This announcement contains inside
information
Mincon
Group plc
("Mincon" or the "Group")
2024
Half 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 half year results for the six months ended 30 June
2024.
|
H1 2024 Key Financial Highlights
|
H1 2024
|
H1 2023
|
|
· Revenue
|
€68.0
million
|
€80.6
million
|
|
· Gross
Profit
|
€17.4
million
|
€25.6
million
|
|
· EBITDA
|
€4.7
million
|
€11.8
million
|
|
· Operating
Profit
|
€0.2 million
|
€7.8
million
|
Joe Purcell, Chief Executive Officer, commenting on the
results, said:
"The first half of 2024 remained
challenging in terms of revenue generation and this has had a
knock-on effect to our margins and ROCE. The challenging market
environment that we noted in our Q1 trading update continued;
however, we were encouraged to see a recovery in our order books
towards the end of Q2, which has continued post the period end. We
expect a recovery in revenue as the increased order book begins to
be delivered to customers.
We are continuing our sharp focus,
started in 2023, on driving operational efficiencies throughout the
business and optimising our balance sheet management. This has been
supported by a root and branch review of our global operations.
This review has led to cost-cutting initiatives, which includes the
decision to close our carbide business in Sheffield later this
year. Other initiatives to drive operational efficiencies include
the introduction of robotics in Shannon, improved procurement to
reduce manufacturing input costs, restructuring in South Africa and
refining our innovation management process. We expect that the
decisions we are taking as a result of this review will have a
positive effect on margins in H2 and beyond.
Geographic markets
Our business in the Americas is
down on the same period last year. This is driven by a number of
factors including exiting a low margin mining supply contract in
Chile as well as reductions in construction related activities in
North America. The wind-up of the supply contract in Chile will be
a positive for our balance sheet and margins. Construction activity
was suppressed in the first six months, but we still have a large
project pipeline and have recently seen a pickup in project wins
and subsequent order activity.
Our Europe & Middle East
region is also down on the same period last year. As our primary
manufacturing region for the Group, cost inflation has been a
challenge to deal with in recent periods, but our ongoing work to
mitigate this, as part of our review, should start to come through
in H2. Coupled with stronger order books, mainly for mining and
construction customers globally, we anticipate a recovery in Europe
& Middle East region revenue and margins in H2.
Our Africa region is marginally
down on the same period last year. However, we expect to see our
efforts to develop a better market share with improved revenue and,
importantly margins, starting to take effect in H2 and beyond. We
remain committed to this important region due to its proven mineral
reserve levels and the role this will play in the global challenges
ahead.
We are pleased to note the
recovery in our revenues in the Australia Pacific region, another
important mining area, where proven mineral reserves will underpin
continued production and expected demand for Mincon products in the
long term. Mincon's superior product offering to lower total
drilling cost in production mining is starting to bear fruit in the
region and has supported the recent revenue recovery. This early
increase in H1 is anticipated to be further strengthened in H2 by
Mincon's first large construction project win for a harbour project
in Australia. We won this project on the back of our proven success
in other projects in Europe and North America. It is notable that
this win is from a pipeline of projects in Australia that are being
actively pursued and is just reward for the team effort in the
region.
Business Development
Given the global interest rate
environment that we are operating in, investments are being delayed
in areas such as new or expanded mining capacity, infrastructure
and renewable energy projects. As part of widespread global
ambitions and protocols to reduce emissions, the industry needs to
increase the efficiency of mining methods associated with any
increased mining output of critical metals such as copper and
battery metals. Efficiency and emissions reduction is also the key
in delivering ambitious infrastructure and renewable energy
projects.
Mincon has developed a skillset in
percussion drilling, which has a critical part to play in the
solution to meet the emissions reduction targets for the markets
which we are supplying. We believe that Mincon's focus on
engineering, manufacturing and service is a compelling offering
that will position the Group well to provide solutions to our
clients to increase output with reduced consumption of energy. The
product packages we produce today are market leading and we
continue to innovate and constantly improve these by developing new
technologies and applications that will ensure our future as well
as making a meaningful contribution to global emissions
reduction.
Our Greenhammer collaboration is
progressing well on the copper mine in Arizona. Our rig
manufacturer partner is also positive about the results, and we are
in active dialogue around its commercial development.
Our subsea project collaboration
is also progressing well, and the plan is to complete an offshore
installation at a consented site before the end of this year.
Leading players in the offshore wind industry have been closely
monitoring this project and have attended a number of our testing
sites which underpins our belief in the commercial opportunity for
this project. I look forward to the transformational benefit that
this will deliver for Mincon and the offshore renewables
industry.
Conclusion
The first six months of 2024 have
been a challenging period for Mincon. However, with the recent
improvements in our order books and encouraging contract wins, we
see opportunities emerging to recover the lost ground from H1 2024.
