Interim Results

RNS Number : 5506J
Breedon Aggregates Ld
18 July 2013
 



 

 

 

News release

 

18 July 2013

 

Breedon Aggregates Limited

("Breedon Aggregates" or "the Group")

 

Interim results (unaudited) for six months to 30 June 2013

 

Breedon Aggregates, the UK's largest independent aggregates business, announces its unaudited interim results for the six months ended 30 June 2013.

 

 30 June 2013

30 June 2012

Change

Revenue

£100.2 million

£83.0 million

+  21%

Underlying EBITDA

£13.0 million

£9.7 million

+  34%

Underlying operating profit

£6.6 million

£3.9 million

+  69%

Underlying profit before tax

£5.3 million

£2.2 million


Underlying basic EPS

0.55 pence

0.28 pence


Total non-current assets

£202.8 million

£150.2 million


 

Highlights

·    Underlying EBITDA margin improved to 12.9% (June 2012: 11.7%), reflecting continued downward pressure on costs, stable pricing and early benefit of acquisitions

·    Successful £61 million share placing to fund acquisitions: net debt reduced to £72.2 million (June 2012: £81.8 million)

·    Trading in line with expectations, despite continuing weak market conditions and poor weather in the first quarter

·    Acquisitions of former Aggregate Industries and Marshalls operations completed on 30 April 2013

·    Midlands holding up well and very good medium-term prospects in Scotland

·    Acquisitions opening up new markets in Manchester, north Wales, Cheshire,  Gloucestershire and the Scottish Hebrides; new product range added with concrete blocks in Scotland

·    Group expects further progress in second half, with significant and improving contribution from acquisitions this year and next

 

 

   Underlying results are stated before acquisition-related expenses, redundancy and reorganisation costs, property items, impairments, amortisation of acquisition intangibles, changes in the fair value of financial instruments and related tax items.  References to an underlying profit measure throughout this Announcement are defined on this basis.



 

Looking ahead Peter Tom CBE, Executive Chairman, commented:

 

"The general outlook for construction in the UK looks more positive than it did at this time last year.  The decline in construction output appears to be levelling out and there is no doubt that a sustained recovery in the housing market is already underway.  Fears about the economy sliding back into recession have receded and some confidence appears to be returning to the sector.

 

"We expect product volumes in the second half of the year, on a like-for-like basis, to be slightly ahead of the comparable period last year, with the exception of asphalt which will continue to suffer from reduced local authority spending until recently allocated funding starts to come through. 

 

"The Group has performed well in the first six months of 2013 and we expect to make further progress in the second half."

 

- ends -

The full text of the Group's interim statement is attached, together with detailed financial results.

Enquiries:

Breedon Aggregates Limited

Tel: 01332 694010

Peter Tom, Executive Chairman

Simon Vivian, Group Chief Executive

Ian Peters, Group Finance Director

 

 

Stephen Jacobs, Head of Communications

Tel: 07831 764592



Cenkos Securities plc (Nomad and joint broker)

Max Hartley/ Nicholas Wells

 

Tel: 020 7397 8900

 

Peel Hunt LLP (Joint broker)

Tel: 020 7418 8900

Justin Jones/ Mike Bell

 


 


Breedon Aggregates Limited

Interim results (unaudited) for the six months to 30 June 2013

Group Results

 

Breedon Aggregates Limited, the UK's largest independent aggregates business, today announces its results for the six months to 30 June 2013.

 

Group results include two months' contribution from the recent acquisitions of the former Marshalls quarries in England and the former Aggregate Industries operations in Scotland, which were completed on 30 April 2013.  These businesses are both performing well and have made a positive contribution in the period.  We are confident that both will be excellent acquisitions for Breedon and we expect to deliver significant performance improvements as the operations become fully integrated with our existing business.

 

Group revenue for the half-year was 21 per cent ahead of the same period in the previous year. Excluding the recent acquisitions revenue was 13 per cent ahead.  Underlying Group EBITDA before our share of associated undertakings increased by 34 per cent to £13.0 million (30 June 2012: £9.7 million).  Excluding acquisitions, underlying EBITDA increased by 18 per cent.  Underlying EBITDA margin improved to 12.9 per cent (30 June 2012: 11.7 per cent).  Underlying EBITDA margin, excluding acquisitions, improved to 12.2 per cent.

