Good morning, everyone. Thank you very much for joining the 2022 SigmaRoc annual results presentation this morning. I'm very happy you could make it up to this fabulous room. I've got with me David Barrett, Chairman, and Garth Palmer, CFO, and in the room two further founding members of our team, Fons and Charles.
We've got a few slides for you this morning, which we will quickly run through, a financial section presented by Garth, and afterwards some time for Q&A from here in the room and hopefully from the live webcast as well. To start, with a probably bit of a cliché these days, 2022 was an extraordinary year.
Extraordinary for us in particular because it allowed us to really demonstrate that the platform we've been building for 6 years since starting this business is really starting to deliver what we hoped it would, which is a platform for enhanced growth, potentially compounding growth as we go forward. It's got 5 main strands to it. First and foremost, we are a North European business.
We're diversified in terms of geography. We're diversified in terms of end markets. That has allowed us to mitigate any risk that we've seen across the year so far. Secondly, since the beginning, we've tried to keep this platform very agile, very decentralized, very localized. It has allowed us again to be much quicker on the ball when things start to change as we have seen in 2022.
Thirdly, we've had an acquisition strategy from the beginning, and that's again delivered further, very interesting value for us. Four acquisitions since 2021, with a large one in Nordkalk in July, which we have integrated and subsequently have been generating the synergies from over the course of last year. That M&A strategy keeps going, a very active 14 projects or so currently ongoing, some organic, some pure acquisition, so that we can keep going the integration work and the generation of value from our M&A pipeline. Lastly, the fifth strand is ESG.
We saw very early on that from an ESG perspective, we could not just follow the trend, but also be ahead of the game, certainly in our sector, and there's a few slides on that further down in the presentation, which I'm happy to take you through. If you translate this into numbers, these are targets, 3-5-year targets that we set in July of 2021.
Good, sustained long-term growth, well ahead at 90% of our target of 5%. Obviously, there's some dynamic pricing in that, but the rest was taking of market share using our product in different industries. A good margin, 22% net margin. That is, if you take away or take out the contractual pass-through of energy that we have in some contractual structures, nicely ahead of the 20% target that we had.
GBP 0.08 earnings with a long-term target of GBP 0.08. I'm very pleased to have hit that number. Translate this into cash generation, 87% cash conversion ratio, GBP 54.5 million generated last year, which we obviously used into the business.
Generates a ROIC of round about 11% with a nice trajectory up to 15% as we de-gear, and then a leverage ratio well below the 2 times number, 1.77 as we always aspire to do. A fairly busy page here to give you a bit of context of what these numbers actually mean. This is the evolution of the group since day one.
At the top, a large number of acquisitions we've made, all every time at a very attractive multiple. We've integrated those into our group. We've delivered the synergies from it. That shows you this uplift, which you see at the bottom of the slide. When you translate that in cumulative average growth numbers, we get to 80% growth in revenue, over 80% in EBITDA, and 170% when it comes to earnings per share.
Very pleased with all these statistics, especially if you consider at the bottom the leverage ratio we've held over the last 6 years, never above 2, really, never used high leverage to drive earnings. A very, very pleasing picture here on this page. If you look forward, a few interesting points.
We have had four key mottos that we've sort of followed since day one. We invest. We invest in good businesses. We buy. We bring them into the group, and we improve them. The statistics there have been very attractive, 40% EBITDA growth for everything pre-Nordkalk, Nordkalk being obviously very recent, and Nordkalk itself at today stands already at 10%.
We integrate these businesses into little platforms to drive further synergies to maximize margins and therefore generate further cash we can then reinvest. We innovate. We innovate from a digitization perspective, from a decarbonization perspective, and usually at a faster pace than most others in the sector.
As a result, we believe that the platform for enhanced value creation, hopefully compounding value creation, is really established now across North Europe, to do exactly what we've done the last 6 years from here on. I'd like to pass you on to Garth for the financials.
Thank you, Max. Good morning, everyone. I'm very pleased to report strong 2022 for SigmaRoc. Significant progress was made. We're well ahead of our expectations, exceeded all the targets we set from the outset. In terms of financial performance, we're reporting GBP 538 million in revenue. That's up 98% year-on-year and up 19% like for like.
