Final Results

Dividend payout significantly increased

Breedon Group plc (Breedon or the Group), a leading vertically-integrated construction materials group in Great Britain and Ireland, announces audited annual results for the year ended 31 December 2023.

FINANCIAL HIGHLIGHTS

Disciplined execution of our sustainable growth strategy delivered high-quality earnings

• Full year results ahead of upgraded expectations9
• Record revenue increased 7%; pricing contributed 9ppt, offset by 2ppt volume reduction reflecting challenging macroeconomic conditions
• Record Underlying EBIT due to disciplined focus on cost recovery and self-help measures

Strengthened financial position underpins strategic flexibility

• Balanced financial position maintained; Covenant Leverage reduced to 0.5x (2022: 0.7x), net capital expenditure of £103m (2022: £102m) supporting further investment for growth
• Working capital outflow as forecast; good control of inventories and strong cash collection
• Post-tax ROIC broadly in-line with target; impacted by increased corporation tax rates

Full-year dividend significantly increased by 29% to 13.5p;

• Payout ratio now at target of 40% (2022: 30%); total cash returned to shareholders in 2023 through dividends increased to £37.3m (2022: £30.5m)
• Increased payout delivers on our commitment to return capital to shareholders, reflects the health of our balance sheet, confidence in our cash generation and ability to deliver our strategy

OPERATING HIGHLIGHTS

Resilient performance in tough markets, delivering excellent service to our customers

• GB revenue increased 6%; solidified our robust market position, delivered excellent customer service, completed two bolt-on transactions and strengthened our airfield surfacing capability
• Ireland revenue increased 4%; market conditions improving during the year, we completed an important bolt-on acquisition, increased our mineral reserves and grew our aggregate and asphalt volumes
• Cement delivered another record year, increasing revenue 10%; robust pricing, diversified end-market exposure, market-leading quality and reliability drove a strong performance

STRATEGIC HIGHLIGHTS

Sustainability gaining momentum

• We kept our colleagues and contractors safer on our sites
• Group-wide net zero targets submitted to Science Based Targets initiative (SBTi) for formal validation
• First CDP rating secured; Climate Change achieved B rating, Water Security received C rating
• Increased sales of lower clinker content cement and industry-leading levels of alternative fuel substitution achieved
• Launch of the landmark Peak Cluster carbon capture and storage project hosted at Hope

Delivering growth through optimisation and expansion

• Tailored operational and commercial efficiency programmes implemented
• Mineral reserves and resources replenished, maintaining valuable asset base at 1bn tonnes
• Completed three earnings enhancing transactions with a combined enterprise value of £22m

Listing on the Main Market of the London Stock Exchange and entry to the FTSE 250 index

• Listing moved to the Main Market and entry to a series of UK FTSE indices

Earnings enhancing acquisition of BMC Enterprises Inc.; launching Breedon's scalable third platform

• Announcing our entry to the US through the acquisition of BMC Enterprises Inc. (BMC) for US$300 million - see separate announcement issued today www.breedongroup.com/investors

CURRENT TRADING AND OUTLOOK

Resilient model, strategically well-positioned

• The near-term macroeconomic and geopolitical landscape remains uncertain
• Infrastructure and housing end-markets are forecast to return to growth in the medium-term
• Our proven strategy offers substantial optionality and multiple routes to growth, underpinned by our healthy balance sheet, diversified funding and thoughtful approach to capital allocation
• Expect BMC to be earnings enhancing in the first full year of ownership
• Post-acquisition Pro Forma Covenant Leverage for the Group of c.1.4x; enabling flexibility for dividends and future bolt-on acquisitions across each of our platforms

Rob Wood, Chief Executive Officer, commented:

"The record results we delivered in 2023 are a real accomplishment and something I am extremely proud of. The challenging trading conditions our team faced required agile and bold responses which they took with discipline and determination. As a result we kept our workforce safe and well, reinforced our market positions and were recognised by our clients for the quality of our products and services. For this I sincerely thank the whole team.

"Breedon has proved itself to be dependable and consistent, regardless of the short-term headwinds. Although the near-term outlook remains uncertain, when I take stock I am reassured. The markets we serve, particularly infrastructure and housing, are supported by long-term structural deficits with spending ambitions that are upheld by cross-party government support in the UK and Ireland, where I am further encouraged by the recent progress in Stormont. The mineral of which we are stewards is hundreds of millions of years old and securing additional reserves requires careful planning and committed local engagement, something we excel at. We occupy strong and growing market positions and operate a valuable portfolio of integrated assets, delivering essential construction materials to customers who trust us to provide an excellent service.

"We made further progress on our strategic growth priorities in 2023, our vertical model is maturing and provides us with a strong platform for our future growth. Today I am delighted to announce the acquisition of BMC. This transaction will give us a platform that is well-placed to grow in the highly-fragmented US construction market, is culturally aligned with Breedon and has a familiar performance track record. We are excited for what this new chapter will bring to the Group and we look forward to welcoming the BMC team to the Breedon family."

Notes:

• Underlying results are stated before acquisition-related expenses, property gains and losses, AIM to Main Market costs, amortisation of acquisition intangibles and related tax items. References to an Underlying profit measure throughout this announcement are defined on this basis.
• Like-for-like reflects reported values adjusted for the impact of acquisitions and disposals.
• Earnings before interest and tax, which equates to profit from operations.
• EPS in the Underlying Highlights is adjusted Underlying Basic EPS, which is Underlying Basic EPS adjusted to exclude the impact of changes in the deferred tax rate of £0.7m (2022: £1.1m).
• Net Debt including IFRS 16 lease liabilities.
• Covenant Leverage is defined as the ratio of Underlying EBITDA to Net Debt, with both Underlying EBITDA and Net Debt amended to reflect the material items which are adjusted by the Group and its lenders in determining leverage for the purpose of assessing covenant compliance. In both the current and prior periods, the only material adjusting item was the impact of IFRS 16.
• FCF conversion: Free Cash Flow relative to Underlying EBITDA.
• ROIC: post-tax return on average invested capital.

RESULTS PRESENTATION

Breedon will host a results presentation for analysts and investors at 08:30am today at the offices of Numis, 45 Gresham Street, London EC2V 7BF, or online via www.breedongroup.com/investors. The presentation will be followed by Q&A, where it will be possible to participate through the following dial-in details: