Final Results

RNS Number : 1858Z
SigmaRoc PLC
16 May 2019
 

SigmaRoc plc / EPIC: SRC / Market: AIM / Sector: Construction & Materials

 16 May 2019

 

SigmaRoc plc

('SigmaRoc' or the 'Company')

 

Audited full year results for year ended 31 December 2018

 

SigmaRoc plc, the AIM listed buy-and-build construction materials group, is pleased to announce its audited results for the year ended 31 December 2018.

 

Financial highlights1

31 December 2018

31 December 2017

Change

Underlying revenue

£41.2m

£27.2m

+52.0%

Underlying EBITDA

£9.8m

£5.5m

+78.5%

Underlying profit before tax

£5.5m

£2.6m

+113.8%

Underlying EPS

3.83p

2.02p

+89.6%

Net debt

£16.0m

£11.8m

+35.6%

 

1 Underlying results are stated before acquisition related expenses, certain finance costs, share option expense and warranty & indemnity insurance

 

Operational highlights:

 

-     More than doubled underlying profit before tax and close to doubled underlying EPS while reducing gearing and making substantial investments back into the business;

-     SigmaPPG platform created combining precast products offering and establishing basis for further growth in 2019;

-     30% year-on-year operational EBITDA improvements versus previous 12 months at newly acquired businesses Allen and Poundfield Products under SigmaPPG ownership;

-     Acquisition of high PSV quarry in South Wales, with 120% resource increase post acquisition, to start third platform

-     Continued execution of strategy with two substantial transactions completed post year-end and acquisition pipeline under continued active development; and

-     Two major acquisitions, post period, which increases the estimated reserves and resources of the Group to approximately 100mt, 26 operational sites and 12 quarries across three platforms.

 

 

David Barrett, Executive Chairman, commented:

 

"I am pleased to report another strong year in 2018 where we were able to exceed our expectations and build a solid business from which to continue to deliver on our growth strategy."

 

"We successfully integrated the two UK specialist concrete businesses acquired late in 2017 and formed the SigmaPPG platform, expanding this further in January 2019 with the acquisition of CCP Building Products Limited. While doing this we were also able to achieve a 78.5% uplift in EBITDA compared to the prior year and continued to develop our acquisition pipeline."

 

"I am extremely proud of our progress and development and look forward to another successful year in 2019."

 

 

Max Vermorken, CEO, commented:

 

"On a 52% uplift in revenue, we delivered a c.90% uplift in underlying EPS, while our leverage ratio decreased. I think these are excellent numbers and testimony to the determination of our Group."

 

"Financial performance is, however, not everything. We materially improved our safety culture across all new businesses. We ensured our colleagues are engaged and motivated to deliver further improvements. As a result, we were able to deliver three important acquisitions in 2018 and early 2019 without losing focus on the underlying business."

 

END


The full text of the statement is set out below, together with detailed financial results.
 
SigmaRoc will host a meeting for invited analysts at 9.00am today. Conference call dial-in details are available from the Company upon request to join the analyst meeting. A recording will also be available on request from the Company.

 

---------------------------------------------------------------------------------------------------------------------------

 

For further information, please contact:

 

SigmaRoc plc

Max Vermoken

 

Tel: +44 (0) 207 002 1080

Strand Hanson (Nominated and Financial adviser)

James Spinney / James Dance / Jack Botros

 

Tel: +44 (0) 207 409 3494

Liberum Capital (Joint Broker)

Neil Patel / Jamie Richards / Jonathan Wilkes-Green / William Hall

Tel: +44 (0) 203 100 2000

 

Berenberg (Joint Broker)

Ben Wright / Mark Whitmore

 

Tel: +44 (0) 203 207 7800

Investor Relations

Ben Feder

Tel: +44 (0) 207 002 1080

 

 

 

 

CHAIRMAN'S STATEMENT

 

Introduction

Please allow me to start with a summary of what SigmaRoc plc (the 'Company') and its subsidiary undertakings (which together comprise the 'Group' or 'SigmaRoc') does. SigmaRoc invests, in strong local businesses and in strong managers. SigmaRoc improves - starting immediately after acquisition - the financial, operational and safety performance of its companies. Finally, SigmaRoc integrates its acquisitions into platforms of compatible businesses without stifling itself or its acquisitions with heavy handed intervention from the top. Our performance to date is demonstrating that this model works. Our managers and staff are focussed, our safety records are excellent and our financial performance is again very solid.

 

This opening paragraph may sound a little triumphant. In a much more challenging market environment, with a Company management team not much larger than it was when we were only a cash shell, we have again delivered strong results on all fronts. It makes me proud to serve as the Chairman of a business with such capabilities, particularly the resilience and drive to continue to generate value for shareholders. I am equally proud that our shareholder base has recognised the potential in the business and has helped us through continued support and engagement.

 

There are three areas I would like to focus this year's statement on in order to give you more insight into what challenges we have addressed and what achievements we've made to deliver these strong results. These areas are, firstly, the financial performance of the Group, secondly, our focus on making our business safe, and lastly, our continued investment into the business including its expansion through further acquisitions.

 

Financial performance

In many ways 2018 was a more challenging year than the year before. The winter was much longer and much harsher than expected, impacting the performance of our UK footprint. Coupled with the fact we were at the starting phase of our restructuring efforts of the newly acquired businesses Allen (Concrete) Limited ('Allen') and Poundfield Products Limited ('Poundfield') (together 'SigmaPPG'), made our first quarter more than a little challenging. Our Channel Islands platform continued to perform in line with expectations helping us to achieve good numbers for the first half of the year.

 

The second half was characterised by continued efforts in terms of integration of the new businesses and management of the existing ones. Our Channel Islands platform continued to deliver as expected and in line with the phasing of the demand in the Islands. While volumes in Jersey remained strong and Guernsey's volumes improved versus the previous year, they remained somewhat below previous trends and historical highs. On the mainland, Allen and Poundfield recovered from slow starts and began to contribute fully to the EBITDA of the Group leading to strong numbers for the Group as a whole.

 

While hard at work on the operational front we also strengthened our capital position. With the assistance of key shareholders, in January 2019 we were able to redeem the £10m convertible loan notes improving our cost of capital going forward. Santander UK plc ('Santander') was extremely helpful and provided us with an extended credit facility, increased from £20m to £34m on similar terms to the existing facility. The Group's overall net debt position, of £16.0m, remained in line with our self-imposed targets. Strong cash generation kept net debt levels at 1.63 times underlying EBITDA.

 

Safety

I would also like to highlight the solid health and safety performance achieved throughout 2018. Ronez reached a landmark 1,000 cumulative days without incident in February 2019, a fantastic achievement. With the addition of two new businesses and over 70 new colleagues we faced a significant challenge in integrating a very different safety culture into our overall business. The safety culture at owner operated businesses is often inferior to what industry majors have put in place over many years. However, we were able to improve that safety culture in a short space of time with full buy-in from our new colleagues.

 

As a result of our efforts we have dramatically improved the safety culture at both Allen and Poundfield. Reporting of safety incidents has significantly increased while overall incidents have decreased. We are very much encouraged by the focus of the workforce and management across the Group, who have resolutely focused on, and implemented, Group safety initiatives. This remains a priority at every level of the Group as we continue to target zero-harm through ongoing safety improvements.

 

As the Group is growing, we have put additional focus on the areas of safety and compliance, with a dedicated person now in charge of ensuring that the highest safety and compliance standards are observed in a uniform way across the Group. Safety is and will always remain the responsibility of the line managers. However, as we continue to acquire businesses with varying health and safety records, it is paramount we bring all businesses up to a high level of safety culture whilst also providing the processes that help to embed the necessary culture that comes with it.

 

Investing for the future

Much of our outlook for the next 12 months is in fact driven by the investment and improvement work done this past year. We have spent both a lot of time and money to significantly improve the setup of the companies we acquired. At Poundfield we launched an extensive overhaul programme to improve the safety and operational performance of the business. This involved the acquisition of further land to allow for the business to grow. We also made great efforts in segregating traffic, separating production, stocking and loading, as well as the optimisation of the whole production process. This project is still ongoing and the results to date are promising in terms of what can be achieved going forward.

 

At Ronez, we have also continued our programme to make the business safer and better equipped to service customers to the highest standard. A programme of gradual replacement of plant and machinery is underway and already showing results in efficiency gains. A key investment this year was the new Readymix Concrete plant on Jersey and an overhaul of the fleet of delivery trucks. The new plant was designed specifically for the needs of the Island and was officially opened on 13 February 2019. Its reliability and performance have been exceptional in the first months of operations and customer feedback has been equally positive.

