TIDMSRC
RNS Number : 1156K
SigmaRoc PLC
20 April 2020
SigmaRoc plc / EPIC: SRC / Market: AIM / Sector: Construction
& Materials
20 April 2020
SigmaRoc plc
('SigmaRoc' or the 'Company')
Audited full year results for year ended 31 December 2019 and
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 2019.
Financial highlights(1) 31 December 2019 31 December 2018 Change
Underlying revenue GBP70.4m GBP41.2m +70.6%
Underlying EBITDA GBP14.5m GBP9.8m +47.6%
Underlying profit
before tax GBP8.4m GBP5.5m +51.3%
Underlying EPS 4.20p 3.83p +9.7%
Adjusted Leverage
Ratio(2) 2.07x 1.63x +27.0%
(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 the 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:
- Four acquisitions during the year including CCP Building
Products Limited and 40% holding in GDH (Holdings) Limited in the
UK; and Carrieres du Hainaut and Stone Holdings Limited in
Belgium;
- The new ready-mix operations were opened at Ronez in Jersey in February 2019;
- Revenue increased to GBP70.4 million, with underlying EBITDA
increasing to GBP14.5 million, a growth of 47.6% year-on-year;
- Entered into the Northern European market with the acquisition
of Carrieres du Hainaut and Stone Holdings;
- Implemented a Group-wide safety policy and saw the LTIFR reduce by 36%; and
- The Groups operations expanded to over 30 production sites and close to 1,000 employees.
Annual General Meeting
SigmaRoc is also pleased to give notice that its Annual General
Meeting ('AGM') will be held on 18 May 2020 at 1:00 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.
In light of the UK government's response to the COVID-19
outbreak, which includes banning all non-essential travel and
gatherings of more than two people, the Company strongly encourages
all Shareholders to submit their form of proxy, rather than attend
the AGM in person.
David Barrett, Executive Chairman, commented:
"I am pleased to report another strong year in 2019 where we
were able to substantially grow the Group, meeting our ambitious
expectations for the year. We made four acquisitions during the
year, which collectively and on a pro-forma basis, add GBP112
million in revenue and GBP17 million in EBITDA annually."
"I am extremely proud of our continued progress and believe we
are well positioned to successfully manage the challenges presented
to our business by the COVID-19 pandemic."
Max Vermorken, CEO, commented:
"I would like to thank the great team we have at SigmaRoc for
another excellent year. Through a combination of organic and
acquisitive growth we increased revenue by 71% to GBP70.4 million,
Underlying EBITDA by 48% to GBP14.5 million and Underlying EPS by
10% to 4.2p."
"As Garth moves to a Non-Executive Director role, I am extremely
grateful he helped us build a business in great financial shape,
with a solid asset base, potential to grow across four existing
platforms and the opportunity to create new platforms for further
expansion. I also thank Dom and Patrick for their contributions and
am pleased that both will remain involved with the Group as
advisors."
"Looking forward, we have the COVID-19 crisis to navigate. The
Group is well prepared to confront the potential consequences of
the crisis and to then continue its growth story, thanks to the
resilience of its great workforce and supportive unions. I am
therefore optimistic about what we can achieve in the months ahead
of us this year and beyond."
Text from the 2019 Annual Report is set out below, together with
detailed financial results.
SigmaRoc will host a meeting for invited analysts at 9.00am and
private investors at 2.00pm today. Conference call dial-in details
are available from the Company upon request to join the analyst or
private investor meetings. A recording will also be available on
request from the Company.
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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 /
Jack Botros
Peel Hunt (Joint Broker) Tel: +44 (0) 20 7418 8900
Mike Bell/Ed Allsopp
Liberum Capital (Joint Broker) Tel: +44 (0) 203 100 2000
Neil Patel / Jamie Richards /
Jonathan Wilkes-Green / William
Hall
Rubik Communications (Financial Tel: +44 (0) 207 002 1080
PR adviser) info@rubikcomms.com
Andrea Mora / Charlotte Hollinshead
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014. Upon the
publication of this announcement via Regulatory Information
Service, this inside information is now considered to be in the
public domain.
CHAIRMAN'S STATEMENT
SigmaRoc has completed a very successful 2019. Our revenue
reached GBP70 million, our underlying EBITDA grew by 47.6%, to
GBP14.5 million with our underlying earnings per share growing
further to 4.20 pence.
Underlying EBITDA margins remained strong at 20.7% when taking
into account the incorporation of a lower margin and higher volume
business with the acquisition of CCP. Our remaining business
recorded EBITDA margins of 24.6%, which is in-line with our 2018
performance.
As a result of these strong financial results the business was
able to continue its growth by starting two new platforms in South
Wales and Belgium respectively. The business now operates over 30
production sites, including 15 quarries, with over 400 million
tonnes of mineral reserves and resources across the Group, with the
potential to further expand each platform.
A year of substantial growth
2019 was characterised by significant growth, both organically
and through acquisition. We completed a total of four acquisitions
during the year, complementing our PPG Platform, substantially
growing our South Wales platform and creating a new platform, in
Belgium.
Additionally, we have invested in our existing businesses in
order to expand the offering and production capacity, thereby
organically growing our footprint. In 2019, we invested
significantly in our ready-mix concrete offering at Ronez Jersey
and expanded our production capacities at both Poundfield and CCP.
We also upgraded our plant and machinery across the business to
further solidify our operating base.
The most substantial acquisition saw our move into Belgium
through the acquisitions of Carrieres du Hainaut, the leading
producer of the world-famous Belgian Bluestone, as well as
significant volumes of construction aggregates, and Stone Holdings,
which specialises in armour rock for sea and river defence work.
The potential for the business to now expand into the Benelux area
is significant as we build out a quarrying platform that already
includes three quarries in Belgium.
Safety
The safety and the wellbeing of our colleagues is paramount to
our activity and to a well-run business. We have invested
substantially to ensure that workplaces across the Group
continuously improves and accidents are avoided. In November 2019,
we implemented a new Group-wide safety policy to ensure uniform
safety standards across the Group.
The impact of the policy has already been visible. Our Belgian
platform recorded its longest period without incident on record,
between the time of our acquisition and earlier this year. Our
safety record in the other parts of the business also improved,
with a net drop in LTIFR of 36% on the previous year. Total
incident reporting increased across the Group, showing improved
quality of information flow.
Governance and sustainability
As part of the continued transformation of the business, we have
placed further emphasis on governance and sustainability. In
September 2019, we announced the proposed appointment of Jacques
Emsens, a renowned industrialist and expert in specialist minerals,
to our Board as an independent Non-Executive Director.
Immediately following the release of these Accounts, the Company
intends to formally appoint Jacques Emsens to the Board, together
with Simon Chisholm, who brings detailed knowledge of equity
markets, fund management and market regulation. Simon qualified as
a Chartered Accountant and has over 20 years of experience working
in the investment arena. He is currently founder and managing
director of Feros Advisers Limited and has previously worked as a
fund manager investing in European equities at Singer &
Friedlander, Henderson Global Investors and other large
institutions. Simon will join the Board as a senior independent
Non-Executive Director and will chair the Audit Committee.
In addition, we have created an advisory board with the aim of
guiding our business through a number of exciting projects in the
Benelux region. It is a privilege to have private equity investor,
Count Christophe de Limburg Stirum, and former Heidelberg Benelux
CEO Pascal Lesoinne, join our Benelux advisory board.
With these changes, we have put in place a solid supervisory
body of high calibre individuals with significant experience in the
industry, listed businesses and the fast-changing regulatory
environment, to help us to guide the business forward.
From a sustainability perspective, we also made significant
progress throughout the year. A separate section of this report is
dedicated to our specific efforts in this area, which include
renewal programmes for our mobile and delivery fleet for lower
emission vehicles, to product ranges aimed at assisting with the
challenges faced by the effects of climate change, and the
participation in breeding programmes for certain animal species
near our sites.
Looking forward
The first important announcement at this stage is that we see
our CFO, Garth Palmer, step down from the role he has held since we
founded the business. Garth, who has served as our CFO on a
part-time basis and is also a partner in accounting firm,
Heytesbury Corporate LLP, has been an exceptional CFO to our
business. Guiding us through sometimes challenging and always very
intense times, his skill and dedication has been a significant
contributing factor to our success to date. Garth has indicated,
however, he will remain on our Board as a Non-Executive Director,
for which we are extremely grateful.
We are also very pleased to announce our new fulltime CFO, Dean
Masefield, who will also join the Board immediately following the
release of these Accounts. Dean joined SigmaRoc in 2017 taking on
the roles of Financial Director for the Ronez Platform and then
Deputy CFO to the Group in 2019. Prior to joining SigmaRoc Dean
served as Head of Finance of BNP Paribas and later Equiom Channel
Islands overseeing all accounting, reporting, regulatory and
systems aspects for tens of billions of USD in assets under
management. Dean is a Chartered Accountant having qualified with
BDO in 1997 and is presently an FCA, having qualified with the
Institute of Chartered Accountants of England and Wales.
In order to maintain an appropriately sized Board relative to
the size and stage of development of the Group, Dominic Traynor and
Patrick Dolberg have both agreed to step down from their current
positions as Non-Executive Directors of the Company, following
completion of the Annual General Meeting to be held on 18 May
2020.
Dominic has been with us on this journey from the very beginning
and we are extremely thankful to him for his contributions toward
our success to date, which have culminated in the Group exceeding
forecast annual turnover of GBP100 million. We are pleased that
Dominic will be taking up a position on one of the subsidiary
boards and will therefore remain involved with the Group in an
advisory capacity.
Patrick has been with us since we completed the reverse takeover
of Ronez in early January 2017 and has been instrumental in guiding
the Group through its early growth phase, for which we are
extremely grateful. Patrick is a Belgian national and formerly ran
Holcim's European operations. Given our European growth aspirations
we are pleased to report that Patrick will join our Benelux
advisory committee and, therefore, will continue to provide
guidance as we grow the Group.
With these Board changes we have positioned the business well
for the future. With significant potential for further development.
In the Benelux region, we have a well-balanced business that can
capitalise on growth opportunities as and when they arise. Our
position in South Wales is promising and can be expanded. Our
precast group, SigmaPPG, is in great shape and fully
integrated.
We started 2020 well with a strong first quarter, however, at
the time of writing, the outbreak of the Coronavirus pandemic and
its economic consequences create uncertainty. We continue to
actively monitor the situation and implement required contingency
plans as and when appropriate. We remain confident that we have a
solid business with fantastic assets and that once the economy
rebounds, we will be well positioned to resume delivering further
shareholder value.
David Barrett
Executive Chairman
17 April 2020
CEO's STRATEGIC REPORT
2019 was a significant year for SigmaRoc. Nearly every month of
the year, the business made a major step forward, whether it was
through organic growth, acquisition, financial and operational
improvement and/or a review of our safety, governance, reporting
systems and environmental impact. As a result, where we started
2019 as a business with two platforms, we finished the year with
four platforms across four regions, nearly 1,000 colleagues and
ample opportunity to further expand and develop.
Financial performance
Focussing first on the financial performance of the Group, where
we have delivered excellent results. Revenue increased to GBP70.4
million, with underlying EBITDA increasing to GBP14.5 million, a
growth of 47.6% year-on-year. Underlying earnings per share
increased to 4.20 pence. Underlying EBITDA margins continued to be
strong at 20.7% when taking into account the integration of CCP, a
quality business specialising in concrete blocks that typically
attract a lower margin. As we further integrate and grow the Group,
these margins are expected to continue to grow above 20%, assuming
2019 activity levels.
Our balance sheet has also continued to improve, with the
refinancing of the GBP10 million, 6% convertible loan notes and the
simultaneous extension of the Santander credit facilities from
GBP20 million to GBP34 million. With the acquisition of CCP in the
North West, our joint venture with G.D. Harries in South Wales and
our acquisition of CDH in the Benelux, we have extended our mineral
reserves and resources to over 400 million tonnes across the Group,
at 15 quarries. The asset backing in the Group is therefore solid
and is further complemented by land, plant and machinery at the
various production sites.
Trading Summary
Throughout 2019, we have continued to press on with improvement
programmes launched across the various businesses. A dedicated
section in this report on our business model gives further detail
of the progress made. As a result of these programmes, each
business we own is performing better than it had prior to
acquisition.
Ronez had another strong year of continued increased performance
recording over GBP29 million in sales, biased to the first half.
