TIDMBREE
RNS Number : 2097S
Breedon Group PLC
08 March 2023
8 March 2023
BREEDON GROUP PLC
Annual results 2022
Growth strategy delivers record earnings, higher returns and
reduced leverage
Breedon Group plc (Breedon or the Group), a leading
vertically-integrated construction materials group in Great Britain
and Ireland, announces audited annual results for the year ended 31
December 2022.
Statutory highlights Underlying (1) highlights
GBP m
except where stated 2022 2021 % change 2022 2021 % change % LFL (2)
----------- ---------- --------- --------- -------- --------- ----------
Revenue 1,396.3 1,232.5 13% 1,396.3 1,232.5 13% 11%
EBIT 148.0 127.4 16% 155.0 133.6 16% 15%
EBIT margin 10.6% 10.3% 11.1% 10.8% 30bps
Profit Before Tax 135.8 114.3 19% 142.8 120.5 19%
Basic EPS(3) 6.65p 4.65p 43% 7.08p 5.98p 18%
Dividend per share 2.1p 1.6p 31%
Net Debt(4) 197.7 212.5 (7)%
Covenant Leverage(5) 0.7x 0.8x (0.1)x
FCF conversion(6) 29% 59% (30)ppt
ROIC(7) 10.8% 9.5% 130bps
FINANCIAL HIGHLIGHTS
Successful implementation of our growth strategy delivers record
revenue and earnings
-- Full year results ahead of expectations(8)
-- Revenue increased 13%; timely implementation of our dynamic
pricing strategy contributed +20ppt, partially offset by a 10ppt
volume reduction which normalised in line with the market
-- Full input cost recovery supported Underlying EBIT growth of
16%, and margin expansion of 30bps to 11.1%
Thoughtful capital allocation has led to higher returns and a
strengthened financial position
-- ROIC increased 130bps to 10.8%, ahead of our medium term target of 10%
-- Strong financial position maintained, enabling investment for
growth; Covenant Leverage reduced to 0.7x (2021: 0.8x) while net
capital expenditure increased to GBP102m (2021: GBP71m)
-- Working capital outflow as forecast, reflecting strong cash
collection offset by the effects of inflation and the purchase of
carbon requirements for 2023
Full year dividend increased 31% to 2.1p;
-- Total cash returned to shareholders in 2022 from dividends
increased to GBP30.5m (2021:GBP8.4m) reflecting a raised payout
ratio of 30% (2021: 27%)
OPERATING HIGHLIGHTS
Each division contributed to advancing strategy, revenue and
earnings
-- GB revenue increased 15%; we completed three bolt-on
transactions, and our surfacing business was awarded a place on the
National Highways Pavement Delivery Framework
-- Ireland tendering accelerated noticeably in the second half;
we won high-quality infrastructure contracts and successfully
recovered input costs
-- Cement had a record year; revenue increased 22% and operating
margin expanded 40bps to 17.3% supported by resilient end-markets,
dynamic pricing and full cost recovery
Sustainability agenda progressing
-- We committed to the Science Based Targets initiative and disclosed our first TCFD analysis
-- We achieved our highest ever rate of alternative fuel
substitution, increased sales of reduced clinker content product
and committed to further exploration of the Peak Cluster carbon
capture and storage project
Seeking admission to the Main Market of the London Stock
Exchange
-- As a reflection of our scale, maturity and growth ambitions,
in the coming months we intend to seek admission to the Premium
Listing segment of the London Stock Exchange - see separate
announcement issued today
CURRENT TRADING AND OUTLOOK
Breedon has begun 2023 positively and in a strong position
-- The UK economic backdrop remains uncertain, particularly with
regard to residential housebuilding
-- UK Infrastructure and industrial construction end-markets are
still expected to grow in 2023, underpinned by large ongoing
projects
-- Breedon's Ireland operations are expected to benefit from a
strong macroeconomic backdrop, coupled with the structural need for
housing and infrastructure investment
-- Our successful dynamic pricing strategy, forward hedging
programme and careful approach to cost management remain in
place
-- Our strong balance sheet and thoughtful approach to capital
allocation provides strategic optionality with scope for investment
and acquisition activity focused on the UK and Ireland
-- Overall, the Board expectations for 2023 remain unchanged
Rob Wood, Chief Executive Officer, commented :
"2022 was another record year. Each division progressed and we
made meaningful headway on our growth strategy, expanding
organically, acquiring strategically important assets, and moving
our sustainability agenda forward.
"We grew sustainably through replenishing and optimising our
mineral assets, investing in our colleague's safety and wellbeing,
and reducing our carbon footprint while maintaining a secure
financial position. We have a mineral pipeline in excess of 100
million tonnes, we achieved the highest substitution of fossil
fuels at our cement plants in our history, and we invested for
growth while still reducing our leverage.
"In recent years our local and entrepreneurial operating model
has been tried and tested, keeping our people safe while growing
high-quality earnings, and maintaining a strong balance sheet.
Despite the uncertain economic and geopolitical landscape, 2023 has
begun positively and we are in a strong position. We will continue
to supply essential materials to growing end-markets, and we remain
confident in our ability to deliver."
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 domestic law by virtue of the European Union
(Withdrawal) Act 2018.
Notes:
1. Underlying results are stated before acquisition-related
expenses, redundancy and reorganisation costs, property gains and
losses, amortisation of acquisition intangibles and related tax
items. 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. EPS in the Underlying Highlights is adjusted Underlying Basic
EPS, which is Underlying Basic EPS adjusted to exclude the impact
of changes in the deferred tax rate of GBP1.1m (2021:
GBP17.3m).
4. Net Debt including IFRS 16 lease liabilities.
5. 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. In both the current and prior
periods, the only material adjusting item was the impact of IFRS
16.
6. FCF conversion: Free Cash Flow relative to Underlying EBITDA.
7. ROIC: post-tax return on average invested capital.
8. Information for investors, including analyst consensus
estimates, can be found on the Group's website at
www.breedongroup.com/investors .
RESULTS PRESENTATION
Breedon will host a results presentation for analysts and
investors at 08:30am today at the offices of Numis, 45 Gresham
Street, London EC2V 7BF, or online via
www.breedongroup.com/investors . The presentation will be followed
by Q&A, where it will be possible to participate through the
following dial-in details:
Event Title: Breedon Full Year Results 2022
Start Time/Date: 08:30 Wednesday, 8 March 2023 - please
join the event 5-10 minutes prior to scheduled
start time. When prompted, provide the
confirmation code or event title
Confirmation Code: 6306831
United Kingdom, Toll-free: 0808 109 0700
United Kingdom, Local: +44 (0) 33 0551 0200
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
+44 (0) 20 7260
Numis (NOMAD and joint broker) 1000
Oliver Hardy (NOMAD), Ben Stoop
+44 (0) 20 7991
HSBC (Joint broker) 8888
Sam McLennan, Joe Weaving
+44 (0) 20 3128
MHP (Public relations adviser) 8193
Reg Hoare, Rachel Farrington, Charles Hirst breedon@mhpgroup.com
Breedon Group plc
Breedon Group plc, a leading vertically-integrated construction
materials group in Great Britain and Ireland, delivers essential
products to the construction sector. Breedon holds 1bn 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 3,700
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.
SUSTAINABLE GROWTH STRATEGY DELIVERED RECORD EARNINGS
During 2022, our key construction end-markets, notably
infrastructure, housebuilding and industrial, continued to benefit
from long-term structural growth drivers, enabling us to report
record results once again, growing revenue by 13% and Underlying
EBIT by 16%.
Against this supportive landscape, our entrepreneurial and
decentralised teams stayed close to their customers, capitalising
on their embedded position within local markets which informed
timely commercial decisions. Our dynamic pricing strategy,
complemented by our strategic hedging programme and careful cost
management, ensured full cost recovery, delivering revenue of
GBP1,396.3m (2021: GBP1,232.5m) and Underlying EBIT of GBP155.0m
(2021: GBP133.6m), along with margin expansion of 30bps to
11.1%.
Cash generation remained robust and we continued to invest for
growth; we completed three strategically significant bolt-on
acquisitions and increased our net capital expenditure to GBP102m
(2021: GBP71m) as bottlenecks in the supply chain relaxed while
reducing our Covenant Leverage to 0.7x (2021: 0.8x). ROIC exceeded
our medium-term target, increasing 130bps to 10.8%. As a result of
increased levels of capital investment, tax and working capital
movements, Free Cash Flow conversion for the year was 29% (2021:
59%).
The Board regularly reviews capital allocation scenarios,
balancing capital investment and M&A with reducing debt and
returning cash to shareholders, while prioritising profitable
growth and ROIC. Alongside these record results, the Board has
approved a full year dividend of 2.1p (2021: 1.6p), an increase of
31%, as we continue to implement our progressive dividend
policy.
