdictions. 2021 Annual Report and Form 20-F 135 Independent Auditor’s US Reports REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of CRH public limited company (CRH plc) Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of CRH plc and subsidiaries (the ‘Company’) as at 31 December 2021 and 2020, the related consolidated income statements and consolidated statements of comprehensive income, changes in equity and cash flows, for each of the two years in the period ended 31 December 2021, and the related notes (collectively referred to as the ‘financial statements’). In our opinion, the fin ancial statements present fairly, in all material respects, the consolidated financial position of the Company as at 31 December 2021 and 2020, and the consolidated res ults of its operations and its cash flows for each of the two years in the period ended 31 December 2021, in conformity with International Financial Reporting Stan dards as issued by the International Accounting Standards Board. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB) , the Company’s internal control over financial reporting as at 31 December 2021, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated 2 March 2022 , expressed an unqualified opinion on the Company’s internal control over financial reporting. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on t he Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCA OB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the aud it to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits i ncluded performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current-period audit of the financial statements tha t were communicated or required to be communicated to the Audit Committee and that (1) relate to accounts or disclosures that are material to the financial statement s and (2) involved our especially challenging, subjective, or complex judgements. The communication of critical audit matters does not alter in any way our opini on on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit m atters or on the accounts or disclosures to which they relate. 136 Independent Auditor’s US Reports - continued Intangible Assets – Assessment of the carrying value of goodwill associated with selected cash generating units – Refer to accounting policies and note 14 to the financial statements Critical Audit Matter Description The goodwill balance was $9.5 billion as at 31 December 2021. The Company did not record an impairment charge during the year. The Company’s evaluation of the carrying value of goodwill for impairment involves the comparison of the recoverable amount of goodwill of each cash generating unit (CGU) to its carrying value. The Company used the value-in-use approach, which deploys a discounted cash flow model to estimate the recoverable amount. This requires management to make significant estimates and assumptions related to discount rates, short-term forecasts of revenues a nd margins, and long-term growth rates which drive net cash flows. Changes in these assumptions could have a significant impact on the recoverable amount, the a mount of any goodwill impairment charge, or both. We focused on CGUs where the recoverable amount exceeded its carrying value by an insignificant amount and on CGUs which had a significant change in cash flow forecasts compared to the prior year. Based on these procedures we identified certain CGUs of interest and performed sensitivit ies on key management estimates and assumptions, which included the assistance of our valuation specialists. We determined that the assessment of the carrying value of goodwill of one selected CGU was a critical audit matter because it required a high degree of auditor judgement and an increased extent of effort when performing audit procedures to evaluate the reasonableness of management’s est imates and assumptions related to short-term forecasts of revenues and long-term growth rates. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to the short-term forecasts of revenues and long-term growth rates of one CGU, as described above, used by management to estimate the recoverable amount of the selected CGU included the following, among others: • We tested the operating effectiveness of controls over management’s determination of the short-term forecasts of revenues and l ong-term growth rates used to determine the recoverable amount of the selected CGU. • We agreed the underlying cash flow forecasts to the Board approved projections and we evaluated management’s ability to accurat ely forecast future revenues by: • performing a look-back analysis and comparing actual results to management’s historical forecasts; • assessing the reasonableness of the impact of macroeconomic activity on short-term cash flows; • benchmarking management’s forecasts against independent third-party economic and industry projections; and • comparing internal Company communications to management and the Board against the cash flow forecasts to evaluate for consisten cy. • We compared the long-term growth rates, used by management to grow cash flows from year 5 to year 10 in order to calculate a te rminal value at that point, to independent external sources and developed our own range to assess the reasonableness of these rates. • We compared the actual results for the year ended 31 December 2021 to management’s forecasts at the date of the annual impairme nt test to determine if any indicators of impairment existed. 2021 Annual Report and Form 20-F 137 Revenue recognition for long-term contracts – Refer to accounting policies and note 1 to the financial statements Critical Audit Matter Description The Company’s revenues derived from long-term contracts accounted for 22% ($6.9 billion) of the total revenue in 2021. The Company recognises long-term contract revenue over the contract term as the work progresses because transfer of control and the fulfillment of performance obligations to the customer is continuous. The percentage-of-completion method is used to recognise revenue and is calculated b ased on the proportion of the contract costs incurred at the balance sheet date relative to the total estimated costs of the contract. The accounting for the se contracts involves judgement, particularly as it relates to the process of estimating total costs. We identified revenue recognition for long-term contracts as a critical audit matter because of the judgements made by manageme nt to estimate total costs for the performance obligations used to recognise revenue for certain long-term contracts in certain components. This required extensiv e audit effort due to the complexity of long-term contracts and required a high degree of auditor judgement when performing audit procedures to audit management’s esti mates of total costs and evaluating the results of those procedures. How the Critical Audit Matter Was Addressed in the Audit Our audit procedures related to management’s estimates of total costs for the performance obligations used to recognise revenue for certain long-term contracts in selected components included the following, among others: • We tested the operating effectiveness of controls over long-term contract revenue, including management’s controls over the est imates of total costs for performance obligations. • We selected a sample of long-term contracts and: • evaluated whether the contracts were properly included in management’s calculation of long-term contract revenue based on the t erms and conditions of each contract, including whether continuous transfer of control to the customer occurred as progress was made toward fulfilling the performance obligation; • tested the accuracy and completeness of the costs incurred to date for the performance obligation to supporting documentation; • evaluated the estimates of total cost for the performance obligation by: • comparing costs incurred to date to the costs management estimated, at either the inception of the contract or the start of the reporting period, to be incurred to date; • evaluating management’s ability to accurately estimate the total cost by performing corroborating inquiries with the Company’s project managers and engineers, and comparing the estimates to management’s work plans, engineering specifications, and supplier contracts; and • comparing management’s estimates for the selected contracts to costs of similar performance obligations, when applicable. • tested the mathematical accuracy of management’s calculation of revenue for the performance obligation. • We evaluated management’s ability to estimate total costs accurately by comparing actual costs to management’s historical estim ates for performance obligations that have been fulfilled. /s/ Deloitte Ireland LLP Dublin, Ireland 2 March 2022 The first accounting period we audited was 31 December 2020. In 2019, we began preparing for audit firm transition. 138 Independent Auditor’s US Reports - continued REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the shareholders and the Board of Directors of CRH public limited company (CRH plc). Opinion on Internal Control over Financial Reporting We have audited the internal control over financial reporting of CRH plc and subsidiaries (the ‘Company’) as at 31 December 202 1, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as at 31 December 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO. We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB) , the consolidated balance sheets of CRH plc as at 31 December 2021 and 2020, the related consolidated income statements and consolidated statements of co mprehensive income, changes in equity and cash flows for each of the two years in the period ended 31 December 2021, and the related notes (collectively re ferred to as the ‘financial statements’) of the Company and our report dated 2 March 2022, expressed an unqualified opinion on those financial statements. Basis for Opinion The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessm ent of the effectiveness of internal control over financial reporting, included in the accompanying management’s report on internal control over financial reporting . Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm register ed with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and reg ulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audi t to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included o btaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating e ffectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our au dit provides a reasonable basis for our opinion. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the relia bility of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A compan y’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, acc urately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are b eing made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, p rojections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the deg ree of compliance with the policies or procedures may deteriorate. /s/ Deloitte Ireland LLP Dublin, Ireland 2 March 2022 2021 Annual Report and Form 20-F 139 Report of Independent Registered Public Accounting Firm To the Shareholders and the Board of Directors of CRH public limited company (CRH plc). Opinion on the Financial Statements We have audited the accompanying Consolidated Income Statement and Consolidated Statement of Comprehensive Income, Changes in E quity and Cash Flows of CRH plc (the ‘Company’) for the year ended 31 December 2019, and related notes (collectively referred to as the ‘financial stat ements’). In our opinion, the financial statements present fairly, in all material aspects, the consolidated results of its operations and its cash flows for the year ended 31 December 2019, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Change in Presentation Currency As discussed in the Accounting Policies to the consolidated financial statements, the Company has elected to change its present ation currency from euro to US Dollar as of 1 January 2020. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on t he Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United State s) (PCAOB) and are required to be independent with respect to the Company in accordance with the US federal securities laws and the applicable rules and regulati ons of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audi t to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included per forming procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Ernst & Young Chartered Accountants We served as the Company’s auditor from 1988 to 2019. Dublin, Ireland 27 February 2020, except for the effects of the change in presentation currency discussed in the Accounting Policies to the con solidated financial statements, as to which the date is 3 March 2021 Note that the report set out above is included for the purposes of CRH plc’s Annual Report on Form 20-F for 2021 only and does not form part of CRH plc’s Annual Report and Form 20-F for 2019. 140 Consolidated Income Statement for the financial year ended 31 December 2021 2021 $m 2020 $m 2019 $m Notes 1,2 Revenue 30,981 27,587 28,132 4 Cost of sales (20,493) (18,425) (18,859) Gross profit 10,488 9,162 9,273 4 Operating costs (6,903) (6,899) (6,480) 2,5,7 Group operating profit 3,585 2,263 2,793 2,6 Profit/(loss) on disposals 119 9 (189) Profit before finance costs 3,704 2,272 2,604 9 Finance costs (311) (389) (387) 9 Finance income - - 22 9 Other financial expense (106) (101) (125) 2 Share of equity accounted investments’ profit/(loss) 55 (118) 67 2 Profit before tax from continuing operations 3,342 1,664 2,181 10 Income tax expense (721) (499) (534) Group profit for the financial year from continuing operations 2,621 1,165 1,647 3 Profit after tax for the financial year from discontinued operations - - 91 Group profit for the financial year 2,621 1,165 1,738 Profit attributable to: Equity holders of the Company From continuing operations 2,565 1,122 1,627 From discontinued operations - - 90 Non-controlling interests From continuing operations 56 43 20 From discontinued operations - - 1 Group profit for the financial year 2,621 1,165 1,738 12 Basic earnings per Ordinary Share 328.8c 142.9c 214.3c 12 Diluted earnings per Ordinary Share 326.0c 141.8c 212.6c 12 Basic earnings per Ordinary Share from continuing operations 328.8c 142.9c 203.0c 12 Diluted earnings per Ordinary Share from continuing operations 326.0c 141.8c 201.4c 2021 Annual Report and Form 20-F 141 Consolidated Statement of Comprehensive Income for the financial year ended 31 December 2021 2021 $m 2020 $m 2019 $m Notes Group profit for the financial year 2,621 1,165 1,738 Other comprehensive income Items that may be reclassified to profit or loss in subsequent years: Currency translation effects (338) 440 472 25 Gains relating to cash flow hedges 34 7 27 10 Tax relating to cash flow hedges (8) - (4) (312) 447 495 Items that will not be reclassified to profit or loss in subsequent years: 28 Remeasurement of retirement benefit obligations 264 (33) (19) 10 Tax relating to retirement benefit obligations (36) 11 (4) 228 (22) (23) Total other comprehensive income for the financial year (84) 425 472 Total comprehensive income for the financial year 2,537 1,590 2,210 Attributable to: Equity holders of the Company 2,516 1,515 2,174 Non-controlling interests 21 75 36 Total comprehensive income for the financial year 2,537 1,590 2,210 142 Consolidated Balance Sheet as at 31 December 2021 2021 $m 2020 $m Notes ASSETS Non-current assets 13 Property, plant and equipment 19,502 19,317 14 Intangible assets 9,848 9,373 15 Investments accounted for using the equity method 653 626 15 Other financial assets 12 13 17 Other receivables 239 325 28 Retirement benefit assets 166 - 25 Derivative financial instruments 97 184 27 Deferred income tax assets 109 129 Total non-current assets 30,626 29,967 Current assets 16 Inventories 3,611 3,117 17 Trade and other receivables 4,569 4,086 Current income tax recoverable 42 36 25 Derivative financial instruments 39 17 23 Cash and cash equivalents 5,783 7,721 Total current assets 14,044 14,977 Total assets 44,670 44,944 EQUITY Capital and reserves attributable to the Company’s equity holders 29 Equity share capital 309 333 29 Preference share capital 1 1 29 Share premium account - 7,493 29 Treasury Shares and own shares (195) (386) Other reserves 445 444 Foreign currency translation reserve (97) 206 Retained income 19,770 11,565 Capital and reserves attributable to the Company’s equity holders 20,233 19,656 31 Non-controlling interests 681 692 Total equity 20,914 20,348 LIABILITIES Non-current liabilities 20 Lease liabilities 1,374 1,339 24 Interest-bearing loans and borrowings 9,938 10,958 25 Derivative financial instruments - 1 27 Deferred income tax liabilities 2,734 2,613 18 Other payables 717 711 28 Retirement benefit obligations 475 556 26 Provisions for liabilities 937 953 Total non-current liabilities 16,175 17,131 Current liabilities 20 Lease liabilities 297 296 18 Trade and other payables 5,692 4,792 Current income tax liabilities 550 619 24 Interest-bearing loans and borrowings 549 1,257 25 Derivative financial instruments 14 12 26 Provisions for liabilities 479 489 Total current liabilities 7,581 7,465 Total liabilities 23,756 24,596 Total equity and liabilities 44,670 44,944 R. Boucher, A. Manifold, Directors 2021 Annual Report and Form 20-F 143 Consolidated Statement of Changes in Equity for the financial year ended 31 December 2021 Attributable to the equity holders of the Company Issued share capital $m Share premium account $m Treasury Shares/ own shares $m Other reserves $m Foreign currency translation reserve $m Retained income $m Total $m Non- controlling interests $m Total equity $m Notes At 1 January 2021 334 7,493 (386) 444 206 11,565 19,656 692 20,348 Group profit for the financial year - - - - - 2,565 2,565 56 2,621 Other comprehensive income - - - - (303) 254 (49) (35) (84) Total comprehensive income - - - - (303) 2,819 2,516 21 2,537 8 Share-based payment expense - - - 110 - - 110 - 110 29 Shares acquired by CRH plc (Treasury Shares) - - (880) - - (281) (1,161) - (1,161) 29 Treasury Shares/own shares reissued - - 19 - - (19) - - - 29 Shares acquired by Employee Benefit Trust (own shares) - - (16) - - - (16) - (16) 29 Shares distributed under the Performance Share Plan Awards - - 117 (117) - - - - - 29 Reduction in Share Premium - (7,493) - - - 7,493 - - - 29 Cancellation of Income Shares (16) - - - - 16 - - - 29 Cancellation of Treasury Shares (8) - 951 8 - (951) - - - 10 Tax relating to share-based payment expense - - - - - 24 24 - 24 Share option exercises - - - - - 13 13 - 13 11 Dividends - - - - - (909) (909) (32) (941) At 31 December 2021 310 - (195) 445 (97) 19,770 20,233 681 20,914 for the financial year ended 31 December 2020 At 1 January 2020 336 7,493 (360) 411 (202) 11,350 19,028 607 19,635 Group profit for the financial year - - - - - 1,122 1,122 43 1,165 Other comprehensive income - - - - 408 (15) 393 32 425 Total comprehensive income - - - - 408 1,107 1,515 75 1,590 8 Share-based payment expense - - - 96 - - 96 - 96 29 Shares acquired by CRH plc (Treasury Shares) - - (220) - - - (220) - (220) 29 Treasury Shares/own shares reissued - - 8 - - (8) - - - 29 Shares acquired by Employee Benefit Trust (own shares) - - (29) - - - (29) - (29) 29 Shares distributed under the Performance Share Plan Awards - - 65 (65) - - - - - 29 Cancellation of Treasury Shares (2) - 150 2 - (150) - - - 10 Tax relating to share-based payment expense - - - - - 1 1 - 1 Share option exercises - - - - - 6 6 - 6 11 Dividends - - - - - (710) (710) (15) (725) 6 Disposal of non-controlling interests - - - - - - - (6) (6) Transactions involving non-controlling interests - - - - - (31) (31) 31 - At 31 December 2020 334 7,493 (386) 444 206 11,565 19,656 692 20,348 for the financial year ended 31 December 2019 At 1 January 2019 353 7,493 (920) 378 (659) 11,705 18,350 602 18,952 Group profit for the financial year - - - - - 1,717 1,717 21 1,738 Other comprehensive income - - - - 457 - 457 15 472 Total comprehensive income - - - - 457 1,717 2,174 36 2,210 8 Share-based payment expense - - - 86 - - 86 - 86 Shares acquired by CRH plc (Treasury Shares) - - (886) - - - (886) - (886) Treasury Shares/own shares reissued - - 42 - - (42) - - - Shares acquired by Employee Benefit Trust (own shares) - - (68) - - - (68) - (68) Shares distributed under the Performance Share Plan Awards - - 70 (70) - - - - - Cancellation of Treasury Shares (17) - 1,402 17 - (1,402) - - - 10 Tax relating to share-based payment expense - - - - - 11 11 - 11 Share option exercises - - - - - 22 22 - 22 11 Dividends - - - - - (652) (652) (11) (663) Disposal of non-controlling interests - - - - - - - (9) (9) 30 Non-controlling interests arising on acquisition of subsidiaries - - - - - - - 1 1 Transactions involving non-controlling interests - - - - - (9) (9) (12) (21) At 31 December 2019 336 7,493 (360) 411 (202) 11,350 19,028 607 19,635 144 Consolidated Statement of Cash Flows for the financial year ended 31 December 2021 2021 $m 2020 $m 2019 $m Notes Cash flows from operating activities Profit before tax from continuing operations 3,342 1,664 2,181 3 Profit before tax from discontinued operations - - 117 Profit before tax including discontinued operations 3,342 1,664 2,298 9 Finance costs (net) 417 490 498 Share of equity accounted investments’ (profit)/loss (55) 118 (81) 6 (Profit)/loss on disposals (119) (9) 191 Group operating profit 3,585 2,263 2,906 13,20 Depreciation charge 1,691 1,624 1,721 14 Amortisation of intangible assets 74 70 66 13,14,20 Impairment charge - 673 9 8 Share-based payment expense 110 96 86 Other 21 6 (3) 19 Net movement on working capital and provisions (228) 196 (71) Cash generated from operations 5,253 4,928 4,714 Interest paid (including leases) (401) (432) (469) Corporation tax paid (642) (558) (364) Net cash inflow from operating activities 4,210 3,938 3,881 Cash flows from investing activities 6 Proceeds from disposals (net of cash disposed and deferred proceeds) 387 184 2,343 Interest received - - 22 15 Dividends received from equity accounted investments 32 35 39 13 Purchase of property, plant and equipment (1,554) (996) (1,374) 30 Acquisition of subsidiaries (net of cash acquired) (1,494) (351) (727) 15 Other investments and advances (4) (1) (32) 19 Deferred and contingent acquisition consideration paid (33) (54) (54) 19 Deferred divestment consideration received 120 123 - Net cash (outflow)/inflow from investing activities (2,546) (1,060) 217 Cash flows from financing activities Proceeds from exercise of share options 13 6 22 Transactions involving non-controlling interests - - (21) 21 Increase in interest-bearing loans and borrowings - 6,427 106 21 Net cash flow arising from derivative financial instruments (37) 26 (40) 21 Repayment of interest-bearing loans and borrowings (1,183) (4,943) (640) 20 Repayment of lease liabilities (i) (264) (258) (356) 29 Treasury Shares/own shares purchased (896) (249) (954) 11 Dividends paid to equity holders of the Company (906) (707) (652) 11 Dividends paid to non-controlling interests (32) (15) (11) Net cash (outflow)/inflow from financing activities (3,305) 287 (2,546) (Decrease)/increase in cash and cash equivalents (1,641) 3,165 1,552 Reconciliation of opening to closing cash and cash equivalents Cash and cash equivalents at 1 January 7,721 4,218 2,686 Translation adjustment (297) 338 (20) (Decrease)/increase in cash and cash equivalents (1,641) 3,165 1,552 23 Cash and cash equivalents at 31 December 5,783 7,721 4,218 (i) Repayment of lease liabilities amounted to $328 million (2020: $326 million; 2019: $433 million), of which $64 million (202 0: $68 million; 2019: $77 million) related to interest paid which is presented in cash flows from operating activities. 2021 Annual Report and Form 20-F 145 Accounting Policies (including key accounting estimates and assumptions) This document constitutes both the Annual Report and the Financial Statements in accordance with Irish and certain relevant UK requirements, and the Annual Report on Form 20-F in accordance with the US Securities Exchange Act of 1934. Basis of Preparation The Consolidated Financial Statements of CRH plc have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, which comprise standards and interpretations approved by the International Accounting Standards Board (IASB). IFRS as adopted by the European Union differ in certain respects from IFRS as issued by the IASB. However, the differences have no impact on the Consolidated Financial Statements for the financial years presented. The Consolidated Financial Statements are also prepared in compliance with the Companies Act 2014 and Article 4 of the EU IAS Regulation. CRH plc, the Parent Company, is a publicly traded limited company incorporated and domiciled in the Republic of Ireland. The Consolidated Financial Statements, which are presented in US Dollar millions, have been prepared under the historical cost convention as modified by the measurement at fair value of share-based payments, retirement benefit obligations and certain financial assets and liabilities including derivative financial instruments. The accounting policies set out below have been applied consistently by all of the Group’s subsidiaries, joint ventures and associates to all periods presented in the Consolidated Financial Statements. In accordance with Section 304 of the Companies Act 2014, the Company is availing of the exemption from presenting its individual profit and loss account to the Annual General Meeting and from filing it with the Registrar of Companies. Adoption of IFRS and International Financial Reporting Interpretations Committee (IFRIC) interpretations The following standard amendments became effective for the Group as of 1 January 2021: • Amendments to IFRS 9 Financial Instruments , IAS 39 Financial Instruments: Recognition and measurement , IFRS 7 Financial Instruments: Disclosures , IFRS 4 Insurance Contracts and IFRS 16 Leases – Interest Rate Benchmark Reform – Phase 2. The amendments did not result in a material impact on the Group’s results The following standard amendment was issued in March 2021 effective for annual reporting periods beginning on or after 1 April 2021 with earlier application permitted: • Amendments to IFRS 16 – COVID-19-Related Rent Concessions beyond 30 June 2021. The amendment was adopted effective 1 January 2021 and did not result in a material impact on the Group’s results IFRS and IFRIC interpretations being adopted in subsequent years IFRS 17 Insurance Contracts In May 2017, the IASB issued IFRS 17 which will be effective for reporting periods beginning on or after 1 January 2023, with presentation of comparative figures required. The Group is currently evaluating the impact of this standard on future periods which is not expected to be material. There are no other IFRS or IFRIC interpretations th at are effective subsequent to the CRH 2021 financial year-end that are expected to have a material impact on the results or financial position of the Group. Climate Change and Carbon Reduction Targets In August 2021, the Group announced that its carbon emissions reduction target of 520kg of CO 2 per tonne of cementitious material was being brought forward from 2030 to 2025. Climate change risks including the impact of achieving this target have been considered and assessed in the preparation of the Consolidated Financial Statements for the year ended 31 December 2021. The table below provides details of where further information has been provided in these Consolidated Financial Statements. Climate Change and 2025 Carbon Reduction Target References Pages Impairment testing of goodwill and property, plant and equipment 150 and 175 Provisions for liabilities 147 Inventories 152 Retirement Benefit Obligations 198 In early 2022, the Group adopted a new target of a 25% reduction in CO 2 emissions (Scope 1 and Scope 2) by 2030 compared to 2020 levels. The Science Based Targets initiative (SBTi) has approved our science-based emissions reduction target. The Group’s assessment is that the impact of the adoption of this target will be consistent with the impact of the 2025 targets on the estimates, judgements and assumptions set out in the relevant disclosures referenced above. In line with the application of our accounting policies, estimates and underlying assumptions are reviewed on an ongoing basis as we continue to develop and implement our strategy to meet the 2030 targets. Change in presentation currency As outlined in our 2020 Annual Report and Form 20-F, on 28 February 2020, the Group announced that with effect from 1 January 2020 it would be changing the currency in which it presents its financial results from euro to US Dollar. Within our current portfolio of businesses, our euro denominated earnings, while sizeable, are a relatively lower proportion of overall earnings. To reduce the potential for foreign exchange volatility in our future reported earnings, the Board determined that, with effect from 1 January 2020, CRH will present its results in US Dollar. Given the current composition of the Group’s activities, this change is expected to reduce the impact of currency movements on reported results. Key Accounting Policies which involve Estimates, Assumptions and Judgements The preparation of the Consolidated 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. In some cases, the accounting treatment of a particular transaction is specifically dictated by IFRS and does not require management’s judgement in its application. Management considers that their use of estimates, assumptions and judgements in the application of the Group’s accounting policies are inter-related and therefore discuss them together below with the major sources of estimation uncertainty and significant judgements separately identified. 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. 146 Accounting Policies - continued The critical accounting policies, which involve significant estimates, assumptions or judgements, the actual outcome of which could have a material impact on the Group’s results and financial position outlined below, are as follows: Impairment of goodwill and property, plant and equipment – Notes 13 and 14 Goodwill In the year in which a business combination is effected and where some or all of the goodwill allocated to a particular cash-generating unit (CGU) arose in respect of that combination, the CGU is tested for impairment prior to the end of the relevant annual period. Goodwill is subject to impairment testing on an annual basis and at any time during the year if an indicator of impairment is considered to exist. Where the carrying value exceeds the estimated recoverable amount (being the greater of fair value less costs of disposal and value-in-use), an impairment loss is recognised by writing down goodwill to its recoverable amount. Major sources of estimation uncertainty: Projected EBITDA (as defined) margin, long-term growth and pre-tax discount rates The impairment testing process requires management to make significant judgements and estimates regarding the future cash flows expected to be generated by CGUs to which goodwill has been allocated. In assessing value-in-use, the net cash flow forecasts (reflecting revenue forecasts, projected EBITDA (as defined) margin and other cash flow movements) are extrapolated using long-term growth rates to determine the basis for an annuity-based terminal value. Future cash flows, including the terminal value, are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. The estimates of future cash flows exclude cash inflows or outflows attributable to financing activities and income tax. Future cash flows relating to the eventual disposal of these CGUs and other factors may also be relevant to determine the recoverable amount of goodwill. Management periodically evaluates and updates the estimates based on the conditions which influence these variables. The assumptions and conditions for determining impairments of goodwill reflect management’s best assumptions and estimates, but these items involve inherent uncertainties described above, many of which are not under management’s control. As a result, the accounting for such items could result in different estimates or amounts if management used different assumptions or if different conditions occur in future accounting periods. A detailed discussion of the impairment methodology applied, key assumptions used and related sensitivity analyses by the Group in the context of goodwill is provided in note 14 to the Consolidated Financial Statements. The recoverable amount of goodwill is determined by reference to the CGU to which the goodwill has been allocated. Impairment losses arising in respect of goodwill are not reversed once recognised. Goodwill relating to associates and joint ventures is included in the carrying amount of the investment and is neither amortised nor individually tested for impairment. Where indicators of impairment of an investment arise in accordance with the requirements of IAS 36 Impairment of Assets , the carrying amount is tested for impairment by comparing its recoverable amount with its carrying amount. Property, plant and equipment The carrying values of items of property, plant and equipment are reviewed for indicators of impairment at each reporting date and are subject to impairment testing when events or changes in circumstances indicate that the carrying values may not be recoverable. Property, plant and equipment assets are reviewed for potential impairment by applying a series of external and internal indicators specific to the assets under consideration. These indicators encompass macroeconomic issues including the inherent cyclicality of the building materials sector, actual obsolescence or physical damage, a deterioration in forecast performance in the internal reporting cycle and restructuring and rationalisation programmes. Where the carrying value exceeds the estimated recoverable amount (being the greater of fair value less costs of disposal and value-in-use), an impairment loss is recognised by writing down the assets to their recoverable amount. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined by reference to the CGU to which the asset belongs. In assessing value-in-use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the CGU for which the future cash flow estimates have not been adjusted. The estimates of future cash flows exclude cash inflows or outflows attributable to financing activities and income tax. Retirement benefit obligations – Note 28 Costs arising in respect of the Group’s defined contribution pension schemes are charged to the Consolidated Income Statement in the period in which they are incurred. The Group has no legal or constructive obligation to pay further contributions in the event that the fund does not hold sufficient assets to meet its benefit commitments. The liabilities and costs associated with the Group’s defined benefit pension schemes (both funded and unfunded) are assessed either on the basis of the attained age, the projected unit credit, the current unit credit or the aggregate cost methods by professionally qualified actuaries and are arrived at using actuarial assumptions based on market expectations at the balance sheet date. Major sources of estimation uncertainty: Discount rates The assumptions underlying the actuarial valuations (including discount rates , rates of increase in future compensation levels, mortality rates and healthcare cost trends), from which the amounts recognised in the Consolidated Financial Statements are determined, are updated annually based on current economic conditions and for any relevant changes to the terms and conditions of the pension and post-retirement plans. These assumptions can be affected by (i) for the discount rate , changes in the rates of return on high-quality corporate bonds; (ii) for future compensation levels, future labour market conditions and (iii) for healthcare cost trend rates, the rate of medical cost inflation in the relevant regions. The weighted average actuarial assumptions used and sensitivity analysis in relation to the significant assumptions employed in the determination of pension and other post- retirement liabilities are contained in note 28 to the Consolidated Financial Statements. The assumptions that are the most significant to the measurement of retirement benefit obligations are the discount rates . The discount rates employed in determining the present value of the schemes’ liabilities are determined by reference to market yields at the balance sheet date on high- quality corporate bonds of a currency and term consistent with the currency and term of the associated post-employment benefit obligations. Whilst management believes that the assumptions used are appropriate, differences in actual experience or changes in assumptions may affect the obligations and expenses recognised in future accounting periods. The assets and liabilities of defined benefit pension schemes may exhibit significant period-on-period volatility attributable primarily to changes in bond yields and longevity. * EBITDA is defined as earnings before in terest, taxes, depreciation, amortisation, asset impairment charges, profit on dispos als and the Group’s share of equity account ed investments’ profit after tax. 2021 Annual Report and Form 20-F 147 In addition to future service contributions, significant cash contributions may be required to remediate past service deficits. The net surplus or deficit arising on each of the Group’s defined benefit pension schemes, are shown either within non-current assets or non-current liabilities in the Consolidated Balance Sheet. The deferred tax impact of pension scheme surpluses and deficits is disclosed separately within deferred tax assets or liabilities as appropriate. Remeasurements, comprising actuarial gains and losses and the return on plan assets (excluding net interest), are recognised immediately in the Consolidated Balance Sheet with a corresponding debit or credit to retained earnings through other comprehensive income in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods. The defined benefit pension asset or liability in the Consolidated Balance Sheet comprises the total for each plan of the present value of the defined benefit obligation less the fair value of plan assets out of which the obligations are to be settled directly. Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance policies. Fair value is based on market price information and, in the case of published quoted securities; it is the published bid price. The value of any defined benefit asset is limited to the present value of any economic benefits available in the form of refunds from the plan and reductions in the future contributions to the plan. The Group’s obligation in respect of post- employment healthcare and life assurance benefits represents the amount of future benefit that employees have earned in return for service in the current and prior periods. The obligation is computed on the basis of the projected unit credit method and is discounted to present value using a discount rate equating to the market yield at the balance sheet date on high-quality corporate bonds of a currency and term consistent with the currency and estimated term of the post-employment obligations. Provisions for liabilities – Note 26 A provision is recognised when the Group has a present obligation (either legal or constructive) as a result of a past event, it is probable that a transfer of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Significant judgement: Judgement is required in determining whether the Group has a present obligation and whether it is probable that an outflow of economic benefits will be required to settle this obligation. This judgement is applied to information available at the time of determining the liability including but not limited to judgements around interpretations of legislation, regulations, case law and insurance contracts depending on the nature of the provision. Where the Group anticipates that a provision will be reimbursed, the reimbursement is recognised as a separate asset only when it is virtually certain that the reimbursement will arise. Provisions are measured at the present value of the expenditures expected to be required to settle the obligation. The increase in the provision due to the passage of time is recognised as an interest expense. Contingent liabilities arising on business combinations are recognised as provisions if the contingent liability can be reliably measured at its acquisition date fair value. Provisions are not recognised for future operating losses. Management is not aware of any potential changes to key assumptions that have a significant risk of causing a material adjustment to the carrying value of provisions within the next financial year; however due to the nature of some of our provisions, estimates may depend on the outcome of future events and need to be revised as circumstances change in future accounting periods. Refer to note 26 for the expected timing of outflows by provisions category. Environmental and remediation provisions The measurement of environmental and remediation provisions is based on an evaluation of currently available facts with respect to each individual site and considers factors such as existing technology, currently enacted laws and regulations and prior experience in remediation of sites. Inherent uncertainties exist in such evaluations primarily due to unknown conditions, changing governmental regulations and legal standards regarding liability, the protracted length of the clean-up periods and evolving technologies. The environmental and remediation liabilities provided for in the Consolidated Financial Statements reflect the judgement applied by management in respect of information available at the time of determining the liability and are adjusted periodically as remediation efforts progress or as additional technical or legal information becomes available. The impact of climate change and policy risks and uncertainties as set out on pages 118 and 235 on environmental and remediation provisions has been considered, specifically the impact on timing and extent of costs and cash outflows. Changes to legislation, including those relating to climate change, are factored into the assessment of provisions when the legislation is virtually certain to be enacted. The Group’s 2025 carbon emissions target of 520kg of CO 2 per tonne of cementitious material is also considered in these judgements. The measurement of our provisions is based on reasonable and supportable assumptions that represent management’s current best estimate of the range of economic conditions that will exist in the foreseeable future. These assumptions do not have a significant risk of resulting in a material adjustment to the carrying value of these provisions within the next financial year and therefore do not represent a major source of estimation uncertainty. Due to the inherent uncertainties described above, many of which are not under management’s control, actual costs and cash outflows could differ if management used different assumptions or if different conditions occur in future accounting periods. Legal contingencies The status of each significant claim and legal proceeding in which the Group is involved is reviewed by management on a periodic basis and the Group’s potential financial exposure is assessed. If the potential loss from any claim or legal proceeding is considered probable, and the amount can be reliably estimated, a liability is recognised for the estimated loss. Because of the uncertainties inherent in such matters, the related provisions are based on the best information available at the time; the issues taken into account by management and factored into the assessment of legal contingencies include, as applicable, the status of settlement negotiations, interpretations of contractual obligations, prior experience with similar contingencies/claims, and advice obtained from legal counsel and other third parties. As additional information becomes available on pending claims, the potential liability is reassessed and revisions are made to the amounts accrued where appropriate. Such revisions in the judgements and estimates of the potential liabilities could have an impact on the results of operations and financial position of the Group in future accounting periods. Insurance provisions Insurance provisions are subject to actuarial valuation and are based on actuarial triangulations which are extrapolated from historical claims experience. These provisions include claims which are classified as “incurred but not reported”, the status of which are reviewed periodically by management, in conjunction with appropriately qualified advisors. Changes in actuarial methodologies and assumptions, along with the receipt of new information, could have an impact on the financial position of the Group through recognition of additional, or release of, provisions in future accounting periods. 148 Accounting Policies - continued Other Significant Accounting Policies Basis of consolidation The Consolidated Financial Statements include the financial statements of the Parent Company and all subsidiaries drawn up to 31 December each year, and the Group’s share of the results of joint ventures and associates which are accounted for using the equity method. The financial year-ends of the Group’s subsidiaries, joint ventures and associates are coterminous. Subsidiaries Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. A change in the ownership interest of a subsidiary without a change in control is accounted for as an equity transaction. When the Group holds less than the majority of voting rights, other facts and circumstances including contractual arrangements that give the Group power over the investee may result in the Group controlling the investee. The Group reassesses whether it controls an investee if, and when, facts and circumstances indicate that there are changes to the elements evidencing control. Non-controlling interests represent the portion of the equity of a subsidiary not attributable either directly or indirectly to the Parent Company and are presented separately in the Consolidated Income Statement and within equity in the Consolidated Balance Sheet, distinguished from Parent Company shareholders’ equity. Acquisitions of non-controlling interests are accounted for as transactions with equity holders in their capacity as equity holders and therefore no goodwill is recognised as a result of such transactions. On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. Investments in associates and joint ventures – Note 15 An associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of an entity, but is not control or joint control over those policies. A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of the arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. The Group’s investments in its associates and joint ventures are accounted for using the equity method from the date significant influence/joint control is deemed to arise until the date on which significant influence/joint control ceases to exist or when the interest becomes classified as an asset held for sale. The Consolidated Income Statement reflects the Group’s share of result after tax of the related associates and joint ventures. Investments in associates and joint ventures are carried in the Consolidated Balance Sheet at cost adjusted in respect of post-acquisition changes in the Group’s share of net assets, less any impairment in value. Loans advanced to associates or joint ventures form part of the net investment in the associate or joint venture held on the Consolidated Balance Sheet. The Group applies IFRS 9, including the impairment requirements, to these loans as the equity method does not apply. If necessary, impairment losses on the carrying amount of an investment are reported within the Group’s share of equity accounted investments’ results in the Consolidated Income Statement. If the Group’s share of losses exceeds the carrying amount of an associate or joint venture, the carrying amount is reduced to nil and recognition of further losses is discontinued except to the extent that the Group has incurred obligations in respect of the associate or joint venture. Joint operations A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets and obligations for the liabilities, relating to the arrangement. The Group’s investments in its joint operations are accounted for by recognising its assets and its liabilities, including its share of any assets or liabilities held jointly; its share of the revenue from the sale of the output by the joint operation; and its expenses, including its share of any expenses incurred jointly. Revenue recognition – Note 1 The Group recognises revenue in the amount of the price expected to be received for goods and services supplied at a point in time or over time, as contractual performance obligations are fulfilled and control of goods and services passes to the customer. It excludes trade discounts and value- added tax/sales tax. Revenue derived from sale of goods (sources other than construction contracts) The Group manufactures and supplies a diverse range of building materials and products. Whilst there are a number of different activities across the Group; recognition of revenue from the sale of goods is similar; being at the point in time when control is deemed to pass to the customer upon leaving a CRH premises or upon delivery to a customer depending on the terms of the sale. Contracts do not contain multiple performance obligations (as defined by IFRS 15 Revenue from Contracts with Customers ). Across the Group, goods are often sold with discounts or rebates based on cumulative sales over a period. This variable consideration is only recognised when it is highly probable that it will not be subsequently reversed and is recognised using the most likely amount or expected value methods, depending on the individual contract terms. In the application of appropriate revenue recognition, judgement is exercised by management in the determination of the likelihood and quantum of such items based on experience and historical trading patterns. The Group is deemed to be a principal to an arrangement when it controls a promised good or service before transferring them to a customer and accordingly recognises revenue on a gross basis. Where the Group is determined to be an agent to a transaction, based on the principle of control; the net amount retained after the deduction of any costs to the principal is recognised as revenue. Within the non-construction contract businesses no element of financing is deemed present as transactions are all made with average credit terms (usually 90 days), consistent with market practice. Revenue derived from construction contracts The Group enters into a number of construction contracts, to complete large construction projects. Contracts usually commence and complete within one year and are generally fixed price. The Group typically recognises revenue within its construction contract businesses over time, as it performs its obligations. Management believe this best reflects the transfer of control to the customer by providing a faithful depiction of primarily the enhancement of a customer controlled asset or the construction of an asset with no alternative use. The percentage-of-completion method is used to recognise revenue when the outcome of a contract can be estimated reliably. The percentage-of-completion is calculated using an input method and based on the proportion of contract costs incurred at the balance sheet date 2021 Annual Report and Form 20-F 149 relative to the total estimated costs of the contract. In all of our construction contract arrangements the Group has an enforceable right to payment for work and performance obligations completed to date. Some of the Group’s construction contracts may contain forms of variable consideration that can either increase or decrease the transaction price. Variable consideration is estimated based on the most likely amount or expected value methods (depending on the contract terms) and the transaction price is adjusted to the extent it is highly probable that a significant reversal of revenue recognised will not occur. In some instances revenue is recognised in the period subsequent to the contracted work being completed when there is final certainty over the remaining element of variable consideration. Recognition of contract assets and liabilities In our construction contract businesses, amounts are billed as work progresses in accordance with pre-agreed contractual terms. When a performance obligation is satisfied but a customer has not yet been billed this is recognised as a contract asset (unbilled revenue) and included within Trade and Other Receivables (note 17). Retentions (representing the percentage of consideration due which is retained by the customer until certain contractual activities are completed) are also a common feature of construction contracts and are recognised as a contract asset within Trade and Other Receivables when we have a right to consideration in exchange for the completion of the contract. Retentions are consistent with industry norms and the purpose of these is not to provide a form of financing. Apart from retentions, the Group does not have any construction contracts where the period between the transfer of the promised goods to the customer and payment by the customer exceeds one year. As a consequence, the Group applies the practical expedient in IFRS 15 and does not adjust any of its transaction prices for the time value of money. When consideration is received in advance of work being performed, or we have billed an amount to a customer that is in excess of revenue recognised on the contract; this is recognised as a contract liability within Trade and Other Payables (note 18); and the revenue is generally recognised in the subsequent period when the right to recognise revenue has been determined. As a result, advance payments received for construction contract arrangements are not considered a significant form of financing. Cumulative costs incurred, net of amounts transferred to cost of sales, after deducting onerous provisions, provisions for contingencies and payments on account not matched with revenue, are included as construction contract balances in inventories (note 16). Cost includes all expenditure directly related to specific projects and an allocation of fixed and variable overheads incurred in the Group’s contract activities based on normal operating capacity. The Group’s contracts generally are for a duration of less than one year and therefore the Group does not capitalise incremental contract costs; instead expensing as incurred, as permitted by the practical expedient under IFRS 15. Onerous contracts and warranties When a contract is identified as being onerous (i.e. its unavoidable cost exceeds the economic benefit of the contract), a provision is created; being the lower of costs to complete the contract and the cost of exiting the contract. The Group recognises a provision for assurance-type (standard) warranties offered across the Group under its terms and conditions in accordance with IAS 37 Provisions, Contingent Liabilities and Contingent Assets . The Group provides assurance-type warranties for general repairs and does not typically provide service-type (extended) warranties. Segment reporting – Note 2 Operating segments are reported in a manner consistent with the internal organisational and management structure and the internal reporting information provided to the Chief Operating Decision Maker who is responsible for allocating resources and assessing performance of the operating segments. Assets and liabilities held for sale – Note 3 Non-current assets and disposal groups classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within 12 months from the date of classification as held for sale. Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale. The Group ceases to use the equity method of accounting from the date on which an interest in a joint venture or associate becomes held for sale. Non-current assets classified as held for sale and liabilities directly associated with those assets are presented separately as current items in the Consolidated Balance Sheet. Discontinued operations – Note 3 Discontinued operations are reported when a component of the Group, that represents a separate major line of business or geographical area of operation, has been disposed of, or when a sale is highly probable; its operations and cash flows can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the Group and is classified as held for sale or has been disposed of. The Group classifies a non-current asset or disposal group as held for sale if its carrying value will be recovered through a sales transaction or distribution to shareholders rather than continuing use. In the Consolidated Income Statement, discontinued operations are excluded from the results of continuing operations and are presented as a single amount as profit or loss after tax from discontinued operations. Corresponding notes to the Consolidated Income Statement exclude amounts for discontinued operations, unless stated otherwise. Share-based payments – Note 8 The Group operates a number of equity-settled share-based payment plans. Details of these plans, together with the nature of the underlying market and non-market performance and other vesting conditions are outlined in note 8. The Group has no material exposure in respect of cash-settled share- based payment transactions and share-based payment transactions with cash alternatives. Awards under Performance Share Plans 25% of the awards under the 2014 Performance Share Plan are subject to a TSR (and hence market-based) vesting condition measured against a tailored sector peer group. Accordingly, the fair value assigned to the related equity instruments at the grant date is derived using a Monte Carlo simulation technique to model the market-based performance conditions; and is adjusted to reflect the anticipated likelihood as at the grant date of achieving the vesting condition. Awards are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance and/or service conditions are satisfied. The remaining awards granted under the 2014 Performance Share Plan are subject to non-market- based vesting conditions; 50% are subject to a cumulative cash flow target and 25% are subject to a RONA metric. The fair value of the awards is calculated as the market price of the shares at the date of grant. No expense is recognised for awards that do not ultimately vest. At the balance sheet date the estimate of the level of vesting is reviewed and any adjustment necessary is recognised in the Consolidated Income Statement. 150 Accounting Policies - continued If awards which vest under the 2014 Performance Share Plan are allotted to an Employee Benefit Trust, an increase in nominal share capital and share premium are recognised accordingly on allotment. Savings-related Share Option Scheme The fair values assigned to options under the Savings-related Share Option Scheme are derived in accordance with the trinomial valuation methodology on the basis that the services to be rendered by employees as consideration for the granting of share options will be received over the vesting period, which is assessed as at the grant date. The cost is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled. The cumulative expense recognised at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group’s best estimate of the number of equity instruments that will ultimately vest. The Consolidated Income Statement expense/credit for a period represents the movement in cumulative expense recognised at the beginning and end of that period. The cumulative charge to the Consolidated Income Statement is reversed only where an employee in receipt of share options leaves service prior to completion of the expected vesting period and those options forfeit in consequence. Where an award is cancelled, it is treated as if it is vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. This includes any award where non-vesting conditions within the control of either the Company or the employee are not met. All cancellations of awards are treated equally. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. The dilutive effect of outstanding options is reflected as additional share dilution in the determination of diluted earnings per share. Taxation – current and deferred – Notes 10 and 27 Current tax represents the expected tax payable (or recoverable) on the taxable profit for the year using tax rates enacted for the period. Where items are accounted for outside of profit or loss, the related income tax is recognised either in other comprehensive income or directly in equity as appropriate. Deferred tax is recognised using the liability method on temporary differences arising at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts in the Consolidated Financial Statements. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill. In addition, deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that, at the time of the transaction, affects neither accounting nor taxable profit or loss. For the most part, no provision has been made for temporary differences applicable to investments in subsidiaries and joint ventures as the Group is in a position to control the timing of reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future. However, a temporary difference has been recognised to the extent that specific assets have been identified for sale or where there is a specific intention to unwind the temporary difference in the foreseeable future. Due to the absence of control in the context of associates (significant influence only), deferred tax liabilities are recognised where appropriate in respect of CRH’s investments in these entities on the basis that the exercise of significant influence would not necessarily prevent earnings being remitted by other shareholders in the undertaking. Deferred tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets and liabilities are not subject to discounting. Deferred tax assets are recognised in respect of all deductible temporary differences, carry-forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profits will be available against which the temporary differences can be utilised. The carrying amounts of deferred tax assets are subject to review at each balance sheet date and are reduced to the extent that future taxable profits are considered to be inadequate to allow all or part of any deferred tax asset to be utilised. The Group’s income tax charge is based on reported profit and enacted statutory tax rates, which reflect various allowances and reliefs available to the Group in the multiple tax jurisdictions in which it operates. The determination of the Group’s provision for income tax re quires certain judgements and estimates in relation to matters where the ultimate tax outcome may not be certain. The recognition or non-recognition of deferred tax assets as appropriate also requires judgement as it involves an assessment of the future recoverability of those assets. In addition, the Group is subject to tax audits which can involve complex i ssues that could require extended periods to conclude, the resolution of which is often not within the control of the Group. Although management believes that the estimates included in the Consolidated Financial Statements and its tax return position s are reasonable, there is no certainty that the final outcome of these matters will not be different than that which is reflected in the Group’s historical income tax provisions and accruals. Whilst it is possible, the Group does not currently anticipate that any such differences could have a material impact on the income tax provision and profit for the period in which such a determination is made no r does it expect any significant impact on its financial position within the next 12 months. This is based on the Group’s knowledge and experience, as well as the profile of the individual components which have been reflected in the current tax liability, the status of the tax audits, enquiries and negotiations in progress at each year-end, previous claims and any factors specific to the relevant tax environments. Property, plant and equipment – Note 13 The carrying value of property, plant and equipment (excluding leased right-of-use assets) of $17,938 million at 31 December 2021 represents 40% of total assets at that date. Property, plant and equipment are stated at cost less any accumulated depreciation and any accumulated impairments except for certain items that had been revalued to fair value prior to the date of transition to IFRS (1 January 2004). Repair and maintenance expenditure is included in an asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repair and maintenance expenditure is charged to the Consolidated Income Statement during the financial period in which it is incurred. Borrowing costs incurred in the construction of major assets which take a substantial period of time to complete are capitalised in the financial period in which they are incurred. In the application of the Group’s accounting policy, judgement is exercised by management in the determination of residual values and useful lives. Depreciation methods, useful lives and residual values are reviewed at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the depreciation period or method as appropriate on a prospective basis. Amongst other factors, consideration is given to climate change and policy risks and uncertainties as set out on pages 118 and 235 when determining the useful lives of assets. The determination of useful lives also considers the Group’s 2025 carbon 2021 Annual Report and Form 20-F 151 emissions target of 520kg of CO 2 per tonne of cementitious material. Capital expenditure will continue to be required for ongoing projects and the useful lives of future capital expenditure may differ from current assumptions, however there were no significant changes in the estimates of useful lives during the current financial year. Future developments in techno logy may also result in a risk of obsolescence for the Group’s current portfolio of plant and machinery asse ts, however the expected time-frame for these develo pments is not currently anticipated to impact their re maining useful lives as the majority of the Group’s plan t and machinery assets will be fully depreciated within ten years. Depreciation and depletion is calculated to write off the book value of each item of property, plant and equipment over its useful economic life on a straight-line basis at the following rates: Land and buildings The book value of mineral-bearing land, less an estimate of its residual value, is depleted over the period of the mineral extraction in the proportion which production for the year bears to the latest estimates of proven and probable mineral reserves. Land, other than mineral-bearing land, is not depreciated. In general, buildings are depreciated at 2.5% per annum (p.a.). Plant and machinery These are depreciated at rates ranging from 3.3% p.a. to 20% p.a. depending on the type of asset. Plant and machinery includes transport vehicles which are, on average, depreciated at 20% p.a. Business combinations – Note 30 The Group applies the acquisition method in accounting for business combinations. The cost of an acquisition is measured as the aggregate of the consideration transferred (excluding amounts relating to the settlement of pre-existing relationships), the amount of any non-controlling interest in the acquiree and, in a business combination achieved in stages, the acquisition- date fair value of the acquirer’s previously-held equity interest in the acquiree. Transaction costs that the Group incurs in connection with a business combination are expensed as incurred. To the extent that settlement of all or any part of consideration for a business combination is deferred, the fair value of the deferred component is determined through discounting the amounts payable to their present value at the date of exchange. The discount component is unwound as an interest charge in the Consolidated Income Statement over the life of the obligation. Any contingent consideration is recognised at fair value at the acquisition date and included in the cost of the acquisition. The fair value of contingent consideration at acquisition date is arrived at through discounting the expected payment to present value. In general, in order for contingent consideration to become payable, pre-defined profit and/or profit/net asset ratios must be exceeded. Subsequent changes to the fair value of the contingent consideration will be recognised in profit or loss unless the contingent consideration is classified as equity, in which case it is not remeasured and settlement is accounted for within equity. The assets and liabilities arising on business combination activity are measured at their acquisition-date fair values. Contingent liabilities assumed in business combination activity are recognised as of the acquisition date, where such contingent liabilities are present obligations arising from past events and their fair value can be measured reliably. In the case of a business combination achieved in stages, the acquisition- date fair value of the acquirer’s previously-held equity interest in the acquiree is remeasured to fair value as at the acquisition date through profit or loss. When the initial accounting for a business combination is determined provisionally, any adjustments to the provisional values allocated to the consideration, identifiable assets or liabilities (and contingent liabilities, if relevant) are made within the measurement period, a period of no more than one year from the acquisition date. Goodwill – Note 14 Goodwill arising on a business combination is initially measured at cost, being the excess of the cost of an acquisition over the fair value of the net identifiable assets and liabilities assumed at the date of acquisition and relates to the future economic benefits arising from assets which are not capable of being individually identified and separately recognised. Following initial recognition, goodwill is measured at cost less any accumulated impairment losses. If the cost of the acquisition is lower than the fair value of the net assets of the subsidiary acquired, the identification and measurement of the related assets and liabilities and contingent liabilities are revisited and the cost is reassessed with any remaining balance recognised immediately in the Consolidated Income Statement. The carrying amount of goodwill in respect of associates and joint ventures is included in investments accounted for using the equity method (i.e. within financial assets) in the Consolidated Balance Sheet. Where a subsidiary is disposed of or terminated through closure, the carrying value of any goodwill of that subsidiary is included in the determination of the net profit or loss on disposal/termination. Intangible assets (other than goodwill) arising on business combinations – Note 14 An intangible asset is capitalised separately from goodwill as part of a business combination at cost (fair value at date of acquisition). Subsequent to initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. The carrying values of definite-lived intangible assets (the Group does not currently have any indefinite-lived intangible assets other than goodwill) are reviewed for indicators of impairment at each reporting date and are subject to impairment testing when events or changes in circumstances indicate that the carrying values may not be recoverable. Intangible assets are amortised on a straight-line basis. In general, based on the current composition of definite-lived intangible assets, the useful lives for customer-related intangible assets range from five to fifteen years and the useful lives for marketing related intangible assets range from ten to twenty years. Amortisation periods, useful lives, expected patterns of consumption and residual values are reviewed at each financial year-end. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortisation period or method as appropriate on a prospective basis. Leases – Notes 13 and 20 The Group enters into leases for a range of assets, principally relating to property. These property leases have varying terms, renewal rights and escalation clauses, including periodic rent reviews linked with a consumer price index and/or other indices. The Group also leases plant and machinery, vehicles and equipment. The terms and conditions of these leases do not impose significant financial restrictions on the Group. A contract contains a lease if it is enforceable and conveys the right to control the use of a specified asset for a period of time in exchange for consideration, which is assessed at inception. A right-of-use asset and lease liability are recognised at the commencement date for contracts containing a lease, with the exception of leases with a term of 12 months or less which do not contain a purchase option, leases where the underlying asset is of low value and leases with associated payments that vary directly in line with usage or sales. The commencement date is the date at which the asset is made available for use by the Group. 152 Accounting Policies - continued The lease liability is initially measured at the present value of the future lease payments, discounted using the incremental borrowing rate or the interest rate implicit in the lease, if this is readily determinable, over the remaining lease term. Lease payments include fixed payments less any lease incentives receivable, variable payments that are dependent on a rate or index known at the commencement date, amounts expected to be paid under residual value guarantees and any payments for an optional renewal period and purchase and termination option payments, if the Group is reasonably certain to exercise those options. The lease term is the non-cancellable period of the lease adjusted for any renewal or termination options which are reasonably certain to be exercised. Variable lease payments that do not depend on an index or a rate and rentals relating to low value or short-term leases are recognised as an expense in the period in which they are incurred. Management applies judgement in determining whether it is reasonably certain that a renewal, termination or purchase option will be exercised. Incremental borrowing rates are calculated using a portfolio approach, based on the risk profile of the entity holding the lease and the term and currency of the lease. After initial recognition, the lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments or when the Group changes its assessment of whether it is reasonably certain to exercise an option within the contract. A corresponding adjustment is made to the carrying amount of the right-of-use asset. The right-of-use asset is initially measured at cost, which comprises the lease liability adjusted for any payments made at or before the commencement date, initial direct costs incurred, lease incentives received and an estimate of the cost to dismantle or restore the underlying asset or the site on which it is located at the end of the lease term. The right-of-use asset is depreciated over the lease term or, where a purchase option is reasonably certain to be exercised, over the useful economic life of the asset in line with depreciation rates for owned property, plant and equipment. The right-of-use asset is tested periodically for impairment if an impairment indicator is considered to exist. Non-lease components in a contract such as maintenance and other service charges are separated from lease payments and are expensed as incurred. Inventories – Note 16 Inventories are stated at the lower of cost and net realisable value. Cost is based on the first-in/ first-out principle (and weighted average, where appropriate) and includes all expenditure incurred in acquiring the inventories and bringing them to their present location and condition. Raw materials are valued on the basis of purchase cost on a first-in/ first-out basis. In the case of finished goods and work-in-progress, cost includes direct materials, direct labour and attributable overheads based on normal operating capacity and excludes borrowing costs. Net realisable value is the estimated proceeds of sale less all further costs to completion, and less all costs to be incurred in marketing, selling and distribution. Estimates of net realisable value are based on the most reliable evidence available at the time the estimates are made, taking into consideration fluctuations of price or cost directly relating to events occurring after the end of the period, the likelihood of short-term changes in buyer preferences, product obsolescence or perishability (all of which are generally low given the nature of the Group’s products) and the purpose for which the inventory is held. Climate change and policy risks and uncertainties as set out on pages 118 and 235 may also result in additional costs, changes to selling prices or product obsolescence impacting the valuation of inventories in future years. There were no material write-downs of inventories required in this regard during the current financial year. Materials and other supplies held for use in the production of inventories are not written down below cost if the finished goods, in which they will be incorporated, are expected to be sold at or above cost. Trade and other receivables – Note 17 The classification of financial assets depends on the Group’s business model for managing the financial assets and the contractual terms of the cash flows. The Group’s principal financial assets are its trade and other receivables (including contract assets). Trade and other receivables are recognised when the Group becomes a party to the contract and has a legal right to receive cash. Trade receivables (including contract assets) are carried at original invoice amount, which is equivalent to amortised cost, less an expected credit loss provision. Further details on the approach the Group applies to providing for expected credit losses is outlined in note 17. Cash and cash equivalents – Note 23 Cash and cash equivalents comprise cash balances held for the purpose of meeting short-term cash commitments and investments which are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value. Cash and cash equivalents are classified as financial assets measured at amortised cost or, in the case of certain money market deposits, fair value through profit or loss. Bank overdrafts are included within current interest- bearing loans and borrowings in the Consolidated Balance Sheet. Where the overdrafts are repayable on demand and form an integral part of cash management, they are netted against cash and cash equivalents for the purposes of the Consolidated Statement of Cash Flows. Interest-bearing loans and borrowings – Note 24 All loans and borrowings are initially recorded at the fair value of the consideration received net of directly attributable transaction costs. The computation of amortised cost includes any issue costs and any discount or premium materialising on settlement. Subsequent to initial recognition, current and non-current interest-bearing loans and borrowings are, in general, measured at amortised cost employing the effective interest methodology. Fixed rate loans and borrowings, which have been hedged to floating rates (using interest rate swaps), are measured at amortised cost adjusted for changes in value attributable to the hedged risks arising from changes in underlying market interest rates. Borrowing costs arising on financial instruments are recognised as an expense in the period in which they are incurred (unless capitalised as part of the cost of property, plant and equipment). Derivative financial instruments and hedging practices – Note 25 In order to manage interest rate, foreign currency and commodity risks and to realise the desired currency profile of borrowings, the Group employs derivative financial instruments (principally interest rate swaps, currency forwards and currency swaps). Derivative financial instruments are recognised initially at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at fair value. The carrying value of derivatives is fair value based on discounted future cash flows and adjusted for counterparty risk. Future floating rate cash flows are estimated based on future interest rates (from observable yield curves at the end of the reporting period). Fixed and floating rate cash flows are discounted at future interest rates and translated at period-end foreign exchange rates. Short dated forward foreign exchange contracts are used to hedge the forward foreign exchange risk on currency exposures. The forward price elements to these contracts are excluded from the hedge. 2021 Annual Report and Form 20-F 153 At the inception of a derivative transaction, the Group documents the relationship between the hedged item and the hedging instrument together with its risk management objective and the strategy underlying the proposed transaction. The Group also documents its assessment, both at the inception of the hedging relationship and subsequently on an ongoing basis, of the effectiveness of the hedging instrument in offsetting movements in the fair values or cash flows of the hedged items. Where derivatives do not fulfil the criteria for hedge accounting, changes in fair values are reported in the Consolidated Income Statement and Consolidated Balance Sheet. Fair value and cash flow hedges The Group uses fair value hedges and cash flow hedges in its treasury activities. For the purposes of hedge accounting, hedges are classified either as fair value hedges (which entail hedging the exposure to movements in the fair value of a recognised asset or liability or an unrecognised firm commitment that could affect profit or loss) or cash flow hedges (which hedge exposure to fluctuations in future cash flows derived from a particular risk associated with a recognised asset or liability, or a highly probable forecast transaction that could affect profit or loss). Where the conditions for hedge accounting are satisfied and the hedging instrument concerned is classified as a fair value hedge, any gain or loss stemming from the remeasurement of the hedging instrument to fair value is reported in the Consolidated Income Statement. In addition, any gain or loss on the hedged item which is attributable to the hedged risk is adjusted against the carrying amount of the hedged item and reflected in the Consolidated Income Statement. Where the adjustment is to the carrying amount of a hedged interest-bearing financial instrument, the adjustment is amortised to the Consolidated Income Statement with the objective of achieving full amortisation by maturity. Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective part of any gain or loss on the derivative financial instrument is recognised as other comprehensive income, net of the income tax effect, with the ineffective portion being reported in the Consolidated Income Statement. The associated gains or losses that had previously been recognised as other comprehensive income are transferred to the Consolidated Income Statement contemporaneously with the materialisation of the hedged transaction. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised, or no longer qualifies for hedge accounting. At that point in time, any cumulative gain or loss on the hedging instrument recognised as other comprehensive income remains there until the forecast transaction occurs. If a hedged transaction is no longer anticipated to occur, the net cumulative gain or loss previously recognised as other comprehensive income is transferred to the Consolidated Income Statement in the period. Net investment hedges Where foreign currency swaps provide a hedge against a net investment in a foreign operation, and the hedge is deemed to be effective, foreign exchange differences are taken directly to a foreign currency translation reserve. The ineffective portion of any gain or loss on the hedging instrument is recognised immediately in the Consolidated Income Statement. Cumulative gains and losses remain in equity until disposal of the net investment in the foreign operation at which point the related differences are transferred to the Consolidated Income Statement as part of the overall gain or loss on sale. Share capital and dividends – Notes 29 and 11 Treasury Shares and own shares Ordinary Shares acquired by the Parent Company through the share buyback programme (Treasury Shares) or purchased by the Employee Benefit Trust on behalf of the Parent Company under the terms of the Performance Share Plans and the Restricted Share Plan (own shares) are deducted from equity and presented on the face of the Consolidated Balance Sheet. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Parent Company’s Ordinary Shares. A financial liability is recorded if a contractual obligation to repurchase shares exists at the balance sheet date. Dividends Dividends on Ordinary Shares are recognised as a liability in the Consolidated Financial Statements in the period in which they are declared by the Parent Company and approved by shareholders in respect of final dividends. Other Reserves Other Reserves primarily comprise reserves relating to the Group’s share-based payments expense. Foreign currency translation Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The Consolidated Financial Statements are presented in US Dollar, which is the presentation currency of the Group. The functional currency of the Parent Company is euro. Transactions in foreign currencies are recorded at the rate of exchange in effect at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the rate of exchange in effect at the balance sheet date. All currency translation differences are taken to the Consolidated Income Statement with the exception of all monetary items that provide an effective hedge for a net investment in a foreign operation. These are recognised in other comprehensive income until the disposal of the net investment, at which time they are recognised in the Consolidated Income Statement. Results and cash flows of subsidiaries, joint ventures and associates with non-US Dollar functional currencies have been translated into US Dollar at average exchange rates for the year, and the related balance sheets have been translated at the rates of exchange in effect at the balance sheet date. Adjustments arising on translation of the results and net assets of non-US Dollar subsidiaries, joint ventures, associates and joint operations are recognised in a separate translation reserve within equity, net of differences on related currency borrowings. All other translation differences are taken to the Consolidated Income Statement. Goodwill and fair value adjustments arising on acquisition of a foreign operation are regarded as assets and liabilities of the foreign operation and are translated accordingly. 154 Accounting Policies - continued The principal exchange rates used for the translation of results, cash flows and balance sheets into US Dollar were as follows: Average Year-end US Dollar 1 = 2021 2020 2019 2021 2020 Brazilian Real 5.3968 5.1568 3.9423 5.5716 5.1941 Canadian Dollar 1.2538 1.3412 1.3269 1.2716 1.2751 Chinese Renminbi 6.4493 6.9010 6.9098 6.3513 6.5404 Danish Krone 6.2919 6.5388 6.6691 6.5652 6.0650 Euro 0.8460 0.8771 0.8933 0.8829 0.8151 Hungarian Forint 303.3739 307.9331 290.5732 325.9300 296.8600 Indian Rupee 73.9391 74.1177 70.4208 74.3009 73.0706 Philippine Peso 49.2983 49.6071 51.7955 50.9800 48.0300 Polish Zloty 3.8633 3.8971 3.8389 4.0579 3.7166 Pound Sterling 0.7270 0.7798 0.7841 0.7417 0.7320 Romanian Leu 4.1641 4.2432 4.2388 4.3692 3.9683 Serbian Dinar 99.4732 103.1510 105.2592 103.7590 95.8751 Swiss Franc 0.9145 0.9387 0.9937 0.9119 0.8806 Ukrainian Hryvnia 27.2588 26.9857 25.8045 27.2850 28.3242 2021 Annual Report and Form 20-F 155 Notes on Consolidated Financial Statements 1. Revenue CRH is the leading building materials business in the world. It manufactures and supplies a range of integrated building materials, products and innovative solutions which can be found throughout the built environment, from major public infrastructure projects to commercial buildings and homes. The Group has three operating segments (as identified under IFRS 8 Operating Segments ) generating revenue through the following activities: Americas Materials businesses in the US and Canada utilise an extensive network of reserve backed quarry locations, to provide asphalt paving services and to produce and supply a range of materials including cement, aggregates, readymixed concrete and asphalt. These materials are used widely in a variety of construction projects including public infrastructure, commercial buildings and homes. This segment also includes the Group’s cement operations in Brazil, which were divested in April 2021. Europe Materials businesses are predominantly engaged in the manufacture and supply of cement, lime, aggregates, asphalt, readymixed concrete and concrete products, as well as paving and construction services. Our materials are used extensively in a wide range of construction applications, from major public road and infrastructure projects, to the development and refurbishment of commercial buildings and homes. This segment comprises businesses operating in 20 countries across Western, Central and Eastern Europe as well as the Philippines in Asia. Our Building Products segment includes businesses operating across a portfolio of building product related platforms including architectural products, infrastructure products, construction accessories and building envelope. Our businesses offer a diverse range of products including brickwork supports that keep walls standing, glazing systems that hold glass in place, products that collect, connect and protect vital utility infrastructure and pavers, blocks and patio products used to pave our city centres and create unique outdoor living spaces. This segment comprises businesses operating in 19 countries primarily in the US, Canada and Western Europe. It also included up to their disposal in 2019, our perimeter protection and shutters & awnings businesses. The divestment of our Europe Distribution business (excluding DIY Benelux), formerly part of the Building Products segment, was completed in 2019. As a result, it was classified as discontinued operations in 2019. A. Disaggregated revenue In the following tables, revenue is disaggregated by primary geographic market and by principal activities and products. Due to the diversified nature of the Group, the basis on which management reviews its businesses varies across the Group. Geography is the primary basis for the Americas Materials and Europe Materials businesses; while activities and products are used for the Building Products businesses. Revenue from external customers (as defined in IFRS 8) 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 2. Primary geographic markets Year ended 31 December Americas Materials 2021 Europe Materials 2021 Building Products 2021 Total 2021 Americas Materials 2020 Europe Materials 2020 Building Products 2020 Total 2020 Americas Materials 2019 Europe Materials 2019 Building Products 2019 Total 2019 $m $m $m $m $m $m $m $m $m $m $m $m Continuing operations Republic of Ireland (country of domicile) - 706 - 706 - 632 - 632 - 655 - 655 United Kingdom - 3,979 244 4,223 - 3,157 180 3,337 - 3,478 243 3,721 Rest of Europe (i) - 5,243 1,085 6,328 - 4,841 992 5,833 - 4,845 1,162 6,007 United States 11,172 - 6,021 17,193 9,984 - 5,479 15,463 10,307 - 5,086 15,393 Rest of World (ii) 1,235 653 643 2,531 1,289 511 522 2,322 1,319 531 506 2,356 Total Group from continuing operations 12,407 10,581 7,993 30,981 11,273 9,141 7,173 27,587 11,626 9,509 6,997 28,132 Discontinued operations Rest of Europe (i) - Europe Distribution - - 3,557 Total Group 30,981 27,587 31,689 (i) The Rest of Europe principally includes Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hunga ry, Luxembourg, the Netherlands, Poland, Romania, Serbia, Slovakia, Spain, Sweden, Switzerland and Ukraine. (ii) The Rest of World principally includes Australia, Brazil, Canada and the Philippines. 156 1. Revenue - continued Principal activities and products Year ended 31 December Americas Materials (iii) 2021 Europe Materials (iii) 2021 Building Products 2021 Total 2021 Americas Materials (iii) 2020 Europe Materials (iii) 2020 Building Products 2020 Total 2020 Americas Materials (iii) 2019 Europe Materials (iii) 2019 Building Products 2019 Total 2019 $m $m $m $m $m $m $m $m $m $m $m $m Continuing operations Cement, lime and cement products 1,483 3,463 - 4,946 1,403 2,974 - 4,377 1,368 2,962 - 4,330 Aggregates, asphalt and readymixed products 6,262 3,606 - 9,868 5,604 3,100 - 8,704 5,649 3,427 - 9,076 Construction contract activities 4,662 2,065 175 6,902 4,266 1,732 168 6,166 4,609 1,801 185 6,595 Architectural products - 1,264 3,790 5,054 - 1,166 3,439 4,605 - 1,069 2,983 4,052 Infrastructure products - 183 1,605 1,788 - 169 1,278 1,447 - 250 1,387 1,637 Construction accessories - - 731 731 - - 626 626 - - 660 660 Architectural glass and glazing systems and related hardware - - 1,692 1,692 - - 1,662 1,662 - - 1,782 1,782 Total Group from continuing operations 12,407 10,581 7,993 30,981 11,273 9,141 7,173 27,587 11,626 9,509 6,997 28,132 Discontinued operations General Builders Merchants, DIY Germany and Sanitary, Heating & Plumbing - Europe Distribution - - 3,557 Total Group 30,981 27,587 31,689 (iii) Americas Materials and Europe Materials both operate vertically integrated businesses, which are founded in resource-back ed cement and aggregates assets and which support the manufacture and supply of aggregates, asphalt, cement, readymixed and precast concrete and landscaping produc ts. Accordingly, for the purpose of disaggregation of revenue we have included certain products together, as this is how management reviews and evaluate s this business line. There are no material dependencies or concentrations of individual customers which would warrant disclosure under IFRS 8. The individual entities within the Group have a large number of customers spread across various activities, end-uses and geographies. Revenue derived through the supply of services and intersegment revenue are not material to the Group. The transfer pricing policy implemented by the Group between operating segments and across its constituent entities is described in note 32. In addition, due to the nature of building materials, which have a low value-to-weight ratio, the Group’s revenue streams include a low level of cross-border transactions. B. Contract balances For information on the Group’s construction contract balances, including movements during the year, refer to notes 16, 17 and 18. Movements in our net contract balances are not considered significant and are primarily driven by the timing of billing work-in-progress within our construction contract businesses. C. Unsatisfied long-term construction contracts and other performance obligations Revenue yet to be recognised from fixed-price long- term construction contracts, primarily within our Americas Materials and Europe Materials businesses, amounted to $3,177 million at 31 December 2021 (2020: $2,604 million; 2019: $2,097 million). The Group has applied the practical expedient of IFRS 15 whereby revenue yet to be recognised on contracts that had an original expected duration of less than one year is not disclosed. The majority of open contracts at 31 December 2021 will close and revenue will be recognised within 12 months of the balance sheet date. * Revenue principally recognised over time . Construction contracts are generally comp leted within the same financial reporting y ear. 2021 Annual Report and Form 20-F 157 2. Segment Information As outlined in note 1, the Group has three operating segments. The segments reflect the Group’s organisational structure and the nature of the financial information reported to and assessed by the Group Chief Executive and Finance Director, who are together determined to fulfil the role of Chief Operating Decision Maker (as defined in IFRS 8). No operating segments have been aggregated to form these reportable segments. The principal factors employed in the identification of the three segments reflected in this note include: • the Group’s organisational structure in 2021 (during 2021 each divisional President fulfilled the role of “segment manager” as outlined in IFRS 8); • the nature of the reporting lines to the Chief Operating Decision Maker (as defined in IFRS 8); • the structure of internal reporting documentation such as management accounts and budgets; and • the degree of homogeneity of products and services within each of the segments from which revenue is derived The Chief Operating Decision Maker monitors the operating results of segments separately in order to allocate resources between segments and to assess performance. Segment performance is evaluated using EBITDA (as defined). Given that net finance costs and income tax are managed on a centralised basis, these items are not allocated between operating segments for the purposes of the information presented to the Chief Operating Decision Maker and are accordingly omitted from the detailed segmental analysis below. There are no asymmetrical allocations to reporting segments which would require disclosure. A. Operating segments disclosures—Consolidated Income Statement data Year ended 31 December Revenue EBITDA (as defined) 2021 $m 2020 $m 2019 $m 2021 $m 2020 $m 2019 $m Continuing operations Americas Materials 12,407 11,273 11,626 2,588 2,405 2,194 Europe Materials 10,581 9,141 9,509 1,410 1,055 1,208 Building Products 7,993 7,173 6,997 1,352 1,170 1,076 Total Group from continuing operations 30,981 27,587 28,132 5,350 4,630 4,478 Discontinued operations Europe Distribution - - 3,557 - - 224 Total Group 30,981 27,587 31,689 5,350 4,630 4,702 Continuing operations EBITDA (as defined) 5,350 4,630 4,478 Depreciation, amortisation and impairment (i) (1,765) (2,367) (1,685) Group operating profit 3,585 2,263 2,793 Profit/(loss) on disposals (ii) 119 9 (189) Finance costs less income (311) (389) (365) Other financial expense (106) (101) (125) Share of equity accounted investments’ profit/(loss) (iii) 55 (118) 67 Profit before tax from continuing operations 3,342 1,664 2,181 (i) Depreciation, amortisation and impairment (ii) Profit/(loss) on disposals (note 6) (iii) Share of equity accounted investments’ profit/(loss) 2021 $m 2020 $m 2019 $m 2021 $m 2020 $m 2019 $m 2021 $m 2020 $m 2019 $m Americas Materials (800) (774) (771) 126 8 (2) 17 34 43 Europe Materials (596) (1,245) (586) 17 (12) (283) 21 (148) 14 Building Products (369) (348) (328) (24) 13 96 17 (4) 10 Total Group from continuing operations (1,765) (2,367) (1,685) 119 9 (189) 55 (118) 67 * EBITDA is defined as earnings before in terest, taxes, depreciation, amortisation, asset impairment charges, profit on dispos als and the Group’s share of equity account ed investments’ profit after tax. 158 2. Segment Information - continued B. Operating segments disclosures - Consolidated Balance Sheet data As at 31 December Total assets Total liabilities 2021 $m 2020 $m 2021 $m 2020 $m Americas Materials 17,064 16,172 3,292 2,897 Europe Materials 12,367 12,730 4,100 3,971 Building Products 8,504 7,316 2,579 2,268 Total Group 37,935 36,218 9,971 9,136 Reconciliation to total assets as reported in the Consolidated Balance Sheet: Investments accounted for using the equity method 653 626 Other financial assets 12 13 Derivative financial instruments (current and non-current) 136 201 Income tax assets (current and deferred) 151 165 Cash and cash equivalents 5,783 7,721 Total assets as reported in the Consolidated Balance Sheet 44,670 44,944 Reconciliation to total liabilities as reported in the Consolidated Balance Sheet: Interest-bearing loans and borrowings (current and non-current) 10,487 12,215 Derivative financial instruments (current and non-current) 14 13 Income tax liabilities (current and deferred) 3,284 3,232 Total liabilities as reported in the Consolidated Balance Sheet 23,756 24,596 C. Operating segments disclosures - other items Additions to non-current assets Year ended 31 December Property, plant and equipment (i) (note 13, 20) Financial assets (note 15) Total Group 2021 $m 2020 $m 2019 $m 2021 $m 2020 $m 2019 $m 2021 $m 2020 $m 2019 $m Continuing operations Americas Materials 750 527 750 4 1 30 754 528 780 Europe Materials 607 384 549 - - 1 607 384 550 Building Products 417 265 353 - - - 417 265 353 Total Group from continuing operations 1,774 1,176 1,652 4 1 31 1,778 1,177 1,683 Discontinued operations Europe Distribution - - - - - 1 - - 1 Total Group 1,774 1,176 1,652 4 1 32 1,778 1,177 1,684 (i) Additions to property, plant and equipment include $10 million (2020: $14 million; 2019: $96 million) relating to leased mi neral reserves which fall outside the scope of IFRS 16. 2021 Annual Report and Form 20-F 159 D. Information about geographical areas The non-current assets (as defined in IFRS 8) attributable to the country of domicile and all foreign countries of operation, f or which revenue exceeds 10% of total external Group revenue, are set out below. As at 31 December Non-current assets 2021 2020 $m $m Republic of Ireland (country of domicile) 544 603 United Kingdom 2,595 2,594 United States 17,304 15,990 Other 9,560 10,129 Total Group 30,003 29,316 3. Assets Held for Sale and Discontinued Operations No businesses divested in 2021 or 2020 are considered to be either separate major lines of business or geographical areas of operation and therefore do not constitute discontinued operations. No businesses met the IFRS 5 Non-Current Assets Held for Sale and Discontinued Operations held for sale criteria at 31 December 2021. In February 2022, the Group reached agreement to divest of its Building Envelope business for an enterprise value of $3.8 billion. Building Envelope which forms part of our Building Products segment provides architectural glass, storefront systems, architectural glazing systems and related hardware to customers primarily in North America. The transaction which is subject to customary conditions and regulatory approvals is expected to close in the first half of 2022. A. Loss on disposal of discontinued operations In October 2019, the Group completed the divestment of its Europe Distribution business, formerly part of our Building Products segment. This was considered to be a discontinued operation as defined in IFRS 5 and was classified accordingly in 2019. The table below sets out the proceeds and related loss recognised on divestment which were included in profit after tax for the financial year 2019 from discontinued operations. 2019 $m Assets/(liabilities) disposed of at net carrying amount: - non-current assets 1,462 - cash and cash equivalents 112 - working capital and provisions 665 - current tax 2 - lease liabilities (410) - deferred tax (32) - retirement benefit obligations (47) - non-controlling interests (9) Net assets disposed 1,743 Reclassification of currency translation effects on disposal 117 Total 1,860 Proceeds from disposal (net of disposal costs) 1,855 Loss on disposal from discontinued operations (5) Net cash inflow arising on disposal Proceeds from disposal from discontinued operations 1,855 Less: cash and cash equivalents disposed (112) Total 1,743 * Non-current assets comprise property, pl ant and equipment , intangible assets and investments accounted for using the equity m et hod. 160 3. 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 year 2019 are set out as follows: 2019 $m Revenue 3,557 EBITDA (as defined) 224 Depreciation (108) Amortisation (2) Impairment (1) Operating profit 113 Loss on disposals (2) Profit before finance costs 111 Finance costs (8) Share of equity accounted investments’ profit 14 Profit before tax 117 Attributable income tax expense (26) Profit after tax for the financial year from discontinued operations 91 Profit attributable to: Equity holders of the Company 90 Non-controlling interests 1 Profit for the financial year from discontinued operations 91 Basic earnings per Ordinary Share from discontinued operations 11.3c Diluted earnings per Ordinary Share from discontinued operations 11.2c Cash flows from discontinued operations Net cash inflow from operating activities 36 Net cash inflow from investing activities 1,722 Net cash outflow from financing activities (80) Net cash inflow 1,678 4. Cost Analysis Continuing operations 2021 $m 2020 $m 2019 $m Cost of sales analysis Raw materials and goods for resale 6,942 5,757 5,840 Employment costs (note 7) 4,089 3,871 3,880 Energy conversion costs 1,540 1,268 1,464 Repairs and maintenance 1,183 1,103 1,097 Depreciation, amortisation and impairment (i) 1,427 1,621 1,370 Change in inventory (439) 63 (70) Other production expenses (primarily sub-contractor costs) 5,751 4,742 5,278 Total 20,493 18,425 18,859 Operating costs analysis Selling and distribution costs 4,849 4,454 4,547 Administrative expenses 2,054 2,445 1,933 Total 6,903 6,899 6,480 * EBITDA is defined as earnings before inte rest, taxes, depreciation, am ortisation, asset im pairment charges, profit on disposa ls and the Group’s share of equity accounted investments’ profit after tax. 2021 Annual Report and Form 20-F 161 (i) Depreciation, amortisation and impairment analysis Cost of sales Operating costs Total 2021 $m 2020 $m 2019 $m 2021 $m 2020 $m 2019 $m 2021 $m 2020 $m 2019 $m Depreciation and depletion (note 13, 20) 1,427 1,367 1,364 264 257 249 1,691 1,624 1,613 Amortisation of intangible assets (note 14) - - - 74 70 64 74 70 64 Impairment of property, plant and equipment (note 13, 20) (ii) - 254 6 - 9 2 - 263 8 Impairment of intangible assets (note 14) (ii) - - - - 410 - - 410 - Total 1,427 1,621 1,370 338 746 315 1,765 2,367 1,685 (ii) Total impairment charges for the year ended 31 December 2021 amounted to $nil million (2020: $827 million, including a cha rge of $154 million related to equity accounted investments as detailed in note 15; 2019: $8 million). 5. Auditor’s Remuneration Continuing operations In accordance with statutory requirements in Ireland, fees for professional services provided by the Group’s independent audito r in respect of each of the following categories were: Statutory auditor (Ireland) Network firms Total Deloitte EY (i) Deloitte EY (i) Deloitte EY (i) 2021 $m 2020 $m 2019 $m 2021 $m 2020 $m 2019 $m 2021 $m 2020 $m 2019 $m Audit fees (ii) (iii) 7 6 4 14 12 16 21 18 20 Other audit-related assurance fees (iii) - - - 1 - - 1 - - Tax advisory services (iii) - - - - - 1 - - 1 Total 7 6 4 15 12 17 22 18 21 (i) With effect from 2020, following a competitive tender process, Deloitte Ireland LLP (Deloitte) was appointed as auditor of the Group, replacing Ernst & Young (EY). In the table above, auditor’s remuneration for services provided during the years ended 31 December 2021 and 2020 thus relates to Deloitte and for the year ended 31 December 2019 to EY. (ii) Audit of the Group accounts includes the audit of internal control over financial reporting and parent and subsidiary stat utory audit fees, but excludes $3 million (2020: $3 million; 2019: $3 million) paid to auditors other than Deloitte (2021 and 2020) and EY (2019). (iii) Audit fees in 2019, including discontinued operations, amounted to $20 million. Other audit-related assurance fees in 201 9, including discontinued operations, amounted to $nil million and tax advisory services in 2019, including discontinued operations, amounted to $1 million. There were no other fees for services provided by the Group’s independent auditor (2020: $nil million; 2019: $nil million). 162 6. Business and Non-Current Asset Disposals Business disposals Disposal of other non-current assets Total 2021 $m 2020 $m 2019 $m 2021 $m 2020 $m 2019 $m 2021 $m 2020 $m 2019 $m Continuing operations Assets/(liabilities) disposed of at net carrying amount: - non-current assets 135 74 669 100 127 157 235 201 826 - cash and cash equivalents 31 7 50 - - - 31 7 50 - working capital and provisions 25 29 93 - - - 25 29 93 - current tax - - (1) - - - - - (1) - lease liabilities (3) (12) (53) (17) (32) (33) (20) (44) (86) - deferred tax 1 (3) (3) - - - 1 (3) (3) - retirement benefit obligations (1) (1) (2) - - - (1) (1) (2) - non-controlling interests - (6) - - - - - (6) - Net assets disposed 188 88 753 83 95 124 271 183 877 Reclassification of currency translation effects on disposal 29 13 263 - - - 29 13 263 Total 217 101 1,016 83 95 124 300 196 1,140 Proceeds from disposals (net of disposal costs) 295 77 787 124 128 164 419 205 951 Profit/(loss) on disposals from continuing operations 78 (24) (229) 41 33 40 119 9 (189) Discontinued operations (Loss)/profit on disposals from discontinued operations (note 3) - - (5) - - 3 - - (2) Total Group profit/(loss) on disposals 78 (24) (234) 41 33 43 119 9 (191) Net cash inflow arising on disposal Continuing operations Proceeds from disposals from continuing operations 295 77 787 124 128 164 419 205 951 Less: cash and cash equivalents disposed (31) (7) (50) - - - (31) (7) (50) Less: deferred proceeds arising on disposal (note 19) (i) (1) (14) (302) - - - (1) (14) (302) Net cash inflow arising on disposal from continuing operations 263 56 435 124 128 164 387 184 599 Discontinued operations Net cash inflow arising on disposal from discontinued operations - - 1,743 - - 1 - - 1,744 Total Group net cash inflow arising on disposal 263 56 2,178 124 128 165 387 184 2,343 (i) On 31 December 2019, CRH completed the sale of the Group’s 50% stake in its joint venture in India, My Home Industries Limi ted (MHIL), for deferred proceeds of $0.3 billion which will be received in several agreed tranches. 2021 Annual Report and Form 20-F 163 7. Employment Continuing operations The average number of employees is as follows: Year ended 31 December 2021 2020 2019 Americas Materials 28,272 27,412 28,576 Europe Materials 25,636 26,785 27,238 Building Products 23,538 22,902 24,437 Total Group 77,446 77,099 80,251 The average number of employees in 2019, including discontinued operations, was 86,951. Employment costs charged in the Consolidated Income Statement for continuing operations are analysed as follows: 2021 $m 2020 $m 2019 $m Wages and salaries 4,873 4,573 4,604 Social welfare costs 495 461 473 Redundancy, healthcare and other employment benefit costs 656 723 653 Share-based payment expense (note 8) 110 96 83 Total retirement benefits expense (note 28) 381 359 341 Total (i) (ii) 6,515 6,212 6,154 Total charge analysed between: Cost of sales 4,089 3,871 3,880 Operating costs 2,416 2,330 2,259 Finance costs (net) - applicable to retirement benefit obligations (note 9) 10 11 15 Total 6,515 6,212 6,154 (i) Directors’ emoluments (which are included in administrative expenses in note 4) are presented in note 32. (ii) Employment costs in 2019, including discontinued operations, are analysed as follows: Wages and salaries 4,988 Social welfare costs 544 Redundancy, healthcare and other employment benefit costs 676 Share-based payment expense (note 8) 86 Total retirement benefits expense (note 28) 369 Total 6,663 164 8. Share-based Payment Expense Continuing operations 2021 $m 2020 $m 2019 $m Performance Share Plans and Restricted Share Plan expense 108 93 79 Share option expense 2 3 4 Total share-based payment expense (i) 110 96 83 (i) The total share-based payment expense in 2019, including discontinued operations, amounted to $86 million. Share-based payment expense relates primarily to awards granted under the 2014 Performance Share Plan and the Group’s Savings-r elated Share Option Schemes. The expense, which in 2019 also includes charges in relation to the 2013 Restricted Share Plan, is reflected in operating costs in the Consolidated Income Statement. 