The markets in Jersey remained strong, while Guernsey has
unfortunately not yet seen the higher volume months it witnessed
five years ago. In particular, our new concrete offering in Jersey
has helped solidify our position as the concrete supplier of
choice, demonstrating that the investment case for the new plant
was a robust one. The contracting division also did an outstanding
job in both islands, delivering challenging jobs in sometimes
difficult circumstances as both the weather and the structure of
the sites can be tricky in the islands.
Our second platform, SigmaPPG, recorded a solid year all round
after a slower start than expected. CCP, acquired in February 2019,
showed slower trading in the initial few months of ownership, both
in its block and aggregates businesses. However, the block business
saw volumes increase rapidly across the year, with nightshifts
being introduced for the first time to follow demand. The Aberdo
quarry was restructured extensively making it an exemplary
turn-around case and won the British Aggregate Association Quarry
of the Year award.
Allen Concrete and Poundfield Products continued their strong
performance with an expanded product range. After further
investment to reorganise the Poundfield site as a result of
increasing levels of demand, it has now captured a leading position
in the UK as a supplier of choice for technically challenging
bespoke precast concrete projects and retaining walls.
Across the second and third quarters of 2019, production levels
hit record all-time highs propelling Poundfield's revenues to over
GBP9m. Large sea defence projects were delivered in the UK,
protecting the British coastlines. The retaining wall business
continued to diversify its offering to include new applications of
the product and selling to, for example, nuclear facilities. The
flooring business grew further with its end-to-end design solution
and short lead times.
Growth
While we continued to focus on performance improvements, we did
not lose focus on our acquisition growth strategy. We expanded into
South Wales through a joint venture partnership with G.D. Harries,
a leading construction materials supplier led by Ian Harries and
assisted by our MD for the region, David McClelland. The business
recorded an excellent year, well ahead of its performance in 2018
with an underlying EBITDA of GBP3.2 million, a year-on-year growth
of 24.8%.
In the third quarter, we commenced our expansion into Belgium,
following many months of planning, initially appointing Emmanuel
Maes as MD of Europe, a highly experienced former CEO of dredging
and aggregates supplier, Group De Cloedt, followed by the
acquisition of Stone Holdings and subsequently and more
significantly, Carrieres du Hainaut.
Carrieres du Hainaut is globally the leading supplier of Belgian
Blue Stone, a highly sought-after decorative stone with
applications in infrastructure, housing and public spaces. It
recorded sales of EUR51.4 million and an underlying EBITDA of
EUR13.6 million in 2019. Extension projects are ongoing to extend
the site to over 300 hectares. Additionally, CDH is a major
producer of construction aggregates with volumes of nearly 2
million tonnes per year, one of the largest operations of its kind
in Belgium. Combined, CDH has approximately 200 million tonnes of
aggregate and over 27 million cubic metres of dimension stone,
enough for over 100 years of production at the current rate.
The potential with this acquisition lies in the fact that the
business offers a real platform for growth. Belgian Blue Stone
remains undiscovered in many markets including the UK, yet we
believe that we have the required commercial teams in place within
our PPG Platform to change this. The partnership on the production
of construction aggregates comes to an end in three years giving us
full flexibility to consider all options to produce and even
commercialise this valuable material ourselves, or in continued
collaboration with a quality partner.
Safety
Major progress was made in the field of safety and the wellbeing
of our colleagues. As an executive committee we designed and
implemented a Group-wide safety policy in line with the highest
standards in the industry. We appointed Clinton White as Safety and
Estates Director and he coordinates with line managers in each
business to ensure safety is an output of best practice operations.
We continue to use external auditors to review our safety
performance independently, to ensure we constantly improve.
Year-on-year the results are visible. The total number of
incidents has declined while the business grew. Our Group-wide
LTIFR reduced by 36%. Total reported near misses increased
indicating better reporting. The culture in each platform is
changing to embrace our best practice safety policy. A key example
would be our Belgian platform which saw the longest period without
incident on record subsequent to our take-over of the business.
Environment, Social and Governance (ESG)
Over the course of 2019 we made significant progress on all
aspects of our ESG focus. A dedicated section of this report
provides full details, however, some aspects we can highlight
here.
During the course of 2019, we started the search to extend our
Board with further independent Non-Executive Directors, with a view
to ensuring robust governance of the business. With the proposed
appointments of industrialist, Jacques Emsens, and former fund
manager and Chartered Accountant, Simon Chisholm, we will add solid
experience to our Board in the management of large listed
industrial groups as well as the regulatory aspects of publicly
listed companies.
At an operational level, in May 2020, we are very pleased to be
appointing Anthony Brockbank, Equity Capital Markets (ECM) partner
with law firm, Fieldfisher LLP, as our General Council, on a part
time basis. We consider Anthony to be amongst the most experienced
ECM lawyers in the UK and he will further assure compliance with
the market rules and regulations.
On a social and environmental front, we continued to reinforce
our existing initiatives to reduce our environmental impact,
protect our operational sites from pollution, care for indigenous
species of wildlife and actively seek to produce products which
help with the mitigation of some of the impacts of climate change.
Further details on these initiatives are provided in the dedicated
section further into this report.
Promotion of the Company for the benefit of members as a
whole
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
2019 and up to the date of these Accounts:
-- Response to the Coronavirus pandemic: as detailed in the
Coronavirus update, 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 four acquisitions during 2019, which expanded the
SigmaPPG and South Wales platforms and created a new platform in
Belgium.
-- 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 adopting a Group-wide safety
policy to ensure uniform safety standards across the Group.
Strategic approach and outlook
Our strategic approach is to build clusters of local and
complementary businesses to deliver shareholder value from
synergies, operational improvement and competitive advantage. We
target assets that deliver a value proposition to customers, have a
strong local market presence and hard asset backing, resulting in
improved margins. We seek income streams that are diversified and
supported by quality assets producing aggregates, concrete, precast
and prestressed concrete and related products and services.
At the time of writing the outlook is complex. The underlying
business is sound, filled with significant potential and the
capacity to expand both organically and through acquisition. The
teams are skilled and the operational structure is efficient,
following several improvement initiatives. The project pipeline
remains filled with exciting projects, both in terms of product
development and potential acquisition targets that could strongly
complement our existing footprint.
We started the year well with solid performance in all parts of
the business. While Ronez had some inclement weather to deal with,
in the shape of several storms passing through the Channel Islands,
its underlying demand and project pipeline remains solid. The
Benelux platform recorded robust sales in both aggregates and
dimension stone, indicating a good pipeline overall.
Our discussions with Santander and four banks in Belgium to put
in place a Group-wide credit facility, which would provide further
financial flexibility to support our growth, are far advanced and
we look forward to providing further updates as and when
appropriate.
In consideration of the above, I believe it is only fitting to
close this report with three facts: firstly, our business made
excellent progress in 2019 and Q1 2020; secondly, as a management
team we have, since early March 2020, made preparations to mitigate
the impact of COVID-19 on our business through several action plans
and mitigation strategies; and thirdly, the underlying business,
its asset backing and strength of its senior management team
position the Group well to deliver shareholder value.
This report was approved by the Board on 17 April 2020.
Max Vermorken
Chief Executive Officer
CORONAVIRUS UPDATE
Since the end of February 2020, we have been working to prepare
our business for scenarios that I do not think anyone could have
anticipated, namely, those brought about by the impact of the
Coronavirus pandemic. Fortunately, as a team, we believe were ahead
of most and found ourselves in a good position to help protect our
staff and our business from the potential consequences of COVID-19.
With this message, I intend to give you some insight into how we
are approaching this challenge.
(a) Preparation and uniform approach
In early March 2020, it became apparent that the Coronavirus
would pose a serious challenge to all of us. To prepare for this
challenge, we instructed our Health and Safety Director, Clint
White, and the Group MDs to immediately start coordinating our
response across the entire business. A Group-wide campaign on how
to prevent contracting the virus, based on scientific and
Government advice, was started. At the time of writing, this has
been successful, with all our operations remaining free of
confirmed or probable Coronavirus cases.
(b) Increasing our readiness
As time passed, it quickly became apparent that basic hygiene
rules would not be enough and that we needed to do more; we needed
strict social distancing. As a business, we are fortunate in that
we mostly work in the open air, on sites with plenty of space and
carry out jobs that can be reconfigured to be performed alone,
indicating a relatively lower risk profile.
However, across the Group we also have administrative offices,
portacabins, breakrooms and toilets. We have made sure to ventilate
these spaces well where possible, otherwise deciding to limit
access or closing them completely. We have also enhanced cleaning
routines and surfaces touched by staff are now cleaned more
frequently. Those who could work from home were instructed to do
so, in order to respect the social distancing instructions. In
addition, a programme was put in place to ensure those working from
home did so in the right setup and environment.
(c) Financial preparation
As a team, we also looked carefully at the possible financial
implications to our business resulting from Coronavirus. I am happy
to report that, at an early stage of pandemic, we developed
contingency plans that prepared our business well for the possible
consequences of this virus. Simulations were run to understand how
long we could survive with zero revenue, how much revenue loss we
could stand to remain cash positive, how much revenue could be lost
before banking covenants were breached and what would need to be
done to make our financial position as secure as possible.
The plans we developed were reassuring. Our cash balance was
robust and would allow us to operate for over six months with zero
revenue and without drawing any further debt. We have access to
further bank facilities if required. Even more encouraging is the
fact that these plans were prepared, finalised and presented to the
Board well before the UK and Belgium governments announced the
various financial support packages. When it became clear how such
financial support could help us if required, we felt we were in an
excellent position as a Group to deal with the challenges
ahead.
(d) Brace for impact
As Coronavirus started to spread and Belgium, the UK and the
Channel Islands started reporting a significant number of cases,
the implementation of our contingency plans became the priority.
Several additional steps were taken:
-- Daily calls: To coordinate activity across all businesses and
facilitate a uniform approach across the Group, daily calls with
all managers were set up to report on the situation in each
business.
-- Continuing to operate: The next dilemma became whether to
stay open or shut our sites. Government regulations in the UK and
Belgium indicated our activities could continue, as long as all
health recommendations were followed. In the Channel Islands the
indications changed over time. As a management team, we debated the
matter extensively, to conclude that if we could guarantee correct
social distancing and hygiene measures, staying open where
permitted was the right answer. While keeping our staff out of harm
was our key focus, our second priority had to be supporting our
local economies and communities by paying our bills and supplying
materials required for projects such as hospitals and road
infrastructure. If we could continue to operate and trade, we were
not a burden to the economy, but in fact, contributing to it. This
ultimately felt like the right approach.
As a result, the Group had to close all but essential
infrastructure maintenance operations, in both Guernsey and Jersey,
for a period of 14 days commencing effective from 26 March 2020 and
4 April 2020 respectively. Guernsey has remained closed up until
the publication of these Accounts, however, there is an expectation
of an easing of restrictions and a controlled restart of business
activity during the week commencing 20 April 2020. The Jersey
Government has implemented a permitting system that is
progressively facilitating the reopening of accredited construction
sites and small works. At the time of writing modest supplies have
commenced, with an acceleration in the Group's operations expected
to commence from 20 April 2020.
In the UK, the Group remains active across all sites, albeit at
reduced volume levels, supplying product where doing so is an
economically viable proposition for its customers. In this context,
the Group has decided to suspend some of its production capacity
and supply from stock. In Wales, G.D. Harries remains active across
a number of civil engineering and road maintenance contracts,
having reduced production and haulage capacity in-line with current
local demand.
The Group's Belgian businesses also remain operational with the
support of staff and unions, supplying bluestone to a reduced
number of active customers. The Group's partner in the sale of
aggregates from its Soignies quarry has decided to close its
production entirely until further notice. However, the Group
continues to supply customers from its other aggregate quarries
near the town of Huy.
-- Consultation with unions and staff: In order to ensure our
operations could continue, a dialogue with staff commenced at each
production site. Those who were considered to potentially be at
risk (for example those that had a pre-existing medical condition),
those who had any symptoms similar to those experienced by people
suffering from COVID-19, or those who were in contact with COVID-19
patients, were instructed to go home and isolate. Surveys were
conducted to understand requirements to stay home with children,
providing management with a good understanding of the pressures on
our staff.