Whilst the scheduling of the commencement of large construction
projects will have a bearing on the timing and pace of the Group's
recovery, looking further ahead, the Board retains its confidence
in a return to growth in revenues and margins in H2 2024 versus
H1.
With that in mind, I want to
acknowledge our team's efforts through the difficult period we have
endured and look forward to better days ahead."
Joseph Purcell
Chief Executive Officer
Key financial commentary
Market Industries and Product Mix
Revenue in the first half of 2024
contracted by 16% versus the first half of 2023, primarily due to a
decrease in our construction industry revenue, though there were
also contractions in our mining and waterwell/geothermal revenue.
Foreign exchange movements had a minor impact on the Group's
revenue contraction, at less than 1%.
Industry mix (by revenue)
|
|
H1 2024
|
H1 2023
|
|
·
Mining
|
48%
|
43%
|
|
·
Construction
|
36%
|
39%
|
|
·
Waterwell / Geothermal
|
16%
|
18%
|
Our revenue from the construction
industry contracted by 23% during the period. However, this has
been on the back of significant growth in this industry, year on
year, since 2019.
Most of the slowdown in the
construction industry was in the Americas region where revenue
decreased by 29% in H1 2024. The decline in construction revenue in
the Europe & Middle East region for H1 2024 was 17% versus H1
2023. Across both the Americas and Europe & Middle East
regions, interest rates have been the driving factor in the
slowdown. Interest rates increased further during H2 2023, and this
has had a direct impact on the starting date of a number of
construction projects. These are mainly in private sector projects
and others that are deemed non-critical.
We have also seen less revenue in
the quarry industry, which forms part of our construction revenue,
as activity and demand for materials for private sector projects
and residential buildings have decreased in certain countries
across Europe and North America. We have also seen reduced demand
for products that are used in tunnelling projects. That impact has
mostly been with our European construction revenue.
Elsewhere in construction, we
continue to develop new market opportunities for our products.
Outside of the Europe & Middle East and North American markets,
our construction revenue increased by 46% in the period and
accounted for 9% of our total construction revenue in H1
2024.
Our mining revenue contracted by
6% in H1 2024 versus H1 2023. A large mining contract that we
serviced locally in Chile finished in early Q2 2024, as the margins
required to win a re-tender were ultimately not at a level which
the Group would be willing to contract. This contributed to a fall
in mining revenue in the Americas region of 23% in the period. When
we exclude this contract, our mining revenue in H1 2024 fell by
2%.
Mining revenue in Africa also
contracted in the period by 5%, largely due to reduced activity in
the exploration sector.
However, our mining revenue
increased by 8% in the Australia Pacific region in the period, as
we recovered some market share. In the Europe & Middle East
region our mining revenue had a significant increase in the period
of 89%. We saw a return to more regular orders in mining in this
region during the period after customer destocking in
2023.
Our revenue in the
waterwell/geothermal industry contracted by 22% in H1 2024 versus
H1 2023, after growing by 10% in the first half of 2023. This
decline is directly related to a contraction in geothermal
drilling, due to a downturn in the construction industry in
Northern Europe. There has also been a slight contraction in the
waterwell industry in North America again tied to a construction
slow down.
Earnings
Our earnings have been impacted in
the period due to an increase in competition for projects which is
a result of contraction in our markets, particularly in the
construction and geothermal sectors. This, coupled with some price
reductions in our offerings to customers resulted in less revenue
in H1 2024.
As customer activity reduced, the
manufacturing throughput of product in our own plants has fallen,
and this has impacted manufacturing cost per product. This was
compounded in H1 2024 by the continued focus on reducing our
inventory as we manage our working capital levels. As a result,
fixed manufacturing overheads are spread across less factory
output. To ensure on time delivery is met, we have retained a
certain level of variable costs and therefore full cost efficiency
could not be met in the period.
However, during the period we
further reduced variable costs that are not directly linked with
volume manufacturing, such as manufacturing employee costs and
external subcontracting costs, which reduced by 12% and 37%
respectively during the period versus H1 2023.
Construction projects that have
started in the period are more expensive for contractors due to
higher interest rates and inflationary factors during 2023. This
has led to contractors pressing consumable suppliers on pricing.
Fewer project starts in H1 2024 also gave rise to further price
competition in tender processes. The combination of these factors
has had a significant bearing on our margins during H1
2024.
Our finance costs have increased
marginally in the period on reduced borrowings. This is a
reflection of higher interest rates in H2 2023. The Group has a
number of bank loans and lease liabilities with a mixture of
variable and fixed interest rates.
Balance Sheet and Cash
Our cash generated from operations
increased marginally over the same period in the prior year due to
reduced working capital requirements in H1 2024.
