Albert Manifold - CEO Senan Murphy - Finance Director.

Yassine Touahri - Exane BNP Paribas Gregor Kuglitsch - UBS Rob Gardiner - Davy Arnaud Lehmann - Bank of America Merrill Lynch John Fraser-Andrews - HSBC Robert Eason - Goodbody Will Jones - Redburn Christen Hjorth - Numis Glynis Johnson - Deutsche Bank Aynsley Lammin - Canaccord Mike Betts - Jefferies.

Good morning, ladies and gentlemen. I’d like to welcome you to the 2016 Interim Results for CRH here today in London. My name is Albert Manifold; I’m the Chief Executive of CRH. And I’m joined here on stage by Senan, Senan Murphy..

Good morning, everyone..

Senan is our new CFO. And together, for the next 30 minutes, so we’re going to take you through a presentation of really what’s behind the results you’ve seen this morning, the story behind them, and how we see the world, a little bit about 2016, of course, upfront.

But I’m going to take about 5 minutes, at the end of that presentation, before the Q&A, just to take you through the changes that we’ve been through in our business, and looking at where we are now and where we see the next few years.

The years 2009 to, I suppose 2012, 2013, we had a terrible recession, significant restructuring cost cutting, really sort of getting in pace with the volumes we saw there. 2014, market changed. We reset our business for the next phase of growth across CRH.

I suppose, 2015 really was the year of big deals, and 2016 is a year of deliveries, as we said last year. I think it’s good to ask ourselves the question now, as we see the year coming out ahead of us, where 2017 is going to be, and, indeed, the years to 2020, 2021, and just give you a sense of where we see our business.

And after that, of course, we’ll go in to Q&A here in the room, and we’ll have people on the wires as well. So maybe just kicking off, looking at some of the key messages, I’m not going to dwell too much on this page. Two points I want to make about this.

I came up through the operations of CRH and for me as an operator, the real health of the business is shown by the margins and the returns that deliver by the business.

And we can see our business, again, ahead in the first half of the year, ahead of margins and returns in all divisions, real, great strength coming through, and also very strong, tight cash management, delivering a very good cash performance for the first half of the year.

And Senan is going to take you through how our cash performance in this first half of the year should unwind towards the end of the year and give you a sense of where we see the year-end debt level, which is crucial to us, of course, returning to the M&A game.

Looking at some of the key numbers here, and this is a page of big numbers at this stage, and again, two numbers I’d just like to highlight you there. The EBITDA margin, on a pro forma basis, almost 1% ahead of last year. A real sense of good leverage in our business, tightly managed. This business has come back.

And for the first time in, since, I guess, 2010, 2009 actually, our dividend moving ahead. Really, a sense of showing that our businesses are moving ahead in terms of performing ahead of our plan, good strong cash performance, and, really, a sign of confidence of where we see the business going forward. I’m glad to see that returning again.

We had a progressive dividend policy for 26 years, we held it for the last seven years. To me, that seven years is almost as impressive as the 26 years before that. But now we return to dividend increases again, which is good to see. We’re going to talk about the trading performance of the businesses across our new structure.

We announced there, a couple of weeks ago, that we’re reporting with the Americas, as we’ve always done, but now Europe, and a division in Asia as well. I’m going to go through the performance across those three territories, just to give you a sense of how our business has performed.

Just looking at Europe, first and foremost, the map on the right, with all the different colored shades of blue, that shows you the countries that we’re in across Europe. Very substantial business, at this stage, of size and scale and breadth, really, as a result of the big transactions we did last year.

But more importantly, it shows you across Europe the GDP trends. All of those are showing growth in 2016. That’s the first time we’ve seen that in quite some time. So, we’re seeing some very early stages of recovery starting to come through, it’s low growth, it’s slow but it’s starting.

The impact of Brexit, the vote was only nine weeks ago today, is not really fully understood here in the UK and also in continent of Europe we haven’t really got a sense of what the impact in the medium term will be, I am sure we’ll talk about that later on. As of yet we haven’t seen any real impact on our businesses.

But one thing is for sure, is construction markets across Europe are well below long term trends and needs and construction spending is forecast increases. What we need to debate, of course, is the pace of that growth and the period of which it’s going to extend over.

Looking at the trading performance for the first half of the year, you can see really two quarters very different in Europe. The first quarter, relatively flat with the first quarter of last year, but in the second quarter we returned to growth.

I should say all of that growth is volume led, there is still almost no pricing in Europe and that one or two markets we do see pricing coming through, but it’s all running that, but that’s entirely consistent with what we said in the past in that recovery will come to in volume first and then prices will follow.

Do you remember the USA in 2011-2012 that’s where we are het again volumes come back first and it took two or three years before pricing became an embedded part of the business and is there now a conference that will happen in Europe in the years ahead.

So, looking at the growth rates that we’re seeing in quarter two and for the first half of the year, we expect that modest low level of volume led growth to continue for the remainder of the year across Europe.

And just to give you a sense of our businesses in Europe now post the big deals that we did it’s important now that CRH is now the largest heavyside business in Europe, across 13 major geographies a very deep embedded business across residential, non-residential and indeed infrastructure.

These new platforms that we acquired last year in the United Kingdom, in France and Germany and in Southeast Europe will not only give us growth to acquisition but as we said last year, will beget a decade of further vertical integrated growth in our business that’s what we always do.

We buy the platform and we grow downstream and we will intend to do that on those new platforms.

I should say I am talking about Europe here, but I am going to include Canada and the Philippines in this as well, is the integration of those heavyside assets we bought last year is now complete, they are now CRH there is no more LafargeHolcim; it’s now CRH. We’ve done very well. We’ve done quicker than we thought.

Our synergy delivery is on track and in fact we identified 40 million of synergies this year, but during the course of this year we’ve identified a further incremental 10 million this year or we’re tracking about 50 million this year.

So we should increase the overall total by about 10 million, but again we’ll come back and update to you with us at the end of the year when we’ve delivered. Well, let’s talk about what we’ve done rather than what we’re going to do.

Just turning to the Americas and very different click on terms of economic growth here across the pond in the United States and even Canada, but particularly in the United States, very positive economic momentum and of course construction market as you will have seen are consistently outpacing economic growth and we’re seeing this in our businesses, primarily led by a very strong consistently strong residential and non-resident markets probably moving in the range of 3% to 3.5% volume growth year-on-year which is consistent with what everybody is telling you.

Infrastructure is also powering ahead, good strength consistently coming through underpins now by long term funding that’s in place that for 2020 gives us good momentum behind that business and all of these underpinning a very good pricing environment as well, as we seek to recover seven years of no pricing in the United States this is our third year of getting pricing back and we’re still not back to where we should.

So that coming through on top of volume is very good for our businesses. And just to give it a size and scale of the USA one number I want to pick out on the right hand side of the page which really stands out for me, over the next decade the U.S. will spend $10 trillion on construction.

That’s the size of the GDP of China, the second-largest economy in the world. So a very significant opportunity for us in the U.S. as we go forward. Looking at the performance of our U.S. business, a very strong first quarter. Now, that has to be taken in to consideration of very favorable weather.

