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News release

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11 March 2020

Breedon Group plc

('Breedon' or 'the Group')

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Annual Results 2019

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Breedon, a leading vertically-integrated construction materials group in Great Britain and Ireland, announces its audited annual results for the year ended 31 December 2019.

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�	2019	2018	Change
Revenue	�929.6 million	�862.7 million	+8%
Underlying EBIT�	�116.6 million	�103.5 million	+13%
Profit before tax	�94.6 million	�79.9 million	+18%
Underlying basic EPS�	����� 5.08 pence	����� 4.70 pence	+8%
Net debt	�290.3 million	�310.7 million	�

^��� Underlying results are stated before acquisition-related expenses, redundancy and reorganisation costs, property items, amortisation of acquisition intangibles and related tax items.� References to an underlying profit measure throughout this announcement are defined on this basis.

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20.2 million tonnes of aggregates sold (2018: 19.4 million tonnes)

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3.0 million tonnes of asphalt sold (2018: 2.8 million tonnes)

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3.0 million cubic metres of ready-mixed concrete sold (2018: 3.2 million cubic metres)

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2.0 million tonnes of cement sold (2018: 2.0 million tonnes)

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Highlights

���� Excellent performance in challenging conditions

���� Improved results from all three Divisions

���� Strong cash flow reduced post IFRS 16 closing Leverage to 1.6x

���� Integration of Lagan largely completed

���� Acquisition of Roadway strengthened our position in North Wales

���� Capital Concrete joint venture secured critical mass in the London readymix market

���� Agreed acquisition of portfolio of assets from CEMEX in the UK

���� Committed to the GCCA's Sustainability Charter

���� Intention to declare a maiden dividend with our 2021 interims

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Pat Ward, Group Chief Executive, commented:

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"We closed 2019 with a strong result, in line with the market's expectations, reflecting an excellent performance from our businesses in some challenging market conditions.�

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"Breedon is in excellent shape. We have a well-established business extending throughout GB and Ireland, having delivered great results irrespective of market conditions. We have an outstanding team of colleagues and, following the acquisition of the CEMEX asset portfolio, we will have the backing of more than a billion tonnes of valuable mineral reserves and resources, together with two well-invested cement plants.

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"After 10 years of successful and profitable growth, we have a clear strategy for the coming years, built on a clear market philosophy, strong governance, a healthy culture and a firm commitment to playing our part in alleviating the impact of climate change and delivering a sustainable future.

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"With the UK Government committed to significantly increased investment in infrastructure, we are well placed to benefit from the increased demand for our products that this will create.

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"I am confident that we will make further progress in 2020 and beyond."

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- ends -

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A summary of the Group's annual results is attached, including a glossary of terms.

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Breedon will host a meeting for invited analysts at 9.00am today and there will be a simultaneous webcast of the meeting.� Please use this link to join the webcast:

https://brrmedia.news/lsjwl

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The webcast will also be available to view on our website later today at�www.breedongroup.com/investors.

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Enquiries:

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Breedon Group plc	������������������ 01332 694010
Pat Ward, Group Chief Executive Rob Wood, Group Finance Director	�
Stephen Jacobs, Head of Communications	������������������ 07831 764592
� Cenkos Securities plc (Nomad & joint broker)	������������������ 020 7397 8900
Max Hartley	�
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Numis Securities (Joint broker)	������������������ 020 7260 1000
Heraclis Economides, Ben Stoop����������������������������������������������������������������������������������������	�
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Teneo (Public Relations Adviser to Breedon)	������ 020 7420 3180
Matt Denham Rachel Miller	�

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Note to Editors

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Breedon Group plc is a leading vertically-integrated construction materials group in Great Britain and Ireland.� It operates two cement plants and an extensive network of quarries, asphalt plants and ready-mixed concrete plants, together with slate production, concrete and clay products manufacturing, contract surfacing and highway maintenance operations.� The Group employs nearly 3,000 people and has nearly 900 million tonnes of mineral reserves and resources.� Its strategy is to continue growing organically and through the acquisition of businesses in the heavyside construction materials market.

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Breedon Group plc

Annual results for the year ended 31 December 2019

Statement from the Chair

This is my inaugural report to shareholders as Chairman of Breedon and I would like to start by acknowledging the strong legacy left by my predecessor, Peter Tom, and thanking him for his distinguished service over the past 10 years. That said, Pat Ward and his excellent team have made my transition both smooth and enjoyable.

2019 was one of the most challenging years we have faced so far. As a result of the uncertainties surrounding the UK's withdrawal from the EU, we spent much of the year swimming against the tide. UK business investment is estimated to have fallen by 1.4 per cent, construction markets were broadly flat and competition was tough. This difficult backdrop, however, only served to intensify our team's efforts to improve our business. To deliver a 13 per cent increase in Underlying EBIT on eight per cent higher revenues under these conditions is testament to the skill and resourcefulness of management and the dedication and commitment of our 3,000 colleagues.

Able managers of high character running businesses about which they are passionate are good ingredients for success. We are fortunate to have these qualities in abundance throughout Breedon.

Acquisitions

In October, we were pleased to complete the acquisition of Roadway and in December we formed a strategically important joint venture in London with Brett, trading as Capital Concrete. We followed this up immediately after the year-end with an agreement to acquire a portfolio of high-quality assets from CEMEX in the UK, which will substantially strengthen our GB network and our platform for further growth. Our pipeline remains robust and we remain keen to transact with companies that add to Breedon's strategic goals and share our values.

