# SigmaRoc PLC Q&A with CEO Max Vermorken: Full Year Results (LON:SRC)

- Link: https://www.directorstalkinterviews.com/sigmaroc-plc-qa-ceo-max-vermorken-full-year-results-lonsrc/412751650
- Published: 2018-05-24T11:00:24+01:00
- Author: Amilia Stone

**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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