CRH PLC (CRH) 2015 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and I'd like to welcome you all to the 2015 results for CRH here this morning in London.

My name is Albert Manifold and I'm the Chief Executive of CRH. And I'm joined here this morning by some members of our senior management team. Firstly, we have Maeve Carton; and then on stage here, working across, we have Randy Lake, who heads up our materials business in the United States; we have Ken McKnight who heads up our heavyside business here in Europe; Keith Haas who heads up our products and distribution business in the US; David Dillon who heads up our lightside and distribution business here in Europe.

And actually here in the audience we have our new CFO, Senan Murphy, who joined us in January. And also we're joined by Marc St. Nicolaas who heads up our businesses out in Asia.

So this morning, for about 30 minutes or so, we're going to take you through a short presentation behind the results that we published this morning, just taking you through them and explaining what drove the performance.

After that, as usual, in a format like this, we're going to take some Q&A, initially from the room but I just heard this morning we have a record number of participants who are dialing in down the line and watching this remotely on video, so I think that's the trend, the way things are going. But we're going to take -- allow time for questions for those of you who are watching down the lines. And we've also got, as usual, questions coming on the wires as well.

All told, we probably should be done in about an hour, an hour and a half. So we'll see how it goes.

So just kicking off and looking at some of the headlines for 2015. Well it was a year of very significant profit growth for CRH. Of course, we did have a good contribution from acquisitions that we did during the course of the year, a good part to the contribution.

But also, a very significant and positive delivery by our heritage businesses. They showed good performance across all geographies; Europe against a very flat backdrop delivered very good results; and in particular, the United States, a good set of results against a good positive momentum.

We also made good progress in the whole area of our portfolio review. We set out about 18 months ago that we wanted to focus on recycling capital back into better performing assets. And in 2015, we had proceeds of about EUR1 billion that we achieved through divestments, and we'll talk more about that later on.

And both of those things delivered improved returns and margins for the second year in a row in CRH which is very important. We've set our target that we're going to bring returns and margins back to peak during the current cycle, and again, we've made good progress with regard to that.

But I want to particularly highlight as we well again through the presentation, the performance and the cash generated and our net debt/EBITDA; significantly ahead of our expectations, and indeed most of your expectations, with net debt now at the yearend down to EUR6.6 billion and crucially below 3 times net debt/EBITDA metric.

Just looking at some of the financial numbers we see here, you can see revenue's ahead 25% on last year, about -- just a touch under EUR24 billion. EBITDA actually ahead 35%, so good leverage, good drop-through to our bottom line on the performance of the top line. But again, if you look at that strong cash flow, and that's delivered against a backdrop of a growing business, and anybody who knows about that business knows that's a business that's sucked up cash.

Working capital investments tend to rise when a business is growing. Capital expenditure needs tend to rise, and they did rise. And yet we've still managed to generate EUR1.3 billion of net operating cash flow, and that facilitated us being able to reduce debt down below our expectations, and yours.

Just to take you through how we're going to go through the presentation this morning. My colleagues are going to take you through the European and US businesses, and for consistency sake and to provide at least clarity with what we've presented before, we're presenting them exactly as we have before. So the European and US presentations exclude any impact of the LafargeHolcim assets; I'm actually going to present them later on in the presentation separately.

So when my colleagues talk about Europe and the US they will have no impact of anything to do with LafargeHolcim; I'll pick that up later on.

So firstly, we're going to turn to Europe. Ken McKnight, as I said, runs our heavyside businesses, and he's going to take you through the cement business that we had last year, the aggres, the readymixed business we had across Europe firstly.

And then David Dillon, who runs our lightside and distribution business, is going to talk about his business and how they delivered in 2015.

So Ken?

Thank you, Albert. CRH is now the number one heavyside building materials business in Europe. We actually operate in 18 countries, and that gives us a coverage of about three-quarters of the European population.

So 18 countries, 18 different economies, all at different points in the cycle; different levels of construction spend. So a bit of a patchwork quilt when you come to look at the overall economic situation. Based on (inaudible) I think the word that we have in the slide which is mixed.

But if you actually look at our European footprint, and I think this is important, we actually operate in Northern Europe, Central Europe and Eastern Europe, and we've got very little exposure to Southern Europe and the Mediterranean region. So that means we're well positioned to benefit as the main European markets actually recover.

Having said that, the trading environment remains competitive. Pricing is challenging and somewhat subdued.

So against that backdrop, we were quite pleased with our trading performance in 2015 where we held our own. But not only did that, we managed to actually increase our cement volumes and indeed our margins. And there are many reasons behind that trading performance for last year, and I just want to highlight two which I think are important.

The first one, what we saw coming through in 2015 was the benefit of the various profit improvement programs that we put in place over recent times. This certainly did help drive our margins, and we continuously focus on ways to run our businesses better.

The second point I would make is our vertical integration model where typically, we try to pull through about one-third of our cement volumes through our downstream businesses, be it readymixed concrete, pre-cast concrete or other concrete products.

And if I look to Poland, Poland is a very important country for us in European heavyside, we would not have achieved the trading performance we did do in 2015 without the strength of our vertical integration model.

So Ken covered our heavyside businesses in Europe and I'm going to move on to our lightside and distribution businesses.

First up, Europe lightside. Europe lightside provides engineered product solutions for the construction industry. We design, manufacture and supply high value add products with a strong focus on innovation and product development.

A good example here, in London, behind you is the Tate Modern extension where we are supplying steel fixing accessories which are a key product to the architectural design of the building's facade.

Lightside is an important part of our overall portfolio in Europe because it increases our RMI exposure. As Ken mentioned, our market backdrop in Europe in 2015 was mixed, but here in the UK, lightside had a good performance on the back of strong residential activity.

Germany and Benelux were stable, and France is a bit more challenged.

An added benefit of lightside is their products are exportable. And we export about 10% of our products globally, where we leverage the knowledge and development that we have in Europe and supply high-margin projects overseas.

Europe lightside is a higher margin business, which, as you can see, grew our sales and profits by mid-single digits in 2015. This is on the back of increased project activity in our overseas markets, in particular in the Middle East, but also a relentless focus on commercial excellence, cost reduction and, what we normally do here in CRH, just improving the business.

All this, combined with the asset-light nature of the business, made 2015 a good year for Europe lightside, with mid-teens returns, which is much improved from the high-single digits of a couple of years ago.

Moving to Europe distribution and Europe distribution is a very strong business from CRH, which we've built up over many years. And we are the number two building materials distributor in mainland Europe.

We've a strong footprint, good fundamental markets and it's an important part of our balance also, as two-thirds of this business is focused on the RMI market and mainly residential or non-residential building.

We are the leader in the Dutch market and that market continued to improve on the back of strong new build residential activity.

Switzerland and France were challenged but we had a good performance in Germany and Belgium.

So mixed overall markets, as we already mentioned.

The distribution business is by its nature a lower margin business and here we really live or die by the margins we achieve. And against the mixed market backdrop I'm pleased that we were able to grow our margins in 2015. Real, good old-fashioned focus from us in tight cost control, commercial initiatives, improved service delivery across the business.

And, like lightside, it's also asset light and with good cash generation and good returns through the cycle. And, like lightside, an important part of our overall portfolio.

So, pulling Europe together there, you can see from the slides a fairly modest uptick in revenues and satisfactory to see good leverage coming through. But that's all against a fairly modest background, a fairly anemic marketplace. And I think it's very important that when the market doesn't help you you have to turn to yourself to see what you can do within your businesses.

And both David and Ken referred to cost control, efficiency, effectiveness, good commercial management. That was what we did to drive our businesses. And, very importantly, we saw, again, improved margins in all three divisions in Europe against that backdrop. And for me, as an operations guide, that's a sign of a well-managed business.

Now the numbers we're presenting here this morning are underpinned by a strong performance by our US businesses. Now, for sure, we had some fair tailwinds. There's a positive momentum in the US economy. We had lower commodity prices. But that was just the backdrop against which the market we operated in. We still had to deliver.

