Edited Transcript of BREE.L earnings conference call or presentation 29-Jul-20 8:00am GMT

So we started moving towards opening sites in early May, and demand continued to improve. Regionally, which is considered the strength for us, we saw good recovery in the Republic of Ireland in cement and in the asphalt and aggregate business. And that started to underlying the benefits of our geographical spread throughout the business. Scotland was a little slower. Principally, the first one was done in Scotland. It was more cautious in the approach, and we slowly opened the business. And even when the decision was made to open the business, they were very prescriptive on how long it should take to achieve COVID readiness from a safety perspective in the business. And that was a little — that disadvantage does a little, because I was always conscious that the way we shut the business down in March, we could reopen quickly. Our businesses naturally lend themselves to social distancing because people work in their own machines or in an outdoor environment. So we always felt we could reopen sites within 24 hours, other than cement, which would be for 8 hours. So when Scottish government really prescribed that the COVID-readiness work should take 2 weeks. Again, that delayed our return in Scotland. But pleasingly, we were able to see that June’s revenues continue to recover and grow. And really, they recovered to 99{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} of June 2019. So that was a strong recovery. We finished the half year with a strong balance sheet. Net debt reduced to GBP 253.6 million and leverage of 1.9, which when you consider, essentially, we’ve lost almost a quarter through our business for 2020 is, I think, a commendable result. And our financial headroom at June 30 was GBP 344 million. The acquisition of CEMEX assets are expected to complete imminently, and we’re delighted about that. So for us, the recovery looks well underway. Many of our colleagues are back at work. The vast majority of our colleagues are back at work. And for us, that work is positive. And then I’ll pass it to Robert.

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Rob Wood, Breedon Group plc – Group Finance Director & Director [3]

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Thank you, Pat. And good morning, everybody. As you can see from the financial highlights, the impact of COVID-19 has been significant, following the encouraging performance of our business in the first 12 weeks of the year, the moving to lockdown and immediate fall in demand in the latter part of March led us into a swift and managed shutdown of the majority of our operations. Our revenues in April fell to 19{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} of those recorded in the same month of 2019, followed by 45{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} in May before improving to 99{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} in June as the recovery began to gather pace. On a like-for-like basis, excluding the 2 additional trading days in June 2020, June’s revenue was 91{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} of June 2019. The impact of COVID-19 resulted in a first half revenue decline of 25{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} and an underlying EBIT decline of 101{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}. We moved quickly in March to preserve our liquidity, restricting capital expenditures committed on critical projects and eliminating discretionary expenditure and applying robust discipline to our management of working capital, this enabled us to reduce our net debt to GBP 253.6 million from GBP 290.3 million at the year-end and GBP 343.7 million a year ago.

Leverage was 1.9x compared with 1.6x at the year-end and 2.0x a year ago.

Turning to the income statement and revenue, which at GBP 335.3 million was down 25{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}. At the earnings level, the underlying EBIT loss of GBP 0.6 million was down 101{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}. The reduced interest costs of GBP 6.4 million reflected the lower level of net debt and the lower cost of debt in 2020. Non-underlying items of GBP 3.1 million were primarily comprised of amortization costs and acquisition costs. The resulting loss before tax of GBP 10.1 million was down 126{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}. The tax charge reflected an effective tax rate of 18{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}. It also reflected the U.K. government’s decision to cancel the planned reduction in corporation tax rates in 2020 from 19{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} to 17{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}, which we flagged to the market at our 2019 results.

Back in March, this has resulted in an increase of GBP 5.5 million in the group’s deferred tax liabilities. All this translated into an underlying basic loss per share of 0.65p for the first half.

Now turning to the segmental performance. Post lockdowns, the pace of reopening differed from business to business, determined in part by the needs of our customers and in part by the differing time lines by which the various governments and devolved administrations ease restrictions of movements.

Great Britain’s performance was impacted by Scotland, which remains subdued until well into June as a result of the delayed lifting of restrictions by the Scottish Parliament. (inaudible) performance benefited from our operations in the Republic of Ireland and recovered strongly from late May onwards.

Lastly, our cement business was in lockdown for a shorter period than our other businesses as we were able to safely produce to stock for a period of time post lockdown.

Turning to our products. All volumes declined given the COVID-19 lockdowns. Asphalt declines exceeded aggregates and cement volumes as a result of our Scottish exposure. Concrete volumes also reflected the fact that the recovery of concrete demand has lagged that of our other products. In terms of pricing, prices have generally progressed in excess of inflation in the first half, and discipline has been maintained in the post-COVID-19 period.

