BREE Breedon Group Plc

LIVING OUR VALUES DELIVERED RESULTS AHEAD OF EXPECTATIONS

Living our values has never been more evident than in 2024 when our team 'Made it Happen' in the face of significant market headwinds, political and economic instability, and poor weather conditions.

By adhering to a clear objective, to be a bigger and better Breedon, and through the enduring resilience and commitment of our first-class team, we delivered significant strategic and operational milestones across the Group, contributing to a fourth successive year of record revenue and delivering Underlying results ahead of expectations.

We created our third platform in the US, evolved our strategy and upgraded our sustainability targets. This remarkable outcome was achieved by maintaining a determined commitment to executing our strategy and a deliberate focus on operational and commercial excellence.

In March, we entered the US construction materials market through the acquisition of BMC for an enterprise value of US$300m. BMC, headquartered in St Louis, Missouri, supplies ready-mixed concrete, aggregates and building products. With an entrepreneurial approach and strong growth track record, the close cultural alignment enabled the smooth integration of BMC into the Group, delivering an encouraging initial contribution.

For further detail, turn to the finance review on page 13.

OUTLOOK

Enquiry levels were healthy towards the end of 2024 and have remained encouraging in the first two months of 2025. Weather conditions in all our markets have been disruptive in early 2025. However, this is traditionally a quieter period of the year for us.

The economic landscape in the US is robust while RoI is strong, benefiting from a budget surplus, falling interest rates and net inward migration. Both regions benefit from long-term commitments to fund development in infrastructure. In addition, they each experience structural housing shortfalls, lack of inventory in the secondary market and improving affordability at the margin.

While we remain optimistic that 2024 should represent a floor in construction market activity in the UK, the broader economic outlook is less clear. The Government's growth agenda is supportive for the construction materials industry, interest rates have started to fall and the housing market lacks inventory. However, the catalyst to stimulate a recovery in confidence and investment is yet to materialise.   

Our M&A pipeline remains well populated and we have exciting opportunities in each of our geographies. We continue to prioritise the build out of our US business in the Midwest and we have scope in GB and Ireland to expand our regional footprint and downstream activities.

We remain focused on our operational and commercial excellence programmes and have maintained investment in our machinery and plant through the cycle. This will enable us to maximise the productivity and efficiency of our operations when activity levels improve. While the timing remains uncertain, when market activity improves Breedon is optimally positioned to benefit.

STRATEGY REVIEW

Evolving our strategy: Breedon 3.0

 

Our strategy has evolved at intervals since Breedon was formed but always with the same simple principle at its core; deliver profitable growth, by efficiently providing essential materials to structurally growing end-markets and executing carefully considered acquisitions in target geographies.

Key to operating our successful model are our values. Our intention to 'Keep it Simple' and 'Strive to Improve' is evident in this evolution of our strategy, Breedon 3.0, where we have simplified and clarified how we will deliver our next chapter of growth, ensuring our strategy relates directly to the day-to-day activities of our operational colleagues.

We have retained our emphasis on profitable growth through the core driving forces of 'Expand' and 'Improve'. Furthermore, the implementation of our strategy is viewed through the lenses of 'People' - leading our first-class entrepreneurial team effectively, 'Sustainability' - operating our business sustainably, and 'Finance' - deploying our capital in accordance with our disciplined financial framework.

Expand

Breedon is a consolidator and M&A is at the heart of our strategy. Since formation, we have built three vertically-integrated platforms in GB, Ireland and, most recently, the US, unlocking value in the process.

We balance M&A with organic growth by serving structurally attractive end-markets in geographies that benefit from long-term growth prospects.

The launch of our scalable third platform in the US through the carefully targeted acquisition of BMC delivers an optimal combination of both these routes to Expand. Construction starts in the US are forecast to outpace European construction output in the medium-term, driven by housing and infrastructure deficits and federally funded stimulus programmes. In addition, the US is highly fragmented with c.60% of the market supplied by over 5,000 operators, providing a significant opportunity to source high-quality assets at fair valuations.

Our focus in the US in the medium-term will be on Missouri and the surrounding states, a region with an economic footprint roughly equivalent to the UK but with more than double the demand for aggregates. Within that region we will focus on growing our footprint and building out our vertically-integrated model. In October 2024, BMC completed its first transaction under Breedon ownership, acquiring Building Products, a highly complementary, downstream manufacturer of masonry blocks and other building products.

The US offers Breedon numerous opportunities and our objective in the coming decade is to build a US business of a scale comparable to our combined GB and Ireland operations.

The prospect for further M&A in GB and Ireland for bolt-on and downstream transactions remains compelling, and our M&A pipeline is well populated. In January 2024, we completed the acquisition of Eco-Asphalt, a Merseyside asphalt supplier strategically located within the region where we service the National Highways Pavement framework. In April 2024 we acquired Phoenix Surfacing, enhancing our presence in the Midlands and reinforcing our regional surfacing, airfields and recycled asphalt capabilities.

