Interim Results

RNS Number : 1512Y

SigmaRoc PLC

07 September 2020

 

SigmaRoc plc/ EPIC: SRC / Market: AIM / Sector: Mining

7 September 2020

SigmaRoc plc ('SigmaRoc', the 'Company' or the 'Group')

Interim Results

SigmaRoc plc, the AIM listed buy-and-build construction materials group, is pleased to announce its unaudited interim results for the six months ended 30 June 2020. 

Highlights:

	6 months to 30 June 2020	6 months to 30 June 2019	Change
Underlying revenue	£54.5m	£29.8m	+83.0%
Underlying1 EBITDA	£10.9m	£5.7m	+91%
Underlying1 profit before tax	£5.3m	£3.5m	+51.4%
Underlying1 EPS	1.98p	1.97p	+0.5%
Cash and cash equivalents	£17.3m	£3.6m	+380.5%
Underlying EBITDA margin	20.0%	19.1%	+4.7%

¹ Underlying results are stated before acquisition related expenses, certain finance costs, redundancy and reorganisation costs, impairments, amortisation of acquisition intangibles and share option expense. References to an underlying profit measure throughout this interim report are defined on this basis.

Operational highlights:

· Strong H1 2020 despite difficulties arising from the pandemic

· Improved underlying EBITDA margins

· Reduction in net leverage across the first six months of the year

·Strong cash position due to effective cash management, with cash £7.4m higher versus 31 December 2019 year-end position

· Revenues on a pro-forma adjusted basis in line with prior year despite the impact of COVID-19

· Resilience of decentralised business model demonstrated with profitability maintained

· Ongoing engagement with staff and local communities to ensure safety and allow continued support and trading

·Option to acquire the remaining 60% of GD Harries exercised in August 2020, funded by Group's own cash reserves for a cash consideration of £7.3 million

David Barrett, Executive Chairman, commented:

"It gives me great pleasure to be reporting these results for the Group in a year of an ongoing global pandemic, never before seen in my working career. The ability for our businesses to keep safely confronting these challenging times demonstrates the strength of the Group and its strategy."

Max Vermorken, CEO, commented:

"D espite this year's ongoing pandemic, the Group's performance across the first six months of 2020 was extremely strong. Our decentralised, locally focused business model continues to prove successful in our industry, allowing us to operate and perform even in the face of global adversity. The Group is backed by a solid asset base providing security in these times of uncertainty. We are therefore confident we can continue to build further shareholder value."

The full text of the interim statement is set out below, together with detailed financial results, and will be available on the Company's website at www.sigmaroc.com.

An investor and analyst call will take place at 8.00 a.m. today. To participate in the results call, please register your interest via the following links:

URL: https://attendee.gotowebinar.com/register/3269624733946529037

Webinar ID: 879-013-771 https://www.gotomeeting.com/en-gb/webinar/join-webinar

Should you wish to ask questions of management, there will be an online Q&A facility to log any questions. It may not be possible for all questions to be heard during the call.

Any large investor or analyst wishing to arrange a one to one call with the Company, should contact [e-mail] or one of the Company's Joint Brokers via the relevant contact details below.

Information on the Company is available on its website at www.sigmaroc.com.

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.

Enquiries:

SigmaRoc	Tel: [phone]
Max Vermorken, CEO
Strand Hanson (Nominated and Financial adviser)	Tel: [phone]
James Spinney / James Dance / Jack Botros
Liberum Capital (Co-Broker)	Tel: [phone]
Neil Patel / Jamie Richards / Jonathan Wilkes-Green / William Hall
Peel Hunt (Co-Broker)	Tel: [phone]
Mike Bell / Ed Allsopp
Rubik Communications (Financial PR adviser)	Tel: [phone]
Andrea Mora / Charlotte Hollinshead	[e-mail]

EXECUTIVE STATEMENT

In what has been a turbulent first six months of this year, we have managed to deliver a strong and effective response to the challenges brought by the COVID-19 pandemic. We began to put in place measures to deal with the crisis from as early as February 2020 and, with our decentralised structure, we have been able to quickly implement health and safety protocols, social distancing measures, and comprehensively engage with our staff, unions, customers and suppliers.

These measures and this early preparation have enabled us to remain operational throughout the crisis, where government rules have permitted us to do so. This has led to us being able to keep our workforce safe, to keep most of our personnel actively employed, while at the same time delivering a strong financial performance.

The Group reported revenue of £54.5 million, representing an 83% year-on-year increase, and an underlying EBITDA of £10.9 million, being an uplift of 91% year-on-year. Underlying profit before tax was £5.3 million and underlying EPS 1.98p. Revenue and underlying EBITDA have increased in part due to the acquisition of Carrieres du Hainaut in October 2019. Our 40% interest in GDH provided minimal contribution to the Group's results for the period as it was equity accounted and therefore not consolidated into the Group. Having exercised our option to acquire the remaining 60%, GDH will now provide a meaningful contribution to the Group's future results.