EBITDA of GBP 102 million, up 106% year-on-year and 9% like for like. There's a bit more detail on revenue and EBITDA, which we'll get into on the subsequent slides. Net margin, which adjusts for contractual pass-throughs of almost 22%, up 140 basis points year-on-year. Rounding out earnings per share of just over 8 pence per share, 49% increase year-on-year.
From pre-Nordkalk in 2020, that's an 80% increase in earnings to the group over a two-year period. Really strong progress there. In terms of balance sheet, strong cash generation, free cash flow of GBP 54 million, and a cash conversion ratio of 87%, which combined with our strong financial performance and that cash generation translated into a return on invested capital of 10.7%, up 310 basis points year-on-year.
As Max touched on, clear path towards our medium-term target of 15%. Rounding that out, net debt of GBP 194 million, excluding IFRS 16, that's GBP 177 million, comfortably below our two times target leverage ratio. Really strong performance demonstrates the resilience of the group.
It was a difficult operating market, also sets us up for growth moving forward. Looking at revenue in a bit more detail, our revenue bridge, GBP 272 million in FY 2021, grew that 98% up to GBP 538 million. Organic growth of that was 32% organic growth, 6% in the Northwest, 5% in the West, and 21% in the Northeast. That growth is underpinned by volumes.
Volumes are up 1% like for like. Pricing power, and then in the Northeast, that extra is really the contractual pass-throughs and the dynamic pricing. On top of that, M&A added a further 66%. That's 6% in the Northwest from Johnston and RightCast, which were acquired during the year.
1% in the West is a full year of B-Mix, and then in the North East, obviously it's Nordkalk, full year of Nordkalk and La Belonga. Strong revenue growth driven by acquisitions that we made and then effective operating thereafter. Bit more detail on revenue in terms of our diversification. We have broad diversification across the group in terms of geography, customer, product and markets. That diversification really helps give the group stability and resilience.
A good example is, I guess, in U.K. house building, there's obviously a lot of concern there. Within our group, 55% is construction, 25% residential. If you drill down to that, about 8% is U.K. exposed, and then within that, 3%-4% is low-end housing and RMI. First point there is we have low exposure to that specific area of concern.
Also in 2022, we were able to compensate for softening there with stronger infrastructure and also better construction in other markets such as the Benelux and the Baltics. The broad diversification gives us platform for future growth. Looking at EBITDA evolution for the year, EUR 49 million in 2021, that grew 106% to EUR 102 million. 22% of that was organic, 4% in the Northwest, 4% in the West, and 14% in the Northeast.
That's underpinned by, again, volumes and pricing power, also effective hedging, operational improvement programs, and cost-saving initiatives across the group. Obviously, Nordkalk was a big focus with its first full year.
A lot of effort went in there and helped compensate with some of the difficulties we had in Q1 with some of the customer strikes. The balance obviously from M&A, 85%, 12% in the Northwest is Johnston and RightCast, minor contribution from full year of B-Mix in the West, and obviously Nordkalk in the Northeast.
Strong EBITDA growth on the back of our acquisition strategy and our operational improvements that we pushed through on those. A little bit more detail on the income statement. GBP 538 million revenue, obviously touched on. Cost of sales of GBP 422 million, translating into profit from operations of GBP 116 million. On the right, we've got a breakdown of cost of sales as a percentage of revenue year on year.
You can sort of see, obviously, given the dynamics last year with the high inflation and cost pass-throughs, materials and production up from 30% to 32%, energy from 10%-14%, distribution and selling from 7%-8%. That's obviously just a function of higher cost base and having to work that through in the top line with the revenue growth.
Labor, the movement there isn't compression because of higher costs elsewhere. It's the dynamics with Nordkalk. Nordkalk has a higher, much more energy-intensive processes, so a relatively lower labor component. So it came into the group at about 10%, whereas pre-Nordkalk, the group is about 20%, so that's naturally converging. Below profit from operations, admin expenses of GBP 46 million.
