TIDMMCON
RNS Number : 5606V
Mincon Group Plc
10 August 2020
Mincon Group plc
("Mincon" or the "Group")
2020 Half Year Financial Results
Mincon Group plc (Euronext:MIO AIM:MCON), the Irish engineering
Group specialising in the design, manufacture, sale and servicing
of rock drilling tools and associated products, announces its half
year results for the six months ended 30 June 2020.
H1 2020 Key Financial Highlights (comparison to H1 2019*):
-- Revenue up 8% to EUR64.7 million
-- Mincon manufactured product up 10% to EUR55.6 million
-- Non-Mincon manufactured product down 4% to EUR9.1 million
-- Gross profit up 13% to EUR23.5 million
-- Operating profit up 21% to EUR8.3 million
*Excluding H1 2019 write off's and exceptional items
Joe Purcell, Chief Executive Officer, commenting on the results,
said:
"The first half of 2020 was a return to increasing revenue,
profitability and cash generation for the Mincon Group. This was
achieved despite the challenging operating environment due to the
Covid-19 crisis.
In January we completed the substantial acquisition of Lehti
Group to bring the manufacturing margin for our Geotech products
inhouse. This, coupled with increasing our capacity to support
large Geotech contracts in the construction industry, has helped to
increase our gross margin in a growing and important sector for the
Group. Indeed, this growth has helped to offset weakness in other
markets due to Covid-19.
The strategic shift in 2019 to the regional management structure
has meant that we can have a more fluid and immediate response to
global supply and service issues as they arise. Our strong local
representation has also meant that where we can safely get onsite,
we will endeavour to do so in order to provide the essential
support required, managed within the prevailing local conditions
and regulations. This has been essential in supporting day to day
business as well as dealing with the large Geotech and full-service
mining contracts that are continuing to come our way.
To protect our personnel around the globe, we have increased our
focus on operational health & safety which includes a Group
embargo on International travel. This has pushed the Group to a
growing efficiency in remote working both internally with our
factories and customer service centres, and our customer base.
All our factories have remained operational with the exception
of our factory in South Africa where the mining sector there was in
lockdown during March/April 2020, however our South Africa factory
reopened during May 2020. The Group's factories are the cash
generating engines of our business and it is vital that they
continue to operate in the coming challenges that Covid-19 will
present.
Product development has also been affected by the crisis, most
notably with our customer in Australia for the hydraulic
Greenhammer. Site access to the Greenhammer test site is still
restricted, and with the re-imposition of lockdowns in Victoria and
New South Wales we are waiting to hear when we can get back onsite.
Once we get this confirmation, we will mobilise our team to get the
10" system up and running and move to commercialisation of this
exciting product for Mincon and the hard rock surface mining
market. Other product development has also been delayed due to
restricted testing opportunities, but the engineering work
continues, and we have a number of projects that will be ready for
field testing once restrictions ease.
Concluding comments
When we consider the shape of our business today it becomes
clear that the ambition and strategy to use our engineering
knowhow, to grow our product offering and support in the Geotech
sector, effectively reducing our overall exposure to the mining
sector, is starting to work. This does not mean that we will be
reducing our efforts to increase market share in the mining sector,
the opposite is the case, and we will continue to work hard and
chase the opportunities that we know are out there. Regarding the
effects to the Group of the Covid-19 crisis, the continued
investment in our manufacturing capacity and service levels within
the regions that we operate has helped to alleviate these. During
the challenges ahead, the health and safety of our most important
asset, our people, will be at the forefront of my concerns, and
with that in my mind I would like to acknowledge and give thanks
for the commitment that everyone in the Group has shown throughout
this crisis.
I would also like to thank the board and our shareholders for
their support over the last few years and in particular more
recently, and hope to see a return to a more normal way of life in
the not too distant future".
Joseph Purcell
Chief Executive Officer
Market Industries and Product Mix
The Groups industry mix has changed during the period as the
Group continues to win Geotech contracts in the construction
industry.
Industry mix (by revenue)
H1 2020 H1 2019
Mining 52% 61%
Construction 27% 15%
Geothermal / Waterwell 19% 22%
Other 2% 2%
Construction contracts won during 2019 continued into 2020 in
North America, as did the supply of other projects in Europe. The
winning of additional contracts in North and South America during
H1 2020, together with the acquisitions in the period, has
accelerated the Group's growth in the construction market where
revenue has almost doubled (+98% growth, with 74% being organic
growth) versus the same period in the prior year.
The Group's supply and service to the mining industry contracted
in the period by 9% due to the impact of temporary mine closures in
the efforts to suppress the spread of Covid-19. This was mostly
experienced in Southern Africa, Central and South America. The
Group also experienced a weakness in the APAC mining industry due
to the lockdowns in these areas where mining activity was affected
by several lockdown related factors, namely:
-- Mines operating on reduced staffing due to social distancing requirements
-- Inability to get on some mines to continue product testing and provide support
-- Severely restricted global freight capacity
The Geothermal and Waterwell industry that is mainly
concentrated in Europe and North America experienced a decline and
this was felt mostly in Central Europe where some business ceased
completely as a result of the Covid-19 pandemic. The overall effect
on supply to this industry for the Group saw revenue contract by 6%
in the period.
