TIDMMCON
RNS Number : 6410S
Mincon Group Plc
13 March 2023
Mincon Group plc
("Mincon" or the "Group")
2022 Full Year Financial Results
Mincon Group plc (Euronext: MIO AIM:MCON), the Irish engineering
group specialising in the design, manufacture, sale and servicing
of rock drilling tools and associated products, announces its
results for the year ended 31 December 2022.
Change
2022 2021 in period
---------------------------- -------- ------- -----------
Product revenue: EUR'000 EUR'000
Sale of Mincon product 141,830 118,802 +19%
Sale of third-party product 28,178 25,560 +10%
Total revenue 170,008 144,362 +18%
-----------
Gross profit 54,070 48,763 +11%
---------------------------- -------- ------- -----------
EBITDA 27,531 25,212 +9%
---------------------------- -------- ------- -----------
Operating profit 19,749 18,107 +9%
---------------------------- -------- ------- -----------
Profit for the period 14,704 14,600 +1%
---------------------------- -------- ------- -----------
Financial Highlights
-- 2022 Group revenue of EUR170 million, representing 18% growth over 2021:
o Revenue across each of our three industries grew in 2022:
-- The stand out performance was in construction with revenue
growth of 45%
-- Mining, our largest industry, had revenue growth of 6%
-- Waterwell/geothermal revenue grew by 7%
o The vast majority of growth was organic, with the 2022
acquisition in the USA contributing 0.5% to our revenue growth for
the year
-- Gross profit grew by 11% in 2022 to EUR54.1 million, with
gross margin for the year of 31.8% (2021:33.8%):
-- Price increases implemented in H2 2022 offset the
well-reported manufacturing cost inflation experienced in H1
2022
-- 2022 gross margin is inclusive of significant Greenhammer and
Subsea project costs absorbed during H2 2022
-- EBITDA of EUR27.5 million in 2022, an increase of 9% over 2021
-- Final dividend of 1.05c per ordinary share recommended,
taking the total dividend for 2022 to 2.10c per ordinary share
(2021: 2.10c per ordinary share)
Operational and Business Development Highlights
-- Navigated the difficult environment in H1 2022 arising from
raw materials and freight availability pressures and maintained our
excellent customer service levels, conserving or growing market
share in our key markets. These pressures started to ease in H2
2022 and as a result we have started to normalise our shipping
arrangements and working capital position
-- Signing of the first commercial contract for the Greenhammer
system with a blue-chip mining contractor operating on a major gold
mine in Western Australia
-- Significant milestones achieved with our Subsea project and
the large diameter drilling system in Malaysia
-- The Group's order books are strong, and the opportunity for
our large R&D projects is ever more evident with critical work
continuing in 2023
Chief Executive's Review:
"Despite what was another challenging year characterised by
volatility and uncertainty in the global markets in which we
operate, I am pleased to report that Mincon delivered further
growth in revenue and profitability in 2022.
Revenues
We achieved revenue growth across all our industries and
finished the year ahead of 2021 by approximately 18%, driven by
continued organic growth.
Our construction segment delivered strong growth levels with
revenues up 45% on 2021 to EUR61.8 million as a result of a
particularly strong performance in North America where our direct
to market approach for mid-to-large projects delivered some
excellent contract wins.
Revenue in our mining business was up 6% in the year to EUR81.4
million, mostly through organic growth. Again, North America was
the standout here, while we also managed to grow our revenues in
Africa as COVID-19 restrictions eased there at the beginning of
2022. Conversely, our mining business in the EME and APAC regions
was more challenged during the period reflecting suspension of
trading with Russian customers, decisions by some customers to
reduce carried inventory and the effects of site access
restrictions in Australia.
Finally, our Waterwell / Geothermal segment achieved 7% revenue
growth in 2022 to EUR26.7 million, again primarily due to strong
performance in North America where our direct sales approach to
smaller contractors proved effective. Revenue in the EME region was
broadly flat in the year but we managed to protect our market share
in Geothermal consumables.
Profitability
2022 was characterised by heavy cost inflation globally, with
the biggest effect being felt in Europe, largely due to the war in
Ukraine. We continued to navigate poor freight conditions which
hampered our ability to provide the excellent service-levels our
customers expect, as well as requiring working capital investment
due to the higher levels of inventory required to manage extended
shipping transit times.
We introduced price increases in Q2 2022, and those were
implemented in Q3 2022. These largely offset the cost increases in
our manufacturing during the second half of 2022, however during
that period we significantly increased our development spend
through our Greenhammer and Subsea projects, as we continue to
invest strategically in long-term growth projects.
Freight conditions did start to improve toward the end of the
year, and this has encouraged us to look critically at our
inventory levels across the group. This will be a strong focus for
the year ahead and we have started a group wide project to unwind
our working capital position by reducing our inventory to better
match prevailing conditions.
As well as this we have largely succeeded in reducing our lead
times from key factories such as Shannon which has given the
breathing space to carefully plan our production based on forecasts
and to reduce our reliance on more expensive air freight
requirements which arose from time to time during 2022 to ensure
product delivery to key customers.
Our strong regional management structure continued to work well
throughout the year as it had previously demonstrated during the
COVID crisis. The last business area to open for travel was Western
Australia in March 2022. This opening up has meant that we have
been able to return to on-the-ground business development to
rebuild our revenues in the region.
Product Development
A significant part of rebuilding our revenues in the Australian
market will be through our Greenhammer project. As previously
announced in September 2022, we were pleased to announce the
signing of the first commercial contract for the Greenhammer system
with a blue-chip mining contractor operating on a major gold mine
in Western Australia, an important milestone after many years of
development work and a step toward revenue generation from this
project.
We have been on site with the system drilling blastholes with
our Mincon owned test rig. The Greenhammer system has performed to
expectations when operating. However, it has been challenging to
consistently deliver drilled metres due to reliability issues
encountered with the drill rig. As a result, we had to carry out an
extensive rebuild on the rig which we are confident will reliably
support the system. While this delay has been frustrating in the
short term, we remain confident in the long-term success of this
project and believe that the system will be transformational for
Mincon and the hard rock surface mining industry.
We believe that the successful roll out of this innovative
drilling system will require that we closely collaborate with rig
manufacturers to ensure the system is properly supported on a
reliable drill rig platform. With that in mind we have engaged in
discussions with rig manufacturers with a view to developing
mutually beneficial working relationships.
We have made significant progress on our subsea project with a
number of significant milestones achieved on the road to completing
our project objectives for the Disruptive Technology Innovation
Funded (DTIF) collaboration. The objective of the project is to
deliver a load tested anchor solution for the offshore wind turbine
industry. We remain confident that we will achieve the project
objectives and in so doing, we can commence the commercialisation
of this exciting opportunity in collaboration with our project
partner, Subsea Micropiles Limited.
We have successfully drilled test holes with our full-size
prototype water powered hammer system. This was test drilled in a
quarry close to our manufacturing plant in Shannon using an
excavator mounted drilling rig which was designed and manufactured
in our plant in Benton. This drill rig is one of three units that
will ultimately be assembled in our Shannon plant, to complete the
subsea drilling rig. The assembly work will commence in the first
half of 2023 with a view to being offshore for testing toward the
end of this year. There is a significant interest in our solution
from offshore developers and we have engaged with a top-class
multifunctional team to develop the full commercial solution which
will include expertise and delivery in areas such as large-scale
fabrication, subsea electronics, grouting, mooring lines and vessel
services including subsea remote operating vehicles.
Our engineering focus continues to be on more efficient drilling
systems, and we have made progress in 2022 on continuous
improvement initiatives for some of our current products which will
serve us well for the year ahead. We also finally got onsite in
Malaysia, after COVID-19 restrictions were lifted, to see our large
diameter drilling system drilling 1750 mm diameter holes. We were
very happy with the performance of the system and believe that
there is a great future for this concept within our product
offering for the large diameter construction piling industry.
Sustainability
In August 2022 we published our first sustainability report
which outlined our commitment to report on carbon emissions across
the group as well as targets to reduce them. Within the report, we
outlined the measures and initiatives to meet the company's
sustainability goals by 2040 and our intermediate goals by 2030. An
Environment and Sustainability sub-committee of the Board, led by
Dr. Pirita Mikkanen who joined the Board as a non-executive
director in 2022, was formed to ensure that our sustainability
goals are met, and appropriate new targets set. Key initial targets
for Mincon include a 50% reduction in manufacturing CO2 emissions
by 2030, to achieve net zero carbon emissions by 2040 and to have
100% of Mincon manufacturing sites using a mix of fossil-fuel free
energy sources by 2040. We look forward to reporting on the
progress we are making on meeting our targets during our ongoing
sustainability journey. Our next sustainability report is due to be
published in line with our interim results in August 2023.
Concluding comments
It is pleasing to be able to report on a further year of revenue
and profit growth for Mincon in 2022, during what proved to be a
challenging environment and, I am particularly encouraged with the
resilience displayed by the Company in meeting and overcoming the
challenges presented by inflation, the global supply chain and
residual market access restrictions due to COVID. Whilst these
challenges delayed our ambitions to fully realise the opportunities
and deliver on the growth platform we have created, we remain
confident that we will deliver in the year ahead as well as make
significant progress on our ambitious product development
projects.
These ambitious projects challenge us, but they are essential to
underpin our future, maintain our competitive advantages and to
drive our profitability and return on capital employed. It also
ensures our sustainability as we develop and attract future
engineering leaders within the Group.
I am very pleased and appreciative of the efforts and
perseverance of our global teams across engineering, manufacturing,
and customer service, in delivering these results for last year. I
would also like to acknowledge the continued support of our board
and investors and look forward to the challenges and opportunities
in the year ahead."
13 March 2023
For further information, please contact:
Mincon Group plc Tel: +353 (61) 361 099
Joe Purcell CEO
Mark McNamara CFO
Davy Corporate Finance
(Nominated Adviser, Euronext Growth Listing Sponsor and Joint
Broker) Tel: +353 (1) 679 6363
Anthony Farrell
Daragh O'Reilly
Shore Capital (Joint Broker) Tel: +44 (0) 20 7408 4090
Malachy McEntyre
Mark Percy
Daniel Bush .
Consolidated Income Statement for the year ended 31 December
2022
2022 2021
Notes EUR'000 EUR'000
----------------------------------- ------- ---------- ----------
Continuing operations
Revenue 4 170,008 144,362
Cost of sales 6 (115,938) (95,599)
---------- ----------
Gross profit 54,070 48,763
Operating costs 6 (34,321) (30,656)
---------- ----------
Operating profit 19,749 18,107
Finance costs 7 (1,479) (927)
Finance income 26 20
Foreign exchange gain 469 630
Movement on deferred consideration 22 (31) (2)
Profit before tax 18,734 17,828
-----------------------------------
Income tax expense 11 (4,030) (3,228)
----------------------------------- ------- ---------- ----------
Profit for the period 14,704 14,600
----------------------------------- ------- ---------- ----------
Earnings per Ordinary Share
Basic earnings per share, 20 6.92 6.87
Diluted earnings per share, 20 6.85 6.69
----------------------------------- ------- ---------- ----------
The accompanying notes are an integral part of these financial
statements.
Consolidated Statement of Comprehensive Income for the year
ended 31 December 2022
2022 2021
EUR'000 EUR'000
--------------------------------------------------- -------- --------
Profit for the year 14,704 14,600
Other comprehensive loss:
Items that are or may be reclassified subsequently
to profit or loss:
Foreign currency translation - foreign operations (418) 2,865
Other comprehensive (loss)/income for the year (418) 2,865
--------------------------------------------------- -------- --------
Total comprehensive income for the year 14,286 17,465
--------------------------------------------------- -------- --------
The accompanying notes are an integral part of these financial
statements.
Consolidated Statement of Financial Position as at 31 December
2022
2022 2021
Notes EUR'000 EUR'000
------------------------------------- ----- ------------------ -----------------
Non-Current Assets
Intangible assets and goodwill 12 40,109 40,157
Property, plant and equipment 13 53,004 50,660
Deferred tax asset 11 1,994 1,075
Total Non-Current Assets 95,107 91,892
-------------------------------------- ----- ------------------ -----------------
Current Assets
Inventory and capital equipment 14 76,911 63,050
Trade and other receivables 15a 23,872 25,110
Prepayments and other current assets 15b 12,727 8,822
Current tax asset 361 521
Cash and cash equivalents 22 15,939 19,049
Total Current Assets 129,810 116,552
-------------------------------------- ----- ------------------ -----------------
Total Assets 224,917 208,444
-------------------------------------- ----- ------------------ -----------------
Equity
Ordinary share capital 19 2,125 2,125
Share premium 67,647 67,647
Undenominated capital 39 39
Merger reserve (17,393) (17,393)
Share based payment reserve 2,505 2,695
Foreign currency translation reserve (5,586) (5,168)
Retained earnings 104,449 94,207
-------------------------------------- ----- ------------------ -----------------
Total Equity 153,786 144,152
-------------------------------------- ----- ------------------ -----------------
Non-Current Liabilities
Loans and borrowings 18 26,971 23,265
Deferred tax liability 11 2,046 1,622
Deferred consideration 22 1,705 4,224
Other liabilities 833 852
Total Non-Current Liabilities 31,555 29,963
-------------------------------------- ----- ------------------ -----------------
Current Liabilities
Loans and borrowings 18 14,973 11,205
Trade and other payables 16 14,420 15,683
Accrued and other liabilities 16 8,699 6,027
Current tax liability 1,484 1,414
Total Current Liabilities 39,576 34,329
-------------------------------------- ----- ------------------ -----------------
Total Liabilities 71,131 64,292
-------------------------------------- ----- ------------------ -----------------
Total Equity and Liabilities 224,917 208,444
-------------------------------------- ----- ------------------ -----------------
The accompanying notes are an integral part of these financial
statements.
