REG - Breedon Group PLC - Final Results
05/03/2025 07:00
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RNS Number : 3519Z Breedon Group PLC 05 March 2025
5 March 2025
BREEDON GROUP PLC
Annual results 2024
A further year of record Underlying results; ahead of expectations
BMC integration completed; encouraging initial contribution
Breedon Group plc (Breedon or the Group), a leading vertically-integrated
construction materials group in Great Britain, Ireland and the United States,
announces audited results for the year ended 31 December 2024.
Statutory highlights Underlying(1) highlights
£m 2024 2023 % change 2024 2023 % change % LFL(2)
except where stated
Revenue 1,576.3 1,487.5 6% 1,576.3 1,487.5 6% (5)%
EBITDA(3) 245.8 231.8 6% 269.9 242.3 11% -
EBITDA(3) margin 15.6% 15.6% - 17.1% 16.3% 80bps
EBIT(4) 149.6 145.7 3% 173.7 156.2 11% -
EBIT(4) margin 9.5% 9.8% (30)bps 11.0% 10.5% 50bps
Profit Before Tax 125.4 134.4 (7)% 150.8 144.9 4%
Basic EPS(5) ( ) 28.1p 31.1p (10)% 34.4p 34.0p 1%
Dividend per share 14.5p 13.5p 7%
Net Debt(6) 405.3 169.9 139%
Covenant Leverage(7) 1.4x 0.5x 0.9x
ROIC(8) 9.0% 9.9% (90)bps
FINANCIAL HIGHLIGHTS
Acquisition of BMC and careful cost control mitigated market headwinds and
weather impact
· Revenue increased 6% driven by our entry into the US
o Volume reduced 6ppt due to significant market headwinds in GB and poor
weather conditions across our geographies
o Resilient pricing contributed 2ppt, enabled by our strong competitive
position
· Underlying EBITDA margin increased 80bps helped by careful
control of costs
Strategic flexibility retained
· Covenant Leverage increased to 1.4x reflecting BMC acquisition;
comfortably within our target range of 1x to 2x
· Leverage reduced 0.2x in the second half due to strong cash
generation and prudent working capital stewardship
· Post-tax ROIC 9.0% reflects the impact of increased corporate tax
rates and ten months ownership of BMC
Total dividend increased to 14.5p; reflecting our confidence in the future
OPERATING HIGHLIGHTS
Enduring resilience and commitment of Team Breedon delivered strong operating
performance
· GB revenue decreased 4%; robust surfacing performance, resilient
pricing and deliberate cost management protected profitability, partially
offsetting challenging market conditions which stabilised in the second half
· Ireland delivered a strong performance; Underlying EBITDA margin
expanded 260bps reflecting the supportive market in RoI, deliberate focus on
growing profitably, increased contribution from aggregates and disciplined
cost management
· BMC integration successfully completed and delivered an
encouraging initial contribution despite poor weather conditions in the final
quarter. Investment in health, safety and wellbeing delivering immediate
benefits, improving productivity by reducing lost time injuries
· Cement Underlying EBITDA margin expanded 300bps; volume
stabilised in the second half, underlying pricing progressed and we
successfully delivered three major capital investment projects
STRATEGIC HIGHLIGHTS
EXPAND: M&A pipeline active across all three platforms
· Scalable third platform launched with an active pipeline of
opportunities across the Midwest
· First US bolt-on transaction, Building Products, completed in
October
· Completed two downstream bolt-on transactions in GB to in-fill
capability and footprint
IMPROVE: Focus on continual operational and commercial excellence
· Operational efficiencies and process improvements coupled with
actions to scale capacity appropriately, ensure Breedon is set fair when
markets recover
LENSES: Material progress across the Group
· People:
o Team Breedon; exceptionally high engagement scores sustained at 78%
· Sustainability:
o 2030 targets upgraded, reflecting the material progress made in recent
years
o Enhanced disclosure and transparency rewarded; CDP ratings awarded and
upgraded (Climate Change: A-, Water Security: B-). Net zero targets formally
validated by SBTi
o Carbon footprint reduced further; increasing sales of CEM II cement and
Breedon Balance product range, greater utilisation of alternative fuels
· Finance:
o Disciplined financial framework underpinning growth; healthy balance sheet
and cash flow sustained
EXPAND: Earnings enhancing acquisition of Lionmark; scaling and diversifying
Breedon US
· Announcing our diversification into asphalt and surfacing in the
US Midwest through the acquisition of Lionmark for US$238m - see separate
announcement issued today at Investors - Breedon
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CURRENT TRADING AND OUTLOOK
Optimally positioned to benefit when construction market activity improves
· Enquiry levels were healthy towards the end of 2024 and have
remained encouraging in the first two months of 2025
· The economic landscape in the US is robust while RoI is strong,
benefiting from a budget surplus and net inward migration
· Optimistic 2024 should represent a floor in construction market
activity in the UK while the broader economic outlook is less clear
· Our M&A pipeline remains well-populated and provides exciting
opportunities in each of our geographies and we continue to prioritise the
build-out of our US business
· We remain focused on self-help and have maintained investment
through the cycle, ensuring Breedon is well-positioned to participate when
market activity improves
Rob Wood, Chief Executive Officer, remarked:
"2024 was another successful year for Breedon. We entered the US market,
delivered record revenue in the face of challenging conditions, and took care
of our people. I am extremely proud of what our team has accomplished. What
they deliver is remarkable and does not happen by chance. It takes grit,
resolve and a relentless focus on getting the job done and so I thank them for
'Making it Happen'.
"When I reflect on another year of progress at Breedon I am struck by how much
we have changed and improved. We have extended our model downstream and into
new geographies, grown our team and expanded our market position. Even more
striking is what has remained the same. By staying true to our purpose of
making a material difference while living our values, we have built a bigger
and better Breedon.
"Entering 2025 we have three strong platforms, a first-class team, an
abundance of opportunity and our markets are poised for recovery. Our
refreshed Breedon 3.0 strategy means that everything we need for success is
now in place and I am more excited than ever for our future".
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No. 596/2014, as it forms part of the UK
domestic law by virtue of the European Union (Withdrawal) Act 2018 (as
amended).
RESULTS PRESENTATION
Breedon will host a results presentation for analysts and investors at 08:30am
today at the offices of Deutsche Numis, 45 Gresham Street, London EC2V 7BF, or
online via www.breedongroup.com/investors
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. The presentation will be followed by Q&A, where it will be possible to
participate through the following dial-in details:
Event Title: Breedon Annual Results 2024
Start Time/Date: 08:30 Wednesday, 5 March 2025 - please join the event 5-10 minutes prior to
scheduled start time. When prompted, provide the event title
Webcast link: https://brrmedia.news/BREE_FY24
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United Kingdom, Toll-free: 0808 109 0700
United Kingdom, Local: +44 (0) 33 0551 0200
Confirmation Code: Breedon Full Year Results
ENQUIRIES
Breedon Group plc +44 (0) 1332 694010
Rob Wood, Chief Executive Officer
James Brotherton, Chief Financial Officer
Louise Turner-Smith, Head of Investor Relations +44 (0) 7860 911909
MHP (Public relations adviser) +44 (0) 7595 461231
Reg Hoare, Rachel Farrington, Charles Hirst breedon@mhpgroup.com
Notes:
1. Underlying results are stated before acquisition-related expenses,
property gains and losses, redundancy and reorganisation costs, amortisation
of acquired intangibles, unamortised banking arrangement fee and related tax
items. Prior year included costs associated with the Group's move from AIM
to the Main Market. References to an Underlying profit measure throughout
this announcement are defined on this basis.
2. Like-for-like reflects reported values adjusted for the impact of
acquisitions and disposals.
3. Earnings before interest, tax, depreciation and amortisation.
4. Earnings before interest and tax, which equates to profit from
operations.
5. EPS in the Underlying highlights is Adjusted Underlying Basic EPS,
which is Underlying Basic EPS adjusted to exclude the impact of non-underlying
items.
6. Net Debt including IFRS 16 lease liabilities.
7. Covenant Leverage is defined as the ratio of Underlying EBITDA to
Net Debt, with both Underlying EBITDA and Net Debt amended to reflect the
material items which are adjusted by the Group and its lenders in determining
leverage for the purpose of assessing covenant compliance. The only material
adjusting items being the impact of IFRS 16 and a pro-forma adjustment to
include pre-acquisition EBITDA from businesses owned for less than twelve
months.
8. ROIC: post-tax return on average invested capital.
9. Information for investors, including analyst consensus estimates,
can be found on the Group's website at www.breedongroup.com/investors
(https://protect.checkpoint.com/v2/___http:/www.breedongroup.com/investors___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzphMzc0ZDYwMjQzYzk2ZWU3MTc1M2QwMmQxMDY0NzQyMDo2OmIyYWQ6N2VkYWY1YjE3OTY1MDk4NTBhNTVkNjg0M2QxZWI2ZjVlNDVmNDY2NGViNmNlNGUwZDIxZThiYWFlNzhlM2E4YTpwOkY6Tg)
.
About Breedon Group plc
Breedon Group plc, a leading vertically-integrated construction materials
group in Great Britain, Ireland and the United States delivers essential
products to the construction sector. Breedon holds 1.4bn tonnes of mineral
reserves and resources with long reserve life, supplying value-added products
and services, including specialty materials, surfacing and highway maintenance
operations, to a broad range of customers through its extensive local network
of quarries, ready-mixed concrete and asphalt plants.
The Group's two well-invested cement plants are actively engaged in a number
of carbon reduction practices, which include utilising alternative raw
materials and lower carbon fuels. Breedon's 4,500 colleagues embody our
commitment to 'Make a Material Difference' as the Group continues to execute
its strategy to create sustainable value for all stakeholders, delivering
growth through organic improvement and acquisition in the heavyside
construction materials market. Breedon shares (BREE) are traded on the Main
Market of the London Stock Exchange and are a constituent of the FTSE 250
index.
LEI: 213800DQGNQE3X76WS92
LIVING OUR VALUES DELIVERED RESULTS AHEAD OF EXPECTATIONS
Living our values has never been more evident than in 2024 when our team 'Made
it Happen' in the face of significant market headwinds, political and economic
instability, and poor weather conditions.
By adhering to a clear objective, to be a bigger and better Breedon, and
through the enduring resilience and commitment of our first-class team, we
delivered significant strategic and operational milestones across the Group,
contributing to a fourth successive year of record revenue and delivering
Underlying results ahead of expectations.
We created our third platform in the US, evolved our strategy and upgraded our
sustainability targets. This remarkable outcome was achieved by maintaining a
determined commitment to executing our strategy and a deliberate focus on
operational and commercial excellence.
In March, we entered the US construction materials market through the
acquisition of BMC for an enterprise value of US$300m. BMC, headquartered in
St Louis, Missouri, supplies ready-mixed concrete, aggregates and building
products. With an entrepreneurial approach and strong growth track record, the
close cultural alignment enabled the smooth integration of BMC into the Group,
delivering an encouraging initial contribution.
For further detail, turn to the finance review on page 13.
OUTLOOK
Enquiry levels were healthy towards the end of 2024 and have remained
encouraging in the first two months of 2025. Weather conditions in all our
markets have been disruptive in early 2025. However, this is traditionally a
quieter period of the year for us.
The economic landscape in the US is robust while RoI is strong, benefiting
from a budget surplus, falling interest rates and net inward migration. Both
regions benefit from long-term commitments to fund development in
infrastructure. In addition, they each experience structural housing
shortfalls, lack of inventory in the secondary market and improving
affordability at the margin.
While we remain optimistic that 2024 should represent a floor in construction
market activity in the UK, the broader economic outlook is less clear. The
Government's growth agenda is supportive for the construction materials
industry, interest rates have started to fall and the housing market lacks
inventory. However, the catalyst to stimulate a recovery in confidence and
investment is yet to materialise.
Our M&A pipeline remains well populated and we have exciting opportunities
in each of our geographies. We continue to prioritise the build out of our US
business in the Midwest and we have scope in GB and Ireland to expand our
regional footprint and downstream activities.
We remain focused on our operational and commercial excellence programmes and
have maintained investment in our machinery and plant through the cycle. This
will enable us to maximise the productivity and efficiency of our operations
when activity levels improve. While the timing remains uncertain, when market
activity improves Breedon is optimally positioned to benefit.
STRATEGY REVIEW
Evolving our strategy: Breedon 3.0
Our strategy has evolved at intervals since Breedon was formed but always with
the same simple principle at its core; deliver profitable growth, by
efficiently providing essential materials to structurally growing end-markets
and executing carefully considered acquisitions in target geographies.
Key to operating our successful model are our values. Our intention to 'Keep
it Simple' and 'Strive to Improve' is evident in this evolution of our
strategy, Breedon 3.0, where we have simplified and clarified how we will
deliver our next chapter of growth, ensuring our strategy relates directly to
the day-to-day activities of our operational colleagues.
We have retained our emphasis on profitable growth through the core driving
forces of 'Expand' and 'Improve'. Furthermore, the implementation of our
strategy is viewed through the lenses of 'People' - leading our first-class
entrepreneurial team effectively, 'Sustainability' - operating our business
sustainably, and 'Finance' - deploying our capital in accordance with our
disciplined financial framework.
Expand
Breedon is a consolidator and M&A is at the heart of our strategy. Since
formation, we have built three vertically-integrated platforms in GB, Ireland
and, most recently, the US, unlocking value in the process.
We balance M&A with organic growth by serving structurally attractive
end-markets in geographies that benefit from long-term growth prospects.
The launch of our scalable third platform in the US through the carefully
targeted acquisition of BMC delivers an optimal combination of both these
routes to Expand. Construction starts in the US are forecast to outpace
European construction output in the medium-term, driven by housing and
infrastructure deficits and federally funded stimulus programmes. In addition,
the US is highly fragmented with c.60% of the market supplied by over 5,000
operators, providing a significant opportunity to source high-quality assets
at fair valuations.
Our focus in the US in the medium-term will be on Missouri and the surrounding
states, a region with an economic footprint roughly equivalent to the UK but
with more than double the demand for aggregates. Within that region we will
focus on growing our footprint and building out our vertically-integrated
model. In October 2024, BMC completed its first transaction under Breedon
ownership, acquiring Building Products, a highly complementary, downstream
manufacturer of masonry blocks and other building products.
The US offers Breedon numerous opportunities and our objective in the coming
decade is to build a US business of a scale comparable to our combined GB and
Ireland operations.
The prospect for further M&A in GB and Ireland for bolt-on and downstream
transactions remains compelling, and our M&A pipeline is well populated.
In January 2024, we completed the acquisition of Eco-Asphalt, a Merseyside
asphalt supplier strategically located within the region where we service the
National Highways Pavement framework. In April 2024 we acquired Phoenix
Surfacing, enhancing our presence in the Midlands and reinforcing our regional
surfacing, airfields and recycled asphalt capabilities.
Improve
By bringing the assets we acquire onto our vertically-integrated platforms, we
can unlock efficiencies, drive innovation and provide our customers with a
reliable and trusted supply chain partner. This continual process creates a
virtuous cycle of enhancement, complementing end-market growth and M&A
with self-help, enabling us to outperform our markets.
Our valuable mineral reserves and resources are the lifeblood of our business
and replenishing them requires diligent long-term planning and strong
community relationships. In 2024 our land and minerals team successfully
replenished our mineral reserves and resources, securing planning consent for
extensions at eight quarries, adding 51m tonnes of mineral assets,
significantly ahead of the 27.3m tonnes extracted in the year.
Our teams utilise proprietary software to map local markets and track mineral
replenishment requirements far into the future. We have an additional pipeline
of 142m tonnes at various stages of development, equivalent to more than five
years of production at current rates.
As a trusted steward of land and mineral assets, we seek to refine our
processes through innovation and commercial and operational excellence
programmes to ensure we maximise the value of every tonne of material we
produce while minimising the impact on our neighbours and environment.
By using a broad diagnostics benchmark of operational efficiency indicators
and analysing every step of the production process from quarry 'face to gate',
we understand each site's unique requirements, enabling us to target our
investment with care. Process reengineering enabled us to remove the need for
contract crushing at Leaton and Cloud Hill while the development of our
Running Equipment Efficiency Improvement Programme enabled us to increase the
utilisation of the wash plant at Dowlow by 50%.
Our vertically-integrated model promotes commercial excellence, evident in the
success of our GB surfacing business. Through the close collaboration of our
commercial and site teams we have ensured the reliable provision of highly
technical asphalt with sustainable properties to our growing airfield
surfacing business.
Increasing the use of technology and innovation is allowing us to unlock
efficiencies while improving safety. By using 'setting out' robots to
autonomously navigate airfield surfacing projects, marking out each stage of
laying asphalt with precision, we increased accuracy and efficiency while
reducing the risk of vehicle interaction. We will increasingly utilise
Artificial Intelligence and virtual reality for training and quality control,
improving outcomes for our people and our customers.
We view the implementation of our strategy through three lenses
People: Our people make Breedon unique
In 2024 we added nearly 600 colleagues through the acquisition of BMC. On
completion of the transaction, enhancing safety practices and procedures took
priority and we saw immediate benefits, not only reducing time lost to
injuries by 80% but also their severity.
Improving the health, safety and wellbeing of our team is a constant objective
and therefore, in 2024 we undertook a greater number of Visible Felt
Leadership visits across the Group. We were pleased to see a direct
improvement in our safety metrics with a reduction in the lost time injury
frequency rate to 3.3 per million hours worked (2023: 3.5).
Replenishing our team through the early careers route is essential for the
future success of the Group, bringing in fresh talent and perspectives. The
apprentice and industrial placement student programmes have been extremely
successful in recent years, bringing 170 early careers colleagues into Breedon
since 2022, of which 40 joined in the last 12 months.
'Showing we Care' is a value we live by, particularly with regard to our
people. In 2024, we rewarded our colleagues with a 4% pay rise and implemented
additional management training to enhance our leadership skills. These actions
were acknowledged in our latest engagement survey, which once again recorded
exceptionally high scores for the construction materials industry with 75% of
our colleagues taking part (2023: 76%), and 78% reporting that they felt
engaged (2023: 80%).
Sustainability: Operating sustainably
Operating our business sustainably is a strategic imperative and at the
forefront of every decision we take. Breedon has always taken its
responsibility to its people and its communities seriously and we have
committed to increase our disclosure and transparency while working towards
reducing our carbon footprint.
In recognition of the substantial progress we have made, we were pleased to
receive formal validation of our Group wide carbon reduction targets from SBTi
during 2024. In addition, we were awarded our first CDP ratings, receiving a C
for Water Security and a B for Climate Change. Both ratings have subsequently
been upgraded, and in February 2025 we were awarded B- for Water Security and
A- for Climate Change.
Decarbonising our Cement business is essential to achieving our net zero
objective and we are targeting every part of our operation that contributes to
CO(2) emissions. Both our cement plants made progress to increase the use of
alternative fuels, reaching a blended replacement rate of nearly 50% while our
modern Kinnegad plant at times achieved 100% utilisation of low carbon
alternatives. Our development of a high-strength, lower carbon CEM II product
was well received by our customers and CEM II now comprises 37% of our cement
sales (2023: 30%).
Carbon capture and storage is an essential technology to enable the
decarbonisation of the cement production process. During 2024 we made further
progress, moving into the FEED stage (front-end engineering and design) of our
plans to capture CO(2) emissions at Hope, exploring different technologies and
engineering solutions to capture our carbon emissions.
The landmark Peak Cluster carbon capture and storage project has the potential
to decarbonise 40% of the cement and lime production in the UK and we continue
to work with the Peak Cluster partners towards the next stage of this exciting
project.
In light of the significant progress we have made towards our sustainability
targets, in 2024 we took the opportunity to upgrade our ambitions. We have
accelerated our plans to decarbonise and we are now aiming to reduce Scope 1
and 2 emissions and Scope 3 emissions from purchased clinker and cement by
23.3% by 2030 from a 2022 baseline. Creating social value remains a key
objective and we will generate a cumulative £500m benefit to society by 2030.
We will work towards generating half of our downstream revenue from our
Breedon Balance product range by 2030 (2024: 34%), thereby contributing to a
more sustainable built environment.
Finance: Disciplined financial framework
Our financial framework governs how we connect thoughtful capital allocation
to strategy, facilitating multiple routes to growth. By prioritising
profitable growth, through-cycle investment and responsible leverage, the
framework has served us well, ensuring a strong balance sheet, healthy returns
and strategic financial flexibility.
We have multiple investment opportunities and at Breedon investment is a
differentiator. Even though volumes have declined in each of the past three
years, we deliberately maintained capital investment through the cycle, an
approach that ensures our well-invested assets will be positioned to respond
efficiently when the end-market backdrop improves.
In 2024 we evolved the suite of financial targets by which we measure our
performance, retaining our emphasis on profitability and financial
flexibility. While we have maintained the majority of our targets we have
modified our Free Cash Flow conversion measure, reducing the target to 45% to
reflect higher corporate tax rates.
An Underlying EBITDA margin target range was introduced to complement our
existing Underlying EBIT margin target range. Our cost of borrowing is
directly impacted by our level of Underlying EBITDA and relates to our debt
covenant compliance. M&A transactions predominantly reference an
Underlying EBITDA multiple when assessing valuation. Many of our UK and
International peers report Underlying EBITDA performance as their primary
profit metric. Our primary operating profit performance measure going forward
will be Underlying EBITDA.
For further detail, turn to the finance review on page 13.
OPERATIONAL REVIEW
Product volumes
million tonnes except where stated 2024 2023 Change % LFL %
Aggregates 27.3 25.7 6% (3)%
Asphalt 3.6 3.8 (4)% (5)%
Cement 2.0 2.1 (5)% (5)%
Ready-mixed concrete (m(3)) 3.3m 2.9m 11% (11)%
Note: Reported percentage movements are based on non-rounded data.
