Hand sanitizer and surface cleaner company Byotrol had a strong 2020 and are confident about 2021 Watch Now
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East and have access to Premium Chat. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
All looking positive for the future and major construction projects. Tucked away.
Here's a list of the assets being disposed (Appendix) to satisfy the CMA.
The interesting takeout for me is the decision on the East of Scotland cement terminals.
The Cemex cement terminal is in Leith, very close to Breedon's terminal in Dundee. Breedon must see a better business case for the Leith terminal because they offered up the Dundee terminal they acquired a few years ago through the Sherburn acquisition.
Looks like Breedon has taken the opportunity to high grade some assets.
Very positive and achievable.
Breedon Group: Berenberg reiterates buy with a target price of 105.0p.
I think that it is very positive that Breedon have said that their results are likely to be ahead of market expectations.
So many companies are hiding behind covid and not giving projections for the rest of the year - the board could easily have followed this line.
I guess its an indication that the actual results may be far better than 2019 for the rest of the year and that the update in November may bring another upgrade.
Great news, imo. Lets hope for an upward trajectory from here.
I have worked throughout lock-down and have never seen as much construction going on in my lifetime. I'm hoping that is a good sign for us investors in Breedon.
Good luck all
I’ve been trying to get my head around whether the update is as good as it appears to be. The market always likes to hear ‘ahead of market expectations’, but I’m more focused on my expectations.
Generally, I’ve written off 2020 for the companies I follow in the Covid impacted universe. In addition, typically I see a good result as a repeat of 2019 numbers in 2021. But in Breedon I am looking for something better, because of the operating momentum entering 2020 (pre-Covid) and the Cemex acquisition. I’d guess the market did too, as reflected in the share price performance at the turn of the year. Although, an element of that performance would have been due to the Brexit ‘resolution’, which to some degree is now being disrupted.
Alongside the half year results this update provides a good guide towards the 2nd half, although I’d have preferred a revenue update without the ‘noise’ of a one-month contribution from the Cemex acquisition. Taking out the Cemex contribution, using latest figures from 2018, points to a 2.5% like for like improvement in July and August over 2019. But it is a noisy adjustment.
It’s too early to get a firm handle on 2021, but I’m sensing Breedon might start 2021 at a similar operating level to how they started 2020, with the additional positive impact that the Cemex acquisition will have been in-house for 5 months rather than 7 months into the future, and effectively £70m of the £155m cash cost paid down.
To support that position, which I feel is top end, would need year-end metrics of pre-IFSR 16 net debt £320m and an adjusted EPS of ((66.5-15.5)*0.8)/1,696 = 2.4p.
The November update will provide a good marker along the way (I’m looking for c£60m-£65m below the 2019 revenue number).
The big unknows are how the UK and Ireland come through Covid, and the impact of a possible ‘hard border’ on operations and market sentiment. Breedon should guide on any operational impact at the results next March.
Looks like the wheels are moving again.. Would be nice to see a steady upward trend. Been in the doldrums for too long.....
Short, sweet and positive.
Hello, I have taken a leap of faith by joining today. GLA
Looks like Breedon's adjustments will be accepted and the merger will move forward. Hopefully with full integration before year end - just keeps ongoing comparisons cleaner.
But the detail of the commentary is interesting (at least to me).
"These undertakings will require the divestment of a small number of ready-mixed concrete plants and an asphalt plant in England, and two quarries and a cement terminal in Scotland."
The CMA raised a competition concern with one quarry, so I assumed a simply addressing the CMAs concerns would involve the disposal of that one quarry. The fact that there are two quarries for disposal suggests to me they have decided they prefer to keep the highlighted quarry and satisfy the CMA with the disposal of two alternative quarries - perhaps quarries not even part of the Cemex acquisition, but part of their existing estate. It seems a sensible strategy to consider the bigger picture. Perhaps a similar approach was made wrt RMC locations.
and every hole needs filling!
Haven't been able to place a deal on Hargreaves for a couple of hours. Anyone have any ideas why?
Today's RNS has the long term share awards for the EPS performance period for 3 calendar years from the 2019 number 5.08p . The performance measure is after inflation (RPI), which in principle aligns with share holder interests but for one thing. If a placing is made for say acquisitions, recently Hope and Lagan, retail shareholders have had their holding diluted by the issue of discounted shares to Institutional shareholders and directors. The long term share awards are 'adjusted' to remove the impact of this dilution. Seems unfair when it is the directors taking these decisions but by various mechanisms avoid the resultant dilution.
I wish retail investors had a greater say over this loss of pre-emptive rights. One good thing about the recent Cemex deal is that it didn't require a placing - discounted or otherwise.
The last award published (implemented 3 years ago) had an EPS threshold of +25%, and a maximum vesting level of 59%. I'm guessing these are more generous than previous years, as the growth rate has declined from the heady days of 3-7 years ago.
Perhaps of greater interest is the fact that the remuneration committee has agreed a target metric, which I guess now means Breedon has a handle on their near and medium term growth prospects, post lockdown.
A trading update coming soon?
Ye, I brought some last night just before close, I brought at the bid price 77.00, so I guess all those late trades last night were buys.