 

We also significantly expanded our footprint in the UK with the acquisition of a high polished stone value ('PSV') quarry in South Wales and progressed due diligence on two additional transactions that culminated in the acquisition of CCP Building Products Limited ('CCP') in January 2019 and a 40% interest in GDH (Holdings) Limited ('GDH') in April 2019. CCP significantly expands our precast and prestressed concrete platform in the UK and GDH will be the cornerstone of our new construction materials platform in South Wales. The addition of CCP and GDH post year-end supports future expansion and further opportunities for the Group.

 

Conclusion

The Board therefore believes that the outlook for the Group is very good. The markets in the Channel Islands are performing as expected, with a slight dip in Jersey being offset by a corresponding increase in Guernsey, after a number of subdued years, volumes were up in 2018. The trend remains below some of its historically stronger years and we see potential for continued recovery over time. The shipping division launched in 2017 remains a strong performer and continues to contribute strategically and to the overall performance of the Channel Island platform.

 

In mainland UK, work to integrate the precast platform has been successful, following a similar path to the Channel Islands business in H1 2017. In this, strengthening of operational and commercial efforts, where our Group's expertise can bring benefits, was key, with our industry leading health and safety standards being a priority.

 

Looking further ahead it is evident that the value we create for shareholders lies in the identification, acquisition and integration of businesses into platforms which run at a high operational standard. The resources and management capacity required to pursue this process and deliver acquisitive growth is in place within the Group and we are pleased with the progress made towards delivering on our acquisition pipeline this year. The number of opportunities both in the UK and in selected European countries is encouraging and we remain disciplined in our selection and appraisal of target companies in line with our strategy.

 

We have every expectation of making further progress this year.

 

David Barrett

Executive Chairman

15 May 2019 

 

 

CEO'S STATEMENT

 

At the tail end of 2016 we launched SigmaRoc plc as a buy-and-build construction materials company, to drive shareholder value by creating platforms of connected and compatible quality businesses focused on their local and regional markets. Our 2018 results show we are delivering on our strategy having met our targets and I see plenty of opportunity ahead to build SigmaRoc into a significant operator in the construction materials sector. The review of 2018 below provides some colour to the achievements in our second full year and to what may lie ahead.

 

Review of business

In October 2017 the Group acquired Topcrete Limited ('Topcrete') which via its wholly owned subsidiary Allen provides specialist wetcast concrete products in London and the Midlands. Then in December 2017 the Group acquired Poundfield which provides specialised patented concrete products and systems within the United Kingdom primarily for complex infrastructure projects and retaining wall systems.

 

With the acquisition of these two businesses, SigmaRoc established its SigmaPPG platform and took a strong position in the UK market for precast and prestressed products, targeting the industrial and agricultural sectors, as well as housing and specialist infrastructure projects. Both companies are asset backed with significant land holdings and intellectual property in the form of patents and trademarks, making these businesses an ideal fit within the SigmaRoc business model.

 

A key driver for the acquisition of any business by SigmaRoc is our ability to improve the business' performance in a relatively short period of time, without, however, destroying the main fabric of that business through asset stripping and redundancy driven cost cutting. The graphic below gives a relatively good perspective of our impact on those businesses we purchase. It shows a like-for-like comparison of the 12 months prior to our ownership versus the first 12 months of our ownership for the Channel Islands Platform and the Precast Platform.

 

During 2018 the Group also laid foundations for a new platform in the UK, acquiring the high PSV Foelfach Stone quarry in South Wales. Sources of high PSV aggregates are scarce in the UK and are of key importance for road surfacing because of the skid resistance qualities. In January 2019, we were pleased to announce a 120% increase in the Foelfach Stone quarry resource and the appointment of David McClelland to the Group's executive team as Managing Director for the new UK platform.

 

Trading summary

Last year started slowly in the UK with the harsh winter causing some disruption to demand and our ability to produce and deliver effectively. The slow start to the year was rectified, with Poundfield having a particularly strong finish to the year. Activity in the Channel Islands was generally consistent with our expectations, although a slight downturn in Jersey was offset by an increase in volumes in Guernsey. Delays to some projects in Jersey affected concrete and aggregate volumes, although this was partially offset by a strong road contracting performance. In Guernsey the opposite was true, with projects coming online earlier than expected resulting in improved volumes for aggregates and concrete.

 

Overall, the Ronez platform performed well, delivering £27 million in revenue, representing an increase of 4% compared to 2017. The SigmaPPG platform achieved £14 million in revenue, being an increase of 8% relative to the prior year.

 

Group underlying EBITDA performance was strong, delivering £9.8 million, an increase of 78.5% from 2017.  We generated a full year underlying net profit after tax of £5.2 million equating to an earnings per share of 3.83p. Total capital expenditure ('Capex') was £6.7 million, however this includes £3.5 million investment in land and minerals and £1.2 million for the new ready-mix plant in Jersey, leaving a balance of £2 million which is consistent with the prior year despite addition of two new operating entities.

 

Safety & compliance

Our industry keeps appearing in the news with disappointing stories of injured colleagues. At SigmaRoc, however, we have doubled our efforts to improve our safety systems across the Group. This is crucial as we are acquiring companies with often very different approaches to safety. Some are relatively up to standard, others not at all. We are encouraged, however, by the progress made since we took over the respective businesses. Employee engagement has been a significant contributing factor, with safety representation now on site, employees engaged in training programs, including LOTTO through to NEBOSH Diploma's. Safety is now openly and actively spoken about.

 

Across the Group we have recorded an increase in safety conversations and incident recording, pointing clearly to the increased focus on safety and the adoption of a much improved safety culture. While this increase in reporting could or perhaps should have increased the number of incidents recorded versus the prior year, we in fact recorded a year-on-year drop in incidents of 15% across all businesses. This is significant as it points to the improved safety culture being adopted across the Group. Even at Ronez, a business managed by a major with excellent health & safety standards, we managed to reduce Total Harm Incidents by 36% year on year. At SigmaPPG the net reduction was 10%, however, starting from a position where the safety culture lagged well behind our Group standards.

 

The results above have been achieved through tangible efforts by managers and supervisors on the ground. Personal Protective Equipment ('PPE') standards have been increased across the Group. Segregation of foot traffic and vehicle traffic has now been enforced across the Group. We now also have a dedicated person in charge of auditing all safety best practices, ensuring these are followed and implemented. Safety therefore remains the responsibility of managers and supervisors, but there is a clear uniform set of best practices and a central person to ensure they are followed. We are therefore encouraged the right focus on safety and compliance is present in the business, yet much work remains on the road to zero harm.

 

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, and have a strong local market presence and hard asset backing, resulting in improved margins. The income stream is diversified and supported by quality assets that produce aggregates, concrete, precast and prestressed concrete and related products and services.

 

As a result of this strategy we have been able to show a significant increase in EPS since we launched SigmaRoc in 2016. The graphic below tracks the sales, EBITDA and earnings improvements across the relevant period and clearly shows the success of our strategy. With sales in line with expectations for the first quarter of 2019 we look forward to further expansion across the year.

 

Looking further ahead we were pleased to announce that we successfully completed the acquisition of CCP in January 2019 to expand the footprint of our SigmaPPG platform. Then, in April 2019 we completed an initial 40% acquisition of GDH with an 18 month exclusive option to acquire the remaining 60% on or before 31 August 2020, which we plan to do through a combination of our own cash and Santander debt.

 

Our focus for the next 12 months is on driving financial performance across the enlarged Group and completing the full acquisition of GDH, however we will continue to assess further opportunities to expand through the acquisition of high quality local businesses. We maintain our philosophy that local businesses in our sector are fundamentally better if they retain their strong local branding but are complemented by being part of a group with management, sales, operational and commercial expertise.

 

Overall, we remain optimistic about the future and of achieving further progress in 2019.

 

This report was approved by the Board on 15 May 2019.

 

Max Vermorken

CEO

 

 

DIRECTOR'S REPORT

 

I am pleased to report a strong year financially for the Group during which we achieved our ambitious financial targets, which assisted us in taking several key steps in expanding our business. This is the first year in which Ronez, Topcrete and Poundfield are consolidated into our results for the full year.


Accordingly, our full year for 2018 generated revenue of £41.2 million (2017: £27.1 million) of which £27 million was generated from our Channel Islands operations. The underlying earnings before our share of associated undertakings, depreciation, amortisation and tax ('EBITDA') was £9.8 million (2017: £5.5 million). The profit before taxation for the Group for the year ended 31 December 2018 was £3.8 million (2017: £0.8 million).

The loss for the Company for the year ended 31 December 2018 before taxation amounts to £0.9 million (2017: loss £3.3 million).

 

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 2019.