The sale of Mincon manufactured product grew by 10% in H1 2020
and that has contributed to the Group's overall revenue growth to
EUR64.7 million, an increase of 8% on the same period in 2019, with
organic growth of 4.5%. The acquisitions in 2020 are within the
construction sector and accounted for 3.5% of overall revenue
growth.
Earnings
The Group's gross profit for the period increased by 13% to
EUR23.5 million (H1 2019: EUR20.8 million excluding impairments).
The increase in margin was due to Mincon DTH and Mincon Geotech
products together accounting for a larger amount of the sales mix
in the current period. These two product ranges now earn
comparative margins since the Group acquired the remaining
manufacturing of the Geotech products through the strategic
acquisition of the Lehti Group in January 2020.
Operating profits for the period increased by 21% to EUR8.3
million (H1 2019: EUR6.8 million excluding reorganisation costs and
impairments). The increase in profits are attributable to better
gross margins and the improved operating leverage arising from the
reorganisation of the business undertaken in 2019. The Group also
incurred less travel costs due to the international travel ban
imposed across the Group in light of the global Covid-19
pandemic.
Finance costs increased through the finance borrowings and right
of use asset finance costs within the companies acquired in 2020
together with additional Group borrowings in January 2020. The
South African Rand, Australian Dollar and British Sterling have
seen a negative impact in the period and have contributed to an
overall FX loss for the Group, this has pushed the earnings per
share to 2.93 cent for the period.
Balance Sheet & Cash
Net Working capital increased in the period by 5%, mostly due to
acquisitions. The business generated EUR10.9 million from
operations in the period and this was invested in acquisitions and
capital equipment, most notably on heat treatment facilities in
Australia as the Group continues to add more agility to business
operations and regional independence. Total cash generation in the
period remained flat with a negative FX effect being the net
difference.
Covid-19
During the first half of 2020 the Group had experienced regional
disruption to order intake due to measures brought in by local
governments to control the spread of Covid-19. In particular the
Group has witnessed mining customers in Southern African countries,
Australia and parts of Central and South American countries
operations being interrupted as a result. The Mincon Group has done
everything in its control to supply its customers across all
regions and industries during this Covid-19 pandemic and will
continue to do so while maintaining the safety of all Mincon
employees.
Towards the end of Q2 2020 the Group has observed Covid-19
government measures being slowly unwound in most countries where
the Group has a presence, though it is expected that parts of these
restrictions will remain in place for some time to come and that
will continue to have a bearing on supply to the Group's customers.
The regions that the Group serves may be affected further depending
on how governments and business confront the Covid-19 challenge
that is now ahead of us all.
The Group has put in place additional lines of credit during Q2
2020 with its banking partners as the impact and duration of the
Covid-19 pandemic remains uncertain. The industries that the Group
supplies to are robust and some local governments have brought in
measures to ensure resilience in their economies during the
Covid-19 pandemic. The Group balance sheet remains very strong and
the Group has not experienced any Covid-19 material asset
effects.
Dividend
The final dividend for 2019 in the amount of EUR0.0105 (1.05
cent) was approved by shareholders at the Annual General Meeting
held on 23 July 2020. This amounts to a dividend payment of EUR2.2
million which will be paid on 4 September 2020 to shareholders on
the register at the close of business on 14 August 2020. In light
of the global Covid-19 pandemic, the board of directors have
adopted a prudent approach and have decided to postpone a decision
on an interim dividend to later in the year.
A PDF version of this statement is also available at the
following link:
http://www.rns-pdf.londonstockexchange.com/rns/5606V_1-2020-8-7.pdf
10 AUGUST 2020
For further information, please contact:
Mincon Group plc
Joe Purcell CEO Tel: + 353 (61) 361 099
Mark McNamara CFO
Davy Corporate Finance Tel: +353 (1) 679 6363
(Nominated Adviser and Euronext Growth
Adviser)
Anthony Farrell
Daragh O'Reilly
Mincon Group plc
2020 Half Year Financial Results
Condensed consolidated income statement
For the 6 months ended 30 June 2020
Unaudited
2019
Excluding Exceptional Including
Unaudited exceptional items exceptional
2020 items (Note items
Notes EUR'000 EUR'000 9) EUR'000
EUR'000
----------------------------- ------- ------------ ------------- ------------ -------------
Continuing operations
Revenue 6 64,654 59,922 - 59,922
Cost of sales 8 (41,197) (41,098) - (41,098)
Gross profit 23,457 18,824 - 18,824
Operating costs 8 (15,194) (14,595) (2,842) (17,437)
Operating profit 8,263 4,229 (2,842) 1,387
Finance income 18 72 - 72
Finance cost (412) (303) - (303)
Foreign exchange gain/(loss) (227) 41 - 41
Contingent consideration 13 (50) - (50)
Profit before tax 7,655 3,989 (2,842) 1,147
----------------------------- ------------- ------------
Settlement gain - - 7,261 7,261
----------------------------- ------- ------------ ------------- ------------ -------------
Income tax expense (1,297) (1,223) - (1,223)
----------------------------- ------- ------------ ------------- ------------ -------------
Profit for the period 6,358 2,766 4,419 7,185
----------------------------- ------- ------------ ------------- ------------ -------------
Profit attributable to:
- owners of the Parent 6,198 7,144
- non-controlling interests 160 41
----------------------------- ------- ------------ -------------
Earnings per Ordinary Share
Basic earnings per share, 13 2.93 3.39
Diluted earnings per share, 13 2.86 3.35
----------------------------- ------- ------------ -------------
Condensed consolidated statement of comprehensive income
For the 6 months ended 30 June 2020
Unaudited Unaudited
2020 2019
H1 H1
EUR'000 EUR'000
--------------------------------------------------------- --------- ----------
Profit for the period 6,358 7,185
Other comprehensive income/(loss):
Items that are or may be reclassified subsequently to
profit or loss:
Foreign currency translation - foreign operations (3,734) 878
Other comprehensive profit / (loss) for the period (3,734) 878
--------------------------------------------------------- --------- ----------
Total comprehensive income for the period 2,624 8,063
--------------------------------------------------------- --------- ----------
Total comprehensive income attributable to:
- owners of the Parent 2,464 8,022
- non-controlling interests 160 41
--------------------------------------------------------- --------- ----------
The accompanying notes are an integral part of these financial
statements.