 

Financial Highlights


 6 months 

30 June

6 months

30 June

 

 


2013

2012



£'m

£'m

variance

Revenue




England

50.8

44.1

+  15%

Scotland

49.4

38.9

+  27%

Total

100.2

83.0

+  21%

Underlying EBITDA




England

7.2

5.5

+  31%

Scotland

7.3

5.7

+  28%

Head Office

(1.5)

(1.5)


Total

13.0

9.7

+  34%

EBITDA Margin

12.9%

11.7%


 

 

Operating Performance

 

Trading during the first half was in line with expectations, despite continuing weak market conditions and poor weather during the first quarter which saw severe snow falls in the month of March.  Activity picked up in the second quarter and recovered the earlier shortfalls. 

 

The performance of the UK construction sector remains lacklustre: output fell by 4.7 per cent in the three months to April 2013, but the rate of decline has slowed significantly since April, providing some hope that the downward trend of the past few years might be coming to an end.

 

The Mineral Products Association reports that, in the first five months of the year, national product volumes were flat in aggregates, down eight per cent in asphalt and up four per cent in concrete compared to 2012.  The moving annual trend continues to be negative for all products.

 

Sales volumes of aggregates and concrete, excluding acquisitions, were above last year while asphalt was flat.  No major contracts were supplied and we continue to target smaller projects with our existing customers where we can expect repeat business at reasonable prices.  Our 'self-help' approach continues to deliver benefits based on improved productivity, careful work selection and robust cost control.

 

On 10 April we announced a placing of £61 million to fund the acquisition of Aggregate Industries' operations in northern Scotland and Marshalls' construction aggregates business in England.  These transactions have added ten active quarries, four asphalt plants, seven ready-mixed concrete plants and two concrete block plants to the Group's operations, together with significant additional mineral reserves.  The Group's total mineral reserves and resources now stand at nearly 400 million tonnes, or enough to last 76 years at current production rates.

 

Having now owned these businesses for nearly three months, we are delighted with the assets we have acquired and the quality of the nearly 200 people who have joined us.  We have recently held a series of roadshows to welcome them to the Breedon group.

 

During our due diligence investigation of these businesses, we identified that both had suffered from a period of significant under-investment over the past few years and we have moved quickly to replace vital equipment and to improve production efficiency, which will help drive an improved performance in the future.

 

The review of the Scottish acquisition by the Office of Fair Trading (OFT), announced on 30 April, is continuing and we have provided the information that they have requested.  We continue to believe that there are no material issues affecting competition in these markets but full integration of the acquired units is on hold until the review is completed.

 

We continue to work hard to further improve the Group's safety performance.  The situation today is very different to three years ago and we have made significant progress in embedding a strong safety culture within the business, although there remains much to do.  In 2012 we reduced Lost Time Incidents (LTIs) by 50 per cent.  In the first six months of 2013 we had only one LTI and we are therefore on target to reduce LTIs by a further 50 per cent this year.

 

Our associate company, BEAR Scotland, was awarded the North West trunk road maintenance contract by Transport Scotland and took over from Scotland TranServ at the beginning of April.  This major success means that Breedon will continue to provide the materials and surfacing required under this contract for up to ten years.

 

1stMix, our 'small load' ready-mixed concrete business established last year, continues to grow and is making a positive contribution to our concrete performance in England.  Having started out with three mixer vehicles, the business now operates ten mixers from eight locations.

 

We continue to invest in the asset base of our business with over £6 million of capital expenditure during the first six months of 2013.  Projects commissioned during the first half included refurbishment of the asphalt plant at Leaton quarry, investment in improved productivity at Cloud Hill quarry, a new mobile crushing train for Scotland and a major plant upgrade at Orrock quarry.

 

Balance sheet and cash flow

 

Net assets at 30 June 2013 were £142.8 million compared to £79.3 million at 31 December 2012 and £75.6 million at 30 June 2012.  During the first half the Company completed a placing of 290,476,190 new shares, raising £61.0 million, before expenses, to fund the acquisitions referred to above.  In addition, 10,002,287 new shares were issued, raising £1.2 million, in settlement of the exercise of certain warrants issued in September 2010 as part of the reverse takeover of Breedon Holdings Limited.

 

Cash generated from operating activities was £2.7 million after an increase in working capital of £8.2 million as a result of the recent acquisitions and the seasonal requirements of the business.  The Group spent £60.5 million on acquisitions and capital expenditure and received £2.0 million from asset disposals.  It also repaid £2.5 million of finance leases.  The net cash outflow for the period was £0.2 million and net debt at 30 June 2013 was £72.2 million compared to £74.1 million at 31 December 2012 and £81.8 million at 30 June 2012.

