REG - SigmaRoc PLC - Interim Results

SigmarocAnnouncement

07/09/2020 07:00

RNS Number : 1512Y
  
SigmaRoc PLC
  
07 September 2020
  
 

 
SigmaRoc plc/ EPIC: SRC / Market: AIM / Sector: Mining
7 September 2020
SigmaRoc plc ('SigmaRoc', the 'Company' or the 'Group')
Interim Results
 
SigmaRoc plc, the AIM listed buy-and-build construction materials group, is pleased to announce its unaudited interim results for the six months ended 30 June 2020.  
 
Highlights:




 


6 months to 30 June 2020


6 months to 30 June 2019


Change




 


 


 


 




Underlying revenue


£54.5m


£29.8m


+83.0%




Underlying1 EBITDA


£10.9m


£5.7m


+91%




Underlying1 profit before tax


£5.3m


£3.5m


+51.4%




Underlying1 EPS


1.98p


1.97p


+0.5%




Cash and cash equivalents


£17.3m


£3.6m


+380.5%




Underlying EBITDA margin


20.0%


19.1%


+4.7%




 
1 Underlying results are stated before acquisition related expenses, certain finance costs, redundancy and reorganisation costs, impairments, amortisation of acquisition intangibles and share option expense. References to an underlying profit measure throughout this interim report are defined on this basis.
 
Operational highlights:
 
·      Strong H1 2020 despite difficulties arising from the pandemic
·      Improved underlying EBITDA margins
·      Reduction in net leverage across the first six months of the year
·    Strong cash position due to effective cash management, with cash £7.4m higher versus 31 December 2019 year-end position
·      Revenues on a pro-forma adjusted basis in line with prior year despite the impact of COVID-19
·      Resilience of decentralised business model demonstrated with profitability maintained
·      Ongoing engagement with staff and local communities to ensure safety and allow continued support and trading
·    Option to acquire the remaining 60% of GD Harries exercised in August 2020, funded by Group's own cash reserves for a cash consideration of £7.3 million
 
 
 
David Barrett, Executive Chairman, commented:
 
"It gives me great pleasure to be reporting these results for the Group in a year of an ongoing global pandemic, never before seen in my working career. The ability for our businesses to keep safely confronting these challenging times demonstrates the strength of the Group and its strategy."
 
Max Vermorken, CEO, commented:
 
"Despite this year's ongoing pandemic, the Group's performance across the first six months of 2020 was extremely strong. Our decentralised, locally focused business model continues to prove successful in our industry, allowing us to operate and perform even in the face of global adversity. The Group is backed by a solid asset base providing security in these times of uncertainty. We are therefore confident we can continue to build further shareholder value."
 
The full text of the interim statement is set out below, together with detailed financial results, and will be available on the Company's website at www.sigmaroc.com.
 
An investor and analyst call will take place at 8.00 a.m. today. To participate in the results call, please register your interest via the following links:
 
 
URL: https://attendee.gotowebinar.com/register/3269624733946529037
 
Webinar ID: 879-013-771 https://www.gotomeeting.com/en-gb/webinar/join-webinar
 
Should you wish to ask questions of management, there will be an online Q&A facility to log any questions. It may not be possible for all questions to be heard during the call.
 
Any large investor or analyst wishing to arrange a one to one call with the Company, should contact ir@sigmaroc.com or one of the Company's Joint Brokers via the relevant contact details below.
 
Information on the Company is available on its website at www.sigmaroc.com.
 
 
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement via Regulatory Information Service, this inside information is now considered to be in the public domain.
 
Enquiries:
 




SigmaRoc


Tel: +44(0)207 002 1080




Max Vermorken, CEO


 




 


 




Strand Hanson (Nominated and Financial adviser)


Tel: +44(0)207 409 3494




James Spinney / James Dance / Jack Botros


 




 


 




Liberum Capital (Co-Broker)


Tel: +44(0)203 100 2000




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


 




 
Peel Hunt (Co-Broker)


Tel: +44(0)207 418 8900




Mike Bell / Ed Allsopp
 


 




Rubik Communications (Financial PR adviser)


Tel: +44(0)207 002 1080




Andrea Mora / Charlotte Hollinshead


info@rubikcomms.com




 
 
EXECUTIVE STATEMENT
 
In what has been a turbulent first six months of this year, we have managed to deliver a strong and effective response to the challenges brought by the COVID-19 pandemic. We began to put in place measures to deal with the crisis from as early as February 2020 and, with our decentralised structure, we have been able to quickly implement health and safety protocols, social distancing measures, and comprehensively engage with our staff, unions, customers and suppliers.
 
These measures and this early preparation have enabled us to remain operational throughout the crisis, where government rules have permitted us to do so. This has led to us being able to keep our workforce safe, to keep most of our personnel actively employed, while at the same time delivering a strong financial performance.
 
The Group reported revenue of £54.5 million, representing an 83% year-on-year increase, and an underlying EBITDA of £10.9 million, being an uplift of 91% year-on-year. Underlying profit before tax was £5.3 million and underlying EPS 1.98p. Revenue and underlying EBITDA have increased in part due to the acquisition of Carrieres du Hainaut in October 2019. Our 40% interest in GDH provided minimal contribution to the Group's results for the period as it was equity accounted and therefore not consolidated into the Group. Having exercised our option to acquire the remaining 60%, GDH will now provide a meaningful contribution to the Group's future results.
 
The robust trading performance and implementation of careful and effective cash management strategies has led to an increase in the cash position of the Group of £7.4m over the six-month period, bringing the Group cash position to £17.3m at 30 June 2020. Consequently the Group reduced its adjusted leverage ratio* from 2.07x at the end of 2019 to 1.97x at 30 June 2020.
 
