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Good Afternoon Londoner7, have been on the website today, found the recorded presentations to the analysts and investors for 2020 results. Have listened to analysts presentation (44min). Max Vermorken CEO knows his business, though there was a problem with his sound, therefore hard listening. The CFO, joined last year, has a good grasp of the numbers and gave the impression that he is acutely aware how well every part of the company is functioning financially. Was a question on Greenbloc from an analyst regarding availability of raw materials if demand for the increases. He suggested that there would be no problem for the company. Answers to other questions included that profit margins in all areas of the business are constantly under review. Health and Safety is not a cost as improvement in that area leads to efficient working. Future acquisitions? Good companies bought at the right price.
New build homes and low deposit schemes, am not a fan of any scheme to help buying as they just serve to push prices up, rewarding the haves. Regarding the news itself, more likely that the house builders will be marked down first, on the banks mortgage news.
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fdh, as I said there was some good discussion in the Q&A on the Greenbloc. Key for SRC is the IP they have on the product, i.e. what's to stop other supply. This was touched on but I didn't pick it up clearly. I often need to listen a couple of times to get the detail. Shame they don't provide a transcript.
On the FT article. Sounds like a slow news day. New builds have always carried a premium. It's the housebuilders way of snaffling up a share of the tax payers cash government's throw at the sector in the form of Help to Buy, etc. including the latest wheeze. Also, not impressed by the threat of a return to the downdip in 2010-2013. As I recall there was a dip across the economy, which was reflected in house building rather than house building or policy being the cause. I thought if was a delayed reaction to the 2008/9 crash, when new starts were shelved. Projects already in the pipe line carried the industry through to 2010.
I think what the HBF are doing here is lobbying for their preferred position, which is their function. I'm sure they know someone close to the commons that could pull the right strings.
Thanks Londoner7, will revisit the website during this weekend. My previous visit focused on this product as I was thinking of durability, claimed to be better than a block made with portland cement. In view of their respective geographic distribution, don't think there is any reason to not own both BREE and SRC (with their Greenbloc in the PPG).
Did read today that the UK banks weren't going to offer 95% mortgages on new build houses, as they lost some value after being bought. Which could have an impact on the sector, though neither company here, is totally dependent on the UK.
https://www.ft.com/content/e921a438-3532-4ddf-8f5b-06113cf3f762 (subscription required though headline visible)
fdh, I'm also invested in BREE, but take an interest in SCR.
There was some good discussion in the recent Q&A on the Greenbloc. I listened live but I'd guess there's a recording on the web site.
No worries, am invested in BREE but am taking a look at Sigmaroc, with regard to investment. Are there any competing alternatives to Greenbloc?
You are correct, I should have written "Sigmaroc can now increasingly self-fund its growth".
What I like is that Sigmaroc has evolved from funding acquisitions with new equity in the past, which was not exciting EPS-wise, to funding acquisitions with a well negotiated £125m credit facility, to increasingly being able to grow organically thanks to increased profitability and operations.
"can now self-fund its growth"
Read the extract from the CFO's Report on the results, below
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Net debt
Net debt at 31 December 2020 was £43.8 million (2019: £49.8 million), and was refinanced on 21 December 2020.
Bank facilities
In December 2020, the Company entered a new Syndicated Senior Credit Facility of up to £125 million (the 'Credit Facility') led by Santander UK and including several major UK and European banks. The Credit Facility, which comprises an £85 million committed term facility and a £40 million accordion option, will provide the Group with further capacity and flexibility to support its ongoing buy-and-build strategy, as well as reducing like-for-like borrowing costs.
The Group's new Debt Facilities have a maturity date of 21 December 2025 and are subject to a variable interest rate based on LIBOR plus a margin depending on EBITDA. As at 31 December 2020, total undrawn facilities available to the Group via the new Debt Facilities amounted to £63.7 million.
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£63.7m of undrawn debt is available to fund growth.
Impressive 2020 audited results even if no pandemic ever happened. It's revealing of a growing champion that's smartly positioned, excellently steered, innovates and can now self-fund its growth. Projected P/E and EV/EBITDA ratios suggest significant share price upside.