M&A Announcement

Apr 17, 2018

morning, everybody. Welcome to this presentation. To be hosted today by Peter Tom, our Chairman Pat Ward, Group Chief Executive and Rob Wood, our Group Finance Director. I'll hand over to you now. Thank you, Steve. Thank you everyone for coming. It's obviously a very exciting morning for Breeden and our new colleagues at Lagan. We've had a relationship with the Lagan business and with Kevin for probably 25 years. Pat and I in our former life were importing the White Mountain high PSV chips into the agriid industry asphalt business. And then currently, of course, we have a joint bench with White Mountain working on the Aberdeen Ring Road. And as will come out in the presentation, it's an absolutely superb business, very, very well invested and in many respects a very, very similar DNA to Breden. And so we are really looking forward to the next few years all working together. And I'll now pass you over to Pat who will run through the details of the business and then Rob will obviously do the financial stuff. Good morning. As Peter said, exciting transaction for us and I have to say that if we could have designed a transaction that would be complementary as a next strategic step for Breen, it would be this transaction. So it's a very elegant solution for us and for the lagging group. We're creating a leading independent construction materials group in the U. K. And Ireland. LAGEN itself is a leading supplier of construction materials and contract surfacing in Ireland and in the U. K. And as Peter talked, joint venture partners in Aberdeen, and they've also been active in several other major projects in the mainland. So a total cash consideration of $455,000,000 on a cash and debt free basis. I'll talk about it at the end, but there's strong strategic rationale for the combination. It gives us an expansion into a very attractive Irish construction market, and it gives us that expansion in a meaningful way, a meaningful size that gives us a critical mass for a sustainable business. It's underpinned by many, many significant assets, but 2 of the main ones are the modern cement manufacturing facility at Kinnegaard, about 40 odd kilometers outside Dublin and significant reserves and resources. Within the document, we've identified a figure of 120,000,000 tonnes. Potentially, that number should increase as we convert some of the prospect to resource or reserves. So again, solid assets for the business. Complementary Downstream businesses and strong development potential, and it gives us an enhanced platform for further organic growth and bolt on acquisitions. The avenue that Bredin has had on the Mainland for organic growth in bolt on acquisitions has not diminished. The opportunities are still there. This gives us a parallel market that affords us the same opportunities. It's almost like replicating what Bredin has been achieving on the mainland. It's expected to be double digit earnings accretive in the 1st full year post acquisition, and we've identified synergies of approximately $5,000,000 by year 3. Same as hope, the basis for those synergies are primarily overhead, group office changes at lagging. They don't take any account commercial or operational synergies. Potentially, there could have been further opportunities, but we see this business not as a business where we want to strip costs out. We very much see this as a platform for growth, and we want to make sure that we have the resources in place that we can grow this business. The next page, I won't dwell on it too much. It's essentially the breeding footprint. Many people here, I think, are familiar with that. So I'll move on to giving a brief description of how the businesses are currently run. They're currently run as 4 separate businesses: lagging cement or lagging products, which includes the cement plant Construction Materials in the Republic of Ireland Construction Materials in Northern Ireland and materials in Northern Ireland and Welsh slate. The Cement division, as I mentioned before, great cement asset, one of the youngest plants in Europe, certainly one of the youngest plant on the mainland in Ireland. It has also within that is a ready mix businesses in the North and South of Ireland. It has a sand dredging business in Lough Neagh just outside Belfast. It has the only Irish based brick plant, clay brick plant, which produces about 12,000,000 bricks per year. And it's several concrete product facilities, which utilize some of the reserves that the some of the production capability that the business has. Solid, solid business. And from our perspective, complements very well on the Mainland Hope Cement Plant, as you knew, we ran with 1 individual plant and 2 cement terminals. This will be very complementary. The Republic of Ireland business is a very well developed high performing asphalt and paving business. Significant market share in the general market, little bit greater market share on major projects. The business itself had identified a lack of aggregates business supporting the asphalt and the ready mix business within cement, and they had started a process about 4 years ago where they had been acquiring some aggregate reserves and distressed assets, and we're about to undertake development of this aggregate business. From Bearden's perspective, that's a perfect launching pad to grow that aggregate business. The Northern Irish business reputationally is a well developed aggregate business that operates under the White Mountain