Improve

By bringing the assets we acquire onto our vertically-integrated platforms, we can unlock efficiencies, drive innovation and provide our customers with a reliable and trusted supply chain partner. This continual process creates a virtuous cycle of enhancement, complementing end-market growth and M&A with self-help, enabling us to outperform our markets.

Our valuable mineral reserves and resources are the lifeblood of our business and replenishing them requires diligent long-term planning and strong community relationships. In 2024 our land and minerals team successfully replenished our mineral reserves and resources, securing planning consent for extensions at eight quarries, adding 51m tonnes of mineral assets, significantly ahead of the 27.3m tonnes extracted in the year.

Our teams utilise proprietary software to map local markets and track mineral replenishment requirements far into the future. We have an additional pipeline of 142m tonnes at various stages of development, equivalent to more than five years of production at current rates.

As a trusted steward of land and mineral assets, we seek to refine our processes through innovation and commercial and operational excellence programmes to ensure we maximise the value of every tonne of material we produce while minimising the impact on our neighbours and environment. 

By using a broad diagnostics benchmark of operational efficiency indicators and analysing every step of the production process from quarry 'face to gate', we understand each site's unique requirements, enabling us to target our investment with care. Process reengineering enabled us to remove the need for contract crushing at Leaton and Cloud Hill while the development of our Running Equipment Efficiency Improvement Programme enabled us to increase the utilisation of the wash plant at Dowlow by 50%.

Our vertically-integrated model promotes commercial excellence, evident in the success of our GB surfacing business. Through the close collaboration of our commercial and site teams we have ensured the reliable provision of highly technical asphalt with sustainable properties to our growing airfield surfacing business.

Increasing the use of technology and innovation is allowing us to unlock efficiencies while improving safety. By using 'setting out' robots to autonomously navigate airfield surfacing projects, marking out each stage of laying asphalt with precision, we increased accuracy and efficiency while reducing the risk of vehicle interaction. We will increasingly utilise Artificial Intelligence and virtual reality for training and quality control, improving outcomes for our people and our customers.

We view the implementation of our strategy through three lenses

People: Our people make Breedon unique

In 2024 we added nearly 600 colleagues through the acquisition of BMC. On completion of the transaction, enhancing safety practices and procedures took priority and we saw immediate benefits, not only reducing time lost to injuries by 80% but also their severity.

Improving the health, safety and wellbeing of our team is a constant objective and therefore, in 2024 we undertook a greater number of Visible Felt Leadership visits across the Group. We were pleased to see a direct improvement in our safety metrics with a reduction in the lost time injury frequency rate to 3.3 per million hours worked (2023: 3.5).

Replenishing our team through the early careers route is essential for the future success of the Group, bringing in fresh talent and perspectives. The apprentice and industrial placement student programmes have been extremely successful in recent years, bringing 170 early careers colleagues into Breedon since 2022, of which 40 joined in the last 12 months.

'Showing we Care' is a value we live by, particularly with regard to our people. In 2024, we rewarded our colleagues with a 4% pay rise and implemented additional management training to enhance our leadership skills. These actions were acknowledged in our latest engagement survey, which once again recorded exceptionally high scores for the construction materials industry with 75% of our colleagues taking part (2023: 76%), and 78% reporting that they felt engaged (2023: 80%).

Sustainability: Operating sustainably

Operating our business sustainably is a strategic imperative and at the forefront of every decision we take. Breedon has always taken its responsibility to its people and its communities seriously and we have committed to increase our disclosure and transparency while working towards reducing our carbon footprint.

In recognition of the substantial progress we have made, we were pleased to receive formal validation of our Group wide carbon reduction targets from SBTi during 2024. In addition, we were awarded our first CDP ratings, receiving a C for Water Security and a B for Climate Change. Both ratings have subsequently been upgraded, and in February 2025 we were awarded B- for Water Security and A- for Climate Change.

Decarbonising our Cement business is essential to achieving our net zero objective and we are targeting every part of our operation that contributes to CO₂ emissions. Both our cement plants made progress to increase the use of alternative fuels, reaching a blended replacement rate of nearly 50% while our modern Kinnegad plant at times achieved 100% utilisation of low carbon alternatives. Our development of a high-strength, lower carbon CEM II product was well received by our customers and CEM II now comprises 37% of our cement sales (2023: 30%).

Carbon capture and storage is an essential technology to enable the decarbonisation of the cement production process. During 2024 we made further progress, moving into the FEED stage (front-end engineering and design) of our plans to capture CO₂ emissions at Hope, exploring different technologies and engineering solutions to capture our carbon emissions.

The landmark Peak Cluster carbon capture and storage project has the potential to decarbonise 40% of the cement and lime production in the UK and we continue to work with the Peak Cluster partners towards the next stage of this exciting project.

In light of the significant progress we have made towards our sustainability targets, in 2024 we took the opportunity to upgrade our ambitions. We have accelerated our plans to decarbonise and we are now aiming to reduce Scope 1 and 2 emissions and Scope 3 emissions from purchased clinker and cement by 23.3% by 2030 from a 2022 baseline. Creating social value remains a key objective and we will generate a cumulative £500m benefit to society by 2030. We will work towards generating half of our downstream revenue from our Breedon Balance product range by 2030 (2024: 34%), thereby contributing to a more sustainable built environment.  

