TIDMSRC
RNS Number : 2187V
SigmaRoc PLC
13 April 2021
SigmaRoc plc / EPIC: SRC / Market: AIM / Sector: Construction
& Materials
13 April 2021
SigmaRoc plc
('SigmaRoc', the 'Company' or the 'Group')
Audited full year results for year ended 31 December 2020
Notice of AGM
SigmaRoc plc, the AIM listed buy-and-build construction
materials group, is pleased to announce its audited results for the
year ended 31 December 2020.
Financial highlights(1) 31 December 2020 31 December 2019 Change
Underlying revenue GBP124.2m GBP70.4m +76.6%
Underlying EBITDA GBP23.9m GBP14.5m +64.1%
Underlying profit
before tax GBP12.2m GBP8.4m +45.2%
Underlying EPS 4.50p 4.20p +7%
Adjusted Leverage
Ratio(2) 1.69x 2.07x -18.4%
(1) Underlying results are stated before acquisition related
expenses, certain finance costs, redundancy and reorganisation
costs, impairments, amortisation of acquisition intangibles and
share option expense. References to an underlying profit measure
throughout this Annual Report are defined on this basis.
(2) Adjusted leverage ratio compares net debt to underlying
EBITDA for the last twelve months adjusted for pre-acquisition
earnings of subsidiaries acquired during the year.
Operational highlights:
Invest
- GD Harries: Completion of 100% ownership
- Benelux: 168mt expansion at CDH approved
- Equity raise: GBP12.4m raised for H1 2021 pipeline
projects
Improve
- Safety: Completion of Safety external audits and introduction of HighVizz
- Operation gearing: Underlying EBITDA margin remained strong at 19%
- Corporate Governance: Appointment of independent non-executive
directors and dedicated general counsel
Integrate
- Group debt facility: Consolidation of debt facilities following acquisition of CDH
- Integration of CDH: >400 people
- Integration of GD Harries: >200 people
Innovate
- Sustainability: Innovation in concrete products and asphalt solutions
- Digital solutions: Enhancement of safety, operations and asset utilisation
- Products: Supply of innovative product for major project
Annual General Meeting
SigmaRoc is also pleased to provide notice that its Annual
General Meeting ('AGM') will be held on 19 May 2021 at 3.00 p.m. at
56 Queen Anne Street, London, W1G 8LA. Copies of the Notice of AGM,
together with the Form of Proxy and Annual Report have been posted
to shareholders and are available to view on the Company's
website.
We are keen to welcome Shareholders in person to our AGM this
year, particularly given the constraints we faced in 2020 due to
the COVID-19 pandemic. We are therefore proposing to welcome the
maximum number of Shareholders we are able within safety
constraints and in accordance with government guidelines.
Shareholders intending to attend the AGM, should this be
possible, are asked to register their intention to attend as soon
as practicable by emailing agm@sigmaroc.com.
Given the uncertainty around potentially tighter restrictions
due to the COVID-19 pandemic, which could change at short notice,
it cannot be known with certainty whether (or how many)
Shareholders will be able to attend the AGM. Accordingly, we
encourage all Shareholders to complete and return a completed proxy
form appointing David Barrett, Executive Chairman, as the Chair of
the Meeting, as their proxy. This will ensure that your vote will
be counted if ultimately you (or any other proxy you might
otherwise appoint) are not able to attend the Meeting.
David Barrett, Executive Chairman, commented:
"In what proved to be a very challenging year, I am extremely
proud that our business has performed so well, with our robust and
agile business model delivering growth despite the unprecedented
circumstances. We delivered revenue of GBP124.2million and
increased both our Underlying EBITDA and our underlying EPS. We
completed the acquisition of GD Harries and prepared our Balance
Sheet for future growth with the completion of a debt
refinancing."
"I am confident that we will continue on the road to further
success, building on the solid foundations we have laid down during
our first four years."
Max Vermorken, CEO, commented:
"I would like to thank the SigmaRoc team for their extraordinary
hard work throughout 2020. Despite the pandemic we were able to
deliver an extremely strong performance, driving our revenues up by
64% to GBP124.2 million, and increasing Underlying EBITDA to
GBP23.9 million. Underlying earnings per share grew by 7% to 4.50p
in a year of very difficult trading conditions."
"Looking forward, we continue to seek ways to invest, improve,
integrate and innovate, and in the first quarter of 2021 we
launched our cement free concrete building block - Greenbloc. We
also recently entered into an agreement with LafargeHolcim which
will see an expansion of our aggregates operations in Belgium and,
subsequent to that, we acquired two large-scale concrete suppliers
in the Limburg area of Belgium."
"I am excited for the future path of the Group and I am
optimistic that with our great workforce and support of our
investors, we can continue to further grow and achieve strong
results in the months and years ahead"
The full text of the statement is set out below, together with
detailed financial results.
SigmaRoc will host a meeting for invited analysts at 8.00 a.m.
To participate in the call, please register by contacting
ir@sigmaroc.com.
The Group has also organised a dedicated results call and
Q&A session for private investors at 12.00 p.m. today. To
participate in the call, please register interest via the following
link: https://zoom.us/webinar/register/WN_4tkkjmz9TxO0P8-ZPmAZPA
.
A recording will also be available on request from the
Company
---------------------------------------------------------------------------------------------------------------------------
For further information, please contact:
SigmaRoc plc Tel: +44 (0) 207 002 1080
Max Vermorken
Strand Hanson Limited (Nominated Tel: +44(0) 207 409 3494
and Financial Adviser)
James Spinney / James Dance
/ Rob Patrick
Liberum Capital (Co-Broker) Tel: +44 (0) 203 100 2000
Neil Patel / Jamie Richards
/ William Hall
Peel Hunt (Co-Broker) Tel: +44 (0) 20 7418 8900
Mike Bell/Ed Allsopp
Investor Relations Tel: +44 (0) 207 002 1080
Florian Werner ir@sigmaroc.com
CHAIRMAN'S STATEMENT
My 45 years in the construction materials industry was still not
enough to anticipate and prepare for the extraordinary year we
witnessed in 2020. I am extremely proud that despite such
challenging circumstances our business performed very well, thanks
to a sound business model, high quality teams with motivated staff
around the Group and the ability to respond quickly to changing
circumstances. As a result, we delivered revenue of GBP124 million,
Underlying EBITDA of GBP24 million and Underlying Earnings per
share of 4.5 pence. Another year of growth despite the exceptional
challenges as we continue with the journey of SigmaRoc.
Our timely response allowed us to do more than just manage the
unprecedented health crisis. As a Group we adapted our methods of
work to remain 'open for business' and also delivered several key
infrastructure projects which helped the UK both battle the
pandemic and prepare for Brexit. Our improvement projects continued
at the most recently acquired businesses. We also prepared our
Balance Sheet for further growth through a debt refinancing and a
very well supported equity fundraise. To summarise, 2020 was
another year of significant progress for the SigmaRoc group of
companies.
Growth
At the start of 2020, it was our ambition to continue the trend
set in 2019 and sustain our momentum. Our plans included an
ambitious debt refinancing, the acquisition of the remaining 60% of
G.D. Harries, the improvement of margins and operational quality
across the Group and a continued focus on Sustainability
initiatives.
While the pandemic slowed our progress, I am happy to report we
delivered most of our initial objectives even as we managed the
impact of COVID-19 on our Group. G.D. Harries now fully forms part
of SigmaRoc. Our new debt facilities allow us to pursue further
growth, and we are grateful for the continued support of Santander
together with a consortium of high quality European and UK banks.
As a result, our Group now starts to gain scale where an important
source of its further development will be funded from internally
generated free cash flows, to the benefit of our Shareholders.
Safety and COVID-19
2020 presented a very significant challenge from a Health &
Safety perspective, both due to COVID-19 and operationally.
Protecting our staff from COVID-19 and ensuring the virus did not
spread within the business was key. We were successful inasmuch as
only 34 COVID-19 self-isolation cases were recorded. This across
the Group of nearly 1,000 staff and pleasingly no confirmed spread
of the virus within the business was recorded.
A second real challenge was managing our operational safety.
With travel restrictions, people working from home and people
coming back into the workplace after a period of absence, the risk
of accidents and the probability of a lack of reporting increases.
However, the outcome was contrary to that probability. Our LTIFR
reduced 22% and TIFR reduced 6%. During the same period our number
of reported incidents increased materially in part due to improved
safety software and monitoring tools.
Governance
Last year was also a year of significant progress from a
governance perspective. Our Group had grown rapidly since inception
in 2017 and required a review of its Board and governance
structures, which we started in 2019. As a result of this process,
we restructured our Board composition, adding two high calibre
independent non-executive directors in Jacques Emsens and Simon
Chisholm. We improved our corporate governance principles and
reviewed the various Board committees to ensure the right processes
are in place. We also appointed Anthony Brockbank as General
Counsel. Anthony's expertise and experience in governance and
corporate law will ensure our compliance has a further level of
scrutiny and robustness.
We also made a significant leap forward in our Environmental and
Social initiatives with a substantial section of this report
dedicated to these efforts. Our combined Environmental, Social and
Governance initiatives will become an ever more important component
of our activities and we are proud of our low carbon concrete
products offering, our partnerships with several innovative
companies, our focus on renewable energy sources where possible and
our attention to our operating footprint and what can be done to
improve it.
Forward look
Looking forward I remain convinced we are on the right track for
further success to be built on the solid foundations laid down
during our first four years. This past year was particularly
challenging for most businesses, and for many, personally. Our
performance has demonstrated the quality of our business model, the
determination of our management teams, the dedication of an
exceptional workforce and the potential our Group has for the
future.
As we progress through 2021, I am convinced we will continue on
the road to further success. We have an exciting list of projects
on which we are actively working. We have several high quality
businesses in our Group which can continue to deliver great
results. We also have a series of more recently acquired businesses
which are the focus of our attention to improve and integrate them
to the benefit of the wider Group. I therefore remain optimistic
and curious as to what future opportunities SigmaRoc can take
advantage of for the benefit of the Group and its Shareholders.
David Barrett
Executive Chairman
12 April 2021
CEO's STRATEGIC REPORT
2020 was the year of "unknown unknowns". Nobody was fully
prepared for 2020 and in all honesty, neither were we. A dedicated
workforce, a business model built for speed and agility and
networks of supportive customers and suppliers helped us through
the worst of it and onto another successful year. It is with a
great sense of humility and gratitude for the extraordinary hard
work of the SigmaRoc team throughout 2020 that I present this
annual report.
Financial performance
In 2020, we outperformed pre-COVID broker estimates set at the
end of 2019. With revenues at GBP124.2 million, underlying EBITDA
increasing to GBP23.9 million, a 64.1% year-on-year increase and
underlying profit before tax at GBP12.2 million we delivered an
extremely strong performance. Underlying earnings per share rose to
4.50 pence, a 7% growth on 2019, in a year with significant volume
swings, margin erosion and difficult trading conditions. Given the
circumstances we are extremely proud that we were able to post
another year of earnings growth for our Shareholders.
Significant efforts were made over the course of 2019 and 2020
to improve the margins across the Group, targeting Underlying
EBITDA margins of over 20%. Even as 2020 was a particularly
challenging year with significant volume swings, and the full
integration of lower margin businesses in Wales and Belgium, our
overall Underlying EBITDA margins remained strong at 19%. Over the
course of the next 18 months as our improvement efforts take hold,
we aim to see that margin increase to our targeted level of
20%.
As a result of our good performance and several restructuring
efforts in 2019, cash generation was strong in 2020. Starting the
year with GBP9.9 million we ended the year with GBP27.4 million,
(including the addition of GBP12.4 million cash raised in December
2020) and after the deduction of several significant investments.
These investments include the acquisition of the remaining 60%
stake in G.D. Harries at GBP7.3 million, the payment of deferred
consideration in Belgium of circa GBP2 million, the acquisition of
further land in Belgium for the quarry extension of approximately
GBP2 million, as well as further general capital investments into
the business.
The solid trading, margin improvement and cash generation has
had further positive consequences on the quality of our Balance
Sheet. Starting the year with GBP49.8 million in net debt to
Underlying EBITDA equating to a ratio of 2.07 times we finished the
year at 1.69 times. This figure includes the full consolidation of
G.D. Harries in South Wales, which historically held higher net
debt levels than our Group's targeted ratio. Efforts are currently
being made to ensure the overall debt levels of the Group do not
exceed a 2 times net debt to Underlying EBITDA ratio after cash is
spent on further acquisitions, with the intention of a further
downward trend.
Considering total and net tangible assets, further improvements
were also realised through the completion of the PPA process for
Carrieres du Hainaut and the inclusion of G.D. Harries. A separate
PPA process will be undertaken for G.D. Harries during this year
even though the business has only a limited amount of goodwill at
acquisition. Both businesses are significantly asset backed,
increasing our total tangible assets to GBP145 million at 31
December 2020. Calculating our total debt to tangible assets we
arrive at a ratio of below 2:1, further demonstrating the quality
of the Balance Sheet and asset backing available to both equity and
debt investors.
Trading and Operational Summary
As much as it may sound trivial, 2020 really was a year of four
very distinct quarters. In order to give sufficient detail, it
seems reasonable to discuss both trading and operational aspects
side-by-side on a quarter-by-quarter basis. Our response to
COVID-19 is covered in detail below and will not be reviewed here.
Additional information in the form of data is also available in the
Business Review section, supplementing this narrative.
The first quarter of the year started fully in line with
expectations. Trading across all platforms started well with a
strong month of January at the PPG Platform and a slightly slower
start at Ronez. CDH and G.D. Harries performed as expected putting
the business on track for the delivery of analyst expectations
issued in 2019. Operationally all platforms started the year as
expected delivering budgeted volumes. PPG being slightly more
seasonal, weather and major project driven would see its volumes
rise from an expected softer start in January to more normal run
rates in March. No specific impact from COVID-19 or lockdowns would
be felt in the first quarter.
As we started the second quarter the situation changed
dramatically. The lockdowns affecting each of the regions we are
operating in inferred significant volume drops. These drops were in
some cases more than 60% of budgeted volumes. We had made the
decision to remain open across all sites and put in place our
COVID-19 plans allowing us to do so. Scenarios prepared in the
months earlier on cash burn, cost reductions, shift reductions and
of course all protocols allowing us to operate safely were put into
action. As demand dropped further significant concern arose in
relation to paying bills and getting paid. Reinforcing the
messaging to customers and suppliers that it was our mission to
help our local economies by remaining active, paying our bills and
delivering product, was well received and any cashflow concerns
subsided.
April then provided a further blow as strict virus reduction
policies in Guernsey and Jersey meant complete shutdowns of our
activities. Luckily those measures were limited in time and
progressive relaxation in these measures allowed for a gradual
return to work. Across other platforms, those customers who had
initially decided to shut down were returning to work leading to
increased volumes. Entering into May and June, the recovery
gathered further pace. Our volumes returned to pre-COVID levels as
did turnover.
At this point it is interesting to give some context on
operational gearing across the Group. As volumes dropped in April,
we started to calculate our cash burn and estimate our effective
cost base. With cash levels over GBP10 million across the Group we
could sustain multiple months of near nil revenue. However, our
cost base had shown sufficient flexibility without making specific
use of COVID-19 related Government aid packages. As a result, we
were able to remain EBITDA positive for the month of April. This is
a great indication that our effective operational gearing is
low.
The third quarter presented a much more normalised picture
across the Group. While sales were impacted by sector summer
shutdowns in the Benelux region, overall trading volumes returned
to normal levels. Our ability to service customers and have
sufficient stock on the ground at our various sites helped in
delivering a solid performance. Operationally, the picture also
returned to a more normal situation, with most work shifts and
personnel returning.
The fourth quarter on the other hand had remained an enigma to
us across the summer months. It was not obvious from the
indications received through our customer networks what trading
would look like. In part a lack of visibility in terms of
orderbooks contributed to this uncertainty. The quarter did,
however, turn out in line with normal trading, allowing for small
exceptions. Relatively mild weather conditions helped, as well as a
slower than expected return of lockdowns.
The narrative provided above is somewhat more lengthy than
usual, however, given the extraordinary year, I wished to present
you with additional context. A key take-away of last year's
performance must be the flexibility and agility with which the
business responded to the changes in the trading environment. We
prepared early for the possibility of a lockdown and its
consequences. All scenarios detailing cash burn, cost reductions,
shift reductions, possible closures and other considerations had
been prepared. However, the agility with which each platform
responded to changing trading conditions on a daily basis is what
made the difference. Our Group has great teams in each platform,
who were able to make maximal use of our decentralised operating
model.
COVID-19 Update
On Monday, 24 March 2020, having consulted with the various
Managing Directors, General Managers and staff, we decided to
remain open throughout the lockdowns in Belgium, the UK and the
Channel Islands. This decision was not an easy one, but one
supported by the various management teams and representatives of
staff. It was taken in the knowledge that we had prepared the
business during the month of March for the scenario of a lockdown
and were able to keep staff sufficiently distanced, in open air
facilities or in sufficiently sanitised
offices in order to minimise the risk of COVID-19 contagion within the Group.
At 31 December 2020, we had 34 people self-isolating on a
workforce of nearly 1,000 people. One person was taken to hospital.
We also confirmed that to our best knowledge the virus did not
spread within the Group, having traced all positive cases to
contamination outside work. Of this record we are proud, but
realise that as
time goes by, the probability of encountering more positive COVID-19 cases increases.
Starting the year 2021 we continued our vigilance, reinforcing
our COVID-19 protocols including working from home where possible,
sanitising workspaces, wearing masks when working in less
ventilated spaces or offices
and a renewed push to make people aware of the risk. At the time of writing, we have 1 person self-isolating.
Operationally, the lock downs of 2021 have not had the same
impact as the lockdown of spring 2020. The UK government issued a
renewed letter urging the construction sector to remain active
during this lockdown period with similar albeit less formal
messages of support in Belgium and the Channel Islands. As a
consequence, all sites remain active with production at acceptable
levels for the time of the year.
Growth and development
Development:
With all its complexities and the unknowns, we kept our focus
throughout the year on the continued development of the Group.
First and foremost was the acquisition of the second tranche of
G.D. Harries thereby forming a new fourth platform in South Wales.
G.D. Harries is an excellent business with a strong market position
in South Wales, a solid asset base including 7 quarries, 80 million
tonnes of reserves and resources and several concrete and asphalt
plants.
The main attraction of the acquisition of G.D. Harries is its
potential to form the starting point of a new platform in South
West Wales. The business was built over many decades by Ian Harries
and his father before him. It delivered a solid performance in 2019
with revenue of GBP27.2 million and Underlying EBITDA of GBP3.2
million. While 2020 was a challenging year for Wales in general,
G.D. Harries delivered Underlying EBITDA of GBP3.0 million on
GBP26.7 million revenue. This performance is in line with our
expectations and further validates the acquisition rationale.
Further development work was undertaken in Belgium where we
closed off two major chapters in the extension of Carrieres du
Hainaut. Having received the required zoning changes in August
2019, the quarry was awaiting confirmation of approval to move a
road that crosses its current extraction zone. The Walloon regional
government granted this permission and agreed to contribute EUR700k
to the envisaged cost of the project. Additionally, we closed as
planned the purchase of further land adjacent to the current
extraction zone for circa GBP1.8 million, thereby finalising a long
project lasting nearly a decade during which over 100 parcels of
land were bought or exchanged in order to secure the future of the
activities at Carrieres du Hainaut for generations. The local
management team at Carrieres du Hainaut was key in this success, as
was the support of the local and regional governments.
In the rest of UK our development activities were somewhat more
limited and consisted primarily in the extension of our existing
sites, and the renovation of these sites with the aim to increase
our production capacity, safety records and product offering. In
particular, Poundfield and CCP were the focus of these efforts as
was the creation of an improved South London sales depot for Allen
Concrete.
Debt refinancing:
A key project this year was the refinancing of our Group Credit
Facilities. With the acquisition of CDH at the end of 2019 we
acquired their existing credit facilities supplied by four leading
Belgian banks. As these facilities were at the end of their life
and as it made more practical sense to agree a Group wide facility,
simplifying cash management and reducing overall financing cost, we
launched a debt refinancing project early in the year.
After an initial suspension of this project in March due to
COVID-19 and lockdowns, we were pleased to announce an expanded
GBP125 million multi-currency credit facility including a GBP40
million uncommitted accordion facility supplied by a consortium of
high-quality UK and European banks led by Santander. With adjusted
leverage ratio covenant commencing at 3.5 times Underlying EBITDA,
the facility has a term of 5 years of which 2 are non-amortising
and a margin rate of 2.5% over LIBOR at an effective 2 times
leverage ratio. These terms are an improvement on the facilities we
had in place and allow us to further develop the business, while
keeping our overall leverage at 2 times Underlying EBITDA or
less.
Equity raise:
A second key project undertaken at the end of last year was the
equity raise using the 10% special authorities obtained at the 2020
AGM. The equity raise of GBP12.4 million puts the Group in a great
position to take advantage of a series of opportunities, both
organic and through acquisition, identified across this past year.
We have indeed already started to deploy the capital raised with
further detail given in the post period section below.
Safety
Continued focus was put on health and safety this year, with a
much broader scope than in normal years. Naturally we put in place
all Government guidelines in relation to COVID-19. For those
working from home we issued further guidelines and support to aid
in the transition to remote working. As a result of these measures,
we have been able to limit the spread of COVID-19 in the business
and keep the number of infected people low.
While the challenges to operate safely increased as a
consequence of social distancing and other restrictions, we were
able to make further progress on safety this year. Our LTIFR
dropped [2 2% ] as did our TIFR by [ 6% ]. Incidents decreased in
part due to new systems put in place to track, report and
investigate all safety incidents. A dedicated safety report in the
Sustainability section of this Annual Report will provide further
context.
Sustainability
A dedicated Sustainability section is included in the Annual
Report and I will limit the review in this section to several
highlights. As announced last year we have now formalised our
Sustainability initiatives in line with market best practice and as
a result of this, we are now able to better report on the
initiatives we take and their impact.
Environmental
In 2019, we presented a first series of initiatives in our
annual report dedicated to the improvement of our environmental
impact, carbon footprint and product portfolio. Included in this
year's report is a full review of our carbon footprint. I am
therefore happy to report we have been able to progress on several
initiatives reducing our carbon footprint across the Group.
We have made a first significant step in the direction of
offering ultra-low carbon alternatives to every concrete product we
produce. In January 2021 we launched the production of our
Greenbloc product line with the launch of the ultra-low carbon
solid dense concrete block. We also launched a collaboration with
Airlite, a manufacturer of CO(2) , SO(x) and NO(x) absorbing
coatings, which we are applying to several of our concrete
products. Further innovations are detailed in the Sustainability
section as we improve our footprint.
We were also able to make further progress in increasing our
electricity sourced from renewable sources through the installation
of the third phase of our photovoltaic park. Once fully operational
it will increase our electricity generated renewably and on site,
to 30% of our total electricity consumption. In addition to this we
continue to pump filter and supply fresh drinking water to the
water system in Belgium.
Further initiatives were undertaken to improve the environmental
impact of our operations through continuous site improvement plans,
engagement with local communities as well as programmes to promote
flora and fauna around our sites.
Social
On a Social front several initiatives were launched which are
detailed in the Sustainability report. One highlight is in Belgium,
where we have gifted to the city of Soignies an area of land of 10
hect ares adjacent to the quarry. The area forms a large protective
hill, onto which trees were planted. It is the aim of the council
to develop the area into a park or nature walk from which our
operations can be viewed. We have had a lot of success with a
similar project in Guernsey and will assist the council.
In other areas of the business, we have endeavoured to engage
more closely with the local communities to ensure a better dialogue
exists. As part of these initiatives, events were organised at some
of our operations where COVID-19 restrictions permitted.
Governance
From a governance perspective, 2020 was a year of significant
change and improvement for the Group. The Governance report will
provide ample more detail. Firstly, our Board saw profound change
with the joining of several independent and highly skilled
directors. The entire corporate governance code was reviewed as
well as the Articles in order to align both to London Stock
Exchange and QCA best practices. We appointed a very experienced
corporate lawyer as our General Counsel to further improve our
compliance and created additional Board committees covering the
various listing requirements or recommendations.
Statement by the directors in performance of their statutory
duties in accordance with s172(1) of the Companies Act 2006
The Director's believe they have acted in the way most likely to
promote the success of the Group for the benefit of its members as
a whole, as required by s712 of the Companies Act 2006. The
requirements of s172 are for the Directors to:
-- Consider the likely consequences of any decision in the long term;
-- Act fairly between the members of the Company;
-- Maintain a reputation for high standards of business conduct;
-- Consider the interests of the Group's employees;
-- Foster the Group's relationships with suppliers, customers and others; and
-- Consider the impact of the Group's operations on the community and environment.
The application of the s172 requirements are demonstrated
throughout this report and the Accounts as a whole, with the
following examples representing some of the key decisions made in
2020 and up to the date of these Accounts:
-- Response to the Coronavirus pandemic: the Group has taken
various measures to protect the wellbeing of its employees,
maintain good working relationships with its customers and
suppliers, and ensure the commercial viability of its business.
-- Continued pursuit of buy and build growth strategy: the Group
has aggressively continued its buy and build growth strategy,
completing two acquisitions during 2020, which expanded the South
Wales and Benelux platforms.
-- Safety initiatives: safety and wellbeing of our colleagues is
one of our top priorities and the Group continued to improve its
health and safety standards, including implementing a Group wide
health and safety reporting tool.
Post-period announcements
In the second half of 2020, we started to look forward to 2021
and what we could realise in the new year. Plans were made to both
improve our business further and continue its expansion. To be in a
good position to attack 2021, in December 2020, we raised some
additional funding, with the intention to deploy it rapidly in the
new year.
We were therefore happy we could make good on these promised
within the first quarter of 2021. A separate section is dedicated
to the three key transactions and projects we completed, the first
being the introduction of Greenbloc. With the launch of our cement
free concrete building block we set a new benchmark for the
industry by being the first company in the UK to do so. The
reduction in embodied CO(2) is significant and as the product gets
more widely adopted this reduction will have its impact on the
sustainability of construction in the UK as a whole.
We subsequently announced an important transaction in Belgium
where we reached a mutually beneficial deal with LafargeHolcim at
our Carrieres du Hainaut operations. Taking over all crushing and
screening plant from LafargeHolcim and entering into a take-or-pay
agreement with them, we put ourselves in a great position to
prepare our entry into the Belgian aggregates market as a large
scale supplier. In the meantime, we benefit from the additional
EBITDA generated from the plant while not having spent any further
capital to generate these returns.
We then turned our eye to establishing our footprint more widely
in the Belgian market with the acquisition of B-mix Beton and
Casters Beton, two large scale suppliers of concrete in the Limburg
area. As a consequence of this, we are gradually expanding our
footprint in order to become a significant operator in the Benelux
region.
Strategic approach and outlook
It is evident the drive and determination of our teams remains
high to deliver excellent results and exciting new opportunities
for the business to expand and grow further. The strategy of local
focus through platforms which are agile and close to the end
customer remains robust and has shown its value during the
difficult times of this past year. The outlook therefore remains
positive and above all exciting.
With your continued support, for which we are grateful and which
we never take for granted, we can continue to Invest, Improve,
Integrate and Innovate to the benefit of our shareholders and our
stakeholders.
This report was approved by the Board on 12 April 2021.
Max Vermorken
Chief Executive Officer
CHIEF FINANCIAL OFFICER'S REPORT
Following my first year as an executive Board member and Chief
Financial Officer, having taken over from Garth Palmer in 2020, I
would like to begin this report by thanking the Board and
shareholders for the opportunity.
I am very pleased to report a strong year financially for the
Group, during which we exceeded our ambitious financial targets,
while continuing to expand our business during a global pandemic
crisis. We completed the acquisition of the remaining parts of
Stone Holdings and G.D. Harries as well as a full debt
refinancing.
In our full 2020 financial year, the Group generated revenue of
GBP 124.2 million (2019: GBP70.4 million) and Underlying EBITDA of
GBP23.9 million (2019: GBP14.5 million). The Underlying profit
before taxation for the Group for the year ended 31 December 2020
was GBP12.2 million (2019: GBP8.4 million).
The loss for the Company for the year ended 31 December 2020
before taxation amounts to GBP5.8 million (2019: loss GBP4.7
million), which includes GBP2 million of non-underlying
expenses.
The Board monitors the activities and performance of the Group
on a regular basis. The Board uses financial indicators based on
budget versus actual to assess the performance of the Group. The
indicators set out below will continue to be used by the Board to
assess performance over the period to 31 December 2021.
2020 2019
------------------------- -------------- -------------
Cash and cash equivalents GBP27,451,984 GBP9,867,696
------------------------- -------------- -------------
Revenue GBP124,231,115 GBP70,362,472
------------------------- -------------- -------------
Underlying EBITDA GBP23,896,126 GBP14,534,647
------------------------- -------------- -------------
Capital expenditure GBP6,451,893 GBP3,384,363
------------------------- -------------- -------------
Cash generated from operations was GBP 28.5 million (2019:
GBP2.1 million) with a net increase in cash of GBP17.5 million
(2019: net increase of GBP6.1 million). In December 2020, the Group
raised, in aggregate, GBP12.4 million in relation to future
acquisitions.
Revenue and underlying EBITDA exceeded expectations and
management forecasts.
Capital expenditure relates to purchase of new plant and
machinery and improvements to existing infrastructure across the
Group.
PPA
BDO UK undertook the PPA exercise required under IFRS 3 to
allocate a fair value to the acquired assets of CDH.
The PPA process resulted in a reduction of goodwill recorded on
the Statement of Financial Position of the Group for CDH from GBP51
million to GBP7.2 million. The reduction was to transfer the value
of goodwill to tangible assets for land and buildings, land and
mineral reserves, intangible assets for trade name and deferred tax
assets.
Non-underlying items
The Company's loss after taxation for 2020 amounts to GBP5.8
million, of which GBP2 million relates to non-underlying items,
while the Group's non-underlying items totaled GBP5 million for the
year. These items relate to eight categories:
1. GBP1.4 million amortisation of acquired assets and adjustments to acquired assets
2. GBP1.4 million in exclusivity, introducer, consulting, legal
fees and other direct costs relating to acquisitions. During the
year the Group acquired the remaining shares in G.D. Harries and
Stone Holdings.
3. GBP0.8 million legal and restructuring expenses relating to
the rebranding and alignment of all subsidiaries across the
Group.
4. GBP0.3 million in share based payments relating to grants of options.
5. GBP0.3 million on unwinding of discounts on deferred consideration payments for CDH and CCP.
6. GBP0.6 million in other exceptional costs which primarily
relate to non-cash balance sheet adjustments and COVID-19 costs
7. GBP0.1 million in discontinued operations including the
trading expenses, stock adjustments and redundancies incurred at
the Bury site for the 2020FY.
8. GBP0.1 million for provision of legal fees.
Interest and tax
Net finance costs in the year totaled GBP2.7 million (2019:
GBP2.0 million) including associated interest, bank finance
facilities, as well as interest on finance leases (including IFRS
16 adjustments), hire purchase agreements and non-cash adjustment
for unwinding of discounts on deferred consideration payments for
CDH and CCP.
A tax charge of GBP 0.7 million (2019: GBP0.5 million) was
recognised in the year, resulting in a tax charge on profitability
generated from mineral extraction in the Channel Islands and
profits generated through the Group's UK and Belgium based
operations.
Earnings per share
Basic EPS for the year was 2.55 pence (2019: 0.92 pence),
adjusted for the non-underlying items mentioned above. Underlying
basic EPS for the year totaled 4.50 pence (2019: 4.20 pence).
Statement of financial position
Net assets at 31 December 2020 were GBP 124 million (2019:
GBP102 million). Net assets are underpinned by mineral resources,
land & buildings and plant & machinery assets of the
Group.
Cash flow
Cash generated by operations was GBP28. 5 million (2019: GBP2.1
million). The Group spent GBP8.4 million on acquisitions net of
cash acquired and GBP6.5 million on capital projects. The Group
raised GBP12.0 million net of fees through the issue of equity and
repaid net borrowings of GBP6.4 million. The net result was a cash
inflow for the year of GBP17.5 million.
Net debt
Net debt at 31 December 2020 was GBP43.8 million (2019: GBP49.8
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 GBP125 million (the 'Credit Facility') led
by Santander UK and including several major UK and European banks.
The Credit Facility, which comprises an GBP85 million committed
term facility and a GBP40 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 GBP63.7 million.
The Group's new Debt Facilities are subject to covenants which
are tested monthly and certified quarterly. These covenants
are:
-- Group interest cover ratio set at a minimum of 3.5 times EBITDA; and
-- A maximum adjusted leverage ratio, which is the ratio of
total net debt, including further borrowings such as deferred
consideration, to adjusted EBITDA, of 3.5x in 2020. As at 31
December 2020, the Group comfortably complied with its bank
facility covenants.
Capital Allocations
We prioritise the maintenance of a strong balance sheet and
deploy our capital responsibly, allowing us to commit significant
organic investment to our business whilst continuing to pursue
acquisitions to accelerate our strategic development. This
conservative approach to financial management will enable us to
continue
pursuing capital growth for our shareholders.
Dividends
Subject to availability of distributable reserves, dividends
will be paid to shareholders when the Directors believe it is
appropriate and prudent to do so. The focus of the Group at this
stage of its development will be on delivering capital growth for
shareholders. The Directors therefore do not recommend the payment
of a dividend for the year (31 December 2019: nil).
Post Balance Sheet event
Post 2020 close we have conducted a series of activities worthy
of mention in this annual report:
Employee Benefits
All of our UK employees, almost 400, have been offered both
Private Medical Insurance and Group Life Assurance. Our benefits
provider commented that the uptake of this offering from our
employees was unprecedented with many adding family members.
SigmaRoc has also engaged Link Group to set up a Share Incentive
Plan for all UK employees, an offering we already have in the
Channel Islands. We are continuing to investigate Share Plans for
our European operations.
This report was approved by the Board on 12 April 2021 and
signed on its behalf .
Dean Masefield
Chief Financial Officer
SUSTAINABILITY REPORT
SigmaRoc is committed to sustainability and disclosure and going
forward will have a dedicated section in the annual report on
sustainability. With sustainability being such a key subject, we
have committed to a sustainability framework relevant to our size
and industry following review of global frameworks such as TCFD,
SASB and FTSE Russell, of which themselves align to the UN
Sustainable Development Goals.
1. Environment
SigmaRoc looks to follow four key statements with regards to our
commitment to environmental responsibility:
1. Sustainable use of reserves and resources;
2. Responsible use of key resources including raw material, mineral and water;
3. Optimise energy use and minimise impact of our operations on the environment; and
4. Contribute to sustainable construction and address
environmental aspects either through production or consumption.
2020 continued to be a very focused year with several areas
delivering or creating the foundation to deliver some inspirational
opportunities:
1.1 Biodiversity
As our extractive operations continue, areas that have been long
since mined have been nurtured overtime. This year, we were proud
to be able to give a large restored part of a previously working
site back to the community, where walking and cycling trails can be
set up for the local communities to enjoy. We have also conducted
land swaps where areas of our ownership have been swapped with
local farmers, thereby allowing them more land whilst in return
giving us better access to mineral with less environmental impact.
We have also participated in smaller projects with more remote
communities such as the planting of over 1,000 trees and the
successful translocation of blue grass following ongoing operations
at one of our sites.
1.2 Climate Change
This will be our first year of SECR reporting and whilst this is
limited to the UK, in the interests of full disclosure, we have
voluntarily exceeded the minimum requirements set out in the 2018
Regulations by also including energy use and greenhouse gas
emissions for operations outside of the UK. Further SECR details
can be found in the next section.
Over the year we have continued to embrace technology; this
includes energy sourcing, consumption and energy management.
Energy Sourcing
Continuing our commitment to renewable energy where possible, we
have signed the contract for the third phase of the solar
photovoltaic extension, to be installed in 2021, increasing energy
generation from 950MWh to 3,800MWh. We continue to look at
alternative energy options across our other sites and have been in
discussions with various energy suppliers for the installation of
solar farms to feed our plants with surplus being added to the
grid.
Energy use
With regards to energy use, we have continued to extend our
change over to LED lighting, and have successfully completed more
sites, with others still transitioning. We have also extended our
focus on energy to our mobile plant, with several aging machines
being upgraded to more fuel-efficient models, and one of our
primary haulage contractors upgrading their fleet to Euro 6 HGV. As
we have shown commitment, so have our employees, with several
identifying the UK Government backed cycle scheme which we have
supported.
Energy monitoring
To ensure we are not using fuel unnecessarily we have also
continued to roll out MachineMax that allows monitoring and
management of our assets thereby reducing idle times and
unnecessary operation.
1.2.1 Pollution and resources
We regularly review our production processes to minimise
resource use and waste generation. This year has included ensuring
where we do not already harvest rain water, we do so, thereby
reducing the impact on water tables or potable water supply. In
Belgium this has been taken one step further by [ensuring] a closed
circuit which includes the supply of 40,000 families in the local
community.
Where waste does occur, we continue to have dedicated recycling
functions and actively look to reuse it by feeding waste material
back into our process.
In addition to our own waste, we also review other industries'
waste usage to see what opportunities exist, such as for
substitution in full or part of raw materials to minimise
environmental impact. This includes working in conjunction with
Natural UK to replace the use of conventional fibres in asphalt to
using recycled, clean nappies from local recycling facilities.
Contribution to sustainable products and uses
In 2020, we developed GreenBloc, a cement free block that
reduces the CO(2) footprint of a traditional block by up to 77%.
Further to this we also looked at our products to see how they
themselves can reduce pollution and improve the environment.
Through research and working in close partnerships with others, we
are working with product ranges that not only offset aspects such
as carbon, but also remove pollutions such as
CO(2) , NOx and SOx.
Further information on our policies such as (biodiversity,
environment, and pollution) can be found at www.sigmaroc.com .
1.3 Streamlined Energy and Carbon Reporting (SECR)
Energy use and associated greenhouse gas emissions
SigmaRoc is pleased to report its 2020 annual energy consumption
and associated annual greenhouse gas emissions pursuant to the 2018
Regulations.
Organisational boundary
In the interests of full disclosure, SigmaRoc has voluntarily
exceeded the minimum requirements set out in the 2018 Regulations
by also including energy use and greenhouse gas emissions for
operations outside of the UK. Therefore, energy use and emissions
are reported for assets and operations in the UK, the Channel
Islands and Belgium, covering the entire Group as defined by the
operational control approach.
Reporting period
The annual reporting period is 1 January to 31 December each
year and the energy and carbon emissions are aligned to this
period. G.D. Harries was fully acquired on 21 September 2020,
meaning energy and emissions are only included for this subsidiary
from the date of full control as per the operational control
approach.
Quantification and reporting methodology
The 2019 UK Government Environmental Reporting Guidelines and
the GHG Protocol Corporate Accounting and Reporting Standard
(revised edition) were followed. The 2020 UK Government GHG
Conversion Factors for Company Reporting were used in the majority
of emission calculations with the exception of electricity emission
factors for Belgium, Jersey and Guernsey. These 'location-based'
factors were sourced from the Association of Issuing Bodies, Jersey
Electricity and Guernsey Electricity respectively and exclude
transmission and distribution losses. The report has been reviewed
independently by Briar Consulting Engineers Limited.
Electricity and gas consumption records were based on invoices,
with some pro-rata and benchmark estimations carried out to
complete missing data. Transport emissions were calculated from a
combination of mileage and fuel records. Fuel used for off-highway
fleet vehicles were reported separately from fuel used for other
stationary machinery where possible. Gross calorific values were
used except for mileage energy calculations as per Government GHG
Conversion Factors.
The associated emissions are divided into mandatory and
voluntary emissions according to the 2018 Regulations. For large
unquoted organisations, the 2018 Regulations define mandatory
emissions as purchased electricity, gas combustion and transport
fuel purchased by the organisation (including company cars,
off-highway fleet and expense claims for business mileage in
personal or hire cars). Reporting energy and emission sources
outside of these sources is considered voluntary and reported
separately.
The emissions are further divided into their relevant scopes as
per the GHG Protocol. The scopes are defined as:
-- Scope 1: Direct GHG emissions that occur from sources owned
or controlled by the organisation.
-- Scope 2: Indirect GHG emissions from the generation of
acquired and consumed electricity, steam, heating or cooling.
-- Scope 3: Other indirect GHG emissions that occur as a
consequence of the organisations activities but occur from sources
not owned or controlled by the organisation.