The growth there is just through acquisitions, integration of Nordkalk, full year of Nordkalk, full year B-Mix, RightCast, Johnston, and La Belonga. Finance costs of GBP 9 million is twofold. Obviously, larger debt profile. We completed Nordkalk at the end of 2021 and used about EUR 200 million of debt there. There's higher debt footprint, a full year, but also higher cost of debt.
We closed 2021 with an all-in finance cost of about 2.5%, ended 2022 circa 5%. Other net gains are share of earnings from associates, gains from sale of property, plant, and equipment, and some Forex adjustments. Tax expense of GBP 9 million is up obviously on the higher earnings profile of the group. It's relatively lower than expected, about 14% of profit before tax.
That's a function of, utilization of top co-costs in the UK with the addition of Johnston. We get a full benefit there, and also, capital allowances across the UK. That translated into a profit of GBP 54 million, and taking out the non-controlling interest is a touch over GBP 51 million. On 638 million shares for the year and earnings per share of GBP 0.08. Really strong financial performance for the group. Moving on to the balance sheet, looking at our net debt evolution for the year. We finished 21 at GBP 164 million net debt following the Nordkalk acquisition. Obviously generated GBP 102 million in underlying EBITDA.
We had a GBP 7 million positive working capital movement in the year, paid down GBP 11 million in tax, and GBP 14 million in net CapEx, which I'll give a bit more detail on in the next slide. We deployed GBP 58 million on acquisitions. That's including cash paid, any deferred consideration, debt absorbed as part of the acquisition, net of cash acquired.
The breakdown of that is about GBP 49 million for Johnston, GBP 3 million for RightCast, and GBP 6 million for La Belonga. Paid out GBP 9 million in net finance costs and GBP 19 million of other outflows. That's underlying cash costs, loss on other translation of the euro loan. We had about a GBP 6 million hit there, which was with the way the euro evolved at the end of last year. That gets translated at year-end.
There's some dividends to non-controlling interests and some other adjustments for IFRS 16 and financial derivatives. That translated into a closing net debt of GBP 194 million, 1.93 adjusted leverage ratio. Adding back IFRS 16 leases of GBP 17 million takes us to GBP 177 million and below that 1.8 times. Really strong cash generation, which supported our acquisitions in the year and enabled us to maintain a leverage ratio below 2 times.
A little detail on the CapEx and that net GBP 41 million that we touched on. GBP 26 million of that is maintenance CapEx, preserving the existing earnings footprint of the group, keeping plant and equipment in good working order, replacing if as and when necessary. Target that to be about 85% of DNA, came in at 87%.
On top of that, we had some specific spend around resource extensions across the Channel Islands, Belgium, and Finland. That GBP 6 million added an extra 13 years of production to the group. That the maintenance CapEx and the resource extensions, technically that's maintenance as well. We put that at GBP 32 million, and that's sort of the figure we're using in our free cash flow.
Then on top of that, we had GBP 19 million in growth CapEx, which is itemized on the top right. GBP 12 million and growth CapEx obviously adds to the earnings footprint of the group, either through top line or through cost savings. EUR 10 million of the EUR 12 million land purchases was the B-Mix option that we exercised. So that secures the operating site there for B-Mix and reduces its overheads. We also then sold half of the land.
It was about 11 hectares. We sold 5-6 of that, which you see in the divestments, and we'll touch on in a second. The balance of the growth CapEx was EUR 4 million on plant capacity increases in the Nordics to support the cement majors and EUR 2 million to internalize haulage across the PPG platform. That reduces their cost base, and de-risks in terms of reliance on third-party contractors.
Lastly, EUR 1 million was spent on alternative fuel conversions for plant across the Nordics and Poland, so shifting away from gas, alternative fuels, biofuels. There was savings there from a cost perspective and also helped reduce our CO2 footprint. Offsetting the outlays, we had EUR 10 million of inflows from divestments.
We obviously had an active divestment program at the end of last year to generate cash, sell off any non-core. I've touched on the four and a half million GBP of that GBP 5 million is the B-Mix land that we sold for a half a million GBP profit within the same year. The other GBP 500K was a disused quarry in Belgium.