Shareholder value

Good performance, of course, is of limited value unless investors enjoy the benefits and there is no doubt that the performance of our share price during the year was largely disappointing, driven partly by a weak macroeconomic environment and partly by a significant churn in our shareholder register unrelated to the performance of the business. Throughout this period, we have remained focused on preserving and enhancing Breedon's intrinsic value, so that as conditions improve, so does our company's value.

It was pleasing to note the rise in the share price towards the end of the year, signifying that the hard work of the past few years was being recognised. This gave a much-needed boost to our colleagues and provided a deserved reward for our investors. Unforeseen global events outside our control may have an adverse effect on the economy, but we will remain steadfast in our efforts to operate our businesses as efficiently and profitably as possible.

From the first day that your company was admitted to trading on AIM in 2008, we have been fortunate to have had supportive shareholders who joined us because they wished to make a long-term investment in a business that would do well and do good. We have benefited enormously from your support.

Sustainability

We understand that as one of the leading businesses in the UK and Ireland, operating in an environmentally sensitive industry, Breedon's obligations go well beyond delivering a strong financial performance. Our responsibility is to all our stakeholders and this is reflected in our newly-defined purpose: to make a material difference to the lives of our customers, our colleagues and our communities. Making this purpose a reality is vital to maintaining our licence to operate, to the successful execution of our strategy and to ensuring that we are the best corporate citizen we can be.

Climate change and sustainability are defining factors in determining a company's long-term prospects. We understand the role we play and recognise that we must place these issues at the heart of our business and strengthen our commitment to transparency, so that our shareholders have a clear picture of how we manage these important issues. A company cannot achieve long-term success without having a strong sense of purpose and a determined consideration of a broad range of stakeholders. Ultimately, purpose is the engine of long-term profitability. It is the duty of the Board to implement frameworks for managing sustainability issues and to produce effective disclosures associated with them.

We have accordingly adopted the GCCA's Sustainability Charter, obligating us to set and achieve demanding targets on health and safety; climate change and energy; social responsibility; environment and nature; and the circular economy. The Board will be uncompromising in its requirement for continuous improvement in all these areas in the years ahead.

Purpose and values

It is of course the case that genuinely improving the lives of our stakeholders can only happen if we have a culture rooted in strong ethical values and behaviours. In 2019 we embarked on a wide-ranging internal consultation, including a Group-wide engagement survey, in an effort to define and articulate our culture more clearly. The values we identified will be embedded in the business and provide the benchmark against which we will measure our success in engaging with and changing the lives of our stakeholders, both inside and outside the company, in the coming years.

Governance

You should rightly expect strong governance to be at the heart of our culture. In this regard, you will have seen that during 2019 the Board was further strengthened with the appointments of experienced non-executive directors Clive Watson and Moni Mannings, who this year assume respectively the chairs of our Audit Committee and Remuneration Committee.

I am also delighted to announce that in spring 2020 we will welcome Carol Hui to the Board as an independent non-executive director. Carol is Chief of Staff and General Counsel at Heathrow Airport Holdings Limited and has previously served in senior positions in oil and gas, logistics and infrastructure companies. She was also a corporate finance lawyer at Slaughter and May. She is currently Chairwoman of Robert Walters Plc and a non-executive director of the British Tourist Authority.

On behalf of the Board, I would like to record my appreciation to David Williams, who retired from the Board at the end of last year, and to Susie Farnon and Peter Cornell, who will retire prior to the 2020 AGM. David and Susie have served on the Board for a decade or more and I thank them for their dedicated and loyal service.

Dividend

One of the most common questions I have been asked since becoming Chairman is when Breedon will begin paying a dividend. I am delighted to be able to confirm that we intend to adopt a progressive distribution policy from next year, commencing with a maiden dividend to be declared with our 2021 interim results.

Strategy

As we look back on our successes over the last 10 years, it is appropriate that we should have taken stock of our strategy to ensure that we are match-fit for the coming years. Our strategy is detailed later in the results.

Over the long term we aspire to be a leading vertically-integrated international construction materials group delivering superior value for all our stakeholders.

We will achieve this by maintaining a clear purpose and culture, with robust governance, a commitment to sustainability and social responsibility, operating in long-term growth markets, with conservative financial management and a growing and well-utilised asset base.

The future

Looking ahead, I remain enthusiastic about the future. Breedon has an exceptional team of people who have consistently delivered exceptional results.

I am confident that we are well equipped to tackle any challenge with which we are presented and ready to take full advantage of the many opportunities which lie ahead.

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Amit Bhatia

Non-executive Chairman

11 March 2020

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Breedon Group plc

Annual results for the year ended 31 December 2019

Group Chief Executive's review

We closed 2019 with a strong result, in line with the market's expectations, reflecting an excellent performance from our businesses in some challenging market conditions. On behalf of the Board and Executive Committee, I would like to begin my review with a sincere thank you to all our colleagues for their tireless efforts.

Market background

The UK construction industry endured one of its toughest periods for many years, with output in GB remaining stubbornly flat amid declines in activity in the public non-housing, industrial, commercial and repair, maintenance and improvement sectors.

Growth was once again largely accounted for by infrastructure and housing, which worked to our advantage given that these represent the majority of our end-use markets, although as always there were significant regional variations.

In RoI, the picture was very different. Total output is estimated to have risen by around eight per cent, supported by exceptional growth in new residential construction activity.