As a result of this strong and balanced financial performance,
we have made excellent progress towards the targets we set out at
our Capital Markets Event in the Autumn of 2021, growing revenue,
margins and returns while maintaining a healthy financial position
and increasing dividends to shareholders.
STRATEGY REVIEW
Resilient platform for sustainable growth
During Breedon's relatively short history, a resilient platform
has been built and tested in a range of market conditions, from
Brexit and the pandemic, to surging inflation coupled with
political turmoil and rising interest rates.
This foundation has been created through a consistent and
well-executed strategy, and has delivered market-leading growth and
consistent cash flow. Since our first full year of trading as
Breedon in 2011, the business has grown revenue 21% and Underlying
EBIT 34% on average per annum.
Our business has created significant value and we have continued
to develop our platform through the execution of our strategy;
embed a culture of Sustainability, Optimise our assets and Expand
our footprint and capability, while maintaining a disciplined
Financial Framework.
Sustain
Our sustainability framework sets out how Breedon is responding
to the urgent challenge posed by climate change and continues to
gain traction alongside increased disclosure.
We confirmed our commitment to the Science Based Targets
initiative in 2022 which in due course will be followed with the
release of a plan outlining the trajectories required to achieve
science-based carbon reductions following the 1.5(o) C warming
pathway.
We enhanced our risk considerations in respect of the Task Force
on Climate-Related Financial Disclosures, providing a clear
analysis of how climate change impacts our risk and opportunity
landscape, and undertaking our first detailed scenario analysis
which can be found in our Annual Report 2022.
We made further progress at our cement plants, achieving our
highest ever combined rate of alternative fuel substitution and
biomass usage, nearing 50% while at times exceeding 90% at
Kinnegad. Our electricity requirements in 2022 were substantially
all sourced through renewable contracts and we were awarded
planning permission at Kinnegad to install a solar farm with the
capacity to deliver up to 17MW, up to 20% of all the plant's energy
needs. Our Hope plant continued to engage in the pioneering HyNet
carbon capture and storage infrastructure project as a member of
the Peak Cluster and we have received planning consent to progress
with the ARM project.
Our deliberate focus on health, safety and wellbeing brings
together best practice, embracing new and innovative technologies
with the ambition to become a leading company in health, safety and
wellbeing. In 2022, we maintained our strong track record, with the
lost time injury frequency rate (LTIFR) falling to 2.10 (2021:
2.19) while the lost time injury severity rate (LTISR) halved. This
was achieved by reinvigorating our Home Safe and Well programme,
increasing training and conducting nearly 40% more visible felt
leadership site visits.
With ambitious growth plans, it is critical we continue to
invest in our talent. In 2022 we enhanced our colleague
communication platform, supported 93 colleagues through higher and
further education programmes in collaboration with the Universities
of Derby and Newcastle, and recruited 60 new apprentices across the
business. In recognition of the rising cost of living, we made two
additional payments to salary during the year to over 3,000 of our
colleagues. These actions were recognised in our engagement survey;
an unprecedented 75% of our colleagues took part producing an
engagement score of 77%, eight percentage points higher than in
2021.
Optimise
In an industry where new reserves and plants are limited by
restrictive planning practices, we carefully manage the valuable
resources we own. Every day, our team looks for ways to improve the
business and this culture of continuous self-help ensures we are
constantly improving the efficiency of our operations and
maximising the returns from our products and services.
In 2022, we implemented electronic proof of delivery across the
Group, improving our customer service, accelerating cash receipts
and using less paper. We delivered GBP2m of synergies as planned
from the integration of the acquired Cemex assets, and introduced
an operating model in GB to optimise quarrying efficiency and
proliferate best practice.
Expand
Growth at Breedon has always been balanced between buy and
build. In 2022, the business grew organically, delivering 11%
revenue growth on a like-for-like basis and 13% overall.
Our vertically-integrated model is backed by around one billion
tonnes of mineral reserves and resources making us one of the
largest heavyside building materials suppliers in the UK and
Ireland, with mineral reserves under our stewardship equivalent to
over 30 years of production. The diligent long-term planning of our
land management teams means our mineral planning pipeline is
currently in excess of 100 million tonnes.
Our downstream ready-mixed concrete, asphalt and surfacing
operations are largely self-sufficient, enabling us to pull
materials through the operating model, adding value through the
process. This year, we brought together the asphalt assets acquired
from Cemex with our proven surfacing capability to win a place on
the National Highways Pavement Delivery Framework in England.
Our outstanding team has been built around an entrepreneurial
culture of empowerment and decentralisation which makes us a strong
partner for our customers, a trusted owner of assets, and
contributes to our active M&A pipeline. Many of our acquisition
opportunities come to us through our local knowledge and personal
engagement with the asset owners.
In 2022, we acquired concrete supplier RT Mycock, further
extending our reach and capability. We enhanced our surfacing
platform with the addition of Thomas Bow, an East Midlands
surfacing business we have worked in partnership with since 2018.
We expanded our aggregates capability with the acquisition of
Severn Sands, a family-run marine sand dredging business, bringing
valuable licences in the Bristol channel into the business. These
transactions, with a combined spend of GBP15.1m, were immediately
accretive to earnings, and have met or exceeded our
expectations.
OUTLOOK
We enter 2023 in a strong position, supplying structurally
growing end-markets with essential materials, delivered by our
outstanding team and underpinned by a healthy financial
position.
We recognise the UK economic backdrop remains uncertain,
particularly with regard to residential housebuilding. However, the
end-markets we serve benefit from long-term structural growth
dynamics. The CPA continues to expect UK infrastructure and
industrial construction output will grow in 2023, underpinned by
large ongoing projects. Euroconstruct forecasts construction output
in RoI will grow 2.5% in real terms, supported by the strong
macroeconomic backdrop and structural need for housing and
infrastructure investment.
Our successful dynamic pricing strategy, forward hedging
programme and careful approach to cost management, which enabled us
to fully recover input cost increases in 2022, remain in place.
Our strategy provides multiple options for growth and our strong
balance sheet and thoughtful approach to capital allocation offers
the financial flexibility to take measured action at the right
time. Our M&A pipeline remains robust and we continue to engage
with asset owners in GB and Ireland as we seek to infill our
existing capability and footprint in the near-term. Longer-term, we
continue to explore the possibility of selectively establishing a
platform in the US, a large and fragmented market that offers
attractive growth prospects in-line with our rigorous investment
criteria. The cultural and regulatory profile matches our home
markets, playing to our experience and strong track record of
acquisition integration.
The Breedon model has repeatedly demonstrated its resilience,
delivering strong operational performances irrespective of the
macroeconomic backdrop, and we remain confident in our ability to
deliver. Overall, the Board's expectations for 2023 remain
unchanged.
OPERATIONAL REVIEW
Product volumes
million tonnes except
where stated 2022 2021 2020 2019
----- ----- ----- -----
Aggregates 26.3 29.2 21.7 20.2
Asphalt 3.8 4.1 3.3 3.0
Cement 2.2 2.4 2.0 2.0
Ready-mixed concrete
(m(3) ) 3.0m 3.3m 2.6m 3.0m
Volumes reduced in the year as expected to more normal levels
following exceptional post-covid demand in 2021 and the moderation
of UK economic growth.
When compared to 2019, volumes of our core products remain ahead
on a like-for-like basis: aggregates up 1%, asphalt up 9%, and
cement up 9%. Ready-mixed concrete volumes decreased by 9% compared
to 2019, reflecting the planned closure of less profitable plants
in 2021 and an increased commercial focus.
Great Britain
Change
GBPm except where stated 2022 2021 % LFL %
------ ------ ------- ------
Revenue 972.4 845.2 +15% +11%
Underlying EBIT 86.4 74.3 +16% +15%
Underlying EBIT margin 8.9% 8.8% 10bps
Our GB team had a successful year. We kept our people safe and
delivered significant organic growth, fully recovering rising input
costs despite unpredictable market conditions. Our extensive
network, local market knowledge and entrepreneurial culture meant
we recorded revenue of GBP972.4m (2021: GBP845.2m), an increase of
15.0% in the year, or 11.1% on a like-for-like basis.
Volumes normalised in line with the broader aggregates industry
as UK economic growth moderated. Rising input costs drove the
well-publicised need for price increases and were fully recovered,
leading to Underlying EBIT of GBP86.4m (2021: GBP74.3m). Underlying
EBIT margin increased by 10bps to 8.9%.
In 2021 we invested in our surfacing business, growing the team
and extending capability. We built on that platform in 2022,
expanding our presence in the East Midlands, acquiring the Thomas
Bow surfacing business with which we had partnered since 2018. This
investment was validated when we were awarded a place on the
National Highways Pavement Delivery Framework in England. Our
associate, BEAR Scotland, successfully retained the Transport
Scotland North West Network Management contract, while Breedon
remained the dedicated materials supplier to BEAR and Amey in
Scotland on the North West and North East contracts.
