MAKING A MATERIAL
DIFFERENCE
ANNUAL REPORT AND
ACCOUNTS 2023
from quarry to customer
Breedon Group plc Annual Report and Accounts 2023
Contents
Our purpose is to make a
material difference to the lives
of our colleagues, customers
and communities.
We achieve that by delivering
essential construction materials
while living our values;
keeping it simple, striving to
improve, making it happen
and showing we care.
The strategic report has been
approved by the Board of Directors
and signed on its behalf by:
Rob Wood
Chief Executive Officer
6 March 2024
STRATEGIC REPORT
GOVERNANCE REPORT
Board of Directors
Corporate governance statement
Board in action
Engaging with our workforce
Monitoring culture
Engaging with shareholders
Diversity reporting
Annual Board performance
Audit & Risk Committee report
Nomination Committee report
Sustainability Committee report
Compliance statement against
the Code
CONSOLIDATED FINANCIAL
STATEMENTS
Independent Auditor’s report
Consolidated income statement
Consolidated statement
of comprehensive income
Consolidated statement
of financial position
Consolidated statement
of changes in equity
Consolidated statement
of cash flows
Notes to the consolidated
statements
COMPANY FINANCIAL
STATEMENTS
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»119
»121
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»125
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»133
»135
Company balance sheet
Directors’ Remuneration report
»145
– Annual statement
– Remuneration at a glance
– Directors’ Remuneration Policy
– Annual Report on Remuneration
Directors’ report
Statement of directors’
responsibilities
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»148
»149
»160
»169
»172
Company statement of
changes in equity
Notes to the Company
financial statements
Subsidiaries
ADDITIONAL INFORMATION
Information for shareholders
Glossary
»174
»184
»185
»186
»187
»188
»189
»220
»221
»222
»226
»228
»230
From quarry to customer
Investment case
Breedon at a glance
Chair’s statement
Market review
Business model
Chief Executive Officer’s review
and strategy
– Great Britain
– Ireland
– Cement
Key performance indicators
Chief Financial Officer’s review
Managing our risks and
opportunities
– Principal risks
– Climate-related risks and
opportunities
Viability Statement
Sustainability
– Planet
– People
– Places
– Principles
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Section 172 Statement
»105
01
From quarry to customer
Breedon is a leading vertically-integrated construction
materials group in Great Britain and Ireland.
We supply the construction industry with the essential
materials needed to build the places where we live
and work, play and in-between.
We use our core assets to produce valued-added
downstream products, pulling our aggregates and
cement through to deliver asphalt, ready-mixed concrete
and surfacing solutions to the construction supply chain.
Record revenue
Robust earnings
Revenue
Profit before tax
Resilient returns
Return on invested capital
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information From quarry to customer
02
My role is simple: supply essential
construction materials to our
customers safely and efficiently,
with the best quality and service
in the market.
Phil Shimwell
Dowlow Quarry Manager
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information From quarry to customer
KEEP IT SIMPLE
03
At Dowlow our team took
simple steps to generate
efficiency gains and
sustainability improvements.
Investment underpinned
simplicity
Crushing operations
overhauled
New office and
welfare facilities
Simply good sense
Carefully targeted investment
enabled the reconfiguration of
this 125 year old site, uncovering
efficiency gains and sustainability
improvements.
New mobile equipment enabled
the relocation of mineral
crushing operations, simplifying
quarry movements and reducing
fuel use by up to two thirds.
Our new facilities simplified
on and off-site locations and
brought our team together,
improving safety, welfare,
distribution and training.
By collaborating with our
customers, our train provider and
Network Rail, we maximised our
rail haulage capability, increasing
weekly train loads by 30%.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Breedon Group plc Annual Report and Accounts 2023
04
From quarry to customer
The Highlands and Islands airports
provide vital community links. To resurface
Islay airfield we redefined project delivery,
improving our capability, enhancing our
customer service and leaving legacy
benefits for the wider community.
John Macleod
General Manager, Surfacing Solutions
Strategic report Governance Financial statements Additional information From quarry to customer
STRIVE TO IMPROVE
05
To resurface Islay airfield we
reviewed how we deliver our
remote surfacing projects,
producing far-reaching
improvements to our
capability and service.
Continually improving
our product
Investing in solutions
Enhancing customer
service
Improvements reach
beyond our projects
In only two years we have built a
highly credible airfield surfacing
business with strong client
relationships and contractor
partnerships.
Our new mobile asphalt plant
ensures the reliable provision of
high-quality surfacing material
in remote locations, improving
our capability.
We minimised the impact of our
presence on the island during
peak tourism season by using
independent transport, haulage
and catering providers.
We voluntarily resurfaced
local public spaces, hosted
community site visits and
provided work experience.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information From quarry to customer
06
Maximising the power of our
vertical model is key to our success in
Ireland. By extending our upstream
mineral reserves we are supporting
our market leading surfacing activities
and improving our customer service.
Brian Downes
Ireland Head of Land Minerals and Environment
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information From quarry to customer
MAKE IT HAPPEN
07
We have nearly tripled
our mineral reserves and
resources in Ireland since
Breedon acquired Lagan
in 2018.
Proactive planning and
determined engagement
Acquisitions and
land purchases
Increasingly
self-sufficient
Making it happen for the
whole community
Since establishing Breedon in
Ireland we have added 93 million
tonnes of mineral reserves and
resources, nearly tripling our
mineral assets in the region.
In 2023 we added over
50 million tonnes of mineral
reserves through acquisition
or by accessing land adjacent
to existing quarries.
We deliver hundreds of surfacing
projects each year, fulfilling more
of those projects with our own
material than ever before.
We maximise the biodiversity
of our sites and support local
communities with sponsorship
and employment opportunities.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information From quarry to customer
08
At Hope caring is in our DNA. Our
customers care that we reduce our carbon
footprint without compromising product
quality. We work to benefit our neighbours
and their communities. And we make sure our
colleagues go Home Safe and Well every day.
Donna Hunt
Head of Sustainability
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information From quarry to customer
SHOW WE CARE
09
Hope Cement Works has
operated in the Peak District
for nearly a century and
we care deeply about
our legacy.
Outstanding safety and
welfare record
Innovating to reduce
our carbon footprint
Creating wildlife habitats
Heart of the community
Sending our people Home Safe
and Well is our highest priority.
Safety training is enhanced with
access to mental health first aiders
and personal finance workshops.
We carried out pioneering
industrial trials with graphene
to enhance CEM II compressive
strength while reducing its
carbon footprint.
Land restoration is critical to
our legacy in the Peak District
National Park. We work closely
with local organisations to
conserve wildlife habitats.
We contribute meaningfully
to the Peak District, providing
employment, sharing our
recreational facilities and
opening our forest school
to local communities.
Wildlife photo needed
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
Investment case
We offer
sustainable growth,
underpinned by a
proven financial
framework
10
The foundations of our asset-backed model
are one billion tonnes of mineral reserves and
resources and two well-invested cement plants.
Our vertically-integrated operating model
offers margin-enhancing routes to market by
pulling through our cement and aggregates in
the production of ready-mixed concrete and
asphalt, and the provision of surfacing solutions.
We supply attractive end-markets, such as
infrastructure and housebuilding, which benefit
from long-term structural growth trends.
Our self-help culture of continuous
improvement supports margin enhancement
and drives returns in excess of our cost of capital.
Our disciplined capital allocation enhances
returns, delivers strong Free Cash Flow generation,
enables multiple routes to growth, and facilitates
the payment of a progressive dividend.
At a glance
»12
Business model
»22
Market review
»16
Strategy
»28
Financial review
»44
Photo to come
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Investment case
An outstanding track record
of sustainable growth
Since our first full year of trading as Breedon, we have undertaken
25 acquisitions while simultaneously pursuing organic growth.
In this time, our growth has outpaced our markets, we have
successfully converted profits to cash and rapidly reduced gearing.
11
Breedon
Six bolt-on
transactions
Hope
Lagan
Cemex
UK assets
Six bolt-on
transactions
20111
20121
20131
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
£169m
£6m
Covenant
Leverage1
times
5.6
3.6
Revenue CAGR2 20%
£1,488m
Underlying EBIT3 CAGR 31%
£156m
1.9
1.7
1.5
0.9
(0.2)
1.9
1.4
1.9
0.8
0.7
0.5
1 Covenant Leverage has been calculated on a consistent basis for all periods, following the principles set out in the Group’s current debt facility agreements. Note 27 of the
consolidated financial statements contains further details of this calculation.
2 CAGR: Compound annual growth rate.
3 EBIT refers to earnings before interest and tax and equates to profit from operations.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 12
Breedon at a glance
A balanced portfolio
of high-quality assets
operated by our
first class team
Reserves and resources
tonnes
bn
Asset-backed and vertically-integrated
We have a balanced portfolio of valuable
assets operated by our first class team of
3,900 highly-engaged colleagues.
Aggregates
>100
quarries
Our quarries supply aggregates
both to our customers and our own
ready-mixed concrete and asphalt
plants, pulling materials through the
business model.
Cement
2
plants
Two well-invested cement
plants capable of producing
more than two million tonnes
of cement annually.
tonnes
We are stewards of one billion
tonnes of mineral reserves and
resources, equivalent to around
35 years of production.
Our extensive road and
rail haulage infrastructure
delivers our mineral reserves
and resources sustainably to
our customers.
Ready-mixed concrete
>160
plants
Over 160 ready-mixed
concrete plants
supplying quality
assured concrete,
screed and mortar to a
broad scope of projects.
Asphalt
>50
plants
Over 50 asphalt plants
supplying quality
assured materials to a
wide range of projects
from car parks to major
trunk roads.
Surfacing
Our Great Britain surfacing operations are
strategically located around nine regional
hubs in England and Scotland, serving our
customers efficiently and economically.
Our Ireland surfacing and contracting activities
benefit from multi-year frameworks and term
contracts, delivering high-profile projects including
airport runways and major trunk road resurfacing.
2015
2016
2017
2018
2019
2020
2021
2022
2023
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Breedon at a glance
Our culture
Our purpose is to make a material
difference to the lives of our colleagues,
customers and communities.
Our values
Our people
We adopt clear authentic behaviours
to ensure long-term success.
Our people are one of our greatest assets.
Their safety and wellbeing is our highest
priority and the objective of our
Home Safe and Well campaign.
KEEP IT
SIMPLE
STRIVE TO
IMPROVE
MAKE IT
HAPPEN
SHOW
WE CARE
people
new graduates
and apprentices
engagement
score
13
Our strategy
Sustain
Sustainability considerations guide all of our decisions
Optimise
Continuously improving efficiency
Expand
Through organic and inorganic growth
Financial framework
Supporting our strategy through investment and capital allocation
Our reporting lines
Great Britain
An extensive footprint of
quarries and downstream
operations, from Hampshire
to the Hebrides.
Ireland
A network of quarries and plants
across the Island of Ireland,
supporting a highly regarded
surfacing business.
Cement
Our Cement division operates two
well-invested plants in GB and
Ireland, producing more than two
million tonnes of cement annually.
More detail
»36
More detail
»38
More detail
»40
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Chair’s statement
Amit Bhatia
Chair
This is a year to be
proud of. I believe
Breedon’s best days
are yet to come.
14
Delivering results
to be proud of
Growing revenue and Underlying profit
from operations through the tough
conditions we experienced in 2023 is down
to the resilience of our team, the quality of
our model and the power of our strategy.
These results are a real accomplishment
given the economic and political context
in which they were delivered, making this
a year to be proud of.
This level of execution has become a familiar
pattern at Breedon, providing the Board
with the confidence to approve a significant
29% increase in our full-year dividend
to 13.5p.
Strong model, proven strategy
Our strategy, governed by the Board, is
simple and effective; operate sustainably,
optimise our operations, expand our
business and deploy capital thoughtfully.
While the business has changed
significantly in its relatively short history,
the fundamentals of the strategy have
altered very little.
As our footprint and capability have
expanded, and the vertically-integrated
model has matured, our opportunities
for self-help have grown, reinforcing
our resilience and reducing our reliance
on trading conditions to generate
outstanding results. Our results have
clearly demonstrated this in recent years,
particularly in 2023.
Growth remains our
main objective
What has not changed is our growth
mindset. From the Board through
management to the quarry floor, the
whole team is focused on the future. We
continuously ask ourselves how to operate
our assets as efficiently as possible, when
and where to grow our capability and
footprint, and how we can most effectively
deploy capital to drive growth.
Critical to our long-term success we have
focused on maintaining and growing our
asset base, either organically through
internal investment or externally through
M&A. Operating according to these
fundamental principles, coupled with
our patient and persistent approach, has
enabled us to build the business of which
we are stewards today.
Cash dividends paid
£m
2023
2022
2021
2020
2019
8.4
37.3
30.5
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 15
We are maturing the business and as part
of that process, during 2023 we moved
our listing from AIM to the Main Market,
a transition which the Board believes
more appropriately reflects the scale and
maturity we have achieved.
Heartfelt thanks to our team
While there are many contributors to
the success of a business, at Breedon
it is our colleagues that make the most
material difference. Yet again they have
demonstrated remarkable fortitude in
the face of great uncertainty to produce
the extraordinary results of 2023 and the
Board thanks them.
Breedon is stronger and fitter than at
any time in its relatively short history and
I believe our best days are yet to come.
Amit Bhatia
Non-executive Chair
6 March 2024
Board site visit
The Board site visit to
Mansfield asphalt plant
in September 2023
Chair’s statement
Sustainability is critical to
our success
One aspect that has gained momentum is
the sustainability agenda. We have always
taken our responsibility to our colleagues
and our communities seriously; taking good
care of our Planet, People and Places is our
obligation in order to operate. However, the
need to capture and verify our sustainability
progress is driving us to build new
relationships and adopt new practices.
The Sustainability Committee, that was
established in 2022, has overseen material
progress in 2023. We committed to the
Peak Cluster carbon capture and storage
project, secured a rating from CDP and
submitted our net zero target to the Science
Based Targets initiative (SBTi) for formal
validation. While these are significant
milestones we are only in the foothills of our
sustainability voyage and the Committee
will continue to oversee our determined
and unrelenting progress.
Maturing from AIM to the
Main Market
Through the actions of our team and
under the guidance of the Board, Breedon
has become an established construction
materials business across GB and Ireland,
with an enviable track record for growth
and value creation.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Market review
Supplying structurally-
attractive and growing
end-markets with
essential building
materials, products
and services
16
Growth drivers
Economic driver
Essential industry
The construction industry plays a fundamental
role in everyday life. It is an important
economic contributor, creating, maintaining
and improving the built environment.
According to the CBI, every £1 spent on
UK construction contributed £2.92 of value
to the UK economy, employing 2.3 million
people directly and generating 6% of UK
Gross Value Added.
The population in our core markets is
growing and urbanising; in the UK, 3%
growth is forecast in the coming decade,
while in the RoI, the population is set to
increase by one million between 2016
and 2040. With household formation
outpacing population growth, the pressure
on our infrastructure, residential and
non-residential spaces is likely to persist.
Nearly two thirds of homes in England
and Wales are over 50 years old and there
have been decades of underinvestment
in infrastructure. With the pressing need
to protect the environment, and new
technological drivers emerging, there is
a clear need for investment to grow our
built environment.
Source: ONS, CBI, Government of Ireland National
Development Plan 2021-2030.
Mineral products are a key component of
the construction supply chain, providing
essential heavyside building materials to the
construction sector, including aggregates,
cement and concrete products and asphalt.
The market in GB is relatively consolidated;
Breedon is one of the top five producers
who together have access to c.78% of
all consented reserves, with around
300 companies accounting for the
remainder. The life of consented reserves
for aggregates across GB is estimated
to be 31 years, a reduction of 30% in the
past decade.
Planning consent for new quarries in the
UK and RoI is rarely granted. This drives an
urgent need to optimise mineral production
alongside long-term strategic planning to
secure extensions to the existing estate.
Due to the heavy nature of the materials and
associated costs of transport, our products
travel relatively short distances. As a result,
building materials markets are driven by
local and regional factors.
Source: MPA, BDS market Intelligence.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 17
Market review
Growth drivers
Disciplined provision supports mineral products pricing power
Meeting the UK’s need for infrastructure, homes, regeneration, energy security and
decarbonisation over the next 12 years will require an estimated 4 billion tonnes of
aggregates, an increase of more than 40% over the 12 years prior to 2023.
Over the long-term, aggregates pricing has outpaced inflation. This is primarily due to
industry consolidation and a good track record for managing capacity.
Aggregates markets by source of supply in Great Britain, 1955-2023
million tonnes
Aggregates prices outpace inflation over time
indexed to 100 in 1996
300
200
100
300
250
200
150
100
50
1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2023
96
97
98
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21 22
23
Crushed rock Sand and gravel Recycled and secondary
UK PPI: Other mining and quarrying products UK CPI Index
Source: MPA
Source: ONS
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 18
Market review
Markets
End-markets
The fundamental drivers for construction
end-markets support long-term growth.
However, the uncertain macroeconomic
landscape, persistent inflation and reduced
purchasing power of private households
and public bodies has moderated the
near-term prospects for the heavyside
building materials market in the UK and RoI.
Revenue by end-market
UK
RoI
87%
13%
Infrastructure c.50%
Housing
c.20%
Industrial,
Commercial
and other
c.30%
Infrastructure
In its latest report in 2019, the World
Economic Forum ranked UK 11th and RoI
31st out of 137 countries for overall quality
of infrastructure, a headwind in both cases
to their global competitive position.
Furthermore, quality of UK infrastructure
was ranked 27th while in RoI the inadequacy
of infrastructure supply was considered the
most problematic factor for doing business,
achieving a rank of 52nd. To address
these significant deficits, both UK and
RoI governments published national
infrastructure plans.
In its latest analysis of the National
Infrastructure and Construction Pipeline,
published in February 2024, the UK
committed to invest up to £775bn over
the coming decade, with £164bn of
spending planned in the next two years.
In 2021 the Government of Ireland
relaunched the National Development
Plan (NDP) which outlined over €165bn
of public investment by 2030. To deliver
sustainable economic growth and improve
environmental and social outcomes, public
investment in RoI will increase to 5% of
GNI by 2025, well above the EU average
of 3% of GDP.
World Economic Forum competitiveness
Index ranking for infrastructure quality
UK
11th
RoI
27th
To support economic productivity,
strategic road and rail investment remain
high on political agendas with water,
sewage treatment and harbours growing
in importance.
reallocated £8bn of the HS2 Northern
phase budget to local authority’s pothole
repairs over the next ten years, there is still
an urgent need for investment in the UK’s
infrastructure.
In the UK long-term budgets have been
reallocated, pushing out timeframes on
major projects and redirecting budgets
towards maintaining existing infrastructure.
The latest Association of Local Authority
Road Maintenance survey in March 2023
identified an 11-year backlog of repairs
worth £14bn. Although the UK Government
In RoI, Budget 2024 established an
Infrastructure, Climate and Nature Fund
to enable sustained levels of infrastructure
investment out to 2030, providing a buffer
in the event of an economic downturn.
Source: National Infrastructure and Construction
Pipeline February 2024, UK Autumn Statement
November 2023, 96th Euroconstruct, ALARM survey
March 2023.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 19
169.7
166.4
169.9
181.5
170.1
30.7
30.1
28.8
27.9
27.2
Market review
Markets
Housebuilding
Homes shortfall
UK up to
1,000,000
RoI
400,000
There is a fundamental shortage of housing
with an estimated deficit of up to one million
homes in the UK and 400,000 in RoI due
to housing starts falling short of household
formation over recent decades. Up to
340,000 new homes are required each year
to meet demand in England alone while the
NDP estimates over 33,000 new homes
are required each year in RoI.
There is wide recognition supply-side
policies have not kept pace with demand.
The planning processes in UK and RoI
are under-resourced and the FMB
Housebuilders Survey 2023 found that
the UK planning system presented a
greater restriction to the delivery of
new homes than mortgage availability.
UK Construction Output
£bn
2025f
2024f
2023e
2022
2021
Source: CPA.
Ireland Construction Output
€bn
2025f
2024f
2023e
2022
2021
Source: 96th Euroconstruct.
With a rapidly growing population in RoI,
the Irish Government published its most
ambitious housing plan in 2021. The Housing
for All plan contained a series of actions
designed to double housing output by
2026, supported by more than €4bn of
annual Government funding. Furthermore,
Budget 2024 extended the Help-to-Buy
scheme to the end of 2025 to support
first-time buyers. In the first nine months of
2023, nearly 24,000 homes commenced
construction, an increase of 14% on the
same period in 2022.
In the UK the National Planning Policy
Framework was published in December
2023, setting the framework under
which local authorities take planning
decisions. According to the Construction
Products Association (CPA), removing the
requirement for local authorities to show
a five-year supply of housing while at the
same time providing more neighbourhood
protection from speculative development
are unlikely to unlock improvements on
the supply side without fresh Government
policies.
Source: Commons library research briefing: Tackling the
under-supply of housing, ONS, CPA, 96th Euroconstruct.
Commercial, Industrial
and other
The pandemic has materially affected
where we work, how we shop and how
we spend our leisure time. Commercial
construction is typically driven by large
economically sensitive projects and, as
retail, leisure and home working practices
in the UK and RoI have undergone
material behavioural changes in recent
years, commercial construction has been
contracting.
On the contrary, Industrial output has
benefitted from these cultural shifts as
corporate practices have responded to new
logistics and supply chain requirements,
building large warehouses, distribution
and data centres.
Source: CPA, 96th Euroconstruct.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Market review
Markets
Volumes
Mineral product volumes in 2023 reflected
the moderation of economic growth in
the UK and Ireland. Mineral product sales
in 2023 marked the second consecutive
year of volume contraction in response to
the rising costs of construction, budget
constraints and ongoing economic
uncertainty.
In GB, where data is more readily available,
volumes reflected softness, most notably
in housebuilding. Commercial and road
construction end-markets were also
impacted. While asphalt and crushed
rock volumes moderated less than
originally forecast, volume contraction
in ready-mixed concrete, mortar and
sand and gravel were more pronounced
than original Mineral Product Association
(MPA) forecasts.
Aggregates volumes contracted 5% with
the drag from housebuilding partially
offset by ongoing major projects. Asphalt
volumes reduced nearly 7%, reflecting
delays in major road construction projects.
Ready-mixed concrete volumes declined
to the lowest level since 1964 (other
than 2020) demonstrating the general
slowdown in construction end-markets.
The MPA forecast indicates volumes will
remain under pressure in 2024, albeit to
a lesser degree. This reflects the muted
economic backdrop in general and weak
housebuilding activity in particular.
20
160.4
157.6
159.8
168.3
183.3
20.5
20.3
20.4
21.8
23.3
13.8
13.6
13.8
14.8
15.3
GB Aggregates
million tonnes
2025f
2024f
2023
2022
2021
GB Asphalt
million tonnes
2025f
2024f
2023
2022
2021
GB Ready-mixed concrete
million m3
2025f
2024f
2023
2022
2021
160m
tonnes
primary aggregates
5%
2023
volume reduction
Source: MPA.Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 21
With inflation normalising and interest
rates widely anticipated to fall in 2024,
we remain confident in the medium to
long-term outlook for the economically
sensitive construction materials industry.
In its latest forecasts, the Office for Budget
Responsibility expects real GDP in the UK
to grow 0.6% in 2023 and 0.7% in 2024
before reaccelerating to 1.4% in 2025.
In RoI Modified Domestic Demand is
forecast to grow at 2.2% in 2023 and 2024
before regaining momentum in 2025.
Source: CPA, OBR, S&P Global/CIPS, BNP Paribas
Real Estate, HM Treasury.
Market review
Outlook
The fundamental need to invest in the built environment
to support economic prosperity is clear and Breedon is
well positioned to meet that demand in the UK and RoI
when conditions promote a return to growth.
Our markets are characterised by steady
growth and pricing power through the
cycle. The prospects in the medium to
long-term in both the UK and RoI are
well-underpinned by high levels of
pent-up demand.
Construction output in the near-term
is expected to be muted in both the UK
and RoI.
In its January 2024 update the CPA
downgraded forecasts, expecting
construction output to fall 2.1% in 2024
before recovering in 2025.
CPA forecast
2024
2.1%
2025
2.0%
The December 2023 UK construction PMI of
46.8 remained below the neutral indicator
of 50 for the fourth consecutive month.
More encouragingly new work decreased
at a slower pace and employment in the
sector improved, suggesting incremental
optimism.
In RoI, where the economy has
demonstrated remarkable resilience, the
construction industry faces a number of
bottlenecks, notably the availability of a
skilled construction workforce.
RoI construction PMI remained in
contraction territory throughout 2023, and
concluded the year at 45.1. Nonetheless,
sector employment increased reflecting
signs of optimism. Euroconstruct forecasts
construction output growth in 2024 of
4.4%, slowing to 2.2% in 2025.
In both the UK and RoI infrastructure is
well supported by ongoing major projects
and planned investment. In the UK a recent
review of the National Infrastructure and
Construction Pipeline reaffirmed long-term
spending commitments and in RoI the
National Planning Framework review will
go for public consultation in 2024.
The need for housebuilding in both
geographies is undisputed. In RoI
Euroconstruct projects housing
completions will continue to grow with
roughly 105,000 units built in the next
three years. In the UK the outlook for
housebuilding is more muted with CPA
forecasting another year of contraction
before returning to growth in 2025
as affordability and planning remain
short-term headwinds to growth.
Euroconstruct forecast
2024
4.4%
2025
2.2%
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Business model
What we do
Generating cash
What sets us apart
22
E
L
P
O
E
P
R
U
O
S
T
E
S
S
A
D
E
K
C
A
B
-
T
E
S
S
A
VERTICALLY-INTEGRATED
>100
quarries
2
cement
plants
1bn
tonnes
Higher
margin
Aggregates
Cement
Asphalt
Ready-mixed concrete
Block
Tile
Surfacing
Better
ROIC
OUR CUSTOMERS
We provide
essential products
and services to
the construction
supply chain
We are a business-to-business
provider, serving a diversified
network of customers. Our primary
end-markets are infrastructure,
housebuilding and industrial.
We provide materials to small
local businesses, materials
merchants and major
contractors.
The infrastructure projects our
customers deliver are backed by
central government funding or
local authority budgets.
We are typically engaged in the
early stages of construction
projects due to the nature of
our products.
Our materials are utilised in
foundations and groundworks
or the early phases of building
production.
Our exposure to repair,
maintenance and improvement
construction is limited.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023
Business model
What we do
VERTICALLY-INTEGRATED
Quarries, Cement
Products
Surfacing
S
T
E
S
S
A
D
E
K
C
A
B
-
T
E
S
S
A
Generating cash
What sets us apart
23
Our business model in action
at Wickwar
Business-to-business
Our quarries and cement plants
produce the materials which flow
downstream through the model
to our customers and our own
operations.
Buy and build platform
Organic investment is supported
by our healthy balance sheet and
strong cash generation.
We are a trusted owner of
acquired assets and have an
active M&A pipeline.
c.900kt
Annual Wickwar aggregate production
Wickwar: Building resilienceWickwar is an example of the business model at its best. Acquired in 2020, Wickwar demonstrates how we optimise acquired assets.Since acquisition we have integrated the site operations to maximise efficiency to produce c.900,000 tonnes of aggregate annually. Through diligent planning and targeted investment, we have extended reserve life by 20 years with potential for future extensions.Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Business model
What we do
VERTICALLY-INTEGRATED
Quarries, Cement
Products
Surfacing
S
T
E
S
S
A
D
E
K
C
A
B
-
T
E
S
S
A
Generating cash
What sets us apart
24
Downstream operations
pull through valuable aggregates
and cement
Maximising value
Our ready-mixed concrete,
asphalt and block plants use our
own aggregates and cement
to produce quality assured
materials.
Our processes pull material
through to the customer,
maximising the value of every
tonne of material we produce.
Operating locally
Our sales and distribution
model mirrors our local markets.
Our people are close to their
customers and markets, have
clear margin visibility, and are
empowered to make timely
entrepreneurial decisions.
>50
Wickwar colleagues
Pulling material through at WickwarThe site is home to downstream production facilities, supplying local construction markets and providing employment for over 50 colleagues.Our asphalt plant produces 115,000 tonnes each year and has recycled asphalt planings (RAP) capability. Wickwar operates ready-mixed concrete and concrete block plants and is exploring inert landfill potential to enhance recycling possibilities.Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Business model
What we do
VERTICALLY-INTEGRATED
Quarries, Cement
Products
Surfacing
S
T
E
S
S
A
D
E
K
C
A
B
-
T
E
S
S
A
Generating cash
What sets us apart
25
Growing the surfacing business
enhances our route to market
Local supply.
National footprint
We deliver surfacing and
maintenance services to national
and local road networks, and
airfield operators.
Our surfacing strategy aims
to utilise our core products,
enhancing margins within a
conservative risk profile.
Market reach extended
We have built a strong reputation
for quality and reliability in GB
and Ireland. Airfield surfacing is a
highly specialised market where
we have rapidly established a
robust national market position.
4 years
Pipeline of airfield work
From Wickwar quarry to airfield customerIn 2023, in partnership with Volker Fitzpatrick, we delivered 6,000 tonnes of highly technical Marshall asphalt from our Wickwar asphalt plant. We operated within strict time and access constraints to surface the Southampton Airport runway extension, ensuring no passenger disruption.We have a four year pipeline of work across a portfolio of airfields.Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Business model
What we do
Generating cash
What sets us apart
Breedon’s business model is highly cash generative,
delivering a strong balance sheet and strategic optionality
26
Highly cash generative
Deploying capital
Our business model is highly cash
generative, rapidly converting revenue
and profit into cash.
We deploy our capital responsibly,
maintaining strategic optionality.
Investment for growth
Upstream product orders have short lead
times which vary, based on the nature of
the construction project.
Delivering downstream products and
services pulls high-value products
through to the customer.
Investment in systems and processes
ensures cash collection is efficient,
quickly converting revenue to cash.
Our balanced portfolio of assets and
services delivers a blended operating
margin and return on invested capital.
Upstream mineral products deliver a
high operating margin. However, the
capital-intensive nature of the assets
impacts the return on invested capital.
Conversely, downstream services have
low capital requirements and deliver
higher returns on invested capital.
Our thoughtful capital allocation
approach balances returns generated
by our asset portfolio.
Capital investment is evaluated for both
maintenance and growth objectives and
all opportunities are considered through
a sustainability lens.
We invest in replenishing our mineral
reserves and resources and extending
our quarry assets where possible.
Our assets operate in harsh and abrasive
environments and we invest proactively
to maintain and upgrade our capital
equipment.
Financing Breedon’s future
Capital deployment is balanced to maintain
strategic optionality and maximise return
on invested capital.
Breedon has an excellent track
record of rapidly reducing leverage
following acquisitions.
Our progressive dividend policy,
introduced in 2021, targets a payout
ratio of 40% of Underlying Basic EPS.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 27
Business model
What we do
Generating cash
What sets us apart
Breedon’s local relationships and investment
approach are significant differentiators
Our assets
Our people
Opening a new quarry or cement plant
is challenging. Consequently, our asset-
backed model allows us to maintain our
strong position in the market.
Securing incremental permits and
continuous parcels of land to existing
quarries is achievable.
Our modern cement plant in Kinnegad
was commissioned in 2002 and is one of
the most modern plants in Europe.
Our investment strategy
Our thoughtful approach to capital
allocation has delivered a balanced
growth profile where M&A and organic
expansion have contributed evenly.
businesses integrated
Since we began trading as Breedon,
we have acquired and integrated
25 businesses, where we have a strong
track-record of improving operations
and profitability.
Disciplined capital investment ensures
our assets are well maintained and
incorporate the latest innovations.
Our first class team is at the heart of our
business and one of our greatest assets.
people
We have an entrepreneurial, empowered
and engaged workforce.
Our colleagues have deep and
longstanding local relationships and
are connected to their communities,
which is key to our licence to operate.
Our brand
Breedon has become a top five heavyside
construction materials provider in GB and
RoI in just over a decade. Our brand has
gained prominence with a reputation for
quality of product and reliability of service.
Our Net Promoter Scores (NPS) recognise
our services as extremely good.
Our reputation
as an asset owner
We have a reputation as a good owner
and acquirer of assets. Our M&A pipeline is
populated with family-run operations for
whom this is an important consideration.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Chief Executive Officer’s review and strategy
NEW IMAGE TO
BE SUPPLIED
Rob Wood
Chief Executive
Officer
We delivered an incredibly
good year due to our
focus and discipline.
28
£156m
Underlying EBIT
(2022: £155m)
£134m
Statutory PBT
(2022: £136m)
Record Revenue and
Underlying EBIT
Recent years have presented Breedon
with a broad spectrum of challenges.
To succeed in these markets has required
a clear strategy, a strong business model
and an agile team with focus and discipline.
At Breedon we have worked hard to ensure
we have all three. As a business we are
maturing and our move from AIM to the
Main Market in 2023 is evidence of the scale
and market position we have achieved in the
last decade.
The strong 2023 results were delivered
in tough markets and are testament to
the resilience of our vertically-integrated
model and sustainable growth strategy.
Although our key end-markets experienced
a number of short-term headwinds during
the year, volume contraction was moderate
and pricing remained sufficient to fully
recover costs.
Infrastructure spending remained stable
with major projects making steady
progress. Housebuilding was impacted
by the macroeconomic landscape and
changes to building standards which
affected the seasonality of our earnings.
Nonetheless, the long-term structural
growth drivers remain in place, underpinning
the outlook for our key end-markets which
continue to experience cross-party political
support in GB and Ireland.
Carefully managing factors
within our control
The macroeconomic conditions which
drive volumes are beyond our direct
influence. Therefore, we increased our
focus on carefully managing all factors
within our control. In 2023, in addition to our
deliberate pricing strategy, we emphasised
operational and commercial excellence
across the Group to maximise the value of
our products and services and increase
productivity.
Consequently, we delivered results ahead
of expectations, growing revenue 7% to
£1,487.5m (2022: £1,396.3m), or 4% on a
like-for-like basis when adjusting for the
three bolt-on acquisitions completed in
the year.
During the year we invested in central
functions in order to support our growth
ambitions and delivered record Underlying
EBIT of £156.2m (2022: £155.0m). Our
Underlying EBIT margin of 10.5%, which
reflects the impact of operating leverage on
reduced volumes, is 60bps lower than 2022,
a year which benefitted materially from our
forward energy hedging policy.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Chief Executive Officer’s review and strategy
Focusing on our medium-term
objectives
Two years ago we established a financial
framework with a balanced suite of
medium-term targets. Return on invested
capital (ROIC), a post-tax measure,
moderated during the year to 9.9%
(2022: 10.8%, target 10%), reflecting the
increase in the UK corporation tax rate.
Cash generation remained healthy during
the period, enabling us to invest for growth.
We maintained our net capital expenditure
at £103m (2022: £102m) and completed
three bolt-on transactions, investing
£20m during the year. As anticipated,
working capital experienced an outflow
of £9m, primarily due to inflation.
Consequently, Free Cash Flow conversion
for the year improved to 39% (2022: 29%,
target 50%).
Sustaining a robust balance sheet
underpins our strategic optionality as we
pursue both organic and inorganic routes to
growth. During the year Covenant Leverage
reduced further to 0.5x (2022: 0.7x), below
our medium-term target of 1x to 2x.
To reflect the confidence we have in our
vertical model, the strength of our team
and our market position, the Board has
approved a full-year dividend of 13.5p
(2022: 10.5p), a significant increase of 29%.
In addition to investing for growth and
maintaining sustainable leverage, we have
progressed our dividend payout ratio
to our target of 40% of Underlying EPS
(2022: 30%).
Our team makes the most
material difference
The Breedon team is entrepreneurial
and adaptable, dedicated to providing
our customers with best in class service.
They frequently operate in harsh physical
conditions, going the extra mile to ensure
we deliver high-quality products to our
customers on time.
2023 was one of the warmest and wettest
years on record, presenting a material
limitation to meeting our clients’ needs.
Yet regardless of this disruption, our
first-class team delivered for our customers
and their performance was recognised
in our latest NPS surveys; we provided a
service classified as ‘extremely good’ by
NPS, with trust scores frequently rated
as ‘outstanding’.
We never take this performance for granted
and continually strive to make Breedon
a great place to work. During the year
we awarded a pay increase of 6% to our
colleagues and partnered with a leading
wealth and benefits adviser to support our
team through the cost of living crisis.
Our strategy
Sustain
Sustainability considerations guide
all of our decisions
Optimise
Continuously improving efficiency
Expand
Through organic and
inorganic growth
Financial framework
Supporting our strategy through
investment and capital allocation
29
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Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 30
Chief Executive Officer’s review and strategy
We welcomed 70 new graduates and
apprentices (2022: 60) and supported an
additional 37 colleagues through further
and higher education (2022: 22), receiving
enhanced silver membership of The 5%
Club which recognises our determination
to play our part in the development of a
workforce for the future.
Our commitment to our people was reflected
in our 2023 colleague engagement survey
which delivered its best results ever. With
76% of our colleagues taking part (2022:
75%), 80% felt engaged, an improvement
of 3ppt on the prior year. Going forward we
will invest further in our team and seek to
grow our talent to ensure we can deliver an
excellent service to our customers.
Sustainable growth strategy delivering
80%
employee
engagement
70
new apprentices
and graduates
1bn
tonnes mineral reserves
and resources
c.35
years mineral reserve life
Sustain
Our Sustainability Framework has made
further tangible progress, delivering some
significant milestones in 2023 towards the
long-term sustainability of the business.
Our highest priority remains ensuring our
3,900 colleagues and all those that attend
our sites go ‘Home Safe and Well’ every day.
In 2023 we made real progress, enhancing
the cultural perceptions around our safety
behaviours, encouraging reporting and
sharing of learnings across the Group.
In 2023, although the lost time injury
frequency rate for our colleagues and
contractors increased to 3.5 per million
hours worked (2022: 3.1), the severity of
those injuries diminished, and the broader
total injury frequency rate reduced to 17.0
(2022: 17.2). Leading indicators, such as the
Visible Felt Leadership (VFL) visits that we
undertake to audit safety behaviour on our
sites, increased 7% which should be positive
for future outcomes.
In 2021 we established a roadmap to achieve
net zero by 2050, setting medium and long-
term targets to reduce the carbon footprint
of our Cement division, the principal
contributor of the Group’s CO2 emissions. In
2023 we extended our net zero plans and
our Group-wide targets were submitted to
SBTi for formal validation which will take
place in 2024.
In 2023 we made our first submission for
assessment by CDP which has since been
awarded a CDP rating of B for Climate
Change and C for Water Security.
Our cement business operates with
industry leading levels of alternative fuel
substitution, achieving a combined rate
of nearly 50% fossil fuel replacement with
our modern plant in Kinnegad exceeding
over 90% at times. We increased our sales
of CEM II cement, a lower clinker content
product, and invested further in a network
of CEM II silos in GB where regulation has
been modified to permit its wider use.
Consequently, CEM II now comprises
roughly a quarter of our cement sales,
increasing by over 50% from the prior year.
Throughout 2023, we increased the
proportion of concrete and asphalt sales
with sustainable attributes by 3ppt to
40%. Furthermore, we launched the
‘Breedon Balance’ brand which promotes
a broad range of products with sustainable
attributes.
Through a combination of these actions we
reduced our Group carbon emissions per tonne
of product by 5% during 2023 while our
carbon intensity by revenue reduced by 15%.
Securing a sustainable future for the UK
cement industry is vital if we are to achieve
net zero as a country. In line with this
ambition, during the year we hosted the
launch of the Peak Cluster carbon capture
and storage initiative, a collaborative project
that aims to store over three million tonnes
of carbon dioxide emissions each year by
2030, a move that will reduce UK emissions
into the atmosphere from cement and
lime manufacture by around 40%. This is a
landmark project for the industry and for
it to be successful it requires significant
commitment from the UK Government.
Optimise
At Breedon each site has unique
characteristics and we continually review
the performance of the team and plant
to ensure we produce our materials with
maximum efficiency and minimum cost.
In 2023, each business implemented an
operational and commercial excellence
programme, revisiting the entire process
from quarry to customer.
Using a broad diagnostics benchmark of
operational efficiency indicators and financial
measures, we conducted site reviews
to identify underperforming assets and
bottlenecks and establish a plan for training,
improvement and investment. Often a few
small interventions have a material impact
on productivity with rapid payback. Actions
have included revisiting quarry architecture,
adjusting maintenance schedules to minimise
downtime and overtime, and investing in
productivity enhancing equipment.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Chief Executive Officer’s review and strategy
In 2022, we implemented an electronic
proof of delivery (EPOD) system, advancing
its use across the Group during 2023.
By removing c.1.5 million paper tickets
each year we have already saved 529 trees,
reduced queries by 58% and generated
a material working capital improvement
with further progress planned for 2024.
Our M&A pipeline remains healthy and
active with many bolt-on opportunities
originating from our local presence and
personal engagement with the asset
owners. In 2023 we completed three
earnings enhancing transactions in GB
and Ireland with a combined enterprise
value of £22m.
Expand
We have once again delivered balanced
revenue growth, supported by deliberate
pricing, ongoing internal investment and
strategic acquisitions.
In 2023 we replenished our strategically
valuable asset base of mineral reserves
and resources at one billion tonnes, which
equates to around 35 years of production.
We believe our diligent approach to land
management and mineral planning sets
us apart and we have identified further
mineral planning opportunities in excess
of 125 million tonnes.
In Ireland the acquisition of Robinson Quarry
Masters (Robinsons), a family-run quarrying
and concrete block business, has enhanced
our mineral footprint north of Belfast. In GB
we acquired two downstream businesses;
Broome Bros., a leading manufacturer of
concrete blocks based in Doncaster, and
Minster Surfacing, an award-winning regional
surfacing business based in Lincoln. Each of
the acquired businesses has integrated well
and is performing in line with our expectations.
On 6 March 2024 we announced the
acquisition of BMC Enterprises Inc (BMC)
for an enterprise value of c.US$300m.
This is an exciting opportunity to
replicate the Breedon model in the highly
fragmented US construction materials
market through a culturally aligned team.
31
Outlook
The macroeconomic and geopolitical
landscape remains uncertain. While the
near-term outlook for our industry is
finely balanced, the longer-term outlook
for our main end-markets, infrastructure
and housebuilding, is well supported
by structural growth dynamics and we
are confident we will see them return to
growth in the medium-term.
As we lap the base effects of 2023 we
expect volumes and pricing to stabilise.
In the UK the CPA forecasts construction
output will contract by 2.1% in 2024 as
stable infrastructure production is offset
by ongoing weakness in housebuilding,
with both sectors expected to return to
growth in 2025.
Euroconstruct forecasts that RoI GDP
growth will remain the highest in Western
Europe, leading to construction output of
4.4% as significant foreign direct investment
and population growth drive the need for
investment in housing and infrastructure.
The construction industry is widely
recognised to be an important economic
contributor, benefitting from cross-party
Government support. Therefore, we
welcome the clarity that will follow the UK
general election and we are encouraged
by the recent reinstatement of a governing
Assembly in Northern Ireland.
Our M&A pipeline remains well populated
with active discussions and, with leverage of
0.5x, our healthy balance sheet, diversified
funding and thoughtful approach to capital
allocation will enable us to respond swiftly
when the right transactions become available.
Encouragingly, 2024 has begun with the
acquisition in January of Eco-Asphalt
Supplies, a Merseyside asphalt supplier with
strong sustainability credentials, located
within the region where we service the
National Highways Pavement framework.
The Breedon local model has once
again proved its resilience, delivering an
outstanding performance in challenging
conditions and we are confident in our
ability to rapidly respond to the evolving
economic and political backdrop.
Our growth strategy is well established,
our forward hedging policy remains in place
providing cost visibility, and we expect the
commercial and operational excellence
reviews we implemented in 2023 will
generate further productivity gains.
We expect the acquisition of BMC will be
earnings enhancing in its first full year of
ownership. BMC will be consolidated for
fractionally less than ten months in 2024
and our Pro Forma Covenant Leverage on
acquisition is c.1.4x, enabling flexibility for
dividends and future bolt-on acquisitions
across each of our platforms. The acquisition
is an exciting opportunity that will enhance
the longer-term growth profile of the Group.
Rob Wood
Chief Executive Officer
6 March 2024
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Chief Executive Officer’s review and strategy
Sustain
Operating a sustainable business is one
of our highest priorities and all strategic
decisions are made with this in mind.
Breedon has a long history of taking positive actions to
embed a culture of sustainability and our bespoke framework
sets out how we are responding to the urgent challenge
posed by climate change.
We have introduced a range of measurable performance
indicators to drive our sustainability performance, while
increasing transparency and disclosure as we move towards
our 2030 targets.
KPIs
Risks
Emissions intensity –
Group revenue
Emissions intensity –
Cement
Combined LTIFR
Combined TIFR
People positively impacted
Sustainable products
Climate change
Competition
Failure of a critical asset
Health and safety
IT and cyber security
Laws, regulations and
governance
Markets
Land and mineral
management
People
Supply chain and input costs
More detail on our KPIs
»42
More detail on our Risks »54
32
-
Progress during the year
Carbon reduction
External validation
Participation in the Peak Cluster
carbon capture and storage
project, increasing utilisation of
alternative fuels and increased
sales of Breedon Balance
products.
We were awarded a CDP rating
of B for Climate Change and
C for Water Security and our
medium-term carbon reduction
targets were submitted to SBTi
for formal validation.
Biodiversity ambition
Home Safe and Well
We implemented biodiversity
action plans at another 14 of
our sites creating undisturbed
habitats where wildlife and
nature can flourish.
We progressed our safety record,
changing cultural perceptions
and improving safety behaviours.
Future priorities
Transparency and
disclosure
We are committed to increase
our transparency and disclosure
as we move towards our
2030 targets.
External verification
We are investing in systems
and processes to improve the
capture and robustness of our
data, disclose our performance
to credible agencies and seek
third-party ratings.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Chief Executive Officer’s review and strategy
Optimise
We are a trusted steward of mineral
reserves and resources, continually
improving the efficiency of our operations.
In an industry where new reserves are limited by planning
practices, we carefully manage the valuable resources we
own. Our land management process has a long-term pipeline
coupled with disciplined quarry acquisition, operation
and development.
Our processes are continually refined to enhance the value of
every tonne of material we quarry and manufacture. We fully
integrate acquired assets, applying Breedon best practice,
ensuring our competitive position is maximised.
KPIs
Risks
Adjusted Underlying Basic EPS
Free Cash Flow conversion
Return on invested capital
Revenue
Underlying EBIT margin
Acquisitions and material
capex projects
Competition
IT and cyber security
Land and mineral
management
People
More detail on our KPIs
»42
More detail on our Risks »54
33
Progress during the year
Commercial and
operational excellence
Each business implemented
self-help programmes in 2023 to
maximise productivity, optimise
costs and embed a culture of
continual improvement.
Improving all outcomes
Deliver incremental sustainability
benefits and enhance reliability
and safety while maximising the
return on every tonne of material
we produce and improve our
customer service.
Electronic proof
of delivery
Harnessing technology to
enhance commercial, logistical
and administrative productivity,
unlock lasting financial benefits
and improve our carbon footprint.
Site reviews
Review every stage of production
from the quarry face to the gate,
considering the local market
requirement, asset utilisation,
capital requirement and
EBITDA performance.
Future priorities
Responsible stewards
Perpetual improvement
We have particular regard to our
responsibility as stewards of the
land we own with a long-term plan
to maximise planning consents.
Continual self-help is embedded
in our culture and our team
constantly strives to improve
our practices and processes.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Chief Executive Officer’s review and strategy
Expand
Breedon has a balanced track record of
complementing organic growth with
carefully selected transactions to expand
our footprint and capabilities.
We have multiple routes to expand the business which
we prioritise according to market conditions.
We deliver organic growth by serving structurally growing
end-markets, underpinned by long-term government
funding commitments. We deploy investment capital
thoughtfully and our sophisticated land management is
complemented by continual optimisation.
We have an active M&A pipeline where we have contributed
to the consolidation of the heavyside building materials
market in GB and Ireland for over a decade.
KPIs
Risks
Covenant Leverage
Free Cash Flow conversion
Revenue
Reserves and resources
Return on invested capital
Underlying EBIT margin
Acquisitions and material
capex projects
Competition
Failure of a critical asset
Land and mineral
management
Laws, regulations and
governance
Markets
More detail on our KPIs
»42
More detail on our Risks »54
34
Progress during the year
Replenishing our mineral
reserves
During the year our land
management team replenished
our mineral reserves through
successful planning applications
to extend or enhance existing
sites, or by purchasing adjacent
land.
Growing our capability
Minster Surfacing is a business
with strong sustainability
credentials extending to asphalt
recycling and waste reduction.
Broome Bros., a leading concrete
block manufacturer located
adjacent to a Breedon ready-
mixed concrete site, extends our
downstream route to market.
Extending our footprint
With the acquisition of Robinsons
we extended our presence in
the aggregates market north of
Belfast while the acquisition of
Minster Surfacing enhanced our
presence in the Midlands and
central England.
Developing new markets
We have developed a highly credible
presence in the civil and military
airfield surfacing market, completing
numerous projects across the
UK and RoI in 2023. During the
year we continued to explore the
commercial potential for inert
landfill at our depleted quarries.
Future priorities
Investing for growth
Active M&A pipeline
Each year we invest in maintaining
and expanding our land portfolio
and asset base with roughly
30% of our capital expenditure
directed towards growth projects.
Our healthy pipeline in the UK
and RoI, where we seek to in-fill
our existing footprint, develops
from our local relationships with
the asset owners, supported by
our reputation as a good acquirer.
Longer term we continue to
evaluate opportunities in the US.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Chief Executive Officer’s review and strategy
Financial framework
Our financial framework governs how
we connect our strategy to investment
and capital allocation.
Our financial framework sets out how we allocate
capital to the multiple growth options available to us.
The cash we generate is responsibly combined with
diversified sources of external of finance.
The framework prioritises sustainable growth and
responsible leverage, focusing on return on capital
investment and profitability, while ensuring a strong
balance sheet that gives us strategic flexibility.
KPIs
Risks
Covenant Leverage
Dividend per share
Free Cash Flow conversion
Return on invested capital
Underlying EBIT margin
Acquisitions and material
capex projects
Competition
Failure of a critical asset
Markets
Supply chain and input costs
Treasury
More detail on our KPIs
»42
More detail on our Risks »54
35
Progress during the year
Deploying capital
Investing for growth
We completed three earnings
enhancing transactions,
extending our mineral assets and
expanding our capability and
footprint.
Returning cash to
shareholders
In 2021 we committed to return
cash to our shareholders through
the introduction of a progressive
dividend. In 2023 we made a cash
dividend payment of £37.3m to
Breedon Group shareholders
(2022: £30.5m) and the Board
approved a full year dividend of
13.5p.
We deployed £103m capital
expenditure, investing in our
mineral asset base, fleet and
plant. Our Cement business
invested in carbon emissions
reduction projects and a new
concrete tile plant in NI.
Cash flow generation
The Group-wide implementation
of our EPOD system combined
with our rigorous approach
to cash collection enabled us
to carefully manage working
capital. With 42% more
construction businesses entering
administration in 2023 than in
2022, disciplined cash collection
is more important than ever.
Future priorities
Thoughtful capital
allocation
Our thoughtful approach to
capital allocation prioritises a
healthy balance sheet, ensuring
we have the strategic optionality
and flexibility to continue to
pursue our growth ambitions.
Sustainable leverage
Our medium-term objective is
to maintain prudent Covenant
Leverage of between 1x and 2x,
only moving outside this range
to ensure financial resilience
or for compelling acquisition
opportunities.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Operating reviews Great Britain
Great Britain
Our GB business has delivered a
solid performance, growing revenue
in challenging trading conditions.
Highlights
Revenue
Underlying EBIT
£1,033.8m £86.4m
+6%
0%
Solid trading performance; Underlying
EBIT maintained in a softening market
through our deliberate pricing strategy.
Excellence programmes implemented;
enhanced focus on operational and
commercial productivity.
M&A and new markets; converting pipeline
to earnings enhancing transactions,
growing aviation surfacing and inert
landfill opportunities.
36
22.2
23.2
25.7
19.0
17.6
2.8
2.8
3.0
2.3
1.9
2.8
2.9
3.0
2.5
2.8
Solid trading performance
Aggregates
million tonnes
2023
2022
2021
2020
2019
Asphalt
million tonnes
2023
2022
2021
2020
2019
Concrete
million m3
2023
2022
2021
2020
2019
The GB business successfully navigated
challenging market conditions throughout
the year to deliver a solid performance.
Our vertical model, entrepreneurial culture
and extensive local market knowledge
enabled us to grow revenue 6% to £1,033.8m
(2022: £972.4m). Adjusting for the
acquisitions of Minster Surfacing and
Broome Bros. in the first half, like-for-like
revenue increased 3%.
Volumes moderated during the course
of the year. Changes in housebuilding
regulations in the summer caused
ready-mixed concrete volumes to soften
in the second half. Although infrastructure
remained resilient, volumes for aggregates
and asphalt were impacted by clients’
budget constraints after a long period of
building materials cost inflation.
Our key end-markets of infrastructure and
housing are structurally under-invested
while the supply of the essential heavyside
building materials we provide is constrained
by planning practices. Consequently,
pricing remained robust with average
selling prices sufficient to recover rising
input costs. Underlying EBIT margin
decreased by 50bps to 8.4%, principally
due to product mix and the impact of
reduced volumes on operating leverage.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
Operating reviews Great Britain
Taking self-help actions
Although a culture of continual
improvement is embedded throughout
the team, in 2023 we reinvigorated our
self-help measures, implementing tailored
programmes in our materials and surfacing
operations. By closely monitoring plant
efficiency and with carefully targeted
investment we have been able to identify
and resolve bottlenecks across our sites.
We improved asset run time, reducing the
need for overtime working, improving fuel
consumption and reducing safety risks.
The location and age of crushing equipment
is influential to the efficiency of a site.
We upgraded our crushing capability at
Dowlow, Leaton and Cloud Hill, enabling
plant alterations and productivity gains
and were able to remove contractors from
the process while maintaining output.
Growing our capability,
extending our footprint
We built out our downstream capability
in 2023 further still, pulling more material
through the business. We have built a
strong reputation for quality and reliability
in airfield surfacing leading to a four year
pipeline of commercial work with strong
partners, and military work for the Defence
Infrastructure Organisation.
During our first year delivering the National
Highways Pavement Delivery framework
we have secured a good portfolio of work,
and the acquisition of Minster Surfacing has
reinforced our regional surfacing, airfields
and recycled asphalt capability.
Enhancing our sustainability
credentials
In 2023 we continued to explore opportunities
to repurpose depleted quarries and recycle
materials. In select locations we are building
specialist local partnerships, enabling us to
capture recyclable material while taking a
fee for receiving inert landfill.
We invested further in CEM II silos ahead
of the building regulation change that
occurred in November and extended
our ability to receive and store RAP.
GB outlook
The macroeconomic and political
backdrop remains unpredictable, leading
to budget pressures and delayed project
commitments. In our latest NPS survey
our customers classified our service as
‘extremely good’ while trust scores were
rated ‘outstanding’. This is a consequence of
the quality of our products and service and
places us in a strong competitive position
which we intend to reinforce through our
ongoing excellence programmes.
37
Maturing a business formed
through acquisition
In 2023 we undertook a
comprehensive review of our
operations, using performance
indicators to give a clear picture of
our asset capability and maximise
the efficiency of the business.
This has enabled our site managers
to apply targeted investment
and make confident decisions to
improve operational performance.
These actions improve all outcomes,
driving natural sustainability
benefits, enhancing reliability and
safety, while maximising the value
of every tonne we produce.
Pictured above is the ‘cut and cover’
tunnel we completed at Wickwar,
in 2023, enabling us to efficiently
access a further 20 years of mineral
reserves, with potential for future
extensions.
Our customers require the right
products in the right place at the
right time, for the right price. While
our NPS scores indicate we are
already meeting many of our clients’
needs, we continually strive to
improve our service and efficiency.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Operating reviews > Ireland
Ireland
Our Ireland business delivered a
robust performance, providing
high-quality work to loyal customers.
Highlights
TEXTURE TO BE ADDED
Revenue
Underlying EBIT
£235.5m £29.0m
+4%
+2%
Robust performance; growing earnings
in mixed markets.
Vertical integration enhanced; growing
mineral reserves and pipeline.
Well positioned for 2024; excellence
programme implemented to position
the business for sustainable growth.
38
Robust performance in
mixed markets
positive pricing tailwind which we sustained
in the second half, supporting Underlying
EBIT of £29.0m and a margin of 12.3%.
Our business in Ireland has a strong
reputation for delivering high-quality
service to loyal customers, often through
frameworks and long-term contracts.
We are well positioned to deliver materials
to markets that benefit from significant
foreign direct investment and rapid
population growth while suffering structural
infrastructure and housing deficits.
Market conditions varied by region and
improved through the course of the year.
In Northern Ireland, although significant
pent-up demand exists, the absence of a
governing Assembly limited the volume
of tenders coming to market. Nonetheless,
we won work on a number of frameworks.
In RoI, tendering and pricing remained
resilient; we approached completion of
the Dunkettle Interchange, a three-year
project in partnership with Sisk, and
secured further high-quality new work.
Aggregate volumes increased 11%
following the acquisition of Robinsons,
asphalt volumes grew 9% due to strong
downstream activity in RoI, while ready-
mixed concrete volumes declined.
As a result, revenue in 2023 increased to
£235.5m. On a like-for-like basis, revenue
increased 3% and aggregate volumes
increased 5%. We entered the year with a
Mineral reserves enhanced
Our land and minerals team work closely
with planning authorities to reactivate
dormant quarries and extend existing sites.
Since 2018 we have successfully extended
our reserves and resources from 60 million
tonnes to 153 million tonnes today. In 2023
through the acquisition of land adjoining
three existing quarries, combined with
the addition of Robinsons, we added
over 50 million tonnes of mineral with
nearly 40 million tonnes at various stages
of planning.
Positioned for sustainable
growth
Building on the re-branding to Breedon
Ireland we undertook the prior year, we
reviewed our Ireland growth strategy in
2023 with the intention to be a leader in
every market we serve. We implemented
an excellence programme promoting
optimised processes and enhanced
sustainability credentials. Consequently,
we aligned operations within materials
and surfacing under a single director
respectively, dedicated to maximising
efficiency across Ireland, further emphasising
the pull of materials through the business.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Operating reviews > Ireland
In 2023 we signed up to the Business in the
Community Ireland Low Carbon Pledge.
We are exploring opportunities for solar
farms on our sites, increasing our warm-mix
asphalt and materials recycling capabilities,
and increasing our electric vehicle fleet.
We have an active M&A pipeline to increase
our mineral independence, and we work
closely with long-term partners on major
projects to meet growing market demand.
We work closely with local authorities,
national agencies such as Transport for
Infrastructure Ireland and the whole
spectrum of contractors. It is increasingly
evident that tenders are awarded on
quality measures where we perform well.
In our latest NPS report our service was
classified as ‘very good’ while our trust
score was ‘outstanding’. Therefore, we
are confident our Ireland business is
well positioned to deliver our strategic
objectives of growth and market leadership.
Ireland outlook
We deliver high quality work to repeat
customers in markets with growing
populations and structural housing and
infrastructure deficits. RoI is forecast to
remain the fastest growing region in
Western Europe, driving demand for
construction projects and materials. In NI,
where there is significant pent-up demand,
we are optimistic the recent return of the
governing Assembly to Stormont will
enable the budget process to be reinstated.
Aggregates
million tonnes
2023
2022
2021
2020
2019
Asphalt
million tonnes
2023
2022
2021
2020
2019
Concrete
million m3
2023
2022
2021
2020
2019
3.2
3.5
3.5
2.7
2.6
1.0
1.0
1.0
1.1
1.1
0.2
0.2
0.2
0.2
0.1
39
Dunkettle Interchange
The Dunkettle Interchange is a
strategically important transport
scheme on behalf of Transport
Infrastructure Ireland to the East
of Cork City where four key road
networks come together. This
major project is intended to relieve
traffic congestion and improve road
safety, and includes 12 bridges, four
roundabouts and a series of new
pedestrian and cycling routes.
Working in close partnership with
Sisk, over the past three years
Breedon Ireland has delivered
700,000 tonnes of aggregates
and 80,000 tonnes of asphalt from
our local quarry at Rossmore, with
25,000 m3 of concrete delivered
from our plant at Milebush.
The Dunkettle interchange will
complete in 2024, bringing clear
safety and productivity benefits
to the local community and we are
already preparing to work alongside
Sisk on other major projects across
the island of Ireland.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Operating reviews > Cement
Cement
Cement delivered a strong financial
result and advanced plans to reduce
our carbon emissions.
Highlights
Revenue
Underlying EBIT
£331.2m £55.2m
+10%
+6%
Growing revenue and Underlying EBIT;
strong financial result delivered.
Excellent operational performance;
plant reliability and alternative fuel
substitution progressed.
Advancing our carbon reduction plans;
Peak Cluster carbon capture and storage
initiative launched at our Hope plant.
40
In 2023 Hope sustained its Plant Mastery
status for a remarkable fifth consecutive
year. Kinnegad maintained its strong
reliability record, a creditable outcome as
the high use of alternative fuels increases
the engineering complexity of the cement
production process.
Our customers appreciate our consistent
quality and reliability and this was
recognised in our latest customer survey
where our NPS result was classified as
‘extremely good’ while our trust measure
was ‘outstanding’.
Executing sustainability
enhancing projects
Within our Sustainability Framework,
Breedon has committed to achieve net
zero by 2050 and we have a variety of
projects under way to reduce our carbon
emissions. In 2023, by maximising the use
of waste derived alternative fuels which
would otherwise enter landfill, we achieved
a combined fossil fuel replacement rate
of nearly 50% with Kinnegad utilising 79%
alternative fuels, exceeding 90% at times.
Resilient growth
Breedon is a prominent operator in the
GB and Ireland cement markets. With
Kinnegad, the most modern plant in
Ireland, leading the market for fossil fuel
replacement and Hope, the largest cement
plant in GB, setting the pace for reliability,
Breedon Cement is well positioned.
In 2023, as demand from the housebuilding
and commercial sectors declined, volumes
reduced 4% to 2.1 million tonnes. Pricing
increased by 17% leading to an overall
revenue increase of 10%.
Exceptional reliability
We take a rigorous approach to plant
maintenance, planning years ahead to
maximise the benefit of our investment
and the productivity of our plants.
During the period we undertook the
customary annual planned maintenance
programme that enables us to sustain our
exceptional reliability. Both winter and
autumn programmes were completed
on schedule and within budget.
Plant Mastery status, an industry recognised
measure, is awarded to operations that
maintain plant reliability in excess of 96%
for three consecutive years and is typically
associated with excellent cost and quality
control and accompanied by outstanding
health, safety and environmental records.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Operating reviews > Cement
Kinnegad commenced construction of a
17MW solar farm while Hope is undertaking
a feasibility study to examine the possibility
of a small solar farm that would benefit the
wider local community.
Reducing the clinker intensity of our cement
with the use of low carbon supplementary
cementitious materials will also contribute
to reducing our carbon footprint.
Approximately 60% of Kinnegad sales are
now CEM II (2022: 50%), a product range
with lower clinker content. In GB, building
standards were modified in November 2023
to permit the wider use of CEM II. More than
10% of Hope sales are already CEM II and,
as our customers incorporate the new
standards into their designs, we expect
this will increase still further.
Reduction of CO2 emissions is a significant
challenge for the cement industry
and so we have established innovative
partnerships to tackle this objective.
Graphene is an extremely versatile material,
known to improve the performance of
low clinker factor cements. Working in
collaboration with our graphene supply
partners, we participated in successful
field trials of graphene enhanced cement
which demonstrated up to a 10% increase in
compressive strength and a potential route
to further reductions in carbon emissions.
As the UK cement industry works to secure
a sustainable future, carbon capture and
storage has a vital role to play in reaching
our net zero objective. The Peak Cluster
carbon capture and storage initiative was
launched at our Hope plant during the
year; as a key partner we now have a clear
path to achieve our carbon reduction goal.
The project is in its early stages, considering
feasibility and design options.
Cement outlook
Demand for cement remains resilient and
we occupy a robust market position. In the
UK, short-term softness in housebuilding is
balanced by large ongoing infrastructure
projects. In RoI, housing and infrastructure
are supported by the Government’s
long-term development plans to
accommodate a strong economy.
Cement
million tonnes
2023
2022
2021
2020
2019
2.1
2.2
2.4
2.0
2.0
41
Investing in the future
Our Hope plant, the largest in GB,
began cement production in 1929
and is approaching its centenary.
To maintain production and ensure
we operate safely requires advance
planning and investment.
The primary crusher, which
first entered service in 1957, is a
critical component at the start of
the clinker production process.
Installing its replacement is a major
undertaking. Preparatory work
took place this year with the final
transition scheduled to coincide
with kiln maintenance in the autumn
of 2024.
We are diversifying our use of
materials in the clinker production
process. By investing in an
Alternative Raw Material (ARM)
facility we will be able to utilise
rail-fed supplies of naturally lower
sulphur secondary materials, such
as Welsh slate and pulverised fuel
ash (PFA), enabling a significant
reduction in sulphur dioxide
emissions at Hope.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Key performance indicators
Revenue
£
Financial
Our financial KPIs are used to measure
progress against our strategy and act
as risk monitors.
There have been no changes to either
the metrics used as financial KPIs,
or the calculation methodology during
the current year, although earnings and
dividend per share measures have been
restated for the impact of the 5:1 share
consolidation undertaken during the year.
Where a financial KPI is a non-statutory
measure of performance, a reconciliation
to the most directly related statutory
measure is provided in note 27 to the
consolidated financial statements.
Links to remuneration
ST
LT
Considered by Remuneration Committee as
part of determining the annual cash bonus
Impacts vesting levels of our longer-term
performance share plans
Directors’ Remuneration report
»145
Underlying
EBIT margin
%
Adjusted
Underlying
Basic EPS*
pence
Dividend
per share*
pence
Covenant
Leverage
times
Return on
invested capital
%
Free Cash Flow
conversion
%
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
Why we chose this measure
How we performed
42
Link to
remuneration
1,487.5
1,396.3
This metric tracks the Group’s
top-line growth.
1,232.5
928.7
929.6
10.5
11.1
10.8
8.2
12.5
This metric tracks changes in the
relative profitability of the Group.
34.0
35.4
29.9
This metric tracks changes in
adjusted Underlying Basic EPS
for our shareholders.
15.9
25.4
10.5
8.0
13.5
This metric tracks cash returned to
shareholders through dividends.
Revenue increased as modest volume
reductions were more than offset by
continued robust pricing.
Underlying EBIT margin fell as a result
of reduced operational gearing in a
lower volume environment and the
impact of our energy hedges moving
back into line with market pricing from
the second quarter of the year.
While we grew pre-tax earnings per
share, the impact of the increased
UK corporation tax rate resulted
in lower adjusted Underlying EPS
than in 2022.
ST
LT
We first declared a dividend in 2021
and have increased our payout ratio
in both 2022 and 2023, meeting our
target payout ratio of 40% in respect
of 2023.
0.5
0.7
0.8
1.9
1.4
This is a key credit metric for our providers
of debt finance which tracks the ability
of the Group to maintain sufficient
liquidity to service the needs of the
business and determines the margin
payable on our revolving credit facility.
Year-end Covenant Leverage
of 0.5x represents continued
de-gearing following an
acquisition-related increase
during 2020.
9.9
10.8
9.5
This metric tracks how well the
Group generates returns in relation
to the average capital invested.
5.5
8.8
ROIC fell as a result of the increased
UK corporation tax rate in 2023. 9.9%
is broadly in line with the Group’s
cost of capital and our medium-term
target of 10%.
39
29
59
50
94
This metric tracks the conversion of
Underlying EBITDA into Free Cash
Flow, which is a key indicator that
the Group is able to generate
sufficient cash to support its
capital allocation priorities.
We reported improved Free Cash
Flow conversion compared to 2022
while continuing to invest record
amounts back into our business,
making progress towards our
medium term target of 50%.
* Comparative values for Earnings and Dividend per share measures have been restated to reflect the impact of the 5:1 share consolidation undertaken during the year.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
Key performance indicators
Non-financial
and sustainability
Our non-financial KPIs are used to measure
progress against our strategy and act as
risk monitors.
There have been no changes to either
the metrics used as non-financial KPIs or the
calculation methodology during the current
year, except for lost time injury frequency
rate (LTIFR) and total injury frequency rate
(TIFR) which now reflect the combined
measure of employee and contractor health
and safety outcomes, which better reflects
the activities on our sites.
These include the metrics used to track
progress against our 2030 sustainability
targets for Planet, People and Places.
For further information on our 2030
sustainability targets, including details
on how these metrics have been defined,
see the Sustainability review from page 71
and our TCFD report from page 61.
