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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Breedon Group Plc | LSE:BREE | London | Ordinary Share | GB00BM8NFJ84 | ORD GBP0.01 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -6.50 | -1.72% | 371.00 | 371.00 | 372.00 | 376.00 | 370.00 | 376.00 | 73,629 | 12:27:08 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMBREE
RNS Number : 5432L
Breedon Group PLC
20 July 2017
20 July 2017
Breedon Group plc
("Breedon" or "the Group")
Interim results (unaudited) for the six months to 30 June 2017
Breedon Group plc, the UK's largest independent construction materials group, announces its unaudited interim results for the six months ended 30 June 2017.
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30 June 30 June Change
2017 2016
GBP326.3 GBP163.0
Revenue million million +100%
GBP35.8 GBP22.8
Underlying EBIT million million +57%
GBP31.2 GBP20.9
Profit before tax million million +50%
Underlying basic
EPS 1.84 pence 1.50 pence +23%
Net debt/(cash) GBP146.8 GBP(17.6)
million million
Underlying results are stated before acquisition-related expenses, redundancy and reorganisation costs, property items, amortisation of acquisition intangibles and related tax items. References to an underlying profit measure throughout this announcement are defined on this basis.
7.9 million tonnes of aggregates sold (30 June 2016: 4.6 million tonnes)
0.9 million tonnes of asphalt sold (30 June 2016: 0.9 million tonnes)
1.7 million cubic metres of ready-mixed concrete sold (30 June 2016: 0.5 million cubic metres)
Highlights
-- Strong profit improvement from former Breedon Aggregates business and robust contribution from former Hope Construction Materials ("Hope")
-- Underlying EBIT margin of 15.8% achieved in former Breedon Aggregates business, comfortably ahead of our 2020 target of 15%
-- Further progress on safety improvement: Lost Time Injury Frequency Rate reduced from 1.87 in 2016 to 1.41 at half-year
-- Net debt reduced to GBP146.8m (Dec 2016: GBP159.3m)
-- Both cement kiln maintenance and upgrade shutdowns completed in first half, on time and to budget
-- Integration of former Hope operations completed, with planned synergies expected to be fully delivered in 2018, ahead of schedule
-- Pro Mini Mix acquired; further bolt-on acquisitions in pipeline -- Organic development underway in two new quarries in Scotland and County Durham -- Remain confident that we will meet 2017 market expectations
Peter Tom CBE, Executive Chairman, commented:
"I am pleased to report that in the first half of 2017 the former Breedon Aggregates business posted a strong profit improvement and the former Hope Construction Materials business made a robust contribution, even after taking into account the shutdowns of both our cement kilns for planned annual maintenance and upgrade during the first half, which were completed on time and to budget.
"Although the outcome of the General Election, coupled with the commencement of Brexit negotiations, have created some further uncertainty for the UK economy, the outlook for UK construction remains encouraging. It is reassuring that the Government's direction of travel appears to be moving away from continued austerity towards fiscal stimulus, which can only be helpful to our industry.
"We have consistently demonstrated our ability to generate value for our shareholders irrespective of economic conditions, through flexible and imaginative customer service, rigorous cost control, focused investment and a culture of continuous operational improvement. These disciplines, coupled with a strong balance sheet and healthy cashflow, put us in a strong position to take advantage of future growth opportunities, both organically and through further bolt-on acquisitions.
"More immediately, our performance in the first six months and our prospects for the second half give us confidence that we will meet 2017 market expectations."
- ends -
The full text of the Group's interim statement is attached, together with detailed financial results.
Breedon will host a meeting for invited analysts at 9.00am today and there will be a simultaneous webcast of the meeting. Please use this link to join the webcast:
http://webcasting.brrmedia.co.uk/broadcast/595e4de7e0455d29e61eae07
The webcast will also be available to view on our website later today at www.breedongroup.com/investors.
