REG - SigmaRoc PLC - Trading Update, Notice of Results & Presentations

SigmarocAnnouncement

30/07/2024 07:00

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RNS Number : 2831Y  SigmaRoc PLC  30 July 2024

30 July 2024

 

(EPIC: SRC / Market: AIM / Sector: Construction Materials)

 

SIGMAROC PLC

 ('SigmaRoc', the 'Group' or the 'Company')

 

 

Trading update, CFO succession and Polish anti-trust clearance

Strong first half performance underpins confidence in our full year
expectations

Notice of Results, Analyst Briefing & Investor Presentation

 

SigmaRoc, the Northern European lime and limestone Group, is pleased to
provide the following trading update for the six months ended 30 June 2024
('H1' or the 'Period') reflecting a performance ahead of expectations(1).

 

Highlights

·      H1 revenues £469m (H1 2023: £290m), up 62% YoY, reflecting the
contribution from CRH acquisitions;

·      Underlying EBITDA of £100m (H1 2023: £55m), up 82% YoY and
ahead of budget;

·      Underlying EBITDA margin improved to 21.3%, up 240bps YoY (H1
2023: 19.0%), due to effective pricing and cost management;

·      Pro-forma(2) revenue down 8% and underlying EBITDA down 3%, due
to softer volumes and lower pass through on top-line;

·      Underlying EPS expected to close over 3.1p with pro-forma(2)
underlying EPS over 4.2p, up more than 5% (H1 2023: 4.0p);

·      Covenant Leverage expected below 2.6x with pro-forma(2) leverage
under 2.3x; and

·      The Board's expectations for the year unchanged.

 

Notes: (1) Based on underlying EBITDA; (2) Pro-forma calculation includes Deal
2 and Deal 3 for entire Period on an underlying basis.

 

Update on European lime businesses acquired from CRH

 

·      Acquisition of German, Czech and Irish businesses completed on 4
January 2024 and are now fully integrated ('Deal 1');

·      UK lime acquisition completed in March 2024 with integration
progressing ahead of schedule ('Deal 2');

·      Polish anti-trust clearance delivered post period end with
completion expected end of August 2024 ('Deal 3');

·      CRH lime businesses performing in line with expectations;

·      Synergy programme on track with further detail at the interims.

 

Markets and trading

 

Trading evolved in line with trends seen in 2023. The Group's diversified
model and end market exposure allowed it to take advantage of certain
tailwinds and mitigate the headwinds, delivering trading modestly ahead of
budget, along with improved EBITDA margins.

 

·    Industrial Minerals markets (42.3% of H1 2024 Group revenues: H1 2023
30.3%) - Overall performance in line with budget with good volume development.
Generally robust sector but demand in the paper and pulp segment was initially
impacted by strike action which has now ended. Some early signs of softness in
automotive demand may impact steel in the next two to four quarters.

 

·      Environmental and agriculture markets (17.4% of H1 2024 Group
revenues: H1 2023 12.5%) - Good volume development in food and water
purification segments, while poor weather led to higher than usual wind energy
generation and reduced demand from the power generation sector. Some of these
trends are expected to continue in the short term.

 

·      Construction markets (40.3% of H1 2024 Group revenues: H1 2023
57.2%) - Infrastructure applications, which represent around 65% of the
Group's construction market revenues, saw robust demand in both the UK and
Continental Europe. As expected, residential markets remained soft throughout
the Period. The Group was effective in re-focusing local market resources to
increase infrastructure weighting.

 

Synergy programme, integration and Poland

 

The synergy programme targeting EUR30-EUR60m by 2027 is on track, despite not
yet including any potential benefits of the Polish perimeter. We will update
the market further with the interim results in September.

 

Integration of businesses acquired to date as part of the CRH acquisitions has
gone smoothly. Transitional Service Agreements ('TSA') have been exited for
the German, Czech and Irish businesses. Integration of the UK carved-out
business is progressing ahead of schedule.

 

Completion of the Polish acquisition is expected by the end of August 2024,
having now received Polish anti-trust clearance ahead of schedule. The Group
will aim to integrate the Polish business and exit any TSA arrangements in the
same manner as for the other acquired companies.

 

CFO succession

 

After nearly eight years with the Group, Garth Palmer has notified the Board
of his intention to pursue other interests starting in 2025. Garth will
gradually hand over his tasks to Jan Van Beek, Deputy CFO and CFO designate,
who will join the Board when Garth steps down. The appropriate AIM disclosures
will be provided in due course once all regulatory processes have been
completed and, in any event, before Jan is appointed to the Board.

 

Jan qualified as an accountant with Deloitte and led their international
practice in the Netherlands. He subsequently built a distinguished career in
senior finance roles within the minerals and chemicals industry based in
Europe and the USA. During his time at Shell plc spin-out Hexion Jan was
Global Finance Director and subsequently CFO of several divisions, comprising
turnover of over USD 4bn and sales in 4 continents.

 

At Hexion Jan was jointly responsible for investor relations work in relation
to USD 3bn NYSE listed bonds, the refinancing of multi-layered debt facilities
as well as reporting work up to ultimate owner Apollo Global Management. At
the end of his tenure with Hexion, Jan became CFO designate of a USD 2bn
spin-out.

 

Most recently Jan was Head of Finance at ASML, the world leading producer of
machines for the semiconductor industry with a market capitalisation of EUR
335bn.

