SigmaRoc plc / EPIC: SRC / Market: AIM / Sector: Construction Materials
10 December 2018
SigmaRoc plc
('SigmaRoc' or the 'Company' or the 'Group')
Trading update
Proposed Acquisition of CCP Building Products Limited
Proposed Refinancing of Convertible Loan Notes
Increase of Santander Credit Facility
Notice of General Meeting
SigmaRoc plc, the AIM listed buy-and-build construction materials group, is pleased to update the market on several important developments which are expected to position the Group for continued growth and deliver improved shareholder value:
Highlights:
- Strong trading performance for the 10 month period to 31 October 2018 recording +58% year-on-year revenue growth, demonstrating the success of the strategy;
- Proposed acquisition of CCP, on a favourable earnings multiple, an immediately value accretive concrete products and quarrying group, with strong growth prospects;
- Proposed refinancing of the Convertible Loan Notes improving the Company's capital structure, financing costs and dilution;
- Increase in the Santander Credit Facility to facilitate further growth.
Each of the above mentioned highlights are expected to assist the Company's future growth and development, as described in detail in the 5 sections below:
1) Trading update:
SigmaRoc has delivered strong results in the 10 months to 31 October 2018. Year-on-year revenue, underlying EBITDA and underlying EPS are all significantly improved. Despite weather disruptions and more challenging market conditions, year-on-year revenue growth for the 10 month period to October 2018 was 58 per cent. The Group remains on track for a strong full year performance in line with its expectations.
SigmaRoc intends to publish preliminary results for the year ended 31 December 2018 around 13 March 2019.
2) Proposed Acquisition of CCP Building Products Limited ('CCP'):
SigmaRoc is pleased to announce it has conditionally agreed to acquire the entire issued share capital of CCP for an initial consideration of £15.21 million in cash on a debt free / cash free basis (the 'Proposed Acquisition'). The acquisition consideration will be satisfied by a drawdown of the Santander Credit Facility and a proposed vendor consideration placing of new SigmaRoc ordinary shares.
CCP is an integrated concrete products and quarrying group located in the Liverpool and Manchester area. In the 12 months to 31 August 2018, revenue at CCP was £20.9m and adjusted EBITDA £2.6m. CCP reported net assets of £2.1 million based on unaudited management information as at 31 May 2018. Consisting of four production sites and a trading business with an estimated setup capital exceeding £22 million, CCP is an excellent complement to SigmaRoc with significant growth potential.
CCP's founding management team will remain with the business and drive its profitability as part of an earn-out package pegged against EBITDA growth targets, which if met should see the business grow substantially over the next three years. A company presentation is available on the SigmaRoc website at www.sigmaroc.com.
If the Proposed Acquisition does not complete by 31 January 2019 the Proposed Acquisition will not proceed.
3) Proposed refinancing of the Convertible Loan Note Instrument ('CLNs'):
The Company has received an offer from Ravenscroft Limited for and on behalf of the majority of holders of the CLNs to enable the Company to redeem the CLNs on terms which the Board considers favourable and intends to accept, subject to the passing of the resolutions as set out in paragraph 5 below. Full detail on the redemption of the CLNs will be published once the redemption has been formally accepted by the Board.
The refinancing of the CLNs, should it be approved, will have a significant and positive effect on the capital structure and financing costs of the Company. David Barrett and Max Vermorken are interested in £125,000 and £25,000 of the CLNs respectively and will agree to participate in the refinancing, which will constitute a related party transaction in accordance with AIM Rules for Companies.
4) Increase of the Term Loan and Revolving Credit Facilities (the 'Santander Credit Facility'):
With the support of Santander UK plc, the Company has agreed an increase of its committed credit facilities from £20m to a total amount of £34m. The key terms of the facility remain broadly in line with the originally agreed Santander Credit Facility. The increased facilities will be utilised for the refinancing of the CLNs, the acquisition of CCP and to provide finance for further projects the Company is considering.
5) Notice of General Meeting:
The Company has today posted a circular to Shareholders containing a Notice of General Meeting, to be held at the Washington Mayfair Hotel, 5 Curzon Street, London, W1J 5HE, United Kingdom on 27 December 2018 at 10.00 a.m. The purpose of the General Meeting is to consider and if thought appropriate pass an ordinary resolution to permit the directors of the Company to allot Ordinary Shares or grant rights to subscribe for or convert any securities into Ordinary Shares comprising:
1) An aggregate nominal amount of £351,351 in connection with the Proposed Acquisition of CCP Group;
2) An aggregate nominal amount of £20,270 in connection with the Poundfield Deferred Consideration as per the Company announcement on 13 December 2017;
3) An aggregate nominal amount of £27,027 in connection with the payment of accrued bonuses due to management and certain employees in lieu of cash; and
4) Up to an aggregate nominal amount of £179,550 representing approximately 10 per cent. of the Enlarged Share Capital.
In addition, a special resolution is being proposed to permit the Directors to allot Ordinary Shares or grant rights to subscribe for or convert any securities into Ordinary Shares up to an aggregate nominal amount of £27,027.
The ordinary resolution enables the Directors to effect the Proposed Acquisition of CCP Group, permit the issue of the Poundfield Deferred Consideration Shares, enable the issue of the management and employee performance bonus shares and provide management with some flexibility to issue further Ordinary Shares representing approximately 10 per cent. of the Enlarged Share Capital without requiring further shareholder approval.
The special resolution, which is conditional on the passing of Resolution 1, will permit the Company to pay the accrued bonuses due to management and certain employees in shares rather than cash helping to incentivise future performance.
The Notice of General Meeting and Form of Proxy, together with an explanatory covering letter from the Company's Chairman, will be available for download from the Company's website at www.sigmaroc.com
David Barrett, Chairman, commented:
"We are about to close out a year of significant further development of the Group. The acquisitions made in 2017 are performing very well. We expect CCP will be an excellent addition to the group, value accretive for shareholders and the right next step overall. With the support of the CLN holders and Santander we are able to position SigmaRoc for a solid start of what we hope will be another excellent year."
Max Vermorken, CEO, commented:
"Invest, Improve, Integrate - It is a strategy which is already delivering strong results and will continue to do so. CCP will be a great fit in our journey, immediately accretive and a truly excellent addition to the group. CCP's management team will continue to drive its performance and continue the growth of an already very impressive business. We are also excited about the support granted by Santander and the CLN holders to help continue our story with further success."
Enquiries:
SigmaRoc |
Tel: +44(0)207 002 1080 |
Max Vermorken, CEO |
|
|
|
Strand Hanson (Nominated and Financial adviser) |
Tel: +44(0)207 409 3494 |
James Spinney / James Dance |
|
|
|
Berenberg (Broker) |
Tel: +44(0)203 207 7800 |
Ben Wright / Mark Whitmore / Laure Fine |
|
|
|
Investor Relations |
Tel: +44(0)207 002 1080 |
Ian Osburn / Ben Feder |
[email protected] |
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.
