Breedon Group PLC · LSE:BREE
Breedon — Investor Presentation (May 2014)
54 slides from Breedon's investor presentation, May 1, 2014
Slide 1: An introduction to Breedon Aggregates Scotland
An introduction to Breedon Aggregates Scotland 1 May 2014 Introduction Peter Tom CBE Chairman 1
Slide 2: Agenda
Agenda Group overview Overview of Breedon Aggregates in Scotland Reserves & resources Health & safety improvement Financial overview The economic and political landscape The competitive landscape Integrating the AI operations Investment priorities Major project opportunities 2
Slide 3: Group overview
BREEDO AGGREGATES Group overview
Slide 4: A little history
A little history 2008 Marwyn Materials created and listed on AIM • Strategy to consolidate smaller end of heavyside building materials industry • Experienced management with track record in delivering shareholder value 2010 Acquisition of Breedon Holdings for £160m EV • Breedon Aggregates created –
Slide 5: Our vital statistics
Our vital statistics Fully integrated aggregates business : 5th largest in UK – 41 quarries – 22 asphalt plants – 51 readymix & mortar plants – 2 concrete block plants 1,000 employees Fully invested operations – £14m annual fixed asset depreciation 400m tonnes of owned or controlled mineral reserves
Slide 6: Overview of Breedon Aggregates Scotland
Overview of Breedon Aggregates Scotland 6
Slide 7: Scotland Locations
Scotland Locations 4 “Zo BREEDON AGGREGATES © stornoway Co} ole ©) reternead ° ime Bp % Aviemore cage Aberdeen ® a o 00 Dundee oO? oS ® Stirling Og? Glasgow Edinburgh Ardchronie Quarry Balmullo Quarry Banavie Quarry Beauly Quarry Benderloch Quarry* Bonawe Quarry Boyne Bay Quarry Bridge of Don Concre
Slide 8: Breedon in Scotland
Breedon in Scotland 27 quarries: granite, basalt, limestone, sand & gravel, decorative aggregates, agricultural lime 15 asphalt plants 31 ready-mixed concrete plants + 50% of Mobile Concrete Solutions 2 concrete block operations 6 surfacing contracting regional offices Strong market positions across
Slide 9: Reserves & resources
Reserves & resources Reserves Resources East 33 MT 24 MT North East 190 MT 19 MT North West 24 MT 13 MT Hebrides 3 MT 4 MT TOTAL 250 MT 60 MT • Projects on-going to preserve and extend licence to operate at all quarry sites • Two greenfield mineral projects in early planning phase • Five quarry exte
Slide 10: Health & safety
Health & safety Near-miss reporting increased by nearly 6,000% VFL Reporting up 88% since 2012 OHSAS 18001 health & safety accreditation secured for the entire Contracting business Strategy for OHSAS 18001 accreditation for concrete block operations 8 quarries in Scotland awarded GoodQuarry accredit
Slide 11: Lost Time Incidents
Lost Time Incidents BASL Lost Time Incident Frequency Rate 2.50 2.10 2.00 1.50 1.00 0.69 0.50 0.00 September March 2010 2014 11
Slide 12: Scotland – Summary financials
Scotland – Summary financials 2012 2013 Variance Volumes £’000 £’000 % +27.4% Aggregates Turnover 82,179 109,660 +33.4% +14.5% Asphalt +29.0% Concrete EBITDA 11,345 15,868 +39.9% Operating Profit 5,548 9,013 +62.5% EBITDA Margin 13.8% 14.5% +0.7% Operating margin 6.8% 8.2% +1.4% AI acquisition compl
Slide 13: BEAR Scotland
BEAR Scotland experience that delivers 13
Slide 14: BEAR Scotland
BEAR Scotland BEAR Scotland is an integrated service provider based and operating in Scotland. Formed by the alliance of leading consultancy, quarry product and highway term maintenance organisations. 25.0% 37.5% 37.5% 14
Slide 15: BEAR Scotland
BEAR Scotland Currently operating 3 out of 4 trunk road operating areas 700+ employees Strong financial performance 2013 share of profit equity accounted £1.4m (2012 - £1.0m) 2013 100% revenue £76m (2012 - £50.7m) Activities include: Winter maintenance Landscaping Structural maintenance Roads and br
Slide 16: BEAR Scotland – history
BEAR Scotland – history 2000 – Incorporated 2001 – Award of NW and NE contracts 2005 – Award of A92 Dundee-Arbroath 2006 – Lost NW to Scotland Transerv 2007 – Re-gain NE and win SE from Amey 2008 – Acquisition of Growing Concern 2010 – Awarded 10 year extension on A92 2010 – Award of M80 Stepps-Hagg
Slide 17: BEAR Scotland – 4G contracts