Finance: Disciplined financial framework

Our financial framework governs how we connect thoughtful capital allocation to strategy, facilitating multiple routes to growth. By prioritising profitable growth, through-cycle investment and responsible leverage, the framework has served us well, ensuring a strong balance sheet, healthy returns and strategic financial flexibility.

We have multiple investment opportunities and at Breedon investment is a differentiator. Even though volumes have declined in each of the past three years, we deliberately maintained capital investment through the cycle, an approach that ensures our well-invested assets will be positioned to respond efficiently when the end-market backdrop improves.

In 2024 we evolved the suite of financial targets by which we measure our performance, retaining our emphasis on profitability and financial flexibility. While we have maintained the majority of our targets we have modified our Free Cash Flow conversion measure, reducing the target to 45% to reflect higher corporate tax rates.

An Underlying EBITDA margin target range was introduced to complement our existing Underlying EBIT margin target range. Our cost of borrowing is directly impacted by our level of Underlying EBITDA and relates to our debt covenant compliance. M&A transactions predominantly reference an Underlying EBITDA multiple when assessing valuation. Many of our UK and International peers report Underlying EBITDA performance as their primary profit metric. Our primary operating profit performance measure going forward will be Underlying EBITDA.

For further detail, turn to the finance review on page 13.

OPERATIONAL REVIEW

Product volumes

million tonnes except where stated	2024	2023	Change %	LFL  %
Aggregates	27.3	25.7	6%	(3)%
Asphalt	3.6	3.8	(4)%	(5)%
Cement	2.0	2.1	(5)%	(5)%
Ready-mixed concrete (m3)	3.3m	2.9m	11%	(11)%
Note: Reported percentage movements are based on non-rounded data.

 

Great Britain

£m except where stated	2024	2023	Change %	LFL  %
Revenue	997.4	1,033.8	(4)%	(6)%
Underlying EBITDA	131.9	138.6	(5)%	(6)%
Underlying EBITDA margin	13.2%	13.4%	(20)bps
Underlying EBIT	78.5	86.4	(9)%	(11)%
Underlying EBIT margin	7.9%	8.4%	(50)bps

 

Our GB business delivered a resilient performance in 2024, one of the wettest years on record when weather conditions presented significant challenges to on-site activity for us and our customers. With the GB market experiencing its third consecutive year of volume decline, our first-class team drew on their extensive experience and strong customer relationships to manage through the challenging market conditions.

Infrastructure remained relatively robust and, while some high-profile civil engineering projects were cancelled, spending on the maintenance of road, airport, water and energy infrastructure underpinned sales of aggregates and asphalt where volumes only declined 5% and 3% respectively on a like-for-like basis. The downturn in housebuilding activity was particularly evident in ready-mixed concrete sales, which declined 12% organically.

Challenging conditions were felt across the construction supply chain and, although the pace of insolvencies abated towards the end of 2024, the overall level remained elevated at c.29% above the level seen during Covid-19.

Notwithstanding the soft market conditions, our volumes stabilised in the second half with sequential volumes comparable to the first half. Consequently, pricing was sustained. Revenue declined 4% to £997.4m (2023: £1,033.8m) or 6% organically.

Our team took deliberate actions to manage the cost base and protect profitability, restructuring the materials business and scaling capacity appropriately. During the year we closed or mothballed 11 ready-mixed concrete plants, five quarries and two asphalt plants.

As a result, Underlying EBITDA reduced 5% to £131.9m (2023: £138.6m) or down 6% organically. In a business with high operating leverage, it is therefore highly creditable that our team delivered an Underlying EBITDA margin of 13.2%, a small reduction of 20bps compared to 2023.

We maintained our focus on self-help throughout the year, partially mitigating the soft market conditions. We continued to drive our commercial and operational excellence programmes to streamline processes, maximise efficiency and enhance customer service and expanded our presence in new markets with the acquisitions of Eco-Asphalt and Phoenix Surfacing.

Our surfacing business increased its airfield maintenance presence, completing high-profile projects for the Defence Infrastructure Organisation (DIO) and pulling through a third of the GB Materials asphalt volumes. Working in close collaboration internally and with our customers we laid 36,000 tonnes of asphalt at RAF Leeming in nine days.

We have built a strong brand in this niche market, investing carefully in mobile plant and technology to deliver value and reliability for our customers. Consequently, we have a healthy airfields pipeline of DIO and commercial projects with up to five years' visibility.

GB outlook

The market backdrop is stabilising and we believe 2024 will prove to be a floor for volumes, particularly in the event of a housebuilding recovery. We have continued to invest through the cycle, maintaining close customer relationships, ensuring that when our end-markets return to growth, our team, and the plant and machinery they operate, are well-positioned to respond efficiently and reliably.