Great Britain
£m except where stated 2024 2023 Change % LFL %
Revenue 997.4 1,033.8 (4)% (6)%
Underlying EBITDA 131.9 138.6 (5)% (6)%
Underlying EBITDA margin 13.2% 13.4% (20)bps
Underlying EBIT 78.5 86.4 (9)% (11)%
Underlying EBIT margin 7.9% 8.4% (50)bps
Our GB business delivered a resilient performance in 2024, one of the wettest
years on record when weather conditions presented significant challenges to
on-site activity for us and our customers. With the GB market experiencing its
third consecutive year of volume decline, our first-class team drew on their
extensive experience and strong customer relationships to manage through the
challenging market conditions.
Infrastructure remained relatively robust and, while some high-profile civil
engineering projects were cancelled, spending on the maintenance of road,
airport, water and energy infrastructure underpinned sales of aggregates and
asphalt where volumes only declined 5% and 3% respectively on a like-for-like
basis. The downturn in housebuilding activity was particularly evident in
ready-mixed concrete sales, which declined 12% organically.
Challenging conditions were felt across the construction supply chain and,
although the pace of insolvencies abated towards the end of 2024, the overall
level remained elevated at c.29% above the level seen during Covid-19.
Notwithstanding the soft market conditions, our volumes stabilised in the
second half with sequential volumes comparable to the first half.
Consequently, pricing was sustained. Revenue declined 4% to £997.4m (2023:
£1,033.8m) or 6% organically.
Our team took deliberate actions to manage the cost base and protect
profitability, restructuring the materials business and scaling capacity
appropriately. During the year we closed or mothballed 11 ready-mixed concrete
plants, five quarries and two asphalt plants.
As a result, Underlying EBITDA reduced 5% to £131.9m (2023: £138.6m) or down
6% organically. In a business with high operating leverage, it is therefore
highly creditable that our team delivered an Underlying EBITDA margin of
13.2%, a small reduction of 20bps compared to 2023.
We maintained our focus on self-help throughout the year, partially mitigating
the soft market conditions. We continued to drive our commercial and
operational excellence programmes to streamline processes, maximise efficiency
and enhance customer service and expanded our presence in new markets with the
acquisitions of Eco-Asphalt and Phoenix Surfacing.
Our surfacing business increased its airfield maintenance presence, completing
high-profile projects for the Defence Infrastructure Organisation (DIO) and
pulling through a third of the GB Materials asphalt volumes. Working in close
collaboration internally and with our customers we laid 36,000 tonnes of
asphalt at RAF Leeming in nine days.
We have built a strong brand in this niche market, investing carefully in
mobile plant and technology to deliver value and reliability for our
customers. Consequently, we have a healthy airfields pipeline of DIO and
commercial projects with up to five years' visibility.
GB outlook
The market backdrop is stabilising and we believe 2024 will prove to be a
floor for volumes, particularly in the event of a housebuilding recovery. We
have continued to invest through the cycle, maintaining close customer
relationships, ensuring that when our end-markets return to growth, our team,
and the plant and machinery they operate, are well-positioned to respond
efficiently and reliably.
Ireland
£m except where stated 2024 2023 Change % LFL %
Revenue 233.4 235.5 (1)% (2)%
Underlying EBITDA 41.5 35.9 16% 14%
Underlying EBITDA margin 17.8% 15.2% 260bps
Underlying EBIT 33.6 29.0 16% 14%
Underlying EBIT margin 14.4% 12.3% 210bps
Our business in Ireland delivered a strong performance in 2024. RoI benefited
from positive market conditions driven by the budget surplus and investment in
housing and infrastructure while the return of the governing Assembly in NI
contributed to an improvement in sentiment.
Furthermore, actions taken in recent years to restructure and rebrand our
Irish business, reinvigorate the leadership team and enhance the contribution
from aggregates came to the fore during the year, driving volume and enhancing
profitability.
Increasing the supply of our own mineral assets through our downstream
operations has been a strategic priority in Ireland. In 2024 we once again
enhanced our contribution from aggregates by recommissioning dormant quarries
and acquiring well-located assets.
We secured extensions at three existing quarries, submitted plans for two new
strategically located asphalt plants and a recycled asphalt planings hub, and
are preparing three new renewable energy projects.
Our sites are well positioned to serve infrastructure projects across Ireland
and the steep rise in house building activity benefited our operations in RoI.
We supplied high-profile infrastructure projects such as the Celtic
Interconnector and end-uses such as high-speed road networks and rail ballast
which require a specific high-value aggregates specification that quarries in
our portfolio provide. Consequently, aggregates volumes in Ireland increased
11%, or 8% on a like-for-like basis. Since acquisition our aggregates volumes
in Ireland have increased on average by 9% per year.
In 2024 we tendered for c.600 road maintenance schemes and delivered multiple
high-speed framework projects and contracts for Dublin Airport. In NI,
although the political backdrop stabilised, the phased return to work of the
civil service presented some challenges in progressing the letting of
framework contracts, which in turn impacted activity levels. This, together
with our more structured approach to the tendering of contracts led to 11%
lower asphalt volumes in Ireland across the year.
Due to our leading market positions and reputation for high quality service,
pricing was sustained. Revenue was stable at £233.4m (2023: £235.5m) or down
2% on a like-for-like basis after adjusting for the acquisition of Robinsons
in May 2023.
Growing profitably is a guiding principle of our strategy and we have
continued to review the optimal configuration of the division. During 2024, we
took further steps to enhance profitability, increasing the contribution from
aggregate sales, reducing headcount and selectively tendering for projects.
These deliberate actions resulted in Underlying EBITDA of £41.5m, an increase
of 16%, or 14% on an organic basis, and delivered an Underlying EBITDA margin
of 17.8%, an increase of 260bps.
Ireland outlook
The political and economic landscape in RoI is supportive where the Government
operates a budget surplus and net inward migration is driving population
growth and the need to invest in housing and infrastructure. In NI, while
sentiment has improved, the economic outlook remains less clear. There are a
number of large infrastructure projects coming to market in 2025 and we are
well positioned to benefit. Our M&A pipeline is well populated and active
discussions are ongoing.
United States
£m except where stated 2024 2023 Change %
Revenue 132.5 - -
Underlying EBITDA 24.8 - -
Underlying EBITDA margin 18.7% - -
Underlying EBIT 16.4 - -
Underlying EBIT margin 12.4% - -
In March 2024, we delivered a transformational strategic objective. Our third
geographic platform was established through the acquisition of BMC which
provides us with a solid foundation for growth in the US construction
materials market.
BMC's culture is closely aligned to Breedon. Our entrepreneurial US team are
close to their local markets, operating an aggregates-led
vertically-integrated model, pulling our own material through our ready-mixed
concrete plants. BMC is a consolidator and has been built through many
transactions, with an ambitious pipeline of target opportunities.
The integration of BMC has been completed quickly and successfully and, in its
first ten months under Breedon's ownership, BMC delivered an encouraging
initial contribution despite poor weather conditions in the final quarter
impacting volumes. Due to the supportive level of underlying demand and
healthy backlogs, pricing throughout the year was positive. BMC contributed
revenue of £132.5m and Underlying EBITDA of £24.8m in the period since 7
March. Underlying EBITDA margin of 18.7% absorbs certain additional operating
costs including investment in improving health, safety and wellbeing outcomes.
Ensuring our colleagues return Home Safe and Well each day is our highest
priority. While BMC had already committed to improve its safety practices,
following completion we increased the emphasis on safety culture, introducing
new protocols while investing in equipment and training to enhance safety
outcomes. These actions delivered immediate benefits, improving productivity
by reducing days lost to injuries by 80%.
Our M&A pipeline is well populated, active and focused on those states
surrounding Missouri that we define as the Midwest. Since completing our entry
to the US, we are considered to be a credible acquirer, and our expanded
pipeline has been complemented by inbound interest.
During October BMC completed its first transaction under Breedon's ownership,
acquiring a building products and masonry manufacturer in Western Illinois.
Building Products is highly complementary to our downstream products business
and generates revenue of c.US$9.0m per annum.
United States outlook
The economic and political backdrop in the US is supportive. Residential
construction is underpinned by regional population growth and urbanisation
while infrastructure and industrial end-markets have been significantly
under-invested and benefiting from the recent introduction of new federal and
state funding programmes. Falling interest rates and major infrastructure
projects should continue to support growth in the future.
Cement
£m except where stated 2024 2023 Change %
Revenue 309.2 331.2 (7)%
Underlying EBITDA 88.2 84.5 4%
Underlying EBITDA margin 28.5% 25.5% 300bps
Underlying EBIT 58.5 55.2 6%
Underlying EBIT margin 18.9% 16.7% 220bps
The positivity and commitment of our first-class team were exemplary in 2024
and they delivered a strong performance. By adhering to our core strategic
priority to Improve and focusing on excellence, they enabled Cement to deliver
a significant improvement in Underlying EBITDA margin in the face of
considerable market headwinds and challenging weather conditions.
Infrastructure end-market demand remained resilient in 2024. However, the
slow-down in house building in GB had a material impact on cement demand,
resulting in a reduction in volume for the division as a whole of 5% during
the period. Volumes for the division stabilised as the year progressed and
production in the second half was comparable to that achieved in the first
half.
With the cement market entering a third year of declining volumes, ensuring we
provide the highest quality product, and most reliable service, has never been
more important. Although the headline price of cement reduced 1%, reflecting
the removal of carbon surcharges due to the lower cost of carbon emission
allowances, we remained agile and close to our customers, enabling us to
progress underlying pricing.
We recorded revenue of £309.2m (2023: £331.2m) during the period, a decrease
of 7%. Despite this, through the careful management of our cost base,
Underlying EBITDA increased 4% to £88.2m (2023: £84.5m), expanding
Underlying EBITDA margin by 300bps to 28.5%.
Both our plants operate at world-class levels of kiln reliability, exceeding
94% uptime due to our diligent monitoring and proactive approach to
maintenance. While Hope sustained high levels of performance, Kinnegad once
again improved its reliability. Planned kiln maintenance completed on time and
within budget in all cases.
Kinnegad, the most modern plant in Ireland, successfully trialled new
materials as alternative fuels. The team achieved average fossil fuel
replacement of 81%, at times reaching 100% when feed stock availability
allowed. Hope continued to increase the mix of alternative fuels enabling
Cement to achieve a combined rate of nearly 50% fossil fuel replacement.
During the year, Hope, the largest cement plant in GB, progressed two major
capital improvement projects alongside its annual programme of maintenance and
capital investments. The primary crusher was replaced, having been in service
since 1950. The ARM project, which will enable the import of secondary
materials from our Welsh Slate sites, approached its conclusion ahead of
commissioning in spring 2025.
At Kinnegad, the new 17MW solar farm neared completion ahead of commissioning
in spring 2025. We commenced the construction of a new bagging plant adjacent
to the existing site which will begin operation in the first half of 2025 and
improve our competitive position in the bagged cement market.
Cement outlook
The fortunes of the cement market are influenced by the outlook for housing.