In Belgium and in Jersey, where the workforces are unionised, a
dialogue was started with the unions, who in every case were
proactive, supportive and understanding that, as long as staff
could be kept safe, there was a local community and economy to
consider, as well as the future of the business. The union
representatives showed true leadership and vision during those
discussions.
-- Face masks: A topic that followed from our staff
consultations was the need for face masks. After failing to secure
the required number we decided to hire a team of seamstresses and
make them ourselves. 2,000 face masks have been ordered of which
1,000 have been received and distributed to members of staff. The
remaining 1,000 are planned to be donated to local hospitals.
Appropriate instructions were given to each staff member to ensure
proper use of the masks.
-- Paying our bills and helping the community: The next
challenge became the management of our cash in a climate where more
and more customers were signalling that they would not be making
timely payment of their outstanding liabilities. Daily cash
monitoring and bi-weekly calls were set up between all accounting
and credit control teams to ensure we managed our cash prudently.
Through discussions with our customers and suppliers, we were able
to continue to pay our bills and maintain our cash position without
significant erosion. In the end, our mission has been to be a
supportive business, helping its local communities where it could
while not endangering its own liquidity position.
At the time of writing, the above summary provides a detailed
perspective of our position and our approach to dealing with the
Coronavirus. We firmly believe that the Group is in a strong
position. We have remained operational where permitted and where
deemed safe, selling product, collecting cash and paying suppliers.
We are supplying products to those who needed them for their
activities, including hospitals and for the maintenance of roads.
Wherever possible we have helped our local communities without
forgetting our mandate to our shareholders.
To conclude this additional update, I want to make it very clear
that none of the above could have been achieved without the
tireless support of a phenomenal team of individuals who
collectively make up the SigmaRoc group. In the face of this
crisis, they remained humble, disciplined, understanding and a true
team. They understood how little we could do as individuals but how
much we could accomplish as a team, as a business, as a
society.
Max Vermorken
CEO
SigmaRoc plc
BUSINESS REVIEW: INVEST, IMPROVE, INTEGRATE
Our business model
SigmaRoc was set up with the vision to build a competitive
construction materials group, focussed on the long term benefits
our industry has to offer. Our business model was conceived out of
the experiences of many high level executives and entrepreneurs in
the sector, allowing several important conclusions to be drawn.
Construction materials are a local product, consumed and
produced locally, and, due to their high mass to price ratio, they
tend to travel shorter distances to end customers than other
commodities, such as oil or metals. This brings a particular
dynamic to the sector, focussed on local and fragmented
markets.
Our business model starts from the understanding that each local
market is different, with its own particularities, competitive
pressures and local history. Understanding that structure,
preserving its history and local dynamics, while applying
best-in-class operational and financial management, will
ultimately, all things being equal, lead to a better offering, for
investors, customers, employees and local communities.
A particular ingredient in that structure is empowering local
managers and operators to take full responsibility for their
business or division. Only local managers fully understand the
requirements of the local market. Product innovation, customer
engagement and Capex decisions are all driven by local requirements
and not by a group agenda, which may or may not be adequate for
what is required on the ground.
At a group level, we utilise this decentralised approach to
focus on what we are best at; finding appealing investment
opportunities, helping the acquired businesses reach a
best-in-class status operationally and financially, and lock in
synergies available to us through scale and expertise.
Implementing our strategy
In practice, the implementation of the vision expressed above
can be achieved through three core principles:
We invest in businesses. This is not the same as acquiring them.
We aim to keep and improve those aspects which made them worth
acquiring, whether that is their independent mind-set, their
entrepreneurial nature or their founder.
We improve the businesses we have bought by targeting those
aspects which were less efficient than they could be. This can vary
widely from inefficient sales efforts, poor cash management to
operational difficulties.
Lastly, we integrate the businesses we buy into clusters where
compatibility secures synergies and where scale helps to generate
local buying power. We also integrate acquired businesses into the
infrastructure of the Group, providing centralised technical,
financial and managerial support, allowing the newly integrated
business to capture efficiencies and economies of scale.
Invest
-- Only in businesses with solid intrinsic value;
-- Only in businesses with the potential to be improved and grown;
-- Only in businesses which can be bought at an attractive valuation.
Improve
-- The operational and financial performance of the business;
-- The motivation of management to drive growth;
-- The ultimate offering to the local market and community.
Integrate
1. By building platforms of compatible businesses;
2. By unlocking those synergies which do not come at a significant cost;
3. By recognising the value of what previous owners built.
DIRECTORS' REPORT
As I will be stepping down from my role as an executive Board
member and Chief Financial Officer following publication of these
Accounts, I would like to begin this report by thanking the Board
and shareholders for the opportunities afforded to me over the
better part of four years. Due to other business interests, I have
occupied my role in a part time capacity, and it was always
envisioned I would step aside when the time was right. Now more
than ever the Group needs a fulltime CFO and we are extremely
pleased to have Dean Masefield taking over. I have immensely
enjoyed my time to date with SigmaRoc, am extremely proud of
everything we have achieved together and look forward to continuing
the journey as a Non-Executive Director.
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. We completed four
acquisitions during the year, with CCP in January, GDH in April,
Stone in September and then CDH in October.
In our full 2019 financial year, the Group generated revenue of
GBP70.4 million (2018: GBP41.2 million) and underlying EBITDA of
GBP14.5 million (2018: GBP9.8 million). The underlying profit
before taxation for the Group for the year ended 31 December 2019
was GBP8.4 million (2017: GBP5.5 million).
The loss for the Company for the year ended 31 December 2019
before taxation amounts to GBP4.7 million (2018: loss GBP0.9
million), which includes GBP3.6 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 2020.
2019 2018
------------------------- ------------- -------------
Cash and cash equivalents GBP9,867,696 GBP3,771,735
------------------------- ------------- -------------
Revenue GBP70,362,472 GBP41,241,673
------------------------- ------------- -------------
Underlying EBITDA GBP14,534,647 GBP9,823,080
------------------------- ------------- -------------
Capital expenditure GBP3,384,363 GBP6,670,447
------------------------- ------------- -------------
Cash generated from operations was GBP2.1 million (2018: GBP5.5
million) with a net increase in cash of GBP6.1 million (2018: net
decrease of GBP3.2 million). In October 2019, the Group raised in
aggregate, GBP33 million in relation to the acquisition of CDH,
which resulted in a net cash surplus of GBP5 million after paying
cash consideration and associated transaction costs.
Revenue and underlying EBITDA is in line with 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 CCP.
The PPA process resulted in a reduction of goodwill recorded on
the Statement of Financial Position of the Group for CCP from
GBP13.5 million to GBP7.9 million. The reduction was to transfer
the value of goodwill to intangible assets for land and mineral
reserves, trade name, workforce and customer relations.
Non-underlying items
The Company's loss after taxation for 2019 amounts to GBP4.7
million, of which GBP3.6 million relates to non-underlying items,
while the Group's non-underlying items totaled GBP6.2 million for
the year. These items relate to seven categories:
1. GBP2.6 million in exclusivity, introducer, consulting, legal
fees and other direct costs relating to prospective acquisitions.
During the year the Group acquired four businesses, being CCP, GDH,
Stone and CDH for a combined enterprise value of approximately
GBP112 million and proforma EBITDA of approximately GBP17
million.
2. GBP0.8 million legal and restructuring expenses relating to
the rebranding and alignment of all subsidiaries across the
Group.
3. GBP1.2 million amortisation of acquired assets.
4. GBP0.7 million in relation to the convertible loan note
redemption premium and associated advisor fees.
5. GBP0.5 million loss on discontinued operations at its Bury site.
6. GBP0.2 million in share based payments relating to grants of options.
7. GBP0.2 million in other exceptional costs which primarily
relate to non-cash balance sheet adjustments.
Interest and tax
Net finance costs in the year totaled GBP2 million (2018: GBP1
million) and included GBP0.5 million redemption premium on the
Group's convertible loan notes plus associated interest, bank
finance facilities, as well as interest on finance leases
(including IFRS 16 adjustments) and hire purchase agreements.
A tax charge of GBP0.5 million (2018: GBP0.3 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 0.92 pence (2018: 2.65 pence),
adjusted for the non-underlying items mentioned above. Underlying
basic EPS for the year totaled 4.20 pence (2018: 3.83 pence).
Statement of financial position
Net assets at 31 December 2019 were GBP102 million (2018: GBP54
million). Net assets are underpinned by mineral resources, land and
buildings and plant and machinery assets of the Group.
Cash flow
Cash generated by operations was GBP2.1 million (2018: GBP5.5
million). The Group spent GBP35.9 million on acquisitions net of
cash acquired and GBP3.4 million on capital projects. The Group
raised GBP44 million net of fees through the issue of equity and
drew down net borrowings of GBP1.2 million which included repayment
of the GBP10 million convertible loan notes, GBP16.3 million
drawdown from the Santander credit facility and GBP5.1 million of
debt repayments in acquired subsidiaries. The net result was a cash
inflow for the year of GBP6.1 million. Net debt at 31 December 2019
was GBP49.8 million (2018: GBP16.0 million), GBP32.0 million
arising from the recent acquisition of CDH and is in the process of
being refinanced.
Bank facilities
In 2017 the Group secured debt facilities with Santander
consisting of a GBP2 million RCF, an GBP18 million term facility
and a further "accordion" facility of GBP10 million. In December
2018 the Group received credit approval from Santander to increase
the RCF to GBP4 million and the term facility to GBP30 million,
bringing the total debt facilities available with Santander to
GBP34 million (the 'Existing Debt Facilities').
The Group is currently in the final stages of agreeing a new
club financing facility agreement with Santander and several
Belgian banks for an RCF of GBP15 million, term facility of GBP45
million and an acquisition and Capex facility of GBP20 million (the
'Club Refinance'). Successful negotiation of the Club Refinance,
which is at an advanced stage, will result in total debt facilities
being made available to the Group of GBP80 million, with a further
GBP40 million accordion facility on materially the same terms as
the Existing Debt Facilities. As a result of the Coronavirus
pandemic, it has been mutually agreed to extend the existing
Belgian debt facilities to 31 December 2020 and it is expected that
the Club Refinance will be formalised on or before this date.
The Group's Existing Debt Facilities have a maturity date of 29
August 2022 and are subject to a variable interest rate based on
LIBOR plus a margin depending on EBITDA. As at 31 December 2019,
total undrawn facilities available to the Group via the Existing
Debt Facilities amounted to GBP7.7 million.
The Group's Existing 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; a maximum adjusted leverage ratio, which is the ratio of
total net debt, including further borrowings such as the
convertible loan notes, to adjusted EBITDA, of 3.25x in 2019. At 31
December 2019, the Group comfortably complied with its bank
facility covenants.
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 2018: nil).
Principal risks and uncertainties
The management of the business and the execution of the Group's
strategy are subject to a number of risks. The key business risks
affecting the Group are set out below.
Risks are formally reviewed by the Board and appropriate
processes are put in place to monitor and mitigate them. If more
than one risk event occurs, it is possible that the overall effect
of such events would compound the possible adverse effects on the
Group.
Operational risk
Since the period under review, the Coronavirus pandemic has
become a significant emerging risk to the global economy. Due to
inherent uncertainty, the Group cannot reasonably estimate the
potential impact on the Group's financial position, results of
operations or cash flows in the future, however the Board continues
to actively monitor the situation as more information about
COVID-19 emerges and responds accordingly, taking into
consideration the various contingency and mitigation plans it
implemented from the early outset of the Coronavirus outbreak.
Reserve and resource estimates
The Group's reporting of reserves and resources are estimates,
and so there is potential uncertainty over the amount of such
reserves and resources held at the year-end. These may require
revision based on future actual production. In addition, there is
risk of new leases (in particular Chouet phase 2 and the West
extension at St John's) not being approved and, as such, leading to
revised valuation and future income streams for the operations at
Ronez.
Dependence on key personnel
The Group is dependent upon its executive management team.
Whilst it has entered into contractual agreements with the aim of
securing the services of these personnel, the retention of their
services cannot be guaranteed. The development and success of the
Group depends on its ability to recruit and retain high quality and
experienced staff. The loss of the service of key personnel or the
inability to attract additional qualified personnel as the Group
grows could have an adverse effect on future business and financial
conditions.
Uninsured risk
The Group may become subject to liability for hazards that
cannot be insured against or third-party claims that exceed the
insurance cover. The Group may also be disrupted by a variety of
risks and hazards that are beyond its control, including
geological, geotechnical and seismic factors, environmental
hazards, industrial accidents, occupation and health hazards and
weather conditions or other acts of God.