The robust trading performance and implementation of careful and effective cash management strategies has led to an increase in the cash position of the Group of £7.4m over the six-month period, bringing the Group cash position to £17.3m at 30 June 2020. Consequently the Group reduced its adjusted leverage ratio* from 2.07x at the end of 2019 to 1.97x at 30 June 2020.

* - Adjusted leverage ratio compares net debt to underlying EBITDA for the last twelve months adjusted for any pre-acquisition earnings of subsidiaries acquired during the relevant period.

Operating performance

As noted above, the Group has reported a strong financial performance across the first six months of 2020 despite the challenging circumstances. Ronez started the year with a strong pipeline of projects, particularly in Jersey, though storm weather disruption slightly hampered the first few months. With the development of the COVID-19 crisis, Government lockdown restrictions were implemented in the Channel Islands, with the restrictions in Guernsey being harsher than in Jersey, with an almost complete shutdown for part of April. Conversely, Jersey was able to maintain trading, serving a number of essential construction projects under the Government's construction licensing scheme. With restrictions being relaxed in late April, this led to near-normal trading being resumed by the end of June. The outlook for the second half is promising, especially in Jersey with the recommencement of projects delayed by lockdown, a full programme for Jersey road reconstruction, and the commencement of further housing and commercial schemes.

SigmaPPG, which specialises in manufacturing precast concrete products, started the year very strongly in each of the three entities. Revenues for Allen Concrete, which manufactures precast concrete products for the fencing and building industries, were up 26% for the first quarter year-on-year, and the company managed to continue production operations throughout the pandemic. Sales understandably fell in April, as many customers temporarily closed their branches, but demand increased considerably in May, and again in June.

Poundfield, a manufacturer of precast concrete products, had a strong order book at the beginning of the year, particularly in the bespoke division, and this was further boosted with some large bespoke projects being secured in the first quarter. The onset of COVID-19 led the company to concentrate on these projects in April, with a consequent slowdown in flooring and retaining wall manufacturing operations, but from May onwards business recovered to normal trading with May and June posting record revenue levels for the company.

CCP Building Products, a supplier of concrete blocks and aggregates, had a good first quarter, though the pandemic led to a significant slowdown in April. With carefully managed cost reductions, the company remained profitable throughout and by the end of May all sites were fully operational. Demand for blocks has returned to normal levels, with aggregate demands regaining traction and returning to expected levels.

Carrieres du Hainaut began the year well with strong commercial activity in both bluestone and aggregates in January and February. The COVID-19 pandemic led to a circa 50% drop in activity from mid-March to mid-April, but with the support of the staff and trade unions, it was possible to keep the business operational throughout these difficult months. Activity improved from mid-April, with a resumption to normal levels of trading from the middle of May. June has seen the benefit of some catch-up from jobs that were postponed in March and there have also been gains of market share from our competitors, due to our prompt and efficient management of the crisis. As a result, sales for the 6 months to June 2020 are 10% higher than the six-month period to June 2019.

GDH faced some stronger challenges during the height of the COVID-19 crisis, with asphalt and construction materials being heavily affected, and South Wales only returning to normal trading in July as local road schemes and construction work resumed. However, GDH demonstrated its strength and resilience with many of the operational sites remaining open to support essential services and customers across numerous sectors, including local hospital developments, water treatment centres and the farming community. Alongside this, improved initiatives have been put in place with regards to health and safety, increasing the engagement of all employees.

Safety

We have always had the safety and well-being of our colleagues at the forefront of the business and in early 2020 we launched a Group-wide engagement plan, to build on our previous successes and ensure that we work in partnership with our staff to deliver health and safety excellence. The ongoing pandemic has, as one would expect, posed a serious test to our Group-wide health and safety practices; our teams' dedication to the health of our staff and its early response to the crisis has demonstrated our unwavering commitment to keeping our workforce safe. We have consulted with unions and staff throughout, implemented strict social distancing, increased cleaning routines and ensured we maintained adherence to all Government guidance. We are immensely proud of the way that our workforce has risen to the challenge and delivered compliant systems and processes that protected everyone entering our places of work.

Moving forward, we will continue to invest in workplace improvement. Our Safety and Estates Director continuously works with the line managers in the businesses to review and maintain best practices across all of our sites and to support the personal health and safety development of our teams through coaching and engagement. This approach is also supported by using a common external audit process across all our sites, with auditors mandated to audit our systems, processes, workplace conditions and compliance. This is done in partnership with local teams, enabling the Group to become aligned with a common set of principles and goals.

We will continue to develop our Health and Safety plan with our teams, building on workplace engagement through our health and safety committees, utilising housekeeping audits, and building competence in near hit awareness, reporting and investigation, all of which will continue to develop and strengthen our health and safety culture.

