7 - 9 Swallow Street London W1B 4DE United Kingdom Phone: +44 20 7129 7828 Email: info@sigmaroc.com Web: www.sigmaroc.com 1 / SigmaRoc 2019
Expanding in South Wales One of the largest independent family-owned vertically integrated ISO accredited building materials businesses in Wales. It has been operating for over 40 years serving both local community projects and multi-million pound regional projects in the public and private sectors. Strategic footprint built up over decades will prove an ideal starting point for a welsh platform with high barriers to entry. G.D Harries: Key statistics 2018 G.D Harries: Locations Aggregates 7 80mt* £26m Ready Mix Concrete Asphalt Wharf Mineral Reserves Hard Hardstone and Resources assets quarries 3 6 1 Asphalt Wharf Concrete plants operation plants 4 200 ISO Contracting 9001 and 14001 Full time Teams accreditation employees Pembroke Swansea Newport Source : *SLR - Technical due diligence report. The term ‘resource’ refers to deposits outside of the permitted extraction boundary but within the freehold area, that could be worked in a similar manner to the reserves. Cardiff 2 / SigmaRoc 2019
GD Harries history from inception Aggregates Asphalt Ready Mix Concrete Contracting Port side Founded : Growth : Diversify : Acquisition : Growth : Established as Contracting Purchase quarry Purchase of F H New Ready-mix small haulage becomes part of and asphalt Gilman vertically plants opened and plant hire Rock plant integrated operator assets 2016 1977 1998 Growth of Ready Mix Creation of G.D Harries Creation of quarrying and Asphalt Concrete 1995 2011 Creation of Contracting Acquisition of F H Gilman 3 / SigmaRoc 2019
Investment criterion #1: Asset backing The acquisition of G.D Harries is backed by £26m of fixed assets that includes a large land and mineral portfolio as well as an extensive range of fixed plant and mobile equipment. Aset footprint is unique and difficult to replicate due to high barrier to entry in the area and provides backing with a solid foundation for expansion. Rock: Asset backing in the form of mineral holdings, land, plant and machinery as well as distribution fleet £0.2m £3.2m £8.5m £26m £14.0m Land & Mineral Plant & Machinery Fleet Fixtures & Fittings Source: https://beta.companieshouse.gov.uk/company/07778287/filing-history 4 / SigmaRoc 2019
Investment criterion #2: Market presence South Wales is a market with a large number of small independent quarrying and RMX companies where there has been little consolidation, unlike in England. G.D Harries is the largest and most integrated independent businesses in South West Wales. Regional Aggregate & RMX production volumes Top Regional aggregate producers by volume Source : BDS, IoQ, South Wales Aggregates Working Party Pembroke Swansea Top Regional RMX producers by volume Cardiff Rock Sites Rock Majors Independents Competitors 5 / SigmaRoc 2019
Investment criterion #3: Market structure Welsh government has a proactive approach to promoting enterprise zones leading to infrastructure development and increase in housing demand. Both private and government large and mega projects will increase demand for building materials which historically attracts the Majors, leaving other higher margin projects for the independents. Key future focus areas are on education, utilities and transport networks. South Wales Local Government infrastructure budget 2003 Recession 2016 Regional Construction Market 15.5% Growth YoY in regional construction 19% YoY Increase in new home registrations £3bn Regional construction projects Pembroke >£700m South Wales LA major projects pipeline Swansea >£1.2bn Mega project proposals e.g. M4 Corridor >£250m Coastal defence Aggregates Ready Mix Concrete 50% Aggregates go into RMX and Asphalt Asphalt Wharf Construction Projects 6 / SigmaRoc 2019
Investment criterion #4: Financials £23.4m £3.4m £26m ` ` Revenue* Adjusted EBITDA* Tangible Assets* 2015-2018 2015-2018 2015-2018 Profitability initiatives: 1. Sourcing of raw materials to reduce input costs; 2. Operational improvement initiatives; 3. IT and management reporting systems overhaul; Source: Management Accounts and Management information *Averaged 7 / SigmaRoc 2019
Investment criterion #5: Strategic fit G.D Harries Limited is a solid, vertically integrated building materials company with an extensive footprint in South-West Wales. It is the product of decades of hard work by the main shareholders’ family and covers all streams of the construction materials offering. Acquisition Checklist: Invest, Improve, Integrate ✓ Asset Backing Asset Value of £26m - 17 operational units - around 80mt reserves and resources; ✓ Market Potential Significant major projects and potential for expansion to the East between Swansea and Cardiff; ✓ Market Presence Leading market presence with organic growth potential using footprint as a base; ✓ Strategic Fit & Synergies Major self contained platform with growth and improvement potential and solid asset backing; ✓ Integration & Improvement Integration work required with help of incumbent management and high profile regional MD; ✓ Purchase structure Funded through a mix of cash and the absorption, refinancing or winding down of credit facilities; Earnings accretive on current performance with significant additional EPS growth as value ✓ EPS Growth captured; Margin defence in downturn due to high variable costs, lean operating costs and operational ✓ Managed Risks gearing; 8 / SigmaRoc 2019
SigmaRoc management structure SigmaRoc plc operates a lean management and reporting structure with each platform being managed semi-autonomously by a managing director reporting directly into the CEO. G.D Harries will become the core of the South West platform sharing competences, customer accounts, product expertise and back-office setup, managed by its own board reporting directly to SigmaRoc plc ExCo. David Barrett Max Vermorken Garth Palmer ACA Patrick Dolberg Dom Traynor Tim Hall Executive Chairman Chief Executive Officer Chief Financial Officer Non-Executive Director Non-Executive Director Non-Executive Director Co-founder - 45 years in Co-founder - Head Chartered accountant and Former CEO Holcim USA, Partner corporate law at Former CEO of Breedon industry, co-founder of Lafarge - Holcim merger partner at advisory firm Group Exco member West Druces, specialising in South and MD Tarmac London Concrete in Northern Europe Heytesbury Corporate Europe at Holcim AIM listings and M&A. Western Region Charles Trigg TBC G.D. Harries Board of Directors Post Transaction: Technical Director Finance Director Ian Harries: Owner who built G.D. Harries to present size and scope Co-founder - Group Capex Holcim Northern Janet Phillips: Business Manager G.D. Harries Europe David McClelland: MD South West SigmaRoc plc David Barrett: Chairman SigmaRoc plc Mike Osborne David McClelland Mick Roddy MD Ronez Platform MD South West UK MD PPG Platform Former director in Former MD Tarmac Commercial and regional Aggregate Industries and managing Central management roles in Hilti, Tarmac Materials region Lagan and Cupa Group 9 / SigmaRoc 2019
SigmaRoc post GD Harries Acquisition Post the acquisition of GD Harries, SigmaRoc’s footprint will include 100m tonnes of reserves and resources at 11 quarries with significant quarrying life. The group will have grown to operate 26 sites across the UK with a significant quarrying footprint and the opportunity to expand. The group will employ close to 500 people across three platforms. SigmaRoc: Key statistics 100mt 26 11 Reserves and Plants and Hardstone resources* operations quarries 3 7 500 Operational People Acquisitions in Platforms Employed two years 173.8m £34m £79m Shares in Market Cap at Agreed debt circulation 46GBp share price facilities Source : *SLR - Technical due diligence report. The term ‘resource’ refers to deposits outside of the permitted extraction boundary but within the freehold area, that could be worked in a similar manner to the reserves. 10 / SigmaRoc 2019
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