Consolidated statement of financial position
As at 30 June 2020
Unaudited
30 June 31 December
2020 2019
Notes EUR'000 EUR'000
---------------------------------------------- ----- --------------------- ------------
Non-Current Assets
Intangible assets and goodwill 15 36,281 31,937
Property, plant and equipment 16 47,849 41,172
Deferred tax asset 11 637 616
Total Non-Current Assets 84,767 73,725
----------------------------------------------- ----- --------------------- ------------
Current Assets
Inventory and capital equipment 17 53,504 48,590
Trade and other receivables 18 22,922 20,346
Prepayments and other current assets 2,870 6,098
Current tax asset 11 40 589
Cash and cash equivalents 16,035 16,368
Total Current Assets 95,370 91,991
----------------------------------------------- ----- --------------------- ------------
Total Assets 180,138 165,716
----------------------------------------------- ----- --------------------- ------------
Equity
Ordinary share capital 12 2,117 2,110
Share premium 67,647 67,647
Undenominated capital 39 39
Merger reserve (17,393) (17,393)
Restricted equity reserve 420 419
Share based payment reserve 14 1,945 1,629
Foreign currency translation reserve (7,602) (3,868)
Retained earnings 80,644 74,446
----------------------------------------------- ----- --------------------- ------------
Equity attributable to owners of Mincon Group
plc 127,817 125,029
----------------------------------------------- ----- --------------------- ------------
Non-controlling interests 1,275 1,115
Total Equity 129,092 126,144
Non-Current Liabilities
Loans and borrowings 19 16,813 10,879
Deferred tax liability 11 458 1,794
Deferred contingent consideration 20 5,357 4,962
Other liabilities 2,025 153
Total Non-Current Liabilities 24,653 17,788
----------------------------------------------- ----- --------------------- ------------
Current Liabilities
Loans and borrowings 19 6,459 4,043
Trade and other payables 11,197 10,853
Accrued and other liabilities 6,843 5,827
Current tax liability 11 1,894 1,061
Total Current Liabilities 26,393 21,784
----------------------------------------------- ----- --------------------- ------------
Total Liabilities 51,046 39,572
----------------------------------------------- ----- --------------------- ------------
Total Equity and Liabilities 180,138 165,716
----------------------------------------------- ----- --------------------- ------------
The accompanying notes are an integral part of these financial
statements.
Condensed consolidated statement of cash flows
For the 6 months ended 30 June 2020
--------------------------------------------------------- ---------------------
Unaudited Unaudited
H1 H1
2020 2019
EUR'000 EUR'000
--------------------------------------------------------- --------- ----------
Operating activities:
Profit for the period 6,358 7,185
Adjustments to reconcile profit to net cash provided
by operating activities:
Depreciation 3,149 2,551
Fair value movement on deferred contingent consideration (13) 50
Finance cost 412 303
Finance income (18) (72)
Gain on the sale of operations, net of tax - (7,261)
Income tax expense 1,297 1,223
Other non-cash movements (244) (438)
--------------------------------------------------------- --------- ----------
10,941 3,541
Changes in trade and other receivables 422 (2,079)
Changes in prepayments and other assets 3,160 (948)
Changes in inventory (3,440) 1,071
Changes in trade and other payables 189 1,587
--------------------------------------------------------- --------- ----------
Cash provided by operations 11,272 3,172
Interest received 18 72
Interest paid (412) (303)
Income taxes paid (1,153) (2,027)
--------------------------------------------------------- --------- ----------
Net cash provided by/(used in) operating activities 9,725 914
--------------------------------------------------------- --------- ----------
Investing activities
Purchase of property, plant and equipment (4,469) (3,746)
Investment in intangible assets (459) (589)
Proceeds from the issuance of share capital 7 5
Payment of deferred contingent consideration (1,023) (500)
Acquisitions, net of cash required (7,225) (800)
Proceeds from sale of discontinued operations - 8,075
Net cash provided by/(used in) investing activities (13,169) 2,445
--------------------------------------------------------- --------- ----------
Financing activities
Dividends paid - (2,210)
Repayment of loans and finance leases (1,984) (891)
Drawdown of loans 5,441 5,472
Net cash provided by/(used in) financing activities 3,457 2,371
--------------------------------------------------------- --------- ----------
Effect of foreign exchange rate changes on cash (346) (10)
--------------------------------------------------------- --------- ----------
Net increase/(decrease) in cash and cash equivalents (333) 5,720
--------------------------------------------------------- --------- ----------
Cash and cash equivalents at the beginning of the
year 16,368 8,042
--------------------------------------------------------- --------- ----------
Cash and cash equivalents at the end of the period 16,035 13,762
--------------------------------------------------------- --------- ----------
The accompanying notes are an integral part of these financial
statements.