Invest, improve, integrate

Since the acquisition of Carrieres du Hainaut, we have focused on integrating this business into the Group, and we have sought to improve processes to achieve efficiencies, as well as developing the safety processes to align these with the SigmaRoc safety culture. There is further potential for growth in this business, particularly with the flexibility of options at the end of the partnership on aggregates production which presents an opportunity for the Group to explore commercially attractive alternatives. The Group is also seeking to develop further opportunities with the appointment of a UK commercial representative for Bluestone.

With regards to our South Wales Platform, the Group held 40% of the share capital of G.D. Harries with an option to acquire the remaining 60%. G.D. Harries has demonstrated its resilience and strong economic viability in difficult circumstances and we are pleased to confirm that the Group has exercised this option to acquire the remaining GDH shares in August 2020, using its own cash reserves to fund the acquisition, for a cash consideration of £7.3 million.

Organic development

We continue to review all our existing assets with a view to developing efficiencies and the results within this interim report are testament to the resilience of the Group during this extremely demanding six-month period. We have been able to keep all of our sites open and continue to trade, where Government rules have permitted, and our decentralised model has demonstrated our ability to minimise the impact of COVID-19.

Environment, Social and Governance (ESG)

During the course of the six months to June 2020, we have made progress on our ESG initiatives, although this has been hampered to a large degree by the travel restrictions imposed by the pandemic.

We have made a number of appointments to the Board, as detailed in the Corporate section below.

At an operational level, we appointed Anthony Brockbank, Equity Capital Markets (ECM) partner with law firm Fieldfisher LLP, as our General Council, on a part time basis. Anthony is an extremely experienced ECM lawyer and will further assure compliance with the market rules and regulations.

With regards to 2020 initiatives on the social and environmental front, Ronez is trialling a cement free concrete to reduce Scope 1 carbon dioxide emissions. Ronez is also seeking to obtain 3rd Party accreditation for ISO 45001 Occupational Health and Safety Management Systems across the Ronez Platform, although this has been delayed by the travel restrictions applying to the Channel Islands.

At PPG, the programme of replacing the insulation of nine main ovens to reduce carbon footprint and overheads has been completed. The trialling of a greener range of products is ongoing.

In South Wales, there is a focus on the development and implementation of changes to the production processes which will lead to the reduced consumption of bitumen, liquid fuels and electricity, and thus improvement in the long term sustainability and reduction in the carbon footprint.

In Belgium, completion dates for Phase 3 of the solar panel development plan and the installation of an electricity charging station at the on-site parking facilities have been pushed back but these projects will be completed as soon as restrictions allow.

Corporate

In April 2020, we welcomed Jacques Emsens and Simon Chisholm to the Board as Non-Executive Directors and Dean Masefield was appointed as Chief Financial Officer, replacing Garth Palmer who remains on the Board as a Non-Executive Director.

Outlook

In spite of COVID related disruptions in March and April, the swift and effective action taken by the team in managing costs, ensuring operational continuity where possible and identifying commercial opportunities in local markets ensured a resilient performance through the lockdown period and a strong response as market conditions began to recover. As a result, performance in the first half was robust with positive momentum in growth and margin appreciate maintained.

Trading for July and August was consistent with the trends seen through the half year end, with the Group's European operations witnessing normal seasonal reductions in activity in this period. Ronez continues to see an encouraging rebound in Jersey, supported by a solid order book into Q4, but with a slower return of activity in Guernsey. SigmaPPG performance remains strong with supply into a number of high-quality infrastructure projects. The recovery in South Wales has continued with the order book now benefiting from some significant project work and the Group will look to begin implementing further efficiency initiatives in the business having acquired the outstanding 60% interest in GD Harries in August. Aggregate demand for CDH is encouraging coming out of the summer holiday period as is the residential market order book for Bluestone. Visibility over Belgian commercial and public sector Bluestone demand is more limited and so demand patterns for the fourth quarter are more challenging to predict at this stage.

On the basis of no further significant impacts on the Group's markets as a result of the pandemic, the Board expects the recovery trends experienced through the third quarter to be maintained over the remainder of the year. As a result and with the benefit of the GD Harries acquisition, the Board expects 2020 financial performance to reflect further significant year on year progress which could be further accelerated by a continued recovery in end-market conditions in 2021.