2014 Performance Share Plan Details of the awards made under the 2014 Performance Share Plan are summarised below. An expense of $108 million was recognise d in 2021 (2020: $93 million; 2019: $78 million). Details of awards granted under the 2014 Performance Share Plan Number of shares Share price at date of award Period to earliest release date Initial award (i) Net outstanding at 31 December 2021 Granted in 2021 € 39.79 3 years 3,261,885 3,154,225 Granted in 2020 € 31.50 3 years 3,428,021 3,232,561 Granted in 2019 € 29.44 3 years 3,688,027 3,352,346 (i) Numbers represent the initial awards including those granted to employees of Europe Distribution in 2019. The Remuneration Committee has determined that dividend equivalents will accrue on awards under the 2014 Performance Share Plan. Subject to satisfaction of the applicable performance criteria, such dividend equivalents will be released to participants in the form of additional shares on vesting. 25% of each award made is subject to TSR performance measured against a tailored peer group; 25% is subject to a RONA metric; with the remaining 50% subject to a cumulative cashflow metric. Performance for the awards will be assessed over a three-year period. The fair values assigned to the portion of awards which are subject to TSR performance against peers was € 22.23 (2020: € 18.52; 2019: € 18.59). The fair value of these awards was calculated using a TSR pricing model taking account of peer group TSR, volatilities and correlations together with the following assumptions: 2021 2020 2019 Risk-free interest rate (%) (0.56) (0.61) (0.37) Expected volatility (%) 35.1 22.1 23.2 The expected volatility was determined using a historical sample of daily CRH share prices. The fair value of (i) the portion of awards subject to cash flow performance and (ii) the portion of awards subject to a RONA m etric was calculated as the closing CRH share price at the date the award was granted. 2021 Annual Report and Form 20-F 165 Share Option Schemes The 2010 Share Option Scheme was replaced in 2014 by the 2014 Performance Share Plan, and accordingly no options have been gran ted since 2013. Details of movement and options outstanding under Share Option Schemes (excluding Savings-related Share Option Schemes) Weighted average exercise price Number of options 2021 Weighted average exercise price Number of options 2020 Weighted average exercise price Number of options 2019 Outstanding at beginning of year € 16.19 197,253 € 16.19 278,349 € 16.48 800,770 Exercised (i) € 16.19 (51,522) € 16.19 (77,748) € 16.65 (520,115) Lapsed - - € 16.19 (3,348) € 16.19 (2,306) Outstanding at end of year (ii) € 16.19 145,731 € 16.19 197,253 € 16.19 278,349 Exercisable at end of year € 16.19 145,731 € 16.19 197,253 € 16.19 278,349 (i) The weighted average share price at the date of exercise of these options was € 42.10 (2020: € 31.70; 2019: € 29.10). (ii) All options granted have a life of ten years. All outstanding options are denominated in euro and have an exercise price o f € 16.19 (2020: € 16.19; 2019: € 16.19). 2021 2020 2019 Weighted average remaining contractual life for the share options outstanding at 31 December (years) 1.30 2.30 3.30 2010 and 2021 Savings-related Share Option Schemes In April 2021, shareholders approved the adoption of the 2021 savings-related share option schemes, which replaced the schemes approved by shareholders in May 2010. Under both schemes, participants may save up to € 500/Stg£500 per month from their net salaries for a fixed term of three or five years and at the end of the savings period they have the option to buy CRH shares at a discount of up to 15% of the market price on the date of invitation of each savings contract. Details of options granted under the Savings-related Share Option Schemes Weighted average exercise price Number of options 2021 Weighted average exercise price Number of options 2020 Weighted average exercise price Number of options 2019 Outstanding at beginning of year € 23.83/Stg£19.69 1,173,507 € 23.67/Stg£20.17 1,508,862 € 22.15/Stg£18.74 1,686,176 Exercised (i) € 22.77/Stg£18.69 (470,001) € 23.21/Stg£22.37 (178,773) € 19.09/Stg£16.20 (627,034) Lapsed € 24.75/Stg£21.49 (73,411) € 23.25/Stg£21.54 (156,582) € 23.49/Stg£20.85 (207,070) Granted (ii) Stg£31.04 455,068 - - € 24.24/Stg£20.11 656,790 Outstanding at end of year € 24.28/Stg£25.42 1,085,163 € 23.83/Stg£19.69 1,173,507 € 23.67/Stg£20.17 1,508,862 Exercisable at end of year € 23.27/Stg£20.56 14,197 € 24.66/Stg£24.51 16,528 € 18.88/Stg£15.89 13,065 (i) The weighted average share price at the date of exercise of these options was € 42.53 (2020: € 31.70; 2019: € 28.52). (ii) Pursuant to the 2010 and 2021 Savings-related Share Option Schemes operated by the Group, employees were granted options o ver 455,068 of CRH plc’s Ordinary Shares in October 2021 (2020: nil; 2019: 556,493 share options in April 2019 and 100,297 share options in May 2019). T his figure comprises options over 346,237 (2020: nil; 2019: 518,944) shares and 108,831 (2020: nil; 2019: 137,846) shares which are normally exercisable wit hin a period of six months after the third or the fifth anniversary of the contract, whichever is applicable. The exercise price at which the options are grante d under the scheme represents a discount of 15% to the market price on the date of invitation of each savings contract. 166 8. Share-based Payment Expense - continued Continuing operations 2021 2020 2019 Weighted average remaining contractual life for the share options outstanding at 31 December (years) 1.81 1.14 1.87 euro-denominated options outstanding at end of year (number) 132,769 214,826 290,627 Range of exercise prices ( € ) 20.83-27.86 20.83-27.86 17.67-27.86 Pound Sterling-denominated options outstanding at end of year (number) 952,394 958,681 1,218,235 Range of exercise prices (Stg£) 16.16-31.04 16.16-24.51 14.94-24.51 The weighted fair values assigned to options issued under the Savings-related Share Option Schemes, which were computed in acco rdance with the trinomial valuation methodology, were as follows: 3-year 5-year Granted in 2021 (October) € 6.78 € 7.05 Granted in 2019 (April) € 7.55 € 7.98 Granted in 2019 (May) € 6.67 € 7.19 The fair value of these options were determined using the following assumptions: 2021 2019 3-year 5-year 3-year 5-year October April May April May Weighted average exercise price ( € ) 36.83 36.83 23.30 24.24 23.30 24.24 Risk free interest rate (%) (0.61) (0.43) (0.56) (0.58) (0.40) (0.41) Expected dividend payments over the expected life ( € ) 3.25 5.65 2.34 2.34 4.06 4.06 Expected volatility (%) 23.5 21.2 19.6 20.0 21.1 21.3 Expected life in years 3 5 3 3 5 5 The expected volatility was determined using a historical sample of 37 month-end CRH share prices in respect of the three-year savings-related share options and 61 month-end share prices in respect of the five-year savings-related share options. The expected lives of the options are based o n historical data and are therefore not necessarily indicative of exercise patterns that may materialise. Other than the assumptions listed above, no other features of options grants were factored into the determination of fair value . The terms of the options issued under the Savings-related Share Option Schemes do not contain any market conditions within the meaning of IFRS 2 Share-based Payment. 2021 Annual Report and Form 20-F 167 9. Finance Costs and Finance Income Continuing operations 2021 $m 2020 $m 2019 $m Finance costs Interest payable on borrowings 344 381 374 Net (income)/cost on interest rate and currency swaps (31) 2 15 Mark-to-market of derivatives and related fixed rate debt: - interest rate swaps (i) 85 (97) (72) - currency forwards and currency swaps 1 2 2 - fixed rate debt (i) (90) 80 68 Net (gain)/loss on non-derivative financial instruments (4) 21 - Interest payable on cash and cash equivalents and other 6 - - Net finance cost on gross debt including related derivatives 311 389 387 Finance income Interest receivable on loans to joint ventures and associates - - (5) Interest receivable on cash and cash equivalents and other - - (17) Finance income - - (22) Finance costs less income 311 389 365 Other financial expense Unwinding of discount element of lease liabilities (note 20) 64 68 69 Unwinding of discount element of provisions for liabilities (note 26) 18 21 25 Unwinding of discount applicable to deferred and contingent acquisition consideration (note 18) 20 21 16 Unwinding of discount applicable to deferred divestment proceeds (12) (24) - Unwinding of discount applicable to leased mineral reserves 6 4 - Pension-related finance cost (net) (note 28) 10 11 15 Net other financial expense 106 101 125 Total net finance costs (ii) 417 490 490 (i) The Group uses interest rate swaps to convert fixed rate debt to floating rate. Fixed rate debt, which has been converted t o floating rate through the use of interest rate swaps, is stated in the Consolidated Balance Sheet at adjusted value to reflect movements in underlying fixed rat es. The movement on this adjustment, together with the offsetting movement in the fair value of the related interest rate swaps, is included in finance costs in each reporting period. (ii) Net finance costs in 2019, including discontinued operations, amounted to $498 million. 168 10. Income Tax Expense Recognised within the Consolidated Income Statement Continuing operations 2021 $m 2020 $m 2019 $m (a) Current tax Republic of Ireland 15 23 20 Overseas 603 571 385 Total current tax expense 618 594 405 (b) Deferred tax Origination and reversal of temporary differences: Retirement benefit obligations 2 (9) (1) Share-based payment expense (6) (3) (6) Derivative financial instruments 2 - 2 Other items 105 (83) 134 Total deferred tax expense/(income) 103 (95) 129 Income tax reported in the Consolidated Income Statement 721 499 534 Recognised outside the Consolidated Income Statement (a) Within the Consolidated Statement of Comprehensive Income: Deferred tax - retirement benefit obligations (36) 11 (4) Deferred tax - cash flow hedges (8) - (4) (44) 11 (8) (b) Within the Consolidated Statement of Changes in Equity: Current tax Current tax - share option exercises 14 2 5 Deferred tax Deferred tax - share-based payment expense 10 (1) 6 24 1 11 Income tax recognised outside the Consolidated Income Statement (20) 12 3 2021 Annual Report and Form 20-F 169 2021 2020 2019 Reconciliation of applicable tax rate to effective tax rate Continuing operations Profit before tax ($m) 3,342 1,664 2,181 Tax charge expressed as a percentage of profit before tax (effective tax rate): - current tax expense only 18.5% 35.7% 18.6% - total income tax expense (current and deferred) 21.6% 30.0% 24.5% The following table reconciles the applicable Republic of Ireland statutory tax rate to the effective tax rate (current and def erred) of the Group: % of profit before tax Irish corporation tax rate 12.5 12.5 12.5 Higher tax rates on overseas earnings 9.8 10.6 12.8 Other items - arising from 2020 impairment - 8.4 - - other items (primarily comprising items not chargeable to tax/expenses not deductible for tax) (0.7) (1.5) (0.8) Total effective tax rate 21.6 30.0 24.5 Other disclosures Effective tax rate The 2021 effective tax rate is 21.6% (2020: 30.0%; 2019: 24.5%). The tax charge associated with discontinued operations in 2019 is recognised separately in “Profit after tax for the financial year from discontinued operations”. See note 3 for further details. Changes in tax rates The total tax charge in future periods will be affected by any changes to the tax rates in force in the countries in which the Group operates. Proposed dividends There are no income tax consequences for the Company in respect of dividends proposed prior to issuance of the Consolidated Financial Statements and for which a liability has not been recognised. 170 11. Dividends The dividends paid and proposed in respect of each class of share capital are as follows: 2021 $m 2020 $m 2019 $m Dividends to shareholders (i) Equity Final - paid 93.00c per Ordinary Share (2020: 70.00c; 2019: 59.20c) (ii) 730 537 477 Interim - paid 23.00c per Ordinary Share (2020: 22.00c; 2019: 22.00c) (ii) 179 173 175 Total 909 710 652 Reconciliation to Consolidated Statement of Cash Flows Dividends to shareholders 909 710 652 Translation adjustment (iii) (3) (3) - Dividends paid to equity holders of the Company 906 707 652 Dividends paid by subsidiaries to non-controlling interests 32 15 11 Total dividends paid 938 722 663 Dividends proposed (memorandum disclosure) Equity Final 2021 - proposed 98.00c per Ordinary Share (2020: 93.00c; 2019: 70.00c) (ii) 751 730 550 (i) In 2021 the 5% Cumulative Preference Shares paid a dividend of € 3,175 (2020: € 3,175; 2019: € 3,175) and the 7% ‘A’ Cumulative Preference Shares paid a dividend of € 77,521 (2020: € 77,521; 2019: € 77,521). (ii) Interim and final dividends per share declared previously in euro have been translated to US Dollar using the dividend rec ord date exchange rate. (iii) Translation adjustment arising from US Dollar declared dividends paid in non-US Dollar currencies. 2021 Annual Report and Form 20-F 171 12. Earnings per Ordinary Share The computation of basic and diluted earnings per Ordinary Share is set out below: 2021 $m 2020 $m 2019 $m Numerator computations Group profit for the financial year 2,621 1,165 1,738 Profit attributable to non-controlling interests (56) (43) (21) Profit attributable to equity holders of the Company 2,565 1,122 1,717 Preference dividends - - - Profit attributable to ordinary equity holders of the Company - numerator for basic/diluted earnings per Ordinary Share 2,565 1,122 1,717 Profit after tax for the financial year from discontinued operations - attributable to equity holders of the Company - - 90 Profit attributable to ordinary equity holders of the Company - numerator for basic/diluted earnings per Ordinary Share from continuing operations 2,565 1,122 1,627 Denominator computations Weighted average number of Ordinary Shares (millions) outstanding for the year (i) 780.2 785.1 801.3 Effect of dilutive potential Ordinary Shares (employee share awards) (millions) (i) (ii) 6.6 6.0 6.4 Denominator for diluted earnings per Ordinary Share 786.8 791.1 807.7 Basic earnings per Ordinary Share 328.8c 142.9c 214.3c Diluted earnings per Ordinary Share 326.0c 141.8c 212.6c Basic earnings per Ordinary Share from continuing operations 328.8c 142.9c 203.0c Diluted earnings per Ordinary Share from continuing operations 326.0c 141.8c 201.4c (i) The weighted average number of Ordinary Shares included in the computation of basic and diluted earnings per Ordinary Share has been adjusted to exclude shares held by the Employee Benefit Trust and Ordinary Shares repurchased and held by the Company (CRH plc) as Treasury Shares given that these shares do not rank for dividend. The number of Ordinary Shares so held at the balance sheet date is detailed in note 29. (ii) Ordinary shares, that would only be issued contingent on certain conditions (totalling 3,630,633 at 31 December 2021, 4,05 3,377 at 31 December 2020 and 3,618,278 at 31 December 2019) are excluded from the computation of diluted earnings per Ordinary Share where the conditions go verning exercisability have not been satisfied as at the end of the reporting period or they are antidilutive for the periods presented. 172 13. Property, Plant and Equipment Mineral- bearing land $m Land and buildings $m Plant and machinery $m Assets in course of construction $m Total $m At 31 December 2021 Owned Cost/deemed cost 4,890 5,865 19,754 977 31,486 Accumulated depreciation (and impairment charges) (1,244) (1,904) (10,360) (40) (13,548) Net carrying amount 3,646 3,961 9,394 937 17,938 At 1 January 2021, net carrying amount 3,698 4,081 9,416 572 17,767 Translation adjustment (59) (111) (146) (22) (338) Reclassifications 28 20 449 (501) (4) Transfer from leased assets (note 20) - - 10 - 10 Additions at cost 13 94 564 883 1,554 Additions to leased mineral reserves (note 19) (i) 10 - - - 10 Arising on acquisition (note 30) 81 86 346 8 521 Disposals at net carrying amount (11) (63) (92) (3) (169) Depreciation charge for year (114) (146) (1,153) - (1,413) At 31 December 2021, net carrying amount 3,646 3,961 9,394 937 17,938 Land and buildings $m Plant and machinery $m Other $m Leased right-of-use assets (ii) At 31 December 2021, net carrying amount (note 20) 1,195 313 56 1,564 Total property, plant and equipment 19,502 The equivalent disclosure for the prior year is as follows: Mineral- bearing land $m Land and buildings $m Plant and machinery $m Assets in course of construction $m Total $m At 31 December 2020 Owned Cost/deemed cost 4,874 5,928 19,400 612 30,814 Accumulated depreciation (and impairment charges) (1,176) (1,847) (9,984) (40) (13,047) Net carrying amount 3,698 4,081 9,416 572 17,767 At 1 January 2020, net carrying amount 3,687 4,027 9,490 718 17,922 Translation adjustment 82 109 232 13 436 Reclassifications 52 76 440 (572) (4) Transfer from leased assets (note 20) - 5 2 - 7 Additions at cost 28 42 512 414 996 Additions to leased mineral reserves (note 19) (i) 14 - - - 14 Arising on acquisition (note 30) 7 42 72 1 122 Disposals at net carrying amount (8) (57) (60) (2) (127) Depreciation charge for year (108) (155) (1,082) - (1,345) Impairment charge for year (iii) (56) (8) (190) - (254) At 31 December 2020, net carrying amount 3,698 4,081 9,416 572 17,767 Land and buildings $m Plant and machinery $m Other $m Leased right-of-use assets (ii) At 31 December 2020, net carrying amount (note 20) 1,151 342 57 1,550 Total property, plant and equipment 19,317 2021 Annual Report and Form 20-F 173 Mineral- bearing land $m Land and buildings $m Plant and machinery $m Assets in course of construction $m Total $m Owned At 1 January 2020 Cost/deemed cost 4,670 5,653 18,292 757 29,372 Accumulated depreciation (and impairment charges) (983) (1,626) (8,802) (39) (11,450) Net carrying amount 3,687 4,027 9,490 718 17,922 (i) Additions relating to leased mineral reserves which fall outside the scope of IFRS 16. (ii) See note 20 for more detailed information on right-of-use assets and lease liabilities of the Group. (iii) No impairment charge was recognised in 2021 (2020: $263 million including $9 million related to leased right-of-use asset s (note 20); 2019: $9 million). The charge in 2020 principally relates to the write-down of specific assets relating to our UK business within our Europe Materials segment following a strategic review of its operational footprint, together with impairments booked in respect of two CGUs in the same segment. An extended p eriod of lower than anticipated demand and reduced price growth resulting from the combined economic impacts of Brexit and COVID-19 were the primar y drivers of the impairment charge. The recoverable amount of these assets is their value-in-use of $185 million and is calculated using real pr e-tax discount rates ranging from 7.3% to 7.7%. Future purchase commitments for property, plant and equipment 2021 $m 2020 $m Contracted for but not provided in the financial statements 628 423 Authorised by the Directors but not contracted for 417 307 174 14. Intangible Assets Other intangible assets Goodwill $m Marketing- related $m Customer- related (i) $m Contract- based $m Total $m At 31 December 2021 Cost/deemed cost 10,251 202 705 77 11,235 Accumulated amortisation (and impairment charges) (800) (98) (423) (66) (1,387) Net carrying amount 9,451 104 282 11 9,848 At 1 January 2021, net carrying amount 9,032 87 240 14 9,373 Translation adjustment (221) (1) - 1 (221) Arising on acquisition (note 30) 679 32 99 - 810 Disposals (39) - (1) - (40) Amortisation charge for year (ii) - (14) (56) (4) (74) At 31 December 2021, net carrying amount 9,451 104 282 11 9,848 The equivalent disclosure for the prior year is as follows: At 31 December 2020 Cost/deemed cost 9,790 172 601 75 10,638 Accumulated amortisation (and impairment charges) (758) (85) (361) (61) (1,265) Net carrying amount 9,032 87 240 14 9,373 At 1 January 2020, net carrying amount 9,093 95 265 22 9,475 Translation adjustment 198 1 2 - 201 Reclassifications - - - (5) (5) Arising on acquisition (note 30) 157 2 29 - 188 Disposals (6) - - - (6) Amortisation charge for year (ii) - (11) (56) (3) (70) Impairment charge for year (iii) (410) - - - (410) At 31 December 2020, net carrying amount 9,032 87 240 14 9,373 At 1 January 2020 Cost/deemed cost 9,413 167 575 87 10,242 Accumulated amortisation (and impairment charges) (320) (72) (310) (65) (767) Net carrying amount 9,093 95 265 22 9,475 (i) The customer-related intangible assets relate predominantly to non-contractual customer relationships. (ii) The amortisation charge primarily relates to customer-related intangible assets. (iii) Further details on note (iii) are set out overleaf. 2021 Annual Report and Form 20-F 175 Annual goodwill testing Cash-generating units Goodwill acquired through business combination activity has been allocated to CGUs that are expected to benefit from synergies in that combination. The CGUs represent the lowest level within the Group at which the associated goodwill is monitored for internal management purposes, and are not larger than the operating segments determined in accordance with IFRS 8. A total of 22 (2020: 22) CGUs have been identified and these are analysed between the three business segments below. All businesses within the various CGUs exhibit similar and/or consistent profit margin and asset intensity characteristics. Assets, liabilities, deferred tax and goodwill have been assigned to the CGUs on a reasonable and consistent basis. Number of cash-generating units Goodwill 2021 2020 2021 $m 2020 $m Americas Materials 5 5 4,292 4,057 Europe Materials 16 16 2,195 2,402 Building Products 1 1 2,964 2,573 Total Group 22 22 9,451 9,032 Impairment testing methodology and results Goodwill is subject to impairment testing on an annual basis. The recoverable amount of 22 CGUs is determined based on a value-in-use computation, using Level 3 inputs in accordance with the fair value hierarchy. The cash flow forecasts are primarily based on a five-year strategic plan document formally approved by the Board of Directors and specifically exclude the impact of future development activity. To align with the Group’ s acquisition modelling methodology, these cash flows are projected forward for an additional five years to determine the basis for an annuity-based terminal value. As in prior years, the terminal value is based on a 20-year annuity, with the exception o f certain long- lived cement assets, where an assumption of a 30-year annuity has been used. Projected cash flows beyond the initial evaluation period have been extrapolated using real growth rates ranging from 1.8% in the Americas, 0.8% to 2.1% in Europe and 3.1% in Asia. Such real growth rates do not exceed the long-term averag e growth rates for the countries in which each CGU operates. The value-in-use represents the present value of the future cash flows, includ ing the terminal value, discounted at a rate appropriate to each CGU. The real pre-tax discount rates used range from 6.5% to 8.6% (2020: 6.5% to 8.6%). These rates are in line with the Group’s estimated weighted average cost of capital, arrived at using the Capital Asset Pricing Model. Net cash flows incorporate estimated capital expenditure required to achieve the Group’s 2025 carbon emissions target of 520kg of CO 2 per tonne of cementitious material. The 2021 annual goodwill impairment testing process has resulted in no intangible asset impairments. The 2020 annual impairment testing process resulted in an impairment of $410 million being recorded in respect of our UK CGU in Europe Materials due to a sustained period of economic disruption following the Brexit referendum in 2016, the impact of the COVID-19 pandemic and the political uncertainty that pr esented in the second half of 2020 prior to the end of the Brexit transition period between the UK and the European Union. The assumptions underlying the 2020 value-in- use model projections resulted in a pr esent value (using a real pre-tax discount rate of 7.6%) of $1,782 million and a related goodwill impairment being recorded of $410 million. Key sources of estimation uncertainty The cash flows have been arrived at taking into account the Group’s strong financial position, its established history of earnings and cash flow generation and the nature of the building materials industry, where product obsolescence is very low. However, expected future cash flows are inherently uncertain and are therefore liable to material change over time. The key assumptions employed in arriving at the estimates of future cash flows factored into impairment testing are subjective and include projected EBITDA (as defined) margins, long-term growth and discount rates used and the duration of the discounted cash flow model. Significant under-performance in any of CRH’s major CGUs may give rise to a material write- down of goodwill which would have a substantial impact on the Group’s income and equity, however given the excess headroom on the models the likelihood of this happening is not considered reasonably possible. * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on dispos als and the Group’s share of equity accounted investments’ profit after tax. 176 14. Intangible Assets - continued Significant goodwill amounts The goodwill allocated to the Americas Cement, AMAT South (Americas Materials segment) and the Building Products (Building Products segment) CGUs account for between 10% and 31% of the total carrying amount shown on page 174. The goodwill allocated to each of the remaining CGUs is less than 10% of the total carrying value in all other cases. The additional disclosures required for the three CGUs with significant goodwill are as follows: Americas Cement AMAT South Building Products 2021 2020 2021 2020 2021 2020 Goodwill allocated to the cash-generating unit at balance sheet date $2,157m $2,155m $944m $998m $2,964m $2,573m Discount rate applied to the cash flow projections (real pre-tax) 7.5% 7.7% 8.3% 8.0% 8.3% 8.0% Average EBITDA (as defined) margin over the initial 5-year period 53.8% 48.5% 17.9% 17.8% 19.1% 18.3% Value-in-use (present value of future cash flows) $10,749m $8,103m $5,041m $5,140m $14,831m $12,977m Excess of value-in-use over carrying amount $5,953m $3,238m $2,749m $2,492m $9,191m $7,653m Long-term growth rates 1.8% 1.6% 1.8% 1.6% 1.8% 1.6% The key assumptions and methodology used in respect of these three CGUs are consistent with those described above. The values applied to each of the key estimates and assumptions are specific to the individual CGUs and were derived from a combination of internal and external factors based on historical experience and took into account the cash flows specifically associated with these businesses. The cash flows and annuity-based terminal value were projected in line with the methodology disclosed above. The Americas Cement, AMAT South and Building Products CGUs are not included in the ‘Sensitivity analysis’ section below. Given the magnitude of the excess of value-in-use over carrying amount, and our belief that the key assumptions are reasonable, management believes that it is not reasonably possible that there would be a change in the key assumptions such that the carrying amount would exceed the value-in-use. Consequently no further disclosures relating to sensitivity of the value-in-use computations for the Americas Cement, AMAT South or Building Products CGUs are considered to be warranted. Sensitivity analysis A qualitative and quantitative assessment has been performed and results in additional sensitivity disclosures for one of the total 22 CGUs. The key assumptions, methodology used and values applied to each of the key assumptions for this CGU are in line with those outlined above (a 30-year annuity period has been used). The CGU had goodwill of $565 million at the date of testing. The table below identifies the amounts by which each of the following assumptions may either decline or increase to arrive at a zero excess of the present value of future cash flows over the book value of net assets in the CGU selected for sensitivity analysis disclosures: One cash-generating unit Reduction in EBITDA (as defined) margin 5.3 percentage points Reduction in long-term growth rate 3.2 percentage points Increase in pre-tax discount rate 2.7 percentage points The average EBITDA (as defined) margin for this CGU over the initial five-year period was 21.5%. The value-in-use (being the present value of the future net cash flows) was $2,172 million and the carrying amount was $1,538 million, resulting in an excess of value-in-use over carrying amount of $634 million. * EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on dispos als and the Group’s share of equity accounted investments’ profit after tax. 2021 Annual Report and Form 20-F 177 15. Financial Assets Investments accounted for using the equity method (i.e. joint ventures and associates) Share of net assets $m Loans $m Total $m Other $m At 1 January 2021 609 17 626 13 Translation adjustment 10 (1) 9 - Investments and advances - 4 4 - Disposals and repayments - (7) (7) (1) Return of share capital (2) - (2) - Share of profit after tax (i) 55 - 55 - Dividends received (32) - (32) - At 31 December 2021 640 13 653 12 The equivalent disclosure for the prior year is as follows: At 1 January 2020 747 28 775 13 Translation adjustment 31 1 32 - Investments and advances - 1 1 - Disposals and repayments (10) (13) (23) - Return of share capital (6) - (6) - Share of loss after tax (i) (ii) (118) - (118) - Dividends received (35) - (35) - At 31 December 2020 609 17 626 13 (i) The Group’s share of joint ventures and associates profit/(loss) after tax is equity accounted and is presented as a single line item in the Consolidated Income Statement. It is analysed as follows; profit after tax from joint ventures: $11 million (2020: $22 million; 2019: $46 million), profit after tax from associates: $44 million (2020: loss after tax of $140 million; 2019: profit after tax of $21 million). (ii) In 2020 an impairment charge of $154 million was recorded within the loss after tax from associates which principally rela tes to the write-down of our equity accounted investment in China which forms part of Europe Materials. Challenging market conditions in Northeast China affecting pricing, combined with an increase in the discount rate and the economic impact of COVID-19, were the primary drivers of the impairment charge. In 2020, the recoverable amount of this financial asset was its value-in-use calculated using a real pre-tax discount rate of 9.2%. A listing of the principal equity accounted investments is contained on page 264. 16. Inventories 2021 $m 2020 $m Raw materials 1,737 1,403 Work-in-progress (i) 136 144 Finished goods 1,738 1,570 Total inventories at the lower of cost and net realisable value 3,611 3,117 (i) Work-in-progress includes $9 million (2020: $9 million) in respect of the cumulative costs incurred, net of amounts transfe rred to cost of sales under percentage-of-completion accounting, for construction contracts in progress at the balance sheet date. An analysis of the Group’s cost of sales expense is provided in note 4 to the financial statements. Write-downs of inventories recognised as an expense within cost of sales amounted to $2 million (2020: $9 million; 2019: $9 mil lion). 178 17. Trade and Other Receivables 2021 $m 2020 $m Current Trade receivables 3,586 3,209 Construction contract assets (i) 565 499 Total trade receivables and construction contract assets, gross 4,151 3,708 Loss allowance (131) (140) Total trade receivables and construction contract assets, net 4,020 3,568 Amounts receivable from equity accounted investments 31 32 Prepayments 251 221 Other receivables 267 265 Total 4,569 4,086 Non-current Other receivables 239 325 (i) Includes unbilled revenue and retentions held by customers in respect of construction contracts at the balance sheet date a mounting to $361 million and $204 million respectively (2020: $297 million and $202 million respectively). The movements in these balances during the year w as as follows: Unbilled revenue Retentions 2021 $m 2020 $m 2021 $m 2020 $m At 1 January 297 278 202 206 Translation adjustment (4) 7 (1) 3 Additional contract balances recognised 318 238 130 130 Invoiced in the period (239) (226) - - Received from customers - - (125) (137) Written off during the year (11) - - - Disposals - - (2) - At 31 December 361 297 204 202 Trade receivables, construction contract assets and deferred divestment consideration are measured at amortised cost (less any expected credit loss allowance) as the Group’s business model is to “hold to collect” contractual cash flows, and the cash flows arising from trade and other rece ivables are solely payments of principal and interest. The carrying amount of trade receivables, construction contract assets and deferred divestment consideration clos ely approximate their fair value. Valuation and qualifying accounts (expected credit loss allowance) The movements in the expected credit loss allowance for receivables during the financial year were as follows: 2021 $m 2020 $m 2019 $m At 1 January 140 133 153 Translation adjustment (5) 5 (1) Disposed of during year (1) (4) (34) Written off during year (14) (23) (29) Arising on acquisition (note 30) 1 - 1 Net remeasurement of expected credit loss allowance 10 29 43 At 31 December 131 140 133 2021 Annual Report and Form 20-F 179 Given the common profile of CRH’s customers, how customer credit risk is managed at appropriate Group locations, and the breadt h and scale of its international operations, a disclosure of concentrations of credit risk by segment best enables users of financial statements to assess CRH’s credit risk exposure. The following table sets out the gross carrying value of trade receivables and construction contract assets and expected credit loss allowanc e by segment: Trade receivables and construction contract assets, gross Expected credit loss allowance 2021 $m 2020 $m 2019 $m 2021 $m 2020 $m 2019 $m Americas Materials 1,735 1,475 1,520 27 34 31 Europe Materials 1,427 1,403 1,379 79 83 78 Building Products (i) 989 830 810 25 23 24 Total Group 4,151 3,708 3,709 131 140 133 (i) Analysis of Building Products segment by geographic location: Americas 821 676 662 19 17 18 Europe 168 154 148 6 6 6 Total 989 830 810 25 23 24 Customer credit risk is managed according to established policies, procedures and controls. Customer credit quality is assessed in line with strict credit rating criteria and credit limits are established where appropriate. Outstanding customer balances are regularly monitored for evidence of customer financial difficulties including payment default, breach of contract etc. Significant balances are reviewed individually while smaller balances are grouped and assessed collectively. Receivables balances are in general unsecured and non-interest-bearing. Customer credit risk arising in the context of the Group’s receivables is not significant and the total expected credit loss allowance for impairment of trade receivables and construction contract assets amounts to 3.2% of the Group’s gross trade receivables and construction contract assets (2020: 3.8%). The Group considers the ageing of past due receivables a key factor in assessing credit risk. The trade receivables and construction contract assets balances disclosed above comprise a large number of customers spread across the Group’s activities and geographies with balances classified as “not past due” representing 68% of the total gross trade receivables and construction contract assets balance at the balance sheet date (2020: 66%). There have been no significant changes to the Group’s credit risk parameters or to the composition of the Group’s trade receivables and construction contract assets portfolio during the financial year. The Group applies the simplified approach to providing for expected credit losses (ECL) permitted by IFRS 9 which requires expected lifetime losses to be recognised from initial recognition of the receivables. Receivables such as those which relate to bonded government contracts and receivables which fall under credit insurance are considered lower risk and would not attract a material ECL. Given the positive economic outlook (e.g. forecast Gross Domestic Product) for the next 12 months in the majority of the economies in which we operate we consider that our ECL adequately represents the risk of default on our receivable balances. Trade receivables are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the company. Where recoveries are made, these are recognised in the Consolidated Income Statement. Aged analysis The aged analysis of net trade receivables and construction contract assets at the balance sheet date was as follows: Americas Materials Europe Materials Building Products Total Americas Materials Europe Materials Building Products Total 2021 $m 2021 $m 2021 $m 2021 $m 2020 $m 2020 $m 2020 $m 2020 $m Not past due 1,139 1,050 626 2,815 956 958 523 2,437 Past due: - less than 60 days 469 223 227 919 396 310 198 904 - 60 days or greater but less than 120 days 74 44 74 192 65 32 59 156 - 120 days or greater 26 31 37 94 24 20 27 71 Total trade receivables, net 1,708 1,348 964 4,020 1,441 1,320 807 3,568 Trade receivables and construction contract assets are in general receivable within 90 days of the balance sheet date. 180 18. Trade and Other Payables 2021 $m 2020 $m Current Trade payables 2,727 2,164 Construction contract-related payables (i) 336 318 Deferred and contingent acquisition consideration (ii) 33 34 Accruals 2,184 2,077 Other payables 410 196 Amounts payable to equity accounted investments 2 3 Total 5,692 4,792 Non-current Other payables 389 381 Deferred and contingent acquisition consideration (ii) 328 330 Total 717 711 (i) Construction contract-related payables include billings in excess of revenue, together with advances received from customers in respect of work to be performed under construction contracts and foreseeable losses thereon. $288 million was recognised in the Consolidated Income Statement during 2021 which was included in the contract-related payables balance at 31 December 2020. The movements in these balances during the year was as follows: Advances received Billings in excess of revenue 2021 $m 2020 $m 2021 $m 2020 $m At 1 January 31 12 283 239 Translation adjustment (3) 2 (5) 6 Additional contract balances recognised 58 29 255 254 Opening balances recognised as revenue (30) (12) (258) (216) Disposals - - (1) - At 31 December 56 31 274 283 The carrying amounts of trade payables, construction contract-related payables and other payables approximate their fair value largely due to the short-term maturities and nature of these instruments. (ii) The fair value of total contingent consideration is $317 million (2020: $301 million) (Level 3 in the fair value hierarchy ), and deferred consideration is $44 million (2020: $63 million). On an undiscounted basis, the corresponding future payments relating to contingent consideration, for which the Group may be liable, ranges from $296 million to $449 million. This is based on a range of estimated potential outcomes of the expected payment amounts primarily dependent on underlying performance metrics as set out in the relevant agreements. The fair value of contingent consideration is arrived at through discounting the expected payment to present value. Based on a reasonable possible change in assumptions, the fair value ranges from $249 million to $380 million on a discounted basis. The movement in deferred and contingent consideration during the financial year was as follows: 2021 $m 2020 $m At 1 January 364 376 Translation adjustment (1) 1 Arising on acquisitions and investments during year (note 30) 1 7 Changes in estimate 10 13 Paid during year (33) (54) Discount unwinding 20 21 At 31 December 361 364 2021 Annual Report and Form 20-F 181 19. Movement in Working Capital and Provisions for Liabilities Working Capital Inventories $m Trade and other receivables $m Trade and other payables $m Provisions for liabilities $m Total $m At 1 January 2021 3,117 4,411 (5,503) (1,442) 583 Translation adjustment (84) (102) 147 37 (2) Arising on acquisition (note 30) 157 191 (143) (1) 204 Disposals (22) (20) 11 6 (25) Deferred and contingent acquisition consideration: - arising on acquisitions during year (note 30) - - (1) - (1) - paid during year - - 33 - 33 Deferred divestment consideration: - arising on disposals during year - 1 - - 1 - received during year - (120) - - (120) Shares to be acquired by CRH plc (Treasury Shares) (note 29) - - (281) - (281) Interest accruals and discount unwinding - 11 (7) (18) (14) Reclassification 4 - (6) - (2) Additions to leased mineral reserves - - (10) - (10) Increase/(decrease) in working capital and provisions for liabilities 439 436 (649) 2 228 At 31 December 2021 3,611 4,808 (6,409) (1,416) 594 The equivalent disclosure for the prior years is as follows: At 1 January 2020 3,080 4,587 (5,461) (1,302) 904 Translation adjustment 71 107 (150) (43) (15) Arising on acquisition (note 30) 23 47 (21) - 49 Disposals (14) (37) 17 5 (29) Deferred and contingent acquisition consideration: - arising on acquisitions during year (note 30) - - (7) - (7) - paid during year - - 54 - 54 Deferred divestment consideration: - arising on disposals during year - 14 - - 14 - received during year - (123) - - (123) Interest accruals and discount unwinding - 4 (24) (21) (41) Reclassification 20 (11) (22) - (13) Additions to leased mineral reserves - - (14) - (14) (Decrease)/increase in working capital and provisions for liabilities (63) (177) 125 (81) (196) At 31 December 2020 3,117 4,411 (5,503) (1,442) 583 At 1 January 2019 3,505 4,872 (5,817) (1,244) 1,316 Effect of adopting IFRS 16 - 3 13 1 17 Translation adjustment 2 9 (8) 4 7 Arising on acquisition (note 30) 65 73 (82) (7) 49 Disposals (581) (747) 570 - (758) Deferred and contingent acquisition consideration: - arising on acquisitions during year (note 30) - - (20) - (20) - paid during year - - 54 - 54 Deferred proceeds arising on disposals during year - 302 - - 302 Interest accruals and discount unwinding - (12) (1) (25) (38) Additions to leased mineral reserves - - (96) - (96) Increase/(decrease) in working capital and provisions for liabilities 89 87 (74) (31) 71 At 31 December 2019 3,080 4,587 (5,461) (1,302) 904 182 20. Leases Leased right-of-use assets Land and buildings $m Plant and machinery $m Other $m Total $m At 31 December 2021 Cost 1,573 581 105 2,259 Accumulated depreciation (and impairment charges) (378) (268) (49) (695) Net carrying amount 1,195 313 56 1,564 At 1 January 2021, net carrying amount 1,151 342 57 1,550 Translation adjustment (24) (9) (1) (34) Transfer to owned assets - (10) - (10) Additions at cost 96 92 22 210 Arising on acquisition (note 30) 77 11 - 88 Disposals at net carrying amount (12) (5) (1) (18) Adjustment as a result of remeasurement of lease liability 45 9 2 56 Depreciation charge for year (138) (117) (23) (278) At 31 December 2021, net carrying amount 1,195 313 56 1,564 The equivalent disclosure for the prior year is as follows: At 31 December 2020 Cost 1,419 553 97 2,069 Accumulated depreciation (and impairment charges) (268) (211) (40) (519) Net carrying amount 1,151 342 57 1,550 At 1 January 2020, net carrying amount 1,221 378 53 1,652 Translation adjustment 28 11 2 41 Transfer to owned assets (5) (2) - (7) Additions at cost 59 82 25 166 Arising on acquisition (note 30) 12 - - 12 Disposals at net carrying amount (32) (11) (2) (45) Adjustment as a result of remeasurement of lease liability 9 7 3 19 Depreciation charge for year (132) (123) (24) (279) Impairment charge for year (9) - - (9) At 31 December 2020, net carrying amount 1,151 342 57 1,550 At 1 January 2020 Cost 1,354 508 75 1,937 Accumulated depreciation (133) (130) (22) (285) Net carrying amount 1,221 378 53 1,652 2021 Annual Report and Form 20-F 183 Lease liabilities Land and buildings $m Plant and machinery $m Other $m Total $m At 1 January 2021 1,228 350 57 1,635 Translation adjustment (24) (9) (1) (34) Addition of right-of-use assets 96 92 22 210 Arising on acquisition (note 30) 77 11 - 88 Disposals (14) (5) (1) (20) Remeasurements 45 9 2 56 Payments (164) (139) (25) (328) Discount unwinding 52 10 2 64 At 31 December 2021 1,296 319 56 1,671 The equivalent disclosure for the prior year is as follows: At 1 January 2020 1,263 382 52 1,697 Translation adjustment 30 12 1 43 Reclassifications (6) 5 1 - Addition of right-of-use assets 59 82 25 166 Arising on acquisition (note 30) 12 - - 12 Disposals (31) (11) (2) (44) Remeasurements 9 7 3 19 Payments (162) (139) (25) (326) Discount unwinding 54 12 2 68 At 31 December 2020 1,228 350 57 1,635 The table below shows a maturity analysis of the discounted and undiscounted lease liability arising from the Group’s leasing a ctivities. The projections are based on the foreign exchange rates applying at the end of the relevant financial year and on interest rates (discounted projections onl y) applicable to the lease portfolio. As at 31 December 2021 As at 31 December 2020 Discounted $m Undiscounted $m Discounted $m Undiscounted $m Within one year 297 302 296 301 Between one and two years 241 254 241 255 Between two and three years 190 208 189 208 Between three and four years 154 175 154 177 Between four and five years 126 150 125 150 After five years 663 1,099 630 1,085 Total 1,671 2,188 1,635 2,176 184 20. Leases - continued The Group avails of the exemption from capitalising lease costs for short-term leases and low-value assets where the relevant c riteria are met. Variable lease payments directly linked to sales or usage are also expensed as incurred. The following lease costs have been charged to the Consolidate d Income Statement as incurred: Continuing operations 2021 $m 2020 $m Short-term leases 241 210 Lease of low-value assets 8 7 Variable lease payments not included in the lease liability 97 86 Total 346 303 Total cash outflow for lease payments 674 629 Lease commitments for short-term leases are similar to the portfolio of short-term leases for which the costs, as above, were e xpensed to the Consolidated Income Statement. The effect of excluding future cash outflows arising from variable lease payments, termination options, residual value guarantees and leases not yet commenced from lease liabilities was not material for the Group. The potential undiscounted future cash outflows arising from t he exercise of renewal options that are not expected to be exercised (and are therefore not included in the lease term) are as follows: As at 31 December 2021 $m As at 31 December 2020 $m Within one year 4 2 Between one and two years 5 5 Between two and three years 6 9 Between three and four years 8 9 Between four and five years 8 10 After five years 568 576 Total 599 611 Income from subleasing and gains/losses on sale and leaseback transactions were not material for the Group. 2021 Annual Report and Form 20-F 185 21. Analysis of Net Debt Components of net debt 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 (see note 22 for details of the capital and risk management pol icies employed by the Group). 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 31 December 2021 As at 31 December 2020 Book value $m Fair value $m Book value $m Fair value $m Cash and cash equivalents (note 23) 5,783 5,783 7,721 7,721 Interest-bearing loans and borrowings (note 24) (10,487) (11,340) (12,215) (13,407) Lease liabilities (note 20) (1,671) (1,671) (1,635) (1,635) Derivative financial instruments (net) (note 25) 122 122 188 188 Group net debt (6,253) (7,106) (5,941) (7,133) Reconciliation of opening to closing net debt 2021 $m 2020 $m 2019 $m At 1 January (5,941) (7,532) (7,998) Movement in year Increase in interest-bearing loans and borrowings - (6,427) (106) Repayment of interest-bearing loans and borrowings (i) 1,183 4,943 640 Debt, including lease liabilities, in acquired companies (note 30) (91) (12) (81) Debt, including lease liabilities, in disposed companies 3 12 463 Effect of adopting IFRS 16 - - (2,237) Net increase in lease liabilities (249) (153) (184) Repayment of lease liabilities 264 258 356 Net cash flow arising from derivative financial instruments 37 (26) 40 Mark-to-market and other non-cash adjustments 38 22 28 Translation adjustment on financing activities 441 (529) 15 Decrease/(increase) in liabilities from financing activities 1,626 (1,912) (1,066) Translation adjustment on cash and cash equivalents (297) 338 (20) (Decrease)/increase in cash and cash equivalents (1,641) 3,165 1,552 At 31 December (6,253) (5,941) (7,532) * Interest-bearing loans and borrowings are Level 2 instruments whose fair value is derived from quoted market prices. 186 21. Analysis of Net Debt - continued The following table shows the effective interest rates on period-end fixed and gross debt: As at 31 December 2021 As at 31 December 2020 $m Interest rate Weighted average fixed period Years $m Interest rate Weighted average fixed period Years Interest-bearing loans and borrowings nominal - fixed rate (ii) (10,052) (11,822) Derivative financial instruments - fixed rate 1,800 1,835 Net fixed rate debt including derivatives (8,252) 2.9% 8.6 (9,987) 2.9% 8.4 Interest-bearing loans and borrowings nominal - floating rate (iii) (317) (184) Cumulative fair value hedge adjustment (ii) (118) (209) Derivative financial instruments - floating rate (ii) (1,800) (1,835) Derivative financial instruments (net) - fair value 122 188 Gross debt including derivative financial instruments, excluding lease liabilities (10,365) 2.8% (12,027) 2.7% Lease liabilities - fixed rate (1,671) (1,635) Gross debt including derivative financial instruments, including lease liabilities (12,036) (13,662) Cash and cash equivalents - floating rate (note 23) 5,783 7,721 Group net debt (6,253) (5,941) (i) In January 2021 the Group repaid a $400 million bond upon maturity and in April 2021 a € 600 million bond was repaid early when a 3-month par-call option was exercised. (ii) Of the Group’s nominal fixed rate debt at 31 December 2021, $1,800 million (2020: $1,835 million) is hedged to a mix of US D LIBOR and EURIBOR floating rates using interest rate swaps. (iii) Floating rate debt comprises bank borrowings bearing interest at rates set in advance for periods ranging from overnight to less than one year largely by reference to inter-bank interest rates. 2021 Annual Report and Form 20-F 187 Currency profile The currency profile of the Group’s net debt and net worth (capital and reserves attributable to the Company’s equity holders) as at 31 December 2021 and 31 December 2020 is as follows: US Dollar $m euro $m Pound Sterling $m Canadian Dollar $m Philippine Peso $m Polish Zloty $m Swiss Franc $m Other (i) $m Total $m Cash and cash equivalents (note 23) 2,266 2,386 365 274 19 166 103 204 5,783 Interest-bearing loans and borrowings (note 24) (4,665) (4,479) (537) (3) (431) - (361) (11) (10,487) Lease liabilities (note 20) (856) (250) (255) (150) (8) (54) (47) (51) (1,671) Derivative financial instruments (net) (note 25) 189 1,463 (339) (606) (91) (184) - (310) 122 Net debt by major currency including derivative financial instruments (3,066) (880) (766) (485) (511) (72) (305) (168) (6,253) Non-debt assets and liabilities analysed as follows: Non-current assets 17,661 4,204 2,614 1,844 1,621 371 608 1,606 30,529 Current assets 4,369 1,498 993 564 176 161 84 377 8,222 Non-current liabilities (3,115) (714) (431) (213) (132) (19) (168) (71) (4,863) Current liabilities (2,866) (1,593) (1,156) (348) (153) (178) (83) (344) (6,721) Non-controlling interests (105) (45) - - (498) - (8) (25) (681) Capital and reserves attributable to the Company’s equity holders 12,878 2,470 1,254 1,362 503 263 128 1,375 20,233 The equivalent disclosure for the prior year is as follows: Cash and cash equivalents (note 23) 1,886 4,586 319 319 62 149 125 275 7,721 Interest-bearing loans and borrowings (note 24) (5,134) (5,589) (543) (6) (546) - (374) (23) (12,215) Lease liabilities (note 20) (797) (282) (247) (156) (10) (31) (54) (58) (1,635) Derivative financial instruments (net) (note 25) 937 736 (344) (774) (25) (111) - (231) 188 Net debt by major currency including derivative financial instruments (3,108) (549) (815) (617) (519) 7 (303) (37) (5,941) Non-debt assets and liabilities analysed as follows: Non-current assets 16,199 4,614 2,598 1,905 1,759 368 553 1,787 29,783 Current assets 3,586 1,465 871 519 171 155 85 387 7,239 Non-current liabilities (3,094) (678) (391) (229) (177) (22) (145) (97) (4,833) Current liabilities (2,160) (1,654) (980) (338) (165) (175) (91) (337) (5,900) Non-controlling interests (103) (54) - - (501) - (8) (26) (692) Capital and reserves attributable to the Company’s equity holders 11,320 3,144 1,283 1,240 568 333 91 1,677 19,656 (i) The principal currencies included in this category are the Chinese Renminbi, the Romanian Leu, the Ukrainian Hryvnia, the S erbian Dinar and the Indian Rupee. 188 21. Analysis of Net Debt - continued Liquidity and capital resources The following table provides certain information related to our cash generation and changes in our cash and cash equivalents po sition: 2021 $m 2020 $m 2019 $m Net cash inflow from operating activities 4,210 3,938 3,881 Net cash (outflow)/inflow from investing activities (2,546) (1,060) 217 Net cash (outflow)/inflow from financing activities (3,305) 287 (2,546) (Decrease)/increase in cash and cash equivalents (1,641) 3,165 1,552 Cash and cash equivalents at beginning of year (note 23) 7,721 4,218 2,686 Effect of exchange rate changes (297) 338 (20) Cash and cash equivalents at end of year (note 23) 5,783 7,721 4,218 Lease liabilities (1,671) (1,635) (1,697) Bank overdrafts (excluding those in notional cash pooling arrangements) (111) (120) (46) Borrowings (10,376) (12,095) (10,081) Derivative financial instruments 122 188 74 Total liabilities from financing activities (12,036) (13,662) (11,750) Net debt at end of year (6,253) (5,941) (7,532) The Group believes that its financial resources (operating cash together with cash and cash equivalents of $5.8 billion and und rawn committed loan facilities of $4.0 billion) is sufficient to cover the Group’s cash requirements. At 31 December 2021, US Dollar and euro denominated cash and cash equivalents represented 39% (2020: 24%) and 41% (2020: 59%) o f total cash and cash equivalents respectively. Significant borrowings The main sources of Group debt funding are public bond markets in Europe and North America. The following external bonds were o utstanding as at 31 December 2021: Annual coupons Outstanding (millions) Final maturity Hedged to floating rate (millions) Swiss Franc bonds 1.375% CHF330 2022 - euro bonds 3.125% € 750 2023 € 375 euro bonds 0.875% € 500 2023 - euro bonds 1.875% € 600 2024 - US Dollar bonds 3.875% $1,250 2025 $ 875 euro bonds 1.250% € 750 2026 - US Dollar bonds 3.400% $600 2027 - US Dollar bonds 3.950% $900 2028 $ 500 euro bonds 1.375% € 600 2028 - Pound Sterling bonds 4.125% £400 2029 - euro bonds 1.625% € 750 2030 - US Dollar bonds (i) 6.400% $213 2033 - US Dollar bonds 5.125% $500 2045 - US Dollar bonds 4.400% $400 2047 - US Dollar bonds 4.500% $600 2048 - (i) The $300 million bond was issued in September 2003, and at the time of issuance the bond was partially swapped to floating interest rates. In August 2009 and December 2010, $87 million of the issued notes were acquired by CRH plc as part of liability management exercis es undertaken and the interest rate hedge was closed out. At 31 December 2021, the remaining fair value hedge adjustment on the hedged item o n the Consolidated Balance Sheet was $35 million (2020: $38 million). 