REG - Mincon Group Plc - Half Yearly Report
08/08/2022 07:00
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RNS Number : 1482V Mincon Group Plc 08 August 2022
Mincon Group plc
("Mincon" or the "Group")
2022 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 2022.
H1 2022 Key Financial Highlights (comparison to H1 2021):
· Revenue up 27% to €85.1 million
- Of which Mincon manufactured product up 24% to €70.9 million
- Of which non-Mincon manufactured product up 48% to €14.2 million
· Gross Profit up 18% to €27.1 million
· EBITDA up 15% to €12.7 million
· Operating Profit up 18% to €8.8 million
Joe Purcell, Chief Executive Officer, commenting on the results, said:
"We carried forward the momentum from H2 2021 into this period with 27%
revenue growth over H1 2021. This was achieved by continuing to catch up on
our strong order books for all our markets, with growth achieved across all
three Industries of mining, construction, and waterwell/geothermal. The
revenue growth was achieved by increased output from our factories as a result
of investment in 2021 in new capacity, as well as the acquisition of Attakroc
and Spartan Drilling Tools in North America. A particularly pleasing aspect of
the growth was the increase in construction revenue, most notably from the
delivery of products to a large contract in the USA.
The strong growth in revenue has been accompanied by some pressure on our
margins, consistent with the trends noted in our final 2021 results and Q1
2022 trading update, due to cost increases across many fronts, but
particularly in raw materials and energy, as well as freight, partly arising
from the use of air freight to reduce our order backlog.
Sea freight conditions remain challenging, with no improvement in sight, so we
will continue our current policy of holding high levels of finished goods
inventory so that we can give our customers the excellent service that they
expect from Mincon. On a more positive note, there has been a recent reduction
in the constraints around raw material availability, which has enabled us to
start unwinding raw material inventories, due to better supply conditions.
We have implemented price increases, and these are starting to take effect,
but constant vigilance is required to keep up with the pace of the cost
inflationary pressures that we are seeing.
On the product development front, we have made some good progress on the
Greenhammer, and I am very pleased to report that we are in discussions with a
major mining contractor in Western Australia on commercialising the system and
we hope to have a further update on this shortly. This is the culmination of
many years of development work, and we are confident that it can have a
significant impact on both Mincon and hard rock surface mining more generally.
This Greenhammer development has not gone unnoticed by the mining industry in
Western Australia, who are keen to monitor the performance of this new system.
In other product development news, once Malaysia re-opened for travel, we made
a trip to see how our large hammer and bit prototype had coped with the
drilling conditions. We were pleased to see that they were in excellent
condition which augurs well for the future of this product for large diameter
drilling.
Our Subsea project progresses well, and we have successfully developed a
small-scale prototype water-powered hammer and bit. This is an important early
step, as this design will be the cornerstone of our offering, once we can
develop a commercial solution on successful completion of the Disruptive
Technologies Innovation Fund (DTIF) project on which we are working with our
consortium partners.
On the topic of sustainability, I am very pleased that Pirita Mikkanen joined
our board in March this year. Pirita brings a wealth of experience in
sustainability and energy efficiency which are important near-term
considerations for Mincon, and she has agreed to take the chair of our newly
formed Environment and Sustainability board sub-committee.
One of the first tasks of the committee was the oversight and approval of our
first sustainability report which will be published later this month.
Conclusion
While global conditions remain challenging, we are tackling and overcoming the
difficulties presented. We have introduced price increases throughout the
period and as these take effect they will ease the pressure on margins in H2
2022. Our engineering skillsets continue to deliver, and our ambition has been
reinforced by the progress on this front. Our manufacturing strength has
grown, enabling us to reduce backlogs as we manage our strong order books.
Our strong market presence across the globe has ensured that our customers get
the service that they should expect. I would like to acknowledge the efforts
of all my colleagues in ensuring this strong performance for the first half of
2022 and continuing our growth for the rest of the year."