Now turning to net debt, which stands at GBP 253.6 million at the half year. It has reduced by GBP 36.7 million since the end of 2019 and this reflected the underlying EBITDA of GBP 32.6 million, a GBP 38.4 million working capital inflow, which has benefited from tax deferrals and the absence of the usual seasonal increase in working capital, interest and tax paid of a combined GBP 15.5 million and GBP 15.6 million net capital expenditure outflow.

As already mentioned, this level of net debt translated into a leverage of 1.9x, 1.7x on a covenant basis. Excluding the impact of the tax deferrals, these would have been 2.2x and 2.0x. Although the recovery in May and June allowed us to remain comfortably within our original covenants, in April, we agreed with our banks a relaxation of our 30th of June 2020 covenants and a deferral of GBP 35 million of loan amortization to April 22. Our banks have also indicated their intention to agree a relaxation of covenants for the December 2020 period, if required.

Additionally, in May, we were confirmed as being eligible for the COVID corporate financing facility with an issue of a limit of GBP 300 million, although at this stage, we have no current intention of utilizing this facility. This meant that at the 30th of June, we had GBP 124 million of cash and an undrawn committed bank facility of GBP 219.4 million, combining to give headroom of GBP 344.0 million before the impact of the CCFF and before the imminent completion of the CEMEX assets.

In summary, it’s been a challenging first half. The near-term outlook for our business is clearly dependent on the speed at which demand recovers. And given the uncertainties that we still face, we remain unable at this stage to provide market guidance. However, we will update the market as soon as we have sufficiently robust information to be able to do so. I’ll now pass you on to Pat to take you through the operational review and outlook.

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [4]

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Thanks, Rob. As we get through the next stage, I’m not going to labor some of the data because such a dynamic environment we work in, some of the information is almost redundant before we get it. And I’m sure we’ll tackle many of these areas as we get to the Q&A. But with the first slide, I’d like to draw your attention to the graph on the right-hand side, which talk about NPA sales volume, which you can see is a significant deterioration in demand. Maybe I’d sort of — I’d also caution that in some areas, our reduction in demand would be great on this because London itself was a bit more resilient in other parts of the country. And traditionally, we don’t have as much exposure in London. And we have a significant business in Scotland and the lockdown in Scotland continued longer. So I’d say even some of our deterioration was maybe more exaggerated we’re seeing here. But again, it’s a testament to our colleagues in a business that with such a deterioration in demand, we’ve been able to manage through that quarter.

Business reviews, I’ve touched on a little bit, but I’ll come back. As I said, a good start to the year in all regions, very strong in Q1 in England, and we also have had a decent recovery as we come out of lockdown in Q2. Scotland is more protracted as we discussed. And we won some early supply contracts during the lockdown period for HS2. The A9, which is one of the major projects where we’re going to be supplying for the majority of 2020. It was, obviously, stopped in Scotland, it has started again. And we’re happy that Loak Farm, which was a really almost a bottle pet-type site adjacent and on the alignment to the A9 is supporting our shear glass site, and we are now supporting the contractor and trying to catch up some of the schedule that’s been lost due to this. So we’re pleased to have that going again. And we were also successful, very successful in being awarded the 5G framework contract in Scotland. We’re delighted about that. In Ireland, the recovery was strong in the ROI throughout June and quickly got back to and in some cases, exceeded pre-COVID expectations. So we’re delighted about that. And we won significant contracts on the N52 in the second phase of Dublin’s airport runway. And in the north of Ireland, we won contracts in the M1 and A4. And pleasingly for us, we won — we were awarded significant contracts during the lockdown period, which I’m indebted to some of our clients and customers who continue to bid work and continue to award more work during that period. So that was a positive going forward. And cement, good, steady recovery. The progression was quite solid. We managed to keep the sites open longer because of the nature of our building inventory in the plants and 2 shutdowns were completed during H1 as well.

