1 Institute of Chartered Accountants in Ireland, October 2007 Institute of Chartered Accountants in Ireland CRH Acquisition Success Myles Lee Finance Director

Institute of Chartered Accountants in Ireland, October 20071

Institute of Chartered

Accountants in Ireland

CRH

Acquisition Success

Myles Lee

Finance Director

CRH plc

October 2007


CRH OriginsCRH Origins

1970 merger of Cement & Roadstone formed Cement Roadstone Holdings, later CRH

Rapid Irish growth in 1970s but CRH a big fish in small pond – 95% of business in Ireland

Experienced and ambitious management team with strong cash flow to deploy

Strategy evolved - invest at home to be the low cost producer; grow by acquisition o/seas

In late 1970s – began to actively seek opportunities outside Ireland


CRH GrowthCRH Growth

1970s €26m€26m €43m16 acqs

€43m16 acqs €325m €325m 62 : 33 : 562 : 33 : 5

SalesAcquisition

ActivitySales

% Balance*IRL:Europe:US

* Basis: Sales # 2000 – H1’2007

1980s €325m€325m €440m49 acqs

€440m49 acqs €1.3Bn€1.3Bn 19 : 64 : 1719 : 64 : 17

1990s €1.3Bn€1.3Bn €3.8Bn189 acqs

€3.8Bn189 acqs €6.7Bn€6.7Bn 9 : 36 : 559 : 36 : 55

2000s €6.7Bn€6.7Bn €10.9Bn#

402 acqs

€10.9Bn#

402 acqs Now €20Bn+Now €20Bn+ 7 : 41 : 527 : 41 : 52

M&A part of CRH DNAM&A part of CRH DNA


0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

1970 1974 1978 1982 1986 1990 1994 1998 2002 2006

Delivering Superior Performance ….Delivering Superior Performance ….

Growth Index: 1989 = 100

PBT+20%

EPS+17%

DPS+12%

20% CAGR in Total Shareholder Return since 197020% CAGR in Total Shareholder Return since 1970


International Building Materials Group; Market Cap c.€14bn; Top 6 in sector

Now in 30 countries; 3 continents; 3,300+ locations; 80,000+ people

Annualised Sales over €20bn focussed on three core businesses

Primary materials

Value-added building products

Building materials distribution

Evenly balanced across geographies, products and sector end-use

Listed Dublin (CRH.I), London (CRH.L), NYSE (CRH); Eurotop 300 stock

CRH TodayCRH Today


Three Core Businesses – Three Core Businesses – Focused DiversityFocused Diversity

2006 Sales €7.7Bn

Cement/RMC/Concrete Products 31%

Aggregates/Asphalt 36%

Contracting Revenues 33%

Primary Materials

2006 Sales €4.2Bn

B Merchants - Europe 47%

DIY - Europe 19%

Specialist Dist - US 34%

Distribution

2006 Sales €6.8BnConcrete Products 60%Clay Products 9%Glass Fabrication 9%Insulation 6%Const Accessories 6%Building Envelope 10%

Building Products


Geographic PresenceGeographic Presence

Broadly 50/50 balance between Americas & EuropeBroadly 50/50 balance between Americas & Europe

30 Countries

All 50 US States

30 Countries

All 50 US States


DevelopmenDevelopmen

tt

StrategyStrategy

DevelopmenDevelopmen

tt

StrategyStrategy


Clear StrategyClear Strategy

Stick to core businesses in building materials - but broad

Invest at “home”; be the low cost market leader

Develop “overseas”; create platforms for future growth

Generally mid-sized deals with some larger transactions

Negotiate deals that meet sellers needs ... and our needs

Rigorous approach to evaluation, approval and review

Objective is to maintain and develop a balanced portfolio

All underpinned by strong governance, prudent financing, transparent reporting

Twin imperatives ... performance and growthTwin imperatives ... performance and growth


Development TeamsDevelopment Teams

Multiple development teams embedded within existing operating units

Each team has a mix of professional skills and operational experience

Reporting to and directed by long-serving senior line managers

Responsible for identifying, evaluating, concluding and integrating opportunities