On behalf of the Board:
Hugh McCullough Joseph Purcell
Chairman Chief Executive Officer
Consolidated Statement of Cash Flows for the year ended 31
December 2022
2022 2021
Notes EUR'000 EUR'000
------------------------------------------------- ------ ------------------- -----------------
Operating activities:
Profit for the period 14,704 14,600
Adjustments to reconcile profit to net cash
provided by operating activities:
Depreciation 13 7,782 7,105
Amortisation of intellectual property 12 190 105
Amortisation of product development 12 121 -
Movement on deferred consideration 31 2
Finance cost 1,479 927
Finance income (26) (20)
Loss/(Gain) on sale of property, plant and
equipment 32 (177)
Income tax expense 4,030 3,228
Other non-cash movements (458) (633)
------------------------------------------------- ------ ------------------- -----------------
27,885 25,137
Changes in trade and other receivables 1,354 (2,695)
Changes in prepayments and other assets (3,848) (4,502)
Changes in inventory (13,463) (7,468)
Changes in trade and other payables 1,632 5,240
Cash provided by operations 13,560 15,712
Interest received 26 20
Interest paid (1,479) (927)
Income taxes paid (4,042) (3,627)
------------------------------------------------- ------ ------------------- -----------------
Net cash provided by operating activities 8,065 11,178
------------------------------------------------- ------ ------------------- -----------------
Investing activities
Purchase of property, plant and equipment (7,309) (7,567)
Proceeds from the sale of property, plant
and equipment 996 543
Investment in intangible assets (286) (1,139)
Proceeds from the issuance of share capital - 8
Acquisitions of subsidiary, net of cash acquired (1,014) (681)
Investment in acquired intangible assets (147) (275)
Payment of deferred consideration (2,628) (2,082)
Proceeds from the sale of subsidiaries - 111
Net cash used in investing activities (10,388) (11,082)
------------------------------------------------- ------ ------------------- -----------------
Financing activities
Dividends paid (4,462) (6,693)
Repayment of borrowings 18 (4,107) (3,262)
Repayment of lease liabilities 18 (3,993) (3,590)
Drawdown of loans 18 11,478 15,236
Purchase of NCI - -
Net cash provided by/(used in) financing
activities (1,084) 1,691
------------------------------------------------- ------ ------------------- -----------------
Effect of foreign exchange rate changes on
cash 297 217
------------------------------------------------- ------ ------------------- -----------------
Net increase in cash and cash equivalents (3,110) 2,004
------------------------------------------------- ------ ------------------- -----------------
Cash and cash equivalents at the beginning
of the year 19,049 17,045
------------------------------------------------- ------ ------------------- -----------------
Cash and cash equivalents at the end of the
year 15,939 19,049
------------------------------------------------- ------ ------------------- -----------------
The accompanying notes are an integral part of these financial
statements
1. Description of business
The consolidated financial statements of Mincon Group plc (also
referred to as "Mincon" or "the Group") comprises the Company and
its subsidiaries (together referred to as "the Group"). The
companies registered address is Smithstown Industrial Estate,
Smithstown, Shannon, Co. Clare, Ireland.
The Group is an Irish engineering Group, specialising in the
design, manufacturing, sale and servicing of rock drilling tools
and associated products. Mincon Group Plc is domiciled in Shannon,
Ireland.
On 26 November 2013, Mincon Group plc was admitted to trading on
the Euronext Growth and the Alternative Investment Market (AIM) of
the London Stock Exchange.
2. Basis of preparation
These consolidated financial statements have been prepared in
accordance with the International Financial Reporting Standards as
adopted by the European Union (EU IFRS), which comprise standards
and interpretations approved by the International Accounting
Standards Board (IASB), and endorsed by the EU.
The Group's financial statements consolidate those of the parent
company and all of its subsidiaries as of 31 December 2022. All
subsidiaries have a reporting date of 31 December.
The accounting policies set out in note 3 have been applied
consistently in preparing the Group and Company financial
statements for the years ended 31 December 2022 and 31 December
2021.
The Group and Company financial statements are presented in
euro, which is the functional currency of the Company and also the
presentation currency for the Group's financial reporting. Unless
otherwise indicated, the amounts are presented in thousands of
euro. These financial statements are prepared on the historical
cost basis.
The preparation of the consolidated financial statements in
conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of policies
and reported amounts of assets and liabilities, income and
expenses. The judgements, estimates and associated assumptions are
based on historical experience and various other factors that are
believed to be reasonable under the circumstances. Actual results
could differ materially from these estimates. The areas involving a
high degree of judgement and the areas where estimates and
assumptions are critical to the consolidated financial statements
are discussed in note 3.
The directors believe that the Group has adequate resources to
continue in operational existence for the foreseeable future and
that it is appropriate to continue to prepare our consolidated
financial statements on a going concern basis.
3. Significant accounting principles, accounting estimates and
judgements
The accounting principles as set out in the following paragraphs have,
unless otherwise stated, been consistently applied to all periods
presented in the consolidated financial statements and for all entities
included in the consolidated financial statements.
The following new and amended standards are not expected to have a
significant impact on the Group's consolidated financial statements:
New Standards adopted as at 1 January 2022
-- IFRS 3 References to the Conceptual Framework
-- IAS 16 Proceeds before Intended Use
-- IAS 37 Onerous Contracts - Cost of Fulfilling a Contract
-- IFRS 1, IFRS 9, IFRS 16, IAS 41 Annual Improvements to IFRS Standards
2018-2020 Cycle
Standards, amendments and Interpretations to existing Standards that
are not yet effective
-- IIAS 1 Classification of Liabilities as Current or Non-current
-- IAS 1 Disclosure of Accounting Policies (Amendments to IAS 1 and
IFRS Practice Statement 2)
-- IAS 12 Deferred Tax related to Assets and Liabilities arising from
a Single Transaction
(Amendments to IAS 12)
-- IAS 1 Disclosure of Accounting Policies
-- IAS 8 Definition of Accounting Estimates
3. Significant accounting principles, accounting estimates and judgements
(continued)
Segment Reporting
An operating segment is a component of the Group that engages in busi-ness
activities from which it may earn revenue and incur expenses, and
for which discrete financial information is available. The operating
result of the operating segment is reviewed regularly by the Board
of Directors, the chief operating decision maker, to make deci-sions
about allocation of resources and also to assess performance.
Results are reported in a manner consistent with the internal reporting
provided to the chief operating decision maker (CODM). Our CODM has
been identified as the Board of Directors.
The Group has determined that it has one reportable segment (see Note
5). The Group is managed as a single business unit that sells drilling
equipment, primarily manufactured by Mincon manufacturing sites.
Revenue Recognition
The Group is involved in the sale and servicing of rock drilling tools
and associated products. Revenue from the sale of these goods and
services to customers is measured at the fair value of the consideration
received or receivable (excluding sales taxes). The Group recognises
revenue when it transfers control of goods to a customer or has completed
a service over a set period (typically one month) for a customer.
The following provides information about the nature and timing of
the satisfaction of performance obligations in contracts with customers,
including significant payment terms, and the related revenue recognition
policies.
Customers obtain control of products when one of the following conditions
are satisfied:
1. The goods have been picked up by the customer from Mincon's premises.
2. When goods have been shipped by Mincon, the goods are delivered
to the customer and have been accepted at their premises, or;
3. The customer accepts responsibility of the goods during transit
that is in line with international commercial terms.
Where the Group provides a service to a customer, who also purchases
Mincon manufactured product from the Group, the revenue associated
with this service is separately identified in a set period (typically
one month) and is recognised in the Groups revenue as it occurs.
Invoices are generated when the above conditions are satisfied. Invoices
are payable within the timeframe as set in agreement with the customer
at the point of placing the order of the product or service. Discounts
are provided from time-to-time to customers.
Customers may be permitted to return goods where issues are identified
with regard to quality of the product. Returned goods are exchanged
only for new goods or a credit note. No cash refunds are offered.
Where the customer is permitted to return an item, revenue is recognised
to the extent that it is highly probable that a significant reversal
in the amount of cumulative revenue recognised will not occur. Therefore,
the amount of revenue recognised is adjusted for expected returns,
which are estimated based on the historical data for specific types
of products. In these circumstances, a refund liability and a right
to recover returned goods asset are recognised.
The Group has elected to apply IFRS 15 Practical expedient, the Group
need not adjust the promised amount of consideration for the effects
of a significant financing component if the entity expects, at contract
inception, that the period between when the Group transfers a promised
good or service to a customer and when the customer pays for that
good or service will be one year or less.
Government Grants
Amounts recognised in the profit and loss account are presented under
the heading Operating Costs on a systematic basis in the periods in
which the expenses are recognised, unless the conditions for receiving
the grant are met after the related expenses have been recognised.
In this case, the grant is recognised when it is receivable. Current
government grants have no conditions attached.
3. Significant accounting principles, accounting estimates and
judgements (continued)
Earnings per share
Basic earnings per share is calculated based on the profit for the
year attributable to owners of the Company and the basic weighted
average number of shares outstanding. Diluted earnings per share
is calculated based on the profit for the year attributable to owners
of the Company and the diluted weighted average number of shares
outstanding.
Taxation
Current tax comprises the expected tax payable or receivable on
the taxable income or loss for the year and any adjustment to the
tax payable or receivable in respect of previous years. The amount
of current tax payable or receivable is the best estimate of the
tax amount expected to be paid or received that reflects
uncertainty related to income taxes, if any. It is measured using
tax rates enacted or substantively enacted at the reporting date.
Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain
criteria are met.
Deferred tax
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for:
-- not a business combination and that affects neither
accounting nor taxable profit or loss;
-- temporary differences related to investments in subsidiaries,
associates and joint arrangements to the extent that the Group is
able to control the timing of the reversal of the temporary
differences and it is probable that they will not reverse in the
foreseeable future; and
-- taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused
tax credits and deductible temporary differences to the extent that
it is probable that future taxable profits will be available
against which they can be used. Future taxable profits are
determined based on the reversal of relevant taxable temporary
differences. If the amount of taxable temporary differences is
insufficient to recognise a deferred tax asset in full, then future
taxable profits, adjusted for reversals of existing temporary
differences, are considered, based on the business plans for
individual subsidiaries in the Group. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be
realised; such reductions are reversed when the probability of
future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each
reporting date and recognised to the extent that it has become
probable that future taxable profits will be available against
which they can be used.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, using tax
rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences
that would follow from the manner in which the Group expects, at
the reporting date, to recover or settle the carrying amount of its
assets and liabilities.
Deferred tax assets and liabilities are offset only if certain
criteria are met.
Leases
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Group uses the
definition of a lease in IFRS 16.
(i) As a lessee
At commencement or on modification of a contract that contains a
lease component, the Group allocates the consideration in the
contract to each lease component on the basis of its relative
stand-alone prices
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and
an
3. Significant accounting principles, accounting estimates and
judgements (continued)
Leases (continued)
estimate of costs to dismantle and remove the underlying asset
or to restore the underlying asset or the site on which it is
located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the end of the
lease term, unless the lease transfers ownership of the underlying
asset to the Group by the end of the lease term or the cost of the
right-of-use asset reflects that the Group will exercise a purchase
option. In that case the right-of-use asset will be depreciated
over the useful life of the underlying asset, which is determined
on the same basis as those of property and equipment. In addition,
the right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements of the
lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate.
The Group determines its incremental borrowing rate by obtaining
interest rates from various external financing sources.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate,
if there is a change in the Group's estimate of the amount expected
to be payable under a residual value guarantee, if the Group
changes its assessment of whether it will exercise a purchase,
extension or termination option or if there is a revised
in-substance fixed lease payment.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced to
zero.
(ii) As a lessor
At inception or on modification of a contract that contains a
lease component, the Group allocates the consideration in the
contract to each lease component on the basis of their relative
stand-alone prices.
When the Group acts as a lessor, it determines at lease
inception whether each lease is a finance lease or an operating
lease.
When the Group is an intermediate lessor, it accounts for its
interests in the head lease and the sub-lease separately. It
assesses the lease classification of a sub-lease with reference to
the right-of-use asset arising from the head lease, not with
reference to the underlying asset.
Short term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and
lease liabilities for leases of low-value assets and short-term
leases, including IT equipment. The Group recognises the lease
payments associated with these leases as an expense on a
straight-line basis over the lease term.
Inventories and capital equipment
Inventories and capital equipment (rigs) are valued at the lower
of cost or net realisable value. Net realisable value is the
estimated selling price in the ordinary course of business less the
estimated costs of completion and selling expenses. The cost of
inventories is based on the first-in, first-out principle and
includes the costs of acquiring inventories and bringing them to
their existing location and condition. Inventories manufactured by
the Group and work in progress include an appropriate share of
production overheads based on normal operating capacity.