* - Adjusted leverage ratio compares net debt to underlying EBITDA for the last twelve months adjusted for any pre-acquisition earnings of subsidiaries acquired during the relevant period.
 
Operating performance
 
As noted above, the Group has reported a strong financial performance across the first six months of 2020 despite the challenging circumstances. Ronez started the year with a strong pipeline of projects, particularly in Jersey, though storm weather disruption slightly hampered the first few months. With the development of the COVID-19 crisis, Government lockdown restrictions were implemented in the Channel Islands, with the restrictions in Guernsey being harsher than in Jersey, with an almost complete shutdown for part of April. Conversely, Jersey was able to maintain trading, serving a number of essential construction projects under the Government's construction licensing scheme. With restrictions being relaxed in late April, this led to near-normal trading being resumed by the end of June. The outlook for the second half is promising, especially in Jersey with the recommencement of projects delayed by lockdown, a full programme for Jersey road reconstruction, and the commencement of further housing and commercial schemes.
 
SigmaPPG, which specialises in manufacturing precast concrete products, started the year very strongly in each of the three entities. Revenues for Allen Concrete, which manufactures precast concrete products for the fencing and building industries, were up 26% for the first quarter year-on-year, and the company managed to continue production operations throughout the pandemic. Sales understandably fell in April, as many customers temporarily closed their branches, but demand increased considerably in May, and again in June.
 
Poundfield, a manufacturer of precast concrete products, had a strong order book at the beginning of the year, particularly in the bespoke division, and this was further boosted with some large bespoke projects being secured in the first quarter. The onset of COVID-19 led the company to concentrate on these projects in April, with a consequent slowdown in flooring and retaining wall manufacturing operations, but from May onwards business recovered to normal trading with May and June posting record revenue levels for the company.
 
CCP Building Products, a supplier of concrete blocks and aggregates, had a good first quarter, though the pandemic led to a significant slowdown in April. With carefully managed cost reductions, the company remained profitable throughout and by the end of May all sites were fully operational. Demand for blocks has returned to normal levels, with aggregate demands regaining traction and returning to expected levels.
 
Carrieres du Hainaut began the year well with strong commercial activity in both bluestone and aggregates in January and February. The COVID-19 pandemic led to a circa 50% drop in activity from mid-March to mid-April, but with the support of the staff and trade unions, it was possible to keep the business operational throughout these difficult months. Activity improved from mid-April, with a resumption to normal levels of trading from the middle of May. June has seen the benefit of some catch-up from jobs that were postponed in March and there have also been gains of market share from our competitors, due to our prompt and efficient management of the crisis. As a result, sales for the 6 months to June 2020 are 10% higher than the six-month period to June 2019.
 
GDH faced some stronger challenges during the height of the COVID-19 crisis, with asphalt and construction materials being heavily affected, and South Wales only returning to normal trading in July as local road schemes and construction work resumed. However, GDH demonstrated its strength and resilience with many of the operational sites remaining open to support essential services and customers across numerous sectors, including local hospital developments, water treatment centres and the farming community. Alongside this, improved initiatives have been put in place with regards to health and safety, increasing the engagement of all employees.
 
 
Safety
 
We have always had the safety and well-being of our colleagues at the forefront of the business and in early 2020 we launched a Group-wide engagement plan, to build on our previous successes and ensure that we work in partnership with our staff to deliver health and safety excellence. The ongoing pandemic has, as one would expect, posed a serious test to our Group-wide health and safety practices; our teams' dedication to the health of our staff and its early response to the crisis has demonstrated our unwavering commitment to keeping our workforce safe. We have consulted with unions and staff throughout, implemented strict social distancing, increased cleaning routines and ensured we maintained adherence to all Government guidance. We are immensely proud of the way that our workforce has risen to the challenge and delivered compliant systems and processes that protected everyone entering our places of work.
 
Moving forward, we will continue to invest in workplace improvement. Our Safety and Estates Director continuously works with the line managers in the businesses to review and maintain best practices across all of our sites and to support the personal health and safety development of our teams through coaching and engagement. This approach is also supported by using a common external audit process across all our sites, with auditors mandated to audit our systems, processes, workplace conditions and compliance. This is done in partnership with local teams, enabling the Group to become aligned with a common set of principles and goals.
 
We will continue to develop our Health and Safety plan with our teams, building on workplace engagement through our health and safety committees, utilising housekeeping audits, and building competence in near hit awareness, reporting and investigation, all of which will continue to develop and strengthen our health and safety culture.
 
 
Invest, improve, integrate
 
Since the acquisition of Carrieres du Hainaut, we have focused on integrating this business into the Group, and we have sought to improve processes to achieve efficiencies, as well as developing the safety processes to align these with the SigmaRoc safety culture. There is further potential for growth in this business, particularly with the flexibility of options at the end of the partnership on aggregates production which presents an opportunity for the Group to explore commercially attractive alternatives. The Group is also seeking to develop further opportunities with the appointment of a UK commercial representative for Bluestone.
 
With regards to our South Wales Platform, the Group held 40% of the share capital of G.D. Harries with an option to acquire the remaining 60%. G.D. Harries has demonstrated its resilience and strong economic viability in difficult circumstances and we are pleased to confirm that the Group has exercised this option to acquire the remaining GDH shares in August 2020, using its own cash reserves to fund the acquisition, for a cash consideration of £7.3 million.
 
 
Organic development
 
We continue to review all our existing assets with a view to developing efficiencies and the results within this interim report are testament to the resilience of the Group during this extremely demanding six-month period. We have been able to keep all of our sites open and continue to trade, where Government rules have permitted, and our decentralised model has demonstrated our ability to minimise the impact of COVID-19.
 