Joseph Purcell
Chief Executive Officer
Market Industries and Product Mix
We have achieved strong revenue growth of 27% in this reported period. The
vast majority of our growth has been organic with a contribution from currency
tailwinds, supported by a solid performance from our H2 2021 acquisition. We
had positive revenue growth across our three industries.
Industry mix (by revenue)
H1 2022 H1 2021
· Mining 48% 52%
· Construction 37% 30%
· Waterwell / Geothermal 15% 18%
Our revenue from the construction industry grew by 55% in the period, mostly
due to large construction projects in North America. Additionally, we
experienced encouraging growth in Europe & Middle East region as we rolled
out improved product performance for the construction industry. We have
expanded our footprint in the construction industry, and we began invoicing
outside of our two main construction industry regions of the Americas and
Europe & Middle East. Though the amount invoiced is not yet of a
substantial size, it is encouraging for the future, as our products and
service offering to this industry becomes more widely known. The strong US
dollar performance in this period also added to the growth of our construction
revenue.
Mining is our largest industry; it has been the mainstay of our four regions
over the past decade. We gained further inroads in market share with
substantial organic revenue growth in H1 2022. Overall growth in mining
revenue, including acquisitions, was 18% for the Group during the period. As
the Covid-19 restrictions eased at the end of Q1 2022, it gave us the
opportunity to grow our revenue in the Africa region. We have also had strong
organic mining revenue growth in North America, along with a contribution from
H2 2021 and H1 2022 acquisitions. Our mining revenue in the Europe &
Middle East region increased during the period albeit with the suspension of
supply to Russian customers at the end of February this year. Australasia
mining revenue contracted during the period as the customer mix changed in the
region. Currency tailwinds also played a material part in our mining revenue
growth for the Group during this period.
The waterwell/geothermal industry is a significant and important industry for
Mincon. It is mostly concentrated in two of our four regions, the Americas,
and Europe & Middle East. We experienced positive waterwell/geothermal
revenue growth in the Americas as the industry there recovers from the
pandemic. Revenue in the Europe & Middle East region was flat for H1 2022.
Most of the revenue we earn within the waterwell/geothermal industry in the
Europe & Middle East region is through supplying the geothermal industry,
and that industry has not extended past H1 2021 levels in this period.
The revenue earned by our H2 2021 acquisition has mostly contributed to the
increase in non-Mincon manufactured product revenue. However, this acquisition
is transitioning, where possible, to sell more Mincon products while reducing
its non-Mincon manufactured inventory. Our increase in revenue to the mining
industry is partially made up of non-Mincon product sales, due to the nature
of mining in certain regions, and that has also contributed to the change in
product mix percentage for the period.
Earnings
Inflationary factors have had a large impact on our input costs during the
reporting period. We have experienced inflation on all fronts; in
manufacturing, procurement of non-Mincon manufactured product, employee costs
and operational costs in the regions in which we operate. We have sought to
increase prices for our product and traded product to mitigate the pressure on
our margins, however in some cases, there is a lag between cost increases and
price increases, and therefore we have absorbed some of the increased costs
during the period.
The price increases we have introduced have been rolled out gradually across
the regions, with the majority of planned increases being fully introduced
towards the end of the period which has eased the pressure on our margins. The
increased sales volume of Mincon manufactured product has also contributed to
some easing on margin pressure, as our fixed overheads, such as depreciation
and fixed rents, are spread across a larger manufactured volume.
The increase in our raw material costs has had the most significant impact on
our manufacturing margin for the period. The cost increase is mostly due to
our raw material suppliers passing on their increased production energy costs
to their customers.
Our own manufacturing energy costs also significantly increased in H1 2022,
particularly in our European manufacturing plants, as these costs soared
across the region. We are commissioning a more energy efficient heat treatment
plant in our Shannon factory in H2 2022, and once commissioned this will play
a part in offsetting some of these cost increases incurred in H1 2022.
Due to the increase in demand for our products in the period, our
manufacturing lead times increased. To ensure timely delivery to our
customers, we continued to transport high volumes of our own product by air.
We also outsourced some manufacturing to ease the pressure within the
factories. As we roll out further capacity in H2 2022, we should be able to
bring further manufacturing back in-house and thus increase our manufacturing
margin.