 

Outlook

 

Trading conditions in Europe present both head and tailwinds which the Board
is actively managing. A rebound in residential construction has not yet
materialised given prevailing high interest rates and relatively low new
planning applications. Industrial minerals will see areas of outperformance
and possible challenges in relation to expected softness in automotive demand.
Environmental markets have been consistently strong in the food and
agricultural segments, with weather-related pockets of lower demand in power
generation.

 

The Board remains confident in the Group's ability to deliver on the
completion and integration of the Polish assets, and to continue to build on
SigmaRoc's position as a European leader in lime and limestone.

 

The Board's current outlook for FY24 remains unchanged and in line with
consensus(1).

 

Note: (1)Consensus expectations for SigmaRoc, being the average of forecasts
for the year ending 31 December 2024 provided by Analysts covering the
Company, are revenue of £1,060.0m and underlying EBITDA of £219.3m.

 

Max Vermorken, CEO of SigmaRoc, commented:

 

"2024 is a year of profound transformation as we complete the three phases of
the CRH acquisitions as we build a leading industrial and construction
minerals platform with a focus on lime and limestone.

 

"On a proforma basis the Group sees its earnings per share expand again. Given
how busy the teams have been with the integration of several new businesses, a
demanding synergy programme, while also navigating mixed market conditions,
this is an outstanding result.

 

"The integration of the Group is progressing smoothly. We thank our new
colleagues for the warm welcome we have received as new owners and appreciate
the shared enthusiasm for building a unique European minerals platform.

 

"We are confident the enlarged Group can deliver strongly in the coming years
to the benefit of all our stakeholders. Lime is an essential product for life,
used in multiple areas of the economy, from construction to industry. It is
essential for the green transition, including flue gas cleaning, slaking
rivers and lakes, the manufacture and recycling of lithium batteries, and the
construction infrastructure behind green energy production."

 

Chairman, David Barrett, on behalf of the SigmaRoc Board, added:

 

"We would like to thank Garth Palmer for his dedication to the Group over the
last eight years. Without his tenacity, professionalism, rigour and Australian
no nonsense approach, this Group would not have been able to deliver what it
has to date. We will be sad to see Garth depart and wish him the very best for
the future.

 

"We also congratulate Jan, who joined in May, on his upcoming appointment as
CFO of the Group. Jan was selected following a rigorous external search
process involving the Group's nominations Committee and its founders. Jan
brings a wealth of experience and above all the can-do attitude which this
Group so much appreciates in its key team members. We look forward to
continuing the journey with Jan.

 

"We look to the future with optimism as we have again delivered a strong first
half despite mixed market conditions."

 

Notice of Interim Results - Analyst Briefing & Investor Presentation

SigmaRoc will announce its results for the six months ending 30 June 2024 on
Monday, 9 September 2024.

Analyst Briefing

SigmaRoc will host an online briefing for analysts on Monday, 9 September 2024
at 08:30 GMT. For more details and to register to attend please email
SigmaRoc@walbrookpr.com.

Investor Presentation

SigmaRoc is pleased to announce that its Executive team will provide a live
presentation to private investors reviewing the 2024 interim results and
prospects via Investor Meet Company on Monday, 9 September at 14.00 GMT.

The presentation is open to all existing and potential shareholders. Questions
can be submitted before the event via your Investor Meet Company dashboard up
until 9.00am the day before the meeting or at any time during the live
presentation. Investors can sign up to Investor Meet Company for free and add
to meet SigmaRoc via:

https://www.investormeetcompany.com/sigmaroc-plc/register-investor

Investors who already follow SigmaRoc on the Investor Meet Company platform
will automatically be invited.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET
ABUSE REGULATION (EU) NO. 596/2014 AS IT FORMS PART OF UK LAW BY VIRTUE OF THE
EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED.

 

Information on the Company is available on its website, www.sigmaroc.com.

 

For further information, please contact:

 

 SigmaRoc plc                                Tel: +44 (0) 207 002 1080

 Max Vermorken (Chief Executive Officer)

 Garth Palmer (Chief Financial Officer)      ir@sigmaroc.com (mailto:ir@sigmaroc.com)

 Tom Jenkins (Head of Investor Relations)

 Panmure Liberum (Nomad and Co-Broker)       Tel: +44 (0) 203 100 2000

 Scott Mathieson / John More / Dru Danford

 Deutsche Numis (Co-Broker)                  Tel: +44 (0) 20 7260 1000

 Richard Thomas / Hannah Boros

 Walbrook PR Ltd (Public Relations)          Tel: +44 20 7933 8780 sigmaroc@walbrookpr.com

 Tom Cooper / Nick Rome                      Mob: +44 7971 221972

 

About SigmaRoc plc:

SigmaRoc is a quoted industrial minerals and construction materials group,
focussed on lime and limestone, targeting limestone assets in the UK and
Northern Europe.

Lime and limestone are key resources in the transition to a more sustainable
economy. New applications for lime and limestone products as part of a drive
for sustainability include the production and recycling of lithium batteries,
the decarbonisation of construction including through substitution of
cementitious material and new building materials, and environmental
applications including lake liming, air pollution and direct air capture.

SigmaRoc seeks to create value by purchasing assets in fragmented materials
markets and extracting efficiencies through active management and by forming
the assets into larger groups. It seeks to de- risk its investments through
the selection of projects with strong asset backing.

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