Breedon Regulatory News (BREE)

News release

10 April 2013

Breedon Aggregates Limited

("Breedon Aggregates" or the "Group")

Breedon Aggregates announces £61 million placing to fund acquisitions

Group acquires Scottish assets from Aggregate Industries for £34.0m

and is in advanced stages of a possible acquisition for up to £19.0m

Ÿ Scottish acquisition will add 6 active quarries, 4 asphalt plants, 7 ready-mixed concrete plants & 2 concrete block plants in Grampian, Tayside, Highlands and Hebrides

Ÿ Group mineral reserves & resources will more than double to almost 400m tonnes: enough to last 76 years at current extraction rates

Ÿ Scottish acquisition would have added approximately 20% to Group revenue and 24% to Group EBITDA in 2012

Ÿ Possible acquisition of assets in England and Wales could add a further 4 quarries and up to 13m tonnes of mineral reserves and resources

Ÿ Company has conditionally raised £61.0 million through a placing at 21p per share to fund acquisitions

Ÿ Acquisitions will take the Group into new, contiguous, geographical markets and are in line with Breedon's stated strategy of acquiring earnings-enhancing aggregates-related businesses with strong potential for performance improvements and/or synergy benefits

Peter Tom CBE, Chairman, said, "These acquisitions are consistent with our long-term aim of becoming the lowest-cost operator in our chosen markets. We believe that they will put us in an even stronger position to benefit from any UK economic recovery.

"We will remain focused on further improving our performance and our management team has demonstrated its ability to deliver solid results in the most difficult market conditions. The previous acquisitions made by the Group have all added significant value to our core business and this gives us confidence in our ability to repeat this with future deals. Weather permitting, the Board is confident of making further progress in 2013."

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More about Breedon Aggregates

Breedon Aggregates Limited is the largest independent aggregates group in the UK. Following these acquisitions (if both are completed), it will operate 37 quarries, 22 asphalt plants, 48 concrete (including mortar) plants and two concrete block plants in England, Scotland and Wales and will employ approximately 1,000 people. The group will have nearly 400 million tonnes of mineral reserves and resources in the UK. Breedon Aggregates' strategy is to continue growing through consolidation of the UK heavyside building materials sector.

For further information:

Breedon Aggregates Limited 01332 694010

Peter Tom CBE, Executive Chairman

Simon Vivian, Group Chief Executive

Ian Peters, Group Finance Director

Stephen Jacobs, Head of Communications 07831 764592

Cenkos Securities 020 7397 8900

Max Hartley, Nicholas Wells

A copy of the full circular giving further details of the acquisitions and placing is available on Breedon Aggregates' website at http://www.breedonaggregatesir.com/documents.aspx

10 April 2013

PLACING OF 290,476,190 ORDINARY SHARES,

ACQUISITION AND POSSIBLE FURTHER ACQUISITION

Introduction

The Company announced today that Breedon Aggregates Scotland Limited, a wholly owned subsidiary of the Company, had entered into an acquisition agreement for the purpose of acquiring certain assets from Aggregate Industries for a total consideration of £34.0 million in cash. The assets include 6 active quarries, 4 asphalt plants, 7 ready-mix concrete plants, 2 concrete block works and approximately 206 million tonnes of mineral reserves and resources in Scotland. If the Acquisition is completed, the Group's mineral reserves and resources will more than double to almost 400 million tonnes, providing an estimated 76 years' life at current extraction rates. The Directors believe that the Acquisition will assist in generating growth for the Group as a whole once the assets are embedded into the Group's wider operations.

The Company is also in advanced discussions with Marshalls PLC to acquire a parcel of assets in England and Wales, which, if completed, would add a further 4 quarries and an additional 13 million tonnes of mineral reserves and resources to the Group, plus a greenfield opportunity under option and the potential for additional mineral prospects of 5 million tonnes. Aggregate production from these assets was 0.9 million tonnes in 2012 (2011: 1.0 million), generating revenue of approximately £10 million (2011: £10.6 million) and an EBITDA of £2.3 million (2011: £3.1 million). The consideration for the Possible Acquisition is expected to be between £17.5 million and £19.0 million, depending upon satisfaction of certain conditions subsequent. There can be no certainty that the acquisition of these assets will complete, nor as to its final terms. A further announcement regarding the Possible Acquisition will be made in due course.

The Company also announced today that it has conditionally raised approximately £61.0 million (before expenses) by the proposed issue of 290,476,190 Ordinary Shares at the Placing Price.

