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SigmaRoc: THE INVESTMENT CASE
INVESTMENT OVERVIEW

Proximity to customer is cornerstone of SigmaRoc's buy and build strategy

More purchases are likely as SigmaRoc is committed to growth by acquisition
concrete
INVESTMENT OVERVIEW: SRC The Big Picture
Lots of pre-cast firms are still family-run

Evidence of its buy and build strategy coming together showed through in concrete products and building materials group SigmaRoc PLC’s (LON:SRC) first half.

Meaningful first-time contributions from acquisitions Allen Concrete and Poundfield meant profits more than doubled.

WATCH: Half-year results show SigmaRoc's acquisition strategy clearly works says CEO Vermorken

They made it three additions since the company embarked on the current expansion plan in December 2016.

More purchases are likely as SigmaRoc is committed to growth by acquisition.

Max Vermorken, chief executive, says 35% of quarries in the UK are family-owned/private, while in pre-cast products, the percentage is even higher.

And the pipeline of potential deals is full to overflowing, he adds.

Firms have looked how the acquisitions of Poundfield, Allen and also Ronez, a Channel Islands-based quarry owner, have panned out and are now approaching SigmaRoc, he says.

Known local businesses

“Proximity to the customer” is the cornerstone of the strategy.

For large projects, there are the major suppliers, but for smaller developments, Vermorken believes local flexibility and presence are crucial.

That is why it retains the branding and sales team of the businesses it acquires.

“Known local businesses that supply local customers,” is how Vermorken summarises it.

READ: SigmaRoc doubles profits as new additions show their worth

Vermorken says there was some tweaking at both Allen and Poundfield, but essentially both are solid businesses with considerable potential.

At Poundfield, he says there was literally no space at the yard to handle any more sales.

The yard’s workflow has been reorganised and the next step will be to put in extra capacity to give it the scope to expand.

Poundfield has patents for a range of pre-cast products and one of these, Shuttlebloc, is being produced and sold by Tarmac under license.

Shuttleblocs are very large pre-cast products used in infrastructure and heavy industry.

Poundfield did not have the capacity to make them and they also require skilled installation, so the deal with Tarmac is a win-win.

Allen Concrete, meanwhile, is a long-established supplier of pre-cast fencing posts and the aim here is to boost volumes steadily.

Profits double

Revenues in the half year to June jumped 52% to £19.9mln, with underlying profits 139% higher at £2.8mln.

Vermorken said the improvement was achieved despite the extremely harsh winter that meant demand for farming-related products such as retaining walls picked up later than usual.

He says numbers in the market are punchy going forward, but the first half indicates the potential.

At 41.5p, the company is valued at £56.7mln.

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