Links to remuneration
ST
LT
Considered by Remuneration Committee as
part of determining the annual cash bonus
Impacts vesting levels of our longer-term
performance share plans
Directors’ Remuneration report
»145
Combined
LTIFR
per million
hours worked
(employee and
contractor)
Combined
TIFR
per million
hours worked
(employee and
contractor)
Reserves and
resources
billion tonnes
Emissions
intensity –
Revenue
kgCO2e per
£ revenue
Emissions
intensity –
Cementitious
reduction per tonne
from 2005 baseline
People
positively
impacted
number of people
per year
Sustainable
product sales
total concrete and
asphalt revenue
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
Why we chose this measure
How we performed
3.53
3.10
3.05
1.59
This industry-standard metric tracks
our health and safety performance
and enables us to maintain a strong
health and safety culture.
7.72
Our combined LTIFR performance
reflects an increase in the number of
lost time injuries recorded. There was
however, a 15% reduction in our lost
time injury severity rate.
16.99
17.23
19.80
17.97
21.07
This is a wider measure of our health
and safety performance, which
indicates the total injury frequency
rate of the Group across both our own
colleagues and contractors working
on our behalf.
Our performance has improved
year-on-year, and we will continue
to work hard to reduce this measure.
1.1
1.3
1.0
1.0
1.0
1.0
0.9
1.6
1.7
1.9
24%
23%
23%
This metric tracks the level of reserves
and resources available to the Group.
We maintained our asset base at
1.0 billion tonnes, with consumption
being offset by new reserves acquired
by the Group. At current volumes,
this equates to around 35 years
of production.
This is a reporting requirement of
the UK Government’s SECR regime
which tracks our overall carbon
intensity and has been reported
by the Group since 2019.
Our total location-based emissions
for this period were 1.7 MtCO2e, a
decrease of 7% in comparison to 2022.
The resultant emissions intensity is
1.1 kgCO2e/£ revenue, a reduction
of 15% in comparison to 2022.
This tracks the progress in
decarbonising our cement production
and aligns with our 2030 target to
achieve a 30% reduction in gross
carbon intensity per tonne of
cementitious product.
From our 2005 baseline we have
achieved a 24% reduction to date.
We are targeting further reductions
in line with our longer-term 2050
decarbonisation roadmap.
23,856
17,814
This is a key measure of social value
and aligns with our 2030 target to
positively impact 100,000 people.
11,114
We increased the number of people
positively impacted during the
year, bringing the total number of
people positively impacted to date
up to 54,784, achieving 54.8% of
our 2030 target.
40%
37%
25%
This tracks our success in increasing
our sales of sustainable products and
aligns with our 2030 target to achieve
50% of our concrete and asphalt sales
revenue from products with enhanced
sustainability attributes.
We achieved 40% of our concrete
and asphalt sales revenue from
products with enhanced sustainability
attributes. This compares to 37%
in 2022 and reflects an increased
adoption of CEM II cements.
43
Link to
remuneration
ST
ST
ST
ST
ST
ST
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Chief Financial Officer’s review
Revenue and Underlying EBIT
44
Great Britain
Ireland
Cement
Central administration
Share of profit of associate
and JVs
Eliminations
Total
2023
2022
Revenue
£m
1,033.8
235.5
331.2
–
–
(113.0)
1,487.5
Underlying
EBIT*
£m
86.4
29.0
55.2
(17.0)
2.6
–
156.2
Revenue
£m
972.4
226.2
300.7
–
–
(103.0)
1,396.3
Underlying
EBIT*
£m
86.4
28.3
52.1
(15.3)
3.5
–
155.0
* Underlying results are stated before acquisition-related expenses, redundancy and reorganisation costs,
property losses, AIM to Main Market costs, amortisation of acquisition intangibles and related tax items.
In 2023 we delivered a further year of
strong performance, advancing revenue
and Underlying EBIT through robust
pricing, disciplined cost management and
improvements in operations.
Revenue for the year at £1,487.5m increased
by 7% compared to 2022 (£1,396.3m), with
pricing of 9% continuing to more than offset
the impact of 2% lower volumes.
As the year progressed, our markets
slowed, with 11% revenue growth in the first
half of the year followed by a more modest
3% in the final six months of the year.
On a like-for-like basis, excluding the impact
of acquisitions, revenue increased by 4%
(2022: 11%).
Against this more challenging backdrop we
delivered resilient earnings growth with
Underlying EBIT of £156.2m up £1.2m on 2022
(£155.0m), with a strong performance from
each division and after further investment
into our central support functions.
On a statutory basis, Group profit from
operations of £145.7m reduced by £2.3m
from £148.0m in 2022, primarily as a result
of the costs associated with the move from
AIM to the Main Market which have been
presented as non-underlying. Underlying
EBIT margin of 10.5% was below the
11.1% reported in 2022, due to reduced
operational gearing in a lower volume
environment and the impact of our energy
hedges moving back into line with market
pricing, having provided a significant
benefit throughout 2022.
We remain confident in our medium-term
ambition to generate an Underlying EBIT
margin of between 12% and 15% once
volume growth returns to our markets.
Impact of acquisitions
Three bolt-on acquisitions completed
during the year for an aggregate Enterprise
Value of £22.0m and contributed £19.0m
revenue and £1.8m Underlying EBIT during
the period of ownership.
James Brotherton
Chief Financial
Officer
Our sustainable growth
strategy continues to deliver,
with another strong
performance in more
challenging market conditions.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 45
Chief Financial Officer’s review
Joint ventures
Tax
Our share of profit from our associate and
joint ventures was lower at £2.6m (2022:
£3.5m), primarily due to reductions in
Scottish Government road maintenance
spending impacting the performance of
BEAR Scotland.
Interest
The Group recorded an Underlying tax
charge at an effective rate of 20.4%
(2022: 16.0%), which equated to a charge
of £29.5m (2022: £22.9m).
The year-on-year increase in tax charges
was primarily attributable to the increase in
the effective UK corporation tax rate from
19% in 2022 to 23.5% in 2023.
We complied effectively with our stated
tax strategy, and we make a significant
contribution to the economies in which we
operate through taxation, either borne by
the Group or collected on behalf of, and
paid to, the tax authorities. In 2023 the total
taxes borne and collected by the Group
amounted to c.£210m (2022: c.£210m).
Earnings per share
Net finance costs in the year totalled £11.3m
(2022: £12.2m) and included interest on
the Group’s debt facilities, lease liabilities,
amortisation of bank arrangement fees, and
the unwinding of discounting on provisions,
net of interest received from short-term
cash deposits and money market funds.
Net cash interest of £6.5m (2022: £9.0m)
reduced in line with debt levels throughout
the year. We incurred a higher non-cash
charge to unwind the discount on provisions
as a result of higher risk free rates in the year.
The statutory tax charge, calculated relative
to statutory profit before tax and inclusive
of deferred tax rate changes, was 21.4% or
£28.8m (2022: 17.1% or £23.2m).
Alongside a further increase in the UK tax
rate to 25%, which will increase the future
effective tax rate of the Group from 2024, in
December 2021, the OECD released model
rules for a new global minimum corporate
tax framework applicable to multinational
enterprise groups with global revenues of
over €750 million (Pillar Two rules).
The increase in UK corporation tax rates
offset the impact of earnings growth and
resulted in a decrease of 4% in Underlying
Basic EPS for the year to 33.8p (2022:
35.1p), while Statutory Basic EPS was 31.1 p
(2022: 33.2p).
Adjusted Underlying Basic EPS, calculated
using Underlying earnings and adjusted
to exclude the impact of the £0.7m (2022:
£1.1m) charge recognised in respect of
deferred tax rate changes, decreased by
4% to 34.0p (2022: 35.4p).
Non-underlying items
Non-underlying items in the year amounted
to a pre-tax cost of £10.5m (2022: £7.0m),
of which the largest item was £6.0m
(2022: £4.8m) amortisation of acquired
intangible assets. Other non-underlying
items comprised £3.6m of AIM to
Main Market costs and £0.9m of
acquisition-related costs.
The UK substantively enacted legislation
implementing these Pillar Two rules on
20 June 2023 and they apply to the Group
with effect from 1 January 2024.
The Group has no significant dilutive
instruments, and diluted EPS measures
closely track non-diluted measures
for the year.
The Group is reviewing this legislation
together with developing guidance.
At 1 January 2024 the impact of Pillar Two
rules on the Group is limited to the Group’s
taxable profits generated in RoI. Based
on the information currently available, the
impact of Pillar Two rules on the Group tax
position is not expected to be material.
Return on invested capital
The increase in UK corporation tax rates and
a higher average capital employed offset
the impact of earnings growth, resulting in
ROIC of 9.9% for 2023 (2022: 10.8%) using
average invested capital.
This is in line with the Group’s cost of capital
and sits broadly in-line with our medium-
term target to deliver ROIC in excess of 10%.
Statement of financial position
Net assets at 31 December 2023 were
£1,110.7m (2022: £1,043.8m).
Total non-current assets of £1,397.9m
(2022: £1,370.7m) increased as a result
of capital investment in excess of
depreciation and the acquisitions
completed during 2023.
Current assets were £59.8m higher than
December 2022, reflecting the impact
of inflation on working capital balances,
higher cash holdings and purchases of UK
ETS credits which are held on the balance
sheet in inventory.
Total liabilities increased year-on-year,
with provision balances increasing to
reflect the increased expected costs of
restoration compared to 2022, partially
offset by increases in discount rates as a
result of external market movements during
the year.
Impairment reviews
We completed our annual impairment
review of goodwill and retain comfortable
levels of headroom relative to the carrying
value of our asset base.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 46
Chief Financial Officer’s review
Year-on-year change in volumes
Group restructuring, share
consolidation and capital
reduction
In connection with the move from AIM to
the Main Market, a new holding company
was incorporated during 2023, which
obtained control over the Group via a
court approved scheme of arrangement
on 17 May 2023.
This restructuring does not impact
reported earnings, cash flows or net assets.
Further details of the scheme and the
accounting impacts are included in the
financial statements.
On 17 May 2023 the Group undertook a
share consolidation at a ratio of five to one.
Earnings and dividend per share measures
have been restated to reflect this.
On 9 June 2023 we completed a capital
reduction which increased the Company’s
distributable reserves by £471.1m.
Input costs and hedges
Input cost inflation had a less significant
impact on our results than in 2022.
Although energy (gas and electricity),
fuels, bitumen and carbon credits reduced
in price throughout the year, the impact
of our energy hedges moving back in line
with market rates added around £25m
of additional cost in 2023 compared
with 2022. In 2022 our hedges provided
a significant degree of protection from
high levels of energy inflation experienced
during that year.
Our strategy is to hedge substantially all
energy and carbon requirements for at least
one year in advance, with further layered
purchases extending into future years,
to deliver near-term cost certainty.
A proportion of our bitumen requirements
are hedged in the short-term, typically for
larger contracts where pricing is agreed
up front. Remaining purchases are made
at spot; the market for asphalt, in which
bitumen is the primary purchased raw
material, has historically responded quickly
to bitumen price changes. Most other fuels
are purchased at spot and passed on.
For 2024, we are hedged substantially in
line with our policy.
Volumes
Our volume performance reflects the
markets in which we operate, in particular
the cyclical slowdown in construction
activity in the UK through the course
of 2023.
On a like-for-like basis compared to 2022,
volumes were down 4% for aggregates,
4% for ready-mixed concrete and 4% for
cement, while asphalt was flat year-on-year.
Aggregates
million tonnes
29.2
+6%
4 year CAGR
26.3 25.7
-2%
vs 2022
21.7
20.2
Asphalt
million tonnes
4.1
3.8 3.8
3.3
3.0
+6%
4 year CAGR
0%
vs 2022
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Concrete
million m3
3.0
2.6
3.3
-1%
4 year CAGR
3.0
2.9
-3%
vs 2022
Cement
million tonnes
2.4
2.0 2.0
+1%
4 year CAGR
2.2
2.1
-4%
vs 2022
2019
2020
2021
2022
2023
2019
2020
2021
2022
2023
Note: Reported percentage movements are based on non-rounded data.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Chief Financial Officer’s review
2023 Net Debt movement
£m
Free Cash Flow +£94.8 million
£0
(8.5)
(6.5)
(32.5)
Inflow
Outflow
(103.4)
3.4
(19.9)
(121.9)
(37.6)
(9.5)
(169.9)
48.0
(197.7)
242.3
Opening
Net Debt
Underlying
EBITDA
Working
capital
and provisions
Interest
Tax
Net capital
expenditure
Other
operating
cash flow
Acquisitions
Dividends
paid
Other
Closing
Net Debt
IFRS 16
Closing
Net Debt
(excluding
IFRS 16)
47
Free Cash Flow
Our Free Cash Flow increased by 38%
year-on-year to £94.8m (2022: £68.7m)
despite investing significant amounts of
capital expenditure, ahead of depreciation.
Net capital expenditure increased by £1.4m
to £103.4m (2022: £102.0m) comprising
capital investment of £106.8m offset by
£3.4m of proceeds from specific asset
disposals. Working capital flows reflected
strong cash collection, offset by the
purchase of UK ETS credits.
Free Cash Flow conversion
Free Cash Flow conversion for the year
improved by 10 ppts to 39% (2022:
29%) reflecting strong working capital
management and lower cash interest
costs offset by a higher cash tax charge.
This remains lower than our medium-term
average target, principally due to our
investment programme and the impact
of increasing statutory rates of taxation.
Over the past five years our Free Cash
Flow conversion has averaged 54%.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Chief Financial Officer’s review
Net Debt
At 31 December 2023, Net Debt was
£169.9m (2022: £197.7m). Net Debt
includes IFRS 16 lease liabilities of £48.0m
(2022: £49.3m).
Covenant Leverage at the year-end
was 0.5x (2022: 0.7x) reflecting the
resilience of the Group’s balance sheet
and allows significant flexibility in
pursuing our sustainable growth strategy.
Borrowing facilities
The Group’s borrowing facilities comprise
a £350m multi-currency revolving credit
facility (RCF) and a £250m US Private
Placement (USPP).
During the year, we exercised our option
to extend the RCF for a one-year period.
Arrangement fees of £0.7m were capitalised
in the year and will be amortised over the
period of the additional borrowing.
Following the exercise of the extension
option, the RCF is available to the Group
until June 2026.
Interest on the RCF is calculated as a
margin referenced to the Group’s Covenant
Leverage plus the base rate applicable to
the currency of borrowing.
This delivers a payout ratio of 40%
(2022: 30%) of Underlying Basic
EPS, achieving our committed target
payout ratio.
The USPP, issued in 2021, provides
long-term financing at low fixed interest
rates with an average fixed coupon of
approximately 2%. The USPP comprises
£170m sterling and £80m drawn in euro,
with a maturity profile between 2028
and 2036.
Our borrowing facilities are subject to
leverage and interest cover covenants
which are tested half-yearly, and we
remained fully compliant with all covenants
during the year.
The Group maintains a strong liquidity
position and at 31 December 2023 had total
available liquidity of over £475m comprising
undrawn borrowing facilities of £350m and
cash and cash equivalents of £126.9m.
Dividend
Subject to shareholder approval, we intend
to pay a dividend in respect of the 2023
financial results of 13.5p, an increase of 29%
from 2022 (10.5p).
Since starting to pay a dividend in 2021,
we have declared nearly £110m of cash
dividends to shareholders.
Assuming further strong financial
performance and cash generation, our
intention is to maintain the payout ratio
at around 40% of Underlying Basic EPS.
An interim dividend of 4.0p (2022: 3.5p)
was paid on 10 November 2023 and, subject
to shareholder approval, the remaining 9.5p
(2022: 7.0p) will be paid as a final dividend
on 17 May 2024.
Dividends are recorded in the financial
statements of the accounting period
in which they are paid. Accordingly
dividend payments to Breedon Group
shareholders amounting to £37.3m
(2022: £30.5m) have been recognised
in the 2023 financial statements.
Thoughtful capital allocation is core to our
financial strategy, and we remain confident
that our progressive dividend policy will not
compromise the Group’s ability to execute
on our strategic objectives.
48
Tax strategy
Breedon’s tax strategy governs our
approach to tax compliance, and is
underpinned by the following principles:
To comply with all relevant
tax regulations.
To ensure ethical tax practice is
maintained and tax planning
is undertaken responsibly.
To engage proactively and transparently
with relevant tax authorities.
To manage tax risks effectively
and maintain a high standard of
tax governance.
The strategy is kept under review
by the Audit & Risk Committee on
behalf of the Board, and full details
can be found on our website at
www.breedongroup.com/policies.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 49
Chief Financial Officer’s review
Capital allocation
Conservative and disciplined financial
management and the maintenance of a
strong balance sheet are at the core of our
thoughtful approach to capital allocation.
The Board will always seek to deploy our
capital responsibly, focusing on organic
investment in our business to ensure that
our asset base is well invested. We will look
to pursue further selective acquisitions
which will accelerate our strategic
development and that we are confident
will create long-term value.
This conservative approach to financial
management enables us to pursue capital
growth for our shareholders through
active development of our business,
while supporting our progressive
dividend policy.
James Brotherton
Chief Financial Officer
6 March 2024
Our capital allocation model
Investment as a differentiator
Maximise value
through capital
deployment
Investment
opportunities
Strategic
objectives
Excess
capital
Disciplined
capital
deployment
I
C
N
A
G
R
O
A
&
M
Reserves and
resources
Business
investment
Bolt-on
3rd platform
exploration
Profitable
growth
Margin
improvement
Strong
balance
sheet
Dividends
Debt
reduction
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Managing our risks and opportunities
Effective risk management
is fundamental to delivering
our strategy
Our risk framework
Risk is an inherent and accepted element of doing business,
and effective risk management is fundamental to how we run
our business. Our risk management framework facilitates the
identification, assessment and mitigation of risks to an acceptable
level, enabling us to make informed decisions and deliver our
strategic priorities.
50
Risk appetite
The level of risk accepted in pursuit of
our strategic goals is guided by our risk
appetite, which is set by the Board and
reviewed on an annual basis. This provides
clear guidance to management as to the
level of risk the Board considers acceptable
and sets appropriate boundaries for
business activities and behaviours.
The following appetite statements are
used to describe the level of risk the Board
is prepared to take across each of the
principal risk areas.
Averse
We have little appetite for risk and will
seek to apply more controls to minimise
our exposure and avoid uncertainty.
Cautious
We have an appetite for some risk,
however prefer options that have a low
degree of downside.
Open
We are open to taking considered risks
and will choose options that offer an
acceptable level of reward with a greater
likelihood of success.
Seeking
We are willing to proactively take risks and
be more innovative to pursue strategic
opportunities and achieve higher returns,
despite the higher inherent risks. The costs
and benefits of the increased risk accepted
must be fully understood and measures to
mitigate or transfer the risk established.
Risk categorisation
Our risk review processes apply a common
methodology across the Group for
identifying and assessing risk. Principal
risks are categorised as either Strategic,
Operational or Financial risks, defined as:
Strategic risks
Events that may make it difficult, or even
impossible, for the Group to achieve its
strategic objectives.
Operational risks
Events or threats that are inherent in our
day-to-day operations.
Financial risks
Threats arising from ineffective
management and control of the Group’s
financial resources or movements in the
financial markets.
Risk velocity
For 2023 we have disclosed the velocity
of each risk, defined as the time elapsing
between an event occurring which
crystalises a risk and the point at which
Breedon would be impacted. This is
expressed in days, weeks, months or years.
Principal risk disclosure
»54
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Managing our risks and opportunities
Risk identification
and assessment
Our management teams assess the
likelihood and potential impact of key risks
against a risk matrix containing a range of
both quantitative and qualitative factors
for consideration.
Once identified and assessed, risks
are assigned to a member of senior
management who is accountable for
ensuring appropriate processes and
controls are implemented to mitigate
that risk to within the level of appetite
set by the Board, which may include
the transfer of risk through insurance.
Risks are assessed both before and after
the impact of these mitigations, with
post-mitigation residual risk reported as the
‘net’ risk within the principal risk table on
pages 54 to 60 and these assessments are
recorded on risk registers which are held
for each division and central function.
Risk registers are formally reviewed by the
Head of Risk and Control to identify the
most significant risks for inclusion on the
Group risk register. The Group risk register
consolidates risks by principal areas and
is reviewed at least twice a year by both
the Executive Committee and the Board.
Risk assurance, monitoring
and reporting
Our Internal Audit function undertakes
a number of independent reviews
across our principal risk areas to provide
assurance over the effectiveness of
key controls. These reviews are agreed
annually in advance with the Audit & Risk
Committee at the point of approval of
the Internal Audit plan, although there
is opportunity throughout the year to
make amendments to the plan should
this be required.
In addition, the second-line Group Risk
& Controls team undertake various
process reviews throughout the year,
with a particular focus in recent years
on ensuring compliance with the Group
Financial Controls framework.
Findings resulting from these reviews
are reported throughout the year to
the Audit & Risk Committee along with
the actions that have been agreed with
management. Progress with previously
agreed mitigating actions is monitored
throughout the year by the Group Risk
& Control team and validated by Internal
Audit, with formal progress updates
provided to the Audit & Risk Committee.
51
‘Four lines of defence’ risk management
and internal control framework
Our framework utilises a ‘four lines of defence’ approach, with roles and responsibilities
defined as set out below.
Board
Audit & Risk Committee
Overall responsibility for the Group’s risk
management and internal control framework,
and for reviewing effectiveness. The CFO has
executive management responsibility for risk
and internal control.
Reviews the suitability and effectiveness of the risk
management and internal control framework on
behalf of the Board. Performance by the business
against risk appetite is monitored and reported
to the Audit & Risk Committee. The Committee
monitors the effectiveness and independence of
the internal and external auditors.
Senior management and risk owners
Ensure that the risk management and internal
control framework is embedded within their
respective business area and develop an
effective risk culture.
1
2
3
Front line teams
Group risk and controls
Internal audit
Responsible for providing
independent assurance over
risk and control activities
performed by the first and
second lines of defence.
Any Breedon colleague who
makes decisions, deploys
resources or contributes to
an outcome is responsible for
identifying associated risks
and implementing internal
processes and controls to
manage those risks.
E
C
N
E
F
E
D
F
O
S
E
N
I
L
Provides expertise and
support to the front line teams
responsible for designing the
risk management policies,
processes and controls,
monitoring the ongoing
effectiveness of internal
controls and the reporting
of risk across the Group.
Other monitoring functions
Responsible for designing
policies and processes and
monitoring the effectiveness
of processes and controls, for
their area of accountability.
4
External audit and regulators
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
Managing our risks and opportunities
2023 priorities
Areas of focus for 2024
While significant progress has been made
in recent years to improve risk and control
processes of the Group, there remain
further key areas of focus heading into
2024 including:
The implementation of an internal
controls compliance tool, which
will facilitate the storing of controls
evidence, automate workflows to
track completion of control activities
and provide greater ‘real-time’
reporting capabilities.
Further development of the Group
Fraud Risk Management and
Information and Cyber Governance
Frameworks.
Increased focus on our assessment
of non-financial reporting controls.
Enhanced risk reporting throughout
the year.
Throughout 2023 the Group Risk and
Control team:
Focussed on further embedding the
Group Financial Control Framework
through a full cycle of second line
testing to provide assurance on the
divisional self-certification of compliance
with the key controls identified within
the framework.
Assumed responsibility for the Group’s
Information Security team, enhancing
that team’s independence from our
operational technology teams.
Undertook work to prepare for
prospective new corporate governance
regulations, including the development
of an audit and assurance policy, fraud
risk assessments and the resilience
statement. Although many of these
proposed changes were subsequently
withdrawn, a number of these cover
important areas where we see value
irrespective of legislative requirements.
Worked closely with Internal Audit
on the reviews which they conducted
during the year, including monitoring the
implementation of the recommendations
arising from those reviews.
52
The interactive workshops each performed a
detailed review of a selected business process,
discussing potential fraud risks and mitigating
control activities to build a Group fraud risk
assessment and inform the next steps to
be taken.
We have invested further in training our people
to identify potential fraud indicators, with
mandatory training covering anti-bribery and
code of conduct delivered during the year.
Case study
Focusing on fraud risk…
During 2023 the Group Risk and Control
team initiated a project to formalise Breedon’s
Fraud Risk Management Framework. The
framework will include a Group-wide policy
and risk assessment, awareness training,
incident reporting and monitoring processes,
with oversight provided by the Audit & Risk
Committee.
A number of focused fraud workshops were
undertaken with colleagues across our group
functions and business divisions, with a wide
mix of attendees from senior management
to colleagues involved in the operational
processes day-to-day.
Case study
Strengthening our cyber response…
With the increasing sophistication and external
threat of a cyber breach occurring, we continue
to strengthen our response to cyber risk,
including further investment in security and
infrastructure improvements.
to Cyber Security to assess and benchmark our
security maturity. We have used the findings
from the review to refine our security strategy
and have made good progress in implementing
the recommendations.
In addition to resilient infrastructure, the vigilance
of our people is the greatest defence against
a cyber attack. We support them through
annual cyber training and operate a continuous
simulated phishing programme which allows
us to assess the responsiveness of our people
over time and follow up with targeted additional
training where appropriate.
We have refined our cyber controls still further
and in 2023 RSM, our internal auditors, undertook
a cyber security review aligned to the principles
of the National Cyber Security Centre’s 10 steps
Our governance has evolved further, with a newly
formed Information and Cyber Risk Committee,
chaired by the Group Head of Information
Security. It oversees cyber risk management
through integrating policies, procedures and
controls that align with business objectives and
compliance requirements, creating a foundation
for secure operations. This Committee meets
at least four times a year, with regular updates
provided to the Audit & Risk Committee, with the
most recent update provided in January 2024
where the Audit & Risk Committee received a
presentation on the Group’s cyber strategy.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 53
Managing our risks and opportunities
Emerging risks
Emerging risks are identified through our
standard risk processes. We define an
emerging risk as a new risk that cannot yet
be fully assessed, or a risk that is known to
some degree however is believed unlikely
to materialise or have a material impact in
the short term. Emerging risks typically
relate to one or more existing principal risks
however may result in the identification of
additional principal risks as they are more
fully understood.
We are currently assessing two potentially
significant emerging risks:
Emerging risk
Link principal risk(s)
Possible impacts
Generative artificial intelligence
Artificial intelligence that can generate new
content, such as text, images, and audio,
that is often indistinguishable from
human-generated content.
IT and cyber
security
Laws, regulations
and governance
Operational technology
The increasing modernisation and digitalisation
landscape is likely to mean that operational
hardware and software, typically separate
from IT systems, becomes more connected
with information technology.
Failure of a
critical asset
Health and safety
IT and cyber
security
Data loss
Automation of
cyber attacks
Sophisticated
phishing emails
Quality
control and
misinformation
Physical harm
to people
Operational
disruption
Financial loss
Reputational
damage
Principal risks
The principal risks and uncertainties
outlined in this section reflect those risks
that, in the opinion of the Board, might
materially affect the Group’s future
performance, prospects or reputation.
The assessment of these principal and
emerging risks and the effectiveness of
the associated controls put in place reflect
management’s current expectations,
forecasts and assumptions, and will be
subject to changes in our internal and
external environments.
Changes to our principal
risk reporting
Whilst the nature of the principal risks
reported remains consistent with 2022
we have simplified our presentation of the
principal risks, resulting in a reduction in
the number of individual principal risks
from 16 to 12.
New or expanded risks
Competition risk has been identified as a
standalone principal risk, having previously
formed part of our Market risk. This is to
allow a clearer distinction between the
strategic risk arising from the markets we
choose to operate in, and our operational
risk in how we serve our customers and
compete to grow our share of those
overall markets.
Acquisitions risk now includes material
capital projects risk.
Merged or downgraded risks
Some risks reported in 2022 have been
combined with similar risks for reporting
purposes, or are no longer considered a
standalone principal risk, instead forming
a sub-risk for one of our principal risks.
The table below maps these adjustments
alongside the rationale for the change.
Risk reported in 2022
2023 Principal risk
Rationale
Financing and
interest rates
Currency
Treasury
To better reflect the operational management
of those risks within our treasury function.
Credit risk
Markets
Credit risk is directly linked to the economic
challenges facing our customers.
Environmental
impact
Land and mineral
management
Mineral Reserves
Product
specification
Laws, regulations
and governance
Our previous Mineral Reserves risk has been
expanded to cover the full life cycle of operating
our sites, including obtaining minerals and
planning permissions, operating in compliance
with environmental and other regulations and
ultimately fulfilling our restoration obligations.
Product standards are governed by applicable
regulations, and as we have had no history of
significant product specification claims, this
does not merit presentation as a standalone
principal risk.
Digitalisation
Competition
IT and cyber security
People
Digitalisation impacts on a number of our
principal risks and is therefore no longer
considered a standalone principal risk.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 54
Appetite
Net risk
rating
Velocity
Trend
SEEKING
MEDIUM
YEARS
Principal risks
Risk
Summary
Our principal risks
are the most
significant risks
that might
adversely impact
the Group
Whilst the nature of the principal risks
reported has not changed, we have made
a number of changes to the presentation of
principal risks compared to 2022 resulting
in a reduction of principal risks from 16 to 12.
See page 53.
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2
3
4
5
6
7
8
9
10
11
Acquisitions and material
capital projects
Our ability to complete the acquisitions and
strategic projects required to deliver our
growth strategy.
Climate change
Markets
The transitional and physical risks arising from
climate change as we decarbonise our business.
OPEN
VERY HIGH YEARS
The impact of the macroeconomic environment
on our business.
OPEN
HIGH
MONTHS
Land and mineral
management
Managing mineral reserves to deliver our growth
strategy; ensuring compliance with planning and
environmental regulations.
CAUTIOUS MEDIUM
YEARS
People
Competition
The successful recruitment, development and
retention of our people.
CAUTIOUS MEDIUM
YEARS
The impact of our competitors on our market share
and profitability.
OPEN
HIGH
MONTHS
Failure of a critical asset
The risk of unplanned downtime or operational
inefficiency at our critical operating locations.
AVERSE
HIGH
DAYS
Health and safety
Ensuring our employees and other stakeholders
return home safe and well.
AVERSE
HIGH
DAYS
IT and cyber security
The impact of a cyber security incident or a lack of
resilience in our technology infrastructure.
AVERSE
HIGH
DAYS
Laws, regulations
and governance
Supply chain and
input costs
Our ability to comply with all applicable laws,
regulations and principles of corporate governance.
AVERSE
MEDIUM
DAYS
Managing input costs volatility and supply chain risk.
OPEN
HIGH
MONTHS
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Treasury
Our ability to secure access to the capital needed
to deliver our growth strategy and to manage the
impact of interest and currency rates.
CAUTIOUS LOW
YEARS
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55
Principal risks
Net risk rating
Link to strategy
Low
Medium
High
Very high
Sustain
Optimise
Expand
Financial framework
Risk context
How this risk could impact us
Mitigations
Trend
Velocity
Link to
strategy
1 Acquisitions and material capex projects
Our growth strategy is predicated on
continued successful execution and
integration of M&A and delivery of major
capital investment projects. These come
with higher levels of inherent risk compared
to ‘business as usual’ operations.
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2 Climate change
Climate change poses a significant
challenge to our business and our response
to climate risks and opportunities forms a
critical pillar of our strategy.
Cement manufacturing in particular
emits significant amounts of carbon, with
emissions hard to abate due to the majority
of carbon being released through chemical
reactions during the manufacturing
process. Delivering on our commitment
to achieve net zero by 2050 will require
significant capital investment and the
development of technology which has not
yet been proven commercially at scale.
Acquisitions are subject to rigorous
due diligence and approval processes,
supported by specialist advisers, and
include careful consideration of competition
regulation and sustainability.
Material capital projects and business
integrations are subject to detailed project
plans, implemented by dedicated teams
and with progress monitored by the Board.
No significant
change to
risk profile
in 2023.
If we do not identify suitable acquisition
targets which meet our stringent criteria
on quality, price and sustainability,
we could not execute the inorganic
element of our growth strategy.
Failure to integrate acquisitions
successfully, including delivering
expected synergies, could result in
lower returns on capital.
Competition authorities may restrict
the businesses we are able to acquire.
If capital projects overrun in either
cost or time, these could fail to deliver
expected benefits and cause business
disruption.
If we do not successfully decarbonise
our business in line with our targets and
the wider industry we may be exposed to
significant additional costs and reduced
demand for our products.
We may experience operational
disruption due to the physical impacts
of climate change.
Full details of physical and transitional
risks and mitigations are provided in
our Task Force on Climate-Related
Financial Disclosures (TCFD) reporting
on pages 61 to 68.
We have set carbon reduction targets
and have submitted additional targets to
the SBTi. We are transparent in reporting
our progress against these and senior
management remuneration is structured
to incentivise delivery.
We have appropriate sustainability
governance structures and processes,
overseen by the Board with support from
external specialists where appropriate.
Full details of physical and transitional risks
and mitigations are provided in our TCFD
reporting on pages 61 to 68.
No significant
change to
risk profile
in 2023.
YEARS
Although it is
possible for a failed
acquisition or capital
project to have a
more immediate
impact, this risk is
most likely to impact
over a number of
years, reflecting
the longer-term
nature of our
growth strategy.
YEARS
This risk is most
likely to impact
over the medium
term, as physical
impacts are slow to
materialise in our
trading geographies
and the level of
decarbonisation in
any one year is less
significant than the
multi-year trend.
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Net risk rating
Link to strategy
Low
Medium
High
Very high
Sustain
Optimise
Expand
Financial framework
How this risk could impact us
Mitigations
Trend
Velocity
Link to
strategy
Macroeconomic factors or changes
in government policy could reduce
demand for our products, impacting
our profitability.
The market trends which impact our
sales also impact our customers, and so
may increase our exposure to credit risk.
We closely follow published indicators of
activity in our geographies and sectors
and maintain regular contact with our key
stakeholders to identify significant trends
or events which could impact our business.
Our budgeting and forecasting processes
provide up-to-date financial information
which allows us to adapt our plans
accordingly.
Credit risk insurance cover is maintained
over the majority of our private sector
customers.
Our markets
have been
further
impacted
by a cyclical
downturn
during 2023
which has
increased
the level of
market risk.
Principal risks
Risk context
3 Markets
Demand for our products is well diversified
across the public and private sectors, and
our products are supplied into a variety of
infrastructure, residential and commercial
projects. Although the medium to
long-term prospects remain positive for
our industry, our markets are cyclical and
in particular are influenced by the level of
government infrastructure spending.
We accept the risk of operating in these
markets, however to succeed our operating
model has to combine resilience during
market downturns with the strategic
flexibility to meet demand when markets
are growing.
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4 Land and mineral management
Minerals are the life blood of our business
and we extract significant volumes each
year to be sold as aggregates or fed into
our downstream manufacturing processes.
Securing new reserves organically has a
significant lead time from the agreement
of a land deal through to the granting
of planning permission; meaning our
Land & Minerals teams need to plan
for the long-term to ensure continuity
of production.
Once reserves are secured it is crucial that
we comply with environmental regulation,
planning restrictions and permits to
ensure we can continue to operate the sites.
When a site is no longer operational, we are
required to fulfil our restoration obligations.
If we fail to replenish our mineral reserves
and resources over time, we will be
deprived of our critical raw material,
disrupting operations and reducing the
value of our business.
Our Land & Minerals team supports
our businesses in obtaining additional
mineral reserves and resources, providing
in-house expertise through the lifecycle of
our quarries and plants.
No significant
change to
risk profile
in 2023.
If we fail to measure our existing reserves
and resources accurately, we may
operate our quarries inefficiently.
We monitor our mineral assets to assess
both the quality and the longevity of our
resources, with the aid of external experts.
We proactively monitor environmental
compliance, including restoration
plans, and have policies in place setting
clear expectations on how we should
manage our environmental impact.
These are communicated to our people
through training programmes.
Failure to comply with planning
requirements or to obtain new or
extended permissions at a quarry
or plant could prevent the business
from operating facilities or extracting
its mineral reserves.
A compliance breach could incur
significant remediation costs and impact
our licence to operate that site and
ability to secure new mineral reserves.
The costs to fulfil our restoration
obligation at end of quarry life may
increase by more than we have forecast,
resulting in additional costs.
MONTHS
Market downturns
usually impact
within months as
our customers
complete their
existing projects
which are replaced
with lower levels of
new work.
YEARS
Absent a material
compliance breach
which could have an
immediate impact
for the site involved,
this risk is primarily a
multi-year risk from
failure to manage
our minerals pipeline
appropriately.
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Principal risks
Risk context
5 People
We employ 3,900 colleagues across UK
and RoI, a number of whom work in highly
skilled and specialised roles.
Recruitment is expected to become more
challenging in future years as a significant
proportion of the workforce approaches
retirement.
We are part-way through the
implementation of our five-year People
Plan, which aims to embed our values,
attract a talented and diverse workforce,
provide opportunities for everyone and
ensure Breedon remains a great place
to work.
6 Competition
We face volume and price competition
from both large and small players in our
industry. As our products are largely
commodities, the strength of our customer
relationships and service offering can be
a key differentiator in securing orders.
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Net risk rating
Link to strategy
Low
Medium
High
Very high
Sustain
Optimise
Expand
Financial framework
How this risk could impact us
Mitigations
Trend
Velocity
Link to
strategy
Our People team provide the framework of
policies and procedures to mitigate this risk.
See ‘People’ on pages 87 to 92 for further
details.
No significant
change to
risk profile
in 2023.
This risk is most
likely to impact
gradually over a
number of years.
YEARS
Failure to attract and retain the
right people could have an adverse
impact on our ability to achieve our
strategic objectives.
If we do not have adequate succession
planning processes, we may experience
short-term disruption if key individuals
leave the business.
Failure to equip our people with the
right skills and training increases the
possibility that they will not deliver to
their potential.
If we fail to deliver consistently
excellent customer service, increasingly
underpinned by digitalisation, we may
lose market share to our competitors.
Our competitors’ pricing strategies
could cause supply/demand imbalances
and limit our ability to implement price
rises to cover increasing costs.
A new entrant to our markets could
gain market share, reducing our
sales volumes.
Over the longer term, competing
alternative products could emerge which
reduce demand for our core products.
Our commercial teams engage closely with
our customers to understand their needs
and provide excellent customer service.
We have made a number of strategic
investments in digital projects to improve
the customer experience and simplify
administrative processes.
Our product technical teams evaluate and
research new products, materials, methods
and technologies and test these in the field
to assess their performance.
MONTHS
This risk can impact
in the short-term
at a local level
through either a new
entrant or changes
in competitor
behaviour;
however more
fundamental shifts
to the competitive
landscape are likely
to be multi-year.
The cyclical
downturn in
the overall
size of our
markets
which
continued
during 2023
increases
the level
of risk that
competitors
adjust their
pricing
strategies
to secure
volume.
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Principal risks
Net risk rating
Link to strategy
Low
Medium
High
Very high
Sustain
Optimise
Expand
Financial framework
Risk context
How this risk could impact us
Mitigations
Trend
Velocity
Link to
strategy
7 Failure of a critical asset
Our two cement plants and some of
our larger quarries make a significant
contribution to our overall profitability and
significant management focus is devoted
to maximising production uptime and
efficiency at these locations.
Our cement plants in particular are complex
manufacturing environments, operating
24:7 outside of planned maintenance
shutdowns and the reliability of the kilns
is critical to our operational success.
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8 Health and safety
Our industry has to operate in inherently
dangerous environments, involving
heavy machinery, extreme temperatures
in manufacturing processes, the use of
explosives in our quarries and significant
numbers of plant and vehicle movements.
Our risk extends to locations outside of
our direct control such as road surfacing
or rail operations and construction sites.
We take our obligation to keep our people
safe extremely seriously, with robust
control practices and a constant focus
on continuously improving our safety
culture. However we cannot eliminate
this risk entirely.
An unplanned production outage at
one of our two cement plants or at a
small number of critical quarries could
reduce production efficiency, cause
significant operational disruption and
loss of earnings.
The most serious impact would be
fatality or physical harm caused to
our employees or other stakeholders.
If we were deemed culpable, we could
be impacted by significant regulatory
fines, reputational damage and business
disruption.
Our sites have real-time performance
monitoring and preventative maintenance
and inspection programmes designed by
our specialist plant engineers, with external
support utilised when appropriate.
Each of our cement kilns is subject to an
annual shutdown in accordance with a
planned maintenance schedule.
Back up processes and facilities are in place
across critical areas of the plants and spare
parts are held for critical equipment.
We hold Business Interruption Insurance
and continue to strengthen business
continuity plans.
Our Group Head of Health, Safety and
Wellbeing has day-to-day management
responsibility for this risk.
We promote a strong safety culture with
a focus on continuous improvement and
personal ownership of health, safety
and wellbeing.
We provide people with the tools and
equipment they need to do the job safely,
and invest in risk reduction technologies,
including regular health, safety and
wellbeing training.
Detailed investigations into both actual
and potential incidents, and the sharing
of learnings to help to prevent recurrence.
No significant
change to
risk profile
in 2023.
DAYS
This risk could
have an immediate
impact if a critical
asset suffered
unscheduled
downtime.
DAYS
No significant
change to
risk profile
in 2023.
This risk could
have an immediate
impact in the event
of a serious incident.
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Principal risks
Net risk rating
Link to strategy
Low
Medium
High
Very high
Sustain
Optimise
Expand
Financial framework
Risk context
How this risk could impact us
Mitigations
Trend
Velocity
Link to
strategy
9 IT and cyber security
Our business is becoming increasingly
digital, which requires resilient and secure
digital infrastructure as a foundation, both
within Breedon and at approved third
parties who are provided with access to
our data and systems.
At the same time, external cyber threats
are growing increasingly frequent and
sophisticated, with more significant
potential impacts. This means management
of our cyber risk remains fundamental to
our strategy.
A cyber security incident, whether
through external cyber attack or internal
data breach, could cause operational
disruption, data loss, financial penalties,
reputational damage and potential
legal consequences.
Lack of infrastructure resilience could
result in business disruption and reduce
our ability to benefit from increasing
digitalisation.
Systems integration projects or
significant IT changes may lead to
business disruption.
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10 Laws, regulations and governance
We must comply with a complex set of laws
and regulations in both the UK and RoI.
Compliance is increasingly complex, and
the penalties for getting compliance wrong
more severe.
A breach of laws and regulations
could expose us to significant legal
consequences including fines,
reputational damage and operational
disruption.
These include, among others, environmental,
competition, fraud, bribery, market abuse,
taxation and data privacy, in addition to the
requirements arising from our Premium
Listing on the London Stock Exchange.
Our compliance programme sets clear
expectations and provides our people
with support to do the right thing.
Our dedicated Information Security team
monitors and responds to new and existing
cyber risks and strengthens the Group’s
cyber resilience with the support of external
service providers.
Our people undertake regular cyber
training, including simulated phishing
attacks to educate users on cyber risk.
Policies and processes are in place,
including business continuity and disaster
recovery plans, to define the standards of
controls we have implemented to prevent,
detect and respond quickly to events.
We are increasing investment in digital
infrastructure to increase security
and resilience.
IT system development projects are carefully
planned and managed with defined
governance and control procedures.
Our legal compliance team monitors
and responds to legal and regulatory
developments, supported by external
expertise where required.
We maintain specific policies for each area
of compliance, which are communicated
to our people through regular compliance
training.
Externally facilitated confidential
whistleblowing process, with all reports,
subsequent findings and follow up actions
overseen by the Audit & Risk Committee.
Our tax strategy is approved by the Audit &
Risk Committee, with compliance monitored
Group-wide applying the principles of the Senior
Accounting Officer requirements in the UK.
DAYS
A cyber attack or
a failure in critical
IT infrastructure
could have an
immediate impact.
Our risk
continues to
increase as
cyber attacks
become more
sophisticated,
are more likely
to occur and
our business
is increasingly
digital.
There has
been a small
increase in the
level of risk
following our
move from
AIM to the
Main Market
in 2023.
DAYS
This risk could result
in an immediate
impact if a law or
regulation was
found to have
been breached.
Over a multi-year
period a
repeated failure to
demonstrate strong
compliance could
have additional
consequences.
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Principal risks
Net risk rating
Link to strategy
Low
Medium
High
Very high
Sustain
Optimise
Expand
Financial framework
Risk context
How this risk could impact us
Mitigations
Trend
Velocity
Link to
strategy
11 Supply chain and input costs
The majority of our raw material
requirements are minerals which have been
purchased at historic cost and sit as mineral
reserves and resources in our quarries,
providing a natural hedge against inflation.
Of our remaining cost base, a significant
proportion is either directly or indirectly
impacted by the price of hydrocarbons,
so are sensitive to the global geopolitical
trends which have caused significant cost
volatility in recent years.
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If we do not pass on increased input
costs immediately to our customers,
our profitability and margins will be
adversely impacted.
The execution of our procurement and
hedging strategies could fail to provide
us with appropriate cost certainty, or
result in overpaying for commodities.
If we cannot obtain alternative fuels and
raw materials for our cement business,
production may be disrupted.
If we fail to contract with counterparties
who are reliable and maintain high
standards of governance, compliance
and sustainability, we may be exposed
to operational disruption, reputational
damage and fines.
Input cost increases are passed onto
customers through our deliberate pricing
strategy to recover costs.
Our layered hedging strategy provides a
degree of cost certainty around energy,
bitumen and carbon credits under both
UK and EU ETS schemes.
We are investing in a number of longer-term
renewable energy generation projects
for electricity to reduce dependency on
volatile markets.
Our strategic purchasing programme
aims to secure contracts for key products
and services to ensure counterparties are
assessed and selected with considerations
covering a wide range of criteria.
Following
significant
volatility
experienced
in recent
years, levels
of risk are
reducing
as inflation
appears to be
moderating
and energy
prices
stabilising.
MONTHS
While prices can
move significantly
in the short term,
our hedging
programme delays
the likely impact
for our key input
costs to reduce the
velocity to months.
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Access to capital at appropriate rates is a
prerequisite of our growth strategy. Our
capital structure, which includes USPP and
RCF facilities, gives us immediate access
to significant liquidity, and it is important
to us that we maintain strong relationships
with both our lenders and shareholders to
ensure this continues.
In 2023 our trading operations used Sterling
and Euro as functional currencies, with
some US Dollar requirements for purchases.
We aim to use the natural hedges that arise
from our operations in currencies other
than Sterling; however it remains important
to execute our treasury strategy effectively
to minimise unnecessary currency volatility.
Lack of sufficient available capital could
cause us to miss out on significant
growth opportunities or, in extreme
situations, threaten the viability of
our business.
Increased interest rates could result in
reduced profitability.
The value of our earnings and assets may
be impacted by currency fluctuations.
We maintain good relationships with our
lenders and shareholders and have a strong
history of raising debt and equity financing.
We utilise fixed and floating rate borrowings
to minimise interest costs while maintaining
appropriate levels of liquidity.
Our borrowings are structured to mitigate
the impact of currency fluctuations on
asset values.
YEARS
The most significant
impact would
be an inability
to successfully
refinance our
facilities.
Our current maturity
profile means that
this risk would not
impact us in the
short to medium
term.
Interest rate
rises during
2023 have
increased the
overall level of
risk slightly.
However
our strong
balance sheet
means that
the overall
level of risk
remains low.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
Climate-related risks and opportunities
Task Force on Climate-related
Financial Disclosures
We have set out our climate-related
financial disclosures consistent with
the 11 TCFD recommendations and
recommended disclosures in this section
of our Annual Report in compliance with
Listing Rule 9.8.6R and with consideration
of Sections C and E of the 2021 TCFD
Annex.
Our Sustainability report from page 71
sets out how Breedon is responding to the
urgent challenge posed by climate change,
our progress against the metrics and
targets which we have set to decarbonise
our business, and the practical actions we
are taking to achieve this.
Our TCFD disclosure supplements the
Sustainability report by providing a clear
analysis for our stakeholders on how
climate change impacts Breedon’s risk and
opportunity landscape, and the governance
arrangements we have in place to support
delivery of our strategy.
During 2023 we have continued to improve
our transparency and disclosure and have
developed and submitted targets to the
SBTi for validation, which we expect to be
completed in 2024. We plan to report the
targets and progress made against them in
our 2024 Annual Report.
TCFD Pillar
Our response
Governance
Disclose the organisation’s
governance around
climate-related risks
and opportunities.
The Board retains overall responsibility for
climate-related risks and opportunities.
The Board is supported by the Sustainability
Committee, which comprises all members
of the Board and is chaired by Carol Hui.
Our Head of Sustainability leads
Breedon’s sustainability team. She reports
directly to the CEO and has day-to-day
management responsibility for
climate-related issues.
The Executive Committee is responsible for
the design, implementation and execution
of the sustainability strategies and policies
of the Group.
Strategy
Disclose the actual
and potential impacts
of climate-related risks
and opportunities
on the organisation’s
businesses, strategy, and
financial planning where
such information is material.
Climate change presents both
opportunities and risks for Breedon in
delivering our sustainable growth strategy.
To ensure that the latest scientific evidence
on the impacts of climate change is
properly understood and to stress test the
impact on our strategy, we modelled the
impact of our most material risks under
a range of possible warming scenarios.
This exercise highlighted a number of
tactical actions to manage climate risks
and opportunities however has not
required fundamental adjustments to our
strategy. Our strategic commitment to
sustainability is demonstrated through
‘Sustain’, one of our key strategic pillars,
with decarbonisation a critical element of
delivering value for all our stakeholders.
Further information
Climate-related
governance
arrangements
Sustainability
Committee report
Climate scenarios
modelled
Sustainability and
our wider strategy
Risk management
Disclose how the
organisation identifies,
assesses, and manages
climate-related risks.
Climate change-related risk identification,
assessment and management is
considered through the Group’s
overall risk management and internal
control framework.
We have embedded our Sustainability risk
register into the Group-wide risk processes.
The Head of Sustainability, together with
the management teams and People,
Planet and Places working groups have
reassessed the outputs from the climate
risk review exercise undertaken with
a third party in 2022 and agreed action
priorities with management.
Risk management
processes
Climate-related risks
and opportunities
Metrics and targets
Disclose the metrics and
targets used to assess
and manage relevant
climate-related risks and
opportunities where such
information is material.
We report CO2 metrics in line with the
UK SECR , which include both absolute
emissions (Scope 1, 2 and 3) alongside
intensity measures relative to revenue
and volumes.
Progress against our targets is
monitored and reviewed regularly by
management, the Executive Committee,
the Sustainability Committee and
the Board.
We have committed to net zero by 2050,
with medium-term targets set through
to 2030. During 2023 we developed and
submitted near term and net-zero targets
aligned to the SBTi standards which we
expect to be validated during 2024.
Delivery of these objectives is
supported through short-term targets,
the achievement of which is linked to
incentive schemes which form part of
senior managers’ remuneration.
SECR reporting
Carbon targets
and progress
Sustainability
objectives and
remuneration
61
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»65
»71, 32
»62
»63
»75
»76
»161
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 62
Climate-related risks and opportunities
Climate change governance process
The Board
The Board is ultimately responsible for our strategy
to create sustainable value for all our stakeholders
over the long term. The Board retains ownership
of climate-related risks and opportunities and
is supported by the Committees of the Board.
It receives regular updates from management on
climate-related issues. See page 71.
Carol Hui is Chair of the Sustainability Committee.
Sustainability
Committee
Audit & Risk
Committee
Remuneration
Committee
Nomination
Committee
Oversees
sustainability
strategies, policies,
and targets.
Reviews sustainability
risks and
opportunities.
Considers the integrity
of climate-related
disclosures.
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Evaluates the
performance of the
Group over time in
delivering against
these targets.
Designs remuneration
structures ensuring
alignment with
climate targets.
Monitors performance
against climate-
related targets
when approving
remuneration.
For further detail
on how executive
remuneration is linked
to sustainability
objectives, see
our Director’s
Remuneration report
from page 145.
Supports the Board
in reviewing and
challenging climate-
related risks and
opportunities as part
of the principal risk
reviews.
Considers the integrity
of climate-related
disclosures.
Reviews the
effectiveness of
risk identification
and management
processes, including
climate-related risk.
Oversees appropriate
assurance on
disclosed climate
metrics.
Ensures Board and
senior managers
have sufficient
experience to provide
effective leadership
on climate issues.
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Executive Committee
Responsible for the design, implementation
and execution of the strategies and policies of
the Group in relation to sustainability.
Management
Our Head of Sustainability leads Breedon’s
sustainability team. She reports directly to the
CEO and chairs our cross-divisional working
groups for Planet, People and Places.
The Group-level sustainability team and the
cross-divisional working groups support
our businesses to ensure that sustainability
Receives regular updates from the Head of
Sustainability.
is effectively embedded into our working
practices, climate-related KPIs are accurately
defined and quantified, that practical measures
are in place to make progress against our
climate-related targets and that this is
monitored and reported appropriately.
Climate risk management
process
Climate change is one of Breedon’s
principal risks, with climate-related risks
and opportunities integrated into the
Group’s overall risk management and
internal control framework, which is set
out on page 51.
As part of our risk process, a full
climate risk review was undertaken
during 2022 to ensure that our risk
assessment reflected the latest scientific
understanding of the likely impacts of
climate change. This was updated during
2023 to cover acquisitions made during
the year and updates to underlying data.
The climate risk review assessed
the risks and opportunities arising
from both physical and transitional
impacts of climate change. Risk levels
were considered over different time
horizons through to 2050 and under
three different possible warming
scenarios, allowing for a comprehensive
understanding of the evolving
risk landscape.
The formal output of this exercise was
used to update our sustainability risk
register which tracks our climate risks
alongside the effectiveness of mitigating
actions taken by the Group.
This exercise underpinned the selection
of the most significant climate-related
risks and opportunities which we have
modelled in our scenario analysis.
Our TCFD process
Assessment of potential climate
risks to identify a longlist of possible
climate-related impacts.
Discussions with operational management
to assess risks using Breedon’s standard
risk framework and shortlist the most
significant climate risks and opportunities
for further consideration.
Scenario analysis performed, with external
data analysis, to estimate the unmitigated
impact under each climate scenario in the
short, medium and longer term.
Findings communicated to the Board
and senior operational management.
Action plans agreed to help to mitigate
risk impacts.
Integration into business
as usual risk management
processes, with plans to mitigate
identified risks considered as part of
our overall risk process. Sustainability
risk register updated to capture
both detailed risk information
and mitigating actions.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 63
Climate-related risks and opportunities
Net risk rating
Low
Medium
High
Very high
Our principal climate-related risks and opportunities are as follows:
Risk/opportunity description
Management response
Risk
Flooding
Landslides
Timeframe
Net rating
Medium to long
Medium to long
Low
Low
Water availability
Medium to long
Medium
Carbon pricing
Capital cost of transition
Short to long
Short to long
Very high
Very high
Fuel costs and availability
Medium to long
Very high
Reputational damage
Substitute products
Short to long
Medium to long
High
Low
Opportunity
Alternative uses of land resources
Climate resilience and/or green
infrastructure projects
Medium to long
Very high
Short to long
Very high
Sustainable products
Short to long
High
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The Group currently trades in the UK and RoI, therefore the opportunities and risks are
applicable to all geographies in the group. The table below reports the amount and extent
to which the assets and revenue of each division is vulnerable to the significant climate risks
and opportunities reported above.
Great Britain
£1,034m
£921m
Ireland
£235m
£283m
Cement
£331m
£539m
LOW HIGH
LOW HIGH
LOW HIGH
By division
Revenue
Total assets
Potential impact
Physical risks
Transitional risks
Opportunities
Flooding
Sites may be at increased risk of
flooding – either from rising sea levels
or increased rainfall causing rivers
to overflow.
Only a small number of sites are expected to
be impacted by flooding risk, these are mostly
leasehold sites that could be relocated.
Business interruption plans are in place and flood
risk is considered as part of our capital investment
process to ensure future investments are sustainable.
Landslides
Sites may be at increased risk
of landslides.
Water availability
Climate change could put additional
stress on the availability of water, which
is a key operating material for a number
of our quarries and concrete plants.
Our land and minerals teams conduct regular
geological surveys to monitor landslide and
landslip risks at our quarries and ensure
appropriate contingency plans are in place.
Only a small number of non-quarry locations are
expected to be impacted. These are mostly
leasehold sites that could be relocated, and
geological risk is considered as part of our capital
investment process, where relevant, to ensure
future investments are sustainable.
We are installing smart meters at our top water
consuming sites to understand demand patterns
and allow us to scope operational contingency
measures, including water storage.
Carbon pricing
We purchase carbon allowances for our
carbon emissions under both UK and
EU ETS schemes.
The cost of these allowances is forecast
to rise over the long term under nearly
all climate scenarios, as a factor of both
market pricing and the gradual withdrawal
of existing free allowances to incentivise
investment in low carbon technologies.
If the cost of emissions allowances rises
faster than the speed that we are able to
decarbonise, this would result in increased
input costs.
Cement imported from countries with
lower carbon costs would be more
affordable than locally produced cement
unless a carbon border adjustment
mechanism is imposed.
We have carbon reduction targets and roadmaps
across our businesses. In addition, we have developed
SBTi-aligned near-term and net zero targets that
have been submitted for formal validation, which
we expect to be confirmed during 2024.
Progress against our targets is monitored via KPIs
which are linked to Executive Committee remuneration.
These will reduce the carbon intensity of our
business and the corresponding requirement for
emissions allowances.
To the extent that carbon prices rise more rapidly
than the impact can be mitigated through carbon
reduction, our dynamic pricing strategy has
allowed us to pass on increases to date and we
expect this will continue.
Both UK and EU governments have proposed carbon
border adjustment mechanisms to ensure equal
treatment of carbon costs on cement imports, and
we are engaged with the process through industry
bodies to ensure these are appropriately drawn.
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Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
64
Climate-related risks and opportunities
Net risk rating
Low
Medium
High
Very high
Risk/opportunity description
Management response
Risk/opportunity description
Management response
Capital cost
of transition
While the capital costs of our carbon
reduction strategy are reflected in our
financial plans, the technology required
to decarbonise our Cement business
is not yet proven at scale and it is
consequently not possible to quantify
the gross cost of the transition over
the longer term.
It is likely that very substantial capital
investment will be required, which could
limit funds available to invest in growth
projects elsewhere in the business.
To be commercially viable, the costs
of this investment would need to
be passed into the market through
higher pricing, and without clarity as
to the level of investment required, it is
unclear how this might impact demand
for cement.
Fuel costs and
availability
The transition to a lower carbon
economy is forecast to impact the cost
and availability of fuels which Breedon
currently uses or may use in the future.
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Our base case scenario is that the required
carbon reduction technologies will be developed
to operate at scale over the medium term, and
that these will represent commercially viable
investments either on a standalone basis or with
the benefit of additional government subsidy.
We are closely monitoring developments
in emissions-reducing technology, and our
financial forecasting processes reflect the
costs of anticipated sustainability projects.
We are an active member of the MPA and the
Global Cement and Concrete Association
(GCCA), supporting collaborative approaches
to climate challenges and policy development
across the sector.
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Reputational damage
If our sustainability strategy does not
demonstrably succeed in meeting the
challenge of climate change, or we fail
to meet our carbon reduction targets
due to a perceived lack of commitment,
we may suffer significant reputational
damage impacting our relationships
with our customers, employees,
investors and other stakeholders.
We demonstrate our commitment to
sustainability by taking visible actions today
to decarbonise our business, setting ourselves
credible targets for the future and underpinning
this with appropriate governance structures.
Our investments in sustainability projects
provide tangible evidence that we take reducing
carbon emitted by our operations seriously.
During 2023 we have developed and submitted
near-term and net zero targets to the SBTi for
validation, which we expect to be validated
in 2024.
Our Head of Sustainability provides subject
matter expertise in this area, and the Board is
supported, in particular by the Sustainability
Committee, to ensure that our governance
structures are appropriate, to provide challenge
and scrutiny, and to monitor progress.
Substitute products
If a lower carbon substitute product
for concrete emerged which was
commercially scalable, there could be a
reduction in demand for concrete and
cement products.
There is no obvious scalable substitute product
for concrete available at present and we believe
it is unlikely that one will be developed in the
near term.
Over the longer term, the targeted reduction in
the carbon intensity of our operations will reduce
the advantage of substitutes.
Our Energy team monitors developments in
fuel costs and availability, and works closely
with operational teams to ensure that we have
maximum optionality on the types of fuel
capable of being used in our plants.
We are investing in a number of renewable
energy generation projects for electricity to
reduce dependency on volatile markets, provide
longer-term cost certainty and become a more
sustainable business.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
65
Climate-related risks and opportunities
Net opportunity rating
Low
Medium
High
Very high
Risk/opportunity description
Management response
Financial impacts
Alternative uses of
land resources
We have significant land holdings,
typically areas of our quarries on which
restoration has been completed,
which could be used for alternative
purposes such as carbon sequestration
to generate our own emissions
credits, biodiversity net gain or to
host renewable energy infrastructure,
such as solar farms.
Climate resilience
and/or green
infrastructure projects
Our products are used in infrastructure
projects which both enhance physical
climate resilience, such as flood
defence schemes, and in transitional
technologies, such as green energy
networks. Increasing investment
into these type of projects increases
demand for our existing products.
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Sustainable products
Demand for more sustainable products
is expected to increase, which provides
a market opportunity to improve both
volumes and margins through product
innovation and investment in lower
carbon technologies.
We have undertaken a natural and social
capital performance assessment of all our
non-operating rural assets and are currently
developing proposals for the implementation of
the recommendations. This will ensure that we
are maximising future value for our stakeholders.
Our network of operating locations and
significant mineral reserves throughout the
UK and RoI means we are well positioned
to take advantage of increased demand
arising from climate resilience and green
infrastructure projects.
In 2022 we launched Breedon Balance, our
range of products with sustainable attributes,
and we continue to review opportunities for
innovation within our products.
Capital investment supports these product
developments, with a recent multi-million
pound investment in new silos across our
ready-mixed concrete network, providing
additional capacity for sites to provide
lower carbon CEM II ready-mixed concrete.
Additional silos are planned for 2024.
Further details can be found within the
Sustainability report on pages 71 to 104.
Where we have been able to utilise external data sources to quantify a climate-related risk
or opportunity, we have disclosed details of the data source and the resultant possible
financial impact (prior to mitigating actions) which has informed our scenario analysis.
For those risks which cannot be reliably quantified, we have assumed that a worst case
scenario (before mitigations) would be £55m of operating profit foregone per annum,
representing the 2023 Underlying EBIT contribution from our Cement business.
Data source
Risk modelled
Output (highest modelled impact)
World Resources Institute’s (WRI)
Aqueduct Floods tool to
determine flood risk.
Flooding
Landslide risks using UNEP
GRID WESR:Risk.
Landslides
WRI’s Aqueduct Water Risk Atlas
to determine risk of water stress
impacting production.
Water
availability
International Energy Agency’s
Global Energy and Climate model.
Carbon
pricing
Fuel price projections are derived
from an Integrated Assessment
Model framework which simulates,
in a forward-looking fashion, the
dynamics within and between
the energy, land use, water, air
pollution and health, economy
and climate systems.
Fuel
costs and
availability
Under the most pessimistic climate scenario
modelled, less than 2% of operating profit is
estimated to be at risk due to an increased
risk of flooding to 2050.
Under the most pessimistic climate scenario
modelled, less than 2% of operating profit is
estimated to be at risk due to an increased
risk of landslides to 2050.
Under the most pessimistic climate
scenario modelled, less than 1% of operating
profit is estimated to be at risk due to a
lack of water availability until 2030, and
less than 2% to 2050.
To achieve net zero by 2050, all free
allowances are withdrawn and carbon price
grows rapidly to reach £181/tonne by 2050.
Assuming no reduction of current emissions
levels, this would represent a gross cost of
c.£275m per annum to Breedon.
To achieve net zero by 2050, fuel availability
is limited and costs increase significantly.
Assuming Breedon’s current fuel mix
does not change from a 2021 baseline,
this could add up to £40m of increased
cost to Breedon by 2030 and £70m per
annum by 2050.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
66
Relative exposure to transitional and physical risks
under each of the Group’s climate scenarios
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Disorderly
transition
Orderly
transition
Adaptation
PHYSICAL RISKS
Climate-related risks and opportunities
Outcome of
scenarios modelled
In each scenario modelled, the Group
would continue to be profitable and cash
generative, although in some scenarios
some restructuring of our operating model
may be required to achieve this.
Given the need to decarbonise our cement
operations, we are significantly more
exposed to transitional than physical
climate risks.
Therefore the Orderly and Disorderly
scenarios which involve a successful
transition to net zero by 2050 present
the highest risk to Breedon as a result of
elevated transitional risks in those pathways.
Opportunities are less impacted by the
transition pathway, but are greater in the
Orderly and Disorderly scenarios.
Scenario analysis
Climate scenarios considered and
impact on risk
Our financial plan, which is incorporated
into our viability and impairment
assessments, assumes that the UK
and RoI meet their stated policy
commitments to net zero by 2050
on time and in full. However, there
remain a number of different possible
warming scenarios as government
policy and scientific understanding
evolve over time.
During 2023 we have refreshed the
detailed analysis undertaken during
2022 to assess the impact of three
possible different warming scenarios
on our most significant climate-related
risks and opportunities.
Risks have been assessed over short,
medium and longer-term time horizons.
The short-term analysis to 2025
aligns with our short-term financial
planning cycle, 2030 with the timing
of our medium-term decarbonisation
roadmap and 2050 with our longer-term
commitment to achieving net zero by
this date.
Underpinning the analysis in each
scenario is an assumption that the costs
of transition impact the industry equally
and that no scalable substitute product
for concrete emerges in the near term.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
Climate-related risks and opportunities
TRANSITIONAL RISKS
PHYSICAL RISKS
OPPORTUNITIES
LOW
HIGH
Risk/opportunity impact (unmitigated)
67
2025
2030
2050
Scenario
Orderly transition
The Orderly transition scenario assumes that
climate policies are introduced early and gradually
become more stringent, limiting the increase in
global temperatures to more manageable levels.
Transitional risks increase as climate action
is more rapid and ambitious than current
policy, which would include significant
increases in carbon pricing and investment
in renewable energy.
Disorderly transition
The Disorderly transition scenario assumes
a delayed introduction of climate policies,
with global greenhouse gas emissions (GHG)
increasing throughout the 2020s before more
drastic action is taken by governments from
2030 to achieve net zero by 2050, with global
temperatures reaching significantly higher
levels than under the Orderly transition scenario.
Adaptation
The Adaptation scenario assumes that some
climate policies are implemented, however
these are not sufficient to halt significant
global warming.
Critical temperature thresholds are exceeded,
leading to severe and irreversible physical
impacts, resulting in the highest level of
physical risk across the three scenarios modelled.
1.5 – 2.5°C
Physical risks are relatively subdued in
comparison to other scenarios as expected
temperature increases are lower, however still
reflect increases in the frequency and intensity
of extreme weather events and disruptions to
weather patterns.
Risk /opportunity
Carbon pricing
Capital cost of transition
Fuel costs and availability
Reputational damage
Water availability
Alternative uses of land resources
Climate resilience and/or green
infrastructure projects
2.0 – 3.5°C
Carbon pricing
Transitional risks are therefore the highest of
all scenarios reflecting the greater severity
of the measures required as a result of the
delayed implementation of policy measures,
while physical risks increase relative to
the Orderly transition model as increased
global temperatures result in more extreme
weather events.
Capital cost of transition
Fuel costs and availability
Reputational damage
Water availability
Alternative uses of land resources
Climate resilience and/or green
infrastructure projects
3.0 – 5.0°C+
Carbon pricing
Policy measures focus less on incentivising
decarbonisation and more on adaptation,
resulting in lower levels of transitional risk and
increased spend on climate resilience projects.
Capital cost of transition
Fuel costs and availability
Reputational damage
Water availability
Alternative uses of land resources
Climate resilience and/or green
infrastructure projects
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Climate-related risks and opportunities
Impact on strategy
Metric
Risks/opportunity
Sustainability remains a critical element
of our strategy which underpins the
whole of our operating model.
The greatest climate-related risks arise
from transitional impacts, which are
mitigated through the strategic actions
being taken to decarbonise our business
and achieve net zero by 2050.
We are well positioned to capitalise
on climate-related opportunities,
with a strategy to grow the percentage
of sales from products with sustainable
attributes, and are in the process of
reviewing our land holdings to assess
how we can best utilise them to
maximise sustainable, environmentally
friendly outcomes.
Our operating locations in the UK and RoI
are exposed to relatively low physical risk,
and consequently this does not require a
significant strategic response. A number
of tactical initiatives are in place to ensure
that the physical risks to achieving our
strategy are appropriately managed.
The key metrics that we have selected
to measure our success in executing our
sustainability strategy are as follows:
GHG emissions –
scope 1 & 2
Emissions
intensity
Energy use
Gross carbon
intensity
per tonne
cementitious
product
Sustainable
product sales
Carbon pricing
Capital cost of transition
Fuel costs and availability
Reputational damage
Carbon pricing
Capital cost of transition
Fuel costs and availability
Reputational damage
Fuel costs and availability
Reputational damage
Sustainable products
The targets which have been set for
each of these metrics are set out in the
Sustainability review from page 71.
Climate in the
financial statements
We have considered the financial reporting
implications of the impacts of climate
change on the financial statements.
