TIDMMCON
RNS Number : 9353S
Mincon Group Plc
22 March 2021
Mincon Group plc
("Mincon" or the "Group")
2020 Full Year Financial Results
Mincon Group plc (Euronext: MIO AIM:MCON), the Irish engineering
group specialising in the design, manufacture, sale and servicing
of rock drilling tools and associated products, announces its
results for the year ended 31 December 2020.
Percentage
change
in
2020 2019(1) period
---------------------------- -------- ------- -----------
Product revenue: EUR'000 EUR'000
Sale of Mincon product 108,556 100,731 +7.8%
Sale of third-party product 21,347 19,940 +7.1%
Total revenue 129,903 120,671 +7.7%
-------
Gross profit 45,717 40,513 +12.8%
---------------------------- -------- ------- -----------
Operating profit 18,249 11,810 +54.5%
---------------------------- -------- ------- -----------
Profit for the period 14,386 9,549 +50.7%
---------------------------- -------- ------- -----------
(1) Before exceptional items
Joe Purcell, Chief Executive Officer, commenting on the results,
said:
2020: LOCAL CHALLENGES, GLOBAL RESILIENCE
During 2020 the world faced a pandemic that was unprecedented in
modern times. Almost nobody went untouched by this global health
crisis: whether it was illness, or lockdowns imposed as authorities
responded to contain the spread of Covid-19.
These measures also affected businesses to varying degrees,
however I am pleased to say that Mincon was able to remain
operational throughout 2020. Mincon equipment is widely used for
essential projects and services, so in many markets our
manufacturing facilities were able to continue operating.
Similarly, Mincon's direct-to-market approach meant that our
service centres remained productive and continued to deliver
excellent, customer service, safely and responsibly.
Our involvement in full-service mining and large geotechnical
contracts has led to an increase in direct end user revenue, the
direct approach now accounts for 77% of total turnover. In addition
to our direct sales model, we will continue to work through
distributors to serve the market in areas where the direct model is
unviable, or where we already have strong distributor partnerships
in place.
In 2019, Mincon implemented a regional management structure to
reflect the Group's vision, culture, and ambition. As the pandemic
unfolded, this Group structure enabled us to be proactive rather
than reactive. As a result, the pandemic had a more muted impact on
the Group's bottom line, and we ended 2020 with a positive profit
growth.
This growth took place on the backdrop of challenging trading
conditions across the world. Global restrictions prevented us from
being on-site at customer operations, impacting both product
development and sales. Additionally, pandemic-related lockdowns in
certain markets saw the temporary closure of our manufacturing
facilities in those countries.
When local governments imposed restrictions to contain the
Covid-19 pandemic, our businesses in those markets reacted with the
health and safety of the workforce as the primary concern. Where
necessary, operations were temporarily suspended until health
authorities felt it was safe for work to continue. Due to our
global footprint and our cohesive regional management structure,
Mincon was able to shift manufacturing to our other factories where
restrictions were less severe, as required - a successful example
of the Group operating together to benefit the overall
business.
The Covid-19 pandemic was a pressure test of our resilience,
business systems, preparedness, and management. Although the global
mass vaccination programme is a positive development, we believe
that travel restrictions and social distancing will be a part of
life for at least the rest of the year.
During 2020 our revenue grew by 8% compared with our 2019
continuing operations. This was due, in part, to the expansion of
the Group's core operations, with organic growth of 3%, or 6% on a
constant currency basis. Our acquisitions of Lehti and RocDrill
contributed to 5% of the Group's revenue growth for year. We
continued our expansion into the construction industry with
significant year-on-year revenue growth of 33% in the industry,
which accounted for 30% of the Group's revenue in 2020 (2019: 25%).
Mining also experienced growth of 2%, however Covid-19 restrictions
prevented us from fully pursuing new opportunities in this
industry.
Our operating margin increased to 14.0% of revenue in 2020
(2019: 9.8%), as we experienced stronger gross margins from large
construction projects in the Americas. We implemented a Group-wide
international travel ban early in 2020 that contributed to a
significant savings on travel for the year. We also availed of
employee related government grants in Australia, Sweden and the UK,
totalling EUR1.3 million in the year. These grants compensated for
the Group being affected by the impact of the pandemic in those
countries.
Efficiency in innovation
Mincon has a strong background in design, manufacture, delivery,
and service of high-quality surface drilling solutions. We have
strategically grown our product line-up to offer a comprehensive
range of products for the whole drill string and for use in
multiple industries. We pride ourselves on innovative engineering
and superior manufacturing and service, something that has always
been at the core of what we do.
Although the past year had its challenges for our engineering
teams, due to limited testing opportunities, we were able to use
this to our advantage. We are now even more ambitious when it comes
to helping our customers improve safety and reduce the effect of
their operations on the environment, which includes using less
energy. Our engineers are focused on developing the next generation
of drilling tools aimed at energy-efficient drilling, with a
reduced impact on the environment and, in some cases, a
transformational effect on Mincon and our customers.
Our primary engineering objectives continue to be driven by our
Technology Steering Group, comprising senior engineers who each
have many decades of experience in the rock-drilling industry. The
experience in the Group is broad and includes expertise in
mechanical design and simulation; metallurgy and heat-treatment,
market and application knowledge; and hands-on drilling.
Product development
Mincon's product development takes place in the following
areas:
1. Product maintenance
Ongoing product development and continuous improvement of
existing product lines, ensuring that we remain the industry
benchmark. We also focus on identifying areas for optimisation at
customer operations by closely working with them on site.
2. New product design and development
New designs and iterations of existing technologies. Over the
coming years, this development will include work on:
-- New DTH hammer and bit developments with a focus on speed and efficiency;
-- Continuous improvement for our range of open, and
sealed-bearing, rotary drill bits, to deliver market-leading
performance in terms of life and penetration rates;
-- Optimising drill-rod performance and durability;
-- Further development to the performance and range of cushion subs; and,
-- Carbide grade developments.
3. New technology development
Spearheaded by Mincon's Technology Steering Group, which is
exploring several new technologies and concepts for development,
including:
-- Greenhammer (working name) - Mincon's flagship technology for
single-pass, hard-rock blasthole drilling, using a high-performance
DTH hydraulic percussion system;
-- Drilled foundation product developments particularly for sensitive ground conditions;
-- Plans for advancing hammer technology to encompass larger
hole size capabilities than ever, while maintaining the focus on
efficiency and productivity; and,
-- All-new drilling technologies and approaches for new industries
Direction of these new products and technologies is spearheaded
by the Technology Steering Group. Development takes place at the
Group's R&D facility near our headquarters in Shannon, Ireland,
where we have dedicated manufacturing capabilities and capacity to
ensure our engineers' designs are machined into reality in a timely
fashion. Results from field testing are then incorporated into
improved design so that new revisions can be rapidly manufactured
and sent back for field testing, without interrupting day-to-day
production.
The hydraulic systems
The pandemic affected product development of our Greenhammer
technology in Australia. Site access was - and continues to be -
limited to essential personnel only, primarily due to strict
lockdowns imposed by the Australian government. While waiting to
get on site, we have developed a smaller, 10" system that is fitted
to our own drill rig. This is ready to go on site when restrictions
are eased. We have also sourced our own rig for the larger, 12"
system, which has already been developed. This will be commissioned
after we get the 10" system running.
Mincon remains committed to the commercialisation of this
exciting technology that we believe will transform the hard-rock
surface mining market. It is notable that our involvement in this
project has had an enormously positive impact on the Group,
increasing our engineering capacity and advancing our technical
understanding of rock drilling. The skillsets that have been honed
in the development of the Greenhammer project are being deployed in
other projects and areas of the business, which will be of
significant benefit to the Group's business as a whole.
New products to market
As with the Greenhammer project in Australia, development of
Mincon's other technologies and products faced some setbacks in
2020 - mainly due to travel restrictions limiting testing
opportunities. However, where it was safe to do so, successful
tests were conducted for new drill bit designs, evolutions of our
next-generation MP-series DTH hammers, and new material
technologies that promise improved wear resistance.
In addition to using customer feedback for the continuous
improvement of existing products, we are always working on
developing new technologies that will lower drilling costs for
customers by focusing on products that deliver better efficiency,
faster penetration rates, and improved longevity.
Mincon also has an ambition to push the limits of drilling
technology. We want to innovate and disrupt the market with unique
uses of our existing technologies in new applications, or by
partnering with service providers to develop all-new solutions that
draw on our extensive expertise.
Strategic acquisitions
Growth through strategic acquisitions remains part of the
Group's strategy. This approach allows for organic growth as well
as procuring the correct skills, products, and manufacturing
capacity in line with market demand and management's ambitions.
Our acquisitions in 2020 brought more value to our construction
and geotechnical offering. Through the acquisition of Lehti Group,
we now own the entire value chain associated with the manufacturing
and sales of all our geotechnical products. The talented and
committed team in the Lehti factory has fully integrated with the
proven team at Mincon Finland. Both businesses have been physically
consolidated, by moving our business and service team to the
factory in Ylöjärvi, Finland. This consolidation has created a
dynamic, cohesive and talented team with engineering and
manufacturing excellence, as well as an excellent customer service
capability that will ensure the business thrives both locally and
globally.
Whilst having a market leading product and manufacturing
capacity for the Geotech industry, of equal importance is the
ability to provide on-site support and training to ensure product
performance is maintained at or above customer expectations. With
that in mind, the acquisition of RocDrill in France adds
significantly to this skillset as well as expanding our customer
base through the additional clients and potential projects list
that Rocdrill brought. Since joining the group in May 2020, the
team at Rocdrill has integrated well and has been instrumental in
helping to advance our geotechnical ambitions.
Post the financial year end, in January 2021 the Group completed
the acquisition of Hammer Drilling Rigs (HDR), a specialist in
supply of hard rock drilling attachments based in the USA. HDR
specialises in drill mast attachments to heavy equipment that is
used in a variety of applications, including the installation of
anchor points for solar field projects. This was a strategic
acquisition to support Mincon's offering of a complete solution to
customers within this sector of the renewable energy industry.
We will continue to explore the market for acquisitions that fit
our strategic goals, and which help us take opportunities that we
believe are present in our industries and in new industries.
Dividend
In response to the initial emergence of the Covid-19 pandemic
last year, the Board decided to adopt a prudent approach by
suspending the interim dividend for 2020. However, following a
review of the Group's performance in the interim period and an
assessment of its ongoing capital requirements, the Board stated
its intention in the interim trading announcement released on 9
November 2020 to increase the final dividend declared in respect of
the financial year 2020 so that the final dividend will be in line
with the total dividend paid for 2019. The Board is therefore
recommending the payment of a full year dividend of 2.10 cent per
ordinary share. Subject to Shareholder approval at the annual
general meeting, the final dividend will be paid on 18 June 2021 to
Shareholders on the register at the close of business on 28 May
2021.
Concluding comments
2020 was a challenging year for Mincon but we successfully
tested the resilience and cohesiveness of our regional management
structure. Throughout the year this shone through, and I would like
to thank all who stepped up to the tasks that a very unusual year
threw their way.
The capacity of our engineering teams grew, through guidance
from the Technology Steering Group. We will continue to nurture
that talent through our ambitious goals to develop and
commercialise innovative and transformative solutions for the
industries we target. We will also continue to look at diversifying
our revenue streams, while growing core business activities in the
mining, construction, and waterwell/geothermal industries.
To support and manufacture our expanding product range, we will
continue to review and update our well-invested factories, ensuring
that quality, throughput, and energy efficiency is at the core of
any investment decision.
The upcoming vaccination programmes do not mean that we will be
less vigilant or relax our fight against the transmission of
Covid-19. The health and safety of all our people continues to be
my primary concern and I would urge everyone to take all the
necessary precautions to best ensure that we emerge safely from
this crisis and get back to some semblance of normality. To that
end I would like to thank all for perseverance in this and I look
forward to better days ahead.
Ends
22 March 2021
For further information please contact:
Mincon Group plc Tel: +353 (61)
361 099
Joe Purcell - Chief Executive Officer
Mark McNamara - Chief Financial Officer
Davy Corporate Finance (Nominated Adviser and Euronext Tel: +353 (1)
Growth Advisor) 679 6363
Anthony Farrell
Daragh O' Reilly
Consolidated Income Statement for the year ended 31 December
2020
2019
Excluding Exceptional Including
2020 exceptional items exceptional
EUR'000 items (Note items
Notes EUR'000 8) EUR'000
EUR'000
-------------------------------------- ------- ---------- ------------- ------------ -------------
Continuing operations
Revenue 4 129,903 120,671 3,074 123,745
Cost of sales 6 (84,186) (80,158) (2,489) (82,647)
Gross profit 45,717 40,513 585 41,098
Operating costs 6 (27,468) (28,703) (5,113) (33,816)
Operating profit 18,249 11,810 (4,528) 7,282
Finance costs (857) (582) - (582)
Finance income 42 107 - 107
Foreign exchange loss (376) (130) - (130)
FV movement on deferred consideration 23 11 10 - 10
Profit on disposal of operations - - 7,489 7,489
Profit before tax 17,069 11,215 2,961 14,176
-------------------------------------- ------------- ------------
Income tax expense 11 (2,683) (1,666) (127) (1,793)
-------------------------------------- ------- ---------- ------------- ------------ -------------
Profit for the period 14,386 9,549 2,834 12,383
-------------------------------------- ------- ---------- ------------- ------------ -------------
Profit attributable to:
- owners of the Parent 14,221 12,329
- non-controlling interests 19 165 54
-------------------------------------- ------- ---------- -------------
Earnings per Ordinary Share
Basic earnings per share, 21 6.72 5.84c
Diluted earnings per share, 21 6.57 5.80c
-------------------------------------- ------- ---------- -------------
The accompanying notes are an integral part of these financial
statements.
Consolidated Statement of Comprehensive Income for the year
ended 31 December 2020
2020 2019
EUR'000 EUR'000
--------------------------------------------------- -------- --------
Profit for the year 14,386 12,383
Other comprehensive loss:
Items that are or may be reclassified subsequently
to profit or loss:
Foreign currency translation - foreign operations (4,165) 2,153
Other 156 (1,092)
Other comprehensive (expense)/income for the year (4,009) 1,061
--------------------------------------------------- -------- --------
Total comprehensive income for the year 10,377 13,444
--------------------------------------------------- -------- --------
Total comprehensive income attributable to:
- owners of the Parent 10,212 13,390
- non-controlling interests 165 54
--------------------------------------------------- -------- --------
The accompanying notes are an integral part of these financial
statements.
Consolidated Statement of Financial Position as at 31 December
2020
2020 2019
Notes EUR'000 EUR'000
---------------------------------------- ----- ------------------ --------
Non-Current Assets
Intangible assets and goodwill 12 36,987 31,937
Property, plant and equipment 13 45,820 41,172
Deferred tax asset 11 1,093 616
Total Non-Current Assets 83,900 73,725
----------------------------------------- ----- ------------------ --------
Current Assets
Inventory and capital equipment 14 53,017 48,590
Trade and other receivables 15a 20,640 20,346
Prepayments and other current assets 15b 4,186 6,098
Current tax asset 311 589
Cash and cash equivalents 23 17,045 16,368
Total Current Assets 95,199 91,991
----------------------------------------- ----- ------------------ --------
Total Assets 179,099 165,716
----------------------------------------- ----- ------------------ --------
Equity
Ordinary share capital 20 2,117 2,110
Share premium 20 67,647 67,647
Undenominated capital 39 39
Merger reserve 20 (17,393) (17,393)
Share based payment reserve 22 2,259 1,629
Foreign currency translation reserve (8,033) (3,868)
Retained earnings 86,300 74,865
----------------------------------------- ----- ------------------ --------
Equity attributable to owners of Mincon
Group plc 132,936 125,029
----------------------------------------- ----- ------------------ --------
Non-controlling interests - 1,115
Total Equity 132,936 126,144
Non-Current Liabilities
Loans and borrowings 18 14,789 10,879
Deferred tax liability 11 1,832 1,794
Deferred contingent consideration 23 4,723 4,962
Other liabilities 503 153
Total Non-Current Liabilities 21,847 17,788
----------------------------------------- ----- ------------------ --------
Current Liabilities
Loans and borrowings 18 6,822 4,043
Trade and other payables 16 10,457 10,853
Accrued and other liabilities 16 5,529 5,827
Current tax liability 1,508 1,061
Total Current Liabilities 24,316 21,784
----------------------------------------- ----- ------------------ --------
Total Liabilities 46,163 39,572
----------------------------------------- ----- ------------------ --------
Total Equity and Liabilities 179,099 165,716
----------------------------------------- ----- ------------------ --------
The accompanying notes are an integral part of these financial
statements.
On behalf of the Board:
Hugh McCullough Joseph Purcell
Chairman Chief Executive Officer
Consolidated Statement of Cash Flows for the year ended 31
December 2020
2020 2019
Notes EUR'000 EUR'000
------------------------------------------------- ------ --------- --------
Operating activities:
Profit for the period 14,386 12,383
Adjustments to reconcile profit to net cash
provided by operating activities:
Depreciation 13 6,482 5,242
Fair value movement on deferred contingent
consideration (11) (10)
Gain on sale of operations, net of tax - (7,489)
Finance cost 857 582
Finance income (42) (107)
Loss on sale of property, plant and equipment 18
Income tax expense 2,683 1,793
NCI movement in equity 720
Other non-cash movements 372 209
------------------------------------------------- ------ --------- --------
25,465 12,603
Changes in trade and other receivables 919 1,037
Changes in prepayments and other assets 1,209 1,873
Changes in inventory (3,228) 1,050
Changes in trade and other payables (1,812) (1,865)
Cash provided by operations 22,553 14,698
Interest received 42 107
Interest paid (857) (582)
Income taxes paid (2,389) (1,713)
------------------------------------------------- ------ --------- --------
Net cash provided by operating activities 19,349 12,510
------------------------------------------------- ------ --------- --------
Investing activities
Purchase of property, plant and equipment (7,222) (7,930)
Proceeds from the sale of property, plant 331 -
and equipment
Investment in intangible assets (1,065) (1,405)
Proceeds from the issuance of share capital 7 5
Acquisitions of subsidiary, net of cash acquired (7,156) (770)
Purchase of NCI (1,000)
Payment of deferred contingent consideration (2,460) (1,600)
Proceeds from the sale of subsidiaries 706 8,517
Proceeds from former joint venture investments - -
Net cash used in investing activities (17,859) (3,183)
------------------------------------------------- ------ --------- --------
Financing activities
Dividends paid (2,222) (4,426)
Repayment of loans and finance leases 18 (4,991) (2,778)
Drawdown of loans 18 6,622 6,182
Net cash used in financing activities (591) (1,022)
------------------------------------------------- ------ --------- --------
Effect of foreign exchange rate changes on
cash (222) 21
------------------------------------------------- ------ --------- --------
Net increase in cash and cash equivalents 677 8,326
------------------------------------------------- ------ --------- --------
Cash and cash equivalents at the beginning
of the year 16,368 8,042
------------------------------------------------- ------ --------- --------
Cash and cash equivalents at the end of the
year 17,045 16,368
------------------------------------------------- ------ --------- --------
The accompanying notes are an integral part of these financial
statemen
Consolidated Statement of Changes in Equity for the year ended
31 December 2020
Share Foreign
based currency
Share Share Merger Un-denominated payment translation Retained Non-controlling Total
capital premium reserve capital reserve reserve earnings Total interests equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
---------------- -------- ------- -------- -------------- ------- ------------- -------- ------- --------------- -------
Balances at 1
January 2019 2,105 67,647 (17,393) 39 1,274 (6,021) 68,054 115,705 1,061 116,766
-------- ------- -------- -------------- ------- ------------- -------- ------- --------------- -------
Comprehensive
income:
Profit for the
year - - - - - - 12,329 12,329 54 12,383
Other
comprehensive
income/(loss):
Foreign currency
translation - - - - - 2,153 - 2,153 - 2,153
Other - - - - - - (1,092) (1,092) - (1,092)
------------- -------- ------- --------------- -------
Total
comprehensive
income 2,153 11,237 13,390 54 13,444
------------- -------- ------- --------------- -------
Transactions
with
Shareholders:
Equity-settled
share-based
payments 5 - - - - - - 5 - 5
Share based
payments - - - - 355 - - 355 - 355
Dividends - - - - - - (4,426) (4,426) - (4,426)
Balances at 31
December
2019 2,110 67,647 (17,393) 39 1,629 (3,868) 74,865 125,029 1,115 126,144
---------------- -------- ------- -------- -------------- ------- ------------- -------- ------- --------------- -------
Comprehensive
income:
Profit for the
year - - - - - - 14,221 14,221 165 14,386
Other
comprehensive
income/(loss):
Foreign currency
translation - - - - - (4,165) - (4,165) - (4,165)
Other - 156 156 - 156
------------- -------- ------- --------------- -------
Total
comprehensive
income (4,165) 14,377 10,212 165 10,377
------------- -------- ------- --------------- -------
Transactions
with
Shareholders:
Equity-settled
share-based
payments 7 - - - - - - 7 - 7
Share-based
payments - - - - 630 - - 630 - 630
Dividends - - - - - - (2,222) (2,222) - (2,222)
Acquisition of
non-Controlling
Interest
without a
change
in control
(note 19) - - - - - - (720) (720) (1,280) (2,000)
Balances at 31
December
2020 2,117 67,647 (17,393) 39 2,259 (8,033) 86,300 132,936 - 132,936
---------------- -------- ------- -------- -------------- ------- ------------- -------- ------- --------------- -------
The accompanying notes are an integral part of these financial
statements. See note 20 for explanation of movements in reserve
balances.
1. Description of business
The consolidated financial statements of Mincon Group Plc (also
referred to as "Mincon" or "the Group") comprises the Company and
its subsidiaries (together referred to as "the Group"). The
companies registered address is Smithstown Industrial Estate,
Smithstown, Shannon, Co. Clare, Ireland.
The Group is an Irish engineering Group, specialising in the
design, manufacturing, sale and servicing of rock drilling tools
and associated products. Mincon Group Plc is domiciled in Shannon,
Ireland.
On 26 November 2013, Mincon Group plc was admitted to trading on
the Enterprise Securities Market (ESM) of the Euronext Dublin and
the Alternative Investment Market (AIM) of the London Stock
Exchange.
2. Basis of preparation
These consolidated financial statements have been prepared in
accordance with the International Financial Reporting Standards as
adopted by the European Union (EU IFRS), which comprise standards
and interpretations approved by the International Accounting
Standards Board (IASB), and endorsed by the EU.
The individual financial statements of the Company have been
prepared in accordance with IFRSs as adopted by the EU and as
applied in accordance with the Companies Act 2014 which permit a
company that publishes its Group and Company financial statements
together to take advantage of the exemption in Section 304 of the
Companies Act 2014 from presenting to its members its Company
income statement, statement of comprehensive income and related
notes that form part of the approved Company financial
statements.
The accounting policies set out in note 3 have been applied
consistently in preparing the Group and Company financial
statements for the years ended 31 December 2020 and 31 December
2019.
The Group and Company financial statements are presented in
euro, which is the functional currency of the Company and also the
presentation currency for the Group's financial reporting. Unless
otherwise indicated, the amounts are presented in thousands of
euro. These financial statements are prepared on the historical
cost basis.
The preparation of the consolidated financial statements in
conformity with IFRS requires management to make judgements,
estimates and assumptions that affect the application of policies
and reported amounts of assets and liabilities, income and
expenses. The judgements, estimates and associated assumptions are
based on historical experience and various other factors that are
believed to be reasonable under the circumstances. Actual results
could differ materially from these estimates. The areas involving a
high degree of judgement and the areas where estimates and
assumptions are critical to the consolidated financial statements
are discussed in note 3.
The directors believe that the Group has adequate resources to
continue in operational existence for the foreseeable future and
that it is appropriate to continue to prepare our consolidated
financial statements on a going concern basis.
3. Significant accounting principles, accounting estimates and
judgements
The accounting principles as set out in the following paragraphs have,
unless otherwise stated, been consistently applied to all periods
presented in the consolidated financial statements and for all entities
included in the consolidated financial statements. The Group has initially
adopted Definition of a Business (Amendments to IFRS 3) and it has
not had a significant impact on the Groups financial statements.
The Group applied Definitions of a Business (Amendments to IFRS 3)
to business combinations whose acquisition dates are on or after 1
January 2020 in assessing whether it had acquired a business or a
group of assets. See Note 9 for the details of the Groups acquisitions
of subsidiary during the year.
3. Significant accounting principles, accounting estimates and judgements
(continued)
Revenue Recognition
The Group is involved in the sale and servicing of rock drilling tools
and associated products. Revenue from the sale of these goods and
services to customers is measured at the fair value of the consideration
received or receivable (excluding sales taxes). The Group recognises
revenue when it transfers control of goods to a customer.
The following provides information about the nature and timing of
the satisfaction of performance obligations in contracts with customers,
including significant payment terms, and the related revenue recognition
policies.
Customers obtain control of products when one of the following conditions
are satisfied:
1. The goods have been picked up by the customer from Mincon's premises.
2. When goods have been shipped by Mincon, the goods are delivered
to the customer and have been accepted at their premises.
Invoices are generated when the above conditions are satisfied. Invoices
are payable within the timeframe as set in agreement with the customer
at the point of placing the order of the product. Discounts are provided
from time-to-time to customers.
Customers may be permitted to return goods where issues are identified
with regard to quality of the product. Returned goods are exchanged
only for new goods or a credit note. No cash refunds are offered.
Where the customer is permitted to return an item, revenue is recognised
to the extent that it is highly probable that a significant reversal
in the amount of cumulative revenue recognised will not occur. Therefore,
the amount of revenue recognised is adjusted for expected returns,
which are estimated based on the historical data for specific types
of product. In these circumstances, a refund liability and a right
to recover returned goods asset are recognised.
Government Grants
Amounts recognised in the profit and loss account are presented under
the heading Operating Costs on a systematic basis in the periods in
which the expenses are recognised, unless the conditions for receiving
the grant are met after the related expenses have been recognised.
In this case, the grant is recognised when it is receivable.
Earnings per share
Basic earnings per share is calculated based on the profit for the
year attributable to owners of the Company and the basic weighted
average number of shares outstanding. Diluted earnings per share
is calcu-lated based on the profit for the year attributable to owners
of the Company and the diluted weighted average number of shares
outstanding.
Taxation
Current tax comprises the expected tax payable or receivable on
the taxable income or loss for the year and any adjustment to the
tax payable or receivable in respect of previous years. The amount
of current tax payable or receivable is the best estimate of the
tax amount expected to be paid or received that reflects
uncertainty related to income taxes, if any. It is measured using
tax rates enacted or substantively enacted at the reporting date.
Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain
criteria are met.
Deferred tax
Deferred tax is recognised in respect of temporary differences
between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation
purposes. Deferred tax is not recognised for:
-- temporary differences on the initial recognition of assets or
liabilities in a transaction that is not a business combination and
that affects neither accounting nor taxable profit or loss;
-- temporary differences related to investments in subsidiaries,
associates and joint arrangements to the extent that the Group is
able to control the timing of the reversal of the temporary
differences and it is probable that they will not reverse in the
foreseeable future; and
-- taxable temporary differences arising on the initial recognition of goodwill.
3. Significant accounting principles, accounting estimates and
judgements (continued)
Taxation (continued)
Deferred tax assets are recognised for unused tax losses, unused
tax credits and deductible temporary differences to the extent that
it is probable that future taxable profits will be available
against which they can be used. Future taxable profits are
determined based on the reversal of relevant taxable temporary
differences. If the amount of taxable temporary differences is
insufficient to recognise a deferred tax asset in full, then future
taxable profits, adjusted for reversals of existing temporary
differences, are considered, based on the business plans for
individual subsidiaries in the Group. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be
realised; such reductions are reversed when the probability of
future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each
reporting date and recognised to the extent that it has become
probable that future taxable profits will be available against
which they can be used.
Deferred tax is measured at the tax rates that are expected to
be applied to temporary differences when they reverse, using tax
rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences
that would follow from the manner in which the Group expects, at
the reporting date, to recover or settle the carrying amount of its
assets and liabilities.
Deferred tax assets and liabilities are offset only if certain
criteria are met.
Leases
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to
control the use of an identified asset, the Group uses the
definition of a lease in IFRS 16.
(i) As a lessee
At commencement or on modification of a contract that contains a
lease component, the Group allocates the consideration in the
contract to each lease component on the basis of its relative
stand-alone prices.
The Group recognises a right-of-use asset and a lease liability
at the lease commencement date. The right-of-use asset is initially
measured at cost, which comprises the initial amount of the lease
liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an
estimate of costs to dismantle and remove the underlying asset or
to restore the underlying asset or the site on which it is located,
less any lease incentives received.
The right-of-use asset is subsequently depreciated using the
straight-line method from the commencement date to the end of the
lease term, unless the lease transfers ownership of the underlying
asset to the Group by the end of the lease term or the cost of the
right-of-use asset reflects that the Group will exercise a purchase
option. In that case the right-of-use asset will be depreciated
over the useful life of the underlying asset, which is determined
on the same basis as those of property and equipment. In addition,
the right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements of the
lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted using the interest rate implicit in the lease or, if
that rate cannot be readily determined, the Group's incremental
borrowing rate.
The Group determines its incremental borrowing rate by obtaining
interest rates from various external financing sources.
The lease liability is measured at amortised cost using the
effective interest method. It is remeasured when there is a change
in future lease payments arising from a change in an index or rate,
if there is a change in the Group's estimate of the amount expected
to be payable under a residual value guarantee, if the Group
changes its assessment of whether it will exercise a purchase,
extension or termination option or if there is a revised
in-substance fixed lease payment.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the
carrying amount of the right-of-use asset has been reduced to
zero.
3. Significant accounting principles, accounting estimates and
judgements (continued)
Leases (continued)
(ii) As a lessor
At inception or on modification of a contract that contains a
lease component, the Group allocates the consideration in the
contract to each lease component on the basis of their relative
stand-alone prices.
When the Group acts as a lessor, it determines at lease
inception whether each lease is a finance lease or an operating
lease.
When the Group is an intermediate lessor, it accounts for its
interests in the head lease and the sub-lease separately. It
assesses the lease classification of a sub-lease with reference to
the right-of-use asset arising from the head lease, not with
reference to the underlying asset.
Short term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and
lease liabilities for leases of low-value assets and short-term
leases, including IT equipment. The Group recognises the lease
payments associated with these leases as an expense on a
straight-line basis over the lease term.
Inventories and capital equipment
Inventories and capital equipment are valued at the lower of
cost or net realisable value. Net realisable value is the estimated
selling price in the ordinary course of business less the estimated
costs of completion and selling expenses. The cost of inventories
is based on the first-in, first-out principle and includes the
costs of acquiring inventories and bringing them to their existing
location and condition. Inventories manufactured by the Group and
work in progress include an appropriate share of production
overheads based on normal operating capacity. Inventories are
reported net of deductions for obsolescence.
Intangible Assets and Goodwill
Goodwill
The Group accounts for acquisitions using the purchase
accounting method as outlined in IFRS 3 Business Combinations.
Group management has determined that the Group has one operating
segment and therefore all goodwill is tested for impairment at
Group level and this is tested for impairment annually.
Intangible assets
Expenditure on research activities is recognised in profit or
loss as incurred.
Development expenditure is capitalised only if the expenditure
can be measured reliably, the product or process is technically and
commercially feasible, future economic benefits are probable and
the Group intends to and has sufficient resources to complete
development and to use or sell the asset. Otherwise, it is
recognised in the profit or loss as incurred. Subsequent to initial
recognition, development expenditure is measured at cost less
accumulated amortisation and any accumulated impairment losses.
Subsequent expenditure is capitalised only when it increases the
future economic benefits embodied in the specific asset to which it
relates. All other expenditure, including expenditure on internally
generated goodwill and brands, is recognised in profit or loss as
incurred.
Foreign Currency
Foreign currency transactions
Transactions in foreign currencies (those which are denominated
in a currency other than the functional currency) are translated at
the foreign exchange rate ruling at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies
are translated using the foreign exchange rate at the statement of
financial position date. Exchange gains and losses related to trade
receivables and payables, other financial assets and payables, and
other operating receiv-ables and payables are separately presented
on the face of the income statement.
Exchange rate differences on translation to functional currency
are reported in profit or loss, except when reported in other
compre-hensive income for the translation of intra-group
receivables from, or liabilities to, a for-eign operation that in
substance is part of the net investment in the foreign
operation.
Exchange rates for major currencies used in the various
reporting periods are shown in note 23.
3. Significant accounting principles, accounting estimates and
judgements (continued)
Foreign Currency (continued)
Translation of accounts of foreign entities
The assets and liabilities of foreign entities, including
goodwill and fair value adjustments arising on consolidation, are
translated to euro at the exchange rates ruling at the reporting
date. Revenues, expenses, gains, and losses are translated at
average exchange rates, when these approximate the exchange rate
for the respective transaction. Foreign exchange differences
arising on translation of foreign entities are recognised in other
comprehensive income and are accumulated in a separate component of
equity as a translation reserve. On divestment of foreign entities,
the accumulated exchange differences, are recycled through profit
or loss, increasing or decreasing the profit or loss on
divestments.
Business combinations and consolidation
The consolidated financial statements include the financial
statements of the Group and all companies in which Mincon Group
plc, directly or indirectly, has control. The Group controls an
entity when it is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect
those returns through its power over the entity. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date on which control commences until
the date on which control ceases.
The consolidated financial statements have been prepared in
accordance with the acquisition method. According to this method,
business combinations are seen as if the Group directly acquires
the assets and assumes the liabilities of the entity acquired. At
the acquisition date, i.e. the date on which control is obtained,
each identifiable asset acquired and liability assumed is
recognised at its acquisition-date fair value.
Consideration transferred is measured at its fair value. It
includes the sum of the acquisition date fair values of the assets
transferred, liabilities incurred to the previous owners of the
acquiree, and equity interests issued by the Group. Deferred
contingent consideration is initially measured at its
acquisition-date fair value. Any subsequent change in such fair
value is recognised in profit or loss, unless the deferred
contingent consideration is classified as equity. In that case,
there is no remeasurement and the subsequent settlement is
accounted for within equity. Deferred contingent consideration
arises in the current year where part payment for an acquisition is
deferred to the following year or years.
Transaction costs that the Group incurs in connection with a
business combination, such as legal fees, due diligence fees, and
other professional and consulting fees are expensed as
incurred.
Goodwill is measured as the excess of the fair value of the
consideration transferred, the amount of any non-controlling
interest in the acquiree, and the fair value of the Group's
previously held equity interest in the acquiree (if any) over the
net of acquisition-date fair values of the identifiable assets
acquired and liabilities assumed. Goodwill is not amortised but
tested for impairment at least annually.
Non-controlling interest is initially measured either at fair
value or at the non-controlling interest's proportionate share of
the fair value of the acquiree's identifiable net assets. This
means that goodwill is either recorded in "full" (on the total
acquired net assets) or in "part" (only on the Group's share of net
assets). The choice of measurement basis is made on an
acquisition-by-acquisition basis.
Earnings from the acquirees are reported in the consolidated
income statement from the date of control.
Intra-group balances and transactions such as income, expenses
and dividends are eliminated in preparing the consolidated
financial statements. Profits and losses resulting from intra-group
transactions that are recognised in assets, such as inventory, are
eliminated in full, but losses are only eliminated to the extent
that there is no evidence of impairment.
Property, plant and equipment
Items of property, plant and equipment are carried at cost less
accumulated depreciation and impairment losses. Cost of an item of
property, plant and equipment comprises the purchase price, import
duties, and any cost directly attributable to bringing the asset to
its location and condition for use. The Group capitalises costs on
initial recognition and on replacement of significant parts of
property, plant and equipment, if it is probable that the future
economic benefits embodied will flow to the Group and the cost can
be measured reliably. All other costs are recognised as an expense
in profit or loss when incurred.
3. Significant accounting principles, accounting estimates and
judgements (continued)
Property, plant and equipment (continued)
Depreciation
Depreciation is calculated based on cost using the straight-line
method over the estimated useful life of the asset. The following
useful lives are used for depreciation:
Years
Buildings 20-30
Plant and equipment 3-10
The depreciation methods, useful lives and residual values are
reassessed annually. Land is not depreciated.
Right of use assets are depreciated using the straight-line
method over the estimated useful life of the asset being the
remaining duration of the lease from inception date of the asset.
The depreciation methods, useful lives and residual values are
reassessed annually.
Financial Assets and Liabilities
Recognition and derecognition
Financial assets and liabilities are recognised at fair value
when the Group becomes a party to the contractual provisions of the
instrument. Purchases and sales of financial assets are accounted
for at trade date, which is the day when the Group contractually
commits to acquire or dispose of the assets. Trade receivables are
recognised on delivery of product. Liabilities are recognised when
the other party has performed and there is a contractual obligation
to pay. Derecognition (fully or partially) of a financial asset
occurs when the rights to receive cash flows from the financial
instruments expire or are transferred and substantially all of the
risks and rewards of ownership have been removed from the Group.
The Group derecognises (fully or partially) a financial liability
when the obligation specified in the contract is discharged or
otherwise expires. A financial asset and a financial liability are
offset and the net amount presented in the statement of financial
position when there is a legally enforceable right to set off the
recognised amounts and there is an intention to either settle on a
net basis or to realise the asset and settle the liability
simultaneously.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a financial asset or a financial liability and of
allocating the interest income or interest expense over the
relevant periods. The effective interest rate is the rate that
exactly discounts estimated future cash payments or receipts
through the expected life of the financial instrument, or when
appropriate a shorter period, to the net carrying amount of the
financial asset or financial liability. The calculation includes
all fees and points paid or received between parties to the
contract that are an integral part of the effective interest rate,
transaction costs, and all other premiums or discounts.
Borrowing costs
All borrowing costs are expensed in accordance with the
effective interest rate method.