 

 

2018

2017

Cash and cash equivalents

£3,771,735

£7,001,058

Revenue

£41,241,673

£27,073,686

Underlying EBITDA

£9,823,080

£5,504,375

Capital expenditure

£6,670,447

£1,793,164

 

Cash in 2017 was inflated due to the timing of the fundraise for Poundfield which included provision for the £3.5 million deferred cash consideration for Topcrete and £1.5 million for the purchase of Poundfield land & buildings. Cash generated from operations was £5.5 million with £2 million spent to acquire land & minerals and £2.2 million invested back into the Group's businesses.

 

Revenue and underlying EBITDA is in line with expectations and management forecasts.

 

Capital expenditure includes £3.5 million for the acquisition of land & minerals, £1.2 million for the new Jersey ready-mix plant and the balance consisting of new plant & machinery and improvements to existing infrastructure across the Group.

 

PPA

BDO UK undertook the Purchase Price Allocation ('PPA') exercise required under IFRS 3 to allocate a fair value to the acquired assets of Topcrete and Poundfield.

 

The PPA process resulted in a reduction of goodwill recorded on the Statement of Financial Position of the Group for Topcrete from £7 million to £6.1 million and for Poundfield from £6.9 million to £6.5 million. The reduction was to shift the value of goodwill to intangible assets for trade name, patented processes, order backlog, workforce and customer relations.

 

Non-underlying items

The Company's loss after taxation for 2018 amounts to £0.9 million, of which £0.06 million relates to non-underlying items, while the Group's non-underlying items totaled £1.6 million for the year. These items relate to four categories.

 

First, the Group incurred £0.6 million in consulting and legal fees relating to prospective acquisitions.

 

Second, the Group incurred £0.4 million in legal and restructuring expenses relating to the rebranding and alignment of all subsidiaries across the Group.

 

Thirdly, the Group incurred £0.3 million in amortisation of acquired intangible assets.

 

Finally, the Group incurred £0.3 million in exceptional costs which relate to shareholder and investor matters and other start up business costs in Foelfach Stone Limited.

 

Interest and tax

Net finance costs in the year totaled £1 million (2017: £0.7 million) and included interest on the Group's convertible loan notes, bank finance facilities, as well as interest on finance leases and hire purchase agreements.

 

A tax charge of £0.3 million (2017: £0.5 million) was recognised in the year, resulting in a tax charge on profitability generated from mineral extraction in the Channel Islands and profits generated through the Group's UK based operations.


Earnings per share

Basic earnings per share ('EPS') for the year was 2.65 pence (2017: 0.34 pence), adjusted for the non-underlying items mentioned above. Underlying basic EPS for the year totaled 3.83 pence (2017: 2.02 pence).

 

Statement of financial position

Net assets at 31 December 2018 were £54 million (2017: £50.5 million). Net assets are underpinned by mineral resources, land & buildings and plant & machinery assets of the Group.

 

Cash flow

Cash generated by operations was £5.5 million (2017: consumed £0.4 million). The Group spent £3.0 million on deferred cash consideration for acquisitions made in 2017 and £6.7 million on capital projects including £3.5 million for the purchase of land & minerals. The Group drew down £1 million from its revolving credit facility with Santander plc ('Santander'). The net result was a cash outflow for the year of £3.2 million. Net debt at 31 December 2018 was £16.0 million (2017: £11.8 million).

 

Bank facilities

In 2017 the Group secured debt facilities with Santander consisting of a £2 million revolving credit facility (the 'Santander RCF'), an £18 million term facility (the 'Santander Term Facility') and a further "accordion" facility of £10 million. In December 2018 the Group received credit approval from Santander to increase the Santander RCF to £4 million and the Santander Term Facility to £30 million, bringing the total debt facilities available with Santander to £34 million. The Group's bank loans 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 2018, total undrawn facilities available to the Group amounted to £10 million based on the original facilities, with this increasing to £11.7 million in January 2019 following acquisition of CCP and redemption of the CLN's.

 

The Group's bank 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 3.25 in 2018. At 31 December 2018 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 2017: 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 event occurs, it is possible that the overall effect of such events would compound the possible adverse effects on the Group.

 

Reserve and resource estimates

The Group's reporting reserves and resources are estimates, and so there is potential uncertainty over the amount of reserves 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 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 which 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 2018 are shown below and had, at that time, the following beneficial interests in the shares of the Company:

 

 

 

31 December 2018

31 December 2017

 

Ordinary Shares

Options

Ordinary Shares

Options

Max Vermorken

210,032

4,368,188

183,032

4,368,188

David Barrett

760,032

1,879,513

760,032

1,879,513

Dominic Traynor

-

26,014

-

26,014

Garth Palmer

114,594

26,014

10,000

26,014

Patrick Dolberg

75,000

304,580

75,000

304,580

Gary Drinkwater1

-

-

-

-

 

(1) Resigned on 7 November 2018

 

Further details on options can be found in Note 26 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.

 

Further details of corporate governance can be found in the Corporate Governance Report on page 20.

 

Going concern

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 35 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 2018, the Company had an average of 26 days (2017: 31 days) purchases outstanding in trade payables and the Group had an average of 43 days (2017: 39 days).

 

Future developments

Details of future developments for the Group are disclosed in the Chairman's Statement on page 5 and the CEO's Strategic Report on page 9.

 

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 15 May 2019 and signed on its behalf

Garth Palmer

CFO

 

 

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2018

 

 

 

Year ended 31 December 2018

Year ended 31 December 2017

 

 

Underlying

Non-underlying* (Note 11)

Total

Underlying

Non-underlying* (Note 11)

Total

Continued operations

Note

£

£

£

£

£

£

 

 

 

 

 

 

 

 

Revenue

7

41,241,673

-

41,241,673

27,073,686

-

27,073,686

 

 

 

 

 

 

 

 

Cost of sales

8

(29,805,080)

-

(29,805,080)

(21,120,246)

-

(21,120,246)

 

 

 

 

 

 

 

 

Profit from operations

 

11,436,593

-

11,436,593

5,953,440

-

5,953,440

 

 

 

 

 

 

 

 

Administrative expenses

8

(4,899,620)

(1,622,778)

(6,522,398)

(2,593,628)

(1,676,126)

(4,269,754)

Net finance (expense)/income

12

(1,047,670)

-

(1,047,670)

(704,816)

(56,564)

(761,380)

Other net (losses)/gains

13

48,308

-

48,308

(70,088)

-

(70,088)

Foreign Exchange

 

(16,934)

-

(16,934)

(2,724)

-

(2,724)

 

 

 

 

 

 

 

 

Profit before tax

 

5,520,677

(1,622,778)

3,897,899

2,582,184

(1,732,690)

849,494

 

 

 

 

 

 

 

 

Tax expense

14

(278,755)

-

(278,755)

(494,036)

-

(494,036)

 

 

 

 

 

 

 

 

Profit/(loss)

 

5,241,922

(1,622,778)

3,619,144

2,088,148

(1,732,690)

355,458

 

 

 

 

 

 

 

 

Profit/(loss) attributable to:

 

 

 

 

 

 

 

Owners of the parent

 

5,241,922

(1,622,778)

3,619,144

2,088,148

(1,732,690)

355,458

 

 

5,241,922

(1,622,778)

3,619,144

2,088,148

(1,732,690)

355,458

Basic earnings per share attributable to owners of the parent (expressed in pence per share)

28

3.83

(1.18)

2.65

2.02

(1.68)

0.34

Diluted earnings per share attributable to owners of the parent (expressed in pence per share)

28

3.49

(1.08)

2.41

1.79

(1.48)

0.30

                 

 

 

* Non-underlying items represent acquisition related expenses, certain finance costs, share option expense and warranty & indemnity insurance. See Note 11 for more information.