Funding risk
The only sources of funding currently available to the Group are
through the issue of additional equity capital in the Company or
through debt financing. The Company's ability to raise further
funds will depend on the success of the Group's activities and its
investment strategy. The Group may not be successful in procuring
funds on terms that are attractive and, if such funding is
unavailable, the Group may be required to reduce the scope of its
investment activities.
Financial risks
The Group's operations expose it to a variety of financial risks
that can include market risk (including foreign currency, price and
interest rate risk), credit risk, and liquidity risk. The Group has
a risk management programme in place that seeks to limit the
adverse effects on the financial performance of the Group by
monitoring levels of debt finance and the related finance costs.
The Group does not use derivative financial instruments to manage
interest rate costs and, as such, no hedge accounting is
applied.
Details of the Group's financial risk management policies are
set out in Note 3 to the Financial Statements.
Principal activity
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 three
Non-Executive Directors. The Corporate Head Office of the Company
is located in London, UK.
Directors & Directors' interests
The Directors who served during the year ended 31 December 2019
are shown below and had, at that time, the following beneficial
interests in the shares of the Company:
31 December 2019 31 December 2018
--------------------- -------------------
Ordinary Options Ordinary Options
Shares Shares
---------------- --------- ---------- -------- ---------
Max Vermorken 447,511 11,807,349 210,032 4,368,188
---------------- --------- ---------- -------- ---------
David Barrett 2,175,640 5,638,674 760,032 1,879,513
---------------- --------- ---------- -------- ---------
Garth Palmer 256,186 3,326,014 114,594 488,136
---------------- --------- ---------- -------- ---------
Dominic Traynor - 791,511 - 26,014
---------------- --------- ---------- -------- ---------
Patrick Dolberg 184,756 765,497 75,000 304,580
---------------- --------- ---------- -------- ---------
Tim Hall(1) 300,000 750,000 - -
---------------- --------- ---------- -------- ---------
(1) Appointed on 18 April 2019
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.
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
As documented extensively in these Accounts, the impact of the
COVID-19 pandemic on the Group's business, revenues and cash flow
creates significant uncertainty. However, given the Group's robust
balance sheet and in conjunction with forecast projections based
on, what are considered to be as at the date of these Accounts,
worst case scenarios, 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 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 2019, the Company had an average of
82 days (2018: 26 days) purchases outstanding in trade payables and
the Group had an average of 51 days (2018: 43 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 17 April 2020 and
signed on its behalf.
Garth Palmer
Chief Financial Officer
ENVIRONMENTAL INITIATIVES
Energy Efficiency
-- We are quadrupling the energy generated from solar panels at
our Belgian business CDH from 950MWh to around 3,800MWh
representing around one third of the energy consumption of the
site. We expect this third photovoltaic park to be up and running
in 2020.
-- We are progressing through a programme to replace all
sodium-based factory lights with LED lights which consume on
average around 25% of the energy consumed by their sodium based
equivalent
-- We are progressing through a programme to upgrade our
delivery fleet to EURO-6 engines where possible and EURO 5 in the
Channel Island as imposed by axle width restrictions.
Recycling
-- We continue to pump over 2.5 million m(3) per year of water
from the quarry at Soignies, and treating the water for domestic
use to serve the needs of around 30,000 households.
-- Through a partnership with UK start-up, MacRebur, we have
used over 40,000 plastic bottles as a replacement for bitumen in
the construction of roads.
-- We continue to monitor, improve and optimise our use of
recycled materials as a replacement for polluting compounds. This
includes the use of granulated blast furnace slag as a cement
replacer, the reduction of steel reinforcement bars in our precast
products and the reduction of water use in our concrete and
ready-mix products.
-- We have started to capture rainwater from the roofs of our
factories to be utilised in our production process already
capturing over 5,000 litres since the start of the initiative
earlier this year in 2020.
-- We are making active use of returned materials and recycle on
average 3,000 tonnes of aggregates at Poundfield Products alone
into new production.
Wildlife
-- Having won the 2018 Insurance Corporation Environmental award
for Best Conservation Project, Ronez's engagement with the Birds On
The Edge programme, to re-introduce the Red Billed Chough to
Jersey, continued to progress positively. The number of breeding
birds in the quarry grew once gain and the facilities provided by
Ronez for monitoring the breeding pairs were improved further with
better access for conservation staff and new nest boxes being
installed.
-- We are part of the European initiative "Life in quarries" in
Belgium promoting the reintroduction of wildlife near our quarrying
operations
-- We have started a nesting and breeding programme near and at
our precast production sites to stimulate birdlife following the
success of the Ronez programme.
SOCIAL INITIATIVES
Local communities
-- Through the "Convention PFI (Plan Formation-Insertion)" and
the associated certification via the "CEFOMEPI (Centre de Formation
aux Métiers de la Pierre)", CDH has over the years trained over 100
young unskilled colleagues to give them the required certification
to work in the ornamental stone sector. The programme is considered
a success with a high retention rate of over 80%.
-- Across 2019, we have supported the Durrell Wildlife Trust
initiative of creating, displaying and subsequently selling at
auction life-sized gorillas sculptures, raising GBP1 million for
the Trust and engaging a large part of the Channel Island
community.
-- G.D. Harries sponsored and organised a series of fundraising
and sponsoring events to support the local community including
fundraising for Prostate Cymru, sponsoring the Narberth Rugby club,
the Grassland Society, the Young Farmers and the Royal Welsh
Agricultural Show.
-- Since the founding of SigmaRoc we have actively engaged with
universities in the UK and in the USA to interest young graduates,
in particular female students, in the quarrying and construction
materials sectors, which are typically dominated by men.
GOVERNANCE INITIATIVES
QCA Corporate Governance Code
-- We adhere to the QCA Corporate Governance code and its ten
key principles as detailed in our Corporate Governance Report.
Board appointments
-- In line with the QCA Code, during 2019 reviewed our board
composition to increase both its skill and its composition.
Following the publication of these Accounts, Jacques Emsens, an
industrialist with a long successful career serving on boards of
large quoted industrial groups and investment funds, will be
appointed to the Board.
-- In addition, following the publication of these Account, the
board looks forward to welcoming Simon Chisholm to the Board,
adding significant skill to the board in terms of knowledge of the
investment community and their requirements. Simon qualified as a
Chartered Accountant and will take up the role of Chairman of the
Audit Committee thereby giving it the required skill.
General Counsel appointment
-- We were extremely pleased to be appointing Anthony Brockbank
as our General Counsel on a part time basis effective from May
2020, which will greatly assist with our internal competencies in
terms of corporate governance, compliance with applicable
regulations and directives and general ability to handle legal
matters internally. Anthony is a partner at city law firm,
Fieldfisher.
2020 ESG INITATIVES
Ronez Platform
-- Gain 3rd Party accreditation for ISO 45001 Occupational
Health and Safety Management Systems across the Ronez Platform and
complement our ISO 14001 accreditation for Environmental management
with the Guernsey ESIM Environmental Business Operations Award.
This will complete a full suite of external accreditations for
H&S, Quality and Environmental Management.
-- Develop a Sustainability Framework for the business that
quantifies Scope 1 Carbon Dioxide emissions from Ronez's operations
and quantifies the opportunities, with costs and time-frame, for
offsetting these Scope 1 emissions. In addition to the 1,000 trees
planted through a volunteer initiative lead by Ronez during
February 2020, further targets include installation of charging
points on site for electric vehicles and the installation of
photo-voltaic cells on selected roofs.
-- Whilst supporting government objectives to achieve carbon
neutrality by exploiting opportunities for carbon offset, Ronez's
targets for 2020 will also include development of products that
reduce Scope 1 emissions. A cement free concrete, which employs the
addition of an activating chemical to recycled ground granulated
blast furnace slag, is expected to be developed, trialled and
offered to the market in pursuit of this objective.
PPG Platform
-- Move from the trial phase into the implementation phase of a
"greener" range of products with the ultimate goal to have a cement
free range of block and retaining walls.
-- Finish a programme of further enhancing the main nine ovens
at our Middlewich site by replacing the ovens insulation. For many
years this was poorly designed and, with the introduction of more
modern bonded insulation products, we have been able to replace old
and inefficient insulation with a more modern alternative,
increasing insulation depth by 100mm. This has removed the need to
use energy for heating during winter nights and we have also been
able to cease adding an extra 10kg to 20kg of cement during winter
months in order to aid curing, collectively reducing our carbon
footprint and overheads.
-- Continue to work with the HR director of a recently closed
plant in the area of one of our operations to find employment for
c.45 of the nearly 100 staff made redundant.
South Wales Platform
-- Continue to improve workplace conditions for the benefit of
all our employees, visitors and local community.
-- Working with local communities to further develop local
liaison committees, which will highlight key opportunities for
community partnership and interaction.
-- A focus on sustainability across our sites, with improvements
targeted on recycling, electricity and liquid fuel utilisation,
together with water management.
Benelux Platform
-- Phase 3 of our solar panel development plan: 3 MWh will be
installed to increase solar-powered electricity to 30% of our
annual usage;
-- Install electricity charging station at our on-site parking
facilities to encourage the usage of electrical vehicles going
forward;
-- Finalise permit for an extension zone, in cooperation with
the Soignies liaison committee, in order to develop a new site that
will be well integrated into its surrounding environment;
David Barrett
Chairman
17 April 2020
CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 31 DECEMBER 2019
Year ended 31 December
Year ended 31 December 2019 2018
Non-underlying*
Non-underlying (Note 11
Underlying (Note 11) Total Underlying ) Total
Continued GBP
operations Note GBP GBP GBP GBP GBP
----------------- ---- ------------ -------------- -------------- -------------- ----------------- --------------
Revenue 7 70,362,472 - 70,362,472 41,241,673 - 41,241,673
------------ -------------- -------------- -------------- ----------------- --------------
Cost of sales 8 (50,924,209) - (50,924,209) (29,805,080) - (29,805,080)
Profit from
operations 19,438,263 - 19,438,263 11,436,593 - 11,436,593
------------ -------------- -------------- -------------- ----------------- --------------
Administrative
expenses 8 (9,922,199) (4,953,675) (14,875,874) (4,899,620) (1,622,778) (6,522,398)
Net finance
(expense)/income 12 (1,268,122) (695,457) (1,963,579) (1,047,670) - (1,047,670)
Other net 13
(losses)/gains 14 125,843 (529,948) (404,105) 48,308 - 48,308
Foreign Exchange (19,641) - (19,641) (16,934) - (16,934)
Profit before tax 8,354,144 (6,179,080) 2,175,064 5,520,677 (1,622,778) 3,897,899
------------ -------------- -------------- -------------- ----------------- --------------
Tax expense 15 (448,518) - (448,518) (278,755) - (278,755)
Profit/(loss) 7,905,626 (6,179,080) 1,726,546 5,241,922 (1,622,778) 3,619,144
------------ -------------- -------------- -------------- ----------------- --------------
Profit/(loss)
attributable
to:
Owners of the
parent 7,905,626 (6,179,080) 1,726,546 5,241,922 (1,622,778) 3,619,144
------------ -------------- --------------
7,905,626 (6,179,080) 1,726,546 5,241,922 (1,622,778) 3,619,144
------------ -------------- -------------- -------------- ----------------- --------------
Basic earnings
per share
attributable
to owners of the
parent
(expressed
in pence per
share) 31 4.20 (3.28) 0.92 3.83 (1.18) 2.65
------------ -------------- -------------- -------------- ----------------- --------------
Diluted earnings
per share
attributable
to owners of the
parent
(expressed
in pence per
share) 31 3.78 (2.96) 0.82 3.49 (1.08) 2.41
------------ -------------- -------------- -------------- ----------------- --------------
* 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 2019
Year ended Year ended
31 December 31 December
2019 2018
Note GBP GBP
-------------------------------------------- ----- ------------ ------------
Profit/(loss) for the year 1,726,546 3,619,144
------------ ------------
Other comprehensive income:
Items that will or may be reclassified to
profit or loss:
Other comprehensive income (447,978) -
(447,978) -
------------ ------------
Total comprehensive income 1,278,568 3,619,144
------------ ------------
Total comprehensive income attributable to:
Owners of the parent 1,278,568 3,619,144
------------ ------------
Total comprehensive income for the period 1,278,568 3,619,144
------------ ------------
STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2019
Consolidated Company
------------------------ -------------------------
31 December 31 December 31 December 31 December
2019 2018 2019 2018
Note GBP GBP GBP GBP
------------------------------- ---- ----------- ----------- ------------ -----------
Non-current assets
Property, plant and equipment 16 78,718,333 49,972,011 71,765 4,339
Intangible assets 17 80,243,724 18,974,771 - -
Investments in subsidiary
undertakings 18 - - 94,370,845 55,481,505
Investment in equity-accounted
associate 19 5,538,212 - 5,538,212 -
Other receivables 19,996 - - -
164,520,265 68,946,782 99,980,822 55,485,844
----------- ----------- ------------ -----------
Current assets
Trade and other receivables 20 22,232,596 6,467,207 787,825 917,263
Inventories 21 11,160,574 4,844,483 - -
Cash and cash equivalents 22 9,867,696 3,771,735 3,935,831 115,756
43,260,866 15,083,425 4,723,656 1,033,019
----------- ----------- ------------ -----------
Total assets 207,781,131 84,030,207 104,704,478 56,518,863
----------- ----------- ------------ -----------
Current liabilities
Trade and other payables 23 37,158,011 8,054,274 16,844,018 595,087
Current tax payable 884,871 471,531 - -
Borrowings 24 4,461,336 74,581 24,827 -
42,504,218 8,600,386 16,868,845 595,087
----------- ----------- ------------ -----------
Non-current liabilities
Borrowings 24 55,194,015 19,694,405 41,671 10,000,000
Deferred tax liabilities 1,098,148 974,294 - -
Provisions 25 6,936,754 632,011 - -
----------- ----------- ------------ -----------
63,228,917 21,300,710 41,671 10,000,000
----------- ----------- ------------ -----------
Total liabilities 105,733,135 29,901,096 16,910,516 10,595,087
----------- ----------- ------------ -----------
Net assets 102,047,996 54,129,111 87,793,962 45,923,776
----------- ----------- ------------ -----------
Equity attributable to
owners of the parent
Share capital 28 2,537,393 1,367,056 2,537,393 1,367,056
Share premium 28 95,358,556 50,136,904 95,358,556 50,136,904
Share option reserve 29 531,213 352,877 531,213 352,877
Other reserves 30 913,740 1,361,718 1,361,718 1,361,718
Retained earnings 2,707,094 910,556 (11,994,918) (7,294,779)
Total equity 102,047,996 54,129,111 87,793,962 45,923,776
----------- ----------- ------------ -----------
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 2019 was
GBP4,699,471 (year
ended 31 December 2018: GBP924,003).