Enquiries:
Breedon Group plc Tel: 01332 694010 Peter Tom, Executive Chairman Pat Ward, Group Chief Executive Rob Wood, Group Finance Director Stephen Jacobs, Head of Communications Tel: 07831 764592 Cenkos Securities plc (Nomad and Tel: 020 7397 joint broker) 8900 Max Hartley Numis Securities (Joint broker) Tel: 020 7260 Heraclis Economides/Ben Stoop 1000
Note to Editors
Breedon Group plc is the UK's largest independent construction materials group. It operates the country's largest cement plant, two cementitious import terminals, around 60 quarries, 30 asphalt plants, 200 ready-mixed concrete plants and three concrete products plants nationwide. The Group employs around 2,300 people and has more than 750 million tonnes of mineral reserves and resources. Its strategy is to continue growing organically and through acquisition of businesses in the UK heavyside construction materials market.
Breedon Group plc
Interim results (unaudited) for the six months to 30 June 2017
Group Results
Breedon Group, the UK's largest independent construction materials group, today announces its unaudited results for the six months to 30 June 2017.
The former Breedon Aggregates business posted a strong profit improvement and the former Hope Construction Materials business ("Hope") made a robust contribution, even after taking into account the shutdowns of both our cement kilns for planned annual maintenance and upgrade during the first half, which were completed on time and to budget.
Group revenue for the half-year was GBP326.3 million (2016: GBP163.0 million) and underlying earnings before interest and tax ("EBIT") increased by 57% to GBP35.8 million (2016: GBP22.8 million).
The underlying EBIT margin, our principal performance measure, was 11.0% (30 June 2016: 14.0%), reflecting, as anticipated, the lower margin delivered by the former Hope business and the phasing of Hope Cement's shutdowns. The former Breedon Aggregates business however, delivered an underlying EBIT margin of 15.8%, comfortably ahead of our medium-term target of 15% by 2020. Whilst it will clearly be more challenging in the wake of the Hope acquisition, we continue to target a 15% underlying EBIT margin for the Group by 2020.
Notwithstanding the seasonality of the business, the Group continued to be strongly cash-generative.
Financial Highlights
Six months Six months
ended ended
30 June 30 June
2017 2016
GBPm GBPm Variance
Revenue
Breedon Northern 97.9 77.0 +27%
Breedon Southern 190.6 86.0 +122%
Hope Cement 71.5 -
Eliminations (33.7) -
Total 326.3 163.0 +100%
------------------------ ----------- ----------- ---------
Underlying EBIT
Breedon Northern 10.7 10.0 +7%
Breedon Southern 22.7 15.9 +43%
Hope Cement 9.3 -
Central administration (8.1) (3.5)
Share of associate
and joint ventures 1.2 0.4
Total 35.8 22.8 +57%
------------------------ ----------- ----------- ---------
Underlying EBIT margin 11.0% 14.0%
As indicated in our 2016 full-year results announcement, all aggregates, asphalt and concrete operations have been consolidated into our Breedon Northern and Breedon Southern businesses and all our cementitious operations are now housed within Hope Cement. This provides the basis on which these results are reported.
Operating performance
Breedon Northern continued to benefit from the significant opportunities in Scotland created by the Aberdeen Western Peripheral Route and the widening of the A9, against the backdrop of a generally subdued market. The aggregates and concrete operations of Sherburn Minerals Group ("Sherburn"), acquired in November 2016, were smoothly integrated into the Division and a new regional office was opened on our own land at Raisby quarry in County Durham. Major supply contracts won in the period included the new Aberdeen Conference Centre and Macallan Distillery in the Highlands.
Breedon Southern supplied a number of major projects, including Jaguar Land Rover, the M1 widening scheme at junctions 23a-25 and phase one of the East Midlands Gateway. We also opened our first sales office in north-west England, which was quickly followed by winning our first significant ready-mixed concrete order in central Manchester. Major improvements were made to the former Hope quarries, notably at Dowlow, our rail-linked quarry in Derbyshire, where new machinery and crushing equipment delivered increased production and product flexibility.
Hope Cement's performance reflected two factors: our decision this year to carry out both annual maintenance and upgrade shutdowns at our cement plant in the first six months, which accordingly softened its first-half contribution; and the integration of Sherburn's cementitious import terminals which, as we expected, have proved highly complementary.
These performances were delivered against a background of continuing growth in construction, with the Office for National Statistics reporting a 1.1% increase in output in the first quarter compared with the previous quarter. The Mineral Products Association correspondingly reported seasonally-adjusted market volume increases of 2.1% for aggregates and 0.7% for ready-mixed concrete, with asphalt down 0.8%, over the same period.