 



 

Outlook

 

The general outlook for construction in the UK looks more positive than it did at this time last year.  The decline in construction output appears to be levelling out and there is no doubt that a sustained recovery in the housing market is already underway.  Fears about the economy sliding back into recession have receded and some confidence appears to be returning to the sector.

 

There is a growing recognition by Government that capital spending was cut too quickly at the onset of the downturn and that this contributed to the economic difficulties of the past few years.  The recent Spending Review seeks to redress this and the Treasury has published a document entitled Investing in Britain's Future which outlines a pipeline of proposed infrastructure investments worth £100 billion between 2015 and 2020.  As always, it is difficult to identify how much of this funding is new and how much had already been announced, but perhaps the more important point is the new political commitment to infrastructure investment and the recognition that this has an important part to play in any sustained economic recovery.

 

In England, our core markets in the Midlands have held up reasonably well, with continuing investment by several large manufacturers.  Nottingham remains buoyant, thanks primarily to the tram project and further expansion at the university.  The major A453 widening project is well underway and we have secured the aggregates and concrete supplies from our Cloud Hill quarry.  Our recently-acquired quarries open up new markets for us in Manchester, north Wales, Cheshire and Gloucestershire.

 

In Scotland, the medium-term prospects look very good, with the £750 million Aberdeen ring road expected to start early next year and a £3 billion upgrade of the A9 planned over the next 12 years.  We expect modest increases in spending by Transport Scotland on road maintenance as the election approaches and the anticipated approval of the main electricity connector to the Hebrides is expected to trigger a number of renewable energy projects there.

 

We expect product volumes in the second half of the year, on a like-for-like basis, to be slightly ahead of the comparable period last year, with the exception of asphalt which will continue to suffer from reduced local authority spending until recently allocated funding starts to come through. 

 

The Group has performed well in the first six months of 2013 and we expect to make further progress in the second half.  The recent acquisitions will benefit from the focus and direction we will apply and we are confident of a significant and improving contribution from them this year and next.

 

Finally, we would like to thank all of our 1,000 employees for their contribution to the success of the business in the first half of the year, as well as offering a warm welcome to those who have recently joined us.

 

 

 

 

 

Peter Tom CBE                                                                        Simon Vivian

Executive Chairman                                                                   Group Chief Executive

                       


 

Breedon Aggregates Limited

Interim results (unaudited) for the six months to 30 June 2013

 

 

Condensed Consolidated Income Statement

for the six months ended 30 June 2013

 

 


Six months ended 30 June 2013

Six months ended 30 June 2012

Year ended 31 December 2012

 


Underlying

Non-underlying*

 (note 5)

Total

Underlying

Non-underlying*

 (note 5)

Total

Underlying

Non-underlying*

 (note 5)

Total

 


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 











 

Revenue

100,205

-

100,205

82,977

-

82,977

173,457

-

173,457

 

Cost of sales

(73,300)

-

(73,300)

(61,764)

-

(61,764)

(126,426)

-

(126,426)

 

Gross profit

26,905

-

26,905

21,213

-

21,213

47,031

-

47,031

 











 

Distribution expenses

(13,960)

-

(13,960)

(10,881)

-

(10,881)

(24,031)

-

(24,031)

 

Administrative expenses

(6,301)

(976)

(7,277)

(6,412)

570

(5,842)

(14,160)

195

(13,965)

 

Group operating profit

6,644

(976)

5,668

3,920

570

4,490

8,840

195

9,035

 











 

Share of profit of associated undertaking (net of tax)

535

-

535

497

-

497

1,033

-

1,033

 

Profit from operations

7,179

(976)

6,203

4,417

570

4,987

9,873

195

10,068

 











 

Financial income

26

-

26

2

-

2

5

-

5

 

Financial expense

(1,863)

-

(1,863)

(2,255)

-

(2,255)

(4,279)

-

(4,279)

 

Profit before taxation

5,342

(976)

4,366

2,164

570

2,734

5,599

195

5,794

 











 

Taxation

(1,202)

206

(996)

(492)

(140)

(632)

(1,392)

885

(507)

 

Profit for the period

4,140

(770)

3,370

1,672

430

2,102

4,207

1,080

5,287

 

 

 










 

Attributable to:










 

Equity holders of the parent

4,116

(770)

3,346

1,648

430

2,078

4,176

1,080

5,256

 

Non-controlling interests

24

-

24

24

-

24

31

-

31

 

Profit for the period

4,140

(770)

3,370

1,672

430

2,102

4,207

1,080

5,287

 

 

 










 

Basic earnings per ordinary share

0.55p


0.45p

0.28p


0.35p

0.67p


0.85p

 

Diluted earnings per ordinary share

0.48p


0.39p

0.25p


0.31p

0.59p


0.75p

 











* Non-underlying items represent acquisition-related expenses, redundancy and reorganisation costs, property items, impairments, amortisation of acquisition intangibles, changes in the fair value of financial instruments and related tax items. 