Inventories are reported net of deductions for obsolescence.
Intangible Assets and Goodwill
Goodwill
The Group accounts for acquisitions using the purchase
accounting method as outlined in IFRS 3 Business Combinations.
Goodwill is not amortised and is tested annually.
Intangible assets
Expenditure on research activities is recognised in profit or
loss as incurred.
3. Significant accounting principles, accounting estimates and
judgements (continued)
Intangible Assets and Goodwill (continued)
Development expenditure is capitalised only if the Group can
demonstrate if the expenditure can be measured reliably, the
product or process is technically and commercially feasible, future
economic benefits are probable and the Group intends to and has
sufficient resources to complete development and to use or sell the
asset. Otherwise, it is recognised in the profit or loss as
incurred. Subsequent to initial recognition, development
expenditure is measured at cost less accumulated amortisation and
any accumulated impairment losses.
Acquired IP which has been obtained at a cost that can be
measured reliably, and that meets the definition and recognition
criteria of IAS38, will be accounted for as an intangible
asset.
Recognising an internally developed intangible assets post the
development phase once the company has assessed the development
phase is complete and the asset is ready for use. Internally
generated assets have an infinite life. They will be amortised over
a fifteen-year period on a straight line basis. Currently there is
fourteen years and nine months remaining on the amortisation.
Foreign Currency
Foreign currency transactions
Transactions in foreign currencies (those which are denominated
in a currency other than the functional currency) are translated at
the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies
are translated using the foreign exchange rate at the statement of
financial position date. Exchange gains and losses related to trade
receivables and payables, other financial assets and payables, and
other operating receivables and payables are separately presented
on the face of the income statement.
Exchange rate differences on translation to functional currency
are reported in profit or loss, except when reported in other
comprehensive income for the translation of intra-group receivables
from, or liabilities to, a foreign operation that in substance is
part of the net investment in the foreign operation.
Exchange rates for major currencies used in the various
reporting periods are shown in note 22.
Translation of accounts of foreign entities
The assets and liabilities of foreign entities, including
goodwill and fair value adjustments arising on consolidation, are
translated to euro at the exchange rates ruling at the reporting
date. Revenues, expenses, gains, and losses are translated at
average exchange rates, when these approximate the exchange rate
for the respective transaction. Foreign exchange differences
arising on translation of foreign entities are recognised in other
comprehensive income and are accumulated in a separate component of
equity as a translation reserve. On divestment of foreign entities,
the accumulated exchange differences, are recycled through profit
or loss, increasing or decreasing the profit or loss on
divestments.
Business combinations and consolidation
The consolidated financial statements include the financial
statements of the Group and all companies in which Mincon Group
plc, directly or indirectly, has control. The Group controls an
entity when it 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. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date on which control commences until
the date on which control ceases.
The consolidated financial statements have been prepared in
accordance with the acquisition method.
According to this method, business combinations are seen as if
the Group directly acquires the assets and assumes the liabilities
of the entity acquired. At the acquisition date, i.e., the date on
which control is obtained, each identifiable asset acquired, and
liability assumed is recognised at its acquisition-date fair
value.
Consideration transferred is measured at its fair value. It
includes the sum of the acquisition date fair values of the assets
transferred, liabilities incurred to the previous owners of the
acquiree, and equity interests issued by the Group. Deferred
consideration is initially measured at its acquisition-date fair
value. Any subsequent change in such fair value is recognised in
profit or loss, unless the deferred consideration is classified as
equity. In that case, there is no remeasurement and the subsequent
settlement is accounted for within equity. Deferred consideration
arises in the current year where part payment for an acquisition is
deferred to the following year or years.
3. Significant accounting principles, accounting estimates and
judgements (continued)
Business combinations and consolidation (continued)
Transaction costs that the Group incurs in connection with a
business combination, such as legal fees, due diligence fees, and
other professional and consulting fees are expensed as
incurred.
Goodwill is measured as the excess of the fair value of the
consideration transferred, the amount of any non-controlling
interest in the acquiree, and the fair value of the Group's
previously held equity interest in the acquiree (if any) over the
net of acquisition-date fair values of the identifiable assets
acquired and liabilities assumed. Goodwill is not amortised but
tested for impairment at least annually.
Non-controlling interest is initially measured either at fair
value or at the non-controlling interest's proportionate share of
the fair value of the acquiree's identifiable net assets. This
means that goodwill is either recorded in "full" (on the total
acquired net assets) or in "part" (only on the Group's share of net
assets). The choice of measurement basis is made on an
acquisition-by-acquisition basis.
Earnings from the acquirees are reported in the consolidated
income statement from the date of control.
Intra-group balances and transactions such as income, expenses
and dividends are eliminated in preparing the consolidated
financial statements. Profits and losses resulting from intra-group
transactions that are recognised in assets, such as inventory, are
eliminated in full, but losses are only eliminated to the extent
that there is no evidence of impairment.
Property, plant and equipment
Items of property, plant and equipment are carried at cost less
accumulated depreciation and impairment losses. Cost of an item of
property, plant and equipment comprises the purchase price, import
duties, and any cost directly attributable to bringing the asset to
its location and condition for use. The Group capitalises costs on
initial recognition and on replacement of significant parts of
property, plant and equipment, if it is probable that the future
economic benefits embodied will flow to the Group and the cost can
be measured reliably. All other costs are recognised as an expense
in profit or loss when incurred.
Depreciation
Depreciation is calculated based on cost using the straight-line
method over the estimated useful life of the asset. The following
useful lives are used for depreciation:
Years
Buildings 20-30
Plant and equipment 3-10
The depreciation methods, useful lives and residual values are
reassessed annually. Land is not depreciated.
Right of use assets are depreciated using the straight-line
method over the estimated useful life of the asset being the
remaining duration of the lease from inception date of the asset.
The depreciation methods, useful lives and residual values are
reassessed annually.
Financial Assets and Liabilities
Classification and initial measurement of financial assets
financial liabilities.
Financial assets and liabilities are recognised at fair value
when the Group becomes a party to the contractual provisions of the
instrument. Purchases and sales of financial assets are accounted
for at trade date, which is the day when the Group contractually
commits to acquire or dispose of the assets. Trade receivables are
recognised once the responsibility associated with control of the
product has transferred to the customer. Liabilities are recognised
when the other party has performed and there is a contractual
obligation to pay. A financial asset and a financial liability are
offset, and the net amount presented in the statement of financial
position when there is a legally enforceable right to set off the
recognised amounts and there is an intention to either settle on a
net basis or to realise the asset and settle the liability
simultaneously.
The classification is determined by both:
-- the entity's business model for managing the financial asset,
and
-- the contractual cash flow characteristics of the financial
asset.
3. Significant accounting principles, accounting estimates and
judgements (continued)
Financial Assets and Liabilities ( continued)
Subsequent measurement of financial assets and financial
liabilities
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets
meet the following conditions (and are not designated as
FVTPL):
-- they are held within a business model whose objective is to
hold the financial assets and collect its contractual cash flows,
and
-- the contractual terms of the financial assets give rise to
cash flows that are solely payments of principal and interest on
the principal amount outstanding.
After initial recognition, these are measured at amortised cost
using the effective interest method. Discounting is omitted where
the effect of discounting is immaterial.
Financial liabilities at amortised cost
Subsequently, financial liabilities are measured at amortised
cost using the effective interest method.
Derecognition (fully or partially) of a financial asset occurs
when the rights to receive cash flows from the financial
instruments expire or are transferred and substantially all of the
risks and rewards of ownership have been removed from the Group.
Financial assets are assessed at each reporting date. The Group
derecognises (fully or partially) a financial liability when the
obligation specified in the contract is discharged or otherwise
expires.
Impairment of financial assets
Financial assets are assessed from initial recognition and at
each reporting date to determine whether there is a requirement for
impairment. Financial assets require there expected lifetime losses
to be recognised from initial recognition.
IFRS 9's impairment requirements use forward-looking information
to recognise expected credit losses - the 'expected credit loss
(ECL) model'. Instruments within the scope of the requirements
included loans and other debt-type financial assets measured at
amortised cost, trade and other receivables.
The Group considers a broader range of information when
assessing credit risk and measuring expected credit losses,
including past events, current conditions, reasonable and
supportable forecasts that affect the expected collectability of
the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made
between:
-- financial instruments that have not deteriorated
significantly in credit quality since initial recognition or that
have low credit risk ('Stage 1') and
-- financial instruments that have deteriorated significantly in
credit quality since initial recognition and whose credit risk is
not low ('Stage 2').
'Stage 3' would cover financial assets that have objective
evidence of impairment at the reporting date.
'12-month expected credit losses' are recognised for the first
category (ie Stage 1) while 'lifetime expected credit losses' are
recognised for the second category (ie Stage 2).
Measurement of the expected credit losses is determined by a
probability-weighted estimate of credit losses over the expected
life of the financial instrument.
Trade and other receivables
The Group makes use of a simplified approach in accounting for
trade and other receivables and records the loss allowance as
lifetime expected credit losses. These are the expected shortfalls
in contractual cash flows, considering the potential for default at
any point during the life of the financial instrument. In
calculating, the Group uses its historical experience, external
indicators and forward-looking information to calculate the
expected credit losses using a provision matrix.
The Group assesses impairment of trade and other receivables on
a collective basis as they possess shared credit risk
characteristics they have been grouped based on the days past
due.
3. Significant accounting principles, accounting estimates and
judgements (continued)
Financial Assets and Liabilities ( continued)
Borrowing costs
All borrowing costs are expensed in accordance with the
effective interest rate method.
Equity
Shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares and share options are
recognised as a deduction from equity, net of any tax effect.
Financial instruments carried at fair value: Deferred
consideration
Fair value is calculated based on the present value of future
principal and interest cash flows, discounted at the market rate of
interest at the reporting date. These are set amounts detailed in
each contract.
Finance income and expenses
Finance income and expense are included in profit or loss using
the effective interest method.
Contingent liabilities
A contingent liability is a possible obligation or a present
obligation that arises from past events that is not reported as a
liability or provision, as it is not probable that an outflow of
resources will be required to settle the obligation or that a
sufficiently reliable calculation of the amount cannot be made.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with maturities of three months or less..
Provisions
A provision is recognised in the statement of financial position
when the Group has a legal or constructive obligation as a result
of a past event, it is probable that an outflow of economic
benefits will be required to settle the obligation, and the outflow
can be estimated reliably. The amount recognised as a provision is
the best estimate of the expenditure required to settle the present
obligation at the reporting date. If the effect of the time value
of money is material, the provision is determined by discounting
the expected future cash flows at a pre-tax rate that reflects the
current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
A provision for restructuring is recognised when the Group has
approved a detailed and formal restructuring plan and the
restructuring has either commenced or been announced publicly.
Future operating losses are not provided for.
Defined contribution plans
A defined contribution retirement benefit plan is a
post-employment benefit plan under which the Group pays fixed
contributions into a separate entity and will have no legal or
constructive obligation to pay further amounts. Obligations for
contributions to defined contribution retirement benefit plans are
recognised as an employee benefit expense in profit or loss when
employees provide services entitling them to the contributions.
Share-based payment transactions
The Group operates a long-term incentive plan which allows the
Company to grant Restricted Share Awards ("RSAs") to executive
directors and senior management. All schemes are equity settled
arrangements under IFRS 2 Share-based Payment.
The grant-date fair value of share-based payment awards granted
to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the
employees become unconditionally entitled to the awards. The amount
recognised as an expense is adjusted to reflect the number of
awards for which the related service and non-market performance
conditions are expected to be met, such that the amount ultimately
recognised as an expense is based on the number of awards that meet
the related service and non-market performance conditions at the
vesting date. It is reversed only where entitlements do not vest
because all
non-market performance conditions have not been met or where an
employee in receipt of share entitlements leaves the Group before
the end of the vesting period and forfeits those options in
consequence.
3. Significant accounting principles, accounting estimates and
judgements (continued)
Critical accounting estimates and judgements
The preparation of financial statements requires management's
judgement and the use of estimates and assumptions that affect the
amounts reported in the consolidated financial statements and
accompanying notes. These estimates and associated assumptions are
based on historical experience and various other factors that are
believed to be reasonable under the prevailing circumstances.
Actual results may differ from those estimates. The estimates and
assumptions are reviewed on an ongoing basis. Revisions to the
accounting estimates are recognised in the period in which they are
revised and in any future periods affected.
Following are the estimates and judgements which, in the opinion
of management, are significant to the underlying amounts included
in the financial reports and for which there is a significant risk
that future events or new information could entail a change in
those estimates or judgements.
Deferred consideration
The deferred consideration payable represents management's best
estimate of the fair value of the amounts that will be payable,
discounted as appropriate using a market interest rate. The fair
value was estimated by assigning probabilities, based on
management's current expectations, to the potential pay-out
scenarios. The fair value of deferred consideration is primarily
dependent on the future performance of the acquired businesses
against predetermined targets and on management's current
expectations thereof.
Climate-related matters
Consistent with the prior year, as at 31 December 2022, the
Group has not identified significant risks induced by climate
changes that could negatively and materially affect the estimates
and judgements currently used in the Group's financial statements.
Management continuously assesses the impact of climate-related
matters.
Goodwill
The initial recognition of goodwill represents management' best
estimate of the fair value of the acquired entities value less the
identified assets acquired.
