21. Analysis of Net Debt

Components of net debt

Net debt comprises cash and cash equivalents, interest-bearing loans and borrowings, lease liabilities and derivative financial instrument assets and liabilities; it enables investors to see the economic effects of these in total (see note 22 for details of the capital and risk management policies employed by the Group). Net debt is commonly used in computations such as net debt as a % of total equity and net debt as a % of market capitalisation.


	As at 31 December 2021				As at 31 December 2020
	Book value $m		Fair value $m		Book value $m		Fair value $m
Cash and cash equivalents (note 23)		5,783		5,783		7,721		7,721
Interest-bearing loans and borrowings (note 24)*		(10,487)		(11,340)		(12,215)		(13,407)
Lease liabilities (note 20)		(1,671)		(1,671)		(1,635)		(1,635)
Derivative financial instruments (net) (note 25)		122		122		188		188
Group net debt		(6,253)		(7,106)		(5,941)		(7,133)


Reconciliation of opening to closing net debt	2021 $m		2020 $m		2019 $m
At 1 January		(5,941)		(7,532)		(7,998)
Movement in year
Increase in interest-bearing loans and borrowings		-		(6,427)		(106)
Repayment of interest-bearing loans and borrowings (i)		1,183		4,943		640
Debt, including lease liabilities, in acquired companies (note 30)		(91)		(12)		(81)
Debt, including lease liabilities, in disposed companies		3		12		463
Effect of adopting IFRS 16		-		-		(2,237)
Net increase in lease liabilities		(249)		(153)		(184)
Repayment of lease liabilities		264		258		356
Net cash flow arising from derivative financial instruments		37		(26)		40
Mark-to-market and other non-cash adjustments		38		22		28
Translation adjustment on financing activities		441		(529)		15
Decrease/(increase) in liabilities from financing activities		1,626		(1,912)		(1,066)
Translation adjustment on cash and cash equivalents		(297)		338		(20)
(Decrease)/increase in cash and cash equivalents		(1,641)		3,165		1,552
At 31 December		(6,253)		(5,941)		(7,532)

The following table shows the effective interest rates on

period-end

fixed and gross debt:


	As at 31 December 2021						As at 31 December 2020
	$m		Interest rate		Weighted average fixed period Years		$m		Interest rate		Weighted average fixed period Years
Interest-bearing loans and borrowings nominal - fixed rate (ii)		(10,052)						(11,822)
Derivative financial instruments - fixed rate		1,800						1,835
Net fixed rate debt including derivatives		(8,252)		2.9%		8.6		(9,987)		2.9%		8.4
Interest-bearing loans and borrowings nominal - floating rate (iii)		(317)						(184)
Cumulative fair value hedge adjustment (ii)		(118)						(209)
Derivative financial instruments - floating rate (ii)		(1,800)						(1,835)
Derivative financial instruments (net) - fair value		122						188
Gross debt including derivative financial instruments, excluding lease liabilities		(10,365)		2.8%				(12,027)		2.7%
Lease liabilities - fixed rate		(1,671)						(1,635)
Gross debt including derivative financial instruments, including lease liabilities		(12,036)						(13,662)
Cash and cash equivalents - floating rate (note 23)		5,783						7,721
Group net debt		(6,253)						(5,941)

(i)	In January 2021 the Group repaid a $400 million bond upon maturity and in April 2021 a € 600 million bond was repaid early when a 3-month par-call option was exercised.

(ii)	Of the Group’s nominal fixed rate debt at 31 December 2021, $1,800 million (2020: $1,835 million) is hedged to a mix of USD LIBOR and EURIBOR floating rates using interest rate swaps.

(iii)

Floating rate debt comprises bank borrowings bearing interest at rates set in advance for periods ranging from overnight to less than one year largely by reference to inter-bank interest rates.

Currency profile

The currency profile of the Group’s net debt and net worth (capital and reserves attributable to the Company’s equity holders) as at 31 December 2021 and 31 December 2020 is as follows:


	US Dollar $m		euro $m		Pound Sterling $m		Canadian Dollar $m		Philippine Peso $m		Polish Zloty $m		Swiss Franc $m		Other (i) $m		Total $m
Cash and cash equivalents (note 23)		2,266		2,386		365		274		19		166		103		204		5,783
Interest-bearing loans and borrowings (note 24)		(4,665)		(4,479)		(537)		(3)		(431)		-		(361)		(11)		(10,487)
Lease liabilities (note 20)		(856)		(250)		(255)		(150)		(8)		(54)		(47)		(51)		(1,671)
Derivative financial instruments (net) (note 25)		189		1,463		(339)		(606)		(91)		(184)		-		(310)		122
Net debt by major currency including derivative financial instruments		(3,066)		(880)		(766)		(485)		(511)		(72)		(305)		(168)		(6,253)