Regarding of the CEMEX assets, which we have discussed many times, we expect completion to be imminent. You can define imminent in your own, but the assets will be held separate until completion of the CMA’s investigation. The business will trade as pinnacle construction materials under an independent management team for the period of the hold separate. And it will be headquartered in separate offices near East Midlands airport and several regional offices throughout the geography where these assets are located. The CMA’s decision on Phase 1 of its investigation is due to be announced on the 26th of August 2020. And following completion of the CMA’s investigation, these assets will be integrated into Breedon. And I am more confident about the quality of these assets and the colleagues that will be joining us in their ability to improve this business as soon as it comes across the Breedon. And I’m also — the fact that it’s imminently pleasing for me, as you see the markets recovering quickly, the sort of — it was always key when this transaction was completed. So for me, the sooner the better as we see the recovery in the markets.

2020 group outlook, again, I won’t labor the data from the CPA, et cetera. I think maybe the commentary I’d make is, June, we got back to 99{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} of 2019’s volumes. And that started, that was improving throughout the month. The volumes at June relative to ’19 were better at the end of June than they were at beginning of June. And I would say that, that was a level of improvement continuing throughout July. So I think that’s more relevant than some of the data, which we’ll catch up with that. So again, activity levels are improving in all sectors and all geographies.

So finally, the group outlook for us, for 2020, the recovery is well underway. Inquiry levels are encouraging, awards of work are encouraging and the competitive nature in the market is encouraging.

The increased demand for major projects, A9, HS2, Dublin airport, and these have continued to be awarded during the lockdown period. We’ve also been able to benefit as Breedon has done in the past from self-help. As we — we’ve always sort of said as the volume is not there to help us, we’ll take the opportunity to inquire a moment to improve our business, to look at operational efficiencies, to look at technical efficiencies, to look at logistical efficiencies. And we’ve been able to do that. And as we bring people back, we’ve been able to execute more of those improvements. And we can see that. I think we’ll see that over the course of H2, show an improvement in our business overall. And we’ll continue to see the benefits of our geographical diversity and that diversity will be enhanced by the CEMEX acquisition when it completes and is fully integrated. And at this point, we affirm that we are unable at this stage to provide market guidance, but that will evolve, and I’m sure we can talk about it throughout the Q&A. I think that wraps up the formal part of the presentation.

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Questions and Answers

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Operator [1]

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Okay. Thank you, Pat. (Operator Instructions) So I think we’ll just take our first question from David O’Brien.

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David A. O’Brien, Goodbody Stockbrokers UC, Research Division – Investment Analyst [2]

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Can you hear me?

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [3]

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Yes, David, maybe we should lose your video.

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David A. O’Brien, Goodbody Stockbrokers UC, Research Division – Investment Analyst [4]

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It’s great to see everyone’s keeping safe and well, firstly. A couple for me, please, If I could. The key question for everybody is trying to decide for between impendent demand and real demand. And I guess it is too early to even have a gauge at that at the moment. But what I’m trying to get a sense of is, is given that there are only so many days in the week to catch up on missed activity. How long do you guys think this catch-up period will last? And when do you feel you have a truer sense of underlying demand in the market?

Secondly, you’ve talked about Scotland, I suppose it was being a little bit slower drop and up because of the government’s hesitancy. From what you’ve seen to date is the pace of recovery, albeit lagged, much in the same trajectory you’ve seen in England. And 1/3 — a lot of stress through the environment in terms of all the way to the supply chain. I guess, what kind of opportunities do you think are going to come up for you guys over the next 6 to 12 months? Do you think that will be accelerated? How do you think you’re placed to take advantage of, given the completion of CEMEX very shortly? And finally, for me, a lot of talk about stimulus phase in Republic of Ireland or into the U.K., when do you think or how does Breedon think about the overall stimulus impacting activity levels in terms of timing? How confident you are around of taking effect? And how well placed you are to take advantage of those opportunities as well?

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [5]

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Yes. I’m not sure at this point, we’re seeing a lot of benefit from pent-up demand. The volumes are improving. And certainly, they’re improving at the start through asphalt maintenance and the asphalt program supported by aggregates and a little slower in ready mix, which I think was associated with a slow start to homebuilding. I don’t think we’re seeing at this point much benefit from the stimulus, particularly from the Chancellor’s comments on his pothole fund, which we believe will come through. But I think that’s the coming in the future, maybe even in the midterm. I’m very confident about 2020 and the level of activity out there that we can — there will be some catch-up, but clearly, you won’t catch up 2.5 months of such impacted — some impacted volume. What we are seeing more recently is an improvement in the last few weeks in ready-mix concrete. So there’s clearly more of a move to open some homebuilding sites, and that’s that’s a positive. So very quickly, we saw asphalt contracting aggregates. All of those businesses getting back to — moving towards pre-COVID levels and ready-mix was lagging a bit. But in the last couple of weeks, we’ve started to see that come forward. And in then Scotland, yes, it was slow. It was slow starting, but the recovery in Scotland, I think has picked up pace again in the last 2 weeks, and we’re starting to see that now sort of level out at the level of activities that we — it’s following the same recovery path as we saw in the south. It’s just lagging it by, I don’t know, 4 weeks or something, but it’s continuing to improve.