So now I'm going to turn to Randy Lake, who runs the materials business in the US. And then after him Keith Haas, who's going to take up the products and distribution business to explain exactly how these delivered those returns and those profits this year. Randy?

Thanks, Albert. We did see good progress in 2015, as overall economic confidence improved. And most visibly for us was an improving balance in our end-use market consumption. But really positive momentum across the entire Group, as both demand and pricing improved and, as Albert indicated, certainly aided by a favorable energy cost environment.

I would say we've been well pleased with the passage of the FAST Act. That really brought stability to the infrastructure market, which was the first highway bill passed in over a decade. And so that really complemented a lot of good work that had been done by individual states over the past three or four years to improve underlying funding levels.

And so, against that backdrop, we delivered good growth across all regions.

We have a significant footprint in the US: 44 states of operations. And, as the number 1 building materials company in the US, we bring a significant amount of scale and expertise to our vertically integrated businesses that allow us to deliver value throughout the chain.

And so, through the fundamentals of tight commercial management combined with a clear focus on operational best practices, we delivered significant leverage in 2015. Keith?

Thanks, Randy. I'll speak to you for a moment about our Americas products and our Americas distribution businesses.

Americas Products is a set of businesses focused on the residential and non-residential construction centers in North America, which provides good portfolio balance to our Americas materials business that Randy just spoke about.

And each of those businesses with Americas Products has leading positions in their market segments, clear across the United States and Canada. As already noted, there were favorable market environment for Americas Products in 2015.

In the residential sector, which is about one-half of our business, we saw another robust year in the multi-family segment and a welcome improvement in the single-family segment, which is larger and more critical to our business.

And, in addition, it was a good year for residential repair and improvements, both through DIY channels and through professional channels.

It was another good year for us in the non-residential segment, which, again, was about one-half of our business in North America.

And I think it's important to note what drives our business in non-residential. Primarily it's general commercial construction, office, educational and lodging. And, therefore, we have a low exposure to the more challenged sectors in non-residential; those being industrial and related energy and gas.

So when you look at the favorable market backdrop there, it helped our pricing. It was a favorable environment for pricing for Americas Products.

And when you pull all that together, we demonstrated strong top-line growth through commercial initiatives and operational initiatives, good operating leverage and a welcome improvement in our operating margins for the year.

A key aspect of our business in 2015 for Americas Products was our portfolio management. We divested a number of low-return, low-growth businesses and, in turn, took that cash and invested in a major acquisition; a company called C.R. Laurence, which we announced in Q3 of last year, which is a higher growth business, high-return business, with significant synergies for our existing portfolio.

And a note on C.R. Laurence. The integration has gone well and is now operationally complete. Our tracking for delivery of synergies that we announced at the time of acquisition is on track and the business has performed, from a trading standpoint, to plan since acquisition.

Turning now to our distribution business, where we are a top 3 specialist provider of exterior and interior building products in the United States, it was another good year. And we have very strong local market positions that enhances our national footprint. And having strong local positions is really the key to delivering superior returns.

Like Americas Products, it was a good environment. We were able to advance our businesses both from the exterior side and the interior side.

And, while competitive pricing prevailed, we were able to manage through that in a disciplined manner and generate good top-line organic growth in the business through tight cost control, good operational leverage and a 40 basis point improvement in our operating margins in the distribution division.

So, in summary, if you look at Americas Products and distribution, 2015 was a satisfying year in our trading performance, cash delivery, margin improvement, as we seek to return our margins to peak, and the management and development of our portfolio.

Thanks, Keith. So, overall, just pulling the US together, you can see a good performance by our businesses in the United States, with revenues and, indeed, profitability well ahead of last year.

One comment I'd like to make about the US. I think we were very disciplined and measured as to how we ran our businesses in the US last year. I think we focused very much on the right things in terms of there was a lot of activity out there; people could have chased business everywhere. I think we were balanced and measured. We focused on profitable growth, cash and margins.

I think that shows up in the results and it shows up in, again, for the second year in a row, all three divisions showing an improvement in margins. And, again, underpinning the health of the businesses going forward.

I now want to turn to just update you on the performance and how we're doing with regard to our divestment program, and specifically about how some of the big acquisitions we did during last year performed and specifically about LafargeHolcim.

About 18 months or so ago we announced a divestment program whereby we said we were going to start recycling capital out of underperforming businesses into better businesses and invest that capital elsewhere.

Well, we made good progress in 2015. We divested about EUR1 billion of businesses during the last year; ahead of our expectations, again. And that brings our total program to about EUR1.4 billion of divestments.

And, by and large, through that program we're selling those businesses at somewhere north of 10 times EBITDA. And we're recycling that capital back into businesses at about 8 times EBITDA. And that underpins a strong performance and profitability going forward and underpins an enhancement of our returns as we go forward.

And I just want to assure you that, even though we've made tremendous progress in the initial program, this is now an embedded part of the process of management within CRH. It is going to be a continuous process. We are continually looking at our businesses, evaluating whether these businesses should stay in CRH, whether we can drive the returns. And if they don't, we will divest and we will move them on and recycle that capital back into areas where we see more profitable growth and better returns.

Specifically moving to the LafargeHolcim assets that we acquired last year. First and foremost, I want to say I want to confirm to you we're absolutely delighted with the businesses we acquired. We bought some great management teams and some great market positions and we have effectively got four new platforms with this, and five with C.R. Laurence. And we're delighted with those businesses.

Now just to take you through how the businesses performed because we've only had them for five months of 2015; talking to Europe, first of all.

As Ken and David said, it was a mixed bag. But, specifically, the big countries we have in Europe, the United Kingdom here, performed very well in 2015. Strong delivery, strong volume growth and strong demand, principally on the back of residential and also infrastructure, delivered a very good performance here in the UK by the tarmac businesses.

The French business was somewhat challenged but we expected that and we'd factored that in. And, actually, we think 2015 was more or less the trough for France. We don't have any big expectations for growth but we think we'll see some growth in 2016.

Germany was solid and stable. It performed exactly in line with our expectations, as, indeed, did Central and Eastern Europe. Probably the only standout performer there, I would say, was Romania where we saw good volume growth.

But, all told, Europe performed ahead of our expectations for 2015.

Moving to the Americas. The big business we have in the Americas is Canada and Canada, again, met our expectations. Performed very well. Our focus on eastern Canada, our main market is Ontario, second market is Quebec. And, actually, those businesses held up very well and are integrating well with our businesses in the northern part of the United States.

The Brazilian assets that we acquired, they're only a small, relatively immaterial part of our business. Of course, Brazil had its challenges last year and will continue next year but, again, they don't shift the needle within CRH.

And lastly, the very important acquisition of the number 2 cement business in the Philippines; very fine business, which showed good volume growth all through last year and that's continuing on this year. And pricing starting to move ahead in quarter 3/quarter 4 last year and again in quarter 1 this year and, again, delivering ahead of expectation.

So, as you see by the chart in front of me, we had a contribution of about EUR368 million of EBITDA to CRH's results in last year.

Actually, more importantly, the run rate for those businesses on an annualized basis is about EUR820 million. And, just to remind you, that compares to a number of about EUR750 million for those businesses in 2014.

So good delivery by what we bought ahead of our expectations and now working well within our Group.

Let me just talk about how they are working within our Group and the integration and how that's going.

Well, I'm happy to say, again, we are ahead of expectations, ahead of plan. Largely speaking, from an operational and an organizational position, those businesses now are fully integrated with our old heritage businesses and are operating as one unit under one set of management teams. And the focus now is on driving value creation, driving performance and the realization of synergies within those businesses.

And when I go round and meet investors in May, when I often talk about this, investors talk about a couple of things and synergies is one area they really want to focus on. And when we look at the synergies now, we mentioned last year that we had identified about EUR90 million of synergies across the LafargeHolcim assets where we could realize savings.

Well, we've had five months with our feet under the table. We've had a chance to work together as a team and we've identified a further EUR30 million of synergies so far. This is work in progress and we're turning over stones all the time.