Operating costs, excluding acquisitions, have increased also due to
inflationary pressures, particularly employee costs across all regions, as we
endeavour to retain key employees. With the easing of Covid-19 travel
restrictions during the period, our sales team took the opportunity to visit
our overseas customers and to visit new customers to ensure we maintain strong
customer relationships. This increased travel activity, together with the
increase in post-pandemic travel costs, and an increase the number of in
customers, has led to a considerable operational cost increase for the Group
in this period.
As a result of these inflationary cost increases during the period, the Group
achieved a lower gross margin percentage versus the prior period. However,
through the anticipated impact of passing on price increases to customers, raw
material supply pressures unwinding and a normalisation of product mix with
the sale of more Mincon-produced product, the Group is confident of improving
this margin performance in the second half of the year.
Balance sheet and cash
With the sharp increased demand for our product over the reported period, we
have experienced a rise in working capital requirements and this has
significantly reduced cash generated from our operating activities.
We have been developing new manufacturing techniques with key plant partners,
while also developing property to increase our manufacturing footprint. We
have used the cash generated from our operations to fund these important
projects for the future development of the Group.
We remain prudent in our approach to borrowing, particularly during
inflationary periods. However, we have borrowed further across the Group in
the period and have used this additional lending to finance the commissioning
of plant and equipment in our factories, and to support our working capital
requirements in the regions where we have experienced a surge in demand for
our products.
Our concerns in relation to our supply chain are easing as raw material
supplies are becoming more available in most areas in which we manufacture. As
this trend continues across the Group, we are prepared to reduce the level of
raw materials held in terms of the number of weeks being carried.
Sea freight conditions remain challenging and thus we are holding larger
amounts of Mincon manufactured inventory, and until these issues within that
industry ease we will continue to hold buffer stocks of our own inventory.
During the period we paid €1 million for current year acquisitions and
€0.4 million for historical acquisitions. We also paid a final year dividend
for 2021 of €2.2 million towards the end of this period.
The Board of Mincon has approved the payment of an interim dividend in the
amount of 1.05 cent per ordinary share, which will be paid on 9 September 2022
to shareholders on the register at the close of business on 19 August 2022.
08 AUGUST 2022
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 Adviser and Joint Tel: +353 (1) 679 6363
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
2022 Half Year Financial Results
Condensed consolidated income statement
For the 6 months ended 30 June 2022
Unaudited Unaudited
H1 2022 H1 2021
Notes €'000 €'000
Continuing operations
Revenue 6 85,168 67,000
Cost of sales 8 (58,106) (44,094)
Gross profit 27,062 22,906
Operating costs 8 (18,238) (15,402)
Operating profit 8,824 7,504
Finance income 11 15
Finance cost (623) (406)
Foreign exchange gain/(loss) 835 868
Movement on deferred consideration 10 (1)
Profit before tax 9,057 7,980
Income tax expense (2,527) (1,623)
Profit for the period 6,530 6,357
Earnings per Ordinary Share
Basic earnings per share 12 3.07c 2.99c
Diluted earnings per share 12 2.99c 2.91c
Condensed consolidated statement of comprehensive income
For the 6 months ended 30 June 2022
Unaudited Unaudited
2022 2021
H1 H1
€'000 €'000
Profit for the period 6,530 6,357
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation - foreign operations 3,814 1,340
Other comprehensive profit for the period 3,814 1,340
Total comprehensive income for the period 10,344 7,697
The accompanying notes are an integral part of these financial statements.