Investments in subsidiaries - Company
Investments in subsidiary undertakings are stated at cost less
provision for impairment in the Company's statement of financial
position. Loans to subsidiary undertakings are initially recorded
at fair value in the Company statement of financial position and
subsequently at amortised cost using an effective interest rate
methodology.
Impairment of financial assets
Financial assets are assessed at each reporting date to
determine whether there is any objective evidence that they are
impaired. A financial asset is considered to be impaired if
objective evidence indicates that one or more events have had a
negative effect on the estimated future cash flows of that
asset.
Equity
Shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares and share options are
recognised as a deduction from equity, net of any tax effect.
Contingent liabilities
A contingent liability is a possible obligation or a present
obligation that arises from past events that is not reported as a
liability or provision, as it is not probable that an outflow of
resources will be required to settle the obligation or that a
sufficiently reliable calculation of the amount cannot be made.
3. Significant accounting principles, accounting estimates and
judgements (continued)
Financial Assets and Liabilities ( continued)
Financial instruments carried at fair value: Non-derivative
financial liabilities
Fair value is calculated based on the present value of future
principal and interest cash flows, discounted at the market rate of
interest at the reporting date.
Finance income and expenses
Finance income and expense are included in profit or loss using
the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits with maturities of three months or less.
Provisions
A provision is recognised in the statement of financial position
when the Group has a legal or constructive obligation as a result
of a past event, it is probable that an outflow of economic
benefits will be required to settle the obligation, and the outflow
can be estimated reliably. The amount recognised as a provision is
the best estimate of the expenditure required to settle the present
obligation at the reporting date. If the effect of the time value
of money is material, the provision is determined by discounting
the expected future cash flows at a pre-tax rate that reflects the
current market assessments of the time value of money and, where
appropriate, the risks specific to the liability.
A provision for restructuring is recognised when the Group has
approved a detailed and formal restructuring plan and the
restructuring has either commenced or been announced publicly.
Future operating losses are not provided for.
Exceptional Items
The Group has adopted an Income Statement format which seeks to
highlight significant items within the Group results for the year.
Exceptional items may include restructuring, profit or loss on
disposal or termination of operations, litigation costs and
settlements, profit or loss on disposal of investments, profit or
loss on disposal of property, plant and equipment, acquisition
costs, adjustment to contingent consideration and impairment of
assets relating to significant transactions. Judgement is used by
the Group in assessing particular items, which by virtue of their
scale and nature, should be presented in the Income Statements and
disclosed in the related notes as exceptional items.
Defined contribution plans
A defined contribution retirement benefit plan is a
post-employment benefit plan under which the Group pays fixed
contributions into a separate entity and will have no legal or
constructive obligation to pay further amounts. Obligations for
contributions to defined contribution retirement benefit plans are
recognised as an employee benefit expense in profit or loss when
employees provide services entitling them to the contributions.
Share-based payment transactions
The Group operates a long term incentive plan which allows the
Company to grant Restricted Share Awards ("RSAs") to executive
directors and senior management. All schemes are equity settled
arrangements under IFRS 2 Share-based Payment.
The grant-date fair value of share-based payment awards granted
to employees is recognised as an employee expense, with a
corresponding increase in equity, over the period that the
employees become unconditionally entitled to the awards. The amount
recognised as an expense is adjusted to reflect the number of
awards for which the related service and non-market performance
conditions are expected to be met, such that the amount ultimately
recognised as an expense is based on the number of awards that meet
the related service and non-market performance conditions at the
vesting date.
3. Significant accounting principles, accounting estimates and
judgements (continued)
Critical accounting estimates and judgements
The preparation of financial statements requires management's
judgement and the use of estimates and assumptions that affect the
amounts reported in the consolidated financial statements and
accompanying notes. These estimates and associated assumptions are
based on historical experience and various other factors that are
believed to be reasonable under the prevailing circumstances.
Actual results may differ from those estimates. The estimates and
assumptions are reviewed on an ongoing basis. Revisions to the
accounting estimates are recognised in the period in which they are
revised and in any future periods affected.
Following are the estimates and judgements which, in the opinion
of management, are significant to the underlying amounts included
in the financial reports and for which there is a significant risk
that future events or new information could entail a change in
those estimates or judgements.
Deferred contingent consideration
The deferred contingent 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 contingent
consideration is primarily dependent on the future performance of
the acquired businesses against predetermined targets and on
management's current expectations thereof.
Goodwill
The initial recognition of goodwill represents management' best
estimate of the fair value of the acquired entities value less the
identified assets acquired.
During the annual impairment assessment over goodwill,
management calculate the recoverable value of the group using their
best estimate of the discounted future cash flows of the group. The
fair values were estimated using management's current and future
projections of the Mincon Group's performance as well as
appropriate data inputs and assumptions
Trade and other receivables
Trade and other receivables are included in current assets,
except for those with maturities more than 12 months after the
reporting date, which are classified as non-current assets. The
Group estimates the risk that receivables will not be paid and
provides for doubtful debts in line with IFRS 9.
4. Revenue
In the following table, revenue is disaggregated between Mincon
manufactured product and product that is purchased outside the
Group and resold through Mincon distribution channels.
2020 2019
EUR'000 EUR'000
---------------------------- ------- -------
Product revenue:
Sale of Mincon product 108,556 103,797
Sale of third party product 21,347 19,948
Total revenue 129,903 123,745
---------------------------- ------- -------
5. Operating Segment
An operating segment is a component of the Group that engages in
busi-ness activities from which it may earn revenue and incur
expenses, and for which discrete financial information is
available. The operating results of the operating segment is
reviewed regularly by the Board of Directors, the chief operating
decision maker, to make deci-sions about allocation of resources
and also to assess performance.
Results are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker (CODM).
Our CODM has been identified as the Board of Directors.
The Group has determined that it has one reportable segment. The
Group is managed as a single business unit that sells drilling
equipment, primarily manufactured by Mincon manufacturing
sites.
The CODM assesses operating segment performance based on a
measure of operating profit. Segment revenue for the year ended 31
December 2020 of EUR129.9million (2019: EUR123.7 million) is wholly
derived from sales to external customers.
Entity-wide disclosures
The business is managed on a worldwide basis but operates
manufacturing facilities and sales offices in Ireland, UK, Sweden,
Finland, South Africa, Western Australia, the United States and
Canada and sales offices in nine other locations including Eastern
Australia, South Africa, France, Spain, Namibia, Sweden, Chile and
Peru. In presenting information on geography, revenue is based on
the geographical location of customers and non-current assets based
on the location of these assets.
Revenue by region (by location of customers):
2020 2019
EUR'000 EUR'000
----------------------------------------- ------- -------
Region:
Ireland 1,487 772
Americas 43,640 39,410
Australasia 24,754 27,351
Europe, Middle East, Africa 60,022 56,212
Total revenue from continuing operations 129,903 123,745
----------------------------------------- ------- -------
During 2020 Mincon had sales in the USA of EUR24.7 million
(2019: EUR20.8 million), Australia of EUR14.6 million (2019:
EUR18.5 million) and Sweden of EUR13.5 million (2019: EUR12.8
million), these separately contributed to more than 10% of the
entire Group's sales for 2020.
Non-current assets by region (location of assets):
2020 2019
EUR'000 EUR'000
Region:
Ireland 18,315 17,064
Americas 11,310 21,846
Australasia 11,338 11,144
Europe, Middle East, Africa 41,844 23,055
Total non-current assets(1) 82,807 73,109
---------------------------------------------------- ------- -------
(1) Non-current assets exclude deferred tax assets.
During 2020 Mincon held non-current assets (excluding deferred
tax assets) in the USA of EUR9.4 million, these separately
contributed to more than 10% of the entire Group's non-current
assets (excluding deferred tax assets) for 2020.
6. Cost of Sales and operating expenses
Included within cost of sales and operating costs were the
following major components:
Cost of sales
2020 2019
EUR'000 EUR'000
--------------------------------------------- ------- -------
Raw materials 33,913 39,190
Third party product purchases 16,098 14,204
Employee costs 17,504 14,045
Depreciation (note 13) 4,216 3,312
Distribution costs 3,106 2,380
Energy costs 1,623 1,450
Maintenance of machinery 1,392 1,363
Impairment of finished goods inventory - 1,692
Cost of sales of disposed operations(note 8) - 2,489
Subcontracting 4,311 2,102
Other 2,023 420
Total cost of sales 84,186 82,647
--------------------------------------------- ------- -------
Operating costs
2020 2019
EUR'000 EUR'000
-------------------------------------------------------- ------- -------
Employee costs (including director emoluments) 17,438 15,899
Depreciation (note 13) 2,266 1,930
Rent 793 865
Travel 775 2,375
Professional costs 1,814 1,938
Administration 2,007 2,247
Marketing 542 886
Salary and termination payments for redundant employees
(note 8) - 2,754
Impairment of trade receivable - 799
Operating costs of disposed operations (note 8) - 2,359
Other 1,833 1,764
Total other operating costs 27,468 33,816
-------------------------------------------------------- ------- -------
The Group invested approximately EUR3.7 million on research and
development projects in 2020 (2019: EUR3.2 million). EUR2.6 million
of this has been expensed in the period (2019: EUR1.8 million),
with the balance of EUR1.1 million capitalised (2019: EUR1.4
million) (note 12).
The Group recognised EUR1.3 million in Government Grants in 2020
(2019:NIL). These grants differ in structure from country to
country, they primarily relate to personnel costs.
7. Employee information
2020 2019
EUR'000 EUR'000
--------------------------------------------------------- -------- -------
Wages and salaries - excluding directors 28,753 25,088
Wages, salaries, fees and retirement benefit - directors
(note 10) 795 760
Salary and termination payments for redundant employees - 2,754
Social security costs 3,029 2,677
Retirement benefit costs of defined contribution
plans 1,735 1,064
Share based payment expense (note 22) 630 355
Total employee costs 34,942 32,698
--------------------------------------------------------- -------- -------
The Group capitalised payroll costs of EUR0.5 million in 2020 (2019:
EUR0.5 million) in relation to research and development.
The average number of employees was as follows:
2020 2019
Number Number
------------------------------------------------------- -------- ------
Sales and distribution 126 124
General and administration 66 56
Manufacturing, service and development 360 290
------------------------------------------------------- -------- ------
Average number of persons employed 552 470
------------------------------------------------------- -------- ------
Retirement benefit and Other Employee Benefit Plans
The Group operates various defined contribution retirement
benefit plans. During the year ended 31 December 2020, the Group
recorded EUR1.7 million (2019: EUR1.1 million) of expense in
connection with these plans.
8. Exceptional Items
2020 2019
EUR'000 EUR'000
-------------------------------------------------------- ------- --------
Revenue
Revenue from disposed operations - 3,074
-------------------------------------------------------- ------- --------
Total Revenue - 3,074
-------------------------------------------------------- ------- --------
Cost of sales
Impairment of capital equipment inventory -
Cost of sales of disposed operations - (2,489)
Total cost of sales - (2,489)
-------------------------------------------------------- ------- --------
Operating costs
Salary and termination payments for redundant employees - (2,754)
Acquisition related costs - -
Operating costs of disposed operations - (2,359)
-------------------------------------------------------- ------- --------
Total operating costs - (5,113)
-------------------------------------------------------- ------- --------
Tax on disposals and discontinued operations - (127)
-------------------------------------------------------- ------- --------
Profit on Disposal (note 9) - 7,489
-------------------------------------------------------- ------- --------
Total exceptional profit after tax - 2,834
-------------------------------------------------------- ------- --------
8. Exceptional Items (continued)
The Group had undertaken a reorganisation of its activities
across all regions during 2019, including relocation of activities,
closing of regional offices and redundancies where necessary.
The Group had also disposed of operations in two distribution
centres, Mincon Tanzania and Mincon Russia, following a strategic
decision to place greater focus and emphasis on the Groups key
competencies while focusing on the profitability of the core
business activities and growth areas where there are synergies and
tangible growth opportunities.
The Group has chosen to present exceptional items separately
from the reorganisation.
9. Acquisitions & Disposals
In January 2020, Mincon acquired 100% shareholding in Lehti
Group, a Finnish based product manufacturing and distributing
company, for a consideration of EUR7.7 million. The transaction
included a cash consideration of EUR7 million and deferred
consideration of EUR706,000.
In May 2020, Mincon acquired 100% shareholding in Rocdrill, a
French-based construction product distributor
and drilling specialist, for a consideration of EUR1 million.
The transaction included a cash consideration of EUR450,000 and
deferred consideration of EUR550,000.
A. Consideration transferred
The following table summarises the acquisition date fair value
of each major class of consideration transferred.
EURL Rocdrill Lehti Total
Group
EUR'000 EUR'000 EUR'000
----------------------------------- -------------- -------- --------
Cash 450 7,000 7,450
Deferred contingent consideration 550 706 1,256
Total consideration transferred 1,000 7,706 8,706
------------------------------------- -------------- -------- --------
B. Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets
and liabilities assumed at the date of acquisition.
