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Mincon Group Plc
Earnings Release • Mar 11, 2024
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Earnings Release
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National Storage Mechanism | Additional information 
RNS Number : 2121G
Mincon Group Plc
11 March 2024
Mincon Group plc
("Mincon" or the "Group")
2023 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 2023.
| 2023 | 2022 | Change in period | |
| €'000 | €'000 | ||
| Total revenue | 156,931 | 170,008 | -8% |
| Gross profit | 45,523 | 54,070 | -16% |
| EBITDA | 21,074 | 27,531 | -23% |
| Operating profit | 12,290 | 19,749 | -38% |
| Profit for the period | 7,470 | 14,704 | -49% |
Financial Summary
· 2023 Group revenue of €156.9 million, a decrease of 8% versus 2022, with FX headwinds was 5% of the contraction:
o The contraction in revenue was primarily driven by disruption in the mining industry:
§ Mining revenue decreased by 16%, with contraction across all our mining regions driven in part by customers resetting stock post covid disruption.
§ Our Waterwell/geothermal revenue grew by 3% in 2023.
§ Construction revenue was up 2% on a constant currency basis although reported revenues fell by 2%.
· EBITDA of €21.1 million in 2023, slightly ahead of guidance but reflecting a 23% decrease versus 2022:
§ This was a result of the lower revenues and reduced margins as a consequence of smaller volumes through the manufacturing facilities.
o We continued with our R&D investment through 2023, with €4.1 million expensed, broadly flat on 2022. However, we are expecting a decrease in R&D spend in 2024.
o Measures were taken to protect our margins in the challenging market environment, through cutting costs, bringing some subcontracting back in-house and through a redundancy programme, resulting in a net EBITDA saving of €3.1 million for the Group in 2023.
o We have further initiatives ongoing to enhance competitiveness of our cost base.
· Our net debt position reduced by €6.4 million in 2023.
· The Group commissioned €10.5 million in capital equipment in 2023, to create greater efficiencies in our operations and catering for further expansion in manufacturing capacity. This reflects a peak of investment in the near term, with capital equipment expected to be less than depreciation levels in 2024.
· We continued with the execution of our inventory rationalisation programme, with a decrease in our inventory holding of 9% in the year. Also, a more positive trend in the remainder of our working capital.
· Final dividend of 1.05c per ordinary share recommended, taking the total dividend for 2023 to 2.10c per ordinary share (2021: 2.10c per ordinary share).
Chief Executive's Review:
2023 has been a challenging year for Mincon in terms of revenue, profitability and ROCE. Revenue in H2 2023 was lower than expected due to a number of factors, notably a slower than expected recovery in mining revenues as customers ran down their inventories and the continuation of more muted conditions in exploration drilling, while we also experienced delays to anticipated commencements on some construction projects during the period.
The team at Mincon have worked hard to position the Group against this tough market backdrop and there are some positives to note in respect of our year-end cash and net debt position and the continued good results we have seen from our inventory reduction project. These positive balance sheet movements will continue to be worked on through 2024, something that is vital in the current interest rate environment.
With the appointment of Tom Purcell as our COO in 2023, we began the process of carrying out a root and branch review of all our businesses, and that is ongoing into H1 2024. The actions we take now will help ensure that we create a more stable base to better cope with both the challenges and opportunities ahead.
Geographic Markets
Our business in the Americas was largely flat on the prior year but it was notable that our construction revenue, although slightly down on the prior year, did have a lot of smaller project revenue which is more sustainable in the longer term. We did have a large construction project delayed from H2 2023 until this year, but we are expecting to get positive news on this in the near term. Elsewhere in the Americas, we have finished a mining supply contract in Chile and the effect of this will be significantly positive for our balance sheet as we unwind the working capital position tied up in the contract. We continue to believe that the Americas represent an area with a lot of potential growth across all our industries, as it has been in the past and, to that end, we intend to capture further growth in the mining and construction industries with further investment in Q1 2024.
Our Europe and Middle East (EME) region, like the Americas, was flat on the prior year. This was achieved despite our mining revenue being down, with increases in construction and water well/geothermal markets offsetting this. As this is our primary region for manufacturing activities within the Group, the cost inflation in the region, largely due to the war in Ukraine, has been a significant challenge to deal with in recent periods. As a result, we have been looking closely at every avenue for sensible cost management initiatives to offset these increases.
Regarding our business in the Australia Pacific (APAC) region, we experienced a revenue decline of 15% on the prior year. We are continuing to work hard to rebuild our revenues in the region and we are confident that we will make progress through 2024. We see good opportunities to regain lost business here through our strong presence on the ground to support local requirements and to provide a better value proposition to our customers by tailoring products manufactured in - country and supported with our field service technicians.
Our business in Africa is a sharp focus for the year ahead, as it experienced a revenue decline of 22% on the prior year. We have put plans in place to regain market share with strategic hires to assist in business development in the West Africa region as well as continuing our focus on revenue generation in Southern Africa through building upon our strong local presence.
Business Development
During the year, we continued our collaboration on the Greenhammer project with a major rig manufacturer and this is ready to start drilling on a copper mine in Arizona. We are confident that this approach will realise the potential that this product offers. Following this strategic decision, we elected to discontinue the previous testing on our own rig in Australia during the year. The Greenhammer team in that region are now focused on supporting the opportunity in the US as well as onsite business development work in the APAC region as part of our drive to rebuild our revenues there.
Our push to provide larger diameter drilling systems for the construction piling industry was slower to materialise in 2023 than we had originally anticipated. This is due to a lack of suitable project starts in Malaysia following a downturn in that region in the second half of 2023. We anticipate opportunities in H1 2024 and will provide further updates on this product area during the year. Regarding the construction market in general, we still have a significant pipeline of potential projects and have made good progress in some new markets with our spiral flush offering, which augers well for improving our market spread for the year ahead.
I am pleased to report that the Subsea project with our collaboration partners, Subsea Micropiles, has progressed well since our last update. The subsea rig has been completed and we have successfully shown that it can be road transported as a fully assembled unit. This significant milestone was achieved in November 2023, when we moved the rig from our plant in Shannon, Ireland to Jamestown Manufacturing Ltd. in Portarlington, Ireland to carry out the commissioning of the rig as well as the terrestrial load testing program essential for certification.
The functional testing of the rig has been successful, we have drilled and grouted the templates in place for load testing. We also successfully completed an initial wet test of the drilling system at Killybegs Port. We will hold the system there for now to use it as a base for marine testing in Ireland.
The subsea project progress has been closely followed by the offshore industry and there have been some important strategic agreements made with well-funded industry players. These agreements are essential pillars in moving the project closer to commerciality and unlocking the enormous potential that offshore wind represents for Mincon and our collaboration partners, Subsea Micropiles.
Sustainability
I am pleased to announce that our third Environment & Sustainability report has been published and outlines the progress that we have made in 2023 toward our goals to reduce emissions as part of our commitment to ensure the long-term sustainability of the business, and our commitment to people and the environment. As first reported for FY2022, we have further refined our scope 3 emissions reporting which clearly points to the engineering challenge of increasing the operational efficiency of our products in order to reduce their carbon emissions in use. This is becoming increasingly critical to the industries in which we work as they all have a pivotal role to play in the global push to reduce emissions. Indeed, in mining alone (currently 4%-7% of global emissions), the increase in output required is anticipated to reach levels never before seen and to achieve this it must be done at dramatically reduced levels of emissions to have any hope of making a positive impact on the environment.
Conclusion
After a difficult 2023, Mincon is focused on taking the appropriate strategic decisions in 2024 to meet the current market challenges and to position the business to best capitalise on the long-term opportunities we see in our end-markets. The subdued market environment in H2 of 2023 has continued into H1 2024 although we have begun to see some improvement in our order book. We are working hard to improve our competitiveness and input costs which together with potential improvement in the market environment gives us more confidence around performance in the second half of this year. . We must also continue our work on delivering on the promise of our development projects. We also need to complete our root and branch review to put a stable base under the business to both deal with the challenges and realise the significant opportunities ahead.
Finally, I would like to acknowledge the global Mincon team for their diligence and commitment through a difficult year in 2023, as well as the continuing support of our Board and investors. I remain confident that if we continue to hold fast and build on the foundation we have created, we will make a positive contribution in terms of our key business metrics and the environment in which we live.
11 March 2024
For further information, please contact:
Mincon Group plc Tel: +353 (61) 361 099
Joe Purcell CEO
Mark McNamara CFO
Davy Corporate Finance
(Nominated Adviser, Euronext Growth Listing Sponsor and Joint Broker) Tel: +353 (1) 679 6363
Anthony Farrell
Daragh O'Reilly
Shore Capital (Joint Broker) Tel: +44 (0) 20 7408 4090
Malachy McEntyre
Mark Percy
Daniel Bush
Consolidated Income Statement
For the year ended 31 December 2023
| Notes | 2023 €'000 |
2022 €'000 |
|
| Continuing operations | |||
| Revenue | 4 | 156,931 | 170,008 |
| Cost of sales | 6 | (111,408) | (115,938) |
| Gross profit | 45,523 | 54,070 | |
| Operating costs | 6 | (33,233) | (34,321) |
| Operating profit | 12,290 | 19,749 | |
| Finance costs | 7 | (2,472) | (1,479) |
| Finance income | 90 | 26 | |
| Foreign exchange (loss)/gain | (1,001) | 469 | |
| Movement on deferred consideration | 22 | (3) | (31) |
| Profit before tax | 8,904 | 18,734 | |
| Income tax expense | 11 | (1,434) | (4,030) |
| Profit for the period | 7,470 | 14,704 | |
| Profit attributable to: | |||
| - owners of the Parent | 7,470 | 14,704 | |
| Earnings per Ordinary Share | |||
| Basic earnings per share, | 20 | 3.52 | 6.92 |
| Diluted earnings per share, | 20 | 3.50 | 6.85 |
The accompanying notes are an integral to these financial statements.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2023
| 2023 | 2022 | |
| €'000 | €'000 | |
| Profit for the year | 7,470 | 14,704 |
| Other comprehensive loss: | ||
| Items that are or may be reclassified subsequently to profit or loss: | ||
| Foreign currency translation - foreign operations | (2,280) | (418) |
| Other comprehensive (loss)/income for the year | (2,280) | (418) |
| Total comprehensive income for the year | 5,190 | 14,286 |
| Total comprehensive income attributable to: | ||
| - owners of the Parent | 5,190 | 14,286 |
The accompanying notes are an integral to these financial statements.
