SigmaRoc Annual Report 2023

Plain-text annual report

SIGMAROC Annual Report 2023 SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT One essential mineral for life. INDUSTRY Iron Steel Aluminium Cobalt Copper Gold Lead Lithium Nickel Titanium Uranium Zinc Float glass Container glass Glass fibre filaments Fibreglass insulation Computer glass Lamps and bulbs glass Laboratory glass containers and equipment Optical glass High temperature cookware Oven glass Paper Paper coatings Plastics Rubbers Sulphonates Phenates Salicylates Fire extinguisher foam Soap Detergents Engine lubricants Leather hide processing Chrome chemicals Modelling clay Cat litter component Glue Gelatin Capsules Cosmetics Ointments CONSTRUCTION & ENGINEERING Refractory lining bricks Mortars Granular repair products Renders Plasters Insulating building blocks Sand-lime bricks Lime concrete High alumina cements Limewash Soil stabilisation 3 Soil treatment Hydraulic road binders Tunnelling Aggregate improvement Asphalt enhancement Hemp lime binder Paints Adhesives Caulking agents Sealant Pumped tunnel grouts additive Road tunnel safety lighting improvement Heat island effect coolant Pest inhibitor Calcium silicate fire protection boards and castings ENVIRONMENT & FOOD Treatment of effluent Water filtration Salt brines purification Soda lime Removal of acidic to air Removal of pollutants of emissions to air Flue gas treatment Liquid acidity neutralisation Effluent treatment Sewage sludge modifier Contaminated land treatment Shipping emissions Battery making Battery recycling Lake liming Drinking water Sugar Fertilisers Animal feed Fish farming Fruit farming Milk Cream Butter Corn tortillas Fungicide Dietary supplements Antacids Toothpaste Baking powder Inorganic salt SOURCE: https://ec.europa.eu/ ...need lime to be produced. SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Welcome to the 2023 Annual Report SigmaRoc is a lime and industrial limestone group targeting quarried materials assets in the UK and Northern Europe. It seeks to create value by purchasing assets in fragmented materials markets and extracting efficiencies through active management and by forming the assets into larger groups. It seeks to de- risk its investments via strong asset backing at its projects. Visit our corporate website www.sigmaroc.com Liming in Reku, FInland Contents Strategic Report Highlights Group at a glance Investment case Chairman's Statement CEO's strategic report 2023 timeline Key developments About us Regions and platforms Our markets KPI monitors Our ESG journey Risk report CFO report CIO report Stakeholders report Governance Report Board members Corporate governance report Audit committee report Remuneration committee report Nomination report Directors report Statement of directors' responsabilities Independent auditors report to the members of SigmaRoc Financial Report Definitions Consolidated income statement Consolidated statements of comprehensive income Consolidated statements of financial position Consolidated statement of changes in equity Cashflow statements Notes to the financial statements Company information 5 6 - 151 6 10 12 14 18 24 26 34 54 82 88 92 132 138 142 146 152 - 189 152 156 160 164 174 176 180 182 190 - 254 190 196 197 198 199 201 202 255 Financial highlights Statutory results Underlying1 results REVENUE £580.3m 31 December 2022: £538.0m EBITDA £87.3m 31 December 2022: £95.0m EBITDA MARGIN 15.0% 31 December 2022: 17.7% PROFIT BEFORE TAX £28.3m 31 December 2022: £42.7m EPS 1.95p 31 December 2022: 4.89p ___ +8% -8% -270bps -42% -60% REVENUE £580.3m 31 December 2022: £538.0m EBITDA £116.7m 31 December 2022: £101.7m EBITDA MARGIN 20.1% 31 December 2022: 18.9% PROFIT BEFORE TAX £71.2m 31 December 2022: £62.7m EPS 8.12p 31 December 2022: 8.0p +8% +15% +120bps +14% +1% 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 Annual Report are defined on this basis. Non-underlying items are described further in the Chief Financial Officer’s report. These measures are not defined by UK IAS and therefore may not be directly comparable to similar measures adopted by other companies. 2. Net debt including IFRS 16 lease liabilities. 3. Free Cash Flow takes net cash flows from operating activities and adjusts for CapEx, net interest paid, and for the underlying result further adjusts for net non-underlying expenses paid and working capital payments relating to pre-acquisition accruals or purchase price adjustments. 4.Free Cash Flow conversion is FCF relative to underlying EBITDA. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023NET DEBT2 £182.4 31 December 2022: £193.8m CONVENANT LEVERAGE 1.57x 31 December 2022: 1.93x ROIC 10.8% -6% -19% 31 December 2022: 10.3% +50bps FCF3 £47.0m 31 December 2022: £54.3m FCF CONVERSION4 40.3% 31 December 2022: 53.4% 7 Strategic execution driving strong performance, against a challenging market backdrop • • Trading resilience, efficiency gains and value-accretive acquisitions combined record earnings performance, ahead of original expectations5 to deliver LFL revenue grew by 2% and underlying EBITDA by 10%, despite a 4% volume decline, reflecting the Group’s strong market position, pricing power and differentiated operational model with diversified end markets • Continued emphasis on operational efficiency, with £4m of annualised profitability gains delivered across the Group, enabled further underlying EBITDA margin improvement to over 20%, demonstrating the Group’s pricing power • Underlying EPS increased by 1% despite significant increase in finance costs and impact of dilution from the £30m equity fundraise in February 2023 with the proceeds fully invested in the months following the fundraise Strong financial position and improved returns • Covenant Leverage reduced to 1.57x further demonstrates ability of Group to de-gear while continuing to invest in growth • ROIC increased by 50bps to 10.8%6, with clear path to medium term target of 15% -12.7% • Underlying EBIT ROI of 14% for acquired businesses (including FY23 acquisitions) • Solid FCF at £47m reduced 13% YoY due to higher net interest payments and working capital absorption to support growth -12.7ppt ____ 5. Company compiled analyst consensus estimates as of 18 December 2023: revenue of £596.9m, underlying EBITDA of £110.2m and underlying EPS of 7.5p. 6. ROIC calculation revised to include total equity in invested capital rather than just share capital. Seabased liming in Rymattyla, Finland Operational and strategic highlights Growth • Benefited from broad diversification across end markets and regions • • Subdued demand in residential construction markets was partially offset by a stronger backdrop for infrastructure projects and industrial markets Leadership in local markets and continued focus on service excellence supported a dynamic pricing approach, which largely offset the impact of inflation through the year Investment • Entered into agreements, in November 2023, to acquire CRH’s European lime and industrial limestone assets, leading European transforming the Group producer into a • Deployed £32m to acquire six businesses generating £8m EBITDA across the UK, Belgium, France and the Nordics, which have all been successfully integrated and generating proforma 2023 EBITDA of £10m • CapEx of £33m includes £5m of quarry development, contributing towards c.175 years of mine life at CDH and Ronez • • Successfully developed new asphalt plant in Llandarcy with first commercial sales commencing in March 2024 Successful commissioning of Aqualung carbon capture technology in Sweden, ongoing deployment of biofuels across network, and partnership formed with Materials Evolution to further decarbonise concrete product offerings in line with the Group’s ESG strategy Execution • Continued safety improvement across the Group, with Total Incident Frequency Rate (TIFR) and Serious Harm Injury Frequency Rate (SHIFR) improved by 6% and 31% respectively including both employees and contractors • • Successful launch of Aqualung carbon capture facility in Sweden with development now focused on purification, compression and liquefaction for utilisation Launch of Puccini Blue, a revolutionary, highly sustainable re-interpretation of Belgium Blue Stone, revealing unique features not seen in other natural stone • Progress on Materials Evolution partnership to produce low-carbon concrete products with the first plant on CCP’s site near Wrexham expected to be operational mid-2024 • Delivering continued YoY sustainability improvements: – 29% reduction in CO2 e intensity since 2021 baseline – 12% YoY reduction in electrical energy intensity – 71% fossil the Group free electricity across supported by 100% fossil free electricity in Nordics and Belgium – POC to show kilns can run on between 50%-100% biofuel depending on kiln type – 35% of total energy consumption from alternative and renewable means Outlook • • • Trends from 2023 expected to persist into 2024, with strong infrastructure and industrial markets and subdued residential construction Trading for the first two months of the year in-line with expectations, hence the Board’s outlook for FY24 remains unchanged industrial Integration of CRH European limestone assets is progressing well and the Board is confident that once integrated, the Group will begin delivering previously outlined synergies, enhancing cash flows, and reducing leverage lime and STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023 9 ESG highlights Building a better business EMISSIONS INTENSITY REDUCTION 29% Reduction since 2021 baseline ENERGY INTENSITY REDUCTION 12% Year-on-year reduction INJURY FREQUENCY REDUCTION 31% Year-on-year reduction in Serious Harm ALTERNATIVE FUELS 100% Biofuel success in kiln ALTERNATIVE POWER 71% Use across the Group SAFETY AUDITS 172 Site audits conducted Solar panels at CDH in Soignies, Belgium Group at a glance Founded by an industry team from a blank sheet of paper, SigmaRoc is a lime and industrial limestone group targeting quarried materials assets in the UK and Northern Europe. It seeks to create value by purchasing assets in fragmented materials markets and extracting efficiencies through active management and by forming the assets into larger groups. It seeks to de-risk its investments via strong asset backing at its projects. Our vision Lime for Life | To be Northern Europe's leading supplier of this essential mineral critical for life across the industrial and construction sectors. Transitioning into a sector leading industrial mineral business FY23 revenue breakdown BY PRODUCTS BY SEGMENTS Stone - 48% Products - 31% Lime - 21% Construction - 57% Industry - 31% Environment - 12% Three core products STONE LIME PRODUCTS Materials extracted from natural stone quarries. This category includes various types of stone such as granite, limestone, and others. Stone products can be used for construction purposes in civil engineering, road works, sea defences. in inorganic A calcium-containing form the material, often (calcium oxide) of quicklime or (calcium lime hydrated hydroxide). It is essential in various industrial processes, including (as a mortar or construction plaster agriculture (as a soil conditioner), water treatment (for pH adjustment), and chemical manufacturing (as a reactant). Lime is also used in traditional building materials and has historical significance in architecture and art. additive), refer generally to Products such manufactured materials as concrete blocks and concrete products and asphalt. They are essential components the construction industry and are used in residential, commercial, industrial and infrastructure projects. in STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023Underlying results1 11 REVENUE £m EBITDA £m EBITDA MARGIN % EPS pence LEVERAGE RATIO ratio 272 538 580 49 102 117 18 19 20 5.4 8.0 8.1 1.70 1.77 1.57 2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023 2021 2022 2023 Three regions become five NORTH & EAST REGION Scandinavia, Baltics and Poland 58% of the FY23 Group revenue NORTH WEST REGION UK, Ireland 25% of the FY23 Group revenue Revenue excludes Irish business as integrated post period (Jan 2024) WEST REGION Belgium, France, North Spain 17% of the FY23 Group revenue EAST REGION Poland Assuming exercise of Polish call option CENTRAL REGION Germany, Czechia Post-period integration (Jan 2024) 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 Annual Report are defined on this basis. SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Investment case 1| Building a leading lime and limestone group By targeting assets across North Europe 2| Sustainable growth market Across all target markets from 2017 - 2031 Leadership position: #1 in 5 countries1 Countries: UK, Ireland, Norway, Sweden, and Finland. Predicted average value growth in lime and limestone in our target markets: +4% p.a. Target markets: Steel, construction, pulp & paper, environment, chemical, food. 3| Track record of improving businesses Disciplined capital allocation with a track record of value-enhancing acquisitions. EBITDA improvement: +29% Average improvement for all acquired businesses 5| Strong acquisition strategy Proven track record of delivering attractively priced deals Deals: 18 deals at 6.7x Average multiple 1 Assuming exercise of call options 2 Includes Fels and Ireland 4| Strong asset backing Reserves and resources 2.7 Billion tonnes2 Balance sheet underpinned by extensive access to mineral 6| Consistent per share growth Improving every year since IPO EPS: EPS >8x EPS growth since 2016 13 Fels kilns in Rübeland, Germany SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Chairman’s statement Nordkalk site in Wolica, Poland Chairman’s statement Dear Shareholders, At the end of 2023, we achieved a key milestone in the development of our Group, with the proposed acquisition of CRH’s European lime assets. The first and largest of three phases of this transaction completed post period end, in January 2024, and we are now positioned to become a leading operator in these markets across Europe. This strategic move, a long-held ambition cultivated through careful assembly of the right assets in Northern Europe, brings transformational scale, market position and product offering as we evolve into a leading lime entity. This strategic advancement was realised amidst challenging market conditions both in equity markets and across various sectors and regions, yet we maintained our core business's record of continuous improvement, with another year of strong performance. This report offers deeper insights and context as we gear up for yet another year of substantial progress. OVERVIEW I am very pleased to report another solid financial performance for the year. Despite a challenging market, we achieved a 2% LFL increase in revenues to £580m, while managing a 4% LFL decrease in volumes. This performance underscores the robust and diverse nature of our Group, adept at sustaining earnings growth even in subdued markets. 15 We also enhanced our underlying profitability, with a 10% LFL increase in underlying EBITDA, and a modest yet positive improvement in underlying EPS to 8.12p. This was achieved amidst a significant YoY increase in financing costs and the effective absorption of the dilutive impact from the February 2023 fundraising. "Our teams have demonstrated exceptional focus and efficiency, leading to operational improvements across the board and a return to historical margin trends." David Barrett Executive Chairman These efficiency improvements have been primarily operational and have led to significant net cost reductions across the Group. Commercial initiatives, selling product in new markets, or new products in old markets have also helped deliver these results. David Barrett CHAIRMAN STRATEGIC REPORT Our year was not just about financial gains. We made in our environmental, social, and significant strides governance initiatives. Our safety standards (ESG) have improved further due to a new group-wide safety management approach. Environmentally, we have made a significant leap by operating one of Europe’s largest carbon capture systems in Sweden. In respect of Governance, we are actively pursuing the addition of two independent board members and the refinement of our policies and procedures strengthens our corporate structure. LIME AND LIMESTONE The CRH Lime Acquisitions, announced in November 2023, stand as a transformative milestone for the Group. These acquisitions not only elevate our operations in the sector, but also align with our ambition for compounding growth and market leadership. Lime and limestone, being essential to modern life and industry, place us at the forefront of a market critical to the ongoing economic transition towards sustainability. Lime and limestone are less well understood as critical minerals for modern life. They are however, both key, and will continue to be. Lime is sometimes described as by far the cheapest alkali available, and alkali are a group of chemical compounds without which a whole host of industrial processes simply cannot run. This is what makes these minerals so exciting to us as a Group. OUTLOOK As we enter FY24, we have several important areas of focus including the completion of the remaining transactions from CRH and seamlessly integrating these assets. Once integrated we will turn our attention to delivering the previously outlined synergies, enhancing cash flows, and reducing leverage, thereby setting a strong foundation for further growth, with a strategic focus on lime and limestone. The trading backdrop in the early months of 2024 remains similar to 2023, characterised by variability and challenges, conditions which our diversified market exposure is well set up to effectively address. The European construction sector continues to face challenges, in the residential segments, whilst ongoing infrastructure investment is expected to support ongoing project activity. Industrial demand will vary by sector, influenced by both local and global trends. In particular paper and pulp is having a better year, while steel production benefits from disruptions in other regions. Overall, however, we remain optimistic on the outlook for the year with respect to potentially improving demand for newbuild housing as expected interest rate cuts improve the wider construction climate. The likely reversal should have further spill-over effects in other areas of the economy benefitting our end markets in general. In closing, the past year has been a testament to our resilience and strategic foresight. As we move forward, we remain committed to facing challenges head-on and capitalising on opportunities for growth and development. Thank you for your continued trust and support. David Barrett Executive Chairman 17 March 2024 SIGMAROC ANNUAL REPORT 202317 Nordkalk site in Tytyri, Finland SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT CEO’s strategic report Nordkalk limestone CEO’s strategic report Dear Shareholders, In 2016, we launched SigmaRoc with the ambition to operate a portfolio of high-quality assets across Northern Europe which would give us an advantageous competitive position thanks to their market position, barriers to entry, margin and improvement potential and potential links to larger economic players. All of these features are clearly evident in what we now very simply describe as a leading European lime and limestone business. Lime and limestone are a unique group of products, critical to modern life and essential to a more sustainable world. Building a leading position in this sector is not easy and has been the long-term ambition of our group, initially through our acquisitions of CDH in 2019 and Nordkalk in 2021. Whilst market and operating conditions in both 2022 and 2023 became increasingly challenging, leading many competitors to pause their strategic growth ambition, we continued to integrate, grow and optimise our businesses with the same agility and focus that has been the hallmark of the Group. By retaining focus on our goals, we were able to execute the transformational strategic step in our evolution this year, through the acquisition of CRH’s asset base and successfully position ourselves as a leader in limestone and lime across Northern Europe. This pivotal evolution has not only brought strategic alignment across our operations but also paved the way for sustainable growth and enhanced shareholder value. 19 The journey to this point has been intricate and required a series of calculated assumptions and strategic steps, executed with precision and timeliness. The support from our shareholders and the relentless commitment of our team were instrumental in this journey. Their contributions have been the cornerstone in establishing SigmaRoc as a key player in the European lime industry, a sector vital to both construction and industrial applications. "Throughout the year, we successfully repositioned ourselves as a leader in limestone and lime across Northern Europe. This pivotal transformation has not only brought strategic alignment to our operations but also paved the way for sustainable growth and enhanced shareholder value." Max Vermorken Chief Executive Officer Max Vermorken CEO CEO’s strategic report This statement aims to provide additional context on the year that just closed, the steps taken, and how these steps now set the Group up for chapter two of its journey. We are now poised to focus on integrating our diverse operations into a synergistic whole, a compounding value creator, a driver of innovation, a leader in the sector, and hopefully the envy of the industrial minerals space. FINANCIAL PERFORMANCE The Group again delivered a strong performance against very challenging market conditions in 2023, a testament to the diversification and quality of the business, as well as the skill in execution of our team. Group revenue increased to £580m, a 2% LFL increase. Underlying EBITDA increased to £117m, an increase of 10% LFL. Underlying profit after tax increased to £58.8m, translating into underlying EPS of 8.12p, representing a 1% increase YoY. This evolution is very pleasing as the senior debt finance costs more than doubled between 2022 and 2023, reflecting rising interest rates. Tax expense increased also, from 15% to 17% of profit before tax, as some carry forward losses were used up in prior periods. The ability of the Group to deliver another year of underlying EPS growth is an enormous testament to the hard work of so many, in particular those seldomly mentioned in our annual report, our machine and plant operators, quarry staff and sales representatives who all look for ideas to improve the performance of the Group. Considering this performance on a more granular level, the Group performed particularly well given some of the local trading conditions. Overall volumes were down, as was to be expected, but by only 4% LFL, a modest drop when considering an average European construction output slowdown of 1.7% with 1.6% in the UK.1 The largest impact on volumes was therefore within the construction segment, particularly newbuild housing, where much action was taken early in the year. in line with our Industrial performance was overall expectations, for a year without volume growth on the back of overstocking in the paper segment, and a reduction in demand for some chemical applications. These lower volumes were compensated for by robust continued demand in steel, environmental and infrastructure projects. Considering these trends on a regional basis, our North West Region, comprising mostly construction materials businesses including more commodity-like products, had several challenging months to endure as they actively shifted focus from residential to infrastructure projects. Much progress was made to upscale the precast products. The integrated businesses in Wales and the Channel Islands delivered a strong year, despite several contractor bankruptcies in Jersey created disruption in this market. As a result, the North West Region recorded a LFL decrease in revenues of 1%, against a LFL decline in volumes of 8% and LFL underlying EBITDA improvement of 1%. The West Region also delivered a solid performance across its two platforms, Dimension Stone and Benelux. Initiatives taken in 2022, commercially and within production, helped 1.Global consulting firm Dimension Stone trade successfully through a challenging market, assisted by additional infrastructure work and overseas sales. The aggregates and concrete businesses both had good years, despite increased monthly volume volatility. West Region volumes decreased by 8% LFL, delivering overall revenues of €114m, a LFL decrease of 7%. In spite of the difficult trading conditions, the West Region was able effectively to manage its cost base and increase underlying EBITDA by 15% LFL, achieving a 473bps improvement in underlying EBITDA margin in the process. The new businesses in the Limburg Region and on the southern border of Belgium performed well, delivering more than expected in their first partial year of ownership. Our North East Region had a great year delivering on all strategic and financial priorities. The restructure announced at the end of 2022 helped deliver a more agile organisation, able to capture more value via commercial and operational initiatives. Revenues increased to €390m, a 3% LFL increase, on volumes down 3% LFL, driven mainly by weaker residential construction demand in the Nordics which has relatively low impact on profitability. The Lime, Poland and the Baltic businesses performed strongly, translating into a 12% LFL increase in underlying EBITDA and a 179bps improvement in underlying EBITDA margin. STRATEGIC DEVELOPMENT 2023 marked an exceptionally dynamic year in our Group’s history. At the end of 2022 we had identified several acquisition and investment opportunities that were available at depressed valuations, due to macro- economic uncertainty. This pipeline of bolt-on acquisitions consolidated our positions in Sweden, Finland, the Baltic states, Benelux and the UK, expanding our Group in terms of geography and product range in a year where volume growth was likely to be extremely challenging. As we embarked on integrating these bolt-on acquisitions, our focus shifted to an opportunity that has been a long-held ambition of the Group – the acquisition of CRH’s lime and industrial limestone assets. These very significant assets, known for their operational efficiency and value, presented a complex acquisition proposition, especially in a transaction climate that appeared less favourable. Notwithstanding the backdrop, our evaluation of the transaction was very clear and came from two perspectives: firstly, its financial viability, considering immediate and long-term earnings growth and our ability to achieve and maintain target ROIC levels; and secondly, the strategic value in elevating our status, not merely as a participant in the lime and limestone sector, but as a principal producer of these essential materials in Northern Europe. What followed were months of work by a small but dedicated team to deliver a transaction which if completed in full, would see our Group double in size and establish itself as Europe’s second largest producer by volume of a critical industrial and construction mineral. The project was ambitious and extremely challenging given its scale and structure. It required a significant scale up in debt facilities which our STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023two main banks, Santander and BNPP, fully underwrote. We further relied on equity investment from existing and new shareholders to fund the acquisitions. Despite the complexities, with the critical support from our shareholders we were able to finalise the transformative transaction by the end of November 2023. The acquisitions do more than just amplify our size in the lime sector. First, they clarify and accelerate our strategic direction, affirming our central commitment to the lime and limestone sector. Secondly, they bring us to a scale where concurrent objectives of compounding growth, share buybacks, dividend distributions, and debt reduction become achievable. Lastly, through geographic footprint and product offering, it transforms SigmaRoc into a unique asset backed industrial minerals group with much further potential. SAFETY The Group has made significant progress in safety throughout 2023, with our drive for continuous improvement prompting a fresh perspective on safety practices. Although reporting via our HighVizz application was already commendable, the implementation of learnings across the Group needed improvement. In response, our board safety committee introduced two fundamental changes. First, we launched a Group-wide supervisor training programme to ensure that supervisors are effectively fulfilling their roles. This training highlighted that, in many cases, individuals designated as supervisors were not fully performing their duties, leaving critical supervisory roles effectively unmanned. As a result, unsafe behaviours or key learnings at Group level were not consistently reaching operators. The second major change was the initiation of a safety audit programme. Similar in concept to a financial audit, the safety team of the Group, with a Group-wide mandate, now conducts audits at all sites to assess both the accuracy of safety documentation and the actual safety practices on the ground. These audits are designed to drive continuous improvement in our operations. 172 audits were conducted this year by Clint White, our HSE&P Director. An incredible feat reflecting our unwavering commitment to ensuring the highest standards of safety across all operations. A comprehensive review of the progress we have made can be found in the ESG section of this report on page 92. ENVIRONMENTAL AND SOCIAL Alongside safety we made good progress in a number of other facets of our ESG strategy in 2023. To document progress clearly, we have now included a dedicated ESG section in this report, starting on page 92. Of the many initiatives detailed in the ESG report, there are four projects of which we are especially proud. First, we believe we are the first kiln operation in Europe with a fully functioning carbon capture facility, capable of capturing CO2 at scale. The installation has been fully commissioned and is now capturing CO2 to calibrate the second stage of the CCUS process – either utilisation (U), 21 or sequestration (S). Progress is being made in both areas, with the help of additional testing facilities to ensure the quality and consistency of the captured CO2 for effective use in either U or S scenarios. The second project is the launch of a full-scale aggregates recycling installation in North Wales, which now treats and recycles 350kt tonnes of waste aggregates per year. This initiative will eventually liberate c.5m tonnes of virgin aggregate previously trapped beneath waste piles deemed of insufficient quality for recycling. This complements our recycling activities in Finland, Sweden, Belgium and the Channel Islands, where we are processing returned concrete, demolition waste and waste aggregates. The third project focuses on utilising 100% of the material extracted from our dimension stone quarries. Previously, stone not suitable for high-quality slabs or tiles was used for security bunds or construction aggregate – neither high in value nor value-add. Throughout the year, our teams in Belgium have explored various high-value applications for this stone, significantly enhancing its potential. Lastly, we have continued our efforts to clean our energy sources, both in terms of combustibles and electricity. Significant progress detailed in the ESG section on page 131 includes applications for wind turbines to supplement our solar arrays and increase clean energy usage at various production sites. Additionally, we are transitioning to biofuels for running our kilns, having already achieved a full week of operation solely on biofuels – a first in the industry. With respect to social targets we have made a leap forward as well, delivering over 22,000 hours of learning and development, as well as promoting diversity across the group with 42% of non-operational positions being held by women. At a local level our business continues to work closely with our communities, donating time and materials to community projects as well as land and water for community use. Overall, the progress in 2023 has been significant, paralleled by our active engagement in financial and growth objectives. More developments are expected in the future. NON-FINANCIAL AND SUSTAINABILITY INFORMATION STATEMENT The Company recognises the need to report on the on the principal risks associated with climate change and sustainability under the Companies Act. The Group has fulfilled their requirements to report under the act throughout the ESG section on pages 92-131. GOVERNANCE to make significant strides in We have continued governance, with the rollout of additional policies across the Group, further strengthening our commitment to robust and effective management practices, and establishing new board committees focusing on ESG and Innovation. These committees are instrumental in guiding our strategic direction in these critical areas, ensuring that we stay at the forefront of industry developments and maintain our commitment to sustainable and innovative practices. STRATEGIC REPORT CEO’s strategic report INNOVATION The fourth pillar of our 4i operational model, innovation, has seen notable advancement, extending beyond our ESG-related programmes. This year we have made significant progress in our product range and innovation investment, with three projects particularly standing out. First, we have made considerable further progress with our Greenbloc range. This product line is now incorporated in almost all of our concrete products, available in three distinct performance levels. These levels provide a range of embodied CO2 reductions from 50% to 90%. Looking ahead, we aim to surpass the 100% mark, positioning ourselves as pioneers in producing large-scale negative carbon concrete products. In our quest for innovation, we have initiated a scheme to fund external technologies that can make our products more competitive, advanced and/or sustainable. HighVizz was an early success within this initiative and building on this, we have now formed a partnership with Mevo. Mevo is a revolutionary new technology for the grinding and blending of non-cementitious minerals, imparting certain binding properties to the materials. We have supported Mevo in raising £15m in venture funding and have assisted in the construction of its first large- scale plant. Once operational, we anticipate that Mevo’s technology will be at the forefront of decarbonising all our concrete products. POST PERIOD ANNOUNCEMENTS On 4 January 2024 the Group successfully completed the first of three proposed CRH Lime acquisitions, and in conjunction with CRH Deal 1 completed admission of the Group’s enlarged share capital with a £200m gross equity fundraise and new €875m senior finance facility. On 1 March 2024 the Group issued notice of exercise of the call option to acquire CRH’s UK lime operations for a total consideration of €155m, with the transaction expected to complete by the end of March 2024. OUTLOOK SigmaRoc’s impressive performance in 2023, reflected in our robust financial results, underscores the inherent strength and quality of our assets and operations. Since January 2024, we have welcomed several new businesses into our Group, and this expansion is set to continue as we acquire the remainder of CRH’s European lime businesses in a planned phased approach. Each of these acquisitions represents high-quality assets with strong market positions, reinforcing our confidence in the sustained performance of not only our existing operations but also those of the recently integrated businesses. This report was approved by the Board on 17 March 2024. Max Vermorken Chief Executive Officer SIGMAROC ANNUAL REPORT 202323 CEO Max Vermorken taking Harvard students around the bluestone quarry at CDH in Soignies in February 2024 2023 timeline of key events JANUARY Acquired Juuan Dolomitik for an effective multiple of 2.6 times recurring EBITDA. JD is a specialist supplier of high-quality dolomitic limestone used in the agricultural and environmental sectors to improve regulation of soil pH and water retention. JD’s operations are located close to the Group’s existing Finnish business and represent a into dolomitic limestone. extension valuable MARCH Publication of annual results for 2022 and notification of AGM to be held in April 2023. Notification that the Group had been successful in its claim to seek compensation from the Swedish state in respect of land use restrictions. MAY held hearing Court in relation to the Company’s capital reduction which was approved by Shareholders at the AGM in April 2023. FEBRUARY APRIL JUNE of and leading Acquired Goijens, a ready-mixed supplier recycling concrete solutions in Belgium, at an effective multiple of 5 times recurring EBITDA. The Group raised £30m to accelerate execution on a pipeline of acquisitions, disposals and investment projects across the Group, which had been assembled over the previous 12 months. launch of Successful the Group’s first carbon capture facility at Nordkalk’s Köping site in Sweden. The fully scalable system, capture carbon utilising Aqualung’s innovative membrane technology, is the first-ever implementation of its kind in the industry. of leading Acquired Retaining, a manufacturer specialty retaining wall systems, for an effective multiple of 2.9 times EBITDA. average recurring Retaining fits well with the PPG Platform, expanding its range of walling solutions, which already includes the patented Alfabloc, as well as extending PPG’s reach into the north of the UK. AGM held and all resolutions passed. Publication of 2023 ESG that report. Notification the Swedish state appealed the March 2023 verdict relating successful to claim and subsequently the Group also appealed. the Group’s STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023 JULY CCP. partnership Strategic with Material Evolution to develop new range of low carbon concrete products, with trials commenced at innovative The manufacturing process enables the production of cement at ambient temperatures by using various waste materials and feedstocks, eliminating reliance on fossil fuels. Acquisition of ST Investicija which operates three quarries in Lithuania. 25 SEPTEMBER interim Publication of results and update on sustainability initiatives, including Aqualung carbon capture project, and with Materials partnership Evolution for low carbon cement. Completion of the acquisition of four concrete plants within Northern France, close to the Belgian border, in conjunction with the establishment of acquiring and operating entity Betons. NOVEMBER agreements to Conditional acquire certain European lime businesses from CRH, alongside an equity placing for £200m and updated bank facilities as part of the financing. Publication of AIM Admission Document and general meeting agenda in relation to the acquisitions. Update on sustainability issues, including cement-free carbon in negative concrete blocks partnership with Carbon8. Nordkalk collaborates with OX2 on the development of e-fuel production. Nordkalk celebrates 125 years of excellence and unveils innovative new products. AUGUST OCTOBER DECEMBER Completed the acquisition of Björka Mineral, a leading supplier high-grade limestone and dolomite powders in Sweden. of General meeting held with all resolutions passed in respect of the proposed acquisitions from CRH to create one of Northern lime and Europe’s limestone producers. leading in Publication of Q3 trading update and the integration of businesses acquired the course of 2023 progressing well and delivering expected synergies. The Aqualung carbon capture unit completed trials to capture CO2. Launch of Puccini revolutionary, highly Blue, a sustainable re-interpretation of Belgium Blue Stone. SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Key developments Fels kilns in Rübeland, Germany Bolt-on acquisitions during 2023 27 In February 2023, the Group raised £30m of equity to accelerate execution on a pipeline of acquisitions across the Group, which had been assembled over the previous 12 months. The acquisitions were made on an average EV/ EBITDA multiple of 3.9 times and are expected to contribute an additional c. £8m of annualised EBITDA. A summary of each of the acquisitions is as follows: GOIJENS, BELGIUM The acquisition of Goijens, a leading supplier of ready-mixed concrete and recycling solutions, was closed at an effective multiple of 5 times recurring average EBITDA for the years 2020 to 2022. As with other acquisitions the Group has made, we expect synergies and operational improvements to reduce the effective multiple paid and Goijens traded ahead of the acquired EBITDA in its first months of ownership within the Group. JUUAN DOLOMITIK, FINLAND The Group completed the acquisition of Juuan Dolomitik for an effective multiple of 2.6 times recurring average EBITDA for the years 2020 to 2022, pre-synergies and operational improvements. JD is a specialist supplier of high-quality dolomitic limestone, used in the agricultural and environmental sectors to improve regulation of soil pH and water retention. JD’s operations are located close to the Group’s existing Finnish business and represent a valuable extension into dolomitic limestone. JD adds approximately 1.5m tonnes of reserves, equating to roughly 30 years of operating life, and €1.5m of revenues to the Group. RETAINING, UK In April 2023 the Group closed the acquisition of Retaining, a leading manufacturer of specialty retaining wall systems, for an effective multiple of 2.9 times recurring average EBITDA for the years 2020 to 2022, before expected synergies and operational improvements. This business fits well with the PPG precast platform, both expanding its range of walling solutions, which already includes the patented Alfabloc, as well as extending PPG’s reach into the north of the UK. ST INVESTICIJA, LITHUANIA In July 2023 the Group acquired aggregates supplier ST Investicija and its subsidiaries, which operate three quarries in Lithuania. The acquisition materially strengthens the aggregates business of our Baltics platform, bolstering the mineral position and quarrying assets of the Group in this region. BJÖRKA MINERAL, SWEDEN In August 2023 the Group acquired Björka Mineral, a subsidiary of Swiss industrials materials group Omya, for an undisclosed sum. Björka Mineral is a leading supplier of high-grade limestone and dolomite powders. It operates three quarries that are synergistic to the Group’s existing operations in Sweden. BETONS, BELGIUM/FRANCE BORDER In September 2023 the Group formed Betons and acquired four concrete plants located in Northern France from leading limestone producer Groupe CB. The concrete plants were acquired for an initial consideration of 3.5 times recurring EBITDA for the year 2022. Goijens production site, Belgium • CRH Deal 3 Consists of the Polish lime operations of CRH for a total consideration of €100m, to be funded from deferred consideration. Deal 3 is subject to a call option, whereby SigmaRoc has been granted the right (but not the obligation) to acquire the Polish lime operations of CRH. The Polish lime operations are also integrated within other CRH businesses and similarly need to be carved out into a standalone entity before they can be acquired. Deal 3 is anticipated to complete toward the end of 3Q24 and is subject to anti-trust filings. On an FY22 pro-forma basis the enlarged group, being SigmaRoc plus the Acquisitions, would have reported the following key metrics: underlying revenue in excess of £1b underlying EBITDA of £211m • • • mineral reserves of c. 2.7b tonnes • • operations in 14 countries over 3k employees Strategically the Acquisitions represent an opportunity to become one of Europe’s leaders in lime, combining high quality businesses and complementary footprints, positioning the Group as either the number one or number two participant in all its key lime markets. Lime and limestone are key resources in the transition to a more sustainable economy and lime products are natural carbon absorbers. New applications for lime and limestone products as part of a drive for sustainability include the production and recycling of lithium batteries as part of increasing electrification, the decarbonisation of construction including through substitution of cementitious material, and new building materials, and environmental applications including lake liming, air pollution control and direct air capture. Furthermore, the Acquisitions are aligned with the Group’s ESG and net-zero ambitions, positioning the Group to be part of CCUS hubs, and giving the Group a strategic role in the decarbonisation of key industries such as steel and chemicals. CRH Lime Acquisitions On 22 November 2023, the Company announced the conditional and transformational acquisition of a comprehensive portfolio of European lime and industrial limestone assets from CRH, alongside a £200m equity fundraising and new €875m debt facility. The acquisitions are independent of each other, but on a combined basis represent a total consideration of €1bn, with €825m initial and €175 million deferred consideration. The acquisitions are structured as follows (with Deal 1, Deal 2 and Deal 3 collectively representing the ‘Acquisitions’): • CRH Deal 1 Comprises German, Czech and Irish lime and industrial limestone businesses for a total consideration of €745m, subject to customary purchase price adjustments. The consideration satisfied by a combination of €230m from gross equity proceeds, €350m drawdown from the new debt facility and €75m deferred consideration. Due to its size, Deal 1 comprised a reverse takeover of the Company under the AIM Rules for Companies and was therefore conditional on Shareholder approval, which was obtained at a general meeting held on 11 December 2023. Deal 1 has been completed on 4 January 2024, bringing to the Group 1 billion tonnes of reserves, over 850 employees, and annualised revenues of over €350m. The addition of these assets transforms the scale of the Group’s industrial minerals business and is expected to unlock significant financial, operational and strategic benefits. • CRH Deal 2 Consists of the UK lime operations of CRH for a total consideration of €155m, to be satisfied entirely by drawdown from the new debt facility. Deal 2 is subject to a call option, whereby SigmaRoc has been granted the right (but not the obligation) to acquire the UK lime operations of CRH. The UK lime operations were integrated within other CRH businesses and have been required to be carved out into a standalone entity before they can be acquired. Deal 2 is expected to complete at the end of March 2024, with the Group having exercised its call option on 1 March 2024. Fels kilns in Münchehof, Germany STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023Building a sector leading industrial mineral business #1* in Sweden #1* in Norway #1* in the UK #1* in Ireland SigmaRoc enlarged footprint SigmaRoc sites CRH Deal 1, 2 and 3 sites * Pro-forma FY22 figures for the enlarged Group assuming exercise of call options 29 #1* in Finland #2* in Germany #2* in Poland #2* in Czechia Fels site in Rübeland, Germany Aqualung Aqualung carbon capture unit in Köping, Sweden In 2023, SigmaRoc successfully installed and commissioned its first carbon capture unit at Nordkalk’s site in Köping, Sweden. The fully scalable carbon capture system, utilising Aqualung’s innovative membrane technology, is the first-ever implementation of its kind in the industry. The carbon capture system has been developed by Aqualung, a leading provider of membrane-based carbon capture and separation technology, based in Norway. Over the course of the preceding year, SigmaRoc reviewed an array of technologies including amine absorption, solid absorption, membrane and cryogenic. The Aqualung membrane technology was considered best suited for the Group’s operations based on the following factors: small footprint, low CapEx and operating costs, and a relatively low complexity and efficient solution. The system is modular and fully scalable, allowing SigmaRoc significant flexibility in the roll out of the solution. The Aqualung module installed in Köping can capture up to 25% of the process emissions emitted from a standard kiln and was initially designed as a ‘catch and release’ system to demonstrate the durability and efficiency of the membranes. The unit is able to capture CO2 with a purity of 96% through just 2 stages and has since been connected to a pilot purification module to simulate settings required to produce higher purities of CO2 for different end use applications that go beyond sequestration requirements. We believe review of alternative application is required whilst European Governments and third parties develops legislation, policies and sequestration infrastructure including pipeline, storage facilities and portside facilities to allow for commercially available sequestration. SigmaRoc is working with various businesses and solution providers with regards to the end use of CO2, including being involved with the NICE (Norvik Infrastructure CCS East Sweden) project to explore all CO2 utilisation and sequestration options. Nordkalk also secured part-funding from the Swedish Energy Agency for the implementation and scaling of the Köping carbon system with the intention to capitalise on the learning from the engineering, commissioning and operation phase of the initial module. SigmaRoc will continue to update on the progress as well as roll-out plans to implement the technology in all of Nordkalk’s operating kilns by 2030. "As a Group we are always on the lookout for interesting technologies that can help us advance our business and our operations. Aqualung is clearly that type of technology. Partnering with them to potentially decarbonise our operations well ahead of not just our timeline but probably the entire industry, is very exciting and the result of intense work across the Group, in particular at Nordkalk." CHARLES TRIGG CTO STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202331 CCP production site in Llay, UK Materials Evolution (Mevo) During the year, SigmaRoc entered a strategic partnership with Material Evolution, an advanced materials company producing low carbon cement from industrial waste streams, to develop a range of low carbon concrete products. Mevo has developed a process that produces an emission- free substitute for ready-mix and precast concrete. With the cement industry currently accounting for 8% of global CO2 emissions, there is growing demand for reducing its carbon footprint. Mevo’s innovative manufacturing process effectively addresses the problem of high CO2 emissions from conventional cement production by producing cement at ambient temperatures using various waste materials and feedstocks, thereby eliminating the reliance on fossil fuels. Trials for product development have commenced at CCP, SigmaRoc’s largest precast concrete manufacturer. "Our partnership with Mevo marks a significant step towards an emissions-free solution for ready-mix and precast concrete. Through our trials at CCP, we are confident that these innovative products will not only meet market demand but also pave the way to transforming the cement industry and driving sustainable innovation." FONS VERMORKEN CIO Greenbloc and environmental sustainability CCP Greenbloc as standard; Through 2023 Greenbloc technology has made significant strides in sustainable development across the business, offering up to 50% carbon reduction on all standard blocks produced at CCP Building Products. This has saved over 6,000 tonnes of CO2 since its introduction and has been offered at no additional cost to the customer. CCP completed its expanded new ranges by introducing an additional premium range product, which sits between its standard 50% reduction product and ultra cement-free, and provides up to a 70% carbon reduction at a competitive price. Poundfield Cement-free; Further Greenbloc cement-free development at Poundfield introduced a necessary flexible solution, enabling daily production and the ability to turn for environmentally cement-free concrete on-and-off the UK significant bespoke projects. These Environmental Agency’s Canvey Island Sea Defence and Jimmy’s Farm Polar Bear Relocation projects, both of which achieved over 80% reduction in the carbon embodiment of the concrete products. As a result of these initiatives, Poundfield has become one of the leading UK producers of cement-free pre-cast concrete, producing more wet- include cast cement-free concrete per day than any other precast company, and underscoring the industry’s shift towards more sustainable practices. The resulting media focus has brought more cement-free projects to the business for 2024. Greenbloc carbon-negative; A leap in innovation was gained through the production of a carbon-negative-cement-free concrete block, which boasted a 115% carbon reduction and was created using Greenbloc cement-free technology, combined with carbon-negative aggregate produced from waste materials and captured carbon. The block showed all the same characteristics and performance as standard equivalent cement-based blocks and is expected to become part of an extended future range with the introduction of Mevo at CCP in 2024. Marshalls collaborative Greenbloc – MTech; SigmaRoc has produced an in-house cement-free-carbon-negative concrete with patentable opportunities, in collaboration with Marshalls. The concrete combines carbon-negative materials with an in-house developed cement-free binder which incorporates upcycled waste lime kiln dust from Nordkalk. The patent application will be submitted in 2024 with expected opportunities for use in 2025. CCP production site in Llay, UK STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202333 Greenbloc products SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT About us Field in Reku, Finland 35 Lime for Life SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Why lime and limestone? From limestone to lime... FOOD CHEMICALS & OTHER PULP & PAPER Fodder Soil PH Control Soda ash Sugar Chemicals Paint Paper pulp Filing / coating QUARRYING Drilling & crushing Crushing / sieving Secondary crushing ENVIRONMENT STEEL CONSTRUCTION Quarrying Asphalt Roads Concrete LIMESTONE Desulphurisation Iron industry Building materials 37 ...one essential mineral for life Soil PH Control Chemicals Chemicals Chemicals Paper pulp Filing / coating Paper pulp Filing / coating Calcination of limestone Further crushing Hydration of quicklime Kiln calcination Hydration / carbonation Contaminated soil Steel prod. Water purification Water & air purification Steel prod. Soil stabilisation CSU AAC Earth-works Plaster, mortar Putty LIME SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Our vision To be Northern Europe's leading supplier of this essential mineral critical for life across the industrial and construction sectors. NEW GROUP REVENUE SPLIT1 BY GEOGRAPHY Germany - 26% Czechia - 5% UK - 11% Ireland - 2% Finland - 16% Baltics - 1% Poland - 14% Benelux - 9% 9% 14% 16% 22% 26% BY INDUSTRY Construction - 48% Steel - 22% Environment - 15% PPB - 7% Chemicals - 5% Food - 3% 5% 7% 15% 22% 48% BY PRODUCT 15% Lime - 56% Stone - 29% Products - 15% 29% 56% 1 Pro-forma FY22 figures for the enlarged Group assuming exercise of call options 39 The Group2 EBITDA MINERALS £211m C. 2.7Bt POSITION IN 5 COUNTRIES POSITION IN 3 COUNTRIES #1 #2 REVENUE £1B COUNTRIES 14 CORE SECTORS 6 SigmaRoc enlarged footprint SigmaRoc sites CRH Deal 1, 2 and 3 sites #1 in Sweden #1 in Norway #1 in the UK #1 in Ireland 2 Pro-forma FY22 figures for the enlarged Group assuming exercise of call options #1 in Finland #2 in Germany #2 in Poland #2 in Czechia Growing in markets with positive outlooks... Limestone value (2017 -2031) Lime value (2017 -2031) CAGR +1.6% +0.9% +1.7% CAGR +11.7% +3.6% +2.8% €824M €788M €881M €726M 73 101 63 111 291 60 94 77 99 374 38 100 79 106 426 108 84 111 476 €1.9B 227 140 82 107 401 €1.7B 202 133 75 92 342 857 986 €1.4B 164 121 134* 279 676 €804M 83 73 89* 139 420 87 83 75 74 2017 2022 2027 2031 2017 2022 2027 2031 Steel Construction Paper, pulp & board Food Environment Other Note: The above graphs only refer to the following countries: Sweden, Finland, UK, Ireland, Germany, Czechia, Poland. The value of limestone in the contruction industry excludes captive use for cement or captive use for lime production and excludes Aggregates with Low Calcium Carbonate content (<95%). SOURCE: Global consulting firm DID YOU KNOW? Lime products are natural carbon sinks Application Carbon. rates Timeframe Drinking water 100% Instantly Pulp & paper 93% Instantly Mortar 80-92% >4X faster recarbonation than other binders Flue gas 59-64% Instantly Steel 39-56% 3-6 months STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023...with huge long-term growth opportunities through new applications 41 Mega trend: Decarbonisation (of construction) DECARBONISATION OF CONSTRUCTION HOW WE ARE RESPONDING Many countries across Europe have embraced ambitious goals and comprehensive strategies to transition towards low-carbon and sustainable pathways. Spearheading this movement, the European Commission launched the EU Green Deal in 2019, committing the bloc to achieving climate neutrality by 2050. This initiative sets out a roadmap for reducing greenhouse gas emissions, enhancing energy efficiency and fostering green innovation across all sectors of the economy. The transition to a net-zero economy in Europe is projected to require substantial investment, with estimates suggesting that approximately €350 trillion will be needed in cumulative spending on physical assets globally over the next three decades, with a significant portion allocated within the next 10-15 years. This translates to an annual spending of €11.7 trillion, indicating a surge in demand for sustainable solutions across various industries as part of Europe's ambitious decarbonisation efforts. The decarbonisation of the construction industry in Europe stands as a pivotal mega trend in the global sustainability transition, with lime and limestone emerging as crucial resources. These versatile materials play an important role in various eco-friendly applications, notably as substitute cementitious materials, where they significantly reduce carbon emissions associated with traditional cement production. Moreover, innovations such as hemp lime for building materials showcase the potential of integrating sustainable practices into construction, offering both insulation properties and reduced environmental impact. Additionally, the incorporation of hydrated lime into asphalt mixes not only enhances durability and performance but also contributes to reducing the carbon footprint of transportation infrastructure. As the industry continues to embrace new building materials and techniques, lime and limestone stand at the forefront of facilitating a greener, more sustainable future for construction in Europe and beyond. KEY STATISTICS 2X The European Union's Renovation Wave Strategy aims to double the annual renovation rate of buildings by 2030, with a focus on improving energy efficiency and reducing carbon emissions. SOURCE: https://ec.europa.eu/ SUBSTITUTE CEMENTITIOUS MATERIAL PORT SLUDGE STABILISATION HEMP-LIME FOR BUILDING MATERIALS ASPHALT MIX WITH HYDRATED LIME NEW HOUSE BUILDING MATERIALS ...with huge long-term growth opportunities through new applications Mega trend: Electrification LITHIUM BATTERIES PRODUCTION LITHIUM BATTERIES RECYCLING ELECTRICITY GRID UPGRADES ELECTRIFICATION HOW WE ARE RESPONDING Lime plays a crucial role in the production and recycling of lithium-ion batteries, essential for powering electric vehicles and storing renewable energy. Limestone-derived products are integral in infrastructure projects related to electric grid upgrades, enabling the efficient distribution and utilisation of electricity. Electrification in Europe is not only essential for achieving net-zero emissions but also for driving efficiency and productivity across various sectors. By 2030, nearly two-thirds of emissions reduction in the European Union is projected to be accomplished through energy efficiency and electrification initiatives. The trend of electrification in Europe goes beyond personal vehicles, encompassing crucial sectors like lithium battery production and the electric grid. Lithium battery production is vital for powering electric vehicles and storing renewable energy. Upgrading the electric grid is essential for optimising energy distribution and improving reliability. SOURCE: https://about.bnef.com/ KEY STATISTICS 12m According to a report by Bloomberg NEF, electric vehicle sales in Europe are expected to reach 5.4 million units in 2025 and 12 million units in 2030, representing a significant increase from current levels. €7.5b The European Investment Bank (EIB) has announced plans to invest €7.5 billion in electricity network upgrades and smart grid projects across the EU as part of the European Commission's Clean Energy for All Europeans package. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023Mega trend: Environmental protection 43 ENVIRONMENTAL PROTECTION HOW WE ARE RESPONDING The mega trend of environmental protection in Europe is gaining momentum, with innovative applications emerging to safeguard crucial ecosystems and combat pollution. Efforts such as ocean and lake liming are being explored to restore acidity balance and promote marine biodiversity. Additionally, initiatives like Air Pollution Control Residues cleaning tackle industrial waste, ensuring cleaner air and waterways. Shipping emissions, a significant contributor to pollution, are being addressed through regulations and advancements in green technology. Moreover, the concept of direct air capture is gaining traction, offering a promising solution to remove carbon dioxide from the atmosphere. As Europe prioritises environmental stewardship, these diverse approaches underscore the region's commitment to preserving natural resources and mitigating the impacts of climate change. In ocean and lake liming, limestone is used to neutralise acidity and restore pH balance, thereby enhancing water quality and fostering the growth of aquatic life. Air Pollution Control Residues cleaning often involves the use of lime to treat industrial waste, neutralising harmful pollutants and reducing environmental impact. Lime is also employed in shipping emissions control, where it serves as an absorbent for sulphur dioxide emissions, mitigating air pollution from maritime activities. Furthermore, in the emerging field of direct air capture, lime-based sorbents are being explored as a means of capturing carbon dioxide from the atmosphere, aiding in climate change mitigation efforts. KEY STATISTICS €130b SOURCE: https://ec.europa.eu/ General government expenditure in the EU on environmental protection amounted to €130 billion in 2022. OCEAN LIMING LAKE LIMING DIRECT AIR CAPTURE AIR POLLUTION CONTROL RESIDUES CLEANING SHIPPING EMISSIONS (FLUE GAS) SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Our core operating principles Core operating principles 1 We own quarries as their fixed costs are manageable and barriers to entry are high. 2 3 4 We help and empower local managers to become best in class operators. We seek to sell everything we quarry and add downstream activities only locally. We confront industrial challenges be it footprint or product. This gives us PRICING POWER This gives us COST CONTROL This gives us MARGIN EXPANSION This gives us A COMPETITIVE EDGE We call this INVEST We call this IMPROVE We call this INTEGRATE We call this INNOVATE Key deductions 1 2 3 4 Quarries produce many products which can serve diverse growing end markets. Integration is mostly horizontal across the products spectrum and along the value chain. Targeted value enhancing acquisition means accelerated organic growth We deliver value responsibly with a positive impact on society and the environment. This gives us DIVERSE END-MARKETS This gives us an AGILE STRUCTURE This is DISCIPLINED CAPITAL ALLOCATION This gives us ESG LEADERSHIP 45 the first-ever implementation of its kind in the industry. For further information see our announcement of 22 June 2023. Following initial commissioning at Köping in June 2023, the Aqualung CO2 capture module started the second phase of its programme in October, consisting of the preparation of captured CO2 for industrial use. A dedicated purification, compression and installed to transform captured CO2 into an industrial gas capable of being using in industrial processes or sequestered in CCS facilities. liquefaction unit was 3. Strategic partnership with Materials Evolution Earlier in July SigmaRoc announced that it had entered a strategic partnership with Material Evolution, an advanced materials company producing low carbon cement from industrial waste streams, to develop a range of low carbon concrete products. Trials for product development have already commenced at CCP. Further information is available on pages 26-31. Based on our strategy, since inception and during 2023, we have been able to continue to grow through acquisition and organic growth. With each business, by adhering to our investment principles and applying our Improvement and Integration programs, we have ensured both improved performance and value. Aqualung membrane Applying the Strategy in 2023 In February 2023, the Group raised £30m to accelerate execution on a pipeline of acquisitions, disposals and INVESTMENT projects across the Group, which had been assembled over the previous 12 months. The Group completed six acquisitions in 2023: 1. Goijens Concrete Group, Belgium 2. Juuan Dolomitik, Finland 3. Retaining Holding Limited, UK 4. Björka Mineral, Sweden 5. Betons, Belgium 6. ST Investicija, Lithuania Our businesses continued to focus on IMPROVING, allowing us to enhance our existing facilities, as demonstrated by several strategic initiatives including the development of an asphalt plant. The Group commenced construction, installation and commissioning of a new asphalt plant that will be able to supply up to 150 tonnes per hour of both hot and cold asphalt, as well as the production of sustainable asphalt using proven nappy-cycle and recycled asphalt. The site will allow the Group to expand its product and service offerings along the M4 corridor to existing and new customers including local communities, SWTRA and large infrastructure projects. The recently acquired businesses were INTEGRATED into the wider Group network. As we have done consistently to date, we will look to integrate our newly acquired businesses and continue to unlock synergies where appropriate. We continue to INNOVATE through various new and ongoing initiatives: 1. Development of Biofuels The Group continues to develop the use of its alternative fuels program, including biofuels, across its kiln network. The project has achieved success in continual timed operation of 100% substitution of biofuels whilst achieving up to 50% biofuels in other kilns as the Group continues its development program. 2. Installation of Aqualung, first phase As already announced, the Group successfully installed and commissioned its first carbon capture unit at Nordkalk’s site in Köping, Sweden. The fully scalable carbon capture system, utilising Aqualung’s innovative membrane technology, is Sustainable long-term growth track record *Ronez was acquired in January 2017 I I E L P T L U M A D T B E N O T S U Q C A I I I ALLEN CONCRETE 6.3x HARRIES 7.6x RONEZ* & SIGMAGSY 9.0x POUNDFIELD 6.8x CCP 5.9x CUVELIER 4.4x I A D T B E & E U N E V E R S P E I O T A R E G A R E V E L 0.2p 2.0p 3.8p 4.2p TARGET <2.0X 1.63x 2.07x FY16 FY17 FY18 FY19 STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023 B-MIX 3.9x CASTERS 3.9x GDH 1.0x JOHNSTON 7.6x RIGHTCAST 5.0x CARRIERES DU HAINAUT 6.8x NORDKALK 6.9x LA BELONGA 7.0x 47 JUUAN DOLO. 6.4x GOIJENS 5.3x RETAINING 6.4x BJÖRKA MINERAL 3.2x BALTIC AGG. 3.7x BETONS 3.4x FY23 REVENUES £580m FY23 EBITDA £117m 4.5p 5.4p 8.0p 8.1p 1.69x 1.70x 1.77x 1.57x FY20 FY21 FY22 FY23 Cumulative growth and returns... EBITDA improvement1 Invested EBITDA at each acquisition Improved EBITDA based on FY23 RONEZ 20172 PRE NORDKALK 20213 PRE CRH LIME4 +29% +57% +60% 2017-2023 2021-2023 2017-2023 EBITDA ACQUISITION MULTIPLES 9.0x 5.6x 6.9x 4.4x 6.7x 5.3x Pre synergies Post synergies & improvements 1Excludes corporate overheads 2Ronez only 3Everything pre Nordkalk 4Everything pre CRH lime Norkalk limestone quarry in Pargas, FInland STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023...with a consistent track record of improving acquired businesses FY23 EBIT ROI for acquisitions (EBIT / acquisition EV) 49 Acquisitions made in FY23 Average at 14% ACQUISITIONS PERFORMING WELL Good track record of acquisitions since IPO • • • £680m invested in 18 acquisitions £400m new equity Strong track record of improving acquired businesses with 29% average uplift in EBITDA post-acquisition Generating strong returns FY23 average EBIT ROI of 14% expected for acquired businesses (inc. recent acquisitions) Focussed acquisition approach Companies targeted by: • Product, reserves, geography, market, customers • • Typical acquisition multiple <7x Targeting EBIT ROI>15% 5%5%9%10%11%12%13%14%14%16%18%19%20%21%21%22%28%29%ABCDEFGHIJKLMNOPQRStrategy, development, M&A During 2022 the Group embarked on an ambitious plan to increase its footprint and market presence via bolt-on M&A, strategic development projects and potential major transactions. In order to facilitate and coordinate this activity a new unit was created, managed by Emmanuel Maes as Chief Acquisition and Development Director. Emmanuel Maes CHIEF DEVELOPMENT AND ACQUISITIONS DIRECTOR joined SigmaRoc in Emmanuel 2019 and has been instrumental in developing the Group in Europe. Until December 2023, Emmanuel was in charge of the Group’s West region, developing its two platforms from acquisition to full integration. His work included the restructuring of the Aggregates and Dimension stone businesses and the delivery of significant performance uplifts in both. Additionally a concrete focussed platform was established containing 7 operational sites. Previously Emmanuel served as CEO of Group De Cloedt (2004-2018), a Belgian in dredging, company specialising production and commercialisation of sand, gravel and hardstone, building the business from €40 million to €240 million annual turnover, through organic growth and acquisitions. The mandate of this unit is threefold. Firstly, coordination of all acquisition and divestment activities; secondly the origination and execution on strategic partnerships and initiatives; thirdly, the preparation of certain businesses for further integration into the Group’s key regions. The activities of this new unit have been numerous. In the early parts of 2023, it coordinated an ambitious plan to acquire up to 8 bolt-on companies across Europe, 6 of which have since been acquired. It coordinated the disposal of four non-core assets and prepared the ground for further organic expansion and partnership initiatives. Looking ahead the unit will play a pivotal role in the Group’s strategy. Where a lot of the growth came from pure M&A work in the past, the Group’s new structure and scale will favour further organic investment and development work. Several projects currently undertaken are listed below. In order to achieve its goals the unit calls upon two further teams - finance and technical teams – within the Group to supplement its capabilities at times when the activities are most intense. In years to come we anticipate the workload of this team will increase and its delivery will be a key driver of the Group’s progress. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202351 Further information is available in the Key Developments section of the report. In addition to these transactional activities the Group made progress on a number of other fronts. RECENT DEVELOPMENTS 1. Ameli Green Lime Solutions Significant progress has been made with the incorporation of the company and the formal securing of a land plot in Dunkirk harbor. The ongoing permitting process is a crucial step towards operational readiness, aligning with the Group’s strategic expansion plans. 2. New Crushing and Screening Plant in Soignies, Belgium Investments in this facility underline the Group’s commitment to enhancing aggregate production capabilities. As preparations to assume commercialisation responsibilities by January 2025 continue, the Group is on track to further bolster its operational efficiency. 3. Baltic Aggregates Finland and Lithuania Our operations in Finland have shown strong performance, particularly in the local market, with promising beginnings in export to Baltic countries. In Lithuania, rapid integration efforts and a focus on safety and efficiency have yielded excellent financial results, setting the stage for further improvements and expansion. 4. Nordkalk Turkey Operating a limestone quarry in Eskibalikli, our joint venture in Turkey has demonstrated robust performance, affirming our ability to succeed in diverse markets. 5. Canteras La Belonga, Oviedo Acquired in partnership with Carrières du Boulonnais, our limestone quarry in Oviedo has shown commendable results, with significant improvements across various operational aspects. Our focus remains on enhancing reach, financial performance and expanding market particularly in the local and export markets. Malte Konig Development Director In 2023, the Group completed several acquisitions and divestments. The acquisitions: 1. Goijens Concrete Group, Belgium 2. Juuan Dolomitik, Finland 3. Retaining Holding Limited, UK 4. Björka Mineral, Sweden 5. Betons, Belgium 6. ST Investicija, Lithuania The divestments: 1. Disposal of industrial land and a disused quarry, Belgium 2. Disposal of grinding plant, Poland 3. Disposal of road maintenance business, Belgium Progress on integration of CRH Deal 1 Synergies: €33m incremental EBITDA identified to date million € 60 30 30 Validated Deal 1 synergies 33 2 Synergy ambition Deal 1 + 2 + 3 (by 2027)* Total potential identified so far (Deal 1 only) Synergies already being implemented in 2024 Synergies estimate with Deal 2* Synergies estimate with Deal 3* Synergies estimated by 2027* *Assuming exercise of call options Ambition for synergies with Deal 2 and 3* Implementation work already started with synergies worth €2m (Deal 1 only) PMI structure SteerCo Head of PMI Integration Synergies Legal Disposals Capital allocation Data cube Lime strategy Germany, Czech, Ireland Central Region UK North Region Poland North West Region East Region West Region STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202353 Guy Edwards GROUP HEAD OF INTEGRATION Elisa Frenay GROUP MARKETING LEAD Ludovic Emsens GROUP VENTURES LEAD SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Regions and Platforms Nordkalk limestone SIGMAROC ANNUAL REPORT 202355 Group structure Following the transformational acquisition of Nordkalk in August 2021, the Group’s geographical footprint, product offering and end-user markets changed substantially. Whilst wishing to retain the established platform model, which has proven effective in ensuring the businesses remain locally focused and agile, we saw the potential to enhance this through additional Group level structure to support further growth and expansion. In 2022 we augmented our platforms with an overarching regional structure. Each region has a Managing Director and Financial Director who are responsible and accountable for overseeing performance, steering development and driving growth. The regional structure aligns the Group as follows: Region MD FD Countries Platforms North West Michael Roddy Michael Crump UK Channel Islands West Eric Dothée Dean Masefield Belgium Netherlands Luxembourg Northern France PPG England Wales Channel Islands Dimension Stone Benelux North East Marcel Gestranius Marcel Gestranius Finland Quicklime Nordics Poland Baltics Sweden Norway Poland Baltics Spain1 1 La Belonga was acquired by Nordkalk and in 2023 reported into the North East Region; this will be reviewed as the Group develops. As part of the CRH Lime Acquisitions, the Group is expanding this structure to include a new Central Region, which consists of Germany and Czechia, as well as separating the North East Region into two, with the North Region comprising Finland, Sweden, Norway and the Baltics, and the East Region comprising Poland and Ukraine. Construction minerals are quarried lower-grade limestone or granite products, crushed to various size specifications, and sold as aggregate or processed into value-added products such as concrete blocks, pre-cast concrete, ready- mix concrete, and asphalt. Construction mineral customers range from: At a product level, the Group was structured around three core product categories which it used to assess performance, being industrial minerals, construction minerals and dimension stone. limestone material which Industrial minerals are higher-grade limestone products is produced from quarried processed into an ore and then ground into powders and granulates or burnt into quicklime, which can then be further processed through re-carbonation. Industrial minerals also include other high-grade specialised minerals such as dolomite and wollastonite. Industrial mineral customers are typically large national or multinational corporates under fixed annual supply agreements over long-term contracts. In most cases, these contracts include dynamic pricing mechanisms to adjust for changes in the price of key input costs such as energy and logistics. • Government Agencies and maintenance of vertical and horizontal infrastructure such as roads and sea defences. construction for • Large corporates for vertical and horizontal construction including commercial and residential. Independent house builders and contractors. • • Merchants and resellers including shipping agencies and wholesalers. • Individuals and small businesses undertaking small projects and home improvements. is natural limestone with unique Dimension stone characteristics (colour, texture and pattern) which is quarried as large blocks, processed into slabs, and then cut and finished to various specifications. Dimension Group structure stone is used in the construction market for infrastructure and residential projects as tiles, skirtings, paving, cladding and bespoke applications such as kitchen benches and swimming pools. Dimension stone customers include stone transformers and cutters, wholesalers, building merchants and contractors. Customer contracts range from multi-year development projects, structured supply arrangements and periodic or one-off orders. In terms of end-markets, the Group broadly fits into two primary categories, being construction materials and industrial minerals. Lime and high-grade limestone materials have many industrial applications, ranging from fillers in the production of cardboard to reactive agents in the treatment of flue gas, soil and water. The Group’s industrial mineral markets comprise: • Pulp, paper & board: Quicklime is required in the closed chemical circulation of modern pulp mills, helping decrease environmental impact of the production process. Approximately 250 kg of quicklime is required to produce a tonne of pulp. Quicklime and limestone are also used as filler in the production of paper and cardboard and more broadly in effluent treatment. • Metals & mining: Quicklime and limestone are used in various metal production applications, including steel and copper production and metal recycling. Quicklime is also an important chemical for regulating various processes in the mining industry. • Environmental: Quicklime, slaked lime and limestone powders are used to remove acidic compounds such as sulphur, chlorine and fluorine from flue gas before the chimney. Quicklime and slaked lime are also used to treat water, raising the pH level of drinking water and reducing toxicity of wastewater. • Agriculture: Quicklime in achieving sustainable and more productive agriculture, both in terms of livestock and farming. Limestone is also used to increase soil pH and in animal feed. is critical • Chemical: Finely ground limestone powders are used as fillers in paint and adhesives. Wollastonite is also used to enhance properties of paint, plastics and other unique applications. Quarried limestone and granite minerals are used in the construction of roads, concrete and other building materials. Construction materials markets are broadly categorised as either infrastructure or residential: • Infrastructure: Uses quarried limestone or granite minerals in the construction of large infrastructure projects such as roads, railways, bridges, ports, airports and commercial buildings. Primary products include aggregates, asphalt and contract services, ready-mix concrete, pre-cast concrete and dimension stone. the construction of various • Residential: Uses quarried in limestone or granite forms minerals large national of housing. Customers and housebuilders, individuals. Primary products include aggregates, pre-cast concrete and concrete products, ready-mix concrete and dimension stone. contractors developers, include STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202357 Nordkalk's locomotive in Miedzianka, Poland North West The North West Region is led by Michael Roddy and geographically covers England, Wales and the Channel Islands. It comprises four platforms which are detailed below. The North West is primarily focused on the construction industry, which accounts for 99% of revenue, and the core product group is therefore construction minerals, including pre-cast concrete and concrete products, ready-mix concrete, asphalt and surfacing, dimension stone and aggregates. MICHAEL RODDY MD OF NORTH WEST AND MD OF PPG Michael joined the company in in 2017 with the remit to assist in the growth of the Precast Products Group (PPG) platform. Since then, Michael’s role has expanded in line with the Group’s growth and today he oversees the North West Region as Regional Manager Director. As MD of the North West, Michael is responsible for overseeing the growth and development of the region in line with our core principles of “Invest, Improve, Integrate, and Innovate” across all platforms. Michael has over 20 years of experience in different leadership positions across the construction and industrial supply chain. Michael holds an MBA from Robert Gordon University and a bachelor’s degree in business from Dublin Institute of Technology. Wash plant in Aberdo, UK STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202359 Key metrics for the North West Region during the year were as follows: Statutory Results Underlying Results Financial metrics 2023 2022 Change 2023 2022 Change Revenue EBITDA £142.3m £139.5m £28.5m £28.3m +2% +1% £142.3m £139.5m £31.6m £30.0m +2% +5% EBITDA margin 20.0% 20.3% -30bps 22.2% 21.5% +70bps Sales volume metrics Construction mineral (tonnes) Dimension stone (m3) Operational metrics People Reserves and Resources (tonnes) Sites 2023 3.1m 3.0k 2023 676 185.5m 37 2022 3.3m 3.2k 2022 669 188.5m 35 Change -6% -6% Change +1% -2% +6% Reported revenue and underlying EBITDA were both up YoY in 2023, reflecting the impact of the acquisitions of Rightcast and Retaining, together with organic improvement in the underlying businesses. Construction mineral volumes were down as a result of JQG, CCP and Allen. JQG endured delays in infrastructure project work, which impacted quarry performance, while CCP and Allen have relatively large exposure to UK residential construction. It is testament to the quality of the management teams in the North West that they were able once again to increase earnings while experiencing softening volumes. MICHAEL CRUMP MD OF NORTH WEST AND FD OF PPG Michael joined SigmaRoc in 2019 and is currently Finance Director for the North West Region and the PPG Platform. In these roles Michael is responsible for transforming the financial processes from legacy systems to an integrated group structure. Furthermore, Michael has led the development of financial analysis and reporting to support the investment and growth of the businesses. Michael began his career in audit, initially in Australia and later in the UK with BDO. After qualifying he spent a number of years in various finance roles within Jaguar Land Rover. Michael holds a Bachelor of Commerce from Griffith University, Australia and is a member of The Institute of Chartered Accountants in England & Wales. PPG PPG is a group of companies specialising in manufacturing precast concrete products and blocks. The platform includes Allen Concrete, Poundfield Precast, CCP Building Products, Rightcast and more recently Retaining. With a triangulation of bases in London, on the East Coast and in the North West, PPG supply a wide and diverse range of industries ranging from house builders and farmers to national sea defence projects and international contractors, both directly and through merchants. The PPG companies are some of the most experienced and innovative in their industry with some operating for over 70 years and collectively owning a significant number of patents and licences. PLATFORM HIGHLIGHTS 2023 has been a very successful year for the PPG platform, with further growth across the businesses and another acquisition. The health and well-being of our staff remained our most important objective. To aid this, in 2023 we launched “Peptalk”, an app-based platform designed to promote employee engagement and wellbeing. Continued focus on behavioural safety techniques has led to a further reduction in incident severity and frequency. Safety pitstops were completed across the platform with focus on core risks, further enhancing the proactive safety culture. In terms of business performance, Poundfield achieved further growth in 2023, increasing revenue by 6% over the previous year. The bespoke division continued to see advancement in the size, scale and complexity of projects, undertaking significant jobs for HS2 and Mace along with a landmark cement free concrete project for the UK Environment Agency. Capital investment at the Creeting operation included the replacement of diesel forklift trucks with electric to reduce carbon emissions, and the continued increase in storage capacity, enabling the business for further growth. Due to the slowdown in the residential construction market CCP executed proactive cost control, enabling the business to deliver a strong result in a difficult market. As part of this process the business reduced its cost base by during the year, also placing itself in a strong position entering 2024. Development in technology further enhanced our ultra-low carbon concrete (ULCC) with all products offering carbon savings as standard (vs 100% cement alternative). The installation and commissioning of a new wash plant at Aberdo quarry was completed in the second half of the year, offering premium washed aggregates previously designated as waste, in turn releasing approximately 5 million tonnes of limestone reserve. Allen had another successful year, maintaining continued high service levels, which coupled with close relationships to our loyal customer base, resulted in a strong customer retention rate within a competitive market. Further investment at our Wellingborough plant resulted in the automation of a greater range of products reducing lead times, strengthening our product offering and reducing operating costs. A review, focus and site improvements in respect of the businesses’ core health and Safety risks, resulted in an LTI free year. Rightcast maintained its strong financial performance since its acquisition the previous year, maintaining LFL sales revenue and margin. Capital investment was focussed on improving the standard of employee welfare facilities. In April 2023 Retaining joined the platform and has gone from strength to strength since, exceeding expectations and the original forecast model. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202361 PLATFORM METRICS Key metrics for the PPG Platform during the year were as follows: People Reserves and Resources (tonnes) Sites 2023 262 13.2m 10 2022 249 13.8m 8 Change +5% -4% +25% The PPG Platform welcomed 28 new people when the Group acquired Retaining, offset by efficiency reductions in staffing in CCP and Allen. Poundfield production site in Ipswich, UK England Following the acquisition of the Johnston Quarry Group in January 2022, the Group established its England Platform focusing on quarried and mined limestone for the construction market. is a specialist quarried materials supplier Johnston producing construction aggregates and premium quality building stone, as well as agricultural lime for soil improvement. Its aggregate products are typically used in infrastructure projects, with its unique Cotswolds Ironstone and Bath Stone used in specified high end housing applications. The business currently consists of four quarries, three mines and two separate stone processing located across the Southwest, Oxfordshire and sites Lincolnshire. Apex City of Bath Hotel in Bath made out of Bath stone STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023PLATFORM HIGHLIGHTS In 2023, our core focus remained on enhancing the health, safety and well-being of our staff across all our businesses. We have continued to refine our behavioural safety techniques, leading to a decrease in incident severity and frequency. Specifically, we are conducting a comprehensive health & safety review of competence and training to further bolster our safety culture. Financially, Johnston's performance was bolstered by a thorough review of operating costs and integration into the SigmaRoc supply chain, resulting in substantial savings. Our commitment to high levels of customer service, strong customer relationships, and top-quality products has resulted in exceptional customer retention throughout the year. Moving forward, our Bath Stone Group's focus is on developing the mine to produce high-value dimensional stone products, positioning the company for future growth and increased market share. Plans are underway to initiate secondary processing of historic and new waste streams to generate additional income and create valuable void space, supporting continued expansion in the coming year. 63 Our strategic review of operations within Building Stone has identified key areas of operational efficiencies. We anticipate realising these efficiencies in 2024, contributing to our ongoing growth and success. In our quarries division, we observed strong production levels, an improved health and safety culture, and strategic investment across all sites, fostering further growth in the year and positioning the business for sustained, profitable expansion in the years ahead. Notably, the most encouraging aspect of the year within Johnston was the continued integration of the business, its people, supply chain and loyal customers into the wider SigmaRoc Group. As we look to the future, numerous opportunities exist across all sectors of the business to enhance efficiencies and output. With a new leadership structure in place bringing significant industry experience, we are poised to further elevate our operations. Furthermore, a full cost base review has us well positioned for 2024, providing significant headroom for growth when market conditions improve. PLATFORM METRICS Key operational metrics for the England Platform during the year were as follows: People Reserves and Resources (tonnes) Sites 2023 80 90.1m 7 2022 74 90.8m 7 Change +8% -1% - Johnston saw an increase in staff due to the internalisation of some quarry processes that were previously outsourced. Wales Harries is the cornerstone for SigmaRoc’s Welsh platform. Following the Group taking 100% ownership in September 2020, we have a significant footprint in the region with opportunities to expand the businesses organically and acquisitively. Harries is one of Wales’ largest independent suppliers of aggregates. Based in West Wales, it operates out of six granite and limestone quarries incorporating three asphalt plants, eight concrete plants and a wharf operation, as well as a civil engineering division delivering significant infrastructure projects. Following the award of the SWTRA contract and in preparation for tendering of the NMWTRA contract, the business has been restructured into two divisions: 1. 2. Construction Materials, which focuses on aggregates and ready-mix concrete. Construction Services, which focuses on civil engineering, road surfacing, road construction and asphalt. Harries quarry at Bolton Hill, Wales STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202365 Harries primary crusher at Bolton Hill, Wales PLATFORM HIGHLIGHTS The Wales Platform achieved steady organic growth during 2023, which is attributed to strong price improvements and better operational efficiency. The £1.5M primary crusher CapEx project at Bolton Hill was completed and delivered operational improvements throughout the second half of the year. Work commenced on the new asphalt plant in Llandarcy (£3.6m Growth Investment) and has progressed well with commissioning and first commercial sales commencing in March 2024. Harries delivered several successful major projects through the SWTRA surfacing framework and also secured a position on the Southwest Wales Regional Civil Engineering Contractors framework, which is worth an estimated £9m in net sales over three years. Innovation continued to be a key focus during 2023, with Harries developing several innovative concrete mixes to support specific project requirements. Harries progressed the development of low carbon concrete mixes and introduced liquid screed to our Cardigan ready-mix plant, to open up new territory for this market. With regard to sustainability, Harries supported and delivered several renewable projects at the Celtic Freeport in Pembroke and continued to develop internal renewable projects at three key sites, securing grid connections for the projects in the year. Harries also developed a partnership to investigate the feasibility of replacing fossil fuels with Green Hydrogen with Trafigura and H2Energy. Harries also completed a carbon baseline assessment and a net-zero reduction plan, which will be supported by internalising renewable energy sources. PLATFORM METRICS Key operational metrics for the Wales Platform during the year were as follows: People Reserves and Resources (tonnes) Sites 2023 202 72.0m 14 2022 209 73.5m 14 Change -3% -2% - Operational efficiency improvements in the Wales Platform led to a slight reduction in headcount during 2023. Channel Islands Ronez’s operations supply the Channel Islands with aggregates, ready-mixed concrete, asphalt and precast concrete products and services. Operating out of multiple sites across Jersey and Guernsey with satellite offerings on other islands, Ronez offers a full range of high- quality construction products and services. The creation of a shipping division, SigmaGsy, by SigmaRoc upon acquisition of Ronez has helped with transporting dry-bulk materials to and from our own sites as well as third party sites in the UK and Europe, resulting in higher profits and operational efficiency. MIKE OSBORNE MD OF CHANNEL ISLANDS Mike Osborne is the Managing Director of the Channel Islands platform, reporting directly to the CEO, having previously been Managing Director from 2007 until the company was acquired by SigmaRoc in 2017, and has been responsible for Ronez’s strategic direction and operational management. Ronez continues to be a cornerstone asset of SigmaRoc, delivering consistently strong results with a history of riding the economic cycle normally associated with the UK. Ronez block plant in Jersey, Channel Islands STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202367 PLATFORM HIGHLIGHTS The headwinds that developed during 2022 intensified Islands Platform during 2023, with for the Channel exceptionally high interest rates impacting the commercial viability of many developments. These factors also contributed to high profile insolvencies in the construction sector which precipitated a loss of confidence in parts of the market. inflation and rising Whilst housing and commercial development remained subdued, asphalt and our contracting business saw improved volumes and increased market share. Aggregate volumes were also very strong in Guernsey, with significant contracts being supplied in power infrastructure and the sports sector. This, combined with the strong asphalt performance, whilst also benefitting from ongoing productivity and efficiency gains, resulted in a platform EBITDA that was broadly in line with the prior year. Development work for the quarry extension in Jersey and for the new quarry at Chouet in Guernsey progressed to plan, with both sites to be operational in 2024, providing reserves that will underpin the business through the next two decades and beyond. The underlying housing demand in the islands, together with considerable investment that is planned in ports, health and educational infrastructure, is anticipated to create a considerable increase in demand across all product streams in the mid-term. PLATFORM METRICS Key operational metrics for the Channel Islands Platform during the year were as follows: 2023 2022 Change People 139 140 -1% Reserves and Resources (tonnes) 10.1m 10.3m -2% Sites 6 6 - Some streamlining of processes led to a minimal reduction in staff in the Channel Islands during 2023. West The West Region is led by Eric Dothée and geographically covers Belgium, the Netherlands, Luxembourg and Northern France. It comprises the Dimension Stone and Benelux platforms, which are detailed below. Currently, the West Region is solely focused on the construction industry and the core product groups are dimension stone and construction minerals. Key metrics for the West Region during the year were as follows: Statutory Results Underlying Results Financial metrics 2023 2022 Change 2023 2022 Change Revenue EBITDA €113.8m €102.5m €26.5m €20.9m +11% +27% €113.8m €102.5m €27.8m €21.7m +11% +28% EBITDA margin 23.3% 20.4% +290bps 24.4% 21.2% +320bps Sales volume metrics Construction mineral (tonnes) Dimension stone (m2) Operational metrics People Reserves and Resources (tonnes) Sites 2023 2.4m 0.8m 2023 518 266.0m 11 2022 2.4m 0.9m 2022 496 269.1m 6 Change 0% -11% Change +4% -1% +83% Revenue and underlying EBITDA are up YoY through a combination of the acquisitions of Goijens and Betons during the year, organic improvement in the underlying businesses, and effects of dynamic pricing arrangements improving margin. The primary drivers of the organic improvement in the West Region were proactive cost management in CDH, mitigating the impact of softer volumes, and then across the Benelux platform, in particular Goijens, which increased underlying EBITDA by over 50% LFL. Construction mineral volumes were steady YoY, however dimension stone experienced some softness due to weakening residential demand and this carried through into revenue. The acquisition of Goijens and the creation of Betons saw an increase in staff and sites in the West Region. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202369 ERIC DOTHÉE MD OF WEST Eric joined SigmaRoc in January 2024 as MD of West. Before joining SigmaRoc Eric was CEO of Eaglestone Luxembourg and a member of the ComEx of Eaglestone Group, a pan-european real estate developer. Prior to Eaglestone Luxembourg Eric was Head of Business Development and Asset Management at IKO Real Estate, where he ran the department of Marketing & Communication from 2010 to 2020. He was also a Director at IKO AM, an asset and investment company focused on Asian investors. Eric holds a M.Sc. in Management from the Solvay Brussels School Economics & Management in Brussels, where he majored in Finance. He is certified as a real estate professional in Luxembourg and was a Board Member of LuxReal. DEAN MASEFIELD FD OF WEST, DEPUTY GROUP CFO Dean has occupied numerous roles within the SigmaRoc Group, initially as Finance Director of the Channel Islands Platform, then as Finance Director of SigmaRoc, and more recently as Deputy CFO and Director of Investor Relations. Prior to joining SigmaRoc, Dean held several roles within the finance industry in Jersey, predominantly in trust companies and banks, including a Head of Finance role at BNP Paribas. Dean started his career providing audit, accountancy and tax services and qualified with BDO in Jersey. Dean is a fellow of the Institute of Chartered Accountants in England and Wales. CDH production site in Soignies, Belgium Dimension Stone CDH is the world’s largest producer of Belgian blue limestone. CDH presently produces around 115,000 cubic metres of blocks, together with around 800,000 square metres of sawn blocks, of high quality Belgian Bluestone per year, a high-grade dimension stone produced exclusively in Belgium under European protected status. Belgian bluestone can be found in infrastructure and residential projects across the globe. Our Dimension Stone platform is well positioned with reserves and resources of over 150 million tonnes of construction aggregates and over 28 million cubic metres of high quality Belgian Bluestone. The business employs over 420 people and has a proud history dating back 130 years. Due to its high quality and distinctive characteristics, Bluestone is a Global Heritage Resource and a sought- after product that travels worldwide (unlike most aggregate products). Bluestone can be used in residential, commercial and infrastructure projects, as well as for architectural and cosmetic applications. CDH bluestone tiles STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202371 Kitchen island in Puccini Blue PLATFORM HIGHLIGHTS in Safety: Reorganisation of production department order to develop higher agility and ensure management and supervision is present, active and visible on the work floor. It allowed us further to increase safety awareness and behaviour which resulted in significantly improved frequency and severity rates. Environment: Implementation of conditions linked to permit for expansion of the quarry. First phase of the new public road is completed. Previous overburden area has been handed over to the city of Soignies and transformed into a recreation area. Construction of noise walls ongoing. Additional permit demand for increased solar energy is launched. Partnership to be finalised for development of 2 windmills. Continuous efforts to develop biodiversity on the site resulted in the visit of their majesties The King and Queen of Belgium on the 9th of March 2023. Performance: Significant decrease in sales volumes (due to downturn in residential construction in our main markets) was compensated by improved margins and productivity improvements. Main projects included the city centre of Charleroi, Adolphe Max Boulevard in Brussels, the area around the previous stock exchange of Brussels and the restoration of Notre Dame de Paris. Development of Pucchini line which combines innovation, product development and raw material performance. Operations: Start up of new stone cutting line DE25 which increased productivity in finished products department. Further focus on raw materials yield (Puches) with proven results. PLATFORM METRICS Key operational metrics for the Dimension Stone Platform during the year were as follows: People Reserves and Resources (tonnes) Sites 2023 387 73.2m 1 2022 405 73.5m 1 2023 -4% - - Efficiency improvements in operational processes led to a slight reduction in staff in the Dimension Stone platform during 2023. Benelux Following the Group taking-over of all LafargeHolcim’s production installations located at CDH in April 2021, shortly followed by the acquisitions of the B-Mix and Casters businesses in Belgium, SigmaRoc created the Granulats du Hainaut aggregates brand and separated its European heavy-side materials operations into two separate platforms. CDH continued as a Europe wide dimension stone platform and a new, integrated, concrete and construction aggregates Benelux platform was created, including the GduH, Cuvelier, B-Mix and Casters businesses. There are >190Mt of aggregate reserves and resources attributable to the Benelux platform, in addition to the CDH bluestone reserves and resources. The Benelux platform produces over 2 million tonnes of aggregates and over 350,000 m3 of concrete, servicing the Hainaut, Liege and Limburg markets. Our aggregate products supply a range of partners and construction companies with products for concrete, sea defence work and riverbank fortification. The aggregates business is led by Christophe Huyghebaert and concrete by Dirk De Leus. PLATFORM HIGHLIGHTS The Belgian ready-mix concrete plants had a very strong year, with dynamic pricing and active cost control translating into improved profitability. Cuvelier also reported a good year, bolstered by strong market demand that led to increased production volumes and solid profit margins. Our quarry in Soignies, Granulats du Hainaut, also performed commendably. The volumes produced were in line with our projections, primarily driven by our contract with Holcim, resulting in the quarry's EBITDA being in-line with budget. Looking ahead to 2024, Granulats du Hainaut is gearing up for a busy year. This includes the establishment of a new sales and logistics department, a strategic move in anticipation of the conclusion of the Holcim contract at the end of 2024. Additionally, the quarry is set to commence investments in a new crushing and screening plant. Toward the end of 2023 the Benelux platform expanded into the North of France with the acquisition of four ready- mix concrete plants from CdB. The plants are strategically located near the Soignies quarry and operated under newly incorporated Betons. CHRISTOPHE HUYGHEBAERT MD OF BENELUX joined Christophe Huyghebaert, who SigmaRoc in 2021 to manage the Group’s dimension stone platform. Prior to joining Christophe SigmaRoc, worked for Heidelbergcement Benelux. He has held different management positions in cement, aggregates and concrete operations. DIRK DE LEUS MD OF BENELUX experience in industry aggregates, concrete Dirk has over 30 years the of in construction ready- the mix (General Manager Inter-Beton) and cement markets in Belgium (General manager of Cemminerals). Dirk joined SigmaRoc in April 2022 as general manager of the Benelux platform. integrates, and streamlines all He oversees, the ready-mix and aggregate businesses in Benelux. His main priorities are to grow the business, to professionalise and to make our Benelux business more sustainable. Dirk holds a degree of commercial engineer from the University of Leuven. PLATFORM METRICS Key operational metrics for the Benelux Platform during the year were as follows: People Reserves and Resources (tonnes) Sites 2023 131 192.8m 10 2022 91 195.6m 5 Change +44% -1% +100% The Benelux platform welcomed 44 new people with the acquisition of Goijens in Belgium in January 2023 and the creation of Betons in the north of France in September 2023. With this, the Group added 5 new sites to the platform. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202373 GDH production site in Soignies, Belgium North East The North East Region is anchored by Nordkalk, a leader in limestone-based products and solutions in Northern Europe. Nordkalk stands at the forefront of delivering vital raw materials to a multitude of industries, with a strong emphasis on sustainable and environmentally friendly solutions. Its offerings play a pivotal role in enhancing air and water quality, as well as improving the productivity of agricultural land. Spanning over a century in operation, the region boasts over 800 employees and encompasses more than 40 sites across 10 countries. Limestone, a cornerstone material for Nordkalk, is integral to a wide array of products and industries, including construction, protection, chemicals, metals & mining and pulp & paper. Constantly innovating, Nordkalk has expanded beyond its traditional environmental agriculture, market segments, exploring new applications and ventures. A significant focus is placed on the circular economy, with such products currently accounting for 12% of Nordkalk's sales volumes — a figure the Company is committed to increasing. Moreover, Nordkalk has a longstanding tradition of utilising by-products efficiently, achieving over 90% material efficiency, a number that continues to grow. Key metrics for the North East Region during the year were as follows: Statutory Results Underlying Results Financial metrics 2023 2022 Change 2023 2022 Change Revenue EBITDA €390.4m €365.3m €81.7m €72.1m +7% +13% €390.4m €365.3m €83.8m €72.5m +7% +16% EBITDA margin 21.3% 19.7% +160bps 21.5% 19.8% +170bps Sales volume metrics Industrial mineral (tonnes) Construction mineral (tonnes) Operational metrics People 2023 2.9m 11.1m 2023 880 Reserves and Resources (tonnes) 1,150.4m Sites 51 2022 3.2m 11.0m 2022 827 1,142.0m 43 Change -9% -1% Change +6% +1% +19% The acquisitions of Juuan Dolomitik in Finland, Björka Minerals in Sweden and ST Investicija in Lithuania contributed to an increase in people during 2023. These acquisitions also led an increase in the reserves and resources held by the Group, as well as an increase in the number of operating sites. MARCEL GESTRANIUS NORTH EAST MD AND CEO OF NORDKALK Marcel joined Nordkalk in January 1998 and has over 20 years of various experience began leadership as an ICT coordinator and has held the position of division controller, financial director, group controller, acting now as CEO and CFO. Marcel holds a master’s degree in Information Processing. in Marcel positions. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202375 Quicklime Nordkalk established a dedicated quicklime platform to provide industrial focus on its production and customers. The Quicklime platform will manage the energy transformation from fossil to renewable fuels and upgrade its kiln network to meet sustainability requirements. The platform consists of Nordkalk’s own kilns in Finland, Sweden and Estonia, kilns operated by JV companies in Sweden and Norway, and customer owned kilns in Finland and Germany that are operated by Nordkalk. PLATFORM HIGHLIGHTS Nordkalk’s Quicklime platform had a very strong 2023, benefiting from growth in metals & mining and PP&B volumes, plus margin improvement from dynamic pricing and effective management actions to improve operational efficiencies, including supply chain optimisation. The Quicklime platform also oversaw the successful launch of the Group’s first carbon capture facility at Köping in Sweden. The fully scalable carbon capture system, utilising Aqualung’s innovative membrane technology, is the first- ever implementation of its kind in the industry. MIKAEL FURU MD OF NORDICS QUICKLIME Mikael been has working at Nordkalk in different managerial positions since 2009. In October 2022, he was appointed as MD for Nordkalk’s new Quicklime platform. Before that he held the position of EVP responsible for Nordkalk’s joining Northern Europe Region. Prior to Nordkalk, Mikael worked at sales in Metso Paper. He holds a degree in Master of Science in Engineering, Process Technology from Åbo Akademi University in Turku, Finland. Nordkalk site in Pargas, Finland PLATFORM METRICS Key operational metrics for the Quicklime Platform during the year were as follows: People Kilns Sites 2023 129 10 13 2022 128 10 13 Change - - - The Quicklime platform metrics remain stable, with the strong year for the platform, including margin improvement, being achieved without the need to reduce head count. Nordics Nordkalk’s Nordics platform consists of limestone, carbonate and specialty products businesses in Finland and Sweden. The main sites include limestone quarries and grinding operations in Pargas and Lappeenranta in Finland and on the island of Gotland in Sweden. PLATFORM HIGHLIGHTS Nordkalk’s Nordics platform navigated a difficult market in 2023, with soft residential construction and PP&B markets. In spite of these headwinds, the platform delivered strategically its acquisitions, sustainability initiatives, and investments aimed at expanding reserves and enhancing product offerings, setting a solid foundation for future growth and sustainability. through The acquisitions of Juuan Dolomitik in Finland and Björka Mineral in Sweden represented strategic moves to enhance the Group’s portfolio of high-quality limestone and dolomite reserves. The launch of Nordkalk’s first fossil-free carbonate production site in Ignaberga, Sweden, marked a significant milestone towards sustainability and innovation within the industry. The introduction of the new sustainable product portfolio, 'Next & Complete,' further emphasised the Group’s focus on environmental stewardship and meeting the growing demand for sustainable construction materials. ANSSI KOIKKALAINEN MD OF NORDICS FINLAND Anssi Koikkalainen has been working at Nordkalk for almost 20 years in several sales, purchasing and business development roles. In his current role as MD of Nordics Finland, Anssi is responsible for Nordkalk’s Finnish limestone, carbonate and specialty products businesses. Anssi’s responsibility area includes various mining and production operations in the region, sales and marketing, and business development. Anssi holds a master’s degree in industrial engineering & management from LUT, Lappeenranta University of Technology in Lappeenranta, Finland. ANNICA LINDFORS MD OF NORDICS SWEDEN as Annica Lindfors first started at Nordkalk a summer trainee in the 90s and returned to Nordkalk taking on the role of Project Manager R&D in 2012. From there she has held commercial roles as well as becoming Business Development Director and Director of Circular Solutions before taking on her current role as MD of Nordics Sweden. Annica’s area of responsibility includes various mining and production operations in the region, sales and marketing, and business development. Annica holds a master’s degree in chemical engineering from Abo Akademi University, Turku, Finland. Nordkalk limestone STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202377 PLATFORM METRICS Key operational metrics for the Nordics Platform during the year were as follows: People Reserves and Resources (tonnes) Sites 2023 321 795.8m 21 2022 308 779.5m 16 Change +4% +2% +31% The acquisitions of Björka Minerals and Juan Dolomitik led to an increase in people, as well as operational sites and reserves and resources. Nordkalk agriculture lime Poland Nordkalk’s Poland platform consists of Nordkalk’s limestone and carbonate operations in Poland and comprises quarries and grinding operations across four locations including Miedzianka, in the middle of Poland, which is Nordkalk’s largest quarry. The Poland platform also includes relatively small operations in Turkey and prospective mineral permits in Ukraine. PLATFORM HIGHLIGHTS Nordkalk’s Poland platform had a very strong year, benefiting from robust demand within infrastructure, chemical and environmental markets. Dynamic pricing mitigated high input costs, and operational improvement programmes improved margins and profitability. In addition to strong financial performance, Poland also marked a milestone with its first full year of mining operations at the new Ołowianka quarry, adding 1.2m tonnes per annum of limestone capacity and permitting for a further 3.2m tonnes of reserves secured. PIOTR MACIAK MD OF POLAND Piotr Maciak has been working for Nordkalk since 2009 in sales and business managerial positions. Before joining Nordkalk, he held several commercial managerial positions, mainly industrial companies in Poland. In his current position, Piotr has full responsibility for Nordkalk’s business operations in Poland. He holds a master’s degree in Power Engineering from Warsaw Technological University in Warsaw, Poland. in STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202379 PLATFORM METRICS Key operational metrics for the Poland Platform during the year were as follows: People Reserves and Resources (tonnes) Sites 2023 245 307.6m 4 2022 254 314.8m 5 Change -4% -2% -20% In December 2023 Poland concluded the divestment of a grinding plant which was deemed non-core to the Group’s operations and was located at a significant distance from any of the Group’s mineral resources. This accounted for the movement in people and sites during the year. Nordkalk limestone quarry in Miedzianka, Poland SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Baltics Nordkalk’s Baltics platform consists of the Baltic Aggregates business and the newly acquired ST Investicija in Lithuania and is focused on developing Nordkalk’s limestone and dolomite operations in the Baltic countries, including exports from Finland. Nordkalk also has three active quarrying sites in Estonia and a grinding plant next to the Rakke lime kiln. PLATFORM METRICS Key operational metrics for the Baltics Platform during the year were as follows: 2023 2022 Change People 72 62 +16% Reserves and Resources (tonnes) 47.0m 47.7m -1% PLATFORM HIGHLIGHTS Sites 8 3 +167% The Baltics platform had a busy year of growth and Investicija expansion, with significantly expanding its capacity in Lithuania and focus on improving logistics through sales optimisation. the acquisition of ST The acquisition of ST Investicija led to an increase in the number of people in the Baltics platform, as well as an increase in the number of operating sites. GEDIMINAS SKVERNYS MD OF BALTICS Gediminas Skvernys started as MD of Nordkalk’s Baltics platform and Baltic Aggregates in 2022. Prior to joining Nordkalk, he worked as CEO of Dolomitas, a company specialising in dolomite construction aggregates in Lithuania and granite importation from Scandinavia. Gediminas holds a business & commercial master’s degree from Kaunas University of Technology in Kaunas, Lithuania. Farming in Reku, Finland 81 Nordkalk team members on site SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Our Markets Nordkalk quarry in Pargas, Finland Macro conditions in the market GDP growth rate CPI inflation rate 83 (%, YoY) UK Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 FINLAND Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 SWEDEN Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 POLAND Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 BELGIUM Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 SOURCE: https://tradingeconomics.com (%, YoY) Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 Q4 2023 Q3 2023 Q2 2023 Q1 2023 Q4 2022 2.5-0.3-0.60.51.0-0.6-0.1-0.3-1.6-1.80.60.30.30.2-0.2-0.51.7-0.3-1.1-0.21.41.71.31.41.511.087.114.983.540.828.838.377.005.873.9311.5711.439.837.775.5717.3317.0313.079.706.4711.087.114.983.540.82Macro conditions in the market COAL (Eur/T) Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 GAS (Eur/MWh) Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 BRENT CRUDE OIL (Eur/barrel) Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 SOURCE FOR ABOVE GRAPHS: https://tradingeconomics.com/commodity ELECTRICITY UK (Eur/MWh) Q1 2022 Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 SOURCE: https://tradingeconomics.com/united-kingdom 454.5 125.4 339.2 24.0 113.1 65.8 663.1 68.2 -50.0100.0150.0200.0250.0300.0350.0400.0450.0500.003/01/202203/02/202203/03/202203/04/202203/05/202203/06/202203/07/202203/08/202203/09/202203/10/202203/11/202203/12/202203/01/202303/02/202303/03/202303/04/202303/05/202303/06/202303/07/202303/08/202303/09/202303/10/202303/11/202303/12/202303/01/202403/02/202403/03/2024-50.0100.0150.0200.0250.0300.0350.0400.003/01/202203/02/202203/03/202203/04/202203/05/202203/06/202203/07/202203/08/202203/09/202203/10/202203/11/202203/12/202203/01/202303/02/202303/03/202303/04/202303/05/202303/06/202303/07/202303/08/202303/09/202303/10/202303/11/202303/12/202303/01/202403/02/202403/03/2024-20.040.060.080.0100.0120.0140.003/01/202203/02/202203/03/202203/04/202203/05/202203/06/202203/07/202203/08/202203/09/202203/10/202203/11/202203/12/202203/01/202303/02/202303/03/202303/04/202303/05/202303/06/202303/07/202303/08/202303/09/202303/10/202303/11/202303/12/202303/01/202403/02/202403/03/2024-100.0200.0300.0400.0500.0600.0700.004/01/202204/02/202204/03/202204/04/202204/05/202204/06/202204/07/202204/08/202204/09/202204/10/202204/11/202204/12/202204/01/202304/02/202304/03/202304/04/202304/05/202304/06/202304/07/202304/08/202304/09/202304/10/202304/11/202304/12/202304/01/202404/02/202404/03/2024STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023Biggest sources of electricity by country 85 Nuclear Gas Coal Wind Hydro EU electricity generation by source Nuclear 25% Gas 20% Coal 14% Hydro 13% Wind 13% OtherEU construction forecast1 (% change in real terms) Non-res. building Residential building Civil engineering 1. In Belgium, France, Germany, Ireland, Norway, Sweden, Finland, UK, Czechia, Poland, Spain SOURCE: Consulting firm • Construction market softened in 2023, particularly in residential • Outlook for 2024 improved but residential remains soft • Interest rate drops should improve situation in H2 and beyond • Return to growth in all areas expected from 2025 • Long term drivers underpin both residential and infrastructure construction CDH quarry covered in by snow and fogg in Soignies, Belgium -474-7-343-8.30.93.10.40.72.11.4-0.64.0-0.32.01.92.42.420202021202220232024F2025F2026FSTRATEGIC REPORTSIGMAROC ANNUAL REPORT 202387 Euralille in Bluestone cladding in Lille, France Photographer: Julien Lanoo SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Key measures and statistics CDH production site in Soignies, Belgium Key measures and statistics 89 FY23 financials EBITDA £m £580m +8% 2023 £117m +15% £538m +98% 2022 £102m +108% Revenue £m 2023 2022 2021 £272m +119% 2021 £49m 2020 £124m +77% 2020 £24m 2019 £70m 2019 £15m Underlying EBITDA margin % Underlying EPS pence +104% +60% 2023 2022 2021 2020 2019 20% 18% 19% 19% +5% +6% -5% 2023 2022 2021 -10% 2020 21% 2019 8.1p +1% 8.0p +48% +20% +7% 5.4p 4.5p 4.2p Leverage ratio ratio 2023 2022 2021 2020 2019 1.6x 1.8x 1.7x 1.7x 2.1x -11% +4% +1% -18% Key measures and statistics FY23 volumes Aggregates million tonnes Concrete & concrete products thousand cubic metres 2023 2022 2021 2020 14.9m t +0% 2023 717.7k m3 +12% 14.9m t +135% 2022 640.1k m3 +1% 6.4m t +104% 2021 630.7k m3 +49% 3.1m t +74% 2020 422.1k m3 +21% 2019 1.8m t 2019 349.9k m3 Asphalt and asphalt laid thousand tonnes Dimension stone thousand tonnes 2023 2022 2021 2020 2019 209.9k t -15% 2023 86.9k t -13% 247.1k t -4% 256.8k t +12% 2022 2021 99.6k t +6% 94.2k t +13% 229.4k t -2% 2020 83.3k t +8485% 234.1k t 2019 1.0k t Quicklime thousand tonnes High grade limestone million tonnes 2023 2022 2021 2020 2019 - - 701.9k t -3% 721.8k t 162% 275k t 2023 2022 2021 2020 2019 - - 2.3m t -9% 2.5m t +190% 0.9m t STRATEGIC REPORTSIGMAROC ANNUAL REPORT 20232023 2022 2021 2020 2019 2023 2022 2021 2020 91 Key measures and statistics FY23 assets Reserves and resources billion tonnes Total assets £m 1.6b t 1.6b t 0% 20% 2023 2022 £1015m +4% £977m +27% 1.3b t 257% 2021 £769m 0.4b t 0.4b t -1% 2020 £257m 2019 £208m Tangible assets1 £m Number of sites £815m +9% 2023 99 £749m +66% 2022 £450m +117% 2021 84 76 31 30 £207m +70% 2020 2019 £122m 2019 People 2023 2022 2021 2020 2019 2092 2009 1865 +4% +8% +98% +31% 942 717 1 Total assets excluding intangible assets, deferred tax, investments, available for sale assets and derivatives +199% +24% +18% +11% +145% +3% SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Our ESG Journey Liming in Reku, Finland SIGMAROC ANNUAL REPORT 202393 Our ESG Journey Charles Trigg CHIEF TECHNICAL OFFICER As a business our overall aim is to ensure sustainable returns to our shareholders. As a Group we are committed to ensuring this can be done in a manner where we minimise risks and seize opportunities so that our business continues to be strong in the years to come. • • • • • • This year has seen some substantial achievements in terms of ESG: 71% fossil free electricity across the Group with 100% fossil free electricity in Nordics and Belgium 35% alternative energy that including alternative / renewable electricity and biofuels / alternative fuels 29% GHG emissions intensity reduction from 2021 baseline 12% YoY energy consumption reduction • • • • • 172 site audits conducted for health and safety 0 fatalities and cases of silicosis 6% reduction in total injury frequency rates for employees and contractors on our sites >25% reduction in lost time and serious harm frequency rates for employees and contractors on our sites >2.5 billion communities litres of water supplied to local 36% and 87% YoY reduction respectively in NOx and SOx • AA MSCI rating 79% of all our businesses are IOS certified in either ISO9001, ISO14001, ISO45001 • Launch of multiple sustainable products Following on from our 2023 annual report and standalone annual 2023 ESG Report, we continue to commit to reporting and disclosure of both mandatory and voluntary ESG and sustainability matters. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202395 Sustainability Recognition and Commitment – Currently holding a AA rating, we are recognised as a “Leader” in our sector by MSCI. This year we registered with CDP and submitted our first Climate Change questionnaire, and await validation of our emissions reduction targets from the SBTi. STAKEHOLDER ENGAGEMENT AND MATERIALITY ASSESSMENT We continually engage with a wide array of internal and external stakeholders to identify the key sustainability issues that matter most to the Group and to our core stakeholders. Our findings have guided our ESG journey, through setting strategic sustainability performance targets against each material issue. We report on our progress against the strategic targets set and further information on our Materiality Assessment, including our Materiality Matrix. SECR – We continue to report our energy consumption and Scope 1-3 greenhouse gas emissions according to the SECR regulations, including non-mandatory aspects to ensure full transparency of our emissions and intensity ratio. TCFD – This is the first year we have fully reported against the recommendations and recommended disclosures of the Taskforce on Climate-Related financial disclosures (TCFD), under the Companies (Strategic Report) (Climate- related Financial Disclosure) Regulations 2022. The report was developed in conjunction with external consultants. The report has been reviewed by both the Audit Committee as well as the Company Auditors. The report can be found on page 124 of this report. SASB – We continue to use SASB as a guiding principle for disclosure of metrics that are material to our industry as per the SASB materiality matrix. SBTi – In line with our stated ambition, this year we have submitted our Scope 1-3 carbon footprint alongside our emissions reduction targets data to SBTi. We have committed to reducing our Scope 1&2 emissions, and to reducing our Scope 3 emissions, aligned with the ambition and emissions reduction trajectory required to curb global temperature rise to 1.5ºC. European Energy Directive – UK ESOS report has been compiled and will be submitted in line with UK submission requirements. MATERIALITY ASSESSMENT Increasing importance to Stakeholder vs. increasing importance to SigmaRoc l s r e d o h e k a t S o t e c n a t r o p m i i g n s a e r c n I 1. Sustainable use of reserves and resources 2 1 2. Responsible use of key resources 4 3 11 6 12 9 5 10 8 7 3. 4. 5. 6. Optimal energy use and minimal impact on the environment Contributing to sustainable construction and addressing environmental aspects Ensure people leave work in the same or better condition than when they arrived Supporting the physical and mental health of our employees and their families 7. Attract, train, retain and engage our workforce 8. Be a good neighbour, source local, buy local, sell local, invest local 9. Promote QCA and Corporate Governance 10. Ensure proactive Board oversight and independance of commitees 11. Focus on risk management and mitigation 12. Ensure transparency on reporting and tax Increasing importance to SigmaRoc Our ESG Journey Stakeholders (in alphabetical order) Description How we engage Colleagues Customers and Suppliers We have a dedicated workforce of c. 2,000 across the Group. We recognise our dedicated workforce as a key driver of the value derived from the business. Our colleagues are experienced and continuously developed to fulfil their potential. All employees are offered a fair benefits and compensation package relative to their role and level in the organisation. We encourage share ownership where it is available and, where possible, are working to setup where it is not currently in place. All our businesses are decentralised and locally focused so that we know the customers’ and suppliers’ areas like they do. We work alongside our customers to provide “right first time” service and to seek proactive and innovative solutions to support requirements. “Right first time” is key to success and ensuring customer loyalty as part of our long-term success. We recognise the huge role our suppliers play in our long-term success. We strive to ensure timely payments and maximise value to support the delivery of our customers’ needs. We balance economic requirements with sustainability considerations over the whole supply chain. Site presence and visual felt leadership. Employee groups and committees and unions. Focus on development training and succession planning. Decentralised approach with flat management allowing easy access to all staff. Employee benefit offerings that can also extend to family members. Prioritise a local focus on both customers and suppliers. Engage directly from our sites so that the customer and supplier deal directly with the site they are supplying or buying from. Ensure timely payments are made to suppliers. Functional and intuitive websites and digital solutions focused on the customer. Ensure adequate checks and due diligence are done on customers and suppliers. Communities By being decentralised and local we are at the heart of the communities in which we operate allowing us to be good, knowledgeable, supportive and engaging neighbours. Proactive approach and active participation in community and industry working groups, forums and committees. Investors All our Shareholders play an important role in the continued success of our business. We maintain purposeful and close relationships with them either directly or via wider mediums such as Q&A webinars and conferences. We seek to be transparent and give clear and consistent messages across all communication channels. Dedicated forums such as AGM, annual and interim webinar Q&As and/or interactive investor presentations. Annual and interim reports, trading statements and RNS. Regular phone calls and dialogues. Broker and NED contacts. Site visits, investor roadshows, investor conferences. Regulators / local Government We look to develop and sustain good relationships with many regulators who govern our businesses to ensure the success of our business and maintaining our license to operate. We are committed to adherence of legal and regulatory requirements. We are committed to have independent review / oversight be it internally or externally. We are committed to a sustainability framework following review of international standards. Regular dialogue with Governments, Government agencies, regulators and industry groups. Active membership of the industry bodies such as Mineral Products Association, Federation Industries Extractives and European Lime Association. Effective and clear policies to ensure governance. Education and training of staff to reinforce compliance with regulations. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023CO2 AND THE LIME INDUSTRY AND HOW IT VARIES FROM CEMENT AND OTHER INDUSTRIES To deal with CO2, it is crucial to understand how CO2 is governed and how it is produced. European Union Emissions Trading System (EUETS) The EUETS regulates greenhouse gas emissions of energy and energy-intensive industries as well as inner-European aviation. The EUETS puts a cap on the carbon dioxide (CO2) emitted by business and creates a market and price for carbon allowances. It covers 45% of EU emissions, including energy intensive sectors and approximately 12,000 installations. The EUETS works on the ‘cap and trade’ principle. A ‘cap’, or limit, is set on the total amount of certain greenhouse gases that can be emitted by factories, power plants and other installations in the system within the cap, and companies receive or buy emission allowances which they can consume or trade as needed. An allowance gives the right to emit a tonne of CO2, and any allowance surplus to requirement can be accumulated and used to offset future emissions or traded. 97 The directive concerning Phase IV (2021-2030) of the ETS entered into force on 8 April 2018. Secondary legislation and guidance documents defining the revised ETS scheme were published in 2023 to align it with the target of a 55% reduction of EU Green House Gas emissions. The new benchmark values (the value at which the free allowance is set) are below the actual emissions of the covered industries, and this deficit, along with market measures such as a stability reserve held by the EU and the faster reduction in year-on-year allowances drove traded prices in 2023 up to values of €80-€100/tonne, though at the time of publishing they have dropped. Recently the Cross Border Adjustment Mechanism (CBAM) was brought in for many industries, including cement. Lime however is not part of CBAM. CBAM is a mechanism whereby importers of materials such as steel and cement into Europe will have to pay a duty / tax to ensure that European business and importers are equally priced with regards to carbon costs. In order for those industries to protect their boundaries, the consequence was to relinquish all free allocation by 2034 compared to allowing allowance to run until the 2050 timeline associated with the current legislation. As previously mentioned, lime is excluded from this and will continue its gradual reduction of free allocation under the existing rules. Lime Industry and CO2 Lime Industry and CO2 For lime there are sources of CO2 along the production process, however there are two primary sources that make up the majority of CO2 emissions: fuel and process emissions from the calcination part of the process. Lime Industry and CO2 For lime there are sources of CO2 along the production process, however there are two primary sources that make up the majority of CO2 emissions: fuel and process emissions from the calcination part of the process. For lime there are sources of CO2 emissions throughout the production process, however there are two primary sources that make up the majority of CO2 emissions: fuel and process emissions from the calcination part of the process. CO2 Power & energy CO2 Fuel & process emissions Drilling and blasting Drilling and blasting Crushing Crushing Sieving Sieving Secondary crusher Secondary crusher Calcination of limestone to Calcination of produce quicklime limestone to produce quicklime Water Water Hydration of quicklime Hydration of quicklime Hydrated lime Hydrated lime Milk of lime Milk of lime Water Water Mining Mining Calcination Calcination Hydration Hydration Our ESG Journey The calcination process is simply the formula of deriving CaO from CaCO3 using heat. CaCO3 Energy CaO CO2 The two main sources of CO2 from the calcination part of the process are as follows: Combustion CO2 (~25% to 35%) is produced from the burning of fossil fuels, while process CO2 (~65% to 75%) results from the actual calcination of limestone. Power and energy CO2 can be reduced through energy efficiency, renewable electricity, fuel efficiency and renewable / alternative fuels. We are actively working on renewable energy solutions and Power Purchase Agreements. Combustion CO2 can be reduced by energy efficiency and fuel selection, as well as by carbon capture utilisation or sequestration (CCUS). We have achieved success with fossil free lime calcination, achieving 100% substitution by biomass at one site. Our first Carbon Capture unit has also been successfully installed and commissioned. Process CO2 can only be addressed by CCUS, with our first Carbon Capture unit having been successfully installed and commissioned. Carbon capture utilisation or sequestration The emissions from lime kilns are well suited to technologies such as CCUS as they have a higher CO2 content than most post-combustion gases and contain fewer contaminants due to using only limestone as feedstock and, due to product requirements, more stringent fuel quality requirements and typically lower gas filtration temperatures. Post-combustion capture (PCC) systems constitute a technically and economically viable solution to reduce emissions in a variety of sectors. Retrofitting existing plants with post-combustion capture units may be the only effective and economically viable way to reduce emissions at the stack, without affecting the process upstream. The availability of a range of commercially ready technologies suitable for different types of CO2 point sources is crucial for the wide deployment of CCUS systems. Given the wide ranges of plant sizes and flue gas specifications relevant to different emitting sources, it is unlikely that a single technology could fit best in all cases. Therefore, for effective process design, it is convenient to consider multiple technologies and select the most efficient and economically viable option to serve the purpose. In addition to the membrane technology currently in use by SigmaRoc, there are a few other options, some of which are more traditional and geared towards large emitters with each solution having their own opportunities and risks: • Amine scrubbing is acknowledged as the most mature CCUS solution. Absorption-based processes for the separation of CO2 from flue gases have been widely researched, and their effectiveness has been proven through testing on a variety of scales, from laboratory to commercial. For lime, this solution is both costly and requires a substantial footprint with significant energy consumption and issues with disposal of waste residues. • Cryogenic capture and separation is a more recent development offered by industrial gas companies as an extension of their in-house process. For lime, this solution is both costly and requires a substantial footprint with significant energy consumption. SigmaRoc believes that membrane technology is optimally suited to our single kilns / small cluster of kilns due to the proven technology, small footprint, low capital and operating costs and high efficiencies. For our sites that have multiple kilns with larger emission volumes, carbon capture can be done via membrane, but also by other technologies, allowing a flexible approach to carbon capture based on the site, infrastructure and country policies and legislation. Other technologies, that may be more suited to the SigmaRoc kiln network, are being trialled and investigated including Ocean GeoLoop which employs an all-electric pressure swing process for CO2 capture where a trial plant designed to capture 10,000 tonnes of CO2 is to be established with Nordkalk’s joint venture partner in Norway. This allows the Company to constantly select the best option for both its operations and its operating jurisdictions. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 202399 Fels site in Rübeland, Germany Road Map to Net Zero 2025 All concrete products available in low carbon and ultra-low carbon 2027 Carbon Capture Storage and utilisation trial plant operational 100% of all manufactured products can utilise waste / recycled materials* 100% utilisation of all production materials 2030 Alternative fuels used in mobile equipment 2.5% reduction in energy intensity 100% third party energy sourced from renewable means CARBON ENERGY INTENSITY AND EFFICIENCY RESOURCE UTILISATION AND CIRCULAR ECONOMY CO2CO2CO2STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023101 As a business, our overall aim is to ensure sustainable returns to our shareholders. As a Group we are committed to ensuring this can be done in a manner where we minimise risks, seize opportunities and so that our business continues to be strong in the years to come. Our focus on returns to shareholders is through our 4i principles, all of which are underpinned by ESG. Shareholder returns are an output of our inputs, which are our business model and ESG principles. 2032 Alternative fuels used in fixed equipment (e.g lime and asphalt) 2038 All kilns are carbon neutral 2040 NET ZERO *where industry specifications allow for it CO2Our ESG Journey OVERALL PERFORMANCE Road Map to Net Zero ESG Subject Target Date Progress to date Status All concrete products available in low carbon and ultra-low carbon. Carbon capture storage and utilisation trial plant operational. Alternative fuels used in mobile equipment. 2025 100% of concrete products available in low carbon and ultra-low carbon. Achieved 2023 2025 First module commissioned and operational. Achieved 2023 2030 One site is running 100% fossil free. On Track Carbon Alternative fuels used in fixed equipment (e.g. lime and asphalt). 2032 All kilns are carbon neutral. 2038 Net-zero. 2040 t n e m n o r i v n E 100% fossil fuel substitution achieved on vertical lime kiln using biofuel >50% fossil fuel substitution achieved on rotary lime kiln using biofuel with potential to go to 100% upon completion of remaining biofuel project. CCUS system commissioned and capture taking place at initial kiln. Corporation with JV partner on all-electric pressure swing process CCUS at the Norwegian site. Energy intensity and efficiency Resource utilisation and circular economy 2.5% reduction in energy intensity. 2030 12% YoY energy intensity reduction in 2023. 29% reduction in energy intensity from 2021 baseline. 100% third party energy sourced from renewable means. 2030 100% of all manufactured products can utilise waste / recycled materials.1 100% of electrical energy sourced from fossil free means in Nordics and Belgium 71% of Group electrical energy sourced from fossil free means 100% of our manufactured products (where specification allows) can use recycled products 2025 This includes products such as asphalt, concrete, and concrete products which are already using, where specification allows, waste / recycled materials such as nappies, RAP, PFA, GGBS and recycled aggregates. 100% utilisation of all production materials. 2027 Nordkalk Next, Nordkalk Complete, Puccini Blue, Mevo, Greenbloc, Aggregates reprocessing, and Concrete Product mix designs are key examples of where we are driving towards 100% utilisation of all our production materials. On Track On Track On Track Achieved 2023 On Track Achieved 2023 On Track 1 Where industry specifications allow for it STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023Environment Pillar Key Focus Area Link to UN SDG Targets How did we do Focus for 2024 103 Sustainable use of reserves and resources. Goal 12: Responsible consumption & production Achieve Carbon net-zero road map targets. Reduction in energy intensity and increase in energy efficiency. Maximisation of resource utilisation and circular economy. Goal 13: Climate Action Goal 12: Responsible consumption & production Goal 13: Climate Action Goal 12: Responsible consumption & production Goal 13: Climate Action Goal 9: Industry, innovation & infrastructure Goal 12: Responsible consumption & production Responsible use key resources including raw material, mineral and water. Optimise energy use and minimise impact of our operations on the environment. Contribute to sustainable construction and address environmental aspects either through product production or use. t n e m n o r i v n E Incorporation of new business into our ESG Road map. Continue to focus and accelerate where possible our net-zero road map targets. Continue energy and fuel optimisation to reduce the reliance on fossil fuels. First Carbon Capture plant installed and commissioned. Installation and commissioning of a new wash plant offering premium washed aggregates previously designated as waste, in turn releasing approximately 5 million tonnes of limestone. Creation of Puccini Blue to allow utilisation of up to 100% of the material extracted from our dimension stone quarries. 100% fossil fuel substitution in lime kiln at an operating site. First fossil free site created. UK ESOS completed, ready for submission to authorities. Energy surveys completed across platforms that have found multiple opportunities and savings. Further solar installations and tendering for installation of wind energy. Partnership with Mevo. Achieve low and ultra low carbon offering across all our Concrete Products. Nordkalk Next, Nordkalk Complete and Puccini Blue offerings in drive to sustainable products across our other businesses. Submission of SBTi. Use of OneClick for creation of LCAs and EPADs. Our ESG Journey Social Pillar Key Focus Area l a i c o S Ensure people leave work in the same or better condition than when they arrived. Support the physical and mental health of our employees and their families. Attract, train, retain and engage our workforce. Be a good neighbour; source local, buy local, sell local, invest local. Governance Pillar Key Focus Area Promote QCA and Corporate Governance Codes. Ensure proactive Board oversight and independence of committees. e c n a n r e v o G Link to UN SDG Goal 3: Good health & wellbeing Goal 8: Decent work & economic growth Goal 3: Good health & wellbeing Goal 4: Quality education Goal 8: Decent work & economic growth Goal 11: Sustainable cities & communities Link to UN SDG Goal 16: Peace, justice & strong institutions Goal 16: Peace, justice & strong institutions Focus on Risk Management and mitigation, including cyber. Goal 16: Peace, justice & strong institutions Ensure transparency on reporting and Tax. Goal 16: Peace, justice & strong institutions Targets How did we do Focus for 2024 Total injury frequency rate and harm injury frequency rate reduction year on year. Increase workforce engagement and retention. Increase board diversity. Improved safety performance with a notable 31% and 25% reduction in SHIFR and LTIFR respectively. This data is not just limited to employees, but included all those that work on our sites including contractors. 172 site safety audits conducted by Group Health & Safety Director. Initiation and roll out of PEPtalk across UK business. Completion of initial Front Line Supervision initiative to ensure Supervisors spend optimal time managing safety, quality and productivity. Supervisor training to at least IOSH Managing Safely level. Increase Group audit team across the platform. Continual roll out of supervisor alignment programme for Health & Safety. Continued focus on 3 core Health & Safety areas: Structure & Compliance; Proactive Prevention; and Learn & Improve. Continue to work with government agencies, education establishments and communities to offer long term employment opportunities. Targets How did we do Focus for 2024 Continue to implement, and transparently disclose, compliance and matters relating to ESG. Maintain ongoing compliance in a dynamic environment across multiple jurisdictions. Appointment of Tom Jenkins as Head of Investor Relations. Formalisation of Formity across the Group to ensure governance training and compliance. Engagement of CEN-ESG to conduct gap analysis and peer review report that identified opportunities to improve our policies and governance. Completion of first TCFD report. 100% compliance target on Formity training and acknowledgement for Group polices across the Group. Creation of dedicated ESG Board Committee. Quarterly ESG reporting to Board and ESG Committee. Continued interaction with institutional investors’ ESG & Stewardship analysts to ensure compliance with reporting requirements. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023105 SASB SASB provides industry-specific standards for disclosing performance on sustainability topics including, but not limited to, climate in a comparable manner that are reasonably likely to have a material effect on financial performance of companies in each industry. SASB Topic Accounting Metric Category Unit of Measure Code 2023 Result Greenhouse Gas Emissions Gross global Scope 1 emissions, percentage covered under emissions- limiting regulations Quantitative Metric tonnes (t) CO2-e, Percentage (%) EM-CM- 110a.1 662,135 tCO2e Further detail can be seen in the independent SECR data on page 122 Greenhouse Gas Emissions Discussion of long-term and short-term strategy or plan to manage Scope 1 emissions, emissions reduction targets, and an analysis of performance against those targets n/a Discussion and Analysis EM-CM- 110a.2 The road to net-zero is detailed on pages 100-101 Our decarbonisation program of our kilns is detailed on pages 100-101 Air Quality Air emissions such as: Quantitative Metric tonnes (t) EM-CM- 120a.1 447 196.3 Quantitative Gigajoules (GJ) Percentage (%) EM-CM- 130a.1 4.3m GJ of energy. 15% from grid electricity. (1) NOx, (2) SOx, Energy Management (1) Total energy consumed, (2) percentage grid electricity, (3) percentage alternative, (4) percentage renewable Water Management Total fresh water withdrawn, Quantitative Thousand cubic meters (m.) Percentage (%) EM-CM- 140a.1 35% alternative energy that includes alternative / renewable electricity and biofuels / alternative fuels. 5% renewable energy that includes renewable electricity and biofuel. 34,000k m3 of water is managed that includes dewatering processes from seasonal snow melt water, rain water collection etc. Of the water managed 2%, 748k m3, is used for operational purposes which is a mix of fresh water, recycled and collected. Of the water managed 8%, >2,5m m3, is allocated to local communities for drinking water purposes. Our ESG Journey SASB Topic Accounting Metric Category Unit of Measure Code 2023 Result Waste Management Amount of waste generated Quantitative Metric tonnes (t) EM-CM- 150a.1 2,787,498t generated of which 88% is recycled. Biodiversity Impacts Biodiversity Impacts Description of environmental management policies and practices for active sites Terrestrial acreage disturbed; percentage of impacted area restored n/a Discussion and Analysis Quantitative Acres (ac) Percentage (%) EM-CM- 160a.1 EM-CM- 160a.2 Workforce Health & Safety Workforce Health & Safety Product Innovation Total recordable incident rate (TRIR) Quantitative Rate EM-CM- 320a.1 Number of reported cases of silicosis Quantitative Number Total addressable market and share of market for products that reduce energy, water and/or material impacts during usage and/or production Quantitative Reporting currency Percentage (%) EM-CM- 320a.2 EM-CM- 410a.2 This is predominantly related to overburden removal at quarries. These materials are often stored or used for restoration purposes including the recultivation of indigenous soils for remediation. The creation of new business is also looking to use surplus material into other business streams and therefore reprocess historical and future material once deemed waste. Full detail is on pages 113, 114, 131 5,287 acres of land is disturbed which accounts for about 48% of our land holdings. 17% of disturbed land was restored or is under restoration program. Data has historically been collected as an amalgamation for Direct Employee, Contract employee and external contractors as it is believed that we are responsible for all those on our site regardless of employment status. The performance of health and safety can be found on page 114 None Market share is not a straightforward number to capture given all the industries and end markets we operate in, however in the Greenbloc and Sustainability section on pages 32, 110 we clearly show how construction material product innovation is being driven. Pricing Integrity and Transparency Total amount of monetary losses as a result of legal proceedings associated with cartel activities, price fixing, and anti-trust activities Quantitative Reporting currency EM-CM- 520a.1 £0 Zero STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023107 MD of Nordics Sweden, Annica Lindfors on site Our ESG Journey CASE STUDIES Aqualung update and NoFraKalk In 2023, SigmaRoc successfully installed and commissioned its first carbon capture unit at Nordkalk’s site in Köping, Sweden. The fully scalable carbon capture system, utilising Aqualung’s innovative membrane technology, is the first- ever implementation of its kind in the industry. The carbon capture system has been developed by Aqualung, a leading provider of membrane-based carbon capture and separation technology, based in Norway. Over the course of the preceding year, SigmaRoc reviewed an array of technologies including amine absorption, solid absorption, membrane and cryogenic. The Aqualung membrane technology was considered best suited for the Group’s operations based on the following factors: small footprint, low CapEx and operating costs, and a relatively low complexity and efficient solution. The system is modular and fully scalable, allowing SigmaRoc significant flexibility in the roll out of the solution. The Aqualung module installed in Köping can capture up to 25% of the process emissions emitted from a standard kiln and was initially designed as a ‘catch and release’ system to demonstrate the durability and efficiency of the membranes. The unit is able to capture CO2 with a purity of 96% through just 2 stages. The unit has been connected to a pilot purification module to simulate settings required to produce higher purities of CO2 for different end use applications that go beyond sequestration requirements. We believe review of alternative application is required whilst European Governments and third parties develops legislation, policies and sequestration infrastructure including pipeline, storage facilities and portside facilities to allow for commercially available sequestration. SigmaRoc is working with various businesses and solution providers with regards to the end use of CO2, including being involved with the NICE (Norvik Infrastructure CCS East Sweden) project to explore all CO2 utilisation and sequestration options. Nordkalk also secured part-funding from the Swedish Energy Agency for the implementation and scaling of the Köping carbon system with the intention to capitalise on the learning from the engineering, commissioning and operation phase of the initial module. As part of the Groups JV, Norfrakalk in conjunction with Ocean GeoLoop are initiating an industrial trial plant designed to capture 10,000 tonnes of CO2 in Norway using an all- electric pressure swing process. Launch of Aqualung with CTO Charles Trigg and Industrial Director Martin Bains in Koping, Sweden STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023109 Biodiversity The concept of dynamic biodiversity management combines integrated management of the operation of an active quarry with dynamic preservation, management and restoration measures for species and habitats. This principle makes it possible to integrate the populations of species present in the quarry into a network of habitats ensuring constant availability of environments conducive to their development. We have integrated the dynamic management of biodiversity into its extraction activity as part of the Life in Quarries project and have conducted annual monitoring to assess the structure and functionality of the habitats created. Since 2020, in Belgium we have ensured compliance with a management plan in response to local biological issues using the tools and skills acquired as part of the Life in Quarries project. A summary of activities in 2023 is set out below: ACTION UNIT Pioneer ponds (nb) Mineral pioneer lawns (ha) Swallow cliffs (nb) Solitary bee slope (nb) Various shelters (nb) Permanent ponds (nb) Gentle sloping banks (m) Gull platforms (nb) Artificial bat galleries (nb) Historic bat galleries (nb) Commitment Current 15 1.5 1 1 10 10 50 2 1 1 18 1.72 2 1 14 15 Active 18 1.72 2 1 14 15 52.53 52.53 5 1 1 5 1 1 During 2023, specific training was given by the University of Gembloux on two areas: Pollinators the awareness about Career pollinators and the disappearance of wild bees which are essential for biodiversity and a large part of the crops intended for our food. Pollinators need quality food resources at each stage of their life, winter nesting sites, construction materials for nesting and shelter to protect themselves from the wind and predators all whilst considering light pollution. Planting hedges in Quarries With their gradual disappearance throughout the country, hedges have taken away the multiple roles they fulfilled. They have local and regional ecological importance by diversifying the landscape and providing habitat and food resources for many species. They fulfil other roles of ecological connectivity and provide a range of ecosystem services, shading, fight against runoff, improvement of soil quality. They also support the quarry in other services: fight against erosion, protective barrier, sound insulation. They can constitute an additional opportunity to contribute to the conservation of Biodiversity in the quarry. SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Puccini Blue Waste reuse & Circular Products Circular solutions have been a large focus in 2023 with the extension and launch of several sustainable product lines, such as Greenbloc, Mevo, MTech, Puccini Blue, Nordkalk Next and Nordkalk Complete on industrial scales. Mevo Mevo is a revolutionary new technology for the grinding and blending of non-cementitious minerals, imparting certain binding properties to the materials. The Company has supported Mevo in raising £15m in venture funding and has assisted in the construction of its first large-scale plant. Once operational, we anticipate that Mevo’s technology will be at the forefront of decarbonising all our concrete products. Greenbloc Through 2023 Greenbloc technology has made significant strides in sustainable development across the business, offering up to 50% carbon reduction on all standard blocks produced at CCP Building Products. This has saved over 6,000 tonnes of CO2 since its introduction and has been offered at no additional cost to the customer. CCP completed its expanded new ranges by introducing an additional premium range product, which sits between its standard 50% reduction product and ultra cement-free and provides up to a 70% carbon reduction at a competitive price. Greenbloc can now be incorporated in almost all of our concrete products, available in three distinct performance levels. These levels provide a range of embodied CO2 reductions from 50% to 90%. Greenbloc is a flexible solution, enabling daily production and the ability to turn cement- free concrete on-and-off for environmentally significant bespoke projects. These include the UK Environmental Agency’s Canvey Island Sea Defence and Jimmy’s Farm Polar Bear Relocation projects, both of which achieved over 80% reduction in the carbon embodiment of the concrete products. As a result of these initiatives, we have become one of the leading UK producers of cement-free pre-cast concrete, producing more wet-cast cement-free concrete per day than any other precast company, and underscoring the industry’s shift towards more sustainable practices. The resulting media focus has brought more cement-free projects to the business for 2024. Looking ahead, we aim to surpass the 100% mark, positioning ourselves as pioneers in producing large-scale negative carbon concrete products. A leap in innovation was gained through the production of a carbon-negative-cement-free concrete block, which boasted a 115% carbon reduction and was created using Greenbloc cement-free technology, combined with carbon-negative aggregate produced from waste materials and captured carbon. The block showed all the same characteristics and performance as standard equivalent cement-based blocks and is expected to become part of an extended future range with the introduction of Mevo at CCP in 2024. MTech SigmaRoc has produced an in-house cement-free-carbon- in negative concrete with patentable opportunities, collaboration with Marshalls. The concrete combines carbon- negative materials with an in-house developed cement-free binder which incorporates upcycled waste lime kiln dust from Nordkalk. The patent application will be submitted in 2024 with expected opportunities for use in 2025. Puccini Blue Developed by John Vis (Commercial Director of Carrieres du Hainaut) and Chris Vermorken (Legal and Operational Advisor) with the help of Elisa Frenay (Group Marketing Lead), Puccini Blue is a revolutionary new way to maximise quarry yield by making the fault lines of products a distinctive and highly desirable feature through resin technology. Material that once had to be separated due to natural fault lines and therefore producing less yield, can now be processed to ensure structural integrity of the fault lines to maximise not only the yield, but the aesthetic product offering so desirable to our customers. Nordkalk Next A product offering where at least 33% of the material used is reusable material, own or external, that is not used or is considered waste. Further, 33% of energy used in production is fossil free. This is considered as per energy content. Nordkalk Complete A product offering where 100% of the material used is material, own or external, that is not used or is considered waste. CO2 neutral scope 1 and scope 2. Sustainable Products We are proud to be working in collaboration with a series of partners on the development of products that promote sustainability, such as the EcoTile, that creates spaces within the fabric of our cities and towns in which multiple species can survive and thrive, and where humans can interact and engage safely with nature. Initial trials showed that a multitude of species settled where they were expected to, and in the design features – the multispecies design works. In 2023, Nordkalk introduced seven innovative, sustainable products and solutions across a diverse range of applications. A brand-new range of fossil-free products was launched in Ignaberga, Sweden, marking a significant step forward in the company's commitment to sustainability. Additionally, more efficient soil improvement products specifically designed for agricultural purposes were developed for the Swedish market. In the construction sector, Nordkalk developed two novel fillers: an ultrafine product aimed at reducing the use of cement and additives in plasters, and another product designed to minimise the bitumen content in roofing materials. Our People and PepTalk The way in which companies measure the “S” in ESG or their social impact has a significant effect on the wellbeing of their employees, the wider community and the organisation's stakeholders. The significance of measuring and reporting social risks and impacts is underscored by the presence of social inequalities and the necessity for a transition to a sustainable economy. Prioritising employee wellbeing and the internal culture of organisations is becoming increasingly important in today’s society and are essential metrics for the “S” in the ESG strategy as employee wellbeing is central to an organisation’s social performance. In 2023 SigmaRoc incorporated PepTalk into its UK ESG strategy to enhance employee engagement and well- being. PepTalk provides a data-led engagement platform to improve psychological safety, enhance employee morale and reduce attrition. The integration of PepTalk aligns with 111 their commitment to enhancing employee wellbeing and contributes to a positive corporate culture. PepTalk supports our Social Responsibility strategy as follows: • • • • Employee Wellbeing: providing a safe, inclusive workplace and offering a tool such as PepTalk’s platform and program that can help in delivering regular training and development opportunities to foster professional growth. Employee Satisfaction & Feedback: measurement of employee satisfaction and the success of wellbeing initiatives. 100% reach: modern technology enables a dispersed team to stay connected through a wide range of content- led program and actions plans that are designed to support team connection and engagement. Expert-led Wellbeing and Culture Calendar: rolling wellbeing and culture content calendar, designed in partnership with industry experts and thought leaders that enables employees to perform at their best. • Team Building Initiatives: customised competitions across wellness and activity designed to drive employee connection and collaboration. • Behavioural Change Programs: behavioural change programs and interventions for managers and team members to address potential inhibitors to engagement and promote learning and skill building. • Leadership Tools: supporting managers to work on building psychological safety, trust and authenticity with their teams. Launch of Puccini Blue in Marmomac Our ESG Journey ENVIRONMENT Carbon Emissions Targets & Performance Baseline Year Target Year Target description Target reduction Status 2021 2040 Net zero by 2040 2021 2038 2021 2030 2021 2030 All kilns are carbon neutral by 2038 2.5% reduction in energy intensity by 2030 100% third party energy sourced from renewable means by 2030 On Target 100% 7% YoY emissions reduction in 2023. 12% emissions reduction since the 2021 baseline. On Target 100% 100% fossil fuel substitution achieved at site. Carbon capture module installed and commissioned. Achieved 2.5% 12% YoY achieved in 2023. 29% overall reduction since the 2021 baseline. On Target 100% of Belgium, Finland and Sweden use alternative / renewable electrical energy. 71% of Group uses alternative / renewable electrical energy. As we go through the SBTi verification process, the Group will develop defined targets. The SECR report is conducted in line with 2019 UK Government Environmental Reporting Guidelines and the GHG Protocol Corporate Accounting and Reporting Standard (revised edition) and covers all operations where we have operational control. The SECR report also includes both mandatory and voluntary reporting to ensure transparent disclosure. GHG Emissions tCO2e Energy consumption mWh 2023 2022 2021 662 -7% -6% 2023 2022 2021 709 750 1.19m 1.26m 1.34m 2021 baseline reduction of 12% 2021 baseline reduction of 11% GHG emission intensity tCo2e per £m revenue Energy intensity mWh per £m revenue 2023 2022 2021 1,141 -13% 2023 2,057 1,317 -19% 2022 2,339 1,617 20211 2,889 2021 baseline reduction of 29% 2021 baseline reduction of 29% -5% -6% -12% -19% 1 Emissions based on SECR reports including both Mandatory and Voluntary data. To allow like for like comparisons, 2021 data was adjusted for Nordkalk (the North East region) which was reported for a full 12 months in 2021 (despite joining SigmaRoc in September 2021) and 2022 to provide comparable annual emissions for the Group STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023 Mitigation Biodiversity and Land Use The 3 focuses areas for 2023 were: Policy 113 • • • Scope 1 – commissioning of the Company’s first modular Carbon Capture system Scope 2 – improvement of energy use and energy intensity and sourcing of alternative energy Scope 3 – continual development of sustainable products The commissioning of the Company’s first modular Carbon Capture system and continual development of sustainable products helping recue scope 1 and scope 3 emission. The modular plant is now commissioned and able to capture with a purity of 96% through just 2 stages. Subject to finding a commercial outlet for the CO2, the Company is in a position to expand the roll out of the system. Whilst Governments and third parties continue to try to develop necessary policies and infrastructure for transport and sequestration of CO2, the Company is proactively identifying independent transportation systems that can utilise road and rail as well as internal and external CO2 uses such as the sequestration of CO2 into our own concrete products to support Greenbloc and Mevo technology. The Company has engaged with a series of mandatory and voluntary programmes to focus on the reduction of emissions intensities. These include reporting to CDP as well as submission to SBTi of which we are awaiting the verification process. Additional initiatives include completion of our ESOS report which is part of the European Energy Directive and the submission of our annual SECR report that looks at both mandatory and voluntary reporting aspects and is a guide to focus areas. Toxic Emissions and Waste Governance and Strategy Environmental Management Systems (EMS) are key to ensuring management of toxic emissions and waste. Across our businesses, 76% of our businesses (by revenue) have an ISO14001 certified Environmental Management System (EMS) that also include provisions for waste management with no fines being incurred in 2023. Our EMSs, including our 14001 audited EMS are regularly audited by external auditors as well as additional specialised audits conducted by the likes of MCA and Lloyds Register for aspects such as MARPOL (the International Convention for the Prevention of Pollution from Ships.) Targets & Performance In terms of air quality, our NOx and SOx performance has seen a significant step change reduction. This has been achieved through a combination of kiln network balancing and the use of Selective Non Catalytic Reduction (SNCR) systems. 196 447 2023 2022 1,544 699 87% 36% SOx NOx SigmaRoc operates a series of policies that include: Environment and Water Policy Sustainability Policy • • • Biodiversity Policy • Energy and Climate Policy These include provisions and commitments on sustainably managing natural resources and raw materials, minimising disturbance from operations and reclaiming habitat and disturbed land. The Board has overall responsibility for the Policies and approves the policies which are then cascaded throughout the business with a formal acknowledgement and training program to be rolled out in 2024 to all employees and contractors as required. These will be monitored and audited quarterly by the Board with a target of 100% compliance for employees in terms of acknowledgement and training. Program and Structures Restoration and Rehabilitation As part of site planning and permits, most government agencies and authorities require restoration plans to be in place. These restoration plans cannot be completed until the operations have come to end of life, however where there is an opportunity, our sites work concurrently to restore areas that are no longer operational. Despite the Group operating over a large area of approximately 5,287 acres, with 17% having been restored or under restoration restored in line with local authorities and community requirements. Protection of natural ecosystems Even before a point of final restoration, our sites work closely with local authorities, working groups and communities to ensure we maximise not only the preservation of existing ecosystems, but often the generation of further eco-systems to provide a thriving environment for existing species but also previously extinct species. This includes both fauna and flora with success derived through programs such as flora relocation programmes, wildflower programs, Red Bill chough breeding programs, Peregrine falcon nesting programs and great crested newt habitat establishment. Some sites are close to Sites of Specific Scientific Interest where our working relationships with local groups and national agencies have helped ensure they thrive. Where there is risk of impact, the valuable species are moved to other suitable or created areas. Biodiversity and Community Impact The Company works closely with communities and local authorities to ensure that our ongoing operations and future operations minimise environmental and community impact. Our future works are supported by impact assessments prior to the commencement of work. Operational considerations not only seek to minimise impact, but also actively enhance biodiversity in surrounding areas. Before commencing operation of a site, the potential environmental, including bio diversity, and social impacts are assessed through an Environmental Impact Assessment Our ESG Journey process, after which an application for an environmental permit is typically made. During the operating phase of the sites, environmental management is guided by environmental permits, which set regulatory requirements for the operation and closure, and by the environmental management system of the Company including ISO14001. The Group is committed to minimising its impact on the natural environment where integrate biodiversity management into all steps of planning, production and closure of sites whilst maintaining a hierarchy of mitigation (avoid, minimize, restore, and finally offset). it operates. We Water management Our operations manage over 34,000k m3 of water per year including fresh water, seasonal snow melt water, rainwater collection and run off. Of the water managed, 2%, 748k m3, is used for operational purposes which is a mix of fresh water, recycled and collected. Furthermore, 8%, 2.5m m3, is allocated to local communities for drinking water purposes. SOCIAL Community Relations Community Impact and Disturbance SigmaRoc operates a series of policies that include: Sustainability Policy Environment and Water Policy • • • Biodiversity Policy • Human Rights and Community policy These include provisions and commitments to support protected areas, local community engagement approach and impact assessments. The policies are approved by the Board and cascaded throughout the business with a formal acknowledgement and training program to be rolled out in 2024 to all employees and contractors as required. These will be monitored and audited quarterly by the Board with a target of 100% compliance for employees in terms of acknowledgement and training. The Company adopts a precautionary approach with formal channels for local community engagement. The businesses’ environmental aspects are guided by local individual operating policies, ensuring that their requirements, as well as wider requirements, are met. Distribution of Benefits local approach to both The Company promotes a procurement and hiring to support local businesses and communities. A significant majority of our workforce live local to their place of work and the Company engages in community development projects and philanthropic programs to support local communities, be it donations of labour and materials, allocation of land for public access or creation of community activity areas. Conflict and Human rights SigmaRoc operates a series of policies that include a Human Rights and Community policy. The policies are approved by the Board and cascaded throughout the business with a formal acknowledgement and training program to be rolled out in 2024 to all employees and contractors as required. These will be monitored and audited quarterly by the Board with a target of 100% compliance for employees in terms of acknowledgement and training. Health & Safety Overview Operating in numerous countries across the UK and Europe, we continue to ensure compliance with local regulation, which is managed at a local level, whilst at the same time integrating these businesses to align with best practice Group H&S standards. We are committed ensuring awareness about H&S issues; reducing the number of severity of accidents; preventing occupational disease; promoting wellbeing and preventing exposure to hazardous substances. STRUCTURED & COMPLIANT PROACTIVE PREVENTION LEARN & IMPROVE 1. All sites audited with identified improvement actions. 2. All corrective actions properly closed out and on time. 1. Core risks with live action plan. 1. No repeat events. 2. Uncontrolled Risks and Hazards (HIRE) logged and actioned. 2. Performance and events promptly communicated throughout the businesses. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023115 The Group also maintains a strong focus on conducting detailed investigations, not only after an event has happened, but also before events happen. For example, through Bow Tie analysis, core risk events can be reviewed before they happen. This allows causes to be proactively identified so safety barriers can be implemented to mitigate routes to an adverse H&S event. On the flip side, the effects and consequences of the event are also proactively identified so safety barriers can be implemented to mitigate the impacts of such an event. Post event investigation, including investigation on near hits, and externally publicised events both in our industry and beyond, is conducted. The level of investigation is proportional to the severity and seeks to review not just the event, but also organisation factors, task and environmental conditions, individual and team actions and absent or failed defences. It is by these principles and through core risk management and investigation that the Group can act to continually deliver its year-on-year H&S improvement. Clint White HSE&P DIRECTOR Principles The Group continues to drive its overarching H&S standards which we believe supported the continual improvement in health and safety in 2024. Core Risks The Company continues to focus on its core risks: Entrapment by machinery / moving parts • Contact with moving vehicles / objects • • Hit by suspended load / falling objects • • • Powders and COSHH material handling Trapped by significant mass / energy Falls from height Two primary areas of focus that have improved our control of core risks have been: 1. Serious Injury or Fatality (SIF) framework; and 2. Investigations. Front line leadership SIF is the focus on events that could lead to Serious Injury or Fatality; in simple terms those events that cause or have the potential to cause life threatening / changing injuries. This work has been heavily developed in recent times and is seen to be the next evolution of well-grounded traditional H&S principles; driving the focus to those areas that are of the most serious nature. This has supported and aligns with our core risks and enables us to develop improved reporting to ensure action on those key areas. We continue focus on front line leadership, with learning and development supported by programs such as NEBOSH and IOSH training for supervisor and front-line management. Our boots on the ground program has been a significant contributor to our ongoing health and safety success. Front- line leaders are more visible in the business ensuring a continued improvement in the output of not only safety, but also quality and productivity. Our ESG Journey HighVizz HighVizz continues to be continually developed and integrated into our newly acquired businesses allowing us dynamically to report and manage safety. HighVizz includes SIF identification, as well as new modules such as pre-start inspections, and enables our teams to have lean processes and systems that ensure risks are managed more effectively and efficiently. Occupational Health Both SASB and the UK Minerals Product Association have a focus on occupational health, especially Silicosis. As a Group we have a hierarchy of controls, based upon best health and safety guidance and an assessment of the risks within our sites and workplaces ensuring compliance with HASWA 1974, MHSWR 1999, COSHH Regulations, L140 – HSE ACOP for HAVS, PUWER 1998, HSG258 – HSE Controlling airborne contaminants at work (use of LEVs) and EH75-4 and INDG 463 Silica and control methods. These include: • Use of Risk assessments, safe systems of works and COSHH assessments; • Minimising dust generated by our operations through engineering controls such as enclosing processing equipment and transfer points, water suppression, use of spray systems for dust encapsulation and local exhaust ventilation; • Periodic personal and local monitoring by external consultants and subsequent personal assessments against recognised exposure limits; • Health questionnaires and health surveillance of staff by Occupational Health specialists; • Where surveys identify potential exposure above recognised exposure limits warning signage is posted and workers are required to wear appropriate respiratory protective equipment including full and half masks, and air fed breathing systems; • • • Time limits set for and policy of job rotation to minimise exposure times in addition to the use of specialised PPE in areas of risk; Training for new employees and regular refresher training for existing employees to raise awareness of the risks to health that can arise from exposure; and Training in the correct use and maintenance of PPE provided to protect their health and other checks such as face fit testing for dust masks. Governance and strategy the Company’s operations are certified 69% of to ISO18001/45001. Those that are not, leverage the safety management systems. In addition to safety management systems, the Group operates its own internal audit function with over 172 internal audits conducted in 2023 across our operations. The audits focus on both systems and sites, with interactive and constructive feedback and actions generated. The audit also monitors the close out of these actions. Responsibility The Board has overall responsibility for Health and Safety with the implementation of the strategy and performance managed by the Group Health & Safety committee that has both Executive Directors, Non-Executive Directors and Executive Committee members as part of the committee. The delivery of the strategy and driving of performance is then the directive of the Group Health & Safety Director. Once the Health & Safety strategy is set by the Board and Group HS Committee, the Executive Committee and Health & Safety Director implement the strategy and drive the performance. Each month the performance is reviewed by the executive management committee in a dedicated meeting and is cascaded wider to ensure that all employees are engaged. Health and safety form a key part of every Board and Executive meeting. HS Policy The Company operates a Group wide Health & Safety Policy that is cascaded and implemented in every business. The Policy applies to any person operating on our sites, including employees, contractors and visitors. The policy is approved by the Board and cascaded throughout the business with a formal acknowledgement and training program to be rolled out in 2024 to all employees and contractors as required. These will be monitored and audited quarterly by the Board with a target of 100% compliance for employees in terms of acknowledgement and training. H&S Targets and Performance The group is committed to the continuous improvement of health and safety and wellbeing for any person who is on our site, be it an employee, contractor or visitor. Health and Safety Frequency rate improvements TIFR (contractor and Employees) HIFR contractor and Employees) SHIFR contractor and Employees) LTIFR contractor and Employees) 2020 2021 2022 2023 2% 26% 17% 6% -9% 28% 6% 17% 27% -29% 19% 31% 47% -31% 8% 25% Fatalities 0 0 0 0 Since the start of all reporting, both employees and contractors have been included in all the statistics. In 2023 contractor and employee statistics were separated to allow greater understanding of where focus should be between contractor and employee. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023117 0 to 20 - 1% 21 to 30 - 11% 31 to 40 - 20% 41 to 50 - 26% 51 to 60 - 31% >61 - 11% 51 to 60 - 31% Health and Safety Frequency rate improvements Age 6% 17% 2023 31% 25% 17% 26% 2022 6% 19% 8% 2021 28% -29% -31% 2020 -9% 27% 47% 2% TIFR HIFR SHIFR LTIR 2020 2021 2022 2023 Silicosis 0 0 0 0 Labour Management Within the Group, as per the business owner at 31 December 2023 the Group employed c.2000 people. Within the heavy materials industry, diversity continues be a challenge especially at an operational level with 80% of our workforce being at an operational level. Across the Group 12% of our work force is female, however 42% of our shared services and management is female. We continue to engage with school leavers and apprentices to ensure there is succession planning and that the knowledge of our long serving employees is retained within the business with our overall age profile as follows: This development of our teams has been supported by >22,000 hours of learning and development that has been delivered during the course of 2023. In addition to the recruitment of staff to support our growing businesses, we also review employee retention through aspects such as local satisfaction surveys, training, career management plans and performance reviews. The Group has not experienced any strikes / lockouts within its businesses in the last three years. Strategy Each OPCO is responsible for the recruitment, management, and retention of its employees with renumeration policies being guided by local legislation. Generally, Supervisors and managers have a variable component to their renumeration which is based on a combination of business performance as well as personal performance and operators have a variable component to their renumeration which is usually based on operation and site performance. Each business complies with its jurisdictional requirements around aspects such as pensions and where applicable / available offers additional non-compensation employee benefits such as life assurance and medical insurance that can often be extended to employees’ families, allowing them access to preferential rates. GOVERNANCE Corporate Governance Board In 2023 the Board consisted of Independent Non-Executive Directors (57%) and Executive Directors (43%). In 2024 the Board is expected to consist of Independent Non-Executive Directors (67%) and Executive Directors (33%) subject to formal appointments. In 2024 the Board is expected to have representation of experts in Finance, Industry and ESG. In 2024 the Independent Non-Executive Directors are expected to be 33% female, subject to formal appointment. SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Our ESG Journey Committee Audit Renumeration Nominations Safety ESG Fully Independent Experts on Committee Yes Yes Yes Part Part Finance Finance Finance Industry Industry ESG1 Finance2 These policies are designed to facilitate good governance with the intention of running the business in accordance with good business ethics. Furthermore the policies are approved by the Board and cascaded throughout the business. A formal acknowledgement and training program will be rolled out in 2024 to all employees and contractors as required. These will be monitored and audited quarterly by the Board with a target of 100% compliance for employees in terms of acknowledgement and training. Day to day management of the Policies is overseen by the Group’s Executive Committee. When engaging suppliers and contractors, the operating businesses can conduct review of their policies to ensure they observe the principles set out in our policies. 