REG - Mincon Group Plc - Half Yearly Report
08/08/2023 07:00
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RNS Number : 5703I Mincon Group Plc 08 August 2023
Mincon Group plc
("Mincon" or the "Group")
2023 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 2023.
H1 2023 Key Financial Highlights:
H1 2023 H1 2022
· Revenue €80.6 million €85.1 million
- Of which Mincon manufactured product €67.2 million €70.9 million
- Of which Non-Mincon manufactured product €13.4 million €14.2 million
· Gross Profit €25.6 million €27.1 million
· EBITDA €11.8 million €12.7million
· Operating Profit €7.8 million €8.8 million
Joe Purcell, Chief Executive Officer, commenting on the results, said:
"H1 2023 has been a challenging period for Mincon with our revenue behind the
same period in the prior year, primarily due to a shortfall in our sales to
the mining industry and FX headwinds. This performance in the sector is down
to several factors but mainly due to reduced exploration activity and certain
larger customers taking advantage of improved freight conditions to reduce
inventories. We are, however, working on regaining some of this revenue with
some positive drilling results from customer testing that we are doing in all
our regions, most notably in APAC.
In positive news, it is very pleasing to see that we have consolidated the
gains we made last year in the construction sector, and more importantly, the
revenue mix includes a higher proportion of smaller projects, which gives a
more sustainable spread to the business. It is notable that there continues to
be a strong pipeline of large projects that we are looking to land in H2 and
beyond. Our sales into the water well/geothermal well drilling market are up,
driven by gains in EME and the Americas.
As a result of the lower mining revenues, we have looked closely at our costs
and have taken selective, targeted action to reduce costs where appropriate.
The results of this cost reduction exercise will be seen in H2, which should
help us to recover margins. In July, we announced the appointment of Tom
Purcell to the role of COO for the Group. Most recently, Tom has been leading
a project to reduce our inventories across the Group and we are pleased to
report that we have started to make good progress in this area.
I am pleased to report that our sustainability report for 2022 will be
published in conjunction with these results. This will show that we have
achieved initial progress on our ambitious goals to reduce scope 1 and 2
emissions. It also indicates that our biggest challenge and opportunity to
reduce emissions is around the end-use of our products. This has been well
known to us for many years and is what has driven our ambition and engineering
innovations to focus on the drilling efficiency of our products, whether it be
through increased rate of drilling, longer product life or reliability.
These attributes are particularly noticeable with some of the new product
develpoment projects that we have been working on, such as our Greenhammer
system. We have engaged with a major rig manufacturer on a collaboration to
prove out the system by converting one of their rigs and testing it at a
location in the US. This is an attractive location as the largest rig
population suitable for conversion to Greenhammer is in this market. Another
attractive feature of this collaboration is the service footprint that we both
have in this market. We remain heavily focused on getting the system running
in Western Australia and expect the system to return to operation in the
coming month at the gold mine where we have been carrying out drilling in
recent months.
Another project which can deliver positive efficiency gains is our large
hammer and bit project that we have been testing in Malaysia. We have had
excellent performance figures when it has been run and we have been onsite a
number of times to see the system in action. We see a great opportunity to
push this out to the large diameter drilling market to replace incumbent
systems that have much lower productivity with resulting higher emissions.
Our Subsea project has been gathering momentum and at our recent AGM we made a
presentation to assembled shareholders and guests in conjunction with our
collaboration partners, Subsea Micropiles. We had very positive feedback from
this event, and we have commenced the assembly of the subsea rig at our
facility in Shannon. We are working hard to have the subsea testing underway
within the next six months. There remains an enormous opportunity for Mincon
with this exciting project on the successful completion of our collaboration
with Subsea Micropiles and our University partners.
These transformational product development projects as well as the continuous
improvement initiatives we are engaged in across our product lines give us
confidence about the future of our business. To ensure we are adequately
positioned to capitalise on these opportunities, we invested a further €4.3
million in property, plant and equipment during the period, which includes a
step-change in efficiency gains with a new heat treatment facility at our
Shannon plant. This will be followed up with the commissioning of a new
manufacturing building at our Shannon site and installing purpose-built
robotic machining cells in the extension to cater for the growth opportunities
we see.