Consolidated Statement of Financial Position
As at 31 December 2023
| 2023 | 2022 | |||
| Notes | €'000 | €'000 | ||
| Non-Current Assets | ||||
| Intangible assets and goodwill | 12 | 40,625 | 40,109 | |
| Property, plant and equipment | 13 | 54,763 | 53,004 | |
| Deferred tax asset | 11 | 2,664 | 2,050 | |
| Total Non-Current Assets | 98,052 | 95,163 | ||
| Current Assets | ||||
| Inventory and capital equipment | 14 | 69,730 | 76,911 | |
| Trade and other receivables | 15a | 21,616 | 23,872 | |
| Prepayments and other current assets | 15b | 8,609 | 12,727 | |
| Current tax asset | 1,007 | 305 | ||
| Cash and cash equivalents | 22 | 20,482 | 15,939 | |
| Total Current Assets | 121,444 | 129,754 | ||
| Total Assets | 219,496 | 224,917 | ||
| Equity | ||||
| Ordinary share capital | 19 | 2,125 | 2,125 | |
| Share premium | 67,647 | 67,647 | ||
| Undenominated capital | 39 | 39 | ||
| Merger reserve | (17,393) | (17,393) | ||
| Share based payment reserve | 2,241 | 2,505 | ||
| Foreign currency translation reserve | (7,866) | (5,586) | ||
| Retained earnings | 107,458 | 104,449 | ||
| Total Equity | 154,251 | 153,786 | ||
| Non-Current Liabilities | ||||
| Loans and borrowings | 18 | 26,032 | 26,971 | |
| Deferred tax liability | 11 | 2,099 | 2,046 | |
| Deferred consideration | 22 | 1,998 | 1,705 | |
| Other liabilities | 932 | 833 | ||
| Total Non-Current Liabilities | 31,061 | 31,555 | ||
| Current Liabilities | ||||
| Loans and borrowings | 18 | 14,080 | 14,973 | |
| Trade and other payables | 16 | 10,505 | 14,420 | |
| Accrued and other liabilities | 16 | 8,596 | 8,699 | |
| Current tax liability | 1,003 | 1,484 | ||
| Total Current Liabilities | 34,184 | 39,576 | ||
| Total Liabilities | 65,245 | 71,131 | ||
| Total Equity and Liabilities | 219,496 | 224,917 |
The accompanying notes are an integral to these financial statements.
On behalf of the Board:
Hugh McCullough Joseph Purcell
Chairman Chief Executive Officer 11 March 2024
Consolidated Statement of Cash Flows
For the year ended 31 December 2023
| 2023 | 2022 | ||
| Notes | €'000 | €'000 | |
| Operating activities: | |||
| Profit for the period | 7,470 | 14,704 | |
| Adjustments to reconcile profit to net cash provided by operating activities: | |||
| Depreciation | 13 | 7,997 | 7,782 |
| Amortisation of intellectual property | 12 | 216 | 190 |
| Amortisation of internally generated intangible asset | 12 | 485 | 121 |
| Movement on deferred consideration | 3 | 31 | |
| Finance cost | 7 | 2,472 | 1,479 |
| Finance income | (90) | (26) | |
| (Gain)/loss on sale of property, plant and equipment | (100) | 32 | |
| Income tax expense | 11 | 1,434 | 4,030 |
| Other non-cash movements | 1,009 | (459) | |
| 20,896 | 27,884 | ||
| Changes in trade and other receivables | 1,694 | 1,354 | |
| Changes in prepayments and other assets | 3,993 | (3,848) | |
| Changes in inventory | 5,596 | (13,463) | |
| Changes in trade and other payables | (3,613) | 1,632 | |
| Cash provided by operations | 28,566 | 13,560 | |
| Interest received | 90 | 26 | |
| Interest paid | (2,472) | (1,479) | |
| Income taxes paid | (3,693) | (4,042) | |
| Net cash provided by operating activities | 22,491 | 8,064 | |
| Investing activities | |||
| Purchase of property, plant and equipment | 13 | (10,201) | (7,309) |
| Proceeds from the sale of property, plant and equipment | 13 | 471 | 996 |
| Investment in intangible assets | 12 | - | (285) |
| Acquisitions of subsidiary, net of cash acquired | 9 | - | (1,014) |
| Investment in acquired intangible assets | 12 | (158) | (147) |
| Payment of deferred consideration | 22 | (1,054) | (2,628) |
| Net cash used in investing activities | (10,942) | (10,387) | |
| Financing activities | |||
| Dividends paid | 19 | (4,461) | (4,462) |
| Repayment of borrowings | 18 | (5,350) | (4,107) |
| Repayment of lease liabilities | 18 | (4,194) | (3,993) |
| Drawdown of loans | 18 | 7,223 | 11,478 |
| Net cash provided (used in) financing activities | (6,782) | (1,084) | |
| Effect of foreign exchange rate changes on cash | (224) | 297 | |
| Net increase/(decrease) in cash and cash equivalents | 4,543 | (3,110) | |
| Cash and cash equivalents at the beginning of the year | 15,939 | 19,049 | |
| Cash and cash equivalents at the end of the year | 20,482 | 15,939 |
The notes are an integral part of these consolidated financial statements
Consolidated Statement of Changes in Equity
For the year ended 31 December 2023
| Share capital |
Share premium | Merger reserve | Un-denominated capital |
Share based payment reserve | Foreign currency translation reserve |
Retained earnings | Total equity |
|
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |
| Balances at 1 January 2022 | 2,125 | 67,647 | (17,393) | 39 | 2,695 | (5,168) | 94,207 | 144,152 |
| Comprehensive income: | ||||||||
| Profit for the year | - | - | - | - | - | - | 14,704 | 14,704 |
| Other comprehensive income/(loss): | ||||||||
| Foreign currency translation | - | - | - | - | - | (418) | - | (418) |
| Total comprehensive income | (418) | 14,704 | 14,286 | |||||
| Transactions with Shareholders: | ||||||||
| Issuance of share capital | - | - | - | - | - | - | - | - |
| Share based payments | - | - | - | - | (190) | - | - | (190) |
| Dividends | - | - | - | - | - | - | (4,462) | (4,462) |
| Total transactions with Shareholders | - | - | - | - | (190) | - | (4,462) | (4,652) |
| Balances at 31 December 2022 | 2,125 | 67,647 | (17,393) | 39 | 2,505 | (5,586) | 104,449 | 153,786 |
| Comprehensive income: | ||||||||
| Profit for the year | - | - | - | - | - | - | 7,470 | 7,470 |
| Other comprehensive income/(loss): | ||||||||
| Foreign currency translation | - | - | - | - | - | (2,280) | - | (2,280) |
| Total comprehensive income | (2,280) | 7,470 | 5,190 | |||||
| Transactions with Shareholders: | ||||||||
| Issuance of share capital | - | - | - | - | - | - | - | - |
| Share-based payments | - | - | - | - | (264) | - | - | (264) |
| Dividends | - | - | - | - | - | - | (4,461) | (4,461) |
| Total transactions with Shareholders | - | - | - | - | (264) | - | (4,461) | (4,725) |
| Balances at 31 December 2023 | 2,125 | 67,647 | (17,393) | 39 | 2,241 | (7,866) | 107,458 | 154,251 |
The notes are an integral part of these consolidated financial statements. See note 19 for explanation of movements in reserve balances.
Notes to the Consolidated Financial Statements
1. Description of business
The consolidated financial statements of Mincon Group plc (also referred to as "Mincon" or "the Group") comprises the Company and its subsidiaries (together referred to as "the Group"). The companies registered address is Smithstown Industrial Estate, Smithstown, Shannon, Co. Clare, Ireland.
The Group is an Irish engineering Group, specialising in the design, manufacturing, sale and servicing of rock drilling tools and associated products. Mincon Group Plc is domiciled in Shannon, Ireland.
On 26 November 2013, Mincon Group plc was admitted to trading on the Euronext Growth and the Alternative Investment Market (AIM) of the London Stock Exchange.
2. Basis of preparation
These consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards as adopted by the European Union (EU IFRS), which comprise standards and interpretations approved by the International Accounting Standards Board (IASB), and endorsed by the EU.
The Group's financial statements consolidate those of the parent company and all of its subsidiaries as of 31 December 2023. All subsidiaries have a reporting date of 31 December.
The accounting policies set out in note 3 have been applied consistently in preparing the Group and Company financial statements for the years ended 31 December 2023 and 31 December 2022.
The Group and Company financial statements are presented in euro, which is the functional currency of the Company and also the presentation currency for the Group's financial reporting. Unless otherwise indicated, the amounts are presented in thousands of euro. These financial statements are prepared on the historical cost basis.
The preparation of the consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The judgements, estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results could differ materially from these estimates. The areas involving a high degree of judgement and the areas where estimates and assumptions are critical to the consolidated financial statements are discussed in note 3.
The directors believe that the Group has adequate resources to continue in operational existence for the foreseeable future and that it is appropriate to continue to prepare our consolidated financial statements on a going concern basis.
3. Significant accounting principles, accounting estimates and judgements
The accounting principles as set out in the following paragraphs have, unless otherwise stated, been consistently applied to all periods presented in the consolidated financial statements and for all entities included in the consolidated financial statements.
The following new and amended standards are not expected to have a significant impact on the Group's consolidated financial statements:
New Standards adopted as at 1 January 2023
• IFRS 17 Insurance Contracts
• IAS 8 Definition of Accounting Estimates
• IAS 1 Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2)
• IAS 12 Deferred Tax related to Assets and Liabilities arising from a Single Transaction
(Amendments to IAS 12)
• IAS 12 International Tax Reform - Pillar Two Model Rules
3. Significant accounting principles, accounting estimates and judgements (continued)
Standards, amendments and Interpretations to existing Standards that are not yet effective
• Liability in a Sale and Leaseback (Amendments to IFRS 16 Leases)
• Classification of Liabilities as Current or Non-Current (Amendments to IAS 1 Presentation of Financial
Statements)
• Lack of Exchangeability (Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates)
• Supplier Finance Arrangements (Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures)
Segment Reporting
An operating segment is a component of the Group that engages in busi-ness activities from which it may earn revenue and incur expenses, and for which discrete financial information is available. The operating 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 (see Note 5). The Group is managed as a single business unit that sells drilling equipment, primarily manufactured by Mincon manufacturing sites.
Revenue Recognition
The Group is involved in the sale and servicing of rock drilling tools and associated products. Revenue from the sale of these goods and services to customers is measured at the fair value of the consideration received or receivable (excluding sales taxes). The Group recognises revenue when it transfers control of goods to a customer or has completed a service over a set period (typically one month) for a customer.
The following provides information about the nature and timing of the satisfaction of performance obligations in contracts with customers, including significant payment terms, and the related revenue recognition policies.
Customers obtain control of products when one of the following conditions are satisfied:
1. The goods have been picked up by the customer from Mincon's premises.
2. When goods have been shipped by Mincon, the goods are delivered to the customer and have been accepted at their premises, or;
3. The customer accepts responsibility of the goods during transit that is in line with international commercial terms.
Where the Group provides a service to a customer, who also purchases Mincon manufactured product from the Group, the revenue associated with this service is separately identified in a set period (typically one month) and is recognised in the Groups revenue as it occurs.
Invoices are generated when the above conditions are satisfied. Invoices are payable within the timeframe as set in agreement with the customer at the point of placing the order of the product or service. Discounts are provided from time-to-time to customers.
Customers may be permitted to return goods where issues are identified with regard to quality of the product. Returned goods are exchanged only for new goods or a credit note. No cash refunds are offered.
Where the customer is permitted to return an item, revenue is recognised to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur. Therefore, the amount of revenue recognised is adjusted for expected returns, which are estimated based on the historical data for specific types of product. In these circumstances, a refund liability and a right to recover returned goods asset are recognised.
The Group recognises contract liabilities for consideration received in respect of unsatisfied performance obligations and reports these amounts as accruals and other liabilities in its consolidated statement of financial position. Similarly, if the Group satisfies a performance obligation before it receives the consideration, the Group recognises either a contract asset or a receivable in its consolidated statement of financial position, depending on whether something other than the passage of time is required before the consideration is due.
3. Significant accounting principles, accounting estimates and judgements (continued)
Revenue Recognition (continued)
The Group has elected to apply IFRS 15 Practical expedient, the Group need not adjust the promised amount of consideration for the effects of a significant financing component if the entity expects, at contract inception, that the period between when the Group transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.
Government Grants
Amounts recognised in the profit and loss account are presented under the heading Operating Costs on a systematic basis in the periods in which the expenses are recognised, unless the conditions for receiving the grant are met after the related expenses have been recognised. In this case, the grant is recognised when it is receivable. Current government grants have no conditions attached.