In light of the fact that our cementitious activities have expanded and broadened with the acquisition of the Sherburn importation business, meaning they are no longer exclusively focused on the Hope Cement Works, we have decided to bring the Division under the umbrella of the Group brand. Accordingly, from 1 August 2017 Hope Cement will be renamed Breedon Cement, which will give us greater flexibility as we further develop this business in the future.
Integration of Hope
The integration of the former Hope operations is now complete, with all three Divisions on a common IT platform. We now expect to deliver the full GBP10 million of planned synergies in 2018, comfortably ahead of our original schedule.
Safety of colleagues
We made good progress in improving the key measure of our safety performance, reporting a 25% reduction in our Lost Time Injury Frequency Rate (LTIFR) from 1.87 at the end of 2016 to 1.41 at the end of the first half, moving us closer to our goal of a 40% LTIFR reduction over the full year.
Safety remains at the top of the Board agenda and we continue to push hard towards our goal of Zero Harm. We are focused on developing a strong culture of safe behaviour, driven by a reinvigorated Visible Felt Leadership programme which commits our senior executive team to spending more time in the field, encouraging greater engagement among our colleagues.
At the heart of our drive for safer behaviour is a set of non-negotiable Safety Commitments which we introduced at the beginning of this year and which every one of our colleagues is expected to sign up to. These Commitments are providing a sharpened focus for all our health & safety activities and it has been encouraging to see them enthusiastically embraced by our workforce.
Organic development
Our programme of investment in improving operational efficiency and expanding our capacity and mineral reserves continued through the first six months. Most notably, we commenced investment in two strategically important new quarries, at North Drumboy in the Central Belt of Scotland and Low Harperley in County Durham, for which planning consents were recently secured.
North Drumboy is a hard rock quarry situated approximately 10 miles from the buoyant Glasgow market and will enable us further to internalise supply of stone to our network of concrete plants in the region. Low Harperley, near Bishop Auckland, is the only active source of sand & gravel in County Durham and will provide us with an additional source of material for our network of concrete plants in the north-east of England. Both quarries are expected to be fully operational in the second half of this year.
The acquisition of Hope has also made possible a key strategic investment in additional asphalt capacity for Breedon Southern, with a proposal for a new plant at Dowlow quarry which we expect to be operational in early 2018.
Acquisition
In May we acquired Pro Mini Mix, a small mini mix concrete operator based in the Black Country, which complements our 1stMix business and extends our reach into the West Midlands, also providing another valuable route to market for our aggregates and cement.
We continue to review a number of other potential bolt-on acquisitions.
Balance sheet and cash flow
Net assets at 30 June 2017 were GBP494.1 million, compared to GBP467.5 million at 31 December 2016 and GBP251.2 million at 30 June 2016.
Cash generated from operating activities was GBP30.2 million, after an increase in working capital of GBP23.6 million as a result of the seasonal requirements of the business. Group capital expenditure totalled GBP12.3 million and was all spent in cash.
The Group received GBP1.8 million from asset disposals and repaid GBP4.5 million of loans and finance leases. The net cash inflow for the period was GBP8.5 million and the Group had net debt at 30 June 2017 of GBP146.8 million, compared to net debt of GBP159.3 million at 31 December 2016 and net cash of GBP17.6 million at 30 June 2016.
Breedon Southern leadership
It is nearly seven years since Tim Hall took on the role of Chief Executive of Breedon Aggregates England, during which time he has made an outstanding contribution to the Group, leading his business through a period of exceptional growth and change, including numerous bolt-on purchases and the integration of our largest and most transformative acquisition to date, which is now complete.
As we look now to the long-term development of Breedon Southern, it is appropriate that we plan for his succession. We are therefore in the process of identifying a new Chief Executive for the Division, with a view to completing an orderly handover of Tim's responsibilities in due course. He has been an integral part of the Breedon success story and when he departs will leave a powerful legacy for his successor.
Outlook
Although the outcome of the General Election, coupled with the commencement of Brexit negotiations, have created some further uncertainty for the UK economy, the outlook for UK construction remains encouraging. The Construction Products Association (CPA) is forecasting construction output growth of 1.3% in 2017 and 1.2% in 2018, before accelerating to 2.3% growth in 2019.