Conclusion
While the first half of 2023 has been challenging, we are confident that our
focus on the efficiency of our production facilities but, more importantly,
the efficient products we have today as well as those in development, will
ensure that we can grow and thrive in the longer term.
In the short term we expect to deliver revenue growth in H2, while also
realising the benefits of our cost reduction program to deliver a much
improved margin in H2 2023 over H1 2023. We are also confident that we will
continue with the progress we are making on inventory reduction in H2 2023. I
feel privileged to work with the global Mincon team and look forward to
delivering on the platform that we have created."
Joseph Purcell
Chief Executive Officer
Key financial commentary
Market Industries and Product Mix
Revenue in the first half of 2023 contracted by 5%, due to a decrease in our
mining industry revenue and currency headwinds. Foreign exchange movements
represented 3% of the reduction in reported revenue, most notably due to the
South African Rand weakening during Q2 2023.
Industry mix (by revenue)
H1 2023 H1 2022
· Mining 43% 48%
· Construction 39% 37%
· Waterwell / Geothermal 18% 15%
Our revenue from the mining industry contracted by 15% during the period, with
revenues down in three out of our four geographic regions. The largest
contraction in our mining revenue was in the Europe & Middle East region,
down 72% versus the same period in the prior year. We have received fewer
orders from one large customer in this region due to their inventory reduction
strategy. Since the beginning of the war in Ukraine, emerging mining
opportunities for the Group in Eastern Europe and further East into Asia, have
unfortunately been significantly affected, a disappointing result given we had
been making positive traction in the mining industry in those areas in recent
years.
Our mining revenue in Africa contracted by 11%, however this has mostly been
driven by the weakening in the South African Rand during the period. Excluding
FX impacts, our Africa region business contracted by 1% in the period due
mainly to reduced activity in the exploration sector. Mining in our APAC
region also contracted in the period and is behind H1 2022 revenue by 22%.
Our revenue in the construction industry was flat during the period, however
this has been on the back of significant growth in this industry, year on
year, since 2019. The Americas region, where we have seen the largest growth
in this industry over the last few years, contracted by 2% in this period, due
to the absence of any new large construction project and FX headwinds. The
focus during H1 2023 has been on winning smaller projects as they provide the
Group with a steadier income stream and reduced complexity in controlling
working capital. Large construction projects will remain an important part in
our construction growth however, and there continues to be a healthy pipeline
of projects which we will selectively target.
Our Europe & Middle East region had construction revenue growth of 8%
during the period, this has been due to our expanded footprint in Northern
Europe. Our other regions are continuing to develop the industry for our
products.
Our revenue in the waterwell/geothermal industry grew by 10% in the period. We
experienced positive growth in North America and Northern Europe where we earn
the vast majority of our revenue in this industry.
Earnings
Our earnings have been impacted due to lower revenue earned in the period,
though our gross margin percentage is consistent with H1 2022. This is due to
price increases that were implemented in H2 2022, and measures taken to
protect our margins during this reported period.
In line with our inventory reduction ambitions, we have decreased our
manufacturing output in H1 2023 versus the same period in the prior year.
However, our margins have been temporarily impacted as a result.
Decreased revenue together with our inventory reduction program has had an
impact on our gross margin versus the first quarter of the year due to less
manufactured product in our factories. As a result, our manufacturing plants
are not fully utilising their capacity and manufacturing overheads are spread
across less factory output, thus impacting our consolidated gross margin.
To mitigate this impact on our margin we have implemented a cost reduction
program across our factories and our operations, to maximise efficiency in
manufacturing and to rightsize costs in subsidiaries to match their revenue.
That program has continued into H2 2023, and we will see the full benefits at
the end of this year and into 2024.
Earnings (continued)
We have also reduced our subcontract manufacturing significantly in the period
and this has given some relief to our factories, enabling us to increase the
volume of Mincon-manufactured product through our manufacturing plants and
thus benefiting our gross margin.