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2018

 

 

 

Year ended 31 December 2018

Year ended 31 December 2017

 

Note

£

£

 

 

 

 

Profit/(Loss) for the year

 

3,619,144

355,458

Other comprehensive income:

 

 

 

Items that will or may be reclassified to profit or loss:

 

 

 

Other comprehensive income

 

-

-

 

 

-

-

 

 

 

 

Total comprehensive income

 

3,619,144

355,458

 

 

 

 

Total comprehensive income attributable to:

 

 

 

Owners of the parent

 

3,619,144

355,458

Total comprehensive income for the period

 

3,619,144

355,458

 

 

STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2018

 

 

 

 

 

Consolidated

 

Company

 

 

31 December 2018

31 December 2017

 

31 December 2018

31 December 2017

 

Note

£

£

 

£

£

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

15

49,972,011

46,556,298

 

4,339

3,855

Intangible assets

16

18,974,771

18,955,402

 

-

-

Investments in subsidiary undertakings

17

-

-

 

55,481,505

57,267,057

 

 

68,946,782

65,511,700

 

55,485,844

57,270,912

Current assets

 

 

 

 

 

 

Trade and other receivables

18

6,467,207

4,667,803

 

917,263

74,211

Inventories

19

4,844,483

4,441,663

 

-

-

Cash and cash equivalents

20

3,771,735

7,001,058

 

115,756

211,823

 

 

15,083,425

16,110,524

 

1,033,019

286,034

Total assets

 

84,030,207

81,622,224

 

56,518,863

57,556,946

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

21

8,054,274

10,045,397

 

595,087

684,167

Current tax payable

 

471,531

621,714

 

-

-

Borrowings

22

74,581

92,411

 

-

-

 

 

8,600,386

10,759,522

 

595,087

684,167

Non-current liabilities

 

 

 

 

 

 

Borrowings

22

19,694,405

18,679,901

 

10,000,000

10,000,000

Deferred tax liabilities

 

974,294

1,015,823

 

-

-

Provisions

23

632,011

632,011

 

-

-

 

 

21,300,710

20,327,735

 

10,000,000

10,000,000

Total liabilities

 

29,901,096

31,087,257

 

10,595,087

10,684,167

Net assets

 

54,129,111

50,534,967

 

45,923,776

46,872,779

 

 

 

 

 

 

 

Equity attributable to owners of the parent

 

 

 

 

 

 

Share capital

25

1,367,056

1,367,056

 

1,367,056

1,367,056

Share premium

25

50,136,904

50,161,904

 

50,136,904

50,161,904

Share option reserve

26

352,877

352,877

 

352,877

352,877

Other reserves

27

1,361,718

1,361,718

 

1,361,718

1,361,718

Retained earnings

 

910,556

(2,708,588)

 

(7,294,779)

(6,370,776)

Total equity

 

54,129,111

50,534,967

 

45,923,776

46,872,779

 

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 2018 was £924,003 (year ended 31 December 2017: £3,306,730).

 

The Financial Statements were approved and authorised for issue by the Board of Directors on 15 May 2019 and were signed on its behalf by Garth Palmer, Director.

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2018

 

 

 

Share

capital

Share premium

Share option reserve

Other reserves

Retained earnings

Total

 

Note

£

£

£

£

£

£

Balance as at 1 January 2017

 

270,555

266,667

-

1,117,178

(3,084,424)

(1,430,024)

Profit for the year

 

-

-

-

-

355,458

355,458

Total comprehensive income for the period

 

-

-

-

-

355,458

355,458

Contributions by and distributions to owners

 

 

 

 

 

 

 

Issue of ordinary shares

25

1,341,041

52,624,974

-

-

-

53,966,015

Issue costs

25

-

(2,729,737)

-

-

-

(2,729,737)

Share option charge

 

-

-

352,877

-

20,378

373,255

Share consolidation

25

(244,540)

-

-

244,540

-

-

Total contributions by and distributions to owners

 

1,096,501

49,895,237

352,877

244,540

20,378

51,609,533

Balance as at 31 December 2017

 

1,367,056

50,161,904

352,877

1,361,718

(2,708,588)

50,534,967

 

 

 

 

 

 

 

 

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

25

-

(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

 

 

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2018

 

 

 

Share

capital

Share premium

Share option reserve

Other reserves

Retained earnings

Total

 

Note

£

£

£

£

£

£

Balance as at 1 January 2017

 

270,555

266,667

-

1,117,178

(3,084,424)

(1,430,024)

Profit/(Loss)

 

-

-

-

-

(3,306,730)

(3,306,730)

Total comprehensive income for the period

 

-

-

-

-

(3,306,730)

(3,306,730)

Contributions by and distributions to owners

 

 

 

 

 

 

 

Issue of ordinary shares

25

1,341,041

52,624,974

-

-

-

53,966,015

Issue costs

25

-

(2,729,737)

-

-

-

(2,729,737)

Share option charge

 

-

-

352,877

-

20,378

373,255

Share consolidation

25

(244,540)

-

-

244,540

-

-

Total contributions by and distributions to owners

 

1,096,501

49,895,237

352,877

244,540

20,378

51,609,533

Balance as at 31 December 2017

 

1,367,056

50,161,904

352,877

1,361,718

(6,370,776)

46,872,779

 

 

 

 

 

 

 

 

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

25

-

(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

 

 

CASH FLOW STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2018

 

 

 

 

Consolidated

 

Company

 

 

Year ended 31 December 2018

Year ended 31 December 2017

 

Year ended 31 December 2018

Year ended 31 December 2017

 

Note

£

£

 

£

£

Cash flows from operating activities

 

 

 

 

 

 

Profit/(Loss)

 

355,458

 

(924,003)

(3,306,730)

Adjustments for:

 

 

 

 

 

 

Depreciation and amortisation

15 16

3,560,332

2,217,375

 

5,753

2,433

Share option expense

 

-

352,877

 

-

352,877

Share based payments

 

-

5,979

 

-

5,979

(Increase)/decrease in trade and other receivables

 

(820,091)

325,535

 

(843,053)

80,173

Increase in inventories

 

(1,385,856)

(290,440)

 

-

-

(Decrease)/increase in trade and other payables

 

512,201

(3,328,733)

 

(1,018,240)

(1,071,791)

Net cash flows from operating activities

 

5,485,730

(361,949)

 

(2,779,543)

(3,937,059)

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Purchase of property, plant and equipment 

15

(6,670,447)

(1,793,164)

 

(6,237)

(1,773)

Purchase of intangible assets

 

(7,180)

-

 

-

-

Acquisition of businesses

 

(3,000,000)

(60,821,496)

 

-

(1)

Net loans with subsidiaries

 

-

-

 

2,714,713

(57,267,056)

Net cash used in investing activities

 

(9,677,627)

(62,614,660)

 

2,708,476

(57,268,830)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Proceeds from share issue

 

-

53,966,015

 

 

53,966,015

Cost of share issue

 

(25,000)

(2,729,737)

 

(25,000)

(2,729,737)

Proceeds from debt issue

 

-

10,000,000

 

-

10,000,000

Proceeds from borrowings

 

1,000,000

9,000,000

 

-

-

Cost of borrowings

 

-

(427,640)

 

-

-

Repayment of finance lease obligations

 

(12,426)

(12,405)

 

-

-

Net cash used in financing activities

 

962,574

69,796,233

 

(25,000)

61,236,278

 

 

 

 

 

 

 

Net increase in cash and cash equivalents

 

(3,229,323)

6,819,624

 

(96,067)

30,389

Cash and cash equivalents at beginning of period

 

7,001,058

181,434

 

211,823

181,434

Cash and cash equivalents and end of period

20

3,771,735

7,001,058

 

115,756

211,823

 

 

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 2018, the Company adopted IFRS 9, Financial Instruments ('IFRS 9'), which replaced IAS 39, Financial Instruments: Recognition and Measurement. IFRS 9 addresses the classification, measurement and recognition of financial assets and liabilities. IFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income ('VOCI'), and fair value through the profit and loss statement ('FVTPL'). The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the entity's business model and of the financial asset.

 

Investments in equity instruments are required to be measured at FVTPL with the irrevocable option at inception to present changes in fair value in other comprehensive income.

 

There is now a new expected credit losses model that replaces the incurred loss impairment model previously used in IAS 39. The Company has no other financial assets (except those at amortised cost) and as a result there is no impact of the new impairment requirements to the Financial Information.

 

From 1 January 2018, the Company classifies its financial assets in the following measurement categories:

·     Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss), and

·     Those to be measured at amortised cost.

The Company only holds assets measured at fair value, where gains and losses will be recorded in profit or loss. At initial recognition, the Company measures a financial asset at its fair value plus, in the case of a financial asset not at FVTPL, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets are expensed and carried at FVTPL.

 

Financial Liabilities

 

The Company reviewed the financial liabilities reported on its Statement of Financial Position and completed an assessment between IAS 39 and IFRS 9 to identify any accounting changes. The financial liabilities subject to this review were the trade and other payables and borrowings. Based on this assessment of the classification and measurement model, impairment, and interest expense, the accounting impact on financial liabilities was determined not to be material.

 

For financial liabilities there were no changes to classification and measurement. The Company does not have any such assets and there is no change in the accounting treatment for the Company's financial liabilities.

 

The Company has applied IFRS 9 but there have been no adjustments required following adoption as detailed above.

 

As of 1 January 2018, the Company adopted IFRS 15, Revenue from Contracts with Customers ('IFRS 15') which supersedes IAS 11 Construction Contracts, IAS 18 Revenue, IFRIC 13 Customer Loyalty Programmes, IFRIC 15 Agreements for the Construction of Real Estate, IFRIC 18 Transfers of Assets from Customers, and SIC-31 Revenue-Barter Transactions Involving Advertising Services.

 

During 2017, the Group completed an impact assessment of IFRS 15 and concluded that the adoption of IFRS 15 does not have a material impact on its consolidated results. Management reviewed contracts where the Group received consideration in order to determine whether or not they should be accounted for in accordance with IFRS 15. The contracts are accounted for in accordance with IFRS 15, and revenue is recognised at either a point-in-time or over time, depending on the nature of the services and existence of acceptance clauses

 

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 16

Leases

*1 January 2019

Annual Improvements

2015-2017 Cycle

1 January 2019

IFRIC 23

Uncertainty over Income tax treatments     

*1 January 2019

IFRS 9 (Amendments)

Prepayment features with negative

compensation

*1 January 2019

IAS 19 (Amendments)

Plan amendment, curtailment or settlements

1 January 2019

IAS 28 (Amendments)

Long term interests in associates and joint ventures

*1 January 2019

 

* Subject to EU endorsement

 

The Group is evaluating the impact of the new and amended standards above.

 

The operating leases currently held will be subject to IFRS 16 changes as all lease (subject to certain criteria) will be deemed finance leases. The impact of this will be monitored by management. All other standards 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.

 

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.

 

2.3. Going Concern

 

The Financial Statements have been prepared on a going concern basis. The Directors have a reasonable expectation that the Group and Company have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the Financial Statements.

 

2.4. Segment Reporting

 

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors that makes strategic decisions.

 

2.5. Foreign Currencies

 

a)    Functional and Presentation Currency

 

Items included in the Financial Statements are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The Financial Statements are presented in Pounds Sterling, rounded to the nearest pound, which is the Group's functional currency.

 

b)    Transactions and Balances

 

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement.  Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Income Statement within 'finance income or costs'. All other foreign exchange gains and losses are presented in the Income Statement within 'Other net gains/(losses)'.

 

Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets measured at fair value, such as equities classified as available for sale, are included in other comprehensive income.

 

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 acquiree over the fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree.  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 Topcrete Limited ('Topcrete') and Poundfield Products (Group) Limited ('Poundfield') as at the completion date. As a result of this exercise, goodwill in Topcrete decreased from £7.0 million to £6.1 million with the corresponding movement being intangible assets and goodwill in Poundfield decreasing from £7.0 million to £6.8 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 capitalised development costs for assets produced that assist in the operations of the Group and incur revenue. These are amortised at 10% reducing balance. 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 (except the Poundfield group which uses the declining balance method) at the following annual rates:

 

Office equipment

12.5% - 50%

 

 

Land and Buildings

0 - 2%

Plant and machinery

5% - 20%

Furniture and vehicles

7.5% - 33.3%

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.

 

(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 other 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.

 

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.

 

Compound Financial Instruments

 

Compound financial instruments issued by the Group for cash comprise convertible notes that can be converted to share capital at the option of the holder and include a host liability together with a derivative.

 

The derivative portion is initially recorded at fair value and the liability component is recognised initially at the difference between the fair value of the compound financial instrument as a whole and the fair value of the derivative component.

 

Subsequent to their initial recognition, the liability component of a compound financial instrument is measured at amortised cost using the effective interest method. The derivative component of a compound financial instrument is held at fair value where material, determined using a Black Scholes model.

 

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 disclosed 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.    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.  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.

 

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. 

 

Leases of assets under which a significant amount of the risks and benefits of ownership are effectively retained by the lessor are classified as operating leases. Operating lease payments are charged to the Income Statement on a straight-line basis over the period of the respective leases.

 

 

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 does not hedge against market risks as the exposure is not deemed sufficient to enter into forward contracts. 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 2018

 

 

Less than 1 year

Between 1 and 2 years

Between 2 and 5 years

Over 5 years

 

£

£

£

£

Borrowings

74,581

32,016

19,662,389

-

Trade and other payables

8,054,274

-

-

-

 

8,128,855

32,016

19,662,389

-

 

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 2018 is as follows:

 

 

Consolidated

 

31 December 2018

31 December 2017

 

£

£

Total borrowings (Note 22)

19,768,986

18,772,312

Less: Cash and cash equivalents (Note 22)

(3,771,735)

(7,001,058)

Net debt

15,997,251

11,771,254

Total equity

54,129,111

50,534,697

Total capital

70,126,362

62,305,951

Gearing ratio

0.23

0.19

 

 

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 PPA included the revaluation of land and minerals based on the estimated remaining reserves within St John's and Les Vardes 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 £16,826,369 as at 31 December 2018 (31 December 2017: £17,827,833). 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 2018 (31 December 2017: £nil). 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 2018 of £632,011 and relate to the removal of the plant and equipment held at St John's and Les Vardes quarry. 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 firstly inflated using the current rate of inflation as per the Bank of England. The future restoration provision is discounted to its present value based on the Group's incremental cost of borrowing.

 

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 26 to the Financial Statements.

 

 

5.    Dividends

 

No dividend has been declared or paid by the Group during the year ended 31 December 2018 (2017: 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, Guernsey and Jersey. Activities in the United Kingdom, Guernsey and Jersey relate to the production and sale of construction material products and services.

 

 

31 December 2018

 

 

United Kingdom

Jersey

Guernsey

Total

 

£

£

£

£

Revenue

14,202,557

14,956,086

12,083,030

41,241,673

Profit/(loss) from operations per reportable segment

4,147,759

3,248,036

4,040,798

11,436,593

Additions to non-current assets

3,866,559

576,423

(1,007,900)

3,435,082

Reportable segment assets

33,647,239

29,776,732

20,606,236

84,030,207

Reportable segment liabilities

25,525,191

2,771,820

1,604,085

29,901,096

           

 

 

 

31 December 2017

 

United Kingdom

Jersey

Guernsey

Total

 

£

£

£

£

Revenue

1,074,378

15,707,082

10,292,226

27,073,686

Profit/(loss) from operations per reportable segment

167,344

3,172,563

2,613,533

5,953,440

Additions to non-current assets

21,424,128

16,516,826

27,566,231

65,507,185

Reportable segment assets

31,193,850

24,354,752

26,073,622

81,622,224

Reportable segment liabilities

27,671,645

2,004,249

1,411,363

31,087,257

 

 

7.    Revenue

 

 

Consolidated

 

31 December 2018

31 December 2017

 

£

£

Upstream products

4,334,071

5,223,228

Value added products

27,501,692

14,524,305

Value added services

9,119,421

7,219,518

Other

286,489

106,635

 

41,241,673

27,073,686

       

 

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 2018

31 December 2017

 

£

£

Cost of sales

 

 

Changes in inventories of finished goods and work in progress

(2,214,864)

(96,628)

Production cost of goods sold

7,218,469

8,493,169

Distribution and selling expenses

2,751,855

1,426,286

Raw materials and consumables used

8,813,263

759,492

Employee benefit expenses

8,885,946

8,136,776

Depreciation and amortisation expense

3,560,332

2,217,375

Other costs of sale

790,079

183,776

Total cost of sales

29,805,080

21,120,246

Administrative expenses

 

 

Operational admin expenses

4,934,878

1,426,500

Corporate admin expenses

1,587,520

2,843,254

Total administrative expenses

6,522,398

4,269,754

 

During the year the Group (including its overseas subsidiaries) obtained the following services from the Company's auditors and its associates:

 

 

Consolidated

 

31 December 2018

31 December 2017

 

£

£

Fees payable to the Company's auditor and its associates for the audit of the Company and Consolidated Financial Statements

102,000

55,000

Fees payable to the Company's auditor and its associates for tax services

19,335

26,570

Fees paid or payable to the Company's auditor and its associates for due diligence and transactional services

94,931

108,077

Fees paid to the Company's auditor for other services

30,725

9,470

 

246,991

199,117

 

 

9.    Employee Benefits Expense

 

 

Consolidated

 

Company

 

31 December 2018

31 December 2017

 

31 December 2018

31 December 2017

Staff costs (excluding directors)

£

£

 

£

£

Salaries and wages

10,699,931

7,587,057

 

148,112

106,250

Post-employment benefits

99,529

-

 

-

-

Social security contributions and similar taxes

1,133,171

515,595

 

64,538

13,444

Other employment costs

137,285

366,704

 

19,483

10,000

 

12,069,916

8,469,356

 

232,133

129,694

 

 

Consolidated

 

Company

 

31 December 2018

31 December 2017

 

31 December 2018

31 December 2017

Average number of FTE employees by function

#

#

 

#

#

Management

27

14

 

2

1

Operations

192

130

 

-

-

Administration

37

18

 

1

-

 

256

162

 

3

1

 

 

10.  Directors' Remuneration

 

 

31 December 2018

 

Directors' fees

Taxable benefits

Pension benefits

Options issued

Total

 

£

£

£

£

£

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 (1)

20,833

-

-

-

20,833

Patrick Dolberg

25,000

-

-

-

25,000

 

570,833

27,600

33,500

-

631,933

 

 

31 December 2017

 

Directors' fees

Taxable benefits

Pension benefits

Options issued

Total

 

£

£

£

£

£

Executive Directors

 

 

 

 

 

David Barrett

120,000

-

-

45,417

165,417

Garth Palmer

40,000

-

4,000

5,094

49,094

Max Vermorken

150,000

-

15,429

102,577

268,006

Non-executive Directors

 

 

 

 

 

Dominic Traynor

25,000

-

2,929

5,094

33,023

Gary Drinkwater (1)

25,000

-

-

-

25,000

Patrick Dolberg

24,723

-

-

5,871

30,594

 

384,723

-

22,358

164,053

571,134

 

 

 

 

 

 

(1)   Resigned on 7 November 2018.