David Barrett	Max Vermorken	Dean Masefield
Executive Chairman	Chief Executive Officer	Chief Financial Officer

4 September 2020

CONSOLIDATED INCOME STATEMENT

		6 months to 30 June 2020 Unaudited				6 months to 30 June 2019 Unaudited
		Underlying	Non-underlying* (Note 6)		Total	Underlying	Non-underlying* (Note 6)	Total
Continued operations	Note	£	£		£	£	£	£
Revenue		54,502,811	-		54,502,811	29,777,661	-	29,777,661
Cost of sales	5	(39,267,631)	-		(39,267,631)	(21,509,659)	-	(21,509,659)
Profit from operations		15,235,180	-		15,235,180	8,268,002	-	8,268,002
Administrative expenses	5	(8,850,652)	(1,790,251)		(10,640,903)	(4,468,436)	(1,311,187)	(5,779,623)
Net finance (expense)/income		(1,149,270)	-		(1,149,270)	(446,543)	(539,452)	(985,995)
Other net (losses)/gains		72,957	(13,604)		59,353	113,975	(54,527)	59,448
Foreign Exchange		6,527	-		6,527	(11,167)	-	(11,167)
Profit before tax		5,314,742	(1,803,855)		3,510,887	3,455,831	(1,905,166)	1,550,665
Tax expense		(299,902)	-		(299,902)	(131,520)	-	(131,520)
Profit/(loss)		5,014,840	(1,803,855)		3,210,985	3,324,311	(1,905,166)	1,419,145
Profit/(loss) attributable to:
Owners of the parent		5,014,840	(1,803,855)		3,210,985	3,324,311	(1,905,166)	1,419,145
		5,014,840	(1,803,855)		3,210,985	3,324,311	(1,905,166)	1,419,145
Basic earnings per share attributable to owners of the parent (expressed in pence per share)	12	1.98	(0.71)		1.27	1.97	(1.13)	0.84
Diluted earnings per share attributable to owners of the parent (expressed in pence per share)	12	1.83	(0.66)		1.17	1.78	(1.02)	0.76

* Non-underlying items represent acquisition related expenses, restructuring costs, certain finance costs, share option expense and amortisation of acquired intangibles. See Note 6 for more information.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

		6 months to 30 June 2020 Unaudited	6 months to 30 June 2019 Unaudited
	Note	£	£
Profit/(loss) for the year		3,210,985	1,419,145
Other comprehensive income:
Items that will or may be reclassified to profit or loss:
Currency exchange gains		2,954,847	-
		2,954,847	-
Total comprehensive income		6,165,832	1,419,145
Total comprehensive income attributable to:
Owners of the parent		6,165,832	1,419,145
Total comprehensive income for the period		6,165,832	1,419,145

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

  Company number: 05204176

		30 June 2020 Unaudited	30 June 2019 Unaudited	31 December 2019 Audited
	Note	£	£	£
Non-current assets
Property, plant and equipment	7	118,946,662	54,137,429	78,718,333
Intangible assets	8	45,427,754	33,299,138	80,243,724
Investments in associates	9	5,151,527	5,003,321	5,538,212
Other receivables		21,620	-	19,996
		169,547,563	92,439,888	164,520,265
Current assets
Trade and other receivables		20,898,236	13,084,304	22,232,596
Inventories		11,799,546	6,190,797	11,160,574
Cash and cash equivalents		17,279,238	3,583,663	9,867,696
		49,977,020	22,858,764	43,260,866
Total assets		219,524,583	115,298,652	207,781,131
Current liabilities
Trade and other payables		38,345,216	15,595,921	37,158,011
Current tax payable		1,160,147	502,849	884,871
Borrowings	10	1,762,815	121,433	4,461,336
		41,268,178	16,220,203	42,504,218
Non-current liabilities
Borrowings	10	62,018,129	26,805,363	55,194,015
Deferred tax liabilities		1,098,148	1,098,148	1,098,148
Provisions		6,899,677	718,822	6,936,754
		70,015,954	28,622,333	63,228,917
Total Liabilities		111,284,132	44,842,536	105,733,135
Net assets		108,240,451	70,456,116	102,047,996
Equity attributable to owners of the parent
Share capital	11	2,537,393	1,738,175	2,537,393
Share premium	11	95,358,556	64,463,963	95,358,556
Share option reserve		557,836	492,248	531,213
Other reserves		3,868,587	1,361,718	913,740
Retained earnings		5,918,079	2,400,012	2,707,094
Total equity		108,240,451	70,456,116	102,047,996