2021 Annual Report and Form 20-F 189 22. Capital and Financial Risk Management Capital management Overall summary The primary objectives of CRH’s capital management strategy are to ensure that the Group maintains a strong credit rating to support its business and to create shareholder value by managing the debt and equity balance and the cost of capital. The Group is committed to optimising the use of its balance sheet within the confines of the overall objective to maintain an investment grade credit rating. The capital structure of th e Group, which comprises net debt and capital and reserves attributable to the Company’s equity holders, may be summarised as follows: 2021 $m 2020 $m Capital and reserves attributable to the Company’s equity holders 20,233 19,656 Net debt 6,253 5,941 Capital and net debt 26,486 25,597 The Board periodically reviews the capital structure of the Group, including the cost of capital and the risks associated with each class of capital. The Group manages and, if necessary, adjusts its capital structure taking account of underlying economic conditions; any material adjustments to the Group’s capital structure in terms of the relative proportions of debt and equity are approved by the Board. In order to maintain or adjust the capital structure, the Group may issue new shares, dispose of assets, amend investment plans, alter dividend policy or return capital to shareholders. Dividend cover for the year ended 31 December 2021 amounted to 2.7x (2020: 1.2x). No changes were made in the objectives or policies during 2021. Financial risk management objectives and policies The Group uses financial instruments throughout its businesses: interest-bearing loans and borrowings, cash and cash equivalents and leases are used to finance the Group’s operations; trade receivables and trade payables arise directly from operations; and derivatives, principally interest rate and currency swaps and currency forwards, are used to manage interest rate risks and currency exposures and to achieve the desired profile of borrowings. In accordance with the UK Financial Conduct Authority’s announcement on 5 March 2021, LIBOR benchmark rates were discontinued after 31 December 2021 except for the majority of the US dollar settings which will be discontinued after 30 June 2023. Those rates that were discontinued were replaced by alternative risk-free rates (ARR) as part of the inter-bank offer rate (IBOR) reform. The Group prepared an action plan, encompassing treasury, legal, accounting and IT functions, to enable a smooth transition to the alternative benchmark rates. The review identified a range of contracts that reference IBORs, including credit facilities, derivative instruments, money market deposits, lease agreements, and supply contract agreements. Action plans were developed for each of these arrangements to ensure a smooth transition to ARR. None of the changes had an impact on the Group’s financing or interest rate hedging strategies, nor did they have a material financial impact. At 31 December 2021, the notional value of hedging instruments that reference 3-month US LIBOR is $1.4 billion. While the Secured Overnight Financing Rate (SOFR) benchmark rate has been widely adopted by market participants and effectively replaced US LIBOR in new contracts since 31 December 2021, a number of US LIBOR settings, including 3-month and 6-month US LIBOR, will continue to be published until 30 June 2023. Accordingly, absent any agreement with counterparties to transition to an ARR before this date, the Group’s existing USD denominated interest rate swaps with maturity dates beyond 30 June 2023 will only transition to ARR once US LIBOR publication ceases. As at 31 December 2021, the Group has not transitioned any of its existing USD denominated interest rate swaps to ARRs. The Group’s other interest rate swaps reference EURIBOR rates and thus are not impacted by the IBOR reforms. The Group does not trade in financial instruments nor does it enter into any leveraged derivative transactions. The Group’s corporate treasury function provides services to the business units, co-ordinates access to domestic and international financial markets, and monitors and manages the financial risks relating to the operations of the Group. The Group Treasurer reports to the Director of Group Finance and the activities of the corporate treasury function are subject to regular internal audit. Systems and processes are in place to monitor and control the Group’s liquidity risks. The Group’s net debt position forms part of the monthly documentation presented to the Board. The Group’s hedging activity is based on observable economic relationships, when there is confidence that such relationships will continue for the foreseeable future. Matching critical terms such as notional amount, tenor, timing and currency, the Group establishes relationships between a hedge item and hedge instrument where directional response to changes in fair value, driven by underlying economic conditions, are opposing and proportional in equal measure being an economic relationship under IFRS 9. Hedging ratios of 1:1 are used throughout all hedging activity as the hedge item and hedge instrument are of the same type and currency. The hedges employed mitigate identified risks and have consistently demonstrated close economic relationships. Ineffectiveness between the hedge item and hedge instrument are immaterial in the overall context of the Group. The main risks attaching to the Group’s financial instruments are interest rate risk, foreign currency risk, credit risk, liquidity risk and commodity price risk. The Board reviews and agrees policies for the prudent management of each of these risks as documented below. Interest rate risk The Group’s exposure to market risk for changes in interest rates stems predominantly from its long- term debt obligations. Interest cost is managed using a mix of fixed and floating rate debt. With the objective of managing this mix in a cost-efficient manner, the Group enters into interest rate swaps, under which the Group contracts to exchange, at predetermined intervals, the difference between fixed and variable interest amounts calculated by reference to a pre-agreed notional principal. Such contracts enable the Group to mitigate the risk of changing interest rates on the fair value of issued fixed rate debt and the cash flow exposures of issued floating rate debt. These swaps are designated under IFRS 9 to hedge underlying debt obligations and qualify for hedge accounting treatment. The Group applies hedge accounting where there is an economic relationship between the hedged item and the hedging instrument. The existence of an economic relationship is determined initially by comparing the critical terms of the hedging instrument and those of the hedged item and it is prospectively assessed using linear regression analysis. The Group issues fixed rate debt and may enter into interest rate swaps with critical terms that match those of the debt and on a 1:1 hedge ratio basis. The hedge ratio is determined by comparing the notional amount of the derivative with the notional amount of the debt. The hedge relationship is designated for the full term and notional value of the debt. 190 22. Capital and Financial Risk Management - continued The following table demonstrates the impact on profit before tax of a range of possible changes in the interest rates applicable to net floating rate borrowings, with all other variables held constant. These impacts are calculated based on the closing balance sheet floating rate net debt for a full year and assume that all floating interest rates change by the same amount. Percentage change in cost of borrowings (i) +/- 1% Impact on profit before tax 2021 +/- $38m 2020 +/- $59m 2019 +/- $23m (i) Sensitivity analysis for cost of borrowing has been presented for continuing operations only. Foreign currency risk Due to the nature of building materials, which in general have a low value-to-weight ratio, the Group’s activities are conducted primarily in the local currency of the country of operation resulting in low levels of foreign currency transaction risk; variances arising in this regard are reflected in operating costs or cost of sales in the Consolidated Income Statement in the period in which they arise. Given the Group’s presence in 28 countries worldwide, the principal foreign exchange risk arises from fluctuations in the US Dollar value of the Group’s net investment in a wide basket of currencies other than the US Dollar; such changes are reported separately within the Consolidated Statement of Comprehensive Income. A currency profile of the Group’s net debt and net worth is presented in note 21. The Group’s established policy is to spread its net worth across the currencies of its various operations with the objective of limiting its exposure to individual currencies and thus promoting consistency with the geographical balance of its operations. In order to achieve this objective, the Group manages its borrowings, where practicable and cost effective, to act as a natural foreign currency hedge of a portion of its foreign currency assets. The Group’s foreign exchange hedging strategy and activity is based on the assumption that changes in international economic factors are reflected in current foreign exchange rates and impacts the translation of the Group’s non-euro net assets (euro being the functional currency of the ultimate parent company). The economic relationship, being the translation impact of the Group’s net investment in non-euro subsidiaries (hedge item) is hedged against a foreign currency swap (hedge instrument) to counterbalance movements in foreign currency rates. The Group identifies certain portions of foreign currency net investments where foreign currency translation movements can be mitigated through the use of currency swaps in the same currency pairing. A hedge ratio of 1:1 is established. As at 31 December 2021, the notional amount of hedged net investments was $726 million (2020: $1,028 million). The primary currency pairs in use are euro versus Canadian Dollar, Pound Sterling, Romanian Leu, Polish Zloty and Danish Kroner. The fair value movements of the hedge instruments are inverse to the impact of the translation of the hedged net assets because the critical terms match. This reduces the Group’s exposure to fluctuations on the translation of the Group’s subsidiaries with a non-euro functional currency into euro. Potential sources of ineffectiveness are changes in the interest rate differentials of the hedged currency pairs, recorded through the Consolidated Income Statement. Past trends indicate that the economic relationship described will continue for the foreseeable future. The fair values and maturity analysis of the hedge instruments are set out in note 25. Undesignated financial instruments are termed “not designated as hedges”. The following table demonstrates the sensitivity of profit before tax and equity to selected movements in the relevant US Dollar/euro exchange rate (with all other variables held constant); the euro has been selected as the appropriate currency for this analysis given the materiality of the Group’s activities in euro. The impact on profit before tax is based on changing the US Dollar/euro exchange rate used in calculating profit before tax for the period. The impact on total equity and financial instruments is calculated by changing the US Dollar/euro exchange rate used in measuring the closing balance sheet. Percentage change in relevant $/ € exchange rate (i) +/- 5% Impact on profit before tax 2021 -/+ $22m 2020 -/+ $19m 2019 +/- $4m Impact on total equity 2021 +/-$123m 2020 +/-$157m 2019 +/-$177m * Includes the impact on financial instruments which is as follows: 2021 -/+ $44m 2020 -/+ $27m 2019 -/+ $11m (i) Sensitivity analysis for exchange rates has been presented for continuing operations only. Financial instruments include deposits, money market funds, commercial papers, bank loans, medium-term notes and other fixed term debt, interest rate swaps, commodity swaps and foreign exchange contracts. They exclude trade receivables and trade payables on the basis that they are denominated in the currency of the underlying operations. The Group minimises the impact of movements in foreign exchange rates on the Group’s income statement through matching where possible, foreign currency monetary assets and liabilities or the use of derivative contracts at an entity level. Credit/counterparty risk In addition to cash at bank and in hand, the Group holds significant cash balances which are invested on a short-term basis and are classified as cash equivalents (see note 23). These deposits, investments and other financial instruments (principally certain derivatives and loans and receivables included within financial assets) give rise to credit risk on amounts due from counterparty financial institutions (stemming from their insolvency or a downgrade in their credit ratings). Credit risk is managed by limiting the aggregate amount and duration of exposure to any one counterparty primarily depending on its credit rating and by regular review of these ratings and internal treasury policies. 2021 Annual Report and Form 20-F 191 Acceptable credit ratings for deposits and other financial instruments are higher investment-grade ratings—in general, counterparties have ratings of A3/A-/A- or higher from at least two of Moody’s/ Standard & Poor’s/Fitch ratings agencies. The maximum exposure arising in the event of default on the part of the counterparty (including insolvency) is the carrying value of the relevant financial instrument. Credit rating of counterparty (Moody’s/Standard & Poor’s/ Fitch) As at 31 December 2021 As at 31 December 2020 $m % $m % Aaa/AAA/AAA 2,021 35% 916 12% Aa/AA/AA 2,394 41% 3,074 40% A/A/A 1,216 21% 3,536 46% Baa/BBB/BBB or lower 152 3% 195 2% 5,783 100% 7,721 100% Money market liquidity funds are managed by external third-party fund managers to maintain Aaa/AAA long-term ratings and P1/A1 short-term ratings from Moody’s/Standard & Poor’s. The Group limits its investment in each fund to a prescribed maximum amount or 5% of the fund’s assets under management, whichever is the lower. The Group has a number of managed investment funds that hold fixed income euro securities with an average credit quality of Aaa/ AAA. As at 31 December 2021, 65% (2020: 88%) of cash and cash equivalents was held with higher investment grade bank counterparties, and 35% (2020: 12%) with the money market funds. Credit risk arising in the context of the Group’s operations is not significant with the total loss allowance at the balance sheet date amounting to 3.2% of gross trade receivables and construction contract assets (2020: 3.8%). Information in relation to the Group’s credit risk management of trade receivables is provided in note 17. Amounts receivable from related parties (notes 17 and 32) are immaterial. Factoring arrangements and supplier financing arrangements are employed in certain of the Group’s operations where deemed to be of benefit by operational management and are deemed immaterial. In its worldwide insurance programme, the Group carries appropriate levels of insurance for typical business risks (including product liability) with various leading insurance companies. However, in the event of the failure of one or more of its insurance counterparties, the Group could be impacted by losses where recovery from such counterparties is not possible. Liquidity risk The principal liquidity risks faced by the Group stem from the maturation of debt obligations and derivative transactions. A downgrade of CRH’s credit ratings may give rise to increases in funding costs in respect of future debt and may impair the Group’s ability to raise funds on acceptable terms. The Group’s corporate treasury function ensures that sufficient resources are available to meet such liabilities as they fall due through a combination of cash and cash equivalents, cash flows and undrawn committed bank facilities. Flexibility in funding sources is achieved through a variety of means including (i) maintaining cash and cash equivalents only with a diverse group of highly- rated counterparties; (ii) limiting the annual maturity of such balances; (iii) borrowing the bulk of the Group’s debt requirements under committed bank lines or other term financing; and (iv) having surplus committed lines of credit. The undrawn committed facilities available to the Group as at the balance sheet date are quantified in note 24; these facilities span a wide number of highly-rated financial institutions thus minimising any potential exposure arising from concentrations in borrowing sources. The repayment schedule (analysed by maturity date) applicable to the Group’s outstanding interest-bearing loans and borrowings as at the balance sheet date is also presented in note 24. The Group’s € 1.5 billion Euro Commercial Paper Programme and $2.0 billion US Dollar Commercial Paper Programme means we have framework programmes in the money markets in place that allow the Group to issue in the relevant markets within a short period of time. Commodity price risk The principal commodity price risks are identified in a variety of highly probable and active commodity contracts where a significant part of the price to be paid relies on a reference to specific floating price indices (usually US Dollar) for a specific period. Programmes are in place to hedge the quantities and qualities of commodity products, including fuel oil and related products, electricity and carbon credits. The aim of the programmes is to neutralise the variability in the Consolidated Income Statement as a result of changes in associated commodity indices over a timeframe of approximately four years (2020: five years). A hedge ratio of 1:1 is established. Fixed price swap contracts in the entity’s operating currency are used to hedge the same specific floating index risk and currency risk where it is determined that those risks are better managed at a fixed price rather than being exposed to uncontrollable price fluctuations due to the floating price index element of the contract. Sources of ineffectiveness can relate to timing of cash flows and counterparty credit risk adjustments. The derivative contracts qualify for cash flow hedge accounting under IFRS 9 and the fair values by maturity are set out in note 25. The notional and fair values in respect of derivative contracts as at 31 December 2021 and 31 December 2020 were as follows: Profile of commodity products As at 31 December 2021 As at 31 December 2020 Notional value $m Fair value $m Notional value $m Fair value $m Commodity swaps 86 - 85 - Derivative asset/(liability) - 32 - (2) 192 22. Capital and Financial Risk Management - continued The tables below show the projected contractual undiscounted total cash outflows (principal and interest) arising from the Grou p’s trade and other payables, gross debt and derivative financial instruments. The tables also include the gross cash inflows projected to arise from derivative fi nancial instruments. These projections are based on the interest and foreign exchange rates applying at the end of the relevant financial year. Within 1 year $m Between 1 and 2 years $m Between 2 and 3 years $m Between 3 and 4 years $m Between 4 and 5 years $m After 5 years $m Total $m At 31 December 2021 Financial liabilities - cash outflows Trade and other payables 5,697 196 44 202 170 288 6,597 Lease liabilities 302 254 208 175 150 1,099 2,188 Other interest-bearing loans and borrowings 559 1,420 683 1,254 853 5,666 10,435 Interest payments on other interest-bearing loans and borrowings (i) 315 286 264 238 214 1,715 3,032 Currency forwards and currency swaps - gross cash outflows 1,567 - - - - - 1,567 Other derivative financial instruments 1 - - - - - 1 Gross projected cash outflows 8,441 2,156 1,199 1,869 1,387 8,768 23,820 Derivative financial instruments - cash inflows Interest rate swaps - net cash inflows (ii) (41) (34) (32) (22) (13) (20) (162) Currency forwards and currency swaps - gross cash inflows (1,559) - - - - - (1,559) Other derivative financial instruments (32) (1) - - - - (33) Gross projected cash inflows (1,632) (35) (32) (22) (13) (20) (1,754) The equivalent disclosure for the prior year is as follows: At 31 December 2020 Financial liabilities - cash outflows Trade and other payables 4,797 171 49 209 181 371 5,778 Lease liabilities 301 255 208 177 150 1,085 2,176 Other interest-bearing loans and borrowings 1,270 479 1,538 741 1,255 6,805 12,088 Interest payments on other interest-bearing loans and borrowings (i) 345 328 296 272 246 1,952 3,439 Currency forwards and currency swaps - gross cash outflows 2,345 - - - - - 2,345 Other derivative financial instruments 5 1 - - - - 6 Gross projected cash outflows 9,063 1,234 2,091 1,399 1,832 10,213 25,832 Derivative financial instruments - cash inflows Interest rate swaps - net cash inflows (ii) (40) (40) (33) (30) (22) (32) (197) Currency forwards and currency swaps - gross cash inflows (2,350) - - - - - (2,350) Other derivative financial instruments (4) (1) - - - - (5) Gross projected cash inflows (2,394) (41) (33) (30) (22) (32) (2,552) (i) At 31 December 2021 and 31 December 2020, a portion of the Group’s long-term debt carried variable interest rates. The Grou p uses the interest rates in effect on 31 December to calculate the interest payments on the long-term debt for the periods indicated. (ii) The Group uses interest rate swaps to help manage its interest cost. Under these contracts the Group has agreed to exchang e at predetermined intervals, the net difference between fixed and variable interest amounts calculated by reference to a pre-agreed notional principal. The Group us es the interest rates in effect on 31 December to calculate the net interest receipts or payments on these contracts. 2021 Annual Report and Form 20-F 193 23. Cash and Cash Equivalents Cash and cash equivalents balances are spread across a wide number of highly-rated financial institutions. The credit risk atta ching to these items is documented in note 22. Cash and cash equivalents are included in the Consolidated Balance Sheet at amortised cost and are analysed as follows: 2021 $m 2020 $m Cash at bank and in hand 925 1,482 Investments (short-term deposits) 4,858 6,239 Total 5,783 7,721 Cash at bank earns/pays interest at floating rates based on daily deposit bank rates. Short-term deposits, which include bank a nd money market deposits, are made for varying periods of between one day and three months depending on the immediate cash requirements of the Group, earning inte rest at the respective short-term deposit rates. Money market deposits are held at fair value through profit and loss and are Level 1 instruments. The fair values of money mark et deposits are calculated by multiplying the net asset value per share by the investment held at the balance sheet date. 24. Interest-bearing Loans and Borrowings 2021 $m 2020 $m Bank overdrafts 111 120 Bank loans 430 541 Bonds 9,946 11,554 Interest-bearing loans and borrowings 10,487 12,215 Interest-bearing loans and borrowings include borrowings of $nil million (2020: $nil million) secured on specific items of prop erty, plant and equipment. Maturity profile of loans and borrowings and undrawn committed facilities As at 31 December 2021 As at 31 December 2020 Loans and borrowings $m Undrawn committed facilities $m Loans and borrowings $m Undrawn committed facilities $m Within one year 549 19 1,257 10 Between one and two years 1,422 - 467 5 Between two and three years 676 - 1,552 61 Between three and four years 1,277 - 733 - Between four and five years 845 3,964 1,320 4,294 After five years 5,718 - 6,886 - Total 10,487 3,983 12,215 4,370 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 above represent the facilities available to be drawn by the Group at 31 December 2021. The Group successfully carried out an amendment of its € 3.5 billion revolving credit facility in March 2021 whereby the Group extended the maturity date of the facility for a further year to 2026. In January 2021 the Group repaid a $400 million bond upon maturity and in April 2021 a € 600 million bond was repaid early when a 3-month par-call option was exercised. At the end of 2021 a number of LIBOR settings ceased to be published (including Sterling and Swiss Franc), while certain US Dollar LIBOR settings will continue to be provided until June 2023. There is no change to the publication of EURIBOR rates. The Group’s syndicated revolving credit facility (undrawn as at 31 December 2021) previously referenced USD LIBOR, GBP LIBOR and CHF LIBOR rates. During 2021 the Group negotiated with its Lenders amendments to the facility to include market standard LIBOR replacement language. From 1 January 2022 the agreement will adopt the Secured Overnight Financing Rate (SOFR), Sterling Overnight Index Average (SONIA) and Swiss Average Rate Overnight (SARON) as the alternative benchmark rates in respect of USD, GBP and CHF LIBOR rates respectively. Guarantees The Company has given letters of guarantee to secure obligations of subsidiary undertakings as follows: $10.0 billion in respect of loans and borrowings, bank advances and derivative obligations (2020: $11.6 billion) and $0.4 billion in respect of letters of credit (2020: $0.4 billion). Any Irish registered wholly-owned subsidiary of the Company may avail of the exemption from filing its statutory financial statements for the year ended 31 December 2021 as permitted by section 357 of the Companies Act 2014 and if an Irish registered wholly-owned subsidiary of the Company elects to avail of this exemption, there will be in force an irrevocable guarantee from the Company in respect of all commitments entered into by such wholly- owned subsidiary, including amounts shown as liabilities (within the meaning of section 357 (1) (b) of the Companies Act 2014) in such wholly-owned subsidiary’s statutory financial statements for the year ended 31 December 2021. 194 25. Derivative Financial Instruments The fair values of derivative financial instruments are analysed by year of maturity and by accounting designation as follows: Fair value hedges $m Cash flow hedges $m Net investment hedges $m Not designated as hedges $m Total $m At 31 December 2021 Derivative assets Within one year - current assets - 36 1 2 39 Between one and two years 20 1 - - 21 Between three and four years 32 - - - 32 After five years 44 - - - 44 Non-current assets 96 1 - - 97 Total derivative assets 96 37 1 2 136 Derivative liabilities Within one year - current liabilities - (2) (10) (2) (14) Total derivative liabilities - (2) (10) (2) (14) Net asset/(liability) arising on derivative financial instruments 96 35 (9) - 122 The equivalent disclosure for the prior year is as follows: At 31 December 2020 Derivative assets Within one year - current assets - 7 8 2 17 Between one and two years - 1 - - 1 Between two and three years 32 - - - 32 Between four and five years 74 - - - 74 After five years 77 - - - 77 Non-current assets 183 1 - - 184 Total derivative assets 183 8 8 2 201 Derivative liabilities Within one year - current liabilities - (6) (2) (4) (12) Between one and two years - non-current liabilities - (1) - - (1) Total derivative liabilities - (7) (2) (4) (13) Net asset/(liability) arising on derivative financial instruments 183 1 6 (2) 188 2021 Annual Report and Form 20-F 195 At 31 December 2021 and 2020, the Group had no master netting or similar arrangements, no collateral posting requirements, or enforceable right of set-off agreements with any of its derivative counterparts. Fair value hedges consist of interest rate swaps. These instruments hedge risks arising from changes in asset/liability fair values due to interest rate movements. Cash flow hedges consist of currency forwards, currency swaps and commodity swaps. These instruments hedge risks arising to future cash flows from movements in foreign exchange rates and commodity prices. Cash flow hedges are expected to affect profit and loss over the period to maturity. Net investment hedges comprise of currency forwards and currency swaps and hedge changes in the value of net investments due to currency movements. The profit/(loss) arising on fair value hedges, cash flow hedges, and related hedged items reflected in the Consolidated Income Statement is shown below: 2021 $m 2020 $m 2019 $m Fair value hedges and related hedged items Movement in cumulative fair value of the hedge adjustment of hedge instruments (85) 97 72 Movement in cumulative fair value of the hedge adjustment of hedged items 87 (83) (71) Components of other comprehensive income - cash flow hedges Gains/(losses) arising during the year: - commodity swaps 34 (2) 30 - currency forwards - 9 (3) Total 34 7 27 Fair value hierarchy 2021 Level 2 $m 2020 Level 2 $m Assets measured at fair value Fair value hedges - interest rate swaps 96 183 Cash flow hedges - currency forwards, currency swaps and commodity swaps 37 8 Net investment hedges - currency forwards and currency swaps 1 8 Not designated as hedges (classified as held for trading) - currency forwards and currency swaps 2 2 Total 136 201 Liabilities measured at fair value Cash flow hedges - currency forwards, currency swaps and commodity swaps (2) (7) Net investment hedges - currency forwards and currency swaps (10) (2) Not designated as hedges (classified as held for trading) - currency forwards and currency swaps (2) (4) Total (14) (13) At 31 December 2021 and 2020 there were no derivatives valued using Level 1 or Level 3 fair value techniques. 196 26. Provisions for Liabilities At 1 January $m Translation adjustment $m Arising on acquisition (note 30) $m Provided during year $m Utilised during year $m Disposed during year $m Reversed unused $m Discount unwinding $m At 31 December $m 31 December 2021 Insurance (i) 349 (4) 1 137 (76) - (17) 5 395 Environment and remediation (ii) 684 (18) - 49 (26) (3) (15) 10 681 Rationalisation and redundancy (iii) 48 (1) - 29 (36) - (19) - 21 Other (iv) 361 (14) - 100 (63) (3) (65) 3 319 Total 1,442 (37) 1 315 (201) (6) (116) 18 1,416 Analysed as: Non-current liabilities 953 937 Current liabilities 489 479 Total 1,442 1,416 The equivalent disclosure for the prior year is as follows: 31 December 2020 Insurance (i) 330 4 - 162 (119) - (34) 6 349 Environment and remediation (ii) 585 23 - 103 (15) (5) (19) 12 684 Rationalisation and redundancy (iii) 17 2 - 111 (77) - (5) - 48 Other (iv) 370 14 - 125 (59) - (92) 3 361 Total 1,302 43 - 501 (270) (5) (150) 21 1,442 Analysed as: Non-current liabilities 854 953 Current liabilities 448 489 Total 1,302 1,442 (i) This provision relates to obligations arising under the self-insurance components of the Group’s insurance arrangements whi ch comprise employers’ liability (workers’ compensation in the US), public and products liability (general liability in the US), automobile liability, property damage, business interruption and various other insurances; a substantial proportion of the total provision pertains to claims which are classified as “incurred but not reported”. Due to the extended timeframe associated with many of the insurances, a significant proportion of the total provision is subject to periodic actuar ial valuation. The projected cash flows underlying the discounting process are established through the application of actuarial triangulations, which are extrapolated from historical claims experience. The triangulations applied in the discounting process indicate that the Group’s insurance provisions have an average life of four y ears (2020: four years). (ii) This provision comprises obligations governing site remediation, restoration and environmental works to be incurred in com pliance with either local or national environmental regulations together with constructive obligations stemming from established best practice. The value of current obligations is $96 million (2020: $106 million), whilst $310 million (2020: $301 million) of the total provision will be utilised in the medium-term (two to ten years). The value of legal and constructive obligations applicable to long-lived assets (principally mineral-bearing land) that will unwind over a 30-year timeframe is $27 5 million (2020: $277 million). In discounting the related obligations, expected future cash outflows have been determined with due regard to extraction status an d anticipated remaining life. The discount rates used are consistent with the timing of the expected future cash outflows of the provision and the economic envir onment of the jurisdiction where the provision will be settled. (iii) These provisions relate to irrevocable commitments under various rationalisation and redundancy programmes, none of which are individually material to the Group. In 2021, $29 million (2020: $111 million; 2019: $32 million) was provided in respect of rationalisation and redundancy a ctivities as a consequence of undertaking various cost reduction initiatives across all operations. These initiatives included removing excess capacity from manufacturing and distribution networks and scaling operations to match supply and demand. The Group expects that these provisions will primarily be utilised within one to two years of the balance sheet date (2020: one to two years). (iv) Other provisions primarily relate to legal claims and also include onerous contracts, guarantees and warranties and employ ee related provisions. The Group expects the majority of these provisions will be utilised within one to five years of the balance sheet date (2020: one to five years); however due to the nature of the legal provisions there is a level of uncertainty in the timing of settlement as the Group generally cannot determine the extent and duration of the legal process. 2021 Annual Report and Form 20-F 197 27. Deferred Income Tax The deductible and taxable temporary differences in respect of which deferred tax has been recognised are as follows: 2021 $m 2020 $m Reported in balance sheet after offset Deferred tax liabilities 2,734 2,613 Deferred tax assets (109) (129) Net deferred income tax liability 2,625 2,484 Deferred income tax assets (deductible temporary differences) Deficits on Group retirement benefit schemes 98 128 Revaluation of derivative financial instruments to fair value 4 8 Tax loss carryforwards (primarily income tax losses) 93 176 Share-based payment expense 54 41 Provisions for liabilities and working capital-related items 446 402 Lease liabilities 335 330 Other deductible temporary differences 87 59 Total 1,117 1,144 Deferred income tax assets have been recognised in respect of all deductible temporary differences, with the exception of some tax loss carryforwards. The amount of tax losses where recovery is not probable and is therefore not recognised in the Consolidated Balance Sheet is $1.2 billion (20 20: $1.4 billion). The vast majority either do not expire based on current tax legislation or they expire post 2026 (2020: 2025). Of the losses not recognised in the Conso lidated Balance Sheet, $0.1 billion (2020: $0.1 billion) expire within five years, $0.4 billion (2020: $0.3 billion) expire post five years and the remainder of lo sses do not expire. Deferred income tax liabilities (taxable temporary differences) Taxable temporary differences principally attributable to accelerated tax depreciation and fair value adjustments arising on acquisition (i) 3,218 3,123 Leased right-of-use assets 314 315 Investment in subsidiaries 164 161 Surpluses on Group retirement benefit schemes 9 - Revaluation of derivative financial instruments to fair value 15 12 Rolled-over capital gains 22 17 Total 3,742 3,628 Investments in subsidiaries The aggregate temporary differences in relation to investments in subsidiaries for which deferred tax liabilities have not been recognised is $12.1 billion (2020: $10.9 billion) given the Group is in a position to control the timing of reversal and management’s intention not to unwind these temporary differences. Participation exemptions and tax credits are available in the majority of jurisdictions in which the Group operates. A deferred tax liability has been recognised in respect of any temporary differences relating to investments in subsidiaries expected to unwind in the foreseeable future. Movement in net deferred income tax liability At 1 January 2,484 2,551 Translation adjustment (34) 41 Net expense/(income) for the year 103 (95) Arising on acquisition (note 30) 37 - Disposals 1 (3) Movement in deferred tax recognised in the Consolidated Statement of Comprehensive Income 44 (11) Movement in deferred tax recognised in the Consolidated Statement of Changes in Equity (10) 1 At 31 December 2,625 2,484 (i) Fair value adjustments arising on acquisition principally relate to property, plant and equipment. 198 28. Retirement Benefit Obligations The Group operates either defined benefit or defined contribution pension schemes in all of its principal operating areas. The disclosures included below relate to all pension schemes in the Group. The Group operates defined benefit pension schemes in Belgium, Canada, France, Germany, Italy, the Netherlands, the Philippines, the Republic of Ireland, Romania, Serbia, Slovakia, Switzerland, the UK and the US. The Group also operated a defined benefit pension scheme in Brazil which was divested in April 2021. The Group has a mixture of funded and unfunded defined benefit pension schemes. The net surplus of the funded schemes is $54 million (2020: net liability of $154 million net of surpluses of $111 million). Unfunded obligations (including jubilee, post-retirement healthcare obligations and long-term service commitments) comprise of a number of schemes in Canada, France, Germany, Italy, the Netherlands, the Philippines, Romania, Serbia, Slovakia, Switzerland and the US, totalling a net liability of $363 million (2020: $402 million). Funded defined benefit schemes in the Republic of Ireland, Switzerland and the UK are administered by separate funds that are legally distinct from the Group under the jurisdiction of Trustees. The Trustees are required by law to act in the best interests of the scheme participants and are responsible for the definition of investment strategy and for scheme administration. Other schemes are also administered in line with the local regulatory environment. The level of benefits available to most members depends on length of service and either their average salary over their period of employment or their salary in the final years leading up to retirement. For Switzerland, the level of benefits depends on salary, level of savings contributions, the interest rate on old age accounts (which cannot be negative) and the annuity conversion factor on retirement. The Group’s pension schemes in Switzerland are contribution-based schemes with guarantees to provide further contributions in the event that the plan assets are insufficient to meet the benefit obligations. Defined benefit pension schemes - principal risks Through its defined benefit pension and jubilee schemes, long-term service commitments and post-retirement healthcare plans, the Group is exposed to a number of risks, the most significant of which are detailed below: Asset volatility: Under IAS 19 Employee Benefits , the assets of the Group’s defined benefit pension schemes are reported at fair value (using bid prices, where relevant). The majority of the schemes’ assets comprise equities, bonds and property, all of which may fluctuate significantly in value from period to period including from fluctuations arising in respect of climate change and associated risks and uncertainties. Given that liabilities are discounted to present value based on bond yields and that bond prices are inversely related to yields, an increase in the liability discount rate (which would reduce liabilities) would reduce bond values, though not necessarily by an equal magnitude. Given the maturity of certain of the Group’s funded defined benefit pension schemes, de-risking frameworks have been introduced to mitigate deficit volatility and enable better matching of investment returns with the cash outflows related to benefit obligations. These frameworks entail the usage of asset-liability matching techniques, whereby triggers are set for the conversion of equity holdings into bonds of similar average duration to the relevant liabilities. Discount rates: The discount rates employed in determining the present value of the schemes’ liabilities are determined by reference to market yields at the balance sheet date on high-quality corporate bonds of a currency and term consistent with the currency and term of the associated post-employment benefit obligations. Changes in discount rates impact the quantum of liabilities as discussed above. Inflation risk: A significant amount of the Group’s pension obligations are linked to inflation; higher inflation will lead to higher liabilities (although in most cases, caps on the level of inflationary increases are in place to protect the schemes against extreme inflation). Longevity risk: In the majority of cases, the Group’s defined benefit pension schemes provide benefits for life with spousal and dependent child reversionary provisions; increases in life expectancy (decreases in mortality assumptions) will therefore give rise to higher liabilities. Aggregation For the purposes of the disclosures which follow; the schemes in Belgium, France, Germany, Italy, the Netherlands, the Republic of Ireland and Slovakia have been aggregated into a “Eurozone” category on the basis of common currency and financial assumptions; schemes in Brazil, the Philippines, Romania, Serbia and the UK have been aggregated into an “Other” category. Financial assumptions—scheme liabilities The major long-term assumptions used by the Group’s actuaries in the computation of scheme liabilities and post-retirement heal thcare obligations are as follows: Eurozone United States and Canada Switzerland 2021 % 2020 % 2019 % 2021 % 2020 % 2019 % 2021 % 2020 % 2019 % Rate of increase in: - salaries 2.92 2.52 3.37 3.03 3.37 3.37 1.25 1.00 1.50 - pensions in payment 1.90 1.45 1.46 - - - - - - Inflation 1.90 1.50 1.50 2.00 2.00 2.00 0.75 0.50 1.00 Discount rate 1.43 1.14 1.43 2.82 2.34 3.14 0.30 0.20 0.30 Medical cost trend rate n/a n/a n/a 5.91 5.97 5.18 n/a n/a n/a 2021 Annual Report and Form 20-F 199 The mortality assumptions employed in determining the present value of scheme liabilities under IAS 19 represent actuarial guid elines in the relevant jurisdictions, taking account of mortality experience and industry circumstances. For schemes in the Republic of Irela nd and the UK, the mortality assumptions used are in accordance with the underlying funding valuations. For the Group’s most material schemes, the future life expectations factored into the relevant valuations, based on retirement at 65 years of age for current and future retirees, are as follows: Republic of Ireland United States and Canada Switzerland 2021 2020 2019 2021 2020 2019 2021 2020 2019 Current retirees - male 22.6 22.5 23.0 20.5 20.1 20.2 22.6 22.6 22.6 - female 24.5 24.4 24.5 22.4 22.2 22.3 24.4 24.7 24.7 Future retirees - male 24.9 24.8 25.4 22.2 22.0 22.1 25.4 24.8 24.8 - female 26.8 26.7 26.8 24.1 23.9 24.2 26.9 26.8 26.8 The above data allows for future improvements in life expectancy. Impact on Consolidated Income Statement The total retirement benefit expense from continuing operations in the Consolidated Income Statement is as follows: 2021 $m 2020 $m 2019 $m Total defined contribution expense (i) 309 289 290 Total defined benefit expense (i) 72 70 51 Total expense in Consolidated Income Statement 381 359 341 (i) The total defined contribution and defined benefit expense in 2019 including discontinued operations, amounted to $299 mill ion and $70 million respectively. At 31 December 2021, $92 million (2020: $105 million) was included in trade and other payables in respect of defined contributi on pension liabilities. Analysis of defined benefit expense Charged in arriving at Group profit before finance costs: Current service cost 55 53 48 Administration expenses 4 5 8 Past service (credit)/cost net (3) 1 (20) Loss on settlements 6 - - Subtotal 62 59 36 Included in finance income and finance costs respectively: Interest income on scheme assets (46) (56) (72) Interest cost on scheme liabilities 56 67 87 Net interest expense 10 11 15 Net expense to Consolidated Income Statement 72 70 51 The composition of the net expense to the Consolidated Income Statement is as follows: Eurozone 29 30 28 United States and Canada 21 16 6 Switzerland 10 12 8 Other 12 12 9 Total 72 70 51 200 28. Retirement Benefit Obligations - continued Reconciliation of scheme assets (bid value) 2021 $m 2020 $m At 1 January 3,321 3,013 Movement in year Interest income on scheme assets 46 56 Remeasurement adjustments - return on scheme assets excluding interest income 165 174 Employer contributions paid 43 46 Contributions paid by plan participants 7 7 Benefit and settlement payments (258) (158) Administration expenses (4) (5) Translation adjustment (146) 188 At 31 December 3,174 3,321 The composition of scheme assets is as follows: Eurozone 1,563 1,603 United States and Canada 873 1,018 Switzerland 460 444 Other 278 256 Total 3,174 3,321 Reconciliation of actuarial value of liabilities At 1 January (3,877) (3,493) Movement in year Current service cost (55) (53) Past service credit/(cost) net 3 (1) Loss on settlements (6) - Interest cost on scheme liabilities (56) (67) Disposals 1 1 Remeasurement adjustments - experience variations (7) 32 - actuarial gain/(loss) from changes in financial assumptions 70 (251) - actuarial gain from changes in demographic assumptions 36 12 Contributions paid by plan participants (7) (7) Benefit and settlement payments 258 158 Translation adjustment 157 (208) At 31 December (3,483) (3,877) The composition of the actuarial value of liabilities is as follows: Eurozone (1,671) (1,769) United States and Canada (1,093) (1,293) Switzerland (394) (425) Other (325) (390) Total (3,483) (3,877) Net pension deficit (i) (309) (556) Related deferred income tax asset 89 128 Net pension liability (220) (428) The composition of the net pension liability is as follows: Eurozone (87) (138) United States and Canada (164) (206) Switzerland 66 22 Other (35) (106) Total (220) (428) (i) Reconciliation to Consolidated Balance Sheet Retirement benefit assets 166 - Retirement benefit obligations (475) (556) Net pension deficit (309) (556) 2021 Annual Report and Form 20-F 201 A UK High Court ruling in November 2020 relating to the equalisation of guaranteed minimum pensions for men and women did not m aterially impact the liability associated with the Group’s UK defined benefit pension schemes. Sensitivity analysis The revised liabilities due to the impact of a reasonably possible change (as indicated below) in the principal actuarial assum ptions would be as follows: Eurozone 2021 $m United States and Canada 2021 $m Switzerland 2021 $m Other 2021 $m Total Group 2021 $m Scheme liabilities at 31 December (1,671) (1,093) (394) (325) (3,483) Revised liabilities Discount rate Increase by 0.25% (1,597) (1,060) (378) (310) (3,345) Decrease by 0.25% (1,750) (1,127) (411) (341) (3,629) Inflation rate Increase by 0.25% (1,745) (1,096) (395) (334) (3,570) Decrease by 0.25% (1,602) (1,090) (393) (319) (3,404) Mortality assumption Increase by 1 year (1,607) (1,059) (380) (314) (3,360) Decrease by 1 year (1,736) (1,127) (408) (335) (3,606) The above sensitivity analysis are derived through changing the individual assumption while holding all other assumptions constant. Split of scheme assets 2021 $m 2020 $m Investments quoted in active markets Equity instruments (i) 752 862 Debt instruments (ii) 1,874 2,025 Property 128 106 Cash and cash equivalents 40 56 Investment funds 129 166 Unquoted investments Equity instruments 2 2 Debt instruments (iii) 14 12 Property 71 69 Cash and cash equivalents 9 6 Assets held by insurance company 155 17 Total assets 3,174 3,321 (i) Equity instruments primarily relate to developed markets. (ii) Quoted debt instruments are made up of $1,317 million (2020: $1,288 million) and $557 million (2020: $737 million) of gove rnment and non-government instruments respectively. (iii) Unquoted debt instruments primarily relate to government debt instruments. 202 28. Retirement Benefit Obligations - continued Actuarial valuations - funding requirements and future cash flows In accordance with statutory requirements in the Republic of Ireland and funding requirements set by the Trustees in the UK, additional annual contributions and lump-sum payments are determined to get the plans to a fully funded position (on a funding basis). The funding requirements in relation to the Group’s defined benefit schemes are assessed in accordance with the advice of independent and qualified actuaries and valuations are prepared in this regard either annually, where local requirements mandate that this be done, or at triennial intervals at a maximum in all other cases. In the Republic of Ireland and the UK, either the attained age or projected unit credit methods are used in the valuations. In Canada, Germany, Switzerland and the US, valuations are performed in accordance with the projected unit credit methodology. The dates of the funding valuations range from January 2019 to March 2021. In general, funding valuations are not available for public inspection; however, the results of valuations are advised to the members of the various schemes on request. The Group has contracted payments (presented on a discounted basis) to certain schemes in the UK of $17 million (2020: $20 million; 2019: $21 million). The maturity profile of the Group’s contracted payments (on a discounted basis) is as follows: 2021 $m 2020 $m 2019 $m Within one year 2 2 2 Between one and two years 2 2 2 Between two and three years 2 2 2 Between three and four years 2 2 2 Between four and five years 2 2 2 After five years 7 10 11 Total 17 20 21 Employer contributions payable in the 2022 financial year including minimum funding payments (expressed using year-end exchange rates for 2021) are estimated at $40 million. Average duration and scheme composition Eurozone United States and Canada Switzerland 2021 2020 2019 2021 2020 2019 2021 2020 2019 Average duration of defined benefit obligation (years) 18.3 18.3 18.1 12.3 12.9 12.5 17.0 17.6 17.8 Allocation of defined benefit obligation by participant: Active plan participants 69% 70% 74% 49% 43% 44% 74% 74% 74% Deferred plan participants 10% 10% 8% 15% 12% 12% - - - Retirees 21% 20% 18% 36% 45% 44% 26% 26% 26% 2021 Annual Report and Form 20-F 203 29. Share Capital and Reserves Equity share capital 2021 2020 Ordinary Shares of € 0.32 each (i) Income Shares of € 0.02 each Ordinary Shares of € 0.32 each (i) Income Shares of € 0.02 each Authorised At 1 January ($m) 491 28 491 28 Cancellation of Income Shares (ii) - (28) - - At 31 December ($m) 491 - 491 28 Number of Shares at 1 January (millions) 1,250 1,250 1,250 1,250 Cancellation of Income Shares (ii) - (1,250) - - Number of Shares at 31 December (millions) 1,250 - 1,250 1,250 Allotted, called-up and fully paid At 1 January ($m) 317 16 319 16 Cancellation of Income Shares (ii) - (16) - - Cancellation of Treasury Shares (iii) (8) - (2) - At 31 December ($m) 309 - 317 16 The movement in the number of shares (expressed in millions) during the financial year was as follows: At 1 January 795 795 799 799 Cancellation of Income Shares (ii) - (795) - - Cancellation of Treasury Shares (iii) (21) - (4) (4) At 31 December 774 - 795 795 (i) The Ordinary Shares represent 99.53% of the total issued share capital as at 31 December 2021 (2020: 93.71%). (ii) The Income Shares were cancelled with effect from 9 February 2021 pursuant to a resolution approved by the Shareholders at an extraordinary general meeting of the Company held on 9 February 2021 (2020: Income Shares represented 5.86% of the total issued share capital). (iii) During 2021, 21,000,000 Ordinary Shares (2020: 4,500,000 Ordinary Shares including Income Shares) were cancelled. The amo unt paid to repurchase these shares was initially recognised in Treasury Shares/own shares and was transferred to retained income on cancellation. Share schemes The aggregate number of shares which may be committed for issue in respect of any share option scheme, savings-related share op tion scheme, share participation scheme, performance share plan or any subsequent option scheme or share plan, may not exceed 10% of the issued ordinary share c apital from time to time. Share option schemes Details of share options granted under the Company’s Share Option Schemes and the terms attaching thereto are provided in note 8 to the financial statements. Under these schemes, options over a total of 521,523 Ordinary Shares were exercised during the financial year, which were satis fied by the reissue of Treasury Shares (2020: 256,521; 2019: 1,147,149). 204 29. Share Capital and Reserves - continued Share participation schemes As at 31 December 2021, 8,444,240 (2020: 8,319,280) Ordinary Shares had been appropriated to participation schemes. In 2021, th e appropriation was satisfied by the purchase of 124,960 shares (2020: 144,702 satisfied by the purchase of shares). The Ordinary Shares appropriated pursuant t o these schemes were issued at market value on the dates of appropriation. The shares issued pursuant to these schemes are excluded from the scope of IFRS 2 a nd are hence not factored into the expense computation and the associated disclosures in note 8. Preference share capital 5% Cumulative Preference Shares of € 1.27 each 7% ‘A’ Cumulative Preference Shares of € 1.27 each Number of Shares ‘000s $m Number of Shares ‘000s $m Authorised At 1 January 2021 and 31 December 2021 150 - 872 1 Allotted, called-up and fully paid At 1 January 2021 and 31 December 2021 50 - 872 1 There was no movement in the number of cumulative preference shares in either the current or the prior year. The holders of the 5% Cumulative Preference Shares are entitled to a fixed cumulative preference dividend at a rate of 5% per a nnum and priority in a winding-up to repayment of capital, but have no further right to participate in profits or assets and are not entitled to be present or vote at general meetings unless their dividend is in arrears. Dividends on the 5% Cumulative Preference Shares are payable half-yearly on 15 April and 15 October in each year. The 5% Cumulative Preference Shares represent 0.03% of the total issued share capital as at 31 December 2021 (2020: 0.02%). The holders of the 7% ‘A’ Cumulative Preference Shares are entitled to a fixed cumulative preference dividend at a rate of 7% p er annum, and subject to the rights of the holders of the 5% Cumulative Preference Shares, priority in a winding-up to repayment of capital, but have no further right to participate in profits or assets and are not entitled to be present or vote at general meetings unless their dividend is in arrears or unless the business of the meetin g includes certain matters, which are specified in the Articles of Association. Dividends on the 7% ‘A’ Cumulative Preference Shares are payable half-yearly on 5 Apr il and 5 October in each year. The 7% ‘A’ Cumulative Preference Shares represent 0.44% of the total issued share capital as at 31 December 2021 (2020: 0.41%). Treasury Shares/own shares 2021 $m 2020 $m At 1 January (386) (360) Own Shares released by the Employee Benefit Trust under the 2014 Performance Share Plan 117 65 Shares acquired by CRH pl c (Treasury Shares) (i) (880) (220) Shares acquired by Employee Be nefit Trust (own shares) (16) (29) Treasury Shares/own shar es reissued (ii) 19 8 Cancellation of Treasury Shares 951 150 At 31 December (195) (386) Notes (i) to (ii) are set out overleaf. 2021 Annual Report and Form 20-F 205 The movement in the number of Treasury Shares/own shares during the financial year is outlined in the table below (2020: includ es Income Shares): Number of shares 2021 2020 At 1 January 10,320,739 10,236,356 Own Shares released by the Employee Benefit Trust under the 2014 P erformance Share Plan (3,254,236) (2,180,467) Shares acquired by CRH plc (Treasury Shares) (i) 17,829,602 5,951,146 Shares acquired by Employee Benefit Trust (own shares) 345,981 1,070,225 Treasury Shares/own shares reissued (ii) (521,523) (256,521) Cancellation of Treasury Shares (21,000,000) (4,500,000) At 31 December 3,720,563 10,320,739 Split of Treasury Shares/own shares (iii) Treasury Shares 3,476,859 10,087,161 Own shares 243,704 233,578 3,720,563 10,320,739 (i) During 2021, CRH repurchased a total of 17,829,602 Ordinary Shares returning a further $0.9 billion of cash to shareholders . This brings total cash returned to shareholders under the share buyback programme (‘the Programme’) to $2.9 billion since its commencement in May 2018. (ii) These reissued Treasury Shares were previously purchased at an average price of $37.15 (2020: $32.45). (iii) As at the balance sheet date, the nominal value of the Treasury Shares and own shares was € 1.1 million and € 0.1 million respectively (2020: € 3.4 million and € 0.1 million respectively). Dividends have been waived by the Trustees of the own shares. 