brand and it exports high quality, high PSV aggregate to the Mainland through port agreements and potentially up to 17 ports throughout the Mainland. That's a great resource to have within the overall group. And reputationally, they have a well developed asphalt contracting business. That's a sustainable business in the North of Ireland, underpinned by several framework agreements that run through 2020. It's well invested in, but again, we believe and the local management within the Northern Irish believes a significant opportunity to organically invest or grow the business through bolt on acquisitions. The Welsh slate business is, again, it's a I mean, very lucky, not lucky, they've created such a good business that the brands there's a lot of quality in the brand. And the Welsh slate brand is predominantly associated with the very high quality slate that creates roofing slate and architectural products. And these products are sold Australia, Europe and throughout the U. K. And have been for over 100 years. That business itself, I believe, will be complementary as far as the architectural products go. It will be complementary as far as the Specialist Decorative Aggregates go, which will dovetail nicely with our special aggregate business within Breton. A further opportunity is potentially dealing with the waste product that you exploit in order to yield a high quality value slate. I think for us sorry, one maybe one more opportunity I should talk about is the Republic of Ireland Business and the Northern Irish Business both have bitumen terminals, bitumen import terminals, and in South, they have an emulsions plant. They import raw material from Europe and they self supply bitumen throughout their business in Northern Ireland, Southern Ireland, and they have during 2017 supplied projects in the West of Scotland and in Wales. For us, over the years, we've always worked hard to minimize any potential risk on increased hydrocarbon costs through strategic procurement plan for bitumen. This gives us further opportunities to either by bringing in this technical resource and the operational resource, we have the know how. If we choose, we can export bitumen from Belfast or from Dublin to the Mainland and support our asphalt business in Breeding. If we decided to replicate those facilities on the Mainland, that's available too as well. But potentially, it's always a tool that will allow us to be more strategic in our procuring of bitumen. So that's a significant asset for us and something we're very pleased to have on board. Over the years, when we're asked about as Breeding grows, our question has always been, how do you grow and how do you remain Breeding? Our view is always about the people. It's about the business, but it's about the people. It's about the people understanding our culture. It's about the complementary natures of the businesses. And I'm delighted to say, I don't think you could have 2 businesses that are more aligned as far as culture and really the way we go about our everyday business. We've had the ability to see each other up and close in the joint venture project in Aberdeen and AWPR. And so we've got to understand each other's DNA, which then brings us to integration. And in my 2 years here, I've been absolutely delighted at how Breeden integrates businesses. They've been very successful for the last 6, 7 years in integrating businesses. Hope, I think, demonstrated the ability to take a large business, a business that was a bit diverse from Breeden because it was the first move into cement, but that business, the integration went as well as anybody could expect, and I think Breeden have delivered on every level in that integration. I actually feel that this integration is no more difficult and in some respects, probably a little easier because we have the cement business, which will align completely and will be merged with our existing Hope Cement business, which is fundamentally the Hope Cement Plant in the 2 terminals. And that will be run by Jude Lagan, who is the current Managing Director of that business. So for us, that's a quick win, bringing those businesses together. The well slate business, because of the alignment with special aggregates in the architectural stone, will be integrated into our Southern business. So Breeden Southern will absorb Welsh slate and allow Welsh slate to have more of a national reach, and that will be under the guidance of Mike Pierce. What that essentially leaves us with are 2 construction material businesses, 2 distinct regional construction material businesses, which are very like our breeding Northern business. There's no activities that are carried out in these businesses that we don't or haven't carried out in our careers or in Breeden currently. So for me, when we break the integration down into these four components, it's a low risk. It's a low risk integration as far as I'm concerned. So for us, again, it's an exciting time to welcome our new colleagues, our 750 colleagues, and I fail to see where it can go wrong. It's a great business. It's in a great market. The assets are superb. And not to be missed, the people I think will be complementary, but I think we're going to get very talented group of individuals in the business. There's some slides on MAPs. I think maybe the only one I'll refer to is the Republic of Ireland one because if you look at this, this is the most basic way I can explain it. But if you look at the blue dots, which are the asphalt plants and the