2009 Annual Report - CRH

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28. Retirement Benefit Obligations continued Actuarial valuations - funding requirements 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 Ireland and Britain, either the attained age or projected unit credit methods are used in the valuations. In the Netherlands and Switzerland, the actuarial valuations reflect the current unit method, while the valuations are performed in accordance with the projected unit credit methodology in Portugal and Germany. In the United States, valuations are performed using a variety of actuarial cost methodologies - current unit, projected unit and aggregate cost. The actuarial valuations range from April 2006 to December 2009. The assumptions which have the most significant effect on the results of the actuarial valuations are those relating to the rate of return on investments and the rates of increase in remuneration and pensions. In the course of preparing the funding valuations, it was assumed that the rate of return on investments would, on average, exceed annual remuneration increases by 2% and pension increases by 3% per annum. In general, actuarial valuations are not available for public inspection; however, the results of valuations are advised to the members of the various schemes. Financial assumptions The financial assumptions employed in the valuation of the defined benefit liabilities arising on pension schemes, post-retirement healthcare obligations and long-term service commitments applying the projected unit credit methodology are as follows: Scheme liabilities The major long-term assumptions used by the Group’s actuaries in the computation of scheme liabilities as at 31st December 2009 and 31st December 2008 are as follows: Britain and Eurozone Northern Ireland Switzerland United States 2009 2008 2009 2008 2009 2008 2009 2008 % % % % % % % % Rate of increase in: - salaries 4.00 3.80 4.50 3.50 2.25 2.25 3.50 3.50 - pensions in payment 2.00 1.80 3.50-3.70 2.75-3.25 0.50 0.50 - - Inflation 2.00 1.80 3.50 2.75 1.50 1.50 2.00 2.00 Discount rate 6.00 5.80 5.75 6.25 3.25 3.50 5.75 6.25 Medical cost trend rate 5.25 5.25 n/a n/a n/a n/a 9.50 10.00 The mortality assumptions employed in determining the present value of scheme liabilities under IAS 19 are in accordance with the underlying funding valuations and represented actuarial best practice in the relevant jurisdictions taking account of mortality experience and industry circumstances. With regard to the most material of the Group’s 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: 104 CRH Republic of Ireland Britain and Northern Ireland Switzerland 2009 2008 2009 2008 2009 2008 Current retirees - male 20.7 19.8 22.7 21.9 18.5 18.4 - female 23.8 22.8 25.5 24.6 22.0 21.9 Future retirees - male 21.8 20.8 24.5 22.4 18.5 18.4 - female 24.8 23.8 27.2 25.1 22.0 21.9 The above data allow for future improvements in life expectancy. Scheme assets The long-term rates of return expected at 31st December 2009 and 31st December 2008, determined in conjunction with the Group’s actuaries and analysed by class of investment, are as follows: Eurozone Britain and Northern Ireland Switzerland United States 2009 2008 2009 2008 2009 2008 2009 2008 % % % % % % % % Equities 8.00 9.00 8.00 9.00 6.75 7.50 8.00 9.00 Bonds 4.50 4.25 5.00 4.75 2.75 3.25 5.50 6.00 Property 7.00 7.00 7.00 7.00 4.75 4.50 7.00 7.00 Other 2.50 2.50 2.50 2.50 2.50 2.50 2.50 2.50 The methodology applied in relation to the expected return on equities is driven by prevailing risk-free rates in the four jurisdictions listed and the application of an equity risk premium (which varies by country) to those rates. The differences between the expected return on bonds and the yields used to discount the liabilities in each of the four jurisdictions listed are driven by the fact that the majority of the Group’s schemes hold an amalgam of government and corporate bonds. The property and “other” (largely cash holdings) components of the asset portfolio are not material. In all cases, the reasonableness of the assumed rates of return is assessed by reference to actual and target asset allocations in the long-term and the Group’s overall investment strategy as articulated to the trustees of the various defined benefit pension schemes in operation.