Condensed consolidated statement of changes in equity for the 6
months ended 30 June 20
Share Foreign
Restricted based currency Unaudited
Share Share Merger equity Un-denominated payment translation Retained Non-controlling Total
capital premium reserve reserve capital reserve reserve earnings Total interests equity
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
--------------- ------- ------- -------- ---------- -------------- ------- ----------- -------- ------- --------------- ---------
Balances at 1
July 2019 2,110 67,647 (17,393) 459 39 1,706 (5,143) 71,477 120,902 1,102 122,004
--------------- ------- ------- -------- ---------- -------------- ------- ----------- -------- ------- --------------- ---------
Comprehensive
income:
Profit for the
period - - - - - - - 7,395 7,395 13 7,408
Other
comprehensive
income/(loss):
Foreign
currency
translation - - - - - - 1,275 - 1,275 - 1,275
----------- -------- ------- --------------- ---------
Total
comprehensive
income 1,275 7,395 8,670 13 8,683
----------- -------- ------- --------------- ---------
Non-taxable
income - - - (40) - - - - (40) - (40)
Transactions
with
Shareholders:
Share-based
payments - - - - - (77) - - (77) - (77)
Dividend
payment - - - - - - - (4,426) (4,426) - (4,426)
Balances at 31
December
2019 2,110 67,647 (17,393) 419 39 1,629 (3,868) 74,446 125,029 1,115 126,144
--------------- ------- ------- -------- ---------- -------------- ------- ----------- -------- ------- --------------- ---------
Comprehensive
income:
Profit for the
period - - - - - - - 6,198 6,198 160 6,358
Other
comprehensive
income/(loss):
Foreign
currency
translation - - - - - - (3,734) - (3,734) - (3,734)
----------- -------- ------- --------------- ---------
Total
comprehensive
income (3,734) 6,198 2,464 160 2,624
----------- -------- ------- --------------- ---------
Non-taxable
income - - - 1 - - - - 1 - 1
-----------
Transactions
with
Shareholders:
Equity-settled
share-based
payment 7 - - - - - - - 7 - 7
Share-based
payments - - - - - 316 - - 316 - 316
Dividend - - - - - - - - - - -
payment
Balances at 30
June 2020 2,117 67,647 (17,393) 420 39 1,945 (7,602) 80,644 127,817 1,275 129,092
--------------- ------- ------- -------- ---------- -------------- ------- ----------- -------- ------- --------------- ---------
The accompanying notes are an integral part of these financial
statements.
Notes to the consolidated interim financial statements
1 Description of business
Mincon Group plc ("the Company") is a company incorporated in
the Republic of Ireland. The unaudited consolidated interim
financial statements of the Company for the six months ended 30
June 2020 (the "Interim Financial Statements") include the Company
and its subsidiaries (together referred to as the "Group"). The
Interim Financial Statements were authorised for issue by the
Directors on 7 August 2020.
2. Basis of preparation
The Interim Financial Statements have been prepared in
accordance with IAS 34, 'Interim Financial Reporting', as adopted
by the EU. The Interim Financial Statements do not include all of
the information required for full annual financial statements and
should be read in conjunction with the Group's consolidated
financial statements for the year ended 31 December 2019 as set out
in the 2019 Annual Report (the "2019 Accounts"). The Interim
Financial Statements do, however, include selected explanatory
notes to explain events and transactions that are significant to an
understanding of the changes in the Group's financial position and
performance since the last annual financial statements.
The Interim Financial Statements do not constitute statutory
financial statements. The statutory financial statements for the
year ended 31 December 2019, extracts from which are included in
these Interim Financial Statements, were prepared under IFRS as
adopted by the EU and will be filed with the Registrar of Companies
together with the Company's 2019 annual return. They are available
from the Company website www.mincon.com and, when filed, from the
registrar of companies. The auditor's report on those statutory
financial statements was unqualified.
The Interim Financial Statements are presented in Euro, rounded
to the nearest thousand, which is the functional currency of the
parent company and also the presentation currency for the Group's
financial reporting.
The financial information contained in the Interim Financial
Statements has been prepared in accordance with the accounting
policies applied in the 2019 Accounts.
3. Use of estimates and judgements
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income, and expenses. The
judgements, estimates and associated assumptions are based on
historical experience and other factors that are believed to be
reasonable under the circumstances, the results of which form the
basis of making the judgements about the carrying values of assets
and liabilities that are not readily apparent from other sources.
Actual results may differ materially from these estimates. In
preparing the Interim Financial Statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those that applied to the 2019 Financial Statements.
4. Changes in significant accounting policies
There have been no changes in significant accounting policies
applied in these interim financial statements, they are the same as
those applied in the last annual audited financial statements.