We expanded our strategic capability and reserves through the
acquisition of Severn Sands, a marine sand dredging business, and
increased our ready-mixed concrete offering through the acquisition
of RT Mycock.
We complemented our M&A activities with significant organic
investment, directing c.40% of the increased spend towards projects
aimed at driving growth.
The completion and commissioning of the Mansfield asphalt plant
met all our strategic goals. This GBP6.5m investment has expanded
the plant's production capacity, optimised efficiency, and offers
improved sustainability features by enabling the use of up to 50%
recycled asphalt while reducing its carbon footprint.
Health, safety and wellbeing remains our highest priority. In
2022, we hosted regular safety workshops across the business,
improved our injury frequency rate and materially reduced the
severity of injuries sustained.
Operating the business model relies on our ability to optimise
the use of our mineral reserves and resources and extend the life
of our quarries. In 2022, we secured 14 million tonnes of mineral
reserves and resources with an extensive pipeline at various stages
of planning.
Delivering our products sustainably is an operational
imperative. Revenue generated from asphalt and concrete products
with sustainable attributes accelerated materially from 21% in 2021
to 38% in 2022. We launched Breedon Balance, our new product range
that meets stringent sustainability criteria. In anticipation of a
change to building regulations in 2023, we are investing in a
network of silos that will allow us to increase the proportion of
CEM II in our concrete mix, a cement product with a reduced carbon
footprint.
Great Britain outlook
We are mindful of the challenges faced by our customers; while
we recognise the uncertainties they face, the CPA continues to
forecast growth in infrastructure and industrial end-markets and we
remain focused on working collaboratively with all our customers to
meet their needs while maximising the efficiency of our operations.
We are already seeing the benefits of the actions we took in 2022
to invest for growth and improve processes and systems and we
expect this to continue.
Ireland
GBPm except where stated 2022 2021 Change %
------ ------ ---------
Revenue 226.2 225.4 -
Underlying EBIT 28.3 28.2 -
Underlying EBIT margin 12.5% 12.5% -
Our team in Ireland delivered a resilient performance, fully
recovering input costs and winning high-quality new work. Our
business has an established market position across the Island of
Ireland and an experienced team, embedded within a healthy network
of repeat customers.
Softness in aggregate and asphalt volumes at the half year
reflected the absence of the governing Assembly in NI and the
tendering delays in RoI. Tendering activity in RoI accelerated
notably in the second half.
In NI, the DfI revised the procurement process for
infrastructure tenders, leading to a number of contract awards
coming through in the second half of 2022. We were successful in
the first two rounds of awards, securing both the Down and Armagh
District Term Surfacing contracts. Tenders have been submitted for
the remaining rounds with outcomes phased through 2023.
We have a successful street lighting maintenance business in NI
which benefits from the switch to more efficient LED technology. In
the second half, we were pleased to win two Street Lighting
Maintenance contracts with the DfI, each for a five-year term.
Across the year as a whole, our infrastructure and housing
end-markets remained robust, supporting a high degree of input cost
recovery which yielded stable results, recording revenue of
GBP226.2m, Underlying EBIT of GBP28.3m and Underlying EBIT margin
of 12.5%.
The encouraging medium-term economic backdrop in Ireland is led
by population expansion, accompanied by fundamental infrastructure
and housing shortages. Within this market we have an exceptional
track record for delivering complex projects on time, to budget and
safely, which enables us to secure high-quality, risk-managed
tenders, with price indexation mechanisms.
Our reputation for high-quality surfacing works helped us secure
27 trunk road projects and hundreds of local road resurfacing
tenders across the Island of Ireland in the year. We completed work
on the M1 near Dublin and the A2 in Belfast, operating both
contracts within restrictions to weekend and night-time operations.
To meet our clients' needs, these projects required significant
planning, collaboration with local stakeholders and commitment from
our supply chain, so we were pleased to deliver them on time and to
budget.
We are positioning the Ireland business for growth and
profitability; during 2022 we rebranded Whitemountain and Lagan as
Breedon and we invested in the team. A review of strategic
opportunities in Ireland crystalised our decision to exit our civil
engineering business during the year where the contract risk
profile had deteriorated.
We are building new relationships to complement our existing
commercial and public authority partnerships and broadening our
reach, enabling us to leverage our expanded footprint and pull
through more of our own material.
We made further progress with minerals in 2022 and have
opportunities at various stages of the planning process. In the
year we secured 11 million tonnes of incremental reserves and
resources, reopened the dormant Cahersiveen quarry in Kerry and
progressed a number of other extension opportunities.
Ireland outlook
The Government of Ireland has set out clear long-term spending
commitments and RoI remains the fastest growing economy in Western
Europe. In NI, while the pace of activity continues to be impacted
by the absence of the governing Assembly, our business is
underpinned by multi-year frameworks and term contracts.
High-quality tenders are coming to market and our experienced and
agile team are well positioned to win further work.
Cement
GBPm except where stated 2022 2021 Change %
------ ------ ---------
Revenue 300.7 245.6 +22%
Underlying EBIT 52.1 41.6 +25%
Underlying EBIT margin 17.3% 16.9% +40bps
Our cement plants in GB and Ireland enjoyed their most
successful year ever, aided by the hard work of our colleagues. The
division delivered strong revenue and earnings growth in 2022 as
demand in the UK for cement and cementitious products remained
robust. Cement volumes fell 9% to 2.2 million tonnes from the
elevated levels of 2021, driven primarily by lower concrete volumes
and reduced imports.
Pricing remained resilient, increasing steadily during the year
in response to rising input costs. We introduced a dynamic and
transparent pricing strategy, implementing a carbon surcharge
mechanism which gives our customers direct visibility of the carbon
cost of the cement they purchase.
Our forward hedging strategy afforded us a clear view of our
input costs, empowering our commercial teams to focus on full cost
recovery. Consequently, revenue increased 22% to GBP300.7m,
delivering Underlying EBIT of GBP52.1m, expanding margin by 40bps
to 17.3%.
Our teams are embedded in their communities and have a deep
personal connection to the plants. They take enormous pride in
meeting their stakeholder's needs and maximising plant
performance.
Our Kinnegad plant improved kiln reliability, a creditable
performance in light of the high proportion of alternative fuels it
utilises which adds complexity to the production process.
In 2021, our Hope plant achieved Plant Mastery status for
delivering three consecutive years of kiln reliability in excess of
96%. This is an industry recognised measure which denotes
market-leading plants with strong cost and quality control, high
workforce engagement and excellent health, safety and environmental
records. This remarkable performance was sustained in 2022,
delivering kiln reliability of 96.1% as a result of the rigorous
forward planning and maintenance programme operated by the team.
Both plants delivered three complex planned kiln maintenance
shutdowns on schedule and within budget.
One of our 2030 sustainability targets is a 30% reduction in
gross carbon intensity per tonne of cementitious product. We are
pursuing numerous strategies to reduce our carbon footprint,
switching away from fossil fuel inputs, reducing the clinker
content of our cementitious products and turning to innovation for
carbon abatement solutions.
In 2022, both plants increased fossil fuel replacement,
achieving a combined rate nearing 50% alternative fuel utilisation.
Hope increased fuel replacement by two percentage points while
Kinnegad once more improved its world leading alternative fuel
usage to 77% (2021: 75%). Kinnegad was granted planning permission
for a 17MW solar farm while Hope received the necessary planning
consent to start the ARM project in earnest.
Reducing the clinker content of our products supports our
clients' sustainability objectives. CEM II now comprises 50% of
Kinnegad sales (2021: 40%) and we expect this contribution will
continue to increase.
With respect to carbon abatement, our Hope plant is actively
involved in the HyNet industrial decarbonisation, carbon capture
and storage project as a member of the Peak Cluster. Our
participation in this pioneering infrastructure project will
facilitate the capture, transport and storage of CO(2)
emissions.
Cement outlook
The outlook for the cement market is positive, underpinned by
large ongoing infrastructure projects in the UK. In RoI, housing
and infrastructure are supported by the Government of Ireland's
development plans to accommodate a rapidly growing population.
FINANCE REVIEW
In 2022 we delivered another year of record performance,
advancing revenue and Underlying EBIT through robust pricing,
disciplined cost management and improvements in operating
performance and reduced our Covenant Leverage to 0.7x.
This record performance was achieved against a backdrop of
significant input cost inflation throughout 2022 and the impact of
more challenging macroeconomic conditions towards the end of the
year.
Revenue for the year at GBP1,396.3m increased by 13% compared to
2021 (GBP1,232.5m), reflecting the success of our dynamic pricing
strategy in recovering input cost increases, offset by the expected
reduction in volumes to more normal levels following exceptional
post-covid demand in 2021 and the moderation of UK economic growth.