28. Retirement Benefit Obligations continued (a) Impact on Consolidated Income Statement The total expense charged to the Consolidated Income Statement in respect of defined contribution and defined benefit pension schemes, post-retirement healthcare obligations and long-term service commitments is as follows: Analysis of defined benefit expense The total defined benefit expense (comprising funded and unfunded defined benefit pension schemes and unfunded post-retirement healthcare obligations and longterm service commitments) is analysed as follows: Eurozone Britain and Northern Ireland Switzerland United States Total Group 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 €m €m €m €m €m €m €m €m €m €m Charged in arriving at Group operating profit Current service cost 13 18 8 11 17 16 6 6 44 51 Past service cost: benefit enhancements 11 (2) - 1 - 2 1 - 12 1 Curtailment gain (i) - - (1) (2) - - (23) - (24) (2) Subtotal 24 16 7 10 17 18 (16) 6 32 50 Included in finance revenue and finance costs respectively 2009 2008 €m €m Total defined contribution pension expense 139 141 Defined benefit Pension schemes (funded and unfunded) 39 35 Long-term service commitments (unfunded) 1 - Total defined benefit expense 40 35 Total expense in Consolidated Income Statement 179 176 Expected return on scheme assets (35) (52) (23) (30) (20) (21) (9) (10) (87) (113) Interest cost on scheme liabilities 42 45 24 27 17 16 12 10 95 98 Subtotal 7 (7) 1 (3) (3) (5) 3 - 8 (15) Net charge to Consolidated Income Statement 31 9 8 7 14 13 (13) 6 40 35 Actual return on pension scheme assets 70 (200) 63 (82) 45 (48) 22 (34) 200 (364) (i) During 2009, the Group closed certain of its defined benefit pension schemes in the United States to future accrual, giving rise to a curtailment gain of €23 million and a reduction in liabilities of the same amount. In compensation for the closure to future accrual, provision has been made for additional defined contribution top-up payments amounting to €11 million; this obligation is reflected in the 2009 defined contribution expense of €139 million presented above. Based on the assumptions employed for the valuation of assets and liabilities at year-end 2009, and excluding the once-off past-service costs and curtailment gains recognised above of €12 million, the net charge in the 2010 Consolidated Income Statement is anticipated to exhibit a small increase from the 2009 figure of €52 million at constant exchange rates. No reimbursement rights have been recognised as assets in accordance with IAS 19 Employee Benefits. CRH 105
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Annual Report 2009 PERFORMANCE AND
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Contents inside cover CRH at a Glan
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Key Financial Figures 2009 €m 2,8
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Americas Materials - 37% of Group T
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CRH is an international group with
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. . Emerging Regions - Strategy in
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. . . . . . Diverse Portfolio - Str
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CRH is committed to ethically and r
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as well as adding to our presence i
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Chief Executive’s Review Overview
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Responding to the evolving market e
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Group Operations The global economi
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Europe Materials Europe Materials e
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operating adjustments were implemen
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Europe Products & Distribution Thro
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Building Envelope Products These op
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Mark Towe Chief Executive Officer T
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asphalt plants and paving operation
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Mark Towe Chief Executive Officer T
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Glass The Glass group is the market
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offset by the decline in the averag
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which mature after more than one ye
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W.I. O’Mahony* BE, BL, MBA, FIEI
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issues confronting the Group; that
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# assists management, at their requ
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accounting period and up to the dat
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# CRH’s business may be affected
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Report on Directors’ Remuneration
Page 57 and 58: Directors’ Remuneration Notes Exe
Page 59 and 60: Pension entitlements - defined bene
Page 61 and 62: Directors’ interests The Company
Page 63 and 64: Directors’ Interests in Share Cap
Page 65 and 66: Independent Auditors’ Report to t
Page 67 and 68: Consolidated Balance Sheet as at 31
Page 69 and 70: Consolidated Statement of Cash Flow
Page 71 and 72: the Group and one or more other ven
Page 73 and 74: indicate that the carrying values m
Page 75 and 76: floating rates (using interest rate
Page 77 and 78: 1. Segment Information continued A.
Page 79 and 80: 2. Proportionate Consolidation of J
Page 81 and 82: 5. Directors’ Emoluments and Inte
Page 83 and 84: 7. Share-based Payment Expense cont
Page 85 and 86: 8. Finance Costs and Finance Revenu
Page 87 and 88: 10. Income Tax Expense continued Fa
Page 89 and 90: 13. Property, Plant and Equipment L
Page 91 and 92: 14. Intangible Assets continued Goo
Page 93 and 94: 17. Inventories 2009 2008 €m €m
Page 95 and 96: 21. Capital and Financial Risk Mana
Page 97 and 98: 21. Capital and Financial Risk Mana
Page 99 and 100: 23. Interest-bearing Loans and Borr
Page 101 and 102: 24. Derivative Financial Instrument
Page 103 and 104: 25. Analysis of Net Debt Components
Page 105 and 106: 25. Analysis of Net Debt continued
Page 107: 27. Deferred Income Tax The deducti
Page 111 and 112: 28. Retirement Benefit Obligations
Page 113 and 114: 29. Capital Grants 2009 2008 €m
Page 115 and 116: 30. Share Capital and Reserves cont
Page 117 and 118: 32. Acquisition of Subsidiaries and
Page 119 and 120: 33. Related Party Transactions The
Page 121 and 122: Notes to the Company Balance Sheet
Page 123 and 124: 7. Movement in Shareholders’ Fund
Page 125 and 126: CREST Transfer of the Company’s s
Page 127 and 128: John Parson President & Chief Opera
Page 129 and 130: Incorporated and operating in % hel
Page 131 and 132: Incorporated and operating in % hel
Page 133 and 134: Principal Joint Venture Undertaking
Page 135 and 136: Group Financial Summary (Figures pr
Page 137 and 138: G Geographic leadership positions 2
Page 139 and 140: Notes
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2009 Annual Report - CRH

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