5. Financial Reporting impact due to the Covid-19 Pandemic:
a. Government Grants
The Group received government grants in certain countries where
the Group operates. These grants differ in structure from country
to country but primarily relate to personnel costs.
b. Expected Credit losses
The Group has not witnessed any trends in its analysis of its
customers that would indicate an adjustment to its trade
receivables as at the 30 June 2020 due to the Covid-19
pandemic.
c. Inventory
The Group has not experienced any material impact on its
valuation of inventory as of 30 June 2020, that can be directly
attributable to the Covid-19 pandemic.
d. Risk Assessment
The Mincon Group's operations are spread globally. This brings
various exposures, such as trading and financial, and strategic
risks. The primary trading risks would encompass operational,
legal, regulatory and compliance. Strategic risks would cover long
term risks effecting the business such as evolving industry trends,
technological advancements, and global economic developments.
Financial risks extend to but are not limited to pricing risks,
currency risks, interest rate volatility and taxation risks. The
risk of managing Covid-19 is encompassed with the abovementioned
risks and therefore the Group considers its management of these
risks as a whole.
6. Revenue
H1 H1
2020 2019
EUR'000 EUR'000
---------------------------- ------- --------
Product revenue:
Sale of Mincon product 55,565 50,464
Sale of third-party product 9,089 9,458
Total revenue 64,654 59,922
---------------------------- ------- --------
7. Operating Segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker
(CODM). Our CODM has been identified as the Board of Directors.
Having assessed the aggregation criteria contained in IFRS 8
operating segments and considering how the Group manages its
business and allocates resources, the Group has determined that it
has one reportable segment. In particular the Group is managed as a
single business unit that sells drilling equipment, primarily
manufactured by Mincon manufacturing sites.
Entity-wide disclosures
The business is managed on a worldwide basis but operates
manufacturing facilities and sales offices in Ireland, Sweden,
Finland, South Africa, UK, Australia, the United States and Canada
and sales offices in other locations including Australia, South
Africa, Finland, Spain, Namibia, France, Sweden, Canada, Chile and
Peru. In presenting information on geography, revenue is based on
the geographical location of customers and non-current assets based
on the location of these assets.
7. Operating Segments (continued)
Revenue by region (by location of customers):
H1 H1
2020 2019
EUR'000 EUR'000
----------------------------------------- ------- ---------------
Region:
Ireland 647 392
Americas 21,509 17,202
Asia Pacific 10,572 12,773
Europe, Middle East, Africa 31,926 29,555
Total revenue from continuing operations 64,654 59,922
----------------------------------------- ------- ---------------
Non-current assets by region (location of assets):
30 June 31 December
2020 2019
EUR'000 EUR'000
Region:
Ireland 46,886 42,830
Americas 12,635 12,839
Asia Pacific 11,813 9,493
Europe, Middle East, Africa 12,796 7,947
Total non-current assets(1) 84,130 73,109
---------------------------------------------------- ------- -----------
(1) Non-current assets exclude deferred tax assets.
8. Cost of Sales and operating expenses
Included within cost of sales, selling and distribution expenses
and general and administrative expenses were the following major
components:
Cost of sales
H1 H1
2020 2019
EUR'000 EUR'000
---------------------------------------- -------- --------
Raw materials 17,517 16,888
Third party product purchases 7,122 7,743
Employee costs 8,438 8,370
Depreciation 2,024 1,567
Impairment of finished goods inventory 257 1,992
Other 5,839 4,538
---------------------------------------- -------- --------
Total cost of sales 41,197 41,098
---------------------------------------- -------- --------
The level of finished goods inventory impairment within cost of
sales amounted to EUR257,000 (30 June 2019: EUR2 million).
General and selling expenses
H1 H1
2020 2019
EUR'000 EUR'000
----------------------------------- ---------
Employee costs 8,880 8,564
Depreciation 1,125 984
Acquisition and related costs 343 136
Impairment of trade receivables - 582
Reorganisational costs (note 9) - 2,842
Other 4,846 4,329
------------------------------------ --------- ---------
Total other operating costs 15,194 17,437
------------------------------------ --------- ---------
The Group provides for all receivables where there is objective
evidence, including historical loss experience, that amounts are
irrecoverable. The Group considers all receivables fully
recoverable.
Employee information
H1 H1
2020 2019
EUR'000 EUR'000
--------------------------------------------- -------- --------
Wages and salaries 14,591 13,925
Social security costs 1,648 1,592
Pension costs of defined contribution plans 763 985
Redundancy payments (note 9) - 1,241
Share based payments (note 14) 316 432
--------------------------------------------- -------- --------
Total employee costs 17,318 18,175
--------------------------------------------- -------- --------
The Group capitalised payroll costs of EUR250,000 in H1 2020 in
relation to research and development.
The average number of employees was as follows:
H1 H1
2020 2019
Number Number
--------------------------------------------------- ------- -------
Sales and distribution 126 130
General and administration 61 58
Manufacturing, service and development 340 329
--------------------------------------------------- ------- -------
Average number of persons employed 527 517
--------------------------------------------------- ------- -------
9. Exceptional Items
H1 2020 H1 2019
EUR'000 EUR'000
------------------------------------ ------- --------
Operating costs
Reorganisational costs - (2,842)
Total operating costs - (2,842)
------------------------------------ ------- --------
Profit from discontinued operations - 7,261
------------------------------------ ------- --------
Total exceptional items - 4,419
------------------------------------ ------- --------
During 2019 the Group undertook a reorganisation of its
activities across all regions and incurred costs of EUR2.8 million
in doing so. The reorganisation included relocation of activities;
closing of regional offices; and, redundancies where necessary.