Consolidated statement of financial position
As at 30 June 2022
Unaudited 31 December
30 June 2021
2022
Notes €'000 €'000
Non-Current Assets
Intangible assets and goodwill 14 41,423 40,157
Property, plant and equipment 15 51,167 50,660
Deferred tax asset 10 1,089 1,075
Total Non-Current Assets 93,679 91,892
Current Assets
Inventory and capital equipment 16 74,560 63,050
Trade and other receivables 17 29,328 25,110
Prepayments and other current assets 12,347 8,822
Current tax asset 10 75 521
Cash and cash equivalents 15,331 19,049
Total Current Assets 131,641 116,552
Total Assets 225,320 208,444
Equity
Ordinary share capital 11 2,125 2,125
Share premium 67,647 67,647
Undenominated capital 39 39
Merger reserve (17,393) (17,393)
Share based payment reserve 13 2,959 2,695
Foreign currency translation reserve (1,354) (5,168)
Retained earnings 98,506 94,207
Total Equity 152,529 144,152
Non-Current Liabilities
Loans and borrowings 18 24,303 23,265
Deferred tax liability 10 1,897 1,622
Deferred consideration 19 4,123 4,224
Other liabilities 801 852
Total Non-Current Liabilities 31,124 29,963
Current Liabilities
Loans and borrowings 18 13,430 11,205
Trade and other payables 19,199 15,683
Accrued and other liabilities 7,676 6,027
Current tax liability 10 1,362 1,414
Total Current Liabilities 41,667 34,329
Total Liabilities 72,791 64,292
Total Equity and Liabilities 225,320 208,444
The accompanying notes are an integral part of these financial statements.
Condensed consolidated statement of cash flows
For the 6 months ended 30 June 2022
Unaudited Unaudited
H1 H1
2022 2021
€'000 €'000
Operating activities:
Profit for the period 6,530 6,357
Adjustments to reconcile profit to net cash provided by operating activities:
Depreciation 3,890 3,442
Amortisation of intangible asset 92 145
Movement on deferred consideration (10) 1
Finance cost 623 406
Finance income (11) (15)
Loss/(Gain) on sale of property, plant & equipment 154 (78)
Income tax expense 2,527 1,623
Other non-cash movements (831) (881)
12,964 11,000
Changes in trade and other receivables (3,396) (1,193)
Changes in prepayments and other assets (3,333) (3,274)
Changes in inventory (9,362) (4,179)
Changes in trade and other payables 4,599 2,085
Cash provided by operations 1,472 4,439
Interest received 11 15
Interest paid (623) (406)
Income taxes paid (1,793) (2,146)
Net cash provided (used in)/by operating activities (933) 1,902
Investing activities
Purchase of property, plant and equipment (2,327) (2,501)
Proceeds from the sale of property, plant and equipment 605 -
Investment in intangible assets (286) (419)
Proceeds from the issuance of share capital - 8
Acquisitions, net of cash required (1,014) -
Payment of deferred consideration (204) (1,832)
Investment in acquired intangible assets (147) (359)
Proceeds from sale of discontinued operations - 111
Net cash provided used in investing activities (3,373) (4,992)
Financing activities
Dividends paid (2,231) (4,462)
Repayment of borrowings (1,162) (1,392)
Repayment of lease liabilities (1,349) (1,734)
Drawdown of loans 5,159 5,137
Net cash provided by/(used in) financing activities 417 (2,451)
Effect of foreign exchange rate changes on cash 171 180
Net decrease in cash and cash equivalents (3,718) (5,361)
Cash and cash equivalents at the beginning of the year 19,049 17,045
Cash and cash equivalents at the end of the period 15,331 11,684
The accompanying notes are an integral part of these financial statements.
