TIDMBREE
RNS Number : 0460G
Breedon Group PLC
22 July 2021
22 July 2021
Breedon Group plc
Strong trading and operational performance leading to further
deleveraging and increased expectations for full year
Breedon Group plc, ("Breedon" or the "Group") a leading
construction materials group in Great Britain and Ireland,
announces unaudited interim results for the six months ended 30
June 2021.
Six Months ended Six Months ended Six Months ended
30 June 2021 30 June 2020 30 June 2019 (3)
----------------- ----------------- ------------------
Revenue GBP600.9m GBP335.3m GBP447.4m
Underlying EBIT (1) GBP56.4m GBP(0.6)m GBP49.5m
Profit/(loss) before tax GBP46.2m GBP(10.1)m GBP39.5m
Underlying basic EPS (1) 1.54p (0.65)p 2.03p
Dividend per share 0.5p n/a n/a
Free cash flow GBP34.3m GBP41.5m GBP16.8m
Net debt GBP291.5m GBP253.6m GBP343.7m
Leverage (2) 1.2x 1.7x 1.8x
ROIC 9.2% 5.2% 8.1%
(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) Leverage is Covenant Leverage as defined by the Group's
banking facilities. This excludes the impact of IFRS 16 and
includes the proforma impact of M&A
(3) H1 2019 numbers are provided as a more relevant trading comparative
Highlights
-- Strong trading performance supported by recovery in construction activity
-- Growing momentum in Ireland despite partial lockdown of construction sector
-- Like-for-like Revenue 17 per cent and Underlying EBIT 9 per cent ahead of H1 2019
-- Integration of CEMEX Acquisition ahead of schedule
-- Sustainability strategy developed; KPIs and targets to be published in the autumn
-- Leverage reduced to 1.2x at end of June, within 12 months of CEMEX Acquisition
-- Refinancing completed; diversifying sources of credit and extending maturity profile
-- First interim dividend announced; commitment to a progressive dividend policy
-- Underlying EBIT for 2021 now expected to be at the top end of market expectations
Rob Wood, Chief Executive officer, commented:
"Breedon delivered a strong trading result in the first half of
2021, building on the recovery in demand which started in the
second half of last year. This resilient performance reflects the
commitment and efforts of all our colleagues; who have each
demonstrated the highest levels of enthusiasm, professionalism and
flexibility in working safely across the business, despite the
challenges of the past fifteen months.
This encouraging trading performance and cash generation has
helped to strengthen the Group's balance sheet and we are pleased
to announce our first dividend as planned, along with our
commitment to a progressive dividend policy.
Our first half performance, current trading conditions and
improved visibility for the remainder of the year combine to give
us greater confidence in the outlook for 2021 and we now expect
Underlying EBIT for 2021 to be at the top end of market
expectations.
The outlook for our end markets remains positive, with the UK
and Irish governments committed to significant investment in
infrastructure, combined with sustained structural demand for new
build residential housing. With a strong balance sheet and new
financing facilities we are well positioned to continue to invest
in the growth of the business and to create value for all our
stakeholders."
* Market expectations are defined as Breedon compiled sell side
analyst consensus. As at 21 July 2021 the range of market
expectations for Underlying EBIT for the full year 2021 was GBP109
million to GBP128 million with an average of GBP117 million.
- ends -
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.
Results Presentation
Breedon will host a virtual meeting for analysts and investors
at 9.00am today and there will be a simultaneous webcast of the
meeting. Please use this link to join the webcast:
https://brrmedia.news/BREE_HY21
The webcast will be available to view on our website later today
at www.breedongroup.com/investors .
Capital markets event
Breedon will host a capital markets event for institutional
investors and analysts in the autumn. The event will include
presentations from Breedon's senior leadership team, covering
topics including the Group's strategy and sustainability
initiatives. Further details will be made available in due
course.
Enquiries
Breedon Group plc Tel: 01332 694010
Rob Wood, Chief Executive Officer
James Brotherton, Chief Financial Officer
Robert Coates, Head of Investor Relations Tel: 07880 486329
Numis Securities (NOMAD and joint broker) Tel: 020 7260 1000
Ben Stoop
Oliver Hardy (NOMAD)
HSBC (Joint broker) Tel: 020 7991 8888
Sam McLennan
Joe Weaving
Teneo (Public relations adviser to Breedon) Tel: 020 7420 3180
Matt Denham
Claire Scicluna
Notes to Editors
Breedon Group plc is a leading construction materials group in
Great Britain and Ireland. It operates two cement plants and an
extensive network of quarries, asphalt plants and ready-mixed
concrete plants, together with slate production, concrete and clay
products manufacturing, contract surfacing and highway maintenance
operations. The Group employs approximately 3,500 people and has
over 1 billion tonnes of mineral reserves and resources. The
Group's strategy is to continue growing through organic improvement
and the acquisition of businesses in the heavyside construction
materials market.
continued recovery in demand across all divisions
Breedon delivered a strong trading result in the first half of
2021, building on the recovery in demand which started in the
second half of 2020. This resilient performance reflects the
commitment and efforts of all our colleagues; who have each
demonstrated the highest levels of enthusiasm, professionalism and
flexibility in working safely across the business, despite the
challenges of the past fifteen months.
In GB, we benefitted from the continued recovery in demand for
our products, with robust activity in both the residential housing
and infrastructure markets. In Ireland, we experienced a slower
start to the year in RoI due to government restrictions on
non-essential construction activity. However, activity levels
picked up from April, with good demand for our products and
services during the second quarter, and there is growing momentum
across the whole of the Irish business. Cement saw significant
volume increases in both the UK and Irish markets during the
period. While certain input costs have increased for the Group in
the period, given the supportive market conditions, we expect these
will be recovered over time.
The combination of improved profitability and lower debt saw our
leverage reduce further in the period, leaving us with a refinanced
balance sheet and significant capacity to invest in the business in
the future. We continue to see opportunities for further growth and
development of the business in our core markets in GB and Ireland
and have an encouraging M&A pipeline. During the period we
completed the acquisition of Express Minimix, a business that is
highly complementary to our existing minimix operations and expands
our product and service offering to both new and existing
customers.
We have announced the Group's first interim dividend of 0.5
pence per share, demonstrating our confidence in the strength of
and outlook for the business and have committed to a progressive
future dividend policy. We expect the final dividend in respect of
2021 will be not less than 1.0 pence per share, subject to
shareholder approval, giving a total dividend for 2021 of not less
than 1.5 pence for the year.
delivering value from the CEMEX acquisition
The integration of the high-quality, well-located assets
acquired in 2020 as part of the CEMEX Acquisition is ahead of
schedule. We have completed organisation, legal entity and IT
systems integration and are now focused on business improvement
initiatives to streamline operations and improve local customer
service. Incremental investment opportunities have been identified
and we are deploying capital and resources into the business that
will optimise the performance of the acquired assets and help
improve margins.
We remain confident that these assets will deliver the committed
net synergy target of GBP2.0 million by 2023 and that, in time, the
business will deliver returns similar to that achieved
historically.
our Strategy in action
The Group's strategy is built on three pillars of "Sustain",
"Optimise" and "Expand" and we have made good progress with a
variety of initiatives across each of the pillars during the
period.
Sustain
We have further developed our sustainability plans, building on
our membership of the Global Cement & Concrete Association and
the stakeholder engagement and materiality assessment work
completed last year. We have identified our most material areas of
impact and are developing the targets required to track our future
performance across the business, as we look to operate more
sustainably and ensure we have a positive environmental, social and
economic impact in the coming years.
We look forward to updating stakeholders on our sustainability
plans, together with KPIs and targets, at our capital markets event
to be held in the autumn.