In our businesses in the U.S., we would not expect to start working until the second week of March. Actually, for the second week of January we were back working, so we effectively had almost two extra months of construction spend. Happily, we didn’t borrow from the future, because the backlogs were very good going forward.

So it was just extra work that needed to be done. But we’ve returned to more normalized trends in the second quarter, and they’re the trends that we’re seeing rolling out during the current quarter.

I mean, it’s going fairly well, we’re halfway through our most important quarter, the third quarter in the United States, and it seems to be tracking the second quarter volume level, pricing levels we’ve seen there. Margins and returns in the U.S.

ahead in all divisions, as they are in Europe, again, again, the real sign of health of our business coming through. And happily, the Canadian business is fully integrated now as part of our Americas business, integrated with the business itself, the border, performing very well. The interaction between the two teams has gone very, very well.

The Canadian team have stepped up and the performance in the first half of the year of 2016 is ahead of the first half of 2015, and we’re delighted to see that. Again, just a sense of the opportunity we see, and what we see our business delivering across the Americas, and specifically in the United States.

We’re the largest building materials player in all of the United States, and growing. The top 10 players in the United States only make up 25% of the total aggregate and asphalt market out there, so significantly fragmented market, many, many years of consolidation to come, which is exactly where we want it to be.

The margins and returns that we are generating through our U.S. businesses are ahead of where I, as an operations guys, and we, as a team, would expect them to be at this point in the cycle, which is very interesting. Not really surprising, but interesting, and it’s caused by couple of things.

During the period 2009 to about 2013, we went through a very significant restructuring program. We took out to the €2.5 billion of costs across all our businesses. But we also reinvested in our businesses. We reinvested across our group, in the teeth of the recession, €2.5 billion in capital expenditure.

Now that went in to make our businesses more efficient, more effective, better placed, and better balanced. And we’re seeing the benefit of that coming through now as the volumes return with higher margins, and good leverage, and good drop through to the bottom-line, which is contributing to better returns.

And I should say, with regard to CRL, the C.R. Laurence business which we acquired last year, $1.3 billion deal last August, the integration of that business has gone well. It’s performing very well, synergy delivery is on track, and, again, that business is ahead for the first half in 2016 versus a pro forma 2015. So, delighted to see that.

And the team did a great job there, as well. Just moving to our new division of Asia, which is primarily about Philippino business, the business in the Philippines, and just to remind you of what that is. The Philippines is a country of 100 million people. Ours is a cement business there.

It’s a 20 million tonne cement market, and we’re the number two player there with about 6 million tonnes of cement capacity. We are completely sold out, by the way, as is everybody. We’re importing cement to supply that market.

The business has gone very well, driven by strong residential, strong repatriation of funds from overseas, Philippines who are sending money back to build the residential market, but very strong commitment to infrastructure. And the new administration has almost doubled the commitment to infrastructure in the next five years, which is good to see.

And that’s going to underpin demand for those markets again for the next decade or so and the key chance for ourselves is to build capacity to match demand and supply of the market which we will do. And we have signaled that to the market and we’ll let you know about we make a decision in 2017-2018.

With good growth in top line, good control of costs, profit ahead and we’re very pleased the way that has landed within CRH ahead of last year. Just to call out to two countries at the bottom of that chart there India and China neither of which I should say are consolidated in the EBITDA number we’ve seen this morning.

India is a 50-50 joint venture, broadly speaking volumes are ahead in India, prices are back. We deliver on average and this should we will do again mid single-digit returns on that business that’s a long term play for pretty good business.

China, a much more challenging environment, the overall market for many businesses in China significant volume reduction down in that business and grappling with the challenges of overcapacity that was going to be with us and that will play up overtime our investment there is a 26% holding in the northeast of China [indiscernible] in the period.

So pulling on that together and just to give you a sense and take walk through our first half performance in 2016 versus last year. On the left hand side of the slide you can see the EBITDA performance for CRH last year of €555 million.

To that we add the pro forma first half LafargeHolcim of 2015 to give us €934 million as a pro forma half one 2015 results for CRH and the growth you can see coming against that in this current year is pretty much all coming from the heritage businesses which is a real final strength in our core asset base businesses, delivering good volumes, good pricing, good margins and better returns.

I should say with regard to LafargeHolcim, they are also delivering very well as indeed our CRL, with LafargeHolcim specifically last year they delivered an EBITDA pro forma of about 820 million that was up from the previous year of 750 million so very significant uptick in one year for those businesses.

And we said in February if we could hold that for this year I thought that will be a very good performance, well actually the first half of the year you can see they are actually ahead again, so good to see that. On all of those coming together to deliver an EBITDA figure for the first half of 2016 of €1.12 billion.

So that’s really a little bit of what behind the delivery of the numbers themselves, the story behind it, what’s driving the numbers.

I am going to ask Senan now to take you through the actual components of the actual profit growth itself and crucially take you through what’s been happening in the cash side of things and where we see the cash ending up and debt ending up at the end of the year.

Senan?.

Thanks Albert. Good morning, everyone. It’s a pleasure for me to be here and this is my first opportunity to actually to speak all of you at a results event. And with a very strong set of results it certainly a nice way to be able to start this conversation.

So today what I’d like to do is just spend a few minutes running through some of the highlights of our financial performance for the first half of the year. So starting sales and earnings. Today we’re reporting a sales number of €12.7 billion for the first half of the year that is a 35% increase over the corresponding period last year.

In addition, we’re reporting an EBITDA of €1.12 billion that is more than double the EBITDA that we reported for the first half of last year. Very strong performance. As you can see on this slide there are number of components, number of elements that are driving that strong performance.

The one that stands out most for me however, is the organic growth is this significant organic growth that we’ve delivered in the last six months. What you can see here is organic sales growth of €800 million in the first half and a corresponding EBITDA growth in organic terms of €150 million. That converts to a 19% operating leverage.

That’s significant profit delivery. Obviously, the other significant component in the first half of this year is a contribution from those large acquisitions that Albert mentioned earlier that we completed in the second half of last year.

Here you can see that those deals are contributing nearly €2.9 billion in sales and over €380 million in EBITDA in the first six months of this year.

As Albert mentioned earlier on, those deals now are fully integrated in to our business, they’re delivering on their synergies, they’re performing in line with our expectations, and we’re very happy with the way they’re operating. Next, we move on to our operating cash highlights.

The key takeaway for me on this slide is the fact that our cash flow from operations in the first half of this year is €300 million better than the corresponding period last year. Again, there is a number of key drivers behind that.

Obviously, our earnings delivery, our earnings growth is a major contributor, and, certainly, our ability to be able to convert those earnings in to cash flows. But there’s two other items that I’d like to call out here on this cash flow that bear attention, our capital expenditure, and our working capital.

On capital expenditure, we’re investing over €400 million across our business in the first half of the year, that equates to 80% depreciation. I guess, in addition, there’s a very strong focus and control around this to make sure that, that capital spend gives us a strong return on investments.

And the best way to think about that, or articulate that, is that during 2016 we would expect that 40% of that capital spend is on expansion activity, or expansion investment, as opposed to maintenance or replacement activity. The other item that’s worth attention here is the working capital.

You can see, in the first half of the year, that we had an outflow in working capital. That reflects the seasonal nature of our business. We always have, in the first half of the year, a situation where we ramp up our working capital balances in preparation for a busy second half of the year.