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Rob Wood, Breedon Group plc – Group Finance Director & Director [6]

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I think that’s answered a couple of questions. On the pent-up demand versus normal demand, I mean — I think, Pat and I view is that we will have much greater clarity in the next week, month, 6 weeks. And I think we’ll be in a much position — better position to update the market and maybe recommend some form of guidance for really after the summer holidays, probably in September at this stage.

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David A. O’Brien, Goodbody Stockbrokers UC, Research Division – Investment Analyst [7]

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Okay. In terms of the opportunities that you think you might see going forward?

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [8]

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Sorry, David, I missed that.

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David A. O’Brien, Goodbody Stockbrokers UC, Research Division – Investment Analyst [9]

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In terms of the potential M&A opportunities you might see going forward? And whether it will be accelerated and whether you’re positioned to take advantage?

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [10]

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I don’t think we’ll see a flux of distressed sellers because of COVID. I mean there’s many reasons why people decide to sell businesses. And generally, it’s a motion or its family decision. So I don’t anticipate a flux of them. If something bolt-on came along and it was compelling, we could look at it. I think, for me, more importantly, we’re getting a CEMEX transaction with 6 regional businesses and the potential to improve those businesses, I believe, is a significant opportunity, and that will be a focus for us. So that will be our priority, David.

No. On the sake of that, we won’t need a — we have a pipeline of acquisitions, and we’ll continue to keep a pipeline of acquisitions. It’s just a different challenge, keeping them alive and keeping them and going along until the timing suits. The company divesting and it suits us.

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Operator [11]

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Okay. We’ll now take our next question from Christian Hjorth.

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Christen David Hjorth, Numis Securities Limited, Research Division – Analyst [12]

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So I think it just dropped off there for a second at the worst possible time. A few questions from me. I think you touched on this briefly, but just in terms of competitive dynamics that you’re seeing in the market, perhaps, particularly amongst the majors who may be drawn in other directions given the global nature of the crisis. One for Rob as well, just in terms of should we be aware of any sort of particular one-off cost savings or sort of costs in the first half that won’t repeat — just unlikely to repeat? And then just thirdly, on sustainability. Clearly, a lot of the focus in the first half has been on the impact of COVID. But I understand you guys have obviously done some good work around sustainability as well and appointed ahead of sustainability. So any color on that would be great.

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [13]

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Yes. Competitive behavior, it’s quite varied. I think as a lockdown, we saw different behaviors, particularly from the majors, some of the majors locked down sort of quickly and hard. As we did and others decided to take a more cautious approach and retain people at work and maybe look for market opportunities and that’s everybody’s decision. But for us, our priority at that point was our colleagues. And there was so many unknowns about the safety aspect of our colleagues that we felt that was right. The drop in demand validated that decision as well. So I’m very happy with how we came about that. What I would say is, as we recover, I’ve seen no discernible change in competitive behavior in the marketplace. And I wouldn’t anticipate much.

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Rob Wood, Breedon Group plc – Group Finance Director & Director [14]

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From a H1 sort of one-off sort of cost saving or cost hit, Christen, I mean, on the cost savings side, I mean, the one impact that is worth flagging to the market is the benefit we got from the furlough payments, and they totaled approximately GBP 11 million in the first half. And I think in terms of cost, look, it’s very hard. I mean, it was very much about battening down the hatches. We took the decision to not restrict our employees pay to the furlough, 80{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}. So we top them up to make them whole. But really, the second half is now those sorts of receipts and things should be behind us, and the vast majority of our employees are back with us.

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [15]

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I’m afraid, Christen, here again because I have to admit that thinking, talking and listening at the same time is too much of a challenge.

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Christen David Hjorth, Numis Securities Limited, Research Division – Analyst [16]

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Sorry. So I think I can add you 1 of these 3 anyway. So you probably ahead of me. It was just on sustainability, I suppose, obviously, the big focus is on the impact of COVID-19 and the recovery, but I know you guys have pointed ahead of sustainability. And just sort of any color and progress in terms of what’s happening there?