Our operating employee costs are flat on H1 2022, though we have reduced our
headcount in administration and sales. Total costs associated with employees
exiting the business in H1 2023 was €0.7 million and that cost was recorded
within our operating employee costs. As a result of these actions, we expect
to see a considerable saving in employee costs in H2 2023.
Our finance costs have increased in the period reflecting increased interest
costs on our borrowings as a result of the wider change in the interest rate
environment as central banks take action to address inflation. 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 has increased significantly over the same
period from the prior year although the impact from movements in debtor
balances and the timing of orders in the first half has resulted in a lower
closing cash position at the end of the period. This is due to where we earned
our revenues in the first half of the year and we expect this debtor position
to unwind in the coming months.
As previously noted in our discussion on new business development initiatives,
we have commissioned €4.3 million of property plant and equipment in the
period. This is mostly from large capex projects over the past eighteen
months, including the new heat treatment facilities in Shannon.
We have implemented a Group-wide inventory reduction program, with the goal of
reducing our overall inventory levels in terms of months. Targets have been
set for each subsidiary in the Group with timelines attached. We expect to
make inroads in our goals on this important project for the Group by the end
of this year.
We borrowed further in the first half of 2023. This is mostly in relation to
our capital equipment program. The borrowings over capital equipment
commissioning are in relation to our Subsea project. We plan to borrow further
in H2 2023 to see out our large capex projects.
During the period we paid €0.4 million for historical acquisitions. We also
paid a final year dividend for 2022 of €2.2 million in June 2023. The Board
of Mincon has approved the payment of an interim dividend in the amount of
€0.0105 (1.05 cent) per ordinary share, which will be paid to shareholders
in December 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
Tel: +353 (1) 679 6363
Listing Sponsor 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
2023 Half Year Financial Results
Condensed consolidated income statement
For the 6 months ended 30 June 2023
Unaudited Unaudited
H1 2023 H1 2022
Notes €'000 €'000
Continuing operations
Revenue 6 80,585 85,168
Cost of sales 8 (54,940) (58,106)
Gross profit 25,645 27,062
Operating costs 8 (17,863) (18,238)
Operating profit 7,782 8,824
Finance income 19 11
Finance cost (1,175) (623)
Foreign exchange gain/(loss) (503) 835
Movement on deferred consideration 4 10
Profit before tax 6,127 9,057
Income tax expense (1,228) (2,527)
Profit for the period 4,899 6,530
Earnings per Ordinary Share
Basic earnings per share 12 2.31c 3.07c
Diluted earnings per share 12 2.28c 2.99c
Condensed consolidated statement of comprehensive income
For the 6 months ended 30 June 2023
Unaudited Unaudited
2023 2022
H1 H1
€'000 €'000
Profit for the period 4,899 6,530
Other comprehensive income:
Items that are or may be reclassified subsequently to profit or loss:
Foreign currency translation - foreign operations (2,840) 3,814
Other comprehensive (loss)/profit for the period (2,840) 3,814
Total comprehensive income for the period 2,059 10,344
The accompanying notes are an integral part of these financial statements.
Consolidated statement of financial position
As at 30 June 2023
Unaudited 31 December
30 June 2022
2023
Notes €'000 €'000
Non-Current Assets
Intangible assets and goodwill 14 39,503 40,109
Property, plant and equipment 15 52,777 53,004
Deferred tax asset 10 2,446 2,050
Total Non-Current Assets 94,726 95,163
Current Assets
Inventory and capital equipment 16 76,064 76,911
Trade and other receivables 17 30,467 23,872
Prepayments and other current assets 12,717 12,727
Current tax asset 10 314 305
Cash and cash equivalents 12,673 15,939
Total Current Assets 132,235 129,754
Total Assets 226,961 224,917
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 2,669 2,505
Foreign currency translation reserve (8,426) (5,586)
Retained earnings 107,117 104,449
Total Equity 153,778 153,786
Non-Current Liabilities
Loans and borrowings 18 28,787 26,971
Deferred tax liability 10 2,091 2,046
Deferred consideration 19 1,498 1,705
Other liabilities 849 833
Total Non-Current Liabilities 33,225 31,555
Current Liabilities
Loans and borrowings 18 15,280 14,973
Trade and other payables 14,711 14,420
Accrued and other liabilities 8,537 8,699
Current tax liability 10 1,430 1,484
Total Current Liabilities 39,958 39,576
Total Liabilities 73,183 71,131
Total Equity and Liabilities 226,961 224,917
The accompanying notes are an integral part of these financial statements.
