Directors’ Report The Directors submit their report and financial  statements for the year ended 31 December 2012. Sales revenue for 2012 of €18.7 billion was 3%  higher than in 2011 (€18.1 billion). Operating profit  for the Group decreased by 3% to €845 million after  restructuring and impairment charges totalling €88  million (2011: €82 million). In CRH’s European  segments operating profit decreased by €102 million  to €418 million, a decrease of 20%, reflecting the  slowing momentum in European economies and the  impact of divestments. In the Americas operating  profit increased by €76 million (22%) to €427 million  (2011: €351 million). Overall operating profit margin  for the Group decreased to 4.5% (2011: 4.8%).  Profit on disposal of non-current assets at €230  million was significantly higher than last year (€55  million) due primarily to the significant profit recorded  on the divestment of our 49% stake in Secil. Profit before tax amounted to €674 million, a  decrease of €37 million (5%) on 2011. After  providing for tax, Group profit for the financial year  amounted to €554 million (2011: €597 million). Basic  earnings per share amounted to 76.5c compared  with 82.6c in the previous year, a decrease of 7%. Comprehensive reviews of the financial and  operating performance of the Group during 2012  are set out in the Chief Executive’s Review on pages  13 to 15, the Finance Review on pages 17 to 19 -  which includes Key Financial Performance Indicators  on page 18 - and the separate Operations Reviews  for each of the business segments on pages 24 to  35. The treasury policy and objectives of the Group  are set out in detail in note 22 to the financial  statements on page 101.  An interim dividend of 18.5c (2011: 18.5c) per share  was paid in October 2012. The Board is  recommending a final dividend of 44c per share, in  line with the final dividend for 2011. This gives a total  dividend of 62.5c for the year, maintaining last year’s  level. It is proposed to pay the final dividend on 13  May 2013 to shareholders registered at the close of  business on 8 March 2013. A scrip dividend  alternative will be offered to shareholders. The €0.65 billion of development activity during  2012 reflects CRH’s long-term, value-based  approach to developing the Group’s balanced  portfolio. Excluding net deferred payments, spend  for 2012 amounted to €526 million (2011: €610  million) on a total of 36 bolt-on transactions which  will contribute annualised sales of approximately  €680 million, of which €274 million has been  reflected in our 2012 results. Our pipeline of  acquisition opportunities remains healthy. Expenditure of €256 million in the first half of 2012  included 18 acquisition and investment initiatives  which strengthened our existing market positions  and added valuable and well-located aggregates  reserves. The second half of the year saw a step-up  in the level of development activity with 18  transactions at a total cost of €390 million (€270  million cash spend excluding deferred payments),  with the largest transaction being a majority stake in  Under Irish Company law (Regulation 5(4)(c)(ii) of the  Transparency (Directive 2004/109/EC) Regulations  2007), the Group is required to give a description of  As set out in the Corporate Social Responsibility  (CSR) section on page 6, the Group is fully  committed to operating ethically and responsibly in  all aspects of its business relating to employees,  customers, neighbours and other stakeholders.  Details of CRH’s policies and performance relating  to Health and Safety, Environment and Climate  Change, and People and Community matters are  set out in the separately published annual CSR  Reports which are available on the Group’s website  at www. crh.com. Joint ventures and associates:  CRH does not have  a controlling interest in certain businesses (i.e. joint  ventures and associates) in which it has invested  and may invest; the greater complexity inherent in  these arrangements accompanied by the need for  proactive relationship management may restrict the  Group’s ability to generate adequate returns and to  develop and grow its business. Acquisition activity:  Growth through acquisition is a  key element of CRH’s strategy. CRH may not be  able to continue to grow as contemplated in its  business plan if it is unable to identify attractive  targets (including potential new platforms for  growth), execute full and proper due diligence,  raise funds on acceptable terms, complete such  acquisition transactions, integrate the operations of  the acquired businesses and realise anticipated  levels of profitability and cash flows. Assuming no major financial or energy market  dislocations, we expect that ongoing improvements  in our businesses in the Americas combined with  further profit improvement initiatives throughout our  operations will outweigh continuing trading  pressures in our European segments enabling the  Group to achieve progress in 2013. Commodity products and substitution:  CRH faces  strong volume and price competition across its  product lines. In addition, existing products may be  replaced by substitute products which CRH does  not produce or distribute. Against this backdrop, if  CRH fails to generate competitive advantage  through differentiation across the supply chain (for  example, through superior product quality,  engendering customer loyalty or excellence in  logistics), market share, and thus financial  performance, may decline. Political and economic uncertainty:  As an  international business, CRH operates in many  countries with differing, and in some cases  potentially fast-changing, economic, social and  political conditions. Changes in these conditions,  including the possibility of disintegration of the  eurozone and/or a failure to resolve current fiscal  and budgetary issues in the United States, or in the  governmental and regulatory requirements in any of  the countries in which CRH operates (with  particular reference to developing markets), may,  for example, adversely affect CRH’s business thus  leading to possible impairment of financial  performance and/or restrictions on future growth  opportunities. In contrast to the United States, economic growth in  Europe turned negative in the second quarter and  full-year GDP for the European Union as a whole is  estimated to have fallen slightly. Current forecasts  suggest only modest growth at best for 2013. On  the positive side, however, the strong commitment  from the European Central Bank to providing  support for peripheral Eurozone economies has  resulted in a more stable financial backdrop which is  encouraging from a confidence building perspective  and is an essential prerequisite for European  economic recovery. Nevertheless, 2013 will be  another challenging year for our European Divisions  with significant actions, as already announced,  being implemented to counteract market weakness.  After a slower second quarter, GDP in the United  States picked up strongly in the third quarter of  2012. However, some once-off factors contributed  to a weaker final quarter with GDP growth currently  estimated at approximately 2% for 2012 as a whole.  Despite this variable pattern, we believe that the  fundamentals are in place for continued positive  momentum in the US economy in 2013, although  the moderate fiscal tightening resulting from payroll  tax increases may weigh somewhat on first-half  economic growth. Against this backdrop we expect  our Americas operations to show progress in 2013.  Industry cyclicality:  The level of construction activity  in local and national markets is inherently cyclical  being influenced by a wide variety of factors  including global and national economic  circumstances, ongoing austerity programmes in  the developed world, governments’ ability to fund  infrastructure projects, consumer sentiment and  weather conditions. The Group’s financial  performance may also be negatively impacted by  unfavourable swings in fuel and other commodity/ raw material prices. The adequacy and timeliness  of management’s response to unfavourable events  are of critical importance. The Group’s strategy and its business model are  summarised on page 14. Total proceeds from completed disposals in 2012  amounted to €859 million. The major disposals  were the divestment in May 2012 of our 49%  stake in Portuguese cement producer Secil and  the sale in April of our wholly-owned Magnetic  Autocontrol business. The sales impact of these  disposals, and of the 2011 disposal of Europe  Products’ Insulation and Climate Control business,  was €389 million in 2012. the principal risks and uncertainties which it faces.  These risks and uncertainties reflect the international  scope of the Group’s operations and the Group’s  decentralised structure. The list provided in the 2011  Annual Report has been updated to group the key  strategic risks facing the Group separately from the  key financial and reporting risks. Trap Rock Industries, an integrated aggregates and  asphalt business in New Jersey. Principal strategic risks and uncertainties 2013 Outlook  Accounts and Business Review Corporate and Social Responsibility Principal Risks and Uncertainties Development Activity 68 CRH Dividend