Trading performance

Revenues rose by eight per cent to �929.6 million, generating a 13 per cent increase in Underlying EBIT to �116.6 million, equivalent to an Underlying EBIT margin of 12.5 per cent. Profit before tax rose 18 per cent to �94.6 million. Strong cash generation remains one of Breedon's distinctive characteristics and once again we delivered an excellent result. Starting this year, we will be disclosing our Free Cash Flow (FCF) annually as a KPI, together with our Return on Invested Capital (ROIC), which we believe investors regard as important additional measures of our performance.

All three of our Divisions (Great Britain, Ireland and Cement) produced improved results, albeit with inevitable regional variations depending on their respective market conditions, achieved against the backdrop of improved selling prices and assisted by a generally more benign input cost environment.�

Thanks to our strong cash flow, post IFRS 16 net debt at the end of the year stood at �290.3 million, equivalent to 1.6 times Underlying EBITDA.

Organic development

We have consistently deployed capital expenditure at least to the level of depreciation, believing that well-invested plant and equipment is vital to the efficient long-term performance of our quarries, plants and contracting services operations. 2019 was no exception, with around �60 million directed to operational enhancements, increased capacity, geographical expansion and further development of our mineral reserves and resources.

Among the landmark projects undertaken during the year was a major replant at our North Cave quarry in Yorkshire, together with new wash plants in our sand and gravel quarry at Low Plains in Cumbria and in our temporary pit at Loak Farm in Perthshire. The latter will equip us to service upcoming demand from the second phase of the A9 Dualling scheme, for which we won a major supply and lay surfacing contract during the year. We also completed the replacement of the raw mill drive and kiln shell at our Hope cement works.

Once again we worked hard to create and release new sources of minerals, including the development of a new sand and gravel quarry at Willington near Bedford and substantial additional aggregates reserves released at Norton Bottoms quarry in Lincolnshire. In RoI we opened a sixth quarry, at Castlepollard in County Westmeath. We will continue selectively to reopen our remaining mothballed quarries in RoI as market demand dictates.

Acquisitions

The acquisition of Roadway for �13.5 million in October represented an important step in establishing Breedon as a fully integrated business in North Wales. It enables us for the first time to offer a comprehensive asphalt supply and lay service throughout North Wales, Shropshire, Cheshire and Merseyside and provides an additional route to market for aggregates from our quarries in the region.

In December we realised our longstanding strategic ambition to secure critical mass in the London ready-mixed concrete market through the creation of a joint venture with Brett. The company, which trades across Greater London as Capital Concrete, is jointly owned by Breedon and Brett, together with the company's senior management, and provides both partners with a strong platform from which to develop our offerings to the largest construction materials market in the UK.

Shortly after the year-end, in January 2020, we agreed to acquire a substantial portfolio of high-quality assets from CEMEX in the UK. This �178 million acquisition is due to complete in the second quarter of this year and will significantly extend the Group's national network via a single transaction, strengthening our footprint in six key regions of GB, bringing us around 650 new high-quality, well trained colleagues, and adding nearly 170 million tonnes of mineral reserves and resources.

The purchase is fully consistent with our strategy of acquiring earnings-enhancing aggregates-led businesses with strong potential for performance improvements and synergy benefits. It is also one of a number of significant transactions we have concluded with our major peers over the last few years, confirming our ability to benefit from non-core divestments by our larger competitors.

The TUPE consultation process is well underway, IT migration planning is on track and we are engaged in constructive discussions with the Competition and Markets Authority in relation to its review of the transaction.

Safety

I am pleased to report that we made very encouraging progress in reducing the frequency of lost-time injuries last year. As a result, we saw our key historical safety metric, our Employee LTIFR, fall to 1.05, only marginally above our target for the year.

This year we are also reporting our Total Injury Frequency Rate (TIFR), which takes account of all injuries, however minor. This fell to 17.17 from 20.54 in 2018.

Although these are encouraging outcomes and compare favourably with our industry peers, we are not complacent - there are still too many minor injuries occurring in our business and we will not be satisfied until we are sending all our colleagues home in the same condition they arrived at work.

In 2019 we appointed our first Group Head of Health, Safety & Environment, who brings with him a wealth of experience from within our industry and has assumed overall responsibility for the health and safety of our 3,000 colleagues, as well as overseeing our environmental activities. We look forward to him taking our safety engagement to new levels.

Colleague engagement

As the Chairman reports in his statement, last year we undertook our first Group-wide engagement survey, as part of an extensive consultation on the Group's purpose and values. We have always believed that the quality and dedication of our people are among the primary reasons for Breedon's competitive advantage, but we believed it was important for us to delve more deeply into our colleagues' perceptions of the company they work for, acknowledging what we do well and not so well, in order to articulate our values more clearly and embed them in the business.

At the end of January 2020 we launched our new purpose and values to our top 100 managers, who enthusiastically embraced them and began to roll them out to their respective teams in the weeks that followed.

Outlook

Breedon is in excellent shape. We have a well-established business extending throughout GB and Ireland, having delivered great results irrespective of market conditions. We have an outstanding team of colleagues and, following the acquisition of the CEMEX asset portfolio, we will have the backing of more than a billion tonnes of valuable mineral reserves and resources, together with two well-invested cement plants.

After 10 years of successful and profitable growth, we have a clear strategy for the coming years, built on a clear market philosophy, strong governance, a healthy culture and a firm commitment to playing our part in alleviating the impact of climate change and delivering a sustainable future.

With the UK Government committed to significantly increased investment in infrastructure, we are well placed to benefit from the increased demand for our products that this will create.

The Group is monitoring the potential impact of the COVID-19 virus and has contingency plans in place which will be refined as the Government releases more information.

I am confident that we will make further progress in 2020 and beyond.

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Pat Ward

Group Chief Executive

11 March 2020

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Breedon Group plc

Annual results for the year ended 31 December 2019

Our strategy

There are six pillars to our strategy, which together constitute the essential elements of Breedon's investment case. From this year we will report on our progress against these pillars.

1. A clear purpose and the right culture

Our purpose is simple: to make a material difference to the lives of our colleagues, our customers and our communities, recognising that our products are essential to our economic livelihood and to the development of healthy living and working spaces for everyone.

We acknowledge that no company can achieve its purpose without the right culture, rooted in strong ethical values and behaviours, and a safe working environment. Over the past year we have engaged in a wide-ranging consultation with our colleagues in an effort to define and give clear expression to that culture. It can be summarised in the four values which will guide us in everything we do over the coming years:

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�� Keep it simple

�� Make it happen

�� Strive to improve

�� Show we care

Our priority is to ensure that these values become deeply embedded in our business, that they are reflected in the working environment we provide for our colleagues and that they drive the right leadership behaviours in our management team.

2. Robust governance

We are already compliant with the QCA Corporate Governance Code, having a strategy and business model which promotes long-term shareholder value and meets our shareholders' needs and expectations, supported by effective risk management and broad stakeholder engagement activity.

We have been steadily developing our Board to ensure that it is well balanced, with the right mix of skills and experience, evaluated against clear and relevant objectives, with governance structures that are fit for purpose and support sound decision-making.

We have always sought to adhere to the highest standards of corporate best practice, which in due course will naturally support a likely transition from AIM to a full listing on the London Stock Exchange, at which point we will be governed by the FRC's UK Corporate Governance Code, with which we are already substantially compliant.�

3. Commitment to sustainability and social responsibility

As an extractive industry we have an obligation to ensure that our impact on the environment and society are minimised. Being a good corporate citizen is essential to protecting our licence to operate and is central to our purpose: to make a material difference to the communities we serve.

From 2019 we have fully embraced our wider stakeholder and social responsibilities by targeting full compliance with the five pillars of the GCCA's Sustainability Charter:

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�� Health and safety

�� Climate change and energy

�� Social responsibility

�� Environment and nature

�� Circular economy

4. Long-term growth markets

We will continue to focus on construction materials markets that deliver profitable growth across the cycle. We see numerous opportunities to expand both our geographical footprint and our product portfolio through organic investment and acquisitions.

As we look over time to international markets beyond GB and Ireland, we will focus only on those countries which are characterised by robust legal systems, reliable planning regimes and benign local cultures with minimal political risk.

5. Conservative financial management

Breedon has always sought to balance growth and profitability. We prioritise the maintenance of a strong balance sheet with a responsible approach to Leverage and deploy our capital responsibly, allowing us to commit significant organic investment to our business whilst continuing to pursue acquisitions to accelerate our strategic development.

This conservative approach to financial management will enable us to continue pursuing capital growth for our shareholders, whilst supporting our future dividend policy.

6. A growing, well-utilised asset base

The resources we use to produce our products are scarce and valuable, so it is vital that we maintain a high level of mineral reserves and maximise the value of every tonne of material we quarry or manufacture. We achieve this through a disciplined approach to quarry acquisition and development, coupled with a deep-rooted culture of self-help that ensures our operations remain efficient and competitive irrespective of market conditions.

At the end of 2019 we had nearly 900 million tonnes of mineral reserves and resources, enough to last 38 years at current rates of extraction, coupled with two cement plants with high replacement values.

Looking to the future, we aim to increase our asset base in all the markets in which we operate and ensure that we continue extracting value as efficiently as possible and with due regard to our responsibilities as stewards of the land on which we operate.

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Breedon Group plc

Annual results for the year ended 31 December 2019

Managing our risks and opportunities

By identifying and managing our existing and emerging risks effectively we can focus on our long-term business opportunities.

Our strategy informs the setting of the Group's priorities. Opportunities, and the risk accepted in pursuit of these, are guided by the risk appetite set by the Board and governed by the Group's risk management framework.

The Group's principal risks and uncertainties do not comprise all the risks associated with the Group.

Additional risks not presently known or currently deemed to be less material may also have an adverse effect on the Group's business in the future.

Risk is an inherent and accepted element of doing business and effective risk management is fundamental to how we run our business. The Group's approach to risk management is to identify material, existing and emerging risks and then to develop actions or processes to accept, transfer or mitigate those risks to an acceptable level.

This year we have chosen to present 'Environment and climate change' separately from 'Health and Safety' as a principal and emerging risk, recognising the increase in its profile, both externally, and within the Group.

The Group's principal risks, in alphabetical order, are:

1.�� Acquisitions

2.�� Competition and margins

3.�� Environment and climate change

4.�� Financing, liquidity and currency

5.�� Health and safety

6.�� IT and cyber security

7.�� Legal and regulatory

8.�� Market conditions

9.�� People

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Brexit

The Group continues to manage the potential impacts that Brexit could have on its business and on our risk assessment. Brexit has not been presented as an additional principal risk, but adds an additional level of uncertainty that increases the overall risk profile of the Group.

With the exception of cement and the importation of bitumen, our businesses are all essentially local and our products do not generally cross national borders. In addition, the supply chain is generally local.

In the case of cement and bitumen, however, we do import into the UK from the EU.

The major risk to this importation would be if the UK left the EU without a deal following the end of the transition period in 2020. In such a scenario WTO rules would prevail and the Group could be exposed to:

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���� supply chain delays;

���� the requirement for additional working capital; and

���� tariffs.

In addition, the Group could also be indirectly impacted by reduced confidence, delays in our wider supply chains and labour shortages.