During the annual impairment assessment over goodwill,
management calculate the recoverable value of the group using their
best estimate of the discounted future cash flows of the group. The
fair values were estimated using management's current and future
projections of the Mincon Group's performance as well as
appropriate data inputs and assumptions.
Useful life and residual values of Intangible Assets
Distinguishing the research and development phase, determining
the useful life, and deciding whether the recognition requirements
for the capitalisation of development costs of new projects are met
all require judgement. These judgements are based on historical
experience and various other factors that are believed to be
reasonable under the prevailing circumstances.
After capitalisation, management monitors whether the
recognition requirements continue to be met and whether there are
any indicators that capitalised costs may be impaired.
Trade and other receivables
Trade and other receivables are included in current assets,
except for those with maturities more than 12 months after the
reporting date, which are classified as non-current assets. The
Group estimates the risk that receivables will not be paid and
provides for doubtful debts in line with IFRS 9.
The Group applies the simplified approach to providing for
expected credit losses (ECL) permitted by IFRS 9 Financial
Instruments, which requires expected lifetime losses to be
recognised from initial recognition of the receivables and
considered at each reporting date. Loss rates are calculated using
a "roll rate" method based on the probability of a receivable
progressing through successive chains of non-payment to
write-off.
Trade receivables are written off when there is no reasonable
expectation of recovery, such as a debtor failing to engage in a
repayment plan with the company. Where recoveries are made, these
are recognised in the Consolidated Income Statement.
4. Revenue
In the following table, revenue is disaggregated between Mincon
manufactured product and product that is purchased outside the
Group and resold through Mincon distribution channels.
2022 2021
EUR'000 EUR'000
---------------------------- ------- -------
Product revenue:
Sale of Mincon product 141,830 118,802
Sale of third party product 28,178 25,560
Total revenue 170,008 144,362
---------------------------- ------- -------
The Group's revenue disaggregated by primary geographical
markets are disclosed in Note 5.
5. Operating Segment
The CODM assesses operating segment performance based on
operating profit. Segment revenue for the year ended 31 December
2021 of EUR170 million (2020: EUR144.4 million) is wholly derived
from sales to external customers.
Entity-wide disclosures
The business is managed on a worldwide basis but operates
manufacturing facilities and sales offices in Ireland, UK, Sweden,
Finland, South Africa, Western Australia, the United States and
Canada and sales offices in ten other locations including Eastern
Australia, South Africa, France, Spain, Namibia, Sweden, Chile and
Peru. In presenting information on geography, revenue is based on
the geographical location of customers and non-current assets based
on the location of these assets.
Revenue by region (by location of customers):
2022 2021
EUR'000 EUR'000
----------------------------------------- ------- -------
Region:
I reland 2,974 1,859
Americas 69,752 45,908
Australasia 16,882 17,327
Europe, Middle East, Africa 80,400 79,268
Total revenue from continuing operations 170,008 144,362
----------------------------------------- ------- -------
During 2022, Mincon had sales in the USA of EUR42.4 million
(2020: EUR24.4 million), this contributed to more than 10% of the
entire Group's sales for 2022.
2022 2021
EUR'000 EUR'000
Region:
Americas 17,752 14,682
Australasia 12,252 11,838
Europe, Middle East, Africa 63,109 64,297
Total non-current assets(1) 93,113 90,817
------------------------------------------------------ ------- -------
(1) Non-current assets exclude deferred tax assets.
During 2022, Mincon held non-current assets (excluding deferred
tax assets) in Ireland of EUR17.6 million (2021: EUR18.3 million),
in the USA of EUR12.5 million (2021: EUR10.7 million) these
separately contributed to more than 10% of the entire Group's
non-current assets (excluding deferred tax assets) for 2022.
5. Operating Segment (continued)
2022 2021
EUR'000 EUR'000
Region:
Americas 6,839 4,577
Australasia 2,555 2,290
Europe, Middle East, Africa 20,115 21,474
Total non-current liabilities(1) 29,509 28,341
--------------------------------------------------- ------- -------
(1) Non-current liabilities exclude deferred tax
liabilities.
During 2022, Mincon held non-current liabilities (excluding
deferred tax liabilities) in Ireland of EUR13.5 million (2021:
EUR11.6 million), this contributed to more than 10% of the entire
Group's non-current liabilities (excluding deferred tax
liabilities) for 2022.
6. Cost of Sales and operating expenses
Included within cost of sales and operating costs were the
following major components:
Cost of sales
2022 2021
EUR'000 EUR'000
------------------------------------ ------- -------
Raw materials 45,523 37,081
Third party product purchases 21,838 19,275
Employee costs 23,093 19,764
Depreciation (note 13) 5,194 4,801
In bound costs on purchases 4,759 3,772
Energy costs 3,116 2,188
Maintenance of machinery 2,120 1,711
Subcontracting 7,139 5,463
Amortisation of product development 121 -
Other 3,035 1,544
Total cost of sales 115,938 95,599
------------------------------------ ------- -------
The Group invested approximately EUR4.4 million on research and
development projects in 2022 (2021: EUR3.9 million). EUR4.1 million
of this has been expensed in the period (2021: EUR2.8 million),
with the balance of EUR285,000 of development costs capitalised
(2021: EUR1.1 million) (note 12).
Operating costs
2022 2021
EUR'000 EUR'000
----------------------------------------------- ------- -------
Employee costs (including director emoluments) 20,370 18,615
Depreciation (note 13) 2,588 2,304
Amortisation of acquired IP 190 105
Travel 1,927 1,238
Professional costs 2,637 2,589
Administration 2,997 2,841
Marketing 706 694
Legal cost 846 629
Other 2,060 1,641
Total other operating costs 34,321 30,656
----------------------------------------------- ------- -------
The Group recognised EUR119,000 in Government Grants in 2021
(2021: EUR450,000). These grants differ in structure from country
to country, they primarily relate to personnel costs.
7. Finance costs
2022 2021
EUR'000 EUR'000
--------------------------------- ------- -------
Interest on lease liabilities 609 684
Interest on loans and borrowings 870 243
--------------------------------- ------- -------
Finance costs 1,479 927
--------------------------------- ------- -------
8. Employee information
2022 2021
EUR'000 EUR'000
--------------------------------------------------------- -------- -------
Wages and salaries - excluding directors 36,085 31,830
Wages, salaries, fees and retirement benefit - directors
(note 10) 868 797
Social security costs 4,428 3,357
Retirement benefit costs of defined contribution
plans 2,272 1,959
Share based payment expense (note 21) (190) 436
Total employee costs 43,463 38,379
--------------------------------------------------------- -------- -------
In addition to the above employee costs, the Group capitalised payroll
costs of EUR151,000 in 2022 (2021: EUR700,000) in relation to development.
At 31 December 2022, there was EUR234,000 (2020: EUR256,000) accrued
for and not in paid pension contributions.
The average number of employees was as follows:
2022 2021
Number Number
------------------------------------------------------------ --------- -------
Sales and distribution 133 136
General and administration 75 75
Manufacturing, service and development 417 383
------------------------------------------------------------ --------- -------
Average number of persons employed 625 594
------------------------------------------------------------ --------- -------
Retirement benefit and Other Employee Benefit Plans
The Group operates various defined contribution retirement
benefit plans. During the year ended 31 December 2022, the Group
recorded EUR2.3 million (2021: EUR2 million) of expense in
connection with these plans.
9. Acquisitions & Disposals
2022 Acquisition
In January 2022, Mincon acquired 100% shareholding in Spartan
Drilling Tools, a manufacturer of drill pipe and related products
based in the USA for a consideration of EUR1,014,000. Spartan
Drilling Tools was acquired to manufacture drill pipe closer to the
end user in the America's region.
A. Consideration transferred
The following table summarises the acquisition date fair value
of each major class of consideration transferred.
Spartan Total
Drilling
Tools
EUR'000 EUR'000
--------------------------------- ---------- --------
Deferred consideration 1,014 1,014
Total consideration transferred 1,014 1,014
----------------------------------- ---------- --------
9. Acquisitions & Disposals (continued)
B. Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets
and liabilities assumed at the date of acquisition.
Total
EUR'000
----------------------------------------------- -------------
Property, plant and equipment 480
Right of use assets 455
Inventories 369
Trade receivables 133
Other assets 63
Trade and other payables (83)
Right of use liabilities (455)
Other accruals and liabilities (109)
Fair value of identifiable net assets acquired 853
----------------------------------------------- -------------
Measurement of fair values
The valuation techniques used for measuring the fair value of
material assets acquired were as follows.
Assets acquired Valuation Technique
Property, plant Market comparison technique and cost technique: The valuation
and equipment model considers quoted market prices for similar items
when they are available, and depreciated replacement cost
when appropriate. Depreciated replacement cost reflects
adjustments for physical deterioration as well as functional
and economic obsolescence.
Inventories Market comparison technique: The fair value is determined
based on the estimated selling price in the ordinary course
of business less the estimated costs of completion and
sale, and a reasonable profit margin based on the effort
required to complete and sell the inventories.
----------- ------------------------------------------------------------
Assets acquired Valuation Technique
----------------- --------------------------------------------------------------
Trade receivables All receivable balances were assessed and all are collectable.
Trade and other All were accessed and deemed payable to credible suppliers
payables
--------------- -----------------------------------------------------------
Other current All were accessed for recoverability and all is recoverable
assets
Other accruals All were assessed for credibility and deemed payable
and liabilities
---------------- ----------------------------------------------------
The loss from the acquisition of Spartan Drilling Tools has been
consolidated into the Mincon Group 2022 profit for the reporting
period.
Goodwill
Goodwill of EUR 161,000 is primarily due to growth expectations,
expected future profitability and expected cost synergies.
Goodwill arising from the acquisition has been recognised as
follows.
Spartan Total
Drilling 2022
Tools EUR'000
EUR'000
--------------------------------------- ---------- ---------
Consideration transferred 1,014 1,014
Fair value of identifiable net assets (853) (853)
--------------------------------------- ---------- ---------
Goodwill 161 161
--------------------------------------- ---------- ---------
2021 Acquisition
In June 2021, Mincon acquired the business of Campbell's Welding
& Fabrication, for a consideration of EUR421,000. This was made
up of a cash consideration of EUR84,000 and deferred consideration
of EUR337,000. Mincon acquired Campbell's Welding & Fabrication
to bring in-house their knowhow and processes.
9. Acquisitions & Disposals (continued)
2021 Acquisition
In June 2021, Mincon acquired 100% shareholding in Attakroc, a
Canadian-based mining and construction product distributor, for a
consideration of EUR1.8 million. The Group acquired Attakroc to
bring in-house their vast experience in selling and servicing the
mining and construction industries in western Canada. Attakroc
brings their knowledge of the local market conditions and give
Mincon a distinctive advantage in this region. The transaction
included a cash consideration of EUR600,000 and deferred
consideration of EUR1.2 million.
A. Consideration transferred
The following table summarises the acquisition date fair value
of each major class of consideration transferred.
Campbell
Welding
& Fabrication Attakroc Total
EUR'000 EUR'000 EUR'000
--------------------------------- --------------- --------- --------
Cash 84 597 681
Deferred consideration 337 1,227 1,564
Total consideration transferred 421 1,824 2,245
----------------------------------- --------------- --------- --------
B. Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets
and liabilities assumed at the date of acquisition.
Total
EUR'000
----------------------------------------------- ---------------
Property, plant and equipment 176
Right of use assets 39
Inventories 958
Trade receivables 1,174
Other assets 15
Trade and other payables (699)
Right of use liabilities (39)
Other accruals and liabilities (615)
Fair value of identifiable net assets acquired 1,009
----------------------------------------------- ---------------
Measurement of fair values
The valuation techniques used for measuring the fair value of
material assets acquired were as follows.
Assets acquired Valuation Technique
Property, plant Market comparison technique and cost technique: The valuation
and equipment model considers quoted market prices for similar items
when they are available, and depreciated replacement cost
when appropriate. Depreciated replacement cost reflects
adjustments for physical deterioration as well as functional
and economic obsolescence.
Inventories Market comparison technique: The fair value is determined
based on the estimated selling price in the ordinary course
of business less the estimated costs of completion and
sale, and a reasonable profit margin based on the effort
required to complete and sell the inventories.
----------- ------------------------------------------------------------
Goodwill
Goodwill arising from the acquisition has been recognised as
follows.