Condensed consolidated statement of changes in equity for the 6 months ended
30 June 2022
Share Share premium Merger reserve Un-denominated Share based payment reserve Foreign Retained earnings Unaudited Total
capital capital currency translation reserve equity
€'000 €'000 €'000 €'000 €'000 €'000 €'000 €'000
Balances at 1 July 2021 2,125 67,647 (17,393) 39 2,418 (6,693) 88,195 136,338
Comprehensive income:
Profit for the period - - - - - - 8,243 8,243
Other comprehensive income/(:
Foreign currency translation - - - - - 1,525 - 1,525
Total comprehensive income 1,525 8,243 9,768
Transactions with Shareholders:
Share-based payments - - - - 277 - - 277
Dividend payment - - - - - - (2,231) (2,231)
Total transactions with Shareholders - - - - 277 - (2,331) (1,954)
Balances at 31 December 2021 2,125 67,647 (17,393) 39 2,695 (5,168) 94,207 144,152
Comprehensive income:
Profit for the period - - - - - - 6,530 6,530
Other comprehensive income:
Foreign currency translation - - - - - 3,814 - 3,814
Total comprehensive income 3,814 6,530 10,344
Transactions with Shareholders:
Share-based payments - - - - 264 - - 264
Dividend payment - - - - - - (2,231) (2,231)
Total transactions with Shareholders - - - - 264 - (2,231) (1,967)
Balances at 30 June 2022 2,125 67,647 (17,393) 39 2,959 (1,354) 98,506 152,529
The accompanying notes are an integral part of these financial statements
Notes to the consolidated interim financial statements
1 Description of business
Mincon Group plc ("the Company") is a company incorporated in the Republic of
Ireland. The unaudited consolidated interim financial statements of the
Company for the six months ended 30 June 2022 (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 8 August 2022.
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 2021 as set
out in the 2021 Annual Report (the "2021 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 2021, 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 2021 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 2021
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 2021 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. Financial Reporting impact due to the Covid-19 Pandemic:
a. Government Grants
The Group received government grants in certain countries where the Group
operates. These grants differ in structure from country to country but
primarily relate to personnel costs. During the six months ended 30 June 2022,
when the terms attached to the grants were complied with, the grant was
recognised in operating costs in the consolidated income statement.
b. Expected Credit losses
The Group has not witnessed any trends in its analysis of its customers that
would indicate an adjustment to its trade receivables as at the 30 June 2022
due to the Covid-19 pandemic.
c. Inventory
The Group has not experienced any material impact on its valuation of
inventory as of 30 June 2022, that can be directly attributable to the
Covid-19 pandemic.
d. Risk Assessment
The Mincon Group's operations are spread globally. This brings various
exposures, such as trading and financial, and strategic risks. The primary
trading risks would encompass operational, legal, regulatory and compliance.
Strategic risks would cover long term risks effecting the business such as
evolving industry trends, technological advancements, and global economic
developments. Financial risks extend to but are not limited to pricing risks,
currency risks, interest rate volatility and taxation risks. The risk of
managing Covid-19 is encompassed with the abovementioned risks and therefore
the Group considers its management of these risks as a whole.
6. Revenue
H1 H1
2022 2021
€'000 €'000
Product revenue:
Sale of Mincon product 70,906 57,390
Sale of third-party product 14,262 9,610
Total revenue 85,168 67,000
7. 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, 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.
7. Operating Segments (continued)
Revenue by region (by location of customers):
H1 H1
2022 2021
€'000 €'000
Region:
Europe, Middle East, Africa 42,805 38,340
Americas 33,649 20,010
Australasia 8,714 8,650
Total revenue from continuing operations 85,168 67,000
Non-current assets by region (location of assets):
30 June 31 December
2022 2021
€'000 €'000
Region: ( )
Europe, Middle East, Africa 64,745 64,297
Americas 16,026 14,682
Australasia 11,819 11,838
Total non-current assets((1)) 92,590 90,817
(1) Non-current assets exclude deferred tax assets.
8. Cost of Sales and operating expenses
Included within cost of sales, operating costs were the following major
components:
Cost of sales
H1 H1
2022 2021
€'000 €'000
Raw materials 22,621 17,633
Third-party product purchases 10,886 7,111
Employee costs 11,599 9,751
Depreciation 2,628 2,259
In bound costs on purchases 2,512 1,767
Energy costs 1,562 999
Maintenance of machinery 1,000 767
Subcontracting 3,860 2,852
Other 1,438 955
Total cost of sales 58,106 44,094
Operating costs
H1 H1
2022 2021
€'000 €'000
Employee costs 10,835 9,343
Depreciation 1,262 1,183
Amortisation of acquired IP 91 145
Travel 918 499
Other 5,132 4,232
Total other operating costs 18,238 15,402
The Group recognised €194,000 in Government Grants during H1 2022 (H1 2021:
€307,000). These grants differ in structure from country to country, they
primarily relate to personnel costs.