And primarily, as you can see by the chart here, the increased synergies are coming in the area of improved processes and a little bit in improved procurement. There's more to go there, I'm sure.

And the approved processes are exactly in the areas where we thought they would be. We spoke about how the platforms and the complementarity of the business gave us increased opportunities for self-supply of resource-backed products.

So in the areas of aggregates in France and Benelux, we spoke about how we would drive benefits there. Well, there's just deeper pools for us to dip into there. And more opportunity.

Specifically in the western part of Europe, again we trade a lot of cement and cementitious products but in Spain and Ireland and UK. And now we can do so more and expand that to France and Benelux and, again, more opportunities for cost savings for CRH.

And, again, the businesses in Canada and the northern parts of the United States are working well together and, again, deeper pools of opportunity.

This is work in progress. We'll update you as we go through the course of the year, but we've made good progress.

And, as Keith has said, the C.R. Laurence deal. Another big deal for us and a very important deal for us and a testament to our strength of a product business and our ambition to build a strong, vibrant products business across the United States and beyond.

And, as Keith said, the business is performing to plan. And, specifically, with regard to synergies, I just want to confirm to you this morning that, again, those synergies will be delivered in 2017, as we expected.

So now what I'm going to do is, we have heard from the people who deliver the operations, who deliver the performance within their divisions. I'm now going to ask Maeve to take you through what's behind those numbers and the delivery of those particular businesses.

Thank you, Albert. As Albert mentioned in his opening remarks this morning, 2015 has been a good year for CRH. Our sales number of EUR23.6 billion reflects an increase of 25%. Whereas the EBITDA, at EUR2.2 billion, represents an increase of 35%.

Of course, there's a number of contributory factors to that growth in EBITDA, not least of which, of course, was the currency translation effect. We had the benefit during 2015 of a much stronger US dollar. And that, combined with other currency movements, added EUR218 million of incremental EBITDA in the current year.

We also had a good contribution from our development activity. The acquisition of the LH assets that Albert was talking about and other acquisition activities, offset by the lost contribution from businesses we divested, added a net EUR115 million of EBITDA to our numbers for this year.

But the real highlight of the performance in 2015 is the strong incremental profit delivered by our underlying businesses; our organic EUR258 million of incremental contribution from those businesses.

Against the backdrop that my colleagues talked about of fairly mixed environment in Europe and modest volume growth in the US, our organic sales went up by 3%. But, on that, the EBITDA increase was 13% and operating leverage of 40%. So very, very strong performance against a more modest background.

And that's really the effect, the living proof, if you like, of that self-help that Albert was talking about of focusing on the businesses, delivering efficiencies, looking after commercial excellence and really paying attention to how we make money and deliver profit.

Looking at the movement on EBITDA in the shape of a performance bridge, we've a number of moving parts there to arrive at the EUR500-plus million growth in EBITDA for 2015.

On the right-hand side of the slide you can see the incremental impact from the LH assets; almost EUR400 million of profit in 2015 for the period post-acquisition, reflecting a strong finish to the year that Albert was talking about.

We've also reflected in our profit for this year once-off transaction-related costs of just under EUR200 million. And they're reflected there also.

On the left-hand side of the performance bridge we have the lost contribution from the businesses divested. So those businesses that contributed in 2014 and are not there in 2015. That resulted in a reduction of EUR100 million in our EBITDA number. And you also can see the EUR200 million benefit of the more favorable currency environment.

But right at the heart of that profit bridge, and right at the heart of our performance, is the strong delivery from our underlying operations, which contributed almost EUR300 million of extra profits and were the primary contributor to the 25% increase in EBITDA for CRH, before you take into account the major acquisition in the year. So a very strong performance.

Moving on to cash and operating cash flow.

A focus on cash and cash generation has always been a key part of CRH's thinking and also a key capability of CRH. And in 2015 one of the real highlights for me is the fact that that focus generated operating cash flows of EUR1.3 billion.

Albert mentioned that the trading environment does have an effect of increased outflows, particularly on capital expenditure. And that was the case in 2015, where, as you can see, our capital expenditure went up significantly compared to 2014.

The biggest contributor to that was a focus on investing in profit-generating and business-improving investments, particularly in our US businesses, which we're seeing the benefits of improving market conditions. And we were investing in those businesses to make sure they were well positioned to benefit from the improved environment.

Given the proportion of our expenditure in the US, there's also a currency effect in that number also.

The development projects in 2015 accounted for probably about one-third of that number. And that represents a doubling of development capital expenditure compared with last year.

The capital expenditure number also includes EUR155 million of expenditure from the LH assets. And that represented about 95% of the depreciation associated with those assets during the post-acquisition period.

The other big outflow in 2015 of EUR650 million relates primarily to interest and tax payments, which, as you might expect, were higher in 2015; reflecting the higher trading for the business during the year.

The number I would really like to draw your attention to, however, is the inflow of EUR642 million from working capital in 2015. A really strong performance by all our businesses against the backdrop of a trend which would imply, with higher trading and a very strong finish to the year, would normally give rise to a capital outflow.

So, against that backdrop, delivery of a working capital inflow in the year is a very, very strong performance.

If you think of that in terms of the balance sheet, the working capital of EUR2.1 billion in the balance sheet at December 31, 2015 is the lowest level of working capital relative to our trading that CRH has delivered. So a record performance on working capital in 2015.

2015 was a year of very big movements on our net debt. The acquisition activity amounted to a total number of EUR8 billion. That number, in terms of net debt movements, was reduced by the inflows of EUR1.6 billion from the placing of shares, with the support of our shareholders, as they supported the placing that we announced in February 2015 in connection with the acquisition of the LH assets.

So the net effect of that acquisition activity on our debt movements is just over EUR6 billion.

On the debt-reduction side we had the benefit of EUR1 billion of divestment proceeds that Albert talked about, which brought our cumulative divestment proceeds to EUR1.4 billion, with our program well on track.

And the other net debt reduction of EUR1 billion is delivered from our operations; the biggest contributor of that, of course, being the EUR1.3 billion of operating cash flows.

When we announced the transaction for the LH assets in February of 2015 we were conscious that, in consummating that deal, we were adding significantly to CRH's debt and also stretching our debt metrics in the process. So at the time of that announcement we also expressed our commitment to restoring those debt metrics to normalized levels during 2015.

And the highlight for me, in terms of the cash flows for this year, is the progress that we've made in that journey, with net debt at the end of 2015 at EUR6.6 billion; representing just under 3 times EBITDA.

So, to sum up, 2015 was a year of continued progress for CRH. A strong advance in EBITDA.

Good progress on our margin and returns agenda. We stated two years ago our intention to restore margins and returns to the previous peak levels and we're well on our way to doing that. 2015 represents the second consecutive year of growth in that regard and delivery in that regard, right across our operations.

With financial discipline and good financial management being absolutely core to CRH, I'm particularly proud of the performance in respect of cash generation in 2015. And, as I hand over management of the finances of the Group to my new colleague Senan Murphy, I'm delighted that I'm leaving the Group well on its way and well on track to delivering on its commitment of restoring debt metrics by the end of this year.

2015 was a year of good progress across many fronts in CRH. I think that we had good demand environments in our main markets and we managed our businesses tightly, as you would expect. We made good progress in divestments and we generated an increase in margins and returns.

We exited the year, actually, with a high level of activity in our two main markets, buoyed, no doubt, by the fact we had very favorable weather conditions both in the United States and, indeed, in Europe during the months of November and December.

Now sometimes there's a concern that you pull forward work from 2016 back into the previous year or the new year. Actually, that really wasn't the case because we started 2016 on a very solid footing. We've had a good start to the year, with good activity levels. Of course, winter hasn't really come here either to Europe or the United States, so, again, helped by good weather. But it's early days yet. It's only just two months gone but so far, so good.

Now, of course, there seems to be increasing uncertainty about the pace of the global growth out there. And I, like you, am an interested observer in where that goes during the course of 2016 and beyond.

The only insight that I can do, or the only comment I can make, is on what we know within our businesses, in our markets and what we are seeing now. And, as I go down through those individual markets, I'll explain to you the visibility that we have and what we can see.