The net proceeds of the Placing (approximately £58.7 million) will be used to finance the purchase price of the Acquisition (£34 million) and the Possible Acquisition (if it proceeds), together with associated transaction costs. If the Possible Acquisition does not proceed, the balance of the net proceeds of the Placing will be used for funding future acquisitions and for ongoing working capital requirements. The Group will continue to retain the benefit of its existing £15 million revolving credit facility which is available for additional opportunistic acquisitions. The Placing is conditional (among other things) upon the sale and purchase agreement for the Acquisition becoming unconditional (save for any condition as to Admission or receipt of net proceeds of the Placing) and not being terminated.

Background to and reasons for the Acquisition

In line with the Company's stated strategy of acquiring earnings-enhancing aggregates-related businesses with strong potential for performance improvements and/or synergy benefits, the Acquisition offers the opportunity to add to the Group's existing business in Scotland, whilst the Possible Acquisition offers the opportunity to add to the Group's existing business in England. In each case, the acquired business should benefit from the Group's highly experienced management team, who will work to enhance customer service levels and improve operational efficiency. In addition, both the Acquisition and the Possible Acquisition, if completed, will provide the Group with a move into new, but contiguous, geographical markets.

The Board believes that the Acquisition and the Possible Acquisition are consistent with the Group's long-term aim to become the lowest cost operator in its chosen markets. The Board further believes that, if the Acquisition and the Possible Acquisition are completed, the Group will be in an even stronger position to benefit from any UK economic recovery.

Background on the Acquisition

The proposed purchase of certain Scottish assets from Aggregate Industries, part of the Holcim Group, is to be effected by way of a purchase of the trade and assets of 11 quarries (of which 6 are active), 7 ready-mixed concrete plants, 4 asphalt plants (including associated contracting activities) and 2 concrete block factories, plus a number of non-operational units. These activities are based in the Grampian, Tayside and Highland regions of mainland Scotland and on the Hebrides. The quarries produce a range of aggregates for general construction use or use in production of ready-mixed concrete, mortar and asphalt. Total mineral reserves and resources are approximately 206 million tonnes.

Sales volumes achieved by these operations in 2012 were 933,000 tonnes of aggregates, 86,000 tonnes of asphalt, 116,000 tonnes of concrete blocks and 104,000m3 of ready-mixed concrete. Revenue and EBITDA generated in 2012 by these operations were £34.2 million and £4.9 million respectively. The Directors believe that there is potential to significantly improve the performance of these operations through rationalisation and significant new contracts, including the upgrade to the A9 north of Perth and the Aberdeen Western Peripheral Route. Consideration for the assets and inventories is £34.0 million and will be funded through the net proceeds from the Placing. Additional working capital requirements for the acquired business will be funded from existing bank facilities or free cashflow.

Based on 2012 financial information, the Acquisition would have added approximately 20% to revenue and 24% to EBITDA for the Group for the last financial year.

Acquisition Agreement

Completion of the asset purchase agreement is conditional, amongst other things, upon:

·; Receipt by Breedon Aggregates Scotland Limited of the consent of the relevant landlords to the assignment of certain leases;

·; The Placing Agreement becoming unconditional;

·; Shareholder approval of the resolutions proposed at the Extraordinary General Meeting;

·; Admission of the Placing Shares;

·; No material adverse change having occurred in respect of the assets or the business of the seller; and

·; The consideration of £34.0 million being paid in cash.

In connection with the Acquisition, the seller has given certain warranties and indemnities to Breedon Aggregates Scotland Limited, subject to a limitation cap, in relation to environmental, tax and other matters.

Current Trading and Outlook

Current Trading

The Company announced the Group's final results for the year ended 31 December 2012 on 5 March 2013, an excerpt from which is below:

"Revenue for the year was £173.5 million (2011: £168.9 million). Excluding revenue from acquisitions, including the full-year revenue from C&G Concrete which was acquired in July 2011, revenue would have been £154.8 million (2011: £161.7 million).

Underlying earnings before our share of associated undertakings, interest, tax, depreciation and amortisation (EBITDA) were £20.2 million (2011: £17.1 million). Of this, EBITDA of £2.1 million (2011: £0.5 million) was generated by acquisitions, including a full year's earnings from C&G. Underlying Group operating profit was £8.8 million (2011: £5.7 million). Underlying results are stated before acquisition-related expenses, redundancy and reorganisation costs, property items, impairments, amortisation of acquisition intangibles, changes in the fair value of financial instruments, gains on bargain purchase and related tax items.

Profit after tax for the year was £5.3 million (2011: £1.2 million).

Net debt at 31 December 2012 was £74.1 million (2011: £96.2 million)."