Pricing contributed 20ppt of the revenue improvement, partially
offset by overall volume reductions of 10ppt. On a like-for-like
basis, excluding the impact of acquisitions, revenue increased by
11%.
We delivered record earnings with Group operating profit of
GBP144.5m (2021: GBP124.5m) and there was an encouraging
improvement in our share of profit of associate and joint ventures
of GBP3.5m (2021: GBP2.9m).
Our Underlying EBIT of GBP155.0m was up GBP21.4m or 16% on 2021
(GBP133.6m), with each division growing earnings compared to
2021.
Underlying EBIT margins strengthened to 11.1% ahead of 10.8%
reported in 2021 helped in part by synergy benefits of GBP2m from
the Cemex assets, in line with the target communicated at the time
of the acquisition. This represents further progress towards our
medium-term ambition to generate an Underlying EBIT margin of
between 12% and 15%.
Impact of acquisitions and non-underlying items
Our performance included a contribution of GBP35.6m revenue and
GBP1.0m Underlying EBIT from the three strategic bolt-on
acquisitions which completed during the second half of the
year.
Non-underlying items in the year amounted to a pre-tax cost of
GBP7.0m (2021: GBP6.2m), of which the majority was GBP4.8m (2021:
GBP3.6m) of amortisation of acquired intangible assets. Other
non-underlying items comprised a net GBP1.5m of gains and losses
recognised on the disposal of properties and GBP0.7m of acquisition
related costs.
Interest and profit before tax
Net finance costs in the year totalled GBP12.2m (2021: GBP13.1m)
and included interest on the Group's debt facilities and lease
liabilities, amortisation of bank arrangement fees, and the
unwinding of discounting on provisions.
Finance costs were lower than the prior year as leverage
continued to fall and we realised a full year of benefits from the
refinancing undertaken during 2021.
Approximately 40% of the Group's available facilities are at
fixed rates of interest, with the remainder floating relative to
SONIA or EURIBOR as appropriate.
Profit before tax was GBP135.8m, 19% above 2021 (GBP114.3m).
Underlying profit before tax was GBP142.8m, 19% above 2021
(GBP120.5m).
Tax
The Group recorded an Underlying tax charge at an effective rate
of 16.0% (2021: 16.1%), which in absolute terms equated to a charge
of GBP22.9m (2021: GBP19.4m).
We recognised a non-cash deferred tax charge of GBP1.1m (2021:
GBP17.3m) to measure movements in our deferred tax liability in the
UK at a higher tax rate than the current statutory rate of 19%.
We remeasured our existing liability in 2021 following the UK
Government substantively enacting legislation to increase the
future rate of corporation tax to 25% from 19%. To remain
consistent we have continued to present rate change impacts as a
separate line within the Underlying column of the consolidated
income statement.
The statutory tax charge, which includes the full impact of the
deferred tax rate changes outlined above, was GBP23.2m (2021:
GBP35.7m).
Alongside the legislated tax rate change in the UK from 19% to
25% which will increase the future effective tax rate of the Group
from 2023, the Group may be impacted in the future by BEPS Pillar
2, the OECD initiative for a global minimum 15% rate, as a result
of our trading operations in RoI where the statutory rate of
corporation tax is 12.5%. The Group's corporation tax charge in RoI
was GBP6.0 million in 2022, so while exposure is not expected to be
material, we continue to closely monitor developments.
We complied effectively with our stated tax strategy, and we
continue to make a significant contribution to the economies in
which we operate through taxation, either borne by the Group or
collected on behalf of, and paid to the tax authorities. In 2022,
the total taxes borne and collected by the Group amounted to
c.GBP210m (2021: c.GBP210m).
Earnings per share
Statutory Basic EPS increased by 43% to 6.65p (2021: 4.65p),
while Underlying Basic EPS for the year totalled 7.02p (2021:
4.96p).
Adjusted Underlying Basic EPS, calculated using Underlying
earnings and adjusted to exclude the impact of the GBP1.1m (2021:
GBP17.3m) charge recognised in respect of deferred tax rate
changes, increased by 18% to 7.08p (2021: 5.98p).
Statutory diluted EPS was 6.63p (2021: 4.62p), with the only
adjustment made in calculating dilution relating to employee share
option schemes. Adjusted Underlying Diluted EPS was 7.05p (2021:
5.95p).
Statement of financial position and ROIC
Net assets at 31 December 2022 were GBP1,043.8m (2021:
GBP949.8m). Total non-current assets of GBP1,370.7m (2021:
GBP1,317.7m) increased as a result of the impact of exchange rates
on Euro-denominated assets and the acquisitions completed during
2022. Current assets were GBP63.3m higher than December 2021,
reflecting the impact of inflation on working capital balances,
higher cash holdings and increasing raw materials inventory levels
at our cement plants to manage possible supply chain disruption and
ensure continuity of production.
Total liabilities increased year on year, with provision
balances increasing to reflect the impact of a higher inflation
rate used in the calculation of long term site restoration
liabilities, partially offset by corresponding increases in
discount rates, as a result of external market movements during the
year.
Using average invested capital, ROIC strengthened through the
year to end 2022 at 10.8% (2021: 9.5%) which is in excess of the
Group's cost of capital and demonstrates progress in achieving our
medium-term target to consistently deliver ROIC in excess of
10%.
Impairment review
We completed our annual impairment review of goodwill and retain
comfortable levels of headroom relative to the carrying value of
our asset base.
Input cost and hedging strategy
Input cost inflation had a significant impact on our results,
with energy (gas and electricity), fuels, bitumen and the cost of
carbon emission permits under both UK and EU ETS schemes all
showing significant volatility. Although energy costs have fallen
from the peaks experienced in the second half of 2022, they remain
elevated relative to historic levels and cost price volatility is
expected to continue into 2023.
Our strategy 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.
A proportion of our bitumen requirements are hedged in the short
term, typically for larger contracts where pricing is agreed in
advance. Remaining purchases are at spot; the market for asphalt,
in which bitumen is the primary purchased raw material, has
historically responded quickly to bitumen price changes. Other
fuels are purchased at spot and passed on.
Our 2022 earnings have benefited from our hedging programme,
with the primary impact being to provide near term cost certainty
and delay the point at which the Group has been exposed to
increased input cost prices. In turn this allows time for our
dynamic approach to pricing to reflect the underlying market
movements, avoiding a potentially significant cost of under
recovery due to sales pricing lags.
For 2023, we are substantially hedged in line with our policy.
Recent reductions in the cost of energy have moved our forward
position to align more closely with market rates. However, our
hedges are still expected to provide a net benefit to the Group
during 2023.
Free cash flow
We generated GBP68.7m of Free Cash Flow (2021: GBP127.3m) while
significantly increasing capital investment.
Net capital expenditure increased by GBP30.7m to GBP102.0m
(2021: GBP71.3m) comprising capital investment of GBP106.8m offset
by GBP4.8m of proceeds from specific asset disposals. This
increased investment was in line with our market guidance of
c.GBP170m in aggregate across 2021 and 2022.
Working capital flows reflected strong cash collection offset by
the purchase of UK ETS carbon credits, the inventory build to
ensure continuity of production at our cement plants and the impact
of inflation on working capital balances.
As a result of increased levels of capital investment, tax and
working capital movements, Free Cash Flow conversion for the year
was 29% (2021: 59%). We continue to target average Free Cash Flow
conversion after regular capital investment of 50%.
Acquisitions
Our Net Debt increased by GBP15.1m (2021: GBP6.1m), as a result
of the three bolt-on acquisitions completed during 2022.
Net Debt and borrowing facilities
At 31 December 2022 Net Debt was GBP197.7m (2021: GBP212.5m).
Net Debt includes IFRS 16 lease liabilities of GBP49.3m (2021:
GBP51.0m). Our Covenant Leverage at the year-end was 0.7x (2021:
0.8x) reflecting the resilience of the Group's balance sheet and
allows significant flexibility in pursuing our sustainable growth
strategy.
The Group's borrowing facilities comprise a GBP350m
multi-currency revolving credit facility (RCF) and a GBP250m USPP.
During the year, we exercised our option to extend the RCF for a
one year period. Arrangement fees of GBP0.7m were capitalised in
the year and will be amortised over the period of the additional
borrowing.
Following the exercise of the extension option, the RCF is
available to the Group until June 2025 with an option to extend for
up to a further year. Interest on the RCF is calculated as a margin
referenced to the Group's Covenant Leverage plus SONIA or EURIBOR
according to the currency of borrowing.
The USPP issued in 2021 provides long term financing at low
fixed interest rates with an average fixed coupon of approximately
2%. The USPP comprises GBP170m sterling and GBP80m drawn in euro,
with 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 2022, total undrawn borrowing facilities available to the
Group amounted to GBP350m.