red dots are the aggregate facilities, in an ideal world, you would want them sort of cohabiting a site. And you can see how strategic the business in the South has been by bringing up some of these aggregate facilities in the area of their asphalt plants. And that to me is the aggregate business at an embryonic state and it will move forward from there. They've done a wonderful job setting up that launch pad, and we are excited to get in and help develop that business. I think the other marks really just speak for themselves. So Rob? Okay. Thank you, Pat. Good morning, everybody. Lagan Group has had strong growth over the last couple of years. Revenue in 2017 was just shy of $250,000,000 and EBIT has been increasing on the back of the improving Irish markets, but also due to the repatriation of cement volumes from Continental Europe to the domestic market following the sale of their cement terminal in the Netherlands in 20 16. Underlying EBIT margin at 10.4 percent lags our 2017 12.3 percent, but post synergies, they are comparable. Looking forward, the outlook for the Irish market in the next few years is positive. The latest Irish government's capital investment plan, published a couple of months ago, anticipates a doubling of investment between 20172021. In addition, EuroConstructor forecasting that construction growth will increase by 28% by 2020, this being the 2nd highest growth out of the 19 EuroConstruct member countries. It is also worth noting that the Irish cycle tends to lag the UK construction cycle and that the indexed output is at a level comparable to only the pre Celtic Tiger years. Growth in Northern Ireland is more modest but still encouraging. Now turning to how we're going to finance the transaction. The cash consideration of €455,000,000 will be financed by a combination of debt and equity. In respect of debt, we have entered into a new $500,000,000 facility with Barclays HSBC, RBS, Santander and First Trust, which is part of AIB. The new facility has $150,000,000 amortizing term element and a $350,000,000 revolving element. It replaces our existing $300,000,000 facility and has a 4 year term. The pricing of the new facility is marginally better than our existing facility. In terms of equity, the placing of approximately 170,000,000 has been conditionally placed by our brokers with institution investors at a price of 76.5p. However, approximately 50,000,000 is subject to clawback by other institutional investors and our brokers will today commence the book building process in respect of this. In addition, we will provide other shareholders the opportunity to participate in the equity raise at the placing price to raise up to £4,000,000 through an open offer. The open offer is in addition to and separate from the placing and is conditional upon completion. The acquisition will significantly increase Breeden's scale and profitability. In addition, we expect to achieve annual cost synergies of approximately £5,000,000 by the 3rd full year following completion, and also expect the acquisition to be double digit accretive to our underlying EPS in 2019. Pro form a opening leverage is expected to be approximately 2.6x underlying pro form a EBITDA and is expected to fall to less than 1x in 2020. Pro form a financials are revenue of €901,000,000 underlying EBITDA of 163,000,000 pounds underlying EBIT of £106,000,000 and as already mentioned, pro form a open leverage is expected to be approximately 2.6 times. In summary, the Enlarged Group will provide us with a stronger platform for further investment and growth. We anticipate admission and settlement of the placing shares on Thursday and completion of the acquisition on Friday. The open offer will follow and close in mid May. And I'll pass you back to Pat now. Okay. Will state our strategy for the enlarged breeding group, and it's quite simple because this was the objectives for breeding group prior. And if you asked the lagging group, this would be their objectives for the lagging group. So for me, this is how complementary this transaction is for both individuals. And as you can see over the years and you'll and as you get to know the assets in lagging, they've delivered on this. They've delivered on this all constantly. Okay. I'll just read our trading update. In common with the rest of our industry, we have experienced disruption from the severe weather in the Q1, which has impacted the phasing of some of our works. However, with the worst of the weather behind us, we have seen an improvement in recent weeks and anticipate a continuing recovery in activity. The Board's expectations for the full year remain unchanged. So in summary, maybe I'll reiterate what we believe is a compelling strategic rationale for this transaction. It's an enhanced market position. As I talked before, it creates a leading independent construction materials group in the U. K. And Ireland. It gives us extended geographic coverage. It strengthened our cement capability, which was always an objective of ours, and we now feel that with the whole plant that we took on board was in good condition, well invested. We're now bringing in a more modern cement plant, well invested, no legacy capital investment required. We're in a very strong position with our cement capability. It gives us an expanded range of products and services. We talked about White Mountain IPSV, emulsions and bitumen import and export. Another area that of expertise the group brings is both the Republic of Ireland Business