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

		Share capital	Share premium	Share option reserve	Other reserves	Retained earnings	Total
	Note	£	£	£	£	£	£
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 period		-	-	-	-	1,419,145	1,419,145
Total comprehensive income for the period		-	-	-	-	1,419,145	1,419,145
Contributions by and distributions to owners
Issue of ordinary shares		302,570	12,102,821	-	-	-	12,405,391
Issue costs		-	(457,212)	-	-	-	(457,212)
Share based payments		68,549	2,681,450	-	-	-	2,749,999
Share option charge		-	-	139,371	-	-	139,371
IFRS 16 prior year adjustment		-	-	-	-	70,311	70,311
Total contributions by and distributions to owners		371,119	14,327,059	139,371	-	70,311	14,907,860
Balance as at 30 June 2019		1,738,175	64,463,963	492,248	1,361,718	2,400,012	70,456,116
Balance as at 1 January 2020		2,537,393	95,358,556	531,213	913,740	2,707,094	102,047,996
Profit for the period		-	-	-	-	3,210,985	3,210,985
Currency translation differences		-	-	-	2,954,847	-	2,954,847
Total comprehensive income for the period		-	-	-	2,954,847	3,210,985	6,165,832
Contributions by and distributions to owners
Issue of ordinary shares		-	-	-	-	-	-
Issue costs		-	-	-	-	-	-
Share option charge		-	-	26,623	-	-	26,623
Total contributions by and distributions to owners		-	-	26,623	-	-	26,623
Balance as at 30 June 2020		2,537,393	95,358,556	557,836	3,868,587	5,918,079	108,240,451

CASH FLOW STATEMENTS

		6 months to 30 June 2020 Unaudited	6 months to 30 June 2019 Unaudited
	Note	£	£
Cash flows from operating activities
Profit		3,210,985	1,419,145
Adjustments for:
Depreciation and amortisation		5,283,866	2,182,793
Share option expense		26,623	139,371
Loss/(gain) on sale of property, plant and equipment		(122,331)	23,802
Net finance costs		1,149,270	985,995
Other non-cash adjustments		(18,371)	-
Net tax paid		61,058	26,861
Share of earnings from associates		(57,682)	(112,529)
(Increase)/decrease in trade and other receivables		2,245,755	(4,060,760)
Increase in inventories		(64,796)	(486,831)
Increase in trade and other payables		(47,422)	(3,080,944)
Net cash flows from operating activities		11,666,955	(2,963,097)
Investing activities
Purchase of property, plant and equipment	7	(2,017,112)	(1,360,167)
Cash paid for acquisition of subsidiaries (net of cash acquired)		(1,542,109)	(10,089,389)
Sale of property plant and equipment		378,151	6,289
Purchase of intangible assets		(29,261)	-
Net cash used in investing activities		(3,210,331)	(11,443,267)
Financing activities
Proceeds from share issue		-	12,405,393
Cost of share issue		-	(457,212)
Net finance costs paid		(1,003,353)	(985,995)
Net borrowings		4,056,548	16,300,000
Cost of borrowings		-	(125,454)
Repayment of borrowings		(4,103,308)	(12,875,685)
Net cash generated from financing activities		(1,050,113)	14,261,047
Net increase in cash and cash equivalents		7,406,511	(145,317)
Cash and cash equivalents at beginning of period		9,867,696	3,728,980
Exchange (losses)/gains on cash		5,031	-
Cash and cash equivalents and end of period		17,279,238	3,583,663

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.  Basis of preparation

The condensed interim financial statements have been prepared in accordance with the requirements of the AIM Rules for Companies. As permitted, the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing this interim financial information. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2019, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.

The interim financial information set out above does not constitute statutory accounts within the meaning of the Companies Act 2006. It has been prepared on a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union.

Statutory financial statements for the period ended 31 December 2019 were approved by the Board of Directors on 17 April 2020 and delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified with material uncertainty related to going concern. The comparative financial information for the interim period ended 30 June 2019 and year ended 31 December 2019 is for the Group only.

Going concern

The Directors, having made appropriate enquiries, consider that adequate resources exist for the Company and Group to continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the condensed interim financial statements for the period ended 30 June 2020.

Risks and uncertainties

The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Company's medium-term performance and the factors that mitigate those risks have not substantially changed from those set out in the Group's 2019 Annual Report and Financial Statements, a copy of which is available on the Company's website: www.sigmaroc.com. The key financial risks are liquidity risk, credit risk, interest rate risk and fair value estimation.

Critical accounting estimates

The preparation of condensed interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the end of the reporting period. Significant items subject to such estimates are set out in Note 4 of the Group's 2019 Annual Report and Financial Statements. The nature and amounts of such estimates have not changed significantly during the interim period.

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.

3.  Accounting policies

Except as described below, the same accounting policies, presentation and methods of computation have been followed in these condensed interim financial statements as were applied in the preparation of the company's annual financial statements for the year ended 31 December 2019, except for the impact of the adoption of the Standards and interpretations described in para 3.1 below:

3.1.  Changes in accounting policy and disclosures

(a) Accounting developments during 2020

The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial Reporting Standards and IFRIC interpretations. The amendments and revisions were applicable for the period ended 30 June 2020 but did not results in any material changes to the financial statements of the Group or Company.

The following standards were adopted by the Group during the year:

· IFRS 3 (Amendments) - Business Combinations (effective 1 January 2020)

· IAS 1 (Amendments) - Presentation of Financial Statements (effective 1 January 2020)

· IAS 8 - Accounting policies, Changes in Accounting Estimates (effective 1 January 2020)

(b) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted

Standard		Effective date
IAS 1	Classification of Liabilities as Current or Non-Current.	* 1 January 2022

^* Subject to EU endorsement

The Group is evaluating the impact of the new and amended standards above. The Directors believe that these new and amended standards are not expected to have a material impact on the Group's results or shareholders' funds.