Dividend
Subject to shareholder approval, we intend to pay a dividend in
respect of the 2022 financial results of 2.1p, an increase of 31%
from 2021 (1.6p). This equates to a payout ratio of 30% (2021: 27%)
of adjusted Underlying EPS. Assuming continued positive trading
conditions and cash generation, the Group continues to target a
payout ratio of 40% of Underlying EPS over time.
An interim dividend of 0.7p (2021: 0.5p) was paid on 30
September 2022 and, subject to shareholder approval, the remaining
1.4p (2021:1.1p) will be paid as a final dividend on 5 May 2023.
Under IFRS dividends are recorded in the financial statements of
the accounting period in which they are declared. Accordingly,
dividend payments amounting to GBP30.5m (2021: GBP8.4m) have been
recognised in the 2022 financial statements.
Thoughtful capital allocation is core to our financial strategy,
and we remain confident that our progressive dividend policy will
not compromise the Group's ability to execute on our strategic
objectives.
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 our capital responsibly, focusing on organic
investment in our business to ensure that our asset base is
well-invested. We will continue to pursue 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, whilst supporting our progressive
dividend policy.
2023 technical guidance
We expect working capital to experience the normal seasonal
outflow in the first half of 2023, with an overall modest
inflationary outflow for the full year of c.GBP20m.
We continue to prioritise investment in the business and expect
to invest c.GBP90m in capital projects during 2023.
Cash costs of dividends paid during 2023 will be c.GBP35m and
our net interest expense c.GBP15m. of which c.GBP9m will be cash
interest.
We expect an effective tax rate of c.20%, reflecting the
increased statutory rate of tax in the UK, with cash tax payments
higher than the effective rate as a result of the accelerated
superdeduction capital allowances claimed in 2021 and 2022.
RISK
The Group's principal risks in alphabetical order (by risk
category) are:
Strategic Operational Financial
* Credit risk
* Acquisitions * Environmental impact
* Currency risk
* Climate change * Failure of a critical asset
* Digitalisation * Health, safety and wellbeing * Financing and interest rate risk
* Market conditions * Input costs
* Mineral reserves * IT and cyber security
* People * Legal and regulatory
* Product specification
Further details of the principal risks facing the Group for the
year ended 31 December 2022 are set out in the Group's Annual
Report which will be made available at 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 Financial Statements in accordance with applicable law and
regulations.
Jersey company law requires the Directors to prepare Financial
Statements for each financial year. Under that law they have
elected to prepare the Financial Statements in accordance with
UK-adopted international accounting standards and applicable law
.
Under Jersey company law the Directors must prepare Financial
Statements that give a true and fair view of the state of affairs
of the Group and of the profit or loss of the Group for that
period. In preparing these 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;
-- state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the Financial Statements;
-- assess the Group'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 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 Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the Financial Statements comply with Companies (Jersey) Law, 1991.
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 Company and
the Group and to prevent and detect fraud and other
irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in Jersey governing the preparation
and dissemination of Financial Statements may differ from
legislation in other jurisdictions. The directors shall remain
responsible for establishing and controlling the process for doing
so, and for ensuring that the financial statements are complete and
unaltered in any way.
Rob Wood James Brotherton
Chief Executive Officer Chief Financial Officer
8 March 2023
condensed Consolidated Income Statement
for the Year ended 31 December 2022
2022 2021
Underlying Non-underlying* Total Underlying Non- underlying* Total
(note 4) (note 4)
---------------------------------------- ---------- --------------- ------- ---------- ----------------- -------
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 1,396.3 - 1,396.3 1,232.5 - 1,232.5
Cost of sales (910.1) - (910.1) (804.1) - (804.1)
----------------------------------------
Gross profit 486.2 - 486.2 428.4 - 428.4
Distribution expenses (231.0) - (231.0) (210.6) - (210.6)
Administrative expenses (103.7) (7.0) (110.7) (87.1) (6.2) (93.3)
Group operating profit 151.5 (7.0) 144.5 130.7 (6.2) 124.5
Share of profit of associate and joint
ventures 3.5 - 3.5 2.9 - 2.9
---------------------------------------- ---------- --------------- ------- ---------- ----------------- -------
Profit from operations 155.0 (7.0) 148.0 133.6 (6.2) 127.4
Financial income 0.2 - 0.2 - - -
Financial expense (12.4) - (12.4) (13.1) - (13.1)
----------------------------------------
Profit before taxation 142.8 (7.0) 135.8 120.5 (6.2) 114.3
Tax at effective rate (22.9) 0.8 (22.1) (19.4) 1.0 (18.4)
Changes in deferred tax rate (1.1) - (1.1) (17.3) - (17.3)
---------------------------------------- ---------- --------------- ------- ---------- ----------------- -------
Taxation (24.0) 0.8 (23.2) (36.7) 1.0 (35.7)
---------------------------------------- ---------- --------------- ------- ---------- ----------------- -------
Profit for the year 118.8 (6.2) 112.6 83.8 (5.2) 78.6
---------------------------------------- ---------- --------------- ------- ---------- ----------------- -------
Attributable to:
Breedon Group shareholders 118.7 (6.2) 112.5 83.7 (5.2) 78.5
Non-controlling interests 0.1 - 0.1 0.1 - 0.1
----------------------------------------
Profit for the year 118.8 (6.2) 112.6 83.8 (5.2) 78.6
---------------------------------------- ---------- --------------- ------- ---------- ----------------- -------
* Non-underlying items represent acquisition-related expenses, redundancy and reorganisation
costs, property losses, amortisation of acquisition intangibles and related tax items.
Earnings per share
Basic 6.65p 4.65p
Diluted 6.63p 4.62p
---------------------------------------- ---------- --------------- ------- ---------- ----------------- -------
Dividends in respect of the year
Dividend per share 2.10p 1.60p
---------------------------------------- ---------- --------------- ------- ---------- ----------------- -------
condensed Consolidated Statement of Comprehensive Income
for the year ended 31 december 2022
2022 2021
---------------------------------------------------------------------------------- ----- ------
GBPm GBPm
Profit for the year 112.6 78.6
Other comprehensive income/(expense)
Items which may be reclassified subsequently to profit and loss:
Foreign exchange differences on translation of foreign operations, net of hedging 10.2 (14.7)
Effective portion of changes in fair value of cash flow hedges (1.3) 1.2
Taxation on items taken directly to other comprehensive income 0.2 (0.2)
Other comprehensive income/(expense) for the year 9.1 (13.7)
---------------------------------------------------------------------------------- ----- ------
Total comprehensive income for the year 121.7 64.9
---------------------------------------------------------------------------------- ----- ------
Total comprehensive income for the year is attributable to:
Breedon Group shareholders 121.6 64.8
Non-controlling interests 0.1 0.1
---------------------------------------------------------------------------------- ----- ------
121.7 64.9
---------------------------------------------------------------------------------- ----- ------
condensed Consolidated Statement of Financial Position
at 31 December 2022
2022 2021
-------------------------------------------- ---------- --------
GBPm GBPm
Non-current assets
Property, plant and equipment 787.9 749.9
Right-of-use assets 47.1 49.6
Intangible assets 518.2 501.5
Investment in associate and joint ventures 13.7 12.2
Trade and other receivables 3.8 4.5
--------------------------------------------
Total non-current assets 1,370.7 1,317.7
-------------------------------------------- ---------- --------
Current assets
Inventories 94.8 62.0
Trade and other receivables 218.6 205.9
Cash and cash equivalents 101.7 83.9
Total current assets 415.1 351.8
-------------------------------------------- ---------- --------
Total assets 1,785.8 1,669.5
--------------------------------------------
Current liabilities
Interest-bearing loans and borrowings (7.9) (7.2)
Trade and other payables (263.8) (257.7)
Current tax payable (3.8) (4.7)
Provisions (9.2) (9.5)
-------------------------------------------- ---------- --------
Total current liabilities (284.7) (279.1)
--------------------------------------------
Non-current liabilities
Interest-bearing loans and borrowings (291.5) (289.2)
Provisions (76.8) (63.9)
Deferred tax liabilities (89.0) (87.5)
-------------------------------------------- ---------- --------
Total non-current liabilities (457.3) (440.6)
-------------------------------------------- ---------- --------
Total liabilities (742.0) (719.7)
-------------------------------------------- ---------- --------
Net assets 1,043.8 ) 949.8
-------------------------------------------- ---------- --------
Equity attributable to Breedon Group
shareholders
Stated capital 555.0 553.0
Hedging reserve 0.1 1.2
Translation reserve 0.4 (9.8)
Retained earnings 488.0 405.2
--------------------------------------------
Total equity attributable to Breedon
Group shareholders 1,043.5 949.6
Non-controlling interests 0.3 0.2
-------------------------------------------- ---------- --------
Total equity 1,043.8 949.8
-------------------------------------------- ---------- --------
condensed Consolidated Statement of Changes in Equity
for the year ended 31 december 2022