We completed our employee engagement survey with encouraging
levels of overall engagement from colleagues across the business,
and the results showed positive sentiment regarding our response to
the pandemic. Additionally, our NPS survey on behalf of the Cement
Division showed improved customer perception.
Optimise
We have reopened dormant quarries in both RoI and GB including
the Shap quarry in Cumbria, acquired as part of the CEMEX
Acquisition, which is rail linked and capable of providing high
quality aggregate materials to parts of the North of England and
the Midlands, where we have identified upcoming projects that
should generate incremental demand.
We have commenced groundworks on a new railhead at Llandudno
Junction which will allow Welsh Slate by-product to be shipped by
rail to other GB locations.
Expand
We have secured additional reserves at Wickwar quarry near
Bristol, completed the acquisition of Express Minimix, and are
executing our growth strategy for our contracting operations in
GB.
Operational and DIVISIONAL PERFORMANCE
PRODUCT VOLUMES
Six months ended Six months ended Six months ended
million tonnes except where stated 30 June 2021 30 June 2020 30 June 2019
----------------- ----------------- -----------------
Aggregates 15.0 8.0 9.9
Asphalt 2.0 1.0 1.4
Cement 1.2 0.8 1.0
Ready-mixed concrete 1.7m m(3) 1.0m m(3) 1.5m m(3)
Volumes increased across all product categories as a result of
the strong markets and incremental contributions from the CEMEX
assets.
gREAT BRITAIN
Six months ended Six months ended Six months ended Like-for-like
30 June 2021 30 June 2020 30 June 2019 H1 2021
GBP'million except where stated versus H1 2019
----------------- ----------------- ----------------- ----------------
Revenue 420.2 209.0 289.6 +19%
Underlying EBIT 36.8 (1.3) 30.3 +8%
Underlying EBIT Margin 8.8% (0.6)% 10.5% (1.0)ppt
Comparatives for 2020 and 2019 restated to reclassify certain
cement related activities between GB and Cement Divisions. See note
4 for details.
In GB, the continued recovery in activity levels has resulted in
improved volumes across all our products. We have seen demand
increase from larger infrastructure projects combined with a strong
growth in housing starts and robust private sector activity levels.
During the period the Division saw an increase in tendering
activity and worked on some notable contracts, including works at
Aberdeen Harbour, HS2, the A9 dualling project and the Caernarfon
bypass. We have also made good progress in recruiting the
commercial resources needed to support the planned expansion of our
contracting operations in GB.
On a reported basis, the Division benefitted from a contribution
from the former CEMEX assets which started to be operationally
integrated in December 2020. On a like-for-like basis, compared
with H1 2019, Revenue increased by 19 per cent and Underlying EBIT
increased by 8 per cent, with the like-for-like margin impacted in
the short term by increased input costs, which we expect to recover
over time, and a slower recovery in ready-mixed concrete
volumes.
IRELAND
Six months ended Six months ended Six months ended Like-for-like
30 June 2021 30 June 2020 30 June 2019 H1 2021
GBP'million except where stated versus H1 2019
----------------- ----------------- ----------------- ------------------
Revenue 101.1 69.2 93.5 +8%
Underlying EBIT 8.9 1.8 8.9 -
Underlying EBIT Margin 8.8% 2.6% 9.5% (0.7)ppt
After a slower start to the year in RoI due to government
restrictions on non-essential construction, activity levels picked
up and we saw good demand for our products and services during the
second quarter, and there is growing momentum across the whole of
the Irish business. Tendering activity has steadily increased
through the period and the Division has worked on a number of
projects, including the Dunkettle interchange and the A6, and our
framework contract with the NI Central Procurement Directorate was
renewed.
The Division delivered good growth in Revenue over H1 2020,
mainly driven by the recovery in aggregate and contracting volumes.
On a like-for-like basis, Revenue is 8 per cent ahead of H1 2019
with Underlying EBIT in line with H1 2019 levels.
CEMENT
Six months ended Six months ended Six months ended Like-for-like
30 June 2021 30 June 2020 30 June 2019 H1 2021
GBP'million except where stated vs H1 2019
----------------- ----------------- ----------------- --------------
Revenue 120.0 81.5 101.9 +15%
Underlying EBIT 18.3 6.0 16.3 +23%
Underlying EBIT Margin 15.3% 7.4% 16.0% +1.1ppt
Comparatives for 2020 and 2019 restated to reclassify certain
cement related activities between GB and Cement Divisions. See note
4 for details.
Cement experienced significant volume increases in both the UK
and Irish markets during the period. The Division has worked
closely with customers to maintain supply levels where possible
given the levels of market demand.
On a like-for-like basis, including adjusting for the timing of
maintenance shutdowns, compared with H1 2019, Revenue increased by
15 per cent, Underlying EBIT by 23 per cent and there was an
improvement in Underlying EBIT margin.
Three planned kiln maintenance shutdowns were completed by the
Division during H1 2021 (H1 2020: two, H1 2019: two) and the next
scheduled maintenance shutdowns for the cement kilns will be in
January 2022.
During the period the UK Emissions Trading scheme commenced
operation, and we have purchased all the carbon allowances that
will be required by the Division for the 2021 production year in
both the UK and Ireland.
Group results
Profit and loss account
Trading in H1 2021 benefitted from volume growth across all our
key products and regions as construction activity continued the
sustained recovery that began towards the end of the second quarter
of 2020, and from contributions from the CEMEX assets.
Revenue for the half-year was GBP600.9 million (H1 2020:
GBP335.3 million) and Underlying EBIT was GBP56.4 million (H1 2020:
GBP(0.6) million), with an EBIT margin of 9.4 per cent (H1 2020:
(0.2) per cent). Given the impact of COVID on the 2020 first half
performance, like-for-like comparisons with the prior year period
are less meaningful. On a like-for-like basis, compared with H1
2019, Revenue increased 17 per cent and Underlying EBIT increased 9
per cent.
Non-underlying Items
The Group recorded GBP2.7 million of non-underlying items during
the period (H1 2020: GBP3.1 million) including GBP1.3 million of
acquisition and integration related costs and GBP1.8 million of
amortisation costs. These were offset by GBP0.4 million of profits
made on property transactions in the period.
Taxation
The underlying tax charge for the six months ended 30 June 2021
has been based on the estimated effective weighted average rate
applicable for existing operations for the full year. This is based
on a combined underlying effective rate of 17.2 per cent on profits
arising in the Group's UK and Irish subsidiary undertakings.
Following the substantive enactment of the increase in the UK
Corporation Tax rate from 19 per cent to 25 per cent from April
2023 a deferred tax charge of GBP14.4 million has been recognised
to remeasure the Group's UK deferred tax liabilities at 30 June
2021 at this higher rate.
Earnings per share
Underlying basic EPS for the period totalled 1.54 pence (2020:
(0.65) pence), reflecting the recovery in trading and profitability
of the business, partially offset by the non-cash deferred tax
charge associated with the change in UK Corporation Tax rate.
Balance sheet
Net assets at 30 June 2021 were GBP905.3 million (H1 2020:
GBP842.7 million; FY 2020: GBP888.4 million) and statutory net debt
at 30 June 2021 was GBP291.5 million (H1 2020: GBP253.6 million; FY
2020: GBP318.3 million).
Covenant Leverage reduced to 1.2 times at 30 June 2021 (H1 2020:
1.7x; FY 2020: 1.9x). This clearly demonstrates the cash generative
characteristics of the Group and the consequential rapid
deleveraging of the balance sheet following the CEMEX
Acquisition.
ROIC recovered significantly during the period to 9.2 per cent
(H1 2020: 5.2 per cent), reflecting the strong trading over the
past twelve months combined with the proactive management of
working capital.