So rather than focusing on a movement here, I think what’s more important is to focus on the absolute balances. And if you look at our working capital balances at the end of June, and think about them as a percentage of sales, what you will see is continues improvement over previous years. So this area gets a very strong focus across the business.

It’s one that everybody is measured on, and it’s one we pay a lot of attention to, and, as a result, you’re seeing progress year on year. And finally, moving on to our net debt. Albert gave you the summary in his introduction. We’re ahead of our de-leveraging target. What we’ve shown you here is our forecast year-end net debt position.

Rather than focusing on the mid-year one, which is obviously impacted by that seasonal working capital feature I mentioned earlier, we’re looking forward to year-end. And what we’ve shown you here is our expected movement in net debt over 2016. The big standout you can see is a €1 billion of cash inflow from operations.

So that is that strong earnings delivery we’ve talked about being converted in to cash. It’s also worth highlighting here that we are assuming for this year, that our acquisition activity will be funded by proceeds from divestments. That was the case in the first half of the year.

We spent €150 million in the first half on acquisitions, and that was largely funded by the €140 million of proceeds that we got from divestments. And the final feature on this moment that is worth acknowledging is that we will be spending approximately €400 million on dividends back to our shareholders during 2016.

So where that leaves us with is a position whereby at the end of this year we’re comfortable and we will be at or below €6 billion of net debt. When you think about that net debt as a ratio to EBITDA, it sets us up to be in a position where our net debt to EBITDA by the end of the year is at two times or below.

So the summary for me is that we’re ahead on our deleveraging targets and we’re well on track to move our balance sheet back to normalized levels. And that we’re well set to exit 2016 with a really strong balance sheet. So I am going to hand you back now to Albert. He is going to give you a little bit more color about the second half outlook..

Thanks and leave that slide up there for a moment because that to me is probably the most important slide in the presentation this morning. We went to our shareholders 16, 18 months ago, we asked them to trust us.

We said, we want your money please, we’re going to take that money, we’re going to borrow more money and we’re going to invest in assets that’s great value for your our shareholders.

And a key part of that promise to them was we will pay back that money we borrow as quickly as possibly can to get the debt levels CRH back to where you expect them to be.

And its credit to Senan and his team, may even the team before and did all the people in our group that we focused on that and it provides very strong tight cash management and are well on track to deliver our planned impact ahead of our plan.

Just looking at the outlook for the CRH Group before I talk about where I see us going in the next few years.

We’ve signaled well to with our announcement at the end of October where our earnings levels are going to be somewhere north of €3 billion I don’t know specifically where they are going to be and where it’s going to land it depend on whether how long the season goes, volumes, pricing, whatever. We’ll let you know as soon as we know.

And as Senan has made clear to you the net debt at 6 billion you’re looking at a net debt EBITDA ratio below our normalized levels at about two which is very good to see. That’s going to be delivered by as I said earlier on modest growth continuing in Europe, it’s a slow unwind, but growth all the same.

In the Americas we have a very challenging second half comp, you will recall at the second half of last year there was no winter, in fact we worked all the way through Thanksgiving up to Christmas. We planned to work the Thanksgiving. This year, we plan to work Thanksgiving as well by the way.

With given the pact of growth in the economy, given the pace of growth in construction markets, we still believe the second half performance in the United States will be ahead of the very, very good second half performance of 2015.

And as we said, the back half in the Philippines is positive, good volume growth, good pricing, shows continue to deliver good profitable growth in the second half of the year. So that’s how 2016 shapes up. And now let’s talk a little bit about where actually 2016 leads us on to. This is the foundation for the next few years.

And what I want to talk about is where we’re positioned in our markets and how we see 2017 to 2020 rolling out and the next phase of growth for CRH. Let me start about this year.

This is the foundation, this is a year as we set off delivery and for us talk about delivering our EBIT targets and our cash markets, plus some other interest and things are happening within our business. Our margins and returns are being restored very quickly.

Of course that’s to the strong operations delivery of our businesses, but it’s also about disciplined capital management. In the last three years we disposed off over €1.5 billion of businesses at 10 times EBITDA, and we reinvested that at 8 times EBITDA.

That capital management philosophy has been very supportive of improving returns in our businesses. And the last point, crucially, there, strong cash generation capability. Cash is the life blood, the oxygen of the business. We’re using it now to restore our debt metrics, for sure.

But as always, in the future, we’ll use it for growth, capital expenditure, acquisitions, looking after our shareholders, but, in particular, growing our businesses. And having that oxygen, having that cash going forward is crucial to that growth story.

And I think we’ve proven again our ability, as we have in the past to deliver strong cash generation in our business. If I was standing here this morning and had to invest my elderly mother’s pension fund, the two places in the world, I would invest her meager pension fund would be the United States and Europe.

And, hey presto, look where we make 90% of our earnings. The two parts of the world where we see the most constant stable earnings flow in the next few years, where you can get cash out, and it’s predictable, and you can plan your business, and you have visibility are the Americas and Europe.

And 90% of our earnings are earned in those two geographies. Not only that, look on the right-hand side, we’re the largest building materials player in all of the United States, by a country mile. Also, post the big transactions last year, we’re the largest heavyside player in all of Europe.

So we’re in the right footprint, and we’ve got leading positions. Crucially, we have got well-invested businesses that have the capacity to bring back volume through those businesses that gives good drop-through with leverage to the bottom-line. Our biggest business in CRH, U.S.

materials, is only operating at 70% capacity, thus, it could put another 30% of volume through tomorrow, if the markets were there. Our cement business in Europe are working at less than 70% capacity.

And, as anybody who runs a business knows, it’s that filling up of capacity, where you get that good leverage and drop-through to the bottom-line, that helps deliver those increased margins and those better returns. And it should continue so, if the volumes come through.

So we’re in the right markets, got great market positions, we’ve got the assets ready to go. But where’s the volume going to come from? And that’s about the cycle. And let’s just stop and look at the cycle in Europe and in the U.S.. It’s our contention, and I’m going to discuss it in a moment, is the U.S., is not even yet at mid-cycle.

And Europe, as we all know, is clearly just starting on a very slow growth phase. It will be low and slow, but it’s growth. Just looking at the U.S., and there’s a lot of facts on this page here, but three numbers I want to read to you, 4 million homes underbuilt since 2010, one in every six miles of U.S.

roads in need of repair, and $225 billion of FAST Act highway funding put in place between 2016 to 2020, as U.S. construction activity levels returns to long-term trends, we believe we are going to see a sustained period of construction growth in the U.S. for the next five years, which sets our businesses up very well to enjoy the benefits of that.

Looking at Europe, 400,000 homes per annum in housing starts below the long-term average, 2015 for the first time a decade, EUROCONSTRUCT showed that all 19 countries showed construction market growth, I can’t remember when I last saw that, and over $1 trillion of private money available for investments in European infrastructure over the next decade, up about 35% to what it was in the previous decade.

If you can recall the first slide we showed on Europe, GDP up in all major countries. EUROCONSTRUCT showing increases in 2015 and in 2016, for all of the big 19 countries it measures. And if you look to the presentation today, go to page 39 for those of you have it, look at the volume increases across all our markets.