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [17]

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It’s a little early because Donna joined us, I think, on June 1. And for an initial period, Donna couldn’t couldn’t access the sites, and we haven’t spent a lot of time together, but I actually talked to Donna this morning in the corridor, and I’ll probably — Rob and I will get with Donna in the next week or so. But knowing Donna from my past role at Aggregate Industries and Donna was there. I have no doubt that her progress is significant. And what she did tell me, as I knew that we have pockets of excellence throughout our business from a sustainability perspective. And so she sees many areas that she can grasp and drive forward. And her passion will sort of flow through this business. So we’re excited about that. I mean, some of the presentations from an ESG perspective will pick up some of the benchmarking of where we are. But I think it’s really watched this space as we move forward. I don’t think the (inaudible) I know the downturn in Q2 will not have an impact on our aspirations or our ability to execute those aspirations as a company.

Is that vague enough?

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Operator [18]

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We’ll now take our next question from one of the telephone lines from a telephone number ending 949.

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Clyde Lewis, Peel Hunt LLP, Research Division – Deputy Head of Research [19]

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Julian, it’s Clyde Lewis, Peel Hunt. A couple of questions, if I can. Just, I suppose, in terms of sort of cash flow, Rob, probably more for you, just in terms of helping us understand how some of those first half benefits, particularly in terms of the tax deferral will unwind, you mentioned about GBP 11 million on the furlough payment. So have you actually sort of considered repaying that, like some other companies have sort of come to the conclusion of. I Suppose the other one on cash — was on CapEx. Can you just sort of update us as to where your current thoughts are on sort of, I suppose, spending for the rest of the year? And how you’re thinking about some bigger projects that you might have in the pipeline?

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Rob Wood, Breedon Group plc – Group Finance Director & Director [20]

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Okay. Thanks, Clyde. So on the working capital and on the taxes, the benefits of the tax deferrals is approximately GBP 30 million in the first half. And 2/3 of that have been repaid in the third quarter, and 1/3 of those will be repayable in the first quarter of ’21. In terms of the GBP 11 million furlough payments, we are aware of companies that have made statements potentially where they’ve decided to repay. I think our view is the majority of those companies are companies that actually have not had a material reduction in profitability through the COVID-19 period. And we — I mean, as you can see, have had our complete profitability wiped out by the second quarter. And so we do not believe we are someone that have managed to deliver the expected performance in the first half. So at this stage, we have no intention to be repaying that.

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [21]

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I think what’s important here is we were pleased to have the government support at that time. But because of that also, for the — certainly for the first couple of months, we were able to top our colleagues up to 100{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}, which I know relieve burden on many families in many households. So we were only able to do that because of our colleagues support in the past and ultimately, because the government support during the job retention program as well.

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Rob Wood, Breedon Group plc – Group Finance Director & Director [22]

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I think the third question on CapEx is we very clearly made the statement that we would restrict CapEx to committed and critical. We — as we’ve said before, we’re not in a position yet to recommence market guidance. And so at this stage, we’re still very much focused on minimizing that spend. We will update the markets in due course. As I said, hopefully, in September. But until that time, we will be maintaining strong control over spending.

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Clyde Lewis, Peel Hunt LLP, Research Division – Deputy Head of Research [23]

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Rob, can I have 1 follow-up I mean? It’s always very difficult for you guys to say too much about cement market share. But obviously, your cement number was quite a bit better than ready-mix in terms of sort of the volumes for the first half. And I’ve heard your comments about, you’ve obviously continued to produce cement through a little bit of a lockdown and putting some into sort of stock. But would it — would you be able to sort of say whether the level of imports into the U.K. have moved sort of adversely or down, I suppose, in the last sort of 3, 4 months to help your overall market share in the U.K?

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [24]

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I think you’re right. There — I mean, it’s probably an area we shouldn’t go. And even you start asking us about, we improved our market share. So.

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Christen David Hjorth, Numis Securities Limited, Research Division – Analyst [25]

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Okay. I thought of that anyway.

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [26]

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Clyde, there isn’t that visibility. I mean, unfortunately, with cement and because of its past that sort of information on the sort of near-term level of imports and market shares just doesn’t exist.

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Operator [27]

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We’ll now take our next question from Kevin Cammack.