Environment, Social and Governance (ESG)
 
During the course of the six months to June 2020, we have made progress on our ESG initiatives, although this has been hampered to a large degree by the travel restrictions imposed by the pandemic.
 
We have made a number of appointments to the Board, as detailed in the Corporate section below.
 
At an operational level, we appointed Anthony Brockbank, Equity Capital Markets (ECM) partner with law firm Fieldfisher LLP, as our General Council, on a part time basis. Anthony is an extremely experienced ECM lawyer and will further assure compliance with the market rules and regulations.
 
With regards to 2020 initiatives on the social and environmental front, Ronez is trialling a cement free concrete to reduce Scope 1 carbon dioxide emissions. Ronez is also seeking to obtain 3rd Party accreditation for ISO 45001 Occupational Health and Safety Management Systems across the Ronez Platform, although this has been delayed by the travel restrictions applying to the Channel Islands.
 
At PPG, the programme of replacing the insulation of nine main ovens to reduce carbon footprint and overheads has been completed. The trialling of a greener range of products is ongoing.
 
In South Wales, there is a focus on the development and implementation of changes to the production processes which will lead to the reduced consumption of bitumen, liquid fuels and electricity, and thus improvement in the long term sustainability and reduction in the carbon footprint.
 
In Belgium, completion dates for Phase 3 of the solar panel development plan and the installation of an electricity charging station at the on-site parking facilities have been pushed back but these projects will be completed as soon as restrictions allow.
 
Corporate
 
In April 2020, we welcomed Jacques Emsens and Simon Chisholm to the Board as Non-Executive Directors and Dean Masefield was appointed as Chief Financial Officer, replacing Garth Palmer who remains on the Board as a Non-Executive Director.
 
 
Outlook
 
In spite of COVID related disruptions in March and April, the swift and effective action taken by the team in managing costs, ensuring operational continuity where possible and identifying commercial opportunities in local markets ensured a resilient performance through the lockdown period and a strong response as market conditions began to recover. As a result, performance in the first half was robust with positive momentum in growth and margin appreciate maintained.
 
Trading for July and August was consistent with the trends seen through the half year end, with the Group's European operations witnessing normal seasonal reductions in activity in this period. Ronez continues to see an encouraging rebound in Jersey, supported by a solid order book into Q4, but with a slower return of activity in Guernsey. SigmaPPG performance remains strong with supply into a number of high-quality infrastructure projects. The recovery in South Wales has continued with the order book now benefiting from some significant project work and the Group will look to begin implementing further efficiency initiatives in the business having acquired the outstanding 60% interest in GD Harries in August. Aggregate demand for CDH is encouraging coming out of the summer holiday period as is the residential market order book for Bluestone. Visibility over Belgian commercial and public sector Bluestone demand is more limited and so demand patterns for the fourth quarter are more challenging to predict at this stage.
 
On the basis of no further significant impacts on the Group's markets as a result of the pandemic, the Board expects the recovery trends experienced through the third quarter to be maintained over the remainder of the year. As a result and with the benefit of the GD Harries acquisition, the Board expects 2020 financial performance to reflect further significant year on year progress which could be further accelerated by a continued recovery in end-market conditions in 2021.
 
 




David Barrett


Max Vermorken


Dean Masefield




Executive Chairman


Chief Executive Officer


Chief Financial Officer




 
4 September 2020

CONSOLIDATED INCOME STATEMENT
 




 


 


6 months to 30 June 2020
Unaudited


6 months to 30 June 2019
Unaudited


 




 


 


Underlying


Non-underlying* (Note 6)


Total


Underlying


Non-underlying* (Note 6)


Total




Continued operations


Note


£


£


£


£


£


£




 


 


 


 


 


 


 


 




Revenue


 


54,502,811


-


54,502,811


29,777,661


-


29,777,661




 


 


 


 


 


 


 


 




Cost of sales


5


(39,267,631)


-


(39,267,631)


(21,509,659)


-


(21,509,659)




 


 


 


 


 


 


 


 




Profit from operations


 


15,235,180


-


15,235,180


8,268,002


-


8,268,002




 


 


 


 


 


 


 


 




Administrative expenses


5


(8,850,652)


(1,790,251)


(10,640,903)


(4,468,436)


(1,311,187)


(5,779,623)




Net finance (expense)/income


 


(1,149,270)


-


(1,149,270)


(446,543)


(539,452)


(985,995)




Other net (losses)/gains


 


72,957


(13,604)


59,353


113,975


(54,527)


59,448




Foreign Exchange


 


6,527


-


6,527


(11,167)


-


(11,167)




 


 


 


 


 


 


 


 




Profit before tax


 


5,314,742


(1,803,855)


3,510,887


3,455,831


(1,905,166)


1,550,665




 


 


 


 


 


 


 


 




Tax expense


 


(299,902)


-


(299,902)


(131,520)


-


(131,520)




 


 


 


 


 


 


 


 




Profit/(loss)


 


5,014,840


(1,803,855)


3,210,985


3,324,311


(1,905,166)


1,419,145




 


 


 


 


 


 


 


 




Profit/(loss) attributable to:


 


 


 


 


 


 


 




Owners of the parent


 


5,014,840


(1,803,855)


3,210,985


3,324,311


(1,905,166)


1,419,145




 


 


5,014,840


(1,803,855)


3,210,985


3,324,311


(1,905,166)


1,419,145




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


12


1.98


(0.71)


1.27


1.97


(1.13)


0.84




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


12


1.83


(0.66)


1.17


1.78


(1.02)


0.76




 


 


 


 


 


 


 


 



 
 
 
 
 
 
 
 
 
 



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


CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
 




 


 


6 months to 30 June 2020
Unaudited


6 months to 30 June 2019
Unaudited




 