All of the 13 markets where we do business volumes are up. I can’t remember when I have seen all of those three businesses pointing northward.

And not, for a second saying Europe is in the hockey-stick growth both Europe stabilized over the last 12 or 18 months it is a volume that recovery it is going to be slow, but it’s happening and pricing will follow in time. Look, it’s very easy to stand here this morning and present a great set of numbers for CRH this is a good news day for CRH.

All of the hard work that we’ve done in the teeth of the recession and as we work past that recession doing big deals betting them down has been to get it to this point in time. In CRH we would believe that great companies produce superior performance not just in or two years but over sustained period of time.

And looking at where we have our footprint and looking at our market positions and looking at where we are in the cycle and looking at what we do in terms of generating profitable growth, improving returns and margins and cash we believe the CRH has a great opportunity to capitalize on those market positions in the years ahead. Okay.

So with that that’s the end of the presentation part of this morning. And now going to move to questions and answers. Initially I would ask we go into the room probably give about 20, 25 minutes here in the room. We will have people on the telephone lines and particularly those on line who want to give questions.

So If I can ask you can just raise your hand so the people with the microphones will go around, you can give your name and the name of the institution first and we get to as many people as we can. Thank you..

Good morning. Yassine Touahri from Exane BNP Paribas. A few questions.

Firstly, on would you, there are a lot of political changes in Europe, in the UK, it’s an election year in the U.S., there will be a lot of election in Continental Europe, how do you think this could impact your business? Do you see this as an opportunity? Do you see more infrastructure spending? Or do you see this as a risk? Then, my second question would be on cost inflation.

What we’ve seen since the beginning of the year is that commodity prices have started to increase and coal prices, asphalt costs are rising today. Do you think this could slow down the pace of your margin expansion next year? Or do you think this could be offset by more pricing? And the last question on capital allocation.

We’ve seen that you created an Asia division, does it mean that you’ve got ambition to become bigger in this region through acquisition, or through CapEx?.

Okay. So three questions there. One, discussing the political changes that may be coming in the United States and Europe 2017 with some elections in Europe and also at the end of this year the presidential in the U.S.

and the impact that may have on infrastructure and a question on some cost inflation coming in whether that was with the margins we can manage our margins and the last question the ambition we have for acquisition based on the Asia business. On the first question, with regard to the political changes I think the U.S.

has set its stall out with regard to infrastructure spend, absent what happens on the political stage. And the federal government have committed to the fact that funding and cash in place to increase funding for the next five years.

In addition to that, we’ve seen across the last 12, 14 months 18 states deliver specific stage initials that will deliver about 27 billion of extra funding to highways and road programs again over the next coming years.

It is interesting to note if we add both of those together and look what happened over the last four or five years, because we can be seduced in to thinking that the current environment is the new normal, we spent, in the United States, about $420 billion on roads over the last four, five years, four years.

In the next four years, with the federal money and the state money that’s committed, that’s likely to be closer to $470 billion. So I think we’re looking at a very significant uptick of 11%, 12% in actual dollars of spend available for U.S. infrastructure in the next number of years.

With regard to Europe, of course, a lot of the European infrastructure spending comes from the European Union, and, of course, it comes from local governments. Most of that is focused, over 50% of that is focused on Eastern Europe, and most of that is focused on big countries, such as Poland and Romania.

I don’t think that any of the elections next year going to have a significant impact on that. They are long-term programs that take place over decades, and they’re put in place for seven, eight years, or so, so I don’t significantly, I think it’s going to be a significant difference.

With regard to cost inflation, and what we’re seeing in our businesses. For the first half of the year I’ll actually say, probably, we have seen cost deflation in our business with commodity prices.

And we cover forward a lot of our other costs, electricity, coal, petcoke, oil, et cetera, et cetera, so it tends to evolve over time, we’re not seeing any cost inflation pressures. But normally, we do have a good track record of passing on cost inflation in our businesses, in particular, in periods of better volumes.

In tough periods of volume is more challenging. So I don’t have any concerns in terms of margin compression with regard to any cost inflation we might see in our markets, and with regard to the Asia division, the Asia division really was a reflection of the fact that we had a business of size and scale out there in the Philippines.

The Indian and Chinese businesses do take up a lot of management time, they need dedicated management focus so it’s to reflect that. We have an ambition about growing our businesses in Asia, but very much in line with our long-stated strategy of slowly but surely feeding it out. You’re not going to see a big explosion of CRH investment.

We’re linked with every second deal out in Asia, but that’s the newspapers for you. We have a steady, progressive approach, built over decades, of how we see Asia evolving because of the slow game. And this, just setting up a division, doesn’t signify any change in that strategy. It’s a slow build out..

Gregor Kuglitsch from UBS. I’ve got three questions. The first one is on pricing in Europe. Can you give us a little bit of an outlook when you see that turning, I think it was quite clear still under pressure in most of your geographies in the first half? That’s the first question.

The second question is can you give us some kind of sense, it’s obviously difficult for us to do, as the business stands today, what you think, at the peak, on a pro forma basis, the EBITDA was? So against the €3 billion, do you have a rough guestimate for us, just so we have a little bit of reference point.

And then as we go in to next year, I think you sort of called out, you’ll be back in the M&A game, I think that’s what you said.

So, can you give us a little bit of color as to what kind of direction you’re thinking? Is it rebalancing more away from cement and heavyside, which obviously you went a little bit overweight, or is it more a geographic game? So if you can give a bit of color of what we should be expecting in terms of M&A in to next year, please. Thank you..

Okay, there’s three questions there. Very quickly, on the, the pricing in Europe, you’re right, it remains very challenging. And I do think that what was the pricing is behind us.

What is significant, if you look on page 39, I’m sorry to say, but a lot of the facts are on that page in terms of volumes and pricing with Europe, on the left hand side of the column, you’ll see all the arrows pointing north, all pluses, which is volume. On the right hand side, which is pricing, all the arrows are pointing south.

That just doesn’t make sense. But actually, if you stop the clock and look at where you are in recession, the early stages of recession, normally, and we’ve said this before, you see a scramble for volume as people try to fill capacity. And that tends to come at a little bit of pricing indiscipline.

There are some good markets around where we start to see pricing coming back. And I believe that in this time make sure we would be in a better place and in 2018 we will be in a better place again, it’s a long slow unwind, but I think we’ve turned the quarter but it is challenging absolutely right.

With regards to where we are, with regard to EBITDA and our business of this year versus where we were in terms of peak, it’s a very different business of course and it’s like comparing apples and oranges, it was below 3 billion in terms of peak in where we were plus our business now is completely different [indiscernible] different size, the volumes are impacted otherwise I am not too sure is actually comparable in terms of looking where it was.

And with regards to the M&A and looking at that and where our focus is going forward, you’re absolutely right we’ve taken a shift towards the heavyside businesses but that was opportunity driven and we did say last year we felt that the deals that we did last year on the LafargeHolcim deals were very much three or four years of acquisitions compressed into one deal we saw the opportunity and we basically just executed that opportunity.

We do have a long term strategy I think the balance business is against end use across different products and different geographies, that has not changed and will not change.