Non-debt assets and liabilities analysed as follows:
Non-current assets		17,661		4,204		2,614		1,844		1,621		371		608		1,606		30,529
Current assets		4,369		1,498		993		564		176		161		84		377		8,222
Non-current liabilities		(3,115)		(714)		(431)		(213)		(132)		(19)		(168)		(71)		(4,863)
Current liabilities		(2,866)		(1,593)		(1,156)		(348)		(153)		(178)		(83)		(344)		(6,721)
Non-controlling interests		(105)		(45)		-		-		(498)		-		(8)		(25)		(681)
Capital and reserves attributable to the Company’s equity holders		12,878		2,470		1,254		1,362		503		263		128		1,375		20,233

The equivalent disclosure for the prior year is as follows:

Cash and cash equivalents (note 23)		1,886		4,586		319		319		62		149		125		275		7,721
Interest-bearing loans and borrowings (note 24)		(5,134)		(5,589)		(543)		(6)		(546)		-		(374)		(23)		(12,215)
Lease liabilities (note 20)		(797)		(282)		(247)		(156)		(10)		(31)		(54)		(58)		(1,635)
Derivative financial instruments (net) (note 25)		937		736		(344)		(774)		(25)		(111)		-		(231)		188
Net debt by major currency including derivative financial instruments		(3,108)		(549)		(815)		(617)		(519)		7		(303)		(37)		(5,941)

Non-debt assets and liabilities analysed as follows:
Non-current assets		16,199		4,614		2,598		1,905		1,759		368		553		1,787		29,783
Current assets		3,586		1,465		871		519		171		155		85		387		7,239
Non-current liabilities		(3,094)		(678)		(391)		(229)		(177)		(22)		(145)		(97)		(4,833)
Current liabilities		(2,160)		(1,654)		(980)		(338)		(165)		(175)		(91)		(337)		(5,900)
Non-controlling interests		(103)		(54)		-		-		(501)		-		(8)		(26)		(692)
Capital and reserves attributable to the Company’s equity holders		11,320		3,144		1,283		1,240		568		333		91		1,677		19,656

(i)	The principal currencies included in this category are the Chinese Renminbi, the Romanian Leu, the Ukrainian Hryvnia, the Serbian Dinar and the Indian Rupee.

Liquidity and capital resources

The following table provides certain information related to our cash generation and changes in our cash and cash equivalents position:


	2021 $m		2020 $m		2019 $m
Net cash inflow from operating activities		4,210		3,938		3,881
Net cash (outflow)/inflow from investing activities		(2,546)		(1,060)		217
Net cash (outflow)/inflow from financing activities		(3,305)		287		(2,546)
(Decrease)/increase in cash and cash equivalents		(1,641)		3,165		1,552
Cash and cash equivalents at beginning of year (note 23)		7,721		4,218		2,686
Effect of exchange rate changes		(297)		338		(20)
Cash and cash equivalents at end of year (note 23)		5,783		7,721		4,218
Lease liabilities		(1,671)		(1,635)		(1,697)
Bank overdrafts (excluding those in notional cash pooling arrangements)		(111)		(120)		(46)
Borrowings		(10,376)		(12,095)		(10,081)
Derivative financial instruments		122		188		74
Total liabilities from financing activities		(12,036)		(13,662)		(11,750)
Net debt at end of year		(6,253)		(5,941)		(7,532)

The Group believes that its financial resources (operating cash together with cash and cash equivalents of $5.8 billion and undrawn committed loan facilities of $4.0 billion) is sufficient to cover the Group’s cash requirements.

At 31 December 2021, US Dollar and euro denominated cash and cash equivalents represented 39% (2020: 24%) and 41% (2020: 59%) of total cash and cash equivalents respectively.

Significant borrowings

The main sources of Group debt funding are public bond markets in Europe and North America. The following external bonds were outstanding as at 31 December 2021:


	Annual coupons	Outstanding (millions)		Final maturity		Hedged to floating rate (millions)
Swiss Franc bonds	1.375%		CHF330		2022		-
euro bonds	3.125%		€ 750		2023	€	375
euro bonds	0.875%		€ 500		2023		-
euro bonds	1.875%		€ 600		2024		-
US Dollar bonds	3.875%		$1,250		2025	$	875
euro bonds	1.250%		€ 750		2026		-
US Dollar bonds	3.400%		$600		2027		-
US Dollar bonds	3.950%		$900		2028	$	500
euro bonds	1.375%		€ 600		2028		-
Pound Sterling bonds	4.125%		£400		2029		-
euro bonds	1.625%		€ 750		2030		-
US Dollar bonds (i)	6.400%		$213		2033		-
US Dollar bonds	5.125%		$500		2045		-
US Dollar bonds	4.400%		$400		2047		-
US Dollar bonds	4.500%		$600		2048		-

(i)

The $300 million bond was issued in September 2003, and at the time of issuance the bond was partially swapped to floating interest rates. In August 2009 and December 2010, $87 million of the issued notes were acquired by CRH plc as part of liability management exercises undertaken and the interest rate hedge was closed out. At 31 December 2021, the remaining fair value hedge adjustment on the hedged item on the Consolidated Balance Sheet was $35 million (2020: $38 million).