(Operator Instructions)

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Kevin Malcolm Cammack, Cenkos Securities plc., Research Division – Building and Construction Analyst [28]

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Can you hear me?

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [29]

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Yes.

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Kevin Malcolm Cammack, Cenkos Securities plc., Research Division – Building and Construction Analyst [30]

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Right. Let me go. Okay. I think I’ve got just 3. One very quick qualification question. Just regarding the cement business. Will you still have to do a shutdown in the second half of the year given that you obviously haven’t been producing out of the plant for the whole period? Is it — will it still be necessary to do that? And I mean, presumably, that is comparable with the second half of last year in that sense, if it is done.

Second question I had was just on the outstanding facilities and staff, around 10{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}. What point do they come back? Or will they not come back? Is this potentially part of any rationalization program, which you’re still working on?

And the last question I had was really regarding CEMEX. You obviously had a little bit longer to browse the business, et cetera. Obviously not as intently as you would like to. But tactically, because of that and because of lockdown experience that they must have endured the same as you do you think you’ll approach the integration or focus of what you’re trying to do with CEMEX? Do you think tactically, that will be any different now? Or will it be pretty much as as you’ve been saying previously.

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Rob Wood, Breedon Group plc – Group Finance Director & Director [31]

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If I pick up the first one, Kevin, I think at this stage, the market should assume we have the shutdown regime as we had in 2019. With 2 in the first half and 1 in the second half. We will reassess things. And when we do come back to the market with guidance, we will update the market accordingly and confirm or change that.

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [32]

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As far as closed plants and colleagues, they are still not at work. You’re right. It’s less. I mean, it’s probably closer to 7{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} than 10{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}. And what I would say now is we’ll bring back plants and people as we need them as demand grows. I think any changes there will be — they’re not COVID related, really. They’re just plant efficiencies and plant opportunities. So we’ll — as we continue to see volumes grow, we’ll just continue to evaluate that. But that will be done on normal protocols that Breedon over the years would use to get their operational efficiencies up. So it’s not a forced decision or a distressed decision. It’s — it will be a purely business decision, and we evaluate that on a weekly basis, Kevin.

And as far as CEMEX goes, tactically, I don’t see any change. I mean the quality of the assets and the quality of the markets they are in, still there. Perhaps maybe the one change would be, clearly, there’s been a deterioration in their business over the 3 years prior to our transaction. And undoubtedly, during COVID, the business will have suffered some of the same issues as many of us. In pre-COVID, we would have been getting a CEMEX business that was sort of limping a little from its performance clearly. And all I’d say is it’s going to be a market position now where many of its competitors are lumping coming out of COVID. So perversely, the CEMEX facilities might be in a better position than it would have been relative to pre-COVID. So still excited about the quality assets, still excited about the quality of colleagues that’s coming across, sort of no hesitancy in looking to get the deal done. And nothing significant would change in our ability to integrate the business, of course, subject to CMA’s decision and the remedies required from that as far as divestments go, and then we can integrate, but no worries.

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Kevin Malcolm Cammack, Cenkos Securities plc., Research Division – Building and Construction Analyst [33]

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Okay. Sorry, just to be clear, the comment you made around the CMA, so they’re due to report back the end of August?

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [34]

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Yes.

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Kevin Malcolm Cammack, Cenkos Securities plc., Research Division – Building and Construction Analyst [35]

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If — I mean, obviously, I suspect there might be 1 or 2 things at the edges. But fundamentally, is that then when you — when this sort of independent management of the business, would that cease at that point?

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [36]

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No. So we expect a decision then, which will come up with issues. And we’ll have remedies for those issues, which much like Hope will involve divestments, which last August or last Christmas, we talked about what we believed. I have no reason to believe it will be much different in our assessment now. I think the whole (inaudible) will continue until we execute those divestments.

And that’s always been our understanding, Kevin. No change now.

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Operator [37]

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At this stage, we don’t have any more questions coming in. So I would just hand over to Steve. I’m not sure whether Steve’s got any questions that have come in by e-mail or whether he’d like to wrap up?

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Stephen Jacobs, Breedon Group plc – Head of Communications & Marketing [38]

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No questions coming in from me. Thank you, everybody. Good to see you all. That concludes the event today. Just to mention that the webcast, which has been recorded will be up on our sites later this morning. And I very much hope to see you all in person some time soon. Thank you very much, indeed.

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Patrick Ward, Breedon Group plc – Group Chief Executive & Director [39]

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Thank you.