Stated Hedging Translation Retained Attributable Non-controlling Total
capital reserve reserve earnings to Breedon interests equity
Group shareholders
-------------------- --------- --------- ------------ ---------- -------------------- ---------------- --------
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 1
January
2021 551.6 0.2 4.9 331.6 888.3 0.1 888.4
Shares issued 1.4 - - - 1.4 - 1.4
Dividends paid - - - (8.4) (8.4) - (8.4)
Total comprehensive
income for the
year - 1.0 (14.7) 78.5 64.8 0.1 64.9
Share-based
payments
(inclusive of
deferred
tax recognised in
equity) - - - 3.5 3.5 - 3.5
-------------------- --------- --------- ------------ ---------- -------------------- ---------------- --------
Balance at 31
December
2021 553.0 1.2 (9.8) 405.2 949.6 0.2 949.8
Shares issued 2.0 - - - 2.0 - 2.0
Dividends paid - - - (30.5) (30.5) - (30.5)
Total comprehensive
income for the
year - (1.1) 10.2 112.5 121.6 0.1 121.7
Share-based
payments
(inclusive of
deferred
tax recognised in
equity) - - - 0.8 0.8 - 0.8
Balance at 31
December
2022 555.0 0.1 0.4 488.0 1,043.5 0.3 1,043.8
-------------------- --------- --------- ------------ ---------- -------------------- ---------------- --------
condensed Consolidated Statement of Cash Flows
for the Year ended 31 december 2022
2022 2021
----------------------------------------------------------------------- -------- --------
GBPm GBPm
Cash flows from operating activities
Profit for the year 112.6 78.6
Adjustments for:
Depreciation and mineral depletion 83.5 83.3
Amortisation 4.8 3.6
Financial income (0.2) -
Financial expense 12.4 13.1
Share of profit of associate and joint ventures (3.5) (2.9)
Loss on sale of property, plant and equipment 2.4 -
Gain on stepped acquisition (0.3) -
Share-based payments 1.2 2.9
Taxation 23.2 35.7
----------------------------------------------------------------------- -------- --------
Operating cash flows before changes in working capital and provisions 236.1 214.3
Increase in trade and other receivables (0.2) (17.6)
Increase in inventories (31.7) (3.5)
(Decrease)/increase in trade and other payables (9.1) 17.2
Increase in provisions 7.7 6.7
----------------------------------------------------------------------- -------- --------
Cash generated from operating activities 202.8 217.1
Interest paid (6.7) (6.8)
Interest element of lease payments (2.5) (2.6)
Interest received 0.2 -
Income taxes paid (25.8) (13.6)
-----------------------------------------------------------------------
Net cash from operating activities 168.0 194.1
----------------------------------------------------------------------- -------- --------
Cash flows used in investing activities
Acquisition of businesses (12.6) (6.1)
Dividends from associate and joint ventures 1.7 1.9
Purchase of property, plant and equipment (106.8) (76.9)
Proceeds from sale of property, plant and equipment 4.8 5.6
Net cash used in investing activities (112.9) (75.5)
----------------------------------------------------------------------- -------- --------
Cash flows used in financing activities
Dividends paid (30.5) (8.4)
Proceeds from the issue of shares (net of costs) 2.0 1.4
Proceeds from new interest-bearing loans (net of costs) - 513.9
Repayment of interest-bearing loans - (563.1)
Revolving Credit Facility extension costs (0.7) -
Repayment of lease obligations (8.8) (9.7)
Net cash used in financing activities (38.0) (65.9)
----------------------------------------------------------------------- -------- --------
Net increase in cash and cash equivalents 17.1 52.7
Cash and cash equivalents at 1 January 83.9 31.7
Foreign exchange differences 0.7 (0.5)
----------------------------------------------------------------------- -------- --------
Cash and cash equivalents at 31 December 101.7 83.9
----------------------------------------------------------------------- -------- --------
Notes to the Financial Statements
1 Basis of preparation
Breedon Group plc is a company domiciled in Jersey. The
financial information (note 11) consolidates the results of the
Company and its subsidiary undertakings, and equity account for the
Group's interest in its associate and its joint ventures
(collectively the 'Group').
The financial information has been prepared in accordance with
UK-adopted international accounting standards and under the
historical cost convention except for the revaluation to fair value
of certain financial instruments.
Alternative performance measures
The following non-GAAP performance measures have been used in
the financial statements:
- Like-for-like revenue
* Underlying Earnings Before Interest and Tax (EBIT) * Underlying Basic Earnings Per Share (EPS) * Return on invested capital
* Underlying EBIT Margin * Free Cash Flow * Covenant Leverage
* Underlying EBITDA * Free Cash Flow conversion * Net Debt
* Like-for-like Underlying EBIT * Net Debt (excluding IFRS 16)
Management uses these terms as they believe these measures allow
a better 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.
A reconciliation between these alternative performance measures
to the most directly related statutory measures is included within
note 10.
2 Going concern
These 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 GBP350m
multi-currency RCF, which runs to at least June 2025 and GBP250m of
USPP loan notes with maturities between 2028 and 2036.
The Group comfortably met all covenants in 2022 and other terms
of its borrowing agreements in the period, and maintained a track
record of profitability and cash generation, with an overall profit
before taxation of GBP135.8m and net cash from operating activities
of GBP168.0m.
The Group has prepared cash flow forecasts for a period of
twelve months from the date of signing these financial statements,
which show a sustained trend of profitability and 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, whilst the downside
scenario models a 30 per cent reduction in revenues, which the
Group believes is an extremely severe sensitivity relative to
likely outcomes and historic experience.
As at 31 December 2022, the Group had cash of GBP101.7m and
undrawn banking facilities of GBP350.0m. At the date of this
report, the Group retains a similar level of liquidity, 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
financial statements and therefore have prepared the financial
statements on a going concern basis.
3 Segmental analysis
The principal activities of the Group are the quarrying of
aggregates and manufacture and sale of construction materials and
buildings products, including cement, asphalt and ready-mixed
concrete, together with related activities in GB and Ireland.
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.
Cement: our cementitious operations in Great Britain and
Ireland.
2022 2021
Revenue *Underlying Revenue *Underlying
EBITDA EBITDA
------------------------------------------------ ------- ----------- ------- -----------
Income statement GBPm GBPm GBPm GBPm
Great Britain 972.4 136.1 845.2 124.2
Ireland 226.2 34.4 225.4 35.4
Cement 300.7 79.6 245.6 67.7
Central administration - (15.1) - (13.3)
Eliminations (103.0) - (83.7) -
------------------------------------------------ ------- ----------- ------- -----------
Group 1,396.3 235.0 1,232.5 214.0
------------------------------------------------ ------- ----------- ------- -----------
Reconciliation to statutory profit
Group Underlying EBITDA as above 235.0 214.0
Depreciation and mineral depletion (83.5) (83.3)
----------- -----------
Great Britain 86.4 74.3
Ireland 28.3 28.2
Cement 52.1 41.6
Central administration (15.3) (13.4)
----------- -----------
Underlying Group operating profit 151.5 130.7
Share of profit of associate and joint ventures 3.5 2.9
Underlying profit from operations (EBIT) 155.0 133.6
Non-underlying items (note 4) (7.0) (6.2)
------- -----------
Profit from operations 148.0 127.4
------------------------------------------------ ------- ----------- ------- -----------
*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.
Analysis of revenue by geographic location of end-market
2022 2021
--------------------- -------- --------
GBPm GBPm
United Kingdom 1,217.3 1,088.2
Republic of Ireland 176.5 141.1
Other 2.5 3.2
--------------------- -------- --------
1,396.3 1,232.5
--------------------- -------- --------
3 Segmental analysis (continued)
Analysis of revenue by major products and service lines by
segment
2022 2021
--------------- -------- --------
GBPm GBPm
Sale of goods
Great Britain 829.0 740.2
Ireland 82.0 66.4
Cement 300.7 245.6
Eliminations (103.0) (83.7)
--------------- -------- --------
1,108.7 968.5
--------------- -------- --------
Surfacing
Great Britain 143.4 105.0
Ireland 144.2 159.0
--------------- -------- --------
287.6 264.0
--------------- -------- --------
Total 1,396.3 1,232.5
--------------- -------- --------
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
2022 2021
Total Total Total Total
assets liabilities assets liabilities
----------------------- ------- ------------ ------- ------------
GBPm GBPm GBPm GBPm
Great Britain 900.9 (228.0) 841.8 (203.0)
Ireland 260.6 (40.5) 254.4 (45.8)
Cement 519.7 (62.0) 487.2 (65.0)
Central administration 2.9 (19.3) 2.2 (17.3)
----------------------- ------- ------------ ------- ------------
Total operations 1,684.1 (349.8) 1,585.6 (331.1)
Current tax - (3.8) - (4.7)
Deferred tax - (89.0) - (87.5)
Net Debt 101.7 (299.4) 83.9 (296.4)
----------------------- ------- ------------ ------- ------------
Total Group 1,785.8 (742.0) 1,669.5 (719.7)
----------------------- ------- ------------ ------- ------------
Net assets 1,043.8 949.8
----------------------- ------- ------------ ------- ------------
4 Non-underlying items
Non-underlying items are those which are either unlikely to
recur in future periods or which distort the underlying trading
performance of the business, including non-cash items. The
directors monitor the performance of the Group using alternative
performance measures which are 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. Underlying measures are presented on a consistent basis
over time to assist in the comparison of performance.