Condensed consolidated statement of cash flows
For the 6 months ended 30 June 2023
Unaudited Unaudited
H1 H1
2023 2022
€'000 €'000
Operating activities:
Profit for the period 4,899 6,530
Adjustments to reconcile profit to net cash provided by operating activities:
Depreciation 3,974 3,890
Amortisation of internally generated intangible asset 242 -
Amortisation of intellectual property 108 92
Movement on deferred consideration (4) (10)
Finance cost 1,175 623
Finance income (19) (11)
Loss on sale of property, plant & equipment 11 154
Income tax expense 1,228 2,527
Other non-cash movements 510 (831)
12,124 12,964
Changes in trade and other receivables (7,272) (3,396)
Changes in prepayments and other assets (119) (3,333)
Changes in inventory (814) (9,362)
Changes in trade and other payables 650 4,599
Cash provided by operations 4,569 1,472
Interest received 19 11
Interest paid (1,175) (623)
Income taxes paid (1,462) (1,793)
Net cash provided by/(used in) operating activities 1,951 (933)
Investing activities
Purchase of property, plant and equipment (4,278) (2,327)
Proceeds from the sale of property, plant and equipment 288 605
Investment in intangible assets - (286)
Acquisitions, net of cash required - (1,014)
Payment of deferred consideration (203) (204)
Investment in acquired intangible assets (158) (147)
Net cash provided used in investing activities (4,351) (3,373)
Financing activities
Dividends paid (2,231) (2,231)
Repayment of borrowings (2,569) (1,162)
Repayment of lease liabilities (2,112) (1,349)
Drawdown of loans 6,472 5,159
Net cash provided (used in)/by financing activities (440) 417
Effect of foreign exchange rate changes on cash (426) 171
Net decrease in cash and cash equivalents (3,266) (3,718)
Cash and cash equivalents at the beginning of the year 15,939 19,049
Cash and cash equivalents at the end of the period 12,673 15,331
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 2023
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 2022 2,125 67,647 (17,393) 39 2,959 (1,354) 98,506 152,529
Comprehensive income:
Profit for the period - - - - - - 8,174 8,174
Other comprehensive income:
Foreign currency translation - - - - - (4,232) - (4,232)
Total comprehensive income (4,232) 8,174 3,942
Transactions with Shareholders:
Share-based payments - - - - (454) - - (454)
Dividend payment - - - - - - (2,231) (2,231)
Total transactions with Shareholders - - - - (454) - (2,231) (2,685)
Balances at 31 December 2022 2,125 67,647 (17,393) 39 2,505 (5,586) 104,449 153,786
Comprehensive income:
Profit for the period - - - - - - 4,899 4,899
Other comprehensive income:
Foreign currency translation - - - - - (2,840) - (2,840)
Total comprehensive income (2,840) 4,899 2,059
Transactions with Shareholders:
Share-based payments - - - - 164 - - 164
Dividend payment - - ,- - - - (2,231) (2,231)
Total transactions with Shareholders - - - - 164 - (2,231) (2,067)
Balances at 30 June 2023 2,125 67,647 (17,393) 39 2,669 (8,426) 107,117 153,778
The accompanying notes are an integral part of these financial statement
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 2023 (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 2023.
