Page 224 - Sigmaroc Annual-Report 2023

SIGMAROC ANNUAL REPORT 2023 FINANCIAL REPORT
Notes to the financial statements
An adjustment has been made to reflect the initial accounting for the acquisition of JQG and Goijens by the Company, being the elimination of the investment in JQG and Goijens against the non-monetary assets acquired and recognition of goodwill. In 2023, the Company determined the fair value of the net assets acquired pursuant to the acquisition of JQG and Goijens, via a Purchase Price Allocation (‘PPA’) exercise. For JQG, the PPA determined a decrease of £33.1 million of goodwill with the corresponding movement to uplift the value of the land and minerals and other intangibles, this is net off by a deferred tax liability on the PPA of £9.6 million. For Goijens, the PPA determined a decrease of £3.5 million of goodwill with the corresponding movement to uplift the value of the Customer relations and Land and Buildings, this is net off by a deferred tax liability on the PPA of £0.9 million. This adheres to the requirements of IFRS 3 and this adjustment has been made as a prior year adjustment.
In 2022, PPA adjustments were made to acquisitions in 2021, Nordkalk and BMix, during the measurement period and the adjustment of £235 million was made as a separate line item rather than as a prior year adjustment in line with IFRS 3. No adjustment has been made to align with IFRS 3 as any restatement would only affect comparative opening balances in this annual report and accounts such that the matter has no ongoing relevance. The Group didn’t include provisional adjustments for the reduction in goodwill in the year ended 31 December 2021, which is when the assets were acquired, leaving the initial accounting for these assets incomplete as they were pending completion of the PPA during the measurement period. The Group refrains from making internal provisional adjustments to goodwill given the subjectivity and difficulty in quantifying the potential uplifts. All PPA adjustments to goodwill are provided by an independent third party and are completed during the measurement period in line with IFRS 3.
The PPA for the acquisitions post July 2023, being Björka and ST Investicija, will be prepared within the measurement period.
The Goodwill allocated to each region is shown below:
The intangible asset classes are:
• Goodwill is the excess of the consideration transferred and the acquisition date fair value of any previous equity interest in the acquire over the fair value of the net identifiable assets.
• Customer relations is the value attributed to the key customer lists and relationships.
• Intellectual property is the patents owned by the Group.
• Research and development is the acquisition of new technical knowledge and trying to improve existing processes or products or; developing new processes or products.
• Branding is the value attributed to the established company brand.
• Other intangibles consist of capitalised development costs for assets produced that assist in the operations of the Group and incur revenue.
Amortisation of intangible assets is included in cost of sales on the Income Statement. Development costs have been capitalised in accordance with the requirements of IAS 38 and are therefore not treated, for dividend purposes, as a realised loss.
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.
A total of eighteen operating segments are considered to be Ronez in the Channel Islands; Topcrete, Poundfield, CCP, Rightcast, Retaining, Harries and Johnston in the UK; CDH, Stone, GduH, B-Mix, Goijens and Betons in Belgium; and Quicklime, Nordics, Baltics and Poland in Northern Europe. The operating segments are then allocated to regions.
31 December 2023
31 December 2022
North West
West
North East
£’000
£’000
£’000
53,621
23,200
93,516
9.3%
12.24%
11.17%
23.1%
22.9%
21.9%
157,640
37,963
261,047
2%
2%
2%
North West
£’000
West
£’000
Goodwill allocated to region at balance sheet date
Discount rate applied to cash flow projections
Average EBITDA margin over 5 years
Headroom 139,705
Long term growth rates 2% 2%
71,798 10% 23.6%
81,627 10% 21.1% 129,296
22.4%
North East
£’000
20,400
10%
66,291
2%