Impairment of non-current assets
As noted in our impairment testing
disclosure in note 9 of the consolidated
financial statements, there may be elevated
levels of climate-related risk in respect of
assets in our Cement division as clarity
emerges on the costs and corresponding
commercial impact of the transition to net
zero. However there is no current indication
of impairment under either base or
sensitised scenarios.
Inventory obsolescence
If market demand were to decline
significantly as a result of climate change,
impacting consumer purchasing habits,
the cost of inventory held on the Group’s
balance sheet may become irrecoverable.
There has been no sign of decreasing
demand for the Group’s products as a
result of societal responses to climate
change. Furthermore, any change in
consumer demand is expected to occur
over a prolonged period of time. Financial
controls are in place to identify these shifts
in demand and we would expect to have
sufficient time to identify any risks and
adapt stock production accordingly.
The Group’s inventories include some
spare parts held for our Cement
plants. As discussed in our impairment
testing disclosures, the technological
advancements required to achieve net
zero could result in these items becoming
obsolete over time, but at present these
parts are held to support a profitable
trading business and are not impaired.
Recoverability of trade debtors
The economic impacts of climate change
may damage our customers’ liquidity,
leading to irrecoverable debts. Cash
collection has remained strong across the
Group throughout 2023 and we mitigate
this risk through credit insurance policies.
We have not identified any indicators
that our customers’ ability to settle debts
has been impacted by climate change
factors. Financial controls are in place to
identify any concerns regarding bad debts.
68
Furthermore, any risks arising as a result
of climate change are expected to occur
slowly over an extended period of time,
enabling management to respond.
Trade payables and other liabilities
The economic impacts of climate change
may damage our suppliers’ abilities to
continue in operation, disrupting our supply
chain. We have not identified any signs that
the ability of our suppliers to trade is currently
impacted by climate change and consider
this unlikely in the short to medium term.
Where we hold provisions for restoration,
it is likely that the sustainability standards
governing restoration obligations will
increase over time. However, this would not
impact measurement of existing liabilities.
Going Concern and Viability
We have considered the impact of climate
change through the short to medium-term
forecasts used to support our use of the
Going Concern assumption in preparing
our financial statements, and our Viability
assessment over a three-year period.
Over the longer-term, it is possible that
the impact of climate change could result
in increased costs of capital. However
we completed a successful refinancing
exercise in 2021 at competitive interest
rates, we maintain positive relationships
with our lenders and there has been no
indication that the impact of climate
change will result in any significant issue
in the Group obtaining finance.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 69
Viability Statement
Viability
Statement
In accordance with provision 31 of the UK
Corporate Governance Code (the Code),
the Board has assessed the viability of the
Company over a three-year period to
December 2026, taking into account
the Company’s current position and
principal risks.
Based on that assessment, the directors
have a reasonable expectation that the
Company will be able to continue in
operation and meet its liabilities as they fall
due over the period to 31 December 2026.
Viability assessment period
The directors have determined that three
years is an appropriate timeframe over
which to provide a Viability Statement.
This is aligned to the period in which the
long-term plan is derived. The directors
consider that demand in the Group’s
business is ultimately driven by certain key
markets and macroeconomic factors which
are difficult to project accurately beyond a
three-year period.
The Group has significant headroom in
borrowing facilities. As at 31 December
2023, the Group had liquidity headroom
of over £475m and Covenant Leverage
of 0.5x. The Group comfortably met all
covenants in 2023 and other terms of
its borrowing agreements in the period.
The viability assessment assumes
that the existing RCF, which is due for
repayment in June 2026 is successfully
refinanced at the existing facility limit
of £350.0m.
Assessment of current position
and long-term prospects
The Board’s assessment of the Group’s
financial position at 31 December 2023 is
set out in the Chief Financial Officer’s review
on pages 44 to 49. Important aspects of
that assessment that are most relevant to
the assessment of viability are:
Although volumes have reduced
during 2023, as a result of challenging
macroeconomic conditions, the Group
has achieved record underlying results
by successfully implementing pricing
actions to recover cost inflation, and
the Group has demonstrated in recent
years the ability to flex the cost base in
response to changes in demand.
The Group’s operations are consistently
cash generative, and underpinned by
well-invested assets.
In addition, the Board considers the Group’s
business model and strategy as outlined
on pages 22 to 35 and the principal risks
set out on pages 54 to 60.
Budgeting and long-term
planning
Breedon’s longer-term prospects are
assessed primarily through the Group’s
budgeting and strategic planning
process. The annual Group budget is
compiled in the autumn of each year
and generates a detailed forecast for the
year ahead. The budget is performed
at a site-by-site level which is reviewed
by divisional management before being
presented to the directors and finally
reviewed and approved by the Board.
The long-term planning is conducted
at a higher level and applies higher level
assumptions to the base budgeted figures.
The divisional strategies together with the
long-term market outlook is considered
within the long-term planning process and
reviewed by the CFO. The output of the
long-term plan includes a consolidated
set of financial projections for the Group
covering the budget plus a further two year
period, including a review of forecast debt
covenant compliance and debt headroom.
The long-term plan reviewed as part of
the assessment of prospects in this report
therefore covers the three-year period
ending 31 December 2026.
Severe but plausible
downside scenarios
While we have estimated the size of each
of the severe but plausible scenarios
described on the following page, we have
grouped scenarios with similar impact types
together and performed stress testing
for the scenario with the greatest impact.
Where the scenario occurs at a point in time,
we have assumed that it occurs at the point
in the plan with the lowest headroom.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Viability Statement
The risks and scenarios tested are described below:
The risks and scenarios tested are described below:
Risk assessed
Severe but plausible scenario
Stress test applied
Stress test
Amount modelled
70
Acquisitions and
material capital
projects
A material capital project experiences
a significant overspend and delays
result in business disruption.
Volume demand for our products
reduces as a result of a deteriorating
macroeconomic environment.
Markets
Land & mineral
Management
Compliance breaches are identified
resulting in immediate remediation
costs and the temporary closure
of sites.
Adverse one-off cost
event
Reduction to revenue and
profitability
Adverse one-off cost
event
Reduction to revenue
and profitability
Reduction to revenue
and profitability
Increased opening
debt
Opening Net Debt is increased by £250m on the first day of the
assessment period.
Reduction to revenue
and profitability
Reduction to budgeted revenues of 10% in the first year followed by a
further 5% reduction in each of the following two years.
Adverse one-off
cost event
A £50m cash outflow at the point in the forecast with the lowest
headroom.
One-off financial
penalty
A one off £5m cash outflow at the point in the forecast with the
lowest headroom.
Increase to base rate
Base rate is assumed to increase to 7.5% for the assessment period.
Competition
A loss of market share to competitors
or new entrants and increased
pressure on pricing.
Reduction to revenue
and profitability
Combined scenario
Reduction to budgeted revenues and profitability as per the stress test
above, opening debt increased by £250m, an increase to base rates to
7.5% and an adverse one-off cost event at the point in the forecast with
the lowest headroom.
Failure of a critical
asset
An unplanned production outage
causing significant operational
disruption and loss of earnings.
Adverse one-off cost
event
Health and safety
A serious health and safety
incident leading to regulatory fines,
reputational damage and business
disruption.
Adverse one-off cost
event
Reduction to revenue
and profitability
IT and cyber security
A cyber attack resulting in business
disruption and data loss leading to
regulatory penalties.
One-off financial penalty
Reduction to revenue
and profitability
Laws, regulations
and governance
A breach of law or regulations results
in a significant one-off penalty.
One-off financial penalty
Supply chain and
input costs
A rise in input costs without the ability
to increase revenues to offset.
Reduction to revenue
and profitability
Treasury
Interest rates increase.
An increase to base rate
Breedon have tested the above scenarios
individually as well as the combined
scenario outlined above. After undertaking
reasonable mitigating actions, Breedon
should be able to comfortably withstand
the impact of the severe but plausible
scenarios.
The models take account of the natural
reduction in variable costs and availability
and likely effectiveness of mitigating actions
available to the Group, including the flexing
of capital expenditure, dividend payments
and discretionary spend. The models
do not include significant structural
actions, such as closing or mothballing
quarries or divesting assets, which would
be undertaken in the event necessary.
The models do not consider changes to
the Group’s capital structure it may be able
to make through refinancing existing debt
facilities and/or raising equity finance.
Going concern
The directors have continued to adopt
the going concern basis in preparing the
financial statements (see note 1 in the notes
to the consolidated financial statements).
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Sustainability
We are a
progressive,
71
Our sustainability strategy and framework focuses on our
most material areas of importance and impact, with clear
targets and objectives to help us achieve our aims.
Planet
»75
People
»87
Places
»93
Making a material difference to…
… the environment
… our society
… the built environment
s
t
e
g
r
a
t
0
3
0
2
s
a
e
r
a
s
u
c
o
F
30% reduction in gross
carbon intensity per tonne
cementitious product
(from 2005 baseline)
Carbon and energy
reduction
Responsible use of
resources
Positive impact on nature
and biodiversity
Positively impact more than
100,000 people
50% of our concrete and
asphalt sales revenue from
products with enhanced
sustainability attributes
Develop and empower a
diverse, talented workforce
Sustainable products
and services
Positive impact on the
communities in which
we work
Research, development
and innovation
Collaboration and influence
Underpinned by our fundamental operating Principles
»97
Health, safety
and wellbeing
Quality
Ethics and
integrity
Good
governance
Stakeholder
engagement
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
Sustainability
Our approach
Breedon’s approach is to drive sustainable change
pragmatically, balanced with the needs of our stakeholders,
and to disclose our progress transparently.
72
Our strategic focus areas and targets
Climate-related risk
Breedon’s Sustainability Framework is
linked to our overall Company vision,
strategy and purpose, and focuses on our
most material areas of impact – Planet,
People, Places, underpinned by our
operating Principles.
Our approach is informed by a Materiality
Assessment with extensive stakeholder
engagement and we prioritise our material
topics based on:
the importance of the issue to the Group
and our stakeholders, and
the social, economic and environmental
impact of the topic in relation to the
core activities, products and services
provided by the Group.
Principal risks
»54
Our Sustainability strategy strives to
support the principles of 13 of the 17 United
Nations Sustainable Development Goals.
We have embedded climate-related risks
and opportunities into our strategy; the
metrics and targets we have set ourselves;
and the progress we are making on our
journey towards achieving net zero carbon.
Breedon applies the recommendations
for the TCFD and the identification,
assessment and effective management of
climate-related risks and opportunities is
fully embedded in our Risk Management
process.
More detail on our net zero focus can be
found on pages 76 and 77 and our TCFD
detail can be found on pages 61 to 68.
Net zero reduction pathway
TCFD
»77
»61
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 73
Sustainability
Governance and management of
climate change and sustainability
Effective governance is critical to ensure that
we manage our sustainability impacts and
our wider business responsibly. A Board-level
Sustainability Committee ensures that
the main Board is effective in its oversight
of the Group’s Sustainability Framework
and policies, and the consideration and
management of climate-related risks and
opportunities. The work of the Sustainability
Committee during the year is set out on
pages 133 and 134.
Sustainability Committee
»133
The CEO, Executive Committee and
Head of Sustainability have day-to-day
responsibility for climate change and
environmental matters and are responsible
for the development and implementation
of the Group’s Sustainability strategy,
which is included in the Group’s annual
bonus scheme.
Cross-divisional working groups, with
appointed Executive Committee sponsors,
support the divisions in delivering their
sustainability targets for each of the Planet,
People, Places and Principles focus areas.
Performance against our Sustainability
Framework is reported monthly to our
Executive Committee and the Board;
on a quarterly basis to the Sustainability
Committee; annually in our Annual Report;
and regularly on our website and through
selected indices.
We have clear Group-wide polices and
standards that detail the way we do business
and our expectations of our colleagues and
supply chain, covering issues such as:
Energy and carbon
Circular economy
Environment and biodiversity
Quality
Health, safety and wellbeing
Diversity and inclusion
Social responsibility
Sustainable procurement
Externally, Breedon is an active member
of the GCCA, the MPA, the Buildings
Materials Federation and the Irish Concrete
Federation, ensuring that we are well
positioned to collaborate with our peers
to tackle the barriers towards a greater
adoption of sustainable solutions across
the industry.
Cross-industry collaboration
»104
2023 progress
Areas of focus for 2024
We made good progress against all our
targets this year.
We have exceeded our Group-wide carbon
intensity reduction target, another credible
step on our journey to achieve net zero.
Furthermore, our new science-based near-
term and net zero targets were submitted
to the SBTi for formal verification.
We achieved record levels of financial and
material donations to the wider community
and exceeded our target to positively
impact 25,000 people.
40% of our concrete and asphalt revenue is
now from sales of products with enhanced
sustainability attributes, and in addition, we
have increased the proportion of product
sales from our more sustainable Breedon
Balance range to 28%.
For the first time, in 2023 we provided
a Climate Change and a Water Security
disclosure to the CDP and were scored B
and C respectively.
Our reporting has been continuously
updated and improved over the years
and 2023 marks another step forward
as we began to align to the forthcoming
EU Corporate Sustainability Reporting
Directive (CSRD) requirements.
We will continue to focus on reducing
the carbon intensity of our core products
and on making progress towards our
longer-term decarbonisation levers such
as Carbon Capture and Storage (CCS).
We will continue to replenish and
responsibly use our mineral reserves,
to implement our recently developed
Biodiversity Action Plans (BAPs), and
make progress towards improved water
management.
We will prioritise key Diversity, Equity
and Inclusion themes, making our people
practices fairer and more inclusive for
colleagues, and improve our data to help
inform our plans and better report our
value to society.
Building on the Materiality Assessment
undertaken in 2020, in December 2023
we started our first Double Materiality
Assessment (DMA) process facilitated by
an independent consultant.
The output from this robust process
of research and engagement with key
stakeholder groups will enable us to reflect
and, if necessary, adjust our Sustainability
Framework and targets in 2024. This will
ensure we remain appropriately focused
on the topics that are most material for our
business, both from an impact and financial
materiality perspective, and guide our
future reporting and disclosures.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 74
Sustainability
Sustainability
Key actions
Performance
Strategic actions and progress achieved
2021
2022
Principles
Principles
2023 progress
Principles
Materiality Assessment undertaken
Board–level Committee established
SBTi targets developed and submitted for validation
Sustainability strategic framework developed
Scope 3 data and reporting increased
Group-level Sustainable Procurement Policy established
2030 targets established
10% remuneration linked to sustainability KPIs
15% remuneration linked to key sustainability KPIs
Group-level policies established
TCFD aligned disclosures in Annual Report
241 sites with Responsible Sourcing certification
139 sites with Responsible Sourcing certification
53% improvement in employee LTI severity rate
15% improvement in employee LTI severity rate
18% improvement in employee LTI severity rate
CDP Climate Change and Water Security disclosures
submitted, scoring B and C respectively
Planet
People
Planet
People
Planet
People
100% renewable energy
11,114 people positively
tariff in place
impacted
9% improvement in
energy intensity
7% improvement
in emissions intensity by
revenue
25,000 trees planted
Places
25% revenue from more
sustainable concrete and
asphalt products
19% improvement
in emissions
intensity by revenue
Alternative fuel rate 77%
at Kinnegad, and near
35% at Hope
6% reduction in mains
water per tonne of core
product sold
31,000 trees planted
25 BAPs established
Further 17,814 people
positively impacted
Over £300,000 in
financial donations,
plus over 600 tonnes
materials donated
Places
37% revenue from more
sustainable concrete and
asphalt products
Breedon Balance
sustainable products
established
ISO 50001 extended
across the Group
Further 25,856 people
positively impacted
5% improvement in
carbon intensity per
tonne of core product
15% improvement in
emissions intensity by
revenue
Record 79% annual level
of alternative fuel usage
at Kinnegad
7,362 trees planted
14 further BAPs
established
Over £450,000 in
financial donations,
plus 3,000 tonnes of
materials donated
Places
40% revenue from more
sustainable concrete and
asphalt products
28% revenue from
Breedon Balance
products
80% relevant technical
and commercial people
trained on Breedon
Balance
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Sustainability Planet
Planet
Making a material
difference to
our planet
Our aim is to make a positive material
difference to the environment. We are
committed to achieving net zero by
2050, managing resources responsibly
and creating a positive impact on nature.
75
2030 target
30% reduction in gross carbon intensity per tonne cementitious product
2023 target
2% improvement on Group carbon intensity (per tonne of product, normalised to
2022 production levels) by the end of 2023
Carbon and
energy reduction
»76
Responsible use
of resources
»82
Positive impact
on nature and
biodiversity
»84
Climate change
Land and mineral management
Supply chain and input costs
Laws, regulations and
governance
Land and mineral management
Supply chain and input costs
Laws, regulations and
governance
Land and mineral management
Laws, regulations and
governance
s
a
e
r
a
s
u
c
o
F
s
k
s
i
r
d
e
t
a
e
R
l
G
D
S
N
U
Progress highlights
Emissions intensity
per tonne cementitious
product
24%
reduction from 2005
baseline
7,360
Trees planted in 2023
Emissions intensity
by revenue
Improvement on Group
carbon intensity per tonne
core product
Record annual level of
alternative fuel usage at
Kinnegad
1.1
kgCO2e/£
5%
kgCO2e/t
79%
14
Biodiversity Action Plans
developed in 2023
First CDP submission for
Breedon Group
Science-based near-term
and net zero targets
submitted for validation
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
76
Sustainability Planet
Carbon and energy reduction
Emission intensity – Cementitious
% reduction per tonne from 2005 baseline
2023
2022
2021
24%
23%
23%
Emissions intensity – Revenue
kgCO2e/£
2023
1.1
2022
2021
2020
2019
1.3
1.6
1.7
1.9
Emissions intensity by core products
kgCO2e/t core products
2023
43.9
2022
2021
2020
2019
46.3
44.2
47.2
54.8
Energy Intensity by core products
kWh/tonne
2023
2022
2021
2020
2019
70.5
71.7
68.3
75.0
84.5
What we said we would do
Progress in 2023
We are committed to achieve a 2%
improvement on Group carbon intensity
(per tonne of product, normalised to
2022 production levels) by end of 2023.
We will focus on improving our recording
of Scope 3 data and on identifying
opportunities to achieve reductions in
these emissions.
We will develop potential science–based
carbon reduction targets for strategic
consideration, with an aim to make a
formal science-based target commitment
in due course.
At a consolidated Group level our
carbon per tonne has reduced by 5%.
Limited assurance extended to cover
Scope 3, category 1 for the emissions
relating to purchased cement and
clinker. This accounts for more than a
third of our total Scope 3 emissions.
Science-based near term and net
zero targets have been developed
and submitted to the SBTi for formal
validation.
Our focus on getting
to net zero
Following our formal commitment in 2022
to set carbon reduction targets aligned
to the SBTi, we worked with internal and
external stakeholders during 2023 to
establish challenging yet achievable
near-term and net zero targets covering
our Scope 1, 2 and 3 emissions.
These targets have been approved by the
Executive and Sustainability Committees
and were submitted to the SBTi in
November 2023 for formal validation.
The carbon reduction roadmap displayed
on page 77 reflects these targets. However,
should any amends be required as a result
of the SBTi’s validation process, these will
be communicated through our media
platforms.
In line with SBTi’s Net Zero Standard and
cement sector guidance, net zero means
eliminating more than 95% of our Scope 1, 2
and 3 emissions, with any residual emissions
permanently offset through fully validated
and approved schemes. No carbon offsets
will be included as a carbon reduction
until our emission reduction targets have
been achieved.
Setting ambitious targets is just the first
stage of our net zero journey. Meeting
these reduction targets whilst growing the
business, and delivering on our company
purpose and vision will be a difficult
challenge. However we remain committed
to ensuring Breedon plays its part in
delivering the carbon reductions required
to limit the worst impacts of climate change.
We will achieve the required reductions
through a number of key levers as shown in
the chart on page 77 and we will disclose
our performance to stakeholders as required
by the TCFD and IFRS disclosure standards.
Our 2023 TCFD report on page 61 highlights
the risks associated with future carbon
prices and the capital cost of transitioning,
including a summary of the financial
impacts associated with our carbon
reduction plans. As most of our emissions
are governed by external carbon pricing, we
have not set internal carbon pricing to date.
Methodology
The chart on page 77 shows our absolute
gross carbon reduction roadmap to net
zero in 2050 from our 2022 baseline, along
with our 2030 near-term target. As the SBTi
has a sector-specific approach for cement
production, the Group’s science-based
targets have been set using a combination of
the SBTi’s cross-sector absolute contraction
approach and the cement sectoral
decarbonisation approach. The 2022
baseline was selected as it was the first
year that our energy and carbon data was
subject to third-party assurance.
The emissions included cover Scope 1 and 2
(location based) and Scope 3 (from purchased
cement and clinker only). The remaining
Scope 3 emissions from other categories are
not included here. Our total Scope 3 emissions
account for 28% of our total emissions and,
as this is below the 40% threshold, do not
form part of our near-term target. However,
these emissions are covered by our SBTi net
zero target and will be reduced by 95% by
2050 from the 2022 baseline.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 77
Sustainability Planet
Decarbonisation levers to 2050 - Scope 1, 2 and 3 (purchased cement and clinker only)
Total Scope 1, 2, 3 (purchased cement and clinker only) emissions
(kT CO2e)
2,500
2,000
1,500
1,000
500
0
2,093kT
2022
Operational
efficiency
-37kT
Onsite
renewables
and grid
decarbonisation
-67kT
New
equipment/
technology
-162kT
Fuel
switching
-266kT
Product
optimisation
-88kT
CCS
-1,157kT
Sustainable
procurement
-266kT
Offset
residual
emissions
-115kT
2050
Net zero reduction pathway - Scope 1, 2 and 3 (purchased cement and clinker only)
(MT CO2e)
2.5
2.0
1.5
1.0
0
2.09
1.84
1.61
0.77
0.71
2022
Baseline
2026
2030
SBTi near
term target*
2034
2038
* All pathway figures are pending the SBTi’s formal validation of the proposed near term and net zero targets.
0.22
2042
0.17
2046
0.11
2050
SBTi net
zero target*
Spotlight on Peak Cluster CCS
Carbon capture
and storage
Our main lever to achieve net zero will be
CCS. To realise this, we have played a pivotal
role in the launch of the Peak Cluster, an
innovative collaboration to capture, transport
and permanently store carbon dioxide (CO2)
emissions from neighbouring industries and
across Derbyshire, Staffordshire and Cheshire.
The key elements of this project are:
1. Unprecedented collaboration: Cement and
lime plants owned by Breedon, Tarmac,
Lhoist and Aggregate Industries, together
with Lostock Sustainable Energy Plant,
have come together with Progressive
Energy to form Peak Cluster.
www.peakcluster.co.uk.
2. Carbon emissions storage: The project
will see CO2 emissions captured and
transported before permanently storing
the CO2 beneath the Eastern Irish Sea.
3. Carbon emissions reduction: The project
will remove over three million tonnes of CO2
emissions each year from 2030, reducing
total emissions into the atmosphere from
the cement and lime industry by 40% in
the UK.
2,100
local jobs
safeguarded
£180m
annual economic
boost
3m tonnes
CO2 removed annually
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
78
Sustainability Planet
Reducing carbon emissions
Breakdown of Scopes 1 and 2
We have already made significant progress in reducing our carbon emissions, with
2023 showing a further 7% decrease in our total location-based carbon emissions from
the previous year. Our carbon intensity metric has dropped for the fifth successive
year, now standing at 1.1 kgCO2e/£, a 15% drop from 2022 and 42% since it was first
reported in 2019.
Progress against proposed SBTi Targets
2022
(Baseline)
2023
% diff
(2023/22)
Near Term
target
(2030)
Net Zero
target
(2050)
Scope 1 (tCO2e) (total)
1,746,874
1,615,764
Scope 2 (tCO2e) location based
73,590
77,975
Scope 3 (tCO2e)
(purchased cement & clinker)
Total (tCO2e)
272,254
252,640
2,092,718
1,946,379
-8%
6%
-7%
-7%
–
–
–
–
–
–
-23.3%
-95%
Bureau Veritas UK is in the process of performing an independent limited assurance
opinion on our 2023 data for Scope 1 and Scope 2 greenhouse gas (GHG) emissions,
along with the Scope 3 emissions associated with the purchase of cement and clinker
from external suppliers. The full Limited Assurance Statement will be found on our website,
when completed, at www.breedongroup.com/sustainability.
Greenhouse gas reporting methodology
The methodology applied to the calculation of greenhouse gas emissions is the GHG
Protocol Corporate Accounting and Reporting Standard. We have applied an operational
control boundary, and carbon conversion factors have been taken from UK Government
GHG Conversion Factors for Company Reporting – 2023 and the IEA emission factors for
non-UK sites where appropriate. For sites that operate within the UK and EU ETS schemes,
the ETS emissions data for kiln fuels has been used. Our GHG emissions are reported in
tonnes of carbon dioxide equivalent (tCO2e), for the period 1 January to 31 December 2023.
We report our location-based and market-based emissions separately as per previous
years, to reflect the Group’s choice of electricity supply.
Breedon Group energy and carbon consumption and emissions 2023.
On-site combustion
(MWh)
Electricity (MWh)
Road Transport (MWh)
Energy (MWh)
Process emissions
Scope 1 (tCO2e)
Scope 1 (tCO2e)
Scope 2 (tCO2e)
location-based
Scope 2 (tCO2e)
market-based
Total (tCO2e)
location-based
Total (tCO2e)
market-based
UK
Rest of World
Total
Great Britain
Ireland
Cement
2023
Group total
2022
% diff
(2023/22)
514,651
93,614
56,089
151,773
1,710,492
2,376,916
2,470,140
15,341
3,326
234,582
343,537
351,471
15,605
75,020
100,089
664,354
170,440 1,960,679 2,795,473 2,921,700
n/a
n/a
981,253
981,253
1,046,836
142,192
40,117
452,202
634,511
700,038
-3.8%
-2.3%
-25.0%
-4.3%
-6.3%
-9.4%
19,385
4,222
54,368
77,975
73,590
6.0%
0
1,214
181
1,395
2,205
-36.7%
161,577
44,339
1,487,823
1,693,739 1,820,464
142,192
41,331
1,433,636
1,617,159
1,749,079
Energy MWh
2,110,984
684,489
tCO2e
(inc. process)
%
76% 1,257,399
24%
436,340
-7.0%
-7.5%
%
74%
26%
2,795,473
100% 1,693,739
100%
The table above shows the total annual energy use and gross carbon emissions associated
with the consumption of electricity, natural gas, all other fuels combusted on site, and
fuel consumed for relevant business transport purposes, for the period 1 January to
31 December 2023, and a comparison with 2022. This table also includes the direct process
emissions associated with the manufacture of cement.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 79
Sustainability Planet
Breakdown of Scope 3 categories
Scope 1
69%
Scope 3 emissions categories
Purchased goods and services
Capital goods
Fuel and energy-related activities
Upstream transportation and distribution
Waste generated in operations
Scope 3
Business travel
Employee commuting
Upstream leased assets
Downstream transportation and distribution
Processing of sold products
End-of-life treatment of sold products
Scope 2
3%
2023
tonnes
CO2e
% of total
Scope 1, 2, 3
emissions
385,688
16.4%
20,689
118,425
98,188
668
1,405
8,771
318
18,367
4,444
79
0.9%
5.0%
4.2%
0.0%
0.1%
0.4%
0.0%
0.8%
0.2%
0.0%
Scope 3 methodology
The methodology applied to the
calculation of Scope 3 emissions
follows the GHG Protocol’s Corporate
Value Chain (Scope 3) Accounting and
Reporting Standard. We are continuing
to develop our internal systems in order
to improve the calculation methods
within each category. We report on
11 Scope 3 categories. The categories not
listed have been assessed and deemed
to be immaterial for our business.
Scope 3 total
657,042
27.9%
Emissions intensity
We have used a carbon intensity metric
to express the emissions, for the purpose
of establishing a baseline and for ongoing
comparison. The intensity metric chosen is
by £ revenue. Using our ‘location-based’
emissions total, the resultant emissions
intensity is 1.1 kgCO2e/£ revenue.
This represents a reduction of 15% in
comparison to 2022.
An alternative carbon intensity metric
relates our emissions to the annual sales
tonnages of our core products. In 2023 the
kgCO2e/tonne fell 5% from 46.3 kgCO2e/
tonne to 43.9 kgCO2e/tonne.
Assuring our data
The GHG data we report is tracked
internally during the year through the
Executive Committee, the Sustainability
Committee and shared with the Board.
In 2022 our Scope 1 and 2 GHG data and
processes were subjected to external
assurance for the first time, performed
by Bureau Veritas. This year, in addition
to our Scope 1 and 2 emissions, the scope
of our external assurance was extended
to include the largest proportion of our
Scope 3 impacts – purchased cement and
clinker. Bureau Veritas’s assurance process
is carried out in line with the requirements
of the International Standard on Assurance
Engagements ISAE3000.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 80
fuel capacity with the capability to operate
on fuel oil, and a secondary renewable
dimethyl ether blended with liquefied
petroleum gas option, which offers us fuel
switching opportunities in the future. A new
dryer was installed at our Billingham asphalt
plant in September. Early data shows an 11%
reduction in gas usage per tonne as a result.
Building on the 50,000 kWh generated
from our rooftop solar array at our
head office in Breedon on the Hill, we
are exploring opportunities for onsite
renewable energy generation projects to
reduce dependency on volatile markets,
provide longer-term cost certainty and
become a more sustainable business.
Sustainability Planet
Alternative fuels
Energy management
Alternative fuel replacement is a key
carbon reduction lever for the business.
Our cement plants substitute high levels
of fossil fuels with waste-derived materials
that would otherwise go to landfill. Not only
does this offer a key waste disposal route,
but the ash contained within these fuels is
incorporated into the final product, thereby
reducing the amount of virgin raw materials
that need to be quarried.
During 2023, in collaboration with
environmental regulation requirements,
Kinnegad received permission from the
Environmental Protection Agency to
commence a crumb rubber alternative
fuel test programme. The test programme
will run throughout 2024.
Other fuel switching opportunities are
being explored throughout the Company.
Our bitumen depot in the Port of Dublin and
Temple quarry in NI are the latest of our sites
to trial the use of Hydrotreated Vegetable
Oil, a biofuel with much lower associated
carbon emissions.
We invested €1 million installing fast electric
vehicle charging infrastructure across our
sites in Ireland to provide efficient charge
times and flexibility of use for multiple
vehicles. Consequently, we have acquired
a number of electric vehicles including
an electric forklift at Dublin Port and
electric vans.
When we launched our sustainability
strategy in 2021 one of our Planet targets
was to attain ISO 50001 Energy Management
certification for our key sites by the end
of 2023. Our Breedon Ireland certificate
has now been extended to cover all sites
within that business, and we have achieved
certification for all our GB operations,
including our Hope Cement works. As a
result our ISO 50001 coverage is now 98%
of our energy use.
Increasing energy efficiency
Fuel costs and availability remain a high risk
for the business. See the TCFD section on
page 61 for more detail. As a result, energy
efficiency programmes to mitigate these
risks remain a high priority.
The bitumen terminal at our Dublin Port
site implemented a strategy to reduce
fuel costs in 2021, while increasing the
production rates of polymer modified
bitumen. By fitting a new heat exchanger to
the polymer modified bitumen production
line, the plant was able to maintain the
daily production rates, while reducing the
running time of the steam boiler by 40%.
As a result, fuel usage in 2023 reduced
30% when compared to 2021.
Our energy team monitors developments in
fuel costs and availability, and works closely
with operational teams to ensure that we
have maximum optionality on the types of
fuel capable of being used in our plants.
Our recently published Sustainable
Procurement Policy reinforces the
requirement for evaluating the whole-life
cost and carbon impact of operational
improvements and equipment replacements.
A number of projects were delivered in
2023 which demonstrate our continued
focus on increasing energy efficiency.
A new asphalt burner and dryer installed
at our operation at Leinthall has resulted
in a 12% saving in litres/tonne of burner
fuel. The burner will not only allow us to
reduce overall fuel usage, but has a dual
Renewable energy
While the majority of our electricity
was supplied from renewable contracts
throughout 2023, the last remaining
non-renewables contract changed
over in September, ensuring that 100%
of the Group’s electricity is supplied by
renewable energy.
Progress continued on a field solar array
for up to 17MW at land adjacent to our
Kinnegad cement plant. Planning consents
have been received for the project, which
will have the capacity to deliver up to 20%
of the cement plant’s energy needs and is
expected to come online in early 2025.
While upgrading our office and welfare
facilities at our Dowlow quarry and
asphalt plant, sustainability improvements
influenced all decisions. The building itself
was repurposed and a 20kW roof top solar
array was installed. The refit used recycled
materials and energy efficient lighting
was installed.
Bureau Veritas UK is in the process of
performing an independent limited
assurance opinion on our 2023 data for
energy consumption. The full Limited
Assurance Statement will be found
on our website, when completed, at
www.breedongroup.com/sustainability.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 81
Sustainability Planet
New Lisburn
roof tile factory
Opened January 2024
Spotlight on Breedon roof tiles
Every year we invest in modernising our assets,
expenditure which typically drives sustainability
benefits.
In 2023, we completed a state-of-the-art
concrete roof tile factory in NI, replacing the
existing 35 year old facility with a new production
line, extruder, batching plant, packer and curing
chambers.
This has almost doubled our annual
manufacturing capability, from 12 million to
22 million tiles per year. Sustainability features
were a key consideration from the outset.
Usually 80% of the electrical energy input to
compressed air is lost as heat. We expect to
recover 90% of this lost energy and use it for
product curing.
To further reduce heat loss, high speed insulated
automatic vehicle doors were installed.
To reduce energy use, highly efficient LED
lighting was installed throughout, with reduced
levels in fully automated areas where no
personnel are present.
High efficiency condensing boilers with a high
turndown capability were installed. Together
with detailed metering of all energy consuming
equipment and online energy reporting
we expect to achieve a 15% improvement in
energy efficiency.
All the water consumed in the plant is reused,
with no water being disposed from plant and
minimal fresh water consumed.
The future-proofed design will allow easy
incorporation of additional Solar PV, rainwater
harvesting, and materials recycling solutions.
14%
reduction in CO2 per m2
of tiles produced
90%
recovery of lost energy from
compressed air
50%
expected reduction in
production wastage/raw
material losses
100%
water recycled
122
tiles produced per minute
22m
tiles per year
4,500 m2
facility
£6.7m
total cost of build
80%
uplift in production capability
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Sustainability Planet
Responsible use of resources
Alternative fuels substitution rate
% of kiln fuel GJ
Biofuel used
% of kiln fuel GJ
2023
2022
2021
2020
2019
Mains water
litres/tonne
2023
2022
2021
48.0%
48.5%
46.1%
45.2%
43.0%
2023
2022
2021
2020
2019
16.5
13.7
14.5
18.4%
21.1%
19.5%
20.2%
17.7%
What we said we would do
Progress in 2023
We will develop a Group-wide waste
reduction plan to achieve zero general
waste to landfill by 2025, highlighting
materials across the divisions that could
be used or reused to lower the carbon
intensity of our products.
We have consolidated our UK waste
contractors and each of our divisions
have been collaborating through
the Planet Working Group on waste
reduction solutions and opportunities
for reuse of materials.
We will demonstrate an increase in the
use of recycled, reused, or alternative
raw materials in the manufacture of our
cement, brick and tile, concrete and
asphalt products.
Through the Planet Working Group,
each of our divisions has been
focused on improving the recording of
secondary, reused or recycled materials.
Circular economy and
reducing waste materials
Ensuring the effective use of our virgin
materials has never been more important,
with competition for land use and the drive
to a more circular economy we continue to
explore opportunities for material recovery
and reuse.
Progress has been made towards our
plan to achieve zero waste to landfill by
2025. We have consolidated our waste
contractors in the UK and sought to ensure
our zero landfill ambitions could be realised
during this process. Where practical we
seek to find solutions for our waste that can
bring a positive impact on society, such as
our personal protective equipment (PPE)
recycling and electronic waste schemes,
which have been established in parts of
the business.
We follow the waste hierarchy and look
to reduce the waste generated in the
first instance wherever possible from
operational efficiency improvements to
active engagement with our suppliers to
limit the packaging we receive. For example
over 95% of jobs in GB are now processed
electronically through EPOD, negating the
need for printed tickets.
82
Spotlight on Minster
Increasing our RAP
capabilities
We made great strides in the use of RAP in
2023, with some plants now able to supply
asphalt with up to 80% RAP content. The
acquisition of Minster enhanced our recycled
material capabilities still further.
Minster’s sustainable solutions include a
process that recycles materials from road
maintenance activities. Once these are
crushed into a graded material, mixed with
pulverised fuel ash (PFA) fines and a foam
consisting of bitumen, cement and water, it
can be transported to site and laid as a base
course for roads and footways.
This process is able to make use of road
planings that contain coal tar, a material
classed as hazardous which would otherwise
need to be sent to landfill. Much of the local
road infrastructure in the region contains
coal tar material. This process not only
has circular economy benefits, with 92%
recycled materials, it is a cold mixing process
and, being processed closer to the project
means fewer heavy goods vehicle miles,
thereby reducing the embodied CO2 by 30%
compared to traditional asphalt.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Responsible use of water
We closely monitor our water usage. There
are currently, less than 1% of our production
sites located in areas of high water stress as
classified by the World Resource Institute’s
Risk Atlas tool. However, as described in
our TCFD report, the risk of water scarcity
in future years cannot be ignored and so
our focus on reducing reliance on mains
water and increasing usage of recycled
water continues.
We have installed smart water meters at
more of our sites and will look to extend
their deployment further in 2024. By having
accurate interval data at our sites, we are
able to identify areas of wastage and locate
potential leaks quickly to ensure water is
not lost.
Sustainability Planet
Where sites produce material that may not
be suitable for primary sources, we identify
opportunities for alternative uses.
At our Welsh Slate sites we produce high
quality roof tiles with by-products being a
coarse and a fine slate material.
Historically, slate has had very limited
application in the manufacture of concrete.
However in 2023 our GB technical teams
proposed replacing a portion of the
aggregates at nearby concrete plants
with local slate aggregates and undertook
research and development to establish
a new concrete formulation using slate.
By the end of the year two concrete plants
were using slate aggregate, and research
is ongoing to enhance the performance of
concrete using this material.
In 2023, we made significant advances in
our RAP capabilities. This was achieved
through the acquisition of Minster, and
investments into storage and processing
capabilities at our asphalt plants throughout
the Group. See the spotlight on Minster on
page 82.
Following further investment made in a
cold mix recycling plant in December 2023,
further progress toward reducing the use
of hot mix materials will be made in 2024,
thereby further reducing CO2 emissions.
83
Quarry water management
Our responsibility to our local communities
includes minimising our draw on the local
water resource and maximising our water
independence.
At Wickwar, a site that comprises asphalt,
ready-mixed concrete and concrete block
plants, managing the water flow around the site
is a complex task. Water stored in the main lake,
itself a disused quarry, is used for ready-mixed
concrete and concrete block production, mineral
and wheel washing, and site dust suppression.
Spotlight on Wickwar
These water-intensive activities are managed by
the site team in close collaboration with Tenant
Sibanda, our principal hydrogeologist. During
2023 they upgraded the water management
systems to include rainwater harvesting including
capturing runoff from the block plant and yard,
upgraded our recycled water systems and
installed telemetry to provide more detailed
tracking of water flows and usage.
The upgraded water efficient system, which
relies mainly on recycled water and rainfed
top- up water, was accepted by the Environment
Agency during our abstraction licence variation
application, and is now fully implemented.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 84
Sustainability Planet
Positive impact on nature
and biodiversity
Trees planted
Thousands of trees planted in year
7.4
2023
2022
2021
31.3
24.8
What we said we would do
Progress in 2023
We will develop 14 additional Biodiversity
Action Plans for key sites by the end
of 2023.
14 additional BAPs were completed:
seven in GB Materials, six in Breedon
Ireland and one in Breedon Cement.
We are uniquely positioned to do more
for nature and biodiversity than many
organisations due to our large portfolio
of land and expertise in restoration.
Our quarries include areas rich in
biodiversity and we strive to deliver net
gain on the areas of extraction when the
land is restored.
Environmental management
In addition to land management, we
promote biodiversity and natural habitats at
our sites through careful management and
mitigation of our emissions for the benefit
of the wider society. Compliance with
environmental regulations and continual
improvement are core to our operating
standards, with 96% of our operational
sites certified to the ISO 14001:2015
Environmental Management system
standard.
Routine internal and external audits are
carried out at our sites to ensure our
environmental impacts are managed
appropriately. In 2023, our internal team
of ISO auditors carried out 118 internal
environmental audits and 111 external
environmental audits across the Group.
We continued to deliver our Institute
of Environmental Management and
Assessment accredited environmental
training to our managers and supervisors
and ensure environmental awareness is
given as part of each employee’s induction.
No environmental enforcements were
received in the year.
Air quality
Our sites are regulated by environmental
permits which place conditions on the
controls in place at sites and limits on
emissions. Our cement works have the
largest number of conditions imposed and
because of the compounds found in the
quarry’s raw materials, emissions of sulphur
dioxide, oxides of nitrogen and dust are
closely monitored.
Our suite of environmental performance
data including cement’s emissions
to air is reported on our website at
www.breedongroup.com/performance.
Archaeology and heritage
CFA Archaeology have been carrying
out an archaeological excavation at the
Breedon North Cave Outgang site since
June 2023.
The work has revealed an extensive system
of field boundary ditches and pits dating
from the Iron Age and Roman periods
(2500-1600 years ago) with some evidence
for earlier activity. At least one small pit
contained pottery dating from the Bronze
Age (c. 4000 years ago).
Enhancing biodiversity
across our sites
We developed a further 14 BAPs in the year,
bringing the total number of BAPs in place
at our key sites to 39. The action plans are
developed by experienced ecologists and
highlight the areas of land on site with the
highest biodiversity value and establish
actions for how these and other areas can
be enhanced even further. The tasks vary
by site and have included specific species
surveys, positioning of site lighting to avoid
undue disturbance to nature and planting
of hedgerows.
Habitat creation
Sites across the Group engaged with the
Breedon Biodiversity Week, creating
habitats and holding local community
events. However, enhancing biodiversity is
not just something we focus on one week
per year. Our sites look for ways to enhance
biodiversity wherever possible, and the
projects they carry out are primarily driven
by the local teams and their passion for
the site.
This does not apply exclusively to our
quarry sites. At our concrete plant in
Costessesy, colleagues built a bug hotel,
squirrel house and wild flower area.
The team at Willington created scrapes on
the lake margin for dragonflies and other
invertebrates. Our Surfacing Solutions team
in Scotland added bird boxes around a site
perimeter and created a space for nature at
the rear of the site.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Sustainability Planet
Promoting biodiversity
Spotlight on Biodiversity week
In May we held our first ever Group-wide
Biodiversity Week to raise further awareness
of actions that our colleagues can take to
promote biodiversity at work, at home and in the
community. The events involved local community
and subject matter expert groups and was very
well received.
Blackmountain quarry hosted a wild youth
visit, provided the history of Blackmountain
and future regeneration talk, a tour of the site
and a walk to a National Trust site.
Mullaghglass landfill held an ornithological
experience including bird ringing, and the
installation of bird and bat boxes.
Castlepollard quarry hosted a school
children’s visit and ornithologist talk.
Bird/bat boxes were installed.
Ballystockart quarry held a beekeeping
introduction and working session.
Cambusmore quarry carried out planting
and pond restoration.
Norton Bottoms quarry installed new
beehives on site.
Temple quarry held a biodiversity
and ornithological session with local
schoolchildren.
Rossmore quarry undertook a beehive
inspection and held a Japanese
knotweed seminar.
Breedon Head office arranged woodland
walks with children from the local schools.
85
Biodiversity partnerships
Recognition
We continue to explore partnerships to
maximise our impacts on biodiversity in and
around our sites. During the year we have
engaged with:
We are delighted that our positive
impacts on biodiversity and nature
have been recognised externally
through several awards:
Belfast Hills Partnership and their Wild
Youth Programme;
British Ornithological Society to provide
bird ringing training in Mullaghglass;
Derbyshire Wildlife Trust for habitat
improvement work undertaken at
Hope’s reservoirs 3 and 4 including
the installation of coir rolls on reservoir
margins as part of fringe habitat
improvement work;
the local Callendar Group of the
Scottish Wildlife Trust to help with
pond restoration and planting in Gart
Pond and Balvalachan Pond at our
Cambusmore Quarry; and
the Tree Council through a signed
partnership and commitment to increase
the planting of hedgerows and trees.
Achieved Gold in the Business in the
Community Northern Ireland (BITCNI)
Environmental Benchmarking Survey.
Achieved Platinum in the BITCNI
Biodiversity Charter.
Won ‘Guardian of the Environment’
award at Aisling Awards for Mullaghglass
biodiversity work.
Awarded Silver for ‘Biodiversity
initiative of the year’ at the All-Ireland
Sustainability Awards.
Shortlisted in three categories for the
2024 Green Awards.
Silver Award for Biodiversity Initiative of
the Year at the All-Ireland Sustainability
Awards.
Shortlisted for the Constructors
Employers Federation’s Excellence in
Sustainability Award.
Commended for our North Cave Quarry
Restoration Project in collaboration with
Yorkshire Wildlife Trust and MJCA at the
Royal Town Planning Institute Yorkshire
Awards for Planning Excellence.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information North Cave quarry
Restoration Project
Sustainability Planet
Future focus for Planet
Communicate our SBTi near-term
and net zero targets once formally
validated, and demonstrate progress
towards these.
Continue improving the carbon
intensity of our products.
Continue our use of alternative fuels.
Progress the Kinnegad solar PV project.
Continue to responsibly use our mineral
reserves, reducing waste to landfill.
Demonstrate progress on our zero
waste to landfill plans.
Make progress towards better water
data and management.
Continue implementing the BAPS
recently developed for key sites.
Make further progress towards our
longer-term decarbonisation levers
such as CCS.
86
Spotlight on North Cave Wetlands
The North Cave Wetlands are an excellent
example of how our quarry sites can be
restored for the benefit of local communities
and nature, focusing on species being
impacted by climate change. The extraction
site has been largely restored and provides
numerous habitats for migratory and
breeding bird species. Accessibility has been
key to the project, to ensure that all within
the community are able to enjoy the site to
its fullest.
The restoration work was recognised by the
Royal Town and Planning Institute. After being
nominated in the Yorkshire Regional awards
for Best Project, it received a commendation.
Judges commented:
“ This is an excellent example
of developing an old mineral
extraction site to create a wetland
habitat, securing environmental
improvement and delivering
biodiversity benefits. The scheme
secures a valued recreational
resource with unrestricted access
and accessibility for those with
challenging mobility.”
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Sustainability People
People
Make a material
difference to
society
Our 3,900 colleagues are the heart
of our business, and we aim to
attract, develop and retain talent to
help us achieve our long-term goals.
We aim to be a good neighbour to
the communities in which we work,
ensuring that we operate ethically
and responsibly.
87
2030 target
Positively impact more than 100,000 people
2023 target
Positively impact 25,000 people by the end of 2023
Develop and empower a diverse,
talented workforce
»88
Positive impact on the communities
in which we work
»91
Health and safety
People
Land and mineral management
s
a
e
r
a
s
u
c
o
F
s
k
s
i
r
d
e
t
a
e
R
l
G
D
S
N
U
Progress highlights
Charitable donations
Material donations
People positively
impacted since 2021
Employee engagement
rate
£455,305
3,273 tonnes
54,784
80%
New apprentices
44
Managerial and senior
roles held by women
146
Employee training hours
Awarded Silver
22,697
5% Club
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
88
Sustainability People
Develop and empower a
diverse, talented workforce
Number of women at management level
Proportion of women in workforce
What we said we would do
Progress in 2023
We will create a culture of sustainable
improvement by improving colleague
knowledge, competency and engagement
on sustainability.
Exceeding our 70% target, 80% of all
relevant technical and commercial
colleagues were trained on
sustainability and Breedon Balance.
2023
2022
2021
146
143
2023
2022
2021
119
15%
14%
13%
We will deliver an employee engagement
survey and aim to maintain the
participation rate of 75% for 2023.
80% of our colleagues felt engaged and
our survey participation rate increased
to 76%.
Workforce breakdown by age
16 to 21 years
Workforce breakdown by age
16 to 21 years
2023
2023
2022
2022
2021
2021
3%
2%
3%
2%
3%
3%
50 to 59 years
50 to 59 years
2023
2023
2022
2022
2021
2021
28%
28%
29%
29%
29%
29%
22 to 29 years
22 to 29 years
60 to 69 years
60 to 69 years
2023
2023
2022
2022
2021
2021
12%
12%
12%
12%
12%
12%
30 to 39 years
30 to 39 years
2023
2023
2022
2022
2021
2021
40 to 49 years
40 to 49 years
2023
2023
2022
2022
2021
2021
14%
14%
13%
13%
13%
13%
2023
2023
2022
2022
2021
2021
70 plus years
70 plus years
2023
2023
2022
2022
2021
2021
1%
1%
1%
1%
1%
1%
21%
21%
20%
20%
20%
20%
21%
21%
23%
22%
22%
23%
We will further develop leadership
capability through the delivery of three
identified programmes by the end of 2023:
Safety Culture Leadership, Senior Leader
programme and Leadership Essentials for
managers and supervisors.
Engaged heavily with our leadership
and management teams through
various elements of training, workshops
and communications on the topic
of culture and behaviours. This has
improved awareness across the Group.
Outstanding levels of
colleague engagement
Colleague engagement remains a high
priority and this year we were delighted
that the 2023 annual engagement survey
‘Your Say’ delivered our best ever results.
76% of our colleagues participated in the
survey (75% in 2022) and our engagement
score showed that 80% of colleagues feel
engaged, compared to 77% in 2022.
Our purpose and values underpin everything
we do at Breedon, and 89% of our colleagues
recognised how their work contributes to
the overall success of the Group, whilst 84%
understand and believe in our company
values, a year-on-year improvement.
We use a variety of channels to gather
feedback on what our colleagues need to
support them to be their best and to ensure
Breedon continues to be a great place
to work:
Annual ‘Your Say’ survey enabling
confidential feedback.
Colleague Voice Panel providing a
link to the Board.
Quarterly focus group meetings.
Our internal social media platform –
Viva Engage.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 89
Sustainability People
Pauline Lafferty is our Designated Non-
executive Director (DNED) for Workforce
Engagement and during the autumn she
held face-to-face and virtual sessions
across both GB and Ireland.
Each session was designed to involve
colleagues at differing levels of experience,
grade and role to stimulate good discussion.
Various topics were covered such as
engagement, training and development,
site leadership, employee recognition
mechanisms and colleague communications.
We will run further sessions and build on the
feedback that our colleagues give, so that
we can continue to make Breedon a great
place to work.
We were pleased to have achieved 12th
place in the Sunday Independent/Statista
list of Ireland’s 150 Best Employers, and
to be named as one of Northern Ireland’s
Top 100 companies in the prestigious
list compiled by the Belfast Telegraph in
association with Grant Thornton Ireland,
Colleague support and wellbeing
We have provided support and guidance
throughout the year around physical
and mental wellbeing, providing access
to external support through financial
wellbeing webinars covering debt and
budgeting, and pensions.
Through our Home Safe and Well
programme we have made further
improvements to our facilities across the
business, with support from our colleagues.
A focus on Diversity, Equity
and Inclusion
We are committed to building a truly
inclusive workplace and to treat all our
colleagues with dignity and respect and this
year equality, diversity and inclusion has
been a key focus area for Breedon.
We have developed a diversity and inclusion
strategy that is right for Breedon and right
for all of our colleagues, making sure that
we are representative of the communities
where we live and work and embedding
inclusion into everything we do. We are
taking a more evidence-led approach and
have engaged with colleagues to show
that we are responding to their needs
and expectations.
This year, we carried out a Materiality
Assessment to identify material topics
relevant to Breedon and we engaged with a
wide range of stakeholders and colleagues
from different levels across the Group to
gain their views and feedback. We used the
data from this to prioritise key themes and
benchmarked ourselves, against the Global
Diversity, Equity and Inclusion Benchmark.
Gender representation as at 31 December 2023
Executive Management
Senior leaders
Management roles
All employees
Male
Female
Number
7
1
%
87
13
Number
25
11
%
69
31
Number
961
146
%
87
13
Number
3,353
574
%
85
15
We signed the Armed Forces Covenant in
August and launched our first colleague-led
network that operates across Breedon,
with the objective of creating a diverse
community that supports veterans and
reservists.
Our plan for 2024 will focus on making our
people practices fairer and more inclusive
for colleagues. These include:
Introducing new family friendly policies
and benefits.
New revised recruitment practices and
upskilling training for hiring managers.
New Employee Resource Group looking
at topics including LGBT+ to PPE.
We are looking to improve our data across
all colleagues in all geographical areas to
help inform our plans for 2024.
Developing our people
We support colleagues with technical
and professional qualifications, funded
through our levy and business sponsorship.
Relationships were strengthened with
training providers across the UK and new
relationships established with Make UK,
GP Strategies and East Kilbride college.
Highlights for 2023 include:
Mechanical apprentice Charlie Craven
and maintenance manager John Mulryan
from Hope Cement Works attended a
reception to meet Education Minister
Gillian Keagan. This opportunity came
through High Peak’s MP Robert Largan
who nominated Hope Cement Works as
a local skills champion in recognition of
the proactive work we do in supporting
apprenticeships.
We attended the first Highways Careers
Day in collaboration with the Midlands
Collaborative Community and National
Highways to showcase the diverse roles
and routes into our industry.
Our Northern Ireland region achieved
Investors in People Gold Standard,
recognising our investment into our
business to make sure that great people
work together to support our clients
and customers.
37 new enrolments in higher and further
education programmes, adding to the
22 colleagues already engaged with
their studies.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Sustainability People
Leadership development
During the year our leaders focused
on managing and accelerating people
performance through our new performance
management framework. This has included
targeted development from supervisory
level and upwards.
In 2024, we will focus on driving and
embedding performance conversations
through all of our leadership teams. As part
of this approach, we are investing in the
development of our managers to ensure
we have a solid foundation for colleagues to
develop their careers in the leadership and
management space.
We will be launching our new Management
Essentials programme in 2024, which is
aimed at our supervisory and management
teams. The programme has been designed
to look at various key touch points, including
feedback from our colleague survey and
scoping sessions with senior leaders.
At the heart of the programme will be our
new management competencies, which
are aligned to our values and shaped by the
involvement of colleagues in the business.
These will underpin the development
available to our managers enabling them
to perform and achieve the competencies
effectively.
Investment in Early Careers
Our Early Careers programme is a key part
of the Group’s people strategy, bringing
fresh talent, perspectives and energy
into the business and we are proud of our
long-term investment in young people and
skills development. In 2023 we had four
new graduates in Northern Ireland, and the
Early Careers cohort saw us welcome an
additional 44 new apprentices, of which 16%
are female. This brought our total number
of apprentices and graduates recruited in
2023 to 77, compared to 60 in 2022.
We recruited 22 Large Goods Vehicle (LGV)
driver apprentices, of which 11% are female,
across England and Scotland in partnership
with Seetec, one of the UK’s leading training
providers, that support businesses to meet
current and future needs, while helping
individuals of all ages to build a rewarding
career.
Apprentices
Graduates
LGV drivers
Male
Female
37
4
21
7
0
1
In addition, we were delighted to have
six industrial placements from various
universities across England and Northern
Ireland, providing students with an
opportunity to develop their practical and
technical skills in a role directly relevant to
their vocational course.
90
Building our future
Spotlight on Apprenticeships
Our apprentice pipeline plays a vital role in
building our future. We were pleased to have
been awarded an enhanced silver membership
of The 5% Club, in recognition of the work we
have done to build and develop our workforce,
increasing the number, quality and range of
‘earn and learn’ opportunities across the UK.
Our biggest apprenticeship programmes for
2023 included:
13
apprentices for our
mechanical and electrical
maintenance technicians
13
operatives for our quarries,
ready-mixed and surfacing
operations
22
LGV drivers
Colleague
fundraising
Spotlight on Movember
We focused on men’s mental health and raising
awareness of this important issue, given that
the workforce in the construction sector is
predominantly male.
Breedon colleagues made a huge effort for
Movember this year, collectively raising
more than €15,000 for the charity, which
was matched through our Matched Funding
programme, bringing the grand total
to €30,000.
64
participants
€30,000
raised
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 91
Sustainability People
Positive impact on communities
People positively impacted
number of people per year
Community/charitable financial donations
£
2023
2022
2021
17,814
11,114
25,856
2023
2022
2021
£455,305
£318,097
£154,906
Community/charitable material donations
tonnes
Neighbour complaints
2023
2022
2021
669
513
3,273
2023
2022
2021
2020
26
29
45
72
What we said we would do
Progress in 2023
Demonstrate a positive impact to 25,000
people by the end of 2023.
Throughout 2023 we positively
impacted 25,856 people.
We will improve our ability to demonstrate
the social value of our activities through
further embedding the social value
methodology developed in 2022 and
undertaking an impact assessment for
each division.
Our Surfacing division has provided
customers with our positive social value
impacts relating to specific projects.
We are recruiting a Social Impact
Manager to guide further best practice
across the Group.
We will review and improve the process
of formally promoting opportunities and
recording volunteering hours to better
reflect the actual level of activity being
undertaken across the Company.
A system to promote awareness of local
and national volunteering opportunities
has been selected.
Making a positive societal
impact in communities
We recognise that our sites actively
contribute to the social and economic
wellbeing of surrounding communities.
We create employment opportunities,
support the local economy, and invest in
community based social initiatives through
volunteering, providing materials and by
making monetary donations.
In 2021 we set a target to positively impact
100,000 people by 2030. Throughout 2023
we positively impacted 25,856 people,
which when added to the 28,928 people we
positively impacted since 2021, brings our
cumulative total to 54,784 people positively
impacted. This is 54.8% of our 2030 target.
Our work puts us at the heart of local
communities, places where customers
and colleagues live and work. We want
to support them to be stronger and
increase understanding of the impact and
contribution our work has on everyday life.
Engaging with the local community is an
important part of embedding our inclusive
culture. Throughout the year we have
successfully engaged with community
events and awareness activities.
Highlights include:
In honour of May’s National Walking
Month, we took on our most exhilarating
and closely fought Group-wide
challenge, clocking up a staggering
11,739km over 11 days, and donating a
total of £10,000 to local charities at the
heart of our communities.
Our teams were proud to support the
DIY SOS team with materials for their
Treetops Hospice big build in Risley,
to help create a dedicated children’s
bereavement centre. The programme
featured on the BBC One series ‘DIY SOS:
The Big Build for Children in Need’.
We actively participated in the Green
Kilometre Scheme, a fantastic initiative
that empowers individuals and groups
to make a positive impact on our
local communities.
We extended our partnership with
Leicester Tigers Rugby Club as well as
supporting the women’s team ahead of
the 2023/24 season.
Our focus for 2024 is to improve our social
impact data robustness and availability.
Supporting our suppliers
We believe that working collaboratively
with our supply chain is essential if we are to
achieve our aims of contributing positively
to the environment and society and deliver
better and more sustainable outcomes for
all stakeholders over the long term.
In December 2023, we published our first
Sustainable Procurement Policy Statement
setting out our formal commitment to
foster sustainable procurement and
supplier management and outlining our
expectations and support through our
procurement and supplier management
processes and activities.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 92
Sustainability People
Investment in social value
Good neighbour plans
As part of our focus on being a good
neighbour to the communities around our
operational sites, our businesses have active
liaison programmes with the communities
in which they operate, and they seek to
consider their interests and concerns in
their operational activities.
Volunteering and donations
to community projects
In 2023 the number of donations of
materials to communities and charitable
organisations increased by 43% and our
financial donations increased significantly
to a total of £455,305.
Our donations supported many projects
that are local to our sites, including the
maintenance of play areas and the donation
of materials for community projects and
nature reserves.
Across the Group we promote our ‘Make
a Material Difference Day’ to actively
encourage colleagues to undertake
volunteering activities. Throughout
the year 2,114 volunteering hours were
delivered across the Group.
We boosted the uptake of our matched
funding offer, resulting in an additional
£28,637 being donated to community
and charitable causes.
We have supported several of our
colleagues’ volunteering efforts, from
hiking or cross-country charity bike rides
to school and careers events or historic
garden preservation.
We have allocated up to £100,000 per
annum to use for matched funding to
encourage further involvement and impact
of colleagues in their local communities.
Future focus for People
Improve our data across colleagues to
help inform our DEI plans.
Make our practices fairer and more
inclusive for colleagues, including family
friendly policies and benefits , revised
recruitment practices and training for
managers.
Focus on driving and embedding
performance conversations through
all of our leadership teams.
Further improve data availability and
robustness to more accurately calculate
and report our social value impacts.
>£100k
spent with local SMEs
£250k
spent on local accommodation
600 hours
volunteered in local communities
1000 tonnes
of aggregates donated
4 apprentices
employed and developed
Spotlight on Islay Airport resurfacing project
We operated a Project Bank Account
for payments to be made directly and
simultaneously to our supply chain.
As the project coincided with the peak tourist
season we were careful to manage our use of
the local resources and accommodation.
We made a considerable economic
contribution, engaging local shipping,
haulage, plant hire and ferry services.
The project provided great opportunities for
four apprentices which in turn will support our
growing airfield business.
We donated 250 tonnes of aggregate and
600 hours to prepare a car park and footpath
for the local community hub. In addition we
donated 750 tonnes of aggregate to upgrade
a beach access road that runs alongside the
airport, enabling easy access for the local
community.
The Islay Airport project to rehabilitate the
runways and aeronautical ground lighting,
faced the added challenge of needing to
ship all materials, plant and people to a
remote island while minimising disruption to
tourists and businesses upon which the local
economy depends.
The social value considerations undertaken as
part of this project were:
Zero health/safety incidents.
Local residents’ concerns about potential
night-time noise from the mobile asphalt
plant were addressed by using an alternative
landside location in agreement with Highlands
and Islands Airports Limited.
We formed a fully integrated team on site,
sharing work compound, offices and canteen
facilities. We procured an on-site caterer
from the Hebrides who provided three
cooked meals each day for everyone on site,
including client, project manager, direct and
supply chain workers, which ensured high
productivity and minimised disruption to the
local community.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 93
Sustainability Places
2030 target
50% of our concrete and asphalt sales revenue from products with
enhanced sustainability attributes
Places
Make a material
difference
to the built
environment
Our focus on research,
development, innovation
and collaboration aims to
provide our customers with
products that contribute
to a more sustainable built
environment.
HI RES IMAGE PLACED
SEPARATE CUT OUT TO BE DONE
2023 target
40% of our concrete and asphalt sales revenue to be from products
with enhanced sustainability attributes by the end of 2023
Sustainable products
and services
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Research,
development
and innovation
»95
Collaboration
and influence
»95
Markets
Competition
Laws, regulations and
governance
Competition
Laws, regulations and
governance
Markets
Laws, regulations and
governance
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Progress highlights
Revenue from sustainable concrete
and asphalt products
Revenue from products that meet
the Breedon Balance criteria
CEM II sales target exceeded by
40%
28%
50%
To be included in our Breedon Balance portfolio, products must meet or
exceed the stringent threshold values we have set based around these criteria:
Lower carbon
footprint than a
generic market
equivalent
Incorporates
recycled
content in
the product
Less resource
intensive or
longer lasting
Positive impact
on nature and
biodiversity
Positive impact
on water usage
Ethically
sourced
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
Sustainability Places
Sustainable products
and services
Sustainable concrete and asphalt sales revenue
% of total concrete and asphalt revenue
2023
2022
2021
40%
37%
25%
What we said we would do
Progress in 2023
Building on the performance in 2022 we
are committed to deliver a further increase
of 3ppt in sales revenue from concrete
and asphalt products with enhanced
sustainability attributes.
We increased the metric from 37% in
2022 to 40% in 2023. We achieved this
through investment in RAP processing
capabilities, warm mix asphalt dosing
systems and increased CEM II use in
concrete mixes.
In addition, we will launch, monitor and
start to report on the proportion of revenue
achieved specifically from products that
meet the more stringent criteria of our
Breedon Balance range of products.
We have now established reports on
the proportion of revenue achieved
specifically from products that meet
the Breedon Balance criteria. This figure
stands at 28% for 2023.
We will train 70% of relevant commercial
and technical colleagues on sustainable
solutions.
Our Technical Sustainability team
rolled out the training to relevant teams
covering 80% of these colleagues.
Sustainable products
Our focus is on sustainable products and
services that deliver higher performance or
lower embodied carbon potential over their
whole life.
Our 2030 target is to achieve 50% of
our annual concrete and asphalt sales
revenue from products that have enhanced
sustainability attributes, such as lower
embodied carbon or an increased
percentage of recycled content. In 2023
we met our target, increasing revenue from
sales of concrete and asphalt products with
enhanced sustainability attributes by 3ppt
to 40%.
This was achieved through a combined
focus on both our concrete and asphalt
product base. Our increased sales of
CEM II meant more of our concrete sold
incorporated this lower carbon cement.
Warm mix dosing systems were installed
at more of our asphalt plants across the
Group, allowing us to produce asphalt at
lower temperatures resulting in less energy
use and in turn, lower embodied carbon of
the material. We expanded our use of RAP,
which meant more products contained
recycled content than has been achieved
historically. These are just some of the lower
carbon products which will contribute
towards creating a more sustainable
built environment.
Our product technical teams evaluate and
research new products, materials, methods
and technologies and test these in the field
to assess their performance.
Our Breedon Balance range of products
that launched in January 2023, are products
that address the broad nature of challenges
our customers face: lowering carbon,
utilising recycled materials, increasing the
product life, minimising water footprints,
enhancing biodiversity, and ensuring
ethical sourcing practices. During 2023
we trained 80% of the relevant workforce
on sustainable products, exceeding our
objective of 70%.
94
Spotlight on Recycl8
Low carbon concrete
collaboration
Our colleagues in Scotland worked in
collaboration with sustainable technology
specialists Recycl8, to produce a low carbon
concrete mix. The concrete utilises industrial
waste residues to replace virgin quarried
materials, and by incorporating Recycl8’s
additive, maintains strength and prevents
leaching.
Working in conjunction with Rock Solid,
the producers of the Incinerator Bottom
Ash Aggregate (IBAA) product, the project
required engagement with the environmental
regulator to ensure the waste material was
accepted for use in this application.
Approval was given and in September,
a house foundation project for Barratt
Construction in Perth used IBAA to replace
20% of virgin aggregate within the concrete
mix, alongside a high portion of Ground
Granulated Blast-furnace Slag to deliver a
low carbon, Breedon Balance concrete.
Further trials will take place in 2024 as we seek
to utilise this product in more applications.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 95
Sustainability Places
Bureau Veritas UK is in the process of
performing an independent limited
assurance opinion on the percentage of
revenue from sales of concrete and asphalt
sustainable products. The full Limited
Assurance Statement will be available
on our website, when complete, at
www.breedongroup.com/sustainability.
Environmental Product Declarations
As part of our commitment to transparency
we provide Environmental Product
Declarations (EPD) on key products, and in
2023 we enhanced our product EPD library.
We have EPDs for our brick manufacture at
Kingscourt in Ireland, our cement produced
at Kinnegad and in 2023 we published
EPDs for our Breedon roof tiles. A lifecycle
assessment for our cement produced at
Hope was carried out at the end of the year,
which is going through the verification
process and will be published in 2024.
For our other products including ready-mixed
concrete, we provide carbon calculations or
Lifecycle Analysis (LCA) data on request
to enable customers to select the most
appropriate sustainable product. We have
contributed to the development of concrete
EPDs for the UK concrete industry through
our engagement with the MPA. These industry
level EPDs are due to be published in early 2024.
Adapting our operations
In 2022 we began production of our
lower carbon CEM II bulk product out
of our Hope Cement Works. Since then,
supported by investment in 17 new CEM II
silos across our GB ready-mixed concrete
network, our targets to increase CEM II
sales were exceeded by 50%. Following
the modification of GB building standards
in November 2023 and with 17 additional
CEM II silo installations planned for 2024,
we expect the proportion of CEM II sales
will increase further.
In Ireland, we installed new CEM II silos at
Ballystockart and Blackmountain plants.
Installation of dosing systems at our
asphalt plants continued in 2023. These
systems enable the production of warm
mix asphalt. The lower temperatures require
less heat and therefore less energy during
manufacture resulting in lower embodied
carbon of the finished material.
In November 2022 we commissioned the
new Mansfield asphalt plant. The carbon
emissions associated with the combustion
of fuels and electricity usage at the site
dropped by 43% per tonne of asphalt
compared to the year prior to the upgrade.
Future focus for Places
Make further progress towards our 2030
target to achieve 50% of our asphalt
and concrete sales revenue from more
sustainable products.
Increase the proportion of CEM II sales,
and install additional silos to enable the
use of CEM II downstream.
Publish an EPD for Hope’s cement
product.
Research, development
and innovation
Our focus is on products and solutions that
will help both Breedon and our customers
achieve their sustainability goals.