So looking at Europe first.

Broadly speaking, we think Europe is going to be in a slightly better place in 2016 than it was in 2015. Both David and Ken referred to the fact that it was a mixed market and I think next year is going to be a mixed market again across Europe.

But our footprint favors us. We are a Northern European, Eastern European footprint. And the big countries that drive performance for us in Europe are the UK. And, broadly speaking, we think we're going to see positive momentum in the marketplace in the UK in 2016.

France we've already talked about. I think 2015 represents a trough in France. There's no (inaudible) recovery here. But it's the year before a presidential election and anybody who follows France knows what happens then. And we expect to see some modest growth in constructions markets, driven also by some good residential activity in the eastern and southern part of France.

I think Germany will be solid and stable. Switzerland will be stable to down. But the big markets in Eastern Europe for us, Finland, Poland and now Romania, should show positive volumes in 2016.

Let's see where prices go but, broadly speaking, we think Europe has got more pluses than minuses for us.

The visibility we have in Europe is somewhat shorter than we have in the US. We probably can see to the end of April in terms of order books, in terms of talking to contractors what's out there. And it seems to back up those trends I've just spoken about. Beyond that, we'll just have to wait and see.

Moving to the US, we probably have a greater visibility there. Work tends to be on longer term contracts, particularly in the areas of our infrastructure projects. And there are pockets within our products businesses where we do see some signs and trends that take us longer out. And we probably can look to the half-year with regard to the US and see where we are with demand levels.

As I said to you, we've got off to a good early start. It is early days, but off to a good start across our businesses.

Bidding activity seems to be good. Our backlogs are ahead. The margins in the backlogs are ahead. The American consumer still seems to be there, as evidenced by the fact of some of the positive commentary by some of the big home stores in the United States that we sell into and that are important to us in the early years. And our visibility, as I say, takes us out to the first half.

So the first half looks fairly solid; pretty much a continuation of the same activity levels that we saw at the back end of last year. But, remember, the first half of the year for CRH is much less significant than the second half of the year. We make almost two-thirds of our profitability in the second half of the year.

And then lastly to Asia, to our big opportunity now and our big business in the Philippines.

Again, we probably can look forward maybe to the half-year at least. There are elections in the Philippines coming up in the next couple of months. That has underpinned good infrastructure spend and commitments beyond. There is a continuation of the repatriation of funds from people living abroad driving the residential market. And we expect to see the volumes moving ahead and prices moving ahead.

So we expect the Filipino market and our business to do well.

So, all told, when I put all that together, given what we see, we expect 2016 to be another year of continued growth for CRH.

So that concludes the presentation part of this morning's event.

What I'd like now to do is maybe move initially to the room for some questions. I would ask you, please, if you could raise your hand and give your name and the name of your institution before you ask a question.

And if I could also ask if you could just wait until the microphone comes to you because people down the wires, there's about 600 people plus down the wires watching us, they want to hear your questions so it saves me having to repeat it.

After about 20 minutes or so I'm going to go down the wires and also down to the webcast.

(Operator Instructions).

My questions are in the American materials business. So firstly, could you tell us how much asphalt pricing fell in the context of bitumen falling by 18%? Perhaps you could give some steer on what happened to your unit margin.

Secondly, your asphalt volumes up 6%. Can you say how much of that you think was due to the lower price of asphalt and so what level of volume growth you think? And is that a key feature moving forward?

And finally, the outlook in American materials. Could you just give a feel as to how these unit margins, so with the base effects of the asphalt mix and also diesel reductions, how much more of that will flow into 2016 and what you're expecting from volumes in the American materials? Thank you.

I'm going to just deal with some of those questions myself and then I will ask Randy just to come in and just add some -- whatever the color is he wants to add from his own perspective.

First of all, I think it's important to set out exactly some key characteristics and attributes of our Americas materials business with regard to lower commodity prices and lower bitumen prices.

When we're bidding on work, when there is a collapse or an increase in price over a short period of time, that's bad for us. We have got about a six- to eight-week time lag time. We bid work and we do the work. So we bid one price and in six to eight weeks' time we have to then buy the product to go and deliver to the market. So if there's a dramatic movement in price in that six-week period we win or we lose.

That is not what's happened in commodity pricing across the US and across the world in the last year. There has been a slow trickledown effect over the course of the whole year and that has been well signaled in the marketplace. And every customer we have, every state, every federal customer, every large customer we have knows that and watches that.

In fact, not only are they aware of it, they build it into the pricing mechanism we use in our contracts. About one-third of all the contracts we do for asphalt in the United States has an automatic escalator built into it that, if the price shifts up or down a certain percentage, the overall price, bid price for the contract, shifts too. By the way, it's the same here in tarmac in the UK.

So we have to pass on to our customers all of the benefit they see. There might be a time lag of a few weeks but it's certainly not spreading over months.

The single biggest contribution we have had to the improved performance of our materials business in the United States has been the increase in volumes of aggregates we sell.

I've said this time and time again. We make far more money selling and breaking rock and selling aggregates and pushing aggregates and selling more volumes through our high-fixed cost businesses than we do coating stone with expensive tar or bitumen.

And what we do is we sell asphalt, we make a margin on it but we sell asphalt and we sell our aggregates through the asphalt. You will struggle to find within CRH orphan asphalt plants that are not fed by our aggregate facilities. That's where we make our money.

So, with regard to the actual specifics of the pricing, it's actually not to do with the pricing but to do with the margin; how we can hold on to the margin as it moves up and down with the commodity prices.

So maybe what I might turn to, Randy, there were three questions there in terms of how pricing performed, Randy, in 2015 and in terms of that. And you were just looking about how you feel the margins of the business in 2016 will do against 2015 against that backdrop.

So I think, just to build upon what Albert indicated, you can safely assume, right, with the cost of bitumen declining that average selling price declined as well. But, as Albert indicated, it's really about a margin management.

And so I think it speaks more to the vertical integration model that we have that the construction backlog, we really match up those jobs with input cost based upon that backlog of work across the network or the infrastructure that we have in regards to our (inaudible) network.

So we certainly have some advantage in regards to that logistics, combined with the blending capabilities at the plant to take off-spec material to manage the margin.

I think one of the other questions, in addition, that you asked was in regards to the infrastructure piece, how much of that volume growth was associated with infrastructure?

In 2015 it was more about an improvement in the res and non-res market than it was necessarily the infrastructure piece. It was relatively stable in overall infrastructure. We would expect to see improvement as you get into late 2016 into 2017 as we see the impact of the FAST Act. But, really, a good portion of that growth happened because of growth in the res and non-res.

And, as we look into 2016, I would say the market characteristics are similar now as they were at the beginning of late 2014 into 2015 in regards to those commodity prices. And so our expectation would be to continue to build upon the margins that we achieved in 2015. We would see an expansion into this year.

And it's important to remember, John, as well, is that activity levels in the United States are not back anywhere near where they should be, the long-term need, the long-term (inaudible), nor indeed are our margins. They're just an improvement on 2014. So there's more to go in that.

Gregor Kuglitsch, UBS. I've got two questions. The first one is on the LafargeHolcim assets. Obviously, you're presenting them as a segment. There's clearly nobody on the front row that's specifically in charge of LafargeHolcim. I want to understand your thinking how you ultimately integrate that into the various divisions, what the timescale is on that. Or perhaps it's already happening and it's just a presentational point for the market.

And then the second question is on operating leverage. I think this is the second year where you're doing something that's closer to 40% drop-through rates. I think in the past you've indicated something significantly lower than that when you're guiding ahead. So I want to understand whether you're thinking on operational leverage has changed perhaps the portfolio plays a role in that and how you see that trending over the next two years. Thank you.

Two questions there. I'll take the first question on the integration of the LafargeHolcim assets and the logic behind how we integrated them. And I'll pass the leverage question over to Maeve after that.