The remainder, GBP 5 million, was plant and vehicles across the group. That's mostly U.K. and Benelux. That's excavators, tippers, loaders, et cetera, that were surplus to requirements and were sold to generate some cash, which strong reinvestment back into the group, and that will translate into future earnings growth.
Just to round out, the targets we set when we completed Nordkalk at the end of 2021, just to reiterate those and how we performed against them, obviously targeting 5% compound annual growth on revenue, we achieved 19% like for like. If we adjust out the contractual pass-throughs, then that's about 5%-6%, we're well in line with that target.
EBITDA margin, we're below on EBITDA margin at 19%, but adjusting for those pass-throughs on the same basis, then we're well ahead at 22%, that's ahead of where we sort of expected when we did Nordkalk. EPS growth was sort of implied through the LTIP, the target there was to hit 8p in 2023. We managed to achieve that a year early.
As I touched on, that's sort of 80% earnings growth over a 2-year period. Cash conversion ratio targeting 95%, so 87% for the year, so sort of in range. Free cash flow of over GBP 50 million, obviously had GBP 54 million for 2022, so strong cash there. ROIC of just short of 11% with a 15% target and a clear pathway to get to that. Achieving all of this while maintaining a leverage ratio of below 2 times, which we did. Ahead of plan, medium-term targets either achieved or well within reach, and that sort of rounds out the finance piece, and I'll hand you back to Max.
Thank you very much. A few slides on strategy and operations to round out this presentation. Just as a general sort of set the context a bit, the group currently looks as follows. We have 10 platforms of activity across North Europe. We've grouped them for ease also to understand how the reporting works into 3 regional setups. The UK, which is called Northwest.
The Benelux sort of expanded region there, it's called West. The Northeast, which is the Scandinavian part, the Baltic States and Poland. Obviously plenty of the map still not colored as you can see. The way we make progress towards the target that we have, which is to be a specialist materials group with quarries at our heart, is really these 5 things.
First and foremost, we have 1.6 billion tons in mineral reserve, nicely up from last year. These mineral reserves are sat in quarries. They give us pricing power. They give us a barrier to entry, because quarries are, one, hard to come by specifically in this region and hard to open up new.
Secondly, the exposure we have in terms of end markets is rather broad, both geography-wise, 12 countries, and then in terms of products, over half a dozen different product groups that we are currently in. That allows us to really target a whole bunch of strategic and structural growth niches where things are happening faster than in other markets, based on a number of changes in operating conditions.
We address this, these markets with a decentralized model, which is just key. It's the agility, the operational agility which we need to be able to shift gear very quickly when things change. As a result of those two things, we are able to generate both strong margins and good cash generation, which again allows us to continue our pipeline of M&A work, and continue our investments.
Lastly, we try to be market leading when it comes to innovation, especially in terms of digital, product innovation and ESG, and I'll come to a few slides on that in a minute. If you sort of dig deeper into these various points, let's look at the markets first.
These various types of market and the various types of jurisdictions have really three base classifications. On the first, growth niches. What are they? They are small markets where a sudden change in market conditions and product availability allow us to achieve higher growth, higher margins than normally.
For instance, the use of paper and board to replace plastic for packaging. For instance, the availability of fuel types and what you then need in terms of limestone to scrub flue gases if you use coal or more coal. For instance, using more filler in the making of plastic, so that you use less hydrocarbons. These are sort of the ideas that we have there, and us in our various jurisdictions, we're nicely able to track those. That's the first class.
Secondly, we obviously have our scale markets, the markets where we are fairly large or even on a localized basis, we're a fairly large supplier, therefore a reliable supplier for major construction work, major residential work, infrastructure. The trends there, obviously the energy infrastructure currently needed, macro trends, demography, and all the rest allow us to take advantage of where we are based. Lastly, as a quarrying business, we have a quarry which gives us all sorts of product.
We like to monetize everything we make, that allows us to search for alternative uses of the products that come out of these quarries to have maximum yield of the product that we produce. If you look into the second part then, operational agility.
All the platforms we currently run on the horizontal axis and some of the operational levers on the vertical. It's a fairly busy slide. There isn't a blueprint for what we do. What there is a number of levers that we pull systematically. They are obviously reviewing commercial strategy, reviewing the operations, reviewing what plant and machines we use, and then bolting on more investments and more businesses into the platforms.