2021 2020 Number of Shares $m Number of Shares $m Ordinary Shares repurchased during the period (Treasury Shares) 17,829,602 880 5,951,146 220 Financial liability as at 31 December 281 - Total 1,161 220 At 31 December 2021 a financial liability of $281 million (2020: $nil million) was included in other payables in respect of the latest phase of the Programme which was entered into with Sociéte Générale. This phase will end no later than 30 March 2022. Share premium 2021 $m 2020 $m At 1 January 7,493 7,493 Reduction of share premium (iv) (7,493) - At 31 December - 7,493 (iv) Pursuant to a special resolution approved by shareholders at the Annual General Meeting of the Company held on 29 April 20 21 and the subsequent order of the High Court of Ireland made on 3 June 2021, the capital of the Company was reduced by the entire amount standing to the credit of the Company’s share premium account as at 31 December 2020, with the reserve resulting from the reduc tion being treated as profits available for distribution as defined by Section 117 of the Companies Act 2014. A copy of the aforemen tioned order of the High Court was filed with the Companies Registration Office in Ireland on 3 June 2021. 206 30. Business Combinations The acquisitions completed during the year ended 31 December 2021 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: Colorado: Asphalt Paving Company (8 July); Florida: Extreme Concrete Services, Inc. and JODH, Inc. (30 April); Michigan: RSmith & Sons Trucking, Inc. (15 September); Mississippi: The Blain Companies (2 December); Ohio: Central Allied Enterprises (19 February); Tennessee: Patty Construction, Inc. and Greenback Asphalt Co., Inc. (10 September); Texas: Century Asphalt, Inc. and Angel Brothers Enterprises (30 July); and Utah: Towers Sand & Gravel (10 June). Europe Materials: France: certain assets of Holcim (1 August); Poland: certain assets in Northern Poland (30 December); Romania: certain assets of Top Aggregate (9 August); and Slovakia: certain assets of TBG Slovensko, a.s. (1 April). Building Products: Americas Arizona: Pebble Technology, Inc. (2 November); California: Piranha Pipe & Concrete (12 August); Minnesota: Hancock Concrete Products, LLC (12 March); New Jersey: EP Henry Corporation (21 June) and South Jersey Agricultural Products, Inc. (29 December); New York: National Pipe & Plastics, Inc. (30 September); and Pennsylvania: Graham Architectural Products Company (22 February). Europe Belgium: Schelde-Handel NV and PAS NV (5 July). 2021 Annual Report and Form 20-F 207 The identifiable net assets acquired, including adjustments to provisional fair values, were as follows: 2021 $m 2020 $m 2019 $m ASSETS Non-current assets Property, plant and equipment 609 134 358 Intangible assets 131 31 103 Total non-current assets 740 165 461 Current assets Inventories 157 23 65 Trade and other receivables (i) 191 47 73 Cash and cash equivalents 7 - 11 Total current assets 355 70 149 LIABILITIES Trade and other payables (143) (21) (82) Provisions for liabilities (1) - (7) Retirement benefit obligations - - (1) Lease liabilities (88) (12) (71) Interest-bearing loans and borrowings (3) - (10) Current income tax liabilities - (1) 10 Deferred income tax liabilities (37) - - Total liabilities (272) (34) (161) Total identifiable net assets at fair value 823 201 449 Goodwill arising on acquisition (ii) 679 157 310 Non-controlling interests - - (1) Total consideration 1,502 358 758 Consideration satisfied by: Cash payments 1,501 351 738 Deferred consideration (stated at net present cost) - 4 12 Contingent consideration 1 3 8 Total consideration 1,502 358 758 Net cash outflow arising on acquisition Cash consideration 1,501 351 738 Less: cash and cash equivalents acquired (7) - (11) Total outflow in the Consolidated Statement of Cash Flows 1,494 351 727 Notes (i) to (ii) are set out overleaf. * Non-controlling interests are measured at the proportionate share of net assets. 208 30. Business Combinations - continued The acquisition balance sheet presented on the previous page reflects the identifiable net assets acquired in respect of acquis itions completed during 2021, together with adjustments to provisional fair values in respect of acquisitions completed during 2020. The measurement period for a numb er of acquisitions completed in 2020, closed in 2021 with no material adjustments identified. CRH performs a detailed quantitative and qualitative assessment of each acquisition in order to determine whether it is materia l for the purposes of separate disclosure under IFRS 3 Business Combinations . None of the acquisitions completed during the year were considered sufficiently material to warrant separate disclosure of th e 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) in respect of certain acquisitions due to timing of close. The fair value assigned to identif iable 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. (i) The gross contractual value of trade and other receivables as at the respective dates of acquisition amounted to $192 milli on (2020: $47 million; 2019: $74 million). The fair value of these receivables is $191 million (all of which is expected to be recoverable) (2020: $47 milli on; 2019: $73 million). (ii) The principal factor contributing to the recognition of goodwill on acquisitions entered into by the Group is the realisat ion 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 n ature of operations in the Americas Materials and Europe Materials business segments, no significant separately identifiable intangible assets are recognised on bu siness combinations in these segments. $284 million of the goodwill recognised in respect of acquisitions completed in 2021 is expected to be deductible for tax purposes (2020: $148 million; 2019: $184 million). Acquisition-related costs for continuing operations, which exclude post-acquisition integration costs, amounting to $14 million (2020: $6 million; 2019: $7 million) have been included in operating costs in the Consolidated Income Statement (note 4). The following table analyses the 20 acquisitions completed in 2021 (2020: 17 acquisitions; 2019: 58 acquisitions) by reportable segment and provides details of the goodwill and consideration figures arising in each of those segments: Reportable segments Number of acquisitions Goodwill Consideration 2021 2020 2019 2021 2020 2019 2021 2020 2019 Continuing operations $m $m $m $m $m $m Americas Materials 8 7 27 239 53 35 694 163 182 Europe Materials 4 4 15 1 - 4 17 7 71 Building Products 8 6 15 434 90 253 790 182 501 Total Group from continuing operations 20 17 57 674 143 292 1,501 352 754 Discontinued operations Europe Distribution - - 1 - - - - - 4 Total Group 20 17 58 674 143 292 1,501 352 758 Adjustments to provisional fair values of prior year acquisitions 5 14 18 1 6 - Total 679 157 310 1,502 358 758 The post-acquisition impact of acquisitions completed during the year on the Group’s profit for the financial year was as follo ws: 2021 2020 2019 Continuing operations $m $m $m Revenue 568 103 228 Profit before tax for the financial year 51 9 2 2021 Annual Report and Form 20-F 209 The revenue and profit of the Group for the financial year determined in accordance with IFRS as though the acquisitions effect ed during the year had been at the beginning of the year would have been as follows: 2021 acquisitions $m CRH Group excluding 2021 acquisitions $m Consolidated Group including acquisitions $m Revenue 1,397 30,413 31,810 Profit before tax for the financial year 94 3,291 3,385 There have been no acquisitions completed subsequent to the balance sheet date which would be individually material to the Grou p, 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. 31. Non-controlling Interests The total non-controlling interest at 31 December 2021 is $681 million (2020: $692 million) of which $498 million (2020: $501 m illion) relates to Republic Cement & Building Materials (RCBM), Inc. and Republic Cement Land & Resources (RCLR), Inc. The non-controlling interests in respect of t he Group’s other subsidiaries are not considered to be material. Name Principal activity Country of incorporation Economic ownership interest held by non-controlling interest Republic Cement & Building Materials, Inc. and Republic Cement Land & Resources Inc. Manufacture, development and sale of cement and building materials Philippines 45% The following is summarised financial information for RCBM and RCLR prepared in accordance with IFRS 12 Disclosure of Interests in Other Entities . This information is before intragroup eliminations with other Group companies. Summarised financial information 2021 $m 2020 $m Profit for the year 61 22 Current assets 210 250 Non-current assets 1,618 1,754 Current liabilities (240) (181) Non-current liabilities (737) (984) Net assets 851 839 Cash flows from operating activities 77 38 There were no dividends paid to non-controlling interests of the combined Philippines business during the current or the prior year. CRH holds 40% of the equity share capital in RCBM and RCLR and has an economic interest of 55% of the combined Philippines busi ness. Non-controlling interest relates to another party who holds 60% of the equity share capital in RCBM and RCLR and has an economic interest of 45% of the combined Philippines business. CRH has obtained control (as defined under IFRS 10 Consolidated Financial Statements ) by virtue of contractual arrangements which give CRH power to direct the relevant non-nationalised activities of the business, in compliance with Philippine law. 210 32. Related Party Transactions The principal related party relationships requiring disclosure in the Consolidated Financial Statements of the Group under IAS 24 Related Party Disclosures pertain to: the existence of subsidiaries, joint ventures and associates; transactions with these entities entered into by the Group; the i dentification and compensation of key management personnel; and lease arrangements. Subsidiaries, joint ventures and associates The Consolidated Financial Statements include the financial statements of the Company (CRH plc, the ultimate parent) and its su bsidiaries as well as its joint ventures and associates accounted for by applying the equity method as outlined in the accounting policies on pages 145 to 154. The Grou p’s principal subsidiaries, joint ventures and associates are disclosed on pages 260 to 264. Sales to and purchases from joint ventures and associates are as follows: Joint ventures Associates Continuing operations 2021 $m 2020 $m 2019 $m 2021 $m 2020 $m 2019 $m Sales 157 127 132 42 31 41 Purchases 29 24 27 19 15 18 Loans extended by the Group to joint ventures and associates (see note 15) are included in financial assets. Amounts receivable from and payable to equity accounted investments (arising from the aforementioned sales and purchases transactions) as at the balance sheet date are included as sep arate line items in notes 17 and 18 to the Consolidated Financial Statements. Terms and conditions of transactions with subsidiaries, joint ventures and associates In general, the transfer pricing policy implemented by the Group across its subsidiaries is market-based. Sales to and purchase s from joint ventures and associates are conducted in the ordinary course of business and on terms equivalent to those that prevail in arms-length transactions. The out standing balances included in receivables and payables as at the balance sheet date in respect of transactions with joint ventures and associates are unsecur ed and settlement of these arise in cash. No guarantees have been either requested or provided in relation to related party receivables and payables. Loans to join t ventures and associates (as disclosed in note 15) are extended on normal commercial terms in the ordinary course of business with interest accruing and, in general, paid to the Group at predetermined intervals. Key management personnel For the purposes of the disclosure requirements of IAS 24, the term “key management personnel” (i.e. those persons having autho rity and responsibility for planning, directing and controlling the activities of the Company) comprises of the Board of Directors which manage the business and affairs of the Company. Key management remuneration amounted to: 2021 $m 2020 $m 2019 $m Short-term benefits 10 9 9 Post-employment benefits 1 1 1 Share-based payments - calculated in accordance with the principles disclosed in note 8 8 6 6 Total 19 16 16 Other than these compensation entitlements, there were no other transactions involving key management personnel. Lease arrangements CRH has a number of lease arrangements in place with related parties across the Group, which have been negotiated on an arms-le ngth basis at market rates. We do not consider these arrangements to be material either individually or collectively in the context of the 2021, 2020 and 2019 Co nsolidated Financial Statements. 33. Board Approval The Board of Directors approved and authorised for issue the financial statements on pages 140 to 210 in respect of the year en ded 31 December 2021 on 2 March 2022. 2021 Annual Report and Form 20-F 211 Company Balance Sheet as at 31 December 2021 2021 $m 2020 $m Notes Fixed assets 3 Financial assets 9,221 9,951 Current assets 4 Debtors 822 786 Cash at bank and in hand 687 623 Total current assets 1,509 1,409 Creditors (amounts falling due within one year) 5 Trade and other creditors 397 121 Total current liabilities 397 121 Net current assets 1,112 1,288 Net assets 10,333 11,239 Capital and reserves 8 Called-up share capital 309 333 8 Preference share capital 1 1 8 Share premium account - 7,499 8 Treasury Shares and own shares (195) (386) 9 Revaluation reserve 62 62 Other reserves 436 435 Foreign currency translation reserve (542) 327 9 Profit and loss account (i) 10,262 2,968 Total equity 10,333 11,239 (i) In accordance with section 304 of the Companies Act 2014, the profit for the financial year of the Company amounted to $1,926 million (2020: $651 million). R. Boucher, A. Manifold, Directors 212 Company Statement of Changes in Equity for the financial year ended 31 December 2021 Issued share capital $m Share premium account $m Treasury Shares/ own shares $m Revaluation reserve $m Other reserves $m Foreign currency translation reserve $m Profit and loss account $m Total equity $m At 1 January 2021 334 7,499 (386) 62 435 327 2,968 11,239 Profit for the financial year - - - - - - 1,926 1,926 Total comprehensive income - - - - - - 1,926 1,926 Share-based payment expense - - - - 110 - - 110 Shares acquired by CRH plc (Treasury Shares) - - (880) - - - (281) (1,161) Treasury Shares/own shares reissued - - 19 - - - (19) - Shares acquired by Employee Benefit Trust (own shares) - - (16) - - - - (16) Shares distributed under the Performance Share Plan Awards - - 117 - (117) - - - Reduction in Share Premium - (7,499) - - - - 7,499 - Cancellation of Income Shares (16) - - - - - 16 - Cancellation of Treasury Shares (8) - 951 - 8 - (951) - Share option exercises - - - - - - 13 13 Dividends - - - - - - (909) (909) Translation adjustment - - - - - (869) - (869) At 31 December 2021 310 - (195) 62 436 (542) 10,262 10,333 for the financial year ended 31 December 2020 At 1 January 2020 336 7,499 (360) 62 402 (568) 3,179 10,550 Profit for the financial year - - - - - - 651 651 Total comprehensive income - - - - - - 651 651 Share-based payment expense - - - - 96 - - 96 Shares acquired by CRH plc (Treasury Shares) - - (220) - - - - (220) Treasury Shares/own shares reissued - - 8 - - - (8) - Shares acquired by Employee Benefit Trust (own shares) - - (29) - - - - (29) Shares distributed under the Performance Share Plan Awards - - 65 - (65) - - - Cancellation of Treasury Shares (2) - 150 - 2 - (150) - Share option exercises - - - - - - 6 6 Dividends - - - - - - (710) (710) Translation adjustment - - - - - 895 - 895 At 31 December 2020 334 7,499 (386) 62 435 327 2,968 11,239 2021 Annual Report and Form 20-F 213 Notes to the Company Balance Sheet 1. Basis of Preparation The financial statements have been prepared on a going concern basis under the historical cost convention in accordance with th e Companies Act 2014 and GAAP in the Republic of Ireland (Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101)). Note 2 below describes the principal accounting policies under FRS 101, which have been applied consistently. In these financial statements the Company has applied the exemptions available under FRS 101 in respect of the following disclo sures: • Statement of Cash Flows; • Disclosures in respect of transactions with wholly-owned subsidiaries; • Certain requirements of IAS 1 Presentation of Financial Statements ; • Disclosures required by IFRS 7 Financial Instrument Disclosures ; • Disclosures required by IFRS 13 Fair Value Measurement ; and • The effects of new but not yet effective IFRSs 2. Accounting Policies General information The Company and its subsidiaries (together the ‘Group’) is the leading building materials business in the world. It manufactures and supplies a range of building materials, products and innovative solutions which can be found throughout the built environment in a wide range of construction projects from major public infrastructure to commercial buildings and homes. The Company is a public limited company whose shares are publicly traded. The Company is incorporated and domiciled in the Republic of Ireland. The Company’s registered number is 12965 and registered office address is 42 Fitzwilliam Square, Dublin 2, Ireland. Key accounting policies which involve estimates, assumptions and judgements Preparation of the financial statements requires management to make significant judgements and estimates. The items in the financial statements where these judgements and estimates have been made include: Financial assets Investments in subsidiaries, are stated at cost less any accumulated impairment and are reviewed for impairment if there are indications that the carrying value may not be recoverable. Impairment assessment is considered as part of the Group’s overall impairment assessment. Loans receivable and payable Intercompany loans receivable and payable are initially recognised at fair value. These are subsequently measured at amortised cost, less any loss allowance. Other significant accounting policies Operating income and expense Operating income and expense arises from the Company’s principal activities as a holding and financing company for the Group and are accounted for on an accruals basis. Foreign currencies The functional currency of the Company is euro. Transactions in foreign currencies are translated at the rates of exchange in effect at the transaction date. Monetary assets and liabilities denominated in foreign currencies are translated into euro at the rates of exchange in effect at the balance sheet date, with a corresponding charge or credit to the profit and loss account. The presentation currency of the Company is the US Dollar. Share-based payments The Company has applied the requirements of Section 8 of FRS 101. The accounting policy applicable to share-based payments is addressed in detail on page 149 of the Consolidated Financial Statements. Treasury Shares and own shares Treasury Shares Own equity instruments (i.e. Ordinary Shares) acquired by the Company are deducted from equity and presented on the face of the Company Balance Sheet. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company’s Ordinary Shares. A financial liability is recorded if a contractual obligation to repurchase shares exists at the balance sheet date. Own shares Ordinary Shares purchased by the Employee Benefit Trust on behalf of the Company under the terms of the Performance Share Plan are recorded as a deduction from equity on the face of the Company Balance Sheet. Dividends Dividends on Ordinary Shares are recognised as a liability in the Company’s Financial Statements in the period in which they are declared by the Company and approved by shareholders in respect of final dividends. Dividend income Dividend income is recognised when the right to receive payment is established. Cash and cash equivalents Cash and cash equivalents comprise cash balances held for the purpose of meeting short-term cash commitments and investments which are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value. Bank overdrafts are included within creditors falling due within one year in the Company Balance Sheet. 214 Notes to the Company Balance Sheet - continued 3. Financial Assets The Company’s investment in its subsidiaries is as follows: Shares $m Other $m Total $m At 1 January 2021 at cost 9,439 512 9,951 Capital contribution in respect of share-based payments - 36 36 Translation adjustment (725) (41) (766) At 31 December 2021 at cost 8,714 507 9,221 The equivalent disclosure for the prior year is as follows: At 1 January 2020 at cost 8,642 425 9,067 Capital contribution in respect of share-based payments - 45 45 Translation adjustment 797 42 839 At 31 December 2020 at cost 9,439 512 9,951 The Company’s principal subsidiaries, joint ventures and associates are disclosed on pages 260 to 264. Pursuant to Section 348(4) of the Companies Act 2014, a full list of subsidiaries, joint ventures and associated undertakings w ill be annexed to the Company’s annual return to be filed in the Companies Registration Office in Ireland. 4. Debtors 2021 $m 2020 $m Amounts owed by subsidiary undertakings 822 786 Amounts owed by subsidiary undertakings are repayable on demand. 5. Creditors 2021 $m 2020 $m Amounts falling due within one year Amounts owed to subsidiary undertakings 116 118 Other creditors 281 - Corporation tax liability - 3 397 121 Amounts owed to subsidiary undertakings are repayable on demand. 2021 Annual Report and Form 20-F 215 6. Auditor’s Remuneration (Memorandum Disclosure) In accordance with Section 322 of the Companies Act 2014, the fees paid in 2021 to the statutory auditor Deloitte Ireland LLP (Deloitte) for work engaged by the Parent Company comprised audit fees of $22,000 (2020: $22,000) and other assurance services of $42,000 (2020: $nil). The statutory auditor has not provided any tax advisory or other non-audit services to the Parent Company during the financial year (2020: $nil). 7. Dividends Proposed (Memorandum Disclosure) Details in respect of dividends proposed of $751 million (2020: $730 million) and dividends paid during the year are presented in the dividends note (note 11) on page 170 of the notes to the Consolidated Financial Statements. 8. Called-up Share Capital and Share Premium Called-up Share Capital Details in respect of called-up share capital, preference share capital, Treasury Shares and own shares are presented in the share capital and reserves note (note 29) on pages 203 to 205 of the notes to the Consolidated Financial Statements. Share Premium Pursuant to a special resolution approved by shareholders at the Annual General Meeting of the Company held on 29 April 2021 and the subsequent order of the High Court of Ireland made on 3 June 2021, the capital of the Company was reduced by the entire amount standing to the credit of the Company’s share premium account as at 31 December 2020, with the reserve resulting from the reduction being treated as profits available for distribution as defined by Section 117 of the Companies Act 2014. A copy of the aforementioned order of the High Court was filed with the Companies Registration Office in Ireland on 3 June 2021. 9. Reserves Revaluation Reserve The Company’s revaluation reserve arose on the revaluation of certain investments prior to the transition to FRS 101. Other Reserves The Company’s other reserves includes $27 million (2020: $19 million) undenominated share capital that arose on the cancellation of the Treasury Shares. In accordance with Section 304 of the Companies Act 2014, the Company is availing of the exemption from presenting its individual profit and loss account to the AGM and from filing it with the Registrar of Companies. The reserves of the Company available for distribution are restricted by the amount of the consideration paid for the Treasury Shares and own shares held by the Company, $195 million as at 31 December 2021 (2020: $386 million) and the undenominated share capital of $27 million as at 31 December 2021 (2020: $19 million). 10. Share-based Payments The total expense of $110 million (2020: $96 million) reflected in the Consolidated Financial Statements attributable to employee share options and performance share awards has been included as a capital contribution in financial assets (note 3) in addition to any payments to/from subsidiaries. 11. Section 357 Guarantees Any Irish registered wholly-owned subsidiary of the Company may avail of the exemption from filing its statutory financial statements for the year ended 31 December 2021 as permitted by Section 357 of the Companies Act 2014 and if an Irish registered wholly-owned subsidiary of the Company elects to avail of this exemption, there will be in force an irrevocable guarantee from the Company in respect of all commitments entered into by such wholly-owned subsidiary, including amounts shown as liabilities (within the meaning of Section 357 (1)(b) of the Companies Act 2014) in such wholly-owned subsidiary’s statutory financial statements for the year ended 31 December 2021. Details in relation to other guarantees provided by the Company are provided in the interest-bearing loans and borrowings note (note 24) on page 193 of the notes to the Consolidated Financial Statements. 12. Directors’ Emoluments Directors’ emoluments and interests are presented in note 32 to the Consolidated Financial Statements and in the Directors’ Remuneration Report on pages 80 to 109 of this Annual Report and Form 20-F. 13. Board Approval The Board of Directors approved and authorised for issue the Company Financial Statements on pages 211 to 215 in respect of the year ended 31 December 2021 on 2 March 2022. W e are committ ed t o accou ntabilit y a nd transpa rency aro und our sus tainabil it y per formance and us e detail ed KP Is t o demons tra t e pro gress again st a range o f ambit ious tar get s each year . 2021 Annual Report and Form 20-F 217 Oldcastle Infrastructure, part of CRH’ s Building Products Division installed a stormwater solution capable of capturing, cleaning and inltrating 24 million gallons of stormwater every 24 hours at Los Angeles International Airport (LAX). The StormCapture ® detention system and accompanying products provided an ef cient and sustainable on-site solution to facilitate stormwater drainage and treatment. 216-245 Supplemental 20-F and Other Disclosur es Key Financial Data 218 Non-GAAP Performance Measur es 219 Supplemental Guarantor Information 224 Pr operty , Plants and Equipment 2 2 5 Mineral Reserves and Resour ces 2 2 6 Risk Factors 232 Corporate Gover nance Practices 2 4 0 The Envir onment and Gover nment Regulations 242 EU T axonomy 243 Contractual Obligations 244 Other Disclosur es 245 2021 Annual Report and Form 20-F 219 218 Y ear ended 31 December (amounts in millions, except per share data) 2021 2020 2019 2018 2017 $m $m $m $m $m Consolidated Income Statement data Revenue 30,981 27,587 28,132 27,449 24,461 Group operating pr ot 3,585 2,263 2,793 2,446 2,177 Prot attributable to equity holders of the Company 2,565 1,122 1,627 1,497 1,838 Basic earnings per Ordinary Share 328.8c 142.9c 203.0c 179.8c 220.0c Diluted earnings per Ordinary Share 326.0c 141.8c 201.4c 178.9c 218.6c Dividends paid during the calendar year per Ordinary Shar e (i) 116.0c 92.0c 81.2c 82.8c 72.2c Average number of Or dinary Shares outstanding (ii) 780.2 785.1 801.3 832.4 835.6 All data relates to continuing operations Consolidated Balance Sheet data T otal assets 44,670 44,944 47,612 46,777 42,467 Net assets (iii) 20,914 20,348 19,635 18,952 17,962 Ordinary shar eholders' equity 20,232 19,655 19,027 18,349 17,377 Equity share capital 309 333 335 352 350 Number of Ordinary Shar es (ii) 774.1 795.1 799.6 843.4 839.0 Number of T reasury Shares and own shar es (ii) 3.7 10.3 10.2 27.8 0.4 Number of Ordinary Shar es net of T reasury Shares and own shares (ii) 770.4 784.8 789.4 815.6 838.6 (i) Interim and nal dividends per share declared previously in eur o have been translated to US Dollar using the dividends record date exchange rate. (ii) All share numbers are shown in millions of shar es. (iii) Net assets is calculated as the sum of the total assets less total liabilities. Key Financial Data The Consolidated Financial Statements of CRH plc have been prepar ed in accordance with IFRS as issued by the International Accounting Standards Board. Key nancial data is presented below for the ve years ended on 31 December 2021. As at 31 December 2021 and 2020 and for the three years ended 31 December 2021, the selected nancial data is qualied in its entirety by r eference to, and should be read in conjunction with, the audited Consolidated Financial Statements, the related Notes and the Business Performance section included elsewhere in this Annual Report and Form 20‑F . 2021 Annual Report and Form 20-F 219 218 Reconciliation of Revenue, EBITDA (as dened) and Operating Prot by segment Y ear ended 31 December Revenue EBITDA (as dened) Depreciation, amortisation and impairment Group operating prot (i) 2021 2020 2019 2021 2020 2019 2021 2020 2019 2021 2020 2019 $m $m $m $m $m $m $m $m $m $m $m $m Continuing operations Americas Materials 12,407 11,273 11,626 2,588 2,405 2,194 800 774 771 1,788 1,631 1,423 Europe Materials 10,581 9,141 9,509 1,410 1,055 1,208 596 1,245 586 814 (190) 622 Building Products 7,993 7,173 6,997 1,352 1,170 1,076 369 348 328 983 822 748 T otal Group fr om continuing operations 30,981 27,587 28,132 5,350 4,630 4,478 1,765 2,367 1,685 3,585 2,263 2,793 Discontinued operations Europe Distribution - ‑ 3,557 - ‑ 224 - ‑ 111 - ‑ 113 T otal Group 30,981 27,587 31,689 5,350 4,630 4,702 1,765 2,367 1,796 3,585 2,263 2,906 Group operating pr ot from continuing operations 3,585 2,263 2,793 Prot/(loss) on disposals 119 9 (189) Finance costs less income (311) (389) (365) Other nancial expense (106) (101) (125) Share of equity accounted investments' pr ot/(loss) 55 (118) 67 Prot befor e tax from continuing operations 3,342 1,664 2,181 Income tax expense (721) (499) (534) Group pr ot for the nancial year from continuing operations 2,621 1,165 1,647 Prot after tax for the nancial year fr om discontinued operations - ‑ 91 Group pr ot for the nancial year 2,621 1,165 1,738 (i) Throughout this document, Group operating prot is r eported as shown in the Consolidated Income Statement and excludes prot on disposals. Non-GAAP Performance Measur es CRH uses a number of non‑GAAP performance measures to monitor nancial performance. These measures ar e referred to throughout the discussion of our reported nancial position and operating performance and are measur es which are regularly reviewed by CRH management. These performance measures may not be uniformly dened by all companies and accordingly they may not be directly comparable with similarly titled measures and disclosur es by other companies. Certain information presented is derived fr om amounts calculated in accordance with IFRS but is not itself an expressly permitted GAAP measur e. The non‑GAAP performance measures as summarised below should not be viewed in isolation or as an alternative to the equivalent GAAP measure. * EBITDA is dened as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, pr ot on disposals and the Group’ s share of equity accounted investments’ prot after tax. 2021 Annual Report and Form 20-F 221 220 Return on Net Assets 2021 2020 2019 $m $m $m Group operating pr ot from continuing operations 3,585 2,263 2,793 Group operating pr ot from discontinued operations - ‑ 113 Group operating pr ot 3,585 2,263 2,906 Adjusted for impairment charges (i) - 673 8 Group operating pr ot excluding impairment charges (numerator for RONA computation) 3,585 2,936 2,914 Current year Segment assets (ii) 37,935 36,218 36,716 Segment liabilities (ii) (9,971) (9,136) (8,940) Group segment net assets 27,964 27,082 27,776 Lease liabilities (iii) 1,671 1,635 1,697 Group segment net assets excluding lease liabilities 29,635 28,717 29,473 Prior year Segment assets (ii) 36,218 36,716 36,079 Segment liabilities (ii) 9,136 (8,940) (7,547) Group segment net assets 27,082 27,776 28,532 Lease liabilities (iii) 1,635 1,697 ‑ Group segment net assets excluding lease liabilities 28,717 29,473 28,532 Average net assets (denominator for RONA computation) 29,176 29,095 29,003 RONA 12.3% 10.1% 10.0% Reconciliation of Segment Assets and Liabilities to Group Assets and Liabilities 2021 2020 2019 2018 $m $m $m $m Assets Segment assets (ii) 37,935 36,218 36,716 36,079 Reconciliation to total assets as reported in the Consolidated Balance Sheet: Investments accounted for using the equity method 653 626 775 1,332 Other nancial assets 12 13 13 26 Derivative nancial instruments (current and non‑curr ent) 136 201 92 51 Income tax assets (current and deferr ed) 151 165 98 98 Cash and cash equivalents 5,783 7,721 9,918 9,191 T otal assets as reported in the Consolidated Balance Sheet 44,670 44,944 47,612 46,777 Liabilities Segment liabilities (ii) 9,971 9,136 8,940 7,547 Reconciliation to total liabilities as reported in the Consolidated Balance Sheet: Interest‑bearing loans and borr owings (current and non‑current) 10,487 12,215 15,827 17,172 Derivative nancial instruments (current and non‑curr ent) 14 13 18 68 Income tax liabilities (current and deferr ed) 3,284 3,232 3,192 3,038 T otal liabilities as reported in the Consolidated Balance Sheet 23,756 24,596 27,977 27,825 (i) Operating prot is adjusted for non‑cash impairment charges. Please see note 4 to the Consolidated Financial Statements for further detail on such impairment charges. (ii) Segment assets and liabilities as disclosed in note 2 to the Consolidated Financial Statements. (iii ) Segment liabilities include lease liabilities which are debt in natur e and are therefore adjusted for in arriving at the calculation of Gr oup segment net assets for the calculation of RONA. Segment lease liabilities at 31 December 2021 amounted to: Americas Materials $3 81 milli on ( 2020 : $3 45 m illi on; 2019: $408 million), Europe Materials $517 million (2020: $547 million; 2019: $554 million) and Building Pr oducts $773 million (2020: $743 million; 2019: $735 million). . Non-GAAP Performance Measur es - continued 2021 Annual Report and Form 20-F 221 220 Calculation of Net Debt/EBITDA (as dened) 2021 2020 $m $m Net debt Cash and cash equivalents (i) 5,783 7,721 Interest‑bearing loans and borr owings (i) (10,487) (12,215) Lease liabilities (1,671) (1,635) Derivative nancial instruments (net) (i) 122 188 Group net debt (i) (6,253) (5,941) EBITDA (as dened) from continuing operations 5,350 4,630 Times Net Debt divided by EBITDA (as dened) from continuing operations 1.2 1.3 (i) These items appear in notes 21 to 25 to the Consolidated Financial Statements. T otal Shareholder Return (TSR) T otal shar eholder return represents the total accumulated value delivered to shar eholders (via gross dividends reinvested and share appr eciation) if €100 was invested in CRH plc shares in 1970. 2021 2020 Investment in CRH plc shares (1970) €100 €100 Accumulated CRH plc shares (31 December) ‑ based on reinvestment of dividends 3,548 3,465 Share price (31 December) ‑ Euronext Dublin €46.52 €34.02 Shareholder value (31 December) ‑ '000 €165 €118 T otal shareholder r eturn (i) 15.5% 15.1% (i) Calculated using Compound Average Growth Rate (CAGR) methodology . Calculation of EBITDA (as dened) Net Interest Cover 2021 2020 2019 $m $m $m Interest Finance costs (i) 311 389 387 Finance income (i) - ‑ (22) Net interest 311 389 365 EBITDA (as dened) from continuing operations 5,350 4,630 4,478 Times EBITDA (as dened) Net Interest Cover (EBITDA (as dened) divided by net inter est) 17.2 11.9 12.3 (i) These items appear on the Consolidated Income Statement on page 140 and in note 9 to the Consolidated Financial Statements. * EBITDA is dened as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, pr ot on disposals and the Group’ s share of equity accounted investments’ prot after tax. 2021 Annual Report and Form 20-F 223 222 EBITDA (as dened). EBITDA is dened as earnings before inter est, taxes, depreciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ prot after tax and is quoted by management in conjunction with other GAAP and non‑GAAP nancial 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 (as dened) by segment is monitored by management in or der to allocate resour ces between segments and to assess performance. Given that net nance 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 . EBITDA (as dened) margin is calculated by expressing EBITDA (as dened) as a percentage of sales. Net Debt. Net debt is used by management as it gives a more complete pictur e of the Group’ s current debt situation than total interest‑bearing loans and borrowings. Net debt is pr ovided to enable investors to see the economic effect of gr oss debt, related hedges and cash and cash equivalents in total. Net debt is a non‑GAAP measure and comprises curr ent and non‑current inter est‑bearing loans and borrowings, lease liabilities, cash and cash equivalents and current and non‑curr ent derivative nancial instruments (net). Net Debt/EBITDA (as dened) is monitored by management and is useful to investors in assessing the Company’ s level of indebtedness relative to its protability . It is the ratio of Net Debt to EBITDA (as dened) and is calculated on page 221. EBITDA (as dened) Net Interest Cover . EBITDA (as dened) Net Interest Cover is used by management as a measure which matches the earnings and cash generated by the business to the underlying funding costs. EBITDA (as dened) Net Interest Cover is presented to pr ovide investors with a greater understanding of the impact of CRH’ s debt and nancing arrangements. It is the ratio of EBITDA (as dened) to Net Interest and is calculated on page 221. RONA. Return on Net Assets is a key inter nal pre‑tax and pr e‑non‑cash impairment measure of operating performance throughout the CRH Gr oup and can be used by management and investors to measure the r elative use of assets between CRH’ s business segments and to compare to other businesses. The metric measures management’ s ability to generate prots fr om the net assets requir ed to support that business, focusing on both prot maximisation and the maintenance of an efcient asset base; it encourages ef fective xed asset maintenance programmes, good decisions regar ding expenditure on property , plant and equipment and the timely disposal of surplus assets, and also supports the effective management of the Group’ s working capital base. RONA is calculated by expressing total Gr oup operating prot excluding non‑cash impairment charges 1 as a percentage of average net assets. Net assets comprise total assets by segment (including assets held for sale) less total liabilities by segment (excluding lease liabilities and including liabilities associated with assets classied as held for sale) as shown on page 220 and detailed in note 2 to the Consolidated Financial Statements, and excludes equity accounted investments and other nancial assets, net debt (as previously dened) and tax assets & liabilities. The average net assets for the year is the simple average of the opening and closing balance sheet gures. Organic Revenue, Organic Operating Prot and Organic EBITDA (as dened). CRH pursues a strategy of growth thr ough acquisitions and investments, with $1.5 billion spent on acquisitions and investments in 2021 (2020: $0.4 billion). Acquisitions completed in 2020 and 2021 contributed incremental sales r evenue of $856 million, operating prot of $52 million and EBITDA (as dened) of $101million in 2021. Cash proceeds fr om divestments and non‑current asset disposals amounted to $507 million (net of cash disposed and including deferred consideration proceeds in r espect of prior year divestments (2020: $307 million). The sales impact of divested activities Non-GAAP Performance Measur es - continued * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. 1. T o better align to the measure used internally by management we adjusted our RONA denition in our 2020 Annual Report and Form 20‑F to exclude any non‑cash impairment charges. We accordingly presented our prior period RONA disclosures on page 220 on a consistent basis; excluding non‑cash impairment charges of $8 million in 2019. Prot after T ax (Pre-impairment) 2021 2020 2019 $m $m $m Group pr ot for the nancial year from continuing operations (i) 2,621 1,165 1,647 Adjusted for: Impairment of property , plant and equipment and intangible assets (ii) - 673 8 Impairment of equity accounted investments (iii) - 154 ‑ T ax related to impairment charges - (39) (2) Group pr ot pre‑impairment for the nancial year from continuing operations 2,621 1,953 1,653 Earnings per Share (Pre-impairment) 2021 2020 2019 $m $m $m Prot attributable to or dinary equity holders of the Company from continuing operations (i) (iv) 2,565 1,122 1,627 Impairment of property , plant and equipment and intangible assets (ii) - 673 8 Impairment of equity accounted investments (iii) - 154 ‑ T ax related to impairment charges - (39) (2) Prot attributable to or dinary equity holders of the Company from continuing operations – pre‑impairment 2,565 1,910 1,633 Weighted average number of Or dinary Shares (millions) outstanding for the year (iv) 780.2 785.1 801.3 Basic earnings per Ordinary Share pr e‑impairment from continuing operations 328.8 243.3 203.8 (i) These items appear on the Consolidated Income Statement on page 140. (ii) See further details in note 4 to the Consolidated Financial Statements on page 161. (iii) See further details in note 15 to the Consolidated Financial Statements on page 177. (iv) These items appear in note 12 to the Consolidated Financial Statements on page 171. 2021 Annual Report and Form 20-F 223 222 in 2021 was a negative $182 million and the impact at an operating prot and EBITDA (as dened) level was a negative $51 million and $58million respectively . The US Dollar strengthened against most major currencies by the end of 2021. However , during 2021 the US Dollar weakened against most major currencies r esulting in the average US Dollar/Euro rate weakening from 0.8771 in 2020 to 0.8460 in 2021, and likewise for US Dollar/Pound Sterling weakening from an average 0.7798 in 2020 to 0.7270 in 2021. Overall currency movements resulted in a favourable net for eign currency translation impact on our results as shown in the table on page 39. The average and year ‑end 2021 exchange rates of the major currencies impacting on the Group ar e set out on page 154. Because of the impact of acquisitions, divestments, exchange translation and other non‑recurring items on reported r esults each year , the Group uses organic revenue, organic operating pr ot and organic EBITDA (as dened) as additional performance indicators to assess performance of pre‑existing (also r eferred to as underlying, heritage, like‑for ‑like or ongoing) operations each year . Organic revenue, organic operating pr ot and organic EBITDA (as dened) are arrived at by excluding the incremental r evenue, operating prot and EBITDA (as dened) contributions from curr ent and prior year acquisitions and dive stme nts, th e impact of exchange translation and the impact of any non‑recurring items. In the Business Performance section on pages 36 to 53, changes in organic revenue, organic operating pr ot and organic EBITDA (as dened) are pr esented as additional measures of r evenue, operating prot and EBITDA (as dened) to provide a gr eater understanding of the performance of the Group. Organic change % is calculated by expressing the organic movement as a percentage of the prior year (adjusted for exchange effects). A r econciliation of the changes in organic revenue, organic operating pr ot and organic EBITDA (as dened) to the changes in total revenue, operating pr ot and EBITDA (as dened) for the Group and by segment, is pr esented with the discussion of each segment’ s performance in tables contained in the segment discussion commencing on page 36. Revenue from continuing and discontinued operations, EBITDA (as dened) from continuing and discontinued operations and Operating Prot fr om continuing and discontinued operations. As detailed in note 3 to the Consolidated Financial Statements, our Europe Distribution business has been classied as a discontinued operation in accordance with IFRS 5. In certain instances throughout the Annual Report and Form 20‑F we refer to r evenue, EBITDA (as dened) and operating prot fr om continuing and discontinued operations. Information presented on this basis is useful to investors as (i) it provides further understanding of the Group’ s performance and (ii) assists investors in the comparison of the Group’ s performance with that of other companies. A reconciliation of each of these measur es is detailed on page 219. Cash paid to Shareholders. Cash paid to shareholders is a measur e of cash returned to shareholders r epresenting dividends of $0.9 billion (2020: $0.7 billion) paid during the year and excess cash of $0.9 billion (2020: $0.2 billion) returned through the shar e buyback programme. The metric provides information on dividend gr owth for shareholders and is r eective of CRH’ s continued commitment to return excess cash to shareholders. CRH monitors the cash paid to shareholders as part of its overall capital allocation strategy . T otal Shareholder Return (TSR). TSR is a measure of shareholder r etur ns delivery through the cycle. It repr esents the total accumulated value delivered to shareholders since the formation of the Gr oup in 1970 (via gross dividends r einvested and share appreciation) and is calculated on page 221. The metric provides information on total r etur ns for shareholders and is pr ovided to assist investors in the comparison of the Group's performance with that of other companies. Prot after T ax (Pre-impairment) . Prot after T ax pre‑impairment as calculated on page 222 is a measure of the Gr oup's protability from continuing operations excluding any non‑cash impairment charges and the related tax impact of such impairments. Prot after T ax presented on a pre‑impairment basis is used by management to evaluate the Group's pr otability in a given year and is useful to investors as it (i) provides an understanding of the Group's underlying performance and (ii) assists investors in the comparison of the Group's performance with that of other companies. Earnings per Share (Pre-impairment). Earnings per Share (EPS) pr e‑impairment is a measure of the Group's pr otability per share from continuing operations excluding any non‑cash impairment charges and the related tax impact of such impairments. It is used by management to evaluate the Group's underlying pr otability performance relative to that of other companies and its own past performance. EPS information presented on a pre‑impairment basis is useful to investors as it (i) provides an insight into the Gr oup's underlying performance and protability and (ii) assists investors in the comparison of the Group's performance with that of other companies. EPS pre‑impairment is calculated on page 222 as prot attributable to the ordinary equity holders of the Company fr om continuing operations excluding any non‑cash impairment charges (and the related tax impact of such impairments) divided by the weighted average number of ordinary shar es outstanding for the year . * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. 2021 Annual Report and Form 20-F 225 224 Guarantor Financial Information As of 31 December 2021, CRH plc (the ‘Guarantor’) has fully and unconditionally guaranteed certain debt securities issued by CRH America, Inc. (the ‘Issuer’), including: • US$300 million 6.40% Notes due 2033 – listed on Euronext Dublin (i) (the 'Notes') (i) O r igi na ll y is sue d a s a US$ 30 0 m ill io n bon d in Se ptem be r 200 3. Su bs eq ue ntl y in Au gus t 20 09 an d De ce mb er 201 0, US $87 mi lli on of t he is sue d No tes we re ac qu ire d by CR H plc a s pa r t of liabil it y management e xercises undertaken. CRH America, Inc. is 100% owned by the Company (CRH plc). The Notes are fully and unconditionally guaranteed by CRH plc as dened in the indentures governing the Notes. The Notes are unsecur ed and rank equally with all other present and futur e unsecured and unsubordinated obligations of CRH America, Inc and CRH plc, subject to exceptions for obligations preferr ed by law. The guarantee is a full, irrevocable and unconditional guarantee of the principal, interest, pr emium, if any , and any other amounts payable in respect of the Notes given by CRH plc. CRH plc also fully and unconditionally guarantees securities issued by CRH America Finance, Inc., which is a 100% owned nance subsidiary of CRH plc. Basis of Presentation The following summarised nancial information reects, on a combined basis, the Balance Sheet as at 31 December 2021 and the Income Statement for the year ended 31 December 2021 of CRH America, Inc and CRH plc, which guarantees the register ed debt; collectively the ‘Obligor Group’. Intercompany balances and transactions within the Obligor Group have been eliminated in the summarised nancial information below . Amounts attributable to the Obligor Group’ s investment in non‑obligor subsidiaries have also been excluded. Intercompany r eceivables/payables and transactions with non‑obligor subsidiaries are separately disclosed as applicable. This summarised nancial information has been prepar ed and presented pursuant to the Securities and Exchange Commission Regulation S‑X Rule 13‑01 and is not intended to present the nancial position and results of operations of the Obligor Group in accor dance with IFRS. The summarised Income Statement information for the year ended 31 December 2021 is as follows: For the year ended 31 December 2021 $m Prot befor e tax from continuing operations (i) 1,935 - of which relates to transactions with non-obligor subsidiaries 2,016 Prot for the nancial year – all of which is attributable to equity holders of the Company 1,933 - of which relates to transactions with non-obligor subsidiaries 2,016 (i) Revenue and Gross Prot for the Obligor Group for the year ended 31 December 2021 amounted to $nil million. The summarised Balance Sheet information as at the 31 December 2021 is as follows: As at 31 December 2021 $m Current assets 1,979 Current assets – of which is due from non-obligor subsidiaries 822 Non‑current assets 3,343 Non‑current assets – of which is due from non-obligor subsidiaries 3,311 Current liabilities 408 Current liabilities – of which is due to non-obligor subsidiaries 116 Non‑current liabilities 2,040 Non‑current liabilities – of which is due to non-obligor subsidiaries nil Supplemental Guarantor Information 2021 Annual Report and Form 20-F 225 224 Pr operty , Plants and Equipment At 18 February 2022, CRH had a total of 3,233 building materials production locations. 