Actually, the two people on the stage who are responsible for LafargeHolcim up to now as part of the CRH Group are, indeed, Randy, who now heads up our businesses in the Americas, of course, and he's responsible for the Canadians assets; Ken, who is responsible for the assets in Europe; and Marc St. Nicolaas, who's here in front of you there who is responsible for the Filipino assets now.

The logic of how we integrated them in is what made best business sense to serve the customers in our marketplace. When we set out the deal last year we spoke about these four platforms of growth for us and how they fitted very well with our existing businesses. And it was very clear to us, even before we did the deal, how we could fit them into our network.

The UK is a very good example; how that perfectly fitted in between our network of assets that we had. We had downstream assets in the UK with cement capacity in Ireland. We were shipping cement from Spain already to the UK. That just gave us downstream opportunities do it. So it fitted very much into that particular cluster.

Moving to Germany, Germany fitted very well with our Swiss German business. There was already a lot of trade between those two businesses there.

France fitted in very well with what we have Belgium because the assets in France were in the north east of France and, again, there was already a lot of supply between those two countries. So it's managed as one particular cluster.

And in Eastern Europe, again, we had opportunities and already had businesses in Romania and Slovakia that slotted well into that structure but it fitted very well into those businesses.

As I said to you, the Filipino assets now fit into our Asia structure. We had a business and a structure over there.

So it was down to the market what worked for us and how we could drive value out of the business. That was the logic behind it and, again, I just wanted to confirm to everybody else that the integration now is largely complete. All we have left to do is some back-office work, some investment in IT. There's transition services which will probably take another nine to 12 months. But, effectively, for the profit generating units, that work is now done and these guys are managing the businesses.

Maeve, with regards to leverage?

And I should say that that ongoing work for the integration, the migration of the IT and financial systems, will probably cost us another EUR100 million or plus in 2016.

And it cost us EUR200 million in the current year, of course, yes.

Yes, so following that.

In relation to the leverage, the number for 2015 reflects the very strong performance, particularly in Randy's division in the US, and the nature of our businesses that, as we break those big rocks into small rocks and sell more of them, we have a significant margin advantage which we're benefiting from in 2015.

The number for the Group overall is a little bit flattered as well by the mathematic of the effect that a small improvement in profits in Europe on a small reduction in the organic sales is contributing to the numbers. So the underlying organic leverage is actually a little bit lower than it looks.

But I think, looking forward a number of years, we would be guided by what has happened in the past and historically our leverage has been between 15% and 20%. At the high end of that when the growth is coming from our heavy materials businesses, which obviously was the case in 2015.

So we would still be guiding towards that range for the next couple of years as well, Gregor.

And, of course, our medium-term leverage over the last five or six years has been in that 15% to 20% range. You'll get spikes in years, but we still guide along those lines.

Robert Gardiner, Davy. Could I just go back on one thing, Albert, in the US? You talked about this idea of not chasing business towards the second half of last year and managing your margins versus chasing volume. If you maybe give us a better -- or give us some additional color on that, in terms of how you managed that materials products distribution.

And just to come back on Europe and your outlook. So you talked positively about a lot of your [end] markets. What does the pricing conversation look like then in markets, in cement markets around Europe at the moment? Is it, no way? Or is there some potential to do better in those markets in 2015? Thanks.

Again I'll lead the question and I'm going to ask Randy and Ken just to comment on both of their respective businesses.

I was very deliberate in my comments there in introducing Americas materials. I spoke about we manage our business in a very disciplined and measured way.

Always when you come back from a trough or some sort of a recession, there's always a real need in the business sector to try and get volume back. People have been hanging around on a single shift, they've got expensive equipment that's paid for and they need volume. They really need it to come back into the business. And people chase that at any price.

And that's why pricing is so difficult to shift in the early part of a recovery, as we're seeing in Europe last year and as we saw in the United States the first couple of years of the recovery.

What we saw last year was, for ourselves, a very selective careful dissection of the markets that we were in. And we picked and chose very carefully the businesses we wanted to bid for; focusing on profits and on margins. And I think that paid off. A lot of the early work was volume driven, not the best pricing, but actually we held our discipline, we held back through the year.

And the real strong performance in our materials business was in at the back end of quarter 2, but particularly quarter 3 and quarter 4, when work had to be done because states have budgets and states will spend the money. If they don't spend the money they lose the money.

So we watched very carefully. We could see the work that was being bid. We knew what was coming through and we held our discipline with regard to that.

Maybe, Randy, you just want to talk a little bit about that and I'll come back to you on the cement pricing in a second, Bob.

I think Albert hit it well. I would go back and say it speaks to the vertical integration nature of our business; so the contracting side of the business where roughly 40% of our asphalt buying was consumed internally.

We have a pulse of the market and that business is local. It's a 50-mile radius around any individual plant. So, by having the commercial aptitude to understand the levers that are driving that volume, having visibility and a better understanding in terms of what is in the pipeline, we can be relatively selective.

And we have the opportunity, whether that's through our contracting business or through pricing strategies with third-party customers, to be able to balance from a margin perspective what is our best approach.

So I think it's really about understanding the pulse of that local market. And so it comes down the guys who are running that business day in and day out.

So I think from Albert's comments, he's right. It is understanding what's in the pipeline, both from a res, non-res, but certainly clarity on the infrastructure piece, to be able to manage the margin side.

And specifically on pricing. It's something when we're on the road with investors it's the key focus. Not because they feel it's a key part of our business, although it's a big part now, but they're probably just checking us across some of the other cement players because cement pricing in Europe has been challenged. And it has not been recovering as we felt it should.

But, then again, if you go take a step back and look at where we are in terms of recovery, as we said, you have to see volumes come back before you see pricing coming back.

And my own sense is that we will see a bit more firmness in pricing across European markets this year. But maybe it might be useful, Ken, you might just take it through some of the big markets what happened last year and maybe your own thoughts in terms of what you might think will happen to pricing this year.

We mentioned, and my comments at the start, that pricing had been challenging in Europe heavyside and particularly in cement. And I think again this year, looking forward into 2016, I don't see any big change in that. And I think it's very mixed. Some markets we did see some advances, actually, last year; most of them were fairly steady.

And, again, we go through the bigger ones, whether it be the UK, or Poland, Finland, all were challenging. But they all had different outturns.

And I think what I was getting at when I mentioned our programs that are driving some of our margin gain in Europe heavyside in 2015 over 2014 was the fact that we have very strong operational excellence programs now working in Europe heavyside. And that's not just about price; it's about how we can actually drive the bottom line in the business.

So pricing, yes, absolutely, a very mixed bag going forward. There are some actually price increases planned for this year. And some slippage that we had in some of the markets last year. We reckon they were bit of speed bumps really and we could probably recover them during the course of 2016.

But still outlook, certainly, definitely challenging.

I think the answer is actually that how Europe may perform may well have been, and how the US cement market performed in 2012, 2013 and 2014, if you recall, volumes came back very slowly in the US and pricing. Everyone's signaled big price increases, but they didn't go in 2012, they didn't go in 2013, but they went about 6% 2014, 6% last year and probably about 6% this year, because the pricing just -- when it sticks for one year, you're gone.

I think those markets in the US that saw the highest volume increases were the ones that went quicker. I think, exactly as Ken has said, the markets where we've seen the best volume recovery, principally probably the Eastern European markets, where you see volume growth of 5% to 7% last year and probably continuing along that pace this year, they're the ones that probably will see the better pricing environment this year.

Christen Hjorth, Numis. Just a couple from me. In the US businesses, can you just confirm how far off peak returns each business is?

And then a bit more guidance on the Americas revenue growth for 2016. Do you expect that on an organic like-for-like basis to be a similar level to 2015?

And finally just on working capital. Good performance as a percentage of revenue. How sustainable is that going forward?

Three questions there, just in terms of where we are with regard to peak returns specifically in the US, Christen, was it?

Yes.

The question of working capital, which I'll leave with Maeve, and just in terms of guidance in terms of where we see the US is going to turn out in terms of revenues.

Let me just talk about the US business, first of all, in terms of guidance, in terms of revenue or activity levels.