Each of the various platforms gets a specific treatment along those five axes, six axes. What that then leads to, if you put this on a graph, is these numbers. The businesses we bought pre-Nordkalk, because Nordkalk is obviously fairly recent, we've increased the EBITDA by about 40% in the years that we've owned them.
An average acquisition multiple of about 6.9 drops down to 4.9 for those companies. Nordkalk in 2022 was already up 8%. It's trending higher now, taking that 6.9 acquisition number to about 6.4. The group in total, inclusive Nordkalk we're already at 20. Obviously EBITDA multiples is good to look at. The other point to look at is what happens to return on invested capital.
We have a number of statistics there on the far right. By far right, your left. Margins are solid. Cash conversion is good. Free cash flow is very strong as well. We have GBP 180 roughly in net debt currently. Imagine you were not to use the free cash flow for anything other than de-gear.
You see a de-gearing pattern that happens through the GBP 54 million cash generation. Translate that into a ROIC graph on the right, you get this sort of illustrative evolution to 15% and up from there by our sort of 5-year target horizon as we set in 2021. Obviously, we think that we can utilize the cash we generate rather effectively from an M&A perspective, and we did so in 2022 with 3 nice deals, Johnston, RightCast, and La Belonga.
We sort of classify those into 3 buckets, either high growth products, geographic scale penetration we try to achieve, or an extension of the product range, as you can see on the right. The 3 that we did in 2022 achieved all those. We've continued that now in 2023 with 14 odd deals that we're working on.
Two have been closed already, Goijens in Belgium. Purely scale-based, purely region-based in the northeast of Belgium. Juuan Dolomiittikalkki in Finland to give us a further extension in a high-growth niche, which is agricultural lime, and also expand further up into Finland.
There's another 8 or so currently actively being closed in primarily the northwest and the northeast, and we'll come to market with updates as they get closed. The point I flagged early on in the slides, which is ESG leadership. A few ideas that we delivered on this year. The key point we always try to make is ESG is something that everybody has to focus on, obviously.
There is also a way, by being a leader in this field, to make them strategically very relevant for the group and for our footprint. The JV with ArcelorMittal, the partnership with Aqualung, key examples. They not only help us decarbonize the business, but also strategically move the footprint forward. SBTI, we've signed up to. Green Block, I'll come to in a minute, 'cause that's quite an interesting case at the moment.
We've got further ideas. Hyvis, this is our audit and monitoring tool, which we have built in-house. Allowed us to decrease our incident frequency rate by another 13% year on year. Very pleased with this, and obviously proactively reviewing both board oversight and policies to upgrade our governance. I mentioned Green Block. A few statistics on Green Block.
We launched it in 2020. We spent most of that year to get the required regulations and permits in place to make sure that we could validly say that this was indeed green. We started to sell it towards the end of 2020 and into 2021. 2022 saw a 23 times increase in the amount of Green Block product that we sold across our group.
Translate that into numbers, 22% of everything we make in concrete in the UK is Green Block-based for the year 2022. 40% of all the infrastructure projects that we've delivered in 2022 have Green Block technology as the basis. Green Block as it stands reduces up to 80% of CO2 embodied in concrete. The 22% up at the top here will probably evolve towards the 40 mark across the year 2023.
A very nice example of something that we developed internally, that we launched, and that we now can legitimately say have quite an advantage over in terms of market presence, even as a modest-sized business as we currently are. A few points on outlook to finish off this presentation. First and foremost, we believe that the strategy that we've been following since setting this business up 6 years ago from a blank sheet of paper is starting to really deliver and really show what it can do.
A diversified business, lots of different end markets, lots of geographies, with an agile structure so that we can actually take advantage of the various changes in trends that happen. That's the first key point that we will build on further across this year.
Secondly, the year 2023 is by no means an obvious year. We need to be vigilant towards what happens in the end markets. There are markets that are over, there are markets that are under. Overs and unders as you always have, headwinds and tailwinds. We stand here at the end of Q1. We're ahead of plan in terms of budget. We're ahead of plan in terms of volumes.
