Shares in AIM-listed building materials firm SigmaRoc (SRC:AIM) jumped 5% to 88p after the group announced the acquisition of privately-owned Johnston Quarry Group for £35.5 million.
Johnston owns and operates eight quarries and two processing sites in Oxfordshire, Lincolnshire and the South West, supplying Cotswold Ironstone and Bath Stone for upmarket new-build residential housing as well as agricultural lime for soil improvement.
In the year to September 2021, Johnston posted revenues of £14.7 million, EBITDA (earnings before interest, tax, depreciation and amortization) of £5.9 million and pre-tax profits of £3.6 million.
QUALITY ASSETS
As well as boosting earnings from day one, the acquisition adds 86 million tonnes of freehold and leasehold reserves and resources, taking SigmaRoc’s average life of mine to over 40 years.
Chief executive Max Vermorken called Johnston a ‘high quality quarrying group, with an attractive geographic footprint and a product range which offers architectural and environmental benefits over alternatives’, extending the firm’s footprint significantly in several key markets within the UK.
There are also potential synergies to be gained from improving the group’s operating performance and the use of a single platform.
The firm also signed a follow-on agreement to buy two more quarries from the vendors, together with additional mineral reserves, for up to £14.5 million payable in phases over the next three years.
POSITIVE OUTLOOK
Just before Christmas, SigmaRoc reported a 107% increase in revenues for the 11 months to the end of November thanks to prior-year acquisitions and double-digit underlying sales growth and revealed full year EBITDA would be ahead of market forecasts.
The firm said it saw ‘sustained demand in all key end market and customer segments’ with the prospects for residential and infrastructure construction in particular looking ‘very encouraging’ across the UK and Northern European markets.