If you look across the three end-use markets of the US first for 2016, the way we stand here today one thing we're pretty sure is US Government spend is still there and, at this moment in time, the US consumer is still there.

So, looking at that and how that backdrops with that market, looking at the infrastructure spend and the FAST Act that was passed there at the end of November, the interesting thing about that, I'm going to ask Randy to comment that in a second, is that actually it's not immediately obvious in the work that we do.

There's a long-term nature of the bid work that we do. But what we have seen last year, we have seen states be very supportive of incremental increases in spending. So we do broadly think we will see that increase during the course of the year; maybe 2% or 3% with regard to infrastructure.

With regard to US residential, US residential was just a touch under 1.2 million homes last year; a good increase on the previous year. It seems to us that probably we're in a kind of a 3%, 4%, 5% world in terms of residential growth in the United States, depending on your region.

Non-res may be coming back a wee bit. Our focus on non-res, as Keith has set out, is primarily on commercial, office space, warehousing and hotels and the lodging sector. We are not exposed in any way to the heavy industrial, where perhaps has been the biggest slowdown. So we do expect non-res to keep going on ahead; probably a more 3% to 4% rate.

So all of that guides you -- with those kinds of activity levels and support of pricing, that should bode well for us in the US. But, again, remember the visibility we have is just that six-month window we have. We really don't go beyond June and again that first six months is the less significant part of our business.

Before I pass to Randy just to talk to you about the timing of the FAST Act, just to come back on the peak returns and where we are. My own sense is that the cycle that we're in in Europe and in the United States here, and that was a much more extended cycle, it's relative to the recession that we're in. And in the United States the recession we saw in the construction industry was the single deepest recession we saw since the Great Depression in the 1930s and there's going to be a long unwind from that.

Just look at a good barometer for this. US residential starts: 1.2 million. That is nowhere near the long-term sustainable need. You can debate whether it's 1.4 million or 1.5 million or 1.6 million, but it's 200,000 above it. We're not even back there yet. We haven't caught up yet. And when we catch up we're going to have to overbuild to catch up with the over.

So my own sense is the cycle that we would normally see in construction tends to be about seven-year cycles. We think this is a much longer cycle. It's at least 10 years. And if you put that dimension on this particular cycle, the peak of the cycle looks to be somewhere in the 2020/2019 (inaudible), so it's going to be 2022 or 2023.

So we, ourselves, will not be getting back to peak returns until those volumes start coming back in our businesses. Now that's US.

Europe is in a much flatter cycle and probably a bit more of an extended cycle. But, with regards to our margins, we have been doing a lot of good work over the last five years with the recession, before things started picking up again. We worked on our costs base. We shaped our businesses. We've been working on all the bits and pieces on efficiency, lowering our costs base, strong commercial management and we're getting back there.

We're not back there yet. We're at least 3% or 4% away from where I think we should be in all our American businesses, excluding distribution. But we're getting back up towards that and we're moving in the right direction.

Now just before I pass to Maeve with regard to the next one, I'll ask Randy just on the timing of FAST Act, it's important people understand when that's going to kick in.

So, as I mentioned to begin with, Christen, I think the FAST Act just brought stability to the infrastructure market. So the actual impact of those increased funding levels, which are still significantly below what we think needs to happen just to maintain the existing infrastructure, would be late third quarter into the fourth quarter bidding activity and so it actually translates into improved volumes into 2017.

You complement that with the fact that in 2015 68% of the ballot initiatives that took place at the state or local level passed from the electorate to invest more funding in their local infrastructure. That added about $22 billion over the next coming years. So we'll feel that into 2016.

But the FAST Act really provides that stability that allows states to say, okay, I'll take on a project that lasts two, three or four years. So it's about capacity enhancing as well as normal dollars to the R&M side of it.

And Maeve, working capital?

On working capital. We will continue to focus very hard on working capital and cash generation and cash management during 2016.

I think, in the context of the fact that all of the working capital for the acquired businesses are in the balance sheet at the end of 2015 and will be there at the end of 2016, the capacity to deliver significant reductions in the kind of economic circumstances that we see for 2016 is relatively limited.

It is very hard to call, though. We wouldn't have called such a strong outturn for the year. We'll obviously do our best to replicate it, but I think realistically it will be a much lower number.

Robert Eason, Goodbody. Just in relation to CapEx and what we should expect for 2016 and splitting it out between growth and development, but also I think you said in LafargeHolcim the CapEx was 95% of depreciation there. Also what the CapEx was going to be in those assets, because there's a lot of chatter out there in terms of these assets need a lot of investment.

So just a bit more detail on CapEx and how it's split.

Also, and sorry for picking on the use of words in the presentation, but when you're talking about synergies of EUR120 million, you distinctly used the words, so far. So I'd like you to just expand on that and just give us a bit more color on that.

And, for me, the key takeaway from the results was that the net debt to EBITDA has come down a lot faster. What does that mean for future M&A activity for CRH? Does that mean maybe CRH will be out of the traps a bit quicker in terms of consolidating further opportunities?

Three questions there, so far, Robert. It means that we're working through it. These are complex business issues. And when we set the EUR90 million target we had done some due diligence. It was very much a one-way view of looking in. We had limited access to the business and the people.

When we've got a chance to get in there and identify other opportunities, this is what we've got through -- we're working on many, many initiatives and we'll update you as we go through the course of the year.

With regard to the details of the CapEx, if I can just leave that to Maeve at the end, I just want to come back on the overall thoughts on the CapEx.

There is this idea out there that the assets were poor assets and they were under invested. Well, just watch our CapEx over the next couple of years. You're not going to see a huge shift of investment into these assets. They're very fine assets. They've been invested well.

Holcim and Lafarge, and particularly Holcim, they would not be known for people who don't mind their business and don't mind their assets. They ran their businesses very well. They invested in those businesses. They had good engineers in the business, as did Lafarge, and they were well minded and we've just taken over those assets.

So there's no big capital expenditure needs going forward over and beyond what we anticipated when we bought the business.

And, on that point, we had identified the fact that we needed to invest in extra capacity in the Philippines. And we do like, Holcim Lafarge need to, as Cemex need to, anybody who's out there in that business.

But I think the dynamic is slightly changing out there in terms of there are opportunities perhaps to maybe look at, rather than building big expensive integrator plants on shore within the Philippines, there's a lot of available clinker out in Southeast Asia and when they look at grinding stations, which is a much lesser cost, which, of course, would be a big advantage and boon to us because our models built in are very big heavy CapEx spend, some are out there in 2017/2018.

So, just overall, I've got no concern about any big outflow of CapEx on a philosophical point of view.

(Operator Instructions).

(technical difficulty) across the operational teams and, indeed, headed by Maeve and our finance team, it was way ahead of our expectations. Maeve really put out a three-line whip with her team on terms of working capital management. And it's the record low working capital, above and beyond what we thought we could ever achieve. And that's what delivered. A really star performance in net debt performance.

What it means for our M&A. We were very careful in what we said. Over the years we've always been consistent in CRH. We always said if we saw the value opportunities we would be brave enough to step up and do a deal, do a good deal of good, value integrate it, create value for our shareholders but then get our finances back in place.

Because one of the key investment pieces for CRH is we do not trade at the edges. We keep our balance sheet in the place where CRH has always kept its balance sheet. And our balance sheet will be restored. And that's what our focus is on; bringing our debt metrics back down to normalized levels. We've said that we'll do that during 2016. And when the debt metrics are back down there then we'll have a look out there and see exactly what the opportunities are, because there will be opportunities again.

There's still a lot of distress out there. There's going to be continued shakeout in our industry, further consolidation. And, provided we see value out there, we will participate in it, but only when we have the financial capacity to do so.

Maeve, do you want to talk about CapEx?

Bearing that in mind, we'll be taking those considerations into account as we think about CapEx for 2016.

In the context of improving market conditions we do want to make sure that we're investing in our existing businesses to make sure that they're ready and able to take advantage of the improving markets. And the development spend in 2015 worked out at about 30% or so of the total spend.

And I'd expect that to be a reasonably good indicator of the proportions in 2016 as well.

