BREEDON AGGREGATES ANNUAL RESULTS

Wednesday, Mar 09 2016 by
7

This company runs quarries and sells aggregates, concrete, tarmac and other bulk materials used for civil engineering projects and building.

RNS out this morning with 2015 results
  •  Revenue +18.1%
  • Underlying EBIT +55.5%
  •  Profit before tax +46.4%
  •  Underlying basic EPS +63.4%
  •  Net cash +£76.6m
 Chairman's Statement says:-

· Continued improvement in trading performance, with record results from both England and Scotland

· Underlying EBIT margin up 2.9ppt to 11.9%

· £20+ million invested in capital projects

· Our largest-ever contract finalised: £55 million contract on the Aberdeen Western Peripheral Route, in joint venture

· Performance of 2014 acquisitions ahead of our expectations, particularly the former Barr business

· Agreement to acquire Hope Construction Materials Limited for £336m, subject to CMA approval: our largest acquisition to date

· Outlook continues to be encouraging

See here for full announcement

The Share price is up from 46p a year ago to 69p this morning so 50% increase in the past 12 months.

I bought about a year ago, am pleased with progress to date - they are doing exactly what they said they would - and more than pleased with return to-date. I will be thinking about topping up.

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Disclaimer:  

The author may hold shares in this company. All opinions are his own. You should check any statements that appear factual and seek independent professional advice before making any investment decision.


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Breedon Group plc, formerly Breedon Aggregates Limited, is an independent construction materials company. The Company's operations include a cement plant, two cementitious import terminals, approximately 60 quarries, over 30 asphalt plants, over 200 ready-mixed concrete plants and three concrete products plants. Its segments include Breedon Northern, Breedon Southern and Hope Cement. It supplies a range of cementitious products, crushed rock, sand and gravel, asphalt, ready-mixed concrete and mortar, as well as concrete products and contract surfacing services. Its contract surfacing business comprises road surfacing and maintenance projects, from road networks to car parks, domestic driveways and farm access roads. It produce a range of concrete walling and paving products, blocks and pre-stressed T-beams from its factories in England and Scotland. Its asphalt products are used in various applications, from roads to airport runways, car parks, sport surfaces and domestic driveways. more »

LSE Price
61.5p
Change
 
Mkt Cap (£m)
1,035
P/E (fwd)
11.5
Yield (fwd)
n/a



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6 Posts on this Thread show/hide all

Cisk 9th Mar '16 1 of 6
1

I have topped up and will do so further on any price weakness. There's a lot more to go on this IMHO and once the Hope acquisition is approved (which should be mid summer and will double the size of the company) there's scope for more bottom line improvements and bolt-on acquisitions.

These were excellent results and I see this company as being relatively immune to whatever post-brexit shenanigans the market comes up with.

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Ramridge 9th Mar '16 2 of 6
3

Hmmm. Let me draw your attention to the bottom part of the 'Outlook' statement:
"
While growth prospects remain positive in the UK, there is increasing concern that global growth could be negatively impacted by the Chinese economy and the general slowdown in the emerging markets. Domestically, the EU referendum could also have an adverse effect on growth.

Notwithstanding this, Breedon Aggregates begins an exciting new era in 2016 with the planned acquisition of Hope and we look forward to the future with confidence
"

Is the CEO being extra cautious? extra professional? extra "good citizen" in drawing our attention to what might impact on the company's business?

( no position and not intending to have one)

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herbie47 9th Mar '16 3 of 6
2

Yes good figures but the Hope take over will increase debt considerably. Hope will be funded by £ 300m credit and issuing £41m new shares with existing shareholders. He is right to warn, if there is a recession then many projects will be cancelled/postponed. So I think the timing of the next recession is very important here, if they are loading up debt just before a recession then its not a good move. Also they will probably be overpaying for Hope.

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Cisk 9th Mar '16 4 of 6
2

Hi Ram, I think those comments could be appended to the outlook statement of any company reporting right now. I thought them slightly cautious, given that their business is mostly (if not entirely) in England and Scotland and is probably as immune as you could get.

I suspect the CEO was advised by auditors to add the comments.

Anyway I'm fairly ambivalent to whether we stay in or out. Unlike Paul I don't have a strong wish to leave. What I do think is that, as always, the market is overly occupied by the thought of it, whereas in reality, after some volatility, things will remain much the same. All the talk of the pound dropping by 20% etc is just talk, propagated by nefarious market participants like bankers and fx dealers who need all this volatility to make money.

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Ramridge 9th Mar '16 5 of 6

Hi Cisk - I do not disagree with your Breedon analysis. The statement does look like a standard health warning given that all their business (and I checked this in their recent report) comes from England and Scotland.

FWIW and IMO, on the general economic front, all headwinds including Brexit pale into insignificance compared to the slowdown of the Chinese economy. I think we all (US, UK, EC, emerging countries) are dancing to the tune or the health of the Chinese economy.
I have taken the view that this will continue to be a problem for the rest of the year at least. Based on this belief, I am keeping my portfolio 70% cash and only investing in unusual opportunistic situations.
And believe me it is very difficult to just sit on my hands!
Regards, Ram

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tournesol 9th Mar '16 6 of 6
1

I do not think that Breedon is any more exposed to the effect of a China slowdown than any other small business which operates exclusively in the UK. I think the Chairman was simply appending a standard boiler plate risk assessment type comment.

I think that there is likely to be a continuing stream of infrastructure projects in the UK and that Breedon is well placed to grow its very modest slice of that growing cake. A bigger piece of a bigger cake is the expected outcome.

When I bought a year ago I was looking for 100% gain over the next 3-5 years. I'm not expecting another 50% return over the next 12 months but I think that 10-20% is eminently achievable with the same again in the next few years. Which will take me to my original target.

Of course there is risk, but it seems to me to be pretty low. I am not looking for risk free return. And I manage the risk here by keeping my position size relatively small. (Of course it is 50% bigger than it was when it started but that's not a bad thing. :~) )

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