CASH FLOW
Six months ended Six months ended Six months ended
GBP'million 30 June 2021 30 June 2020 30 June 2019
----------------- ----------------- -----------------
Underlying EBITDA 95.8 32.6 81.1
Working capital (42.8) 38.4 (32.9)
Interest paid (4.9) (4.8) (6.1)
Income taxes paid (4.6) (10.0) (8.7)
Net capex (11.1) (15.6) (17.1)
Other 1.9 0.9 0.5
----------------- ----------------- -----------------
Free cash flow 34.3 41.5 16.8
Acquisitions (4.7) - -
Other (2.8) (4.8) (3.9)
First time adoption of IFRS 16 - - (45.9)
----------------- ----------------- -----------------
Decrease/(increase) in net debt 26.8 36.7 (33.0)
The Group generated free cash flow of GBP34.3 million during H1
2021 (H1 2020: GBP41.5 million) reflecting the expected
normalisation of working capital in 2021, including the payment of
VAT deferred from 2020, and partially offset by lower capital
expenditure due to phasing. We now expect to invest an incremental
GBP30 million in capital expenditure over the course of 2021 and
2022 as we look to take advantage of the corporation tax
superdeduction to accelerate investment in the business.
SUCCESSFUL REFINANCING
During the period we have successfully completed the refinancing
of our business, allowing us to move to unsecured lending
facilities, diversifying our sources of credit and extending the
maturity profile of our borrowings; all at competitive rates. This
gives Breedon significantly greater financial flexibility and
provides us with a strong platform to continue to invest and
deliver future growth.
The Group's banking facilities now comprise a GBP350 million RCF
and a GBP250 million US Private Placement.
The RCF is a multi-currency facility with an accordion option of
up to GBP70 million. The RCF is available to the Group until June
2024 with an option to extend for up to two further years, and has
a total initial interest rate of approximately 2 per cent.
Since the period end, we have completed our first USPP offering;
comprising GBP170m Sterling and GBP80m to be drawn in Euro, with an
average coupon of approximately 2 per cent and a maturity profile
of between seven and 15 years. The USPP was significantly
oversubscribed by prospective investors; reflecting the Group's
strong credit profile, and funds from the USPP are expected to be
drawn down towards the end of the third quarter.
The facilities are subject to Group leverage and interest cover
covenants which are tested half-yearly.
dividend policy confirmed
The Board believes that, given the Group's scale, level of
maturity and cash generation, this is the right time to implement a
structured cash return to shareholders in the form of a committed
and progressive dividend policy.
The Board is confident that the payment of a dividend will not
compromise the Group's ability to execute on our strategic
objectives and Breedon's capital allocation priorities remain
unchanged. We will continue to prioritise the strong balance sheet
that allows us to invest in our asset base such that our business
is able to take advantage of market opportunities and will pursue
selective acquisitions in order to accelerate our strategic
development.
Our first interim dividend of 0.5 pence per share will be paid
on 10 September 2021, to shareholders on the register on 13 August
2021. The cash cost of this first interim dividend is expected to
be GBP8.4 million. We expect that, subject to shareholder approval,
the final dividend for the 2021 full year will be not less than 1.0
pence per share, giving a total dividend of not less than 1.5 pence
for 2021.
Subject to trading conditions and continued sustained cash
generation, the Group intends to adopt a progressive dividend
policy that targets a payout ratio of 40 per cent of underlying
earnings per share over time.
Future dividend payments by the Group are not guaranteed and
will be determined by the Board in light of the facts and
circumstances at the time.
RISK
The Group's principal risks in alphabetical order are:
-- Acquisitions
-- Competition and margins
-- Environment and climate change
-- Financing, liquidity and currency
-- Health and safety
-- IT and cyber security
-- Legal and regulatory
-- Market conditions
-- People
Further details of the main risks for the year ended 31 December
2020 are set out on pages 20 - 23 of the Group's Annual Report for
the year ended 31 December 2020. The Board consider that these are
the risks that could impact the performance of the Group in the
remaining six months of the current financial year. The Board
continues to manage these risks and to mitigate their expected
impact.
Outlook
Our first half performance, current trading conditions and
improved visibility for the remainder of the year combine to give
us greater confidence in the outlook for 2021 and we now expect
Underlying EBIT for the year to be at the top end of market
expectations.
The outlook for our end markets remains positive, with the UK
and Irish governments committed to significant investment in
infrastructure, combined with sustained structural demand for new
build residential housing. With a strong balance sheet and new
financing facilities we are well positioned to continue to invest
in the growth of the business and to create value for all our
stakeholders.
Rob Wood James Brotherton
Chief Executive Officer Chief Financial Officer
22 July 2021
Statement of Directors' Responsibilities
The Directors confirm that, to the best of their knowledge:
-- the condensed consolidated half-year financial statements have been prepared in accordance with IAS 34 Interim
Financial Reporting as adopted by the UK
-- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being
an indication of important events that have occurred during the
first six months of the financial year and their impact on the
condensed consolidated half-year financial statements; and a
description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last Annual Report that could do so.
The Directors of Breedon Group plc are listed in the Group's
2020 Annual Report on page 63.
Since the publication of the 2020 Annual Report, the following
changes to the composition of the Board have occurred: Pat Ward
retired as Group Chief Executive and as an executive director; Rob
Wood was appointed as CEO; James Brotherton was appointed as
executive director and CFO; and Helen Miles was appointed as a
non-executive director. All of these changes took effect on 1 April
2021.
We announced today that Moni Mannings will step down as a
non-executive director on 31 July 2021 and that Pauline Lafferty
will join the Board as a non-executive director and Chair of the
Remuneration Committee on 1 August 2021.
James Brotherton
Chief Financial Officer
22 July 2021
Condensed Consolidated Income Statement
for the six months ended 30 June 2021
Six months ended 30 June 2021 Six months ended 30 June 2020 Year ended 31 December 2020
Underlying Non-underlying* Total Underlying Non- Total Underlying Non- Total
(note 5) underlying* underlying*
(note 5) (note 5)
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 600.9 - 600.9 335.3 - 335.3 928.7 - 928.7
Cost of sales (401.1) - (401.1) (243.9) - (243.9) (630.8) - (630.8)
-----------------
Gross profit 199.8 - 199.8 91.4 - 91.4 297.9 - 297.9
Distribution
expenses (101.9) - (101.9) (58.6) - (58.6) (158.1) - (158.1)
Administrative
expenses (42.2) (2.7) (44.9) (33.3) (3.1) (36.4) (65.0) (14.9) (79.9)
Group operating
profit/(loss) 55.7 (2.7) 53.0 (0.5) (3.1) (3.6) 74.8 (14.9) 59.9
Share of
profit/(loss) of
associate and
joint ventures 0.7 - 0.7 (0.1) - (0.1) 1.7 - 1.7
----------------- ---------- --------------- ------- ---------- ------------------- ------- -------------- ------------------- --------
Profit/(loss)
from operations 56.4 (2.7) 53.7 (0.6) (3.1) (3.7) 76.5 (14.9) 61.6
Financial expense (7.5) - (7.5) (6.4) - (6.4) (13.5) - (13.5)
-----------------
Profit/(loss)
before taxation 48.9 (2.7) 46.2 (7.0) (3.1) (10.1) 63.0 (14.9) 48.1
Taxation - at
effective rate (8.4) 0.4 (8.0) 1.5 0.3 1.8 (9.8) 1.3 (8.5)
Taxation - change
in deferred tax
rate (14.4) - (14.4) (5.5) - (5.5) (5.9) - (5.9)
----------------- ---------- --------------- ------- ---------- ------------------- ------- -------------- ------------------- --------
Profit/(loss) for
the period 26.1 (2.3) 23.8 (11.0) (2.8) (13.8) 47.3 (13.6) 33.7
----------------- ---------- --------------- ------- ---------- ------------------- ------- -------------- ------------------- --------
Attributable to:
Equity holders of
the parent 26.1 (2.3) 23.8 (11.0) (2.8) (13.8) 47.2 (13.6) 33.6
Non-controlling
interests - - - - - - 0.1 - 0.1
-----------------
Profit/(loss) for
the period 26.1 (2.3) 23.8 (11.0) (2.8) (13.8) 47.3 (13.6) 33.7
----------------- ---------- --------------- ------- ---------- ------------------- ------- -------------- ------------------- --------
Basic earnings
per ordinary
share 1.54p 1.41p (0.65p) (0.82p) 2.80p 1.99p
Diluted earnings
per ordinary
share 1.53p 1.39p (0.65p) (0.82p) 2.80p 1.99p
----------------- ---------- --------------- ------- ---------- ------------------- ------- -------------- ------------------- --------
* Non-underlying items represent acquisition-related expenses,
redundancy and reorganisation costs, property gains or losses,
amortisation of acquisition intangibles and related tax items.