Total
EUR'000
----------------------------------------------- ---------------
Property, plant and equipment 2,637
Right of use assets 3,385
Inventories 3,582
Trade receivables 4,704
Other assets 322
Trade and other payables (2,022)
Right of use liabilities (3,385)
Other accruals and liabilities (5,050)
Fair value of identifiable net assets acquired 4,173
----------------------------------------------- ---------------
9. Acquisitions & Disposals (continued)
Measurement of fair values
The valuation techniques used for measuring the fair value of
material assets acquired were as follows.
Assets acquired Valuation Technique
Property, plant Market comparison technique and cost technique: The valuation
and equipment model considers quoted market prices for similar items
when they are available, and depreciated replacement cost
when appropriate. Depreciated replacement cost reflects
adjustments for physical deterioration as well as functional
and economic obsolescence.
Inventories Market comparison technique: The fair value is determined
based on the estimated selling price in the ordinary course
of business less the estimated costs of completion and
sale, and a reasonable profit margin based on the effort
required to complete and sell the inventories.
----------- ------------------------------------------------------------
Goodwill
Goodwill arising from the acquisition has been recognised as
follows.
Total Total
2020 2019
EUR'000 EUR'000
--------------------------------------- --------- ---------
Consideration transferred 8,706 1,802
Fair value of identifiable net assets (4,173) (916)
--------------------------------------- --------- ---------
Goodwill 4,533 886
--------------------------------------- --------- ---------
C. Profit on Disposal
During 2019 the Group disposed of two subsidiaries in Sweden
(Hardtekno and Cebeko) and a distribution subsidiary in South
Africa (Premier Drilling Solutions).
Total Total
2020 2019
EUR'000 EUR'000
------------------------------------------------- ---------- ---------
Consideration received - 8,997
Cash and cash equivalents disposed of - (480)
Net assets - (1,028)
Profit on Disposal - 7,489
------------------------------------------------- ---------- ---------
Total
------------------------------------------------- ---------- ---------
Profit on disposal of Hardtekno - 7,551
Profit on disposal of Cebeko - 106
Profit on disposal of Premier Drilling Solutions - 98
Cost on disposal - (266)
Profit on Disposal - 7,489
------------------------------------------------- ---------- ---------
10. Statutory and other required disclosures
Operating profit is stated after charging the following 2020 2019
amounts:
EUR'000 EUR'000
-------------------------------------------------------- --------------- ---------------
Directors' remuneration
Fees 165 192
Wages and salaries 574 511
Other emoluments - -
Retirement benefit contributions 56 57
-------------------------------------------------------- --------------- ---------------
Total directors' remuneration 795 760
-------------------------------------------------------- --------------- ---------------
Auditor's remuneration 2020 2019
EUR'000 EUR'000
----------------------------------------------------- -------- --------
Auditor's remuneration - Fees payable to lead audit
firm
Audit of the Group financial statements 205 195
Audit of the Company financial statements 15 15
Other assurance services 20 20
Tax advisory services (a) - -
Other non-audit services - 2
----------------------------------------------------- -------- --------
240 232
----------------------------------------------------- -------- --------
Auditor's remuneration - Fees payable to other firms
in lead audit firm's network
Audit services 112 158
Other assurance services 2 2
Tax advisory services 9 63
Total auditor's remuneration 123 223
----------------------------------------------------- -------- --------
(a) Includes tax compliance work on behalf of Group
companies.
11. Income tax
Tax recognised in income statement:
2020 2019
Current tax expense EUR'000 EUR'000
-------------------------------------------------- ------- --------
Current year 3,224 1,648
Adjustment for prior years (103) (89)
-------------------------------------------------- ------- --------
Total current tax expense 3,121 1,559
-------------------------------------------------- ------- --------
Deferred tax expense
Origination and reversal of temporary differences (438) 231
Adjustment for prior years - 3
Total deferred tax (credit)/expense (438) 234
-------------------------------------------------- ------- --------
Total income tax expense 2,683 1,793
-------------------------------------------------- ------- --------
A reconciliation of the expected income tax expense for
continuing operations is computed by applying the standard Irish
tax rate to the profit before tax and the reconciliation to the
actual income tax expense is as follows:
2020 2019
EUR'000 EUR'000
------------------------------------------------------ ------- -------
Profit before tax from continuing operations 17,069 14,176
Irish standard tax rate (12.5%) 12.5% 12.5%
Taxes at the Irish standard rate 2,134 1,772
Foreign income at rates other than the Irish standard
rate 849 957
Losses creating no income tax benefit (843) 288
Other 543 (1,224)
------------------------------------------------------ ------- -------
Total income tax expense 2,683 1,793
------------------------------------------------------ ------- -------
11. Income tax (continued)
The Group's net deferred taxation liability was as follows:
2020 2019
EUR'000 EUR'000
------------------------------------- ------- --------
Deferred taxation assets:
Reserves, provisions and tax credits 585 610
Accrued income 31 -
Tax losses and unrealised FX gains 477 6
Total deferred taxation asset 1,093 616
------------------------------------- ------- --------
Deferred taxation liabilities:
Property, plant and equipment (1,780) (1,742)
Profit not yet taxable (52) (52)
Total deferred taxation liabilities (1,832) (1,794)
------------------------------------- ------- --------
Net deferred taxation liability (739) (1,178)
------------------------------------- ------- --------
The movement in temporary differences during
the year were as follows:
Balance Recognised Acquired in Balance
in a
1 January Profit or Business combination 31 December
Loss
1 January 2019 - 31 December
2019 EUR'000 EUR'000 EUR'000 EUR'000
------------------------------------ --------- ---------- -------------------- ------------
Deferred taxation assets:
Reserves, provisions and tax
credits 278 332 - 610
Tax losses - 6 - 6
------------------------------------ --------- ---------- -------------------- ------------
Total deferred taxation asset 278 338 - 616
------------------------------------ --------- ---------- -------------------- ------------
Deferred taxation liabilities:
Property, plant and equipment (1,154) (588) - (1,742)
Accrued income - - - -
Profit not yet taxable (68) 16 - (52)
------------------------------------ --------- ---------- -------------------- ------------
Total deferred taxation liabilities (1,222) (572) - (1,794)
------------------------------------ --------- ---------- -------------------- ------------
Net deferred taxation liability (944) (234) - (1,178)
------------------------------------ --------- ---------- -------------------- ------------
Balance Recognised Acquired in Balance
in a
1 January Profit or Business combination 31 December
Loss
1 January 2020 - 31 December
2020 EUR'000 EUR'000 EUR'000 EUR'000
------------------------------------ --------- ---------- -------------------- ------------
Deferred taxation assets:
Reserves, provisions and tax
credits 610 (25) - 585
Accrued income - 31 - 31
Tax losses 6 471 - 477
------------------------------------ --------- ---------- -------------------- ------------
Total deferred taxation asset 616 477 - 1,093
------------------------------------ --------- ---------- -------------------- ------------
Deferred taxation liabilities:
Property, plant and equipment (1,742) (38) - (1,780)
Profit not yet taxable (52) - - (52)
------------------------------------ --------- ---------- -------------------- ------------
Total deferred taxation liabilities (1,794) (38) - (1,832)
------------------------------------ --------- ---------- -------------------- ------------
Net deferred taxation liability (1,178) 439 - (739)
------------------------------------ --------- ---------- -------------------- ------------
Deferred taxation assets have not been recognised in respect of
the following items:
2020 2019
EUR'000 EUR'000
----------- ------- --------
Tax losses 3,269 4,112
Total 3,269 4,112
----------- ------- --------
12. Intangible assets and goodwill
Product
development Goodwill Total
EUR'000 EUR'000 EUR'000
---------------------------- ------------ --------- --------
Balance at 1 January 2019 3,377 27,376 30,753
---------------------------- ------------ --------- --------
Internally developed 1,405 - 1,405
---------------------------- ------------ --------- --------
Acquisitions - 886 886
---------------------------- ------------ --------- --------
Disposal (note 9) - (1,529) (1,529)
---------------------------- ------------ --------- --------
Translation differences - 422 422
---------------------------- ------------ --------- --------
Balance at 31 December 2019 4,782 27,155 31,937
---------------------------- ------------ --------- --------
Internally developed 1,065 - 1,065
---------------------------- ------------ --------- --------
Acquisitions (note 9) - 4,533 4,533
---------------------------- ------------ --------- --------
Disposal (note 9) - - -
---------------------------- ------------ --------- --------
Translation differences - (548) (548)
---------------------------- ------------ --------- --------
Balance at 31 December 2020 5,847 31,140 36,987
---------------------------- ------------ --------- --------
Goodwill relates to the acquisition of the below companies,
being the dates that the Group obtained control of these
business:
--..... The remaining 60% of DDS-SA Pty Limited in November
2009.
--..... The 60% acquisition of Omina Supplies in August
2014.
--..... The 65% acquisition of Rotacan in August 2014.
--..... The acquisition of ABC products in August 2014.
--..... The acquisition of Ozmine in January 2015.
--..... The acquisition of Mincon Chile in March 2015.
--..... The acquisition of and Mincon Tanzania in March
2015.
--..... The acquisition of Premier in November 2016.
--..... The acquisition of Rockdrill Engineering in November
2016.
--..... The acquisition of PPV in April 2017.
--..... The acquisition of Viqing July 2017.
--..... The acquisition of Driconeq in March 2018.
--..... The acquisition of Pacific Bit of Canada in January
2019
--..... The acquisition of Lehti Group in January 2020
--..... The acquisition of Rocdrill in May 2020
The Group accounts for acquisitions using the purchase
accounting method as outlined in IFRS 3 Business Combinations.
The businesses acquired were integrated with other Group
operations soon after acquisition. Impairment testing (including
sensitivity analysis) is performed at each period end. Group
management has determined that the Group has one cash generating
unit and one operating segment and therefore all goodwill is tested
for impairment at Group level.
The recoverable amount of goodwill has been assessed based on
estimates of fair value less costs to sell (FVLCS). The FVLCS
valuation is calculated on the basis of a discounted cash flow
("DCF") model. The most significant assumptions within the DCF are
weighted average cost of capital ("WACC"), tax rates and terminal
value assumptions. Goodwill impairment testing did not indicate any
impairment during any of the periods being reported. Four
sensitivities are applied as part of the analysis considering the
effects of changes in 1) the WACC, 2) the EBITDA margin, 3) the
long term growth rate and 4) the level of terminal value capital
expenditure. The sensitivities calculate downside scenarios to
assess potential indications of impairments due to changes in key
assumptions. The results from the sensitivity analysis did not
suggest that goodwill would be impaired when those sensitivities
were applied.
The carrying amount of the CGU was determined to be lower than
its fair value less cost to sell by EUR68.4 million, giving
management substantial headroom and comfort in the above stated
impairment assessment.
The key assumptions used in the estimation of the fair value
less cost calculation were as follows:
12. Intangible assets and goodwill(continued)
2020
----------------------------------- --------
WACC 10.5%
EBIDTA margin 17.8%
Long term growth rate 2.25%
EUR7.1
Terminal value capital expenditure million
----------------------------------- --------
The WACC calculation considers market data and data from
comparable public companies. Peer group data was especially
considered for the beta factor and assumed financing structure
(gearing level). The analysis resulted in a discount rate range of
9.60% to 11.35%. This results in a midpoint WACC being used of
10.5%.
The Long term growth rate of 2.25% applied is based on a
weighted average of the long term inflation rates of the countries
in which Mincon generates revenues and earnings.
The budgeted EBITDA was based on expectations of future
outcomes, taking account for past experience, adjusted for
anticipated revenue growth as detailed in managements approved
Budget. No EBITDA margin effect is assumed in the terminal value
i.e. the budgeted EBITDA margin of 17.8% for 2023 is assumed in the
Terminal Value calculation used to arrive at the FVLCS.
Terminal value Capital expenditure assumes no balance sheet
growth is assumed in the terminal value, CAPEX is assumed to equal
depreciation of EUR7.1 million.
Investment expenditure of EUR1.1 million, which has been
capitalised, is in relation to ongoing product development within
the Group. Amortisation will begin at the stage of
commercialisation and charged to the income statement over a period
of three to five years, or the capitalised amount will be written
off if the project is deemed no longer viable by management.
Change in estimates
During 2020, the Group performed a review of their goodwill
impairment assessment method and concluded that the fair value less
costs of disposal was greater than the value in use. As a result,
the recoverable amount has been calculated using the fair value
less costs of disposal model in the current year. There was no
impact on the financial statements of this change in estimate.
.
13. Property, plant and equipment
Land & Plant & ROU
Buildings Equipment Assets Total
EUR'000 EUR'000 EUR'000 EUR'000
------------------------------------------- --------- --------- -------- --------
Cost:
At 1 January 2019 15,650 40,347 - 55,997
------------------------------------------- --------- --------- -------- --------
Acquisitions through business combinations - 75 - 75
Right of use asset on inception - - 4,683 4,683
Additions 1,223 6,707 490 8,420
Disposals (482) (2,913) (455) (3,850)
Foreign exchange differences (163) 1,613 114 1,564
At 31 December 2019 16,228 45,829 4,832 66,889
------------------------------------------- --------- --------- -------- --------
Acquisitions through business combinations 95 2,542 3,385 6,022
Additions 387 6,835 102 7,324
Disposals and derecognition of ROU
assets - (2,282) (1,199) (3,481)
Foreign exchange differences (419) (1,384) (233) (2,036)
At 31 December 2020 16,291 51,540 6,887 74,718
------------------------------------------- --------- --------- -------- --------
Accumulated depreciation:
At 1 January 2019 (2,855) (18,212) - (21,067)
------------------------------------------- --------- --------- -------- --------
Charged in year (442) (3,456) (1,344) (5,242)
Disposals 279 1,582 - 1,861
Foreign exchange differences (9) (1,260) - (1,269)
--------- --------- -------- --------
At 31 December 2019 (3,027) (21,346) (1,344) (25,717)
------------------------------------------- --------- --------- -------- --------
Charged in year (461) (4,205) (1,816) (6,482)
Disposals - 1,969 432 2,401
Foreign exchange differences 68 750 82 900
------------------------------------------- --------- --------- -------- --------
At 31 December 2020 (3,420) (22,832) (2,646) (28,898)
------------------------------------------- --------- --------- -------- --------
Carrying amount: 31 December 2020 12,871 28,708 4,241 45,820
------------------------------------------- --------- --------- -------- --------
Carrying amount: 31 December 2019 13,201 24,483 3,488 41,172
------------------------------------------- --------- --------- -------- --------
Carrying amount: 1 January 2019 12,795 22,135 - 34,930
------------------------------------------- --------- --------- -------- --------
Right of use assets
The depreciation charge for property, plant and equipment is
recognised in the following line items in the income statement:
2020 2019
EUR'000 EUR'000
----------------------------------------------------- ------- --------
Cost of sales 4,216 3,312
General, selling and distribution expenses 922 586
General, selling and distribution expenses ROU asset 1,344 1,344
Total depreciation charge for property, plant and
equipment 6,482 5,242
----------------------------------------------------- ------- --------
14. Inventory and capital equipment
2020 2019
EUR'000 EUR'000
------------------------------------ ------- --------
Finished goods and work-in-progress 42,326 38,212
Capital equipment 504 962
Raw materials 10,187 9,416
------------------------------------ ------- --------
Total inventory 53,017 48,590
------------------------------------ ------- --------
The Group recorded an impairment of EUR80,000 against inventory
to take account of net realisable value during the year ended 31
December 2020 (2019: EUR1.7 million). Write-downs are included in
cost of sales.
At 31 December 2020 and 31 December 2019, capital equipment are
rigs held in South Africa for resale.
15. Trade and other receivables and other current assets
a) Trade and other receivables
2020 2019
EUR'000 EUR'000
-------------------------------- ------- --------
Gross receivable 21,830 21,424
Provision for impairment (1,190) (1,078)
Net trade and other receivables 20,640 20,346
-------------------------------- ------- --------
Provision
for impairment
EUR'000
---------------------------- ----------------
Balance at 1 January 2020 (1,078)
Additions (112)
Balance at 31 December 2020 (1,190)
---------------------------- ----------------
2020 2019
EUR'000 EUR'000
Less than 60 days 17,878 17,112
61 to 90 days 1,350 1,659
Greater than 90 days 1,412 1,575
-------------------------------- ------- --------
Net trade and other receivables 20,640 20,346
-------------------------------- ------- --------
At 31 December 2020, EUR2.8 million of trade receivables
balances (13%) were past due but not impaired (2019: EUR3.2 million
(16%).
b) Prepayments and other current assets
2020 2019
EUR'000 EUR'000
------------------------------------- -------- ---------
Plant and machinery prepaid 1,597 3,332
Prepayments and other current assets 2,589 2,766
Prepayments and other current assets 4,186 6,098
------------------------------------- -------- ---------
16. Trade creditors, accruals and other liabilities
2020 2019
EUR'000 EUR'000
----------------------------------- -------- -------
Trade creditors 10,457 10,853
Total creditors and other payables 10,457 10,853
----------------------------------- -------- -------
2020 2019
EUR'000 EUR'000
------------------------------------- -------- -------
VAT 390 207
Social security costs 1,088 674
Other accruals and liabilities 4,051 4,946
Total accruals and other liabilities 5,529 5,827
------------------------------------- -------- -------
17. Capital management
The Group's policy is to have a strong capital base in order to
maintain investor, creditor and market confidence and to sustain
future development of the business. Management monitors the return
on capital, as well as the level of dividends to ordinary
shareholders.
The Board of Directors seeks to maintain a balance between the
higher returns that might be possible with higher levels of
borrowing and the advantages and security afforded by a sound
capital position.
The Group monitors capital using a ratio of 'net debt' to
equity. Net debt is calculated as total liabilities less cash and
cash equivalents (as shown in the statement of financial
position).
2020 2019
EUR'000 EUR'000
-------------------------------- --------- --------
Total liabilities (46,163) (39,784)
Less: cash and cash equivalents 17,045 16,368
Net debt (29,118) (23,416)
-------------------------------- --------- --------
Total equity 132,936 126,144
-------------------------------- --------- --------
Net debt to equity ratio 0.22 0.18
-------------------------------- --------- --------
18. Loans and borrowings
2020 2020
Maturity EUR'000 EUR'000
-------------------------------------- ------- --------
Bank loans 2021-2034 11,090 4,879
Finance leases 2021-2026 5,494 5,903
Right of Use leases 2020-2029 5,027 4,140
--------------------------- ----------
Total loans and borrowings 21,611 14,922
------- --------
Current 6,822 4,043
------- --------
Non-current 14,789 10,879
------- --------
The Group has a number of bank loans and finance leases 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 Group has been in compliance with all debt
agreements during the periods presented. The loan agreements in
Ireland carry restrictive financial covenants. Interest rates on
current borrowings are at an average rate of 4.56%
During 2020 the Group availed of the option to enter into
overdraft facilities and to draw down loans of EUR6.6 million with
interest rate between 1% and 10.5%.
18. Loans and borrowings (continued)
Reconciliation of movements of liabilities to cash flows arising
from financing activities
Balance Arising Cash movements Non-cash Foreign Balance
at 1 January from acquisition movements exchange at 31
2020 differences December
2020
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
--------------------- ------------- ----------------- -------------- ---------- ------------ ---------
Loans and borrowings 4,879 3,144 3,210 - (143) 11,090
Finance leases 5,903 - (1,579) 1,276 (106) 5,494
Right of use leases 4,140 3,385 - (2,331) (167) 5,027
Retained earnings - - (2,222) - - (2,222)
Total 14,922 6,529 (591) (1,055) (416) 19,389
--------------------- ------------- ----------------- -------------- ---------- ------------ ---------
19. Non-controlling interest
(a) Non-controlling interest
The following table summarises the information relating to the
Group's subsidiary, Mincon West Africa SL, that has material
non-controlling interests, before any intra-group eliminations. The
non-controlling interest was 20% of this subsidiary until the date
of the transaction described in note 19b.
2020 2019
Non-controlling Interest 20% EUR'000 EUR'000
------------------------------- -------- -------
Non-current assets - 97
Current assets - 4,253
Non-current liabilities - -
Current liabilities - (874)
------------------------------- -------- -------
Net assets - 3,476
------------------------------- -------- -------
Net assets attributable to NCI - 695
------------------------------- -------- -------
Revenue 6,919 6,176
------------------------------- -------- -------
Profit 826 272
------------------------------- -------- -------
OCI - -
------------------------------- -------- -------
Total comprehensive income 826 272
------------------------------- -------- -------
Profit allocated to NCI 165 54
------------------------------- -------- -------
(b) Acquisition of non-controlling interest
Mincon Group plc acquired the additional 20% interest in the
voting shares of Mincon West Africa on 1 October 2020, increasing
its ownership interest to 100%. The carrying amount of Mincon West
Africa's NCI portion in the Group's consolidated financial
statements on the date of acquisition was EUR1.28 million.
EUR'000
--------------------------------------------------------- --------
Cash consideration paid to NCI 1,000
Deferred consideration due to NCI 1,000
Carrying amount of NCI acquired (1,280)
Decrease in equity attributable to owners of the company 720
--------------------------------------------------------- --------
20. Share capital and reserves
At 31 December 2020
Authorised Share Capital Number EUR000
-------------------------------- ----------- ------
Ordinary Shares of EUR0.01 each 500,000,000 5,000
Allotted, called-up and fully paid up shares Number EUR000
--------------------------------------------- ----------- ------
Ordinary Shares of EUR0.01 each 211,675,024 2,117
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.
Voting rights
The holders of Ordinary Shares have the right to receive notice of
and attend and vote at all general meetings of the Company and they
are entitled, on a poll or a show of hands, to one vote for every
Ordinary Share they hold. Votes at general meetings may be given either
personally or by proxy. Subject to the Companies Act and any special
rights or restrictions as to voting attached to any shares, on a show
of hands every member who (being an individual) is present in person
and every proxy and every member (being a corporation) who is present
by a representative duly authorised, shall have one vote, so, however,
that no individual shall have more than one vote for every share carrying
voting rights and on a poll every member present in person or by proxy
shall have one vote for every share of which he is the holder.
Dividends
In September 2020, Mincon Group plc paid a final dividend for
2019 of EUR0.0105 (1.05 cent) per ordinary share. In September
2019, Mincon Group plc paid an interim dividend for 2019 of
EUR0.0105 (1.05 cent) per ordinary share. In June 2019, Mincon
Group plc paid a final dividend for 2018 of EUR0.0105 (1.05 cent)
per ordinary share.
The Board of Mincon Group plc is recommending the payment of a
full year dividend for the year ended 31 December 2020 in the
amount of EUR0.021 (2.10 cent) per ordinary share, which will be
subject to approval at the Annual General Meeting of the Company in
May 2021. This dividend, is in respect to an interim dividend of
1.05 cent and final dividend of 1.05 cent. Subject to Shareholder
approval at the Company's annual general meeting on 28 May
2021.
Share premium and other reserves
As part of a Group reorganisation of the Company, Mincon Group
plc, became the ultimate parent entity of the Group. On 30 August
2013, the Company acquired 100% of the issued share capital in
Smithstown Holdings and acquired (directly or indirectly) the
shareholdings previously held by Smithstown Holdings in each of its
subsidiaries, thereby creating a merger reserve.
21. Earnings per share
Basic earnings per share (EPS) is computed by dividing the
profit for the period available to ordinary shareholders by the
weighted average number of Ordinary Shares outstanding during the
period. Diluted earnings per share is computed by dividing the
profit for the period by the weighted average number of Ordinary
Shares outstanding and, when dilutive, adjusted for the effect of
all potentially dilutive shares. The following table sets forth the
computation for basic and diluted net profit per share for the
years ended 31 December:
2020 2019
Numerator (amounts in EUR'000):
Profit attributable to owners of the Parent 14,221 12,329
Denominator (Number):Basic shares outstanding
Restricted share awards
Diluted weighted average shares outstanding 211,675,024 210,973,102
----------------------------------------------
4,825,517 1,546,189
216,500,544 212,519,291
---------------------------------------------- ----------- -----------
Earnings per Ordinary Share
Basic earnings per share, EUR 6.72 5.84
Diluted earnings per share, EUR 6.57 5.80
-----------
22. Share based payment
During the year ended 31 December 2020, the Remuneration
Committee made a grant of approximately 3,981,250 Restricted Share
Options (RSAs) to members of the senior management team.
The vesting conditions of the scheme state that the minimum
growth in EPS shall be CPI plus 5% per annum, compounded annually,
over the relevant three accounting years up to the share award of
100% of the participants
basic salary. Where awards have been granted to a participant in
excess of 100% of their basic salary, the performance condition for
the element that is in excess of 100% of basic salary is that the
minimum growth in EPS shall be CPI plus 10% per annum, compounded
annually, over the three accounting years.
Number of
Awards
Reconciliation of outstanding share awards in thousand
-------------------------------------------- ------------
Outstanding on 1 January 2020 1,546
Forfeited during the year -
Exercised during the year (702)
Granted during the year -
Outstanding at 31 December 2020 844
-------------------------------------------- ------------
Number of
Options
Reconciliation of outstanding share options in thousands
--------------------------------------------- -------------
Outstanding on 1 January 2020 -
Forfeited during the year -
Exercised during the year -
Granted during the year 3,981
Outstanding at 31 December 2020 3,981
--------------------------------------------- -------------
23. Financial risk management
The Group is exposed to various financial risks arising in the
normal course of business. Its financial risk exposures are
predominantly related to changes in foreign currency exchange rates
and interest rates, as well as the creditworthiness of our
counterparties.