Innovation is a key part of the Breedon
culture and its future, from the development
of lower carbon cements, to utilising
recycled materials in products and from
adopting new production methods
to utilising additives that enhance the
product lifecycle.
We have further enhanced our working
relationships with research consultants
and academia and for our major product
streams we are partnering with others
for the development of more sustainable
products.
Collaboration and influence
Our focus is on cross-industry collaboration
to influence the consideration of more
sustainable solutions.
As active members of both the MPA
and the GCCA, we are well positioned to
collaborate at a global, European, national,
regional and local level.
Through these channels we support
collaborative approaches to climate
challenges and policy development across
the sector. We are able to engage with
our peers to highlight and contribute to
consultations such as the evolution of
the UK ETS and the development of a
watertight UK CBAM to ensure levelised
carbon costs on imports.
We are working to align a consistent
approach across the sector around product
carbon measurement, GHG accounting,
EPDs, and product labelling and product
specification, whilst ensuring we are
disclosing consistently to recognised
frameworks.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Sustainability Places
Cement industry-first trial
Spotlight on Graphene trial at Hope
96
Low res picture
Low carbon asphalt
Breedon’s Hope Plant completed industrial
trials in the summer and autumn of 2023,
trialling graphene addition directly into the
cement manufacturing process for the first
time ever in the UK’s cement industry.
Working in conjunction with graphene
producers First Graphene, academics at
Manchester University and construction
company Morgan Sindall, the project’s key
aims were:
Industrial application: to identify
a suitable means of delivering the
required dosage of graphene to the
manufacturing process and any effects
on the milling circuit.
Enhanced yet more sustainable cement
properties: to prove that graphene
addition to cement will impart greater
strength, as shown in laboratory trials.
This should enable a lower clinker
content for the same performance,
leading to a reduction in carbon intensity.
Performance in use: to test the
performance of concrete in the field
using graphene-enhanced cement.
The phase one trials achieved up to 10%
increase in the cement’s early-stage
compressive strength, which could equate
to a reduction in CO2 emissions during the
manufacturing process.
The cement produced during the phase
one trials was subsequently used in the
construction of a high-volume vehicle
wash-down facility, while successfully
meeting the performance criteria required.
The phase two trials used grinding aid
containing PureGRAPH® to produce an
additional 600 tonnes of graphene-enhanced
cement. The focus of this trial was on the
optimisation of dosing methods at an
increased graphene loading level, with the
resulting formulation change in the grinding
aid. These subsequent trials have shown we
have a safe, scalable and robust method for
graphene addition.
We will continue working with First Graphene
to understand how to incorporate graphene
as a route to reducing the CO2 footprint
associated with cement.
Transport Scotland is responsible for the
delivery of the Scottish government’s vision
for transport, from network infrastructure
to accessibility and sustainability. Their aim
is to reduce carbon emissions by 75% by the
year 2030.
Breedon presented Transport Scotland and
Amey with an opportunity to trial a new, low
carbon Stone Mastic Asphalt technology,
in accordance with TS2010 surface course
specification and guidance.
Breedon carried out a full laboratory
evaluation of its TS2010 material, using
Nypol RE 103. The Nypol RE range from
Nynas includes a biogenic component,
which substantially reduces the carbon
footprint of polymer modified bitumen,
when compared to a normal polymer binder.
Results were presented to Transport
Scotland, to demonstrate this new
technology as a catalyst for reducing
carbon emissions across the country.
Feedback was overwhelmingly positive,
leading to a successful live trial of
the product.
Spotlight on Transport Scotland
The new low carbon asphalt, part of the new
Breedon Balance range of materials, was
successfully installed on a Scottish road
resurfacing project. This is the first time an
asphalt containing biogenic materials has
been used on the Scottish network, marking
an historic achievement and paving the
way for a future incorporating low-carbon
transport.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
Sustainability Principles
Principles
Underpinning the pillars of Planet,
People and Places, our fundamental
operating Principles ensure that we
operate responsibly and transparently.
97
2023 target
Provide a sufficiently comprehensive and detailed disclosure of our
performance to meet the assessment criteria of a credible external framework
Quality
Ethics and
integrity
Good
governance
Stakeholder
engagement
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Competition
Laws,
regulations and
governance
Laws,
regulations and
governance
People
Climate change
Laws,
regulations and
governance
Climate change
Land and mineral
management
Competition
Markets
Heath,
safety and
wellbeing
Health and
safety
People
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Progress highlights
CDP Climate Change scored B
and Water Security scored C
BES 6001
Responsible Sourcing certification for all concrete,
asphalt and aggregates production
Employee LTI severity rate improved by
Increase in Visual Felt Leadership site tours
15%
7%
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
Sustainability Principles
Keeping our people
safe and well
Combined LTIFR (employees & contractors)
per million hours worked
Combined TIFR (employees & contactors)
per million hours worked
2023
2022
2021
2020
2019
3.53
3.10
3.05
1.59
Employee LTI severity rate
per million hours worked
41.7
49.2
2023
2022
2021
2020
2019
2023
2022
2021
2020
2019
7.72
16.99
17.23
19.80
17.97
21.07
105.6
129.3
164.6
What we said we would do
Progress in 2023
We will achieve an improvement in
wellbeing scores over 2023 through
implementation of our wellbeing strategy
and initiatives.
The wellbeing strategy has focused on
improving health surveillance, providing
mental health support and financial
guidance.
98
Home Safe and Well
In our steadfast commitment to fostering
a workplace environment that prioritises
health, safety, and wellbeing, Breedon
remains dedicated to ensuring the welfare
of all team members. Throughout the year,
our unwavering focus on health and safety
has been apparent, with the Home Safe and
Well programme continually challenging
our performance and propelling
improvements.
Notably, our emphasis on learning from
incidents and gaining enhanced insight
into potential consequences, rather than
solely on actual outcomes, has provided
the organisation with robust visibility and
evidence of emerging key risk areas.
Leveraging this insight, Breedon has
initiated a comprehensive programme
to eliminate, where possible, the most
significant risks to our people and those
impacted by our operations. This initiative
includes the introduction of a new metric,
Significant Incident & Injury Frequency and
a novel incident review process known as
Incident Learning Review (ILR). ILR focuses
on reporting and learning outcomes from
incidents with high potential, contributing to
our Significant Risk Elimination programme.
Continuing our dedication to fostering
a Health, Safety, and Wellbeing culture
and behaviours across the Group, we
conducted our inaugural Health Safe and
Well Cultural Survey. This survey served
as a baseline assessment of workforce
perceptions regarding health, safety, and
wellbeing. Subsequent behaviour and
culture workshops engaged managers and
supervisors in addressing specific areas
of improvement.
In response to evolving needs, recent
months have seen an increased focus on
colleague mental health, accompanied by
strategic expansion in this area. The Home
Safe and Well programme is consolidating
best practices from within the sector
and exploring cross-sector and industry
learning opportunities.
The Home Safe and Well programme
strategically concentrate Group-wide
efforts, resulting in positive performance
outcomes in the first half of the year.
Improved understanding of leading
and lagging indicator trends presents
opportunities to further advance our
improvement journey. As the Group
ascends the safety culture maturity
scale, enhanced foresight will position
the business as a sector leader in
the management of health, safety,
and wellbeing.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 99
and workplace wellbeing.
We have continued to help and support
colleagues throughout the year, around
their physical, mental and financial
wellbeing by providing additional advice
and support to all colleagues. Resources
such as mental health first aiders have
been put in place to support all areas of
the business.
In 2024 we will continue our focus on
culture and behaviours, introducing our
new ‘Five Alive’ rules. We will enable
improved operational management
with the introduction of a new reporting
system and Integrated Management
System platform.
Sustainability Principles
Safety performance
We have elevated our focus on leading
activities and overall level of risk awareness
across the Group. As a consequence
the reporting of High Potential Incidents
(HiPo) has experienced an increase of 152%
compared to 2022.
Whilst there was an increase in overall LTIFR
to 3.5 per million hours worked (2022: 3.1),
there has been a significant reduction in the
number of serious LTIs, with the total injury
frequency rate reducing to 17.0 (2022: 17.2)
indicating an improved focus on our
significant risks of injury.
Leading indicators, such as the VFL visits
that we undertake to audit safety behaviour
on our sites, increased 7% which should be
positive for future outcomes.
At Breedon, we are committed to
fostering a robust safety culture.
This is underpinned by our dedication to
continuous improvement, the support of
robust training and development along
with the encouragement of personal
responsibility when it comes to health,
safety and wellbeing.
This approach is further reinforced through
our effective approach to communications,
comprehensive investigations into both
actual and potential incidents, and the
lessons learned to proactively prevent
incidents occurring.
and a clear personal ownership amongst
colleagues for their own health and wellbeing.
We continue to conduct detailed
investigations into both actual and potential
incidents, providing valuable insights to
inform preventative measures and enhance
our proactive approach to risk mitigation.
Our strategy includes regular health
and wellbeing communications, training
programmes and initiatives that address the
diverse needs of our workforce. By fostering
a holistic approach, we aim to create an
environment where every colleague can
thrive, both personally and professionally.
Our Wellbeing Framework has been
designed to address five core priority
areas: mental, physical, financial, social,
We are pleased to report ongoing
improvements across several key
performance indicators, which is a
testament to our collective efforts in
prioritising and enhancing health, safety,
and wellbeing within our organisational
framework.
Bureau Veritas UK is in the process of
performing an independent limited
assurance opinion on our 2023 data for
Combined Total LTIFR, Combined Total
IFR and Employee LTISR. The full Limited
Assurance Statement will be found
on our website, when complete, at
www.breedongroup.com/sustainability.
Health and wellbeing
Breedon is committed to a comprehensive
health, safety and wellbeing strategy
that prioritises the physical, mental, and
emotional welfare of our workforce.
As a fundamental part of our Sustainability
Framework and our People Plan, our Home
Safe and Well programme fosters a culture
of wellness and resilience.
Central to this strategy is the promotion
of a strong safety culture, emphasising
continuous improvement, relevant training,
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Sustainability Principles
Quality assurance and
continuous improvement
What we said we would do
Progress in 2023
We are committed to voluntarily disclosing
our performance to a credible external
framework by end 2023. This will provide
a benchmark and gap analysis to aim for
incremental improvement in 2024.
We submitted both a Climate Change
and a Water Security disclosure to
the CDP, achieving a score of B and
C respectively.
Breedon’s systems and processes are
underpinned by a commitment to quality
assurance and continual improvement.
We have regular reviews of our stakeholder
needs, including customer satisfaction
surveys and the evaluation of complaints.
All our production sites are third-party
accredited to the ISO 9001 Quality Management
Standard and our expert ISO Internal Audit
team continually reviews performance
against the requirements of the Standard.
Additionally, as part of our continued focus
on improvement, our internal team of ISO
auditors carried out 586 internal and 87
external safety audits, and 118 internal and
111 external environmental audits in the year.
This year, we successfully extended the
scope of our ISO 45001 Health and Safety
accreditation to another 100 sites.
We successfully extended the scope of
our BES 6001 accreditation, which was
previously held only for our ready-mixed
concrete production, to include asphalt
and aggregate production.
We have also increased the number of
sites certified to the ISO 50001 Energy
Management accreditation already held
by parts of Breedon Ireland. We extended
it to cover all sites in Breedon Ireland, and
added new certification to cover all our GB
operations, including our Hope Cement
Works, bringing our coverage to 98%.
Our in-house technical teams operate
from laboratories, some of which are
fully accredited by the United Kingdom
Accreditation Service.
In addition we have undertaken a gap
analysis for PAS 2080 Carbon Management
with the intention of achieving this
accreditation in 2024.
100
Operational excellence
Spotlight on Breedon Cement
Breedon Cement was announced as the
Operations Team of the Year at the recent
Operational Excellence Awards held in Dublin.
The win is a testament to the hard work and
dedication of all colleagues across Breedon
Cement.
The awards recognise and reward the
individuals, teams and organisations across the
Isle of Ireland who have made a commitment to
achieving operational excellence and business
transformation.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 101
Sustainability Principles
Ethics and integrity
What we said we would do
Progress in 2023
We will undertake a Human Rights Risk
Assessment exercise to further inform our
Group Risk and Responsible Procurement
processes.
We undertook an externally facilitated
Human Rights Impact and Supply Chain
Risk Assessment exercise with key
stakeholders, including operational and
support service colleagues.
We aim to operate compliantly,
transparently and with integrity, ensuring
ethical operations and responsible sourcing.
We are a signatory of the Gangmasters and
Labour Abuse Authority’s Construction
Protocol, committed to eradicating Modern
Slavery across our supply chains.
We have increased our focus on ensuring a
responsible supply chain and have issued a
new Group- level Sustainable Procurement
Policy. This is supported by robust supplier
approval systems to ensure that our supply
chain is aligned with our values.
We are committed to respecting human
rights and to empowering individuals
and communities to build a better future.
In 2023, we undertook a Human Rights
Impact Assessment for the Group.
Our refreshed Code of Conduct, which was
launched in late 2022, sets the standards of
conduct expected of all employees. They
must work to the highest ethical standards,
comply with the law, and act responsibly.
We have a zero-tolerance approach to
bribery corruption and fraud. In 2023,
over 1,580 employees who do not have
day-to-day IT access received a toolbox
talk on the code of conduct, anti-bribery
and corruption and modern slavery. Other
employees, based on their role, undertake
annual online compliance training.
We operate a confidential whistleblowing
line, which allows any of our colleagues,
customers, suppliers or other stakeholders
to raise concerns as to breach of any
Breedon policies, or other inappropriate
or illegal behaviour.
In 2023 a new Whistleblowing Policy
and Process was launched to ensure all
complaints are triaged by a designated
committee which includes the Chair of
the Audit & Risk Committee and Head
of Risk and Control. Complaints are
then investigated confidentially and
professionally with any recommendations
implemented accordingly.
A summary of all whistleblowing
complaints, and the outcomes, are
reported to the Audit & Risk Committee
with any recurring themes assessed as to
whether a secondary review is required.
All stakeholders are encouraged to raise
any legitimate concerns. Breedon do not
tolerate any reprisals for such reporting.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 102
Responsible sourcing
Spotlight on BES 6001 certification
Responsible Sourcing of Construction
Products is demonstrated through an
ethos of supply chain management and
product stewardship and encompasses
social, economic and environmental factors.
It addresses aspects such as stakeholder
engagement, labour practices and the
management of upstream supply chains.
In 2023 we secured BES 6001 certification
across 241 of our sites for our asphalt,
concrete, aggregates and bitumen products.
Asphalt: Ireland and GB scored ‘Good’
Concrete: Ireland and GB scored
‘Very Good’
Aggregates: Ireland scored ‘Very Good’
and GB scored ‘Good’
Bitumen: Ireland scored ‘Very Good’.
In 2024 we will be seeking recertification
to the new and more demanding version
4 of the Standard and extending our
certification to our concrete block products.
Sustainability Principles
Responsible supply chain
Corporate integrity, responsible sourcing
and the safety and wellbeing of workers
in the countries where we do business are
of paramount importance. These core
principles are reflected in our Supplier Code
of Conduct, which establishes the minimum
standards that must be met by any entity
that supplies products or services to the
Group. We have made a commitment to
work only with those whose standards are
consistent with ours.
Our Supplier Code of Conduct, Modern
Slavery Statement and our Sustainable
Procurement Policy Statement can all be
found on our website www.breedongroup.
com/policies.
To further inform our Group Risk and
Responsible Procurement processes,
in 2023 we undertook a Human Rights
Impact Assessment with key stakeholders,
including operational and support services
colleagues. The workshops were facilitated
by an independent organisation, Action
Sustainability, and were attended by key
colleagues from our Operations, HR, Safety,
Sustainability, Procurement and Legal
teams. This exercise assessed our supply
chain risk against categories of spend,
in line with our new strategic category
management approach.
Since the introduction of this approach
to procurement a total cost of ownership
approach has been implemented for
the award of strategic supply contracts.
These contracts will be awarded based
on quality, sustainability, environmental
impact, safety, innovation and cost, using
procurement tools such as score cards
built with the cross-functional teams of
key people from the business.
Collaboration with our supply chain
is essential if we are to achieve our
sustainability goals. Contracts reviewed
and awarded this year for implementation
in 2024 include:
Biffa waste contract to consolidate all
hazardous and non-hazardous waste.
This supports our ambition to achieve
zero waste sent to landfill and is a driver
for the circular economy.
Scotts Pallets was awarded a major
timber pallet supply agreement for
the next two years. This includes Pallet
LOOP to reclaim pallets back from the
customer and pallet repair. This supports
our aim to reduce environmental impact
by reducing new timber usage and
supporting a more circular approach.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 103
Sustainability Principles
Good governance
What we said we would do
Progress in 2023
We will review the remit and deliverables
of the Planet, People and Places working
groups to enable the delivery of our
nearer-term targets.
Each working group gained an
Executive Committee member as
sponsor to further direct and drive
progress across the divisions.
We will conduct a new Materiality
Assessment in 2023 to ensure the
Company’s sustainability focus continues
to be on the areas of greatest impact and
importance to our business and to our
stakeholders.
An independently facilitated DMA
exercise started in December 2023.
Our focus is on effective governance to
ensure that we manage our sustainability
impacts and our wider business responsibly,
and that our commitment to sustainability is
considered throughout our operations.
Further details, including membership of
the Sustainability Committee, can be found
on pages 112 and 113 and the work of the
Sustainability Committee during the year
is set out on pages 133 and 134.
A Board-level Sustainability Committee
ensures that the main Board is effective in
its oversight of the Group’s Sustainability
Framework and Policies, and the
consideration and management of
climate-related risks and opportunities.
The CEO, Executive Committee and
Head of Sustainability have day-to-day
responsibility for climate change and
environmental matters and are responsible
for the development and implementation
of the Group’s Sustainability strategy,
which is included in the Group’s annual
bonus scheme.
The divisions each have a senior manager
who is the nominated Sustainability
Business Lead for their division, responsible
for effectively embedding the Group’s
sustainability objectives and to drive
improvement actions in their division.
Each division had agreed specific targets for
2023, aligned with and contributing to the
Group’s Sustainability Strategic Framework
and Objectives. The achievement of key
sustainability targets has been linked to
performance incentives.
Cross-divisional working groups, with
appointed Executive Committee sponsors,
support the divisions in delivering their
sustainability targets for each of the Planet,
People, Places and Principles focus areas.
Performance against our Sustainability
Framework is reported monthly to our
Executive Committee and the Board;
on a quarterly basis to the Sustainability
Committee; annually in our Annual Report;
and regularly on our website and through
selected ESG indices.
We have clear Group-wide polices and
standards that detail the way we do
business and our expectations of our
colleagues and supply chain, covering
issues such as carbon and energy
management, environment, quality,
human rights, bribery and corruption, and
health, safety and wellbeing.
We increased the scope of our external
assurance for 2023. Bureau Veritas UK
will be providing an independent limited
assurance opinion on our 2023 data for
Health and Safety metrics, for Scope 1
and Scope 2 GHG emissions, for Scope 3
emissions from purchased cement and
clinker, for energy consumption and for
concrete and asphalt sales from products
with sustainable attributes.
The full Limited Assurance Statement
will be available on our website, when
complete, at www.breedongroup.com/
sustainability.
In December 2023 we began a new DMA
process, the outputs of which will guide a
review of our strategic approach in 2024,
to ensure the Group’s sustainability focus
continues to be on the areas of greatest
impact and importance to our business
and to our stakeholders.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 104
Sustainability Principles
Stakeholder engagement
What we said we would do
Progress in 2023
We will further align our data and
reporting to a recognised sustainability
reporting framework.
We tracked the developing International
Sustainability Standards Board’s
requirements and are preparing for
CSRD-aligned disclosures.
Our focus is on multi-level engagement
with our customers, investors, employees,
suppliers and other relevant parties.
We are active on several topic-specific
working groups across the industry,
through our memberships of the GCCA,
the MPA, the Buildings Materials Federation
and the Irish Concrete Federation, ensuring
that we are well positioned to collaborate
with our peers to tackle the barriers towards
a greater adoption of sustainable solutions
across the industry.
Some of the shared challenges and
opportunities being addressed
collaboratively are:
Net zero delivery. This includes agreeing
a standard approach for carbon
reporting; consistent EPD and LCA
declarations; and exploring potential
routes to further decarbonisation,
including carbon capture.
Circular economy.
Natural environment.
Concrete production promotion.
This includes Green Procurement,
changes required to existing
specifications in product standards to
allow for more sustainable alternatives
and mix designs, and consistent
sector-wide performance data.
Social impact.
Innovation.
As part of our commitment to disclose our
performance transparently, we submitted
a Climate Change and a Water Security
disclosure to the CDP for the first time in
2023 and were scored B and C respectively.
For more detail on our engagement with
various stakeholder groups please see
pages 116 to 120.
Customer
satisfaction
We are always striving to make a material
difference to the lives of our stakeholders,
including our customers.
NPS is the most widely accepted gauge of
customer satisfaction, whereby it measures both
customer loyalty and the quality of the customer
experience provision. The outputs from the survey
are reported from -100 to +100 (a higher score
is desirable).
Our first NPS survey for GB Surfacing Solutions
received an NPS of +73 for customer satisfaction,
classified as ‘extremely good’.
Spotlight on NPS in Surfacing Solutions
48% of our customers by spend were
independently surveyed and the results revealed:
A Net Trust Score of +86 or ‘extremely strong’.
Customers feel that our order processing,
efficiency, range of surfacing solutions and
staff all exceed expectations.
Customers believe we have made a ‘material
difference’ and ‘working with Breedon is easy’.
While we were pleased to see the hard work of
our teams recognised in these scores, there is
always more we can do to improve. We strive to
collaborate with all of our customers to ensure we
provide the most efficient and effective level of
service they need.
Future focus for Principles
Introduce a new reporting and Integrated
Management System platform.
Extend BES 6001 certification to our
concrete blocks.
Achieve PAS 2080 Carbon Management
accreditation.
Complete the DMA and prepare for
CSRD-aligned reporting.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 105
Section 172 Statement
Section 172
Statement
The directors believe that they have acted
in good faith in a way which is likely to
promote the success of the Company
for the benefit of its members and other
stakeholders through the decisions they
have taken in the year to 31 December 2023.
The directors consider the interests
of stakeholders and the impact of the
decisions it takes. In performing their
duties during 2023, the directors have had
regard to the matters set out in S172 of the
Companies Act 2006. You can read more
on how the Board had regard to each
matter during the year as follows:
The likely consequences
of any decision in the
long term
The interests of the
Company’s employees
The need to foster
business relationships
with suppliers,
customers and others
The impact of the
Company’s operations
on the community and
the environment
The desirability of the
Company maintaining
a reputation for high
standards of business
conduct
The need to act fairly
as between members
of the Company
Investment case
»10
People
»87
From quarry
to customer
»01
Market review
»16
Business model
»22
Sustainability
»71
Business model
»22
Engagement
with workforce
»117
Business model
»22
Operating reviews
»36
Managing
our risks and
opportunities
»50
Engagement
with workforce
»117
CEO review
& strategy
»28
Monitoring culture
»118
Operating reviews
»36
Managing
our risks and
opportunities
»50
Governance
report
»110
Monitoring culture
»118
CFO review
»44
Diversity reporting
»121
Sustainability
»71
Sustainability
»71
Whistleblowing
»130
Stakeholder
engagement
»119
Whistleblowing
»130
Code compliance
»135
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 106
Section 172 Statement
Colleagues
Customers and suppliers
Communities
Investors and lenders
Regulators, local government,
industry associations
Key concerns
Physical working conditions
Product development
Noise
Governance
Climate change
Pay and benefits
Communication
Opportunities for
development and training
Health, safety and wellbeing
Sustainability
Service levels
Transportation routes
Sustainability commitments
Health and safety
Product quality
Payment practices
Cost
Environment
Communication
Support for local causes
Profitability and return
on investment
Sustainability commitments
Dividend policies
Environment
Strategy
Emissions and discharges
Site restoration and aftercare
Health and safety
Logistics practices
Planning compliance
Direct methods
of engagement
Colleague focus groups
In person engagement
Targeted consultations
Capital Markets event
Regulator visits and meetings
Colleague groups and
social committees
DNED for workforce
engagement
Personal development
reviews
Contracts and terms
of business
Tender quotations
360 feedback
Site visits and field trips
Local liaison meetings
One-to-one meetings
Good neighbour plans
Telephone calls
Community events
Site tours, open days
School visits
Investor conferences
Brokers’ contacts
AGM and General Meetings
Liaison with local MPs and
government offices
Participation in industry
associations
In-direct methods
of engagement
Colleague engagement
surveys
Intranet, post, emails,
newsletters, notices
Value created
Improved engagement with
colleagues ensures we develop,
motivate and retain our valued
workforce while promoting and
attracting new colleagues who
want to work for us.
Third-party engagement
Social media
Website
Website
Letters, emails, notices
Annual Report and Accounts
Industry associations
Websites
Social media
Mandatory returns
and applications
Notices
Engaging with our customers
helps us deliver excellent
customer service and build
relationships to enable us to
get the right product, to the
right place, at the right time for
the right price. Engaging with
our suppliers helps us deliver
a sustainable supply chain and
circular economy.
Positive engagement with
our communities ensures
that we understand and take
into account their concerns
and needs so that we can
address these and improve the
communities that we live and
work in.
Our engagement with investors
and lenders ensures that they
have a clear understanding of
our business and objectives and
are prepared to continue with
their financial support.
Through our engagement
we are able to respond and
contribute to sector needs
and requirements, deliver on
compliance and regulatory
standards, and have input in
their development.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 107
Section 172 Statement
Board decisions
2023 stakeholder impact
Here we describe some of
the key Board decisions
taken in the year and how
stakeholder interests were
considered as well as other
S172 considerations.
Alternative raw material
project
Context
The Board, with the Cement division
management team, evaluated a project
that would allow production at Hope to use
a range of alternative raw materials in the
clinker production process, which include
PFA and Welsh slate. In order to facilitate
the use of these alternative raw materials
and the use of rail-fed supplies, a new
handling and storage facility would need
to be constructed. In January 2023 the
Board gave approval for the investment.
Consideration of S172 stakeholders
Value created
The project enables Hope to increase the
use of secondary materials while enabling
a significant reduction in sulphur dioxide
emission limits.
Customers and suppliers – commercial
negotiations with suppliers.
Communities – direct engagement with
local residents/stakeholders regarding
intentions for this project for a number
of years with public consultations held
both virtually and in person.
Regulators, local government and
industry associations – engagement
with the Environment Agency regarding
our permit to operate and with the
Peak District National Park Authority.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Section 172 Statement
Dividend
AIM to Main
108
Context
In June 2021, the Board implemented a
structured cash return to shareholders in
the form of a committed and progressive
dividend policy that targeted a consistent
return to shareholders of around 40% of
underlying earnings over time.
cost of the dividend was also considered
as part of the preparation of the Group’s
Viability Statement.
A number of shareholders were present
at the 2023 AGM and were given the
opportunity to engage with the Board.
All resolutions were passed.
Consideration of S172 stakeholders
Value created
Investors and lenders – at the AGM in
April 2023 the Board recommended the
payment of a final dividend in respect
of the year ended 31 December 2022.
In recommending the dividend the
Board took into account the historic
and prospective profitability and
cash generation of the Group and the
Group’s Covenant Leverage. The cash
For the year ended 31 December 2022
a total shareholder dividend was paid of
10.5p. Subject to approval at the AGM in
April 2024, a total dividend of 13.5p will be
paid in respect of the 2023 financial year.
Assuming that the 2023 final dividend is
approved by shareholders, the Group will
have achieved its target dividend policy.
Context
The Board considered that the Admission
to the Main Market of the London Stock
Exchange would further enhance Breedon’s
corporate profile and recognition, as well
as extending the opportunity to invest in
the Group to a broader investor population.
At the same time the Board felt that it was
appropriate that the Group create a new
holding company incorporated in England
and undertake a 5:1 share consolidation.
Consideration of S172 stakeholders
Investors and lenders – a General Meeting
for shareholders was held regarding the
new holding company and the share
consolidation. A prospectus was issued
to shareholders regarding the application
for the new listing. Many shareholders
attended this meeting in person and
engaged with the Board.
Regulators, local government and
industry associations – applications
made with the Financial Conduct
Authority (FCA) and the London Stock
Exchange for the ordinary share capital
of the Company to be admitted to
listing on the premium listing segment
of the Official List and to trading on the
Main Market.
Value created
Breedon is now a constituent of the FTSE
250 Index and the listing has enabled index
tracker funds together with a broader group
of international shareholders to invest in
the Company.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Section 172 Statement
2030 SBTi target and net zero commitment
Acquisitions
109
Context
The Board took the decision to engage
with the SBTi and commit to develop SBTi
aligned near-term and 2050 Net Zero
emissions reduction targets for the Group.
Consideration of S172 stakeholders
Customers and suppliers – the
Board approved a new Sustainable
Procurement Policy to promote the
reduction of Scope 3 emissions in
the supply chain.
Communities – reducing emissions
in line with SBTi reduction pathways
aims to mitigate the worst impacts of
climate change on communities locally
and globally.
Investors – SBTi is recognised by
investors as a credible framework.
Regulators, local government
and industry associations – active
engagement through our memberships
with the MPA and GCCA to influence and
drive progress on the key levers needed
to achieve the emissions reductions.
Value created
The Board acknowledge that the SBTi
targets are recognised by and provide
confidence to our investors, customers
and suppliers.
Context
Value created
During the year, the Group acquired
three businesses to enhance the current
business portfolio: Robinsons, Broome
Bros and Minster. Each of the acquisitions
was presented to the Board by the
acquiring division.
Consideration of S172 stakeholders
Customers and suppliers – engagement
and assurance provided with customers
and suppliers regarding the continuation
of services.
Colleagues – joining the Group as
enabled our new colleagues have access
to Breedon benefits including share
schemes.
The Group’s active M&A pipeline has
continued to yield high-quality earnings
enhancing opportunities that enable
the Group to progress its sustainable
growth strategy.
Each of the acquisitions is aligned with our
vertically-integrated operating model,
providing further opportunity to pull
through upstream building materials while
extending our downstream footprint to
deliver profitable growth.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 110
Governance
Board of Directors
Corporate governance statement
Board in action
Engaging with our workforce
Monitoring culture
Engaging with shareholders
Diversity reporting
Annual Board performance
Audit & Risk Committee report
»112
»114
»115
»117
»118
»119
»121
»123
»125
Nomination Committee report
Sustainability Committee report
Compliance statement against the Code
Directors’ Remuneration report
– Annual statement
– Remuneration at a glance
– Directors’ Remuneration Policy
– Annual report on Remuneration
Directors’ report
Statement of directors’ responsibilities
»131
»133
»135
»145
»145
»148
»149
»160
»169
»172
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Corporate governance at a glance
Board overview
Non-executive tenure
Independence
Amit Bhatia
Carol Hui
Pauline Lafferty
Helen Miles
Clive Watson
7 years, 5 months
3 years, 8 months
2 years, 9 months
2 years, 11 months
4 years, 5 months
1 Non-executive Chair
4 Independent
2 Non-independent
Non-executive experience
Attendance
Board
Strategy
Finance/accounting
Risk/internal control
Sector experience
Legal
Sustainability
Workforce
Governance
Listed company
4
4
4
4
3
3
5
5
5
5
d
r
a
o
B
6/6
6/6
6/6
6/6
6/6
6/6
6/6
k
s
i
R
&
t
i
d
u
A
–
–
–
3/3
3/3
3/3
3/3
n
o
i
t
a
r
e
n
u
m
e
R
–
–
–
5/5
5/5
5/5
5/5
Amit Bhatia
Rob Wood
James Brotherton
Carol Hui
Pauline Lafferty
Helen Miles
Clive Watson
n
o
i
t
a
n
m
o
N
i
y
t
i
l
i
i
b
a
n
a
t
s
u
S
3/3
3/3
–
–
3/3
3/3
3/3
3/3
–
–
3/3
3/3
3/3
3/3
111
Ethnicity
White
Ethnic minority representation
Board
5
3
3
3
3
Audit & Risk Committee
Remuneration Committee
Nomination Committee
Sustainability Committee
Executive Committee
8
Gender
2
1
1
2
2
0
Male
Female
Board
4
1
1
2
2
Audit & Risk Committee
Remuneration Committee
Nomination Committee
Sustainability Committee
3
3
3
3
3
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
112
Amit Bhatia
Chair of the Board
Rob Wood
Chief Executive Officer
James Brotherton
Chief Financial Officer
N S
Independent: No
Independent: No
Independent: No
Amit was appointed to the Board in August 2016,
appointed Deputy Chairman in April 2018 and
Chair in May 2019.
Rob was appointed to the Board in March 2014 as
Group Finance Director and took the position of
Chief Executive Officer in April 2021.
Skills, experience and contribution
Skills, experience and contribution
Amit has over 20 years’ corporate finance and
private equity experience. He is a founding
Partner at Summix Capital, a strategic land and
property fund. He was Executive Chairman of
Hope Construction Materials until it was acquired
by Breedon Group in August 2016 when he joined
the Board as a non-executive.
Amit has a strong strategic and entrepreneurial
approach which he brings to the Board together
with his governance and stewardship experience
which, as Chair, continues to ensure the
long-term success of the Group.
Other positions held:
Director, Queens Park Rangers Football Club
Partner at Summix Capital
Managing Director – AyBe Capital Advisers
Limited
Rob has 20 years’ experience in the international
building materials industry. He qualified as
a Chartered Accountant with Ernst & Young
and subsequently joined Hanson PLC where
he held a number of senior positions including
Finance Director Brick Continental Europe,
Finance Director Building Products UK and
Chief Financial Officer Australia and Asia Pacific.
Following the acquisition of Hanson PLC by
HeidelbergCement AG, Rob returned to the UK
and joined Drax Group plc as Group Financial
Controller. During his time at Drax he also spent a
period of time as Head of Mergers & Acquisitions.
Rob has held an executive position on the
Board for a number of years bringing solid
and invaluable operational leadership, as both
Group Finance Director and Chief Executive
Officer and fully understands the challenges
and opportunities for the Group.
Other positions held:
None
James was appointed to the Board in April 2021
as Chief Financial Officer.
Skills, experience and contribution
James joined Breedon in January 2021.
Previously he was CFO of Tyman Plc between
2010 and 2019, prior to which he was Director
of Corporate Development. Earlier in his career,
James worked in investment banking roles at
Citi and HSBC, after qualifying as a chartered
accountant at Ernst & Young.
James has considerable international
construction sector and corporate experience
in the areas of finance, strategy, operational
efficiency, systems development, mergers and
acquisitions and business integration and has
contributed significantly to the financial longevity
and strategic success of the Group.
Other positions held:
Director, The Quoted Companies Alliance
Member of the Panel on Takeovers
and Mergers
Member of the Pre-Emption Group
Board of Directors
Board
leadership
Our Board comprises an
executive leadership team
with extensive knowledge of
the international construction
materials industry, supported
by experienced non-executive
directors who bring strong
governance disciplines and a
valuable external perspective
to our business.
Messrs Wood and Brotherton were
appointed Directors of new Breedon
Group plc on 17 March 2023 with the
remaining directors on 26 April 2023.
The biographical details given on these
pages provide the first appointment
dates to old Breedon Group plc which
was registered in Jersey.
Key
A Member of the Audit & Risk Committee
R Member of the Remuneration Committee
N Member of the Nomination Committee
S Member of the Sustainability Committee
Committee chair
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 113
Carol Hui, OBE
Non-executive Director
Pauline Lafferty
Non-executive Director
Helen Miles
Non-executive Director
Clive Watson
Non-executive Director
A R N S
Independent: Yes
A R N S
Independent: Yes
A R N S
Independent: Yes
A R N S
Independent: Yes
Carol was appointed to the Board in May 2020
and as Chair of the Sustainability Committee in
January 2022.
Skills, experience and contribution
Carol was the Non-executive Chairman at
Robert Walters plc, an Executive Board Director
at Heathrow Airport Limited and held senior
positions at large companies including Amey
plc and British Gas plc. Previously she was a
corporate finance lawyer with Slaughter and
May. Carol is an experienced non-executive
director having served on varied boards in major
infrastructure, real estate, tourism, charities,
consultancy and education. She has received
numerous legal and business awards throughout
her career. Carol received an OBE in the 2024
New Year’s Honours List for her services to
tourism.
Carol brings a diverse perspective to the Board
and provides it with valuable insight from her
extensive strategic, commercial, legal and
sustainability expertise.
Other positions held:
Non-executive Director, Grainger plc,
Chair of Responsible Business Committee
Non-executive Director, Lord Chamberlain’s
Committee, Royal Household
Board Trustee, Christian Aid
Pauline was appointed to the Board and as Chair
of the Remuneration Committee in August 2021
and is the Designated Non-executive Director for
Workforce Engagement.
Skills, experience and contribution
Pauline brings significant experience from an
international career spanning manufacturing
and supply, executive search and human
resources. Since retiring from her role as Chief
People Officer at Weir Group plc, where she
was responsible for progressing the Group’s
agenda on all aspects of strategic HR, she has
embarked on a non-executive portfolio that
includes being the Chair of the Remuneration
Committee for XP Power Limited and Scottish
Events Campus Limited. Prior to Weir Group plc,
Pauline was a Partner with The Miles Partnership
and an Executive Director at Russell Reynolds
Associates in the UK and Australia, and Asia
Pacific Director of Materials & Supply at Digital
Equipment Corporation in Hong Kong.
Pauline brings to the Board significant
experience with regards to human resources,
particularly in the key areas for the Board of
talent, development and retention, employee
engagement and cultural change. Pauline is a
strong advocate on the Board for both employee
engagement and positive culture changes.
Other positions held:
Non-executive Director, XP Power Limited,
Chair of Remuneration Committee
Helen was appointed to the Board in April 2021 as
an independent Non-executive Director.
Skills, experience and contribution
Helen brings with her a breadth of operational
and commercial experience having worked
within regulated businesses together with her
broader infrastructure experience developed
across Telecoms, Leisure and Banking. As a
member of the UK Board, Helen was instrumental
in delivering HomeServe’s future growth strategy
and ensuring a sustainable, customer-focused
business. As an experienced finance professional,
Helen was previously Chief Financial Officer
for Openreach, part of BT Group plc, and has
extensive experience of delivering major business
transformation across the Group. Prior to BT
Group, Helen worked in a variety of sectors and
organisations such as Bass Taverns Limited,
Barclays Bank plc, and Compass Group plc.
Helen’s strong expertise in the Board’s key areas
of growth strategy and sustainability and her
customer-focused business and transformation
experience, fully supports and complements the
Board’s skill set. Helen brings skills associated
with her current appointment as an executive
on a FTSE 100 Board.
Other positions held:
Chief Financial Officer, Severn Trent Plc
Clive was appointed to the Board in September
2019 and became the Senior Independent
Director and Chair of the Audit & Risk Committee
in April 2020.
Skills, experience and contribution
Clive has considerable finance experience, having
previously been the Group Finance Director of
Spectris plc, Chief Financial Officer and Executive
Vice President for business support at Borealis,
Group Finance Director at Thorn Lighting Group
and held a variety of finance roles at Black &
Decker. In 2019, Clive retired as a Non-executive
Director of Spirax Sarco Engineering plc, where
he was Chair of the Audit Committee and Senior
Independent Director.
Clive is both a Chartered Accountant and
member of the Chartered Institute of Tax with
significant finance experience in a variety of
industries which allows him to continue to
support the Board with its long-term success.
Other positions held:
Non-executive Director discoverIE Group plc,
Chair of Audit & Risk Committee
Non-executive Director Kier Group plc, Chair
of Risk Management & Audit Committee
Non-executive Director Trifast plc, Senior
Independent Director and Chair of Audit and
Risk Committee
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 114
Corporate governance statement
Until 16 May 2023, while listed on the AIM
market of the London Stock Exchange,
the Board complied fully with the QCA
Corporate Governance Code.
On 17 May 2023 the Group adopted the
Code. Set out on pages 135 to 144 is how we
have met the provisions and principles of
the Code since our move to the Main Market
and where we have not, further details
have been provided. We had positioned
ourselves with the principles of the Code
while we were still AIM listed and have
therefore experienced a smooth transition.
During 2024 the Board will be reviewing
the newly published revised Code to align
with the governance expectations of all our
stakeholders.
The Board is committed to an inclusive
environment, with its role being to influence
and monitor culture to ensure that policy,
practices and behaviour throughout our
entire organisation are aligned with the
Group’s purpose, values and strategy.
The Board reviews its Group Diversity and
Inclusivity Policy annually and in 2023
adopted a Board Diversity and Inclusion
Policy to support the Board’s attainment
of the recommendations of the Listing
Rules, FTSE Women Leaders Review
and the Parker Review. Further details
can be found on pages 121 and 122 and I
am pleased to report that we meet two
of the three criteria, set out in the Listing
Rules. The Board will continue to review
its composition and succession plan in line
with the Policy.
The Board have undertaken direct
engagement with colleagues, taking part in
two site visits in the year where all directors
were able to meet with colleagues from
our Ireland, Cement and GB Materials
businesses. Pauline Lafferty, our Designated
Non-executive Director for Workforce
Engagement, has separately undertaken
direct engagement with colleagues, the
outcome of which was subsequently shared
with the Board. See page 117 for further
information on Board engagement.
The Board approved a revised
Whistleblowing Policy and process to
ensure that our colleagues may raise any
concerns confidentially. We were pleased
to receive positive feedback following the
annual ‘Your Say’ survey and following our
first cultural health and safety survey, the
Board can more closely monitor culture with
regards to the health, safety and wellbeing
of our colleagues.
During the year, we further embedded
our Sustainability Committee which
continues to oversee our sustainability
strategy objectives and goals. The Board
has developed a robust framework for
measuring progress against sustainability
objectives and targets on our achievement
towards our carbon reduction and net
zero pathways and how short-term targets
are linked to the Group’s Remuneration
Policy as a key stakeholder consideration.
The report of the Sustainability Committee
can be found on pages 133 and 134 and the
Sustainability report can be found on pages
71 to 104.
Amit Bhatia
Chair
6 March 2024
2023 has been an
impactful year with regards
to governance particularly
following our move from
AIM to a Main Market
listing and the associated
change to our adoption
of the UK Corporate
Governance Code.
Amit Bhatia
Chair
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 115
Board in action
Board in
action
The Board held six scheduled
meetings during the year
together with two site visits,
a strategy day and two Board
update calls.
Each meeting of the Board and Committees
were attended by all respective members.
If the Board needs to make decisions in
between meetings, it can do so through
unanimous approval by email however
will only do so in such situations where the
matter has been discussed at previous
meetings so that directors are fully
appraised, have had the opportunity to
ask questions and are therefore in a position
to make a fully informed decision.
The Board has delegated certain aspects
to Board Committees, details of which can
be found on pages 138 to 140.
The Board held various dinners throughout
the year, some of which were exclusively
for non-executive directors and some
which included the whole Board, the
Executive Committee and their leadership
teams. No decisions are made at dinners.
However these present the Board with the
opportunity to discuss matters impacting
the business in an informal manner and
provides the opportunity to engage with
colleagues outside the workplace setting.
The non-executive directors meet without
the executive directors being present
either as part of a Committee meeting or
prior to each Board meeting. On a regular
basis, individual members of the Executive
Committee and leadership team are
invited to attend to present on strategic
or operational matters.
Key topics for the Board
Strategy
Strategic Plan reviewed
Acquisitions
Move to Main Market
Risk and governance
Risk appetite and principal risk review
Board performance external review
Legal and litigation update
Creation of new holding company
AGM
5:1 share consolidation
Insurance review
External adviser strategy presentations
Directors’ responsibilities training
Economics update
IT and cyber security
Financial
CFO reports on financial performance
Budgets and forecasts
Final and interim dividend
Audit reviews
Audit issues and judgements
Whistleblowing reports
Board succession and dynamics
Matters Reserved to the Board
Declaration of Interests
Going Concern and Viability Statement
People and organisation
Assessment of fair balanced and
understandable
Investor Relations Reports and
interactions
Preliminary Results
Annual Report and Accounts
AGM Trading Statement
Half-Year Results
November Trading Statement
Operational
Presentations from GB Materials, Cement,
Ireland
Board visits to Ireland and Mansfield
CEO reports on operational activity
Modern Slavery Statement
Health, safety and wellbeing reports
Succession planning
Talent management
Diversity and Inclusion Policy
Gender Pay report
Employee engagement and culture
Remuneration, incentives and share awards
Directors’ Remuneration Policy
Sustainability
Alternative raw material project approval
Sustainability strategic objectives
and targets
SBTi and net zero commitment
ESG performance
Sustainability risks and opportunities
ESG policies
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 116
Board in action
Getting to know our people
Training and updates
The Board receive regular training
opportunities during the year including
governance, regulatory and operational
updates. As part of the move to the Main
Market, the Board received an externally
facilitated training session on Directors’
Duties. In addition the Board received a
presentation on the economy and markets
from the CPA, business presentations
from various managing directors and their
finance directors together with internal
presentations on areas that were of
importance to the Board including cyber
security and workforce engagement.
Our modern cement
plant, Kinnegad
In January, the Board visited
Ireland to inspect our
cement plant in Kinnegad,
Co. Westmeath.
Commissioned in 2002,
the site is one of the most
modern cement plants
in Europe.
The Board visited surfacing
works that were being
carried out nearby, then
took a tour of Lobinstown
quarry and met the
workforce on site.
The Board also took the
opportunity to sit down
for a meal with several
colleagues from the Cement
business including Brick
and Tile.
The visit offered the
Board valuable insights
into how our cement
facilities function, and the
opportunity to engage with
a number of our people.
Our new asphalt plant,
Mansfield
The Board visited our
Mansfield, Nottinghamshire
asphalt plant in September
for a tour and to meet with
colleagues.
Mansfield is one of our
newest facilities, installed
in 2022 at a cost of £6.9m
to replace an existing
ageing plant, and offers
greatly expanded capacity
and reduced power
consumption.
The Board enjoyed the
opportunity to see one of
our most modern asphalt
plants in action, and to
better understand the
perspective of the people
working there, finishing
off the day with a dinner
with several Breedon GB
Materials employees.
The Board site visit to
Kinnegad cement plant
January 2023
The Board site
visit to Mansfield
in September 2023
Further details on the impact on
stakeholders through the Board’s
decision-making, can be found in our
S172 statement on pages 105 to 109.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Engaging with our workforce
Engaging
with our
workforce
Our colleagues are the people
behind our brand. They know
our business better than
anyone, with a diverse range
of views and experience,
making them well placed to
help us identify new ways of
working and opportunities for
improvement.
Board engagement with colleagues
The Board uses various channels to
understand the views of colleagues. How
these interests have been considered in
Board discussions and decision making
can be found in the Section 172 Statement
on pages 105 to 109. The Board gathers
feedback on what colleagues need to
support them to be their best and to ensure
Breedon continues to be a great place
to work.
In addition to sites visits that the Board
undertook (see page 116), Pauline Lafferty
our DNED for Workforce Engagement
during September and October held
face-to-face and virtual sessions across
both our GB and Ireland businesses.
Each session is designed to involve
colleagues at differing levels of experience,
grade and role to stimulate good
discussion. Various topics were covered
such as engagement, training and
development, site leadership, employee
recognition mechanisms and colleague
communications.
Updates are provided to the Board
following all engagement activities to
ensure colleagues views are kept at the
centre of the Board’s decision-making.
117
The Board also utilises indirect methods of
engagement with colleagues and received
the results of the engagement survey, Your
Say. The colleague engagement survey
provides key insights into people data and
trends and levels of engagement, together
with the areas of focus for the company for
the forthcoming year.
Our colleague wellbeing continues to be
paramount, and we have continued to
‘show that we care’ when it comes to all
aspects of health, safety and wellbeing.
Support and guidance has been provided
throughout the year around the physical
and mental wellbeing of our colleagues
through the provision of external support
such as financial wellbeing webinars
covering debt and budgeting, and pensions,
together with details of the Company’s
share schemes and how colleagues
can participate. Further information on
employee engagement can be found on
pages 87 to 92.
The Board’s 2024 annual business
programme provides for ongoing direct
engagement with colleagues through both
site visits and sessions undertaken by the
DNED for Workforce Engagement ensuring
that Breedon remains a great place to work.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 118
Monitoring culture
Monitoring
culture
All Group colleagues are
expected to maintain an
appropriate standard of
conduct in all of their activities,
and the directors seek to set
the tone for such behaviour
through their own actions.
To promote a common culture across
the organisation, we have defined a clear
purpose and set of values that support the
successful delivery of our strategy. Led by
the Board and Executive Committee, the
Group continues to embed the purpose ‘to
make a material difference to the lives of our
colleagues, customers and communities’ to
create a workplace where people feel safe,
proud and motivated to do their best.
Our purpose is underpinned by our values:
keep it simple; make it happen; strive to
improve; and show we care. These values
were formally introduced at the beginning
of 2020 following collaboration across our
workforce to ensure that they were relevant
to and resonated with our people.
A Company-wide programme of
workshops ensured that our values and
behaviours were well understood, and they
are now an integral part of our Company
ethos and an established way of working
together to ensure long-term success.
This is maintained through our leaders,
embedding of values and behaviours in
all learning interventions and colleague
engagement through a variety of means,
including annual engagement surveys.
The Board has received regular reports
and provided oversight and guidance
throughout, recognising the importance
and benefits of clear and embraced values
and culture to the workplace experience.
The Board recognises the importance to
monitor our culture for the Group, with
its role being to influence and monitor
culture to ensure that our policy, practices
and behaviour throughout our entire
organisation are aligned with the Group’s
purpose, values and strategy.
During the year, the Board has monitored
culture in a number of ways, including:
Receiving health and safety statistics
at all Board meetings, together with
regular updates on the Group’s activities
to further enhance the culture of safety
within the business.
Through the Group’s colleague
engagement activities including the
annual Your Say survey, feedback
on the Group’s diversity, equity and
inclusion approach and through direct
engagement with colleagues.
We have established a number of
sub-committees. Through our sustainability
framework we measure our performance
indicators to drive our sustainability
performance, while increasing transparency
and disclosure, all under our framework of
Planet, People and Places, underpinned by
our Principles.
Our number one priority remains
sending our colleagues Home Safe and
Well. This year we carried out our first
cultural survey, which provided us with
a benchmark on our health, safety and
wellbeing culture. The results gave the
business valuable feedback on what our
colleagues thought worked well and the
areas that need to be improved.
This will be further supported by
effective health, safety and wellbeing
communications, detailed investigations
into both actual and potential incidents,
and the sharing of lessons to help to
prevent recurrence.
Breedon remains focused on being a
great place to work. At the heart of this
is nurturing a culture of respect; valuing
colleagues for who they are and the
individual experience and perspectives
they bring to Breedon. This is achieved by
creating a sense of team and investing in
colleagues so they have the opportunity
to grow, learn and be the best they can be.
We support colleagues with technical
and professional qualifications, funded
through our levy and business sponsorship.
We have strengthened our relationships
with existing training providers across the
UK and established new relationships.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Engaging with shareholders
Engaging
with
shareholders
The Board is committed to
maintaining regular dialogue
with our shareholders and
market participants, supporting
a comprehensive programme
of investor relations activity.
Our approach
Top questions
We encourage clear and transparent
communication to promote a full
understanding of Breedon’s business
model and strategy. The programme
includes direct Board engagement through
the Chief Executive Officer and Chief
Financial Officer, with Chair participation
upon request. All directors are available to
meet with shareholders at our AGM.
The Board receives regular reports
providing updates on key market events
and share price performance, shareholder
engagement and register analysis, analyst
forecasts and recommendations, market
updates and investor relations activities.
Investor and market participant feedback
are shared with the Board and contribute to
the strategic decisions taken by the Board.
Meeting activity
Through the year we undertook nearly
400 meetings and interactions with
institutions and private investors, extending
our engagement with non-holders and
non-UK investors. The Board conducted
an active engagement programme with
private shareholders in relation to our move
from AIM to the Main Market. The Chair of
the Remuneration Committee engaged
with investors regarding our Remuneration
Policy.
“How are end-markets
performing?”
Our primary markets, infrastructure
and housebuilding, are underpinned
by long-term structural growth drivers.
Short-term both markets have experienced
macroeconomic headwinds with rising
interest rates and persistent inflation
impacting the purchasing power of
private households and public bodies.
Market review
»16
“How have volumes and pricing
responded to short-term
macroeconomic volatility?”
Volumes of our products have moderated.
However, industry fundamentals have
stayed resilient and end-market demand
119
has remained sufficient to support robust
pricing, ensuring full cost recovery.
Chief Executive Officer’s
review and strategy
Operating reviews
»28
»36
“What are your plans for
M&A expansion?”
We have an active M&A pipeline of
opportunities in GB and Ireland where we
seek to in-fill our existing footprint, add
downstream routes to market and new
capabilities. In addition, we are evaluating
opportunities in the US.
Chief Executive Officer’s
review and strategy
»28
“What are your priorities for
capital deployment?”
Our disciplined financial framework
sets out how we allocate capital to the
multiple growth options available to us.
The framework prioritises sustainable
growth, promoting return on invested
capital and profitability while ensuring
a strong and flexible balance sheet.
Chief Executive Officer’s
review and strategy
Chief Financial Officer’s review
»28
»44
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 120
Engaging with shareholders
Investor relations activity in 2023
February
April
June
October
December
Closed period
Q1 trading update
Held AGM, EGM &
Court Meetings
Sustainability
investor
site visit to Hope
Berenberg
European
conference
Capital markets
day and site visit
Paid interim
dividend
Remuneration
Policy
engagement with
shareholders
January
February
March
April
May
June
July
August
September
October
November
December
March
May
July
September
November
2023 interim
results
Investor roadshow;
London, virtual
Investor roadshow;
London, virtual
Ten-month trading
update
Investec UK CEO
conference
Goodbody Annual
Equity Conference
Chair ad hoc
meetings
2022 Annual
results
Investor roadshow;
London, virtual
Published notice of
intention to move
from AIM to Main
Market
Published 2022
Annual Report and
Accounts, Notice
of shareholder
meetings
Berenberg
UK Corporate
conference
Paid final dividend
Investor roadshow;
Edinburgh
Institutional
investor lunch
UBS Pan-Europe
Small and Mid-cap
conference
Publication of
Prospectus
AIM to Main Market
London Stock
Exchange launch
event
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 121
Diversity reporting
Diversity
reporting
The Board, and the Group,
are committed to improve our
diversity and inclusion and
strive to build a culture where all
colleagues feel they can belong.
FCA Listing Rules
FCA Listing
Rule target
Position as at
31 December
2023
At least 40% of
Board directors
are women
43%
Outcome
Achieved
Three Board
directors
were women
At least one
senior Board
position* held
by a woman
At least
one Board
director from a
minority ethnic
background
0
Not met
No senior Board
positions were
held by women
29%
Achieved
Two Board
directors
were from a
minority ethnic
background
* Chair, Chief Executive Officer, Senior Independent
Director or Chief Financial Officer.
The Nomination Committee will review
annually the progress on the implementation
of the Board Diversity and Inclusion Policy
to meet the FCA Listing Rules targets.
FTSE Women Leaders Review
In February 2022 the FTSE Women Leaders
Review, which succeeds and builds upon
the success of the Hampton-Alexander
Review and Davies Review, announced
its gender diversity targets for FTSE 350
companies. Their target is for women to
comprise 40% of all FTSE 350 boards by the
end of 2025 and 40% of leadership teams to
be women by the end of 2025 (leadership
team is defined as the Executive Committee
and their direct reports). At 31 December
2023, the Board was represented by 43%
women and for our leadership team this
was 27%.
We achieved two of the three
FCA Listing Rules targets
All appointments to the Board are made
on the basis of merit, having regard to
diversity to allow contribution from a
range of views, insights, perspectives
and opinions together with the skills,
experience, independence and knowledge
it can bring to Board decision-making
and effectiveness.
The Nomination Committee keeps the
composition of the Board, and its diversity,
under close review and in 2023 approved
a Board Diversity and Inclusion Policy in
which it supports the FCA Listing Rules
targets. The Nomination Committee
considers the wider benefits of diversity to
include age, gender, ethnicity, educational
profile and socioeconomic background.
As at 31 December 2023, the Board
acknowledges that no senior Board
positions were held by women. However,
the Chair of both the Remuneration
Committee and Sustainability Committee
was held by a woman.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Diversity reporting
122
Number
of Senior
positions on the
Board (CEO,
CFO, SID
and Chair)
Percentage
on the Board
Number of
Board Members
Number in
Executive
Management
Percentage
of Executive
Management
White British or other
White (including
minority-white groups)
Mixed/Multiple Ethnic
Groups
Asian/Asian British
Black/African/
Caribbean/Black British
Other ethnic group,
including Arab
Not specified/prefer
not to say
5
0
2
0
0
0
71%
0
29%
0
0
0
3
0
1
0
0
0
8
0
0
0
0
0
100%
0
0
0
0
0
Approach to data collection
All colleagues are asked to provide the
Group with information regarding their
gender and ethnicity when they join.
If provided, the gender and ethnicity
information for colleagues is entered
into the Group’s HR Information System.
Colleagues can update this information
at any time during their employment and
are periodically reminded to provide their
gender and ethnicity information.
The Board are asked to provide the same
information to the Company Secretary
which is confirmed on a regular basis.
Colleagues and the Board are able to self-
identify as either male, female or “other”.
For ethnicity, they are asked to self-identify
based on the Office for National Statistics
ethnicity categories.
43%
of women on
the Board
27%
of women in the
leadership team
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 123
Annual Board performance
Annual
Board
performance
As a company newly
adhering to the UK Corporate
Governance Code, this was our
first Code-compliant external
Board performance review.
We will continue to conduct
these external reviews every
third year.
Comprehensive external
review
The Board Performance Review took place
during 2023, with the main review period
being that of June to September 2023.
The objective of the review was to evaluate
how the Board had progressed since the
previous external review which had taken
place three years prior and to review the
Board’s strengths and to recommend
further improvements that could be
made for the continued effectiveness of
the Board.
Broader scope
The scope of the evaluation was broader
than that conducted three years ago and
included a comprehensive review of all
aspects of the Board’s effectiveness and
that of its Committees. Particular focus
was on succession planning, dynamics,
risk and control, secretariat, people and
culture, ESG, environment and safety and
stakeholders.
Criteria and responsibilities
A number of different criteria were used
during the performance review including
observations of Board and Committee
meetings, reviewing Board and committee
papers and one-to-one interviews with
the individual members of the Board,
Company Secretary, Group People Director,
Deputy Company Secretary, Head of
Sustainability, Group Financial Controller
and Group Head of Risk and Control.
External parties who support the Board,
namely the external audit partner, internal
audit partner and the remuneration
consultant were interviewed on a
one-to-one basis.
The Company Secretary was responsible
for providing the external reviewer with
the necessary access and support, and
the Senior Independent Director (SID)
and Chair were identified as the reviewer’s
escalation point.
External evaluator
appointment and process
Independent Audit were appointed by the
Board to carry out the Board performance
review. Independent Audit do not have any
other connection with the Company or any
of the individual directors or anyone that
took part in the review. During the process,
Independent Audit met with the Board as
a whole and with individual directors to
undertake the evaluation.
Independent Audit undertook the previous
external review which had taken place
in 2020. In that regard, they had been
appointed following a tender process
which had been overseen by both the
Chair and Senior Independent Director.
For the review in 2023 Independent Audit
were appointed by the Board with no other
candidates shortlisted.
The Board considered independence and
objectivity of appointing Independent
Audit alongside that of continuity and
development during the Board’s transition
to a Main Market listing. As Independent
Audit had undertaken the previous external
review, some members of the team
changed to provide independence whilst
maintaining some continuity. The review
was supported by a different partner who
undertook a peer review of the final report.
As part of the Board performance review,
Independent Audit performed a high-level
review of Breedon’s current Internal
Audit arrangements with the objective
to consider whether the Board should
commission an external quality assessment
(EQA) of Internal Audit. Following the
outcome of the review, the Board have
agreed that an EQA will be undertaken
in the first half of 2024. No other services
were or are provided by Independent Audit
to the Company. Independent Audit are a
signatory of The Chartered Governance
Institute Code of Practice for Independent
Board Reviewers.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 124
Annual Board performance
Outcomes
There were three areas for
consideration identified by the
external Board Performance
Review which were presented
to the Board, together with
a number of strengths.
Areas for consideration
by the Board
1. Further develop the Board’s
strategic role;
2. Continue the development of
the assurance framework; and
3. Deepen the Board’s contact
within the organisation.
The Board accepted all three
considerations and the actions to
ensure that they are implemented
in a way to support the Board’s
continued effectiveness. These
include the inclusion of an annual
strategy day into the Board
programme; the commissioning of
an EQA of internal audit which will
take place in the first half of 2024;
and development further of the
Boards engagement plan with more
regular interaction to a wider group.
Strengths identified
It was noted from the external
Board performance review that the
current composition of the Board
brought a broad range of business
and functional skills. The review
did not identify any adverse
composition findings, therefore
the Board have concluded that no
changes to the Board composition
are required as a consequence of
the evaluation.
Other strengths that were identified
are:
The Board was chaired by a
highly respected Chair;
The executive directors were
praised for their delivery of
consistently strong business
performance;
There was strong engagement
and setting of the right level of
strategic ambition for growth
and sustainability;
There is a common commitment
to health and safety;
The Audit & Risk Committee,
the finance function and risk and
controls have strengthened the
risk and assurance framework;
All Committees were well
chaired; and
The Board papers were of high
quality with the Board being
supported with professional
guidance.
“ Independent Audit
identified in their report that
the Board had evolved and
strengthened considerably
since their last review three
years ago.”
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 125
Audit & Risk Committee report
The role of the Committee is to monitor
the integrity of the Group’s financial
statements and ensure that the interests
of shareholders are properly protected
in relation to financial reporting, internal
control and risk management.
The Committee monitors and reviews the
effectiveness of the internal control and
risk management framework alongside the
wider compliance environment operating
within the Group, which includes the
Group’s whistleblowing arrangements.
The Committee makes recommendations
to the Board in respect of the appointment
of the external auditor, reviews and monitors
their independence and objectivity, and
approves their remuneration. It consults
with the external auditor on the scope of
their work and reviews all major points
arising from the audit.
The Committee oversees the Group’s
outsourced internal audit function which
reports directly to the Committee, and has
responsibility for appointing the Head of
Internal Audit, approving the annual internal
audit plan, reviewing key outputs from
internal audit reviews and assessing the
performance of the function.
The Committee has relevant financial
experience at a senior level as set out in
the biographies on pages 112 and 113.
Terms of reference
The Committee’s terms of reference reflect
the current regulatory requirements and
best practice appropriate to the Group’s
size, nature and stage of development.
They were last revised in 2023 following
the Group’s move from AIM to the Premium
Segment of the Main Market of the London
Stock Exchange and are available on the
Group’s website at www.breedongroup.
com/board-committees.
Key activities carried out
in the year
During the year, the Committee met
three times. Relevant members of
management including the CEO, CFO,
Group Financial Controller and Group
Head of Risk and Control were in
attendance at these meetings, which
covered the following topics:
March
review of the Annual Report, including:
significant accounting issues
and disclosures;
Going Concern and Viability;
fair, balanced and understandable
reporting;
risk disclosures;
discussion of KPMG’s findings from the
2022 audit and their independence as
external auditors;
review of independent assurance in
relation to sustainability KPIs;
review of solvency position to support
final dividend;
update on risk management review
processes and financial controls
framework implementation;
update on AIM to Main Market workstream
and approval of the associated non-audit
fees; and
update on progress against the internal
audit plan and findings of control reviews.
July
review and approval of the revised terms
of reference;
review of the interim financial statements,
including interim risk disclosure;
review of the accounting for the
corporate reorganisation undertaken
alongside the AIM to Main Market move;
review of Company Initial Accounts
prepared to support the interim dividend;
update on risk management review
processes and financial controls
framework implementation;
update on findings of internal control
reviews;
The Audit & Risk
Committee maintained
its focus on ensuring high
standards of financial
governance during
the year.
Clive Watson
Chair, Audit & Risk Committee
Attendance
Meetings
attended
Eligible to
attend
Clive Watson
Carol Hui
Pauline Lafferty
Helen Miles
3
3
3
3
3
3
3
3
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 126
Audit & Risk Committee report
July continued
annual review of effectiveness and
independence of the external auditor;
approval of KPMG’s external audit
engagement letter and 2023 fees; and
review of whistleblowing reports and
actions taken.
November
review of external audit plan and
strategy;
review and approval of revisions to
non-audit services policy;
annual review of effectiveness of
Group’s risk management and internal
control framework;
update on financial controls framework
implementation and fraud risk
assessment process;
review of the Group tax strategy;
annual review of the effectiveness of
internal audit;
update on progress against the internal
audit plan and findings of internal
control reviews;
agreed internal audit plan for the
2024 Internal Audit Cycle; and
review of whistleblowing reports
and actions taken.
Significant accounting matters
The Committee considered key accounting
issues, judgements and disclosures in
relation to the Group’s 2023 financial
statements, the most significant of which
were goodwill impairment testing and
restoration provisions.
These key issues were discussed and
reviewed with management and the
external auditors. The Committee
challenged judgements made and
sought clarification where necessary.
The Committee received a report from
the external auditor on the work they had
performed to arrive at their conclusions
and discussed in detail all significant
findings contained within that report.
The information contained in the following
table should be considered together with
KPMG’s independent external audit report
on pages 174 to 183 and the accounting
policies disclosed in the notes to the
financial statements as referenced
in the table.
Area of focus
Audit & Risk Committee review
Conclusions
Impairment of goodwill – Key Audit Risk
See note
9 to the
consolidated
financial
statements
The Group has £474.1m of goodwill arising
from acquisitions. This is not amortised
but is reviewed for impairment on an
annual basis, or more frequently if there
are indications that the goodwill may
be impaired.
The recoverable amounts of each
segment showed significant
headroom compared to their
carrying value when reasonably
possible changes are made to
key assumptions.
The recoverable amounts for each
segment to which goodwill has been
allocated are calculated by determining
the value in use of each segment, based
on the net present value of projected
cash flows, with the most significant
judgements being the forecast financial
performance, longer-term growth rates
and discount rates.
The Committee was presented with a
written report from management setting
out the basis of the calculation, support
for the key assumptions used alongside
a sensitivity analysis to quantify the
impact of possible changes to those
assumptions. This report included detail
on the judgements made about the
impact of climate change on forecast
financial performance in the impairment
review, in particular for the Cement
operating segment.
The Committee discussed these
judgements with both management
and the external auditor, and considered
the appropriateness of the key
assumptions and the adequacy of the
disclosure provided in note 9 of the
consolidated financial statements.
The Committee noted that key
judgements were reasonable, with
the trading performance in 2023
providing additional comfort over
the cash flows used in the review.
They confirmed that management
continues to utilise an external
expert to calculate discount rates,
and that these had risen during
2023 to reflect increased risk-free
rates.
The impact of climate change
and the associated disclosures, in
particular in respect of the Cement
operating segment, was reviewed
and considered by the Committee
to provide a balanced presentation
of the risk of future impairments
against a backdrop of significant
current uncertainty.
The Committee was satisfied
that no impairment of goodwill
was necessary, and that the
disclosures in the financial
statements were appropriate.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 127
Audit & Risk Committee report
Area of focus
Audit & Risk Committee review
Conclusions
Area of focus
Audit & Risk Committee review
Conclusions
Restoration provisions – Key Audit Risk
See notes 16
and 26 to the
consolidated
financial
statements
The Group holds a provision of £91.3m
for the future costs of restoring and
decommissioning its trading assets.
These amounts can be especially
significant for the Group’s 108 quarries
and two cement plants.
The Group conducts an annual process
to review the ongoing accuracy and
adequacy of these provisions, with the aid
of external experts, where appropriate.
During the year, the level of provision
increased by £6.6m to reflect the impact of
higher inflation on the cost of restoration,
partially offset by an increase in the rate
used to discount these costs.
The Committee discussed the output
from the annual review of provisions with
management and the external auditor.
Accounting impact of climate change
See notes 9
and 26 to the
consolidated
financial
statements
Climate change has been identified by
the Group as a principal risk, and both the
physical and transitional risks posed by
climate change could affect accounting
judgements made in preparing the
financial statements.
The Committee was presented with a
paper from management which assessed
this potential impact, concluding that the
judgements made in the impairment of
non-current assets were the only area with
potential to materially impact the financial
statements, as a result of the uncertainty
surrounding the costs involved to transition
to net zero by 2050.
The Committee reviewed this disclosure as
a key accounting judgement in the financial
statements.
The Committee noted the impact
of inflation on the calculation of
restoration provisions during
the year.
They concluded that provisions
were appropriately calculated
and fairly stated in the accounts.
Identification of non-underlying items
See note
3 to the
consolidated
financial
statements
The identification and presentation of
certain items as non-underlying on the
face of the consolidated income statement
requires management to apply judgement
in identifying and appropriately disclosing
these items.
In 2023, total non-underlying items before
tax were £10.5m (2022: £7.0m), being
primarily the amortisation of acquired
intangible assets and costs incurred on the
Group’s move from AIM to the Premium
Segment of the Main Market of the London
Stock Exchange.