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 2022 as set
out in the 2022 Annual Report (the "2022 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 2022, 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 2022 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 2022
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 2022 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 2023,
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 2023
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 2023, 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
2023 2022
€'000 €'000
Product revenue:
Sale of Mincon product 67,190 70,906
Sale of third-party product 13,395 14,262
Total revenue 80,585 85,168
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
2023 2022
€'000 €'000
Region:
Europe, Middle East, Africa 38,021 42,805
Americas 34,894 33,649
Australasia 7,670 8,714
Total revenue from continuing operations 80,585 85,168
Non-current assets by region (location of assets):
30 June 31 December
2023 2022
€'000 €'000
Region: ( )
Europe, Middle East, Africa 63,646 63,109
Americas 17,265 17,752
Australasia 11,369 12,252
Total non-current assets((1)) 92,280 93,113
(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
2023 2022
€'000 €'000
Raw materials 22,364 22,621
Third-party product purchases 10,073 10,886
Employee costs 11,347 11,599
Depreciation 2,643 2,628
In bound costs on purchases 1,744 2,512
Energy costs 1,449 1,562
Maintenance of machinery 832 1,000
Subcontracting 2,612 3,860
Amortisation of product development 242 -
Other 1,634 1,438
Total cost of sales 54,940 58,106
Operating costs
H1 H1
2023 2022
€'000 €'000
Employee costs 10,857 10,835
Depreciation 1,331 1,262
Amortisation of acquired IP 108 91
Travel 889 918
Other 4,678 5,132
Total other operating costs 17,863 18,238
The Group recognised €32,000 in Government Grants during H1 2023 (H1 2022:
€194,000). These grants differ in structure from country to country, they
primarily relate to personnel costs.
Employee information
H1 H1
2023 2022
€'000 €'000
Wages and salaries 19,450 18,817
Social security costs 1,426 2,278
Pension costs of defined contribution plans 1,164 1,075
Share based payments (note 13) 164 264
Total employee costs 22,204 22,434
The average number of employees was as follows:
H1 H1
2023 2022
Number Number
Sales and distribution 138 135
General and administration 80 80
Manufacturing, service and development 406 416
Average number of persons employed 624 631
9. Acquisitions and disposals
Acquisitions
During 2023, Mincon Group Plc made no new 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 2023 was 20% (30 June 2022: 28%). The effective rate
of tax is forecast at 20% for 2023. The tax charge for the six months ended 30
June 2023 of €1.2 million (30 June 2022: €2.5 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
2023 2022
€'000 €'000
Current tax prepayments 314 305
Current tax payable (1,430) (1,484)
Net current tax (1,116) (1,179)
The net deferred tax liability at period-end was as follows:
30 June 31 December
2023 2022
€'000 €'000
Deferred tax asset 2,446 2,050
Deferred tax liability (2,091) (2,046)
Net deferred tax 355 4
11. Share capital
Allotted, called- up and fully paid up shares Number €000
01 January 2023 212,472,413 2,125
30 June 2023 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 2023 H1 2022
Numerator (amounts in €'000):
Profit attributable to owners of the Parent 4,899 6,530
Denominator (Number):
Basic shares outstanding
Restricted share options
Diluted weighted average shares outstanding
212,472,413 212,472,413
2,780,000 5,820,000
215,252,413 218,292,413
Earnings per Ordinary Share
Basic earnings per share, € 2.31c 3.07c
Diluted earnings per share, € 2.28c 2.99c
Diluted weighted average shares outstanding
212,472,413
212,472,413
2,780,000
5,820,000
215,252,413
218,292,413
Earnings per Ordinary Share
Basic earnings per share, €
Diluted earnings per share, €
2.31c
2.28c
3.07c
2.99c
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 2023 2,030
Forfeited during the period (120)
Exercised during the period -
Granted during the period 715
Outstanding at 30 June 2023 2,625
Reconciliation of outstanding share awards Number of Options in thousands
Outstanding on 1 January 2023 -
Forfeited during the period -
Exercised during the period -
Granted during the period 155
Outstanding at 30 June 2023 155
14. Intangible Assets
Internally generated intangible assets Goodwill Total
Acquired intellectual property
€'000 €'000 €'000 €'000
Balance at 1 January 2023 7,150 32,328 631 40,109
Acquired intellectual property - - 158 158
Amortisation of intellectual property - - (108) (108)
Amortisation of product development (242) - - (242)
Foreign currency translation differences - (399) (15) (414)
Balance at 30 June 2023 6,908 31,929 666 39,503
15. Property, Plant and Equipment
Capital expenditure in the first half-year amounted to €4.3 million (30 June
2022: €2.3 million), of which €4.1 million was invested in plant and
equipment (30 June 2022: €1.9 million) and €800,000 million in ROU assets
(30 June 2022: €400,000). The depreciation charge for property, plant and
equipment is recognised in the following line items in the income statement:
H1 H1
2023 2022
€'000 €'000
Cost of sales 2,643 2,628
Operating Costs 1,331 1,262
Total depreciation charge for property, plant and equipment 3,974 3,890
16. Inventory
30 June 31 December
2023 2022
€'000 €'000
Finished goods 48,244 47,983
Work-in-progress 12,215 12,943
Raw materials 15,605 15,985
Total inventory 76,064 76,911
The Group recorded an impairment of €58,000 against inventory to take
account of net realisable value during the period ended 30 June 2023 (30 June
2022: €87,000).