And that is again us allowing us to utilize these various end markets so that we can really, really drive and follow these structural growth niches. Softer demand, obviously people talk about this in RMI, in some, in some spending in the residential and recently real estate in the U.K., in Finland, and in Sweden as well a little bit. The exposure to these sorts of markets in our group remains limited.
Lastly, the project pipeline we have, organic and M&A. We started the year with a pipeline of 14-odd projects we are currently closing out. That's going quite nicely, quite well. Two done, the rest will come in by the end of certainly by the end of this half, this first half.
As we move on, we generate more ideas. We've looked at 130 different M&A ideas since the starting of this business. We've only picked out those that we have closed so far. We automatically generate new ideas by the end of this calendar year so we can continue to expand our group from a strategic perspective and from a footprint perspective. Closing comment really.
Well positioned for long-term growth, good margins, good exposure to markets that give us opportunities, and good and solid cash generation. This completes the slides for today. I thank you very much for your attention. Happy to take any questions from the room. I'll go sit down there. Charlie?
Morning. It's Charlie Campbell from Liberum. Two, 2 or 3, if I can. Just in terms of pricing, just wonder if you can help us on the price effect in 2022 and what we should sort of think about 2023 as that sort of feeds through, or whether any of that reverses already. Second question on Dimension Stone.
I've understood that it, that business has been helped by high shipping costs from Asia, which has kind of closed out some of that. Obviously shipping costs are much lower again, so just wondering whether that comes back and that's a risk to that business. Thirdly, just any update on sort of timing and economics of Dunkirk as well?
'Cause a few months since you announced it, so just wonder if you've sort of firmed up any of those numbers.
Yep.
Thanks so much.
You want to take the first one?
Yep. Yeah, in terms of revenue in 2023, obviously energy has come off quite significantly, that's having an immediate impact on contractual pass-throughs. We are seeing our revenue top line come down. Margins are coming up. We'll see how the year evolves, but if that trend continues, then it'll be we see it as a net positive. We're not giving away any pricing elsewhere at this stage.
All right. Dimension Stone. You're completely right that the disruption in the logistics globally was helpful from that perspective. What we've done is, from a commercial perspective, really, worked in terms of the way we present Dimension Stone, the way we sell Dimension Stone to make sure that it is the product of choice. What helps in that is the sustainability trends.
It's a local product in many, in many of the markets that we sell, in the main markets that we sell into. As the imported materials started to fade, they got replaced nearly automatically by the indigenous materials that we, that we now have. Now, the presentation of the material as a high quality, high class, product of choice for many of the applications actually starts to, starts to help with markets farther afield.
For instance, the U.S. starts to open up to us, we're starting to ship there, markets further away from the sort of the northern regions we sell into. In the U.K., it starts to get traction. I believe that the way we've reviewed our marketing strategy and the positioning of the product helps us in the long term. very really pleased with that. Dunkirk, we announced that in August, September last year.
We're going through the permitting phase, which is always a requirement. We're in the port of Dunkirk near the steelworks, but you still need planning permission. That's being worked on currently together with the ArcelorMittal group. Going very well. As soon as that permit is finalized, the final designs of the various setups are also finalized. That's the right time for us to then update on the economics of it.
Sure.
Morning. Christian York from Midas. Three questions from me, if that's okay. First of all, just an update on how you view your cost of capital in terms of M&A and what that means in terms of potential acquisitions that you look at. The second, you've touched on sort of residential exposure, but maybe just sort of high level. If we look at the group's exposure, how should we split that by geography and between RMI and house building? Then just finally, an update on Aqualung and activity happening there. Thank you.
Yeah. Garth two for you, I think.
Yep. The RMI, I mean, it's split. Obviously, as we touched on, 25% is residential, 8% of that's the U.K., and then the balance, it's across Benelux. I don't actually know off the top of my head the exact splits. Is it 5?
Eight, eight percent in the UK, five in the-
The Baltics.
Yeah.
Essentially, obviously there's been softening in the UK. Our proportion of exposure there is fairly low. We've had really strong, particularly construction in the Benelux. We're not seeing any slowing down elsewhere at this stage. Not really sure. The softening we have in the UK is being compensated for by infrastructure and stronger performance elsewhere. The Baltics are flying as well.
