Good day, and welcome to the CRH plc 2013 Year-end Results Conference Call. Today's conference is being recorded. [Operator Instructions] At this time, I'd like to turn the conference over to Mr. Albert Manifold, CEO. Please go ahead.

Okay. Good morning, ladies and gentlemen. And my name is Albert Manifold, and I'm the Chief Executive of CRH, and I'm very pleased to welcome you here this morning to my first results presentation for CRH, the results of 2013. I'm joined here on the stage this morning by our Finance Director, Maeve Carton.

Good morning, everybody.

And just -- during the course of this morning, just to give you a running order for what we're planning to do, we're going to take you through our trading results, I'll take you through that; and Maeve was then going to go on and go through the financial highlights of the year, also looking at our cost-reduction program and what we did in that. I want to leave plenty of room then to go through the whole portfolio review process and update you on that, what we're trying to do, what our intention is, where we are in the process and, indeed, what our objectives are. And at the end, I want to go through just our sense of where we see 2014 evolving, in terms of giving an outlook. We're then going to go to Q&A at the end of that. We're going to be joined on stage at that time by the Head of our U.S. operations, Mark Towe, who's sitting here in the audience with us. And all told, I think we'll be done by about 10:00 a.m. or thereabouts. Okay, so just starting to look at some key points for 2013 and just looking at what we saw. Well, you would have seen some results already out there from the industry. And it was a very challenging year, 2013, principally because of a very tough weather pattern in the first half of the year. Our 2 key geographies, being the United States and Europe, were faced with a very long, prolonged winter. But we saw a much and better trending performance in the second half of the year which influenced the year. And we'll go to that, and you'll see that cycle repeat through many of our businesses. There were some marked differences, not just…

Thank you, Albert. When we started this presentation, we showed a sales number that's similar to last year and an EBITDA number that was ahead of the guidance which we gave in November 2012. I should say that both of those numbers and, indeed, all the 2012 numbers that we're talking about today and in our announcement have been restated for the change in accounting for our joint ventures and pensions, so that was the change announced during the year. So all our prior year numbers are restated here. In the movement for those sales and PBITDA, there were a number of moving parts which are presented here. I'm just going to draw your attention to a small number of the movements here. The first one, acquisitions and divestments. Later on, Albert is going to talk to you about acquisitions in recent times. So I get to give you a sneak preview here of the performance in 2013, where you can see there, the acquisitions in 2012 -- I'm sorry, the 2013, gave some very good contributions to trading in 2013, an EBITDA margin there of 11.6%. So very strong margins, and I'll say, Albert will go into that in a little bit more detail. The second number I'd like to draw your attention to is the pensions and CO2 gains. Again, Albert mentioned, in the context of our Europe Materials business, some significant year-on-year movements there. In total, last year, we had gains from these pension curtailments and CO2 trading of EUR 61 million. The figure for 2013 was EUR 32 million, so the negative year-on-year impact is EUR 29 million that we show there. And of course, the organic trading. You saw as we talked through the segment's results that there was a distinct trend of things improving…

Thanks, Maeve. What I really like about, as CEO of the business, those last 2 slides Maeve shows in cash generation and liquidity, it just attests to the potential capacity we have in our balance sheet for future growth. But you probably knew all that anyway. And that takes me onto the whole area of talking about the portfolio because that really is what's important here, is not that we the capacity but what we spend, how we spend it and, really importantly, why we invest in these areas. And that's what I want to try and do now with the next 15 minutes or so at this moment in time to update you on our process. But to do that, just let me take you a little back -- back a little bit in time and show you the history of CRH, a history you all know quite well. This chart will be familiar to some of you. It shows the gray bar. It shows the returns generated by our industry over the last 12 years across all our peers. And the dark blue bar shows the returns that CRH has generated over that period as well. And 2 things stand out. First of all, the dreadful impact of the global recession we saw in 2007 on everybody, CRH included. But the second thing is actually CRH, broadly speaking, have produced industry-leading returns through the cycles that are there. So we're doing something right. But how did that happen? Well, you've heard it for years, the proven model of performance and growth. In CRH, we pride ourselves as being really good operators. That's what we focus on. And we actually have across our businesses really good models for making businesses that have solid business improvement. You've heard us talk…