Note


£


£




 


 


 


 




Profit/(loss) for the year


 


3,210,985


1,419,145




Other comprehensive income:


 


 


 




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


 


 


 




Currency exchange gains


 


2,954,847


-




 


 


2,954,847


-




 


 


 


 




Total comprehensive income


 


6,165,832


1,419,145




 


 


 


 




Total comprehensive income attributable to:


 


 


 




Owners of the parent


 


6,165,832


1,419,145




Total comprehensive income for the period


 


6,165,832


1,419,145




 


CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                                                                                                           Company number: 05204176
 




 


 


30 June 2020
Unaudited


30 June 2019
Unaudited


31 December 2019
Audited




 


Note


£


£


£




Non-current assets


 


 


 


 




Property, plant and equipment


7


118,946,662


54,137,429


78,718,333




Intangible assets


8


45,427,754


33,299,138


80,243,724




Investments in associates


9


5,151,527


5,003,321


5,538,212




Other receivables 


 


21,620


-


19,996




 


 


169,547,563


92,439,888


164,520,265




Current assets


 


 


 


 




Trade and other receivables


 


20,898,236


13,084,304


22,232,596




Inventories


 


11,799,546


6,190,797


11,160,574




Cash and cash equivalents


 


17,279,238


3,583,663


9,867,696




 


 


49,977,020


22,858,764


43,260,866




Total assets


 


219,524,583


115,298,652


207,781,131




 


 


 


 


 




Current liabilities


 


 


 


 




Trade and other payables


 


38,345,216


15,595,921


37,158,011




Current tax payable


 


1,160,147


502,849


884,871




Borrowings


10


1,762,815


121,433


4,461,336




 


 


41,268,178


16,220,203


42,504,218




Non-current liabilities


 


 


 


 




Borrowings


10


62,018,129


26,805,363


55,194,015




Deferred tax liabilities


 


1,098,148


1,098,148


1,098,148




Provisions


 


6,899,677


718,822


6,936,754




 


 


70,015,954


28,622,333


63,228,917




Total Liabilities


 


111,284,132


44,842,536


105,733,135




Net assets


 


108,240,451


70,456,116


102,047,996




 


 


 


 


 




Equity attributable to owners of the parent


 


 


 


 




Share capital


11


2,537,393


1,738,175


2,537,393




Share premium


11


95,358,556


64,463,963


95,358,556




Share option reserve


 


557,836


492,248


531,213




Other reserves


 


3,868,587


1,361,718


913,740




Retained earnings


 


5,918,079


2,400,012


2,707,094




Total equity


 


108,240,451


70,456,116


102,047,996




 


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
 




 


 


Share 
capital 


Share premium


Share option reserve


Other reserves


Retained earnings


Total




 


Note


£


£


£


£


£


£




Balance as at 1 January 2019


 


1,367,056


50,136,904


352,877


1,361,718


910,556


54,129,111




Profit for the period


 


-


-


-


-


1,419,145


1,419,145




Total comprehensive income for the period


 


-


-


-


-


1,419,145


1,419,145




Contributions by and distributions to owners


 


 


 


 


 


 


 




Issue of ordinary shares


 


302,570


12,102,821


-


-


-


12,405,391




Issue costs


 


-


(457,212)


-


-


-


(457,212)




Share based payments


 


68,549


2,681,450


-


-


-


2,749,999




Share option charge


 


-


-


139,371


-


-


139,371




IFRS 16 prior year adjustment 


 


-


-


-


-


70,311


70,311




Total contributions by and distributions to owners


 


371,119


14,327,059


139,371


-


70,311


14,907,860




Balance as at 30 June 2019


 


1,738,175


64,463,963


492,248


1,361,718


2,400,012


70,456,116




 


 


 


 


 


 


 


 




Balance as at 1 January 2020


 


2,537,393


95,358,556


531,213


913,740


2,707,094


102,047,996




Profit for the period


 


-


-


-


-


3,210,985


3,210,985




Currency translation differences


 


-


-


-


2,954,847


-


2,954,847




Total comprehensive income for the period


 


-


-


-


2,954,847


3,210,985


6,165,832




Contributions by and distributions to owners


 


 


 


 


 


 


 




Issue of ordinary shares


 


-


-


-


-


-


-




Issue costs


 


-


-


-


-


-


-




Share option charge


 


-


-


26,623


-


-


26,623




Total contributions by and distributions to owners


 


-


-


26,623


-


-


26,623




Balance as at 30 June 2020


 


2,537,393


95,358,556


557,836


3,868,587


5,918,079


108,240,451




 


CASH FLOW STATEMENTS
 




 


 


6 months to 30 June 2020
Unaudited


6 months to 30 June 2019
Unaudited




 


Note


£


£




Cash flows from operating activities


 


 


 




Profit


 


3,210,985


1,419,145




Adjustments for:


 


 


 




Depreciation and amortisation


 


5,283,866


2,182,793




Share option expense


 


26,623


139,371




Loss/(gain) on sale of property, plant and equipment


 


(122,331)


23,802




Net finance costs


 


1,149,270


985,995




Other non-cash adjustments


 


(18,371)


-




Net tax paid


 


61,058


26,861




Share of earnings from associates


 


(57,682)


(112,529)




(Increase)/decrease in trade and other receivables


 


2,245,755


(4,060,760)




Increase in inventories


 


(64,796)


(486,831)




Increase in trade and other payables


 


(47,422)


(3,080,944)




Net cash flows from operating activities


 


11,666,955


(2,963,097)




 


 


 


 




Investing activities


 


 


 




Purchase of property, plant and equipment


7


(2,017,112)


(1,360,167)




Cash paid for acquisition of subsidiaries (net of cash acquired)