We have further reduced our
overall inventory held in the first six months of 2024, excluding
FX, building on the good work completed by our inventory reduction
team in 2023, and this has strengthened our cash reserves by over
€1 million at the half year-end.
Our debtor balance increased over
the prior year end by over €3.5 million, however this was an
expected periodic increase, and we expect this to unwind by the
year end 2024.
We have commissioned property,
plant and equipment of €2.5 million in H1 2024, and we expect a
similar level of investment in H2 2024, as we move towards more
normalised levels of investment following the recent periods of
heightened capital expenditure in the business. We believe our
plants are well equipped to deliver the Group's expected growth
into the future.
Much of the capital expenditure
incurred in recent periods is in relation to a move towards
automation of certain manufacturing processes which we anticipate
will bring noticeable efficiency gains when manufacturing volumes
increase. This bespoke automation solution has been the culmination
of an eighteen-month project.
We borrowed further in the first
half of 2024, mostly in connection with the commissioning of the
new automation processes in our hammer plant in Shannon. We
borrowed elsewhere in the Group to maintain heat treatment
facilities and to equip our sales force to widen our sales
footprint.
During the period we paid €0.5
million for historical acquisitions. We also paid a final year
dividend for 2023 of €2.2 million in June 2024.
For further information, please contact:
Mincon Group
plc
Tel: +353 (61) 361 099
Joe
Purcell
CEO
Mark McNamara
CFO
Tom
Purcell COO
Davy Corporate Finance (Nominated Adviser, Euronext Growth
Tel: +353 (1) 679 6363
Adviser and Joint
Broker)
Anthony Farrell
Daragh O'Reilly
Shore Capital (Joint
Broker)
Tel: +44 (0) 20 7408 4090
Malachy
McEntyre
Mark
Percy
Daniel Bush
Mincon
Group plc
2024
Half Year Financial Results
|
Condensed consolidated income statement
For
the 6 months ended 30 June 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Notes
|
Unaudited
H1 2024
€'000
|
Unaudited
H1 2023
€'000
|
|
|
Continuing operations
|
|
|
|
|
|
Revenue
|
5
|
68,011
|
80,585
|
|
|
Cost of sales
|
7
|
(50,655)
|
(54,940)
|
|
|
Gross profit
|
|
17,356
|
25,645
|
|
|
Operating costs
|
7
|
(17,107)
|
(17,863)
|
|
|
Operating profit
|
|
249
|
7,782
|
|
|
Finance income
|
|
49
|
19
|
|
|
Finance cost
|
|
(1,271)
|
(1,175)
|
|
|
Foreign exchange
gain/(loss)
|
|
102
|
(503)
|
|
|
Movement on deferred
consideration
|
|
4
|
4
|
|
|
(Loss)/Profit before tax
|
|
(867)
|
6,127
|
|
|
Income tax expense
|
|
(116)
|
(1,228)
|
|
|
(Loss)/Profit for the period
|
|
(983)
|
4,899
|
|
|
|
|
|
|
|
|
|
|
(Loss)/Earnings per Ordinary Share
|
|
|
|
|
|
Basic (loss)/earnings per
share
|
10
|
(0.46c)
|
2.31c
|
|
|
Diluted earnings per
share
|
10
|
(0.00c)
|
2.28c
|
|
|
|
|
|
|
|
|
| |
|
Condensed consolidated statement of comprehensive
income
|
|
|
For the 6 months ended 30 June 2024
|
|
|
|
|
|
|
|
|
|
|
Unaudited
2024
H1
|
Unaudited
2023
H1
|
|
|
|
€'000
|
€'000
|
|
|
(Loss)/Profit for the period
|
(983)
|
4,899
|
|
|
Other comprehensive income:
|
|
|
|
|
Items that are or may be reclassified subsequently to profit
or loss:
|
|
|
|
|
Foreign currency translation -
foreign operations
|
968
|
(2,840)
|
|
|
Other comprehensive profit/(loss)
for the period
|
968
|
(2,840)
|
|
|
Total comprehensive (loss)/income for the
period
|
(15)
|
2,059
|
|
|
|
|
|
|
|
|
|
| |
The accompanying notes are an integral part of these
financial statements.