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2021
Six months Year
ended Six months ended ended
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Profit/(loss) for the period 23.8 (13.8) 33.7
Other comprehensive (expense)/income
Items which may be reclassified subsequently to profit and loss:
Foreign exchange differences on translation of foreign operations, net of
hedging (10.3) 15.6 11.6
Effective portion of changes in fair value of cash flow hedges 1.5 0.5 1.7
Taxation on items taken directly to other comprehensive income (0.2) (0.1) (0.2)
Other comprehensive (expense)/income for the period (9.0) 16.0 13.1
-------------------------------------------------------------------------- ---------- ---------------- ------------
Total comprehensive income for the period 14.8 2.2 46.8
-------------------------------------------------------------------------- ---------- ---------------- ------------
Total comprehensive income for the period is attributable to:
Equity holders of the parent 14.8 2.2 46.7
Non-controlling interests - - 0.1
-------------------------------------------------------------------------- ---------- ---------------- ------------
14.8 2.2 46.8
-------------------------------------------------------------------------- ---------- ---------------- ------------
Condensed Consolidated Statement of Financial Position
at 30 June 2021
30 June 30 June 31 December
2021 2020 2020
GBPm (restated*) GBPm (restated**) GBPm
Non-current assets
Property, plant and equipment 782.1 690.3 813.7
Intangible assets 502.8 485.6 509.0
Investment in associate and joint ventures 11.4 10.3 11.2
-----------------------------------------------------
Total non-current assets 1,296.3 1,186.2 1,333.9
----------------------------------------------------- ------------------------ ----------------- ------------------
Current assets
Inventories 57.1 51.1 59.4
Trade and other receivables 263.4 146.2 192.9
Current tax receivable 2.4 4.3 0.9
Cash and cash equivalents 23.7 124.6 31.7
Total current assets 346.6 326.2 284.9
----------------------------------------------------- ------------------------ ----------------- ------------------
Total assets 1,642.9 1,512.4 1,618.8
-----------------------------------------------------
Current liabilities
Interest-bearing loans and borrowings (4.7) (61.6) (64.7)
Trade and other payables (267.7) (189.1) (245.1)
Provisions (5.1) (2.2) (5.0)
----------------------------------------------------- ------------------------ ----------------- ------------------
Total current liabilities (277.5) (252.9) (314.8)
-----------------------------------------------------
Non-current liabilities
Interest-bearing loans and borrowings (310.5) (316.6) (285.3)
Provisions (60.6) (33.4) (60.3)
Deferred tax liabilities (89.0) (66.8) (70.0)
----------------------------------------------------- ------------------------ ----------------- ------------------
Total non-current liabilities (460.1) (416.8) (415.6)
----------------------------------------------------- ------------------------ ----------------- ------------------
Total liabilities (737.6) (669.7) (730.4)
----------------------------------------------------- ------------------------ ----------------- ------------------
Net assets 905.3 842.7 888.4
----------------------------------------------------- ------------------------ ----------------- ------------------
Equity attributable to equity holders of the parent
Stated capital 552.2 551.0 551.6
Hedging reserve 1.5 (0.9) 0.2
Translation reserve (5.4) 8.9 4.9
Retained earnings 356.9 283.6 331.6
-----------------------------------------------------
Total equity attributable to equity holders of the
parent 905.2 842.6 888.3
Non-controlling interests 0.1 0.1 0.1
----------------------------------------------------- ------------------------ ----------------- ------------------
Total equity 905.3 842.7 888.4
----------------------------------------------------- ------------------------ ----------------- ------------------
* Restated following adoption of guidance issued by the IASB in
2020 in respect of the measurement of deferred tax balances on
assets arising through business combinations, resulting in a
reclassification of GBP13.4m between Intangible Assets and Deferred
Tax Liabilities. This was adopted by the Group in the second half
of 2020, and the reclassification was first reported in the Group's
December 2020 balance sheet. Further detail is provided in note
1.
** Restated for review of prior year acquisition during the IFRS
3 hindsight period, see note 12 for further details.
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 June 2021
Stated Hedging Translation Retained Attributable Non-controlling Total
capital reserve reserve earnings to equity interests equity
holders of
parent
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 31
December 2020 551.6 0.2 4.9 331.6 888.3 0.1 888.4
Shares issued 0.6 - - - 0.6 - 0.6
Dividend to - - - - - - -
non-controlling
interests
Total
comprehensive
income for the
period - 1.3 (10.3) 23.8 14.8 - 14.8
Share-based
payments - - - 1.5 1.5 - 1.5
Balance at 30
June 2021 552.2 1.5 (5.4) 356.9 905.2 0.1 905.3
----------------- ------------ ----------- ------------ ----------- ------------- ---------------- ------------
For the six months ended 30 June 2020
Stated Attributable Non-controlling
capital Hedging Translation Retained to equity interests Total
reserve reserve earnings holders of equity
parent
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 31
December 2019 550.0 (1.3) (6.7) 297.0 839.0 0.1 839.1
Shares issued 1.0 - - - 1.0 - 1.0
Dividend to - - - - - - -
non-controlling
interests
Total
comprehensive
income for the
period - 0.4 15.6 (13.8) 2.2 - 2.2
Share-based
payments - - - 0.4 0.4 - 0.4
Balance at 30
June 2020 551.0 (0.9) 8.9 283.6 842.6 0.1 842.7
----------------- ------------ ----------- ------------- ----------- ------------- ---------------- -----------
For the year ended 31 December 2020
Attributable Non-controlling
Stated Hedging Translation Retained to equity interests Total
capital reserve reserve earnings holders of equity
parent
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Balance at 31
December 2019 550.0 (1.3) (6.7) 297.0 839.0 0.1 839.1
Shares issued 1.6 - - - 1.6 - 1.6
Dividend to
non-controlling
interests - - - - - (0.1) (0.1)
Total
comprehensive
income for the
year - 1.5 11.6 33.6 46.7 0.1 46.8
Share-based
payments - - - 1.0 1.0 - 1.0
Balance at 31
December 2020 551.6 0.2 4.9 331.6 888.3 0.1 888.4
----------------- ----------- ----------- ------------- ---------- ------------- ---------------- -----------
Condensed Consolidated Statement of Cash Flows
for the six months ended 30 June 2021
Six months Six months ended Year
ended 30 June ended
30 June 2020 31 December
2021 2020
GBPm GBPm GBPm
Cash flows from operating activities
Profit/(loss) for the period 23.8 (13.8) 33.7
Adjustments for:
Depreciation and mineral depletion 40.1 33.1 74.4
Amortisation 1.8 1.8 3.6
Financial expense 7.5 6.4 13 .5
Share of (profit)/loss of associate and joint ventures (0.7) 0.1 (1.7)
Net (gain)/loss on sale of property, plant and ...equipment (1.9) (0.1) 4.6
Share-based payments 1.5 0.4 1.0
Taxation 22.4 3.7 14.4
----------------------------------------------------------------- ----------- ----------------------- -------------
Operating cash flow before changes in working capital and
provisions 94.5 31.6 143.5
(Increase)/decrease in trade and other receivables (69.6) 20.2 (26.4)
Decrease in inventories 1.6 8.3 10.4
Increase in trade and other payables 27.5 10.0 64.6
(Decrease)/increase in provisions (2.3) (0.1) 7.4
----------------------------------------------------------------- ----------- ----------------------- -------------
Cash generated from operating activities 51.7 70.0 199.5
Interest paid (3.6) (3.7) (7.7)
Interest element of lease payments (1.3) (1.1) (2.6)
Dividend paid to non-controlling interests - - (0.1)
Income taxes paid (4.6) (10.0) (20.7)