 

Details of fees paid to companies and partnerships of which the Directors are related have been disclosed in Note 33.

 

 

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 2018

31 December 2017

 

£

£

Acquisition related expenses

552,981

615,852

Amortisation of acquired intangibles

305,598

-

Restructuring expenses

443,916

303,629

Equity fundraising & investor relations

234,911

-

Share option expense

-

373,255

Warranty & indemnity insurance for Ronez acquisition

-

439,954

Other non-underlying expenses & gains/net

85,372

-

 

1,622,778

1,732,690

       

 

Acquisition related expenses include costs relating to the due diligence of prospective pipeline acquisitions, stamp duty on completed acquisitions and other costs associated with merger & acquisition activity. Restructuring expenses include advisory fees, redundancy costs and rebranding expenses. 

 

Included in the acquisition related expenses is the £45,000 of consulting fees paid to Non-Executive Director Patrick Dolberg (further detail in note 33) due to his involvement in sourcing and acquiring prospective companies.

 

 

12.  Net Finance (Expense)/Income

 

 

Consolidated

 

31 December 2018

31 December 2017

 

£

£

Convertible loan note interest expense

(599,094)

(596,645)

Other interest (expense)/income

(358,437)

(48,855)

Other finance (expense)/income

(90,139)

(115,880)

 

(1,047,670)

(761,380)

         

 

 

13.  Other Net Gains/(Losses)

 

 

Consolidated

 

31 December 2018

31 December 2017

 

£

£

Gain/(losses) on disposal of property, plant and equipment

10,556

17,000

Other gain/(loss)

37,752

(87,088)

 

48,308

(70,088)

 

 

14.  Taxation

 

 

Consolidated

 

31 December 2018

31 December 2017

Tax recognised in profit or loss

£

£

Current tax

(471,532)

(531,992)

Deferred tax

192,777

37,956

Total tax charge in the Income Statement

(278,755)

(494,036)

 

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 2018

31 December 2017

 

£

£

Profit/(loss) before tax subject to charge

3,109,695

1,818,736

Non-taxable profit/(loss)

788,204

(969,242)

Net profit/(loss) before taxation

3,897,899

849,494

Apply Group Relief on taxable profit

(2,625,830)

-

Tax at the applicable rate of 19.9%

96,289

361,928

Effects of:

 

 

Expenditure not deductible for tax purposes

-

-

Timing differences

(213,723)

(4,684)

Differences on tax rates attributable to other jurisdictions

(29,991)

2,494

Depreciation in excess of/(less than) capital allowances

426,180

134,298

Net tax effect of losses carried forward

-

-

Tax charge

278,755

(494,036)

 

The weighted average applicable tax rate of 19.9% (2017: 19.9%) used is a combination of the standard rate of corporation tax rate for entities in the United Kingdom of 19% (2017: 19%), and 20% (2017: 20%) in Jersey and Guernsey.

 

 

15.  Property, Plant and Equipment

 

 

Consolidated

 

Office Equipment

Land and minerals

Land and buildings

Plant and machinery

Furniture and vehicles

Construction in progress

Total

 

 

£

£

£

£

£

£

£

 

Cost

 

 

 

 

 

 

 

 

As at 1 January 2017

4,590

-

-

-

-

-

4,590

 

Acquired through acquisition of subsidiaries

350,382

23,833,225

17,212,767

13,431,383

6,975,803

500,447

62,304,007

 

Fair value adjustment

-

11,931,469

2,946,977

3,626,764

-

-

18,505,210

 

Additions

1,773

95,875

161,780

604,919

928,817

-

1,793,164

 

Disposals

-

-

(10,681)

(83,308)

-

(61,812)

(155,801)

 

As at 31 December 2017

356,745

35,860,569

20,310,843

17,579,758

7,904,620

438,635

82,451,170

 

As at 1 January 2018

356,745

35,860,569

20,310,843

17,579,758

7,904,620

438,635

82,451,170

 

Revaluations

-

(114,034)

13,868

(22,234)

(747,027)

-

(869,427)

 

Additions

26,696

2,109,015

2,054,095

483,269

509,831

1,487,541

6,670,447

 

Disposals

-

-

-

(35,060)

(165,905)

-

(200,965)

 

As at 31 December 2018

383,441

37,855,550

22,378,806

18,005,733

7,501,519

1,926,176

88,051,225

 

Depreciation

 

 

 

 

 

 

 

 

As at 1 January 2017

75

-

-

-

-

-

75

 

Acquired through acquisition of subsidiaries

299,793

5,638,767

11,744,578

9,525,977

6,547,490

-

33,756,605

 

Charge for the year

3,057

458,605

802,534

720,924

229,595

-

2,214,715

 

Disposals

-

-

(10,681)

(65,842)

-

-

(76,523)

 

As at 31 December 2017

302,925

6,097,372

12,536,431

10,181,059

6,777,085

-

35,894,872

 

As at 1 January 2018

302,925

6,097,372

12,536,431

10,181,059

6,777,085

-

35,894,872

 

Revaluations

-

(95,824)

8,875

(35,451)

(747,027)

-

(869,427)

 

Charge for the year

18,399

949,295

860,187

1,081,800

345,053

-

3,254,734

 

Disposals

-

-

-

(35,060)

(165,905)

-

(200,965)

 

As at 31 December 2018

321,324

6,950,843

13,405,493

11,192,348

6,209,206

-

38,079,214

 

Net book value

 

 

 

 

 

 

 

 

As at 31 December 2017

53,820

29,763,197

7,774,412

7,398,699

1,127,535

438,635

46,556,298

 

As at 31 December 2018

62,117

30,904,707

8,973,313

6,813,385

1,292,313

1,926,176

49,972,011

 

 

 

Company

 

Office Equipment

Total

 

£

£

Cost

 

 

As at 1 January 2017

4,590

4,590

Additions

1,773

1,773

Disposals

-

-

As at 31 December 2017

6,363

6,363

As at 1 January 2018

6,363

6,363

Additions

6,237

6,237

Disposals

-

-

As at 31 December 2018

12,600

12,600

Depreciation

 

 

As at 1 January 2017

75

75

Charge for the year

2,433

2,433

Disposals

-

-

As at 31 December 2017

2,508

2,508

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

Net book value

 

 

As at 31 December 2017

3,855

3,855

As at 31 December 2018

4,339

4,339

 

 

16.  Intangible Assets

 

 

 

 

Consolidated

 

Goodwill

Customer Relations

Intellectual property

Branding

Order Backlog

Total

 

£

£

£

£

£

£

Cost & net book value

 

 

 

 

 

 

As at 1 January 2017

-

-

-

-

-

-

Arising on acquisition of Ronez

3,875,516

-

-

486,000

-

4,361,516

Arising on acquisition of Topcrete

7,062,625

-

-

-

-

7,062,625

Arising on acquisition of Poundfield

6,889,692

-

644,229

-

-

7,533,921

Amortisation

-

-

(2,660)

-

-

(2,660)

As at 31 December 2017

17,827,833

-

641,569

486,000

-

18,955,402

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

 

An adjustment has been made to reflect the initial accounting for the acquisitions of Topcrete Limited ('Topcrete') and Poundfield Products (Group) Limited ('Poundfield') by the Company, being the elimination of the investment in Topcrete and Poundfield against the non-monetary assets acquired and recognition of goodwill. In 2018 The Company determined the fair value of the net assets acquired pursuant to the acquisition of Topcrete and Poundfield, via a Purchase Price Allocation ('PPA') exercise.  The PPA's determined a decrease of £926,000 of goodwill in Topcrete with the corresponding movement to be recognised as Customer Relations and Branding and a decrease of £393,252 of goodwill in Poundfield with the corresponding movement to be recognised as Customer Relations, Order Backlog and increasing the value of Intellectual Property.