Overall, the CPA expects construction output to be 4.9% higher in 2019 compared with 2016, underpinned by a 35% increase in infrastructure new work and increased housing activity, which end-uses together account for approximately two-thirds of our revenues. The Mineral Products Association is similarly optimistic, forecasting a 5% growth in ready-mixed concrete volumes and 4% growth in aggregates and cement volumes over 2017-2019, with asphalt sales expected to hold at roughly current levels over the same period.
It is reassuring that the Government's direction of travel appears to be moving away from continued austerity towards fiscal stimulus, which can only be helpful to our industry. Recent examples include the Chancellor's decision to extend the UK Guarantees Scheme to include construction guarantees for the first time, bringing greater certainty to the funding of large-scale infrastructure projects; the announcement of an additional GBP1 billion for trunk road upgrades; and a further GBP2.3 billion investment in infrastructure for new housing.
We have consistently demonstrated our ability to generate value for our shareholders irrespective of economic conditions, through flexible and imaginative customer service, rigorous cost control, focused investment and a culture of continuous operational improvement. These disciplines, coupled with a strong balance sheet and healthy cashflow, put us in a strong position to take advantage of future growth opportunities, both organically and through further bolt-on acquisitions.
More immediately, our performance in the first six months and our prospects for the second half give us confidence that we will meet 2017 market expectations.
Finally, we would like once again to thank everyone at Breedon, colleagues old and new, for their contributions to our results.
Peter Tom CBE Pat Ward
Executive Chairman Group Chief Executive
Condensed Consolidated Income Statement
for the six months ended 30 June 2017
Six months ended Six months ended Year ended 31
30 June 2017 30 June 2016 December 2016
Underlying Non-underlying* Total Underlying Non-underlying* Total Underlying Non-underlying* Total
(note (note (note
5) 5) 5)
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Revenue 326,289 - 326,289 162,957 - 162,957 454,688 - 454,688
Cost of sales (207,206) - (207,206) (102,778) - (102,778) (278,746) - (278,746)
-----------------
Gross profit 119,083 - 119,083 60,179 - 60,179 175,942 - 175,942
Distribution
expenses (60,812) - (60,812) (23,598) - (23,598) (78,517) - (78,517)
Administrative
expenses (23,671) (1,305) (24,976) (14,174) (788) (14,962) (39,188) (8,372) (47,560)
Group operating
profit 34,600 (1,305) 33,295 22,407 (788) 21,619 58,237 (8,372) 49,865
Share of
profit of
associate
and joint
ventures
(net of tax) 1,196 - 1,196 434 - 434 1,374 - 1,374
----------------- ---------- --------------- --------- ---------------- --------------- --------- ---------- --------------- ---------
Profit from
operations 35,796 (1,305) 34,491 22,841 (788) 22,053 59,611 (8,372) 51,239
Financial
income - - - 35 - 35 63 - 63 Financial expense (3,264) - (3,264) (1,231) - (1,231) (4,540) - (4,540) ----------------- Profit before taxation 32,532 (1,305) 31,227 21,645 (788) 20,857 55,134 (8,372) 46,762 Taxation (6,475) 260 (6,215) (4,395) 16 (4,379) (11,198) 1,206 (9,992) ----------------- ---------- --------------- --------- ---------------- --------------- --------- ---------- --------------- --------- Profit for the period 26,057 (1,045) 25,012 17,250 (772) 16,478 43,936 (7,166) 36,770 ----------------- ---------- --------------- --------- ---------------- --------------- --------- ---------- --------------- --------- Attributable to: Equity holders of the parent 26,033 (1,045) 24,988 17,234 (772) 16,462 43,885 (7,166) 36,719 Non-controlling interests 24 - 24 16 - 16 51 - 51 ----------------- Profit for the period 26,057 (1,045) 25,012 17,250 (772) 16,478 43,936 (7,166) 36,770 ----------------- ---------- --------------- --------- ---------------- --------------- --------- ---------- --------------- --------- Basic earnings per ordinary share 1.84p 1.77p 1.50p 1.43p 3.49p 2.92p Diluted earnings per ordinary share 1.79p 1.72p 1.45p 1.38p 3.38p 2.83p ----------------- ---------- --------------- --------- ---------------- --------------- --------- ---------- --------------- ---------
* Non-underlying items represent acquisition-related expenses, redundancy and reorganisation costs, property items, amortisation of acquisition intangibles and related tax items.
Condensed Consolidated Statement of Comprehensive Income
for the six months ended 30 June 2017
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
Profit for the period 25,012 16,478 36,770
Other comprehensive income
Items which may be reclassified
subsequently to profit
and loss:
Effective portion of changes
in fair value of cash flow
hedges (146) (10) 44
Taxation on items taken
directly to other comprehensive
income - 1 -
--------------------------------- ---------- ---------- ------------
Other comprehensive income
for the period (146) (9) 44
--------------------------------- ---------- ---------- ------------
Total comprehensive income
for the period 24,866 16,469 36,814
--------------------------------- ---------- ---------- ------------
Total comprehensive income
for the period is attributable
to:
Equity holders of the parent 24,842 16,453 36,763
Non-controlling interests 24 16 51
--------------------------------- ---------- ---------- ------------
24,866 16,469 36,814
--------------------------------- ---------- ---------- ------------
Condensed Consolidated Statement of Financial Position
at 30 June 2017
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
Non-current assets
Property, plant and equipment 458,935 213,108 467,514
Intangible assets 194,633 22,529 193,784
Investment in associate
and joint ventures 5,702 5,037 5,502
-------------------------------
Total non-current assets 659,270 240,674 666,800
------------------------------- ---------- ---------- ------------
Current assets
Inventories 27,863 11,790 29,331
Trade and other receivables 142,835 71,264 110,772
Cash and cash equivalents 13,174 33,019 4,628
Total current assets 183,872 116,073 144,731
------------------------------- ---------- ---------- ------------
Total assets 843,142 356,747 811,531
-------------------------------
Current liabilities
Interest-bearing loans
and borrowings (4,716) (5,666) (6,893)
Trade and other payables (123,370) (67,072) (116,783)
Current tax payable (6,350) (4,224) (5,114)
Provisions (6,803) (184) (6,478)
------------------------------- ---------- ---------- ------------
Total current liabilities (141,239) (77,146) (135,268)
-------------------------------
Non-current liabilities
Interest-bearing loans
and borrowings (155,236) (9,719) (157,073)
Provisions (25,416) (11,717) (24,429)
Deferred tax liabilities (27,198) (7,011) (27,217)
------------------------------- ---------- ---------- ------------
Total non-current liabilities (207,850) (28,447) (208,719)
------------------------------- ---------- ---------- ------------
Total liabilities (349,089) (105,593) (343,987)
------------------------------- ---------- ---------- ------------
Net assets 494,053 251,154 467,544
------------------------------- ---------- ---------- ------------
Equity attributable to
equity holders of the
parent
Stated capital 377,755 179,139 375,495
Cash flow hedging reserve (138) (45) 8
Capital reserve 1,516 1,516 1,516
Retained earnings 114,728 70,361 90,307
-------------------------------
Total equity attributable
to equity holders of
the parent 493,861 250,971 467,326
Non-controlling interests 192 183 218
------------------------------- ---------- ---------- ------------
Total equity 494,053 251,154 467,544
------------------------------- ---------- ---------- ------------
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30 June 2017
For the six months
ended 30 June 2017
Stated Cash Capital Retained Attributable Non-controlling Total
capital flow reserve earnings to equity interests equity
hedging holders
reserve of parent
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 31
December 2016 375,495 8 1,516 90,307 467,326 218 467,544
Shares issued 2,260 - - (1,551) 709 - 709
Dividend to non-controlling
interests - - - - - (50) (50)
Total comprehensive
income for the
period - (146) - 24,988 24,842 24 24,866
Credit to equity
of share-based
payments - - - 984 984 - 984
Balance at 30
June 2017 377,755 (138) 1,516 114,728 493,861 192 494,053
---------------------------- ----------- --------- --------- ---------- ------------- ---------------- --------
For the six months ended
30 June 2016
Stated Cash Capital Retained Attributable Non-controlling Total
capital flow reserve earnings to equity interests equity
hedging holders
reserve of parent
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 31
December 2015 178,637 (36) 1,516 52,958 233,075 167 233,242
Shares issued 502 - - (154) 348 - 348
Total comprehensive
income for the
period - (9) - 16,462 16,453 16 16,469
Credit to equity
of share-based
payments - - - 1,095 1,095 - 1,095
Balance at 30