|
|
|
|
|
|
|
Condensed Consolidated statement of financial
position
As
at 30 June 2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited
30 June
2024
|
31
December
2023
|
|
|
|
Notes
|
€'000
|
€'000
|
|
|
|
|
|
|
|
Non-Current Assets
|
|
|
|
|
|
Intangible assets and
goodwill
|
|
12
|
40,586
|
40,625
|
|
Property, plant and
equipment
|
|
13
|
53,770
|
54,763
|
|
Deferred tax asset
|
|
8
|
3,082
|
2,664
|
|
Total Non-Current Assets
|
|
|
97,438
|
98,052
|
|
Current Assets
|
|
|
|
|
|
Inventory
|
|
14
|
69,421
|
69,730
|
|
Trade and other
receivables
|
|
15
|
25,430
|
21,616
|
|
Prepayments and other current
assets
|
|
|
8,109
|
8,609
|
|
Current tax asset
|
|
8
|
1,446
|
1,007
|
|
Cash and cash equivalents
|
|
|
15,768
|
20,482
|
|
Total Current Assets
|
|
|
120,174
|
121,444
|
|
Total Assets
|
|
|
217,612
|
219,496
|
|
Equity
|
|
|
|
|
|
Ordinary share capital
|
|
9
|
2,125
|
2,125
|
|
Share premium
|
|
|
67,647
|
67,647
|
|
Undenominated capital
|
|
|
39
|
39
|
|
Merger reserve
|
|
|
(17,393)
|
(17,393)
|
|
Share based payment
reserve
|
|
11
|
2,398
|
2,241
|
|
Foreign currency translation
reserve
|
|
|
(6,898)
|
(7,866)
|
|
Retained earnings
|
|
|
104,244
|
107,458
|
|
Total Equity
|
|
|
152,162
|
154,251
|
|
Non-Current Liabilities
|
|
|
|
|
|
Loans and borrowings
|
|
16
|
25,129
|
26,032
|
|
Deferred tax liability
|
|
8
|
2,123
|
2,099
|
|
Deferred consideration
|
|
17
|
1,837
|
1,998
|
|
Other liabilities
|
|
|
671
|
932
|
|
Total Non-Current Liabilities
|
|
|
29,760
|
31,061
|
|
Current Liabilities
|
|
|
|
|
|
Loans and borrowings
|
|
16
|
13,422
|
14,080
|
|
Trade and other payables
|
|
|
12,493
|
10,505
|
|
Accrued and other
liabilities
|
|
|
9,462
|
8,596
|
|
Current tax liability
|
|
8
|
313
|
1,003
|
|
Total Current Liabilities
|
|
|
35,690
|
34,184
|
|
Total Liabilities
|
|
|
65,450
|
65,245
|
|
Total Equity and Liabilities
|
|
|
217,612
|
219,496
|
|
|
|
|
|
|
The accompanying notes are an integral part of these
financial statements.
|
|
|
|
|
Condensed consolidated statement of cash
flows
For
the 6 months ended 30 June 2024
|
|
|
|
Unaudited
H1
2024
€'000
|
Unaudited
H1
2023
€'000
|
|
Operating activities:
|
|
|
|
(Loss)/Profit for the
period
|
(983)
|
4,899
|
|
Adjustments to reconcile profit to
net cash provided by operating activities:
|
|
|
|
Depreciation
|
4,048
|
3,974
|
|
Amortisation of internally generated
intangible asset
|
242
|
242
|
|
Amortisation of intellectual
property
|
139
|
108
|
|
Movement on deferred
consideration
|
(4)
|
(4)
|
|
Finance cost
|
1,271
|
1,175
|
|
Finance income
|
(49)
|
(19)
|
|
Loss on sale of property, plant
& equipment
|
(133)
|
11
|
|
Income tax expense
|
116
|
1,228
|
|
Other non-cash movements
|
(109)
|
510
|
|
|
4,538
|
12,124
|
|
|
|
|
|
Changes in trade and other
receivables
|
(3,541)
|
(7,272)
|
|
Changes in prepayments and other
assets
|
574
|
(119)
|
|
Changes in inventory
|
1,055
|
(814)
|
|
Changes in trade and other
payables
|
2,291
|
650
|
|
Cash provided by
operations
|
4,917
|
4,569
|
|
|
|
|
|
Interest received
|
49
|
19
|
|
Interest paid
|
(1,271)
|
(1,175)
|
|
Income taxes paid
|
(1,630)
|
(1,462)
|
|
Net
cash provided by operating activities
|
2,065
|
1,951
|
|
|
|
|
|
Investing activities
|
|
|
|
Purchase of property, plant and
equipment
|
(2,534)
|
(4,278)
|
|
Proceeds from the sale of property,
plant and equipment
|
313
|
288
|
|
Payment of deferred
consideration
|
(202)
|
(203)
|
|
Investment in acquired intangible
assets
|
(303)
|
(158)
|
|
Net
cash provided used in investing activities
|
(2,726)
|
(4,351)
|
|
|
|
|
|
Financing activities
|
|
|
|
Dividends paid
|
(2,231)
|
(2,231)
|
|
Repayment of borrowings
|
(2,270)
|
(2,569)
|
|
Repayment of lease
liabilities
|
(1,546)
|
(2,112)
|
|
Drawdown of loans
|
1,969
|
6,472
|
|
Net
cash provided used in financing activities
|
(4,078)
|
(440)
|
|
|
|
|
|
Effect of foreign exchange rate
changes on cash
|
25
|
(426)
|
|
Net
decrease in cash and cash equivalents
|
(4,714)
|
(3,266)
|
|
|
|
|
|
Cash and cash equivalents at the
beginning of the year
|
20,482
|
15,939
|
|
Cash and cash equivalents at the end of the
period
|
15,768
|
12,673
|
|
|
|
|
The accompanying notes are an integral part of these
financial statements.