We have contingency plans in place to mitigate the cement and bitumen risks. Contingency planning in respect of the indirect risks is more challenging and to a large extent we are unable to mitigate against them.

The Group will continue to monitor its Brexit risk position and respond as clarity emerges.

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COVID-19

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The Group's operations are based in GB and Ireland, which have both reported cases of COVID-19.� The UK Government's current response to these cases is to minimise the spread of the virus, and at the time of writing it is too soon to quantify the extent of the risk posed.� The business has contingency plans in place, which focus primarily on the health and wellbeing of our employees, whilst seeking to minimise the disruption to the business.

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Breedon Group plc

Annual results for the year ended 31 December 2019

Group Finance Director's review

During the year we delivered strong earnings growth, underpinned by both organic growth and contributions from our recent acquisitions, the most significant being the April 2018 acquisition of Lagan.

Group aggregates volumes for the year were up four per cent at 20.2 million tonnes, asphalt volumes were up six per cent at 3.0 million tonnes, ready-mixed concrete volumes were down seven per cent at 3.0 million cubic metres and cement volumes were up three per cent at 2.0 million tonnes.

Excluding the impact of acquisitions and disposals, like-for-like aggregates volumes were down three per cent, asphalt volumes down four per cent, ready-mixed concrete volumes down four per cent and cement volumes down three per cent.

These like-for-like volumes were delivered in difficult trading conditions. The political uncertainty created by Brexit overshadowed all our markets in GB during 2019, although as always there were marked regional variations dependent upon localised projects and road schemes. In Ireland, in addition to Brexit, market conditions in NI were compounded by the absence of the Northern Ireland Executive, whilst activity in RoI was more positive. In Cement, the Irish market remained challenging throughout 2019, with all regions relatively muted apart from Dublin which continued to grow strongly, whilst in GB market conditions were broadly stable.

Revenue for the year at �929.6 million was eight per cent ahead of 2018 (�862.7 million). On a like-for-like basis, revenue was up one per cent on 2018. Underlying EBIT was �116.6 million, 13 per cent ahead of 2018 (�103.5 million). On a like-for-like basis, Underlying EBIT improved by 10 per cent.

It is worth noting that, as reported in our November 2019 trading update, the integration of Lagan is now largely complete and our current annual cost synergies run-rate has hit the targeted �5 million.

The Group's Underlying EBIT margin improved by 0.5 percentage points to 12.5 per cent. We continue to target 15 per cent in the medium term, but do not believe that the pursuit of this target in isolation is in the best interests of our shareholders; we have therefore introduced two additional financial measures to our KPIs: FCF and ROIC. We believe that these two additional measures will ensure better shareholder alignment.

Non-underlying items

Non-underlying items in the year amounted to a net pre-tax cost of �8.0 million (2018: �11.8 million), the major items being acquisition costs, redundancy and reorganisation costs and amortisation of acquired intangible assets.

Interest

Net finance costs in the year totalled �14.0 million (2018: �11.8 million) and included interest on the Group's bank facilities, amortisation of bank arrangement fees, interest on lease liabilities and the unwinding of discounting on provisions. The higher costs in 2019 reflected the interest element of lease liabilities following the adoption of IFRS 16 in 2019.

Profit before tax

Profit before tax was �94.6 million, 18 per cent ahead of 2018 (�79.9 million). Underlying profit before tax was �102.6 million, 12 per cent ahead of 2018 (�91.7 million).

As guided previously, the adoption of IFRS 16 - Leases in 2019 under the 'modified retrospective' approach did not have a material impact on the Income Statement at the Underlying profit before tax level; an increase in Underlying EBITDA was offset by increased depreciation and interest costs. However, �47.0 million of additional debt has been recognised on adoption as at 1 January 2019. This does not impact our ability to comply with the covenants associated with our banking facility, as these are tested by reference to accounting policies that were in place at the time the facility was entered into.

Tax

The tax charge was �16.6 million (2018: �15.3 million).

An Underlying tax charge of �17.3 million (2018: �15.9 million) was recorded in the year, resulting in an Underlying effective tax rate for the full year of 16.9 per cent (2018: 17.3 per cent), reflecting increased profits in RoI which are taxed at a lower rate than in the UK.

The Group's tax strategy is to comply with all relevant regulations, whilst managing the total tax burden and seeking to maintain a stable effective tax rate. The Group seeks to achieve this through operating an uncomplicated Group structure.

The Group endeavours to structure its affairs in a tax-efficient manner where there is commercial benefit in doing so, with the aim of supporting investment in the business and its capital expenditure programmes. It seeks to ensure that all tax affairs are administered in a lawful and responsible manner and that its actions do not adversely impact its reputation as a responsible taxpayer. The parameters which govern the Group's approach are set by the Board, which regularly reviews the Group's tax strategy.

The Board and Audit Committee are kept regularly informed of all material developments relating to the Group's tax position. The Group Tax Manager oversees tax compliance activities on a day-to-day basis and reports to senior management.

There is an integrated approach to governance across the business through management control, policies, procedures and training. Risks inherent in the calculation, collection and payment of tax are mitigated by documented policies and procedures.

On an annual basis, the Group carries out a review for the purpose of complying with the UK Senior Accounting Officer legislation.

The Group takes appropriate tax advice and support from reputable professional firms in relation to any tax planning considerations. It is open and transparent in its dealings with HMRC in the UK and the Revenue in RoI and deals with any queries in a timely and open manner and on a full-disclosure basis. In areas of complexity, it is proactive in engaging with HMRC and the Revenue.