Housebuilding activity in RoI is accelerating and, with a strong commitment
from the UK Government to unlock planning, combined with falling interest
rates and improving affordability, we expect 2024 should represent a floor in
construction materials activity.
FINANCE REVIEW
Breedon delivered a further year of balanced financial performance during 2024
with robust pricing and a focus on operational excellence more than offsetting
the impact of a challenging GB market.
Revenue for the Group increased by 6% to £1,576.3m (2023: £1,487.5m),
supported by our entry into the US and price actions. Like-for-like Revenue
for the year decreased 5% (2023: increase of 4%) with 6% of the decrease due
to lower volumes, partially offset by a 2% favourable impact from price.
Revenue growth in the year was more weighted to the second half increasing by
3% in the first six months and 9% in the second when compared with the
equivalent periods in 2023. The second half benefited from a full
contribution from BMC and a modest improvement in GB trading conditions
compared with 2023.
Underlying EBITDA increased by 11% to £269.9m (2023: £242.3m), helped by
good cost control and operational self-help measures across each of the
divisions. The Group's Underlying EBITDA margin for the year increased to
17.1% (2023: 16.3%), assisted by the higher margins generated in BMC and the
significantly improved margin in Ireland. Our Underlying EBITDA margin is
now only slightly below our threshold target of 17.5%.
On a statutory basis, Group profit from operations of £149.6m increased by
£3.9m from £145.7m in 2023.
Impact of acquisitions
In addition to the acquisition of BMC for an enterprise value of US$300m
during 2024, we also completed three smaller bolt-on transactions for an
aggregate enterprise value of £28.8m (2023: three transactions; aggregate
enterprise value £22.0m).
In the ten month period under our ownership BMC contributed £132.5m to
revenue and £24.8m to Underlying EBITDA. The incremental impact of the other
bolt on acquisitions completed in 2023 and 2024 was a contribution to revenue
of £26.7m and to Underlying EBITDA of £2.7m during the year.
Joint ventures
Our share of profit from our associate and joint ventures was higher at £3.5m
(2023: £2.6m), helped by a stronger performance in 2024 from BEAR Scotland.
Interest
Finance costs in the year increased to £25.4m (2023: £13.9m) principally due
to interest payable on the additional debt drawn to fund the acquisition of
BMC together with the write-off of capitalised fees relating to the Group's
previous RCF that was refinanced in the year.
Non-underlying items
There were £24.1m (2023: £10.5m) of non-underlying items which impacted
profit from operations during the period. Key components included £10.2m
(2023: £0.9m) of acquisition-related expenses, and £12.5m (2023: £6.0m)
amortisation of acquired intangibles. Redundancy and reorganisation costs of
£1.3m (2023: nil) relate to an operational efficiency programme implemented
in response to trading conditions in some of our markets.
Tax
The Group recorded an Underlying tax charge of £32.7m (2023: £29.5m) at an
effective rate of 21.7% (2023: 20.4%). The change in the effective rate is due
to increases in the statutory UK corporation tax rate combined with the
evolving geographic distribution of the Group's trading activities.
The statutory tax charge, calculated relative to statutory profit before tax
and inclusive of deferred tax rate changes, was £29.1m (2023: £28.8m),
equivalent to an effective tax rate of 23.2% (2023: 21.4%).
From 1 January 2024, the Group falls within scope of the Pillar Two Model
Rules ('Pillar Two'). The impact of Pillar Two is limited to the Group's
taxable profits generated in the Republic of Ireland, where the tax rate is
12.5%, resulting in a top up charge of £0.6m that has been recorded in the
income statement.
Earnings per share
Statutory Basic EPS decreased to 28.1p (2023: 31.1p) primarily due to the
significant non-underlying expenses recognised in the period and Adjusted
Underlying Basic Earnings per Share increased fractionally to 34.4p (2023:
34.0p). The acquisition of BMC is estimated to have been accretive to 2024
Adjusted Underlying Basic Earnings per Share by c.2%, around twelve months
ahead of schedule.
The Group has no significant dilutive instruments, and diluted EPS measures
closely track non-diluted measures for both the current and prior year.
Return on invested capital
Post-tax ROIC was lower in 2024 at 9.0% (2023: 9.9%). ROIC was impacted by the
GB trading performance, short-term dilution from the BMC acquisition and the
structural impact of increased corporate tax rates. We remain confident in our
ability to deliver a ROIC ahead of our target of 10% in the medium term once
volumes in our key markets recover.
Statement of financial position
Net assets at 31 December 2024 were £1,170.6m (2023: £1,110.7m). Increases
in total assets of £2,114.0m (2023: £1,872.8m) and total liabilities £943.4
(2023: £762.1m) were principally driven by the acquisition of BMC which was
predominantly cash and debt funded.
Impairment review
We completed our annual impairment review of cash generating units containing
goodwill and retain comfortable levels of headroom relative to the carrying
value of our asset base. As well as our continued consideration of the
impacts of climate change on impairment testing; in light of the ongoing
challenging market conditions in GB we applied further sensitivities to our GB
forecasts. The Directors remain of the view that there are no reasonably
possible changes to assumptions which would result in an impairment charge
being recognised.
Input cost and hedging strategy
Our strategy in the UK and RoI is to hedge substantially all energy and carbon
requirements for at least one year in advance, with further layered purchases
extending into future years, to deliver near-term cost certainty, particularly
for our cement plants. Our US business does not include a cement plant and so
its energy requirements are materially lower than the UK and Ireland.
A proportion of our bitumen requirements are hedged in the short-term,
typically for larger contracts where pricing is agreed up front. Our remaining
bitumen purchases are made at spot as are purchases of other fuels.
Free Cash Flow
Free Cash Flow before major capital investment projects was £114.1m (2023:
£94.8m). In 2024 material capital investment projects totalled £23.4m (2023:
£nil) and comprised three projects consisting of the ARM and primary crusher
projects at Hope and the solar farm at Kinnegad.
Working capital management remained disciplined and meant that our Free Cash
Flow conversion rate (Free Cash Flow as a percentage of Underlying EBITDA)
improved to 42%, just behind our medium-term target of 45%.
In total, net capital expenditure increased by £22.2m to £125.6m (2023:
£103.4m) comprising capital investment of £131.3m (2023: £106.8m), offset
by £5.7m of proceeds from specific asset disposals (2023: £3.4m). This
represents around 132% of the Group's depreciation charge and demonstrates our
commitment to use investment as a differentiator for Breedon through the
cycle.
Over the last five years, average Free Cash Flow conversion has been 53%.
Net Debt
Net Debt increased by £235.4m to £405.3m as at 31 December 2024 (2023:
£169.9m), with the increase largely driven by the acquisition of BMC which
was principally funded through our existing debt facilities and use of surplus
cash balances.
Net Debt includes IFRS 16 lease liabilities of £48.7m (2023: £48.0m).
Covenant Leverage at the year-end was 1.4x (2023: 0.5x), well within our
target range of 1x to 2x and 0.2x lower than reported at the half year.
Refinancing of borrowing facilities
During the year, the Group completed the refinancing of its RCF, increasing
the facility size from £350m to £400m and retaining the option of a further
£100m accordion. The amended facility secures access to longer-term finance,
running for an initial four-year period to at least July 2028, and offers an
incremental reduction in ongoing debt service costs.
Fees and expenses capitalised in connection with the refinancing amounted to
£2.3m and will be amortised over the amended life of the facility.
Capitalised fees of £1.3m relating to the previous facility have been
expensed to the income statement as a non-underlying interest cost.
The remaining facilities available to the Group comprise the £250m USPP,
issued in 2021, which provides long-term financing at low fixed interest rates
with an average fixed coupon of approximately 2%. At 31 December 2024 the USPP
comprised £170m sterling and £80m drawn in euro, with a maturity profile
between 2028 and 2036. Our borrowing facilities are subject to leverage and
interest cover covenants which are tested half-yearly, and we remained fully
compliant with all covenants during the year.
The Group maintains a strong liquidity position and at 31 December 2024 had
total available liquidity of over £275m comprising undrawn borrowing
facilities of over £250m together with cash and cash equivalents of £28.9m.
Subsequent to the year end, the Group issued an additional €95m under its
USPP loan note programme. The proceeds from the issuance were used to pay down
its existing RCF balances, increasing the level of committed funds available
for drawing under the RCF. The notes have maturities of between five and seven
years, with a fixed interest rate of approximately 4%.
Dividend
Subject to shareholder approval at the AGM, we intend to pay an increased
total dividend in respect of the 2024 financial results of 14.5p (2023:
13.5p). An interim dividend of 4.5p (2023: 4.0p) was paid on 1 November 2024
and, a final dividend of 10.0p per ordinary share will be paid on 16 May 2025
to shareholders who are on the Register of Members at the close of business on
4 April 2025. The ex-dividend date is 3 April 2025. The latest date for
registering for the Company's DRIP is 22 April 2025, further details of how to
join the DRIP are available on the Company's website.
This delivers a payout ratio of 42% (2023: 40%) of Adjusted Underlying Basic
EPS, slightly ahead of our committed target payout ratio. Since starting to
pay a dividend in 2021, we have declared nearly £160m of cash dividends to
shareholders.
Dividends are recorded in the financial statements of the accounting period in
which they are declared. Accordingly, dividend payments to Breedon Group
shareholders amounting to £48.1m (2023: £37.3m) have been recognised in the
2024 financial statements.
Tax strategy
Breedon's tax strategy governs our approach to tax compliance, and is
underpinned by the following principles:
· To comply with all relevant tax regulations.
· To ensure ethical tax practice is maintained and tax planning is
undertaken responsibly.
· To engage proactively and transparently with relevant tax
authorities.
· To manage tax risks effectively and maintain a high standard of
tax governance.
Our tax strategy is reviewed periodically by the Audit & Risk Committee on
behalf of the Board, and full details can be found on our website at
www.breedongroup.com/policies
(https://protect.checkpoint.com/v2/___http:/www.breedongroup.com/policies___.bXQtcHJvZC1jcC1ldXcyLTE6bmV4dDE1OmM6bzphMzc0ZDYwMjQzYzk2ZWU3MTc1M2QwMmQxMDY0NzQyMDo2OjI3MWU6YzZmZWQ5ODI5MzBhMDE0N2QzNGFjYzI0MTAzYjhjOTUyYzQ1YjYwNjE4OTdiYmY0ZGMyNzE2YjA1ODVjNjQ5NTpwOkY6Tg)
.
During the year we complied with our stated tax strategy and made a
significant contribution to the economies in which we operate through payments
of taxation. In 2024 the total taxes borne or collected by the Group
amounted to c. £200m (2023: c.£210m).
Capital allocation
Conservative and disciplined financial management and the maintenance of a
strong balance sheet are at the core of our thoughtful approach to capital
allocation. The Board will always seek to deploy the Group's capital
responsibly, focusing on organic investment in our business to ensure that our
asset base is well invested.
We will look to pursue further selective acquisitions which will accelerate
our strategic development and that we are confident will create long-term
value. This conservative approach to financial management enables us to pursue
capital growth for our shareholders through active development of our
business, while supporting our progressive dividend policy.
Technical guidance 2025 post Lionmark transaction
Depreciation: c.£115m.
Net interest expense: c.£35m.
Group tax rate c.23%.
NIC and minimum/living wage; c.£5m full year impact.
Capital expenditure: £125m to £135m.
Working capital outflow: £20m to £30m.
Cash interest payment: c.£35m
2025 cash cost of dividends: c.£50m.
RISK
The Group's principal risks that might adversely impact the Group are:
Strategic Operational
· Acquisitions and material capital projects · Competition
· Climate change · Failure of a critical asset
· Land and mineral management · Health and safety
· Markets · IT and cyber security
· People · Laws, regulation and governance
Financial · Supply chain and input costs
· Treasury
Further details of the principal risks facing the Group for the year ended 31
December 2024 are set out in the Group's Annual Report and Accounts which will
be made available on the Group website once published.
The Board consider that these are the risks that could impact the performance
of the Group in the current financial year. The Board continues to manage
these risks and to mitigate their expected impact.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The directors are responsible for preparing the Annual Report and the Group
and parent Company financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare Group and parent Company
financial statements for each financial year. Under that law they are required
to prepare the Group financial statements in accordance with UK-adopted
international accounting standards and applicable law and have elected to
prepare the parent Company financial statements in accordance with UK
accounting standards and applicable law, including FRS 101 Reduced Disclosure
Framework.
Under company law the directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and parent Company and of the Group's profit or loss for
that period. In preparing each of the Group and parent Company financial
statements, the directors are required to:
· select suitable accounting policies and then apply them
consistently;
· make judgements and estimates that are reasonable, relevant, and
reliable and, in respect of the parent Company financial statements only,
prudent;
· for the Group financial statements, state whether they have been
prepared in accordance with UK-adopted international accounting standards;
· for the parent Company financial statements, state whether
applicable UK accounting standards have been followed, subject to any material
departures disclosed and explained in the parent Company financial statements;
· assess the Group and parent Company's ability to continue as a
going concern, disclosing, as applicable, matters related to going concern;
and
· use the going concern basis of accounting unless they either
intend to liquidate the Group or the parent Company or to cease operations or
have no realistic alternative but to do so.
The directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the parent Company's transactions and disclose
with reasonable accuracy at any time the financial position of the parent
Company and enable them to ensure that its financial statements comply with
the Companies Act 2006. They are responsible for such internal control as they
determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably open to them to
safeguard the assets of the Group and to prevent and detect fraud and other
irregularities.
Under applicable law and regulations, the directors are responsible for
preparing a Strategic report, Directors' report, Directors' Remuneration
report and Corporate Governance statement that complies with that law and
those regulations.
In accordance with Disclosure Guidance and Transparency Rule (DTR) 4.1.16R,
the financial statements will form part of the annual financial report
prepared under DTR 4.1.17R and 4.1.18R. The auditor's report on these
financial statements provides no assurance over whether the annual financial
report has been prepared in accordance with those requirements.
The directors are responsible for the maintenance and integrity of the
corporate and financial information included on the company's website.
Legislation in the UK governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
Responsibility statement of the directors in respect of the annual financial
report
We confirm that to the best of our knowledge:
· the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the company and
the undertakings included in the consolidation taken as a whole; and
· the strategic report includes a fair review of the development
and performance of the business and the position of the issuer and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they face.
We consider the Annual Report and Accounts, taken as a whole, is fair,
balanced and understandable and provides the information necessary for
shareholders to assess the Group's position and performance, business model
and strategy.
Rob Wood James Brotherton
Chief Executive Officer Chief Financial Officer
5 March 2025
condensed Consolidated Income Statement
for the Year ended 31 December 2024
2024 2023
Underlying Non-underlying* Total Underlying Non- underlying* Total
(note 4) (note 4)
£m £m £m £m £m £m
Revenue 1,576.3 - 1,576.3 1,487.5 - 1,487.5
Operating expenses (1,406.1) (24.1) (1,430.2) (1,333.9) (10.5) (1,344.4)
Group operating profit 170.2 (24.1) 146.1 153.6 (10.5) 143.1
Share of profit of associate and joint ventures 3.5 - 3.5 2.6 - 2.6
Profit from operations 173.7 (24.1) 149.6 156.2 (10.5) 145.7
Financial income 1.2 - 1.2 2.6 - 2.6
Financial expense (24.1) (1.3) (25.4) (13.9) - (13.9)
Profit before taxation 150.8 (25.4) 125.4 144.9 (10.5) 134.4
Tax at effective tax rate (32.7) 3.6 (29.1) (30.2) 1.4 (28.8)
Taxation (32.7) 3.6 (29.1) (30.2) 1.4 (28.8)
Profit for the year 118.1 (21.8) 96.3 114.7 (9.1) 105.6
Attributable to:
Breedon Group shareholders 118.0 (21.8) 96.2 114.6 (9.1) 105.5
Non-controlling interests 0.1 - 0.1 0.1 - 0.1
Profit for the year 118.1 (21.8) 96.3 114.7 (9.1) 105.6
* Non-underlying items represent acquisition-related expenses, property gains
or losses, redundancy and reorganisation costs, amortisation of acquired
intangibles, unamortised banking arrangement fee and related tax items. The
prior year also included the costs associated with the Group's move from the
AIM to Main Market.
Earnings per share
Basic 28.1p 31.1p
Diluted 28.0p 31.0p
Dividends in respect of the year
Dividend per share 14.5p 13.5p
condensed Consolidated Statement of Comprehensive Income
for the year ended 31 december 2024
2024 2023
£m £m
Profit for the year 96.3 105.6
Other comprehensive (expense)/income
Items which may be reclassified subsequently to profit and loss:
Foreign exchange differences on translation of foreign operations, net of (6.0) (4.1)
hedging
Effective portion of changes in fair value of cash flow hedges 0.8 (0.7)
Taxation on items taken directly to other comprehensive income - 0.1
Other comprehensive expense for the year (5.2) (4.7)
Total comprehensive income for the year 91.1 100.9
Total comprehensive income for the year is attributable to:
Breedon Group shareholders 91.0 100.8
Non-controlling interests 0.1 0.1
91.1 100.9
condensed Consolidated Statement of Financial Position
at 31 December 2024
2024 2023
£m £m
Non-current assets
Property, plant and equipment 939.1 817.2
Right-of-use assets 46.5 45.1
Intangible assets 686.3 520.2
Investment in associate and joint ventures 15.0 14.5
Trade and other receivables - 0.9
Total non-current assets 1,686.9 1,397.9
Current assets
Inventories 135.7 120.1
Trade and other receivables 261.0 227.9
Current tax receivable 1.5 -
Cash and cash equivalents 28.9 126.9
Total current assets 427.1 474.9
Total assets 2,114.0 1,872.8
Current liabilities
Interest-bearing loans and borrowings (8.7) (8.1)
Trade and other payables (283.6) (278.6)
Current tax payable - (0.1)
Provisions (30.0) (8.8)
Total current liabilities (322.3) (295.6)
Non-current liabilities
Interest-bearing loans and borrowings (425.5) (288.7)
Provisions (91.4) (85.8)
Deferred tax liabilities (104.2) (92.0)
Total non-current liabilities (621.1) (466.5)
Total liabilities (943.4) (762.1)
Net assets 1,170.6 1,110.7
Equity attributable to Breedon Group shareholders
Share capital 3.4 3.4
Share premium 2.0 0.7
Hedging reserve 0.3 (0.5)
Translation reserve (9.7) (3.7)
Merger reserve 92.7 80.5
Retained earnings 1,081.5 1,030.0
Total equity attributable to Breedon Group shareholders 1,170.2 1,110.4
Non-controlling interests 0.4 0.3
Total equity 1,170.6 1,110.7
condensed Consolidated Statement of Changes in Equity
for the year ended 31 december 2024
Share capital Share premium Stated capital Hedging reserve Translation reserve Merger reserve Retained earnings Attributable to Breedon Group shareholders Non-controlling interests Total
equity
£m £m £m £m £m £m £m £m £m £m
Balance at 1 January 2023 - - 555.0 0.1 0.4 - 488.0 1,043.5 0.3 1,043.8
Shares issued - 0.7 - - - - - 0.7 - 0.7
Corporate Reorganisation 474.5 - (555.0) - - 80.5 - - - -
Capital reduction (471.1) - - - - - 471.1 - - -
Transfer to non-controlling interests - - - - - - (0.2) (0.2) 0.2 -
Dividends paid - - - - - - (37.3) (37.3) (0.3) (37.6)
Total comprehensive income for the year - - - (0.6) (4.1) - 105.5 100.8 0.1 100.9
Share-based payments(1) - - - - - - 2.9 2.9 - 2.9
Balance at 31 December 2023 3.4 0.7 - (0.5) (3.7) 80.5 1,030.0 1,110.4 0.3 1,110.7
Shares issued - 1.3 - - - 12.2 - 13.5 - 13.5
Transfer to - - - - - - (0.2) (0.2) 0.2 -
non-controlling interests
Dividends paid - - - - - - (48.1) (48.1) (0.2) (48.3)
Total comprehensive income for the year - - - 0.8 (6.0) - 96.2 91.0 0.1 91.1
Share-based payments(1) - - - - - - 3.6 3.6 - 3.6
Balance at 31 December 2024 3.4 2.0 - 0.3 (9.7) 92.7 1,081.5 1,170.2 0.4 1,170.6
1 Share-based payments are shown inclusive of deferred tax
recognised in equity.
condensed Consolidated Statement of Cash Flows
for the Year ended 31 december 2024
2024 2023
£m £m
Cash flows from operating activities
Profit for the year 96.3 105.6
Adjustments for:
Depreciation and mineral depletion 99.7 88.7
Amortisation 12.5 6.0
Financial income (1.2) (2.6)
Financial expense 25.4 13.9
Share of profit of associate and joint ventures (3.5) (2.6)
Gain on sale of property, plant and equipment (1.7) (1.4)
Share-based payments 3.3 3.0
Taxation 29.1 28.8
Operating cash flows before changes in working capital and provisions 259.9 239.4
(Increase) in inventories (8.4) (24.6)
Decrease/(increase) in trade and other receivables 10.5 (1.0)
(Decrease)/increase in trade and other payables (15.6) 8.8
(Decrease)/increase in provisions (3.1) 8.3
Cash generated from operating activities 243.3 230.9
Interest paid (15.9) (6.8)
Interest element of lease payments (2.9) (2.3)
Interest received 1.2 2.6
Income taxes paid (24.0) (32.5)
Net cash from operating activities 201.7 191.9
Cash flows used in investing activities
Acquisition of businesses (173.6) (18.8)
Dividends from associate and joint ventures 3.0 1.8
Purchase of property, plant and equipment (131.3) (106.8)
Proceeds from sale of property, plant and equipment 5.7 3.4
Net cash used in investing activities (296.2) (120.4)
Cash flows used in financing activities
Dividends paid (48.3) (37.6)
Proceeds from the issue of shares (net of costs) 1.3 0.7
Proceeds from interest-bearing loans (net of costs) 357.4 -
Repayment of interest-bearing loans (304.0) (0.9)
Revolving Credit Facility extension costs - (0.7)
Repayment of lease obligations (9.4) (8.1)
Net cash used in financing activities (3.0) (46.6)
Net (decrease)/increase in cash and cash equivalents (97.5) 24.9
Cash and cash equivalents at 1 January 126.9 101.7
Foreign exchange differences (0.5) 0.3
Cash and cash equivalents at 31 December 28.9 126.9
Notes to the Condensed consolidated Financial Statements
1 Basis of preparation
Breedon Group plc (the 'Company') is a company domiciled in England. The
address of the Company's registered office is Pinnacle House, Breedon Quarry,
Breedon on the Hill, Derby, England, DE73 8AP. These condensed consolidated
financial statements of the Company as at and for the year ended 31 December
2024 consist of the consolidation of the financial statements of the Company
and its subsidiaries (collectively the 'Group') and include the Group's
interest in jointly controlled and associated entities.