Notes to the condensed consolidated interim financial
statements
1 Description of business
Mincon Group plc ("the Company") is
a company incorporated in the Republic of Ireland. The unaudited
condensed consolidated interim financial statements of the Company
for the six months ended 30 June 2024 (the "Interim Financial
Statements") include the Company and its subsidiaries (together
referred to as the "Group"). The Interim Financial Statements
were authorised for issue by the Directors on 6 August
2024.
2.
Basis of preparation
The Interim Financial Statements
have been prepared in accordance with IAS 34, 'Interim Financial
Reporting', as adopted by the EU. The Interim Financial
Statements do not include all of the information required for full
annual financial statements and should be read in conjunction with
the Group's consolidated financial statements for the year ended 31
December 2023 as set out in the 2023 Annual Report (the "2023
Accounts"). The Interim Financial Statements do, however, include
selected explanatory notes to explain events and transactions that
are significant to an understanding of the changes in the Group's
financial position and performance since the last annual financial
statements.
The Interim Financial Statements do
not constitute statutory financial statements. The statutory
financial statements for the year ended 31 December 2023, extracts
from which are included in these Interim Financial Statements, were
prepared under IFRS as adopted by the EU and will be filed with the
Registrar of Companies together with the Company's 2023 annual
return. They are available from the Company website
www.mincon.com and, when filed, from the registrar of companies.
The auditor's report on those statutory financial statements was
unqualified.
The Interim Financial Statements
are presented in Euro, rounded to the nearest thousand, which is
the functional currency of the parent company and also the
presentation currency for the Group's financial
reporting.
The financial information contained
in the Interim Financial Statements has been prepared in accordance
with the accounting policies applied in the 2023
Accounts.
3.
Use of estimates and judgements
The preparation of interim
financial statements requires management to make judgements,
estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities,
income, and expenses. The judgements, estimates and associated
assumptions are based on historical experience and other factors
that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgements about the
carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ
materially from these estimates. In preparing the Interim
Financial Statements, the significant judgements made by management
in applying the Group's accounting policies and the key sources of
estimation uncertainty were the same as those that applied to the
2023 Financial Statements.
4.
Changes in significant accounting policies
There have been no changes in
significant accounting policies applied in these Interim Financial
Statements, they are the same as those applied in the last annual
audited financial statements.
5. Revenue
|
|
H1
2024
|
H1
2023
|
|
|
€'000
|
€'000
|
|
Product revenue:
|
|
|
|
Sale of Mincon product
|
54,828
|
67,190
|
|
Sale of third-party
product
|
13,183
|
13,395
|
|
Total revenue
|
68,011
|
80,585
|
6. Operating Segments
Operating segments 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.
Having assessed the aggregation
criteria contained in IFRS 8 operating segments and considering how
the Group manages its business and allocates resources, the Group
has determined that it has one reportable segment. In particular
the Group is managed as a single business unit that sells drilling
equipment, primarily manufactured by Mincon manufacturing
sites.
Entity-wide disclosures
The business is managed on a
worldwide basis but operates manufacturing facilities and sales
offices in Ireland, Sweden, Finland, South Africa, UK, Australia,
the United States and Canada and sales offices in other locations
including Australia, South Africa, Finland, Spain, Namibia, Ghana,
France, Sweden, Canada, 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):
|
|
|
|
|
|
H1
2024
|
H1
2023
|
|
|
€'000
|
€'000
|
|
Region:
|
|
|
|
Europe, Middle East,
Africa
|
32,952
|
38,290
|
|
Americas
|
26,303
|
34,894
|
|
Australasia
|
7,228
|
6,729
|
|
Ireland
|
1,528
|
672
|
|
Total revenue from continuing operations
|
68,011
|
80,585
|
|
|
|
|
|
Non-current assets by region (location of
assets):
|
|
|
|
30 June
2024
|
31
December
2023
|
|
|
€'000
|
€'000
|
|
Region:
|
|
|
|
Europe, Middle East,
Africa
|
66,870
|
67,976
|
|
Americas
|
16,717
|
16,352
|
|
Australasia
|
10,769
|
11,060
|
|
Total non-current assets(1)
|
94,356
|
95,388
|
|
(1) Non-current assets exclude deferred tax
assets.
