Breedon Group (BREE) may have changed its name from Breedon Aggregates, but the biggest transformation has come in the wake of the acquisition last year of Hope Construction Materials. Hope contributed just five months of revenue to the reported period, but helped to boost underlying cash profits by 58 per cent to £59.6m.
Towards the end of the year, Breedon also purchased Sherburn Minerals Group, and while the two acquisitions also meant assuming debt of £155m, the leverage ratio of net debt to cash profits was acceptable at 1.9 times. Also, cash generated from operating activities jumped from £62.1m to £80.8m.
One of the keys to running a successful aggregates business is to have a decent geographical spread, because aggregates are heavy and expensive to transport. Hope, as well as taking the group into cement manufacturing, brought with it four rail-fed cement depots, which last year delivered their highest ever bulk delivery volumes to customers. It also gave Breedon more than 150 ready-mixed concrete plants and five quarries. With Sherburn came four quarries and five ready-mixed concrete plants, providing access to new markets and the ability to expand through importing materials via Sherburn's two terminals.
Analysts at Numis are forecasting adjusted pre-tax profits for the year to December 2017 of £66.5m and EPS of 3.7p (from £55.1m and 3.4p in 2016).
| BREEDON (BREE) | ||||
|---|---|---|---|---|
| ORD PRICE: | 79.4p | MARKET VALUE: | £1.12bn | |
| TOUCH: | 78.8-80p | 12-MONTH HIGH: | 80p | LOW: 55p |
| DIVIDEND YIELD: | nil | PE RATIO: | 27 | |
| NET ASSET VALUE: | 33p* | NET DEBT: | 34% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 173 | 5.8 | 0.9 | nil |
| 2013 | 225 | 11.0 | 1.1 | nil |
| 2014 | 270 | 21.4 | 1.7 | nil |
| 2015 | 319 | 31.3 | 2.3 | nil |
| 2016 | 455 | 46.8 | 2.9 | nil |
| % change | +43 | +50 | +25 | - |
*Includes intangible assets of £194m, or 14p a share | ||||