June 2016 179,139 (45) 1,516 70,361 250,971 183 251,154
--------------------- --------- --------- --------- ---------- ------------- ---------------- --------------
For the year ended 31 December
2016
Stated Cash Capital Retained Attributable Non-controlling Total
capital flow reserve earnings to equity interests equity
hedging holders
reserve of parent
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 31
December 2015 178,637 (36) 1,516 52,958 233,075 167 233,242
Shares issued 196,858 - - (177) 196,681 - 196,681
Total comprehensive
income for the
year - 44 - 36,719 36,763 51 36,814
Credit to equity
of share-based
payments - - - 807 807 - 807
Balance at 31
December 2016 375,495 8 1,516 90,307 467,326 218 467,544
--------------------- --------- --------- --------- ---------- ------------- ---------------- --------------
Consolidated Cash Flow Statement
for the six months ended 30 June 2017
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
Cash flows from operating
activities
Profit for the period 25,012 16,478 36,770
Adjustments for:
Depreciation and amortisation 19,457 9,028 25,530
Financial income - (35) (63)
Financial expense 3,264 1,231 4,540
Share of profit of associate
and joint ventures (net
of tax) (1,196) (434) (1,374)
Net loss/(gain) on sale
of property, plant and
equipment 55 (494) (1,007)
Equity-settled share-based
payment expenses 984 1,095 807
Taxation 6,215 4,379 9,992
---------------------------------- ----------- ----------- -------------
Operating cash flow before
changes in working capital
and provisions 53,791 31,248 75,195
(Increase)/decrease in
trade and other receivables (31,893) (12,493) 6,862
Decrease/(increase) in
inventories 1,469 779 (1,887)
Increase/(decrease) in
trade and other payables 6,225 1,948 (801)
Increase in provisions 605 404 1,429
---------------------------------- ----------- ----------- -------------
Cash generated from operating
activities 30,197 21,886 80,798
Interest paid (1,970) (660) (4,315)
Interest element of finance
lease payments (192) (246) (466)
Dividend paid to non-controlling
interest (50) - -
Income taxes paid (5,003) (3,547) (8,307)
----------------------------------
Net cash from operating
activities 22,982 17,433 67,710
---------------------------------- ----------- ----------- -------------
Cash flows used in investing
activities
Acquisition of businesses (1,200) - (57,062)
Purchase of property, plant
and equipment (12,284) (6,025) (23,729)
Proceeds from sale of property,
plant and equipment 1,790 940 10,070
Repayment of loan to joint
venture 125 100 200
Interest received - 35 63
Dividend from associate
and joint venture 875 375 750
---------------------------------- ----------- ----------- -------------
Net cash used in investing
activities (10,694) (4,575) (69,708)
---------------------------------- ----------- ----------- -------------
Cash flows used in financing
activities
Proceeds from the issue
of shares (net) 709 348 397
Proceeds from new loans
raised - - 195,000
Repayment of loans (1,337) - (205,090)
Repayment of finance lease
obligations (3,114) (3,698) (7,191)
Purchase of financial instrument
- derivative - (11) (12)
Net cash used in financing
activities (3,742) (3,361) (16,896)
---------------------------------- ----------- ----------- -------------
Net increase/(decrease)
in cash and cash equivalents 8,546 9,497 (18,894)
Cash and cash equivalents
at beginning of period 4,628 23,522 23,522
---------------------------------- ----------- ----------- -------------
Cash and cash equivalents
at end of period 13,174 33,019 4,628
---------------------------------- ----------- ----------- -------------
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 EU. 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 2016.
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 2016.
The comparative figures for the financial year ended 31 December 2016 are not 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.
2 Going concern
The Group meets its day-to-day working capital and other funding requirements through its banking facility, which includes an overdraft facility, which expires in November 2019. The Group actively manages its financial risks and operates Board approved financial policies, including interest rate hedging policies, that are designed to ensure that the Group maintains an adequate level of headroom and effectively mitigates financial risks.
On the basis of current financial projections and facilities available, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and, accordingly, consider that it is appropriate to adopt the going concern basis in preparing these Interim Financial Statements.