Breakdown of energy consumption used to calculate emissions
(kWh):
Energy type 2020
United Channel
Mandatory energy: Kingdom Islands Belgium Total
Gas 274,854 - 441,790 716,644
Purchased electricity 2,611,414 2,398,867 12,261,484 17,271,765
Transport (including off-highway
fleet) 6,274,566 1,793,945 18,708,177 26,776,689
----------------------------------- ---------- ---------- ---------- ----------
Total mandatory energy consumed 9,160,834 4,192,812 31,411,451 44,765,098
----------------------------------- ---------- ---------- ---------- ----------
Voluntary energy:
Gas oil (for stationary machinery) 12,704,112 14,123,496 4,752,326 31,579,934
Burning oil 5,077,170 - 714,895 5,792,065
Generated electricity(1) (solar
photovoltaic) - - 940,490 940,490
----------------------------------- ---------- ---------- ---------- ----------
Total voluntary energy consumed 17,781,282 14,123,496 6,407,711 38,312,489
----------------------------------- ---------- ---------- ---------- ----------
Total mandatory & voluntary
energy consumed 26,942,117 18,316,308 37,819,162 83,077,587
----------------------------------- ---------- ---------- ---------- ----------
(1) Solar photovoltaic electricity generated includes any exported energy to the grid
Breakdown of emissions associated with the reported energy use
(tCO e)
Emission source 2020
--------------------------------------- -------------------------------------
United Channel
Mandatory emissions: Kingdom Islands Belgium Total
Scope 1
Gas 50.5 - 94.8 145.3
Transport - Company owned fleet 1,471.6 431.6 4,784.9 6,688.1
--------------------------------------- -------- -------- ------- --------
Scope 2
Purchased electricity (location-based) 608.8 368.7 1,877.6 2,855.1
--------------------------------------- -------- -------- ------- --------
Scope 3
Transport - Business travel
in employee-owned vehicles 41.5 - - 41.5
--------------------------------------- -------- -------- ------- --------
Total gross mandatory emissions 2,172.4 800.2 6,757.3 9,730.0
--------------------------------------- -------- -------- ------- --------
Voluntary emissions:
Scope 1
Gas oil 3,261.5 3,625.9 1,220.0 8,107.4
Burning oil 1,252.4 - 176.3 1,428.7
Generated electricity consumed - - - -
on site
--------------------------------------- -------- -------- ------- --------
Total gross voluntary emissions 4,513.9 3,625.9 1,396.3 9,536.1
--------------------------------------- -------- -------- ------- --------
Total gross mandatory & voluntary
emissions 6,686.3 4,426.1 8,153.7 19,266.1
--------------------------------------- -------- -------- ------- --------
Intensity ratios: tCO(2) e per GBPmillion turnover
Mandatory emissions only 46.4 29.3 134.9 78.3
Mandatory & voluntary emissions 142.9 162.1 162.7 155.1
--------------------------------------- -------- -------- ------- --------
Intensity ratio
The intensity ratio is total gross emissions in metric tonnes
CO(2) equivalent per total million-pound (GBPm) turnover. This is
calculated separately for 'mandatory' emissions and 'mandatory
& voluntary' emissions for the UK, Channel Islands and Belgium.
This financial metric is considered the most relevant to the
company's energy consuming activities and provides a good
comparison of performance over time and across different
organisations and sectors.
Energy efficiency action during current financial year
In the period 1 January to 31 December 2020 for UK operations,
no specific energy efficiency actions were undertaken; however, in
Belgium we have signed the contract for the third phase of the
solar photovoltaic extension to be installed in 2021. This is set
to increase energy generation from 950MWh to 3,800MWh.
2. Social
SigmaRoc looks to follow four key statements with regards to our
commitment to social responsibility:
-- Ensure people leave work in the same or better condition than when they arrived;
-- Support the physical and mental health of our employees and their families;
-- Attract, train, retain, and engage our workforce; and
-- Be a good neighbour: Source local, buy local, sell local, invest local.
Two key areas in 2020 following significant growth at the end of
2019 were:
2.1 Health and Safety
November 2019 saw the re-issue of the group Health & Safety
policy and framework, and during 2020 all then supervisor and
managers put through IOSH and or NEBOSH training to support them
and their commitment to the new Health & Safety policy and
framework
In the spirit of a reset, we also took the opportunity to
conduct a health and safety benchmark review by conducting full
external audit of all our sites during 2020. We are proud to say
that internal follow up has shown many actions and focal areas have
been addressed and good work is on-going with those still
remaining.
We can take comfort in that our overall incident rate has
reduced by 6% and that our LTIFR has reduced again this year by 22%
and that one of our businesses was one of the first in our industry
to achieve the new ISO 45001. During 2021, at least 2 other
businesses should achieve ISO 45001, subject to any ongoing travel
restrictions.
Health and safety engagement has seen positive trends both
locally with local management teams engage with worker
representatives, unions and local government and across the groups
with the introduction of HighVizz, a mobile engagement and safety
management system, as well as monthly cross business safety
meetings and the Group safety committee.
The Group safety committee is chaired by our CEO, Max Vermorken
and as of 2021 will be joined by Non-Executive Director Tim Hall.
The committee:
-- Reviews and agrees the framework and policy for Health,
Safety and Wellbeing across the Group annually
-- Determines each year Group focus areas and performance targets
-- Monitors integrity of information and overall Group performance biannually
-- Monitors progress and performance against audits and plans
-- Reviews and challenges health and safety process and procedures across the Group
-- Reviews and promotes engaging and proactive health, safety and wellbeing culture and focus
During a time of unprecedented global pandemic, we have
leveraged our various programs such as Employee Assistance
Programs, cash plans with access to medical and counselling
services, buddy systems that allow peers to call each other even if
it is to just say "hi, how you doing" and Rehabilitation programs
that allow people to be returned to work, regardless if they are
hurt at home or not to ensure that not only are our staff's
physical and mental health proactively supported, but also their
loved ones at home.
As of 2020, we have engaged programs to review our entire
employee benefits such as life assurance and healthcare to expand
out offering throughout the businesses and through 2021 we remain
committed to continuing to improve the health, mental wellbeing and
safety of our staff, contractors and visitors.
Helping with safety beyond ourselves
Our approach to health and safety extends beyond our own walls;
by engaging our communities, we can help minimise health and safety
matters with regards to visitors, contractors and customers coming
on to our sites. After serving the maximum nine year term as a
voluntary Board member of the Jersey Safety Council, Mike Osborne
stood down during 2020 with Kirsten du Heaume being elected
independently to serve on the council, keeping Ronez at the front
of the behavioural safety agenda in Jersey. In Guernsey we are
proud to have
Seamus Gillespie as a committee member of Guernsey Occupational Safety and Health Association
2.1.1 Employee and Communities Engagement
As we have grown and our presence and reputation has become
stronger, ensuring we have the right people has been an important
focus during 2020. It has been essential that we attract and
recruit the best candidates for our jobs by focusing on their
overall potential both in terms of technical capability but equally
importantly in terms of their soft skills. By offering autonomy
within our businesses, each employee can not only become part of
the business, but they can help the business become part of the
community. By being locally focused, each business can focus on
what is important to their communities, be it support with local
schools, sports teams or charities.
Retaining & Attracting
This year we have seen many of our staff achieve service levels
that are a testament to the culture we look to have and retain in
our businesses; a working environment where people feel part of a
family. Across a business of close to 1,000 employees 32% have
dedicated 15 years to our businesses.
As proud as it is to have such long serving members of staff, we
have also focused on ensuring that those at the very start of their
working lives have the opportunity to become long serving members
of the team. This starts at the very beginning, even before people
are job hunting and are in school looking at career directions.
Across our businesses we have engaged with; over 25 trainees and
apprentices; informal and formal work experience such as Project
Trident providing work experience for school students under the
mentorship of technical and operational staff; and cooperation with
Universities and industrial training centers in the UK, Europe and
America.
At the end of the year, nearly all of our workforce are directly
employed by our businesses with almost 80% working in operational
and manufacturing roles.
Working with local companies when help is needed
Our local presence and commitment led us to become aware of,
engage with, and help support approximately 50 people facing
redundancy in unprecedent times for a high-profile project who
otherwise would have been made redundant. Since the end of the
project, we have retained people and helped others with finding
jobs elsewhere.
Supporting our communities and committing to our industry
This year we have seen our support take many forms from
supporting local charities, be it fundraising,
material or services, to our teams volunteering their time, knowledge and skills.
It is our industry and our people that have led us to be where
we are today, and it is testimony to our employees that they want
to continue to support where they have come from, often
volunteering time outside of normal working hours; Industry working
parties, Board member of national industrial federations, director
and committee roles of business councils and associations as well
as
offering educational commitments ranging from schools to universities.
Further information on our policies can be found at www.sigmaroc.com.
3. Governance
SigmaRoc looks to follow four key statements with regards to our
commitment to governance:
1. Promote QCA and Corporate Governance Codes;
2. Ensure proactive Board oversight and independence of committees;
3. Focus on risk management & mitigation (including cyber)
and conversion of risk into generation of opportunity; and
4. Ensure transparency and disclosure on both reporting and tax.
Following significant growth at the end of 2019, in 2020 heavy
emphasis has been placed on three main areas:
Corporate governance
We appointed two independent non-executive directors, including
new independent chairs for the audit, remuneration and nominations
committees, and a highly qualified inhouse general counsel, with a
specialty in ECM.
Anthony Brockbank, our General Counsel, is a qualified solicitor
specialising in Corporate Finance, M&A and Equity Capital
Markets. Anthony has previously worked for Fieldfisher, Hobson
Audley and Linklaters and has over 30 years' experience in mergers
and acquisitions, flotations and fundraisings with particular
expertise in small and mid-size public company transactions on the
Official List and AIM Market of the London Stock Exchange. Anthony
is ranked by Chambers in Band 1 for capital markets work and as a
leading individual in Legal 500.
This has already led to a full review of all existing corporate
governance handbook and going forward will ensure not only our
compliance with the QCA Corporate Governance Code but alignment
with best practice wherever possible.
In addition to the formal boards and committees, we have also
engaged an independent advisory board in Belgium, consisting of
Emmanuel Maes (former CEO DeCloedt), Pascal Lesoinne (former CEO
Heidelberg Belgium), Christophe de Limburg Stirum (Investor and
entrepreneur specialising in Industrial companies) and Patrick
Dolberg (former CEO Holcim Europe). The function of this board is
to ensure that within Belgium and Europe we have a governance
structure that can work on a local level where there are
jurisdictional differences .
Risk Management
This year we adopted a risk management framework. In the current
business climate, where remote working and communication has become
essential, we have also reviewed our cyber protection with both
insurance policies in place as well as cyber risk management
software that allow for testing and training of cyber security. In
addition, through our service providers, security checks are
performed on a regular basis both at Group and subsidiary
level.
Transparency
Engagement of a full time CFO to ensure adequate time was
dedicated to ensuring accurate and transparent reporting as well as
overall compliance. This has included the separation of our tax and
audit partners as well as the appointment of a training provider on
Criminal Finances Act 2017 that is due to be undertaken in early
2021.
We continue to maintain our policies such as Anti Bribery &
Corruption, which is overseen by the Board and trained annually and
cascaded throughout the business, as well as our Whistleblowing
policy. The Whistleblowing policy gives its employees, or indeed
any other third party, the means to raise concerns in confidence
and (if they wish) anonymously. The Audit Committee reviews reports
on notifications received and ensures that arrangements are in
place for the proportionate and independent investigation of such
matters and for follow up action.
We are also committed to having transparency with all of our
Shareholders and as per last annual reports and interim reports we
will continue to give a presentation webinar to all Shareholders
with an online or moderated Q&A session.
Further information on our policies can be found at
www.sigmaroc.com .
4. Sustainability Roadmap
Development
In 2020 we committed to define SigmaRoc's framework following
review of international and industry standards. We have agreed
commitment statements have have already started work and disclosure
on various aspects, including safety and CO(2) emissions and launch
of sustainable products such as GreenBloc. Through ongoing
engagement with investors we continue to identify areas of focus
and disclosure.
Measure
2020 was our first year of collating information for SECR. We
will continue to set up practical and meaningful measuring
processes to help determine more relevant and quantifiable targets
as well as our ongoing contribution to national industry
bodies.
Analyse and Disclose
Having captured all practical and meaningful data, we can
identify those areas of focus that will bring the biggest wins for
the overall position and performance of the company. Short and long
term targets will be able to be captured and disclosed
Improve
We will continue to monitor, disclose and drive continual
improvement.
DIRECTORS' REPORT
The Directors present their report, together with the audited
Financial Statements, for the year ended 31 December 2020.
Principal Activities
The principal activity of the Company is to make investments
and/or acquire businesses and assets in the construction materials
sector. The principal activity of the Group is the production of
high quality aggregates and supply of value-added construction
materials.
Board composition and head office
The Board comprises three Executive Directors and four
Non-Executive Directors. The Corporate Head Office of the Company
is located in London, UK .
Risk Management
The Board is responsible for the Group's risk management and
continues to develop policies and procedures that reflect the
nature and scale of the Group's business.
Details of the Group's financial risk management policies are
set out in Note 3 to the Financial Statements.
Results and Dividends
For the year to 31 December 2020, the Group's Underlying profit
before tax was GBP12.2 million (2019: GBP8.4 million) and
Underlying profit after tax was GBP11.5 million (2019: GBP7.9
million). Recognising the Group's strategy, current position on its
journey, the Directors are not proposing to adopt a dividend policy
yet.
Stated Capital
Details of the Company's shares in issue are set out in note 28
to the Financial Statements.
Directors
The following Directors served during the year:
Director Position Note
---------------- -------------------------- ------------------------
David Barrett Chairman
---------------- -------------------------- ------------------------
Max Vermorken Chief Executive Officer
---------------- -------------------------- ------------------------
Dean Masefield Chief Financial Officer Appointed 20 April 2020
---------------- -------------------------- ------------------------
Garth Palmer Non-Executive Director
---------------- -------------------------- ------------------------
Tim Hall Non-Executive Director
---------------- -------------------------- ------------------------
Simon Chisholm Independent Non-Executive Appointed 20 April 2020
Director
---------------- -------------------------- ------------------------
Jacques Emsens Independent Non-Executive Appointed 20 April 2020
Director
---------------- -------------------------- ------------------------
Dominic Traynor Non-Executive Director Resigned 18 May 2020
---------------- -------------------------- ------------------------
Patrick Dolberg Independent Non-Executive Resigned 18 May 2020
Director
---------------- -------------------------- ------------------------
Directors & Directors' interests
The Directors who served during the year ended 31 December 2020
are shown below and had, at that time, the following beneficial
interests in the shares of the Company:
31 December 2020 31 December 2019
--------------------- ---------------------
Ordinary Options Ordinary Options
Shares Shares
------------------ --------- ---------- --------- ----------
Max Vermorken 549,529 11,807,349 447,511 11,807,349
------------------ --------- ---------- --------- ----------
David Barrett 2,609,189 5,638,674 2,175,640 5,638,674
------------------ --------- ---------- --------- ----------
Dean Masefield(1) 28,101 30,000 - -
------------------ --------- ---------- --------- ----------
Garth Palmer 438,499 3,326,014 256,186 3,326,014
------------------ --------- ---------- --------- ----------
Tim Hall 329,176 750,000 300,000 750,000
------------------ --------- ---------- --------- ----------
Simon Chisholm(2) - - - -
------------------ --------- ---------- --------- ----------
Jacques Emsens(3) - - - -
------------------ --------- ---------- --------- ----------
(1) Appointed on 20 April 2020
(2) Appointed on 20 April 2020
(3) Appointed on 20 April 2020
Further details on options can be found in Note 29 to the
Financial Statements.
Details on the remuneration of the Director's can be found in
Note 10 to the Financial Statements.
Substantial Shareholdings
The Company is aware that, as at 18 March 2021, other than the
Directors, the interests of Shareholders holding three per cent or
more of the issued share capital of the Company were as shown in
the table below :
Shareholder Shares held Percentage of holdings
----------------------------- -------------------------------- -----------------------
M&G Investment Management 26,352,595 9.45%
----------------------------- -------------------------------- -----------------------
BGF Investment Management
Limited 21,792,872 7.82%
----------------------------- -------------------------------- -----------------------
Ravenscroft 21,345,901 7.66%
----------------------------- -------------------------------- -----------------------
Balliwick Investments 18,910,000 6.78%
----------------------------- -------------------------------- -----------------------
Hermco Property Limited 18,502,502 6.64%
----------------------------- -------------------------------- -----------------------
Chelverton Asset Management 17,952,460 6.44%
----------------------------- -------------------------------- -----------------------
Slater Investments 14,582,422 5.23%
----------------------------- -------------------------------- -----------------------
Janus Henderson Group
plc 13,693,048 4.91%
----------------------------- -------------------------------- -----------------------
Canaccord Genuity Wealth
Management (Inst) 12,500,000 4.48%
----------------------------- -------------------------------- -----------------------
Legal & General Investment
Management 12,018,925 4.31%
----------------------------- -------------------------------- -----------------------
Nigel Wray 10,580,048 3.80%
----------------------------- -------------------------------- -----------------------
Employees
By being responsible for their own businesses, that are aligned
with the overall Group's strategy, employees are fully aware of
their impact and contribution as they are inherently responsible
for their own success. The Group and each business is committed to
employing the best they can, not only in skills and competence but
also in their softer skills, regardless of who they are or where
they have come from. Once engaged, each employee is nurtured and
developed locally with opportunities within each business and
platform offered openly.
Political Contribution
The Group did not make any contributions to political parties
during either the current or the previous year.
Annual General Meeting
The AGM will be held at 56 Queen Anne Street, London, W1G 8LA on
19 May 2021 at 3.00 p.m. The formal notice convening the AGM,
together with explanatory notes on the resolutions contained
therein, is included in the separate circular accompanying this
document and is available on the Company's website at
www.sigmaroc.com.
Viability Statement
The directors have assessed the viability of the Group over a
period to December 2022. This is the same period over which
financial projections were prepared for the Group's strategic
financial plan. In making their assessment the directors have taken
into account the Group's current position and the potential impact
of the principal risks and uncertainties set out on its business
model, future performance, solvency or liquidity. They also stress
tested their analysis by running a number of credible scenarios and
considered the availability of mitigating actions. Based on this
assessment, the directors confirm that they have a reasonable
expectation that the Group will be able to continue in operation
and meet its liabilities as they fall due over the period to
December 2022. In making this statement, the directors have assumed
that financing remains available and that mitigating actions are
effective.
Corporate responsibility
Environmental
SigmaRoc undertakes its activities in a manner that minimises or
eliminates negative environmental impacts and maximises positive
impacts of an environmental nature.
Health and safety
SigmaRoc operates a comprehensive health and safety programme to
ensure the wellness and security of its employees. The control and
eventual elimination of all work related hazards requires a
dedicated team effort involving the active participation of all
employees. A comprehensive health and safety programme is the
primary means for delivering best practices in health and safety
management. This programme is regularly updated to incorporate
employee suggestions, lessons learned from past incidents and new
guidelines related to new projects, with the aim of identifying
areas for further improvement of health and safety management. This
results in continuous improvement of the health and safety
programme. Employee involvement is regarded as fundamental in
recognising and reporting unsafe conditions and avoiding events
that may result in injuries and accidents.
Internal controls
The Board recognises the importance of both financial and
non-financial controls and has reviewed the Group's control
environment and any related shortfalls during the year. Since the
Group was established, the Directors are satisfied that, given the
current size and activities of the Group, adequate internal
controls have been implemented. Whilst they are aware that no
system can provide absolute assurance against material misstatement
or loss, in light of the current activity and proposed future
development of the Group, continuing reviews of internal controls
will be undertaken to ensure that they are adequate and
effective.
Going concern
The Group meets its day-to-day working capital and other funding
requirements through cash and banking facilities; which were
renewed in December 2020.
The impact of the COVID-19 pandemic on the Group's business,
revenues and cash flow creates uncertainty. However, given the
Group's robust balance sheet, solid performance through the
COVID-19 pandemic to date and in conjunction with forecast
projections, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence
for the foreseeable future and, therefore, continue to adopt the
going concern basis in preparing the Annual Report and Financial
Statements. Further details on their assumptions and their
conclusion thereon are included in the statement on going concern
included in Note 2.3 to the Financial Statements.
Directors' and officers' indemnity insurance
The Company has made qualifying third-party indemnity provisions
for the benefit of its Directors and officers. These were made
during the year and remain in force at the date of this Annual
Report.
Events after the reporting period
Events after the reporting period are set out in Note 38 to the Financial Statements.
Policy and practice on payment of creditors
The Group agrees terms and conditions for its business
transactions with suppliers. Payment is then made in accordance
with these terms, subject to the terms and conditions being met by
the supplier. As at 31 December 2020, the Company had an average of
9 days (2019: 51 days) purchases outstanding in trade payables and
the Group had an average of 74 days (2019: 82 days).
Provision of information to Auditor
So far as each of the Directors is aware at the time this report
is approved:
-- there is no relevant audit information of which the Group's auditor is unaware; and
-- the Directors have taken all steps that they ought to have
taken to make themselves aware of any relevant audit information
and to establish that the auditor is aware of that information.
Auditor
PKF Littlejohn LLP has signified its willingness to continue in
office as auditor.
This report was approved by the Board on 12 April 2021.