1 (subject to formal appointments) 2 (subject to formal appointments) MEMBERSHIP Membership to trade organisations, industry bodies and other agencies is critical to ensure continual improvement in all that we do and to help facilitate the ongoing changes our industry and our customers face. Across our platforms we both support and are supported by National and International bodies such as: • Mineral Product Association (MPA): UK industry trade association for the aggregates, asphalt, cement, concrete, dimension stone, lime, mortar and silica sand industries. • • • • • • Federation Industries Extractives (Fediex) of which we have representation on the Board. European Lime Association (EuLA) of which we have representation on the Board. Industrial Minerals Association Europe (IMA Europe). European Calcium Carbonate Association (CCA). International Lime Association (ILA). FedBeton: Federation for ready-mixed concrete Belgium. in Further to these bodies, businesses in the Group also have ISO accreditation or equivalent in: • • • ISO 9001 Quality: 79% of our business by revenue has ISO 9001 ISO 14001 Environment: 76% of our business by revenue has ISO 14001 ISO 18001/45001 Health & Safety: 69% of our business by revenue has ISO 18001/45001 Benelux has local business and product accreditations that are deemed to have greater relevance than the ISO, for both our customers and end-users. Expertise is based on both knowledge and competence through aspects such as qualifications and career experience. Further information on the Board and the Board Committees can be found in the Governance Report section. Ownership and Control The Group is quoted on the AIM market of the London Stock Exchange with the founding members and other senior management holding shares in the company purchased by themselves in compliance with regulations and governed through approval routes overseen by the CFO. Further detail on shareholdings can be found on page 178. Corporate Behaviour Business Ethics SigmaRoc operates a series of policies that include: Environment and Water Sustainability (ESG) policy • Anti Bribery & Corruption • Criminal Finances Act Policy • Code of conduct • Competition Compliance • Whistleblowing • Disclosure (Share dealing) policy • • • Biodiversity • • Health and Safety • Human Rights and Community • Anti-Slavery and Human Trafficking • • Data Protection and Security • Diversity and Inclusion • Energy and Climate Change IT systems and Data Tax 119 SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Streamlined Energy and Carbon Report (SECR) Flue gas SIGMAROC ANNUAL REPORT 2023Streamlined Energy and Carbon Report (SECR) 121 UK ENERGY USE AND ASSOCIATED GREENHOUSE GAS EMISSIONS Current UK based annual energy usage and associated annual greenhouse gas (“GHG”) emissions are reported pursuant (Directors’ Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 (“the 2018 Regulations”) that came into force 1 April 2019. the Companies to ORGANISATIONAL BOUNDARY Energy use and associated GHG emissions are reported across the Group as defined by the operational control approach. This includes operations in the UK, Channel Islands (‘North West’), Belgium (‘West’) and across Estonia, Finland, Poland, Sweden, Turkey & Spain (‘North East’). This exceeds the minimum mandatory requirements set out in the 2018 Regulations for ‘large unquoted companies’, which only require reporting of UK based energy use and emissions. REPORTING PERIOD The annual reporting period is 1st January to 31st December each year and the energy and carbon emissions are aligned to this period. QUANTIFICATION AND REPORTING METHODOLOGY The data was prepared with reference to the 2019 UK Government Environmental Reporting Guidelines and the GHG Protocol Corporate Accounting and Reporting Standard (revised edition). Emissions calculations were based on emission factors published in the 2023 UK Government GHG Conversion Factors for Company Reporting, Statistics Finland Fuel Classification 2023, Swedish Environmental Protection Agency Emission Factors 2022, and the latest available factors from the Association of Issuing Bodies (2022), Jersey Electricity and Guernsey Electricity. The report has been reviewed independently by Briar Consulting Engineers Limited. Electricity and gas consumption were based on invoice records, consumption data and estimation techniques such as the direct comparison and pro-rata extrapolation to complete missing data. Transport usage was calculated from a combination of mileage and fuel records; however, outside the UK and Channel Islands, transport fuel is included with other site fuel usage associated with stationary assets. Gross calorific values were used except for mileage energy calculations as per Government GHG Conversion Factors. The emissions are divided into mandatory and voluntary emissions according to the 2018 Regulations, then further divided into the direct combustion of fuels and the operation of facilities (scope 1), indirect emissions from purchased electricity (scope 2) and further indirect emissions that occur as a consequence of company activities but occur from sources not owned or controlled by the organisation (scope 3). Board members and Ronez MD Mike Osborne on site in Jersey Streamlined Energy and Carbon Report (SECR) BREAKDOWN OF ENERGY CONSUMPTION USED TO CALCULATE EMISSIONS (kWh): Energy type Mandatory energy: Gas Purchased electricity Transport fuel & site fuel Total energy (mandatory) Voluntary energy: Bioenergy Coal Generated electricity2 Total energy (voluntary) 2022 2023 UK Group Total1 UK Group Total1 362,199 208,190,947 313,720 223,279,896 7,024,295 192,100,497 6,774,753 178,284,164 55,806,376 434,579,215 51,728,962 468,734,219 63,192,870 834,870,659 58,817,435 870,298,279 - - - - 32,094,230 387,013,242 4,499,105 423,606,577 - - - - 55,245,659 264,308,210 4,105,784 323,659,653 Total energy (mandatory & voluntary) 63,192,870 1,258,477,236 58,817,435 1,193,957,932 1 The Group total includes consumption from the UK, Channel Islands, Belgium, and Nordkalk (Estonia, Finland, Poland, Sweden, and Turkey). 2 Electricity generated by solar photovoltaic panels. Reported energy includes any exported energy to the grid. BREAKDOWN OF EMISSIONS ASSOCIATED WITH THE REPORTED ENERGY USE (tCO2e): Emission source 2022 2023 Mandatory requirements: UK Group Total3 UK Group Total3 Scope 1 Gas Company owned vehicles & site fuel Scope 2 66 13,859 32,501 113,712 57 12,747 35,102 122,421 Purchased electricity (location-based) 1,358 42,771 1,403 40,492 Scope 3 Category 6: Business travel (grey fleet) Total gross emissions (mandatory) 88 15,371 311 189,295 89 14,296 324 198,339 Voluntary requirements: Scope 1 Bioenergy (CH4 & N2O) Coal Process related emissions Scope 2 Purchased electricity (market-based) Total gross emissions (voluntary) Total gross emissions (mandatory & voluntary – location-based) Outside of Scopes (biofuel tCO2) Bioenergy Petrol/Diesel biofuel content - - - - - 2 131,205 388,517 - 519,724 - - - - - 3 85,502 378,290 0 463,795 15,371 709,019 14,296 662,134 - 223 11,013 239 - 304 19,038 323 3 The Group total includes emissions from the UK, Channel Islands, Belgium, and Nordkalk (Estonia, Finland, Poland, Sweden, and Turkey, with Spain from August 2022 only). STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023 Intensity ratios Tonnes CO2e per million-pound turnover Mandatory emissions only Mandatory & voluntary emissions 2022 351.9 1,317.9 142.3 142.3 BREAKDOWN OF EMISSIONS ACROSS THE GROUP BY REGION FOR 2022 ONLY (tCO2e)4 123 2023 132.4 132.4 341.8 1,141.1 Emission source Scope 1 Bioenergy (CH4 & N2O) Coal Gas North West West North East - - 57 - 95 60 3 85,407 34,985 93,897 2023 Total 3 85,502 35,102 122,421 378,290 Company owned vehicles & site fuel 16,824 11,699 Process related emissions - - 378,290 Scope 2 Purchased electricity (location-based) 1,532 1,808 37,152 40,492 Scope 3 Category 6: Business travel (grey fleet only) Total gross emissions (location-based) Outside of scopes Bioenergy (CO2) Petrol/diesel biofuel content Intensity ratios tCO2e per million-pound turnover 112 18,525 - 323 - 212 324 13,662 629,946 662,134 - - 19,038 - 19,038 323 130.7 138.1 1,855.1 1,141.1 4 The North West includes the UK and Channel Islands; the West Region includes Belgium; the North East Region includes Nordkalk. INTENSITY RATIO The intensity ratio is total gross emissions in metric tonnes CO2e per total million-pound (£m) turnover. This is calculated separately for ‘mandatory’ emissions and ‘mandatory & voluntary’ emissions for the UK and regionally for the North West, West and North East SigmaRoc Regions. This financial metric is considered the most relevant to the Company’s wide- ranging activities and allows a comparison of performance across other organisations and sectors. ENERGY EFFICIENCY ACTION DURING CURRENT FINANCIAL YEAR Emissions in the North East have seen a 7.5% (51,005 tCO2e) decrease in 2023 compared to 2022. A large share of this decrease is due to the further transition away from coal to alternative fuel sources such as recycled fuel oil and biomass. In St John, Jersey, a new solar PV array was commissioned in April 2023. This investment by Jersey Electric will benefit Ronez by saving approximately 57 MWh each year. Ronez has continued to experiment with low temperature asphalt by switching to Nytherm during the reporting period to reduce gas oil usage by approximately 55,500 litres. Furthermore, the addition of 3 EV’s to the company fleet (including 2 plug- in hybrids) will reduce diesel and petrol consumption and therefore reduce emissions associated with transport. At Carrières du Hainaut, there was an extension of the existing photovoltaic park by increasing the existing surface area by approximately 57%. This installation aims to send 62% of the electricity generated to the Carrières site for self- consumption, with the surplus sent into the ORES public network. The project includes the installation of a total power of 1,999,215 kWp from a total of 2,889 panels. Gross UK emissions have decreased by 7.0 % (1,075 tCO2e) in 2023. This is largely due to the significant reduction in emissions by company owned vehicles and site fuel (1,112 tCO2e) across sites within the UK. In particular, kerosene consumption at Bolton Hill Quarry decreased by 1.78 GWh (442.3 tCO2e) in 2023, contributing to nearly half of the decrease in company vehicle and site fuel emissions. SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT TCFD Report Nordkalk limestone quarry in Miedzianka, Poland TCFD Report The Board has noted the new requirement for mandatory climate-related disclosures arising from the Companies (Strategic Report) (Climate-related Financial Disclosure) Regulations 2022. Consequently, we provide disclosures aligned with the recommendations issued by the Task Force on Climate-related Financial Disclosures (TCFD) in this Annual Report for the year ended 31 December 2023. 125 This report is based on the TCFD recommendations and recommended disclosures as detailed in Recommendations of the Task Force on Climate-related Financial Disclosures (2017), considering the additional guidance set out in the TCFD 2021 Annex, ‘Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures’. We recognise that climate change presents both material risks and opportunities to our business and sector. Accordingly, the following report covers the Group’s well-established governance of climate change issues, its integration into our overall risk management processes, our strategies for managing climate-related risks and opportunities, and relevant metrics used to measure progress towards our climate targets. We have prepared this report with the support of external sustainability consultants, CEN-ESG, who have enhanced the analysis of our exposure to natural hazards with a detailed bottom-up site analysis using a geospatial climate hazard mapping tool. This report is based on the structures and operations in place on 31 December 2023. Given the agreement with CRH plc to acquire its European lime operations, we have decided that any detailed quantification of our key climate-related risks and opportunities will be published in next year’s annual report to accommodate the significant transformation to the business from the acquisition. GOVERNANCE Board level At SigmaRoc, climate-related governance has been well-integrated for several years. The Board has overall responsibility for sustainability issues including climate- related matters, and effective management of climate- related risks and opportunities as with all matters of Group strategy. The Board meets quarterly, and ESG, including climate-change, is a standing agenda item at all these meetings, with updates on climate-related issues presented by the Chief Technical Officer (CTO) who sits as a permanent guest at board meetings. Additionally, the Board considers climate-related issues, especially CO2 emissions, when reviewing and guiding strategy, major plans of action, policies, annual budgets, and business plans as well as setting the organisation’s performance objectives, monitoring implementation and performance, and overseeing major capital expenditures, acquisitions, and divestiture. The Board is supported by committees including the Audit Committee, which assists in monitoring ESG performance and climate-related risks. In 2023, the development of science-based targets and the Road Map to Net Zero has been a particular focus of Board meetings, and now drives the management of climate-related risks and opportunities through review of carbon emissions. The Board is responsible for approving TCFD disclosures and is also responsible for reviewing and signing off the risk register, including risks related to the environment and climate change. The Board does not currently receive formal training from third parties on climate-related issues, but receives information provided by the CTO and other members of the Group when required. To ensure appropriate visibility over climate change is maintained as operations continue to expand, in 2024 SigmaRoc will seek to appoint a new non-executive director with a strong background in ESG and climate change. Furthermore, a dedicated ESG Committee has been formed, including Independent Board and Executive Board members and the CTO, who will meet throughout the year when the quarterly ESG & Climate Change Working Group Report will be presented. Management level At the direction of the Board, the Chief Technical Officer is assigned responsibility to assess, monitor and manage climate-related risks and opportunities alongside Group- level risk management. The Executive Committee meets monthly and the CTO is responsible for updating the issues and other ESG Committee on climate-related initiatives. The CTO is informed via ongoing dialogue with the managing directors from each of the business units, who monitor and report on general risks, strategic projects and operations, including climate-related issues, as necessary. Each business unit is also responsible for monitoring and feeding back the key aspects to be reported as defined by permits, legislation and frameworks. Data collection and monitoring is done through online process control systems, purchase orders, consumption meters etc. This includes statutory (e.g NOx and SOx), and non-statutory aspects such as land, power and water use. The data is collated through group wide tools such as OneClick LCA. Following the recent agreement to acquire CRH’s European lime business, SigmaRoc is currently recruiting a Group Sustainability Manager who will be responsible for collating climate and ESG data, monitoring performance, overseeing climate-related projects, and educating across the Group on climate-related issues. The Group Sustainability Manager will also create and lead an ESG & Climate Change Working Group with representatives across all operational regions, who will meet quarterly to review progress across the Group, and subsequently prepare and provide quarterly updates and reports to the Board and ESG Committee. TCFD Report D R A O B T N E M E G A N A M S S E N S U B I BOARD AUDIT COMMITTEE Overall Climate Change responsibility Monitoring ESG performance EXECUTIVE COMMITTEE CHIEF TECHNICAL OFFICER Operational responsibility for Climate Change, ESG and risk management at Group level Executive sponsor for Climate Change, ESG and risk management BUSINESS UNIT MANAGING DIRECTORS Operational responsibility for Climate Change, ESG and risk management at business unit level I O P E R A T O N S / S T R A T E G Y I S C R T E M D N A S S E R G O R P , S K S R I RISK MANAGEMENT Climate-related risks are integrated into SigmaRoc’s risk management processes and are considered as part of the overall Group risk management processes. The risk assessment considered existing and emerging risks and all risk categories outlined in the TCFD recommendations in relation to all of SigmaRoc’s operations as of 31 December 2023. Climate-related risks and opportunities were also considered across upstream and downstream supply chains. Climate-related risk identification is performed both bottom- up, through a detailed assessment of risks affecting each individual site, and top-down, through a high-level assessment of strategic, transition and market risks pertinent to the Group and its sector. Additionally, risks are identified through discussion and engagement with primary investors, peer review and through a cross-functional process led by the CTO taking into account internal stakeholders such as H&S, ESG, Estates and the General Counsel. Site-level environmental risks, including climate change risks, are identified as part of operational risk assessments. These are conducted at a plant level and reviewed, assessed and monitored by regional Environmental and Industrial Direct teams. This year, the Group enhanced its site-level assessment of both chronic and acute physical climate- related risks using geospatial modelling software, which has provided greater detail and specificity for each individual site in the Group’s portfolio. Where material risks are identified, risk assessments are reviewed at divisional and Group level. Once identified, climate-related risks and opportunities are assessed and scored according to their likelihood and impact, in order to assess their relative magnitude relative to other risks. Impact is assessed based on quantitative and qualitative or reputational and financial risk according to the standard risk management thresholds. Likelihood is assessed based on the following thresholds: STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023 Likelihood 1 2 3 Remote Occurrence less frequently than once in 5 years Probable Occurrence within 5 years Frequent Occurrence within one year or more frequently 127 Climate-related risks and opportunities were assessed against the following time horizons: From (years) To (years) Rationale Short-term 2022 Medium-term 2025 2024 2030 In line with strategic cycles (noting 2023 is year 2) In line with medium-term time horizons followed by peers Long-term 2031 2040 and beyond In line with the Road Map to Net Zero and the UK’s Net Zero by 2050 ambitions. following The three climate-related scenarios were examined, looking forward out to 2100, to identify and assess physical climate-related risks. • RCP 2.6: a climate-positive pathway, likely to keep global temperature rise below 2 °C by 2100. CO2 emissions start declining by 2020 and go to zero by 2100. • RCP 4.5: an intermediate and probably baseline scenario more likely than not to result in global temperature rise between 2 °C and 3 °C, by 2100 with a mean sea level rise 35% higher than that of RCP 2.6. Many plant and animal species will be unable to adapt to the effects of RCP 4.5 and higher RCPs. Emissions peak around 2040, then decline. • RCP 8.5: a bad case scenario where global temperatures rise between 4.1-4.8°C by 2100. This scenario is included for its extreme impacts on physical climate risks as the global response to mitigating climate change is limited. The following two climate-related scenarios were examined, looking forward out to 2050, to identify and assess the behaviour of transition risks and opportunities. • Net Zero 2050 (NZE): an ambitious scenario which sets out a narrow but achievable pathway for the global energy sector to achieve net zero CO2 emissions by 2050. This meets the TCFD requirement of using a “below 2°C” scenario and is included as it informs the decarbonisation pathways used by the Science Based Targets initiative (SBTi), which validates corporate net zero targets and ambition. • Stated Policies Scenario (STEPS): a scenario which represents the roll forward of already announced policy measures. This scenario outlines a combination of physical and transitions risk impacts as temperatures rise by around 2.5°C by 2100 from pre-industrial levels, with a 50% probability. This scenario is included as it represents a base case pathway with a trajectory implied by today’s policy settings. Over 2024 SigmaRoc will be restructuring the business in order to integrate appropriately the newly acquired sites into the risk management process. Once appointed, the Group Sustainability Manager will collect data relating to environmental and climate-related risks as part of the quarterly review, maintain a central register and prepare a suite of reports to be reviewed by the Group ESG committee. STRATEGY Having assessed the climate-related hazards affecting the entire estate, SigmaRoc’s overall exposure to physical climate-related risks is considered to be low. By contrast, as a supplier of both low and high grade materials for use in construction, agriculture, environmental and industrial applications, SigmaRoc’s exposure to transition risks may be greater due to developing environmental regulation and stakeholder expectations in Europe. Nevertheless, given the longstanding work to identify and mitigate climate impacts on the Group, the strategy is considered to be resilient to climate risks and opportunities. As detailed against each risk, SigmaRoc is working to decarbonise its operations through energy efficiency, transition to renewable electricity, the development of carbon capture mechanisms and via strategic collaboration to minimise exposure such that any strategic and financial impacts from climate change are limited. Moreover, SigmaRoc considers itself at the forefront of the green transition by providing the materials that are essential to the green economy and will be enhancing its strategy to capitalise on these opportunities in the coming years. TCFD Report KEY RISKS Five key-climate related risks that could have a financial impact on the Group have been identified. Risk Type 1. Disruption due to fluvial and coastal flooding 2. Carbon pricing within operations 3. Carbon pricing in value chain 4. Operational decarbonisation 5. Failure to meet/maintain expected ESG credentials Physical (Chronic and Acute) Transition (Current and Emerging Regulation) Transition (Current and Emerging Regulation) Transition (Technology) Transition (Reputation) Area Own Operations Own Operations Downstream Own Operations Own Operations Primary potential financial impact Loss of revenue due to operational disruption Higher costs associated with energy and other inputs Higher costs associated with carbon tax on Scope 3 emissions Increased capex, increased operating costs Increased cost of capital, loss of investment Time horizon Long Medium Medium Short/Medium Short/Medium Likelihood Medium High High Medium High Location or service most impacted Metrics River flood: Site specific, risk identified at 7 sites across operations. Sea level rise: Site specific, risk identified at 8 sites across operations. • Number of flooding incidents • Days lost due to flooding incidents • Costs of flooding incidents Group Group Group Group • Scope 1&2 emissions • Scope 3 emissions • CO2 intensity • Energy intensity • Total energy consumption • % alternative energy consumption (including renewables & Biofuels) • • External ESG scores Share Price 1. Disruption due to fluvial or coastal flooding Following an assessment of climate-related hazards affecting the Group’s portfolio, flood risk exposure from rivers and sea level rise was identified for several sites. While 92% of the portfolio is at minimal risk of river flooding, 7 sites are currently in the highest flood risk zone and will remain in this risk bracket under all future scenarios and time horizons. Flooding is likely SigmaRoc’s most material physical risk at present due to its potential to destabilise assets. Sea level rise is a growing risk, with 7 sites at medium or high risk under RCP 2.6 and 4.5. Under a severe RCP 8.5 scenario, 7 of these sites would be exposed to high risk, with the final site exposed to extreme risk. Mitigation Mitigation of hydrological risks in some operations is already business as usual. Whereas some sites naturally drain and consequently remain dry, others require periodic de-watering. Historically the Group has found that water logging does not tend to stop operations altogether at an STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023affected quarry, as work can be diverted to a different area of the quarry whilst groundwater is pumped away. Even in the event of downtime at a particular quarry, SigmaRoc has the capacity to rebalance activities across the network and therefore recoup any costs lost, admitting some transfer costs. Redundancy in stock is maintained across quarries, which could also remediate any downtime losses. All sites exposed to a medium/high risk of sea level rise are able to divert resources to alternative sites in the event of a storm surge event. None of the sites identified as being at risk of river flooding are material in terms of financial risk. In addition, the geospatial analysis only models regional flood defences at a handful of countries, so SigmaRoc’s risk exposure may be lower than indicated due to flood and storm defences that have not been accounted for. Further, sea level rise is likely only to materialise in the very long term and could therefore fall outside reasonable business planning horizons. 2. Carbon pricing within operations The scope of carbon pricing (applied directly or indirectly) is expected to expand over the medium term, and the price of carbon is expected to rise. SigmaRoc is already exposed to the EU Emissions Trading Scheme (ETS), although does not fall under the Carbon Border Adjustment Mechanism (CBAM) so the loss of free allocation by 2035 is less substantial than in other adjacent sectors, namely cement. limitations on in scope 3 emissions given Given the nature of the sector, SigmaRoc is a large emitter its ability to decarbonise, with greater especially its supply to customers with high emissions. Some operations will be particularly challenging to decarbonise, while machinery can be replaced with more efficient and cleaner models, substantial emissions (approximately 70-80%) arise from the chemical reactions within kilns. Mitigation SigmaRoc is focused on the transition from fossil fuels to fossil free energy and biofuel, and improvements in operational efficiency such as efforts to reduce machinery idle time. The Group continues to install renewable energy capacity on site, upgrade its vehicle fleet, conduct heat and power loss reviews of large assets, expand carbon capture, utilisation and storage (CCUS) infrastructure, and purchase PPAs. Capital expenditure to decarbonise operations, including the replacement of higher-emitting machinery, is largely covered by business-as-usual expenditure. In addition, SigmaRoc is able to pass on costs related to ETS credits through to customers in contracts. Addressing the challenge posed by chemical reactions in kilns is an ongoing challenge requiring further research and development. In the meantime, costs related to kilns can be passed through to customers in circumstances where sites are cohabited with customers. In addition SigmaRoc actively monitors the evolution of the ETS Carbon Credit pricing and operates a rolling hedging strategy, typically spanning three years forward. It also expects to see similar strategies applied in take-over targets thereby ensuring alignment in the approach to both pass-through mechanisms and Carbon cost mitigation. 3. Carbon pricing within value chain European carbon pricing policies may lead to higher impacting distribution operational costs for shipping, 129 networks. Moreover, there is a concern that customers might be incentivised to procure materials from quarries located in less regulated jurisdictions, where carbon pricing is less stringent, potentially putting European suppliers at a competitive disadvantage. Mitigation leverages the cohabitation of sites with SigmaRoc to ensure more sustainable distribution customers practices. By strategically locating sites near key customers, the Group reduces the need for extensive shipping, mitigating the impact of carbon pricing on transportation. The Group can also avail itself to alternative transportation methods, particularly road, rail and sea transportation, depending on the overall cost. 4. Operational decarbonisation SigmaRoc’s decarbonisation ambitions face a hurdle in potential localised grid capacity constraints, which may impede the electrification of operations. This may increase operating costs if reliance on pricier fuels, subject to carbon levies, becomes necessary or cannot be phased out sufficiently quickly. Additionally, the transition of machinery to electricity or biofuel carries the inherent risk of upfront costs. While these costs are strategically integrated into business-as-usual activities, they remain a critical aspect of natural machinery churn. There may however be limits on the availability of funding for such a transition, and potential constraints on the availability of such technology. More significantly, the development of carbon capture, utilisation and storage (CCUS) capabilities on the estate poses a distinct risk given that CCUS investments do not align with routine equipment churn and require a focused financial strategy. Development of CCUS capabilities will also depend on third parties. Mitigation involves investment Mitigation renewable electricity capacity installation, and planned adaptation of machinery to ensure gradual shift minimising financial strain. in on-site 5. Failure to meet/maintain expected ESG credentials There is a risk that failure to meet non-financial reporting expectations could lead to reduced access to capital and potential divestment. Further, failure to maintain customer expectations on sustainability performance could lead to loss of business and reputational damage, ultimately leading to lower revenue and difficulty winning new business. Mitigation largely reporting, involve continually improving improving Mitigation would sustainability sustainability increasing focus engagement with stakeholders and on sustainability. This may involve costs related to the application of additional internal sustainability resources, additional reporting and data management resource and systems. There may also be additional costs related to use of external sustainability consultants to assist in the Group’s reporting and regulatory obligations. TCFD Report KEY OPPORTUNITIES Four key climate-related financial opportunities that could have a financial impact on the Group have been identified: Opportunity 1. Improved operational efficiency 2. Transition to green electricity 3. Increased market share in products aiding the transition to a green economy 4. Resilience through innovation Type Resource Efficiency Energy Source Markets Resilience Primary potential financial impact Reduced operating costs Reduced operating costs Increased sales Reduced operating costs Time horizon Short/Medium Medium Medium Medium Likelihood High High High Medium Location or service most impacted Global Global Global Global Metrics Energy intensity • • Resource efficiency Energy intensity • • % renewable energy consumption • % of products that can be manufactured through “green” processes (e.g. use of cement alternatives in Greenbloc range) • New products to market • • Innovation spend including R&D and technology such as MEVO FTE hours dedicated to innovation 1. Improved operational efficiency Reducing energy consumption through a programme of efficiency and carbon reduction initiatives may decrease operating costs, increase operating margins and mitigate against the cost of future carbon pricing. Operational efficiency improvements have already been introduced across the Group and continue to be implemented both through dedicated programmes and business-as-usual activities. Examples include: • Metering and monitoring of fuel and electricity consumption; Limiting machinery idling – through software analysis and optimisation of shift patterns; Switching to more efficient fuels, such as the transition from coal and oil to biofuel and recycled fuel in the North East Region; • • • • • Intensity innovations – such as trials of low temperature asphalt; Efficiency upgrades of machinery; • Consolidation of operations to improve efficiencies. Strategy to capitalise SigmaRoc is targeting energy intensity reductions of 2.5% by 2030 from a 2021 base year, for 100% of all manufactured products to utilise waste/recycled materials by 2025, and for 100% utilisation of all production materials by 2027. These targets are in excess of operational efficiency improvements that will be made as part of business-as-usual activities, such as the upgrade of machinery at the end of its lifespan to more efficient models. Efficiency improvements will increasingly be aided by technological advancements in the future. 2. Transition to green electricity Electrification – such as the replacement of diesel- powered water pumps and forklifts with electric alternatives; Transition to green electricity, both through purchase of renewable grid electricity and through generation of renewable electricity onsite, presents another opportunity to STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023131 comprised of many small business units, SigmaRoc can be more dynamic and reactive than peers. Metrics & Targets SigmaRoc currently reports mandatory energy consumption, scope 1, scope 2 and Business Travel emissions for its UK- based operations as required under UK SECR regulation, alongside voluntary energy consumption and scope 1 emissions across its European operations in excess of SECR requirements. As part of the SBTi submission, SigmaRoc has also undertaken efforts to estimate its scope 3 footprint, establishing a team responsible for collecting and monitoring emissions data going forward. Reporting of scope 3 emissions is expected to become more comprehensive as greater confidence in data is achieved. The specific metrics used to monitor each of the climate- related risk and opportunities are noted in the relevant tables above. In addition, SigmaRoc reports against industry-specific SASB metrics including air emissions, water consumption and biodiversity impacts (see pages 109-110), as well as additional metrics to satisfy MSCI and other ESG rating agency requirements (see page 94). to is exposed the European Union’s As SigmaRoc internal carbon Emissions Trading Scheme, additional prices are not applied. However, this will remain under review and the use of internal prices in the coming years will be considered as necessary. In 2021, SigmaRoc launched its Road Map to Net Zero, committing the Group to achieving Net Zero across its operations (Scope 1 & 2) by 2040, through the following: • • • • • • • • • 2025 – All concrete products available in low carbon and ultra-low carbon 2025 – Carbon Capture Storage and utilisation trial plant operational 2025 – 100% of all manufactured products can industry utilise waste/recycled materials specifications allow for it) (Where 2027 – 100% utilisation of all production materials 2030 – Alternative fuels used mobile equipment 2030 – 2.5% reduction in energy intensity compared to the 2021 baseline 2030 – 100% third party energy sourced from renewable means 2032 – Alternative fuels used fixed equipment (e.g. lime and asphalt) 2038 – All kilns are carbon neutral In 2023, SigmaRoc submitted its net zero (Scope 1 and 2) by 2040 target to the SBTi, which is currently under review by SBTi. Delivery of the Road Map to Net Zero was a corporate objective linked to executive remuneration in 2022, and inclusion of climate-related metrics within the remuneration approach going forward will be established for 2024. increasingly reduce operating costs, especially as renewable electricity inexpensive. Renewable energy becomes installations will have the additional benefit of reducing the Group’s dependence on the electricity grid, thereby providing some comfort from any future energy price fluctuations and reducing any exposure to carbon pricing mechanisms. Strategy to capitalise SigmaRoc has published targets for 100% of third-party energy to be sourced from renewable sources by 2030. As part of the target, the Group is currently reviewing site and virtual power purchase agreements (PPAs) across each business, and businesses will continue to expand renewable generation. The Group has an established programme of wind and solar installations to generate renewable electricity, including existing solar photovoltaic capacity at Soignies and installations at Miedzianka and Wolica (Poland) and Dimension Stone (West) during 2022. Wind turbines have been installed at Soignies, and a successful feasibility study was undertaken for windmill construction at the Dimension Stone (West) site. 3. Increased market share in products aiding the transition to a green economy SigmaRoc is well-placed to capitalise on the net-zero transition. Lime is a key resource for the green transition, with various applications such as for the production and recycling of lithium batteries, decarbonisation of construction and as natural carbon sinks. Additionally, SigmaRoc has developed a range of low-carbon products, namely Greenbloc low-carbon concrete. By replacing 100% of cement with alternative materials, Greenbloc products have substantially reduced curing times which reduce energy consumption and carbon emissions. Similarly, SigmaRoc is currently developing concrete blocks that sequester and permanently store waste CO2. Development of such product ranges may increase access to new clients and markets, as the demand for climate- friendly construction materials grows. This opportunity may be expected to manifest in the medium-term, although it depends on the extent to which national regulations keep pace with the green transition. Strategy to capitalise Continue to focus on expanding market-share of low- carbon products. Align offerings with evolving climate- friendly construction demands, with medium-term impact contingent on regulatory advancements. 4. Resilience through innovation Overall there is a significant opportunity for the Group to continue to trial innovations in order to build and maintain climate resilience. The specific financial impacts will vary depending on the nature and outcomes of the trial, for example renewable energy programmes may help to reduce operational costs and thereby increase operating margins, whereas product-related trials may identify new product lines that may generate additional revenue. Strategy to capitalise Continue to target cost reduction and revenue generation through innovation trials and renewable energy initiatives. The Group anticipates that the return on investment in alignment of new and existing operations to new and more efficient machinery will be short. Additionally, as a Group SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Risk Fels limestone quarry in Germany 133 to give it more focus. The Executive Board members also ensure these topics have a dedicated agenda item at the monthly management meetings. The Executive members are charged with overall delivery whilst the Non-Executives challenge and give oversight and governance. AUDIT COMMITTEE The Audit Committee ensures independent oversight of the Board which considers risks and opportunities when setting and reviewing strategy, major plans of action, policies, annual budgets and business plans. It further considers matters when setting performance objectives, monitoring Group performance and reviewing and approving major projects, capital expenditures and acquisitions. ESG COMMITTEE The new ESG Committee will ensure oversight of ESG risks and opportunities when setting and reviewing strategy, major plans of action, policies, annual budgets and business plans. It further considers matters when setting performance objectives, monitoring Group performance, and reviewing and approving major projects, capital expenditures and acquisitions. RISK REPRESENTATIVE To ensure the Board can monitor and oversee progress against goals and targets, the CTO leads risk at a Group level. The CTO works with each platform with regards to ongoing identification of risks, opportunities, and potential impacts on the business as well as reviewing performance metrics and targets and ensuring overall continual improvement. The CTO then liaises with the Board and the relevant committees so that the Board is continually updated with regards to climate-related risks and opportunities as well as overall ESG matters. SENIOR MANAGEMENT TEAM The Group is set up as discrete operational platforms with each platform having its own management team. As such each platform Managing Director is responsible for assessing and managing risks and opportunities for their respective platform. Managing Directors and the Company’s executive management team meet monthly to ensure that Group objectives are met as well as ensuring local risks and opportunities are recognised and managed. Risk "At a high level the Group’s risk appetite is reviewed annually by the Board which defines and approves the level of risk the Group is willing to accept in pursuit of its strategy, thereby guiding management." Charles Trigg Chief Technical Officer The Company’s on-going identification and assessment of risks including ESG and climate-related risks allows both the Board and management to consult and adapt to ensure efficient and effective mitigation with the Board having overall responsibility. The Board of Directors, executive committee and senior management teams continually identify and assess risks and opportunities. This ensures each platform can focus on what is important to their jurisdictions as well as ensuring the Group is focusing on overall risks. Risks are reported and discussed at the executive committee with the CTO having overall responsibility at an executive level. Where high areas of risk are identified, specific committees are set up to monitor and control the risk. The CTO also coordinates with key subject matter experts on Investor Relations, Legal, Safety, Carbon & Energy, Environment and Systems. Risks are then discussed at the Board level who have overall responsibility with the Audit Committee taking the lead with a close working relationship with the CTO. Risks identified are assessed based on aspects such as consequence, impact, likelihood, inter dependencies and associated timeframes (short-, medium-, and long-term time horizons) as well as their drivers such as Political, Operational, Economic and Technical. When assessing the potential size and scope of risks and opportunities, input from industry governing bodies (which are in regular contact with government and associated agencies) as well as inputs from our large shareholders and other stakeholders are used in addition to our usual assessment and prioritisation techniques. These include analysis of probability and impact, risk frequency and risk urgency. Where necessary these are then modelled with scenario and sensitivity parameters to help assess both size and scope. BOARD The Board has overall responsibility for risk management and internal control and for reviewing effectiveness, with specific oversight of Code of Conduct, ESG risks and climate-related matters. These have a dedicated agenda item at Board meetings with the Board meeting at least four times per year with a new ESG committee being formed Chief Technical Officer’s risk report Risk Description Mitigation Competition and Margins Increase in costs or prices; reliance on key suppliers and key customers, including national merchants, could impact supply and profitability. A number of existing competitors compete on range, price, quality and service. Potential new low-cost competitors may be attracted into the market through increased demand. Operate a strategic purchasing plan to minimise key supplier risks, notably in cement and bitumen. Seek to offset rising commodity prices through our product pricing strategy and hedging programmes. Maintain a diverse customer and project base which focuses on quality, service, reliability and continuing focus on new product development. Operate a decentralised model matching focus of independents and new entrants. The Group has a strong focus on operational gearing, allowing it to be flexible during economically disruptive events. The Group has a diverse product portfolio across multiple end markets and jurisdictions. The Group’s relationship with suppliers and customers allows for management of risk including credit risk and where necessary credit risk insurance is sourced. Energy and Power plans developed at all sites to ensure optimal energy and power use. The Group focuses on its multiple supplier and customer relationships, contracts and the use of hedging instruments. Ensure businesses have ability to manage stock and inventory to minimise disruption from energy and power. Committed to reducing level of carbon emissions, reuse and recycling schemes and implementation of sustainability initiatives. Under SECR the Group has committed to monitoring all its operations, not just in the UK, through an independent external organisation. Management, training and control systems are in place to prevent environmental incidents. Promotion of EMS and ISO14001 accreditation and approximately 76% of our businesses are accredited1. Economic and Political is susceptible The Group is dependent on the level of activity in its end markets. Accordingly, it economic downturn, the impact of Government policy, interest rates and any political and economic uncertainty, such as COVID-19 events. to Difficult economic conditions could also increase our exposure to credit risk from our customers. Though captured under Raw Materials sourcing and internal resources, given the current climate, this has been separated out. The Group is susceptible to significant increases in the price of energy and power, utilities, fuel oil, associated haulage costs and decreases in availability. Risks exist around our ability to pass through price increased costs on increases to our customers. Operational impact on the environment or the effects of climate change could expose the Group to regulatory breaches, disruption, significant reputational risk, or a reduction in demand for our products. Energy and Power Environment and Climate Change 1 Based on Group Revenue, not number of businesses STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023135 Risk Description Mitigation Foreign exchange risk: The Group undertakes limited foreign exchange transactions as it sells domestically or in domestic currency with largely local input costs. Some M&A, OpEx and CapEx requires foreign exchange purchases and management considers foreign exchange hedging strategies where significant exposures may arise. Credit risk: Customer credit risk is managed by each subsidiary. The Group principally manages credit risk through management of customer credit limits. The credit limits are set for each customer based on the creditworthiness of the customer and the anticipated levels of business activity. These limits are initially determined when the customer account is first set up and are regularly monitored thereafter. Liquidity risk: Ensure sufficient funding and facilities in place to meet any foreseeable peak in borrowing requirements and liabilities by maintaining strong relationships with our banks and shareholders. Internally, we continuously monitor forecasts and cash flows to ensure that we maintain significant headroom and have self-imposed 2 times leverage, which is only exceeded temporarily and worked down as quickly as possible. Interest rate risk: The Group finances its operations through a mixture of retained profits and bank borrowings, based on floating rates. Interest rate fixing has been reviewed but none have been entered into during the year or at the year end. We safeguard the health and safety of employees, contractors and others working on behalf of the Group with experienced health and safety professionals who provide relevant training and help develop a strong culture alongside the management teams; all of which is overseen and audited by our Group HSEQ director with the support of consultants where necessary. We are constantly improving communication and reporting across the Group through simple and effective systems and processes such as our HS Engagement and Monitoring software, Visible Felt Leadership, HS Committees, back to work and pitstops. IT support teams and service providers continue to monitor and respond to new and expanding cyber risks by implementing best practice in IT security management, back-up systems and risk management software courtesy of our cyber insurance providers. Outdated software and hardware are updated, and cloud solutions embraced, to minimise negative impacts and allow continual operations. Group general counsel and engagement of external specialists to monitor legislative changes and conduct ongoing training. Hold appropriate business accreditations and insurances and ensure there are compliance procedures, policies, ISO standards and independent audit processes which seek to ensure that regulatory and compliance procedures are fully complied with. Finance, Liquidity and Currency Foreign exchange risk: As the Group transacts in currencies other than Sterling, exchange rate fluctuations may adversely impact the Group’s results. Credit risk: Through its customers, the Group is exposed to a counterparty risk that accounts receivable will not be settled leading to a financial loss to the Group. Liquidity risk: Insufficient funds could result in the Group being unable to fund its operations or to continue to invest organically or to undertake acquisitions. Interest rate risk: Movements in interest rates could adversely impact in higher the Group and financing payments to service debt. result Health and Safety Failure to manage health and safety risks could cause harm to our employees or those around us and expose the Group to significant potential regulatory disruption, breaches, liabilities and reputational damage. IT and Cyber Disruption to the IT environment could affect our operational performance and lead to reputational damage, regulatory penalties or significant financial loss. Legal and Regulatory Failure to keep up to date with advances in technology could impact demand and our ability to access the market. Exposure to developments that lead to political, legal and regulatory changes requiring significant changes to Group operations which could impact the Group’s financial results, together with any associated negative reputational damage. Inadvertent failure to comply with elements of a significantly increased governance, legislative and regulatory business environment. A legal or regulatory breach could result in disruption to operations, financial consequence reputational and damage. Chief Technical Officer’s risk report Risk M&A Description Mitigation to fail to Overpay; deliver the expected returns from an acquisition. integrate; fail Failure to identify potential acquisitions to sustain our growth strategy or not be an acquirer of choice. Strong acquisition track record supported by our specialist advisers and rigorous due diligence processes. All acquisitions are approved by the Board and all acquisitions are subject to detailed due diligence processes which are executed by project teams, with progress monitored by the Board. We have developed a management structure which facilitates our growth strategy and, where appropriate, we make arrangements to retain acquired senior management and minimise negative change upon acquiring businesses. The Board uses its networks and reputation to review wider acquisition opportunities and our businesses are all tasked with bringing forward potential acquisition targets for review at Group level. Operational disruption and key equipment failure A material disruption at one of the Group’s operational sites or at one of the Group’s suppliers’ facilities, could prevent from meeting customer demand. the Group The Group has the ability to transfer some of its production across its network of plants and is able to engage subcontractors to reduce the impact of certain production disruptions. In relation to supplier disruption or failure, further third-party suppliers have been identified who can maintain service in the event of a disruption. The Group’s wide geographical spread mitigates this risk to some extent and allows it to manage its production facilities to mitigate the impact of such disruption. The Group operates comprehensive quality control procedures across its sites with both internal and external audit reviews of product quality completed to ensure conformance with internationally recognised standards. All accredited staff undergo rigorous training programmes on quality and the technical teams carry out regular testing of all of our products to provide full technical data on our product range. Quality The nature of the Group’s business it to warranty claims may expose and to claims for product liability, construction defects, project delay, property damage, personal injury and other damages. Any damage to the through Group’s brands, actual or alleged its products, could harm our business, reputation and the Group’s financial results. issues with including Raw Materials sourcing and internal resources The Group is susceptible to significant increases in the price of raw materials, utilities, fuel oil and haulage costs and decreases in availability. Resource expansion plans developed at all sites to ensure timely access to future materials. The Group focuses on its multiple supplier relationships, flexible contracts and the use of hedging instruments. Risks exist around our ability to pass on increased costs through price increases to our customers. Ensure businesses are self-sufficient with ability to increase resources through subcontractors during peak demands. Recruitment and retention Failure to recruit, develop and retain the right people. The Board, Nominations Committee and senior management teams conduct reviews and plan succession for key roles. Failing to create a corporate culture that is based upon ethical values and behaviours. The Board and the Remuneration Committee review all key aspects of remuneration to ensure appropriate packages are in place to assist in the attraction and retention of key employees. Each business has a grading and employee benefit structure with review of incentive plans underway to give help and support long term employee commitment. A focus on identifying internal talent and recruitment of upcoming talent is under review to ensure succession planning and maintain a dynamic talent pool which is supported with development plans. Digital and product development groups that work locally and cross business reviewing both our industry and external offerings and opportunities. Technology and New Business Models Reduction in demand for traditional products. Risk of new competitors and new substitute products appearing. to Failure developments, technological advances. to market react including digital and STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023137 Harries quarry in Coygen, Wales SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT Chief Financial Officer’s Report Ronez production site in Jersey, Channel Islands SIGMAROC ANNUAL REPORT 2023Chief Financial Officer’s Report 139 Garth Palmer CHIEF FINANCIAL OFFICER "I am pleased to report yet another strong year financially for the Group, surpassing expectations in a challenging operational and market environment. While residential construction markets showed significantly subdued volume, our profitability improved." Garth Palmer Chief Financial Officer Cash and cash equivalents Revenue Underlying EBITDA Capital expenditure is due to strong performance in This achievement industrial minerals and infrastructure markets, coupled with proactive management actions in the UK and Nordics to optimise operations. For the year ending 31 December 2023, the Group generated revenue of £580.3 million (2022: £538.0 million) and underlying EBITDA of £116.7 million (2022: £101.7 million). Underlying profit before taxation for the Group was £71.2 million (2022: £62.7 million). The statutory loss for the Company for the year ended 31 December 2023 before taxation amounts to £42.9 million (2022: loss £24.4 million), which includes £30.0 million of non-underlying expenses primarily pertaining to M&A related cash fees, non-cash share option expense and amortisation of finance costs. The Board monitors the activities and performance of the Group on a regular basis and 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 2023. 2023 £’000 55,872 580,285 116,688 43,046 2022 £’000 68,623 537,993 101,723 52,721 Chief Financial Officer’s Report Cash generated from operations was £65.4 million (2022: £87.7 million) with a net decrease in cash of £11.5 million (2022: £4.0 million) after spending £30.2 million on acquisitions net of cash acquired, £37.1 million in net capital expenditure and £20.0 million in senior loan amortisation repayments. EBITDA and exceeded Underlying management forecasts, while revenue and volumes were somewhat softer due to difficult residential construction markets and dynamic pricing effects of lower input costs. expectations Capital expenditure relates to purchases of land and minerals, new plant and machinery and improvements to existing infrastructure across the Group. PPA BDO UK LLP undertook the PPA exercise required under IFRS 3 to allocate a fair value to the acquired assets of JQG and Goijens. The PPA process resulted in a reduction of goodwill recorded on the Statement of Financial Position of the Group for JQG from £49.8 million to £16.7 million and a reduction in Goijens from £5.1 million to £1.6 million. The reduction was to transfer the value of goodwill to tangible assets for land and buildings, land and mineral reserves, intangible assets and deferred tax assets. NON-UNDERLYING ITEMS The Company’s loss after taxation for 2023 amounts to £42.9 million, of which £30.0 million relates to non- underlying items, while the Group’s non-underlying items totalled £42.1 million for the year, of which £12.3 million, representing approximately 30%, are non-cash and non-tax deductible. These items relate to seven categories: 1. 2. 3. 4. 5. 6. £25.9 million in exclusivity, introducer, advisor, consulting, legal fees, accounting fees, insurance and other direct costs relating to acquisitions. During the year the Group acquired Juuan Dolomitik, Goijens, Retaining, Björka Mineral, ST Investicija, Betons and entered into agreements for the CRH Lime Acquisitions which comprise the vast majority of the costs incurred during the year. £6.6 million amortisation of acquired assets and adjustments to acquired assets. £4.0 million in share-based payments relating to grants of options. £3.7 million legal and restructuring expenses relating to the reorganisation and integration of recently acquired subsidiaries, including costs associated with discontinuing sites and operations, transitional salary costs, redundancies, severance and recruitment fees, and costs associated with financial reporting and system migrations. £1.1 million on amortisation of finance costs arising from the syndicated 5-year debt facilities established in July 2021. £0.4 million on unwinding of discounts on deferred consideration payments for Harries. 