3 Financial risks, estimates, assumptions and judgements
In preparing these Interim Financial Statements, management have been required to make judgements, estimates and assumptions 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. The significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty are the same as those that applied to the Consolidated Financial Statements for the year ended 31 December 2016 as set out in note 27 of the Annual Report for that year.
The principal risks and uncertainties the Group faces are in respect of the following:
-- Market conditions -- Competition and margins -- Acquisitions -- Financing and liquidity -- Legal and regulatory -- Health & safety and environment -- People -- IT and cyber security
Further details of these main risks are set out on pages 16 and 17 of the Group's Annual Report for the year ended 31 December 2016. The Directors consider that these are the risks that could impact the performance of the Group in the remaining six months of the current financial year. As in the previous year, these risks are being managed and their anticipated impact mitigated.
4 Segmental analysis
Segmental information is presented in respect of the Group's business segments in line with IFRS 8 - Operating Segments which requires segmental information to be presented on the same basis as it is viewed internally. As from January 2017 all aggregates, asphalt and concrete operations have been consolidated into our Breedon Northern and Breedon Southern businesses and all our cementitious operations are now housed within Hope Cement. Prior year comparisons have been restated. There are no other operating segments. The majority of revenues are earned from the sale of aggregates, cement, related products and services.
Restated
Six months ended Six months ended Year ended
30 June 30 June 31 December
2017 2016 2016
Revenue EBITDA* Revenue EBITDA* Revenue EBITDA*
Income statement GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Breedon Northern 97,914 16,500 76,946 14,689 174,194 29,963
Breedon Southern 190,622 29,238 86,011 20,190 265,254 48,338
Hope Cement 71,505 16,255 - - 52,115 16,152
Central administration - (8,044) - (3,461) - (10,803)
Eliminations (33,752) - - - (36,875) -
------------------------------- --------- --------- --------- --------- -------- --------
Group 326,289 53,949 162,957 31,418 454,688 83,650
------------------------------- --------- --------- --------- --------- -------- --------
*EBITDA represents underlying EBITDA before share of profit from associate and
joint ventures.
Reconciliation to reported profit
Group EBITDA as above 53,949 31,418 83,650
Depreciation and mineral
depletion (19,349) (9,011) (25,413)
Underlying Operating Profit
--------- --------- --------
Breedon Northern 10,711 10,027 19,909
Breedon Southern 22,692 15,851 38,113
Hope Cement 9,348 - 11,060
Central administration (8,151) (3,471) (10,845)
--------- --------- --------
34,600 22,407 58,237
Share of profit of associate
and joint ventures 1,196 434 1,374
Underlying profit from
operations (underlying
EBIT) 35,796 22,841 59,611
Non-underlying items (note
5) (1,305) (788) (8,372)
Profit from operations 34,491 22,053 51,239
Net financial expense (3,264) (1,196) (4,477)
Profit before taxation 31,227 20,857 46,762
Taxation (6,215) (4,379) (9,992)
------------------------------- --------- --------- --------- --------- --------
Profit for the period 25,012 16,478 36,770
------------------------------- --------- --------- --------- --------- -------- --------
5 Non-underlying items
As required by IFRS 3 - Business Combinations, acquisition related costs have been expensed as incurred. Additionally, the Group incurred redundancy costs in respect of the reorganisation of parts of the business. Non-underlying items also include property items, the amortisation of acquisition intangible assets and related tax items.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
Included in administrative
expenses:
Redundancy and reorganisation
costs (1,729) (126) (5,326)
Acquisition costs (39) (704) (3,119)
Gain on property disposals 571 59 185
Amortisation of acquisition
intangible assets (108) (17) (112)
Total non-underlying items
(pre-tax) (1,305) (788) (8,372)
Non-underlying taxation 260 16 1,206
------------------------------- ---------- ---------- ------------
Total non-underlying items
(after tax) (1,045) (772) (7,166)
------------------------------- ---------- ---------- ------------
6 Financial income and expense
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
Interest income - bank deposits - 35 63
Financial income - 35 63
-------------------------------- ---------- ---------- ------------
Interest expense - bank
loans and overdrafts (1,970) (684) (2,748)
Amortisation of prepaid
bank arrangement fee (393) (129) (497)
Interest expense - finance
leases (192) (246) (466)
Unwinding of discount on
provisions (709) (172) (829)
--------------------------------
Financial expense (3,264) (1,231) (4,540)
-------------------------------- ---------- ---------- ------------
7 Taxation
The Company is resident in Jersey which has a zero per cent tax rate. The tax charge for the six months ended 30 June 2017 has been based on the estimated effective blended rate applicable for existing operations for the full year. This is based on an effective rate of 19.25 per cent on profits arising in the Group's UK subsidiary undertakings with no tax deduction for expenses arising in Jersey.