These condensed consolidated financial statements have been prepared in
accordance with UK adopted International Accounting Standards (IAS) and
interpretations issued by the IFRS Interpretations Committee applicable to
companies reporting under UK adopted IFRS. They do not include all the
information required for full annual statements and should be read in
conjunction with the 2024 Annual Report.
The Board of Directors approved the condensed consolidated financial
statements on 5 March 2025. They are not statutory accounts within the meaning
of section 435 of the Companies Act 2006.
The Group's financial statements for the year ended 31 December 2024 were
approved by the Board on 5 March 2025. They have been reported on by the
Group's auditors and will be delivered to the registrar of companies in due
course. The report of the auditors (i) was unqualified, (ii) did not include a
reference to any matters to which the auditors drew attention by way of
emphasis without qualifying their report, and (iii) did not contain a
statement under section 498(2) or (3) of the Companies Act 2006.
The comparative figures for the financial year ended 31 December 2023 have
been extracted from the statutory accounts for that financial year. Those
accounts have been reported on by the Company's auditor. The report of the
auditor (i) was unqualified and (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis without
qualifying their report.
New IFRS Standards and Interpretations adopted in the year
The Group adopted amendments to IAS1, IAS7, IFRS7 and IFRS16 from 1 January
2024. The adoption of these standards has not had a material impact on the
financial statements.
New IFRS Standards and interpretations not adopted
At the date on which these financial statements were authorised, there
were no Standards, Interpretations and Amendments which had been issued but
were not effective for the year ended 31 December 2024 that are expected
to have a material impact on the Group's financial statements in the future.
Significant exchange rates
The following significant exchange rates applied during the year:
2024 2024 2023 2023
Average rate Year-end rate Average rate Year-end rate
Sterling/euro 1.18 1.21 1.15 1.15
Sterling/US dollar 1.29 1.26 1.24 1.27
1 Basis of preparation (continued)
Alternative performance measures
The following non-GAAP performance measures have been used in the financial
statements:
Non-GAAP performance measure Note ref
Underlying Earnings Before Interest and Tax (EBIT) 10
Underlying Earnings Before Interest and Tax, Depreciation and Amortisation 10
(EBITDA)
Underlying EBIT and EBITDA margin 10
Like-for-like Underlying EBIT and EBITDA 10
Like-for-like revenue 10
Adjusted Underlying Basic & Diluted Earnings Per Share (EPS) 8
Free Cash Flow 10
Free Cash Flow conversion 10
Return on invested capital 10
Covenant Leverage 10
Net Debt 6
Management uses these terms as they believe these measures allow an
understanding of the Group's underlying business performance. These
alternative performance measures are well understood by investors and
analysts, are consistent with the Group's historic communication with
investors and reflects the way in which the business is managed.
2 Going concern
These condensed consolidated financial statements are prepared on a going
concern basis which the directors consider to be appropriate for the
following reasons:
The Group meets day-to-day working capital and other funding requirements
through banking facilities, which include
an overdraft facility. Longer-term debt financing is accessed through the
Group's USPP loan note programme. The
facilities comprise a £400m multi-currency RCF, which runs to July 2028 and
£250m of USPP loan notes with maturities between 2028 and 2036.
In 2024, the Group comfortably met all covenants and other terms of its
borrowing agreements. The Group has continued its track record of
profitability and cash generation, with an overall profit before taxation of
£125.4m and net
cash from operating activities of £201.7m.
The Group has prepared cash flow forecasts for a period of 12 months from the
date of signing these condensed
consolidated financial statements, which show a sustained trend of
profitability, cash generation and retained covenant
headroom, even under a 'severe but plausible' downside scenario of forecast
cash flows.
The base case assumes a trading performance delivered in line with market
consensus over the forecast period, while
the downside scenario models a 5%-10% reduction in revenues, which the Group
believes is a severe sensitivity relative to likely outcomes and historic
experience.
As at 31 December 2024, the Group had cash balances of £28.9m and undrawn
banking facilities in excess of £250m. At the date of this report, the
Group's liquidity has increased by c. £80m as a result of the issuance of
additional notes
under its USPP programme. Following the acquisition discussed in note 28, the
level of undrawn facilities will reduce to
c. £150m, which is expected to provide sufficient available funds for the
Group to discharge its liabilities as they fall due.
Consequently, the directors are confident that the Group will have sufficient
funds to continue to meet its liabilities as
they fall due for at least 12 months from the date of approval of these
condensed consolidated financial statements and therefore have prepared the
condensed consolidated financial statements on a going concern basis.
3 Segmental analysis
The Group's activities comprise the following reportable segments:
Great Britain: our construction materials and surfacing businesses in Great
Britain.
Ireland: our construction materials and surfacing businesses on the Island of
Ireland.
United States: our construction materials businesses in the United States,
acquired during the year (see note 9).
Cement: our cementitious operations in Great Britain and the Republic of
Ireland.
2024 2023
Revenue Underlying Revenue Underlying
EBITDA* EBITDA*
Income statement £m £m £m £m
Great Britain 997.4 131.9 1,033.8 138.6
Ireland 233.4 41.5 235.5 35.9
United States 132.5 24.8 - -
Cement 309.2 88.2 331.2 84.5
Central administration - (16.5) - (16.7)
Eliminations (96.2) - (113.0) -
Total 1,576.3 269.9 1,487.5 242.3
Reconciliation to statutory profit
Underlying EBITDA as above 269.9 242.3
Depreciation and mineral depletion (99.7) (88.7)
Underlying Group operating profit 170.2 153.6
Great Britain 78.5 86.4
Ireland 33.6 29.0
United States 16.4 -
Cement 58.5 55.2
Central administration (16.8) (17.0)
Underlying Group operating profit 170.2 153.6
Share of profit of associate and joint ventures 3.5 2.6
Underlying profit from operations (EBIT) 173.7 156.2
Non-underlying items (note 4) (24.1) (10.5)
Profit from operations 149.6 145.7
*Underlying EBITDA is earnings before interest, tax, depreciation and mineral
depletion, amortisation, non-underlying items (note 4) and before our share of
profit of associate and joint ventures.
Disaggregation of revenue from contracts with the customers
Analysis of revenue by geographic location of end-market
The primary geographic markets for all Group revenues for the purpose of IFRS
15 are the UK, Republic of Ireland and United States. In line with the
requirements of IFRS 8, this is analysed by individual countries as follows:
2024 2023
£m £m
United Kingdom 1,251.0 1,296.8
Republic of Ireland 190.1 188.1
United States 132.5 -
Other 2.7 2.6
1,576.3 1,487.5
3 Segmental analysis (continued)
Analysis of revenue by major products and service lines by segment
2024 2023
£m £m
Sale of goods
Great Britain 797.9 855.8
Ireland 106.9 96.5
United States 132.5 -
Cement 309.2 331.2
Eliminations (96.2) (113.0)
1,250.3 1,170.5
Surfacing
Great Britain 199.5 178.0
Ireland 126.5 139.0
326.0 317.0
1,576.3 1,487.5
Eliminations primarily comprise sales from Cement to the Great Britain and
Ireland segments.
Timing of revenue recognition
Sale of goods revenue relates to products for which revenue is recognised at a
point in time as the product is transferred to the customer. Surfacing
revenues are accounted for as products and services for which revenue is
recognised over time.
Statement of financial position 2024 2023
Total Total Total Total
assets liabilities assets liabilities
£m £m £m £m
Great Britain 940.7 (233.8) 920.6 (238.3)
Ireland 269.4 (38.1) 282.8 (40.6)
United States 303.5 (32.7) - -
Cement 567.0 (75.9) 539.2 (73.8)
Central administration 3.0 (24.5) 3.3 (20.5)
Total operations 2,083.6 (405.0) 1,745.9 (373.2)
Current tax 1.5 - - (0.1)
Deferred tax - (104.2) - (92.0)
Net Debt 28.9 (434.2) 126.9 (296.8)
Total Group 2,114.0 (943.4) 1,872.8 (762.1)
Net assets 1,170.6 1,110.7
GB total assets include £13.8m (2023: £13.4m) and Cement total assets
include £1.2m (2023: £1.1m) in respect of investments in associate and joint
ventures.
Geographic location of non-current assets
2024 2023
£m £m
United Kingdom 1,068.0 1,074.6
Republic of Ireland 362.3 323.3
United States 256.6 -
1,686.9 1,397.9
4 Non-underlying items
Non-underlying items are those which, because of their nature, size or
incidence, are either unlikely to recur in future periods or which distort the
underlying trading performance of the business, including non-cash items. For
an item to be classified as non-underlying, it must meet defined criteria
which are applied consistently by the Group.
The directors monitor the performance of the Group using alternative
performance measures which are calculated on an underlying basis. In the
opinion of the directors, this presentation aids understanding of the
underlying business performance and any references to underlying earnings
measures throughout this report are made on this basis.
As underlying measures include the benefits of acquisitions but exclude
significant costs (such as one-off acquisition related costs or amortisation
of acquired intangible assets), they should not be regarded as a complete
picture of the Group's financial performance.
Underlying measures are calculated and presented on a consistent basis over
time to assist in the comparison of performance.
2024 2023
£m £m
Included in operating expenses:
Acquisition-related expenses (note 9) 10.2 0.9
Losses on disposal of property 0.1 -
Redundancy and reorganisation costs 1.3 -
Amortisation of acquired intangible assets 12.5 6.0
AIM to Main Market costs - 3.6
Total non-underlying items (before interest and tax) 24.1 10.5
Non-underlying interest (note 6) 1.3 -
Non-underlying tax (3.6) (1.4)
Total non-underlying items 21.8 9.1
5 Taxation
Recognised in the condensed consolidated income statement
2024 2023
£m £m
Current tax
Current year 26.5 30.5
Prior year (4.1) (2.1)
Total current tax 22.4 28.4
Deferred tax
Current year 2.6 (1.2)
Prior year 4.1 1.6
Total deferred tax 6.7 0.4
Total tax charge in the condensed consolidated income statement 29.1 28.8
Recognised in equity
2024 2023
£m £m
Deferred tax
Derivatives - (0.1)
Share-based payments (0.3) 0.1
Total tax charge in equity (0.3) -
5 Taxation (continued)
Reconciliation of effective tax rate
2024 2023
£m £m
Profit before taxation 125.4 134.4
Tax at the Company's domestic rate of 25.0% (2023: 23.5%) 31.4 31.6
Difference between Company and subsidiary statutory tax rates (5.8) (4.0)
Expenses not deductible for tax purposes 3.2 1.4
Income from associate and joint ventures already taxed (0.8) (0.5)
Change in deferred tax rate - 0.7
Pillar Two top up charge 0.6 -
Other 0.5 0.1
Adjustment in respect of prior years - (0.5)
Total tax charge 29.1 28.8
The Company is tax resident in the UK, with a 25.0% (2023: 23.5%) tax rate.
