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SigmaRoc expands Welsh portfolio with purchase of stake in quarrying group GD Harries

SigmaRoc said it will purchase a 40% stake in GDH for £4.89mln with an option to acquire the remaining 60% for £7.5mln before 31 August 2020

GD Harries lorries
GDH owns six quarries as well as concrete and tarmac plants and is one of Wales’s largest independent suppliers of aggregates

SigmaRoc PLC (LON:SRC) shares rose on Monday following news the group has expanded its portfolio in South Wales with the acquisition of a 40% stake in quarry owner GD Harries (GDH).

GDH owns six quarries as well as concrete and tarmac plants and is one of Wales’s largest independent suppliers of aggregates - minerals used to make cement and asphalt.

READ: SigmaRoc agrees partnership deal with Lindsay Corp for exclusive licensing of the Road Zipper System

SigmaRoc said it would purchase the stake in GDH for £4.89mln using its existing resources and credit facilities, with an option to acquire the remaining 60% for £7.5mln before 31 August 2020.

The acquisition, which was expected to be “immediately earnings enhancing”, increases the group’s British operation to 11 quarries and 26 operational sites.

GDH also expands the company’s South Wales operation, which was started in late-2018 when it acquired the Foelfach quarry in Carmarthenshire.

READ: SigmaRoc acquires Foelfach quarry in Carmarthenshire and appoints new managing director

“With GDH as part of the group, we will operate nearly a dozen quarries, 100mln tonnes of reserves and resources, close to 500 people employed, with significant skill, drive and enthusiasm within the various management teams", said Max Vermorken, SigmaRoc’s chief executive.

Former Breedon CEO to join as non-exec

The company also announced that Tim Hall, the former chief executive of construction materials group Breedon South, would be joining the board as a non-executive director.

“Tim brings a wealth of experience and knowledge of the industry to the board of SigmaRoc and will be an asset in its continued development as he has been with Breedon. In particular, Tim's knowledge and network within the industry will benefit SigmaRoc's growth in the aggregates and construction materials market in the UK,” the company said.

Breedon South is a division of Leicestershire-based firm Breedon Group PLC (LON:BREE), which operates around 80 quarries in the UK and Ireland.

Acquisition to boost EPS by 10%, says broker

In a note to clients, analysts at 'house' broker Liberum Capital said they expect the GDH acquisition to boost earnings per share (EPS) by “around 10%” by 2021.

They added that the appointment of Hall to the board was “another seal of approval for SigmaRoc's business model and its assets”, and that his expertise in the business would be “very well placed” to identify and approach more quarrying businesses in the future.

Liberum repeated a 'buy' rating and 59p target price on SigmaRoc.

In afternoon trading, shares in SigmaRoc were 2.7% higher at 46.20p.

 -- Adds share price --

Quick facts: SigmaRoc

Price: £0.41

Market: AIM
Market Cap: £71.23 m
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