As is Poland.
Yes.
That's the beauty of the setup that we have is that we the quarry product we make can go either left to an infrastructure project or right to a residential project, and that is true everywhere. The PPG Group in particular, as soon as we saw, 'cause we have a block business in there, as soon as we saw softening coming in in the sort of residential markets here in the U.K., we started to really shift the output there towards more infrastructure projects, bigger projects that we could.
That was just simply taking the sales teams and driving their focus towards there. As a result, the PPG Group as it stands, delivers exactly the numbers that we hoped it would, but just a different product mix. Belgium. That's also one of the reasons why we went to Belgium, is it has a history of being very steady from a residential construction perspective. The structure of the market is different. There's less dominance of house builders, of large scale house builders.
It's much more individual projects. That allows it to be much more fragmented and therefore just individuals build their own homes and keeps the market there more stable. Poland is flying and has done as the Baltics are. Finland and Sweden have a bit of softening, a bit like in the U.K. The market structure there is bit more towards what the U.K. looks like. Again, similar thing, big quarries that can sell into all sorts of end products, and that's what we do.
I think our view on that, obviously our cost of debt's come up, but, and the share price has depressed a little. We don't as far as execution and strategy, we're not changing anything, and we have no intention. You know, we obviously did that fundraise, so that sort of that was to smooth out some seasonality in our cash flow. We have no expectation of needing to go back to markets for any acquisitions. We'll be self-funding from here.
Final one, Matt.
Aqualung. Aqualung is the first setup is either on a ship towards the north or already arrived there. It needs to be hooked up to the first kiln. We've promised Martin Bains, who is our Group Industrial Director, that on his birthday, which is end of April, we would be filling a balloon with CO2. As soon as that's done, we will run a few months of trials to sort of really get it properly set up. As that then confirms what we see, we can then go on and expand further from there.
Thank you very much.
Thank you.
Yeah, Harry Goad from Redburn. I think I've got 2 or 3, if that's okay. First of all, just on volumes, current trading. I think you say sort of trading is in line, outlook sort of optimistic for this year. Talk about January and February.
When you say sort of in line, does that mean volumes sort of ahead year-over-year, or maybe just a bit of color on, I guess, that and what, where you see volumes going for this year within that sort of organic mix? Secondly, just on expectations for sort of fixed cost, I guess inflation 'cause energy's coming down. I suppose wages, things like that probably going up. Maybe some color on how that works in the pricing dynamic in that
In terms of when you're going to customers, is that pricing that goes up sort of underlying, but then energy comes off and the surcharge, just a bit of color around that? Then just certainly on the hedging policy, just a reminder of the policy that's in place, how hedged you are for this year, and maybe also maybe for next year, just a bit of color on that? I guess the bottom line being how long does it take for the positives of energy coming back to sort of feed through to sort of profits and margins?
You're off the hook, I think.
Sorry.
Volumes, we're up like for like year on year. Obviously, we had some volume depression at the start of last year. In terms of internally, we're pretty much in line with expectations, though. Trading well there. In terms of pricing, and how the pass-through mechanisms work, it's most of that, obviously the contractual pass-through is, well, all of it is in Nordkalk in the northeast.
That's simply just a function of, you know, whatever the price incurred in a given month, that just gets invoiced through to the customer. There are some other alternative arrangements where, you know, there's a look back, by a quarter, you know, and the pricing gets all monthly or quarterly depending. There can be some timing differentials there, but essentially it just gets sent through.
As energy prices come off, yeah, it sort of automatically adjusts within a sort of 2-3 month period. There was some soft, you know, energy prices started coming off a bit towards the end of December, and we started seeing that in January. In terms of hedging, right? Yeah, hedging, the biggest exposure to energy is obviously, again, in the northeast, the higher electricity consumption in the Nordics. We have a active, a third party that actively manages a portfolio for us with a mandate. We're currently at about 70% hedged on our electricity requirements for the, for this year.
There's the mandate then is they have ranges they can operate within. It sort of scales, so 60%-80% in the current year that we need, and then it reduces by 20% out 4 years from there. We're quite comfortable with our hedging position. They do, they obviously actively manage it and trade it. We're on the upper end, towards the end of last year.