2022 2021
---------------------------------------- ----- -----
GBPm GBPm
Included in administrative expenses:
Redundancy and reorganisation costs - 1.2
Acquisition costs 0.7 0.7
Property (gains) and losses 1.5 0.7
Amortisation of acquired intangible
assets 4.8 3.6
Total non-underlying items (before tax) 7.0 6.2
Non-underlying taxation (0.8) (1.0)
---------------------------------------- ----- -----
Total non-underlying items (after tax) 6.2 5.2
---------------------------------------- ----- -----
Acquisition costs are presented net of a GBP0.3m gain on stepped
acquisition. See note 9.
5 Taxation
Recognised in the condensed consolidated
income statement
2022 2021
----------------------------------------------- ----- -----
GBPm GBPm
Current tax
Current year 23.6 19.1
Prior year 1.0 (0.1)
----------------------------------------------- ----- -----
Total current tax 24.6 19.0
Deferred tax
Current year (1.8) (1.1)
Change in deferred tax rate 1.1 17.3
Prior year (0.7) 0.5
----------------------------------------------- ----- -----
Total deferred tax (1.4) 16.7
----------------------------------------------- ----- -----
Total tax charge in the condensed consolidated
income statement 23.2 35.7
----------------------------------------------- ----- -----
Recognised in equity
2022 2021
----------------------------------------------- ----- -----
GBPm GBPm
Deferred tax
Cash flow hedges (0.2) 0.2
Share-based payments 0.4 (0.6)
----------------------------------------------- ----- -----
Total tax charge/(credit) in equity 0.2 (0.4)
----------------------------------------------- ----- -----
5 Taxation (continued)
Reconciliation of effective tax rate
2022 2021
------------------------------------------- ----- -----
GBPm GBPm
Profit before taxation 135.8 114.3
Tax at the Company's domestic rate of
19% 25.8 21.7
Difference between Company and subsidiary
statutory tax rates (2.6) (2.0)
Expenses not deductible for tax purposes 0.6 0.7
Enhanced capital allowances (1.4) (1.5)
Share-based payments 0.8 -
Unrecognised deferred tax assets (0.7) (0.4)
Income from associate and joint ventures
already taxed (0.7) (0.5)
Change in deferred tax rate 1.1 17.3
Adjustment in respect of prior years 0.3 0.4
------------------------------------------- ----- -----
Total tax charge 23.2 35.7
The Company is tax resident in the UK, with a 19% tax rate. The
Group's subsidiary operations pay tax at a rate of 19% (2021: 19%)
in the UK and 12.5% (2021: 12.5%) in RoI.
Excluding the impact of non-underlying items and the change in
deferred tax rate, the Group's Underlying effective tax rate is
16.0% (2021: 16.1%). Including these items, the Group's reported
tax rate for the year is 17.1% (2021: 31.2%).
On 24 May 2021, legislation was passed which substantively
enacted an increase in UK corporation tax rate from 19% to 25% from
April 2023. This will result in higher tax charges in future years
and a deferred tax charge of GBP17.3m was recognised in the prior
year to remeasure the Group's UK deferred tax liabilities held at
31 December 2021 to this higher rate.
6 Interest-bearing loans and borrowings
Net Debt
2022 2021
----------------------------- ------- -------
GBPm GBPm
Cash and cash equivalents 101.7 83.9
Current borrowings (7.9) (7.2)
Non-current borrowings (291.5) (289.2)
----------------------------- ------- -------
Net Debt (197.7) (212.5)
----------------------------- ------- -------
IFRS 16 lease liabilities 49.3 51.0
----------------------------- ------- -------
Net Debt (excluding IFRS 16) (148.4) (161.5)
----------------------------- ------- -------
Analysis of borrowings between current and non-current
2022 2021
----------------------- ----- -----
GBPm GBPm
Lease liabilities 7.9 7.2
----------------------- ----- -----
Current borrowings 7.9 7.2
----------------------- ----- -----
Bank and USPP debt 250.1 245.4
Lease liabilities 41.4 43.8
----------------------- ----- -----
Non-current borrowings 291.5 289.2
----------------------- ----- -----
6 Interest-bearing loans and borrowings (continued)
The Group's borrowing facilities comprise a GBP350m
multi-currency RCF and a GBP250m USPP.
The RCF is available to the Group until June 2025 with an option
to extend for up to a further one year period. Interest on the RCF
is calculated as a margin referenced to the Group's Covenant
Leverage plus SONIA or EURIBOR according to the currency of
borrowing. Interest margin on the revolving credit facility was
charged in the period at rates of between 1.7% and 1.8%.
The USPP was issued in 2021 with an average fixed coupon of
approximately 2% and comprises GBP170m sterling and GBP80m drawn in
euro, with a maturity profile between 2028 and 2036.
During the year, the Group exercised an option to extend the RCF
for a one year period. Arrangement fees of GBP0.7m were capitalised
in the year and will be amortised over the period of the additional
borrowing.
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 Earnings per share
Basic earnings per share amounts are calculated by dividing
profit for the year attributable to equity holders of the parent
company (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
2022 2021
Earnings Shares EPS Earnings Shares EPS
-------------------------------------------------------- -------- --------- ----- --------- --------- -----
GBPm millions pence GBPm millions pence
Basic EPS 112.5 1,692.767 6.65 78.5 1,688.243 4.65
Adjustments to earnings
Earnings impact of change in deferred tax rate (note 5) 1.1 - 0.06 17.3 - 1.02
Non-underlying items (note 4) 6.2 - 0.37 5.2 - 0.31
-------------------------------------------------------- -------- --------- ----- --------- --------- -----
Adjusted Underlying Basic EPS 119.8 1,692.767 7.08 101.0 1,688.243 5.98
-------------------------------------------------------- -------- --------- ----- --------- --------- -----
Basic EPS to Underlying Basic EPS
2022 2021
Earnings Shares EPS Earnings Shares EPS
------------------------------ -------- --------- ----- --------- --------- -----
GBPm millions pence GBPm millions pence
Basic EPS 112.5 1,692.767 6.65 78.5 1,688.243 4.65
Adjustments to earnings
Non-underlying items (note 4) 6.2 - 0.37 5.2 - 0.31
------------------------------ -------- --------- ----- --------- --------- -----
Underlying Basic EPS 118.7 1,692.767 7.02 83.7 1,688.243 4.96
------------------------------ -------- --------- ----- --------- --------- -----
7 Earnings per share (continued)
Diluted EPS to Underlying Diluted EPS
2022 2021
Earnings Shares EPS Earnings Shares EPS
------------------------------ -------- --------- ----- --------- --------- -----
GBPm millions pence GBPm millions pence
Diluted EPS 112.5 1,696.994 6.63 78.5 1,698.462 4.62
Adjustments to earnings
Non-underlying items (note 4) 6.2 - 0.37 5.2 - 0.31
------------------------------ -------- --------- ----- --------- --------- -----
Underlying Diluted EPS 118.7 1,696.994 7.00 83.7 1,698.462 4.93
------------------------------ -------- --------- ----- --------- --------- -----
Dilutive items in both the current and prior year related to
share-based payments.
8 Stated capital
All shares issued by Breedon are ordinary shares which have no
par value 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.
2022 2021
-------------------------------------------- -------- --------
millions millions
Issued ordinary shares at the beginning
of year 1,689.7 1,687.6
Issued in connection with:
Exercise of savings-related share options 3.1 2.1
Vesting of Performance Share Plan awards 1.6 -
-------------------------------------------- -------- --------
1,694.4 1,689.7
-------------------------------------------- -------- --------
Movements during 2022:
The Company issued 3.1m shares, for cash, raising GBP2.0m in
connection with the exercise of certain savings-related share
options and issued 1.6m shares for nil consideration in connection
with the vesting of awards under the Performance Share Plans.
Movements during 2021:
The Company issued 2.1m shares, for cash, raising GBP1.4m in
connection with the exercise of certain savings-related share
options.