The Group has a Prevention of Facilitation of Tax Evasion policy, which confirms both its zero tolerance approach to acts of criminal facilitation of tax evasion and its commitment to act fairly, professionally and with integrity in all its business dealings.

The Group's tax liabilities arise in the UK and RoI subsidiary companies. In terms of the corporation tax position, all years up to 2016 are agreed in respect of companies acquired prior to 2018.

The Group makes a significant contribution to the economies in which it operates through taxation, either borne by the Group or collected on behalf of, and paid to, HMRC or the Revenue. In 2019 the total taxes borne and collected by the Group amounted to nearly �175 million (2018: over �150 million).

Earnings per share

Basic EPS for the year was 4.64 pence (2018: 4.01 pence), reported after the non-Underlying items mentioned above. Underlying basic EPS for the year totalled 5.08 pence (2018: 4.70 pence).

Statement of financial position

Net assets at 31 December 2019 were �839.1 million (2018: �773.3 million). The net assets continue to be underpinned by the mineral reserves and resources of the Group, which at the end of December 2019 totalled nearly 900 million tonnes, and by our two well-invested cement plants.

Return on invested capital

Using average invested capital, year-end ROIC was 8.8 per cent (2018: 9.9 per cent). The decline in 2019 reflects the impact of the Lagan acquisition in April 2018 on capital invested. However, at 8.8 per cent it more than covers our cost of capital.

Cash flow

Net cash from operating activities was �136.5 million (2018: �134.7 million).

In addition to delivering short-term earnings growth and optimising working capital, we are positioning the Group for the longer term and, as part of that, we are investing further in plant and equipment and adding acquisitions where these make strategic and financial sense.�

During 2019 the Group spent �8.9 million of cash on Roadway and a further �3.0 million on a 43 per cent stake in Capital Concrete (2018: �406.3 million on four acquisitions: Staffs Concrete; Blinkbonny; Lagan; and four quarries and an asphalt plant from Tarmac).

The Group also incurred capital expenditure of �56.3 million (2018: �48.6 million).

Proceeds from the sale of property, plant and equipment totalled �3.3 million in 2019 (2018: �4.9 million).

Proceeds from the issue of shares was �1.0 million (2018: �171.2 million, which included the net proceeds of the equity placing and open offer in respect of the Lagan acquisition).

The repayment of loans of �69.2 million in 2019 reflects the strong cash generation of the Group (2018: new loans of �409.7 million and repayment of loans of �246.1 million, reflecting the refinancing undertaken at the point of the Lagan acquisition).

Repayment of lease obligations totalled �12.9 million (2018: �7.4 million).

Free cash flow

FCF was �90.0 million (2018: �99.5 million).

The decline in 2019 reflects the expected working capital reversal following an exceptionally strong performance in 2018.

Net debt

Net debt at 31 December 2019 was �246.7 million on a pre-IFRS 16 basis (2018: �310.7 million) and leverage was 1.4 times (2018: 2.0 times). Including the impact of IFRS 16 - Leases, which was adopted for the first time in 2019, net debt at 31 December 2019 was �290.3 million and leverage was 1.6 times. This deleveraging clearly demonstrates the highly cash-generative nature of the Group.

Aside from the impact of IFRS 16 - Leases, key movements include: Underlying EBITDA of �180.2 million (2018: �154.4 million); a working capital outflow of �10.3 million (2018: �11.4 million inflow); interest and tax payments of �30.3 million (2018: �25.8 million); net capital expenditure, including IFRS 16 assets, of �55.8 million (2018: �43.7 million); expenditure on acquisitions, including the purchase of a 43 per cent stake in Capital Concrete, of �15.9 million (2018: �461.3 million); and equity raised of �1.0 million (2018: �171.2 million).

Bank facilities

At the time of completing the Lagan acquisition in April 2018 we entered into a new four-year �500 million facility agreement, comprising a term loan of �150 million and a multi-currency revolving credit facility of �350 million.

The facility is subject to a floating interest rate based on LIBOR or, in relation to any loan in Euros, EURIBOR, plus margin. At 31 December 2019, the total undrawn facility available to the Group amounted to �204.7 million.

The facility is subject to Group Leverage and Group interest cover covenants which are tested half-yearly.

At 31 December 2019, the Group comfortably complied with these two covenants. Based on our current estimates, we expect to comply with all our covenants for the foreseeable future.

The Group has in place an interest rate hedge which partially mitigates the risk of interest rate rises on the Group's bank loans.

Capital allocation

We prioritise the maintenance of a strong balance sheet and deploy our capital responsibly, allowing us to commit significant organic investment to our business whilst continuing to pursue acquisitions to accelerate our strategic development.

This conservative approach to financial management will enable us to continue pursuing capital growth for our shareholders, whilst also supporting the dividend policy announced today.

Dividends

Recognising the Group's scale, level of maturity and cash generation, the directors propose to adopt a progressive dividend policy from 2021.

The Board intends that the Company will pay an interim and a final dividend in the approximate proportions of one-third and two-thirds, respectively, of the annual dividend.

The first dividend is therefore currently expected to be declared with the 2021 interim results.

Post balance sheet event

In early January 2020 we announced that we had entered into a conditional agreement with CEMEX to acquire certain assets and operations in the UK for �155 million in cash together with the assumption of �23 million of lease liabilities.

Completion is expected in the second quarter of 2020, subject to completion of a TUPE consultation process.

The cash consideration will be financed from our existing �350 million revolving credit facility and a drawdown of an �80 million term loan through exercise of an accordion option agreed at the time of the 2018 refinancing.

