SRC Sigmaroc Plc

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

SIGMAROC PLC

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

Year-end trading update

Excellent final quarter trading, with 2023 underlying earnings ahead of expectations, alongside transformational investment to create a leading European lime platform  

SigmaRoc, the AIM quoted lime and limestone group, is pleased to update the market on Group trading for the year ended 31 December 2023 ('FY23').

FY23 highlights

·      The Group is expecting to report underlying FY23 EBITDA and EPS ahead of current consensus expectations*:

·      Revenues expected to be 8% higher year-on-year ('YoY') at c. £580m (FY22: £538m);

·      Like-for-like ('LFL') revenue growth of 2%, despite a 4% reduction in volumes, reflecting the Group's diversified geographical end-market profile;

·      Underlying EBITDA is expected to exceed £116m, up c. 10% LFL;

·      Underlying EBITDA margins improved to 20%, increasing by 110bps YoY;

·      Underlying EPS expected to be greater than 8p, ahead of prior year despite significant increase in finance costs while absorbing the dilution of the February 2023 cash raise which was deployed across 2023;

·      FY23 leverage is expected to close below 1.6x (1.7x at 30 June 2023), following strong cash generation in the last quarter of the year;

·      In November 2023, the Group announced the conditional acquisition of a significant portfolio of lime and limestone assets from CRH, the first phase of which completed on 4 January 2024;

·      Post period end - new debt facility successfully syndicated in January 2024.

Operations and trading

The second half of FY23 saw continued good trading in most markets. SigmaRoc's diversified model and end market exposure continued to provide resilience in the latter part of the year, with industrial mineral markets and infrastructure outperforming expectations and offsetting softer residential construction markets.

LFL revenues grew by 2%, despite an overall 4% reduction in volumes. Group revenues increased by 8% YoY to c. £580m, including an initial contribution from 6 bolt-on acquisitions completed progressively across the year.

·      Industrial Minerals markets (43% of FY23 Group revenues) - showed continued resilience in the latter part of the year, supported by long term structural drivers in a number of instances. In particular, pulp, paper & board recovered from destocking earlier in the year. Demand remained well supported in further industrial sectors including metals, environmental and agriculture.

·      Construction markets (57% of FY23 Group revenues) - infrastructure applications, which represent over 60% of the Group's construction market revenues, saw robust demand through the year in both the UK and Continental Europe. As expected, residential markets remained soft throughout the year and the Group was effective in re-focusing local market resources to increase infrastructure weighting.

Ongoing productivity and efficiency initiatives are a key pillar of the Group's long term growth strategy. The Group implemented multiple restructuring and cost saving initiatives across the UK and the Nordics, translating into annualised cost savings of c. £4m and newly acquired businesses are all performing ahead of expectations at their respective acquisition dates. The benefit of the Group's strategic initiatives more than offset the ongoing impact of cost inflation, with the underlying EBITDA margin expected to increase by 110bps to 20%, and underlying EBITDA growth of c.10%.

Acquisition - post period end

On 22 November 2023, the Group announced the transformational acquisition of a number of lime and limestone assets in Germany, Czechia and Ireland (the 'Initial Assets'), from CRH plc, alongside a £200m equity fundraising. Completion of the acquisition of the Initial Assets was effective on 4 January 2024, bringing to the Group 1 billion tonnes of reserves, over 850 employees, and annualised revenues of over €350m. The addition of these assets transforms the scale of the Group's industrial minerals business and is expected to unlock significant financial, operational and strategic benefits. Integration of the Initial Assets is underway, with the further acquisitions of CRH's UK and Polish lime businesses expected later in 2024.

Debt syndication - post period end

In connection with the acquisition of the Initial Assets, SigmaRoc entered a new €875m debt facility with Santander and BNPP. The syndication of these facilities has now been completed, in an oversubscribed process, with a strong consortium of lenders.

Outlook for FY24

The Board's current outlook for FY24 remains unchanged, despite heavy snowfall at the start of the year in parts of Europe leading to usual winter weather disturbance. 2023 was characterised by infrastructure construction and industrial markets performing well in aggregate, with softness in residential construction. Paper, pulp and board saw significant destocking in the early parts of the year, a trend which reversed in the second half of 2023. Steel and other industrial demand had a positive last quarter running into 2024. These trends are likely to persist into 2024, with the potential for improvement in residential construction in the second half as expected interest rate cuts positively impact demand.

The Board remains confident in the Group's ability to deliver a successful integration of the newly acquired companies, and to build from this combination a leader in lime and limestone. The prevailing conditions throughout Europe present both headwinds and tailwinds in the various markets which the Board is actively managing and taking advantage of.

Max Vermorken, CEO of SigmaRoc, commented:

"2023 has been another transformational year for SigmaRoc. We completed a number of bolt on acquisitions during the year, which have been integrated well and enhanced performance in a number of our businesses. In November 2023, we announced the acquisition of a significant portfolio of lime and limestone assets from CRH, creating a leading Northern European industrial minerals platform and a key supplier to a number of structural growth markets.

"We also welcome the Fels-Werke, Vitosov. and Clogrennane teams into the SigmaRoc Group. Their expertise and dedication will undoubtedly contribute to the continued success of the Group as they become an integral part of our journey.

"We have had an encouraging start to 2024, and we are confident the enlarged Group, with a strategic focus on lime and limestone, 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, being used in a number of processes including flue gas cleaning, slaking rivers and lakes, and the manufacture of lithium batteries.

"We look forward to the upcoming year, as a larger and more focussed Group, with optimism."

FY23 annual report and financial statements and ESG report

The Group intends to publish its audited results for the year ended 31 December 2023 and its ESG report by the end of March 2024.

*Consensus expectations for SigmaRoc, being the average of forecasts for the year ending 31 December 2023 provided by Analysts covering the Company, are revenue of £596.9m and underlying EBITDA of £110.2m.

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.

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About SigmaRoc plc

SigmaRoc is an AIM-quoted lime and limestone group targeting quarried materials 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.