2009 Annual Report - CRH

as well as adding to our presence in
northeastern China and in Poland.
Financing Expansion
As a result of the Group’s intense focus
on cash generation and substantial
equity injection achieved by the Rights
Issue in March 2009, CRH has the
financial strength to take advantage of
acquisition opportunities that enhance
our strategic positioning and represent
exceptional value for money.
CRH remains well positioned in terms
of debt facilities with year-end net
debt of under €4 billion, which has an
attractive maturity profile. In May 2009,
the Group raised €0.75 billion with a
debut issue on the Eurobond market.
Market Indices
During 2009, the Company joined the
Dow Jones EURO STOXX 50 ® Index,
which comprises 50 of the leading
blue-chip companies in the Eurozone
and is licensed to financial institutions.
Also in 2009, CRH was added to the
Dow Jones EURO STOXX ® Select
Dividend 30 Index. CRH is also a com-
ponent of a number of other indices,
including the ISEQ 20, the FTSEurofirst
300 and the S&P Europe 250.
Litigation
In December, we received notification
from the Polish Office for Competition
and Consumer Protection that, arising
from an investigation into the Polish
cement industry, it had concluded that
seven companies, including CRH
subsidiary Grupa O . z arów S.A., had
been involved in anti-competitive
practices. As a result, fines were
levied, including a fine of PLN 104.97
million (approximately €25.6 million)
on Grupa O . z arów. The conclusions of
the investigation are a matter of
serious concern to CRH. The Group’s
Code of Business Conduct sets clear
standards for the conduct of its
operations in the various territories in
which the Group operates and
expressly prohibits any anticompetitive
behaviour. We always
understood that Grupa Oz . arów
conducted an independent
commercial policy, which has been
verified by analysis undertaken, at the
request of CRH, by leading Polish
economic experts. We have appealed
the conclusions of the investigation
and the fine.
Corporate Governance
A statement setting out CRH’s key
governance principles and practices is
provided on pages 42 to 47. The
Board and Management of CRH are
committed to achieving the highest
standards of Corporate Governance
and ethical business conduct and are
satisfied that appropriate systems of
internal control are in place
throughout the Group.
From 2010, the Board has decided to
present the Report on Directors’
Remuneration to shareholders for the
purposes of an advisory vote. There is
no legal obligation on the Company to
do this and the outcome of the vote is
not binding on the Company. The
Board believes that such a resolution
is good practice and is an
acknowledgement of shareholders’
entitlement to have a ‘say on pay’.
Board and Senior Management
Terry Neill will retire from the Board at
the conclusion of the Annual General
Meeting on 5th May 2010. Terry has
been a non-executive Director since
2004 and Chairman of the
Remuneration Committee since 2008.
He has made a very significant
contribution to the effectiveness of the
Board and I wish to thank him for his
valued advice and commitment to the
interests of shareholders.
John Kennedy was co-opted to the
Board on 24th June 2009 as a
non-executive Director. John is
Chairman of Wellstream Holdings plc,
a UK listed company and during a
30 year career in the international
industrial and energy services related
sectors he has served as Executive
Vice President of Halliburton
Company, President of Dresser
Enterprises and Chief Operations
Officer of Brown and Root Services.
He brings valuable international
experience to the Board and his
appointment continues the process of
Board renewal at a pace which is
consistent with the maintenance of the
Board’s teamwork and core values.
As provided for in the Company’s
Articles of Association, John Kennedy
is proposed for election at the Annual
General Meeting on 5th May 2010.
Also in accordance with the Articles of
Association and best practice in
relation to the re-election of Directors,
Utz-Hellmuth Felcht, Dan O’Connor
and Liam O’Mahony will retire from
the Board and seek re-election at the
Annual General Meeting. I have
conducted a formal evaluation of the
performance of all Directors and can
confirm that each of the Directors
continues to perform effectively and to
demonstrate commitment to the role.
Notwithstanding Liam O’Mahony’s
former service as an executive, the
Board considers him to be
independent. In forming this view, the
Board has reviewed his performance
in his capacity as a non-executive
Director since January 2009. Based
on this review, the Board is satisfied
that Liam’s ability to exercise
independent judgement, and to act in
the best interests of the Group, is in
no way compromised by his former
service as an executive. I strongly
recommend that John Kennedy,
Utz-Hellmuth Felcht, Dan O’Connor
and Liam O’Mahony be re-elected to
the Board.
Angela Malone retired as Group
Company Secretary during the year
after 14 years in that role and I wish to
thank her for her very significant
contribution to the work of the Board
over that time. She was replaced as
Group Company Secretary by Neil
Colgan and I wish Neil every success
in that position.
The Board notes with regret the
death, in November 2009, of Paddy
Dempsey, a former executive Director
of the Company. Paddy had a record
Kieran McGowan
Chairman
of long and distinguished service and
made a major contribution to CRH
over that time.
Management and Staff
The performance of CRH during
2009, particularly in relation to cost
reduction, cash generation and overall
operational excellence, demonstrated
once again the strength, depth and
resilience of our management and
staff. There is a unique culture of
performance and achievement
throughout the Group and this will
ensure that even in the current
exceptionally difficult economic
environment CRH has the capacity to
deliver superior performance. On
behalf of the Board, I thank Myles Lee
and all CRH employees for their
commitment to the success of the
Group.
Conclusion
Management’s views on the outlook
for 2010 are set out more
comprehensively in the Chief
Executive’s Review and the various
Operations Reviews. The overall
trading outlook for 2010 remains
challenging given forecasts for a slow
pace of recovery from the global
recession and the lag effect for
recovery in construction markets.
Against the background of this
environment, our attention and efforts
will be focussed strongly on ensuring
that our businesses are well
positioned, through continuing cost
reduction, cash generation and
excellence in operational
management, to deal with whatever
trading circumstances may evolve.
Kieran McGowan
1st March 2010
CRH 13