Over time it will redress itself because when you make a big step to one direction you’re not going to auto correct in 12 months, it will take time, but overtime what has dealt and delivered for CRH has been having a balanced strategy, it’s help us ride out the recession much better than anybody else, strong cash flow, better balance to returns, better balance in terms of end user exposure and we think it’s the right strategy about business going forward and that’s what we will return to in time..

Thanks. Rob Gardiner, Davy.

Three for me again, it’s brief, but just to go back on the European pricing and the kind of competitive dynamics there just to pick out a couple of markets where you have very large operations like Switzerland, Poland and even the Philippines related to what some peers are reporting, I don’t know if you would just expand on the kind of competitive dynamics in those markets? Two, in terms of again back on M&A you obviously passed on a lot of deals this year I just wonder in terms of where price expectations are now, have they moved, are they reset higher? And just going back on the UK there the Brexit so rather than ask what’s going to happen as a result of Brexit I am just wondering may be how your mind as a CEO changes due to the uncertainty, does it affect your CapEx decisions, capital allocation here, how you think about that? Thank you..

Okay. They are three good questions there, Bob, I have to say and specifically going back in the pricing in European and you mentioned Switzerland, Poland and the Philippines and you’re right, we have lost market share in Poland and we’ve lost market share in Switzerland and we’ve lost market share in the Philippines.

Now, most people I know in CRH know that is, just goes against the grain we don’t give away market share. But when I see the fact that and I take a country like Poland as a good example. Poland this year will have about 15.8 million tons of cement which is about 2% up on last year. That’s the same level of cements demand as in 2008.

The price of cement is 25% lower in Poland today than it was in 2008. And since then there are cost increases, increased regulation, increase of duplication, all of that has come through our businesses.

So I believe as a chief executive of business we have to earn a price that helps us generate a level of profitability because return for the investments that we’ve made the hundreds of millions of investment we’ve made. You referenced other people who have produced results, we’re down 9% on our volume in a market that’s up 2%.

All those are up double-digit percentage but their prices are in the toilet. I have no idea what they are at? But I know in running a business to the long term value for shareholders I have got to get paid for the product that we’re selling. So, we’re patient and we’re showing forbearance, it won’t last forever, but we’re doing what we can.

And that’s the same story in Switzerland by the way and the same problem, people chasing short term gain by dropping prices that is not conducive for us running a long term business generating terms. In the Philippines it was the same case in the first-half of the year.

We held our price in fact we increased price when others dropped us and one player in specifically decided to increase our volumes. Now they came back and they’ve increased their price back to where the normal prices for everybody else in the market and the volume is coming back.

So it’s about strong leadership in a markets where in markets we’re not the price leader but we’re trying to show a solid price leadership in terms of getting returns to our shareholders I hope it will come through in time I believe it will. That’s what’s behind the differences you’re seeing that we’re talking about.

We’ve got M&A you’re exactly right that we cut on a lot of deals in the current year. And in the last month or so there was two very big chunky deals in the U.S. both of them on price expectations and was in the right time presenting, we wouldn’t have done them because at the moment we’re focused on de-leveraging.

And I would have to say it’s ever been [indiscernible] I always hear we spent too much for business. You know that said that we’re always [indiscernible] that we paid too much. I will never pay, we will never pay for our synergies to all the people, we will never do that.

And I think the deal flow is good, there is a lot of deals out there I think we’re in period whereby many companies and groups are going to have to consistently de-leverage and sell businesses and I believe we’ll be in those [indiscernible] money available to continue to do the deals.

That’s a lot of deal flow out there and I think prices are pretty much exactly where I’d expected them to be. With regard to how I would do the UK and looking at here at the moment, we haven’t seen any dramatic move in nine weeks since the [indiscernible] and the house builders are continuing on to build and making all the right signals.

They’re continuing to finish out what they’re going to do. I think there is little impact and visibility that we have through 2016 so in terms of that part of the market in terms of the non-res market share that’s a little bit soft with the high end things here in London but [indiscernible] but nothing significant, nothing dramatic.

And infrastructure I mean very firm commitments given by the government that they are going to continue with those major infrastructure programs that we’ve seen in terms of high speed too. I was in England in terms of one of the things I’ve asked. So from our point of view we have a heightened level of awareness and caution for sure.

And it doesn’t stop us pulling back on projects it just makes us question a little bit more earnestly and follow the trends a little bit more carefully. And I think everybody will be in the same way. This gain has yet to play out and it will probably be in the medium term rather than the short term. We should keep an eye on them..

Thank you. Good morning. Arnaud Lehmann from Bank of America Merrill Lynch. I have three questions if I may, first few a general one for you Albert. You’ve done -- the portfolio was quite turning, you’ve done the acquisitions now you’ve almost done the de-leveraging. You’ve explained clearly your view of the cycle for Europe and the U.S.

What’s left for you to do as a CEO in the next one, two, three years beyond just running the cycles? That’s my first question. My second question is just a follow up on M&A, you expressed your interest or you said the assets were in good shape in Belgium and the U.S.

from HeidelbergCement and steel, while obviously you didn’t proceed with these acquisitions. Do you have any comments to make on those? And lastly, you said your strategy is more about pricing rather than volumes. However, when I look at your Americas metals business it seems like you have more volumes and competitors, but maybe such less pricing.

So could you please comment on that?.

Okay, three questions there. First of all, the [indiscernible] business is kind of about the CEO you just how this [indiscernible] I am just a guy passing through here. I represent the seventh CEO of CRH and I’ll be eighth and ninth and tenth it’s about the companies not about an individual.

What I did say to you was CRH regardless of to be a great company and great companies produce superior performance over a sustained period of time. We have a good cycle. We’re in the right side of history at this moment in time and look at the cycle. You’re right we will pay the cycle well.

But we’re generating a lot of cash, as Senan has explained, and that cash will be put to use in terms of acquiring further businesses, increasing the breadth of our businesses, the depth of our businesses in creating further value for our shareholders. That’s what we as a team are focused on in CRH. That’s the future.

With regards to those Belgium assets you refer to, yes, I think they were very fine assets. We had a good look at them. We spoke to Heidelberg about them, but at the end of the day they decided to sell them to Cementir. And I wished Cementir very well. They’re a good player, they’re a good operator, they run their businesses very well.

And I think Heidelberg got a good price. I wish them both very well and what they did. With regard to the U.S., yes, our volumes are ahead. I wouldn’t get too concerned about the volume increases in the first half of the year. It’s very much the slow end of the year. I would look at the full year.

So plus we’re seeing sort of mid-teen growth in the first half of the year, overall we’re looking at sort of the 4%, 5%, 6% volume growth at best for the full year, which is more in line with everybody else. I would say that the weather up in the North and the North East was very favorable in the winter season, which is where we are strongest.

So we are the ones who would benefit most because of that. I don’t think it signifies anything else other than that. And in terms of the cost dynamics that you see, again, that’s over a 12-month period. You find one or two or three months where we’re doing a lot of base work, the average price drops down, rather than the high value-added stone.

It doesn’t indicate a different change in construction, it’s just the type of material you’re supplying at a particular time. And particularly with lower volumes, it can give you, screw your percentages. I’d watch it over the full year, rather than the six months. .

