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In accordance with its terms of reference, he will step down as a member of the Audit Committee following the Annual General Meeting in May 2013. On the recommendation of the Nomination and Corporate Governance Committee the Board has appointed Ernst Bärtschi to succeed Jan Maarten as Audit Committee Chairman. Ernst has been a member of the Audit Committee since March 2012 and is one of that Committee’s designated financial experts. We will be reviewing the membership of the  Audit Committee in the coming months. 

As reported to shareholders in the 2011 Annual Report, we recommended that the Board appoint a UK-based service provider to facilitate the external evaluation of the Board. The Committee agreed the terms of reference of the chosen provider, ICSA Board Evaluation (ICSA). The outcome of the evaluation and ICSA’s recommendations are set out on page 42. The next external evaluation will be carried out in 2015. 

We also considered developments in the area of corporate governance. In relation to the changes to the UK Corporate Governance Code published by the FRC in September 2012 and which will apply to CRH for the financial year ending on 31 December 2013, we have considered whether the Audit Committee  should undertake additional work to provide advice to the Board on whether the Annual Report and accounts, taken as a whole, is fair, balanced and understandable. We concluded that, at present, this should remain the collective responsibility of the full Board. However, this matter will be kept under review. 

## Key areas of focus for 2013 

During 2013 we will continue our work on Board renewal and refreshment. In addition, we will monitor developments in the EU regarding the implementation of the corporate governance plan announced in December 2012. This may lead to the introduction of new measures aimed at enhancing transparency and increasing shareholder engagement, although some of the proposals cover issues where CRH already has suitable measures in place. 

## Nicky Hartery 

Nomination and Corporate Governance Committee Chairman 

February 2013 

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