Attakroc Total
EUR'000 2022
EUR'000
--------------------------------------- --------- ---------
Consideration transferred 1,824 1,824
Fair value of identifiable net assets (1,009) (1,009)
--------------------------------------- --------- ---------
Goodwill 815 815
--------------------------------------- --------- ---------
10. Statutory and other required disclosures
Operating profit is stated after charging the following
amounts: 2022 2021
EUR'000 EUR'000
-------------------------------------------------------- ---------------- ---------------
Directors' remuneration
Fees 210 220
Wages and salaries 599 522
Retirement benefit contributions 59 55
-------------------------------------------------------- ---------------- ---------------
Total directors' remuneration 868 797
-------------------------------------------------------- ---------------- ---------------
2022 2021
Auditor's remuneration EUR'000 EUR'000
----------------------------------------------------- -------- --------
Auditor's remuneration - Fees payable to lead audit
firm
Audit of the Group financial statements 180 205
Audit of the Company financial statements 10 15
Other assurance services 13 20
203 240
----------------------------------------------------- -------- --------
Auditor's remuneration - Fees payable to other firms
in lead audit firm's network
Audit services 35 149
Other assurance services - 3
Tax advisory services 2 -
Total auditor's remuneration 37 152
----------------------------------------------------- -------- --------
11. Income tax
Tax recognised in income statement:
2022 2021
Current tax expense EUR'000 EUR'000
-------------------------------------------------- ------- --------
Current year 4,409 3,427
Adjustment for prior years 172 (7)
-------------------------------------------------- ------- --------
Total current tax expense 4,581 3,420
-------------------------------------------------- ------- --------
Deferred tax expense
Origination and reversal of temporary differences (551) (192)
-------------------------------------------------- ------- --------
Total deferred tax expense (551) (192)
Total income tax expense 4,030 3,228
-------------------------------------------------- ------- --------
A reconciliation of the expected income tax expense for
continuing operations is computed by applying the standard Irish
tax rate to the profit before tax and the reconciliation to the
actual income tax expense is as follows:
2021 2021
EUR'000 EUR'000
------------------------------------------------------ ------- -------
Profit before tax from continuing operations 18,734 17,828
Irish standard tax rate (12.5%) 12.5% 12.5%
Taxes at the Irish standard rate 2,342 2,229
Foreign income at rates other than the Irish standard
rate 662 691
Losses created/utilised 304 277
Other 723 31
------------------------------------------------------ ------- -------
Total income tax expense 4,030 3,228
------------------------------------------------------ ------- -------
11. Income tax (continued)
The Group's net deferred taxation liability was as follows:
2022 2021
EUR'000 EUR'000
---------------------------------------- ------- --------
Deferred taxation assets:
Reserves, provisions and tax credits 1,044 741
Tax losses and unrealised FX gains 1,006 334
Total deferred taxation asset 2,050 1,075
---------------------------------------- ------- --------
Deferred taxation liabilities:
Property, plant and equipment (1,808) (1,332)
Profit not yet taxable (238) (290)
Total deferred taxation liabilities (2,046) (1,622)
---------------------------------------- ------- --------
Net deferred taxation asset/(liability) 4 (547)
---------------------------------------- ------- --------
The movement in temporary differences during
the year were as follows:
Balance Recognised Acquired in Balance
in a
1 January Profit Business combination 31 December
or Loss
1 January 2021 - 31 December
2021 EUR'000 EUR'000 EUR'000 EUR'000
------------------------------------ --------- ---------- -------------------- ------------
Deferred taxation assets:
Reserves, provisions and tax
credits 585 156 - 741
Accrued income 31 (31) - -
Tax losses 477 (143) - 334
------------------------------------ --------- ---------- -------------------- ------------
Total deferred taxation asset 1,093 (18) - 1,075
------------------------------------ --------- ---------- -------------------- ------------
Deferred taxation liabilities:
Property, plant and equipment (1,780) 448 - (1,332)
Profit not yet taxable (52) (238) - (290)
------------------------------------ --------- ---------- -------------------- ------------
Total deferred taxation liabilities (1,832) 210 - (1,622)
------------------------------------ --------- ---------- -------------------- ------------
Net deferred taxation liability (739) 192 - (547)
------------------------------------ --------- ---------- -------------------- ------------
Balance Recognised Acquired in Balance
in a
1 January Profit Business combination 31 December
or Loss
1 January 2022 - 31 December
2022 EUR'000 EUR'000 EUR'000 EUR'000
------------------------------------ --------- ---------- -------------------- ------------
Deferred taxation assets:
Reserves, provisions and tax
credits 741 303 - 1,044
Accrued income - - - -
Tax losses 334 672 - 1,006
------------------------------------ --------- ---------- -------------------- ------------
Total deferred taxation asset 1,075 975 - 2,050
------------------------------------ --------- ---------- -------------------- ------------
Deferred taxation liabilities:
Property, plant and equipment (1,332) (476) - (1,808)
Profit not yet taxable (290) 52 - (238)
------------------------------------ --------- ---------- -------------------- ------------
Total deferred taxation liabilities (1,622) (424) - (2,046)
------------------------------------ --------- ---------- -------------------- ------------
Net deferred taxation liability (547) 551 - 4
------------------------------------ --------- ---------- -------------------- ------------
Deferred taxation assets have not been recognised in respect of
the following items:
2022 2021
EUR'000 EUR'000
----------- ------- --------
Tax losses 3,850 3,546
Total 3,850 3,546
----------- ------- --------
12. Intangible assets and goodwill
Internally
generated Acquired
intangible intellectual
Product development asset Goodwill property Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
------------------------------------ ------------------- ------------ --------- -------------- --------
Balance at 1 January 2021 5,847 - 31,140 - 36,987
------------------------------------ ------------------- ------------ --------- -------------- --------
Internally developed 1,139 - - - 1,139
------------------------------------ ------------------- ------------ --------- -------------- --------
Acquisitions - - 815 - 815
------------------------------------ ------------------- ------------ --------- -------------- --------
Acquired intellectual property - - - 696 696
------------------------------------ ------------------- ------------ --------- -------------- --------
Amortisation of intellectual
property - - - (105) (105)
------------------------------------ ------------------- ------------ --------- -------------- --------
Translation differences - - 590 35 625
------------------------------------ ------------------- ------------ --------- -------------- --------
Balance at 31 December 2021 6,986 - 32,545 626 40,157
------------------------------------ ------------------- ------------ --------- -------------- --------
Internally developed 285 - - - 285
------------------------------------ ------------------- ------------ --------- -------------- --------
Acquisitions (note 9) - - 161 - 161
------------------------------------ ------------------- ------------ --------- -------------- --------
Transfer to internally generated
intangible asset (7,271) 7,271 - - -
------------------------------------ ------------------- ------------ --------- -------------- --------
Acquired intellectual property - - - 147 147
------------------------------------ ------------------- ------------ --------- -------------- --------
Amortisation of intellectual
property - - - (190) (190)
------------------------------------ ------------------- ------------ --------- -------------- --------
Amortisation of product development - (121) - - (121)
------------------------------------ ------------------- ------------ --------- -------------- --------
Translation differences - - (378) 48 (330)
------------------------------------ ------------------- ------------ --------- -------------- --------
Balance at 31 December 2022 - 7,150 32,328 631 40,109
------------------------------------ ------------------- ------------ --------- -------------- --------
Goodwill relates to the acquisition of the below companies,
being the dates that the Group obtained control of these
business:
--..... The remaining 60% of DDS-SA Pty Limited in November
2009.
--..... The 60% acquisition of Omina Supplies in August
2014.
--..... The 65% acquisition of Rotacan in August 2014.
--..... The acquisition of ABC products in August 2014.
--..... The acquisition of Ozmine in January 2015.
--..... The acquisition of Mincon Chile in March 2015.
--..... The acquisition of and Mincon Tanzania in March
2015.
--..... The acquisition of Premier in November 2016.
--..... The acquisition of Rockdrill Engineering in November
2016.
--..... The acquisition of PPV in April 2017.
--..... The acquisition of Viqing July 2017.
--..... The acquisition of Driconeq in March 2018.
--..... The acquisition of Pacific Bit of Canada in January
2019
--..... The acquisition of Lehti Group in January 2020
--..... The acquisition of Rocdrill in May 2020
--..... The acquisition of Attakroc in June 2021
--..... The acquisition of Spartan Drilling Tools in January
2022
The Group accounts for acquisitions using the purchase
accounting method as outlined in IFRS 3 Business Combinations.
12. Intangible assets and goodwill (continued)
The recoverable amount of goodwill has been assessed based on
estimates of fair value less costs of disposal (FVLCD). The FVLCD
valuation is calculated on the basis of a discounted cash flow
("DCF") model. The most significant assumptions within the DCF are
weighted average cost of capital ("WACC"), tax rates and terminal
value assumptions. Goodwill impairment testing did not indicate any
impairment during any of the periods being reported. Four
sensitivities are applied as part of the analysis considering the
effects of changes in:
1) the WACC,
2) the EBITDA margin,
3) the long term growth rate and
4) the level of terminal value capital expenditure.
The sensitivities calculate downside scenarios to assess
potential indications of impairments due to changes in key
assumptions. The results from the sensitivity analysis did not
suggest that goodwill would be impaired when those sensitivities
were applied.
The carrying amount of the CGU was determined to be lower than
its fair value less costs of disposal by EUR52.4 million (2021:
EUR42.9 million), giving management substantial headroom and
comfort in the above stated impairment assessment.
The key assumptions used in the estimation of the fair value
less cost calculation were as follows:
2022 2021
----------------------------------- --------------- ---------
WACC 12.60% 9.60%
EBIDTA margin 20.23% 16.69%
Long term growth rate 2.20% 2.24%
EUR9.3
Terminal value capital expenditure EUR10.6 million million
----------------------------------- --------------- ---------
The WACC calculation considers market data and data from
comparable public companies. Peer group data was especially
considered for the beta factor and assumed financing structure
(gearing level). The analysis resulted in a discount rate range of
11.65% to 13.50%. This results in a midpoint WACC being used of
12.6%.
The Long term growth rate of 2.20% applied is based on a
weighted average of the long term inflation rates of the countries
in which Mincon generates revenues and earnings.
The budgeted EBITDA was based on expectations of future
outcomes, taking account for past experience, adjusted for
anticipated revenue growth as detailed in managements approved
Budget. No EBITDA margin effect is assumed in the terminal value
i.e. the budgeted EBITDA margin of 20.23% for 2025 is assumed in
the Terminal Value calculation used to arrive at the FVLCD.
Terminal value capital expenditure assumes no balance sheet
growth is assumed in the terminal value, capital expenditure is
assumed to equal depreciation of EUR10.6 million.
The following table shows the amount by which the two
assumptions below would need to change to individually for the
estimated recoverable amount to be equal to the carrying
amount.
2022 2021
---------------------- ------ -------
WACC 14.80% 10.60%
Long term growth rate 1.35% 1.48%
---------------------- ------ -------
Investment expenditure of EUR285,000, which has been
capitalised, is in relation to ongoing product development within
the Group. Amortisation began in October 2022 once the project was
commercialised. Amortisation is charged into the income statement
over fifteen years on a straight line basis.
13. Property, plant and equipment
Plant
Land & & ROU
Buildings Equipment Assets Total
EUR'000 EUR'000 EUR'000 EUR'000
------------------------------------------- --------- --------- -------- --------
Cost:
At 1 January 2021 16,291 51,540 6,887 74,718
------------------------------------------- --------- --------- -------- --------
Acquisitions through business combinations - 176 39 215
Additions 1,524 6,043 3,419 10,986
Disposals and derecognition of ROU
assets (264) (570) (1,022) (1,856)
Foreign exchange differences 496 1,586 122 2,204
At 31 December 2021 18,047 58,775 9,445 86,267
------------------------------------------- --------- --------- -------- --------
Acquisitions through business combinations 9 471 455 935
Additions 1,146 6,164 2,880 10,190
Disposals and derecognition of ROU
assets (1,226) (1,176) (1,191) (3,593)
Foreign exchange differences 181 274 (58) 397
At 31 December 2022 18,157 64,508 11,531 94,196
------------------------------------------- --------- --------- -------- --------
Accumulated depreciation:
At 1 January 2021 (3,420) (22,832) (2,646) (28,898)
------------------------------------------- --------- --------- -------- --------
Charged in year (524) (4,685) (1,896) (7,105)
Disposals 18 450 866 1,334
Foreign exchange differences (79) (786) (73) (938)
--------- --------- -------- --------
At 31 December 2021 (4,005) (27,853) (3,749) (35,607)
------------------------------------------- --------- --------- -------- --------
Charged in year (577) (5,046) (2,159) (7,782)
Disposals 381 994 1,134 2,509
Foreign exchange differences (41) (282) 11 (312)
------------------------------------------- --------- --------- -------- --------
At 31 December 2022 (4,242) (32,187) (4,763) (41,192)
------------------------------------------- --------- --------- -------- --------
Carrying amount: 31 December 2022 13,915 32,321 6,768 53,004
------------------------------------------- --------- --------- -------- --------
Carrying amount: 31 December 2021 14,042 30,922 5,696 50,660
------------------------------------------- --------- --------- -------- --------
Carrying amount: 1 January 2021 12,871 28,708 4,241 45,820
------------------------------------------- --------- --------- -------- --------
ROU assets includes Property of EUR6 million (2021: EUR5
million) and Plant and Equipment of EUR800,000 (2021: EUR
700,000).
The depreciation charge for property, plant and equipment is
recognised in the following line items in the income statement:
2022 2021
EUR'000 EUR'000
-------------------------------------------------- ------- --------
Cost of sales 4,768 4,413
Cost of sales ROU assets 426 388
Operating expenses 852 796
Operating expenses ROU asset 1,736 1,508
Total depreciation charge for property, plant and
equipment 7,782 7,105
-------------------------------------------------- ------- --------
14. Inventory and capital equipment
2022 2021
EUR'000 EUR'000
----------------- ------- --------
Finished goods 47,983 42,396
Work-in-progress 12,943 9,596
Raw materials 15,985 11,058
Total inventory 76,911 63,050
----------------- ------- --------
The Group recorded an impairment of EUR128,000 against inventory
to take account of net realisable value during the year ended 31
December 2022 (2021: EUR22,000). Write-downs are included in cost
of sales.
