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Total 2012 development spend in the Products  segment amounted to €0.27 billion with a focus on RMI and sustainability segments and on the optimisation of production networks in core markets. In Europe we significantly expanded our RMI-oriented Shutters & Awnings business through the acquisition of a major German player while, in North America, businesses acquired from other public players in our sector served to strengthen core operations in packaged products, concrete pavers and precast products in both the United States and Canada. 

Distribution  acquisitions in Europe totaled €0.05 billion during 2012 with the bulk of this expenditure incurred on the expansion of our Sanitary, Heating and Plumbing channel in Belgium. 

## Organisation and People 

The realigned management structure for our operations in the Americas, outlined in last year’s Chief Executive Review, is now well embedded and is, as expected, accelerating the capture of market growth opportunities as United States construction recovers and is facilitating further streamlining of common business processes and functions across our businesses. 

During 2012 management took the decision to establish a regional CRH headquarters in Singapore to oversee the expansion of our existing interests in India and China and to pursue further development opportunities in the wider region. This office will be led by Ken McKnight, Managing Director Asia, who has transferred from our Europe Materials Division where he had responsibility for Europe West and our operations in India and China. Ken will report directly to Group Chief Operating Officer Albert Manifold while Europe Materials will continue to support activity in the region from its operating resources. We view the establishment of the Singapore office as a further step in the evolution of CRH and an important catalyst for growth in Asia in the medium term. 

## Compliance and Ethics 

Despite the worldwide downturn in our sector, the regulatory environment in which CRH operates is continually changing and placing increased responsibility on our personnel at all levels throughout the organisation. Ensuring that our managers and employees act in a manner consistent with CRH’s core values, and with the various local legal requirements with which our operations throughout the world must comply, is a responsibility that we take very seriously. Over the past few years we have enhanced our existing compliance structures and undertaken a thorough review of the Group’s Code of Business Conduct to ensure that our procedures and processes reflect our commitment to integrity, honesty and respect for the law and that we have a consistency of approach across key governance areas. Our updated Code of Business Conduct and the subsidiary policies relating to Ethical Procurement, Anti-Fraud, Anti-Bribery, Shares & Securities and Competition/Anti-Trust Compliance have been widely circulated throughout CRH supplemented by intensive compliance briefings and training. 

## 2013 Outlook 

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. 

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. 

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. 