4.  Dividends

No dividend has been declared or paid by the Company during the six months ended 30 June 2020 (2019: nil).

5.  Expenses by nature

	6 months to 30 June 2020 Unaudited	6 months to 30 June 2019 Unaudited
	£	£
Cost of sales
Raw materials and production	9,577,898	8,667,482
Distribution and selling expenses	2,977,128	2,781,754
Employee benefit expenses	13,276,857	4,907,662
Maintenance expense	1,771,189	695,085
Plant hire expense	1,067,201	712,189
Depreciation and amortisation expense	4,430,045	1,839,386
Other costs of sale	6,167,313	1,906,101
Total cost of sales	39,267,631	21,509,659
Administrative expenses
Operational admin expenses	7,738,189	3,489,748
Corporate admin expenses	2,902,714	2,289,875
Total administrative expenses	10,640,903	5,779,623

Depreciation and amortisation expense is a combination of property, plant and equipment depreciation and amortisation of intangible assets.

6.  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.

	6 months to 30 June 2020 Unaudited	6 months to 30 June 2019 Unaudited
	£	£
Acquisition related expenses	433,003	309,455
Restructuring expenses	434,631	394,840
Share options expense	26,623	139,371
Equity fundraising & investor relations	-	656,823
Amortisation of acquired intangibles	853,821	343,407
Other non-underlying	55,777	61,270
	1,803,855	1,905,166

Acquisition related expenses include costs relating to the due diligence of prospective pipeline acquisitions and other direct costs associated with merger & acquisition activity including warranty and indemnity insurance, Purchase Price Allocation fees and other consulting fees.

Amortisation of acquired assets are non-cash items which distort the underlying performance of the businesses acquired.

Restructuring expenses include advisory fees, redundancy costs and rebranding expenses. During this period these primarily related to the SigmaPPG platform.

Share option expense is the fair value of the share options issued and or vested during the period.

7.  Property, plant and equipment

	Office equipment	Land and minerals	Land and buildings	Plant and machinery	Furniture and vehicles	Construction in progress	Total
	£	£	£	£	£	£	£
Cost
As at 1 January 2019	383,658	37,951,374	22,369,931	18,041,324	8,248,546	1,926,176	88,921,009
Acquired through acquisition of subsidiary	279,477	-	2,352,190	3,899,172	173,119	-	6,703,958
Transfers in	-	-	1,125,685	63,069	-	-	1,188,754
IFRS 16 Adjustments	-	-	402,855	786,285	-	-	1,189,140
Additions	6,276	-	138,669	780,119	201,730	233,373	1,360,167
Disposals	-	-	(105,000)	(61,860)	(62,885)	(1,279,086)	(1,508,831)
Transfer between classes	82,090	(4,695,824)	4,696,518	63,417	(727,526)	75,263	(506,062)
As at 30 June 2019	751,501	33,255,550	30,980,848	23,571,526	7,832,984	955,726	97,348,135
Acquired through acquisition of subsidiary	2,915,492	14,844,352	11,033,453	53,926,086	9,411,474	-	92,130,857
Transfer between classes	(82,308)	-	40,376	(197,528)	(25,735)	(1,367,535)	(1,632,730)
Fair value adjustments	-	1,762,000	-	-	-	-	1,762,000
IFRS 16 Adjustment	22,689	-	181,930	89,103	-	-	293,722
Additions	133,138	145,140	297,217	623,515	667,303	1,258,021	3,124,334
Disposals	(1,173)	-	(4,000,000)	(20,000)	(54,115)	-	(4,075,288)
Forex	(47,800)	(243,377)	(161,148)	(881,369)	(154,468)	-	(1,488,162)
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
Acquired through acquisition of subsidiary	11,666	-	64,147	3,189,683	360,984	-	3,626,480
Fair value adjustments	-	35,954,347	4,121,301	-	-	-	40,075,648
Additions	22,839	395,450	81,952	381,777	834,840	300,254	2,017,112
Disposals	(185,355)	-	-	(528,671)	(494,114)	-	(1,208,140)
Forex	208,010	1,358,281	1,154,935	3,762,428	696,426	-	7,180,080
As at 30 June 2020	3,748,699	87,471,743	43,795,011	83,916,550	19,075,579	1,146,466	239,154,048
Depreciation
As at 1 January 2019	321,541	7,046,667	13,396,618	11,227,939	6,956,233	-	38,948,998
Acquired through acquisition of subsidiary	214,762	-	219,348	2,370,475	66,905	-	2,871,490
Charge for the year	19,230	462,865	462,087	924,079	215,288	-	2,083,549
Disposals	-	-	(105,000)	(31,769)	(50,500)	-	(187,269)
Transfer between classes	(38,393)	(182,407)	164,287	354,177	(803,726)	-	(506,062)
As at 30 June 2019	517,140	7,327,125	14,137,340	14,844,901	6,384,200	-	43,210,706
Acquired through acquisition of subsidiary	2,597,414	703,698	8,090,348	47,573,973	4,722,892	-	63,688,325
IFRS 16 Adjustment	-	-	153,779	292,103	-	-	445,882
Charge for the year	110,976	548,089	627,459	1,094,950	820,604	-	3,202,078
Disposals	(159)	-	(95,298)	(20,000)	(66,500)	-	(181,957)
Transfer between classes	38,175	22,989	(91,818)	(389,768)	(158,589)	-	(579,011)
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
Acquired through acquisition of subsidiary	11,423	-	39,910	2,918,380	360,984	-	3,330,697
Charge for the year	130,339	479,498	677,004	2,221,752	1,350,321	-	4,858,914
Disposals	(185,355)	-	-	(511,435)	(266,454)	-	(963,244)
Forex	198,680	216,246	435,227	3,167,718	218,613	-	4,236,484
As at 30 June 2020	3,376,048	9,286,108	23,841,308	70,415,284	13,288,638	-	120,207,386
Net book value
As at 30 June 2019	234,361	25,928,425	16,843,508	8,726,625	1,448,784	955,726	54,137,429
As at 31 December 2019	470,578	41,173,301	15,683,509	14,492,464	6,052,269	846,212	78,718,333
As at 30 June 2020	372,651	78,185,635	19,953,703	13,501,266	5,786,941	1,146,466	118,946,662