Albert, it's Barry Dixon from Davy. Just a couple of questions here, if you don't mind, Albert. I mean, you talked about the portfolio review with the objective, I suppose, being to restore peak margins and returns. I mean, should we think about how -- that the returns will structurally improve through the cycle? So we can all look back at what peak returns were in the last cycle and say, "Okay, that's great. We'll get back to that". But I suppose how should we think about returns through the cycle, and do you have a target in your mind for a group return on capital, either RONA or a return on invested capital? A second and maybe related part to that then is if you look out sort of 3 to 5 years from here, I mean, how do you see the structure of the business? I mean, it's very much -- I'm sorry, it's well over 50% heavy side weighted at this point, there's a very -- a strong distribution business which has no impairment charge associated which would suggest that that's a keeper in terms of businesses. So if you were to look out 3 to 5, how do you see the business split between sort of that heavy side, light side and then the products part in the middle? And then, I suppose, the third element to the question is just in terms of the whole U.S. infrastructure side which is clearly a very important part of the business. Does this mean that the focus of that businesses now will be very much on the Northeast of the U.S. or do you see opportunities to -- as time goes on, to sort of grow that business out into other parts of -- or regions of the U.S.?

Okay, thanks, Barry. Maybe I'll leave the last part of that question to Mark Towe to talk about U.S. infrastructure and where see the growth potential going forward. And the first question you asked is about peak returns, where do we see it coming and the time frame we'll see it coming back. Well, historically, if you look back at CRH, peak returns were about 12%, 13% returns, and that's our target, to return back to that. But as I said in the presentation, that's going to be dependent upon a number of factors. One of which, of course, is the portfolio review. It will be dependent on market growth. It will be dependent on pricing coming back and it will be dependent on our ability to get back into the businesses in terms of when we're buying business and making them better. I'm confident of actually focusing on the last part of it. What I'm not in control of is the market or indeed the pricing. What I am encouraged to see though is the leverage we have seen coming back to our Products business this year, and where we are in the cycle in doing that. It's just a question of where are we in the cycle in terms of things. I think Europe is just literally flat. And there's a good -- I was in the U.S. there 2 weeks ago. I was just talking to one of our customers. I was out west in Phoenix and they gave me a very good snapshot in terms of what they're feeling. Now Phoenix is pretty much a kind of mid-recovery residential market. It went very hot, it went very cold. At the peak, they were building about 80,000 homes a year in Phoenix. At the trough, they were…

Yes, Barry, I think the focus on Northeast will continue. That's where our big returns are. We'll continue to grow that area. There are bolt-on acquisitions there. But I think -- our opportunities, we think, going forward really is a middle Atlantic stake. I mean, we have a very good position in Ohio, Pennsylvania and whatever -- other growth opportunities as well, so we'll continue to take a look at that area. We've talked about in the past about where we wanted to grow in Texas which we've done in the last 3 or 4 years. There's a lot of opportunities there, so we continue to look across -- I think the Northeast is very important but I think our growth opportunities are really across the U.S.

Sorry, I had to take Yuri who was just in front, excuse me.

Yes, Yuri Serov from Morgan Stanley. A couple of questions on your disposals that you have identified. One, just to clarify, when you're saying that the businesses identified for disposal make up 10% of your assets, is that before the impairments or after the impairments? And if it's before the impairments, what would it be after the impairments? And then a related question is can you give us an idea as to how much within that asset pool comes from consolidated subsidiaries versus associates and JVs? The second question related to disposals. I don't know how much you can reveal, but it'd be quite useful for us to get a sense as to -- from which business lines those disposals are likely to come? Again, it depends on how much you can tell us. And then just the final bit. Back on the returns, just a clarification. You were talking about returns in the plural sense which suggests that you're kind of committing to get back to peak returns in all your businesses. Is that correct? Are you planning to get to peak returns in Europe as well, and can you discuss how that can happen and over what period of time?

Okay. Thanks, Yuri. Maybe I'll take the second and third part of that question, and go back to Maeve at the end to talk about the impairment and the breakdown between subsidiaries and associate companies. Just on your first point in terms of a breakdown of where those -- the impairment is coming, we've just given a...

