SigmaRoc continues operations into 2020 with solid liquidity


  • Construction materials company with focus on the UK and Northern Europe
  • Taken a major step into Belgium with CDH acquisition
  • House broker says company can withstand coronavirus lockdown
SigmaRoc quarry

Quick facts: SigmaRoc

Price: 45 GBX

Market: AIM
Market Cap: £114.18 m


What SigmaRoc does

SigmRoc PLC (LON:SRC) is a construction materials company with a buy-and-build strategy focusing on assets in the UK and Northern Europe.

Founded in 2016, the firm looks to create value by purchasing assets in the fragmented construction materials market and forming them into larger groups to create efficiencies.

These assets are segmented into regional ‘platforms’,


What it owns

The company’s portfolio includes

Ronez: A concrete and asphalt firm based in the Channel Islands consisting of the St John’s Quarry in Jersey and Les Vardes Quarry and Vale Castle in Guernsey

Allen Concrete: A precast concrete product maker with plants in Surrey and Northamptonshire

Poundfield Products: Suffolk-based precast and prestressed concrete manufacturer

CCP Building Products: Supplier of concrete and aggregates (materials including sand, gravel and crushed stone). Has manufacturing facilities in North West England and North Wales

Foelfach Quarry: Crushed aggregate and stone quarry in Carmarthenshire, Wales, containing some of the home nation’s highest quality aggregate reserves. The quarry also produces high-polished stone, a valuable material for road surfacing

GD Harries (GDH): 40% stake in GDH, one of Wales’s largest independent suppliers of aggregates. Operates seven hardstone quarries, six concrete plants, three asphalt plants, a wharf operation and four road-contracting units


How it's doing 

In an update in March, the company said it expects to report a strong performance from its businesses for the financial year ending 31 December 2019, exceeding analyst estimates.

The construction group said its revenues are expected to reach £70mln, a 71% increase on the previous year, while underlying operational profits (EBITDA) will hit £14mln, a 43% increase on the previous year.

The group added that its adjusted leverage ratio, which compares net debt to underlying EBITDA, was 2.1 times, as at 31 December 2019, adjusted for pre-acquisition earnings.

Meanwhile, in response to the coronavirus pandemic the company said it has strictly implemented all government recommendations, established safety measures, and prepared operational and financial contingency plans.

As a result, and as at 24 March 2020, the company added, it remains operational across all its sites, although this is under continual review. Operating conditions remain in-line with government guidelines, and all staff who can work from home are doing so.

The company is confident it has sufficient liquidity to navigate the coronavirus crisis, with its credit facilities providing additional headroom.

Assuming safe conditions can be maintained across our operational sites SigmaRoc said it remains committed to servicing its customers, keeping its workforce employed and supporting local communities.


What the broker says

In a note in March, Sigmaroc's house broker Liberum, which rates the company at 'buy' with a 65p price target, said they believed the company could "withstand a very extended period of lockdown" and that the market had "underestimated the financial strength of the group and its liquidity position".

"We estimate that the group can withstand a 20% fall in revenues without debt increasing or without needing to draw down more of its facilities, and we also calculate that the group has cash resources and facility headroom in place to withstand around nine months of closure", Liberum said.

"Only SigmaRoc’s operations on Guernsey are restricted and the rest, in Jersey, mainland UK and Belgium remain open. Health & safety is a major priority for SigmaRoc and it is able to continue running its operations, below capacity in some instances, while maintaining social distancing requirements at all times and through continuous and rigorous cleaning. Many of its products are used for repairs and maintenance, which can be critical in keeping infrastructure running, and it also has exposure to the agriculture sector, which is expected to run close to normal", the broker added.

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