15. Trade and other receivables and other current assets
a) Trade and other receivables
2022 2021
EUR'000 EUR'000
-------------------------------- ------- --------
Gross receivable 24,975 26,047
Provision for impairment (1,103) (937)
Net trade and other receivables 23,872 25,110
-------------------------------- ------- --------
Provision
for impairment
EUR'000
----------------------------------------------------------- ----------------
Balance at 1 January 2022 (937)
Increase in provision arising from prior years receivables
impairment (10)
Increase in ECL model (156)
Balance at 31 December 2022 (1,103)
----------------------------------------------------------- ----------------
The following table provides the information about the exposure
to credit risk and ECL's for trade receivables as at 31 December
2022 .
Weighted Gross Loss
average carrying allowance
loss rate amount EUR'000
% EUR'000
Current (not past due) 1% 17,929 179
1-30 days past due 5% 4,245 211
31-60 days past due 13% 1,459 189
61 to 90 days 21% 1,034 216
More than 90 days past due 100% 308 308
-------------------------------- ---------- ------------------------
Net trade and other receivables 24,975 1,103
-------------------------------- ---------- ------------------------
The following table provides the information about the exposure
to credit risk and ECL's for trade receivables as at 31 December
2021 .
Weighted Gross
average carrying Loss
loss rate amount allowance
% EUR'000 EUR'000
Current (not past due) 1% 19,804 198
1-30 days past due 5% 3,749 187
31-60 days past due 14% 1,649 230
61 to 90 days 17% 628 106
More than 90 days past due 100% 216 216
-------------------------------- ---------- ------------
Net trade and other receivables 26,047 937
-------------------------------- ---------- ------------
15. Trade and other receivables and other current assets
(continued)
b) Prepayments and other current assets
2022 2021
EUR'000 EUR'000
------------------------------------------------- -------- -------
Plant and machinery prepaid and under commission 9,852 5,781
Prepayments and other current assets 2,875 3,041
Prepayments and other current assets 12,727 8,822
------------------------------------------------- -------- -------
16. Trade creditors, accruals and other liabilities
2022 2021
EUR'000 EUR'000
----------------------------------- -------- -------
Trade creditors 14,420 15,683
Total creditors and other payables 14,420 15,683
----------------------------------- -------- -------
2022 2021
EUR'000 EUR'000
------------------------------------- -------- -------
VAT 104 31
Social security costs 1,929 768
Other accruals and liabilities 6,666 5,228
Total accruals and other liabilities 8,699 6,027
------------------------------------- -------- -------
17. Capital management
The Group's policy is to have a strong capital base in order to
maintain investor, creditor and market confidence and to sustain
future development of the business. Management monitors the return
on capital, as well as the level of dividends to ordinary
shareholders.
The Board of Directors seeks to maintain a balance between the
higher returns that might be possible with higher levels of
borrowing and the advantages and security afforded by a sound
capital position.
The Group monitors capital using a ratio of 'net debt' to
equity. Net debt is calculated as total liabilities less cash and
cash equivalents (as shown in the statement of financial
position).
2022 2021
EUR'000 EUR'000
-------------------------------- --------- --------
Total liabilities (71,131) (64,292)
Less: cash and cash equivalents 15,939 19,049
Net debt (55,192) (45,243)
-------------------------------- --------- --------
Total equity 153,786 144,152
-------------------------------- --------- --------
Net debt to equity ratio 0.36 0.31
-------------------------------- --------- --------
18. Loans and borrowings
2022 2021
Maturity EUR'000 EUR'000
-------------------------------------- ------- --------
Bank loans 2023-2036 30,848 23,391
Lease Liabilities 2023-2032 11,096 11,079
Total loans and borrowings 41,944 34,470
------- --------
Current 14,973 11,205
------- --------
Non-current 26,971 23,265
------- --------
The Group has a number of bank loans and lease liabilities with
a mixture of variable and fixed interest rates. The Group has not
been in default on any of these debt agreements during any of the
periods presented. The loans are secured against the assets for
which they have been drawn down for.
The Group has been in compliance with all debt agreements during
the periods presented. The loan agreements in Ireland of EUR13.5
million (2020: EUR10.5 million) carry restrictive financial
covenants including, EBITA to be no less than EUR18 million at end
of each reporting period, interest cover to be 3:1 and to maintain
a minimum cash balance of EUR5 million.
Interest rates on current borrowings are at an average rate of
4.89%
During 2022, the Group availed of the option to enter into
overdraft facilities and to draw down loans of EUR11.5 million,
EUR8.8 million in loans and EUR2.7 million in overdraft
facilities.
Loans are repayable in line with their specific terms, the Group
has one bullet repayment due in 2026 of EUR5 million.
Reconciliation of movements of liabilities to cash flows arising
from financing activities
Balance Arising Cash Non-cash Foreign Balance
at 1 January from acquisition movements movements exchange at 31
2021 differences December
2021
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
--------------------- ------------- ----------------- ---------- ---------- ------------ ---------
Loans and borrowings 11,090 83 11,974 - 244 23,391
Lease liabilities 10,521 39 (3,590) 3,943 166 11,079
Total 21,611 122 8,384 3,943 410 34,470
--------------------- ------------- ----------------- ---------- ---------- ------------ ---------
Balance Arising Cash Non-cash Foreign Balance
at 1 January from acquisition movements movements exchange at 31
2022 differences December
2022
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
--------------------- ------------- ----------------- ---------- ---------- ------------ ---------
Loans and borrowings 23,391 109 7,372 - (24) 30,848
Lease liabilities 11,079 455 (3,994) 3,604 (48) 11,096
Total 34,470 564 3,378 3,604 (72) 41,944
--------------------- ------------- ----------------- ---------- ---------- ------------ ---------
Interest Effective
rate range interest
rate
------------------ ----------- ---------
Bank loans 1% - 9% 4.5%
Lease Liabilities 3% - 15% 5.2%
------------------ ----------- ---------
19. Share capital and reserves
At 31 December 2022
Authorised Share Capital Number EUR000
-------------------------------- ----------- ------
Ordinary Shares of EUR0.01 each 500,000,000 5,000
Allotted, called-up and fully paid up shares Number EUR000
--------------------------------------------- ----------- ------
Ordinary Shares of EUR0.01 each 212,472,413 2,125
2022 2021
-------------------------------- ------------ -----------
Opening Share Capital 212,472,413 211,675,024
Share Awards vested during year - 797,389
Authorised Share Capital 212,472,413 212,472,413
-------------------------------- ------------ -----------
Share issuances
On 26 November 2013, Mincon Group plc was admitted to trading on the
Euronext Growth and the Alternative Investment Market (AIM) of the
London Stock Exchange.
Voting rights
The holders of Ordinary Shares have the right to receive notice of
and attend and vote at all general meetings of the Company and they
are entitled, on a poll or a show of hands, to one vote for every
Ordinary Share they hold. Votes at general meetings may be given either
personally or by proxy. Subject to the Companies Act and any special
rights or restrictions as to voting attached to any shares, on a show
of hands every member who (being an individual) is present in person
and every proxy and every member (being a corporation) who is present
by a representative duly authorised, shall have one vote, so, however,
that no individual shall have more than one vote for every share carrying
voting rights and on a poll every member present in person or by proxy
shall have one vote for every share of which he is the holder.
Dividends
In June 2022, Mincon Group plc paid a final dividend for 2021 of
EUR0.0105 (1.05 cent) per ordinary share (EUR2.2 million).
In September 2022, Mincon Group plc paid an interim dividend in
the amount of EUR0.0105 (1.05 cent) per ordinary share (EUR2.2
million total payment), which was paid to shareholders on the
register at the close of business on 19 August 2022.
The Directors recommend the payment of a final dividend of
EUR0.0105 (1.05 cent) per share for the year ended 31 December 2022
(31 December 2021: 1.05 cent per share).
Share premium and other reserves
As part of a Group reorganisation of the Company, Mincon Group
plc, became the ultimate parent entity of the Group. On 30 August
2013, the Company acquired 100% of the issued share capital in
Smithstown Holdings and acquired (directly or indirectly) the
shareholdings previously held by Smithstown Holdings in each of its
subsidiaries, thereby creating a merger reserve.
20. Earnings per share
Basic earnings per share (EPS) is computed by dividing the
profit for the period available to ordinary shareholders by the
weighted average number of Ordinary Shares outstanding during the
period. Diluted earnings per share is computed by dividing the
profit for the period by the weighted average number of Ordinary
Shares outstanding and, when dilutive, adjusted for the effect of
all potentially dilutive shares. The following table sets forth the
computation for basic and diluted net profit per share for the
years ended 31 December:
20. Earnings per share (continued)
2022 2021
Numerator (amounts in EUR'000):
Profit attributable to owners of the Parent 14,704 14,600
Denominator (Number):Basic shares outstanding
Restricted share awards
Diluted weighted average shares outstanding 212,472,413 212,472,413
----------------------------------------------
2,030,000 5,820,000
214,502,413 218,292,413
---------------------------------------------- ----------- -----------
Earnings per Ordinary Share
Basic earnings per share, EUR 6.92 6.87
Diluted earnings per share, EUR 6.85 6.69
-----------
21. Share based payment
The vesting conditions of the scheme state that the minimum
growth in EPS shall be CPI plus 5% per annum, compounded annually,
over the relevant three accounting years up to the share award of
100% of the participants
basic salary. Where awards have been granted to a participant in
excess of 100% of their basic salary, the performance condition for
the element that is in excess of 100% of basic salary is that the
minimum growth in EPS shall be CPI plus 10% per annum, compounded
annually, over the three accounting years.
Number of
Options
Reconciliation of outstanding share options in thousands
--------------------------------------------- --------------
Outstanding on 1 January 2022 5,820
*Forfeited during the year (3,790)
Exercised during the year -
Granted during the year -
Outstanding at 31 December 2022 2,030
--------------------------------------------- --------------
*Based on the conditions set out in the 2022 conditional awards
agreement, all shares were forfeited as conditions were not
met.
2021 Conditional 2020 Conditional
LTIP Scheme Award at Grant Date Award at Grant Date
---------------------------------- --------------------- ----------------------
Conditional Award Invitation date April 2021 April 2020
Year of Potential vesting 2024/2028 2023/2027
Share price at grant date EUR1.35 EUR0.80
Exercise price per share/share
options EUR1.35 EUR0.80
Expected Volatility 36.57% 36.81%
Expected life 7 years 7 years
Risk free rate (0.53%) (0.50%)
Expected dividend yield 1.58% 2.53%
Fair value at grant date EUR0.39 EUR0.21
Valuation model Black & Scholes Model Black & Scholes Model
22. Financial risk management
The Group is exposed to various financial risks arising in the
normal course of business. Its financial risk exposures are
predominantly related to changes in foreign currency exchange rates
and interest rates, as well as the creditworthiness of our
counterparties.
The Company's Board of Directors has overall responsibility for
the establishment and oversight of the Group's risk management
framework. The Group's risk management policies are established to
identify and analyse the risks faced by the Group, to set
appropriate risk limits and controls and to monitor risks and
adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and the
Group's activities. The Group, through its training and management
standards and procedures, aims to maintain a disciplined and
constructive control environment in which all employees understand
their roles and obligations.
The Group audit committee oversees how management monitors
compliance with the Group's risk management policies and
procedures, and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group.
a) Liquidity and capital
The Group defines liquid resources as the total of its cash,
cash equivalents and short term deposits. Capital is defined as the
Group's shareholders' equity and borrowings.
The Group's objectives when managing its liquid resources are:
* To maintain adequate liquid resources to fund its
ongoing operations and safeguard its ability to
continue as a going concern, so that it can continue
to create value for investors;
* To have available the necessary financial resources
to allow it to invest in areas that may create value
for shareholders; and
-- To maintain sufficient financial resources to mitigate against
risks and unforeseen events.
Liquid and capital resources are monitored on the basis of the
total amount of such resources available and the Group's
anticipated requirements for the foreseeable future. The Group's
liquid resources and shareholders' equity at 31 December 2022 and
31 December 2021 were as follows:
a) Liquidity and capital
2022 2021
EUR'000 EUR'000
-------------------------- ------- -------
Cash and cash equivalents 15,939 19,049
Loans and borrowings 41,944 34,470
Shareholders' equity 153,786 144,152
-------------------------- ------- -------
The Group frequently assess its liquidity requirements, together
with this requirement and the rate return of long term euro
deposits, the Group has decided to keep all cash readily available
that is accessible within a month or less. Cash at bank earns
interest at floating rates based on daily bank deposits. The fair
value of cash and cash equivalents equals the carrying amount.
Cash and cash equivalents are held by major Irish, European,
United States and Australian institutions with credit rating of A3
or better. The Company deposits cash with individual institutions
to avoid concentration of risk with any one counterparty. The Group
has also engaged the services of a depository to ensure the
security of the cash assets.
Risk of counterparty default arising on cash and cash
equivalents and derivative financial instruments is controlled by
dealing with high-quality institutions and by policy, limiting the
amount of credit exposure to any one bank or institution.