Dean Masefield
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 DECEMBER 2020
Year ended 31 December
Year ended 31 December 2020 2019
Non-underlying*
Non-underlying (Note 11
Underlying (Note 11) Total Underlying ) Total
Continued GBP
operations Note GBP GBP GBP GBP GBP
----------------- ---- ------------ -------------- ------------ ------------ --------------- ------------
Revenue 7 124,231,115 - 124,231,115 70,362,472 - 70,362,472
------------ -------------- ------------ ------------ --------------- ------------
Cost of sales 8 (90,028,317) - (90,028,317) (50,924,209) - (50,924,209)
Profit from
operations 34,202,798 - 34,202,798 19,438,263 - 19,438,263
------------ -------------- ------------ ------------ --------------- ------------
Administrative
expenses 8 (20,045,509) (4,554,557) (24,600,066) (9,922,199) (4,953,675) (14,875,874)
Net finance
(expense)/income 12 (2,379,230) (359,599) (2,738,829) (1,268,122) (695,457) (1,963,579)
Other net gains 13
/ (losses) 14 340,890 (65,035) 275,855 125,843 (529,948) (404,105)
Foreign Exchange 33,151 - 33,151 (19,641) - (19,641)
Profit/(loss)
before
tax 12,152,100 (4,979,191) 7,172,909 8,354,144 (6,179,080) 2,175,064
------------ -------------- ------------ ------------ --------------- ------------
Tax expense 15 (662,041) - (662,041) (448,518) - (448,518)
Profit/(loss) 11,490,059 (4,979,191) 6,510,868 7,905,626 (6,179,080) 1,726,546
------------ -------------- ------------ ------------ --------------- ------------
Profit/(loss)
attributable
to:
Owners of the
parent 11,490,059 (4,979,191) 6,510,868 7,905,626 (6,179,080) 1,726,546
------------ -------------- ------------
11,490,059 (4,979,191) 6,510,868 7,905,626 (6,179,080) 1,726,546
------------ -------------- ------------ ------------ --------------- ------------
Basic earnings
per share
attributable
to owners of the
parent
(expressed
in pence per
share) 31 4.50 (1.95) 2.55 4.20 (3.28) 0.92
------------ -------------- ------------ ------------ --------------- ------------
Diluted earnings
per share
attributable
to owners of the
parent
(expressed
in pence per
share) 31 4.15 (1.80) 2.35 3.78 (2.96) 0.82
------------ -------------- ------------ ------------ --------------- ------------
* Non-underlying items represent acquisition related expenses,
restructuring costs, certain finance costs, share option expense
and amortisation of acquired intangibles. See Note 11 for more
information.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 31 DECEMBER 2020
Year ended Year ended
31 December 31 December
2020 2019
Note GBP GBP
------------------------------------------------- ----- ------------ ------------
Profit/(loss) for the year 6,510,868 1,726,546
------------ ------------
Other comprehensive income:
Items that will or may be reclassified to profit
or loss:
FX translation reserve 2,379,173 (447,978)
8,890,041 1,278,568
------------ ------------
Total comprehensive income 8,890,041 1,278,568
------------ ------------
Total comprehensive income attributable to:
Owners of the parent 8,890,041 1,278,568
------------ ------------
Total comprehensive income for the period 8,890,041 1,278,568
------------ ------------
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
Consolidated Company
------------------------ --------------------------
31 December 31 December 31 December 31 December
2020 2019 2020 2019
Note GBP GBP GBP GBP
------------------------------- ---- ----------- ----------- ------------ ------------
Non-current assets
Property, plant and equipment 16 144,793,014 78,718,333 52,005 71,765
Intangible assets 17 48,803,895 80,243,724 - -
Investments in subsidiary
undertakings 18 - - 101,249,110 94,370,845
Investment in equity-accounted
associate 19 - 5,538,212 - 5,538,212
Other receivables 21,327 19,996 - -
Deferred tax asset 15 1,411,980 - - -
195,030,216 164,520,265 101,301,115 99,980,822
----------- ----------- ------------ ------------
Current assets
Trade and other receivables 20 20,342,578 22,232,596 997,856 787,825
Inventories 21 14,247,379 11,160,574 - -
Cash and cash equivalents 22 27,451,984 9,867,696 11,521,206 3,935,831
Derivative financial asset 151,770 - 151,770 -
62,193,711 43,260,866 12,670,832 4,723,656
----------- ----------- ------------ ------------
Total assets 257,223,927 207,781,131 113,971,947 104,704,478
----------- ----------- ------------ ------------
Current liabilities
Trade and other payables 23 46,522,548 37,158,011 14,215,450 16,844,018
Current tax payable 706,698 884,871 - -
Borrowings 24 3,611,169 4,461,336 20,653 24,827
50,840,415 42,504,218 14,236,103 16,868,845
----------- ----------- ------------ ------------
Non-current liabilities
Borrowings 24 67,688,396 55,194,015 22,341 41,671
Deferred tax liabilities 15 3,871,086 1,098,148 - -
Provisions 25 6,160,352 6,936,754 - -
Other payables 23 5,100,196 - 5,100,196 -
----------- ----------- ------------ ------------
82,820,030 63,228,917 5,122,537 41,671
----------- ----------- ------------ ------------
Total liabilities 133,660,445 105,733,135 19,358,640 16,910,516
----------- ----------- ------------ ------------
Net assets 123,563,482 102,047,996 94,613,307 87,793,962
----------- ----------- ------------ ------------
Equity attributable to
owners of the parent
Share capital 28 2,787,393 2,537,393 2,787,393 2,537,393
Share premium 28 107,417,822 95,358,556 107,417,822 95,358,556
Share option reserve 29 847,392 531,213 847,392 531,213
Other reserves 30 3,292,913 913,740 1,361,718 1,361,718
Retained earnings 9,217,962 2,707,094 (17,801,018) (11,994,918)
Total equity 123,563,482 102,047,996 94,613,307 87,793,962
----------- ----------- ------------ ------------
The Company has elected to take the exemption under Section 408
of the Companies Act 2006 from presenting the Company's Income
Statement and Statement of Comprehensive Income.
The loss for the Company for the year ended 31 December 2020 was
GBP5,806,100 (year ended 31 December 2019: GBP4,699,471).
The Financial Statements were approved and authorised for issue
by the Board of Directors on 12 April 2021 and were signed on its
behalf by:
Dean Masefield
Chief Financial Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2020
Share
Share Share option Other Retained
capital premium reserve reserves earnings Total
Note GBP GBP GBP GBP GBP GBP
-------------------------- ---- --------- ----------- -------- --------- --------- -----------
Balance as at 1 January
2019 1,367,056 50,136,904 352,877 1,361,718 910,556 54,129,111
--------- ----------- -------- --------- --------- -----------
Profit for the year - - - - 1,726,546 1,726,546
Currency translation
differences - - - (447,978) - (447,978)
--------- ----------- -------- --------- --------- -----------
Total comprehensive
income for the period - - - (447,978) 1,726,546 1,278,568
--------- ----------- -------- --------- --------- -----------
Contributions by and
distributions to owners
Issue of share capital 1,101,788 44,071,478 - - - 45,173,266
Issue costs 28 - (1,531,276) - - - (1,531,276)
Share based payments 68,549 2,681,450 178,336 - - 2,928,335
IFRS 16 Adjustments - - - - 69,992 69,992
Total contributions
by and distributions
to owners 1,170,337 45,221,652 178,336 - 69,992 46,640,317
--------- ----------- -------- --------- --------- -----------
Balance as at 31 December
2019 2,537,393 95,358,556 531,213 913,740 2,707,094 102,047,996
--------- ----------- -------- --------- --------- -----------
Balance as at 1 January
2020 2,537,393 95,358,556 531,213 913,740 2,707,094 102,047,996
--------- ----------- -------- --------- --------- -----------
Profit for the year - - - - 6,510,868 6,510,868
Currency translation
differences - - - 2,379,173 - 2,379,173
--------- ----------- -------- --------- --------- -----------
Total comprehensive
income for the period - - - 2,379,173 6,510,868 8,890,041
--------- ----------- -------- --------- --------- -----------
Contributions by and
distributions to owners
Issue of share capital 243,127 12,156,369 - - - 12,399,496
Issue costs 28 - (440,735) - - - (440,735)
Share based payments 6,873 343,632 316,179 - - 666,684
Total contributions
by and distributions
to owners 250,000 12,059,266 316,179 - - 12,625,445
--------- ----------- -------- --------- --------- -----------
Balance as at 31 December
2020 2,787,393 107,417,822 847,392 3,292,913 9,217,962 123,563,482
--------- ----------- -------- --------- --------- -----------
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2020
Share
Share Share option Other Retained
capital premium reserve reserves earnings Total
Note GBP GBP GBP GBP GBP GBP
-------------------------- ---- --------- ----------- -------- --------- ------------ -----------
Balance as at 1 January
2019 1,367,056 50,136,904 352,877 1,361,718 (7,294,779) 45,923,776
--------- ----------- -------- --------- ------------ -----------
Profit/(Loss) - - - - (4,699,471) (4,699,471)
Total comprehensive
income for the period - - - - (4,699,471) (4,699,471)
--------- ----------- -------- --------- ------------ -----------
Contributions by and
distributions to owners
Issue of share capital 1,101,788 44,071,478 - - - 45,173,266
Issue costs 28 - (1,531,276) - - - (1,531,276)
Share based payments 68,549 2,681,450 178,336 - - 2,928,335
IFRS 16 Adjustments - - - - (668) (668)
Total contributions
by and distributions
to owners 1,170,337 45,221,652 178,336 - (668) 46,569,657
--------- ----------- -------- --------- ------------ -----------
Balance as at 31 December
2019 2,537,393 95,358,556 531,213 1,361,718 (11,994,918) 87,793,962
--------- ----------- -------- --------- ------------ -----------
Balance as at 1 January
2020 2,537,393 95,358,556 531,213 1,361,718 (11,994,918) 87,793,962
--------- ----------- -------- --------- ------------ -----------
Profit/(Loss) - - - - (5,806,100) (5,806,100)
Total comprehensive
income for the period - - - - (5,806,100) (5,806,100)
--------- ----------- -------- --------- ------------ -----------
Contributions by and
distributions to owners
--------- ----------- -------- --------- ------------ -----------
Issue of share capital 243,127 12,156,369 - - - 12,399,496
Issue costs 28 - (440,735) - - - (440,735)
Share based payments 6,873 343,632 316,179 - - 666,684
Total contributions
by and distributions
to owners 250,000 12,059,266 316,179 - - 12,625,445
--------- ----------- -------- --------- ------------ -----------
Balance as at 31 December
2020 2,787,393 107,417,822 847,392 1,361,718 (17,801,018) 94,613,307
--------- ----------- -------- --------- ------------ -----------
CASH FLOW STATEMENTS
FOR THE YEARED 31 DECEMBER 2020
Consolidated Company
-------------------------- --------------------------
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2020 2019 2020 2019
Note GBP GBP GBP GBP
----------------------------------- ---- ------------ ------------ ------------ ------------
Cash flows from operating
activities
Profit/(loss) 6,510,868 1,726,545 (5,484,197) (4,699,471)
Adjustments for:
16
Depreciation and amortisation 17 10,886,578 6,125,957 28,951 19,472
Share option expense 316,179 178,336 316,179 178,336
Loss/(gain) on sale of PP&E (372,966) 41,438 - -
Net finance costs 2,738,829 1,963,579 203,280 361,796
Income tax expense 662,041 448,518 - -
Share of earnings from associates (293,975) (84,018) - -
Non-cash items 649,799 (2,852,839) 350,505 (1,257,541)
(Increase)/decrease in trade
and other receivables 7,558,948 (838,384) (211,035) (620,575)
(Increase)/decrease in inventories (1,008,047) 490,462 - -
(Decrease)/increase in trade
and other payables 2,713,707 (4,522,142) (135,808) 1,356,158
Increase in provisions - 91,407 - -
Income tax paid (1,894,398) (615,128) - -
Net cash flows from operating
activities 28,467,563 2,153,731 (4,932,125) (4,661,825)
------------ ------------ ------------ ------------
Investing activities
Purchase of property, plant
and equipment 16 (6,451,893) (3,384,363) (8,886) (32,535)
Sale of property, plant and
equipment 895,962 48,475 - -
Purchase of intangible assets 17 (152,617) (3,611) - -
Acquisition of businesses
(net of cash acquired) (8,382,804) (35,931,107) (10,116,675) (36,741,325)
Financial derivative (151,770) - (151,770)
Interest received 185,704 773 37,813 773
Net cash used in investing
activities (14,057,418) (39,269,833) (10,239,518) (36,773,087)
------------ ------------ ------------ ------------
Financing activities
Proceeds from share issue 12,399,496 45,173,266 12,399,496 45,173,266
Cost of share issue (440,735) (1,531,274) (440,735) (1,531,274)
Proceeds from borrowings 67,645,725 20,171,691 - -
Cost of borrowings (858,562) (184,000) - -
Repayment of borrowings (73,148,153) (18,720,774) (23,032) (10,000,000)
Net loans with subsidiaries - - 10,809,549 11,655,492
Interest paid (2,486,688) (1,678,500) (695) (40,927)
Repayment of finance lease
obligations - - - -
------------ ------------ ------------ ------------
Net cash used in financing
activities 3,111,083 43,230,409 22,744,583 45,256,557
------------ ------------ ------------ ------------
Net increase/(decrease) in
cash and cash equivalents 17,521,228 6,114,307 7,572,940 3,821,645
Cash and cash equivalents
at beginning of period 9,867,696 3,771,735 3,935,831 115,756
Exchange losses on cash 63,060 (18,346) 12,435 (1,570)
Cash and cash equivalents
and end of period 22 27,451,984 9,867,696 11,521,206 3,935,831
------------ ------------ ------------ ------------
Major non-cash transactions
During the year ended 31 December 2020 there were share based
payments of GBP350,505 to CDH employees and consultants and
non-cash additions of property, plant and equipment. The remainder
of non-cash movements are not considered material.
NOTES TO THE FINANCIAL STATEMENTS
1. General Information
The principal activity of SigmaRoc plc (the 'Company') is to
make investments and/or acquire projects in the construction
materials sector and through its subsidiaries (together the
'Group') is the production of high-quality aggregates and supply of
value-added construction materials. The Company's shares are
admitted to trading on the AIM Market of the London Stock Exchange
('AIM'). The Company is incorporated and domiciled in the United
Kingdom.
The address of its registered office is 7-9 Swallow Street,
London, W1B 4DE.
2. Accounting Policies
The principal accounting policies applied in the preparation of
these Financial Statements are set out below ('Accounting Policies'
or 'Policies'). These Policies have been consistently applied to
all the periods presented, unless otherwise stated.
2.1. Basis of Preparing the Financial Statements
The Financial Statements have been prepared in accordance with
International Financial Reporting Standards ('IFRS') and IFRIC
Interpretations Committee ('IFRIC IC') as adopted by the European
Union. The Financial Statements have also been prepared under the
historical cost convention.
The Financial Statements are presented in UK Pounds Sterling
rounded to the nearest pound.
The preparation of Financial Statements in conformity with
IFRS's requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in the
process of applying the Group's Accounting Policies. The areas
involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the Financial
Information are disclosed in Note 4 .
a) Changes in Accounting Policy
i) New and amended standards adopted by the Group
The Group has adopted the following standards from 1 January
2020:
- Amendments to References to Conceptual Framework in IFRS
Standards
- Amendments to IFRS 3
- Definition of a business
- Amendments to IAS 1 and IAS 8 - Definition of material
- Amendments to IFRS 9, IAS 39 and IFRS 7 - Interest Rate
Benchmark Reform
The adoption of these standards has not had a material impact on
the Financial Statements.
New IFRS Standards and Interpretations not adopted
At the date on which these Financial Statements were authorised,
there were no Standards, Interpretations and Amendments which had
been issued but were not effective for the year ended 31 December
2020 that are expected to materially impact the Group's Financial
Statements.
ii) New standards, amendments and interpretations in issue but
not yet effective or not yet endorsed and not early adopted
Standards, amendments and interpretations that are not yet
effective and have not been early adopted are as follows:
Standard Impact on initial application Effective date
-------------------- ---------------------------------- ---------------
IFRS 3 Reference to Conceptual Framework 1 January 2022
---------------------------------- ---------------
IAS 37 Onerous contracts 1 January 2022
---------------------------------- ---------------
IAS 16 Proceeds before intended use 1 January 2022
---------------------------------- ---------------
Annual improvements 2018-2020 Cycle 1 January 2022
---------------------------------- ---------------
IFRS 17 Insurance contracts 1 January 2023
---------------------------------- ---------------
IAS 8 Accounting estimates 1 January 2023
---------------------------------- ---------------
IAS 1 Classification of Liabilities 1 January 2023
as Current or Non-Current.
---------------------------------- ---------------
The Group is evaluating the impact of the new and amended
standards above which are not expected to have a material impact on
the Group's results or shareholders' funds
2.2. Basis of Consolidation
The Consolidated Financial Statements consolidate the Financial
Statements of the Company and the accounts of all of its subsidiary
undertakings for all periods presented.
Subsidiaries are entities over which the Group has control. The
Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over
the entity. Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
The Group applies the acquisition method of accounting to
account for business combinations. The consideration transferred
for the acquisition of a subsidiary is the fair values of the
assets transferred, the liabilities incurred to the former owners
of the acquiree and the equity interests issued by the Group. The
consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent
liabilities assumed in a business combination are measured
initially at their fair values at the acquisition date.
Acquisition-related costs are expensed as incurred unless they
result from the issuance of shares, in which case they are offset
against the premium on those shares within equity.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent
changes to the fair value of the contingent consideration that is
deemed to be an asset or liability is recognised in accordance with
IAS 39 either in profit or loss or as a change to other
comprehensive income. Contingent consideration that is classified
as equity is not re-measured, and its subsequent settlement is
accounted for within equity.
Investments in subsidiaries are accounted for at cost less
impairment.
Associates are entities over which the Group has significant
influence but not control over the financial and operating
policies. Investments in associates are accounted for using the
equity method of accounting and are initially recognised at cost.
The Group's share of its associates' post-acquisition profits or
losses is recognised in profit or loss, and its share of
post-acquisition movements in reserves is recognised in other
comprehensive income. The cumulative post-acquisition movements are
adjusted against the carrying amount of the investment.
Accounting policies of equity-accounted investees have been
changed where necessary to ensure consistency with the policies
adopted by the Group.
Where considered appropriate, adjustments are made to the
financial information of subsidiaries to bring the accounting
policies used into line with those used by other members of the
Group. All intercompany transactions and balances between Group
enterprises are eliminated on consolidation.
CDH use Belgian GAAP rules to prepare and report their financial
statements. The Group reports using IFRS standards and in order to
comply with the Group's reporting standards, management of CDH
processed several adjustments to ensure the financial information
included at a Group level complies with IFRS. CDH will continue to
prepare their company financial statements in line with the Belgian
GAAP rules.
2.3. Going Concern
As described in note 38 , the Group is managing the impact of
the COVID-19 pandemic on its business and the uncertainty it
creates. The Executive management team have prepared a range of
simulated scenarios based on reductions in revenues, and from
these, they believe that the Group has a sufficiently robust
balance sheet to endure the Coronavirus pandemic.
The Financial Statements have been prepared on a going concern
basis. The Directors have a reasonable expectation that the Group
and Company have adequate resources to continue in operational
existence for the foreseeable future. Thus they continue to adopt
the going concern basis of accounting in preparing the Financial
Statements.
2.4. Segment Reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors that makes
strategic decisions.
2.5. Foreign Currencies
a) Functional and Presentation Currency
Items included in the Financial Statements are measured using
the currency of the primary economic environment in which the
entity operates (the 'functional currency'). The Financial
Statements are presented in Pounds Sterling, rounded to the nearest
pound, which is the Group's functional currency.
b) Transactions and Balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions or valuation where such items are re-measured. Foreign
exchange gains and losses resulting from the settlement of such
transactions and from the translation at year-end exchange rates of
monetary assets and liabilities denominated in foreign currencies
are recognised in the Income Statement. Foreign exchange gains and
losses that relate to borrowings and cash and cash equivalents are
presented in the Income Statement within 'finance income or costs.
All other foreign exchange gains and losses are presented in the
Income Statement within 'Other net gains/(losses)'.
Translation differences on non-monetary financial assets and
liabilities such as equities held at fair value through profit or
loss are recognised in profit or loss as part of the fair value
gain or loss. Translation differences on non-monetary financial
assets measured at fair value, such as equities classified as
available for sale, are included in other comprehensive income.
c) Group companies
The results and financial position of all the Group entities
(none of which has the currency of a hyperinflationary economy)
that have a functional currency different from the presentation
currency are translated into the presentation currency as
follows:
-- assets and liabilities for each period end date presented are
translated at the period-end closing rate;
-- income and expenses for each Income Statement are translated
at average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on
the transaction dates, in which case income and expenses are
translated at the dates of the transactions); and
-- all resulting exchange differences are recognised in other comprehensive income.
On consolidation, exchange differences arising from the
translation of the net investment in foreign entities, and of
monetary items receivable from foreign subsidiaries for which
settlement is neither planned nor likely to occur in the
foreseeable future, are taken to other comprehensive income. When a
foreign operation is sold, such exchange differences are recognised
in the Income Statement as part of the gain or loss on sale.