and the Northern Irish Business have a successful track record of working within airport infrastructure projects. Bredin has a fairly limited track record on that, predominantly in Stornoway Airport. And I feel that as we bring these three businesses together, we'll accelerate our ability to perform in that sector by about 3 or 4 years. Synergy benefits, we talked about $5,000,000 by year 3. It gives us further vertical integration opportunities, the significant potential to expand upstream and downstream on Ireland as well as continuing the pipeline of potential acquisitions that we have on the Mainland. Greater financial capacity. The expected increase in cash flow and strong balance sheet will provide capacity to pursue further growth opportunities. Strengthened management and complementary Jude Lagan, Terry Lagan, who runs the Republic of Ireland Business and Mark Kelly, who runs an business, will join us. And we've got as I say, we've got to know each other over the past year or so, and we're very, very comfortable that both parties will work well together going forward. So we have brought a lot of new talent into our organization as well as the colleagues throughout Northern Ireland, Republic of Ireland and the Welsh slate business. And underpinning all of that is the very favorable economic conditions that are projected continue in the north of Ireland, but predominantly in the south of Ireland over the course of the next 4 or 5 years. I think that concludes the presentation. Okay. Thanks, Matt. Could I just ask people in the room, as usual, just to give their names and houses just for the benefit of the people on the webcast as you ask questions? Many thanks. There's a microphone coming around. Hi. Rob Chancho, Berenberg. Just two questions. Firstly, could you just give a brief comment on the broader market structure in Ireland and Northern Ireland, so the presence of any big firms in that industry, what broad market share this firm is? And I suppose secondly, in the past 2 or 3 years since the big acquisition of Hope and now this, I guess there's been less frequent small bolt ons. Could you just give a view on what your aspiration is? Because clearly now with a substantial EBITDA level, the incremental €10,000,000 €20,000,000 EV type assets are much less relevant, I guess. So just your view on your scope and ambition to do bolt ons of that size? Yes. I mean, obviously, in the Republic of Ireland, there's a very strong player called CRH. And the lagging business has a good market share position on asphalt. It's probably in the region of 20% on general works and a little bit higher on major projects because of the capability of the business. So we feel that the foundation of that market share is solid. What it really doesn't have in the Republic of Ireland is any significant market share on aggregates already mixed, and that's clearly an opportunity. In the North, the asphalt framework agreements, I would suggest, are spread between 4 or 5 businesses that compete vigorously and are all capable of performing within these framework agreements. There's also the mechanism as they release these framework agreements. You're only allowed to win a certain amount. If there's 4 agreements, you're only to win 2 at any given time. So that keeps a degree of competitiveness in the marketplace. And in describing the business in the North, again, I would say a very solid foundation on asphalt, a very solid foundation on paving and a reasonably good position on aggregates, but clearly opportunity to grow aggregates. So what was the second part of your question? Yes, but I think we've been quite active Vop. If you take Sherbourne and you take Pro Mini Mix and you take Staffs and It's the Tarmac deal that sit over the course? The Tarmac deal with the CMA. And of course, we have the added advantage as we know about other transactions on the pipeline. So I talked earlier, Robert, I our appetite bolt ons or even small bolt ons in the U. K. Is not diminished. We're as active as ever. We have been there. And we'll manage the leverage, which will dictate, obviously, if there was a larger transaction. But maybe more importantly, I talked a year ago about 6 months after we got home, and I said I felt from a management bandwidth perspective, we were ready for the next acquisition. We said that the integration has gone smoothly. We're ready for the next acquisition. And I have no doubt that in 6 months' time, we'll be seeing the same thing. So at that point, we'll be managing the leverage because I think we're He meant managing the integration. That's a big deal. Yes. But if we finish a year and our assets are better and our people are better and our management team is more talented, then we'll ready to go forward. And I feel this does that again. It's worth mentioning, Robert, too, that I mean, it's not just the U. K. Now for bolt ons. There's a whole opportunity in Ireland now. Howard Seymour, Numis. 