 


(1,542,109)


(10,089,389)




Sale of property plant and equipment 


 


378,151


6,289




Purchase of intangible assets


 


(29,261)


-




Net cash used in investing activities


 


(3,210,331)


(11,443,267)




 


 


 


 




Financing activities


 


 


 




Proceeds from share issue


 


-


12,405,393




Cost of share issue


 


-


(457,212)




Net finance costs paid


 


(1,003,353)


(985,995)




Net borrowings


 


4,056,548


16,300,000




Cost of borrowings


 


-


(125,454)




Repayment of borrowings


 


(4,103,308)


(12,875,685)




Net cash generated from financing activities


 


(1,050,113)


14,261,047




 


 


 


 




Net increase in cash and cash equivalents


 


7,406,511


(145,317)




Cash and cash equivalents at beginning of period


 


9,867,696


3,728,980




Exchange (losses)/gains on cash


 


5,031


-




Cash and cash equivalents and end of period


 


17,279,238


3,583,663




 
 


NOTES TO THE FINANCIAL STATEMENTS
 
1.    General Information
 
The principal activity of SigmaRoc plc (the 'Company') is to make investments and/or acquire projects in the construction materials sector and through its subsidiaries (together the 'Group') is the production of high-quality aggregates and supply of value-added construction materials. The Company's shares are admitted to trading on the AIM Market of the London Stock Exchange ('AIM'). The Company is incorporated and domiciled in the United Kingdom.
 
The address of its registered office is 7-9 Swallow Street, London, W1B 4DE.
 
 
2.    Basis of preparation
 
The condensed interim financial statements have been prepared in accordance with the requirements of the AIM Rules for Companies. As permitted, the Company has chosen not to adopt IAS 34 "Interim Financial Statements" in preparing this interim financial information. The condensed interim financial statements should be read in conjunction with the annual financial statements for the year ended 31 December 2019, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.
 
The interim financial information set out above does not constitute statutory accounts within the meaning of the Companies Act 2006. It has been prepared on a going concern basis in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS) as adopted by the European Union.
 
Statutory financial statements for the period ended 31 December 2019 were approved by the Board of Directors on 17 April 2020 and delivered to the Registrar of Companies. The report of the auditors on those financial statements was unqualified with material uncertainty related to going concern. The comparative financial information for the interim period ended 30 June 2019 and year ended 31 December 2019 is for the Group only.
 
Going concern
 
The Directors, having made appropriate enquiries, consider that adequate resources exist for the Company and Group to continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the condensed interim financial statements for the period ended 30 June 2020.
 
Risks and uncertainties
 
The Board continuously assesses and monitors the key risks of the business. The key risks that could affect the Company's medium-term performance and the factors that mitigate those risks have not substantially changed from those set out in the Group's 2019 Annual Report and Financial Statements, a copy of which is available on the Company's website: www.sigmaroc.com. The key financial risks are liquidity risk, credit risk, interest rate risk and fair value estimation.
 
Critical accounting estimates
 
The preparation of condensed interim financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the end of the reporting period. Significant items subject to such estimates are set out in Note 4 of the Group's 2019 Annual Report and Financial Statements. The nature and amounts of such estimates have not changed significantly during the interim period.
 
 
 
Foreign Currencies
 
a)    Functional and Presentation Currency
 
Items included in the Financial Statements are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The Financial Statements are presented in Pounds Sterling, rounded to the nearest pound, which is the Group's functional currency.
 
b)    Transactions and Balances
 
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where such items are re-measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income Statement.  Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Income Statement within 'finance income or costs. All other foreign exchange gains and losses are presented in the Income Statement within 'Other net gains/(losses)'.
 
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognised in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets measured at fair value, such as equities classified as available for sale, are included in other comprehensive income.
 
c)    Group companies
 
The results and financial position of all the Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
 
·    assets and liabilities for each period end date presented are translated at the period-end closing rate;
 
·    income and expenses for each Income Statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the dates of the transactions); and
 
·    all resulting exchange differences are recognised in other comprehensive income.
 
On consolidation, exchange differences arising from the translation of the net investment in foreign entities, and of monetary items receivable from foreign subsidiaries for which settlement is neither planned nor likely to occur in the foreseeable future, are taken to other comprehensive income. When a foreign operation is sold, such exchange differences are recognised in the Income Statement as part of the gain or loss on sale.
 
3.    Accounting policies
 
Except as described below, the same accounting policies, presentation and methods of computation have been followed in these condensed interim financial statements as were applied in the preparation of the company's annual financial statements for the year ended 31 December 2019, except for the impact of the adoption of the Standards and interpretations described in para 3.1 below:
 
3.1.  Changes in accounting policy and disclosures
 
(a) Accounting developments during 2020
 
The International Accounting Standards Board (IASB) issued various amendments and revisions to International Financial Reporting Standards and IFRIC interpretations. The amendments and revisions were applicable for the period ended 30 June 2020 but did not results in any material changes to the financial statements of the Group or Company.
 
The following standards were adopted by the Group during the year:
 
·      IFRS 3 (Amendments) - Business Combinations (effective 1 January 2020)
·      IAS 1 (Amendments) - Presentation of Financial Statements (effective 1 January 2020)
·      IAS 8 - Accounting policies, Changes in Accounting Estimates (effective 1 January 2020)
 
(b) New standards, amendments and interpretations in issue but not yet effective or not yet endorsed and not early adopted
 




Standard


 


Effective date




 


 


 




IAS 1 


Classification of Liabilities as Current or Non-Current. 


  * 1 January 2022 




 
* Subject to EU endorsement
 
The Group is evaluating the impact of the new and amended standards above. The Directors believe that these new and amended standards are not expected to have a material impact on the Group's results or shareholders' funds.
 