8.  Intangible assets

		Consolidated
	Goodwill		Customer Relations	Intellectual property	Research & Development	Branding	Other Intangibles	Total
	£		£	£	£	£	£	£
Cost & net book value
As at 1 January 2019	16,826,369		850,846	684,556	-	613,000	-	18,974,771
Additions	-		-	-	3,611	-	-	3,611
Additions through business combination	61,717,258		-	(83,843)	1,210,452	400,000	414,018	63,657,885
Price Purchase Allocation - CCP	(5,539,000)		3,480,000	-	-	297,000	-	(1,762,000)
Amortisation	-		(481,324)	(44,481)	(26,174)	(43,969)	(13,788)	(609,736)
Forex	-		-	-	(20,807)	-	-	(20,807)
As at 31 December 2019	73,004,627		3,849,522	556,232	1,167,082	1,266,031	400,230	80,243,724
As at 1 January 2020	73,004,627		3,849,522	556,232	1,167,082	1,266,031	400,230	80,243,724
Additions	-		-	-	24,423	-	4,838	29,261
Additions through business combination	2,052,975		-	-	-	-	-	2,052,975
Price Purchase Allocation - CDH	(42,367,648)		-	-	-	2,292,000	-	(40,075,648)
Amortisation	-		(25,845)	(42,430)	(258,085)	(93,524)	(5,068)	(424,952)
Forex	3,521,822		-	-	80,572	-	-	3,602,394
As at 30 June 2020	36,211,776		3,823,677	513,802	1,013,992	3,464,507	400,000	45,427,754

An adjustment has been made to reflect the initial accounting for the acquisition of Carrières du Hainaut SCA ('CDH') by the Company, being the elimination of the investment in CDH against the non-monetary assets acquired and recognition of goodwill. In 2020, the Company determined the fair value of the net assets acquired pursuant to the acquisition of CDH, via a Purchase Price Allocation ('PPA') exercise.  The PPA determined a decrease of £42,367,648 of goodwill in CDH with the corresponding movement to be recognised as branding and an uplift in the value of the land and buildings and land and minerals.

Amortisation of intangible assets is included in cost of sales on the Income Statement.

9.  Investments in 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 £4.89 million. GDH is based in in South Wales and own six quarries as well as concrete and tarmac plants and are providers of aggregates for commercial and domestic customers. GDH is included in the consolidated financial statements using the equity method.

			Proportion of ownership interest held
Name	Country of incorporation		30 June 2020	30 June 2019
GDH (Holdings) Limited	United Kingdom		40%	40%

Summarised financial information

GDH	30 June 2020 Unaudited
	£
As at 30 June 2020
Current assets	9,544,782
Non-current assets	12,946,857
Current liabilities	(6,522,938)
Non-current liabilities	(9,764,141)
For the period 1 January 2020 to 30 June 2020
Revenues	8,788,021
Profit after tax from continuing operations	144,204

10.  Borrowings

	6 months to 30 June 2020 Unaudited		6 months to 30 June 2019 Unaudited
	£		£
Non-current liabilities
Santander term facility		25,979,147	25,836,547
Bank Loans		29,615,095	-
Convertible loan notes		-	-
Finance lease liabilities		6,423,887	968,816
		62,018,129	26,805,363
Current liabilities
Santander revolving credit facility		-	-
Bank loans
Finance lease liabilities		1,762,815	121,433
		1,762,815	121,433

On 5 January 2017 the Company issued 10,000,000 unsecured convertible loan notes at a par value of £1 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 £0.52 per Ordinary Share.