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Rob Wood

Group Finance Director

11 March 2020

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Breedon Group plc

Annual results for the year ended 31 December 2019

Business reviews

GREAT BRITAIN

Our operations in GB generated a one per cent increase in revenues to �615.1 million (2018: �609.8 million) and a two per cent increase in Underlying EBIT to �62.8 million (2018: �61.4 million), with a relatively stronger performance in England and Wales than in Scotland, where markets were very much softer.

The political uncertainty created by Brexit overshadowed all our markets in GB during 2019, although as always there were marked regional variations dependent upon localised projects and road schemes.

Breedon Northern

Scotland was hampered once again by a lack of major capital infrastructure spending which inevitably created some margin pressure, although the relatively wide spread of end-use markets we serve helped to protect the business from weakness in individual sectors.

Despite the softness of the market, we took a good share of the available work, including three major new airport runway surfacing projects at Orkney, Aberdeen and RAF Kinloss. We also continued to supply significant volumes of high-specification ready-mixed concrete to Edinburgh Airport and RAF Lossiemouth.

We were particularly pleased to be awarded a substantial supply and lay surfacing contract by Balfour Beatty for the latest phase of the A9 Dualling project: a 9.5 kilometre stretch between Luncarty and Pass of Birnam, part of Transport Scotland's �3 billion upgrade of 129 kilometres of the A9 between Perth and Inverness.

The integration of Daviot and Low Plains quarries, acquired last year from Tarmac, continued with major investments to improve production and profitability at these two strategically important sites. Investment in a new wash plant at Loak Farm also enhances our ability to profitably service the nearby A9 contract. Elsewhere, we continued to ramp up production from our new quarry at North Drumboy near Glasgow.

Our decision to construct a new ready-mixed concrete plant at our Raisby quarry in County Durham was immediately vindicated with the award of a maiden contract to supply substantial volumes to a large flooring contract at a distribution centre near Durham, which continued through the first quarter of this year. More generally, we made good progress in rationalising our network where the footprints of the former Hope Construction Materials and Sherburn Minerals Group concrete plants overlapped.

New land and mineral purchases extended the reserves and resources available at our Boyne Bay and Low Harperley quarries and we look forward in the current year to the opening of a new sand and gravel quarry at South Boreland in south-west Scotland to replace our worked-out quarry at Clayshant.�

Breedon Southern

Our markets for all products in England and Wales were challenging, with the year becoming more difficult as it progressed. Housebuilding was the most robust sector and growth in the early months supported the market overall. Outside of housing, whilst commercial work declined, the East Midlands benefited from an active distribution infrastructure market. Local Authority work was subdued, and highways work sporadic. The West Midlands benefited from early HS2 work. Our price performance was particularly pleasing, with all major product groups showing growth over the previous year.

Major contracts included the supply of rock armour from Minffordd quarry for sea defences at Friog in North Wales and substantial quantities of ready-mixed concrete to BAM Nuttall's �100 million Boston Barrier flood defence project in Lincolnshire. Welsh Slate continued to capitalise on its global reputation with the full re-roofing of the Perth Museum in Australia, involving the supply of three square kilometres of roofing slate.

Another landmark was the selection by the Royal Horticultural Society of our proprietary Breedon Golden Amber Gravel for its spectacular new garden at Bridgewater in Manchester.

Investment continued in the expansion of our quarry and plant network, with the development of a new sand and gravel quarry and concrete plant at Willington near Bedford, a new concrete plant at Borras in Clwyd and planning permission secured for a new concrete plant at Stevenage together with a new rail head and concrete plant at Thorney Mill near Slough.

Incremental aggregates reserves were secured at Potton quarry in Bedfordshire and we commenced extraction of new minerals from the extension recently obtained at Norton Bottoms quarry in Lincolnshire, which will provide us with access to an additional seven million tonnes of material over the next 15 years.

One of the corporate development highlights of the year was the formation of our new joint venture with Brett to service the London ready-mixed concrete market. Capital Concrete had already established a strong presence in London and by combining our London plants in the joint venture with those of Brett, we secured immediate critical mass in this, the UK's largest market. We are both ambitious for Capital Concrete and look forward to developing a business of significant scale in London over the next few years.

The other highlight was the acquisition of Roadway, which gives us a well-established term maintenance and surfacing business in North Wales together with a newly-erected asphalt plant at Wrexham. This provides us with a solid contracting and asphalt production platform in the region which reaches into new markets and allows our surrounding quarries to maximise value by internalising more of their output.

We were particularly pleased to see our safety record improving across GB in 2019, with a significant reduction in our Employee LTIFR and a wide range of new safety initiatives implemented, including: enhanced training on crucial isolation and lockout procedures; the re-induction of our drivers; the rollout of our new IDC health screening programme; and the introduction of a new incident root-cause investigation training course.�

Looking ahead to the remainder of 2020, we see an improving outlook in GB as investment in our key sectors begins to recover. We aim to at least maintain our market shares, whilst pressing ahead with price increases to recover past cost increases and improve margins wherever possible.

IRELAND

Our operations in Ireland, trading as Whitemountain in NI and Lagan in RoI, increased revenues by 29 per cent to �202.0 million (2018: �156.3 million) and Underlying EBIT by 28 per cent to �26.8 million (2018: �20.9 million). Both businesses performed well during the year, with Lagan delivering an especially strong result.

Whitemountain

Market conditions in NI were challenging due to Brexit uncertainty and the absence of the Northern Ireland Executive, leading to the sharpest contraction in business activity of all UK regions, with construction orders continuing to shrink and more subdued volumes in the second half. Tender opportunities were limited and legal challenges to tenders hampered progress of awards and impacted spending.

