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:
Ireland	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.

 

6.  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).

 

 

 

 

 

 

6.  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.

 

7.  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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23.  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 24 May 2024.

 

29.  Approval of financial statements

 

The Board of Directors approved the consolidated financial statements on 11 March 2024.