The Financial Statements were approved and authorised for issue
by the Board of Directors on 17 April 2020 and were signed on its
behalf by:
Garth Palmer
Chief Financial Officer
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2019
Share
Share Share option Other Retained
capital premium reserve reserves earnings Total
Note GBP GBP GBP GBP GBP GBP
-------------------------- ---- --------- ----------- -------- --------- ----------- -----------
Balance as at 1 January
2018 1,367,056 50,161,904 352,877 1,361,718 (2,708,588) 50,534,967
--------- ----------- -------- --------- ----------- -----------
Profit for the year - - - - 3,619,144 3,619,144
Total comprehensive
income for the period - - - - 3,619,144 3,619,144
--------- ----------- -------- --------- ----------- -----------
Contributions by and
distributions to owners
Issue costs 28 - (25,000) - - - (25,000)
Total contributions
by and distributions
to owners - (25,000) - - - (25,000)
--------- ----------- -------- --------- ----------- -----------
Balance as at 31 December
2018 1,367,056 50,136,904 352,877 1,361,718 910,556 54,129,111
--------- ----------- -------- --------- ----------- -----------
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
--------- ----------- -------- --------- ----------- -----------
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 31 DECEMBER 2019
Share
Share Share option Other Retained
capital premium reserve reserves earnings Total
Note GBP GBP GBP GBP GBP GBP
-------------------------- ---- --------- ----------- -------- --------- ------------ -----------
Balance as at 1 January
2018 1,367,056 50,161,904 352,877 1,361,718 (6,370,776) 46,872,779
--------- ----------- -------- --------- ------------ -----------
Profit/(Loss) - - - - (924,003) (924,003)
Total comprehensive
income for the period - - - - (924,003) (924,003)
--------- ----------- -------- --------- ------------ -----------
Contributions by and
distributions to owners
Issue costs 28 - (25,000) - - - (25,000)
Total contributions
by and distributions
to owners - (25,000) - - - (25,000)
--------- ----------- -------- --------- ------------ -----------
Balance as at 31 December
2018 1,367,056 50,136,904 352,877 1,361,718 (7,294,779) 45,923,776
--------- ----------- -------- --------- ------------ -----------
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
--------- ----------- -------- --------- ------------ -----------
CASH FLOW STATEMENTS
FOR THE YEARED 31 DECEMBER 2019
Consolidated Company
-------------------------- --------------------------
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2019 2018 2019 2018
Note GBP GBP GBP GBP
----------------------------------- ---- ------------ ------------ ------------ ------------
Cash flows from operating
activities
Profit/(Loss) 1,726,545 3,619,144 (4,699,471) (924,003)
Adjustments for:
16
Depreciation and amortisation 17 6,125,957 3,560,332 19,472 5,753
Share option expense 178,336 - 178,336 -
Loss on sale of PP&E 41,438 - - -
Net finance costs 1,963,579 - 361,796 -
Income tax expense 448,518 - - -
Share of earnings from associates (84,018) - - -
Non-cash gains (2,852,839) - (1,257,541) -
(Increase)/decrease in trade
and other receivables (838,384) (820,091) (620,575) (843,053)
(Increase)/decrease in inventories 490,462 (1,385,856) - -
(Decrease)/increase in trade
and other payables (4,522,142) 512,201 1,356,158 (1,018,240)
Increase in provisions 91,407 - - -
Income tax paid (615,128) - - -
Net cash flows from operating
activities 2,153,731 5,485,730 (4,661,825) (2,779,543)
------------ ------------ ------------ ------------
Investing activities
Purchase of property, plant
and equipment 16 (3,384,363) (6,670,447) (32,535) (6,237)
Sale of property, plant and
equipment 48,475 - - -
Purchase of intangible assets (3,611) (7,180) - -
Acquisition of businesses
(net of cash acquired) (35,931,107) (3,000,000) (36,741,325) -
Interest received 773 - 773 -
Net cash used in investing
activities (39,269,833) (9,677,627) (36,773,087) (6,237)
------------ ------------ ------------ ------------
Financing activities
Proceeds from share issue 45,173,266 - 45,173,266 -
Cost of share issue (1,531,274) (25,000) (1,531,274) (25,000)
Proceeds from borrowings 20,171,691 1,000,000 - -
Cost of borrowings (184,000) - - -
Repayment of borrowings (18,720,774) - (10,000,000) -
Net loans with subsidiaries - - 11,655,492 2,714,713
Interest paid (1,678,500) - (40,927) -
Repayment of finance lease
obligations - (12,426) - -
------------ ------------ ------------ ------------
Net cash used in financing
activities 43,230,319 962,574 45,256,557 2,689,713
------------ ------------ ------------ ------------
Net increase/(decrease) in
cash and cash equivalents 6,114,217 (3,229,323) 3,821,645 (96,067)
Cash and cash equivalents
at beginning of period 3,771,735 7,001,058 115,756 211,823
Exchange losses on cash (18,256) - (1,570) -
Cash and cash equivalents
and end of period 22 9,867,696 3,771,735 3,935,831 115,756
------------ ------------ ------------ ------------
Major non-cash transactions
During the year ended 31 December 2019 there were share based
payments of GBP2 million to the vendors of CCP Building Products
Limited as part of the initial consideration, GBP750,000 to the
vendors of Poundfield Products (Group) Limited as satisfaction of
the deferred consideration, GBP1.2 million of additional gains on
assets realised from historic business combinations and a GBP1.6
million gain on the sale of the Mitcham property which did not
complete until February 2020.
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
As of 1 January 2019, the Group adopted, IFRS 16 Leases, which
replaced IAS 17. IFRS 16 introduced a single, on-balance sheet
accounting model for leases. As a result, the Group, as a lessee,
is required to recognise use-of-right assets representing its right
to use the underlying assets and lease liabilities representing its
obligation to make lease payments.
The Group has applied IFRS 16 using the modified retrospective
approach, under which the cumulative effect of initial application
is recognised in retained earnings at 1 January 2019. Accordingly,
the comparative information presented for 2018 has not been
restated. The details of the changes in accounting policies are
disclosed below.
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is initially
measured at cost, being the present value of minimum lease
payments, and subsequently at cost less any accumulated
depreciation and impairment losses. The value of the lease will be
remeasured when and if terms of the lease change. The Group shall
apply judgement to determine the lease term for some lease
contracts in which it is a lease that include renewal options.
The Group has applied the exemption not to recognise
right-of-use assets and liabilities for leases with less than 12
months of lease term when applying IFRS 16 to leases previously
classified as operating leases under IAS 17.
As a result of initially applying IFRS 16 as at 1 January 2019,
there has been GBP8.5m impact to the balance sheet including
retained earnings, and the current loss for the year ended 31
December 2019.
As of 1 January 2019, the Company adopted IFRS 16 Leases, IFRIC
23 Uncertainty over leases, IFRS 9 (Amendments) Prepayment features
with negative compensation, IAS 19 (Amendments) Plan amendment,
curtailment or settlements and IAS 28 (Amendments) Long term
interests in associates and joint ventures.
Of the other IFRSs and IFRICs, none are expected to have a
material effect on future Company Financial Information.
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 (Amendments) Definition of a Business *1 January 2020
------------------------------ ----------------
IAS 1 (Amendments) Definition of material
------------------------------ ----------------
IAS 8 (Amendments) Definition of material
------------------------------ ----------------
IFRS 17 Insurance contracts *1 January 2021
------------------------------ ----------------
IAS 1 Classification of Liabilities 1 January 2022
as Current or Non-Current.
------------------------------ ----------------
(*) Subject to EU endorsement
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. Further information as to the
Group's plans to both prepare for and mitigate the effect of the
COVID-19 outbreak is available in the Coronavirus update.
While the Directors believe the Group is in a strong position to
endure the unforeseen consequences of the COVID-19 pandemic, it
creates a material uncertainty over the Group's revenues and cash
flows and therefore its ability to continue as a going concern.
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 CCP Building
Products Limited ('CCP') as at the completion date. As a result of
this exercise, goodwill in CCP decreased from GBP13.5 million to
GBP7.9 million with the corresponding movement being intangible
assets. The current accounting policies regarding the subsequent
treatment intangible assets will apply to fair value uplift
attributable to the PPA.
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 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 and the
fair value less costs to sell. 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.
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 EUR7,100,000 on 29 June 2020 and
EUR4,300,000 on 30 December 2020, such call options being bought
for GBP211,592. These were purchased on 20 December 2019 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
material, 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
the year 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.
IFRS 16 Adoption
On 1 January 2019, the Group adopted all of the requirements of
IFRS 16 - Leases. IFRS 16 Leases was issued in January 2016 and
provides a single lessee accounting model, requiring lessees to
recognise assets and liabilities for all leases unless the lease
term is 12 months or less or the underlying asset has a low
value.
At 1 January 2019 the Group had 11 leases with a lease term
greater than 12 months. Consequently, the adoption of the standard
resulted in GBP69,992 added to the opening financial
statements.
15 new leases were adopted during the financial year as a result
of the acquisition of CDH. In the Statement of Financial Position
the right-of-use asset is recorded in Non-current assets and the
lease liability is split between Current liabilities for the
portion due within 12 months and Non-current liabilities for the
remainder.
To determine the split between principal and interest in the
lease the incremental borrowing rate of the Group was applied. This
method was adopted as the Group was not able to ascertain the
implied interest rate in each lease.
See note 24 for further detail.