John Fraser-Andrews, HSBC. I want to carry on, on American materials. After the very strong performance in half 1, and I note what you’ve just said about the weather in the North East, but you also said earlier that your backlogs were very good that you haven’t borrowed from the future in terms of what’s happened in Q2 and current trading.

So can you indicate where those backlogs are? Are they consistent with that 4% to 5% volume growth in that American materials? Can year say, within half1 to what extent was that very strong EBITDA increase bolstered by any stock profit on your bitumen purchasing program? And can you give a comment on where the contracting margins are trending in that materials business?.

Okay. The first and the third questions are yes/no answers, so I can just give you, and I can go in to the bitumen prices in one second, in the middle. First of all, in the backlogs, just to confirm, the backlogs are exactly where we would expect them to be.

They’re pretty much in line in some of the business, and ahead of last year, and are consistent with the volume guidance we’re giving for the full year. So they’re in pretty good shape at this point in the season. With regards to the contracting margins, contracting margins are actually ahead, again.

Again, good to see that because, again, it really attests to, I suppose, the strength that contractors feel about bidding work going forward. That’s the part of our business where we’ve got the longest lead times, most of our work is almost 12 months ahead. And the margins are ahead in that business at this moment in time.

Specifically about bitumen, and what’s bitumen, the benefit we got with lower bitumen in the first half of the year, again, it’s over the full year. We do most of our bitumen in the second, like this quarter and next quarter.

But specifically to your question, everybody has seen the price of oil for down and, indeed, the price of bitumen reduced during the first half of this year, our customers, too. Most people who follow our business very well in the United States know that our asphalt business is a significant user of that bitumen.

It’s actually half of our total energy costs bill. We spent about €900 million on bitumen last year, but you’ve got to slide and dice that. About one-third of all our contracts for asphalt have got these clauses in them called escalators.

And that means if there’s a move in the price of bitumen we have to automatically pass that on or give that benefits to our customers, because it’s the major cost component in asphalt. So immediately if there’s a price that automatic past precaution so we don’t have a benefit there.

Another one-third of our asphalt work is short term bid work, so our bidding work today that reduce sometime in the next 10 or 14 days and actually again there is a natural flaw there because you’re bidding on the current price of bitumen. So you’re seeing that, people are seeing that coming through.

The last one-third, you rightly say, is the piece we’ve tried to hold on to. But I should say in time it’s just back into the marketplace.

We don’t just dump all our winter-fill as people see onto particular market it’s spread out over the whole year and remember it’s less than half of our total bitumen needs in the full year going to a vertical, it’s an advantage, but not as much as people think.

So in a full year basis I would say you would look at the benefits you have of reduced energy because it’s not just about bitumen, the other half comes through so another 25%, 30% comes from diesel and gasoline and electricity, these prices are well known and customers will demand them passed through to them in lower logistics costs or whatever.

So our advantage in the full year basis is measured this year in tens of millions of dollars not hundreds of millions.

It’s good we’re glad to have it, but it’s nowhere near significance people might think and in the first half of the year you can imagine it’s a lot less than that due to the fact that we don’t have big volumes, the big volumes come through and had to..

Robert Eason from Goodbody. Just a few questions. Just in relation to U.S. products I have two questions, just on the non-res market, what is your thought on that you know there are some talking about projects being delayed ahead of the presidential election, so just your general commentary around U.S. non-res markets? And second with U.S.

products compared to the last couple of years the drop through in terms of organic growth just down a bit in the first half may be just go through the dynamics with us and the expectations of drop through the volumes continue to come through that business.

And coming over to Europe and European materials and your consistent comments about the pricing environment in European materials and we have to wait for it.

In terms of that drop through coming through like should we start stepping up the drop through into the second half or are we really talking about 2017 and 2018 before we get that kind of real strong double-digit drop through. I am sorry, just one financial question.

Just kind of the note 12 you talk about acquisition costs and there are 25 million last year, there were 1 million this year and but you just simply say it does not include ongoing kind of inspiration costs, can you just give us a flavor of what those ongoing inspiration costs were in the first half and what we should be looking in for the full year and is there any carry over into 2017..

Before I pass the acquisition question to Senan in a moment. First, I have that conversation with Mike I kind of start booking price increases for-- so that we find that to be the most consistent external guidance in terms of [indiscernible] non-res construction as it actually follow the good six to nine month lead time.

I know there is some contradictory information out there from [indiscernible] we actually kind of figure out that as talking to developers, talking to contractors, get all of this very consistent what we’re seeing with ABI so that 3% to 5% growth seems to be going forward, it seems to be in commercial, lodging, office space, warehousing and that seems to be the area for us continue to grow our order books are good, our purest non-residential business is all capital bidding envelop and some of our products businesses the order books for those businesses look pretty strong for the remainder of the year.

So it looks to be in good shape. So nothing -- any sign of pull back there at all.

As I mentioned products business, you’re right we saw the drop through in the first-half of the year was 11% leverage was supposed to what you would expect to see from 15% to 20%, that’s a product mix issue more than anything else with the -- in our Americas products business and APG pretax which is kind of a heavy industrial infrastructure type business and also we have OBE.

What we did see in the first-half of the year with a higher than anticipated spend on U.S. growth and infrastructure they performed better in the first-half year, they tend to be more lower commodity type margin of that products.

So in that compressed six month period they’re the ones that perhaps pulls down that drop to, it’s just a mix issue over the 12 months it should even itself out over time.

And third issue with regards to European pricing, seriously I would say from -- when I am saying to you on the stage is there at the moment I look there we’d like to talk about things that are being delivered for rather than most common.

I hope I wouldn’t be saying I think didn’t think this coming, didn’t need this coming but I think it’s going to take time, it’s going to patchy ultimately take that from back but [indiscernible] wait before talking about before bookings into any numbers..

It’s Will Jones from Redburn. Three as well, if I could at least. The first is on the UK volumes in the first-half I think it was at plus 21% number on to then for the first-half.

Is that a one off or is it something around how you’re running the strategy in time that please? And second was I think in the annual report there was a reference to it an ongoing dispute with [indiscernible] financials and regarding the final payment for that deal.

Can you just update us on where that is at please? And then last one is more [indiscernible] one around distribution which obviously given everything with LafargeHolcim and CRL in the last couple of years just taken bit of a back seat if you like in terms of development inside the group.

How do you see that business in terms of how big it needs to be, or any other measure over the medium term, both the U.S.

and Europe just strategy related to that area?.

We’ll see questions two which I am going to answer, one which I won’t. I have no intention of probably going to start talking ourselves and LafargeHolcim on an open microphone, so that will be out in the fullness of time.

And with regards to the cement volume you referred to that is periodically and we were required and happy to do so to supply cement to the LafargeHolcim as part of disposal which is why it skewed our volumes much higher than they should be. Our real cement volumes are up 4%.

So there is an internal -- it’s just there is a one off we have to supply volume perfectly [indiscernible] to stay where they were doing they continue this side of it. And with regard to distribution, Europe distribution, I think our American distribution as well I have to say we actually and distribution is a key part of what we have going forward.

