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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 4.50 | 1.20% | 378.00 | 377.00 | 378.00 | 380.00 | 375.50 | 376.50 | 780,700 | 16:29:53 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From May 2021 to May 2024
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.
Hot Features
Premium
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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July 22, 2021 02:01 ET (06:01 GMT)
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