2009 Annual Report - CRH

# CRH’s business may be affected by the default of counterparties in respect of
money owed to CRH.
# CRH operates in cyclical industries which are affected by factors beyond
Group control such as the level of construction activity, fuel and raw material
prices, which are in turn affected by the performance of national economies,
the implementation of economic policies by sovereign governments and
political developments.
# CRH pursues a strategy of growth through acquisitions. CRH may not be able
to continue to grow as contemplated in its business plan if it is unable to
identify attractive targets, raise funds on acceptable terms, complete such
acquisition transactions and integrate the operations of the acquired
businesses.
# CRH faces strong competition in its various markets, and if CRH fails to
compete successfully, market share will decline.
# Existing products may be replaced by substitute products which CRH does
not produce and, as a result, CRH may lose market share in the markets for
these products.
# Severe weather can reduce construction activity and lead to a decrease in
demand for Group products in areas affected by adverse weather conditions.
# CRH is subject to stringent and evolving environmental and health and safety
laws, regulations and standards which could result in costs related to
compliance and remediation efforts that may adversely affect Group results of
operations and financial condition.
# CRH may be adversely affected by governmental regulations.
# Economic, political and local business risks associated with international
revenue and operations could adversely affect CRH’s business.
# A write-down of goodwill could have a significant impact on the Group’s
income and equity.
# CRH does not have a controlling interest in certain of the businesses in which
it has invested and in the future may invest in businesses in which there will not
be a controlling interest. In addition, CRH is subject to restrictions due to
minority interests in certain of its subsidiaries.
# Financial institution failures may cause CRH to incur increased expenses or
make it more difficult either to utilise CRH’s existing debt capacity or otherwise
obtain financing for CRH’s operations or financing activities.
# A downgrade of CRH’s credit ratings may increase its costs of funding.
# CRH has incurred and will continue to incur debt, which could result in
increased financing costs and could constrain CRH’s business activities.
# Many of CRH’s subsidiaries operate in currencies other than the euro, and
adverse changes in foreign exchange rates relative to the euro could adversely
affect Group reported earnings and cash flow.
# CRH is exposed to interest rate fluctuations.
The Group has long experience of coping with these risks while delivering superior
performance and strong Total Shareholder Return.
Report on Directors’ Remuneration
Resolution 3 to be proposed at the Annual General Meeting deals with the Report
on Directors’ Remuneration, as set out on pages 51 to 59, which the Board has
decided to present to shareholders for the purposes of a non-binding advisory
vote. This is in line with international best practice and the Directors believe that
the resolution will afford shareholders an opportunity to have a ‘say on pay’.
Board of Directors
Mr. T.V. Neill retires from the Board by rotation and does not seek re-election.
Mr. U-H. Felcht and Mr. D.N. O’Connor retire from the Board by rotation and,
being eligible, offer themselves for re-election.
The Board has decided that a non-executive Director who has previously served
in an executive capacity will be subject to annual re-election. Accordingly,
Mr. W.I. O’Mahony retires and, being eligible, offers himself for re-election.
Mr. J.W. Kennedy was appointed to the Board on 24th June 2009. In accordance
with the provisions of Article 110, he retires and, being eligible, offers himself for
re-election.
Disapplication of Pre-emption Rights
A special resolution will be proposed at the Annual General Meeting to renew
the Directors’ authority to disapply statutory pre-emption rights in relation to
allotments of shares for cash. In respect of allotments other than for rights issues
to ordinary shareholders and employees’ share schemes, the authority is limited
to Ordinary/Income Shares (excluding Treasury Shares) having a nominal value
of €11,868,000, representing 5% approximately of the issued Ordinary/Income
share capital at 1st March 2010. This authority will expire on the earlier of the date
of the Annual General Meeting in 2011 or 4th August 2011.
Purchase of Own Shares
On 3rd January 2008, the Company announced the introduction of a share
repurchase programme of up to 5% of the 547,227,194 Ordinary/Income Shares,
with a nominal value of €0.32/€0.02 respectively, then in issue and the intention
to hold the repurchased shares as Treasury Shares. Under the programme, the
termination of which was announced in November 2008, 18,204,355 Ordinary/
Income Shares were purchased, equivalent to 3.3% of the Ordinary Shares in
issue at 31st December 2007, at an average price of €22.30 per share. During
2009, 3,864,805 (2008: 2,000,350) Treasury Shares were re-issued under the
Group’s Share Schemes. As at 1st March 2010, 12,331,671 shares were held as
Treasury Shares, equivalent to 1.77% of the Ordinary Shares in issue (excluding
Treasury Shares).
Special resolutions will be proposed at the Annual General Meeting to renew the
authority of the Company, or any of its subsidiaries, to purchase up to 10% of the
Company’s Ordinary/Income Shares in issue at the date of the Annual General
Meeting and in relation to the maximum and minimum prices at which Treasury
Shares (effectively shares purchased and not cancelled) may be re-issued offmarket
by the Company. If granted, the authorities will expire on the earlier of the
date of the Annual General Meeting in 2011 or 4th August 2011.
The minimum price which may be paid for shares purchased by the Company
shall not be less than the nominal value of the shares and the maximum price will
be 105% of the average market price of such shares over the preceding five days.
As at 1st March 2010, options to subscribe for a total of 25,989,145 Ordinary/
Income Shares are outstanding, representing 3.72% of the issued Ordinary/
Income share capital (excluding Treasury Shares). If the authority to purchase
Ordinary/Income Shares was used in full, the options would represent 4.14%.
The Directors do not have any current intention of exercising the power to
purchase the Company’s own shares and will only do so if they consider it to be
in the best interests of the Company and its shareholders.
Notice Period for Extraordinary General Meetings
Resolution 9 to be proposed at the Annual General Meeting is a special resolution,
which seeks shareholders’ approval to maintain the existing authority in the
Articles of Association that permits the Company to convene an extraordinary
general meeting on 14 clear days’ notice where the purpose of the meeting is
to consider an ordinary resolution. If approved, it is the intention of the Directors
only to utilise this authority where they consider it to be in the best interests of the
Company and its shareholders.
Articles of Association
Resolution 12 to be proposed at the Annual General Meeting is a special
resolution and seeks shareholders’ approval for certain changes to the Articles
of Association. The proposed amendments set out in paragraphs (a) to (f) of
the resolution will update the Articles and also make them consistent with the
Shareholder Rights (Directive 2007/36/EC) Regulations 2009 by:
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