I mean have done of course an option to acquire a very significant business in France coming up in the next couple of years. We have a participation in Samse which is a big business in the eastern part and southern part of France, very fine business, generates good return. France of course is a difficult place construction wise.

But the residential market is strong and in particular there is a one part of France where we do see growth in residential going forward absent any kind of a difficulty to the overall French construction market hit it and south and the east.

So distribution remains core to our business it’s the key focus for us and in a couple of years time we’ll be talking here hopefully about stepping up that investment, which seem quite investment of €600 million to €700 million going into that again. So it’s key part of what we do, I wouldn’t just misinterpret the last 12 months..

Christen Hjorth from Numis. Just a couple from me.

Can you give a bit more color on the additional synergies which have been identified in LafargeHolcim assets, and also, the scope for additional synergies going forward versus the target? And secondly, CapEx at 80% of depreciation, how do you see that playing out for the next couple of years?.

Okay, I’ll pass CapEx to Senan in a moment, to talk about that. With regards to the additional synergies, mainly coming through an improved process and greater cross-selling between our businesses.

If you can recall, a big part of what we said about the footprint of doing the LafargeHolcim deal was we saw great synergy between our businesses, how they would fit together.

And I think, perhaps, we’re seeing more savings, in particular, which we’re seeing between our Belgian and French businesses than we would have anticipated, and also, between our Canadian and U.S. business, which has allowed to step up the improvements in the course of this year.

With regard to making any further statement with regard to synergies, I think what we’ll do is at the end of this year, when we report our results for 2016 in spring of next year, we’ll update you in terms of where we see the targets, as we achieve them. Senan, in terms of the CapEx, I think 80% is a measure over the first six months.

So, obviously, you need to extrapolate that over a longer period of time. I think it’s probably a fair reflection to think about our CapEx as being in line with depreciation, so at about 100%. We should certainly be in the 90% to 110% range.

In terms of our CapEx, I think it’s worth highlighting the fact that 65% of our CapEx today is going into Americas business. So you would expect that in a business where we’re closer to full capacity. And then for example, in our European heavyside business, where we’re not at full capacity, you would have a lower amount of CapEx.

So I think the fair number to think about is about 100% depreciation. And in terms of where it’s going obviously, it’s going more and more, but it’s going into expansion. We are obviously looking Asia as well in terms of CapEx, going forward. That will be something we’ll come back to you with in the future.

I’m just conscious we, I need to give some time for people on the telephone lines, [indiscernible], and also the wires. So we might take one or two more questions from the floor, before we go down the lines on the wire side..

Glynis Johnson from Deutsche Bank. Just one question, if I may then, please, and it really follows on the CapEx, but in more general terms. You talked about a 70% utilization in U.S. materials, but obviously you have a number of products within that.

I wonder if you can give us a bit of color about the different product areas, either relative to each other or relative to that 70%, so we can see where you are more strained in terms of the capacity available..

Okay, as a general overall comment with regard to capacity, first of all, it’s more regional differentiation than actual within the actual project, within the product itself.

What I would say to you is that capacity is something, we’re not measuring capacity as three shifts, seven days a week, because you can’t sustainably run a business on that basis. We look at a capacity probably about 2 in a quarter, or maybe 2.5 as the absolute maximum we can get.

Looking on that basis across all our material business lines on our materials business, OMG business, so aggregates, asphalt, ready-mixed concrete, and, indeed, our precast business in products, again, at 70%, there’s plenty of headroom there regard to it, going forward. The area where we might be tight in capacity in our products business.

And that would be regional, were we’ve seen the strongest of growth, which would be in the Southern States, and particularly out west. And, in fact, we’re building capacity there. But back East, we still have plenty of capacity.

So maybe if we looked at a little bit of Florida, Texas, maybe as you go further west, and in to the Pacific Northwest, that’s where the capacity might get a bit tighter. But again in the city, we’re actually constructing factors for the future there as well.

So, all told, I think we’re still comfortable with the figure we’re going to you of 70% of the big profit earners in the materials business across all the range of businesses, across all the geographies would have that capacity spare. We might take one or two more questions from the floor, before we go down the lines on the wire side..

Aynsley Lammin from Canaccord. Just one very quick one on kind of acquisition spend of the leverages that’s in expected.

Just give us a feel for what level of acquisition spend you would be comfortable with, what we should expect in 2017 and 2018 or the other side what kind of range of net debt to EBITDA you’ll be targeting?.

Okay. I have been very consistent to over the years and part of our investment offering is looking at net debt to EBITDA that we’re very comfortable with and the normalized level, as Senan has said around will be about 2.2 times or so.

And looking at that level where we are at the moment, we’ve no intentions stepping on net debt back up between half which was after LafargeHolcim deal.

So the key within the comfortable and historically normalized level within CRH we would anticipate 2017 if we got a debt level back to where we’ve indicated which we think we will, probably somewhere in the region of 1.5 billion to 2 billion will be appropriate in terms of our own debt metrics. All right.

So I am just going to may be move if you don’t mind, to the telephone lines, in terms of any calls or indeed if any questions from the web I might take those because I know people are frantically waving me to stop this part of the call. Thank you very much indeed. Okay. First, and there are number of questions coming here.

First question on capital allocation may be I might talk about, and Senan, you might in on this question. On capital allocation how do you prioritize capital expenditure versus dividend? Which is good question in terms of -- well, I don’t think at this moment in time anybody buys CRH stock purely for dividends, we’re not of dividend yield business.

We’re a business that grows its bottom line and provides both in the stock price. And I think everything we would do is supportive of that. We see deals out there that we can buy businesses at price that create value and provided we consistently see that going forward we will be in the acquisition game. I will be very supportive of expansion CapEx.

And I’ll ask Senan to help in a moment, in terms of where the pace of that actually is. If I look about our capital expenditure going backward and indeed going forward the best returning investments we have in CRH is internal CapEx.

We’ve been very consistent of us and the more CapEx we can put into our businesses to improve our processes, to expand our footprints the more we will do. So actually we will prioritize both of those because they bring growth. Of course we do recognize that the dividend is very, very important as well which is why we’ve shown that this morning.

Senan in terms of CapEx I wondered you might just talk about, historically, what it’s been and as we look at it going forward..

Yeah I think look, we’ve talked about CapEx earlier on a couple of times in the, again the ongoing guidance is that our CapEx going forward you’d expect it to be in the 100% plus or minus on depreciation and more and more obviously there is an emphasis around expansion CapEx.

I think you can all rest assure that there isn’t any CapEx deals that come to Albert and myself that get turned down because of any obsession with using debt targets. So we’re investing where required in our businesses and supporting growth to do that and I think that certainly continues to be the case.

So if you go back and get my view on that question, CapEx obviously in terms of good returning CapEx is our first priority having the capacities to do acquisition than obviously is what Albert has talked about secondly.

And this year obviously our focus was to get our balance sheet back and healthy so that we would be in a position to be able to do that in 2017 and beyond..

I’ve controlled the questions, so you get the next couple.

One here working capital of sales has improved again is that sustainable and do you think you can improve form here?.

Again as I talked about working capital as a percentage of sales it’s something that, it’s a continuous journey, it’s a focus around the business. But I would say I mean Albert gave some credit to some finance people earlier on this goes across the business. So everybody in the business focuses on working capital.

