Acquisition of certain CEMEX UK assets and operations by Breedon

Breedon is pleased to announce that it has entered into a conditional agreement with CEMEX UK Operations Limited (“CEMEX”) to acquire certain assets and operations in the United Kingdom (“CEMEX’s UK Assets”) for a total consideration of £178 million on a cash and debt free basis (the “Acquisition”). The combination of Breedon’s and CEMEX’s UK Assets will further enhance Breedon’s position as a leading construction materials group in Great Britain and Ireland. The Acquisition is consistent with Breedon’s strategy of acquiring earnings-enhancing aggregates related businesses with strong potential for performance improvements and synergy benefits.

Highlights:

• Breedon has agreed to acquire CEMEX’s UK Assets for £155 million in cash together with the assumption of £23 million of lease liabilities. The cash consideration will be payable to the seller on completion1
• CEMEX’s UK Assets encompass approximately 100 active operations across six divisions located in Scotland, Wales, North-East England, Norfolk, the East Midlands, and Yorkshire
• In the year ended 31 December 2018, CEMEX’s UK Assets generated revenue of £178 million and EBITDA of £23 million
• The oup mineral reserves and resources will increase by approximately 170 million tonnes, enough to last over 27 years at current extraction rates
• Breedon expects to achieve annual net pre-tax cost synergies of approximately £2 million by the third full year following completion
• The Acquisition is expected to be accretive to Underlying EPS and FCF per share2,3 in the first full year following completion
• Return on invested capital is forecast to cover the Group’s weighted average cost of capital by the end of 2022
• Breedon’s pro forma net debt is expected to be approximately 2.4x Underlying EBITDA (2.2x
  on a covenant basis) at completion and to reduce below 1.0x during 2022
• Completion is expected in the second quarter of 2020, subject to completion of a TUPE consultation process

Note: Financial information presented throughout this announcement has been prepared on a post-IFRS 16 basis.

1. Subject to completion adjustments.
2. This should not be construed as a profit forecast and should therefore not be interpreted to mean that the future earnings per
   share or cash flows of the enlarged Group will necessarily be greater than the historical published earnings per share or cash
   flows of the Breedon Group.
3. Free cash flow (FCF) per share is defined as cash from operations less dividends from associates, net capex, interest and tax, divided by the undiluted weighted average number of shares in issue.

Pat Ward, Breedon’s Group Chief Executive, commented: “This is a unique opportunity to extend our national network through a single value-enhancing transaction, substantially increasing our footprint in several regions of Great Britain where we are currently under represented and adding approximately 170 million tonnes of mineral reserves and resources. It also delivers a step-change in the development of our national asphalt strategy.

“There is potential to drive significant performance improvements across these new assets and they will also strengthen our platform for further organic growth and bolt-on acquisitions.

“In addition to the cost synergies we anticipate, we also expect the deal to be accretive to both earnings and free cash flow in the first full year, with a positive ongoing impact on the cash generation of the enlarged Group."