Disposals [indiscernible]

Sorry, the disposals, excuse me -- the disposals in terms of where they're coming, we've given the breakdown of that as far as we're going to go. We've identified that it's largely within Europe and largely within Europe products. I don't think it serves anybody well for us to go start listing out companies’ name-by-name, this is what we're going to dispose of, they've got employees, customers, suppliers. And our goal now is an orderly exit from these businesses and to optimize value for our shareholders. And as and when we move through that disposal process and sell them, we will come back and we'll tell you. So that's as far as we're going to go with regard to on that. With regard to returns, the issue on returns is these are group returns we're targeting because there are different moving parts of our business. So am I saying that all of our businesses are going to get back to peak returns at the same time? Absolutely not. But overall, our group blended return will get back to peak. And when we look at our business going forward, that's our objective. There are a number of factors that will impact upon us. That, as I said to you, is about market, pricing and recovery and that's why I went through the exercise of a setting up here just the market outlook but very importantly, our positions within those markets. Because some of the factors that are within our control where you got structured markets and strong leading positions, you can influence pricing and commercial initiatives as much as you can influence all the parts of quality and quality development within the business, and that's important to us. We know how we'll do well within that so that's an overall group number and an overall group target. Maeve, I might ask you to comment on the impairments?

Yes, Yuri, the 10% is the pre-impairment and post-impairment will be about half of that, around 5% of assets.

So curious [indiscernible]

There's probably the -- your question was in relation to the...

The breakdown.

The break -- yes, there was about EUR 105 million in relation to JVs and Associates?

[indiscernible] of disposals. You're saying 10% of the assets are [indiscernible] disposals were 5% after the impairments. Within that what's the split between JVs versus consolidations that you're seeing?

The proportion of the financial assets will be higher than the 10%, so it was a greater proportion of those. If you look at our total financial assets at the end -- in the balance sheet were something like EUR 1.3 billion and that's after an impairment of EUR 105 million.

Ian Osburn from Cantor Fitzgerald. Just a bit more to push you on the portfolio review and the next phase. It seems the next phase could be up to EUR 2 billion worth of assets. Just how -- what you can tell us what's in there really? Is that a similar sort of profile Europe focused and products and materials-focused or is this second phase just far more across the businesses. And a second question which may be impossible to answer, just on the pace of recovery a bit more, the example you gave which I think was American products highlighted the operational gearing. Do you think that's going to be the main driver in which case we could see a recovery that's quite front end loaded, but your comments on capacity suggests that there's spare capacity in the industry and it will be a more slow progress through the cycle. And if there's a slow progress through the cycle, I'm assuming about a doubling of profits over the next 6 years which implies around 15% profit growth per annum, which -- just your thoughts on that, is that way off or in line with your thinking?

Okay, just on the 20%. Let me be absolutely clear. That's something that's still under review. Actually, it encompasses the business from all divisions and all parts of our business. There are no bad businesses in there. The only question is either we fix, stay, invest or, in time, go. And I think it's more, if we do go, it's in time go, not immediately go. And we're going through that process and we'll come to you in May because actually, this is a work in progress. We only started this in real detail in the fall of last year so we're going through that process. With regard to -- in terms of the pace of recovery and what we see coming through, again, I said it in the presentation that what we have seen in the U.S. has been a volume-led recovery, not really -- pricing hasn't come back yet. And that's really interesting the fact that -- and I use that again to highlight, we've taken about EUR 2.4 billion of price cost increases and have been slow and only able to get back about half of those, by the way, I'd say that's a similar trend across all building materials businesses. And that really attests to the volume weakness and the impact that has on the recovery of pricing. And I think you're going to have to see a more sustained recovery in volumes first before pricing comes back. But we've been here before, in very prolonged at times, not so concentrated, not so coordinated across global economies, and our business has a history of being able to recover back prices in time. We're quite good at doing it. And in fact, it's interesting, you're starting to see in some of the major materials providers and just take the U.S. market as an example coming through, the cement business in the U.S. last year for the first year got about a 5% price increase. The glass business has got a strong price increase. The wallboard, the lumber guys, all got strong price increases where you got concentrations of suppliers saying, on the back of an evolving and improving market, we can get price increases. And actually, that's very good for the industry because it flows down through the industry. We just need to give it time to flow down. So that's kind of the pace of it, it's more volume-led and in time pricing comes through but we're starting to see that those major components, those major raw material businesses, that's the key. That's the start to it and the pricing across the general products will follow after that.

It's Paul Roger from Exane BNP. A couple of questions, really, firstly on capital allocation. Obviously, you've got quite a strong balance sheet already. You're potentially talking about selling up to potentially EUR 3 billion of assets. That's quite a lot of firepower. Do you have a target level of gearing, and what would happen if you fell below that? You've always had a history of bolt-ons. Would look at something bigger? Maybe we can talk a bit about the importance of dividends and buybacks within that. And then secondly, on European Products. We've talked a lot today about some of the structural issues. But, clearly, it's not one business line. I wonder if it's possible to give us a bit more detail in terms of your view on returns for the different businesses within the division?