The Committee considered the nature
of the items which were presented as
non-underlying and the associated
disclosures in the notes to the
financial statements.
The Committee was satisfied
that the non-underlying items
identified by management were
appropriately disclosed and
that this presentation provides
stakeholders with useful additional
understanding of business
performance by reflecting the way
in which the business is managed.
They noted that the nature of
such items was consistent over
time and were clearly disclosed in
the accounts with reconciliations
provided to statutory measures.
Acquisition accounting for intangible assets and goodwill
The Committee was satisfied that
the potential impact of climate
change had been appropriately
considered in preparing the
financial statements, and that
the disclosure fairly reflected the
nature of the risk and judgements
made by management.
See note 25
to the
consolidated
financial
statements
The Committee was satisfied that
the intangible assets and mineral
reserves and resources identified
as part of the acquisitions are
appropriate and have been
accounted for in line with the
applicable accounting standards.
They noted that the assumptions
used in the valuation of the assets
were determined on a consistent
basis to historical acquisitions.
During the year, the Group completed
the acquisition of the three entities for
a combined consideration of £27.1m.
Management performed a fair value
exercise for each of the acquisitions in
which intangible assets were identified,
along with mineral reserves and resources
they were all fair valued and assigned a
useful economic life, over which the assets
will be amortised.
The Audit & Risk Committee reviewed and
discussed, with both management and
the external auditor, a paper prepared
by management setting out the process
followed to identify the intangible assets,
the basis of the fair value of these assets
and the mineral reserves and resources as
well as the assigned useful economic lives.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 128
Audit & Risk Committee report
Area of focus
Audit & Risk Committee review
Conclusions
Area of focus
Audit & Risk Committee review
Conclusions
Alternative Performance Measures
Corporate reorganisation
See note 27
to the
consolidated
financial
statements
The Group utilises a number of Alternative
Performance Measures in response to
demand from its shareholders. Care is
required to ensure that the use of these
measures is compatible with the Group’s
obligation to prepare an Annual Report
which is fair, balanced and understandable.
In particular, these measures should
be calculated on a consistent and
transparent basis over time and
given no more prominence than related
statutory measures.
The Committee reviewed the use
and presentation of these measures
throughout the Annual Report, alongside
the full reconciliations back to statutory
measures provided in note 27 to the
consolidated financial statements.
Going Concern and Viability
See note 1
to the
consolidated
financial
statements
and the
Viability
Statement
on page 69
At each reporting date the Group assesses
whether it remains appropriate to prepare
accounts on a Going Concern basis and
makes a statement on its longer-term
viability as part of its risk reporting.
The Committee reviewed and considered
a paper setting out why management
believe that the Group remains a Going
Concern. This included details of available
facilities, the profit and cash generation of
the Group and a sensitivity analysis in the
form of a ‘severe but plausible’ downside
scenario. Going Concern was also
discussed with the external auditor.
The Viability Statement was reviewed,
alongside a supporting paper from
management, incorporating both a base
case and downside scenario covering the
three-year period of the statement.
The Committee was satisfied the
use of Alternative Performance
Measures enhances the reporting
of the Group by providing
additional information that is
useful to users of the accounts.
They further concluded that
these Alternative Performance
Measures were consistently
calculated and have been
presented fairly together with
full reconciliations alongside the
relevant statutory measures.
See note 1
to the
consolidated
financial
statements
During 2023 the Group undertook a
restructuring exercise alongside its move
from AIM to the Main Market.
This involved the incorporation of a new
holding company, which acquired control
of the group via a court approved scheme
of arrangement on 17 May 2023, a 5:1 share
consolidation and a subsequent capital
reduction.
A paper prepared by management
explaining the accounting impact of these
changes was presented to the Committee.
The Committee was satisfied
that the accounting aspects of
the corporate reorganisation
had been appropriately assessed
and reflected in the financial
statements.
The Committee recommended
to the Board the use of the
Going Concern assumption and
approved the Viability Statement.
They noted that following the
strong levels of profit and cash
generation, the risks facing the
Group have continued to reduce
since 2020. The Committee was
satisfied that the disclosure in the
basis of preparation note to the
financial statements included
all factors relevant to users of
the accounts.
Fair, balanced and
understandable assessment
The Committee reviewed the Annual
Report and was able to confirm to the
Board that the Committee considered
the Annual Report and Accounts,
taken as a whole, was fair, balanced
and understandable and provided the
information necessary for shareholders
to assess the Group’s performance,
business model and strategy.
External auditor
The external auditor, KPMG, has an
independent reporting line to the
Committee and attended all Committee
meetings held in 2023. At these meetings,
the Committee met KPMG without the
executive directors being present to
provide a forum to raise any matters of
concern in confidence.
The Committee discussed and agreed
the scope of the audit plan with KPMG,
and subsequently reviewed their findings,
covering the control environment in
the Group, key accounting matters and
mandatory communications.
The Committee considers the effectiveness
of KPMG’s audit on an annual basis,
including consideration of the standard
of KPMG’s formal communication around
audit strategy and findings, ad hoc
engagements throughout the year
and the feedback which is provided by
management following an internal survey
of relevant stakeholders.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 129
Audit & Risk Committee report
The Committee remains satisfied with
the quality of the audit provided by
KPMG and that they remain objective and
independent.
During 2023, Anna Barrell began acting
as KPMG’s audit partner following the
approval of her appointment by the
Committee in 2022.
KPMG, either directly or via KPMG Channel
Islands Limited, has acted as auditor to the
Group since its formation in 2008, with
the audit last subject to a full competitive
tender in 2019.
KPMG provided £0.6m of non-audit
services during the year which all related
to reporting accountant services, in
connection with the AIM to Main Market
move, expressly permitted by the FRC’s
2019 ethical standard. All work was
approved in advance by the Committee,
is significantly less than the audit fee and in
the opinion of the Committee does not lead
to an actual or perceived conflict of interest.
Internal audit
RSM continue to provide an outsourced
internal audit function to the Group.
They are independent of management
and the Head of Internal Audit, provided
by RSM, reports directly to the Chair of
the Committee.
The 2023 internal audit plan was completed
in line with the plan approved by the
Committee, which received reports from
RSM on the outcome of those reviews
and regular updates on actions taken in
addressing issues previously identified.
RSM attended the Audit & Risk Committee
meetings held during the year. At these
meetings, the Committee met RSM without
the executive directors being present to
provide a forum to raise any matters of
concern in confidence.
The internal audit plan for 2024 has been
approved and includes reviews covering
health & safety and cyber security alongside
a range of other financial and non-financial
processes.
During the year, the Committee undertook
the annual assessment of the performance
of the function. An internal survey was
sent out to relevant stakeholders who had
worked with RSM, with feedback obtained
against a balanced scorecard of criteria
which included technical ability, business
understanding, effective communication,
process management and the quality of
audit reporting.
The Committee concluded that it was
satisfied with the work performed by
RSM and that the internal audit function
was effective.
During 2024, marking three years since
the establishment of the function, we will
undertake an external quality assessment
of the Group’s internal audit arrangements.
Risk management and
internal control
The Audit & Risk Committee monitors
the effectiveness of the Group’s risk
management and internal control systems,
through the following processes:
The Executive team:
Reports to the Board on changes in
the business and external environment
which present significant risks.
Provides the Board with monthly
trading and financial information
and comparison versus KPIs.
Regularly informs the Board on
changes to the competitive landscape.
Performs a review at least twice a year
of the principal risks and mitigations
identified by management through
the risk management processes.
The Audit & Risk Committee:
Receives regular reports on significant
legal, ethical, compliance and insurance
matters from the Group General
Counsel, including summaries of any
reports received through the Group’s
whistleblowing hotline.
Approves the Group risk management
and internal control framework,
which sets out the governance, risk
assessment policies and processes,
for their review and approval.
Receives formal reporting from the
Group Head of Risk and Control on
the risk review processes followed and
the outcome of the formal risk reviews
which form the basis of the principal
and emerging risks reporting.
Reviews progress updates from
the Group Head of Risk and Control
covering control remediation actions,
progress against the internal audit plan
and reviews both the financial controls
framework implementation and risk
management activities.
Receives an update on the outcomes
from the annual self-certification
process for our key financial controls
against the agreed minimum
standards, as defined in the Breedon
Financial Controls Manual, and is
provided a summary of the results of
the second line testing performed.
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Audit & Risk Committee report
Reviews reports from RSM concerning
the design, implementation and
operating effectiveness of internal
controls across the Group’s operations,
including IT and cyber security
controls. This reporting covers both the
scope and findings of reviews, actions
agreed with management as well as
the progress made by management
to address any actions.
Receives regular updates from KPMG,
which includes findings on risk and
internal controls arising from their
work. Subsequent updates on issues
identified by KPMG are reported to
the Audit & Risk Committee.
Receives significant financial
accounting policies for their review
and approval.
The Committee completed its
annual review of the effectiveness of
the Group’s internal control and risk
management framework, concluding
that this remained effective.
Whistleblowing
The Group has adopted a whistleblowing
policy which, together with our confidential
whistleblowing helpline, gives colleagues
or any other third party the means to
raise concerns in confidence and, if they
wish, anonymously.
The Committee reviews reports on
notifications received and ensures
that arrangements are in place for
the proportionate and independent
investigation of such matters and for
follow-up action.
Committee effectiveness
The Committee believes that it has been
effective in 2023. An external evaluation
of the Board and Committee performance
was undertaken during the year (see
pages 123 and 124).
The primary recommendation for the
Committee was to consider commissioning
an external quality assessment in respect of
the internal audit function to complement
the internal effectiveness assessment
undertaken in the year.
The Committee has now commissioned the
Chartered Institute of Internal Auditors to
undertake this review, which will report to
the Committee in the first half of 2024, and
is progressing with actioning a number of
more minor recommendations.
Areas of focus for 2024
The following areas will be key areas of
focus heading into 2024 including:
implementation of the recommendations
arising from the Committee effectiveness
review undertaken during the year;
further work on the assessment
of the Group’s operational, reporting
and compliance controls in advance of
the implementation of UK corporate
governance reforms, including
development of the associated
Audit & Assurance policy; and
oversight of the development of the
Group Fraud Risk Management and the
Information and Security governance
frameworks.
In 2024, the Committee intends to hold four
scheduled meetings to ensure that there is
sufficient time allocated to each of its key
areas of focus.
Clive Watson
Chair, Audit & Risk Committee
6 March 2024
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 131
Nomination Committee report
It is the responsibility of the Nomination
Committee to:
lead the process for Board and senior
management appointments, which
should be subject to a formal, rigorous
and transparent procedure;
ensure effective succession plans are in
place for orderly succession to Board
and senior management positions;
evaluate the skills, experience and
knowledge of the Board and its
committees including an annual
evaluation of the Board and directors;
and
oversee the development of a diverse
pipeline for succession.
The terms of reference for the Nomination
Committee are available on our website
at www.breedongroup.com/board-
committees and were revised following the
Group’s move from AIM to the Premium
Segment of the Main Market of the London
Stock Exchange and are compliant with
the Code.
As required by the Committee’s terms
of reference, throughout the year the
Nomination Committee was chaired by
the Chair of the Company. The Committee
comprises at least three directors, the
majority of which were independent
non-executive directors. The quorum for
Committee meetings is a minimum of two
directors which must comprise a majority of
independent directors. Invites to meetings
were extended to the Chief Executive
Officer, the Group People Director and
external advisers.
The Committee was quorate for all
meetings in 2023 and all members of
the Committee were available to speak
to shareholders at the AGM in 2023. All
directors were re-appointed at the AGM.
Key activities carried out
in the year
During the year, the Committee met three
times and discussed the following:
approved the Board Diversity and
Inclusion Policy;
reviewed succession plans for the Board
including those for the Chair and two
executive directors together with the
Executive Committee;
reviewed talent management within
the Group;
reviewed the structure, size and
composition of the Board;
considered the external review of Board
performance; and
reviewed its terms of reference.
Review of 2023
The Committee terms of reference were
revised during the year to ensure that they
complied with all aspects of Section 3 –
Composition, Succession and Evaluation
of the Code.
In line with the move to the Main Market,
the Committee approved a Board Diversity
and Inclusion Policy in which it supports
compliance with the FCA Listing Rule
targets on diversity. Further details can be
found on pages 121 and 122. The Nomination
Committee is pleased to confirm that as
at 31 December 2023, over 40% of Board
directors were women and that two Board
directors came from a minority ethnic
background. The Committee considers
the wider benefits of diversity to include
age, gender, ethnicity, educational profile
and socioeconomic background.
The Nomination Committee
continues to ensure that the
Board is effective through the
governorship and leadership
of an appropriately
constituted diverse Board
with the right qualities of skills
and experience to lead a
successful organisation.
Amit Bhatia
Chair, Nomination Committee
Attendance
Meetings
attended
Eligible to
attend
Amit Bhatia
Carol Hui
Pauline Lafferty
Helen Miles
Clive Watson
3
3
3
3
3
3
3
3
3
3
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 132
Nomination Committee report
Succession planning has been on the
agenda at all meetings for the Committee
during the year. The Committee keeps
under review the position regarding
the Chair not being independent on
appointment as per provision 9 of the
Code and will continue to do so into 2024.
The Committee considered the succession
planning of the CEO both in terms of
emergency planning for any short-term
incapacity and for the longer-term, as
well as succession plans with regards to
the CFO.
The Nomination Committee received a
presentation on talent management within
the Group and the Executive Committee
succession plan, as part of its wider
considerations of succession planning
for both the Executive Committee and
the leadership population below and to
ensure that effective plans are in place.
The Nomination Committee has kept
the review of the structure, size and
composition of the Board under review
and has made no recommendations
during the year either with regards to
any appointments for any Board or
senior management positions.
The Nomination Committee reviewed skills,
experience and knowledge of its directors
and notes the positive outcome contained
in the external Board Performance
Review which took place during the year
where the findings were that the current
composition of the Board brought a
broad range of business and functional
skills. The Committee will keep this under
review and supports all directors in their
re-election. Please see pages 123 and 124 in
relation to the external Board Performance
Review.
I am pleased to confirm that this resulted
in the Committee declaring that it believed
that it had been effective in 2023.
Focus for 2024
The Nomination Committee will review
and explore the succession plan together
with the talent management plan for the
executive leaders, as well as that for the
Board and in particular the tenure of the
Board including that of the Chair.
In line with the adoption of the Board
Diversity and Inclusion Policy, the
Committee will support the Board on
its journey to increase diversity with the
objective of meeting the FCA target of at
least one senior Board position to be held
by a woman by the end of 2025 which it
currently does not meet.
The Committee firmly believes that
an inclusive culture, with a range of
perspectives, continues as a driver of
business success and is committed to
ensuring that there is a diverse Board with
key skills and experiences, so as to make
effective contribution to the sustainable
long-term growth of the Company.
Amit Bhatia
Chair, Nomination Committee
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 133
Sustainability Committee report
It is the responsibility of the Sustainability
Committee, on behalf of the Board, to:
review the environmental impact and
sustainability of the Group’s operations
particularly in relation to those activities
where the Company has its most
significant environmental impacts
in respect of energy management
and climate change, water use, and
biodiversity and land use. In doing so,
considering the Board’s duty to have
regard to the impact of the Company’s
operations on the community and the
environment as well as the Company’s
other stakeholders, when promoting
the success of the Company;
ensure the promotion of socially
responsible values and standards
that relate to the social and economic
communities in which the Group
operates, are in accordance with the
Company’s corporate sustainability
strategy. Ensure the Company can
demonstrate that it lives through these
values and can act responsibly in its
engagement with all stakeholders in
these communities, locally, nationally
and internationally;
review the Group’s policies and
procedures in relation to sustainability
and associated matters;
review and evaluate the sustainability
performance of the Group, including
but not limited to, energy and carbon
emissions, materials and waste
management and social and community
matters;
monitor, plan and implement relevant
actions for current and pending
regulation and policy changes in relation
to ESG and sustainability matters;
develop and recommend to the Board
corporate sustainability targets and
key performance indicators and receive
and review reports on progress towards
the achievement of such targets and
indicators;
consider matters linked to the Company’s
corporate sustainability strategy; and
consider the Group’s overall approach to
sustainability and ensure it is aligned with
the Group strategy and, if appropriate,
recommend amendments to the above
policies to the Board.
The Committee was quorate for all
meetings in 2023 and all members were
available to speak to shareholders at the
AGM in 2023.
The terms of reference for the Sustainability
Committee are available on our website
at www.breedongroup.com/board-
committees and were revised following the
Group’s move from AIM to the Premium
Segment of the Main Market of the London
Stock Exchange. The main change reflected
the Committee’s new responsibility regarding
a proactive approach to Sustainability and
ESG regulation and policy changes.
Throughout the year the Sustainability
Committee was chaired by Carol Hui.
The Group’s Head of Sustainability, Group
People Director and the Head of Health,
Safety and Wellbeing have a standing
invitation to attend, and provide updates
to the Committee at each meeting.
The Board is responsible for sustainability
within the Group. However, the
Sustainability Committee keeps the Board
updated on its delegated responsibilities in
relation to sustainability and climate-related
issues through regular updates, and all
non-executive directors are members of the
Committee. The Committee, in consultation
with the Audit & Risk Committee, oversees
and monitors sustainability-related risks
and opportunities and the development
of the Group’s sustainability disclosures
including those made in the Company’s
Annual Report.
The Sustainability
Committee has ensured
the Board consider
and manage our
sustainability impact
and wider business
responsibilities effectively.
Carol Hui OBE
Chair, Sustainability Committee
Attendance
Meetings
attended
Eligible to
attend
Carol Hui
Amit Bhatia
Pauline Lafferty
Helen Miles
Clive Watson
3
3
3
3
3
3
3
3
3
3
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 134
Sustainability Committee report
Key activities carried out
in the year
During the year, the Sustainability Committee
met three times and discussed a number
of standing items including sustainability
objectives and progress against targets,
objectives, risks and opportunities and
stakeholder engagement and communication
and in particular the following:
Group-level strategic objectives for
sustainability for 2023 and progress
made against these during the year;
progress against Group-wide sustainability
targets and key performance indicators;
reports on stakeholder and community
engagement;
review and approval of nine sustainability
related Group-level policies;
review of the social value framework and
methodology for measuring positive
impact;
approval of the commitment to develop
carbon reduction targets aligned to the
SBTi standards;
review of sustainability risks and
opportunities;
review of the Annual Report disclosures;
and
consideration of the report from the
external review of Board performance.
Review of 2023
The Committee has continued to develop
and monitor the Board’s corporate
sustainability targets and key performance
indicators. During the year the Committee
received and reviewed progress reports
on the Group-wide 2030 targets:
30% reduction in gross carbon intensity
per tonne of cementitious product
(from 2005 baseline);
100,000 people to be positively
impacted; and
50% concrete and asphalt revenue
to be from products with enhanced
sustainability attributes.
Following the decision made in 2022 for
the Company to develop science-based
targets, the Sustainability Committee
reviewed and approved the proposed
SBTi-aligned near-term and net zero targets
for Group-wide Scope 1 and 2 emissions,
and the Cement-specific Scope 3 reduction
target relating to purchased clinker and
cement. These targets have been submitted
to the SBTi for formal validation during 2024.
The Sustainability Committee reviewed
the priorities of the GCCA and those
of the MPA’s UK Concrete Sustainable
Construction Strategy and were satisfied
that Breedon’s sustainability objectives
were aligned with those of our industry
associations.
During the year the Committee has carefully
reviewed the sustainability risks and
opportunities as part of monitoring the
Sustainability Risk Register.
The Sustainability Committee, on behalf
of the Board, reviewed and approved the
climate-related disclosures for the 2022
Annual Report and approved a suite of
sustainability policies.
Aligned with the Company’s promotion of
socially responsible values and standards,
the Sustainability Committee has supported
engagement with external stakeholders on
key topics, and the increased engagement
with colleagues. This included the sharing of
knowledge through internal cross-divisional
Planet, People and Places working groups
focused on sharing best practice and
supporting the divisions in achieving their
sustainability objectives.
The Sustainability Committee had
oversight of sustainability management
and governance within the operations
of the Company and has reviewed the
environmental impact and sustainability
of the Group’s operations particularly
in relation to those activities where
the Company has its most significant
environmental impacts. For further details
on sustainability please see the report on
pages 71 to 104.
As part of the external Board performance
review, the Sustainability Committee
received a report regarding its own
effectiveness. The report was positive
regarding the Committee’s performance
and observations have been taken on
board and implemented. These were for
the Committee meetings to be scheduled
earlier in the day’s running order of
meetings, to provide a short overview of
the Committee’s agenda, and to invite more
business representatives to the meetings.
I am pleased to confirm that this resulted
in the Committee declaring that it believed
that it had been effective in 2023.
Focus for 2024
The Sustainability Committee will look
at the short-term targets for the year as
well as the longer-term carbon reduction
target which is linked to the Group’s
Remuneration Policy.
Furthermore, following an exercise to assess
the most material areas of impact that the
Group has on the economy, environment
and stakeholders, the Sustainability
Committee will undertake a robust review of
the sustainability framework and targets to
ensure that theses remain fit for the future.
Carol Hui
Chair, Sustainability Committee
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 135
Compliance statement against the Code
Compliance
Statement
Until 16 May 2023, while listed
on AIM, the Board complied
fully with the provisions of
the QCA Governance Code.
Since 17 May 2023, on entry to
the Premium segment of the
Main Market of the London
Stock Exchange, the Company
adopted the UK Corporate
Governance Code.
The Code can be found at www.frc.org.uk.
The Board is pleased to report that they
applied the principles and complied with all
provisions of the Code with the exception
of Provision 9 Chair independence and
Provision 36 with regards to a formal
policy for post-employment shareholding
requirements. Further details on
non-compliance are provided below.
Provision 9 – Chair independence
The Chair, Amit Bhatia was not deemed
to be independent upon his appointment
as Chair.
The Code recommends that a chair should
meet the independence criteria set out in
the Code on appointment. Mr Bhatia is not
considered to have been independent on
appointment to the Board, having been
initially appointed as the representative
of Abicad Holding Limited, a significant
Breedon shareholder pursuant to the terms
of a relationship agreement in force at the
time of his appointment as Chair.
Accordingly, although Mr Bhatia is no
longer a representative of Abicad Holding
Limited, he is not considered to have been
independent on appointment to the Board
and therefore the current Board structure
does not comply with Provision 9 of
the Code.
By way of background, Mr Bhatia was
appointed to the Breedon Board in
August 2016, appointed Deputy Chair
in April 2018, and non-executive Chair
in 2019. He has considerable experience
in both the material sector and through
corporate finance. Previously, Mr Bhatia
was appointed as executive Chair of Hope
Construction Materials in 2013, then the
UK’s largest independent building materials
business before it was acquired by the
Group in August 2016 (which is when he
subsequently joined the Breedon Board).
Given Mr Bhatia’s longstanding experience
in the sector and tenure with the Group, the
Company does not propose to appoint a
new independent Chair in order to comply
with the UK Corporate Governance Code.
Provision 36 – Long-term shareholdings
The Company did not fully comply with the
provision in regards to post-employment
shareholdings for its executive directors.
The Code states that remuneration
schemes should promote long-term
shareholdings by executive directors
that support alignment with long-term
shareholder interests. Share awards
granted for this purpose should be released
for sale on a phased basis and be subject
to a total vesting and holding period of
five years or more. The Remuneration
Committee should develop a formal
policy for post-employment shareholding
requirements encompassing both unvested
and vested shares.
The Directors’ Remuneration Policy which
can be found on page 145 to 168 which will
be put to shareholders at the forthcoming
AGM being held on 24 April 2024 provides
for the incorporation of a post-cessation
shareholding requirement for executive
directors. If approved by shareholders,
then the Company will fully comply with
this provision.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Compliance statement against the Code
Requirements and principles
Application
Compliance and provisions
136
1 Board leadership and Company purpose
A
Board’s role
A successful company is led by an
effective and entrepreneurial board,
whose role is to promote the long-term
sustainable success of the company,
generating value for shareholders
and contributing to wider society.
The Board has collective responsibility for the long-term success of the Company. The Board holds a periodic strategy
day with discussions at every meeting through a robust decision-making process. Long-term strategy, divisional
strategies and a progressive dividend policy are all considerations of the Board in generating value for shareholders.
The Group’s strategy and business model and details of the governance arrangements in place which contribute
to the delivery of our strategy can be found in our Annual Report.
The Board is responsible for leading and controlling the Company and has overall authority for the management and
conduct of its business, strategy and development. The Board is also responsible for ensuring the maintenance of a
sound system of internal controls and risk management (including financial, operational and compliance controls)
and for reviewing the overall effectiveness of systems in place as well as for the approval of any changes to the capital,
corporate and/or management structure of the Company. The Board has a governance framework in place which
includes the directors, board committees, an executive committee and a formal schedule of those matters that are
reserved to the Board and is satisfied that during 2023 its responsibilities were met.
The Company applied all of the
principles and complied with
the provisions of Section 1
Provision 1:
pages 50 to 68 Managing our
risks and opportunities
pages 22 to 27 Business model
pages 111 to 172
Governance report
B
Purpose and culture
The board should establish the
company’s purpose, values and
strategy, and satisfy itself that these
and its culture are aligned. All directors
must act with integrity, lead by example
and promote the desired culture.
The Schedule of Matters Reserved for the Board specifies that the Board is responsible for ensuring that its culture and
values are aligned to the Group’s purpose, long-term strategy and objectives. Procedures for the regulation of Board
conduct are detailed in individual appointment letters. The Annual Report sets out the activities taken by the Board in
respect of monitoring culture and its approach to investing in and rewarding its workforce.
Provision 2:
page 118 Monitoring culture
pages 145 to 168 Directors’
Remuneration report
To promote a common culture across the organisation, the Board defined a clear purpose and set of values that
support the successful delivery of our strategy. Led by the Board and Executive Committee, the purpose ‘to make a
material difference to the lives of our colleagues, customers and communities’ to create a workplace where people
feel safe, proud and motivated to do their best. The values at the heart of our business: keep it simple; make it happen;
strive to improve; and show you care, will drive the performance of the business, motivating and engaging colleagues,
building customer loyalty and strengthening our relationship with local communities.
C
Resources and controls
The board should ensure that the
necessary resources are in place for
the company to meet its objectives
and measure performance against
them. The board should also establish
a framework of prudent and effective
controls, which enable risk to be
assessed and managed.
The Board set and monitor the strategy for the Group, holding management to account on their delivery of the agreed
strategy. This is assisted by a robust internal control and risk management framework, which is overseen by the Audit
& Risk Committee. The Annual Report sets out how resources have been used to meet our strategy for the Group
and those of the individual businesses. The Board has identified five strategic risks, acquisitions and material capital
projects, climate change, markets, land and mineral management and people, all of which are detailed in the Annual
Report.
Provision 1:
pages 50 to 68 Managing our
risks and opportunities
pages 28 to 35 our CEO review
and strategy
pages 36 to 41
Operating reviews
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Requirements and principles
Application
Compliance and provisions
137
1 Board leadership and company purpose continued
D
Stakeholder engagement
In order for the company to meet
its responsibilities to shareholders
and stakeholders, the board should
ensure effective engagement with,
and encourage participation from,
these parties.
The Board regularly receives and considers updates on the views of shareholders through reports from its brokers and
directors following shareholder engagement. The Head of Investor Relations reports and analyst notes are reviewed
to maintain a broad understanding of varying investor views. The Board, including the Chair and the Committee Chairs
engage with shareholders at the AGM and in 2023 through communications such as the prospectus and other media
relating to the move to the Main Market. The Chair of Remuneration Committee consulted with shareholders with
regards to the proposed Remuneration Policy.
At the AGM in 2023 there were no resolutions where 20% of the vote had been cast against a Board recommendation.
The results are published following our AGM.
The Board has appointed Pauline Lafferty as DNED for Workforce Engagement and during 2023 she has undertaken
both face-to-face and virtual sessions across both our GB and Ireland businesses.
E Workforce policies
and practices
The board should ensure that workforce
policies and practices are consistent
with the company’s values and support
its long-term sustainable success. The
workforce should be able to raise any
matters of concern.
Group-wide policies are reviewed regularly and are accessible to all employees. The Board undertakes an annual
engagement survey with all employees with the results being reviewed by the Board to ensure that a supportive and
inclusive culture is in place. The Board engages directly with the workforce through site visits and through the DNED
responsible for workforce engagement.
The Group has in place a Whistleblowing Policy for any employee to raise concerns. The policy provides for a
confidential process for notification and the arrangement for independent investigation to take place. The policy is
monitored by the Audit & Risk Committee and overseen by the Board.
The Board has a Conflicts of Interest Policy and all directors declare any potential interest at meetings and provides
a list of all external directorships together with any third-party relationships. If a director has any concern regarding
the operation of the Board then any such concerns will be minuted in the Board minutes. During the year, the Board
determined that there were no relationships that posed any actual or potential conflict.
Provision 3:
pages 119 and 120
Engaging with shareholders
Provision 4:
no AGM votes below 80%
Provision 5:
pages 105 to 109
S172 Statement
page 117 Engaging with
our workforce
Provision 6:
page 117 Engaging with
our workforce
Provision 7:
pages 112 and 113
Board of Directors
Provision 8:
Director appointment letters
Board Conflicts of Interest
Policy
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 138
Compliance statement against the Code
Requirements and principles
Application
Compliance and provisions
2 Division of responsibilities
F
Role of the Chair
The chair leads the board and is
responsible for its overall effectiveness
in directing the company. They should
demonstrate objective judgement
throughout their tenure and promote
a culture of openness and debate.
In addition, the chair facilitates
constructive board relations and
the effective contribution of all
non-executive directors, and ensures
that directors receive accurate, timely
and clear information.
G
Composition of the Board
The board should include an
appropriate combination of executive
and non-executive (and, in particular,
independent non-executive) directors,
such that no one individual or small
group of individuals dominates the
board’s decision-making. There should
be a clear division of responsibilities
between the leadership of the board
and the executive leadership of the
company’s business.
The Chair was not independent on appointment. The Chair does not represent a significant shareholder, however he is
a Closely Associated Person of a significant shareholder.
The Chair sets the Board’s agenda and the Board is provided with clear, regular and timely information on the
financial performance of the businesses within the Group, and of the Group as a whole. In addition, other trading
reports, contract performance and market reports and data, including reports on personnel-related matters such as
health and safety and environmental issues, are provided. The Board has approved a schedule of matters reserved
for the Board.
All non-executive directors (excluding the Chair) have been identified by the Board as independent. The Board has a
majority of independent directors. No changes to the composition of the Board occurred during the year.
There is a clear division of responsibilities between the Chair, Senior Independent Officer and Chief Executive Officer.
Each Board Committee has Terms of Reference agreed by the Board which sets out the role and responsibilities of
that Committee.
The Chair encourages and facilitates each directors contribution to ensure that no one individual can dominate its
proceedings. All directors are encouraged to use their independent judgement and to challenge all matters, whether
strategic or operational. The Senior Independent Director undertakes an evaluation of the Chair annually and the
Board undertakes an external validation of its performance every three years.
The Company applied all of
the principles and complied
with the provisions of
Section 2 with the exception
of Provision 9 in respect of
the Chair’s independence
on appointment
(see page 135 for details)
Provision 9:
pages 112 and 113
Board of Directors
page 111 Corporate governance
at a glance
Provision 10, 11 & 12:
pages 112 and 113
Board of Directors
Provision 14:
Committee terms of reference
Division of responsibilities
page 111 Corporate governance
at a glance
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Requirements and principles
Application
2 Division of responsibilities continued
139
Compliance and provisions
There is a division of responsibilities between the CEO, the Chair and the SID which is summarised below.
Chair
Senior Independent Director
Chief Executive Officer
Ensure the Board is effective in
setting and implementing the
Group’s direction and strategy.
Act as a sounding board for the
Chair and other members of
the Board.
Oversee the operation of
the governance framework.
Be an alternative point of contact
for shareholders.
Chair the meetings of the
Company, Board and Nomination
Committees.
Work with the Chair, Board
and shareholders to resolve
significant issues.
Ensure the Board is effective in
all aspects of its role, including its
legal, regulatory and shareholder
responsibilities.
Maintain dialogue with the CEO
and the Board on important and
strategic issues.
Obtain a balanced understanding
of the issues and concerns of
shareholders.
Lead the performance evaluation
of the Chair on behalf of the Board.
Oversee the operational day-to-
day management of the Group’s
businesses in line with the strategy
and long-term objectives.
Make decisions affecting the
operations, performance and
strategy of the Group’s businesses,
except for matters reserved to the
Board or Committees.
Implement the strategy and
long-term objectives, annual
budget and operating plan.
There are clear responsibilities to ensure appropriate decision-making with delegations in place through the
terms of reference for each Board Committee. The four main Board committees are:
Audit & Risk Committee
Report on pages 125 to 130
Nomination Committee
Report on pages 131 and 132
Sustainability Committee
Report on pages 133 and 134
Remuneration Committee
Report on pages 145 to 168
Supports the Board’s
responsibilities with
regard to internal
controls and the risk
management framework
together with overseeing
financial reporting.
Supports the Board with
succession, appointments
and the promotion of
diversity and inclusion for
the Board and Executive
Committee together with
ensuring a balance of skills
and experience.
Review strategies, policies
and performance in
relation to sustainability
together with the
environmental impact
and sustainability of
the Group’s operations
and to promote socially
responsible values.
Responsible for
determining the
Remuneration Policy
for executive directors,
Executive Committee
and the Chair together
with appropriateness of
workforce remuneration
and share schemes.
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Requirements and principles
Application
Compliance and provisions
140
2 Division of responsibilities continued
H
Role of Non-executive Directors
Non-executive directors should have
sufficient time to meet their board
responsibilities. They should provide
constructive challenge, strategic
guidance, offer specialist advice
and hold management to account.
All non-executive directors have letters of appointment which detail their responsibilities of the role and time
expectations. The Chair holds regular sessions with the non-executive directors without executive directors being
present. The Nomination Committee which is constituted of non-executive directors has the responsibility for
recommending to the Board any appointments or removal of directors.
The duties of the Board are detailed in our Schedule of Matters Reserved for the Board, which aligns to the
requirements of this principle and includes the key role of appointing and removing executive directors.
Each non-executive director’s letter of appointment sets out the commitments expected to discharge their duties.
Executive directors are prohibited from taking more than one additional listed directorship, with none of the executive
directors holding any such positions during the year.
All directors undergo an induction on appointment and training and development is provided throughout the year.
I
Role of the Company Secretary
The board, supported by the company
secretary, should ensure that it has
the policies, processes, information,
time and resources it needs in order to
function effectively and efficiently.
The Group General Counsel has been appointed by the Board as Company Secretary to act as a trusted advisor to
the Board and its Committees, and ensure there are appropriate interactions between senior management and the
non-executive directors. He is responsible for advising the Board on all governance matters and all directors have
access to him for advice. The Matters Reserved for the Board states that only the Board can appoint or remove the
Company Secretary.
Provision 13:
Letters of appointment
pages 131 and 132
Nomination Committee report
Provisions 15:
Letters of appointment
Schedule of Matters Reserved
for the Board
pages 112 and 113
Board of Directors
pages 131 and 132
Nomination Committee report
Provision 16:
Schedule of Matters Reserved
for the Board
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Requirements and principles
Application
Compliance and provisions
141
3 Composition, succession and evaluation
J
Appointment to the Board and
succession planning
Appointments to the board should
be subject to a formal, rigorous and
transparent procedure, and an effective
succession plan should be maintained
for board and senior management.
Both appointments and succession
plans should be based on merit and
objective criteria and, within this
context, should promote diversity of
gender, social and ethnic backgrounds,
cognitive and personal strengths.
K
Skills, experience and
knowledge of the Board
The board and its committees should
have a combination of skills, experience
and knowledge. Consideration should
be given to the length of service of the
board as a whole and membership
regularly refreshed.
The Board has established a Nomination Committee to which it delegates certain responsibilities. The majority of
the membership of the Committee are independent non-executive directors. The Chair of the Board is Chair of the
Committee, however the terms of reference set out the process for another member to Chair the meeting when
dealing with the Chair’s successor. The Chair was not independent on appointment and is reaching nine years tenure
on the Board. The SID chaired parts of the Nomination Committee meeting when discussions have taken place
regarding Chair succession; the Chair was not present during these discussions.
The Nomination Committee reviews succession plans for the Board and senior executives together with talent
management strategies. The Board has a Diversity and Inclusion Policy which is detailed in the Annual Report.
All directors are subject to re-election as per the Company’s Articles and the supporting reasons for each directors
re-election are set out in the Notice of Meeting.
The current composition of the Board comprises various skills, knowledge and experience that the Nomination
Committee considers is requisite for the Board to discharge its responsibilities effectively. At 31 December 2023,
the tenure of the Board consisted of one non-executive director in their third term (Chair), two in their second term
(SID and Chair of Sustainability), with the remaining two in their first three-year term. The Chair has not been in post
beyond nine years. The composition and performance of the Board, and the skills and experience of each director,
are regularly evaluated, to ensure that they best fit the evolution of the Group’s business. The Nomination Committee
regularly reviews the succession plan to ensure that when seeking to recommend new members to the Board,
consideration of a range of relevant matters including the diversity of its composition is given.
The Board considers that each of the directors brings a senior level of experience and judgement to bear on issues of
operations, finance, strategy, performance, governance and standards of conduct. Directors are given regular access
to the Group’s operations and personnel as and when required. Non-executive directors have a wealth and breadth of
experience gained from their appointments on other boards.
The Company applied all of
the principles and complied
with the provisions of
Section 3
Provision 17:
Terms of reference
pages 131 and 132
Nomination Committee report
pages 121 and 122
Diversity reporting
Provision 18:
Notice of meeting
Provision 19:
pages 112 and 113
Board of directors
Provision 20:
pages 131 and 132
Nomination Committee report
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Compliance statement against the Code
Requirements and principles
Application
Compliance and provisions
142
3 Composition, succession and evaluation continued
L
Board evaluation
Annual evaluation of the board should
consider its composition, diversity
and how effectively members work
together to achieve objectives.
Individual evaluation should
demonstrate whether each director
continues to contribute effectively.
The Board regularly reviews its own effectiveness and the Chair is in regular contact with each member of the Board
to ensure that any concerns are identified and acted upon. The SID undertakes an annual performance review of the
Chair gaining feedback from the other members of the Board.
The Board carries out an externally facilitated Board Performance Review every three years and welcomes
input as part of the process from stakeholders outside of the Board. The Board also conducts an internal review
of its effectiveness during the intervening period. The Board is committed to actioning any suggestions or
recommendations that are made to improve its effectiveness. The Board undertook an external Board performance
review in 2023, the details of which can be found in this Annual Report.
Provisions 21 and 22:
pages 123 and 124 Board
performance review
pages 115 and 116
Board in action
Provision 23:
pages 131 and 132
Nomination Committee report
The Board considers and reviews the requirement for continued professional development and each director is
encouraged to reflect on their own individual needs. The Board is provided with development opportunities inside
and outside the boardroom on a wide range of areas.
pages 121 and 122
Diversity reporting
4 Audit, risk and internal control
M Internal and external audit
The board should establish formal and
transparent policies and procedures
to ensure the independence and
effectiveness of internal and external
audit functions and satisfy itself on
the integrity of financial and narrative
statements.
The Board has established an Audit & Risk Committee. Membership solely consists of non-executive directors.
Two members have recent and relevant financial experience and the Committee as a whole has competence relevant
to the sector. The Chair of the Board is not a member. Terms of reference have been approved which complies fully
with the roles and responsibilities set out in the Code.
The Audit & Risk Committee manages the relationship with the internal and external audit functions on behalf of the
Board satisfying itself of their independence and effectiveness. On an annual basis, the Committee considers reports
on the effectiveness of both the internal and external audit functions which is carried out through assessments in
which both the Group and the audit functions contribute. The Committee has evaluated and considers that the
external auditor is independent and is compliant with the Committee’s policy on the provision of non-audit services.
The Committee also has oversight of the Risk and Control function within the Group together with the finance
function. The Committee is responsible for reviewing the internal financial controls and risk management systems in
order to ensure the integrity of the financial and narrative statements. The Audit & Risk Committee has an approved
policy on the supply of non-audit services.
The Directors’ Responsibilities Statement, Going Concern and Viability Statements are contained within the Annual
Report and are approved by the Board.
The Company applied all of
the principles and complied
with the provisions of
Section 4
Provisions 24 and 26:
pages 125 to 130 Audit & Risk
Committee report
Provision 25:
Terms of reference
pages 125 to 130 Audit & Risk
Committee report
pages 69 and 70
Viability Statement
page 172 Statement of
Directors’ responsibilities
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Compliance statement against the Code
Requirements and principles
Application
Compliance and provisions
143
4 Audit, risk and internal control continued
N
Fair, balanced and
understandable assessment
The board should present a fair,
balanced and understandable
assessment of the company’s position
and prospects.
O Risk management and internal
control framework
The board should establish procedures
to manage risk, oversee the internal
control framework, and determine
the nature and extent of the principal
risks the company is willing to take
in order to achieve its long-term
strategic objectives.
5 Remuneration
P
Remuneration policies and
practices Code
Remuneration policies and practices
should be designed to support strategy
and promote long-term sustainable
success. Executive remuneration
should be aligned to company purpose
and values, and be clearly linked to the
successful delivery of the company’s
long-term strategy.
The Audit & Risk Committee provides advice to the Board as to whether it considers the Annual Report, taken as a
whole, to be fair, balanced and understandable, and provides information necessary for shareholders to assess the
Company’s position, performance, business model and strategy. This responsibility of the Board is presented and
confirmed by the Board in the Annual Report.
The Annual Report contains disclosures that the Board considers it appropriate to adopt the Going Concern basis
of accounting and how it has assessed the prospects of the Company. The Viability Statement confirms that the
directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities
as they fall. The Statement of Directors’ Responsibilities provides details of the director’s responsibility for preparing
the Annual Report.
Provision 25 and 27:
pages 125 to 130 Audit & Risk
Committee report
Provision 30 and 31:
pages 173 to 226
Financial statements
pages 69 and 70
Viability Statement
The Board is ultimately responsible for the internal control framework including risk management and internal
controls, and for ensuring robust systems are in place for the assessment of principal risks and the emerging risks
faced by the Company. The Board conducts an annual assessment of those risks, together with monitoring the risk
management and internal controls and confirms that it has done so in the Annual Report. The procedures that the
Board has in place to identify emerging risks and how these are being managed or mitigated are disclosed in the
Annual Report. The Audit & Risk Committee supports the Board with their responsibility.
Provisions, 28 and 29:
pages 50 to 68 Managing our
risks and opportunities
pages 125 to 130 Audit & Risk
Committee report
The Board has established a Remuneration Committee consisting of independent non-executive directors and a Chair
who has the requisite experience as set out in the Code. The Remuneration Committee assists in fulfilling the Board’s
oversight responsibilities relating to the Directors’ Remuneration Policy and practices and is responsible for the
formalisation of all elements of remuneration for the Chair, the executive directors, and the Executive Committee.
The Remuneration Committee reviews workforce remuneration and relation policies and the alignment of those
incentives and rewards with the culture of the Group. The policies are aligned to our purpose and values and are
designed to support the Company’s long-term strategic aims.
The Company applied all
of the principles and complied
with the provisions of Section
5 with the exception of
provision 36 regarding
a formal policy for
post-employment
shareholding requirements
(see page 135 for detail).
Provisions 32 and 33:
Terms of reference
pages 145 to 168 Directors’
Remuneration report
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Compliance statement against the Code
Requirements and principles
Application
5 Remuneration continued
Q Executive remuneration
A formal and transparent procedure
for developing policy on executive
remuneration and determining director
and senior management remuneration
should be established. No director
should be involved in deciding their
own remuneration outcome.
The Remuneration Committee has established remuneration schemes that promote long-term shareholding by
executive directors that support alignment with long-term shareholder interests, with share awards subject to a total
vesting and holding period and post-employment shareholding requirements. The Remuneration Policy will be put to
shareholders at 2024 AGM for approval.
The Directors’ Remuneration Policy is aligned with the Company’s culture to drive behaviours consistent with
Company strategy and purpose and values, which aims to attract, retain and motivate successfully without paying
more than is necessary. Pension contribution rates for executive directors are aligned to those available to the
workforce. A proportion of remuneration is performance-related with any such elements structured so as to be
transparent, stretching and rigorously applied which do not reward poor performance.
Details of all directors service agreements and letters of appointment are detailed in the Annual Report. Both
executive directors have a contract notice period of one year, whether given by the individual or the Company.
The Board’s overriding approach to payments for loss of office is to act in shareholders’ interests.
Non-executive remuneration remains the responsibility of the Board, as specified in the Schedule of Matters to be
Reserved for the Board and does not include share options or any performance-related elements.
144
Compliance and provisions
Provisions 34:
page 160 Directors’
Remuneration report
Provisions 36, 37, 38, 39:
pages 145 to 168 Directors’
Remuneration report
Provisions 40 and 41:
pages 145 to 168 Directors’
Remuneration report
R
Remuneration outcomes and
independent judgement
Directors should exercise independent
judgement and discretion when
authorising remuneration outcomes,
taking account of company and
individual performance, and wider
circumstances.
The Remuneration Committee consists of only independent non-executive directors and a Chair who has the requisite
experience as set out in the Code.
The Remuneration Committee is supported by an external consultant who provides independent advice and
benchmarking and is identified in the Annual Report.
Policies are in place to override formulaic outcomes and provide provisions for the Remuneration Committee to
recover or withhold sums or share awards. Details of the proposed policy for 2024 is provided in the Annual Report.
Provision 35:
page 167 Directors’
Remuneration report
Provision 37:
pages 145 to 168 Directors’
Remuneration report
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 145
Directors’ Remuneration report ANNUAL STATEMENT
Dear shareholder
Terms of reference
2023 remuneration outcomes
2023 represented a significant milestone for
Breedon as we celebrated the Company’s
move from AIM to the Premium Listing
Segment of the London Stock Exchange’s
Official List and admittance to the FTSE
250 Index.
Being a member of AIM served us well
over the past decade. As one of the larger
businesses on the AIM market, we had
evolved our remuneration practices in
order to ensure they were aligned to high
standards of corporate governance and fit
for purpose for a company of our size by
reference to practices on the Main Market.
Following the successful move to the
Main Market, the Company, for the first
time, is required to have a binding vote on
our Directors’ Remuneration Policy (the
‘Policy’ or ‘2024 Policy’). In addition, we
are required to provide further disclosures
which build on the enhancements
introduced in recent years.
At the 2024 AGM, shareholders will have
the opportunity for an advisory vote on the
Directors’ Remuneration report; a vote to
approve the 2024 Policy; and a separate
vote to approve the Deferred Share Bonus
Plan (DSBP). We look forward to your
continued support.
The Committee works within agreed terms
of reference and makes recommendations
to the Board. They were last revised in 2023
following the Group’s move from AIM to
the Premium Segment of the Main Market
of the London Stock Exchange and are
available on the Group’s website at www.
breedongroup.com/board-committees.
2023 business performance
We have delivered results in 2023 that are
ahead of expectations. Revenues grew 7%
to £1,487.5m and we delivered a record
Underlying EBIT of £156.2m. This was
despite tough market conditions and a
challenging macroeconomic environment.
We have also continued to support
our growth ambitions through bolt-on
acquisitions made during the year.
We made significant progress against
our sustainability targets under our pillars
of Planet, People and Places. Science-
based targets were submitted for formal
verification during the year, we made our
first submission for assessment by CDP, and
have now been awarded a rating of B for
Climate Change and C for Water Security.
All this has been delivered through the
hard work and commitment of our great
team of colleagues at Breedon and we are
delighted to report an improvement in our
engagement scores in 2023 to 80%.
Annual bonus
The outcome for the 2023 annual bonus
reflects the Group’s strong financial
performance and progress made against
corporate objectives for the year.
75% of the annual bonus was based on
underlying operating profit (EBIT) and 25%
on strategic and sustainability objectives.
Underlying EBIT of £156.2m in 2023 was
above the maximum target set and the
financial element (75%) of the bonus paid
out in full.
Excellent progress towards our corporate
objectives in 2023 resulted in a payout of
98% of maximum for this element.
The overall bonus payout for 2023 was
therefore 124% of base salary.
The Committee considered carefully
whether the annual bonus outcome
was consistent with the underlying
performance of the business. On balance,
the Committee agreed the bonus outcome
was a fair reflection of performance
considering the strong Group financial
performance set out above and it supports
the good progress on strategic and
ESG priorities.
The Committee has undertaken
a review of pay as part of our
move from AIM to the Main
Market. The Policy for senior
executives’ pay supports our
strategy to deliver long-term
sustainable performance
for the benefit of all our
stakeholders.
Pauline Lafferty
Chair, Remuneration Committee
Attendance
Pauline Lafferty
Carol Hui
Helen Miles
Clive Watson
Meetings
attended
Eligible to
attend
5
5
5
5
5
5
5
5
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 146
Directors’ Remuneration report
ANNUAL STATEMENT
Annual Statement outlines the key items
considered by the Committee during
the year, including pay outcomes, the
conclusions of the Policy review and our
approach to paying directors in 2024.
»146
Remuneration at a glance
»148
The Directors’ Remuneration Policy
sets out the parameters within which we
operate and implement our remuneration
arrangements for directors, which will
be subject to a shareholder vote at the
2024 AGM.
»149
Annual Report on Remuneration details
the pay outcomes for 2023, sets out
additional information on the context
in which pay has been awarded, and
describes in more detail how we propose
to implement our Policy in 2024.
»160
2021 PSP
The 2021 PSP awards were half subject to a relative Total
Shareholder Return (TSR) measure and half subject to an EPS
measure for the three-year performance period ending 31
December 2023. Breedon’s TSR over the period was below median
of the peer group and therefore no part of this award will vest.
The 2023 EPS of 33.9p was ahead of the maximum target set and
was met in full. Therefore, 50% of the 2021 PSP award will vest in
April 2024.
The Committee believe a 50% PSP outcome is a fair reflection of
overall performance over the three-year performance period in the
context of a challenging macroeconomic environment.
2023 Annual bonus
Underlying EBIT
Corporate objectives
Weighting
% of maximum
achieved
% of bonus
achieved
75%
25%
100%
98%
75%
24.5%
Overall, bonuses of 124.4% of salary became payable to executive
directors.
PSP 2021 awards
EPS
TSR
Weighting
% of maximum
achieved
% of bonus
achieved
50%
50%
100%
0%
50%
0%
Key activities in 2023
During the year, the Remuneration Committee met five times and considered:
January
March
June
November
measures and targets
for the 2023 annual
bonus.
base salary changes
for the executive
directors and
Executive Committee
for 2023 in the context
of workforce increases;
annual bonus
outcomes for 2022;
a review of
remuneration trends
and a corporate
governance update;
approval of the 2020
PSP award vesting
and the grant of the
2023 PSP awards; and
progress against
shareholding
guidelines.
a review of Directors’
Remuneration.
the Committee’s
terms of reference;
September
shareholder
consultation
feedback on our
proposed Directors’
Remuneration Policy.
update on 2024
incentive measures;
preparation of
the Directors’
Remuneration report;
the effectiveness of
the Committee and its
independent advisers;
review of workforce
arrangements; and
update from
shareholders on
the Remuneration
Policy review.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 147
Directors’ Remuneration report ANNUAL STATEMENT
Directors’ Remuneration Policy
As one of the workstreams involved with
our move from AIM to the Main Market,
the Remuneration Committee reviewed
senior executive pay in 2023 to ensure
our practices are in line with shareholder
guidance, the Code and practices in
comparable FTSE businesses. This exercise
concluded with a shareholder consultation
exercise and I am very grateful for the
views and constructive feedback received.
The Committee was of the view that the
existing remuneration structure remains
appropriate for Breedon and is broadly
consistent with market and good practice.
Therefore, the changes to pay in 2024 are
focused on ensuring that our remuneration
arrangements take into account developing
good practice, continue to incentivise
the successful delivery of our strategy
(both from a financial and sustainability
perspective) and remain market competitive.
A number of good practice features
had already been introduced by the
Remuneration Committee. For example,
executive directors’ pension contribution
rates have been workforce aligned for a
number of years; PSP awards have a
two-year post vesting holding period, a
200% of salary shareholding guideline
applies, malus and clawback provisions
have kept up to date with developments
in this area; and base salaries for both
executive directors were set at a discount to
their predecessors upon their appointments.
The 2024 Policy will include the following
features:
Incentive opportunities - bonuses have
been set at 150% of salary for both directors
and the PSP levels will be 200% of salary for
the CEO and 175% of salary for the CFO. The
Committee believes these are appropriate
for the following reasons:
This weighting on variable pay is aligned
with Breedon’s performance-related
culture.
Going forward, bonus deferral will be
introduced requiring one-third of the
annual bonus to be deferred in shares
for two years, thereby reducing overall
cash compensation. Deferral will provide
further alignment with shareholders’
expectations and ensure packages
have greater retention effect.
The incentive quantum is in line with
mid-market levels for companies of
Breedon’s size in the FTSE 250.
The overall quantum reflects the
complexity of Breedon’s business and
operations and its size and scale.
Incorporation of a post-cessation
shareholding guideline – executive
directors will be required to hold
shares to the lower of their holding on
cessation and 200% of salary for two years.
The shareholding requirement excludes
purchased shares and shares acquired from
PSP grants prior to approval of the Policy.
We consulted on these proposals with
shareholders representing over 60% of our
issued share capital and heard back from
the majority. The feedback received was
helpful and we were grateful for the high
level of support provided.
Senior management and
wider workforce
The Committee sets remuneration for
senior executives, and during the year
received updates on colleague remuneration,
policies and practices across the Group.
Pay increases for the wider workforce in
2023 were set to 6% underpinned by a
minimum increase of £1,500 for lower paid
colleagues. The executive directors and
Executive Committee received a lower
increase of 4.5%.
As the DNED, I attended a number of focus
groups in 2023 with colleagues across our
UK and Ireland businesses and discussed a
wide range of topics (see pages 116 and 117).
Looking forward to 2024
For 2024, the Committee will implement
the Remuneration Policy as follows:
Salary
Base salary increases for our two executive
directors will be 4% in 2024 which is in line
with the general workforce increase.
Benefits and pension
No change to benefits. Pension contribution
rates remain in line with the general
workforce contribution offering of 5%
of salary.
Annual bonus
The bonus will be based 75% on adjusted
Underlying EBIT with a moderator applied
to reflect actual capital employed in the
business versus budget.
The remaining 25% will be on key strategic
objectives including ESG.
The targets and objectives are commercially
sensitive and will be disclosed on a
retrospective basis.
PSP
EPS and relative TSR will continue to apply
with reduced weightings of 42.5% each.
The remaining 15% will be based on a new
carbon reduction metric, which reflects our
environmental ambitions.
Pauline Lafferty
Chair, Remuneration Committee
6 March 2024
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Directors’ Remuneration report
REMUNERATION AT A GLANCE
Executive directors 2023 remuneration
Executive director’s remuneration in 2024
148
£289,933
£1,773,192
Salary
(annual base at 1 April)1
CEO
£668,382
CFO
£452,109
Rob
Wood
£683,932
£799,327
James
Brotherton
£468,822
£168,077
£1,177,582
£540,683
Salary, benefits and pension
Bonus
PSP
% shareholding guidelines met (200%)
250
200
195
Rob Wood
150
100
50
0
James Brotherton
18
2021
134
11
2022
194
13
2023
Benefits
Pension
Annual bonus2
Annual bonus
measures
Bonus deferral
Performance
Share Plan2
Performance
measures
Shareholding
guidelines
Private medical insurance, car allowance and executive medical screening.
5% of salary in line with the workforce.
150% of salary
150% of salary
75% on adjusted Underlying EBIT with a moderator applied to reflect actual
capital employed in the business versus budget.
25% on key strategic objectives including ESG.
Malus and clawback provisions apply and Committee discretion to adjust
the bonus outcome.
33% of any annual bonus outcome deferred into an award over shares to be
held for two years.
200% of salary
175% of salary
Awards subject to the Group’s performance over a three year period to
31 December 2026:
42.5% – EPS growth.
42.5% – relative TSR (against the FTSE 250 excluding Investment Trusts).
15% – carbon reduction.
Malus and clawback provisions apply and Committee discretion to adjust
the bonus outcome.
200% of salary.
Requirement to retain half of any vested share awards (net of tax) until
guideline is achieved.
Two year post-cessation shareholding guideline.
Note: The value of holdings in 2021 reflects a higher share price on 31 December 2021.
Rob Wood
James Brotherton
1 With effect from 1 April 2024.
2 Subject to approval of the Policy at the 2024 AGM.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 149
Directors’ Remuneration report DIRECTORS’ REMUNERATION POLICY
Our new Directors’
Remuneration Policy will be
put to a binding shareholder
vote at our AGM on 24 April
2024, and will take formal
effect from that date, subject
to shareholder approval.
The Policy will formally apply for three
years unless a new policy is presented
to shareholders before then. Following
approval, all payments to directors will
be consistent with the approved Policy.
The Policy has been prepared in
accordance with Schedule 8: The Large
and Medium-sized Companies and Groups
(Accounts and Reports) Regulations
2008 (as amended) and the UK Listing
Authority’s Listing Rules.
Considerations in determining
our Policy
Remuneration should align with, and
support, our values and culture.
The main goal of our Policy is to promote
the Group’s long-term success. In pursuit
of this objective, the Remuneration
Committee adheres to the following
principles:
Remuneration packages should be clear
and simple.
Pay should be set so that it attracts,
retains and motivates high-calibre
senior executives and focuses them
on the delivery of the Group’s strategic
and business objectives.
Remuneration should be competitive
against appropriate market benchmarks.
A significant proportion of remuneration
should be based on performance-related
components which provides scope to
earn above-market rewards for strong
performance.
Incentive schemes should be subject
to achieving challenging performance
targets based on measures linked to the
Group’s KPIs and the best interests of
our stakeholders.
Remuneration should achieve the
appropriate cascade of approach
across the Group.
Pay design should take due account of
good governance and ensure it promotes
the long-term success of the Group.
The Policy considered the principles of
the 2018 UK Corporate Governance Code
and the voting guidelines of major UK
institutional investor bodies. Under the
Code, the Committee is asked to address
six factors in determining the Policy:
1. Clarity – the Policy is well understood
by our directors and senior executives
and has been clearly articulated to
shareholders and proxy voting agencies.
2. Simplicity – the Committee believes the
current market-standard remuneration
structure is simple and well-understood.
We have purposefully avoided any
complex structures which have
the potential to deliver unintended
outcomes.
3. Risk – our policy and approach to
target setting seek to discourage any
inappropriate risk-taking. Measures
may be a blend of share price, financial
and non-financial objectives and the
targets are appropriately stretching to
help ensure that the risk of inappropriate
actions being taken is mitigated. Malus
and clawback provisions will apply.
4. Predictability – executives’ incentive
arrangements are subject to individual
participation caps. An indication of the
range of values in packages is provided
in the illustration of reward scenario
charts included in the Policy report.
Deferred bonus and PSP awards provide
alignment with the share price and their
values will depend on share price at the
time of vesting.
5. Proportionality – there is a clear link
between individual awards, delivery of
strategy and our long-term performance.
6. Alignment to culture – pay and policies
cascade down the organisation and are
fully aligned to Breedon’s culture.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 150
Directors’ Remuneration report DIRECTORS’ REMUNERATION POLICY
Policy table for executive directors
The table below sets out the main components of the proposed Policy, together with information on how they will operate, subject to approval by shareholders at the AGM.
Purpose and link to strategy
Operation
Maximum opportunity
Performance conditions
l
y
r
a
a
s
e
s
a
B
s
t
fi
e
n
e
B
To provide a
competitive base
salary reflective of
the particular skills,
calibre and experience
of an individual.
Salaries are normally reviewed annually or where
there is a significant change of responsibilities and
typically take effect from 1 April.
Salaries are determined by reference to the skills and
personal performance of the individual.
The Committee takes into account external market
data and pay and employment conditions elsewhere
in the Group when considering increases to base
salary levels.
While there is no maximum salary, increases will
normally be broadly in line with the range of salary
increases awarded (in percentage of salary terms) to
the wider workforce.
Salary increases above this level may be awarded to
take into account individual circumstances, including
a change in the scope or responsibilities of the role,
a change in market practice, a change in the size or
complexity of the business or to reflect development
or performance in role.
Other factors which will be taken into account will
include progression within the role and competitive
salary levels in companies of a broadly similar size
and complexity.
Although there are no formal performance
conditions, any increase in base salary is only
implemented after careful consideration of individual
contribution and performance and having due regard
to the factors set out in the ‘Operation’ column of
this table.
As it is not possible to calculate in advance the cost of
all benefits, a maximum is not pre-determined.
Not performance related.
To provide
market-competitive,
cost-effective benefits
to assist with retention
and recruitment.
Benefits may include private medical insurance,
life assurance, car allowance and executive
medical screening.
Executive directors are eligible for any other
benefits which are introduced for the wider
workforce on broadly similar terms, and for
other benefits that might be provided based on
individual circumstances, if the Committee decides
it is appropriate.
For external and internal appointments or
relocations, Breedon may pay certain relocation,
travel and/or incidental expenses as appropriate.
Any reasonable business-related expenses can be
reimbursed (and any related tax met if determined
to be a taxable benefit).
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023
Directors’ Remuneration report DIRECTORS’ REMUNERATION POLICY
Purpose and link to strategy
Operation
Maximum opportunity
n
o
i
s
n
e
P
To provide employees
with long-term savings
to allow for retirement
planning.
Rewards achievement
of annual financial
and business targets
aligned with the
Group’s KPIs.
Bonus deferral
encourages
long-term shareholding,
supports retention
and discourages
excessive risk taking.
s
u
n
o
b
l
a
u
n
n
A
The Group may offer participation in a defined
contribution pension plan or permit executive
directors to take a cash supplement in lieu of pension
up to the same value, or a mixture of both.
The CEO and CFO, and any future director
appointments, receive pension contributions aligned
with the wider workforce pension contribution,
currently set at 5% of base salary per annum.
For executive directors, the maximum opportunity is
150% of salary.
Bonuses are determined based on measures and
targets that are agreed by the Remuneration
Committee. Bonus measures are typically based
on performance over the relevant financial year.
Any payment is at the discretion of the Committee
and will be subject to the achievement of
performance targets.
Bonuses are not pensionable.
In respect of bonuses earned in respect of
performance in 2024 and thereafter, up to
two-thirds of the annual bonus will be payable in
cash, following the end of the financial year.
At least one-third of the bonus will be compulsorily
deferred in shares for two years under the DSBP.
The vesting of deferred shares is not subject to any
additional performance conditions.
Participants will be entitled to receive the value
of dividends paid between grant and vesting on
deferred shares. Calculation of the payment may
assume dividend reinvestment.
Bonus payments, including deferred bonus awards,
are subject to malus and clawback provisions
(see the ‘Notes to the Policy table’ for further detail).
151
Performance conditions
Not performance related.
Performance measures will be determined each year
and may be based on financial and/or non-financial
objectives.
Financial measures will normally determine the
majority of the bonus opportunity and the balance
may be based on non-financial, strategic, personal
and/or ESG-related objectives.
Where possible, a graduated scale of targets
is normally set for financial measures, with no
payout for performance below a threshold level
of performance.
The Committee has discretion to adjust the formulaic
outcome arising from the performance conditions
in the event that it considers such an outcome is not
consistent with the Company’s overall performance,
taking account of any factors it considers relevant.
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Directors’ Remuneration report DIRECTORS’ REMUNERATION POLICY
Purpose and link to strategy
Operation
Maximum opportunity
Performance conditions
To drive superior
performance of the
Group and delivery of
the Group’s long-term
objectives, aid retention
and align directors’
interests with those
of the Company’s
shareholders.
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Share-based awards will typically be granted
annually to executive directors in the form of nil or
nominal cost options or conditional awards.
The normal annual award level is 200% of salary
for the CEO and 175% of salary for other executive
directors.
The vesting of awards is subject to the satisfaction of
performance conditions, typically measured over a
period of at least three years.
Awards granted to executive directors will be
subject to a two-year holding period following the
end of the performance term, with shares typically
not being released to participants until the end of
the holding period.
A 10% in ten years’ dilution limit governing the issue
of new shares to satisfy all share schemes operated
by the Company applies.
Participants may be entitled to receive the value
of dividends paid between grant and vesting
(or, if applicable, between grant and the earlier of
the expiry of any holding period and the exercise
of an award) on vested shares. The payment may
be in cash or shares and may assume dividend
reinvestment.
Awards are subject to malus and clawback
provisions (see the ‘Notes to the Policy table’ for
further detail).
Performance conditions, and their weightings where
there is more than one metric, are reviewed annually
to maintain appropriateness and relevance.
Awards will be based on measures which could
include, but are not limited to, EPS, relative TSR or
sustainability-based measures. The Committee
has the flexibility to vary the mix of measures or to
introduce new measures for future awards, taking
into account business priorities at the time of grant.
Up to 25% of the award will vest for threshold
performance with full vesting for maximum
performance.
The Committee may alter the vesting outcome if
it considers that the level of vesting is inconsistent
with the Company’s overall performance, taking
account of any factors it considers relevant. This will
help to ensure that vesting reflects overall Company
performance during the period.
Encourages colleague
share ownership and
therefore increase
alignment with
shareholders.
The Company operates Sharesave schemes.
These schemes are open to all colleagues of the
Group, including executive directors, who have
completed the requisite length of service at the
launch of each invitation.
The Company may introduce other all-employee
schemes, if appropriate, over the life of the Policy.
The scheme is subject to the limits set by HMRC from
time to time.
Not performance related.
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Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023
153
Directors’ Remuneration report DIRECTORS’ REMUNERATION POLICY
Purpose and link to strategy
Operation
Maximum opportunity
Encourages
executive directors
to build a meaningful
shareholding in the
Group so as to further
align their interests with
those of shareholders.
Executive directors are required to retain at least
half of any share awards vesting (after the sale of
any shares to settle tax due) until they have reached
the required level of holding.
Shares owned outright by the executive director
or a connected person count towards the
in-employment guideline.
Share awards which remain subject to a
performance condition are not included. Unvested
deferred bonus shares and vested PSP awards
which remain unexercised may count towards the
in-employment guideline on a net of tax basis.
During employment: Executive directors are required
to build and retain a shareholding in Breedon
equivalent to at least 200% of their base salary.
Post-employment: Executive directors are normally
required to hold shares at a level equal to the lower of
their shareholding at cessation and 200% of salary
for two years post-cessation (excluding shares
purchased with own funds and any shares acquired
from share plan awards granted before the approval
of the Policy).
Performance conditions
Not performance related.
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To attract high-calibre
individuals and
appropriately reflect
knowledge, skills and
experience.
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Fees are normally reviewed annually, taking into
account factors such as the time commitment
and contribution of the role and market levels in
companies of comparable size and complexity.
When reviewing fee levels, account is taken of market
movements in the fees of non-executive directors,
Group Board Committee responsibilities and ongoing
time commitments.
Not performance related.
The Chair is paid an all-inclusive fee for all Board
responsibilities.
Fees for the other non-executive directors may
include a basic fee and additional fees for further
responsibilities (for example, chairing of major
Board committees or holding the office of Senior
Independent Director).
Breedon repays any reasonable expenses that a
non-executive director incurs in carrying out their
duties, including travel, hospitality-related and
other modest benefits and related tax liabilities,
if appropriate.
In exceptional circumstances, if there is a temporary
yet material increase in the time commitments for
non-executive directors, the Board may pay extra
fees on a pro-rata basis to recognise the additional
workload.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023
154
Directors’ Remuneration report
DIRECTORS’ REMUNERATION POLICY
Notes to the Policy table
Malus and clawback
All awards under the annual bonus, the
DSBP and the PSP are subject to malus
and clawback provisions which permit the
Remuneration Committee, at its discretion,
to reduce the size of any future bonus
or share award, to reduce the size of any
granted but unvested share award, or to
require the director to make a payment to
the Company.
The circumstances in which the Committee
may apply the malus and clawback
provisions are:
a material misstatement of the
Company’s financial results;
a miscalculation or an assessment of any
condition (including any performance
condition) that was based on an error;
gross misconduct by a director;
the Company becomes insolvent or
otherwise suffers a corporate failure; or
significant impact on the reputation
and potential financial strength of the
Company.
two years from the date of grant of a
share award under the DSBP; and
two years from the normal vesting date
of a share award under the PSP.
Approach to performance measures
Annual bonus performance measures are
selected annually to align with the Group’s
KPIs and strategic imperatives and the
interests of our shareholders and other
stakeholders. Financial measures (for
example, operating profit) will normally
influence the majority of the bonus with
any remainder based on key strategic,
sustainability and/or personal objectives
designed to ensure executive directors are
incentivised across a range of objectives.
When setting targets, the Committee
considers a number of reference points,
including the Company’s own plans,
external expectations and the economic
environment. Only modest rewards are
available at threshold performance levels,
with rewards at stretch requiring material
outperformance of the business plan.