Outlook

While there is no doubt that 2013 will be another tough year, with construction output forecast to decline again and Mineral Products Association product volumes also forecast to be down, the Directors are generally more optimistic than they were this time last year, although the winter conditions in January and March have resulted in a slow start to the year. The Government at last seems to have realised that switching funding from revenue to capital spending on infrastructure can have a positive effect on GDP, improve employment and deliver significant secondary economic benefits. There is a growing recognition in both public and private sectors that essential maintenance work and upgrades to production facilities cannot be postponed indefinitely.

While the recent announcements made in the Budget and the Autumn statement in November 2012 will take time to feed through, the schemes that were cleared the previous year should start to materialise in 2013. The A453 upgrade between the M1 and Nottingham is a good example; this started early in 2013, with Laing O'Rourke the successful contractor. The overall housing market will hopefully see the benefit from the range of financial support measures introduced which the Directors believe will make buying a new home the easiest way onto the property ladder for first-time buyers. Housebuilders anticipate steady demand over the next few years.

In Scotland, the Directors believe that there will be continuing investment in the renewables sector and related infrastructure. The recently approved Aberdeen by-pass and the commitment to make the A9 from Perth to Inverness into a dual carriageway is expected to benefit the Company in the medium term. The Group's associate company, BEAR Scotland Limited, recently secured the North West maintenance contract from Transport Scotland, which will ensure that the Group continues to benefit from material supplies in that area for the next few years. The Directors are hopeful that transport budgets in Scotland may increase slightly from their recent low levels.

The Group will remain focussed on further improving its performance in safety, operations and customer service. Its management team has demonstrated its ability to deliver solid results in the most difficult market conditions. The previous acquisitions made by the Group have all added significant value to its core business, with the acquisition of C&G in July 2011 in particular exceeding expectations. This gives the Company confidence in its ability to repeat this with future deals. Weather permitting, the Board is confident of making further progress in 2013.

Placing

The Placing Shares have been conditionally placed by Cenkos Securities plc, as agent for the Company, with institutional and other investors in accordance with the terms of the Placing Agreement.

Subject to Admission, the Company will issue 290,476,190 Ordinary Shares which will raise £61.0 million, before expenses, and £58.7 million, after the expenses of the Placing (which are estimated to be £2.3 million (excluding VAT) in total.

The Placing Shares issued pursuant to the Placing will represent approximately 30.9 per cent. of the Enlarged Share Capital. The Placing Shares will, following Admission, rank in full for all dividends and distributions declared, made or paid in respect of the issued Ordinary Share capital of the Company and otherwise rank pari passu in all other respects with the Existing Ordinary Shares. The Placing Price represents a discount to the closing mid-market price of 8.7 per cent. per Ordinary Share as at 9 April 2013 (being the latest practicable date prior to the date of this document).

The following Directors have committed to subscribe for Placing Shares under the Placing:

Related Party Transaction

IAML is a substantial shareholder of the Company, holding 191,844,445 Ordinary Shares, which represents approximately 29.5 per cent. of the Existing Ordinary Shares. IAML, as a participant in the Placing, is therefore a related party for the purposes of the AIM Rules and, under the AIM Rules, the Placing constitutes a related party transaction. Having consulted with Cenkos Securities plc, the Company's nominated adviser, the Directors of the Company consider that the terms of the Placing are fair and reasonable insofar as its Shareholders are concerned.

Extraordinary General Meeting

An Extraordinary General Meeting will be held at the offices of Travers Smith, 10 Snow Hill, London EC1A 2AL on 26 April 2013 at 11:00 a.m. Resolution 1 will be proposed at the Extraordinary General Meeting to grant authority to the Directors to allot relevant securities (as defined in the Articles) of up to an aggregate amount of 290,476,190 Ordinary Shares in connection with the Placing. Resolution 2 will be proposed to grant authority to the Directors to allot equity securities (as defined in the Articles) in connection with the Placing on a non pre-emptive basis as if Article 6.3 of the Articles did not apply).

Irrevocable Undertaking

Marwyn Value Investors LP has signed an irrevocable undertaking to vote in favour of the Resolutions in respect of its holding of 146,223,698 Ordinary Shares which represents 22.49 per cent. of the Existing Ordinary Shares.

Recommendation

The Directors consider the Placing to be in the best interests of the Company and its Shareholders as a whole and accordingly unanimously recommend that Shareholders vote in favour of the Resolutions to be proposed at the Extraordinary General Meeting as they intend to do so in respect of their own beneficial holdings amounting, in aggregate, to 60,773,244 Existing Ordinary Shares, representing approximately 9.35 per cent. of the Existing Ordinary Shares.

DEFINITIONS

The following words and expressions shall have the following meanings in this announcement unless the context otherwise requires: