Breedon Group Stock

[indiscernible] Breedon's 2026 Interim Results Presentation. We're joined today by Rob Wood, Breedon's CEO; and James Brotherton, Breedon's CFO.

And in a second, I'll hand over to them to present their highlights from the first half of 2026. After that, we'll open the floor up to questions in the room. And as ever, we would encourage you to do your very best to limit yourself to two each. When you ask those questions if you could introduce both your name and your institution, that would be really helpful. We'll then go to the phone lines for any virtual questions before wrapping up.

I think finally, to say, we know it's really busy this week. So thank you very much, everyone, for coming. We will try to get through it at a decent clip, and we'll be around afterwards if there's anything that you'd like to come back on.

So without further ado, I will hand over to Rob.

Thanks, Anthony, and good morning, everyone. And welcome to our 2026 results presentation. James and I will guide you through our presentation, and then we'll open things up for questions. I'm pleased to report that in another challenging period, Breedon has proved once again the strength of our model and the quality of our people and has delivered a really solid performance. Positive momentum in Ireland and the U.S. has offset continued market challenges in. GB. Across the group, the short-term impacts of the Middle East conflict have been well managed. And given the strength of our cash generation and our confidence in our long-term prospects, we have again increased our interim dividend.

In parallel to delivering this performance, I'm pleased to report that we have made significant progress on our strategic priorities. The acquisitions which we completed in the U.S. and Ireland demonstrate the ability of our teams to source and execute strategically compelling earnings accretive transactions at attractive valuations. We launched our Back British Cement campaign, more on this later, and we continue to replenish our mineral reserves, the lifeblood of our business. And we continue to focus on self-help. Lastly, our Breedon 3.0 strategy is enabled by our continued investment in people, sustainability and finance, the lenses through which we view our business.

In summary, I'm pleased with our first half performance and with the progress we are making building an increasingly diversified business. I'd like to recognize the shift put in by our 4,900 colleagues for controlling the controllables to deliver a performance and continuing to make Breedon a better and stronger business.

I'll now pass over to James for the financial review.

Good morning, everyone, and thank you, Rob. We delivered a pretty solid first half to 2026 with our reported revenue increasing by 5% and on a like-for-like basis, increasing by around 3%. For context, that's the first time we've recorded like-for-like growth in the first half of a financial year since 2023. Underlying EBITDA was flat to 2025 and slightly ahead on a like-for-like basis, with the EBITDA margin being a touch lower at 13.5%. Our post-tax return on invested capital remains lower than we would like it to be, impacted by the short-term dilution from acquisitions and our absolute levels of profitability. However, we remain confident that when markets recover, we will see a rapid improvement in our reported returns.

Our free cash outflow is lower than we saw last year, principally down to a well-controlled working capital build in the first half. And the relatively small year-on-year increase in our net indebtedness mostly reflects the strong cash generation that you'll recall came through at the back end of 2025, offset by the acquisitions and an increase in our IFRS 16 liability, which I'll talk about later. And you'll find the usual detailed breakdown of our maturity profile of our facilities in the appendices.

Covenant leverage at 2.1x is slightly improved from where we were 12 months ago, although bear in mind that the timing of the cash payment of the 2025 final dividend falls into the second half of this year. So on a like-for-like basis, we're in roughly the same place as where we were this time last year. And as well as investing back into the business and completing 2 strategic acquisitions, we continue to progress the dividend, reflecting our sustained confidence in the group's long-term prospects and our thoughtful approach to capital allocation.

Digging into the revenue and EBITDA movements in a little bit more detail. So for the group overall, we saw modest net pricing, which principally reflects the impact of the necessary charges we've had to implement in the first half. Volume and mix was very slightly ahead of last year with significant improvements in both aggregates and asphalt, offsetting cement and ready-mix concrete volume decreases. And the acquisitions combined contributed around GBP 17 million to revenue. Pricing and surcharges, combined with our hedging program to help offset the increase in costs, and we saw a small absolute drop-through on those improved volumes within the M&A contribution from the consolidation of the loss-making months of Lionmark offsetting the positive contributions that came through from Falling Springs and from Booth. As you'll recall, we changed the reporting structure of the group this time last year. And so our segmental disclosure has been restated under the revised format for the first time. And those restated half year comparatives have been published on the website.

Turning now to each of the divisions. In GB, our revenue was flat with the surcharges broadly balancing out marginally higher costs. Performance benefited from major infrastructure project wins being delivered. However, this was more than offset by the negative drop-through that we saw on those lower ready-mix concrete volumes as a function of the residential market. We have made further progress on operational excellence initiatives in GB, and that's helped to underpin these results, and we'll have more to say on those as the rest of the year unfolds. As you know, we can't comment specifically on GB cement volumes and pricing, but our assessment is there's been little fundamental change to the GB market dynamics so far this year, as evidenced by our steady first half performance in cement. However, the introduction of an effective domestic CBAM from this coming January has to remain a key priority for the government, and Rob will talk about that a little bit more later.

In Ireland, we've seen a really solid first half, delivering strong revenue growth with volume and price up mid-single digits and a promising initial contribution from Booth. Profitability in Ireland was impacted by the unscheduled cement mill shutdown, and we estimate that the net overall opportunity cost for us was a couple of million pounds. Importantly, the repair was completed on a timely basis, and we don't expect any further impact from that this year.

In the U.S., we've seen a really strong like-for-like trading performance in the first half with both revenue and EBITDA up in the mid-teens and positive trends across each product category. As I referenced earlier, our working capital build has been really well controlled for the half year. And as usual, I'd expect the majority of that to unwind over the course of the next 6 months. Our CapEx spend reflects the fact that we are continuing to invest back into the business. And projects of note that are underway this year include our replacement Dublin asphalt plant, our new Scottish cement rail head and the expansion of our bitumen storage facilities in St. Louis, which will allow us to do a meaningful U.S. winter fill for the first time.

In GB, we also took delivery of further cement rail wagons during the period. As we've done previously, we've acquired these on long-term leases, and that's the reason behind the increase in the IFRS 16 liability. In practice, there's very little change to the cash profile of the group arising from this transaction. Overall, we saw a free cash outflow in the period of around GBP 15 million, which compares with around GBP 25 million this time last year.

As usual, I've summarized our technical guidance to cover the balance of the year. So for the year as a whole, we're expecting the first half, second half split of revenue to be around GBP 48 million to GBP 52 million, with profitability, as usual, even more weighted towards the second half of the year. The rest of our income statement guidance is largely unchanged from March other than a slight increase in the depreciation charge.

Some points to note on the cash flow. Our CapEx guidance is slightly higher than it was at March at GBP 125 million to GBP 135 million, and that principally reflects the acquisitions. To confirm that we will see the usual working capital unwind across the balance of the year with our overall year-on-year position expected to be a working capital outflow of between GBP 20 million and GBP 30 million. One thing that is different this year is the timing of our cash dividend payments. All cash dividend payments of GBP 55 million will be paid out in the course of the second half of the financial year, and I'd expect that to be the timing going forward as well. Cash exceptionals, which principally comprise acquisition and integration-related costs, together with Peak Cluster and its associated decarbonization initiatives will total between GBP 10 million and GBP 15 million. And that should lead you to a net debt number for the full year of around GBP 650 million with leverage reducing to close to 2x.

So to summarize, we continue to deliver against our capital allocation framework as evidenced by our organic investment back into the business, securing incremental reserves in GB, investing in our cement distribution network and upgrading our asphalt capabilities in Ireland and our bitumen capabilities in the U.S., inorganic investment through the strategically compelling acquisitions we've completed in the period; all of which came to pass as a result of the depth of our local relationships.

In terms of the balance sheet, we've again extended our debt facilities, and we continue to progress returns to shareholders through the dividend. Our covenant leverage at 2.1x at the peak of our in-year working capital cycle and will reduce as the year progresses. Post-tax returns on invested capital remain lower than we want it to be. However, we are confident that when our markets recover, we will see that rapid improvement in our reported returns. We retain balance sheet flexibility, and we're on course to deliver results in line with expectations for the full year.

Thank you, and I'll now pass back to Rob.

Thanks, James. The one theme that runs through the operational review is the Middle East conflict. And I'm pleased to report that our hedging programs, along with our pricing actions, has ensured that the impact of this has been minimal in the first half.

Let's look first at our U.K. market, where the ongoing residential weakness weighs on market volumes. Year-on-year, May 2026 GDP has grown by 1.3%. However, momentum has stalled in recent months and the economy recorded 0 growth across April and May. Construction output has fallen 1.6% over the first 5 months of the year compared to the first 5 months of 2025, with infrastructure being the only part of the market that continues to provide some resilience. Activity levels within our sector have been well reported, and you are all aware of the concrete 1963 stat, but the MPA now predicts that '26 volumes will be the fifth year of market decline. The latest data available from the MPA volumes for Q1 confirmed that the market for mineral products is still declining with volumes in the year to March down 3% for aggregates, up 5% for asphalt and down 12% for concrete. The residential weakness is clear to see in the concrete number. Also, confidence as measured by the construction PMI index stands at only 38.4% in June after hitting a 6-year low of 38.2% in May.

Given all this, recent MPA and CPA forecasts have been downgraded. Considered against this backdrop, I am really pleased with our GB performance. Revenue was flat, reflecting modest improvements in selected infrastructure and nonresidential building end markets, offset by continued weakness in residential construction. Volume and pricing trends were flat overall, but varied across products according to their end market exposure. Low levels of residential construction particularly impacted concrete, where volumes declined further 8% to the first half of 2025, putting pressure on both pricing and margins.

Our cement operations had a steady first 6 months with earnings broadly flat compared to the first half of 2025. We continue to invest in our cement distribution capability with a new Scottish railhead expected to open in early 2027. Our teams maintained a strong commercial focus, while delivering further operational excellence and self-help initiatives. I think you will now understand why I'm so pleased with the GB performance.

Before moving away from our GB performance, I would like to give an update on our Back British Cement campaign and also give an example of a material infrastructure opportunity that is coming down the line. In March, we launched our Back British Cement campaign to reinforce the vital role domestic cement manufacturing plays in supporting U.K. construction, economic growth and national resilience. The key policy asks for the campaign are targeted at providing a level playing field, including effective border measures, carbon border measures to allow domestic cement producers to compete fairly with overseas manufacturers who do not face the same costs arising from U.K. policy choices. To date, we've had good engagement with stakeholders, but the government's commitment to introducing a robust carbon border adjustment mechanism from January 2027 is an imperative.

Turning to the material infrastructure opportunity. I want to briefly highlight Scottish Renewables. The GBP 50 billion plus Scottish renewables opportunity is to be delivered as part of Ofgem's accelerated strategic transmission investment framework or ASTI, to upgrade the electricity grid, and it will have a material impact on demand for our industry's products in Scotland over the next few years. To put the potential scale of this demand into context, it's estimated that the Beauly to Peterhead upgrade in the north of Scotland alone will require over 4 million tonnes of aggregates. For context, across 2025, our GB business, we sold just over 20 million tonnes of aggregates. Given our footprint in Scotland that you can see highlighted as yellow dots on this slide, we are well positioned to participate in this opportunity.

I want to turn next to the market in the Republic of Ireland, where the operating environment was more positive. A record 12.1% fall in Irish GDP in the first quarter of 2026 was distorted by the surge in exports in 2025 ahead of the feared U.S. tariffs. Modified domestic demand, the better measure of domestic economic activity, rose by 4.3%. Construction output over the same period grew by 3.9%. And whilst the June Middle East impacted construction PMI stands at only 45.4, it is clear that there is significant confidence in the 12-month outlook for construction activity. Also, the latest Euro construct forecast predicts that the Irish construction sector is entering a multiyear period of construction output growth at a rate more than double the Western European average, and it is expected to remain the fastest-growing construction market in Europe through 2028. It is clear that the economy is in a much better place than the U.K. one. And our business in Ireland benefited from this backdrop.

Ireland delivered a strong revenue growth, benefiting from improved construction activity in the Republic of Ireland, including some major projects delayed from 2025 and the initial contribution from Booth. Pricing trends were positive across our core product categories. Volumes were generally ahead of 2025. There was a short-term impact on our Irish margin following an unscheduled shutdown of the cement kiln at Kinnegad during May. The mill is now back operating at full capacity and is not expected to impact the performance during the second half of the year. Excluding this disruption, the trading performance of the business was encouraging, reflecting strong market fundamentals and continued commercial progress. We made further investments to support our growth strategy, reopening a quarry in County Sligo, progressing the replacement of our Dublin asphalt plant and completing the acquisition of Booth, which secured mineral reserves within reach of the strategically important Dublin markets.

Next, I want to talk about our market in the U.S.. U.S. GDP increased by 2.7% in the year to March. Construction output over the year to May declined by 1.5%, impacted by weak rate-sensitive residential. Infrastructure spending remains comparatively resilient. There is no construction PMI in the U.S., but the latest FMI forecast concluded that whilst construction output in 2026 is likely to be broadly flat, growth is restored in 2027 and 2028. Our U.S. business had a strong start to the year with growing market demand and more supportive weather conditions than those experienced in the first half of 2025. While residential demand, which is more sensitive to interest rate environments, was slightly softer, healthy infrastructure and nonresidential demand provided an overall favorable trading backdrop with pricing and volume trends positive for all products. Reported profitability included the 2 loss-making winter months for Lionmark, which were consolidated for the first time following completion of the acquisition in March 2025, partially offset by the initial contribution from Falling Springs. The business continues to demonstrate success in its tendering processes with healthy backlogs as we enter the second half of the year. This included some initial wins for the supply of materials to data center projects, a sector which -- it's activity levels are noticeably increasing in the Midwest. We also expanded our footprint in the U.S. in the period.

And I'd like to touch on the acquisition of Falling Springs at this point. Falling Springs Quarry is a well-invested, highly automated quarry with significant reserves, strategically located approximately 15 minutes from Downtown St. Louis. It's very complementary to our existing St. Louis area footprint, as you can see on this slide, where you can see our existing quarries as blue dots and Falling Springs as yellow dots. Integration into the group's existing operations in the region is progressing to plan, and the business delivered an encouraging additional contribution for the first month of ownership. We now have a great platform in the U.S. and look forward to scaling it further.

I'd now like to turn to the outlook. We are building an increasingly diversified business in the structurally attractive Irish and U.S. markets, while still retaining significant upside in GB when volumes recover. Across the balance of the year, we expect continued positive momentum in Ireland and the U.S. with organic growth complemented by the contributions from acquisitions completed to date. In GB, although infrastructure activity provides some support, demand is expected to decline for the fifth consecutive year, and the timing and pace of recovery is unclear. But overall, we continue to expect to deliver 2026 in line with current market expectations.

I want to close our presentation with a clear message. With a strong team, significant mineral reserves and a well-invested production capacity, we are well positioned to deliver long-term growth in all 3 of our platforms. Thank you. We now welcome your questions.

Rob Chantry, Berenberg. So I guess two questions. So firstly, vertical integration in the U.K. Do you think there's any areas where you're short exposure and hence, pull-through volumes are limited, i.e., are there any areas you want to kind of expand on?

And then secondly, in terms of further diversification in the U.S., clearly, it's kind of quite a St. Louis bias and the kind of related weather impact that has during the season. Is there any kind of prospecting you're doing outside of that area? Is it all kind of very Midwest centered focused?

I'll start, and we'll see where we go. In terms of vertical integration in the U.K., I mean, what we've always said consistently and reaffirmed when we've had capital markets events is that in the U.K., there's white space where we would like to grow our business. And then we would like further vertical integration. And our core products being aggregates and cement, we've always said it's likely to be more into concrete products.

I think in terms of the U.S., again, we've been very clear. BMC was our beachhead, Lionmark, Falling Springs have complemented that and vertically integrated the business. But we've always set the ambition to base ourselves in Missouri, but include what we consider to be the Midwest, which is the neighboring states. And I think in the appendix, there is a slide which just gives you a feel of the opportunity that's available in those surrounding states.

Aynsley Lammin From Investec. Just two for me as well, please. Maybe if you could comment on some of the trends you're seeing in the kind of GB, particularly around energy costs and how you're dealing with that? Are the surcharges sticking? What's the underlying pricing kind of dynamics looking like for H2?

And then the second question, I think you mentioned we'd hear more about potential cost savings towards the end of this year. Have you got kind of plans underway to take more costs out of GB? Or is it a wait-and-see approach as you kind of take a better view of next year?

Thanks, Aynsley. So clearly, there's been significant volatility that's come through in the first half around energy costs. We have managed that through surcharges. The narrative, I think it's fair to say, is inconsistent, and that does present some challenges because clearly, when the oil price is coming down at speed, customers are much more reluctant to take surcharges. But the business is being proactive and is staying close to the customers. And what we're trying to do is to be fair to everyone. Clearly, if we're seeing increased costs coming into the business and increased cost to serve, then we would expect that to be recoverable from the customers. But equally, what we're not trying to do is overexploit the volatility in the oil price.

In terms of cost savings and operational excellence, I mean, the programs still continue. What we've seen in the first half is really the tailwind from 2025 coming through to help support performance. We're continuing with our sort of targeted approach that we first adopted last year of identifying a smaller number of projects where we're dedicating resource, and we'd expect some things to come through in the course of the second half. But we remain focused that -- the one thing we don't want to do is to compromise the recovery. Clearly, the recovery has taken longer to come than any of us hoped or expected, but we still fundamentally believe that our markets will improve. And when that happens, we want to be in the best possible position to take advantage of them. And Rob put the slide up earlier highlighting the opportunity that exists in Scotland because of the fact that we have all of those sites, all of those quarries that are in a position to support that investment that is going to come. And I think it's -- if you like, a real-life case study of why we want to stay invested and why we're not looking to cut costs, that would compromise the future.

Clyde Lewis at Peel Hunt. Two for me. You talked about the acquisition pipeline looking pretty good at the moment. Could you maybe expand on that in terms of sort of, I suppose, the geographical mix within that?

And the second question, probably one for James around the split of costs. It would be great to get a bit of an update as to how much is fixed and how much is semi-variable. And obviously, I can work out the variable as the balance, but it would be great to get an update on that, thinking about, again, operational gearing going forward.

In terms of the acquisition pipeline, you're right. It is healthy. I think given the momentum in the U.S. and Ireland at the moment, it's likely that, that will be our priority in the short term.

Clyde, if you haven't got to Slide 34, at some point [indiscernible], you do because that does break down the cost base and gives you the mix of fixed and variable. I mean, it does move around a little bit. And sometimes costs that you would like to think are variable, you actually find out in reality are fixed. But equally, it can also go the other way around. But ballpark, we reckon the cost base is 40% fixed and 60% variable.

Christen Hjorth From Deutsche Bank. Obviously, two as well. Just maybe following up on the M&A one. Are you seeing more opportunities in the U.S. come across your desk now that you've been active there? And how do you balance that with current leverage levels versus target?

And then the second one, just sort of a refresher on the decarbonization exceptional costs. Just how long we should expect those to go on for? And also sort of what's the catalyst for those to either become underlying or capitalized at some point?

So I'll do the first one. Look, in terms of the U.S., there are significant opportunities, and we continue to evaluate them. I think it's fair to say that our focus is predominantly on bolt-on opportunities, but the team are encouraged to bring the opportunities to us, and then we will review those at the appropriate time. We still generally believe that we have capacity to continue to do bolt-ons. And maybe James, it's worth maybe just talking a bit about what capacity we might have given the sort of target ranges we have for leverage.

Yes. I mean if you look at where our leverage has ended up at the first half, broadly in line with where we were this time last year. We obviously saw significant deleveraging across the second half of 2025. And one of the advantages that we have as a business is that our working capital cycle is very well defined in year. So you do get the expansion in the first half, but you see the contraction come through in the second. So there remains the scope and the capability to do bolt-on acquisitions off the balance sheet.

And clearly, the timing, it's not within our gift. We can be a willing buyer of businesses, but we need to find willing sellers. And something like a Falling Springs, whilst the sort of the end-to-end from active engagement in terms of the transaction was a relatively short period of time, the only reason we got to that position was because the U.S. team had known that asset, had known the management team, had known the shareholder group for a long period of time before that.

Turning to decarbonization. What we've always said is that the investment into the Peak Cluster, the decarbonization initiatives that attached to that, we feel confident we can manage through our sort of existing cash expenditure envelope. So I would expect to see a similar sort of charge to the one that we're seeing this year over, say, the next 5 years in relation to those sorts of projects. It is worth noting, though, that all of the decarbonization projects that have happened at scale have all had some form of either governmental or supergovernmental support. And in some instances, that support has effectively funded the entire decarbonization operation. So I think that it's an area that we continue to engage with government, both directly as Breedon, but also through the Peak Cluster. And we will continue to advocate that whilst we as a business and we as an industry are very committed to decarbonization, it does need to be done with the appropriate levels of support.

And I would just add to that. What you don't see and what goes above the line is everything we're doing every day to increase the use of alternative fuels, to reduce the clinker factor and reduce lower carbon-intensive cement. So it's all business as usual. And the real prize for us is to deliver significant decarbonization of our cement in advance of having to make a decision on carbon capture.

Harry Dow from Rothschild & Co. Just two, please. On the U.S., it was a very strong like-for-like in the first half. It's obviously the weather comp from last year. I just wonder whether you had a view on what the sort of underlying step-up was maybe in the U.S. maybe versus the second half of last year. Just sort of what we should expect for the second half of this year in terms of like-for-like growth. And then you mentioned the opportunity cost in May from the cement plant. Just a clarification, is that of a couple of million, is that an EBITDA? Or is that revenue is kind of an opportunity cost?

So on the second one, that's EBITDA. So effectively, in the month of May, which was the month that the mill was down, we made a distribution margin on cement, but we didn't make the manufacturing margin.

In terms of your first question, Harry, I mean, it's a bit difficult to disentangle whether activity is better because the weather is better or whether actually underlying activity has picked up. But I think in this instance, it genuinely is a case of it's both. If you look, for example, at Lionmark's business, Lionmark, we always expected would be loss-making in the first 2 months of the year, and it was. But the loss was significantly lower than it has been in the last couple of years as a function of the fact that it was a milder winter, and therefore, they were able to get out onto the roads earlier in the season than they have done in the last couple of years.

We were always confident that in a more normal weather pattern year, the U.S. business would perform. I think that's what you've seen in the first half of this year. Clearly, the exam question now is when does winter come? And if winter is deferred, then conceivably, the business can trade all the way into mid-December. Equally, if winter comes sooner, then people will choose to come off building sites, come off construction sites and to all intents and purposes, then will not go back on until the spring.

Cedar Ekblom From Morgan Stanley. I just wanted to talk a little bit more about the competitive landscape in GB specifically. In your chart book, you've got a little bit of positive volume growth in aggregates and asphalt. I appreciate the concrete volumes are down quite a lot. But the like-for-like growth is flat. And so I suppose the question is what's going on with pricing even in an environment where some of your segments are growing, not everything, but some. And is there anything to say around imports as it relates to the ability to get pricing through in GB, specifically on the cement side, clearly? Because we do hear from others in the market that the U.K. or GB in particular, appears to be a market where pricing is more difficult to get at the moment than maybe some of the Continental European markets. So a bit of perspective on the ability to actually push through price and grow your earnings in an environment where growth on volumes is a bit tempered.

So I'll take the first part of that, Cedar, and then Rob, if you take the second. So what I would say is that the pricing in the first half in GB is all surcharges. And I'm not expecting any real pricing in the GB market across all product sets in the course of 2026. Ultimately, you need certain precursors in order to secure pricing into a market. And the first of those is, at the very least, a stable market. It doesn't necessarily have to be growing, doesn't necessarily have to be expanding, but you have to have a stable market. And when you're looking at a market with ready-mix volumes down 8% of what were already multigenerational lows, that presents a real challenge. So any pricing that we see this year will be in the nature of surcharges. And as I touched on earlier, there's quite a lot of volatility around the background noise that attaches to that surcharge discussion.

In terms of cement and imports, they have been increasing. The MPA do track them. It tends to be in arrears, but I think the last statistic is that it's sort of north of 30% is imports. But that's also a factor of production capacity that's been put in place in the U.K. We're naturally short. But I think the most important thing is to do with the U.K. CBAM. It's in place in Europe. The government have committed to it. And even only back 2 weeks or I think it's on the 14th of July, they have reconfirmed their commitment to putting that in place in Parliament. But we do need that. We do need a level playing field. In the U.K., we've made a number of policy choices, which means that in terms of cost of carbon and the cost of electricity, without that CBAM, we don't have a level playing field. And I don't want to be alarmist, but it's a foundation industry, and we need the level playing field. That's all we want.

And if we get that level playing field, and I'm very positive about the long-term future of the cement business and our cement business. But I think the only thing I can say, and we've got the Cement Market Data Order, but the comment we've made in our half year is that our performance in our cement business in GB was comparable to the first half of last year. And that leads you to your own conclusions. Are there any people on the lines at all that have got questions.

We currently have no questions. [Operator Instructions] It appears we have no questions, so I'll hand back.

Thank you very much. Look, thank you very much, everyone. I know how busy you are this week and next week. I know it's another busy week. I'd like to leave you with a couple of things. Firstly, I'm really impressed that you all stuck to two questions. I think that's the first time in as many years as I can remember that you've managed to do that. So something is improving. And the other thing I'd like to say is that it was a solid H1. James and I and the Board are really pleased with where we are. And we really do have a strong team. We've got significant mineral reserves. We've got invested production capacity -- well-invested production capacity, and we are well positioned to deliver long-term growth. Thank you very much.

Good morning, ladies and gentlemen, and welcome to the Breedon Group plc Annual Results Investor Presentation. [Operator Instructions] Before we begin, we'd like to submit the following poll, and I'm sure the company would be most grateful for your participation. And the company would now like to share a copy of the presentation.

Good morning, everybody, and welcome to Breedon's 2025 Results Presentation. James and I will guide you through our presentation and then open things up for questions. I'm pleased to report that in a testing year, Breedon has proved again the strength of our model and the quality of our people. Across all 3 of our geographies in markets that gave us very little by way of tailwind, the team delivered again. In GB, concrete volumes fell to levels not seen since 1963. In Ireland, 2 major infrastructure projects were deferred. And in the U.S., extreme weather in the first half impacted our business. None of this was within our control. What was in our control was our response. Our teams delivered over GBP 20 million worth of self-help. We simplified our management structure to a country-based model, enabling faster decision-making. And we continued to invest through the cycle in our quarries, in our plants and in our people.

I thank the Breedon team for their commitment and for making Breedon a better, stronger business in 2025. In parallel to delivering a performance, I am pleased to report that we made significant progress on our strategic priorities. In 2025, we implemented our evolved strategy, Breedon 3.0, in which we committed to expand and improve the group. And I'm delighted by the progress you see here. In respect of expand, the acquisition and integration of Lionmark in the U.S. was the standout strategic achievement for the year. By adding asphalt and surfacing capability to our aggregates and concrete platform, we have created a more balanced vertically integrated business in the Midwest that now generates almost 20% of group revenue. In respect of improve, we have continued to have success more than replenishing our mineral reserves. And our operational and commercial excellence programs have continued to deliver.

As you know, everything we do is viewed through the lenses of people, sustainability and finance. And with respect to each of those, we have continued to invest in our people, be it health, safety, well-being or training. And it's great that this was recognized in our industry-leading engagement score of 77%. We have made significant progress towards our 2030 sustainability targets, and this progress has been recognized with upgraded ratings. And lastly, we maintained a strong and flexible balance sheet, and James will pick up on this later. So in summary, we've achieved a great deal in 2025 despite the challenging markets and political uncertainty. I'll now pass you over to James for his financial review.

Good morning, everybody, and thank you, Rob. So 2025 was a testing year for the group, as Rob has outlined. Both revenue and EBITDA increased year-on-year, assisted by those U.S. acquisitions. And on a like-for-like basis, revenue and EBITDA declined slightly. However, we did see a small strengthening in profitability coming through in the course of the second half of the year. Our reported margin of 16.3% reflects how volumes drop through to EBITDA, together with the structurally lower margin in our Lionmark business. However, our like-for-like margin performance was notably resilient and supported by the successful delivery of GBP 20 million of contribution from our operational excellence initiatives.

Our return on invested capital was impacted by the lower levels of profitability, our continued investment back into the business and the short-term dilution from the acquisitions. We remain confident that we will deliver a ROIC in excess of 10% in more normal market conditions. The standout performance in the year was our excellent free cash flow generation of over GBP 133 million, which meant that we exited the year with leverage of 1.8x, back well within our target range. And to give some context to that, that is a record free cash flow performance post-COVID for the group and means we've improved our free cash conversion for the third successive year.

We're now ahead of our target cash conversion rate and the 0.4 of a turn of EBITDA of deleveraging since the half year was our largest in-year deleveraging since 2021. Our underlying EPS fell by 8%, reflected the expected increased depreciation charge incurred as we start to depreciate our major capital projects and the higher interest charge derived from increased borrowings. But despite lower EPS, we've increased the dividend to 15p, a 3% increase across the year, reflecting our strong year of cash performance, our commitment to a progressive dividend and our confidence in the future. And this takes our declared cash distributions over the 5 years since we started to pay a dividend to over GBP 210 million at a time when we've been undertaking significant M&A activity off the balance sheet and investing back into our business.

Pricing across the year was broadly flat with a 3% volume and mix impact being principally down to the market challenges we faced in GB. The GBP 20 million we generated from operational excellence initiatives meant that the year-on-year movement on costs was a net positive of GBP 9 million. In terms of our individual product sets, asphalt was our strongest category, recording volume growth on both a reported and a like-for-like basis. And the outlook for asphalt in 2026 remains positive across all 3 of our geographies. Aggregates, cement and ready-mix concrete each saw volume declines in the year. And whilst the pace of contraction in GB ready-mix has moderated, it still remains significant. The net GBP 20 million contribution from M&A principally relates to Lionmark, where the integration with BMC is now substantially complete. Lionmark was earnings enhancing in the year of acquisition as expected, and we have good line of sight to the committed synergies from the acquisition.

Turning now to divisional performance, which we're reporting under our new segmental structure for the first time. As a reminder, the restated track record covering the past 5 years may be found in the appendices. In GB, like-for-like revenues fell by 4%. However, through the operational excellence initiatives, the division broadly managed to maintain its margin. Pricing in GB did come under some pressure as the year progressed, but it's probably been more resilient than I would have expected given the fact that we've had 4 years of market volume declines. And whilst I don't think that volumes will decline materially from here in GB, it remains too soon to call a recovery and pricing will really depend on where the cost environment goes to. We continue to navigate the GB environment effectively. Ireland saw revenue strengthen as the year progressed. And although there was a contraction in both underlying EBITDA and the margin over the year, the absolute margin level in our Irish business is still structurally higher than it was 2 or 3 years ago, and we remain excited about the prospects for the Irish market.

A full year contribution from BMC, together with an initial contribution from Lionmark, has led to a significant increase in our reported U.S. revenue and EBITDA. On a like-for-like basis, revenue in the U.S. increased by 9% with EBITDA broadly flat. I talked at the half year about the expected balance for the year in North America being 35-65 for revenue and 25-75 for profitability. We came out slightly behind that, although still with a very significant weighting towards the second half of the year. In essence, our customers ran out of time to complete their works before winter came. The good news, however, is that, that work hasn't gone away, and we have encouraging U.S. backlogs as we enter 2026. Perhaps as importantly, the weather patterns in the U.S. -- in the Midwest in the year-to-date have been much more normal than they were last year.

As we build out our platform in the U.S., the EBITDA margin will, in all likelihood, bounce around a bit, depending on the margin profile of the businesses we acquire. But over the medium term, I would expect our U.S. EBITDA margin to settle somewhere in the high teens. As you know, we're ahead of schedule in terms of the build-out of our U.S. platform. So I expect M&A in the U.S. this year to be more bolt-on in nature. And it's a real tribute to the team that yet again, Breedon has been able to report growth in both revenue and underlying EBITDA with our compound annual growth rate since our inception some 15 years ago being 18% and 22%, respectively. I talked earlier about our really strong cash generation in 2025. That free cash flow of GBP 133 million was a record post-COVID and increased by 17% in a year where we incurred a structurally higher net interest charge and increased our gross capital investment by some 7%.

We continue to believe and to advocate that investment back into our business at this stage of the cycle is what will ensure that we build enduring competitive advantage as our markets recover. Our working capital performance benefited from the disposal of surplus U.K. carbon allowances. You will recall that in previous years, we have acquired significant U.K. carbon credits for cash, reflecting the lack of liquidity in the forward market. As the U.K. market has matured, we now expect to be able to buy forward in a similar manner to the EU ETS. And so we elected to dispose of around GBP 0.5 million of surplus allowances in the year to free up cash. Net debt for the year closed at just under GBP 530 million, significantly better than expectations and equates to a covenant leverage of 1.8x, again, comfortably back within our target range in a year where we completed a significant acquisition.

Further details on our banking facilities, our USPP program, our covenant compliance and our repayment profile are, as usual, contained in the appendices. Turning now to our technical guidance. As you will recall, the Peak Cluster commenced engineering design during the course of the year, and we've started our own FEED on the Hope carbon capture plant. I expect we will incur single-digit millions of costs on decarbonization-related projects during the course of this year, which we will account for as non-underlying. For the group as a whole, I would expect a similar revenue and EBITDA first half, second half split in 2026 to that seen in 2025. And within that, our U.S. business will continue to have a more marked second half weighting than the other divisions. As a reminder, Lionmark is typically loss-making in the first part of the year. And in 2026, we will be consolidating January and February for the first time.

Our hedging strategy remains in place. The energy costs in the cement business, we aim to have broadly full coverage for the year ahead as we come into the year with layering in place for future years. And for bitumen in the U.K. and Ireland, we aim to cover between 1/3 and 2/3 of expected outgoings with the balance priced out on a job-by-job basis. And again, as a reminder, energy and fuel costs comprise only 8% of our overall cost base. The rest of the technical guidance for this year is reasonably self-explanatory. In terms of performance against our financial framework, we've delivered yet another year of growth despite the respective end market backdrops, and thanks again to our successful execution of M&A. That like-for-like margin was remarkably resilient.

And while our margin performance was below our target range, that is really a function of where we are in the cycle. We've generated record post-COVID free cash flow, which has allowed us to support investment back into the business, M&A activity and our increased dividend with our free cash flow conversion now being well ahead of our target. Returns do remain lower than we would like them to be for the reasons discussed earlier, but we remain confident that with more stable markets, we will make rapid progress back towards our 10% ROIC target. And we've continued to grow the dividend, slightly ahead of our target payout ratio, which I'm comfortable with given that excellent cash generation and where we are in the cycle, while remaining well within our leverage target range and continuing to give us balance sheet optionality.

As we said previously, in the event that our leverage was to approach the lower end of our target range, and we saw limited opportunities to deploy capital were available to the group, we would then give consideration to returning surplus capital to shareholders. Thank you, and I will now hand you back to Rob.

Thanks, James. I'll start the operational review by highlighting 2 central themes that I also flagged at the interims that are out of our control, challenging markets and political uncertainty. Let's look first at our U.K. market, where the picture in 2025 has been one of further contraction. GDP grew by only 0.1% in Q4 and by only 1.3% in 2025 and growth deteriorated as the year progressed. Construction output showed a similar decline as the year progressed. Q4 actually showed a decline of 2.1%. But given relative strength earlier in the year, construction output did grow 1.8% in 2025. Activity levels within our sector have been well reported, and I have already mentioned the concrete 1963 stats. In summary, volumes across all our major mineral products are now at historic lows.

Also, confidence as measured by the construction PMI Index stood at 40.1% in December, having been in contraction territory for most of 2025. Given all of this, recent ONS and CPA forecasts have been downgraded. Considered against this backdrop, our GB performance was resilient, and I will talk more about this in the business review shortly. I want to turn next to the market and ROI, where the operating environment was more positive. GDP showed strong growth of 12.3% in 2025. Modified domestic demand, the better measure of domestic economic activity rose by 4.9%. December's Irish construction PMI registered 48.4%, stronger than GP and just in contraction territory. However, optimism amongst construction firms on the prospects for increasing activity levels over the next 12 months strengthened to its highest level in nearly a year.

The latest euro forecast published in November showed Ireland as one of the leading countries for construction growth across Europe in the next few years. In summary, the Irish economy is in good shape, and our business in Ireland benefited from this backdrop. Next, I want to talk about the market in the U.S. U.S. economic growth slowed for the fourth quarter of 2025 amid the government shutdown. For 2025, it was 2.2%. However, construction output declined modestly in 2025. There is no construction PMI in the U.S., but the latest FMI forecast published in October concluded that amid sustained economic headwinds, including elevated interest rates, a softening labor market and growing uncertainty around federal policy, the construction industry would contract in 2025. This was a significant change from the strong growth forecast early in the year and the modest growth forecast midyear. This slowdown has been primarily driven by weakness in the residential sector. Infrastructure spending remains comparatively resilient.

Moving on to our businesses. Let's start with GB. The GB business delivered a robust outcome in a contracting market. Inquiry levels remained elevated throughout the year as customers maintained a readiness to proceed with construction activities. However, orders were impacted as fragile business confidence and the uncertain political and economic backdrop delayed project starts. Residential housebuilding was subdued, particularly in the second half. However, infrastructure activity was stable. And although volumes experienced a fourth consecutive year of decline, underlying EBITDA margins were broadly maintained as a result of our operational excellence program, which delivered material efficiency savings during the year. Our cement team sustained a high level of performance, plant reliability improved to 97%, and we achieved 39% fossil fuel replacement, a record level for Hope.

Also, our CEM II sales increased to 35%. Whilst covering cement, I would like to touch on the Peak Cluster project and confirm that we have commenced FEED on this project. Moving to Ireland. The Irish business delivered a resilient performance during 2025 with revenue strengthening as we move through the year. While the marketing ROI has continued to expand, activity was more muted in NI as spending is primarily driven by central government. Our business was also impacted by the deferral of 2 major infrastructure projects. We also exited from our noncore street lighting business during the year. Our Kinnegad cement plant maintained its high performance, achieving 95% reliability while replacing 82% of fossil fuels. At times, we have been able to reach 100% substitution. Our CEM II sales also increased to 67%.

Lastly, I will cover our U.S. business, where the acquisition of Lionmark established our leading position as a vertically integrated construction material supplier in Missouri. The infrastructure market remained robust during the year as federal and state funding continued to support activity. Activity more broadly was impacted by the uncertain political and economic backdrop. Residential housebuilding, in particular, remains subdued, impacted by affordability. Also as reported at the interims, Missouri experienced extreme adverse weather patterns in the first half, disrupting our customers' activity on site for extended periods. During January and February, St. Louis recorded 31 days where average temperatures were below freezing against 9 days in 2024, while April was the wettest month for over 100 years.

Lastly, the integration of Lionmark into our U.S. business is now substantially complete, and we're on track to deliver the synergy benefits outlined at the time of acquisition. Moving away from 2025. Before I turn to the outlook for 2026, I would like to say a few words on cement advocacy in GB. As a leading provider of cement in GB and the largest British-owned domestic manufacturer, we have campaigned to raise the profile of this foundation industry and advocate for its key role in our national security and economic prosperity, supporting British jobs, supply chains and decarbonization. The government's ambitions to deliver 1.5 million new homes and invest in schools, hospitals, transport links and green energy infrastructure simply cannot be realized without British cement.

But the industry is facing serious risks, including uneven carbon regulation, high energy prices and a surge in imports. Importing cement risks exporting jobs, investment and emissions overseas while leaving GB exposed to supply chain disruption and geopolitical shocks. In summary, our government tasks are establish a robust carbon border adjustment mechanism, address wider competitiveness challenges such as the high electricity prices, accelerate support for carbon capture technologies and promote domestically produced cement in public procurement. Using public procurement policy to support domestically produced cement could unlock huge opportunities, and it would ensure the government's investment in housing and infrastructure delivers wider economic growth. It will also protect thousands of highly skilled, well-paid jobs across all 4 nations.

We encourage the government engagement and action. It's now time to look forward. Construction market conditions in GB remain subdued, although there are early signs of stabilization. The ROI structural growth story remains firmly intact. And in the U.S., federal and state infrastructure programs provide visibility for our Midwest platform. And across all 3 geographies, we see sustained and increasing levels of inquiry. I want to close our presentation with a clear message. Breedon enters 2026 a better, stronger business with confidence in our proven capability, with the confidence in the agility of the model we operate and we will continue to adapt to the uncertain outlook as it develops. We are primed and ready for when our end markets resume. Thank you.

[Operator Instructions]

That's great. Thank you very much indeed, Rob, James. [Operator Instructions] Just before we go into Q&A session, I just like to remind you a recording of this presentation, along with a copy of the slides and the published Q&A can be accessed via your Investor Meet company dashboard. Rob, James, we received a number of questions ahead of today's event and a number throughout today's meeting. Thank you to everybody for engagement. Rob, maybe I can start with the first one with you, if I may. I'd like to know the long-term aim of the company. Are there plans to expand into a number of platforms, for example?

Thank you. Look, the company has always been a buy-and-build play. originally in GB. And then in 2018, we added a second platform in Ireland. And then most recently, in 2024, we added the U.S. platform and particularly the Midwest in the U.S. We genuinely believe we will continue to develop those 3 platforms. We think having expanded into the U.S. and the Midwest, we have a long runway of opportunities to grow our business in that third platform. And we believe that has the potential to keep Breedon busy buying and building over the next 5 or 10 years. And we don't see the time or the need at this stage to consider an additional platform.

A question here around revenue mix, I guess, what percentage of group revenue is tied to public versus private residential?

If you look at the split of revenue across the group, around half of our revenues are derived from infrastructure projects, some 20% from residential and around 30% from industrial commercial. I think it's worth just unpicking that a little bit more, though. When you look at our U.S. business now, the business that we acquired, BMC back in 2024 was predominantly weighted towards residential construction. And what we've been able to do through the acquisition of Lionmark, which we announced this time last year, is really balance out that end market exposure. So the U.S. end market exposure now for Breedon is around 50% infrastructure, just as for the rest of the group. Slightly more weighted towards residential so 25% residential and the balance being industrial, commercial. And that acquisition of Lionmark essentially has meant that we're now ahead of schedule in terms of the build-out and balance of that U.S. business.

Okay. Let's move on. Sorry, a question from John. John, thank you very much indeed. How confident are you that 2026 is the bottom for GB Construction?

Look, we've had 4 years of declining volumes in GB. And I think our most challenged product has been ready-mix concrete. And the end use or the predominant end use for that product is residential. And it's a residential market that really is on its knees at the moment. Infra interestingly, is relatively stable. So it all depends when the residential market will inflect. If you'd asked us a week ago before the events of the Middle East and where the trajectory was on interest rates and where the confidence was emerging amongst the housebuilders, we would have probably had the view that 2026 could be the bottom for residential. And there could, if the wins were behind us, see some degree of inflection later in the year. I think the jury is out at the moment. I think the key thing is whatever happens, we will continue to focus on the things we can control, and we'll continue to make sure that Breedon delivers.

How much of the GBP 20 million operational savings are structural, I guess, versus one-offs?

So the GBP 20 million of operational excellence initiatives that we talked about in the results presentation, around 1/3 of that will repeat into future years and 2/3 of it is one-off in nature. But I think what I would say around the operational excellence initiatives is this is very much a part of what Breedon does day-to-day, week-to-week within our business. We're always looking at ways to challenge the cost base, at ways to challenge our ways of working and looking at how we can improve the business sequentially year-on-year.

Thank you. Turning just to the next question. What is the addressable market size in the Midwest where you operate?

If you haven't seen our presentation from the Capital Markets event in late 2024, I would ask that maybe you go and have a look because there's some interesting reading in there. And that was exactly what we tried to show at that time. For the states that our target states, Missouri and the surrounding states, the GDP of those states is approximately equal to the GDP of the U.K. and Ireland. So it gives you an idea of the scale and the size of the opportunity ahead in the Midwest. And what's interesting, though, is that the aggregate consumption per capita is double that of GB and Ireland. So it just gives you an idea of just how long the runway is in the Midwest.

Great. What is the expected pipeline size for acquisitions over the next 12 to 24 months? And I guess, how disciplined will you be on valuation in a weaker construction market?

We are very much a buy-and-build business, as Rob talked about earlier. And I would expect that we will continue to make bolt-on/tuck-in acquisitions across each of our platforms over the course of the next year to 2 years. I talked earlier about the fact that our U.S. business and U.S. platform build-out is ahead of schedule. And for that reason, I would expect our acquisitions in North America during the course of 2026 will be more bolt-on in nature. We recently announced the acquisition of Booth in the Republic of Ireland, and that's a very exciting transaction for us, giving us aggregate opportunity close to the Dublin market for the very first time. And we've done a couple of small bolt-on acquisitions in GB. So I would say more of the same when it comes to M&A over the next couple of years.

Thank you very much indeed. A question around buybacks. I guess at what stage might you consider a share buyback?

Where our leverage sits at the moment, we're just within our target range. So our target range is 1 to 2x. We're at 1.8x as we come out of 2025. What we've always said is if we were to approach the bottom of that range and there would be limited opportunities for us as a business to deploy capital, at that point, we would consider means of returning capital to shareholders.

And I guess a final question, and I think a nice one perhaps to end on is what does Breedon 3.0 success look like in 3 to 5 years?

When we first presented on the U.S. and post the acquisition of BMC and Andy Arnold, who runs our U.S. business, joined us at the Capital Markets event back in late 2024. Andy was very clear in his level of ambition for that business. And he wanted to grow a business over the next 5 or 10 years that would rival the scale of our GB and Irish business and in effect, doubling the size of the Breedon business over the next 5 or 10 years. And his level of ambition has prompted the Irish and the GB business to up their game to and up their level of ambition. So I think the next 5 or 10 years, there is a desire. There is an ambition and there is an ability for us to double the size of this business.

Perfect. Thank you very much indeed. And thank you to everybody for your engagement today. Thank you for all your questions. If any more questions do come through, we'll make those available to the company post today's call. Rob, James, I know investor feedback is important to you both. I'll shortly redirect investors on the call to give you their thoughts and their expectations. But perhaps, Rob, I could just come back to you for a couple of closing comments.

Yes. No, thank you very much, everyone, for joining us this morning. Breedon enters 2026 a better and stronger business. And whatever the uncertain global outlook delivers, we will adapt. We've proven that we can adapt in the past. We have a good model. We have a great team, and we look forward to markets inflecting and Breedon delivering significant value in the years ahead. Thank you.

That's great. Rob, James, thank you once again for updating investors. Could I please ask investors not to close this session as we'll now automatically redirect you for the opportunity to provide your feedback in order that the company can better understand your views.

Good morning, everybody. Thank you very much for taking the time to come and listen to Breedon's Annual Results 2025. We appreciate it's a very busy morning for all of us today. So in true Breedon style, we're going to keep this concise. We ask you all to stick to 2 questions only, if possible. And also, I'd like to introduce our Breedon Ireland CEO, Declan Carr. Declan, just put your hand up, hiding at the back. Please take an opportunity to say hello to Declan while you have the chance.

I will be handing over to Rob and James to take you through the results. Thank you very much.

Good morning, everybody. And welcome to Breedon's 2025 Results presentation. James and I will guide you through our presentation and then open things up for questions. I'm pleased to report that in a testing year, Breedon has proved again the strength of our model and the quality of our people. Across all 3 of our geographies in markets that gave us very little by way of tailwind, the team delivered again. In GB, concrete volumes fell to levels not seen since 1963. In Ireland, 2 major infrastructure projects were deferred. And in the U.S., extreme weather in the first half impacted our business. None of this was within our control. What was in our control was our response. Our teams delivered over GBP 20 million worth of self-help. We simplified our management structure to a country-based model, enabling faster decision-making and we continue to invest through the cycle in our quarries, in our plants and in our people. I thank the Breedon team for their commitment and for making Breedon a better, stronger business in 2025.

In parallel to delivering a performance, I am pleased to report that we made significant progress on our strategic priorities. In 2025, we implemented our evolved strategy, Breedon 3.0, in which we committed to expand and improve the group. And I'm delighted by the progress you see here. In respect of Expand, the acquisition and integration of Lionmark in the U.S. was a standout strategic achievement for the year. By adding asphalt and surfacing capability to our aggregates and concrete platform, we have created a more balanced vertically integrated business in the Midwest that now generates almost 20% of group revenue. In respect of Improve, we have continued to have success more than replenishing our mineral reserves. And our operational and commercial excellence programs have continued to deliver.

As you know, everything we do is viewed through the lenses of people, sustainability and finance. And with respect to each of those, we have continued to invest in our people, be it health, safety, well-being or training. And it's great that this was recognized in our industry-leading engagement score of 77%. We have made significant progress towards our 2030 sustainability targets, and this progress has been recognized with upgraded ratings. And lastly, we maintained a strong and flexible balance sheet, and James will pick up on this later. So in summary, we've achieved a great deal in 2025 despite the challenging markets and political uncertainty.

I'll now pass you over to James for his financial review.

Good morning, everybody, and thank you, Rob. So 2025 was a testing year for the group, as Rob has outlined. Both revenue and EBITDA increased year-on-year, assisted by those U.S. acquisitions. And on a like-for-like basis, revenue and EBITDA declined slightly. However, we did see a small strengthening in profitability coming through in the course of the second half of the year. Our reported margin of 16.3% reflects how volumes drop through to EBITDA, together with the structurally lower margin in our Lionmark business. However, our like-for-like margin performance was notably resilient and supported by the successful delivery of GBP 20 million of contribution from our operational excellence initiatives.

Our return on invested capital was impacted by the lower levels of profitability, our continued investment back into the business and the short-term dilution from the acquisitions. We remain confident that we will deliver a ROIC in excess of 10% in more normal market conditions. The standout performance in the year was our excellent free cash flow generation of over GBP 130 million, which meant that we exited the year with leverage of 1.8x, back well within our target range. And to give some context to that, that is a record free cash flow performance post-COVID for the group and means we've improved our free cash conversion for the third successive year. We're now ahead of our target cash conversion rate and the 0.4 of a turn of EBITDA of deleveraging since the half year was our largest in-year deleveraging since 2021.

Our underlying EPS fell by 8%, reflected the expected increased depreciation charge incurred as we start to depreciate our major capital projects and the higher interest charge derived from increased borrowings. But despite lower EPS, we've increased the dividend to 15p, a 3% increase across the year, reflecting our strong year of cash performance, our commitment to a progressive dividend and our confidence in the future. And this takes our declared cash distributions over the 5 years since we started to pay a dividend to over GBP 210 million at a time when we've been undertaking significant M&A activity off the balance sheet and investing back into our business.

Pricing across the year was broadly flat with a 3% volume and mix impact being principally down to the market challenges we faced in GB. The GBP 20 million we generated from operational excellence initiatives meant that the year-on-year movement on costs was a net positive of GBP 9 million. In terms of our individual product sets, asphalt was our strongest category, recording volume growth on both a reported and a like-for-like basis. And the outlook for asphalt in 2026 remains positive across all 3 of our geographies.

Aggregates, cement and ready-mix concrete each saw volume declines in the year. And whilst the pace of contraction in GB ready-mix has moderated, it still remains significant. The net GBP 20 million contribution from M&A principally relates to Lionmark, where the integration with BMC is now substantially complete. Lionmark was earnings enhancing in the year of acquisition as expected, and we have good line of sight to the committed synergies from the acquisition.

Turning now to divisional performance, which we're reporting under our new segmental structure for the first time. As a reminder, the restated track record covering the past 5 years may be found in the appendices. In GB, like-for-like revenues fell by 4%. However, through the operational excellence initiatives, the division broadly managed to maintain its margin. Pricing in GB did come under some pressure as the year progressed, but it's probably been more resilient than I would have expected given the fact that we've had 4 years of market volume declines. And whilst I don't think that volumes will decline materially from here in GB, it remains too soon to call a recovery and pricing will really depend on where the cost environment goes to. We continue to navigate the GB environment effectively.

Ireland saw revenue strengthen as the year progressed. And although there was a contraction in both underlying EBITDA and the margin over the year, the absolute margin level in our Irish business is still structurally higher than it was 2 or 3 years ago, and we remain excited about the prospects for the Irish market. A full year contribution from BMC, together with an initial contribution from Lionmark has led to a significant increase in our reported U.S. revenue and EBITDA. On a like-for-like basis, revenue in the U.S. increased by 9% with EBITDA broadly flat.

I talked at the half year about the expected balance for the year in North America being 35-65 for revenue and 25-75 for profitability. We came out slightly behind that, although still with a very significant weighting towards the second half of the year. In essence, our customers ran out of time to complete their works before winter came. The good news, however, is that, that work hasn't gone away, and we have encouraging U.S. backlogs as we enter 2026. Perhaps as importantly, the weather patterns in the U.S. -- in the Midwest in the year-to-date have been much more normal than they were last year. As we build out our platform in the U.S., the EBITDA margin will, in all likelihood, bounce around a bit, depending on the margin profile of the businesses we acquire. But over the medium term, I would expect our U.S. EBITDA margin to settle somewhere in the high teens. As you know, we're ahead of schedule in terms of the build-out of our U.S. platform. So I expect M&A in the U.S. this year to be more bolt-on in nature. And it's a real tribute to the team that yet again, Breedon has been able to report growth in both revenue and underlying EBITDA with our compound annual growth rate since our inception some 15 years ago being 18% and 22%, respectively.

I talked earlier about our really strong cash generation in 2025. That free cash flow of GBP 133 million was a record post-COVID and increased by 17% in a year where we incurred a structurally higher net interest charge and increased our gross capital investment by some 7%. We continue to believe and to advocate that investment back into our business at this stage of the cycle is what will ensure that we build enduring competitive advantage as our markets recover. Our working capital performance benefited from the disposal of surplus U.K. carbon allowances. You will recall that in previous years, we have acquired significant U.K. carbon credits for cash, reflecting the lack of liquidity in the forward market. As the U.K. market has matured, we now expect to be able to buy forward in a similar manner to the EU ETS. And so we elected to dispose of around GBP 0.5 million of surplus allowances in the year to free up cash.

Net debt for the year closed at just under GBP 530 million, significantly better than expectations and equates to a covenant leverage of 1.8x, again, comfortably back within our target range in a year where we completed a significant acquisition. Further details on our banking facilities, our USPP program, our covenant compliance and our repayment profile are, as usual, contained in the appendices.

Turning now to our technical guidance. As you will recall, the Peak cluster commenced engineering design during the course of the year, and we've started our own FEED on the Hope carbon capture plant. I expect we will incur single-digit millions of costs on decarbonization-related projects during the course of this year, which we will account for as non-underlying.

For the group as a whole, I would expect a similar revenue and EBITDA first half, second half split in 2026 to that seen in 2025. And within that, our U.S. business will continue to have a more marked second half weighting than the other divisions. As a reminder, Lionmark is typically loss-making in the first part of the year. And in 2026, we will be consolidating January and February for the first time. Our hedging strategy remains in place. The energy costs in the cement business, we aim to have broadly full coverage for the year ahead as we come into the year with layering in place for future years. And for bitumen in the U.K. and Ireland, we aim to cover between 1/3 and 2/3 of expected outgoings with the balance priced out on a job-by-job basis.

And again, as a reminder, energy and fuel costs comprise only 8% of our overall cost base. The rest of the technical guidance for this year is reasonably self-explanatory. In terms of performance against our financial framework, we've delivered yet another year of growth despite the respective end market backdrops, and thanks again to our successful execution of M&A. That like-for-like margin was remarkably resilient. And while our margin performance was below our target range, that is really a function of where we are in the cycle. We've generated record post-COVID free cash flow, which has allowed us to support investment back into the business, M&A activity and our increased dividend with our free cash flow conversion now being well ahead of our target.

Returns do remain lower than we would like them to be for the reasons discussed earlier, but we remain confident that with more stable markets, we will make rapid progress back towards our 10% ROIC target. And we've continued to grow the dividend, slightly ahead of our target payout ratio, which I'm comfortable with given that excellent cash generation and where we are in the cycle, while remaining well within our leverage target range and continuing to give us balance sheet optionality.

As we said previously, in the event that our leverage was to approach the lower end of our target range, and we saw limited opportunities to deploy capital were available to the group, we would then give consideration to returning surplus capital to shareholders.

Thank you, and I will now hand you back to Rob.

Thanks, James. I'll start the operational review by highlighting 2 central themes that I also flagged at the interims that are out of our control, challenging markets and political uncertainty. Let's look first at our U.K. market, where the picture in 2025 has been one of further contraction. GDP grew by only 0.1% in Q4 and by only 1.3% in 2025 and growth deteriorated as the year progressed. Construction output showed a similar decline as the year progressed. Q4 actually showed a decline of 2.1%. But given relative strength earlier in the year, construction output did grow 1.8% in 2025.

Activity levels within our sector have been well reported, and I have already mentioned the concrete 1963 stats. In summary, volumes across all our major mineral products are now at historic lows. Also, confidence as measured by the construction PMI index stood at 40.1% in December, having been in contraction territory for most of 2025. Given all of this, recent ONS and CPA forecasts have been downgraded. Considered against this backdrop, our GB performance was resilient, and I will talk more about this in the business review shortly.

I want to turn next to the markets and ROI, where the operating environment was more positive. GDP showed strong growth of 12.3% in 2025. Modified domestic demand, the better measure of domestic economic activity rose by 4.9%. December's Irish construction PMI registered 48.4%, stronger than GB and just in contraction territory. However, optimism amongst construction firms on the prospects for increasing activity levels over the next 12 months strengthened to its highest level in nearly a year. The latest euro forecast published in November showed Ireland as one of the leading countries for construction growth across Europe in the next few years. In summary, the Irish economy is in good shape, and our business in Ireland benefited from this backdrop.

Next, I want to talk about the market in the U.S. U.S. economic growth slowed for the fourth quarter of 2025 amid the government shutdown. For 2025, it was 2.2%. However, construction output declined modestly in 2025. There is no construction PMI in the U.S., but the latest FMI forecast published in October concluded that amid sustained economic headwinds, including elevated interest rates, a softening labor market and growing uncertainty around federal policy, the construction industry would contract in 2025. This was a significant change from the strong growth forecast early in the year and the modest growth forecast midyear. This slowdown has been primarily driven by weakness in the residential sector. Infrastructure spending remains comparatively resilient.

Moving on to our businesses. Let's start with GB. The GB business delivered a robust outcome in a contracting market. Inquiry levels remained elevated throughout the year as customers maintained a readiness to proceed with construction activities. However, orders were impacted as fragile business confidence and the uncertain political and economic backdrop delayed project starts. Residential housebuilding was subdued, particularly in the second half. However, infrastructure activity was stable. And although volumes experienced a fourth consecutive year of decline, underlying EBITDA margins were broadly maintained as a result of our operational excellence program, which delivered material efficiency savings during the year.

Our cement team sustained a high level of performance Plant reliability improved to 97%, and we achieved 39% fossil fuel replacement, a record level for Hope. Also, our CEM II sales increased to 35%. Whilst covering cement, I would like to touch on the Peak Cluster project and confirm that we have commenced FEED on this project.

Moving to Ireland. The Irish business delivered a resilient performance during 2025 with revenue strengthening as we move through the year. While the marketing ROI has continued to expand, activity was more muted in NI as spending is primarily driven by central government. Our business was also impacted by the deferral of 2 major infrastructure projects. We also exited from our noncore street lighting business during the year. Our Kinnegad cement plant maintained its high performance, achieving 95% reliability while replacing 82% of fossil fuels. At times, we have been able to reach 100% substitution. Our CEM II sales also increased to 67%.

Lastly, I will cover our U.S. business, where the acquisition of Lionmark established our leading position as a vertically integrated construction material supplier in Missouri. The infrastructure market remained robust during the year as federal and state funding continued to support activity. Activity more broadly was impacted by the uncertain political and economic backdrop. Residential housebuilding, in particular, remains subdued, impacted by affordability. Also reported -- as reported at the interims, Missouri experienced extreme adverse weather patterns in the first half, disrupting our customers' activity on site for extended periods. During January and February, St. Louis recorded 31 days where average temperatures were below freezing against 9 days in 2024, while April was the wettest month for over 100 years. Lastly, the integration of Lionmark into our U.S. business is now substantially complete, and we're on track to deliver the synergy benefits outlined at the time of acquisition.

Moving away from 2025. Before I turn to the outlook for 2026, I would like to say a few words on cement efficacy in GB. As a leading provider of cement in GB and the largest British-owned domestic manufacturer, we have campaigned to raise the profile of this foundation industry and advocate for its key role in our national security and economic prosperity, supporting British jobs, supply chains and decarbonization. The government's ambitions to deliver 1.5 million new homes and invest in schools, hospitals, transport links and green energy infrastructure simply cannot be realized without British cement. But the industry is facing serious risks, including uneven carbon regulation, high energy prices and a surge in imports.

Importing cement risks exporting jobs, investment and emissions overseas while leaving GB exposed to supply chain disruption and geopolitical shocks. In summary, our government asks are; establish a robust carbon border adjustment mechanism, address wider competitiveness challenges such as the high electricity prices, accelerate support for carbon capture technologies, and promote domestically produced cement in public procurement.

Using public procurement policy to support domestically produced cement could unlock huge opportunities, and it would ensure the government's investment in housing and infrastructure delivers wider economic growth. It would also protect thousands of highly skilled, well-paid jobs across all 4 nations. We encourage the government engagement and action.

It's now time to look forward. Construction market conditions in GB remain subdued, although there are early signs of stabilization. The ROI structural growth story remains firmly intact. And in the U.S., federal and state infrastructure programs provide visibility for our Midwest platform. And across all 3 geographies, we see sustained and increasing levels of inquiry.

I want to close our presentation with a clear message. Breedon enters 2026 a better, stronger business with confidence in our proven capability, with the confidence in the agility of the model we operate and we will continue to adapt to the uncertain outlook as it develops. We are primed and ready for when our end markets resume.

Thank you. We now welcome your questions.

Aynsley Lammin from Investec. Just 2 for me, please. On -- both on GB. When you look at the kind of cost savings, if you could just provide a bit more insight into the incremental cost savings you'll get in '26 versus '25 from what you've already done? And then if volumes are weaker than we hope, are there any extra levers you can pull in terms of cutting costs for GB for this year?

And then the second question, just maybe a bit more color on kind of trading first couple of months of the year in GB. Anything surprisingly positive, surprisingly worse, some of the trends you've seen, obviously, wet weather, but keen to hear any insights.

I'll take the first part of that, Amy. So of that GBP 20 million of operational excellence initiatives that came through in 2025, about 1/3 of that will repeat through into 2026. So it gives us a bit of a tailwind as we come into this year. I think if you unpick the GBP 20 million, in some respects, the most interesting piece of it was around 20% of the value, GBP 4 million came from very specific targeted site dedicated initiatives where we essentially went to a particular site, and we looked at every area of the production process from the moment that the rock is quarried all the way out to how it gets dispatched. And depending upon the site, that could be just a straight aggregate or it could be as part of asphalt or as part of ready-mix as well.

And I think what that has really underlined to us is actually there continues to be opportunities. And we've already identified the sites that we're going to run a similar program at during the course of 2026. So whilst I can't say specifically today, this is the number that we're going to deliver in 2026, what I am confident about is that as we continue to operate programs of that nature that we will be able to generate further savings through operational excellence initiatives.

In respect to trading, I mean, what we would say is that January and February are normally very quiet months for our businesses across all 3 platforms, but we are trading generally in line with expectations. The one positive is the weather in the Midwest this year, and it has definitely been a lot more normal than last year, which is a positive given where we were 12 months ago.

The GBP 20 million will repeat. Is that incremental? Or you're saying that it was all kind of captured last year and GBP 6 million of that...

That it's going to flow through into this year in a way that, for example, the carbon that's in there, that won't necessarily repeat in the course of 2026.

Christen Hjorth from Deutsche Bank. Two questions. First on the carbon credit sales, James. Just a bit more color on when they were sold. Should we think of that as a one-off? Or is there potential for more carbon credit sales as we look forward to 2026?

And then one for Rob as well. Just on the cement side of things, I suppose, what is the key driver of the concerns that you have there? Is that increased imports? Is it the fact that there is this delay between the CBAM in the U.K. and EU? And have there been any government response so far to your asks even if not formal?

So in terms of the carbon credits, we started to sell those really from the tail end of the summer across the balance of the year. The context there is that when the 2 trading systems, the 2 emissions trading systems part of the company following Brexit, there was almost no liquidity in the GB market. And therefore, it was impossible for us to buy forward for delivery at the point of when the credits need to be delivered into the register. There is more liquidity now than there has been previously. We've had to essentially utilize our cash flow to buy in credits to hold them on the balance sheet. And we felt that it was a more effective use of our capital to take the opportunity of that increased liquidity to sell out into the market.

We still retain about the same, again, number of carbon credits on the balance sheet. And clearly, there is, therefore, the option should we choose to do so, to sell those at some point in the future.

In respect of cement, our major concern, all we want is a level playing field. And as you know, the CBAM is up and running in the EU. Our government have committed to bringing in a scheme in 2027. There's a challenge of the stub period, but what we want to see, we want to see the policy. We want to understand what's been put in place. So that's our sort of #1 priority. I think the #2 priority is that given energy pricing in the U.K. versus wider Continental Europe and other locations, we are significantly disadvantaged. We -- governments are aware. We've reached out not only ourselves, but the wider industry and trade associations. And we are in discussions, but time will tell. But as yet, we do not have clarity on what the legislation will be in 2027, and that's a priority.

Cedar Ekblom blanc from Morgan Stanley. Can I just ask on your approach to M&A in 2026. If I look at that cash flow bridge, it looks like you generated about GBP 60 million after dividends before we think about the M&A contribution that you made in 2025. You've made the point around bolt-ons being the ambition. Are we looking at spending that full GBP 60 million in 2026 on bolt-ons? Or are we thinking about a number lower than that? It would be helpful to get a little bit of guidance around what your M&A ambition would be in 2026, appreciating that, obviously, timing of M&A is difficult.

Well, I'll start that and James will probably add to it. But if you look across our 3 markets, in GB and Ireland, very much we see bolt-ons. In the U.S., as James mentioned, we're ahead of where we expected to be in the build-out of our U.S. business after 2 years. And I would say it's more likely than not that further opportunities over the next 12 months will be more of a bolt-on nature than transformational. But as you know, we're not in control of our own destiny. You need a willing seller as well as a willing buyer. So it's impossible, I think, to actually give a definitive view as to what our M&A spend will be. If there's value-enhancing transactions, we would like to have the flexibility to be able to consider pursuing those.

Just on the net debt, would you -- net debt to EBITDA ratio, would you be looking to drive that lower in 2026? Is that something you would commit to that you go from the 1.8 to 1.5 or 1.6. I don't know if you...

Well, again, it comes back to M&A.

Exactly. Yes.

So absent M&A, yes, I would expect to see some further deleveraging during the course of the year, probably not at the same order of magnitude that we saw during the course of 2025. But absent M&A, yes, I would expect to see the leverage come down.

Ken Rumph from Goodbody. I don't know whether Declan is ready for his close up yet, but a couple of questions about Ireland. One, there's a raft of programs and legislation to address the need for housing, related infrastructure and so on, national development plan, changes in regulation. How are these kind of working through in terms of affecting the market because they don't immediately affect things and planning takes time. Some of the laws need to be enacted. So one is that sort of all of those various measures, and there are a lot of them that are aimed at boosting all aspects of Irish construction. How are they progressing? How will they affect this year?

And then on M&A, you've had ambitions to do M&A and indeed organic CapEx. You've done -- I noticed Booth, but I think there was another one, an asphalt business that I forgot -- Tipperary, was it? It's been tough to get deals over the line in Ireland. Are there opportunities or indeed are there CapEx opportunities to get into markets you want to get into if you can't buy a business?

So if I do the first one, James, and you do the second one. I think Declan is on his honeymoon today. He's in listening mode, but I'm sure you can catch him afterwards. But maybe in the future, he'll be up here answering. So we'll answer on his behalf this time, and he can tell me if I'm wrong. But I think what we'd say is we see the legislation going through has been enabling legislation. It will benefit the delivery of the national development plan over the next 5 or 10 years. As we sit here today, it's for the future, and it will help us, but we're not seeing it on the ground yet.

And then I think in terms of M&A in Ireland, Booth is an exciting transaction, not necessarily because of scale, but actually because of what it represents. It's the first significant transaction that we have been able to execute on in the Republic of Ireland. It gets us aggregates within striking distance of the Dublin market really for the first time. And Dublin, as you know, is a key strategic objective for us as a group and how we address and get greater exposure to that Dublin market is important to us.

Quite often in M&A, activity begets activity. And I think the mere fact of having done one transaction potentially opens up the opportunity to do more transactions, probably of a bolt-on nature in the Irish market.

Clyde Lewis at Peel Hunt. I think I've got 3, if I may. One around pricing. Sorry, I know Linda was -- Louise was saying only 2, but I'm going to sneak in with 3. One around pricing, can you just give us an update as to what you've sort of gone with and how it's sticking so far broadly by markets. Clearly, you're not going to give details. But secondly, a little update on cost pressures, the key ones that you see for this year. And the third one was really around the -- probably the bigger CapEx projects I mean following on from Ken's question there, please.

Okay. So I think with the caveat that there's quite a lot of flux around the cost backdrop and the pricing backdrop at the moment. I would have said that coming into this year, I wouldn't have expected very much price in the GB market. Until we see a volume -- a meaningful market volume recovery, quite difficult to see how price moves forward in the GB market. I would have said that in the Irish market, there is an opportunity for a bit of price to come through. And in the U.S., conditions generally and historically have always been pretty conducive to pricing. So again, I would expect to see some pricing coming through there.

I think in terms of the cost backdrop, it's quite difficult to call. I think there's definitely what you might term inflation fatigue in the GB market. And I think another year of significant cost inflation coming into -- back into the GB market probably wouldn't be a good thing. We've all seen -- go back to 2021, where we saw significant inflation coming through the GB market, which was broadly absorbed. I said at that time when we exited 2022 that I felt it was really important that we had a period of much lower cost inflation coming through the GB market, and that's what was proven to be the case. As I sit here today, who knows where costs go within that market. What I would say is that -- and I touched on this in my presentation, is that specifically energy and fuel represents only around 8% of our overall cost base. So we're much less exposed proportionally than some other businesses in the space.

In terms of CapEx, it's kind of more of the same. So we're not going to be doing the sort of the major capital projects that we've talked about historically, but examples of some interesting projects that we're looking at this year. We particularly we're looking at replanting our Dublin asphalt plant during the course of 2026. The plant there is 25 years old, and so is ready to be replanted. There's always activity that goes on at the 2 cement plants just in terms of continuing to invest back into those businesses. And then we will continue to pick off where there are opportunities to invest back into the businesses, those projects that deliver the returns in relatively short order.

[indiscernible], [indiscernible] Asset Management. Just looking at your -- the roads part of your business. So infrastructure is expected to be quite strong this year in 2026. Can roads grow alongside U.K. infrastructure?

I think for the -- well, for GB, and it's not just GB, it's probably the U.S. as well. It's residential, which is a part of the market that's underperforming and it's weak. And it's really residential where we need to see some inflection, which will then start to drive returns. As you say, you mean infrastructure is relatively stable and compared to resi is stronger. So we need to see the wider construction output industry starting to deliver.

Are there any callers on the line at all that might have a question?

We have a question on the line from [indiscernible] from On Field Investment Research.

I just have one question. Could the upcoming revision in the ETS system have an impact on the level of protection from Turkish imports?

You're saying about the potential change in the European emissions trading scheme?

Yes, in the potential adjustment in the U.K. as well.

There isn't clarity on what might happen there. When you read about it, it seems to be more about the tapering off of free allowances as you move further out. I think for us, our challenge is here and now, and it's about the U.K. implementing a CBAM. I think everything we do in parallel to that in the short term is very much focused on reducing the use of fossil fuel, which we've been doing and about reducing the clinker content which is very much around CEM II and the stats I gave out earlier. So for us, our priorities are those and making sure that the government put the legislation in place that they've committed to for 2027.

We also have an additional question on the line from Bruce Hubbard with Lancaster Investment Management.

Looking through my notes from your results announcement, the last 9 months, you've talked in more positive than negative about inquiries and also talked about the problem of conversion. So the question is, does an inquiries lead pot tell us much about the future? Are there any indications on change in conversion? And really, the question, I guess, is why did reasonable inquiries not generally not turn into business? Was it simply a sort of failure of hope for the U.K. economy, nothing more complex than that?

Yes. I mean there isn't -- it's not very complicated. You're right. It's -- if you look -- take residential and you take GB, there are an awful lot of groundworkers who, 12 months ago, were pricing for housebuilders to get back in and to open up new sites. And as the housebuilders believe that the volumes weren't materializing, they held back. And we probably got to the autumn and those groundworkers probably repriced work again. So there's been a number of false storms. What we need is ultimately for the housebuilders to start to deliver on their increased volume, opening up new sites and then those inquiries will start to convert.

And given that we've been on effectively U.K. economy and construction slowing trend through 2025, the fact that inquiries are still strong, is that a good indicator? Or is that sort of hope springs eternal?

I think if we've been having this conversation 10 days ago, I would like to think that on balance, there was a bit more positivity out there in the market. I think given the events of the last week, I think no one knows. Affordability, whether in the U.K. or in the U.S. was a key challenge to demand for housebuilding. And if you looked across the U.K. and the U.S., rate set as were leading us to reductions in 2026. In the last few days, that sentiment has changed. And there is a risk that residential gets pushed out again, both in the U.K. and the U.S. The governments might have the opportunity to do something on demand side stimulus. Let's wait and see. But I think the key message from us is that we've had challenging markets for the last 3 or 4 years. And the self-help we've talked about this morning and the agility of our team and the model we've got, Bruce, means that we -- whatever happens, we will adapt and ensure that Breedon continues to deliver.

Thank you. And currently, there are no other questions on the line.

Ken Rumph, Goodbody. I'll go for the Clyde Lewis' amendment and ask a further question. Data centers were a topic for your U.S. peers. Missouri, one community kind of not back a proposal, but they seem to be finding another that might go ahead. Have projects like that or related energy been a factor for you in the States? And likewise, in Ireland, there's a feeling that they've not been able to take advantage as they could have done and changes are being made there. Again, anything in prospect on that front? Has it affected you at all yet? And is there anything in prospect?

Look, I wouldn't say it's had a material impact on our business to date. We all look at the opportunity that it might create. I mean one of the challenges for data centers is electricity. And so ultimately, there's got to be the distribution and the grid to be able to deliver to those sites. But you would expect us to be pursuing opportunities and looking at what our potential is across all 3 of our platforms over the next few years, and I'd expect it to be part of our portfolio of jobs going forward.

Conscious of time, I think it's probably the right time to wrap it up. I'd like to thank all of you for coming today. Can we just leave you with the message that's on there? We are a better and stronger business than we were 12 months ago, and we are primed and ready. And when the markets inflect, you will see the returns. Thank you very much.

Good morning, everyone, and thank you for joining us on this call this morning. We've delivered a resilient performance for the first 10 months of 2025 despite sustained market challenges that we have experienced. Our focus on self-help and strategic execution has continued to deliver profitable growth. GB in the U.S. residential demand has been particularly subdued, and that has been compounded by infrastructure delays in GB and Ireland. Nonetheless, we have stayed focused on the integration of Lionmark, which has balanced our end market exposure in the U.S. towards infrastructure where the market remains encouraging, and we've continued with operational and commercial initiatives to maximize self-help.

Turning to the revenue performance that we've seen in the year-to-date. We've obviously on a reported basis, seen a further increase in the 10 months to the end of October. On a like-for-like basis, the revenue performance remains pretty consistent with what we saw in the first half of the year, and that's reflected in both volumes and pricing. So volumes remain broadly in line with where they were to the half year, slightly down with a bigger inflection into ready-mix concrete due to its residential housing exposure. And pricing has probably been a little bit more resilient than we might have expected. It is down year-on-year, but it's down marginally in the very low single digits.

If we look across the 3 divisions, the GB performance has really been underpinned by a good deal of self-help and operational and customer initiatives that have gone on within that business. The Irish business has continued to trade robustly, particularly in the context of those significant infrastructure projects having been deferred. And in the U.S., whilst there is a very significant weighting towards the second half of the year, it's slightly behind where we guided to at the half year. So we're going to see a revenue performance more in line with 40-60 and profitability more like 30-70 for the U.S. business over the course of 2025.

When you put all of that together, year-on-year, we will deliver yet another year of profitable growth for the group and underlying EBITDA for 2025 in the range of GBP 275 million to GBP 280 million and a reduction in covenant leverage to the year-end as we outlined at the half year. Turning to the outlook. In the medium term, we remain encouraged by the U.K. government's commitment to infrastructure and housebuilding whilst acknowledging that today ahead of the budget, there is considerable economic and fiscal uncertainty. The national development plan in the Republic of Ireland does represent a significant increase in the potential infrastructure investments in the next few years, and we believe we will be well placed to benefit from that.

And enabling legislation is also being brought forward in Ireland, in particular, the critical Infrastructure Bill and the emergency powers bill, both owned and fast-tracking strategic projects, which is encouraging for our business there. And in the U.S., there remains considerable opportunity to build out our business, and there will be upside from residential when activity returns. However, in the near term, nonresidential infrastructure markets remain resilient and market growth expectations have moderated in the U.S. In summary, we have an excellent team, 3 leading platforms and a well-invested business. So although there is uncertainty about the timing of the market recovery, particularly in the U.K., we remain well placed to take advantage of it when it comes. Operator, please can we now open the lines and take questions.

[Operator Instructions] We will take our first question from Aynsley Lammin from Investec.

Just 2 for me, please. Just on GB, obviously, you're saying that the trends have kind of continued as they were since the half year. But have things got worse in the GB? Just a bit more color maybe on some of the end markets, resi and infrastructure from what you've seen over recent months. And then as you look in -- I know this is about FY '25, but just some of the comments around U.S. growth moderating. Is that primarily residential? Are you a bit more kind of cautious around the outlook for FY '26 and the trends as we go into next year on the U.S., just underlying general construction activity?

On the GB trends, I mean I think you would have seen the NPA stats for Q3. I mean, if anything, the markets got slightly weaker. And I would say aggregates and asphalt have held up and been fairly resilient, but ready-mix and you would have seen the stats, it's now the lowest in 62 or 63 years. And cement, which is correlated to that, there were some recent stats out, which date back to 2024 because of the competition restrictions on data, but it shows that some domestic use of cement is now at its lowest since 1950. The other information that's come out is probably the latest CPA forecast. Their autumn forecast, which just show that growth has been moderating as well. So if anything, I'd say the biggest challenge at the moment is ready-mix correlated to housebuilding. And given the sort of occurrence of hiatus in advance of the budgets and some of the stats and some of the surveys that have come out from RICS, it's almost halted that market.

I think in terms of the U.S. market, in residential, the expectation coming into this year was that there would be some significant moves from the Fed as we came through the year and that, that might in turn lead to a kick start in residential in the U.S. market. That clearly hasn't happened. There is talk of cuts coming through during the course of '26. which may lead to an increase of activity as we move through the year, but it's definitely shifted out to the right. I would say infrastructure and sort of commercial industrial over in the U.S. remains pretty buoyant. And there is opportunity there, particularly if we have a warmer and less damp winter and spring season moving into 2026.

We are now taking our next question from Rajesh Patki from Barclays.

I've got 2 as well. The first one is on pricing. I think you mentioned pricing was down year-on-year, but if you could provide any incremental color by region and if you have seen any changes in competitive behavior? And the second one, again, going back to '26 outlook. It might be too early to give precise outlook for '26, but any initial thoughts on how you're seeing the shape of the recovery at this point for each of the 3 regions?

Rajesh, in terms of pricing, it won't be a surprise to hear that pricing has been challenging in the GB market, in particular this year. Coming back to what I -- to my earlier remarks though probably a bit more resilient than I would have expected. There has been reasonable pricing in the U.S. and that's consistent with statements from some of the domestic majors that have been made over the course of the year that actually -- the pricing environment remains positive in that market. In Ireland, the way that the market operates is very much a year-to-year tendering process. And this year, the tendering prices were broadly where we expected them to be as we moved into the spring summer servicing season.

Looking forward to '26, I think it's quite difficult to call the precise timing of a market recovery in GB at the moment. And certainly, until we're through the budget and into next year, that remains a bit of a moot point. I think for residential in the U.S., whilst I think it is plausible to see some sort of recovery come through as the year moves through. I think, again, it's more likely to be second half weighted than first half weighted. And then in Ireland, it really depends on the timing of when the euros actually get deployed for the national development plan. We are encouraged by the fact that the money is available and there is moves in terms of the legislation to ensure that as projects come to fruition, they can actually start on a reasonable time scale. But we don't yet know exactly how and when those monies will be deployed.

We will take our next question from Ed Prest from Berenberg.

So a couple from me as well. Firstly, you've talked about inquiries not converting into orders in the U.K. Do you have any sense of what's blocking this? Or is it just a case of time and they will come through? And then secondly, in the U.S., it's 40-60 this year in terms of revenue, you guided previously to 35-65 at the half year. Which -- are you expecting FY '26, '27 to revert to a 35- 65? Or is 40-60 looking to be more normal going forward?

So in terms of the inquiries question, Ed, in order to get a sale, you need to have an order. And in order to get an order, you need an inquiry. Not all inquiries convert into orders. They are very much more as much about the logistics of a potential delivery and as they are about pricing, et cetera. We have seen, and we've been saying this consistently now for 15 months or so in GB in particular, a consistent step-up in the level of inquiries. And I think that's one of the things that continues to give us confidence about the medium term in GB. What we need now is the catalyst that will cause those inquiries to convert into those orders and then into sales. And in recent weeks, we have seen some very significant renewables energy inquiries coming through into the GB business.

And I think, again, that sort of underpins our medium-term confidence that actually these markets will recover, and we will see when they do some quite significant levels of demand coming through. But at the moment, it's just difficult to call a timing on that. In terms of the split for the U.S., if you've got a long-range weather forecast for me, then I'm very happy to give you a confirmed split half 1, half 2 to 2026. But I think in all seriousness, we will continue to see a greater weighting in the U.S. business towards the second half.

That is a function of the fact that the servicing operations that Lionmark in particular conducts, they don't really get going until the late spring and then they run across the summer and into the early part of the autumn. So there will continue to be a significant second half weighting. The other thing just to bear in mind, as you're looking at 2026 numbers is that we will be consolidating Lionmark for a full 12 months rather than the 10 months we have done this year and Lionmark is typically loss-making in the first 3 months of any financial year.

We are now taking our next questions from Christen Hjorth from Deutsche Bank.

Just one question for me. Just on the U.S., Gavin, just to help us maybe unpick the performance there in a little bit more detail. What's -- based on the updated guidance, what is the sort of pro forma movement in profit in that business? And how should we think about that being separated between things like poor weather, which potentially could bounce back next year versus tougher markets? And I suppose anything else that surprised you or not with Lionmark and BMC.

I think, Christen, in terms of -- I think if you look at that revenue shift from the guidance we gave at the half year, the substantial majority of that revenue shift relates to the fact that projects have ended up being deferred into 2026 and beyond. So that's really -- and that all comes back to the weather and the weather impact on the business that we saw in the first half and customers just not having enough days left in the year in order to complete projects and therefore, ending up deferring into next year. I think in terms of the end markets, as we've talked about, residential has weighed heavily on the BMC side of the business in the course of 2025. It's a ready-mix business, as you know. And that is the end market that takes a disproportionate amount of ready-mix concrete. So there has definitely been an impact there. And then in terms of Lionmark, I would say Lionmark has been more impacted by that weather, by that late start and the deferral of projects, but I would expect the majority of those projects that have been deferred will come through during the course of 2026.

It's worth reminding everyone just how slow the start was. And I know we talked about at the interims, but to have lost sort of 31 days in the first couple of months to sub 0 average temperatures versus 9 in the previous year just shows you how slow the start was. And the catch-up, whilst there has been some, it's just not been able to catch up quickly enough. And that's not just a sort of Breedon issue. That's the customers being able to catch up as well. We can only sell what our customers can take. So I think that was a real challenge, and we must not forget just how slow the start was.

Our next questions comes from Kenneth Rumph from Goodbody.

I think you've covered some of the questions, but I just wanted to go back to Ireland and the projects that got deferred. I think Adare is now going ahead. A5 is kind of into the long grass, but just the sort of trend there into '26. And the other one was -- I know this is not a call about M&A, but do you continue to kind of work on add-ons because that's been a very fruitful source of kind of earnings and value addition for the group over the longer term.

You're right on Adare. That project has now been awarded, and we would expect to be laying on that bypass during the course of 2026. With the A5, and it is under appeal. But I think the nature of appeal processes and the fact that the scheme was formally canceled means that realistically, I think the earliest we could expect to see it start will be 2027.

And with Adare -- then coming back on with Adare. I mean I think ultimately, the contract was only really awarded once the Ryder Cup was won back in September, but it's got to be done before the next Ryder Cup because Adare is hosting it. We continue to have an active pipeline of opportunities. And those opportunities cover all 3 platforms, and we will continue to progress our bolt-on M&A strategy, but we will be allocating capital carefully, and we will be prioritizing the markets where we see the strongest growth.

Our next question comes from Harry Dow from Rothschild & Co Redburn.

I got a couple of questions, if that's okay. Firstly, I wonder if you could comment on or update us on the sort of variable cost environment maybe as we sort of end the year and go into 2026. I think you've got some visibility on energy costs, but maybe sort of expected wage inflation maybe as we go into next year. And then just secondly, I suppose, on costs, I just wonder whether in your view, given the continued subdued market, it feels as though there's not many signs of a major improvement coming around the corner soon. Do you think the cost base maybe is in the right place? And maybe what the assumption that relies on, I suppose, if we saw maybe no volume improvement next year, do you think there might be more proactive actions you can maybe take on the cost base?

Thanks, Harry. So I think as we look into next year.

My expectation is that the cost environment will broadly remain relatively benign. I think that general inflation is expected to continue to come down. I would expect our energy cost to be slightly lower as we come into next year as a function of where our rolling hedge program is taking energy to. I think in terms of the cost base and is it in the right place? I touched earlier about the extent of the self-help that we've done within the GB business this year. And you're talking probably around a GBP 10 million benefits to the bottom line in terms of the self-help initiatives that have been conducted within the GB business. I think in any year, whether volumes are growing, volumes are contracting, there's always stuff you can do around self-help and in particular, around operational excellence.

And even if volumes were to not inflect again next year, I would still expect us to be able to do an element of self-help within the business. We've talked previously about the fact that throughout these down volume years, we have continued to invest in the business. We have continued, in particular, to be proactive around some of our capital investment programs in order to ensure that we don't compromise the recovery. And that has remained the case this year. And we feel that and we remain confident that each of our markets will improve over time. And therefore, it has been important to continue to invest back into the businesses. And what we would expect, therefore, to see is as markets inflect that we can get a sort of drop-through on the way back up that we've seen going the wrong way against us on the way down.

[Operator Instructions] We are taking our next questions from Sam Cullen from Peel Hunt.

I was going to ask the same question as Harry so I don't actually have a question for you.

It appears we have no further questions. So I will hand back to Rob Wood for any additional or closing remarks. Please go ahead, sir.

Well, look, thank you, everyone, for joining us this morning. I mean look, we have delivered a resilient performance in some quite challenging markets. But we just wanted to remind you that we've got 3 leading platforms. We have an excellent team, and we've continued to invest for growth. And when construction activity does improve, we'll be well positioned to benefit. Thank you very much for joining us.