Details of the specific measures used for
the annual bonus are set out in the Annual
Report on Remuneration.
Malus and clawback provisions may apply
up to:
two years from the date of payment in
respect of cash bonus payments;
PSP performance measures will be selected
to: provide a robust and transparent
basis on which to measure the Group’s
performance; link remuneration outcomes
to delivery of the business strategy over
the longer term; and provide strong
alignment between senior management
and shareholders. The Policy provides for
the Committee to alter the PSP measures
and weightings from year to year. This is to
ensure that the Committee can continue
to incentivise performance appropriately,
if the Group’s strategic ambitions evolve
over the life of the Policy. The Committee
will review the calibration of targets
annually to ensure they remain appropriate
and sufficiently challenging, taking into
account a number of different factors.
As with the annual bonus, these may
include the Group’s business plans and
strategy, external forecasts and the wider
economic environment.
The Committee retains the discretion
to amend the bonus payout and to alter
the PSP vesting level if the outcome
does not reflect its assessment of overall
performance over the relevant periods.
Differences in remuneration policy
between executive directors and
other employees
The overall approach to reward for
employees across the workforce is a
key reference point when setting the
remuneration of the executive directors.
When reviewing the salaries of the
executive directors, the Committee pays
close attention to pay and employment
conditions across the wider workforce
and increases for executive directors will
be set in the context of increases for the
general workforce.
The annual bonus plan cascades down
the business and covers c.500 employees
with payouts usually based on the similar
measures and targets applying to executive
directors. The bonus opportunity varies
by role.
A key difference between the remuneration
of executive directors and that of our
other employees is that, overall, at senior
levels, remuneration is increasingly long
term and ‘at risk’, with an emphasis on
performance-related remuneration
linked to business performance, and
share-based remuneration. This ensures
that remuneration at senior levels will
increase or decrease in line with business
performance and provides alignment
between the interests of executive directors
and shareholders. In particular, long-term
incentives are provided to a small number
of individuals across the Group, as they are
reserved for those considered to have the
greatest potential to influence overall levels
of performance.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Directors’ Remuneration report DIRECTORS’ REMUNERATION POLICY
Flexibility, discretion and
judgement
The Committee operates under the
powers it has been delegated by the
Board. In addition, it complies with rules
that are either subject to shareholder
approval (PSP and DSBP) or to approval
by the Board (annual bonus scheme).
These rules provide the Committee with
certain discretions which serve to ensure
that the implementation of the Policy is
fair, both to the individual director and to
shareholders. The Committee has discretion
to set components of remuneration within
a range, from time to time. The extent of
such discretion is set out in the relevant
rules, the maximum opportunity or the
performance metrics section of the Policy
table. To ensure the efficient administration
of the variable incentive plans outlined
above, the Committee will apply certain
operational discretions.
These include the following:
selecting participants in the plans on
an annual basis;
determining the timing of grants of
awards and/or payments;
determining the quantum of awards
and/or payments (within the limits set
out in the Directors’ Remuneration
Policy table);
determining the choice and adjustment
of performance measures and targets for
each incentive plan in accordance with
the Policy set out above and the rules of
the relevant plan;
determining the extent of vesting based
on the assessment of performance, and
judgement relating to measurement of
performance in certain circumstances
such as a change of control or
reconstruction or other corporate events;
whether malus and clawback shall be
applied to any award in the relevant
circumstances and, if so, the extent to
which it shall be applied;
making appropriate adjustments as
required in certain circumstances, for
instance changes in capital structure;
determining ‘good leaver’ status for
incentive plan purposes and applying
the appropriate treatment; and
undertaking the annual review of
performance measures including their
weightings and setting targets for the
annual bonus plan and other incentive
schemes, where applicable, from year
to year.
If an event occurs which results in the
annual bonus or PSP performance
conditions and/or targets being deemed
no longer appropriate (for example,
material acquisitions or divestments),
the Committee has the ability to adjust
appropriately the measures and/or targets
and alter weightings, provided that the
revised conditions are not materially less
challenging than the original conditions.
155
Any use of this discretion would, where
relevant, be explained in the Directors’
Remuneration Report and may, as
appropriate, be the subject of consultation
with the Company’s major shareholders.
Legacy arrangements
For the avoidance of doubt, the Committee
may approve payments to satisfy
commitments agreed prior to the approval
of this Directors’ Remuneration Policy,
that have been disclosed to shareholders
previously. The Committee may approve
payments outside this Policy in order to
satisfy legacy arrangements made to an
employee prior to (and not in contemplation
of) promotion to the Board.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Directors’ Remuneration report
DIRECTORS’ REMUNERATION POLICY
156
Illustration of the application of the Policy
Illustration of the application of policy
(£000)
£3,730
CEO
£3,061
18%
43%
36%
£1,557
22%
£722
32%
33%
27%
100%
46%
24%
19%
£1,032
19%
33%
48%
40%
35%
25%
33%
29%
21%
£495
100%
Minimum
Target
Maximum
Maximum
with share price
growth
Minimum
Target
Maximum
Maximum
with share price
growth
Total Fixed Remuneration
Annual Bonus
PSP
Share Price Growth
The balance between fixed and variable
‘at risk’ elements of remuneration changes
with performance. Our Policy results in
a significant proportion of remuneration
received by executive directors being
dependent on Company performance.
The charts above illustrate how the policy
would function for minimum, on target and
maximum performance for each executive
director in 2024.
Assumptions for the chart above:
Minimum: comprises fixed pay made up
of base salary levels (applying from 1 April
2024), the value of pension at 5% of
annual basic salary and other benefits
estimated at the value shown in the single
total figure of remuneration table for 2023.
On-target: bonus achieved at 50% of the
maximum opportunity, and the on-target
level of vesting under the PSP taken to be
25% of the face value of the award at grant.
Maximum: full bonus achieved and PSP
vesting in full i.e. 150% of salary bonus
payout and PSP awards to the value of
200% of salary and 175% of salary vesting
for the CEO and CFO respectively.
Share price appreciation of 50% has been
assumed for the PSP awards under the
final ‘maximum with growth’ scenario
(no share price appreciation has been
assumed for the first three sections).
Amounts relating to all-employee
share schemes have, for simplicity,
been excluded from the charts.
Service agreements/letters of appointment and loss of office
CFO
Each director has a service agreement or letter of appointment with the Company
as follows:
£2,360
£1,964
17%
Director
Executive directors
Service agreements/
letters of appointment
and loss of office
Date of contract/
letter of appointment
following Admission
Notice period
From the
director
From the
Company
Rob Wood
27 February 2014
10 May 2023
12 months
12 months
James Brotherton
17 November 2020
10 May 2023
12 months
12 months
Non-executive directors
Amit Bhatia
Carol Hui
1 August 2016
3 March 2020
Pauline Lafferty
17 June 2021
26 April 2023
26 April 2023
26 April 2023
Helen Miles
Clive Watson
18 November 2020
26 April 2023
24 July 2019
26 April 2023
–
–
–
–
–
–
–
–
–
–
The executive directors, Rob Wood and
James Brotherton, entered into new service
agreements with new Breedon on 10 May
2023 in order that their arrangements
reflect the revised structure of the Group
following Admission to the Premium Listing
Segment of the Official List and to trading
on the Main Market. The terms of the Service
Agreements remain substantially the same
as those in place with Breedon prior to
Admission. The non-executive directors,
Amit Bhatia, Carol Hui, Pauline Lafferty,
Helen Miles and Clive Watson, entered
into new letters of appointment with new
Breedon on 26 April 2023.
There are no provisions in the Service
Agreements for contractual benefits
(for example, any enhanced redundancy
payments and/or any ‘exit’ bonus) to be
payable to the executive directors in the
event of termination of their respective
Service Agreements.
The Board’s overriding approach to
payments for loss of office is to act in
shareholders’ interests. The principles on
which payments for loss of office will be
approached are set out opposite.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 157
Directors’ Remuneration report DIRECTORS’ REMUNERATION POLICY
Notice periods
and payments in
lieu of notice
Annual bonus
The maximum notice period for executive directors is 12 months. The Committee retains the right to terminate an executive director’s
service agreement by making a payment in lieu of notice, consisting of salary, cost of benefits and loss of pension provision for the
notice period (or the unexpired portion of it). It is the Company’s policy to have regard to the executive director’s duty to mitigate their
loss in respect of those contractual rights that they would otherwise be entitled to receive.
The payment of bonus for the year in which an executive director leaves will take into consideration the circumstances of the
individual’s departure and their contribution up to the leaving date. Any amounts paid will be pro-rated for the time served and will,
subject to performance, be paid at the usual time (although the Committee retains discretion to pay the annual bonus award earlier).
Any bonus earned for the year of departure and, if relevant, for the prior year may be paid wholly in cash at the Committee’s discretion.
On a change of control, annual bonuses will either continue for the full year or be paid to the time of completion on a pro-rata basis.
Deferred share bonus awards will normally lapse on cessation of employment. However, if an executive director leaves due to death,
ill-health, injury, disability, retirement with the agreement of the Committee (a good leaver), sale of their employing company or
business out of the group, or any other reason at the discretion of the Committee, their award shall either vest on the normal vesting
date or, at the discretion of the Committee, at the date of cessation of employment. On a change of control, DSBP awards will generally
vest in full on the date that control alters, unless the Committee permits (or requires) awards to roll over into equivalent shares in the
acquiror.
PSP
PSP awards will usually lapse on cessation of employment. However, if an executive director leaves due to reason of a ‘good leaver’
their award shall either vest on the normal vesting date or, at the discretion of the Committee, at cessation of employment. In either
case, the extent of vesting will be based on the satisfaction of performance conditions and, unless the Committee determines
otherwise, a pro-rata reduction for time served.
On a change of control, any vesting of awards will be subject to assessment of performance against the performance conditions and
will normally be pro-rated unless the Committee determines otherwise.
Other payments
Payments may be made in the event of a loss of office under the Sharesave scheme, which is governed by its rules and the applicable
legislation and which does not provide discretion in the case of leavers.
In appropriate circumstances, other payments may be made, such as in respect of accrued holiday and outplacement and legal fees
and the Company may pay any statutory entitlements or settle compromise claims in connection with a termination of employment,
where considered in the best interests of the Company.
Where the Committee retains discretion, it will be used to provide flexibility in certain situations, taking into account the circumstances of the director’s
departure and performance.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Directors’ Remuneration report DIRECTORS’ REMUNERATION POLICY
158
Recruitment policy
Base salary
Benefits
Annual bonus
Performance
Share Plan
Replacement or
buyout awards
The Policy aims to facilitate the
appointment of individuals of sufficient
calibre to lead the business, execute
Breedon’s strategy effectively and promote
our long-term success for the benefit of
our shareholders and other stakeholders.
When appointing a new executive
director, the Committee’s approach when
considering the overall remuneration
arrangements in the recruitment of a new
executive director is to take account of the
calibre, expertise and responsibilities of the
individual, his or her remuneration package
in their prior role, and market rates.
Remuneration will be in line with our Policy
and the Committee will not pay more than is
necessary to facilitate recruitment. Further
details are provided in the table.
Depending on the timing and responsibilities
of the appointment, it may be necessary to
set different annual bonus/PSP performance
measures and targets from those applicable
to awards made to other senior executives.
Any incentive awards granted to employees
prior to their promotion to the Board will
be permitted to vest on their original
terms. The terms of appointment for
a non-executive director would be
in accordance with the Policy for
non-executive directors as set out
in the Policy table.
The Committee will set a base salary appropriate to reflect the calibre, experience and responsibilities of the new
appointee. In arriving at a salary, the Committee may consider, among other things, the market rate for the role, internal
relativities and his or her salary level prior to joining the Board.
The Committee has the flexibility to set the salary of a new executive director at a lower level initially, with a series of
planned (above workforce) increases implemented over the following few years to bring the salary to the desired
positioning, subject to individual performance.
In certain circumstances, the Committee has the ability to set the salary of a new executive director at a rate higher than
the market level to reflect the criticality of the role and the experience and performance of the individual.
Benefits will normally be consistent with the principles of the Policy set out in the Policy table. The Company may award
certain additional benefits and other allowances including, but not limited to, those to assist with relocation support,
living and transportation expenses, educational costs for children and, if applicable, tax equalisation to allow flexibility
in employing an overseas national.
The maximum bonus opportunity is 150% of base salary.
The maximum opportunity is 200% of base salary. This may be used on recruitment and on an initial and ongoing basis,
if appropriate.
In addition to the above, the Committee may offer additional cash and/or share-based elements in order to ‘buy out’
remuneration relinquished on leaving a former employer. For the avoidance of doubt, such awards are not subject to
the annual bonus and PSP individual limit caps. In the event of Breedon acquiring or merging with a business, awards
held at the former employer may be rolled over into awards over Breedon shares.
In the event that such a buyout is necessary to secure the services of an executive director, the structure of any award
or payment will mirror, as far as is possible, the arrangements in place at the incoming executive director’s previous
employer.
Any share awards made in this regard may have no performance conditions, or different performance conditions,
or a shorter vesting period compared with the Company’s existing plans, as appropriate.
Awards may be made under the existing incentive schemes or as special one-off arrangements that are permitting
under the Listing Rules. Shareholders will be informed of any buyout arrangements at the time of the executive
director’s appointment or in the next Directors’ Remuneration report.
Notice periods
Notice periods shall be up to 12 months.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 159
Directors’ Remuneration report DIRECTORS’ REMUNERATION POLICY
External appointments for
executive directors
Consideration of
shareholders’ views
The Company recognises that its executive
directors may be invited to become non-
executive directors of other companies.
Such non-executive duties can broaden a
director’s experience and knowledge which
can benefit Breedon. Subject to approval by
the Board, executive directors are allowed
to accept non-executive appointments,
provided that these appointments are not
likely to lead to conflicts of interest, and the
Committee will consider its approach to the
treatment of any fees received by executive
directors in respect of non-executive roles
as they arise.
In its 2023 review of executive remuneration
as part of Breedon’s move to the Main
Market, the Committee conducted a
comprehensive consultation exercise which
elicited feedback from the Company’s
largest shareholders. The Committee
was very grateful for the views received.
The feedback was used constructively
to shape the 2024 Directors’
Remuneration Policy.
The Committee is committed to an
ongoing dialogue with shareholders
and welcomes feedback on directors’
remuneration. The Committee seeks to
engage directly with major shareholders
and their representative bodies on changes
to the Policy. The Committee considers
shareholder feedback received in relation
to the remuneration-related resolutions
each year following the AGM. This,
together with any additional feedback
received from time to time (including any
updates to shareholders’ remuneration
guidelines), is then considered as part
of the Committee’s annual review of the
Policy and its implementation.
Consideration of employment
conditions across the Group
The Committee closely monitors the pay
and conditions of the wider workforce and
the design of the Directors’ Remuneration
Policy is informed by the policy for
employees across the Group.
While employees are not formally consulted
on the design of the Policy, the Board will
receive views through our designated
non-executive director for workforce
engagement on a variety of areas including
pay. The views are considered by the
Committee in determining the approach to
senior executive pay design and outcomes.
Differences in pay policy for
executive directors compared
to the wider workforce
There are some differences in the
structure of the Policy for the executive
directors compared to that for other
employees within the organisation, which
the Committee believes are necessary
to reflect the differing levels of seniority
and responsibility. At senior levels,
remuneration is increasingly long-term,
and ‘at risk’ with an increased emphasis
on performance-related pay and
share-based remuneration. This ensures
the remuneration of the executives
is aligned with both the long-term
performance of the Company and the
interests of shareholders.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 160
Directors’ Remuneration report ANNUAL REPORT ON REMUNERATION
This section of the report has been
prepared in accordance with Part 3 of
The Large and Medium-sized Companies
and Groups (Accounts and Reports)
Regulations 2008 (as amended) and Rule
9.8.6 of the Listing Rules. The Directors’
Remuneration Report (excluding the
Directors’ Remuneration Policy), comprising
the Annual Statement to shareholders by
the Remuneration Committee Chair and the
Annual Report on Remuneration will be put
to a to a single advisory shareholder vote at
the AGM on 24 April 2024.
This part of the report comprises five sections:
A. Remuneration for 2023
B. Directors’ share ownership and share interests
C. Pay comparison
D. Remuneration Committee membership, governance and voting
E. Implementation of Remuneration policy in 2024
A. Remuneration for 2023
Single total figure of directors’ remuneration
The total remuneration of the directors for the year ended 31 December 2023 and the prior year is shown in the table below:
Director
Executive directors
Rob Wood
James Brotherton
Non-executive directors
Amit Bhatia
Carol Hui
Pauline Lafferty
Helen Miles
Clive Watson
Salary/fees
£’000
Benefits1
£’000
Pension2
£’000
Fixed pay
Sub-total
£’000
Annual
bonus3
£’000
PSP awards
vesting4
£’000
Variable pay
Sub-total
£’000
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
2022
2023
Total
£’000
2022
636
430
605
412
20
20
183
64
69
54
74
175
61
67
52
71
–
–
–
–
–
21
21
–
–
–
–
–
28
19
26
18
684
469
652
451
799
541
752
509
290
168
–
–
–
–
–
–
–
–
–
–
183
64
69
54
74
175
61
67
52
71
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
464
–
–
–
–
–
–
1,089
709
1,216
509
1,773
1,178
1,868
960
–
–
–
–
–
–
–
–
–
–
183
64
69
54
74
175
61
67
52
71
1 Benefits paid to Rob Wood and James Brotherton comprise the provision of private medical insurance and a car allowance.
2 Rob Wood and James Brotherton received a salary supplement in lieu of a contribution to a pension arrangement.
3 Further information in relation to the bonuses payable to Rob Wood and James Brotherton is given on pages 161 to 163 and these bonuses were earned pursuant to the terms of the 2023 annual bonus scheme.
4 Both executive directors were granted PSP awards on 23 April 2021 which are due to vest at 50% on 23 April 2024. As the vesting date falls after the remuneration report is signed off, the value of these awards has been estimated using the
three-month average share price to 31 December 2023 (337.5p). The actual value of these awards at the point of vesting will be set out in next year’s remuneration report. The 2022 PSP figures have been updated to reflect the actual share
price on the date of vesting (337.0p and the value of accrued dividends during the vesting period).
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Directors’ Remuneration report ANNUAL REPORT ON REMUNERATION
Annual bonus for the year ended 31 December 2023 (audited)
Objectives
Assessment
161
The annual bonus opportunity for each executive director was 125% of base salary.
The 2023 annual bonus was based on the achievement of stretching Underlying EBIT
targets for 75% with the remaining 25% based on corporate objectives.
Home Safe and Well programme
to progress the Group’s safety
culture during 2023.
The Group’s first Safety Culture survey was implemented to establish
a baseline for improvement.
A programme of training for operational managers and supervisors
across the Group was delivered as part of our Home Safe and
Well programme.
More work on safety leadership will be incorporated into the
management programme designed for 2024.
Achievement: Mostly met.
Underlying EBIT (75% of the total bonus)
Threshold level of
Underlying EBIT
(10% payout)
£m
Maximum level of
Underlying EBIT
£m
Actual level of
Underlying EBIT
£m
Actual level of
Underlying EBIT
after application of
capital employed
moderator
£m
Bonus earned
(percentage of
maximum) %
135.0
155.0
156.2
156.2
100
The rules of the annual bonus scheme provide that the actual level of Underlying EBIT
achieved is subject to the capital moderator. In 2023 the impact of the capital moderator
on the Underlying EBIT achieved was nil (2022: £0.3m Underlying EBIT decrease)
as increases in capital employed from acquisition of businesses were fully offset by a
stronger than budgeted working capital performance.
The Group’s estimated weighted average pre-tax cost of capital at the start of the year
was 13.8%.
Corporate objectives (25% of the total bonus)
Objectives
Assessment
A measured improvement in
customer satisfaction across
all divisions.
All divisions measure customer satisfaction through NPS.
During 2023 all four divisions achieved very good scores with GB
Materials and Cement having made excellent progress on the back
of improvement plans put in place in 2022.
Achievement: Met in full.
Achieve a 2% improvement in
Group carbon intensity and
develop science based carbon
reduction targets.
Carbon intensity per tonne was reduced by 5% and science based
targets have been developed and submitted for verification in 2024
with a roadmap to support their delivery.
Achievement: Met in full.
Improve sales revenue from
products with enhanced
sustainability attributes; and
launch, monitor and start
to report on the proportion
of revenue achieved from
products that meet the
Breedon Balance criteria.
Sales from concrete and asphalt products with enhanced
sustainability attributes represented 40% of revenue for the
year which met the target set and was up from 37% in 2022.
The Breedon Balance range was launched with sales figures being
tracked.
Achievement: Met in full.
Detailed disclosure of ESG
performance data to the CDP.
First Climate Change and Water Security Disclosure submitted to
CDP and B and C score achieved respectively.
Achievement: Met in full.
Further embed the social value
methodology developed in 2022
and demonstrate the positive
impact to 25,000 people by the
end of 2023.
Over 25,000 people positively impacted during the year and the
Group is now over 55% of the way to the 2030 target.
Achievement: Met in full.
As part of the Group’s
digitalisation strategy determine
and scope a new Group-wide
integrated finance platform.
A detailed assessment was made in 2023 of the requirements of the
business for a future state finance platform.
Following an assessment of leaders in finance solutions, a partner
was chosen from a shortlist and was approved by the Board in
November 2023.
The appointment of a CIO was made at the end of 2023 to progress
our digitalisation strategy in 2024.
Achievement: Met in full.
The above objectives made up 25% of the total bonus for the CEO and CFO.
The Committee determined that very strong progress had been made against each of
the objectives and targets and this resulted in a payout of 24.5%.
Corporate objectives for 2023 were based 15% on sustainability and 10% on strategic
priorities goals. The table provides disclosure of the objectives against each area and
actual performance.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 162
Directors’ Remuneration report ANNUAL REPORT ON REMUNERATION
Overall the bonus outcome for the year, taking into account financial performance and the
delivery of corporate objectives, was 99.5% of maximum. The overall bonus for the period
in service as a director was as follows:
Rob Wood
James Brotherton
Maximum bonus
opportunity
(% of salary)
125%
125%
Bonus payout
(% of maximum)
Bonus earned
(£’000s)
124%
124%
799
541
The Remuneration Committee believes these outcomes fairly reflect the performance of
the business over the 2023 financial year and therefore no adjustment is required to the
formulaic outcomes. In arriving at this conclusion, the Committee recognised the record
profit delivered in 2023 in a very challenging macroeconomic environment. The Committee
also considered progress on strategic delivery and sustainability objectives delivered
during the year.
2021 PSP vesting outcome in respect of performance to 31 December 2023 (audited)
Awards were granted under the PSP on 23 April 2021, with vesting subject to two
performance conditions, each with an equal weighting – Underlying Diluted EPS growth
and relative TSR against the constituents of the FTSE 250 (excluding investment trusts).
The EPS performance over the period was such that this part of the award will vest in full.
For TSR, the Company ranked below median of the comparator group and therefore none
of this part of the award will vest. As such, 50% of the awards will vest on 23 April 2024.
Vested awards are subject to a two-year post-vesting holding period.
Number of PSP
awards granted
‘000
Performance
outcome
%
Number of
awards vesting
‘000
Value due to
share price
appreciation
£’000
PSP single total
figure value
£’000
Rob Wood
James Brotherton
172
100
50%
50%
86
50
(141)
(82)
290
168
The value of these awards as set out in the above table is based on the average three-month
share price to 31 December 2023 of 337.5p.
The Committee believes the vesting outcome is a fair reflection of performance over
the three-year period and therefore no discretion has been applied to amend the
formulaic outcomes.
Payments to former directors (audited)
Pat Ward’s 2020 PSP award vested in August 2023. In accordance with the EPS outcome
set out in the 2022 Annual Report, the 2020 award vested in full. Pat’s award was pro-rated
to reflect his time served as an employee of Breedon Group.
The performance period for both measures ended in December 2023 and the awards
will become exercisable on the third anniversary of grant subject to continued service.
These awards are subject to a two-year holding period.
Payments for loss of office (audited)
There were no payments for loss of office during the year.
Relative TSR (50%)
Threshold
(25% vesting)
Maximum
(100% vesting)
Median rank
(1.1)% TSR
Median + 7.5%p.a.
21.4% TSR
Actual
(9.2)% TSR,
below median
ranking
Vesting (% of
maximum)
0.0%
EPS (50%)1
26.5p
32.5p or higher
33.9p
100.0%
1 The EPS targets were adjusted for the one-for-five share consolidation undertaken as part of the move to the
Main Market.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 163
Directors’ Remuneration report ANNUAL REPORT ON REMUNERATION
Pro-rata single total figure of remuneration (audited)
B. Directors’ share ownership and share interests
The following table sets out the single figure of total remuneration for executive directors
in 2023 for the period since qualifying services were provided by the directors to the new
Breedon holding company, 17 May 2023 to 31 December 2023.
Share awards granted in 2023 (audited)
The table below provides details of PSP awards made to executive directors on 11 April 2023.
Salary/
Fees1
£’000
Benefits
£‘000
Pension
supplement
cash
£‘000
Fixed pay
sub-total
£‘000
Bonus
£’000
PSP awards
vesting2
£‘000
Variable
pay
sub-total
£’000
Total
£‘000
2023
Executive directors
Rob Wood
James
Brotherton
401
271
Non-executive directors
Amit Bhatia
Clive Watson
Carol Hui
Helen Miles
Pauline
Lafferty
115
46
40
34
43
13
12
–
–
–
–
–
18
12
–
–
–
–
–
432
501
290
791
1,223
295
339
168
507
802
115
46
40
34
43
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
115
46
40
34
43
1 Salary/fees, pension, benefits and bonus values reflect pay for the period between 17 May 2023 and
31 December 2023.
2 The PSP values relate to the award granted in April 2021 and their full estimated value as set out in the single figure
table on page 160.
Director
Type of award
Rob Wood
Conditional
shares
James Brotherton Conditional
shares
Percentage
of salary
Basis of
award
Number of
shares under
award1
‘000
Face value
of award
£’0001
Percentage
vesting at
threshold
End of
performance
period
150%
150%
272
184
964
652
25%
31 Dec 2025
25%
31 Dec 2025
1 The number of awards was based on a share price of 355.0p being the middle market closing price on the dealing
day prior to grant. This reflects the rollover grant of 16 May 2023 due to the 5:1 share consolidation.
The vesting of the above awards is subject to the achievement of two performance
conditions, measured independently.
Based on Adjusted Underlying
Diluted EPS
Less than 33.25p
Equal to 33.25p
Relative TSR
Below median
Median TSR
Between 33.25p and 37.0p
Between median and upper quartile
Percentage of award relating
to that part of the performance
condition that vests
0%
25%
Between 25% and 100% on a
straight-line basis
37.0p or more
Upper quartile TSR or better
100%
Comparative values for earnings per share measures have been restated to reflect the
impact of the 5:1 share consolidation undertaken during the period.
The EPS condition for 50% of the award measures the Group’s compound annual growth
rate in the Group’s Adjusted Underlying Diluted EPS over the performance period. No
portion of the EPS element may vest unless the Group’s full EPS for 2025 is at least 33.25p,
for which 25% of the EPS element may vest, rising on a straight-line basis to full vesting of
the EPS element for EPS 37.00p or better.
The other 50% of the award compares the Group’s TSR performance over the performance
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Directors’ Remuneration report ANNUAL REPORT ON REMUNERATION
164
period relative to the constituents of the FTSE 250 Index (excluding investment trusts) as
at the start of the performance period. No portion of the TSR element may vest unless the
Group’s TSR performance over the performance period at least equals the median TSR
performance within the comparator group, for which 25% of the TSR element may vest, rising
on a straight-line basis to full vesting of the TSR element for an upper quartile ranking or better.
Outstanding PSP and SAYE awards (audited)
PSP
Rob Wood
Total
James
Brotherton
Total
Year of
award
2020
2021
2022
2023
2021
2022
2023
Awards
held as at
1 Jan 2023
‘000
Granted
‘000
Vested1
‘000
Lapsed1
‘000
131
172
229
–
532
100
155
–
255
–
–
–
272
272
–
–
184
184
137
–
–
–
137
–
–
-
0
–
–
–
–
0
–
–
-
0
Movements in the year
Awards held
as at
31 Dec 2023
‘000
Vesting date
– August 2023
April 2024
April 2025
April 2026
April 2024
April 2025
April 2026
172
229
272
673
100
155
184
439
1 2020 PSP - additional dividend shares 6,347 accrued on vested shares.
* Comparative values for earnings and dividend per share measures have been restated to reflect the impact of the
5:1 share consolidation undertaken during the year.
SAYE
Rob Wood
James Brotherton
Shares under
option
‘000
11
8
Option date
Maturity date
1 April 2019
1 May 2024
1 April 2021
1 May 2026
* Comparative values for earnings and dividend per share measures have been restated to reflect the impact of the
5:1 share consolidation undertaken during the year.
Beneficial interests (audited)
The share interests of each director as at 31 December 2023 (together with interests held
by connected persons) are set out in the table below. To align executive directors with
the interests of shareholders, the Committee has implemented shareholding guidelines
for executive directors and key senior colleagues. The guidelines require that executive
directors build up and maintain an interest in the Ordinary shares of the Company that is
200% of their annual base salary and retain half of any vested share awards (net of any
taxes due) until this guideline is met.
Shareholdings for directors who have held office during the year ended 31 December 2023
are set out as a percentage of salary or fees in the table below.
No. of shares
owned
outright
(including
connected
persons)
31 Dec 2023
‘000
No. of shares
owned
outright
(including
connected
persons)
31 Dec 2022
‘000
Vested but
unexercised
share
awards
Unvested
shares
subject to
performance
conditions
‘000
SAYE
Options
held
‘000
Shareholding
as a % of
salary as at
31 Dec 20231
‘000
Shareholding
guidelines
(200% of
salary) met?
Executive directors
Rob Wood
James
Brotherton
344
15
271
15
Non-executive directors
Amit Bhatia
100
100
Carol Hui
Pauline Lafferty
Helen Miles
Clive Watson
4
0
0
39
0
0
0
25
0
0
–
–
–
–
–
673
439
–
–
–
–
–
11
8
–
–
–
–
–
194
12
–
–
–
–
–
No
No
–
–
–
–
–
Term
(months)
Options matured
during the year
1
Includes the value of beneficially owned shares and any vested but unexercised share awards on a net of tax basis.
* Comparative values for earnings and dividend per share measures have been restated to reflect the impact of the
60
60
Nil
Nil
5:1 share consolidation undertaken during the year.
Executive directors are expected to build and maintain a shareholding equivalent to
200% of their base salary. There was no change in the interests set out above between
31 December 2023 and 6 March 2024.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 165
Directors’ Remuneration report ANNUAL REPORT ON REMUNERATION
C. Pay comparison
CEO pay ratio
Percentage change in directors’ remuneration versus employee pay
The table below shows the percentage changes in base salary or fees, taxable benefits
and annual bonus of each director in the financial year indicated, compared to the
previous financial year, together with the approximate comparative average figures for
those employees who were employed for a full 12 months in the UK. In respect of the 2023
financial year, this section of the employee population (comprising approximately 2,700
individuals across a number of levels) is considered to be the most appropriate group for
comparison purposes, as its remuneration is controlled by the Group and is subject to
similar external market forces as those that relate to the executive directors’ remuneration.
This is a new disclosure for Breedon and will build up over time to show five years’ worth
of data.
Rob Wood
James Brotherton
Amit Bhatia
Carol Hui
Pauline Lafferty
Helen Miles
Clive Watson
Workforce average 1
Salary/Fees
Benefits
Annual bonus
2023
4.5%
4.5%
4.6%
4.9%
3.0%
3.8%
4.2%
6.6%
(4.8)%
(4.8)%
–
–
–
–
–
6.3%
6.3%
–
–
–
–
–
1.0%
9.6%
In line with the reporting regulations, set out below is the ratio of CEO pay compared
to the pay of UK full-time equivalent colleagues of the Group for the financial year ended
31 December 2023. This is another new disclosure for Breedon and we will build up to
five years’ worth of data over time. We expect the pay ratio to vary from year to year,
driven largely by variability in incentive outcomes for the CEO, which will significantly
outweigh any other general employee pay changes at Breedon. The CEO single
total figure remuneration of £1,777,0811 is used in the table below. The Committee will
monitor the CEO pay ratio over time to check that it appears reasonable and is consistent
with the Company’s wider policies on colleague pay, reward and progression. We have
chosen to use Option A in calculating the ratios, which is a calculation based on the pay
of all UK employees on a full-time equivalent basis, as this option is considered to be
more statistically robust. The ratios are based on total pay and benefits inclusive of
short-term and long-term incentives applicable for the respective financial year (1 January
to 31 December). The reference employees at the 25th, 50th and 75th percentile have been
determined by reference to pay and taxable benefits as at the 30 November 2023 with the
final month included on a 1/12 basis.
2023
Method
Option A
25th percentile
pay ratio
Median pay ratio
75th percentile
pay ratio
51.8:1
43.1:1
33.8:1
The Committee is satisfied that the resulting figures are reasonable and are appropriately
representative for the purposes of the CEO pay ratio calculations. The ratio is largely driven
by the high bonus payouts reflecting record level of profit delivered in 2023.
1 The salaries for part time employees have been pro-rated to full time equivalents. Weekly paid employees have
been excluded from the report as the pay conditions are different from those employees who are monthly paid
making comparison misleading.
Set out in the table below is the base salary and total pay and benefits for each of the
percentiles.
Salary
Total pay and benefits
25th percentile
Median
75th percentile
£33,072
£34,302
£32,306
£41,275
£47,000
£52,586
1 This figure is calculated as per the regulatory requirements to include life assurance benefit.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 166
Directors’ Remuneration report ANNUAL REPORT ON REMUNERATION
Total shareholder return performance graph and CEO total pay
The following graph illustrates the total return, in terms of share price growth and dividends
on a notional investment of £100 in Breedon over the last seven years relative to the FTSE
250 Index (excluding investment trusts).
This index was chosen by the Committee as Breedon is a constituent of the index and
it provides an indicator of general UK market performance for companies of a broadly
similar size.
TSR Chart
150
120
90
60
Dec-16
Dec-17
Dec-18
Dec-19
Dec-20
Dec-21
Dec-22
Dec-23
Breedon Group
FTSE 250 (excluding investment trusts)
Source: Datastream (a Refinitiv product).
The total remuneration figures, including annual bonus and vested PSP awards (shown as a
percentage of the maximum that could have been achieved) for the CEO for each of the last
seven financial years are shown in the table below.
Year
2023
2022
2021
2021
2020
2019
2018
2017
CEO
Rob Wood
Rob Wood
Rob Wood1
Pat Ward2
Pat Ward
Pat Ward
Pat Ward
Pat Ward
CEO single figure
of total remuneration
£’000
Annual bonus payout
against maximum
opportunity %
PSP vesting rates %
1,773
1,868
1,722
1,210
1,444
2,076
1,334
1,056
99.5
97.8
100.0
100.0
100.0
82.6
60.5
67.1
50.0
100.0
70.8
70.8
0
61.9
83.5
100
1 Total remuneration for Rob Wood including the period 1 January 2021 to 31 March 2021 when he served as Group
Finance Director.
2 Pat Ward’s remuneration above is for the period ended 31 March 2021 when he retired from the Board.
Relative importance of the spend on pay
The following table shows the Company’s actual spend on pay for all Group colleagues
relative to dividends:
Staff costs1
Dividends2
1 Note 5 of the consolidated financial statements.
2 Dividend paid to Breedon Group shareholders.
2023
£m
208.3
37.3
2022
£m
192.2
30.5
% change
%
8.4
22.3
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 167
Directors’ Remuneration report
ANNUAL REPORT ON REMUNERATION
D. Remuneration Committee membership, governance
Shareholder voting
and voting
Remuneration Committee membership
The Committee in 2023 comprised Pauline Lafferty as Chair of the Committee, Carol Hui,
Helen Miles and Clive Watson all independent non-executive directors. The Committee
met five times during the year and all Committee members were present.
The Chair and selected members of management (including the CEO, the CFO and Group
People Director) are invited to attend meetings where appropriate. The Deputy Company
Secretary is the secretary to the Committee. Attendees are not involved in any decisions
and are not present for any discussions regarding their own remuneration. The Company
Chair may attend meetings but is not present when his own remuneration arrangements
are being decided.
Independent advisers
The Committee takes account of information from both internal and independent
sources, including FIT Remuneration Consultants LLP (FIT) who act as the Committee’s
independent adviser. FIT was appointed by the Committee as a result of a tender process
and advised on all aspects of senior executive remuneration, including remuneration
trends, corporate governance and shareholder views.
FIT is a founder member of the Remuneration Consultants’ Group and complies with its
Code of Conduct, which sets out guidelines to ensure that its advice is independent and
free of undue influence. The Committee reviews the performance and independence
of its advisers on an annual basis. The Committee was satisfied that FIT’s advice was
independent and objective. Breedon incurred fees of £77,996 excluding VAT during 2023
relating to Committee advice. FIT billed on a time and materials basis and did not provide
any other services other than share plan implementation advice to Breedon during 2023.
Breedon submitted the Directors’ Remuneration report for a shareholder vote at the AGM
held on 26 April 2023. The vote was advisory and received the following support.
For
Against
Total votes cast (for and against)
Votes withheld
Directors’ Remuneration report (2023)
Total number of votes
% of votes cast
1,275,901,377
35,911,563
1,312,118,841
305,901
97.26
2.74
100%
–
E. Implementation of policy in 2024
Base salaries
Base salary increases for our two executive directors will be 4% in 2024 which is in line with
the general workforce increase.
Salaries effective from 1 April 2024 will be as follows:
CEO: £668k (2023: £643k).
CFO: £452k (2023: £435K).
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 168
Directors’ Remuneration report
ANNUAL REPORT ON REMUNERATION
Non-executive director’ fees
PSP awards
For 2024, it is anticipated that the CEO will receive an award with a face value of
200% of base salary and the CFO will receive an award of 175% of salary.
The awards will vest subject to the satisfaction of stretching performance
conditions assessed over the three year period ending 31 December 2026.
These measures and weightings will be EPS (42.5%), relative TSR (42.5%) and
carbon reduction (15%).
At the time of signing off this report, the EPS and carbon reduction metrics have
not been finalised. The targets will be disclosed at the time of grant of the PSP
awards, expected to be in late April 2024.
Pauline Lafferty
Chair, Remuneration Committee
6 March 2024
The fee for the non-executive chair for 2024 is £230,000 (2023: £184,965). The Committee has
reset the Chair’s fee to reflect his contribution to the business and the significant time commitment
in fulfilling the role. The Committee believes this provides a fair level of remuneration for an
experienced Chair and that it is comparable, and not in excess of, market rates.
The fees payable to the non-executive directors for 2024 are:
Basic fee of £60,000 (2023: £54,340);
An additional fee for holding the office of Senior Independent Director of £10,500;
An additional fee for chairing the Audit & Risk, Remuneration or Sustainability Committees
of £12,500; and
An additional fee of £7,500 to the non-executive director designated with responsibility for
workforce engagement.
Annual bonus
For 2024, the executive directors will have the opportunity to earn a bonus of up to 150% of salary.
The bonus will be subject to stretching performance conditions based on Underlying EBIT (75%)
and corporate objectives (25%). Financial performance will incorporate a capital employed
moderator designed to incentivise a strong balance sheet and cash management and penalise
poor performance in these areas. In addition, a ‘Quality of Earnings’ assessment will apply in
determining the financial bonus outcome. This subjective assessment of earnings would consider
– in the round – whether the Underlying EBIT outcome is reasonable taking into account other
financial indicators, and assurance from the Audit & Risk Committee.
The performance targets contain confidential information and so are not disclosed on a
prospective basis. The Committee proposes to disclose the targets, and performance against
them, in next year’s report.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 169
Directors’ report
Directors’
report
The directors present their
report, together with the
audited financial statements,
for the year ended
31 December 2023.
The Directors’ report for the year ended
31 December 2023 is presented and
includes sections of the Annual Report
incorporated by reference. This includes
the Governance report set out on pages
111 to 172 and, accordingly, should be read
as part of this report and as permitted
by legislation, some of the matters
required to be included in the Directors’
report have instead been included in the
Strategic report on pages 01 to 109, as the
Board considers them to be of strategic
importance. Specifically, these are:
pages 01 to 49 provide detailed
information relating to a review of
the market, our business model,
strategy, business operations, future
developments and the results and
financial position for the year ended
31 December 2023;
details of the Company’s policy on
addressing the principal risks and
uncertainties facing the Company,
which are set out in the Strategic
report on pages 54 to 60 ;
information as to the Group’s greenhouse
gas emissions for the year ended
31 December 2023, which can be
found on pages 75 to 80;
Section 172 Statement, which is set
out on pages 105 to 109;
how we have engaged with our people
and stakeholders on pages 117 to 120; and
business relationships on pages 01 to 09,
22 to 27, 36 to 41, and 87 to 104.
Disclosures required under
Listing Rule 9.8.4R
The information required to be disclosed in
accordance with Listing Rule 9.8.4R of the
Financial Conduct Authority’s Listing Rules
can be located in the following pages of this
Annual Report:
(4) Details of long-term incentive schemes
– pages 162 to 164; and
(1), (2), (5), (6), (7) – (14) Not applicable.
The Strategic report and the Directors’
report together form the Management
report for the purposes of the Disclosure
Guidance and Transparency Rules (DTR)
4.1.8R.
Principal activities
The principal activities of the Company
are the quarrying of aggregates and
manufacture and sale of construction
materials and building products in GB
and Ireland, including cement, asphalt
and ready-mixed concrete, and specialist
building products and delivery of surfacing
solutions as a further route to market for
our construction materials. Details of our UK
subsidiaries together with those outside of
the UK can be found on pages 226 and 227.
Dividends
The Company paid an interim dividend
on 10 November 2023 of 4.0p per share
to holders of ordinary shares of £0.01 who
were on the register as at 13 October 2023.
A final dividend of 13.5p per share will be
proposed for shareholder approval at the
AGM on 24 April 2024. If approved, the
final dividend will be paid on 17 May 2024 to
shareholders on the Register of Members
on 5 April 2024. The Board has approved
a progressive dividend policy with a target
pay-out of 40%.
Annual General Meeting
The Annual General Meeting of the
Company will be held at Pinnacle House,
Breedon Quarry, Breedon on the Hill,
DE73 8AP on 24 April 2024 at 2.00pm.
The formal notice convening the AGM,
together with explanatory notes on the
resolutions contained therein, is included
in the separate circular accompanying this
document and which is available on the
Company’s website at www.breedongroup.
com/agm.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 170
Directors’ report
Substantial shareholdings
The Company is aware that, as at
20 February 2024, the interests of
shareholders holding 3% or more of the
issued share capital of the Company were
as shown in the table below:
Abicad Holding
Limited
Blackrock
Lansdowne
Partners
MFS Investment
Management
Columbia
Threadneedle
Investments
GLG Partners
Number
61,704,894
31,062,271
20,941,200
14,942,741
14,562,382
13,745,139
%
18.2
9.1
6.2
4.4
4.3
4.0
Capital structure
Details of the Company’s issued share
capital and of the movements during
the year are shown in note 17 to the
consolidated financial statements. The
Company has one class of ordinary shares
which carries no right to fixed income. Each
share carries the right to one vote at General
Meetings of the Company. There are no
restrictions on the transfer of shares, which
are both governed by the general provisions
of the Articles and prevailing legislation. The
directors are not aware of any agreements
between holders of the Company’s shares
that may result in restrictions on the transfer
of securities or on voting rights. The Chair is
recognised by the Board as being a Person
Closely Associated with Abicad Holding
Limited. There are no persons holding
shares carrying special rights regarding
control of the Company.
Details of employee share schemes are set
out in note 18 to the consolidated financial
statements. No person has any special
rights of control over the Company’s
share capital.
The Company did not purchase or acquire
any of its own shares in the financial year to
31 December 2023.
Under the Articles, the directors have
authority to allot ordinary shares, subject
to the aggregate nominal amount limit set
at the General Meeting held on 26 April
2023 of 112,961,901. Shareholders granted
the Company authority to purchase up
to an aggregate of 33,888,570 of its own
shares. No shares have been purchased to
date under this authority and therefore at
31 December 2023 the authority remained
outstanding. Both authorities expire at the
conclusion of the AGM to be held in 2024
or on 26 July 2024 (whichever is sooner)
and a resolution to renew the authorities will
be put to shareholders at the forthcoming
AGM. At 31 December 2023 the Company
held no shares in treasury.
With regard to the appointment and
replacement of directors, the Company
is governed by its Articles, the 2018
UK Corporate Governance Code, the
Companies Act 2006 and related
legislation. Each director stands for election
or re-election annually by shareholders at
each AGM.
The Articles may be amended by Special
Resolution of the shareholders.
Change of control
There are no significant agreements that
take effect, alter or terminate on change
of control of the Company following a
takeover. However, there are a number
of agreements that take effect after, or
terminate upon, a change of control of the
Company, such as commercial contracts,
bank loan agreements, property lease
arrangements and employee share
plans. None of these are considered to be
significant in terms of their likely impact
on the business of the Group as a whole.
No agreements exist with the Company and
its directors or employees for compensation
for loss of office or employment that occurs
because of a takeover bid.
Directors
Biographical details of the directors
serving at 31 December 2023 can be
found on pages 112 and 113 and details of
their service contracts are given in the
Directors’ Remuneration report on page
156. The beneficial and non-beneficial
interests of the directors and their
connected persons in the shares of the
Company at 31 December 2023 and as
at the date of this report are disclosed
in the Directors’ Remuneration report
on page 164.
As set out in the Notice of Meeting, all
the directors will retire at this year’s AGM
and submit themselves for re-election by
shareholders. All directors took part in the
Board performance review in 2023.
Indemnity provisions
The Company maintains Directors’ and
Officers’ liability insurance in respect of
legal action that might be brought against
its Directors and Officers. The Company
has granted an indemnity in favour of its
directors against certain liabilities that may
be incurred as a result of their being in office
to the extent permitted by Section 234 of
the Companies Act 2006. The Company
has not issued any qualifying pension
scheme indemnity provisions.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 171
Directors’ report
Colleagues
Research & Development
The Group recognises the importance of
colleague involvement in the operation and
development of its business units, which
are given autonomy, within a Group policy
and structure, to enable management to
be fully accountable for their own actions
and gain maximum benefit from local
knowledge. Colleagues are informed by
regular consultation, intranet, and internal
newsletters of the progress of both their
own business units and the Group as
a whole.
The Group is committed to providing
equal opportunities for individuals in all
aspects of employment. It considers the
skills and aptitudes of disabled persons in
recruitment, career development, training
and promotion. If existing colleagues
become disabled, every effort is made
to retain them, and retraining is arranged
wherever possible.
How the Board has engaged with
employees can be found on page 117
and provides details of how information
has been provided to them and how
their involvement has been encouraged.
The Section 172 Statement sets out how
the Board has had regard to employees
interests and is set out on page 106.
Innovation is a key part of the Breedon
culture and its future, from the development
of lower carbon cements, to utilising
recycled materials in products and from
adopting new production methods to
utilising additives that enhance the product
lifecycle. Activities of the Group with
regards to research and development
can be found on pages 93 to 96.
Political contributions
The Group did not make any contributions
to political parties during the current or
the previous year.
Financial instruments
Details of the Group’s financial instruments
are set out in note 14 of the consolidated
financial statements.
Sustainability
The Board considers sustainability to be of
strategic importance and as such relevant
information is contained in the Strategic
report on pages 71 to 104 together with our
TCFD disclosures on pages 61 to 68.
Going concern
The directors have continued to adopt
the going concern basis in preparing the
financial statements (see note 1 to the
consolidated financial statements).
Disclosure of information
to auditor
Business relationships
The directors have regard to foster business
relationships with key stakeholders
including suppliers and customers. How
engagement has taken place can be found
on pages 97 to 104. How the effect of that
regard influenced the principal decisions
taken by the directors during the financial
year can be found in the Board’s Section
172 Statement on pages 105 to 109 of the
Strategic report.
The directors who hold office at the date
of this report confirm that, so far as they
are each aware, there is no relevant audit
information of which the Company’s auditor
is unaware, and each director has taken all
steps that he or she ought to have taken
to make himself or herself aware of any
relevant audit information and to establish
that the Company’s auditor is aware of
that information. This confirmation is given
and should be interpreted in accordance
with the provisions of Section 418 of the
Companies Act 2006.
Risk management and
internal control
Auditor
The Board is responsible for the Group’s
system of risk management and continues
to develop policies and procedures that
reflect the nature and scale of the Group’s
business. Further details of the key areas
of risk to the business identified by the
Board are included on pages 54 to 60
and the report of the Board’s Audit & Risk
Committee, which details the internal
control framework can be found on pages
125 to 130. The Group’s operational key
performance indicators are shown on
pages 42 and 43.
KPMG LLP has expressed willingness to
continue in office and a resolution to re-
appoint KPMG LLP will be proposed at the
forthcoming AGM.
Events after the reporting
period
These have been disclosed within note 28 of
the consolidated financial statements.
By order of the Board
Amit Bhatia
Non-executive
Chair
6 March 2024
Rob Wood
Chief Executive
Officer
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 172
Statement of directors’ responsibilities
in respect of the annual report and financial statements
The directors are responsible for preparing
the Annual Report and the Group and
parent Company financial statements
in accordance with applicable law
and regulations.
Company law requires the directors to
prepare Group and parent Company
financial statements for each financial
year. Under that law they are required to
prepare the Group financial statements in
accordance with UK-adopted international
accounting standards and applicable
law and have elected to prepare the
parent Company financial statements in
accordance with UK accounting standards
and applicable law, including FRS 101
Reduced Disclosure Framework.
Under company law the directors must not
approve the financial statements unless
they are satisfied that they give a true and
fair view of the state of affairs of the Group
and parent Company and of the Group’s
profit or loss for that period. In preparing
each of the Group and parent Company
financial statements, the directors are
required to:
select suitable accounting policies and
then apply them consistently;
make judgements and estimates that
are reasonable, relevant, and reliable
and, in respect of the parent Company
financial statements only, prudent;
for the Group financial statements,
state whether they have been prepared
in accordance with UK-adopted
international accounting standards;
for the parent Company financial
statements, state whether applicable
UK accounting standards have been
followed, subject to any material
departures disclosed and explained
in the parent Company financial
statements;
assess the Group and parent Company’s
ability to continue as a going concern,
disclosing, as applicable, matters related
to going concern; and
use the going concern basis of
accounting unless they either intend
to liquidate the Group or the parent
Company or to cease operations, or
have no realistic alternative but to do so.
The directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the parent
Company’s transactions and disclose
with reasonable accuracy at any time the
financial position of the parent Company
and enable them to ensure that its financial
statements comply with the Companies
Act 2006. They are responsible for
such internal control as they determine
is necessary to enable the preparation
of financial statements that are free
from material misstatement, whether
due to fraud or error, and have general
responsibility for taking such steps as are
reasonably open to them to safeguard the
assets of the Group and to prevent and
detect fraud and other irregularities.
Responsibility statement of the
directors in respect of the annual
financial report
We confirm that to the best of our
knowledge:
Under applicable law and regulations, the
directors are responsible for preparing a
Strategic report, Directors’ report, Directors’
Remuneration report and Corporate
Governance statement that complies
with that law and those regulations.
In accordance with Disclosure Guidance
and Transparency Rule (DTR) 4.1.16R, the
financial statements will form part of the
annual financial report prepared under
DTR 4.1.17R and 4.1.18R. The auditor’s report
on these financial statements provides no
assurance over whether the annual financial
report has been prepared in accordance
with those requirements.
The directors are responsible for the
maintenance and integrity of the corporate
and financial information included on
the company’s website. Legislation in
the UK governing the preparation and
dissemination of financial statements may
differ from legislation in other jurisdictions.
the financial statements, prepared in
accordance with the applicable set of
accounting standards, give a true and
fair view of the assets, liabilities, financial
position and profit or loss of the company
and the undertakings included in the
consolidation taken as a whole; and
the strategic report includes a fair review
of the development and performance of
the business and the position of the issuer
and the undertakings included in the
consolidation taken as a whole, together
with a description of the principal risks
and uncertainties that they face.
We consider the Annual Report and
Accounts, taken as a whole, is fair, balanced
and understandable and provides the
information necessary for shareholders
to assess the Group’s position and
performance, business model and strategy.
Rob Wood
Chief Executive
Officer
6 March 2024
James Brotherton
Chief Financial
Officer
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Consolidated financial statements
173
Independent Auditor’s report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
»174
»184
»185
»186
»187
»188
»189
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 174
Independent Auditor’s report
Independent auditor’s report to the members
of Breedon Group plc
1. Our opinion is unmodified
We have audited the financial statements of Breedon Group plc (“the Company”) for the
year ended 31 December 2023 which comprise the consolidated income statement, the
consolidated statement of comprehensive income, the consolidated statement of financial
position, the consolidated statement of changes in equity, the consolidated statement of
cashflows , the company balance sheet, company statement of changes in equity and the
related notes, including the accounting policies in note 1 to the consolidated financial
statements and note 1 to the parent Company financial statements.
In our opinion:
the financial statements give a true and fair view of the state of the Group’s and of the
parent Company’s affairs as at 31 December 2023 and of the Group’s profit for the
year then ended;
the Group financial statements have been properly prepared in accordance with
UK-adopted international accounting standards;
the parent Company financial statements have been properly prepared in accordance
with accounting standards, including FRS 101 Reduced Disclosures Framework; and
the financial statements have been prepared in accordance with the requirements of
the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK)
(“ISAs (UK)”) and applicable law. Our responsibilities are described below. We believe
that the audit evidence we have obtained is a sufficient and appropriate basis for our
opinion. Our audit opinion is consistent with our report to the Audit & Risk committee.
We were first appointed as auditor by the directors on 21 July 2023. The period of total
uninterrupted engagement is for the one financial year ended 31 December 2023. Prior to
that we were also auditor to the Group’s previous parent company, but which,
as it was listed on AIM, was not a public-interest entity. We have fulfilled our ethical
responsibilities under, and we remain independent of the Group in accordance with,
UK ethical requirements including the FRC Ethical Standard as applied to listed public
interest entities. No non-audit services prohibited by that standard were provided.
Overview
Materiality:
Group financial statements as a whole
Coverage
Key audit matters
Recurring risks
New
£6.25m (2022:£6.5m)
4.7% (2022: 4.8%) of Group profit before tax
88% (2022: 87%) of Group profit before tax
vs 2022
Recoverability of goodwill allocated
to Cement
Provision for restoration and
decommissioning obligations
Recoverability of parent
Company debtor
2. Key audit matters: our assessment of risks of
material misstatement
Key audit matters are those matters that, in our professional judgement, were of most
significance in the audit of the financial statements and include the most significant
assessed risks of material misstatement (whether or not due to fraud) identified by us,
including those which had the greatest effect on: the overall audit strategy; the allocation
of resources in the audit; and directing the efforts of the engagement team. We summarise
below the key audit matters, in decreasing order of audit significance, in arriving at our
audit opinion above, together with our key audit procedures to address those matters and,
as required for public interest entities, our results from those procedures. These matters
were addressed, and our results are based on procedures undertaken, in the context of,
and solely for the purpose of, our audit of the financial statements as a whole, and in
forming our opinion thereon, and consequently are incidental to that opinion, and we
do not provide a separate opinion on these matters.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Independent Auditor’s report
Recoverability of
goodwill allocated
to Cement
(£162.1 million;
2022: £163.3 million)
Refer to page 126
(Audit & Risk Committee
report), page 192
(Accounting policies)
and page 201
(financial disclosures).
The risk
Forecast-based assessment
Goodwill and the estimated recoverable amount is subjective
due to the inherent uncertainty involved in forecasting and
discounting future cashflows. In addition, the Group is not able
to quantify the longer-term gross cost of the transition to net
zero, as the technology to achieve this is not yet proven at
scale. Demand for cement could be impacted by the price
increases needed to recover these costs, substitute products
becoming available or longer-term changes in consumer
behaviour.
The future cash flows are also dependent on the continued
availability of limestone resources over the remaining life of the
asset base and are subject to obtaining incremental planning
permissions for quarries and plants.
The effect of these matters is that, as part of our risk
assessment, we determined that the value in use of goodwill
had a high degree of estimation uncertainty, with a potential
range of reasonable outcomes greater than our materiality
for the consolidated financial statements as a whole, and
possibly many times that amount.
In conducting our final audit work we concluded that
reasonably possible changes in the assumptions would not
be expected to result in a material change to the carrying
value of goodwill in the next financial year.
175
Our response
We performed the tests below rather than seeking to rely on any of the Group’s controls
because the nature of the balance is such that we would expect to obtain audit evidence
primarily through the detailed procedures described.
Our procedures included:
Our sector experience: We assessed whether the assumptions used, in particular
those relating to the levels of capital expenditure required to meet the Group’s capital
commitments and the assessment of the continued availability of limestone resources,
reflect our knowledge of the business and industry. We used our own climate change
specialists to assist with verifying management’s statement that the longer-term cost
of transition to net zero cannot be quantified;
Historical comparisons: We considered the historical forecasting accuracy, by
comparing previously forecast cash flows to actual results achieved;
Benchmarking assumptions: We challenged the key inputs used in the Group’s
calculation of the discount rate, forecasts and capital expenditure, using both internal
and external market data where available, including available sources for comparable
companies;
Sensitivity analysis: We performed our own sensitivity analysis over the reasonably
possible combination of changes in the forecasts on the assumptions noted above;
Comparing valuations: We compared the sum of the discounted cash flows of all cash
generating units (CGUs) to the Group’s market capitalisation, thus assessing the
reasonableness of these cash flows; and
Assessing transparency: We assessed whether the Group’s disclosures regarding
the sensitivity of the outcome of the impairment assessment to changes in key
assumptions reflected the risks inherent in the recoverable amount of goodwill.
We considered whether the Group’s disclosure in respect of the potential longer
term impact of climate change was appropriate.
Our results
We found the Group’s conclusion that there is no impairment of goodwill allocated to
Cement to be acceptable (2022 result: acceptable).
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 176
Independent Auditor’s report
Restoration and
decommissioning
provisions
(£91.3 million;
2022: £84.7 million)
Refer to page 127
(Audit & Risk Committee
report), page 193
(Accounting policies)
and page 205
(financial disclosures).
The risk
Subjective estimate:
The calculation of restoration and decommissioning
provisions requires the Group to estimate the quantum and
timing of future costs to restore and decommission sites.
These assumptions are inherently difficult to forecast and
small changes in assumption of certain costs could have a
significant effect of the estimation of the provision .
In addition as the amount of the restoration estimate can
significantly affect results, and given the pressure to meet
targets and the nature of incentive arrangements we also
consider there to be a risk of fraud through the potential for
management bias associated with the restoration estimate.
These calculations also require the Group to determine
an appropriate rate to discount future costs to their net
present value.
As a result of the volatility in markets, inflation and discount
rates are difficult to assess and impact significantly on
the calculation.
There is limited restoration and decommissioning activity
and historical precedent against which to benchmark
estimates of future costs.
The effect of these matters is that, as part of our risk
assessment, we determined that restoration and
decommissioning provisions have a high degree of estimation
uncertainty, with a potential range of outcomes greater than
our materiality for the financial statements as a whole.
The consolidated financial statements (note 26) disclose
the sensitivities estimated by the Group.
Our response
We performed the tests below rather than seeking to rely on any of the Group’s
controls because our knowledge of the design of these controls indicated that we
would not be able to obtain the required evidence to support reliance on controls.
Our procedures included:
Assessing experience of external experts: We evaluated the competence and
objectivity of external experts appointed by the Group to determine an estimate of
restoration and decommissioning costs;
Challenging assumptions and inputs: We critically assessed the consistency of the
assumptions used by the Group in generating the estimated costs of restoration
and decommissioning and agree a sample of estimated costs to external sources;
Historical comparisons: Considered historical forecasting accuracy, by comparing
previously forecast costs to actual costs incurred;
Benchmarking assumptions: We challenged the inflation and discount rates
by comparing them to externally derived data, including available sources for
comparable companies;
Test of details: We evaluated a sample of underlying planning consents to assess the
possible timing of the obligations with respect to restoration and decommissioning
costs; and
Assessing transparency: We assessed whether the Group’s disclosures about the
sensitivity of changes in key assumptions reflected the risks inherent in the estimation
of the liability.
Our results
As a result of our work we found the level of restoration and decommissioning provision
recognised to be acceptable (2022 result: acceptable).
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 177
Independent Auditor’s report
Recoverability of parent
Company debtor
(£507.5 million; 2022: n/a)
Page 223 (Accounting
policies) and page 224
(financial disclosures).
The risk
Subjective estimate:
The amount of the parent Company’s intercompany debtor
with the intermediate holding company for the rest of the
Group’s subsidiaries represents over 99% of the parent
Company’s assets.
Their recoverability is not at a high risk of significant
misstatement or subject to significant judgement.
However, due to its materiality and in the context of the
parent Company financial statements this is considered to
be one of the areas that has the greatest effect on our overall
parent Company audit.
Our response
We performed the tests below rather than seeking to rely on any of the Company’s
controls because the nature of the balance is such that we would expect to obtain audit
evidence primarily through the detailed procedures described.
Our procedures included:
Tests of details: We compared the carrying amount of the parent Company’s
intercompany debtor evaluating the likely risk of default with reference to the
Company’s definition of default and budgets and forecasts of future profitability.
Sensitivity analysis: For the same counterparty we performed sensitivity analysis
to identify the probability of default required in order for the expected credit losses to
be material.
Our results
We found the conclusion that there is no impairment of the intra-group group debtors
balance to be acceptable.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 178
Independent Auditor’s report
3. Our application of materiality and an overview of the
scope of our audit
Group profit before tax
£134.4m (2022: £135.8m)
Group materiality
£6.25m (2022: £6.5m)
Materiality for the Group financial statements as a whole was set at £6.25m (2022: £6.5m),
determined with reference to a benchmark of Group profit before tax of which it
represents 4.7% (2022: 4.8%).
Materiality for the parent Company financial statements as a whole was set at £6.0m,
determined with reference to a benchmark of parent Company total assets, of which it
represents 1.2%.
In line with our audit methodology, our procedures on individual account balances and
disclosures were performed to a lower threshold, performance materiality, so as to reduce
to an acceptable level the risk that individually immaterial misstatements in individual
account balances add up to a material amount across the financial statements as a whole.
Performance materiality was set at 75% (2022: 75%) of materiality for the financial
statements as a whole, which equates to £4.7m (2022: £4.9m) for the Group and £4.5m
for the parent Company. We applied this percentage in our determination of performance
materiality because we did not identify any factors indicating an elevated level of risk.
We agreed to report to the Audit & Risk Committee any corrected or uncorrected
identified misstatements exceeding £0.3m (2022: £0.3m), in addition to other identified
misstatements that warranted reporting on qualitative grounds.
Of the Group’s 33 (2022: 27) reporting components, we subjected 6 (2022: 6) to full
scope audits for Group purposes.
The components within the scope of our work accounted for the percentages
illustrated opposite.
The Group team instructed component auditors as to the significant areas to be covered,
including the relevant risks detailed above and the information to be reported back.
The Group team approved the component materialities, which ranged from £2.0m to
£5.6m (2022: £2.0m to £5.0m), having regard to the mix of size and risk profile of the
Group across the components. The work on 3 of the 6 components (2022: 3 of the
6 components) was performed by component auditors and the rest, including the
audit of the parent Company, was performed by the Group team.
£6.25m
Whole financial statements
materiality (2022: £6.5m)
£4.68m
Whole financial statements
performance materiality
(2022: £4.9m)
£5.6m
Range of materiality at 6
components (£2.0m to £5.6m)
(2022: £2.0m to £5.0m)
£0.3m
Misstatements reported to the Audit
& Risk Committee (2022: £0.3m)
PBT
Group materiality
Group profit before tax
Group revenue
Group total assets
88%
(2022: 87%)
91%
(2022: 92%)
91%
(2022: 91%)
Full scope for group audit
purposes 2023
Residual components
Full scope for group audit
purposes 2022
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 179
Independent Auditor’s report
3. Our application of materiality and an overview of the
scope of our audit (continued)
The scope of the audit work performed was predominately substantive as we placed
limited reliance upon the Group’s internal control over financial reporting.
The Group team visited one (2022: none) component locations in Ireland to assess the
audit risk and strategy. Video and telephone conference meetings were also held with
these component auditors. At these visits and meetings, the findings reported to the
Group team were discussed in more detail, and any further work required by the Group
team was then performed by the component auditor.
4. The impact of climate change in our audit
In planning our audit, we considered the potential impacts of climate change on the
Group’s business and its financial statements.
The Group has set out its targets to reduce gross carbon intensity in the Cement division
by 30% by 2030 and committed to net zero by 2050 for Scope 1 and Scope 2 emissions.
However, whilst the Group has set targets to be carbon neutral by 2050, the gross cost
of this transition, how the demand for cement might be impacted by the price increases
needed to recover these costs, the possibility of substitute products becoming available
and the longer term changes in customer behaviour are not yet known.
To the extent there are known implications, these have been reflected in the financial
statements in accordance with IFRS requirements and have been considered in our audit
as set out in our key audit matter on the recoverability of goodwill allocated to the Cement
cash generating unit. It is therefore possible that the future carrying amounts of assets will
be impacted due to the outcome of these judgements and estimates as the Group
responds to its climate change targets.
Our key audit matter on the recoverability of goodwill allocated to the Cement cash
generating unit explains how we have assessed the Group’s climate related assumptions
and relevant disclosures in arriving at our audit conclusions. This included holding
discussions with our own climate change professionals to challenge our risk assessment.
We have also read the Group’s disclosure of climate related information in the Strategic
report of the Annual Report and compared this to our knowledge gained from our
financial statement audit work which includes the disclosures as recommended by the
TCFD on page 61 to 68 of the Annual Report.
5. Going concern
The directors have prepared the financial statements on the going concern basis as they
do not intend to liquidate the Group or the parent Company or to cease their operations,
as they have concluded that the Group’s and the parent Company’s financial position
means that this is realistic. They have also concluded that there are no material
uncertainties that could have cast significant doubt over their ability to continue as a
going concern for at least a year from the date of approval of the financial statements
(“the going concern period”).
We used our knowledge of the Group, its industry, and the general economic environment
to identify the inherent risks to its business model and analysed how those risks might
affect the Group’s and parent Company’s financial resources or ability to continue
operations over the going concern period. The risks that we considered most likely to
adversely affect the Group’s and parent Company’s available financial resources over
this period were:
The ability of the Group to comply with debt covenants.
We considered whether these risks could plausibly affect the liquidity or covenant
compliance in the going concern period by comparing severe, but plausible downside
scenarios that could arise from these risks individually and collectively against the level of
available financial resources and covenants indicated by the Group’s financial forecasts.
We considered whether the going concern disclosure in note 1 to the consolidated financial
statements and note 1 to the parent Company financial statements gives a full and accurate
description of the assessment of going concern.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 180
Independent Auditor’s report
5. Going concern (continued)
Our conclusions based on this work:
we consider that the directors’ use of the going concern basis of accounting in the
preparation of the financial statements is appropriate;
we have not identified, and concur with the directors’ assessment that there is not,
a material uncertainty related to events or conditions that, individually or collectively,
may cast significant doubt on the Group’s or parent Company’s ability to continue as
a going concern for the going concern period;
we have nothing material to add or draw attention to in relation to the directors’
statement in note 1 to the consolidated financial statements and note 1 to the parent
Company financial statements on the use of the going concern basis of accounting
with no material uncertainties that may cast significant doubt over the Group and
parent Company’s use of that basis for the going concern period, and we found the
going concern disclosure in note 1 to be acceptable; and
the related statement under the Listing Rules set out on page 171 is materially consistent
with the financial statements and our audit knowledge.
However, as we cannot predict all future events or conditions and as subsequent events
may result in outcomes that are inconsistent with judgements that were reasonable at the
time they were made, the above conclusions are not a guarantee that the Group or the
parent Company will continue in operation.
6. Fraud and breaches of laws and regulations – ability to detect
reading Board, Audit & Risk Committee and Remuneration Committee minutes;
considering remuneration incentive schemes and performance targets for
management and the directors;
using analytical procedures to identify any unusual or unexpected relationships; and
considering the existence of significant unusual transactions.
We communicated identified fraud risks throughout the audit team and remained alert
to any indications of fraud throughout the audit. This included communication from the
Group audit team to full scope component audit teams of relevant fraud risks identified at
the Group level and request to full scope component audit teams to report to the Group
audit team any instances of fraud that could give rise to a material misstatement at Group.
As required by auditing standards, and taking into account possible pressures to meet
profit targets and our overall knowledge of the control environment, we perform
procedures to address the risk of management override of controls, in particular the risk
that Group and component management may be in a position to make inappropriate
accounting entries and the risk of bias in accounting estimates and judgements such as
the estimation of restoration and decommission provisions.
On this audit we do not believe there is a fraud risk related to revenue recognition because
product revenue recognition is straightforward and contract revenue contains limited
management judgement, therefore limiting the opportunity to commit a material fraud.
We also identified a fraud risk related to the estimation of restoration and
decommissioning provisions. Further detail in respect of this is set out in the key audit
matter disclosures in section 2 of this report.
Identifying and responding to risks of material misstatement due to fraud
We performed procedures including:
To identify risks of material misstatement due to fraud (‘fraud risks’) we assessed events
or conditions that could indicate an incentive or pressure to commit fraud or provide an
opportunity to commit fraud. Our risk assessment procedures included:
enquiring of directors and other management as to the Group’s high-level policies and
procedures to prevent and detect fraud, including the internal audit function, and the
Group’s channel for ‘whistleblowing’, as well as whether they have knowledge of any
actual, suspected or alleged fraud;
identifying journal entries and other adjustments to test based on risk criteria and
comparing the identified entries to supporting documentation. These included journals
that move costs from above EBITDA to below EBITDA;
incorporating an element of unpredictability in our audit procedures; and
assessing whether the judgements made in making accounting estimates are indicative
of a potential bias.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 181
Independent Auditor’s report
6. Fraud and breaches of laws and regulations – ability to detect
(continued)
Identifying and responding to risks of material misstatement due to
non-compliance with laws and regulations
We identified areas of laws and regulations that could reasonably be expected to have
a material effect on the financial statements from our general commercial and sector
experience, and through discussion with the directors and other management (as required
by auditing standards) and discussed with the directors and other management the
policies and procedures regarding compliance with laws and regulations.
We communicated identified laws and regulations throughout our team and remained
alert to any indications of non-compliance throughout the audit. This included
communication from the Group audit team to full scope component audit teams of
relevant laws and regulations identified at the Group level, and a request for full scope
component auditors to report to the Group team any instances of non-compliance with
laws and regulations that could give rise to a material misstatement at the Group level.
The potential effect of these laws and regulations on the financial statements varies
considerably.
Firstly, the Group is subject to laws and regulations that directly affect the financial
statements including financial reporting legislation (including related companies
legislation), distributable profits legislation and taxation legislation.
We assessed the extent of compliance with these laws and regulations as part of our
procedures on the related financial statement items.
Secondly, the Group is subject to many other laws and regulations where the
consequences of non-compliance could have a material effect on amounts or disclosures
in the financial statements, for instance through the imposition of fines or litigation.
We identified the following areas as those most likely to have such an effect: health and
safety, anti-bribery, employment law and certain aspects of company legislation
recognising the nature of the Group’s activities and its legal form. Auditing standards limit
the required audit procedures to identify non-compliance with these laws and regulations
to enquiry of the directors and other management and inspection of regulatory and legal
correspondence, if any. Therefore if a breach of operational regulations is not disclosed to
us or evident from relevant correspondence, an audit will not detect that breach.
Context of the ability of the audit to detect fraud or breaches of law or regulation
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not
have detected some material misstatements in the financial statements, even though we
have properly planned and performed our audit in accordance with auditing standards.
For example, the further removed non-compliance with laws and regulations is from the
events and transactions reflected in the financial statements, the less likely the inherently
limited procedures required by auditing standards would identify it.
In addition, as with any audit, there remained a higher risk of non-detection of fraud, as
these may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal controls. Our audit procedures are designed to detect material
misstatement. We are not responsible for preventing non-compliance or fraud and cannot
be expected to detect non-compliance with all laws and regulations.
7. We have nothing to report on the other information in
the Annual Report
The directors are responsible for the other information presented in the Annual Report
together with the financial statements. Our opinion on the financial statements does not
cover the other information and, accordingly, we do not express an audit opinion or, except
as explicitly stated below, any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether,
based on our financial statements audit work, the information therein is materially
misstated or inconsistent with the financial statements or our audit knowledge. Based
solely on that work we have not identified material misstatements in the other information.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 182
Independent Auditor’s report
7. We have nothing to report on the other information in
the Annual Report (continued)
Strategic report and Directors’ report
Based solely on our work on the other information:
we have not identified material misstatements in the Strategic report and the
Directors’ report;
in our opinion the information given in those reports for the financial year is
consistent with the financial statements; and
in our opinion those reports have been prepared in accordance with the
Companies Act 2006.
Directors’ Remuneration report
In our opinion the part of the Directors’ Remuneration report to be audited has been
properly prepared in accordance with the Companies Act 2006.
Disclosures of emerging and principal risks and longer-term viability
We are required to perform procedures to identify whether there is a material
inconsistency between the directors’ disclosures in respect of emerging and principal
risk and the Viability Statement, and the financial statements and our audit knowledge.
Based on those procedures, we have nothing material to add or draw attention to in
relation to:
the directors’ confirmation within the compliance against the Code section on
page 143 that they have carried out a robust assessment of the emerging and principal
risks facing the Group, including those that would threaten its business model, future
performance, solvency and liquidity;
the managing of risks and opportunities disclosures describing these risks and
how emerging risks are identified, and explaining how they are being managed and
mitigated; and
the directors’ explanation in the Viability Statement of how they have assessed the
prospects of the Group, over what period they have done so and why they considered
that period to be appropriate, and their statement as to whether they have a reasonable
expectation that the Group will be able to continue in operation and meet its liabilities
as they fall due over the period of their assessment, including any related disclosures
drawing attention to any necessary qualifications or assumptions.
We are also required to review the Viability Statement, set out on page 69 under the Listing
Rules. Based on the above procedures, we have concluded that the above disclosures are
materially consistent with the financial statements and our audit knowledge.
Our work is limited to assessing these matters in the context of only the knowledge
acquired during our financial statements audit. As we cannot predict all future events or
conditions and as subsequent events may result in outcomes that are inconsistent with
judgements that were reasonable at the time they were made, the absence of anything to
report on these statements is not a guarantee as to the Group’s and parent Company’s
longer-term viability.
Corporate governance disclosures
We are required to perform procedures to identify whether there is a material
inconsistency between the directors’ corporate governance disclosures and the financial
statements and our audit knowledge.
Based on those procedures, we have concluded that each of the following is materially
consistent with the financial statements and our audit knowledge:
the Directors’ statement that they consider that the annual report and financial
statements taken as a whole is fair, balanced and understandable, and provides the
information necessary for shareholders to assess the Group’s position and performance,
business model and strategy;
the section of the annual report describing the work of the Audit & Risk Committee,
including the significant issues that the Audit & Risk committee considered in relation
to the financial statements, and how these issues were addressed; and
the section of the Annual Report that describes the review of the effectiveness of the
Group’s risk management and internal control systems.
We are required to review the part of the Corporate Governance statement relating to the
Group’s compliance with the provisions of the UK Corporate Governance Code specified
by the Listing Rules for our review. We have nothing to report in this respect.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 183
Independent Auditor’s report
8. We have nothing to report on the other matters on which we
are required to report by exception
A fuller description of our responsibilities is provided on the FRC’s website at
www.frc.org.uk/auditorsresponsibilities.
Under the Companies Act 2006, we are required to report to you if, in our opinion:
adequate accounting records have not been kept by the parent Company, or returns
adequate for our audit have not been received from branches not visited by us; or
the parent Company financial statements and the part of the Directors’ Remuneration
report to be audited are not in agreement with the accounting records and returns; or
The Company is required to include these financial statements in an annual financial
report prepared under Disclosure Guidance and Transparency Rule 4.1.17R and 4.1.18R.
This auditor’s report provides no assurance over whether the annual financial report has
been prepared in accordance with those requirements.
10. The purpose of our audit work and to whom we owe
certain disclosures of directors’ remuneration specified by law are not made; or
our responsibilities
we have not received all the information and explanations we require for our audit.
We have nothing to report in these respects.
9. Respective responsibilities
Directors’ responsibilities
As explained more fully in their statement set out on page 172, the directors are responsible
for: the preparation of the financial statements including being satisfied that they give
a true and fair view; such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due
to fraud or error; assessing the Group and parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern; and using the going
concern basis of accounting unless they either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue
our opinion in an auditor’s report. Reasonable assurance is a high level of assurance, but
does not guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in aggregate, they could reasonably
be expected to influence the economic decisions of users taken on the basis of the
financial statements.
This report is made solely to the Company’s members, as a body, in accordance with
Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so
that we might state to the Company’s members those matters we are required to state to
them in an auditor’s report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the Company and the
Company’s members, as a body, for our audit work, for this report, or for the opinions we
have formed.
Anna Barrell (Senior Statutory Auditor)
for and on behalf of KPMG LLP, Statutory Auditor
Chartered Accountants
One Snowhill
Snowhill Queensway
Birmingham
B4 6GH
6 March 2024
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Consolidated income statement
Revenue
Operating expenses
Group operating profit
Share of profit of associate and joint ventures
Profit from operations
Financial income
Financial expense
Profit before taxation
Tax at effective rate
Changes in deferred tax rate
Taxation
Profit for the year
Attributable to:
Breedon Group shareholders
Non-controlling interests
Profit for the year
* Non–underlying items represent acquisition–related expenses, property gains or losses, amortisation of acquisition intangibles, AIM to Main Market costs and related tax items.
Earnings per share**
Basic
Diluted
Underlying earnings per share are shown in note 23.
Dividends in respect of the year**
Dividend per share
** Restated comparatives to reflect the impact of the 5:1 share consolidation undertaken during the year. See note 1.
23
23
17
31.1p
31.0p
13.5p
184
For the year ended 31 December 2023
2023
Non-
underlying*
(note 3)
£m
Total
£m
Underlying
£m
2022
Non-
underlying*
(note 3)
£m
Total
£m
–
1,487.5
1,396.3
–
1,396.3
(10.5)
(10.5)
–
(10.5)
–
–
(10.5)
1.4
–
1.4
(1,344.4)
(1,244.8)
143.1
2.6
145.7
2.6
(13.9)
134.4
(28.1)
(0.7)
(28.8)
151.5
3.5
155.0
0.2
(12.4)
142.8
(22.9)
(1.1)
(24.0)
(7.0)
(7.0)
–
(7.0)
–
–
(7.0)
0.8
–
0.8
(1,251.8)
144.5
3.5
148.0
0.2
(12.4)
135.8
(22.1)
(1.1)
(23.2)
Note
2
4
10
2
6
6
7
7
Underlying
£m
1,487.5
(1,333.9)
153.6
2.6
156.2
2.6
(13.9)
144.9
(29.5)
(0.7)
(30.2)
114.7
(9.1)
105.6
118.8
(6.2)
112.6
114.6
0.1
114.7
(9.1)
–
(9.1)
105.5
0.1
105.6
118.7
0.1
118.8
(6.2)
–
(6.2)
112.5
0.1
112.6
33.2p
33.2p
10.5p
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Consolidated statement of comprehensive income
For the year ended 31 December 2023
185
Profit for the year
Other comprehensive (expense)/income
Items which may be reclassified subsequently to profit and loss:
Foreign exchange differences on translation of foreign operations, net of hedging
Effective portion of changes in fair value of cash flow hedges
Taxation on items taken directly to other comprehensive income
Other comprehensive (expense)/income for the year
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Breedon Group shareholders
Non-controlling interests
Note
7
2023
£m
105.6
(4.1)
(0.7)
0.1
(4.7)
100.9
100.8
0.1
100.9
2022
£m
112.6
10.2
(1.3)
0.2
9.1
121.7
121.6
0.1
121.7
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 186
Note
17
17
17
17
17
17
At 31 December 2023
2023
£m
3.4
0.7
–
(0.5)
(3.7)
80.5
1,030.0
1,110.4
0.3
1,110.7
2022
£m
–
–
555.0
0.1
0.4
–
488.0
1,043.5
0.3
1,043.8
2023
£m
2022
£m
Equity attributable to Breedon Group shareholders
817.2
45.1
520.2
14.5
0.9
787.9
Share capital
47.1
Share premium
518.2
Stated capital
13.7
3.8
Hedging reserve
Translation reserve
1,397.9
1,370.7
Merger reserve
Retained earnings
Total equity attributable to Breedon Group shareholders
Non-controlling interests
Total equity
These financial statements were approved by the Board of Directors on 6 March 2024 and
were signed on its behalf by:
Rob Wood
Chief Executive Officer
James Brotherton
Chief Financial Officer
Consolidated statement of financial position
Non-current assets
Property, plant and equipment
Right-of-use assets
Intangible assets
Investment in associate and joint ventures
Trade and other receivables
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Interest-bearing loans and borrowings
Trade and other payables
Current tax payable
Provisions
Total current liabilities
Non-current liabilities
Interest-bearing loans and borrowings
Provisions
Deferred tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Note
8
20
9
10
13
12
13
14
14
15
16
14
16
11
120.1
227.9
126.9
474.9
94.8
218.6
101.7
415.1
1,872.8
1,785.8
(8.1)
(278.6)
(0.1)
(8.8)
(7.9)
(263.8)
(3.8)
(9.2)
(295.6)
(284.7)
(288.7)
(85.8)
(92.0)
(466.5)
(762.1)
(291.5)
(76.8)
(89.0)
(457.3)
(742.0)
1,110.7
1,043.8
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information
Consolidated statement of changes in equity
For the year ended 31 December 2023
187
Hedging
reserve
£m
Translation
reserve
£m
Merger
reserve
£m
Retained
earnings
£m
Attributable
to Breedon
Group
shareholders
£m
Non-
controlling
interests
£m
Balance at 1 January 2022
Shares issued
Dividends paid
Total comprehensive income for the year
Share-based payments1
Balance at 31 December 2022
Shares issued
Corporate Reorganisation
Capital reduction2
Transfer to non-controlling interests
Dividends paid
Total comprehensive income for the year
Share-based payments1
Balance at 31 December 2023
Note
Share
capital
£m
Share
premium
£m
17
17
18
17
1
17
17
18
–
–
–
–
–
–
–
474.5
(471.1)
–
–
–
–
–
–
–
–
–
–
0.7
–
–
–
–
–
–
3.4
0.7
Stated
capital
£m
553.0
2.0
–
–
–
555.0
–
(555.0)
–
–
–
–
–
–
1.2
–
–
(1.1)
–
0.1
–
–
–
–
–
(0.6)
–
(0.5)
(9.8)
–
–
10.2
–
0.4
–
–
–
–
–
(4.1)
–
(3.7)
–
–
–
–
–
–
–
80.5
–
–
–
–
–
405.2
–
(30.5)
112.5
0.8
949.6
2.0
(30.5)
121.6
0.8
488.0
1,043.5
–
–
471.1
(0.2)
(37.3)
105.5
2.9
0.7
–
–
(0.2)
(37.3)
100.8
2.9
1,110.4
80.5
1,030.0
Total
equity
£m
949.8
2.0
(30.5)
121.7
0.8
1,043.8
0.7
–
–
–
(37.6)
100.9
2.9
1,110.7
0.2
–
–
0.1
–
0.3
–
–
–
0.2
(0.3)
0.1
–
0.3
1 Share-based payments are shown inclusive of deferred tax recognised in equity.
2 On 9 June 2023, New Breedon undertook a capital reduction to convert £471.1m of share capital to distributable reserves, with share capital remaining at 338.9 million shares but with a nominal value of £0.01 per share.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 188
Consolidated statement of cash flows
For the year ended 31 December 2023
Cash flows from operating activities
Profit for the year
Adjustments for:
Depreciation and mineral depletion
Amortisation
Financial income
Financial expense
Share of profit of associate and joint ventures
(Gain)/loss on sale of property, plant and equipment
Gain on stepped acquisition
Share-based payments
Taxation
Operating cash flows before changes in
working capital and provisions
Increase in inventories
Increase in trade and other receivables
Increase/(decrease) in trade and other payables
Increase in provisions
Note
2023
£m
2022
£m
105.6
112.6
Dividends paid
Cash flows used in financing activities
4
3
6
6
10
4
7
88.7
6.0
(2.6)
13.9
(2.6)
(1.4)
–
3.0
28.8
Proceeds from the issue of shares (net of costs)
83.5
4.8
Repayment of interest-bearing loans
Revolving Credit Facility extension costs
(0.2)
Repayment of lease obligations
12.4
(3.5)
2.4
(0.3)
1.2
23.2
Net cash used in financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at 1 January
Foreign exchange differences
Cash and cash equivalents at 31 December
Note
17
17
14
2023
£m
(37.6)
0.7
(0.9)
(0.7)
(8.1)
(46.6)
24.9
101.7
0.3
126.9
2022
£m
(30.5)
2.0
–
(0.7)
(8.8)
(38.0)
17.1
83.9
0.7
101.7
239.4
236.1
(24.6)
(1.0)
8.8
8.3
(31.7)
(0.2)
(9.1)
7.7
Cash generated from operating activities
230.9
202.8
Interest paid
Interest element of lease payments
Interest received
Income taxes paid
Net cash from operating activities
Cash flows used in investing activities
Acquisition of businesses
Dividends from associate and joint ventures
Purchase of property, plant and equipment
Proceeds from sale of property, plant and equipment
Net cash used in investing activities
25
10
8
(6.8)
(2.3)
2.6
(32.5)
191.9
(18.8)
1.8
(106.8)
3.4
(120.4)
(6.7)
(2.5)
0.2
(25.8)
168.0
(12.6)
1.7
(106.8)
4.8
(112.9)
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 189
Notes to the consolidated financial statements
1
Accounting policies
The principal activities of the Group are
the quarrying of aggregates together
with manufacture and sale of construction
materials and building products, including
cement, asphalt and ready-mixed concrete,
together with related activities in GB
and Ireland.
Breedon Group plc (the ‘Company’) is a
company domiciled in England. The address
of the Company’s registered office is
Pinnacle House, Breedon Quarry, Breedon
on the Hill, Derby, England, DE73 8AP.
Basis of preparation
These financial statements consolidate
the results of the Company and subsidiary
undertakings, and equity accounts for
the Group’s interests in its associate and
joint ventures (collectively ‘the Group’).
Corporate Reorganisation (AIM to Main)
In connection with the Group’s move from
AIM to the Premium Segment of the Main
Market of the London Stock Exchange
during the first half of 2023, a new holding
company for the Group was established.
Breedon Group plc (‘New Breedon’),
a company registered in England & Wales
with registration number 14739556 was
incorporated on 17 March 2023 to act as
the new parent company for the Group,
in place of Breedon Group plc (‘Old
Breedon’), a company incorporated in
Jersey with registration number 98465.
New Breedon obtained control of the
Group on 17 May 2023 via a court approved
scheme of arrangement (the ‘Corporate
Reorganisation’). Under the scheme of
arrangement, shares with nominal value of
£1.40 were issued in exchange for all the
shares in Old Breedon at a ratio of one
share in New Breedon for every five shares
in Old Breedon. There were no changes in
rights or proportion of control exercised
as a result of the transaction.
IFRS 3 excludes common control
transactions and group reconstructions.
These financial statements therefore
incorporate the results of the reorganisation
using the merger accounting method,
whereby the results and cash flows of all
the combining entities are brought into the
financial statements from the beginning of
the financial year in which the combination
occurs and comparative figures also reflect
the combination of the entities. The Group’s
equity is adjusted to reflect that of the
new holding company, with the difference
between Stated Capital reported by Old
Breedon under Jersey company law and
Share Capital reported by New Breedon
recognised as a Merger Reserve. See note
17 for further disclosure.
Earnings and Dividend per share measures
have been restated to reflect the impact
of the five to one share consolidation.
In all other aspects the Group’s results
and financial position are unaffected by
the change and reflect the continuation
of the Group.
Going concern
These financial statements are prepared
on a going concern basis which the
directors consider to be appropriate
for the following reasons:
The Group meets day-to-day working
capital and other funding requirements
through banking facilities, which include
an overdraft facility. Longer-term
debt financing is accessed through the
Group’s USPP loan note programme.
The facilities comprise a £350m
multi-currency RCF, which runs to June
2026 and £250m of USPP loan notes
with maturities between 2028 and 2036.
Further details of these facilities are
provided in note 14 to the financial
statements.
The Group comfortably met all
covenants in 2023 and other terms of
its borrowing agreements in the period,
and maintained a track record of
profitability and cash generation, with an
overall profit before taxation of £134.4m
and net cash from operating activities
of £191.9m.
The Group has prepared cash flow
forecasts for a period of 12 months from
the date of signing these financial
statements, which show a sustained
trend of profitability, cash generation
and retained covenant headroom, even
under a ‘severe but plausible’ downside
scenario of forecast cash flows.
The impact of the acquisitions discussed
in note 28 on the Group’s borrowings and
covenant headroom has been
considered in making this assessment.
The base case assumes a trading
performance delivered in line with
market consensus over the forecast
period, while the downside scenario
models a 10% reduction in revenues,
which the Group believes is an extremely
severe sensitivity relative to likely
outcomes and historic experience.
As at 31 December 2023, the Group had
cash of £126.9m and undrawn banking
facilities of £350.0m. At the date of this
report, the Group retains a similar level
of liquidity. Following the acquisitions
discussed in note 28 the level of undrawn
facilities will reduce to c.£175m. The
remaining cash and undrawn facility is
expected to provide sufficient available
funds for the Group to discharge its
liabilities as they fall due.
Consequently, the directors are
confident that the Group will have
sufficient funds to continue to meet its
liabilities as they fall due for at least
12 months from the date of approval of
these financial statements and therefore
have prepared the financial statements
on a going concern basis.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 190
Notes to the consolidated financial statements
1
Accounting policies
continued
Applicable laws and accounting standards
These financial statements have been
prepared in accordance with UK-adopted
international accounting standards.
The consolidated financial statements have
been prepared under the historical cost
convention except for the revaluation to
fair value of certain financial instruments.
The accounting policies set out below
have, unless otherwise stated, been applied
consistently throughout the year.
Presentation currency
These financial statements are presented in
sterling. All financial information presented
has been rounded to the nearest £0.1m.
Basis of consolidation
Subsidiary undertakings are entities controlled
by the Group. Control exists when the Group
is exposed to or has rights to variable returns
from its investment and has the ability to
affect those returns through its power over
the investee. In assessing control, potential
voting rights that are currently exercisable
or convertible are taken into account.
The Group considers an entity to be a
subsidiary undertaking when the Group
has control over the entity. Ordinarily this
is when the Group holds more than 50%
of the shares and voting rights. Subsidiary
undertakings are consolidated in
accordance with IFRS 10.
Associates are those entities in which the
Group holds more than 20% of the shares
and voting rights and has significant
influence, but not control, over the financial
and operating policies. Joint ventures
are those entities over whose activities
the Group has joint control, requiring
unanimous consent of the owners for
strategic financial and operating decisions.
from 1 January 2023. The adoption of these
standards has not had a material impact
on the financial statements.
New IFRS Standards and Interpretations
not adopted
The Group’s financial statements
includes the Group’s share of the total
comprehensive income of its associate
and joint ventures, on an equity accounted
basis, from the date that significant
influence or joint control commences
until the date that significant influence
or joint control ceases.
When the Group’s share of losses exceeds
its interest in an associate or joint venture,
the Group’s carrying amount is reduced
to nil and recognition of further losses is
discontinued, except to the extent that the
Group has incurred legal or constructive
obligations or made payments on behalf
of an associate or joint venture.
Accounting estimates and judgements
The preparation of the financial statements
requires the use of certain critical accounting
estimates, and for management to exercise
judgement in the process of applying the
Group’s accounting policies.
The areas involving a higher degree of
judgement or complexity, or areas where
assumptions and estimates are significant
to the consolidated financial statements, are
disclosed in note 26.
New IFRS Standards and Interpretations
adopted in the year
The Group adopted IFRS 17 and
amendments to IAS 1, IAS 8 and IAS 12
At the date on which these financial
statements were authorised, there
were no Standards, Interpretations and
Amendments which had been issued but
were not effective for the year ended
31 December 2023 that are expected
to materially impact the Group’s financial
statements in the future.
Foreign exchange
Foreign exchange transactions
Transactions in foreign currencies are
recorded at the spot rate at the transaction
date. Monetary assets and liabilities
denominated in foreign currencies are
retranslated at the balance sheet date,
with all currency translation differences
recognised within the consolidated income
statement, except for those monetary items
that provide an effective hedge for a net
investment in a foreign operation.
Foreign exchange translation
The consolidated financial statements
are presented in sterling, which is the
presentational currency of the Group.
The individual financial statements of the
Group’s subsidiaries and joint ventures with
a functional currency other than sterling
are translated into sterling according
to IAS 21.
Results and cash flows are translated
monthly using average monthly exchange
rates. Accumulated, assets and liabilities are
translated using the closing rates at the
reporting date and equity is translated at
historic exchange rates.
The resulting translation differences are
recognised in the consolidated statement of
comprehensive income until the subsidiary
is disposed of. Goodwill and fair value
adjustments arising on acquisition of a
foreign operation are regarded as assets
and liabilities of the foreign operation and
are translated accordingly.
Financial instruments
Financial instruments are recognised
when the Group becomes a party to the
contractual provisions of the instrument.
The principal financial assets and liabilities
of the Group are as follows:
Trade receivables and trade payables
Trade receivables and trade payables are
initially recognised at fair value and are then
stated at amortised cost.
Contract assets and liabilities
Contract assets, presented within trade and
other receivables, primarily relate to the
Group’s rights to consideration for work
completed but not billed at the reporting
date on surfacing contracts. The contract
assets are transferred to receivables
when the rights become unconditional.
Contract liabilities, presented within trade
and other payables, primarily relate to the
advance consideration received from
customers on these contracts.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 191
Notes to the consolidated financial statements
1
Accounting policies
continued
Cash and cash equivalents
Cash and cash equivalents comprise
cash at bank and in hand, including bank
deposits and money-market funds with
original maturities of three months or less.
For the purposes of the consolidated
statement of cash flows, bank overdrafts
are included in cash and cash equivalents
as they are an integral part of the Group’s
cash management.
Bank and other borrowings
Interest-bearing bank loans, overdrafts
and other loans, including USPP loan
notes, are recognised initially at fair
value less attributable transaction costs.
All borrowings are subsequently stated
at amortised cost with the difference
between initial net proceeds and
redemption value recognised in the
consolidated income statement over
the period to redemption on an effective
interest basis.
Derivative financial instruments
The majority of the Group’s strategic
hedging programme is delivered using
executory contracts to forward purchase
commodities for our own use. The cost is
recognised in the consolidated income
statement at the agreed forward rates
on receipt of the underlying items.
The Group uses financial instruments to
manage financial risks associated with
the Group’s underlying business activities
and the financing of those activities.
The Group does not undertake any
trading in financial instruments.
This process includes linking all derivatives
designated as hedges to specific
assets and liabilities or to specific firm
commitments or forecast transactions.
Derivatives are initially recognised at fair
value and subsequently remeasured in
future periods at fair value. The gain
or loss on remeasurement is recognised
immediately in profit or loss, unless
a derivative financial instrument is
designated as a hedge of the variability in
cash flows of a recognised asset or liability.
In this instance the effective part of
any gain or loss is recognised in the
consolidated statement of comprehensive
income and in the hedging reserve.
Any ineffective portion of the hedge
is recognised immediately in the
consolidated income statement.
Amounts recorded in the hedging reserve
are subsequently reclassified to the
consolidated income statement when
the expense for the hedged transaction
is actually recognised.
To qualify for hedge accounting,
the hedging relationship must meet
several conditions with respect to
documentation, probability of occurrence,
hedge effectiveness and reliability
of measurement.
At the inception of the transaction,
the Group documents the relationship
between hedging instruments and hedged
items, as well as its risk management
objective and strategy for undertaking
the hedge transaction.
The Group documents an assessment, at
hedge inception and on an annual basis,
as to whether the derivatives that are
used in hedging transactions have been,
and are likely to continue to be, effective
in offsetting changes in fair value or cash
flows of hedged items.
Mineral reserves and resources
Mineral reserves and resources are stated
at cost, including both the purchase price
and costs incurred to gain access to the
reserves, including costs of planning and
initial site development. The value of
mineral reserves and resources recognised
as a result of business combinations is
based on the fair value at the point of
acquisition.
Mineral assets are depreciated using a
physical unit-of-production method,
over the commercial life of the quarry.
Property, plant and equipment
Items of property, plant and equipment
are stated at cost less accumulated
depreciation and any recognised
impairment loss.
Depreciation is charged to the consolidated
income statement on a straight-line basis
over the estimated useful lives of assets,
in order to write off the cost or deemed
cost of assets.
The estimated useful lives are as follows:
Freehold buildings
50 years
Fixtures and fittings
up to 10 years
Office equipment
up to 5 years
Fixed plant
Loose plant
and machinery
up to 35 years
up to 10 years
Motor vehicles
up to 10 years
No depreciation is provided on
freehold land.
Business combinations, intangible
assets and goodwill
The Group measures goodwill as the fair
value of the purchase consideration
transferred, including the recognised
amount of any non-controlling interest
in the acquiree, less the fair value of the
identifiable assets acquired and liabilities
assumed, all measured as of the acquisition
date. Fair value adjustments are always
considered to be provisional at the first
reporting date after the acquisition.
Goodwill arising on the acquisition of
subsidiary undertakings is recognised
as an asset in the consolidated statement
of financial position and is subject to an
annual impairment review.
Other intangible assets that are
acquired by the Group as part of a
business combination are stated at
cost less accumulated amortisation
and impairment losses.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Notes to the consolidated financial statements
1
Accounting policies
continued
Business combinations, intangible
assets and goodwill continued
Cost reflects management’s judgement of
the fair value of the individual intangible
asset calculated by reference to the net
present value of future economic benefits
accruing to the Group from the utilisation
of the asset, discounted at an appropriate
rate. Other intangibles arising on the
acquisition of associated undertakings
are included within the carrying value of
the investment.
Amortisation is based on the estimated
useful economic lives of the assets
concerned, which is considered by the
directors to be a period of up to 20 years.
The Group measures non-controlling
interests at a proportionate share of the
recognised amount of the identifiable net
assets at the acquisition date.
Where the Group has entered into put
options relating to a minority shareholding
as part of a transaction, the Group applies
the ‘anticipated acquisition’ method to
account for the put liability and does not
recognise a separate non-controlling
interest within reserves. Subsequently
changes in the value of the put liability
are recognised within equity.
Impairment of non-financial assets
The carrying amounts of the Group’s
non-financial assets, other than goodwill,
inventories and deferred tax assets
(see separate accounting policies),
are reviewed at each reporting date to
determine whether there is any indication
of impairment; including an assessment of
any indication of impairment arising as a
result of climate change.
Impairment reviews are undertaken at the
level of each significant cash-generating
unit, which is no larger than an operating
segment as defined by IFRS 8. If any
such indication exists then the asset’s
recoverable amount is estimated.
The recoverable amount of an asset or
cash-generating unit is the greater of
the value in use and the fair value less
costs to sell.
In assessing value in use, the estimated
future cash flows are discounted to their
present value using a pre-tax discount rate
that reflects current market assessments
of the time value of money and the risks
specific to the asset.
An impairment loss in respect of goodwill
is not reversed. In respect of other assets,
impairment losses recognised in prior
periods are assessed at each reporting
date for any indications that the loss has
decreased or no longer exists.
An impairment loss is reversed if there has
been a change in the estimates used to
determine the recoverable amount.
An impairment loss is reversed only to the
extent that the asset’s carrying amount
does not exceed the carrying amount
that would have been determined, net
of depreciation or amortisation, if no
impairment loss had been recognised.
Impairment of financial assets
The Group recognises loss allowances
for expected credit losses (ECLs) on
financial and contract assets measured
at amortised cost.
The Group measures loss allowances at
an amount equal to lifetime ECLs except
for bank balances for which credit risk
(i.e. the risk of default occurring over the
expected life of the financial instrument)
has not increased significantly since initial
recognition, which are measured as
12-month ECLs.
Measurement of ECLs
ECLs are a probability-weighted estimate
of credit losses. Credit losses are measured
as the present value of all cash shortfalls
(i.e. the difference between the cash flows
due to the entity in accordance with the
contract and the cash flows that the
Group expects to receive). ECLs are
discounted at the effective interest rate
of the financial asset.
Inventories
Inventories are stated at the lower of cost
and net realisable value. Cost is based on
the first-in first-out principle and includes
expenditure incurred in acquiring the
inventories and bringing them to their
existing location and condition.
In the case of manufactured inventories
and work in progress, cost includes
an appropriate share of overheads,
including mineral depletion where relevant.
The level of overheads included in the
cost of inventory is based on normal
operating capacity.
192
Net realisable value is determined with
reference to sales prices less cost to sell
and, in the case of obsolete stock on an
excess stock model of sales relative to
inventories held.
Emissions rights
The Group is required to purchase carbon
emissions credits to settle liabilities under
both EU and UK ETS. Assets and liabilities
arising in respect of emission rights
are presented on a net basis in the
consolidated financial statements.
Where an emissions credit is received for
nil cost, these are initially measured at a
nominal value of zero and an emissions
liability is recognised only in circumstances
where emissions have exceeded the
allowance for a scheme, from the
perspective of the Group as a whole, and
will require the purchase of additional
allowances to settle an emissions liability.
Emission credits purchased for
consideration are measured at cost using
the first-in first-out principle and presented
within inventories where the net value is in
excess of emissions liabilities.
Retirement benefits
The Group does not operate any defined
benefit plans. Obligations for contributions
to defined contribution pension plans
are recognised as an expense in the
consolidated income statement
as incurred.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 193
Notes to the consolidated financial statements
1
Accounting policies
continued
Provisions
A provision is recognised in the consolidated
statement of financial position when the
Group has a present legal or constructive
obligation, and it is probable that an
outflow of economic benefits will be
required to settle the obligation.
The Group provides for the costs of
decommissioning property, plant and
equipment and to restore its sites. The
initial cost of creating decommissioning
provisions on commencement of
operations is included in property, plant
and equipment and depreciated over the
life of the plant.
Changes in the measurement of a
previously capitalised provision that result
from changes in the estimated timing or
amount of cash outflows are added to,
or deducted from, the cost of the related
asset. All other changes, including
incremental extraction of minerals which
increases the level of restoration provisions,
are recognised in the consolidated
income statement.
All provisions are discounted to their
present value at a rate that reflects current
market assessments of the time value of
money and the risks specific to the liability.
Revenue
Group revenue arises from the sale of
goods and surfacing. IFRS 15 requires
revenue to be recognised in line with
a principles-based five-step model.
This requires the Group to identify its
performance obligations, determine the
transaction price applicable to each of
these performance obligations and then
to select an appropriate method for the
timing of revenue recognition, reflecting
the substance of the performance
obligation, being either recognition
at a point in time or over time.
Revenue from sale of goods
The majority of the Group’s revenue is
derived from the sale of physical goods
to customers. Depending on whether
the goods are delivered to or collected
by the customer, the contract contains
either one performance obligation which
is satisfied at the point of collection, or
two performance obligations which are
satisfied simultaneously at the point
of delivery.
The transaction price for this revenue is
the amount which can be invoiced to
the customer once the performance
obligations are fulfilled, reduced to reflect
provisions recognised for returns, trade
discounts and rebates. Where the Group
offers discounts or volume rebates, the
variable element of revenue is based on
the most likely amount of consideration
that the Group believes will be received.
This value excludes items collected on
behalf of third parties, such as sales taxes.
For all sales of goods, revenue is
recognised at a point in time, being the
point that the goods are transferred to
the customer.
Revenue from surfacing
The majority of surfacing revenue
comprises short-term performance
obligations to supply and lay materials.
Other surfacing revenue can contain
more than one performance obligation
dependent on the nature of the contract.
The transaction price is calculated as
consideration specified by the contract,
adjusted to reflect provisions recognised
for returns, trade discounts and rebates.
Where the agreement with a customer
provides for elements of variable
consideration, these values are included
in the calculation of the transaction price
only to the extent that it is ‘highly probable’
that a significant reversal in the amount
of cumulative revenue recognised will not
occur when the uncertainty associated
with the variable consideration is resolved.
Where the transaction price is allocated
between multiple performance obligations,
this typically reflects the allocation of value
to each performance obligation agreed
with the end customer, unless this does
not reflect the economic substance.
Surfacing performance obligations
are satisfied over time, so revenue is
typically recognised on an output basis,
being volume of product laid for most
surfacing revenue.
Warranties and customer claims
The Group provides assurance type
warranties over the specification of
products but does not provide extended
warranties or maintenance services in
contracts with customers. Claims with
customers may arise in the usual course
of business. Both customer claims and
warranties are accounted for under IAS 37.
Financial income and expense
Financial income and expense comprise
interest payable, finance charges, lease
interest, interest receivable on funds
invested, and gains and losses on related
hedging instruments that are recognised
in the consolidated income statement.
Interest income and interest payable is
recognised in profit or loss as it accrues,
using the effective interest method.
Income tax
Income tax on the profit or loss for the
year comprises current and deferred
tax. Income tax is recognised in the
consolidated income statement except
to the extent that income tax relates to
items recognised directly in equity.
Current tax is the expected tax payable
on the taxable profit for the year. Taxable
profit differs from net profit as reported
in the consolidated income statement
because taxable profit excludes items of
income or expense that are not taxable
or deductible.
The Group’s liability for current tax is
calculated using tax rates enacted or
substantively enacted at the reporting
date and includes any adjustment to tax
payable in respect of previous years.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Notes to the consolidated financial statements
1
Accounting policies
continued
Deferred tax
Deferred tax is provided in full using the
statement of financial position liability
method and represents the tax expected
to be payable or recoverable on the
temporary differences between the
carrying amounts of assets and liabilities
for financial reporting purposes and the
amounts used for taxation purposes.
The following temporary differences are
not provided for:
goodwill not deductible for tax purposes;
the initial recognition of assets or
liabilities that affect neither accounting
nor taxable profit other than in a
business combination; and
differences relating to investments
in subsidiaries to the extent that
they will probably not reverse in the
foreseeable future.
The amount of deferred tax provided
is based on the expected manner of
realisation or settlement of the carrying
amount of assets and liabilities using tax
rates enacted or substantively enacted
at the reporting date.
A deferred tax asset is recognised only
to the extent that it is probable that
future taxable profits will be available
against which the asset can be utilised.
The carrying amount of deferred tax assets
is reviewed at each reporting date and
reduced to the extent that it is no longer
probable that sufficient taxable profit will
be available to allow all or part of the asset
to be recovered.
Deferred tax assets and liabilities are offset
when they relate to income taxes levied by
the same taxation authority and the Group
intends to settle its current tax assets and
liabilities on a net basis.
Leases
Right-of-use assets and liabilities are
recognised for any arrangements meeting
the definition of a lease set out in IFRS 16.
Right-of-use assets are measured at cost,
comprising the initial amount of the
lease liability adjusted for any lease
prepayments, plus any initial direct costs
incurred, less any lease incentives received.
Right-of-use assets are then depreciated
using the straight-line method from the
start of the lease to the earlier of the end
of the useful life of the right-of-use asset
or the end of the lease term.
Lease liabilities are presented within
interest-bearing loans and borrowings.
They are measured at the present value
of future lease payments, discounted at
a rate which reflects both the Group’s
incremental borrowing rate, adjusted for
the time value of money, and the nature
of the leased asset.
The Group has elected to take advantage
of the practical expedients, permitted by
IFRS 16, not to recognise lease assets and
liabilities in respect of short-term and
low-value leases. Charges recognised in
the consolidated income statement in
respect of these leases are not significant
to the Group.
Share-based transactions
Equity-settled share-based payments
to directors, key employees and others
providing similar services are measured at
the fair value of the equity instruments at
the grant date. The fair value is expensed,
with a corresponding increase in equity,
on a straight-line basis over the period that
the employees become unconditionally
entitled to the awards.
At each reporting date, the Group revises
the amount recognised as an expense
to reflect the number of awards for which
the related service and non-market
performance conditions are expected to
be met, such that the amount ultimately
recognised as an expense is based on the
number of awards that meet the related
service and non-market performance
conditions at the vesting date.
For share-based payment awards with
market-based performance conditions,
the grant date fair value of the share-based
payment is measured to reflect such
conditions and there is no true-up for
differences between expected and
actual outcomes.
Where a share-based payment is
net-settled by withholding a specified
portion of the shares to meet statutory
obligations, the arrangement is accounted
for as an equity-settled share-based
payment in its entirety.
Dividends
Dividends are recognised as a liability
in the financial statements in the period in
which they are declared by the Company
194
and, in respect of final dividends, approved
by shareholders.
Alternative performance measures
The following non-GAAP performance
measures have been used in the
financial statements:
i.
ii.
iii.
iv.
v.
vi.
Underlying Earnings Before Interest and
Tax (EBIT)
Underlying EBIT margin
Underlying EBITDA
Like-for-like Underlying EBIT
Like-for-like revenue
Underlying Basic & Diluted Earnings per
Share (EPS)
vii. Adjusted Underlying Basic & Diluted EPS
viii. Free Cash Flow
ix.
x.
xi.
Free Cash Flow conversion
Return on invested capital
Covenant Leverage
xii. Net Debt
xiii. Net Debt (excluding IFRS 16)
Management uses these terms as they
believe these measures allow an
understanding of the Group’s underlying
business performance. These alternative
performance measures are well
understood by investors and analysts,
are consistent with the Group’s historic
communication with investors and reflects
the way in which the business is managed.
A reconciliation between these alternative
performance measures to the most directly
related statutory measures is included
within note 27.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Notes to the consolidated financial statements
2
Segmental analysis
The Group’s activities comprise the following reportable segments:
Great Britain: our construction materials and surfacing businesses in Great Britain.
Ireland: our construction materials and surfacing businesses on the Island of Ireland.
Cement: our cementitious operations in Great Britain and Ireland.
A description of the activities of each segment is included on pages 36 to41.
Income statement
Great Britain
Ireland
Cement
Central administration
Eliminations
Total
Reconciliation to statutory profit
Underlying EBITDA as above
Depreciation and mineral depletion
Underlying Group operating profit
Great Britain
Ireland
Cement
Central administration
Underlying Group operating profit
Share of profit of associate
and joint ventures
Underlying profit from operations (EBIT)
Non-underlying items (note 3)
Profit from operations
2023
2022
Revenue
£m
972.4
226.2
300.7
–
(103.0)
1,396.3
Revenue
£m
1,033.8
235.5
331.2
–
(113.0)
1,487.5
Underlying
EBITDA*
£m
138.6
35.9
84.5
(16.7)
–
242.3
242.3
(88.7)
153.6
86.4
29.0
55.2
(17.0)
153.6
2.6
156.2
(10.5)
145.7
* Underlying EBITDA is earnings before interest, tax, depreciation and mineral depletion, amortisation,
non-underlying items (note 3) and before our share of profit of associate and joint ventures.
195
Disaggregation of revenue from contracts with the customers
Analysis of revenue by geographic location of end-market
The primary geographic market for all Group revenues for the purpose of IFRS 15 is the
UK and RoI. In line with the requirements of IFRS 8, this is analysed by individual countries
as follows:
United Kingdom
Republic of Ireland
Other
2023
£m
1,296.8
188.1
2.6
2022
£m
1,217.3
176.5
2.5
1,487.5
1,396.3
Underlying
EBITDA*
£m
Analysis of revenue by major products and service lines by segment
Sale of goods
Great Britain
Ireland
Cement
Eliminations
Surfacing
Great Britain
Ireland
2023
£m
2022
£m
855.8
96.5
331.2
(113.0)
1,170.5
178.0
139.0
317.0
829.0
82.0
300.7
(103.0)
1,108.7
143.4
144.2
287.6
1,487.5
1,396.3
Eliminations primarily comprise sales from Cement to the Great Britain and Ireland segments.
Timing of revenue recognition
Sale of goods revenue relates to products for which revenue is recognised at a point
in time as the product is transferred to the customer. Surfacing revenues are accounted
for as products and services for which revenue is recognised over time.
136.1
34.4
79.6
(15.1)
–
235.0
235.0
(83.5)
151.5
86.4
28.3
52.1
(15.3)
151.5
3.5
155.0
(7.0)
148.0
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 196
Analysis of depreciation, amortisation and capital expenditure
Notes to the consolidated financial statements
2
Segmental analysis continued
Statement of financial position
Great Britain
Ireland
Cement
Central administration
Total operations
Current tax
Deferred tax
Net Debt
Total Group
Net assets
2023
2022
Total assets
£m
Total liabilities
£m
Total assets
£m
Total liabilities
£m
920.6
282.8
539.2
3.3
(238.3)
(40.6)
(73.8)
(20.5)
900.9
260.6
519.7
2.9
(228.0)
(40.5)
(62.0)
(19.3)
1,745.9
(373.2)
1,684.1
(349.8)
–
–
126.9
1,872.8
(0.1)
(92.0)
(296.8)
(762.1)
1,110.7
–
–
101.7
1,785.8
(3.8)
(89.0)
(299.4)
(742.0)
1,043.8
2023
Great Britain
Ireland
Cement
Central administration
2022
Great Britain
Ireland
Cement
Central administration
Depreciation
and mineral
depletion
£m
Amortisation
of intangible
assets
£m
Additions
to property,
plant and
equipment
£m
52.2
6.9
29.3
0.3
88.7
49.7
6.1
27.5
0.2
83.5
3.6
2.4
–
–
6.0
2.7
2.1
–
–
4.8
56.9
14.1
35.2
0.6
106.8
71.1
10.5
24.9
0.3
106.8
GB total assets include £13.4m (2022: £12.4m) and Cement total assets include £1.1m
(2022: £1.3m) in respect of investments in associate and joint ventures.
Geographic location of property, plant and equipment and right-of-use assets
Additions to owned property, plant and equipment exclude additions in respect of
business combinations.
United Kingdom
Republic of Ireland
2023
£m
726.4
135.9
862.3
2022
£m
705.7
129.3
835.0
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Notes to the consolidated financial statements
3
Non-underlying items
4
Operating expenses and auditor’s remuneration
Non-underlying items are those which, because of their nature, size or incidence, are either
unlikely to recur in future periods or which distort the underlying trading performance of
the business, including non-cash items. For an item to be classified as non-underlying,
it must meet defined criteria which are applied consistently by the Group.
The directors monitor the performance of the Group using alternative performance
measures which are calculated on an underlying basis. In the opinion of the directors,
this presentation aids understanding of the underlying business performance and any
references to underlying earnings measures throughout this report are made on this basis.
Underlying measures are calculated and presented on a consistent basis over time to assist
in the comparison of performance.
Included in operating expenses:
Acquisition costs (note 25)
Property losses
Amortisation of acquired intangible assets
AIM to Main Market costs
Total non-underlying items (before tax)
Non-underlying taxation
Total non-underlying items (after tax)
2023
£m
0.9
–
6.0
3.6
10.5
(1.4)
9.1
2022
£m
0.7
1.5
4.8
–
7.0
(0.8)
6.2
Costs of raw materials purchased
Employee costs (note 5)
Depreciation and mineral depletion:
Owned assets
Leased assets
(Gain)/loss on sale of plant and equipment
Other operating expenses
Underlying operating expenses
Non-underlying operating expenses (note 3)
Operating expenses
Auditor’s remuneration
Audit of the Company
Audit of the Company’s subsidiary undertakings
Reporting accountant’s fees
197
2022
£m
246.2
192.2
74.8
8.7
0.9
722.0
1,244.8
7.0
1,251.8
2023
£m
263.1
208.3
80.6
8.1
(1.4)
775.2
1,333.9
10.5
1,344.4
2023
£m
2022
£m
0.3
0.9
0.6
1.8
–
0.9
0.1
1.0
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Notes to the consolidated financial statements
5
Employees and directors
The aggregate payroll costs of these persons were as follows:
Disclosure by individual director, including information on all outstanding share options,
is provided in the Directors’ Remuneration report from page 160. Remuneration received
by the directors (the Group’s key management personnel) is summarised below:
Wages and salaries
Social security costs
Pension costs
Directors’ remuneration
Share-based payments (note 18)
198
2022
£m
162.3
19.2
8.3
2.4
192.2
2023
£m
177.4
20.3
7.6
3.0
208.3
Salaries and short-term employee benefits
Directors’ fees
Share-based payments (note 18)
2023
£m
2.5
0.4
1.1
4.0
2022
£m
2.4
0.4
0.7
3.5
Pension costs relate to various defined contribution pension schemes operated within
the Group. These are accounted for on a contribution payable basis.
Contributions outstanding at 31 December 2023 amounted to £1.2m (2022: £1.1m)
and are included in other payables.
No pension contributions were paid by the Group directly to any pension schemes
on behalf of the directors in either the current or prior years.
6
Financial income and expense
Staff numbers and costs
The average number of persons employed by the Group during the year was as follows:
Great Britain
Ireland
Cement
Central administration
Number of employees
Total financial income
Interest received on cash deposits and money-market funds
2023
2,793
346
525
233
2022
(*restated)
2,600
328
515
206
Interest charged on bank loans, private placement notes and overdrafts
Amortisation of loan arrangement fees
Lease liabilities
Unwinding of discount on provisions
* Restated for consistent presentation of central administrative headcount with 2023 to reflect changes to the
Group’s internal reporting during 2023.
3,897
3,649
Total financial expense
2023
£m
2.6
2.6
(6.8)
(1.1)
(2.3)
(3.7)
(13.9)
2022
£m
0.2
0.2
(6.7)
(1.1)
(2.5)
(2.1)
(12.4)
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Notes to the consolidated financial statements
7
Taxation
Reconciliation of effective tax rate
Recognised in the consolidated income statement
Profit before taxation
Current tax
Current year
Prior year
Total current tax
Deferred tax
Current year
Change in deferred tax rate
Prior year
Total deferred tax
Total tax charge in the consolidated income statement
Recognised in equity
Deferred tax
Derivatives
Share-based payments
Total tax charge in equity
2023
£m
30.5
(2.1)
28.4
(1.9)
0.7
1.6
0.4
28.8
2023
£m
(0.1)
0.1
–
2022
£m
23.6
1.0
24.6
(1.8)
1.1
(0.7)
(1.4)
23.2
2022
£m
(0.2)
0.4
0.2
199
2022
£m
135.8
25.8
(2.6)
0.6
(1.4)
0.8
(0.7)
(0.7)
–
1.1
0.3
23.2
2023
£m
134.4
31.6
(4.0)
1.4
(0.1)
0.1
–
(0.5)
0.1
0.7
(0.5)
28.8
Tax at the Company’s domestic rate of 23.5% (2022: 19%)
Difference between Company and subsidiary statutory tax rates
Expenses not deductible for tax purposes
Enhanced capital allowances
Share-based payments
Unrecognised deferred tax assets (note 11)
Income from associate and joint ventures already taxed
Chargeable gain on property disposal
Change in deferred tax rate
Adjustment in respect of prior years
Total tax charge
The Company is tax resident in the UK, with a 23.5% tax rate. The Group’s subsidiary
operations pay tax at a rate of 23.5% (2022: 19%) in the UK and 12.5% (2022: 12.5%) in RoI.
Excluding the impact of non-underlying items and the change in deferred tax rate,
the Group’s Underlying effective tax rate is 20.4% (2022: 16.0%). Including these items,
the Group’s reported tax rate for the year is 21.4% (2022: 17.1%).
Global Minimum Corporate Tax Framework
In December 2021, the OECD released model rules for a new global minimum corporate
tax framework applicable to multinational enterprise groups with global revenues of over
€750 million (‘Pillar Two’ rules). The UK substantively enacted legislation implementing
these rules on 20 June 2023 and the rules apply to the Group as of 1 January 2024.
The Group is reviewing this legislation together with developing guidance. At 1 January
2024 the impact of Pillar Two rules on the Group is limited to the Group’s taxable profits
generated in RoI. Based on the information currently available, the impact of these rules
on the Group tax position is not expected to be material.
In accordance with the mandatory exception under Amendments to IAS 12, the Group has
not remeasured deferred tax assets and liabilities as a result of the implementation of the
Pillar Two rules.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Notes to the consolidated financial statements
8
Property, plant and equipment
Cost
Balance at 1 January 2023
Translation adjustment
Business combinations (note 25)
Additions
Disposals and impairment
Change to capitalised provisions
Transfer from leased assets (note 20)
Reclassification
At 31 December 2023
Depreciation and mineral depletion
Balance at 1 January 2023
Translation adjustment
Transfer from leased assets (note 20)
Charge for the year
Disposals and impairment
Reclassification
At 31 December 2023
Net book value
At 31 December 2023
Mineral
reserves and
resources
£m
Land and
buildings
£m
Plant,
equipment
and vehicles
£m
Cost
Total
£m
Balance at 1 January 2022
Translation adjustment
Business combinations (note 25)
340.3
134.8
713.3
1,188.4
Additions
(0.6)
6.5
13.5
(2.0)
–
–
(2.9)
354.8
86.4
(0.1)
–
13.8
(1.5)
(2.1)
96.5
(0.7)
1.6
10.9
(0.5)
(0.6)
–
2.9
(1.8)
2.9
82.4
(6.7)
(3.2)
0.5
–
(9.2)
(3.8)
0.5
–
148.4
787.4
1,290.6
(3.1)
11.0
Disposals and impairment
Change to capitalised provisions
106.8
Reclassification
Depreciation and mineral depletion
Balance at 1 January 2022
Translation adjustment
Charge for the year
Disposals and impairment
32.8
–
–
5.9
(0.1)
2.1
281.3
(0.4)
0.2
60.9
(5.8)
–
400.5
At 31 December 2022
(0.5)
0.2
80.6
(7.4)
–
Net book value
At 31 December 2022
Assets under construction
258.3
107.7
451.2
817.2
200
Mineral
reserves and
resources
£m
Land and
buildings
£m
Plant,
equipment
and vehicles
£m
Total
£m
340.0
130.6
616.9
1,087.5
1.3
–
1.8
(1.0)
–
(1.8)
2.3
0.3
0.5
(0.3)
(0.9)
2.3
4.3
3.3
104.5
(18.4)
3.2
(0.5)
7.9
3.6
106.8
(19.7)
2.3
–
71.3
0.2
15.0
(0.1)
86.4
27.4
0.3
5.2
(0.1)
32.8
238.9
0.7
54.6
(12.9)
281.3
337.6
1.2
74.8
(13.1)
400.5
253.9
102.0
432.0
787.9
40.7
336.2
473.4
Presented within plant, equipment and vehicles are assets in the course of construction
totalling £59.3m (2022: £34.2m) which are not being depreciated.
At 31 December 2022
340.3
134.8
713.3
1,188.4
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Notes to the consolidated financial statements
9
Intangible assets
Goodwill
£m
Customer
related
£m
Other
£m
Total
£m
Other intangible assets primarily comprise brand and permit assets arising from
acquisitions. The amortisation charge on these assets is recognised in non-underlying
operating expenses in the consolidated income statement. The remaining life of the finite
intangible assets ranges from 1-15 years.
Carrying value of goodwill by operating segment
201
Cost
At 1 January 2023
Translation adjustment
Business combinations (note 25)
At 31 December 2023
Amortisation
At 1 January 2023
Translation adjustment
Charge for the year
At 31 December 2023
Net book value
At 31 December 2023
Cost
At 1 January 2022
Translation adjustment
Business combinations (note 25)
At 31 December 2022
Amortisation
At 1 January 2022
Translation adjustment
Charge for the year
At 31 December 2022
Net book value
At 31 December 2022
469.6
(2.4)
6.9
474.1
–
–
–
–
50.4
(0.5)
3.9
53.8
14.7
(0.1)
4.3
18.9
17.7
–
–
17.7
4.8
–
1.7
6.5
537.7
(2.9)
Great Britain
10.8
Ireland
545.6
Cement
2023
£m
200.2
111.8
162.1
474.1
2022
£m
196.7
109.6
163.3
469.6
19.5
(0.1)
6.0
25.4
Impairment tests for cash-generating units (‘CGUs’) containing goodwill
Goodwill arising on business combinations is not amortised but is reviewed for impairment
on an annual basis, or more frequently if there are indications that the goodwill may
be impaired. Goodwill is allocated to groups of CGUs according to the level at which
management monitor that goodwill, being the Group’s operating segments.
474.1
34.9
11.2
520.2
The key assumptions used in performing the impairment review are those used in
calculating the value-in-use of each CGU, as set out below:
454.8
6.1
8.7
469.6
–
–
–
–
44.3
1.4
4.7
50.4
10.7
0.5
3.5
14.7
16.6
–
1.1
17.7
3.5
–
1.3
4.8
515.7
Cash flow projections
7.5
14.5
537.7
14.2
0.5
4.8
19.5
Cash flow projections for each operating segment are derived from the annual budget
approved by the Board for 2024 and the three-year plan for 2025 and 2026. The key
assumptions on which budgets and forecasts are based include sales growth, product mix
and operating costs.
These cash flows are then extrapolated forward for a further period of up to 50 years
reflecting the long-term nature of the underlying assets, subject to obtaining incremental
planning permissions for our quarries and plants. Budgeted cash flows are based on past
experience and forecast future trading conditions.
469.6
35.7
12.9
518.2
Long-term growth rates
Cash flow projections assume a growth rate of 3.2% (2022: 3.4%) from the fourth year of
the value-in-use model, which reflects the impact of longer-term inflation projections on
future earnings derived from published market data.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 202
Notes to the consolidated financial statements
9
Intangible assets continued
Discount rate
Forecast pre-tax cash flows for each segment have been discounted at pre-tax rates of
between 11.5% and 14.7% (2022: between 11.9% and 12.6%). These rates were determined
by an external expert based on market participants’ cost of capital and adjusted to reflect
factors specific to each segment.
Sensitivity
The Group has assessed the impact of possible changes in the key assumptions to the
impairment review, including the capital costs of our carbon reduction strategy that are
included in our financial plans. As discussed further below, it is not possible to quantify the
gross cost of the transition over the longer term and this is therefore excluded from the
sensitivity analysis. Having performed a sensitivity analysis over the key assumptions, the
directors have concluded that there are no reasonably possible changes to assumptions
which would result in an impairment charge being recognised.
Impact of climate change on impairment testing
Impacts related to climate change and the transition to a lower carbon economy
may include:
Physical impacts resulting from increased severity and frequency of extreme weather
events, together with impacts arising from longer-term shifts in climate patterns.
Transitional impacts, including changing demand for the Group’s products due to
shifts in policy, regulation (including carbon pricing mechanisms), legal, technological,
market, customer or societal responses to climate change.
The Group’s risk analysis indicates that the physical impacts of climate change are unlikely
to have a significant impact on our impairment testing, with our operations typically
located in the UK and RoI in regions that face relatively low physical challenges from
climate change.
The impact of the transition to a lower carbon economy could be more significant.
Breedon is committed to net zero by 2050 as well as to the manufacture of cement at our
two well-invested cement plants; however, to achieve net zero will require a significant
reduction in our carbon emissions.
As set out in more detail in our Sustainability report on pages 71 to 104, we have
committed to a 30% reduction from a 2005 baseline in gross carbon intensity per tonne
of cementitious product by 2030, and we are taking near-term actions based on existing
technologies to move towards this objective. In addition, the Group is working with
governments, industry, academia and the GCCA to explore potential routes to further
decarbonisation, including Carbon Capture and Storage through the Peak Cluster project.
While the cash flows associated with our near-term plans are incorporated into our
impairment testing, it is not possible to quantify the gross cost of the transition to
net zero accurately over the longer term, nor how demand for cement might be
impacted by the price increases needed to recover these costs or longer-term changes
in consumer behaviour.
In preparing our impairment testing, we have assumed that volumes remain broadly in line
with current levels. We have assumed that increased costs, including carbon costs and
increased capital investment, will be recovered through pricing, consistent with our historic
experience and that no scalable substitute for concrete emerges in the near term. As the
cost of transition to net zero and the consequent impact on end-market demand becomes
clearer, these judgements will need to be refined and it is possible that this may result in
future impairment charges.
The directors are aware of the evolving risks attached to climate change and will regularly
assess these risks against estimates made in future value-in-use assessments. They
continue to view future impairment charges as unlikely at the date of this report.
10
Investment in associate and joint ventures
The entities contributing to the Group’s financial results are listed on pages 226 and 227.
The Group equity accounts for investments in its associate and joint ventures.
Carrying value
At 1 January 2022
Share of profit of associate and joint ventures
Disposal as part of stepped acquisition
Dividends received
At 31 December 2022
Share of profit of associate and joint ventures
Dividends received
At 31 December 2023
Associate
£m
Joint ventures
£m
Total
£m
5.0
1.3
–
(0.6)
5.7
0.2
(0.4)
5.5
7.2
2.2
(0.3)
(1.1)
8.0
2.4
(1.4)
9.0
12.2
3.5
(0.3)
(1.7)
13.7
2.6
(1.8)
14.5
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 203
Notes to the consolidated financial statements
10
Investment in associate and joint ventures continued
Summary financial information of associate and joint ventures
Non-current assets
Current assets
Current liabilities
Non-current liabilities
Net assets
Revenue
Profit for the year
2023
2022
Associate
£m
Joint ventures
£m
Associate
£m
Joint ventures
£m
19.2
41.6
(37.0)
(8.0)
15.8
161.6
0.4
15.7
21.3
(23.3)
(4.1)
9.6
125.8
5.0
14.9
34.9
(26.7)
(6.6)
16.5
225.4
3.7
12.3
21.7
(19.7)
(7.8)
6.5
118.6
5.3
The table above shows the results and balances of the associate and joint ventures.
Included within the consolidated results of the Group is the share of profit of the associate
and joint ventures, as disclosed in the consolidated income statement.
11
Deferred tax
2022
Property, plant
and equipment
Intangible assets
Derivatives
Historic losses
Share-based payments
Working capital
and provisions
1 January
2022
£m
Acquisitions
(note 25)
£m
Recognised
in income
£m
Recognised
in equity
£m
Translation
adjustments
£m
31 December
2022
£m
(93.6)
(9.9)
(0.2)
0.3
2.0
13.9
(87.5)
(0.8)
(1.3)
–
–
–
–
(2.1)
(0.8)
0.8
–
0.6
–
–
0.2
–
(0.9)
(0.4)
1.7
1.4
–
(0.2)
(0.5)
(0.1)
(95.7)
(10.5)
–
–
–
–
–
0.9
0.7
15.6
(0.6)
(89.0)
There are no identified unrecognised deferred tax assets or liabilities.
12
Inventories
Raw materials and consumables
Work in progress
Finished goods and goods for resale
2023
£m
49.8
9.8
60.5
120.1
2022
£m
56.6
6.3
31.9
94.8
2023
Property, plant
and equipment
Intangible assets
Derivatives
Historic losses
Share-based payments
Working capital
and provisions
1 January
2023
£m
Acquisitions
(note 25)
£m
Recognised
in income
£m
Recognised
in equity
£m
Translation
adjustments
£m
31 December
2023
£m
Inventories (being directly attributable costs of production) of £928.7m (2022: £853.7m)
have been expensed in the year.
ETS assets are presented within finished goods and goods for resale.
(95.7)
(10.5)
–
0.9
0.7
15.6
(89.0)
(2.3)
(0.9)
–
–
–
–
(3.2)
(5.7)
1.3
(0.1)
(0.2)
0.3
4.0
(0.4)
–
–
0.1
–
(0.1)
–
–
0.4
0.2
(103.3)
(9.9)
–
–
–
–
0.6
–
0.7
0.9
19.6
(92.0)
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Analysis of borrowings between current and non-current
Lease liabilities
Current borrowings
Bank and USPP debt
Lease liabilities
Non-current borrowings
204
2022
£m
7.9
7.9
250.1
41.4
291.5
2023
£m
8.1
8.1
248.8
39.9
288.7
The Group’s borrowing facilities comprise a £350m multi-currency RCF and a £250m USPP.
The RCF is available to the Group until June 2026. Interest on the RCF is calculated as a
margin referenced to the Group’s Covenant Leverage plus SONIA or EURIBOR according
to the currency of borrowing. Interest on the RCF was charged in the period at margins of
between 1.8% and 1.9%.
The USPP was issued in 2021 with an average fixed coupon of approximately 2% and
comprises £170m sterling and £80m drawn in Euro, with a maturity profile between
2028 and 2036.
During the year, the Group exercised an option to extend the RCF for a one-year period.
Arrangement fees of £0.7m were capitalised in the year and will be amortised over the
period of the additional borrowing.
Borrowing facilities are subject to leverage and interest cover covenants which are tested
half-yearly. The Group remained fully compliant with all covenants during the year.
Notes to the consolidated financial statements
13
Trade and other receivables
Trade receivables
Amounts due from associate and joint ventures (note 22)
Derivative assets
Contract assets
Other receivables and prepayments
Analysed as
Current
Non-current
2023
£m
185.1
6.1
–
20.1
17.5
2022
£m
175.3
5.8
0.1
14.5
26.7
228.8
222.4
2023
£m
227.9
0.9
228.8
2022
£m
218.6
3.8
222.4
The nature of contract assets has not changed materially during the reporting period.
14
Interest-bearing loans and borrowings
Net Debt
Cash and cash equivalents
Current borrowings
Non-current borrowings
Net Debt
IFRS 16 lease liabilities
Net Debt (excluding IFRS 16)
2023
£m
126.9
(8.1)
(288.7)
(169.9)
48.0
(121.9)
2022
£m
101.7
(7.9)
(291.5)
(197.7)
49.3
(148.4)
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Notes to the consolidated financial statements
14
Interest-bearing loans and borrowings continued
16
Provisions
Reconciliation of cash flow movement to movement in Net Debt
For the year ended 31 December
Net increase in cash and cash equivalents
Foreign exchange differences – cash and cash equivalents
Net movement in cash and cash equivalents
Net cash flow movements in debt financing
Non-cash movements
Net of lease additions and disposals
Amortisation of prepaid bank arrangement fee
Debt acquired via acquisitions (note 25)
Foreign exchange differences – interest-bearing loans and borrowings
Decrease in Net Debt in the year
Net Debt as at 1 January
Net Debt as at 31 December
15
Trade and other payables
Trade payables
Amounts owed to associate and joint ventures (note 22)
Contract liabilities
Deferred consideration (note 25)
Derivative liabilities
Other payables and accrued expenses
Other taxation and social security
2022
£m
At 1 January 2022
17.1
0.7
17.8
9.5
(4.7)
(1.1)
(2.5)
(4.2)
14.8
Translation adjustment
Utilised during the year
Charged to income statement
Unused amounts reversed
Amounts arising from business combinations
Change to capitalised provisions (note 8)
Unwinding of discount
At 31 December 2022
Translation adjustment
Utilised during the year
Charged to income statement
Amounts arising from business combinations (note 25)
Change to capitalised provisions (note 8)
Unwinding of discount
At 31 December 2023
Analysed as
Current
Non-current
2023
£m
24.9
0.3
25.2
9.7
(6.4)
(1.1)
(1.1)
1.5
27.8
(197.7)
(169.9)
(212.5)
(197.7)
2023
£m
145.2
–
12.1
3.0
0.3
99.9
18.1
278.6
2022
£m
161.4
0.1
4.0
0.9
–
79.4
18.0
263.8
The nature of contract liabilities has not changed significantly during the reporting period.
Brought forward contract liabilities of £4.0m have all been recognised in revenue during
the year.
Restoration provisions principally comprise provisions for the cost of restoring and
decommissioning sites where an obligation arises to comply with contractual, environmental,
planning and other legislation. The obligation is calculated on a site-by-site basis and is
subject to regular reviews. Each obligation is discounted to reflect the period over which
it is expected to be settled which, on average, is 10 years.
The discount rates used have been derived using UK and Irish Gilt rates and have been
adjusted, where appropriate, for cash flow risk.
205
Total
£m
73.4
0.2
(2.3)
11.5
(1.4)
0.2
2.3
2.1
86.0
(0.1)
(2.6)
11.1
0.3
(3.8)
3.7
94.6
2022
£m
9.2
76.8
86.0
Restoration
£m
70.7
0.2
(2.3)
11.5
–
0.2
2.3
2.1
84.7
(0.1)
(2.6)
9.1
0.3
(3.8)
3.7
91.3
Other
£m
2.7
–
–
–
(1.4)
–
–
–
1.3
–
–
2.0
–
–
–
3.3
2023
£m
8.8
85.8
94.6
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 206
Notes to the consolidated financial statements
17
Capital, reserves and dividends
Corporate Reorganisation
As described further in note 1, in connection with the Group’s move from AIM to the
Premium Segment of the Main Market of the London Stock Exchange during the first
half of 2023, a new holding company for the Group was established, New Breedon.
New Breedon obtained control of the Group on 17 May 2023 via a court approved scheme
of arrangement.
The Group’s equity has been adjusted to reflect that of the new holding company, with the
difference between Stated Capital and Share Capital recognised as a Merger Reserve.
Stated and share capital
Following the Corporate Reorganisation, all shares issued by Breedon are ordinary shares
which have a par value of £0.01 and are fully paid. The Company has no limit to the number
of shares which may be issued.
The holders of ordinary shares are entitled to receive dividends as declared and are
entitled to one vote per share at meetings of the Company.
Movements during 2022 (Old Breedon):
Old Breedon issued 3.1 million shares for cash raising £2.0m in connection with the exercise
of certain savings-related share options and issued 1.6 million shares for nil consideration in
connection with the vesting of awards under the Performance Share Plans (note 18).