Earnings per share
Basic earnings per share is calculated based on the profit for the year attributable to owners of the Company and the basic weighted average number of shares outstanding. Diluted earnings per share is calculated based on the profit for the year attributable to owners of the Company and the diluted weighted average number of shares outstanding.
Taxation
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using tax rates enacted or substantively enacted at the reporting date. Current tax also includes any tax arising from dividends.
Current tax assets and liabilities are offset only if certain criteria are met.
Deferred tax
Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for:
• not a business combination and that affects neither accounting nor taxable profit or loss;
• temporary differences related to investments in subsidiaries, associates and joint arrangements to the extent that the Group is able to control the timing of the reversal of the temporary differences and it is probable that they will not reverse in the foreseeable future; and
• taxable temporary differences arising on the initial recognition of goodwill.
Deferred tax assets are recognised for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used. Future taxable profits are determined based on the reversal of relevant taxable temporary differences. If the amount of taxable temporary differences is insufficient to recognise a deferred tax asset in full, then future taxable profits, adjusted for reversals of existing temporary differences, are considered, based on the business plans for individual subsidiaries in the Group. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised; such reductions are reversed when the probability of future taxable profits improves.
Unrecognised deferred tax assets are reassessed at each reporting date and recognised to the extent that it has become probable that future taxable profits will be available against which they can be used.
Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, using tax rates enacted or substantively enacted at the reporting date.
The measurement of deferred tax reflects the tax consequences that would follow from the manner in which the Group expects, at the reporting date, to recover or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset only if certain criteria are met.
3. Significant accounting principles, accounting estimates and judgements (continued)
Leases (continued)
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.
(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.
3. Significant accounting principles, accounting estimates and judgements (continued)
Inventories and capital equipment
Inventories and capital equipment (rigs) are valued at the lower of cost or net realisable value. Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and selling expenses. The cost of inventories is based on the first-in, first-out principle and includes the costs of acquiring inventories and bringing them to their existing location and condition. Inventories manufactured by the Group and work in progress include an appropriate share of production overheads based on normal operating capacity. Inventories are reported net of deductions for obsolescence.
Intangible Assets and Goodwill
Goodwill
The Group accounts for acquisitions using the purchase accounting method as outlined in IFRS 3 Business Combinations. Goodwill is not amortised and is tested annually.
Intangible assets
Expenditure on research activities is recognised in profit or loss as incurred.
Development expenditure is capitalised only if the Group can demonstrate if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable and the Group intends to and has sufficient resources to complete development and to use or sell the asset. Otherwise, it is recognised in the profit or loss as incurred. Subsequent to initial recognition, development expenditure is measured at cost less accumulated amortisation and any accumulated impairment losses.
Acquired IP which has been obtained at a cost that can be measured reliably, and that meets the definition and recognition criteria of IAS38, will be accounted for as an intangible asset.
Recognising an internally developed intangible assets post the development phase once the company has assessed the development phase is complete and the asset is ready for use. Internally generated assets have an infinite life. They will be amortised over a fifteen year period on a straight line basis. Currently there is thirteen years and nine months remaining on the amortisation.
Foreign Currency
Foreign currency transactions
Transactions in foreign currencies (those which are denominated in a currency other than the functional currency) are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the foreign exchange rate at the statement of financial position date. Exchange gains and losses related to trade receivables and payables, other financial assets and payables, and other operating receivables and payables are separately presented on the face of the income statement.
Exchange rate differences on translation to functional currency are reported in profit or loss, except when reported in other comprehensive income for the translation of intra-group receivables from, or liabilities to, a foreign operation that in substance is part of the net investment in the foreign operation.
Exchange rates for major currencies used in the various reporting periods are shown in note 22.
Translation of accounts of foreign entities
The assets and liabilities of foreign entities, including goodwill and fair value adjustments arising on consolidation, are translated to euro at the exchange rates ruling at the reporting date. Revenues, expenses, gains, and losses are translated at average exchange rates, when these approximate the exchange rate for the respective transaction. Foreign exchange differences arising on translation of foreign entities are recognised in other comprehensive income and are accumulated in a separate component of equity as a translation reserve. On divestment of foreign entities, the accumulated exchange differences, are recycled through profit or loss, increasing or decreasing the profit or loss on divestments.
Business combinations and consolidation
The consolidated financial statements include the financial statements of the Group and all companies in which Mincon Group plc, directly or indirectly, has control. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control commences until the date on which control ceases.
3. Significant accounting principles, accounting estimates and judgements (continued)
Business combinations and consolidation (continued)
The consolidated financial statements have been prepared in accordance with the acquisition method.
According to this method, business combinations are seen as if the Group directly acquires the assets and assumes the liabilities of the entity acquired. At the acquisition date, i.e., the date on which control is obtained, each identifiable asset acquired, and liability assumed is recognised at its acquisition-date fair value.
Consideration transferred is measured at its fair value. It includes the sum of the acquisition date fair values of the assets transferred, liabilities incurred to the previous owners of the acquiree, and equity interests issued by the Group. Deferred consideration is initially measured at its acquisition-date fair value. Any subsequent change in such fair value is recognised in profit or loss, unless the deferred consideration is classified as equity. In that case, there is no remeasurement and the subsequent settlement is accounted for within equity. Deferred consideration arises in the current year where part payment for an acquisition is deferred to the following year or years.
Transaction costs that the Group incurs in connection with a business combination, such as legal fees, due diligence fees, and other professional and consulting fees are expensed as incurred.
Goodwill is measured as the excess of the fair value of the consideration transferred, the amount of any non-controlling interest in the acquiree, and the fair value of the Group's previously held equity interest in the acquiree (if any) over the net of acquisition-date fair values of the identifiable assets acquired and liabilities assumed. Goodwill is not amortised but tested for impairment at least annually.
Non-controlling interest is initially measured either at fair value or at the non-controlling interest's proportionate share of the fair value of the acquiree's identifiable net assets. This means that goodwill is either recorded in "full" (on the total acquired net assets) or in "part" (only on the Group's share of net assets). The choice of measurement basis is made on an acquisition-by-acquisition basis.
Earnings from the acquirees are reported in the consolidated income statement from the date of control.
Intra-group balances and transactions such as income, expenses and dividends are eliminated in preparing the consolidated financial statements. Profits and losses resulting from intra-group transactions that are recognised in assets, such as inventory, are eliminated in full, but losses are only eliminated to the extent that there is no evidence of impairment.
Property, plant and equipment
Items of property, plant and equipment are carried at cost less accumulated depreciation and impairment losses. Cost of an item of property, plant and equipment comprises the purchase price, import duties, and any cost directly attributable to bringing the asset to its location and condition for use. The Group capitalises costs on initial recognition and on replacement of significant parts of property, plant and equipment, if it is probable that the future economic benefits embodied will flow to the Group and the cost can be measured reliably. All other costs are recognised as an expense in profit or loss when incurred.
Depreciation
Depreciation is calculated based on cost using the straight-line method over the estimated useful life of the asset. The following useful lives are used for depreciation:
Years
Buildings 20-30
Plant and equipment 3-10
The depreciation methods, useful lives and residual values are reassessed annually. Land is not depreciated.
Right of use assets are depreciated using the straight-line method over the estimated useful life of the asset being the remaining duration of the lease from inception date of the asset. The depreciation methods, useful lives and residual values are reassessed annually.
3. Significant accounting principles, accounting estimates and judgements (continued)
Financial Assets and Liabilities
Classification and initial measurement of financial assets financial liabilities.
Financial assets and liabilities are recognised at fair value when the Group becomes a party to the contractual provisions of the instrument. Purchases and sales of financial assets are accounted for at trade date, which is the day when the Group contractually commits to acquire or dispose of the assets. Trade receivables are recognised once the responsibility associated with control of the product has transferred to the customer. Liabilities are recognised when the other party has performed and there is a contractual obligation to pay. A financial asset and a financial liability are offset and the net amount presented in the statement of financial position when there is a legally enforceable right to set off the recognised amounts and there is an intention to either settle on a net basis or to realise the asset and settle the liability simultaneously.
The classification is determined by both:
• the entity's business model for managing the financial asset, and
• the contractual cash flow characteristics of the financial asset.
Subsequent measurement of financial assets and financial liabilities
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVTPL):
· they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows, and
· the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Financial liabilities at amortised cost
Subsequently, financial liabilities are measured at amortised cost using the effective interest method.
Derecognition (fully or partially) of a financial asset occurs when the rights to receive cash flows from the financial instruments expire or are transferred and substantially all of the risks and rewards of ownership have been removed from the Group. Financial assets are assessed at each reporting date. The Group derecognises (fully or partially) a financial liability when the obligation specified in the contract is discharged or otherwise expires.
Impairment of financial assets
Financial assets are assessed from initial recognition and at each reporting date to determine whether there is a requirement for impairment. Financial assets require there expected lifetime losses to be recognised from initial recognition.
IFRS 9's impairment requirements use forward-looking information to recognise expected credit losses - the 'expected credit loss (ECL) model'. Instruments within the scope of the requirements included loans and other debt-type financial assets measured at amortised cost, trade and other receivables.
The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events, current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
· financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk ('Stage 1') and
· financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low ('Stage 2').
'Stage 3' would cover financial assets that have objective evidence of impairment at the reporting date.
'12-month expected credit losses' are recognised for the first category (ie Stage 1) while 'lifetime expected credit losses' are recognised for the second category (ie Stage 2).
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument.
3. Significant accounting principles, accounting estimates and judgements (continued)
Financial Assets and Liabilities (continued)
Trade and other receivables
The Group makes use of a simplified approach in accounting for trade and other receivables and records the loss allowance as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the potential for default at any point during the life of the financial instrument. In calculating, the Group uses its historical experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.
The Group assesses impairment of trade and other receivables on a collective basis as they possess shared credit risk characteristics they have been grouped based on the days past due.
Borrowing costs
All borrowing costs are expensed in accordance with the effective interest rate method.
Equity
Shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of any tax effect.
Financial instruments carried at fair value: Deferred consideration
Fair value is calculated based on the present value of future principal and interest cash flows, discounted at the market rate of interest at the reporting date. These are set amounts detailed in each contract.
Finance income and expenses
Finance income and expense are included in profit or loss using the effective interest method.
Contingent liabilities
A contingent liability is a possible obligation or a present obligation that arises from past events that is not reported as a liability or provision, as it is not probable that an outflow of resources will be required to settle the obligation or that a sufficiently reliable calculation of the amount cannot be made.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less.
Provisions
A provision is recognised in the statement of financial position when the Group has a legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation, and the outflow can be estimated reliably. The amount recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the reporting date. If the effect of the time value of money is material, the provision is determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan and the restructuring has either commenced or been announced publicly. Future operating losses are not provided for.
Defined contribution plans
A defined contribution retirement benefit plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution retirement benefit plans are recognised as an employee benefit expense in profit or loss when employees provide services entitling them to the contributions.
Share-based payment transactions
The Group operates a long term incentive plan which allows the Company to grant Restricted Share Awards ("RSAs") to executive directors and senior management. All schemes are equity settled arrangements under IFRS 2 Share-based Payment.
3. Significant accounting principles, accounting estimates and judgements (continued)
Financial Assets and Liabilities (continued)
Share-based payment transactions (continued)
The grant-date fair value of share-based payment awards granted to employees is recognised as an employee expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which the related service and non-market performance conditions are expected to be met, such that the amount ultimately recognised as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date. It is reversed only where entitlements do not vest because all
non-market performance conditions have not been met or where an employee in receipt of share entitlements leaves the Group before the end of the vesting period and forfeits those options in consequence.