Whitemountain nonetheless performed strongly by concentrating on selective work streams and applying strict cost control. We continued to build on internal supply to other Group companies, with a significant increase in 2019, and are focused on further increasing internal aggregates volumes in 2020.

A significant investment in relocating and replacing the primary crusher at our Temple quarry will improve production capacity, facilitate access to reserves and increase profitability.

In addition to our work in NI, Whitemountain also engages in selective contracts in GB. For example, we successfully completed the �18.4 million new road contract at Colley Lane in Bridgwater, which opened to the public at an official ceremony in December and received enthusiastic plaudits from Somerset County Council. Elsewhere, we won a substantial contract at DP World London Gateway Port for the construction of 1.3 kilometres of new distribution park spine roads, where work will continue through the second quarter of this year. We were also awarded a four-year Civil Engineering Framework for Newry, Mourne & Down council.

We worked hard at improving our health, safety and environmental performance. An initiative to increase reported safety observations helped reduce our Employee LTIFR and we introduced new asset management software to record inspections, usage and repair of company assets. It was encouraging to see Alpha Resource Management, our waste to energy business in NI, awarded a WISHNI Ambassador Award.

We maintained our engagement with local universities, offering placement opportunities to civil engineering and quantity surveying students, and also developed a Higher Level Civil Engineering Apprenticeship programme which enables apprentices both to qualify and to benefit from on-the-job training.�

We aim in the current year to maintain our market share, focusing on recovering costs and increasing our margin. The recent re-establishment of the Northern Ireland Executive offers the potential for approval to be given to a number of delayed infrastructure projects, which can only be good news for our NI business. We also continue to seek commercial opportunities in GB for Whitemountain's contracting operation, with further potential for expanding internal material supply.

Lagan

Market conditions in RoI were positive, with a relatively stronger first half. There is some evidence that a more recent modest reduction in tenders has been occasioned by the well-publicised overspend on the new �2 billion National Children's Hospital in Dublin, which has led to short-term reductions in expenditure elsewhere in the economy. Nonetheless, we delivered a strong performance over the year.

We completed a number of high-profile projects in 2019, including the New Ross Bypass in County Wexford for BAM Dragados, which involved approximately 15 kilometres of roadworks and nearly 30 new structures, including Ireland's longest bridge. A successful overlay on Runway 16-34 at Dublin airport led to the award of the next phase for the same runway. Later in the year we were awarded a sizeable contract to supply asphalt to the new N4 Sligo to Collooney dual carriageway.

Our programme to extend our quarry network in RoI continued with the reopening of a dormant quarry at Castlepollard in County Westmeath, bringing to six the number of active quarries operated by Lagan.

A new bespoke health and safety training programme, '360� Safety', which focused on the interaction between people and vehicles, was completed by all Lagan employees and contractors. In addition, Lagan successfully migrated and gained accreditation to the ISO 45001 Safety Management Standard. Later in the year we completed our successful annual programme of dyeing all the lakes in our dormant quarries black, to discourage trespass and swimming.

Looking ahead to the remainder of 2020, the prospects for construction in RoI remain very encouraging, with all forecasters predicting a healthy growth in output on the back of a continuing strong economy.

CEMENT

Our Cement business delivered a six per cent increase in revenues to �186.4 million (2018: �176.5 million) and a 16 per cent increase in Underlying EBIT to �36.3 million (2018: �31.4 million) against the backdrop of mixed markets.

The Irish cement market remained challenging throughout 2019, with all regions relatively muted apart from Dublin, which continued to grow strongly. In GB, market conditions were broadly stable. Confidence in both markets was clearly impacted by uncertainties around Brexit.

Major investments at Hope Works included the completion of our raw mill drive and kiln shell replacement projects, together with the overhaul of our PCA rail fleet. All three kiln shutdowns at Hope and Kinnegad were completed ahead of time and on budget.

Kiln reliability at Hope remained at high levels, with clinker production ahead of 2018. Kinnegad met all clinker demand and averaged more than 72 per cent usage of alternative fuels, ahead of budget, with successful trials of solid recovered fuel (SRF) paving the way for further progress. Kinnegad also commenced its LEAN waste project with the emphasis on delivering further environmental improvements and cost-savings. In all, our cement kilns consumed around 218,000 tonnes of waste in 2019.

Safety initiatives at Hope involved widespread engagement with our colleagues both at the Works and in our road and rail fleet, which resulted in a much-improved safety performance in 2019, including a totally harm-free kiln shutdown. At Kinnegad, the fourth annual edition of 5-Star Safety was launched, incorporating a team-led site safety improvement programme, which resulted in nearly 90 safety improvements being implemented. Health and wellbeing activities were increased in the second half of the year at Hope and at Kinnegad, with workshops provided across both sites.

Sustainability, most notably the call from across the political spectrum for agreement on 'Net Zero' carbon targets, has risen to the top of our agenda and we are in the process of finalising a definitive sustainability roadmap in conjunction with the GCCA and MPA which will drive our strategy for substantially reducing carbon emissions from our cement plants within an achievable timeframe.

In the remainder of the current year, our commercial priority is to implement price increases to recover cost inflation. A major investment in a new bag filter to replace the electrostatic precipitator system is now underway at Kinnegad, with further alternative fuel trials planned during the year. We are also exploring further alternative fuel options at Hope, together with planning applications for a supplementary raw material delivery system and a longer-term project to extend the limestone quarry.

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