2. First one was actually my second one, but he follows on from that. You've historically given a figure that you'd sort of suggest to spend per annum on bolt ons. Looking forward, do you look to potentially increase that number? Or is it now that the sort of the 2 Irish divisions have to compete alongside the U. K. Divisions for that money? So that's the first one. And then second one just the Irish market. I think for us, the appetite is still there. And I think over the last few years, we probably went from 20 to 30 to 30 to 40 to 40 to 50. I think for the right deals, we have the capacity. I think the next few months very much will be about delivering and deleveraging. But when we get to the end of this year, our leverage should be in a much more comfortable space, and we should have significant capacity. Okay. And then secondly, really just on to the Republic of Ireland Business. I suppose the general question is, you alluded to the reserves you've got. Are there the reserves specifically, Moneta? Or are they relatively well distributed relative to the size of the businesses? Well, obviously, there will be a predominance of reserves associated with the cement plant, which we're the way we would operate, that's akin to how we operate on in the North and particularly on the West Coast of Scotland. There's a lot of small sites. So instead of investing in infrastructure in every site, the way we run these sites in the north is we have a dedicated crushing train and employees who travel with that train. And essentially, what they'll do, however, is they'll move from site to site and they'll campaign crush and they'll put the product where the product is required. Cleverly, I think the group have also acquired certain facilities on, we believe, the alignment of future capital investments. So I think they've done a really good job of putting this sort of foundation in place to build that business. And they would have executed on that without this deal. We just want to help. And on that point, Pat, you alluded to the fact that there's 9 dormant quarries in Ireland. What is a dormant quarry in terms of the capability for to get that up in rain on timescale investment and sort of Tunisia as well? What can you take there? They're all different, but there's you can open a dormant quarry. If the faces have been left in reasonable condition, you can open a dormant quarry within weeks with very little investment because you can contract crush, you can bring in third parties to carry out some of that work. But as I said, and that activity is happening in certain areas there, but other quarries may have been sort of abused towards the end of their life and it takes a little bit longer to get the faces in a workable condition. And for me, I would rather take time to ensure that we get the right equipment and the right development at the phases because quarries are developed for the long term, not for the 8 months. But importantly, there really aren't any earnings associated in this transaction with an aggregate business in the ROI. So everything we do there is a step forward. Yes. But if you look at there's 2 actives and 9 dormants, could you end up in a situation where would the 9 dormants be potentially larger than the 2 actives as they stand at the moment? You see what I mean on a size basis or are they relatively small operations as they stand? No, no, no. Actually, some of them are dormant because quite successfully, they wanted to ensure that they acquired some minerals around it to give it a long life, and that's where they've been active. So because of dormant doesn't mean they're inferior. It just means that in their evolution, they decided before we go in and before we operate, we want to make sure we've got the long life required for the investment. So I've been very prudent in that. It's Clive Lewis at Peel Hunt. I think I've got 6, but I'll do 3 and then hand the mic on. Could you do them slowly? Exactly. Rob, can you give us some sort of idea of a divisional split, those 4 businesses that you are acquiring within the group? Just revenue, hopefully, and maybe, fingers crossed, we get an idea of profitability as well, that would be very useful. 2nd, what sort of tax rate should we be assuming for the combined group or the business you just bought? And the 3rd financial one was on CapEx. It looks like about $25,000,000 of depreciation. I don't know if that's depreciation and amortization. But if you can give us an idea as to, a, how that is likely to evolve? And also, what sort of CapEx we should be looking at for the new group as well going forward. Okay. Divisional splits, just broadly, Welsh slate is probably about 10% of revenues, and the other three divisions are broadly equal at about 30% each. At the EBIT level, plus or minus a bit, that's a pretty similar split. So I think that just gives you a flavor of the relative size of the business. And the tax rates, approximately half their earnings are ROI. So there will be a benefit between the difference between the UK rate and the Irish rates. At the group level, in a full year, it's probably going to be equivalent to 1%. And then CapEx, we the depreciation charge in the business is high. It's about £20,000,000 a year in the business being acquired. It does reflect the modern nature and the investment in the cement plants. And pre fair value adjustments, we anticipate that, that will continue to run at that level. In terms of guidance for CapEx, for the it's a well invested business, I think Pat mentioned, but whether it's a cement or whether it's the asphalt element of the business, well invested. And we expect sort of probably sustainable sort of CapEx to be sort of 50% to 60% of depreciation, so 10,000,000 to 12 to 12000000 a year for that business. So I think on an overall basis, depreciation for the enlarged group will be modestly less than probably 100% of depreciation. I think there were your 3. We've got 3 more now. Okay. I will go again then. Firstly, are there any compliance clearance issues that you've got to go through