-----------------------------------------------------------------
Net cash from operating activities 42.2 55.2 168.4
----------------------------------------------------------------- ----------- ----------------------- -------------
Cash flows used in investing activities
Acquisition of businesses (4.7) - (151.7)
Divestment of businesses - - 9.0
Dividends from associate and joint ventures 0.4 0.5 1.3
Purchase of property, plant and equipment (15.4) (16.1) (38.1)
Proceeds from sale of property, plant and equipment 4.3 0.5 1.7
Net cash used in investing activities (15.4) (15.1) (177.8)
----------------------------------------------------------------- ----------- ----------------------- -------------
Cash flows (used in)/from financing activities
Proceeds from the issue of shares (net of costs) 0.6 1.0 1.6
Proceeds from new interest-bearing loans (net of costs) 265.3 143.7 79.5
Repayment of interest-bearing loans (296.1) (80.0) (53.4)
Repayment of lease obligations (4.5) (4.5) (10.8)
Net cash (used in)/from financing activities (34.7) 60.2 16.9
----------------------------------------------------------------- ----------- ----------------------- -------------
Net (decrease)/increase in cash and cash equivalents (7.9) 100.3 7.5
Cash and cash equivalents at beginning of period 31.7 23.8 23.8
Foreign exchange differences (0.1) 0.5 0.4
----------------------------------------------------------------- ----------- ----------------------- -------------
Cash and cash equivalents at end of period 23.7 124.6 31.7
----------------------------------------------------------------- ----------- ----------------------- -------------
Notes to the Condensed Consolidated Interim Financial
Statements
1 Basis of preparation
Breedon Group plc is a company domiciled in Jersey. These
Condensed Consolidated Interim Financial Statements (the "Interim
Financial Statements") consolidate the results of the Company and
its subsidiary undertakings (collectively the "Group").
These Interim Financial Statements have been prepared in
accordance with IAS 34 - Interim Financial Reporting, as adopted by
the UK. The Interim Financial Statements have been prepared under
the historical cost convention except where the measurement of
balances at fair value is required. The Interim Financial
Statements have been prepared applying the accounting policies and
presentation that were applied in the presentation of the Company's
Consolidated Financial Statements for the year ended 31 December
2020.
These Interim Financial Statements have not been audited or
reviewed by auditors pursuant to the Auditing Practices Board's
guidance on the review of interim financial information. These
statements do not include all of the information required for full
annual financial statements and should be read in conjunction with
the full Annual Report for the year ended 31 December 2020.
The comparative figures for the financial year ended 31 December
2020 have been extracted from the Company's 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
Adoption of IFRS Interpretations Committee IFRIC update on
measurement of deferred tax
During 2020 the IFRS Interpretations Committee released an IFRIC
update in respect of IAS 12 - Income Taxes. This clarified how
deferred tax liabilities should be calculated for assets acquired
through business combinations whose recovery gives rise to multiple
possible tax consequences.
The adoption of this IFRIC update was incorporated into the
reported results for the year ended 31 December 2020, so no
restatement of the Condensed Consolidated Statement of Financial
Position at this date is necessary.
The impact of the updated interpretation is that deferred tax
liabilities are now required to be recognised on assets obtained
through business combinations which are both not eligible for
capital allowances and are being recovered 'through use' by being
depreciated or amortised over an asset's useful life. The adoption
of the new guidance has resulted in the restatement of the
Condensed Consolidated Statement of Financial Position as at 30
June 2020 to recognise additional goodwill and deferred tax
liabilities as follows:
Impact on the Condensed Consolidated Statement of Financial
Position at 30 June 2020
Previously reported Adjustment Restated
GBPm GBPm GBPm
Intangible assets 472.2 13.4 485.6
Total non-current assets 1,172.8 13.4 1,186.2
Total assets 1,499.0 13.4 1,512.4
------------------------------- -------------------- ----------- ---------
Deferred tax liabilities (53.4) (13.4) (66.8)
Total non-current liabilities (403.4) (13.4) (416.8)
Total liabilities (656.3) (13.4) (669.7)
------------------------------- -------------------- ----------- ---------
There is no cash implication to this adjustment. The impact on
the Condensed Consolidated Income Statement is not significant and
this has therefore not been restated.
1 Basis of preparation (continued)
Other new IFRS Standards and Interpretations
The Group has adopted the following standards from 1 January
2021:
- Amendments to IFRS 16 - COVID-19-Related Rent Concessions
- Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16 - Interest Rate Benchmark Reform
The adoption of these standards has not had a material impact on
the Interim Financial Statements.
2 Going concern
These Interim Financial Statements are prepared on a going
concern basis which the Directors consider to be appropriate for
the following reasons.
The Group meets its day-to-day working capital and other funding
requirements through its banking and loan facilities, which include
an overdraft facility. In 2021, the Group has successfully
refinanced its previous facilities which were due to expire in
April 2022. The new facilities comprise a GBP350 million
multi-currency RCF, which runs to June 2024 and GBP250 million of
loan notes which were issued on 16 July 2021 through a USPP with
maturities between seven and 15 years. Further details of these
facilities are provided in note 8.
The Group has prepared cash flow forecasts for a period of more
than twelve months from the date of signing these Interim Financial
Statements, which show a sustained trend of profitability and cash
generation. As at 30 June 2021, the Group had an undrawn banking
facility of GBP105m and a committed issuance of GBP250m in loan
notes through a USPP, expected to be drawn in Q3 2021. These
facilities should provide sufficient liquidity for the Group to
discharge its liabilities as they fall due and covenant
headroom.
The Group comfortably met all covenants and other terms of its
bank facility agreement in the period, and maintained its track
record of profitability and cash generation, with an overall profit
before taxation of GBP46.2m and net cash generated from operating
activities of GBP42.2m.
Based on the above the Directors believe that it remains
appropriate to prepare the Interim Financial Statements on a going
concern basis.
3 Accounting estimates and judgements
In preparing these Interim Financial Statements, management have
been required to make assumptions, estimates and judgements that
affect the application of accounting policies and the reported
amounts of assets and liabilities and income and expense. Actual
results may differ from estimates. There have been no material
additional significant judgements made by management in applying
the Group's accounting policies, nor key sources of estimation
uncertainty compared to those applicable to the Consolidated
Financial Statements for the year ended 31 December 2020 as set out
in note 28 of the Annual Report for that year.
4 Segmental analysis
Segmental information is presented in line with IFRS 8 -
Operating Segments. The Group is split into the same reportable
units as it was for the Consolidated Financial Statements for the
year ended 31 December 2020, which are as follows:
Great Britain comprising our construction materials and
contracting services businesses in Great Britain.