9 Acquisitions
Current year acquisitions
The Group completed three acquisitions in the year, acquiring
80% of the ordinary share capital of Thomas Bow Limited (1 July
2022), and 100% of the ordinary share capitals of R T Mycock &
Sons Limited (1 July 2022) and Severn Sands Limited (1 August
2022). The fair value of the assets and liabilities acquired are
set out as follows:
Provisional
Fair value fair value
Book value adjustments on acquisition
--------------------------------- ----------- ------------- ----------------
GBPm GBPm GBPm
Intangible assets - 5.8 5.8
Property, plant and equipment 3.6 - 3.6
Right-of-use assets 1.6 0.9 2.5
Inventories 0.3 - 0.3
Trade and other receivables 11.1 - 11.1
Cash and cash equivalents 6.3 - 6.3
Trade and other payables (12.7) - (12.7)
Provisions - (0.2) (0.2)
Lease liabilities (1.6) (0.9) (2.5)
Current tax payable (0.3) - (0.3)
Deferred tax liabilities (0.8) (1.3) (2.1)
--------------------------------- ----------- ------------- ----------------
Total 7.5 4.3 11.8
--------------------------------- ----------- ------------- ----------------
Consideration - cash 18.9
Consideration - deemed proceeds
from stepped acquisition of
Breedon Bow Highways Limited 0.7
Deferred consideration 0.9
--------------------------------- ----------- ------------- ----------------
Goodwill arising 8.7
--------------------------------- ----------- ------------- ----------------
Prior to the acquisition of Thomas Bow Limited, the Group &
Thomas Bow Limited were parties in a joint venture, Breedon Bow
Highways Limited, which from the date of acquisition became a
wholly owned subsidiary. The effective acquisition of Thomas Bow
Limited's interest in Breedon Bow Highways has been accounted for
as a stepped acquisition in line with IFRS 3, with a disposal for
assumed proceeds equal to the fair value of GBP0.7m. A GBP0.3m gain
on stepped acquisition has been recognised within non-underlying
items (note 4).
The deferred consideration of GBP0.9m relates to a put liability
over the remaining 20% of the ordinary shares of Thomas Bow Limited
which are held by the management of Thomas Bow Limited. This put
liability has been accounted for using the assumed acquisition
method.
The fair value adjustments primarily comprised:
- Intangible assets, including the value of acquired customer lists and permits;
- Lease liabilities and associated right-of-use assets for leased properties;
- Dilapidation provisions to comply with contractual agreements for leased properties; and
- Deferred tax balances.
The goodwill arising represents expected synergies, the
potential for future growth, access to new markets and the skills
of the existing workforce. Goodwill is not deductible for tax
purposes.
Prior year acquisition
On 1 June 2021, the Group acquired the entire share capital of
Micromix (Northern) Limited (trading as Express Minimix) for
consideration of GBP2.6m. No adjustments have been made in respect
of the acquisition within the measurement period and the
provisional values reported in the prior year are now considered
final.
10 Reconciliation to non-GAAP measures
Non-GAAP performance measures are used throughout the Annual
Report and the Financial Statements. This note provides a
reconciliation between these alternative performance measures to
the most directly related statutory measures.
Reconciliation of earnings based alternative performance
measures
2022 Share of
profit of
Central administration associate
and and joint
Great Britain Ireland Cement eliminations ventures Total
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 972.4 226.2 300.7 (103.0) - 1,396.3
Profit from operations 148.0
Non-underlying items
(note 4) 7.0
----------------------- -------------- -------- ------ ----------------------- ----------- -------
Underlying EBIT 86.4 28.3 52.1 (15.3) 3.5 155.0
Underlying EBIT
margin 8.9% 12.5% 17.3% 11.1%
----------------------- -------------- -------- ------ ----------------------- ----------- -------
Underlying EBIT 86.4 28.3 52.1 (15.3) 3.5 155.0
Share of profit
of associate
and joint ventures - - - - (3.5) (3.5)
Depreciation and
mineral depletion 49.7 6.1 27.5 0.2 - 83.5
----------------------- -------------- -------- ------ ----------------------- ----------- -------
Underlying EBITDA 136.1 34.4 79.6 (15.1) - 235.0
----------------------- -------------- -------- ------ ----------------------- ----------- -------
2021 Share of
profit of
Central administration associate
and and joint
Great Britain Ireland Cement eliminations ventures Total
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 845.2 225.4 245.6 (83.7) - 1,232.5
Profit from operations 127.4
Non-underlying items
(note 4) 6.2
----------------------- -------------- -------- ------ ----------------------- ----------- -------
Underlying EBIT 74.3 28.2 41.6 (13.4) 2.9 133.6
Underlying EBIT
margin 8.8% 12.5% 16.9% 10.8%
----------------------- -------------- -------- ------ ----------------------- ----------- -------
Underlying EBIT 74.3 28.2 41.6 (13.4) 2.9 133.6
Share of profit
of associate
and joint ventures - - - - (2.9) (2.9)
Depreciation and
mineral depletion 49.9 7.2 26.1 0.1 - 83.3
----------------------- -------------- -------- ------ ----------------------- ----------- -------
Underlying EBITDA 124.2 35.4 67.7 (13.3) - 214.0
----------------------- -------------- -------- ------ ----------------------- ----------- -------
10 Reconciliation to non-GAAP measures (continued)
Free Cash Flow
2022 2021
GBPm GBPm
-------------------------------------- ------- ------
Net cash from operating activities 168.0 194.1
-------------------------------------- ------- ------
Net cash used in investing activities (112.9) (75.5)
Acquisition of businesses 12.6 6.1
Cash impact of non-underlying items 1.0 2.6
Free Cash Flow 68.7 127.3
-------------------------------------- ------- ------
Underlying EBITDA 235.0 214.0
-------------------------------------- ------- ------
Free Cash Flow conversion 29% 59%
-------------------------------------- ------- ------
Return on invested capital
2022 2021
--------------------------------------------- ------- -------
GBPm GBPm
Underlying EBIT 155.0 133.6
--------------------------------------------- ------- -------
Underlying effective tax rate 16.0% 16.1%
--------------------------------------------- ------- -------
Taxation at the Group's underlying effective
rate (24.8) (21.5)
Underlying earnings before interest 130.2 112.1
--------------------------------------------- ------- -------
Net assets 1,043.8 949.8
Net Debt (note 6) 197.7 212.5
--------------------------------------------- ------- -------
Invested capital 1,241.5 1,162.3
--------------------------------------------- ------- -------
Average invested capital* 1,201.9 1,184.5
Return on invested capital** 10.8% 9.5%
--------------------------------------------- ------- -------
* 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 2021 was GBP1,206.7m.
** Return on invested capital is calculated as underlying
earnings before interest for the previous twelve months, divided by
average invested capital for the year.
Covenant Leverage
2022 2021
-------------------------------- ------ ------
GBPm GBPm
Underlying EBITDA 235.0 214.0
-------------------------------- ------ ------
Impact of IFRS 16 (11.3) (10.7)
-------------------------------- ------ ------
Underlying EBITDA for covenants 223.7 203.3
-------------------------------- ------ ------
Net Debt (excluding IFRS 16) 148.4 161.5
-------------------------------- ------ ------
Covenant leverage 0.7x 0.8x
-------------------------------- ------ ------
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 periods, the only material adjusting item was the impact of
IFRS 16.
11 Financial information
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2022
or 2021 but is derived from those accounts. Statutory accounts for
2021 have been delivered to the Jersey Companies Registry, and
those for 2022 will be delivered in due course. The Auditor has
reported on those accounts; their reports were (i) unqualified,
(ii) did not include a reference to any matters to which the
Auditor drew attention by way of emphasis without qualifying their
report and (iii) did not contain a statement under Article 113B(3)
or Article 113B(6) of the Companies (Jersey) Law 1991.
The Annual Report will be made available to shareholders on or
before 21 March 2023 and will be displayed on the Company's
website, www.breedongroup.com. Copies of the Annual Report and
Accounts will be available from the Company's Registered Office, 28
Esplanade, St Helier, Jersey, JE2 3QA.
This Announcement of results for the year ended 31 December 2022
was approved by the directors on 8 March 2023.
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
Breedon Breedon Group plc
CEM II CEM II is a composite cement; comprising Portland
cement and up to 35% of other single constituents
to reduce the product's carbon intensity
Cemex Cemex UK Operations Limited
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
EBIT Earnings before interest and tax
EPS Earnings per share
EURIBOR Euro Inter-bank Offered Rate
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
IT Information Technology
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, disposals
and the timing of cement plant maintenance
shutdowns compared to the comparable period.
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
SONIA Sterling Overnight Index Average
UK United Kingdom (GB & NI)
UK ETS UK Emissions Trading Scheme
Underlying Stated before acquisition related expenses,
redundancy and reorganisation costs, property
items, amortisation of acquisition intangibles
and related tax items
Underlying EBITDA Earnings before interest, tax, depreciation
and amortisation non-Underlying items and
before our share of profit from associate
and joint ventures
USPP US Private Placement
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END
FR JRMPTMTMMBTJ
(END) Dow Jones Newswires
March 08, 2023 02:00 ET (07:00 GMT)
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