1,180 locations are leased, with the r emaining 2,053 locations held on a freehold basis. The signicant subsidiary locations as at 31 December 2021 are the cement facilities in the US, Philippines, Poland, Ukraine, the UK, Romania, Slovakia, Canada, Ireland, Germany and France. The clinker (the key intermediate product in the manufacture of cement) capacity for these locations is set out in the table below . Further details on locations and products manufactur ed are provided on pages 266 and 267. None of CRH’ s individual properties is of material signicance to the Gr oup. CRH believes that all the facilities are in good condition, adequate for their purpose and suitably utilised according to the individual natur e and requir ements of the relevant operations. CRH has a continuing programme of impr ovements and replacements to pr operties when considered appropriate to meet the needs of the individual operations. Further information in relation to the Group’ s accounting policy and process governing any impairment of property , plant and equipment is given on page 146 and in note 13 to the Consolidated Financial Statements on page 172. Sources and A vailability of Raw Materials CRH generally owns or leases the real estate on which its main raw materials, namely aggregates, are found. CRH is a signicant pur chaser of certain important materials or resour ces such as cement, bitumen, steel, gas, fuel and other energy supplies, the cost of which can uctuate signicantly and consequently have an adverse impact on CRH’ s business. CRH is not generally dependent on any one source for the supply of these materials or resour ces, other than in certain jurisdictions with regar d to the supply of gas and electricity . Competitive markets generally exist in the jurisdictions in which CRH operates for the supply of cement, bitumen, steel and fuel. Mine Safety Disclosures The information concerning mine safety violations and other regulatory matters r equired by Section 1503(a) of the Dodd‑Frank W all Street Reform and Consumer Protection Act is included in Exhibit 16 to CRH’ s Annual Report on Form 20‑F , as led with the Securities and Exchange Commission (SEC). Signicant Locations – Clinker Capacity Subsidiary Country Number of plants Clinker capacity (tonnes per hour) Ash Grove United States 10 1,148 Republic Cement Philippines 5 628 Poland 1 342 Podilsky Cement PJSC Ukraine 1 325 T armac United Kingdom 3 306 ROMCIM Romania 2 305 Danucem Slovakia 2 290 Ash Grove Canada 2 288 Irish Cement Ireland 2 288 Opterra Germany 2 268 Eqiom France 3 243 2021 Annual Report and Form 20-F 227 226 Mineral Reserves and Resour ces Mineral Reserves and Resources Background The Group’ s mineral reserves (reserves) and mineral resour ces (resources) for the production of primary building materials (which encompasses aggregates (stone, sand and gravel), cement and lime, asphalt, readymixed concr ete and concrete products) fall into a variety of categories spanning a wide number of rock types and geological classications. These reserves and r esources are found within our extensive network of quarry locations in attractive local markets globally . This disclosure of the Group’ s mining properties has been pr epared in accordance with the requir ements of subpart 1300 of Regulation S‑K (“Subpart 1300”). The Group has 1,230 properties with 91,721 hectar es of owned and 37,079 hectares of leased land, r espectively , as disclosed in the table on page 229, the locations of which are pr esented by geographic location in the maps on pages 230 to 231. None of CRH’ s mineral‑bearing properties ar e individually material to the Group as at 31 December 2021. A summary disclosure of CRH’ s mining operations is provided on pages 227 to 231. As at 31 December 2021, the Group’ s reserves and resour ces estimations of 22.8 billion tonnes and 9.7 billion tonnes, respectively , as disclosed on pages 227 to 228, are calculated in accor dance with Subpart 1300. The Group’ s reserves and resour ces disclosures may not be comparable to similar disclosures disclosed in accor dance with the requir ements of other countries and should be read in conjunction with the disclosures that follow on pages 227 to 231. CRH operates predominantly pr oduction stage properties, with a limited number of development and exploration stage properties, as such terms ar e dened in Subpart 1300. Predominantly , CRH’ s production stage pr operties provide raw materials for on‑site modern cement, lime and aggregates producing facilities. Almost exclusively , CRH utilises surface mining and, with a very limited number of exceptions, CRH and its subsidiaries are the only operators of the properties. Reserves Reserves are dened in Subpart 1300 as “an estimate of tonnage and grade or quality of indicated and measured mineral r esources that, in the opinion of the qualied person, can be the basis of an economically viable project. Mor e specically , it is the economically mineable part of a measured or indicated mineral resour ce, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted”. Reserves are classied into two categories, probable and pr oven reserves, in order of increasing geological condence. The Group’ s estimate of 22.8 billion tonnes of reserves, as disclosed on page 227 analysed by rock type (Har d rock, Sand & Gravel and Other), are of recoverable stone, sand, and gravel of suitable quality for economic extraction, based on drilling and studies by the Group’ s geologists and engineers. These estimates also consider reasonable economic and operating constraints as to maximum depth of overburden and stone excavation and are subject to permitting or other restrictions. The disclosed reserves and r esources estimations which include diluting materials and allowances for losses that may occur when the mineral is mined, extracted or processed have been estimated by qualied persons, as such term is dened within Subpart 1300. Not all minerals that may be on CRH’ s mineral‑ bearing properties have been assessed and such properties may be assessed for mineral r eserves or resour ces in future years, as required by operational needs. CRH’ s properties ar e subject to a wide variety of permitting procedur es and conditions, which vary between jurisdictions. Many of CRH’ s properties requir e separate permits from multiple authorities, including but not limited to environmental, mining, regional and national administrative authorities. The periods of validity and the conditions of these permits may be differ ent. Resources A mineral resour ce is dened in Subpart 1300 as "a concentration or occurrence of material of economic interest in or on the Earth's crust in such form, grade or quality , and quantity that there are reasonable pr ospects for economic extraction. A mineral resour ce is a reasonable estimate of mineralisation, taking into account relevant factors such as cut‑off grade, likely mining dimensions, location or continuity , that, with the assumed and justiable technical and economic conditions, is likely to, in whole or in part, become economically extractable". Resources ar e classied into three categories, inferred, indicated or measur ed resources, in order of increasing geological condence. Indicated or measured r esources can be converted to reserves by the application of certain modifying factors which include, but are not limited to, consideration of mining, processing, metallurgical, infrastructur e, economic, marketing, legal, environmental compliance, plans, negotiations, or agreements with local individuals or groups, and governmental factors. There is no certainty that any of the resour ces disclosed on page 228 will be converted into reserves. Resour ces have not been fully assessed using modifying factors, however , an initial assessment has been completed in accordance with Subpart 1300. Internal Controls CRH has established appropriate governance processes to support the publication of our 2021 reserves and r esources disclosures and as outlined on page 66, the Audit Committee, as one of its key areas of focus for 202 1 , h as reviewed and considered the new mining pr operty disclosures. Reserve and resour ce estimates are subject to annual review by each of the r elevant operating companies across the Gr oup in conjunction with the relevant qualied persons. CRH has established and maintains a number of internal controls to address the risks inherent in the mineral r eserves and resour ces reporting process. These internal controls have been embedded into the local control environments and operate acr oss the business, including controls at an Operating Company , Divisional and Group level. As CRH’ s reserves and r esources are pr edominantly in production stage pr operties, features of the internal controls relating to quality assurance and quality control (QA/QC) include: • Databases and data repositories for exploration and/or production data that contain accurate and precise data fr om which reserves and resour ces can be evaluated, and operational plans can be developed; • V erication sampling and testing of known mineralisation. This is generally requir ed to establish compliance with regulation on pr oduct qualities. V erication testing conrms geological maps prepar ed during earlier exploration programmes; and • In the case of cement raw materials, facility laboratories participate in an externally managed annual review pr ocess with ISO 17025 accredited independent laboratories When exploration programmes ar e conducted, QA/ QC measures include: • Ensuring that surface or drill sampling results in the highest quality sample possible. This would include down‑hole surveying of drill holes as necessary; • Obtain pictures of drill sample (e.g. core) for future r eference; • Geological core logging prior to laboratory analysis. Description of sample at various intervals; • Ensuring the integrity of samples from point of origin to analytical laboratory; and • Using nationally or regionally accredited laboratories for all analyses and tests for exploration programmes in pr operties containing aggregates In addition, to provide further assurance over the Group’ s mineral reserves and resour ces reporting process, the Gr oup’ s Internal Audit function completed a limited scope review acr oss a sample of material reporting entities on the operation of these internal controls as at 31 December 2021. 2021 Annual Report and Form 20-F 227 226 The table below presents, by segment and geographic location, the tonnes of pr oven and probable aggregates, cement and lime mineral reserves as at 31 December 2021 and the related per centages by rock type. Reserves Proven Probable T otal Reserves (i) (ii) Country T onnes (iii) Grade: % by rock type T onnes (iii) Grade: % by rock type T onnes (iii) Grade: % by r ock type Hard Rock Sand & Gravel Other Hard Rock Sand & Gravel Other Hard Rock Sand & Gravel Other Cement Europe Materials France 55 100% ‑ ‑ 15 100% ‑ ‑ 70 100% ‑ ‑ Germany 112 100% ‑ ‑ ‑ ‑ ‑ ‑ 112 100% ‑ ‑ Ireland 166 92% ‑ 8% 13 71% ‑ 29% 179 91% ‑ 9% Philippines 298 93% ‑ 7% 194 100% ‑ ‑ 492 96% ‑ 4% Poland 136 93% 6% 1% 48 93% 6% 1% 184 93% 6% 1% Romania 40 96% 1% 3% 206 90% 8% 2% 246 91% 7% 2% Serbia 104 100% ‑ ‑ ‑ ‑ ‑ ‑ 104 100% ‑ ‑ Slovakia 79 98% ‑ 2% 234 92% ‑ 8% 313 94% ‑ 6% Spain 12 100% ‑ ‑ 87 100% ‑ ‑ 99 100% ‑ ‑ Switzerland 85 100% ‑ ‑ ‑ ‑ ‑ ‑ 85 100% ‑ ‑ Ukraine 69 100% ‑ ‑ 25 100% ‑ ‑ 94 100% ‑ ‑ UK 186 98% ‑ 2% 76 90% ‑ 10% 262 96% ‑ 4% Americas Materials Canada 212 100% ‑ ‑ 22 100% ‑ ‑ 234 100% ‑ ‑ US 529 100% ‑ ‑ 97 100% ‑ ‑ 626 100% ‑ ‑ Subtotal 2,083 98% ‑ 2% 1,017 95% 2% 3% 3,100 97% 1% 2% Aggregates Europe Materials Finland 149 77% 23% ‑ 52 82% 18% ‑ 201 78% 22% ‑ France 202 59% 41% ‑ ‑ ‑ ‑ ‑ 202 59% 41% ‑ Ireland 703 90% 10% ‑ 217 93% 7% ‑ 920 91% 9% ‑ Philippines 49 100% ‑ ‑ 5 100% ‑ ‑ 54 100% ‑ ‑ Poland 123 100% ‑ ‑ ‑ ‑ ‑ ‑ 123 100% ‑ ‑ Romania 11 88% 12% ‑ 38 94% 6% ‑ 49 93% 7% ‑ Spain 68 97% 2% 1% 26 95% 5% ‑ 94 96% 3% 1% UK 606 77% 23% ‑ 833 93% 7% ‑ 1,439 86% 14% ‑ Other (iv) 70 43% 57% ‑ 154 51% 49% ‑ 224 49% 51% ‑ Americas Materials Canada 526 76% 24% ‑ 195 81% 19% ‑ 721 78% 22% ‑ US 6,868 76% 16% 8% 8,403 88% 7% 5% 15,271 83% 11% 6% Subtotal 9,375 77% 17% 6% 9,923 88% 8% 4% 19,298 83% 12% 5% Lime Europe Materials Germany 189 100% ‑ ‑ 63 100% ‑ ‑ 252 100% ‑ ‑ Ireland, Poland, UK, Czech Republic 83 100% ‑ ‑ 26 100% ‑ ‑ 109 100% ‑ ‑ Subtotal 272 100% ‑ ‑ 89 100% ‑ ‑ 361 100% ‑ ‑ T otal 11,730 81% 14% 5% 11,029 88% 8% 4% 22,759 85% 10% 5% (i) CRH has no individually material mineral‑bearing properties requiring individual property disclosur e under Subpart 1300. (ii) CRH’ s point of refer ence for the estimation of the Group’ s mineral reserves is “in‑situ” reserves. (iii) All reserves quantities are quoted in millions of tonnes. (iv) Other includes Slovakia and Switzerland. CRH’ s mineral reserves and r esources are used pr edominantly for the production and sale of aggregates, cement and lime. The average sales price for the year ended 31 December 2021 for aggregates and cement was $11.0 and $92.5 per tonne, r espectively , for our Europe Materials businesses and $13.3 and $111.4 per tonne, respectively , for our Americas Materials businesses. The average sales price for lime within our Europe Materials businesses was $113.9 per tonne. These prices, which are used for estimation of both mineral r eserves and resources, are impacted by pr oduct mix, geographic location and foreign currency . 2021 Annual Report and Form 20-F 229 228 Resources Measured Indicated T otal Measured & Indicated Inferred T otal Resources (i) (ii) Country T onnes (iii) Grade: % by rock type T onnes (iii) Grade: % by rock type T onnes (iii) Grade: % by rock type T onnes (iii) Grade: % by rock type Hard Rock Sand & Gravel Other Hard Rock Sand & Gravel Other Hard Rock Sand & Gravel Other Hard Rock Sand & Gravel Other Mineral Reserves and Resour ces - continued The table below presents, by segment and geographic location, the tonnes of measur ed, indicated, and inferred aggregates, cement and lime resour ces as at 31 December 2021 and the related per centage of these resources by rock type. CRH’ s mineral resources in the table below ar e disclosed exclusive of mineral reserves. Lime Europe Materials Germany 470 100% ‑ ‑ 201 100% ‑ ‑ 671 100% ‑ ‑ 137 100% ‑ ‑ 808 Ireland, Poland, UK, Czech Republic 15 100% ‑ ‑ ‑ ‑ ‑ ‑ 15 100% ‑ ‑ 18 100% ‑ ‑ 33 Subtotal 485 100% ‑ ‑ 201 100% ‑ ‑ 686 100% ‑ ‑ 155 100% ‑ ‑ 841 T otal 2,313 85% 14% 1% 2,583 82% 16% 2% 4,896 84% 15% 1% 4,776 76% 19% 5% 9,672 (i) CRH has no individually material mineral‑bearing properties requiring individual property disclosur e under Subpart 1300. (ii) CRH’ s point of refer ence for the estimation of the Group’ s mineral resources is “in‑situ” resour ces. (iii) All resource quantities ar e quoted in millions of tonnes. (iv) Other includes Slovakia and Switzerland. Aggregates Europe Materials Finland ‑ ‑ ‑ ‑ 1 100% ‑ ‑ 1 100% ‑ ‑ ‑ ‑ ‑ ‑ 1 France 43 50% 50% ‑ 3 100% ‑ ‑ 46 53% 47% ‑ ‑ ‑ ‑ ‑ 46 Ireland 90 13% 87% ‑ 264 95% 5% ‑ 354 75% 25% 130 94% 6% ‑ 484 Philippines 26 100% ‑ ‑ 2 100% ‑ ‑ 28 100% ‑ ‑ ‑ ‑ ‑ ‑ 28 Romania 66 97% 3% ‑ 53 87% 13% ‑ 119 92% 8% ‑ 32 88% 12% ‑ 151 UK 58 34% 66% ‑ 412 46% 53% 1% 470 44% 55% 1% 206 85% 15% ‑ 676 Other (iv) 174 65% 35% ‑ ‑ ‑ ‑ ‑ 174 65% 35% ‑ 8 ‑ 100% ‑ 182 Americas Materials Canada 255 90% 10% ‑ 46 93% 7% ‑ 301 90% 10% ‑ 273 100% ‑ ‑ 574 US 613 88% 12% ‑ 1,401 86% 12% 2% 2,014 85% 14% 1% 3,660 70% 24% 6% 5,674 Subtotal 1,325 77% 23% ‑ 2,182 80% 19% 1% 3,507 77% 22% 1% 4,309 74% 21% 5% 7,816 Cement France 25 100% ‑ ‑ ‑ 100% ‑ ‑ 25 100% ‑ ‑ 1 100% ‑ ‑ 26 Germany 4 100% ‑ ‑ ‑ ‑ ‑ ‑ 4 100% ‑ ‑ ‑ ‑ ‑ ‑ 4 Europe Materials Ireland 102 100% ‑ ‑ 21 100% ‑ ‑ 123 100% ‑ ‑ 28 92% 8% ‑ 151 Romania 86 93% ‑ 7% 87 92% 8% ‑ 173 92% 4% 4% 16 99% ‑ 1% 189 Slovakia 131 98% ‑ 2% 19 ‑ ‑ 100% 150 86% ‑ 14% 43 100% ‑ ‑ 193 Switzerland 20 96% 4% ‑ ‑ ‑ ‑ ‑ 20 96% 4% ‑ ‑ ‑ ‑ ‑ 20 Ukraine 68 100% ‑ ‑ ‑ ‑ ‑ ‑ 68 100% ‑ ‑ 45 100% ‑ ‑ 113 UK 4 100% ‑ ‑ 45 86% ‑ 14% 49 87% ‑ 13% 45 100% ‑ ‑ 94 Americas Materials Canada 54 91% ‑ 9% 1 100% ‑ ‑ 55 91% ‑ 9% 2 100% ‑ ‑ 57 US 9 100% ‑ ‑ 27 100% ‑ ‑ 36 100% ‑ ‑ 132 100% ‑ ‑ 168 Subtotal 503 97% ‑ 3% 200 83% 4% 13% 703 93% 1% 6% 312 99% 1% ‑ 1,015 2021 Annual Report and Form 20-F 229 228 Country No. of Quarries/ pits Surface acreage (hectares) (i) (ii) Annualised extraction (millions of tonnes) Y ears to Depletion (iii) Owned Leased 2019 2020 2021 The table below outlines the number of facilities by segment and geographic location along with the annualised extraction (in millions of tonnes) for each of the three years ending 31 December 2021. Lime Germany 8 780 10 5.9 6.1 5.6 45 Europe Materials Ireland, Poland, UK, Czech Republic 4 472 13 3.2 3.1 3.5 35 Subtotal 12 1,252 23 9.1 9.2 9.1 T otal 1,230 91,721 37,079 343.2 281.9 348.7 (i) The disclosures in the table above include the surface area of infrastructur e, process plants, waste piles, water storage, water treatment plants and boundary ar eas of CRH’ s mineral‑bearing properties. Remote pr operties such as ofces, distribution facilities and readymixed concr ete plants are not included. (ii) 1 hectare equals approximately 2.47 acr es. (iii) Y ears to depletion is based on the average of the three years' 2019 to 2021 annualised extraction. (iv) Other includes Slovakia and Switzerland. Aggregates Europe Materials Finland 84 1,235 844 12.5 10.8 10.0 20 France 41 773 1,174 8.2 5.5 7.0 29 Ireland 86 5,268 451 18.3 13.7 19.4 48 Philippines 1 ‑ 178 ‑ ‑ ‑ ‑ Poland 2 211 9 3.9 3.3 3.4 36 Romania 15 425 197 1.4 1.9 2.1 26 Spain 9 76 110 1.5 0.9 1.2 77 UK 181 8,572 6,258 39.0 32.4 42.0 34 Other (iv) 20 427 303 6.5 4.4 4.8 47 Americas Materials Canada 38 6,067 703 20.9 18.9 17.4 41 US 678 54,016 24,582 173.0 133.9 177.2 87 Subtotal 1,155 77,070 34,809 285.2 225.7 284.5 Cement Europe Materials France 3 706 31 3.0 2.5 3.8 18 Germany 2 323 ‑ 2.7 2.3 2.6 43 Ireland 3 1,128 ‑ 2.9 3.1 3.3 54 Philippines 5 999 213 6.7 6.7 8.4 59 Poland 1 414 ‑ 4.2 4.0 4.3 43 Romania 6 301 135 4.3 4.2 4.8 51 Serbia 2 119 41 1.0 1.2 1.2 87 Slovakia 5 66 309 2.3 2.4 2.8 113 Spain 2 78 ‑ 0.4 0.8 1.0 101 Switzerland 3 183 26 1.1 0.9 1.0 83 Ukraine 9 ‑ 975 3.1 3.2 3.8 25 UK 10 901 185 4.5 4.4 6.0 44 Americas Materials Canada 3 766 7 2.9 2.4 2.3 103 US 9 7,415 325 9.8 8.9 9.8 64 Subtotal 63 13,399 2,247 48.9 47.0 55.1 2021 Annual Report and Form 20-F 231 230 CRH Mineral Locations Represents the location of CRH's mineral-bearing properties. North America 2021 Annual Report and Form 20-F 231 230 The Philippines Europe 2021 Annual Report and Form 20-F 233 232 Th is se c tio n de sc rib e s the key r is k fac tor s that co uld a f fe ct th e Gro up’ s b usi ne ss . If any o f the se risks occur , the Group ’ s business, nancial condition, results of operations and prospects co uld b e ma ter ial ly a dve rs el y af fe c ted. The risk factors listed below should be considered in connection with any forward‑looking statements in this Annual Report and Form 20‑F and the cautionary statements contained in Corporate Governance ‑ Disclaimer/Forward‑Looking Statements on page 111. The risk factors presented below ar e reviewed on an annual basis and repr esent the key risk factors faced by the Group at the time of compilation of the 2021 Annual Report and Form 20‑F . During the course of 2022, new risk factors may materialise attributable to changes in markets, regulatory environments and other factors and existing risk factors may become less relevant. The Risk Factors have been grouped to focus on key strategic, operational, compliance and nancial and reporting risks. Risk Factors Industry Cyclicality and Economic Conditions Risk Discussion Description: Construction activity , and therefore demand for the Group’ s products, is inherently cyclical as it is inuenced by global and national economic circumstances, monetary policies, consumer sentiment and weather conditions. The Group may also be negatively impacted by unfavourable swings in fuel and other input costs. Impact: Failure to pr edict and plan for cyclical events or adverse economic conditions could negatively impact nancial performance. The Group’ s operating and nancial performance is inuenced by general economic conditions and the state of infrastructure, r esidential and non‑residential sectors in the countries in which it operates. In general, economic uncertainty exacerbates negative trends in construction activity leading to postponement of or ders. Construction markets are inher ently cyclical and are affected by many factors that are beyond the Gr oup’ s control, including: • The performance of the national economies in the countries in which the Group operates, across Eur ope, the Americas and Asia; • Monetary policies in the countries in which the Group operates — for example, an increase in inter est rates typically reduces the volume of mortgage borr owings thus adversely impacting residential construction activity; • The level of demand for building materials and services, with sustained adverse weather conditions leading to potential disruptions or curtailments in outdoor construction activity; • The price of fuel and principal energy‑related raw materials such as bitumen and steel (which accounted for approximately 10% of annual Gr oup sales revenues in 2021 (9% in 2020)); and • Inationary pressures leading to higher input costs, such as the cost of labour and transportation The adequacy and timeliness of the actions taken by the Group’ s management team are of critical importance in maintaining nancial performance at appropriate levels. Ther e is no guarantee that any future actions taken by Group management will be ef fective in managing these risks. Each of the above factors could have a material adverse effect on the Gr oup’ s operating results and the market price of CRH plc’ s Ordinary Shares. People Management Risk Discussion Description: Existing processes ar ound people management, such as attracting, retaining and developing people, leadership succession planning, developing a diverse and inclusive workforce as well as dealing with collective repr esentation groups, may not deliver , inhibiting the Group achieving its strategy . Impact: Fail ur e to ef fe cti vel y ma na ge ta le nt a nd p la n for leadership succession could impede the realisation of strateg ic ob jec tive s. The identication and subsequent assessment, management, development and deployment of talented individuals is of major importance in continuing to deliver on the Group’ s strategy and in ensuring that succession planning objectives for key executive roles thr oughout its inter national operations are satised. As well as ensuring the Group identies, hir es, integrates, develops and promotes talent, the Group must attract and retain a diverse workfor ce and maintain an inclusive working environment. The Group operates in a labour ‑intensive industry and must navigate the challenges posed by front‑line labour shortages which may impact the Group's ability to pr oduce goods, operate facilities and install products. The maintenance of positive employee and trade/labour union relations is key to the successful operation of the Group. Some of the Gr oup’ s employees are repr esented by trade/labour unions under various collective agreements. For unionised employees, the Gr oup may not be able to renegotiate satisfactorily the relevant collective agreements upon expiration and may face tougher negotiations and higher wage demands. In addition, existing labour agreements may not pr event a strike or work stoppage, with any such activity creating reputational risk and potentially having a material adverse ef fect on the results of operations and nancial condition of the Group. Key Strategic Risk Factors 2021 Annual Report and Form 20-F 233 232 Commodity Products and Substitution Risk Discussion Description: Many of the Group’ s products are commodities, which face strong volume and price competition, and may be replaced by substitute pr oducts which the Group does not pr oduce. Further , the Group must maintain strong customer r elationships to ensure changing consumer prefer ences and approaches to construction are addr essed. Impact: Failure to dif ferentiate and innovate could lead to market share decline, thus adversely impacting nancial performance. The competitive environment in which the Gr oup operates can be signicantly impacted by general economic conditions in combination with local factors including the number of competitors, the degree of utilisation of production capacity and the specics of pr oduct demand. Many of the Group’ s products ar e commodities and competition in such circumstances is driven largely by price. Acr oss the multitude of largely local markets in which the Group conducts business, downwar d pricing pressure is experienced from time to time, and the Group may not always be in a position to r ecover increased operating expenses (caused by factors such as increased fuel and raw material prices) thr ough higher sale prices. The cement business, in particular , is capital‑intensive resulting in signicant xed and semi‑xed costs. The Group’ s prots are ther efore sensitive to changes in volume, which is driven by highly competitive markets, and impacted by ongoing capital expenditure needs. A number of the products sold by the Gr oup compete with other building products that do not feature in the Group’ s existing product range. Any signicant shift in demand prefer ence from the Group's existing products to substitute products, which the Gr oup does not produce, could adversely impact market share and results of operations. Portfolio Management Risk Discussion Description: The Group may engage in acquisition and divestment activity during the year as part of active portfolio management which presents risks ar ound due diligence, execution and integration of assets. Additionally , the Group may be liable for liabilities of companies it has acquired or divested. Impact: Failure to identify and execute deals in an ef cient manner may limit the Group’ s growth potential and impact nancial performance. The Group’ s acquisition strategy focuses on value‑enhancing small to mid‑sized acquisitions, largely in existing markets, supplemented from time to time by larger strategic acquisitions into new markets or new building products. In addition, as part of its ongoing commitment to active portfolio management, the Gr oup may , from time to time, divest businesses which are evaluated to be non‑cor e or underperforming. The realisation of the Gr oup’ s acquisition strategy is dependent on the ability to identify and acquire suitable assets at appropriate prices thus satisfying the stringent cash ow and r etur n on investment criteria underpinning such activities. The Group may not be able to identify such companies, and, even if identied, may not be able to acquire them because of a variety of factors including the outcome of due diligence processes, the ability to raise funds (as r equired) on acceptable terms, the need for competition authority approval in certain instances and competition for transactions fr om peers and other entities exploring acquisition opportunities in the building materials sector . In addition, situations may arise where the Group may be liable for the past acts, omissions or liabilities of companies acquired, or may r emain liable in cases of divestment; for example, the potential environmental liabilities addr essed under the Sustainability and Corporate Social Responsibility Risk Factor on page 237. The Group’ s ability to realise the expected benets from acquisition activity depends, in large part, on its ability to integrate newly‑acquired businesses in a timely and ef fective manner . Even if the Group is able to acquire suitable companies, it still may not achieve the growth synergies or other nancial and operating benets it expected to achieve, and the Group may incur write‑downs, impairment charges or unfor eseen liabilities that could negatively affect its operating r esults or nancial position or could otherwise harm the Group’ s business. Further , integrating an acquired business, product or technology could divert management time and r esources from other matters. 2021 Annual Report and Form 20-F 235 234 Strategic Mineral Reserves Risk Discussion Description: Appropriate r eserves are an increasingly scarce commodity and licences and/or permits requir ed to enable operation are becoming har der to secure. There ar e numerous uncertainties inherent in reserves estimation and in pr ojecting future rates of production. Impact: Failure by the Gr oup to plan for reserve depletion, or to secure permits, may r esult in operation stoppages, adversely impacting nancial performance. The Group’ s reserves for the production of primary building materials (which encompasses cement, lime, aggregates (stone, sand and gravel), asphalt, r eadymixed concrete and concrete products) fall into a variety of categories spanning a wide number of rock types and geological classications found within our extensive network of quarry locations in attractive local markets globally . Continuity of the cash ows derived from the production and sale of building materials is dependent on satisfactory r eserves planning and on the presence of appropriate long‑term arrangements for their r eplacement. There can be no assurance that the required licences and permits will be forthcoming at the appropriate junctur e or that relevant operating entities will continue to satisfy the many terms and conditions under which such licences and permits are granted. The failure to plan adequately for curr ent and future extraction and utilisation or to ensure ongoing compliance with the requir ements of issuing authorities could lead to withdrawal of the related licence or permit and consequential disruption to operations. For additional information on the Group’ s reserve position, see page 226 of this Supplemental 20‑F and Other Disclosures section. Public Policy and Geopolitics Risk Discussion Description: Adverse public policy , economic, social and political situations in any country in which the Group operates could lead to a fall in demand for the Group’ s products, business interruption, r estrictions on repatriation of earnings or a loss of plant access. The ongoing geopolitical conict in Ukraine has contributed to heightened uncertainty . Impact: Changes in these conditions may adversely affect the Group's people, business, r esults of operations, nancial condition or prospects. Our markets and demand for the Group’ s products are inuenced by public policy and the scal ability and investment strategy of local and national governments in the jurisdictions in which we operate. The allocation of government funding for public infrastructure programmes is a key driver for our markets, such as the infrastructure and utilities elements of the Build Back America bill in the US. COVID‑19 r estrictions and lockdowns increase the demand for government social expenditure, while having a dampening ef fect on the receipt of taxes. Any signicant local and national government budget decits, exacerbated by the effects of the COVID‑19 pandemic, might result in a r eduction in the investment made by local and national gover nments in infrastructure spending, thus r educing the demand for the Group’ s products. Similarly , any signicant change in investment strategy by policy makers in any of the Group’ s key markets could reduce addressable market demand, adversely impacting nancial performance. The Group curr ently operates mainly in Western Europe and North America as well as, to a lesser degree, in developing countries/emerging markets in Eastern Europe, the Philippines and China. The economies of these countries are at varying stages of socioeconomic and macr oeconomic development which could give rise to a number of risks, uncertainties and challenges that could include the following: • Changes in political, social or economic conditions; • T rade protection measures and import or export licensing r equirements; • Political unrest and currency disintegration; • Activism and civil disturbance, triggered by natural disasters, terrorist events, outbreak of armed conict, etc.; • Labour and procurement practices which contravene ethical considerations; • Unexpected changes in regulatory and tax requir ements; • State‑imposed restrictions on repatriation of funds; and • Outbreak of public health emergencies/epidemics/pandemics The ongoing geopolitical conict in Ukraine has contributed to heightened uncertainty . The Board is actively monitoring the very recent developments in Ukraine with the priority on the safety and security of our people. The economic and nancial consequences will be assessed as the situation evolves. Key Strategic Risk Factors - continued 2021 Annual Report and Form 20-F 235 234 Key Operational Risk Factors Climate Change and Policy Risk Discussion Description: The impact of climate change may over time affect the operations and cost base of the Group and the markets in which the Group operates. This could include physical risks, such as acute and chronic changes in weather and/or transitional risks such as technological development, policy and regulation change and market and economic responses. Impact: Should the Group not r educe its greenhouse gases (GHGs) emissions by its identied targets, the Group may be subject to increased costs, adverse nancial performance and reputational damage. Physical Risks including: • Acute & Chronic: Acute weather events such as hurricanes or ooding and chronic weather events such as sea level rise or higher temperatures may have an adverse ef fect on the Group’ s business and operations. Operational productivity and demand for the Gr oup’ s products may be reduced during these weather events leading to reduced nancial performance T ransition Risks including: • T echnology: The failure to leverage innovation arising fr om technological advances related to carbon efciencies in pr oducts and processes may increase operational costs, shorten product life cycles or give rise to early product obsolescence, thus impairing nancial performance and/or futur e value creation • Legal & Regulatory: Efforts to address climate change thr ough laws and regulations, for example by requiring r eductions in emissions of GHGs such as CO 2 , can create economic risks and uncertainties for the Group’ s businesses. Such risks could include the cost of purchasing allowances or credits to meet GHG emissions caps, the cost of installing equipment to reduce emissions to comply with GHG limits or requir ed technological standards, decreased prots or losses arising fr om decreased demand for the Group’ s goods and higher production costs resulting dir ectly or indirectly from the imposition of legislative or regulatory contr ols. Manifestation of these increased costs may increase the underlying cost of production of the Gr oup’ s products which may adversely impact the nancial performance of the Group • Market & Reputation: Stakeholder expectations in relation to climate change continue to increase. The Group is subject to a br oad range of additional environmental product information requests by customers in certain regions and incr easing levels of disclosure regarding climate‑r elated environmental performance from nancial institutions, investors and other inter ested stakeholders. The Group includes within its product portfolio pr oducts aimed at climate adaptation, including sustainable drainage systems, ood defences and more r esilient structures, as well as products that lower the operational carbon footprint of buildings, including high performance glass and glazing products that incorporate innovative thermal break technologies for superior thermal performance, pr ecast concrete ooring and walling elements delivering energy savings, and balcony connector products that r educe thermal bridging, delivering energy savings. If customers’ and other stakeholders’ sustainability expectations are not satised, the Group’ s product portfolio may be of reduced r elevance due to weakened customer demand, the Group’ s reputation may be harmed thr ough not meeting investor expectations, and the Group could experience a deterioration in nancial performance, such as increased cost of capital The Group continues to be exposed to costs r elated to carbon emissions trading schemes. While these costs do not currently have a material nancial impact, ther e can be no assurances that more extensive carbon cost mechanisms may be introduced that could potentially impact the Gr oup’ s nancial performance. Further , the Group continues to engage with stakeholders to fully understand their expectations in relation to climate change. However , it is recognised that expectations continue to evolve rapidly , and the Group cannot guarantee that all stakeholders’ expectations will continue to be met. Please refer to page 242 of this Annual Report and Form 20‑F for further details. In addition, the Gr oup publishes an annual independently‑assured Sustainability Report, which is available on www .crh.com. 2021 Annual Report and Form 20-F 237 236 Health and Safety Performance Risk Discussion Description: The Group’ s businesses operate in an industry where health and safety risks are inher ently prominent. Further , the Group is subject to stringent regulations from a health and safety perspective in the various jurisdictions in which it operates. Impact: A serious health and safety incident could have a signicant impact on the Group’ s operational and nancial performance, as well as the Group’ s reputation. The Group’ s industry involves dangerous work and a failure to maintain the focus on making its workplaces safe for our people could result in a deterioration in the Gr oup’ s safety performance and ultimately fatalities. Building materials production can be hazar dous and particular hazards are associated with heavy vehicles, working at height and using mechanised processes. Additionally , the Group’ s safety risks are not limited to facility sites but extend to paving and construction sites and regular encounters with stakeholder sites. This pr esents a complex challenge which requir es safe behaviours and engagement from employees that match the Group’ s robust policies and procedur es. The Group is subject to a br oad and stringent range of existing and evolving laws, regulations, standards and best practices with respect to health and safety in each of the jurisdictions in which it operates. Should the health and safety frameworks, processes and contr ols implemented throughout the Group to protect our people fail, the Group would be exposed to signicant potential legal liabilities and penalties. Further , high numbers of accidents could pose additional challenges in recruiting new employees, ensuring operational continuity and maintaining licences and permits. The COVID‑19 pandemic has presented and continues to pr esent additional health and safety challenges due to potential transmission of the virus and changes to traditional operating norms. There is no guarantee that ef forts to mitigate the risk of transmission will be effective in pr eventing the spread of COVID‑19 at our sites and locations. For additional information on the Group’ s health and safety performance, see page 18 of this Annual Report and Form 20‑F or refer to the Gr oup’ s independently‑assured Sustainability Report, which is available on www .crh.com. Information T echnology and/or Cyber Security Risk Discussion Description: The Group is dependent on information and operational technology systems to support its business activities. Any signicant operational event, whether caused by external attack, insider threat or error , could lead to loss of access to systems or data, adversely impacting business operations. Impact: Security breaches, IT interruptions or data loss could result in signicant business disruption, loss of production, r eputational damage and/or regulatory penalties. Signicant nancial costs in remediation ar e also likely in a major cyber security incident. The Group employs numer ous operational technology and information technology systems, networks and services, many of which are managed, hosted, pr ovided and/or used by third parties, to assist in conducting our business. The proper functioning of our technology and systems is critical to the ef cient operation and management of our business. The Group’ s systems for protecting our assets against cyber security risks may not always be sufcient. As part of our business, the Group collects, pr ocesses, and retains potentially sensitive and condential information about our customers, suppliers, employees and business performance. Despite the security measures we have in place, and those of thir d‑party suppliers and vendors with which we do business, the Group may be subject to cyber security attacks. Such attacks may r esult in interference with production software, corruption or theft of sensitive data, manipulation of nancial data accessible thr ough digital infrastructure, or r eputational losses as a result of misrepresentation via social media and other websites. Security and cyber incidents are becoming incr easingly sophisticated and are continually evolving. As this threat continues to evolve, the Gr oup may be required to expend additional resour ces to continue to modify or enhance protection measur es or to investigate and remediate any vulnerability to cyber incidents. There can be no assurance that future attacks will not be successful due to their incr easing sophistication and the difculties in detecting and defending against them in a timely fashion. While the Group has experienced, and expects to continue to experience, these types of thr eats and incidents, the Group has not detected any material cyber security events. Key Operational Risk Factors - continued 2021 Annual Report and Form 20-F 237 236 Sustainability and Corporate Social Responsibility Risk Discussion Description: The nature of the Gr oup’ s activities poses inherent environmental, social and governance (ESG) risks, which are also subject to an evolving r egulatory framework and changing societal expectations. Impact: Failure to embed sustainability principles within the Group's businesses and strategy may r esult in non‑compliance with relevant r egulations, standards and best practices and lead to adverse stakeholder sentiment and reduced nancial performance. The Group r ecognises that the demand for sustainable products is undoubtedly increasing and seeks opportunities to deliver sustainable products, buildings and infrastructur e at reduced environmental cost throughout their lifetime. Customers, from ar chitects and construction companies to public bodies, have an immediate need for sustainable solutions which respond to climate change. In or der to be involved in the green agenda, the Group needs to work with customers and vendors to innovate around design, delivery and application of pr oducts. If the Group fails to identify and execute on areas for impr oved sustainable performance, the demand for the Group’ s products may fall. If customers’ and other stakeholders’ sustainability expectations are not satised, the Gr oup’ s product portfolio will be of reduced r elevance and the Group will experience a deterioration in nancial performance. The Group is subject to a br oad and increasingly stringent range of existing and evolving laws, regulations, standards and best practices with r espect to gover nance, the environment and social performance in each of the jurisdictions in which it operates giving rise to signicant compliance costs, potential legal liability exposure and potential obligations for the development of its operations. These laws, regulations, standar ds and best practices relate to, amongst other things, climate change, noise, emissions to air , water and soil, the use and handling of hazardous materials and waste disposal practices. Please refer to pages 20 to 27 of this Annual Report and Form 20‑F for further details or r efer to the Group's independently‑assured Sustainability Report, which is available on www .crh.com. COVID-19 Pandemic Risk Discussion Description: Public health emergencies, epidemics or pandemics, such as the emergence and spread of the COVID‑19 pandemic, have the potential to signicantly impact the Group's operations thr ough a fall in demand for the Group's pr oducts, a reduction in staff availability and business interruption. Impact: The emergence and spread of the COVID‑19 pandemic has had a material impact across the construction markets in which the Group operates. The continued uncertainty around the global pandemic could have an adverse effect on the Group's operating r esults, cash ows, nancial condition and/or prospects. The global spread of COVID‑19 and the mitigations and practices implemented by governments, such as restrictions on movement of people, temporary closur e of businesses or public works stoppages has led to and may continue to lead to delays or stoppage of key infrastructure or commer cial projects resulting in a fall in demand for the Group’ s products. While governments in the Group's major markets have not extensively used signicant site closures and stay at home or ders to quell the spread of COVID‑19 during 2021, there can be no guarantee that such tools will not be used in the future. The global economy and many of the economies in which the Group operates have been signicantly impacted by the COVID‑19 pandemic. Any signicant fall in economic performance can lead to the postponement of orders and a fall in demand for the Gr oup’ s products. Further , funding allocated for infrastructure pr ojects may be re‑dir ected to deal with the fallout of the public health emergency . The Group operates in a labour ‑intensive industry where employees’, contractors’ and customers’ activities can be adversely impacted by the availability of human resour ces to design, manufacture or install the Group’ s products. Any signicant loss of employee r esources for a sustained period of time due to quarantine, self‑isolation or sickness as a result of a public health emergency could impact the Gr oup’ s ability to produce, manufacture and deliver goods. Similarly , the Group’ s customers’ activities, and hence the demand for the Group’ s products, could be adversely impacted by similar employee availability issues. Responsibility for business continuity planning is vested in operating company management to ensure that the circumstances likely to give rise to material operational disruption ar e addressed. While business continuity plans exist across the Gr oup’ s businesses, there can be no guarantees that the implementation of these plans will be successful and that the plans will have the desired ef fect in minimising the effects of a public health emergency . As the COVID‑19 pandemic continues, at this time it is not possible to predict the full extent and duration of any further impacts, including those listed above, and whether the actions taken by our leadership and people in the future will be successful in managing the risks posed by COVID‑19. 2021 Annual Report and Form 20-F 239 238 Key Financial and Reporting Risk Factors T axation Charge and Balance Sheet Provisioning Risk Discussion Description: 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. Impact: Changes in tax regimes or assessment of additional tax liabilities in future tax audits could r esult in incremental tax liabilities which could have a material adverse effect on cash ows and the nancial r esults of operations. The Group’ s income tax charge is based on reported prots and statutory tax rates, which r eect various allowances and reliefs and tax ef ciencies available to the Group in the multiple tax jurisdictions in which it operates. The determination of the Group’ s provision for income tax requir es certain judgements and estimates in relation to matters wher e the ultimate tax outcome may not be certain. The recognition of deferred tax assets also requir es judgement as it involves an assessment of the future recoverability of those assets. In addition, the Group is subject to tax audits which can involve complex issues that could r equire extended periods to conclude, the resolution of which is often not within its contr ol. Although management believes that the estimates included in the Consolidated Financial Statements and the Group’ s tax return positions are reasonable, ther e can be no assurance that the nal outcome of these matters will equal the estimates reected in the Group’ s historical income tax provisions and accruals. As a multinational corporation, the Group is subject to various taxes in all jurisdictions of operation. Due to economic and political conditions, tax rates and the interpretation of tax rules in these jurisdictions may be subject to signicant change, heightened during administration changes or periods of scal decit in these economies. For example, there ar e potential tax rate increases in the US under the Biden administration tax policy proposals. In addition, the Gr oup’ s future effective income tax rate could be af fected (positively or negatively) by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets or changes in tax laws or their interpr etation. Finally , changes to international tax principles, for example at an EU level, could adversely affect the Group’ s effective tax rate or r esult in higher cash tax liabilities. If the Group’ s effective income tax rate was to incr ease, its cash ows and the nancial results of operations could be adversely af fected. Key Compliance Risk Factors Laws, Regulations and Business Conduct Risk Discussion Description: The Group is subject to a wide variety of local and international laws and regulations (to include those applicable to it as a listed company) across the many jurisdictions in which it operates, which vary in complexity , application and frequency of change. Impact: Potential breaches of local and international laws and regulations could r esult in litigation or investigations, the imposition of signicant nes, sanctions, adverse operational impact and reputational damage. As an Irish incorporated company , with a premium listing on the London Stock Exchange, a secondary listing on Euronext Dublin and an ADR listing on the New Y ork Stock Exchange, CRH must comply with various laws and regulations including the Irish Companies Acts, the UK Listing Rules, the Eur onext Dublin Listing Rules, the Market Abuse Regulation, the Irish T ransparency Regulation, and reporting obligations under US securities laws. The Group is also subject to various statutes, r egulations, and laws applicable to businesses generally in the countries and markets in which it operates. These include statutes, regulations and laws af fecting land usage, zoning, labour and employment practices, competition/anti‑trust, nancial reporting, taxation, anti‑fraud and theft, anti‑bribery , anti‑corruption, international trade compliance, gover nance, data protection and data privacy and security , environmental, health and safety , and international trade and sanctions laws and other matters. The Group mandates that its employees comply with its Code of Business Conduct which stipulates best practices in relation to legal, compliance and ethical matters amongst other issues. The Code of Business Conduct is available in multiple languages on www .crh.com. The Group cannot guarantee that its employees will at all times successfully comply with all demands of r egulatory agencies, and there can be no assurance that the Gr oup’ s policies and procedures will af ford adequate protection against breaches of these demands, fraudulent and/or corrupt activities. Any such activities or br eaches of exter nal regulations or internal policies could have a material adverse effect on the Gr oup’ s business, results of operations, nancial condition, or prospects. 2021 Annual Report and Form 20-F 239 238 Financial Instruments Risk Discussion Description: The Group uses nancial instruments thr oughout its businesses giving rise to interest rate and leverage, foreign curr ency , counterparty , credit rating and liquidity risks. Impact: A downgrade of the Group’ s credit ratings may give rise to increases in futur e funding costs and may impair the Group’ s ability to raise funds on acceptable terms. In addition, insolvency of the nancial institutions with which the Group conducts business may adversely impact the Group’ s nancial position. • Interest rate and leverage risks: As at 31 December 2021, the Group had outstanding gr oss indebtedness, including leases, of approximately $12.0 billion (2020: $13.7 billion) and cash and cash equivalents of approximately $5.8 billion (2020: $7.7 billion). The Gr oup uses interest rate swaps to convert a portion of its xed rate debt to oating rate. While current leverage is low , acquisition activity could adversely impact its operating and nancial exibility as well as nancial position. There can be no assurance that the Gr oup will not be adversely impacted by increases in borr owing costs in the future. Over the course of 2021, the Group transitioned from some IBOR‑backed rates linked to its main banking facilities to alternative benchmark rates. These alternative benchmark rates are backward‑looking meaning the r elated interest charges will not be fully known until close to the end of the interest period. At this time, it is not possible to say whether the alternative refer ence rates will be more or less volatile than IBOR and whether the transition to alternative reference rate linked contracts will impact CRH’ s borrowing costs and cash ows. Such changes may or may not adversely affect CRH’ s nancial position • Foreign currency risks: If the Group’ s reporting currency weakens r elative to the basket of foreign currencies in which net debt is denominated (including the euro, Canadian Dollar , Swiss Franc, Polish Zloty , Philippine Peso and Pound Sterling), the net debt balance would increase; the converse would apply if the Gr oup’ s reporting curr ency was to strengthen. Where economically feasible, net debt is maintained in the same relative ratio as capital employed to act as an economic hedge of the underlying currency assets • Counterparty risks: Insolvency of the nancial institutions with which the Group conducts business or a downgrade in their credit ratings may lead to losses in the cash balances that the Gr oup holds with such nancial institutions or losses in derivative transactions that the Group has enter ed into with these parties and may render it mor e difcult for the Group to utilise existing debt capacity or otherwise obtain nancing for operations. The Group holds signicant cash and cash equivalents on deposit and derivative transactions with a variety of highly rated nancial institutions which at 31 December 2021, totalled $5.8 billion (2020: $7.7 billion) and $122 million (2020: $188 million) respectively . In addition, certain of the Group’ s activities give rise to signicant amounts receivable fr om counterparties at the balance sheet date; at 31 December 2021, this balance was $4.0 billion (2020: $3.6 billion) • Credit rating risks: A downgrade of the Group’ s credit ratings may give rise to increases in funding costs in respect of futur e debt and may , among other concer ns, impair its ability to access debt markets or otherwise raise funds or enter into lines of credit, for example, on acceptable terms. Such a downgrade may r esult from factors specic to the Group, including incr eased indebtedness stemming from acquisition activity , or from other factors such as general economic or sector specic weakness or sovereign cr edit rating ceilings • Liquidity risks: The principal liquidity risks stem from the maturation of debt obligations and derivative transactions. The Group aims to achieve exibility in funding sour ces through a variety of means including (i) maintaining cash and cash equivalents with a number of highly rated counterparties; (ii) meeting the bulk of debt requir ements through debt capital markets or other term nancing; (iii) limiting the annual maturity of such balances; and (iv) having surplus committed bank lines of credit. However , market or economic conditions may make it difcult at times to r ealise this objective For additional information on the above risks see note 22 to the Consolidated Financial Statements on pages 189 to 192. Goodwill Impairment Risk Discussion Description: Signicant 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. Impact: While a non‑cash item, a material write‑down of goodwill could have a substantial impact on the Group’ s income and equity . An acquisition generates goodwill to the extent that the price paid exceeds the fair value of the net assets acquired. Under IFRS, goodwill and indenite‑lived intangible assets ar e not amortised but are subject to annual impairment testing. Other intangible assets deemed separable from goodwill arising on acquisitions ar e amortised. A detailed discussion of the impairment testing process, the key assumptions used, the r esults of that testing and the related sensitivity analysis is contained in note 14 to the Consolidated Financial Statements on pages 174 to 176. While a goodwill impairment charge does not impact cash ow , a full write‑down at 31 December 2021 would have resulted in a charge to income and a r eduction in equity of $9.5 billion (2020: $9.0 billion). 2021 Annual Report and Form 20-F 241 240 Corporate Gover nance Practices Foreign Curr ency T ranslation Risk Discussion Description: The principal foreign exchange risks to which the Consolidated Financial Statements are exposed pertain to (i) adverse movements in reported r esults when translated into the reporting curr ency; and (ii) declines in the reporting curr ency value of net investments which are denominated in a wide basket of currencies other than the r eporting currency . Impact: Adverse changes in the exchange rates will continue to negatively affect r etained ear nings. The annual impact is reported in the Consolidated Statement of Comprehensive Income. Given the geographic diversity of the Group, a signicant pr oportion of its revenues, expenses, assets and liabilities are denominated in curr encies other than the Group’ s reporting curr ency , including the euro, Canadian Dollar , Swiss Franc, Polish Zloty , Philippine Peso and Pound Sterling. From year to year , adverse changes in the exchange rates used to translate these and other foreign curr encies into the reporting currency have impacted and will continue to impact consolidated results and net worth. For additional information on the impact of foreign exchange movements on the Consolidated Financial Statements for the Group for the year ended 31 December 2021, see the Business Performance and Segmental Reviews section commencing on page 36 and note 22 to the Consolidated Financial Statements on pages 189 to 192. Compliance Statement Non‑US companies such as CRH are exempt fr om most of the corporate governance rules of the NYSE. In common with companies listed on the LSE and Euronext Dublin, CRH’ s corporate governance practices reect, inter alia, compliance with (a) domestic company law; (b) the Listing Rules of the UK Listing Authority and Euronext Dublin; and (c) the 2018 UK Corporate Governance Code, which is appended to the listing rules of the LSE and Euronext Dublin. The Board of CRH has adopted a r obust set of governance principles, which reect the 2018 Code and its principles‑based approach to corporate governance. Accordingly , the way in which CRH makes determinations of Directors’ independence differs fr om the NYSE rules. The Board has determined that, in its judgement, all of the non‑executive Directors ar e independent. In doing so the Board did not explicitly take into consideration the independence requir ements outlined in the NYSE’ s listing standards. However , the Board has determined that all of the non‑executive Directors on the Audit Committee ar e independent according to the r equirements of Rule 10A‑3 of the US Securities Exchange Act of 1934. Further , CRH considers that the T erms of Reference for its Audit Committee, Remuneration Committee, Nomination and Corporate Governance Committee are generally r esponsive to the relevant NYSE rules, but may not address all aspects of such rules. Shareholder Appr oval of Equity Compensation Plans The NYSE rules requir e that shareholders must be given the opportunity to vote on all equity‑compensation plans and material revisions to those plans with certain limited exceptions. CRH complies with Irish requir ements, which are similar to the NYSE rules. The Board, however , does not explicitly take into consideration the NYSE’ s detailed denition on what are consider ed “material revisions”. Risk Management and Internal Control The Board has delegated r esponsibility for monitoring the effectiveness of the Gr oup’ s risk management and internal control systems to the Audit Committee 1 . Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives and, in the case of internal control systems, can provide only reasonable and not absolute assurance against material misstatement or loss. The Consolidated Financial Statements are prepar ed subject to oversight and control of the Finance Director , who seeks to ensure that data is captured fr om Group locations and all required information for disclosure in the Consolidated Financial Statements is provided. An appr opriate control framework has been put in place ar ound the recor ding of appropriate consolidation journals and other adjustments. The Consolidated Financial Statements are r eviewed by the inter nal CRH Financial Reporting and Disclosure Gr oup prior to being reviewed by the Finance Dir ector and Audit Committee and approved by the Boar d of Directors. Group management has r esponsibility for major strategic development and nancing decisions. Responsibility for operational issues is devolved, subject to limits of authority , to product group and operating company management. Management at all levels is responsible for internal control over the business functions that have been delegated. This embedding of the system of internal control throughout the Gr oup’ s operations is designed to enable the organisation to respond quickly to evolving business risks, and to ensure that signicant internal control issues, should they arise, are r eported promptly to appropriate levels of management. Management’ s Report on Internal Control over Financial Reporting In accordance with the r equirements of Rule 13a‑15 of the US Securities Exchange Act, the following report is pr ovided by management in respect of the Company’ s internal control over nancial reporting. As dened by the SEC, internal control over nancial reporting is a pr ocess designed by , or under the supervision of, the Company’ s principal executive and principal nancial ofcers, or persons performing similar functions, and effected by the Company’ s Board of Dir ectors, management and other personnel, to provide r easonable assurance regar ding the reliability of nancial reporting and the preparation of the Consolidated Financial Statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedur es that: Key Financial and Reporting Risk Factors - continued 1. In accordance with Section 167(7) of the Companies Act 2014. 2021 Annual Report and Form 20-F 241 240 • pertain to the maintenance of records that in reasonable detail accurately and fairly r eect the transactions and dispositions of the assets of the Company; • provide reasonable assurance that transactions are r ecorded as necessary to permit preparation of the Consolidated Financial Statements in accordance with generally accepted accounting principles, and that receipts and expenditur es of the Company are being made only in accor dance with authorisations of management and Directors of the Company; and • provide reasonable assurance r egarding prevention or timely detection of unauthorised acquisition, use or disposition of the Company’ s assets that could have a material effect on the Consolidated Financial Statements Our management is responsible for establishing and maintaining adequate internal control over nancial reporting as dened in Rules 13a‑15(f) and 15d‑15(f) under the US Securities Exchange Act. Our internal control system was designed to pr ovide reasonable assurance regar ding the reliability of nancial reporting and the pr eparation of our Company’ s published Consolidated Financial Statements for external purposes under generally accepted accounting principles. In connection with the preparation of the Company’ s annual Consolidated Financial Statements, management has undertaken an assessment of the effectiveness of the Company’ s inter nal control over na nc ia l re por ting a s of 31 Dec em be r 2021 , b ase d on c ri ter ia e sta bl is hed i n Inte rn al C on trol ‑ Inte gra ted Fra me wor k (201 3), is sue d by th e Committee of Sponsoring Organisations of the T readway Commission. Management’ s assessment included an evaluation of the design of the Company’ s internal control over nancial reporting and testing of the operational effectiveness of those contr ols. Based on this assessment, management has concluded and hereby r eports that as of 31 December 2021, the Company’ s internal control over nancial reporting is effective. Our auditors, Deloitte, a register ed public accounting rm, who have audited the Consolidated Financial Statements for the year ended 31 December 2021, have audited the effectiveness of the Company’ s internal controls over nancial reporting. Their report, on which an unqualied opinion is expr essed thereon, is included on page 138. Changes in Internal Control over Financial Reporting During 2021, there has been no change in our internal control over nancial reporting identied in connection with the evaluation requir ed by Rules 13a‑15 that occurred during the period cover ed by this Annual Report and Form 20‑F that has materially affected, or is r easonably likely to materially affect, our internal control over nancial reporting. Acquisitions excluded from the 2020 assessment of internal control over nancial reporting wer e all successfully integrated into the CRH internal control systems in 2021. Evaluation of Disclosure Controls and Pr ocedures Management has evaluated the effectiveness of the design and operation of the disclosure contr ols and procedur es as dened in Exchange Act Rule 13a‑15(e) as of 31 December 2021. Based on that evaluation, the Chief Executive and the Finance Director have concluded that these disclosur e controls and pr ocedures were effective as of such date at the level of providing r easonable assurance. In designing and evaluating our disclosure contr ols and procedur es, management, including the Chief Executive and the Finance Director , recognised that any controls and pr ocedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desir ed control objectives, and management necessarily was requir ed to apply its judgement in evaluating the cost‑benet relationship of possible contr ols and procedur es. Because of the inherent limitations in all control systems, no evaluation of contr ols can provide absolute assurance that all contr ol issues and instances of fraud, if any , within the Company have been detected. In 2021 Oldcastle APG, part of CRH’ s Building Products Division, opened a new dualbagging-line, dry-mix facility located at Cowpens, South Carolina, United States. The plant’ s high throughput capability and strategic geographic location between Charlotte and Atlanta, the fastest growing population centers in the southern United States, bolsters APG’ s end-to-end solutions offerings for customers in the region. 2021 Annual Report and Form 20-F 243 242 The Envir onment and Gover nment Regulations As a building materials company , environmental laws and regulations r elevant to extractive and production pr ocesses are signicant to CRH. In Europe, operations ar e subject to national environmental laws and r egulations, most of which now emanate from Eur opean Union Directives and Regulations. In North America, operations may be subject to federal, state, provincial and local environmental laws and r egulations. In other jurisdictions, including the United Kingdom, national environmental and local laws apply . Environmental Compliance Policy In order to comply with envir onmental regulations and address envir onmental risks and opportunities, CRH has developed an environmental policy . The statement of policy , applied across all Group companies, is to: • address proactively the challenges of climate change, reduce emissions and waste as well as optimise our use of energy , water , land and other resour ces; • promote sustainable product and pr ocess innovation and new business opportunities; • support and enhance biodiversity , ensuring responsible land use and biodiversity management; • comply with or exceed all applicable environmental legislation and continually implement and improve our envir onmental management systems, always striving to meet or exceed industry best practice standards, monitoring and reporting performance; • maintain open communications and ensure that our employees and contractors are awar e of and adhere to their envir onmental responsibilities; and • maintain positive relationships with stakeholders through engagement and consultation, always striving to be good neighbours in every community in which we operate Environmental Management and Governance Achieving the Group’ s environmental policy objectives at all locations is a management imperative. At Board level ther e is a dedicated Safety , Environment & Social Responsibility (SESR) Committee. Overseen by the Board, the Chief Executive has overall responsibility for CRH’ s sustainability performance and for ensuring sustainability policies are implemented in all business lines. Daily responsibility for ensuring that the Gr oup’ s environmental policy is ef fectively implemented lies with individual location managers, assisted by a network of Group envir onmental specialists. At each year end, the Group Sustainability function carries out a detailed assessment of Group environmental performance, which is r eviewed by the SESR Committee and the Board. Addressing Climate Change CRH continues to be a member of the World Business Council for Sustainable Development (WBCSD) and is a founding member of the Global Cement and Concrete Association (GCCA), which is dedicated to developing and strengthening the sector’ s contribution to sustainable construction. Through its membership of the GCCA, WBCSD and various regional industry associations, CRH is actively involved in global and regional discussions on the climate change agenda. European Union leaders in 2021 launched the 'Fit for 55' package of legislative proposals and policy initiatives that aim for an emissions reduction target of at least 55% by 2030, compared to 1990. CRH is monitoring forthcoming legislative requir ements and planning for continued compliance. CRH's operations in the US are subject to a number of federal and state laws and regulations addr essing climate change. Ultimately more compr ehensive “cap and trade” schemes or other emission reduction legislation may be implemented in the US and Canada; depending on the scope of the legislation, this could signicantly impact certain operations in North America. CRH continuously monitors developments in regulations and greenhouse gas initiatives involving local, pr ovincial, state or federal governments. As of 18 February 2022, the Group is not awar e of any such schemes that would materially affect its US operations. CRH is committed to proactively addr essing the challenges of climate change, which may have a multi‑faceted impact on our business strategy . As a provider of building materials and integrated solutions that address the needs of a climate‑r esilient built environment, ther e are likely to be strong growth opportunities for CRH. Ongoing public investment will need to create mor e resilient infrastructure and cities, which requir e higher safety characteristics and are better suited to extr eme weather events like rising water levels and high wind events. CRH includes within its offerings multiple pr oducts aimed at climate adaptation and mitigation, including sustainable drainage systems, concrete pr oducts used in ood defence systems, products contributing to more r esilient structures as well as products with high levels of r ecycled content, such as recycled asphalt pavement. Fr om a physical risk perspective climate change may have implications on business continuity and mitigating against supply chain disruption. A management strategy has been put in place to address these risks and opportunities. In 2020, CRH appointed a dedicated member of our executive leadership team with responsibility for Enterprise Strategy , Sustainability & Innovation, to drive the innovation agenda and enterprise strategy around providing sustainable solutions for customers. In 2021, a specic Climate Change committee was established at executive leadership level, to further drive our climate strategy . In delivering this management strategy , CRH seeks to reduce carbon emissions and energy usage, achieve nancial efciencies, and, in addition, help to addr ess the global challenges of climate change. CRH has developed an ambition to achieve carbon neutrality along the cement and concrete value chain by 2050. As evidence of progr ess in relation to its decarbonisation efforts, in 2021 CRH announced the expectation to achieve its 2030 carbon emissions reduction target of 520kg CO 2 /tonne of cementitious product by 2025. This target repr esents a 33% reduction in specic net cement CO 2 compared with 1990 levels. In early 2022, the Group adopted a new SBTi approved target for a 25% reduction in gr oup‑wide absolute Scope 1 and Scope 2 CO 2 emissions by 2030 (from a 2020 baseline). In order to meet its target, CRH has implemented capital expenditure pr ogrammes in its cement operations to reduce carbon emissions in the context of international and national commitments to reduce gr eenhouse gas emissions as well as CRH’ s own emission reduction pr ogramme and targets discussed above. In regions and countries where trading schemes ar e in operation, facilities that fall within the scope of this legislation comply with CO 2 “cap and trade” schemes, including the European Union Emissions T rading Scheme and other regional schemes. Possible Environmental Liabilities At 18 February 2022, there wer e no pending legal proceedings r elating to site remediation which are anticipated to have a material adverse effect on the nancial position or results of operations or liquidity of the Group, nor have internal reviews r evealed any situations of likely material environmental liability to the Group. Governmental Policies The overall level of government capital expenditures and the allocation by state entities of available funds to differ ent projects, as well as interest rate and tax policies, directly af fect the overall levels of construction activity . The terms and general availability of government permits required to conduct Group business also has an impact on the scope of Group operations. As a r esult such gover nmental decisions and policies can have a signicant impact on the operating results of the Gr oup. 2021 Annual Report and Form 20-F 243 242 EU T axonomy Share of T axonomy‑eligible and T axonomy non‑eligible economic activities T otal $bn Share of T axonomy-eligible economic activities Share of T axonomy non-eligible economic activities T urnover 31.0 14% 86% Capital Expenditure (CapEx) 2.5 14% 86% Operating Expenditure (OpEx) 1.5 23% 77% Compliance Statement The EU T axonomy regulation (Regulation (EU) 2020/852) is part of the EU's overall efforts to implement the European Gr een Deal. It is intended to serve as a standardised and mandatory classication system to determine which economic activities are consider ed as ‘environmentally sustainable’ by the EU. In June 2021, the European Commission formally adopted the Climate Delegated Act with its Annexes, establishing the T echnical Screening Criteria that dene which activities substantially contribute to the rst two, out of six, environmental objectives of the EU T axonomy regulation, namely climate change mitigation (Annex I), and climate change adaptation (Annex II). The T echnical Screening Criteria for the r emaining four environmental objectives ar e expected to be published in 2022. An economic activity which is described in Annex I or Annex II of the Climate Delegated Act is T axonomy‑eligible, irrespective of whether it meets the respective T echnical Screening Criteria or not. For the year ended 31 December 2021, the share of T axonomy‑eligible and T axonomy non‑eligible economic activities in turnover , capital expenditure (CapEx) and operating expenditure (OpEx) ar e requir ed to be disclosed in line with the published EU T axonomy regulation. CRH’ s assessment of T axonomy-eligible economic activities Based on the descriptions of economic activities included in Annex I and Annex II of the Climate Delegated Act, we assessed our activities and identied those which are T axonomy‑eligible. The Climate Delegated Act prioritised specic sectors responsible for 94% of dir ect greenhouse gas emissions in the EU. A high proportion of CRH’ s activities do not fall into these prioritised sectors and are not in scope of the EU T axonomy regulation. While the Climate Delegated Act does not cover a high proportion of our economic activities, we have identied the economic activity “3.7 Manufacture of cement” as a T axonomy‑eligible economic activity . Our turnover , CapEx and OpEx exclusively refer to turnover , assets or processes associated with this economic activity . T axonomy-eligible T urnover The share of T axonomy‑eligible tur nover is calculated by the proportion of turnover derived from economic activities that ar e T axonomy‑eligible (numerator) over total turnover (denominator). The total turnover represents the consolidated revenue, and amounts to $31.0 billion for the nancial year ended 31 December 2021 (as disclosed in our Consolidated Income Statement on page 140). The accounting policy applicable for revenue r ecognition is addressed in detail on page 148 of the Consolidated Financial Statements. CRH’ s share of turnover associated with T axonomy‑ eligible economic activities for the year ended 31 December 2021 was 14%. T axonomy-eligible Capital Expenditure The share of T axonomy‑eligible CapEx is calculated by the proportion of CapEx associated with economic activities that are T axonomy‑eligible (numerator) over total CapEx (denominator). T otal CapEx includes additions to tangible and intangible assets, considered befor e depreciation, amortisation and any re‑measur ements, and excluding fair value changes. It also includes additions as a result of business combinations. T otal CapEx involves all additions to Property , Plant and Equipment, Right‑of‑Use Assets and Intangible Assets. Any acquired goodwill is not consider ed for this purpose. For the reconciliation of total CapEx please see note 13, note 14 and note 20 to the Consolidated Financial Statements. CRH’ s share of CapEx associated with T axonomy‑eligible economic activities for the year ended 31 December 2021 was 14%. CRH continuously invests in technology and efciency pr ojects across our operating companies to enhance environmental performance, as well as investing in the environmental element of major capital investment projects to ensur e we reach our CO 2 reduction targets. T axonomy-eligible Operating Expenditure The share of T axonomy‑eligible OpEx is calculated by the proportion of OpEx associated with economic activities that are T axonomy‑eligible (numerator) over total OpEx (denominator). EU T a xonomy r eg ul atio ns d en e tota l Op E x as th e dir ec t no n‑c ap it al ise d co sts of r es ea rch a nd development (R &D) , building renov ation me as ure s, sh or t‑ter m le ase s, m ain ten an ce a nd rep ai r an d any oth e r dir ec t exp en di ture s re lat ing to the d ay‑to‑d ay se r v ici ng of a ss ets of p rop er ty , plant and equipment. As the EU T axonomy regulation has its own denition of OpEx, the reported OpEx only repr esents a proportion of the total Group cost of sales and operating costs, and mainly includes R&D costs, repairs and maintenance and short‑term leases. CRH’ s share of OpEx associated with T axonomy‑eligible economic activities for the year ended 31 December 2021 was 23%. Future Regulatory Developments From the year ending 31 December 2022 onwar ds, T axonomy‑alignment will also become part of EU T axonomy reporting. An economic activity is T axonomy‑aligned if it fulls all the following requir ements: • Contributes substantially to at least one environmental objective by meeting the dened T echnical Screening Criteria; • Doing no signicant harm to any of the other environmental objectives; and • Is carried out in compliance with ‘Minimum Social Safeguards’ In accordance with the published Delegated Acts, CRH will carry out an assessment of T axonomy‑alignment and report on T axonomy‑alignment in the next nancial year . Furthermore, EU taxonomy r eporting is expected be expanded to include the four further environmental objectives, namely: • Sustainable use and protection of water and marine resour ces; • T ransition to a circular economy; • Pollution prevention and control; and • Protection and restoration of biodiversity and ecosystems 2021 Annual Report and Form 20-F 245 244 Contractual Obligations and on total equ i t y a r is i ng on ne t ye a r‑e nd o at i ng rate d ebt a nd o n yea r ‑ en d eq uit y, base d on e ith er an i ncr ea se/de cre as e of 1 % i n o atin g inte re st rate s or a 5% stre ng the ni ng /we ake ni ng in t he US Do lla r/ eu ro exch an ge ra te. Th e US Do ll ar/ e uro r ate ha s be en s el ec ted fo r thi s se nsi ti vi ty a na ly si s giv en the m ater ia li t y of the G rou p’ s ac tiv iti es i n eu ro. Th is an al ysi s, set o ut i n note 22 to th e Co nso li date d Financial Stat ements, is for illust rative purposes on ly as i n pr act ic e inte res t an d for eig n exch an ge rate s ra rel y ch an ge i n iso lat ion. Quantitative and qualitative information and sensitivity analysis of market risk is contained in notes 21 to 25 to the Consolidated Financial Statements. Of f-Bal ance Sheet Arrangements CRH d oe s not h ave a ny of f‑ba la nc e sh ee t ar ra nge m ent s that h ave, or a re re as on ab ly li kel y to have a c ur ren t or f utu re ef fect o n CR H’ s n an ci al condition, changes in nancial condit ion, re venues or expenses, results o f operations, liquidity , capital expenditures or capital resources t hat is mat erial to inves tors. Quantitative and Qualitative Information about Market Risk CRH addresses the sensitivity of the Gr oup’ s interest rate swaps and debt obligations to changes in interest rates in a sensitivity analysis technique that measures the estimated impacts on the income statement and on equity of either an increase or decrease in market inter est rates or a strengthening or weakening in the euro against all other curr encies, from the rates applicable at 31 December 2021, for each class of nancial instrument with all other variables remaining constant. The technique used measures the estimated impact on pr ot before tax An analysis of the maturity prole of debt, leases capitalised, pur chase obligations, deferred and contingent acquisition consideration and pension scheme contribution commitments at 31 December 2021 is as follows: Payments due by period T otal $m Less than 1 year $m 1-3 years $m 3-5 years $m More than 5 years $m Interest‑bearing loans and borr owings (i) 10,435 559 2,103 2,107 5,666 Lease liabilities (ii) 2,188 302 462 325 1,099 Estimated interest payments on contractually‑committed debt (iii) 3,032 315 550 452 1,715 Deferred and contingent acquisition consideration 361 33 190 134 4 Purchase obligations (iv) 2,200 1,305 351 194 350 Retirement benet obligation commitments (v) 17 2 4 4 7 T otal (vi) 18,233 2,516 3,660 3,216 8,841 (i) Of the $10.4 billion total gross debt, $0.2 billion is drawn on revolving facilities which may be r epaid and redrawn up to the date of maturity . The interest payments are estimated assuming these loans ar e repaid on facility maturity dates. (ii) Lease liabilities are presented on an undiscounted basis as detailed in note 20 and note 22 to the Consolidated Financial Statements. (iii) These interest payments have been estimated on the basis of the following assumptions: (a) no change in variable interest rates; (b) no change in exchange rates; (c) that all debt is repaid as if it falls due fr om future cash generation; and (d) none is renanced by future debt issuance. (iv) Purchase obligations include contracted for capital expenditure. A summary of the Gr oup’ s future purchase commitments as at 31 December 2021 for capital expenditure is set out in note 13 to the Consolidated Financial Statements. These expenditur es for replacement and new projects are in the or dinary course of business and will be nanced from internal resour ces. (v) These retirement benet commitments comprise the contracted payments r elated to our pension schemes in the UK. See further details in note 28 to the Consolidated Financial Statements. (vi) Over the long term, the Group believes that our available cash and cash equivalents, cash from operating activities, along with the access to borrowing facilities will be sufcient to fund our long‑term contractual obligations, maturing debt obligations and capital expenditur es. 2021 Annual Report and Form 20-F 245 244 * EBITDA is dened as ear nings before interest, taxes, depr eciation, amortisation, asset impairment charges, prot on disposals and the Group’ s share of equity accounted investments’ pr ot after tax. Other Disclosur es History , Development and Organisational Structure of the Company CRH is the leading building materials business in the world. Our footprint spans 28 countries, employing c. 77,400 people at over 3,200 operating locations. CRH is the largest building materials business in North America and in Europe and also has r egional positions in Asia. CRH manufactures and supplies a range of integrated building materials, products and innovative solutions for the construction industry . From primary materials, to pr oducts that are highly engineered and high‑value‑added, to integrated building solutions that enable faster , more sustainable construction, CRH is uniquely positioned to address evolving tr ends in global construction markets. Our products can be found throughout the built envir onment in a wide range of construction projects fr om major public infrastructure to commer cial buildings and residential homes. The Group r esulted from the merger in 1970 of two leading Irish public companies, Cement Limited (established in 1936) and Roadstone Limited (incorporated in 1949). Cement Limited manufactured and supplied cement while Roadstone Limited was primarily involved in the manufacture and supply of aggr egates, readymixed concr ete, mortar , coated macadam, asphalt and contract surfacing to the Irish construction industry . As a result of planned geographic diversication since the mid‑1970s, the Group has expanded by acquisition and organic growth into a leading manufacturer and supplier of building materials, products and integrated solutions with, operations in 28 countries around the world. The Company is incorporated and domiciled in Ireland. CRH is a public limited company operating under the Companies Act of Ireland 2014. The Group’ s worldwide headquarters is lo cate d in D ubli n, Ireland. Our principal executive of ces are located at Stonemason’ s W ay , Rathfarnham, Dublin 16, Ireland (telephone: +353 1 404 1000). The Company’ s register ed ofce is located at 42 Fitzwilliam Square, Dublin 2, Ireland and our US agent is CRH Americas, Inc., 900 Ashwood Parkway , Suite 600, Atlanta, Georgia 30338. The Company is the holding company of the Group, wi th di rec t an d in dir ec t sha re a nd l oa n inte res ts in su bs id iar ie s, j oin t ven ture s a nd as so ci ates . From G rou p he adq ua r te rs, a s ma ll tea m of exec uti ves e xerc ise s tra tegi c co ntro l ove r our decentralised operations . In the detailed description of CRH’ s business on pages 36 to 53, estimates of the Group’ s various aggregates and stone r eserves and resources have been provided by engineers employed by the individual operating companies. Further details are included on pages 226 to 231. Details of product end‑use by sector for each reporting segment ar e based on management estimates. A listing of the principal subsidiary undertakings and equity accounted investments is contained on pages 260 to 264. Statements Regarding Competitive Position and Construction Activity Statements made in the Business Performance section and elsewhere in this document r eferring to the Group’ s competitive position are based on the Group’ s belief, and in some cases rely on a range of sources, including investment analysts’ r eports, independent market studies and the Group’ s internal assessment of market share based on publicly available information about the nancial results and performance of market participants. Unless otherwise specied, refer ences to construction activity or other market activity relate to the relevant market as a whole and ar e based on publicly available information from a range of sources, including independent market studies, construction industry data and economic forecasts for individual jurisdictions. Exchange Rates In this Annual Report and Form 20‑F , references to “US Dollar”, “US$”, “$”, “US cents”, “cent” or “c” are, unless otherwise stated, to the United States currency , refer ences to “euro”, “euro cent” or “€” ar e to the euro curr ency and “Stg£” or “Pound Sterling” are to the curr ency of the United Kingdom of Great Britain and Northern Ireland (UK). Other currencies referr ed to in this Annual Report and Form 20‑F include Polish Zloty (PLN), Swiss Franc (CHF), Canadian Dollar (CAD), Chinese Renminbi (RMB), Indian Rupee (INR), Ukrainian Hryvnia (UAH), Philippine Peso (PHP), Romanian Leu (RON) and Serbian Dinar (RSD). For a discussion on the effects of exchange rate uctuations on the nancial condition and results of the operations of the Group, see the Business Performance section beginning on page 36. Legal Proceedings Group companies ar e parties to various legal proceedings, including some in which claims for damages have been asserted against the companies. Having taken appropriate advice, we believe that the aggregate outcome of such proceedings will not have a material ef fect on the Group’ s nancial condition, results of operations or liquidity . Research and Development CRH is engaged in ongoing initiatives that advance its business as part of its relentless focus on continuous improvement. One of these ar eas is resear ch and development, where such costs are not material in the context of the Consolidated Income Statement. CRH’ s policy is to expense such costs as they occur . Employees The average number of employees for the past three nancial years is disclosed in note 7 to the Consolidated Financial Statements on page 163. The Group believes that r elations with its employees and labour unions are satisfactory . Seasonality Activity in the construction industry is characterised by cyclicality and is dependent to a considerable extent on the seasonal impact of weather in CRH’ s operating locations, with activity in some markets reduced signicantly in winter due to inclement weather . First‑half sales accounted for 45% of full‑year 2021 (2020: 44%), while EBITDA (as dened) for the rst six months of 2021 repr esented 37% of the full‑year out‑tur n (2020: 34%). Signicant Changes Other than as disclosed in note 3 to the Consolidated Financial Statements on page 159 with respect to the divestment of the Group’ s Building Envelope business, no signicant changes have occurred since the balance sheet date. Latest Practical Information Where r eferenced in the Supplemental 20‑F and Other Disclosures and Shar eholder Information sections, information is provided at the latest practicable date, 18 February 2022. As the leading building busin ess in t he world , we w ant t o mak e a posit iv e dif ference f or people , society and the envir onment . By engaging with our stakeholders we ensur e tha t we can su cces sfully w ork t oget her t o meet t he challenges facing society . 2021 Annual Report and Form 20-F 247 This Bird observation hide at a gravel pit in Rouvres-en-Plaine, France has been developed in cooperation with nature conservation or ganisations and highlights the important habitats that many of our locations incorporate. The site is owned by Eqiom, part of our Europe Materials Division. Shar eholder Information 246-257 Stock Exchange Listings 248 Ownership of Or dinary Shares 248 Dividends 250 Shar e Plans 251 American Depositary Shar es 252 T axation 253 Memorandum and Articles of Association 2 5 5 General Information 257 2021 Annual Report and Form 20-F 249 248 CRH has a premium listing on the LSE and a secondary listing on Euronext Dublin r epresented by the ticker symbols CRH and CRG respectively . American Depositary Shares (ADSs), each repr esenting one Ordinary Share, are listed on the NYSE. The ADSs are evidenced by ADRs issued by The Bank of New Y ork Mellon (the ‘Depositary’) as Depositary under an Amended and Restated Deposit Agreement dated 28 November 2006. The ticker symbol for the ADSs on the NYSE is CRH. Stock Exchange Listings Ownership of Or dinary Shar es Share price data 2021 2020 LSE Euronext Dublin NYSE LSE Euronext Dublin NYSE Share price at 31 December £39.00 €46.52 $52.80 £30.58 €34.02 $42.58 Market capitalisation £30.1bn €35.9bn $40.7bn £24.0bn €26.7bn $33.4bn Share price movement during year: -high £39.32 €46.96 $53.76 £31.67 €36.50 $42.82 -low £30.22 €34.38 $41.14 £15.74 €17.43 $18.64 The Company is not owned or controlled dir ectly or indirectly by any government or by any corporation or by any other natural or legal person severally or jointly . The major shareholders do not have any special voting rights. As at 2 March 2022, the Company had r eceived notication of certain interests in its Or dinary Share capital that were equal to, or in excess of, 3%. These interests ar e presented in Corporate Governance – Substantial Holdings on page 74. Shareholdings as at 31 December 2021 Geographic location (i) Number of shares held ‘000s % of total United Kingdom 229,920 29.7 North America 229,806 29.7 Europe/Other 155,123 20.0 Retail 132,818 17.2 Ireland 22,996 3.0 T reasury (ii) 3,477 0.4 774,140 100.0 (i) This represents a best estimate of the number of shar es controlled by fund managers resident in the geographic regions indicated. Private shar eholders are classied as retail above. (ii) As detailed in note 29 to the Consolidated Financial Statements. For further information on CRH shares see note 29 to the Consolidated Financial Statements. 2021 Annual Report and Form 20-F 249 248 2020 Month T otal number of share buyback purchases T otal number of EBT purchases T otal number of shares pur chased Average price paid per share - shar e buyback (i) (ii) January 1,850,167 - 1,850,167 €34.72 February 3,210,214 265,820 3,476,034 €33.78 March 890,765 804,405 1,695,170 €30.67 5,951,146 1,070,225 7,021,371 (i) Average price paid per share in r espect of 2021 EBT purchases; March €38.99 and April €39.84 (2020: February €30.68, March €21.94). (ii) The average price paid per share in 2021 in respect of the share buyback pr ogramme was equal to $49.30 (2020: $36.96). Other than the above, there wer e no purchases of equity securities by the issuer and/or afliated persons during the course of 2021. Ownership of Or dinary Shar es - continued 2021 Month T otal number of share buyback purchases T otal number of EBT purchases T otal number of shares pur chased Average price paid per share - shar e buyback (i) (ii) March 1,642,000 307,410 1,949,410 €38.89 April 1,658,731 38,571 1,697,302 €39.81 May 1,042,547 - 1,042,547 €41.25 June 1,502,661 - 1,502,661 €42.77 July 2,095,200 - 2,095,200 €41.66 August 1,535,632 - 1,535,632 €43.65 September 2,358,058 - 2,358,058 €42.87 October 2,267,621 - 2,267,621 €40.46 November 2,366,929 - 2,366,929 €43.64 December 1,360,223 - 1,360,223 €44.98 17,829,602 345,981 18,175,583 Purchases of Equity Securities by the Issuer and Afliated Persons In April 2018, CRH announced its intention to introduce a shar e repurchase programme to repur chase Ordinary Shares (the ‘Programme’). During 2020, CRH repur chased a total of 5,951,146 Ordinary Shar es and returned a further $0.2 billion to shareholders. In 2021, CRH r epurchased a total of 17,829,602 Ordinary Shar es returning a further $0.9 billion of cash to shareholders. This brings the total cash returned to shareholders under the shar e buyback programme to $2.9 billion since its commencement in May 2018. The tables below sets forth the Ordinary Shar es repur chased under this programme together with details of the Ordinary Shar es purchased by the Employee Benet T rust (EBT) during 2020 and 2021. See note 29 to the Consolidated Financial Statements for further details. CREST and Migration to Euroclear Bank Since 1996, CREST has been the depository for the settlement of Irish issuers’ equity securities trading in Dublin and/or London. As a result of Br exit, CREST was no longer available to any Irish incorporated issuers, irrespective of whether they ar e listed in Ireland, London or both, and all Irish issuers had to migrate from CREST to the market’ s chosen replacement system, Eur oclear Bank Belgium. An Extraordinary General Meeting was held on 9 February 2021 to seek shareholder appr oval to the migration of the Company’ s securities to Euroclear Bank’ s central securities depository and to approve associated changes to the Articles of Association. All resolutions wer e passed and the migration took effect on 15 Mar ch 2021. 2021 Annual Report and Form 20-F 251 250 The Company has paid dividends on its Ordinary Shares in r espect of each scal year since the formation of the Group in 1970. Dividends ar e paid to shareholders on the Register of Members on the recor d date for the dividend. Record dates are set in accordance with the rules of the LSE and Eur onext Dublin. An interim dividend is normally declared by the Board of Dir ectors in August of each year and is generally paid in September/October . A nal dividend is normally recommended by the Boar d of Directors following the end of the scal year to which it relates and, if appr oved by the shareholders at an AGM, is generally paid in April/May of that year . The payment of future cash dividends will be dependent upon future earnings, the nancial condition of the Group and other factors. The below table sets forth the amounts of interim, nal and total dividends declared in US cents (2020 - 2021) and euro cent (2017-2019) per Or dinary Share in r espect of each scal year indicated. Solely for the convenience of the reader , dividends declared in the years 2017-2019 have been translated into US cents per Ordinary Shar e at the dividend record date exchange rate. An interim dividend of 23.00 US cents was paid in respect of Or dinary Shares on 8 October 2021. The nal dividend, if approved at the forthcoming AGM of shareholders to be held on 28 April 2022, will be paid on 5 May 2022 to shareholders on the Register of Members as at the close of business on 11 March 2022 and will bring the full-year dividend for 2021 to 121.0 US cents. Dividend Withholding T ax (DWT) must be deducted from dividends paid by an Irish r esident company , unless a shareholder is entitled to an exemption and has submitted a properly completed exemption form to the Company’ s Registrars, Link Registrars Limited (the ‘Registrars’). DWT applies to dividends paid by way of cash or by way of shares under a scrip dividend scheme and is deducted at the standard rate of Income T ax (25%). Non-resident shar eholders located in countries with a double tax treaty with Ireland and certain Irish companies, trusts, pension schemes, investment undertakings and charities may be entitled to claim exemption from DWT . Copies of the exemption form may be obtained from the Registrars. Shareholders should note that DWT will be deducted from dividends in cases wher e a properly completed form has not been r eceived by the specied deadline notied when a dividend is announced. Individuals who are r esident in the Republic of Ireland for tax purposes ar e not entitled to an exemption. If shares ar e held via Euroclear Bank or CREST , the owners of the shares will need to contact the intermediary through whom the shares ar e held in order to arrange for their dividends to be exempted. Shareholders holding Or dinary Shares in certicated form who wish to have their dividend paid direct to their bank account, by electronic funds transfer , can do so by logging on to www .signalshares.com, selecting CRH plc and registering for the shar e portal (the ‘Share Portal’). Shar eholders should note that they will need to have their Investor Code (found on their share certicate), and follow the instructions online to register . Alternatively such shareholders can complete a paper dividend mandate form and submit it to the Registrars. A copy of the form can be obtained on the Registrars's Share Portal or can be r equested directly fr om the Registrars. T ax vouchers will continue to be sent to the shareholder’ s registered address under this arrangement. If shares ar e held via Euroclear Bank or CREST , the dividend will be paid by the Company in accordance with the instructions received fr om Euroclear Bank. Section 5 of the Euroclear T erms and Conditions governing use of the Euroclear system provides that income/dividends received by Eur oclear Bank will be distributed pro-rata to the holders of the r elevant securities (i.e. the relevant EB Participants). Further details on the process of collection, distribution and payment of dividends are pr ovided for in section 5.3 of the EB Operating Procedur es, with reference to the Online Market Guides for market specic operational elements (currently the EB Service Description). All material information regar ding the manner in which receipt of dividends and participation in corporate actions is processed is described in section 5 of the EB Services Description- (V ersion 4) – Custody - Income and Corporate Actions. The owners of the shares held via Euroclear Bank or CREST will need to contact the intermediary through whom the shar es are held in order to arrange for the onwar d payment of the dividend to them. Following the change in reporting curr ency from euro to US Dollar with effect fr om 1 January 2020, all dividends are declar ed in US Dollar . However , they are generally paid in eur o. In order to avoid costs to shareholders, dividends ar e paid in Pound Sterling and US Dollar to shareholders whose shar es are held in certicated form and whose address, according to the Shar e Register , is in the UK and the US respectively , unless they requir e otherwise. In respect of the 2021 nal dividend, the latest date for receipt of curr ency elections is 25 March 2022. Where shar es are held in the Euroclear Bank system, dividends are automatically paid in eur o unless a currency election is made. Investors holding CREST Depositary Interests (“CDI”s) should refer to the CREST International Service Description for information on currency elections in respect of CDIs. Dividends in respect of 7% ‘A ’ Cumulative Prefer ence Shares are paid half-yearly on 5 April and 5 October . Dividends in respect of 5% Cumulative Prefer ence Shares are paid half-yearly on 15 April and 15 October . Dividends US cents per Ordinary Shar e Y ear ended 31 December Interim Final T otal 2021 23.00 98.00 (i) 121.00 2020 22.00 93.00 115.00 euro cent per Or dinary Share US cents per Ordinary Share (ii) Y ears ended 31 December Interim Final T otal Interim Final T otal 2019 20.00 63.00 83.00 22.00 70.00 92.00 2018 19.60 52.40 72.00 22.80 59.20 82.00 2017 19.20 48.80 68.00 23.20 60.00 83.20 (i) Proposed. (ii) Interim and nal dividends per Ordinary Share declar ed previously in euro have been translated to US Dollar using the dividend r ecord date exchange rate. 2021 Annual Report and Form 20-F 251 250 The Group operates shar e option schemes, performance share plans, shar e participation schemes and savings-related shar e option schemes (the ‘Schemes’) for eligible employees in all regions where the r egulations permit the operation of such schemes. A brief description of the Schemes is outlined below . Shares issued (whether by way of the allotment of new shares or the r eissue of T reasury Shares) in connection with the Schemes rank pari passu in all respects with the existing shares in the Company . 2010 Share Option Schemes At the AGM held on 5 May 2010, shareholders approved the adoption of new shar e option schemes to replace the schemes which wer e approved in May 2000 (2000 shar e option schemes). Following the approval by shar eholders of the 2014 Perf ormanc e Share Plan (see below), no further awards will be granted under the 2010 Shar e Option Schemes. Consequently , the last award under the 2010 Share Option Schemes was made in 2013. The 2010 Share Option Schemes wer e based on one tier of options with a single vesting test. The performance criteria for the 2010 Share Option Schemes was EPS-based. V esting only occurred once an initial performance target had been reached and, thereafter , exercise was dependent on continued employment in the Group. In considering the level of vesting based on EPS performance, the Remuneration Committee also considered the overall results of the Gr oup. Subject to the achievement of the EPS performance criteria, options may be exercised not later than ten years from the date of grant of the option, and not earlier than the expiration of three years fr om the date of grant. Benets under the schemes are not pensionable. 2014 Performance Share Plan The 2014 Performance Share Plan was appr oved by shareholders at the AGM on 7 May 2014. It replaces the 2010 Shar e Option Scheme. See page 99 of the 2021 Directors' Remuneration Report for more details. Restricted Share Plan In 2013, the Board appr oved the adoption of the 2013 Restricted Share Plan. Under the rules of the 2013 Restricted Share Plan, certain senior executives (excluding executive Board Dir ectors) can receive conditional awar ds of shares. As (i) executive Directors ar e excluded from awards and (ii) no shares ar e allotted or reissued to satisfy the awards, the listing rules of the LSE and Eur onext Dublin do not requir e shareholder approval for the 2013 Restricted Share Plan. 2010 Savings-related Share Option Schemes At the AGM held on 5 May 2010, shareholders approved the adoption of savings-r elated share option schemes for the UK and Ireland (the ‘2010 Savings-related Shar e Option Schemes’) to replace the 2000 Savings-related Shar e Option Schemes. These schemes expired in May 2020. Prior to the expiry of these schemes, all employees of a participating subsidiary in the Republic of Ireland or the UK, who had satised a requir ed qualifying period, would be invited to participate in this scheme. Eligible employees who wished to participate in the scheme would enter into a savings contract with a nominated savings institution, for a three or a ve-year period, to save a maximum of €500 or Stg£500, as appropriate, per month. At the commencement of each contract period employees would have been granted an option to acquire Or dinary Shares in the Company at an option price which is equal to the amount proposed to be saved plus the bonus payable by the nominated savings institution at the end of the savings period. The price payable for each Ordinary Share under an option could not be less than the higher of par or 75% (or in the case of the UK scheme 80%) of the market value of a share on the day the invitation to apply for the option is issued. On completion of the savings contract, employees may use the amount saved, together with the bonus earned, to exercise the option. At 2 March 2022, 2,118,642 Or dinary Shares have been issued 1 pursuant to the 2010 Savings-related Share Option Schemes to date. 2021 Savings-related Shar e Option Schemes At the AGM held on 29 April 2021, shareholders approved the adoption of savings-r elated share options schemes for the UK and Ireland (the '2021 Savings-related Shar e Option Schemes') to replace the 2010 Savings-related Shar e Option Schemes. These schemes expired in May 2020. All employees of a participating subsidiary in the Republic of Ireland or the UK, who have satised a requir ed qualifying period, are invited to participate in this scheme, although at present ther e is currently no nancial services provider supporting new awards under Irish SA YE schemes following the exit from the market of the curr ent provider in 2021. Eligible employees who wish to participate in the scheme enter into a savings contract with a nominated savings institution, for a three or a ve-year period, to save a maximum of €500 or Stg£500, as appropriate, per month. At the commencement of each contract period employees are granted an option to acquir e Ordinary Shar es in the Company at an option price which is equal to the amount proposed to be saved plus the bonus payable by the nominated savings institution at the end of the savings period. The price payable for each Ordinary Shar e under an option will not be less than the higher of par or 85% of the market value of a share on the day the invitation to apply for the option is issued. On completion of the savings contract, employees may use the amount saved, together with the bonus earned, to exercise the option. At 2 March 2022, no Or dinary Shares have been issued 1 pursuant to the 2021 Savings-related Shar e Option Scheme to date. Share Participation Schemes At the AGM on 13 May 1987, shareholders approved the establishment of Shar e Participation Schemes for the Company , its subsidiaries and companies under its control. Dir ectors and employees of the companies who are tax r esident in Ireland and have at least one year’ s service may elect to participate in these Share Participation Schemes. At 2 March 2022, 8,444,240 Or dinary Shares have been issued 1 pursuant to the Share Participation Schemes. Shar e Plans 1. Whether by way of the allotment of new shares, the reissue of T reasury Shar es or the purchase of Ordinary Shar es. 2021 Annual Report and Form 20-F 253 252 Persons depositing or withdrawing shares must pay: For: $5.00 (or less) per 100 ADSs (or portion of 100 ADSs) • Issuance of ADSs, including issuances resulting from a distribution of shar es or rights or other property • Cancellation of ADSs for the purpose of withdrawal, including if the deposit agreement terminates $5.00 (or less) per 100 ADSs (or portion of 100 ADSs) (A fee equivalent to the fee that would be payable if securities distributed had been shares and the shares had been deposited for issuance of ADSs) • Distribution of deposited securities by the Depositary to ADS register ed holders Applicable Registration or T ransfer fees • T ransfer and registration of shares on our share register to or fr om the name of the Depositary or its agent when the holder deposits or withdraws shares Applicable Expenses of the Depositary • Cable, telex and facsimile transmissions • Currency conversion Applicable T axes and other governmental charges the Depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes • As necessary Fees and charges payable by a holder of ADSs The Depositary collects fees for delivery and surrender of ADSs dir ectly from investors or from intermediaries acting for them depositing shares or surrendering ADSs for the purpose of withdrawal. The Depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The Depositary may generally refuse to pr ovide fee-attracting services until its fees for those services are paid. American Depositary Shar es Category of expense reimbursed to the Company Amount reimbursed for the year ended 31 December 2021 $ New Y ork Stock Exchange listing fees 74,000 Investor relations expenses 326,000 T otal 400,000 The table below sets forth the types of expenses that the Depositary has paid to third parties and the amounts reimbursed for the year ended 31 December 2021: Category of expense waived or paid directly to thir d parties Amount reimbursed for the year ended 31 December 2021 $ Printing, distribution and administration costs paid directly to thir d parties in connection with US shareholder communications and Annual General Meeting related expenses in connection with the American Depositary Share pr ogramme 999 T otal 999 The Depositary has agreed to r eimburse certain Company expenses related to the Company’ s ADS programme and incurr ed by the Company in connection with the ADS programme. For the year ended 31 December 2021 the Depositary reimbursed to the Company , or paid amounts on its behalf to third parties, a total sum of $400,999. This table sets forth the category of expense that the Depositary has agreed to r eimburse to the Company and the amounts reimbursed for the year ended 31 December 2021. The Depositary has also agreed to waive fees for standard costs associated with the administration of the ADS programme and has paid certain expenses directly to thir d parties on behalf of the Company . Under certain circumstances, including r emoval of the Depositary or termination of the ADS programme by the Company , the Company is requir ed to repay the Depositary , up to a maximum of $250,000, the amounts waived, reimbursed and/ or expenses paid by the Depositary to or on behalf of the Company . Fees a nd d ir ec t / in di re ct p ay me nt s mad e by t he D ep osi ta r y to th e Co mpa ny 2021 Annual Report and Form 20-F 253 252 The following summary outlines the material aspects of US federal income and Republic of Ireland tax law regar ding the ownership and disposition of Ordinary Shares or ADSs. Because it is a summary , holders of Ordinary Shar es or ADSs are advised to consult their tax advisors with respect to the tax consequences of their ownership or disposition. The discussion regar ding US federal income tax only applies to you if you hold your shares or ADSs as capital assets for US federal income tax purposes. This discussion addresses only US federal income and Republic of Ireland taxation and does not discuss all of the tax consequences that may be relevant to you in light of your individual circumstances, including for eign, state or local tax consequences, estate and gift tax consequences, and tax consequences arising under the Medicare contribution tax on net investment income or the alternative minimum tax. This summary does not take into account the specic circumstances of any particular holders (such as tax-exempt entities, certain insurance companies, broker -dealers, traders in securities that elect to mark-to-market, investors liable for alternative minimum tax, investors that actually or constructively own 10% or more of the stock of the Company (by vote or value), investors that hold Ordinary Shar es or ADSs as part of a straddle or a hedging or conversion transaction, investors that hold Ordinary Shar es or ADSs as part of a wash sale for tax purposes or investors whose functional currency is not the US Dollar), some of which may be subject to special rules. In addition, if a partnership holds the Ordinary Shar es or ADSs, the US federal income tax treatment of a partner will generally depend on the status of the partner and the tax treatment of the partnership and may not be described fully below . Holders of Ordinary Shares or ADSs are advised to consult their tax advisors with respect to US federal, state and local, Republic of Ireland and other tax consequences of owning and disposing of Ordinary Shar es and ADSs in their particular circumstances, and in particular whether they are eligible for the benets of the Income T ax T reaty (as dened below) in respect of their investment in the Ordinary Shar es or ADSs. The statements regar ding US and Irish laws set forth below are based, in part, on r epresentations of the Depositary and assume that each obligation in the Deposit Agreement and any r elated agreement will be performed in accordance with their terms. This section is based on the Internal Revenue Code of 1986, as amended, its legislative history , existing and proposed US T reasury r egulations, published rulings and court decisions, and the laws of the Republic of Ireland all as curr ently in effect, as well as the Convention between the Government of the United States of America and the Government of Ireland