22. Financial risk management (continued)
a) Liquidity and capital (continued)
At year-end, the Group's total cash and cash equivalents were
held in the following jurisdictions:
31 December 31 December
2022 2021
EUR'000 EUR'000
----------------------------------------------------- ----------- -----------
Ireland 3,668 4,760
Americas 3,039 3,136
Australasia 347 1,108
Europe, Middle East, Africa 8,885 10,045
----------------------------------------------------- ----------- -----------
Total cash, cash equivalents and short term deposits 15,939 19,049
----------------------------------------------------- ----------- -----------
There are currently no restrictions that would have a material
adverse impact on the Group in relation to the intercompany
transfer of cash held by its foreign subsidiaries. The Group
continually evaluates its liquidity requirements, capital needs and
availability of resources in view of, among other things,
alternative uses of capital, the cost of debt and equity capital
and estimated future operating cash flow.
In the normal course of business, the Group may investigate,
evaluate, discuss and engage in future company or product
acquisitions, capital expenditures, investments and other business
opportunities. In the event of any future acquisitions, capital
expenditures, investments or other business opportunities, the
Group may consider using available cash or raising additional
capital, including the issuance of additional debt. The maturity of
the contractual undiscounted cash flows (including estimated future
interest payments on debt) of the Group's financial liabilities at
31 December were as follows:
Total
Current Total Less More
Value of Undiscounted than than
contractual
Cash Flows
Cash Flows 1 Year 1-3 Years 3-5 Years 5 Years
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
----------------------- ---------- ------------- --------------------- --------- --------- -------------------
At 31 December 2021:
Deferred consideration 4,224 4,281 2,319 1,759 203 -
Loans and borrowings 23,391 23,866 7,565 7,163 4,409 4,729
Lease liabilities 11,079 11,302 3,640 5,249 1,699 714
Trade and other
payables 15,683 15,683 15,683 - - -
Accrued and other
financial
liabilities...........
......................
......................
......................
............. 6,027 6,027 6,027 - - -
----------------------- ---------- ------------- --------------------- --------- --------- -------------------
Total at 31 December
2021 60,404 61,159 35,234 14,171 6,311 5,443
----------------------- ---------- ------------- --------------------- --------- --------- -------------------
At 31 December 2022:
Deferred consideration 1,705 1,725 1,054 671 - -
Loans and borrowings 30,848 31,443 11,024 6,805 13,306 308
Lease liabilities 11,096 11,309 3,949 4,695 2,082 584
Trade and other
payables 14,420 14,420 14,420 - - -
Accrued and other
financial
liabilities 8,699 8,699 8,699 - - -
----------------------- ---------- ------------- --------------------- --------- --------- -------------------
Total at 31 December
2022 66,769 67,596 39,146 12,170 15,387 892
----------------------- ---------- ------------- --------------------- --------- --------- -------------------
b) Foreign currency risk
The Group is a multinational business operating in a number of countries
and the euro is the presentation currency. The Group, however, does
have revenues, costs, assets and liabilities denominated in currencies
other than euro.
22. Financial risk management (continued)
b) Foreign currency risk (continued)
Transactions in foreign currencies are recorded at the exchange
rate prevailing at the date of the transaction. The resulting
monetary assets and liabilities are translated into the appropriate
functional currency at exchange rates prevailing at the reporting
date and the resulting gains and losses are recognised in the
income statement. The Group manages some of its transaction
exposure by matching cash inflows and outflows of the same
currencies. The Group does not engage in hedging transactions and
therefore any movements in the primary transactional currencies
will impact profitability. The Group continues to monitor the
appropriateness of this policy.
Foreign currency denominated financial assets and liabilities
which expose the Group to currency risk are disclosed below. The
amounts shown are those reported to key management translated into
EURO at the closing rate:
Short-term exposure Long-term debt
USD SEK ZAR USD SEK ZAR
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
---------------------- ---------- --------- ------- ------- ------- -------
At 31 December 2022:
Financial assets 31,075 12,476 10,790 - - -
Financial liabilities (4,483) (2,613) (1,608) (3,284) (1,136) (1,372)
Total Exposure 26,592 9,864 9,182 (3,284) (1,136) (1,372)
---------------------- ---------- --------- ------- ------- ------- -------
At 31 December 2021:
Financial assets 25,316 11,655 10,119 - - -
Financial liabilities (4,071) (2,959) (1,533) (2,317) (1,094) (1,232)
Total Exposure 21,245 8,695 8,586 (2,317) (1,094) (1,232)
---------------------- ---------- --------- ------- ------- ------- -------
The following table illustrates the sensitivity of profit and
equity in relating to the Group's financial assets and financial
liabilities and the USD/EUR exchange rate, SEK/EUR exchange rate
and ZAR/EUR exchange rate 'all other things being equal'. It
assumes a +/- 4% change of the EUR/USD exchange rate for the year
ended at 31 December 2022 (2021: 4%). A +/- 4% change is considered
for the EUR/SEK exchange rate (2021: 4%). It assumes a +/- 4%
change of the EUR/ZAR exchange rate for the year ended at 31
December 2022 (2021: 4%). Both of these percentages have been
determined based on the average market volatility in exchange rates
in the previous twelve months.
Profit for the Equity
year
USD SEK ZAR ZAR ZAR ZAR
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
----------------- ------- ------- ------- ------- ------- -------
31 December 2022 (3) 35 14 218 244 98
31 December 2021 211 155 (9) (1,016) 2,166 141
----------------- ------- ------- ------- ------- ------- -------
Profit for the Equity
year
USD SEK ZAR ZAR ZAR ZAR
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
----------------- ------- ------- ------- ------- ------- -------
31 December 2022 12 (147) (58) (917) (1,026) (412)
31 December 2021 320 16 (84) (2,135) 1,010 (292)
----------------- ------- ------- ------- ------- ------- -------
The Group has material subsidiaries with a functional currency
other than the euro, such as US dollar, Australian dollar, South
African rand, Canadian dollar, British pound and Swedish krona.
Changes in the exchange rate year on year between the reporting
currencies of these operations and the Euro, have an impact on the
Group's consolidated reported result.
22. Financial risk management (continued)
b) Foreign currency risk
The Group's worldwide presence creates currency volatility when
compared year on year. During 2022, currencies were volatile due to
ongoing war in the Ukraine, however the euro remained relatively
steady against all major currencies the Group trades in.
In 2022, 56% (2021: 54%) of Mincon's revenue EUR170 million
(2020: EUR144 million) was generated in AUD, SEK and USD. The
majority of the Group's manufacturing base has a euro, US dollar or
Swedish Krona cost base. While Group management makes every effort
to reduce the impact of this currency volatility, it is impossible
to eliminate or significantly reduce given the fact that the
highest grades of our key raw materials are either not available or
not denominated in these markets and currencies. Additionally, the
ability to increase prices for our products in these jurisdictions
is limited by the current market factors.
The Group is also exposed to foreign currency risk on its liquid
resources (cash), of which the euro equivalent of EUR4.2 million
was held in US dollar (USD 4.5 million), EUR3 million was held in
Swedish krona (SEK 33.3 million), EUR1.5 million was held in South
Africa rand (ZAR 27 million), and the euro equivalent of EUR1.2
million was held in Canadian dollar (CAD 1.8 million).
2022 2021
Euro exchange rates Closing Average Closing Average
US Dollar 1.07 1.05 1.13 1.18
Australian Dollar 1.57 1.52 1.56 1.57
South African Rand 18.18 17.19 18.06 17.47
Swedish Krona 11.15 10.63 10.26 10.14
-------------------- ------- -------- -------- --------
c) Credit risk
Credit risk is the risk that the possibility that the Group's
customers may experience financial difficulty and be unable to meet
their obligations. The Group monitors its collection experience on
a monthly basis and ensures that a stringent policy is adopted to
provide for all past due amounts. The majority of the Group's
customers are third party distributors and end users of drilling
tools and equipment.
Credit risk management
The credit risk is managed on a group basis based on the Group's
credit risk management policies and procedures.
The credit risk in respect of cash balances held with banks and
deposits with banks are managed via diversification of bank
deposits, and are only with major reputable financial
institutions.
The Group continuously monitors the credit quality of customers.
Where available, external credit ratings and/or reports on
customers are obtained and used. The credit terms range between 30
and 90 days. The credit terms for customers as negotiated with
customers are subject to an internal approval. The ongoing credit
risk is managed through regular review of ageing analysis.
Trade receivables consist of a large number of customers in
various industries and geographical areas.
Trade receivables and contract assets
The Group applies the IFRS 9 simplified model of recognising
lifetime expected credit losses for all trade receivables as these
items do not have a significant financing component.
In measuring the expected credit losses, the trade receivables
have been assessed on a collective basis as they possess shared
credit risk characteristics. They have been grouped based on the
days past due and also according to the geographical location of
customers.
22. Financial risk management (continued)
c) Credit risk (continued)
Trade receivables are written off (i.e. derecognised) when there
is no reasonable expectation of recovery. Failure to make payments
within 180 days from the invoice date and failure to engage with
the Group on alternative payment arrangement amongst other is
considered indicators of no reasonable expectation of recovery.
The closing balance of the trade receivables loss allowance as
at 31 December 2022 reconciles with the trade receivables loss
allowance opening balance as follows:
Trade receivables
EUR'000
-------------------------------------------- -----------------
Opening loss allowance as at 1 January 2021 1,190
Loss allowance recognised during the year (253)
Loss allowance as at 31 December 2021 937
-------------------------------------------- -----------------
Loss allowance recognised during the year 166
Loss allowance as at 31 December 2022 1,103
-------------------------------------------- -----------------
Expected credit loss assessment
The Group allocates each exposure to a credit risk grade based
on data that is determined to be predictive of the risk of loss and
applying experienced credit judgement. Credit risk grades are
defined using quantitative factors that are indicative of the risk
of default and are aligned to past experiences. Loss rates are
based on accrual credit loss experience over the past five
years.(Note 15)
The maximum exposure to credit risk for trade and other
receivables at 31 December 2022 and 31 December 2021 by geographic
region was as follows:
2022 2021
EUR'000 EUR'000
---------------------------- ------- -------
Americas 8,173 7,969
Australasia 3,300 3,330
Europe, Middle East, Africa 12,399 13,811
Total amounts owed 23,872 25,110
---------------------------- ------- -------
d) Interest rate risk
Interest Rate Risk on financial liabilities
There were no significant changes in interest rates during 2022 and
therefore there was no significant impact. Movements in interest rates
had no significant impact on our financial liabilities or finance
cost recognised in either 2021 or 2020.
Interest Rate Risk on cash and cash equivalents
Our exposure to interest rate risk on cash and cash equivalents is
actively monitored and managed, the rate risk on cash and cash equivalents
is not considered material to the Group.
22. Financial risk management (continued)
e) Fair values
Fair value is the amount at which a financial instrument could
be exchanged in an arms-length transaction between informed and
willing parties, other than in a forced or liquidation sale. The
contractual amounts payable less impairment provision of trade
receivables, trade payables and other accrued liabilities
approximate to their fair values.
Financial assets and financial liabilities measured at fair
value in the consolidated statement of financial position are
grouped into three levels of a fair value hierarchy. The three
levels are defined based on the observability of significant inputs
to the measurement, as follows:
-- Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
-- Level 2: inputs other than quoted prices included within
Level 1 that are observable for the asset
or liability, either directly or indirectly
-- Level 3: unobservable inputs for the asset or liability.
Mincon Group plc only apply level 3 for fair value, using the
detail displayed above.
Deferred consideration
The movements in respect of the deferred consideration value in
the year to 31 December 2022 are as follows:
Level
3
EUR'000
------------------------------------------------ -------
Balance at 1 January 2022 4,224
Arising on acquisition -
Cash payment (2,629)
Foreign currency translation adjustment 79
Unwinding of discount on deferred consideration 31
Balance at 31 December 2022 1,705
------------------------------------------------ -------
Deferred consideration includes multiple deferred payments for
prior acquisitions over a fixed period of time. These carry no
significant observational inputs.