4.    Dividends
 
No dividend has been declared or paid by the Company during the six months ended 30 June 2020 (2019: nil).
 
5.    Expenses by nature




 


6 months to 30 June 2020
Unaudited


6 months to 30 June 2019
Unaudited




 


£


£




Cost of sales


 


 




Raw materials and production


9,577,898


8,667,482




Distribution and selling expenses


2,977,128


2,781,754




Employee benefit expenses


13,276,857


4,907,662




Maintenance expense


1,771,189


695,085




Plant hire expense


1,067,201


712,189




Depreciation and amortisation expense


4,430,045


1,839,386




Other costs of sale


6,167,313


1,906,101




Total cost of sales


39,267,631


21,509,659




Administrative expenses


 


 




Operational admin expenses


7,738,189


3,489,748




Corporate admin expenses


2,902,714


2,289,875




Total administrative expenses


10,640,903


5,779,623




 
Depreciation and amortisation expense is a combination of property, plant and equipment depreciation and amortisation of intangible assets.
 
6.    Non-underlying items
 
As required by IFRS 3 - Business Combinations, acquisition costs have been expensed as incurred. Additionally, the Group incurred costs associated with obtaining debt financing, including advisory fees to restructure the Group to satisfy lender requirements.
 




 


6 months to 30 June 2020
Unaudited


6 months to 30 June 2019
Unaudited




 


£


£




Acquisition related expenses


433,003


309,455




Restructuring expenses


434,631


394,840




Share options expense


26,623


139,371




Equity fundraising & investor relations


-


656,823




Amortisation of acquired intangibles 


853,821


343,407




Other non-underlying


55,777


61,270




 


1,803,855


1,905,166




 
Acquisition related expenses include costs relating to the due diligence of prospective pipeline acquisitions and other direct costs associated with merger & acquisition activity including warranty and indemnity insurance, Purchase Price Allocation fees and other consulting fees.
 
Amortisation of acquired assets are non-cash items which distort the underlying performance of the businesses acquired.
 
Restructuring expenses include advisory fees, redundancy costs and rebranding expenses. During this period these primarily related to the SigmaPPG platform.
 
Share option expense is the fair value of the share options issued and or vested during the period.
 
7.    Property, plant and equipment
 




 


Office equipment


Land and minerals


Land and buildings


Plant and machinery


Furniture and vehicles


Construction in progress


Total




 


£


£


£


£


£


£


£




Cost


 


 


 


 


 


 


 




As at 1 January 2019


383,658


37,951,374


22,369,931


18,041,324


8,248,546


1,926,176


88,921,009




Acquired through acquisition of subsidiary


279,477


-


2,352,190


3,899,172


173,119


-


6,703,958




Transfers in


-


-


1,125,685


63,069


-


-


1,188,754




IFRS 16 Adjustments


-


-


402,855


786,285


-


-


1,189,140




Additions


6,276


-


138,669


780,119


201,730


233,373


1,360,167




Disposals


-


-


(105,000)


(61,860)


(62,885)


(1,279,086)


(1,508,831)




Transfer between classes


82,090


(4,695,824)


4,696,518


63,417


(727,526)


75,263


(506,062)




As at 30 June 2019


751,501


33,255,550


30,980,848


23,571,526


7,832,984


955,726


97,348,135




Acquired through acquisition of subsidiary


2,915,492


14,844,352


11,033,453


53,926,086


9,411,474


-


92,130,857




Transfer between classes


(82,308)


-


40,376


(197,528)


(25,735)


(1,367,535)


(1,632,730)




Fair value adjustments


-


1,762,000


-


-


-


-


1,762,000




IFRS 16 Adjustment


22,689


-


181,930


89,103


-


-


293,722




Additions


133,138


145,140


297,217


623,515


667,303


1,258,021


3,124,334




Disposals


(1,173)


-


(4,000,000)


(20,000)


(54,115)


-


(4,075,288)




Forex


(47,800)


(243,377)


(161,148)


(881,369)


(154,468)


-


(1,488,162)




As at 31 December 2019


3,691,539


49,763,665


38,372,676


77,111,333


17,677,443


846,212


187,462,868




Acquired through acquisition of subsidiary


11,666


-


64,147


3,189,683


360,984


-


3,626,480




Fair value adjustments


-


35,954,347


4,121,301


-


-


-


40,075,648




Additions


22,839


395,450


81,952


381,777


834,840


300,254


2,017,112




Disposals


(185,355)


-


-


(528,671)


(494,114)


-


(1,208,140)




Forex


208,010


1,358,281


1,154,935


3,762,428


696,426


-


7,180,080




As at 30 June 2020


3,748,699


87,471,743


43,795,011


83,916,550


19,075,579


1,146,466


239,154,048




 


 


 


 


 


 


 


 




Depreciation


 


 


 


 


 


 


 




As at 1 January 2019


321,541


7,046,667


13,396,618


11,227,939


6,956,233


-


38,948,998




Acquired through acquisition of subsidiary


214,762


-


219,348


2,370,475


66,905


-


2,871,490




Charge for the year


19,230


462,865


462,087


924,079


215,288


-


2,083,549




Disposals


-


-


(105,000)


(31,769)


(50,500)


-


(187,269)




Transfer between classes


(38,393)


(182,407)


164,287


354,177


(803,726)


-


(506,062)




As at 30 June 2019


517,140


7,327,125


14,137,340


14,844,901


6,384,200


-


43,210,706




Acquired through acquisition of subsidiary


2,597,414


703,698


8,090,348


47,573,973


4,722,892


-


63,688,325




IFRS 16 Adjustment


-


-


153,779


292,103


-


-


445,882




Charge for the year


110,976


548,089


627,459


1,094,950


820,604


-


3,202,078




Disposals


(159)


