SigmaRoc acquires Johnson Quarry Group, two further quarries
By Josh White
Date: Tuesday 04 Jan 2022
(Sharecast News) - Quarried materials company SigmaRoc announced the acquisition of Johnston Quarry Group (JQG) and Guiting Quarry on Tuesday, from Nicholas Johnston, Giantflow and Flowgiant, for initial cash of £35.5m.
The AIM-traded firm described JQG as a "specialist quarried materials supplier", producing construction aggregates and building stone as well as agricultural lime for soil improvement.
Its aggregate products were typically used in infrastructure projects, with its Cotswolds ironstone and Bath stone used in specified high-end housing applications.
The business operates eight quarries and two separate processing sites located across the South West of England, Oxfordshire and Lincolnshire.
JQG has access to 86 million tonnes of freehold and leasehold reserves and resources, giving it an average life-of-mine of over 40 years.
For the 12 months ended 30 September, JQG reported revenue of £14.7m, generating EBITDA of £5.9m, and profit before tax of £3.6m.
As at 30 September, it had gross assets of £22.1m and net assets of £6.9m, primarily in land, mineral reserves and plant and machinery.
The company said the acquisition, which would be immediately enhancing to SigmaRoc's underlying earnings, was expected to complete in the coming weeks, following the satisfaction of certain completion conditions.
On completion, JQG's founder Nicholas Johnston would remain available in an advisory capacity as required, for "smooth" integration.
The board said the acquisition consideration was being funded from the firm's existing resources, including the assumption of up to £6m of JQG's long-term debt and up to £3.6m in plant hire contracts.
As part of the acquisition, SigmaRoc also conditionally agreed to purchase two further quarries, together with additional mineral reserves, for a total potential consideration of £14.5m.
The company said the additional sites had a "strategically attractive location" relative to JQG, and would increase its footprint and market access.
It said consideration for the acquisition of the additional sites was payable in three phases, on the delivery of each of the two quarries and the delivery of the mineral reserves with planning permission.
The group said it expected the additional transactions to complete between the second half of 2022, and the second half of 2024.
"Johnston Quarry Group fits the SigmaRoc model well and I believe the benefits gained will be mutual," said chairman David Barrett.
"As a group, we have focussed on building a portfolio of high quality stand-alone businesses, to which we can add value through our improvement and integration efforts, while maintaining those aspects of each which are unique and successful.
"We look forward to welcoming the JQG team to SigmaRoc and see significant potential to create value in this business over time."
Max Vermorken, chief executive officer of SigmaRoc, described JQG as a "high-quality quarrying group", with an "attractive" geographic footprint and a product range with both architectural and environmental benefits over alternatives.
"The acquisition extends our footprint significantly in several key markets within the UK, while offering the opportunity for further improvement and platform based synergies."
At 1056 GMT, shares in SigmaRoc were up 5.33% at 87.95p.
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