It’s actually part of our bonus theme, a part of our management. So everybody is focused on around the business. Albert talked to that cash been [indiscernible] and so all of our business leaders all think of that cash and run their business, has been focused on our working capital. So, all of our business continues to grow.

I think we have opportunity to become more and more efficient in terms of the way we operate and it’s what you’ve seen promised is that continuous improvements are only around CapEx as a percentage of sales continuing to improve.

That’s what we’ve shown you throughout 2015 and obviously we’re still on that journey in ‘16 and it will continue to be a focus half to 2016 as well..

Well for me a good question here, it says talking about the -- give me a sense of what the strategy of CRH is going to unfold, what’s your next big deal or deals coming from in the next few years ahead.

We have been very consistent over the years talking about the balance spot we’ve had, the CRH balance portion of the end use and marks and products and I’ve been very clear about that.

And I suppose if I look at some of the deals that were of interest to us during the course of this year, it was a very big distribution business in the United States, which we’ve passed on because of price and timing.

But that was a nice business, that’s indicative of how we feel, the strength we feel about and it continue to invest in the United States economy, it’s a great place for the business. There was a very big heavy side business from the U.S., which have been very good to our business if we [indiscernible] price that made sense to us.

Again, we couldn’t but again an indication of plugging back into the heavy side business in the United States, which we see as a source of sustainable growth going forward.

The question I asked from somebody about distribution the fact that we’re focusing on -- we’ve a very big deal coming our way on French distribution hopefully in the next two or three years. We have faith in distribution in Europe, it makes very good returns, margins are ahead of that business for the first-half of this year.

Again, looking at that so it’s really filling up the strategy in areas where we have faith in our business and we’ve a proven ability to deliver profit and improve those business and building out our footprint, running the model out in geographic on the vertical integration basis.

I do think of course the challenge with our business is we wouldn’t have to continue to step out. It’s interesting if we go back 10 years in time and look at price of our business, it didn’t exist 10 years ago.

How small was Europe distribution 10 years ago? How small was our OBE business 10 years ago? How small was our APG business 10 or 15 years ago? All fundamentally important parts of our businesses now, we have great growth vehicles that are there that may not be immediately obvious to you.

Our life side business in Europe didn’t exists 10 years ago, it’s now €1 billion, 100 million EBITDA business. It’s based on innovation and growth, searching new markets and actually that is the trend that it’s going to continue in our markets and we have to invest in those trends going forward.

So I think there is a continuation of filling out our geographic spread, continuing with the vertical integration because we get very good returns but always productively looking for the associated businesses side in the construction market.

But as the market is changing and we have to adopt those changes in the future as we have done over the last decade and the past. I think we’re ready for that. And we’re waiting and there is one more call in there [indiscernible] okay, take it..

We have a question from Mike Betts from Jefferies. Please go ahead with your question..

I have two questions if I could please. I think you talked about your volume guidance for the year, 4% to 5%. Can I ask what you’re thinking on price? And I think you touched on it a bit sort of more base material, but the 3% obviously in H1 is somewhat low than the 7%-8% your competitors are achieving.

I mean do you think you’ll get that high for year? Or do you think 3% is a better glide. And then secondly, in the [indiscernible] cement plant that’s out in Canada, could I just revisit that and ask do you now see that as a threat or an opportunity? I mean an opportunity I guess [indiscernible] potentially in the U.S.

but maybe a stretching Canada and how you planning to deal with that? Thank you..

Mike, and just to be clear Mike is talking about the U.S. market there, referring to the fact that our volumes were ahead and our prices were ahead by 3% when others were reporting a price increase of maybe 6%, more 6%, 7%. Again, I suppose, just be careful about looking making long-term judgments based on the first half of the year.

We will guide you towards that price increase that we’re indicating, so 3%, 4% for the full year rather than anything higher than that. And then we seem to be, my opinion, in that sort of early mid-cycle phase of the U.S. where we’re looking at volumes up 3%, 4%, pricing, on average, about 3% in terms of our products. It’s to do with mix, of course.

But, generally speaking, I would say it’s across the range, about that level. Specifically with regard to McInnis cement, and just to fill everybody in the detail, this is new cement plant that is being constructed out in the very Eastern Seaboard of Canada, which will bring new capacity on to that part of Canada.

And the question is will that impact upon our business at this year or next year or year after that, either in Canada or North America. That business is not up and running yet. And our business, as I said, in Canada has shown good growth in the first six months of the year, volumes and prices are ahead.

With regards to what it means for the markets going forward in the future, well, I can’t speculate. All I can tell you is that there are imports of cement all along the Eastern Seaboard of United States, and the price of cement in the United States is $10 a tonne higher than it is in Canada.

The cement plant was built on water, with the specific capability to export. I’ll let you draw your own conclusions as to where most of that cement may end up. Okay, I hope that answers your questions, Mike. Just returning back to two questions I have on the wire.

One here, topical question, Senan, the FX impact in 2016, what do you think, given the weakness of sterling, that will be for CRH for the full year, please?.

Yes. So, FX, obviously, sterling is our biggest factor. But if you look around our business, at today’s exchange rates, if you were to apply them to our business and look out to the second half of the year, probably talking in or around EUR80 million of FX headwinds, the majority of that in sterling.

Again, using today’s exchange rates, you’re probably talking about EUR50 million of that headwind caused by sterling.

So as you remember, or look at sterling, average exchange rate 2015 to average exchange rate 2016, assuming today’s price holds for the rest of the year, we’re talking about a 12%, 13% devaluation in sterling when you apply that to our UK earnings. That’s what you end up with..

And just a last question here, because I’m just, they’re winding me up here at the very end here.

Just in terms of the EUR1 billion cash flow versus EUR3 billion, given what we’ve done in previous years, why that reduction in cash conversion in 2016?.

Yes, okay, I guess, looking at that conversion between EUR3 billion EBITDA and EUR1 billion this year, I think it’s a very strong conversion. If you go back to 2012, 2013, 2014 there’s a couple of features that certainly have changed in our business since then.

The first thing is that our level of CapEx now, obviously, is much higher than it was back in those years when we were, obviously, minding our CapEx, or constraining our CapEx. The second thing to bear in mind is that our debt levels, our leverage levels are higher now.

So I think in 2014, we would have been at a net debt number of about EUR2.5 billion, today, we’re obviously on track to be at EUR6 billion or below at the end of this year. So, obviously, that drives the higher gross debt level, drives up our interest cost.

And then, the other feature, I think, is that our effective tax rate has gradually gone up over the last number of years as the mix of earnings we make in dollars has increased..

Thanks Senan. I’m just going to conclude things then. We’re just right on the time, it’s 9:45. I just want to thank you all for your time and your attention here this morning in the room, and, indeed, those who have taken the time to watch us down the line.

The next time we’re going to talk to you officially, of course, is our interim results, our IMS statement, excuse me in November. And if there’s any questions, or any things that have not been addressed fully, I’d ask you to please contact our IR department. Frank Heisterkamp, our Head of Investor Relations, is in the room here at the moment.

We are happy to again share with you more detail, if you want to do that as well. So, thank you again for your attention. Thank you for your time. And we will talk to you all again in November. Thank you very much..