 



Breedon Aggregates Limited

Interim results (unaudited) for the six months to 30 June 2013

 

Condensed Consolidated Statement of Comprehensive Income

for the six months ended 30 June 2013

 


Six months ended

30 June

2013

Six months ended

30 June

2012

Year

 ended

31 December

2012


£'000

£'000

£'000





Profit for the period

3,370

2,102

5,287





Other comprehensive income/(expense)




Effective portion of changes in fair value of cash flow hedges

21

(96)

(107)

Taxation on items taken directly to other comprehensive income/(expense)

(4)

24

31

Other comprehensive income/(expense) for the period

17

(72)

(76)





Total comprehensive income for the period

3,387

2,030

5,211









Total comprehensive income for the period is attributable to:




Equity holders of the parent

3,363

2,006

5,180

Non-controlling interests

24

24

31


3,387

2,030

5,211





 

 



Breedon Aggregates Limited

Interim results (unaudited) for the six months to 30 June 2013

 

 

Condensed Consolidated Statement of Financial Position

at 30 June 2013

 


30 June

30 June

31 December


2013

2012

2012


£'000

£'000

£'000





Non-current assets




Property, plant and equipment

187,198

147,027

144,895

Intangible assets

14,216

2,305

2,295

Investment in associated undertaking

1,422

914

887

Total non-current assets

202,836

150,246

148,077

Current assets




Inventories

10,789

9,240

8,048

Trade and other receivables

52,921

38,643

36,451

Cash and cash equivalents 

4,817

712

5,048

Total current assets

68,527

48,595

49,547

Total assets

271,363

198,841

197,624

 

Current liabilities




Interest-bearing loans and borrowings

(4,642)

(6,804)

(4,816)

Trade and other payables

(38,820)

(32,372)

(31,035)

Current tax payable

-

-

-

Provisions

(232)

(166)

(123)

Total current liabilities

(43,694)

(39,342)

(35,974)

Non-current liabilities




Interest-bearing loans and borrowings

(72,351)

(75,717)

(74,290)

Provisions

(9,240)

(6,485)

(6,471)

Deferred tax liabilities

(3,284)

(1,667)

(1,540)

Total non-current liabilities

(84,875)

(83,869)

(82,301)

Total liabilities

(128,569)

(123,211)

(118,275)

Net assets

142,794

75,630

79,349





Equity attributable to equity holders of the parent




Stated capital

137,935

77,109

77,586

Cash flow hedging reserve

(154)

(167)

(171)

Capital reserve

1,516

2,069

1,945

Retained earnings

3,384

(3,513)

(150)

Total equity attributable to equity holders of the parent

142,681

75,498

79,210

Non-controlling interests

113

132

139

Total equity

142,794

75,630

79,349

 



Breedon Aggregates Limited

Interim results (unaudited) for the six months to 30 June 2013

 

 

Condensed Consolidated Statement of Changes in Equity

for the six months ended 30 June 2013

 

 

Six months ended 30 June 2013
 
 






Stated capital

Cash flow hedging reserve

Capital reserve

Retained earnings

Attributable to equity holders of parent

Non-controlling interests

Total equity


£'000

£'000

£'000

 £'000

£'000

£'000

 £'000









Balance at 31 December 2012

77,586

(171)

1,945

(150)

79,210

139

79,349

Shares issued

62,629

-

(429)

-

62,200

-

62,200

Expenses of share issue

(2,280)

-

-

-

(2,280)

-

(2,280)

Dividend to non-controlling interests

-

-

-

-

-

(50)

(50)

Total comprehensive income for the period

-

17

-

3,346

3,363

24

3,387

Credit to equity of share based payments

-

-

-

188

188

-

188









Balance at 30 June 2013 

137,935

(154)

1,516

3,384

142,681

113

142,794

 

 

Six months ended 30 June 2012

 
 