Maybe I might just add -- just talk about in terms of the disposals and the proceeds that you come forward. You're coding a figure of EUR 3 billion. I presume you're adding 10% and 20% together, something like that. Be absolutely clear. That 20% in no way I was suggesting these are set for disposal. This is something we're just getting -- it's still under review. Some of them may be disposed in time. My gut feel is, actually, most of them will be retained within the business. We just got to figure out where they fit in the cycle. Some may be retained for 2 years, some may be retained for 5 years, some may be long term. The only business we've identified for disposal at this moment in time is the 10%. We're getting to the 20% and when we get through that exercise, we'll come back and we'll tell you. So I don't want to build up that expectation that there's EUR 3 billion out there. With regard to -- and in terms of acquisition opportunities out there, we think there's lots out there. We've spent EUR 1.5 billion over the last 3 years. And actually, in very tough times, we've been very measured and constrained in doing that, so there's deals out there and we feel we can do value-added deals when we go out there. Looking as in terms of generating excess funds for buybacks, et cetera, et cetera, that's not in our agenda going forward. If we can generate those returns on acquisitions, if we can generate those returns into a growing market, actually, we can create far more value for our shareholders by investing those moneys back into our businesses. With regard to dividends, we were very clear. For the last 30 years, we've been solid on our dividend. We understand how important that is, now of all times. Cash is king. People expect CRH to be delivering dividends, and we know that. We have the capacity to do that. Of course, each year is different. It's a forward-looking statement of how you feel about things. Our dividend cover is down below 1 now. But we've been very clear in our guidance. We will rebuild back our dividend cover, profits recover. Now we're talking about 2014 being a year of profit growth. So all of those things at least give you comfort in that area again. With regard to gearing in debt levels, Maeve, if I may just pass it to you?

Yes. Hi, Paul. Broadly speaking, the financial metric that we look at very closely in terms of managing our finances, would be the level of interest cover. And we've talked over a last number of years of about a 6x EBITDA interest cover being broadly consistent with our rating levels, which we're proud of in terms of, in particular our S&P rating, which has remained unchanged since we first got it back in 2000. So we're very focused on that. So that's the kind of level that we monitor carefully to see -- we'd like to stay within that, broadly, in that area of cover as well. And our debt-to-EBITDA has remained around the 2x, again, over a very long period, and that's a level that is broadly consistent with our rating and with our financial strengths. So those are the kind of metrics we'd be looking at to keep an eye on to make sure that we stay within that broad range.

Then just a follow-up on the European Products. In terms of the different business lines, whether there are big contrasts in terms of the returns between pre-cast or construction accessories. Maybe you can just maybe say a bit more by business line within that division?

I think, when we finish our portfolio review, we'll go and set that out because I started saying to you the important question that we're asking ourselves and you should ask us is; "Why you are investing in this because going forward?" We have got some very good high returning businesses in Europe Products. We have some poor businesses in Europe Products. When we finish our review process and we will come back to you and identify, this is why we're staying in Europe products in these businesses because this is where we see the growth and this where we see the returns. But we'll come back to you later on during the year when we get to that, Paul.

It's Will Jones from Redburn. Three if I could, please. Americas Materials, the EBITDA margin in the second half, 90 basis points higher. I assume falling liquid asphalt costs and cost savings were 2 helps, then it looks like they're both features again for this year. So is your confidence on margin improvement or drop-through strong on that front for that division in 2014? Secondly on Americas Products, you talked about making a volume recovery to get the pricing. You've had a couple of good years of volume now. Where are we in terms of spare capacity in that division, and is it going to be a better year for pricing in '14? And then lastly, weather in the first half of last year, I think the group quantified EUR 80 million EBITDA here in the first half of last year from weather-estimated. Do you think that any of that came back your way in the second half? If not, do you think that when we get the 4 month update with like-for-like sales, should we be expecting acceleration of say, to 2% in the second half of last year as you make back what you lost in the first half of last year?