 

Ireland

£m except where stated	2024	2023	Change %	LFL  %
Revenue	233.4	235.5	(1)%	(2)%
Underlying EBITDA	41.5	35.9	16%	14%
Underlying EBITDA margin	17.8%	15.2%	260bps
Underlying EBIT	33.6	29.0	16%	14%
Underlying EBIT margin	14.4%	12.3%	210bps

 

Our business in Ireland delivered a strong performance in 2024. RoI benefited from positive market conditions driven by the budget surplus and investment in housing and infrastructure while the return of the governing Assembly in NI contributed to an improvement in sentiment.

Furthermore, actions taken in recent years to restructure and rebrand our Irish business, reinvigorate the leadership team and enhance the contribution from aggregates came to the fore during the year, driving volume and enhancing profitability.

Increasing the supply of our own mineral assets through our downstream operations has been a strategic priority in Ireland. In 2024 we once again enhanced our contribution from aggregates by recommissioning dormant quarries and acquiring well-located assets.

We secured extensions at three existing quarries, submitted plans for two new strategically located asphalt plants and a recycled asphalt planings hub, and are preparing three new renewable energy projects.

Our sites are well positioned to serve infrastructure projects across Ireland and the steep rise in house building activity benefited our operations in RoI. We supplied high-profile infrastructure projects such as the Celtic Interconnector and end-uses such as high-speed road networks and rail ballast which require a specific high-value aggregates specification that quarries in our portfolio provide. Consequently, aggregates volumes in Ireland increased 11%, or 8% on a like-for-like basis. Since acquisition our aggregates volumes in Ireland have increased on average by 9% per year.

In 2024 we tendered for c.600 road maintenance schemes and delivered multiple high-speed framework projects and contracts for Dublin Airport. In NI, although the political backdrop stabilised, the phased return to work of the civil service presented some challenges in progressing the letting of framework contracts, which in turn impacted activity levels. This, together with our more structured approach to the tendering of contracts led to 11% lower asphalt volumes in Ireland across the year.

Due to our leading market positions and reputation for high quality service, pricing was sustained. Revenue was stable at £233.4m (2023: £235.5m) or down 2% on a like-for-like basis after adjusting for the acquisition of Robinsons in May 2023.

Growing profitably is a guiding principle of our strategy and we have continued to review the optimal configuration of the division. During 2024, we took further steps to enhance profitability, increasing the contribution from aggregate sales, reducing headcount and selectively tendering for projects.

These deliberate actions resulted in Underlying EBITDA of £41.5m, an increase of 16%, or 14% on an organic basis, and delivered an Underlying EBITDA margin of 17.8%, an increase of 260bps.

Ireland outlook

The political and economic landscape in RoI is supportive where the Government operates a budget surplus and net inward migration is driving population growth and the need to invest in housing and infrastructure. In NI, while sentiment has improved, the economic outlook remains less clear. There are a number of large infrastructure projects coming to market in 2025 and we are well positioned to benefit. Our M&A pipeline is well populated and active discussions are ongoing.

 

United States

£m except where stated	2024	2023	Change %
Revenue	132.5	-	-
Underlying EBITDA	24.8	-	-
Underlying EBITDA margin	18.7%	-	-
Underlying EBIT	16.4	-	-
Underlying EBIT margin	12.4%	-	-

 

In March 2024, we delivered a transformational strategic objective. Our third geographic platform was established through the acquisition of BMC which provides us with a solid foundation for growth in the US construction materials market.

BMC's culture is closely aligned to Breedon. Our entrepreneurial US team are close to their local markets, operating an aggregates-led vertically-integrated model, pulling our own material through our ready-mixed concrete plants. BMC is a consolidator and has been built through many transactions, with an ambitious pipeline of target opportunities.

The integration of BMC has been completed quickly and successfully and, in its first ten months under Breedon's ownership, BMC delivered an encouraging initial contribution despite poor weather conditions in the final quarter impacting volumes. Due to the supportive level of underlying demand and healthy backlogs, pricing throughout the year was positive. BMC contributed revenue of £132.5m and Underlying EBITDA of £24.8m in the period since 7 March. Underlying EBITDA margin of 18.7% absorbs certain additional operating costs including investment in improving health, safety and wellbeing outcomes.

Ensuring our colleagues return Home Safe and Well each day is our highest priority. While BMC had already committed to improve its safety practices, following completion we increased the emphasis on safety culture, introducing new protocols while investing in equipment and training to enhance safety outcomes. These actions delivered immediate benefits, improving productivity by reducing days lost to injuries by 80%.

Our M&A pipeline is well populated, active and focused on those states surrounding Missouri that we define as the Midwest. Since completing our entry to the US, we are considered to be a credible acquirer, and our expanded pipeline has been complemented by inbound interest.

During October BMC completed its first transaction under Breedon's ownership, acquiring a building products and masonry manufacturer in Western Illinois. Building Products is highly complementary to our downstream products business and generates revenue of c.US$9.0m per annum.

United States outlook

The economic and political backdrop in the US is supportive. Residential construction is underpinned by regional population growth and urbanisation while infrastructure and industrial end-markets have been significantly under-invested and benefiting from the recent introduction of new federal and state funding programmes. Falling interest rates and major infrastructure projects should continue to support growth in the future.

Cement

£m except where stated	2024	2023	Change %
Revenue	309.2	331.2	(7)%
Underlying EBITDA	88.2	84.5	4%
Underlying EBITDA margin	28.5%	25.5%	300bps
Underlying EBIT	58.5	55.2	6%
Underlying EBIT margin	18.9%	16.7%	220bps

 

The positivity and commitment of our first-class team were exemplary in 2024 and they delivered a strong performance. By adhering to our core strategic priority to Improve and focusing on excellence, they enabled Cement to deliver a significant improvement in Underlying EBITDA margin in the face of considerable market headwinds and challenging weather conditions.

Infrastructure end-market demand remained resilient in 2024. However, the slow-down in house building in GB had a material impact on cement demand, resulting in a reduction in volume for the division as a whole of 5% during the period. Volumes for the division stabilised as the year progressed and production in the second half was comparable to that achieved in the first half.

With the cement market entering a third year of declining volumes, ensuring we provide the highest quality product, and most reliable service, has never been more important. Although the headline price of cement reduced 1%, reflecting the removal of carbon surcharges due to the lower cost of carbon emission allowances, we remained agile and close to our customers, enabling us to progress underlying pricing.

We recorded revenue of £309.2m (2023: £331.2m) during the period, a decrease of 7%. Despite this, through the careful management of our cost base, Underlying EBITDA increased 4% to £88.2m (2023: £84.5m), expanding Underlying EBITDA margin by 300bps to 28.5%.

Both our plants operate at world-class levels of kiln reliability, exceeding 94% uptime due to our diligent monitoring and proactive approach to maintenance. While Hope sustained high levels of performance, Kinnegad once again improved its reliability. Planned kiln maintenance completed on time and within budget in all cases.

Kinnegad, the most modern plant in Ireland, successfully trialled new materials as alternative fuels. The team achieved average fossil fuel replacement of 81%, at times reaching 100% when feed stock availability allowed. Hope continued to increase the mix of alternative fuels enabling Cement to achieve a combined rate of nearly 50% fossil fuel replacement.

During the year, Hope, the largest cement plant in GB, progressed two major capital improvement projects alongside its annual programme of maintenance and capital investments. The primary crusher was replaced, having been in service since 1950. The ARM project, which will enable the import of secondary materials from our Welsh Slate sites, approached its conclusion ahead of commissioning in spring 2025.

At Kinnegad, the new 17MW solar farm neared completion ahead of commissioning in spring 2025. We commenced the construction of a new bagging plant adjacent to the existing site which will begin operation in the first half of 2025 and improve our competitive position in the bagged cement market.

Cement outlook

The fortunes of the cement market are influenced by the outlook for housing. Housebuilding activity in RoI is accelerating and, with a strong commitment from the UK Government to unlock planning, combined with falling interest rates and improving affordability, we expect 2024 should represent a floor in construction materials activity.

 

FINANCE REVIEW

 

Breedon delivered a further year of balanced financial performance during 2024 with robust pricing and a focus on operational excellence more than offsetting the impact of a challenging GB market. 

Revenue for the Group increased by 6% to £1,576.3m (2023: £1,487.5m), supported by our entry into the US and price actions. Like-for-like Revenue for the year decreased 5% (2023: increase of 4%) with 6% of the decrease due to lower volumes, partially offset by a 2% favourable impact from price.

Revenue growth in the year was more weighted to the second half increasing by 3% in the first six months and 9% in the second when compared with the equivalent periods in 2023.  The second half benefited from a full contribution from BMC and a modest improvement in GB trading conditions compared with 2023. 

Underlying EBITDA increased by 11% to £269.9m (2023: £242.3m), helped by good cost control and operational self-help measures across each of the divisions.  The Group's Underlying EBITDA margin for the year increased to 17.1% (2023: 16.3%), assisted by the higher margins generated in BMC and the significantly improved margin in Ireland.  Our Underlying EBITDA margin is now only slightly below our threshold target of 17.5%.

On a statutory basis, Group profit from operations of £149.6m increased by £3.9m from £145.7m in 2023.

Impact of acquisitions

In addition to the acquisition of BMC for an enterprise value of US$300m during 2024, we also completed three smaller bolt-on transactions for an aggregate enterprise value of £28.8m (2023: three transactions; aggregate enterprise value £22.0m).

In the ten month period under our ownership BMC contributed £132.5m to revenue and £24.8m to Underlying EBITDA. The incremental impact of the other bolt on acquisitions completed in 2023 and 2024 was a contribution to revenue of £26.7m and to Underlying EBITDA of £2.7m during the year.

Joint ventures

Our share of profit from our associate and joint ventures was higher at £3.5m (2023: £2.6m), helped by a stronger performance in 2024 from BEAR Scotland.

Interest

Finance costs in the year increased to £25.4m (2023: £13.9m) principally due to interest payable on the additional debt drawn to fund the acquisition of BMC together with the write-off of capitalised fees relating to the Group's previous RCF that was refinanced in the year.