BEAR Scotland – 4G contracts NE/SE 4th Generation contracts Tender submitted – September 2013 Original scheduled award date – December 2013 Original scheduled start date – 1st April 2014 Revised award date – to be confirmed Revised notified start date – 16th August 2014 17
Slide 18: BEAR Scotland
BEAR Scotland experience that delivers 18
Slide 19: Alba Traffic Management
Alba Traffic Management 19
Slide 20: Alba Traffic Management
Alba Traffic Management Traffic management contractor Breedon owns 75% Works on trunk roads – complementing Breedon activities Events management – growing business Financial performance (100%) 2013 revenue £2.6m (2012 - £2.1m) 2013 EBITDA £0.3m (2012 - £0.3m) Growth continuing in 2014 20
Slide 21: Mobile Concrete Solutions
Mobile Concrete Solutions Joint venture with TSL Contractors Formed in 2012 3 mobile concrete plants Ideally suited for high-volume projects in remote locations Focus on renewable energy sector Strong performance in 2012/13 Project starts recently slowed due to clarification on tariffs and interconn
Slide 22: Economic and political landscape
Economic and political landscape 22
Slide 23: Economic and political landscape
Economic and political landscape Scottish GDP up 1.6% in 2013 – fastest annual growth since 2007 2013 Q4 Scottish GDP up 0.2% – 7th consecutive quarter of economic growth Employment at highest level since records began March 2014: Rises in output and new business Private sector activity expanded for
Slide 24: Competitive landscape
Competitive landscape Breedon market leader in all products north of the Forth/Clyde Estuary Main competitors are independents, e.g. Leiths, Geddes, Tillicoultry, Skene, Pat Munro Margin growth record good Uncertainty of Referendum is undoubtedly stifling economic growth in the short term No step-ch
Slide 25: Integrating the AI operations
Integrating the AI operations Disposals and behavioural remedies to be expedited Commercial integration expected to begin shortly Supply optimisation to be implemented – reducing transport and production costs Full integration of staff and services a priority Planned investment in replacement capex
Slide 26: Investment priorities
Investment priorities Long-reach excavator and washing plant at Beauly Mobile asphalt plant to Uist or temporary in Aberdeen then AWPR/A9? Spaleck screen – to reclaim valued aggregates from unsellable stocks Mobile crushing – retaining production in-house to minimise costs Fleet modernisation – 5 ne
Slide 27: Major projects in medium term
Major projects in medium term 27
Slide 28: Aberdeen Western Peripheral Route
Aberdeen Western Peripheral Route Aberdeen Western Peripheral Route Key Facts • Commence on-site Q1 2015 • Completion by 2018 • Project Value c. £500 million • 55km of dual carriageway • 22km of slip roads • 39km of side roads & accesses • 9 grade separated junctions • 78 principal structures • 94 c
Slide 29: Aberdeen Western Peripheral Route
Aberdeen Western Peripheral Route Breedon Unit Locations 1 2 1 Tom’s Forest quarry, asphalt plant & 4 ready-mixed concrete plant 2 Dyce ready-mixed concrete plant 3 5 3 Craigenlow quarry, asphalt plant & ready-mixed concrete plant 6 4 Bridge of Don ready-mixed concrete plant 7 5 Westhill ready-mixed
Slide 30: A9 Dualling
A9 Dualling Key Facts • Perth to Inverness 177km: only 48km currently dualled • 129km / 80miles to be dualled • 12 projects • 3 projects currently at design stage • Full completion by 2025 • Key Breedon assets: Shierglas Quarry, asphalt plant & ready-mixed Concrete Plant Meadowside quarry Perth read
Slide 31: A96 Dualling
A96 Dualling Key Facts • Aberdeen to Inverness, 160km total length: only 18km currently dualled • 142km to be dualled • To be completed by 2030 • Multiple projects including 30km Inverness to Nairn Bypass • Key Breedon Assets Netherglen quarry, asphalt plant & ready-mixed concrete plant Tom’s Forest
Slide 32: A9 Dualling
A9 Dualling A9 Dualling Kincraig to Dalraddy • 7.45km Long • 4 Underpasses to construct • 2015 / 2016 Commencement • Approx. 70,000 tonnes Asphalt; 30,000m3 lean mix 32
Slide 33: A9 Dualling
A9 Dualling A9 Dualling Luncarty to Pass of Birnham • 9.5km Long • 2017 Commencement • Approx. 80,000 tonnes Asphalt; 35,000 m3 lean mix; significant volumes of aggregates/fill materials 33
Slide 34: A9 Dualling
A9 Dualling A9 Dualling A9 Pass of Birnam to Tay Crossing • 10.2km Long • New Bridge over River Tay • 2017 Commencement • Approx. 90,000 tonnes Asphalt; 40,000 lean mix & significant volumes of aggregates/fill materials 34