Critical accounting estimates and judgements
The preparation of financial statements requires management's judgement and the use of estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. These estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the prevailing circumstances. Actual results may differ from those estimates. The estimates and assumptions are reviewed on an ongoing basis. Revisions to the accounting estimates are recognised in the period in which they are revised and in any future periods affected.
Following are the estimates and judgements which, in the opinion of management, are significant to the underlying amounts included in the financial reports and for which there is a significant risk that future events or new information could entail a change in those estimates or judgements.
Deferred consideration
The deferred consideration payable represents management's best estimate of the fair value of the amounts that will be payable, discounted as appropriate using a market interest rate. The fair value was estimated by assigning probabilities, based on management's current expectations, to the potential pay-out scenarios. The fair value of deferred consideration is primarily dependent on the future performance of the acquired businesses against predetermined targets and on management's current expectations thereof.
Climate-related matters
Consistent with the prior year, as at 31 December 2023, the Group has not identified significant risks induced by climate changes that could negatively and materially affect the estimates and judgements currently used in the Group's financial statements. Management continuously assesses the impact of climate-related matters.
Goodwill
The initial recognition of goodwill represents management' best estimate of the fair value of the acquired entities value less the identified assets acquired.
During the annual impairment assessment over goodwill, management calculate the recoverable value of the group using their best estimate of the discounted future cash flows of the group. The fair values were estimated using management's current and future projections of the Mincon Group's performance as well as appropriate data inputs and assumptions.
Useful life and residual values of Intangible Assets
Distinguishing the research and development phase, determining the useful life, and deciding whether the recognition requirements for the capitalisation of development costs of new projects are met all require judgement. These judgements are based on historical experience and various other factors that are believed to be reasonable under the prevailing circumstances.
After capitalisation, management monitors whether the recognition requirements continue to be met and whether there are any indicators that capitalised costs may be impaired.
Trade and other receivables
Trade and other receivables are included in current assets, except for those with maturities more than 12 months after the reporting date, which are classified as non-current assets. The Group estimates the risk that receivables will not be paid and provides for doubtful debts in line with IFRS 9.
3. Significant accounting principles, accounting estimates and judgements (continued)
Critical accounting estimates and judgements (continued)
Trade and other receivables (continued)
The Group applies the simplified approach to providing for expected credit losses (ECL) permitted by IFRS 9 Financial Instruments, which requires expected lifetime losses to be recognised from initial recognition of the receivables and considered at each reporting date. Loss rates are calculated using a "roll rate" method based on the probability of a receivable progressing through successive chains of non-payment to write-off.
Trade receivables are written off when there is no reasonable expectation of recovery, such as a debtor failing to engage in a repayment plan with the company. Where recoveries are made, these are recognised in the Consolidated Income Statement.
4. Revenue
In the following table, revenue is disaggregated between Mincon manufactured product and product that is purchased outside the Group and resold through Mincon distribution channels.
| 2023 | 2022 | |
| €'000 | €'000 | |
| Product revenue: | ||
| Sale of Mincon product | 128,294 | 141,830 |
| Sale of third party product | 28,637 | 28,178 |
| Total revenue | 156,931 | 170,008 |
The Group's revenue disaggregated by primary geographical markets are disclosed in Note 5.
The Group recognised contract liability amounting to €1 million as at 31 December 2023 (2022:€NIL) which represent customer payments received in advance of performance that are expected to be recognised within the next financial year. Contract liability is recorded under Other accruals and other liabilities (Note 16).
5. Operating Segment
The CODM assesses operating segment performance based on operating profit. Segment revenue for the year ended 31 December 2023 of €156.9 million (2022: €170 million) is wholly derived from sales to external customers.
Entity-wide disclosures
The business is managed on a worldwide basis but operates manufacturing facilities and sales offices in Ireland, UK, Sweden, Finland, South Africa, Western Australia, the United States and Canada and sales offices in ten other locations including Eastern Australia, South Africa, France, Spain, Namibia, Sweden, Chile and Peru. In presenting information on geography, revenue is based on the geographical location of customers and non-current assets based on the location of these assets.
Revenue by region (by location of customers):
| 2023 | 2022 | |
| €'000 | €'000 | |
| Region: | ||
| I reland | 1,619 | 2,974 |
| Americas | 66,466 | 69,752 |
| Australasia | 14,344 | 16,882 |
| Europe, Middle East, Africa | 74,502 | 80,400 |
| Total revenue from continuing operations | 156,931 | 170,008 |
5. Operating Segment (continued)
During 2023, Mincon had sales in the USA of €38.4 million (2022: €42.4 million), this contributed to more than 10% of the entire Group's sales for 2023.
| 2023 | 2022 | |||
| €'000 | €'000 | |||
| Region: | ||||
| Americas | 16,352 | 17,752 | ||
| Australasia | 11,060 | 12,252 | ||
| Europe, Middle East, Africa | 67,976 | 63,109 | ||
| Total non-current assets(1) | 95,388 | 93,113 | ||
| (1) Non-current assets exclude deferred tax assets. | ||||
During 2023, Mincon held non-current assets (excluding deferred tax assets) in Ireland of €23.5 million (2022: €17.6 million), in the USA of €11.7 million (2022: €12.5 million) these separately contributed to more than 10% of the entire Group's non-current assets (excluding deferred tax assets) for 2023.
| 2023 | 2022 | |||
| €'000 | €'000 | |||
| Region: | ||||
| Americas | 5,883 | 6,839 | ||
| Australasia | 1,988 | 2,555 | ||
| Europe, Middle East, Africa | 21,091 | 20,115 | ||
| Total non-current liabilities(1) | 28,962 | 29,509 | ||
| (1) Non-current liabilities exclude deferred tax liabilities. | ||||
During 2023, Mincon held non-current liabilities (excluding deferred tax liabilities) in Ireland of €15.7 million (2022: €13.5 million), this contributed to more than 10% of the entire Group's non-current liabilities (excluding deferred tax liabilities) for 2023.
- Cost of Sales and operating expenses
Included within cost of sales and operating costs were the following major components:
| Cost of sales | ||
| 2023 | 2022 | |
| €'000 | €'000 | |
| Raw materials | 46,201 | 45,523 |
| Third party product purchases | 22,194 | 21,838 |
| Employee costs | 20,980 | 23,093 |
| Depreciation (note 13) | 5,387 | 5,194 |
| In bound costs on purchases | 3,200 | 4,759 |
| Energy costs | 2,735 | 3,116 |
| Maintenance of machinery | 1,529 | 2,120 |
| Subcontracting | 4,884 | 7,139 |
| Amortisation of product development | 485 | 121 |
| Other | 3,813 | 3,035 |
| Total cost of sales | 111,408 | 115,938 |
The Group invested approximately €4.1 million on research and development projects in 2023 (2022: €4.4 million). €4.1 million of this has been expensed in the period (2022: €4.1 million), with the balance of €NIL of development costs capitalised (2022: €285,000) (note 12).
- Cost of Sales and operating expenses (continued)
Operating costs
| 2023 | 2022 | |
| €'000 | €'000 | |
| Employee costs (including director emoluments) | 19,726 | 20,370 |
| Depreciation (note 13) | 2,610 | 2,588 |
| Amortisation of acquired IP | 215 | 190 |
| Travel | 1,812 | 1,927 |
| Professional costs | 2,425 | 2,637 |
| Administration | 2,938 | 2,997 |
| Marketing | 791 | 706 |
| Legal cost | 715 | 846 |
| Other | 2,001 | 2,060 |
| Total other operating costs | 33,233 | 34,321 |
The Group recognised €56,000 in Government Grants in 2023 (2022: €119,000). These grants differ in structure from country to country, they primarily relate to personnel costs.
- Finance costs
| 2023 | 2022 | |
| €'000 | €'000 | |
| Interest on lease liabilities | 698 | 609 |
| Interest on loans and borrowings | 1,774 | 870 |
| Finance costs | 2,472 | 1,479 |
| 8. Employee information | ||
| 2023 | 2022 | |
| €'000 | €'000 | |
| Wages and salaries - excluding directors | 34,633 | 36,085 |
| Wages, salaries, fees and retirement benefit - directors (note 10) | 725 | 868 |
| Social security costs | 3,409 | 4,428 |
| Retirement benefit costs of defined contribution plans | 2,203 | 2,272 |
| Share based payment expense (note 21) | (264) | (190) |
| Total employee costs | 40,706 | 43,463 |
| In addition to the above employee costs, the Group capitalised payroll costs of €NIL in 2023 (2022: €151,000) in relation to development. At 31 December 2023, there was €445,000 (2022: €234,000) accrued for and not in paid pension contributions. |
||
| The average number of employees was as follows: | ||
| 2023 | 2022 | |
| Number | Number | |
| Sales and distribution | 136 | 133 |
| General and administration | 77 | 75 |
| Manufacturing, service and development | 391 | 417 |
| Average number of persons employed | 604 | 625 |
Retirement benefit and Other Employee Benefit Plans
The Group operates various defined contribution retirement benefit plans. During the year ended 31 December 2023, the Group recorded €2.2 million (2022: €2.3 million) of expense in connection with these plans.
9. Acquisitions & Disposals
2023 Acquisition
Mincon Group had no acquisitions in 2023.
2022 Acquisition
In January 2022, Mincon acquired 100% shareholding in Spartan Drilling Tools, a manufacturer of drill pipe and related products based in the USA for a consideration of €1,014,000. Spartan Drilling Tools was acquired to manufacture drill pipe closer to the end user in the America's region.
A. Consideration transferred
The following table summarises the acquisition date fair value of each major class of consideration transferred.
| Spartan Drilling Tools | Total | ||||
| €'000 | €'000 | ||||
| Consideration transferred | 1,014 | 1,014 | |||
| Total consideration transferred | 1,014 | 1,014 |
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 | |
| €'000 | |
| Property, plant and equipment | 480 |
| Right of use assets | 455 |
| Inventories | 369 |
| Trade receivables | 133 |
| Other assets | 63 |
| Trade and other payables | (83) |
| Right of use liabilities | (455) |
| Other accruals and liabilities | (109) |
| Fair value of identifiable net assets acquired | 853 |
Measurement of fair values
The valuation techniques used for measuring the fair value of material assets acquired were as follows.
| Assets acquired | Valuation Technique |
| Property, plant and equipment | Market comparison technique and cost technique: The valuation model considers quoted market prices for similar items when they are available, and depreciated replacement cost when appropriate. Depreciated replacement cost reflects adjustments for physical deterioration as well as functional and economic obsolescence. |
| Inventories | Market comparison technique: The fair value is determined based on the estimated selling price in the ordinary course of business less the estimated costs of completion and sale, and a reasonable profit margin based on the effort required to complete and sell the inventories. |
| Assets acquired | Valuation Technique |
| Trade receivables | All receivable balances were assessed and all are collectable. |
| Trade and other payables | All were accessed and deemed payable to credible suppliers |
| Other current assets | All were accessed for recoverability and all is recoverable |
| Other accruals and liabilities | All were assessed for credibility and deemed payable |
9. Acquisitions & Disposals (continued)
The loss from the acquisition of Spartan Drilling Tools has been consolidated into the Mincon Group 2022 profit for the reporting period.
Goodwill
Goodwill of €161,000 is primarily due to growth expectations, expected future profitability and expected cost synergies.