|
|
7. Cost of Sales and operating
expenses
Included within cost of sales,
operating costs were the following major components:
|
Cost of sales
|
|
|
|
|
H1
2024
|
H1
2023
|
|
|
€'000
|
€'000
|
|
Raw materials
|
20,459
|
22,364
|
|
Third-party product
purchases
|
10,222
|
10,073
|
|
Employee costs
|
9,961
|
11,347
|
|
Depreciation (note 13)
|
2,827
|
2,643
|
|
In bound costs on
purchases
|
1,548
|
1,744
|
|
Energy costs
|
1,289
|
1,449
|
|
Maintenance of machinery
|
795
|
832
|
|
Subcontracting
|
1,639
|
2,612
|
|
Amortisation of product
development
|
242
|
242
|
|
Other
|
1,673
|
1,634
|
|
Total cost of sales
|
50,655
|
54,940
|
Operating costs
|
|
|
|
|
|
|
|
H1
2024
|
H1
2023
|
|
|
|
€'000
|
€'000
|
|
Employee costs
|
10,203
|
10,857
|
|
Depreciation (note 13)
|
1,221
|
1,331
|
|
Amortisation of acquired
IP
|
139
|
108
|
|
Travel
|
1,075
|
889
|
|
Other
|
4,469
|
4,678
|
|
Total other operating costs
|
17,107
|
17,863
|
The Group recognised €NIL in
Government Grants during H1 2024 (H1 2023: €32,000). These grants
differ in structure from country to country, they primarily relate
to personnel costs.
|
Employee information
|
|
|
|
|
H1
2024
|
H1
2023
|
|
|
€'000
|
€'000
|
|
Wages and salaries
|
17,265
|
19,450
|
|
Social security costs
|
1,602
|
1,426
|
|
Pension costs of defined
contribution plans
|
1,140
|
1,164
|
|
Share based payments (note
11)
|
157
|
164
|
|
Total employee costs
|
20,164
|
22,204
|
|
The average number of employees was as
follows:
|
|
|
|
|
H1
2024
|
H1
2023
|
|
|
Number
|
Number
|
|
Sales and distribution
|
125
|
138
|
|
General and
administration
|
74
|
80
|
|
Manufacturing, service and
development
|
335
|
406
|
|
Average number of persons employed
|
534
|
624
|
8. Income Tax
The Group's consolidated effective
tax rate in respect of operations for the six months ended 30 June
2024 was (-13%) (30 June 2023: 20%). The
effective rate of tax is forecast at 12% for 2024. The
tax charge for the six months ended 30 June 2024
of €116,000 (30 June 2023: €1.2 million) includes deferred tax
relating to movements in provisions, net operating losses forward
and the temporary differences for property, plant and equipment
recognised in the income statement.
The net current tax liability at
period-end was as follows:
|
|
30 June
2024
|
31
December
2023
|
|
|
€'000
|
€'000
|
|
Current tax prepayments
|
1,446
|
1,007
|
|
Current tax payable
|
(313)
|
(1,003)
|
|
Net current tax
|
1,133
|
4
|
The net deferred tax liability at
period-end was as follows:
|
|
30 June
2024
|
31
December
2023
|
|
|
€'000
|
€'000
|
|
Deferred tax asset
|
3,082
|
2,664
|
|
Deferred tax liability
|
(2,123)
|
(2,099)
|
|
Net deferred tax
|
959
|
565
|
9. Share capital
|
|
|
|
|
Allotted, called- up and fully paid
up shares
|
Number
|
€000
|
|
01 January 2024
|
212,472,413
|
2,125
|
|
30 June 2024
|
212,472,413
|
2,125
|
|
|
|
|
Share issuances
|
On 26 November 2013, Mincon Group
plc was admitted to trading on the Enterprise Securities Market
(ESM) of the Euronext Dublin and the Alternative Investment Market
(AIM) of the London Stock Exchange.
|
10. (Loss)/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 periods ended 30 June:
|
|
H1 2024
|
H1 2023
|
|
Numerator (amounts in €'000):
|
|
|
|
(Loss)/Profit attributable to owners
of the Parent
|
(983)
|
4,899
|
|
Denominator (Number):
|
Basic shares outstanding
|
|
Restricted share options
|
Diluted weighted average shares
outstanding
|
|
|
|
212,472,413
|
212,472,413
|
|
3,690,000
|
2,780,000
|
|
216,162,413
|
215,252,413
|
|
Earnings per Ordinary Share
|
|
|
|
Basic (loss)/earnings per share,
€
Diluted earnings per share,
€
|
(0.46c)
(0.00c)
|
2.31c
2.28c
|
For the period ended 30 June 2024,
the inclusion of potentially issuable ordinary shares would result
in a decrease in the loss per share, thus, they are considered to
be anti-dilutive and as such, a diluted loss per share was not
included.
11.