 






Stated capital

Cash flow hedging reserve

Capital reserve

Retained earnings

Attributable to equity holders of parent

Non-controlling interests

Total equity


£'000

£'000

£'000

 £'000

£'000

£'000

 £'000









Balance at 31 December 2011

62,715

(95)

2,069

(5,765)

58,924

108

59,032

Shares issued

15,000

-

-

-

15,000

-

15,000

Expenses of share issue

(606)

-

-

-

(606)

-

(606)

Total comprehensive income for the period

-

(72)

-

2,078

2,006

24

2,030

Credit to equity of share based payments

-

-

-

174

174

-

174









Balance at 30 June 2012 

77,109

(167)

2,069

(3,513)

75,498

132

75,630

 

 

Year ended 31 December 2012

 
 
 






Stated capital

Cash flow hedging reserve

Capital reserve

Retained earnings

Attributable to equity holders of parent

Non-controlling interests

Total equity


£'000

£'000

£'000

 £'000

£'000

£'000

 £'000









Balance at 31 December 2011

62,715

(95)

2,069

(5,765)

58,924

108

59,032

Shares issued

15,477

-

(124)

-

15,353

-

15,353

Expenses of share issue

(606)

-

-

-

(606)

-

(606)

Total comprehensive income for the year

-

(76)

-

5,256

5,180

31

5,211

Credit to equity of share based payments

-

-

-

359

359

-

359









Balance at 31 December 2012 

77,586

(171)

1,945

(150)

79,210

139

79,349

 

 

Breedon Aggregates Limited

Interim results (unaudited) for the six months to 30 June 2013

 

Condensed Consolidated Cash Flow Statement

for the six months ended 30 June 2013


Six months ended

30 June

2013

Six months ended

30 June

2012

Year

ended

31 December

2012


£'000

£'000

£'000

Cash flows from operating activities




Profit for the period

3,370

2,102

5,287

Adjustments for:




  Depreciation, amortisation and impairments

6,342

5,801

11,390

  Financial income

(26)

(2)

(5)

  Financial expense

1,863

2,255

4,279

  Share of profit of associated undertaking (net of tax)

(535)

(497)

(1,033)

  Gain on sale of property, plant and equipment

(1,282)

(719)

(1,084)

  Equity settled share based payment expenses

188

174

359

  Taxation

996

632

507

Operating cash flow before changes in working capital and provisions

10,916

9,746

19,700





Increase in trade and other receivables

(16,449)

(3,494)

(1,421)

Decrease/(increase) in inventories

863

(1,221)

111

Increase/(decrease) in trade and other payables

7,795

(1,597)

(2,982)

Decrease in provisions

(425)

(747)

(910)

Cash generated from operating activities

2,700

2,687

14,498





Interest paid

(1,183)

(1,549)

(2,668)

Interest element of finance lease payments

(514)

(618)

(1,207)

Dividend paid to non-controlling interest

(50)

-

-

Income taxes paid

-

-

-

Net cash from operating activities

953

520

10,623





Cash flows used in investing activities




Acquisition of businesses

(54,124)

(847)

(1,546)

Purchase of property, plant and equipment

(6,362)

(2,959)

(7,323)

Proceeds from sale of property, plant and equipment

2,025

3,206

6,204

Interest received

26

2

5

Dividend from associated undertaking

-

375

938

Net cash used in investing activities

(58,435)

(223)

(1,722)





Cash flows from financing activities




Proceeds from the issue of shares (net)

59,920

14,394

14,747

Proceeds from new loans raised

-

1,900

1,900

Repayment of loans

(139)

(11,450)

(11,789)

Repayment of finance lease obligations     

(2,530)

(3,564)

(6,285)

Purchase of financial instrument - derivative

-

(232)

(232)

Net cash from financing activities

57,251

1,048

(1,659)

 




Net (decrease)/increase in cash and cash equivalents

(231)

1,345

7,242

Cash and cash equivalents at beginning of period

5,048

(2,194)

(2,194)

Cash and cash equivalents at end of period

4,817

(849)

5,048





Cash and cash equivalents

4,817

712

5,048

Bank overdraft

-

(1,561)

-

Cash and cash equivalents at end of period

4,817

(849)

5,048





 



Breedon Aggregates Limited 

Interim results (unaudited) for the six months to 30 June 2013

 

Notes to the Condensed Consolidated Interim Financial Statements

 

1              Basis of preparation

Breedon Aggregates Limited is a company domiciled in Jersey.