The Group's subsidiary operations pay tax at a rate of 25.0% (2023: 23.5%) in
the UK and 12.5% (2023: 12.5%) in RoI. US subsidiary operations pay tax at the
federal tax rate of 21% together with state income tax, resulting in a blended
statutory rate of c. 25%.
Excluding the impact of non-underlying items, the Group's Underlying
effective tax rate is 21.7% (2023: 20.4%). Including these items, the Group's
reported tax rate for the year is 23.2% (2023: 21.4%).
Global Minimum Corporate Tax Framework
From 1 January 2024, the Group is within scope of the Global Minimum Corporate
Tax rate of 15% ('Pillar Two' rules). The impact of these new rules on the
Group is limited to the Group's taxable profits generated in the Republic of
Ireland, where the tax rate is 12.5%, resulting in a top up charge of £0.6m.
In accordance with the mandatory exception under Amendments to IAS 12, the
Group has not remeasured deferred tax assets and liabilities as a result of
the implementation of the Pillar Two rules.
6 Interest-bearing loans and borrowings
Net Debt
2024 2023
£m £m
Cash and cash equivalents 28.9 126.9
Current borrowings (8.7) (8.1)
Non-current borrowings (425.5) (288.7)
Net Debt (405.3) (169.9)
IFRS 16 lease liabilities 48.7 48.0
Net Debt (excluding IFRS 16) (356.6) (121.9)
Analysis of borrowings between current and non-current
2024 2023
£m £m
Lease liabilities 8.7 8.1
Current borrowings 8.7 8.1
Bank and USPP debt 385.5 248.8
Lease liabilities 40.0 39.9
Non-current borrowings 425.5 288.7
6 Interest-bearing loans and borrowings (continued)
During the year, the Group completed the refinancing of its RCF, increasing
the facility size from £350m to £400m and retaining the option of a further
£100m accordion. The amended facility secures access to longer-term finance,
running for an initial four-year period to at least July 2028, and offers an
incremental reduction in ongoing debt service costs. The Group's borrowing
facilities as at 31 December 2024 also comprise a £250m USPP.
Interest on the RCF is calculated as a margin referenced to the Group's
Covenant Leverage plus SONIA, SOFR or EURIBOR according to the currency of
borrowing. Interest on the RCF was charged in the period at margins of between
1.65% and 1.75%.
The USPP was issued in 2021 with an average fixed coupon of approximately 2%
and comprises £170m sterling and £80m drawn in euro, with a maturity profile
between 2028 and 2036.
Fees and expenses incurred in connection with the refinancing amounted to
£2.3m and will be amortised over the amended life of the facility. In line
with IFRS 9, the refinancing has been treated as an extinguishment of the
previous RCF. Prepaid fees of £1.3m, which had been held on the balance sheet
in relation to the old facility, have been expensed to the income statement
during 2024 as a non-underlying interest expense.
Borrowing facilities are subject to leverage and interest cover covenants
which are tested half-yearly. The Group remained fully compliant with all
covenants during the year.
7 Stated and share capital
Share capital
All shares issued by Breedon are ordinary shares which have a par value of
£0.01 and are fully paid. The Company has no limit to the number of shares
which may be issued.
The holders of ordinary shares are entitled to receive dividends as declared
and are entitled to one vote per share at meetings of the Company.
Movements during 2024:
The Company issued 0.5 million shares for cash raising £1.3m in connection
with the exercise of certain savings-related share options, with £1.3m
recognised as share premium. The Company issued 0.3 million shares for
non-cash consideration of 1.0p per share, satisfied through the capitalisation
of retained earnings, in connection with the vesting of awards under the
Performance Share Plans.
In addition, 3.2m of ordinary shares were issued to the vendor of BMC, with
£12.2m being recognised within the merger reserve.
Number of ordinary shares (m)
2024
Issued ordinary shares at beginning of year 339.7
Issued in connection with:
Exercise of savings-related share options 0.5
Issued on acquisition of BMC (note 9) 3.2
Vesting of Performance Share Plan awards 0.3
As at 31 December 2024 343.7
Movements during 2023:
Corporate Reorganisation
In connection with the Group's move from AIM to the Premium Segment of the
Main Market of the London Stock Exchange during the first half of 2023, a new
holding company for the Group was established ('New Breedon'), which replaced
the previous parent company of the Group, Breedon Group Limited ('Old
Breedon'). New Breedon obtained control of the Group on 17 May 2023 via a
court approved scheme of arrangement (the 'Corporate Reorganisation'). Under
the scheme arrangement, shares were issued in exchange for all the shares in
Old Breedon at a ratio of one share in New Breedon to five shares in Old
Breedon. The difference between Stated Capital and Share Capital was
recognised as a Merger Reserve.
Other movements during 2023
The Company issued 0.2 million shares for cash raising £0.7m in connection
with the exercise of certain savings-related share options, with £0.7m
recognised as share premium. The company issued 0.6 million shares for
non-cash consideration of 1.0p per share, satisfied through the capitalisation
of retained earnings, in connection with the vesting of awards under the
Performance Share Plans.
7 Stated and share capital (continued)
Number of ordinary shares (m)
2023
Issued ordinary shares at beginning of year 1,694.4
5:1 share consideration (1,355.5)
Issued ordinary shares after corporate reorganisation 338.9
Issued in connection with:
Exercise of savings-related share options 0.2
Vesting of Performance Share Plan awards 0.6
As at 31 December 2023 339.7
8 Earnings per share
Basic earnings per share amounts are calculated by dividing profit for the
year attributable to Breedon Group shareholders by the weighted average number
of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing profit for the
year attributable to Breedon Group shareholders by the weighted average number
of ordinary shares outstanding during the year plus the weighted average
number of ordinary shares that would be issued on the conversion of all the
potential dilutive ordinary shares into ordinary shares.
Calculations of these measures and reconciliations to related alternative
performance measures are as follows:
Basic EPS to Adjusted Underlying Basic EPS
2024 2023
Earnings Shares EPS Earnings Shares EPS
£m millions pence £m millions pence
Basic EPS 96.2 342.754 28.1 105.5 339.148 31.1
Adjustments to earnings
Earnings impact of change in deferred tax rate (note 5) - - - 0.7 - 0.2
Non-underlying items (note 4) 21.8 - 6.3 9.1 - 2.7
Adjusted Underlying Basic EPS 118.0 342.754 34.4 115.3 339.148 34.0
Diluted EPS to Adjusted Underlying Diluted EPS
2024 2023
Earnings Shares EPS Earnings Shares EPS
£m millions pence £m millions pence
Diluted EPS 96.2 343.738 28.0 105.5 339.849 31.0
Adjustments to earnings
Earnings impact of change in deferred tax rate (note 5) - - - 0.7 - 0.2
Non-underlying items (note 4) 21.8 - 6.3 9.1 - 2.7
Adjusted Underlying Diluted EPS 118.0 343.738 34.3 115.3 339.849 33.9
Dilutive items in both the current and prior year related to share-based
payments.
9 Acquisitions
Current year acquisitions
The Group completed four acquisitions in the period, being BMC Enterprises
Inc. (BMC), Eco-Asphalt Supplies Limited, Phoenix Surfacing Limited and
Building Products Inc.
BMC
The Group completed the acquisition of BMC, a supplier of ready-mixed
concrete, aggregates and building products on 6 March 2024, acquiring 100% of
the share capital.
The provisional fair values in respect of the identifiable assets acquired and
liabilities assumed are set out below:
Provisional fair value on acquisition
£m
Intangible assets 109.9
Property, plant and equipment 81.4
Right-of-use assets 1.2
Inventories 7.2
Trade and other receivables 39.1
Cash and cash equivalents 5.5
Trade and other payables (12.8)
Provisions (22.4)
Borrowings (85.9)
Deferred tax liabilities (4.5)
Total acquired net assets 118.7
Cash consideration on completion 155.6
Post-completion payment 0.2
Equity consideration 12.2
Total consideration payable 168.0
Goodwill arising 49.3
Equity Consideration
Equity consideration comprises 3,199,915 ordinary shares issued to the vendor,
valued based on the market price of those shares at the date of acquisition.
Fair value adjustments
Fair value adjustments are always considered to be provisional at the first
reporting date after the acquisition and are inclusive of adjustments to:
- recognise intangible assets, including the value of acquired customer
relationships and non-compete agreements. The value of these assets were
assessed with the support of a third party corporate finance specialist using
an excess earnings method, based on estimated cash flows;
- revalue certain items of property, plant and equipment, including mineral
reserves and resources, to reflect the fair value at date of
acquisition;
- working capital accounts to reflect fair value; and
- restoration provisions to reflect costs to comply with environmental and
other legislation.
The goodwill arising represents the strategic geographic location of assets
acquired, the potential for future growth and the skills of the existing
workforce and management team. Goodwill is deductible for tax purposes.
Since the Group's interim results were published, goodwill has increased by
£5.7m, with the largest adjustment being £4.5m in relation to deferred tax
following agreement of the completion accounts.
Included within provisions is a contingent liability for which the Group is
fully indemnified, with a corresponding asset recognised within trade and
other receivables. The range of outcomes in respect of the contingent
liability is expected to be either nil or £10.0m.
9 Acquisitions (continued)
Other current year acquisitions
The directors consider the remaining acquisitions completed in the year, being
100% of the share capital of Eco-Asphalt Supplies Limited (31 January 2024),
80% of the share capital of Phoenix Surfacing Limited (1 April 2024), and the
trade and assets of Building Products Inc. (18 October 2024) to be
individually immaterial, but material in aggregate.
The combined provisional fair values in respect of the identifiable assets
acquired and liabilities assumed are set out below:
Provisional fair value on acquisition
£m
Intangible assets 7.8
Property, plant and equipment 6.4
Inventories 0.9
Trade and other receivables 5.0
Cash and cash equivalents 1.8
Trade and other payables (5.6)
Provisions (0.1)
Borrowings (1.9)
Deferred tax liabilities (1.5)
Total acquired net assets 12.8
Cash consideration on completion 25.3
Deferred consideration 3.4
Total consideration payable 28.7
Goodwill arising 15.9
Consideration
Deferred consideration includes £2.6m relating to a put liability and has
been accounted for using the anticipated acquisition method.