Goodwill arising from the acquisition has been recognised as follows.
| Spartan Drilling Tools €'000 |
Total 2022 €'000 |
|
| Consideration transferred | 1,014 | 1,014 |
| Fair value of identifiable net assets | (853) | (853) |
| Goodwill | 161 | 161 |
10. Statutory and other required disclosures
| Operating profit is stated after charging the following amounts: | 2023 | 2022 |
| €'000 | €'000 | |
| Directors' remuneration | ||
| Fees | 234 | 210 |
| Wages and salaries | 432 | 599 |
| Retirement benefit contributions | 59 | 59 |
| Total directors' remuneration | 725 | 868 |
| Auditor's remuneration | 2023 €'000 |
2022 €'000 |
| Auditor's remuneration - Fees payable to lead audit firm | ||
| Audit of the Group financial statements | 188 | 180 |
| Audit of the Company financial statements | 10 | 10 |
| Other assurance services | 15 | 13 |
| 213 | 203 | |
| Auditor's remuneration - Fees payable to other firms in lead audit firm's network | ||
| Audit services | 36 | 35 |
| Other assurance services | - | - |
| Tax advisory services | 2 | 2 |
| Total auditor's remuneration | 38 | 37 |
11. Income tax
Tax recognised in income statement:
| 2023 | 2022 | |
| Current tax expense | €'000 | €'000 |
| Current year | 1,995 | 4,409 |
| Adjustment for prior years | - | 172 |
| Total current tax expense | 1,995 | 4,581 |
| Deferred tax expense | ||
| Origination and reversal of temporary differences | (561) | (551) |
| Total deferred tax expense | (561) | (551) |
| Total income tax expense | 1,434 | 4,030 |
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:
| 2023 | 2022 | |
| €'000 | €'000 | |
| Profit before tax from continuing operations | 8,904 | 18,734 |
| Irish standard tax rate (12.5%) | 12.5% | 12.5% |
| Taxes at the Irish standard rate | 1,113 | 2,342 |
| Foreign income at rates other than the Irish standard rate | (462) | 662 |
| Losses created/utilised | (61) | 304 |
| Other | 844 | 722 |
| Total income tax expense | 1,434 | 4,030 |
The Group's net deferred taxation liability was as follows:
| 2023 | 2022 | |
| €'000 | €'000 | |
| Deferred taxation assets: | ||
| Reserves, provisions and tax credits | 2,012 | 1,044 |
| Tax losses and unrealised FX gains | 652 | 1,006 |
| Total deferred taxation asset | 2,664 | 2,050 |
| Deferred taxation liabilities: | ||
| Property, plant and equipment | (2,099) | (1,808) |
| Profit not yet taxable | - | (238) |
| Total deferred taxation liabilities | (2,099) | (2,046) |
| Net deferred taxation asset/(liability) | 565 | 4 |
| The movement in temporary differences during the year were as follows: |
| Balance | Recognised in | Balance | |
| 1 January | Profit or Loss | 31 December | |
| 1 January 2022 - 31 December 2022 | €'000 | €'000 | €'000 |
| Deferred taxation assets: | |||
| Reserves, provisions and tax credits | 741 | 303 | 1,044 |
| Tax losses | 334 | 672 | 1,006 |
| Total deferred taxation asset | 1,075 | 975 | 2,050 |
| Deferred taxation liabilities: | |||
| Property, plant and equipment | (1,332) | (476) | (1,808) |
| Profit not yet taxable | (290) | 52 | (238) |
| Total deferred taxation liabilities | (1,622) | (424) | (2,046) |
| Net deferred taxation liability | (547) | 551 | 4 |
11. Income tax (continued)
| Balance | Recognised in | Balance | |
| 1 January | Profit or Loss | 31 December | |
| 1 January 2023 - 31 December 2023 | €'000 | €'000 | €'000 |
| Deferred taxation assets: | |||
| Reserves, provisions and tax credits | 1,044 | 968 | 2,012 |
| Tax losses | 1,006 | (354) | 652 |
| Total deferred taxation asset | 2,050 | 614 | 2,664 |
| Deferred taxation liabilities: | |||
| Property, plant and equipment | (1,808) | (291) | (2,099) |
| Profit not yet taxable | (238) | 238 | - |
| Total deferred taxation liabilities | (2,046) | (53) | (2,099) |
| Net deferred taxation liability | 4 | 561 | 565 |
Deferred taxation assets have not been recognised in respect of the following items:
| 2023 | 2022 | |
| €'000 | €'000 | |
| Tax losses | 3,789 | 3,850 |
| Total | 3,789 | 3,850 |
12. Intangible assets and goodwill
| Product development | Internally generated intangible asset | Goodwill | Acquired intellectual property |
Total | |
| €'000 | €'000 | €'000 | €'000 | €'000 | |
| Balance at 1 January 2022 | 6,986 | - | 32,545 | 626 | 40,157 |
| Internally developed | 285 | - | - | - | 285 |
| Acquisitions (note 9) | - | - | 161 | - | 161 |
| Transfer to internally generated intangible asset | (7,271) | 7,271 | - | - | - |
| Acquired intellectual property | - | - | - | 147 | 147 |
| Amortisation of intellectual property | - | - | - | (190) | (190) |
| Amortisation of product development | - | (121) | - | - | (121) |
| Translation differences | - | - | (378) | 48 | (330) |
| Balance at 31 December 2022 | - | 7,150 | 32,328 | 631 | 40,109 |
| Acquired intellectual property | - | - | - | 1,517 | 1,517 |
| Amortisation of intellectual property | - | - | - | (216) | (216) |
| Amortisation of product development | - | (485) | - | - | (485) |
| Translation differences | - | - | (278) | (22) | (300) |
| Balance at 31 December 2023 | - | 6,665 | 32,050 | 1,910 | 40,625 |
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 Mincon Tanzania in March 2015
·..... The acquisition of Premier in November 2016
·..... The acquisition of Rockdrill Engineering in November 2016
·..... The acquisition of PPV in April 2017
·..... The acquisition of Viqing July 2017
·..... The acquisition of Driconeq in March 2018
·..... The acquisition of Pacific Bit of Canada in January 2019
·..... The acquisition of Lehti Group in January 2020
·..... The acquisition of Rocdrill in May 2020
·..... The acquisition of Attakroc in June 2021
·..... The acquisition of Spartan Drilling Tools in January 2022
The Group accounts for acquisitions using the purchase accounting method as outlined in IFRS 3 Business Combinations.
12. Intangible assets and goodwill (continued)
The recoverable amount of goodwill has been assessed based on estimates of fair value less costs of disposal (FVLCD). The FVLCD valuation is calculated on the basis of a discounted cash flow ("DCF") model. The most significant assumptions within the DCF are weighted average cost of capital ("WACC"), tax rates and terminal value assumptions. Goodwill impairment testing did not indicate any impairment during any of the periods being reported. Four sensitivities are applied as part of the analysis considering the effects of changes in:
1) the WACC,
2) the EBITDA margin,
3) the long term growth rate and
4) the level of terminal value capital expenditure.
The sensitivities calculate downside scenarios to assess potential indications of impairments due to changes in key assumptions. The results from the sensitivity analysis did not suggest that goodwill would be impaired when those sensitivities were applied.
The carrying amount of the CGU was determined to be lower than its fair value less costs of disposal by €5.3 million (2022: €52.4 million), giving management 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:
| 2023 | 2022 | ||||
| WACC | 11.35% | 12.60% | |||
| EBITDA margin | 16.18% | 20.23% | |||
| Long term growth rate | 2.29% | 2.20% | |||
| Terminal value capital expenditure | €9.8 million | €10.6 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 10.15% to 12.55%. This results in a midpoint WACC being used of 11.35%.
The Long term growth rate of 2.30% 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 16.20% for 2026 is assumed in the Terminal Value calculation used to arrive at the FVLCD.
Terminal value capital expenditure assumes no balance sheet growth is assumed in the terminal value, capital expenditure is assumed to equal depreciation of €9.8 million.
The following table shows the amount by which the two assumptions below would need to change to individually for the estimated recoverable amount to be equal to the carrying amount.
| 2023 | 2022 | |
| WACC | 11.63% | 14.80% |
| Long term growth rate | 1.73% | 1.35% |
Investment expenditure of €NIL (2022: €285,000), which has been capitalised, is in relation to ongoing product development within the Group. Amortisation began in October 2022 once the project was commercialised. Amortisation is charged into the income statement over fifteen years on a straight line basis.
13. Property, plant and equipment
| Land & | Plant & | ROU | ||
| Buildings | Equipment | Assets | Total | |
| €'000 | €'000 | €'000 | €'000 | |
| Cost: | ||||
| At 1 January 2022 | 18,047 | 58,775 | 9,445 | 86,267 |
| Acquisitions through business combinations | 9 | 471 | 455 | 935 |
| Additions | 1,146 | 6,164 | 2,880 | 10,190 |
| Disposals and derecognition of ROU assets | (1,226) | (1,176) | (1,191) | (3,593) |
| Foreign exchange differences | 181 | 274 | (58) | 397 |
| At 31 December 2022 | 18,157 | 64,508 | 11,531 | 94,196 |
| Additions | 3,824 | 6,378 | 1,013 | 11,215 |
| Disposals and derecognition of ROU assets | - | (1,734) | (656) | (2,390) |
| Foreign exchange differences | (337) | (1,029) | (292) | (1,658) |
| At 31 December 2023 | 21,644 | 68,123 | 11,596 | 101,363 |
| Accumulated depreciation: | ||||
| At 1 January 2022 | (4,005) | (27,853) | (3,749) | (35,607) |
| Charged in year | (577) | (5,046) | (2,159) | (7,782) |
| Disposals | 381 | 994 | 1,134 | 2,509 |
| Foreign exchange differences | (41) | (282) | 11 | (312) |
| At 31 December 2022 | (4,242) | (32,187) | (4,763) | (41,192) |
| Charged in year | (648) | (5,144) | (2,205) | (7,997) |
| Disposals | (10) | 1,372 | 567 | 1,929 |
| Foreign exchange differences | 50 | 501 | 109 | 660 |
| At 31 December 2023 | (4,850) | (35,458) | (6,292) | (46,600) |
| Carrying amount: 31 December 2023 | 16,794 | 32,665 | 5,304 | 54,763 |
| Carrying amount: 31 December 2022 | 13,915 | 32,321 | 6,768 | 53,004 |
| Carrying amount: 1 January 2022 | 14,042 | 30,922 | 5,696 | 50,660 |
ROU assets includes Property of €4.2 million (2022: €6 million) and Plant and Equipment of €1.1 million (2022: € 800,000).
The depreciation charge for property, plant and equipment is recognised in the following line items in the income statement:
| 2023 | 2022 | |
| €'000 | €'000 | |
| Cost of sales | 4,994 | 4,768 |
| Cost of sales ROU assets | 393 | 426 |
| Operating expenses | 830 | 852 |
| Operating expenses ROU asset | 1,780 | 1,736 |
| Total depreciation charge for property, plant and equipment | 7,997 | 7,782 |
14. Inventory and capital equipment
| 2023 | 2022 | |
| €'000 | €'000 | |
| Finished goods | 45,953 | 47,983 |
| Work-in-progress | 9,060 | 12,943 |
| Raw materials | 14,717 | 15,985 |
| Total inventory | 69,730 | 76,911 |
The Group recorded an impairment of €87,000 against inventory to take account of net realisable value during the year ended 31 December 2023 (2022: 128,000). Write-downs are included in cost of sales.