2.6. Intangible Assets
Goodwill arises on the acquisition of subsidiaries and
represents the excess of the consideration transferred and the
acquisition date fair value of any previous equity interest in the
acquire over the fair value of the net identifiable assets,
liabilities and contingent liabilities of the acquire. If the total
of consideration transferred, non-controlling interest recognised
and previously held interest measured at fair value is less than
the fair value of the net assets of the subsidiary acquired, in the
case of a bargain purchase, the difference is recognised directly
in the Income Statement.
As reported within the CEO's strategic report, a PPA was carried
out to assess the fair value of the assets acquired in CDH as at
the completion date. As a result of this exercise, goodwill in CDH
decreased from GBP51 million to GBP7.2 million with the
corresponding movement being property, plant and equipment and
intangible assets. The current accounting policies regarding the
subsequent treatment intangible assets will apply to fair value
uplift attributable to the PPA.
Amortisation is provided on intangible assets to write off the
cost less estimated residual value of each asset over its expected
useful economic life on a straight-line basis at the following
annual rates:
Goodwill 0%
Customer relations 7% - 12.5%
Intellectual property 10 - 12%
Research and Development 10% - 20%
Branding 5% - 10%
Other intangibles 0%
For the purpose of impairment testing, goodwill acquired in a
business combination is allocated to each of the cash-generating
units, or groups of cash-generating units, that are expected to
benefit from the synergies of the combination. Each unit or group
of units to which the goodwill is allocated represents the lowest
level within the entity at which the goodwill is monitored for
internal management purposes. Goodwill is monitored at the
operating segment level.
Goodwill is not amortised however impairment reviews are
undertaken annually, or more frequently if events or changes in
circumstances indicate a potential impairment. The carrying value
of goodwill is compared to the recoverable amount, which is the
higher of value in use, discounted to present value using a pre tax
discount rate reflective of the time value of money and risks
specific to the business unit. Any impairment is recognised
immediately as an expense and is not subsequently reversed .
Other intangibles consist of an option over gravel in Poundfield
and capitalised development costs for assets produced that assist
in the operations of the Group and incur revenue. The option for
gravel is amortised based on units of production and the
development costs are amortised over the life of the asset.
Impairment reviews are performed annually. Where the benefit of the
intangible ceases or has been superseded, these are written off the
Income Statement.
2.7. Property, Plant and Equipment
Property, plant and equipment is stated at cost, plus any
purchase price allocation uplift, less accumulated depreciation and
any accumulated impairment losses. Subsequent costs are included in
the asset's carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the
item can be measured reliably. The carrying amount of the replaced
part is derecognised. All other repairs and maintenance are charged
to the Income Statement during the financial period in which they
are incurred.
Depreciation is provided on all property, plant and equipment to
write off the cost less estimated residual value of each asset over
its expected useful economic life on a straight-line basis at the
following annual rates:
Office equipment 12.5% - 50%
Land and Buildings 0 - 2%
Plant and machinery 5% - 20%
Furniture and 7.5% - 33.3%
vehicles
Construction in
progress 0%
The assets' residual values and useful lives are reviewed, and
adjusted if appropriate, at the end of each reporting period.
An asset's carrying amount is written down immediately to its
recoverable amount if the asset's carrying amount is greater than
its estimated recoverable amount.
Gains and losses on disposal are determined by comparing the
proceeds with the carrying amount and are recognised within 'Other
net gains/(losses)' in the Income Statement.
2.8. Land, Mineral Rights and Restoration Costs
Land, quarry development costs, which include directly
attributable construction overheads and mineral rights are recorded
at cost plus any purchase price allocation uplift. Land and quarry
development are depreciated and amortised, respectively, using the
units of production method, based on estimated recoverable
tonnage.
Where the Group has a legal or constructive obligation for
restoration of a site the costs of restoring this site is provided
for. The initial cost of creating this provision is capitalised
within property, plant and equipment and depreciated over the life
of the site. The provisions are discounted to their present value
at a rate which reflects the time value of money and risks specific
to the liability. Changes in the measurement of a previously
capitalized provision are accordingly added or deducted from the
value of the asset.
The depletion of mineral rights and depreciation of restoration
costs are expensed by reference to the quarry activity during the
period and remaining estimated amounts of mineral to be recovered
over the expected life of the operation.
2.9. Financial Assets
Classification
The Group's financial assets consist of loans and receivables.
The classification depends on the purpose for which the financial
assets were acquired. Management determines the classification of
its financial assets at initial recognition.
(i) Financial Assets at Fair Value through Profit or Loss
Financial assets at fair value through profit or loss are
financial assets held for trading. A financial asset is classified
in this category if acquired principally for the purpose of selling
in the short term. Derivatives are also categorised as held for
trading unless they are designated as hedges.
Assets in this category are classified as current assets if
expected to be settled within 12 months; otherwise, they are
classified as non-current. The Group holds call options to cover
their exposure relative to fluctuations against the Euro. They hold
call options to purchase EUR4,000,000 on 30 June 2021 and
EUR6,000,000 on 31 December 2021, such call options being bought
for GBP190,145. These were purchased on 11 December 2020 and as the
value is deemed to be immaterial to the Group, hedge accounting is
not required.
(ii) Loans and Receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. They are included in current assets, except for maturities
greater than 12 months after the balance sheet date. These are
classified as non-current assets. The Group's loans and receivables
comprise trade and other receivables and cash and cash equivalents
at the year-end.
Recognition and Measurement
Regular purchases and sales of financial assets are recognised
on the trade date - the date on which the Group commits to
purchasing or selling the asset. Financial assets carried at fair
value through profit or loss is initially recognised at fair value,
and transaction costs are expensed in the Income Statement.
Financial assets are derecognised when the rights to receive cash
flows from the assets have expired or have been transferred, and
the Group has transferred substantially all of the risks and
rewards of ownership.
Loans and receivables are subsequently carried at amortised cost
using the effective interest method.
Gains or losses arising from changes in the fair value of
financial assets at fair value through profit or loss are presented
in the Income Statement within "Other (Losses)/Gains" in the period
in which they arise.
Impairment of Financial Assets
The Group assesses at the end of each reporting period whether
there is objective evidence that a financial asset, or a group of
financial assets, is impaired. A financial asset, or a group of
financial assets, is impaired and impairment losses are incurred,
only if there is objective evidence of impairment as a result of
one or more events that occurred after the initial recognition of
the assets (a "loss event"), and that loss event (or events) has an
impact on the estimated future cash flows of the financial asset,
or group of financial assets, that can be reliably estimated.
The criteria that the Group uses to determine that there is
objective evidence of an impairment loss include:
-- significant financial difficulty of the issuer or obligor;
-- a breach of contract, such as a default or delinquency in interest or principal repayments;
-- the Group, for economic or legal reasons relating to the
borrower's financial difficulty, granting to the borrower a
concession that the lender would not otherwise consider; and
-- it becomes probable that the borrower will enter bankruptcy
or another financial reorganisation.
The Group first assesses whether objective evidence of
impairment exists.
The amount of the loss is measured as the difference between the
asset's carrying amount and the present value of estimated future
cash flows (excluding future credit losses that have not been
incurred), discounted at the financial asset's original effective
interest rate. The asset's carrying amount is reduced and the loss
is recognised in the Income Statement.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised (such as an
improvement in the debtor's credit rating), the reversal of the
previously recognised impairment loss is recognised in the Income
Statement.
2.10. Inventories
Inventories are initially recognised at cost, and subsequently
at the lower of cost and net realisable value. Cost comprises all
costs of purchase, costs of conversion and other costs incurred in
bringing the inventories to their present location and condition.
In the case of manufactured inventories and work in progress, cost
includes an appropriate share of overheads based on normal
operating capacity.
Weighted average cost is used to determine the cost of
ordinarily interchangeable items.
2.11. Trade Receivables
Trade receivables are amounts due from third parties in the
ordinary course of business. If collection is expected in one year
or less, they are classified as current assets. If not, they are
presented as non-current assets.
2.12. Cash and Cash Equivalents
Cash and cash equivalents comprise cash at bank and in hand and
are subject to an insignificant risk of changes in value.
2.13. Share Capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
2.14. Reserves
Share Premium - the reserve for shares issued above the nominal
value. This also includes the cost of share issues that occurred
during the year.
Retained Earnings - the retained earnings reserve includes all
current and prior periods retained profit and losses.
Share Option Reserve - represents share options awarded by the
Company.
Other Reserves comprise the following:
Capital Redemption Reserve - the capital redemption reserve is
the amount equivalent to the nominal value of shares redeemed by
the Group.
Foreign Currency Translation Reserve - represents the
translation differences arising from translating the financial
statement items from functional currency to presentational
currency.
Deferred Shares - are shares that effectively do not have any
rights or entitlements.
2.15. Trade Payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Accounts payable are classified as current liabilities
if payment is due within one year or less. If not, they are
presented as non-current liabilities.
Trade payables are recognised initially at fair value, and
subsequently measured at amortised cost using the effective
interest method.
2.16. Provisions
The Group provides for the costs of restoring a site where a
legal or constructive obligation exists. The estimated future costs
for known restoration requirements are determined on a site-by-site
basis and are calculated based on the present value of estimated
future costs.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows (where the effect of the time value of money is material).
The increase in provisions due to the passage of time is included
in the Consolidated Statement of Profit or Loss and Comprehensive
Loss.
2.17. Borrowings
Bank and Other Borrowings
Interest-bearing bank loans and overdrafts and other loans are
recognised initially at fair value less attributable transaction
costs. All borrowings are subsequently stated at amortised cost
with the difference between initial net proceeds and redemption
value recognised in the Income Statement over the period to
redemption on an effective interest basis.
2.18. Taxation
Tax is recognised in the Income Statement, except to the extent
that it relates to items recognised in other comprehensive income
or directly in equity. In this case, the tax is also recognised in
other comprehensive income or directly in equity, respectively.
2.19. Non-Underlying Items
Non-underlying items are a non IFRS measure, but the Group have
disclosed these separately in the financial statements, where it is
necessary to do so to provide further understanding of the
financial performance of the Group. They are items that are not
expected to be recurring or do not relate to the ongoing operations
of the Group's business and non-cash items which distort the
underlying performance of the business.
2.20. Revenue Recognition
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts receivable for goods
or services supplied in course of ordinary business, stated net of
discounts, returns and value added taxes. The Group recognises
revenue in accordance with IFRS 15 at either a point in time of
over time, depending on the nature of the goods or services and
existence of acceptance clauses.
Revenue from the sale of goods is recognised when delivery has
taken place and the performance obligation of delivering the goods
has taken place. The performance obligation of products sold are
transferred according to the specific delivery terms that have been
formally agreed with the customer, generally upon delivery when the
bill of lading is signed as evidence that they have accepted the
product delivered to them.
Revenue from the provision of services is recognised as the
services are rendered, in accordance with customer contractual
terms.
2.21. Finance Income
Interest income is recognised using the effective interest
method.
2.22. Employee Benefits - Defined Contribution Plans
The Group maintains defined contribution plans for which the
Group pays fixed contributions to publicly or privately
administered pension insurance plans on a mandatory, contractual or
voluntary basis and will have no legal or constructive obligation
to pay further amounts. The Group's contributions to defined
contribution plans are charged to the Income Statement in the
period to which the contributions relate.
2.23. Share Based Payments
The Group operates a number of equity-settled, share-based
schemes, under which the entity receives services from employees or
third-party suppliers as consideration for equity instruments
(options and warrants) of the Group. The fair value of the
third-party suppliers' services received in exchange for the grant
of the options is recognised as an expense in the Statement of
Comprehensive Income or charged to equity depending on the nature
of the service provided. The value of the employee services
received is expensed in the Income Statement and its value is
determined by reference to the fair value of the options
granted:
-- including any market performance conditions;
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability or sales
growth targets, or remaining an employee of the entity over a
specified time period); and
-- including the impact of any non-vesting conditions (for
example, the requirement for employees to save).
Non-market vesting conditions are included in assumptions about
the number of options that are expected to vest. The total expense
or charge is recognised over the vesting period, which is the
period over which all of the specified vesting conditions are to be
satisfied. At the end of each reporting period, the entity revises
its estimates of the number of options that are expected to vest
based on the non-market vesting conditions. It recognises the
impact of the revision to original estimates, if any, in the Income
Statement or equity as appropriate, with a corresponding adjustment
to a separate reserve in equity.
When the options are exercised, the Company issues new shares.
The proceeds received, net of any directly attributable transaction
costs, are credited to share capital (nominal value) and share
premium when the options are exercised.
2.24. Discontinued Operations
A discontinued operation is a component of the Group's business,
the operations and cash flows of which can be clearly distinguished
from the rest of the Group and which:
-- represents a separate major line of business or geographic area of operations;
-- is part of a single co-ordinated plan to dispose of a
separate major line of business or geographic area of operations;
or
-- is a subsidiary acquired exclusively with a view to re-sale.
Classification as a discontinued operation occurs at the earlier
of disposal or when the operation meets the criteria to be
classified as held-for-sale. The Group operates several business
units which are constantly reviewed to ensure profitability. During
2019 it was determined that the flagging & paving division at
CCP's Bury site was loss making and therefore it was decided that
the operations at this site be discontinued. For further
information, refer to note 14 .
2.25. Leases
The Group leases certain plant and equipment. Leases of plant
and equipment where the Group has substantially all the risks and
rewards of ownership are classified as finance leases under IFRS
16. Finance leases are capitalised on the lease's commencement at
the lower of the fair value of the leased assets and the present
value of the minimum lease payments. Other leases are either small
in value or cover a period of less than 12 months.
Each lease payment is allocated between the liability and
finance charges. The corresponding rental obligations, net of
finance charges, are included in long-term borrowings. The interest
element of the finance cost is charged to the Income Statement over
the lease period so as to produce a constant periodic rate of
interest on the remaining balance of the liability for each period.
Assets obtained under finance leases are depreciated over their
useful lives. The lease liabilities are shown in note 24 .
Rent payable under operating leases on which the short term
exemption has been taken, less any lease incentives received, is
charged to the income statement on a straight-line basis over the
term of the relevant lease except where another more systematic
basis is more representative of the time pattern in which economic
benefits from the lease asset are consumed.
3. Financial Risk Management
3.1. Financial Risk Factors
The Group's activities expose it to a variety of financial
risks: market risk, credit risk and liquidity risk. The Group's
overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential adverse
effects on the Group's financial performance.
Risk management is carried out by the UK based management team
under policies approved by the Board of Directors.
a) Market Risk
The Group is exposed to market risk, primarily relating to
interest rate, foreign exchange and commodity prices. The Group has
not sensitised the figures for fluctuations in interest rates,
foreign exchange or commodity prices as the Directors are of the
opinion that these fluctuations would not have a significant impact
on the Financial Statements at the present time. The Directors will
continue to assess the effect of movements in market risks on the
Group's financial operations and initiate suitable risk management
measures where necessary.
b) Credit Risk
Credit risk arises from cash and cash equivalents as well as
exposure to customers including outstanding receivables. To manage
this risk, the Group periodically assesses the financial
reliability of customers and counterparties .
No credit limits were exceeded during the period, and management
does not expect any losses from non-performance by these
counterparties.
c) Liquidity Risk
The Group 's continued future operations depend on the ability
to raise sufficient working capital through the issue of equity
share capital or debt. The Directors are reasonably confident that
adequate funding will be forthcoming with which to finance
operations. Controls over expenditure are carefully managed.
31 December 2020
--------------------- ---------
Between Between
Less than 1 and 2 2 and 5 Over 5
1 year years years years
GBP GBP GBP GBP
------------------------- ---------- --------- ---------- ---------
Borrowings 3,611,169 2,768,017 64,407,879 512,500
Trade and other payables 46,522,548 708,737 361,511 4,029,948
50,133,717 3,476,754 64,769,390 4,542,448
---------- --------- ---------- ---------
3.2. Capital Risk Management
The Group 's objectives when managing capital are to safeguard
the Group 's ability to continue as a going concern, in order to
enable the Group to continue its construction material investment
activities, and to maintain an optimal capital structure to reduce
the cost of capital.
In order to maintain or adjust the capital structure, the Group
may adjust the issue of shares or sell assets to reduce debts.
The Group defines capital based on the total equity of the
Company. The Group monitors its level of cash resources available
against future planned operational activities and the Company may
issue new shares in order to raise further funds from time to
time.
The gearing ratio at 31 December 2020 is as follows:
Consolidated
-------------------------
31 December 31 December
2020 2019
GBP GBP
------------------------------------------- ------------ -----------
Total borrowings (Note 24 ) 71,299,565 59,655,351
Less: Cash and cash equivalents (Note 22 ) (27,451,984) (9,867,696)
------------ -----------
Net debt 43,847,581 49,787,655
Total equity 123,563,482 102,047,996
Total capital 167,411,063 151,835,651
------------ -----------
Gearing ratio 0.26 0.33
------------ -----------
4. Critical Accounting Estimates
The preparation of the Financial Statements in conformity with
IFRSs requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
Financial Statements and the reported amount of expenses during the
year. Actual results may vary from the estimates used to produce
these Financial Statements.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
Significant items subject to such estimates and assumptions
include, but are not limited to:
a) Land and Mineral Reserves
The determination of fair values of land and mineral reserves
are carried out by appropriately qualified persons in accordance
with the Appraisal and Valuation standards published by the Royal
Institution of Chartered Surveyors. The estimation of recoverable
reserves is based upon factors such as estimates of commodity
prices, future capital requirements and production costs along with
geological assumptions and judgements.
The PPAs included the revaluation of land and minerals based on
the estimated remaining reserves within St John's, Les Vardes,
Aberdo and Carrières du Hainaut quarries. These are then valued
based on the estimated remaining life of the mines and the net
present value for the price per tonnage.
b) Estimated Impairment of Goodwill
The determination of fair values of assets acquired and
liabilities assumed in a business combination involves the use of
estimates and assumptions such as discount rates used and valuation
models applied as well as goodwill allocation.
Goodwill has a carrying value of GBP39,965,803 as at 31 December
2020 (31 December 2019: GBP73,004,627). The Group tests annually
whether goodwill has suffered any impairment, in accordance with
the accounting policy stated in Note 2.6 to the Financial
Statements.
Management has concluded that an impairment charge was not
necessary to the carrying value of goodwill for the period ended 31
December 2020 (31 December 2019: GBPnil). See Note 2.6 to the
Financial Statements.
c) Restoration Provision
The Group's provision for restoration costs has a carrying value
at 31 December 2020 of GBP891,125 (31 December 2019: GBP718,822)
and relate to the removal of the plant and equipment held at
quarries in the Channel Islands and United Kingdom. The cost of
removal was determined by management for the removal and disposal
of the machinery at the point of which the reserves are no longer
available for business use.
The restoration provision is a commitment to restore the site to
a safe and secure environment. The provisions are reviewed
annually.
d) Fair Value of Share Options
The Group has made awards of options and warrants over its
unissued share capital to certain Directors and employees as part
of their remuneration packages. Certain warrants have also been
issued to suppliers for various services received.
The valuation of these options and warrants involves making a
number of critical estimates relating to price volatility, future
dividend yields, expected life of the options and forfeiture rates.
These assumptions have been described in more detail in Note 29 to
the Financial Statements.
e) Valuation and timing of deferred consideration
As part of the acquisition of GD Harries, the Group has agreed
to pay royalty payments over the next 10 years with a minimum total
value of GBP10m. The estimated present value of these payments is
GBP4.69m. In determining this value, management must make critical
estimates as to the timing, value and cost of money of these
payments.
5. Dividends
No dividend has been declared or paid by the Company during the
year ended 31 December 2020 (2019: nil).
6. Segment Information
Management has determined the operating segments based on
reports reviewed by the Board of Directors that are used to make
strategic decisions. During the periods presented the Group had
interests in three key geographical segments, being the United
Kingdom, Channel Islands and Belgium. The Belgium segment was
included as a key geographical segment in October 2019 when the
Group acquired CDH Développement SA. Activities in the United
Kingdom, Channel Islands and Belgium relate to the production and
sale of construction material products and services.