Employee information
H1 H1
2022 2021
€'000 €'000
Wages and salaries 18,817 16,255
Social security costs 2,278 1,935
Pension costs of defined contribution plans 1,075 745
Share based payments (note 13) 264 159
Total employee costs 22,434 19,094
The Group capitalised payroll costs of €151,000 in H1 2022 in relation to
research and development.
The average number of employees was as follows:
H1 H1
2022 2021
Number Number
Sales and distribution 135 126
General and administration 80 71
Manufacturing, service and development 416 370
Average number of persons employed 631 567
9. Acquisitions and disposals
Acquisitions
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 €1,014,000
A. Consideration transferred for acquisitions
Spartan Drilling Tools Total
€'000 €'000
Cash 1,014 1,014
Total consideration transferred 1,014 1,014
B. Goodwill
Spartan Drilling Tools Total
€'000 €'000
Consideration transferred 1,014 1,014
Fair value of identifiable net assets (815) (815)
Goodwill 199 199
10. Income Tax
The Group's consolidated effective tax rate in respect of operations for the
six months ended 30 June 2022 was 28% (30 June 2021: 20%). The effective rate
of tax is forecast at 25% for 2021. The tax charge for the six months ended 30
June 2022 of €2.5 million (30 June 2021: €1.6 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 31 December
2022 2021
€'000 €'000
Current tax prepayments 75 521
Current tax payable (1,362) (1,414)
Net current tax (1,287) (893)
The net deferred tax liability at period-end was as follows:
30 June 31 December
2022 2021
€'000 €'000
Deferred tax asset 1,089 1,075
Deferred tax liability (1,897) (1,622)
Net deferred tax (808) (547)
11. Share capital
Allotted, called- up and fully paid up shares Number €000
01 January 2022 212,472,413 2,125
30 June 2022 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.
12. 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 30
June:
H1 2022 H1 2021
Numerator (amounts in €'000):
Profit attributable to owners of the Parent 6,530 6,357
Denominator (Number):
Basic shares outstanding
Restricted share options
Diluted weighted average shares outstanding
212,472,413 212,472,413
5,820,000 6,041,000
218,292,413 218,513,413
Earnings per Ordinary Share
Basic earnings per share, € 3.07c 2.99c
Diluted earnings per share, € 2.99c 2.91c
Diluted weighted average shares outstanding
212,472,413
212,472,413
5,820,000
6,041,000
218,292,413
218,513,413
Earnings per Ordinary Share
Basic earnings per share, €
Diluted earnings per share, €
3.07c
2.99c
2.99c
2.91c
13. 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.
Reconciliation of outstanding share options Number of Options in thousands
Outstanding on 1 January 2022 5,820
Forfeited during the period -
Exercised during the period -
Granted during the period -
Outstanding at 30 June 2022 5,820
14. Intangible Assets
Product development Goodwill Total
Acquired intellectual property
€'000 €'000 €'000 €'000
Balance at 1 January 2022 6,986 32,545 626 40,157
Internally developed 286 - - 286
Acquisitions - 199 - 199
Acquired intellectual property - - 147 147
Amortisation of intellectual property - - (92) (92)
Foreign currency translation differences - 665 61 726
Balance at 30 June 2022 7,272 33,409 742 41,423
15. Property, Plant and Equipment
Capital expenditure in the first half-year amounted to €2.3 million (30 June
2021: €4.5 million), of which €1.9 million was invested in plant and
equipment (30 June 2021: €2.5 million) and €400,000 million in ROU assets
(30 June 2021: €2 million). The depreciation charge for property, plant and
equipment is recognised in the following line items in the income statement:
H1 H1
2022 2021
€'000 €'000
Cost of sales 2,628 2,259
Operating Costs 1,262 1,183
Total depreciation charge for property, plant and equipment 3,890 3,442
16. Inventory
30 June 31 December
2022 2021
€'000 €'000
Finished goods 46,795 42,396
Work-in-progress 13,145 9,596
Raw materials 14,620 11,058
Total inventory 74,560 63,050
The Group recorded an impairment of €87,000 against inventory to take
account of net realisable value during the period ended 30 June 2022 (30 June
2021: €NIL).
