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SigmaRoc: First-quarter trading ahead of estimates

SigmaRoc's St John's Quarry, Jersey

First-quarter 2020 trading momentum a continuation of strong second-half 2019 performance

FOR the first quarter of 2020, SigmaRoc, performed ahead of budget and analyst estimates, despite significant weather disruption and flooding across the UK and the Channel Islands, and the start of the COVID-19 pandemic.

For the three months to the end of March, the Group recorded an 87% year-on-year increase in unaudited revenues to £26.5 million and a 144% year-on-year increase in unaudited underlying EBITDA to £5.25 million.

As a result, SigmaRoc generated sufficient cash from operations to cover both their non-underlying acquisition and restructuring expenses of £3.9 million relating to the purchase and integration of four businesses in 2019, whilst also reducing gross debt by €2 million in their Benelux operations.

Further to the company’s announcement of 25 March 2020, SigmaRoc will remain active across their operations where they can ensure compliance with all applicable government welfare guidelines and where there is a clear strategic and financial case in the local market.

As required by local government instructions, the Group has had to close all but essential infrastructure maintenance operations in both Guernsey and Jersey for a period of 14 days, but it is expected that a permitting system will be implemented in Jersey shortly, allowing the reopening of accredited construction sites and, in turn, the Group’s operations.

In the UK, SigmaRoc remain active across all sites supplying product where doing so is an economically viable proposition for their customers. In this context, the Group has decided to suspend some of its production capacity and supply from stock.

In Wales, G.D Harries remain active across a number of civil engineering and road maintenance contracts, having reduced production and haulage capacity in line with current local demand.

SigmaRoc’s Belgian businesses also remain operational with the support of staff and unions, supplying bluestone to a reduced number of active customers, whilst the Group’s partner in the sale of aggregates from Soignies Quarry has shut down production entirely until further notice, although the Group is continuing to supply customers from its other quarries near Huy.

In light of this operational picture, SigmaRoc anticipate that reduced activity and demand levels throughout April and possibly May will result in substantially reduced revenue and EBITDA performance in the second quarter, relative to the Group’s expectations prior to the onset of the Covid-19 pandemic.

Nevertheless, SigmaRoc are confident that they have robust business continuity and cost-mitigation plans in place, and, said that as at 3 April 2020, they had £11 million in cash reserves and undrawn headroom of £5 million under their revolving credit facilities, providing a solid liquidity position from which to navigate through even a protracted period of disruption.

As such, the board is confident that SigmaRoc remain in a strong position to confront the currently foreseen consequences of the COVID-19 pandemic and respond quickly as markets recover. A further update on progress will be provided with the release of the Group’s full-year 2019 results, scheduled for 20 April 2020.

Chief executive officer Max Vermorken commented: ‘I am pleased to report good numbers for the first quarter of 2020, demonstrating the underlying quality of the Group. As the COVID-19 pandemic continues to evolve, we will see it impact our Group through site closures in line with government regulations.

‘As a Group, we continue to strictly adhere to government guidelines, to ensure our sites comply with the required safety protocols and keep our staff safe. In this way, we can remain operational, to the extent possible, to support our suppliers, customers and local economies, such that we best prepare our business for a recovery post the COVID-19 pandemic.’

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