23. Subsidiary undertakings
At 31 December 2022, the Group had the following subsidiary
undertakings:
Group Registered Office &
Company Share %* Country of Incorporation
----------------------------------------------------- --------- ----------------------------------------------------
Mincon International Limited 100% Smithstown, Shannon, Co. Clare, Ireland
Manufacturer of rock drilling equipment
----------------------------------------------------- --------- ----------------------------------------------------
Mincon Rockdrills PTY Ltd 100% 8 Fargo Way, Welshpool, WA 6106, Australia
Manufacturer of rock drilling equipment
----------------------------------------------------- --------- ----------------------------------------------------
1676427 Ontario Inc. (Operating as Mincon Canada) 100% 400B Kirkpatrick Street, North Bay,
Ontario, P1B 8G5, Canada
----------------------------------------------------
Manufacturer of rock drilling equipment
----------------------------------------------------- --------- ----------------------------------------------------
Mincon Carbide Ltd 100% Windsor St, Sheffield S4 7WB, United Kingdom
Manufacturer of tungsten carbide
----------------------------------------------------- --------- ----------------------------------------------------
Mincon Inc. 100% 603 Centre Avenue, N.W. Roanoke, VA 24016, USA
----------------------------------------------------
Sales company
----------------------------------------------------- --------- ----------------------------------------------------
Mincon Sweden AB 100% Industrivagen 2-4, 61202 Finspang, Sweden
Sales company
----------------------------------------------------- --------- ----------------------------------------------------
Mincon Nordic OY 100% Hulikanmutka 6, 37570 Lempäälä,
Finland
Sales company
----------------------------------------------------- --------- ----------------------------------------------------
Mincon Holdings Southern Africa (Pty) 100% 1 Northlake, Jetpark 1469, Gauteng, South Africa
Sales company
----------------------------------------------------- --------- ----------------------------------------------------
ABC Products (Rocky) Pty Ltd 100% 2/57 Alexandra Street, North Rockhampton,
Queensland, 4701 Australia
----------------------------------------------------
Sales company
----------------------------------------------------- --------- ----------------------------------------------------
Mincon West Africa SARL 100% Villa TF 4635 GRD, Almadies, Dakar B.P. 45534,
Senegal
----------------------------------------------------
Dormant company
----------------------------------------------------- --------- ----------------------------------------------------
Mincon West Africa SL 100% Calle Adolfo Alonso Fernández, s/n, Parcela
P-16, Planta 2, Oficina 23, Zona Franca de
Gran Canaria, Puerto de la Luz, Código Postal
35008, Las Palmas de Gran Canari
----------------------------------------------------
Sales company
----------------------------------------------------- --------- ----------------------------------------------------
Mincon Poland 100% ul.Mickiewicza 32, 32-050 Skawina, Poland
Dormant company
----------------------------------------------------- --------- ----------------------------------------------------
Mincon Canada - Western Service Centre (previously 100% 3568-191 Street, Unit 101, Surrey BC, V3Z 0P6,
Pacific Bit of Canada) Canada
Sales company
----------------------------------------------------- --------- ----------------------------------------------------
23. Subsidiary undertakings (continued)
Group Registered Office &
Company Share %* Country of Incorporation
----------------------------------------- --------- ----------------------------------------------------------------
Mincon Rockdrills Ghana Limited 100% P.O. Box CT5105, Accra,
Ghana
----------------------------------------------------------------
Dormant company
----------------------------------------- --------- ----------------------------------------------------------------
Mincon S.A.C. 100% Calle La Arboleda 151, Dpto 201, La Planicie, La Molina, Peru
----------------------------------------------------------------
Sales company
----------------------------------------- --------- ----------------------------------------------------------------
Ozmine International Pty Limited 100% Gidgegannup, WA 6083, Australia
----------------------------------------------------------------
Dormant company
----------------------------------------- --------- ----------------------------------------------------------------
Mincon Chile 100% Av. La Dehesa #1201, Torre Norte, Lo Barnechea, Santiago, Chile
----------------------------------------------------------------
Sales company
----------------------------------------- --------- ----------------------------------------------------------------
Mincon Tanzania 100% Plot 1/3 Nyakato Road,
Mwanza, Tanzania
----------------------------------------------------------------
Dormant company
----------------------------------------- --------- ----------------------------------------------------------------
Mincon Namibia Pty Ltd 100% Ausspannplatz, Windhoek, Namibia
Sales company
----------------------------------------- --------- ----------------------------------------------------------------
Mincon Russia 100% 4,4 Lesnoy In,125047 Moscow, Russia
Dormant Company
----------------------------------------- --------- ----------------------------------------------------------------
Mincon Mining Equipment Inc 100% 19789-92a Avenue, Langley, British Columbia V1M3B3, Canada
----------------------------------------------------------------
Sales company
----------------------------------------- --------- ----------------------------------------------------------------
Mincon Exports USA Inc. 100% 603 Centre Ave, Roanoke VA 24016, USA
----------------------------------------------------------------
Group finance company
----------------------------------------- --------- ----------------------------------------------------------------
Mincon International Shannon 100% Smithstown, Shannon, Co. Clare, Ireland
Dormant company
----------------------------------------- --------- ----------------------------------------------------------------
Smithstown Holdings 100% Smithstown, Shannon, Co. Clare, Ireland
Holding company
----------------------------------------- --------- ----------------------------------------------------------------
Mincon Canada Drilling Products Inc. 100%
----------------------------------------------------------------
Holding company Suite 1800-355 Burrard Street, Vancouver, BC V6C 268, Canada
----------------------------------------- --------- ----------------------------------------------------------------
Lotusglade Limited 100% Smithstown, Shannon, Co. Clare, Ireland
Holding company
----------------------------------------- --------- ----------------------------------------------------------------
Floralglade Company 100% Smithstown, Shannon, Co. Clare, Ireland
Holding company
----------------------------------------- --------- ----------------------------------------------------------------
Spartan Drilling Tools 100% 1882 US HWY 6 & 50 Fruita, CO 81507, USA
Manufacturing facility
23. Subsidiary undertakings (continued)
Group Registered Office &
Company Share %* Country of Incorporation
----------------------------------------- --------- ----------------------------------------------------------------
Castle Heat Treatment Limited 100% Smithstown, Shannon, Co. Clare, Ireland
Holding company
----------------------------------------- --------- ----------------------------------------------------------------
Mincon Microcare Limited 100% Smithstown, Shannon, Co. Clare, Ireland
----------------------------------------- --------- ----------------------------------------------------------------
Holding company
----------------------------------------- --------- ----------------------------------------------------------------
Driconeq AB 100% Svetsarevägen 4, 686 33, Sunne, Sweden
Holding company
----------------------------------------- --------- ----------------------------------------------------------------
Driconeq Production AB 100% Svetsarevägen 4, 686 33, Sunne, Sweden
----------------------------------------- --------- ----------------------------------------------------------------
Manufacturing facility
Driconeq Fastighet AB 100% Svetsarevägen 4, 686 33, Sunne, Sweden
----------------------------------------- --------- ----------------------------------------------------------------
Property holding company
Driconeq Do Brasil 100% Rua Dr. Ramiro De Araujo Filho, 348, Jundai, SP, Brasil
----------------------------------------- --------- ----------------------------------------------------------------
Sales company
Driconeq Africa Ltd 100% Cnr of Harriet and James Bright Avenue, Driehoek. Germiston 1400
----------------------------------------- --------- ----------------------------------------------------------------
Manufacturing facility
Driconeq Australia Holdings Pty Ltd 100% 47 Greenwich Parade, AU-6031 Neerabup, WA, Australia
----------------------------------------- --------- ----------------------------------------------------------------
Holding company
Driconeq Australia Pty Ltd 100% 47 Greenwich Parade, AU-6031 Neerabup, WA, Australia
----------------------------------------- --------- ----------------------------------------------------------------
Manufacturing facility
Mincon Drill String AB 100% Svetsarevägen 4, 686 33, Sunne, Sweden
Holding company
EURL Roc Drill 100% Rue Charles Rolland, 29650 Guerlesquin, France
Sales company
Attakroc Inc 100% 601, rue Adanac, Quebec, G1C 7G6, Canada
Sales company
Mincon Quebec 100% 601, rue Adanac, Quebec, G1C 7G6, Canada
Holding company
*All shares held are ordinary shares.
24. Leases
A. Leases as Lessees (IFRS 16)
The Group leases property, plant and equipment across its global
operations.
Mincon Group PLC has elected to apply the practical expedient
allowed under IFRS 16 for short-term leases by class of underlying
asset to which the right of use relates. A class of underlying
asset is a grouping of underlying assets of a similar nature and
use in an entity's operations. The class of underlying assets this
applies to short term leases of office equipment.
Information about leases for which the Group is a lessee is
presented below.
i) Right-of-use assets
31 December
2021
EUR'000
Balance at 1 January 4,241
Depreciation charge for the year (1,896)
Additions to right of use assets 3,458
Disposal of right of use asset (156)
Foreign exchange difference 49
--------------------------------- ---------------
Balance at 31 December 2021 5,696
--------------------------------- ---------------
31 December
2022
EUR'000
Balance at 1 January 5,696
Depreciation charge for the year (2,159)
Additions to right of use assets 3,334
Disposal of right of use asset (57)
Foreign exchange difference (46)
--------------------------------- -------------
Balance at 31 December 2022 6,768
--------------------------------- -------------
ii) Amounts recognised in income statement.
2022 2021
EUR'000 EUR'000
----------------------------------------------- ------- -------
Interest on lease liabilities 354 308
Expenses related to short term leases 245 311
Expenses related to leases of low value assets 10 65
----------------------------------------------- ------- -------
-Leases under IFRS 16 609 684
----------------------------------------------- ------- -------
iii) Amounts recognised in statement of cash flows
2022 2021
EUR'000 EUR'000
------------------------------ ---------------- ----------------
Total cash outflow for leases 3,994 3,590
------------------------------ ---------------- ----------------
Total cash outflow of leases 3,994 3,590
------------------------------ ---------------- ----------------
24. Leases (continued)
iv) Extension options
Some property leases contain extension options exercisable by
the Group. The Group assesses at lease commencement date whether it
is reasonably certain to exercise the extension options. The Group
is reasonably certain it will not incur future lease liabilities
beyond what is currently calculated.
The following table sets out a maturity analysis of lease
liabilities, showing the undiscounted lease payments to be paid
after the reporting date.
31 December
2022
EUR'000
------------------- -----------
Less than one year 2,129
-------------------- -----------
One to two years 3,068
-------------------- -----------
Two to five years 1,525
-------------------- -----------
More than 5 years 568
Total 7,290
-------------------- -----------
B. Leases as Lessor (IFRS 16)
i) Financing Lease
The Group subleased a properties that had been recognised as a
right of use asset in Finland and Australia. The Group recognised
income interest in the year in relation to this totalling
EUR193,000.
The Group manages the risk to retain the right to the assets as
they have a right to inspect the property, the right to enforce the
contractual arrangement with the lessee and the right to perform
maintenance.
The following table sets out a maturity analysis of lease
receivable, showing the undiscounted lease payments to be received
after the reporting date.
31 December 31 December
2022 2021
EUR'000 EUR'000
Less than one year 147 192
One to two years - 146
Balance at 31 December 147 338
------------------------------------ ----------- -----------
Unearned finance income (10) (22)
------------------------------------ ----------- -----------
Total undiscounted lease receivable 137 316
------------------------------------ ----------- -----------
ii) Operating leases
The group leases company owned property out to tenants in the
USA under various agreements. The group recognises these leases as
operating leases from a lessor perspective due to the fact they do
not transfer substantially all of the risks and rewards incidental
to the ownership of the assets.
Rental income recognised by the Group during 2022 was EUR180,000
(2021: EUR214,000).
The following table sets out a maturity analysis of lease
receivable, showing the undiscounted lease payments to be received
after the reporting date.
31 December
2022
EUR'000
Less than one year 22
Total 22
-------------------- -----------
25. Commitments
The following capital commitments for the purchase of property,
plant and equipment had been authorised by the directors at 31
December 2022:
31 December 31 December
2022 2021
EUR'000 EUR'000
Contracted for 3,360 2,837
Not-contracted for 229 772
------------------- ----------- ------------
Total 3,589 3,609
------------------- ----------- ------------
26. Litigation
The Group is not involved in legal proceedings that could have a
material adverse effect on its results or financial position.
27. Related parties
As at 31 December 2022, the share capital of Mincon Group plc
was 56.32% owned by Kingbell Company which is ultimately controlled
by Patrick Purcell and members of the Purcell family. Patrick
Purcell is also a director of the Company.
In June 2022, the Group paid a final dividend for 2021 of
EUR0.0105 to all shareholders. The total dividend paid to Kingbell
Company was EUR1,256,477.
In September 2022, the Group paid an interim dividend for 2022
of EUR0.0105 to all shareholders. The total dividend paid to
Kingbell Company was EUR1,256,477 (September 2020:
EUR1,261,385).
The Group has a related party relationship with its subsidiary
undertakings (see note 23) for a list of these undertakings),
directors and officers. All transactions with subsidiaries
eliminate on consolidation and are not disclosed.
Transactions with Directors
The Group is owed EURNil from directors and shareholders at 31
December 2022 and 2021. The Group has amounts owing to directors of
EURNil as at 31 December 2022 and 2021.
Key management compensation
The profit before tax from continuing operations has been
arrived at after charging the following key management
compensation:
2022 2021
EUR'000 EUR'000
Short term employee benefits 1,561 1,514
Bonus and other emoluments 348 320
Post-employment contributions 149 145
Social security costs 110 109
Share based payment charged in the year (153) 221
---------------------------------------- ------- -------
Total 2,015 2,309
---------------------------------------- ------- -------
The key management compensation amounts disclosed above
represent compensation to those people having the authority and
responsibility for planning, directing and controlling the
activities of the Group, which comprises the Board of Directors and
executive management (ten in total at year end). Amounts included
above are time weighted for the period of the individuals
employment.
28. Events after the reporting date
The Board of Mincon Group plc is recommending the payment of a
final dividend for the year ended 31 December 2022 in the amount of
EUR0.0105 (1.05 cent) per ordinary share, which will be subject to
approval at the Annual General Meeting of the Company in May 2023.
Subject to Shareholder approval at the Company's annual general
meeting, the final dividend will be paid on 16 June 2023 to
Shareholders on the register at the close of business on 26 May
2023.
29. Approval of financial statements
The Board of Directors approved the consolidated financial
statements on 10 March 2023.
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END
FR EAKDEFLSDEFA
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March 13, 2023 03:00 ET (07:00 GMT)
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