Non-underlying items

There were £24.1m (2023: £10.5m) of non-underlying items which impacted profit from operations during the period. Key components included £10.2m (2023: £0.9m) of acquisition-related expenses, and £12.5m (2023: £6.0m) amortisation of acquired intangibles. Redundancy and reorganisation costs of £1.3m (2023: nil) relate to an operational efficiency programme implemented in response to trading conditions in some of our markets.

Tax

The Group recorded an Underlying tax charge of £32.7m (2023: £29.5m) at an effective rate of 21.7% (2023: 20.4%). The change in the effective rate is due to increases in the statutory UK corporation tax rate combined with the evolving geographic distribution of the Group's trading activities.

The statutory tax charge, calculated relative to statutory profit before tax and inclusive of deferred tax rate changes, was £29.1m (2023: £28.8m), equivalent to an effective tax rate of 23.2% (2023: 21.4%).

From 1 January 2024, the Group falls within scope of the Pillar Two Model Rules ('Pillar Two'). The impact of Pillar Two is limited to the Group's taxable profits generated in the Republic of Ireland, where the tax rate is 12.5%, resulting in a top up charge of £0.6m that has been recorded in the income statement.

Earnings per share

Statutory Basic EPS decreased to 28.1p (2023: 31.1p) primarily due to the significant non-underlying expenses recognised in the period and Adjusted Underlying Basic Earnings per Share increased fractionally to 34.4p (2023: 34.0p).  The acquisition of BMC is estimated to have been accretive to 2024 Adjusted Underlying Basic Earnings per Share by c.2%, around twelve months ahead of schedule.

The Group has no significant dilutive instruments, and diluted EPS measures closely track non-diluted measures for both the current and prior year.

Return on invested capital

Post-tax ROIC was lower in 2024 at 9.0% (2023: 9.9%). ROIC was impacted by the GB trading performance, short-term dilution from the BMC acquisition and the structural impact of increased corporate tax rates. We remain confident in our ability to deliver a ROIC ahead of our target of 10% in the medium term once volumes in our key markets recover.

Statement of financial position

Net assets at 31 December 2024 were £1,170.6m (2023: £1,110.7m). Increases in total assets of £2,114.0m (2023: £1,872.8m) and total liabilities £943.4 (2023: £762.1m) were principally driven by the acquisition of BMC which was predominantly cash and debt funded.

Impairment review

We completed our annual impairment review of cash generating units containing goodwill and retain comfortable levels of headroom relative to the carrying value of our asset base.  As well as our continued consideration of the impacts of climate change on impairment testing; in light of the ongoing challenging market conditions in GB we applied further sensitivities to our GB forecasts.  The Directors remain of the view that there are no reasonably possible changes to assumptions which would result in an impairment charge being recognised.

Input cost and hedging strategy

Our strategy in the UK and RoI is to hedge substantially all energy and carbon requirements for at least one year in advance, with further layered purchases extending into future years, to deliver near-term cost certainty, particularly for our cement plants. Our US business does not include a cement plant and so its energy requirements are materially lower than the UK and Ireland. 

A proportion of our bitumen requirements are hedged in the short-term, typically for larger contracts where pricing is agreed up front. Our remaining bitumen purchases are made at spot as are purchases of other fuels.

Free Cash Flow

Free Cash Flow before major capital investment projects was £114.1m (2023: £94.8m). In 2024 material capital investment projects totalled £23.4m (2023: £nil) and comprised three projects consisting of the ARM and primary crusher projects at Hope and the solar farm at Kinnegad.

Working capital management remained disciplined and meant that our Free Cash Flow conversion rate (Free Cash Flow as a percentage of Underlying EBITDA) improved to 42%, just behind our medium-term target of 45%.

In total, net capital expenditure increased by £22.2m to £125.6m (2023: £103.4m) comprising capital investment of £131.3m (2023: £106.8m), offset by £5.7m of proceeds from specific asset disposals (2023: £3.4m). This represents around 132% of the Group's depreciation charge and demonstrates our commitment to use investment as a differentiator for Breedon through the cycle.

Over the last five years, average Free Cash Flow conversion has been 53%.

Net Debt

Net Debt increased by £235.4m to £405.3m as at 31 December 2024 (2023: £169.9m), with the increase largely driven by the acquisition of BMC which was principally funded through our existing debt facilities and use of surplus cash balances.

Net Debt includes IFRS 16 lease liabilities of £48.7m (2023: £48.0m). Covenant Leverage at the year-end was 1.4x (2023: 0.5x), well within our target range of 1x to 2x and 0.2x lower than reported at the half year.

Refinancing of borrowing facilities

During the year, the Group completed the refinancing of its RCF, increasing the facility size from £350m to £400m and retaining the option of a further £100m accordion. The amended facility secures access to longer-term finance, running for an initial four-year period to at least July 2028, and offers an incremental reduction in ongoing debt service costs.

Fees and expenses capitalised in connection with the refinancing amounted to £2.3m and will be amortised over the amended life of the facility. Capitalised fees of £1.3m relating to the previous facility have been expensed to the income statement as a non-underlying interest cost.