Redundancy costs amounted to EUR1.2 million for H1 2019.
10. Acquisitions and disposals
Acquisitions
In January 2020, Mincon acquired 100% shareholding in Lehti
Group, a Finland based construction product manufacturer and
distributor, for a consideration of EUR7.7 million This was made up
of a cash consideration of EUR7 million and deferred consideration
of EUR0.7 million.
In May 2020, Mincon acquired 100% shareholding in Rocdrill, a
French-based construction product distributor and drilling
specialist, for a consideration of EUR1 million. This was made up
of a cash consideration of EUR225,000 and deferred consideration of
EUR775,000. EUR225,000 of the deferred consideration at the end of
H1 2020 will be paid during H2 2020.
A. Consideration transferred for acquisitions
Lehti Rocdrill Total
Group
EUR'000 EUR'000 EUR'000
----------------------------------- -------- --------- --------
Cash 7,000 225 7,225
Deferred contingent consideration 706 775 1,481
----------------------------------- -------- --------- --------
Total consideration transferred 7,706 1,000 8,706
----------------------------------- -------- --------- --------
B. Goodwill
Goodwill arising from the acquisition of Lehti Group and
Rocdrill has been recognised as follows:
Lehti Rocdrill
Group Total
EUR'000 EUR'000 EUR'000
-------------------------------------- -------- ------------ --------
Consideration transferred 7,706 1,000 8,706
Fair value of identifiable net assets (3,742) (357) (4,099)
--------------------------------------- -------- ------------ --------
Goodwill 3,964 643 4,607
--------------------------------------- -------- ------------ --------
11. Income Tax
The Group's consolidated effective tax rate in respect of
operations for the six months ended 30 June 2020 was 17% (30 June
2019: 15%). The effective rate of tax is forecast at 17% for 2020.
The tax charge for the six months ended 30 June 2020 of EUR1.3
million (30 June 2019: EUR1.2 million) includes deferred tax
relating to movements in provisions, net operating losses forward
and the temporary differences for property, plant and equipment
recognised in the income statement.
The net current tax liability at period-end was as follows:
30 June 31 December
2020 2019
EUR'000 EUR'000
------------------------ ------- ------------
Current tax prepayments 40 589
Current tax payable (1,894) (1,061)
------------------------ ------- ------------
Net current tax (1,854) (472)
------------------------ ------- ------------
The net deferred tax liability at period-end was as follows:
30 June 31 December
2020 2019
EUR'000 EUR'000
----------------------- ------- ------------
Deferred tax asset 637 616
Deferred tax liability (458) (1,794)
----------------------- ------- ------------
Net deferred tax 179 (1,178)
----------------------- ------- ------------
12. Share capital
Allotted, called- up and fully paid up shares Number EUR000
---------------------------------------------- ----------- ------
01 January 2020 210,973,102 2,110
Allotted in June 2020 701,922 7
---------------------------------------------- ----------- ------
30 June 2020 211,675,024 2,117
---------------------------------------------- ----------- ------
Share issuances
On 26 November 2013, Mincon Group plc was admitted to trading on the
Enterprise Securities Market (ESM) of the Euronext Dublin and the
Alternative Investment Market (AIM) of the London Stock Exchange.
In April 2020, 701,922 Restricted Share Awards (RSAs) met the
vesting conditions set down by the board of directors and were
allotted to the recipients of the awards.
13. Earnings per share
Basic earnings per share (EPS) is computed by dividing the
profit for the period available to ordinary shareholders by the
weighted average number of Ordinary Shares outstanding during the
period. Diluted earnings per share is computed by dividing the
profit for the period by the weighted average number of Ordinary
Shares outstanding and, when dilutive, adjusted for the effect of
all potentially dilutive shares. The following table sets forth the
computation for basic and diluted net profit per share for the
years ended 30 June:
H1 2020 H1 2019
Numerator (amounts in EUR'000):
Profit attributable to owners of the Parent 6,198 7,144
Denominator (Number):Basic shares outstanding
Restricted share awards
Restricted share options
Diluted weighted average shares outstanding 211,675,024 210,973,102
----------------------------------------------
844,000 2,037,176
3,981,000 -
216,500,024 213,010,278
---------------------------------------------- ----------- -----------
Earnings per Ordinary Share
Basic earnings per share, EUR 2.93c 3.39c
Diluted earnings per share, EUR 2.86c 3.35c
----------- -----------
14. 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.