These Condensed Consolidated Interim Financial Statements (the "Interim Financial Statements") consolidate the results of the Company and its subsidiary undertakings (collectively the "Group").

These Interim Financial Statements have been prepared in accordance with IAS 34: Interim Financial Reporting, as adopted by the EU. The Interim Financial Statements have been prepared under the historical cost convention except where the measurement of balances at fair value is required.

The Interim Financial Statements have been prepared applying the accounting policies and presentation that were applied in the presentation of the Company's Consolidated Financial Statements for the year ended 31 December 2012 except for the following which became effective and were adopted by the Group:

·      Amendments to  IAS 1 - Presentation of Items of Other Comprehensive Income (effective for periods beginning on or after 1 July 2012)

·      Amendments to IFRS 7 - Offsetting Financial Assets and Financial Liabilities (effective for periods beginning on or after 1 January 2013).

·      IFRS 13 - Fair Value Measurement (effective for periods beginning on or after 1 January 2013)

The adoption of the above standards and amendments has not had a material effect on the result for the period. 

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 2012.

The comparative figures for the financial year ended 31 December 2012 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditor.  The report of the auditor (i) was unqualified and (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report.

 

2              Going concern

The Group meets its day-to-day working capital and other funding requirements through its banking facility, which includes an overdraft facility, and which expires in September 2015.

The Group actively manages its financial risks and operates Board approved polices, including interest rate hedging policies, that are designed to ensure that the Group maintains an adequate level of headroom and effectively mitigates financial risks.

On the basis of current financial projections and facilities available, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and, accordingly, consider that it is appropriate to adopt the going concern basis in preparing these Interim Financial Statements.

 

3              Financial risks, estimates, assumptions and judgements

In preparing these Interim Financial Statements, management have been required to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities and income and expense.  Actual results may differ from estimates.  The significant judgments made by management in applying the Group's accounting policies and the key sources of estimation uncertainty are the same as those that applied to the Consolidated Financial Statements for the year ended 31 December 2012 as set out in note 27 of the Annual Report and Accounts for that year.

Details of the main risks the Group faces are set out on pages 21 to 23 of the Group's Annual Report and Accounts for the year ended 31 December 2012.  The Directors consider that these are the risks that could impact the performance of the Group in the remaining six months of the current financial year.  As in the previous year, these risks are being managed and their anticipated impact mitigated. 



 

Breedon Aggregates Limited 

Interim results (unaudited) for the six months to 30 June 2013

 

Notes to the Interim Financial Statements (continued)

 

4              Segmental analysis

Segmental information is presented in respect of the Group's business segments in line with IFRS 8 - Operating Segments which requires segmental information to be presented on the same basis as it is viewed internally.  The Group's Board of Directors, considered as the Group's "Chief Operating Decision Maker", views the business on a geographical basis.  As such, two operating segments (England and Scotland) have been identified as reportable segments.  There are no other operating segments.  The majority of revenues are earned from the sale of aggregates, related products and services.

 


Six months ended

30 June

2013

Six months ended

30 June

2012

Year ended

31 December

2012

Income statement

Revenue

EBITDA*

Revenue

EBITDA*

Revenue

EBITDA*

 


£'000

£'000

£'000

£'000

£'000

£'000

 








 

England

50,821

7,166

44,043

5,451

91,278

11,562

 

Scotland

49,384

7,317

38,934

5,737

82,179

11,345

 

Central administration

-

(1,510)

-

(1,504)

-

(2,724)

 

Group

100,205

12,973

82,977

9,684

173,457

20,183

 

*EBITDA represents underlying EBITDA before share of profit from associated undertaking.

 








 

Reconciliation to reported profit







 

Group profit as above


12,973


9,684


20,183

 

Depreciation


(6,329)


(5,764)


(11,343)

 

Non-underlying items (note 5)


(976)


570


195

 

Group operating profit


5,668


4,490


9,035

 

Share of profit of associated undertaking


535


497


1,033

 

Net financial expense


(1,837)


(2,253)


(4,274)

 

Profit before taxation


4,366


2,734


5,794

 

Taxation


(996)


(632)


(507)

 

Profit for the period


3,370


2,102


5,287

 

 

 

5             Non-underlying items

As required by IFRS 3 - Business Combinations, acquisition costs have been expensed as incurred.  Additionally, the Group incurred redundancy costs in respect of the reorganisation of parts of the businesses.  Non-underlying items also include property items, impairments, the amortisation of acquisition intangible assets, changes in the fair value of financial instruments and related tax items. 