The remaining facilities available to the Group comprise the £250m USPP, issued in 2021, which provides long-term financing at low fixed interest rates with an average fixed coupon of approximately 2%. At 31 December 2024 the USPP comprised £170m sterling and £80m drawn in euro, with a maturity profile between 2028 and 2036. Our borrowing facilities are subject to leverage and interest cover covenants which are tested half-yearly, and we remained fully compliant with all covenants during the year.

The Group maintains a strong liquidity position and at 31 December 2024 had total available liquidity of over £275m comprising undrawn borrowing facilities of over £250m together with cash and cash equivalents of £28.9m.

Subsequent to the year end, the Group issued an additional €95m under its USPP loan note programme. The proceeds from the issuance were used to pay down its existing RCF balances, increasing the level of committed funds available for drawing under the RCF. The notes have maturities of between five and seven years, with a fixed interest rate of approximately 4%.

Dividend

Subject to shareholder approval at the AGM, we intend to pay an increased total dividend in respect of the 2024 financial results of 14.5p (2023: 13.5p). An interim dividend of 4.5p (2023: 4.0p) was paid on 1 November 2024 and, a final dividend of 10.0p per ordinary share will be paid on 16 May 2025 to shareholders who are on the Register of Members at the close of business on 4 April 2025. The ex-dividend date is 3 April 2025. The latest date for registering for the Company's DRIP is 22 April 2025, further details of how to join the DRIP are available on the Company's website.

This delivers a payout ratio of 42% (2023: 40%) of Adjusted Underlying Basic EPS, slightly ahead of our committed target payout ratio. Since starting to pay a dividend in 2021, we have declared nearly £160m of cash dividends to shareholders.

Dividends are recorded in the financial statements of the accounting period in which they are declared. Accordingly, dividend payments to Breedon Group shareholders amounting to £48.1m (2023: £37.3m) have been recognised in the 2024 financial statements.

Tax strategy

Breedon's tax strategy governs our approach to tax compliance, and is underpinned by the following principles:

·      To comply with all relevant tax regulations.

·      To ensure ethical tax practice is maintained and tax planning is undertaken responsibly.

·      To engage proactively and transparently with relevant tax authorities.

·      To manage tax risks effectively and maintain a high standard of tax governance.

Our tax strategy is reviewed periodically by the Audit & Risk Committee on behalf of the Board, and full details can be found on our website at www.breedongroup.com/policies.

During the year we complied with our stated tax strategy and made a significant contribution to the economies in which we operate through payments of taxation.  In 2024 the total taxes borne or collected by the Group amounted to c. £200m (2023: c.£210m).

Capital allocation

Conservative and disciplined financial management and the maintenance of a strong balance sheet are at the core of our thoughtful approach to capital allocation. The Board will always seek to deploy the Group's capital responsibly, focusing on organic investment in our business to ensure that our asset base is well invested.

We will look to pursue further selective acquisitions which will accelerate our strategic development and that we are confident will create long-term value. This conservative approach to financial management enables us to pursue capital growth for our shareholders through active development of our business, while supporting our progressive dividend policy.

Technical guidance 2025 post Lionmark transaction

Depreciation: c.£115m.

Net interest expense: c.£35m.

Group tax rate c.23%.

NIC and minimum/living wage; c.£5m full year impact.

Capital expenditure: £125m to £135m.

Working capital outflow: £20m to £30m.

Cash interest payment: c.£35m

2025 cash cost of dividends: c.£50m. 

 

 

RISK

The Group's principal risks that might adversely impact the Group are:

Strategic	Operational
·      Acquisitions and material capital projects	·      Competition
·      Climate change	·      Failure of a critical asset
·      Land and mineral management	·      Health and safety
·      Markets	·      IT and cyber security
·      People	·      Laws, regulation and governance
Financial	·      Supply chain and input costs
·      Treasury

 

Further details of the principal risks facing the Group for the year ended 31 December 2024 are set out in the Group's Annual Report and Accounts which will be made available on the Group website once published.

The Board consider that these are the risks that could impact the performance of the Group in the current financial year. The Board continues to manage these risks and to mitigate their expected impact.

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare Group and parent Company financial statements for each financial year. Under that law they are required to prepare the Group financial statements in accordance with UK-adopted international accounting standards and applicable law and have elected to prepare the parent Company financial statements in accordance with UK accounting standards and applicable law, including FRS 101 Reduced Disclosure Framework.

Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent Company and of the Group's profit or loss for that period. In preparing each of the Group and parent Company financial statements, the directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgements and estimates that are reasonable, relevant, and reliable and, in respect of the parent Company financial statements only, prudent;

·      for the Group financial statements, state whether they have been prepared in accordance with UK-adopted international accounting standards;

·      for the parent Company financial statements, state whether applicable UK accounting standards have been followed, subject to any material departures disclosed and explained in the parent Company financial statements;

·      assess the Group and parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and

·      use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company or to cease operations or have no realistic alternative but to do so.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are responsible for preparing a Strategic report, Directors' report, Directors' Remuneration report and Corporate Governance statement that complies with that law and those regulations.