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 participant's 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.
|
Reconciliation of outstanding share options
|
Number of Options in
thousands
|
|
Outstanding on 1 January
2024
|
830
|
|
Forfeited during the
period
|
-
|
|
Exercised during the
period
|
-
|
|
Granted during the period
|
2,860
|
|
Outstanding at 30 June 2024
|
3,690
|
12. Intangible Assets and Goodwill
|
|
Internally generated
intangible assets
|
Goodwill
|
Acquired intellectual
property
|
Total
|
|
|
€'000
|
€'000
|
€'000
|
€'000
|
|
Balance at 1 January 2024
|
6,665
|
32,050
|
1,910
|
40,625
|
|
Amortisation of product
development
|
(242)
|
-
|
-
|
(242)
|
|
Acquired intellectual
property
|
-
|
-
|
303
|
303
|
|
Amortisation of intellectual
property
|
-
|
-
|
(139)
|
(139)
|
|
Foreign currency translation
differences
|
-
|
(26)
|
65
|
39
|
|
Balance at 30 June 2024
|
6,423
|
32,024
|
2,139
|
40,586
|
13.
Property, Plant and Equipment
Capital expenditure in the first
half-year amounted to €2.5 million (30 June 2023: €4.3 million), of
which €2.2 million was invested in plant and equipment (30 June
2023: €4.1 million) and €38,000 in ROU assets (30 June 2023:
€800,000). The depreciation charge for property, plant and
equipment is recognised in the following line items in the income
statement:
|
|
H1
2024
|
H1
2023
|
|
|
€'000
|
€'000
|
|
Cost of sales (note 7)
|
2,827
|
2,643
|
|
Operating Costs (note 7)
|
1,221
|
1,331
|
|
Total depreciation charge for property, plant and
equipment
|
4,048
|
3,974
|
14. Inventory
|
|
30 June
2024
|
31
December
2023
|
|
|
€'000
|
€'000
|
|
Finished goods
|
47,079
|
45,953
|
|
Work-in-progress
|
8,912
|
9,060
|
|
Raw materials
|
13,430
|
14,717
|
|
Total inventory
|
69,421
|
69,730
|
The Group recorded an impairment
of €NIL against inventory to take account of net realisable value
during the period ended 30 June 2024 (30 June 2023:
€58,000).
15. Trade and other receivables
|
|
30 June
2024
|
31
December
2023
|
|
|
|
€'000
|
€'000
|
|
|
Gross receivable
|
27,188
|
23,129
|
|
|
Provision for impairment
|
(1,758)
|
(1,513)
|
|
|
Net
trade and other receivables
|
25,430
|
21,616
|
|
|
|
Provision for
impairment
|
|
|
€'000
|
|
Balance at 1 January 2024
|
(1,513)
|
|
Additions
|
(245)
|
|
Balance at 30 June 2024
|
(1,758)
|
|
|
|
|
| |
The following table provides the
information about the exposure to credit risk and ECL's for trade
receivables as at 30 June 2024.
|
|
Weighted average loss rate
%
|
Gross carrying amount
€'000
|
Loss
allowance
€'000
|
|
Current (not past due)
|
1.8%
|
19,194
|
346
|
|
1-30 days past due
|
10.6%
|
3,392
|
360
|
|
31-60 days past due
|
11.9%
|
2,868
|
341
|
|
61 to 90 days
|
17%
|
1,233
|
210
|
|
More than 90 days past
due
|
100%
|
501
|
501
|
|
Net trade and other
receivables
|
|
27,188
|
1,758
|
The following table provides the
information about the exposure to credit risk and ECL's for trade
receivables as at 31 December 2023.
|
|
Weighted average loss rate
%
|
Gross carrying amount
€'000
|
Loss
allowance
€'000
|
|
Current (not past due)
|
2%
|
15,924
|
280
|
|
1-30 days past due
|
9%
|
3,145
|
275
|
|
31-60 days past due
|
22%
|
1,538
|
345
|
|
61 to 90 days
|
15%
|
2,250
|
341
|
|
More than 90 days past
due
|
100%
|
272
|
272
|
|
Net trade and other
receivables
|
|
23,129
|
1,513
|
16. Loans, borrowings and lease liabilities
|
|
|
30 June
2024
|
31
December
2023
|
|
|
Maturity
|
€'000
|
€'000
|
|
Loans and borrowings
|
2024-2036
|
32,320
|
32,486
|
|
Lease
liabilities..........................................................................................................................................................
|
2024-2032
|
6,231
|
7,626
|
|
Total Loans, borrowings and lease
liabilities
|
|
38,551
|
40,112
|
|
Current
|
|
13,422
|
14,080
|
|
Non-current
|
|
25,129
|
26,032
|
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.