7. £0.4 million in other exceptional costs which primarily to non-cash balance sheet adjustments. relate INTEREST AND TAX Net finance costs in the year totalled £15.9 million (2022: £10.4 million) including associated interest on bank finance facilities, as well as interest on finance leases (including IFRS 16 adjustments) and hire purchase agreements. A tax charge of £12.4 million (2022: £9.1 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, Belgium and Nordic based operations. EARNINGS PER SHARE Basic EPS for the year was 1.98 pence (2022: 4.89 pence) and underlying basic EPS (adjusted for the non-underlying items mentioned above) for the year totalled 8.12 pence (2022: 8.03 pence). STATEMENT OF FINANCIAL POSITION Net assets at 31 December 2023 were £514.9 million (2022: £469.9 million). Net assets are underpinned by mineral resources, land and buildings and plant and machinery assets of the Group. CASH FLOW Cash generated by operations was £65.4 million (2022: £87.7 million). The Group spent £30.2 million on acquisitions net of cash acquired, £37.1 million on capital projects including acquisition of intangibles, raised £29.2 million net of fees from the issue of equity, generated £5.2 million through the disposal of non-core property, plant & equipment, and repaid net borrowings of £27.0 million. The net result was a cash outflow for the year of £11.5 million. NET DEBT Net debt at 31 December 2023 was £182.4 million (2022: £193.8 million). BANK FACILITIES On 22 November 2023 the Company entered a new syndicated senior credit facility of up to €750 million (the ‘New Debt Facilities’) led by Santander UK and BNPP, with the syndicate including several major UK and European banks and a further €125 million bridge loan (‘Bridge Loan’). The New Debt Facilities were partially drawn on 4 January 2024 in connection with the CRH Lime Acquisitions, specifically CRH Deal 1, and the legacy debt facility was repaid as part of this process. The New Debt Facilities comprise a €600 million committed term facility, €150 million revolving credit facility and a further €100 million uncommitted accordion. The Group’s New Debt Facilities have a maturity date of 21 November 2028 and are subject to a variable interest rate based on EURIBOR plus a margin depending on underlying EBITDA. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023141 The Group’s New Debt 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 while the Bridge Loan remains outstanding and then 4.0 times thereafter; and • A maximum adjusted leverage ratio, which is the ratio of total net debt, including further borrowings such as deferred consideration, to adjusted EBITDA, of 3.95x in 2024. The Bridge Loan has a maturity date of 21 November 2024, with options for two 6-month extensions which if exercised would push maturity to 21 November 2025. The Bridge Loan is subject to a variable interest rate based on EURIBOR plus a margin as follows: • • • • 2% for months 0 – 6 3% for months 7 – 12 4% for months 13 – 18 (assuming exercise of the first extension option) 5% for months 19 – 24 (assuming exercise of the second extension option) As at 31 December 2023, the Group comfortably complied with its bank facility covenants under the terms of the legacy debt facility and total undrawn facilities available to the Group under the legacy debt facility amounted to approximately £173 million. Nordkalk personnel to Miedzianka, Poland CAPITAL ALLOCATION We prioritise the maintenance of a strong balance sheet and deploy our capital responsibly, allowing us to commit significant organic investment to our business whilst continuing to pursue acquisitions to accelerate our strategic development. This conservative approach to financial management will enable us to continue pursuing capital growth for our shareholders. 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 Group has achieved significant capital growth since its inception and the Directors expect to commence dividend payments once the Group’s Covenant Leverage is below 1.5 times, which following CRH Deal 1 of the CRH Lime Acquisitions, is currently above 2 times. The Directors therefore do not recommend the payment of a dividend for the year (31 December 2022: nil). POST BALANCE SHEET EVENTS Post 2023 close we have conducted a series of activities worthy of mention in this Annual Report. Further information is set out in Note 38. This report was approved by the Board on 17 March 2024 and signed on its behalf. Garth Palmer Chief Financial Officer SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT CIO Systems & Digital Innovation Report SIGMAROC ANNUAL REPORT 2023CIO Systems & Digital Innovation Report 143 Fons Vermorken CHIEF INFORMATION OFFICER "I am delighted to share that the Group has concluded a robust year with no noteworthy IT incidents. We have successfully started the successful deployment of new ERP systems throughout the Nordics, and maintained an ongoing commitment to enhancing and innovating our operations." Fons Vermorken Chief Information Officer Despite the economic challenges, we have effectively navigated through a substantial pipeline of projects, closing a large transaction and ensuring the Group remains ahead in terms of systems and digital advancement. Our primary objectives continue to revolve around innovation within the Group and its internal processes, alongside maintaining the highest standards in cyber and risk management. CYBER RISK MANAGEMENT The security of SigmaRoc IT systems is critical, as any potential breaches can severely disrupt our operations. Inadequate management of cyber risk may lead to adverse consequences such as impacting our financial performance, endangering employee safety, exposing confidential information, harming our brands and reputation and exposing us to legal liabilities. IMPACT ON THE GROUP The surge in cyber threat targeting businesses has notably increased recently, partly to the emergence of new digital tools like ransomware, heightened involvement of nation- states, increased interconnectivity and a substantial rise in the profitability of cyber offenses. relies on digital capabilities for various SigmaRoc operational processes, industrial production, including efficient operations, environmental management, health and safety, communications, transaction processing and risk management. Moreover, our extended supply chains CIO Systems & Digital Innovation Report are also vulnerable to cyber threats, although largely beyond our direct control. To mitigate potential risks, we closely monitor the security of these intricate supply chains. The growing use of machine learning and artificial intelligence further amplifies the sophistication and frequency of fraudulent activities. The emergence of ‘Deepfake’ technology, leveraging machine learning to manipulate audio and visual content, adds to the risk of phishing or fraud attacks impersonating senior executives. Despite significant investments in enhancing our systems, processes and networks, SigmaRoc acknowledges that achieving complete security is challenging. However, we remain dedicated to collaborating with high quality third- party IT providers to enhance IT safety and inform staff of tactical innovations utilised in cybercrime. OUR CURRENT DEVELOPMENTS Geopolitical turmoil has significantly expanded the potential attack surface area due to remote working, thereby increasing the risk of cyber assaults for all businesses. Furthermore, the widespread use of phone and tablet like devices has increased significantly in recent years as being part of the digital transformation of the Group. SigmaRoc has noted a rise in both the frequency and complex of cyberattacks targeting its operations. Our cybersecurity monitoring systems consistently detect attempts to breach our networks and systems. The increase was most noticeable post the announcement of the war in Ukraine. During 2022, there was an instance where one of our email servers experienced a substantial series of attacks. However, the protection systems in place were stringent enough for these attacks not to have resulted in any significant breach of our IT infrastructure or caused any notable business disruptions. is that the frequency of The outlook of the Group cyberattacks, which entail the manipulation of legitimate third-party software to spread malware or gain unauthorised access to systems by impersonating senior management, will rise. Additionally, the Group predicts that ransomware will continue to pose a significant threat to firms in the industry that have become ever more informatised over recent years. HOW WE MITIGATE RISK SigmaRoc takes proactive measures to enhance IT security awareness and education among its personnel. Monthly cyber security trainings are conducted to keep staff informed about the latest cyber-threats and ransomware practices. In line with its decentralized platform structure, SigmaRoc has organized the Group's IT infrastructure similarly to mitigate cyber risks. This includes implementing a layered cybersecurity setup, proactive monitoring, independent penetration testing, off network data backups and data backup restoration tests to validate system security wherever possible. To safeguard critical systems, the Group implements privileged access management protocols and ensures that Harries production site in Bolton Hill, Wales STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023145 system software is kept up to date and maintains regional platforms to enforce patch compliance. Multiple layers of email security are employed, with segregated email servers running on different domains. Additionally, computers and servers are hardened against malware attacks. Corporate applications and communications utilise multiple including two-factor authentication layers of security, and virtual private network (VPN) technology for remote access as needed. While SigmaRoc does not adopt a global approach to IT security, it applies consistent standards across different platforms to proactively monitor and manage cyber risks, as well as to segregate servers. This segregation helps prevent spill-over effects from attacks and mitigates their impact on the Group. Regular engagement of third-party penetration testing further ensures the security of our IT systems. DIGITAL TRANSFORMATION AND INNOVATION industry standards through SigmaRoc is committed to spearheading the digital transformation within the quarried materials industry, innovative aiming to set solutions. Leveraging powerful handheld computer devices, and geolocation capabilities for equipment has enabled the Group to enhance performance, cost efficiency and environmentally friendly. SigmaRoc is known for being the first mover and adopter of technologies that can change the industry and make significant steps towards a net-zero future. CASE STUDY: MACHINEMAX MachineMax, a technology adopted by SigmaRoc several years ago, has become firmly integrated into the Group's operations. As one of the earliest adopters, SigmaRoc contributed to enhancing the product and reaped the benefits of its technological advancements. Given the significance of heavy equipment in our operations, MachineMax plays a vital role in optimizing its management. By tracking key operational metrics, it has boosted fleet productivity, positively impacting machine utilisation, idling time, fuel consumption, emissions, location, tracking, and operating hours. This comprehensive telematics sensor has resulted in improved top-line revenue and reduced operating costs, while simultaneously decreasing emissions and the carbon footprint of the Group. CASE STUDY: HIGHVIZZ Ensuring the safety and security of our colleagues within a safe work environment is the primary focus for every site manager and the entire Group. To achieve this goal, we have developed a customized health and safety solution based on the insights of our operation managers, who possess firsthand knowledge of what best serves their teams. Our real-time health and safety system, HighVizz, goes beyond mere reporting; it prioritizes incident prevention and fosters a robust safety culture. Accessible on every employee's phone, HighVizz enables instant reporting and, crucially, encourages safety discussions originating from within the operation rather than being dictated by senior management. Empowering employees to take responsibility for their own safety and that of their colleagues is the most effective approach to enhancing health and safety standards throughout the Group. Fons Vermorken Chief Information Officer 17 March 2024 SIGMAROC ANNUAL REPORT 2023 GOVERNANCE REPORT Stakeholder Report SIGMAROC ANNUAL REPORT 2023Stakeholder Report We understand and respond to the needs of our stakeholders. The Board is committed to and actively encourages effective relationships and communication with the Group’s stakeholders. This will realise a greater understanding of each stakeholder’s needs. The Board believes that by taking into account these needs and interests, the value for the Group and the long-term success of the Company will be maximised. COLLEAGUES We recognise our dedicated workforce as a key driver of the value derived from the business. Our colleagues are offered development opportunities to further fulfil their potential. All colleagues are offered a fair benefits and compensation package relative to their role and level in the organisation. CUSTOMERS AND SUPPLIERS We work alongside our customers by striving to deliver the best customer service and seek innovative solutions to support many of the major projects on which we operate. We pride ourselves on going the extra mile and recognise customer loyalty as a key part of our long-term success. The Group also recognises the huge role its suppliers play in its long-term success. We endeavour to maximise value from our suppliers and work with them to support the delivery of our customers’ needs. REGULATORS/ ASSOCIATIONS LOCAL GOVERNMENT/ INDUSTRY Developing and sustaining good relationships with the many regulators who govern our business is central to the success of our business and maintaining our license to operate. We are committed to adherence to our legal and regulatory requirements. We actively support our industry representatives in pursuing the best regulatory regime for our business. 147 INVESTORS AND LENDERS Our investors and lenders play an important role in the continued success of our business. We maintain purposeful and close relationships with them, and our sustainable long-term growth strategy provides value for our investors and lenders. COMMUNITIES We are at the heart of the communities in which we operate so recognise our responsibility to be good, supportive and engaged neighbours. Our businesses have active liaison programmes with the communities in which they operate, and they seek to take into account their interests and concerns in their operational activities. STAKEHOLDER ENGAGEMENT We are making a material difference through the impact we have with everyone who lives, works, travels and socialises in communities throughout the UK, Channel Islands and Europe. The Board believes that it has acted in a way which is likely to promote the success of the Company for the benefit of its members and other stakeholders through the decisions it has taken in the year to 31 December 2023. The Board is responsible for establishing the Group’s long- term strategy and objectives; however, it recognises that the executive and senior managers of our businesses play an important role in achieving these goals. The Board has an effective delegation structure in place which allows local management and their workforces to engage effectively and react accordingly, to understand the needs of their suppliers, customers, communities and regulators at a local level. The Board is of the opinion that engaging the majority of its stakeholders on a local level is the most effective process for the long-term success of the Group. Fels team members on site, Germany Stakeholder Report Their material issues Methods of engagement Value created Colleagues Customers & Suppliers Regulators/ Local government/ Industry associations Investors & Lenders Communities • Physical working • Cost • Climate change • Governance • Transportation conditions • Product • Emissions and • Profitability • Pay and benefits development discharges • Communication • Service levels • Opportunities for development and training • Sustainability commitments • Product quality • Health, safety and wellbeing • Sustainability • Payment practices • Site restoration and aftercare • Health and safety • Logistics practices • Planning compliance and return on investment • Sustainability commitments • Environment • Strategy routes • Health and safety • Environment • Communication • Support for local causes • Colleague engagement surveys • Colleague focus groups • Intranet, post, emails, newsletters, notices and presentations. • Colleague groups and social committees • DNED for Workforce engagement • Personal development reviews Improved engagement with colleagues will ensure we develop, motivate and retain our valued workforce while promoting and attracting new colleagues that want to work for us. • Direct engagement • Contracts and terms of business • Mandatory returns and applications • Capital markets • Targeted events consultations • Site visits and field trips • Local liaison meetings • Third-party engagement • Website • Industry associations • Tender quotations • 360 feedback • Regulator visits and meetings • Notices • One-to-one meetings • Liaison with • Telephone calls local MPs and government offices • Participation in industry associations • Investor conferences • Brokers’ contacts • AGM • Social media • Community events • Letters, emails, notices • Site tours • Websites • School visits Engaging with our customers helps us deliver excellent customer service, build relationships to enable us to get the right product, to the right place, at the right time for the right price. Engaging with our suppliers helps us deliver a sustainable supply chain and circular economy. Through our engagement we are able to respond and contribute to sector needs and requirements and deliver on compliance and regulatory standards and have input in their development. Our engagement with investors and lenders ensures that they have a clear understanding of our business and objectives and are prepared to continue with their financial support. Positive engagement with our communities ensures that we understand and take into account their concerns and needs so that we can address these and improve the communities that we live and work in. STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023HIGHLIGHTS OF STAKEHOLDER ENGAGEMENT IN 2023 The Board, together with members of the Executive Committee and other senior and local managers, continued to engage proactively with all our stakeholders. The following are just some examples of those engagements in 2023. COLLEAGUES Focus on development training and succession planning across the Group, with continued emphasis on behavioural safety techniques, health & safety reviews and training. More specifically, in the UK introduced “Peptalk”, an app-based platform designed to promote employee engagement and wellbeing. CUSTOMERS AND SUPPLIERS Our partnership with one of our key suppliers, Heidelberg Materials, stands as a testament to our commitment to collaborative success. Together, we are tackling the crucial challenge of decarbonising the built environment, aligning our efforts for a sustainable future. The trust we've cultivated is evident, highlighted by our North West Region MD Michael Roddy participating as a speaker at their prestigious annual commercial conference, demonstrating the depth of our relationship and shared values. At CDH, working closely with Cereser Marmi, an Italian marble and natural stone company, has illustrated the importance of customer experience within the natural stone sector in today's market landscape. Recognising the significance of presenting our products with a touch of luxury both to our customers and at the quarry itself has been instrumental in our strategy. By imbuing our offerings with a sense of luxury, we not only enhance the value proposition for our existing clientele but also open up avenues for prestigious projects on a global scale. One notable outcome of this approach is Puccini Blue. This exquisite creation emerged from what was once considered a waste product – stone with white veins that had long been overlooked or discarded in local markets. Transforming this into a "luxury design" product has been a revelation. Puccini Blue exudes the same elegance and sophistication as high-end marble, injecting fresh dynamism into the market. Similarly, the Penn Station project presented a formidable challenge, demanding a delicate balance between meeting volumetric requirements and stringent quality standards set by the client. Through astute navigation of the client's needs and leveraging our in-depth knowledge of the product, we succeeded in surpassing expectations. Drawing from the diverse qualities offered by the quarry, we tailored solutions to fulfil the project's demands. In this endeavour, the mantra was clear – where there seemed to be obstacles, we sought solutions. Collaboration with key partners proved to be key in overcoming the hurdles we faced. By working hand in hand with the architect and Vornado, we fostered a culture where "NO" was a call to innovate. This collaborative spirit engendered trust and confidence, propelling the Penn Station project toward its completion. Its success not only stands as a testament to our capabilities but also serves as a compelling marketing asset, poised to bolster CDH's presence in the global export market. REGULATORS, LOCAL GOVERNMENT AND INDUSTRY ASSOCIATIONS Each platform works closely with their local regulators, governments and industry associations with many of our senior management team representing either working groups, committees or holding board positions such as our board position with the European Lime Association. 149 By having our platforms work closely with these bodies, we ensure we are at local communities, forward as ambassadors of best practice. leading our businesses the forefront of our INVESTORS AND LENDERS As part of our commitment to investors and lenders, Tom Jenkins was employed as the Head of Investor Relations for the Group. COMMUNITIES We continue to develop our working relationships with the military and military employment charities and are registered with the Career Transition Partnership. We help facilitate resettlement and transition from military to civilian life as well as support civilian spouses and partners of serving and ex-Forces personnel on their journey into employment. Across all our platforms, our business model of local business for local communities ensures that we continue to integrate into the areas we work, supporting both other local businesses, projects and communities. SECTION 172 STATEMENT The Directors believe they have acted in the way most likely to promote the success of the Group for the benefit of its members as a whole, as required by s172 of the Companies Act 2006. The requirements of s172 are for the Directors to: • Consider the likely consequences of any decision in the long term; • Act fairly between the members of the Company; • Maintain a reputation for high standards of business conduct; • Consider the interests of the Group’s employees; • relationships with suppliers, Foster customers and others; and the Group’s • Consider the impact of the Group’s operations on the community and environment. The application of the s172 requirements are demonstrated throughout this report and the Accounts as a whole, with the following examples representing some of the key decisions made in 2023 and up to the date of these Accounts: • Continued pursuit of buy and build growth strategy: the Group has continued its buy and build growth strategy, completing six acquisitions during 2023 and entering into conditional agreements for the CRH Lime Acquisitions. • • • Entered into a strategic partnership with Material Evolution to develop a new range of low carbon concrete products while continuing the development of Greenbloc and collaboration with Marshalls. Successful commissioning of Aqualung in June to capture carbon from kiln process emissions, with ongoing work to develop commercial utilisation opportunities. Safety initiatives: safety and wellbeing of our colleagues is one of our top priorities and the Group continued to improve its health and safety standards. Stakeholder Report Further specific information as to how the Board has had regard to the s172 factors: Section 172 factor Key examples Page references Consequence of any decision in the long term CEO’s strategic report Business model Our strategy Risk report ESG report Governance report Interests of employees CEO’s strategic report – ESG, Safety & Innovation ESG report Stakeholders report Fostering business relationships with suppliers, customers and others ESG report Impact of operations on the community and environment Maintaining high standard of business conduct CEO’s strategic report – ESG, Safety & Innovation ESG report Stakeholders report Business model Our strategy ESG report Governance report Acting fairly between members ESG report Stakeholders report Governance report 18 44 44 132 92 152 21 92 146 92 21 92 146 44 44 92 152 92 146 152 STRATEGIC REPORTSIGMAROC ANNUAL REPORT 2023151 Nordkalk old quarry in Tytyri, Finland SIGMAROC ANNUAL REPORT 2023 Governance Report the Our Board comprises an executive leadership team with extensive experience of international aggregates industry, supported by experienced non-executive directors who bring strong governance disciplines and a valuable external perspective to our business. DAVID BARRETT EXECUTIVE CHAIRMAN Appointed to Board: August 2016 Independent: No Committees: Nominations Committee Industry Expert: Yes Finance Expert: No Background: Co-founded London Concrete in 1997, subsequently building the business from one concrete plant in London to over a dozen plants around the capital. London Concrete was sold to Aggregate Industries and is currently the number one concrete supplier in London, with flagship projects such as the London Olympics, the Shard, the US embassy and the new Bloomberg building. Having previously worked with Pioneer, David retired from London Concrete in 2015 and is widely considered an expert in the industry. Other Directorships: David also holds directorships in various London based Companies including Thames Aggregates Limited, Thames Recycling Limited and Capital Concrete Limited. GOVERNANCE REPORTSIGMAROC ANNUAL REPORT 2023153 MAX VERMORKEN CHIEF EXECUTIVE OFFICER GARTH PALMER CHIEF FINANCIAL OFFICER Appointed to Board: August 2016 Appointed to Board: January 2017 Independent: No Independent: No Committees: Member of the Safety Committee Industry Expert: Yes Finance Expert: Yes Background: Prior to SigmaRoc, Max was Strategic Advisor to the CEO of LafargeHolcim Ltd (LafargeHolcim) Northern Europe, the world’s largest construction materials group. His role included responsibility for the merger of Lafarge SA and Holcim Ltd in the region involving the only Day 1 integration of the two businesses following the hive-down and integration of two large asset portfolios – a mix which included two cement plants and a multitude of down-stream aggregates and construction materials assets. Prior to working for LafargeHolcim, Max worked in private equity at Luxembourg-headquartered The Genii Group, where he reported directly to its founding principals. Max holds a PhD in Financial Economics from University College London and Bachelor and Master degrees in both Civil Engineering and Financial Economics from University College London and the University of Brussels respectively. Other Directorships: Max is also a Director of a consulting company Skyeye Consulting Limited. Committees: Member of the AIM and MAR Compliance Committee Industry Expert: Yes Finance Expert: Yes Background: Garth was Finance Director of SigmaRoc from inception until April 2020, at which point he stepped down from his part-time executive role, but remained as a non-executive board member and Company Secretary. In August 2021, in conjunction with the acquisition of Nordkalk, Garth returned as a full-time executive and Chief Financial Officer. Prior to joining SigmaRoc, Garth began his career providing audit and corporate services in Perth, qualifying at KPMG, before moving to London in 2005 where he provided compliance services across a range of industries. This led Garth to a Finance Manager role at Apple where he spent four years working on business process improvement, developing and implementing new and improved financial processes and systems before co-founding Westend Corporate LLP providing corporate and financial consulting services for AIM listed companies, predominantly within the mining and resources industries. Garth holds a Bachelor of Commerce Degree and is a member of the Institute of Chartered Accountants in England and Wales. Other Directorships: Garth holds directorships in multiple businesses including Sport:80 Limited, GT Corporate Limited and GT Corporate AB. SIMON CHISHOLM NON-EXECUTIVE DIRECTOR JACQUES EMSENS NON-EXECUTIVE DIRECTOR Appointed to Board: April 2020 Appointed to Board: April 2020 Independent: Yes Independent: Yes Committees: Chairman of Audit Committee; Chairman of the AIM and MAR Compliance Committee; Chairman of the Remuneration Committee; Chairman of the Nominations Committee Industry Expert: No Finance Expert: Yes Background: Simon is the founder and Managing Director of Feros Advisers, having previously been Head of Equity Capital markets at Redburn (Europe), a subsidiary of Rothschild & Co. Simon joined Berenberg in 2003 and established an office for them in London. Over the next 10 years Simon was one of the principal architects in building the business from 3 people in London to around 140 and establishing the bank as a recognised brand name in the global investment community. Before joining the sell-side, Simon was a Fund Manager investing in European equities first at Singer & Friedlander and then at Henderson Global Investors and ran European Smaller Companies investment products. After University Simon joined Coopers and Lybrand and qualified as a Chartered Accountant. Other Directorships: Simon is currently an active Director at Feros Advisers Ltd and Whitefoord Ltd. Committees: Member of the Audit Committee Industry Expert: Yes Finance Expert: Yes Background: Jacques was a Board member and Assistant to the Chairman of SCR-Sibelco N.V; a world leading materials solutions company specialising in sands and industrial minerals. He is a founding member of JPSeven and is a member of the Board of Sofina, and numerous other companies. Jacques has a long history in defining and implementing strategies of industrial businesses. Jacques holds a degree in Business Administration from the European University of Antwerp, from the Université Libre de Bruxelles and from the London Chamber of Commerce and Industry and speaks French, Dutch and English. Other Directorships: Jacques holds directorships in multiple businesses including JPSeven, Sofina, Le Pain Quotidien. GOVERNANCE REPORTSIGMAROC ANNUAL REPORT 2023155 TIM HALL NON-EXECUTIVE DIRECTOR AXELLE HENRY NON-EXECUTIVE DIRECTOR Appointed to Board: April 2019 Appointed to Board: March 2022 Independent: Yes Independent: Yes Committees: Member of the Safety Committee, Member of the Remuneration Committee Committees: AIM and MAR Compliance Committee Industry Expert: Yes Finance Expert: No Industry Expert: No Finance Expert: Yes Background: Tim has spent his entire career in the aggregates industry, most recently as CEO of Breedon South, a business he helped build from inception and from which he retired in August 2017. Prior to this he was Director of Tarmac Limited’s Western Area; Managing Director of Tarmac Western Limited, the company formed by Anglo American from the former assets of Nash Rocks, Tilcon and Tarmac. He spent the previous 27 years with Nash Rocks, latterly as managing director. Tim brings a wealth of experience and knowledge of the industry to the Board. Tim’s knowledge and network within the industry supports SigmaRoc’s growth in the aggregates and construction materials market in the UK. Other Directorships: Tim holds directorships in multiple businesses including Langsun Developments Limited and T G Concrete Bridgnorth Limited. Background: Axelle has served as Chief Financial Officer for Verlinvest Group, a Brussels-based international investment business, since April 2014 and also serves on the board of directors for a number of their private companies, as well as Nasdaq quoted Vita Coco. She has held a variety of senior executive positions, including as Deputy Chief Financial Officer of Groupe Bruxelles Lambert. Ms Henry has over 20 years’ experience in the Private Equity and Investment Sector, starting her career with KPMG as senior auditor. She holds degrees in commercial engineering from the Solvay Business School. Other Directorships: Axelle holds directorships in multiple businesses including Verlinvest, Cofintra SA, Beverage Holdco Inc. and STAK Armonea. Corporate Governance Report The Directors recognise the importance of sound corporate governance. As a company whose shares are traded on AIM, the Board has decided to comply with the QCA Code. In addition, the Directors have adopted a code of conduct for dealings in the shares of the Company by directors and employees and are committed to maintaining the highest standards of corporate governance. Garth Palmer, in his capacity as CFO, has assumed responsibility for ensuring that the Company has appropriate corporate governance standards in place and that these requirements are followed and applied within the Company as a whole. The corporate governance arrangements that the Board has adopted are designed to ensure that the Company delivers long term value to its Shareholders and that Shareholders have the opportunity to express their views and expectations for the Company in a manner that encourages open dialogue with the Board. The Board recognises that its decisions regarding strategy and risk will impact the corporate culture of the Company as a whole and that this will impact the performance of the Company. The Board is very aware that the tone and culture set by the Board will greatly impact all aspects of the Company as a whole and the way that employees behave. A large part of the Company’s activities are centred upon what needs to be an open and respectful dialogue with employees, customers and other stakeholders. Therefore, the importance of sound ethical values and behaviours is crucial to the ability of the Company successfully to achieve its corporate objectives. The Board places great importance on this aspect of corporate life and seeks to ensure that this flows through all that the Company does. The key governance related matters that occurred during the financial year ended 31 December 2023 were: 1. Identifying potential new NEDs for the Board. 2. Adoption of Competition Compliance and Diversity & Inclusion policies. CORPORATE GOVERNANCE REPORT The QCA Code sets out 10 principles that should be applied. These are listed below together with a short explanation of how the Company applies each of the principles: PRINCIPLE ONE Establish a strategy and business model which promote long-term value for shareholders Strategy and purpose: The Company is a lime and limestone group targeting investments in quarried materials assets in the UK and Northern Europe. Lime and limestone are key resources in the transition to a more sustainable economy. New applications for lime and limestone products as part of a drive for sustainability include the production and recycling of lithium batteries, the decarbonisation of construction including through substitution of cementitious material and new building materials, and environmental applications including lake liming, air pollution and direct air capture. The Group’s aim is to create value for shareholders through the successful execution of its buy and build strategy, by purchasing assets in fragmented materials markets and extracting efficiencies through active management and forming the assets into larger groups. It seeks to de- risk its investments through the selection of projects with strong asset backing. Business model: The acquired assets provide a strong operating platform, diversified income streams and stable cash flows in order to grow the Group and execute on its strategy further. The Group is run as a commercially minded business, seeking to return an increase on investment capital to Shareholders. Proven methods of raising capital through recognised means available to publicly listed companies are relied on to fund growth acquisitions. Following each acquisition, the Group seeks to implement operational efficiencies that improve safety, enhance productivity, increase profitability and ultimately create value for Shareholders. PRINCIPLE TWO Seek to understand and meet shareholder needs and expectations Shareholder dialogue: The Company remains committed to listening and communicating openly with its shareholders to ensure that its strategy, business model and performance are clearly understood. Understanding what analysts and investors think about the Company, and in turn, helping these audiences understand the Company’s business, is a key part of driving the business forward and the Company actively seeks dialogue with the market. The Company does so via investor roadshows, attending investor conferences, hosting capital markets days and through regular reporting. Private Shareholders: The AGM is the main forum for dialogue between retail Shareholders and the Company. The Directors routinely attend the AGM and are available to answer questions raised by Shareholders. The results of the AGM are subsequently published on the Company’s corporate website. In addition, the Company has engaged with Investor Meet Company, a technology platform that allows presentations and Q&A between Company management and private investors. Regular updates have been made on this platform throughout the year. Other ad hoc presentations to private investors have been made in the year. Institutional Shareholders: The Company actively seeks to build relationships with institutional Shareholders through calls, presentations and visits. Shareholder relations are managed primarily by the CEO and the Head of Investor Relations, but the Executive Chairman and Senior Independent Non-Executive Director are also available to meet with major shareholders to discuss issues of importance. PRINCIPLE THREE into account wider stakeholder and social Take responsibilities and their implications for long-term success GOVERNANCE REPORTSIGMAROC ANNUAL REPORT 2023Engagement: Engaging with stakeholders strengthens relationships and helps make better business decisions to deliver on commitments. The Company is regularly updated on wider stakeholder engagement feedback to stay abreast of stakeholder insights into the issues that matter most to them and the Group’s business, and to enable the Board to understand and consider these issues in decision-making. With Shareholders, suppliers and customers, employees are one of the most important stakeholder groups and employees’ engagement surveys and feedback are closely monitored. Employees, contractors and suppliers: The Group has established a safe and healthy work environment, which complies with the relevant occupational health & safety laws. The Group ensures that the workforce is provided with sufficient training to develop the appropriate skills and knowledge to complete the tasks requested of them. For the sake of occupational health & safety, all contractors and sub-contractors are treated in exactly the same manner as employees. Communities: The Group has supported and given back to the community by participating in a selection of projects in recent years. Further details of the Group’s environmental, social and governance related initiatives for the year are detailed in the ESG and Stakeholder Reports included in these Accounts. Modern slavery: As part of our mission to “do the right thing” we oppose modern slavery in all its forms and work to prevent it by any means that we can. We expect anyone who has any suspicions of modern slavery in our business or our supply chain to raise their concerns without delay. PRINCIPLE FOUR Risk Management Embed effective risk management, considering both opportunities and threats, throughout the organisation Risk register: To assist the Board with effectively managing risk across the Group the Company has established a risk register which is reviewed periodically. Internal control: The Company has an established framework of internal control, the effectiveness of which is regularly reviewed by executive management, the Audit Committee and the Board in light of an ongoing assessment of significant risks facing the Company and the Group. The Company recognises that maintaining sound controls and discipline is critical to managing the downside risks to its business plan. The Board has ultimate responsibility for the Group’s system of internal control and for reviewing its effectiveness. The Audit Committee assists the Board in discharging its duties regarding the financial statements, accounting policies and the maintenance of proper internal business, and operational and financial controls. The Board presently considers that the internal controls in place are appropriate for the size, complexity and risk profile of the Group. PRINCIPLE FIVE Maintain the board as a well-functioning, balanced team led by the chair 157 Board composition: The Board comprises the Executive Chairman, two Executive Directors, and four Non-Executive Directors, all of whom are deemed independent. The Board considers, after careful review, that the Independent Non- Executive Directors bring an independent judgement to bear. The biographies of the members of the Board can be found on the Company’s website (https://sigmaroc.com/investor- relations/board/). The Board is satisfied that it has a suitable balance between independence and knowledge of the Group and its operations to discharge its duties and responsibilities effectively. The Board receives periodic updates from the management team. All Directors are encouraged to use their independent judgement and to challenge all matters, whether strategic, operational or financial. Membership of the Board, its activities, performance and composition are subject to periodic review. Conflicts of interest: The Company has effective procedures in place to monitor and deal with conflicts of interest. The Board is aware of the other commitments and interests of its Directors, and changes to these commitments and interests are reported to, and, where appropriate, agreed with, the rest of the Board. Formal quarterly meetings and meetings Director Attended Eligible to attend Max Vermorken David Barrett Garth Palmer Simon Chisholm Jacques Emsens Tim Hall Axelle Henry PRINCIPLE SIX 9 10 10 8 9 9 9 10 10 10 10 10 10 10 Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities Suitability: The Board guides and monitors the business and affairs of the Company on behalf of the shareholders by whom they are elected and to whom they are accountable. The Board is satisfied that given its size and stage of development, between the Directors, it has an effective and appropriate balance of skills and experience across technical, commercial and financial disciplines. The Company complies with the QCA Code and full biographical details of the Directors and their skills and experience can be found on the Company’s website: (https:// sigmaroc.com/investor-relations/board/) Appointment, removal and re-election: The Nominations Committee makes decisions regarding the appointment and removal of Directors, and there is a formal, rigorous and transparent procedure for appointments. Corporate Governance Report Independent advice: All Directors are able to take independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense. In addition, the Directors have direct access to the advice and services of the Company Secretary and Chief Financial Officer. The Board and its Committees receive appropriate and timely information prior to each meeting, with a formal agenda being produced for each meeting, and Board and Committee papers distributed several days before meetings take place. PRINCIPLE SEVEN Evaluate board performance based on clear and relevant objectives, seeking continuous improvement Appraisal: The Chairman assesses individual contributions of each member of the Board to ensure that their contribution is relevant and effective; they are committed; and where relevant, they have maintained their independence. the An evaluation of the Board will be carried out annually and on a three-yearly cycle. The evaluations may be facilitated by an independent evaluator. The Remuneration Committee will the performance of the Board with the requirements of its charter, the Company vision and KPIs. compare Succession planning is considered by the Board as a whole. The Board will annually review and make recommendations relating to talent management and succession planning for the Board and the CEO. PRINCIPLE EIGHT Promote a corporate culture that is based on ethical values and behaviours Code of conduct: The Board has adopted a code of conduct which provides a framework for ethical decision-making and actions across the Group. The code of conduct reiterates the Group’s commitment to integrity and fair dealing in its business affairs and its duty of care to all employees, contractors and stakeholders. Each Board member’s adherence to the Group’s code of conduct is assessed as part of the annual Board review and appraisal. Anti-corruption and bribery: The Board has adopted an anti- corruption and bribery policy further to ensure honest and ethical conduct of employees. The Company also provides periodic training to employees to ensure they are aware of their responsibilities in relation to bribery and corruption. The Company has a zero-tolerance approach to bribery and corruption. The Company’s General Counsel is responsible for monitoring compliance with and maintaining the anti- corruption and bribery policy. PRINCIPLE NINE Maintain governance structures and processes that are fit for purpose and support good decision-making by the board Board programme: The Board is responsible for approving the Company strategy and policies, for safeguarding the assets of the Company, and is the ultimate decision-making body of the Company in all matters except those that are reserved for specific shareholder approval. The Board meets at least four times each year in accordance with its scheduled meeting calendar and maintains regular dialogue between Board members, in particular between the CEO, the Chairman and the non-executive Board members. Roles and responsibilities: There is a clear division of responsibility at the head of the Company between the Chairman and the CEO. The Board is supported by the Audit, Remuneration, AIM and MAR Compliance, ESG and Nominations committees. Each committee has access to such resources, information, and advice as it deems necessary, at the cost of the Company, to enable the committee to discharge its duties. As the Group grows and develops the Board will periodically review its corporate governance framework to ensure it remains appropriate for the size, complexity and risk profile of the Group. PRINCIPLE TEN Communicate how the company is governed and is performing by maintaining a dialogue with shareholders and other relevant stakeholders Communication: The Company attaches great importance to providing shareholders with clear and transparent information on the Company's activities, strategy and financial position through the Annual Report and Accounts, full-year and half-year announcements, the Annual General Meeting (AGM) and one-to-one meetings with large existing or potential new shareholders. The Company announces significant developments via various outlets including the London Stock Exchange’s Regulatory News Service (RNS). The Company made its policies and the terms of reference for its committees available on its website. The Board receives regular updates on the views of shareholders through briefings and reports from the CEO and the Company’s brokers. The Company communicates with institutional investors frequently through briefings with management. In addition, analysts’ notes and brokers’ briefings are reviewed to achieve a wide understanding of investors’ views. Anthony Brockbank General Counsel GOVERNANCE REPORTSIGMAROC ANNUAL REPORT 2023159 Nordkalk limestone in Miedzianka, Poland SIGMAROC ANNUAL REPORT 2023 GOVERNANCE REPORT Audit Committee Report Fels team members on site, Germany SIGMAROC ANNUAL REPORT 2023Audit Committee Report an established has The Company the internal of framework effectiveness of which is regularly reviewed by the Audit Committee in light of an ongoing assessment of significant risks facing the Company and the Group. control, The Audit Committee assists the Board in discharging its duties regarding the financial statements, accounting policies and the maintenance of proper internal business, and operational and financial controls. KEY ACTIVITIES CARRIED OUT IN 2023 During the year, the Audit Committee met formally three times and discussed the following: Internal audit External audit tender process Interim report and annual report • • Audit planning • Auditor’s fees and independence • Auditor’s effectiveness • • • • • Going concern and viability statement • • Plans for transition to new accounting standards • Whistleblowing • The Audit Committee’s terms of reference Internal controls and risk management Significant accounting matters Taxation MEETING ATTENDANCE The Committee is made up of Independent Non-Executive Directors and shall meet not less than twice in each financial year. Director Simon Chisholm Jacques Emsens Meetings attended Eligible to attend 3 3 3 3 161 COMMITTEE DUTIES The Audit Committee carries out the duties below for the Company, major subsidiary undertakings and the Group as a whole, as appropriate: • Monitor integrity of the financial statements and financial performance; • Review financial statements, significant financial returns to regulators and any financial information of a sensitive nature; • Review and challenge internal financial controls and risk management systems including the review of matters of a non-financial nature; • Review and challenge accounting policies, accounting methods and adherence to accounting standards; • the external auditor, Review and make recommendations with regards to including appointment, independence, objectivity, effectiveness, performance and remuneration; • Consult with the external auditor on the scope of their work and review all major points arising from the audit; • Ensure fully functional whistleblowing policy. CHAIR STATEMENT The Audit Committee was chaired by myself and comprises of Jacques Emsens as the other member. The Committee has relevant financial experience at a senior level as set out in their biographies. The Audit Committee met three times formally in 2023 and also held informal discussions with the external auditor as appropriate. The principal activities of the Audit Committee in respect of the year ended 31 December 2023, and the manner in which it discharged its responsibilities, were as follows: FINANCIAL STATEMENTS The Audit Committee reviewed and agreed the external auditor’s strategy and approach in advance of their audit for the year ended 31 December 2023, and reviewed reports on the outcome of the audit. The Audit Committee also reviewed the 2023 preliminary results announcement, the Annual Report, the 2023 interim results announcement and the 2023 interim report. SIGNIFICANT ACCOUNTING MATTERS During the year, the Audit Committee considered key accounting issues, judgements and disclosures in relation to the Financial Statements. The most significant of these was the risk of the value of inventory, the carrying value of investments and the value of goodwill at a Group level. The Audit Committee also received communications from management and the external auditor on a number of other accounting matters, including the valuation of mineral reserves and resources, revenue recognition and restoration provisions. GOVERNANCE REPORT Audit Committee Report GOING CONCERN AND VIABILITY The Audit Committee reviews supporting papers from management to support the going concern and viability statements set out on page 179. This includes sensitivity analysis over key assumptions. Following this review, the Audit Committee recommended to the Board the approval of both statements. EXTERNAL AUDITOR The external auditor, PKF, attends meetings of the Audit Committee. The Audit Committee has the opportunity to meet with the external auditor without the executive directors being present to provide a forum to raise any matters of concern in confidence and together discusses and agrees the scope of the audit plan for the full year. The external auditor reports on the control environment in the Group, key accounting matters and mandatory communications. The Audit Committee also receives and reviews a report from the external auditor setting out to its satisfaction how its independence and objectivity is safeguarded when providing non-audit services. The value of non-audit services provided by PKF in respect of the year ending 31 December 2023 amounted to £600,000 for due diligence and transactional services (2022: £116,750, principally in respect of tax services and due diligence and transactional services). During the year there were no circumstances where PKF was engaged to provide services prohibited by the FRC’s 2019 ethical standard or which might have led to a conflict of interest. The Audit Committee continues to be satisfied with the work of PKF and that they continue to remain objective and independent. Zahir Khaki is serving his third year as audit partner. INTERNAL AUDIT The Group does not have a formal internal audit function and the CFO performs a number of activities that an internal audit function would perform. The Audit Committee receive regular formal updates covering planned activities, findings of reviews performed and updates on agreed actions from previous reviews. The Audit Committee considers this is appropriate given the close involvement of the executive directors and senior management on a day-to-day basis. However, the need for an internal audit function will be kept under review by the Audit Committee on behalf of the Board. This report was approved by the Board on 17 March 2024. Simon Chisholm Independent Non-Executive Director SIGMAROC ANNUAL REPORT 2023163 Ronez quarry in Jersey, Channel Islands SIGMAROC ANNUAL REPORT 2023 GOVERNANCE REPORT Remuneration Committee Report CDH production site in Soignies, Belgium SIGMAROC ANNUAL REPORT 2023Remuneration Committee Report 165 The Remuneration Committee has been charged by the Board to ensure that the Group’s pay and benefits practices to attract high are competitive, able calibre people and those to are people perform and remain with the Group over the long term. incentivised to ensure suitably is ultimately responsible for the Group’s The Board remuneration policy. The the Remuneration Committee is to determine the terms of employment for the executive directors and senior management of the Group within the framework established by the Board. role of KEY ACTIVITIES CARRIED OUT IN 2023 During the year, the Remuneration Committee met formally twice and discussed the following: Executive remuneration • • Annual bonuses • Pay and benefit levels across the Group • Remuneration review and shareholder consultation • • • Review of the Committee’s terms of reference The Remuneration Committee report Long term incentives "I am pleased to present the Remuneration Committee report for the year ended 31 December 2023 and can confirm that all aspects of executive remuneration are in order." Simon Chisholm Independent Non-Executive Director We undertook a comprehensive review of our remuneration policy in 2021, which included advice from advisers and consultation with certain Shareholders, to ensure it was appropriate given SigmaRoc’s growth to date combined with the future growth and development ambition of the Group. The focus of 2023 has been on continued implementation of the policy and ensuring pay outcomes fairly reflect the performance of the Group and take into consideration external macroeconomic conditions. three sections: report comprises This this Annual Statement, the Policy Report which summarises our current remuneration policy, and the Annual Report on Remuneration which sets out the amounts earned by directors in 2023, and how we propose to apply the policy in the future. At the 2024 AGM, Shareholders will have the opportunity to vote on the Directors’ Remuneration Report and we look forward to your continued support. Meetings attended Eligible to attend 2023 BUSINESS PERFORMANCE MEETING ATTENDANCE Director Simon Chisholm Tim Hall COMMITTEE DUTIES 2 2 2 2 The Remuneration Committee is responsible for: • Determining and agreeing with the Board the framework or broad policy for the remuneration of the executive officers and other senior managers; • Taking into account all factors which it deems necessary including the level of the Company’s remuneration relative to other companies to ensure that members of the Company are provided with appropriate incentives to encourage enhanced performance and are, in a fair and reasonable manner, rewarded for their individual contributions to the success of the Company; and • Determining each year whether awards will be made, and if so, the overall amounts of such awards, the individual awards to executive directors and other senior executives and the performance targets to be used. 2023 was another busy, challenging and very successful year for the Group. The Group was able to deliver further improved profitability in difficult economic conditions, whereby volumes declined 4% LFL, while simultaneously delivering on a series of bolt-on acquisitions and the transformative agreements for the CRH Lime Acquisitions. From a purely financial perspective, in 2023, the Group delivered revenue of £580.3 million, underlying EBITDA of £116.7 million, underlying profit before tax of £71.2 million and underlying EPS of 8.12p. This is an increase YoY to underlying EPS of 1% and exceeded the initial market consensus estimate of 7.3p by 11%, an exceptional achievement. The Group also had strong cash generation, closing the year with £55.9 million which kept Covenant Leverage well below our long term target range of 2.0x. The Group also maintained its excellent health & safety standards and delivered on the aforementioned bolt-on and transformative acquisitions. 2023 REMUNERATION OUTCOMES In 2021 the Committee undertook a complete review of our remuneration policy in conjunction with our advisers, and in consultation with certain Shareholders, to ensure it was appropriate given SigmaRoc’s growth to date combined Remuneration Committee Report with the future growth and development ambition of the Group. A key outcome of the review, and which was specifically directed by input from Shareholders, was to measure executive director bonuses based on EPS, rather than EBITDA, as it currently provides a more complete assessment of the Group’s financial performance. As a result, annual bonuses have since been primarily based on underlying EPS with additional performance conditions pertaining to corporate objectives – this year focussing on delivery of the Group’s acquisition pipeline following the £30 million fundraise in February 2023. The 2023 underlying EPS targets were set in early 2023, following confirmation of market consensus estimates, and the maximum target set required an out performance relative to market expectations of 10% or more. At the outset of 2023 the market consensus estimates for the Group’s full year EPS was 7.3p, therefore the maximum target was 8.0p. As noted in the 2023 business performance review, the Group performed very strongly despite numerous challenges, achieving underlying EPS of 8.12p, being 1.5% ahead of the maximum target set and this measure, applying to 75% of the overall bonus, was therefore achieved in full. The remaining 25% of the overall bonus pertained to corporate objectives, and this year was focused on execution and delivery of the Group’s investment pipeline communicated as part of the Group’s £30 million fundraise in February 2023. This measure was defined based on a level of profit after tax added to the Group, with a lower limit of £2 million and an upper limit of £3 million, with the newly acquired businesses contributing over £3 million in FY23. The 25% of the overall bonus pertaining to corporate objectives was therefore achieved in full in 2023. The Committee carefully considered whether the annual bonus outcome reflects the underlying performance of the business, as well as the experience of Shareholders and other stakeholders during the year and whether any discretion should be exercised. In doing so, the Committee specifically considered health & safety performance of the Group, factored in broader financial performance (revenue, EBITDA, EBITDA margins, free cash flow, CapEx and ROIC) and overall delivery of strategy. The Committee was satisfied that the bonus outcome was fair, and no discretion was exercised. 