Page 212 - Sigmaroc Annual-Report 2023

SIGMAROC ANNUAL REPORT 2023 FINANCIAL REPORT
Notes to the financial statements
The PPAs included the revaluation of land and minerals based on the estimated remaining reserves within St John’s, Les Vardes, Aberdo, Carrières du Hainaut, Harries, Nordkalk and JQG 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
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.
Where the carrying value exceeds the estimated recoverable amount (being the greater of fair value less costs and value- in-use), an impairment loss is recognised by writing down goodwill to its recoverable amount. When an impairment is recognised as an expense, it is not subsequently reversed.
To assess the value-in-use, the net cash flow forecasts are extrapolated using long-term growth rates to determine the terminal value. These net cash flow forecasts reflect volumes, sales prices, cost of sales and administration costs assumptions in addition to other cash flow movements. Future cash flows, including the terminal value, are discounted to their present value using a pre-tax discount rate takes into account the current market assessments of the time value of money and the certain risks for which the future cash flow estimates have not been adjusted. The future cash flow estimates exclude net cash movement attributable to financing activities and income tax.
The impairment test process requires management to make significant judgements and estimates regarding the valuation models, discount rates used and future cash flows projected to be generated by the operating segment to which goodwill has been allocated. Further information on the impairment assessment and key assumptions used is detailed in note 17.
The PPA assessments provide a reduction to the goodwill for each operating segment via the fair value assessment of the assets acquired in new entities as at the completion date.
Goodwill has a carrying value of £169.7 million at 31 December 2023 (31 December 2022: £115.2 million). Management has concluded that an impairment charge was not necessary to the carrying value of goodwill for the period ended 31 December 2023 (31 December 2022: £nil). See Note 2.6 to the Financial Statements.
c) Restoration Provision
The Group’s provision for restoration costs is an accounting estimate and has a carrying value at 31 December 2023 of £7.9 million (31 December 2022: £6.1 million) and relate to the removal of the plant and equipment held at quarries in the Channel Islands, United Kingdom and Northern Europe.
The cost of removal is a judgement 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. Management judgements are based on a site- by-site basis on the evaluation of available information such as prior experience and current laws and regulations. There are a number of uncertainties which may impact managements
judgements including change in governments, laws and regulations, unknown factors and changes in technology.
The restoration provision is a commitment to restore the site to a safe and secure environment. These provisions are reviewed annually.
d) Recognition of deferred tax assets
Uncertainty exists related to the availability of future taxable profit against which tax losses carried forward can be used, however deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profits will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and level of future taxable profits, together with future tax planning strategies. Further information on income taxes is disclosed in Note 15.
e) Fair value of financial instruments
The fair values of financial instruments that cannot be determined based on quoted market prices and rates are established using different valuation techniques. The Group uses judgement to select methods and make assumptions that are mainly based on market conditions existing at the end of the reporting period. Factors regarding valuation techniques and their assumptions could affect the reported fair values. Further information on fair value of financial instruments is disclosed in note 33.
5. DIVIDENDS
No dividend has been declared or paid by the Company during the year ended 31 December 2023 (2022: 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 has three geographical regions, North West which comprises of PPG, England, Wales and Channel Islands; West which comprises of Dimension Stone and Benelux; and North East which comprises of Quicklime, Nordics, Poland and Baltics. Activities in the North West, West and North East Regions relate to the production and sale of construction material products and services.