Reductions in the UK corporation tax rate from 20 per cent to 19 per cent (effective from 1 April 2017) and to 18 per cent (effective 1 April 2020) were substantively enacted on 26 October 2015, and an additional reduction to 17 per cent (effective from 1 April 2020) was substantially enacted on 6 September 2016. This will reduce the Group's future tax charge accordingly. The deferred tax liability at 30 June 2017 has been calculated based on these rates.
8 Interest-bearing loans and borrowings
This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings.
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
Non-current liabilities
Secured bank loans 148,171 488 147,779
Finance lease liabilities 7,065 9,231 9,294
---------------------------- ---------- ---------- ------------
155,236 9,719 157,073
---------------------------- ---------- ---------- ------------
Current liabilities
Unsecured bank loans - - 1,336
Current portion of finance
lease liabilities 4,716 5,666 5,557
---------------------------- ---------- ---------- ------------
4,716 5,666 6,893
---------------------------- ---------- ---------- ------------
In November 2015, the Group entered into a new four year GBP300 million facility agreement which became effective on completion of the acquisition of Hope Cement Limited and which replaced the facilities previously in place. The new facility carried a rate of interest of between 1.5 per cent and 1.9 per cent above LIBOR, compared to a rate of interest of between 1.35 per cent and 1.7 per cent above LIBOR on the previous facility. The loan is secured by a floating charge over the assets of the Company and its subsidiary undertakings and has a final repayment date of 17 November 2019.
Net (debt)/cash
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
Net (debt)/cash comprises the following
items:
Cash and cash equivalents 13,174 33,019 4,628
Current borrowings (4,716) (5,666) (6,893)
Non-current borrowings (155,236) (9,719) (157,073)
---------------------------------------- ---------- ---------- ------------
(146,778) 17,634 (159,338)
---------------------------------------- ---------- ---------- ------------
9 Earnings per share
The calculation of earnings per share is based on the profit for the period attributable to ordinary shareholders of GBP24,988,000 (30 June 2016: GBP16,462,000, 31 December 2016: GBP36,719,000) and on the weighted average number of ordinary shares in issue during the period of 1,412,888,278 (30 June 2016: 1,150,048,780, 31 December 2016: 1,257,812,971).
The calculation of underlying earnings per share is based on the profit for the period attributable to ordinary shareholders, adjusted to add back the non-underlying items, of GBP26,033,000 (30 June 2016: GBP17,234,000, 31 December 2016: GBP43,885,000) and on the weighted average number of ordinary shares in issue during the period as above.
Diluted earnings per ordinary share is based on 1,453,486,340 (30 June 2016: 1,191,589,466, 31 December 2016: 1,299,537,417) shares and reflects the effect of all dilutive potential ordinary shares.
10 Acquisitions
There have been no material acquisitions in the period.
11 Related party transactions
Related parties are consistent with those disclosed in the Group's Annual Report for the year ended 31 December 2016. All related party transactions are on an arm's length basis.
12 Stated capital
Number of Ordinary Shares
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Issued ordinary shares at
the beginning of the period 1,411,013,763 1,149,390,728 1,149,390,728
Issued in connection with:
Acquisition of Hope Cement
Limited - - 259,120,245
Vesting of Performance
Share Plan awards 2,876,962 - -
Exercise of savings-related
share options 2,360,258 2,218,684 2,502,790
1,416,250,983 1,151,609,412 1,411,013,763
----------------------------- ------------- ------------- -------------
During the period, the Company issued 2,360,258 ordinary shares of no par value raising GBP709,000 in connection with the exercise of certain savings-related share options. On 4 April 2017, the Company issued 2,876,962 ordinary shares of no par value in connection with the vesting of awards under the Performance Share Plan.
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SFEFLUFWSEEW
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July 20, 2017 02:00 ET (06:00 GMT)
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