Like Enquest, Breedon seem to be a very well run company with high quality assets, they have obviously suffered since March but seem to have come back strongly and have plenty in the Bank and with better market conditions should do well.
Also, they are in a market that can dictate price - that will help if we do get higher inflation.
As for Bitumen my view is that that will remain at its present price level for the foreseeable future.
I guess that CMA post was deleted because it looked like insider information - it was also a first time post from an account created yesterday. As you say, it looks like Breedon anticipated the CMA report and have a remedy.
"headline". I meant "headwind"
Hi chilting, I don’t think I’ve seen you here before – it’s a quiet board. Are you in Breedon?
Bitumen is one of Breedon’s largest commodity costs and has been a headline when oil prices rise, so Breedon can be seen as a hedge to your oil investments.
The recent oil price slide has shown up in a c16% drop in Bitumen pricing, following some decline through the latter half of 2019. Hard to quantify but this cost reduction should help margins alongside the above inflation price increases announced last month.
Odd. Had a poster appear here yesterday. One post and he’s gone, along with his post. I wasn’t sure if he was speculating on any CMA outcome. The CMA does appear to be a ‘leaky bucket’ in respect of market impacting news but in this instance CMA news was never expected to be significant.
The CMA headline, “Construction materials deal raises competition concerns” was a near certainty. It all comes down to the detail. It’s a great deal for Breedon, but remedies were expected - the closure or sale of some sites.
In the event, CMA highlighted the cement market in the East of Scotland. My take on Breedon comment is that they may have hoped the cement terminal in Leith would escape the review, but no doubt has suitable plans in place if it didn't The other areas of competition probably relate to RMC plant. When the Cemex news came out I recall thinking, the Sherburn acquisition in 2017 included a cement terminal in Dundee. The two are pretty much each side of the Forth estuary.
I guess Breedon will have already decided on an appropriate remedy. Unless the CMA really has thrown up something unexpected I expect Breedon to accept the findings within the week avoiding Phase 2.
When asked about the interim holding company, Pat said it was likely to be in place for a few months after the CMA announcement. The implementation of remedies could take the rest of the year.
Next news is expected in Sept, with an update on the market since June.
No drama - all as expected by Breedon and the market.
When I commented on this last week I'd forgotten about tomorrow's CMA phase 1 deadline on the Cemex acquisition. I still suspect recent weakness may be due to a share overhang from the Investec sale but there may also be nervousness around tomorrow's decision.
If there is adverse news tomorrow I'd be surprised if it was substantial - I have a value on the entire acquisition of only 6p - but there has been share prices movements recently leading up to CMA news which has been noticed by markets.
There may be a further delay but if there is CMA news tomorrow my expectations are for some closures on RMC sites.
RNS - now we have some insight into yesterday's high volumes.
Investec has offloaded about 6% (c100m shares), with Blackrock picking up at least 2%.
When I saw this yesterday I suspected an off the market transfer between funds. Hopefully the rest of the Investec stock has been taken up by firm hands, who may be below the 3% reporting threshold. If not, and there's an overhang of available stock then we could see a temporary impact on the share price. A consequence of an illiquid stock, particularly one like Breedon with a £1B market cap. on AIM.
Tomorrow might tell us how firm the new holders are.
Hi L3Trader, I though Jude Lagan's holding and sale quite modest so wouldn't read too much into it. Apart from selling part of an options award to cover taxes it's rare to get a reason for the sale.
Besides, I follow a simple maxim when it comes to director buys/sales ( I know JL is a senior manager rather than a director). There is only one reason to buy shares, but there can be many reasons to sell shares.
Daughter needs a housing deposit, the mistress a bigger flat, etc.
Stoneroses, I’m always sorry to hear of people’s jobs at risk. I’m an investor here and can easily adjust to changes with little impact on my circumstances but appreciate it’s a very different situation when your job is at stake.
At the latest update the report was 7% of staff still of furlough with sites opening up as demand came back. The June revenue comparative with 2019 was 91% (LFL) so sort of fits with the 7% number. Breedon promised a further update in Sept.
You say you work in the Northern region, which I know includes Scotland but these days extends south of the border. I live in Scotland and know construction was held back several weeks behind England, so I guess you are seeing a greater impact in your region than the Southern region – is that your experience?
We know from previous acquisitions that the CMA is most likely to raise issues with an overlap of ready mix plant, so I think you’re right to expect restructuring in that area – management has been good at predicting CMA moves so a delay in opening existing RMC sites may be in preparation for a decision on wider restructure. The 26th Aug is a key date.
I would hope that cost control is an ongoing activity but always better to be doing this into an expanding market rather than a contracting market. With the almost stagnant markets of the last couple of years I suspect management are to some degree playing efficiency catchup under cover of the pandemic.
As an investor, and in your case an employee, we can only hope that the Boris build, build, build mantra has substance. If the market gets close to a sustained 2-3% p.a. growth I’d expect Breedon to benefit substantially, for all our benefit, through dividends and SAYE payments.
Breedon has the bases covered, whatever the composition.
A concrete mixture ratio of 1 part cement, 3 parts sand, and 3 parts aggregate is available from your nearest Breedon facility.
For an additional fee Breedon will mix if for you and supply to site.
This has held its value really well, but do people know HS2 is a concrete floor not loose stone.