In April 2017 the Company entered into an £18 million term facility with Santander (the 'Facility'); on 18 October 2017 drew down £9 million to satisfy the initial cash consideration for Topcrete Limited; and, on 21 June 2018 drew down £1 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 £34 million (the 'restated facility'). On 23 January 2019, the Company drew down £10.8m to satisfy the redemption of the Loan Notes; on 1 February 2019, drew down £1.5 million to for working capital in relation to the acquisition of CCP; and on 18 April 2019, drew down £4 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 2.60% 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
	6 months to 30 June 2020 Unaudited	6 months to 30 June 2019 Unaudited		6 months to 30 June 2020 Unaudited		6 months to 30 June 2019 Unaudited
	£	£		£		£
Santander term facility (net of establishment fees)	25,979,147	25,836,547		-		-
Bank loans	29,615,095			-		-
Finance lease liabilities	8,186,702	1,090,249		-		-
	63,780,944	26,926,796		-		-

The fair values are based on cash flows discounted using the borrowing rate of 3% (2019: 3%), which represents the cost of capital of the Group.

11.  Share capital and share premium

	Number of shares	Ordinary shares	Share premium	Total
		£	£	£
Issued and fully paid
As at 1 January 2019	136,705,557	1,367,056	50,136,904	51,503,960
Issue of new shares - 25 January 2019 (1)	35,135,101	351,350	13,596,828	13,948,178
Issue of new shares - 1 February 2019	1,976,888	19,769	730,231	750,000
As at 30 June 2019	173,817,546	1,738,175	64,463,963	66,202,138
Issue of new shares - 15 October 2019 (2)	79,921,640	799,218	30,894,593	31,693,811
As at 31 December 2019	253,739,186	2,537,393	95,358,556	97,895,949
As at 1 January 2020	253,739,186	2,537,393	95,358,556	97,895,949
As at 30 June 2020	253,739,186	2,537,393	95,358,556	97,895,949

(1)  Includes issue costs of £457,212

(2)  Includes issue costs of £1,074,061

12.  Earnings per share

The calculation of the total basic earnings per share of 1.27 pence (2019: 0.84 pence) is calculated by dividing the profit attributable to shareholders of £3,210,985 (2019: £1,419,145) by the weighted average number of ordinary shares of 253,739,186 (2019: 168,820,165) in issue during the period.

Diluted earnings per share of 1.17 pence (2019: 0.76 pence) is calculated by dividing the profit attributable to shareholders of £3,210,985 (2019: £1,419,145) 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 274,594,989 (2019: 186,605,865).

Details of share options that could potentially dilute earnings per share in future periods are disclosed in the notes to the Group's Annual Report and Financial Statements for the year ended 31 December 2019.

13.  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.

14.  Business combination

On 1 January 2020 the Group acquired an additional 25% of the share capital in Stone Holdings SA ('Stone'), bringing the total shareholding in Stone to 74%. The initial cash consideration in September 2019 was £563,403 with an additional £312,109 paid in March 2020. Stone is registered and incorporated in Belgium. Stone operates two quarries and a wharf and is a contracting business which focusses on armour rock for river and sea defence work.  

The following table summarises the consideration paid for Stone and the values of the assets and equity assumed at the acquisition date.

Total consideration	£
Cash	839,092
Deferred cash	287,206
	1,126,298

Recognised amounts of assets and liabilities acquired	£
Cash and cash equivalents	71,510
Trade and other receivables	475,165
Inventories	161,445
Property, plant & equipment	274,686
Intangible assets	850
Trade and other payables	(884,030)
Borrowings	(1,026,303)
Total identifiable net liabilities	(926,677)
Goodwill (refer to note 8 )	2,052,975
Total consideration	1,126,298

15.  Events after the reporting date

On 5 August 2020, SigmaRoc plc completed the acquisition of the final 26% in Stone Holdings SA, following the announcement of the conditional acquisition on 11 September 2019.

Following the announcement on 15 April 2019 of the acquisition of 40% of G.D. Harries, SigmaRoc plc exercised its option in August 2020 to acquire the remaining 60% for a cash consideration of £7.3 million*. Completion is anticipated on or around 21 September 2020.

*Rounded to £7.5 million in the announcement of 1 September 2020.

16.  Approval of interim financial statements

The condensed interim financial statements were approved by the Board of Directors on 4 September 2020.

 

END

 

 

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