2023 POLICY APPLICATION For 2023, the Committee implemented the policy established in 2021 as follows: • Review of executive director salaries to ensure they remain commensurate, taking into consideration the inflationary macroeconomic environment in 2022 and its evolution in 2023, and the fact that the executive directors did not receive any adjustments to their salaries in 2022. • No change to benefits or pension arrangements. • The annual bonus opportunity will continue to be 125% of salary for executive directors and be based at 75% of underlying EPS and 25% for corporate objectives, with suitable safety standards being maintained as an override. • Assessment of to determine vesting of the initial PSP awards granted in October 2021. the performance measures SHAREHOLDERS’ AND EMPLOYEE’S VIEWS We are very grateful for the views received from major Shareholders and seek to engage with Shareholders on a continuous basis on remuneration matters. I can be contacted via the Company Secretary should you have any questions on this report or more generally in relation to the Group’s approach to remuneration. While SigmaRoc applies the QCA Code, the Board considers the principles and provisions in the UK Corporate Governance Code. Under the main code, companies are required to establish a mechanism for gathering the views of the workforce on all matters, including pay. The Board has considered carefully the most effective way of achieving this and has appointed its General Counsel, Anthony Brockbank, as the Group’s workforce representative, reporting to the Board on all workforce engagement matters. GOVERNANCE REPORTSIGMAROC ANNUAL REPORT 2023REMUNERATION AT A GLANCE The key elements of executive directors’ remuneration packages and our approach to implementation in 2023 are summarised below: 167 2022 2023 Fixed pay Salary (annual base) Annual bonus Pension Benefits Maximum opportunity Performance measures • Chairman £375,000 • CEO £475,000 • CFO £375,000 • • • • • • 10% of salary includes private medical and car allowance 125% of salary 75% underlying EPS 25% corporate objectives Safety overrides entire bonus outcome • Committee has absolute discretion to adjust bonus outcome Share based incentives Award level Performance measures In employment Shareholding guidelines • • • none n/a 75% of salary REMUNERATION OUTCOMES FOR 2023 Summary of incentive outcomes • no change • • • • • • • no change no change no change no change no change n/a no change Annual bonus Weighting % of maximum achieved % of bonus achieved Underlying EPS Corporate objectives 75% 25% 100% 100% Safety Overarching n/a 75% 25% n/a Overall, bonuses of 125% of salary became payable to executive directors. Remuneration Committee Report POLICY REPORT PERFORMANCE MEASURED BENEFITS achievement of stretching performance targets and annual bonus may be reduced or eliminated if safety performance or accident records deteriorate or reach unacceptable levels. Remuneration performance measures are selected to align with the Group’s key performance indicators and the interests of Shareholders. Performance targets are set so that they are stretching to achieve maximum pay-out but also ensure excessive risk exposure is mitigated. The Remuneration Committee sets targets that are aligned with the Company’s strategy as well as both external expectations and the economic environment. If there are changing circumstances, such as material acquisitions or changes the Committee retains the ability to adjust or amend performance measures and targets to ensure that they are relevant and to ensure they still incentivise whilst minimising excessive risk exposure. in market conditions, BASE SALARY Our objective is to provide a competitive base salary reflective of the skills and experience of the relevant individual. These are reviewed annually or on a significant change of responsibilities or change in market practice or a change in the size or complexity of the business. The Remuneration Committee also takes into account external market data and pay and employment conditions elsewhere in the Group and industry when considering increases to base salary levels. There are no performance criteria associated with receiving this benefit. ANNUAL CASH BONUS To incentivise the delivery of annual financial, strategic and safety objectives, executive directors and senior management may participate in the annual bonus scheme. The Remuneration Committee sets performance measures and targets at the start of the financial year, or later if appropriate, and based on the performance, bonuses are paid in cash shortly after the completion of the audit of the annual results. The executives’ annual bonus arrangements are focused on the achievement of the Company’s short- and medium- term financial objectives, with financial measures selected to closely align the performance of the executive directors with the strategy of the business and with shareholder value creation. Where non-financial objectives are set, these are chosen to support the delivery of the longer-term strategic milestones and which link to those KPIs of most relevance to each director’s individual responsibilities. For executive directors, the maximum opportunity is 125% of salary. This level of incentive opportunity reflects the Committee’s desire to retain a high proportion of remuneration on variable pay (which is not pensionable). Financial measures will normally determine the majority or all of the bonus opportunity and the balance may be based on non-financial, strategic, personal and/or ESG-related objectives. Where possible, a graduated scale of targets is normally set for financial measures, with no pay-out for performance below a threshold level of performance. Any payment is discretionary and will be subject to the PERFORMANCE SHARE PLAN In conjunction with the acquisition of Nordkalk in August 2021, a Performance Share Plan was proposed to drive performance of the Group and delivery of the Group’s long- term objectives, aid retention of key personnel and align directors’ interests with those of Shareholders. The PSP, together with any other share incentive plan(s), is limited to no more than 10% of the issued ordinary share capital of the Company over a ten-calendar year period. The initial awards under the Performance Share Plan (referend to henceforth as LTIP) were made to the executive directors and certain senior management, with the allocations determined by the Remuneration Committee. The LTIP is subject to meeting EPS growth and TSR criteria, with the first vesting attainable following the financial year ended 31 December 2023. The EPS measure is based on growth in underlying EPS over the performance period. The target range is a sliding scale set at the time of award, taking account of internal and external forecasts, to encourage continuous improvement and incentivise the delivery of stretch performance. The TSR measure takes the total return received by the Group’s Shareholders in terms of share price growth over a three-year period and compares it with the total returns received by shareholders in companies within a predetermined and appropriate comparator group. The Remuneration Committee’s intention is to reward only TSR performance which outperforms the comparator group. Subsequent awards may be granted by the Remuneration Committee within six weeks following the Company’s announcement of its financial results for any annual or six month period. The Remuneration Committee may also grant awards at any other time when it considers there to be exceptional circumstances which justify the granting of awards (for example, in the case of recruitment). An employee may not receive such subsequent awards in any financial year in respect of Ordinary Shares having a market value in excess of 150% of their annual base salary in that financial year. As a general rule, an award will lapse upon a participant’s the Group, with termination of employment within certain exceptions permissible solely at the discretion of the Remuneration Committee (death, injury, ill-health, redundancy etc). The Performance Share Plan and the LTIP awards were approved by Shareholders at a general meeting of the Company on 2 August 2021. NEW OPTION PLAN In connection with the CRH Lime Acquisitions, on 4 January 2024 the Company adopted the New Option Plan (to be known as the ‘SigmaRoc plc Share Option Plan 2023’) in order to incentivise the executives and senior management of the Group and align their interests with those of Shareholders. GOVERNANCE REPORTSIGMAROC ANNUAL REPORT 2023Key terms of the New Option Plan are as follows: OTHER BENEFITS 169 • Administration and eligibility: The Remuneration Committee administers the plan. Any Group employee, including executive directors, can participate at the Committee's discretion, with additional eligibility criteria for tax-qualified options. • Operation and terms: The plan will operate only once, granting options conditional on Admission (being admission of the enlarged group to trading on AIM on 4 January 2024) as a one-off in connection with the proposals. It's not expected that future grants will be made under this plan unless deemed exceptional by the Remuneration Committee. No payment is required for the grant of these options, which are not transferable except upon death or with Remuneration Committee consent. • Grant details: New options have been granted for a total of 56,373,757 Ordinary Shares, representing 5.1% of the Company’s issued share capital upon grant. The final amount granted under the New Option Plan is higher than what was published in the Admission Document, however executive director allocations have not changed, as the Admission Document figure had not taken into account the change in the placing price and resultant increase in Ordinary Shares. The exercise price is set at 60 pence per option, vesting equally on the third, fourth and fifth anniversaries of Admission and remaining exercisable until the tenth anniversary. • Plan limits: The plan operates within the Company's existing 10% dilution limits over a ten-year period, including new issue, treasury or market-purchased Ordinary Shares. • Timing of grants: New options are to be granted immediately following Admission, with no further grants planned unless under exceptional circumstances. • Corporate events and leaving employment: Provisions detail how options are affected by corporate changes or employment termination, allowing for early vesting or adjustments in certain scenarios. • Malus and clawback: The Remuneration Committee may apply these provisions for material misstatements of financial results, errors, misconduct, corporate failure, or reputational damage, affecting unexercised options or requiring repayment of shares received. • Participants’ rights and shares: New options don't confer shareholder rights until exercised, and shares allotted will rank equally with existing shares except for prior record date rights. • Amendments and termination: The plan can be amended by the Remuneration Committee with participant and shareholder consent under certain conditions, ensuring no adverse changes to participant terms without majority consent and maintaining compliance with the employees' share scheme definition under the Companies Act 2006. PENSION Pensions are provided to aid recruitment and retention by allowing the executive directors to make provision for long- term retirement benefits. These are comparable with similar roles in similar companies. Executive directors are currently entitled to receive 10 per cent of their base salary. There are no performance criteria associated with receiving this benefit. The Group also provides competitive and cost-effective benefits that may insurance, car allowance, employee benefits insurance and the reimbursement of certain travel costs. There are no performance criteria associated with receiving these benefits. include private medical All our UK employees, over 500, have been offered both private medical insurance and group life assurance. Our benefits provider commented that the uptake of this offering from our employees was unprecedented, with many adding family members. SigmaRoc has also engaged Link Group to set up a share incentive plan for all UK employees, an offering we already have in the Channel Islands. Under the terms of the SIP, each eligible employee can contribute from salary to purchase Ordinary Shares. We are continuing to investigate share plans for our European operations. NON-EXECUTIVE DIRECTORS Non-executive directors each receive a market rate basic fee, subject to time commitment requirements, for holding the office of non-executive director which is set by the Board as a whole. Non-executive directors do not participate in any incentive scheme, share scheme or pension arrangement (except for minimum statutory requirements), but may be eligible to receive benefits such as the use of secretarial support, travel costs or other benefits that may be appropriate. SERVICE AGREEMENTS / LETTERS OF APPOINTMENT OF DIRECTORS AND LOSS OF OFFICE Each of the directors has a service agreement or letter of appointment with the Company as follows: Director Date joined Notice Director Notice Company David Barrett Max Vermorken Garth Palmer Tim Hall Simon Chisholm Jacques Emsens Axelle Henry 22 August 2016 12 months 12 months 22 August 2016 12 months 12 months 5 January 2017 6 months 6 months 18 April 2019 6 months 6 months 20 April 2020 6 months 6 months 20 April 2020 6 months 6 months 26 April 2022 6 months 6 months When it comes to payments and loss of office, the Board will always look to act in the Shareholders’ interest. NOTICE PERIODS AND PAYMENTS IN LIEU OF NOTICE The maximum notice period for executive directors is 12 months, however the Committee retains the right to terminate an executive director’s service agreement by making a payment in lieu of notice. The payment will include salary, cost of benefits and loss of pension provision for the notice period (or the unexpired portion of it). Remuneration Committee Report Annual bonus leaves The payment of a bonus for the year in which the executive director the Remuneration Committee, taking into consideration their contribution up to the leaving date and normal pro-rating for time in service during the year. is determined by Other payments In appropriate circumstances, other payments may also be made, such as in respect of accrued holiday and outplacement and legal fees. RECRUITMENT POLICY The Remuneration Committee will seek to ensure that when appointing a new executive director, their remuneration arrangements are in the best interests of the Company, and not more than is appropriate. The Committee will determine a new executive director’s remuneration package in line with the policy set out above, however discretionary awards may be made in appropriate circumstances, such as: • An interim appointment to fill a role on a short-term basis; • Provide relocation, travel and subsistence payments; • Reflect remuneration arrangements provided by a previous employer; and • Reimbursement of costs incurred as a consequence of resigning from their previous employment. EXTERNAL APPOINTMENTS FOR EXECUTIVE DIRECTORS The Company recognises that its executive directors may be invited to become non-executive directors of other companies. Such non-executive duties can broaden a director’s experience and knowledge which can benefit SigmaRoc. Subject to approval by the Board, executive directors are allowed to accept non-executive appointments, provided that these appointments are not likely to lead to conflicts of interest, and the Committee will consider its approach to the treatment of any fees received by executive directors in respect of non-executive roles as they arise. CONSIDERATION OF SHAREHOLDERS’ VIEWS The Committee is committed to an ongoing dialogue with Shareholders and welcomes feedback on directors’ remuneration. The Committee seeks to engage directly with major Shareholders and their representative bodies on changes to the policy. The Committee will also consider Shareholder feedback received in relation to the remuneration-related resolution to be put forward at this year’s AGM. This, together with any additional feedback received from time to time (including any updates to Shareholders’ remuneration guidelines), is then considered as part of the Committee’s annual review of remuneration policy and its implementation. In its 2021 review of executive remuneration the Committee conducted a comprehensive consultation exercise which elicited feedback from the Company’s largest Shareholders. The Committee was very grateful for the views received. The feedback, which was largely positive, was used constructively to shape our remuneration arrangements. CONSIDERATION OF EMPLOYMENT CONDITIONS ACROSS THE GROUP The Committee closely monitors the pay and conditions of the wider workforce, and the design of the directors’ remuneration policy is informed by the policy for employees across the Group. While employees are not formally consulted on the design of the directors’ remuneration policy, the Board will receive views through our designated workforce representative on a variety of areas including pay. DIFFERENCES IN PAY POLICY FOR EXECUTIVE DIRECTORS COMPARED TO EMPLOYEES As for the executive directors, general practice across the Group is to recruit employees at competitive market levels of remuneration, incentives and benefits to attract and retain employees, accounting for national and regional talent pools. When considering salary increases for directors, the Committee considers salary increases and pay and employment conditions across the wider workforce. The pension contribution for executive directors is consistent with that for the general workforce. Senior employees can earn annual bonuses for delivering exceptional performance, with corporate performance measures aligned to those set for the executive directors. All UK based employees, including the executive directors, have the opportunity to participate in the tax-approved share incentive plans. There are some differences in the structure of the remuneration policy for the executive directors compared to that for other employees within the organisation, which the Committee believes are necessary to reflect the differing levels of seniority and responsibility. At senior levels, remuneration is increasingly long-term, and ‘at risk’ with an increased emphasis on performance-related pay and share- based remuneration. This ensures the remuneration of the executives is aligned with both the long-term performance of the Company and the interests of Shareholders. GOVERNANCE REPORTSIGMAROC ANNUAL REPORT 2023ANNUAL REPORT ON REMUNERATION The remuneration of the executive directors for the year ended 31 December 2023 was as shown in the table below: Directors’ fees £’000 Bonus £’000 31 December 2023 Taxable benefits £’000 Pension benefits £’000 Options issued 1 £’000 Executive Directors David Barrett Max Vermorken Garth Palmer 375 475 375 469 594 469 1,225 1,532 15 15 15 45 22 48 33 103 - - - - The remuneration of the executive directors for the year ended 31 December 2022 was as shown in the table below: Directors’ fees £’000 Bonus £’000 Taxable benefits £’000 Pension benefits £’000 Options issued 1 £’000 Executive Directors David Barrett Max Vermorken Garth Palmer 375 475 375 469 594 469 1,225 1,532 15 15 15 45 - 60 40 100 - - - - 1 Options issued relate to options granted in the 2019 financial year and vesting in the 2021 financial year. 171 Total £’000 881 1,132 892 2,905 Total £’000 859 1,144 899 2,902 ANNUAL BONUS FOR 2023 The annual bonus opportunity for each executive director was 125% of base salary (pro-rated for service). The 2023 annual bonus was based on the achievement of stretching underlying EPS targets for 75% with the remaining 25% based on corporate objectives. Underlying EPS (75% of the total bonus) Threshold level of underlying EPS Maximum level of underlying EPS Actual level of underlying EPS Bonus earned (percentage of max) 7.3p 7.65p 8.0p 100.0% Remuneration Committee Report Reflecting the strong financial performance of the Group in a challenging year, the earnings outcome for the year was ahead of the maximum EPS target of 8.0p. As a result, the EPS measure was achieved in full. Based on a bonus opportunity of 125% of base salary, and a 75% weighting against the EPS condition, performance against this measure delivered a bonus outcome of 93.75% of base salary. Corporate objectives (25% of the total bonus) The remaining 25% of the overall bonus pertained to corporate objectives, and this year was focused on execution and delivery of the Group’s investment pipeline communicated as part of the Group’s £30 million fundraise in February 2023. This measure was defined based on a level of profit after tax added to the Group in the year, with a lower limit of £2 million and an upper limit of £3 million, with the newly acquired businesses contributing over £3 million in FY23. The 25% of the overall bonus pertaining to corporate objectives was therefore achieved in full in 2023. Overall, the bonus outcome for the year, taking into account financial performance and the delivery of corporate objectives, was 100% of the maximum. The overall bonus for the period in service as a director was as follows: David Barrett – 125% of base salary Max Vermorken – 125% of base salary Garth Palmer – 125% of base salary The Remuneration Committee believes these outcomes fairly reflect the performance of the business over the 2023 financial year. PERFORMANCE SHARE PLAN The LTIP was granted under the PSP in October 2021, with awards vesting subject to a performance condition based on underlying EPS growth for the year ending 31 December 2023 and TSR over a three year period relative to the AIM 100 index. to consider The Remuneration Committee met the performance of the executive management team in relation to the performance conditions set within the LTIP. The Committee has concluded that the management team has delivered above expected performance in relation to the EPS performance condition as defined in the LTIP, reaching 8.12p for the year 2023. As a result of this performance, the Remuneration Committee considers the EPS performance condition of the LTIP as satisfied for the year ended 31 December 2023. Consequently, Part I awards are expected to vest on 31 August 2024, Part II on 31 August 2025 and Part III on 31 August 2026. TSR will be assessed based on the average of the three months immediately preceding 31 August 2024, relative to the starting TSR of 85 pence. No PSP awards were granted in 2023. SHARE INCENTIVE PLAN During 2023, the SIP trustee purchased (using the cash contributions made by employees) a total of 112,417 Ordinary Shares at an average price of 56.07 pence per share. Of these, the CEO and CTO purchased a total of 5,976 Ordinary Shares at an average price of 56.07 pence per share. BENEFICIAL INTERESTS Beneficial interests of directors, their families and trusts in Ordinary Shares of the Company at 31 December 2023 were: Ordinary Shares Vested options Unvested options Ordinary Shares as % of salary Holding guideline met? David Barrett 3,434,180 5,638,674 4,688,460 489% Max Vermorken 827,034 11,807,349 11,221,560 Garth Palmer 671,776 3,326,014 3,919,860 Tim Hall 400,176 750,000 Simon Chisholm Jacques Emsens Axelle Henry - - - - - - - - - - 93% 96% n/a n/a n/a n/a Yes Yes Yes n/a n/a n/a n/a GOVERNANCE REPORTSIGMAROC ANNUAL REPORT 2023In 2022 the Committee introduced a minimum shareholding guideline for executive directors, whereby they are expected to build and maintain a shareholding equivalent to 75% of their base salary. Current holdings of Ordinary Shares by the executive directors represent cash investments made by them into the Company and no Ordinary Shares that they currently hold have been granted to them by the Company in connection with their employment. When that changes the Committee will reassess the minimum shareholding guideline and revise accordingly. CEO REMUNERATION The total remuneration figures, including annual bonus and vested PSP awards (shown as a percentage of the maximum that could have been achieved) for the CEO for each of the last five financial years are shown in the table below. 173 Year 2023 2022 2021 2020 2019 CEO Max Vermorken Max Vermorken Max Vermorken Max Vermorken Max Vermorken CEO total remuneration £ '000 Annual bonus pay-out against maximum opportunity % PSP vesting rates % 1,132 1,148 1,223 938 689 100.0 100.0 100.0 177.0 100.0 n/a n/a n/a n/a n/a 1 Entitled to 100% but voluntarily offered to reduce due to COVID pandemic while achieving Group targets set prior to COVID pandemic. IMPLEMENTATION OF POLICY IN 2024 Base salaries Current base salaries established as part of the Committee review in 2021. for executive directors were The Committee carefully considered base salaries for executive directors during 2023 and has proposed the following changes to be effective in 2024: Executive director David Barrett Max Vermorken Garth Palmer Base salary 20231 £’000 390 490 390 2024 £’000 390 550 390 workforce salaries and wages. While severity of, and responses to, cost-of-living increases varied by country across the Group, the Committee was satisfied that the changes implemented to date, and where applicable, those that were proposed, were fair and reasonable. Non-Executive Directors’ Fees The basic fee for the non-executive directors for 2023 was £50,000. For 2024 it is proposed that NEDs be paid a basic fee of £70,000, representing the substantial growth and development of the Group over the past 12 months. Annual bonus For 2024, the executive directors will have the opportunity to earn a bonus of up to 125% of their base salary. The bonus will be subject to stretching performance conditions based on underlying EPS (75%) and corporate objectives (25%). The performance targets contain confidential information and so are not disclosed on a prospective basis. The Committee propose to disclose the targets, and performance against them, retrospectively as was the case in 2023. 1 Including £15k car allowance which now forms part of base PSP AWARDS The Committee also undertook a review of salaries across the broader Group toward the end of 2023 to ensure they remain commensurate, particularly given recent global inflationary trends and resulting cost of living pressures. Inflation rates by country, across multiple reference dates, were compared to recent and proposed changes to Group The Committee does not expect to grant any further awards under the PSP in 2024. This report was approved by the Board on 17 March 2024. Simon Chisholm Independent Non-Executive Director SIGMAROC ANNUAL REPORT 2023 GOVERNANCE REPORT Nomination Committee Farming in Sweden Nomination Committee The Nomination Committee keeps the leadership of the Group under review and ensures the Board can govern effectively now and in the future. KEY ACTIVITIES CARRIED OUT IN 2023 During the year the Nomination Committee undertook a search for potential independent non-executive director candidates to be appointed to the Board to bolster the Company’s corporate governance. COMMITTEE DUTIES The duties of the Nomination Committee are as follows: • • To be responsible for identifying and nominating for the approval of the Board, candidates to fill Board vacancies as and when they arise; Evaluate the balance of skills, knowledge and experience on the Board; • Keep up to date and fully informed about strategic issues and commercial changes affecting the Group and the market in which it operates; • Give full consideration to succession planning for both executive and non-executive directors and other senior management in the course of its work, taking into account the challenges and opportunities facing the Company and what skills and expertise are therefore needed on the Board in the future; • Regularly review the structure, size and composition (including the skills, knowledge and experience) required of the Board compared to its current position and make recommendations to the Board with regard to any changes; 175 • Keep under review the leadership needs of the organisation, both executive and non- executive, with a view to ensuring the continued ability of the organisation to compete effectively in the marketplace; • Committee Nomination The shall make recommendations to the Board as regards plans for succession for both executive and non-executive directors. "It is a pleasure to be the Chairman of the Nomination Committee in a business that is exponentially growing. I look forward to supporting the Group in ensuring that we have the best executive and senior management teams in place that suit the strategy, business model and culture of SigmaRoc." This report was approved by the Board on 17 March 2024. Simon Chisholm Independent Non-Executive Director Harries site in Foelfach, Wales SIGMAROC ANNUAL REPORT 2023 STRATEGIC REPORT GOVERNANCE REPORT Directors Report Directors Report Nomination Committee Board members on site visit in Rubeland, Germany 177 Directors Report The Directors present their report, together with the audited Financial Statements, for the year ended 31 December 2023. PRINCIPAL ACTIVITIES The principal activity of the Company is to make investments and/or acquire businesses and assets in the construction and industrial quarried materials sectors. The principal activity of the Group is the production of high-quality aggregates and supply of value-added quarried materials. total profit before tax was £28 million (2022: £42.7 million) and underlying profit after tax was £58.8 million (2022: £53.6 million) while total profit after tax was £16.7 million (2022: £33.6 million). Recognising the Group’s strategy and current position on its journey, the Directors are not proposing to adopt a dividend policy yet, however this will be reviewed once the Group’s Covenant Leverage is below 1.5x. STATED CAPITAL Details of the Company’s shares in issue are set out in Note 28 to the Financial Statements. BOARD COMPOSITION AND HEAD OFFICE DIRECTORS The Board comprises three Executive Directors and four Non-Executive Directors at year end. The Corporate Head Office of the Company is located in London, UK. RISK MANAGEMENT The Board is responsible for the Group’s risk management and continues to develop policies and procedures that reflect the nature and scale of the Group’s business. Further details of the key areas of risk to the business identified by the Group are included on pages 132 to 137. Details of the Group’s financial risk management policies are set out in Note 3 to the Financial Statements. RESULTS AND DIVIDENDS For the year to 31 December 2023, the Group’s underlying profit before tax was £71.2 million (2022: £62.7 million) while The following Directors served during the year: Director Position David Barrett Chairman Max Vermorken Chief Executive Officer Garth Palmer Chief Financial Officer Tim Hall Independent Non-Executive Director Simon Chisholm Independent Non-Executive Director Jacques Emsens Independent Non-Executive Director Axelle Henry Independent Non-Executive Director DIRECTORS & DIRECTORS’ INTERESTS The Directors who served during the year ended 31 December 2023 are shown below and had, at that time, the following beneficial interests in the shares of the Company: Max Vermorken David Barrett Garth Palmer Tim Hall Simon Chisholm Jacques Emsens Axelle Henry 31 December 2023 31 December 2022 Ordinary Shares Options Ordinary Shares Options 827,034 11,807,349 759,231 11,807,349 3,434,180 5,638,674 3,053,439 5,638,674 671,776 3,326,014 616,146 3,326,014 400,176 750,000 400,176 750,000 - - - - - - - - - - - - Further details on options can be found in Note 29 to the Financial Statements. Details on the remuneration of the Directors can be found in Note 10 to the Financial Statements. Directors Report SUBSTANTIAL SHAREHOLDINGS The Company is aware that, as at 17 March 2024, other than the Directors, the interests of Shareholders holding three per cent or more of the issued share capital of the Company were as shown in the table below: Shareholder CRH plc Blackrock Lombard Odier Rettig Group Conversant Capital Janus Henderson Investors BGF Slater Investments Canaccord Genuity Wealth Management Chelverton Asset Management Shares held Percentage of holdings 171,578,948 15.39% 74,560,450 54,355,474 50,276,521 47,371,995 46,350,185 46,105,973 40,597,422 35,780,263 35,000,000 6.69% 4.88% 4.51% 4.25% 4.16% 4.14% 3.64% 3.21% 3.14% INHERITANCE TAX EMPLOYEES Shares in AIM quoted trading companies or a holding company of a trading group may, after a 2 year holding period, qualify for Business Property Relief for United Kingdom inheritance tax purposes, subject to the detailed conditions for the relief. Investors should note that Business Property Relief would cease to be available in the event that the Company’s shares were to become listed on a HMRC designated stock exchange, for example the Main Market of the London Stock Exchange. By being responsible for their own businesses, that are aligned with the overall Group’s strategy, employees are fully aware of their impact and contribution as they are inherently responsible for their own success. The Group and each business is committed to employing the best they can, not only in skills and competence but also in their softer skills, regardless of who they are or where they have come from. Once engaged, each employee is nurtured and developed locally with opportunities within each business and platform offered openly. GOVERNANCE REPORTSIGMAROC ANNUAL REPORT 2023POLITICAL CONTRIBUTION The Group did not make any contributions to political parties during either the current or the previous year. ANNUAL GENERAL MEETING The AGM will be held at the Washington Mayfair Hotel, 5 Curzon St, London W1J 5HE on 12 April 2024 at 12:30pm. The formal notice convening the AGM, together with explanatory notes on the resolutions contained therein, is included in the separate circular accompanying this document and is available on the Company’s website at www.sigmaroc.com. VIABILITY STATEMENT The Directors have assessed the viability of the Group over a period to December 2027. This is the same period over which financial projections were prepared for the Group’s strategic financial plan. In making their assessment the Directors have taken into account the Group’s current position and the potential impact of the principal risks and uncertainties set out on pages 132 to 137 on its business model, future performance, solvency or liquidity. They also stress tested their analysis by running a number of credible scenarios and considered the availability of mitigating actions. Based on this assessment, the Directors confirm that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the period to 31 December 2024. In making this statement, the Directors have assumed that financing remains available and that mitigating actions are effective. 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 require 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 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. is regularly updated to 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 179 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 156. Going concern The Group meets its day-to-day working capital and other funding requirements through cash and banking facilities, which were renewed in November 2023 and of which more information can be found on page 203. 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 Annual Report. EVENTS AFTER THE REPORTING PERIOD Events after the reporting period are set out in Note 38 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 2023, the Company had an average of 53 days (2022: 54 days) purchases outstanding in trade payables and the Group had an average of 62 days (2022: 58 days). FUTURE DEVELOPMENTS Details of future developments for the Group are disclosed in the Chairman’s Statement on page 14 and the CEO’s Strategic Report on page 18. 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 17 March 2024. Garth Palmer Chief Financial Officer SIGMAROC ANNUAL REPORT 2023 GOVERNANCE REPORT Statement of Directors’ responsibilities Bluestone bed in quarry in Soignies, Belgium Statement of Directors’ responsibilities 181 The Directors are responsible for preparing the Financial the Annual Report and Statements in accordance with applicable law and regulations, including the AIM Rules for Companies. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the Group and Company in accordance with UK-adopted Financial Statements IAS). International Accounting Standards (UK-adopted Under company law the Directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company, and of the profit or loss of the Group for that period. In preparing these Financial Statements, the Directors are required to: • select suitable accounting policies and then apply them consistently; • make judgments and accounting estimates that are reasonable and prudent; • state whether applicable UK-adopted IAS have been followed, subject to any material departures disclosed and explained in the financial statements; and • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the Financial Statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and Company, and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s website, www.sigmaroc.com. Legislation in the United Kingdom governing the preparation and dissemination of the Financial Statements may differ from legislation in other jurisdictions. The Company is compliant with AIM Rule 26 regarding the Company’s website. The Directors confirm that they have complied with the above requirements in preparing the Financial Statements. Nordkalk underground mine in Lohja, Finland SIGMAROC ANNUAL REPORT 2023 GOVERNANCE REPORT Independent Auditor’s report to the members of SigmaRoc plc Field in Reku, Finland Independent Auditor’s report to the members of SigmaRoc plc 183 • Obtaining cashflow forecasts covering at least a twelve-month period from the approval of the financial statements, ascertaining the key inputs and assumptions in the preparing of this forecast/ budget and assessing the reasonableness of such assumptions; • Comparing previous forecasts to actual performance to assess management’s forecasting accuracy; • Agreeing the key inputs to the forecasts and/or budgets to the underlying supporting documentation; • Agreeing the year-end cash balances to the opening working capital position within the forecasts and/or budgets; • Testing the mathematical accuracy of the forecasts including stress testing the key inputs and assumptions; and • Reviewing of external market factors affecting the Group and the Company and their future economic viability, such as the energy transition, and ensuring they are appropriately reflected in management’s forecasts. The risks that we considered most likely to affect the financial resources or ability to continue operations over the going concern assessment period were: • • • • adverse circumstances impacting timely conversion of trade receivables to cash; the ability of the Group and Company to comply with debt covenants; rising inflation impacting expenditures, cost of sales and operating cashflows; and the failure to achieve forecasted revenue growth. We considered these risks through a review of the application of reasonably foreseeable downside scenarios. We found the going concern disclosure in note 2.3 to be appropriate as it gives a reasonable description of the assessment of going concern supported by the underlying cashflow forecasts reviewed as part of our work in this area. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. OPINION We have audited the financial statements of SigmaRoc plc (the ‘Company’) and its subsidiaries (the ‘Group’) for the year ended 31 December 2023 which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements of Financial Position, the Consolidated and Company Statement of Changes in Equity, the Consolidated and Company Cash Flow Statements and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK- adopted international accounting standards and as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006. In our opinion: • • • • the financial statements give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2023 and of the Group’s profit for the year then ended; the Group financial statements have been properly prepared in accordance with UK-adopted international accounting standards; the Company financial statements have been properly prepared in accordance with UK-adopted international accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. BASIS FOR OPINION We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group and Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. CONCLUSIONS RELATING TO GOING CONCERN In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the Group’s and Company’s ability to continue to adopt the going concern basis of accounting included: • Obtaining the directors’ going concern assessment and evaluating the appropriateness of this assessment; Independent Auditor’s report to the members of SigmaRoc plc OUR APPLICATION OF MATERIALITY The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and to evaluate the effect of misstatements, both individually and in aggregate, on the financial statements as a whole. Group financial statements Company financial statements Materiality for the financial statements as a whole (‘overall materiality’) £5.80 million (2022: £5.20 million) £3.30 million (2022: £3.00 million) Basis of materiality 1% (2022: 0.97%) of turnover 1% (2022: 0.86%) of net assets Rationale Benchmark We considered revenue to be the most relevant performance indicator of the Group as it is a significant driver of profit or loss for the year. The Company operates primarily as a holding company which holds the main debt facility for the Group and as such, we consider net assets as the key metric. Rationale Percentage The percentage applied to the benchmark has been selected to bring into scope all significant classes of transactions, account balances and disclosures relevant for the shareholders, and also to ensure that matters that would have a significant impact on the results were appropriately considered. Performance materiality £4.06 million 70% (2022: 70%) of overall materiality (2022: £3.64 million) £2.31 million (2022: £2.10 million) In determining performance materiality, we considered the following factors: the number and quantum of identified misstatements in the prior year audit; • • management’s attitude to correcting misstatements identified; • our cumulative knowledge of the Group and Company and their environment, including industry specific trends; • • • the consistency in the level of judgement required in key accounting estimates; the stability in key management personnel; and the level of centralisation in the Group’s financial reporting controls and processes. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. For each significant component in the scope of our audit, we allocated a materiality based on the maximum aggregate component materiality. The range of materiality allocated across components was between £4.50 million and £1.90 million (2022: between £3.30 million and £2.00 million). Materiality for material non-significant components of £3.14 million (2022: £2.86 million) was calculated based on a percentage of the Group’s revenue. We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £290,000 (2022: £260,000) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons. OUR APPROACH TO THE AUDIT In designing our audit, we determined materiality, as above, and assessed the risk of material misstatement in the financial statements. In particular, we looked at areas involving significant accounting estimates and judgement by the directors and considered future events that are inherently uncertain. We note that the Group has made acquisitions of subsidiary undertakings and has performed a purchase price allocation during the year on the goodwill asset recognised in the prior year. Both of these areas are inherently complicated and require a significant amount of judgement by management. We also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by management that represented a risk of material misstatement due to fraud. GOVERNANCE REPORTSIGMAROC ANNUAL REPORT 2023Of the Group’s 41 components, including the Company, 5 material and significant components were subject to full scope audits for group purposes, a targeted scope review was performed on a further 19 components assessed as material, and the remaining components were subject to analytical review as they were not significant or material to the Group. The components not subject to full scope audits contained only balances that eliminated on consolidation, or specific balances material to the financial statements. The Company was audited separately to the materiality level noted above. Of the 5 material and significant components, 3 were located in Finland, Sweden, and Poland. The components in these locations were audited by firms outside of the PKF network operating under our instruction. The remaining components were located in London, where the audit work was conducted by us using a team with specific experience of auditing companies within the natural resources sector and publicly listed entities. We interacted regularly with the 185 component audit teams during all stages of the audit and we were responsible for the scope and direction of the audit process. This, in conjunction with additional procedures performed, gave us appropriate evidence for our opinion on the Group and Company financial statements. KEY AUDIT MATTERS Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Key Audit Matter How our scope addressed this matter Valuation and Allocation of Investments in subsidiary undertakings (Company) (Note 18) The Company carries an “Investment in subsidiary undertakings” balance of £567.31 million (2022: £583.42 million) in its Statement of Financial Position. There is a risk that the carrying value of the investments is greater than the recoverable amount and is therefore impaired. We have assessed this to be a key audit matter as the estimated recoverable amount of investments is subjective due to inherent uncertainties involved in forecasting and discounting future cashflows, and thereby overstating the carrying value of investments. Our work in this area included: • Obtaining the impairment models and assessment for each subsidiary and reviewing the models for reasonableness; • Assessing the mathematical accuracy of the models; • For all key assumptions and inputs to the impairment models: • • • discussing their appropriateness with management. agreeing to supporting evidence including, where possible, to third party data; and evaluating and recalculating the discount rate used; • Reviewing the value of the net investment in subsidiaries against the supporting underlying assets; • Assessing the historical forecasting accuracy, by comparing previously forecasted cash flows to actual results achieved; • Performing a sensitivity analysis on the key assumptions and inputs noted above; • Considering the existence of impairment indicators per IAS 36 Impairment of Assets; and • Reviewing the associated disclosures in the financial statements and assessing the appropriateness of such disclosures. Independent Auditor’s report to the members of SigmaRoc plc Valuation and Allocation of Goodwill (Note 17) The Group carries a balance of over £170.34 million (2022: £147.74 million restated) in goodwill relating to the acquisition of its subsidiaries. Furthermore, in accordance with group’s accounting policy on business acquisitions and pending the finalisation of the Purchase Price Allocation (PPA) report, provisional goodwill is allocated to other identifiable assets and any unallocated amount sits within goodwill. In accordance with IAS 36, goodwill is not amortised; however, an impairment review should be undertaken annually, or more frequently, should events or changes in circumstances indicate a potential impairment. Goodwill is allocated to groups of cash generating units according to the level at which management monitors the operating segments. As such, the impairment reviews are performed in conjunction with the respective investment reviews. We have assessed this to be a key audit matter given that the estimated recoverable amount of goodwill is subjective, including the estimates and judgements when calculating the recoverable amount, and as such there is a risk that the carrying value of goodwill may be overstated. Our work in this area included: • Using our valuation team, who are part of our audit team, to review the PPA prepared by a third party engaged by management. The work included reviewing the PPA and assessing the key assumptions and inputs used to allocate the goodwill value to other intangible assets; • Obtaining the impairment models and assessment for each subsidiary and reviewing the models for reasonableness; • Assessing the mathematical accuracy of the models; • For all key assumptions and inputs to the impairment models: • • • discussing their appropriateness with management; agreeing them to supporting evidence and where possible, to third party data; and evaluating and recalculating the discount rate used; • Assessing the historical forecasting accuracy, by comparing previously forecasted cash flows to actual results achieved; • Performing a sensitivity analysis on the key assumptions and inputs noted above; • Considering the existence of impairment indicators per IAS 36 Impairment of Assets; and • Reviewing the associated disclosures in the financial statements and assessing the appropriateness of such disclosures. GOVERNANCE REPORTSIGMAROC ANNUAL REPORT 2023187 Harries production site in Bolton Hill, Wales Independent Auditor’s report to the members of SigmaRoc plc OTHER INFORMATION The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the Group and Company financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. OPINIONS ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006 In our opinion, based on the work undertaken in the course of the audit: • • the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements. MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION In the light of the knowledge and understanding of the Group and the Company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • • • adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from branches not visited by us; or the Company financial statements are not in agreement with the accounting records and returns; or certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. RESPONSIBILITIES OF DIRECTORS As explained more fully in the Statement of Directors’ responsibilities, the directors are responsible for the preparation of the Group and Company financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the Group and Company financial statements, the directors are responsible for assessing the Group and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. including fraud, are laws and Irregularities, instances of non- regulations. We design compliance with procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: • We obtained an understanding of the Group and Company and the sector in which they operate to identify laws and regulations that could reasonably be expected to have a direct effect on the financial statements. We obtained our understanding in this regard through discussions with management, review of accident logbooks, and application of cumulative audit knowledge and experience of the quarrying sector. • We determined the principal laws and regulations relevant to the Group and Company in this regard to be those arising from the: • Companies Act 2006; • UK-adopted international accounting standards; • Quoted Companies Alliance Code; GOVERNANCE REPORTSIGMAROC ANNUAL REPORT 2023 • and Local laws in environmental subsidiary entities; the regulations jurisdictions of including the • AIM Rules for Companies; • Health and safety laws; and • Anti-bribery regulations. and anti-money 189 also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: laundering www.frc.org.uk/auditorsresponsibilities • We designed our audit procedures to ensure the audit team considered whether there were any indications of non-compliance by the Group and Company with those laws and regulations. These procedures included, but were not limited to: • Making enquiries of management; • Reviewing board meeting minutes; • Reviewing Regulatory News Service announcements; • Ensuring adherence to the terms within the exploration permits, including environmental conditions; and • Reviewing legal and regulatory correspondence and reviewing legal and professional fees. • We also identified the risks of material misstatement of the financial statements due to fraud. We considered, in addition to the non-rebuttable presumption of a risk of fraud arising from management override of controls, that the potential for management bias was identified in relation to the valuation of goodwill and investments (noted in the Key audit matters section of our report) as well as the valuation of the defined benefit obligations, including the key actuarial assumptions applied. We addressed this by challenging the assumptions and judgements made by management when auditing that significant accounting estimate and ensuring that there were adequate disclosures included in the respective notes including the disclosures within critical accounting estimates. This description forms part of our auditor’s report. USE OF OUR REPORT This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone, other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed. Zahir Khaki Senior Statutory Auditor For and on behalf of PKF Littlejohn LLP Canary Wharf Statutory Auditors 15 Westferry Circus Canary Wharf London E14 4HD 17 March 2024 • We addressed the fraud arising from risk of management override of controls by performing audit procedures which included, but were not limited to: testing of journals; reviewing accounting estimates for evidence of bias; and evaluating the business rationale of any significant transactions that are unusual or outside the normal course of business. • As part of the Group audit, we have communicated with component auditors the fraud risks associated with the Group and the need for the component auditors to address the risk of fraud in their testing. To ensure that this has been completed, we have reviewed component auditor working papers in this area and obtained responses to our Group instructions from the component auditors. Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is Definitions ‘2018 Regulations’ the Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 that came into force on 1 April 2019 ‘Betons’ Betons du Hainaut et de la Sambre ‘Björka Mineral’ Björka Mineral AB ‘4i’ the Group’s four core operating principles, being Invest, Improve, Integrate and Innovate ‘Bluestone’ Belgian Blue Limestone local to the Hainaut region ‘Accounts’ or ‘Annual Report’ ‘Adjusted Leverage Ratio’ ‘Admission’ ‘AGM’ ‘AIM’ the consolidated financial statements of the Group for the year ended 31 December 2023 together with the Chairman’s Statement, CEO’s Strategic Report, Directors’ Report and additional reports contained therein the comparison of net debt to underlying EBITDA for the last twelve months adjusted for pre-acquisition earnings of subsidiaries acquired during the year the re-admission of Ordinary Shares to trading on AIM on 4 January 2024 in connection with the CRH Lime Acquisitions an annual general meeting of the Company AIM Market of the London Stock Exchange ‘Allen’ or ‘Allen Concrete’ Topcrete Limited and its subsidiary undertakings, including Allen (Concrete) Limited ‘Aqualung’ Aqualung Carbon Capture AS ‘ArcelorMittal’ ArcelorMittal Global Holdings S.L.R. ‘Articles’ the Company’s Articles of Association ‘CCUS’ ‘B-Mix’ ‘Baltics Aggregates’ ‘Baltics Platform’ collectively, B-Mix Beton NV, J&G Overslag en Kraanbedrijf BV and Top Pomping NV Baltic Aggregates Oy, a subsidiary of the Group registered in Finland and focused on aggregate exports from Finland to the Baltic states the Group’s limestone and dolomite operations, and part of Nordkalk, covering the Baltic states markets and including Baltic Aggregates ‘Benelux’ or ‘Benelux Platform’ the Group’s construction materials platform covering the Benelux market including GduH, B-Mix and Stone ‘CdB’ ‘CEO’ ‘CFO’ ‘Channel Islands’ or ‘Channel Islands Platform’ ‘BNPP’ BNP Paribas ‘Board’ or ‘Directors’ ‘Bow Tie’ ‘bps’ ‘CapEx’ the board directors of the Company, being the existing Directors (whose names are set out on page 154 of this document) visual tool to keep an overview of risk management practices basis points, whereby one basis point is equivalent to 0.01% capital expenditure on property, plant and equipment to maintain and preserve the operational efficiency of existing assets, to ensure they are kept in good working condition and can continue to generate the expected level of revenue and profits for the Group ‘Carrieres du Haintaut’ or ‘CDH’ CDH Développement SA and its subsidiary undertakings, including Carrières du Hainaut SCA ‘Casters’ Casters Beton NV ‘CCP’ or ‘Cheshire Concrete Products’ CCP Building Products Limited and its subsidiary undertakings carbon capture utilisation or sequestration Carrières du Boulonnais which is part of Groupe Boulonnais Chief Executive Officer of the Company occupied by Max Vermorken Chief Financial Officer of the Company occupied by Garth Palmer the Group’s construction materials platform covering the Channel Islands market including Ronez and SigmaGsy FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023‘CIO’ Chief Information Officer of the Company occupied by Fons Vermorken ‘Clogrennane’ Clogrennane Lime Limited ‘EMS’ environmental management system ‘England’ or ‘England Platform’ the Group’s construction materials platform covering the English market currently comprising of Johnston 191 ‘CO2’ ‘CO2e ‘Company’ or ‘SigmaRoc’ ‘Coronavirus’, ‘COVID’ or ‘COVID-19’ ‘CRH’ ‘CRH Deal 1’ carbon dioxide carbon dioxide emitted SigmaRoc plc coronavirus (COVID-19) infectious disease and its pandemic outbreak ‘EPD’ ‘EPS’ ‘ESG’ environmental product declaration earnings per share environment, social and governance ‘EUETS’ European Union Emissions Trading System CRH plc (NYSE: CRH) (LSE: CRH) an international group of diversified building materials businesses headquartered in Dublin, Ireland ‘EURIBOR’ the Euro Interbank Offered Rate is an overnight interbank rate comprised of the average interest rates from a panel of large European banks that are used for lending to one another in euros ‘euros’, ‘EUR’ or ‘€” the currency unit of the European Monetary Union the acquisition by the Company of CRH’s German (Fels), Czech (Vitosov) and Irish (Clogrenanne) lime and industrial limestone businesses, which was approved by Shareholders at a general meeting of the Company on 11 December 2023 and was completed on 4 January 2024 ‘FCF’ or ‘Free Cash Flow’ ‘FCF Conversion’ ‘CRH Deal 2’ the proposed acquisition by the Company of CRH’s UK lime operations ‘CRH Deal 3’ the proposed acquisition by the Company of CRH’s Polish lime operations ‘CRH Lime Acquisitions’ the proposed acquisition by the Company of the CRH European lime and industrial limestone assets, structured as three separate and independent transactions, being CRH Deal 1, CRH Deal 2 and CRH Deal 3 ‘FD’ ‘Fels’ ‘CTO’ Chief Technology Officer of the Company occupied by Charles Trigg ‘Cuvelier’ Philippe Cuvelier S.A ‘Dimension Stone’ or ‘Dimension Stone Platform’ the Group’s dimension stone platform based in Belgium consisting of CDH ‘Financial Statements’ net cash flows from operating activities adjusted for CapEx, net interest paid, net non-underlying expenses paid and payments through working capital that relate to pre- acquisition accruals or purchase price adjustments FCF conversion ratio, an indicator that measures the Group’s ability to convert profits into available cash, calculated as Free Cash Flow divided by underlying EBITDA Financial Director of a business, platform or region Fels Holding GmbH, including its fully owned (direct or indirect) subsidiaries Fels-Werke GmbH, Fels Netz GmbH and Fels Vertriebs and Service GmbH & Co KG the consolidated income statement, consolidated statement of comprehensive income, statements of financial position, consolidated statement of changes in equity, Company statement of changes in equity, cash flow statements and the accompanying notes to the financial statements ‘EBITDA’* earnings before interest, tax, depreciation and amortisation ‘FLT’ fork-lift truck ‘eCO2’ embodied CO2 ‘Foelfach’ Foelfach Stone Limited Definitions subsidiary of London Stock Exchange Group that produces, maintains, licenses, and markets stock market indices ‘IOSH’ ‘ISO’ Granulats du Hainaut SA ‘FTSE Russell’ ‘GduH’ or ‘Granulats du Hainaut’ ‘GGBS’ ground-granulated blast-furnace slag ‘ISO 14001’ ‘GHG’ greenhouse gas ‘Goijens’ Gripeco BV and its 100% owned subsidiaries Wegenbouw Goijens NV, Goijens Recycling NV and G&G Bentonpompen BV, a Belgian group of companies acquired by the Group in 2023 and which supplies ready-mixed concrete and pumping solutions in the north east of Belgium ‘Greenbloc’ the Group’s cement free ultra-low carbon precast product range ‘Group’ ‘Groupe Boulonnais’ the Company and its subsidiary undertakings Groupe Carrières du Boulonnais ‘Group Revenue’ consolidated revenue of the Group for the year ended 31 December 2023 ‘Growth Investment’ capital investment to acquire or upgrade assets that enable the Group to expand its operations or improve its efficiency to generate future earnings growth ‘Harries’ GDH (Holdings) Limited and its subsidiary undertakings including Gerald D. Harries & Sons Limited ‘ISO 45001’ ‘JD’ or ‘Juuan Dolomitik’ ‘JQG’, ‘Johnston’ or ‘Johnston Quarry Group’ ‘JV’ ‘kge’ ‘kWh’ Institution of Occupational Safety and Health International Organisation for Standardisation international standard that specifies requirements for an effective EMS, provides a framework that an organisation can follow, rather than establishing environmental performance requirements standard for management systems of occupational health and safety focused on reduction of occupational injuries and diseases, including promoting and protecting physical and mental health Juuan Dolomiittikalkki Oy, a Finnish company acquired by the Group in 2023 which supplies high quality dolomitic limestone to agricultural and environmental industries Johnston Quarry Group Limited, Guiting Quarry Limited and their subsidiary undertakings joint venture kilogram equivalent kilowatt-hour ‘La Belonga’ La Belonga S.A. ‘Leverage Ratio’ the same as Adjusted Leverage Ratio, but excluding IFRS 16 related lease liabilities from net debt ‘HSEQ’ health, safety, environment and quality ‘LFL’ health & safety International Accounting Standards ‘Link’ like-for-like comparative prepared on a pro-forma basis adjusted for impact of any acquisitions or non-recurring events Link Market Services Limited who acts as the Company’s registrar International Accounting Standards Board International Financial Reporting Standards ‘LTIFR’ lost time injury frequency rate ‘LTIP’ or ‘Long Term Incentive Plan’ the initial awards made under the PSP in October 2021 to executive directors and certain senior management ‘H&S’ ‘IAS’ ‘IASB’ ‘IFRS’ ‘IFRSIC’ IFRS Interpretations Committee ‘M&A’ mergers & acquisitions FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023‘Marshalls’ Marshalls plc, the UK’s leading hard landscaping and building materials supplier ‘pH’ scale used to specify acidity or alkalinity 193 ‘MD’ ‘Mevo’ ‘NED’ Managing Director of a business, platform or region Material Evolution Inc Non-Executive Director ‘NEBOSH’ the National Examination Board in Occupational Safety and Health ‘Net Margin’ EBITDA margin adjusted for impact of inflationary cost pass-throughs, such as energy, materials, and distribution ‘New Option Plan’ ‘NMWTRA’ ‘Nordics Platform’ ‘Nordkalk’ The new option plan known as the SigmaRoc plc Share Option Plan 2023 approved by Shareholders on 11 December 2023 and adopted by the Company in connection with the CRH Lime Acquisitions the North and Mid Wales Trunk Road Agent, being one of two trunk road agents in Wales and responsible for managing motorways and trunk roads in North and Mid Wales on behalf of the Welsh Government the Group’s limestone, carbonate and specialty products business, which forms part of Nordkalk, and addresses Finnish and Swedish markets the Nordkalk group, consisting of Nordkalk Oy Ab and its subsidiary undertakings ‘PKF’ PKF Littlejohn LLP ‘Poland Platform’ the Group’s limestone and carbonate operations in Poland, which is part of Nordkalk, and also includes relatively small operations in Turkey and prospective mineral permits in Ukraine ‘Poundfield’ or ‘Poundfield Products’ Poundfield Products (Group) Limited and its subsidiary undertakings, including Poundfield Products Limited ‘PPA’ purchase price allocation ‘PPG’ or ‘PPG Platform’ the Group’s precast concrete products platform covering the UK market including Allen, Poundfield and CCP ‘ppt’ percentage points ‘pro-forma’ ‘PSP’ or ‘Performance Share Plan’ ‘Puccini Blue’ financial information presented on a like-for-like basis adjusting for impact of any acquisitions and non-recurring events performance based share incentive plan a version of Bluestone created through special cutting, polishing and honing techniques developed by the Group ‘QCA Code’ Quoted Companies Alliance’s Corporate Governance Code ‘North East’ or ‘North East Region’ the North East Region of the Group comprising of Nordkalk ‘Quicklime Platform’ ‘North West’ or ‘North West Region’ the North West Region of the Group comprising PPG, England, Wales and the Channel Islands ‘NOx’ nitrogen oxides ‘RCF’ revolving credit facility ‘Ordinary Shares’ the ordinary shares of 1 penny each in the capital of the Company ‘OpEx’ operating expenditure ‘Reserves’ ‘PERC’ Pan European Reserves & Resources Reporting Committee, where possible we follow PERC guidelines when reporting Reserves and Resources ‘PFA’ pulverised fuel ash ‘Resources’ mineral that has a level of geological knowledge and confidence and that there are reasonable prospects for eventual economic extraction the Group’s industrial focused quicklime platform, which forms part of Nordkalk, and owns & operates kilns in Finland, Sweden and Estonia, has JV companies that operate kilns in Sweden and Norway, and manages customer owned kilns in Finland and Germany mineral that has a high level of geological knowledge and confidence, is economically mineable, and includes modifying factors such as having permits and regulatory approvals in place SIGMAROC ANNUAL REPORT 2023 FINANCIAL REPORT Definitions ‘Retaining’ Retaining Holdings Limited and its wholly owned subsidiaries including Retaining (UK) Limited and Geocast Ltd ‘ST Investicija’ or ‘Baltic Aggregates Lithuania’ ST Investicija UAB ‘Rightcast’ Rightcast Limited repair, maintenance and improvement ‘SWTRA’ ‘RMI’ ‘RNS’ ‘ROIC’ Regulatory News Service return on invested capital, a measure of the profitability and value-creating potential of companies relative to the amount of capital invested by shareholders and other debtholders ‘TCFD’ ‘tCO2e’ ‘TIFR’ ‘TSR’ ‘UK’ ‘UK IAS’ the South Wales Trunk Road Agent, being one of two trunk road agents in Wales and responsible for managing motorways and trunk roads in South Wales on behalf of the Welsh Government task force on climate-related financial disclosures tonnes of carbon dioxide equivalent total incident frequency rate total shareholder returns United Kingdom UK-adopted international accounting standards, which includes IAS, IFRS, IFRSIC, and subsequent amendments to those standards and related interpretations, plus future standards and related interpretations issued or adopted by the IASB 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 Annual Report are defined on this basis ‘UPM’ UPM-Kymmene Oyj a Finnish forest industry company ‘USA’ United States of America ‘Vitosov’ Vapenka Vitošov s.r.o. ‘Wales’ or ‘Wales Platform’ the Group’s construction materials platform covering the Southern Welsh market including Harries and Foelfach ‘West’ or ‘West Region’ the West Region of the Group including Dimension Stone and Benelux ‘YoY’ year-on-year * these measures are not defined by UK IAS and therefore may not be directly comparable to similar measures adopted by other companies. These alternative performance measures should be considered in addition to and are not intended to be a substitute for, or superior to, UK IAS measures but provide useful information on the performance of the Group and underlying trends. ‘SIP’ share incentive plan ‘underlying’* ‘Ronez’ Ronez Limited and its subsidiary undertakings ‘Santander’ Santander plc ‘SASB’ sustainability accounting standards board ‘SBTi’ Science Based Targets initiative ‘SECR’ streamlined energy and carbon reporting ‘Shareholder’ a holder of Ordinary Shares ‘SigmaGsy’ SigmaGsy Limited ‘SKOY’ ‘SONIA’ Suomen Karbonaatti Oy, a joint venture company between Nordkalk (51 per cent.) and Omya Oy (49 per cent.), a subsidiary of Switzerland-based industrial minerals company Omya Sterling Overnight Index Average, average of the interest rates that banks pay to borrow Sterling overnight from other financial institutions and other institutional investors ‘SOX’ sulphur oxides ‘SPPI’ the contractual cash flows of an asset that give rise to payments on specified dates that are solely payments of principal and interest ‘Sterling’, ‘GBP’ or ‘£” pound sterling currency of the UK and Channel Islands ‘Stone’ or ‘Stone Holdings’ Stone Holdings S.A and its subsidiary Cuvelier 195 Nordkalk agriculture limestone product Consolidated income statement FOR THE YEAR ENDED 31 DECEMBER 2023 Year ended 31 December 2023 Year ended 31 December 2022 Continued operations Note Revenue Cost of sales Gross profit 7 8 Underlying £’000 580,285 (441,076) 139,209 Non- underlying* (Note 11) £’000 Total £’000 Underlying £’000 Non- underlying* (Note 11) £’000 - - - 580,285 537,993 (441,076) (422,056) 139,209 115,937 - - - Total £’000 537,993 (422,056) 115,937 Administrative expenses 8 (55,354) (43,099) (98,453) (46,144) (19,126) (65,270) Profit from operations 83,855 (43,099) 40,756 69,793 (19,126) 50,667 Net finance (expense)/ income 12 (14,336) (1,528) (15,864) (8,910) (1,528) (10,438) Other net gains / (losses) 13 1,694 1,411 3,105 1,853 641 2,494 Profit/(loss) before tax 71,213 (43,216) 27,997 62,736 (20,013) 42,723 Tax expense 14 (12,428) 1,149 (11,279) (9,142) - (9,142) Profit/(loss) Profit/(loss) attributable to: 58,785 (42,067) 16,718 53,594 (20,013) 33,581 Owners of the parent 55,601 (42,067) 13,534 51,251 (20,013) 31,238 Non-controlling interest 31 3,184 - 3,184 2,343 - 2,343 58,785 (42,067) 16,718 53,594 (20,013) 33,581 Basic earnings per share attributable to owners of the parent (expressed in pence per share) Diluted earnings per share attributable to owners of the parent (expressed in pence per share) 32 8.12 (6.14) 1.98 8.03 (3.14) 4.89 32 7.79 (5.89) 1.90 7.68 (3.00) 4.68 *Non-underlying items represent acquisition related expenses, restructuring costs, certain finance costs, share option expense and amortisation of acquired intangibles. See Note 11 for more information. The Notes on pages 203-254 form part of these Financial Statements. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023Consolidated statement of comprehensive income FOR THE YEAR ENDED 31 DECEMBER 2023 Profit/(loss) for the year Other comprehensive income: Items that will or may be reclassified to profit or loss: 197 Year ended 31 December 2023 £’000 Year ended 31 December 2022 £’000 Note 16,718 33,581 FX translation reserve (3,223) 17,735 Cash flow hedges – effective portion of changes in fair value (5,468) 3,432 Remeasurement of the net defined benefits liability (38) 202 Other comprehensive income, net of tax Total comprehensive income Total comprehensive income attributable to: Owners of the parent Non-controlling interests Total comprehensive income for the period (8,729) 21,369 7,989 54,950 4,918 52,048 3,070 2,902 7,989 54,950 The Notes on pages 203-254 form part of these Financial Statements. Statements of financial position COMPANY NUMBER: 05204176 AS AT 31 DECEMBER 2023 Consolidated Company Note 31 December 2023 £’000 31 December 2022 (Restated)* £’000 31 December 2023 £’000 31 December 2022 £’000 Non-current assets Property, plant and equipment Intangible assets Available for sale assets Investments in subsidiary undertakings Investment in equity-accounted associate Investment in joint ventures Derivative financial asset Other receivables Deferred tax asset Current assets Trade and other receivables Inventories Cash and cash equivalents Derivative financial asset Total assets Current liabilities Trade and other payables Derivative financial liabilities Provisions Borrowings Current tax payable Non-current liabilities Borrowings Employee benefit liabilities Deferred tax liabilities Derivative financial liabilities Provisions Other payables Total liabilities Net assets Equity attributable to owners of the parent Share capital Share premium Share option reserve Other reserves Retained earnings Equity attributable to owners of the parent Non-controlling interest Total equity 16 17 18 19 19 33 20 14 20 21 22 33 23 33 25 24 24 14 25 23 28 28 29 30 31 572,562 188,048 250 - 605 6,448 1,369 3,398 38 772,718 99,034 84,309 55,872 3,328 242,543 1,015,261 158,199 3,926 8,489 37,504 3,844 211,962 200,792 1,305 72,219 1,167 4,724 8,208 288,415 500,377 514,884 6,939 - 11,482 629 481,691 500,741 14,143 514,884 554,460 169,110 - - 576 5,942 4,771 4,259 4,426 743,544 86,805 67,780 68,623 10,683 233,891 977,435 140,443 6,693 6,596 33,846 1,251 188,829 228,630 1,312 79,111 552 4,100 5,051 318,756 507,585 469,850 6,383 400,022 7,483 10,261 33,969 458,118 11,732 469,850 166 - 250 567,305 - 412 - - - 568,133 5,332 - 7,925 - 13,257 581,390 34,082 1,253 - 29,543 - 64,878 174,090 - - - - 5,260 179,350 244,228 337,162 6,939 - 11,482 600 318,141 337, 162 - 337,162 257 - - 583,421 - - - - - 583,678 3,168 - 5,055 - 8,223 591,901 13,527 - - 20,072 - 33,598 206,369 - - - - 5,051 211,420 245,018 346,882 6,383 400,022 7,483 1,362 (68,368) 346,882 - 346,882 * Restated for review of prior year acquisition accounting during the IFRS 3 hindsight period. Refer to note 17 for further information. 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 2023 was £42.9 million (year ended 31 December 2022: loss of £24.4 million). The Financial Statements were approved and authorised for issue by the Board of Directors on 17 March 2024 were signed on its behalf by: Garth Palmer Chief Financial Officer The Notes on pages 203-254 form part of these Financial Statements. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023Consolidated statement of changes in equity FOR THE YEAR ENDED 31 DECEMBER 2023 199 Share capital £’000 Share premium £’000 Note Share option reserve £’000 Other reserves £’000 Retained earnings £’000 Total £’000 Non- controlling interest £’000 Total £’000 Balance as at 1 January 2022 Profit for the year Currency translation differences Other comprehensive income Total comprehensive income for the period Contributions by and distributions to owners Acquired via acquisition Issue of share capital 28 Share based payments Exercise of share options Dividends Other equity adjustments Total contributions by and distributions to owners Balance as at 31 December 2022 Balance as at 1 January 2023 Profit for the year Currency translation differences Other comprehensive income Total comprehensive income for the period Contributions by and distributions to owners Acquired via acquisition Issue of share capital Issue costs Share based payments Exercise of share options Dividends - 28 28 Other equity adjustments 28 Total contributions by and distributions to owners Balance as at 31 December 2023 6,379 399,897 3,104 (11,236) 2,116 400,260 10,894 411,154 - - - - - 4 - - - - 4 - - - - - 125 - - - - - - - - - - 4,453 (74) - - - 31,238 31,238 2,343 33,581 17,176 3,634 - - 17,176 559 17,735 3,634 - 3,634 20,810 31,238 52,048 2,902 54,950 - - - - - 687 - - - 74 - 541 - 129 4,453 - - 974 - - - 974 129 4,453 - (3,038) (3,038) 1,228 - 1,228 125 4,379 687 615 5,810 (2,064) 3,746 6,383 400,022 7,483 10,261 33,969 458,118 11,732 469,850 6,383 400,022 7,483 10,261 33,969 458,118 11,732 469,850 - - - - - - - - - - 556 - - - - - 29,444 (782) - - - (428,684) - - - - - - - 4,002 (3) - - - 13,534 13,534 3,184 16,718 (3,109) (5,506) - - (3,109) (114) (3,223) (5,506) - (5,506) (8,615) 13,534 4,919 3,070 7,989 - - - - - - - - - - 3 - - 30,000 (782) 4,002 - - 616 - - - - 616 30,000 (782) 4,002 - (1,275) (1,275) (1,017) 434,185 4,484 - 4,484 556 (400,022) 3,999 (1,017) 434,188 37,704 (659) 37,045 6,939 - 11,482 629 481,691 500,741 14,143 514,884 The Notes on pages 203-254 form part of these Financial Statements. Company statement of changes in equity FOR THE YEAR ENDED 31 DECEMBER 2023 Share capital £’000 Share premium £’000 Share option reserve £’000 Other reserves £’000 Retained earnings £’000 Total £’000 Note Balance as at 1 January 2022 6,379 399,897 3,104 1,362 (44,026) 366,716 Profit/(Loss) Total comprehensive income for the period Contributions by and distributions to owners Issue of share capital Share based payments Exercise of share options Total contributions by and distributions to owners - - 4 - - 4 - - 125 - - - - - 4,453 (74) 125 4,379 - - - - - - (24,416) (24,416) (24,416) (24,416) - - 74 74 129 4,453 - 4,582 Balance as at 31 December 2022 6,383 400,022 7,483 1,362 (68,368) 346,882 Balance as at 1 January 2023 6,383 400,022 7,483 1,362 (68,368) 346,882 Profit/(Loss) Total comprehensive income for the period Contributions by and distributions to owners - - - - Issue of share capital 556 29,444 Issue costs 28 Share based payments Exercise of share options Other equity adjustments Total contributions by and distributions to owners Balance as at 31 December 2023 - - - - (782) - - (428,684) - - - - 4,002 (3) - - - - - - - (42,940) (42,940) (42,940) (42,940) - - - 3 30,000 (782) 4,002 - - (762) 429,446 556 (400,022) 3,999 (762) 429,449 33,220 6,939 - 11,482 600 318,141 337,162 The Notes on pages 203-254 form part of these Financial Statements. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023Cash flow statements FOR THE YEAR ENDED 31 DECEMBER 2023 201 Consolidated Company Year ended 31 December 2023 £’000 Year ended 31 December 2022 £’000 Year ended 31 December 2023 £’000 Year ended 31 December 2022 £’000 Note 16,718 33,581 (42,941) (24,416) Cash flows from operating activities Profit/(loss) Adjustments for: Depreciation and amortisation 16, 17 39,434 Impairments Share option expense Loss/(gain) on sale of PP&E Net finance costs Income tax expense Share of earnings from joint ventures Non-cash items Increase in trade and other receivables (Increase)/decrease in inventories Increase in trade and other payables Decrease in provisions Income tax paid Net cash inflows/(outflows) from operating activities Investing activities 14 - 4,001 (3,032) 15,865 11,279 (596) (869) (8,613) (13,159) 14,637 934 37,116 30 4,453 (1,471) 10,438 9,142 (786) (475) (6,807) (17,322) 31,182 (19) 109 - 4,001 - 8,703 - - (2,120) (2,132) - 19,888 - - 118 - 4,453 - 7,032 - - 3,927 (450) - 4,151 - - (11,194) (11,332) 65,405 87,730 (14,492) (5,185) Purchase of property, plant and equipment 15, 16 (40,190) Sale of property, plant and equipment Proceeds of sale of subsidiary Purchase of intangible assets Purchase of available for sale assets Investment in joint venture 15, 17 5,890 1,822 (2,857) (250) (411) (51,008) 10,235 - (1,713) - - Acquisition of businesses (net of cash acquired) (30,169) (43,318) Financial derivative Interest received 1,607 1,271 278 603 (18) (14) - - - (250) (411) (6,760) 1,253 201 - - - - - (43,427) 302 7 Net cash used in investing activities (63,287) (84,923) (5,985) (43,132) Financing activities Proceeds from share issue Cost of share issue Proceeds from borrowings Repayment of borrowings Net loans with subsidiaries Interest paid Dividends paid Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Exchange (losses) / gains on cash Cash and cash equivalents and end of period 22 The Notes on pages 203-254 form part of these Financial Statements. 30,000 (782) 5,064 (32,050) - (14,553) (1,275) (13,596) (11,478) 68,623 (1,273) 55,872 129 - 36,154 (30,361) - (9,732) (3,038) (6,848) (4,041) 69,916 2,748 68,623 30,000 (782) - (20,055) 26,432 (12,148) - 129 - 26,840 (8,067) 22,801 (7,537) - 23,447 34,166 2,970 5,055 (100) 7,925 (14,151) 19,038 168 5,055 Notes to the financial statements 1. GENERAL INFORMATION The principal activity of SigmaRoc is to make investments and/or acquire projects in the quarried materials sector, and the principal activity of the Group is the production of high- quality aggregates and supply of value-added industrial and construction materials. The Company’s shares are admitted to trading on AIM and it is incorporated and domiciled in the United Kingdom. The address of its registered office is 6 Heddon Street, London, W1B 4BT. 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 Group and Company Financial Statements have been prepared in accordance with UK-adopted International Accounting Standards and with the requirements of the Companies Act 2006. The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of property, plant and equipment and intangible assets; financial assets and financial liabilities at fair value through profit or loss; derivatives held for hedge accounting classified as financial assets at fair value through other comprehensive income, and defined benefit pension plans for which the plan assets are measured at fair value. The Financial Statements are presented in UK Pounds Sterling rounded to the nearest thousand. The preparation of Financial Statements in conformity with UK IASs 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 standards and amendments adopted by the Group The IASB issued various amendments and revisions to UK IAS and IFRSIC interpretations which include IFRS 3 - Reference to Conceptual Framework, IAS 37 – Onerous Contracts, IAS 16 – Proceeds before intended use, IAS 8 – Accounting estimates, IAS 12 - Deferred Tax and Annual Improvements – 2018 – 2020 Cycle. The amendments and revisions were applicable for the period ended 31 December 2023 but did not result in any material changes to the financial statements of the Group or Company. ii) New standards, amendments and interpretations in issue but not yet effective or not early adopted Standards, amendments and interpretations that are not yet effective and have not been early adopted are as follows: Standard IAS 1 IAS 7 IFRS 16 Impact on initial application Non-current liabilities with covenants Statement of cash flows Leases Effective date 1 January 2024 1 January 2024 1 January 2024 IFRS 7 IAS 21 Supplier finance arrangements The effects of changes in foreign exchange rates 1 January 2024 1 January 2025 The Group and Company are evaluating the impact of the new and amended standards above which are not expected to have a material impact on the Group or Company’s results or shareholders’ funds. 2.2. Basis of Consolidation a) Subsidiaries 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. On consolidation all inter-company transactions, balances and unrealised gains and losses on transactions between group companies are eliminated. 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 37 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. CDH, B-Mix, Stone, Goijens, Betons and GduH use Belgian GAAP rules to prepare and report their financial statements. The Group reports using UK IAS standards and in order to comply with the Group’s reporting standards, management of CDH, GduH, B-Mix and Goijens processed several adjustments to ensure the financial information included at a Group level complies with UK IAS. CDH, GduH, B-Mix and FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023203 Goijens will continue to prepare their company financial statements in line with the Belgian GAAP rules. Nordkalk entities use local GAAP rules to prepare and report their financial statements. The Group reports using UK IAS standards and in order to comply with the Group’s reporting standards, management of Nordkalk processed several adjustments to ensure the financial information included at a Group level complies with UK IAS. Nordkalk will continue to prepare their company financial statements in line with the local GAAP rules. a strong focus on operational gearing, it can remain flexible during economically disruptive events which can have a negative effect on cash flow. At 31 December 2023, the Group had cash of £55.9 million (2022: £68.6 million) and undrawn banking facilities under the legacy debt of £173 million (2022: £173 million), and at the date of this report has similar levels of liquidity which is expected to provide sufficient funds for the Group to discharge its liabilities as and when they fall due and ensure covenants are met. The Group recognises any non-controlling interest at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets. Based on the above, the directors believe that it remains appropriate to prepare the financial statements on a Going Concern basis. b) Associates 2.4. Segment Reporting Associates are entities over which the Group has significant influence but not control over the financial and operating policies. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss, and its share of post-acquisition movements in reserves is recognised in other comprehensive income. The cumulative post- acquisition movements are adjusted against the carrying amount of the investment. Accounting policies of equity–accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group. c) Joint Arrangement A joint arrangement is an arrangement in which two or more parties have joint control. A joint venture is a joint arrangement in which the parties that share joint control have rights to the net assets of the arrangement. Joint arrangements are accounted for using the equity method of accounting and are initially recognised at cost. The Group’s share of its associates’ post-acquisition profits or losses is recognised in profit or loss. d) Employee Benefit Trust 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. The Employee Benefit Trust is considered to be a special purpose entity in which the substance of the relationship is that of control by the Group in order that the Group may benefit from its control. The assets held by the trust are consolidated into the Group. 2.3. Going Concern The Financial Statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons. The Group meets its day-to-day working capital and other funding requirements through operating cash generation and its Debt Facilities. The Debt Facilities comprise of a €600 million committed term facility, €150 million revolving credit facility and a further €100 million uncommitted accordion which matures on 21 November 2028. The Group has met all covenants on its Debt Facilities. The Group has prepared cash flow forecasts for a period of more than 12 months which anticipate a continuous upward trend of profitability and cash generation. As the Group has 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 e) 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 £000’s, which is the Company’s functional currency. f) Transactions and Balances into the Foreign currency transactions are translated 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’. An exception to this is when the borrowings exchange differences arise on monetary items that form part of the reporting entity’s net investment in the consolidated financial in a foreign operation, statements the exchange gain or loss will be shown in other comprehensive income. 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. g) 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; Notes to the financial statements • • 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. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. Exchange differences arising 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. 2.6. Intangible Assets The Group measures goodwill as the fair value of the purchase consideration transferred including the recognised amount of any non-controlling interest in the acquiree, less the fair value of the identifiable assets acquired and liabilities assumed, all measured as of the acquisition date. 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 JQG and Goijens as at the completion date. As a result of this exercise, goodwill in JQG decreased from £40.2 million to £7.1 million with the corresponding movement being land and minerals and other intangibles. Goodwill in Goijens decreased from £5.1 million to £1.6 million with the corresponding movement being land and buildings and customer relationships. The current accounting policies regarding the subsequent treatment of intangible assets will apply to fair value uplift attributable to the PPA. Amortisation is provided on intangible assets to write off the cost less estimated residual value of each asset over its expected useful economic life on a straight-line basis at the following annual rates: Goodwill Customer relations Intellectual property Research and Development Branding Other intangibles 0% 7% - 12.5% 10% – 12% 10% – 20% 5% - 10% 10% - 20% For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the entities, or group of entities, that are expected to benefit from the synergies of the combination. Goodwill is monitored at a Group level. Goodwill is not amortised however impairment reviews are undertaken annually, or more frequently if events or changes in circumstances indicate a potential impairment. When the carrying value of goodwill exceeds the recoverable amount, (the higher of value in use and fair value less costs) an 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 earn revenue. Impairment reviews are performed annually. Where the benefit of the intangible ceases or has been superseded, these are written off to the Income Statement. 2.7. Property, Plant and Equipment Property, plant and equipment is stated at cost, plus any PPA 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 at the following annual rates: Office equipment Land and buildings Plant and machinery 12.5% – 50% 0% – 10% 4% – 33% 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 PPA uplift. Land and quarry development are depreciated and amortised, respectively, using the units of production method, based on estimated recoverable tonnage. Where the Group has a legal or constructive obligation for restoration of a site the costs of restoring this site is provided for. The initial cost of creating this provision is capitalised within property, plant and equipment and depreciated over the life of the site. The provisions are discounted to their present value at a rate which reflects the time value of money and risks specific to the liability. Changes in the measurement of a previously capitalized provision are accordingly added or deducted from the value of the asset. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023The 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. The process of removing overburden and other mine waste materials to access mineral deposits is referred to as stripping. There are two types of stripping activity: • Development stripping is the initial overburden removal during the development phase to obtain access to a mineral deposit that will be commercially produced. • Production stripping relates to overburden removal during the normal course of production activities and commences after the first saleable minerals have been extracted from the component. Development stripping costs are capitalised as a development stripping asset when: • It is probable that future economic benefits associated with the asset will flow to the entity; and • The costs can be measured reliably. Production stripping can give rise to two benefits, the extraction of ore in the current period and improved access to the ore body component in future periods. To the extent that the benefit is the extraction of ore, stripping costs are recognised as an inventory cost. To the extent that the benefit is improved access to future ore, stripping costs are recognised as a production stripping asset if the following criteria are met: • • • It is probable that the future economic benefit (improved access to ore) will flow to the entity; The component of the ore body for which access has been improved can be identified; and The costs relating to the stripping activity can be measured reliably. The development and production stripping assets are depreciated in accordance with units of production based on the proven and probable reserves of the relevant components. Stripping assets are classified as other minerals assets in property, plant and equipment. 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) Financial Assets at Fair Value through other comprehensive income A financial asset is classified and subsequently measured at fair value through other comprehensive income if it meets the 205 SPPI criterion and is managed in a business model in which assets are held both for sale and to collect contractual cash flows, or if an investment in an equity instrument is elected to be measured at fair value through other comprehensive income. Derivatives eligible for hedge accounting are classified as financial assets at fair value through other comprehensive income. (iii) 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. Derivative Financial Instruments The majority of the Group’s strategic hedging programme is delivered using executory contracts to forward purchase exchange contracts or commodities for our own use. The Group uses financial instruments to manage financial risks associated with the Group’s underlying business activities and the financing of those activities. The Group does not undertake any trading in financial instruments. Derivatives are initially recognised at fair value and subsequently remeasured in future periods at fair value. The gain or loss on remeasurement is recognised immediately in profit or loss, unless a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability. In this instance the effective part of any gain or loss is recognised in the consolidated statement of comprehensive income and in the revaluation reserve. in the recorded revaluation reserve are Amounts subsequently reclassified to the consolidated income statement when the expense for the hedged transaction is actually recognised. To qualify for hedge accounting, the hedging relationship must meet several conditions with respect to documentation, probability of occurrence, hedge effectiveness and reliability of measurement. At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and hedged items, including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items. The Group documents its risk management objective and strategy for undertaking its hedge transactions. Notes to the financial statements The fair values of various derivative instruments used for hedging purposes are disclosed in Note 33. Movements on the revaluation reserve in shareholders’ equity are shown in Note 30. The full fair value of a hedging derivative is classified as a non-current asset or liability if the remaining maturity of the hedged item is more than 12 months, and as a current asset or liability if the remaining maturity of the hedged item is less than 12 months. Trading derivatives are classified as a current asset or liability. Impairment of Financial Assets The Group assesses at the end of each reporting period whether there is the need to recognise loss allowances for expected credit losses on financial assets. These are measured at amortised cost. The Group measures loss allowances at an amount equal to lifetime expected credit losses, except for bank balances for which credit risk has not increased significantly since initial recognition, which are measured as 12-month expected credit loss. 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. 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, which is the estimated selling price in the ordinary course of business, less applicable variable selling expenses. 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 recognised initially at fair value, and subsequently measured at amortised cost using the effective interest method, less provision for impairment. 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. Trade receivables – factoring The carrying amounts of the trade receivables excludes receivables which are subject to a factoring arrangement. Under this arrangement, the Group has transferred the relevant receivables to the factor in exchange for cash without recourse. Therefore, it doesn’t recognise the transferred assets in their entirety in its balance sheet. The value of factored receivables at each year end are as follows: 31 December 2023 £’000 31 December 2022 £’000 Total factoring 5,927 5,004 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. Foreign Currency Translation Reserve - represents the translation differences arising from translating the financial statement items from functional currency to presentational currency. Deferred Shares – are shares that effectively do not have any rights or entitlements. Capital Reserve – represents cash that can be used for future expenses or to offset any capital losses. Revaluation Reserve – represents the changes of values in certain assets and includes derivative instruments used for cash-flow hedging 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. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023The 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 Income Statement. 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. 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. Deferred tax is recognised using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit. However, deferred tax liabilities are not recognised if they arise from the initial recognition of goodwill; deferred tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets (including those arising from investments in subsidiaries), are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred income tax assets are recognised on deductible in temporary differences arising subsidiaries only to the extent that it is probable the temporary difference will reverse in the future and there is sufficient taxable profit available against which the temporary difference can be used. investments from Deferred tax liabilities are recognised for taxable temporary differences arising on investments in except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities where there is an intention to settle the balances on a net basis. Deferred tax is calculated at the tax rates (and laws) that have been enacted or substantively enacted by the 207 statement of financial position date and are expected to apply to the period when the deferred tax asset is realised, or the deferred tax liability is settled. Deferred tax assets and liabilities are not discounted. 2.19. Non-underlying Items Non-underlying items are a non UK IAS measure, but the Group have disclosed these 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 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 Group revenue arises from the sale of goods and contracting services. 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, identifying performance obligations within its contracts with customers, determining the transaction price applicable to each of these performance obligations and selecting an appropriate method for the timing of revenue recognition, reflecting the substance of the performance obligation at either a point in time or over time. Sale of goods The majority of the Group’s revenue is derived from the sale of physical goods to customers. Depending on whether the goods are delivered to or collected by the customer, the contract contains either one performance obligation which is satisfied at the point of collection, or two performance obligations which are satisfied simultaneously at the point of delivery. The performance obligation of products sold are transferred according to the specific 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. The transaction price for this revenue is the amount which can be invoiced to the customer once the performance obligations are fulfilled, reduced to reflect provisions recognised for returns, trade discounts and rebates. The Group does not routinely offer discounts or volume rebates, but where it does the variable element of revenue is based on the most likely amount of consideration that the Group believes it will receive. This value excludes items collected on behalf of third parties, such as sales and value added taxes. For all sales of goods, revenue is recognised at a point in time, being the point that the goods are transferred to the customer. Contracting services The majority of contracting services revenue arises from contract surfacing work, which typically comprises short- term contracts with a performance obligation to supply and lay product. Other contracting services revenue can contain more than one performance obligation dependent on the nature of the contract. The transaction price is calculated as consideration specified by the contract, adjusted to reflect provisions recognised for returns, remedial work arising in the normal course of business, trade discounts and rebates. Notes to the financial statements Where the contract provides for elements of variable consideration, these values are included in the calculation of the transaction price only to the extent that it is ‘highly probable’ that a significant reversal in the amount of cumulative revenue recognised will not occur when the uncertainty associated with the variable consideration is resolved. Where the transaction price is allocated between multiple performance obligations on other contracts, this typically reflects the allocation of value to each performance obligation agreed with the end customer, unless this does not reflect the economic substance of the transaction. Performance obligations for contracting services are satisfied over time. Revenue is therefore recognised over time on an output basis, being volume of product laid for contract surfacing. As the performance obligations relating to contracting revenues have an expected duration less than 12 months, the Group has taken the practical expedient on the performance obligations disclosures. 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. Employee Benefits - Defined benefit plans The Group’s net obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of the future benefit that employees have earned in the current and prior periods, discounting the amount and deducting the fair value of any plan assets. Defined benefit obligations are calculated annually by a qualified actuary using the projected unit credit method. When the calculation results in a potential asset for the Group, the recognised asset is limited to the present value of economic benefits available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of economic benefits, consideration is given to any applicable minimum funding requirements. Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognised immediately in other comprehensive income. The Group determines the net interest expense (income) for the net defined benefit liability (asset) for the period by applying the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest expense relating to defined benefit plans are recognised in profit or loss in net financial items. When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on the curtailment is recognised immediately in the profit or loss. The Group recognises gains and losses on the settlement of a defined benefit plan when the settlement occurs. 2.24. 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 Consolidated Income Statement 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 example, profitability or sales growth targets, or remaining an employee of the entity over a specified time period); and conditions vesting (for 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. 2.25. Discontinued Operations A discontinued operation is a component of the Group’s business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which: • • • represents a separate major geographic area of operations; line of business or is part of a single co-ordinated plan to dispose of a separate major line of business or geographic area of operations; or is a subsidiary acquired exclusively with a view to re-sale. Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held-for-sale. The Group operates several business units which are constantly reviewed to ensure profitability. During 2019 it was determined that the flagging & paving division at CCP’s Bury site was loss making and therefore it was decided that the operations at this site be discontinued. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 20232.26. 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 Right- of-use assets and lease liability under IFRS 16. Right-of-use assets are measured at cost, comprising the initial amount of the lease liability adjusted for any lease prepayments, plus initial direct costs, less any lease incentives received. Right-of-use assets are depreciated using the straight-line method from the start of the lease to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. Each lease payment is allocated between the liability and finance charges. The corresponding rental obligations, net of finance charges, are included in long-term and short-term borrowings and are measured at the present value of future lease payments, discounted at the Groups incremental borrowing rate and adjusted for time value of money. 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. The lease liabilities are shown in Note 24. The Group elects to apply the exemptions, permitted by IFRS 16, for lease assets and liabilities regarding short- term and low-value leases. Charges recognised in the consolidated income statement in respect of these leases are not significant to the Group. 2.27. Prior year restatement The statement of financial position has been restated for the finalisation of provisional fair values of the assets and liabilities recognised in respect of the JQG and Goijens acquisitions in 2022, following a PPA review during the IFRS 3 hindsight period. See note 17 for further details. 3. FINANCIAL RISK MANAGEMENT 3.1. Financial Risk Factors The Group and Company’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group and Company’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group and Company’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 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 Group has a strong focus on operational gearing, allowing it to be flexible during economically disruptive events however 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 is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises from cash 209 and cash equivalents, derivative financial instruments and, principally, from the Group’s receivables from customers. Management monitors the exposure to credit risk on an ongoing basis and have credit insurance at a number of its subsidiaries. The Nordkalk entities don’t hold credit insurance as they have a stable customer base with minimal credit losses. No credit limits were exceeded during the period, and management does not expect any losses from non-performance by these counterparties. Exposure to credit risk The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: Trade and other receivables Cash and cash equivalents 31 December 2023 £’000 31 December 2022 £’000 102,432 91,064 55,872 68,623 158,304 159,687 Credit risk associated with cash balances is managed and limited by transacting with financial institutions with high- quality credit ratings. Trade and other receivables The Group’s exposure to credit risk stems mainly from the individual characteristics of each customer. However, management also considers the factors that could influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate. The Group has established a credit policy under which each new customer is analysed individually for creditworthiness, before the Group’s standard payment and delivery terms and conditions are offered to the customer. The Group’s review includes external ratings, when available, and in some cases bank references. Most of the Group’s customers have been trading with the Group for years, and no major credit losses have occurred with these customers. Credit risk is monitored by grouping their credit characteristics, customers according including whether they are individuals or legal entities and whether they are wholesale, retail or end-user customers, as well as by geographic location, industry and the existence of previous financial difficulties. to The maximum exposure to credit risk for trade and other receivables by reportable segment, was: North West West North East 31 December 2023 £’000 31 December 2022 £’000 21,822 19,892 60,718 21,505 13,387 56,172 102,432 91,064 Notes to the financial statements Impairment At the reporting date the ageing of the trade receivables that were not impaired, were as follows. 31 December 2023 £’000 31 December 2022 £’000 Total trade receivables 85,033 79,261 Not overdue 66,536 68,051 Overdue 1 – 30 days 15,286 8,913 Overdue 31 – 60 days 1,646 1,491 Overdue 61 – 90 days More than 90 days Impairment loss recognised 495 1,573 437 554 (503) (185) Provisions for impairment of trade and other receivables are calculated on a lifetime expected loss model in line with the simplified approach available under IFRS 9 for Trade Receivables. The key inputs in determining the level of provision are the historical level of bad debts experienced by the Group and ageing of outstanding amounts. Movements during the year were as follows: At January 1 Amounts arising from business combinations Charged to the Consolidated income statement during the year Movement in provision 31 December 2023 £’000 31 December 2022 £’000 382 - 177 154 713 1,060 36 132 (846) 382 Derivatives Subsidiary currency risks are hedged by the parent or ultimate parent acting as counterparty in currency forward deals. External currency hedging is performed by finance and treasury functions as appropriate. In such deals, the counterparty is a bank or financial institution with a rating at least Baa3 from Moody’s rating agency. A comparable credit rating from a reputable credit rating agency is acceptable. Exceptions may be granted on an individual basis in rare cases where a bank is chosen for geographical reasons, but does not fulfil the stipulated rating criteria. Items hedged against are CO2 emission rights, forecast energy consumption, in foreign currency and forecast earnings. loans c) Currency Risk Following the Nordkalk acquisition, the Group is exposed to currency risk to the extent that there is a mismatch between the currencies in which sales and purchases are denominated and the respective functional currencies of Group companies. The functional currencies of Group companies are primarily the Pound, the Euro, the Polish Zlothy (PLN) and the Swedish Krona (SEK). The currencies in which these transactions are primarily denominated are GBP, EUR, PLN, and SEK. Additional exposures may arise from purchase of fuel in USD. At any point in time, the Group hedges on average 60 to 100 per cent of its estimated foreign currency exposure in respect of forecast sales and purchases over the following 12-18 months. The Group uses forward exchange contracts to hedge its currency risk, with a maturity of up to 12 months from the reporting date. Borrowings are, with a few exceptions, denominated in the subsidiaries domestic currencies. In respect of other monetary assets and liabilities denominated in foreign currencies, the Group’s policy is to ensure that its net exposure remains at an acceptable level by buying or selling foreign currencies at spot rates when necessary to address short-term imbalances. Exposure to currency risk Currency risk sensitivity to a +/- 10 per cent change in the exchange rate is shown for the net currency position per currency. The summary of quantitative data relating to the Group’s exposure to currency risk as reported to the Group management is as follows. 2023 GBP thousand Gross exposure USD SEK NOK PLN EUR (5,660) 24,942 (3,353) (3,177) 74,408 Hedged 11,441 (26,905) 2,646 3,187 (48,758) Net exposure Sensitivity analysis (+/- 10%) 5,781 (1,963) (707) 10 25,650 578 (196) (71) 1 2,565 d) 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 owing to the continued support of the lenders and a history of successful capital raises. Controls over expenditure are carefully managed. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 20231-12 months £’000 1-2 years £’000 2-5 years £’000 More than 5 years £’000 2023 Contractual cash flows Non-derivative financial liabilities Loans 30,709 31,663 148,414 - Trade payables 158,199 2,525 1,060 4,623 Future forecast finance charges Derivative financial liabilities Forward exchange contracts used for hedging Electricity hedges 188,908 34,188 149,474 4,623 11,712 9,807 19,621 - 200,620 43,995 169,095 4,623 1,843 - 2,713 4,556 538 538 - - - - - - The outflows disclosed in the above tables represent the contractual undiscounted cash flows relating to derivative financial liabilities held for risk management purposed and which are not usually closed out before contractual maturity. The interest payments on the variable interest rate loans in the table above reflect market forward interest rates at the reporting date and these amounts may change in line with changes in market interest rates. The future cash flows from derivative instruments may differ from the amount in the above table as interest rates and exchange rates change. With the exception of these financial liabilities, it is not expected that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts. 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 2023 is as follows: 211 Consolidated 31 December 2023 £’000 31 December 2022 £’000 238,296 262,476 (55,872) (68,623) 182,424 514,884 697,308 0.26 193,853 469,850 663,703 0.29 Total borrowings (Note 24) Less: Cash and cash equivalents (Note 22) Net debt Total equity Total capital Gearing ratio 4. CRITICAL ACCOUNTING ESTIMATES The preparation of the Financial Statements, in conformity with UK IASs, requires management to make estimates, assumptions and judgements that affect the reported amounts of assets, 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, assumptions and judgements 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. To determine the reserves, management will engage an independent volume and tonnage assessment, which involves a topographic survey of the quarry working, conducted in 3 dimensions for the date of the assessment using a computer aided design (CAD) system and a series of theoretical computer-generated models, taking into account geotechnical and hydrogeological factors, as well as ensuring that there is a practical extraction plan so that all the rock can be recovered. This produces a removal of overburden model and removal of mineral model. Following this, the volume of reserves is calculated and converted to tonnes by multiplying the volume by the density of the mineral. This process is based upon factors such as estimates of commodity prices and geological assumptions and judgements. Additional estimates include future capital requirements and production costs. is converted to tonnes by The volume of material multiplying the volume by the density of the mineral. The final tonnage will be adjusted to exclude material that is not suitable mineral for processing, such as overburden, tips and weathered rock, to derive at the estimated volume of mineral reserves remaining at the date of assessment. This process is based upon factors such as estimates of commodity prices and geological assumptions and judgements. Additional estimates include future capital requirements and production costs. Notes to the financial statements 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. 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. is a The cost of removal 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 FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023213 31 December 2023 North West £’000 West £’000 North East £’000 Total £’000 Revenue 142,505 98,203 339,577 580,285 Depreciation & Amortisation 10,566 5,986 22,882 39,434 Net finance (expense)/income 15,410 174 280 15,864 Underlying Profit from operations per reportable segment 12,085 17,258 54,512 83,855 Additions to non-current assets 13,243 20,375 5,447 39,065 Reportable segment non-current assets 192,197 121,467 459,054 772,718 Reportable segment assets 248,223 157,524 609,514 1,015,261 Reportable segment liabilities 287,443 42,174 170,760 500,377 31 December 2022 North West £’000 West £’000 North East £’000 Total £’000 Revenue 139,709 87,365 310,919 537,993 Depreciation & Amortisation 9,438 5,339 22,339 37,116 Net finance (expense)/income 9,855 151 432 10,438 Underlying Profit from operations per reportable segment 36,444 22,478 57,015 115,937 Additions to non-current assets 62,400 6,137 28,612 97,149 Reportable segment non-current assets 173,440 103,458 456,138 733,036 Reportable segment assets 221,317 138,823 606,788 966,928 Reportable segment liabilities 342,255 27,806 127,017 497,078 Notes to the financial statements 7. REVENUE Upstream products Value added products Value added services Other Consolidated 31 December 2023 £’000 31 December 2022 £’000 94,202 422,301 53,334 10,448 75,244 401,012 52,292 9,445 580,285 537,993 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. All revenues from upstream and value added products relate to products for which revenue is recognised at a point in time as the product is transferred to the customer. Value added services revenues are accounted for as products and services for which revenue is recognised over time. The Group contracting services revenue for the year ended 31 December 2023 was £27 million (2022: £24.9 million). Refer to note 2.20 for further information on contracting services. 8. EXPENSES BY NATURE Cost of sales Changes in inventories of finished goods and work in progress Raw materials & production Distribution & selling expenses Employees & contractors Maintenance expense Plant hire expense Depreciation & amortisation expense Other costs of sale Total cost of sales Administrative expenses Operational admin expenses Corporate admin expenses Total administrative expenses Consolidated 31 December 2023 £’000 31 December 2022 £’000 9,287 188,419 41,764 122,148 25,167 7,358 31,138 15,795 9,003 198,984 43,671 71,936 21,543 6,449 30,085 40,385 441,076 422,056 51,242 47,211 98,453 42,455 22,815 65,270 Corporate administrative expenses include £36.6 million (2022: £14.1 million) of non-underlying expenses (refer to Note 11). FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023 During the year the Group (including its overseas subsidiaries) obtained the following services from the Company’s auditors and its associates: 215 Fees payable to the Company’s auditor and its associates for the audit of the Company and Consolidated Financial Statements Fees paid or payable to the Company’s auditor and its associates for reporting accountant services associated with the readmission of the Company trading on AIM Consolidated 31 December 2023 £’000 31 December 2022 £’000 533 600 1,133 414 117 531 9. EMPLOYEE BENEFITS EXPENSE Staff costs (excluding directors) Consolidated Company 31 December 2023 £’000 31 December 2022 £’000 31 December 2023 £’000 31 December 2022 £’000 Salaries and wages 94,227 87,682 4,265 2,990 Post-employment benefits 401 250 81 Social security contributions and similar taxes 3,852 1,891 1,051 Other employment costs Share based payments 7,099 8,594 3 - - 3 28 329 2 - 105,582 98,417 5,400 3,349 Average number of FTE employees by function Management Operations Administration Consolidated Company 31 December 2023 31 December 2022 31 December 2023 31 December 2022 68 69 1,655 1,550 370 426 7 - 5 6 - 4 2,093 2,045 12 10 Notes to the financial statements 10. DIRECTORS’ REMUNERATION Executive Directors David Barrett Garth Palmer Max Vermorken Non-executive Directors Timothy Hall Simon Chisholm Jacques Emsens Axelle Henry Executive Directors David Barrett Garth Palmer Max Vermorken Non-executive Directors Timothy Hall Simon Chisholm Jacques Emsens Axelle Henry1 1 Appointed on 26 April 2022. Directors’ fees £’000 Bonus £’000 Taxable benefits £’000 Pension benefits £’000 375 375 475 50 50 50 50 469 469 594 - - - - 15 15 15 - - - - 22 33 48 - 5 - - Total £’000 881 892 1,132 50 55 50 50 1,425 1,532 45 108 3,110 Directors’ fees £’000 Bonus £’000 Taxable benefits £’000 Pension benefits £’000 375 375 475 50 50 50 34 469 469 594 - - - - 15 15 15 - - - - - 40 60 - 5 - - Total £’000 859 899 1,144 50 55 50 34 1,409 1,532 45 105 3,091 The bonuses earned in the year by the Directors reflect the performance of the business, were based on industry standard criteria taking into account external market data, were recommended by the Remuneration Committee and approved by the Board. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 202311. NON-UNDERLYING ITEMS Acquisition related expenses Amortisation and remeasurement of acquired assets Amortisation of finance costs Restructuring expenses Share option expense Unwinding of discount on deferred consideration Net other non-underlying expenses & gains 217 Consolidated 31 December 2023 £’000 31 December 2022 £’000 25,907 6,572 1,085 3,691 4,001 443 368 4,842 6,761 1,085 1,877 4,670 443 335 42,067 20,013 Under 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. Acquisition related expenses include exclusivity, introducer, advisor, consulting, legal fees, accounting fees, insurance and other direct costs relating to acquisitions. During the year the Group acquired Juuan Dolomitik, Goijens, Retaining, Björka Mineral, ST Investicija, Beton and entered into agreements to acquire CRH’s European lime and industrial limestone assets which comprises the vast majority of the costs incurred during the year. Amortisation and remeasurement of acquired assets are non-cash items which distort the underlying performance of the businesses acquired. Amortisation of acquired assets arise from certain fair value uplifts resulting from the PPA. Remeasurement of acquired assets arises from ensuring assets from acquisitions are depreciated in line with Group policy. These are net of the deferred tax liability unwind on the asset fair value uplift. Restructuring expenses relate to the reorganisation and integration of recently acquired subsidiaries, including costs associated with site optimisation, transitional salary costs, redundancies, severance & recruitment fees, and costs associated with financial reporting and system migrations. Share option expense is the fair value of the LTIP’s issued in 2021, refer to Note 29 more information. Unwinding of discount on deferred consideration is a non-cash adjustment relating to deferred consideration arising on acquisitions. Amortisation of finance costs is the amortisation of borrowing costs on the Syndicated Senior Credit Facility. These costs are amortised over a 5-year period. Net other non-underlying expenses and gains include other advisory fees and other associated costs. 