 

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 three operating segments are considered to be Ronez in the Channel Islands, Topcrete in the UK and Poundfield in the UK.

 

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 2019 and the three-year plan to 2020 and 2021. 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 zero per cent and therefore provides plenty of headroom.

 

Discount rate

Forecast cash flows for each operating segment have been discounted at rates of between 13 and 14 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 1.0 per cent point increase in the discount rate would not cause an impairment and the annual growth rate is already assumed to be zero.

 

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 a disorderly exit. This additional analysis indicated the existence of continued headroom for all segments.

 

 

17.  Investment in Subsidiary Undertakings

 

 

Company

 

31 December 2018

31 December 2017

 

£

£

Shares in subsidiary undertakings

 

 

At beginning of the year

1

-

Additions

8,094,299

1

Disposals

-

-

At period end

8,094,300

1

Loan to Group undertakings

47,387,205

57,267,056

Total

55,481,505

57,267,057

 

Investments in Group undertakings are stated at cost less impairment. During the year ownership of the shares in certain subsidiaries were transferred from SigmaFin Limited to the Company.

 

Details of subsidiaries at 31 December 2018 are as follows:

 

Name of subsidiary

Country of incorporation

Share capital held by Company

Share capital held by Group

Principal activities

SigmaFin Limited

England

£1

 

Holding company

Foelfach Stone Limited

England

 

£1

SigmaGsy Limited

Guernsey

 

£1

Ronez Limited

Jersey

 

£2,500,000

Pallot Tarmac (2002) Limited

Jersey

 

£2

Island Aggregates Limited

Guernsey

 

£6,500

Topcrete Limited

England

 

£926,828

A. Larkin (Concrete) Limited

England

 

£37,660

Allen (Concrete) Limited

England

 

£100

Poundfield Products (Group) Limited

England

 

£22,167

Poundfield Products (Holdings) Limited

England

 

£651

Poundfield Innovations Limited

England

 

£6,357

Poundfield Products Limited

England

 

£63,568

Alfabloc Limited

England

 

£1

 

 

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

SigmaGsy Limited

Les Vardes Quarry, Route de Port Grat, St Sampson, Guernsey, GY2 4TF

Ronez Limited

Ronez Quarry, La Route Du Nord, St John, Jersey, JE3 4AR

Pallot Tarmac (2002) Limited

Ronez Quarry, La Route Du Nord, St John, Jersey, JE3 4AR

Island Aggregates Limited

Les Vardes Quarry, Route de Port Grat, 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) Limited

The Grove, Creeting St. Peter, Ipswich, England, IP6 8QG

Poundfield Products (Holdings) Limited

The Grove, Creeting St. Peter, Ipswich, England, IP6 8QG

Poundfield Innovations Limited

The Grove, Creeting St. Peter, Ipswich, England, IP6 8QG

Poundfield Products Limited

The Grove, Creeting St. Peter, Ipswich, England, IP6 8QG

Alfabloc Limited

The Grove, Creeting St. Peter, Ipswich, England, IP6 8QG

For the year ended 31 December 2018 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

 

Impairment review

 

The performance of all companies for the year to 31 December 2018 are in line with expectations for the year against forecast since the year end is in line with expectations. As such there have been no indications of impairment.

 

 

18.  Trade and Other Receivables

 

 

Consolidated

 

Company

 

 

31 December 2018

31 December 2017

 

31 December 2018

31 December 2017

 

£

£

 

£

£

Trade receivables

4,906,459

3,934,952

 

116,509

35,416

Prepayments

495,396

438,981

 

43,586

38,795

Other receivables

1,065,352

293,870

 

757,168

-

 

6,467,207

4,667,803

 

917,263

74,211

                 

 

The carrying value of trade and other receivables classified as loans and receivables approximates fair value. All trade and other receivables and denominated in British Pounds (£).

 

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.

 

 

19.  Inventories

 

 

Consolidated

 

31 December 2018

31 December 2017

Cost and net book value

£

£

Raw materials and consumables

1,338,935

1,255,641

Finished and semi-finished goods

2,157,737

2,320,870

Parts and supplies

1,186,238

656,342

Work in progress

161,573

208,810

 

4,844,483

4,441,663

 

The value of inventories recognised as a debit and included in cost of sales was £5,827,520 (31 December 2017: £4,441,663).

 

 

20.  Cash and Cash Equivalents

 

 

Consolidated

 

Company

 

31 December 2018

31 December 2017

 

31 December 2018

31 December 2017

 

£

£

 

£

£

Cash at bank and on hand

3,771,735

7,001,058

 

115,756

211,823

 

3,771,735

7,001,058

 

115,756

211,823

 

All of the Group's cash at bank is held with institutions with an AA credit rating.

 

 

21.  Trade and Other Payables

 

 

Consolidated

 

Company

 

 

31 December 2018

31 December 2017

 

31 December 2018

31 December 2017

 

£

£

 

£

£

Trade payables

3,939,708

2,847,984

 

204,370

345,095

Wages payable

907,939

696,447

 

-

-

Accruals

1,102,871

1,117,360

 

424,601

404,186

VAT payable

398,652

484,046

 

(46,956)

(102,653)

Deferred consideration payable for acquisitions

1,464,791

4,250,000

 

-

-

Other payables

240,312

649,560

 

13,072

37,539

 

8,054,274

10,045,397

 

595,087

684,167

             

 

All trade and other payables are denominated in UK Pounds.

 

 

22.  Borrowings

 

 

Consolidated

 

Company

 

31 December 2018

31 December 2017

 

31 December 2018

31 December 2017

 

 

£

£

 

£

£

 

Non-current liabilities

 

 

 

 

 

 

Santander term facility

9,662,389

8,572,360

 

-

-

 

Convertible loan notes

10,000,000

10,000,000

 

10,000,000

10,000,000

 

Finance lease liabilities

32,016

107,541

 

-

-

 

 

19,694,405

18,679,901

 

10,000,000

10,000,000

 

Current liabilities

 

 

 

 

 

 

Finance lease liabilities

74,581

92,411

 

-

-

 

 

74,581

92,411

 

-

-

 

               

 

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 are 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.  

 

The 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 2018 the Interest Margin was 2%.

 

The carrying amounts and fair value of the non-current borrowings are:

 

 

Carrying amount

 

Fair value

 

31 December 2018

31 December 2017

 

31 December 2018

31 December 2017

 

 

£

£

 

£

£

 

Santander term facility

9,662,389

8,572,360

 

-

-

 

Convertible loan notes

10,000,000

10,000,000

 

10,000,000

10,000,000

 

Finance lease liabilities

32,016

107,541

 

-

-

 

 

19,694,405

18,679,901

 

10,000,000

10,000,000

 

               

 

The fair values are based on cash flows discounted using the borrowing rate of 6% (2017: 6%), which represents the cost of capital 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 2018

31 December 2017

Finance lease liabilities - minimum lease payments

£

£

Not later than one year

74,581

92,411

Later than one year and no later than five years

32,016

107,541

Later than five years

-

-

 

106,597

199,952

Future finance charges on finance lease liabilities

13,011

25,236

Present value of finance lease liabilities

119,608

225,188

 

 

The present value of finance lease liabilities is as follows:

 

 

Consolidated

 

31 December 2018

31 December 2017

 

£

£

Not later than one year

79,056

98,150

Later than one year and no later than five years

30,204

103,494

Later than five years

-

-

Present value of finance lease liabilities

109,260

201,644

 

 

Reconciliation of liabilities arising from financing activities is as follows:

 

 

Consolidated

 

Long-term borrowings

Short-term borrowings

Lease liabilities

Liabilities arising from financing activities

 

£

£

£

£

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

 

 

23.  Provisions

 

 

Consolidated

 

31 December 2018

31 December 2017

 

£

£

As at 1 January

632,011

-

Accretion

-

632,011

 

632,011

632,011

 

The restoration provision for the St John's and Les Vardes sites is based on the removal costs of the plant and machinery at both sites. Cost estimates are increased at 3.1% (2017: 4.1%) for both sites annually to the anticipated future mine closure date. St John's quarry has an estimated expiry of 7 years, whereas Les Vardes is 5 years. The rate used is from the Retail Price Index as at September 2018 published by the Bank of England which is derived from the Office for National Statistics.

 

The future reclamation cost value is discounted by 12% (2017: 4.58%) which is the weighted average cost of capital within the Group.