15. Trade and other receivables and other current assets
a) Trade and other receivables
| 2023 | 2022 | |
| €'000 | €'000 | |
| Gross receivable | 23,129 | 24,975 |
| Provision for impairment | (1,513) | (1,103) |
| Net trade and other receivables | 21,616 | 23,872 |
| Provision for impairment | |
| €'000 | |
| Balance at 1 January 2023 | (1,103) |
| Increase in provision arising from prior years receivables impairment | 2 |
| Increase in ECL model | (412) |
| Balance at 31 December 2023 | (1,513) |
The following table provides the information about the exposure to credit risk and ECL's for trade receivables as at 31 December 2023 .
| Weighted average loss rate % | Gross carrying amount €'000 | Loss allowance €'000 | |
| Current (not past due) | 2% | 15,924 | 280 |
| 1-30 days past due | 9% | 3,145 | 275 |
| 31-60 days past due | 22% | 1,538 | 345 |
| 61 to 90 days | 15% | 2,250 | 341 |
| More than 90 days past due | 100% | 272 | 272 |
| Net trade and other receivables | 23,129 | 1,513 |
The following table provides the information about the exposure to credit risk and ECL's for trade receivables as at 31 December 2022 .
| Weighted average loss rate % | Gross carrying amount €'000 | Loss allowance €'000 | |
| Current (not past due) | 1% | 17,929 | 179 |
| 1-30 days past due | 5% | 4,245 | 211 |
| 31-60 days past due | 13% | 1,459 | 189 |
| 61 to 90 days | 21% | 1,034 | 216 |
| More than 90 days past due | 100% | 308 | 308 |
| Net trade and other receivables | 24,975 | 1,103 |
15. Trade and other receivables and other current assets (continued)
b) Prepayments and other current assets
| 2023 | 2022 | |
| €'000 | €'000 | |
| Plant and machinery prepaid and under commission | 6,607 | 9,852 |
| Prepayments and other current assets | 2,002 | 2,875 |
| Prepayments and other current assets | 8,609 | 12,727 |
16. Trade creditors, accruals and other liabilities
| 2023 | 2022 | |
| €'000 | €'000 | |
| Trade creditors | 10,505 | 14,420 |
| Total creditors and other payables | 10,505 | 14,420 |
| 2023 | 2022 | |
| €'000 | €'000 | |
| VAT | 664 | 104 |
| Social security costs | 1,810 | 1,929 |
| Other accruals and liabilities | 6,122 | 6,666 |
| Total accruals and other liabilities | 8,596 | 8,699 |
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).
| 2023 | 2022 | |
| €'000 | €'000 | |
| Total liabilities | (65,245) | (71,131) |
| Less: cash and cash equivalents | 20,482 | 15,939 |
| Net debt | (44,763) | (55,192) |
| Total equity | 154,251 | 153,786 |
| Net debt to equity ratio | 0.29 | 0.36 |
18. Loans and borrowings
| 2023 | 2022 | ||
| Maturity | €'000 | €'000 | |
| Bank loans | 2024-2036 | 32,486 | 30,848 |
| Lease Liabilities | 2024-2032 | 7,626 | 11,096 |
| Total loans and borrowings | 40,112 | 41,944 | |
| Current | 14,080 | 14,973 | |
| Non-current | 26,032 | 26,971 |
The Group has a number of bank loans and lease liabilities with a mixture of variable and fixed interest rates. The Group has not been in default on any of these debt agreements during any of the periods presented. The loans are secured against the assets for which they have been drawn down for.
The Group has been in compliance with all debt agreements during the periods presented. The loan agreements in Ireland of €11.5 million (2022: €13.5 million) carry restrictive financial covenants including, EBITDA to be no less than €18 million at end of each reporting period, interest cover to be 3:1 and to maintain a minimum cash balance of €5 million.
Interest rates on current borrowings are at an average rate of 5.12% (2022: 4.89%)
During 2023, the Group availed of the option to enter into overdraft facilities and to draw down loans of €7.2 million (2022: €11.5 million), €6.9 million (2022: €8.8 million) in loans and €300,000 (2022: €2.7 million) in overdraft facilities.
Loans are repayable in line with their specific terms, the Group has one bullet repayment due in 2026 of €5 million.
Reconciliation of movements of liabilities to cash flows arising from financing activities
| Balance at 1 January 2022 | Arising from acquisition | Cash movements | Non-cash movements | Foreign exchange differences | Balance at 31 December 2022 | |
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |
| Loans and borrowings | 23,391 | 109 | 7,372 | - | (24) | 30,848 |
| Lease liabilities | 11,079 | 455 | (3,993) | 3,604 | (49) | 11,096 |
| Total | 34,470 | 564 | 3,379 | 3,604 | (73) | 41,944 |
| Balance at 1 January 2023 | Arising from acquisition | Cash movements | Non-cash movements | Foreign exchange differences | Balance at 31 December 2023 | |
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |
| Loans and borrowings | 30,848 | - | 1,873 | - | (235) | 32,486 |
| Lease liabilities | 11,096 | - | (4,194) | 1,018 | (294) | 7,626 |
| Total | 41,944 | - | (2,321) | 1,018 | (529) | 40,112 |
| Interest rate range | Effective interest rate | |
| Bank loans | 1% - 16% | 5% |
| Lease Liabilities | 3% - 10% | 5.41% |
19. Share capital and reserves
| At 31 December 2023 | ||
| Authorised Share Capital | Number | €000 |
| Ordinary Shares of €0.01 each | 500,000,000 | 5,000 |
| Allotted, called-up and fully paid up shares | Number | €000 |
| Ordinary Shares of €0.01 each | 212,472,413 | 2,125 |
| 2023 | 2022 | |
| Opening Share Capital | 212,472,413 | 212,472,413 |
| Share Awards vested during year | - | - |
| Authorised Share Capital | 212,472,413 | 212,472,413 |
Share issuances
On 26 November 2013, Mincon Group plc was admitted to trading on the Euronext Growth and the Alternative Investment Market (AIM) of the London Stock Exchange.
Voting rights
The holders of Ordinary Shares have the right to receive notice of and attend and vote at all general meetings of the Company and they are entitled, on a poll or a show of hands, to one vote for every Ordinary Share they hold. Votes at general meetings may be given either personally or by proxy. Subject to the Companies Act and any special rights or restrictions as to voting attached to any shares, on a show of hands every member who (being an individual) is present in person and every proxy and every member (being a corporation) who is present by a representative duly authorised, shall have one vote, so, however, that no individual shall have more than one vote for every share carrying voting rights and on a poll every member present in person or by proxy shall have one vote for every share of which he is the holder.
Dividends
In June 2023, Mincon Group plc paid a final dividend for 2022 of €0.0105 (1.05 cent) per ordinary share (€2.2 million).
In December 2023, Mincon Group plc paid an interim dividend in the amount of €0.0105 (1.05 cent) per ordinary share (€2.2 million total payment), which was paid to shareholders on the register at the close of business on 17 November 2023.
The Directors recommend the payment of a final dividend of €0.0105 (1.05 cent) per share for the year ended 31 December 2023 (31 December 2022: 1.05 cent per share).
Share premium and other reserves
As part of a Group reorganisation of the Company, Mincon Group plc, became the ultimate parent entity of the Group. On 30 August 2013, the Company acquired 100% of the issued share capital in Smithstown Holdings and acquired (directly or indirectly) the shareholdings previously held by Smithstown Holdings in each of its subsidiaries, thereby creating a merger reserve.
20. Earnings per share
Basic earnings per share (EPS) is computed by dividing the profit for the period available to ordinary shareholders by the weighted average number of Ordinary Shares outstanding during the period. Diluted earnings per share is computed by dividing the profit for the period by the weighted average number of Ordinary Shares outstanding and, when dilutive, adjusted for the effect of all potentially dilutive shares. The following table sets forth the computation for basic and diluted net profit per share for the years ended 31 December:
20. Earnings per share (continued)
2023
2022
Numerator (amounts in €'000):
Profit attributable to owners of the Parent
7,470
14,704
Denominator (Number):
| Basic shares outstanding |
| Restricted share awards |
Diluted weighted average shares outstanding
212,472,413
212,472,413
830,000
2,030,000
213,302,413
214,502,413
Earnings per Ordinary Share
Basic earnings per share, €
Diluted earnings per share, €
3.52
3.50
6.92
6.85
21. Share based payment
The vesting conditions of the scheme state that the minimum growth in EPS shall be CPI plus 5% per annum, compounded annually, over the relevant three accounting years up to the share award of 100% of the participants
basic salary. Where awards have been granted to a participant in excess of 100% of their basic salary, the performance condition for the element that is in excess of 100% of basic salary is that the minimum growth in EPS shall be CPI plus 10% per annum, compounded annually, over the three accounting years.
| Reconciliation of outstanding share options | Number of Options in thousands |
| Outstanding on 1 January 2022 | 5,820 |
| *Forfeited during the year | (3,790) |
| Exercised during the year | - |
| Granted during the year | - |
| Outstanding at 31 December 2022 | 2,030 |
*Based on the conditions set out in the 2023 conditional awards agreement, all shares were forfeited as conditions were not met.
| Reconciliation of outstanding share options | Number of Options in thousands |
| Outstanding on 1 January 2023 | 2,030 |
| *Forfeited during the year | (2,070) |
| Exercised during the year | - |
| Granted during the year | 870 |
| Outstanding at 31 December 2023 | 830 |
*Based on the conditions set out in the 2024 conditional awards agreement, all shares were forfeited as conditions were not met.
| LTIP Scheme | Conditional Award at Grant Date |
| Conditional Award Invitation date | April 2021 |
| Year of Potential vesting | 2024/2028 |
| Share price at grant date | €1.35 |
| Exercise price per share/share options | €1.35 |
| Expected Volatility | 36.57% |
| Expected life | 7 years |
| Risk free rate | (0.53%) |
| Expected dividend yield | 1.58% |
| Fair value at grant date | €0.39 |
| Valuation model | Black & Scholes Model |
22. Financial risk management
The Group is exposed to various financial risks arising in the normal course of business. Its financial risk exposures are predominantly related to changes in foreign currency exchange rates and interest rates, as well as the creditworthiness of our counterparties.
The Company's Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The Group's risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Group audit committee oversees how management monitors compliance with the Group's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
a) Liquidity and capital
The Group defines liquid resources as the total of its cash, cash equivalents and short term deposits. Capital is defined as the Group's shareholders' equity and borrowings.
The Group's objectives when managing its liquid resources are:
• To maintain adequate liquid resources to fund its ongoing operations and safeguard its ability to continue as a going concern, so that it can continue to create value for investors;
• To have available the necessary financial resources to allow it to invest in areas that may create value for shareholders; and
• To maintain sufficient financial resources to mitigate against risks and unforeseen events.
Liquid and capital resources are monitored on the basis of the total amount of such resources available and the Group's anticipated requirements for the foreseeable future. The Group's liquid resources and shareholders' equity at 31 December 2023 and 31 December 2022 were as follows:
| 2023 | 2022 | |
| €'000 | €'000 | |
| Cash and cash equivalents | 20,482 | 15,939 |
| Loans and borrowings | 40,112 | 41,944 |
| Shareholders' equity | 154,251 | 153,786 |
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, Canadian and Australian institutions with credit rating of A3 or better. The Company deposits cash with individual institutions to avoid concentration of risk with any one counterparty. The Group has also engaged the services of a depository to ensure the security of the cash assets.
Risk of counterparty default arising on cash and cash equivalents and derivative financial instruments is controlled by dealing with high-quality institutions and by policy, limiting the amount of credit exposure to any one bank or institution.