Fair value adjustments
The fair value adjustments primarily comprised:
- intangible assets, including the value of acquired customer relationships;
- impairment of property, plant and equipment; and
- deferred tax balances.
The goodwill arising represents expected synergies, the potential for future
growth, and the skills of the existing workforce.
Impact of current year acquisitions
Income statement
During the period, the BMC acquisition (including Building Products which was
acquired 18 October 2024) contributed revenues of £132.5m, Underlying EBIT of
£16.4m and profit before interest and tax of £13.8m to the results of the
Group.
Other current year acquisitions contributed revenues of £22.9m, Underlying
EBIT of £0.8m and profit before tax of £0.8m to the results of the Group.
Had these acquisitions occurred on 1 January 2024, the results of the Group
for the year ended 31 December 2024 would have shown revenue of £1,612.5m,
Underlying EBIT of £176.0m and profit before tax of £127.7m.
Cash flow
The cash flow impact of acquisitions in the year can be summarised as follows:
£m
Consideration - cash 180.9
Cash and cash equivalents acquired (7.3)
Net cash consideration shown in the consolidated statement of cash flows 173.6
9 Acquisitions (continued)
Acquisition costs
The Group incurred acquisition related costs of £10.2m (2023: £0.9m) which
included external professional fees in relation to these acquisitions. These
are presented as non-underlying operating costs (note 4).
10 Reconciliation to non-GAAP measures
Non-GAAP performance measures are used throughout the Annual Report and the
condensed consolidated financial statements. This note provides a
reconciliation between these alternative performance measures to the most
directly related statutory measures.
These measures are not a substitute for, or superior to, any IFRS measures of
performance. Management believe these measures allow an understanding of the
Group's underlying business performance. They are defined as:
Underlying EBIT - statutory (reported) profit from operations excluding
non-underlying items. Non-underlying items are disclosed in note 4. Management
considers underlying EBIT to be a key measure in understanding the underlying
profit of the Group at this level.
Free Cash Flow (FCF) - calculated as statutory (reported) net cash flow from
operating activities and net cash used in investing activities, adjusted for
the cash impact of major capital projects in the year, cash associated with
acquisition of businesses and the cash impact of non-underlying items. FCF
represents the cash that the Group generates after
spending the money required to maintain or expand its asset base, thus is
useful for management in assessing liquidity.
Net Debt - Net Debt is calculated as the net of cash and cash equivalents and
interest-bearing loans and borrowings (both current and non-current). It is a
measure of the Group's net indebtedness that provides an indicator of the
overall balance sheet strength. Net Debt is also shown on a pre-IFRS 16 basis
as the banking covenants are calculated on a
pre-IFRS 16 basis.
Reconciliation of earnings based alternative performance measures
2024 Great Ireland Cement Central administration Share of profit of associate Total
and joint ventures
Britain and
eliminations
United
States
£m £m £m £m £m £m £m
Revenue 997.4 233.4 132.5 309.2 (96.2) - 1,576.3
Profit from operations 149.6
Non-underlying items (note 4) 24.1
Underlying EBIT 78.5 33.6 16.4 58.5 (16.8) 3.5 173.7
Underlying EBIT margin 7.9% 14.4% 12.4% 18.9% 11.0%
Underlying EBIT 78.5 33.6 16.4 58.5 (16.8) 3.5 173.7
Share of profit of associate - - - - - (3.5) (3.5)
and joint ventures
Depreciation and mineral depletion 53.4 7.9 8.4 29.7 0.3 - 99.7
Underlying EBITDA 131.9 41.5 24.8 88.2 (16.5) - 269.9
Underlying EBITDA margin 13.2% 17.8% 18.7% 28.5% 17.1%
10 Reconciliation to non-GAAP measures (continued)
Reconciliation of earnings based alternative performance measures(continued)
2023 Great Ireland Cement Central administration Share of profit of associate Total
and joint
Britain and ventures
eliminations
£m £m £m £m £m £m
Revenue 1,033.8 235.5 331.2 (113.0) - 1,487.5
Profit from operations 145.7
Non-underlying items (note 4) 10.5
Underlying EBIT 86.4 29.0 55.2 (17.0) 2.6 156.2
Underlying EBIT margin 8.4% 12.3% 16.7% 10.5%
Underlying EBIT 86.4 29.0 55.2 (17.0) 2.6 156.2
Share of profit of associate - - - - (2.6) (2.6)
and joint ventures
Depreciation and mineral depletion 52.2 6.9 29.3 0.3 - 88.7
Underlying EBITDA 138.6 35.9 84.5 (16.7) - 242.3
Underlying EBITDA margin 13.4% 15.2% 25.5% 16.3%
Like-for-like alternative performance measures
There are a number of references throughout this report to like-for-like
revenue, earnings and volumes. Like-for-like numbers exclude the impact of
acquisitions and disposals and have been used alongside non-like-for-like
measures to help the Group better communicate performance in the year when
compared to previous reporting periods.
Covenant Leverage
Covenant Leverage is defined as the ratio of Underlying EBITDA to Net Debt,
with both Underlying EBITDA and Net Debt adjusted to reflect the material
items which are adjusted by the Group and its lenders in determining leverage
for the purpose of assessing covenant compliance and, in the case of our bank
facilities, the margin payable on overdrawn borrowings. In both the current
and prior year, the only material adjusting item was the impact of IFRS 16 -
Leases.
2024 2023
£m £m
Underlying EBITDA 269.9 242.3
Impact of IFRS 16 (11.0) (10.3)
Underlying EBITDA for covenants 258.9 232.0
Net Debt (excluding IFRS 16) 356.6 121.9
Covenant Leverage 1.4x 0.5x
10 Reconciliation to non-GAAP measures (continued)
Free Cash Flow conversion
2024 2023
£m £m
Net cash from operating activities 201.7 191.9
Net cash used in investing activities (296.2) (120.4)
Cash impact of material capital projects 23.4 -
Acquisition of businesses 173.6 18.8
Cash impact of non-underlying items 11.6 4.5
Free Cash Flow 114.1 94.8
Underlying EBITDA 269.9 242.3
Free Cash Flow conversion 42% 39%
The cash impact of material capital projects comprised three projects
consisting of the ARM and Primary Crusher projects at Hope and the Solar Farm
at Kinnegad.
Return on invested capital
2024 2023
£m £m
Underlying EBIT 173.7 156.2
Underlying effective tax rate 21.7% 20.4%
Taxation at the Group's underlying effective rate (37.7) (31.9)
Underlying earnings before interest 136.0 124.3
Net assets 1,170.6 1,110.7
Net Debt (note 6) 405.3 169.9
Invested capital as at 31 December 1,575.9 1,280.6
Average invested capital(1) 1,428.3 1,261.1
Adjustment for timing of significant acquisition(2) 83.3 -
Adjusted average invested capital 1,511.6 -
Return on invested capital(3) 9.0% 9.9%
(1) Average invested capital is calculated by taking the average of the
opening invested capital at 1 January and the closing invested capital at 31
December. Opening invested capital at 1 January 2023 was £1,241.5m.
(2) This adjustment is made to the average of opening and closing invested
capital to more accurately reflect the impact of the timing of the acquisition
of BMC Enterprises which completed on 6 March 2024. See note 9.
(3 ) Return on invested capital is calculated as Underlying earnings before
interest for the previous twelve months, divided by Adjusted average invested
capital for the year.
11 Post balance sheet events
Acquisition of Lionmark
On 5 March 2025 the Group announced the proposed acquisition of Lionmark
Construction Companies LLC, a construction materials and surfacing business
headquartered in St Louis, Missouri.
The acquisition is expected to complete by 7 March 2025. Consideration payable
is based on an enterprise value of US$237.5m, of which US$225.6m is payable in
cash and the remaining US$11.9m through the issue of newly created shares in
Breedon Group plc.
The consideration is subject to customary closing adjustments and retentions.
The cash element of the consideration will be satisfied through a drawdown on
the Group's existing borrowing facilities.
Additional liquidity is provided by €95m of additional notes which were
issued under the Group's USPP programme on 26 February 2025. The notes have
maturities of between five and seven years, with a fixed interest rate of
approximately 4%.
The acquisition is expected to have a material impact on the Group's results
for the year ended 31 December 2025. Given the proximity of the acquisition
date to the date on which the Financial Statements were authorised, the Group
is not yet able to provide certain disclosures required by IFRS 3, including
the initial fair values of assets and liabilities acquired, which have not yet
been ascertained. These disclosures will be presented as part of the Group's
Interim Statement made up to 30 June 2025.
Cautionary Statement
This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 (which forms part of domestic UK law pursuant to the
European Union (Withdrawal) Act 2018 ("EUWA")) ("UK MAR"). In addition, market
soundings (as defined in MAR) were taken in respect of certain matters
contained in this announcement with the result that certain persons became
aware of inside information (as defined in MAR), as permitted by MAR. This
inside information is set out in this announcement. Therefore, those persons
that received inside information in a market sounding are no longer in
possession of such inside information relating to the Company and its
securities.
GLOSSARY
The following definitions apply throughout this announcement, unless the
context requires otherwise.
Adopted IFRS International Financial Reporting Standards as adopted by the UK
ARM Alternative Raw Material
bps basis points
BMC BMC Enterprises Inc.
Breedon Breedon Group plc
CEM II CEM II limestone cement; consists of clinker, minor additional constituents
and up to 20% of limestone which reduces the product's carbon intensity
Covenant Leverage Leverage as defined by the Group's banking facilities. This excludes the
impact of IFRS 16 and includes the proforma impact of M&A
DRIP Dividend Reinvestment Plan
EBIT Earnings before interest and tax which equates to profit from operations
EBITDA Earnings before interest, tax, depreciation and amortisation
EPS Earnings per share
EURIBOR Euro Inter-bank Offered Rate
Exchange rates 2024 2023
Average rate Year-end rate Average rate Year-end rate
Sterling/Euro 1.18 1.21 1.15 1.15
Sterling/US dollar 1.29 1.26 1.24 1.27
GAAP Generally Accepted Accounting Principles
GB Great Britain
Group Breedon and its subsidiary companies
IAS International Accounting Standards
IFRS International Financial Reporting Standard
Invested capital Net assets plus Net Debt
Ireland The Island of Ireland
Leverage Net Debt expressed as a multiple of Underlying EBITDA
Like-for-like Like-for-like reflects reported values adjusted for the impact of acquisitions
and disposals
M&A Mergers & acquisitions
NI Northern Ireland
ppt percentage point
RCF Revolving Credit Facility
RoI Republic of Ireland
ROIC Post-tax Return on Invested Capital for the previous twelve months
SBTi Science Based Targets initiative
SONIA Sterling Overnight Index Average
UK United Kingdom (GB and NI)
Underlying Stated before acquisition-related expenses, property gains and losses,
redundancy and reorganisation costs, amortisation of acquired intangibles,
unamortised banking arrangement fee and related tax items. Prior year
included costs associated with the Group's move from the AIM to Main Market
Underlying EBITDA Earnings before interest, tax, depreciation and amortisation non-Underlying
items and before our share of profit from associate and joint ventures
US United States
USPP US Private Placement
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