at all? Obviously, it's an Irish cement plant, but you're importing into the UK. So I'm just wondering if there are any issues on that front. And presumably, going forward, the UK authorities, if you wanted to do something else related to cement, I suspect they will look at it slightly differently than they currently do. Yes. I mean, obviously, there's a filing, but we don't anticipate any implications from the CMA perspective that would have any impact on the transaction. And going forward, whether this transaction happens or not, the CMA would always, rightly so, be very active in looking at any potential deals that we would do. I don't think that changes anything, but this is really the first sort of step outside the Mainland U. K. To sort of this is really the first sort of step outside the Mainland U. K. Sort of GB. Is this the sort of opening of the door for other overseas acquisitions, either Europe or sort of America? Has that process started to be It'd be nice if you let do this one before you start that. And the third one I had But our point has always been, our focus was on this, the pipeline in the Mainland. And if something developed outside of that, we would always look at it and evaluate it, but we weren't terribly active in Europe. And I think now we can say that we have 2 parallel markets that we can look at bolt on organic growth. And as leverage gets to the right level, if something else occurred and something came to you and it was right and it was complementary and added value, then absolutely, we're comfortable to look at it. The third one I had was, and whether you can disclose it or not, but is the seller, is Kevin going to take any shares through the placing at all? So will he be an ongoing investor in Breton? No, he's not. Okay. So he's selling out completely? Yes. And Kevin has built a great business there and we are, I think he's passionate about the business, and I think it's probably easier for Kevin and probably easier all around that he's going to go and do his own thing, but I think he'll be passionately watching it because he's very proud of what he's achieved and what he wants that business to deliver, yes. Yes. Rob Tanfry again. Very, very quick question. Could you I know you mentioned it briefly your statement, Rob, just talking about the step up in EBITDA margins from 2016 to 2017. Could you just talk a bit more about where that margin has been historically? And then secondly, just front of the dynamics of why it stepped up from 14.8% to 18.5% and underlying whether you see that as ex breeding if that was going to progress at that level? I think the most material step up will be on the back of the repatriation of the cement. I mean, the Lagan business were very successful in finding an outlook for cement in the downturn, and they have their terminal in the Netherlands. And as the domestic markets improved, they have repatriated that. They closed the terminal in 2016, and the benefits have gone straight through to margin. I think there is a backdrop to the the improving markets in Ireland. So I think the big step change has happened. But going forward, we're confident of making further progress. Kevin Kamak at Sandoz. 2, please. Firstly, the group previously had a stated target of getting to a 15% EBIT margin. Does this alter that in terms of that being an achievable target still for the enlarged group? That's the first thing. And secondly, I just wonder if either theoretically or in practice, you can just talk us through a bit more what the advantages of the bitumen facilities physically do mean to the group? I mean, to what extent how rapidly can it change the face of what you're currently doing? And in effect, I suppose one other thing I'm asking is, if you were to use that facility to the benefit of the UK or the mainland business, is there enough capacity existingly in that facility over and beyond what's used within Ireland? Or does it physically mean you have to replicate another business in the Mainland to do that? So on the margin one first, if you by the time you take you achieve the $5,000,000 in synergies, then the margin and the sort of lagging business that's coming in is very similar to bringing 12.3%, 12.4% in that range. So from our perspective, 15% was a target for 2020. We've all achieved it in prior businesses. I think I talked about lagging looks very similar, being in the makeup and structure of its business. So I would we'll look at it, but I would it wouldn't surprise me if our view is the $15,000,000 is achievable and it's question of when. So it's very much like when we bought Hope. We said we're still maintaining the 15%. It's just a matter of when. Does it delay the achievement? I think we'll be seeing the same thing here. As far as the bitumen terminals go, they've supplied a lot more bitumen than they're currently supplying. And really, the capacity constraints there are more about how often you turn ships and how often you move the product out rather than the physical constraints of the tanks. So clearly, those two terminals could supply the U. K. If we decided the Mainland if we decided that's what we wanted to do. But if it was a value enhancing investment, we can look at it for the Mainland as well. But really, Kevin, that's a day one priority for us is really to decide to evaluate that and decide where is the best bang for our buck and operate in those terminals and how can they complement our business in the Mainland. And I think that's the additional benefit