Ireland comprising our construction materials and contracting
services businesses on the Island of Ireland.
Cement comprising our cementitious operations in Great Britain
and Ireland.
Six months ended Six months ended Year ended
30 June 30 June 31 December
2021 2020 ** 2020 **
Revenue Underlying Revenue Underlying EBITDA* Revenue Underlying
EBITDA* EBITDA*
Income statement GBPm GBPm GBPm GBPm GBPm GBPm
Great Britain 420.2 60.5 209.0 15.5 602.8 74.5
Ireland 101.1 12.4 69.2 5.6 189.3 27.9
Cement 120.0 31.2 81.5 18.4 197.2 57.5
Central administration - (8.3) - (6.9) - (10.7)
Eliminations (40.4) - (24.4) - (60.6) -
------------------------------ --------- ---------- ------------------ ------------------ ------- ----------
Group 600.9 95.8 335.3 32.6 928.7 149.2
------------------------------ --------- ---------- ------------------ ------------------ ------- ----------
Reconciliation to statutory profit/(loss)
Group Underlying EBITDA as above 95.8 32.6 149.2
Depreciation and mineral depletion (40.1) (33.1) (74.4)
Great Britain 36.8 (1.3) 33.5
Ireland 8.9 1.8 20.5
Cement 18.3 6.0 31.7
Central administration (8.3) (7.0) (10.9)
------ ------ ------
Underlying Group operating profit/(loss) 55.7 (0.5) 74.8
Share of profit/(loss) of associate and joint ventures 0.7 (0.1) 1.7
Underlying profit/(loss) from operations (EBIT) 56.4 (0.6) 76.5
Non-underlying items (note 5) (2.7) (3.1) (14.9)
Profit/(loss) from operations 53.7 (3.7) 61.6
Financial expense (7.5) (6.4) (13.5)
Profit/(loss) before taxation 46.2 (10.1) 48.1
Taxation - at effective rate (8.0) 1.8 (8.5)
Taxation - change in deferred tax rate (14.4) (5.5) (5.9)
-------------------------------------------------------- ------ ------ ------
Profit/(loss) for the period 23.8 (13.8) 33.7
-------------------------------------------------------- ------ ------ ------
*Underlying EBITDA is earnings before interest, tax,
depreciation, amortisation, non-underlying items (note 5) and
before our share of profit/(loss) from associate and joint
ventures.
**As a result of the integration of the CEMEX Acquisition into
the Group, certain cement related activities which formed part of
Great Britain in 2020 are now reported within the Cement segment.
The segmental analysis presented in respect of 2020 has been
restated accordingly. The reallocated activities contributed
GBP20.0m of revenue, GBP2.5m of EBITDA, and GBP1.3m of EBIT for the
year ended 31 December 2020.
4 Segmental analysis (continued)
Analysis of revenue by major products and service lines by
segment
Six months ended Six months Year
30 June ended ended
2021 30 June 31 December
2020 * 2020 *
GBPm GBPm GBPm
Sale of goods
Great Britain 369.4 189.0 525.5
Ireland 32.4 21.0 51.9
Cement 120.0 81.5 197.2
Eliminations (40.4) (24.4) (60.6)
481.4 267.1 714.0
-------------- ---------------- ---------- ------------
Contracting services
Great Britain 50.8 20.0 77.3
Ireland 68.7 48.2 137.4
119.5 68.2 214.7
--------------------- ----- ---- -----
Total 600.9 335.3 928.7
------ ----- ----- -----
Timing of revenue recognition
Al l revenues from the sale of goods relate to products for
which revenue is recognised at a point in time as the product is
transferred to the customer. Contracting services revenues are
accounted for as products and services for which revenue is
recognised over time.
Statement of financial position
30 June 30 June 31 December
2021 2020 ** 2020 *
Total Total Total Total Total Total
assets liabilities assets liabilities assets liabilities
GBPm GBPm GBPm GBPm GBPm GBPm
Great Britain 856.3 (204.6) 627.7 (118.9) 836.1 (186.6)
Ireland 270.7 (54.6) 256.3 (42.7) 252.3 (46.0)
Cement 483.7 (59.5) 493.7 (36.3) 496.9 (56.4)
Central administration 6.1 (14.7) 5.8 (26.8) 0.9 (21.4)
----------------------- ------- ------------ ------- ------------ ------- ------------
Total operations 1,616.8 (333.4) 1,383.5 (224.7) 1,586.2 (310.4)
Current tax 2.4 - 4.3 - 0.9 -
Deferred tax - (89.0) - (66.8) - (70.0)
Net debt 23.7 (315.2) 124.6 (378.2) 31.7 (350.0)
----------------------- ------- ------------ ------- ------------ ------- ------------
Total Group 1,642.9 (737.6) 1,512.4 (669.7) 1,618.8 (730.4)
----------------------- ------- ------------ ------- ------------ ------- ------------
Net assets 905.3 842.7 888.4
----------------------- ------- ------------ ------- ------------ ------- ------------
*As a result of the integration of the CEMEX Acquisition into
the Group, certain cement related activities which formed part of
Great Britain in 2020 are now reported within the Cement segment.
The segmental analysis presented in respect of 2020 has been
restated accordingly. In addition, Total assets for Great Britain
have been reduced by GBP0.5m, and deferred tax liabilities reduced
by GBP0.5m following a revision to the fair value accounting for
the CEMEX Acquisition during the hindsight period. See note 12 for
further details.
**Comparative values have been restated for 30 June 2020 to
reflect the impact of the Group adopting updated guidance from the
IASB for the measurement of deferred taxation on business
combinations. This results in GBP13.4m of additional goodwill
assets and GBP13.4m of additional deferred tax liabilities. See
note 1 for further details.
5 Non-underlying items
Non-underlying items are those which are either unlikely to
recur in future periods or which distort the underlying performance
of the business, including non-cash items. In the opinion of the
Directors, this presentation aids understanding of the underlying
business performance and 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.
Six months ended Six months Year
30 June ended ended
2021 30 June 31 December
2020 2020
GBPm GBPm GBPm
Included in administrative expenses:
Redundancy and reorganisation costs 0.9 0.2 0.9
Acquisition costs 0.4 0.8 7.5
Property (gains)/losses (0.4) 0.3 2.9
Amortisation of acquired intangible assets 1.8 1.8 3.6
Total non-underlying items (pre-tax) 2.7 3.1 14.9
Non-underlying taxation (0.4) (0.3) (1.3)
-------------------------------------------- ------------------- ------------------- ------------
Total non-underlying items (post-tax) 2.3 2.8 13.6
-------------------------------------------- ------------------- ------------------- ------------
6 Financial expense
Six months ended Six months Year
30 June ended ended
2021 30 June 31 December
2020 2020
GBPm GBPm GBPm
Bank loans and overdrafts 3.6 3.7 7.7
Amortisation of prepaid bank arrangement fee 1.8 0.7 1.4
Lease liabilities 1.3 1.1 2.6
Unwinding of discount on provisions 0.8 0.9 1.8
---------------------------------------------
Financial expense 7.5 6.4 13.5
--------------------------------------------- ------------------- ---------- ------------
7 Taxation
Recognised in the Condensed Consolidated Statement of
Comprehensive Income
Six months ended Six months Year
30 June ended ended
2021 30 June 31 December
2020 2020
GBPm GBPm GBPm
Taxation - at effective rate 8.0 (1.8) 8.5
Taxation - change in deferred tax rate 14.4 5.5 5.9
Total tax charge 22.4 3.7 14.4
--------------------------------------- ---------------- ---------- ------------
The tax charge at effective rate for the six months ended 30
June 2021 has been based on the estimated effective weighted
average rate applicable for existing operations for the full year.