Number of
Awards in
Reconciliation of outstanding share awards thousands
-------------------------------------------- ----------
Outstanding on 1 January 2020 1,546
Forfeited during the period -
Exercised during the period (702)
Granted during the period -
Outstanding at 30 June 2020 844
-------------------------------------------- ----------
Number of
Options in
Reconciliation of outstanding share options thousands
--------------------------------------------- -----------
Outstanding on 1 January 2020 -
Forfeited during the period -
Exercised during the period -
Granted during the period 3,981
Outstanding at 30 June 2020 3,981
--------------------------------------------- -----------
15. Intangible Assets
Product development
Goodwill Total
EUR'000 EUR'000 EUR'000
----------------------------------------- -------------------- ----------- -------
Balance at 1 January 2020 4,782 27,155 31,937
----------------------------------------- -------------------- ----------- -------
Investments / Internally developed 459 - 459
----------------------------------------- -------------------- ----------- -------
Acquisitions - 4,607 4,607
----------------------------------------- -------------------- ----------- -------
Disposals - - -
----------------------------------------- -------------------- ----------- -------
Impairment of goodwill - - -
----------------------------------------- -------------------- ----------- -------
Foreign currency translation differences - (722) (722)
----------------------------------------- -------------------- ----------- -------
Balance at 30 June 2020 5,241 31,040 36,281
----------------------------------------- -------------------- ----------- -------
16. Property, Plant and Equipment
Capital expenditure in the first half-year amounted to EUR4.5
million (30 June 2019 EUR3.7 million). The acquisition of Lehti
Group has brought EUR2.7 million into Property, Plant and
Equipment, and Rocdrill have brought EUR143,000 into Property,
Plant and Equipment from the date of acquisition. The depreciation
charge for property, plant and equipment is recognised in the
following line items in the income statement:
H1 H1
2020 2019
EUR'000 EUR'000
-------------------------------------------------- ------- --------
Cost of sales 2,024 1,567
Operating Costs 1,125 984
Total depreciation charge for property, plant and
equipment 3,149 2,551
-------------------------------------------------- ------- --------
17. Inventory
30 June 31 December
2020 2019
EUR'000 EUR'000
------------------------------------ ------- ------------
Finished goods and work-in-progress 41,055 38,212
Capital equipment 463 962
Raw materials 11,986 9,416
------------------------------------ ------- ------------
Total inventory 53,504 48,590
------------------------------------ ------- ------------
The Group recorded an impairment of EUR257,000 against inventory
to take account of net realisable value during the period ended 30
June 2020 (30 June 2019: EUR2 million).
18. Trade and other receivables
30 June 31 December
2020 2019
EUR'000 EUR'000
-------------------------------- ------- ----------------
Gross receivable 24,396 21,424
Provision for impairment (1,474) (1,078)
Net trade and other receivables 22,922 20,346
-------------------------------- ------- ----------------
Provision
for impairment
EUR'000
----------------------------------------- ------------------
Balance at 1 January 2020 (1,078)
Additions (396)
Balance at 30 June 2020 (1,474)
----------------------------------------- ------------------
18. Trade and other receivables (continued)
30 June 31 December
2020 2019
EUR'000 EUR'000
Less than 60 days 21,263 17,112
61 to 90 days 637 1,659
Greater than 90 days 1,022 1,575
-------------------------------- ------- ------------
Net trade and other receivables 22,922 20,346
-------------------------------- ------- ------------
At 30 June 2020, EUR1.7 million (7%) of trade receivables
balance were past due but not impaired (31 December 2019, EUR3.2
million (16%).
19. Loans, borrowings and lease liabilities
30 June 31 December
2020 2019
Maturity EUR'000 EUR'000
--------------------------------------------------------- ------- ------------
Loans and borrowings 2019-2026 12,068 4,879
Lease liabilities 2019-2025 5,173 5,903
ROU lease liability 2020-2028 6,031 4,140
---------------------------------------------- ----------
Total Loans, borrowings and lease liabilities 23,272 14,922
------- ------------
Current 6,459 4,043
------- ------------
Non-current 16,813 10,879
------- ------------
The Group has a number of bank loans and lease liabilities in
Ireland, the United Kingdom, USA, Sweden, Peru, Australia, Namibia
and Chile with a mixture of variable and fixed interest rates. The
Group has been in compliance with all debt agreements during the
periods presented. The loan agreements in Ireland carry restrictive
financial covenants.
20. Financial Risk Management
The Group is exposed to various financial risks arising in the
normal course of business. Our financial risk exposures are
predominantly related to changes in foreign currency exchange rates
as well as the creditworthiness of our financial asset
counterparties.
The half-year financial statements do not include all financial
risk management information and disclosures required in the annual
financial statements, and should be read in conjunction with the
2019 Annual Report. There have been no changes in our risk
management policies since year-end and no material changes in our
interest rate risk.
a) Liquidity and Capital
The Group defines liquid resources as the total of its cash,
cash equivalents and short term deposits. Capital is defined as the
Group's shareholders' equity and borrowings.
The Group's objectives when managing its liquid resources are:
* To maintain adequate liquid resources to fund its
ongoing operations and safeguard its ability to
continue as a going concern, so that it can continue
to create value for investors;
* To have available the necessary financial resources
to allow it to invest in areas that may create value
for shareholders; and
-- To maintain sufficient financial resources to mitigate against
risks and unforeseen events.
Liquid and capital resources are monitored on the basis of the
total amount of such resources available and the Group's
anticipated requirements for the foreseeable future. The Group's
liquid resources and shareholders' equity at 30 June 2020 and 31
December 2019 were as follows:
30 June 31 December
2020 2019
EUR'000 EUR'000
-------------------------- -------- -----------
Cash and cash equivalents 16,035 16,368
Loans and borrowings 23,272 14,922
Shareholders' equity 127,817 125,029
-------------------------- -------- -----------
b) Foreign currency risk
The Group is a multinational business operating in a number of
countries and the euro is the presentation currency. The Group,
however, does have revenues, costs, assets and liabilities
denominated in currencies other than euro. Transactions in foreign
currencies are recorded at the exchange rate prevailing at the date
of the transaction. The resulting monetary assets and liabilities
are translated into the appropriate functional currency at exchange
rates prevailing at the reporting date and the resulting gains and
losses are recognised in the income statement. The Group manages
some of its transaction exposure by matching cash inflows and
outflows of the same currencies. The Group does not engage in
hedging transactions and therefore any movements in the primary
transactional currencies will impact profitability. The Group
continues to monitor appropriateness of this policy.