Okay. Maybe what I might do is, I may just deal with the weather and the products since you've given an overview on the margin evolution, and I'll maybe ask Mark to give an overview in terms of how we see the business going forward into 2014. Just on the weather. We think about 1/2 the EUR 80 million that lie in the first half came back in the second half. We had a very strong run of weather all the way through to Thanksgiving. It wasn't just weather, it was a very fine weather in that time in the U.S., and that certainly helped us. So about 1/2, we think came back well. With regard to your second question, in terms of products and pricing. Well, actually, we saw almost no pricing power in 2012, even though volumes were coming back. We saw some pricing power and some sweet spots, particularly, in Florida, Georgia, Texas, Arizona, and North and South California. That's -- they were our sweet spots for residential construction. This is not a national residential market recovery. This was in certain sweet spots. And in those areas, we got good pricing. It was tough in other areas. But again, as volumes recover and it becomes more sustained, you're going to get more of a chance with that. So we think we've got stronger pricing power in 2014 over '13, as we did '13 over '12. And with regards to the margins coming through, I'll let Mark -- I kind of just add my own observation as well, though, is that you should also look us -- in terms of our business, we produced in our aggregates business many different grades of stone. And stone, is -- different prices or grades of stone are used for different end uses. When you get an imbalance, what happens is you got to go back and reprocess stone. So a very large stone, for instance, will be used in aggregate and readymixed concrete, very small fine stone in asphalt. But when we crush down, it falls out in different sizes. If we have no readymixed business or less readymixed business, we got to reprocess that stone, which is extra cost. What we saw coming back in higher volumes was a much more balanced recovery where all products were rising, and that efficiency runs through our plants, and that is a function of some of our margins coming back. Mark, I don't know how you feel about that in terms of...

No, I think a couple of things to follow-up on the product side. We've a rough time. We get pricing. We did get price up in the second half of the year, and we'll continue to do that. We'd be -- part of the thing are our Home Center business were pretty much flat, and we can -- that's a tough sale. But I think one of the things that you have to remember now that, Maeve talked a little bit about the cost reduction, even though we haven't been able to get price up like we'd like to get to at this point, it's coming, but we've been able to have our margins go up, because we've been able to get our cost reductions through there. So that's been very important for us. And it will improve as we go forward as the volume comes up. On the asphalt piece that you asked about the part of the piece -- the big piece for us is liquid bitumen, we don't see any problem. We think it'll be flat again this year. It's a little bit lower last year. So we think that, even with that last year, our margins were better than we had the year before. So we're hoping to have a price increase in 2014. It's just so early in the season, right now we really haven't started bidding yet. We will start doing that in March and April, and we'll see where we are mid of the year. But we'd be optimistic on the pricing going forward. It's modest, but it's is going to make improvement.

Arnaud Lehmann from Bank of America Merrill Lynch. Three questions, if I may. Firstly, coming back on your disposals program -- I mean, over the last few years, obviously, CRH has done a few hundred million euros of acquisitions and disposals every year. I know we are talking about 3% of EBITDA and 5% of net assets to be disposal just -- which would imply a few hundred million euro as well. So could you come back on this and explain me what is different this time and what you, as a new CEO, are going to do differently from Mr. Lee? My second question is on -- you speak about a EUR 29 million loss, I think on pensions and CO2. Could you please split pensions and CO2? I understand that's probably a gain on pension and the loss on CO2? And lastly, I mean the topic there and what has been the impact of the ongoing revolution on your business so far?

Okay. Thanks, Arnaud. I'll take 1 and 3, and I'll ask Maeve to give you some detail on the pensions and CO2. Just on the Ukraine, I'd like to take that one first. Last year, we made about EUR 18 million EBIT in Ukraine. We actually employ across 3 locations in Western Ukraine, about 1,500 people. And actually, that's our first and primary concern is the people, employees that work for us. Also, indeed, we've been talking to, and our job is to support, our customers and our suppliers as they go through what is a very challenging time for the country. It's very uncertain at this moment in time. And I don't want to rush to judgment. It's clearly evolving on a day-by-day basis. It's early season for us. Actually, we're still selling, still producing, and our plants are still working. But we just have to take a moment and just let -- see how the situation evolves before we can get a better picture of what's going to happen, so that's the size and scale of what we have there, what we do, and actually our priorities are our people and our locations, which are all fine, and we'll just see exactly how the year evolves. And with regard to the CO2 and pensions, Maeve is going to come back to the last one?

Yes. It's not so much a loss this year as a lower gains. Last year, there was about EUR 30 million each of gains on trading for CO2 and gains for pension curtailments. This year, the pension curtailments -- by this year I mean, of course, 2013, our pension curtailments were about EUR 24 million, and the CO2 gains were about EUR 8 million. So that's the reduction -- the year-on-year reduction, that's the EUR 29 million that we spoke about.