22. Financial risk management (continued)
a) Liquidity and capital (continued)
At year-end, the Group's total cash and cash equivalents were held in the following jurisdictions:
| 31 December | 31 December | |
| 2023 | 2022 | |
| €'000 | €'000 | |
| Ireland | 2,088 | 3,668 |
| Americas | 3,517 | 3,039 |
| Australasia | 657 | 347 |
| Europe, Middle East, Africa | 14,220 | 8,885 |
| Total cash, cash equivalents and short term deposits | 20,482 | 15,939 |
There are currently no restrictions that would have a material adverse impact on the Group in relation to the intercompany transfer of cash held by its foreign subsidiaries. The Group continually evaluates its liquidity requirements, capital needs and availability of resources in view of, among other things, alternative uses of capital, the cost of debt and equity capital and estimated future operating cash flow.
In the normal course of business, the Group may investigate, evaluate, discuss and engage in future company or product acquisitions, capital expenditures, investments and other business opportunities. In the event of any future acquisitions, capital expenditures, investments or other business opportunities, the Group may consider using available cash or raising additional capital, including the issuance of additional debt. The maturity of the contractual undiscounted cash flows (including estimated future interest payments on debt) of the Group's financial liabilities at 31 December were as follows:
| Total | |||||||
| Current Value of | Total Undiscounted contractual Cash Flows | Less than | More than | ||||
| Cash Flows | 1 Year | 1-3 Years | 3-5 Years | 5 Years | |||
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | ||
| At 31 December 2022: | |||||||
| Deferred consideration | 1,705 | 1,725 | 1,054 | 671 | - | - | |
| Loans and borrowings | 30,848 | 31,443 | 11,024 | 6,805 | 13,306 | 308 | |
| Lease liabilities | 11,096 | 11,309 | 3,949 | 4,695 | 2,082 | 584 | |
| Trade and other payables | 14,420 | 14,420 | 14,420 | - | - | - | |
| Accrued and other financial liabilities | 8,699 | 8,699 | 8,699 | - | - | - | |
| Total at 31 December 2022 | 66,768 | 67,596 | 39,146 | 12,171 | 15,388 | 892 | |
| At 31 December 2023: | |||||||
| Deferred consideration | 1,998 | 2,045 | 442 | 1,603 | - | - | |
| Loans and borrowings | 32,486 | 33,124 | 11,212 | 6,738 | 14,520 | 654 | |
| Lease liabilities | 7,626 | 7,769 | 2,869 | 3,061 | 963 | 876 | |
| Trade and other payables | 10,505 | 10,505 | 10,505 | - | - | - | |
| Accrued and other financial liabilities | 8,596 | 8,596 | 8,596 | - | - | - | |
| Total at 31 December 2023 | 61,211 | 62,039 | 33,624 | 11,402 | 15,483 | 1,530 | |
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 the appropriateness of this policy.
22. Financial risk management (continued)
b) Foreign currency risk (continued)
Foreign currency denominated financial assets and liabilities which expose the Group to currency risk are disclosed below. The amounts shown are those reported to key management translated into EURO at the closing rate:
| Short-term exposure | Long-term debt | |||||||
| USD | SEK | ZAR | USD | SEK | ZAR | |||
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |||
| At 31 December 2023: | ||||||||
| Financial assets | 27,756 | 13,387 | 9,675 | - | - | - | ||
| Financial liabilities | (3,666) | (2,235) | (1,386) | (3,010) | (892) | (764) | ||
| Total Exposure | 24,090 | 11,152 | 8,289 | (3,010) | (892) | (764) | ||
| At 31 December 2022: | ||||||||
| Financial assets | 31,075 | 12,476 | 10,790 | - | - | - | ||
| Financial liabilities | (4,483) | (2,613) | (1,608) | (3,284) | (1,136) | (1,372) | ||
| Total Exposure | 26,592 | 9,863 | 9,182 | (3,284) | (1,136) | (1,372) | ||
The following table illustrates the sensitivity of profit and equity in relating to the Group's financial assets and financial liabilities and the USD/EUR exchange rate, SEK/EUR exchange rate and ZAR/EUR exchange rate 'all other things being equal'. It assumes a +/- 1% change of the EUR/USD exchange rate for the year ended at 31 December 2023 (2022: 4%). A +/- 2% change is considered for the EUR/SEK exchange rate (2022: 4%). It assumes a +/- 8% change of the EUR/ZAR exchange rate for the year ended at 31 December 2023 (2022: 4%). Both of these percentages have been determined based on the average market volatility in exchange rates in the previous twelve months.
| Profit for the year | Equity | |||||||
| USD | SEK | ZAR | USD | SEK | ZAR | |||
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |||
| 31 December 2023 | (10) | 34 | 54 | 194 | 499 | 722 | ||
| 31 December 2022 | (3) | 35 | 14 | 218 | 244 | 98 | ||
| Profit for the year | Equity | |||||||
| USD | SEK | ZAR | USD | SEK | ZAR | |||
| €'000 | €'000 | €'000 | €'000 | €'000 | €'000 | |||
| 31 December 2023 | 10 | (36) | (64) | (198) | (519) | (847) | ||
| 31 December 2022 | 12 | (147) | (58) | (917) | (1,026) | (412) | ||
The Group has material subsidiaries with a functional currency other than the euro, such as US dollar, Australian dollar, South African rand, Canadian dollar, British pound and Swedish krona. Changes in the exchange rate year on year between the reporting currencies of these operations and the Euro, have an impact on the Group's consolidated reported result.
The Group's worldwide presence creates currency volatility, as reported in the Group's results, when compared year on year. During 2023, the currencies that the Group trades with were volatile due to local economic performances and geopolitical issues. As a result, all major currencies that we trade in weekend against the euro in 2023.
22. Financial risk management (continued)
b) Foreign currency risk
In 2023, 56% (2022: 56%) of Mincon's revenue €158 million (2022: €170 million) was generated in AUD, SEK and USD. The majority of the Group's manufacturing base has a euro, US dollar or Swedish Krona cost base. While Group management makes every effort to reduce the impact of this currency volatility, it is impossible to eliminate or significantly reduce given the fact that the highest grades of our key raw materials are either not available or not denominated in these markets and currencies. Additionally, the ability to increase prices for our products in these jurisdictions is limited by the current market factors.
The Group is also exposed to foreign currency risk on its liquid resources (cash), of which the euro equivalent of €3.8 million was held in US dollar (USD 4.2 million), €3.5 million was held in Swedish krona (SEK 38.8 million), €1.1 million was held in South Africa rand (ZAR 21.5 million), and the euro equivalent of €973,000 on was held in Canadian dollar (CAD 1.4 million).
| 2023 | 2022 | |||
| Euro exchange rates | Closing | Average | Closing | Average |
| US Dollar | 1.10 | 1.08 | 1.07 | 1.05 |
| Australian Dollar | 1.62 | 1.63 | 1.57 | 1.52 |
| South African Rand | 20.18 | 19.94 | 18.18 | 17.19 |
| Swedish Krona | 11.13 | 11.47 | 11.15 | 10.63 |
c) Credit risk
Credit risk is the risk that the possibility that the Group's customers may experience financial difficulty and be unable to meet their obligations. The Group monitors its collection experience on a monthly basis and ensures that a stringent policy is adopted to provide for all past due amounts. The majority of the Group's customers are third party distributors and end users of drilling tools and equipment.
Credit risk management
The credit risk is managed on a group basis based on the Group's credit risk management policies and procedures.
The credit risk in respect of cash balances held with banks and deposits with banks are managed via diversification of bank deposits, and are only with major reputable financial institutions.
The Group continuously monitors the credit quality of customers. Where available, external credit ratings and/or reports on customers are obtained and used. The credit terms range between 30 and 90 days. The credit terms for customers as negotiated with customers are subject to an internal approval. The ongoing credit risk is managed through regular review of ageing analysis.
Trade receivables consist of a large number of customers in various industries and geographical areas.
Trade receivables and contract assets
The Group applies the IFRS 9 simplified model of recognising lifetime expected credit losses for all trade receivables as these items do not have a significant financing component.
In measuring the expected credit losses, the trade receivables have been assessed on a collective basis as they possess shared credit risk characteristics. They have been grouped based on the days past due and also according to the geographical location of customers.
22. Financial risk management (continued)
c) Credit risk (continued)
Trade receivables are written off (i.e. derecognised) when there is no reasonable expectation of recovery. Failure to make payments within 180 days from the invoice date and failure to engage with the Group on alternative payment arrangement amongst other is considered indicators of no reasonable expectation of recovery.
The closing balance of the trade receivables loss allowance as at 31 December 2023 reconciles with the trade receivables loss allowance opening balance as follows:
| Trade receivables | |
| €'000 | |
| Opening loss allowance as at 1 January 2022 | 937 |
| Loss allowance recognised during the year | 166 |
| Loss allowance as at 31 December 2022 | 1,103 |
| Loss allowance recognised during the year | 410 |
| Loss allowance as at 31 December 2023 | 1,513 |
Expected credit loss assessment
The Group allocates each exposure to a credit risk grade based on data that is determined to be predictive of the risk of loss and applying experienced credit judgement. Credit risk grades are defined using quantitative factors that are indicative of the risk of default and are aligned to past experiences. Loss rates are based on accrual credit loss experience over the past five years.(Note 15)
The maximum exposure to credit risk for trade and other receivables at 31 December 2023 and 31 December 2022 by geographic region was as follows:
| 2023 | 2022 | |
| €'000 | €'000 | |
| Americas | 8,704 | 8,173 |
| Australasia | 1,900 | 3,300 |
| Europe, Middle East, Africa | 11,012 | 12,399 |
| Total amounts owed | 21,616 | 23,872 |
d) Interest rate risk
Interest Rate Risk on financial liabilities
Interest rates increased rapidly through 2023. As a result, the Group variable rate lending had a significant impact on our income statement during the year. This is very noteworthy when it is shown in contrast to our interest payments during 2022, as the 2023 level of Group lending was relatively flat and comparable to 2022.
Interest Rate Risk on cash and cash equivalents
Our exposure to interest rate risk on cash and cash equivalents is actively monitored and managed, the rate risk on cash and cash equivalents is not considered material to the Group.
22. Financial risk management (continued)
e) Fair values
Fair value is the amount at which a financial instrument could be exchanged in an arms-length transaction between informed and willing parties, other than in a forced or liquidation sale. The contractual amounts payable less impairment provision of trade receivables, trade payables and other accrued liabilities approximate to their fair values.
Financial assets and financial liabilities measured at fair value in the consolidated statement of financial position are grouped into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the measurement, as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset
or liability, either directly or indirectly
• Level 3: unobservable inputs for the asset or liability.
Mincon Group plc only apply level 3 for fair value, using the detail displayed above.
Deferred consideration
The movements in respect of the deferred consideration value in the year to 31 December 2023 are as follows:
| Level 3 | |
| €'000 | |
| Balance at 1 January 2023 | 1,705 |
| Arising on acquisition | 1,359 |
| Cash payment | (1,054) |
| Foreign currency translation adjustment | (15) |
| Unwinding of discount on deferred consideration | 3 |
| Balance at 31 December 2023 | 1,998 |
Deferred consideration includes multiple deferred payments for prior acquisitions over a fixed period of time. These carry no significant observational inputs.