Slide 35: V&A Museum, Dundee Waterfront
V&A Museum, Dundee Waterfront V&A Museum, Dundee Waterfront • New £45 million Museum • 2014 Commencement • Part of £1 billion Dundee Waterfront Redevelopment • Circa 20,000m3 Structural Concrete • Significant aggregates, etc. 35
Slide 36: Oban Regeneration – The Lorn Arc
Oban Regeneration – The Lorn Arc Oban Regeneration – The Lorn Arc Oban, Dunstaffnage, Dunbeg, North Connel • Regeneration Scheme • £18.9 million Government Tax Incremental Finance (TIF), £125million Private Investment • £2.75m Lorn Road / Kirk Road Project Infrastructure Works – Autumn 2014. • £18.9
Slide 37: Peterhead Carbon Capture and Storage
Peterhead Carbon Capture and Storage Peterhead Carbon Capture and Storage Peterhead Power Station • £100bn Project • Preferred Bidder for Government funding, 2016 start likely. • 2 miles from Stirlinghill Quarry • Major Concrete & Aggregate requirement 37
Slide 38: A96 Inveramsay Bridge Improvements
A96 Inveramsay Bridge Improvements A96 Inveramsay Bridge Improvements • £12 million project • 1.45km road construction • New Bridge construction • Currently out to tender • 100,000m3 Fill Materials required • 15,000 tonnes of Bound pavement 38
Slide 39: Offshore Wind Energy
Offshore Wind Energy Offshore Wind Energy Turbine Construction • Gravity base foundations – concrete construction, towed offshore by barge. • Projects • Seagreen Alpha & Bravo - £1.5bn • Inch Cape - £1.5bn • Firth of Forth - £1.5bn • Moray Firth - £0.5bn 39
Slide 40: Kingennie Golf Development, Dundee
Kingennie Golf Development, Dundee Kingennie Golf Development, Dundee Golf, Leisure & Residential Development • Major Infrastructure requirement • £60 million Project • Site neighbours Cunmont Quarry • <5miles from Ethiebeaton Quarry • 2014 Start on Site 40
Slide 41: CHORD – Town Centre Regeneration
CHORD – Town Centre Regeneration CHORD – Town Centre Regeneration • £30 million committed investment • 5 Waterfront Towns • Campeltown - £6.5m • Helensburgh - £6.9m • Oban - £6.9m • Rothesay - £2.4m • Dunoon - £8.3m • Significant Highway Improvements 41
Slide 42: Tornagrain Village
Tornagrain Village Tornagrain Village New Town, West of Inverness • Major Infrastructure requirement • £400 million Project • 4,960 Houses • Outline Planning received 42
Slide 43: Marcliffe Hotel Redevelopment
Marcliffe Hotel Redevelopment Marcliffe Hotel Redevelopment Commercial Development • Office, Restaurant & Spa construction • £90 million Project • 2015 Commencement 43
Slide 44: Stornoway Ferry Terminal
Stornoway Ferry Terminal Stornoway Ferry Terminal • Subcontract value £2.3 million • Aggregate volume 60,000t • Asphalt volume 3,500t • Concrete volume 1,500m3 44
Slide 45: Windfarms on Isle of Lewis
Windfarms on Isle of Lewis Windfarms on Isle of Lewis • Lewis Windpower: 36 turbines • Beinn Mhor Power: 36 turbines • Concrete: 25,000m3 on each of the above 2 main projects + significant amount of roadworks required • Various other small community type windfarms 45
Slide 46: Questions
4 yy” Thank you BREEDON Questions
Slide 47: Breedon Aggregates
BREEDON AGGREGATES
Slide 48: Today's visits
Today’s visits Craigenlow Tom’s Forest Kemnay 48
Slide 49: Craigenlow
Craigenlow
Slide 50: Craigenlow
Craigenlow Long established granite quarry at Dunecht, 10 miles from Aberdeen Reserves & resources > 10 million tonnes • Site is part freehold, with leasehold for the minerals running to 2023 with opportunity to extend • Planning consent for production to 2023 with extension anticipated • Good prosp
Slide 51: Tom's Forest
Tom’s Forest
Slide 52: Tom's Forest
Tom’s Forest Extensive freehold mineral operation near Kintore, Aberdeenshire Reserves & resources: Granite > 20 million tonnes Metamorphic rock > 50 million tonnes Sand & gravel 1 million tonnes • Favourable site geology enables production of wide range of construction materials • No depth limit on
Slide 53: Kemnay
Kemnay
Slide 54: Kemnay
Kemnay Modern, high-capacity building materials factory • Three operations produce high-quality concrete products for residential, commercial and industrial construction applications across north of Scotland • Exceptionally strong Fyfestone brand dating back nearly 60 years • Fyfestone Elite and Pre