Six months ended

30 June

2013

Six months

ended

30 June

2012

Year

ended

31 December

2012


£'000

£'000

£'000

Included in administrative expenses:




  Redundancy costs

(184)

(101)

(382)

  Acquisition costs

(1,338)

(35)

(168)

  Gain on property disposals

559

104

153

  Release of provision for environmental and planning

-

639

639

  Amortisation of other intangible assets

(13)

(37)

(47)

Total non-underlying items (pre-tax)

(976)

570

195

Non-underlying taxation

206

(140)

885

Total non-underlying items (after-tax)

(770)

430

1,080

 



Breedon Aggregates Limited

Interim results (unaudited) for the six months to 30 June 2013

 

Notes to the Interim Financial Statements (continued)

 

6             Financial income and expense


Six months ended

30 June

2013

Six months

ended

30 June

2012

Year

ended

31 December

2012


£'000

£'000

£'000





Interest income - bank deposits

7

2

5

Interest income - other

19

-

-

Financial income

26

2

5





Interest expense - bank loans and overdrafts

(1,159)

(1,523)

(2,778)

Amortisation of prepaid bank arrangement fee

(64)

(54)

(128)

Interest expense - finance leases

(514)

(618)

(1,207)

Unwinding of discount on provisions

(126)

(60)

(166)

Financial expense

(1,863)

(2,255)

(4,279)

 

7             Taxation

The Company is resident in Jersey which has a zero per cent tax rate.  The tax charge for the six months ended 30 June 2013 has been based on the estimated effective blended rate applicable for existing operations for the full year.  This is based on a zero per cent tax rate on profits arising in Jersey and an effective rate of 23.25% on profits arising in the Group's UK subsidiary undertakings.

Reductions in the UK corporation tax rate from 26% to 24% (effective from 1 April 2012) and to 23% (effective from 1 April 2013) were substantively enacted on 26 March 2012 and 3 July 2012 respectively.  Further reductions to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) were substantively enacted on 2 July 2013.  This will reduce the Group's future current tax charge accordingly.

 8             Interest-bearing loans and borrowings

This note provides information about the contractual terms of the Group's interest-bearing loans and borrowings.


Six months ended

30 June

2013

Six months

ended

30 June

2012

Year

ended

31 December

2012


£'000

£'000

£'000

Non-current liabilities




Secured bank loans

62,733

63,111

62,822

Finance lease liabilities

9,618

12,606

11,468


72,351

75,717

74,290





Current liabilities




Secured overdrafts

-

1,561

-

Current portion of finance lease liabilities

4,642

5,243

4,816


4,642

6,804

4,816

The bank loans and overdrafts carry a rate of interest of 3% above LIBOR and are secured on the freehold and leasehold properties and other assets of the Company and its subsidiary undertakings and have a final repayment date of 5 September 2015.

Net debt

Net debt comprises the following items:


Six months ended

30 June

2013

Six months

ended

30 June

2012

Year

ended

31 December

2012


£'000

£'000

£'000





  Cash and cash equivalents

4,817

712

5,048

  Current borrowings

(4,642)

(6,804)

(4,816)

  Non-current borrowings

(72,351)

(75,717)

(74,290)


(72,176)

(81,809)

(74,058)

Breedon Aggregates Limited

Interim results (unaudited) for the six months to 30 June 2013

 

Notes to the Interim Financial Statements (continued)

 

9             Earnings per share

The calculation of earnings per share is based on the profit for the period attributable to ordinary shareholders of £3,346,000 (30 June 2012: £2,078,000, 31 December 2012: £5,256,000) and on the weighted average number of ordinary shares in issue during the period of 751,125,117 (30 June 2012: 592,140,986, 31 December 2012: 619,801,185).

The calculation of underlying earnings per share is based on the profit for the period attributable to ordinary shareholders, adjusted to add back the non-underlying items, of £4,116,000 (30 June 2012: £1,648,000, 31 December 2012: £4,176,000) and on the weighted average number of ordinary shares in issue during the period as above.

Diluted earnings per ordinary share is based on 863,538,602 (30 June 2012: 667,980,463, 31 December 2012: 704,182,150) shares and reflects the effect of all dilutive potential ordinary shares.

10           Acquisitions

On 30 April 2013, the Group acquired certain trade and quarrying assets from Marshalls Mono Limited.  This transaction has been accounted for as a business combination.  