17. Trade and other receivables
30 June 31 December
2022 2021
€'000 €'000
Gross receivable 30,562 26,047
Provision for impairment (1,234) (937)
Net trade and other receivables 29,328 25,110
Provision for impairment
€'000
Balance at 1 January 2022 (937)
Additions (297)
Balance at 30 June 2022 (1,234)
The following table provides the information about the exposure to credit risk
and ECL's for trade receivables as at 30 June 2022.
Weighted average loss rate % Gross carrying amount €'000 Loss
allowance
€'000
Current (not past due) 1% 22,314 223
1-30 days past due 5% 4,200 209
31-60 days past due 12% 2,683 320
61 to 90 days 23% 1,143 260
More than 90 days past due 100% 222 222
Net trade and other receivables 30,562 1,234
The following table provides the information about the exposure to credit risk
and ECL's for trade receivables as at 31 December 2021.
Weighted average loss rate % Gross carrying amount €'000 Loss
allowance
€'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
18. Loans, borrowings and lease liabilities
30 June 31 December
2022 2021
Maturity €'000 €'000
Loans and borrowings 2022-2036 27,316 23,391
Lease liabilities 2022-2031 10,417 11,079
Total Loans, borrowings and lease liabilities 37,733 34,470
Current 13,430 11,205
Non-current 24,303 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.
19. 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 2021 Annual Report.
There have been no changes in our risk management policies since year-end and
no material changes in our interest rate risk.
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
30 June 2022 and 31 December 2021 were as follows:
30 June 2022 31 December 2021
€'000 €'000
Cash and cash equivalents 15,331 19,049
Loans and borrowings 37,733 34,470
Shareholders' equity 152,529 144,152
19. 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 2022, 58% (2021: 56%) of Mincon's revenue €85 million (30 June 2021:
€67 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 H1 2022 31 December H1 2021
2022 2021
Euro exchange rates Closing Average Closing Average
US Dollar 1.04 1.09 1.13 1.20
Australian Dollar 1.52 1.52 1.56 1.56
Canadian Dollar 1.35 1.39 1.44 1.50
Great British Pound 0.86 0.84 0.84 0.87
South African Rand 17.02 16.83 18.06 17.51
Swedish Krona 10.70 10.47 10.26 10.12
There has been no material change in the Group's currency exposure since 31
December 2021. Such exposure comprises the monetary assets and monetary
liabilities that are not denominated in the functional currency of the
operating unit involved.
19. 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 2022 are as follows:
Deferred
consideration
€'000
Balance at 1 January 2022 4,224
Arising on acquisition -
Cash payment (204)
Fair value movement (10)
Foreign currency translation differences 113
Balance at 30 June 2022 4,123
20. Commitments
The following capital commitments for the purchase of property, plant and
equipment had been authorised by the directors at 30 June 2022:
Total
€'000
Contracted for 4,617
Not contracted for 37
Total 4,654
21. Litigation
The Group is not involved in legal proceedings that could have a material
adverse effect on its results or financial position.
22. 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 2022, the share capital of Mincon Group plc was 56.32% owned by
Kingbell Company (31 December 2021 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 2021 in June 2022, Kingbell Company receive €1.3 million.
There were no other related party transactions in the half year ended 30 June
2022 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 2021 Annual Report that could have a material effect on the
financial position or performance of the Company in the same period.
23. Events after the reporting date
Dividend
On 4 August 2022, the Board of Mincon Group plc approved the payment of an
interim dividend in the amount of €0.0105 (1.05 cent) per ordinary share.
This amounts to a dividend payment of €2.2 million which will be paid on 09
September 2022 to shareholders on the register at the close of business on 19
August 2022.
24. Approval of financial statements
The Board of Directors approved the interim condensed consolidated financial
statements for the six months ended 30 June 2022 on 08 August 2022.
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