 

 

24.  Financial Instruments by Category

 

 

 

Consolidated

31 December 2018

 

Loans & receivables

Total

Assets per Statement of Financial Performance

£

£

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

£

£

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

 

 

Consolidated

31 December 2017

 

Loans & receivables

Total

Assets per Statement of Financial Performance

£

£

Trade and other receivables (excluding prepayments)

4,228,822

4,228,822

Cash and cash equivalents

7,001,058

7,001,058

 

11,229,880

11,229,880

 

 

 

 

At amortised cost

Total

Liabilities per Statement of Financial Performance

£

£

Borrowings (excluding finance leases)

18,572,360

18,572,360

Finance lease liabilities

199,952

199,952

Trade and other payables (excluding non-financial liabilities)

10,667,111

10,667,111

 

29,439,423

29,439,423

 

 

 

 

Company

31 December 2018

 

Loans & receivables

Total

Assets per Statement of Financial Performance

£

£

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

£

£

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

 

 

 

 

Company

31 December 2017

 

Loans & receivables

Total

Assets per Statement of Financial Performance

£

£

Trade and other receivables (excluding prepayments)

35,416

35,416

Cash and cash equivalents

211,823

211,823

 

247,239

247,239

 

 

 

 

At amortised cost

Total

Liabilities per Statement of Financial Performance

£

£

Borrowings (excluding finance leases)

10,000,000

10,000,000

Finance lease liabilities

-

-

Trade and other payables (excluding non-financial liabilities)

684,167

684,167

 

10,684,167

10,684,167

         

 

 

25.  Share Capital and Share Premium

 

 

Number of shares

Ordinary shares

Share premium

Total

 

 

£

£

£

Issued and fully paid

 

 

 

 

As at 1 January 2017

270,555,743

270,555

266,667

537,222

Consolidation - 3 January 2017

(267,954,245)

(244,540)

-

(244,540)

Issue of new shares - 5 January 2017 (1)

100,000,000

1,000,000

36,862,713

37,862,713

Options Exercised - 3 May 2017

104,059

1,041

24,974

26,015

Issue of new shares - 14 December 2017 (2)

34,000,000

340,000

13,007,550

13,347,550

As at 31 December 2017

136,705,557

1,367,056

50,161,904

51,528,960

As at 1 January 2018

136,705,557

1,367,056

50,161,904

51,528,960

Cost of secondary placing (3)

-

-

(25,000)

(25,000)

As at 31 December 2018

136,705,557

1,367,056

50,136,904

51,503,960

 

(1)   Includes issue costs of £2,137,287

(2)   Includes issue costs of £592,450

(3)   Issue costs on secondary placing of £25,000

 

 

26.  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 2018

31 December 2017

Grant date

Expiry date

Exercise price in £ 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

 

 

 

13,573,443

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 A

2017 Options B

2017 Options C

2017 Options 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

 

£46,900

£15,083

£76,418

£234,854

 

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 2018 is shown below:

 

 

 

31 December 2018

 

31 December 2017

 

 

Weighted average exercise price

 

 

Weighted average exercise price

 

Number

£

 

Number

£

Outstanding at beginning of the year

13,573,443

0.40

 

-

-

Granted

-

-

 

13,677,502

0.40

Exercised

-

-

 

(104,059)

0.25

Outstanding as at year end

13,573,443

0.40

 

13,573,443

0.40

Exercisable at year end

13,573,443

0.40

 

13,573,443

0.40

 

 

27.  Other Reserves

 

 

 

Group

 

 

Deferred shares

Capital redemption reserve

Total

 

£

£

£

As at 1 January 2017

517,139

600,039

1,117,178

Capital re-organisation

244,540

-

244,540

As at 31 December 2017

761,679

600,039

1,361,718

As at 1 January 2018

761,679

600,039

1,361,718

As at 31 December 2018

761,679

600,039

1,361,718

 

 

Company

 

Deferred shares

Capital redemption reserve

Total

 

£

£

£

As at 1 January 2017

517,139

600,039

1,117,178

Capital re-organisation

244,540

-

244,540

As at 31 December 2017

761,679

600,039

1,361,718

As at 1 January 2018

761,679

600,039

1,361,718

As at 31 December 2018

761,679

600,039

1,361,718

 

 

28.  Earnings Per Share

 

The calculation of the total basic earnings per share of 2.65 pence (2017: 0.34 pence) is calculated by dividing the profit attributable to shareholders of £3,619,144 (2017: £355,458) by the weighted average number of ordinary shares of 136,705,557 (2017: 103,251,598) in issue during the period.

                                                                                                                          

Diluted earnings per share of 2.41 pence (2017: 0.30 pence) is calculated by dividing the profit attributable to shareholders of £3,619,144 (2017: £355,458) 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 150,383,059 (2017: 116,779,209).

 

Details of share options that could potentially dilute earnings per share in future periods are disclosed in Note 26.

 

 

29.  Fair Value Estimation

 

There are no financial instruments carried at fair value.

 

 

30.  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.       

 

 

31.  Operating lease commitments

 

The Group leases land for plant and road access under non-cancellable operating lease agreements. The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

 

 

Consolidated

 

31 December 2018

31 December 2017

 

£

£

Not later than one year

161,325

43,481

Later than one year but not later than five years

345,289

126,912

Later than five years

142,733

173,461

 

649,346

343,854

 

 

32.  Contingencies

 

The Group is not aware of any personal injury or damage claims open against the Group.

 

 

33.  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 2018

31 December 2017

 

£

£

Ronez Limited

(4,995,129)

(1,197,186)

SigmaGsy Limited

(1,995,066)

3,094,885

SigmaFin Limited

50,336,445

55,369,357

Topcrete Limited

(850,425)

-

Poundfield Products (Group) Limited

4,799,580

-

Foelfach Stone Limited

91,800

-

 

47,387,205

57,267,056

 

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 fee of £85,000 (2017: £72,000) for the provision of corporate management and consulting services to the Company. A balance of £8,557 was outstanding at the year-end.

 

Druces LLP, a limited liability partnership of which Dominic Traynor is a partner, invoiced a fee of £177,302 (2017: £nil) for the provision of legal services for acquisitions. A balance of £119,659 was outstanding at the year-end.

 

Ronaldsons LLP, a limited liability partnership of which Dominic Traynor is a partner, invoiced a fee of £10,000 (2017: £36,502) for the provision of legal services. No balance was outstanding at the year-end.

 

Patrick Dolberg invoiced a fee of £45,000 (2017: £nil) 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 £5,000 in September 2018 by Poundfield Products (Group) Limited. The loan is for a period of 12 months to be repaid by 9 monthly instalments starting January 2019 and at year end the full amount was outstanding.

 

 

34.  Ultimate Controlling Party

 

The Directors believe there is no ultimate controlling party.

 

 

35.  Events After the Reporting Date

 

On 24 January 2019, the Company entered into an agreement with Santander to increase the committed credit facilities provided to the Group to a total amount of £34 million. On the same date the Company redeemed £10 million 6 per cent. convertible unsecured loan notes at a 5% premium by utilising £10.5 million of the increased credit facilities provided by Santander.

 

On 25 January 2019, the Company issued 30,257,053 ordinary shares of 1p each ('Ordinary Shares') at a price of 41p per share to raise £12.4 million to part fund the initial consideration for the acquisition of CCP Building Products Limited ('CCP').

 

On 25 January 2019, the Company issued 4,878,048 Ordinary Shares at a price of 41p per share to the vendors of CCP to satisfy £2 million of the £15.21 million initial consideration.

 

On 1 February 2019, the Company issued 1,976,888 Ordinary Shares at a price of 37.9p per share to the previous owners of Poundfield Products (Group) Limited to satisfy the £750,000 deferred consideration payment.

 

On 15 April 2019, the Company granted 12,896,722 options over ordinary shares of 1p each in the capital of the Company to board members and senior management personnel. Of which 3,350,387 of the options were awarded as Management Scheme Options with an exercise price of 40p and will expire on 5 January 2022 and 9,656,934 of the options were awarded as Non-Management Scheme Options to certain members of senior staff with an exercise price of 46p that will vest over three years in equal tranches and will expire on 16 April 2026.

 

On 15 April 2019, the Company acquired a 40 per cent. equity interest in GDH (Holdings) Limited ('GDH'), a significant quarrying group located in South Wales, for a cash consideration of £4.89m. In addition, the Company has entered into an option agreement with the owners of GDH, whereby SigmaRoc has the exclusive right to purchase the remaining 60 per cent. of GDH for cash consideration of £7.5m, on or before 31 August 2020.

 

On 18 April 2019, the Board appointed Timothy Hall as a Non-Executive Director.

 

- ends -

 


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Sigmaroc (SRC)
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