And going back to your last point, Arnaud, about how much money we have and is this just something that we're fiddling around the edges in terms of the portfolios that was behind it; actually, from a CRH point of view, this is about capital allocation and then reallocation of capital. We're not short of money to spend. We've got sufficient capacity in our balance sheet to spend. But it's about understanding how and how -- where and why we create value. We have identified 10% of assets that we will dispose. In time, in that 20%, there will be other disposals in that 20% that will fall out. I just can't tell you at the moment, we're working through that exercise. But most of those businesses will evolve and will happen and be disposed of over time. I suppose the most important principle I'm saying to you is that we're now talking about active portfolio management going forward. There is a cycle in which CRH makes money. We make about 60% of our profitable growth in CRH directly or indirectly through the acquisition process. When we buy businesses, we create great growth directly or indirectly in that process, so we can have strong organic growth markets but if we don't have acquisition opportunities going forward, we tie one hand behind our backs. So there's a natural time for which CRH should be a holder of businesses. And when the market is consolidated and you lose out and there are no further acquisition opportunities, actually, you got to decide whether you're going to hold that business, whether it's a cash cow or whether it's time to crystallize the value in that and reallocate back down the portfolio. That's probably the ethos we're trying to communicate you now. Rather than saying we're going to sell off a 1/3 or 1/4 of the series, that's not the case. We don't have that many bad businesses. But what we are seeing is a process where we're starting a more active allocation and reallocation as we go forward. And that will become a fundamental part of what we do going forward.

It's Gregor Kuglitsch from UBS. Just 2 questions. Can you just -- on the margins and ROIC going back to peak representing 12%, 13% as a post-tax number firstly; and then on the margin side, I think you did say slightly shy of 10% on an EBIT basis. Is that what you're, basically, talking about? Obviously, there are some mix differences with more distribution over recent years. Obviously, there is a little bit of an adjustment to make some -- or maybe just clarify on that. And then of the 20% that you sort of still thinking about, if I'm not mistaken, can you just maybe give us -- told us 5% -- 3% of EBITDA for the 10%, how much profit contribution comes from the 20%? Obviously, you're telling me they are good business, so therefore, I presume they're probably more in line with that sort of 20%. And then maybe one quick for Maeve. You've, obviously, done very well on cash flow. You've done sort of slightly shy of EUR 750 million. Is that a number you think you can repeat, or all said, as clearly that's quite important? And then finally, if you can just maybe give us a little bit more granularity country by country in Europe, what your expectations are going into '14? Obviously, the core countries -- Benelux, Switzerland, Finland and so on and so forth, if you could just give us sort of a rundown of that, that will be helpful?

Okay. Thanks, Gregor. May we -- maybe I'll ask Maeve to comment maybe on the issue with regard to the margins and the EBIT cash, and I'll come back and circle back on the country overview and the other issues here.

Okay. Well, I'll start with the cash flow. The operating cash flow for 2013, was you said, just under EUR 0.50 billion. Obviously, the exact number will depend on profitability in 2014 as well, but I think we do see profits improving in 2014. We will continue in 2014 to maintain a very tight control of capital expenditure. We've spoken in the past of the fact that while we maintained tight control, we have invested very well in our assets when -- in the good years. And also, the lower levels of activity, particularly in our heavy materials businesses, the lower levels of activity in the past number of years has meant lower wear and tear on the heavy equipment, and therefore, a lower requirement for CapEx. So we've -- our assets are well-invested and in good shape, so it's not that we have a huge burden of spend to continue to wait to be spent very quickly. So we'll keep control on capital expenditure. One of the things that to watch is, as we see activities picking up, there is a tendency for working capital to increase as the result of that. What we've found is working capital can also -- year-end working capital can be very sensitive to weather in the last month or 2 of the year. But so there's a lots of moving parts in the answer, but I suspect -- we would expect progress on cash flow. On the margin side, the 10% EBITDA margin -- or EBIT margin that historically we've achieved is part of -- is in our thinking in terms of where we would see things returning to. So that's -- the composition of that has, obviously, reflect a mix of businesses from history, which is going to be different from our mix of businesses in the future. So the timing of where we get -- how we get to there will depend on the pace of recovery in the different markets we're in. But broadly speaking, in overall terms, that's the kind of peak -- that's what we have in our mind when we're thinking of peak returns. And very lastly. Sorry, John. The last as -- you are correct that ROIC is an after-tax number.

And just to come back to of equity -- it's about, of those of the 20%, it depends on when you measure it. It is delivered in a range from a low of about 11% to the high of about 17% of total EBITDA, and it depends where you pick the cycle on that and such.