Other reserves
Hedging reserve
The hedging reserve comprises the effective portion of the cumulative net change in the
fair value of cash flow hedged instruments related to hedged transactions which have not
yet occurred.
Merger reserve
The merger reserve was created as part of the Corporate Reorganisation and represents
the difference between the Stated Capital reported by Old Breedon and the Share Capital
of New Breedon.
Translation reserve
The translation reserve comprises all foreign exchange differences arising from the
translation of the financial statements of foreign operations as well as from the translation
of the liabilities that hedge the Group’s net investment in foreign operations.
Issued ordinary shares
Old Breedon at 1 January 2022
Exercise of savings-related share options
Vesting of Performance Share Plan awards
Old Breedon at 31 December 2022
5:1 share consolidation as part of Corporate Reorganisation
New Breedon opening shares
Exercise of savings-related share options
Vesting of Performance Share Plan awards
New Breedon at 31 December 2023
Movements during 2023 (New Breedon):
The Company issued 0.2 million shares for cash raising £0.7m in connection with the
exercise of certain savings-related share options, with £0.7m recognised as share
premium. The Company issued 0.6 million shares for non-cash consideration of 1 pence
per share, satisfied through the capitalisation of retained earnings, in connection with
the vesting of awards under the Performance Share Plans (note 18).
Millions
Dividends
1,689.7
Paid in year
3.1
1.6
1,694.4
(1,355.5)
338.9
0.2
0.6
339.7
Dividends paid comprise the following elements:
Dividends paid to Breedon Group plc shareholders
Dividends paid to non-controlling interests in consolidated subsidiaries
Total dividends paid
2023
£m
37.3
0.3
37.6
2022
£m
30.5
–
30.5
Amounts recognised as dividends paid to Breedon Group plc shareholders in the year
comprised £37.3m, being £23.7m in respect of the final dividend of the year ended
31 December 2022 of 7.0p per share and £13.6m in respect of an interim dividend of 4.0p
per share for the year ended 31 December 2023.
Dividends totalling £0.2m have been paid to non-controlling interests relating to
consolidated subsidiaries accounted for using the anticipated acquisition method and has
been recognised directly in equity. A further £0.1m has been paid to non-controlling
interests relating to other consolidated subsidiaries.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 207
Notes to the consolidated financial statements
17
Capital, reserves and dividends continued
Future dividends
The directors have proposed a final dividend in respect of the financial year ended
31 December 2023 of 9.5p per share which will absorb an estimated £32.2m of
shareholders’ funds. Assuming the final dividend is approved by shareholders at the
Annual General Meeting of the Company to be held on 24 April 2024, the final dividend
will be paid on 17 May 2024 to shareholders who are on the register at the close of business
on 4 April 2024.
Subject to trading conditions and continued sustained cash generation, the Group intends
to maintain a payout ratio of around 40% of Underlying Basic EPS. Future dividend
payments by the Group are not guaranteed and will be determined by the directors in
light of the facts and circumstances at the time.
Movements in outstanding options and awards
Share options (millions)
PSP – non-market
based performance
conditions
PSP – market based
performance
conditions
Sharesave Schemes
Outstanding
at 1 Jan 2023
Corporate
Reorganisation
(note 17)
Granted
Vested
Lapsed
Outstanding
at 31 Dec
2023
6.7
(5.3)
0.7
(0.6)
(0.1)
1.4
3.7
19.0
29.4
(3.0)
(15.2)
(23.5)
0.5
1.6
2.8
–
(0.2)
(0.8)
(0.1)
(0.9)
(1.1)
1.1
4.3
6.8
All PSP share awards have an exercise price of nil. The exercise price for outstanding
Sharesave Schemes at 31 December 2023 is between £2.75 and £3.90.
Following the Corporate Reorganisation (note 17), holders of options in Old Breedon
were able to exchange those options for options in New Breedon. The exercise price and
number of options were adjusted at a ratio of five to one.
18
Share-based payments
Options granted during the year
Share-based payments to employees include PSP awards made to senior executives
and voluntary participation in savings-related share option schemes (‘Sharesave
Schemes’) for the wider workforce.
Under the PSP, awards may be granted to key senior employees as either a conditional
award or as a nil paid (or nominal) cost award. Awards will normally vest three years
after grant subject to satisfaction of the relevant performance conditions; for certain
employees these may be subject to an additional two-year holding period.
Sharesave Schemes are open to all eligible employees both in the UK and RoI.
These schemes have a term of either three or five years.
Further details of these options and awards, as well as the interests of the directors in
both the PSP and the Breedon Sharesave Schemes, can be found in the Directors’
Remuneration report from page 145 to 168.
The fair value of options and awards granted during the year, and the key inputs used to
derive the fair value, were as follows:
Fair value at grant date
Valuation model
Exercise price
Share price at grant date
Holding period
Expected volatility
Risk-free rate
Vesting period
Expected dividend yield
PSP – non-market
based performance
conditions
PSP – market based
performance
conditions
Sharesave
£3.56
£2.71
£0.83 – £0.97
Black–Scholes
Stochastic
Black–Scholes
–
£3.56
–
£3.02 – £3.31
£3.56
0–2 years
0–2 years
29–31%
3.44%
3 years
n/a
29–31%
3.44%
3 years
n/a
£3.55
–
29–33%
3.42–3.44%
3–5 years
2.96%
Where share awards contain mechanisms to compensate for the dilutive impact of
dividends paid during the vesting period, no dividend yield has been incorporated into
the calculation of the fair value of those awards.
Expected volatility has been calculated on share price movements compared to historic
option values, over the period consistent with the holding period prior to the date of grant.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Notes to the consolidated financial statements
19
Financial instruments
The Group has the following financial assets and liabilities:
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a
financial instrument fails to meet their contractual obligations. Credit risk arises principally
from the Group’s cash and cash equivalents held with financial counterparties and the
Group’s receivables due from customers.
Financial
instruments
£m
Management has a credit policy in place and exposure to credit risk is monitored on an
ongoing basis. At the reporting date there were no significant concentrations of customer
credit risk.
2023
Non-
financial
instruments
£m
Book value
£m
208
Financial assets
Trade and other receivables
Cash and cash equivalents
Total financial assets
Financial liabilities
Borrowings
Lease liabilities
Trade and other payables
Total financial liabilities
Financial assets
Trade and other receivables
Cash and cash equivalents
Total financial assets
Financial liabilities
Borrowings
Lease liabilities
Trade and other payables
Total financial liabilities
228.8
126.9
355.7
(248.8)
(48.0)
(278.6)
(575.4)
10.9
–
10.9
217.9
126.9
344.8
2.7
–
(251.5)
(48.0)
(30.2)
(248.4)
(27.5)
(547.9)
2022
Book value
£m
Non-financial
instruments
£m
Financial
instruments
£m
222.4
101.7
324.1
(250.1)
(49.3)
(263.8)
(563.2)
16.3
–
16.3
3.1
–
(22.0)
(18.9)
206.1
101.7
307.8
(253.2)
(49.3)
(241.8)
(544.3)
Credit risk associated with cash balances is managed and limited by transacting with
financial institutions with high-quality credit ratings.
Exposure to credit risk
The carrying amount of financial assets at the reporting date represents the maximum
credit exposure. The maximum exposure to credit risk at the reporting date was:
Trade and other receivables
Cash and cash equivalents
Carrying amount
2023
£m
217.9
126.9
344.8
The maximum exposure to credit risk for trade and other receivables by reportable
segment was:
Great Britain
Ireland
Cement
Central administration
Carrying amount
2023
£m
144.0
39.7
33.1
1.1
217.9
2022
£m
206.1
101.7
307.8
2022
£m
138.9
35.5
31.0
0.7
206.1
The Group has exposure to the following risks from its use of financial instruments:
Credit risk
Foreign exchange risk
Liquidity risk
Interest rate risk
Management considers that the credit quality of the various receivables is good in respect
of the amounts outstanding. The Group has no individually significant customers and the
majority of the Group’s customers are end-user customers. Credit insurance is in place to
cover the majority of the Group’s private sector UK and Ireland trade receivables, subject
to an aggregate first loss. The Group has fully provided for all its doubtful debt exposure.
The remaining credit risk is therefore considered to be low. Balances are only written off
when the Group has exhausted all options to recover the amounts receivable.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Notes to the consolidated financial statements
19
Financial instruments continued
Exposure to credit risk continued
The ageing of trade and other receivables at the reporting date was:
Not past due
Past due
0-30 days
Past due
31-60 days
Past due
more than
60 days
2023
Impairment
£m
Net
£m
(2.3)
192.9
(0.9)
(1.2)
(2.5)
(6.9)
12.9
6.3
5.8
217.9
Gross
£m
195.2
13.8
7.5
8.3
224.8
2022
Impairment
£m
(2.1)
(1.1)
(0.7)
(4.1)
(8.0)
Gross
£m
187.3
14.0
4.7
8.1
214.1
Net
£m
185.2
12.9
4.0
4.0
206.1
Provisions for impairment of trade and other receivables are calculated on a lifetime
expected loss model in line with IFRS 9. The key inputs in determining the level of provision
are the historical level of bad debts experienced by the Group and ageing of outstanding
amounts. Movements during the year were as follows:
At 1 January
Charged to the consolidated income statement during the year
Utilised during the year
Unused amounts released
At 31 December
Foreign exchange risk
Transactional
2023
£m
8.0
3.0
(2.0)
(2.1)
6.9
2022
£m
8.5
2.2
(1.3)
(1.4)
8.0
The Group has limited transactional currency exposures arising on sales and purchases made
in currencies other than the functional currency of the entity making the sale or purchase.
Significant exposures which are deemed at least highly probable are matched where possible.
Translation
The Group has significant net assets denominated in euro. The translation of these
balances into sterling for reporting purposes exposes the Group to foreign exchange
209
movements in the consolidated statement of financial position and consolidated income
statement, along with a corresponding impact on certain key performance indicators.
The Group’s strategy is to mitigate this risk through utilising euro borrowings as a hedge
against movements in the sterling value of euro investments. The level of this hedge is
currently managed with the objective of mitigating the impact of foreign exchange
movements on Covenant Leverage.
Currency analysis and exchange rate sensitivity
Foreign currency financial assets and liabilities, translated into sterling at the closing rate,
are as follows:
2023
2022
Sterling
£m
Euro
£m
Total
£m
Sterling
£m
Euro
£m
Total
£m
189.0
28.9
217.9
179.2
26.9
206.1
121.2
310.2
5.7
34.6
126.9
344.8
80.9
260.1
20.8
47.7
101.7
307.8
Financial assets
Trade and other
receivables
Cash and cash
equivalents
Total financial assets
Financial liabilities
Borrowings
Lease liabilities
Trade and other payables
(208.1)
(40.3)
(248.4)
(170.0)
(47.9)
(81.5)
(0.1)
(251.5)
(48.0)
(170.0)
(49.2)
(206.4)
(83.2)
(253.2)
(0.1)
(35.4)
(49.3)
(241.8)
Total financial
liabilities
Potential impact on
profit before taxation
– gain/(loss)
10% increase in
functional currency
10% decrease in
functional currency
Potential impact on
other comprehensive
income – gain/(loss)
10% increase in
functional currency
10% decrease in
functional currency
(426.0)
(121.9)
(547.9)
(425.6)
(118.7)
(544.3)
–
–
–
–
0.8
0.8
(1.0)
(1.0)
7.1
7.1
(8.7)
(8.7)
–
–
–
–
1.0
1.0
(1.2)
(1.2)
5.5
5.5
(6.7)
(6.7)
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 210
Carrying
amount
£m
Contractual
cash flows
£m
Within
one year
£m
Between one
and five years
£m
More than
five years
£m
–
5.3
170.0
83.2
49.3
241.8
544.3
211.5
90.8
73.3
241.8
622.7
2.1
4.0
1.0
9.1
241.8
258.0
3.2
15.8
4.0
24.2
–
47.2
–
191.7
85.8
40.0
–
317.5
Notes to the consolidated financial statements
19
Financial instruments continued
Significant exchange rates
The following significant exchange rates applied during the year:
2023
2022
Average rate Year-end rate
Average rate Year-end rate
31 December 2022
Non–derivative
financial liabilities
Multi–currency revolving
credit facility
USPP loan notes
– Sterling
1.15
1.15
1.17
1.13
– Euro
Sterling/euro
Liquidity risk
Lease liabilities
Trade and other payables
Interest rate risk
Liquidity risk is the risk that the Group does not have sufficient financial resources to meet
obligations as they fall due. The Group manages liquidity risk by monitoring forecasts and
cash flows and negotiating appropriate bank facilities. The Group uses term and revolving
bank facilities and sufficient headroom is maintained above peak requirements to meet
unforeseen events.
The following are the contractual maturities of financial liabilities, including estimated
interest payments based on current utilisation:
Carrying
amount
£m
Contractual
cash flows
£m
Within
one year
£m
Between one
and five years
£m
More than
five years
£m
Fixed rate instruments
Financial liabilities
Variable rate instruments
Financial assets
31 December 2023
Non–derivative
financial liabilities
Multi–currency revolving
credit facility
USPP loan notes
– Sterling
– Euro
Lease liabilities
Trade and other payables
The Group borrows at floating and fixed interest rates. At the reporting date the interest
rate profile of the Group’s interest-bearing financial instruments was:
2023
£m
2022
£m
(299.5)
(299.4)
126.9
101.7
–
5.3
170.0
81.5
48.0
248.4
547.9
207.5
88.0
72.1
248.4
621.3
2.1
4.0
1.0
9.0
248.4
264.5
3.2
40.8
44.6
23.0
–
111.6
–
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value
through profit or loss. Therefore, a change in interest rates at the reporting date would not
affect profit or loss.
162.7
42.4
40.1
–
245.2
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Notes to the consolidated financial statements
19
Financial instruments continued
20
Leases
Cash flow sensitivity analysis for variable rate instruments
Right-of-use assets
As at 31 December 2023, all our drawn borrowings are fixed rate instruments and as such,
these are not exposed to interest rate fluctuations. An increase of 100 basis points in
interest rates in respect of variable rate instruments at the reporting date values would
increase profit for the year by £1.3m (2022: increase of £0.4m). A decrease of 100 basis
points would decrease profit for the year by £1.3m (2022: £0.2m). These analyses assume
that all other variables remain constant.
Fair values versus carrying amounts
The directors consider that the carrying amounts recorded in the financial information in
respect of financial assets and liabilities, which are carried at amortised cost, approximates
to their fair values with the exception of the £251.5m of USPP loan note liabilities which
have an estimated fair value of £201.1m.
Derivative financial assets and liabilities are carried at fair value. The different levels have
been defined as follows:
Cost
Balance at 1 January 2023
Acquired on business combinations (note 25)
Additions
Transfer to owned assets
Disposals and impairments
Balance at 31 December 2023
Depreciation
Balance at 1 January 2023
Charge for the year
Transfer to owned assets
Disposals and impairments
Level 1 – unadjusted quoted prices in active markets for identical assets or liabilities;
Balance at 31 December 2023
Level 2 – inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either as a direct price or indirectly derived from prices; and
Net book value
At 31 December 2023
Level 3 – inputs for the asset or liability that are not based on observable market data.
The fair value of the derivative financial assets and liabilities are based on bank valuations.
Capital management
The Board’s capital management policy is to maintain a strong balance sheet, providing
flexibility to pursue growth opportunities. The Board seeks to maintain a balance
between the higher returns that might be possible with higher levels of borrowing and
the advantages and security afforded by a sound capital position.
In maintaining the Group’s capital structure in line with these principles, the Board may
choose to adjust amounts paid as dividends to shareholders, issue new equity or dispose
of assets as required.
The financial covenants associated with the Group’s borrowings are a maximum leverage
ratio and a minimum interest cover. The Group complied with these financial covenants
throughout the financial year.
Cost
Balance at 1 January 2022
Acquired on business combinations (note 25)
Additions
Disposals and impairments
Balance at 31 December 2022
Depreciation
Balance at 1 January 2022
Charge for the year
Disposals and impairments
Balance at 31 December 2022
Net book value
At 31 December 2022
211
Total
£m
79.6
0.2
6.4
(0.5)
(1.8)
83.9
32.5
8.1
(0.2)
(1.6)
38.8
Land and
buildings
£m
Plant,
equipment
and vehicles
£m
45.9
–
5.5
–
(0.2)
51.2
11.6
3.4
–
(0.2)
14.8
33.7
0.2
0.9
(0.5)
(1.6)
32.7
20.9
4.7
(0.2)
(1.4)
24.0
36.4
8.7
45.1
42.0
0.9
3.8
(0.8)
45.9
9.0
3.0
(0.4)
11.6
34.1
1.6
0.5
(2.5)
33.7
17.5
5.7
(2.3)
20.9
76.1
2.5
4.3
(3.3)
79.6
26.5
8.7
(2.7)
32.5
34.3
12.8
47.1
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 212
Notes to the consolidated financial statements
20
Leases continued
22
Related parties
Lease liabilities are secured on the assets to which they relate and are payable as follows:
Less than one year
Between one and five years
More than five years
2023
Minimum
lease
payments
£m
2022
Minimum
lease
payments
£m
9.0
23.0
40.1
72.1
9.1
24.2
40.0
73.3
The value of lease payments made during the year was £10.4m (2022: £11.3m).
Movements between owned and leased assets
Items transferred to owned assets represent leases where the liability has been fully repaid
in the normal course of business and legal ownership of the asset has transferred to the
Group. Where an underlying physical asset is purchased by the Group and this causes an
existing lease to end, this is presented as an addition to owned assets within note 8 and as
a disposal of a leased asset within this note.
During the year the Group supplied services and materials to, and purchased services and
materials from, its associate and joint ventures on an arm’s length basis. The Group had the
following transactions with these related parties during the year:
2023
BEAR Scotland
Other
2022
BEAR Scotland
Other
Sales
£m
Purchases
£m
Receivables
£m
Payables
£m
21.0
12.0
33.0
40.5
10.8
51.3
–
2.5
2.5
–
2.1
2.1
1.6
4.5
6.1
0.8
5.0
5.8
–
–
–
–
0.1
0.1
Parent and ultimate controlling party
The Company’s shares are traded on the Premium Segment of the Main Market of the
London Stock Exchange. The Company’s shareholder base is monitored on a regular basis.
There is no controlling party and the Company does not have a parent.
21
Capital commitments
Transactions with directors and directors’ shareholdings
At 31 December 2023 the Group had commitments to purchase property, plant and
equipment for £27.9m (2022: £29.5m). These commitments are expected to be settled
during the course of 2024.
Details of transactions with directors, directors’ shareholdings and outstanding share
options and awards are given in the Directors’ Remuneration report on pages 145 to 168.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 213
Diluted EPS to Adjusted Underlying Diluted EPS
Notes to the consolidated financial statements
23
Earnings per share
Basic earnings per share amounts are calculated by dividing profit for the year attributable
to Breedon Group shareholders by the weighted average number of ordinary shares
outstanding during the year.
Diluted earnings per share amounts are calculated by dividing profit for the year
attributable to Breedon Group shareholders by the weighted average number of ordinary
shares outstanding during the year plus the weighted average number of ordinary shares
that would be issued on the conversion of all the potential dilutive ordinary shares into
ordinary shares.
Calculations of these measures and reconciliations to related alternative performance
measures are as follows:
Diluted EPS
Adjustments to
earnings
Earnings impact of
change in deferred
tax rate (note 7)
Non-underlying
items (note 3)
Adjusted Underlying
Diluted EPS
2023
2022 (*restated)
Earnings
£m
Shares
millions
105.5
339.849
EPS
pence
31.0
Earnings
£m
Shares
millions
112.5
339.399
EPS
pence
33.2
0.7
9.1
–
–
0.2
2.7
1.1
6.2
–
–
0.3
1.8
115.3
339.849
33.9
119.8
339.399
35.3
Basic EPS to Adjusted Underlying Basic EPS
Diluted EPS to Underlying Diluted EPS
Basic EPS
Adjustments to
earnings
Earnings impact of
change in deferred
tax rate (note 7)
Non-underlying
items (note 3)
Adjusted Underlying
Basic EPS
2023
2022 (*restated)
Earnings
£m
Shares
millions
105.5
339.148
EPS
pence
31.1
Earnings
£m
Shares
millions
112.5
338.553
EPS
pence
33.2
0.7
9.1
–
–
0.2
2.7
1.1
6.2
–
–
0.3
1.9
115.3
339.148
34.0
119.8
338.553
35.4
Basic EPS to Underlying Basic EPS
Diluted EPS
Adjustments to
earnings
Non-underlying
items (note 3)
Underlying Diluted
EPS
2023
2022 (*restated)
Earnings
£m
Shares
millions
105.5
339.849
EPS
pence
31.0
Earnings
£m
Shares
millions
112.5
339.399
EPS
pence
33.2
9.1
–
2.7
6.2
–
1.8
114.6
339.849
33.7
118.7
339.399
35.0
* Comparative figures restated to reflect the impact of the 5:1 share consolidation undertaken in the year.
See Corporate Reorganisation disclosed within note 17.
Dilutive items in both the current and prior year related to share-based payments.
Details of the Group’s share schemes, which may become dilutive in the future, are set out
in note 18.
2023
2022 (*restated)
Earnings
£m
Shares
millions
105.5
339.148
EPS
pence
31.1
Earnings
£m
Shares
millions
112.5
338.553
EPS
pence
33.2
Basic EPS
Adjustments to
earnings
Non-underlying
items (note 3)
Underlying Basic EPS
114.6
339.148
9.1
–
2.7
33.8
6.2
–
118.7
338.553
1.9
35.1
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Notes to the consolidated financial statements
24
Contingent liabilities
The Group has guaranteed its share of the banking facilities of BEAR Scotland.
The maximum liability at 31 December 2023 amounted to £2.9m (2022: £2.9m).
This has been accounted for as a Financial Guarantee Contract in line with IFRS 9.
The Group has guaranteed the performance of the BEAR Scotland contracts in respect
of the maintenance of certain trunk roads in the North-West and South-East of Scotland
and in respect of the M80 operating and maintenance contract. The Group has also
guaranteed the performance of the Breedon Colas contract in respect of Lot 1 of the
North Super Region of the Pavement Delivery Framework issued by National Highways.
These guarantees have been accounted for as insurance contracts in line with IFRS 17.
For the year ended 31 December 2023, the subsidiary companies listed below are exempt
from the requirements of the Companies Act 2006 relating to the audit of individual
financial statements by virtue of section 479A. As a result, the Company guarantees all
outstanding liabilities to which the subsidiary companies are subject.
Name of undertaking
Breedon Midco Limited
Minster Surfacing Limited
Alliance Recycling (UK) Ltd
Country of incorporation or
registration
England and Wales
England and Wales
England and Wales
214
25
Acquisitions
Current year acquisitions
The Group completed three individually immaterial acquisitions in the current year, being
Broome Bros. (Doncaster) Limited (1 May 2023), Robinson Quarry Masters Limited
(15 May 2023) and Minster Surfacing Limited (5 May 2023). Total consideration for these
acquisitions was £27.1m. The fair value of the assets and liabilities acquired is set out
as follows:
Intangible assets
Property, plant and equipment
Right-of-use assets
Inventories
Trade and other receivables
Company registration number
Cash and cash equivalents
14777332
Trade and other payables
04084446
Provisions
09418245
Lease liabilities
Borrowings
Current tax payable
Deferred tax liabilities
Total
Consideration – cash
Deferred consideration
Goodwill arising
Consideration
Book value
£m
Fair value
adjustments
£m
Provisional
fair value on
acquisition
£m
–
4.5
0.2
1.2
6.2
6.2
(3.5)
(0.3)
(0.2)
(0.9)
(0.4)
(0.7)
12.3
3.9
6.5
–
–
–
–
–
–
–
–
–
(2.5)
7.9
3.9
11.0
0.2
1.2
6.2
6.2
(3.5)
(0.3)
(0.2)
(0.9)
(0.4)
(3.2)
20.2
25.0
2.1
6.9
Deferred consideration includes £1.1m relating to an earnout arrangement and £1.0m
relating to a put liability over the remaining 20% of the ordinary shares of Minster Surfacing
Limited. The put liability has been accounted for using the anticipated acquisition method.
The earnout will be paid to the former owner based on the performance of the acquired
entity over a two year period.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 215
Notes to the consolidated financial statements
25
Acquisitions continued
Fair value adjustments
The fair value adjustments comprised:
Intangible assets, including the value of acquired customer lists;
Revaluation of certain items of property, plant and equipment; and
Associated deferred tax balances.
The goodwill arising represents expected synergies, the potential for future growth,
access to new markets and the skills of the existing workforce. Goodwill is not deductible
for tax purposes.
Impact of current year acquisition
Income statement
During the year, the combined acquisitions contributed revenues of £19.0m, Underlying
EBIT of £1.8m and profit before tax of £1.8m to the Group. Had these acquisitions occurred
on 1 January 2023, the results of the Group for the year ended 31 December 2023 would
have shown revenue of £1,494.8m, Underlying EBIT of £157.3m and Profit before tax of
£135.5m.
Cash flow
The cash flow impact of acquisitions in the year can be summarised as follows:
Prior year acquisition
The Group completed three acquisitions in the prior year, acquiring 80% of the ordinary
share capital of Thomas Bow Limited (1 July 2022), and 100% of the ordinary share capitals
of R T Mycock & Sons Limited (1 July 2022) and Severn Sands Limited (1 August 2022) for
total consideration of £20.5m. No additional adjustments have been made in respect of
these acquisitions within the measurement period and the provisional values reported in
the prior year are now considered final.
26
Accounting estimates and judgements
Preparation of financial information requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the
reported amounts of assets, liabilities, income and expenses. Actual results may differ
from these estimates.
Estimates and their associated underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the estimate is
revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical
judgements in applying accounting policies that have the most significant effect on the
amounts recognised in the financial information are described below.
Accounting estimates
Restoration provisions
Consideration – Cash
Cash and cash equivalents acquired
Net cash consideration shown in the consolidated statement of cash flows
Acquisition costs
The Group incurred acquisition related costs of £0.9m (2022: £0.7m) which included
external professional fees in relation to these acquisitions. These are presented as
non-underlying operating costs (note 3).
£m
25.0
(6.2)
18.8
Restoration provisions principally comprise provisions for the cost of restoring and
decommissioning sites where an obligation arises to comply with contractual,
environmental, planning and other legislation. This is an inherently subjective
calculation and there is significant estimation required to determine the exact cost
of the restoration work.
Estimated future cash flows have been determined on a site by site basis based
on the present day cost of restoration. An increase in these gross cash flow assumptions
of 10% would result in an increase of the restoration liability of £8.8m. The estimated cost
of restoration is subject to both internal and external expert evaluation in order to mitigate
the risk of material error.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 216
Notes to the consolidated financial statements
26
Accounting estimates and judgements continued
27
Reconciliation to non-GAAP measures
These cash flows are inflated to the point that the cash flow is expected to occur and
discounted, at a rate which reflects both the time value of money and the risk specific
to the restoration liability, in order to derive the net present value of the obligation
as at the balance sheet date. The discount and long-term inflation rates used in this
calculation are between 3.3-5.1% and 3.1-3.4% respectively. A 100 bps increase in discount
rate or decrease in the long-term inflation rate would result in a decrease in the value of
restoration provisions by £7.5m or £7.8m respectively. A 100 bps decrease in discount
rate or increase in the long-term inflation rate would result in an increase in the value of
restoration provisions by £9.0m or £9.2m respectively.
Restoration dates have been determined as the earlier of the date at which reserves are
expected to be exhausted or planning permission on reserves is expected to expire.
Reasonably possible changes in restoration dates would not have a material impact
on the financial statements, and management do not consider restoration dates to be
significant estimates.
Accounting judgements
Impact of climate change on impairment review
The Group is committed to achieving net zero by 2050, as well as to the manufacture of
cement at its two well-invested cement plants; however, to achieve net zero will require a
significant reduction in carbon emissions.
The cash flows used in our impairment review are underpinned by a judgement that future
cement volumes remain broadly in line with current levels and that increased costs to
achieve net zero will be recovered through market acceptance of increased pricing.
See note 9 for additional detail and further information on how the impact of climate
change has been considered through the impairment testing.
Non-GAAP performance measures are used throughout this Annual Report and these
consolidated financial statements. This note provides a reconciliation between these
alternative performance measures to the most directly related statutory measures.
Reconciliation of earnings based alternative performance measures
Great
Britain
£m
1,033.8
Ireland
£m
235.5
Cement
£m
331.2
Central
administration
and
eliminations
£m
Share of
profit of
associate
and joint
ventures
£m
Total
£m
(113.0)
–
1,487.5
86.4
29.0
55.2
(17.0)
2.6
8.4%
12.3%
16.7%
145.7
10.5
156.2
10.5%
86.4
29.0
55.2
(17.0)
2.6
156.2
–
–
–
–
(2.6)
(2.6)
52.2
138.6
6.9
35.9
29.3
84.5
0.3
(16.7)
–
–
88.7
242.3
2023
Revenue
Profit from operations
Non-underlying
items (note 3)
Underlying EBIT
Underlying
EBIT margin
Underlying EBIT
Share of profit
of associate and
joint ventures
Depreciation and
mineral depletion
Underlying EBITDA
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Free Cash Flow conversion
Free Cash Flow has been reconciled to net cash from operating activities, which is the most
relevant GAAP measure.
Notes to the consolidated financial statements
27
Reconciliation to non-GAAP measures continued
2022
Revenue
Profit from operations
Non-underlying
items (note 3)
Underlying EBIT
Underlying
EBIT margin
Underlying EBIT
Share of profit
of associate and
joint ventures
Depreciation and
mineral depletion
Underlying EBITDA
Central
administration
and
eliminations
£m
Share of
profit of
associate
and joint
ventures
£m
Underlying EBITDA
Impact of IFRS 16
Underlying EBITDA for covenants
Net Debt (excluding IFRS 16) (note 14)
Total
£m
Covenant Leverage
Great
Britain
£m
972.4
Ireland
£m
226.2
Cement
£m
300.7
(103.0)
–
1,396.3
86.4
28.3
52.1
(15.3)
3.5
8.9%
12.5%
17.3%
148.0
7.0
155.0
11.1%
86.4
28.3
52.1
(15.3)
3.5
155.0
Net cash used in investing activities
–
–
–
–
(3.5)
(3.5)
49.7
136.1
6.1
34.4
27.5
79.6
0.2
(15.1)
–
–
83.5
235.0
Like-for-like alternative performance measures
There are a number of references throughout this report to like-for-like revenue, earnings
and volumes. Like-for-like numbers exclude the impact of acquisitions and disposals
and have been used alongside non-like-for-like measures to help the Group better
communicate performance in the year when compared to previous reporting periods.
Covenant Leverage
Net cash from operating activities
Acquisition of businesses
Cash impact of non-underlying items
Free Cash Flow
Underlying EBITDA
Free Cash Flow conversion
Return on invested capital
Underlying EBIT
Underlying effective tax rate (note 7)
Taxation at the Group’s underlying effective rate
Underlying earnings before interest
Covenant Leverage is defined as the ratio of Underlying EBITDA to Net Debt, with both
Underlying EBITDA and Net Debt adjusted to reflect the material items which are adjusted
by the Group and its lenders in determining leverage for the purpose of assessing covenant
compliance and, in the case of our bank facilities, the margin payable on overdrawn
borrowings. In both the current and prior year, the only material adjusting item was the
impact of IFRS 16.
Net assets
Net Debt (note 14)
Invested capital at 31 December
Average invested capital*
Return on invested capital**
217
2022
£m
235.0
(11.3)
223.7
148.4
0.7x
2023
£m
242.3
(10.3)
232.0
121.9
0.5x
2023
£m
191.9
(120.4)
18.8
4.5
94.8
242.3
39%
2023
£m
156.2
20.4%
(31.9)
124.3
1,110.7
169.9
1,280.6
1,261.1
9.9%
2022
£m
168.0
(112.9)
12.6
1.0
68.7
235.0
29%
2022
£m
155.0
16.0%
(24.8)
130.2
1,043.8
197.7
1,241.5
1,201.9
10.8%
* Average invested capital is calculated by taking the average of the opening invested capital at 1 January and the
closing invested capital at 31 December. Opening invested capital at 1 January 2022 was £1,162.3m.
** Return on invested capital is calculated as Underlying earnings before interest, divided by average invested capital
for the year.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 218
Notes to the consolidated financial statements
28
Post balance sheet events
Acquisition of BMC Enterprises Inc
On 6 March 2024 the Group announced the proposed acquisition of the entire share
capital of BMC Enterprises Inc, a supplier of aggregates and ready mixed concrete
headquartered in St Louis, Missouri, USA. The acquisition is expected to complete by
7 March 2024.
Consideration payable is based on an enterprise value of US$300m, of which US$285m
is payable in cash and the remaining US$15m through the issue of newly created shares
in Breedon Group plc. The consideration is subject to customary closing adjustments
and retentions.
The cash element of the consideration will be satisfied through the utilisation of surplus
cash balances and drawdown on the Group’s existing borrowing facilities.
The acquisition is expected to have a material impact on the Group’s results for the year
ended 31 December 2024.
Given the proximity of the acquisition date to the date on which the financial statements
were authorised, the Group is not yet able to provide certain disclosures required by IFRS
3, including the initial fair values of assets and liabilities acquired, which have not yet been
ascertained. These disclosures will be presented as part of the Group’s Interim Statement
made up to 30 June 2024.
Acquisition of Eco-Asphalt Supplies Limited
On 31 January 2024 the Group acquired the entire share capital of Eco-Asphalt Supplies
Limited, an asphalt supplier based in the UK, for an enterprise value of £5.5m. This
acquisition is not expected to materially impact the earnings of the Group for the
year ended 31 December 2024.
Given the proximity of the acquisition date to the date on which the financial statements
were authorised, the Group is not yet able to provide certain disclosures required by IFRS
3, including the initial fair values of assets and liabilities acquired, which have not yet been
ascertained. These disclosures will be presented as part of the Group’s Interim Statement
made up to 30 June 2024.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Company financial statements
219
Company balance sheet
Company statement of changes in equity
Notes to the Company financial statements
Subsidiaries
»220
»221
»222
»226
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Company balance sheet
As at 31 December 2023
220
Non-current assets
Investment in subsidiary
Trade and other receivables
Current assets
Trade and other receivables
Current liabilities
Trade and other creditors
Net assets
Capital and reserves
Share capital
Share premium
Merger reserve
Profit and loss account
Equity shareholder’s funds
Note
7
4
5
6
6
2, 6
2023
£m
–
507.2
0.9
(13.6)
494.5
3.4
0.7
32.6
457.8
494.5
The Company has elected to take the exemption under section 408 of the Companies Act 2006 from presenting the parent company income statement. The result for the Company for
the period was a loss of £1.8m.
The Company financial statements on pages 220 to 225 were approved by the Board on 6 March 2024 and signed on its behalf by:
Rob Wood
Chief Executive Officer
James Brotherton
Chief Financial Officer
Company number: 147395566
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Company statement of changes in equity
Balance on incorporation at 17 March 2023
Scheme of arrangement (note 2)
Capital reduction (note 3)
Loss for the period
Share-based payments
Dividends paid
Shares issued
Balance at 31 December 2023
221
For the period from 17 March 2023 to 31 December 2023
Share
capital
£m
0.1
474.4
(471.1)
–
–
–
–
3.4
Share
premium
£m
–
–
–
–
–
–
0.7
0.7
Merger
reserve
£m
–
32.6
–
–
–
–
–
Retained
earnings
£m
–
–
471.1
(1.8)
2.1
(13.6)
–
Total
equity
£m
0.1
507.0
–
(1.8)
2.1
(13.6)
0.7
32.6
457.8
494.5
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Notes to the Company financial statements
1
Accounting policies
Basis of accounting
Breedon Group plc (the ‘Company’) is
a public limited company, limited by
shares, which is listed on the London Stock
Exchange and incorporated and domiciled
in England and Wales. The registered
number is 14739556 and the address of
the registered office is Pinnacle House,
Breedon Quarry, Breedon on the Hill,
Derby, England, DE73 8AP.
These financial statements present
information about the Company from
the point of its incorporation on 17 March
2023 as an individual undertaking and not
about its Group. As the Company was
incorporated in the period, no comparative
information has been presented.
In preparing these financial statements,
the Company applies the recognition,
measurement and disclosure requirements
of International Financial Reporting
Standards as adopted by the UK (“Adopted
IFRSs”) but makes amendments where
necessary in order to comply with
Companies Act 2006 and has set out
below where advantage of the FRS 101
disclosure exemptions have been taken.
The financial statements are presented
in pounds sterling (£), which is the
Company’s functional currency, and are
shown in £millions to one decimal place.
The Company is included within the
consolidated financial statements of
Breedon Group plc. The consolidated
financial statements of Breedon Group plc
are prepared in accordance with IFRS and
are publicly available. In these financial
statements, the Company is considered to
be a qualifying entity and has applied the
exemptions available under FRS 101 in
respect of the following disclosures:
A Cash Flow Statement and related
notes;
Disclosures in respect of the
compensation of Key Management
Personnel;
Disclosures in respect of transactions
with wholly owned subsidiaries; and
Disclosures in respect of capital
management.
As the consolidated financial statements of
Breedon Group plc include the equivalent
disclosures, the Company has taken the
exemptions available under FRS 101 in
respect of the following disclosures:
IFRS 2 Share-Based Payments in
respect of group settled share-based
payments.
Certain disclosures required by IFRS 13
– Fair Value Measurement and the
disclosures required by IFRS 7 –
Financial Instrument Disclosures.
The Company intends to continue to adopt
the reduced disclosure framework of FRS
101 in its next financial statements.
222
Going Concern
The financial statements have been
prepared on a Going Concern basis.
As the Company is the parent company
of the Group, the directors believe it is
appropriate to consider the use of
the Going Concern assumption at a
Group level.
The Group meets day-to-day working
capital and other funding requirements
through banking facilities, which include
an overdraft facility. Longer-term
debt financing is accessed through the
Group’s USPP loan note programme.
The facilities comprise a £350m
multi-currency Revolving Credit
Facility (‘RCF’) to June 2026 and
£250m of USPP loan notes with
maturities between 2028 and 2036.
Further details of these facilities are
provided in note 14 to the Group’s
consolidated financial statements.
The Group comfortably met all
covenants in 2023 and other terms of
its borrowing agreements in the period
and maintained its track record of
profitability and cash generation, with
an overall profit before taxation for the
period of £134.4m and net cash from
operating activities of £191.9m.
The Group has prepared cash flow
forecasts for a period of 12 months
from the date of signing these financial
statements, which show a sustained
trend of profitability, cash generation
and retained covenant headroom, even
under a ‘severe but plausible’ downside
scenario of forecast cash flows.
The impact of the acquisitions discussed
in note 28 of the consolidated financial
statements on the Group’s borrowings
and covenant headroom has been
considered in making this assessment.
The base case assumes a trading
performance delivered in line with
market consensus over the forecast
period, whilst the downside scenario
models a 10% reduction in revenues,
which the Group believes is an extremely
severe sensitivity relative to likely
outcomes and historic experience.
At 31 December 2023, the Group had
cash and cash equivalents of £126.9m
and undrawn banking facilities of £350.0m.
At the date of this report, the Group retains
a similar level of liquidity. Following the
acquisitions discussed in note 28 of the
consolidated financial statements the
level of undrawn facilities will reduce to c.
£175m. The remaining cash and undrawn
facility is expected to provide sufficient
available funds for the Group to
discharge its liabilities as they fall due.
Consequently, the directors are
confident that the Group, and therefore
the Company, will have sufficient funds
to continue to meet its liabilities as they
fall due for at least 12 months from the
date of approval of these financial
statements and therefore have
prepared the financial statements
on a going concern basis.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 223
Notes to the Company financial statements
1
Accounting policies
continued
Company result for the period
In accordance with the exemption
permitted under section 408(3) of the
Companies Act 2006, the Company has
elected not to present its own Income
Statement or Statement of Comprehensive
Income.
Accounting policies
The accounting policies set out in the notes
below have been applied in preparing the
financial statements for the period ended
31 December 2023.
Newly effective standards
There were no newly effective standards in
the period from 17 March to 31 December
2023 which had a material impact on the
Company, nor are any standards published
but not yet effective which are expected to
have a material impact on the Company.
Taxation
The charge for taxation is based on the
result for the year and takes into account
taxation deferred because of timing
differences between the treatment of
certain items for taxation and accounting
purposes.
of deferred tax provided is based on
the expected manner of realisation or
settlement of the carrying amount of
assets and liabilities using tax rates
enacted or substantively enacted at
the reporting date.
A deferred tax asset is recognised only to
the extent that it is probable that future
taxable profits will be available against
which the temporary difference can be
utilised. The carrying amount of deferred
tax assets is reviewed at each reporting
date and reduced to the extent that it is
no longer probable that sufficient taxable
profit will be available to allow all or part
of the asset to be recovered.
Deferred tax assets and liabilities are offset
when they relate to income taxes levied
by the same taxation authority and the
Company intends to settle its current tax
assets and liabilities on a net basis.
Fixed asset investments
Fixed asset investments are stated at cost
less provision for any diminution in value.
Financial instruments
Financial instruments are recognised
when the Group becomes a party to the
contractual provisions of the instrument.
The principal financial assets and liabilities
of the Group are as follows:
Deferred tax is provided on the temporary
differences between the carrying amounts
of assets and liabilities for financial
reporting purposes and the amounts
used for taxation purposes. The amount
Trade receivables and payables
Trade receivable and trade payables are
initially recognised at fair value and are
then stated at amortised cost.
Cash and cash equivalents
Cash and cash equivalents comprise
cash at bank and in hand, including bank
deposits with original maturities of three
months or less.
Impairment of financial assets
The Company recognises loss allowances
for expected credit losses (ECLs) on
financial assets measured at amortised
cost.
The Company measures loss allowances
at an amount equal to lifetime ECL, except
for bank balances for which credit risk
(i.e. the risk of default occurring over the
expected life of the financial instrument)
has not increased significantly since initial
recognition, which are measured as
12-month ECL.
Measurement of ECLs
ECLs are a probability-weighted estimate
of credit losses. Credit losses are measured
as the present value of all cash shortfalls
(i.e. the difference between the cash flows
due to the entity in accordance with the
contract and the cash flows that the
Company expects to receive). ECLs are
discounted at the effective interest rate
of the financial asset.
Share-based payments
Equity-settled share-based payments
to directors, key employees and others
providing similar services are measured at
the fair value of the equity instruments at
the grant date.
The fair value is recharged to the subsidiary
entities which receive services from those
individuals who have been granted awards
on a straight-line basis over the period that
the employees become unconditionally
entitled to the awards.
Financial risk management
The Company’s financial risk is managed as
part of the Group’s strategy and policies
as discussed in note 19 of the Group
financial statements.
Estimates and judgements
No significant estimates or judgements
have been used by the directors in
preparing these financial statements.
Directors’ remuneration and
staff numbers
The Company has no employees other
than the directors, who did not receive any
remuneration for their services directly
from the Company the current period.
See note 5 in the Group consolidated
financial statements for Key Management
Personnel compensation.
External auditor’s remuneration
The remuneration paid to the external
auditor in relation to the audit of the
Company is disclosed in note 4 of the
consolidated financial statements. The fees
for the audit of the Company’s financial
statements are borne by a subsidiary of
the Company and are not recharged.
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 224
2023
£m
507.5
0.1
0.3
0.2
508.1
Notes to the Company financial statements
2
Scheme of arrangement
4
Trade and other receivables
Breedon Group plc (‘New Breedon’) is a public company domiciled in England & Wales
with registration number 14739556 which was incorporated on 17 March 2023 to act as
the new holding company for Breedon Group plc (‘Old Breedon’) and its subsidiaries
(the ‘Group’) to replace Old Breedon, a company incorporated in Jersey with registration
number 98465 in connection with the Group’s move from AIM to the Premium Segment
of the Main Market of the London Stock Exchange during the first half of 2023.
New Breedon obtained control of the Group on 17 May 2023 via a court approved scheme
of arrangement. Under the scheme of arrangement, shares with a nominal value of £1.40
were issued in exchange for all the shares in Old Breedon at a ratio of one share in New
Breedon for every five shares in Old Breedon. There were no changes in rights or
proportion of control exercised as a result of the transaction.
The difference between the nominal value of the shares issued under the scheme of
arrangement of £474.4m and the net assets of Old Breedon of £507.0m has been
recognised within a Merger Reserve.
3
Capital reduction
Amounts owed by Group undertakings
Prepayments and accrued income
Corporation tax
Deferred tax
Included within amounts owed by Group undertakings is £507.2m due after more than one
year. The loan was initially repayable on demand and interest free. The terms of the loan
were revised during the period with interest being charged on the outstanding amount at a
rate of SONIA plus a market rate margin. All other amounts owed by Group undertakings
are unsecured, interest free, and due on demand.
The amounts owed by Group undertakings are financial assets and are held at
amortised cost.
Deferred tax assets are recognised in relation to share-based payment arrangements. The
charge for the current period has been recognised wholly within the income statement.
On 9 June 2023, the Company undertook a capital reduction to convert £471.1m of share
capital to distributable reserves, resulting in share capital of 338.9 million shares with a
nominal value of £0.01 per share.
5
Trade and other creditors
Amounts owed to Group undertakings
Accruals and other creditors
Amounts owed by Group undertakings are interest free and repayable on demand.
All trade and other creditors are financial liabilities and are held at amortised cost.
2023
£m
12.7
0.9
13.6
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Notes to the Company financial statements
6
Capital and reserves
Share capital and premium
Allotted, called-up and fully paid as at 31 December 2023:
Ordinary shares of £0.01 each
Number
(millions)
339.7
£m
3.4
The Company had 14,286 ordinary shares with a nominal value of £3.50 on incorporation
on 17 March 2023.
As part of the scheme of arrangement (note 2) the Company issued 338.9 million ordinary
shares with a nominal value of £1.40. Subsequently, the Company undertook a capital
reduction effective 9 June 2023 which cancelled the original 14,286 ordinary shares with a
nominal value of £3.50 and reduced the nominal value of the remaining ordinary shares
from £1.40 to £0.01.
The Company issued 0.2 million shares for cash raising £0.7m in connection with the
exercise of certain savings-related share options, of which £0.7m was recognised as share
premium. The Company issued 0.6 million shares for non-cash consideration of 1.0p per
share, satisfied through the capitalisation of retained earnings, in connection with the
vesting of awards under the Performance Share Plans.
Merger reserve
The Merger reserve was created as a result of the scheme of arrangement (note 2).
7
Investments
The Company holds an investment of £1, comprising 100% of the ordinary share capital
of Breedon Midco Limited, a holding company within the Group registered in England &
Wales with a company number of 14777332 and a registered address at Pinnacle House,
Breedon Quarry, Breedon on the Hill, Derby, England, DE73 8AP.
A full list of subsidiaries is presented on pages 226 and 227 of the Breedon Group plc
Annual Report.
Movements in investments during the period were as follows:
Investments as at date of incorporation
Scheme of arrangement (note 2)
Disposal to subsidiary entity
225
2023
£m
-
507.0
(507.0)
-
As noted in note 2, the Company obtained control of the Group and recognised this as an
investment. The Company then sold this investment to Breedon Midco Limited, a directly
held subsidiary, for consideration equal to the value of the investment, resulting in a nil gain
or loss.
8
Share-based payments
Details of the Company’s share-based payments are disclosed within note 18 of the Group
consolidated financial statements.
9
Contingent liabilities
The Company acceded as guarantor to the Group’s debt facilities during the period, which
comprise a £350m Revolving Credit Facility and £250m US Private Placement. These have
been accounted for as Financial Guarantee Contracts in line with IFRS 9.
For the year ended 31 December 2023, the subsidiary companies listed below are exempt
from the requirements of the Companies Act 2006 relating to the audit of individual
financial statements by virtue of section 479A. As a result, the Company guarantees all
outstanding liabilities to which the subsidiary companies are subject.
Name of undertaking
Breedon Midco Limited
Minster Surfacing Limited
Alliance Recycling (UK) Ltd
Country of incorporation or
registration
Company registration number
England and Wales
England and Wales
England and Wales
14777332
04084446
09418245
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 Subsidiaries
As at 31 December 2023, the companies listed below and on the following pages are indirectly held by Breedon Group plc except Breedon Midco Limited which is 100% directly owned.
226
Company name
ALBA Traffic Management Limited
Alfred McAlpine Slate Penrhyn Limited
Alliance Recycling (UK) Ltd
Alpha Resource Management Ltd
Barney Precast Limited
Berwyn Granite Quarries Limited
Blinkbonny Quarry (Borders) Limited
Boyne Bay Lime Company Ltd, The
Breedon Aggregates SW Limited
Breedon Bow Highways Limited
Breedon Brick Limited
Breedon Cement Ireland Limited
Breedon Cement Limited
Breedon Employee Services Ireland Limited
Breedon Facilities Management Limited
Breedon Group Limited
Breedon Group Services Limited
Breedon Holdings (Jersey) Limited
Breedon Holdings Limited
Breedon Investments USA Inc
Breedon Midco Limited
Breedon Northern Limited
Breedon Properties Limited
Breedon Scotland Limited
Breedon Southern Limited
Breedon Surfacing Solutions Limited
Breedon Trading Limited
Breedon Whitemountain Ltd
Broome Bros. (Doncaster) Limited
City Asphalt Limited
Registered
address
Proportion of
ordinary shares
held directly
by the parent
Proportion of
ordinary shares
held by
the Group
3
1
1
2
1
1
3
3
3
1
5
5
1
4
3
6
1
6
1
9
1
3
1
3
1
1
1
3
1
8
75
100
80
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Company name
City Mini Mix (Notts) Limited
Clearwell Quarries Limited
Cocklebank Conservations Limited
Cwmorthin Slate Quarry 1994 Company Limited
75
100
80
100
99.4
Deckal Limited
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
EJCC Limited
Enneurope Limited
Enneurope Holdings Limited
Flemings’ Coal Mines Limited
Flemings’ Fireclays Limited
Flemings’ Fireclays Manufacturing Limited
Glencarne Bricks Limited
Glenfarne Clayware Limited
Greenshine
Hart Aggregates Limited
Hope Construction Products Limited
Hope Dormant 1 Limited
Hope Ready Mixed Concrete Limited
Humberside Aggregates Limited
Huntsman’s Quarries Limited
Kilcarn Limited
Kingscourt Bricks Limited
Kingscourt Clay Products Limited
Lagan Airports Limited
Lagan Asphalt (UK) Ltd
Lagan Asphalt Group Limited
Lagan Asphalt Limited
Lagan Bitumen Limited
Lagan Cement Limited
Lagan Cement Products Limited
Registered
address
Proportion of
ordinary shares
held directly
by the parent
Proportion of
ordinary shares
held by
the Group
1
1
1
1
7
1
1
1
4
4
4
4
4
7
1
1
1
1
1
1
2
2
2
2
2
2
4
1
2
2
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
99.4
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 227
Registered
address
Proportion of
ordinary shares
held directly
by the parent
Proportion of
ordinary shares
held by
the Group
14
1
1
10
1
1
11
12
1
13
37.5
50
50
43
100
100
50
50
100
50
37.5
50
50
43
50
50
50
50
50
50
Registered
address
Proportion of
ordinary shares
held directly
by the parent
Proportion of
ordinary shares
held by
the Group
Joint ventures and associates
Company name
BEAR Scotland Limited
Breedon Bowen Limited
Breedon Colas Limited
Capital Concrete Limited
H.V. Bowen & Sons (Quarry) Ltd
H.V. Bowen & Sons (Transport) Limited
Kingscourt Country Manor Brick Company Limited
Northern Quarry Products Limited
PSV (UK) Ltd
Welsh Slate Europe B.V.
Registered office addresses
7
7
4
4
2
1
5
1
2
1
1
1
1
1
2
1
2
1
1
1
1
1
1
1
1
1
1
8
1
1
2
100
100
100
100
100
100
100
80
99.9
99.4
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
100
100
100
100
100
100
100
100
100
100
80
99.9
99.4
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
80
100
100
100
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Pinnacle House, Breedon Quarry, Breedon on the Hill, Derby, England, DE73 8AP
5 Blackwater Road, Newtownabbey, Northern Ireland, BT36 4TZ
Ethiebeaton Quarry, Kingennie, Monifieth, Angus, DD5 3RB
Rosemount Business Park, Ballycoolin Road, Dublin 11, Dublin
Killaskillen, Kinnegad, Westmeath, Ireland
28 Esplanade, St Helier, Jersey, JE2 3QA
Bank Chambers, 15-19 Athol Street, Douglas, IM1 1LB
Ashbow Court 4-12 Middleton Street, Lenton, Nottingham, England, NG7 2AL
1209 Orange Street, City of Wilmington, New Castle County, Delaware 19801, United States
Robert Brett House, Ashford Road, Canterbury, Kent, England, CT4 7PP
Unit 26 Airways Industrial Estate, Dublin 17, Santry, Dublin, D17 TH93
Rigifa, Cove, Aberdeen, United Kingdom, AB12 3LR
Battenweg 10, 6051AD Maasbracht, NL
BEAR House, Inveralmond Road, Inveralmond Industrial Estate, Perth, PH1 3TW
Subsidiaries
Company name
Lagan Group (Holdings) Limited
Lagan Group Limited
Lagan Hibernian Limited
Lagan Materials Limited
Lagan Whitemountain Limited
Marwyn Materials (UK) Limited
Midwest Aggregates Limited
Minster Surfacing Limited
Mulholland Bros (Brick and Sand) Limited
Natural Building Materials Limited
Nith Aggregates Limited
Nottingham Ready Mix Limited
Pinnacle Construction Materials Limited
Pro Mini Mix Concrete, Mortars and Screeds Limited
Roadmix Limited
Roadway Civil Engineering & Surfacing Ltd
Robinson Quarry Masters Limited
RT Mycock & Sons Limited
Severn Sands (Holdings) Limited
Severn Sands Limited
Sherburn Cement Limited
Sherburn Minerals Limited
Sherburn Sand Company Limited
Sherburn Stone Company Limited
Staffs Concrete Limited
The Cwt-Y-Bugail Slate Quarries Limited
The Waveney Asphalt Company Limited
Thomas Bow Limited
UK Stone Direct Limited
Welsh Slate Limited
Whitemountain Quarries Ltd
Strategic report Governance Financial statements Additional informationBreedon Group plc Annual Report and Accounts 2023 228
Shareholder information
Registrar
All administrative enquiries relating to
shareholdings, such as lost certificates,
changes of address, change of ownership
or dividend payments and requests to
receive corporate documents by email
should, in the first instance, be directed to
the Company’s Registrar, Link Group, and
clearly state the shareholder’s registered
address and, if available, your investor
code, which can be found on your share
certificate:
By post: Link Group, Central Square,
29 Wellington Street, Leeds, LS1 4DL.
By telephone: 0371 664 0300. Calls are
charged at the standard geographic rate
and will vary by provider. If you are outside
the UK call +44 371 664 0300. Calls outside
the UK will be charged at the applicable
international rate. The helpline is open
between 9.00am and 5.30pm, Monday
to Friday excluding public holidays in
England and Wales.
E: shareholderenquiries@linkgroup.co.uk
W: www.linkgroup.eu
Registering on the Registrar’s share portal,
Signal Shares, enables you to view your
shareholding, including an indicative share
price and valuation, check your holding
balance and transactions, change your
address or bank details and view dividend
payments. To register for Signal Shares just
visit www.breedonshares.com. All you
need is your investor code, which can be
found on your share certificate.
Group website and electronic
communications
The 2023 Annual Report and other
information about the Company are
available on its website. The Company
operates a service whereby you can
register to receive notice by email of all
announcements released by the Company.
The Company’s share price (15-minute
delay) is displayed on the Company’s
website.
Shareholder documents are now, following
changes in company law and shareholder
approval, primarily made available via the
Company’s website, unless a shareholder
has requested to continue to receive hard
copies of such documents. If a shareholder
has registered their up-to-date email
address, an email will be sent to that
address when such documents are
available on the website.
If shareholders have not provided an
up-to-date email address and have not
elected to receive documents in hard copy,
a letter will be posted to their address that
is recorded on the Register of Members
notifying them that the documents are
available on the website. Shareholders
can continue to receive hard copies of
shareholder documents by contacting
the Registrar.
If you have not already registered your
current email address, you can do so at
www.breedonshares.com.
Investors who hold their shares via an
intermediary should contact the
intermediary regarding the receipt of
shareholder documents from the
Company.
The Group has a wide range of information
that is available on the website including:
financial information – annual reports
and half year results, financial news
and events;
share price information;
shareholder services information;
dividend information; and
press releases – both current and
historical.
Multiple accounts
Shareholders who receive more than
one copy of communications from the
Company may have more than one
account in their name on the Company’s
Register of Members. Any shareholder
wishing to amalgamate such holdings
should write to the Registrar giving details
of the accounts concerned and instructions
on how they should be amalgamated.
Dividend information
The Company pays its dividend to
shareholders by electronic transfer.
You will need to have a dividend mandate
registered against your Breedon shareholder
account by the record date which enables
payment of the dividend straight to your
bank account. By paying dividends by direct
credit, it helps to reduce the Company’s
impact on the environment and provides
greater benefits in terms of efficiency, cost,
and safeguards the security of the payment.
Please register your bank details at
www.breedongroup.com/dividends or
contact our Registrar, Link Group, on 0371
664 0300 or +44 371 664 0300 if outside
the UK.
Investors who hold their shares via an
intermediary should contact the
intermediary regarding the receipt of
dividend payments from the Company.
Dividend reinvestment plan
(UK and Channel Islands only)
Link Group provide a Dividend
Reinvestment Plan (DRIP) which provides
shareholders in the UK and Channel Islands
with the opportunity to reinvest their
dividend payments to purchase additional
ordinary shares in the Company. If you
choose to join the DRIP, Link Group will use
the cash dividend payment to which you
are entitled to acquire further ordinary
shares in the Company on your behalf as
soon as practicable after the dividend
payment date. Terms and conditions
and a brochure may be found online at
www.breedonshares.com, where you can
also join the DRIP or contact Link Group on
0371 664 0381 (see below for call charges)
or email shares@linkgroup.co.uk to request
a DRIP application form.
In order to be effective for a particular
dividend, any application must reach Link
by no later than the DRIP election date
specified in the financial calendar, set out
at www.breedongroup.com/dividends.
Applications to join the DRIP received after
that date will take effect from the next
dividend payment date.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information 229
Shareholder information
If you receive any unsolicited mail or
investment advice:
Please note that due to the minimum
charge, the service may not be cost
effective for all participants, and the
value of shares, and any income from
them, can fall as well as rise. This is not a
recommendation to purchase shares and
if you are in any doubt as to what action
you should take you should consult an
appropriately qualified professional advisor.
Unsolicited mail, investment advice
and fraud
The Company is obliged by law to make its
share register publicly available and, as a
consequence, some shareholders may
receive unsolicited mail. In addition, many
companies have become aware that their
shareholders have received unsolicited
phone calls or correspondence, typically
from overseas ‘brokers’, concerning
investment matters.
These callers can be very persistent and
extremely persuasive and their activities
have resulted in considerable losses for
some investors. It is not just the novice
investor that has been deceived in this
way; many victims have been successfully
investing for several years. Shareholders
are advised to be very wary of any
unsolicited advice, offers to buy shares at a
discount or offers of free company reports.
Please keep in mind that firms authorised
by the Financial Conduct Authority (FCA)
are unlikely to contact you out of the blue
with an offer to buy or sell shares.
Make sure you get the correct name of
the person and organisation.
Check the Financial Services Register
at www.fca.org.uk.
Use the details on the Financial Services
Register to contact the firm.
Call the FCA Consumer Helpline on
0800 111 6768 if there are no contact
details on the Register or you are told
they are out of date.
Beware of fraudsters claiming to be from
an authorised firm, copying its website
or giving you false contact details.
Use the firm’s contact details listed on
the Register if you want to call them back.
Search the list of unauthorised firms and
individuals to avoid doing business with
at www.fca.org.uk/scams.
Report a share scam by telling the FCA
using the share fraud reporting form in the
Consumers section of the FCA website.
If the unsolicited phone calls persist,
hang up.
If you wish to limit the number of
unsolicited calls you receive, contact
the Telephone Preference Service (TPS)
at www.tpsonline.org.uk and follow the
link, or from your mobile phone register
your mobile number, free of charge, by
texting ‘TPS’ together with your email
address to 85095.
If you wish to limit the amount of
unsolicited mail you receive, contact
the Mailing Preference Service on
020 7291 3310 or visit the website at
www.mpsonline.org.uk.
If you deal with an unauthorised firm,
you will not be eligible to receive payment
under the Financial Services Compensation
Scheme. If you have already paid money
to share fraudsters, you should contact
Action Fraud on 0300 123 2040 or report
online at www.actionfraud.police.uk/
reporting-fraud-and-cyber-crime.
Share dealing services
You can buy shares through any authorised
stockbroker or bank that offers a share
dealing service in the UK, or in your country
of residence if outside the UK.
Link Group also provides a share dealing
service to private shareholders in the UK
or Channel Islands.
For further information on the share
dealing service provided by Link Group, or
to buy and sell shares via Link Group visit
www.linksharedeal.com or call 0371 664
0445. Calls are charged at the standard
geographic rate and will vary by provider.
Lines are open between 8.00am and
4.30pm, Monday to Friday excluding
public holidays in England and Wales.
This is not a recommendation to buy and
sell shares and this service may not be
suitable for all shareholders. The price of
shares can go down as well as up and
you are not guaranteed to get back the
amount you originally invested. Terms and
conditions apply. Link Group is a trading
name of Link Market Services Trustees
Limited which is authorised and regulated
by the Financial Conduct Authority.
This service is only available to private
shareholders resident in the United
Kingdom, the Channel Islands or the
Isle of Man.
Link Group is a trading name of Link Market
Services Limited and Link Market Services
Trustees Limited. Share registration and
associated services are provided by Link
Market Services Limited (registered in
England and Wales, No. 2605568).
Regulated services are provided by
Link Market Services Trustees Limited
(registered in England and Wales
No. 2729260), which is authorised and
regulated by the Financial Conduct
Authority.
The registered office of each of these
companies is Link Group, Central Square,
29 Wellington Street, Leeds, LS1 4DL.
Electronic voting
Shareholders can submit proxies for the
2024 AGM electronically by logging on
to www.breedonshares.com. Electronic
proxy appointments must be received by
the Company’s Registrar no later than
2.00pm on 22 April 2024 (or not less than
48 hours before the time fixed for any
adjourned meeting).
Shareholder communication
E: shareholderenquiries@linkgroup.co.uk
T: 0371 664 0300
Calls are charged at the standard
geographic rate and will vary by provider.
If you are outside the UK call +44 371 664
0300. Calls outside the UK will be charged
at the applicable international rate. The
helpline is open between 9.00am and
5.30pm, Monday to Friday excluding public
holidays in England and Wales.
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Glossary
The following definitions apply throughout this Annual
Report, unless the context requires otherwise.
AGM
AIM
ARM
BAP
BEAR
Scotland
bps
Annual General Meeting of the Company
Alternative Investment Market of the London
Stock Exchange
Alternative raw material
Biodiversity Action Plan
BEAR Scotland Limited
basis points
Breedon
Breedon Group plc
Breedon Colas Breedon Colas Limited
Broome Bros Broome Bros (Doncaster) Limited
CAGR
CBAM
CCS
CEM II
Compound annual growth rate
Carbon Border Adjustment Mechanism
Carbon capture and storage
Portland composite cement; comprising Portland
cement and up to 35% of certain other single
constituents
Cemex
Cemex UK Operations Limited
CEO
CFO
CGU
CO2e
CPA
CSRD
DMA
DNED
Division
DRIP
EBIT
EPD
EPOD
EPS
EQA
ESG
ETS
Chief Executive Officer
Chief Financial Officer
Cash-Generating Unit
Carbon dioxide equivalent
Construction Products Association
Corporate Sustainability Reporting Directive
Double Materiality Assessment
Designated Non-executive Director
One of the Group’s three operating segments: GB,
Ireland and Cement
Dividend Reinvestment Plan
Earnings before interest and tax, which equates to
profit from operations
Environmental Product Declaration
Electronic proof of delivery
Earnings per share
external quality assessment
Environment, Social and Governance
Emissions Trading Scheme
230
EU
European Union
New Breedon the company registered in England & Wales
EURIBOR
Euro Inter-bank Offered Rate
FCA
FRC
GAAP
GB
GCCA
GDP
GHG
GJ
GNI
Financial Conduct Authority
Financial Reporting Council
Generally Accepted Accounting Principles
Great Britain
Global Cement and Concrete Association
Gross domestic product
Greenhouse gas (emissions)
Gigajoule
Gross National Income
Group
Breedon and its subsidiary companies
HR
IAS
IFRS
Human Resources
International Accounting Standards
International Financial Reporting Standard
invested capital Net assets plus Net Debt
Ireland
The Island of Ireland
ISO
IT
KPI
kT
Lagan
Leverage
LGV
LCA
International Organization for Standardisation
Information Technology
Key Performance Indicator
kilo tonnes
Lagan Group (Holdings) Limited
Net Debt expressed as a multiple of Underlying
EBITDA
Large goods vehicle
Lifecycle analysis
Like-for-like
Like-for-like reflects reported values adjusted for
the impact of acquisitions and disposals
Underlying
LTI
LTIFR
LTISR
M&A
Minster
MPA
Lost time injury
Lost time injury frequency rate
Lost time injury severity rate
Mergers & acquisitions
Minster Surfacing Limited
Mineral Products Association
MW/MWh
Megawatt/Megawatt hour
NDP
National Development Plan
Net Debt
Net Debt including IFRS 16 lease liabilities
Net capital
expenditure
Purchase of property, plant and equipment net of
proceeds from sale of property, plant and equipment
and incorporated on 17 March 2023 to act as the
new parent company for the Group, in place of
Breedon Group plc (Old Breedon), a company
incorporated in Jersey
NI
Northern Ireland
no mither
no bother
NPS
PPE
ppt
PSP
QCA
RAP
RCF
Net Promoter Scores
personal protective equipment
percentage points
Performance Share Plan
Quoted Companies Alliance
Recycled asphalt planings
Revolving Credit Facility
Robinsons
Robinson Quarry Masters Limited
RoI
ROIC
SBTi
SECR
SDG
SONIA
Sterling
TCFD
TIFR
TSR
UK
Underlying
EBIT
Underlying
EBITDA
Republic of Ireland
Post-tax Return on Invested Capital
Science Based Targets initiative
Streamlined Energy and Carbon Reporting
Sustainability Development Goal
Sterling Overnight Index Average
Pounds sterling
Task Force on Climate-related Financial
Disclosures
Total injury frequency rate
Total shareholder return
United Kingdom (GB and NI)
Stated before acquisition related expenses,
property gains or losses, amortisation of
acquisition intangibles, AIM to Main Market costs
and related tax items.
Earnings before interest, tax and non-underlying
items
Earnings before interest, tax, depreciation and
amortisation, non-underlying items and before
our share of profit from associate and joint
ventures
USPP
VFL
US Private Placement
Visible Felt Leadership
Breedon Group plc Annual Report and Accounts 2023Strategic report Governance Financial statements Additional information Advisers and Company information
Company information
Joint broker
Deutsche Numis
45 Gresham Street
London EC4M 7LT
Joint broker
HSBC Bank plc
8 Canada Square
London E14 5HQ
Solicitors to the Company (UK)
Travers Smith LLP
10 Snow Hill
London EC1A 2AL
Contact
If you require information regarding
Breedon Group plc, please contact:
Breedon Group plc
Pinnacle House
Breedon on the Hill
Derby DE73 8AP
Tel: 01332 694010
E: info@breedongroup.com
W: www.breedongroup.com
Registered in England & Wales
Company number 14739556
Registered office
Pinnacle House
Breedon Quarry
Breedon on the Hill
Derby DE73 8AP
England
Directors
A Bhatia (appointed 26 April 2023)
J Brotherton (appointed 17 March 2023)
C Hui (appointed 26 April 2023)
P Lafferty (appointed 26 April 2023)
H Miles (appointed 26 April 2023)
C Watson (appointed 26 April 2023)
R Wood (appointed 17 March 2023)
Company secretary
J Atherton-Ham
(appointed 17 March 2023)
Registrar
Link Group
Central Square
29 Wellington Street
Leeds LS1 4DL
Independent auditor
KPMG LLP
One Snowhill
Snowhill Queensway
Birmingham B4 6GH
Printed on Magno Satin, an FSC® certified
Mixed Sources paper manufactured
using pulp from well-managed forests
and other controlled sources at a mill
accredited with EMAS and ISO 14001
environmental standards.
Printed by Pureprint Group.
Pureprint are ISO 14001 certified,
CarbonNeutral® and FSC® chain of
custody certified.
Designed and produced by Friend.
www.friendstudio.com.
232
Breedon Group plc
+44 (0) 1332 694000
breedongroup.com
Pinnacle House
Breedon Quarry
Main Street
Breedon on the Hill
Derby, DE73 8AP
Breedon Group plc Annual Report and Accounts 2023