-


(95,298)


(20,000)


(66,500)


-


(181,957)




Transfer between classes


38,175


22,989


(91,818)


(389,768)


(158,589)


-


(579,011)




Forex


(42,585)


(11,537)


(132,643)


(777,290)


(77,433)


-


(1,041,488)




As at 31 December 2019


3,220,961


8,590,364


22,689,167


62,618,869


11,625,174


-


108,744,535




Acquired through acquisition of subsidiary


11,423


-


39,910


2,918,380


360,984


-


3,330,697




Charge for the year


130,339


479,498


677,004


2,221,752


1,350,321


-


4,858,914




Disposals


(185,355)


-


-


(511,435)


(266,454)


-


(963,244)




Forex


198,680


216,246


435,227


3,167,718


218,613


-


4,236,484




As at 30 June 2020


3,376,048


9,286,108


23,841,308


70,415,284


13,288,638


-


120,207,386




Net book value


 


 


 


 


 


 


 




As at 30 June 2019


234,361


25,928,425


16,843,508


8,726,625


1,448,784


955,726


54,137,429




As at 31 December 2019


470,578


41,173,301


15,683,509


14,492,464


6,052,269


846,212


78,718,333




As at 30 June 2020


372,651


78,185,635


19,953,703


13,501,266


5,786,941


1,146,466


118,946,662




 
 
 
8.    Intangible assets




 


Consolidated




 


Goodwill


Customer Relations


Intellectual property


Research & Development


Branding


Other Intangibles


Total




 


£


£


£


£


£


£


£




Cost & net book value


 


 


 


 


 


 


 




As at 1 January 2019


16,826,369


850,846


684,556


-


613,000


-


18,974,771




Additions


-


-


-


3,611


-


-


3,611




Additions through business combination


61,717,258


-


(83,843)


1,210,452


400,000


414,018


63,657,885




Price Purchase Allocation - CCP


(5,539,000)


3,480,000


-


-


297,000


-


(1,762,000)




Amortisation


-


(481,324)


(44,481)


(26,174)


(43,969)


(13,788)


(609,736)




Forex


-


-


-


(20,807)


-


-


(20,807)




As at 31 December 2019


73,004,627


3,849,522


556,232


1,167,082


1,266,031


400,230


80,243,724




As at 1 January 2020


73,004,627


3,849,522


556,232


1,167,082


1,266,031


400,230


80,243,724




Additions


-


-


-


24,423


-


4,838


29,261




Additions through business combination


2,052,975


-


-


-


-


-


2,052,975




Price Purchase Allocation - CDH


(42,367,648)


-


-


-


2,292,000


-


(40,075,648)




Amortisation


-


(25,845)


(42,430)


(258,085)


(93,524)


(5,068)


(424,952)




Forex


3,521,822


-


-


80,572


-


-


3,602,394




As at 30 June 2020


36,211,776


3,823,677


513,802


1,013,992


3,464,507


400,000


45,427,754



 
 
 
 
 
 
 
 
 



 
An adjustment has been made to reflect the initial accounting for the acquisition of Carrières du Hainaut SCA ('CDH') by the Company, being the elimination of the investment in CDH against the non-monetary assets acquired and recognition of goodwill. In 2020, the Company determined the fair value of the net assets acquired pursuant to the acquisition of CDH, via a Purchase Price Allocation ('PPA') exercise.  The PPA determined a decrease of £42,367,648 of goodwill in CDH with the corresponding movement to be recognised as branding and an uplift in the value of the land and buildings and land and minerals.
 
Amortisation of intangible assets is included in cost of sales on the Income Statement.
 
9.    Investments in associates
 
On 18 April 2019, the Company acquired a 40% equity interest in GDH (Holdings) Limited ('GDH'), a quarrying group located in South Wales for a cash consideration of £4.89 million. GDH is based in in South Wales and own six quarries as well as concrete and tarmac plants and are providers of aggregates for commercial and domestic customers. GDH is included in the consolidated financial statements using the equity method.
 




 


 


Proportion of ownership interest held




Name


Country of incorporation


30 June 2020


30 June 2019




GDH (Holdings) Limited 


United Kingdom


40%


40%



 
 
 
 
 



 
 
Summarised financial information




GDH


30 June 2020
Unaudited




 


£




As at 30 June 2020


 




Current assets


9,544,782




Non-current assets


12,946,857




Current liabilities


(6,522,938)




Non-current liabilities


(9,764,141)




 


 




For the period 1 January 2020 to 30 June 2020


 




Revenues


8,788,021




Profit after tax from continuing operations


144,204




 
10.   Borrowings




 


6 months to 30 June 2020
Unaudited


6 months to 30 June 2019
Unaudited




 


£


£




Non-current liabilities


 


 




Santander term facility


25,979,147


25,836,547




Bank Loans


29,615,095


-




Convertible loan notes


-


-




Finance lease liabilities


6,423,887


968,816




 


62,018,129


26,805,363




Current liabilities


 


 




Santander revolving credit facility


-


-




Bank loans


 


 




Finance lease liabilities


1,762,815


121,433




 


1,762,815


121,433



 
 
 
 



 
On 5 January 2017 the Company issued 10,000,000 unsecured convertible loan notes at a par value of £1 per loan note accruing interest daily at a rate of 6% per annum and repayable on 5 January 2022 (the 'Loan Notes'). The Loan Notes were convertible into Ordinary Shares by the holders issuing a conversion notice any time prior to the repayment due date at a fixed price of £0.52 per Ordinary Share.
 