“Living with the consequences” drives rigorous evaluation

Central HQ-based team targets new regional and product opportunities


Devolved process - but rigorous and controlledDevolved process - but rigorous and controlled

Acquisition ApproachAcquisition Approach

Integration• Approach tailor-made for each deal

• Implement CRH MIS, reporting, budgeting, cash and capex controls

• Transition to CRH Best Practice

• And then pursue growth plans

Integration• Approach tailor-made for each deal

• Implement CRH MIS, reporting, budgeting, cash and capex controls

• Transition to CRH Best Practice

• And then pursue growth plans

Evaluation• Rigorous qualitative operational review process and due diligence

• Evaluation based on prudent margin, cash flow, term value assumptions

• Strict Board approval process, with subsequent 3 year look back

Evaluation• Rigorous qualitative operational review process and due diligence

• Evaluation based on prudent margin, cash flow, term value assumptions

• Strict Board approval process, with subsequent 3 year look back

Courtship/negotiation• Patient approach recognising evolving owner circumstances

• Deals tailored to meet varying owner (and our) needs

• Upfront clarity with regard to post-acquisition priorities

Courtship/negotiation• Patient approach recognising evolving owner circumstances

• Deals tailored to meet varying owner (and our) needs

• Upfront clarity with regard to post-acquisition priorities

Identifying deals• Ongoing contact with extensive 25 year+ target database

• Each deal done opens doors to further opportunities

• CRH scale ensures access to all larger industry transactions

Identifying deals• Ongoing contact with extensive 25 year+ target database

• Each deal done opens doors to further opportunities

• CRH scale ensures access to all larger industry transactions


Acquisition Process - Key GuidelinesAcquisition Process - Key Guidelines

Seek well managed businesses with good market positions

Maintain continuity of contact with potential targets

Communicate upfront CRH post-acquisition objectives

Set realistic timeframe and targets – no blue skies

Maintain control of process and advisers

…….Always remember #1 priority is to create shareholder value …….

……. Post acquisition - Above all don’t make it worse …….……. Post acquisition - Above all don’t make it worse …….


Americas MaterialsAmericas Materials

Strategy in ActionStrategy in Action

Americas MaterialsAmericas Materials

Strategy in ActionStrategy in Action


Americas Materials – Growth StoryAmericas Materials – Growth Story

First US acquisition in 1978 in concrete products in Western states

Though US aggregates/asphalt sectors a natural focus given Irish expertise

Took till 1985 to find a suitable entry point with acquisition of Callanan

Significant position in Albany region of Upstate NY, sales US$77m

Production of 2m tons aggregates with 289 employees


Americas Materials – 20 Years of GrowthAmericas Materials – 20 Years of Growth

Development Spend, Sales

0

125

250

375

500

625

750

875

1,000

1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Dev SpendUS $M

0

500

1000

1500

2000

2500

3000

3500

4000

Sales US$M

Mt HopeNJ

TilconNew England

NY/NJ

Thompson McCullyMichigan

ShellyOhio

US AggregatesWest/Central

MountainCompaniesKentucky

# of# ofDeals 1 1Deals 1 1 00 11 00 00 00 11 22 44 66 66 44 88 1515 1717 1616 2020 1100 1212 1313

CallananNY

SE JohnsonOhio/Michigan

1985 – 2005: 137 acquisitions at a cost of US$4.3Bn1985 – 2005: 137 acquisitions at a cost of US$4.3Bn


NY / NJ$0.7 Bn Sales

Since 1985


Since 1985

New England$0.6 Bn Sales

Since 1988


Since 1988


Since 1985


Since 1985

Central$1.2 Bn Sales

Since 1993


Since 1993


Since 1985


Since 1985


Since 1988


Since 1988

West$1.4 Bn Sales

Since 1995

West$1.4 Bn Sales

Since 1995


Since 1993


Since 1993


Since 1985


Since 1985


Since 1988


Since 1988

Americas Materials – End-2005Americas Materials – End-2005

Sales $3.9Bn from 4 regional divisions; strong market shares and aggs reserves

Vertically integrated; highway construction activities as an outlet for aggs/asphalt