During the past number of years you've seen in our business, but also in the industry, levels of expenditure that have been less than depreciation. And we've been saying that, as we saw markets improve, the proportions would trend back up to be more in line.

Our spend to depreciation last year was approximately 105%. I would say a guide of somewhere in that same region around the 100%, 105% of depreciation would be a reasonable number to be using for 2016. So that would bring it up a little bit over EUR1 billion of spend.

Just want to take maybe one or two more questions from the floor, because I do want to get down to the wires just to take some calls from people who are watching from outside the room here as well. So any other questions?

Arnaud Lehmann, Bank of America Merrill Lynch. Maybe a follow up on M&A. I think you've been mentioned in the press potentially looking at LafargeHolcim assets in India. And marginally could you elaborate, if you're going to do more deals, what would be the focus?

A related question around asset disposals. Are you happy with the shape of the Group today? Are there any divisions where you believe maybe there are less core business than others, especially if you're working on net debt reduction?

And lastly, on refinancing costs, probably for Maeve. There's been a bit of volatility on credit market in the last few weeks. Have you seen anything on your side in terms of cost of debt, refinancing, access to credit, etc.?

So three questions there. One is where the focus of M&A might be going forward and where we're linked with lots of deals around the place and the press and our commentary on that.

Second question is are we happy with the shape of the Group and where it's going and will it lead to further disposals?

And the third question on financing costs, which I'll leave to Maeve at the very end, and maybe I can take the first two.

As I said in the previous question, our focus at this moment in time is, as we said in February of last year, we repeated last year at the interims then again in November and we're repeating again today, our focus is in bringing our net debt down and restoring our debt metrics to more normalized levels within CRH.

We made a good start to that during 2015. We are not there yet and we will focus on getting there.

Now that's not to say that, if we saw a unique opportunity for value, for creating value for our shareholders, for a deal that was out there, that we wouldn't do it. But I have to say the chances of that happening, to be so enticing for us to move away from our stated objective of getting back to normal net debt metrics, I just don't think it's there. But you never know. There's a lot of distress out there.

Broadly speaking, the shape of the Group. I think we've disposed of now EUR1.4 billion of assets across the Group. It's a very significant part of our Group that's gone.

Probably more significantly as we've taken on the heavyside, big part of heavyside have done acquisitions (inaudible) [DLH] assets that have come on board.

I think the shape of the Group is focused very much on being a business that's focused on value and value creation. We drive value on all our businesses, principally in a couple of ways. Number one, through the vertical integration model. which works very well on heavyside businesses. And number two, we create value by the small bolt-on acquisition model.

We talked about the two big deals we did last year. We also did 20 other deals across the world for EUR160 million. That's where we add value; the small businesses that we buy that are good prices and we create value. And it's the accumulation of those businesses that really add the value for CRH and I think we will be consistent by sticking to that core business and core model.

And where we find businesses that can buy into that, knowing what we do within the heritage businesses, having an acquisition opportunity on the small bolt-on model to build out our franchise and size and scale that works for us.

Our distribution business complements very well our heavyside businesses because it's got low asset intensity and high returns in the early phase.

Our best returning business, as I've said every year, is our Americas distribution businesses because it has low asset intensity and good cash generation characteristics.

And our products business is very important to us because it addresses the future of CRH. And our products businesses come from, in both the Americas and Europe, from being very small businesses 10 or 15 years ago to being very significant businesses now.

The business that David runs in Europe in lightside, that business was a EUR200 million -- EUR20 million EBITDA business 10 years ago. It's now EUR1 billion business, producing in excess of EUR100 million of EBITDA. Where is it going to be in 10 years' time?

Because it addresses the new construction trends that are out there, developing innovative new products that he spoke about for the changing face of construction around the world. And what we're doing is adapting and building that as the market grows.

So, quite frankly, I'm happing with the shape of the businesses, happy with the core heavy materials businesses, which are at the heart of what we do; strong profitability, strong cash generation, a great business model, robust, good barriers to entry in good market positions.

The distribution business, which services a different end to the ore and mine market, with low asset intensity and high returns, good characteristics of cash and the future growth of the business being addressed by looking at the products businesses, developing markets [but] products to new markets.

The credit markets. When we announced the LafargeHolcim transaction in February of last year and were conscious of the effect that that would have on debt, we significantly de-risked our debt profile in putting together a very well-priced financing package for that transaction; of course, paying EUR2 billion of the proceeds from cash resources we already had.

And we also went back to the bond markets four times, or we raised four sets of bonds, in 2015, raising EUR2.5 billion or, in fact, a little more than that of bonds at record low prices.

So we're well organized in terms of the financing, having taken advantage of the low markets.

So we keep an eye on the debt markets. We're always ready to act quickly if an opportunity arises, but we're not under pressure to rush in in the current very volatile environment.

So we'll keep a very close eye on it. As I say, we've got a debt maturity profile that is nicely spread out over the next number of years and we have the financing well in place with bank facilities and the financing for the transaction, which supports our position at the moment.

I'm now going to have to move down the wires, because there's more people outside this room who are following it than inside this room and I'm going to give them an opportunity to talk. Have we got some questions on the wires there?

Gerard Moore, Investec.

Three quick questions, please. First of all, on energy costs, leaving aside bitumen, what type of outlook do you see for energy costs (inaudible) or what type of savings do you think you can get there?

Secondly, then, in terms of the Irish market. You cite it in your outlook statement but just wondering is it growing fast enough at this stage to be material for the overall European business?

And then the third question. You indicated that you have announced some price increases in Europe in specific markets. Just wondering if you could share with us which markets those price increases are coming in into and the extent of the price increase? Thanks.

Gerard, you're digging into the detail. The energy cost outlook for 2016, excluding bitumen. If you look at where oil is now at this stage, our broad expectation is for it to be flat to slightly plus. I won't go into the dynamics on the supply side, but there seems to be a determination on some producers to keep producing.

And in a world where we're not seeing strong economic growth, beyond where people think of expectations, it's hard to see what's going to shift that particular needle away from where it is at this moment in time.

So our overall expectation is flat to slightly up with regard to overall energy costs.

Our main exposure cost is not only bitumen, but it's in gasoline, diesel costs, power costs and, of course, crucially, in coal and in petcoke for our big cement businesses.

With regard to the Irish market, unfortunately, as an Irishman, it still will not be too significant within CRH, given the size and scale of CRH now, but also in terms of the trough the Irish market experienced in construction over the last number of years.

There is good growth coming forward there, principally in around the residential market, in around the Dublin area. There's some good non-residential work being supported by investments by some of the multinationals coming in to support high-tech industry and pharmaceuticals, and some small infrastructure work going forward.

But it's a fairly modest pace of growth but still good to see it coming through.

And the third question is, which I'm not going to go into the detail of the extent of price increases because those price increases are a matter of negotiation that really is in the very early days of being implemented, but, broadly speaking, the countries where you're seeing good volume growth, particularly in the eastern part of Europe, are the ones where we would expect to see some price increases.

I think, given the volume levels we see here in the UK, again there will be some small modest price increases; probably in line with inflation. So there [they are]. Maybe in the Netherlands as well.

Thank you.

I'll take one more question on the wires because I've just got quite a lot of questions from the Dublin end as well. Is there another question on the wires, then?

Josep Pujal, Kepler.

Three quick ones from me. The first one is on the tax rate. I think it increased from 23% to 29%. Could you tell us if this is permanent or if there was something which was a one-off? And could you give us guidance on the normative tax rate going forward?

My second question is on the increase on the non-controlling interests. I would like to know in which geographies did it take place? Do you feel comfortable with this for the cash circulation? Or would it be a priority when you will have deleveraged to buy them back?

And the third question is still on energy and diesel bills. Could you tell us how much those two bills went down in 2015 for you? Thank you.

Three questions there. I will leave the questions on the increase in the tax rate and also in terms of the movement in the contribution from associated companies to Maeve.

And the last question was in terms of how much energy and diesel and the overall energy costs dynamic changed within CRH for the last year.