17. Financial Risk Management
The Group is exposed to various
financial risks arising in the normal course of business. Our
financial risk exposures are predominantly related to changes in
foreign currency exchange rates as well as the creditworthiness of
our financial asset counterparties.
The half-year financial statements
do not include all financial risk management information and
disclosures required in the annual financial statements and should
be read in conjunction with the 2023 Annual Report. There have been
no changes in our risk management policies since year-end and no
material changes in our interest rate risk.
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 30 June 2024 and 31 December 2023 were as
follows:
|
|
30 June
2024
|
31 December
2023
|
|
|
€'000
|
€'000
|
|
Cash and cash equivalents
|
15,768
|
20,482
|
|
Loans and borrowings
|
38,551
|
40,112
|
|
Shareholders' equity
|
152,162
|
154,251
|
17. Financial Risk Management (continued)
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. 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
appropriateness of this policy.
The Group's global operations
create a translation exposure on the Group's net assets since the
financial statements of entities with non-euro functional
currencies are translated to euro when preparing the consolidated
financial statements. The Group does not use derivative instruments
to hedge these net investments.
The principal foreign currency
risks to which the Group is exposed relate to movements in the
exchange rate of the euro against US dollar, South African rand,
Australian dollar, Swedish krona, British Pound and Canadian
dollar.
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.
In 2024, 55% (2023: 56%) of
Mincon's revenue €68 million (30 June 2023: €81 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.
Currency also has a significant
transactional impact on the Group as outstanding balances in
foreign currencies are retranslated at closing rates at each period
end. The changes in the South African Rand, Australian Dollar,
Swedish Krona and British Pound have either weakened or
strengthened, resulting in a foreign exchange loss being recognised
in other comprehensive income and a significant movement in foreign
currency translation reserve.
Average and closing exchange rates
for the Group's primary currency exposures were as disclosed in the
table below for the period presented.
|
|
30 June
2024
|
H1 2024
|
31
December
2023
|
H1 2023
|
|
Euro
exchange rates
|
Closing
|
Average
|
Closing
|
Average
|
|
US Dollar
|
1.07
|
1.08
|
1.10
|
1.08
|
|
Australian Dollar
|
1.61
|
1.64
|
1.62
|
1.60
|
|
Canadian Dollar
|
1.47
|
1.47
|
1.46
|
1.46
|
|
Great British Pound
|
0.85
|
0.85
|
0.87
|
0.88
|
|
South African Rand
|
19.46
|
20.22
|
20.18
|
19.67
|
|
Swedish Krona
|
11.35
|
11.39
|
11.13
|
11.33
|
There has been no material change
in the Group's currency exposure since 31 December 2023. Such
exposure comprises the monetary assets and monetary liabilities
that are not denominated in the functional currency of the
operating unit involved.
17. Financial Risk Management (continued)
c) Fair values
Financial instruments carried at fair value
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 not
dependent on the future performance of the acquired businesses
against predetermined targets and on management's current
expectations thereof.
Movements in the year in respect of Level 3 financial
instruments carried at fair value
The movements in respect of the
financial assets and liabilities carried at fair value in the
period ended to 30 June 2024 are as follows:
|
|
Deferred
consideration
|
|
|
€'000
|
|
Balance at 1 January 2024
|
1,998
|
|
Cash payment
|
(202)
|
|
Foreign currency translation
adjustment
|
45
|
|
Unwinding of discount on deferred
consideration
|
(4)
|
|
Balance at 30 June 2024
|
1,837
|
18. Commitments
The following capital commitments
for the purchase of property, plant and equipment had been
authorised by the directors at 30 June 2024:
|
|
Total
|
|
|
€'000
|
|
Contracted for
|
1,013
|
|
Not contracted for
|
37
|
|
Total
|
1,050
|
19. Litigation
The Group is not involved in legal
proceedings that could have a material adverse effect on its
results or financial position.
20. Related Parties
The Group has relationships with
its subsidiaries, directors and senior key management personnel.
All transactions with subsidiaries eliminate on consolidation and
are not disclosed.
As at 30 June 2024, the share
capital of Mincon Group plc was 56.32% owned by Kingbell Company
(31 December 2023 56.32%), this company is ultimately controlled by
Patrick Purcell and members of the Purcell family. Patrick Purcell
is also a director of the Company. The Group paid the final
dividend for 2023 in June 2024, Kingbell Company receive €1.3
million.
There were no other related party
transactions in the half year ended 30 June 2024 that affected the
financial position or the performance of the Company during that
period and there were no changes in the related party transactions
described in the 2023 Annual Report that could have a material
effect on the financial position or performance of the Company in
the same period.
21. Subsequent events
There have been no significant
events subsequent to the period end 30 June 2024 affecting the
Group.
22. Approval of financial statements
The Board of Directors approved
the interim condensed consolidated financial statements for the six
months ended 30 June 2024 on 06 August 2024.