SigmaRoc H1 Update

SigmaRoc (SRC.L, AIM All-Share, Market Cap £107m, 37.5p, 2.2% of JIC Portfolio)

Trading update for H1 ended 30th June

Conclusion: SigmaRoc looks to have managed COVID and the lockdown as well as could be hoped. Flat revenues on a like for like basis is impressive given the disruption. Its strategy of acquiring other businesses has been put on hold while it focused on keeping its existing sites working and managing its cash resources. Looking forward it says that its focus is returning to “investment strategy, with significant value creation opportunities available.” Earnings per share will obviously fall this year due to a higher number of shares compared to a year ago. It issued shares to fund its acquisitions. I have it as Medium Risk/Medium Return, (2.0% target weighting). I’m happy with that given a 2020 PE ratio of only 10.0x and is standing at a c. 50% discount to the value of its reserves. Happy Holder!

Main points:

Revenue for the six months up 83% to £54.5m

Underlying EBITDA up 91% to £10.9m with margins improving from 19.1% to 20.0%

At 30th June it had cash of £17.3m up from £9.9m in June 2019 and total net debt was down 7% to £46.3m.

The figures above include acquisitions. On an organic basis it says that on a like-for-like basis, revenues were approximately flat.

“Summary and outlook
The Group has delivered results ahead of its own expectations given the challenging trading environment. These are attributable to the Group’s early preparation and active management, ability to continue operating where permitted and above all its motivated workforce and management team. The Group remains convinced it has created a setup better capable of managing uncertainty, rapidly changing conditions and challenging working environments. 
Notwithstanding the consistent recovery in activity levels since May, the Board believes that it is still too early to provide accurate guidance for the remainder of the year given continued uncertainty over the full impact of COVID-19 on the economy as well as the scale and timing of government support for spending in various construction market segments. This position will be kept under review and reassessed at the time of the release of full H1 2020 results planned for 7 September 2020.
Having maintained a strong operational and financial position through the very challenging conditions experienced in Q2, SigmaRoc is now focused on maintaining the strategic momentum that had been created through 2019 and into the early part of this year. As such, the Board will review opportunities to invest in support of its platforms where it believes there is the potential for significant value creation.

David Barrett, Chairman of SigmaRoc, commented:
“I am very pleased to be reporting these results for the Group. In my 45 years in the industry I have seen many cycles and the challenges they pose for business. Navigating these challenges in the way SigmaRoc and its management team have done demonstrates the resilience of the Group and its strategy.” 

Max Vermorken, CEO of SigmaRoc, commented:
“The Group’s performance across the first six months of 2020 is extremely strong given the context and risks we faced. As a Group we have demonstrated again that a decentralised business model focussed on local markets works well in our industry and in challenging times. The Group is further supported by a solid asset base. The Group will continue to confront all challenges head-on to deliver further shareholder value.”Screenshot 2020-07-30 at 07.50.53