SigmaRoc PLC – SRC – Trading update

SigmaRoc PLC – SRC – Trading update

SigmaRoc, a heavy construction materials group active in the UK, Channel Islands and the Benelux, is pleased to update the market on its continued resilient trading and financial performance during the second half of 2020.

 

Highlights:

 

Revenue

Revenues of £114m for the 11 months ended November 2020 - a 78% increase over the prior year, significantly ahead of current market expectations

FY20 outlook

Full year underlying results expected to be comfortably ahead of current market expectations

Cash generation

Strong cash generation resulted in an increase in cash and equivalents to £14.5m at 30 November 2020, subsequent to acquisition of the remaining 60% equity interest in GDH from cash reserves

Furlough:

Debt refinancing

Group to repay UK funding assistance of approximately £250k

New Group-wide facility on schedule for completion by year end

Fundraising

Proposed equity issue to raise approximately £12.4 million for further near-term earnings enhancing acquisitions and investment pipeline

 

Revenue and trading:

For the eleven month period ended 30 November 2020, the Group recorded consolidated unaudited revenues of £114 million, representing an increase of 78 per cent. over the equivalent period in 2019. At the time of the publication of its interim results, on 7 September 2020, the Group reported that the combination of improving demand and a highly effective operational response to the COVID-19 pandemic had seen an encouraging performance recovery across all of its businesses starting in May and continuing into the third quarter of 2020. Pleasingly, following the normal seasonal reductions in activity, particularly in European markets, these recovery trends have continued through the second half and been supplemented by the Group's ongoing commercial and operational enhancement initiatives. Whilst the further lockdown restrictions implemented in recent weeks, associated with the second wave of COVID-19, reinforce an element of uncertainty over outlook, they have not materially impacted either the Group's operations or short-term customer demand. As a result, the Board currently expects to deliver results for the year ending 31 December 2020 ahead of current market expectations.

 

Cashflow:

As has been the case throughout this challenging period, the Group continues to focus on cash generation in order to minimise risk and retain the capacity to make further progress strategically. As at 30 November 2020, the Group had unaudited cash and cash equivalents of £14.5 million. This reflects further strong operational cash inflows during the second half, even after paying the cash consideration for the acquisition of the remaining 60 per cent equity interest in GDH (Holdings) Limited (the 'GDH Acquisition') at the end of the third quarter.

 

Furlough:

The Group intends to repay funding assistance received from the UK Government for the entities under its control during the first lockdown. This assistance amounted to approximately £250k and will be repaid in full.

 

Debt refinancing:

As part of the previously announced strengthening of its financing structure, the Group has made significant progress with a new group-wide credit facility to replace its existing facilities in the UK and Belgium. Having received commitment and support letters from all participating banks, the Group expects the Senior Facility Agreement to be in place before the year-end.

 

Outlook:

The Group has achieved results ahead of the Board's expectations given the challenging trading environment. These are attributable to the Group's early preparation and active management, ability to continue operating where permitted and above all its motivated workforce and management team. The Group is optimistic as to the potential normalising market conditions in 2021 and has been buoyed by the UK Government's commitment to infrastructure investment as part of its COVID-19 recovery strategy.

 

Fundraising:

Having managed the risks posed by the COVID-19 pandemic early in its onset, the Group was able to progress its buy-and-build strategy through the completion of the GDH Acquisition. In order to take advantage of further opportunities that the current economic climate is offering, the Group is today announcing a proposed equity issue, to raise approximately £12.4 million, which will enable it to accelerate execution of its identified near term acquisition and investment pipeline (the "Fundraising").

 

The details of the Fundraising are set out in a separate announcement also released by the Company today.

 

David Barrett, Chairman of SigmaRoc, commented:

"I am very pleased by the results the Group has achieved in an exceptionally difficult period and look forward to closing out the year well ahead of where we expected to be in April and May. I am very proud of the SigmaRoc team and our ability to execute our strategy in spite of such difficult circumstances."

 

Max Vermorken, CEO of SigmaRoc, commented:

"The Group's performance for the eleven months to 30 November 2020 is very strong given the context and risks we faced. The Group has continued to demonstrate that a decentralised business model focussed on local markets is a robust approach in our industry, particularly in challenging times. The Group is supported by a solid asset base and will continue to confront all challenges head-on while executing on its buy-and-build strategy to deliver further shareholder value."

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