Last year?

Last year? Between 11% and 17% greater. We'll taken it now later in the moment. But it depends -- I'm looking forward in terms future potential what they can generate. That's the real focus in terms of future growth. And just the other issue, just a quick tour of Europe in terms of where we see Europe, just going back. We have set it out in our statement, but just to clarify it. In terms of looking in our main markets to Switzerland, which is our biggest country in terms of profitability and top line in Europe, we look at that being a very solid performance in Europe, of progress again in 2014, and I see no reason why it shouldn't be. And actually, we think the Netherlands will be broadly stable. We don't see it continue on down as it has done in the past. All the forecasts and all our indications are it will be broadly flat. Belgium, broadly slightly up. Germany, slightly up. Poland, we think slightly up as well, which it’s good to see. Finland would be flat. France, maybe slightly down. Ireland, Spain, broadly flat in terms of where they are. So that's kind of the flat, slightly up have kind of [indiscernible] absolutely up or like together. I just need to be curt in my time, I'm just going to John [ph] here if I can, because I've got to take some calls from the conference call as well. So maybe I'll take 1 or 2 my questions from the floor.

I think, pretty quick. Just two points of clarity. One is, on the EUR 750 million that's been written down, or the EUR 650 million plus the EUR 105 million is, is about all against businesses that are in the portfolio that will be subject to disposal or some of it within the ongoing businesses? Also, is it a goodwill write-off or will this hit the assets in terms of fixed assets, et cetera, and therefore, knocks you on depreciation when we think about how the businesses will look for a potential acquirer, or is just really a goodwill write-down that will be visual to a CRH shareholder? And then finally, the 10% of net asset. Again, just to be completely clear, net asset value, which one are we talking about -- as in EUR 9.8 billion of equity plus EUR 3 billion of debt, or are we thinking of a net asset number, because the RONAs aren't in the slide [ph] back?

Okay. Maeve, I'll give you all 3.

Lots of questions there, John. The first one is the write-off of the EUR 755 million, EUR 650 million of that is at operating profit level, and about EUR 380 million of that is goodwill, and the balance is plant and equipment, buildings to a certain extent. And the question about the -- can you remind me your next question now?

The net assets.

The net assets. The figure -- the growth number, where the net asset number we're using calculating that 10% is around EUR 15.5 billion. So it's equity, plus debt, plus adding back some of the [indiscernible] this year.

Okay. I'm sorry. I'm going to have to go to the phone lines, because there are people beeping at me here and I am trying to fair to everybody who is in the room, and also those who dialed in as well. I think we've got some calls coming in the lines. And if I don't get you here in the room, I'll be here afterwards so we can pick up with you afterwards.

We have a question from Robert Eason from Goodbody.

Just a few questions. Firstly, on the U.S. nonresidential market. Now over the last 6 months, we've kind of had a mixed signals from the ABI. I just want to get your feelings on how the non-res markets is developing for yourself and your prognosis for the current year? Just points of clarification in terms of the other queries. What should we put in for CapEx for 2014? And you talked about that due to your bond issuance last year that your average charge is coming down for debt. Can you just give us an indication of where the average charge will be for this year? Or just you can give us an indication of where the total financial charge will be? And my last question is in relation to you 26% stake in China. Can you just give us an indication of the quantum, the size of that business now from an EBITDA perspective? Remind us about the option that you have in terms of purchasing and move about business?

Okay. I'm just going to repeat those questions because they may not necessarily heard them on the lines. Robert has asked; to quantify the 26% in China in terms of what the size and scale of that business and where we are over the option, he asked to clarify our debt costs and our debt charge with regard to our bonds for last year, clarification on CapEx for 2014, and also just a commentary on U.S. nonresidential in terms of how we see the market evolving in 2014. Or maybe if I take China, I'll pass the U.S. question to Mark, and let me handle the 2 financial questions. Just the size and scale of that business, that business has the capacity in China, which we have a 26% stake in, of about total capacity of 27 million tons of cement. Last year, it sold about 22 million tons of cement. So a very big business. Dimensionally, the EBITDA of that business was somewhere between EUR 250 million and EUR 300 million EBITDA last year in a tough market. Our option actually expires at January 2015, and the question we have is whether it's a fixed hard option or whether we want to extend that option and go on. I think, there's a number of options open to us in the table. We have a fixed option, but we have a close relationship with our partner. And our key focus, actually, is working with our partner to improve returns. When we spoke about emerging markets, we spoke about balancing returns and long-term growth. I don't want to go down the road of just buying growth or buying, putting flags on maps, this business is all about returns. And what we're doing at the moment is working with our partners to an agreed objective of improving returns to a point where we feel confident and they feel confident that it's the right time for us to step in. So we'll update you in that as we go through the course of the year. Maybe if I just pass the U.S., Mark, with regards to nonresidential of where we are on the cycle?