The fair value of the consideration paid and the consolidated net assets acquired, together with the goodwill arising in respect of this business combination, are as follows:


Book value

Fair value

 adjustments

Fair value on

 acquisition


£'000

£'000

£'000





Mineral reserves and resources

8,647

151

8,798

Land and buildings

1,500

-

1,500

Plant and equipment

3,099

270

3,369

Inventories

1,534

(659)

875

Provisions - Restoration

-

(2,088)

(2,088)

Deferred tax liabilities

-

(88)

(88)

Total

14,780

(2,414)

12,366

Consideration:




  Cash


17,891


  Deferred (held in escrow)


1,500


Total



19,391

Goodwill



7,025

The provisional fair value adjustments comprise adjustments to mineral reserves and resources and plant and machinery to reflect fair value at the date of acquisition; to inventories to reflect fair value; to provisions to reflect restoration costs to comply with environmental, planning and other legislation; and to deferred tax balances.

During the period, this business contributed revenues of £2,056,000 and underlying EBITDA of £583,000 to the Group's results.

On 30 April 2013, the Group acquired certain Scottish trade and assets from Aggregate Industries UK Limited.  This transaction has been accounted for as a business combination.  

The fair value of the consideration paid and the consolidated net assets acquired, together with the goodwill arising in respect of this business combination, are as follows:


Book value

Fair value

 adjustments

Fair value on

 acquisition


£'000

£'000

£'000





Mineral reserves and resources

15,925

2,135

18,060

Land and buildings

4,810

969

5,779

Plant and equipment

5,300

(299)

5,001

Intangibles

-

305

305

Inventories

3,333

(604)

2,729

Provisions - Restoration

-

(1,089)

(1,089)

Deferred tax liabilities

-

(656)

(656)

Total

29,368

761

30,129

Consideration:




  Cash



34,733

Goodwill



4,604

 



 

Breedon Aggregates Limited

Interim results (unaudited) for the six months to 30 June 2013

 

Notes to the Interim Financial Statements (continued)

 

10           Acquisitions (continued)

The provisional fair value adjustments comprise adjustments to mineral reserves and resources and plant and machinery to reflect fair value at the date of acquisition; to intangibles to reflect the fair value at acquisition; to inventories to reflect fair value; to provisions to reflect restoration costs to comply with environmental, planning and other legislation; and to deferred tax balances.

During the period, this business contributed revenues of £4,835,000 and underlying EBITDA of £987,000 to the Group's results.

Prior year acquisitions

On 16 January 2012, the Group acquired the entire issued share capital of Nottingham Ready Mix Limited and on 16 July 2012, the Group acquired the trade and assets of Speyside Sand & Gravel Quarries Limited (comprising Rothes Glen Quarry).  These transactions have been accounted for as acquisitions.  Details of the fair value of consideration paid and the net assets acquired, together with the goodwill arising in respect of these acquisitions of £694,000, are given in note 26 on page 78 of the Group's Annual Report and Accounts for the year ended 31 December 2012.  There have been no changes in the provisional fair value adjustments in the six months to 30 June 2013.

11           Related party transactions

Related parties are consistent with those disclosed in the Group's Annual Report and Accounts for the year ended 31 December 2012.  All related party transactions are on an arm's length basis.

There have been no related party transactions in the first six months of the current financial year which have materially affected the financial position or performance of the Group.

12           Stated capital


Ordinary Shares


Six months ended

30 June

2013

Six months

ended

30 June

2012

Year

ended

31 December

2012


Number

Number

Number





Issued ordinary shares at the beginning of the period

647,270,914

561,005,454

561,005,454

Issued in connection with:




  Placing

290,476,190

83,333,335

83,333,335

  Exercise of savings related share options

-

-

40,699

  Exercise of warrants

10,002,287

-

2,891,426


947,749,391

644,338,789

647,270,914

On 7 January 2013, the Company issued 3,000,000 ordinary shares of no par value at 12 pence per share, raising £360,000, and on 23 May 2013, the Company issued 7,002,287 ordinary shares of no par value at 12 pence per share, raising £840,000.  Both of these issues were in settlement of the exercise of certain warrants issued in September 2010 as part of the reverse takeover of Breedon Holdings Limited

On 29 April 2013, the Company issued 290,476,190 ordinary shares of no par value at 21 pence per share wholly for cash, raising a total of £61,000,000 before expenses. 

 

 

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. 

 

 


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