- Subsidiary undertakings
At 31 December 2023, the Group had the following subsidiary undertakings:
| Company | Group Share %* |
Registered Office & Country of Incorporation |
| Mincon International Limited | 100% | Smithstown, Shannon, Co. Clare, Ireland |
| Manufacturer of rock drilling equipment | ||
| Mincon Rockdrills PTY Ltd | 100% | 8 Fargo Way, Welshpool, WA 6106, Australia |
| Manufacturer of rock drilling equipment | ||
| 1676427 Ontario Inc. (Operating as Mincon Canada) | 100% | 400B Kirkpatrick Street, North Bay, Ontario, P1B 8G5, Canada |
| Manufacturer of rock drilling equipment | ||
| Mincon Carbide Ltd | 100% | Windsor St, Sheffield S4 7WB, United Kingdom |
| Manufacturer of tungsten carbide | ||
| Mincon Inc. | 100% | 603 Centre Avenue, N.W. Roanoke, VA 24016, USA |
| Sales company | ||
| Mincon Sweden AB | 100% | Industrivagen 2-4, 61202 Finspang, Sweden |
| Sales company | ||
| Mincon Nordic OY | 100% | Hulikanmutka 6, 37570 Lempäälä, Finland |
| Sales company | ||
| Mincon Holdings Southern Africa (Pty) | 100% | 1 Northlake, Jetpark 1469, Gauteng, South Africa |
| Sales company | ||
| ABC Products (Rocky) Pty Ltd | 100% | 2/57 Alexandra Street, North Rockhampton, Queensland, 4701 Australia |
| Sales company | ||
| Mincon West Africa SL | 100% | Calle Adolfo Alonso Fernández, s/n, Parcela P-16, Planta 2, Oficina 23, Zona Franca de Gran Canaria, Puerto de la Luz, Código Postal 35008, Las Palmas de Gran Canari |
| Sales company | ||
| Mincon Poland | 100% | ul.Mickiewicza 32, 32-050 Skawina, Poland |
| Dormant company | ||
| Mincon Canada - Western Service Centre (previously Pacific Bit of Canada) | 100% | 3568-191 Street, Unit 101, Surrey BC, V3Z 0P6, Canada |
| Sales company |
| 23. Subsidiary undertakings (continued) | ||
| Company | Group Share %* |
Registered Office & Country of Incorporation |
| Mincon Rockdrills Ghana Limited | 100% | P.O. Box CT5105, Accra, Ghana |
| Dormant company | ||
| Mincon S.A.C. | 100% | Calle La Arboleda 151, Dpto 201, La Planicie, La Molina, Peru |
| Sales company | ||
| Ozmine International Pty Limited | 100% | Gidgegannup, WA 6083, Australia |
| Dormant company | ||
| Mincon Chile | 100% | Av. La Dehesa #1201, Torre Norte, Lo Barnechea, Santiago, Chile |
| Sales company | ||
| Mincon Tanzania | 100% | Plot 1/3 Nyakato Road, Mwanza, Tanzania |
| Dormant company | ||
| Mincon Namibia Pty Ltd | 100% | Ausspannplatz, Windhoek, Namibia |
| Sales company | ||
| Mincon Mining Equipment Inc | 100% | 19789-92a Avenue, Langley, British Columbia V1M3B3, Canada |
| Sales company | ||
| Mincon Exports USA Inc. | 100% | 603 Centre Ave, Roanoke VA 24016, USA |
| Group finance company | ||
| Mincon International Shannon | 100% | Smithstown, Shannon, Co. Clare, Ireland |
| Dormant company | ||
| Smithstown Holdings | 100% | Smithstown, Shannon, Co. Clare, Ireland |
| Holding company | ||
| Mincon Canada Drilling Products Inc. | 100% | Suite 1800-355 Burrard Street, Vancouver, BC V6C 268, Canada |
| Holding company | ||
| MGP Investments Limited Holding Company |
100% | Smithstown, Shannon, Co. Clare, Ireland |
| Lotusglade Limited | 100% | Smithstown, Shannon, Co. Clare, Ireland |
| Holding company | ||
| Floralglade Company | 100% | Smithstown, Shannon, Co. Clare, Ireland |
| Holding company | ||
| Spartan Drilling Tools Manufacturing facility 23. Subsidiary undertakings (continued) |
100% | 1882 US HWY 6 & 50 Fruita, CO 81507, USA |
| Company | Group Share %* |
Registered Office & Country of Incorporation |
| Castle Heat Treatment Limited | 100% | Smithstown, Shannon, Co. Clare, Ireland |
| Holding company | ||
| Mincon Microcare Limited | 100% | Smithstown, Shannon, Co. Clare, Ireland |
| Holding company | ||
| Driconeq AB | 100% | Svetsarevägen 4, 686 33, Sunne, Sweden |
| Holding company | ||
| Driconeq Production AB | 100% | Svetsarevägen 4, 686 33, Sunne, Sweden |
| Manufacturing facility | ||
| Driconeq Fastighet AB | 100% | Svetsarevägen 4, 686 33, Sunne, Sweden |
| Property holding company | ||
| Driconeq Do Brasil | 100% | Rua Dr. Ramiro De Araujo Filho, 348, Jundai, SP, Brasil |
| Sales company | ||
| Driconeq Africa Ltd | 100% | Cnr of Harriet and James Bright Avenue, Driehoek. Germiston 1400 |
| Manufacturing facility | ||
| Driconeq Australia Holdings Pty Ltd | 100% | 47 Greenwich Parade, AU-6031 Neerabup, WA, Australia |
| Holding company | ||
| Driconeq Australia Pty Ltd | 100% | 47 Greenwich Parade, AU-6031 Neerabup, WA, Australia |
| Manufacturing facility | ||
| Mincon Drill String AB | 100% | Svetsarevägen 4, 686 33, Sunne, Sweden |
| Holding company | ||
| EURL Roc Drill Sales company |
100% | Rue Charles Rolland, 29650 Guerlesquin, France |
| Attakroc Inc Sales company |
100% | 601, rue Adanac, Quebec, G1C 7G6, Canada |
| Mincon Quebec Holding company |
100% | 601, rue Adanac, Quebec, G1C 7G6, Canada |
| *All shares held are ordinary shares. |
24. Leases
A. Leases as Lessees (IFRS 16)
The Group leases property, plant and equipment across its global operations.
Mincon Group PLC has elected to apply the practical expedient allowed under IFRS 16 for short-term leases by class of underlying asset to which the right of use relates. A class of underlying asset is a grouping of underlying assets of a similar nature and use in an entity's operations. The class of underlying assets this applies to short term leases of office equipment.
Information about leases for which the Group is a lessee is presented below.
i) Right-of-use assets
| 31 December 2022 | |||
| €'000 | |||
| Balance at 1 January 2022 | 5,696 | ||
| Depreciation charge for the year | (2,159) | ||
| Additions to right of use assets | 3,334 | ||
| Disposal of right of use asset | (57) | ||
| Foreign exchange difference | (46) | ||
| Balance at 31 December 2022 | 6,768 | ||
| 31 December 2023 | |||
| €'000 | |||
| Balance at 1 January 2023 | 6,768 | ||
| Depreciation charge for the year | (2,205) | ||
| Additions to right of use assets | 1,013 | ||
| Disposal of right of use asset | (89) | ||
| Foreign exchange difference | (183) | ||
| Balance at 31 December 2023 | 5,304 | ||
ii) Amounts recognised in income statement.
| 2023 | 2022 | |
| €'000 | €'000 | |
| Interest on lease liabilities | 698 | 354 |
| Expenses related to short term leases | 5 | 245 |
| Expenses related to leases of low value assets | - | 10 |
| Leases under IFRS 16 | 703 | 609 |
iii) Amounts recognised in statement of cash flows
| 2023 | 2022 | |
| €'000 | €'000 | |
| Total cash outflow for leases | 4,194 | 3,994 |
| Total cash outflow of leases | 4,194 | 3,994 |
24. Leases (continued)
iv) Extension options
Some property leases contain extension options exercisable by the Group. The Group assesses at lease commencement date whether it is reasonably certain to exercise the extension options. The Group is reasonably certain it will not incur future lease liabilities beyond what is currently calculated.
The following table sets out a maturity analysis of lease liabilities, showing the undiscounted lease payments to be paid after the reporting date.
| 31 December 2023 | ||
| €'000 | ||
| Less than one year | 2,068 | |
| One to two years | 2,042 | |
| Two to five years | 788 | |
| More than 5 years | 850 | |
| Total | 5,748 |
| 31 December 2022 | ||
| €'000 | ||
| Less than one year | 2,219 | |
| One to two years | 3,068 | |
| Two to five years | 1,525 | |
| More than 5 years | 568 | |
| Total | 7,290 |
B. Leases as Lessor (IFRS 16)
i) Financing Lease
The Group subleased a properties that had been recognised as a right of use asset in Finland and Australia. The Group recognised income interest in the year in relation to this totalling €132,000 (2022: €193,000).
The Group manages the risk to retain the right to the assets as they have a right to inspect the property, the right to enforce the contractual arrangement with the lessee and the right to perform maintenance.
The following table sets out a maturity analysis of lease receivable, showing the undiscounted lease payments to be received after the reporting date.
| 31 December 2023 | 31 December 2022 | |
| €'000 | €'000 | |
| Less than one year | 11 | 147 |
| One to two years | - | - |
| Balance at 31 December | 11 | 147 |
| Unearned finance income | - | (10) |
| Total undiscounted lease receivable | 11 | 137 |
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 2023 was €120,000 (2022: €180,000).
24. Leases (continued)
B. Leases as Lessor (IFRS 16)
i) Operating leases (continued)
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 2023 | ||
| €'000 | ||
| Less than one year | 73 | |
| One to two years | 30 | |
| Two to three years | 32 | |
| Total | 135 |
| 31 December 2022 | ||
| €'000 | ||
| Less than one year | 22 | |
| Total | 22 |
25. Commitments
The following capital commitments for the purchase of property, plant and equipment had been authorised by the directors at 31 December 2023:
| 31 December | 31 December | ||
| 2023 | 2022 | ||
| €'000 | €'000 | ||
| Contracted for | 1,585 | 3,360 | |
| Not-contracted for | - | 229 | |
| Total | 1,585 | 3,589 | |
26. Litigation
The Group is not involved in legal proceedings that could have a material adverse effect on its results or financial position.
27. Related parties
As at 31 December 2023, the share capital of Mincon Group plc was 56.32% owned by Kingbell Company which is ultimately controlled by Patrick Purcell and members of the Purcell family. Patrick Purcell is also a director of the Company.
In June 2023, the Group paid a final dividend for 2022 of €0.0105 to all shareholders. The total dividend paid to Kingbell Company was €1,256,477.
In December 2023, the Group paid an interim dividend for 2023 of €0.0105 to all shareholders. The total dividend paid to Kingbell Company was €1,256,477 (September 2022: €1,256,477).
The Group has a related party relationship with its subsidiary undertakings (see note 23) for a list of these undertakings), directors and officers. All transactions with subsidiaries eliminate on consolidation and are not disclosed.
27. Related parties (continued)
Transactions with Directors
The Group is owed €Nil from directors and shareholders at 31 December 2023 and 2022. The Group has amounts owing to directors of €Nil as at 31 December 2023 and 2022.
Key management compensation
The profit before tax from continuing operations has been arrived at after charging the following key management compensation:
| 2023 | 2022 | |
| €'000 | €'000 | |
| Short term employee benefits | 1,616 | 1,561 |
| Bonus and other emoluments | 24 | 348 |
| Post-employment contributions | 156 | 149 |
| Social security costs | 117 | 110 |
| Share based payment charged in the year | (160) | (153) |
| Total | 1,753 | 2,015 |
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 (twelve in total at year end). Amounts included above are time weighted for the period of the individuals employment.
28. Events after the reporting date
The Board of Mincon Group plc is recommending the payment of a final dividend for the year ended 31 December 2023 in the amount of €0.0105 (1.05 cent) per ordinary share, which will be subject to approval at the Annual General Meeting of the Company in May 2024. Subject to Shareholder approval at the Company's annual general meeting, the final dividend will be paid on 14 June 2024 to Shareholders on the register at the close of business on 2 4 May 2024.
29. Approval of financial statements
The Board of Directors approved the consolidated financial statements on 11 March 2024.
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