The Company's Board of Directors has overall responsibility for
the establishment and oversight of the Group's risk management
framework. The Board of directors has established the risk
management committee, which is responsible for developing and
monitoring the Group's risk management policies. The committee
reports regularly to the Board of Directors on its activities.
The Group's risk management policies are established to identify
and analyse the risks faced by the Group, to set appropriate risk
limits and controls and to monitor risks and adherence to limits.
Risk management policies and systems are reviewed regularly to
reflect changes in market conditions and the Group's activities.
The Group, through its training and management standards and
procedures, aims to maintain a disciplined and constructive control
environment in which all employees understand their roles and
obligations.
The Group audit committee oversees how management monitors
compliance with the Group's risk management policies and
procedures, and reviews the adequacy of the risk management
framework in relation to the risks faced by the Group.
a) Liquidity and capital
The Group defines liquid resources as the total of its cash,
cash equivalents and short term deposits. Capital is defined as the
Group's shareholders' equity and borrowings.
The Group's objectives when managing its liquid resources are:
* To maintain adequate liquid resources to fund its
ongoing operations and safeguard its ability to
continue as a going concern, so that it can continue
to create value for investors;
* To have available the necessary financial resources
to allow it to invest in areas that may create value
for shareholders; and
-- To maintain sufficient financial resources to mitigate against
risks and unforeseen events.
Liquid and capital resources are monitored on the basis of the
total amount of such resources available and the Group's
anticipated requirements for the foreseeable future. The Group's
liquid resources and shareholders' equity at 31 December 2020 and
31 December 2019 were as follows:
2020 2019
EUR'000 EUR'000
-------------------------- ------- -------
Cash and cash equivalents 17,045 16,368
Loans and borrowings 21,611 14,922
Shareholders' equity 132,936 125,029
-------------------------- ------- -------
The Group frequently assess its liquidity requirements, together
with this requirement and the rate return of long term euro
deposits, the Group has decided to keep all cash readily available
that is accessible within a month or less. Cash at bank earns
interest at floating rates based on daily bank deposits. The fair
value of cash and cash equivalents equals the carrying amount.
Cash and cash equivalents are held by major Irish, European,
United States and Australian institutions with credit rating of A3
or better. The Company deposits cash with individual institutions
to avoid concentration of risk with any one counterparty. The Group
has also engaged the services of a depository to ensure the
security of the cash assets.
Risk of counterparty default arising on cash and cash
equivalents and derivative financial instruments is controlled by
dealing with high-quality institutions and by policy, limiting the
amount of credit exposure to any one bank or institution.
The Group is also exposed to credit risk on its liquid resources (cash),
of which the euro equivalent of EUR2.8 million was held in US dollar
(USD 3.5 million), EUR2.4 million was held in Swedish krona (SEK 24.7
million) and the euro equivalent of EUR1.7 million was held Australian
dollar (AUD 2.7 million). The Directors actively monitor the credit
risk associated with this exposure.
23. Financial risk management (continued)
a) Liquidity and capital (continued)
At year-end, the Group's total cash and cash equivalents were
held in the following jurisdictions:
31 December 31 December
2020 2019
EUR'000 EUR'000
Ireland 1,870 5,759
Americas 2,989 2,339
Australasia 1,723 1,625
Europe, Middle East, Africa 10,463 6,645
----------------------------------------------------- ----------- -----------
Total cash, cash equivalents and short term deposits 17,045 16,368
----------------------------------------------------- ----------- -----------
There are currently no restrictions that would have a material
adverse impact on the Group in relation to the intercompany
transfer of cash held by its foreign subsidiaries. The Group
continually evaluates its liquidity requirements, capital needs and
availability of resources in view of, among other things,
alternative uses of capital, the cost of debt and equity capital
and estimated future operating cash flow.
In the normal course of business, the Group may investigate,
evaluate, discuss and engage in future company or product
acquisitions, capital expenditures, investments and other business
opportunities. In the event of any future acquisitions, capital
expenditures, investments or other business opportunities, the
Group may consider using available cash or raising additional
capital, including the issuance of additional debt. The maturity of
the contractual undiscounted cash flows (including estimated future
interest payments on debt) of the Group's financial liabilities at
31 December were as follows:
Total
Fair Value Less than More than
of
Cash Flows 1 Year 1-3 Years 3-5 Years 5 Years
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
---------------------------------- ---------- --------- --------- --------- ---------
At 31 December 2019:
Deferred contingent consideration 4,962 2,452 2,510 - -
Loans and borrowings 4,879 1,441 847 782 1,809
Finance leases 5,903 1,244 2,895 1,764 -
Right of use leases 4,140 1,360 1,807 735 238
Trade and other payables 10,853 10,853 - - -
Accrued and other financial
liabilities 5,827 5,827 - - -
---------------------------------- ---------- --------- --------- --------- ---------
Total at 31 December 2019 36,564 23,177 8,059 3,281 2,047
---------------------------------- ---------- --------- --------- --------- ---------
At 31 December 2020:
Deferred contingent consideration 4,723 2,068 2,186 359 110
Loans and borrowings 11,090 3,666 3,875 1,881 1,668
Finance leases 5,494 1,448 2,924 1,030 92
Right of use leases 5,027 1,707 2,449 850 21
Trade and other payables 10,457 10,457 - - -
Accrued and other financial
liabilities 5,529 5,529 - - -
---------------------------------- ---------- --------- --------- --------- ---------
Total at 31 December 2020 42,320 24,875 11,434 4,120 1,891
---------------------------------- ---------- --------- --------- --------- ---------
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
23. Financial risk management (continued)
b) Foreign currency risk (continued)
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 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.
The Group's worldwide presence creates currency volatility when
compared year on year. During 2020, currencies were extremely
volatile due to the Covid-19 Global pandemic, however the euro
remained relatively steady against all major currencies the Group
trades in.
The US dollar, the largest currency the Group trades in outside
the euro began to weaken at the beginning of H2 2020, and steadily
declined during that period and ended the year 9% weaker compared
with 2019 year end. This weakening was directly linked with
economic uncertainty, with the US presidential elections tension
that continued in 2021 while in the midst of the Covid-19 Global
pandemic.
In South Africa, where Mincon has a large presence in relative
terms to the Group, the South Africa rand weakened at the beginning
of the Covid-19 Global pandemic as South Africa temporarily closed
a large portion of its economy and more specifically most of its
mining sector. However, the South African rand did recover towards
the latter stages of 2020 and finished 14% behind the year end
2019.
The Australian dollar weakened in 2019, and the beginning of the
Covid-19 Global pandemic compounded this in Q1 2020, as the
Australian economy is very much dependent on the mining sector. As
mining proved to be resilient during this pandemic the Australian
dollar began to recover through the remainder of the year and
finished 2020 flat against the euro.
-- The US dollar decreased by 9% against the closing 2019 euro
rate (2019 increase of 2% against 2018).
-- The Australian dollar remained flat against the closing 2019
euro rated (2019 increase of 2% against 2018).
-- The South African rand has decreased 14% against the closing
2019 euro rated (2019 increase of 4% against 2018).
-- The Swedish Krona has increased 4% against the closing 2019
euro rated (2019 decrease of 3% against 2018).
In 2020, 57% (2019: 60%) of Mincon's revenue EUR130 million
(2019: EUR124 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.
2020 2019
Euro exchange rates Closing Average Closing Average
US Dollar 1.22 1.14 1.12 1.11
Australian Dollar 1.59 1.66 1.59 1.61
South African Rand 17.91 18.76 15.72 15.93
Swedish Krona 10.06 10.48 10.51 10.53
-------------------- ------- -------- -------- --------
23. Financial risk management (continued)
c) Credit risk
Credit risk is the risk that the possibility that the Group's
customers may experience financial difficulty and be unable to meet
their obligations. The Group monitors its collection experience on
a monthly basis and ensures that a stringent policy is adopted to
provide for all past due amounts. The majority of the Group's
customers are third party distributors and end users of drilling
tools and equipment.
Expected credit loss assessment
The Group allocates each exposure to a credit risk grade based
on data that is determined to be predictive of the risk of loss and
applying experienced credit judgement. Credit risk grades are
defined using quantitative factors that are indicative of the risk
of default and are aligned to past experiences. Loss rates are
based on accrual credit loss experience over the past five
years.
The maximum exposure to credit risk for trade and other
receivables at 31 December 2020 and 31 December 2019 by geographic
region was as follows:
2020 2019
EUR'000 EUR'000
---------------------------- ------- -------
Ireland 121 88
Americas 7,298 6,141
Australasia 2,540 4,495
Europe, Middle East, Africa 10,681 9,622
Total amounts owed 20,640 20,346
---------------------------- ------- -------
The Group is also exposed to credit risk on its liquid resources
(cash), of which the euro equivalent of EUR2.8 million was held in
US dollar (USD 3.5 million), EUR2.4 million was held in Swedish
krona (SEK 24.7 million) and the euro equivalent of EUR1.7 million
was held Australian dollar (AUD 2.7 million). The Directors
actively monitor the credit risk associated with this exposure,
cash and cash equivalents are held by major Irish, European, United
States and Australian institutions with credit rating of A3 or
better.
d) Interest rate risk
Interest Rate Risk on financial liabilities
Movements in interest rates had no significant impact on our financial
liabilities or finance cost recognised in either 2019 or 2020.
Interest Rate Risk on cash and cash equivalents
Our exposure to interest rate risk on cash and cash equivalents is
actively monitored and managed, the rate risk on cash and cash equivalents
is not considered material to the Group.
e) Fair values
Fair value is the amount at which a financial instrument could
be exchanged in an arms-length transaction between informed and
willing parties, other than in a forced or liquidation sale. The
contractual amounts payable less impairment provision of trade
receivables, trade payables and other accrued liabilities
approximate to their fair values. Under IFRS 7, the disclosure of
fair values is not required when the carrying amount is the
reasonable approximation of fair value.
There are no material differences between the carrying amounts
and fair value of our financial liabilities as at 31 December 2019
or 2020.
Financial instruments carried at fair value
The deferred contingent 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.