In April 2017 the Company entered into an £18 million term facility with Santander (the 'Facility'); on 18 October 2017 drew down £9 million to satisfy the initial cash consideration for Topcrete Limited; and, on 21 June 2018 drew down £1 million to assist with the purchase of Foelfach Stone Limited.  
 
In January 2019, the Company amended and restated its term facility with Santander and increased it to £34 million (the 'restated facility'). On 23 January 2019, the Company drew down £10.8m to satisfy the redemption of the Loan Notes; on 1 February 2019, drew down £1.5 million to for working capital in relation to the acquisition of CCP; and on 18 April 2019, drew down £4 million to satisfy the purchase of 40% of GDH (Holdings) Limited.
 
The restated facility is secured by a floating charge over the assets of SigmaFin Limited and its subsidiary undertakings. Interest is charged at a rate between 1.5% and 2.75% above LIBOR ('Interest Margin'), based on the calculation of the adjusted leverage ratio for the relevant period. For the period ending 31 December 2019 the Interest Margin was 1.75%.
 
In October 2019, as part of the acquisition of CDH, the Group agreed to assume its term loan facility with the view to refinance. CDH has a term loan facility with Belfius Bank, ING Belgium, BNP Paribas Fortis and KBC Bank (the 'Term Loan'). Interest is charged at 2.60% and the Term Loan is secured via floating charges and assets in CDH.
 
The carrying amounts and fair value of the non-current borrowings are:
 




 


Carrying amount


 


Fair value




 


6 months to 30 June 2020
Unaudited


6 months to 30 June 2019
Unaudited


 


6 months to 30 June 2020
Unaudited


6 months to 30 June 2019
Unaudited


 




 


£


£


 


£


£


 




Santander term facility (net of establishment fees)


25,979,147


25,836,547


 


-


-


 




Bank loans


29,615,095


 


 


-


-


 




Finance lease liabilities


8,186,702


1,090,249


 


-


-


 




 


63,780,944


26,926,796


 


-


-


 



 
 
 
 
 
 
 
 



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




 


Number of shares


Ordinary shares


Share premium


Total




 


 


£


£


£




Issued and fully paid


 


 


 


 




As at 1 January 2019


136,705,557


1,367,056


50,136,904


51,503,960




Issue of new shares - 25 January 2019 (1)


35,135,101


351,350


13,596,828


13,948,178




Issue of new shares - 1 February 2019


1,976,888


19,769


730,231


750,000




As at 30 June 2019


173,817,546


1,738,175


64,463,963


66,202,138




Issue of new shares - 15 October 2019 (2)


79,921,640


799,218


30,894,593


31,693,811




As at 31 December 2019


253,739,186


2,537,393


95,358,556


97,895,949




As at 1 January 2020


253,739,186


2,537,393


95,358,556


97,895,949




As at 30 June 2020


253,739,186


2,537,393


95,358,556


97,895,949




 
(1)   Includes issue costs of £457,212
(2)   Includes issue costs of £1,074,061
 
12.   Earnings per share
 
The calculation of the total basic earnings per share of 1.27 pence (2019: 0.84 pence) is calculated by dividing the profit attributable to shareholders of £3,210,985 (2019: £1,419,145) by the weighted average number of ordinary shares of 253,739,186 (2019: 168,820,165) in issue during the period.
                                                                                                                          
Diluted earnings per share of 1.17 pence (2019: 0.76 pence) is calculated by dividing the profit attributable to shareholders of £3,210,985 (2019: £1,419,145) by the weighted average number of ordinary shares in issue during the period plus the weighted average number of share options and warrants to subscribe for ordinary shares in the Company, which together total 274,594,989 (2019: 186,605,865).
 
Details of share options that could potentially dilute earnings per share in future periods are disclosed in the notes to the Group's Annual Report and Financial Statements for the year ended 31 December 2019.
 
 
 
13.   Fair value of financial assets and liabilities measured at amortised costs
 
Financial assets and liabilities comprise the following:
                                                                                        
·      Trade and other receivables
·      Cash and cash equivalents
·      Trade and other payables
 
The fair values of these items equate to their carrying values as at the reporting date.
 
14.  Business combination
 
On 1 January 2020 the Group acquired an additional 25% of the share capital in Stone Holdings SA ('Stone'), bringing the total shareholding in Stone to 74%. The initial cash consideration in September 2019 was £563,403 with an additional £312,109 paid in March 2020. Stone is registered and incorporated in Belgium. Stone operates two quarries and a wharf and is a contracting business which focusses on armour rock for river and sea defence work.  
 
The following table summarises the consideration paid for Stone and the values of the assets and equity assumed at the acquisition date.
 




Total consideration


£




Cash


839,092




Deferred cash


287,206




 


1,126,298




 




Recognised amounts of assets and liabilities acquired 


£




Cash and cash equivalents


71,510




Trade and other receivables


475,165




Inventories


161,445




Property, plant & equipment


274,686




Intangible assets


850




Trade and other payables


(884,030)




Borrowings


(1,026,303)




Total identifiable net liabilities


(926,677)




Goodwill (refer to note 8)


2,052,975




Total consideration


1,126,298




 
 
15.   Events after the reporting date
 
On 5 August 2020, SigmaRoc plc completed the acquisition of the final 26% in Stone Holdings SA, following the announcement of the conditional acquisition on 11 September 2019.
 
Following the announcement on 15 April 2019 of the acquisition of 40% of G.D. Harries, SigmaRoc plc exercised its option in August 2020 to acquire the remaining 60% for a cash consideration of £7.3 million*. Completion is anticipated on or around 21 September 2020.
 
*Rounded to £7.5 million in the announcement of 1 September 2020.
 
16.   Approval of interim financial statements
 
The condensed interim financial statements were approved by the Board of Directors on 4 September 2020.
 
 

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