We've been very consistent overall across all of CRH. Total energy bill can account for, in normal terms, probably about 9.2% to 9.5% of total revenues. Last year it was about 8.8% to 8.9%. So, lower than it would normally have been, but that was the dimension of the difference in terms of energy costs with regard to revenues.

But the tax rate, Maeve, and associate --

On the tax rate, the effective tax rate in 2015 reflects the fact that almost EUR200 million of once-off costs associated with the LafargeHolcim transaction are, largely speaking, non-tax deductible.

So if you exclude those from the equation, the underlying tax charge is closer to 25.8% or so. And I think the range for the next year or two, there'll be some upward pressure on it, given the profile of the countries in which the trading profits are improving, but, broadly speaking, that 26%, 27% is probably a reasonable figure to be using for the next couple of years.

In relation to the non-controlling interests, the significant increase in 2015 reflects the structure of the transaction in the Philippines, where the LafargeHolcim transactions -- we have a joint venture partner in the Philippines. CRH's effective share is 55% and the partner's share is 45%. And so that 45% is reflected in non-controlling interests.

So I think we're very happy with that de-risk. It reduces the debt for CRH and also has brought in a very good partner for CRH in a market that's [important].

I'm going to turn now to the largest constituent audience we have out there, those watching on the video feed, and there's about 600 people out there. We've had seven pages of questions, which I won't get through. You'll have to forgive me. But maybe some questions I can maybe just ask the team here.

One question that's come in with regard to the synergy targets have been increased and where do we see further opportunities. I presume this is in relation to the LafargeHolcim transaction.

Maybe what I might do is, I might ask Ken. I know you've been a fundamental with regard to identifying synergies and where we're going forward on these.

I think the opportunities are there. Again, you mentioned just the scale. We've more than doubled our cement footprint in Europe heavyside. We had the teams all together towards the end of last year on a cement best practice, a couple of days looking to see where different taskforces could derive those synergies.

One thing that jumped out of the page, really, was alternative fuels and the substitution rate. And we think there's certainly upside on that. And that certainly will be baked into our projections going forward.

So I think on the cement side, it's probably the input costs, as regards fuel, as regards alternative fuels, particularly, Albert, would be an area we'd be working on, given the size of our European cement footprint after the LafargeHolcim transaction.

I think one of the things we would have seen again, just to back that up, both in all the cement businesses we've bought. And, actually, it's interesting, I'm actually going to ask Randy this question as well, is that in the asphalt business we bought here, in tarmac it has been very interesting to put the two teams together and see where the specialties lie in both sets of teams.

Everybody's good at something. Not everybody's good at everything. And it's been interesting to merge those two knowledge bases together. I'm just interested, and I thought we were very good in our asphalt business, the two areas of improved efficiency tend to be on what we use warm mix asphalt, which effectively means use less heat, less energy in making the asphalt, but also the increase of recycled asphalt.

Maybe, Randy, you want to talk about that, because that's an interesting story as well.

So I think it's through the chain there, what has happened with the knowledge base here at tarmac and as well as the American materials has been everywhere from the increase in usage of recycled materials, we look for 1% a year type increase, but certainly our advancement in the US, in regards to warm mix asphalt, but the technology that tarmac has brought in terms of delivering that to the marketplace, the commercial aptitude, the actual selling process, has been revealing to us in the Americas and to really sell as a value-added product a variety of things that they have done for some period of time here in the UK.

So those are exciting, both operationally and commercial type of opportunities. When you get a group like that together, they challenge each other. So we're pleased with what's happening there.

Just back to you, Randy, sorry to go back to you again. Just a question. Is the winter-fill strategy we're using, is it a wise hedging strategy in a low-cost energy environment?

I think the winter fill or the physical hedging of liquid is a good strategy, no matter what the cost environment is. So I think, as we historically found out, no matter the dynamics, the market characteristics of crude as it relates then to liquid asphalt is that winter is always the cheapest time of the year to buy material.

And what we end up using is certainly the logistics and the terminals that we have across the US, the footprint, to be able to buy low and then to bleed that back in during the spring season.

So I think, even in today's environment, it's the right strategy.

Maeve, just a clarification from somebody. Could you just explain to people what's the reporting structure going forward?

For 2015 we showed our six historic segments and the LH assets as one line item to make sure that was clear what the contribution was.

For 2016 reporting the North American business will go under Randy in Americas materials segment. The Philippines business will be reported in an Asia separate segment. And the European businesses will fold into the Europe heavyside.

I suppose this is probably you, Keith. It's on US residential. The increase of multi-family homes' construction, the structural shift towards that, is this a risk for our residentially exposed businesses? You're probably the most residentially exposed business we have.

Yes. Thanks, Albert. Well I think there's really two questions there. One is the structural shift to multi-family. I think it's natural, given that there was a collapse in residential markets, driven by over financing and everything else. But, as the markets came back, multi-family, which is primarily rental, would be the strength early on.

We're seeing the single-family segment gain momentum as the cycle unfolds, but we're well positioned to serve the multi-family segment if it ends up being a long-term trend both through our distribution businesses and our products businesses.

And one thing to note about our business as well. In residential we're quite geared toward improvements. And so new construction is quite not as important as residential repair and maintenance improvements.

We're well positioned there. I think the C.R. Laurence acquisition we did, which feeds into the glass and glazing industry, has positive effects for multi-family construction going forward.

So, however the market evolves, I think we're well positioned and we can move our product development and positioning of portfolio to service it.

And we're way over time. I've just got one last question, which I'm going to deal with first and maybe I'll pass it to Ken.

The question is where do we see greater opportunities for vertical integration? And I think the issue I just wanted to reinforce on that particular point; over the years, and in the years ahead, CRH makes all its money on small bolt-on deals and that comes through vertical integration.

Randy said earlier in the presentation, he spoke about his business being a 50-mile business. That's what local construction is all about. The products don't shift large distances.

Our world is a collection of 50-mile markets. And in those 50-mile markets there may be five or six trading companies. And what we try to do is to build up a network and a franchise of scale and opportunity where we can share those benefits, supported by a strong resource-backed asset, be it aggregates or cement. And that's how we've played the game within the building materials sector.

But maybe in terms of vertical integration opportunities, of course, we've chased the (inaudible) CRH businesses. One of the real attractive parts of the LafargeHolcim business was the fact that they were nowhere near as vertical integrated as we are.

Maybe, Ken, you might just talk about the cement business in Europe and the opportunities you see with the businesses we've bought and what the extent of vertical we have in our business is.

I mentioned Poland earlier on as a model for us in terms of where they built vertical integration the model has worked very well.

And looking at that, and taking that as really where we're trying to get to, Romania, particularly, and the East would be certainly a market where we already have a readymixed business there. We've very strong cement footprint also now, and market share. So we could certainly see rolling out the vertical integration model and pulling through more volumes through our readymixed business in Romania.

I think the interesting thing, as you go further east in Europe, if you look at France, you mentioned Albert, our assets up in the north east of France, and we've also businesses downstream in the Benelux. So quite clearly there are opportunities there to roll out the model.

And I think also if you look at our German business, which is essentially -- it was a paving business but now we've got cement in Germany also. So, quite clearly, we'll be looking to pull through more cement volume through our paving business in Germany.

So both East and West we see good opportunities going forward to roll out a model that we know works.

And I would say, just to summarize, I'd say also, I was in Asia, one of the real attractiveness of the market in the Philippines for us was not just the potential opportunity with the cement businesses that were there. What we could see is that country is starting to modernize, have more and more vertical integration. Aggregates, agro products, concrete products, readymixed will become more and more part of the building materials industry out there.

And we are probably the best player downstream in the industry. And we see significant opportunities for us as we go forward.

But we've come to the end of the presentation. We're way over time. I just want to thank you for your participation in the room here this morning. I'd like to thank those of you down the line who dialed in and watched us.

We will be working hard for 2016 for everybody and we'll get a chance to update you with our updating statement with our Annual General Meeting at the end of April. So thank you very much for your attention and have a good day. Thank you.

This concludes today's conference call. You may now disconnect your lines.