31 December 2020
United Channel Belgium Total
Kingdom Islands
GBP GBP GBP GBP
-------------------------------------- ----------- ----------- ----------- -----------
Revenue 46,790,487 27,324,939 50,115,689 124,231,115
----------- ----------- ----------- -----------
Profit from operations per reportable
segment 10,016,729 9,230,303 14,955,766 34,202,798
----------- ----------- ----------- -----------
Additions to non-current assets 32,030,117 (1,891,258) 371,094 30,509,953
Reportable segment assets 107,559,239 49,214,403 100,450,285 257,223,927
Reportable segment liabilities 76,031,131 5,369,328 52,259,986 133,660,445
----------- ----------- ----------- -----------
31 December 2019
United Channel Belgium Total
Kingdom Islands
GBP GBP GBP GBP
-------------------------------------- ---------- ----------- ---------- -----------
Revenue 32,964,660 29,241,597 8,156,215 70,362,472
---------- ----------- ---------- -----------
Profit from operations per reportable
segment 8,170,774 9,198,697 2,068,792 19,438,263
---------- ----------- ---------- -----------
Additions to non-current assets 20,908,087 (1,689,474) 76,354,868 95,573,481
Reportable segment assets 72,555,343 49,710,145 85,515,641 207,781,129
Reportable segment liabilities 51,548,505 4,796,404 49,388,226 105,733,135
---------- ----------- ---------- -----------
7. Revenue
Consolidated
------------------------
31 December 31 December
2020 2019
GBP GBP
--------------------- ----------- -----------
Upstream products 13,333,702 6,972,097
Value added products 105,428,101 56,086,965
Value added services 3,921,116 6,652,397
Other 1,548,196 651,013
124,231,115 70,362,472
----------- -----------
Upstream products revenue relates to the sale of aggregates and
cement. Value added products is the sale of finished goods that
have undertaken a manufacturing process within each of the
subsidiaries. Value added services consists of the transportation,
installation and contracting services provided.
8. Expenses by Nature
Consolidated
------------------------
31 December 31 December
2020 2019
GBP GBP
-------------------------------------------------- ----------- -----------
Cost of sales
Changes in inventories of finished goods and work
in progress (1,757,994) (680,415)
Production cost of goods sold 11,975,751 6,869,232
Distribution and selling expenses 8,136,509 5,921,567
Raw materials and consumables used 27,740,858 19,320,078
Employee benefit expenses 29,507,527 12,792,817
Depreciation and amortisation expense 9,364,796 4,912,383
Other costs of sale 5,060,870 1,788,547
Total cost of sales 90,028,317 50,924,209
----------- -----------
Administrative expenses
Operational admin expenses 17,270,000 9,922,199
Corporate admin expenses 7,330,006 4,953,675
Total administrative expenses 24,600,066 14,875,874
----------- -----------
Corporate administrative expenses include GBP2,047,521 of
non-underlying expenses (refer to note 11 ).
During the year the Group (including its overseas subsidiaries)
obtained the following services from the Company's auditors and its
associates:
Consolidated
------------------------
31 December 31 December
2020 2019
GBP GBP
---------------------------------------------------------- ----------- -----------
Fees payable to the Company's auditor and its
associates for the audit of the Company and Consolidated
Financial Statements 193,994 171,165
Fees payable to the Company's auditor and its
associates for tax services 9,028 30,572
Fees paid or payable to the Company's auditor
and its associates for due diligence and transactional
services 24,050 140,932
Fees paid to the Company's auditor for other
services - 17,877
227,072 360,546
----------- -----------
9. Employee Benefits Expense
Consolidated Company
------------------------ ------------------------
31 December 31 December 31 December 31 December
2020 2019 2020 2019
Staff costs (excluding directors) GBP GBP GBP GBP
---------------------------------- ----------- ----------- ----------- -----------
Salaries and wages 31,638,511 16,823,415 1,423,765 902,710
Post-employment benefits 114,443 107,206 51,896 36,430
Social security contributions
and similar taxes 431,962 134,524 211,651 59,217
Other employment costs 7,938,620 867,944 65,420 20,724
----------- -----------
40,123,536 17,933,089 1,752,732 1,019,081
----------- ----------- ----------- -----------
Consolidated Company
------------------------ ------------------------
31 December 31 December 31 December 31 December
2020 2019 2020 2019
Average number of FTE employees
by function # # # #
-------------------------------- ----------- ----------- ----------- -----------
Management 58 63 5 3
Operations 744 576 - -
Administration 140 78 2 1
942 717 7 4
----------- ----------- ----------- -----------
10. Directors' Remuneration
31 December 2020
Directors' Taxable Pension Options
fees Bonus benefits benefits issued Total
GBP GBP GBP GBP GBP GBP
------------------------ ---------- ------- --------- --------- ------- ---------
Executive Directors
David Barrett 305,278 280,000 13,800 - 45,855 644,933
Dean Masefield (1) 125,000 90,000 5,792 12,500 66 233,358
Max Vermorken 395,000 380,000 13,800 39,500 109,634 937,934
Non-executive Directors
Dominic Traynor (2) 40,000 - - 5,000 5,101 50,101
Patrick Dolberg (3) 40,000 - - - 4,430 44,430
Timothy Hall 40,000 - - - 27,263 67,263
Garth Palmer(4) 54,962 25,000 - 5,496 30,155 115,613
Simon Chisholm (5) 28,030 - - 2,803 - 30,833
Jacques Emsens (6) 28,030 - - - - 28,030
1,056,300 775,000 33,392 65,299 222,504 2,152,495
---------- ------- --------- --------- ------- ---------
31 December 2019
Directors' Taxable Pension Options
fees Bonus benefits benefits issued Total
GBP GBP GBP GBP GBP GBP
------------------------ ---------- ------- --------- --------- ------- ---------
Executive Directors
David Barrett 190,000 230,000 13,800 - 27,700 461,500
Garth Palmer 60,000 - - 6,000 22,100 88,100
Max Vermorken 250,000 340,000 13,800 25,000 60,676 689,476
Non-executive Directors
Dominic Traynor 32,005 - - 3,201 5,009 40,215
Patrick Dolberg 32,005 - - - 3,442 35,447
Timothy Hall 24,580 - - - 11,897 36,477
588,590 570,000 27,600 34,201 130,824 1,351,215
---------- ------- --------- --------- ------- ---------
(1) Appointed on 20 April 2020
(2) Resigned on 18 May 2020
(3) Resigned on 18 May 2020
(4) Garth Palmer was CFO until 20 April 2020 to which when he
stepped down and stayed on the board as a Non-Executive director.
His bonus was performance based for the period 1 January 2020 until
20 April 20.
(5) Appointed on 20 April 2020
(6) Appointed on 20 April 2020
The bonuses earned in the year by the Directors reflect the
performance of the business, were based on industry standard
criteria taking into account external market data, were recommended
by the Remuneration Committee and approved by the Board.
Details of fees paid to companies and partnerships of which the
Directors are related have been disclosed in Note 36 .
11. Non-underlying Items
As required by IFRS 3 - Business Combinations, acquisition costs
have been expensed as incurred. Additionally, the Group incurred
costs associated with obtaining debt financing, including advisory
fees to restructure the Group to satisfy lender requirements.
Consolidated
------------------------
31 December 31 December
2020 2019
GBP GBP
-------------------------------------------------- ----------- -----------
Acquisition related expenses 1,371,797 2,615,860
Amortisation and remeasurement of acquired assets 1,408,964 1,213,574
Restructuring expenses 802,804 820,949
Equity & debt funding expenses 144,906 659,823
Discontinued operations 100,209 529,948
Share option expense 316,179 178,336
Unwinding of discount on deferred consideration 321,903
Net other non-underlying expenses & gains 512,429 160,590
----------- -----------
4,979,191 6,179,080
----------- -----------
Acquisition related expenses include costs relating to the due
diligence of prospective pipeline acquisitions, stamp duty on
completed acquisitions and other direct costs associated with
merger & acquisition activity including a completion bonus to
certain employees in relation to the acquisition of CDH. During the
year the Group acquired the remaining share capital in GD Harries
and Stone Holdings.
Amortisation and remeasurement of acquired assets are non-cash
items which distort the underlying performance of the businesses
acquired. Amortisation of acquired assets arise from certain fair
value uplifts resulting from the PPA. Remeasurement of acquired
assets arises from ensuring assets from acquisitions are
depreciated in line with Group policy.
Restructuring expenses include advisory fees, redundancy costs
and moving expenses. During the year these primarily related to the
SigmaPPG platform.
Equity & debt funding expenses relates to consulting fees
for the debt refinance.
Share option expense is the fair value of the share options
issued during the year, refer to note 29 more information.
Unwinding of discount on deferred consideration is a non-cash
adjustment relating to deferred consideration arising on
acquisitions.
Discontinued operations include the trading expenses, stock
adjustments and redundancies incurred at the Bury site for the
period from January 2020 to December 2020. Refer to note 14 for
more information.
Net other non-underlying expenses and gains include COVID-19
related costs such as purchases of face masks and other protective
equipment, procurement and administration of testing kits,
modifications to working environments to ensure safety and other
associated costs.
12. Net Finance (Expense)/Income
Consolidated
------------------------
31 December 31 December
2020 2019
GBP GBP
------------------------------------------------ ----------- -----------
Convertible loan redemption interest premium - (500,000)
Convertible loan note interest expense - (39,452)
Other interest (expense)/income (2,290,520) (1,294,666)
Other finance (expense)/income (126,406) (129,461)
Unwinding of discount on deferred consideration (321,903) -
(2,738,829) (1,963,579)
----------- -----------
13. Other Net Gains/(Losses)
Consolidated
------------------------
31 December 31 December
2020 2019
GBP GBP
--------------------------------------------- ----------- -----------
Gain/(losses) on disposal of property, plant
and equipment 372,966 (14,536)
Other gain/(loss) (251,464) 56,361
Loss on call options (38,375) -
Share of earnings from associates 293,975 84,018
Loss on discontinued operations (101,247) (529,948)
275,855 (404,105)
----------- -----------
For more information on the loss on discontinued operations,
please refer to note 14.
14. Discontinued Operations
From due diligence undertaken as part of the acquisition of CCP
in January 2019, doubts existed over the viability of the flagging
& paving division at its site in Bury. After a detailed review
it was determined that the business unit was loss making and it was
decided that the operations at this site be discontinued effective
from 1 February 2019.
Financial information relating to the discontinued operation for
the period is set out below.
31 December 31 December
2020 2019
Income statement GBP GBP
------------------------------------------------ ----------- -----------
Revenue 811,862
Cost of sales (150,038) (1,103,550)
----------- -----------
Gross profit (150,038) (291,688)
Administration (55,781) (146,429)
Other expenses 105,610 (91,831)
----------- -----------
Loss from discontinued operation (100,209) (529,948)
----------- -----------
Basic earnings per share attributable to owners
of the parent (expressed in pence per share) (0.04) (0.28)
----------- -----------
31 December 31 December
2020 2019
Cash movement GBP GBP
----------------------------------------------- ----------- -----------
Net cash outflow from operating activities (94,040) (125,846)
Net cash inflow from investing activities 287,500 (212,465)
Net cash inflow from financing activities - -
----------- -----------
Net increase / (decrease) in cash generated by
the subsidiary 193,460 (338,311)
----------- -----------
15. Taxation
Consolidated
------------------------
31 December 31 December
2020 2019
Tax recognised in profit or loss GBP GBP
----------------------------------------- ----------- -----------
Current tax (789,683) (448,518)
Deferred tax 127,642 -
----------- -----------
Total tax charge in the Income Statement (662,041) (448,518)
----------- -----------
The tax on the Group's profit/(loss) before taxation differs
from the theoretical amount that would arise using the weighted
average tax rate applicable to the profits/(losses) of the
consolidated entities as follows:
Consolidated
------------------------
31 December 31 December
2020 2019
GBP GBP
------------------------------------------------- ----------- -----------
Profit/(loss) before tax subject to charge 7,095,798 1,726,545
Tax at the applicable rate of 25.14% 1,784,309 359,294
----------- -----------
Effects of:
Expenditure not deductible for tax purposes 1,241,151 639,226
Deferred tax not recognised (1,859,472) 237,384
Remeasurement of deferred tax for changes in tax
rates (435,771) (1,041,015)
Income not taxable for tax purposes (659,432) -
Depreciation in excess of/(less than) capital
allowances 613,251 227,160
Net tax effect of losses carried forward (21,995) 26,469
----------- -----------
Tax charge 662,041 448,518
----------- -----------
The weighted average applicable tax rate of 25.14% (2019:
20.81%) used is a combination of the standard rate of corporation
tax rate for entities in the United Kingdom of 19% (2019: 19%), 20%
on quarrying of minerals and rental property (2019: 20%) in Jersey
and Guernsey and 30% (2019: 33.99%) in Belgium.
Deferred Tax Asset Temporary timing
Tax losses differences Total
----------------------------- ----------- ----------------- ----------
At 1 January 2020 - - -
Charged/(credited) directly
to
equity 402,088 1,009,892 1,411,980
----------- ----------------- ----------
At 31 December 2020 402,088 1,009,892 1,411,980
----------- ----------------- ----------
Deferred Tax Liability Temporary timing
Tax losses differences Total
----------------------------- ----------- ----------------- ----------
At 1 January 2020 - 1,098,148 1,098,148
Acquisition of subsidiary 2,900,580 2,900,580
Charged/(credited) directly
to
income statement (127,642) - (127,642)
----------- ----------------- ----------
At 31 December 2020 (127,642) 3,998,728 3,871,086
----------- ----------------- ----------
Deferred income tax assets of GBP1,411,980 (2019: nil) are
recognised to the extent that the realisation of related tax
benefits through future taxable profits is probable. Deferred tax
liabilities of GBP3,871,086 (2019: 1,098,148) are recognised in
full.
16. Property, Plant and Equipment
Consolidated
Office Land and Land and Plant Furniture Construction
Equipment minerals buildings and machinery and vehicles in progress Total
GBP GBP GBP GBP GBP GBP GBP
---------------------- ---------- ----------- ----------- -------------- ------------- ------------ -----------
Cost
As at 1 January
2019 383,440 37,855,548 22,472,510 17,970,282 7,437,362 1,932,082 88,051,224
Acquired through
acquisition 3,194,969 14,844,352 13,385,643 57,825,258 9,642,516 - 98,892,738
Transfer between
classes - (4,600,000) 5,760,000 - - (1,160,000) -
Fair value adjustment - 1,762,000 - - - - 1,762,000
IFRS 16 Adjustment 22,689 - 584,785 875,388 - - 1,482,862
Additions 139,414 145,140 435,886 1,403,634 869,033 391,256 3,384,363
Disposals (1,173) - (4,105,000) (81,860) (117,000) (317,126) (4,477,693)
Forex (47,800) (243,375) (161,148) (881,369) (154,468) - (1,488,160)
---------- ----------- ----------- -------------- ------------- ------------ -----------
As at 31 December
2019 3,691,539 49,763,665 38,372,676 77,111,333 17,677,443 846,212 187,462,868
---------- ----------- ----------- -------------- ------------- ------------ -----------
As at 1 January
2020 3,691,539 49,763,665 38,372,676 77,111,333 17,677,443 846,212 187,462,868
Acquired through
acquisition 302,871 15,085,384 ,1,138,624 17,420,145 6,503,077 - 40,450,102
Transfer between
classes - - - 133,245 - (133,245) -
Fair value adjustment - 35,954,347 5,322,372 (48,419) - - 41,228,300
Additions 66,574 2,937,442 570,150 1,472,808 870,548 534,371 6,451,893
Disposals - (192,147) - (580,752) (780,076) - (1,552,975)
Forex 164,480 830,659 544,608 2,989,989 265,970 - 4,795,706
---------- ----------- ----------- -------------- ------------- ------------ -----------
As at 31 December
2020 4,225,464 104,379,350 45,948,430 98,498,349 24,536,962 1,247,338 278,835,894
---------- ----------- ----------- -------------- ------------- ------------ -----------
Depreciation
As at 1 January
2019 321,323 6,950,843 13,405,493 11,192,348 6,209,206 - 38,079,213
Acquired through
acquisition 2,812,176 703,698 8,309,696 49,944,448 4,789,797 - 66,559,815
Transfer between
classes - (63,594) 63,594 - - - -
IFRS 16 Adjustment - - 153,779 292,103 - - 445,882
Charge for the
year 130,206 1,010,954 1,089,546 2,019,029 820,604 - 5,070,339
Disposals (159) - (200,298) (51,769) (117,000) - (369,226)
Forex (42,585) (11,537) (132,643) (777,290) (77,433) - (1,041,488)
As at 31 December
2019 3,220,961 8,590,364 22,689,167 62,618,869 11,625,174 - 108,744,535
---------- ----------- ----------- -------------- ------------- ------------ -----------
As at 1 January
2020 3,220,961 8,590,364 22,689,167 62,618,869 11,625,174 - 108,744,535
Acquired through
acquisition 197,810 1,164,293 39,368 8,062,189 3,246,089 - 12,709,749
Charge for the
year 250,226 1,579,146 1,904,968 3,898,612 2,403,723 - 10,036,675
Disposals - - - (496,507) (530,725) - (1,027,232)
Forex 148,051 39,536 451,292 2,654,356 285,917 - 3,579,152
---------- ----------- ----------- -------------- ------------- ------------ -----------
As at 31 December
2020 3,817,048 11,373,339 25,084,795 76,737,519 17,030,178 - 134,042,879
---------- ----------- ----------- -------------- ------------- ------------ -----------
Net book value
---------- ----------- ----------- -------------- ------------- ------------ -----------
As at 31 December
2019 470,578 41,173,301 15,683,509 14,492,464 6,052,269 846,212 78,718,333
---------- ----------- ----------- -------------- ------------- ------------ -----------
As at 31 December
2020 408,416 93,006,011 20,863,635 21,760,830 7,506,784 1,247,338 144,793,014
---------- ----------- ----------- -------------- ------------- ------------ -----------
The depreciation on the right of use assets for the year ended
31 December 2020 was GBP1,367,375 (2019: GBP611,627) and the net
book value is GBP5,475,572 (2019: GBP6,969,922).
Company
Office Equipment Land & Buildings Motor Vehicle Total
GBP GBP GBP GBP
----------------------- ---------------- ---------------- ------------- -------
Cost
As at 1 January 2019 12,600 - - 12,600
Additions 8,207 - 24,328 32,535
IFRS 16 Adjustment - 54,363 - 54,363
Disposals - - - -
---------------- ---------------- ------------- -------
As at 31 December 2019 20,807 54,363 24,328 99,498
---------------- ---------------- ------------- -------
As at 1 January 2020 20,807 54,363 24,328 99,498
Additions 8,886 - - 8,886
Disposals - - - -
Forex - - 305 305
---------------- ---------------- ------------- -------
As at 31 December 2020 29,693 54,363 24,633 108,689
---------------- ---------------- ------------- -------
Depreciation
As at 1 January 2019 8,261 - - 8,261
Charge for the year 6,072 13,313 87 19,472
Disposals - - - -
As at 31 December 2019 14,333 13,313 87 27,733
---------------- ---------------- ------------- -------
As at 1 January 2020 14,333 13,313 87 27,733
Charge for the year 7,456 13,313 8,182 28,951
Disposals - - - -
---------------- ---------------- ------------- -------
As at 31 December 2020 21,789 26,626 8,269 56,684
---------------- ---------------- ------------- -------
Net book value
---------------- ---------------- ------------- -------
As at 31 December 2019 6,474 41,050 24,241 71,765
---------------- ---------------- ------------- -------
As at 31 December 2020 7,904 27,737 16,364 52,005
---------------- ---------------- ------------- -------
The depreciation on the right of use assets for the year ended
31 December 2020 was GBP13,313 (2019: GBP13,313) and the net book
value is GBP27,737 (2019: GBP41,050).
17. Intangible Assets
Consolidated
------------
Customer Intellectual Research Other
Goodwill Relations property & Development Branding Intangibles Total
GBP GBP GBP GBP GBP GBP
-------------- ------------ ---------- ------------ ------------- --------- ------------ ------------
Cost & net
book value
As at 1
January 2019 16,826,369 850,846 684,556 - 613,000 - 18,974,771
Additions - - - 3,611 - - 3,611
Additions
through
business
combination 61,717,258 - (83,843) 1,210,452 400,000 414,018 63,657,885
Price Purchase
Allocation
- CCP (5,539,000) 3,480,000 - - 297,000 - (1,762,000)
Amortisation - (481,324) (44,481) (26,174) (43,969) (13,788) (609,736)
Forex - - - (20,807) - - (20,807)
As at 31
December
2019 73,004,627 3,849,522 556,232 1,167,082 1,266,031 400,230 80,243,724
------------ ---------- ------------ ------------- --------- ------------ ------------
As at 1
January 2020 73,004,627 3,849,522 556,232 1,167,082 1,266,031 400,230 80,243,724
------------ ---------- ------------ ------------- --------- ------------ ------------
Additions - - - 152,617 - - 152,617
Additions
through
business
combination 7,887,073 - - - - - 7,887,073
Price Purchase
Allocation
- CDH (43,779,628) - - - 2,292,000 - (41,487,628)
Amortisation - (516,930) (84,860) (88,323) (159,790) - (849,903)
Forex 2,853,731 - - 4,511 - (230) 2,882,103
------------ ---------- ------------ ------------- --------- ------------ ------------
As at 31
December
2020 39,965,803 3,332,592 471,372 1,235,887 3,398,241 400,000 48,803,895
------------ ---------- ------------ ------------- --------- ------------ ------------
An adjustment has been made to reflect the initial accounting
for the acquisition of Carrières Du Hainaut ('CDH') by the Company,
being the elimination of the investment in CDH against the
non-monetary assets acquired and recognition of goodwill. In 2020,
the Company determined the fair value of the net assets acquired
pursuant to the acquisition of CDH, via a Purchase Price Allocation
('PPA') exercise. The PPA's determined a decrease of GBP43.8m of
goodwill in CDH with the corresponding movement to be recognised as
Trademarks and Licences, uplift the value of the Land and Buildings
and Land and Minerals and recognition of a deferred tax asset.