This is based on a combined underlying effective rate of 17.2 per
cent on profits arising in the Group's UK and Irish subsidiary
undertakings.
In addition, legislation was passed on 24 May 2021 which
substantively enacted an increase in the UK corporation tax rate
from 19 per cent to 25 per cent from April 2023. A deferred tax
charge of GBP14.4m has been recognised to remeasure the Group's UK
deferred tax liabilities at 30 June 2021 at this higher rate.
8 Interest-bearing loans and borrowings
Net Debt
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Cash and cash equivalents 23.7 124.6 31.7
Current borrowings (4.7) (61.6) (64.7)
Non-current borrowings (310.5) (316.6) (285.3)
----------------------------------------- ------- ------- -----------
Statutory net debt (291.5) (253.6) (318.3)
----------------------------------------- ------- ------- -----------
IFRS 16 lease liabilities* 49.6 42.2 53.1
----------------------------------------- ------- ------- -----------
Net debt excluding the impact of IFRS 16 (241.9) (211.4) (265.2)
----------------------------------------- ------- ------- -----------
* IFRS 16 lease liabilities represent the incremental impact of
IFRS 16 - Leases following the adoption by the Group of the
standard in 2019.
Analysis of borrowings between current and non-current
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Bank loans - 55.0 55.0
Lease liabilities 4.7 6.6 9.7
----------------------- ------- ------- -----------
Current borrowings 4.7 61.6 64.7
----------------------- ------- ------- -----------
Bank loans 265.3 278.1 240.6
Lease liabilities 45.2 38.5 44.7
----------------------- ------- ------- -----------
Non-current borrowings 310.5 316.6 285.3
----------------------- ------- ------- -----------
The Group refinanced its debt facilities in the first half of
2021, repaying all existing bank debt on 30 June 2021 and expensing
remaining loan arrangement fees of GBP1.2m on extinguishment of the
old facility, as required by IFRS 9. This charge is presented in
the Income Statement within Underlying financial expense.
The Group's new facilities comprise a multi-currency revolving
credit facility of GBP350m with an opening margin of 1.95 per cent
above SONIA or EURIBOR according to the currency of borrowings. The
revolving credit facility is unsecured and repayable in June 2024,
with two one-year extension options through to June 2026.
In addition, the Group has diversified its funding sources
through entry into the USPP market. On 16 July 2021 the Group
issued GBP250m of USPP loan notes, which are expected to be drawn
in Q3 2021. The USPP facility comprises GBP170m Sterling and GBP80m
to be drawn in Euro, and matures in tranches between seven and 15
years, with interest rates between 1.07 and 2.38 per cent.
9 Earnings per share
The calculation of earnings per share is based on the profit for
the period attributable to ordinary shareholders of GBP23.8m (30
June 2020: loss of GBP13.8m, 31 December 2020: profit of GBP33.6m)
and on the weighted average number of ordinary shares in issue
during the period of 1,687,890,141 (30 June 2020: 1,683,650,088, 31
December 2020: 1,685,428,368).
The calculation of underlying earnings per share is based on the
underlying profit for the period attributable to ordinary
shareholders of GBP26.1m (30 June 2020: loss of GBP11.0m, 31
December 2020: profit of GBP47.2m) and on the weighted average
number of ordinary shares in issue during the period as above.
Diluted earnings per ordinary share is based on 1,700,784,607
shares (30 June 2020: 1,685,991,560, 31 December 2020:
1,688,962,456) and reflects the effect of all dilutive potential
ordinary shares.
10 Related party transactions
The nature of related party transactions is consistent with
those disclosed in the Group's Annual Report for the year ended 31
December 2020. Related party transactions are conducted on an arm's
length basis.
11 Stated capital
Number of Ordinary Shares (m)
Six months ended Six months Year
30 June ended ended
2021 30 June 31 December
2020 2020
Issued ordinary shares at the beginning of period 1,687.6 1,682.9 1,682.9
Issued in connection with:
Exercise of savings-related share options 1.0 1.8 2.9
Vesting of Performance Share Plan awards - 1.8 1.8
1,688.6 1,686.5 1,687.6
-------------------------------------------------- ---------------- ---------- ------------
During the period, the Company issued approximately one million
ordinary shares of no par value raising GBP0.6m in connection with
the exercise of certain savings-related share options.
12 Acquisitions
Prior year acquisition
On 31 July 2020 the Group completed the CEMEX Acquisition,
although was not able to begin the process of integration and fair
value accounting until December 2020 when CMA restrictions were
lifted.
The provisional fair values of the assets and liabilities
acquired have been reconsidered in the hindsight period under IFRS
3 and changes to fair values have been made to the extent that
these reflect facts and circumstances which existed at the point of
acquisition.
During the period the Group commissioned a third-party report on
the discount rate applicable to the CEMEX assets acquired as a
standalone business. Application of this more accurate discount
rate leads to a reduction in the value of owned property, plant and
equipment and a corresponding increase in goodwill, net of deferred
tax liabilities. All changes to fair values made in the hindsight
period only impact the balance sheet.
The preliminary and final fair values of the consideration paid,
and the consolidated net assets acquired, together with the
goodwill arising in respect of this acquisition are set out
below:
Year ended Six months ended
31 December 2020 30 June 2021
Preliminary fair value on Measurement period fair Final fair value on
acquisition value adjustments acquisition
GBPm GBPm GBPm
Intangible assets 0.1 - 0.1
Property, plant and equipment
- owned 136.9 (2.6) 134.3
Property, plant and equipment
- leased 17.9 - 17.9
Inventories 11.9 - 11.9
Trade and other receivables 0.3 - 0.3
Interest-bearing loans and
borrowings (17.9) - (17.9)
Trade and other payables (0.4) - (0.4)
Provisions (14.3) - (14.3)
Deferred tax liabilities (7.2) 0.5 (6.7)
Total 127.3 (2.1) 125.2
----------------------------- ---------------------------- --------------------------- ----------------------------
Consideration - cash 151.1 - 151.1
Consideration - deferred
consideration 3.0 - 3.0
----------------------------- ---------------------------- --------------------------- ----------------------------
Goodwill arising 26.8 2.1 28.9
----------------------------- ---------------------------- --------------------------- ----------------------------
Deferred consideration of GBP3.0m has been settled during the
six months ended 30 June 2021 and is reported as part of
'Acquisition of businesses' in the Group's Condensed Consolidated
Statement of Cash Flows.
