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SigmaRoc Plc

CEO Q&A with Max Vermorken at SigmaRoc PLC (LON:SRC)

SigmaRoc PLC (LON:SRC) Chief Executive Officer Max Vermorken caught up with DirectorsTalk for an exclusive interview to discuss their full year results.


Q1: Max, a great set of numbers announced, can you talk us through the highlights?

A1: So, these are the first numbers that we’ve published at SigmaRoc, we started obviously as a cash shell, so I’ll talk you through both the high level numbers we published and a like-for-like, year-on-year, comparison with the operational businesses underlying these numbers.

The business itself turned over just over £27 million in consolidated revenue which is an increase of 11% year-on-year comparative with the Ronez Group in 2016. We generated £5.5 million in group EBITDA, that’s a 37% increase year-on-year with an EBITDA margin of around 20% which again we’re very happy with. Pre-tax profits underline about 34% and all these improvements are driven through by the structural changes and the synergies we identified in the business and we put in place across 2017.


Q2: Can you also talk us through your strategy of operating local businesses as clusters, what does this mean?

A2: Construction materials are fundamentally very local business, the products are very heavy and not very expensive, they’re abundantly available pretty much everywhere so you’re talking about region-based or even town-based business. So, when you then look at how to optimally utilise that logic, it is best in our view to group compatible businesses together by grouping synergies, cost savings but also from a topline perspective, mark sure that they share customer lists and so on.

What you end up with is a cluster of companies, we at the top make sure that purchasing power, because we’re a bigger group, gets put through and management and health and safety rationale gets put through any smaller entities. So, you find yourself at the end of this journey with a series of clusters and an operating company above to drive synergies overall.


Q3: You have an active buy and build strategy, what do you look for in your targets?

A3: The targets we look for, the companies we look for, are very much of two distinct criteria.

First and foremost, we want them to be quality companies, they need to have something that in our view underpins value; asset base, a location, a product type, something that will maintain the value across the cycle for the future, that’s really key thing number one.

Secondly, we want to make sure that businesses that we buy are in regions we very well know and understand so that we can not only buy that one company but identify a few others around it, build that cluster and be active in a region where we’ve operated before.

That is the receipt to be able to generate synergies and shareholder value ultimately. Start with something good, buy it at a decent price, improve it, group it into a cluster and then continue to manage it.


Q4: One of your recent partnerships was with Tarmac Limited, what did they bring to SigmaRoc?

A4: Tarmac Limited is obviously a leading construction materials business in the UK, they decided to group with us on a particular product that Poundfield Products Group have in their patent portfolio but don’t actually produce. So, this is actually an additional revenue stream for us from a product that was developed but didn’t actually produce at the moment in time. The reason why it doesn’t is because the Shuttabloc product, the product in question, is fairly technical and very large in scale, it also requires capability to install and manage the installation work which again applies risk and so forth.

So, Tarmac are actually a very good partner for us to actually be able to take on both production and commercialisation and production and then help us with that side of the business so that we can then focus on all the other products that Poundfield owns patents on and drive the sales there. So, a very nice complement to the Poundfield business.


Q5: Can you comment on trading for the year to date?

A5: Trading up to April has been good, in line with the budget we set for the year. We see everybody speaks about a slightly longer winter which is indeed true and some of our products going to the agricultural markets, they started slightly later this year than the years before.

Overall, we’re very happy and the business is doing well against that budget.


Q6: What can investors expect to see in the rest of 2018 from SigmaRoc?

A6: I would say work on two fronts, the Ronez and the Channel Islands clusters is now fully integrated, so we’re try to replicate similar logic within the precast cluster in the south-east and east of the UK, that’s clearly point number one. We’re constantly on the look out for bolt-on acquisitions and/or straightforward separate acquisitions to create new clusters.

So, improve and build and that’s the logic of the whole business going forward.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.