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Tue October 15 2019

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SigmaRoc moves into Welsh quarry group

15 Apr SigmaRoc has acquired a 40% stake in South Wales quarrying group GD Harries & Sons (GDH) and agreed terms for complete takeover next year.

GDH has seven hardstone quarries across South Wales
GDH has seven hardstone quarries across South Wales

GDH operates 17 production facilities, including seven hardstone quarries, six concrete plants, three asphalt plants and a wharf operation, as well as four road contracting units.

AIM-listed SigmaRoc was established in 2016 by an ex-Holcim team with the strategy of buying niche building materials companies to develop a group, much like Breedon has done. Its first acquisition was Ronez, a Channel Islands quarrying and concrete business bought from LafargeHolcim for £45m in December 2016. A year later it paid £12m for Topcrete and Allen Concrete and then another £10m for Poundfield. In December 2018 it paid £15m for CCP (formerly Cheshire Concrete Products).

SigmaRoc has now paid £4.89m for 40% of GDH and entered into an option agreement to buy the remaining 60% for £7.5m on or before 31st August 2020.

GDH has average revenues of £23.4m in recent years and adjusted Ebitda of £3.4m. Held assets have a book value of £26m.

GDH was founded by Gerald D Harries as a haulage and plant hire operator in 1977. It was subsequently built up to become one of Wales’s largest independent suppliers of aggregates by his son Ian Harries, who is staying with the company. It has 240 employees and close to 80 million tonnes of reserves and resources.

SigmaRoc has also agreed to pay the owner of GDH – Ian Harries, Janet Philips and Westerby Trustee Services – a royalty of 40 pence per tonne in relation to GDH's further mineral resources. The royalty will be subject to guaranteed minimum payments of £160,000 per annum but with a cap of £10m aggregate over 12 years.

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Should SigmaRoc not exercise its option to complete the takeover by 31st August 2020, Ian Harries and Janet Philips, the existing directors of GDH, have the right to buy back SigmaRoc’s 40% for not less than £3.5m.

SigmaRoc chief executive Max Vermorken said: "I am extremely proud of what our small team has been able to achieve within only a short space of time. With GDH as part of the Group, we will operate nearly a dozen quarries, 100 million tonnes of reserves and resources, close to 500 people employed, with significant skill, drive and enthusiasm within the various management teams."

GDH chairman Ian Harries said: "Having been approached by several companies to buy the business, SigmaRoc was the only one we engaged with directly due to their business ethos and commitment to our workforce which has over the years been a key factor in driving the business forward.  We are very excited by SigmaRoc's investment in us which will allow us to continue to grow the business into the future, creating job opportunities and continuing to serve our longstanding customers. The strength and depths of SigmaRoc will enable us to drive our business further for which the process has already commenced."

In addition, SigmaRox has appointed Tim Hall, former CEO of Breedon South, to join its board as a non-executive director.

"Tim joining the board is a very positive next step for us,” Max Vermorken said. “As a small team we all contribute to the evolution of our business and adding Tim to that mix will most certainly accelerate our development even further."

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