23. Financial risk management (continued)
e) Fair values (continued)
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 year to 31 December 2020 are as
follows:
Deferred
contingent
consideration
EUR'000
--------------------------------------------------------- --------------
Balance at 1 January 2020 4,962
Arising on acquisition 1,257
Purchase of NCI 1,000
Cash payment (2,460)
Foreign currency translation adjustment (25)
Fair value movement on deferred contingent consideration (11)
Balance at 31 December 2020 4,723
--------------------------------------------------------- --------------
24. Subsidiary undertakings
At 31 December 2020 the Group had the following subsidiary
undertakings:
Group Registered Office &
Company Share % Country of Incorporation
------------------------------------------- -------- ---------------------------------------------------------------
Mincon International Limited 100% Smithstown, Shannon, Co. Clare, Ireland
Manufacturer of rock drilling equipment
------------------------------------------- -------- ---------------------------------------------------------------
Mincon Rockdrills PTY Ltd 100% 8 Fargo Way, Welshpool, WA 6106, Australia
Manufacturer of rock drilling equipment
------------------------------------------- -------- ---------------------------------------------------------------
1676427 Ontario Inc. (Operating as Rotacan) 100% 400B Kirkpatrick Street, North Bay,
Ontario, P1B 8G5, Canada
---------------------------------------------------------------
Manufacturer of rock drilling equipment
------------------------------------------- -------- ---------------------------------------------------------------
Mincon Carbide Ltd 100% Windsor St, Sheffield S4 7WB, United Kingdom
Manufacturer of tungsten carbide
------------------------------------------- -------- ---------------------------------------------------------------
Viqing Drilling Equipment AB 100%* Svarvarevagen 1, SE-686 33 Sunne, Sweden
Manufacturer of drill pipe equipment
------------------------------------------- -------- ---------------------------------------------------------------
Mincon Inc. 100% 603 Centre Avenue, N.W. Roanoke, VA 24016, USA
---------------------------------------------------------------
Sales company
------------------------------------------- -------- ---------------------------------------------------------------
Mincon Sweden AB 100% Industrivagen 2-4, 61202 Finspang, Sweden
Sales company
------------------------------------------- -------- ---------------------------------------------------------------
Mincon Nordic OY 100% Hulikanmutka 6, 37570 Lempäälä, Finland
Sales company
------------------------------------------- -------- ---------------------------------------------------------------
Mincon Holdings Southern Africa (Pty) 100% 1 Northlake, Jetpark 1469, Gauteng, South Africa
Sales company
------------------------------------------- -------- ---------------------------------------------------------------
ABC Products (Rocky) Pty Ltd 100% 2/57 Alexandra Street, North Rockhampton, Queensland, 4701
Australia
---------------------------------------------------------------
Sales company
------------------------------------------- -------- ---------------------------------------------------------------
Mincon West Africa SARL 80% Villa TF 4635 GRD, Almadies, Dakar B.P. 45534, Senegal
---------------------------------------------------------------
Dormant company
------------------------------------------- -------- ---------------------------------------------------------------
Mincon West Africa SL 100% Calle Adolfo Alonso Fernández, s/n, Parcela P-16, Planta
2, Oficina 23, Zona Franca de
Gran Canaria, Puerto de la Luz, Código Postal 35008, Las
Palmas de Gran Canari
---------------------------------------------------------------
Sales company
------------------------------------------- -------- ---------------------------------------------------------------
Mincon Poland 100% ul.Mickiewicza 32, 32-050 Skawina, Poland
Dormant company
------------------------------------------- -------- ---------------------------------------------------------------
Pacific Bit of Canada 100% 9485 189 Unit204, Surrey, BC V4N 5L8, Canada
Sales company
------------------------------------------- -------- ---------------------------------------------------------------
24. Subsidiary undertakings (continued)
Group Registered Office &
Company Share % Country of Incorporation
------------------------------------------ -------- ---------------------------------------------------------------
Mincon Rockdrills Ghana Limited 100% P.O. Box CT5105, Accra,
Ghana
---------------------------------------------------------------
Dormant company
------------------------------------------ -------- ---------------------------------------------------------------
Mincon S.A.C. 100% Calle La Arboleda 151, Dpto 201, La Planicie, La Molina, Peru
---------------------------------------------------------------
Sales company
------------------------------------------ -------- ---------------------------------------------------------------
Ozmine International Pty Limited 100% Gidgegannup, WA 6083, Australia
---------------------------------------------------------------
Sales company
------------------------------------------ -------- ---------------------------------------------------------------
Mincon Chile 100% Av. La Dehesa #1201, Torre Norte, Lo Barnechea, Santiago, Chile
---------------------------------------------------------------
Sales company
------------------------------------------ -------- ---------------------------------------------------------------
Mincon Tanzania 100% Plot 1/3 Nyakato Road,
Mwanza, Tanzania
---------------------------------------------------------------
Dormant company
------------------------------------------ -------- ---------------------------------------------------------------
Mincon Namibia Pty Ltd 100% Ausspannplatz, Windhoek, Namibia
Sales company
------------------------------------------ -------- ---------------------------------------------------------------
Mincon Russia 100% 4,4 Lesnoy In,125047 Moscow, Russia
Dormant Company
------------------------------------------ -------- ---------------------------------------------------------------
Mincon Mining Equipment Inc 100%* 19789-92a Avenue, Langley, British Columbia V1M3B3, Canada
---------------------------------------------------------------
Sales company
------------------------------------------ -------- ---------------------------------------------------------------
Pirkanmaan Poraveikot OY PPV 100%* Hulikanmutka 6, 37570 Lempäälä, Finland
Engineering company
------------------------------------------ -------- ---------------------------------------------------------------
Mincon Exports USA Inc. 100% 603 Centre Ave, Roanoke VA 24016, USA
---------------------------------------------------------------
Group finance company
------------------------------------------ -------- ---------------------------------------------------------------
Mincon International Shannon 100%* Smithstown, Shannon, Co. Clare, Ireland
Dormant company
------------------------------------------ -------- ---------------------------------------------------------------
Smithstown Holdings 100% Smithstown, Shannon, Co. Clare, Ireland
Holding company
------------------------------------------ -------- ---------------------------------------------------------------
Mincon Canada Drilling Products Inc. 100%
---------------------------------------------------------------
Holding company Suite 1800-355 Burrard Street, Vancouver, BC V6C 268, Canada
------------------------------------------ -------- ---------------------------------------------------------------
Lotusglade Limited 100%* Smithstown, Shannon, Co. Clare, Ireland
Holding company
------------------------------------------ -------- ---------------------------------------------------------------
Floralglade Company 100% Smithstown, Shannon, Co. Clare, Ireland
Holding company
------------------------------------------ -------- ---------------------------------------------------------------
24. Subsidiary undertakings (continued)
Group Registered Office &
Company Share % Country of Incorporation
----------------------------------- -------- ----------------------------------------------------------------
Castle Heat Treatment Limited 100%* Smithstown, Shannon, Co. Clare, Ireland
Holding company
----------------------------------- -------- ----------------------------------------------------------------
Mincon Microcare Limited 100%* Smithstown, Shannon, Co. Clare, Ireland
----------------------------------- -------- ----------------------------------------------------------------
Holding company
----------------------------------- -------- ----------------------------------------------------------------
Cebeko Elast AB 100%* Svarvarevagen 1, SE-686 33 Sunne, Sweden
Holding company
----------------------------------- -------- ----------------------------------------------------------------
Driconeq AB 100% Svetsarevägen 4, 686 33, Sunne, Sweden
Holding company
----------------------------------- -------- ----------------------------------------------------------------
Driconeq Production AB 100% Svetsarevägen 4, 686 33, Sunne, Sweden
----------------------------------- -------- ----------------------------------------------------------------
Manufacturing facility
Driconeq Fastighet AB 100% Svetsarevägen 4, 686 33, Sunne, Sweden
----------------------------------- -------- ----------------------------------------------------------------
Property holding company
Driconeq Do Brasil 100% Rua Dr. Ramiro De Araujo Filho, 348, Jundai, SP, Brasil
----------------------------------- -------- ----------------------------------------------------------------
Sales company
Driconeq Africa Ltd 100% Cnr of Harriet and James Bright Avenue, Driehoek. Germiston 1400
----------------------------------- -------- ----------------------------------------------------------------
Manufacturing facility
Driconeq Australia Holdings Pty Ltd 100% 47 Greenwich Parade, AU-6031 Neerabup, WA, Australia
----------------------------------- -------- ----------------------------------------------------------------
Holding company
Driconeq Australia Pty Ltd 100% 47 Greenwich Parade, AU-6031 Neerabup, WA, Australia
----------------------------------- -------- ----------------------------------------------------------------
Manufacturing facility
Mincon Drill String AB 100% Svetsarevägen 4, 686 33, Sunne, Sweden
Holding company
EURL Roc Drill 100% Rue Charles Rolland, 29650 Guerlesquin, France
25. Leases
A. Leases as Lessees (IFRS 16)
The group leases property, plant and equipment across its global
operations.
During 2020, one of the leased properties in Finland was sublet.
The lease and sublease expire in 2023
During 2019, one of the leased properties in Australia was
sublet. The lease and sublease expire in 2024.
The Group leases IT and other equipment with contract terms of
less than 12 months and also for low value items.
The Group has elected not to recognise right-of -use assets and
lease liabilities for these leases in line with availing of the
exemptions for such leases allowable under IFRS16.
Information about leases for which the Group is a lessee is
presented below.
i) Right-of-use assets
31 December
2019
EUR'000
Balance at 1 January 4,683
Depreciation charge for the year (1,344)
Additions to right of use assets 490
Derecognition of right of use asset* (455)
Foreign exchange difference 114
------------------------------------- ---------------
Balance at 31 December 2019 3,488
------------------------------------- ---------------
31 December
2020
EUR'000
Balance at 1 January 3,488
Depreciation charge for the year (1,816)
Additions to right of use assets 3,487
Disposal of right of use asset (536)
Derecognition of right of use asset* (231)
Foreign exchange difference (151)
------------------------------------- -------------
Balance at 31 December 2020 4,241
------------------------------------- -------------
*Derecognition of the right of use asset during 2020 is as a
result of entering into a finance sub-lease.
.
ii) Amounts recognised in income statement.
2020 2019
EUR'000 EUR'000
----------------------------------------------- ------- -----------------
Interest on lease liabilities 332 247
Expenses related to short term leases 314 363
Expenses related to leases of low value assets 95 28
----------------------------------------------- ------- -----------------
-Leases under IFRS 16 741 638
----------------------------------------------- ------- -----------------
iii) Amounts recognised in statement of cash flows
2020 2019
EUR'000 EUR'000
------------------------------ ---------------- -------
Total cash outflow for leases 1,579 2,121
------------------------------ ---------------- -------
Total cash outflow of leases 1,579 2,121
------------------------------ ---------------- -------
25. Leases (continued)
iv) Extension options
Some property leases contain extension options exercisable by
the Group. The Group assesses at lease commencement date whether it
is reasonably certain to exercise the extension options. The Group
is reasonably certain it will not incur future lease liabilities
beyond what is currently calculated.
B. Leases as Lessor (IFRS 16)
i) Financing Lease
The group subleased a properties that had been recognised as a
right of use asset in Finland and Australia. The group recognised
income interest in the year in relation to this totalling
EUR143,000.
The following table sets out a maturity analysis of lease
receivable, showing the undiscounted lease payments to be received
after the reporting date.
31 December 31 December
2020 2019
EUR'000 EUR'000
Less than one year 188 138
One to two years 185 138
Two to three years 140 135
Three to four years - 135
More than five years - -
------------------------------------ --------------- ---------------
Balance at 31 December 2020 513 546
------------------------------------ --------------- ---------------
Unearned finance income (43) (62)
------------------------------------ --------------- ---------------
Total undiscounted lease receivable 470 484
------------------------------------ --------------- ---------------
ii) Operating leases
The group leases company owned property out to tenants in the
USA under various agreements. The group recognises these leases as
operating leases from a lessor perspective due to the fact they do
not transfer substantially all of the risks and rewards incidental
to the ownership of the assets.
Rental income recognised by the Group during 2020 was EUR213,000
(2019: EUR125,000).
The following table sets out a maturity analysis of lease
receivable, showing the undiscounted lease payments to be received
after the reporting date.
31 December
2020
EUR'000
Less than one year 107
One to two years 67
Two to three years 21
Three to four years -
More than five years -
--------------------- -----------
Total 195
---------------------- -----------
26. Commitments
The following capital commitments for the purchase of property,
plant and equipment had been authorised by the directors at 31
December 2020:
31 December 31 December
2020 2019
EUR'000 EUR'000
Contracted for 3,044 358
Not-contracted for 521 -
------------------- ----------- ------------
Total 3,565 358
------------------- ----------- ------------
27. Litigation
The Group is not involved in legal proceedings that could have a
material adverse effect on its results or financial position.
28. Related parties
As at 31 December 2020, the share capital of Mincon Group plc
was 56.54% owned by Kingbell Company which is ultimately controlled
by Patrick Purcell and members of the Purcell family. Patrick
Purcell is also a director of the Company.
In September 2020, the Group paid a final dividend for 2019 of
EUR0.0105 to all shareholders. The total dividend paid to Kingbell
Company was EUR1,256,551 (September 2019: EUR1,256,551).
The Group has a related party relationship with its subsidiary
and its joint venture undertakings (see note 24) for a list of
these undertakings), directors and officers. All transactions with
subsidiaries eliminate on consolidation and are not disclosed.
Transactions with Directors
The Group is owed EURNil from directors and shareholders at 31
December 2020 and 2019. The Group has amounts owing to directors of
EURNil as at 31 December 2020 and 2019.
Key management compensation
The profit before tax from continuing operations has been
arrived at after charging the following key management
compensation:
2020 2019
EUR'000 EUR'000
Short term employee benefits 1,441 1,369
Share based payment charged in the year - 67
Bonus and other emoluments 347 10
Post-employment contributions 126 68
Social security costs 86 133
---------------------------------------- ------- -------
Total 2,000 1,647
---------------------------------------- ------- -------
The key management compensation amounts disclosed above
represent compensation to those people having the authority and
responsibility for planning, directing and controlling the
activities of the Group, which comprises the Board of Directors and
executive management (ten in total at year end). Amounts included
above are time weighted for the period of the individuals
employment.
29. Events after the reporting date
The Board of Mincon Group plc is recommending the payment of a
full year dividend for the year ended 31 December 2020 in the
amount of EUR0.021 (2.10 cent) per ordinary share, which will be
subject to approval at the Annual General Meeting of the Company in
May 202 1 . This dividend, is in respect to an interim dividend of
1.05 cent and final dividend of 1.05 cent. Subject to Shareholder
approval at the Company's annual general meeting, the final
dividend will be paid on 18 June 2021 to Shareholders on the
register at the close of business on 28 May 2021.
Acquisition of the Hammer Drilling Rigs
On 1 January 2021, the Group completed the acquisition of the
Hammer Drilling Rigs (HDR), a specialist in supply of hard rock
drilling attachments based in the USA, for a consideration of
EUR2.1 million. There is zero goodwill arising on acquisition as
the Group acquired the IP of the business, the full consideration
will be amortised over the next five years.
30. Approval of financial statements
The Board of Directors approved the consolidated financial
statements on 19 March 2021.
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END
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