12. NET FINANCE INCOME/(EXPENSE) Net interest expense Dividends Other finance expense Unwinding of discount on deferred consideration Consolidated 31 December 2023 £’000 (14,759) 423 (1,085) (443) (15,864) 31 December 2022 £’000 (9,557) 647 (1,085) (443) (10,438) Notes to the financial statements 13. OTHER NET GAINS/(LOSSES) Gain/(losses) on disposal of property, plant and equipment Other gain/(loss) Gain/(loss) on call options Impairment Share of earnings from joint ventures Forex movement 14. TAXATION Tax recognised in Consolidated Income Statement Current tax Deferred tax Consolidated 31 December 2023 £’000 31 December 2022 £’000 3,032 83 (306) - 596 (300) 3,105 1,471 20 248 (30) 786 - 2,495 Consolidated 31 December 2023 £’000 31 December 2022 £’000 (10,850) (6,960) (1,578) (2,182) Total tax charge in the Income Statement (12,428) (9,142) Recognised within the consolidated statement of Comprehensive Income Deferred tax – retirement benefit obligations Deferred tax – cash flow hedges Total tax recognised within the Consolidated Statement of Comprehensive Income Consolidated 31 December 2023 £’000 31 December 2022 £’000 8 1,379 1,387 (49) (845) (894) FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023The differences between the total tax charge and the amount calculated by applying the standard UK corporation tax of 23.52% (2022: 19%) to the profit before tax of the Group are as follows: 219 Consolidated 31 December 2023 £’000 31 December 2022 £’000 Profit/(loss) on ordinary activities before tax 27,997 42,723 Current tax using the UK corporation tax rate of 23.5% (2022: 19.00%) 6,579 8,117 Effects of: Expenses not deductible Income not taxable Recognition of previously unrecognised deferred tax Deferred tax not recognised Adjustment to tax charge in respect of prior periods Effect of overseas tax rates Changes in tax rates Tax charge 5,405 1,475 (2,228) (1,351) - 3,318 784 (1,238) (192) (757) 1,214 (785) 1,015 214 12,428 9,142 Legislation to increase the rate of corporation tax in the UK from 1 April 2023 was substantially enacted on 24 May 2021. The 25% rate has therefore been applied to any timing differences that are expected to reverse on or after 1 April 2023. On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK, introducing a global minimum effective tax rate of 15%. The legislation implements a domestic top-up tax and a multinational top-up tax, effective for accounting periods starting on or after 31 December 2023. However, this legislation does not apply to the Group in the financial year beginning 1 January 2024 as its consolidated revenue does not meet the legislation requirements of being greater than €750m in two of the four preceding years, the group will continue to monitor the legislation in future years. Deferred Tax Asset At 1 January 2023 Reclassification Charged directly to income statement At 31 December 2023 Tax losses £’000 Temporary timing differences £’000 Total £’000 4,424 4,424 (4,424) (4,424) 24 24 38 38 - - 14 14 Notes to the financial statements Tax losses £’000 Temporary timing differences £’000 Deferred Tax Liability As at 1 January 2023 (as previously stated) Adjustment to PPA As at 1 January 2023 (as restated) Reclassification Acquisition of subsidiary Charged/(Credited) directly to income statement Amount charged/(Credited) to OCI Amount charged/(Credited) to equity Effect of movements in foreign exchange (128) - (128) (2,034) (196) 156 - - 8 Total £’000 68,604 10,507 79,111 (4,424) (196) 585 68,732 10,507 79,239 (2,390) - 429 (2,074) (2,074) 250 (1,041) 74,413 250 (1,033) 72,219 At 31 December 2023 (2,194) Deferred tax assets and liabilities are offset to the extent that there is a legally enforceable right to offset current tax assets against current tax liabilities. Deferred tax assets in relation to losses of £3.6 million (2022: £3.5 million) and other temporary differences of £6.1 million (2022: £3.4 million) have not been recognised due to uncertainty over their recoverability. 15. ASSET ACQUISITION During the year, the Group purchased four concrete plants located on the Belgian border with France, along with operating permits, branding, and customer relations. These are collectively considered to be the acquisition of Betons. The Directors have treated the acquisition of Betons as an asset acquisition as the acquisition was not considered to meet the definition of a business combination under IFRS 3, and therefore they judged the fair value of the assets acquired to be equal to the fair value of the consideration. The amounts acquired as an asset acquisition are shown below: Property, plant & equipment (refer to note 16) Intangible assets (refer to note 17) Total asset acquisition Consolidated 31 December 2023 £’000 31 December 2022 £’000 954 2,229 3,183 - - - FINANCIAL REPORTSIGMAROC ANNUAL REPORT 202316. PROPERTY, PLANT AND EQUIPMENT Office Equipment £'000 Land and minerals £'000 Land and buildings £'000 Plant and machinery £'000 Vehicles £'000 Right of use £'000 Construction in progress £'000 Total £'000 Consolidated 221 Cost As at 1 January 2022 Acquired through acquisition Transfer between classes Fair value adjustment Additions Disposals Forex As at 31 December 2022 (as previously stated) Fair value adjustment – PPA* As at 31 December 2022 (as restated) As at 1 January 2023 Acquired through acquisition Transfer between classes/ reallocation from intangibles Fair value adjustment Additions Disposals Forex As at 31 December 2023 Depreciation As at 1 January 2022 Transfer between classes Acquired through acquisition Charge for the year Disposals Forex As at 31 December 2022 As at 1 January 2023 Transfer between classes/ reallocation from intangibles Acquired through acquisition Charge for the year Disposals Forex As at 31 December 2023 Net book value As at 31 December 2022 (restated) As at 31 December 2023 4,593 189,967 121,233 289,918 24,595 - 13,243 643,549 157 - - 222 (56) 177 - 20,601 15,294 227 2,052 38 38,369 74 211,629 2,051 (468) 2,881 (5,722) 10,508 15,160 (4,525) 653 (24,217) 12,450 24,274 (2,888) 10,382 (2,350) 3 1,491 (2,356) 915 35,014 - 5,926 (2,862) (696) (2,799) - 1,884 - (671) - 234,590 51,008 (13,155) 13,641 5,093 406,134 157,908 325,213 22,525 39,434 11,695 968,002 - 30,286 986 - - - - 31,272 5,093 5,093 436,420 436,420 158,894 158,894 325,213 325,213 22,525 22,525 39,434 39,434 11,695 11,695 999,274 999,274 92 3,218 10,533 23,595 2,689 938 245 41,310 - - 206 - (73) 6,478 406 5,849 (36) (3,705) (78) - 3,072 (1,987) 421 1,798 - 15,416 (7,234) (2,849) (214) - 3,388 (531) (215) (154) 2,507 2,211 (3,079) 217 (1,479) - 10,048 - 18 6,351 2,913 40,190 (12,867) (6,186) 5,318 448,630 170,855 355,939 27,642 42,074 20,527 1,070,985 4,040 70,174 68,393 226,274 18,232 - 77 208 (55) 170 - (1,850) (14,533) (1,101) 17,484 - 6,548 - 3,179 8,693 5,139 (91) 1,098 7,588 14,996 (1,597) 6,580 32 1,303 (1,742) 613 392 6,257 (907) (780) 4,440 4,440 79,901 79,901 81,382 81,382 239,308 239,308 17,337 17,337 22,446 22,446 13 1,737 - 276 - 428 45 206 - (64) 762 7,994 (27) (1,369) 6,772 4,919 (1,718) (456) 20,285 16,640 (5,240) (1,452) 1,723 1,567 (217) 67 - 5,608 (2,736) (2,154) 4,640 88,998 90,899 269,817 20,477 23,592 - - - - - - - - - - - - - - 387,113 - 16,782 34,451 (4,392) 10,860 444,814 444,814 2,454 29,587 36,934 (9,938) (5,428) 498,423 653 356,519 77,512 85,905 5,188 16,988 11,695 554,460 678 359,632 79,956 86,122 7,165 18,482 20,527 572,562 *Refer to note 17 for further information regarding the PPA fair value adjustment. Notes to the financial statements Company Office Equipment £’000 Land & Buildings £’000 Right of use £’000 Motor Vehicle £’000 Total £’000 Cost As at 1 January 2022 Transfer between classes Fair value adjustment Additions Disposals As at 31 December 2022 As at 1 January 2023 Additions Disposals As at 31 December 2023 Depreciation As at 1 January 2022 Transfer between classes Charge for the year Disposals As at 31 December 2022 As at 1 January 2023 Charge for the year Disposals As at 31 December 2023 Net book value As at 31 December 2022 As at 31 December 2023 245 265 25 (25) - - - - - - - - (265) - - - - - - - - 40 (40) 16 (16) - - - - - - - - - - - - - - - - - - - - 14 - 259 259 6 - 265 50 - 50 - 100 100 50 - 150 159 115 - 535 290 (68) - - 222 222 12 - - (68) 14 - 481 481 18 - 234 499 - 56 68 - 124 124 59 - 106 - 118 - 224 224 109 - 183 333 98 51 257 166 FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023223 Consolidated Goodwill £’000 Customer Relations £’000 Intellectual property £’000 Research & Development £’000 Branding £’000 Other Intangibles £’000 Total £’000 17. INTANGIBLE ASSETS Cost As at 1 January 2022 305,966 4,414 2,027 5,938 3,611 18,798 340,754 Additions Provisional additions through business combination Price Purchase Allocation – B-Mix Price Purchase Allocation – Nordkalk - 89,096 (4,429) - - - (233,955) 3,795 Forex 17,147 - - - - - - - - - - - - - - - - 1,713 1,713 - - - 89,096 (4,429) (230,160) 336 17,483 173,825 8,209 2,027 5,938 3,611 20,847 214,457 As at 31 December 2022 (as previously stated) Price Purchase Allocation – JQG Price Purchase Allocation – Goijens As at 31 December 2022 (as restated) (23,448) - (2,638) 2,516 147,739 10,725 As at 1 January 2023 147,739 10,725 Additions Reallocations Provisional additions through business combination Forex - - 23,685 (1,087) 1,114 - - As at 31 December 2023 170,337 11,762 - - 2,027 2,027 - - - - - 2,805 (20,643) - (122) 5,938 3,611 23,652 193,692 5,938 3,611 23,652 193,692 4 - 1,739 2,857 (77) (2,027) (122) (401) (6,490) (9,117) - - - - 132 - - - 23,685 1,225 270 5,952 3,210 20,126 211,387 1,598 1,641 5,367 Depreciation As at 1 January 2022 Charge for the year Forex As at 31 December 2022 As at 1 January 2023 Charge for the year Reallocations Forex As at 31 December 2023 Net book value As at 31 December 2022 (restated) - - - - - - - - - 147,739 As at 31 December 2023 170,337 826 - 2,424 2,424 1,079 - - 3,503 8,301 8,259 85 - 1,726 1,726 - (1,726) - - 301 - 373 160 - 533 533 159 - - 12,617 21,596 1,507 2,665 321 321 14,445 24,582 14,445 24,582 1,215 2,513 (1,735) (3,461) (427) (295) 87 - 5,454 5,454 60 - 132 5,646 692 13,498 23,339 484 306 3,078 2,518 9,207 169,110 6,628 188,048 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 £’000 West £’000 North East £’000 North West £’000 West £’000 North East £’000 Goodwill allocated to region at balance sheet date 53,621 23,200 93,516 71,798 20,400 81,627 Discount rate applied to cash flow projections 9.3% 12.24% 11.17% 10% 10% 10% Average EBITDA margin over 5 years 23.1% 22.9% 21.9% 23.6% 22.4% 21.1% Headroom 157,640 37,963 261,047 139,705 66,291 129,296 Long term growth rates 2% 2% 2% 2% 2% 2% FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023225 Key assumptions Sensitivity The key assumptions used in performing the impairment review are set out below: Cash flow projections The key assumptions and methodology used in respect of the operating segments are consistent with those described above. The values applied to each of the key estimates and assumptions are specific to the individual operating segment and are based on past experience and forecast future trading conditions. The cash flows and terminal value were projected in line with the methodology disclosed above. Long-term growth rates 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. The table below identifies the amounts by which each of the following assumptions would decline or increase to arrive at a zero excess of the present value of future cash flows over the book value of net assets in the two operating segments selected for sensitivity analysis disclosures: Reduction in cash flows 6.0% - 7.0% Increase in discount rate 2.0% - 3.7% Cash flow projections are prudently based on 2 per cent (2022: 2 per cent) and therefore provides plenty of headroom. Reduction in growth rate 2.0% Discount rate Forecast cash flows for each operating segment have been discounted at rates of 9.30 per cent to 12.24 per cent (2022: 10 per cent); which was calculated based on market participants’ cost of capital and adjusted to reflect factors specific to each operating segment. This demonstrated that a 1.0% (2022: 1.0%) increase in the discount rate would not cause an impairment and the annual growth rate is assumed to be 2.0% (2022: 2.0%). The Directors have therefore concluded that no impairment to goodwill is necessary. 18. INVESTMENT IN SUBSIDIARY UNDERTAKINGS Shares in subsidiary undertakings At beginning of the year Additions Disposals At period end Loan to/(from) Group undertakings Total Investments in Group undertakings are stated at cost less impairment. Company 31 December 2023 £’000 31 December 2022 £’000 482,622 6,190 - 488,812 78,493 567,305 435,085 47,537 - 482,622 100,799 583,421 Notes to the financial statements Details of subsidiaries at 31 December 2023 are as follows: Country of incorporation Share capital held by Company Share capital held by Group Name of subsidiary SigmaFin Limited Foelfach Stone Limited SigmaGsy Limited Ronez Limited Pallot Tarmac (2002) Limited Island Aggregates Limited Topcrete Limited A. Larkin (Concrete) Limited Allen (Concrete) Limited Poundfield Products (Group) Limited England England Guernsey Jersey Jersey Guernsey England England England England Poundfield Products (Holdings) Limited England Poundfield Innovations Limited Poundfield Precast Limited Greenbloc Limited CCP Building Products Limited Cheshire Concrete Products Limited Clwyd Concrete Products Limited Country Concrete Products Limited CCP Trading Limited CCP Aggregates Limited Stone Service Center Carrières du Hainaut SCA Granulats du Hainaut SA CDH Management 2 SPRL GDH (Holdings) Limited Gerald D. Harries & Sons Limited GD Harries & Sons Limited Stone Holding Company SA Cuvelier Philippe SA B-Mix Beton NV Nordkalk Oy Ab Nordkalk AB Kalkproduktion Storugns AB Nordkalk AS Nordkalk GmbH Nordkalk Sp.z o.o England England England England England England England England England Belgium Belgium Belgium Belgium England England England Belgium Belgium Belgium Finland Sweden Sweden Estonia Germany Poland £45,181,877 £1 £1 Principal activities Holding company Construction materials Shipping logistics £2,500,000 Construction materials £2 Road contracting services £6,500 Waste recycling £926,828 Pre-cast concrete producer £37,660 Dormant £100 Holding company £651 £6,357 Holding company Holding company Patents & licencing £22,167 £63,568 Pre-cast concrete producer £1 Dormant £50 Construction materials £1 £100 £100 £100 Dormant Dormant Dormant Dormant £100,000 Construction materials €23,660,763 Holding company €16,316,089 Construction materials €62,000 International marketing €760,000 Holding company £54,054 Construction materials £112 £1 €100 €750 Construction materials Dormant Construction materials Construction materials €680,600 Concrete producer €1,000,000 €2,439,000 €293,000 €959,000 €50,000 €19,637,000 Limestone quarrying and processing Limestone quarrying and processing Limestone quarrying and processing Limestone quarrying and processing Limestone quarrying and processing Limestone quarrying and processing FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023Name of subsidiary Suomen Karbonaatti Oy NKD Holding Oy Ab Nordeka Maden A.S Baltic Aggregates Oy NK – East Oy Nordkalk Ukraine TOV Nordkalk Prykarpattya TOV Johnston Quarry Group Limited Building Stone Limited CSSL No.2 Limited Guiting Quarry Limited Bath Stone Group Limited Monks Park Minerals Limited Stoke Hill Minerals Limited The Bath Stone Company Limited Hartham Park Minerals Limited Costwold Stone Sales Limited Flick Quarry Limited Creeton Quarry Limited Oathill Quarry Limited Ropsley Quarry Limited Righcast Limited Canteras La Belonga SA Nayles Barn Quarry Limited C B Collier Quarry Limited Gripeco BV Goijens Recycling NV G&G Betonpompen BV Retaining Holdings Limited Retaining (UK) Limited Geocast Ltd Juuan Dolomiittikalkki Oy ST Investicija UAB Compus UAB Draseikiu Karjeras UAB Baltijos Karjerai UAB Karjeru Verslas UAB Kvykliu Karjeras UAB Björka Mineral AB Country of incorporation Share capital held by Company Share capital held by Group Principal activities 227 Finland Finland Turkey Finland Finland Ukraine Ukraine England England England England England England England England England England England England England England England Spain England England Belgium Belgium Belgium England England England Finland Lithuania Lithuania Lithuania Lithuania Lithuania Lithuania Sweden €2,102,000 Limestone quarrying and processing €3,000 Holding company €1,020,000 Limestone quarrying and processing €1 Crushing stone €8,869 Holding company €539 €308 £190 £1 £1 £100 £110 £1 Mining rights Dormant Holding company Stone producing Dormant Construction materials Holding company Dormant £13,620 Minerals rights £1 £1 £1 £1 £100 £1 £100 £103 Construction materials Dormant Dormant Dormant Dormant Dormant Dormant Concrete manufacturer €273,575 Construction materials £100 £1 Dormant Dormant €284,762 Concrete producer €62,000 €50,000 £67 £100 £100 €52,700 €2,900 €2,896 €203,000 €12,876 €61,712 €102,500 €60 Concrete producer Concrete producer Holding company Retaining wall system Retaining wall system Limestone quarrying and processing Limestone quarrying and processing Limestone quarrying and processing Limestone quarrying and processing Limestone quarrying and processing Limestone quarrying and processing Limestone quarrying and processing Limestone quarrying and processing Notes to the financial statements Name of subsidiary Registered office address SigmaFin Limited 6 Heddon Street, London W1B 4BT Foelfach Stone Limited 6 Heddon Street, London W1B 4BT 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 Poundfield Products (Holdings) Limited Poundfield Innovations Limited The Grove, Creeting St. Peter, Ipswich, England, IP6 8QG The Grove, Creeting St. Peter, Ipswich, England, IP6 8QG The Grove, Creeting St. Peter, Ipswich, England, IP6 8QG Poundfield Precast Limited The Grove, Creeting St. Peter, Ipswich, England, IP6 8QG Greenbloc Limited The Grove, Creeting St. Peter, Ipswich, England, IP6 8QG CCP Building Products Limited Cheshire Concrete Products Limited Clwyd Concrete Products Limited Country Concrete Products Limited Llay Road, Llay, Wrexham, Clwyd, LL12 0TL Llay Road, Llay, Wrexham, Clwyd, LL12 0TL Llay Road, Llay, Wrexham, Clwyd, LL12 0TL Llay Road, Llay, Wrexham, Clwyd, LL12 0TL CCP Trading Limited Llay Road, Llay, Wrexham, Clwyd, LL12 0TL CCP Aggregates Limited Llay Road, Llay, Wrexham, Clwyd, LL12 0TL CDH Développement SA Rue de Cognebeau 245, B-7060 Soignies, Belgium Carrières du Hainaut SCA Rue de Cognebeau 245, B-7060 Soignies, Belgium Granulats du Hainaut SA Rue de Cognebeau 245, B-7060 Soignies, Belgium CDH Management 2 SPRL Rue de Cognebeau 245, B-7060 Soignies, Belgium GDH (Holdings) Limited Rowlands View, Templeton, Narbeth, SA67 8RG Gerald D. Harries & Sons Limited Rowlands View, Templeton, Narbeth, SA67 8RG GD Harries & Sons Limited 6 Heddon Street, London W1B 4BT Stone Holding Company SA Avenue Louise 292, BE-1050 Ixelles, Belgium Cuvelier Philippe SA Avenue Louise 292, BE-1050 Ixelles, Belgium B-Mix Beton NV Nordkalk Oy Ab Nordkalk AB Kanaalweg 110, B-3980 Tessenderlo, Belgium Skräbbölentie 18, FI-21600, Parainen, Finland Box 901, 731 29 Köping Kalkproduktion Storugns AB Strugns, 620 34 Lärbro Nordkalk AS Nordkalk GmbH Lääne-Viru maakond, Väike- Maarja vald, Rakke alevik, F.R Faehlmanni tee 11a, 46301 Innungsstrabe 7, 21244 Buchholz in der Nordheide FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023229 Name of subsidiary Registered office address Nordkalk Sp.z o.o ul. Plac Na Groblach, nr 21, lok. Miejsc, Krakow, kod 31-101, poczta, Krakow, kraj Polska Suomen Karbonaatti Oy Ihalaisen teollisuusalue, 53500 Lappeenranta NKD Holding Oy Ab Skräbbölentie 18, 21600 Parainen, Finland Nordeka Maden A.S Levent MH.Cömert Sk. Yapi Kredi Blokl.c Blok no.1 c/17 Besiktas Baltic Aggregates Oy Skräbbölentie 18, FI-21600, Parainen, Finland NK – East Oy Skräbbölentie 18, FI-21600, Parainen, Finland Nordkalk Ukraine TOV Ivana Makukha st. 14, 78000, Ivano-Frankivsk Oblast, Tlumach, Ukraine Nordkalk Prykarpattya TOV Galytska st 10, 7600 Ivano-Frankivsk, Ukraine Johnston Quarry Group Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD Building Stone Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD CSSL No.2 Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD Guiting Quarry Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD Bath Stone Group Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD Monks Park Minerals Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD Stoke Hill Minerals Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD The Bath Stone Company Limited Hartham Park Minerals Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD Costwold Stone Sales Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD Flick Quarry Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD Creeton Quarry Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD Oathill Quarry Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD Ropsley Quarry Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD Rightcast Limited Unit W4 Junction 38 Business Park, Darton, Barnsley, South Yorkshire, S75 5QQ Canteras La Belonga SA Oviedo, Cellagu-Latores, 33193, Spain Nayles Barn Quarry Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD C B Collier Quarry Limited Westfield Lodge Butchers Hill, Great Tew, Chipping Norton, Oxfordshire, England, OX7 4AD Gripeco BV Industrieterrein Kanaal-Noord 1150, 3960 Bree, Belgium Goijens Recycling NV Industrieterrein Kanaal-Noord 1150, 3960 Bree, Belgium G&G Betonpompen BV Industrieterrein Kanaal-Noord 1150, 3960 Bree, Belgium Retaining Holdings Limited Hughes House, Cargo Fleet Road, Middlesbrough, United Kingdom, TS3 6AG Retaining (UK) Limited Hughes House, Cargo Fleet Road, Middlesbrough, United Kingdom, TS3 6AG Geocast Ltd Hughes House, Cargo Fleet Road, Middlesbrough, United Kingdom, TS3 6AG Juuan Dolomiittikalkki Oy Onninpolku 1, 83900 Juuka, Finland ST Investicija UAB Raudondvario pl. 131B, Kaunas, Lithuania Compus UAB Raudondvario pl. 131B, Kaunas, Lithuania Draseikiu Karjeras UAB Raudondvario pl. 131B, Kaunas, Lithuania Baltijos Karjerai UAB Raudondvario pl. 131B, Kaunas, Lithuania Karjeru Verslas UAB Raudondvario pl. 131B, Kaunas, Lithuania Kvykliu Karjeras UAB Raudondvario pl. 131B, Kaunas, Lithuania Björka Mineral AB Södra Tullgatan 3, 211 40 Malmö, Sweden Notes to the financial statements For the year ended 31 December 2023 the following subsidiaries were entitled to exemption from audit under section 479A of the Companies Act 2006 related to the following subsidiary companies: Topcrete Limited SigmaFin Limited Foelfach Stone Limited • • • • A. Larkin (Concrete) Limited • Allen (Concrete) Limited • Poundfield Products (Group) Limited • Poundfield Products (Holdings) Limited • Poundfield Innovations Limited • Poundfield Precast Limited • Greenbloc Limited • CCP Building Products Limited • Cheshire Concrete Products Limited • Clwyd Concrete Products Limited • Country Concrete Products Limited • CCP Trading Limited • CCP Aggregates Limited • GDH (Holdings) Limited • Gerald D. Harries & Sons Limited • GD Harries & Sons Limited • Johnston Quarry Group Limited The Bath Stone Company Limited Stoke Hill Minerals Limited • Building Stone Limited • CSSL No.2 Limited • Guiting Quarry Limited • Bath Stone Group Limited • Monks Park Minerals Limited • • • Hartham Park Minerals Limited • Costwold Stone Sales Limited • • Creeton Quarry Limited • Oathill Quarry Limited • Ropsley Quarry Limited • Rightcast Limited • Retaining Holdings Limited • Retaining (UK) Limited • Geocast Ltd • Nayles Barn Quarry Limited • C B Collier Quarry Limited Flick Quarry Limited Impairment review The performance of all companies for the year ended 31 December 2023 are in line with forecasted expectations and as such there have been no indications of impairment. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 202319. INVESTMENT IN EQUITY ACCOUNTED ASSOCIATES & JOINT VENTURES Nordkalk has a joint venture agreement with Franzefoss Minerals AS, managing a lime kiln located in Norway which was entered into on 5 August 2004. The Group entered into a joint venture agreement partnering with Arcelor Mittal, to invest in green quicklime and dolime production in Dunkirk, which was entered into on 11 September 2022. The Group has one non-material local associate in Pargas, Pargas Hyreshus Ab. 231 Interests in associates Interest in joint venture 31 December 2023 £’000 31 December 2022 £’000 605 6,448 7,053 576 5,942 6,518 Proportion of ownership interest held Name Country of incorporation 31 December 2023 31 December 2022 NorFraKalk AS Norway AMeLi Green Lime Solutions France Summarised financial information 50% 47.5% 50% - NorFraKalk AS - Cost and net book value 31 December 2023 £’000 31 December 2022 £’000 Current assets Non-current assets Current liabilities Non-current liabilities 7,735 10,078 (2,739) (4,651) 10,423 8,815 7,338 (3,388) (1,872) 10,893 Revenues Profit after tax from continuing operations For the period 1 January 2023 to 31 December 2023 £’000 For the period 1 September 2022 to 31 December 2022 £’000 15,903 1,372 20,055 1,602 Notes to the financial statements 20. TRADE AND OTHER RECEIVABLES Current asset Trade receivables Prepayments Other receivables Non-current asset Other receivables Consolidated Company 31 December 2023 £’000 31 December 2022 £’000 31 December 2023 £’000 31 December 2022 £’000 85,033 6,961 7,040 99,034 3,398 3,398 78,879 4,917 3,009 86,805 4,259 4,259 3,690 422 1,220 5,332 - - 2,555 358 255 3,168 - - The carrying value of trade and other receivables classified as loans and receivables approximates fair value. The carrying amounts of the Group and Company’s trade and other receivables are denominated in the following currencies: UK Pounds Euros Swedish Krona Zlotys Ukrainian Hryvnia Turkish Lira Consolidated Company 31 December 2023 £’000 31 December 2022 £’000 22,013 57,839 15,240 6,518 - 822 21,479 49,112 13,945 5,803 - 725 31 December 2023 £’000 31 December 2022 £’000 5,052 3,168 - - - - - - - - - - 102,432 91,064 5,052 3,168 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. 21. INVENTORIES Cost and net book value Raw materials and consumables Finished and semi-finished goods Work in progress Consolidated 31 December 2023 £’000 31 December 2022 £’000 32,823 44,265 7,221 84,309 26,104 36,187 5,489 67,780 The amount recognised as change of value in inventory included in cost of sales was £9 million (31 December 2022: (£9 million)). FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023233 22. CASH AND CASH EQUIVALENTS Cash at bank and on hand Consolidated Company 31 December 2023 £’000 31 December 2022 £’000 31 December 2023 £’000 31 December 2022 £’000 55,872 55,872 68,623 68,623 7,925 7,925 5,055 5,055 All of the Group’s cash at bank is held with institutions with a credit rating of at least A-. Exceptions may be granted on an individual basis in rare cases where a bank is chosen for geographical reasons but does not fulfil the stipulated rating criteria. The carrying amounts of the Group and Company’s cash and cash equivalents are denominated in the following currencies: UK Pounds Euros Swedish krona Zlotys Ukrainian Hryvnia Turkish Lira 23. TRADE AND OTHER PAYABLES Current liabilities Trade payables Wages Payable Accruals VAT payable/(receivable) Deferred consideration Other payables Non-current liabilities Deferred consideration Consolidated Company 31 December 2023 ‘000 31 December 2022 ‘000 31 December 2023 ‘000 31 December 2022 ‘000 11,111 37,308 4,938 2,137 43 335 8,536 56,322 1,100 2,479 20 166 4,617 3,308 - - - - 1,576 3,479 - - - - 55,872 68,623 7,925 5,055 Consolidated Company 31 December 2023 £’000 31 December 2022 £’000 31 December 2023 £’000 31 December 2022 £’000 78,572 13,715 46,120 3,366 8,887 7,539 69,907 13,662 39,627 3,785 5,873 7,589 15,184 - 15,462 (1,654) 3,865 1,225 2,964 1,032 4,475 (12) 4,243 825 158,199 140,443 34,082 13,527 8,208 8,208 5,051 5,051 5,260 5,260 5,051 5,051 Notes to the financial statements The carrying amounts of the Group and Company’s trade and other payables are denominated in the following currencies: Consolidated Company 31 December 2023 ‘000 31 December 2022 ‘000 31 December 2023 ‘000 31 December 2022 ‘000 49,003 80,349 26,712 10,029 11 303 44,493 69,579 21,523 9,663 9 227 29,114 9,908 320 - - - 16,419 2,159 - - - - 166,407 145,494 39,342 18,578 Consolidated Company 31 December 2023 £’000 31 December 2022 £’000 31 December 2023 £’000 31 December 2022 £’000 UK Pounds Euros Swedish krona Zlotys Ukrainian Hryvnia Turkish Lira 24. BORROWINGS Non-current liabilities Syndicated Senior Credit Facility 174,090 206,342 174,090 206,342 Bank Loans Finance lease liabilities IFRS 16 leases Current liabilities 5,986 7,853 12,863 200,792 2,617 7,375 12,296 228,630 - - - - - 27 174,090 206,369 Syndicated Senior Credit Facility 29,500 20,000 29,500 20,000 Bank Loans Finance lease liabilities IFRS 16 leases 1,209 2,066 4,729 6,500 2,927 4,419 - - 43 - - 72 37,504 33,846 29,543 20,072 In July 2021, the Group entered into a new Syndicated Senior Credit Facility of up to £305 million (the ‘Legacy Debt’) led by Santander UK and including several major UK and European banks. The Legacy Debt, which comprises a £205 million committed term facility, a £100 million revolving facility commitment and a further £100 million accordion option. This new facility replaces all previously existing bank loans within the Group. The Legacy Debt is secured by a floating charge over the assets of SigmaFin Limited, Carrieres du Hainaut and Nordkalk and is secured by a combination of debentures, security interest agreements, pledges and floating rate charges over the assets of SigmaRoc plc, SigmaFin Limited, B-Mix, Carrieres du Hainaut and Nordkalk. Interest is charged at a rate between 1.85% and 3.35% above SONIA (‘Interest Margin’), based on the calculation of the adjusted leverage ratio for the relevant period. For the period ending 31 December 2023 the Interest Margin was 2.35%. On 22 November 2023 the Company entered into a new syndicated senior credit facility of up to €750 million (the ‘New Debt Facilities’) led by Santander UK and BNPP, with the syndicate including several major UK and European banks and a further €125 million bridge loan (‘Bridge Loan’). The New Debt Facilities comprise a €600 million committed term facility, €150 million revolving credit facility and a further €100 million uncommitted accordion. The New Debt Facilities are conditional on the completion of the acquisition of the CRH Deal 1, following completion, the Legacy Debt will be repaid in full. As of 31 December 2023, the Group hadn’t drawn any funds from the New Debt Facilities. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023 The carrying amounts and fair value of the non-current borrowings are: Syndicated Senior Credit Facility Bank Loans Finance lease liabilities IFRS 16 leases Lease Liabilities 235 Carrying amount and fair value 31 December 2023 £’000 31 December 2022 £’000 174,090 206,342 5,986 7,853 2,617 7,375 12,863 12,296 200,792 228,630 Lease liabilities are effectively secured, as the rights to the leased asset revert to the lessor in the event of default. Leases which are entered into as a hire purchase agreement, or a finance lease is shown as finance leases. Finance lease liabilities – minimum lease payments Not later than one year Later than one year and no later than five years Later than five years Future finance charges on finance lease liabilities Present value of finance lease liabilities Consolidated 31 December 2023 £’000 31 December 2022 £’000 6,795 7,346 15,647 14,547 5,069 5,124 27,511 27,017 4,466 3,200 31,977 30,217 For the year ended 31 December 2023, the total finance charges were £1 million (2022: £0.6 million) The contracted and planned lease commitments were discounted using a weighted average incremental borrowing rate of 6.5%. The present value of finance lease liabilities is as follows: Not later than one year Later than one year and no later than five years Later than five years Present value of finance lease liabilities Consolidated 31 December 2023 £’000 31 December 2022 £’000 7,236 7,566 16,664 14,983 5,398 5,278 29,298 27,827 Notes to the financial statements Reconciliation of liabilities arising from financing activities is as follows: Consolidated As at 1 January 2023 Increase/(decrease) through financing cash flows Increase from refinancing Amortisation of finance arrangement fees Increase through obtaining control of subsidiaries Long-term borrowings £’000 208,959 - - (1,085) - Short-term borrowings £’000 26,500 (22,932) 549 - 135 Transfer between classes (25,673) 25,673 Lease liabilities £’000 27,017 (9,118) 4,515 - 836 - 4,673 (412) Liabilities arising from financing activities £’000 262,476 (32,050) 5,064 (1,085) 971 - 4,673 (1,753) 238,296 - (2,125) 180,076 - 784 30,709 27,511 Revaluation Foreign exchange movement As at 31 December 2023 25. PROVISIONS As at 1 January Acquired on business combination Addition/(Deduction) The provision total is made up of £632,011 as a restoration provision for the St John’s and Les Vardes sites; £86,812 for the Aberdo site; £172,303 for quarries in Wales; £6.7 million for the Nordkalk sites; and £338,943 for the Johnston sites which are all based on the removal costs of the plant and machinery at the sites and restoration of the land. Cost estimates in Jersey and Guernsey are not increased on an annual basis – there is no legal or planning obligation to enhance the sites through restoration. The commitment is to restore the site to a safe environment; thus the provision is reviewed on an annual basis. The estimated expiry on the quarries ranges between 5 – 35 years. Of the remaining amount, £242,000 is to cover the loss on the Holcim contract in GduH, £62,000 for legal fees, £1.69 million for other restructuring costs in the Nordkalk entities, £3.19 million is the provision for early retirement in Belgium, where salaried workers can qualify for early retirement based on age and £70,000 for early retirement in the Nordkalk entities. The provision for early retirement consists of the estimated amount that will be paid by the employer to the “early retired workers” till the age of the full pension. Refer to Note 26 for more information. The future reclamation cost value is discounted by 8% (2022 8%) which is the weighted average cost of capital within the Group. Consolidated 31 December 2023 £’000 31 December 2022 £’000 10,697 10,175 1,546 970 631 (110) 13,213 10,696 26. RETIREMENT BENEFIT SCHEMES The Group sponsors various post-employment benefit plans. These include both defined contribution and defined benefit plans as defined by IAS 19 Employee Benefits. Defined contribution plans funds or For defined contribution plans outside Belgium, the Group pays contributions to publicly or privately administered pension the contributions have been paid, the Group has no further payment obligation. The contributions are expensed in the year in which they are due. For the year ended, contributions paid into defined contribution plans amounted to £317,000. insurance contracts. Once Defined benefit plans The Group has group insurance plans for some of its Belgian, Swedish and Polish employees funded through defined payments to insurance companies. The Belgian pension plans are by law subject to minimum guaranteed rates of return. In the past the minimum guaranteed rates were 3.25% on employer contributions and 3.75% on employee contributions. A law of December 2015 (enforced on 1 January 2016) modifies the minimum guaranteed rates of return applicable to the Group’s Belgian pension plans. For insured plans, the rates of 3.25% on employer contributions FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023and 3.75% on employee contributions will continue to apply to the contributions accumulated before 2016. For contributions paid on or after 1 January 2016, a variable minimum guaranteed rate of return with a floor of 1.75% applies. The Group obtained actuarial calculations for the periods reported based on the projected unit credit method. The Swedish plan provides an old-age pension cover for plan members whereas plan members receive a lump sum payment upon retirement in the Polish plan. Both Swedish and Polish plans are based on collective labour agreements. Through its defined benefit plans, the Group is exposed to a number of risks. A decrease in bond yields will increase the plan liabilities. Some of the Group’s pension obligations are linked to inflation and higher inflation will lead to higher liabilities. The majority of the plans obligations are to provide benefits for the life of the plan member, so increases in life expectancy will result in an increase in the plans liabilities. 237 Employee benefits amounts in the Statement of Financial Position Assets Liabilities Net defined benefit liability at end of year Amounts recognised in the Statement of Financial Position Present value of funded defined benefit obligations Fair value of plan assets Present value of unfunded defined benefit obligation Unrecognised past service cost Total Amounts recognised in the Income Statement Current service cost Interest cost Expected return on plan assets Total pension expense Changes in the present value of the defined benefit obligation Defined benefit obligation at beginning of year Current service cost Interest cost Benefits paid Remeasurements Remeasurements in OCI Other significant events Foreign exchange movement Defined benefit obligation at end of year 31 December 2023 £’000 31 December 2022 £’000 - 4,355 4,355 - 3,543 3,543 31 December 2023 £’000 31 December 2022 £’000 967 (153) 814 3,541 - 4,355 2,468 (2,071) 397 3,128 - 3,543 31 December 2023 £’000 31 December 2022 £’000 152 112 163 427 160 47 (127) 80 31 December 2023 £’000 31 December 2022 £’000 3,543 152 112 (354) 163 978 (40) (199) 4,355 4,292 160 47 (317) (127) (844) 249 83 3,543 Notes to the financial statements Amounts recognised in the Statement of Changes in Equity Prior year cumulative actuarial remeasurements Remeasurements Foreign exchange movement Cumulative amount of actuarial gains and losses recognised in the Statement of recognised income / (expense) Movements in the net liability/(asset) recognised in the Statement of Financial Position Net liability in the balance sheet at beginning of year Total expense recognised in the income statement Contributions paid by the company Amount recognised in the statement of recognised (income)/expense Remeasurements in OCI Other significant events Foreign exchange movement Defined benefit obligation at end of year Principal actuarial assumptions as at 31 December 2022 31 December 2023 £’000 31 December 2022 £’000 - 978 - 978 152 (844) 54 (638) 31 December 2023 £’000 31 December 2022 £’000 3,543 264 (354) 163 978 (40) (199) 4,355 4,292 207 (317) (127) (844) 249 83 3,543 3.87% 2.93% 2.00% Discount rate Future salary increases Future inflation Post-retirement benefits The Group operates both defined benefit and defined contribution pension plans. Pension plans in Belgium are of the defined benefit type because of the minimum promised return on contributions required by law. The liability or asset recognised in the Statement of Financial Position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high-quality corporate bonds that are denominated in the currency in which the benefits will be paid, and that have terms approximating to the terms of the related obligation. The net interest cost is calculated by applying the discount rate to the net balance of the defined benefit obligation and the fair value of plan assets. This cost is included in employee benefit expense in the Income Statement. Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the Statement of Changes in Equity and in the Statement of Financial Position. For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 202327. FINANCIAL INSTRUMENTS BY CATEGORY Consolidated 31 December 2023 Assets per Statement of Financial Performance Trade and other receivables (excluding prepayments) Cash and cash equivalents Liabilities per Statement of Financial Performance Borrowings (excluding finance leases) Finance lease liabilities Trade and other payables (excluding non-financial liabilities) Loans & receivables £’000 95,471 55,872 151,343 At amortised cost £’000 210,785 27,511 166,407 404,703 Consolidated 31 December 2022 Assets per Statement of Financial Performance Trade and other receivables (excluding prepayments) Cash and cash equivalents Liabilities per Statement of Financial Performance Borrowings (excluding finance leases) Finance lease liabilities Trade and other payables (excluding non-financial liabilities) Loans & receivables £’000 86,148 68,623 154,771 At amortised cost £’000 235,459 27,017 145,495 407,971 Company 31 December 2023 Assets per Statement of Financial Performance Trade and other receivables (excluding prepayments) Cash and cash equivalents Liabilities per Statement of Financial Performance Borrowings (excluding finance leases) Finance lease liabilities Trade and other payables (excluding non-financial liabilities) Loans & receivables £’000 4,909 7,925 12,834 At amortised cost £’000 203,589 43 39,345 242,977 239 Total £’000 95,471 55,872 151,343 Total £’000 210,785 27,511 166,407 404,703 Total £’000 86,148 68,623 154,771 Total £’000 235,459 27,017 145,495 407,971 Total £’000 4,909 7,925 12,834 Total £’000 203,589 43 39,345 242,977 Notes to the financial statements Company 31 December 2022 Assets per Statement of Financial Performance Trade and other receivables (excluding prepayments) Cash and cash equivalents Liabilities per Statement of Financial Performance Borrowings (excluding finance leases) Finance lease liabilities Trade and other payables (excluding non-financial liabilities) Loans & receivables £’000 2,810 5,055 7,865 At amortised cost £’000 226,342 99 18,577 245,018 Total £’000 2,810 5,055 7,865 Total £’000 226,342 99 18,577 245,018 28. SHARE CAPITAL AND SHARE PREMIUM Issued and fully paid Number of shares Ordinary shares £’000 Share premium £’000 Total £’000 As at 1 January 2022 637,915,750 6,379 399,897 406,276 Exercise of options & warrants – 4 January 2022 330,594 4 125 129 As at 31 December 2022 638,246,344 6,383 400,022 406,405 As at 1 January 2023 638,246,344 6,383 400,022 406,405 Issue of new shares - 28 February 20231 55,555,555 556 28,682 29,238 Capital reduction – 23 May 2023 - - (428,704) (428,704) As at 31 December 2023 693,801,899 6,939 - 6,939 1 Includes issue costs of £781,679 The authorised share capital consists of 1,114,854,530 ordinary shares at a par value of 1 penny. On 23 February 2023, the Company raised £29.2 million net of issue costs via the issue and allotment of 55,555,555 new Ordinary Shares at a price of 54 pence per share. On 23 May 2023, the Company undertook a capital reduction whereby the existing share premium and the deferred shares were cancelled. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 202329. SHARE OPTIONS In 2021, the Company introduced a long term incentive plan (LTIP) for senior management personnel. Shares are awarded in the Company and vest in 3 parts over the third, fourth and fifth anniversary to the extent the performance conditions are met. Share options and warrants outstanding and exercisable at the end of the year have the following expiry dates and exercise prices: 241 Grant date Expiry date 5 January 2017 30 December 2026 5 January 2017 30 December 2026 15 April 2019 15 April 2026 30 December 2019 30 December 2026 Exercise price in £ per share 0.25 0.40 0.46 0.46 Options & Warrants 31 December 2023 # 31 December 2022 # 260,146 260,146 11,878,645 11,878,645 9,030,934 9,030,934 7,943,058 7,976,392 29,112,783 29,146,117 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 2019 Options C 2019 Options D 5/1/2017 5/1/2017 15/4/2019 30/12/2019 Vested on Revalued on Life (years) Share price Risk free rate 15/12/2021 15/12/2021 5 0.8295 0.40% 5 0.8295 0.40% Expected volatility 31.32% 31.32% Expected dividend yield Marketability discount - - - - Total fair value £58,345 £661,604 £419,130 £729,632 The risk-free rate of return is based on zero yield government bonds for a term consistent with the option life. The volatility is calculated by dividing the standard deviation of the closing share price from the prior six months by the average of the closing share price from the prior six months. 2017 Options A and B were extended for another 5 years by the Board on 15 December 2021 and were revalued on this day. - 7 0.465 0.31% 4.69% - - - 7 0.525 0.55% 8.19% - - Notes to the financial statements A reconciliation of options and warrants and LTIP awards granted over the year to 31 December 2023 is shown below: Options and warrants 31 December 2023 31 December 2022 Weighted average exercise price £ # Weighted average exercise price £ # Outstanding at beginning of the year 29,146,117 0.44 30,200,045 Granted Vested Exercised Outstanding as at year end Exercisable at year end LTIP awards - - (33,334) 29,112,783 29,112,783 - - 0.46 0.44 0.44 - - (1,053,927) 29,146,117 29,146,117 0.45 - - 0.44 0.44 0.44 31 December 2023 31 December 2022 Weighted average valuation price £ # Weighted average valuation price £ # Outstanding at beginning of the year 25,620,000 0.69 25,620,000 0.69 Granted Vested Exercised - - - Outstanding as at year end 25,620,000 Exercisable at year end - 30. OTHER RESERVES - - - 0.69 - - - - 25,620,000 - - - - 0.69 - Consolidated Deferred shares £’000 Capital redemption reserve £’000 Revaluation reserve £’000 Capital reserve £’000 As at 1 January 2022 762 600 Other comprehensive income Currency translation differences Other equity adjustments As at 31 December 2022 As at 1 January 2023 Other comprehensive income Currency translation differences Other adjustments As at 31 December 2023 - - - 762 762 - - (762) - 1,037 3,634 - - 4,671 4,671 (5,506) - - - - - 600 600 - - - 600 (835) Foreign currency translation reserve £’000 Total £’000 (13,635) (11,236) - 3,634 17,176 17,176 - 687 3,541 3,541 10,261 10,261 - (5,506) (3,109) (3,109) - 432 (1,017) 629 - - - 687 687 687 - - (255) 432 FINANCIAL REPORTSIGMAROC ANNUAL REPORT 202331. NON-CONTROLLING INTERESTS As at 1 January Acquired in business combination Non-controlling interests share of profit in the period Dividends paid Foreign exchange movement As at 31 December Current assets Non-current assets Current liabilities Non-current liabilities Net Assets Net Assets Attributable to NCI Revenue Profit after taxation Other comprehensive income Total comprehensive income Net operating cash flow Net investing cash flow Net financing cash flow Dividends paid to NCI 243 Consolidated 31 December 2023 £’000 31 December 2022 £’000 11,732 616 3,184 (1,275) (114) 14,143 10,894 974 2,343 (3,038) 559 11,732 31 December 2023 31 December 2022 Other individually immaterial subsidiaries £’000 Suomen Karbonaatti £’000 Other individually immaterial subsidiaries £’000 Suomen Karbonaatti £’000 18,762 14,459 17,592 12,427 2,489 23,612 3,348 19,605 (4,919) (8,442) (7,975) (7,627) (7,807) (6,082) (5,767) (4,361) 8,525 4,192 23,547 7,800 7,198 3,527 20,044 7,366 38,252 32,062 37,760 23,662 4,108 3,705 3,294 1,993 - 4,108 4,486 (324) - 3,705 5,081 (8,971) - 3,294 4,196 (679) - 1,993 1,556 (2,782) (2,610) 4,021 (6,208) 1,701 1,275 - 3,038 - 32. EARNINGS PER SHARE The calculation of the total basic earnings per share of 1.98 pence (2022: 4.89 pence) is calculated by dividing the profit attributable to shareholders of £13,534 million (2022: £31,238 million) by the weighted average number of ordinary shares of 684,973,893 (2022: 638,243,627) in issue during the period. shareholders of £13,534 million (2022: £31,238 million) 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 714,091,517 (2022: 667,430,527). The weighted average number of shares is the opening balance of ordinary shares plus the weighted average of 46,727,549 shares. Diluted earnings per share of 1.90 pence (2022: 4.68 pence) is calculated by dividing the profit attributable to Details of share options that could potentially dilute earnings per share in future periods are disclosed in Note 29. Notes to the financial statements 33. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES MEASURED AT AMORTISED COSTS The following table shows the carrying amounts and fair values of the financial assets and liabilities, including their levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not measured at fair value if the carrying amount is a reasonable approximation of fair value. Items where the carrying amount equates to the fair value are categorised to three levels: • • • Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date. Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Items which are categorised as Level 2 financial assets and liabilities are forward exchange contracts and these are valued using the year end exchange rate for the relevant currencies. Carrying Amount Fair value Fair value – Hedging instruments £’000 Fair value through P&L £’000 Fair value through OCI £’000 Financial asset at amortised cost £’000 Other financial liabilities £’000 - - 122 580 - 3,995 - - - - Forward exchange contracts Electricity hedges Financials assets not measured at fair value Trade and other receivables (excl. Derivatives) Cash and cash equivalents - - - - - - 102,432 - 102,432 55,872 - 55,872 - - Financial liabilities measured at fair value Forward exchange contracts Electricity hedges - - 1,253 590 - 3,250 - - - - 1,843 - 1,843 1,843 3,250 3,250 - 3,250 Financial liabilities not measured at fair value Loans Finance lease liability Trade and other payables (excl. derivative) 210,786 210,786 27,510 27,510 166,406 166,406 Total £’000 Level 1 £’000 Level 2 £’000 Total £’000 702 - 702 702 3,995 3,995 - - - 3,995 - - FINANCIAL REPORTSIGMAROC ANNUAL REPORT 202334. BUSINESS COMBINATIONS Nayles Barn Quarry Limited On 27 January 2023, the Group acquired 100 per cent. of the share capital of Nayles Barn Quarry Limited (‘Nayles Barn’) for cash consideration of £3.5 million. This was part of the deferred consideration from the JQG acquisition. Nayles Barn is registered and incorporated in England. The following table summarises the consideration paid for Nayles Barn and the values of the assets and equity assumed at the acquisition date. 245 Total consideration Net cash consideration Recognised amounts of assets and liabilities acquired Trade and other receivables Property, plant & equipment Trade and other payables Investment in Subsidiary Total identifiable net assets Goodwill (refer to note 17) Total consideration Since 27 January 2023 Nayles Barn hasn’t contributed profit or revenue. £’000 3,500 3,500 £’000 15 73 (771) 670 (13) 3,513 3,500 Notes to the financial statements Goijens On 31 January 2023, the Group acquired 100 per cent. of the share capital of Gripeco BV and its subsidiaries (‘Goijens’) for a cash consideration of €14 million. Goijens is registered and incorporated in Belgium. The principal activity is the operation of concrete plants. The following table summarises the consideration paid for Goijens and the values of the assets and equity assumed at the acquisition date. Total consideration Cash Recognised amounts of assets and liabilities acquired Cash and cash equivalents Trade and other receivables Investment in subsidiaries Inventories Property, plant & equipment Trade and other payables Income tax payable Borrowings Total identifiable net assets Goodwill (refer to note 17) Total consideration £’000 12,144 12,144 £’000 1,904 2,175 713 233 3,790 (1,499) (25) (234) 7,057 5,087 12,144 Since 31 January 2023, Goijens has contributed a profit of £1.3 million and revenue of £14.7 million. Had Goijens been consolidated from 1 January 2023, the consolidated statement of income would show additional loss of £0.1 million and revenue of £0.5 million. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023Juuan Dolomitik On 1 February 2023, the Group acquired 70 per cent. of the share capital of Juuan Dolomitik and its subsidiaries for a cash consideration of €1.83 million. Juuan Dolomitik is registered and incorporated in Finland. Juuan Dolomitik is a land improvement lime manufacturing company. The following table summarises the consideration paid for Juuan Dolomitik and the values of the assets and equity assumed at the acquisition date. 247 Total consideration Cash Deferred consideration Recognised amounts of assets and liabilities acquired Cash and cash equivalents Trade and other receivables Inventories Property, plant & equipment Investment in Subsidiary Trade and other payables Borrowings Non-controlling interest Total identifiable net assets Goodwill (refer to note 17) Total consideration £’000 530 1,059 1,589 £’000 794 361 93 879 36 (79) (29) (616) 1,439 150 1,589 Since 1 February 2023, Juuan Dolomitik has contributed a profit of £0.1 million and revenue of £1.5 million. Had Juuan Dolomitik been consolidated from 1 January 2023, the consolidated statement of income would show no additional profit and revenue of £0.2 million. Notes to the financial statements Retaining On 7 April 2023, the Group acquired 100 per cent. of the share capital of Retaining and its subsidiaries for a cash consideration of £2.45 million. Retaining is registered and incorporated in England. Retaining provides retaining wall solutions across the United Kingdom. The following table summarises the consideration paid for Retaining and the values of the assets and equity assumed at the acquisition date. Total consideration Cash Recognised amounts of assets and liabilities acquired Cash and cash equivalents Trade and other receivables Inventories Property, plant & equipment Trade and other payables Income tax payable Deferred tax liability Borrowings Total identifiable net assets Goodwill (refer to note 17) Total consideration £’000 2,450 2,450 £’000 150 300 1,372 396 (889) (46) (30) (459) 794 1,656 2,450 Since 7 April 2023, Retaining has contributed a profit of £0.6 million and revenue of £4.2 million. Had Retaining been consolidated from 1 January 2023, the consolidated statement of income would show additional loss of £0.1 million and revenue of £1.4 million. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023Björka Mineral On 31 July 2023, the Group acquired 100 per cent. of the share capital of Björka Mineral for a cash consideration of €14.7 million. Björka Mineral is registered and incorporated in Sweden. Björka Mineral is a leading supplier of high-grade limestone and dolomite powders. The following table summarises the consideration paid for Björka Mineral and the values of the assets and equity assumed at the acquisition date. 249 Total consideration Cash consideration Equity contributions Deferred consideration Recognised amounts of assets and liabilities acquired Cash and cash equivalents Trade and other receivables Inventories Property, plant & equipment Intangible assets Trade and other payables Income tax refund Deferred tax liability Borrowings Provisions Total identifiable net assets Provisional goodwill (refer to note 17) Total consideration £’000 9,543 468 2,982 12,993 £’000 104 2,043 1,849 6,964 11 (1,756) 112 (179) (5,619) (1,554) 1,975 11,018 12,993 Since 31 July 2023, Björka Mineral has contributed a profit of £0.7 million and revenue of £5.5 million. Had Björka Mineral been consolidated from 1 January 2023, the consolidated statement of income would show additional profit of £0.1 million and revenue of £7.3 million. Notes to the financial statements ST Investicija On 12 July 2023, the Group acquired 100 per cent. of the share capital of ST Investicija and its subsidiaries for a cash consideration of €4.3 million. ST Investicija is registered and incorporated in Lithuania. ST Investicija operates three quarries in Lithuania. The following table summarises the consideration paid for ST Investicija and the values of the assets and equity assumed at the acquisition date. Total consideration Cash Recognised amounts of assets and liabilities acquired Cash and cash equivalents Trade and other receivables Inventories Investments Property, plant & equipment Trade and other payables Income tax payable Deferred tax liability Borrowings Provisions Total identifiable net assets Provisional goodwill (refer to note 17) Total consideration £’000 3,714 3,714 £’000 753 694 230 14 899 (517) (82) (490) (48) 1,453 2,261 3,714 Since 12 July 2023, ST Investicija has contributed a profit of £0.4 million and revenue of £1.9 million. Had Retaining been consolidated from 1 January 2023, the consolidated statement of income would show additional profit of £0.3 million and revenue of £1.6 million. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 202335. CONTINGENCIES The Group is not aware of any material personal injury or damage claims open against the Group. 36. RELATED PARTY TRANSACTIONS Loans with Group Undertakings Amounts receivable/(payable) as a result of loans granted to/(from) subsidiary undertakings are as follows: 251 Ronez Limited SigmaGsy Limited SigmaFin Limited Topcrete Limited Poundfield Products (Group) Limited Foelfach Stone Limited CCP Building Products Limited Carrières du Hainaut SCA GDH (Holdings) Limited B-Mix Beton NV Stone Holdings SA Nordkalk Oy Ab Johnston Quarry Group Rightcast Limited Retaining (UK) Limited Company 31 December 2023 £’000 31 December 2022 £’000 (27,152) (22,764) (9,013) 21,885 (7,663) 20,549 (11,179) (10,346) 5,012 594 5,311 16,799 11,435 10,349 409 43,062 12,604 (1,117) (506) 78,493 5,356 557 4,586 14,948 10,035 8,013 384 70,196 7,747 (799) - 100,799 Loans granted to or from subsidiaries are unsecured, have interest charged at 6.5% and are repayable in Pounds Sterling on demand from the Company. All intra Group transactions are eliminated on consolidation. 37. ULTIMATE CONTROLLING PARTY The Directors believe there is no ultimate controlling party. Notes to the financial statements 38. EVENTS AFTER THE REPORTING DATE On 4 January 2024 the Company: • • • raised gross proceeds of approximately £200 million through the issue of 421,052,631 new Ordinary Shares at a price of 47.5 pence per share; refinanced its senior debt with a new €875 million finance facility; and completed the acquisitions of Fels Holding GmbH and its subsidiaries, Vapenka Vitošov s.r.o. and Clogrennane Lime Limited for an aggregate consideration of €745 million before customary purchase price deductions. Financial information for each entity acquired shown below: Fels Holdings GmbH On 4 January 2024, the Group acquired 100 per cent. of the share capital of Fels Holding GmbH (‘Fels’) and its subsidiaries for a cash consideration of €500.7 million. Fels is registered and incorporated in Germany. Fels is a lime producer with the key operations of extracting limestone from quarries as well further processing the limestone. The following table summarises the consideration paid for Fels and the values of the assets and equity assumed at the acquisition date. Total consideration Initial cash Deferred settlement Purchase of shareholder loan Deferred consideration Recognised amounts of assets and liabilities acquired Cash and cash equivalents Trade and other receivables Inventories Property, plant & equipment Intangible assets Intercompany borrowings Trade and other payables Income tax payable Deferred tax liability Borrowings Provisions Total identifiable net assets Provisional goodwill Total consideration £’000 249,876 (8,675) 128,059 65,060 434,320 £’000 26,928 26,103 22,134 447,811 122,619 (128,273) (55,302) (5,384) (93,120) (10) (43,841) 319,665 114,655 434,320 FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023Vapenka Vitošov s.r.o On 4 January 2024, the Group acquired 75 per cent. of the share capital of Vapenka Vitošov s.r.o (‘Vapenka’) for a cash consideration of €85.8 million. Vapenka is registered and incorporated in the Czech Republic. Vapenka is a lime producer with the key operations of extracting limestone from quarries as well further processing the limestone. The following table summarises the consideration paid for Vapenka and the values of the assets and equity assumed at the acquisition date. 253 Total consideration Cash Recognised amounts of assets and liabilities acquired Cash and cash equivalents Trade and other receivables Inventories Property, plant & equipment Intangible assets Trade and other payables Income tax payable Deferred tax liability Borrowings Provisions Total identifiable net assets Provisional goodwill Total consideration £’000 74,388 74,388 £’000 2,951 5,266 4,434 64,446 13,375 (4,617) (748) (12,394) (8) (442) 72,263 2,125 74,388 Notes to the financial statements Clogrennane Lime Limited On 4 January 2024, the Group acquired 100 per cent. of the share capital of Clogrennane Lime Limited (‘Clogrennane’) for a cash consideration of €58.2 million. Clogrennane is registered and incorporated in Ireland. Clogrennane is a lime producer with the key operations of extracting limestone from quarries as well further processing the limestone. The following table summarises the consideration paid for Clogrennane and the values of the assets and equity assumed at the acquisition date. Total consideration Cash Recognised amounts of assets and liabilities acquired Cash and cash equivalents Trade and other receivables Inventories Property, plant & equipment Trade and other payables Income tax payable Deferred tax liability Borrowings Total identifiable net assets Provisional goodwill Total consideration £’000 50,517 50,517 £’000 8,523 3,671 2,609 9,327 (4,265) (1,215) (986) (1) 17,663 32,854 50,517 On 4 March 2024, the Company issued notice of exercise of the call option, entered on 22 November 2023, to acquire the UK lime operations of CRH plc for a total consideration of €155 million. Completion is expected by the end of March 2024. FINANCIAL REPORTSIGMAROC ANNUAL REPORT 2023255 Company information DIRECTORS David Barrett (Executive Chairman) Max Vermorken (Chief Executive Officer) Garth Palmer (Chief Financial Officer) Tim Hall (Non-Executive Director) Simon Chisholm (Non-Executive Director) Jacques Emsens (Non-Executive Director) Axelle Henry (Non-Executive Director) COMPANY SECRETARY Julie Kuenzel REGISTERED OFFICE 6 Heddon Street London W1B 4BT COMPANY NUMBER 05204176 BANKERS Santander UK plc 2 Triton Square Regent’s Place London NW1 3AN BNP Paribas 10 Harewood Avenue London NW1 6AA NOMINATED & FINANCIAL ADVISER Liberum Capital Limited 25 Ropemaker Street London EC2Y 9LY JOINT BROKERS Liberum Capital Limited 25 Ropemaker Street London EC2Y 9LY Peel Hunt LLP 100 Liverpool Street London EC2M 2AT Deutsche Numis 45 Gresham Street London EC2V 7BF INDEPENDENT AUDITOR PKF Littlejohn LLP Statutory Auditor 15 Westferry Circus Canary Wharf London E14 4HD SOLICITORS Fieldfisher Riverbank House 2 Swan Lane London EC4R 3TT REGISTRARS Link Market Services Limited The Registry 34 Beckenham Road Beckenham Kent BR3 4TU SIGMAROC ANNUAL REPORT 2023 Fels site in Münchehof, Germany 6 Heddon St London W1B 4BT United Kingdom +44 20 7129 7828 info@sigmaroc.com www.sigmroc.com Printed by: perivan.com CBP00019082504183028

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