in this business. I think somebody mentioned at the start. It's our first foray out of the Mainland. It's a business in Ireland that's got enough critical mass to be a sustainable business itself that can be developed, but also has linked to the Mainland that supplies high PSV stone. The group do paving projects on the Mainland and bitumen comes into the Mainland from there. So it's not completely autonomous. It's not completely independent. The businesses are they can work well together and they can grow together. And that will be particularly useful as we bring talent across the businesses. White Mountain, one of the areas we've noticed in Aberdeen is they have a lot of talented young engineers who have come from university in Northern Ireland, a lot of good paving engineers. And that's particularly when the airports are concerned, that's something we can certainly learn from and leverage and breed. I think the other important bit, Kevin, is that Pat and I in our previous life were involved in importing bitumen into the USA. And when I left, we had 2 terminals and I know Pat opened another one in Denver. So we are quite familiar with how that market works. Interesting enough, a significant amount of the supplies we were then bringing in were coming from the same supplier that Kevin uses today. Does it literally all come from one source or? No, no. It used some of it used to come from Venezuela, but that not now. Most of it comes out of Spain. John Messenger from Redburn. Can I just follow on with bitumen? Just sorry, an ignorance on my part just to understand a bit more. But are you effectively just doing clever things with raw bitumen in terms of obviously the description around binders and what you're doing? I assume is this effectively you've got a bode interest obviously, so you've got your shipping capabilities, storage I assume as well, but is there actually a plant there that's doing clever things with a basic grade of bitumen that you're adding value to as well? Or is that overcomplicating it in terms of No, no. No. In the Republic of Ireland, there is an emulsion facility as well. So they can modify bitumen to create more specialist value enhancing products. They we would procure those specialist products in the external market. That certainly gives us further opportunity, John. Just on Cement, am I right in thinking that the plant's been running pretty much full tilt and to your point, you were shipping it or they were shipping it to the Netherlands, bit to the UK, I assume. The product flow, where is that now? And I know it's, who knows, but what have you assumed in terms of the world, the trading status quo in terms of Brexit and what might happen, just in terms of where the ultimate 650,000 tonnes will be sold? Yes. I think we'll continue to help execute the sort of plan LION we're on. They've been quite innovative. When the recession was on, they were moving product to Europe, they were moving product to the mainland, but they were also aggressively executing their alternative fuels plan. Well, and as you know, the higher you put alternative fuels, you restrain your capacity somewhat, which is fine when the market's a bit slower. But I would if I look forward, John, I would expect that as the market continues to grow in Ireland, the tons that move to the U. K. Could be repatriated towards Ireland. And if the market slows again, we can all because we're on the mainland and a significant presence, we can always we have that opportunity to bring product onto the mainland as well. So I think that's how we see it going forward, and that's just being consistent with the strategy Lagan had themselves. Got you. And then finally, just Rob, that going to give earlier on the sales split, was the splitter EBITDA or at EBIT when you said it was broadly the same? EBIT. Was it EBIT? EBITDA, you'll expect the cement business to have higher. Fantastic. Thanks. And John, the markets kind of sustain themselves, so I don't if there's a hard board on Brexit, we don't know what's going to happen. I don't see that as significant because there's the aggregate facilities in the north will come into Mainland and if you did it north plants in the south, we'll feed the plants there. I don't see a lot of cross border if it became a hard border. Howard Seymour Newman again. Just actually on Bricks. Did you mention the Bricks sales at the moment are about $12,000,000 What's the size of the plant? Well, that I think that's the capacity at the moment, but I know the group had plans in place to accelerate development at that facility, and that's something we'll need to evaluate kind of day 1 as well. And maybe early days, but bricks are a different business, I suppose cement is as well. But as you look at it, it's something that you'd like to continue in this space of the group. Yes. What's particularly pleasing that at this point, everything within this transaction, we're very comfortable retaining. We don't have anything slated that we would like to exit. So as far as we are concerned, if we are building on this platform from now going forward, we'll be delighted with that. If there are no further questions, there's still some bacon sandwiches, some rather cold now and some coffee. And thank you all very much for coming. And for the benefit of those on the call, just a reminder that you can access the presentation again on the website and a recording of this webcast will be up on the site late this morning. Thank you everybody for joining us.