(i)	The customer-related intangible assets relate predominantly to non-contractual customer relationships.

(ii)	The amortisation charge primarily relates to customer-related intangible assets.

(iii)

Further details on note (iii) are set out overleaf.

Cash-generating units

Goodwill acquired through business combination activity has been allocated to CGUs that are expected to benefit from synergies in that combination. The CGUs represent the lowest level within the Group at which the associated goodwill is monitored for internal management purposes, and are not larger than the operating segments

determined in accordance with IFRS 8. A total of 22 (2020: 22) CGUs have been identified and these are analysed between the three business segments below. All businesses within the various CGUs exhibit similar and/or consistent profit margin and asset intensity characteristics. Assets, liabilities, deferred tax and goodwill have been assigned to the CGUs on a reasonable and consistent basis.


	Number of cash-generating units				Goodwill
	2021		2020		2021 $m		2020 $m
Americas Materials		5		5		4,292		4,057
Europe Materials		16		16		2,195		2,402
Building Products		1		1		2,964		2,573
Total Group		22		22		9,451		9,032

Impairment testing methodology and

results

Goodwill is subject to impairment testing on an annual basis. The recoverable amount of 22 CGUs is determined based on a

value-in-use

computation, using Level 3 inputs in accordance with the fair value hierarchy.

The cash flow forecasts are primarily based on a five-year strategic plan document formally approved by the Board of Directors and specifically exclude the impact of future development activity. To align with the Group’s acquisition modelling methodology, these cash flows are projected forward for an additional five years to determine the basis for an annuity-based terminal value. As in prior years, the terminal value is based on a

20-year

annuity, with the exception of certain long-lived cement assets, where an assumption of a

30-year annuity has been used. Projected cash

flows beyond the initial evaluation period have been extrapolated using real growth rates ranging from 1.8% in the Americas, 0.8% to 2.1% in Europe and 3.1% in Asia. Such real growth rates do not exceed the long-term average growth rates for the countries in which each CGU operates. The

value-in-use

represents the present value of the future cash flows, including the terminal value, discounted at a rate appropriate to each CGU. The real pre-tax discount rates used range from 6.5% to 8.6% (2020: 6.5% to 8.6%). These rates are in line with the Group’s estimated weighted average cost of capital, arrived at using the Capital Asset Pricing Model. Net cash flows incorporate estimated capital expenditure required to achieve the Group’s 2025 carbon emissions target of 520kg of CO

per tonne of cementitious material. The 2021 annual goodwill impairment testing process has resulted in no intangible asset impairments. The 2020 annual impairment testing process resulted in an impairment of $410 million being recorded in respect of our UK CGU in Europe Materials due to a sustained period of economic disruption following the Brexit referendum in 2016, the impact of the

COVID-19

pandemic and the political uncertainty that presented in the second half of 2020 prior to the end of the Brexit transition period between the UK and the European Union. The assumptions underlying the 2020

value-in-use

model projections resulted in a present value (using a real

pre-tax

discount rate of 7.6%) of $1,782 million and a related goodwill impairment being recorded of $410 million.

Key sources of estimation

uncertainty

The cash flows have been arrived at taking into account the Group’s strong financial position, its established history of earnings and cash flow generation and the nature of the building materials industry, where product obsolescence is very low. However, expected future cash flows are inherently uncertain and are therefore liable to material change over time. The key assumptions employed in arriving at the estimates of future cash flows factored into impairment testing are subjective and include projected EBITDA (as defined)* margins, long-term growth and discount rates used and the duration of the discounted cash flow model. Significant under-performance in any of CRH’s major CGUs may give rise to a material write-down of goodwill which would have a substantial impact on the Group’s income and equity, however given the excess headroom on the models the likelihood of this happening is not considered reasonably possible.

* EBITDA is defined as earnings before interest, taxes, depreciation, amortisation, asset impairment charges, profit on disposals and the Group’s share of equity accounted investments’ profit after tax.

Significant goodwill amounts

The goodwill allocated to the Americas Cement, AMAT South (Americas Materials segment) and the Building Products (Building Products segment) CGUs account for between 10% and 31% of the total carrying amount shown on page

174

. The goodwill allocated to each of the remaining CGUs is less than 10% of the total carrying value in all other cases. The additional disclosures required for the three CGUs with significant goodwill are as follows:


	Americas Cement				AMAT South				Building Products
	2021		2020		2021		2020		2021		2020
Goodwill allocated to the cash-generating unit at balance sheet date		$2,157m		$2,155m		$944m		$998m		$2,964m		$2,573m
Discount rate applied to the cash flow projections (real pre-tax)		7.5%		7.7%		8.3%		8.0%		8.3%		8.0%
Average EBITDA (as defined)* margin over the initial 5-year period		53.8%		48.5%		17.9%		17.8%		19.1%		18.3%
Value-in-use (present value of future cash flows)		$10,749m		$8,103m		$5,041m		$5,140m		$14,831m		$12,977m
Excess of value-in-use over carrying amount		$5,953m		$3,238m		$2,749m		$2,492m		$9,191m		$7,653m
Long-term growth rates		1.8%		1.6%		1.8%		1.6%		1.8%		1.6%

The key assumptions and methodology used in respect of these

three

CGUs are consistent with those described above. The values applied to each of the key estimates and assumptions are specific to the individual CGUs and were derived from a combination of internal and external factors based on historical experience and took into account the cash flows specifically associated with these businesses. The cash flows and

annuity-

based

terminal value were projected in line with the methodology disclosed above.

The Americas Cement, AMAT South and Building Products CGUs are not included in the ‘Sensitivity analysis’ section below. Given the magnitude of the excess of

value-in-use

over carrying amount, and our belief that the key assumptions are reasonable, management believes that it is not

reasonably possible that there would be a change in the key assumptions such that the carrying amount would exceed the

value-in-use.

Consequently no further disclosures relating to sensitivity of the

value-in-use

computations for the Americas Cement, AMAT South or Building Products CGUs are considered to be warranted.

Sensitivity analysis

A qualitative and quantitative assessment has been performed and results in additional sensitivity disclosures for one of the total 22 CGUs. The key assumptions, methodology used and values applied to each of the key assumptions for this CGU are in line with those outlined above (a

30-year

annuity period has been used). The CGU had goodwill of $565 million at the date of testing. The table below identifies the amounts by which each of the following assumptions may either decline or increase to arrive at a zero excess of the present value of future cash flows over the book value of net assets in the CGU selected for sensitivity analysis disclosures:


		One cash-generating unit
Reduction in EBITDA (as defined)* margin		5.3 percentage points
Reduction in long-term growth rate		3.2 percentage points
Increase in pre-tax discount rate		2.7 percentage points

The average EBITDA (as defined)* margin for this CGU over the initial five-year period was 21.5%. The

value-in-use

(being the present value of the future net cash flows) was $2,172 million and the carrying amount was $1,538 million, resulting in an excess of

value-in-use

over carrying amount of $634 million.