17. Trade and other receivables
30 June 31 December
2023 2022
€'000 €'000
Gross receivable 31,750 24,975
Provision for impairment (1,283) (1,103)
Net trade and other receivables 30,467 23,872
Provision for impairment
€'000
Balance at 1 January 2023 (1,103)
Additions (180)
Balance at 30 June 2023 (1,283)
The following table provides the information about the exposure to credit risk
and ECL's for trade receivables as at 30 June 2023.
Weighted average loss rate % Gross carrying amount €'000 Loss
allowance
€'000
Current (not past due) 1.2% 23,318 280
1-30 days past due 6.2% 4,293 266
31-60 days past due 12% 2,289 271
61 to 90 days 14.5% 1,618 235
More than 90 days past due 100% 232 231
Net trade and other receivables 31,750 1,283
The following table provides the information about the exposure to credit risk
and ECL's for trade receivables as at 31 December 2022.
Weighted average loss rate % Gross carrying amount €'000 Loss
allowance
€'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
18. Loans, borrowings and lease liabilities
30 June 31 December
2023 2022
Maturity €'000 €'000
Loans and borrowings 2023-2037 34,531 30,848
Lease liabilities 2023-2032 9,536 11,096
Total Loans, borrowings and lease liabilities 44,067 41,944
Current 15,280 14,973
Non-current 28,787 26,971
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 2022 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 2023 and 31 December 2022 were as follows:
30 June 2023 31 December 2022
€'000 €'000
Cash and cash equivalents 12,673 15,939
Loans and borrowings 44,067 41,944
Shareholders' equity 153,778 153,786
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 2023, 56% (2022: 58%) of Mincon's revenue €81 million (30 June 2022:
€85 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 2023 31 December H1 2022
2023 2022
Euro exchange rates Closing Average Closing Average
US Dollar 1.09 1.08 1.07 1.05
Australian Dollar 1.64 1.60 1.57 1.52
Canadian Dollar 1.44 1.46 1.45 1.37
Great British Pound 0.86 0.88 0.88 0.85
South African Rand 20.50 19.67 18.18 17.19
Swedish Krona 11.79 11.33 11.15 10.63
There has been no material change in the Group's currency exposure since 31
December 2022. 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 2023 are as follows:
Deferred
consideration
€'000
Balance at 1 January 2023 1,705
Cash payment (203)
Fair value movement (4)
Balance at 30 June 2023 1,498
20. Commitments
The following capital commitments for the purchase of property, plant and
equipment had been authorised by the directors at 30 June 2023:
Total
€'000
Contracted for 2,104
Not contracted for 28
Total 2,132
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 2023, the share capital of Mincon Group plc was 56.32% owned by
Kingbell Company (31 December 2022 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 2022 in June 2023, Kingbell Company receive €1.3 million.
There were no other related party transactions in the half year ended 30 June
2023 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 2022 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 3 August 2023, 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 08
December 2023 to shareholders on the register at the close of business on 17
November 2023.
24. Approval of financial statements
The Board of Directors approved the interim condensed consolidated financial
statements for the six months ended 30 June 2023 on 08 August 2023.
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