In accordance with Disclosure Guidance and Transparency Rule (DTR) 4.1.16R, the financial statements will form part of the annual financial report prepared under DTR 4.1.17R and 4.1.18R. The auditor's report on these financial statements provides no assurance over whether the annual financial report has been prepared in accordance with those requirements.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement of the directors in respect of the annual financial report

We confirm that to the best of our knowledge:

·      the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and

·      the strategic report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position and performance, business model and strategy.

Rob Wood	James Brotherton
Chief Executive Officer	Chief Financial Officer
5 March 2025

 

 

condensed Consolidated Income Statement

for the Year ended 31 December 2024

 

 

	2024			2023
	Underlying	Non-underlying*  (note 4)	Total	Underlying	Non- underlying*    (note 4)	Total
	£m	£m	£m	£m	£m	£m
Revenue	1,576.3	-	1,576.3	1,487.5	-	1,487.5
Operating expenses	(1,406.1)	(24.1)	(1,430.2)	(1,333.9)	(10.5)	(1,344.4)
Group operating profit	170.2	(24.1)	146.1	153.6	(10.5)	143.1
Share of profit of associate and joint ventures	3.5	-	3.5	2.6	-	2.6
Profit from operations	173.7	(24.1)	149.6	156.2	(10.5)	145.7
Financial income	1.2	-	1.2	2.6	-	2.6
Financial expense	(24.1)	(1.3)	(25.4)	(13.9)	-	(13.9)
Profit before taxation	150.8	(25.4)	125.4	144.9	(10.5)	134.4
Tax at effective tax rate	(32.7)	3.6	(29.1)	(30.2)	1.4	(28.8)
Taxation	(32.7)	3.6	(29.1)	(30.2)	1.4	(28.8)
Profit for the year	118.1	(21.8)	96.3	114.7	(9.1)	105.6
Attributable to:
Breedon Group shareholders	118.0	(21.8)	96.2	114.6	(9.1)	105.5
Non-controlling interests	0.1	-	0.1	0.1	-	0.1
Profit for the year	118.1	(21.8)	96.3	114.7	(9.1)	105.6
* Non-underlying items represent acquisition-related expenses, property gains or losses, redundancy and reorganisation costs, amortisation of acquired intangibles, unamortised banking arrangement fee and related tax items. The prior year also included the costs associated with the Group's move from the AIM to Main Market.
Earnings per share
Basic			28.1p			31.1p
Diluted			28.0p			31.0p
Dividends in respect of the year
Dividend per share			14.5p			13.5p

 

  

 

 

condensed Consolidated Statement of Comprehensive Income

for the year ended 31 december 2024

 

	2024	2023
	£m	£m
Profit for the year	96.3	105.6
Other comprehensive (expense)/income   Items which may be reclassified subsequently to profit and loss:
Foreign exchange differences on translation of foreign operations, net of hedging	(6.0)	(4.1)
Effective portion of changes in fair value of cash flow hedges	0.8	(0.7)
Taxation on items taken directly to other comprehensive income	-	0.1
Other comprehensive expense for the year	(5.2)	(4.7)
Total comprehensive income for the year	91.1	100.9
Total comprehensive income for the year is attributable to:
Breedon Group shareholders	91.0	100.8
Non-controlling interests	0.1	0.1
	91.1	100.9

 

 

 

condensed Consolidated Statement of Financial Position

at 31 December 2024

 

	2024	2023
	£m	£m
Non-current assets
Property, plant and equipment	939.1	817.2
Right-of-use assets	46.5	45.1
Intangible assets	686.3	520.2
Investment in associate and joint ventures	15.0	14.5
Trade and other receivables	-	0.9
Total non-current assets	1,686.9	1,397.9
Current assets
Inventories	135.7	120.1
Trade and other receivables	261.0	227.9
Current tax receivable	1.5	-
Cash and cash equivalents	28.9	126.9
Total current assets	427.1	474.9
Total assets	2,114.0	1,872.8
Current liabilities
Interest-bearing loans and borrowings	(8.7)	(8.1)
Trade and other payables	(283.6)	(278.6)
Current tax payable	-	(0.1)
Provisions	(30.0)	(8.8)
Total current liabilities	(322.3)	(295.6)
Non-current liabilities
Interest-bearing loans and borrowings	(425.5)	(288.7)
Provisions	(91.4)	(85.8)
Deferred tax liabilities	(104.2)	(92.0)
Total non-current liabilities	(621.1)	(466.5)
Total liabilities	(943.4)	(762.1)
Net assets	1,170.6	1,110.7
Equity attributable to Breedon Group shareholders
Share capital	3.4	3.4
Share premium	2.0	0.7
Hedging reserve	0.3	(0.5)
Translation reserve	(9.7)	(3.7)
Merger reserve	92.7	80.5
Retained earnings	1,081.5	1,030.0
Total equity attributable to Breedon Group shareholders	1,170.2	1,110.4
Non-controlling interests	0.4	0.3
Total equity	1,170.6	1,110.7