for the A voidance of Double T axation and the Prevention of Fiscal Evasion with Respect to T axes on Income and Capital Gains (the ‘Income T ax T reaty’). These laws are subject to change, possibly on a retr oactive basis. In general, holders of ADSs will be treated as the owners of Ordinary Shar es represented thereby for the purposes of the Income T ax T reaty and for US federal income tax purposes. Exchanges of Ordinary Shares for ADSs, and ADSs for Or dinary Shares, generally will not be subject to US federal income or Irish tax. As used herein, the term “US holder” means a benecial owner of an Ordinary Shar e or ADS who, for US federal income tax purposes: (i) is a US citizen or resident, a US corporation, an estate whose income is subject to US federal income tax regar dless of its source, or a trust if a US court can exercise primary supervision over the trust’ s administration and one or more US persons ar e authorised to control all substantial decisions of the trust, and (ii) is not a resident of, or or dinarily resident in, the Republic of Ireland for purposes of Irish taxes. T a xat io n of D ivi d end s Pai d to US Holders Under general Irish tax law , US holders are not liable for Irish tax on dividends received fr om the Company . On the payment of dividends, the Company is obliged to withhold DWT . The statutory rate during 2021 was 25% of the dividend payable. Dividends paid by the Company to a US tax resident individual will be exempt from DWT pr ovided the following conditions are met: 1. the individual (who must be the benecial owner) is resident for tax purposes in the US (or any country with which Ireland has a double tax treaty) and neither r esident nor ordinarily resident in Ireland; and 2. the individual signs a declaration to the Company , which states that he/she is a US tax resident individual at the time of making the declaration and that he/she will notify the Company in writing when he/she no longer meets the condition in (1) above; or 3. the individual provides the Company with a certicate of tax residency fr om the US tax authorities Dividends paid by the Company to a US tax resident company (which must be the benecial owner) will be exempt from DWT , provided the following conditions are met: 1. the recipient company is r esident for tax purposes in the US (or any country with which Ireland has a double tax tr eaty) and not under the control, either dir ectly or indirectly , of Irish resident persons; 2. the recipient company is not tax resident in Ireland; and 3. the recipient company pr ovides a declaration to the Company , which states that it is entitled to an exemption from DWT , on the basis that it meets the condition in (1) above at the time of making the declaration, and that it will notify the Company when it no longer meets the condition in (1) above For US federal income tax purposes, and subject to the passive foreign investment company (PFIC) rules discussed below , US holders will include in gross income the gross amount of any dividend paid by the Company out of its current or accumulated earnings and prots (as determined for US federal income tax purposes) as ordinary income when the dividend is actually or constructively received by the US holder , in the case of Ordinary Shares, or by the Depositary , in the case of ADSs. Any Irish tax withheld from this dividend payment must be included in this gross amount even though the amount withheld is not in fact received. Dividends paid to non-corporate US holders that constitute qualied dividend income will be taxed at the prefer ential rates applicable to long-term capital gains provided certain holding period r equirements are met. Dividends the Company pays with r espect to Ordinary Shar es or ADSs generally will be qualied dividend income. Dividends paid by CRH will not be eligible for the dividends received deduction generally allowed to US corporations in respect of dividends r eceived from other US corporations. The amount of the dividend distribution includable in income of a US holder will be the US Dollar value of the dividends on the date they are distributed, regar dless of whether the US holder elects to receive the payment in a curr ency other than US Dollars. If the US holder elects to receive the payment in a currency other than US Dollars, generally any gain or loss resulting fr om currency exchange uctuations during the period from the date the dividend payment is distributed to the date such payment is received will be tr eated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualied dividend income. Such gain or loss will generally be income or loss from sour ces within the US for foreign tax credit limitation purposes. T axation 2021 Annual Report and Form 20-F 255 254 T axation - continued Distributions in excess of current and accumulated earnings and prots, as determined for US federal income tax purposes, will be treated as a non- taxable return of capital to the extent of the US holder’ s basis in the Ordinary Shar es or ADSs and thereafter as capital gain. However , the Company does not calculate earnings and prots in accordance with US federal income tax principles. Accordingly , US holders should expect to generally treat distributions the Company makes as dividends. For foreign tax cr edit limitation purposes, dividends the Company pays with respect to Or dinary Shares or ADSs will generally be income from sour ces outside the US, and will, depending on your circumstances, generally be “passive” income for purposes of computing the foreign tax cr edit allowable to a US holder . Subject to certain limitations, the Irish tax withheld in accordance with the Income T ax T reaty and paid over to the Republic of Ireland will be cr editable or deductible against your US federal income tax liability . Special rules apply in determining the foreign tax credit limitation with r espect to dividends that are subject to the pr eferential tax rates. Any Irish tax withheld from distributions will not be eligible for a foreign tax cr edit to the extent an exemption from the tax withheld is available to the US holder . Capital Gains T ax A US holder will not be liable for Irish tax on gains realised on the sale or other disposition of Ordinary Shar es or ADSs unless the Ordinary Shares or ADSs ar e held in connection with a trade or business carried on by such holder in the Republic of Ireland thr ough a branch or agency . A US holder will be liable for US federal income tax on such gains in the same manner as gains from a sale or other disposition of any other shares in a company . Subject to the PFIC rules below , US holders who sell or otherwise dispose of Ordinary Shar es or ADSs will recognise a capital gain or loss for US federal income tax purposes equal to the differ ence between the US Dollar value of the amount realised on the sale or disposition and the tax basis, determined in US Dollars, in the Ordinary Shar es or ADSs. Capital gains of a non-corporate US holder are generally taxed at a prefer ential rate where the holder has a holding period greater than one year , and the capital gain or loss will generally be US source for for eign tax credit limitation purposes. Capital Acquisitions T ax (Estate/Gift T ax ) Although non-residents may hold Or dinary Shares, the shares ar e deemed to be situated in the Republic of Ireland, because the Company is requir ed to maintain its Share Register in the Republic of Ireland for Irish Capital Gains T ax purposes. Accordingly , holders of Ordinary Shar es may be subject to Irish gift or inheritance tax, notwithstanding that the parties involved are domiciled and resident outside the Republic of Ireland. Certain exemption thr esholds apply to gifts and inheritances depending on the relationship between the donor and donee. Under the Ireland-US Estate T ax T reaty with respect to taxes on the estates of deceased persons, credit against US federal estate tax is available in respect of any Irish inheritance tax payable in respect of transfers of Ordinary Shar es. Additional US Federal Inco me T ax Considerations The Company believes that Ordinary Shar es and ADSs should not currently be tr eated as stock of a PFIC for US federal income tax purposes and does not expect them to become stock of a PFIC in the foreseeable futur e. However , this conclusion is a factual determination that is made annually and thus may be subject to change. If the Company is treated as a PFIC and you ar e a US holder that did not make a mark-to-market election, you will be subject to special rules with respect to any gain you realise on the sale or other disposition of your Ordinary Shar es or ADSs and any excess distribution that the Company makes to you. Generally , any such gain or excess distribution will be allocated ratably over your holding period for the Ordinary Shar es or ADSs, the amount allocated to the taxable year in which you realised the gain or received the excess distribution, or to prior years before the rst year in which we wer e a PFIC with respect to you, will be taxed as or dinary income, the amount allocated to each prior year will be generally taxed as ordinary income at the highest tax rate in effect for each other such year , and an interest charge will be applied to any tax attributable to such gain or excess distribution for the prior years. With certain exceptions, Ordinary Shar es or ADSs will be treated as stock in a PFIC if the company was a PFIC at any time during the investor’ s holding period in the Ordinary Shar es or ADSs. In addition, dividends that you receive fr om the Company will not constitute qualied dividend income to you if the Company is deemed to be a PFIC either in the taxable year of the distribution or the preceding taxable year , but instead will be taxable at rates applicable to ordinary income. Stamp Duty Section 90 Stamp Duties Consolidation Act 1999 exempts from Irish stamp duty transfers of ADSs where the ADSs ar e dealt in and quoted on a recognised stock exchange in the US and the underlying deposited securities are dealt in and quoted on a recognised stock exchange. The Irish tax authorities regar d NASDAQ and the NYSE as recognised stock exchanges. Irish stamp duty will be charged at the rate of 1% of the amount or value of the consideration on any conveyance or transfer on sale of Ordinary Shar es (exemption generally available in the case of single transfers with a value of less than €1,000). Exchanges of Ordinary Shar es for ADSs, and ADSs for Ordinary Shar es may be subject to Irish stamp duty in certain circumstances. 2021 Annual Report and Form 20-F 255 254 The Company’ s Memorandum of Association sets out the objects and powers of the Company . The Articles of Association detail the rights attaching to each share class; the method by which the Company’ s shares can be pur chased or reissued; the provisions which apply to the holding of and voting at general meetings; and the rules relating to the Directors, including their appointment, retir ement, re-election, duties and powers. A copy of the current Memorandum and Articles of Association can be obtained from the Gr oup’ s website, www .crh.com. The following summarises certain provisions of CRH’ s Memorandum and Articles of Association and applicable Irish law . Objects and Purposes CRH is incorporated under the name CRH public limited company and is register ed in Ireland with register ed number 12965. Clause 4 of CRH’ s Memorandum of Association provides that its objects include the business of an investment holding company . Clause 4 also sets out other objects including the business of quarry masters and proprietors and lessees and workers of quarries, sand and gravel pits, mines and the like generally; the business of road-makers and contractors, building contractors, builders merchants and providers and dealers in r oad making and building materials, timber merchants; and the carrying on of any other business calculated to benet CRH. The memorandum grants CRH a range of corporate capabilities to effect these objects. Directors The Directors manage the business and af fairs of CRH. Directors who ar e in any way , whether directly or indirectly , interested in contracts or other arrangements with CRH must declare the natur e of their interest at a meeting of the Dir ectors, and, subject to certain exemptions, may not vote in respect of any contract or arrangement or other proposal whatsoever in which they have any material interest other than by virtue of their inter est in shares or debentures in the Company . However , in the absence of some other material interest not indicated below , a Director is entitled to vote and to be counted in a quorum for the purpose of any vote relating to a resolution concerning the following matters: • the giving of security or indemnity with respect to money lent or obligations taken by the Director at the request or for the benet of the Company; • the giving of security or indemnity to a third party with respect to a debt or obligation of the Company which the Director has assumed responsibility for under a guarantee, indemnity or the giving of security; Memorandum and Articles of Association J.H. Rudolph & Co., Inc, part of CRH’ s America’s Materials Division, deliver ed this runway extension project at Huntingburg Regional Airport in Indiana, United States. The project included increasing the length of the runway by over 500 feet and the construction of Indiana’ s rst trafc tunnel under an airport runway . 2021 Annual Report and Form 20-F 257 256 • any proposal in which the Dir ector is interested concerning the underwriting of Company shares, debentures or other securities; • any other proposal concerning any other company in which the Director is inter ested, directly or indirectly (whether as an of cer , shareholder or otherwise) provided that the Dir ector is not the holder of 1% or more of the voting inter est in the shares of such company; and • proposals concerning the modication of certain retir ement benets under which the Director may benet and which have been approved or are subject to appr oval by the Irish Revenue Commissioners The Directors may exer cise all the powers of the Company to borrow money , except that such general power is restricted to the aggr egate amount of principal borrowed less cash balances of the Company and its subsidiaries not exceeding an amount twice the aggregate of (i) the shar e capital of the Company; and (ii) the amount standing to the credit of r etained income, foreign currency translation reserve and other r eserves, capital grants, deferred taxation and non-controlling inter est; less any repayable government grants; less (iii) the aggregate amount of T reasury Shares and own shar es held by the Company . The Company in general meeting from time to time determines the fees payable to the Directors. The Board may grant special r emuneration to any of its number who being called upon, shall render any special or extra services to the Company or go or reside abr oad in connection with the conduct of any of the affairs of the Company . The qualication of a Director is the holding alone and not jointly with any other person of 1,000 Ordinary Shar es in the capital of the Company . V oting Rights The Articles provide that, at shar eholders’ meetings, holders of Ordinary Shar es, either in person or by proxy , are entitled to one vote on a show of hands and one vote per share on a poll. No member is entitled to vote at any general meeting unless all calls or other sums immediately payable in respect of shares in the Company have been paid. Laws , De cr ee s or O t he r Regulations There ar e no restrictions under the Memorandum and Articles of Association of the Company or under Irish law that limit the right of non-Irish residents or foreign owners fr eely to hold their Ordinary Shares or to vote their Ordinary Shar es. Liquidation Rights/Return of Capital In the event of the Company being wound up, the liquidator may , with the sanction of a shareholders’ special resolution, divide among the holders of the Ordinary Shar es the whole or any part of the net assets of the Company (after the return of capital and payment of accrued dividends on the prefer ence shares) in cash or in kind, and may set such values as he deems fair upon any property to be so divided and determine how such division will be carried out. The liquidator may , with a like sanction, vest such assets in trust as he thinks t, but no shareholders will be compelled to accept any shares or other assets upon which ther e is any liability . V ariation of Rights Subject to the provisions of the Companies Act 2014, the rights attached to any class of shares may be varied with the consent in writing of the holders of not less than three fourths in nominal value of the issued shares of that class, or with the sanction of a special resolution passed at a separate general meeting of the holders of those shares. Issue of Shares Subject to the provisions of the Companies Act 2014 and the Articles of Association, the issue of shares is at the discr etion of the Directors. Dividends Shareholders may by or dinary resolution declare nal dividends and the Directors may declar e interim dividends but no nal dividend may be declared in excess of the amount recommended by the Directors and no dividend may be paid otherwise than out of income available for that purpose in accordance with the Companies Act 2014. Ther e is provision to of fer scrip dividends in lieu of cash. The prefer ence shares rank for xed rate dividends in priority to the Ordinary and Income Shar es for the time being of the Company . Any dividend which has remained unclaimed for 12 years fr om the date of its declaration shall, if the Directors so decide, be forfeited and cease to remain owing by the Company . Meetings Shareholder meetings may be convened by majority vote of the Directors or r equisitioned by shareholders holding not less than 5% of the voting rights of the Company . A quorum for a general meeting of the Company is constituted by two or more shar eholders present in person and entitled to vote. The passing of resolutions at a meeting of the Company , other than special resolutions, requir es a simple majority . A special resolution, in respect of which not less than 21 clear days’ notice in writing must be given, requir es the afrmative vote of at least 75% of the votes cast. Disclosure of Shar eholders’ Interests A shareholder may lose the right to vote by not complying with any statutory notice or notice pursuant to Article 14 of the Articles of Association given by the Company requiring an indication in writing of: (i) the capacity in which the shares ar e held or any interest ther ein; (ii) the persons who have an interest in the shar es and the nature of their interest; or (iii) whether any of the voting rights carried by such shares ar e the subject of any agreement or arrangement under which another person is entitled to control the shar eholder’ s exercise of these rights. Prefer ence Shares Details of the 5% and 7% ‘A ’ Cumulative Preference Shares ar e disclosed in note 29 to the Consolidated Financial Statements. Use of Electronic Communication Whenever the Company , a Director , the Secretary , a member or any ofcer or person is r equired or permitted by the Articles of Association to give information in writing, such information may be given by electronic means or in electr onic form, whether as electronic communication or otherwise, provided that the electr onic means or electronic form has been approved by the Dir ectors. Memorandum and Articles of Association - continued 2021 Annual Report and Form 20-F 257 256 Announcement of nal results for 2021 3 March 2022 Ex-dividend date 10 Mar ch 2022 Record date for dividend 11 March 2022 Latest date for receipt of completed bank mandates 25 March 2022 Latest date for receipt of curr ency elections 25 March 2022 Latest date for revocation of existing bank mandates 25 March 2022 Annual General Meeting 28 April 2022 Dividend payment date 5 May 2022 Further updates to the calendar can be found on www .crh.com. Financial Calendar Electronic Communications Following the introduction of the 2007 T ransparency Regulations, and in order to adopt a mor e environmentally friendly and cost ef fective approach, the Company provides shar eholders with hard copy notications that the Annual Report and Form 20-F and other shareholder communications ar e available electronically via the CRH website, www .crh.com, and only sends a printed copy to those shareholders who specically request a copy . Shareholders who choose to do so can elect to receive email notications that the Annual Reports and other Shareholder communications ar e available electronically . However , shareholders will continue to receive printed pr oxy forms, dividend documentation and, if the Company deems it appropriate, other documentation by post. Shareholders can alter the method by which they receive communications by contacting the Registrars. CRH W ebsite Information on, or accessible through our website, www .crh.com, other than the item identied as the Annual Report and Form 20-F , does not form part of and is not incorporated into the Company’ s Annual Report on Form 20-F as led with the SEC (the ‘Form 20-F’). References in this document to other documents on the CRH website, such as the CRH Sustainability Report, are included only as an aid to their location and are not incorporated by r eference into the Form 20-F . The Group’ s website provides the full text of the Form 20-F , which is led annually with the SEC, interim reports, trading updates, copies of presentations to analysts and investors and circulars to shar eholders. News releases are made available in the News section of the website, immediately after release to the Stock Exchanges. Electronic Pr oxy V oting Shareholders holding shares in cer ticated form may l odg e a pr oxy f or m for th e 2022 AGM electronically b y accessing the Registrars’ w ebsite www .signalshares.com and entering CRH plc in the company name eld. Shareholders will need to register for Signal Shar es by clicking on "registration section" (if you have not register ed previously) and following the registration instructions. Investors who hold their interests in the Company's shares thr ough either the Euroclear Bank system or as CREST Depository Interests ("CDI"s) should r efer to the Euroclear Bank Service Description or the CREST International Manual respectively or to the broker or custodian thr ough whom they hold their shares to give their voting instructions. Further details on how shareholders holding shar es in uncerticated form can vote electronically at the 2022 AGM are available in the notes to the Notice of the AGM. Registrars Enquiries concerning shareholdings should be addressed to the Registrars: Link Asset Services, P .O. Box 1110 Maynooth, Co. Kildare, Ireland. T elephone: +353 1 553 0050 Fax: +353 1 224 0700 Website: www .linkassetservices.com Shareholders with access to the internet may check their accounts by logging onto www .signalshares.com, selecting CRH plc and registering for the shar e portal. Shareholders should note that they will need to have their Investor Code (found on their share certicate) and follow the instructions online to register . This facility allows shareholders to check their shar eholdings and dividend payments, register e-mail addr esses, appoint proxies electr onically and download standard forms r equired to initiate changes in details held by the Registrars. Shareholders will need to register for a User ID befor e using some of the services. American Depositary Receipts The ADR programme is administer ed by the Bank of New Y ork Mellon and enquiries regarding ADRs should be addressed to: BNY Mellon Shareowner Services, P .O. Box 505000, Louisville, KY 40233-5000, U.S.A. T elephone: T oll Free Number US residents: 1-888-269-2377 International: +1 201-680-6825 E-mail: shrrelations@cpushar eownerservices.com Website: www .mybnymdr .com Frequently Asked Questions (F AQs) The Group’ s website contains answers to questions frequently asked by shar eholders, including questions regar ding shareholdings, dividend payments, electronic communications and shar eholder rights. The F AQs can be accessed in the Investors section of the website under Shareholder Centr e. Exchange Controls Certain aspects of CRH’ s international monetary operations outside the European Union wer e, prior to 31 December 1992, subject to regulation by the Central Bank of Ireland. These contr ols have now ceased. There ar e currently no Irish foreign exchange controls, or other statute or r egulations that restrict the export or import of capital, that affect the r emittance of dividends, other than dividend withholding tax on the Ordinary Shar es, or that affect the conduct of the Company’ s operations. Principal Accountant Fees and Services Details of auditors’ fees for Deloitte Ireland LLP , Dublin Ireland, PCAOB ID No. 1193 (in r espect of the years ended 31 December 2021 and 31 December 2020) and Ernst & Y oung, Dublin Ireland, PCAOB ID No. 1411 (in respect of the year ended 31 December 2019) are set out in note 5 to the Consolidated Financial Statements. For details on the audit and non-audit services pre-appr oval policy see Corporate Governance – Exter nal Auditors on page 65. Documents on Display The SEC maintains an internet site at http://www .sec.gov that contains reports led electronically with the SEC, including this Form 20-F and documents referr ed to herein. SEC lings are also available to the public from commer cial document retrieval services. This Form 20-F is also available at CRH's website, www .crh.com. General Information Acr os s our busine sse s an uncompromising appr oach t o w ork place sa fe t y ensur es that o ur people are pro tect e d from po ten tial ha zard s as the y go about th eir jobs . W e conti nue t o in ves t in init iat ives t o stre n gth e n o u r c ul ture of he a lth, safety a nd wellbeing. Dycore and Heembeton both part of CRH’ s Europe Materials Division based in the Netherlands collaborated on a solution involving the on-site assembly of hollow core oors, ribbed oors, prefab concrete walls and the facades for 95 homes in this housing project in Groningen, Netherlands. 2021 Annual Report and Form 20-F 259 Other Information 258-272 Principal Subsidiary Undertakings 260 Principal Equity Accounted Investments 264 Executive Leadership Biographies 265 Our Pr oducts and Services Locations 266 Exhibits 268 Cross Re ference t o F orm 20- F Requi rements 269 Index 270 Signatur es 272 2021 Annual Report and Form 20-F 261 260 Germany Fels Holding GmbH 100 Holding company Fels Netz GmbH 100 Logistics and owned railway infrastructure operator Fels V ertriebs und Service GmbH & Co. KG. 100 Lime and limestone, development of new products Fels-Werke GmbH 100 Pr oduction and sale of lime and limestone Opterra GmbH 100 Cement and r eadymixed concrete Hungary Danucem Magyarország Kft. 100 Cement and readymixed concr ete Ferrobeton Dunaújvár osi Beton- és V asbetonelem-gyártó Zrt 100 Pr ecast concrete structural elements Ireland Clogrennane Lime Limited 100 Burnt and hydrated lime Irish Cement Limited 100 Cement Roadstone Limited 100 Aggregates, readymixed concrete, mortar , coated macadam, concrete blocks and pipes, asphalt, agricultural and chemical limestone and contract surfacing Netherlands Calduran B.V . 100 Sand-lime bricks and building elements Cementbouw B.V . 100 Cement transport and trading, readymixed concrete and aggregates Heembeton B.V . 100 Pr ecast concrete structural elements Dycore B.V . 100 Concrete ooring elements Philippines (i) Republic Cement & Building Materials, Inc. 40 Cement Republic Cement Land & Resources Inc. 40 Cement and Building Materials (i) 55% economic interest in the combined Philippines business (see note 31 to the Consolidated Financial Statements). Europe Materials Incorporated and operating in % held Products and services Belgium Ergon N.V . 100 Precast concr ete and structural elements Oeterbeton N.V . 100 Precast concr ete Prefaco N.V . 100 Pr ecast concrete structural elements Schelfhout N.V . 100 Precast concrete wall elements VVM N.V . 100 Clinker grinding and cement production Britain & Northern Ireland Northstone (NI) Limited (including Farrans Construction, Materials and Cubis divisions) 100 Aggregates, r eadymixed concrete, mortar , coated macadam, rooftiles, building and civil engineering contracting Premier Cement Limited 100 Marketing and distribution of cement Southern Cement Limited 100 Sale and distribution of cement T armac Aggregates Limited 100 Aggregates, asphalt, r eadymixed concrete and contracting T armac Building Products Limited 100 Building products T armac Cement and Lime Limited 100 Cement and lime T armac T rading Limited 100 Aggregates, asphalt, cement, readymixed concrete and contracting Czech Republic V apenka Vitosov s.r .o 75 Production of lime and lime products Denmark Betongruppen RBR A/S 100 Concrete paving manufacturer CRH Concrete A/S 100 Structural concrete products RC Beton A/S 100 Manufacturer of concrete paving, concr ete blocks and underground products Finland Finnsementti Oy 100 Cement Rudus Oy 100 Aggregates, readymixed concrete and concr ete products France Eqiom 99.99 Aggregates, cement and readymixed concr ete L ’industrielle du Béton S.A. 100 Structural concrete products Stradal 100 Utility and infrastructural concrete pr oducts Principal Subsidiary Undertakings as at 31 December 2021 2021 Annual Report and Form 20-F 261 260 Europe Materials - continued Incorporated and operating in % held Products and services Romania ROMCIM S.A. 98.61 Cement Elpreco S.A. 100 Architectural concr ete products Ferrobeton Romania SRL 100 Structural concrete products Serbia Moravacem d.o.o. Popovac 100 Cement Slovakia Danucem (Slovensko) a.s. 99.78 Cement and readymixed concrete Ferrobeton Slovensko s.r .o. 100 Precast concrete structural elements Spain Beton Catalan, S.A. 100 Readymixed concrete Cementos Lemona, S.A. 98.75 Cement Switzerland JURA-Holding AG 100 Cement, aggregates and r eadymixed concrete Ukraine LLC Cement 100 Cement and clinker grinding PJSC Mykolaivcement 100 Cement Podilsky Cement PJSC 100 Cement Poland Przedsiebiorstwo Produkcji Mas Betonowych Bosta Beton Sp. z o.o. 90.30 Readymixed concrete Drogomex Sp. z o.o. 100 Asphalt and contract surfacing Cement Ozarów S.A. 100 Cement Masfalt Sp. z o.o. 100 Asphalt and contract surfacing T rzuskawica S.A. 100 Production of lime and lime pr oducts 2021 Annual Report and Form 20-F 263 262 Americas Materials Incorporated and operating in % held Products and services Canada CRH Canada Group Inc. 100 Aggregates, asphalt, cement and readymixed concrete and provider of construction services United States Ash Grove Cement Company 100 Aggregates, readymixed concrete and cement Callanan Industries, Inc. 100 Aggregates, asphalt, readymixed concr ete and related construction activities CPM Development Corporation 100 Aggregates, asphalt, readymixed concrete, pr estressed concrete and r elated construction activities Dolomite Products Company , Inc. 100 Aggregates, asphalt, r eadymixed concrete and related construction activities Michigan Paving and Materials Company 100 Aggregates, asphalt and related construction activities Mountain Enterprises, Inc. 100 Aggregates, asphalt and related construction activities Mulzer Crushed Stone, Inc 100 Aggregates, asphalt, r eadymixed concrete, aggregates distribution and related construction activities CRH Americas Materials, Inc. and subsidiaries 100 Holding company Oldcastle SW Group, Inc. 100 Aggregates, asphalt, r eadymixed concrete and related construction activities OMG Midwest, Inc. 100 Aggregates, asphalt, readymixed concr ete and related construction activities Pennsy Supply , Inc. 100 Aggregates, asphalt, readymixed concrete and related construction activities Pike Industries, Inc. 100 Aggregates, asphalt, readymixed concr ete and related construction activities P .J. Keating Company 100 Aggregates, asphalt and related construction activities Preferr ed Materials, Inc. 100 Aggregates, asphalt, readymixed concr ete, aggregates distribution and related construction activities Staker & Parson Companies 100 Aggregates, asphalt, r eadymixed concrete and related construction activities Suwannee American Cement Company , LLC 80 Cement Tilcon Connecticut Inc. 100 Aggregates, asphalt, r eadymixed concrete and related construction activities Tilcon New Y ork Inc. 100 Aggregates, asphalt and related construction activities The Shelly Company 100 Aggregates, asphalt, r eadymixed concrete and related construction activities T rap Rock Industries, LLC 60 Aggregates, asphalt and related construction activities West Virginia Paving, Inc. 100 Aggregates, asphalt and related construction activities Principal Subsidiary Undertakings - continued as at 31 December 2021 2021 Annual Report and Form 20-F 263 262 Building Products Incorporated and operating in % held Products and services Australia Ancon Building Products Pty Ltd 100 Construction accessories Cubis Systems Australia Pty Ltd 100 Supplier of access chambers and ducting products Belgium Plakabeton N.V . 100 Construction accessories Marlux N.V . 100 Concrete paving and landscaping pr oducts Stradus N.V . 100 Concr ete paving and landscaping products Britain & Northern Ireland Ancon Limited 100 Construction accessories Canada Oldcastle Building Products Canada, Inc. (trading as Gr oupe Permacon, Expocrete Concr ete Products, T echniseal, Oldcastle BuildingEnvelope, C.R. Laurence of Canada, Oldcastle Enclosure Solutions) 100 Specialty masonry , hardscape and patio pr oducts, custom fabricated glass, architectural glazing systems and har dware for glass industry , utility boxes and trench systems France Plaka Group France S.A.S. 100 Construction accessories Germany EHL AG 100 Concrete paving and landscape walling pr oducts Leviat GmbH 100 Construction accessories Ireland Cubis Systems Limited 100 Supplier of access chambers and ducting products Netherlands Struyk V erwo Groep B.V . 100 Concrete paving products Poland Polbruk S.A. 100 Concrete paving pr oducts Slovakia Premac, spol. s.r .o. 100 Concr ete paving and oor elements Switzerland Leviat AG 100 Construction accessories United States MoistureShield, Inc. 100 Composite building products CRH Americas Products, Inc. 100 Holding company CRH America, Inc. 100 Holding company CRH America Finance, Inc. 100 Holding company C.R. Laurence Co., Inc. 100 Fabrication and distribution of custom hardwar e products for the glass industry Meadow Burke, LLC 100 Concr ete accessories CRH Americas, Inc. 100 Holding company Oldcastle APG Northeast, Inc. (trading principally as Anchor Concrete Pr oducts) 100 Specialty masonry , hardscape and patio products Oldcastle APG South, Inc. (trading principally as Adams Products, Georgia Masonry Supply , Northeld Block Company , Anchor Block, Oldcastle Mid-Atlantic, EP Henry and Oldcastle Coastal) 100 Specialty masonry , hardscape and patio products Oldcastle APG West, Inc. (trading principally as Amcor Masonry Products, Central Pr e-Mix Concrete Products, Jewell Concrete, Ash Grove Pr oducts, Sierra Building Products, US Mix and Superlite Block) 100 Specialty masonry and stone products, hardscape and patio pr oducts Oldcastle APG, Inc. 100 Holding company APG Mid-Atlantic, Inc. 100 Specialty masonry , hardscape and patio products Oldcastle BuildingEnvelope™, Inc. 100 Custom fabricated architectural glass and architectural glazing systems Oldcastle Building Products, Inc. 100 Holding company Oldcastle Lawn & Garden, Inc. 100 Patio products, bagged stone, mulch and stone Oldcastle Infrastructure, Inc. 100 Precast concrete pr oducts, concrete pipe, prestr essed plank and structural elements Pebble T echnology International 100 Aggregate pool nishes National Pipe & Plastics, Inc. 100 Pipe Products 2021 Annual Report and Form 20-F 265 264 Principal Equity Accounted Investments as at 31 December 2021 Americas Materials Airlinx T ransit Partners Inc. 50 Special-purpose entity on Ontario infrastructure construction Canada Blackbird Infrastructur e 407 General Partnership 50 Special-purpose entity on highway infrastructure construction Blackbird Maintenance 407 General Partnership 50 Construction Blackbird Constructors 407 General Partnership 50 Construction Blackbird Infrastructur e 407 CRH GP Inc 50 Special-purpose entity on highway infrastructure construction DAD (Finch West LRT Inc.) 33 Special-purpose entity on Ontario infrastructure construction Kiewit-Dufferin Midtown Partnership 35 Construction Mosaic T ransit Partners General Partnership 33 Special-purpose entity on Ontario infrastructure construction Mosaic T ransit Constructors General Partnership 33 Construction United States Buckeye Ready-Mix, LLC 45 Readymixed concrete Cadillac Asphalt, LLC 50 Asphalt Piedmont Asphalt, LLC 50 Asphalt Southside Materials, LLC 50 Aggregates * Audited by rms other than Deloitte Pursuant to Sections 314-316 of the Companies Act 2014, a full list of subsidiaries, joint ventures and associated undertakings will be annexed to the Company’ s Annual Return to be led in the Companies Registration Ofce in Ireland. Europe Materials Incorporated and operating in % held Products and services China Y atai Building Materials Group Company Limited 26 Cement Ireland Kemek Limited 50 Commercial explosives 2021 Annual Report and Form 20-F 265 264 Executive Leadership Biographies Albert joined CRH in 1998. Prior to joining CRH, he was Chief Operating Ofcer with a private equity group. While at CRH he has held a variety of senior positions, including Finance Director of the Eur ope Materials Division, Group Development Dir ector and Managing Director of Eur ope Materials. He became Chief Operating Ofcer in January 2009 and was appointed Group Chief Executive with ef fect from 1 January 2014. Qualications: FCP A, MBA, MBS. Albert Manifold Group Chief Executive Appointed to the Board January 2009 Jim has over 30 years' experience in the building materials industry , nearly 20 years of which have been with CRH. Jim joined CRH as Finance Director for Roadstone and since then has held a number of positions across the Gr oup, including Country Manager for Ireland, Managing Dir ector of each of the Western and Eastern regions of our Europe Materials Division and most recently Chief of Staf f to the Chief Executive, where he worked closely with divisional and operational leadership and had oversight of the Group’ s Performance, Safety and Special Projects activities and led a number of Performance Improvement initiatives in r ecent years. He was appointed Finance Director Designate in March 2021 and became Gr oup Finance Director with effect fr om 1 June 2021. Qualications: BComm, FCA. Jim Mintern Group Finance Dir ector Appointed to the Board June 2021 Gina joined CRH in July 2019 as Senior Vice President, HR for our Building Pr oducts division, before being appointed Chief Human Resour ces Ofcer (CRHO) in January 2021. Gina has over 25 years’ experience in Global Human Resource roles spanning large scale industries including Building Products, Mining, Logistics & W arehousing, T elecommunications and Automotive. Immediately prior to CRH, she served as CHRO at T oronto- based Kinross Gold Corporation. Qualications: BA (Social Science), MBA. Gina Jardine Chief Human Resources Of cer Before joining CRH in the Americas in 1999, Dan held various operating positions in the construction materials sector . At CRH, he has served in a number of roles including Pr esident of our Michigan business, President of Americas Materials northeast division and most recently , President of Americas Materials north division. Dan was appointed President of Americas Materials in 2021. Qualications: BS (Civil Engineering), MBA. Dan Stover President, Americas Materials Nathan joined CRH in the Americas in 2011. Prior to joining CRH, he held various operating and strategy roles in the building materials industry . At CRH, he has served in a number of business development and executive leadership roles, including Vice President US Strategy & Development, Senior Vice President, Central Division of Americas Materials and most recently as Pr esident of CRH’ s Building Envelope business. Nathan was appointed President of Building Pr oducts in 2021. Qualications: BS (Business), MBA. Nathan Creech President, Building Pr oducts Onne joined CRH in January 2018 as Chief Operating Ofcer for our Eur ope Materials Division and was appointed Divisional President in July 2018 with responsibility for our cement, lime, asphalt, aggregates and concr ete operations in mainland Europe and in Asia. Onne has extensive cement industry experience, having worked across four continents, including roles as the CEO of Dangote Cement in Nigeria and CEO of Ambuja Cements Ltd. in India, prior to joining CRH. Qualications: Bachelor of Economics and Accounting, MBA. Onne van der Weijde President, Eur ope Materials Isabel joined CRH in 2020 in the newly created r ole of Group General Counsel. Isabel was pr eviously a partner at Arthur Cox, one of Ireland's top-tier law rms, and is recognised globally as a leader in her eld. She has advised State entities, multinationals and domestic corporations, and their boards, on business-critical risk, exposure and litigation arising fr om transactions and disputes as well as regulatory compliance and competition issues. Isabel is also an accredited mediator and an experienced and active mentor . Qualications: BCL, Law Society of Ireland, CEDR Accredited Mediator . Isabel Foley Group General Counsel Juan Pablo joined CRH in October 2020 to take up the newly created r ole of Chief Innovation & Sustainability Ofcer . He has over 25 years' experience working in the building materials industry across the Americas and Eur ope. His areas of expertise cover strategic planning, M&A, venture capital, digital innovation, and marketing. Immediately prior to CRH, he served as EVP of Strategic Planning and New Business Development at CEMEX. Qualications: BS, MBA. Juan Pablo San Agustín Group Executive, Strategy , Sustainability & Innovation Randy joined CRH in the Americas in 1996 and has held several senior operating positions across multiple CRH businesses, initially in Architectural Products, then in Materials. In 2008, he was appointed President of our Americas Materials Performance group and subsequently led the launch of our Building Solutions business. Prior to his current appointment, Randy served as Pr esident of Americas Materials from 2016 to 2020 and Gr oup Executive, Strategic Operations from 2020 to 2021. Randy is actively involved in the Materials industry in North America and served as Chairman of the US National Stone, Sand & Gravel Association in 2018. Qualications: BS (Business Administration), MBA. Randy Lake Chief Operating Ofcer David joined CRH in 1998 in the United States, where he was Contr oller for the Americas Materials Division. He returned to Europe in 2003, initially as Development Manager for the Europe Materials Division. He has since held a number of senior operational and leadership roles acr oss the Group including Country Manager Finland in the Europe Materials Division, Managing Director of Eur ope Lightside, Divisional President of Eur ope Lightside & Distribution, and President Global Strategy & Business Development. Prior to joining CRH he held various nancial roles in the airline industry . Qualications: BComm, FCA. David Dillon Executive Vice President, Chief of Staff Executive Leadership team at 2 March 2022. 2021 Annual Report and Form 20-F 267 266 Our Locations Cement Aggregates Lime Readymixed Concrete Asphalt Australia Austria Belgium Canada China 1 Czech Republic Denmark Estonia Finland France Germany Hungary Ireland Italy Malaysia Netherlands Norway Philippines Poland Romania Serbia Slovakia Spain Sweden Switzerland Ukraine United Kingdom United States Our Pr oducts and Services Locations * Includes Infrastructure Products, Ar chitecture Products and Network Access Products 1. Includes the Group's equity accounted investment 2021 Annual Report and Form 20-F 267 266 Paving & Construction Concrete Products Glass & Glazing Systems Custom Glazing Hardwar e Construction Accessories 2021 Annual Report and Form 20-F 269 268 The following documents are led in the SEC’ s EDGAR system, as part of this Annual Report on Form 20-F , and can be viewed on the SEC’ s website. 1. Memorandum and Articles of Association. 2.1 Amended and Restated Deposit Agreement dated 28 November 2006, between CRH plc and The Bank of New Y ork Mellon. 2.2 Description of securities registered under Section 12 of the Exchange Act. 8. Listing of principal subsidiary undertakings and equity accounted investments (included on pages 260 to 264 of this Annual Report and Form 20-F). 12. Certications of Chief Executive Ofcer and Chief Financial Ofcer pursuant to Section 302 of the Public Company Accounting Reform and Investor Protection Act of 2002. 13. Certications of Chief Executive Ofcer and Chief Financial Ofcer pursuant to Section 906 of the Public Company Accounting Reform and Investor Protection Act of 2002. 15.1 Consent of Independent Registered Public Accounting Firm - Deloitte. 15.2 Consent of Independent Registered Public Accounting Firm - EY . 15.3 Gover nance Appendix. 16. Disclosure of Mine Safety and Health Administration (MSHA) Safety Data. 17. List of Issuers and Guarantors. 101. Inline eXtensible Business Reporting Language (XBRL). * Incorporated by reference to Annual Report on Form 20-F for the year ended 31 December 2020 that was led by the company on 12 March 2021. ** Incorporated by reference to Annual Report on Form 20-F for the year ended 31 December 2006 that was led by the Company on 3 May 2007. *** Furnished but not led. The total amount of long-term debt of the Registrant and its subsidiaries authorised under any one instrument does not exceed 10% of the total assets of CRH plc and its subsidiaries on a consolidated basis. The Company agrees to furnish copies of any such instrument to the SEC upon request. Exhibits 2021 Annual Report and Form 20-F 269 268 Page P ART I Item 1. Identity of Directors, Senior Management and Advisors n/a Item 2. Offer Statistics and Expected Timetable n/a Item 3. Key Information A - [Reserved] n/a B - Capitalisation and Indebtedness n/a C - Reasons for the Offer and Use of Proceeds n/a D - Risk Factors 232-240 Item 4. Information on the Company A - History and Development of the Company 2-4, 12-14, 38-40, 159-160, 172-173, 206-208, 245, 257 B - Business Overview 2, 12-13, 42-53, 111, 155-159, 225, 232-240, 242, 245 C - Organisational Structure 245, 260-264 D - Property , Plants and Equipment 146, 172-173, 225-231 Item 4A. Unresolved Staf f Comments None Item 5. Operating and Financial Review and Prospects A - Operating Results 10-12, 18-19, 25, 38-40, 42-53, 76-77, 242 B - Liquidity and Capital Resources 38-40, 144-153, 167, 172-173, 178-179, 180-196, 198-202, 244 C - Research and Development, Patents and Licences, etc. 245 D - T rend Information 12, 38-40, 42-53 E - Critical Accounting Estimates n/a Supplemental Guarantor Information 224 Item 6. Directors, Senior Management and Employees A - Directors and Senior Management 8-9, 56-59, 61, 265 B - Compensation 81-109, 198-202 C - Board Practices 56-59, 64-68, 70-75, 95 D - Employees 163, 245 E - Share Ownership 108, 251 Item 7. Major Shareholders and Related Party T ransactions A - Major Shareholders 74, 248-249 B - Related Party T ransactions 210 C - Interests of Experts and Counsel n/a Item 8. Financial Information A - Consolidated Statements and Other Financial Information 140-210 - Legal Proceedings 242, 245 - Dividends 110, 250 B - Signicant Changes 245 Item 9. The Offer and Listing A - Offer and Listing Details 248 B - Plan of Distribution n/a Page C - Markets 248 D - Selling Shareholders n/a E - Dilution n/a F - Expenses of the Issue n/a Item 10. Additional Information A - Share Capital n/a B - Memorandum and Articles of Association 255-256 C - Material Contracts None D - Exchange Controls 257 E - T axation 253-254 F - Dividends and Paying Agents n/a G - Statements by Experts n/a H - Documents on Display 257 I - Subsidiary Information 260-264 Item 11. Quantitative and Qualitative Disclosures about Market Risk 244 Item 12. Description of Securities Other than Equity Securities A - Debt Securities n/a B - Warrants and Rights n/a C - Other Securities n/a D - American Depositary Shares 252 P ART II Item 13. Defaults, Dividend Arrearages and Delinquencies None Item 14. Material Modications to the Rights of Security Holders and Use of Proceeds None Item 15. Controls and Pr ocedures 138, 240-241 Item 16A. Audit Committee Financial Expert 57-59, 64 Item 16B. Code of Ethics 74-75 Item 16C. Principal Accountant Fees and Services 65, 68, 75, 161, 257 Item 16D. Exemptions from the Listing Standards for Audit Committees n/a Item 16E. Purchases of Equity Securities by the Issuer and Afliated Pur chasers 249 Item 16F . Change in Registrant’ s Certifying Accountant None Item 16G. Corporate Governance 240-241 Item 16H. Mine Safety Disclosures 225 Item 16I. Disclosure Regarding For eign Jurisdictions that Prevent Inspections n/a P ART III Item 17. Financial Statements n/a Item 18. Financial Statements 140-210 Item 19. Exhibits 268 This table has been provided as a cr oss reference from the information included in this Annual Report and Form 20-F to the r equirements of this 20-F . Cr oss Refer ence to Form 20-F Requir ements 2021 Annual Report and Form 20-F 271 270 A Accounting Policies 145 Acquisitions, Divestments 74 & Finance Committee American Depositary Shares 252 Americas Materials 42 Annual General Meeting 108 Audit Committee 64 Auditors (Directors’ Report) 112 Auditor’ s Remuneration 65, 161, 215 Auditor’ s Report, Independent (Irish) 124 Auditor’ s Report, Independent (US) 135 B Balance Sheet - Company 211 - Consolidated 142 Board Appr oval of Financial Statements (note 33) 210 Board Committees 74 Board Ef fectiveness 61 Board of Dir ectors 56 Board Responsibilities 73 Building Products 50 Business and Non-Current Asset Disposals (note 6) 162 Business Combinations (note 30) 151, 206 Business Model 16 Business Performance 36 C Capital and Financial Risk Management (note 22) 189 Carbon 23, 25 Cash and Cash Equivalents (note 23) 152, 193 Cash Flow , Operating 19 Cash Flow Statement, Consolidated 144 Chairman’ s Introduction 4 Chief Executive’ s Review 10 Climate - Strategy 29 - T argets 31 - TCFD 28 Communications with Shareholders 75 Company Secretary 75 Compliance and Ethics 74 Contractual Obligations 244 Corporate Governance Practices 240 Corporate Governance Report 60 Cost Analysis (note 4) 160 Credit Ratings 190 CREST and Migration to Euroclear Bank 249 D Debt, Analysis of Net (note 21) 185 Deferred Income T ax - expense (note 10) 150, 168 - assets and liabilities (note 27) 150, 197 Depreciation - cost analysis (note 4) 160 - property , plant and equipment (note 13) 146, 150, 172 - segment analysis (note 2) 157 Derivative Financial Instruments (note 25) 152, 194 Directors’ Emoluments and Inter ests (note 32) 210 Directors’ Inter ests in Share Capital 108 Directors’ Remuneration Report 80 Directors’ Report 110 Directors’ Responsibilities, Statement of 113 Directors’ Shar e Options 102 Discontinued Operations (note 3) 149, 159 Dividend Payments (Shareholder Information) 110, 250 Dividend per Share 1 Dividends (note 11) 170 E Earnings per Ordinary Share (note 12) 171 Employees, Average Number (note 7) 163 Employment Costs (note 7) 163 Environment 23, 242 Equity Accounted Investments’ Prot, Share of 157 ESG Ratings 20 Europe Materials 46 EU T axonomy 243 Exchange Rates 154 Exhibits 268 F Finance Costs and Finance Income (note 9) 167 Finance Director’ s Review 38 Financial Assets (note 15) 177 Financial Calendar 257 Financial Statements, Consolidated 140 Foreign Curr ency T ranslation 121, 240 Frequently Asked Questions 257 G Global Business 2 Going Concern 112 Governance 54 Greenhouse Gas Emissions 18 Guarantees (note 24; note 11 to Company Balance Sheet) 193, 215 H Health and Safety 18 Index 2021 Annual Report and Form 20-F 271 270 I Inclusion and Diversity 18, 77 Income Statement, Consolidated 140 Income T ax Expense (note 10) 168 Intangible Assets (note 14) 151, 174 Inventories (note 16) 152, 177 Investor Relations Activities 75 K Key Components of 2021 Performance 39 Key Financial Data 218 KPIs, Financial 19 KPIs, Non-Financial 18 L Leases (note 20) 151, 182 Listing Rule 9.8.4C 111 Loans and Borrowings, Interest-Bearing (note 24) 152, 193 M Measuring Performance 18 Memorandum and Articles of Association 75, 255 N Nomination & Corporate Governance Committee 70 Non-controlling Inter ests (note 31) 209 Non-GAAP Performance Measures 219 Notes on Consolidated Financial Statements 155 Notes to the Company Balance Sheet 213 O Operating Costs (note 4) 160 P Pensions, Retirement Benet Obligations (note 28) 146, 198 People 116, 232 Principal Equity Accounted Investments 264 Principal Risks and Uncertainties 116 Principal Subsidiary Undertakings 260 Prot on Disposals (note 6) 162 Property , Plant and Equipment (note 13) 146, 150,172 Property , Plants and Equipment 225 Provisions for Liabilities (note 26) 147, 196 Proxy V oting, Electronic 257 R Registrars 257 Regulatory Information 111 Related Party T ransactions (note 32) 210 Remuneration Committee 98 Reserves, Mineral 226 Resources, Mineral 226 Retirement Benet Obligations (note 28) 146, 198 Return on Net Assets (RONA) 19, 220, 222 Revenue (note 1) 148, 155 Risk Governance 33 Risk Management and Internal Control 112, 240 Risk Factors 232 S Safety 22 Safety , Environment & Social Responsibility Committee 20, 76, 242 Sector Exposure and End-Use - Americas Materials 43 - Europe Materials 47 - Building Products 51 Segment Information (note 2) 149, 157 Senior Independent Director 57 Share-based Payments (note 8) 149, 164 Share Capital and Reserves (note 29) 153, 203 Share Options - Directors 102 - Employees (note 8) 164 Share Pr emium 205, 215 Share Price Data 248 Shareholder Communication 75 Shareholdings as at 31 December 2021 74, 248 Solutions 13 Statement of Changes in Equity , Consolidated 143 Statement of Changes in Equity , Company 212 Statement of Comprehensive Income, Consolidated 141 Statement of Directors’ Responsibilities 113 Stock Exchange Listings 74, 248 Strategy 14 Substantial Holdings 74 Sustainability 20 T T ask Force on Climate-r elated Financial Disclosures (TCFD) 28 T otal Shareholder Return (TSR) 11, 19, 221 T rade and Other Payables (note 18) 180 T rade and Other Receivables (note 17) 152, 178 V Viability Statement 35, 112 V olumes, Annualised - Americas Materials 43 - Europe Materials 47 W Website 74, 257 Working Capital and Pr ovisions for Liabilities, Movement in (note 19) 181 2021 Annual Report and Form 20-F PB 272 The registrant her eby certies that it meets all of the requirements for ling on Form 20-F and that it has duly caused and authorised the undersigned to sign this Annual Report on its behalf. /s/ J. Mintern Jim Mintern Group Finance Dir ector Dated: 11 March 2022 Signatur es CRH public limited company (Registrant) By: CRH plc Stonemason’ s Way Rathfarnham Dublin 16 D16 KH51 Ireland T elephone: +353 1 404 1000 E-mail: [email protected] Website: www .crh.com Registered Ofce 42 Fitzwilliam Square Dublin 2 D02 R279 Ireland T elephone: +353 1 634 4340 E-mail: [email protected] CRH ® is a registered trade mark of CRH plc. Cover image: Oldcastle Infrastructure, part of CRH’ s Building Product’ s Division installed a new proprietary stormwater management solution MaxCapture™ in Chandler , Arizona, United States. Due to the dry climate, when it rains stormwater runoff cannot inltrate back into the soil and recharge the aquafers, resulting in surface ooding and a depleted water supply . MaxCapture is a customizable, modular system which integrates two existing Oldcastle Infrastructure systems, StormCaptur e ® and MaxWell ® to detain and inltrate large volumes of stormwater runoff, maximising ef fectiveness while reducing both the overall footprint and installation cost of the solution.
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