Since 1988


Since 1988


Since 1985


Since 1985


Since 1993


Since 1993

West$1.4 Bn Sales

Since 1995

West$1.4 Bn Sales

Since 1995

2005 Volumes

Aggs 147mt

Asphalt 37mt

RMC 6.5m m3

2005 Volumes

Aggs 147mt

Asphalt 37mt

RMC 6.5m m3


Americas Materials – APAC OpportunityAmericas Materials – APAC Opportunity

APAC was a division of Ashland Inc, primarily focussed on chemical sector

Ashland commenced a silent auction process in late ’05 / early ’06

We engaged and signed a exclusivity agreement in mid-June 2006

Then mobilised CRH resources and undertook extensive due diligence

Concluding CRH’s largest ever acquisition by end-August 2006


At Acquisition Net of Disposals

Consideration $1.3 billion $1.1 billion

Sales (LTM June 2006) $2.9 billion $2.4 billion

EBITDA (LTM June 2006) $220 million $190 million

APAC – New Americas Materials PlatformAPAC – New Americas Materials Platform

Major expansion into midwestern and southern US states

Significantly increased US aggregates and asphalt positions

Substantial scope for administrative, operational and purchasing synergies

With selective disposals to increase the materials focus …

… and aggregates/other downstream acquisitions over time



Since 1988


Since 1988


Since 1985


Since 1985


Since 1993


Since 1993

West$1.4 Bn Sales

Since 1995

West$1.4 Bn Sales

Since 1995

Americas Materials – End-2006Americas Materials – End-2006

Annualised sales now c.$7Bn across 5 regional divisions

1985 to 2006 – 157 deals at a combined cost of $5.7Bn


Since 1988


Since 1988


Since 1985


Since 1985


Since 1993


Since 1993

West$1.4 Bn Sales

Since 1995

West$1.4 Bn Sales

Since 1995

‘05 Vols + APAC

Aggs 176mt

Asphalt 65mt

RMC 7.3m m3

‘05 Vols + APAC

Aggs 176mt

Asphalt 65mt

RMC 7.3m m3

APAC$2.4 Bn Sales

Since 2006

APAC$2.4 Bn Sales

Since 2006


Since 1988


Since 1988


Since 1985


Since 1985


Since 1993


Since 1993

West$1.4 Bn Sales

Since 1995

West$1.4 Bn Sales

Since 1995


2006 Development Spend2006 Development Spend

APAC just one element of a record €2.1Bn 2006 development spend

Also completed 68 other deals across CRH operations

€Bn Europe Americas Total

Materials 0.1 0.2 0.3

Products 0.3 0.4 0.7

Distribution 0.1 0.1 0.2

Total 0.5 0.7 1.2


H1 2007 Development SpendH1 2007 Development Spend

Further €1Bn spend on 35 transactions in H1 2007 across CRH operations

€Bn Europe Americas Total

Materials 0.2 <0.1 0.3

Products 0.1 0.2 0.3

Distribution 0.4 <0.1 0.4

Total 0.7 0.3 1.0

And c.€0.3Bn announced to-date H2’2007 for 4 Americas Materials businesses


Going ForwardGoing ForwardGoing ForwardGoing Forward


Acquisitions Market TodayAcquisitions Market Today

Recent trends and challenges

Large Industry transactions and Private Equity interest in sector …

… drove higher acquisition multiples over recent years, however, …

… M&A appetites and multiples have cooled with recent market turbulence

CRH Going Forward

Changing market backdrop likely to lead to increased opportunities

Still lots to achieve in our existing markets and products …

… plus opportunities in developing regions


OverallOverall

Sustained focus on operational performance is the foundation for growth

CRH Development Strategy continues to evolve and deliver …..

…. our clear and consistent strategic vision ….

“to be a leading international

building materials group

delivering superior

performance and growthperformance and growth”


Institute of Chartered

Accountants in Ireland

CRH

Acquisition Success

Myles Lee

Finance Director

CRH plc

October 2007

Documents

1 Institute of Chartered Accountants in Ireland, October 2007 Institute of Chartered Accountants in Ireland CRH Acquisition Success Myles Lee Finance Director