They've scaled that down. We got down to about below 60%, and obviously as it's softened up, they've built the position back up. The other exposure, I guess, main is Poland. Obviously, we heavily reduced our gas requirements, so that's only 20%, and we're hedged out just on an annual basis there.
Fuel oils are very difficult to hedge. We've looked into it, but we've sort of taken the view it's simpler just to take spot.
Thank you. Clyde Lewis at Peel Hunt. I think I've got 4, if I may. Just wondering if there's an update on the Swedish land issue and where we are in that process. It'd be useful to sort of understand where you've got to on that front. Second one was on CapEx plans for this year. It'd be, again, useful to sort of talk about the number, the quantum, but also maybe just remind us of the bigger projects within that.
The third one was probably on the 5-year targets. You're only just into them, but you've obviously got to quite a few of those targets already. Are you actively starting to think about rebasing some of those sort of benchmarks in terms of sort of where you want to get to?
Can you help us in terms of where you wanna try and go with those? The last one was on M&A. Obviously, you've flagged the 8 projects that you said you're looking at, the northeast, northwest. What's the sort of other pipeline starting to look like? Are sellers more interested in selling or less interested? How are they, their price expectations changing? How, I suppose, is that secondary pipeline starting to develop?
Yeah. Yeah, yeah, good. The land piece I can, I can tick off quite easily. We won a court case in Sweden because a potential future quarry that we had was converted to Natura 2000 land number of years back. We felt that that wasn't a fair way of dealing with that land and the quarrying aspirations that we had there.
That case in the courts was won. There's now a period of appeal until the 4th of April. We're waiting to see what the state will do. Once we know this thing is going, we can then update either that we're back into an appeal process or not, in which case then the case is closed. That's the Swedish point. The CapEx-
CapEx. Yeah. CapEx, maintenance CapEx should sort of be in line with 2022. Then obviously we've, you know, got these growth initiatives, so the Lendase asphalt plant. There's some work ongoing in the Nordics. That is probably gonna be about a GBP 10 million in growth CapEx for the year, maybe a touch higher.
Yeah. Then there's a few other big-
It'll be similar to what we had last year, but without the divestments offsetting.
Yeah.
Well, there is a sale of plant, processing plant in Poland.
Yeah. We're actively on that. The mix will look fairly similar to what we had in 2022. There's obviously a number of bigger projects that we flagged, new crushing installation in Belgium, but that's really only for 2024, so that doesn't impact 23 yet. The rest is fairly run-of-the-mill, CapEx type investments to keep the business going. M&A-wise, at any point in time, we sort of have, and that's always been the case since day one, sort of six, seven deals on live.
We grouped a portfolio together of a larger number in through 2022 because there was simply no appetite nowhere because of all the uncertainty to do much M&A work. That led to a larger number of projects towards the back end of last year and into this year, that we hoped to close because of A, the valuations, B, the type of project, where they were, what they would do for us. That pipeline we're going through. We automatically constantly come across new ideas. We're in 12 different countries, and each time we buy something somewhere, someone crops up and says, "Oh, well, I saw that you bought this.
Would you mind looking at this for me?" That pipeline is fairly similar in terms of size and scope and scale and location as what we're currently running through. I think the targets are the last one. Trick question. Thank you very much. So these were three to five-year targets. We'll see what the year 2023 brings for the first half for sure, and then we'll review at that point in time. We're quite pleased that we managed to get this far this quickly. If you'd asked me in January 2022, "Will you reach your three to five-year targets in 2022?" I would have said no.
We were looking at a major strike, plant breakdowns, and then the Ukraine war started, and the energy and this and that. We really didn't think that we would hit them this quickly. It is really a testament to the quality of the businesses, the quality of the people, and then the speed at which we can change course if we need to. That you could see as soon as the big strikes came about, it was like,
"Okay, well, we need to do something about this," and we started to change course there. I'm hopeful that we can over-deliver again. Any more questions from the room? Anything online? No? I think the time is over as well, so. Excellent. Well, thank you very much for joining today.