The goodwill is made up of GBP21.2m for the PPG Platform,
GBP8.9m for the Benelux platform, GBP6.2m for the South Wales
platform and GBP3.7m for the Ronez platform.
The intangible asset classes are:
- Goodwill is the excess of the consideration transferred and
the acquisition date fair value of any previous equity interest in
the acquire over the fair value of the net identifiable assets.
- Customer relations is the value attributed to the key customer lists and relationships.
- Intellectual property is the patents owned by the Group.
- Research and development is the acquiring of new technical
knowledge and trying to improve existing processes or products or
developing new processes or products.
- Branding is the value attributed to the established company brand.
- Other intangibles consist of an option over gravel in
Poundfield and capitalised development costs for assets produced
that assist in the operations of the Group and incur revenue
Amortisation of intangible assets is included in cost of sales
on the Income Statement.
Impairment tests for goodwill
Goodwill arising on business combinations is not amortised but
is reviewed for impairment on an annual basis, or more frequently
if there are indications that the goodwill may be impaired.
Goodwill is allocated to groups of cash generating units according
to the level at which management monitor that goodwill, which is at
the level of operating segments.
The seven operating segments are considered to be Ronez in the
Channel Islands, Topcrete in the UK, Poundfield in the UK, CCP in
the UK, GD Harries in the UK, CDH in Belgium and Stone in
Belgium.
Key assumptions
The key assumptions used in performing the impairment review are
set out below:
Cash flow projections
Cash flow projections for each operating segment are derived
from the annual budget approved by the Board for 2020 and the
three-year plan to 2021 and 2022. The key assumptions on which
budgets and forecasts are based include sales volumes, product mix
and operating costs. These cash flows are then extrapolated forward
for a further 17 years, with the total period of 20 years
reflecting the long-term nature of the underlying assets. Budgeted
cash flows are based on past experience and forecast future trading
conditions.
Long-term growth rates
Cash flow projections are prudently based on 2 per cent and
therefore provides plenty of headroom.
Discount rate
Forecast cash flows for each operating segment have been
discounted at rates of 8 per cent which was calculated by an
external expert based on market participants' cost of capital and
adjusted to reflect factors specific to each operating segment.
Sensitivity
The Group has applied sensitivities to assess whether any
reasonable possible changes in assumptions could cause an
impairment that would be material to these consolidated Financial
Statements. This demonstrated that a 1% increase in the discount
rate would not cause an impairment and the annual growth rate is
assumed to be 2%.
The Directors have therefore concluded that no impairment to
goodwill is necessary.
Impact of Brexit
In performing the impairment review, the Directors have
carefully considered the additional uncertainty arising from Brexit
through performing additional sensitivity analysis based on Brexit
specific scenarios. These included changes to the discount rate and
modelling the impact of a significant decline in short-to-medium
term growth caused by an economic shock following an exit. This
additional analysis indicated the existence of continued headroom
for all segments.
18. Investment in Subsidiary Undertakings
Company
-------------------------
31 December 31 December
2020 2019
GBP GBP
---------------------------------- ------------ -----------
Shares in subsidiary undertakings
At beginning of the year 94,370,845 55,481,505
Additions 25,667,619 45,723,272
Disposals - -
------------ -----------
At period end 120,038,464 101,204,777
------------ -----------
Loan from Group undertakings (18,789,354) (6,833,932)
------------ -----------
Total 101,249,110 94,370,845
------------ -----------
Investments in Group undertakings are stated at cost less
impairment. During the year the Company acquired the remaining 60%
in GDH (Holdings) Limited and 51% in Stone Holdings.
Details of subsidiaries at 31 December 2020 are as follows:
Share capital Share capital
Country held by held by
Name of subsidiary of incorporation Company Group Principal activities
------------------------------ ----------------- ------------- ------------- -----------------------
SigmaFin Limited England GBP45,181,877 Holding company
Foelfach Stone Limited England GBP1 Construction materials
SigmaGsy Limited Guernsey GBP1 Shipping logistics
Ronez Limited Jersey GBP2,500,000 Construction materials
Pallot Tarmac (2002) Road contracting
Limited Jersey GBP2 services
Island Aggregates Limited Guernsey GBP6,500 Waste recycling
Pre-cast concrete
Topcrete Limited England GBP926,828 producer
A. Larkin (Concrete)
Limited England GBP37,660 Dormant
Allen (Concrete) Limited England GBP100 Holding company
Poundfield Products (Group)
Limited England GBP22,167 Holding company
Poundfield Products (Holdings)
Limited England GBP651 Holding company
Poundfield Innovations
Limited England GBP6,357 Patents & licencing
Pre-cast concrete
Poundfield Precast Limited England GBP63,568 producer
Alfabloc Limited England GBP1 Dormant
CCP Building Products GBP50
Limited England Construction materials
Cheshire Concrete Products GBP1 Dormant
Limited England
Clwyd Concrete Products England GBP100 Dormant
Limited
Country Concrete Products England GBP100 Dormant
Limited
CCP Trading Limited England GBP100 Dormant
CCP Aggregates Limited England GBP100,000 Construction materials
CDH Développement Belgium EUR23,660,763 Holding company
SA
Carrières du Hainaut Belgium EUR16,316,089 Construction materials
SCA
Coordination du Hainaut Belgium EUR45,184,400 Financing company
SCS
CDH International SCA Belgium EUR62,000 International marketing
CDH Management 2 SPRL Belgium EUR760,000 Holding company
GDH (Holdings) Limited England GBP54,054 Construction materials
Gerald D. Harries & Sons England GBP112 Construction materials
Limited
Stone Holding Company Belgium EUR100 Construction materials
SA
Cuvelier Philippe SA Belgium EUR750 Construction materials
Name of subsidiary Registered office address
------------------------------ -------------------------------------------
SigmaFin Limited 7-9 Swallow Street, London, W1B 4DE
Foelfach Stone Limited 7-9 Swallow Street, London, W1B 4DE
Les Vardes Quarry, Route de Port Grat,
SigmaGsy Limited St Sampson, Guernsey, GY2 4TF
Ronez Quarry, La Route Du Nord, St John,
Ronez Limited Jersey, JE3 4AR
Pallot Tarmac (2002) Ronez Quarry, La Route Du Nord, St John,
Limited Jersey, JE3 4AR
Les Vardes Quarry, Route de Port Grat,
Island Aggregates Limited St Sampson, Guernsey, GY2 4TF
Topcrete Limited 38 Willow Lane, Mitcham, Surrey, CR4 4NA
A. Larkin (Concrete)
Limited 38 Willow Lane, Mitcham, Surrey, CR4 4NA
Allen (Concrete) Limited 38 Willow Lane, Mitcham, Surrey, CR4 4NA
Poundfield Products (Group) The Grove, Creeting St. Peter, Ipswich,
Limited England, IP6 8QG
Poundfield Products (Holdings) The Grove, Creeting St. Peter, Ipswich,
Limited England, IP6 8QG
Poundfield Innovations The Grove, Creeting St. Peter, Ipswich,
Limited England, IP6 8QG
The Grove, Creeting St. Peter, Ipswich,
Poundfield Precast Limited England, IP6 8QG
The Grove, Creeting St. Peter, Ipswich,
Greenbloc Limited England, IP6 8QG
CCP Building Products
Limited Llay Road, Llay, Wrexham, Clwyd, LL12 0TL
Cheshire Concrete Products
Limited Llay Road, Llay, Wrexham, Clwyd, LL12 0TL
Clwyd Concrete Products
Limited Llay Road, Llay, Wrexham, Clwyd, LL12 0TL
Country Concrete Products
Limited Llay Road, Llay, Wrexham, Clwyd, LL12 0TL
CCP Trading Limited Llay Road, Llay, Wrexham, Clwyd, LL12 0TL
CCP Aggregates Limited Llay Road, Llay, Wrexham, Clwyd, LL12 0TL
CDH Développement Rue de Cognebeau 245, B-7060 Soignies,
SA Belgium
Carrières du Hainaut Rue de Cognebeau 245, B-7060 Soignies,
SCA Belgium
Coordination du Hainaut Rue de Cognebeau 245, B-7060 Soignies,
SCS Belgium
Rue de Cognebeau 245, B-7060 Soignies,
CDH International SCA Belgium
Rue de Cognebeau 245, B-7060 Soignies,
CDH Management 2 SPRL Belgium
Rowlands View, Templeton, Narbeth, SA67
GDH (Holdings) Limited 8RG
Gerald D. Harries & Sons Rowlands View, Templeton, Narbeth, SA67
Limited 8RG
Stone Holding Company Avenue Louise 292, BE-1050 Ixelles, Belgium
SA
Cuvelier Philippe SA Avenue Louise 292, BE-1050 Ixelles, Belgium
For the year ended 31 December 2020 the Company was entitled to
exemption from audit under section 479A of the Companies Act 2006
related to the following subsidiary companies:
-- SigmaFin Limited
-- Foelfach Stone Limited
-- Topcrete Limited
-- A. Larkin (Concrete) Limited
-- Allen (Concrete) Limited
-- Poundfield Products (Group) Limited
-- Poundfield Products (Holdings) Limited
-- Poundfield Innovations Limited
-- Poundfield Precast Limited
-- Greenbloc Limited
-- CCP Building Products Limited
-- Cheshire Concrete Products Limited
-- Clwyd Concrete Products Limited
-- Country Concrete Products Limited
-- CCP Trading Limited
-- CCP Aggregates Limited
-- GDH (Holdings) Limited
-- Gerald D. Harries & Sons Limited
Impairment review
The performance of all companies for the year ended 31 December
2020 are in line with forecasted expectations and as such there
have been no indications of impairment.
19. Investment in Equity Accounted Associates
On 18 April 2019, the Company acquired a 40% equity interest in
GDH (Holdings) Limited ('GDH'), a quarrying group located in South
Wales for a cash consideration of GBP4.89 million. GDH is based in
South Wales and owns six quarries as well as concrete and tarmac
plants and is a provider of aggregates for commercial and domestic
customers.
On 11 September 2019, the Company acquired 49% equity interest
in Stone Holdings SA ('Stone') for a cash consideration of GBP563k
(EUR658k). Stone is based in Belgium and operates two quarries and
a wharf and contracting business which focusses on armour rock for
river and sea defence work.
On 21 September 2020, the Company acquired the remaining 60% of
the share capital in GDH and its subsidiaries.
On 1 January 2020, the Company acquired a further 25% of Stone
for GBP287k (EUR339k), and was therefore treated as a subsidiary of
the Group for the full 2020 financial year.
On 7 August 2020, the Company acquired the remaining 26% of
Stone for GBP287k (EUR339k).
Further details on the acquisitions are in note 34 Business
Combinations.
For the period 1 January 2020 to 21 September 2020, GDH is
included in the consolidated financial statements using the equity
method.
Proportion of
ownership interest
held
------------------------- ---------------------------- ---------------------------
31 December 31 December
Name Country of incorporation 2020 2019
------------------------ --------------------------- --------------- ------------
GDH (Holdings) Limited United Kingdom - 40%
Stone Holdings SA Belgium - 49%
Summarised financial information
21 September 31 December
GDH 2020 2019
GBP GBP
--------------------------------------------- ---------------------- -------------------------
Current assets 9,222,637 10,275,551
Non-current assets 27,864,288 26,343,207
Current liabilities (17,329,654) (11,234,400)
Non-current liabilities (7,354,166) (10,939,312)
---------------------- -------------------------
For the period For the period
1 January 2020 19 April 2019
to 21 September to 31 December
2020 2019
-------------------------------------------------------------------- -------------------------
Revenues 18,479,517 18,982,758
Profit after tax from continuing operations 293,975 83,054
---------------------- -------------------------
31 December
Stone Holdings 1 January 2020 2019
GBP GBP
-------------------------------------------- --------------- --------------
As 31 December 2020
Current assets 830,404 830,404
Non-current assets 3,586,218 3,586,218
Current liabilities (1,716,439) (1,716,439)
Non-current liabilities (549,671) (549,671)
--------------- --------------
For the period For the period
1 January 2020 11 September
to 1 January 2019 to 31
2020 December 2019
-------------------------------------------- --------------- --------------
Revenues - 482,704
Profit after tax from continuing operations - 964
--------------- --------------
20. Trade and Other Receivables
Consolidated Company
------------------------ ----------- -----------
31 December 31 December 31 December 31 December
2020 2019 2020 2019
GBP GBP GBP GBP
------------------ ----------- ----------- ----------- -----------
Trade receivables 18,074,224 14,662,423 876,972 533,606
Prepayments 1,142,601 1,111,141 113,715 247,050
Other receivables 1,125,753 6,459,032 7,169 7,169
20,342,578 22,232,596 997,856 787,825
----------- ----------- ----------- -----------
The carrying value of trade and other receivables classified as
loans and receivables approximates fair value.
The carrying amounts of the Group and Company's trade and other
receivables are denominated in the following currencies:
Group Company
-------------------------- --------------------------
31 December 31 December 31 December 31 December
2020 2019 2020 2019
----------- ------------ ------------ ---------------- ------------
UK Pounds 14,366,762 15,939,755 997,856 787,825
Euros 5,975,816 6,292,841 - -
20,342,578 22,232,596 997,856 787,825
----------- ------------ ------------ ---------------- ------------
Other classes of financial assets included within trade and
other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivable mentioned above. The
Group does not hold any collateral as security.
21. Inventories
Consolidated
------------------------
31 December 31 December
2020 2019
Cost and net book value GBP GBP
--------------------------------- ----------- -----------
Raw materials and consumables 5,705,723 3,695,360
Finished and semi-finished goods 7,872,034 7,416,751
Work in progress 669,622 48,463
----------- -----------
14,247,379 11,160,574
----------- -----------
The value of inventories recognised as a credit and included in
cost of sales was GBP1,757,994 (31 December 2019: GBP490,462).
22. Cash and Cash Equivalents
Consolidated Company
------------------------ ------------------------
31 December 31 December 31 December 31 December
2020 2019 2020 2019
GBP GBP GBP GBP
------------------------- ----------- ----------- ----------- -----------
Cash at bank and on hand 27,451,984 9,867,696 11,521,206 3,935,831
27,451,984 9,867,696 11,521,206 3,935,831
----------- ----------- ----------- -----------
All of the Group's cash at bank is held with institutions with a
credit rating of at least A-.
The carrying amounts of the Group and Company's cash and cash
equivalents are denominated in the following currencies:
Group Company
-------------------------- --------------------------
31 December 31 December 31 December 31 December
2020 2019 2020 2019
----------- ------------ ------------ ---------------- ------------
UK Pounds 19,928,816 8,410,763 11,521,206 3,935,831
Euros 7,523,168 1,456,933 - -
27,451,984 9,867,696 11,521,206 3,935,831
----------- ------------ ------------ ---------------- ------------
23. Trade and Other Payables
Consolidated Company
------------------------------- ------------------------------------
31 December 31 December 31 December 31 December
2020 2019 2020 2019
GBP GBP GBP GBP
--------------------------- ------------ ------------ --- ------------------ ------------
Current liabilities
Trade payables 16,287,914 10,306,033 147,026 763,808
Wages Payable 4,307,610 4,072,972 133 -
Accruals 6,290,699 4,173,341 1,675,603 1,268,750
VAT payable/(receivable) 2,282,241 660,033 (38,859) (85,508)
Deferred consideration 13,390,253 16,025,254 12,388,733 14,881,493
Other payables 3,963,831 1,920,378 42,814 15,475
------------ ------------ ------------------ ------------
46,522,548 55,194,015 14,215,450 16,844,018
------------ ------------ ------------------ ------------
Non - Current liabilities
Deferred consideration 5,100,196 - 5,100,196 -
5,100,196 - 5,100,196 -
------------ ------------ ------------------ ------------
The carrying amounts of the Group and Company's trade and other
payables are denominated in the following currencies:
Group Company
-------------------------- --------------------------
31 December 31 December 31 December 31 December
2020 2019 2020 2019
---------- ------------ ------------ ---------------- ------------
UK Pounds 38,548,115 27,130,229 19,315,646 16,844,018
Euros 13,074,629 10,027,782 - -
51,622,744 37,158,011 19,315,646 16,844,018
24. Borrowings
Consolidated Company
31 December 31 December 31 December 31 December
2020 2019 2020 2019
GBP GBP GBP GBP
Non-current liabilities
Syndicated Senior Credit Facility 61,235,485 - - -
Santander term facility - 25,907,847 - -
Bank Loans - 26,216,013 - -
Finance lease liabilities 6,452,911 3,070,155 22,341 41,671
67,688,396 55,194,015 22,341 41,671
Current liabilities
Finance lease liabilities 3,611,169 4,461,336 20,653 24,827
3,611,169 4,461,336 20,653 24,827
In December 2020 the Group entered into a new Syndicated Senior
Credit Facility of up to GBP125 million (the 'Credit Facility') led
by Santander UK and including several major UK and European banks.
The Credit Facility, which comprises an GBP85 million committed
term facility and a GBP40 million accordion option. This new
facility replaces all previously existing bank loans within the
Group.
The restated facility is secured by a floating charge over the
assets of SigmaFin Limited and CDH and is secured by a combination
of debentures, security interest agreements, pledges and floating
rate charges over the assets of SigmaRoc Plc, SigmaFin Ltd,
Carrieres du Hainaut and their subsidiary undertakings. Interest is
charged at a rate between 1.5% and 3.25% above LIBOR ('Interest
Margin'), based on the calculation of the adjusted leverage ratio
for the relevant period. For the period ending 31 December 2020 the
Interest Margin was 2.25%.
The carrying amounts and fair value of the non-current
borrowings are:
Carrying amount and fair
value
31 December 31 December
2020 2019
GBP GBP
Santander term facility 61,235,485 25,907,847
Belgian bank loans - 26,216,013
Convertible loan notes - -
Finance lease liabilities 10,064,080 7,531,491
71,299,565 59,655,351
Finance Lease Liabilities
Lease liabilities are effectively secured, as the rights to the
leased asset revert to the lessor in the event of default.
Consolidated
31 December 31 December
2020 2019
Finance lease liabilities - minimum lease payments GBP GBP
Not later than one year 3,611,673 4,461,336
Later than one year and no later than five years 5,823,464 2,902,039
Later than five years 628,944 168,116
10,064,081 7,531,491
Future finance charges on finance lease liabilities 680,551 367,910
Present value of finance lease liabilities 10,744,632 7,899,401
For the year ended 31 December 2020, the total finance charges
were GBP2,661,447.
The contracted and planned lease commitments were discounted
using a weighted average incremental borrowing rate of 3%.
The present value of finance lease liabilities is as
follows:
Consolidated
-----------
31 December 31 December
2020 2019
GBP GBP
Not later than one year 3,720,023 4,595,176
Later than one year and no later than five years 5,998,168 2,989,100
Later than five years 647,812 173,160
Present value of finance lease liabilities 10,366,003 7,757,436
Reconciliation of liabilities arising from financing activities
is as follows:
Consolidated
Liabilities
arising from
Short-term financing
Long-term borrowings borrowings Lease liabilities activities
GBP GBP GBP GBP
As at 1 January 2020 52,123,860 - 7,531,491 59,655,351
Increase/(decrease)
through financing
cash flows 1,540,341 - (3,679,232) (2,138,891)
Amortisation of finance
arrangement fees (126,406) - - (126,406)
Increase through
IFRS 16 - - - -
Increase through
obtaining control
of subsidiaries 7,697,690 - 6,211,821 13,909,511
As at 31 December
2020 61,235,485 - 10,064,080 71,299,565
25. Provisions
Consolidated
31 December 31 December
2020 2019
GBP GBP
As at 1 January 6,936,754 632,011
Acquired on business combination 172,303 6,620,250
Deduction (948,705) (315,507)
6,160,352 6,936,754
The provision total is made up of GBP632,011 as a restoration
provision for the St John's and Les Vardes sites, GBP86,812 for the
Aberdo site and GBP172,303 for quarries in Wales which are all
based on the removal costs of the plant and machinery at the sites
and restoration of the land. Cost estimates in Jersey and Guernsey
are not increased on an annual basis - there is no legal or
planning obligation to enhance the sites through restoration. The
commitment is to restore the site to a safe environment; thus the
provision is reviewed on an annual basis. The estimated expiry on
the quarries ranges between 5 - 35 years.