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 2019
---------------------- ------
Between Between
Less than 1 and 2 2 and 5 Over 5
1 year years years years
GBP GBP GBP GBP
------------------------- ---------- ---------- ---------- ------
Borrowings 4,461,336 2,782,318 52,411,697 -
Trade and other payables 27,579,511 9,578,500 - -
32,040,847 12,360,818 52,411,697 -
---------- ---------- ---------- ------
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 2019 is as follows:
Consolidated
------------------------
31 December 31 December
2019 2018
GBP GBP
------------------------------------------- ----------- -----------
Total borrowings (Note 24 ) 59,655,351 19,768,986
Less: Cash and cash equivalents (Note 22 ) (9,867,696) (3,771,735)
----------- -----------
Net debt 49,787,655 15,997,251
Total equity 102,047,994 54,129,111
Total capital 151,835,649 70,126,362
----------- -----------
Gearing ratio 0.33 0.23
----------- -----------
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 and
Aberdo 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 GBP73,004,627 as at 31 December
2019 (31 December 2018: GBP16,826,369). 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 2019 (31 December 2018: 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 2019 of GBP718,822 (31 December 2018: GBP632,011)
and relate to the removal of the plant and equipment held at St
John's, Les Vardes and Aberdo quarries. 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.
5. Dividends
No dividend has been declared or paid by the Company during the
year ended 31 December 2019 (2018: 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 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
---------- ----------- ---------- -----------
31 December 2018
United Channel
Kingdom Islands Total
GBP GBP GBP
-------------------------------------- ---------- ---------- ----------
Revenue 14,202,557 27,039,116 41,241,673
---------- ---------- ----------
Profit from operations per reportable
segment 4,147,759 7,288,834 11,436,593
---------- ---------- ----------
Additions to non-current assets 3,866,559 (431,477) 3,435,082
Reportable segment assets 33,647,239 50,382,968 84,030,207
Reportable segment liabilities 25,525,191 4,375,905 29,901,096
---------- ---------- ----------
7. Revenue
Consolidated
------------------------
31 December 31 December
2019 2018
GBP GBP
--------------------- ----------- -----------
Upstream products 6,972,097 4,334,071
Value added products 56,086,965 27,501,692
Value added services 6,652,397 9,119,421
Other 651,013 286,489
70,362,472 41,241,673
----------- -----------
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
2019 2018
GBP GBP
--------------------------------------------- ----------- -----------
Cost of sales
Changes in inventories of finished goods and
work in progress (680,415) (2,214,864)
Production cost of goods sold 6,869,232 7,218,469
Distribution and selling expenses 5,921,567 2,751,855
Raw materials and consumables used 19,320,078 8,813,263
Employee benefit expenses 12,792,817 8,885,946
Depreciation and amortisation expense 4,912,383 3,560,332
Other costs of sale 1,788,547 790,079
Total cost of sales 50,924,209 29,805,080
----------- -----------
Administrative expenses
Operational admin expenses 9,922,199 4,934,878
Corporate admin expenses 4,953,675 1,587,520
Total administrative expenses 14,875,874 6,522,398
----------- -----------
Corporate administrative expenses include GBP3,562,584 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
2019 2018
GBP GBP
-------------------------------------------------------- ----------- -----------
Fees payable to the Company's auditor and its
associates for the audit of the Company and
Consolidated Financial Statements 171,165 102,000
Fees payable to the Company's auditor and its
associates for tax services 30,572 19,335
Fees paid or payable to the Company's auditor
and its associates for due diligence and transactional
services 140,932 94,931
Fees paid to the Company's auditor for other
services 17,877 30,725
360,546 246,991
----------- -----------
9. Employee Benefits Expense
Consolidated Company
------------------------ ------------------------
31 December 31 December 31 December 31 December
2019 2018 2019 2018
Staff costs (excluding directors) GBP GBP GBP GBP
---------------------------------- ----------- ----------- ----------- -----------
Salaries and wages 16,823,415 10,699,931 902,710 148,112
Post-employment benefits 107,206 99,529 36,430 -
Social security contributions
and similar taxes 134,524 1,133,171 59,217 64,538
Other employment costs 867,944 137,285 20,724 19,483
----------- -----------
17,933,089 12,069,916 1,019,081 232,133
----------- ----------- ----------- -----------
Consolidated Company
------------------------ ------------------------
31 December 31 December 31 December 31 December
2019 2018 2019 2018
Average number of FTE employees
by function # # # #
-------------------------------- ----------- ----------- ----------- -----------
Management 63 27 3 2
Operations 576 192 - -
Administration 78 37 1 1
717 256 4 3
----------- ----------- ----------- -----------
10. Directors' Remuneration
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 (1) 24,580 - - - 11,897 36,477
588,590 570,000 27,600 34,201 130,824 1,351,215
---------- ------- --------- --------- ------- ---------
31 December 2018
Directors' Taxable Pension Options
fees benefits benefits issued Total
GBP GBP GBP GBP GBP
------------------------ ---------- --------- --------- ------- -------
Executive Directors
David Barrett 190,000 13,800 - - 203,800
Garth Palmer 60,000 - 6,000 - 66,000
Max Vermorken 250,000 13,800 25,000 - 288,800
Non-executive Directors
Dominic Traynor 25,000 - 2,500 - 27,500
Gary Drinkwater (2) 20,833 - - - 20,833
Patrick Dolberg 25,000 - - - 25,000
570,833 27,600 33,500 - 631,933
---------- --------- --------- ------- -------
(1) Appointed on 18 April 2019
(2) Resigned on 7 November 2018.
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
2019 2018
GBP GBP
--------------------------------------------- ----------- -----------
Acquisition related gains and expenses (net) 2,615,860 552,981
Amortisation of acquired assets 1,213,574 305,598
Restructuring expenses 820,949 443,916
Equity & debt funding expenses 659,823 234,911
Discontinued operations 529,948 -
Share option expense 178,336 -
Net other non-underlying expenses & gains 160,590 85,372
----------- -----------
6,179,080 1,622,778
----------- -----------
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 four businesses, being CCP, GDH, Stone and
CDH for a combined enterprise value of approximately GBP112 million
and proforma EBITDA of approximately GBP17 million.
Amortisation of acquired assets are non-cash items which distort
the underlying performance of the businesses acquired. To be
consistent with management's treatment of amortisation of acquired
of assets, last year's figure has been amended to include
amortisation of certain fair value uplifts resulting from the PPA
process.
Restructuring expenses include advisory fees, redundancy costs
and rebranding expenses. During the year these primarily related to
the SigmaPPG platform.
Equity & debt funding expenses include GBP550,000 redemption
premium for the convertible loan notes and associated advisory
fees.
Share option expense is the fair value of the share options
issued during the year, refer to note 29 more information.
Discontinued operations include the trading expenses, stock
adjustments and redundancies incurred at the Bury site for the
period from February 2019 to December 2019. Refer to note 14 for
more information.
12. Net Finance (Expense)/Income
Consolidated
------------------------
31 December 31 December
2019 2018
GBP GBP
--------------------------------------------- ----------- -----------
Convertible loan redemption interest premium (500,000) -
Convertible loan note interest expense (39,452) (599,094)
Other interest (expense)/income (1,294,666) (358,437)
Other finance (expense)/income (129,461) (90,139)
(1,963,579) (1,047,670)
----------- -----------
13. Other Net Gains/(Losses)
Consolidated
------------------------
31 December 31 December
2019 2018
GBP GBP
--------------------------------------------- ----------- -----------
Gain/(losses) on disposal of property, plant
and equipment (14,536) 10,556
Other gain/(loss) 56,361 37,752
Share of earnings from associates 84,018 -
Loss on discontinued operations (529,948)
(404,105) 48,308
----------- -----------
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
2019
Income statement GBP
--------------------------------------------------- -----------
Revenue 811,862
Cost of sales (1,103,550)
-----------
Gross profit (291,688)
Administration (146,429)
Other expenses (91,831)
-----------
Loss from discontinued operation (529,948)
-----------
Basic earnings per share attributable to owners of
the parent (expressed in pence per share) (0.28)
-----------
31 December
2019
Cash movement GBP
------------------------------------------------- -----------
Net cash inflow from operating activities (125,846)
Net cash inflow from investing activities (212,465)
Net cash inflow from financing activities -
-----------
Net decrease in cash generated by the subsidiary (338,311)
-----------
15. Taxation
Consolidated
------------------------
31 December 31 December
2019 2018
Tax recognised in profit or loss GBP GBP
----------------------------------------- ----------- -----------
Current tax (448,518) (471,532)
Deferred tax - 192,777
----------- -----------
Total tax charge in the Income Statement (448,518) (278,755)
----------- -----------
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
2019 2018
GBP GBP
----------------------------------------------- ----------- -----------
Profit/(loss) before tax subject to charge (2,621,437) 3,109,695
Non-taxable profit/(loss) 4,347,983 788,204
----------- -----------
Net profit/(loss) before taxation 1,726,545 3,897,899
Apply Group Relief on taxable profit - (2,625,830)
----------- -----------
Tax at the applicable rate of 20.81% 359,294 96,289
----------- -----------
Effects of:
Expenditure not deductible for tax purposes 639,226 -
Timing differences 237,384 (213,723)
Differences on tax rates attributable to other
jurisdictions (1,041,015) (29,991)
Depreciation in excess of/(less than) capital
allowances 227,160 426,180
Net tax effect of losses carried forward 26,469 -
----------- -----------
Tax charge 448,518 278,755
----------- -----------
The weighted average applicable tax rate of 20.81% (2018: 19.9%)
used is a combination of the standard rate of corporation tax rate
for entities in the United Kingdom of 19% (2018: 19%), 20% on
quarrying of minerals and rental property (2018: 20%) in Jersey and
Guernsey and 33.99% in Belgium.
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
2018 356,745 35,860,567 20,404,547 17,544,307 7,846,370 438,635 82,451,171
Revaluations - (114,034) 13,868 (22,234) (747,027) - (869,427)
Additions 26,695 2,109,015 2,054,095 483,269 503,926 1,493,447 6,670,447
Disposals - - - (35,060) (165,907) - (200,967)
---------- ----------- ----------- -------------- ------------- ------------ -----------
As at 31 December
2018 383,440 37,855,548 22,472,510 17,970,282 7,437,362 1,932,082 88,051,224
---------- ----------- ----------- -------------- ------------- ------------ -----------
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 - - (1,304,466) (144,466)
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) (172,660) (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
---------- ----------- ----------- -------------- ------------- ------------ -----------
Depreciation
As at 1 January
2018 303,195 6,097,372 12,536,431 10,181,059 6,777,085 - 35,895,142
Revaluations - (95,824) 8,875 (35,451) (747,027) - (869,427)
Charge for the
year 18,128 949,295 860,187 1,081,800 345,053 - 3,254,463
Disposals - - - (35,060) (165,905) - (200,965)
As at 31 December
2018 321,323 6,950,843 13,405,493 11,192,348 6,209,206 - 38,079,213
---------- ----------- ----------- -------------- ------------- ------------ -----------
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
---------- ----------- ----------- -------------- ------------- ------------ -----------
Net book value
---------- ----------- ----------- -------------- ------------- ------------ -----------
As at 31 December
2018 62,117 30,904,705 9,067,017 6,777,934 1,228,156 1,932,082 49,972,011
---------- ----------- ----------- -------------- ------------- ------------ -----------
As at 31 December
2019 470,578 41,173,300 15,683,509 14,492,465 6,052,269 846,212 78,718,333
---------- ----------- ----------- -------------- ------------- ------------ -----------
The depreciation on the right of use assets for the year ended
31 December 2019 was GBP611,627 and the net book value is
GBP6,969,922.