The Group's global operations create a translation exposure on
the Group's net assets since the financial statements of entities
with non-euro functional currencies are translated to euro when
preparing the consolidated financial statements. The Group does not
use derivative instruments to hedge these net investments.
The principal foreign currency risks to which the Group is
exposed relate to movements in the exchange rate of the euro
against US dollar, South African rand, Australian dollar, Swedish
krona and Canadian dollar.
The Group has material subsidiaries with a functional currency
other than the euro, such as US dollar, Australian dollar, South
African rand, Canadian dollar, British pound and Swedish krona.
In 2020, 67% (2018: 56%) of Mincon's revenue EUR64 million (30
June 2019: EUR60 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.
20. Financial Risk Management (continued)
b) Foreign currency risk (continued)
Currency also has a significant transactional impact on the
Group as outstanding balances in foreign currencies are
retranslated at closing rates at each period end. The changes in
the South African Rand, Australian Dollar, Swedish Krona and
British Pound have either weakened or strengthened, resulting in a
foreign exchange loss being recognised in other comprehensive
income and a significant movement in foreign currency translation
reserve.
Average and closing exchange rates for the Group's primary
currency exposures were as disclosed in the table below for the
period presented.
30 June 31 December
2020 H1 2020 2019 H1 2019
Euro exchange rates Closing Average Closing Average
-------------------- ------- -------- ------------ --------
US Dollar 1.12 1.12 1.12 1.13
Australian Dollar 1.63 1.65 1.59 1.61
Great British Pound 0.91 0.90 0.85 0.89
South African Rand 19.49 18.31 15.72 16.16
Swedish Krona 10.47 10.48 10.51 10.59
-------------------- ------- -------- ------------ --------
There has been no material change in the Group's currency
exposure since 31 December 2019. Such exposure comprises the
monetary assets and monetary liabilities that are not denominated
in the functional currency of the operating unit involved.
c) Fair values
Financial instruments carried at fair value
The deferred contingent consideration payable represents
management's best estimate of the fair value of the amounts that
will be payable, discounted as appropriate using a market interest
rate. The fair value was estimated by assigning probabilities,
based on management's current expectations, to the potential
pay-out scenarios. The fair value of deferred contingent
consideration is not dependent on the future performance of the
acquired businesses against predetermined targets and on
management's current expectations thereof.
Movements in the year in respect of Level 3 financial
instruments carried at fair value
The movements in respect of the financial assets and liabilities
carried at fair value in the period ended to 30 June 2020 are as
follows:
Deferred
contingent
consideration
EUR'000
----------------------------------------- --------------
Balance at 1 January 2020 4,962
----------------------------------------- --------------
Arising on acquisition 1,481
----------------------------------------- --------------
Cash payment (1,023)
----------------------------------------- --------------
Fair value movement -
----------------------------------------- --------------
Foreign currency translation differences (63)
----------------------------------------- --------------
Balance at 30 June 2020 5,357
----------------------------------------- --------------
21. Commitments
The following capital commitments for the purchase of property,
plant and equipment had been authorised by the directors at 30 June
2020:
Total
EUR'000
------------------- --------
Contracted for 958
Not contracted for 610
------------------- --------
Total 1,568
------------------- --------
22. Litigation
The Group is not involved in legal proceedings that could have a
material adverse effect on its results or financial position.
23. Related Parties
The Group has relationships with its subsidiaries, directors and
senior key management personnel. All transactions with subsidiaries
eliminate on consolidation and are not disclosed.
As at 30 June 2020, the share capital of Mincon Group plc was
56.54% owned by Kingbell Company (31 December 2019 56.72%), this
company is ultimately controlled by Patrick Purcell and members of
the Purcell family. Patrick Purcell is also a director of the
Company. The Group has not yet paid the final dividend for 2019,
however it has been approved by shareholders at the 2020 AGM, when
paid Kingbell Company will receive EUR1.3 million.
There were no other related party transactions in the half year
ended 30 June 2020 that affected the financial position or the
performance of the Company during that period and there were no
changes in the related party transactions described in the 2019
Annual Report that could have a material effect on the financial
position or performance of the Company in the same period.
24. Events after the reporting date
Dividend
The final dividend for 2019 in the amount of EUR0.0105 (1.05
cent) was approved by shareholders at the Annual General Meeting
held on 23 July 2020. This amounts to a dividend payment of EUR2.2
million which will be paid on 4 September 2020 to shareholders on
the register at the close of business on 14 August 2020.
25. Approval of financial statements
The Board of Directors approved the interim condensed
consolidated financial statements for the six months ended 30 June
2020 on 07 August 2020.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FLFFRTSIDIII
(END) Dow Jones Newswires
August 10, 2020 02:00 ET (06:00 GMT)
Mincon (LSE:MCON)
Historical Stock Chart
From Jun 2024 to Jul 2024
Mincon (LSE:MCON)
Historical Stock Chart
From Jul 2023 to Jul 2024