Yes, Rob, that's a good question, because we're confused as well with the mixed signals that we get on ABI. So what we've taken to is take a look through the business that we play in that area, our Distribution business. Their view would be -- this is on the interior piece. Their view would be non-res, probably that their growth we'd look at 6% to 7% for 2014 where they play. And then on the product size, would be similar to that. So that will be our view. Right now, it's kind of early in this season, but that will be our view. It's going to be up.

Okay. And quickly, Robert, to comment about the lower interest costs, it's really a kind of a medium to long-term comment that -- the securing the bonds at the lowest interest rates, the lowest coupons we have ever achieved sets us up very well for the future. For 2014, I would expect interest, the total financial cost to be fairly similar to last year, so around a EUR 300 million mark. And in terms of capital expenditure, again, the same answer. Roughly, we're going to continue to keep very tight control of capital expenditure in 2014. So my current estimate is that around the same level as 2013, so around the EUR 500 million mark.

Thanks, Maeve. And I'll take one more question from the call, because they're winding up here at the back is there one more question on the lines we can take?

We have a question now from Tom Holmes from Investec. Tom Holmes - Investec Securities (UK), Research Division: Just 2 from me, if I could. Just keeping with the U.S., with MAP-21 due to expire at the end of September, would you be optimistic of a long-term replacement funding program being agreed or should we expect to see a series of short-term extensions similar to those that follow the expiry of its predecessor in September '09? And then just one briefly for Maeve. Could you give us an update, please, on the expected tax rate for 2014?

Maeve, you might take the tax rate; and I'll pass MAP-21 to Mark, please.

Hi, Tom. I think, our expectation would be with an improving situation in the U.S., on U.S. accounting for greater proportion of profits, that has a natural tendency to increase our tax charge. So I would be expecting it to be in the 20s, probably 22 -- somewhere between 22% and 24% for 2014.

Mark, MAP-21?

Tom, on the MAP-21, you're right. We're funded through September of 2014. The Congress now is getting ready to start, have a debate about extending this thing. It, in my view at this point, probably nothing will happen. We'll probably get an extension at the end of September until we get passed the 2014 elections. Then we'll have the debate in 2015. There has been a lot of talk about the infrastructure play. President Obama has talked about this, one of his initiatives, right now is to figure out how to keep fund that. So I think it's a lot of debate. I think, the view is that the infrastructure needs to be looked at. If there is a need to have higher funding. At this point, we just have to see where we are. We're not worried about it at all, not getting it extended. So we'll be comfortable. But the funding at EUR 41 billion will continue to go forward, I think, and the upside will be if we could get a long-term bill.

Okay, listen, they're frantically winding me up at the back, so I'm sorry, we have to cut it there. If anybody on the wires, on the webcast or anybody in the room didn't get a chance to ask a question, please feel free to contact our Investor Relations in Belgard Castle in Dublin. Or indeed, my colleagues and I will be here afterwards just to go through any questions you have. I just want to leave you with a couple of thoughts in terms of how we see the year running up in front of us. We've been very clear. We see a fairly moderate pace recovery coming forward in the U.S. Last year was on one cylinder, we think the second cylinder is going to start firing this year and that will be in nonresidential. We see signs of stabilization in Europe, and that is carried forward into the early weeks of 2014, which is encouraging to see, very good to see. We think we've shown to you in the benefits of leverage that come back through the business, which really is, actually, a result of all the good work we've done on the way down. We're going to look like idiots on the way down, or we did look like idiots on the way down, and we're going to look like heroes on the way back up. But both of those statements are wrong, by the way, you just do your job. And we've got very good financial strength in our balance sheet, great capacity to do deals, but we'll do so in a disciplined manner, the portfolio review will ensure that, and we're very much focused now going forward on refocusing CRH back to its core principles of returns and growth, and that's how you should think about us going forward. So we have our AGM. Our IMS will be -- our AGM in early May, and we'll also update you with regard to where we are with the portfolio review at that time. So thank you very much for your time and your attention today for you in the room and those on the wires, and we look forward to talking to you again in May. Thank you very much.