Of the remaining amount GBP1.5m is to cover the loss on the
Holcim contract in CDH, GBP150,000 for legal fees and GBP3.6m is
the provision for early retirement in Belgium, where salaried
workers can qualify for early retirement based on age and the
number of years of service. The provision for early retirement
consists of the estimated amount that will be paid by the employer
to the "early retired workers" till the age of the full pension.
Refer to note 26 for more information.
The future reclamation cost value is discounted by 7.39% (2019:
12%) which is the weighted average cost of capital within the
Group.
26. Retirement benefit schemes
The Group sponsors various post-employment benefit plans. These
include both defined contribution and defined benefit plans as
defined by IAS 19 Employee Benefits.
Defined contribution plans
For defined contribution plans outside Belgium, the Group pays
contributions to publicly or privately administered pension funds
or insurance contracts. Once the contributions have been paid, the
Group has no further payment obligation. The contributions are
expensed in the year in which they are due. For the year ended,
contributions paid into defined contribution plans amounted to
GBP434k.
Defined benefit plans
The Group has group insurance plans for some of its Belgian
employees funded through defined payments to insurance companies.
The Belgian pension plans are by law subject to minimum guaranteed
rates of return. In the past the minimum guaranteed rates were
3.25% on employer contributions and 3.75% on employee
contributions. A law of December 2015 (enforced on 1 January 2016)
modifies the minimum guaranteed rates of return applicable to the
Group's Belgian pension plans. For insured plans, the rates of
3.25% on employer contributions and 3.75% on employee contributions
will continue to apply to the contributions accumulated before
2016. For contributions paid on or after 1 January 2016, a variable
minimum guaranteed rate of return with a floor of 1.75% applies.
The Group obtained actuarial calculations for the periods reported
based on the projected unit credit method.
Employee benefits amounts in the Statement of 2020 2019
Financial Position GBP GBP
Assets - -
Liabilities 3,592,713 3,758,285
Net defined benefit liability at end of year 3,592,713 3,758,285
Amounts recognised in the Statement of Financial 2020 2019
Position GBP GBP
Present value of funded defined benefit obligations 2,379,055 2,252,187
Fair value of plan assets (2,213,854) (2,095,797)
165,201 156,390
Present value of unfunded defined benefit obligation 3,427,512 3,601,895
Unrecognised past service cost - -
Total 3,592,713 3,758,285
2020 2019
Amounts recognised in the Income Statement GBP GBP
Current service cost 128,321 61,871
Interest cost 18,894 3,308
Expected return on plan assets (31,257) (46,342)
Total pension expense 115,958 18,837
Changes in the present value of the defined benefit 2020 2019
obligation GBP GBP
Defined benefit obligation at beginning of year 3,758,285 -
Current service cost 128,321 61,871
Interest cost 18,894 3,308
Benefits paid (493,238) (84,815)
Remeasurements (31,257) (46,342)
Acquired in business combination - 3,824,263
Foreign exchange movement 211,707 -
Defined benefit obligation at end of year 3,592,712 3,758,285
Amounts recognised in the Statement of Changes 2020 2019
in Equity GBP GBP
Prior year cumulative actuarial remeasurements (46,342) -
Remeasurements (31,257) (46,342)
Foreign exchange movement 2,610
Cumulative amount of actuarial gains and losses
recognised in the Statement of recognised income
/ (expense) (74,989) (46,342)
Movements in the net liability/(asset) recognised 2020 2019
in the Statement of Financial Position GBP GBP
Net liability in the balance sheet at beginning
of year 3,758,285 -
Total expense recognised in the income statement 147,215 61,871
Contributions paid by the company (493,238) 3,308
Amount recognised in the statement of recognised
(income)/expense (31,257) (84,815)
Acquired in business combination - 3,777,921
Foreign exchange movement 211,707
Defined benefit obligation at end of year 3,592,712 3,758,285
Principal actuarial assumptions as at 31 December 2020
-----
Discount rate 0.18%
Future salary increases 1.60%
Future inflation 1.68%
Post-retirement benefits
The Group operates both defined benefit and defined contribution
pension plans.
Pension plans in Belgium are of the defined benefit type because
of the minimum promised return on contributions required by law.
The liability or asset recognised in the Statement of Financial
Position in respect of defined benefit pension plans is the present
value of the defined benefit obligation at the end of the reporting
period less the fair value of plan assets. The defined benefit
obligation is calculated annually by independent actuaries using
the projected unit credit method. The present value of the defined
benefit obligation is determined by discounting the estimated
future cash outflows using interest rates of high-quality corporate
bonds that are denominated in the currency in which the benefits
will be paid, and that have terms approximating to the terms of the
related obligation. The net interest cost is calculated by applying
the discount rate to the net balance of the defined benefit
obligation and the fair value of plan assets. This cost is included
in employee benefit expense in the Income Statement. Remeasurement
gains and losses arising from experience adjustments and changes in
actuarial assumptions are recognised in the period in which they
occur, directly in other comprehensive income. They are included in
retained earnings in the Statement of Changes in Equity and in the
Statement of Financial Position.
For defined contribution plans, the Group pays contributions to
publicly or privately administered pension insurance plans on a
mandatory, contractual or voluntary basis. The Group has no further
payment obligations once the contributions have been paid. The
contributions are recognised as employee benefit expense when they
are due.
27. Financial Instruments by Category
Consolidated 31 December 2020
Loans &
receivables Total
Assets per Statement of Financial Performance GBP GBP
Trade and other receivables (excluding prepayments) 19,178,650 19,178,650
Cash and cash equivalents 27,451,984 27,451,984
46,630,634 46,630,634
At amortised
cost Total
Liabilities per Statement of Financial Performance GBP GBP
Borrowings (excluding finance leases) 61,235,485 61,235,485
Finance lease liabilities 10,064,080 10,064,080
Trade and other payables (excluding non-financial
liabilities) 51,622,744 51,622,744
122,922,309 122,922,309
Consolidated 31 December 2019
Loans &
receivables Total
Assets per Statement of Financial Performance GBP GBP
Trade and other receivables (excluding prepayments) 21,121,455 21,121,455
Cash and cash equivalents 9,867,696 9,867,696
30,989,151 30,989,151
At amortised
cost Total
Liabilities per Statement of Financial Performance GBP GBP
Borrowings (excluding finance leases) 52,123,860 52,123,860
Finance lease liabilities 7,531,491 7,531,491
Trade and other payables (excluding non-financial
liabilities) 37,158,011 37,158,011
96,813,362 96,813,362
Company 31 December 2020
Loans &
receivables Total
Assets per Statement of Financial Performance GBP GBP
Trade and other receivables (excluding prepayments) 884,141 884,141
Cash and cash equivalents 11,521,206 11,521,206
12,405,347 12,405,347
At amortised
cost Total
Liabilities per Statement of Financial Performance GBP GBP
Borrowings (excluding finance leases) - -
Finance lease liabilities 42,994 42,994
Trade and other payables (excluding non-financial
liabilities) 18,993,743 18,993,743
19,036,737 19,036,737
Company 31 December 2019
Loans & receivables Total
Assets per Statement of Financial Performance GBP GBP
Trade and other receivables (excluding prepayments) 540,775 540,775
Cash and cash equivalents 3,935,831 3,935,831
4,476,606 4,476,606
At amortised
cost Total
Liabilities per Statement of Financial Performance GBP GBP
Borrowings (excluding finance leases) - -
Finance lease liabilities 66,498 66,498
Trade and other payables (excluding non-financial
liabilities) 19,315,646 19,315,646
19,382,144 19,382,144
28. Share Capital and Share Premium
Number of Ordinary Share premium
shares shares Total
GBP GBP GBP
Issued and fully paid
As at 1 January 2019 136,705,557 1,367,056 50,136,904 51,503,960
Issue of new shares - 25
January 2019 (1) 35,135,101 351,351 13,596,828 13,948,179
Issue of new shares - 1 February
2019 1,976,888 19,770 730,230 750,000
Issue of new shares - 15
October 2019 (2) 79,921,640 799,216 30,894,594 31,693,810
As at 31 December 2019 253,739,186 2,537,393 95,358,556 97,895,949
As at 1 January 2020 253,739,186 2,537,393 95,358,556 97,895,949
Issue of new shares - 9 December
2020 (3) 25,000,000 250,000 12,059,266 12,309,266
As at 31 December 2020 278,739,186 2,787,393 107,417,822 110,205,215
(1) Includes issue costs of GBP457,215
(2) Includes issue costs of GBP1,074,061
(3) Includes issue costs of GBP440,736
On 9 December 2020 the Company raised GBP11,958,760 net of issue
costs via the issue and allotment of 24,312,737 new Ordinary Shares
at a price of 51 pence per share. On the same day the Company
issued and allotted 687,263 new Ordinary Shares at a price of 51
pence per share as share based payments.
29. Share Options
Share options and warrants outstanding and exercisable at the
end of the year have the following expiry dates and exercise
prices:
Options & Warrants
31 December 31 December
2020 2019
Exercise price
Grant date Expiry date in GBP per share
5 January 2017 4 January 2022 0.44 1,026,014 1,026,014
5 January 2017 22 August 2021 0.25 78,044 78,044
5 January 2017 5 January 2022 0.25 286,160 286,160
5 January 2017 5 January 2022 0.40 12,183,225 12,183,225
15 April 2019 15 April 2026 0.46 3,216,978 3,216,978
30 December 2019 30 December 2026 0.46 2,704,353 2,704,353
30 December 2020 30 December 2026 0.46 5,921,331 -
25,416,105 19,494,774
The Company and Group have no legal or constructive obligation
to settle or repurchase the options or warrants in cash.
The fair value of the share options and warrants was determined
using the Black Scholes valuation model. The parameters used are
detailed below:
2017 Options 2017 Options 2017 Options 2017 Options
A B C D
Vested on 5/1/2017 5/1/2017 5/1/2017 5/1/2017
Life (years) 5 4 5 5
Share price 0.425 0.425 0.425 0.425
Risk free rate 0.52% 0.52% 0.52% 0.52%
Expected volatility 24.81% 24.81% 24.81% 24.81%
Expected dividend yield - - - -
Marketability discount 50% - - 50%
Total fair value GBP46,900 GBP15,083 GBP76,418 GBP234,854
2019 Options 2019 Options 2019 Options 2019 Options
E F G H
Vested on 15/4/2019 30/12/2019 15/4/2020 30/12/2020
Life (years) 7 7 6 6
Share price 0.465 0.525 0.295 0.6575
Risk free rate 0.31% 0.55% 0.40% 0.50%
Expected volatility 4.69% 8.19% 17.46% 12.04%
Expected dividend yield - - - -
Total fair value GBP49,638 GBP128,698 GBP21,259 GBP294,920
The risk-free rate of return is based on zero yield government
bonds for a term consistent with the option life.
The volatility is calculated by dividing the standard deviation
of the closing share price from the prior six months by the average
of the closing share price from the prior six months.
A 50% discount was applied to Options A & D due to the
uncertainty surrounding the future performance of the Group. The
Options A & D were issued in the first year of acquisitions
which at the time had not had a significant impact on the Company's
share price. Therefore a 50% discount was applied to reflect the
fact the Company was still in an early stage with regards to
acquiring niche company's and building value for the
shareholders.
A reconciliation of options and warrants granted over the year
to 31 December 2020 is shown below:
31 December 2020 31 December 2019
Weighted Weighted
average average
exercise exercise
price price
Number GBP Number GBP
Outstanding at beginning of
the year 19,494,774 0.40 13,573,443 0.40
Granted - - 17,777,991 0.46
Vested 5,921,331 0.46 - -
Exercised - - - -
Outstanding as at year end 31,337,434 0.44 31,351,434 0.44
Exercisable at year end 25,416,105 0.42 19,494,774 0.42
30. Other Reserves
Company
Foreign
Capital currency
Deferred redemption translation
shares reserve reserve Total
GBP GBP GBP GBP
As at 1 January 2019 761,679 600,039 - 1,361,718
Currency translation differences - - (447,978) (447,978)
As at 31 December 2019 761,679 600,039 (447,978) 913,740
As at 1 January 2020 761,679 600,039 (447,978) 913,740
Currency translation differences - - 2,379, 173 2,379,173
As at 31 December 2020 761,679 600,039 1,931,195 3,292,913
31. Earnings Per Share
The calculation of the total basic earnings per share of 2.55
pence (2019: 0.92 pence) is calculated by dividing the profit
attributable to shareholders of GBP6,510,868 (2019: GBP1,726,546)
by the weighted average number of ordinary shares of 255,310,224
(2019: 188,418,538) in issue during the period.
Diluted earnings per share of 2.35 pence (2019: 0.82 pence) is
calculated by dividing the profit attributable to shareholders of
GBP6,510,868 (2019: GBP1,726,546) by the weighted average number of
ordinary shares in issue during the period plus the weighted
average number of share options and warrants to subscribe for
ordinary shares in the Company, which together total 277,113,850
(2019: 209,045,831). The weighted average number of shares is the
opening balance of ordinary shares plus the weighted average of
1,571,038 shares.
Details of share options that could potentially dilute earnings
per share in future periods are disclosed in Note 29 .
32. Fair Value Estimation
The Group holds call options to purchase EUR4,000,000 on 30 June
2021 and EUR6,000,000 on 30 December 2021.
The call options were bought on 11 December 2020 for GBP190,145
and as at 31 December they had a fair value of GBP151,770 resulting
in a loss of GBP38,375. Refer to note 13 for more information.
33. Fair Value of Financial Assets and Liabilities Measured at Amortised Costs
Financial assets and liabilities comprise the following:
-- Trade and other receivables
-- Cash and cash equivalents
-- Trade and other payables
The fair values of these items equate to their carrying values
as at the reporting date .
34. Business Combinations
Stone Holdings SA
On 11 September 2019, the Company acquired 49% equity interest
in Stone Holdings SA and its subsidiaries ('Stone') for a cash
consideration of GBP563k (EUR658k). On 1 January 2020, the Group
acquired an additional 25% of the share capital of Stone for cash
consideration of GBP312k (EUR339k) and on 7 August 2020 the Group
acquired the remaining 26% for GBP308k (EUR339). Stone is
registered and incorporated in Belgium. Stone is based in Belgium
and operates two quarries and a wharf and contracting business
which focusses on armour rock for river and sea defence work. At
the time of taking control of Stone they it did not own the mineral
reserves and held only a small amount of depreciated assets.
The following table summarises the consideration paid for Stone
and the values of the assets and equity assumed at the acquisition
date.
Total consideration GBP
---------
49% Initial cash consideration 551,886
Share of profit for 2019 816
Fair Value as at 31 December 2019 & Acquisition 552,702
26% Deferred cash consideration - 1 January 2020 287,206
25% Deferred cash consideration - 5 August 2020 287,206
Loans repaid (321,500)
805,614
Recognised amounts of assets and liabilities acquired GBP
Cash and cash equivalents 71,510
Trade and other receivables 475,165
Inventories 161,445
Property, plant & equipment 275,535
Trade and other payables (884,030)
Borrowings (1,026,302)
Total identifiable net liabilities (926,677)
Goodwill (refer to note 17 ) 1,732,291
Total consideration 805,614
GDH (Holdings) Limited
On 16 April 2019, the Group acquired 40% of the share capital of
GDH (Holdings) Limited ('GDH') and its subsidiaries for cash
consideration of GBP4.8m. On 21 September 2020, the Group acquired
the remaining 60% of the share capital for cash consideration of
GBP6.4 million (being GBP7.3 million less adjustments for various
obligations assumed by the Group as part of the acquisition).
Royalty payments are due over the next 12 years and total a minimum
of GBP10m. A minimum amount of GBP160k is due each year. The
royalty payments have been discounted at discount rate, reflecting
the Group's cost of money and risks associated with the industry,
of 7.39%. For the period that GDH was treated as an associate to
the Group the share of profit attributed was GBP377,029.
In accordance with IFRS 3, the Company will perform a PPA within
the 12 months of fully acquiring GDH.
GDH is registered and incorporated in the United Kingdom. The
principal activity is the production of high-quality aggregates and
supply of value-added construction materials.
The following table summarises the consideration paid for GDH
and the values of the assets and equity assumed at the acquisition
date.
Total consideration GBP
40% cash consideration 4,890,792
Share of profit for 2019 83,054
Fair value as at 31 December 2019 4,973,846
Share of profit for period 1/1/20 - 21/9/20 293,975
Fair value as at 21 September 2020 5,267,821
60% cash consideration 6,442,922
Discounted Royalty payments 4,679,186
Loans repaid 893,266
17,283,195
Recognised amounts of assets and liabilities acquired GBP
Cash and cash equivalents 1,731,621
Trade and other receivables 4,823,982
Inventories 2,238,313
Property, plant & equipment 27,190,620
Tax liabilities (2,843,842)
Trade and other payables (8,462,138)
Provisions (172,303)
Borrowings (13,377,840)
Total identifiable net assets 11,128,413
Goodwill (refer to note 17) 6,154,782
Total consideration 17,283,195
35. Contingencies
The Group is not aware of any material personal injury or damage
claims open against the Group.
36. Related party transactions
Loans with Group Undertakings
Amounts receivable/(payable) as a result of loans granted
to/(from) subsidiary undertakings are as follows:
Company
31 December 31 December
2020 2019
GBP GBP
Ronez Limited (12,878,274) (9,625,760)
SigmaGsy Limited (4,455,066) (3,014,167)
SigmaFin Limited (7,138,810) (8,756,846)
Topcrete Limited (8,178,013) (1,022,931)
Poundfield Products (Group) Limited 6,363,536 7,088,761
Foelfach Stone Limited 457,326 442,858
CCP Building Products Limited 5,785,781 6,372,333
Carrières du Hainaut SCA (6,186) 1,681,820
GDH (Holdings) Limited 1,233,517 -
Stone Holdings SA 368,321 -
(18,447,868) (6,833,932)
Loans granted to or from subsidiaries are unsecured, interest
free and repayable in Pounds Sterling on demand from the
Company.
All intra Group transactions are eliminated on
consolidation.
Other Transactions
Heytesbury Corporate LLP, a limited liability partnership of
which Garth Palmer is a partner, invoiced a total fee of GBP249,997
(2019: GBP370,000) for the provision of corporate management and
consulting services to the Company. No balance was outstanding at
the year-end.
Druces LLP, a limited liability partnership of which Dominic
Traynor is a partner, invoiced a fee of GBP65,542 (2019:
GBP330,072) for the provision of legal services for acquisitions.
There was no balance outstanding at year end.
Julia Traynor, the wife of Non-Executive Director Dominic
Traynor, invoiced a fee of GBP26,250 (2019: GBP40,000) for the
provision of administrative and legal services to the Company in
relation to prospective acquisitions. No balance was outstanding at
the year-end.
Patrick Dolberg invoiced a fee of GBP45,000 (2019: GBP45,000)
for the provision of consulting services to the Company in relation
to prospective acquisitions. No balance was outstanding at the
year-end.
37. Ultimate Controlling Party
The Directors believe there is no ultimate controlling
party.
38. Events After the Reporting Date
Expansion of aggregates operations in Belgium
On 26 March 2021, the Group entered into an agreement to assume
control of LaFargeHolcim's quarrying operations which are located
at the Group's CDH site. Prior to entering this agreement,
production and commercialisation of the aggregates at the CDH site
was undertaken by LaFargeHolcim under an inefficient royalty deal
which was due to end in February 2023.
This agreement gives the Group full control over CDH's
production assets and will enable the Group to drive operational
efficiencies over time.
Acquisition of Belgian concrete assets
On 6 April 2021, the Group, in line with its stated strategy,
completed the acquisitions of B-Mix Beton NV, J&G Overslag en
Kraanbedrijf BV and Top Pomping NV (collectively 'B-Mix'), as well
as Casters Beton NV ('Casters') from Groep Janssens N.V. for a
combined cash consideration of EUR13m.
B-Mix and Casters operate four concrete plants in Tessenderlo
and Genk in Belgium. In the year ended 31 December 2020 the
businesses, in total, generated a turnover of EUR22m, EBITDA of
EUR3.3m and a net profit of EUR1.5m. They will be immediately
enhancing to the Group's underlying earnings, and the acquisitions
were funded from the net cash proceeds generated by the Group's
equity fundraising in December 2020.
No further financial information on these transactions is
available at this time, due to the proximity of the acquisitions to
the reporting date of these financial statements.
Alongside these acquisitions, the Group has also entered into an
option agreement with Jabo N.V., granting it the right to acquire
11 hectares of quayside industrial land in Tessenderlo, for a
consideration of EUR9m. The land subject to the Option includes
approximately 260m of quayside along the Albert Canal which houses
the B-Mix concrete business.
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END
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