Company
Office Equipment Land & Buildings Motor Vehicle Total
GBP GBP GBP GBP
------------------------------- ------------------ ---------------- ------------- ----------
Cost
As at 1 January 2018 6,363 - - 6,363
Additions 6,237 - - 6,237
Disposals - - - -
------------------ ---------------- ------------- ----------
As at 31 December 2018 12,600 - - 12,600
------------------ ---------------- ------------- ----------
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
------------------ ---------------- ------------- ----------
Depreciation
As at 1 January 2018 2,508 - - 2,508
Charge for the year 5,753 - - 5,753
Disposals - - - -
As at 31 December 2018 8,261 - - 8,261
------------------ ---------------- ------------- ----------
As at 1 January 2019 8,261 - - 8,261
Charge for the year 6,072 - 87 6,159
IFRS 16 Adjustment - 13,313 - 13,313
Disposals - - - -
------------------ ---------------- ------------- ----------
As at 31 December 2019 14,333 13,313 87 27,733
------------------ ---------------- ------------- ----------
Net book value
------------------ ---------------- ------------- ----------
As at 31 December 2018 4,339 - - 4,339
------------------ ---------------- ------------- ----------
As at 31 December 2019 6,474 41,050 24,241 71,765
------------------ ---------------- ------------- ----------
17. Intangible Assets
Consolidated
Customer Research
Relations Intellectual & Other
Goodwill property Development Branding Intangibles Total
GBP GBP GBP GBP GBP GBP
----------------------- --------- ---------- ------------ ----------- --------- ------------ -------------
Cost & net book
value
As at 1 January
2018 17,827,833 - 641,569 - 486,000 - 18,955,402
Additions 317,788 - 7,179 - - - 324,967
Price Purchase
Allocation
- Topcrete (926,000) 775,000 - - 151,000 - -
Price Purchase
Allocation
- Poundfield (393,252) 159,000 121,252 - - 113,000 -
Amortisation - (83,154) (85,444) - (24,000) (113,000) (305,598)
As at 31 December
2018 16,826,369 850,846 684,556 - 613,000 - 18,974,771
------------- ---------- ------------ ----------- --------- ------------ -------------
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
------------- ---------- ------------ ----------- --------- ------------ -------------
An adjustment has been made to reflect the initial accounting
for the acquisition of CCP Building Products Limited ('CCP') by the
Company, being the elimination of the investment in CCP against the
non-monetary assets acquired and recognition of goodwill. In 2019,
the Company determined the fair value of the net assets acquired
pursuant to the acquisition of CCP, via a Purchase Price Allocation
('PPA') exercise. The PPA's determined a decrease of GBP5,539,000
of goodwill in CCP with the corresponding movement to be recognised
as Customer Relations, Branding and uplift the value of the Land
and Minerals at Aberdo quarry.
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 five operating segments are considered to be Ronez in the
Channel Islands, Topcrete in the UK, Poundfield in the UK, CCP in
the UK and CDH 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 11 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
2019 2018
GBP GBP
----------------------------------------------- ----------- -----------
Shares in subsidiary undertakings
At beginning of the year 55,481,505 1
Additions 45,723,272 8,094,299
Disposals - -
----------- -----------
At period end 101,204,777 8,094,300
----------- -----------
Loan to Group undertakings (6,833,932) 47,387,205
----------- -----------
Total 94,370,845 55,481,505
----------- -----------
Investments in Group undertakings are stated at cost less
impairment. During the year the Company acquired 100% of CCP
Building Products Limited, 40% in GDH (Holdings) Limited, 100% of
CDH Développement SA and 49% in Stone Holdings.
Details of subsidiaries at 31 December 2019 are as follows:
Share capital Share capital
Country held by held by
Name of subsidiary of incorporation Company Group Principal activities
------------------------------ ----------------- ------------- ------------- -----------------------
SigmaFin Limited England GBP1 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 Products 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
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 Products Limited England, IP6 8QG
The Grove, Creeting St. Peter, Ipswich,
Alfabloc 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
For the year ended 31 December 2019 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 Products Limited
-- Alfabloc Limited
-- CCP Building Products Limited
-- Cheshire Concrete Products Limited
-- Clwyd Concrete Products Limited
-- Country Concrete Products Limited
-- CCP Trading Limited
-- CCP Aggregates Limited
Impairment review
The performance of all companies for the year ended 31 December
2019 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.
GDH and Stone are included in the consolidated financial
statements using the equity method.
Proportion of
ownership interest
held
---------------------------------------------------- ------ ----------------------
31 December 31 December
Name Country of incorporation 2019 2018
------------------------- --------------------------- -------------- ------------
GDH (Holdings) Limited United Kingdom 40% -
Stone Holdings SA Belgium 49% -
Summarised financial information
GDH 31 December 2019
GBP
------------------------------------------------- --------------------------
As at 31 December 2019
Current assets 10,275,551
Non-current assets 26,343,207
Current liabilities (11,234,400)
Non-current liabilities (10,939,312)
--------------------------
For the period 19 April 2019 to 31 December 2019
Revenues 18,982,758
Profit after tax from continuing operations 83,054
--------------------------
31 December
Stone Holdings 2019
GBP
----------------------------------------------------- -----------
As 31 December 2019
Current assets 830,404
Non-current assets 3,586,218
Current liabilities (1,716,439)
Non-current liabilities (549,671)
-----------
For the period 11 September 2019 to 31 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
2019 2018 2019 2018
GBP GBP GBP GBP
--------------------------- ----------- ----------- ----------- -------------
Trade receivables 14,662,423 4,906,459 533,606 116,509
Prepayments 1,111,141 495,396 247,050 43,586
Other receivables 6,459,032 1,065,352 7,169 757,168
22,232,596 6,467,207 787,825 917,263
----------- ----------- ----------- -------------
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
2019 2018 2019 2018
----------------------------- -------------- ------------ ------------ ------------
UK Pounds 15,939,755 6,467,207 787,825 917,263
Euros 6,292,841 - - -
22,232,596 6,467,207 787,825 917,263
----------------------------- -------------- ------------ ------------ ------------
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
2019 2018
Cost and net book value GBP GBP
--------------------------------- ----------- -----------
Raw materials and consumables 3,695,360 2,525,173
Finished and semi-finished goods 7,416,751 2,157,737
Work in progress 48,463 161,573
----------- -----------
11,160,574 4,844,483
----------- -----------
The value of inventories recognised as a debit and included in
cost of sales was GBP490,462 (31 December 2018: GBP5,827,520).
22. Cash and Cash Equivalents
Consolidated Company
------------------------ ------------------------
31 December 31 December 31 December 31 December
2019 2018 2019 2018
GBP GBP GBP GBP
------------------------- ----------- ----------- ----------- -----------
Cash at bank and on hand 9,867,696 3,771,735 3,935,831 115,756
9,867,696 3,771,735 3,935,831 115,756
----------- ----------- ----------- -----------
All of the Group's cash at bank is held with institutions with
an AA credit rating.
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
2019 2018 2019 2018
----------------------------- -------------- ------------ ------------ ------------
UK Pounds 8,410,763 3,771,735 3,935,831 115,756
Euros 1,456,933 - - -
9,867,696 3,771,735 3,935,831 115,756
----------------------------- -------------- ------------ ------------ ------------
23. Trade and Other Payables
Consolidated Company
------------------------ --------------------------
31 December 31 December 31 December 31 December
2019 2018 2019 2018
GBP GBP GBP GBP
-------------------------------- ----------- ----------- ------------- -------------
Trade payables 10,306,033 3,939,708 763,808 204,370
Wages payable 4,072,972 907,939 - -
Accruals 4,173,341 1,102,871 1,268,750 424,601
VAT payable / (receivable) 660,033 398,652 (85,508) (46,956)
Deferred consideration payable
for acquisitions 16,025,254 1,464,791 14,881,493 -
Other payables 1,920,378 240,313 15,475 13,072
----------- ----------- ------------- -------------
37,158,011 8,054,274 16,844,018 595,087
----------- ----------- ------------- -------------
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
2019 2018 2019 2018
----------------------------- -------------- ------------ ------------ ------------
UK Pounds 27,130,229 8,054,274 16,844,018 595,087
Euros 10,027,782 - - -
----------------------------- -------------- ------------ ------------ ------------
37,158,011 8,054,274 16,844,018 595,087
----------------------------- -------------- ------------ ------------ ------------
24. Borrowings
Consolidated Company
------------------------- ----------------------------
31 December 31 December 31 December 31 December
2019 2018 2019 2018
GBP GBP GBP GBP
-------------------------------- ----------- ----------- ---------------- -----------
Non-current liabilities
Santander term facility 25,907,847 9,662,389 - -
Convertible loan notes - 10,000,000 - 10,000,000
Bank Loans 26,216,013 - - -
Finance lease liabilities 3,070,155 32,016 41,671 -
----------- ----------- ---------------- -----------
55,194,015 19,694,405 41,671 10,000,000
----------- ----------- ---------------- -----------
Current liabilities
Finance lease liabilities 4,461,336 74,581 24,827 -
----------- ----------- ---------------- -----------
4,461,336 74,581 24,827 -
----------- ----------- ---------------- -----------
On 5 January 2017 the Company issued 10,000,000 unsecured
convertible loan notes at a par value of GBP1 per loan note
accruing interest daily at a rate of 6% per annum and repayable on
5 January 2022 (the 'Loan Notes'). The Loan Notes were convertible
into Ordinary Shares by the holders issuing a conversion notice any
time prior to the repayment due date at a fixed price of GBP0.52
per Ordinary Share.
In April 2017 the Company entered into an GBP18 million term
facility with Santander (the 'Facility'); on 18 October 2017 drew
down GBP9 million to satisfy the initial cash consideration for
Topcrete Limited; and, on 21 June 2018 drew down GBP1 million to
assist with the purchase of Foelfach Stone Limited.
In January 2019, the Company amended and restated its term
facility with Santander and increased it to GBP34 million (the
'restated facility'). On 23 January 2019, the Company drew down
GBP10.8m to satisfy the redemption of the Loan Notes; on 1 February
2019, drew down GBP1.5 million to for working capital in relation
to the acquisition of CCP; and on 18 April 2019, drew down GBP4
million to satisfy the purchase of 40% of GDH (Holdings)
Limited.
The restated facility is secured by a floating charge over the
assets of SigmaFin Limited and its subsidiary undertakings.
Interest is charged at a rate between 1.5% and 2.75% above LIBOR
('Interest Margin'), based on the calculation of the adjusted
leverage ratio for the relevant period. For the period ending 31
December 2019 the Interest Margin was 1.75%.
In October 2019, as part of the acquisition of CDH, the Group
agreed to assume its term loan facility with the view to refinance.
CDH has a term loan facility with Belfius Bank, ING Belgium, BNP
Paribas Fortis and KBC Bank (the 'Term Loan'). Interest is charged
at 3.15% and the Term Loan is secured via floating charges and
assets in CDH.
The carrying amounts and fair value of the non-current
borrowings are:
Carrying amount Fair value
------------------------- -------------------------
31 December 31 December 31 December 31 December
2019 2018 2019 2018
GBP GBP GBP GBP
------------------------------- ----------- ----------- ------------- -----------
Santander term facility 25,907,847 9,662,389 - -
Belgian bank loans 26,216,013 - - -
Convertible loan notes - 10,000,000 - 10,000,000
Finance lease liabilities 7,531,491 32,016 - -
----------- ----------- ------------- -----------
59,655,351 19,694,405 - 10,000,000
----------- ----------- ------------- -----------
The fair values are based on cash flows discounted using the
borrowing rate of 3% (2018: 6%), which represents the cost of debt
of the Group.
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
2019 2018
Finance lease liabilities - minimum lease payments GBP GBP
---------------------------------------------------- ----------- -----------
Not later than one year 4,461,336 74,581
Later than one year and no later than five years 2,902,039 32,016
Later than five years 168,116 -
7,531,491 106,597
----------- -----------
Future finance charges on finance lease liabilities 367,910 13,011
----------- -----------
Present value of finance lease liabilities 7,899,401 119,608
----------- -----------
For the year ended 31 December 2019, the total finance charges
were GBP280,496.
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
2019 2018
GBP GBP
------------------------------------------------- ----------- -------------
Not later than one year 4,595,176 79,056
Later than one year and no later than five years 2,989,100 30,204
Later than five years 173,159 -
Present value of finance lease liabilities 7,757,436 109,260
----------- -------------
Reconciliation of liabilities arising from financing activities
is as follows:
Consolidated
Liabilities
Long-term Short-term arising from
borrowings borrowings Lease liabilities financing activities
GBP GBP GBP GBP
---------------------------- ------------------- --------------- ------------------- ---------------------
As at 1 January 2019 19,662,389 - 106,597 19,768,986
Increase/(decrease) through
financing cash flows 6,300,000 - (1,300,570) 4,999,430
Amortisation of finance
arrangement fees (129,461) - - (129,461)
Increase through IFRS
16 - - 8,725,464 8,725,464
Increase through obtaining
control of subsidiaries 26,290,932 - - 26,290,932
As at 31 December 2019 52,123,860 - 7,531,491 59,655,351
------------------- --------------- ------------------- ---------------------
Consolidated
Liabilities arising
Long-term Short-term from financing
borrowings borrowings Lease liabilities activities
GBP GBP GBP GBP
---------------------------- ----------- --------------- ----------------------- -------------------------
As at 1 January 2018 18,572,360 - 199,952 18,772,312
Increase/(decrease) through
financing cash flows - - (93,355) (93,355)
Amortisation of finance
arrangement fees 90,029 - - 90,029
Increase through obtaining
control of subsidiaries 1,000,000 - - 1,000,000
As at 31 December 2018 19,662,389 - 106,597 19,768,986
----------- --------------- ----------------------- -------------------------
25. Provisions
Consolidated
------------------------
31 December 31 December
2019 2018
GBP GBP
--------------------------------- ----------- -----------
As at 1 January 632,011 632,011
Acquired on business combination 6,620,250 -
Deduction (315,507) -
6,936,754 632,011
----------- -----------
The provision total is made up of GBP632,011 as a restoration
provision for the St John's and Les Vardes sites which is based on
the removal costs of the plant and machinery at both sites,
GBP86,812 as a restoration provision for the Aberdo site which is
based on the removal costs of the plant and machinery at the site.