13 Reconciliation to non-GAAP measures
A number of non-GAAP performance measures are used throughout
this Interim Report and these Interim 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
Six months ended Central
30 June 2021 administration Share of profit
and of associate and joint
Great Britain Ireland Cement eliminations ventures Total
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 420.2 101.1 120.0 (40.4) 600.9
Profit from operations 53.7
Non-underlying items (note 5) 2.7
------------------------------ ------------- --------- ------ --------------- ---------------------------- -----
Underlying EBIT 36.8 8.9 18.3 (8.3) 0.7 56.4
Underlying EBIT margin** 8.8% 8.8% 15.3% 9.4%
------------------------------ ------------- --------- ------ --------------- ---------------------------- -----
Underlying EBIT 36.8 8.9 18.3 (8.3) 0.7 56.4
Share of profit of associate
and joint ventures - - - - (0.7) (0.7)
Depreciation and depletion 23.7 3.5 12.9 - - 40.1
------------------------------ ------------- --------- ------ --------------- ---------------------------- -----
Underlying EBITDA 60.5 12.4 31.2 (8.3) - 95.8
------------------------------ ------------- --------- ------ --------------- ---------------------------- -----
Six months ended Central
30 June 2020 * administration Share of profit of
and associate and
Great Britain Ireland Cement eliminations joint ventures Total
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 209.0 69.2 81.5 (24.4) 335.3
Loss from operations (3.7)
Non-underlying items
(note 5) 3.1
------------------------- -------------- ------- ------ ------------------------- ----------------------- ------
Underlying EBIT (1.3) 1.8 6.0 (7.0) (0.1) (0.6)
Underlying EBIT margin** (0.6%) 2.6% 7.4% (0.2%)
------------------------- -------------- ------- ------ ------------------------- ----------------------- ------
Underlying EBIT (1.3) 1.8 6.0 (7.0) (0.1) (0.6)
Share of loss of
associate
and joint ventures - - - - 0.1 0.1
Depreciation and
depletion 16.8 3.8 12.4 0.1 - 33.1
------------------------- -------------- ------- ------ ------------------------- ----------------------- ------
Underlying EBITDA 15.5 5.6 18.4 (6.9) - 32.6
------------------------- -------------- ------- ------ ------------------------- ----------------------- ------
Year ended Central
31 December 2020 * administration
Share of profit of
and associate and
Great Britain Ireland Cement eliminations joint ventures Total
GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 602.8 189.3 197.2 (60.6) 928.7
Profit from operations 61.6
Non-underlying items
(note 5) 14.9
------------------------ -------------- --------- ------ ------------------------- ----------------------- -----
Underlying EBIT 33.5 20.5 31.7 (10.9) 1.7 76.5
Underlying EBIT margin** 5.6% 10.8% 16.1% 8.2%
------------------------ -------------- --------- ------ ------------------------- ----------------------- -----
Underlying EBIT 33.5 20.5 31.7 (10.9) 1.7 76.5
Share of profit of
associate
and joint ventures - - - - (1.7) (1.7)
Depreciation and
depletion 41.0 7.4 25.8 0.2 - 74.4
------------------------ -------------- --------- ------ ------------------------- ----------------------- -----
Underlying EBITDA 74.5 27.9 57.5 (10.7) - 149.2
------------------------ -------------- --------- ------ ------------------------- ----------------------- -----
*As a result of the integration of the CEMEX Acquisition into
the Group, certain cement related activities which formed part of
Great Britain in 2020 are now reported within our Cement segment.
The segmental analysis presented in respect of 2020 has been
restated accordingly.
** Underlying EBIT margin is calculated as Underlying EBIT
divided by revenue.
13 Reconciliation to non-GAAP measures (continued)
Free cash flow
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
Underlying EBIT 56.4 (0.6) 76.5
Depreciation and mineral depletion 40.1 33.1 74.4
(Increase)/decrease in trade and other receivables (69.6) 20.2 (26.4)
Decrease in inventories 1.6 8.3 10.4
Increase in trade and other payables 27.5 10.0 64.6
(Decrease)/increase in provisions (2.3) (0.1) 7.4
Share of profit of associate and joint ventures (0.7) 0.1 (1.7)
Share-based payments 1.5 0.4 1.0
Dividends from associate and joint ventures 0.4 0.5 1.3
Dividend paid to non-controlling interests - - (0.1)
Income taxes paid (4.6) (10.0) (20.7)
Interest paid (3.6) (3.7) (7.7)
Interest element of lease payments (1.3) (1.1) (2.6)
Purchase of property, plant and equipment (15.4) (16.1) (38.1)
Proceeds from the sale of property, plant and equipment 4.3 0.5 1.7
Free cash flow 34.3 41.5 140.0
-------------------------------------------------------- ---------- ---------- ------------
Return on invested capital
Twelve months Twelve months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
H2 2019 Underlying EBIT - 67.1 -
H1 2020 Underlying EBIT - (0.6) (0.6)
H2 2020 Underlying EBIT 77.1 - 77.1
H1 2021 Underlying EBIT 56.4 - -
-------------------------------------------------- ------------- ------------- ------------
LTM Underlying EBIT 133.5 66.5 76.5
-------------------------------------------------- ------------- ------------- ------------
Underlying effective tax rate 17.2% 14.8% 15.6%
-------------------------------------------------- ------------- ------------- ------------
Taxation at the Group's underlying effective rate (23.0) (9.8) (11.9)
Underlying earnings before interest 110.5 56.7 64.6
-------------------------------------------------- ------------- ------------- ------------
Net assets 905.3 842.7 888.4
Net debt (note 8) 291.5 253.6 318.3
-------------------------------------------------- ------------- ------------- ------------
Invested capital 1,196.8 1,096.3 1,206.7
-------------------------------------------------- ------------- ------------- ------------
Average invested capital* 1,201.8 1,090.2 1,168.1
Return on invested capital** 9.2% 5.2% 5.5%
-------------------------------------------------- ------------- ------------- ------------
* Average invested capital is calculated by taking the average
of the opening invested capital at 1 January and the closing
invested capital at the reporting date. Opening invested capital at
1 January 2019 was GBP1,084.0m.
** Return on invested capital is calculated as underlying
earnings before interest for the previous twelve months, divided by
average invested capital for the period.
13 Reconciliation to non-GAAP measures (continued)
Leverage
Twelve months Twelve months Year
ended ended ended
30 June 30 June 31 December
2021 2020 2020
GBPm GBPm GBPm
As reported
-------------------------- ------------- ------------- ------------
H2 2019 Underlying EBITDA - 99.1 -
H1 2020 Underlying EBITDA - 32.6 32.6
H2 2020 Underlying EBITDA 116.6 - 116.6
H1 2021 Underlying EBITDA 95.8 - -
-------------------------- ------------- ------------- ------------
LTM Underlying EBITDA 212.4 131.7 149.2
-------------------------- ------------- ------------- ------------
Net debt (note 8) 291.5 253.6 318.3
-------------------------- ------------- ------------- ------------
Statutory leverage 1.4x 1.9x 2.1x
Covenant leverage 1.2x 1.7x 1.9x
-------------------------- ------------- ------------- ------------
Statutory leverage is calculated as the ratio of Underlying
EBITDA for the previous twelve months to net debt.
Covenant leverage is calculated by adjusting statutory leverage
to exclude the impact of IFRS 16 and include the full pro-forma
twelve months earnings impact of any acquisitions or
divestments.
14 Subsequent events
On 16 July 2021 the Group entered into a note purchase agreement
to issue GBP250m of loan notes as part of the USPP. The loan notes
have maturities falling between seven and 15 years, with interest
rates between 1.07 and 2.38 per cent.
Cautionary Statement
This announcement contains forward looking statements which are
made in good faith based on the information available at the time
of its approval. It is believed that the expectations reflected in
these statements are reasonable but they may be affected by a
number of risks and uncertainties that are inherent in any forward
looking statement which could cause actual results to differ from
those currently anticipated.
GLOSSARY
The following definitions apply throughout this announcement,
unless the context requires otherwise.
Adopted IFRS International Financial Reporting Standards
as adopted by the UK
Breedon Breedon Group plc
CEMEX CEMEX UK Operations Limited
CEMEX Acquisition Acquisition of certain assets from CEMEX
CEO Chief Executive Officer
CFO Chief Financial Officer
CMA Competition and Markets Authority
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
Division One of the Group's three operating segments:
GB, Ireland and Cement
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
HS2 High Speed 2
IAS International Accounting Standards
IASB International Accounting Standards Board
IFRIC International Financial Reporting Interpretation
Committee
IFRS International Financial Reporting Standard
Invested Capital Net assets plus net debt
Ireland The Island of Ireland
IT Information Technology
KPI Key Performance Indicator
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
LTM Last twelve months
M&A Mergers & acquisitions
NI Northern Ireland
NPS Net Promoter Score
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)
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
VAT Value Added Tax
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END
IR PPUPWMUPGGQG
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