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. St John's quarry has an estimated expiry of 7 years,
Les Vardes is 5 years and Aberdo is 14 years.
Of the remaining amount GBP2.1m is to cover the loss on the
Holcim contract in CDH and GBP3.5m 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.
The future reclamation cost value is discounted by 12% (2018:
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 Financial
Position GBP
-------------------------------------------------------- ---------
Assets -
Liabilities 3,758,285
Net defined benefit liability at end of year 3,758,285
---------
Amounts recognised in the Statement of Financial Position GBP
---------------------------------------------------------- -----------
Present value of funded defined benefit obligations 2,252,187
Fair value of plan assets (2,095,797)
-----------
156,390
-----------
Present value of unfunded defined benefit obligation 3,601,895
Unrecognised past service cost -
Total 3,758,285
-----------
Amounts recognised in the Income Statement GBP
------------------------------------------- --------
Current service cost 61,871
Interest cost 3,308
Expected return on plan assets (46,342)
--------
Total pension expense 18,837
--------
Changes in the present value of the defined benefit obligation GBP
--------------------------------------------------------------- ---------
Defined benefit obligation at beginning of year -
Current service cost 61,871
Interest cost 3,308
Benefits paid (84,815)
Remeasurements (46,342)
Acquired in business combination 3,824,263
---------
Defined benefit obligation at end of year 3,758,285
---------
Amounts recognised in the Statement of Changes in Equity GBP
----------------------------------------------------------- --------
Prior year cumulative actuarial remeasurements -
Remeasurements (46,342)
Cumulative amount of actuarial gains and losses recognised
in the Statement of recognised income / (expense) (46,342)
--------
Movements in the net liability/(asset) recognised in
the Statement of Financial Position GBP
------------------------------------------------------------------ ---------
Net liability in the balance sheet at beginning of year -
Total expense recognised in the income statement 61,871
Contributions paid by the company 3,308
Amount recognised in the statement of recognised (income)/expense (84,815)
Acquired in business combination (46,342)
Defined benefit obligation at end of year 3,758,285
---------
Principal actuarial assumptions as at 31 December 2019
------------------------------------------------------- -----
Discount rate 0.60%
Future salary increases 2.25%
Future inflation 1.75%
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 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
------------ ----------
Consolidated 31 December 2018
------------------------
Loans &
receivables Total
Assets per Statement of Financial Performance GBP GBP
---------------------------------------------------- ------------ ----------
Trade and other receivables (excluding prepayments) 5,971,811 5,971,811
Cash and cash equivalents 3,771,735 3,771,735
------------ ----------
9,743,546 9,743,546
------------ ----------
At amortised
cost Total
Liabilities per Statement of Financial Performance GBP GBP
---------------------------------------------------- ------------ ----------
Borrowings (excluding finance leases) 19,662,389 19,662,389
Finance lease liabilities 106,597 106,597
Trade and other payables (excluding non-financial
liabilities) 8,054,274 8,054,274
------------ ----------
27,823,260 27,823,260
------------ ----------
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) 16,844,018 16,844,018
16,910,516 16,910,516
------------ ----------
Company 31 December 2018
Loans &
receivables Total
Assets per Statement of Financial Performance GBP GBP
Trade and other receivables (excluding prepayments) 873,677 873,677
Cash and cash equivalents 115,756 115,756
989,433 989,433
At amortised
cost Total
Liabilities per Statement of Financial Performance GBP GBP
Borrowings (excluding finance leases) 10,000,000 10,000,000
Finance lease liabilities - -
Trade and other payables (excluding non-financial
liabilities) 595,087 595,087
10,595,087 10,595,087
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 2018 136,705,557 1,367,056 50,161,904 51,528,960
Cost of secondary placing
(1) - - (25,000) (25,000)
As at 31 December 2018 136,705,557 1,367,056 50,136,904 51,503,960
As at 1 January 2019 136,705,557 1,367,056 50,136,904 51,503,960
Issue of new shares - 25
January 2019 (2) 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 (3) 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
(1) Issue costs on secondary placing of GBP25,000
(2) Includes issue costs of GBP457,215
(3) Includes issue costs of GBP1,074,061
On 25 January 2019 the Company raised GBP12,405,392 net of issue
costs via the issue and allotment of 30,257,053 new Ordinary Shares
at a price of 41 pence per share. On the same day the Company
issued and allotted 4,878,048 at a price of 41 pence per share as
consideration for CCP Building Products Limited of
GBP2,000,000.
On 1 February 2019 the Company issued and allotted 1,976,888 at
a price of 39 pence per share to the vendor of Poundfield Products
(Group) Limited as satisfaction for the deferred consideration of
GBP750,000.
On 15 October 2019 the Company raised GBP31,693,810 net of issue
costs via the issue and allotment of 79,921,640 new Ordinary Shares
at a price of 41 pence per share.
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
2019 2018
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 -
30 December 2019 30 December 2026 0.46 2,704,353 -
19,494,774 13,573,443
----------- -----------
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
Granted 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% 4.03%
Expected dividend yield - - - -
Marketability discount 50% - - 50%
Total fair value GBP46,900 GBP15,083 GBP76,418 GBP234,854
2019 Options 2019 Options
E F
Granted on 15/4/2019 30/12/2019
Life (years) 7 7
Share price 0.465 0.525
Risk free rate 0.31% 0.55%
Expected volatility 4.69% 8.19%
Expected dividend yield - -
Total fair value GBP49,638 GBP128,698
The risk-free rate of return is based on zero yield government
bonds for a term consistent with the option life.
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 2019 is shown below:
31 December 2019 31 December 2018
Weighted Weighted
average average
exercise exercise
price price
Number GBP Number GBP
---------------------------- --------- ---------- ---------
Outstanding at beginning of
the year 13,573,443 0.40 13,573,443 0.40
Granted 17,777,991 0.46 - -
Exercised - - - -
Outstanding as at year end 31,351,434 0.44 13,573,443 0.40
Exercisable at year end 19,494,774 0.42 13,573,443 0.40
--------- ---------- ---------
30. Other Reserves
Company
Foreign
currency
Deferred Capital redemption translation
shares reserve reserve Total
GBP GBP GBP GBP
As at 1 January 2018 761,679 600,039 - 1,361,718
As at 31 December 2018 761,679 600,039 - 1,361,718
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) 913,470
31. Earnings Per Share
The calculation of the total basic earnings per share of 0.92
pence (2018: 2.65 pence) is calculated by dividing the profit
attributable to shareholders of GBP1,726,546 (2018: GBP3,619,144)
by the weighted average number of ordinary shares of 188,418,538
(2018: 136,705,557) in issue during the period.
Diluted earnings per share of 0.82 pence (2018: 2.41 pence) is
calculated by dividing the profit attributable to shareholders of
GBP1,726,546 (2018: GBP3,619,144) 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 209,045,831
(2018: 150,383,059).
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 EUR7,100,000 on 29 June
2020 and EUR4,300,000 on 30 December 2020.
The call options were bought on 20 December 2019 for GBP211,592
and as at 31 December they had a fair value of GBP198,123 resulting
in a loss of GBP11,542.
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
CCP Building Products Limited
On 25 January 2019, the Group acquired 100% of the share capital
of CCP Building Products Limited ('CCP') and its subsidiaries for
initial cash consideration of GBP4.7 million (being GBP9.8 million
less adjustments for various obligations assumed by the Group as
part of the acquisition). CCP 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 CCP
and the values of the assets and equity assumed at the acquisition
date.
Total consideration GBP
--------------------- ---------
Cash 7,049,102
Share based payments 2,000,000
Deferred cash 748,635
9,807,737
---------
Recognised amounts of assets and liabilities acquired GBP
Cash and cash equivalents (42,762)
Trade and other receivables 3,564,595
Inventories 859,486
Property, plant & equipment 3,832,468
Tax liabilities (176,507)
Trade and other payables (6,972,916)
Borrowings (4,642,061)
Provisions for liabilities (86,813)
Total identifiable net liabilities (3,664,510)
Goodwill (refer to note 17 ) 13,472,247
Total consideration 9,807,737
Carrières du Hainaut SCA
On 15 October 2019, the Group acquired 100% of the share capital
of Carrières du Hainaut SCA ('CDH') and its subsidiaries for
initial cash consideration of GBP25 million (being GBP26.1 million
less adjustments for various obligations assumed by the Group as
part of the acquisition). CDH is registered and incorporated in the
Belgium. 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 CDH
and the values of the assets and equity assumed at the acquisition
date.
Total consideration GBP
-------------------- ----------
Cash 25,049,142
Deferred cash 13,155,740
----------
38,204,882
----------
Recognised amounts of assets and liabilities acquired GBP
Cash and cash equivalents 1,317,276
Trade and other receivables 7,404,563
Inventories 5,966,633
Property, plant & equipment 27,244,292
Intangible assets 1,283,135
Tax liabilities (577,397)
Trade and other payables (11,673,010)
Borrowings (35,133,458)
Provisions for liabilities (6,533,437)
Total identifiable net liabilities (10,701,403)
Goodwill (refer to note 17 ) 48,906,284
Total consideration 38,204,882
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
2019 2018
GBP GBP
------------------------------------ ------------ -----------
Ronez Limited (9,625,760) (4,995,129)
SigmaGsy Limited (3,014,167) (1,995,066)
SigmaFin Limited (8,756,846) 50,336,445
Topcrete Limited (1,022,931) (850,425)
Poundfield Products (Group) Limited 7,088,761 4,799,580
Foelfach Stone Limited 442,858 91,800
CCP Building Products Limited 6,372,333 -
Carrières du Hainaut SCA 1,681,820 -
(6,833,932) 47,387,205
Loans granted to or from subsidiaries are unsecured, interest
free and repayable in Pounds Sterling when sufficient cash
resources are available.
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 GBP370,000
(2018: GBP85,000) for the provision of corporate management and
consulting services to the Company which includes GBP285,000 for
services relating to acquisitions of CCP, GDH, Stone and CDH. A
balance of GBP178,477 was outstanding at the year-end.
Druces LLP, a limited liability partnership of which Dominic
Traynor is a partner, invoiced a fee of GBP330,072 (2018:
GBP177,302) 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 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 (2018: GBP45,000)
for the provision of consulting services to the Company in relation
to prospective acquisitions. No balance was outstanding at the
year-end.
Michael Roddy, a Director of the subsidiary companies was loaned
GBP6,000 in August 2019 by Allen Concrete Limited. The loan is for
a period of 12 months to be repaid by 12 monthly instalments
starting October 2019 and at year end GBP4,000 was outstanding.
37. Ultimate Controlling Party
The Directors believe there is no ultimate controlling
party.
38. Events After the Reporting Date
On 11 March 2020, the World Health Organisation declared the
Coronavirus outbreak to be a pandemic in recognition of its rapid
spread across the globe, with over 200 countries now affected. Many
governments are taking increasingly stringent steps to help contain
or delay the spread of the virus and as a result there is a
significant increase in economic uncertainty.
For the Group's 31 December 2019 financial statements, the
Coronavirus outbreak and the related impacts are considered
non-adjusting events. Consequently, there is no impact on the
recognition and measurement of assets and liabilities. Due to the
uncertainty of the outcome of current events, the Group cannot
reasonably estimate the impact these events will have on the
Group's financial position, results of operations or cash flows in
the future.
- ends -
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR GPUQACUPUGRB
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April 20, 2020 02:00 ET (06:00 GMT)
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